LOAN AGREEMENT
GENERAL TERMS
BORROWER: Value America, Inc.
AMOUNT: $5,000,000
PURPOSE: Line of Credit to support letters of credit and vendor financing
COMMITMENT FEE: $2,500.00 payable quarterly.
LETTER OF CREDIT FEES: All letters of credit will carry a 0.75% annual fee
(prorated for shorter periods). Minimum letter of credit fee will be $350.00 and
maximum fee will be $10,000.00.
COLLATERAL: Advances under the line and issued letters of credit will be fully
secured by properly margined liquid securities acceptable to the bank.
INTEREST RATE: Interest on any funds advanced will accrue at a rate per annum
of the LIBOR plus 1.75% in effect on each respective day.
REPAYMENT TERMS: Any cash advances under the line will be evidenced by short
term notes (less than 12 months) with interest payable monthly on the first day
of each month.
PREPAYMENT: Borrower shall reserve the right to prepay any notes, in whole or
in part, at any time or times, without penalty and with interest payable only
on the amount of principal so prepaid to the date of such prepayment. Any such
prepayments shall apply to the latest maturing principal installments.
EXPIRATION/RENEWAL: Any Agreement to advance funds under the Agreement shall
expire on May 31, 1999, and the Bank shall have no further obligation to extend
credit.
REQUIREMENTS APPLICABLE TO LOAN
THE BORROWER UNDERSTANDS AND AGREES THAT THE BANK SHALL REQUIRE IN FORM AND
CONTENT SATISFACTORY TO THE BANK AND ITS COUNSEL THE FOLLOWING:
Borrowing Resolution: A Directors' resolution on the Bank's form authorizing
the loan or the guarantee or endorsement thereof and the execution of the loan
documents by the appropriate parties.
Articles of Incorporation, Bylaws: A certified true copy of the articles of
incorporation, bylaws of the corporation.
Legal Opinion: A legal opinion from an attorney acceptable to the Bank to the
effect that the loan documents are valid and binding and enforceable according
to their terms under all applicable laws and regulations and that liquid
collateral may be pledged under the terms of the 5% Cumulative Convertible
Series A Preferred Stock Agreement.
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COVENANTS AND CONDITIONS
Representations by the Borrower: In borrowing hereunder, the Borrower
represents and warrants to the Bank that all information that has been
furnished to the Bank prior to this Agreement being issued is true and accurate
and the Borrower has not failed to disclose any information of a material
nature regarding its business or financial condition and further that there is
no litigation, investigation or proceeding pending or threatened against the
Borrower or any other person liable to the Bank for the repayment of this loan
which may, in any way, adversely affect the financial condition, operation or
prospects of the Borrower or such person.
Advance Procedure: Advances on this loan will be made under individual notes
or letter of credit applications signed by an authorized representative of
the Borrower.
Financial Reporting Requirements: So long as the Borrower is indebted to
the Bank, the Borrower shall submit monthly, within 45 days of the end of
each month, internally prepared financial statements of the Borrower, including
a balance sheet and income statement; and annually, within one hundred twenty
(120) days following the end of the Borrower's fiscal year, a balance sheet
and income statement prepared in accordance with generally accepted
accounting principles on and audited basis by an independent certified public
accountant acceptable to the Bank, including, a balance sheet, income
statement, changes in capital position, and reconciliation of net worth and
including all normal and reasonable financial notes.
Closing Costs and Expenses: The Borrower shall be responsible for paying all
of the Bank's expenses incident to the making and closing of the loan.
Default: Borrower shall be in default under each of the loan documents if it
shall default in the payment or any amounts due and owing under the loans or
should it fail to timely and properly observe, keep or perform any term,
covenant, agreement or condition in any loan document or in any other loan
agreement, promissory note, security agreement, deed of trust, mortgage,
assignment or other contract securing or evidencing payment of any indebtedness
of Borrower to the Bank. Upon the occurrence of any Event of Default under this
Agreement, the Note[s], together with all interest accrued thereon and any
expenses of the Bank in connection therewith, will immediately become due and
payable on demand of the Bank.
Remedies Upon Default: If an Event of Default shall occur, Bank shall have all
rights, powers and remedies available under each of the loan documents as well
as all rights and remedies available at law or in equity.
Cure Period - Borrower will have ten calendar days to cure default under
document repayment terms and thirty calendar days to cure covenant and condition
defaults.
Additional Items: Such other documents and agreements as the Bank or its counsel
may reasonably request, including, but not limited to, an opinion of counsel
to the Borrower and the Guarantor(s), (if any).
Survival: The terms and provisions of this Agreement shall survive the closing
of the loan made hereunder, the delivery of all documents necessary to carry
out the provision of this Agreement, and the funding and making of loans and
disbursements hereunder.
Successor to Bank: The provisions of this Agreement will extend to and be
available to any subsequent holder of a Note, as well as to the Bank.
Amendments and Waivers: The Bank and the Borrower may, from time to time,
enter into written amendments, supplements or modifications to this Agreement,
the Note[s] or the Collateral Documents, and the Bank may execute and deliver
to the Borrower a written instrument waiving, on such terms and
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conditions as the Bank may specify, any of the requirements of this Agreement,
the Note[s] or the Collateral Documents or any Event of Default; provided,
however, that no such waiver will extend to any subsequent or other Event of
Default or impair any right consequent thereon.
Governing Law: This Agreement, the Note[s], the Collateral Documents and all
other loan documents executed in connection with this Agreement will be deemed
to be contracts made under, and for all purposes will be construed in
accordance with, the laws of the Commonwealth of Virginia.
IN WITNESS WHEREOF, the undersigned have caused this Agreement to be
executed.
JEFFERSON NATIONAL BANK
By /s/ Xxxxxx X. May Date: 3/17/98
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Senior Vice President
VALUE AMERICA, INC.
By /s/ Xxxx X. Xxxxxxx Date: 4/8/98
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Title: CFO & EVP
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