Exhibit 10.26
AMENDED AND RESTATED
REIMBURSEMENT AGREEMENT
AMENDED AND RESTATED REIMBURSEMENT AGREEMENT (this "Agreement"), dated as
of June 27, 2005, by and among Direct Insite Corp., a Delaware corporation (the
"Company") and the undersigned parties set forth on Schedule A annexed hereto
(each a "Guarantor" and collectively, the "Guarantors").
WHEREAS, the Company had secured a revolving line of credit (the "2003
Credit Facility") in the principal amount of $500,000 from JPMorgan Chase Bank
(the "Lender"), as evidenced by that certain Grid Demand Promissory Note
(Libor/Prime) dated June 27, 2003; and
WHEREAS, the Company has negotiated a new line of credit with Lender dated
June 30, 2005 (the "Credit Facility") to provide, among other things, that the
original Maturity Date under the 2003 Credit Facility be extended to June 30,
2007;
WHEREAS, as a condition precedent to providing the Credit Facility, the
Lender requires that each Guarantor provide, as a financial accommodation to the
Company and the Lender, a guaranty of the obligations of the Company in
substantially the forms provided by the Lender (each, a "Guaranty" and
collectively, the "Guarantees") in the aggregate maximum amount of $500,000 (as
among all Guarantors) (the "Guaranty Amount"), which Guaranty Amount, for the
purposes of the reimbursement obligations of the Company under this Agreement,
shall include any indebtedness, liability, obligation or expense of any kind
incurred by the Guarantors under or in connection with the Guarantees; and
WHEREAS, as a condition precedent to providing the Credit Facility, and in
addition to the Guarantees, the Lender requires that Tall Oaks Group L.L.C.
execute and deliver, as a financial accommodation to the Company and the Lender,
a Collateral Agreement in substantially the form provided by the Lender (the
"Collateral Agreement" and, together with the Guarantees, the "Guaranty
Documents") in respect of the Guaranty Amount; and
WHEREAS, the Company and Guarantors are parties to a Reimbursement
Agreement dated June 27, 2003, which, in order to satisfy the requirements of
Lender and reflect the current understanding of the parties, is replaced by this
Agreement; and
WHEREAS, as a condition precedent to executing and delivering the Guaranty
Documents to the Lender and in order to induce the Guarantors to execute and
deliver such Guaranty Documents, the Company has agreed to execute and deliver
this Agreement to, among other things, provide (i) for the issuance of a Note
(as defined below) and associated securities to each Guarantor in the event that
the Lender exercises its right to payment under the Guaranty Documents and (ii)
the issuance and delivery of Warrants (as defined below) to purchase an
aggregate of 500,000 shares of the common stock of Company;
NOW, THEREFORE, in consideration of the premises and representations,
warranties, covenants and agreements herein contained, and intending to be
legally bound hereby, the parties hereby agree as follows:
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ARTICLE I.
REIMBURSEMENT AND CONSIDERATION PROVISIONS
Section 1.01. Reimbursement Obligations and Consideration.
(a) In the event that a Guarantor shall, at any time or from time to time,
make a payment to the Lender under a Guaranty or draw down funds under the
Collateral Agreement, the Company agrees to simultaneously issue to such
Guarantor a senior subordinated secured promissory note (each a "Note"), which
Note shall be issued in an amount equal to any and all amounts paid by a
Guarantor to the Lender pursuant to or in connection with such Guaranty
Documents, which shall constitute principal amounts due under the Note. The Note
shall be on such terms and conditions as to be consistent with: (i) the intended
financing to be provided to Company by Sigma Opportunity Fund LLC currently
being negotiated, or (ii) at the option of Guarantors, on such terms as are
offered in any financing obtained by the Company prior to the issuance of the
Note (either (i) or (ii), a "Financing"). Notwithstanding the foregoing, it is
understood that the Notes shall be senior to the repayment of all other debt,
other than bank financing. In addition to the Note, the Company agrees to
simultaneously issue to the Guarantor such securities (which may include,
without limitation, warrants) as are issued, or as were contemplated to be
issued, in respect of a Financing, and such securities shall be issued on
substantially the same terms as the securities issued, or contemplated to be
issued, in such Financing; provided that any terms of the Warrants (as defined
below) that are more favorable than those issued in the Financing shall be
included with the terms of such securities.
(b) Upon execution and delivery of this Agreement, the Company shall
further issue and deliver to the Guarantors as they may direct, five-year
warrants (the "Warrants") to purchase an aggregate of 500,000 shares of the
Company's Common Stock, in the form attached as Exhibit A hereto. In addition to
such other terms as set forth in the Warrant, the Warrants shall: (i) have an
initial exercise price of $1.00 per share; (ii) contain a "cashless exercise"
feature; and (iii) provide that both the strike price and the number of shares
of the Company's Common Stock into which the Warrants are exercisable, and such
other rights and terms as are provided in the Warrants, shall be adjusted to
reflect any more favorable terms or rights that may be included in any financing
consummated prior to September 30, 2005, or series of related financings in
respect of such financing (irrespective of whether any such series of related
financings occurs prior to September 30, 2005), or, if no financing is
consummated prior to September 30, 2005, then in the Company's next round of
financing, or series of related financings, whichever financing is the most
favorable.
Section 1.02. Obligations Absolute. The obligations of the Company under
this Agreement shall be absolute, unconditional and irrevocable, and shall be
discharged strictly in accordance with the terms hereof, under all circumstances
whatsoever, including, without limitation, the following circumstances:
(a) any lack of validity or enforceability of any of the Guaranty Documents
or any other agreement, instrument or document relating thereto;
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(b) any amendment or waiver of or any consent to departure from any of the
Guaranty Documents;
(c) any other defense whatsoever that might constitute a defense available
to, or discharge of, the Company or the Guarantors;
(d) the existence of any claim, setoff, defense or other rights which the
Company may have against a Guarantor or a Guarantor may have against the Lender,
whether in connection with this Agreement or any unrelated transaction; and
(e) any other circumstance or happening whatsoever, whether or not similar
to any of the foregoing.
ARTICLE II.
REPRESENTATIONS AND WARRANTIES
The Company hereby represents, covenants and warrants to the Guarantors as
follows:
Section 2.01. Existence, Power and Qualification. The Company is a duly
organized and validly existing company, has the power to own its properties and
to carry on its business as is now being conducted, and is duly qualified to do
business and is in good standing in every jurisdiction in which the character of
the properties owned by it or in which the transaction of its business makes its
qualification necessary.
Section 2.02. Power and Authority. The Company has full power and authority
to enter into and perform its obligations under this Agreement. The Company has
taken all necessary action to authorize the execution, delivery and performance
of this Agreement in accordance with its terms.
Section 2.03. Validity. This Agreement constitutes the legal, valid and
binding obligation of the Company, enforceable against the Company in accordance
with its terms, except as such enforceability may be limited by bankruptcy,
insolvency, or other similar laws of general application relating to or
affecting the enforcement of creditors' rights generally, and by general
principles of equity.
Section 2.04. No Conflict. The execution, delivery and performance of this
Agreement by the Company will not violate, conflict with, or constitute any
default under any provision of (a) the Company's charter or by-laws, (b) any
applicable provisions of all constitutions, treaties, statutes, laws (including,
but not limited to, common law), rules, regulations, ordinances, codes or orders
of any governmental authority or any order, writ, rule, judgment, injunction,
decree, stipulation, determination, decision, consent, agreement or award
entered into by or with any governmental authority (a "Government Order")
applicable to the Company or its properties or assets, or (c) any mortgage,
agreement, contract or other undertaking or instrument to which the Company is a
party or by which the Company's properties or assets are bound.
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Section 2.05. Pending Matters. No action or investigation is pending or, to
the best of the Company's knowledge, threatened before or by any court or
administrative agency which might result in any material adverse change in the
financial condition, operations or prospects of the Company. The Company is not
in violation of any agreement, the violation of which might reasonably be
expected to have a material adverse effect on its business or assets, and the
Company is not in violation of any Governmental Order to which it is subject.
Section 2.06. Survival of Representations and Warranties. All
representations and warranties made herein or made in any certificate delivered
pursuant hereto shall survive the execution hereof or thereof.
Section 2.07. Issuance of Securities. The issuance of the Warrants has
been, and upon issuance, if necessary, the Notes will be, duly authorized by all
necessary corporate action, and issued free and clear of all liens, encumbrances
and rights of refusal of any kind. When the shares of common stock issuable upon
exercise of the Warrant (the "Warrant Shares") are issued and paid for in
accordance with the terms of the Warrant, such shares will be duly authorized by
all necessary corporate action and validly issued and outstanding, fully paid
and nonassessable, free and clear of all liens, encumbrances and rights of
refusal of any kind and the holders shall be entitled to all rights accorded to
a holder of Common Stock.
ARTICLE III.
COVENANTS
Section 3.01. Reservation of Common Stock. For so long as any Warrants or
other securities convertible into shares of Common Stock held by a Guarantor and
issued pursuant to this Agreement, including under Section 1.01(a) hereof, shall
remain outstanding, the Company covenants and agrees that it will at all times
fully reserve from its authorized but unissued shares of Common Stock such
sufficient number of shares thereof to permit the conversion in full of such
Warrants or other securities in accordance with the terms thereof (the "Reserved
Common Stock").
Section 3.02. Change of Control. Upon any anticipated Change of Control of
the Company, the Company shall take all commercially reasonable actions
necessary to release the Guaranty at the time of or immediately prior to the
consummation of such Change of Control. For purposes of this Section 3.02,
"Change of Control" shall be as defined as: (i) any merger, consolidation or
reorganization of the Company into or with any other person or entity (except a
merger, consolidation or reorganization with or into a wholly-owned subsidiary
of the Company or a merger, consolidation or reorganization in which either (A)
the Company's voting stock outstanding immediately prior to such transaction
continues to represent a majority by voting power of the voting stock
outstanding immediately following such transaction on a fully diluted basis or
(B) the shares of capital stock issued in exchange for the Company's voting
stock outstanding immediately prior to such transaction represent a majority by
voting power of the voting stock of the continuing or resulting entity
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immediately following such transaction on a fully diluted basis); (ii) any
issuance, sale or other disposition (or series of related sales or dispositions)
of the capital stock of the Company by the Company and/or stockholders in which
the stockholders immediately prior to such event do not hold a majority by
voting power of the outstanding stock of the Company immediately after such
event (on a fully diluted basis) (other than in a public offering); or (iii) any
sale, license, lease or disposition of all or substantially all of the assets of
the Company.
Section 3.03. Additional Agreements or Arrangements with JPMorgan Chase.
The Company covenants and agrees that, other than the Note, including, but not
limited to, any repayments and drawdowns under the Note, the Company will not
enter into or otherwise engage in any other arrangement or agreement with the
Lender, and/or any of its subsidiaries or affiliates, of any kind, without first
obtaining the prior written consent of each Guarantor.
Section 3.04. Registration of the Reserved Common Stock. The Company agrees
to register the Reserved Common Stock for resale on substantially the same terms
and conditions set forth in Section 6 (the "Registration Rights") of the Stock
Purchase and Registration Rights Agreement dated as of June 3, 2003 by and
between the Company and Metropolitan Venture Partners II, L.P., or such other
agreement entered into after the date thereof that supersedes, amends or
otherwise alters the Registration Rights thereunder, as if the Holder of this
Warrant were the party entitled to the Registration Rights thereunder, which
terms and conditions of such Registration Rights are incorporated by reference
to and made a part of this Agreement. Regardless of whether the Company
registers the resale of the Reserved Common Stock, the Company will, upon the
presentation of an opinion (in form and substance reasonably satisfactory to the
Company) of counsel by a Guarantor, allow such Guarantor to offer and sell the
Reserved Common Stock in reliance on the provisions of Rule 144 of the
Securities Act of 1933, as amended, or other exemption from the registration
provisions of state or federal law, at the option of the Guarantor.
ARTICLE IV.
MISCELLANEOUS
Section 4.01. Term of Agreement. This Agreement is effective commencing on
the date hereof. This Agreement shall remain in full force and effect until the
later of (a) the date on which the Guarantor's obligations under all of the
Guaranty Documents are terminated or expired and (b) the date on which all
reimbursement obligations of the Company to the Guarantors have been irrevocably
paid and satisfied in full. Any other termination of this Agreement shall not
terminate or otherwise affect in any way any liability or obligation of any
party hereto to the extent such liability or obligation relates to events
occurring or circumstances existing prior to or as of, or as a result of, such
termination. The Company reserves the right, at its sole option, to extend the
Maturity Date on the Credit Facility for up to an additional 12 months, and
Guarantors agree to remain obligated under the terms and conditions hereof,
without further consideration. Where the Company elects to seek an extension of
the Maturity Date, Guarantors shall use commercially reasonable efforts to
assist the Company in the discussions with Lender.
Section 4.02. Method of Communication. Except as otherwise provided in this
Agreement, all notices and communications hereunder shall be in writing. Any
notice shall be effective if delivered by hand delivery or sent via telecopy,
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recognized overnight courier service or certified mail, return receipt
requested, and shall be presumed to be received by a party hereto (a) on the
date of delivery if delivered by hand or sent by telecopy, (b) on the next
business day if sent by recognized overnight courier service and (c) on the
third business day following the date sent by certified mail, return receipt
requested.
Section 4.03. Notices. Notices to any party shall be sent to it at the
following addresses, or any other address as to which all the other parties are
notified in writing.
If to the Company: Direct Insite Corp.
00 Xxxxxxx Xxxxx
Xxxxxxx, Xxx Xxxx 00000
Attention: Chief Financial Officer
Fax: (000) 000-0000
With copies to: Xxxxxx Xxxxxxxx, Esq.
Xxxxxxx, Xxxxxxxxx & Xxxxxxxx, LLP
000 Xxxx Xxxxxx, Xxxxx 0000
Xxx Xxxx, XX 00000
Fax: (000) 000-0000
If to the Guarantors: to the addresses set forth in Schedule A hereto.
Section 4.04. Amendments and Waivers. None of the terms or provisions of
this Agreement may be waived, amended, supplemented or otherwise modified except
by a written instrument executed by the parties hereto.
Section 4.05. Severability. Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
Section 4.06. Integration. This Agreement, together with the Exhibits,
represents the agreement of the parties hereto with respect to the subject
matter hereof, and there are no agreements, promises, undertakings,
representations or warranties by the parties hereto relative to subject matter
hereof not expressly set forth or referred to herein, all of which are
superceded by this Agreement to together with the Exhibits.
Section 4.07. No Waiver; Cumulative Remedies. No failure to exercise and no
delay in exercising, on the part of the Guarantors, any right, remedy, power or
privilege hereunder shall operate as a waiver thereof; nor shall any single or
partial exercise of any right, remedy, power or privilege hereunder preclude any
other or further exercise thereof or the exercise of any other right, remedy,
power or privilege. The rights, remedies, powers and privileges herein provided
are cumulative and not exclusive of any rights, remedies, powers and privileges
provided by law.
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Section 4.08. Payment of Expenses; Indemnity. The Company shall (a) pay all
reasonable out-of-pocket expenses of the Guarantors in connection with (i) the
preparation, execution and delivery of this Agreement, whenever the same shall
be executed and delivered, not to exceed $10,000, (ii) the preparation,
execution and delivery of any waiver, amendment or consent by the Guarantors
relating to this Agreement, including without limitation reasonable fees and
disbursements of counsel for the Guarantors (iii) the administration and
enforcement of any rights and remedies of the Guarantors under this Agreement,
including consulting with accountants and attorneys concerning the nature, scope
or value of any right or remedy of the Guarantors hereunder or any factual
matters in connection therewith, which expenses shall include without limitation
the reasonable fees and disbursements of the Guarantors, and (b) defend,
indemnify and hold harmless the Guarantors from and against any losses,
penalties, fines, liabilities, judgments, settlements, damages, costs and
expenses, suffered by any such person in connection with any claim,
investigation, litigation or other proceeding (whether or not the Guarantors are
a party thereto) and the prosecution and defense thereof, arising out of or in
any way connected with this Agreement or the Guaranty Documents (after taking
into account the issuance of the Note in accordance with the terms hereof),
including without limitation, reasonable attorneys' and consultants' fees of the
Guarantors, except to the extent that any of the foregoing directly result from
the gross negligence or willful misconduct of the party seeking indemnification
therefor.
Section 4.09. Successors and Assigns. This Agreement shall be binding upon
and inure to the benefit of the Guarantors and their respective successors and
assigns, except that no party hereunder may assign or transfer any of its rights
or obligations under this Agreement without the prior written consent of the
other parties hereto, except by intestate transfer under the death of an
individual Guarantor.
Section 4.10. WAIVERS OF JURY TRIAL. THE PARTIES HERETO HEREBY IRREVOCABLY
AND UNCONDITIONALLY WAIVE TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING
RELATING TO THIS AGREEMENT AND FOR ANY COUNTERCLAIM THEREIN.
Section 4.11. Section Headings. The section headings used in this Agreement
are for convenience of reference only and are not to affect the construction
hereof or be taken into consideration in the interpretation hereof.
Section 4.12. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK
WITHOUT GIVING EFFECT TO LAWS RELATING TO CONFLICT OF LAWS.
Section 4.13. Counterparts. This Agreement may be signed in any number of
counterparts, each which shall be an original, with the same effect as if the
signatures thereto and hereto were upon the same instrument.
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective authorized officers as of its finalization on
July 12, 2005.
DIRECT INSITE CORP.
By: /s/ Xxxxxxx X. Xxxxxxx
Name: Xxxxxxx X. Xxxxxxx
Title: Chief Financial Officer
/s/ Xxxxxxxx X. Xxxx
Xxxxxxxx X. Xxxx
TALL OAKS GROUP L.L.C.
By: /s/ Xxxxxxxx X. Xxxx
Name: Xxxxxxxx X. Xxxx
Title: General Manager
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SCHEDULE A
GUARANTORS
Name/Address
------------
Xxxxxxxx X. Xxxx
c/o Tall Oaks Group L.L.C.
The Majestic
000 Xxxxxxx Xxxx Xxxx, Xxx. 0X
Xxx Xxxx, XX 00000
Tall Oaks Group L.L.C.
The Majestic
000 Xxxxxxx Xxxx Xxxx, Xxx. 0X
Xxx Xxxx, XX 00000
Attn: Xxxxxxxx X. Xxxx
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