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*Certain sections omitted and filed separately with the Commission.
Exhibit 10.13
CREDIT AGREEMENT
This Credit Agreement ("Agreement") is made and entered into on January 19,
2000, by and between XxxxxxxXxxxx.xxx Inc., Delaware corporation, ("Borrower"),
and Imperial Bank, a California banking corporation, ("Bank").
Subject to the terms and conditions of this Agreement, any security agreement(s)
executed by Borrower in favor of Bank, any note(s) executed by Borrower in favor
of Bank, or any other agreements executed in conjunction therewith
(collectively, the "Loan Documents"), Bank shall make the loan(s) and or
advance(s) (individually a "Loan" and collectively "Loans") referred to below to
Borrower.
In consideration of mutual covenants and conditions hereof, the parties hereto
agree as follows:
1. AMOUNT AND TERMS OF CREDIT
1.01 REVOLVING CREDIT COMMITMENT.
(a) REVOLVING LINE OF CREDIT. Subject to the terms and conditions of
this Agreement and provided that no Event of Default (as hereinafter defined)
has occurred and is continuing, Bank shall, upon Borrower's request make
advances ("Revolving Loans") to Borrower, for working capital and the issuance
of standby letters of credit, in an aggregate amount outstanding at any one time
not to exceed $7,500,000.00 minus the outstanding amount of all Term Loans (if
any, as such term is hereinafter defined) (the "Revolving Line of Credit") until
December 31, 2000, (the "Revolving Line of Credit Maturity Date"). Revolving
Loans may be repaid and reborrowed, provided that all outstanding principal and
accrued interest on the Revolving Loans shall be payable in full on the
Revolving Line of Credit Maturity Date.
(b) REVOLVING NOTE. The interest rate, payment terms, maturity date
and certain other terms of the Revolving Loan will be contained in a promissory
note dated the date of this Agreement, as such may be amended or replaced from
time to time.
(c) LETTER OF CREDIT USAGE. Subject to availability under the
Revolving Line of Credit, at any time and from time to time from the date hereof
through the banking day immediately prior to the Revolving Line of Credit
Maturity Date, Bank shall issue for the account of Borrower such standby letters
of credit ("Letters of Credit") as Borrower may request, which requests shall be
made by delivering to Bank a duly executed letter of credit application on
Bank's standard form; provided, however, that (i) the outstanding and undrawn
amounts of all such Letters of Credit shall not at any time exceed $750,000, and
(ii) shall be deemed to constitute Revolving Loans for the purpose of
calculating availability under the Revolving Line of Credit. Unless agreed to in
writing by Bank, no Letter of Credit shall have an expiration date that is later
than the Revolving Line of Credit Maturity Date. All Letters of Credit shall be
in form and substance acceptable to Bank in its sole discretion and shall be
subject to the terms and conditions of Bank's form application and letter of
credit agreement and other agreements required by Bank. Borrower will pay all
usual issuance and other fees that Bank notifies Borrower it will be charged for
issuing and processing Letters of Credit for Borrower.
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1.02 TERM LOAN COMMITMENT.
(a) COMMITMENT. Subject to all the terms and conditions of this
Agreement and provided that no Event of Default has occurred and is continuing,
Bank hereby agrees to make loans (each a "Term Loan," and collectively the "Term
Loans") to Borrower in such amounts as Borrower shall request at any time from
the date hereof through the date that is nine (9) months from the date hereof
(the "Term Loan Availability End Date"), in an aggregate principal amount not to
exceed $3,000,000 (the "Term Loan Commitment") for the purchase of new equipment
and software and the financing of equipment and software acquired by Borrower on
or after June 1, 1999; provided, however, that the outstanding amounts under
such Term Loans for the purchase of software shall not at any time exceed
$500,000; and provided, further, that the outstanding amounts under all such
Term Loans (i) shall not at any time exceed the Term Loan Commitment and (ii)
shall be deemed to constitute Revolving Loans for the purpose of calculating
availability under the Revolving Line of Credit. Any commitment of Bank,
pursuant to the terms of this Agreement, to make Term Loans shall expire on the
Term Loan Availability End Date, and the outstanding amount of all such Term
Loans shall thereafter be repaid in twenty four (24) equal monthly payments of
principal and interest. Any Term Loans, which are prepaid by Borrower, may not
be reborrowed.
(b) TERM LOAN NOTES. The amount of each Term Loan made by Bank to
Borrower hereunder shall be evidenced by a separate promissory note (each a
"Term Note," and collectively, the "Term Notes").
(c) REQUESTS FOR TERM LOANS. When Borrower desires to obtain a Term
Loan, Borrower shall notify Bank (which notice shall be signed by a duly
authorized officer of Borrower and shall be irrevocable) to be received no later
than 3:00 p.m. Pacific time three (3) banking days before the day on which the
Term Loan is to be made. The notice shall include a copy of the invoice for the
equipment and/or software to be financed. Term Loans may only be used for the
purchase of new equipment and software and the financing of equipment and
software acquired by Borrower on or after June 1, 1999, and will be limited to
100% of the invoice amount for such equipment and software, approved from time
to time by Bank, less any taxes, shipping and freight charges or discounts,
warranty charges, installation expenses and other soft costs. In connection with
any Term Loans made to finance equipment and software acquired by Borrower on or
after June 1, 1999, all such equipment and software shall be free of all liens
except such liens as are granted to Bank in connection with this Agreement and
the Loan Documents.
1.03 PRIOR LOANS. Any loan made by Bank to Borrower prior to the date
of this Agreement and other obligations outstanding from Borrower to Bank are
subject to the terms and conditions of this Agreement and the interest rate,
payments of principal and interest and other the terms contained in any note
evidencing the prior loan remain in full force and effect, and Borrower agrees
to continue to make payments in accordance with the terms of any such prior
note.
1.04 LOAN FEE. In addition to any other amounts due, or to become due,
concurrent with the execution hereof, in connection with the Revolving Line of
Credit and the Term Loans, Borrower shall pay to Bank a loan fee of $20,000,
which amount shall be fully earned and non-refundable as of the date hereof.
1.05 COLLATERAL. Borrower shall grant or cause to be granted to Bank a
first priority lien on any and all currently existing and hereafter acquired or
arising personal property assets of Borrower which are assigned or hereafter are
assigned to Bank as security or in which Bank now has or hereafter acquires a
security interest or pursuant to the terms of any security agreement, an
intellectual property security agreement, or otherwise as security for the
prompt payment and performance of all Borrower's
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obligations to Bank under this Agreement and the other Loan Documents, all as
may be subject to Section 5.03 hereof, excluding previously leased equipment,
and including general intangibles. Bank shall obtain a specific filing on all
copyrights, patents, and trademarks, filed at the U.S. Copyright Office and the
U.S. Patent and Trademark Office.
1.06 COLLECTION OF PAYMENTS. Borrower authorizes Bank to collect all
interest, fees, costs, and/or expenses due under this Agreement by charging
Borrower's demand deposit account number * with Bank, or any other demand
deposit account maintained by Borrower with Bank, for the full amount thereof.
Should there be insufficient funds in any such demand deposit account to pay all
such sums when due, the full amount of such deficiency shall be immediately due
and payable by Borrower.
2. REPRESENTATIONS OF BORROWER
Borrower represents and warrants that:
2.01 EXISTENCE AND RIGHTS. As of the date of this Agreement, Borrower
is a corporation, duly organized and existing and in good standing under the
laws of the state of Delaware; so long as this Agreement shall remain in force
and effect or Borrower shall have any amounts owing to Bank, under this
Agreement or otherwise, Borrower is validly existing, authorized and in good
standing to do business in the state of its incorporation; Borrower has the
appropriate powers and adequate authority, rights and franchises to own its
property and to carry on its business as now conducted, and is duly qualified
and in good standing in each state in which the character of the properties
owned by it therein or the conduct of its business makes such qualification
necessary; and Borrower has the power and adequate authority to make and carry
out this Agreement. Borrower has no investment in any other business entity
unless specified in writing to Bank.
2.02 AGREEMENT AUTHORIZED. The execution, delivery and performance of
this Agreement and the Loan Documents are duly authorized and do not require the
consent or approval of any governmental body or other regulatory authority; are
not in contravention of or in conflict with any law or regulation or any term or
provision of Borrower's articles of incorporation, by-laws, or similar document
as the case may be, and this Agreement is the valid, binding and legally
enforceable obligation of Borrower in accordance with its terms, subject only to
bankruptcy, insolvency or similar laws affecting creditors rights generally.
2.03 NO CONFLICT. The execution, delivery and performance of this
Agreement and the Loan Documents are not in contravention of or in conflict with
any agreement, indenture or undertaking to which Borrower is a party or by which
it or any of its property may be bound or affected, and do not cause any lien,
charge or other encumbrance to be created or imposed upon any such property by
reason thereof.
2.04 LITIGATION. Except as disclosed in writing to Bank by Borrower on
Schedule L-1 to this Agreement, there is no litigation or other proceeding
pending or, to Borrower's knowledge, threatened against or affecting Borrower
which if determined adversely to Borrower or its interest would have a material
adverse effect on the financial condition of Borrower, and Borrower is not in
default with
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respect to any order, writ, injunction, decree or demand of any court or other
governmental or regulatory authority.
2.05 FINANCIAL CONDITION. The consolidated balance sheet of Borrower as
of November 30, 1999, and the related profit and loss statement for the eleven
month period ended as of that date, a copy of which has heretofore been
delivered to Bank by Borrower, and all other statements and data submitted in
writing by Borrower to Bank in connection with this request for credit are true
and correct in all material respects, and said balance sheet and profit and loss
statement truly presents the financial condition of Borrower as of the date
thereof, and the results of the operations of Borrower for the period covered
thereby in all material respects, and has been prepared in accordance with
generally accepted accounting principles on a basis consistently maintained.
Since such date there have been no material adverse changes in the financial
condition or business of Borrower. Borrower has no knowledge of any material
liabilities, contingent or otherwise, at such date not reflected in said balance
sheet, and Borrower has not entered into any special commitments or substantial
contracts which are not reflected in said balance sheet, other than in the
ordinary and normal course of its business, which may have a materially adverse
effect upon its financial condition, operations or business as now conducted.
2.06 TITLE TO ASSETS. Borrower has good title to its assets, and the
same are not subject to any liens or encumbrances other than those permitted by
Section 5.03 hereof.
2.07 TAX STATUS. Borrower has no liability for any material delinquent
state, local or federal taxes, and, if Borrower has contracted with any
government agency, Borrower has no material liability for renegotiation of
profits.
2.08 TRADEMARKS, PATENTS. Borrower, as of the date hereof, possesses
all necessary trademarks, trade names, copyrights, patents, patent rights, and
licenses to conduct its business as now operated, without any known conflict
with the valid trademarks, trade names, copyrights, patents and license rights
of others.
2.09 REGULATION U. None of the proceeds of any Loan shall be used to
purchase or carry margin stock (as defined within Regulation U of the Board of
Governors of the Federal Reserve System).
2.10 ERISA. All defined benefit pension plans as defined in the
Employees Retirement Income Security Act of 1974, as amended ("ERISA"), of
Borrower meet, as of the date hereof, the minimum funding standards of Section
302 of ERISA, and no Reportable Event or Prohibited Transaction as defined in
ERISA has occurred with respect to any such plan.
3. CONDITIONS PRECEDENT TO LOAN
Prior to Bank being obligated to make any Loan pursuant to this
Agreement, Bank must receive all of the following, each of which must be in form
and substance satisfactory to Bank:
3.01 PROMISSORY NOTE. Original executed promissory notes evidencing the
obligations of Borrower to Bank under this Agreement.
3.02 SECURITY AGREEMENT. Original executed security agreement covering
the personal property collateral securing the Loan.
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3.03 INTELLECTUAL PROPERTY SECURITY AGREEMENT. Original executed
Intellectual Property Security Agreement covering the intellectual property
securing the loan.
3.04 DISBURSEMENT REQUEST AND AUTHORIZATION. Original executed
Disbursement Request and Authorization.
3.05 AGREEMENT TO PROVIDE INSURANCE. Agreement to provide Insurance
executed by Borrower, in form, substance, amounts, covering risks and issued by
companies satisfactory to Bank, and where required by Bank, with lenders loss
payable endorsement in favor of Bank.
3.06 FINANCING STATEMENT. Financing statements executed by Borrower.
3.07 INSURANCE. Borrower shall have delivered to Bank evidence of
insurance coverage required pursuant to that Agreement to Provide Insurance
executed by Borrower, in form, substance, amounts, covering risks and issued by
companies satisfactory to Bank, and where required by Bank, with lenders loss
payable endorsement in favor of Bank.
3.08 ORGANIZATIONAL DOCUMENTS. Copies of the articles of incorporation,
or similar document as the case may be, of the Borrower.
3.09 AUTHORIZATIONS. Certified copies of all action taken by Borrower
to authorize the execution, delivery and performance of the Loan Documents.
3.10 GOOD STANDING. Good standing certificates from the appropriate
secretary of state of the state in which any Borrower is organized and in each
state in which it is required to be qualified to do business.
3.11 CREDIT AGREEMENT. This Agreement, duly executed by Borrower.
3.12 ADDITIONAL DOCUMENTS. Such other documents, instruments, and
agreements as Bank may reasonably deem necessary.
4. AFFIRMATIVE COVENANTS OF BORROWER
Borrower agrees that so long as it is indebted to Bank, under borrowings, or
other indebtedness, or so long as Bank has any obligation to extend credit to
Borrower it will, unless Bank shall otherwise consent in writing:
4.01 RIGHTS AND FACILITIES. Maintain and preserve all rights,
franchises and other authority adequate for the conduct of its business;
maintain its properties, equipment and facilities in good order and repair;
conduct its business in an orderly manner without voluntary interruption and, if
a corporation or partnership, maintain and preserve its existence.
4.02 USE OF PROCEEDS. Use the proceeds of the Loans only for purposes
specified in Section 1 of this Agreement.
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4.03 INSURANCE. Maintain public liability, property damage and workers'
compensation insurance and insurance on all its insurable property against fire
and other hazards with responsible insurance carriers to the extent usually
maintained by similar businesses and/or in the exercise of good business
judgment, and as required by that Agreement to Provide Insurance executed by
Borrower, with the Bank to be shown as lenders loss payee on such policies.
4.04 TAXES AND OTHER LIABILITIES. Pay and discharge, before the same
become delinquent and before penalties accrue thereon, all taxes, assessments
and governmental charges upon or against it or any of its properties, and all
its other liabilities at any time existing, except to the extent and so long as:
(a) The same are being contested in good faith and by appropriate proceedings
in such manner as not to cause any materially adverse effect upon its financial
condition or the loss of any right of redemption from any sale thereunder; and
(b) It shall have set aside on its books reserves (segregated to the extent
required by generally accepted accounting practice) deemed by it to be adequate
with respect thereto.
4.05 RECORDS AND REPORTS. Maintain a standard and modern system of
accounting in accordance with generally accepted accounting principles on a
basis consistently maintained; permit Bank's representatives to have access to,
and to examine its properties, books and records at all reasonable times and
upon reasonable notice during normal business hours, after having received
notice thereof; and furnish Bank:
(a) MONTHLY FINANCIAL STATEMENT. As soon as available, and in any
event within 30 days after the close of each month of each fiscal year of
Borrower, commencing on the month next ending, a balance sheet, profit and loss
statement, statement of shareholder's equity and statement of cash flows of
Borrower as of the close of such period and covering operations for the portion
of Borrower's fiscal year ending on the last day of such period, all in
reasonable detail and reasonably acceptable to Bank, stating in comparative form
the figures for the corresponding date and period in the preceding fiscal year,
prepared in accordance with generally accepted accounting principles on a basis
consistently maintained by Borrower and certified by an appropriate officer of
Borrower, subject, however, to year-end adjustments.
(b) ANNUAL FINANCIAL STATEMENT. As soon as available, and in any event
within 90 days after and as of the close of each fiscal year of Borrower, the
audited balance sheet, profit and loss statement, statement of shareholder's
equity and statement of cash flows of Borrower, all in reasonable detail,
stating in comparative form the figures for the corresponding date and period in
the preceding fiscal year, audited by an independent certified public accountant
selected by Borrower and reasonably acceptable to Bank, in accordance with
generally accepted accounting principles on a basis consistently maintained by
Borrower with the unqualified opinion of such accountant satisfactory to Bank.
(c) OFFICER'S CERTIFICATE. Within 30 days after the end of each month
of each fiscal year of Borrower, a certificate of the chief financial officer of
Borrower, stating that Borrower has performed and observed each and every
covenant contained in this Agreement to be performed by it and that no event has
occurred and no condition then exists which constitutes an Event of Default,
hereunder or
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would constitute an Event of Default upon the lapse of time or upon the giving
of notice and the lapse of time specified herein; or, if any such event has
occurred or any such condition exists, specifying the nature thereof.
(d) AUDIT REPORTS. Promptly after the receipt thereof by Borrower,
copies of any detailed audit reports submitted to Borrower by independent
accountants in connection with each annual or interim audit of the accounts of
Borrower performed by such accountants.
(e) STOCKHOLDER, SECURITY AND EXCHANGE COMMISSION STATEMENTS AND
REPORTS Promptly after the same are available, copies of all such proxy
statements, financial statements and reports as Borrower or any subsidiary shall
send to its members or stockholders as appropriate, if any, and copies of all
reports which Borrower or any subsidiary may file with the Securities and
Exchange Commission, or any governmental authority at any time substituted
therefor.
(f) OTHER INFORMATION. Such other information relating to the affairs
of Borrower as the Bank may reasonably request from time to time, specifically
including, but not limited to, at the time Borrower becomes a publicly traded
entity, copies of Borrower's 10Q and 10K reports at the time of filing with SEC.
(g) NOTICE OF DEFAULT. Promptly notify Bank in writing of the
occurrence of any Event of Default or any event that, upon notice or lapse of
time would be an Event of Default under this Agreement or under any other Loan
Document.
4.06 QUICK RATIO. As of the earlier of February 29, 2000 or the
occurrence of the Equity Event, (as defined below), maintain on a monthly basis
a Quick Ratio of not less than 1.50:1.00. For purposes of this facility, the
Quick Ratio will be calculated as cash and cash equivalents plus billed trade
accounts receivable divided by current liabilities (including all amounts due to
stockholders, officers and affiliates), less deferred maintenance revenue, in
each case as determined in accordance with generally accepted accounting
principles, consistently applied.
4.07 EQUITY EVENT. The Equity Event must occur on or before February
29, 2000. For purposes of this credit facility, the "Equity Event" is defined as
the earlier to occur of, (i) the successful completion of the initial public
offering of the common shares of the capital stock of Borrower or (ii) the
successful sale of Series D preferred stock of Borrower, in each case that shall
yield gross proceeds of not less than $25,000,000.
4.08 WARRANTS. On the date hereof, Bank shall receive warrants to
purchase $375,000 in shares of Borrower's common stock at an initial exercise
price equal to the lesser of (i) $10 per share, or (ii) the per share price
received by Borrower in the sale of the Borrower's Series D preferred stock
referred to above (the "Initial Exercise Price"). If the Equity Event has not
occurred by February 29, 2000, then Bank shall receive warrants to purchase an
additional $150,000 in shares of the Borrower's common stock at the Initial
Exercise Price, and, as of the last day of each month thereafter, if the Equity
Event has not occurred, then Bank shall receive warrants to purchase an
additional $150,000 in shares of the Borrower's common stock at the Initial
Exercise Price.
4.09 MINIMUM REVENUE. Borrower's gross revenues shall be not less than
* for the year ending 12/31/99; * for the quarter ending 3/31/00; * for the
quarter ending
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6/30/00; * for the quarter ending 9/30/00; and * for the quarter ending
12/31/00, in each case as determined in accordance with generally accepted
accounting principles, consistently applied.
4.10 ERISA. Cause all defined benefit pension plans, as defined in
ERISA, of Borrower to, at all times, meet the minimum funding standards of
Section 302 of ERISA, and ensure that no Reportable Event or Prohibited
Transaction, as defined in ERISA, will occur with respect to any such plan.
4.11 LAWS. At all times comply with, or cause to be complied with, all
laws, statues, rules, regulations, orders and directions of any governmental
authority having jurisdiction over Borrower or Borrower's business.
4.12 GAAP. Compliance with all financial covenants shall be calculated
based on generally accepted accounting principles applied on a consistent basis
as maintained by Borrower.
4.13 DEPOSIT ACCOUNTS. Maintain, or cause to be maintained, on deposit
with Bank, deposit balances in an aggregate average collected amount of not less
than $1,000,000 (the "Minimum Collected Balance Requirement"). Balances shall be
calculated after reduction for the reserve requirement of the Federal Reserve
Board and uncollected funds.
4.14 NOTICES. Promptly notify Bank in writing of (i) the occurrence of
any Event of Default hereunder or any event which upon notice and lapse of time
would be an Event of Default; (ii) all litigation affecting Borrower where the
amount is $10,000 or more; any substantial dispute which may exist between
Borrower and any governmental regulatory body or law enforcement authority; any
change in Borrower's name or principal place of business; or any other matter
which has resulted or might result in a material adverse change in Borrower's
financial condition or operations.
5. NEGATIVE COVENANTS OF BORROWER
Borrower agrees that so long as it is indebted to Bank, or so long as Bank has
any obligation to extend credit to Borrower, it will not, without Bank's written
consent:
5.01 TYPE OF BUSINESS; MANAGEMENT; CHANGE IN CONTROL. Make any
substantial change in the character of its business.
5.02 OUTSIDE INDEBTEDNESS. Create, incur, assume or permit to exist any
indebtedness for borrowed moneys other than Loans from the Bank except
obligations now existing as shown in the financial statement dated November 30,
1999, excluding those obligations being refinanced by Bank, or sell or transfer,
either with or without recourse, any accounts or notes receivable or any moneys
due or to become due.
5.03 LIENS AND ENCUMBRANCES. Create, incur, permit to exist, or assume
any mortgage, pledge, encumbrance, lien or charge of any kind upon any asset now
owned or hereafter acquired by it, including but not limited to Borrower's
intellectual property, other than liens for taxes not delinquent and liens in
Bank's favor and other than liens agreed to in writing by Bank.
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5.04 LOANS, INVESTMENTS, SECONDARY LIABILITIES. Make any loans or
advances to any person or other entity other than in the ordinary and normal
course of its business as now conducted or make any investment in the securities
of any person or other entity other than the United States Government, Imperial
Bank sponsored paper, or the Monarch Money Market funds; or guarantee or
otherwise become liable upon the obligation of any person or other entity,
except by endorsement of negotiable instruments for deposit or collection in the
ordinary and normal course of its business.
5.05 ACQUISITION OR SALE OF BUSINESS; MERGER OR CONSOLIDATION. Purchase
or otherwise acquire the assets or business of any person or other entity; or
liquidate, dissolve, merge or consolidate, or commence any proceedings therefor;
or sell any assets except in the ordinary and normal course of its business as
now conducted; or sell, lease, assign, or transfer any substantial part of its
business or fixed assets, or any property or other assets necessary for the
continuance of its business as now conducted, including without limitation the
selling of any property or other asset accompanied by the leasing back of the
same.
5.06 DIVIDENDS, DISTRIBUTIONS. Declare or pay any dividend or make any
other distribution on any of its capital stock now outstanding or hereafter
issued or purchase, redeem or retire any of such stock other than in dividends
or distributions payable in Borrower's capital stock, except for the repurchase
of Borrower's capital stock from officers, directors, employees or consultants
of Borrower upon termination of their employment with or rendering of service to
Borrower.
6. EVENTS OF DEFAULT
The occurrence of any of the following events of default ("Events of Default")
shall, at Bank's option, terminate Bank's commitment to lend and make all sums
of principal and interest then remaining unpaid on all Borrower's indebtedness
to Bank immediately due and payable, all without demand, presentment or notice,
all of which are hereby expressly waived:
6.01 FAILURE TO PAY. Failure to pay any installment of principal or of
interest on any indebtedness of Borrower to Bank within five (5) days of the
date on which amount is due and payable to Bank under this agreement or any
other Loan Document.
6.02 BREACH OF COVENANT. Failure of Borrower to perform any other term
or condition of this Agreement or any Loan Document binding upon Borrower.
6.03 BREACH OF WARRANTY. Any of Borrower's representations or
warranties made herein or any statement or certificate at any time given in
writing pursuant hereto or in connection herewith shall be knowingly false or
misleading in any respect.
6.04 INSOLVENCY; RECEIVER OR TRUSTEE. Borrower shall become insolvent;
or admit its inability to pay its debts as they mature; or make an assignment
for the benefit of creditors; or apply for or consent to the appointment of a
receiver or trustee for it or for a substantial part of its property or
business.
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6.05 JUDGMENTS, ATTACHMENTS. Any money judgment writ or warrant of
attachment, or similar process shall be entered or filed against Borrower or any
of its assets and shall remain unvacated, unbonded or unstayed for a period of
fifteen (15) days or in any event later than five (5) days prior to the date of
any proposed sale thereunder.
6.06 BANKRUPTCY. Bankruptcy, insolvency, reorganization or liquidation
proceedings or other proceedings for relief under any bankruptcy law or any law
for the relief of debtors shall be instituted by or against Borrower and, if
instituted against it, shall not be dismissed within thirty (30) days
thereafter.
6.07 CESSATION OF BUSINESS. Borrower shall voluntarily suspend its
business.
6.08 ADVERSE CHANGE. Any change which, in the opinion of Bank, is
materially adverse to the financial condition of Borrower; or should Bank, for
any reason, believe that the prospect of Borrower's payment or performance
hereunder or under any other agreement or instrument with Bank be materially
impaired.
6.09 IMPAIRMENT OF SECURITY. Bank in good xxxxx xxxxx itself insecure.
6.10 OTHER DEFAULTS. Borrower shall commit or do or fail to commit or
do any act or thing which would constitute an event of default under any of the
terms of any other agreement, document or instrument executed or to be executed
by it concerning the obligation to pay money.
6.11 ADVANCES. Notwithstanding anything to the contrary contained
herein, Bank shall have no duty to make advances or other extensions of credit
to Borrower upon the occurrence and during the continuation of any Event of
Default hereunder, notwithstanding any cure period provided for herein.
6.12 RIGHT TO CURE. If any default, other than a default on
indebtedness, is curable, and if Borrower has not been given a prior notice of a
breach of the same provision of this agreement, it may be cured, (and no Event
of Default will have occurred), if Borrower, after Bank sends written notice
demanding cure of such default, (a) cures the default within ten (10) days, or
(b) if the cure requires more than ten (10) days, immediately initiates steps
which Bank deems, in Bank's sole discretion, to be sufficient to cure the
default and thereafter continues and completes all reasonable and necessary
steps sufficient to produce compliance as soon as reasonably practical.
7. MISCELLANEOUS PROVISIONS
7.01 FAILURE OR INDULGENCE NOT WAIVER. No failure or delay on the part
of Bank or any holder of notes issued hereunder, in the exercise of any power,
right or privilege hereunder shall operate as a waiver thereof, nor shall any
single or partial exercise of any such power, right or privilege preclude other
or further exercise thereof or of any other right, power or privilege. All
rights and remedies existing under this Agreement or any note (s) issued in
connection with a Loan that Bank may make hereunder, are cumulative to, and not
exclusive of, any rights or remedies otherwise available.
7.02 COUNTERPARTS; ENTIRE AGREEMENT. This Agreement may be executed by
the parties hereto in several counterparts, each of which shall be deemed to be
an original and all of which shall
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constitute together but one and the same agreement. This Agreement, and the
other Loan Documents constitute the entire understanding among the parties
hereto with respect to the subject matter hereof and supersedes any prior
agreements, written or oral, with respect thereto.
7.03 ATTORNEY'S FEES. Borrower will pay promptly to Bank without demand
after notice, with interest thereon from the date of expenditure at the rate
applicable to the Loan, reasonable attorneys' fees and all costs and expenses
paid or incurred by Bank in collecting or compromising the Loan after the
occurrence of an Event of Default, whether or not suit is filed. If suit is
brought to enforce any provision of this Agreement, the prevailing party shall
be entitled to recover its reasonable attorneys' fees and court costs in
addition to any other remedy or recovery awarded by the court.
7.04 ADDITIONAL REMEDIES. The rights, powers and remedies given to Bank
hereunder shall be cumulative and not alternative and shall be in addition to
all rights, powers and remedies given to Bank by law against Borrower or any
other person, including but not limited to Bank's rights of setoff or banker's
lien.
7.05 INUREMENT. The benefits of this Agreement shall inure to the
successors and assigns of Bank and the permitted successors and assigns of
Borrower.
7.06 APPLICABLE LAW. This Agreement and all other agreements and
instruments required by Bank in connection therewith shall be governed by and
construed according to the laws of the state of California, to the jurisdiction
of whose courts the parties hereby agree to submit.
7.07 OFFSET. In addition to and not in limitation of all rights of
offset that Bank or other holder of the Loan may have under applicable law, Bank
or other holder of any note issued hereunder shall, upon the occurrence of any
Event of Default or any event which with the passage of time or notice would
constitute such an Event of Default, have the right to appropriate and apply to
the payment of the Loan any and all balances, credits, deposits, accounts or
monies of Borrower then or thereafter with Bank or other holder, within ten (10)
days after the Event of Default, and notice of the occurrence of any Event of
Default by Bank to Borrower.
7.08 SEVERABILITY. Should any one or more provisions of the Agreement
be determined to be illegal or unenforceable, all other provisions nevertheless
shall be effective.
7.09 TIME OF THE ESSENCE. Time is hereby declared to be of the essence
of this Agreement and of every part hereof.
7.10 ACCOUNTING. All accounting terms shall have the meanings applied
under generally accepted accounting principles unless otherwise specified.
7.11 REFERENCE PROVISION.
(a) Other than (i) nonjudicial foreclosure and all matters in connection
therewith regarding security interests in real or personal property; or (ii) the
appointment of a receiver, or the exercise of other provisional remedies (any
and all of which may be initiated pursuant to applicable law), each controversy,
dispute or claim between the parties arising out of or relating to this Credit
Agreement, any security agreement executed by Borrower in favor of Bank or any
note executed by Borrower in favor of Bank or
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any other agreement or instrument issued in favor of Bank by Borrower
(collectively in this subsection, the "Agreement") which controversy, dispute or
claim is not settled in writing within thirty (30) days after the "Claim Date"
(defined as the date on which a party subject to this Agreement gives written
notice to all other parties that a controversy, dispute or claim exists), will
be settled by a reference proceeding in California in accordance with the
provisions of Section 638 et seq. of the California Code of Civil Procedure, or
their successor section ("CCP"), which shall constitute the exclusive remedy for
the settlement of any controversy, dispute or claim concerning this Agreement,
including whether such controversy, dispute or claim is subject to the reference
proceeding and except as set forth above, the parties waive their rights to
initiate any legal proceedings against each other in any court or jurisdiction
other than the Superior Court in the County where the Real Property, if any, is
located or Los Angeles County if none (the "Court"). The referee shall be a
retired Judge of the Court selected by mutual agreement of the parties, and if
they cannot so agree within forty-five (45) days after the Claim Date, the
referee shall be promptly selected by the Presiding Judge of the Court (or his
representative). The referee shall be appointed to sit as a temporary judge,
with all of the powers for a temporary judge, as authorized by law, and upon
selection should take and subscribe to the oath of office as provided for in
Rule 244 of the California Rules of Court (or any subsequently enacted Rule).
Each party shall have one peremptory challenge pursuant to CCP Section 170.6.
The referee shall (a) be requested to set the matter for hearing within sixty
(60) days after the date of selection of the referee and (b) try any and all
issues of law or fact and report a statement of decision upon them, if possible,
within ninety (90) days of the Claim Date. Any decision rendered by the referee
will be final, binding and conclusive and judgment shall be entered pursuant to
CCP Section 644 in any court in the state of California having jurisdiction. Any
party may apply for a reference proceeding at any time after thirty (30) days
following notice to any other party of the nature of the controversy, dispute or
claim, by filing a petition for a hearing and/or trial. All discovery permitted
by this Agreement shall be completed no later than fifteen (15) days before the
first hearing date established by the referee. The referee may extend such
period in the event of a party's refusal to provide requested discovery for any
reason whatsoever, including, without limitation, legal objections raised to
such discovery or unavailability of a witness due to absence or illness. No
party shall be entitled to "priority" in conducting discovery. Depositions may
be taken by either party upon seven (7) days written notice, and request for
production or inspection of documents shall be responded to within ten (10) days
after service. All disputes relating to discovery which cannot be resolved by
the parties shall be submitted to the referee whose decision shall be final and
binding upon the parties. Pending appointment of the referee as provided herein,
the Superior Court is empowered to issue temporary and/or provisional remedies,
as appropriate.
(b) Except as expressly set forth in this Agreement, the referee shall
determine the manner in which the reference proceeding is conducted including
the time and place of all hearings, the order of presentation of evidence, and
all other questions that arise with respect to the course of the reference
proceeding. All proceedings and hearings conducted before the referee, except
for trial, shall be conducted without a court reporter except that when any
party so requests, a court reporter will be used at any hearing conducted before
the referee. The party making such a request shall have the obligation to
arrange for and pay for the court reporter. The costs of the court reporter at
the trial shall be borne equally by the parties.
(c) The referee shall be required to determine all issues in accordance with
existing case law and the statutory laws of the state of California. The rules
of evidence applicable to proceedings at law in the state of California will be
applicable to the reference proceeding. The referee shall be empowered to enter
equitable as well as legal relief, to provide all temporary and/or provisional
remedies and to enter equitable orders that will be binding upon the parties.
The referee shall issue a single judgment at the close of the reference
proceeding which shall dispose of all of the claims of the parties that are the
subject of the
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reference. The parties hereto expressly reserve the right to contest or appeal
from the final judgment or any appealable order or appealable judgment entered
by the referee. The parties hereto expressly reserve the right to findings of
fact, conclusions of laws, a written statement of decision, and the right to
move for a new trial or a different judgment, which new trial, if granted, is
also to be a reference proceeding under this provision.
(d) In the event that the enabling legislation which provides for appointment
of a referee is repealed (and no successor statute is enacted), any dispute
between the parties that would otherwise be determined by the reference
procedure herein described will be resolved and determined by arbitration. The
arbitration will be conducted by a retired judge of the Court, in accordance
with the California Arbitration Act, Section 1280 through Section 1294.2 of the
CCP as amended from time to time. The limitations with respect to discovery as
set forth hereinabove shall apply to any such arbitration proceeding.
7.12 This Agreement may be modified only by a writing signed by all
parties hereto.
[Signature page follows.]
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This Agreement is executed on behalf of the parties by duly authorized officers
as of the date first above written.
IMPERIAL BANK, XXXXXXXXXXXX.XXX INC.,
a California banking corporation ("Bank") a Delaware corporation ("Borrower")
By: /s/ IMPERIAL BANK By: /s/ XXXXXXXXXXXX.XXX INC.
------------------------------------- -------------------------------------
Its: Its:
------------------------------------- -------------------------------------
By:
-------------------------------------
Its:
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SCHEDULE L-1
Pending and Threatened Litigation
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FIRST AMENDMENT
TO
CREDIT AGREEMENT
This First Amendment ("Amendment") is made as of February 11, 2000 by and
between XxxxxxxXxxxx.xxx Inc., a Delaware corporation ("Borrower") and Imperial
Bank, a California banking corporation, ("Bank") and amends certain provisions
of that Credit Agreement dated as of January 19, 2000, as previously amended
("Agreement"), by and between Borrower and Bank, as follows:
A. Section 4.09 of the Agreement is hereby amended in full to read as follows:
"As of the earlier of February 29, 2000 or the occurrence of the Equity Event,
(as defined below), Borrower shall maintain on a monthly basis a Tangible Net
Worth of not less than Fifteen Million Dollars ($15,000,000). "Tangible Net
Worth" means at any date as of which the amount thereof shall be determined,
the financial statement net worth of Borrower, less intangible assets, plus
Subordinated Debt, on a consolidated basis determined in accordance with GAAP.
"Subordinated Debt" means any debt incurred by Borrower that is subordinated to
the debt owing by Borrower to Bank on terms reasonably acceptable to Bank (and
identified as being such by Borrower and Bank)."
B. Except as provided above, the Agreement remains unchanged. Any capitalized
terms used herein and not defined herein shall have the meanings defined in the
Agreement.
C. This Amendment is effective as of February 11, 2000 and the parties hereby
confirm that the Agreement as amended is in full force and effect.
XxxxxxxXxxxx.xxx Inc.
By: /s/ XXXXXX XXXXXX
-------------------------------------
Name: Xxxxxx Xxxxxx
-----------------------------------
Title: Vice President and Controller
----------------------------------
IMPERIAL BANK
By: /s/ XXXX X. XXXXXXXX
-------------------------------------
Name: Xxxx X. XxXxxxxx
-----------------------------------
Title: Vice President
----------------------------------
