EXHIBIT 10.2
December 2, 2003
Xxxx Xxxxxxxxx
Chief Financial Officer
Quovadx, Inc.
0000 X. Xxxxxxx'x Xxxxx Xxxxxx
Xxxxxxxxx, XX 00000
Dear Xx. Xxxxxxxxx:
This letter sets forth a commitment from Comerica Bank ("Bank" or "Lender") to
Quovadx, Inc. and Xxxxxxxxxx.xxx Corporation (collectively referred to as
"Borrower"), the credit described below. The credit facility will be subject to
the terms and conditions of the Bank's definitive loan documents which will
include (but not be limited to) the following in detail:
I. CREDIT FACILITY
New $12,000,000 Non-Revolving Line of Credit ("Line 1") for the sole
purpose of funding a portion of the cash required of Borrower for its
acquisition of a majority stake in Rogue Wave Software, Inc. (the
"Acquisition").
Reduce existing $4,000,000 Revolving Line of Credit ("Line 2") to
$3,135,000 to support the issuance of existing commercial and standby
letters of credit.
II. MATURITY
Line 1: 90 days from closing of Line 1 or within 5 days of Borrower
closing at least $12,000,000 from the sale of its equity
securities.
Line 2: August 25, 2005
III. BORROWING FORMULA
Line 1: $12,000,000 available to Borrower through Maturity to fund
the acquisition of another company. From closing of definitive
loan documents through 12/31/03, advances and outstanding
amounts on Line 1 allowed up to 80% of Eligible Accounts.
After 12/31/03, advances and outstanding amounts on Line 1
allowed up to 60% of Eligible Accounts up to a limit
$7,000,000, plus 100% of pledged cash held at Bank.
As used herein, "Eligible Accounts" include domestic accounts
receivable, accounts receivable backed by letters of credit
and other pre-approved or insured foreign accounts receivable
of Borrowers which are outstanding less than 90 days from
invoice date subject to certain exclusions for contra, US
government, allowances and reserves for bad debt and
inter-company accounts. Other than accounts backed by letters
of credit, any accounts that alone exceed 20% of total
Eligible Accounts will have the amount in excess of 20%
excluded, unless approved in writing by
QUOVADX, INC.
COMMITMENT LETTER
12/2/2003
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the Bank. Any account 20% or more of which is outstanding over
90 days from invoice date will be excluded in its entirety.
Prior to being included in the Borrowing Base:
o Bank to require direct verifications on all Debtors
with AR concentrations greater than 10%.
o The Bank's International Department to approve any
letters of credit used to support ARs and such L/Cs
are to have the issuing Bank make direct payment to
the Borrower's account at Bank for any funds drawn on
the L/C.
o Bank to review and approve the contract language for
ARs generated as a result of progress xxxxxxxx and
debtors with AR concentrations greater than 10% for
progress related xxxxxxxx to be excluded from
Eligible Accounts.
Line 2: Non-formula, until Line 1 is repaid, then it reverts back to
the Borrowing Base set forth in Line 1.
IV. PAYMENT TERMS
Line 1: Interest monthly - principal and interest due at Maturity.
All principal and interest on Line 1 to be repaid by the
collection of Xxxxxxxx's accounts receivable into an account
at Comerica or the sale of Borrower's equity securities, not
from any cash acquired or assets converted from any merger or
acquisition.
Line 2: None.
V. COLLATERAL
Bank to have a blanket first priority security interest in all assets
of Borrower, perfected by UCC filings and related Security Agreements,
including all present and future inventory, intellectual property,
chattel paper, accounts, contract rights and fixtures and the product
thereof. The security interest is to include a perfection of the
InfoTech L/C, including possession by the Bank such that the Bank could
negotiate it fully according to its terms.
Previously encumbered equipment or assets to be excluded.
Upon full payment of Line 1 the Collateral shall revert to that as it
existed prior to the closing of documents for Line 1.
VI. PRICING
A. Interest Rate: Line 1: Bank's Prime Rate (currently 4.00%).
Line 2: n/a
B. Facility Fee: Line 1: $80,000 due and payable at closing, $40,000
due upon Xxxxxxxx's first advance.
Line 2: n/a
C. Unused Fee: Line 1: none
Line 2: n/a
VII. CONDITIONS
A. Within five (5) days immediately after the completion of the
Acquisition, Borrower to maintain combined account balances at
the Bank or at Comerica Securities or Munder Capital
Management
QUOVADX, INC.
COMMITMENT LETTER
12/2/2003
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(with account control agreements), at all times of no less
than $18,000,000, plus 50% of any new equity raised after the
closing of Line 1.
B. Borrower to maintain its operating accounts with Comerica Bank
within 90 days of closing Line 1, as long as the Bank's
products are competitive in the marketplace in regards to
pricing and functionality.
C. Borrower to maintain $2,000,000 in cash at Bank at all times
to support its operating requirements.
D. Borrower required to utilize all of its available cash, except
for the $2,000,000 cash requirement at Bank, prior to funding
Line 1.
E. Advances on Line 1 made only after a satisfactory review by
Bank of a complete cash sources and uses statement presented
by the Borrower for the Acquisition and a satisfactory review
of Xxxxxxxx's AR aging report and Borrowing Base Certificate.
F. At its own discretion and expense, Bank may require a legal
review or analysis (including potentially from Borrower's
counsel) on all potential fraudulent transfer issues prior to
closing definitive loan documents.
G. Bank to require Borrower Base Certificates and Account
Receivable aging reports on a weekly basis 15 days in arrears.
H. Bank to amend the existing Loan and Security Agreement between
Bank and Borrower dated August 26, 2003 to allow Xxxxxxxx to
enter into the Acquisition.
I. If over 90% of the total outstanding shares are tendered and
subsequently purchased by the Borrower, Borrower must file a
Short Form Merger Agreement with the SEC allowing it to
immediately own 100% of the outstanding shares. If the entity
being acquired in the Acquisition becomes a separate
subsidiary of the Borrower, such subsidiary shall become a
co-Borrower to Line 1.
J. If more than 50%, but less than 90% of the total outstanding
shares are tendered and subsequently purchased by the
Borrower, the acquisition holding subsidiary of the Borrower
used to acquire the shares (the Chess Acquisition Corp.) shall
become a guarantor to Line 1 and pledge 100% of its stock in
support of the Loan.
K. All reasonable expenses of Bank for legal fees, documentation
fees, UCC searches and filing fees, collateral appraisals, and
all other costs involved with documenting and enforcing the
loans, including the expenses of Bank's outside counsel, shall
be borne by the Borrower, up to a limit of $10,000.
L. All other conditions from the existing Loan and Security
Agreement between Bank and Borrower dated August 26, 2003,
unless otherwise noted above, shall remain in full force and
effect.
This letter is provided solely for your information and is delivered to you with
the understanding that neither it nor its substance shall be disclosed to any
third person, except those who are in confidential relationship with you, or
where the same is required by law.
As a statement that the terms and conditions outlined herein are satisfactory,
we ask that you return a signed copy of this letter and a check in the amount of
$40,000 made payable to the Bank (the "Deposit"), no later than the close of
business on January 28, 2004. If the Bank executes and delivers loan documents
consistent with terms and
QUOVADX, INC.
COMMITMENT LETTER
12/2/2003
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conditions substantially in the form as provided herein and Xxxxxxxx decides for
any reason not to execute the loan documents, the Deposit shall be retained by
the Bank in its entirety. If the Bank fails to execute and deliver loan
documents consistent with terms and conditions substantially in the form as
provided herein, the Deposit will be promptly returned. The Bank shall have no
obligation hereunder until receipt of such executed copy and such check. This
proposal shall expire on the close of business January 28, 2004 if the Bank has
not received an executed copy of this letter and the previously described check
on or before such date and time.
This letter is intended to set forth the terms of the credit facility currently
under discussion between us. It is intended that all legal rights and
obligations of the Bank and you would be set forth in the signed definitive loan
documents.
On behalf of the Senior Management of the Bank, we are delighted to propose
making this credit facility available to Quovadx, Inc. & Xxxxxxxxxx.xxx
Corporation and look forward to a long and mutually rewarding relationship.
Please don't hesitate to call if you have any questions or problems.
Sincerely,
Xxx Xxx Xxxxxxxx X.X. Xxxxxxx
Vice President & Regional Marketing Manager Senior Vice President & Manager
Comerica Bank Comerica Bank
Kirkland, Washington Kirkland, Washington
Accepted and agreed to:
QUOVADX, INC. & XXXXXXXXXX.XXX CORPORATION
BY: /s/ XXXX X. XXXXXXXXX
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TITLE: EXECUTIVE VICE PRESIDENT AND CHIEF FINANCIAL OFFICER
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DATE: DECEMBER 2, 2003
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