EXHIBIT 10.46
[CIBC Logo] Xxxxx X. Xxxxxx
Director
Knowledge-Based Business
000 Xxxxxxx Xxxxxx, 0xx Xxxxx
Xxxxxxxxx XX X0X 0X0
Tel. 000 000-0000
Fax. 000 000-0000
January 2, 2003
PIVOTAL CORPORATION
000 Xxxxxx Xxxxxx
Xxxxxxxxx, X.X.
Attention: Xx. Xxxxx Xxxxx, Vice-President Finance
Dear Xx. Xxxxx:
Re: Credit Agreement with CIBC dated December 24, 2002
As previously requested/agreed, we have cancelled Credit B & C under the Credit
Agreement with CIBC dated December 24, 2002. The limit of Credit A has also been
reduced to cover only the outstanding Letters of Credit as follows:
------------------------------------------------------------------------------------------------
Description of Letter of Credit Undrawn Amount as of December 27, Expiration Date
(Number, Partial Name of Beneficiary) 2002
------------------------------------------------------------------------------------------------
SBGV700127, Yarrow Bay USD$25,000.00 21 February 2003
SBGV721685, AMEX CAD$250,000.00 30 March 2003
SBGV21655, National Penn USD$1,045,000.00 26 April 2003 + auto renewal
SBGV724504, Smithe Street CAD$8,111,520.00 02 Aug 2003 + auto renewal
We also confirm that on December 31, 2002 we received a Standby Letter of Credit
issued/confirmed by American Express Bank, Ltd. of New York in the amount of
CAD$8,111,520.00 which is security for Letter of Credit SBGV724504 noted above.
Accordingly, CAD$8,111,520.00 of the cash collateral we hold as security was
effectively released December 31, 2002.
The remaining cash collateral and security documents will continue to be held
until we are provided with the balance of required security.
Yours truly,
/s/ Xxxxx X. Xxxxxx
Xxxxx X. Xxxxxx
[CIBC Logo] Canadian Imperial Bank of Commerce
KNOWLEDGE BASED BUSINESS (KBB)
000 Xxxxxxx Xxxxxx, 0xx Xxxxx
Xxxxxxxxx, XX X0X 0X0
December 24, 2002
PIVOTAL CORPORATION
000 Xxxxxx Xxxxxx
Xxxxxxxxx, X.X.
Attention: Xx. Xxxxx Xxxxx, Vice-President Finance
Dear Xx. Xxxxx:
We, Canadian Imperial Bank of Commerce ("CIBC"), are pleased to establish
the following Credits for PIVOTAL CORPORATION (a B.C. Company), our customer.
THE TOTAL OF ALL CREDIT USAGE UNDER THIS AGREEMENT IS NOT TO EXCEED
US$7,000,000.00
CREDIT A: LETTERS OF CREDIT/GUARANTEE
Credit Limit: US$7,000,000
Purpose: To issue Standby Letters of Credit as required from time
to time.
Fees: Fees are 105bps/80bps (80bps/55bps with BofA or Xxxxx
Fargo security in place of Amex security) per annum for
financial and non-financial L/Cs respectively, subject to
a minimum of $150, plus out of pocket expenses.
Documentation: Our standard L/C documentation. This is a demand credit.
CREDIT B: FOREIGN EXCHANGE CONTRACTS
Credit Limit: US$500,000
Description: You may, at our discretion, enter into one or more spot,
forward or other foreign exchange rate transactions with
us and/or CIBC World Markets. Your ability to make use
of this Credit will depend upon your outstanding
obligations under such transactions, as determined by us.
This is a demand Credit.
[INITIALS]
Pivotal Corporation Credit Agreement Page 1 of 11
CREDIT C: PURCHASING CARD LIMIT
Credit Limit: CDN$125,000
Description: To enable the issuance of CIBC Purchasing Cards.
Documentation: Standard Purchasing Card documentation. This is a demand
credit.
SECURITY
Security: The following security is required:
Unconditional and irrevocable Standby Letter of Credit in
favour of CIBC to be issued by Silicon Valley bank and
confirmed through American Express Bank Ltd., New York
(or issued directly by American Express Bank Ltd.) in the
sum of US$7,000,000.00.
Note: Bank of America or Xxxxx Fargo may be substituted
for American Express Bank Ltd. as the guarantor/issuer of
the security.
COVENANTS
Covenants: This agreement will only become effective and replace
prior agreements on satisfaction of the preconditions
listed below under Schedule of Standard Credit Terms and
confirmation of the following:
1. CIBC has received, and is satisfied with the form of
security.
2. This agreement has been executed/accepted by the
borrower with an original copy returned to CIBC.
REPORTING REQUIREMENTS
Reporting You will provide:
Requirements:
(1) Within 45 days of the end of each fiscal quarter,
financial statements for that fiscal quarter.
(2) Within 120 days of each fiscal year-end, financial
statements for that fiscal year on an audited basis.
[INITIALS]
Pivotal Corporation Credit Agreement Page 2 of 11
FEES
Loan Administration: $100 per month.
Structuring Fee: A fee of 65bps (45bps with Bank of America or Xxxxx Fargo
Bank security substituted for American Express Bank) on
the total credit amount (payable on acceptance of this
agreement).
Review: Waived for the January 2003 review.
OTHER PROVISIONS
Calculations: When applicable, the calculations made under the
"Covenants" and "Reporting Requirements" sections of this
Agreement are to be done on a consolidated basis.
Interest Rate Currently 21% per year. If the Credit Limit of a Credit,
Applicable to or the Credit Limit of part of a Credit, or the Overall
Credit Limit Credit Limit, is exceeded at any time, the Interest Rate
Excesses: Applicable to Credit Limit Excesses is calculated on that
excess amount.
In connection with any amounts in foreign currency, see
"Foreign Currency Conversion" in the Attached Schedule.
Next Scheduled We will review the credit by January 31, 2003 to confirm
Review Date: all documentation is on hand. At that time, we will review
your financial statements and those of the guarantor, and
how well you have complied with the requirements of this
Agreement. The terms of this Agreement will continue to
apply until either a new Agreement or an Amendment to this
one is settled.
Standard Credit The attached Schedule - Standard Credit Terms forms part of
Terms: this Agreement.
Please indicate your acceptance of these terms by returning a signed copy
of this Agreement. If we do not receive a signed copy by December 24, 2002, then
this offer will expire.
Yours truly,
Canadian Imperial Bank of Commerce
by:
/s/ Xxxxx X. Xxxxxx
[INITIALS]
Pivotal Corporation Credit Agreement Page 3 of 11
Xxxxx X. Xxxxxx
Director, Knowledge-Based Business
Phone: 000-000-0000
Fax: 000-000-0000
E-mail: xxxxx.xxxxxx@xxxx.xxx
Acknowledgement: The undersigned certifies that all information provided to CIBC
is true, and acknowledges receipt of a copy of this Agreement (including any
Schedules referred to above).
Accepted this 24th day of December, 2002.
PIVOTAL CORPORATION
By: /s/ Xxxxxx Sisodraker By: /s/ Xxxxx Xxxxx
------------------------------ ------------------------------
Name: Xxxxxx Xxxxxxxxxx Name: Xxxxx Xxxxx
------------------------------ ------------------------------
Title: CFO Title: VP Finance
------------------------------ ------------------------------
[INITIALS]
Pivotal Corporation Credit Agreement Page 4 of 11
SCHEDULE - STANDARD CREDIT TERMS
Article 1 - General
1.1 Interest Rate. You will pay interest on each Credit at nominal rates per
year equal to:
(a) for amounts above the Credit Limit of a Credit or a part of a Credit or
the Overall Credit Limit, as described in section 1.4, or for amounts that are
not paid when due, the Interest Rate Applicable to Credit Limit Excesses, and
(b) for any other amounts, the rate specified in this Agreement.
1.2 Variable Interest. Each variable interest rate provided for under this
Agreement will change automatically, without notice, whenever the Prime Rate or
the U.S. Base Rate, as the case may be, changes.
1.3 Payment of Interest. Interest is calculated on the daily balance of the
Credit at the end of each day. Interest is due once a month, unless the
Agreement states otherwise. Unless you have made other arrangements with us, we
will automatically debit your Operating Account for interest amounts owing. If
your Operating Account is in overdraft and you do not deposit to the account an
amount equal to the monthly interest payment, the effect is that we will be
charging interest on overdue interest (which is known as compounding). Unpaid
interest continues to compound whether or not we have demanded payment from you
or started a legal action, or get judgment, against you.
1.4 Interest Rate Applicable to Credit Limit Excesses. To determine whether the
Interest Rate Applicable to Credit Limit Excesses is to be charged, the
following rules apply:
(a) Interest Rate Applicable to Credit Limit Excesses will be charged on
the amount that exceeds the Credit Limit of any particular Credit. This will
happen even if the Overall Credit Limit has not been exceeded.
(b) If there are several parts of a Credit, Interest Rate Applicable to
Credit Limit Excesses will be charged if the Credit Limit of a particular part
is exceeded. For example, if Credit A's limit is $250,000, and the limit of one
part is $100,000 and the limit of that part is exceeded by $25,000, the Interest
Rate Applicable to Credit Limit Excesses will be charged on that $25,000 excess,
even if the total amount outstanding under Credit A is less than $250,000.
(c) To determine if the Overall Credit Limit has been exceeded, the
outstanding principal amount of each Credit is totalled, and any amounts in
foreign currency are converted to Canadian dollars. If that total exceeds the
Overall Credit Limit, the Interest Rate Applicable to Credit Limit Excesses will
be charged on that excess amount. For example, if there are three Credits, each
with a Credit Limit of $100,000 and an Overall Credit Limit of $250,000, if each
of those Credits is at $90,000, they are each under their own Credit Limits, but
the Overall Credit Limit has been exceeded by $20,000, and the Interest Rate
Applicable to Credit Limit Excesses will be charged on that excess amount.
[INITIALS]
Pivotal Corporation Credit Agreement Page 5 of 11
1.5 Fees. You will pay CIBC's fees for each Credit as out lined in the Letter.
You will also reimburse us for all reasonable fees (including legal fees) and
out-of-pocket expenses incurred in registering any security, and in enforcing
our rights under this Agreement or any security. We will automatically debit
your Operating Account for fee amounts owing.
1.6 Our rights to demand Credits. At CIBC, we believe that the banker-customer
relationship is based on mutual trust and respect. It is important for us to
know all the relevant information (whether good or bad) about your business.
CIBC is itself a business. Managing risks and monitoring our customers' ability
to repay is critical to us. We can only continue to lend when we feel that we
are likely to be repaid. As a result, if you do something that jeopardizes that
relationship, or if we no longer feel that you are likely to repay all amounts
borrowed, we may have to act. We may decide to act, for example, because of
something you have done, information we receive about your business, or changes
to the economy that affect your business. Some of the actions that we may decide
to take include requiring you to give us more financial information, negotiating
a change in the interest rate or fees, or asking you to get further accounting
assistance, put more cash into the business, provide more security, or produce a
satisfactory business plan. It is important to us that your business succeeds.
We may, however, at our discretion, demand immediate repayment of any
outstanding amounts under any demand Credit. We may also, at any time and for
any cause, cancel the unused portion of any demand Credit. Under normal
circumstances, however, we will give you 30 days' notice of any of these
actions.
1.7 Payments. If any payment is due on a day other than a Business Day, then
the payment is due on the next Business Day.
1.8 Applying money received. If you have not made payments as required by this
Agreement, or if you have failed to satisfy any term of this Agreement (or any
other agreement you have that relates to this Agreement), or at any time before
default but after we have given you appropriate notice, we may decide how to
apply any money that we receive. This means that we may choose which Credit to
apply the money against or what mix of principal, interest, fees and overdue
amounts within any Credit will be paid.
1.9 Information requirements. We may from time to time reasonably require you
to provide further information about your business. We may require information
from you to be in a form acceptable to us.
1.10 Insurance. You will keep all your business assets and property insured (to
the full insurable value) against loss or damage by fire and all other risks
usual for property such as your (plus for any other risks we may reasonably
require). If we request, these policies will include a loss payee clause (and if
you are giving us mortgage security, a mortgagee clause). As further security,
you assign all insurance proceeds to us. If we ask, you will give us either the
policies themselves or adequate evidence of their existence. If your insurance
coverage for any reason stops, we may (but do not have to) insure the property.
We will automatically debit your Operating Account for these amounts. Finally,
you will notify us immediately of any loss or damage to the property.
[INITIALS]
Pivotal Corporation Credit Agreement Page 6 of 11
1.11 Environmental. You will carry on your business, and maintain your assets
and property, in accordance with all applicable environmental laws and
regulations. If (a) there is any release, deposit, discharge or disposal of
pollutants of any sort (collectively, a "Discharge") in connection with either
your business or your property, and we pay any fines or for any clean-up, or (b)
we suffer any loss or damage as a result of any Discharge, you will reimburse
CIBC, its directors, officers, employees and agents for any and all losses,
damages, fines, costs and other amounts (including amounts spent preparing any
necessary environmental assessment or other reports, or defending any lawsuits)
that result. If we ask, you will defend any lawsuits, investigations or
prosecutions brought against CIBC or any of its directors, officers, employees
and agents in connection with any Discharge. Your obligation to us under this
section continues even after all Credits have been repaid and this Agreement has
terminated.
1.12 Consent to release information. We may from time to time give any credit or
other information about you to, or receive such information from, (a) any
financial institution, credit reporting agency, rating agency or credit bureau,
(b) any person, firm or corporation with whom you may have or propose to have
financial dealings, and (c) any person, firm or corporation in connection with
any dealings you have or propose to have with us. You agree that we may use that
information to establish and maintain your relationship with us and to offer any
services as permitted by law, including services and products offered by our
subsidiaries when it is considered that this may be suitable to you.
1.13 Our pricing policy. Fees, interest rates and other charges for your banking
arrangements are dependent upon each other. If you decide to cancel any of these
arrangements, you will have to pay us any increased or added fees, interest
rates and charges we determine and notify you of. These increased or added
amount are effective from the date of the changes that you made.
1.14 Proof of debt. This Agreement provides the proof, between CIBC and you, of
the credit made available to you. There may be times when the type of Credit you
have requires you to sign additional documents. Throughout the time that we
provide you credit under this Agreement, our loan accounting records will
provide complete proof of all terms and conditions of your credit (such as
principal loan balances, interest calculations, and payment dates).
1.15 Renewals of this Agreement. This Agreement will remain in effect for your
Credits for as long as they remain unchanged. We have shown a Next Scheduled
Review Date in the Letter. If there are no changes to the Credits this Agreement
will continue to apply, and you will not need to sign anything further. If there
are any changes, we will provide you with either an amending agreement, or a new
replacement Letter, for you to sign.
1.16 Confidentiality. The terms of this Agreement are confidential between you
and CIBC. You therefore agree not to disclose the contents of this Agreement to
anyone except your professional advisors.
1.17 Pre-conditions. You may use the Credits granted to you under this Agreement
only if:
(a) we have received properly signed copies of all documentation that we
may require in connection with the operation of your accounts and your ability
to borrow and give security;
(b) all the required security has been received and registered to our
satisfaction;
[INITIALS]
Pivotal Corporation Credit Agreement Page 7 of 11
(c) any special provisions or conditions set forth in the Letter have been
complied with; and
(d) if applicable, you have given us the required number of days notice for
a drawing under a Credit.
1.18 Assignment. CIBC may assign, sell or participate (referred to as a
"transfer") all or any part of its rights and obligations under this Agreement,
or under any Credit granted in this Agreement, to any third party (a "Lender"),
subject to your prior written consent. You will not unreasonably withhold your
consent. For a Demand Credit, CIBC will not need your consent if we have made
demand and you have failed to repay us in full. For a Committed Credit, we will
not need your consent if there has been an Event of Default that is not capable
of being remedied. You agree to sign any documents and take any actions that any
Lender may reasonably require in connection with any such transfer. Upon
completion of the transfer, the Lender will have the same rights and obligations
under this Agreement as if it were a party to it.
1.19 Notices. We may give you any notice in person or by telephone, or by letter
that is sent either by fax or by mail.
1.21 Foreign Currency Conversion. If this Agreement includes foreign currency
Credits, then currency changes may affect whether either the Credit Limit of any
Credit or the Overall Credit Limit has been exceeded.
(a) See section 1.4 for the general rules on how the Interest Rate
Applicable to Credit Limit Excesses is calculated.
(b) To determine the Overall Credit Limit, all foreign currency amounts are
converted to Canadian dollars, even if the Credit Limits of any particular
Credits are quoted directly in a foreign currency (such as US dollars). No
matter how the Credit Limit of a particular Credit is quoted, therefore,
currency fluctuations can affect whether the Overall Credit Limit has been
exceeded. For example, if Credits X and Y have Credit Limits of C$100,000 and
US$50,000, respectively, with an Overall Credit Limit of C$175,000, if Credit X
is at C$90,000 and Credit Y is at US$45,000, the Interest Rate Applicable to
Credit Limit Excesses will be charged only if, after converting the US dollar
amount, the Overall Credit Limit is exceeded.
(c) Whether the Credit Limit of a particular Credit has been exceeded will
depend on how the Credit Limit is quoted, as described below.
(d) If the Credit Limit is quoted as, for example, the US dollar equivalent
of a Canadian dollar amount, daily exchange rate fluctuations may affect whether
that Credit Limit has been exceeded. If, on the other hand, the Credit Limit is
quoted in a foreign currency (for example, directly in US dollars), whether that
Credit Limit has been exceeded is determined by reference only to the closing
balance of that Credit in that currency.
(e) For example, assume an outstanding balance of a Credit on a particular
day of US$200,000. If the Credit Limit is stated as "the US dollar equivalent of
C$275,000", then whether the Credit Limit of that Credit has been exceeded will
depend on the value of the Canadian dollar on that day. If the conversion
calculations determine that the outstanding
[INITIALS]
Pivotal Corporation Credit Agreement Page 8 of 11
balance is under the Credit Limit, a drop in the value of the Canadian dollar
the next day (without any change in the balance) may have the effect of putting
that Credit over its Credit Limit. If, on the other hand, the Credit Limit is
stated as "US$200,000", the Credit Limit is not exceeded, and a drop in the
value of the dollar the next day will not change that (although the Overall
Credit Limit may be affected).
(f) Conversion calculations are done on the closing daily balance of the
Credit. The conversion factor used is the mid-point between the buying and
selling rate offered by CIBC for that currency on the conversion date.
ARTICLE 2 - DEFINITIONS
2.1 Definitions. In this Agreement, the following terms have the following
meanings:
"Acceptances" means "L/C Acceptance" or "Avalized Documentary Collections" or
both as the case may be.
"Avalized Documentary Collection" means a bill of exchange, drawn on you,
avalized by CIBC at your request.
"Base Rate Loan" means a US dollar loan on which interest is calculated by
reference to the US Base Rate.
"Business Day" means any day (other than a Saturday or a Sunday) that the CIBC
Branch/Centre is open for business.
"CIBC Branch/Centre" means the CIBC branch of banking centre noted on the first
page of this Agreement, as changed from time to time by agreement between the
parties.
"Credit" means any credit referred to in the Letter, and if there are two or
more parts to a Credit, "Credit" includes reference to each part.
"Credit Limit" of any Credit means the amount specified in the Letter as its
Credit Limit, and if there are two or more parts to a Credit, "Credit Limit"
includes reference to each such part.
"Current Assets" are cash, accounts receivable, inventory and other assets that
are likely to be converted into cash, sold, exchanged or expended in the normal
course of business within one year or less, excluding amounts due from related
parties.
"Current Liabilities" means debts that are or will become payable within one
year or one operating cycle, whichever is longer. They usually include accounts
payable, accrued expenses, deferred revenue and the current portion of long-term
debt.
"Current Ratio" means the ratio of Current Assets to Current Liabilities.
"Debt to Effective Equity Ratio" means the ratio of X to Y, where
[INITIALS]
Pivotal Corporation Credit Agreement Page 9 of 11
X is the total of all liabilities, less all Postponed Debt, and
Y is the total Shareholders' Equity, plus all Postponed Debt, less (i)
amounts due from investments in related parties and (ii) Intangibles.
"Interest Rate Applicable to Credit Limit Excesses", unless otherwise defined in
the Letter, means the Standard Overdraft Rate.
"Fixed Rate Loan" means any loan drawn down, converted or extended under a
Credit at an interest rate which was fixed for a term, instead of referenced to
a variable rate such as the Prime Rate or US Base Rate, at the time of such
drawdown, conversion or extension. For purposes of certainty, a Fixed Rate Loan
includes a LIBOR Loan.
"Intangibles" means assets of the business that have no value in themselves but
represent value. They include such things as copyright, patents and trademarks;
franchises; licenses; leases; research and development costs; and deferred
development costs.
"Letter" means the letter agreement between you and CIBC to which this Schedule
and any other Schedules are attached.
"Letter of Credit" or "L/C" means a documentary or stand-by letter of credit, a
letter of guarantee, or a similar instrument in form and substance satisfactory
to us.
"L/C Acceptance" means a draft (as defined under the Bills of Exchange Act
(Canada)) payable to the beneficiary of a documentary L/C which the L/C
applicant or beneficiary, as the case may be, has presented to us for acceptance
under the terms of the L/C.
"Lien" includes a mortgage, charge, lien, security interest or encumbrance of
any sort on an asset, and includes conditional sales contracts, title retention
agreements, capital trusts and capital leases.
"Minimum Shareholders' Equity" means the total Shareholders' Equity, minus (a)
amounts due form investments in related parties, and the value of all
Intangibles, plus (b) all Postponed Debt.
"Minimum Working Capital" means the dollar amount resulting from deducting
Current Liabilities from Current Assets.
"Normal Course Lien" means a Lien that (a) arises by operation of law or in the
ordinary course of business as a result of owning any such asset (but does not
include a Lien given to another creditor to secure debts owed to that creditor)
and (b), taken together with all other Normal Course Liens, does not materially
affect the value of the asset or its use in the business.
"Operating Account" means the account that you normally use for the day-to-day
cash needs of your business, and may be either or both of a Canadian dollar and
a US dollar account.
"Postponed Debt" means any debt owed by you that has been formally postponed to
CIBC.
"Prime Rate" means the variable reference rate of interest per year declared by
CIBC from time to time to be its prime rate for Canadian dollar loans made by
CIBC in Canada.
[INITIALS]
Pivotal Corporation Credit Agreement Page 10 of 11
"Prime Rate Loan" means a Canadian dollar loan on which interest is calculated
by reference to Prime Rate.
"Purchase Money Lien" means a Lien incurred in the ordinary course of business
only to secure the purchase price of an asset, or to secure debt used only the
finance the purchase of the asset.
"Shareholders' Equity" means paid-in capital, retained earnings and attributed
or contributed surplus.
"Standard Overdraft Rate" means the variable reference interest rate per year
declared by CIBC from time to time to be its standard overdraft rate on
overdrafts in Canadian or US dollar accounts maintained with CIBC in Canada.
"US Base Rate" means the variable reference interest rate per year as declared
by CIBC from time to time to be its base rate for US dollar loans made by CIBC
in Canada.
[INITIALS]
Pivotal Corporation Credit Agreement Page 11 of 11
