EXHIBIT 10.10
IMPERIAL BANK
Innovative Business Banking
Member FDIC
STARTER KIT LOAN AND SECURITY AGREEMENT
Borrower: Chemdex Corporation Address: 000 Xxx Xxxxxxx Xxxx
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Date: February 1, 1998 Xxxx Xxxx, XX 00000
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THIS LOAN AND SECURITY AGREEMENT ("Agreement") is made and entered into on the
above date between IMPERIAL BANK ("Bank"), whose address is 000 Xxxxxxx Xxxxxxx,
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Xxx Xxxx, XX 00000-0000 and the party(ies) named above (jointly and severally,
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"Borrower"), whose chief executive office is located at the above address
("Borrower's Address").
1. LOANS. Bank will make loans to Borrower (the "Loans") in amounts determined
by Bank in its reasonable business judgment up to the amount (the "Credit
Limit") shown on the Schedule to this Agreement (the "Schedule"), provided no
Event of Default and no event which, with notice or passage of time or both,
would constitute an Event of Default is occurring or has occurred. All Loans and
other monetary Obligations will bear interest at the rate shown on the Schedule.
Interest will be payable monthly, on the date shown on the monthly billing from
Bank. Bank may, in its discretion, charge Borrower's deposit accounts maintained
with Bank for any amounts coming due under this Agreement.
2. SECURITY INTEREST. As security for all present and future indebtedness,
guarantees, liabilities, and other obligations, of Borrower to Bank
(collectively, the "Obligations"), Borrower hereby grants Bank a continuing
security interest in all of Borrower's right title and interest in and to any
property now or hereafter described in a security agreement executed by Borrower
to Bank as well as the following types of property, whether now owned or
hereafter acquired, and wherever located (collectively, the "Collateral"): All
"accounts", "general intangibles," "chattel paper," "documents," "letters of
credit," "instruments," " deposit accounts," "inventory," "farm products,"
"fixtures" and "equipment," as such terms are defined in Division 9 of the
California Uniform Commercial Code in effect on the date hereof, and all
products, proceeds and insurance proceeds of the foregoing.
3. REPRESENTATIONS AND AGREEMENTS OF BORROWER. Borrower represents to Bank as
follows, and Borrower agrees that the following representations will continue to
be true, and that Borrower will comply with all of the following agreements
throughout the term of this Agreement:
3.1 CORPORATE EXISTENCE AND AUTHORITY. Borrower, if a corporation, is and will
continue to be, duly authorized, validly existing and in good standing under the
laws of the jurisdiction of its incorporation. The execution. delivery and
performance by Borrower of this Agreement, and all other documents contemplated
hereby have been duly and validly authorized, and do not violate any law or any
provision of and are not grounds for acceleration under, any agreement or
instrument which is binding upon Borrower.
3.2 NAME: PLACES OF BUSINESS. The name of Borrower set forth in this Agreement
is its correct name. Borrower shall give Bank 15 days' prior written notice
before changing its name. The address set forth in the heading to this Agreement
is Borrower's chief executive office. In addition, Borrower has places of
business and Collateral is located only at the locations set forth on the
Schedule. Borrower will give Bank at least 15 days prior written notice before
changing its chief executive office or locating the Collateral at any other
location.
3.3 COLLATERAL. Bank has and will at all times continue to have a first-
priority perfected security interest in all of the Collateral other than
specific equipment identified in existing filed or to be filed Financing
Statements. Borrower will immediately advise Bank in writing of any material
loss or damage to the Collateral.
3.4 FINANCIAL CONDITION AND STATEMENTS. All financial statements now or in the
future delivered to Bank have been, and will be prepared in conformity with
generally accepted accounting principles. Since the last date covered by any
such statement, there has been no material adverse change in the financial
condition or business of Borrower. Borrower will provide Bank: (i) within 30
days after the end of each month, a monthly financial statement prepared by
Borrower, and such other information as Bank shall reasonably request; (ii)
within 90 days following the end of Borrower's fiscal year, complete annual
financial statements, certified by independent certified public accountants
acceptable to Bank and accompanied by the unqualified report thereon by said
independent certified public accountants; and (iii) other financial information
reasonably requested by Bank from time to time.
3.5 TAXES: COMPLIANCE WITH LAW. Borrower has filed, and will file, when due,
all tax returns and reports required by applicable law, and Borrower has paid.
and will pay, when due, all taxes, assessments, deposits and contributions now
or in the future owed by Borrower. Borrower has complied. and will comply, in
all material respects, with all applicable laws, rules and regulations.
3.6 INSURANCE. Borrower will at all times adequately insure all of the tangible
personal property Collateral and carry such other business insurance as is
customary in Borrower's industry.
3.7 ACCESS TO COLLATERAL AND BOOKS AND RECORDS. At reasonable times, on one
business day's notice, Bank, or its agents. shall have the right to inspect the
Collateral, and the right to audit and copy Borrower's books and records.
3.8 BANKING RELATIONSHIP AND OPERATING ACCOUNTS. Borrower shall maintain its
primary operating deposit accounts with Bank. Borrower shall at all times
maintain its primary banking relationship with Bank.
3.9 ADDITIONAL AGREEMENTS. Borrower shall not, without Bank's prior written
consent, do any of the following: (i) enter into any transaction outside the
ordinary course of business except for the sale of capital stock to venture
investors. provided that Borrower promptly delivers written notification to Bank
of any such stock sale; (ii) sell or transfer any Collateral, except in
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the ordinary course of business; (iii) pay or declare any dividends on
Borrower's stock (except for dividends payable solely in stock of Borrower); or
(iv) redeem, retire, purchase or otherwise acquire, directly or indirectly, any
of Borrower's stock other than the repurchase of up to five percent (5%) of
Borrower's then issued stock in any fiscal year from Borrower's employees or
directors pursuant to written agreements with Borrower.
4. TERM. This Agreement shall continue in effect until the maturity date set
forth on the Schedule (the "Maturity Date"). This Agreement may be terminated,
without penalty, prior to the Maturity Date as follows: (i) by Borrower,
effective three business days after written notice of termination is given to
Bank; or (ii) by Bank at any time after the occurrence of an Event of Default,
without notice, effective immediately. On the Maturity Date or on any earlier
effective date of termination, Borrower shall pay all Obligations in full,
whether or not such Obligations are otherwise then due and payable. No
termination shall in any way affect or impair any security interest or other
right or remedy of Bank, nor shall any such termination relieve Borrower of any
Obligation to Bank, until all of the Obligations have been paid and performed in
full.
5. EVENTS OF DEFAULT AND REMEDIES. The occurrence of any of the following
events shall constitute an "Event of Default" under this Agreement: (a) Any
representation, statement, report or certificate given to Bank by Borrower or
any of its officers, employees or agents, now or in the future, is untrue or
misleading in a material respect; or (b) Borrower fails to pay when due any Loan
or any interest thereon or any other monetary Obligation; or (c) the total
Obligations outstanding at any time exceed the Credit Limit; or (d) Borrower
fails to perform any other non-monetary Obligation, which failure is not cured
within 5 business days after the date due; or (e) Dissolution, termination of
existence, insolvency or business failure of Borrower or appointment of a
receiver, trustee or custodian, for all or any part of the property of,
assignment for the benefit of creditors by, or the commencement of any
proceeding by or against Borrower under any reorganization, bankruptcy,
insolvency, arrangement, readjustment of debt, dissolution or liquidation law or
statute of any jurisdiction, now or in the future in effect; or (f) a material
adverse change in the business. operations, or financial or other condition of
Borrower. If an Event of Default occurs, Bank, shall have the right to
accelerate and declare all of the Obligations to be immediately due and payable,
increase the interest rate by an additional five percent per annum, and exercise
all rights and remedies recorded by applicable law. If any interest payment,
principal payment or principal balance payment due from Borrower is delinquent
ten or more days, Borrower agrees to pay Bank a late charge in the amount of 5%
of the payment so due and unpaid, in addition to the payment; but nothing in
this provision is to be construed as any obligation on the part of Bank to
accept payment of any payment past due or less than the total unpaid principal
balance after maturity. All payments shall be applied first to any late charges
owing, then to interest and the remainder, if any, to principal.
6. GENERAL. If any provision of this Agreement is held to be unenforceable,
the remainder of this Agreement shall still continue in full force and effect.
This Agreement and any other written agreements, documents and instruments
executed in connection herewith are the complete agreement between Borrower and
Bank and supersede all prior and contemporaneous
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negotiations and oral representations and agreements, all of which are merged
and integrated in this Agreement. There are no oral understandings,
representations or agreements between the parties which are not in this
Agreement or in other written agreements signed by the parties in connection
with this Agreement. The failure of Bank at any time to require Borrower to
comply strictly with any of the provisions of this Agreement shall not waive
Bank's right later to demand and receive strict compliance. Any waiver of a
default shall not waive any other default. None of the provisions of this
Agreement may be waived except by a specific written waiver signed by an officer
of Bank and delivered to Borrower. The provisions of this Agreement may not be
amended, except in a writing signed by Borrower and Bank. Borrower shall
reimburse Bank for all reasonable attorney's fees and all other reasonable costs
incurred by Bank, in connection with this Agreement (whether or not a lawsuit is
filed) including any post petition bankruptcy activities. If Bank or Borrower
files any lawsuit against the other predicated on a breach of this Agreement,
the prevailing party shall be entitled to recover its reasonable costs and
attorney's fees from the non-prevailing party. Borrower may not assign any
rights under this Agreement without Bank's prior written consent. This Agreement
shall be governed by the laws of the State of California to the jurisdiction of
whose courts Borrower hereby agrees to submit.
7. MUTUAL WAIVER OF JURY TRIAL. BORROWER AND BANK EACH HEREBY WAIVE THE RIGHT
TO TRIAL BY JURY IN ANY ACTION OR PROCEEDING BASED UPON, ARISING OUT OF, OR IN
ANY WAY RELATING TO, THIS AGREEMENT OR ANY CONDUCT, ACT OR OMISSION OF BANK OR
BORROWER OR ANY OF THEIR DIRECTORS, OFFICERS, EMPLOYEES, AGENTS, ATTORNEYS OR
AFFILIATES.
8. REFERENCE PROCEEDINGS. a. Each controversy, dispute or claim ("Claim")
between the parties arising out of or relating to this Agreement, which is not
settled in writing within ten days after the "Claim Date" (defined as the date
on which a party gives written notice to all other parties that a controversy,
dispute or claim exists), will be settled by a reference proceeding in Los
Angeles, California in accordance with the provisions of Section 638 et seq. of
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the California Code of Civil Procedure, or their successor section ("CCP"),
which shall constitute the exclusive remedy for the settlement of any Claim,
including whether such Claim is subject to the reference proceeding and the
parties waive their rights to initiate any legal proceedings against each other
in any court or jurisdiction other than the Superior Court of Los Angeles (the
"Court"). The referee shall be a retired Judge selected by mutual agreement of
the parties, and if they cannot so agree within thirty days after the Claim
Date, the referee shall be selected by the Presiding Judge of the Court. The
referee shall be appointed to sit as a temporary judge, as authorized by law.
The referee shall (a) be requested to set the matter for hearing within sixty
(60) days after the Claim Date 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 entered pursuant to CCP 644 in the Court. 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
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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.
b. 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 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 expressly reserve the right to
findings of fact, conclusions of law, 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.
Borrower:
Chemdex Corporation
By:________________________________________________
President or Vice President
By:________________________________________________
(Assistant) Secretary or Chief Financial Officer
Bank:
IMPERIAL BANK
By:_________________________________________________
Title:______________________________________________
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Schedule to Starter Kit Loan and Security Agreement (Equipment Advances)
BORROWER: Chemdex Corporation
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DATE: February 18, 1998
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This Schedule is an integral part of the Loan and Security Agreement
between Imperial Bank ("Bank") and the above-named Borrower of even date.
CREDIT LIMIT (EQUIPMENT)
(Section 1): $ 400.000 (such amount to be funded under the aggregate
Credit Limit). Software Advances are limited to $100,000 of
the aggregate Credit Limit. At no time shall total equipment
Advances exceed the Credit Limit.
Equipment Advances will be made during two consecutive
advance periods identified as Period (1) and Period (2).
Period (1) Equipment Advances will be made only on or prior
to August 17, 1998 (the "Last Advance Date") and only for
the purpose of purchasing equipment reasonably acceptable to
Bank. Borrower must provide invoices for the equipment to
Bank on or before the Last Advance Date.
Period (2) Equipment Advances will be made only during the
period beginning August 18, 1998 and on or prior to February
17, 1999 (the "Last Advance Date") and only for the purpose
of purchasing equipment reasonably acceptable to Bank.
Borrower must provide invoices for the equipment to Bank on
or before the Last Advance Date.
INTEREST RATE The rate equal to Bank's Prime Rate in effect from time to
(Section 1): time plus 1.0% per annum. Interest shall be calculated on
the basis of a 360 day year for the actual number of days
elapsed. The Prime Rate shall be the rate announced from
time to time by Bank as its "Prime Rate;" as a base rate
upon which other rates charged by Bank are based, and it is
not necessarily the best rate available at Bank. The
interest rate applicable to the Obligations shall change on
each date there is a change in the Prime Rate.
MATURITY DATE After the Last Advance Date of Period (1), the unpaid
(Section 4): principal balance of the Equipment Advances advanced during
Period (1) shall be repaid in 30 equal monthly installments
of principal, plus interest, commencing on August 18, 1998
and continuing on the same day of each month thereafter
until the entire unpaid principal balance of the Equipment
Advances and all accrued unpaid interest have been paid
(subject to Bank's right to
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accelerate the Equipment Advances on an Event of Default).
After the Last Advance Date of Period (2), the unpaid
principal balance of the Equipment Advances advanced during
Period (2) shall be repaid in 30 equal monthly installments
of principal, plus interest, commencing on February 18, 1999
and continuing on the same day of each month thereafter
until the entire unpaid principal balance of the Equipment
Advances and all accrued unpaid interest have been paid
(subject to Bank's right to accelerate the Equipment
Advances on an Event of Default).
BORROWER: BANK:
CHEMDEX CORPORATION IMPERIAL BANK
By:___________________________ By:_________________________
President of Vice President Title:______________________
By:___________________________
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Schedule to Starter Kit Loan and Security Agreement (Merchant Services Sublimit)
BORROWER: Chemdex Corporation
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DATE: February 18, 1998
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This Schedule is an integral part of the Loan and Security Agreement
between Imperial Bank ("Bank") and the above-named Borrower of even date.
MERCHANT SERVICES The aggregate Credit Limit Shall be reduced by
Sublimit (Section 1): an amount equal to the sum of (a) $ 50,000 (the
"Merchant Service Reserve"). Bank may, in its sole
discretion, charge as Loans. any amounts that may
become due or owing to Bank in connection with
merchant credit card processing services furnished
to Borrower by or through Bank, the "Credit Card
Services." Borrower shall execute all standard form
applications and agreements of Bank in connection
with the Credit Card Services and, without limiting
any of the terms of such applications and
agreements, Borrower will pay all standard fees and
charges of Bank in connection with the Credit Card
Services and, without limiting any of the terms of
such applications and agreements, Borrower will pay
all standard fees and charges of Bank in connection
with the Credit Card Services.
MATURITY DATE (Section 4): August 18, 1999
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BORROWER: BANK:
CHEMDEX CORPORATION IMPERIAL BANK
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By:____________________ By:_______________________
President or Vice President Title:____________________
By:___________________________
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RESOLUTION AUTHORIZING CREDIT
BORROWER: CHEMDEX CORPORATION, A CORPORATION ORGANIZED UNDER THE LAWS OF THE
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STATE OF DELAWARE
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DATE: SEPTEMBER 4, 1997
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I, the undersigned, officer of the above-named borrower, a corporation
organized under the laws of the state set forth above, do hereby certify that
the following is a full, true and correct copy of resolutions duly and regularly
adopted by the Board of Directors of said corporation as required by law, and by
the by-laws, of said corporation, and that said resolutions are still in full
force and effect and have not been in any way modified, repealed, rescinded,
amended or revoked.
RESOLVED, that this corporation borrow from Imperial Bank ("Bank"). from
time to time, such sum or sums of money as, in the judgment of the officer
or officers authorized hereby, this corporation may require.
RESOLVED FURTHER, that any officer of this corporation be, and he or she is
hereby authorized, in the name of this corporation, to execute and deliver
to Bank the loan agreements, security agreements, notes financing
statements, and other documents and instruments providing for such loans
and evidencing or securing such loans and said authorized officers are
authorized from time to tome to execute renewals, extensions and/or
amendments of said loan agreements, security agreements, and other
documents and instruments.
RESOLVED FURTHER, that said authorized officers be and they are hereby
authorized, as security for any and all indebtedness of this corporation to
Bank, whether arising pursuant to this resolution or otherwise, to grant to
but not limited to, any and all real property. accounts, inventory,
equipment, general intangibles, instruments documents, chattel paper,
notes, money, deposit accounts, furniture, fixtures, goods and other
property of every kind, and to execute and deliver to Bank any and all
pledge agreements mortgages, deeds of trust, financing statements, security
agreements and other agreements, which said instruments and the note or
notes and other instruments referred to in the proceeding paragraph may
contain such provisions, covenants, recitals and agreements as Bank may
require. and said authorized officers may approve, and the execution
thereof by said authorized officers shall be conclusive evidence of such
approval.
RESOLVED FURTHER, that Bank may conclusively rely on a certified copy of
these resolutions and a certificate of an officer of this corporation as to
the officers of this corporation and their offices and signatures, and
continue to conclusively rely on such certified copy of these resolutions
and said certificate for all past, present and future transactions until
written notice of any change hereto or thereto is given to Bank by this
corporation by certified mail, return receipt requested.
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The undersigned further hereby certifies that the following persons are the
fully elected and acting officers of the corporation named above as borrower and
that the following are their actual signatures:
NAMES OFFICE(S) ACTUAL SIGNATURES
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Xxxxx X. Xxxxx President
___________________ ____________________ _____________________
Secretary
___________________ ____________________ _____________________
___________________ ____________________ _____________________
IN WITNESS WHEREOF, I have hereunto set my hand as such corporate Officer on the
date set forth above
X________________________
Its:_____________________
PRO FORMA INVOICE FOR LOAN CHARGES
BORROWER: Chemdex Corporation
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ACCOUNT OFFICER: Xxxxx Xxxxx
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DATE: February 18. 1998
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LOAN FEE: $1,500
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UCC & FILING FEES: $ 330
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Please indicate the method of payment:
( ) A check for the total amount is attached.
( ) Debit Account #__________ for the total amount.
( ) Loan proceeds
______________________________
By:___________________________
Authorized Signer
Imperial Bank
By:____________________________
Account Officer's Signature
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