Exhibit 10.1
[City National Bank Letterhead]
REVOLVING NOTE
$10,000,000.00 Note#643-648/36232
Xxxxxxx Oaks, California
May 31, 2001
On July 1, 2002, Digital Insight Corporation, a Delaware corporation
("Borrower"), promises to pay to the order of City National Bank, a national
banking association ("CNB"), at its office in this city, in United States
Dollars and in immediately available funds, the principal sum of Ten Million
Dollars ($10,000,000.00) ("Revolving Credit Commitment"), or so much thereof as
may be advanced and be outstanding, with interest thereon to be computed on each
advance from the date of its disbursement at a rate computed on a basis if a
360-day year, actual days elapsed, equal to the "Prime Rate" of CNB, as it
exists from time to time, per year. "Prime Rate" shall mean the rate most
recently announced by CNB at its principal office in Beverly Hills, California,
as its "Prime Rate." Any change in the Prime Rate shall become effective on the
same business day on which the Prime Rate shall change, without prior notice to
Borrower.
As provided herein, the principal of this Note may be borrowed, repaid and
reborrowed from time to time prior to maturity, provided at the time of any
borrowing no Event of Default (as hereinafter defined) exists, and provided
further that the total borrowings outstanding at any one time shall not exceed
the Revolving Credit Commitment less outstanding Letters of Credit. Each
borrowing and repayment hereunder shall be noted in the books and records of
CNB. The excess of borrowings over repayments shall evidence the principal
balance due hereon from time to time and at any time. Borrowings hereunder
shall be presumed to have been made to or for the benefit of Borrower when made
a noted in such books and records.
Interest accruing on this Note shall be payable on the last day of each
month, commencing May 31, 2001.
A Commitment Fee shall be payable at the end of each fiscal quarter, in
arrears, and shall be equal to 0.25 percent (1/4%), computed on an annual basis
based upon a 360 day year, of the average of the daily differences between the
Revolving Credit Commitment and the aggregate of Revolving Credit Loans and
Letters of Credit outstanding.
The occurrence of any of the following shall constitute an "Event of
Default" hereunder, if not cured after ten (10) days written notice thereof
given by CNB to Borrower:
1. Failure to make any payment of principal or interest when due under this
Note;
2. Filing of a petition by or against Borrower under any provision of the
Bankruptcy Code;
3. Appointment of a receiver or an assignee for the benefit of creditors for
Xxxxxxxx;
4. Commencement of dissolution or liquidation proceedings or the
disqualification (under any applicable law or regulation) of Borrower;
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5. Any financial statement provided by Borrower to CNB is materially false or
misleading;
6. Any material default in the payment of performance of any obligation, or an
acceleration of any payment obligations based on any material default under
any provision of any contract or instrument pursuant to which Borrower has
incurred any obligation for borrowed money, any purchase obligation or any
other liability of any kind to any person or entity, including CNB;
7. Any sale or transfer of all or a substantial part of the assets of Borrower
other than in the ordinary course of business;
8. Any material violation, breach or default under this Note, any letter
agreement, guaranty, security agreement, deed of trust, subordination
agreement or any other contract or instrument executed in connection with
this Note or securing this Note;
9. Failure of Borrower to furnish CNB, within the times specified, the
following statements:
9.1 Within sixty (60) days after the end of each quarterly accounting
period of each fiscal year, a copy of Borrower's Form 10-Q, or in lieu
thereof, a financial statement consisting of not less than a balance
sheet, income statement, reconciliation of net worth and statement of
cash flows, with notes thereto, prepared in accordance with generally
acceptable accounting principals consistently applied, which financial
statement may be internally prepared;
9.2 Within one hundred twenty (120) days after the close of each fiscal
year, a copy of Borrower's Form 10-K, or in lieu thereof, a copy of the
annual audit report for such year for Borrower and the Subsidiaries
including therein a balance sheet, income statement, reconciliation of
net worth and statement of cash flows, with notes thereto, the balance
sheet, income statement and statement of cash flows to be audited by a
certified public accountant acceptable to CNB, and certified by such
accountants to have been prepared in accordance with generally
acceptable accounting principals consistently applied and accompanied
by Borrower's certification as to whether any event has occurred which
constitutes an Event of Default, and if so, stating the facts with
respect thereto;
9.3 Prior to the consummation of an acquisition, a pro forma statement as
to Borrower's compliance with the financial covenants set forth in
Section 10, below, where such acquisition is valued at more that One
Hundred Million Dollars ($100,000,000.00) on a pooling of interests
basis or Twenty Million Dollars ($20,000,000.00) on a purchase basis;
9.4 The Federal Income Tax Return for Borrower within ten (10) days after
its filing of each Return, respectively; and
9.5 Such additional information, reports, and/or statements as CNB may,
from time to time, reasonably request.
10. Failure of Borrower to maintain the following:
10.1 Tangible Net Worth of not less than $20,000,000.00 at all times;
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10.2 A ratio of Total Senior Liabilities to Tangible Net Worth of not more
than 1.5 to 1.0 at all times; and
10.3 Quarterly operating losses, plus extraordinary charges and merger
related acquisition costs including amortization of goodwill and
deferred compensation (as it related to acquisitions), plus taxes,
interest expense, and any one-time non-recurring items, not to exceed:
10.3.1 $7,000,000.00 for the fiscal quarter ending June 30, 2001;
10.3.2 $5,000,000.00 for the fiscal quarter ending September 30,
2001;
10.3.3 $4,000,000.00 for the fiscal quarter ending December 31,
2001;
10.3.4 $4,000,000.00 for the fiscal quarter ending March 31, 2002;
and
10.3.5 $3,000,000.00 for the fiscal quarter ending thereafter.
10.4 Liquid Assets at all times of not less than the greater of (a) Twice
the amount of Revolving Credit Loans and other bank debt outstanding,
or (b) the total Cash Expenditures.
For purposes of this Note, the following terms have the following meanings:
"Cash Expenditures" shall mean the difference between Liquid Assets at the
beginning and the end of the two (2) most recent fiscal quarters, if such Liquid
Assets are lower at the end of the two (2) most recent fiscal quarters.
"Liquid Assets" shall mean the sum of cash, cash equivalents and Marketable
Securities held in Borrower's name upon which there is no security interest,
lien or other encumbrance.
"Marketable Securities" shall mean "margin stock" as defined in Regulation
U of the Federal Reserve Board; bonds and other debt securities of United States
corporations not falling within the definition of "margin stock" with a credit
quality rating of at least A by Standard & Poors or A2 by Xxxxx'x; obligation of
the United States government or agencies thereof; and obligations of any state,
territory, municipality or local governmental subdivision or entity of the
United States, with a credit quality rating of at least A by Standard & Poors or
A2 by Xxxxx'x.
"Subordinated Debt" shall mean indebtedness of Borrower or any Subsidiary
the repayment of principal and interest of which is subordinated to CNB, on
terms satisfactory to CNB.
"Tangible Net Worth" shall mean the total of all assets appearing on a
balance sheet prepared in accordance with generally accepted accounting
principals consistently applied for Borrower and the Subsidiaries on a
consolidated basis, minus (a) all intangible assets, including without
limitation, unamortized debt discount, affiliate, employee and officer
receivables or advances, goodwill, research and development costs, patents,
trademarks, the excess of purchase price over underlying values of acquired
companies, any covenants not to compete, deferred charges, copyrights,
franchises and appraisal surplus; minus (b) all obligations which are required
by generally accepted accounting principals consistently applied to be reflected
as a liability on the consolidated balance sheet of Borrower and the
Subsidiaries; minus, (c) the amount, if any, at which shares of stock of a non-
wholly
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owned Subsidiary appear on the asset side of Borrower's consolidated balance
sheet, as determined in accordance with generally accepted accounting principals
consistently applied; minus (d) minority interests; and minus (e) deferred
income and reserves not otherwise reflected as a liability on the consolidated
balance sheet of Borrower and the Subsidiaries.
"Total Senior Liabilities" shall mean, as of any date of determination, the
amount of all obligations that should be reflected as a liability on a
consolidated balance sheet of Borrower and the Subsidiaries prepared in
accordance with generally accepted accounting principals consistently applied,
less Subordinated Debt.
Upon the occurrence of any Event of Default, CNB, at its option, may
declare all sums of principal and interest outstanding hereunder to be
immediately due and payable without presentment, demand, protest or notice of
dishonor all of which are expressly waived by Borrower, and CNB shall have no
obligation to make any further advances hereunder. Xxxxxxxx agrees to pay all
costs and expenses, including reasonable attorneys' fees (which counsel may be
CNB employees), expended or incurred by CNB (or allocable to CNB's in-house
counsel) in connection with the enforcement of this Note or the collection of
any sums due hereunder and irrespective of whether suit is filed. Any principal
or interest not paid when due hereunder shall thereafter bear additional
interest from its due date at a rate of five percent (5%) per year higher than
the interest rate as determined and computed above, and continuing thereafter
until paid.
This Note and all matters relating thereto, shall be governed by the laws
of the State of California.
"Borrower" Digital Insight Corporation, a
Delaware corporation
By: /s/ Xxxxx XxXxxxxxx
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Xxxxx XxXxxxxxx, Senior Vice President -
Finance, Chief Financial Officer and Secretary
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