EXHIBIT 10.18
LINE OF CREDIT AGREEMENT
THIS LINE OF CREDIT AGREEMENT (this "Agreement") is dated as of October 18,
1999, by and between NETZEE, INC., a Georgia corporation (the "Borrower") and
XXXXXXX PARTNERS, L.P., a Georgia limited partnership (the "Lender").
Section 1. Definitions. The following terms have the meaning set forth
-----------
below, unless the context otherwise requires:
"Advance" means any advance by the Lender to or for the benefit of the
Borrower under the Line of Credit.
"Applicable Law" means all provisions of any constitution, statute, law,
rule, regulation, decision, order, decree, judgment, release, license, permit,
stipulation or other official pronouncement enacted, promulgated or issued by
any governmental authority.
"Business Day" means any day excluding Saturday, Sunday and any day which
is a legal holiday under the laws of the State of Georgia or is a day on which
banking institutions located in such state are closed.
"Event of Default" has the meaning set forth in Section 6.
"Line of Credit" means the revolving line of credit opened by the Lender in
favor of the Borrower pursuant to this Agreement.
"Line of Credit Limit" means $3,000,000.
"Loan Documents" means this Agreement and any other documents evidencing
the Advances and the other Obligations.
"Obligations" means the principal of, and interest on, the Advances,
together with all other amounts owing by the Borrower to the Lender under this
Agreement.
"Person" means any individual, corporation, partnership, both general and
limited, limited liability company, association, trust or other entity or
organization, including any government or political subdivision or any agency or
instrumentality thereof.
"Prime Rate" as of the date hereof or as of the date of any adjustment in
the interest rate hereunder, as the case may be, means the Prime Rate as
published on such date in the "MONEY RATES" column of The Wall Street Journal,
-----------------------
regardless of the stated effective date thereof. If a range of rates is so
published, the "Prime Rate" shall be the mid-point of such range. The Prime Rate
initially shall be established on the date hereof and shall be adjusted on the
first business day of each month hereafter, except that if The Wall Street
---------------
Journal is not published on such business day, then
1
the Prime Rate shall be adjusted on the next business day on which The Wall
--------
Street Journal is published.
-------------
"Subsidiary" means, with respect to any Person, a corporation or other
entity, whether incorporated or unincorporated, of which at least a majority of
the securities or interests having by the terms thereof voting power to elect a
majority of the board of directors or others performing similar functions with
respect to such corporation or other entity is at that time, directly or
indirectly, owned or controlled by such Person, or by one or more of its
Subsidiaries, or by such Person and one or more of its Subsidiaries.
"Subsidiaries" means all such corporations or other entities.
"Termination Date" means September 30, 2002.
Section 2. The Line of Credit.
---------- ------------------
(a) Commitment to Lend. Subject to the terms and conditions of this
------------------
Agreement, the Lender agrees to make Advances to the Borrower upon the
Borrower's request made in the manner described below, during the period
commencing on the date hereof and ending on the Termination Date. The aggregate
principal amount of all outstanding Advances shall not at any time exceed the
Line of Credit Limit. The principal amount of any Advances that are repaid by
the Borrower pursuant to Section 2(e) may, subject to the terms and conditions
hereof, be reborrowed.
(b) Method of Borrowing. To request an Advance, the Borrower shall give
-------------------
the Lender a written borrowing notice (a "Notice of Borrowing") on or before
4:00 p.m. (Atlanta time) not less than two (2) Business Days prior to the
proposed borrowing date, specifying the borrowing date, the purpose of the
Advance and the principal amount of such Advance.
(c) Disbursements. Not later than 1:00 p.m. (Atlanta time) on the
-------------
borrowing date specified, the Lender shall disburse the amount of such Advance
in immediately available funds to such account as the Borrower shall from time
to time designate.
(d) Mandatory Payment and Termination of Commitment. The Line of Credit
-----------------------------------------------
shall terminate and the unpaid principal balance thereof and all accrued and
unpaid interest thereon shall be immediately due and payable in full on the
Termination Date.
(e) Voluntary Repayments. The Borrower shall have the right at any time,
--------------------
and from time to time, to repay all or a portion of any outstanding Advances or
all or any portion of any outstanding accrued interest, in each case without
premium or penalty. All prepayments shall be allocated first to accrued
interest and then to principal.
(f) Interest. Interest on the outstanding principal amount of the Line of
--------
Credit shall accrue at a variable rate per annum equal to the Prime Rate, as
adjusted from time to time in accordance with the definition thereof. Interest
shall be computed on the basis of a 365 or 366 day year, as applicable, for the
actual number of days elapsed. All accrued interest shall be due and payable in
full on March 1, June 1, September 1 and December 1 of each year during the term
hereof or on the Termination Date.
2
(g) Termination of Commitment. In no event shall any Advances be made on
-------------------------
or after the Termination Date.
Section 3. Conditions. The obligation of the Lender to make each
----------
Advance is subject to the satisfaction of the following additional conditions:
(a) no event which, but for the passing of time or giving of notice, would
constitute an Event of Default hereunder shall have occurred and remained in
existence at the time of such Advance; and
(b) all of the representations and warranties of the Borrower made herein
shall be true and correct in all material respects as of the date of such
Advance.
Section 4. Representations and Warranties. In order to induce the Lender
------------------------------
to make Advances hereunder, the Borrower represents and warrants as of the date
hereof as follows:
(a) Power and Authority. The Borrower has all requisite power and
-------------------
authority to execute, deliver and perform its obligations under the Loan
Documents.
(b) Due Authorization, Etc. The Borrower's execution, delivery and
-----------------------
performance of the Loan Documents have been duly authorized by all necessary
action on the part of the Borrower, and each of the Loan Documents has been duly
executed and delivered by the Borrower.
(c) Enforceability. Each Loan Document constitutes a valid and binding
--------------
agreement of the Borrower, enforceable against the Borrower in accordance with
its terms, except as such enforceability may be subject to general principles of
equity and to bankruptcy, insolvency and similar laws affecting the enforcement
of creditors' rights generally.
(d) Organization. The Borrower is a duly organized and validly existing
------------
Georgia corporation in good standing.
(e) Pending or Threatened Litigation. There are no pending or, to the
--------------------------------
Borrower's knowledge, threatened actions or proceedings before any court or
administrative or governmental agency that are likely to materially adversely
affect the financial condition or business operations of the Borrower and its
Subsidiaries, taken as a whole.
(f) Defaults. There is no event which is, or which with notice or lapse of
--------
time or both would be, an Event of Default hereunder.
All of the foregoing representations and warranties shall be deemed made on
the date hereof and on the date of each Advance.
3
Section 5. Covenants. The Borrower agrees that until the Termination
---------
Date and thereafter until all of the Advances, together with all accrued but
unpaid interest thereon and all other amounts owing hereunder, shall have been
paid in full:
(a) Use of Proceeds. The Borrower shall use the proceeds of each Advance
---------------
for ordinary course working capital purposes, including capital purchases.
(b) Notice of Default. Promptly upon any officer of the Borrower obtaining
-----------------
knowledge of the occurrence of any Event of Default, the Borrower shall deliver
to the Lender a certificate of the Borrower's chief executive officer specifying
the nature and period of existence thereof and what action the Borrower has
taken, is taking and proposes to take with respect thereto.
(c) Existence. The Borrower shall, and shall cause each of its
---------
Subsidiaries to, at all times preserve and keep in full force and effect its
existence and all rights and franchises material to its business.
(d) Compliance with Laws. The Borrower shall, and shall cause each of its
--------------------
Subsidiaries to, comply in all material respects with the requirements of all
Applicable Laws in all jurisdictions in which the Borrower or such Subsidiary is
now doing business or may hereafter be doing business.
(e) Board Representation. The Lender shall have the right to designate one
--------------------
member of the Borrower's board of directors, and the Borrower shall use its best
efforts to cause the Lender's designee to be appointed or elected to, and to
remain a member of, the Borrower's board of directors.
Section 6. Events of Default. The occurrence of any one or more of the
-----------------
following events shall constitute an Event of Default by the Borrower under this
Agreement:
(a) the Borrower fails to pay the principal or accrued interest on the Line
of Credit when due (and such failure continues for a period of five (5) days);
(b) the Borrower breaches or otherwise fails to perform or observe any
covenant or agreement contained in this Agreement and such failure to perform or
observe is not cured within thirty (30) days after the Borrower receives notice
of the occurrence thereof;
(c) any representation, warranty or information contained in this Agreement
or required to be furnished to the Lender hereunder, is false or misleading in
any material respect on the date made or furnished;
(d) the Borrower or any of its material Subsidiaries makes an assignment
for the benefit of creditors or admits in writing its inability to pay its debts
generally as they become due; or an order, judgment or decree is entered
adjudicating the Borrower or such Subsidiary bankrupt or insolvent; or any order
for relief with respect to the Borrower is entered under the United States
Bankruptcy Code; or the Borrower or any of its Subsidiaries petitions or applies
to any tribunal for the appointment of a custodian, trustee, receiver or
liquidator of the Borrower, or of any substantial part of the assets of the
Borrower or such Subsidiary, or commences any proceeding relating to the
4
Borrower or any of its Subsidiaries under any bankruptcy reorganization,
arrangement, insolvency, readjustment of debt, dissolution or liquidation law of
any jurisdiction; or any such petition or application is filed, or any such
proceeding is commenced, against the Borrower or any of its Subsidiaries and
either (i) the Borrower or such Subsidiary by any act indicates its approval
thereof, consents thereto or acquiesces therein or (ii) such petition,
application or proceeding is not dismissed within sixty (60) days;
(e) any money judgments, writs or warrants of attachment, or similar
process are entered or filed against the Borrower or any of its Subsidiaries or
any of its assets having a value equal to or exceeding $500,000, and remained
undischarged, unvacated, unbonded and unstayed for a period of thirty (30) days;
(f) any order, judgment or decree is entered against the Borrower or any of
its Subsidiaries decreeing the dissolution or split up of the Borrower or such
Subsidiary and such order remains undischarged or unstayed for a period in
excess of thirty (30) days; or
(g) either (i) the acquisition by any individual, entity or group (within
the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of
1934 (the "Exchange Act")) (a "Person") of beneficial ownership (within the
meaning of Rule 13d-3 promulgated under the Exchange Act) of voting securities
of the Borrower where such acquisition causes such Person to own more than fifty
percent (50%) of the combined voting power of the then outstanding voting
securities of the Borrower entitled to vote generally in the election of
directors, other than acquisitions by The Intercept Group, Inc. or its
affiliates, or (ii) the acquisition by a third party not affiliated with the
Borrower of all or substantially all of the Borrower's assets.
Section 7. Remedies on Default. Upon the occurrence of an Event of
-------------------
Default, the Lender shall have the following rights and remedies:
(a) Termination; Acceleration. The Lender may cease making Advances to the
-------------------------
Borrower and may declare the entire outstanding Obligations immediately due and
payable and may pursue any and all actions to collect and enforce the collection
of such amounts; provided that upon the occurrence of an Event of Default
described in Section 6(d), the Lender's obligation to make Advances shall
automatically terminate and all outstanding Obligations shall become immediately
due and payable without any notice or action whatsoever by the Lender.
(b) Other Remedies; Cumulative. The Lender may exercise any and all other
--------------------------
rights and remedies available to it under the Loan Documents or under Applicable
Law; and the Lender's rights and remedies under this Agreement, the other Loan
Documents and Applicable Law are cumulative and not exclusive of any other right
or remedy which the Lender may have at law or at equity.
Section 8. Miscellaneous.
-------------
(a) Collection Expenses. The Borrower shall pay to the Lender all out-of-
-------------------
pocket expenses incurred by the Lender, including reasonable and actual
attorney's fees and expenses, in connection with any Event of Default and
collection and other enforcement proceedings resulting
5
therefrom, including out-of-pocket expenses incurred in enforcing this Agreement
and the other Loan Documents.
(b) Survival. The representations, warranties, covenants and agreements
--------
contained in this Agreement shall survive the closing of the transactions
contemplated by this Agreement, and the remedies of a party for breaches of such
representations, warranties, covenants or agreements shall not be affected by
any investigation by, or knowledge of, the non-breaching party prior to the date
of this Agreement.
(c) Further Assurances. Upon the execution of this Agreement and
------------------
thereafter, each party to this Agreement shall do such things as may be
reasonably requested by the other party in order more effectively to consummate
or document the transactions contemplated by this Agreement.
(d) Notices. Unless otherwise specifically provided herein, any notice or
-------
other communication required or permitted to be given under this Agreement shall
be in writing addressed to the respective party as set forth below and may be
personally served, sent by facsimile, telex or overnight courier service or
United States mail and shall be deemed to have been given: (a) if delivered by
courier, when delivered; (b) if delivered by telecopy or telex, on the date of
transmission if transmitted on a Business Day before 4:00 p.m. (Atlanta, Georgia
time) or, if not, on the next succeeding Business Day; (c) if delivered by
overnight courier, one (1) Business Day after delivery to such courier properly
addressed; or (d) if by U.S. Mail, four (4) Business Days after depositing in
the United States mail, with postage prepaid and properly addressed.
Notices shall be addressed as follows:
If to the Borrower: Netzee, Inc.
0000 Xxxxx Xxxxx Xxxx
000 Xxxxx Xxxxxx
Xxxxxxx, Xxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxxxx
Facsimile No.: 000 000-0000
With a copy to: Xxxxxxxxxx, Xxxxxx & Xxxxxxx LLP
000 Xxxxxxxxx Xxxxxx, X.X.
Xxxxx 0000
Xxxxxxx, Xxxxxxx 00000
Attention: Xxxx X. Xxxxxxx
Facsimile No.: 000-000-0000
If to the Lender: Xxxxxxx Partners, L.P.
000 Xxxxxxxx Xxxxxxx
Xxxxx 0000
Xxxxxxx, Xxxxxxx 00000
Attention: Xxxx Xxxxxx
Facsimile No.: 000-000-0000
6
With a copy to: Powell, Goldstein, Xxxxxx & Xxxxxx LLP
000 Xxxxxxxxx Xxxxxx, X.X.
00xx Xxxxx
Xxxxxxx, Xxxxxxx 00000
Attention: Xxxxxx X. XxXxxxx
Facsimile No.: 000-000-0000
or to such other address as the party addressed shall have previously designated
by written notice to the serving party, given in accordance with this Section
8(d). A notice not given as provided above shall, if it is in writing, be
deemed given if and when actually received by the party to whom given.
(e) Time of the Essence. Time is of the essence of each and every
-------------------
provision of this Agreement.
(f) Assignment; Successors in Interest. The Borrower may not assign,
----------------------------------
transfer or delegate any of its rights or obligations under this Agreement or
the other Loan Documents without the prior written consent of the Lender. The
Lender may assign or grant participations in this Agreement and the other Loan
Documents and the Borrower's obligations hereunder and thereunder without the
Borrower's consent. Any other assignments or participations may be made only
with the prior written consent of the Borrower. This Agreement is binding upon
the parties to this Agreement and their respective successors and assigns, and
inures to the benefit of the parties to this Agreement and their respective
permitted successors and assigns. References to a party to this Agreement are
also references to any permitted successor or assign of such party. An
Affiliate of Lender means a person or entity controlled by, controlling or under
common control of the Lender.
(g) Number; Gender; Captions. Whenever the context so requires, the
------------------------
singular number includes the plural, the plural includes the singular, and the
gender of any pronoun includes the other genders. Titles and captions of or in
this Agreement are inserted only as a matter of convenience and for reference
and in no way affect the scope of this Agreement or the intent of its
provisions.
(h) Severability. In the event that any court of competent jurisdiction
------------
shall determine that any provision of this Agreement that is not essential to
accomplishing the purposes of the parties hereto is invalid, such determination
shall not affect the validity of any other provision of this Agreement, which
shall remain in full force and effect and which shall be construed as to be
valid under Applicable Law.
(i) Remedies Cumulative. The remedies of a party to this Agreement
-------------------
provided in this Agreement are cumulative and shall not exclude any other
remedies to which any party to this Agreement may be lawfully entitled, under
this Agreement or Applicable Law, and the exercise of a remedy shall not be
deemed an election excluding any other remedy (any such claim by the other party
to this Agreement being hereby waived).
7
(j) Integration; Amendment; Waiver. This Agreement (a) constitutes the
------------------------------
entire agreement of the parties to this Agreement with respect to its subject
matter, (b) supersedes all prior agreements, if any, of the parties to this
Agreement with respect to its subject matter, and (c) may not be amended except
in writing signed by the party to this Agreement against whom the change is
being asserted. The failure of any party to this Agreement at any time or times
to require the performance of any provision of this Agreement shall in no manner
affect the right to enforce the same; and no waiver by any party to this
Agreement of any provision (or of a breach of any provision) of this Agreement,
whether by conduct or otherwise, in any one or more instances, shall be deemed
or construed either as a further or continuing waiver of any such provision or
breach or as a waiver of any other provision (or of a breach of any other
provision) of this Agreement.
(k) Controlling Law. This Agreement shall be construed and enforced in
---------------
accordance with, and all questions concerning the construction, validity,
interpretation and performance of this Agreement shall be governed by, the laws
of the State of Georgia, without giving effect to provisions thereof regarding
conflict of laws.
(l) Copies. This Agreement may be executed in two or more copies, each of
------
which shall be deemed an original, and it shall not be necessary in making proof
of this Agreement or its terms to produce or account for more than one of such
copies.
[Remainder of this page intentionally left blank]
8
DULY EXECUTED and delivered by the parties to this Agreement as of the date
first set forth above.
BORROWER:
NETZEE, INC.
By: /s/ Xxxxxxx X. Xxxxxxxx Xx.
--------------------------------
Name: Xxxxxxx X. Xxxxxxxx Xx.
Title: CFO & EVP
LENDER:
XXXXXXX PARTNERS, L.P.
By: /s/ Xxxx Xxxxxx
--------------------------------
Name: Xxxx Xxxxxx
Title: CFO
9
