EXHIBIT 10.14
TERM LOAN AND SECURITY AGREEMENT
THIS TERM LOAN AND SECURITY AGREEMENT ("Agreement") is made and delivered this
3rd day of July, 2002, by and between Xxxxxxx Technology, Inc., a Delaware
corporation (the "Company"), and Xxxx Xxxxxxx ("Borrower").
WHEREAS, Borrower desires to obtain a loan from the Company, as herein
provided; and,
WHEREAS, the Company is willing to provide such loan to and in favor of
Borrower, subject to the terms and conditions set forth in this Agreement;
NOW, THEREFORE, in consideration of the premises and the mutual promises
herein contained, Borrower and the Company agree as follows:
1. Definitions. As used in this Agreement, the following terms shall have
the following respective meanings:
"Interest Rate" shall mean that annual rate of interest equal to the
greater of (i) the prime rate plus 125 basis points and (ii) that interest rate
charged by Prudential under the Margin Agreement.
"Business Day" shall mean any day, other than a Saturday, Sunday or
holiday, on which the Company is open to carry on all or substantially all of
its normal business in California.
"Indebtedness" shall mean all loans, advances, indebtedness, obligations
and liabilities of Borrower to the Company under this Agreement, whether matured
or unmatured, liquidated or unliquidated, direct or indirect, absolute or
contingent, joint or several, due or to become due, now existing or hereafter
arising.
"Maturity Date" shall mean December 31, 2002.
2. Term Loan.
2.1 Loan. Subject to the terms and conditions of this Agreement, the
Company agrees to make a loan to Borrower upon the terms and conditions set
forth herein (the "Loan"). The aggregate principal amount of the Loan shall
be $2,600,647.03. Borrower may prepay all or part of the outstanding Loan
at any time without premium or penalty.
2.2 Interest. The Loan shall, from and after the date hereof, bear
interest at a per annum rate equal to the Interest Rate. Interest on the
unpaid balance of the Loan outstanding from time to time shall be payable
on the Maturity Date, when all unpaid principal, interest and other amounts
owing under this Agreement shall be due and payable.
1
2.3 Interest Computations. In the event the Interest Rate is changed
from time to time hereafter, the applicable rate of interest hereunder
shall be increased or decreased effective as of 12:01 a.m. on the day the
Interest Rate is changed, by an amount equal to such change in the Interest
Rate. All interest chargeable hereunder shall be computed on the basis of a
three hundred sixty (360) day year for the actual number of days elapsed.
2.4 Company's Books and Records. The amounts from time to time
outstanding hereunder, the applicable interest rate in respect of the Loan,
and the amount and date of any repayment hereunder, shall be noted on the
Company's books and records, which shall be conclusive evidence thereof,
absent manifest error; provided, however, any failure by the Company to
make any such notation, or any error in any such notation, shall not
relieve Borrower of its obligations to pay to the Company all amounts owing
to the Company under or pursuant to this Agreement when due in accordance
with the terms hereof.
3. Repayment.
3.1 Accrual and Payment of Interest and Maturity. The Loan, and all
principal and interest outstanding hereunder, shall mature and become due
and payable in full on the Maturity Date; provided, however, that should
the Borrower sell any shares of common stock of the Company at any time
while any portion of the Loan or other amounts are outstanding under this
Agreement, the full amount of the proceeds from such sale of common shall
be applied against and used to repay the Loan. In addition, should Borrower
maintain or establish a margin account after the date hereof with any
broker or investment banker at any time while any portion of the Loan is
outstanding hereunder, the full proceeds from any initial borrowing under
such margin account shall be used to repay the Loan or portion thereof.
Borrower agrees that, while any amounts are outstanding hereunder, Borrower
shall not borrow against any margin agreement, without applying the
proceeds of such borrowing to repayment of proceeds hereunder.
3.2 Payments on Non-Business Day. In the event that any payment of any
principal, interest, or any other amounts payable by Borrower under or
pursuant to this Agreement shall become due on any day which is not a
Business Day, such due date shall be extended to the next succeeding
Business Day, and, to the extent applicable, interest shall continue to
accrue and be payable at the applicable rate(s) for and during any such
extension.
3.3 Payment Procedures. All sums payable by Borrower to the Company
under or pursuant to this Agreement, whether principal, interest, or
otherwise, shall be paid, when due, directly to the Company at its
headquarters offices in Fremont, California, or at such other office of the
Company as the Company may designate in writing to Borrower from time to
time, in immediately available United States funds, and without setoff,
deduction or counterclaim.
3.4 Default Rate. Notwithstanding anything to the contrary set forth
herein, in the event that and so long as any Event of Default shall have
occurred and be continuing or exist, all indebtedness outstanding under
this Agreement shall bear interest at a rate equal to the then applicable
interest rate plus two percent (2%), which interest, in any case, shall be
payable upon demand.
2
3.5 Preferences. Borrower hereby expressly agrees that, to the extent
that the Company receives any payment or benefit of or otherwise upon any
of the indebtedness hereunder, and such payment or benefit, or any part
thereof, is subsequently invalidated, declared to be fraudulent or
preferential, set aside, or required to be repaid to a trustee, receiver,
or any other party under any bankruptcy act, state or federal law, common
law, or equitable cause, then to the extent of such payment or benefit, the
Indebtedness, or part thereof, intended to be satisfied shall be revived
and continued in full force and effect as if such payment or benefit had
not been made by Borrower or received by the Company, and, further, any
such repayment by the Company shall be added to and be deemed to be
additional indebtedness hereunder.
3.6 Proceeds Upon Sale of Company Common Stock. Borrower agrees that
until all amounts due hereunder are repaid in full, Borrower shall apply
the proceeds of any sale of any Company common stock to repayment of the
Loan. In the event of any other disposition, including any disposition
relating to a merger or acquisition involving the Company, all amounts due
hereunder shall be immediately due and payable and all proceeds relating to
any such transactions shall be applied to the repayment of all amounts due
under this Agreement.
4. Grant of Security Interest. Borrower grants and pledges to Company a
continuing security interest in all presently existing and hereafter acquired or
arising shares of common or preferred stock of the Company owned by Borrower
(the "Collateral"), and pledges the Collateral in order to secure prompt payment
of any and all Indebtedness and in order to secure prompt performance by
Borrower of each of its covenants and duties hereunder. Borrower hereby agrees
that it will not create or suffer to exist any security interest in the
Collateral at any time other than the interest of the Company hereunder other
than any pledge of or security interest in the Collateral to secure amounts due
under a margin account, so long as the proceeds of any borrowing under the
margin account are used to repay amounts due hereunder.
5. Events of Default; Remedies.
5.1 Events of Default. The occurrence or existence of any of the
following conditions or events shall constitute an "Event of Default"
hereunder:
(i) upon non-payment of any principal, interest or other sums due
to the Company under this Agreement;
(ii) default in the observance or performance of any of the
conditions, covenants or agreements of Borrower set forth in this
Agreement, and continuance thereof for a period of thirty (30) days;
3
(iii) if Borrower becomes insolvent or generally fails to pay, or
admits in writing its inability to pay, its debts as they mature, or
applies for, consents to, or acquiesces in the appointment of a
trustee, receiver, liquidator, conservator or other custodian for
Borrower or a substantial part of his property, or makes a general
assignment for the benefit of creditors; or files a voluntary petition
in bankruptcy or in the absence of such filing application, consent or
acquiescence, a trustee, receiver, liquidator, conservator or other
custodian is appointed for Borrower or for a substantial part of his
property, and the same is not discharged within thirty (30) days; or
any bankruptcy, reorganization, debt arrangement, or other proceedings
under any bankruptcy or insolvency law, or any dissolution or
liquidation proceeding, is instituted by or against Borrower, if
instituted against Borrower, the same is consented to or acquiesced in
by Borrower, or otherwise remains undismissed for thirty (30) days; or
any warrant of attachment is issued against any substantial part of
the property of Borrower, which is not released within thirty (30)
days of service thereof.
5.2 Rights and Remedies. Upon the occurrence and during the
continuance of an Event of Default, Company may, at its election, without
notice of its election and without demand, do any one or more of the
following, all of which are authorized by Borrower:
(i) declare all Indebtedness immediately due and payable;
(ii) terminate this Agreement as to any future liability or
obligation of the Company, but without affecting the Company's rights
and security interests in the Collateral, and the Indebtedness of
Borrower to the Company;
(iii) without notice to Borrower set off and apply to the
Indebtedness any and all indebtedness at any time owing to or for the
credit or the account of Borrower by the Company;
(iv) sell the Collateral at either a public or private sale, or
both, by way of one or more contracts or transactions, for cash or on
terms, in such manner and at such places (including Borrower's
premises) as Company determines is commercially reasonable, and apply
the proceeds thereof to the Indebtedness in whatever manner or order
Company deems appropriate.
Any deficiency that exists after disposition of the Collateral will be paid
immediately by Borrower.
6. Miscellaneous.
6.1 Fees and Costs. In the event Company incurs any costs or fees in
order to enforce payment of this Agreement or any portion thereof, the
Borrower agrees to pay to Company, in addition to such amounts as are owed
pursuant to this Agreement, such costs and fees, including, without
limitation, a reasonable sum for attorneys' fees.
6.2 Taxes and Fees. Should any tax (other than a tax based upon the
net income of the Company) or recording or filing fee become payable in
respect of this Agreement or any amendment, modification or supplement
hereof or thereof, Borrower agrees to pay such taxes (or reimburse the
Company therefor), together with any interest or penalties thereon, and
agree to hold the Company harmless with respect thereto; provided, however,
that Borrower shall have no liability for any tax or fees due solely as a
result of the Company's failure to comply with any provisions of applicable
law.
4
6.3 Governing Law. This Agreement, and the note entered into in connection
herewith, shall be governed by and construed and enforced in accordance with the
laws of the State of California.
6.4 Notices. All notices and other communications provided for herein or in
any document contemplated hereby, given hereunder or required by law to be
given, shall be in writing (unless expressly provided to the contrary). If
personally delivered, such notices shall be effective when delivered, and in the
case of mailing, such notices shall be effective two (2) Business Days after
sending by first class mail, postage prepaid, in each case addressed to the
parties as set forth on the signature page of this Agreement, or to such other
address as a party shall have designated to the other in writing in accordance
with this Section.
6.5 Successors and Assigns. This Agreement shall be binding upon and shall
inure to the benefit of Borrower and the Company and their respective successors
and assigns. The foregoing shall not authorize any assignment or transfer by
Borrower, of any of its respective rights, duties or obligations hereunder, such
assignments or transfers being expressly prohibited. The Company, however, may
freely assign, whether by assignment, participation or otherwise, its rights and
obligations hereunder.
6.6 Amendment and Waiver. No amendment or waiver of any provision of this
Agreement shall in any event be effective unless the same shall be in writing
and signed by each of the parties hereto and then such waiver or consent shall
be effective only in the specific instance(s) and for the specific time(s) and
purpose(s) for which given.
6.7 Severability. In case any one or more of the obligations of Borrower
under this Agreement, or any Note, shall be invalid, illegal or unenforceable in
any jurisdiction, the validity, legality and enforceability of the remaining
obligations of Borrower shall not in any way be affected or impaired thereby.
6.8 Complete Agreement, Conflicts. This Agreement and the note entered into
in connection herewith contain the entire agreement of the parties thereto and
supersedes all prior agreements and understandings related to the subject matter
hereof, and none of the parties shall be bound by anything not expressed in
writing.
6.9 Counterparts. This Agreement may be executed in any number of
counterparts and by different parties on separate counterparts, each of which,
when executed and delivered, shall be deemed to be an original, and all of
which, when taken together, shall constitute but one and the same Agreement.
5
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement
as of the date and year first set forth above.
THE COMPANY
XXXXXXX TECHNOLOGY, INC. BORROWER
By: ______________________________ By: ______________________________
Xxxx Xxxxxxx
Print Name:
Its:
6
