1
Exhibit 99.2
CREDIT AGREEMENT
TABLE OF CONTENTS
PAGE
----
ARTICLE I THE CREDIT AND LENDER WARRANT 1
SECTION 1.1 TERM LOAN 1
SECTION 1.2 INTEREST 2
SECTION 1.3 CONVERTIBILITY 2
SECTION 1.4 LENDER WARRANT 2
ARTICLE II BORROWER REPRESENTATIONS AND WARRANTIES 3
SECTION 2.1 ORGANIZATION, GOOD STANDING AND QUALIFICATION 3
SECTION 2.2 CAPITALIZATION AND VOTING RIGHTS 3
SECTION 2.3 SUBSIDIARIES 4
SECTION 2.4 AUTHORIZATION 4
SECTION 2.5 VALID ISSUANCE OF TERM NOTE, LENDER WARRANT,
PREFERRED STOCK AND COMMON STOCK 5
SECTION 2.6 CONSENTS 5
SECTION 2.7 LITIGATION 5
SECTION 2.8 PROPRIETARY INFORMATION AND INVENTIONS
AGREEMENTS 6
SECTION 2.9 PATENTS AND TRADEMARKS 6
SECTION 2.10 LEGAL COMPLIANCE 6
SECTION 2.11 COMPLIANCE WITH OTHER INSTRUMENTS 7
SECTION 2.12 AGREEMENTS; ACTION 7
SECTION 2.13 RELATED-PARTY TRANSACTIONS 9
SECTION 2.14 PERMITS 9
SECTION 2.15 DISCLOSURE 9
SECTION 2.16 REGISTRATION RIGHTS 9
SECTION 2.17 CORPORATE DOCUMENTS 9
SECTION 2.18 TITLE TO PROPERTY AND ASSETS 9
SECTION 2.19 FINANCIAL STATEMENTS; NO UNDISCLOSED LIABILITIES;
PROJECTIONS 10
SECTION 2.20 CHANGES IN CONDITIONS 10
SECTION 2.21 INSURANCE 11
SECTION 2.22 MINUTE BOOKS 11
SECTION 2.23 TAX RETURNS, PAYMENTS AND ELECTIONS 11
SECTION 2.24 ENVIRONMENTAL LAWS 12
SECTION 2.25 EMPLOYEES; EMPLOYEE COMPENSATION 12
SECTION 2.26 EMPLOYEE BENEFIT PLANS 12
ARTICLE III LENDER REPRESENTATIONS AND WARRANTIES 12
-1-
2
TABLE OF CONTENTS
(CONTINUED)
PAGE
----
SECTION 3.1 AUTHORIZATION 12
SECTION 3.2 PURCHASE ENTIRELY FOR OWN ACCOUNT 12
SECTION 3.3 DISCLOSURE OF INFORMATION 13
SECTION 3.4 INVESTMENT EXPERIENCE 13
SECTION 3.5 ACCREDITED LENDER 13
SECTION 3.6 RESTRICTED SECURITIES 13
SECTION 3.7 FURTHER LIMITATIONS ON DISPOSITION 13
SECTION 3.8 LEGENDS 14
ARTICLE IV CONDITIONS 15
SECTION 4.1 LENDER CONDITIONS OF EXTENSION OF CREDIT 15
SECTION 4.2 BORROWER CONDITION 16
ARTICLE V AFFIRMATIVE COVENANTS 16
SECTION 5.1 PUNCTUAL PAYMENTS 17
SECTION 5.2 ACCOUNTING RECORDS 17
SECTION 5.3 COMPLIANCE 17
SECTION 5.4 INSURANCE 17
SECTION 5.5 FACILITIES 17
SECTION 5.6 TAXES AND OTHER LIABILITIES 17
SECTION 5.7 NOTICE TO LENDER 17
ARTICLE VI NEGATIVE COVENANTS 18
SECTION 6.1 OTHER INDEBTEDNESS 18
SECTION 6.2 DIVIDENDS, DISTRIBUTIONS 18
SECTION 6.3 RELATED PARTY TRANSACTION 18
SECTION 6.4 STOCK OPTION PLAN 18
SECTION 6.5 MERGER, CONSOLIDATION, TRANSFER OF ASSETS 19
ARTICLE VII EVENTS OF DEFAULT 19
SECTION 7.1 EVENTS OF DEFAULT 19
SECTION 7.2 REMEDIES 20
ARTICLE VIII MISCELLANEOUS 20
SECTION 8.1 NO WAIVER 20
SECTION 8.2 SUCCESSORS, ASSIGNMENT 20
SECTION 8.3 SURVIVAL OF WARRANTIES 20
SECTION 8.4 GOVERNING LAW; CONSENT TO JURISDICTION 20
SECTION 8.5 COUNTERPARTS 20
SECTION 8.6 TITLES AND SUBTITLES 21
SECTION 8.7 FINDER'S FEE 21
SECTION 8.8 SUBORDINATION 21
-2-
3
TABLE OF CONTENTS
(CONTINUED)
PAGE
----
SECTION 8.9 EXPENSES 21
SECTION 8.10 AMENDMENT AND WAIVERS 21
SECTION 8.11 SEVERABILITY 21
SECTION 8.12 ENTIRE AGREEMENT 21
EXHIBITS
EXHIBIT A - Form of Term Sheet
EXHIBIT B - Form of Lender Warrant
EXHIBIT C - Schedule of Exceptions
EXHIBIT D - XxxxxXxx.xxx, Inc. Amended and Restated Certificate of Incorporation
EXHIBIT E - Borrower's Stock Option Plan
EXHIBIT F - Schedule of Borrower Stock Option Grants
EXHIBIT G - Investor Rights Agreement
EXHIBIT H - Parent Guarantee
EXHIBIT I - Opinion of Xxxxxxx Xxxxxxxxxxx Xxxxxx & Xxxxxxx LLP
-3-
4
CREDIT AGREEMENT
THIS AGREEMENT is entered into as of July 23, 1999 by and between
XxxxxXxx.xxx, Inc., a Delaware Corporation ("BORROWER"), Navidec, Inc., a
Colorado corporation ("PARENT"), and WFC Holdings Corporation, a Delaware
corporation ("LENDER" or "WFC").
RECITAL
-------
Borrower has requested from Lender the credit accommodation described
below, and Lender has agreed to provide said credit accommodation to Borrower on
the terms and conditions contained herein.
Prior to or simultaneous with the issuance of the Term Note and the
Lender Warrant (each, as defined below), Parent is transferring to Borrower all
its assets (including all related intellectual property and agreements) used in
the conduct of the XxxxxXxx.xxx business (the "XXXXXXXX.XXX BUSINESS"). Unless
otherwise indicated or the context requires otherwise, references to the
"BORROWER" shall be deemed to be references to the Borrower including the
XxxxxXxx.xxx Business after giving effect to such transfer.
NOW, THEREFORE, for valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, Lender and Borrower hereby agree as follows:
ARTICLE I
THE CREDIT AND LENDER WARRANT
-----------------------------
SECTION 1.1 TERM LOAN
.
(a) Term Loan. Subject to the terms and conditions of this
Agreement, Lender hereby agrees to make a loan to Borrower in the principal
amount of Fifteen Million dollars ($15,000,000) (the "TERM LOAN"). Borrower's
obligation to repay the Term Loan shall be evidenced by a promissory note
substantially in the form of EXHIBIT A attached hereto ("TERM NOTE"), all terms
of which are incorporated herein by this reference. The date upon which the Term
Loan is funded hereunder is referred to as the "CLOSING DATE."
(b) Repayment. Subject to the terms hereof and those contained in
the Term Note, the principal amount of the Term Loan and all accrued interest
thereon shall be repaid on December 31, 2004 (the "MATURITY DATE").
-4-
5
(c) MANDATORY PREPAYMENT. Lender can require mandatory prepayment of
the Term Note (including all interest accrued thereon) if:
(i) Borrower shall have not consummated a underwritten public
offering of Borrower's common stock having gross proceeds to the Borrower in
excess of $15 million by October 31, 2001;
(ii) if, in one or more transactions, the assets primarily used
or necessary to the XxxxxXxx.xxx Business are sold or transferred by Borrower or
if Parent fails to transfer any such asset owned by it within 10 days of request
therefor by Borrower or Lender; or
(iii) (A) J. Xxxxx Xxxxxx shall cease to be a director of
Borrower or a working active executive officer of Parent or (B) Xxxxxxx Xxxxxxx
shall cease to be a working active executive officer of Borrower (in either
case, other than as a result of death or reasonably as a result of physical or
mental incapacity).
(d) VOLUNTARY PREPAYMENT. Borrower may not prepay principal or
interest on the Term Loan.
SECTION 1.2 INTEREST
.
The outstanding principal balance of the Term Note, and accrued
interest thereon, shall bear interest at the rate of three percent (3%) per
annum; accrued semiannually and payable on the Maturity Date. The interest rate
reflects the benefit of the Lender Warrant.
SECTION 1.3 CONVERTIBILITY
.
Subject to restrictions under the Bank Holding Company Act (the "BHC
ACT") and the terms of the Transfer and Conversion Restriction Agreement of even
date herewith (the "CONVERSION AGREEMENT"), the Term Loan is convertible in
accordance with the terms of the Term Note.
SECTION 1.4 LENDER WARRANT
.
LENDER WARRANT. In consideration of the credit accommodation hereunder
by Lender to Borrower, and for other good and valuable consideration, Borrower
has issued to Lender a warrant in the form of EXHIBIT B attached hereto (the
"LENDER WARRANT"). The shares of Borrower common stock ("COMMON STOCK") acquired
upon exercise of the Lender Warrant are referred to as "WARRANT SHARES."
ARTICLE II
-5-
6
BORROWER REPRESENTATIONS AND WARRANTIES
The Parent and the Borrower hereby, jointly and severally, represent
and warrant to the Lender that, except as set forth on the Schedule of
Exceptions attached as EXHIBIT C (the "SCHEDULE OF EXCEPTIONS"):
SECTION 2.1 ORGANIZATION, GOOD STANDING AND QUALIFICATION
. The Borrower is a corporation established for the purpose of
conducting the XxxxxXxx.xxx Business. The Parent is duly organized, validly
existing and in good standing under the laws of the State of Colorado and has
all requisite corporate power and authority to own and operate the XxxxxXxx.xxx
Business and to execute and deliver this Agreement, the Investor Rights
Agreement, attached hereto as EXHIBIT G (the "RIGHTS AGREEMENT"), and the Parent
Guarantee, attached hereto as EXHIBIT H (the "PARENT GUARANTEE"). The Borrower
is duly organized, validly existing and in good standing under the laws of the
State of Delaware and has all requisite corporate power and authority to own and
operate its property and assets (including the XxxxxXxx.xxx Business) and to
carry on its business as proposed to be conducted, to execute and deliver this
Agreement, and the Term Note, the Lender Warrant, the Investor Rights Agreement,
the Parent Guarantee and the Conversion Agreement (collectively, the "ANCILLARY
AGREEMENTS"), to issue and sell the Series A Preferred Stock issuable upon
conversion of the Term Note, to issue and sell the Common Stock issuable upon
conversion of the Series A Preferred Stock, to issue and sell the Common Stock
issuable upon exercise of the Lender Warrant, and to carry out the provisions of
this Agreement and each Ancillary Agreement. Each of the Parent (as it relates
to the XxxxxXxx.xxx Business) and the Borrower is duly qualified to transact
business and is in good standing in each jurisdiction in which the failure so to
qualify would have a material adverse effect on the XxxxxXxx.xxx Business (in
the case of Parent) or its business, properties or financial condition (in the
case of the Borrower).
SECTION 2.2 CAPITALIZATION AND VOTING RIGHTS
. The authorized capital of the Borrower consists, or will consist
immediately prior to the Closing, of:
(a) PREFERRED STOCK. Six Million Four Hundred Thousand (6,400,000)
shares of Series A Preferred Stock (the "SERIES A PREFERRED STOCK"), of which
(A) Three Million Two Hundred Thousand (3,200,000) shares have been designated
Series A-1 Voting Preferred Stock (the "SERIES A-1 PREFERRED STOCK"), none of
which are outstanding prior to the Closing and all of which have been reserved
for potential issuance under the Term Note and (B) Three Million Two Hundred
Thousand (3,200,000) have been designated Series A-2 Non-Voting Preferred Stock
(the "SERIES A-2 PREFERRED STOCK") none of which are outstanding prior to the
Closing and all of which have been reserved for potential issuance under the
Term Note. The rights, privileges and preferences of the Series A Preferred
Stock will be as stated in the Borrower's Amended and Restated Certificate of
Incorporation in the form of EXHIBIT D attached hereto (the "CERTIFICATE").
(b) COMMON STOCK. Twenty Eight Million Six Hundred Thousand
(28,600,000) shares of Common Stock (the "COMMON STOCK"), of which (A)
Twenty-Three Million Six Hundred Thousand
-6-
7
(23,600,000) have been designated voting Common Stock of which Twelve Million
Eight Hundred Thousand (12,800,000) shares are issued and outstanding and (B)
Five Million (5,000,000) shares have been designated non-voting Common Stock of
which no shares are issued and outstanding. All outstanding shares of Common
Stock are voting Common Stock owned by Parent. The outstanding shares of Common
Stock are all duly and validly authorized and issued, fully paid and
nonassessable, and were issued in compliance with the registration or
qualification provisions of the Securities Act of 1933, as amended (the "ACT")
and any relevant state securities laws or pursuant to valid exemptions
therefrom. The Borrower has reserved Two Million (2,000,000) shares of its
Common Stock for issuance under its 1999 Stock Option Plan (the "BORROWER'S
STOCK OPTION PLAN") in the form attached hereto as EXHIBIT E. The options
outstanding under Borrower's Stock Option are owned by the individuals in the
numbers specified in EXHIBIT F. All such options vest as described in the
Schedule of Exceptions.
(c) Except for (A) the conversion privileges of the Term Note and
the exercise privileges under the Lender Warrant, (B) the rights provided in the
Investor Rights Agreement and (C) as set forth on the Schedule of Exceptions,
there are not outstanding any options, warrants, rights (including conversion or
preemptive rights or rights of first refusal) or obligations for the purchase or
acquisition from Parent or the Borrower of any shares of the Borrower's capital
stock. Except as set forth on the Schedule of Exceptions, neither the Parent nor
the Borrower is a party or subject to any agreement or understanding and, to the
best of the Borrower's knowledge, there is no agreement or understanding between
any other persons or entities which affects or relates to the voting or giving
of written consents with respect to any Borrower security or by a director of
the Borrower.
SECTION 2.3 SUBSIDIARIES
. Except as set forth in the Schedule of Exceptions, the Borrower does
not presently own or control, directly or indirectly, any interest in any other
corporation, association, or other business entity. The Borrower is not a
participant in any joint venture, partnership, or similar arrangement.
SECTION 2.4 AUTHORIZATION
. All corporate action on the part of the Parent, the Borrower and
their respective officers, directors and stockholders necessary for the
authorization, execution and delivery of this Agreement and the Ancillary
Agreements to which it is a party, the performance of all obligations, as
applicable, of the Parent and the Borrower hereunder and thereunder, and the
authorization, issuance (or reservation for issuance), sale and delivery of the
Term Note and the Lender Warrant being sold hereunder, the Borrower Common Stock
issuable upon the exercise of the Lender Warrant, the Series A Preferred Stock
issuable upon the conversion of the Term Note, and the Common Stock issuable
upon the conversion of the Series A Preferred Stock has been taken or will be
taken prior to the Closing, and this Agreement and the Ancillary Agreements,
constitute valid and legally binding obligations, as applicable, of the Parent
and the Borrower, enforceable in accordance with their respective terms, except
(i) as limited by applicable bankruptcy, insolvency, reorganization, moratorium,
and other laws of general application affecting enforcement of creditors' rights
generally, (ii) as limited by laws relating to the availability of specific
performance, injunctive relief, or other equitable remedies, and (iii) to the
extent the indemnification provisions contained in the
-7-
8
Rights Agreement may be limited by applicable federal or state securities laws.
SECTION 2.5 VALID ISSUANCE OF TERM NOTE, LENDER WARRANT, PREFERRED
STOCK AND COMMON STOCK
. The Term Note and the Lender Warrant when issued, sold and delivered
in accordance with the terms of this Agreement for the consideration expressed
herein, will be validly issued and fully paid and will be free of restrictions
on transfer other than restrictions on transfer under this Agreement, the Rights
Agreement, the Conversion Agreement, and the BHC Act and, based in part upon the
representations of the Lender in this Agreement, will be issued in compliance
with the registration and qualification provisions of all applicable federal and
state securities laws. The Common Stock issuable upon exercise of the Lender
Warrant has been duly and validly reserved for issuance and, upon issuance in
accordance with the terms of the Lender Warrant, will be validly issued, fully
paid and nonassessable and will be free of restrictions on transfer other than
restrictions on transfer under this Agreement and the Rights Agreement and under
applicable securities laws and the BHC Act. The Series A Preferred Stock
issuable upon conversion of the Term Note (the "NOTE SHARES") and the Common
Stock issuable upon conversion of the Series A Preferred Stock (the "CONVERSION
SHARES") have been duly and validly reserved for issuance and, upon issuance in
accordance with the applicable terms of the Term Note or the Certificate, as the
case may be, will be validly issued, fully paid and nonassessable and will be
free of restrictions on transfer other than restrictions on transfer under this
Agreement, the Rights Agreement and the Conversion Agreement and under
applicable securities laws and the BHC Act.
SECTION 2.6 CONSENTS
. Except as set forth on the Schedule of Exceptions, no consent,
approval, order or authorization of, or registration, qualification,
designation, declaration or filing with, any federal, state or local
governmental authority on the part of the Borrower or any other person or entity
not a party to this Agreement is required in connection with the consummation of
the transactions contemplated by this Agreement (including the transfer of the
XxxxxXxx.xxx Business to Borrower), except for (i) the filing pursuant to
Section 25102(f) of the California Corporate Securities Law of 1968, as amended,
and the rules thereunder, which filing will be effected within 15 days of
Closing or within 15 days of the issuance of the Note Shares or Conversion
Shares, as the case may be, and (ii) such consents as shall have been obtained
prior to the Closing and are described in reasonable detail in Section 2.6 of
the Schedule of Exceptions hereunder.
SECTION 2.7 LITIGATION
. There is no action, suit, proceeding or investigation pending or to
Borrower's knowledge currently threatened against the Parent or the Borrower
that questions the validity of this Agreement or the Ancillary Agreements, or
the right of the Parent or the Borrower, as applicable, to enter into any such
agreement, or to consummate the transactions contemplated hereby or thereby
(including the transfer of the XxxxxXxx.xxx Business to the Borrower), or that
might result, either individually or in the aggregate, in any material adverse
changes in the assets, condition or affairs of the Borrower (including the
XxxxxXxx.xxx Business), financially or otherwise, or any change in the
-8-
9
current equity ownership of the Borrower. There is no action, suit, proceeding
or investigation by the Parent relating to the XxxxxXxx.xxx Business or the
Borrower currently pending or that the Parent or the Borrower intends to
initiate.
SECTION 2.8 PROPRIETARY INFORMATION AND INVENTIONS AGREEMENTS
. Each employee, officer and consultant of the XxxxxXxx.xxx Business
and the Borrower has executed a Proprietary Information and Inventions Agreement
in the form provided to counsel to Lender. Neither the Parent nor the Borrower
is aware that any of the XxxxxXxx.xxx Business' employees or the Borrower's
employees, officers or consultants are in violation thereof, and the Borrower
will use its best efforts to prevent any such violation. Neither the Parent nor
the Borrower is aware that any officer or key employee related to the
XxxxxXxx.xxx Business or the Borrower intends to terminate employment with the
Parent or the Borrower, nor does the Parent or the Borrower have a present
intention to terminate the employment of any of the foregoing. Subject to
general principles relating to wrongful termination of employees, the employment
of each officer and employee of the Borrower or Parent (related to the
XxxxxXxx.xxx Business) is terminable at the will of the Parent or the Borrower.
SECTION 2.9 PATENTS AND TRADEMARKS
. To the best of its knowledge, at the Closing, the Borrower owns or
possesses sufficient legal rights to all patents, trademarks, servicemarks,
trade names, copyrights, trade secrets, licenses, information, proprietary
rights and processes necessary for its business as now conducted and as proposed
to be conducted without any conflict with or infringement of the rights of
others. The Schedule of Exceptions contains a complete list of patents and
pending patent applications of the Parent (related to the XxxxxXxx.xxx Business)
and the Borrower. Neither the Parent (as related to the XxxxxXxx.xxx Business)
nor the Borrower has received any oral or written communications alleging that
it has violated or that its business as currently conducted or proposed to be
conducted would violate any of the patents, trademarks, service marks, trade
names, copyrights or trade secrets or other proprietary rights of any other
person or entity. Neither Parent (as related to the XxxxxXxx.xxx Business) nor
the Borrower is aware that any of its employees is obligated under any contract
(including licenses, covenants or commitments of any nature) or other agreement,
or subject to any judgment, decree or order of any court or administrative
agency, that would interfere with the use of his or her best efforts to promote
the interests of the Borrower (including the XxxxxXxx.xxx Business) or that
would conflict with the Borrower's business as proposed to be conducted. Neither
the execution nor delivery of this Agreement nor any of the Ancillary
Agreements, nor the carrying on of the Parent's or the Borrower's business by
the employees of the Parent (related to the XxxxxXxx.xxx Business) or the
Borrower, nor the conduct of the Borrower's business as proposed, will, to the
best of the Parent's or the Borrower's knowledge, conflict with or result in a
breach of the terms, conditions or provisions of, or constitute a default under,
any contract, covenant or instrument under which any of such employees is now
obligated. Neither the Parent nor the Borrower believes it is or will be
necessary to utilize any inventions of any of XxxxxXxx.xxx Business employees
(or people it currently intends to hire) made prior to their employment by the
Parent or the Borrower.
SECTION 2.10 LEGAL COMPLIANCE
-9-
10
. Each of the Parent (as it relates to the XxxxxXxx.xxx Business) and
the Borrower has complied in all material respects with all applicable laws
(including rules, regulations, codes, plans, injunctions, judgments, orders,
decrees, rulings, and charges thereunder) of federal, state, regional, local,
and foreign governments (and all agencies thereof), and no action, suit,
proceeding, hearing, investigation, charge, complaint, claim, demand, or notice
has been filed or commenced against any of them alleging any failure so to
comply.
SECTION 2.11 COMPLIANCE WITH OTHER INSTRUMENTS
. Neither the Borrower nor Parent is in violation or default of any
provision of its Certificate or Bylaws, or in any material respect of any
instrument, judgment, order, writ, decree or contract to which it is a party or
by which it is bound, or, to the best of its knowledge, of any provision of any
federal or state statute, rule or regulation applicable to it. The execution,
delivery and performance by Parent and the Borrower, as applicable, of this
Agreement, and the Ancillary Agreements to which it is party and the
consummation of the transactions contemplated hereby and thereby (including
Parent's transfer of the XxxxxXxx.xxx Business to the Borrower) will not result
in any such violation or be in conflict with or constitute, with or without the
passage of time and giving of notice, either a default under any such provision,
instrument, judgment, order, writ, decree or contract or an event that results
in the creation of any lien, charge or encumbrance upon any assets of the Parent
related to the XxxxxXxx.xxx Business or the Borrower or the suspension,
revocation, impairment, forfeiture, or nonrenewal of any material permit,
license, authorization, or approval applicable to the XxxxxXxx.xxx Business or
the Borrower, its business or operations or any of its assets or properties.
SECTION 2.12 AGREEMENTS; ACTION
.
(a) Except for agreements set forth on the Schedule of Exceptions,
or except as explicitly contemplated by this Agreement and the Ancillary
Agreements, there are no agreements, understandings or proposed transactions
between the Borrower and any of its officers, directors, affiliates, or any
affiliate thereof.
(b) Borrower is not party to any agreement with any financial
institution which provides for delivery of a DriveOff solution prior to, or on
terms more favorable than, the solution proposed to be delivered to Xxxxx Fargo
& Co. under the agreements between it and the Company.
(c) Except as expressly contemplated by this Agreement or as set
forth on the Schedule of Exceptions, there are no agreements, understandings,
instruments, contracts, proposed transactions, judgments, orders, writs or
decrees to which the XxxxxXxx.xxx Business or the Borrower is a party or by
which it is bound that may involve (i) obligations (contingent or otherwise) of,
or payments to the XxxxxXxx.xxx Business or the Borrower in excess of, ten
thousand dollars ($10,000), or (ii) the license of any patent, copyright, trade
secret or other proprietary right to or from the XxxxxXxx.xxx Business or the
Borrower, or (iii) provisions restricting, affecting or providing preferential
terms with respect to the development, manufacture or distribution of the
-10-
11
Borrower's products or services (including the XxxxxXxx.xxx Business' products
and services), or (iv) indemnification by the Parent (as it relates to the
XxxxxXxx.xxx Business) or the Borrower with respect to infringements of
proprietary rights.
(d) With respect to the Borrower's obligations thereunder and, to
the Borrower's and Parent's knowledge, with respect to the obligations of the
other parties thereto, all of the contracts, agreements and instruments set
forth or required to be set forth on the attached Schedule of Exceptions are
valid, binding and enforceable in accordance with their respective terms,
subject to laws of general application relating to bankruptcy, insolvency, and
the relief of debtors and other laws of general application effecting
enforcement of creditors' rights generally, rules of law governing specific
performance, injunctive relief or other equitable remedies, and limitations of
public policy. Each of the Parent (as it relates to the XxxxxXxx.xxx Business)
and the Borrower has performed all material obligations required to be performed
by it under the contracts, agreements and instruments listed or required to be
listed on the attached Schedule of Exceptions and is not in default under or in
breach of nor in receipt of any claim of default or breach under any such
contract, agreement or instrument; no event has occurred which with the passage
of time or the giving of notice or both would result in a default, breach or
event of noncompliance by the Parent (as it relates to the XxxxxXxx.xxx
Business) or the Borrower under any contract, agreement or instrument listed or
required to be listed on the attached Schedule of Exceptions; and neither the
Parent nor the Borrower has knowledge of any breach or anticipated breach by the
other parties to any contract, agreement, instrument or commitment listed or
required to be listed on the attached Schedule of Exceptions.
(e) A true and correct copy of each of the written instruments,
plans, contracts and agreements and an accurate description of each of the oral
arrangements, contracts and agreements which are referred to on the attached
Schedule of Exceptions have been made available to the Lender's counsel.
(f) The Borrower has not declared or paid any dividends or
authorized or made any distribution upon or with respect to any class or series
of its capital stock. The Borrower (including the XxxxxXxx.xxx Business) has not
(i) except as set forth on the Schedule of Exceptions, incurred or been
transferred by Parent any indebtedness for money borrowed or any other
liabilities in excess of five thousand dollars ($5,000) in the aggregate, (ii)
made any loans or advances to any person, other than ordinary advances for
travel expenses, or (iii) sold, exchanged or otherwise disposed of any of its
assets or rights, other than the sale of its inventory in the ordinary course of
business.
(g) The Borrower (including the XxxxxXxx.xxx Business) is not a
party to and is not bound by any contract, agreement or instrument, or subject
to any restriction under its Certificate or Bylaws, that adversely affects its
business as now conducted or as proposed to be conducted, its properties or its
financial condition (including exclusive licensing, services or distribution
agreements and non-compete agreements).
(h) The Borrower has no current plans to (i) consolidate with or
merge into any other corporation, (ii) sell, convey or dispose of all or
substantially all of the assets of the Borrower or engage in a series of related
transactions in which more than fifty percent (50%) of the voting power of the
Borrower would be disposed of with any corporation, partnership, association or
other
-11-
12
business entity or individual, or (iii) engage in any other form of acquisition,
liquidation, dissolution or winding up the Borrower (other than the acquisition
of the XxxxxXxx.xxx Business).
SECTION 2.13 RELATED-PARTY TRANSACTIONS
. None of Parent, any employee, officer, or director of the Parent or
the Borrower or member of any such individual's immediate family is indebted to
the Borrower (including the XxxxxXxx.xxx Business), nor is the Borrower indebted
(or committed to make loans or extend or guarantee credit) to any of them.
Except as a result of their ownership of Parent or Borrower securities or
options, none of such persons has any direct or indirect ownership interest in
any firm or corporation with which the Borrower (including the XxxxxXxx.xxx
Business) is affiliated or with which it has a business relationship, or, to the
best of the Parent's or the Borrower's knowledge, any firm or corporation that
competes with the Borrower (including the XxxxxXxx.xxx Business), except that
such individuals or entities may own nominal amounts (up to one percent (1%)) of
stock in publicly traded companies that may compete with the Borrower. Except as
a result of their ownership of Parent or Borrower securities or options, no
officer, director or member of the immediate family of any officer or director
of the Parent or the Borrower is directly or indirectly interested in any
material contract with the Borrower.
SECTION 2.14 PERMITS
. The Borrower (including the XxxxxXxx.xxx Business) has all
franchises, permits, licenses, and any similar authority necessary for the
conduct of its business as now being conducted by it, the lack of which could
materially and adversely affect the business, properties or financial condition
of the Borrower, and the Borrower believes it can obtain, without undue burden
or expense, any similar authority for the conduct of its business as planned to
be conducted. The Borrower (including the XxxxxXxx.xxx Business) is not in
default in any material respect under any of such franchises, permits, licenses,
or other similar authority.
SECTION 2.15 DISCLOSURE
. Parent and the Borrower have fully provided Lender with all the
information that Lender has requested for deciding whether to lend hereunder and
all information which the Borrower believes is reasonably necessary to enable a
reasonable Lender to make such decision. Neither this Agreement nor any other
statements or certificates made or delivered in connection herewith contains any
untrue statement of a material fact or omits to state a material fact necessary
to make the statements herein or therein not misleading.
SECTION 2.16 REGISTRATION RIGHTS
. Except as provided in the Rights Agreement, the Borrower has not
granted or agreed to grant any registration rights, including piggyback rights,
to any person or entity.
SECTION 2.17 CORPORATE DOCUMENTS
. Except for amendments necessary to satisfy representations and
warranties or conditions
-12-
13
contained herein, the Certificate and Bylaws of the Borrower are in the form
previously provided to counsel for the Lender.
SECTION 2.18 TITLE TO PROPERTY AND ASSETS
. At Closing, the Borrower owns its property and assets (including the
XxxxxXxx.xxx Business) free and clear of all mortgages, liens, loans and
encumbrances, except such encumbrances and liens that arise in the ordinary
course of business and do not materially impair its ownership or use of such
property or assets. The assets acquired at or prior to Closing in connection
with Parent's transfer to the Borrower of the XxxxxXxx.xxx Business constitute
substantially all the assets, properties and right necessary to conduct the
XxxxxXxx.xxx Business, which immediately prior to such Closing are used in
connection with the conduct of the XxxxxXxx.xxx Business as conducted by Parent.
With respect to the property and assets it leases, the Borrower (including the
XxxxxXxx.xxx Business) is in compliance with such leases and, to the best of its
knowledge, holds a valid leasehold interest free of any liens, claims or
encumbrances.
SECTION 2.19 FINANCIAL STATEMENTS; NO UNDISCLOSED LIABILITIES;
PROJECTIONS
.
(a) The Borrower has delivered to Lender its initial unaudited
balance sheet (giving effect to the acquisition of the XxxxxXxx.xxx Business)
(the "INITIAL BALANCE SHEET"). The Borrower (including the XxxxxXxx.xxx
Business) is not a guarantor or indemnitor of any indebtedness of any other
person, firm or corporation. The Borrower maintains a standard system of
accounting established and administered in accordance with GAAP. Except for
obligations incurred in the ordinary course of business which are not material,
the Borrower does not have any liability, indebtedness, obligation, expense,
claim, deficiency, guaranty or endorsement of any type, whether accrued,
absolute, contingent, matured, unmatured or other (whether or not required to be
reflected in financial statements in accordance with GAAP), which individually
or in the aggregate, (i) has not been reflected in the Initial Balance Sheet, or
(ii) have not been specifically described in this Agreement or in the Schedule
of Exceptions and specifically identified herein or therein as not being
included in the Initial Balance Sheet.
(b) The Borrower has provided to the Lender projected financial
information for the three year period ended December 31, 2001 (the "PROJECTED
FINANCIAL STATEMENTS"). The Projected Financial Information was prepared by
Parent and the Borrower in good faith and based on assumptions deemed reasonable
by the Parent and the Borrower.
SECTION 2.20 CHANGES IN CONDITIONS
. Since December 31, 1998 or in the case of the Borrower the date of
its incorporation, there has not been:
(a) any sale, assignment or transfer of any patents, trademarks,
copyrights, trade secrets or other intangible assets owned by the Parent (as it
relates to the XxxxxXxx.xxx Business other than the transfer of the XxxxxXxx.xxx
Business to Borrower) or the Borrower or sale of material amount
-13-
14
of assets;
(b) any resignation or termination of employment of any key officer
of the Borrower or the XxxxxXxx.xxx Business;
(c) any mortgage, pledge, transfer of a security interest in, or
lien, created by the Borrower or Parent, with respect to any of the Borrower's
or the XxxxxXxx.xxx Business' material properties or assets, except liens for
taxes not yet due or payable;
(d) any loans or guarantees made by the Parent (as it relates to the
XxxxxXxx.xxx Business) or the Borrower to or for the benefit of its employees,
officers or directors, or any members of their immediate families, other than
travel advances and other advances made in the ordinary course of its business;
(e) any declaration, setting aside or payment or other distribution
in respect of any of the Borrower's capital stock, or any direct or indirect
redemption, purchase or other acquisition of any of such stock by the Borrower;
or
(f) to Parent's or Borrower's knowledge, any other event or
condition of any character which might materially and adversely affect the
assets, financial condition, properties, operating results or business of the
XxxxxXxx.xxx Business or the Borrower.
SECTION 2.21 INSURANCE
. The Borrower (including the XxxxxXxx.xxx Business) has in full force
and effect fire and casualty insurance policies, with extended coverage,
sufficient in amount (subject to reasonable deductibles) to allow it to replace
any of its properties that might be damaged or destroyed.
SECTION 2.22 MINUTE BOOKS
. The minute books of the Borrower provided to counsel to WFC contain a
complete summary of all meetings of directors and stockholders and all actions
by written consent without a meeting by the directors and stockholders since the
time of incorporation and reflect all actions by the directors (and any
committee of the directors) and stockholders referred to in such minutes
accurately in all material respects.
SECTION 2.23 TAX RETURNS, PAYMENTS AND ELECTIONS
. Each of the Parent (as it may impact the XxxxxXxx.xxx Business) and
the Borrower has filed all tax returns and reports as required by law. These
returns and reports are true and correct in all material respects. Each of the
Parent (as it may impact the XxxxxXxx.xxx Business) and the Borrower has paid
all taxes and other assessments due, except those contested by it in good faith.
The provision for taxes, if any, of the Borrower as shown in the Initial Balance
Sheet is adequate for taxes due or accrued as of the date thereof. The Borrower
has not elected pursuant to the Internal Revenue Code of 1986, as amended (the
"CODE"), to be treated as an S corporation or a collapsible corporation pursuant
to Section 341(f) of Section 1362(a) of the Code. Neither the Parent (as it may
-14-
15
impact the XxxxxXxx.xxx Business) nor the Borrower has ever had any tax
deficiency proposed or assessed against it or executed any waiver of any statute
of limitations on the assessment or collection of any tax or governmental
charge. To the Parent's and Borrower's knowledge, as they relate to the
XxxxxXxx.xxx Business, none of the Parent's federal income tax returns and none
of its state income or franchise tax or sales or use tax returns has ever been
audited by governmental authorities. Since its incorporation, the Borrower has
made adequate provisions on its books of account for all taxes, assessments and
governmental charges with respect to its business, properties and operations for
such period. Each of the Parent (as it relates to the XxxxxXxx.xxx Business and
its employees) and the Borrower has withheld or collected from each payment made
to each of its employees, the amount of all taxes (including, but not limited
to, federal income taxes, Federal Insurance Contribution Act taxes and Federal
Unemployment Tax Act taxes) required to be withheld or collected therefrom, and
has paid the same to the proper tax receiving officers or authorized
depositaries.
SECTION 2.24 ENVIRONMENTAL LAWS
. To the best of its knowledge, the Borrower (including the
XxxxxXxx.xxx Business) is not in violation of and has no liability or potential
liability under any applicable statute, law, or regulation relating to the
environment or occupational health and safety, and to the best of its and
Parent's knowledge, with respect to the XxxxxXxx.xxx Business, no material
expenditures are or will be required in order to comply with any such existing
statute, law, or regulation.
SECTION 2.25 EMPLOYEES; EMPLOYEE COMPENSATION
. To its knowledge, each of the Parent (as related to the XxxxxXxx.xxx
Business) and the Borrower has complied in all material respects with all
applicable state and federal equal employment opportunity and other laws related
to employment. To the Parent's and the Borrower's knowledge, no employee of the
XxxxxXxx.xxx Business or the Borrower is or will be in violation of any
judgment, decree or order, or any term of any employment contract, patent
disclosure agreement or other contract or agreement relating to the relationship
of any such employee with the Borrower or any other party because of the nature
of the business conducted or to be conducted by the Borrower or to the
utilization by the employee of his best efforts with respect to such business.
The Borrower is not party to or bound by any currently effective employment
contract, deferred compensation agreement, bonus plan, incentive plan, profit
sharing plan, retirement agreement, or other employee compensation agreement,
except the Borrower's Stock Option Plan and offer letters in the ordinary course
of business.
SECTION 2.26 EMPLOYEE BENEFIT PLANS
. Other than the Borrower Stock Option, the Borrower does not have any
Employee Benefit Plan as defined in the Employee Retirement Income Security Act
of 1974, as amended.
ARTICLE III
LENDER REPRESENTATIONS AND WARRANTIES
-------------------------------------
-15-
16
Lender hereby represents and warrants that:
SECTION 3.1 AUTHORIZATION
. Lender has full power and authority to enter into this Agreement and
the Ancillary Agreements to which it is party, and each such agreement
constitutes its valid and legally binding obligation, enforceable in accordance
with its terms, except (i) as limited by applicable bankruptcy, insolvency,
reorganization, moratorium, and other laws of general application affecting
enforcement of creditors' rights generally, (ii) as limited by laws relating to
the availability of specific performance, injunctive relief, or other equitable
remedies, and (iii) to the extent the indemnification provisions contained in
the Investor Rights Agreement may be limited by applicable federal or state
securities laws.
SECTION 3.2 PURCHASE ENTIRELY FOR OWN ACCOUNT
. This Agreement is made with the Lender in reliance upon its
representation to the Borrower, which by Lender's execution of this Agreement
Lender hereby confirms, the Term Note and the Lender Warrant to be received by
Lender, the shares of Common Stock to be received upon exercise of the Lender
Warrant, the shares of Series A Preferred Stock issuable upon the conversion of
the Term Note, and the shares of Common Stock issuable upon the conversion of
the Series A Preferred Stock (collectively, the "SECURITIES") will be acquired
for investment for Lender's own account, not as a nominee or agent, and not with
a view to the resale or distribution of any part thereof, and that Lender has no
present intention of selling, granting any participation in, or otherwise
distributing the same. By executing this Agreement, Lender further represents
that it does not have any contract, undertaking, agreement or arrangement with
any person to sell, transfer or grant participation to such person or to any
third person, with respect to any of the Securities.
SECTION 3.3 DISCLOSURE OF INFORMATION
. Lender believes it has received all the information it considers
necessary or appropriate for deciding whether to make the Term Loan hereunder
and to purchase the Lender Warrant. Lender further represents that it has had an
opportunity to ask questions and receive answers from the Borrower regarding the
terms and conditions of the Term Loan and the Lender Warrant and the business,
properties and financial condition of the Borrower. The foregoing, however, does
not limit or modify the representations and warranties of the Borrower or Parent
in Section 2 of this Agreement or the right of Lender to rely thereon.
3.4 INVESTMENT EXPERIENCE
. The Lender is an Lender in securities of companies in the development
stage and acknowledges that it is able to fend for itself, can bear the economic
risk of its investment, and has such knowledge and experience in financial or
business matters that it is capable of evaluating the merits and risks of the
Term Loan and the Lender Warrant. Lender has not been organized solely for the
purpose of acquiring the Term Loan and the Lender Warrant.
-16-
17
SECTION 3.5 ACCREDITED LENDER
. Lender is an "ACCREDITED LENDER" within the meaning of Securities and
Exchange Commission ("SEC") Rule 501 of Regulation D, as presently in effect.
SECTION 3.6 RESTRICTED SECURITIES
. Lender understands that the Securities it is purchasing are
characterized as "RESTRICTED SECURITIES" under the federal securities laws
inasmuch as they are being acquired from the Borrower in a transaction not
involving a public offering and that under such laws and applicable regulations
such securities may be resold without registration under the Act, only in
certain limited circumstances. In addition, Lender represents that it is
familiar with SEC Rule 144, as presently in effect, and understands the resale
limitations imposed thereby and by the Act. Lender understands that no public
market presently exists for the Term Note, the Lender Warrant, the Warrant
Shares or Common Stock of the Borrower, and there can be no assurance that any
such market will be created.
SECTION 3.7 FURTHER LIMITATIONS ON DISPOSITION
. Without in any way limiting the above, Lender further agrees not to
make any disposition of all or any portion of the Securities unless, and until
the transferee has agreed in writing for the benefit of the Borrower to be bound
by this Section 3 and Section 6 of this Agreement and the Rights Agreement, and:
(a) There is then in effect a Registration Statement under the Act
covering such proposed disposition and such disposition is made in accordance
with such Registration Statement; or
(b) Lender shall have notified the Borrower of the proposed
disposition and shall have furnished the Borrower with a detailed statement of
the circumstances surrounding the proposed disposition, and (ii) if reasonably
requested by the Borrower, Lender shall have furnished the Borrower with an
opinion of counsel, reasonably satisfactory to the Borrower that such
disposition will not require registration of such shares under the Act. It is
agreed that the Borrower will not require opinions of counsel for transactions
made pursuant to Rule 144 except in unusual circumstances.
(c) Notwithstanding the provisions of paragraphs (a) and (b) above,
no such Registration Statement or opinion of counsel shall be necessary for a
transfer by a partnership to a partner of such partnership or a retired partner
of such partnership who retires after the date hereof, or to the estate of any
such partner or retired partner or the transfer by gift, will or intestate
succession of any partner to his or her spouse or to the siblings, lineal
descendants or ancestors of such partner or his or her spouse, if the transferee
agrees in writing to be subject to the terms hereof to the same extent as
Lender.
SECTION 3.8 LEGENDS
. It is understood that the certificates evidencing the Securities
(other than the Term Note)
-17-
18
shall bear the following legend:
"The securities represented hereby have been acquired for
investment and have not been registered under the Securities Act of
1933, as amended. Such securities may not be sold or transferred in the
absence of such registration or unless the Corporation receives an
opinion of counsel reasonably acceptable to it stating that such sale
or transfer is exempt from the registration and prospectus delivery
requirements of said Act. Copies of the agreements covering the
purchase of these shares and restricting their transfer may be obtained
at no cost by written request made by the holder of record of this
Certificate to the Secretary of the Corporation at the principal
executive offices of the Corporation."
"The securities represented by this Certificate are subject to
the terms and conditions of the Corporation's Investor Rights Agreement
dated August ___, 1999. A copy of such agreement may be obtained
without charge upon written request to the Corporation at its principal
place of business."
ARTICLE IV
CONDITIONS
----------
SECTION 4.1 LENDER CONDITIONS OF EXTENSION OF CREDIT
. The obligation of Lender to extend the credit contemplated by this
Agreement is subject to the fulfillment to Lender's satisfaction of all of the
following conditions:
(a) REPRESENTATIONS AND WARRANTIES. The representations and
warranties of the Parent and the Borrower contained in Article II shall be true
on and as of the Closing with the same effect as though such representations and
warranties had been made on and as of the date of such Closing.
(b) PERFORMANCE. The Parent and the Borrower shall have performed
and complied with all agreements, obligations and conditions contained in this
Credit Agreement that are required to be performed or complied with by it on or
before the Closing.
(c) XXXXXXXX.XXX BUSINESS TRANSFER AND CONSENTS. Simultaneous with
or prior to the Closing, Parent shall have transferred the XxxxxXxx.xxx Business
to the Borrower [and in connection therewith shall have acquired the consents
set forth in Section 2.6 of the Schedule of Exceptions].
(d) COMPLIANCE CERTIFICATE. The President of the Parent and the
Borrower shall deliver to Lender at the Closing a certificate stating that the
conditions specified in Paragraphs (a) and (b) have been fulfilled.
(e) AMENDED AND RESTATED CERTIFICATE. Borrower shall have filed the
amended Certificate in the form attached hereto as EXHIBIT D with the Delaware
Secretary of State.
(f) QUALIFICATIONS. All prior authorizations, approvals, or permits,
if any, of any
-18-
19
governmental authority or regulatory body of the United States or of any state
that are required in connection with the lawful issuance and sale of the Term
Note and the other Securities pursuant to this Credit Agreement shall be duly
obtained and effective as of the Closing.
(g) PROCEEDINGS AND DOCUMENTS. All corporate and other proceedings
in connection with the transactions contemplated at the Closing (including the
transfer of the XxxxxXxx.xxx Business to the Borrower) and all documents
incident thereto shall be reasonably satisfactory in form and substance to
Lender's counsel, and they shall have received all such counterpart original and
certified or other copies of such documents as they may reasonably request. The
documentation related to the transfer of the XxxxxXxx.xxx Business shall contain
for the benefit of the Borrower appropriate representations and warranties of
Parent, indemnification provisions from Parent in favor of the Borrower and
mutual further assurance provisions in form and substance satisfactory to
Lender's counsel.
(h) PROPRIETARY INFORMATION AND INVENTIONS AGREEMENTS. Each of J.
Xxxxx Xxxxxx, Xxxxxxx Xxxxxxx, Xxxxxxx Xxxxxxxxx and Xxxxxx Xxxxxxxx and the
Borrower shall have entered into a Proprietary Information and Inventions
Agreement in the form previously provided to special counsel for the Lenders.
(i) INVESTOR RIGHTS AGREEMENT. The Borrower, Lender and the other
parties thereto shall have entered into the Rights Agreement.
(j) PARENT GUARANTEE. Each of the Parent and the Borrower shall have
entered into the Parent Guarantee.
(k) OPINION OF COMPANY COUNSEL. Lender shall have received from
Xxxxxxx Xxxxxxxxxxx Xxxxxx & Xxxxxxx LLP, counsel to Parent and the Borrower, an
opinion, dated as of the Closing, in the form and substance reasonably
satisfactory to WFC's counsel.
(l) PARENT SHARES. WFC shall have consummated prior to or
simultaneous with the Closing its acquisition of Parent shares from Parent
pursuant to the Stock and Note Purchase Agreement of even date herewith by and
between Parent and WFC.
SECTION 4.2 BORROWER CONDITION
. The obligations of the Borrower to Lender under this Agreement are
subject to the fulfillment on or before the Closing of each of the following
conditions by that Lender:
(a) REPRESENTATIONS AND WARRANTIES. The representations and
warranties of Lender contained in Section 3 shall be true on and as of the
Closing with the same effect as though such representations and warranties had
been made on and as of the Closing.
(b) QUALIFICATIONS. All authorizations, approvals, or permits, if
any, of any governmental authority or regulatory body of the United States or of
any state that are required in connection with the lawful issuance and sale of
the Securities pursuant to this Agreement shall be duly obtained and effective
as of the Closing.
-19-
20
(c) INVESTOR RIGHTS AGREEMENT. The Borrower and each of the Lenders
shall have entered into the Rights Agreement.
(d) PARENT SHARES. WFC shall have consummated prior to or
simultaneous with the Closing its acquisition of Parent shares from Parent.
ARTICLE V
AFFIRMATIVE COVENANTS
---------------------
Borrower covenants that so long as any liabilities (whether direct or
contingent, liquidated or unliquidated) of Borrower to Lender under this
Agreement or the Term Loan remain outstanding, and until payment in full of all
obligations of Borrower subject hereto and thereto, Borrower shall, unless
Lender otherwise consents in writing:
SECTION 5.1 PUNCTUAL PAYMENTS
. Punctually pay all principal, interest, fees or other liabilities due
under this Agreement or the Term Loan at the times and place and in the manner
specified therein.
SECTION 5.2 ACCOUNTING RECORDS
. Maintain adequate books and records in accordance with generally
accepted accounting principles consistently applied, and permit any
representative of Lender, at any reasonable time, to inspect, audit and examine
such books and records, to make reasonable numbers of copies of the same, and to
inspect the properties of Borrower.
SECTION 5.3 COMPLIANCE
. Preserve and maintain in all material respects all licenses, permits,
governmental approvals, rights, privileges and franchises necessary for the
conduct of its business; and comply with the provisions of all documents
pursuant to which Borrower is organized and/or which govern Borrower's continued
existence and with the requirements of all laws, rules, regulations and orders
of any governmental authority applicable to Borrower and/or its business.
SECTION 5.4 INSURANCE
. Maintain and keep in force insurance of the types and in amounts
customarily carried in lines of business similar to that of Borrower, including
but not limited to fire, extended coverage, public liability, flood, property
damage and workers' compensation, with all such insurance carried with companies
and in amounts reasonably satisfactory to Lender, and deliver to Lender from
time to time at Lender's request schedules setting forth all insurance then in
effect.
SECTION 5.5 FACILITIES
-20-
21
. Keep all properties useful or necessary to Borrower's business in
good repair and condition, and from time to time make necessary repairs,
renewals and replacements thereto so that such properties shall be reasonably
preserved and maintained.
SECTION 5.6 TAXES AND OTHER LIABILITIES
. Pay and discharge when due any and all indebtedness, obligations,
assessments and taxes, both real or personal, including without limitation
federal and state income taxes and state and local property taxes and
assessments, except such (a) as Borrower may in good faith contest or as to
which a bona fide dispute may arise, and (b) for which Borrower has made
provision, to Lender's reasonable satisfaction, for eventual payment thereof in
the event Borrower is obligated to make such payment.
SECTION 5.7 NOTICE TO LENDER
. Promptly (but in no event more than five (5) days after the
occurrence of each such event or matter) give written notice to Lender in
reasonable detail of: (a) the occurrence of any Event of Default (as defined in
Article VII), or any condition, event or act which with the giving of notice or
the passage of time or both would constitute an Event of Default; (b) any change
in the name of Borrower.
ARTICLE VI
NEGATIVE COVENANTS
------------------
Borrower further covenants that so long as any liabilities (whether
direct or contingent, liquidated or unliquidated) of Borrower to Lender under
this Agreement or the Term Note remain outstanding, and until payment in full of
all obligations of Borrower subject hereto and thereto, Borrower will not
without Lender's prior written consent:
SECTION 6.1 OTHER INDEBTEDNESS
. Create, incur, assume or permit to exist any indebtedness or
liabilities resulting from borrowings, loans or advances, whether secured or
unsecured, matured or unmatured, liquidated or unliquidated, joint or several,
except (a) the liabilities of Borrower to Lender, and (b) any other liabilities
of Borrower existing as of, and disclosed to Lender prior to, the date hereof
and (c) liabilities for borrowed money not in excess of Thirty Million Dollars
($30,000,000).
SECTION 6.2 DIVIDENDS, DISTRIBUTIONS
. Pay or declare any dividend or redeem, repurchase or acquire any
share of its capital stock (except for dividends payable in Common Stock, for
shares repurchased at cost in accordance with restricted stock purchase
agreements with employees, officers, directors and consultants and redemptions
of Series A Preferred Stock contemplated by the Certificate).
-21-
22
SECTION 6.3 RELATED PARTY TRANSACTION
.
(a) Engage in any loans, leases, contracts or other transactions
with any director, officer, key employee or greater than ten percent (10%)
stockholder of Borrower or any member of any such person's immediate family,
including the parents, spouse, children and other relatives of any such person;
PROVIDED, HOWEVER, that the foregoing shall not prohibit (i) any transaction
which prior entering into with a third party, such transaction, the Borrower's
Board of Directors shall in good faith determined that such transaction is as
favorable to Borrower as could be obtained in an arm's-length transaction (ii)
option grants to directors, officers and employees pursuant to Borrower's Stock
Option Plan.
(b) Enter into any severance agreement with any senior level
employee or executive officer of the Borrower providing for severance payments
in excess of twelve (12) months.
SECTION 6.4 STOCK OPTION PLAN
. Increase the aggregate number of shares reserved for issuance
pursuant to Borrower's Stock Option Plan or any other plan (including any
amendment thereto) providing for the issuance of capital stock or options to
purchase capital stock to any employee, officer, director or consultant in
excess of an aggregate of 2,600,000 shares of Common Stock (adjusted to reflect
subsequent stock dividends, stock splits, combinations or recapitalizations).
SECTION 6.5 MERGER, CONSOLIDATION, TRANSFER OF ASSETS
. Effect (i) a consolidation, merger or other business combination with
one or more persons that would result after giving cumulative effect to such
transactions in the holder's of the Borrower's capital stock prior to such
transaction(s) owning less than 50% of the surviving or combined company or
business or (ii) sell all or substantially all its assets in one or more
transactions to one or more other persons, unless the aggregate consideration
per share of Common Stock (on an as converted basis and without regard to any
liquidation preference contained in the Series A Preferred Stock or any other
class of preferred stock) exceeds Twelve Dollars and Fifty Cents ($12.50) share.
ARTICLE VII
EVENTS OF DEFAULT
-----------------
SECTION 7.1 EVENTS OF DEFAULT
. The occurrence of any of the following shall constitute an "EVENT OF
DEFAULT" under this Agreement:
(a) Borrower shall fail to pay when due any principal, interest,
fees or other amounts payable hereunder or under the Term Loan.
-22-
23
(b) Any certificate furnished to Lender in connection with, or any
representation or warranty made by Borrower or any other party under this
Agreement or any other Ancillary Agreement shall prove to be incorrect, false or
misleading in any material respect when furnished or made.
(c) Any default in the performance of or compliance with any
material obligation, agreement or other provision contained herein or in the
Term Note (other than those referred to in subsections (a) and (b) above), and
with respect to any such default which by its nature can be cured, such default
shall continue for a period of twenty (20) days from its occurrence.
(d) Borrower or Parent shall become insolvent, or shall suffer or
consent to or apply for the appointment of a receiver, trustee, custodian or
liquidator of itself or any of its property, or shall generally fail to pay its
debts as they become due, or shall make a general assignment for the benefit of
creditors; Borrower or Parent shall file a voluntary petition in bankruptcy, or
seeking reorganization, in order to effect a plan or other arrangement with
creditors or any other relief under the Bankruptcy Reform Act, Title 11 of the
United States Code, as amended or recodified from time to time ("BANKRUPTCY
CODE"), or under any state or federal law granting relief to debtors, whether
now or hereafter in effect; or any involuntary petition or proceeding pursuant
to the Bankruptcy Code or any other applicable state or federal law relating to
bankruptcy, reorganization or other relief for debtors is filed or commenced
against Borrower or Parent, which is unstayed within 45 days thereof, or
Borrower or Parent shall file an answer admitting the jurisdiction of the court
and the material allegations of any involuntary petition; or Borrower or Parent
shall be adjudicated a bankrupt, or an order for relief shall be entered against
Borrower or Parent by any court of competent jurisdiction under the Bankruptcy
Code or any other applicable state or federal law relating to bankruptcy,
reorganization or other relief for debtors.
SECTION 7.2 REMEDIES
. Upon the occurrence of any Event of Default the indebtedness of
Borrower under the Term Note, any term thereof to the contrary notwithstanding,
shall at Lender's option and without notice become immediately due and payable
without presentment, demand, protest or notice of dishonor, all of which are
hereby expressly waived by Borrower. All rights, powers and remedies of Lender
may be exercised at any time by Lender and from time to time after the
occurrence of an Event of Default, are cumulative and not exclusive, and shall
be in addition to any other rights, powers or remedies provided by law or
equity.
ARTICLE VIII
MISCELLANEOUS
-------------
SECTION 8.1 NO WAIVER
. No delay, failure or discontinuance of Lender in exercising any
right, power or remedy hereunder or under the Term Note shall affect or operate
as a waiver of such right, power or remedy; nor shall any single or partial
exercise of any such right, power or remedy preclude, waive or
-23-
24
otherwise affect any other or further exercise thereof or the exercise of any
other right, power or remedy. Any waiver, permit, consent or approval of any
kind by Lender of any breach of or default under this Agreement and the Term
Note must be in writing and shall be effective only to the extent set forth in
such writing.
SECTION 8.2 SUCCESSORS, ASSIGNMENT
. This Agreement shall be binding upon and inure to the benefit of the
heirs, executors, administrators, legal representatives, successors and assigns
of the parties; provided however, that Borrower may not assign or transfer its
interest hereunder without Lender's prior written consent. Subject to the BHC
Act and the Conversion Agreement, Lender reserves the right to sell, assign,
transfer, negotiate or grant participations in all or any part of, or any
interest in, Lender's rights and benefits under this Agreement and the Term
Loan.
SECTION 8.3 SURVIVAL OF WARRANTIES
. The warranties, representations and covenants of Parent, Borrower and
Lender contained in or made pursuant to this Agreement shall survive the
execution and delivery of this Agreement and the Closing and shall in no way be
affected by any investigation of the subject matter thereof made by or on behalf
of the other parties. All representations and warranties shall survive for a
period of two years except that the intellectual property and tax
representations and warranties which shall survive for three years or the
lapsing of the applicable statute of limitations, respectively.
SECTION 8.4 GOVERNING LAW; CONSENT TO JURISDICTION
. This Agreement shall be governed by and construed under the laws of
the State of Delaware as applied to agreements among California residents
entered into and to be performed entirely within Delaware.
SECTION 8.5 COUNTERPARTS
. This Agreement may be executed in two or more counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
SECTION 8.6 TITLES AND SUBTITLES
. The titles and subtitles used in this Agreement are used for
convenience only and are not to be considered in construing or interpreting this
Agreement.
SECTION 8.7 FINDER'S FEE
. Except for any fee payable by Borrower to First Security Xxx Xxxxxx
in connection with the transactions contemplated by this Agreement (which must
be acceptable to WFC), each party represents that it neither is nor will be
obligated for any finders' fee or commission in connection with this
transaction. Lender agrees to indemnify and hold harmless Borrower from any
liability for any commission or compensation in the nature of a finders' fee
(and the costs and expenses of defending against such liability or asserted
liability) for which Lender or any of its officers, partners,
-24-
25
employees, or representatives is responsible. Parent and Borrower agree to
indemnify and hold harmless Lender from any liability for any commission or
compensation in the nature of a finders' fee (and the costs and expenses of
defending against such liability or asserted liability) for which Parent or
Borrower or any of its directors, officers, employees or representatives is
responsible.
SECTION 8.8 SUBORDINATION
. Lender agrees that amounts owed under the Term Note shall be
subordinate to up to Fifteen Million ($15,000,000) of indebtedness for borrowed
money (including interest thereon) owed to a bank, lender, financial institution
or the like. At Borrower's expense, Lender agrees to enter into a subordination
agreement with Borrower's creditors in form and substance reasonably acceptable
to Lender and its counsel.
SECTION 8.9 EXPENSES
. The Borrower shall pay all costs and expenses that it incurs with
respect to the negotiation, execution, delivery and performance of this
Agreement. The Borrower shall reimburse Lender for all reasonable fees and
expenses (including without limitation all accounting, consulting, travel and
other third party fees and expenses) up to a maximum of $40,000 (collectively
"EXPENSES").
SECTION 8.10 AMENDMENT AND WAIVERS
. Any term of this Agreement may be amended and any term of this
Agreement may be waived (either generally or in a particular instance and either
retroactively or prospectively) only with the written consent of the Borrower,
Parent and Lender. Any amendment or waiver effected in accordance with this
paragraph shall be binding upon each party to this Agreement and any holder of
the Term Note and each future holder of the Term Note and the Borrower.
SECTION 8.11 SEVERABILITY
. If one or more provisions of this Agreement are held to be
unenforceable under applicable law, such provision shall be excluded from this
Agreement and the balance of the Agreement shall be interpreted as if such
provision were so excluded and shall be enforceable in accordance with its
terms.
SECTION 8.12 ENTIRE AGREEMENT
. This Agreement and the documents referred to herein constitute the
entire agreement among the parties and no party shall be liable or bound to any
other party in any manner by any warranties, representations, or covenants
except as specifically set forth herein or therein.
-25-
26
IN WITNESS WHEREOF, the parties have executed this Credit Agreement as
of the date first above written.
PARENT: NAVIDEC, INC.
By: /s/ J. Xxxxx Xxxxxx
------------------------------
J. Xxxxx Xxxxxx, President
Address: 00 Xxxxxxxxx Xxxxx
Xxxxxxxxx, Xxxxxxxx 00000
Attention: Xxxxx Xxxxxx
(T) (000) 000-0000
(F)
with a copy to:
Benesch, Friedlander, Xxxxxx & Xxxxxxx LLP
0000 XX Xxxxx
000 Xxxxxx Xxxxxx
Xxxxxxxxx, Xxxx 00000
Attention: Xxxxxxx Xxxxx
(T) (000) 000-0000
(F) (000) 000-0000
BORROWER: XXXXXXXX.XXX, INC.
By: /s/ Xxxxxxx X. Xxxxxxx
---------------------------------
Xxxxxxx X. Xxxxxxx, President
Address: 00 Xxxxxxxxx Xxxxx
Xxxxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxxx Xxxxxxx
(T) (000) 000-0000
(F) (000) 000-0000
with a copy to:
Benesch, Friedlander, Xxxxxx & Xxxxxxx LLP
as provided above
-26-
27
LENDER: WFC HOLDINGS CORPORATION
By: /s/ Xxxxxx Xxxxxxxxx
----------------------------------
Xxxxxx Xxxxxxxxx, Senior Vice
President & Treasurer
By: /s/ Xxxx Xxxxxxxx
----------------------------------
Xxxx Xxxxxxxx, Senior Vice
President
Address: 000 Xxxxxx Xxxxxx
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxx Xxxxxxxxx
(T) (000) 000-0000
(F) (000) 000-0000
with a copy to:
Xxxxxx Xxxxxxx Xxxxxxxx & Xxxxxx
000 Xxxx Xxxx Xxxx
Xxxx Xxxx, Xxxxxxxxxx 00000
Attention: Xxxx Xxxxxx
(T) (000) 000-0000
(F) (000) 000-0000
-27-
