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LOAN AGREEMENT

Loan Agreement

LOAN AGREEMENT | Document Parties: KANA SOFTWARE INC | AGILITY CAPITAL, LLC | EVERGANCE PARTNERS, LLC You are currently viewing:
This Loan Agreement involves

KANA SOFTWARE INC | AGILITY CAPITAL, LLC | EVERGANCE PARTNERS, LLC

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Title: LOAN AGREEMENT
Governing Law: California     Date: 8/14/2009
Industry: Software and Programming     Sector: Technology

LOAN AGREEMENT, Parties: kana software inc , agility capital  llc , evergance partners  llc
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Exhibit 10.02

LOAN AGREEMENT

Dated as of July 30, 2009

by and between

AGILITY CAPITAL, LLC

as Agility

and

KANA SOFTWARE, INC.

as Borrower

TOTAL CREDIT AMOUNT: Up to $1,000,000

 

Maturity Date:

  

Earliest of Acquisition, Change of Control, and June 30, 2010

Formula:

  

None

Facility Origination Fee:

  

$40,000

Interest:

  

15% Fixed

Warrants:

  

None

The information set forth above is subject to the terms and conditions set forth in the balance of this Agreement. The parties agree as follows:

 

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1. Advance and Payments .

(a) Advance . Borrower may request one advance of up to $1,000,000 (the “Advance”) on the date of this Agreement (the “Closing Date”). Agility’s obligation to make the Advance is subject to (i) Agility’s determination, in its sole discretion, that there has not occurred a circumstance or circumstances that have a Material Adverse Effect, (ii) receipt of an Unconditional Guaranty from EVERGANCE PARTNERS, LLC, and (iii) the execution, delivery and filing of such instruments and agreements as Agility deems appropriate, including, but not limited to, an intercreditor agreement with Bridge Bank (“Senior Lender”), and certification by Borrower that its EBITDA, as defined in the agreement for Senior Lender, for the quarter ended June 30, 2009, is not less than $500,000.

(b) Interest; Payments . Borrower shall pay interest on the outstanding principal balance of the Advance at a fixed rate per annum equal to Fifteen Percent (15.0%). Interest shall be calculated on the basis of a 360-day year for the actual number of days elapsed, shall accrue from the date of the Advance and continue until the Advance has been repaid, and shall be payable in arrears on the first day of each month until the Advance has been repaid. Beginning September 1, 2009, and on the first day of each month thereafter, Borrower shall pay to Agility, $90,000 plus accrued but unpaid interest. On the Maturity Date, all amounts outstanding under this Agreement shall be due and payable. Any partial month shall be prorated on the basis of a 30-day month based on the actual number of days outstanding. Borrower may prepay all or any part of the Advance without penalty or premium, but may not reborrow any amount repaid. Any prepayment shall be applied first to interest, then to principal installments in reverse order of maturity.

(c) Fees . On the Closing Date, Borrower shall pay Senior Lender for delivery to Agility an origination fee of $40,000, and on the earliest to occur of (i) the Maturity Date, (ii) the date that Borrower prepays the outstanding Obligations, and (iii) the date that the outstanding Obligations become due, Borrower shall pay Agility a fee of $350,000. Such fees are earned in full as of the Closing Date.

(d) Maturity Date . All amounts outstanding hereunder are due and payable on the earliest to occur of (i) June 30, 2010; (ii) an Acquisition; or (iii) any reorganization, consolidation, or merger of Borrower where the holders of Borrower’s securities before the transaction beneficially own less than 50% of the outstanding voting securities of the surviving entity after the transaction (a “Change of Control”) (the “Maturity Date”).

(e) Late Payment . After the occurrence of a payment default under this Agreement (“Payment Default”), the Obligations shall bear interest at a rate equal to 5% above the rate that would otherwise apply, until such time as the default is cured. In addition, upon the occurrence of such Payment Default, Borrower shall pay to Agility a fee of $50,000. Borrower shall pay Agility an additional $50,000 on the fifteenth day thereafter if the Payment Default has not been cured by then. An additional $50,000 will be earned and due on every tenth day thereafter so long as the Payment Default has not been cured. The terms of this paragraph shall not be construed as Agility’s consent to Borrower’s failure to pay any amounts in strict accordance with this Agreement, and Agility’s charging any such fees and/or acceptance of any such payments shall not restrict Agility’s exercise of any remedies arising out of any such failure.

2. Security Interest . As security for all present and future indebtedness, guarantees, liabilities, and other obligations of Borrower to Agility under this Agreement, including all fees specified in Section 1 (collectively, the “Obligations”), Borrower grants Agility a security interest in all of Borrower’s personal property, whether now owned or hereafter acquired, including without limitation the property described on Exhibit A attached hereto, and all products, proceeds and insurance proceeds of the foregoing (collectively, the “Collateral”). Borrower authorizes Agility to execute such documents and take such actions as Agility reasonably deems appropriate from time to time to perfect or continue the security interest granted hereunder.

3. Representations, Warranties and Covenants . Borrower represents to Agility as follows (which shall be deemed continuing throughout the term of this Agreement):

(a) Authorization . The execution, delivery and performance by Borrower of this Agreement, and all other documents contemplated hereby have been duly and validly authorized by all necessary corporate action, and do not violate Borrower’s Certificate of Incorporation or by-laws, or any law or any material agreement or instrument which is binding upon Borrower or its property.

 

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(b) State of Incorporation; Places of Business; Locations of Collateral . Borrower is and will continue to be, duly organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation. Borrower is and will continue to be qualified and licensed to do business in all jurisdictions in which it is required to do so. The address set forth in this Agreement under Borrower’s signature is Borrower’s chief executive office. Other than the chief executive office, the Collateral is located at the address(es) set forth on Exhibit B .

(c) Title to Collateral; Permitted Liens . Borrower is now, and will at all times in the future be, the sole owner of all the Collateral. The Collateral now is and will remain free and clear of any and all liens, security interests, encumbrances and adverse claims, except for (i) the lien in favor of Senior Lender securing the Permitted Senior Debt; (ii) purchase money security interests in specific items of Equipment; (iii) leases of specific items of Equipment; (iv) liens for taxes, fees, assessments or other governmental charges or levies, either not delinquent or being contested in good faith by appropriate proceedings, provided the same have no priority over any of Agility’s security interests; (v) liens of materialmen, mechanics, warehousemen, carriers, or other similar liens arising in the ordinary course of business and securing obligations that are not delinquent; and (vi) the liens set forth on Exhibit B .

(d) Financial Condition, Statements and Reports . The financial statements provided to Agility by Borrower have been prepared in accordance with generally accepted accounting principles, consistently applied (“GAAP”). All financial statements now or in the future delivered to Agility will fairly reflect the financial condition of Borrower, at the times and for the periods therein stated. Between the last date covered by any such statement provided to Agility and the date hereof, there has been no circumstance that could constitute or give rise to a Material Adverse Effect. Borrower has timely filed, and will timely file, all tax returns and reports required by applicable law, and Borrower has timely paid, and will timely pay, all applicable taxes, assessments, deposits and contributions now or in the future owed by Borrower, unless Borrower is contesting or negotiating in good faith a resolution of outstanding tax liability issues and Borrower maintains adequate reserves under GAAP.

(e) Compliance with Law . Borrower has complied, and will comply, in all material respects, with all provisions of all material applicable laws and regulations.

(f) Information . All information provided to Agility by or on behalf of Borrower on or prior to the date of this Agreement is true and correct in all material respects, and no representation or other statement made by Borrower to Agility contains any untrue statement of a material fact or omits to state a material fact necessary to make any statements made to Agility not misleading at the time made.

(g) Litigation . Except as disclosed on Exhibit B , there is no claim or litigation pending or (to best of Borrower’s knowledge) threatened against Borrower. Borrower will promptly inform Agility in writing of any claim or litigation in the future.

(h) Subsidiaries; Investments . Except as disclosed on Exhibit B , Borrower has no wholly-owned or partially owned subsidiaries, and Exhibit B sets forth all loans by Borrower to, and all investments by Borrower in, any person, entity, corporation partnership or joint venture.

(i) Deposit and Investment Accounts . Borrower maintains only the operating, savings, deposit, securities and investment accounts listed on Exhibit B . On the Closing Date, Borrower shall enter into an account control agreement with Bridge Bank on terms acceptable to Lender.

4. Other Covenants .

(a) Financial Statements, Reports, Certificates . Borrower shall deliver the following to Bank: (a) as soon as available, but in any event within thirty (30) days after the end of each calendar month, a company prepared consolidated balance sheet and income statement covering Borrower’s consolidated operations

 

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during such period, prepared in accordance with GAAP, consistently applied, in a form acceptable to Bank and certified by a Responsible Officer; (b) copies of all statements, reports and notices sent or made available generally by Borrower to its security holders or to any holders of Subordinated Debt and as soon as available, but in any event within five (5) days after the filing thereof, all reports filed with the Securities and Exchange Commission including without limitation on Forms 10-K and 10-Q; (c) promptly upon receipt of notice thereof, a report of any legal actions pending or threatened against Borrower or any Subsidiary that could result in damages or costs to Borrower or any Subsidiary of Fifty Thousand Dollars ($50,000) or more; (d) as soon as available, but in any event no later than sixty (60) days after the beginning of Borrower’s fiscal year, an operating budget in form reasonably acceptable to Bank and approved by Borrower’s board of directors; and (e) such budgets, sales projections, operating plans or other financial information as Bank may reasonably request from time to time. Agility shall have the right to review and copy Borrower’s books and records and audit and inspect the Collateral, from time to time, upon reasonable notice to Borrower. Agility or its officers, employees, or agents shall have a right to visit Borrower’s premises and interview Borrower’s officers at Borrower’s expense.

(b) Insurance . Borrower will maintain insurance on the Collateral and Borrower’s business, in amounts and of a type that are customary to businesses similar to Borrower’s, and Agility will be named in a Agility’s loss payable endorsement in favor of Agility, in form reasonably acceptable to Agility.

(c) Subsidiary Excess Cash . At least once per month (and, after the occurrence of an Event of Default, at least once per week), Borrower will cause each of its Subsidiaries to transfer to Borrower’s account with Senior Lender all of its cash balances in excess of the cash needed by such Subsidiary to conduct its business in the ordinary course.

(d) Senior Debt . Borrower may incur indebtedness (the “Senior Debt”) from Senior Lender up to a principal amount equal to the lesser of (i) $5,000,000 or (ii) 80% of the book value of Borrower’s accounts receivable less than 90 days outstanding from invoice date owing from account debtors with a principal place of business in the United States and also any subsidiaries of IB


 
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