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
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Maturity
Date:
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Earliest of
Acquisition, Change of Control, and June 30, 2010
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Formula:
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None
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Facility
Origination Fee:
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$40,000
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Interest:
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15%
Fixed
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Warrants:
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None
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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:
1
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