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EXHIBIT 2.4
YELLOWBRIX, INC.
NOTE AND WARRANT PURCHASE AGREEMENT
DATED AS OF NOVEMBER 29, 2000
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YELLOWBRIX, INC.
As of November 29, 2000
To: The Purchasers Enumerated on Schedule I Attached Hereto
Re: Convertible Secured Note and Warrant
Ladies and Gentlemen:
YellowBrix, Inc., a Delaware corporation (the "Company") and the
Purchasers enumerated on Schedule I attached hereto (the "Purchasers"), in
consideration of the premises and the covenants hereinafter contained, and for
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, hereby agree as follows:
ARTICLE I
PURCHASE, SALE AND TERMS OF NOTE AND WARRANT
Section 1.1 The Notes. The Company has authorized the issuance and sale
to the Purchasers of convertible secured notes (the "Notes"), in the aggregate
principal amount of up to Four Million Dollars ($4,000,000). The Purchasers,
subject to the provisions of this Section 1.1, will fund the Notes in one or
more advances (each an "Advance" and collectively "Advances"); provided that
each such Advance is requested in good faith by a majority of the Board of
Directors of the Company; and provided, further, that any Advance must be in an
amount of not less than Five Hundred Thousand Dollars ($500,000) and that the
Notes, in the aggregate and including all Advances, shall not be in an amount
more than Four Million Dollars ($4,000,000). The Notes shall be substantially in
the form set forth in Exhibit A hereto, shall be secured by the assets of the
Company in accordance with the terms and conditions of the Security Agreement in
the form set forth in Exhibit D hereto, and shall be convertible into New
Securities as set forth in Section 1.10 below. Each Advance shall be recorded on
the books and records of each of the Purchasers, and endorsed by the Purchasers
and the Company on the grid attached to each of their Notes. The aggregate
amount reflected on the books and records as outstanding at any time, including
any entries by each Purchaser and the Company on the grid attached to such
Purchaser's Note, shall be prima facie evidence of the aggregate amount owing
and unpaid under such Note at such time. The term "Note" as used hereinafter
shall be understood to include any Advances made under such Note.
Notwithstanding anything to the contrary in the foregoing, ABN AMRO Capital
(USA) Inc. shall not be required to fund more than [one million, two hundred and
fifty thousand dollars and NO cents ($1,250,000) of the Notes.
Section 1.2 The Warrants.
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(a) The Company has also authorized the issuance and sale to
each Purchaser of warrants (the "Warrants") to purchase Common Stock (as
hereinafter defined), all on the terms outlined in the Warrant and in Sections
1.2(b) and (c) below; the shares subject to the Warrants shall constitute
authorized but unissued shares and shall be subject to adjustment in accordance
with the terms of the Warrant. The Warrant shall be substantially in the form
set forth in Exhibit B hereto. The Company shall issue a Warrant in connection
with any Advance made by a Purchaser as required under the terms of such
Warrant. The term "Warrant" as used hereinafter shall be understood to include
any changes made to such Warrant by virtue of any Advances.
(b) Following each Advance by a Purchaser, the Company shall
issue the Purchaser a Warrant to purchase a number of shares of Common Stock
equal to thirty percent (30%) of the principal amount of each Advance, divided
by $3.72, or eighty-five percent (85%) of the purchase price per share issued in
a Private Equity Qualified Financing (as defined in the Warrant of the Company
granted of even date herewith).
(c) In addition to the Warrants to be issued under Section
1.2(b), beginning January 8, 2001, and on the first day of each month
thereafter, if principal remains outstanding on the Notes, the Company shall
issue the Purchaser an additional Warrant to purchase the number of shares of
Common Stock equal to thirty-five percent (35%) of the outstanding principal
balance on the Notes, divided by $3.72, or eighty-five percent (85%) of the
purchase price per share issued in a Private Equity Qualified Financing (as
defined in the Warrant of the Company granted of even date herewith).
Section 1.3 Purchase and Sale of Notes and Warrants.
(a) The Closing. The Company agrees to issue and sell to the
Purchasers, and, subject to and in reliance upon the representations,
warranties, terms and conditions of this Agreement, each Purchaser agrees to
purchase from the Company, the Notes and the Warrants for the aggregate purchase
price, representing the first Advance, set forth opposite the Purchaser's name
on Schedule I. Such purchase and sale shall take place at a closing (the
"Closing") to be held at the offices of Mintz, Levin, Cohn, Ferris, Glovsky and
Popeo, P.C., One Fountain Square, ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇, ▇▇
▇▇▇▇▇ on November 29, 2000, at 1:00 P.M. (the "Closing Date"), or on such other
date and at such other time as may be mutually agreed upon. At the Closing, the
Company will issue the Notes, dated the Closing Date, payable to the order of
each Purchaser, in the principal amount set forth opposite the Purchaser's name
on Schedule I (the "Principal Amount"), and will issue the Warrants to the
Purchasers, against receipt by the Company of a bank check or wire transfer in
payment of the full Principal Amount. (b) Allocation of Purchase Price. The
Company and the Purchasers, having adverse interests and as a result of arm's
length bargaining, agree that: (i) neither the Purchasers nor any of their
respective affiliates have rendered or have agreed to render any services to the
Company in connection with this Agreement or the issuance of the Notes and the
Warrants; and (ii) the Warrants, when issued, shall not be issued as
compensation. The Company and the Purchasers agree that the fair market value of
the Purchaser's right hereunder to be issued a Warrant is equal to one percent
(1%) of the Principal Amount paid by each Purchaser at the Closing.
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(c) Use of Proceeds. The Company agrees to use the proceeds
from the sale of the Notes and the Warrants for general working capital
purposes. The Company agrees not to use such proceeds to repay any indebtedness
of the Company to any institutional lender or to pay any outstanding obligations
of any party other than the Company (including, without limitation, any personal
indebtedness of any officer or employee of the Company or other third party).
Section 1.4 Payments and Endorsements. Payments of principal and
interest, if any, on the Notes shall be made directly by wire transfer to each
Purchaser at its address enumerated on Schedule I hereto, without any
presentment or notation of payment, except that prior to any transfer of any
Note, the holder of record shall endorse on the Note a record of the date to
which interest has been paid and all payments made on account of principal of
the Note.
Section 1.5 Payment on Non-Business Days. Whenever any payment to be made
shall be due on a day which is not a Business Day (as hereinafter defined), such
payment may be made on the next succeeding Business Day, and such extension of
time shall in such case be included in the computation of payment of interest
due.
Section 1.6 Registration, etc. The Company shall maintain at its
principal office a register relating to the Notes (and Warrants, as further set
forth in the Warrant) and shall record therein the name and address of the
registered holder of each Note and Warrant, the address to which notices are to
be sent and the address to which payments on the Notes are to be made as
designated by the registered holder if other than the address of the holder, and
the particulars of all transfers, exchanges and replacements of the Notes and
Warrants. No transfer of any Note or Warrant shall be valid unless made on such
register for the registered holder or his, her or its executors or
administrators or his, her or their duly appointed attorney, upon surrender
therefor for exchange as hereinafter provided, accompanied by an instrument in
writing, in form and execution reasonably satisfactory to the Company. Each Note
or any other note issued hereunder, whether originally or upon transfer,
exchange or replacement of such Note, shall be registered on the date of
execution thereof by the Company and shall be dated the date to which interest
has been paid on the Note. The registered holder of each Note shall be that
Person (as hereinafter defined) in whose name the Note has been so registered by
the Company. A registered holder shall be deemed the owner of each Note for all
purposes of this Agreement and, subject to the provisions hereof, shall be
entitled to the principal, premium, if any, and interest evidenced by such Note
free from all equities or rights of set-off or counterclaim among the Company
and the transferor of such registered holder or any previous registered holder
of such Note.
Section 1.7 Transfer and Exchange of Notes and Warrants.
(a) Subject to compliance with all applicable state and federal
securities laws and Section 1.7(c) below, the registered holder of each Note
may, prior to the acceleration or prepayment thereof, surrender such Note at the
principal office of the Company for transfer or exchange. Promptly after notice
to the Company from a registered holder of its intention to make such exchange
and without expense (other than transfer taxes, if any) to such registered
holder, the Company shall, at its cost and expense, issue in exchange therefor
another note or notes, in such denominations as requested by the registered
holder, for the same aggregate principal amount as the unpaid principal amount
of the note or notes so surrendered and having the same maturity and rate of
interest, containing the same provisions and subject to the same
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terms and conditions as the note or notes so surrendered. Each new note shall be
made payable to such Person or Persons, or registered assigns, as the registered
holder of such surrendered note or notes may designate, and such transfer or
exchange shall be made in such a manner that no gain or loss of principal or
interest shall result therefrom.
(b) Subject to compliance with all applicable state and federal
securities laws and Section 1.7(c) below, the registered holder of each Warrant
may, prior to the expiration thereof, surrender such Warrant at the principal
office of the Company for transfer or exchange in accordance with the terms and
conditions set forth in the Warrant attached as Exhibit B hereto.
(c) Notwithstanding anything to the contrary in this Agreement,
the Purchaser agrees for a period of six (6) months from the date hereof that it
will not transfer any Note or Warrant to any person that is not a "qualified
institutional buyer" as that term is defined under Rule 144A of the Securities
Act (as hereinafter defined) or, if the Purchaser is not a qualified
institutional buyer, to any person that is not an accredited investor as that
term is defined in Rule 501(a)(1), (a)(2), (a)(3), (a)(7) or (a)(8) under the
Securities Act with at least $35,000,000 of investment assets.
Section 1.8 Replacement of Notes and Warrants.
(a) Upon receipt of evidence reasonably satisfactory to the
Company of the loss, theft, destruction or mutilation of a Note or any note
issued in exchange therefor and, if requested in the case of any such loss,
theft or destruction, upon delivery of an indemnity bond or other agreement or
security reasonably satisfactory to the Company, or, in the case of any such
mutilation, upon surrender and cancellation of such note, the Company will issue
a new note, of like tenor and amount and dated the date to which interest has
been paid, in lieu of such lost, stolen, destroyed or mutilated note; provided,
however, if any note of which a Purchaser, its nominee, or any of its partners
or affiliates is the registered holder is lost, stolen or destroyed, the
affidavit of the registered holder setting forth the circumstances with respect
to such loss, theft or destruction shall be accepted as satisfactory evidence
thereof, and no indemnification bond or other security shall be required as a
condition to the execution and delivery by the Company of a new note in
replacement of such lost, stolen or destroyed note other than the registered
holder's written agreement to indemnify the Company.
(b) Upon receipt of evidence satisfactory to the Company of the
loss, theft, destruction or mutilation of a Warrant or any warrant issued in
exchange therefor and, if requested and required in the case of any such loss,
theft or destruction, upon delivery of an indemnity bond or other agreement or
security reasonably satisfactory to the Company, or, in the case of any such
mutilation, upon surrender and cancellation of such warrant, the Company will
issue a new warrant in accordance with the terms and conditions of the form of
Warrant attached hereto as Exhibit B.
Section 1.9 Representations by the Purchasers. Each Purchaser hereby
severally represents and warrants, as follows:
(a) It is the Purchaser's present intention to acquire the
Notes and the Warrants for its own account and the Note and the Warrant are
being and will be acquired for the
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purpose of investment and not with a view to distribution or resale thereof;
subject, nevertheless, to the condition that the disposition of the property of
the Purchaser shall at all times be within its control.
(b) The Purchaser is an accredited investor as that term is
defined in Rule 501(a)(1), (a)(2), (a)(3), (a)(7) or (a)(8) under Regulation D
of the Securities Act with at least $70,000,000 of investment assets or is a
"qualified institutional buyer" within the meaning of Rule 144A of the
Securities Act, and was not organized for the specific purpose of acquiring the
Notes and the Warrants.
(c) The Purchaser represents that it has sufficient knowledge
and experience in investing in companies similar to the Company in terms of the
Company's stage of development so as to be able to evaluate the risks and merits
of its investment in the Company and it is able financially to bear the risks
thereof.
(d) The Purchaser understands that (i) the Notes and the
Warrants, the shares issuable upon conversion of the Notes and exercise of the
Warrants, and the shares issuable upon conversion of any convertible securities
issued with respect to the Notes and the Warrants have not been registered under
the Securities Act by reason of their issuance in a transaction exempt from the
registration requirements of the Securities Act pursuant to Section 4(2) thereof
or Rule 505 or 506 promulgated under the Securities Act, (ii) the Notes and the
Warrants, the shares issuable upon conversion of the Notes and exercise of the
Warrants, and the shares issuable upon conversion of any convertible securities
issued with respect to the Notes and the Warrants must be held indefinitely
unless a subsequent disposition thereof is registered under the Securities Act
or is exempt from such registration, (iii) the Warrants and the shares issuable
upon conversion of the Notes and exercise of the Warrants or upon conversion of
any convertible securities issued with respect to the Note and the Warrant will
bear a legend to such effect and (iv) the Company will make a notation on its
transfer books to such effect.
(e) The Purchaser has all necessary power and has taken all
action required to make all the provisions of this Agreement, the Notes, the
Warrants and any other agreements and instruments executed by it in connection
herewith and therewith the valid and enforceable obligations they purport to be.
(f) No Person has or will have, as a result of the transactions
contemplated by this Agreement, any right, interest or valid claim against or
upon the Purchaser for any commission, fee or other compensation as a finder or
broker because of any act or omission by the Purchaser or any agent of the
Purchaser.
(g) The Purchaser had a preexisting relationship with the
Company prior to executing this Agreement or any other documents relating
thereto.
(h) The Purchaser was not induced by the filing of the
Registration Statement to participate in the offer and sale of the Notes or the
Warrants or the shares of Common Stock or any convertible securities underlying
the Notes or the Warrants, and that the Purchaser's decision to so participate
was not influenced by the information contained in the Registration Statement.
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Section 1.10 Equity Financing and Conversion of Note. Subject to the
terms and provisions of the Notes, all or any portion of the principal amount of
the Notes, together with any accumulated but unpaid interest thereon accruing,
may be subject to mandatory conversion or may be converted at the option of the
Purchaser, into equity securities of the Company upon a Qualified Financing,
upon a Change in Control and at certain other times. Subject to the terms and
provisions of the Notes, all or any portion of the outstanding principal and
accrued interest of the Note may be converted into securities of the Company of
the same class and having the same rights and privileges pertaining generally to
the class of securities issued in the Qualified Financing (the "New
Securities"). The Company shall deliver to the Purchaser copies of all
materials, term sheets, proposals and the like provided to or received from
potential investors in the Qualified Financing or Change of Control which
describe the proposed terms of the Qualified Financing or Change of Control,
will provide such other information as is reasonably requested by the Purchasers
and shall in any event provide the Purchaser with at least ten (10) days' prior
notice of the date and final terms of the proposed Qualified Financing.
ARTICLE II
CONDITIONS TO OBLIGATIONS OF PURCHASERS AND THE COMPANY
Section 2.1 Conditions Precedent of Purchasers. The obligation of each of
the Purchasers to purchase and pay for their respective Note and the Warrant to
be purchased by it hereunder at the Closing, and the obligation of each
Purchaser to make any subsequent Advance hereunder, is subject to the following
conditions:
(a) Representations and Warranties. Each of the representations
and warranties of the Company set forth in Article III hereof shall be true on
the date of such Closing.
(b) Performance. The Company shall have performed and complied
with all agreements, obligations, and conditions contained in this Agreement
that are required to be performed or complied by it on or before Closing.
(c) Consents. All authorizations, approvals and consents that
are required in connection with the lawful issuance and sale of the Notes and
the Warrants pursuant to this Agreement shall be duly obtained and effective as
of the Closing.
(d) Documentation at Closing. Each Purchaser shall have
received prior to or at the Closing all of the following, each in form and
substance satisfactory to the Purchaser:
(i) The duly executed Note and Warrant to be issued as
of such date.
(ii) A certified copy of the Certificate of Incorporation
of the Company, as amended to the Closing Date, certified by the Secretary of
State of the State of Delaware, and a copy of the Bylaws of the Company, as
amended to the Closing Date.
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(iii) A certified copy of the resolutions of the Board of
Directors of the Company, evidencing approval of this Agreement, the Notes, the
Warrants and other matters contemplated hereby.
(iv) Certified copies of all documents evidencing other
necessary action and governmental approvals, if any, and consents with respect
to this Agreement, the Notes and the Warrants.
(v) A certificate of the Secretary of the Company which
shall certify the names of the officers of the Company authorized to sign this
Agreement, the Notes, the Warrants and the other documents or certificates to be
delivered pursuant to this Agreement by the Company, or any of its officers,
together with the true signatures of such officers. The Purchasers may
conclusively rely on such certificate until they shall receive a further
certificate of the Secretary of the Company canceling or amending the prior
certificate and submitting the signatures of the officers named in such further
certificate.
(vi) A certificate from a duly authorized officer of the
Company stating that to his or her knowledge: (i) the representations and
warranties of the Company contained in Article III hereof and otherwise made by
the Company in writing in connection with the transactions contemplated hereby
are true and correct as if made on the date of such certificate (except with
respect to matters and items, such as financial statements, which are expressly
reported as of a particular date); (ii) the Company has performed and complied
with all agreements, obligations, and conditions contained in this Agreement
that are required to be performed or complied with by it on or before Closing;
and (iii) no condition or event has occurred or is continuing or will result
from execution and delivery of this Agreement, the Notes or the Warrants which
constitute an Event of Default (as hereinafter defined) or would constitute an
Event of Default but for the requirement that notice be given or time elapse, or
both.
(vii) The Company shall have furnished to the Purchasers
all forms which the Purchasers shall have informed the Company are required by
the Small Business Administration (the "SBA") in connection with the
transactions contemplated hereby, including without limitation, a Size Status
Declaration on SBA Form 480, an Assurance of Compliance on SBA Form 652D and a
Portfolio Financing Report on SBA Form 1031, which forms shall be in proper form
for filing with the SBA.
(viii) The duly executed Related Agreements to be issued as
of such date.
(ix) The Company shall have delivered to the Purchasers
the opinion of Mintz, Levin, Cohn, Ferris, Glovsky & Popeo, counsel to the
Company, dated the date of the Closing, in form and substance satisfactory to
the Purchasers.
(x) A duly executed Shareholder Rights Agreement dated
of even date herewith, attached hereto as Exhibit F, pursuant to which the
shares of Common Stock issuable upon conversion (x) of the Notes (or Series A
Preferred Stock of the Company, if applicable), (y) any securities received in a
Qualified Financing and (z) the exercise of the Warrants (or
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conversion of the Series A Preferred Stock of the Company if applicable) would
be subject to the registration rights set forth in such agreement.
(xi) A duly executed amendment to the Certificate of
Designation and Determination of Rights and Preferences for Series A Convertible
Preferred Stock of the Company in the form attached hereto as Exhibit E.
Section 2.2 Conditions Precedent of the Company. All obligations of the
Company at the Closing are subject at the Company's option to the fulfillment
prior to or at the Closing Date of each of the following conditions:
(a) Representations and Warranties. All representations and
warranties of the Purchasers contained in this Agreement shall be true and
complete in all material respects at and as of the Initial Closing Date as
though made at and as of that time.
(b) Covenants and Condition. The Purchasers shall have
performed and complied in all material respects with all covenants, agreements
and conditions required by this Agreement to be performed or complied with by
them prior to or on the Closing Date.
(c) No Injunction. None of the transactions contemplated by
this Agreement shall be restrained or enjoined (preliminarily, temporarily or
permanently) by any Governmental Authority.
(d) Related Agreements. Each of the other Related Agreements
shall be executed and delivered by the other parties thereto at or prior to the
Closing Date.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to the Purchasers, as of the date
hereof and as of the Closing Date and as of the date of closing on any
subsequent Advance, as follows, except as otherwise provided in the Disclosure
Schedules attached hereto (as the same shall be updated by affidavit of the
Company immediately prior to the Closing Date or the date of closing on any
subsequent Advance):
Section 3.1 Organization, Qualification, Corporate Power and
Enforceability. The Company is a corporation duly organized, validly existing,
and in good standing under the laws of the jurisdiction of its incorporation.
The Company is duly authorized to conduct business and is in good standing under
the laws of each jurisdiction where such qualification is required, except where
the lack of such qualification would not have a material adverse effect on the
financial condition of the Company taken as a whole. This Agreement and the
Related Agreements are legal, valid and binding obligations of the Company,
enforceable against the Company in accordance with their respective terms.
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Section 3.2 Capitalization. The entire authorized capital stock of the
Company consists of 55,000,000 shares of capital stock, of which 50,000,000
represent shares of Common Stock and 5,000,000 represent shares of Preferred
Stock. 750,000 shares of the Preferred Stock have been designated as Series A
Convertible Preferred Stock. As of October 31, 2000, there were 11,179,568
shares of Common Stock and 200,000 shares of Convertible Preferred Stock issued
and outstanding. All of the issued and outstanding Company Shares have been duly
authorized, are validly issued, fully paid, and nonassessable, and are held of
record by the shareholders as set forth in the Schedule 3.2. Except as disclosed
in Schedule 3.2, there are no outstanding or authorized options, warrants,
purchase rights, subscription rights, conversion rights, exchange rights, or
other contracts or commitments that could require the Company to issue, sell, or
otherwise cause to become outstanding any of its capital stock. There are no
outstanding or authorized stock appreciation, phantom stock, profit
participation, or similar rights with respect to the Company.
Section 3.3 Noncontravention. To the actual knowledge without independent
investigation of ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, S. ▇▇▇▇▇ ▇▇▇▇▇▇▇ and ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
("Knowledge") of the Company, neither the execution and the delivery of this
Agreement, nor the consummation of the transactions or the other documents
contemplated hereby, will (i) violate any constitution, statute, regulation,
rule, injunction, judgment, order, decree, ruling, charge, or other restriction
of any government, governmental agency, or court to which any of the Company is
subject or any provision of the charter or bylaws of the Company or (ii)
conflict with, result in a breach of, constitute a default under, result in the
acceleration of, create in any party the right to accelerate, terminate, modify,
or cancel, or require any notice under any agreement, contract, lease, license,
instrument, or other arrangement to which the Company is a party or by which it
is bound or to which any of its assets is subject (or result in the imposition
of any security interest upon any of its assets), except where the violation,
conflict, breach, default, acceleration, termination, modification,
cancellation, failure to give notice, or security interest would not have a
material adverse effect on the financial condition of the Company or on the
ability of the parties to consummate the transactions contemplated by this
Agreement. The Company does not need to give any notice to, make any filing
with, or obtain any authorization, consent, or approval of any government or
governmental agency in order for the Parties to consummate the transactions
contemplated by this Agreement, except where the failure to give notice, to
file, or to obtain any authorization, consent, or approval would not have a
material adverse effect on the financial condition of the Company or on the
ability of the parties to consummate the transactions contemplated by this
Agreement.
Section 3.4 Brokers' Fees. Except for fees and consideration payable to
Mayflower Resources, Inc. (which fees have been fully disclosed to the
Purchasers on Schedule 3.4), the Company has no liability or obligation to pay
any fees or commissions to any broker, finder, or agent with respect to the
transactions contemplated by this Agreement.
Section 3.5 No Subsidiaries. The Company has no subsidiaries and has not
invested cash in exchange for an equity interest in any entity.
Section 3.6 Financial Statements. The Company has delivered the following
financial statements (collectively the "Financial Statements") to the
undersigned: (i) audited balance sheets and statements of income, changes in
stockholders' equity, and cash flow as of and for the fiscal
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years ended December 31, 1997, 1998, and 1999 for the Company; and (ii)
unaudited balance sheet and statements of income, changes in stockholders'
equity, and cash flow (the "Most Recent Financial Statements") as of and for the
nine months ended September 30, 2000 (the "Most Recent Fiscal Month End") for
the Company. The Financial Statements (including the notes thereto) have been
prepared in accordance with GAAP applied on a consistent basis throughout the
periods covered thereby and present fairly the financial condition of the
Company as of such dates and the results of operations of the Company for such
periods. Except as set forth on Schedule 3.6, the Company has no material
liabilities (fixed or contingent, including, but not limited to, any tax
liabilities due or to become due) which are, or Indebtedness which is, not fully
reflected or provided for in the balance sheet for the Most Recent Fiscal Month
End, other than trade payables and accruals incurred in the Ordinary Course of
Business since the date of such balance sheet. The Company is not in default on
any of its capital or operating leases that would result in a material adverse
effect on the financial condition of the Company taken as a whole. The Company
is not in default under any Indebtedness owed to the QIP Investors (as defined
in the Intercreditor Agreement of even date herewith).
Section 3.7 Events Subsequent to Most Recent Fiscal Month End. Since the
Most Recent Fiscal Month End, there has not been any material adverse change in
the business, condition (financial or otherwise), assets or prospects of the
Company other than as set forth in Schedule 3.7 hereto.
Section 3.8 Legal Compliance. To the Knowledge of the Company, the
Company has complied with all applicable laws (including rules, regulations,
codes, plans, injunctions, judgments, orders, decrees, rulings, and charges
thereunder) of federal, state, local, and foreign governments (and all agencies
thereof), except where the failure to comply would not have a material adverse
effect upon the financial condition of the Company taken as a whole.
Section 3.9 Real Property.
(a) The Company owns no real property.
(b) The Company has delivered or made available for inspection
to the undersigned correct and complete copies of the leases and subleases to
which it is a party (as amended to date). Each such lease and sublease is legal,
valid, binding, enforceable, and in full force and effect, except where the
illegality, invalidity, nonbinding nature, unenforceability, or ineffectiveness
would not have a material adverse effect on the financial condition of the
Company.
Section 3.10 Intellectual Property.
(a) The Company has not interfered with, infringed upon,
misappropriated, or violated any material Intellectual Property rights of third
parties in any material respect. To the Knowledge of the Company, no third party
has interfered with, infringed upon, misappropriated, or violated any material
Intellectual Property rights of the Company in any material respect.
(b) The Company's Intellectual Property is sufficient, in the
opinion of the Company, for the operation of the Company's business as it
currently is conducted or as reflected in the Business Plan (defined herein).
The Company is the owner of all right, title, and
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interest in and to the Intellectual Property, or has the right to use the
Intellectual Property pursuant to valid and binding license agreements entered
into with third parties.
(c) For purposes hereof, "Intellectual Property" means (a) all
inventions (whether patentable or unpatentable and whether or not reduced to
practice), all improvements thereto, and all patents, patent applications, and
patent disclosures, together with all reissuances, continuations,
continuations-in-part, revisions, extensions, and reexaminations thereof, (b)
all trademarks, service marks, trade dress, logos, trade names, and corporate
names, together with all translations, adaptations, derivations, and
combinations thereof and including all goodwill associated therewith, and all
applications, registrations, and renewals in connection therewith, (c) all
copyrightable works, all copyrights, and all applications, registrations, and
renewals in connection therewith, (d) all mask works and all applications,
registrations, and renewals in connection therewith, (e) all trade secrets and
confidential business information (including ideas, research and development,
know-how, formulas, compositions, manufacturing and production processes and
techniques, technical data, designs, drawings, specifications, customer and
supplier lists, pricing and cost information, and business and marketing plans
and proposals), (f) all computer software (including data and related
documentation), (g) all other proprietary rights, and (h) all copies and
tangible embodiments thereof (in whatever form or medium).
Section 3.11 No Litigation. Except as provided in Schedule 3.11, the
Company (i) is not subject to any outstanding injunction, judgment, order,
decree, ruling, or charge and (ii) is not a party to any action, suit,
proceeding, hearing, or investigation of, in, or before any court or
quasi-judicial or administrative agency of any federal, state, local, or foreign
jurisdiction, except where the injunction, judgment, order, decree, ruling,
action, suit, proceeding, hearing, or investigation would not have a material
adverse effect on the financial condition of the Company.
Section 3.12 Insurance. All policies of insurance to which the Company is
a party or that provide coverage to the Company, or any director or officer of
the Company:
(a) are valid, outstanding, and enforceable;
(b) taken together and in the sole discretion of the Company,
provide adequate insurance coverage for the assets and the operations of the
Company for all likely risks to which the Company is normally exposed; and
(c) will continue in full force and effect following the
Closing.
Section 3.13 Employees. The Company is not a party to or bound by any
collective bargaining agreement, nor, to the Company's Knowledge, has it
experienced any strike or material grievance, claim of unfair labor practices,
or other collective bargaining dispute since its inception. To the Company's
Knowledge, the Company has not committed any material unfair labor practice. The
Company has no Knowledge of any organizational effort presently being made on
behalf of any labor union with respect to employees of the Company.
Section 3.14 Title to Properties. The Company owns all the properties and
assets (whether real, personal, or mixed and whether tangible or intangible)
that it purports to own
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located in the facilities operated by the Company or reflected as owned in the
books and records of the Company, including all of the properties and assets
reflected in the Financial Statements, and all of the properties and assets
purchased or otherwise acquired by the Company since the Most Recent Fiscal
Month End.
Section 3.15 Small Business Concern. The Company with its "affiliates"
(as that term is defined in Part 121.103 of Title 13 of the Code of Federal
Regulations) is a "small business" within the meaning of the Small Business Act
and Part 121 of said Regulations. The information pertaining to the Company set
forth in Small Business Administration Forms 480, 652 and 1031 is accurate and
complete.
Section 3.16 Series A Preferred Stock Grant Date. The Company represents
that the grant date for purposes of determining the decrease in the conversion
price to $1.78 for the Series A Preferred Stock is May 31, 2000.
Section 3.17 Disclaimer of Other Representations and Warranties. Except
as expressly set forth in this Article III, the Company makes no representation
or warranty, express or implied, at law or in equity, in respect of the Company,
or any of its assets, liabilities or operations, including, without limitation,
with respect to merchantability or fitness for any particular purpose, and any
such other representations or warranties are hereby expressly disclaimed. The
Purchaser hereby acknowledge and agrees that, except to the extent specifically
set forth in this Article III, the Purchaser is purchasing the Notes and
Warrants on an "as-is, where-is" basis.
ARTICLE IV
COVENANTS OF THE COMPANY
Section 4.1 Affirmative Covenants Other Than Reporting Requirements.
Without limiting any other covenants and provisions of this Agreement, the
Company covenants and agrees that, as long as the Notes are outstanding, it will
perform and observe the following covenants and provisions:
(a) Punctual Payment. Pay the principal of, and interest on,
the Notes at the times and place and in the manner provided in the Notes and
herein.
(b) Payment of Taxes and Trade Debt. Pay and discharge all
taxes, assessments and governmental charges or levies that are material and
which are imposed upon it or upon its income or profits or business, or upon any
properties belonging to it, prior to the date on which penalties attach hereto,
and all lawful claims which, if unpaid, might become a material lien or charge
upon any properties of the Company, provided that the Company shall not be
required to pay any such tax, assessment, charge, levy or claim which is being
contested in good faith and by appropriate proceedings if the Company shall, if
required by GAAP, have set aside on its books adequate reserves with respect
thereto. Pay when due, or in conformity with customary trade terms, all material
lease obligations, and trade debt incident to the operations of
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the Company, except such as are being contested in good faith and by appropriate
proceedings if the Company shall have set aside on its books adequate reserves
with respect thereto.
(c) Maintenance of Properties and Insurance. Maintain all of
its material properties. The Company shall also maintain insurance covering its
properties and business with responsible and reputable insurance companies or
associations in such amounts and covering such risks as is usually carried by
companies engaged in similar businesses and owning similar properties in the
same general areas in which the Company operates.
(d) Preservation of Corporate Existence. Preserve and maintain
its corporate existence and all rights, franchises and privileges in the
jurisdiction of its organization, and qualify and remain qualified as a foreign
corporation in each jurisdiction in which such qualification is necessary or
desirable in view of its business and operations or the ownership of its
properties, except where the failure to qualify would not have a material
adverse effect on the operation of the Company's business. Preserve and maintain
all licenses and other rights to use patents, processes, licenses, trademarks,
trade names, inventions, intellectual property rights or copyrights owned or
possessed by it, and material to the conduct of its business.
(e) Compliance with Laws. Comply with all applicable laws,
rules, regulations and orders of any governmental authority, noncompliance with
which could materially adversely affect its business or condition, financial or
other.
(f) Inspection Rights. The Company shall permit such persons as
the Majority Holders may designate and at the Purchaser's expense, upon not less
than two (2) days' prior notice to the Company to visit and inspect, during
normal business hours and without material disruption to the Company's business,
any of the properties of the Company and its subsidiaries, examine their records
and books of account, and make copies and extracts therefrom, discuss the
affairs, finances and accounts of the Company with its directors, officers,
employees and public accountants (and the Company hereby authorizes said
accountants to discuss with the Purchaser and such designees such affairs,
finances and accounts), and consult with and advise the management of the
Company and its officers, partners, directors and independent accountants as to
its affairs, finances and accounts, all at reasonable times and upon reasonable
notice. The Purchasers and their approved designees agree that he/she or it will
keep confidential and will not disclose, divulge or use (other than for purposes
of monitoring its investment in the Company) any confidential, proprietary or
secret information which any Purchaser may obtain from the Company pursuant to
financial statements, reports and other materials submitted by the Company to
such Purchaser pursuant to this Agreement, or pursuant to inspection rights
granted hereunder, unless such information is known to the public through no
fault of any such Purchaser or its designees or representatives; provided,
however, a Purchaser may disclose such information (i) to its attorneys,
accountants and other professionals to the extent necessary to obtain their
services in connection with its investment in the Company, (ii) to any
prospective permitted transferee of Notes, the Warrants or any securities
issuable in connection therewith, so long as the prospective transferee agrees
to be bound by the provisions of this subsection, and (iii) to any general
partner or affiliate of any Purchaser.
(g) SBA Examiner Audits, Requests for Documents. At any
reasonable time and from time to time during business hours, and upon prior
notice, provide SBA examiners
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access to its books and records for SBA audit purposes. In addition, upon
request of the Purchasers, the Company shall deliver or cause to be delivered
copies of any and all documents, certificates or other instruments which the
Purchaser may request from time to time (i) in response to a request for
production of the same from the SBA, or (ii) in compliance with any requirement
under the Small Business Investment Act.
(h) Keeping of Records and Books of Account. Keep adequate
records and books of account, in which complete entries will be made in
accordance with GAAP consistently applied, reflecting all material financial
transactions of the Company, and in which, for each fiscal year, are proper
reserves for depreciation, depletion, obsolescence, amortization, taxes, bad
debts and other purposes in connection with its business shall be made.
(i) Compliance with ERISA. Comply with all minimum funding
requirements applicable to any pension or other employee benefit or employee
contribution plans which are subject to ERISA or to the Internal Revenue Code of
1986 as amended (the "Code"), and comply in all material respects with the
provisions of ERISA and the Code, and the rules and regulations thereunder,
which are applicable to any such plan. The Company will not permit any event or
condition to exist which could permit any such plan to be terminated under
circumstances which would cause the lien provided for in Section 4068 of ERISA
to attach to the assets of the Company.
(j) Foreign Corrupt Practices Act. Comply, and cause each
officer, director, partner, employee and agent of the Company to comply, at all
times with the prohibitions on certain acts and practices set forth in the
Foreign Corrupt Practices Act of 1977, and any rules or regulations promulgated
thereunder.
(k) Confidentiality Agreement. The Company will use its best
efforts to have all key officers execute a confidentiality and invention
assignment agreement with the Company.
(l) Pro Rata Payment. All payments by the Company to the
Holders of the Notes (whether for principal, interest, premium or otherwise)
shall be allocated among the Notes pro rata in accordance with their respective
outstanding principal balances.
Section 4.2 Negative Covenants. Without limiting any other covenants and
provisions hereof, the Company covenants and agrees that, as long as the Notes
are outstanding, it will comply with and observe the following covenants and
provisions and will not, without the prior written consent of the Majority
Holders:
(a) Distributions. Declare or pay any dividends (other than
stock splits), purchase, redeem, retire, or otherwise acquire for value any of
its capital stock (or rights, options or warrants to purchase such capital
stock) now or hereafter outstanding, or make any distribution to shareholders as
such.
(b) Stock Issuance of Redeemable Shares. Issue any additional
capital stock of the Company if the sale has a redemption feature, other than
New Securities issued in a Qualified Financing.
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(c) Change in Nature of Business. Make any material change in
the nature of its business as carried on at the date hereof, without the prior
approval of its Board of Directors.
(d) Payment on Indebtedness. The Company shall not (i) make any
payments on Indebtedness to Mayflower Resources, Inc. or S. ▇▇▇▇▇ ▇▇▇▇▇▇▇; (ii)
make any payments on Indebtedness to the QIP Investors (as defined in the
Intercreditor Agreement of even date herewith); and (iii) make any voluntary
Prepayment (as hereinafter defined) of principal or interest on any Indebtedness
other than the Notes for borrowed money prior to the repayment of the Notes or
the conversion of the Notes into capital stock of the Company. "Prepayment"
shall mean any payment of any Indebtedness prior to the scheduled date of
payment therefor.
(e) Additional Indebtedness. The Company shall not enter into
any commitment for additional Indebtedness other than for capital or operating
leases, purchase money security interests and bank financing secured by the
Company's accounts receivable (provided such accounts receivable financing is
reasonably approved by the Purchasers).
Section 4.3 Reporting Requirements. Prior to the Company's completion of
an initial public offering of its securities on any national market or exchange
under the Securities Act, the Company will furnish to the each registered holder
of the Notes, the Warrants or any securities issuable on exercise of the
Warrants or conversion of the Notes:
(a) as soon as possible and in any event within ten (10) days
after the occurrence of each Event of Default or each event which, with the
giving of notice or lapse of time or both, would constitute an Event of Default,
the statement of the Chief Financial Officer of the Company setting forth
details of such Event of Default or event and the action which the Company
proposes to take with respect thereto;
(b) as soon as reasonably possible, and in any event within
thirty (30) days after the end of each month, unaudited financial statements of
the Company as at the end of such month;
(c) as soon as available and in any event within forty-five
(45) days after the end of each of the first three (3) quarters of each fiscal
year of the Company, balance sheets of the Company as of the end of such quarter
and statements of income and retained earnings and of changes in financial
position of the Company for the period commencing at the end of the previous
fiscal year and ending with the end of such quarter, setting forth in each case
in comparative form the corresponding figures for the corresponding period of
the preceding fiscal year, all in reasonable detail and duly certified (subject
to year-end audit adjustments) by the Chief Financial Officer of the Company as
having been prepared in accordance with GAAP consistently applied;
(d) as soon as available and in any event within ninety (90)
days after the end of each fiscal year of the Company, a copy of the annual
audit report for such year for such Company, including therein the balance sheet
of the Company as of the end of such fiscal year and statement of income and
retained earnings and of changes in financial position of the Company for such
fiscal year, setting forth in each case in comparative form the corresponding
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figures for the preceding fiscal year, all duly certified by the Company's
independent public accountants;
(e) prior to the start of each fiscal year, or no later than
thirty (30) days after the start of such fiscal year, capital and operating
expense budgets, cash projections and income and loss projections for the
Company in respect of such fiscal year, all itemized in reasonable detail and,
promptly after preparation, any revisions to any of the forgoing; and
(f) promptly after sending, making available, or filing the
same, such reports and financial statements as the Company shall send or make
available to the stockholders or owners of the Company or to the Commission and
such other information respecting the business, properties or the condition or
operations, financial or otherwise, of the Company as the Purchaser may from
time to time reasonably request.
ARTICLE IVA
COVENANTS OF PURCHASER
Section 4.1A Non-Disclosure. Purchaser covenants that it will keep
confidential and not disclose any material or non-public information obtained
from the Company pursuant to discussions with the Company or its due diligence
investigation of the Company, other than as required by applicable law, for a
period of three years from the date hereof.
Section 4.2A No-Trade Period. Purchaser covenants that it will not trade
in the Company's securities in any manner while in the possession of material
non-public information pertaining to the Company.
ARTICLE V
DEMAND OBLIGATIONS; EVENTS OF DEFAULT; REMEDIES
Section 5.1 Demand Obligations; Events of Default. Nothing contained in
this section, or elsewhere in this Agreement, shall affect or alter the demand
nature of such of the Obligations (as hereinafter defined) as are by their
terms, demand obligations. The occurrence of an Event of Default shall not be a
prerequisite for the Purchasers making demand or requiring payment of such
obligations except as set forth in the Note.
Subject to the provisions of the first paragraph of this section, the
occurrence of any one or more of the following events shall constitute an event
of default hereunder (said events are hereinafter referred to individually as an
"Event of Default" and together as the "Events of Default"), entitling the
Purchasers to pursue all of its remedies hereunder and under any of the other
Financing Documents (as hereinafter defined):
(a) The failure of the Company to pay any amount of principal
and interest under the Notes when and as due thereunder within five (5) days of
the date when due;
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(▇) The failure of the Company to pay any other Obligation
within five (5) days of the date when due;
(c) The failure of the Company to punctually perform, observe,
comply with or satisfy any material covenant, agreement or condition contained
in any of the Financing Documents (other than those covenants and agreements set
forth in clauses (a) and (b) of this Section 5.1), which failure remains uncured
for more than twenty (20) business days after written notice by the Purchaser to
the Company for the cure thereof;
(d) Any statement, certificate, report, financial statement,
representation or warranty now or hereafter made or furnished by the Company in
any of the Financing Documents, in connection with the execution and delivery
thereof or in compliance with any of the provisions thereof, was, when made or
furnished, false or erroneous in any material respect, or omitted or failed to
state a material fact necessary in order to make the statements contained
therein not misleading;
(e) The termination of existence, dissolution, winding up or
liquidation of the Company or the sale or other transfer of all or substantially
all of the assets or the capital stock of the Company to a third party;
(f) The Company shall commence a voluntary case concerning
itself under Title 11 of the United States Code entitled "Bankruptcy," as now or
hereafter in effect, or any successor thereto (the "Bankruptcy Code"); or an
involuntary case is commenced against the Company and the petition is not
controverted within thirty (30) days, or is not dismissed within sixty (60) days
after commencement of the case; or a custodian (as defined in the Bankruptcy
Code) is appointed for, or takes charge of, all or substantially all of the
property of the Company; or the Company commences any other proceeding under any
reorganization, arrangement, adjustment of debt, relief of debtors, dissolution,
insolvency or liquidation or similar law of any jurisdiction whether now or
hereafter in effect relating to the Company; or there is commenced against the
Company any such proceeding which remains undismissed for a period of forty-five
(45) days; or the Company is adjudicated insolvent or bankrupt; or any order of
relief or other order approving any such case or proceeding is entered; or the
Company suffers any appointment of any custodian or the like for it or any
substantial part of its property to continue undischarged or unstayed for a
period of forty-five (45) days; or the Company makes a general assignment for
the benefit of creditors; or any corporate action is taken by the Company for
the purpose of effecting any of the foregoing; or
(g) The failure of the Company to punctually perform, observe,
comply with or satisfy any material covenant, agreement or condition in any
agreement entered into by the Company which failure results in the acceleration
of any other Indebtedness of the Company of more than $75,000.
Section 5.2 General Remedies. In addition to and without in any way
limiting any other rights and remedies available to any of the Purchasers
hereunder or under any of the other Financing Documents or under applicable law
or in equity, and at any time or times following the demand for payment of the
Obligations which are payable on demand, and the expiry of any applicable grace
period, or upon the occurrence of an Event of Default:
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(a) the Majority Holders may declare and cause all or any
portion of the Obligations to be immediately due and payable (provided, however,
that upon a default under Section 5.1(f) of this Agreement, all of the
Obligations are immediately due and payable without the taking of any action by
any of the Lenders);
(b) each Purchaser shall have the right to apply to the
Obligations any deposits or other sums at any time credited by or due from the
Purchaser to the Company; and
(c) each Purchaser may exercise any rights and remedies
available under the Financing Documents as they shall deem appropriate.
Section 5.3 Remedies Not Exclusive. The enumeration of rights and
remedies in the Financing Documents is not intended to be exclusive, and they
shall be in addition to and not by way of limitation of such others as the
Purchasers may have under the UCC (as hereinafter defined), other applicable
law, and any and all other documents, instruments, agreements or other writings
between or among Company, the Purchasers or other Persons. Each Purchaser shall
determine its choice of rights and remedies and the order in which they shall be
exercised, and which collateral, if any, is to be proceeded against and in which
order. The exercise of any right or remedy against the Company, any other Person
or any or all collateral shall not preclude the exercise of others or the
exercise thereof against Company, any other Person or any other collateral, all
of which shall be cumulative. No act, failure or delay by any Purchaser shall
constitute a waiver of any of its rights and remedies. No single or partial
waiver by a Purchaser of any provision of the Financing Documents, or of any
breach or default thereunder, or of any right or remedy which the Purchaser may
have, shall operate as a waiver of any other provision, breach, default, right
or remedy or of the same one on a future occasion.
ARTICLE VI
DEFINITIONS AND ACCOUNTING TERMS
Section 6.1 Certain Defined Terms. As used in this Agreement, the
following terms shall have the following meanings (such meanings to be equally
applicable to both the singular and plural forms of the terms defined):
"Agreement" means this Note and Warrant Purchase Agreement, as from time
to time amended and in effect between the parties.
"Advance" shall have the meaning assigned to that term in Section 1.1.
"Business Day" means a day other than Saturday, Sunday or a public
holiday under the laws of the State of Delaware.
"Change-in-Control" shall mean (i) any sale, lease, exchange or other
transfer (in one transaction or series of transactions) of all or substantially
all of the assets of the Company, (ii) any consolidation or merger of the
Company with any other entity (including without limitation,
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a triangular merger) where the stockholders of the Company immediately prior to
the consolidation or merger, would not, immediately after the consolidation or
merger, beneficially own, directly or indirectly, shares representing fifty
percent (50%) of the combined voting power of all of the outstanding securities
of the entity issuing cash or securities in the consolidation or merger (or its
ultimate parent corporation, if any), or (iii) a person, including a "person" as
defined in Section 13(d)(3) of the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), other than the Company, becomes the beneficial owner (as
defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of
securities of the Company representing fifty percent (50%) or more of the total
voting power represented by the Company's then outstanding voting securities.
"Closing" shall have the meaning assigned to that term in Section 1.3(a)
as well as any future closing which shall occur as part of an Advance on the
Closing Date.
"Closing Date" shall have the meaning assigned to that term in Section
1.3(a) as well as such date occurring three business days after the Company
requests an Advance.
"Code" shall have the meaning assigned to that term in Section 4.1(i).
"Commission" means the United States Securities and Exchange Commission
or any other federal agency at the time administering the Securities Act.
"Company" means YellowBrix, Inc., and its successors and assigns.
"Events of Default" shall have the meaning assigned to that term in
Section 5.1.
"Exchange Act" means the Securities Exchange Act of 1934 or any similar
federal statute, and the rules and regulations of the Commission (or of any
other federal agency then administering the Exchange Act) thereunder, all as the
same shall be in effect at the time.
"Financial Statements" shall have the meaning assigned to that term in
Section 3.6.
"Financing Documents" means and includes the following, as the same may
be hereafter amended, modified, substituted, extended or restated, from time to
time: this Agreement, the Note, the Warrant, the Security Agreement, the
Intercreditor Agreement and any and all other documents, instruments, financing
statements agreements and writings, whether now or hereafter executed by or on
behalf of the Company, and delivered or assigned to the Purchasers in connection
with the transactions contemplated herein or therein.
"GAAP" means generally accepted accounting principles.
"Indebtedness" means all obligations, contingent and otherwise, which
should, in accordance with GAAP consistently applied, be classified upon the
obligor's balance sheet as liabilities, but in any event including, without
limitation, liabilities secured by any mortgage on property owned or acquired
subject to such mortgage, whether or not the liability secured thereby shall
have been assumed, and also including, without limitation, (i) all guaranties,
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endorsements and other contingent obligations, in respect of Indebtedness of
others, whether or not the same are or should be so reflected in said balance
sheet, except guaranties by endorsement of negotiable instruments for deposit or
collection or similar transactions in the ordinary course of business and (ii)
the present value of any lease payments due under leases required to be
capitalized in accordance with applicable Statements of Financial Accounting
Standards, determined in accordance with applicable Statements of Financial
Accounting Standards.
"Intellectual Property" shall have the meaning assigned to that term in
Section 3.10(c).
"Intercreditor Agreement" shall mean the Intercreditor Agreement, in the
form attached hereto as Exhibit C executed by the Company, the Purchasers and
the QIP Investors.
"Majority Holders" shall mean the holders of more than fifty percent
(50%) of the aggregate outstanding principal balances due under the Notes.
"New Securities" shall have the meaning assigned to that term in Section
1.10.
"Notes" shall have the meaning assigned to that term in Section 1.1.
"Obligations" means any and all indebtedness, liabilities, duties,
undertakings, warranties, covenants and agreements (including those of payment
or performance) of the Company to the Purchaser, of every kind, nature and
description, which arise under or pursuant to the terms of any or all of the
Financing Documents, whether or not the same are now existing or hereafter
arising, due or not due, absolute or contingent, liquidated or unliquidated.
"Ordinary Course of Business" means with respect to any entity, the
ordinary course of business consistent with past custom and practice (including
with respect to quantity and frequency) of that entity.
"Permitted Liens" means any lien, charge, encumbrance, mortgage,
conditional sale agreement, title retention agreement, financing lease, pledge
or security interest of any kind or type and whether arising by Contract or
under law that either is currently reflected on the financial statements for the
Most Recent Fiscal Month Ended or that is incurred in the Ordinary Course of
Business.
"Person" means an individual, corporation, partnership, joint venture,
limited liability company, trust, or unincorporated organization, or a
government or any agency or political subdivision thereof, or any other entity
or business form.
"Prepayment" shall have the meaning assigned to that term in Section
4.2(d).
"Principal Amount" shall have the meaning assigned to that term in
Section 1.3(a).
"Purchaser" means and shall include not only the Person enumerated on
Schedule I hereto but also any other permitted transferees of the Note or the
Warrant.
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"QIP Investors" means Quantum Industrial Partners, LDC, Geosor
Corporation, ▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ ▇▇▇▇.
"Qualified Financing" means (i) the sale by the Company of its capital
stock or any securities convertible into or exercisable for shares of its
capital stock ("Capital Stock Equivalents") in a single transaction or series of
related transactions from which at least $10,000,000 of gross proceeds are
raised, exclusive of the amounts raised by way of purchase of the Notes, or (ii)
the completion of an initial public offering under the Securities Act in which
the Company raises gross proceeds in the amount of $30,000,000 or more.
"Related Agreements" shall mean the Security Agreement, the Notes, the
Warrants and the Intercreditor Agreement.
"Registration Statement" shall mean the registration statement on Form
S-1 filed by the Company on October 20, 2000, with the Commission for the
proposed public offer and sale of shares by the Company of the Company's Common
Stock.
"SBA" shall have the meaning assigned to that term in Section
2.1(d)(viii).
"Security Agreement" shall mean the Security Agreement, in the form
attached hereto as Exhibit D executed by the Company granting a security
interest in certain Collateral described in Section 1 of the Security Agreement.
"Securities Act" means the Securities Act of 1933 or any similar federal
statute, and the rules and regulations of the Commission (or of any other
federal agency then administering the Securities Act) thereunder, all as the
same shall be in effect at the time.
"Subsidiary" or "Subsidiaries" means any corporation, association, joint
stock company, business trust or other similar organization of which fifty
percent (50%) or more of the ordinary voting power for the election of a
majority of the members of the board of directors or other governing body of
such entity is held or controlled by the Company; or any other such organization
the management of which is directly or indirectly controlled by the Company
through the exercise of voting power or otherwise.
"UCC" means the Uniform Commercial Code as in effect from time to time in
the applicable jurisdiction.
"Warrants" shall have the meaning assigned to that term in Section 1.2.
Section 6.2 Accounting Terms. All accounting terms not specifically
defined herein shall be construed in accordance with GAAP consistent with those
applied in preparation of the financial statements attached hereto as Schedule
3.6, and all financial data submitted pursuant to this Agreement and all
financial tests to be calculated in accordance with this Agreement shall be
prepared and calculated in accordance with such principles.
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ARTICLE VII
MISCELLANEOUS
Section 7.1 No Waiver; Cumulative Remedies. No failure or delay on the
part of the Purchasers, or any other holder of the Notes and the Warrants in
exercising any right, power or remedy hereunder shall operate as a waiver
thereof, nor shall any single or partial exercise of any such right, power or
remedy preclude any other or further exercise thereof or the exercise of any
other right, power or remedy hereunder. The remedies herein provided are
cumulative and not exclusive of any remedies provided by law.
Section 7.2 Amendments, Waivers and Consent. Any provision in this
Agreement, the Notes or the Warrants to the contrary notwithstanding, changes in
or additions to this Agreement may be made, and compliance with any covenant or
provision herein or therein set forth may be omitted or waived, if the Company
shall obtain consent thereto in writing from the Majority Holders. Any waiver or
consent may be given subject to satisfaction of conditions stated therein and
any waiver or consent shall be effective only in the specific instance and for
the specific purpose for which given.
Section 7.3 Addresses for Notices, etc. All notices, requests, demands
and other communications provided for hereunder shall be in writing (including
telefacsimile communication) and mailed or faxed or delivered to the applicable
party at the addresses indicated below:
If to the Company: YellowBrix, Inc.
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: General Counsel
with a copy to: ▇▇▇▇▇ ▇. ▇▇▇▇, Esq.
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ and ▇▇▇▇▇ P.C.
One Fountain Square
▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
If to the Purchasers, at the addresses set forth in Schedule I.
If to any other holder of the Notes or the Warrants, at such holder's
address for notice as set forth in the register maintained by the Company, or,
as to each of the foregoing, at such other address as shall be designated by
such Person in a written notice to the other party complying as to delivery with
the terms of this section. All such notices, requests, demands and other
communications shall, when mailed or faxed, respectively, be effective three (3)
days after
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deposited in the mails or faxed with transmission confirmed electronically,
respectively, addressed as aforesaid.
Section 7.4 Costs, Expenses and Taxes. The Company shall pay the
reasonable fees of Purchaser's counsel, and all of its Counsel's out-of-pocket
expenses, with respect to the preparation, execution and delivery of this
Agreement, the Notes, the Warrants and other instruments and documents to be
delivered hereunder. The Company shall pay any and all stamp and other taxes
payable or determined to be payable in connection with the execution and
delivery of this Agreement, the Notes, the Warrants and the other instruments
and documents to be delivered hereunder or thereunder and agrees to save each of
the Purchasers harmless from and against any and all liabilities with respect to
or resulting from any delay in paying or omission to pay such taxes and filing
fees. The Company also agrees to pay, on demand, all reasonable fees, costs and
expenses (including, without limitation, attorneys' reasonable fees and
expenses) incurred or paid by the Purchasers in connection with (i) the
necessary amendment or modification of this Agreement, the Notes, the Warrants
or any other documents or instruments executed and delivered herewith, (ii) the
enforcement of the Purchasers' rights and remedies under this Agreement, the
Notes, the Warrants or any other documents or instruments executed and delivered
herewith; (iii) the administration, supervision, protection of or realization on
any collateral held as security for the Company's payment and performance
obligations; or (iv) the defense of any action against the Purchasers with
respect to the Purchasers' rights or remedies in respect of any of the
transactions contemplated herein; and all of the foregoing fees, costs and
expenses may be paid by each Purchaser, acting in its sole discretion, and added
to the amounts outstanding on the Notes, in each case, whether or not any suit
or other legal proceedings are commenced or pending.
Section 7.5 Binding Effect; Assignment. This Agreement shall be binding
upon and inure to the benefit of the Company and the Purchasers and their
respective successors and assigns, except that the Company shall not have the
right to assign its rights hereunder or any interest herein without the prior
written consent of the Majority Holders.
Section 7.6 Survival of Representations and Warranties. All
representations and warranties made in this Agreement, the Notes, the Warrants
or any other instrument or document delivered in connection herewith or
therewith, shall survive the execution and delivery hereof or thereof and the
making of the loans.
Section 7.7 Prior Agreements. This Agreement, and the documents attached
hereto, constitute the entire agreement between the parties and supersedes any
prior understandings or agreements concerning the subject matter hereof.
Section 7.8 Severability. The invalidity or unenforceability of any
provision hereof shall in no way affect the validity or enforceability of any
other provision.
Section 7.9 Headings. Article, section and subsection headings in this
Agreement are included herein for convenience of reference only and shall not
constitute a part of this Agreement for any other purpose.
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Section 7.10 Counterparts. This Agreement may be executed in any number
of counterparts, and by facsimile, all of which taken together shall constitute
one and the same instrument, and each of the parties hereto may execute this
Agreement by signing any such counterpart.
Section 7.11 Further Assurances. From and after the date of this
Agreement, upon the request of the Majority Holders, the Company shall execute
and deliver such instruments, documents and other writings as may be necessary
or desirable to confirm and carry out and to effectuate fully the intent and
purposes of this Agreement, the Notes and the Warrants.
Section 7.12 Jury Waiver. THE COMPANY AND EACH OF THE PURCHASERS AGREE
THAT NEITHER OF THEM NOR ANY ASSIGNEE OR SUCCESSOR SHALL (I) SEEK A JURY TRIAL
IN ANY LAWSUIT, PROCEEDING, COUNTERCLAIM, OR ANY OTHER ACTION BASED UPON, OR
ARISING OUT OF, THIS AGREEMENT OR ANY OF THE OTHER FINANCING DOCUMENTS, ANY
RELATED INSTRUMENTS, ANY COLLATERAL OR THE DEALINGS OR THE RELATIONSHIP BETWEEN
OR AMONG ANY OF THEM, OR (II) SEEK TO CONSOLIDATE ANY SUCH ACTION WITH ANY OTHER
ACTION IN WHICH A JURY TRIAL CANNOT BE OR HAS NOT BEEN WAIVED; PROVIDED,
HOWEVER, THAT THE FOREGOING SHALL NOT PRECLUDE ANY PARTY OR ITS SUCCESSORS FROM
ASSERTING ANY COUNTERCLAIM WHICH WOULD OTHERWISE BE BARRED OR FORFEITED. EXCEPT
AS STATED IN THE PRECEDING SENTENCE, THE PROVISIONS OF THIS SECTION SHALL BE
SUBJECT TO NO EXCEPTIONS. NEITHER THE COMPANY NOR ANY PURCHASER HAS AGREED WITH
OR REPRESENTED TO THE OTHER THAT THE PROVISIONS OF THIS SECTION WILL NOT BE
FULLY ENFORCED IN ALL INSTANCES.
Section 7.13 Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware for all purposes
and in all respects, without giving effect to the conflict of law provisions
thereof.
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, the Company, and each of the Purchasers have each
duly executed or caused to be executed this Agreement, under seal, as of the day
and year first written above.
COMPANY:
YELLOWBRIX, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
---------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Chief Executive Officer
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PURCHASER:
ABN AMRO Capital (USA) Inc.
By:
---------------------------
Name:
Title:
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LIST OF EXHIBITS AND SCHEDULES
Schedule I Purchasers
Exhibit A Form of Note
Exhibit B Form of Warrant
Exhibit C Form of Intercreditor Agreement
Exhibit D Form of Security Agreement
Exhibit E Certificate of Designation
Exhibit F Shareholder Rights Agreement
Disclosure Schedules
29
SCHEDULE I
PURCHASERS
Name First Advance Amount
ABN-AMRO Capital (USA), Inc. $700,000
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▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
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EXHIBIT A
FORM OF NOTE
ADVANCES AND PAYMENTS OF PRINCIPAL
Amount of Outstanding Notation
Date Amount of Advance Principal Paid Principal Balance Made By
-------------------------------------------------------------------------------------------------
November 29, 2000 $700,000 $ $ ABN AMRO Capital
(USA) Inc.
YellowBrix, Inc.
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31
EXHIBIT B
FORM OF WARRANT
32
2
EXHIBIT C
FORM OF INTERCREDITOR AGREEMENT
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3
EXHIBIT D
FORM OF SECURITY AGREEMENT
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4
Exhibit E
Certificate of Designation
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5
Exhibit F
Shareholder Rights Agreement
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6
DISCLOSURE SCHEDULES
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