PREPAYMENT AND AMENDMENT AGREEMENT
Exhibit 10.4.2
This
Agreement, made as of this 9th day of
February, 2010, by and between Diligent Board Member Services,
Inc. (“Diligent”) located at ▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇
▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇ and Services Share Holding LLC
(“LLC”) located at ▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇
▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇:
WHEREAS,
LLC executed a promissory note for amounts loaned by Diligent to LLC, dated
October 1, 2007, which Note currently has an outstanding balance of US$7,167,791
(hereinafter the “Note”); and
WHEREAS,
the Note is secured by the pledge by LLC of 21,667,597 shares of the common
stock of Diligent owned by LLC (the “Pledged Stock”); and
WHEREAS,
the parties hereto desire to agree upon certain prepayments on the principal
balance of the Note and certain amendments to the terms of the Note as provided
below.
NOW,
THEREFORE, the parties hereto hereby agree as follows:
|
|
1.
|
Cash
Prepayment.
|
Contemporaneous
with the execution of this Agreement, the parties have entered into an Escrow
Agreement with UMB Bank (the “Escrow Agreement”). LLC has deposited
$1,164,133 less brokerage commissions, if any, paid to ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, into the
escrow account (the “Escrow Account”) created pursuant to the Escrow
Agreement. The amount deposited represents the proceeds of the sale
by LLC of 4,823,000 shares of the Pledged Stock. The final amount
deposited may differ from the above based on the total number of shares sold by
LLC. The amount deposited in the Escrow Account shall be distributed
to Diligent as follows:
|
|
a.
|
$89,522.39
shall be paid by Escrow Agent to Diligent on April 1, 2010 as payment of
the interest payment due on April 1 under the
Note.
|
|
|
b.
|
$57,058.22
shall be paid to Diligent by Escrow Agent on May 28, 2010 as payment of
the accrued interest due on the Note through that
date.
|
|
|
c.
|
The
remaining balance in the Escrow Account shall be paid to Diligent by
Escrow Agent immediately following the consummation of the transaction in
paragraph 2 and the amendment becoming effective pursuant to paragraph 3
below. This amount shall be applied to reduce the outstanding
balance of principal due on the Note as of May 28, 2010 by the amount
paid.
|
|
|
d.
|
Alternatively,
the remaining balance in the Escrow Account shall be distributed to
Diligent upon execution and delivery to Escrow Agent of written
instructions to do so signed by representatives of Diligent and
LLC.
|
|
|
e.
|
In
the event that the cash prepayment is not made to Diligent as contemplated
in 1c or d above, the remaining balance in the Escrow Account shall be
distributed to Diligent by the Escrow Agent on October 1,
2010.
|
The
provisions of this paragraph (1) shall survive any termination of this Agreement
and shall continue in effect until the actions described in this paragraph 1
have been fully completed.
|
|
2.
|
Prepayment.
|
At the
Closing as defined in paragraph 3 below, LLC shall transfer all of its right,
title and interest in 11,650,000 shares of the Pledged Stock to Diligent
(hereinafter referred to as the “Transferred Shares”). In
consideration of such transfer, Diligent shall credit LLC with a payment of
US$3,075,676 against the outstanding balance of principal due on the
Note. This reflects a per share value of US$0.264 being allocated as
the value of each of the Transferred Shares. Attached as Exhibit A is
the Off-Market Transfer Form to record the aforementioned transfer on Link
Market Services’ register. This form shall be executed and delivered
by LLC and Diligent at the Closing, and filed by Diligent after the Closing. LLC
agrees to execute any additional documents and do any other acts necessary to
complete the transaction and record the transfer of the Transferred Shares to
Diligent on Link Market Services’ register. At the Closing, Diligent
shall deliver to LLC a statement of the balance due on the Note as set forth in
Exhibit B.
|
|
3.
|
Amendment of
Note.
|
Effective
immediately following successful completion of the Closing, the Note shall be
amended, without further action, as follows:
|
|
a.
|
Paragraph
1 shall be amended by inserting “Effective May 29, 2010,” at the beginning
of the paragraph and deleting “five percent (5%)” and inserting “six and
one-half percent (6.5%)” in its
place.
|
|
|
b.
|
Paragraph
2 of the Note is deleted in its entirety and is replaced with the
following new paragraph 2:
|
|
|
“2.
|
Maturity
Date. This Note matures and shall be due and payable in full on
October 1, 2012 (the “Maturity
Date”).”
|
|
|
c.
|
The
first sentence of paragraph 3 of the Note is deleted in its entirety and
replaced with the following new sentence: “Effective May 29,
2010, accrued and unpaid interest shall be payable, in arrears, on the
first day of January of each calendar year until the Maturity
Date.”
|
2
|
|
d.
|
Paragraph
12 (b) of the Note shall be deleted in its
entirety.
|
A signed
copy of this Agreement shall be attached to the Note.
|
|
4.
|
Closing.
|
The 2010
Annual Meeting of Diligent is scheduled for May 28, 2010 (the “Annual
Meeting”). The holding of the Closing and the consummation of the
transaction in paragraph 2 above, and the effectiveness of the amendment in
paragraph 3 above, are conditioned upon the actions contemplated in these two
paragraphs being approved at the Annual Meeting by a vote of the shareholders of
Diligent eligible to vote on these matters. The Closing to consummate
the prepayment transaction shall be held on the next business day in the U.S.
following the vote by the shareholders at the 2010 Annual Meeting of Diligent
approving the proposed prepayment and amendment (referred to herein as the
“Closing”). The Closing shall be held in the headquarters offices of
Diligent in New York City. If the shareholders do not approve the
actions proposed in paragraphs 2 and 3 above, then this Agreement shall
terminate and neither party shall have any further obligation to the other with
respect to the subject matter hereof.
|
|
5.
|
Representations and
Warranties.
|
LLC
hereby represents and warrants as follows:
|
|
a.
|
No
Conflicts. The
execution, delivery and performance of this Agreement will not breach,
violate, require any consent, or constitute a default under any contract,
agreement, instrument, or other commitment or any order, decree, judgment,
or other edict to which the LLC is a party or any of its property is
subject.
|
|
|
b.
|
Ownership
of the Shares. The
LLC
is the lawful and sole owner of all of the Transferred
Shares.
|
|
|
c.
|
No
Options, Warrants, Contract Rights Etc. Other
than the Pledge, (i) the LLC is not a party to any agreement, written
or oral, creating rights in respect of the Transferred Shares in any third
person or relating to the voting or disposition of the Transferred Shares,
(ii) the LLC has the full power and legal right to sell, assign,
transfer and deliver the Transferred Shares, (iii) there are no
existing warrants, options, stock purchase agreements, redemption
agreements, restrictions of any nature, calls or rights to subscribe of
any character relating to the Transferred
Shares.
|
|
|
d.
|
Authority. The LLC is
a limited liability company duly organized, validly existing and in good
standing under the laws of the State of Delaware. The
transactions contemplated by this Agreement have been duly authorized and
approved by all necessary and appropriate action by the
LLC.
|
3
|
|
6.
|
Entire
Agreement.
|
This
Agreement contains the entire understanding and agreement between Diligent and
LLC with respect to the subject matter hereof, and supersedes all other prior
and contemporaneous proposals, representations, agreements, understandings and
commitments between the parties with respect to the subject matter
hereof.
|
|
7.
|
Variation or
Amendment.
|
No
amendment or modification or variation of this Agreement will be effective
unless the parties execute a written agreement signed by an authorized
representative of each of them effecting such amendment, modification, or
variation.
|
|
8.
|
Governing
Law.
|
The
interpretation of this Agreement, and all matters related to this Agreement,
will be governed and construed in accordance with the laws of the State of New
York, USA, without reference to the choice of law provisions of New York
law.
|
|
9.
|
No Assignment or
Delegation.
|
Neither
Diligent nor LLC may assign this Agreement, in whole or in part, nor assign any
of its rights hereunder or delegate any of its duties hereunder, to any third
party without the prior written consent of the other party.
|
|
10.
|
Board
Approval.
|
This
Agreement is subject to approval by the Diligent Board of
Directors.
Remainder
of this page intentionally left blank.
4
IN
WITNESS WHEREOF, the Parties have executed this Agreement as of the date and
year first above written.
|
BY:
|
|
|
/s/ Alessandro
Sodi
|
|
|
Name:
|
Alessandro Sodi
|
|
Title:
|
President and Chief Executive
Officer
|
| SERVICES SHARE HOLDING LLC | |
|
BY:
|
|
|
/s/ ▇▇▇▇▇▇
▇▇▇▇▇▇▇
|
|
|
Name:
|
▇▇▇▇▇▇ ▇▇▇▇▇▇▇
|
|
Title:
|
Member
|
5