EXHIBIT 10.10
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LOAN AGREEMENT
Dated as of September 27, 1996
between
ACTIVE SOFTWARE, INC.
as Borrower,
and
VENTURE LENDING & LEASING, INC.,
as Lender
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TABLE OF CONTENTS
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Page
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ARTICLE 1 - DEFINITIONS................................................. 1
ARTICLE 2 - THE COMMITMENT AND LOANS.................................... 4
2.1 The Commitment............................................. 4
2.2 Limitation on Loans........................................ 4
2.3 Notes Evidencing Loans; Repayment.......................... 4
2.4 Procedures for Borrowing................................... 5
2.5 Interest................................................... 5
2.6 Interest Rate Calculation.................................. 5
2.7 Default Interest........................................... 5
2.8 Lender's Records........................................... 6
2.9 Security................................................... 6
2.10 Issuance of Warrant to Lender.............................. 6
ARTICLE 3 - REPRESENTATIONS AND WARRANTIES.............................. 6
3.1 Due Organization........................................... 6
3.2 Authorization, Validity and Enforceability................. 6
3.3 Compliance with Applicable Laws............................ 6
3.4 Copyrights, Patents, Trademarks and Licenses............... 7
3.5 No Conflict................................................ 7
3.6 No Litigation, Claims or Proceedings....................... 7
3.7 Correctness of Financial Statements........................ 7
3.8 No Subsidiaries............................................ 7
3.9 Environmental Matters...................................... 7
3.10 No Event of Default........................................ 7
ARTICLE 4 - CONDITIONS PRECEDENT........................................ 7
4.1 Conditions to First Loan................................... 7
4.2 Conditions to All Loans.................................... 8
ARTICLE 5 - AFFIRMATIVE COVENANTS....................................... 9
5.1 Notice to Lender........................................... 9
5.2 Financial Statements....................................... 9
5.3 Managerial Assistance from Lender.......................... 9
5.4 Existence.................................................. 10
5.5 Accounting Records......................................... 11
5.6 Compliance With Laws....................................... 11
5.7 Taxes and Other Liabilities................................ 11
5.8 Financial Covenants........................................ 11
5.9 Use of Proceeds............................................ 11
ARTICLE 6 - NEGATIVE COVENANTS.......................................... 11
6.1 Changes/Mergers............................................ 11
6.2 Sales of Assets............................................ 11
ARTICLE 7 - EVENTS OF DEFAULT........................................... 11
7.1 Events of Default.......................................... 11
ARTICLE 8 - GENERAL PROVISIONS.......................................... 12
8.1 Notices.................................................... 12
8.2 Binding Effect............................................. 13
8.3 No Waiver.................................................. 13
8.4 Rights Cumulative.......................................... 13
8.5 Unenforceable Provisions................................... 13
8.6 Accounting Terms........................................... 13
8.7 Indemnification; Exculpation............................... 13
8.8 Reimbursement.............................................. 14
8.9 Execution in Counterparts.................................. 14
8.10 Entire Agreement........................................... 14
8.11 Governing Law and Jurisdiction............................. 14
8.12 Waiver of Jury Trial....................................... 15
LIST OF EXHIBITS
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Exhibit "A" Form of Note
Exhibit "B" Form of Borrowing Request
Exhibit "C" Security Agreement (Equipment)
Exhibit "D" Form of Warrant
LOAN AGREEMENT
This LOAN AGREEMENT is entered into as of September 27, 1996, between
ACTIVE SOFTWARE, INC., a California corporation ("Borrower"), and VENTURE
LENDING & LEASING, INC., a Maryland corporation ("VLLI" or "Lender").
WHEREAS, Lender has agreed to make available to Borrower a loan
facility upon the terms and conditions set forth in this Agreement.
NOW, THEREFORE, in consideration of the mutual agreements, provisions
and covenants contained herein, the parties agree as follows:
ARTICLE 1 - DEFINITIONS
The definitions appearing in this Agreement or any supplement or
addendum to this Agreement, shall be applicable to both the singular and plural
forms of the defined terms:
"Additional Interest" means, with respect to each Loan, an amount of
interest payable thereon, in addition to Basic Interest, payable on the Maturity
Date of such Loan in an amount equal to fifteen percent (15.00%) of the original
principal amount of such Loan.
"Affiliate" means any Person which directly or indirectly controls, is
controlled by, or is under common control with, Borrower. "Control," "controlled
by" and "under common control with" means direct or indirect possession of the
power to direct or cause the direction of management or policies (whether
through ownership of voting securities, by contract or otherwise); provided that
control shall be conclusively presumed when any Person or affiliated group
directly or indirectly owns five percent or more of the securities having
ordinary voting power for the election of directors of a corporation.
"Agreement" means this Loan Agreement as it may be amended or
supplemented from time to time.
"Bankruptcy Code" means the Federal Bankruptcy Reform Act of 1978 (11
U.S.C. (S)101, et seq.), as amended.
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"Basic Interest" means the fixed rate of interest payable on the
outstanding balance of each Loan at the applicable Designated Rate.
"Borrowing Date" means the Business Day on which the proceeds of a
Loan are disbursed by Lender.
"Business Day" means any day other than a Saturday, Sunday or other
day on which commercial banks in New York City or San Francisco are authorized
or required by law to close.
"Closing Date" means the date of this Agreement.
"Collateral" has the meaning ascribed thereto in the Security
Agreement.
"Commitment" means the obligation of Lender to make Loans to Borrower
in an aggregate, original principal amount not exceeding Eight Hundred Thousand
Dollars ($800,000.00).
"Default" means an event which with the giving of notice, passage of
time, or both would constitute an Event of Default.
"Default Rate" is defined in Section 2.7.
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"Designated Rate" means a fixed rate of interest of nine and 40/100
(9.40%) per annum applicable to a Loan.
"Environmental Laws" means all federal, state or local laws, statutes,
common law duties, rules, regulations, ordinances and codes, together with all
administrative orders, directed duties, requests, licenses, authorizations and
permits of, and agreements with, any governmental authorities, in each case
relating to environmental, health, or safety matters.
"Equipment" means all of Debtor's specific equipment and software
identified and described on Schedule 1 attached to the Security Agreement and
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incorporated herein by reference (as such Schedule may be amended or
supplemented from time to time) all replacements, parts, accessions and
additions thereto, and all proceeds thereof arising from the sale, lease, rental
or other use or disposition thereof, including all rights to payment with
respect to insurance or condemnation, returned premiums, or any cause of action
relating to any of the foregoing.
"Event Of Default" means any event described in Article 7.
"GAAP" means generally accepted accounting principles and practices
consistent with those principles and practices promulgated or adopted by the
Financial Accounting Standards Board and the Board of the American Institute of
Certified Public Accountants, their respective predecessors and successors. Each
accounting term used but not otherwise expressly defined herein shall have the
meaning given it by GAAP.
"Indebtedness" of any Person means at any date, without duplication
and without regard to whether matured or unmatured, absolute or contingent: (i)
all obligations of such Person for borrowed money; (ii) all obligations of such
Person evidenced by bonds, debentures, notes, or other similar instruments;
(iii) all obligations of such Person to pay the deferred purchase price of
property or services, except trade accounts payable arising in the ordinary
course of business; (iv) all obligations of such Person as lessee under capital
leases; (v) all obligations of such Person to reimburse or prepay any bank or
other Person in respect of amounts paid under a letter of credit, banker's
acceptance, or similar instrument, whether drawn or undrawn; (vi) all
obligations of such Person to purchase securities which arise out of or in
connection with the sale of the same or substantially similar securities; (vii)
all obligations of such Person in connection with any agreement to purchase,
redeem, exchange, convert or otherwise acquire for
value any capital stock of such Person or any warrants, rights or options to
acquire such capital stock, now or hereafter outstanding, except to the extent
that such obligations remain performable solely at the option of such Person;
(viii) all obligations to repurchase assets previously sold (including any
obligation to repurchase any accounts or chattel paper under any factoring,
receivables purchase, or similar arrangement); (ix) obligations of such Person
under interest rate swap, cap, collar or similar hedging arrangements; and (x)
all obligations of others of any type described in clause (i) through clause
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(ix) above guaranteed by such Person.
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"Insolvency Proceeding" means (a) any case, action or proceeding
before any court or other governmental authority relating to bankruptcy,
reorganization, insolvency, liquidation, receivership, dissolution, winding-up
or relief of debtors, or (b) any general assignment for the benefit of
creditors, composition, marshalling of assets for creditors, or other, similar
arrangement in respect of its creditors generally or any substantial portion of
its creditors, undertaken under U.S. Federal, state or foreign law, including
the Bankruptcy Code.
"Lien" means any voluntary or involuntary security interest, mortgage,
pledge, claim, charge, encumbrance, title retention agreement, or third party
interest, covering all or any part of the property of Borrower or any other
Person
"Loan" means an extension of credit by Lender under Section 2 of this
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Agreement.
"Loan Documents" means, individually and collectively, this Agreement,
each Note, the Security Agreement and any other security or pledge agreement(s),
and all other contracts, instruments, addenda and documents executed in
connection with this Agreement or the extensions of credit which are the subject
of this Agreement.
"Material Adverse Effect" or "Material Adverse Change" means (a) a
material adverse change in, or a material adverse effect upon, the operations,
business, properties, or condition (financial or otherwise) of Borrower; (b) a
material impairment of the ability of Borrower to perform under any Loan
Document and to avoid any Event of Default; or (c) a material adverse effect
upon the legality, validity, binding effect or enforceability against Borrower
of any Loan Document.
"Maturity Date" means, with regard to each Note, the date on which
payment of all outstanding principal and accrued interest, including Additional
Interest, is due, whether at stated maturity or by acceleration.
"Note" means a promissory note substantially in the form of Exhibit
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"A" hereto, executed by Borrower evidencing each Loan.
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"Obligations" means all advances, debts, liabilities, obligations,
covenants and duties arising under any Loan Document, owing by Borrower to
Lender, whether direct or indirect (including those acquired by assignment),
absolute or contingent, due or to become due, now existing or hereafter arising.
"Person" means any individual or entity.
"Qualified Public Offering" means the closing of a firmly underwritten
public offering of Borrower's common stock with aggregate proceeds of not less
than $10,000,000 (prior to underwriting expenses and commissions).
"Related Person" means any Affiliate of Borrower, or any officer,
employee, director or shareholder of Borrower or any Affiliate.
"Security Agreement" means the Security Agreement substantially in the
form of Exhibit "C" hereto, executed by Borrower.
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"Termination Date" means the earlier of: (a) the date Lender may
terminate making loans or extending the credit pursuant to the rights of Lender
under Article 7, or (b) August 31, 1997.
"UCC" means the Uniform Commercial Code as enacted in the applicable
jurisdiction, in effect on the Closing Date and as amended from time to time.
ARTICLE 2 - THE COMMITMENT AND LOANS
2.1 The Commitment. Subject to the terms and conditions of this
Agreement, Lender agrees to make term loans to Borrower from time to time from
the Closing Date and to, but not including, the Termination Date in an aggregate
principal amount not exceeding the Commitment for purposes of financing
Borrower's acquisition of Equipment. The Commitment is not a revolving credit
commitment, and Borrower shall not have the right to repay and reborrow
hereunder.
2.2 Limitation On Loans. Each Loan shall be in an amount not to exceed
one hundred percent (100%) of the amount paid or payable by Borrower to a non-
affiliated manufacturer, vendor or dealer for an item of Equipment as shown on
an invoice therefor (excluding any commissions and any portion of the payment
which relates to the servicing of the equipment and sales taxes payable by
Borrower upon acquisition, and delivery charges). Lender shall not be obligated
to make any Loan under its Commitment if at the time of or after giving effect
to the proposed Loan Lender would no longer qualify as: (A) a "venture capital
operating company" under U.S. Department of Labor Regulations Section 2510.3
101(d), Title 29 of the Code of Federal Regulations, as amended; and (B) a
"business development company" under the provisions of federal Investment
Company Act of 1940, as amended; and (C) a "regulated investment company" under
the provisions of the Internal Revenue Code of 1986, as amended. Each Loan
requested by Borrower to be made on a single Business Day shall be for a
principal amount of Fifty Thousand Dollars ($50,000.00) or a multiple thereof,
except to the extent the remaining Commitment is a lesser amount.
2.3 Notes Evidencing Loans; Repayment. Each Loan shall be evidenced by a
separate Note payable to the order of Lender substantially in the form of
Exhibit "A" to this Agreement, in the total principal amount of the Loan. Each
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Note shall be payable as follows' Principal and Basic Interest shall be paid in
forty two (42) equal and successive monthly payments, in advance,
beginning on the Borrowing Date and continuing on the first Business Day of each
month thereafter; provided, that if the Borrowing Date of a Loan is not the
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first day of a month, then (i) the 42-month amortization period shall commence
on the first day of the next month following the Borrowing Date, and (ii)
Borrower shall pay to Lender, in advance on the Borrowing Date a payment of
Basic Interest that will accrue on such Loan from the Borrowing Date through the
last day of such month. Borrower shall also prepay on the Borrowing Date the
first amortization installment payment. The Additional Interest on each Loan
shall be paid on the first Business Day of the forty third (43rd) full month
after the Borrowing Date of such Loan. The payment of amortization installments
of principal of and interest on a Loan in advance results in a higher effective
rate of interest than the stated Designated Rate applicable to such Loan.
2.4 Procedures For Borrowing.
(a) Borrower shall give Lender at least five (5) Business Days'
prior to a proposed Borrowing Date written notice of any request for borrowing
hereunder (a "Borrowing Request"). Each Borrowing Request shall be in
substantially the form of Exhibit "B" hereto, shall be executed by the chief
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financial officer of Borrower, and shall state how much is requested, and shall
be accompanied by copies of invoices for the Equipment to be financed and such
additional information and documentation as Lender may deem reasonably necessary
to determine whether the proposed borrowing will comply with the limitations in
Section 2.2. To the Borrower's best knowledge after due inquiry of its senior
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officers, the Borrowing Request shall also certify that all Equipment to be
financed thereby is owned by Borrower free and clear of all Liens except in
favor of Lender.
(b) No later than 1:00 p.m. Pacific Standard Time on the Borrowing
Date, if Borrower has satisfied the conditions precedent in Article 4, Lender
shall make the Loan available to Borrower in immediately available funds.
2.5 Interest. Basic Interest on the outstanding principal balance of the
each Loan shall accrue daily from the Borrowing Date until the Maturity Date at
the Designated Rate. On the Maturity Date of a Loan, Borrower shall pay the
Additional Interest thereon.
2.6 Interest Rate Calculation. Basic Interest, along with charges and fees
under this Agreement and any Loan Document, shall be calculated for actual days
elapsed on the basis of a 360-day year, which results in higher interest, charge
or fee payments than if a 365-day year were used. In no event shall Borrower be
obligated to pay Lender interest, charges or fees at a rate in excess of the
highest rate permitted by applicable law from time to time in effect.
2.7 Default Interest. Any unpaid payments of principal or interest with
respect to any Loan shall bear interest from their respective maturities,
whether scheduled or accelerated, at the Designated Rate for such Loan plus five
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percent (5.00%) per annum, until paid in full, whether before or after judgment
(the "Default Rate"). Borrower shall pay such interest within 15 days of demand.
2.8 Lender's Records. Principal, Basic Interest, Additional Interest and
all other sums owed under any Loan Document shall be evidenced by entries in
records maintained by Lender for such purpose. Each payment on and any other
credits with respect to principal, Basic Interest, Additional Interest and all
other sums outstanding under any Loan Document shall be evidenced by entries in
such records. Absent manifest error, Lender's records shall be conclusive
evidence thereof.
2.9 Security. As security for all Obligations to Lender, Borrower shall
grant concurrently to Lender, or ensure that Lender is concurrently granted,
perfected security interests of first priority in all of the Equipment and other
Collateral pursuant to the Security Agreement, subject only to Liens disclosed
to and approved by Lender prior to the Closing Date to this Agreement.
2.10 Issuance of Warrant to Lender. As additional consideration for the
making of the Loans under this Agreement, upon the making of, and as a condition
to, the initial Loan, Lender shall be entitled to receive a warrant to purchase
a number of shares of common stock of Borrower ("Warrant Shares") with an
aggregate initial exercise price of $28,000 determined on the basis of a per
share exercise price of $1.00. The warrant issued under this Agreement shall be
in substantially the form attached hereto as Exhibit "D"; shall be transferable
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by Lender, subject to compliance with applicable securities laws shall expire
not earlier than September 30, 2004; and shall be entitled to piggy-back
registration rights and "net issuance" provisions, and anti-dilution protections
reasonably satisfactory to Lender and its counsel. Lender hereby makes the
representations to Borrower set forth in Section 17 of the Warrant.
ARTICLE 3 - REPRESENTATIONS AND WARRANTIES
Borrower represents and warrants that as of the Closing Date and each
Borrowing Date:
3.1 Due Organization. Borrower is a corporation duly organized and validly
existing in good standing under the laws of California, and is duly qualified to
conduct business and is in good standing in each other jurisdiction in which its
business is conducted or its properties are located.
3.2 Authorization, Validity and Enforceability. The execution, delivery
and performance of all Loan Documents executed by Borrower are within Borrower's
powers have been duly authorized, and are not in conflict with Borrower's
articles of incorporation or by-laws, or the terms of any charter or other
organizational document of Borrower, as amended from time to time; and all such
Loan Documents constitute valid and binding obligations of Borrower, enforceable
in accordance with their terms (except as may be limited by bankruptcy,
insolvency and similar laws affecting the enforcement of creditors' rights in
general, and subject to general principles of equity).
3.3 Compliance with Applicable Laws. Borrower has complied with all
licensing, permit and fictitious name requirements necessary to lawfully conduct
the business in which it is engaged, and to any sales, leases or the furnishing
of services by Borrower, including without limitation those requiring consumer
or other disclosures, the noncompliance with which would have a Material Adverse
Effect.
3.4 Copyrights, Patents, Trademarks and Licenses.
(a) Borrower owns or is licensed or otherwise has the right to use
all of the patents, trademarks, service marks, trade names, copyrights,
contractual franchises, authorizations and other rights that are reasonably
necessary for the operation of its business, without conflict with the rights of
any other Person.
(b) No slogan or other advertising device, product, process,
method, substance, part or other material now employed, or now contemplated to
be employed, by Borrower infringes upon any rights held by any other Person.
(c) No claim or litigation regarding any of the foregoing is
pending or threatened, which, in either case, could reasonably be expected to
have a Material Adverse Effect.
3.5 No Conflict. The execution, delivery, and performance by Borrower of
all Loan Documents are not in conflict with any law, rule, regulation, order or
directive, or any indenture, agreement, or undertaking to which Borrower is a
party or by which Borrower may be bound or affected.
3.6 No Litigation, Claims or Proceedings. There is no litigation, tax
claim, proceeding or dispute pending, or, to the knowledge of Borrower,
threatened against or affecting Borrower or its property which would have a
Material Adverse Effect.
3.7 Correctness Of Financial Statements. Borrower's financial statements
which have been delivered to Lender fairly and accurately reflect Borrower's
financial condition as of March 31, 1996; and, since that date there has been no
Material Adverse Change.
3.8 No Subsidiaries. Borrower is not a majority owner of or in a control
relationship with any other business entity.
3.9 Environmental Matters. Borrower has reviewed, or caused to be reviewed
on its behalf, all Environmental Laws applicable to its business operations and
materials handled therein, and as a result thereof has reasonably concluded that
Borrower is in compliance with such Environmental Laws, except to the extent a
failure to be in such compliance could not reasonably be expected to have a
Material Adverse Effect on Borrower's operations, properties or financial
condition.
3.10 No Event of Default. No Default or Event of Default has occurred and
is continuing.
ARTICLE 4 - CONDITIONS PRECEDENT
4.1 Conditions to First Loan. The obligation of Lender to make its first
Loan hereunder is, in addition to the conditions precedent specified in Section
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4.2, subject to the fulfillment of the following conditions and to the receipt
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by Lender of the documents described below, duly executed and in form and
substance satisfactory to Lender and its counsel:
(a) Resolutions. A certified copy of the resolutions of the Board
of Directors of Borrower authorizing the execution, delivery and performance by
Borrower of the Loan Documents.
(b) Incumbency and Signatures. A certificate of the secretary of
Borrower certifying the names of the officer or officers of Borrower authorized
to sign the Loan Documents, together with a sample of the true signature of each
such officer.
(c) Opinion of Counsel. The opinion of Venture Law Group, counsel
for Borrower, together with any opinions, certificates and other matters on
which such opinion relies.
(d) Articles and By-laws. Certified copies of the Articles of
Incorporation and By-Laws of Borrower, as amended through the Closing Date.
(e) The Agreement. A counterpart of this Agreement with all
schedules completed and attached thereto, and disclosing such information as is
acceptable to Lender.
(f) Security Agreement. A Security Agreement executed by
Borrower, substantially in the form of Exhibit "C", together with filing copies
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(or other evidence of filing satisfactory to Lender and its counsel) of such
Uniform Commercial Code financing statements, collateral assignments and
termination statements, with respect to the Collateral (as defined in such
Security Agreement) as Lender shall request.
(g) Lien Searches. A Uniform Commercial Code lien search of
Borrower from the California Secretary of State, as of a date reasonably
satisfactory to Lender and its counsel.
(h) Good Standing Certificate. A Certificate of Good Standing as of
a date acceptable to Lender with respect to Borrower from the California
Secretary of State.
(i) Warrant. A warrant issued by Borrower to Lender exercisable for
the Warrant Shares, as described in Section 2.10 hereof.
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4.2 Conditions to All Loans. The obligation of Lender to make its initial
Loan and each subsequent Loan is subject to the following further conditions
precedent that:
(a) No Default. No Default or Event of Default has occurred and is
continuing or will result from the making of any such Loan, and the
representations and warranties of Borrower contained in Article 3 of this
Agreement are true and correct as of the Borrowing Date of such Loan.
(b) No Adverse Material Change. No Material Adverse Change shall
have occurred since the date of the most recent financial statements
submitted to Lender.
(c) Note. Borrower shall have delivered an executed Note evidencing
such Loan, in form and substance satisfactory to Lender.
(d) Borrowing Request. Borrower shall have delivered to Lender a
Borrowing request for such Loan.
(e) VCOC Limitation. The making of the Loan will not result in a
violation of the condition applicable to Lender described in Section 2.2.
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ARTICLE 5 - AFFIRMATIVE COVENANTS
During the term of this Agreement and until its performance of all
Obligations to Lender, Borrower will:
5.1 Notice to Lender. Promptly give written notice to each Lender of:
(a) Any litigation or administrative or regulatory proceeding
affecting Borrower where the amount claimed against Borrower is Fifty Thousand
Dollars ($50,000) or more, or where the granting of the relief requested would
have a Material Adverse Effect.
(b) Any substantial dispute which may exist between Borrower or any
governmental or regulatory authority.
(c) The occurrence of any Event of Default or any event which with
the giving of notice, the passage of time, or both, would constitute an Event of
Default.
(d) Any change in the location of any of Borrower's places of
business at least thirty (30) days in advance of such change, or of the
establishment of any new, or the discontinuance of any existing, place of
business.
(e) Any other matter which has resulted or might result in a Material
Adverse Change.
5.2 Financial Statements. Deliver to each Lender or cause to be delivered
to Lender, in form and detail satisfactory to Lender the following financial
information, which Borrower warrants shall be accurate and complete in all
material respects:
(a) Monthly Financial Statements. As soon as available but no later
than thirty (30) days after the end of each month, Borrower's balance sheet as
of the end of such period, and Borrower's income statement for such period and
for that portion of Borrower's financial reporting year ending with such period,
prepared and attested by a responsible financial officer of Borrower as fairly
presenting Borrower's financial condition and the results of Borrower's
operations. After a Qualified Public Offering, the foregoing interim financial
statements shall be delivered no later than 45 days after each fiscal quarter
and for the quarter-annual fiscal period then ended.
(b) Year-End Financial Statements. As soon as available but no later
than ninety (90) days after and as of the end of each financial reporting year,
a complete copy of Borrower's audit report, which shall include balance sheet,
income statement, statement of changes in equity and statement of cash flows for
such year, prepared and certified by an
independent certified public accountant selected by Borrower and reasonably
satisfactory to Lender (the "Accountant") . The Accountant's certification shall
not be qualified or limited due to a restricted or limited examination by the
Accountant of any material portion of Borrower's records or otherwise.
(c) Compliance Certificates. Simultaneously with the delivery of each
set of financial statements referred to in paragraphs (a) and (b) above, a
certificate of the chief financial officer of Borrower stating whether any
Default or Event of Default exists on the date of such certificate, and if so,
setting forth the details thereof and the action which Borrower is taking or
proposes to take with respect thereto.
(d) Government Required Reports; Press Releases. Promptly after
sending, issuing, making available, or filing, all reports, proxy statements,
and financial statements that Borrower sends or makes available to its
stockholders, and, not later than five (5) days after actual filing or the date
such filing was first due, all registration statements and reports that Borrower
files or is required to file with the Securities and Exchange Commission.
(e) Other Information. Such other statements, lists of property and
accounts, budgets, forecasts, reports, or other information as any Lender may
reasonably from time to time request.
5.3 Managerial Assistance from Lender. Permit Lender, as a "venture
capital operating company" to participate in, and influence the conduct of
management of Borrower through the exercise of "management rights, as such terms
are defined in 29 C.F.R. (S) 2510.3-101(d), and:
(a) Permit Lender to make available to Borrower, at no cost to
Borrower, "significant managerial assistance", as defined in Section 2(a)(47) of
the Investment Company Act of 1940, as amended, either in the form of: (i)
consulting arrangements with Lender or any of its officers, directors, employees
or affiliates, (ii) Borrower's allowing Lender to provide recommendations of
prospective candidates for election to Borrower's Board of Directors, or (iii)
Lender, at Borrower's request, seeking the services of third-party consultants
to aid Borrower with respect to its management and operations;
(b) Permit Lender to make available consulting and advisory services
to officers of Borrower regarding Borrower's equipment acquisition and financing
plans, and such other matters affecting the business, financial condition and
prospects of Borrower as Lender shall reasonably deem relevant; and
(c) If Lender reasonably believes that financial or other
developments affecting Borrower have impaired or are likely to impair Borrower's
ability to perform its obligations under this Agreement, permit Lender
reasonable access to Borrower's management and/or Board of Directors and
opportunity to present Lender's views with respect to such developments.
5.4 Existence. Maintain and preserve Borrower's existence, present
form of business, and all rights and privileges necessary or desirable in the
normal course of its business.
5.5 Accounting Records. Maintain adequate books, accounts and records, and
prepare all financial statements in accordance with GAAP, and in compliance with
the regulations of any governmental or regulatory authority having jurisdiction
over Borrower or Borrower's business; and permit employees or agents of Lender
at such reasonable times as Lender may request, at Borrower's expense, to
inspect Borrower's properties, and to examine, and make copies and memoranda of
Borrower's books, accounts and records.
5.6 Compliance With Laws. Comply with all laws (including Environmental
Laws), rules, regulations applicable to, and all orders and directives of any
governmental or regulatory authority having jurisdiction over, Borrower or
Borrower's business, and with all material agreements to which Borrower is a
party, except to the extent that any such noncompliance would not have a
Material Adverse Effect.
5.7 Taxes and Other Liabilities. Pay all Borrower's obligations when due;
pay all taxes and other governmental or regulatory assessments before
delinquency or before any penalty attaches thereto, except as may be contested
in good faith by the appropriate procedures and for which Borrower shall
maintain appropriate reserves; and timely file all required tax returns.
5.8 Financial Covenants. Comply with the terms of all financial covenants
contained in any addendum to this Agreement.
5.9 Use Of Proceeds. Use the proceeds of Loans only as set forth in
Article 2 of this Agreement; and not directly or indirectly to purchase or carry
any margin stock, as defined from time to time by the Board of Governors of the
Federal Reserve System in Federal Regulation U.
ARTICLE 6 - NEGATIVE COVENANTS
During the term of this Agreement and until the performance of all
obligations to Lender hereunder, Borrower will not:
6.1 Changes/Mergers. Liquidate or dissolve, or enter into any
consolidation or merger unless the shareholders of the Borrower immediately
preceding such consolidation or merger own, directly or indirectly, more than
50% of the surviving entity.
6.2 Sales of Assets. Sell, transfer, lease or otherwise dispose of any of
Borrower's assets except for fair consideration and in the ordinary course of
its business; or enter into any sale or leaseback agreement covering any of
Borrower's fixed or capital assets.
ARTICLE 7 - EVENTS OF DEFAULT
7.1 Events of Default. Upon the occurrence and during the continuation of
any Default, the obligation of Lender to make any additional Loan shall be
suspended. The occurrence of any of the following shall terminate any obligation
of Lender to make any additional Loan; and shall, at the option of Lender (1)
make all sums of Basic Interest, principal, Additional Interest and any other
amounts owing under any Loan Documents immediately due and payable without
notice of default, presentment or demand for payment, protest or notice of
nonpayment or dishonor or any other notices
or demands, and (2) give Lender the right to exercise any other right or remedy
provided by contract or applicable law:
(a) Borrower shall fail to make any payment of principal or interest
under this Agreement, or to pay any fees or other charges when due under any
Loan Document, and such failure continues for five (5) Business Days or more
after the same first becomes due.
(b) Any representation or warranty made, or financial statement,
certificate or other document provided, by Borrower shall prove to have been
false or misleading in any material respect when made or deemed made herein.
(c) Borrower shall fail to pay its debts generally as they become due
or shall commence any Insolvency Proceeding with respect to itself; an
involuntary Insolvency Proceeding shall be filed against Borrower, or a
custodian, receiver, trustee, assignee for the benefit of creditors, or other
similar official, shall be appointed to take possession, custody or control of
the properties of Borrower, and such involuntary Insolvency Proceeding, petition
or appointment is acquiesced to by Borrower or is not dismissed within sixty
(60) days; or the dissolution or termination of the business of Borrower.
(d) Borrower shall be in default beyond any applicable period of
grace or cure under any other agreement involving the borrowing of money, the
purchase of property, the advance of credit or any other monetary liability of
any kind to Lender or to any Person which results in the acceleration of payment
of such obligation in an amount in excess of One Hundred Thousand Dollars
($100,000).
(e) Any governmental or regulatory authority shall take any judicial
or administrative action, or any defined benefit pension plan maintained by
Borrower shall have any unfunded liabilities, any of which, in the reasonable
judgment of Lender, might have a Material Adverse Effect.
(f) Any sale, transfer or other disposition of all or a substantial
or material part of the assets of Borrower other than in the ordinary course of
business, including without limitation to any trust or similar entity, shall
occur.
(g) Any judgment(s) singly or in the aggregate in excess of One
Hundred Thousand Dollars ($100,000) shall be entered against Borrower which
remain unsatisfied unvacated or unstayed pending appeal for thirty (30) or more
days after entry thereof.
(h) Borrower shall fail in a material respect to perform any of its
duties or obligations under any Loan Document not specifically referenced in
this Article 7, which failure continues for 30 days after notice thereof from
Lender.
ARTICLE 8 - GENERAL PROVISIONS
8.1 Notices. Any notice given by any party under any Loan Document shall
be in writing and personally delivered, sent by overnight courier, or United
States mail, postage prepaid, or sent by facsimile, to be promptly confirmed in
writing, or other authenticated message, charges prepaid, to the
other party's or parties' addresses shown on the signature pages hereto. Each
party may change the address or facsimile number to which notices, requests and
other communications are to be sent by giving written notice of such change to
each other party. Notice given by hand delivery shall be deemed received on the
date delivered, or if such date is not a Business Day, on the next Business Day
thereafter; if sent by overnight courier, on the next Business Day after
delivery to the courier service; if by first class mail, on the third Business
Day after deposit in the U.S. Mail; and if by telecopy, on the date of
transmission, or if such date is not a Business Day, on the next Business Day
thereafter.
8.2 Binding Effect. The Loan Documents shall be binding upon and inure to
the benefit of Borrower and Lender and their respective successors and assigns;
provided, however, that Borrower may not assign or transfer Borrower's rights or
obligations under any Loan Document without each Lender's prior written consent.
Lender reserves the right to sell, assign, transfer, negotiate or grant
participations in all or any part of, or any interest in, Lender's rights and
obligations under the Loan Documents subject to compliance with applicable
securities laws. In connection with any of the foregoing, Lender may disclose
all documents and information which Lender now or hereafter may have relating to
the Loans, Borrower, or its business.
8.3 No Waiver. Any waiver, consent or approval by Lender of any Event, of
Default or breach of any provision, condition, or covenant of any Loan Document
must be in writing and shall be effective only to the extent set forth in
writing. No waiver of any breach or default shall be deemed a waiver of any
later breach or default of the same or any other provision of any Loan Document.
No failure or delay on the part of Lender in exercising any power, right, or
privilege under any Loan Document shall operate as a waiver thereof, and no
single or partial exercise of any such power, right, or privilege shall preclude
any further exercise thereof or the exercise of any other power, right or
privilege. Lender has the right at its sole option to continue to accept
interest and/or principal payments due under the Loan Documents after default,
and such acceptance shall not constitute a waiver of said default or an
extension of the Maturity Date unless Lender agrees otherwise in writing.
8.4 Rights Cumulative. All rights and remedies existing under the Loan
Documents are cumulative to, and not exclusive of, any other rights or remedies
available under contract or applicable law.
8.5 Unenforceable Provisions. Any provision of any Loan Document executed
by Borrower which is prohibited or unenforceable in any jurisdiction, shall be
so only as to such jurisdiction and only to the extent of such prohibition or
unenforceability, but all the remaining provisions of any such Loan Document
shall remain valid and enforceable.
8.6 Accounting Terms. Except as otherwise provided in this Agreement,
accounting terms and financial covenants and information shall be determined and
prepared in accordance with GAAP.
8.7 Indemnification; Exculpation. Borrower shall pay and protect, defend
and indemnify Lender and Lender's employees, officers, directors, shareholders,
affiliates, correspondents, agents and representatives (other than Lender,
collectively "Agents") against, and hold Lender and each such Agent harmless
from, all claims, actions, proceedings, liabilities, damages,
losses, expenses (including, without limitation, attorneys' fees and costs) and
other amounts incurred by Lender and each such Agent, arising from (i) the
matters contemplated by this Agreement or any other Loan Documents or (ii) any
contention that Borrower has failed to comply with any law, rule, regulation,
order or directive applicable to Borrower's business; provided, however, that
this indemnification shall not apply to any of the foregoing incurred solely as
the result of Lender's or any Agent's gross negligence or willful misconduct or
breach of this Agreement. This indemnification shall survive the payment and
satisfaction of all of Borrower's Obligations to Lender.
8.8 Reimbursement. Borrower shall reimburse Lender for all costs and
expenses, including without limitation reasonable attorneys' fees and
disbursements expended or incurred by Lender in any arbitration, mediation,
judicial reference, legal action or otherwise in connection with (a) the
enforcement of the Loan Documents, including without limitation during any
workout, attempted workout (b) collecting any sum which becomes due Lender under
any Loan Document. For the purposes of this section, attorneys' fees shall
include, without limitation, fees incurred in connection with the following: (1)
contempt proceedings; (2) discovery; (3) any motion, proceeding or other
activity of any kind in connection with an Insolvency Proceeding; (4)
garnishment, levy, and debtor and third party examinations; and (5) postjudgment
motions and proceedings of any kind, including without limitation any activity
taken to collect or enforce any judgment. All of the foregoing costs and
expenses shall be payable upon demand by Lender, and if not paid within forty-
five (45) days of presentation of invoices shall bear interest at the highest
applicable Default Rate.
8.9 Execution in Counterparts. This Agreement may be executed in any
number of counterparts which, when taken together, shall constitute but one
agreement.
8.10 Entire Agreement. The Loan Documents are intended by the parties as
the final expression of their agreement and therefore contain the entire
agreement between the parties and supersede all prior understandings or
agreements concerning the subject matter hereof. This Agreement may be amended
only in a writing signed by Borrower and Lender.
8.11 Governing Law and Jurisdiction.
(a) THIS AGREEMENT AND THE LOAN DOCUMENTS SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF CALIFORNIA.
(b) ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT OR
ANY OTHER LOAN DOCUMENT MAY BE BROUGHT IN THE COURTS OF THE STATE OF
CALIFORNIA OR OF THE UNITED STATES FOR THE NORTHERN, CENTRAL OR SOUTHERN
DISTRICT OF CALIFORNIA, AND BY EXECUTION AND DELIVERY OF THIS AGREEMENT,
EACH OF BORROWER AND LENDER CONSENTS, FOR ITSELF AND IN RESPECT OF ITS
PROPERTY, TO THE NON-EXCLUSIVE JURISDICTION OF THOSE COURTS. EACH OF
BORROWER AND LENDER IRREVOCABLY WAIVES ANY OBJECTION, INCLUDING ANY
OBJECTION TO THE LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM NON
CONVENIENS, WHICH IT MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY
ACTION OR PROCEEDING IN SUCH JURISDICTION IN RESPECT OF THIS AGREEMENT OR
ANY DOCUMENT RELATED HERETO. BORROWER AND LENDER EACH
WAIVE PERSONAL SERVICE OF ANY SUMMONS, COMPLAINT OR OTHER PROCESS, WHICH
MAY BE MADE BY ANY OTHER MEANS PERMITTED BY CALIFORNIA LAW.
8.12 Waiver of Jury Trial. BORROWER AND LENDER EACH WAIVES ITS RESPECTIVE
RIGHTS TO A TRIAL BY JURY OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING
OUT OF OR RELATED TO THIS AGREEMENT, THE OTHER LOAN DOCUMENTS, OR THE
TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY, IN ANY ACTION, PROCEEDING OR OTHER
LITIGATION OF ANY TYPE BROUGHT BY ANY OF THE PARTIES AGAINST ANY OTHER PARTY OR
ANY PARTICIPANT OR ASSIGNEE, WHETHER WITH RESPECT TO CONTRACT CLAIMS, TORT
CLAIMS, OR OTHERWISE. BORROWER AND LENDER EACH AGREES THAT ANY SUCH CLAIM OR
CAUSE OF ACTION SHALL BE TRIED BY A COURT TRIAL WITHOUT A JURY. WITHOUT LIMITING
THE FOREGOING, THE PARTIES FURTHER AGREE THAT THEIR RESPECTIVE RIGHT TO A TRIAL
BY JURY IS WAIVED BY OPERATION OF THIS SECTION AS TO ANY ACTION, COUNTERCLAIM OR
OTHER PROCEEDING WHICH SEEMS, IN WHOLE OR IN PART, TO CHALLENGE THE VALIDITY OR
ENFORCEABILITY OF THIS AGREEMENT OR THE OTHER LOAN DOCUMENTS OR ANY PROVISION
HEREOF OR THEREOF. THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS,
RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT AND THE OTHER LOAN
DOCUMENTS.
IN WITNESS WHEREOF, Borrower and Lender have executed this Agreement
as of the date set forth in the preamble.
Addresses for Notices: ACTIVE SOFTWARE, INC.
----------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ ▇▇▇▇. ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇ By: /s/ R. ▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇ ▇▇▇▇▇ -----------------------------------
Fax: ▇▇▇-▇▇▇-▇▇▇▇ Name: R. ▇▇▇▇▇ ▇▇▇▇▇
---------------------------------
Its: CHAIRMAN
----------------------------------
Venture Lending & Leasing, Inc. VENTURE LENDING & LEASING, INC.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ By: /s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
--------------------------------
Chief Financial Officer
Fax No. ▇▇▇-▇▇▇-▇▇▇▇ Name: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
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Its: PRESIDENT & CFO
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EXHIBIT A
Note No. 50-001
PROMISSORY NOTE
$401,216.83 December 20, ▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇
The undersigned ("Borrower") promises to pay to the order of VENTURE
LENDING & LEASING, INC., a Maryland corporation ("Lender") at its office at ▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, or at such other
place as Lender may designate in writing, in lawful money of the United States
of America, the principal sum of Four Hundred One Thousand Two Hundred Sixteen
and 83/100 Dollars ($401,216.83), with Basic Interest thereon from the date
hereof until maturity, whether scheduled or accelerated, at a fixed rate per
annum of nine and 40/100 percent (9.40%), and with Additional Interest in the
sum of Sixty Thousand One Hundred Eighty Two and 52/100 Dollars ($60,182.52)
payable on the Maturity Date.
This Note is one of the Notes referred to in, and is entitled to all the
benefits of, a Loan Agreement dated September 27, 1996, between Borrower and
Lender. Each capitalized term not otherwise defined herein shall have the
meaning set forth in the Loan Agreement. The Loan Agreement contains provisions
for the acceleration of the maturity of this Note upon the happening of certain
stated events.
Principal of and interest on this Note shall be payable as follows:
On the Borrowing Date, Borrower shall pay (i) Basic Interest, in advance,
on the outstanding principal balance of this Note at the Designated Rate for the
period from the Borrowing Date through December 31, 1996; and (ii) a first (1st)
and last (42nd) amortization installment of principal and Basic Interest in the
amount of $22,307.66, in advance for the month of January 1, 1997 and June,
2000.
Commencing on the first day of the second full month after the Borrowing
Date, and continuing on the first day of each consecutive month thereafter,
principal and Basic Interest shall be payable, in advance, in thirty-nine (39)
equal consecutive installments of Eleven Thousand One Hundred Fifty Three and
83/100 Dollars ($11,153.83) each, with a fortieth (40th) installment equal to
the entire unpaid principal balance and accrued Basic Interest on May 1, 2000.
The Additional Interest amount shall be payable on July 1, 2000.
Any unpaid payments of principal or interest on this Note shall bear
interest from their respective maturities, whether scheduled or accelerated, at
a rate per annum equal to the Default Rate. Borrower shall pay such interest
within 15 days on demand.
Interest, charges and fees shall be calculated for actual days elapsed on
the basis of a 360-day year, which results in higher interest, charge or fee
payments than if a 365-day year were used, In no event shall Borrower be
obligated to pay interest, charges or fees at a rate in excess of the highest
rate permitted by applicable law from time to time in effect.
This Note shall be governed by, and construed in accordance with, the laws
of the State of California.
ACTIVE SOFTWARE, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
---------------------------
Its: President + CEO
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Name: ▇.▇. ▇▇▇ ▇▇▇▇▇▇
-------------------------
EXHIBIT B
BORROWER REQUEST
_____________,1996
Venture Lending & Leasing, Inc.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Re: ACTIVE SOFTWARE, INC.
Gentlemen:
Reference is made to the Loan Agreement dated as of September 27, 1996 (as
it has been and may be amended from time to time, the "Loan Agreement", the
capitalized terms used herein as defined therein), between Venture Lending &
Leasing, Inc. and Active Software, Inc. (the "Company").
The undersigned is the Chief Financial Officer of the Company, and hereby
requests a Loan under the Loan Agreement, and in that connection certifies as
follows:
1. The amount of the proposed Loan is $____________. The Business Day of
the proposed Loan is____________1996.
2. As of this date, no Default or Event of Default has occurred and is
continuing, or will result from the making of the proposed Loan, and the
representations and warranties of the Company contained in Article 3 of the Loan
Agreement are true and correct.
3. No Material Adverse Change has occurred since the date of the most
recent financial statements submitted to you by the Company.
The Company agrees to notify you promptly before the funding of the Loan if
any of the matters to which I have certified above shall not be true and correct
on the Borrowing Date.
Very Truly Yours,
-----------------------
Chief Financial Officer
EXHIBIT C
SECURITY AGREEMENT
(EQUIPMENT)
This Agreement is made as of September 27, 1996, by ACTIVE SOFTWARE, INC.,
a California corporation ("Debtor") in favor of VENTURE LENDING & LEASING, INC.,
a Maryland corporation ("Secured Party").
ARTICLE I - DEFINITIONS
The following definitions shall be applicable to both the singular and
plural forms of the defined terms:
"Agreement" means this Security Agreement, as it may be amended from time
to time.
"Collateral" means all Debtor's Equipment and Fixtures now owned or
hereafter acquired, wherever located, and whether held by Debtor or any third
party, and all proceeds and products thereof, including all insurance and
condemnation proceeds ("Proceeds"), and all Records necessary to the operation
of the Equipment.
"Equipment" means all of Debtor's specific equipment and software
identified and described on Schedule 1 attached to this Agreement and
----------
incorporated herein by reference (as such Schedule may be amended or
supplemented from time to time), all replacements, parts, accessions and
additions thereto, and all proceeds thereof arising from the sale, lease, rental
or other use or disposition thereof, including all rights to payment with
respect to insurance or condemnation, returned premiums, or any cause of action
relating to any of the foregoing.
"Event of Default" means an event described in Article 6.
"Fixtures" means all items of Equipment that are so related to the real
property upon which they are located that an interest in them arises under real
property law, and all proceeds thereof arising from the sale, lease, rental or
other use or disposition thereof.
"Indebtedness" means all debts, obligations and liabilities of Debtor to
Secured Party currently existing or now or hereafter made, incurred or created,
whether pursuant to the Loan Documents, whether voluntary or involuntary and
however arising or evidenced, whether direct or acquired by Secured Party by
assignment or succession, whether due or not due, absolute or contingent,
liquidated or unliquidated, determined or undetermined, and whether Debtor may
be liable individually or jointly, or whether recovery upon such debt may be or
become barred by any statute of limitations or otherwise unenforceable
and all renewals, extensions and modifications thereof, and all attorneys' fees
and costs incurred by Secured Party in connection with the collection and
enforcement thereof.
"Lien" means any voluntary or involuntary security interest, mortgage,
pledge, claim, charge, encumbrance, title retention agreement, or third party
interest covering all or any part of the property of Debtor or any other Person.
"Loan Agreement" means that certain Loan Agreement between Debtor and
Secured Party of even date herewith, as amended from time to time.
"Person" means any individual or entity, including without limitation
Secured Party where the context so permits and in Secured Party's sole
discretion.
"Records" means all Debtor's computer programs, software, hardware, source
codes and data processing information and all written documents necessary for
the operation of the Equipment.
"Uniform Commercial Code" means the California Uniform Commercial Code, as
amended from time to time.
Terms not specifically defined in this Agreement have the meanings
prescribed in the Loan Agreement, and if not defined therein then the meanings
prescribed in the Uniform Commercial Code.
ARTICLE 2 - GRANT OF SECURITY INTEREST
To secure the timely payment of the Indebtedness and performance of all
obligations of Debtor to Secured Party, Debtor grants to Secured Party a
security interest in the Collateral.
ARTICLE 3 - REPRESENTATIONS AND WARRANTIES
Debtor represents and warrants that, at all times during the term of this
Agreement:
3.1 Governmental Actions. Debtor has obtained all consents and actions of,
and has performed all filings with, any governmental or regulatory authority
required to authorize the execution, delivery or performance of this Agreement.
Debtor has, at the time Lender makes a Loan with respect to an item of equipment
in accordance with Section 2.2 of the Loan Agreement, and at all times
thereafter while such Loan is outstanding, obtained all consents and actions of,
and has performed all filings with, any governmental or regulatory authority
required to grant and perfect Secured Party's security interest in such item of
equipment which is part of the Collateral.
2
3.2 Title. Except for the security interests created by this Agreement,
Debtor is and will be the unconditional legal and beneficial owner of the
Collateral. The Collateral is subject to no Liens, rights or defenses of others,
except Liens permitted Under the Loan Agreement.
3.3 Collateral Not Inventory. Debtor is not in the business of selling
goods of the kind included within the Collateral subject to this Agreement.
3.4 Chief Executive Office. Debtor's chief executive office is located at:
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ ▇▇▇▇., ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
3.5 Records Location. Other than as set forth in Section 3.4, Records are
maintained at:
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ ▇▇▇▇., ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
3.6 Equipment or Fixtures Location. Other than as set forth in Section
3.4, Equipment or Fixtures are located at:
3.7 Other Places of Business. In addition to the locations set forth in
Sections 3.5 through 3.7, Debtor maintains the following place(s) of business:
3.8 Business Names. Debtor has conducted business in the following names
other than as stated in the preamble to this Agreement:
3.9 Financing Statements. Copies of all financing statements and all other
documents publicly recorded or filed naming Debtor as debtor or obligor have
been delivered to Secured Party, prior to the date of this Agreement.
ARTICLE 4 - AFFIRMATIVE COVENANTS
During the term of this Agreement and until payment of all the Indebtedness
and performance of all obligations to Secured Party, Debtor will, unless Secured
Party otherwise consents in writing:
4.1 Use of Proceeds. Use the proceeds of any credit extended by Secured
Party to Debtor only in accordance with the terms of the Loan Documents.
4.2 Delivery of Certain Items. Deliver to Secured Party promptly (a) after
an Event of Default, all Proceeds; (b) such specific acknowledgments,
assignments or other agreements as Secured Party may reasonably request relating
to the Collateral; and (c) copies of such Records and other reports in such form
and detail and at such times as Secured Party may reasonably require relating to
the Collateral.
4.3 Maintenance of Collateral; Inspection. Do all things necessary to
maintain, preserve, protect and keep all Collateral in good working order and
saleable condition, dealing with the Collateral in all ways as are considered
good practice by owners of like property, and use the Collateral lawfully and
only as permitted by Debtor's insurance policies. Debtor hereby authorizes
Secured Party's officers, employees, representatives and agents, upon reasonable
notice, at reasonable times and with reasonable frequency, to inspect the
Collateral and to discuss the Collateral and the Records relating thereto with
Debtor's officers.
4.4 Maintenance of Records; Inspection. Maintain, or cause to be
maintained, complete and accurate Records relating to the Collateral. Secured
Party, its officers, employees, agents and representatives, upon reasonable
notice, shall have the right, from time to time, to examine the Records relating
to the Collateral and to make copies or extracts therefrom.
4.5 Debtor's Duty to Give Notice. Give prompt notice to Secured Party of:
(a) any material decrease in the value of any Collateral and the amount of such
decrease (other than depreciation calculated in the ordinary course of business
under applicable tax laws and regulations and in accordance with generally
accepted accounting principles); (b) any threatened or asserted dispute or claim
with respect to the Collateral; (c) any litigation or administrative or
regulatory proceeding which is reasonably likely to have a material adverse
effect on Debtor or its business; and (d) the occurrence of any Event of Default
or of any other development, financial or otherwise, which is reasonably likely
to materially adversely affect the Collateral or Debtor's ability to pay the
indebtedness or perform its obligations to Secured Party.
4
4.6 Financing Statements and Other Actions. Execute and deliver to Secured
Party, and file or record at Debtor's expense all financing statements, notices
and other documents from time to time requested by Secured Party to maintain a
first perfected security interest in the Collateral in favor of Secured Party,
all in form and substance satisfactory to Secured Party, perform such other acts
and execute and deliver to Secured Party such additional conveyances,
assignments, agreements and instruments, as Secured Party may at any time
reasonably request in connection with the administration and enforcement of this
Agreement or Secured Party's rights, powers and remedies hereunder.
4.7 Decals, Markings. At the request of Secured Party, firmly affix a
decal, stencil or other marking to designated items of Collateral, indicating
thereon the security interest of Secured Party.
4.8 Agreement With Real Property Owner/Landlord. Obtain and maintain such
acknowledgments, consents, waivers and agreements from the owner, lienholder,
mortgagee and landlord with respect to any real property on which Collateral is
located as Secured Party may reasonably require, all in form and substance
satisfactory to Secured Party.
ARTICLE 5 - NEGATIVE COVENANTS
During the term of this Agreement and until payment of all the Indebtedness
and performance of all obligations to Secured Party, Debtor will not, without
Secured Party's prior written consent:
5.1 Liens. Create, incur, assume or permit to exist any Lien on any
Collateral, except Liens permitted under the Loan Agreement.
5.2 Documents of Title. Sign or authorize the signing of any financing
statement or other document naming Debtor as debtor or obligor, except those
which do not relate to the Collateral or which, with respect to the Collateral
are permitted under the Loan Agreement, or acquiesce or cooperate in the
issuance of any warehouse receipt or other document of title with respect to any
Collateral, except those negotiated to Secured Party or those naming Secured
Party as secured party.
5.3 Disposition of Collateral. Sell, transfer, lease or otherwise dispose
of any Collateral.
5.4 Change in Location, Name, Legal Structure. If and to the extent the
same would in any manner impair the creation, perfection or priority of Secured
Party's security interest in the Collateral, (a) maintain Records, its chief
executive office
5
or residence, or a place of business at a location other than as specified in
Article 3; or (b) change its name, mailing address, the nature of its business,
or its legal structure.
ARTICLE 6 - EVENTS OF DEFAULT
6.1 Events of Default. The occurrence of any of the following shall
constitute an Event of Default:
(a) Any "Event of Default" as defined in the Loan Agreement.
(b) Secured Party shall not have a first perfected security interest
in any Collateral for ten (10) or more days after notice to Debtor;
(c) Secured Party reasonably determines, in good faith, that its
security interest in the Collateral is materially impaired for ten (10) or more
days after notice to Debtor;
(d) Secured Party reasonably determines, in good faith, that any or
all of the Collateral, including any proceeds, is in danger of dissipation,
loss, theft, damage or destruction, or otherwise in jeopardy such as would
materially impair the value of the Collateral (with due consideration to
applicable insurance coverage);
(e) Debtor shall fail to perform any of its duties or obligations
under this Agreement not specifically referenced in this Article 6 and such
failure remains uncured for thirty (30) or more days after notice to Debtor;
6.2 Acceleration and Remedies. Upon the occurrence of any Event of Default
Secured Party shall be entitled to, at Secured Party's option, without notice or
demand of any kind, (a) declare all or any part of the Indebtedness immediately
due and payable; (b) exercise any or all of the rights and remedies available to
a secured party under the Uniform Commercial Code or any other applicable law;
and (c) exercise any or all of Secured Party's rights and remedies provided for
in this Agreement and in any other Loan Document. The obligations of Debtor
under this Agreement shall continue to be effective or be reinstated, as the
case may be, if at any time any payment of any Indebtedness is rescinded or must
otherwise be returned by Secured Party upon, on account of, or in connection
with, the insolvency, bankruptcy or reorganization of Debtor, or otherwise, all
as though such payment had not been made.
6.3 Sale of Collateral. After the occurrence of an Event of Default
Secured Party may sell all or any part of the Collateral, at public or private
sales, to itself, a wholesaler, retailer or investor, for cash, upon credit or
for future
6
delivery, and at such price or prices as Secured Party may reasonably deem
commercially reasonable. To the extent permitted by law, Debtor-hereby
specifically waives all rights of redemption and any rights of stay or appraisal
which it has or may have under any applicable law in effect from time to time.
Any such public or private sales shall be held at such times and at such
place(s) as Secured Party may determine. In case of the sale of all or any part
of the Collateral on credit or for future delivery, the Collateral so sold may
be retained by Secured Party until the selling price is paid by the purchaser,
but Secured Party shall not incur any liability in case of the failure of such
purchaser to pay for the Collateral and, in case of any such failure, such
Collateral may be resold. Secured Party may, instead of exercising its power of
sale, proceed to enforce its security interest in the Collateral by seeking a
judgment or decree of a court of competent jurisdiction.
6.4 Debtor's Obligation Upon Default. Upon the request of Secured Party
after the occurrence of an Event of Default Debtor will:
(a) Assemble and make available to Secured Party the Collateral at
such place(s) as Secured Party shall designate, segregating all Collateral so
that each item is capable of identification; and
(b) Permit Secured Party, by Secured Party's officers, employees,
agents and representatives, to enter any premises where any Collateral is
located, to take possession of the Collateral and to remove the Collateral or to
conduct any public or private sale of the Collateral, all without any liability
of Secured Party for rent or other compensation for the use of Debtor's
premises.
ARTICLE 7 - SPECIAL COLLATERAL PROVISIONS
7.1 Performance of Debtor's Obligations. Without having any obligation to
do so, Secured Party may perform or pay any obligation which Debtor has agreed
to perform or pay under this Agreement, including, without limitation, the
payment or discharge of taxes or Liens levied or placed on or threatened against
the Collateral. In so performing or paying, Secured Party shall determine the
action to be taken and the amount necessary to discharge such obligations.
Debtor shall reimburse Secured Party on demand for any amounts paid by Secured
Party pursuant to this Section, which amounts shall constitute Indebtedness
secured by the Collateral and shall bear interest from the date of demand at the
rate applicable to overdue payments under the Loan Agreement.
7.2 Power of Attorney. For the purpose of protecting, preserving and
enforcing the Collateral and Secured Party's
7
rights under this Agreement, Debtor hereby irrevocably appoints Secured Party,
with full power of substitution, effective following an Event of Default, as its
attorney-in-fact with full power and authority to do any act which Debtor is
obligated to do, or Secured Party has the right to do, hereunder; to exercise
such rights with respect to the Collateral as Debtor might exercise; to use such
Equipment, Fixtures or other property as Debtor might use; to enter Debtor's
premises; to give notice of Secured Party's security interest in and to collect
the Collateral and the Proceeds; and to execute and file in Debtor's name any
financing statements, amendments and continuation statements necessary or
desirable to perfect or continue the perfection of Secured Party's security
interests in the Collateral. Debtor hereby ratifies all that Secured Party shall
lawfully do or cause to be done by virtue of this appointment.
7.3 Authorization for Secured Party to Take Certain Action. The power of
attorney created in Section 7.3 is a power coupled with an interest and shall be
irrevocable. The powers conferred on Secured Party hereunder are solely to
protect its interests in the Collateral and shall not impose any duty upon
Secured Party to exercise such powers. Secured Party shall be accountable only
for amounts that it actually receives as a result of the exercise of such powers
and in no event shall Secured Party or any of its directors, officers,
employees, agents or representatives be responsible to Debtor for any act or
failure to act, except for gross negligence or willful misconduct. Secured Party
may exercise this power of attorney without notice to or assent of Debtor, in
the name of Debtor, or in Secured Party's own name, from time to time following
an Event of Default in Secured Party's sole discretion and at Debtor's expense.
To further carry out the terms of this Agreement, Secured Party may upon the
occurrence of an Event of Default:
(a) Execute any statements or documents to take possession of, and
endorse and collect and receive delivery or payment of, any checks, drafts,
notes, acceptances or other instruments and documents constituting the payment
of amounts due and to become due or any performance to be rendered with respect
to the Collateral;
(a) Sign and endorse any invoices, freight or express bills, bills of
lading, storage or warehouse receipts; drafts, certificates and statements under
any commercial or standby letter of credit, assignments, leases, bills of sale,
or any other documents relating to the Collateral, including without limitation
the Records;
(c) Use or operate Collateral or any other property of Debtor for the
purpose of preserving or liquidating Collateral;
(d) File any claim or take any other action or proceeding in any court
of law or equity or as otherwise deemed
8
appropriate by Secured Party for the purpose of collecting any and all monies
due or securing any performance to be rendered with respect to the Collateral;
(e) Commence, prosecute or defend any suits, actions or proceedings or
as otherwise deemed appropriate by Secured Party for the purpose of protecting
or collecting the Collateral. In furtherance of this right, upon the occurrence
of an Event of Default Secured Party may apply for the appointment of a receiver
or similar official to operate Debtor's business, and, to the fullest extent
permitted by law, Debtor hereby waives any right to oppose such appointment;
(f) Prepare, adjust, execute, deliver and receive payment under
insurance claims, and collect and receive payment of and endorse any instrument
in payment of loss or returned premiums or any other insurance refund or return,
and apply such amounts, at Secured Party's sole discretion, toward repayment of
the Indebtedness or replacement of the Collateral.
7.4 Application of Proceeds. Any Proceeds and other monies or property
received by Secured Party pursuant to the terms of this Agreement or any Loan
Document may be applied by Secured Party first to the payment of expenses of
collection, including without limitation to reasonable attorneys' fees, and then
to the payment of the Indebtedness in such order of application as Secured Party
may elect. Notwithstanding the rights given to Debtor pursuant to California
Civil Code sections 1479 and 2822 or equivalent provisions in the laws of the
state specified in the governing law clause of this document (and any amendments
or successors thereto), to designate how payments will be applied, Debtor hereby
waives such rights and Secured Party shall have the right in its sole discretion
to determine the order and method of the application of payments received from
Debtor or from the sale or disposition of the Collateral and to revise such
application prospectively or retroactively at its discretion.
7.5 Deficiency. If the proceeds of any sale of the Collateral are
insufficient to cover all costs and expenses of such sale and the payment in
full of all Indebtedness, plus all other sums required to be expended or
distributed by Secured Party, then Debtor shall be liable for any such
deficiency.
7.6 Secured Party Transfer. Upon the transfer of all or any part of the
Indebtedness, Secured Party may transfer all or any part of its interest in the
Collateral and shall be fully discharged thereafter from all liability and
responsibility with respect to such interest in the Collateral so transferred,
and the transferee shall be vested with all the rights and powers of Secured
Party hereunder with respect to such interest in the Collateral so transferred.
9
ARTICLE 8 - GENERAL PROVISIONS
8.1 Notices. Any notice given by any party under this Agreement shall be
given in the manner prescribed in the Loan Agreement.
8.2 Binding Effect. This Agreement shall be binding upon Debtor, its
permitted successors, representatives and assigns, and shall inure to the
benefit of Secured Party and its successors, representatives and assigns;
provided however that Debtor may not assign or transfer Debtor's obligations
under this Agreement without Secured Party's prior written consent. Secured
Party reserves the right to sell, assign, or transfer its rights and powers
under this Agreement in whole or in part without notice to Debtor. In that
connection, Secured Party may disclose all documents and information which
Secured Party now or hereafter may have relating to this Agreement, Debtor or
Debtor's business.
8.3 No Waiver. Any waiver, consent or approval by Secured Party of any
Event of Default or breach of any provision, condition or covenant of this
Agreement or any Loan Document must be in writing and shall be effective only to
the extent set forth in writing. No waiver or any breach of default shall be
deemed a waiver of any later breach or default of the same or any other
provision of this Agreement or any of the Loan Documents. No failure or delay on
the part of Secured Party in exercising any power, right or privilege under this
Agreement or any Loan Document shall operate as a waiver thereof, and no single
or partial exercise of any such power, right or privilege shall preclude any
further exercise thereof, or the exercise of any further power, right or
privilege.
8.4 Rights Cumulative. All rights and remedies existing under this
Agreement are cumulative to, and not exclusive of, any other rights or remedies
available under contract or applicable law.
8.5 Unenforceable Provisions. Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction shall be so only as to such
jurisdiction and only to the extent of such prohibition or unenforceability, but
all the remaining provisions of this Agreement shall remain valid and
enforceable.
8.6 Governing Law, Waiver of Notice. Except as may be otherwise provided
by the Uniform Commercial Code or in any addendum hereto, this Agreement shall
be governed by and construed in accordance with the laws of the State of
California. To the fullest extent permitted by law, Debtor hereby waives
presentment, demand, protest, notice of dishonor and all other
10
notices and demands as well as any applicable statute of limitations.
8.7 Entire Agreement. This Agreement, together with the other Loan
Documents, is intended by Debtor and Secured Party as the final expression of
Debtor's obligations to Secured Party in connection with the Collateral and
supersedes all prior understandings or agreements concerning the subject matter
hereof. This Agreement may be amended only by a writing signed by Debtor and
accepted by Secured Party in writing.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date set
forth in the preamble.
ACTIVE SOFTWARE, INC. VENTURE LENDING & LEASING, INC.
By: /s/ R. ▇▇▇▇▇ ▇▇▇▇▇ By: /s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
------------------ ---------------------------
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Chief Financial Officer
11
Schedule 1 to Security Agreement
Description of Equipment
Quantity Article Make Y. Mfq. Model Serial or
-------- ------- ---- ------- ----- ---------
Motor No.
--------
See attached continuation to Schedule 1
together with all improvements, replacements, accessions and additions thereto,
wherever located, and all Proceeds thereof arising from the sale, lease, rental
or other use or disposition of any such property, including all rights to
payment with respect to insurance or condemnation, returned premiums, or any
cause of action relating to any of the foregoing.
ACTIVE SOFTWARE, INC.
By:/s/ R. ▇▇▇▇▇ ▇▇▇▇▇
------------------
VENTURE LENDING & LEASING, INC.
By: /s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
--------------------------------
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Chief Financial Officer
EXHIBIT A TO FINANCING STATEMENT
BETWEEN
ACTIVE SOFTWARE, INC.,
AS DEBTOR,
AND
VENTURE LENDING & LEASING, INC.,
AS SECURED PARTY
------------------------------------------
Item 6 continued:
----------------
All of Debtor's right, title and interest in and to the Collateral, as such
term is defined below.
"Collateral" means all Debtor's Equipment and Fixtures now owned or
hereafter acquired, wherever located, and whether held by Debtor or any third
party, and all proceeds and products thereof, including all insurance and
condemnation proceeds ("Proceeds"), and all Records necessary for the operation
of the Equipment.
"Equipment" means all of Debtor's specific equipment and software
identified and described on Schedule 1 attached to this Agreement and
----------
incorporated herein by reference (as such Schedule may be amended or
supplemented from time to time), all replacements, parts, accessions and
additions thereto, and all proceeds thereof arising from the sale, lease, rental
or other use or disposition thereof, including all rights to payment with
respect to insurance or condemnation, returned premiums, or any cause of action
relating to any of the foregoing.
"Fixtures" means all items of Equipment that are so related to the real
property upon which they are located that an interest in them arises under real
property law, and all proceeds thereof arising from the sale, lease, rental or
other use or disposition thereof.
"Records" means all Debtor's computer programs, software, hardware, source
codes and data processing information and all written documents necessary for
the operation of the Equipment.
EXHIBIT D
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR INVESTMENT
AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 OR ANY STATE
SECURITIES LAWS. SUCH SECURITIES MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE
OF SUCH REGISTRATION OR AN EXEMPTION THEREFROM UNDER SAID ACT AND ANY APPLICABLE
STATE SECURITIES LAWS.
WARRANT TO PURCHASE
28,000 SHARES OF COMMON STOCK OF
ACTIVE SOFTWARE, INC.
(Void after September 30, 2004)
This certifies that VENTURE LENDING & LEASING, INC., a Maryland
corporation, or assigns (the "Holder"), for value received, is entitled to
purchase from ACTIVE SOFTWARE, INC., a California corporation (the "Company"),
28,000 fully paid and nonassessable shares of the Company's Common Stock
("Common Stock") for cash at a price of $1.00 per share (the "Stock Purchase
Price") at any time or from time to time up to and including 5:00 p.m. (Pacific
time) on August 31, 2004 (the "Expiration Date"), upon surrender to the Company
at its principal office at ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇., ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇,
▇▇ ▇▇▇▇▇ (or at such other location as the Company may advise Holder in writing)
of this Warrant properly endorsed with the Form of Subscription attached hereto
duly filled in and signed and upon payment in cash or by check of the aggregate
Stock Purchase Price for the number of shares for which this Warrant is being
exercised determined in accordance with the provisions hereof. The Stock
Purchase Price and the number of shares purchasable hereunder are subject to
adjustment as provided in Section 4 of this Warrant.
This Warrant is subject to the following terms and conditions:
1. Exercise; Issuance of Certificates; Payment
-------------------------------------------
for Shares.
-----------
(a) Unless an election is made pursuant to clause (b) of this Section
1, this Warrant shall be exercisable at the option of the Holder, at any time or
from time to time, on or before the Expiration Date for all or any portion of
the shares of Common Stock (but not for a fraction of a share) which may be
purchased hereunder for the Stock Purchase Price multiplied by the number of
shares to be purchased. The Company agrees that the shares of Common Stock
purchased under this Warrant shall be and are deemed to be issued to the holder
hereof as the record owner of such shares as of the close of business on the
date on which this
Warrant shall have been surrendered and payment made for such shares. Subject to
the provisions of Section 2, certificates for the shares of Common Stock so
purchased, together with any other securities or property to which the Holder
hereof is entitled upon such exercise, shall be delivered to the Holder hereof
by the Company at the Company's expense within a reasonable time after the
rights represented by this Warrant have been so exercised. Except as provided in
clause (b) of this Section 1, in case of a purchase of less than all the shares
which may be purchased under this Warrant, the Company shall cancel this Warrant
and execute and deliver a new Warrant or Warrants of like tenor for the balance
of the shares purchasable under the Warrant surrendered upon such purchase to
the Holder hereof within a reasonable time. Each stock certificate so delivered
shall be in such denominations of Common Stock as may be requested by the Holder
hereof and shall be registered in the name of such Holder or such other name as
shall be designated by such Holder, subject to the limitations contained in
Section 2.
(b) The Holder, in lieu of exercising this Warrant by the payment of
the Stock Purchase Price pursuant to clause (a) of this Section 1, may elect, at
any time on or before the Expiration Date, to receive, through conversion of
this Warrant or any portion hereof into that number of shares of Common Stock
equal to the quotient of: (i) the difference between (A) the Per Share Price (as
hereinafter defined) of the Common Stock, less (B) the Stock Purchase Price then
in effect, multiplied by the number of shares of Common Stock the Holder would
otherwise have been entitled to purchase hereunder pursuant to clause (a) of
this Section 1 (or such lesser number of shares as the Holder may designate in
the case of a partial exercise of this Warrant); over (ii) the Per Share Price.
(c) For purposes of clause (b) of this Section 1, "Per Share Price"
means (i) if the Company's Common Stock is then listed or admitted to trading on
any national securities exchange or traded on any national market system, the
average of the closing bid and asked prices of the Company's Common Stock as
reported on such exchange or market system for the ten (10) consecutive trading
days prior to the date of the Holder's election to convert hereunder; (ii) if
this Warrant is being converted in conjunction with a public offering of stock,
the price to the public per share pursuant to the offering; or (iii) if no
shares of the Company's Common Stock are listed or admitted to trading on any
national securities exchange or traded on any national market system, the price
per share which the Company would obtain from a willing buyer for shares sold by
the Company from authorized but unissued shares as such price shall be agreed
upon by the Holder and the Company or, if agreement cannot be reached within ten
(10) business days of the Holder's election hereunder, as
2
such price shall be determined by the Board of Directors of the Company, acting
in good faith.
2. Limitation on Transfer.
----------------------
(a) The Warrant and the Common Stock shall not be transferable except
upon the conditions specified in this Section 2, which conditions are intended
to insure compliance with the provisions of the Securities Act. Each holder of
this Warrant or the Common Stock issuable hereunder will cause any proposed
transferee of the Warrant or Common Stock to agree to take and hold such
securities subject to the provisions and upon the conditions specified in this
Section 2.
(b) Each certificate representing this Warrant or the Common Stock
Shall (unless otherwise permitted by the provisions of this Section 2 or unless
such securities have been registered under the Securities Act or sold under Rule
144) be stamped or otherwise imprinted with a legend substantially in the
following form (in addition to any legend required under applicable state
securities laws):
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR
INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 OR
ANY STATE SECURITIES LAWS. SUCH SECURITIES MAY NOT BE SOLD OR TRANSFERRED
IN THE ABSENCE OF SUCH REGISTRATION OR AN EXEMPTION THEREFROM UNDER SAID
ACT AND ANY APPLICABLE STATE SECURITIES LAWS.
(c) The Holder of this Warrant and each person to whom this Warrant is
subsequently transferred represents and warrants to the Company (by acceptance
of such transfer) that it will not transfer the Warrant (or securities issuable
upon exercise hereof unless a registration statement under the Securities Act
was in effect with respect to such securities at the time of issuance thereof)
except pursuant to (i) an effective registration statement under the Securities
Act, (ii) Rule 144 under the Securities Act (or any other rule under the
Securities Act relating to the disposition of securities), or (iii) an opinion
of counsel, reasonably satisfactory to counsel for the Company, that an
exemption from such registration is available.
3. Shares to be Fully Paid; Reservation of Shares. The Company covenants
----------------------------------------------
and agrees that all shares of Common Stock which may be issued upon the exercise
of the rights represented by this Warrant will, upon issuance, be duly
authorized, validly issued, fully paid and nonassessable and free from all
preemptive rights of any shareholder and free of all taxes, liens and charges
with respect to the issue thereof. The Company further covenants and agrees that
during the period within which the rights represented by this
3
Warrant maybe exercised, the Company will at all times have authorized and
reserved, for the purpose of issue or transfer upon exercise of the subscription
rights evidenced by this Warrant, a sufficient number of shares of authorized
but unissued Common Stock, or other securities and property, when and as
required to provide for the exercise of the rights represented by this Warrant.
The Company will take all such action as may be necessary to assure that such
shares of Common Stock may be issued as provided herein without violation of any
applicable law or regulation, or of any requirements of any domestic securities
exchange upon which the Common Stock may be listed. The Company will not take
any action which would result in any adjustment of the Stock Purchase Price (as
defined in Section 4 hereof) (i) if the total number of shares of Common Stock
issuable after such action upon exercise of all outstanding warrants, together
with all shares of Common Stock then outstanding and all shares of Common Stock
then issuable upon exercise of all options and upon the conversion of all
convertible securities then outstanding, would exceed the total number of shares
of Common Stock then authorized by the Company's Articles of Incorporation.
4. Adjustment of Stock Purchase Price Number of Shares. The Stock
---------------------------------------------------
Purchase Price and the number of shares purchasable upon the exercise of this
Warrant shall be subject to adjustment from time to time upon the occurrence of
certain events described in this Section 4. Upon each adjustment of the Stock
Purchase Price, the Holder of this Warrant shall thereafter be entitled to
purchase, at the Stock Purchase Price resulting from such adjustment, the number
of shares obtained by multiplying the Stock Purchase Price in effect immediately
prior to such adjustment by the number of shares purchasable pursuant hereto
immediately prior to such adjustment, and dividing the product thereof by the
Stock Purchase Price resulting from such adjustment.
4.1 Subdivision or Combination of Stock. In case the Company shall at
-----------------------------------
any time subdivide its outstanding shares of Common Stock into a greater number
of shares, the Stock Purchase Price in effect immediately prior to such
subdivision shall be proportionately reduced, and conversely, in case the
outstanding shares of Common Stock of the Company shall be combined into a
smaller number of shares, the Stock Purchase Price in effect immediately prior
to such combination shall be proportionately increased.
4.2 Dividends in Preferred Stock, Other Stock, Property,
---------------------------------------------------
Reclassification. If at any time or from time to time the holders of Common
----------------
Stock (or any shares of stock or other securities at the time receivable upon
the exercise of this Warrant) shall have received or become entitled to receive,
without payment therefor,
4
(a) by way of dividend or other distribution any shares of stock
or other securities, whether or not such securities are at any time directly or
indirectly convertible into or exchangeable for Common Stock, or any rights or
options to subscribe for, purchase or otherwise acquire any of the foregoing, or
(b) any cash paid or payable otherwise than as a cash dividend,
or
(c) additional stock or other securities or property (including
cash) by way of spinoff, split-up, reclassification, combination of shares or
similar corporate rearrangement, (other than shares of Common Stock issued as a
stock split, adjustments in respect of which shall be covered by the terms of
Section 4.1 above),
then and in each such case, the Holder hereof shall, upon the exercise of this
Warrant, be entitled to receive, in addition to the number of shares of Common
Stock receivable thereupon, and without payment of any additional consideration
therefore, the amount of stock and other securities and property (including cash
in the cases referred to in clauses (b) and (c) above) which such Holder would
hold on the date of such exercise had he been the holder of record of such
Common Stock as of the date on which holders of Common Stock received or became
entitled to receive such shares and/or all other additional stock and other
securities and property.
4.3 Reorganization Reclassification, Consolidation, Merger or Sale.
--------------------------------------------------------------
If any capital reorganization of the capital stock of the Company, or any
consolidation or merger of the Company with another corporation, or the sale of
all or substantially all of its assets to another corporation shall be effected
in such a way that holders of Common Stock shall be entitled to receive stock,
securities or assets with respect to or in exchange for Common Stock, then, as a
condition of such reorganization, reclassification, consolidation, merger or
sale, lawful and adequate provisions shall be made whereby the holder hereof
shall thereafter have the right to purchase and receive(in lieu of the shares of
the Common Stock of the Company immediately theretofore purchasable and
receivable upon the exercise of the rights represented hereby) such shares of
stock, securities or assets as may be issued or payable with respect to or in
exchange for a number of outstanding shares of such Common Stock equal to the
number of shares of such stock immediately theretofore purchasable and
receivable upon the exercise of the rights represented hereby. In any such case,
appropriate provision shall be made with respect to the rights and interests of
the holder of this Warrant to the end that the provisions hereof (including,
without limitation, provisions for adjustments of
5
the Stock Purchase Price and of the number of shares purchasable and receivable
upon the exercise of this Warrant) shall thereafter be applicable, as nearly as
may be possible, in relation to any shares of stock, securities or assets
thereafter deliverable upon the exercise hereof. The Company will not effect any
such consolidation, merger or sale unless, prior to the consummation thereof,
the successor corporation (if other than the Company) resulting from such
consolidation or the corporation purchasing such assets shall assume by written
instrument, executed and mailed or delivered to the registered Holder hereof at
the last address of such Holder appearing on the books of the Company, the
obligation to deliver to such Holder such shares of stock, securities or assets
as, in accordance with the foregoing provisions, such Holder may be entitled to
purchase.
4.4 Notice of Adjustment. Upon any adjustment of the Stock Purchase
--------------------
Price, and/or any increase or decrease in the number of shares purchasable upon
the exercise of this Warrant the Company shall give written notice thereof, by
first class mail, postage prepaid, addressed to the registered holder of this
Warrant at the address of such holder as shown on the books of the Company. The
notice shall be signed by the Company's chief financial officer and shall state
the Stock Purchase Price resulting from such adjustment and the increase or
decrease, if any, in the number of shares purchasable at such price upon the
exercise of this Warrant, setting forth in reasonable detail the method of
calculation and the facts upon which such calculation is based.
4.5 Other Notices. If at any time:
-------------
(a) the Company shall declare any cash dividend upon any of its
stock;
(b) the Company shall declare any dividend upon its stock
payable in stock, or make any special dividend or other distribution to the
holders of its stock;
(c) the Company shall offer for subscription pro rata to the
holders of its Common Stock any additional shares of stock of any class or other
rights;
(d) there shall be any capital reorganization or
reclassification of the capital stock of the Company, or consolidation or merger
of the Company with, or sale of all or substantially all of its assets to,
another corporation;
(e) there shall be a voluntary or involuntary dissolution,
liquidation or winding-up of the Company; or
6
(f) the Company shall take or propose to take any other action,
notice of which is actually provided to holders of the Common Stock;
then, in anyone or more of said cases, the Company shall give, by first class
mail, postage prepaid, addressed to the holder of this Warrant at the address of
such holder as shown on the books of the Company, (i) at least 10 day's prior
written notice of the date on which the books of the Company shall close or a
record shall be taken for such dividend, distribution or subscription rights or
for determining rights to vote in respect of any such reorganization,
reclassification, consolidation, merger, sale, dissolution, liquidation or
winding-up, or other action and (ii) in the case of any such reorganization,
reclassification, consolidation, merger, sale, dissolution, liquidation or
winding-up, or other action, at least 10 day's written notice of the date when
the same shall take place. Any notice given in accordance with the foregoing
clause (i) shall also specify, in the case of any such dividend, distribution or
subscription rights, the date on which the holders of stock shall be entitled
thereto. Any notice given in accordance with the foregoing clause (ii) shall
also specify the date on which the holders of Common Stock shall be entitled to
exchange their Common Stock for securities or other property deliverable upon
such reorganization, reclassification, consolidation, merger, sale, dissolution,
liquidation or winding-up, or other action as the case may be.
4.6 Certain Events. If any change in the outstanding Common Stock of
the Company or any other event occurs as to which the other provisions of this
Section 4 are not strictly applicable or if strictly applicable would not fairly
protect the purchase rights of the Holder of the Warrant in accordance with the
essential intent and principles of such provisions, then the Board of Directors
of the Company shall make an adjustment in the number and class of shares
available under the Warrant, the Stock Purchase Price and/or the application of
such provisions, in accordance with such essential intent and principles, so as
to protect such purchase rights as aforesaid. The adjustment shall be such as
will give the Holder of the Warrant upon exercise for the same aggregate Stock
Purchase Price the total number, class and kind of shares as he would have owned
had the Warrant been exercised prior to the event and had he continued to hold
such shares until after the event requiring adjustment.
5. Issue Tax. The issuance of certificates for shares of Common Stock
---------
upon the exercise of the Warrant shall be made without charge to the Holder of
the Warrant for any issue tax in respect thereof; provided, however, that the
Company shall not be required to pay any tax which may be payable in respect of
any transfer involved in the issuance
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and delivery of any certificate in a name other than that of the then Holder of
the Warrant being exercised.
6. Closing of Books. The Company will at no time close its transfer books
----------------
against the transfer of any Warrant or of any shares of Common Stock issued or
issuable upon the exercise of any warrant in any manner which interferes with
the timely exercise of this Warrant.
7. No Voting or Dividend Rights; Limitation of Liability. Nothing
-----------------------------------------------------
contained in this Warrant shall be construed as conferring upon the Holder
hereof the right to vote or to consent as a shareholder in respect of meetings
of shareholders for the election of directors of the Company or any other
matters or any rights whatsoever as a shareholder of the Company. No dividends
or interest shall be payable or accrued in respect of this Warrant or the
interest represented hereby or the shares purchasable hereunder until, and only
to the extent that, this Warrant shall have been exercised. No provisions
hereof, in the absence of affirmative action by the holder to purchase shares of
Common Stock, and no mere enumeration herein of the rights or privileges of the
Holder hereof, shall give rise to any liability of such Holder for the Stock
Purchase Price or as a shareholder of the Company, whether such liability is
asserted by the Company or by its creditors.
8. Intentionally Deleted.
---------------------
9. Registration Rights. The Holder hereof shall be entitled, with respect
-------------------
to the shares of Common Stock issued upon exercise hereof to all of the
registration rights set forth in the Section 3 of the Company's Rights Agreement
dated as of February 1, 1996 (other than those set forth in Section 3.2 and
3.12) to the same extent and on the same terms and conditions as possessed by
the Series A Shareholders thereunder. The Company shall take such action as may
be reasonably necessary to assure that the granting of such registration rights
to the Holder does not violate the provisions of such agreement or any of the
Company's charter documents or rights of prior grantees of registration rights.
10. Rights and Obligations Survive Exercise of Warrant. The rights and
--------------------------------------------------
obligations of the Company, of the Holder of this Warrant and of the holder of
shares of Common Stock issued upon exercise of this Warrant, contained in
Sections 6 and 9 shall survive the exercise of this Warrant.
11. Modification and Waiver. This Warrant and any provision hereof may be
-----------------------
changed, waived, discharged or terminated only by an instrument in writing
signed by the party against which enforcement of the same is sought.
12. Notices. Any notice, request or other document
-------
8
required or permitted to be given or delivered to the holder hereof or the
Company shall be deemed to have been given (i) upon receipt if delivered
personally or by courier, (ii) upon confirmation of receipt if by telecopy, or
(iii) three business days after deposit in the U.S. mail, with postage prepaid
and certified or registered, to each such holder at its address as shown on the
books of the Company or to the Company at the address indicated therefor in the
first paragraph of this Warrant.
13. Binding Effect on Successors. This Warrant shall be binding upon any
----------------------------
corporation succeeding the Company by merger, consolidation or acquisition of
all or substantially all of the Company's assets. All of the obligations of the
Company relating to the Common Stock issuable upon the exercise of this Warrant
shall survive the exercise and termination of this Warrant. All of the covenants
and agreements of the Company shall inure to the benefit of the successors and
assign of the holder hereof. The Company will, at the time of the exercise of
this Warrant, in whole or in part, upon request of the Holder hereof but at the
Company's expense, acknowledge in writing its continuing obligation to the
Holder hereof in respect of any rights (including, without limitation, any right
to registration of the shares of Common Stock) to which the holder hereof shall
continue to be entitled after such exercise in accordance with this Warrant;
provided, that the failure of the holder hereof to make any such request shall
not affect the continuing obligation of the Company to the Holder hereof in
respect of such rights.
14. Descriptive Headings and Governing Law. The descriptive headings of
--------------------------------------
the several sections and paragraphs of this Warrant are inserted for convenience
only and do not constitute a part of this Warrant. This Warrant shall be
construed and enforced in accordance with, and the rights of the parties shall
be governed by, the laws of the State of California.
15. Lost Warrants or Stock Certificates. The Company represents and
-----------------------------------
warrants to the Holder hereof that upon receipt of evidence reasonably
satisfactory to the Company of the loss, theft, destruction, or mutilation of
any Warrant or stock certificate and, in the case of any such loss, theft or
destruction, upon receipt of an indemnity reasonably satisfactory to the
Company, or in the case of any such mutilation upon surrender and cancellation
of such Warrant or stock certificate, the Company at its expense will make and
deliver a new Warrant or stock certificate, of like tenor, in lieu of the lost,
stolen, destroyed or mutilated Warrant or stock certificate.
9
16. Fractional Shares. No fractional shares shall be issued upon exercise
-----------------
of this Warrant. The Company shall, in lieu of issuing any fractional share, pay
the holder entitled to such fraction a sum in cash equal to such fraction
multiplied by the then effective Stock Purchase Price.
17. Representations of Holder. With respect to this Warrant and any
-------------------------
securities issued upon exercise thereof, Holder represents and warrants to the
Company as follows:
17.1 Experience. It is experienced in evaluating and investing in
----------
companies engaged in businesses similar to that of the Company; it understands
that investment in the Warrant involves substantial risks; it has made detailed
inquiries concerning the Company, its business and services, its officers and
its personnel; the officers of the Company have made available to Holder any and
all written information it has requested; the officers of the Company have
answered to Holder's satisfaction all inquiries made by it; in making this
investment it has relied upon information made available to it by the Company;
it has such knowledge and experience in financial and business matters that it
is capable of evaluating the merits and risks of investment in the Company and
it is able to bear the economic risk of that investment; and it is an
"accredited investor" as defined in Regulation D promulgated by the Securities
and Exchange Commission.
17.2 Investment. It is acquiring the Warrant and any securities
----------
issued upon exercise thereof for investment for its own account and not with a
view to, or for resale in connection with, any distribution thereof. It
understands that the Warrant and the shares of Common Stock issuable upon
exercise thereof, have not been registered under the Securities Act of 1933, as
amended, nor qualified under applicable state securities laws.
17.3 Rule 144. It acknowledges that the Warrant and the Common Stock
--------
must be held indefinitely unless they are subsequently registered under the
Securities Act or an exemption from such registration is available. It has been
advised or is aware of the provisions of Rule 144 promulgated under the
Securities Act.
17.4 Access to Data. It has had an opportunity to discuss the
--------------
Company's business, management and financial affairs with the Company's
management and has had the opportunity to inspect the Company's facilities.
18. Additional Representations and Covenants of the Company. The Company
-------------------------------------------------------
hereby represents, warrants and agrees as follows:
18.1 Corporate Power. The Company has all requisite corporate power
---------------
and corporate authority to issue
10
this Warrant and to carry out and perform its obligations hereunder.
18.2 Authorization. All corporate action on the part of the Company,
-------------
its directors and shareholders necessary for the authorization, execution,
delivery and performance by the Company of this has been taken. This Warrant is
a valid and binding obligation of the Company, enforceable in accordance with
its terms.
18.3 Offering. Subject in part to the truth and accuracy of Holder's
--------
representations set forth in Section 17 hereof, the offer, issuance and sale of
the Warrant is, and the issuance of Common Stock upon exercise of the Warrant
will be exempt from the registration requirements of the Securities Act, and are
exempt from the qualification requirements of any applicable state securities
laws; and neither the Company nor anyone acting on its behalf will take any
action hereafter that would cause the loss of such exemptions.
18.4 Stock Issuance. Upon exercise of the Warrant, the Company will
--------------
use its best efforts to cause stock certificates representing the shares of
Common Stock purchased pursuant to the exercise to be issued in the individual
names of Holder, its nominees or assignees, as appropriate at the time of such
exercise.
18.5 Articles and By-Laws. The Company has provided Holder with true
--------------------
and complete copies of the Company's Articles or Certificate of Incorporation,
By-Laws, and each Certificate of Determination or other charter document
setting, forth any rights, preferences and privileges of Company's capital
stock, each as amended and in effect on the date of issuance of this Warrant.
18.6 Financial and Other Reports. From time to time up to the earlier
---------------------------
of the Expiration Date or the complete exercise of this Warrant, the Company
shall furnish to Holder (i) within 90 days after the close of each fiscal year
of the Company an audited balance sheet and statement of changes in financial
position at and as of the end of such fiscal year, together with an audited
statement of income for such fiscal year; (ii) within 45 days after the close of
each fiscal quarter of the Company, an unaudited balance sheet and statement of
cash flows at and as of the end of such quarter, together with an unaudited
statement of income for such quarter; and (iii) promptly after sending, making
available, or filing, copies of all reports, proxy statements, and financial
statements that the Company sends or makes available to its shareholders
generally and all registration statements and reports that the Company files
with the SEC.
11
IN WITNESS WHEREOF, the Company has caused this Warrant to be duly
executed by its officers, thereunto duly authorized this ___ day of September,
1996.
ACTIVE SOFTWARE, INC.
By:_____________________________________
Title:__________________________________
12
FORM OF SUBSCRIPTION
--------------------
(To be signed only upon exercise of Warrant)
To:________________________________
The undersigned, the holder of the within Warrant, hereby irrevocably
elects to exercise the purchase right represented by such Warrant for, and to
purchase thereunder, ____________________________________________(________) (1)
shares of Common Stock of_____________________________________ and herewith
makes payment of _______________________________
Dollars ($_________) therefor, and requests that the certificates for such
shares be issued in the name of, and delivered to,
_________________________________, whose address is ___________________________.
The undersigned represents that it is acquiring such Common Stock for
its own account for investment and not with a view to or for sale in connection
with any distribution thereof (subject, however, to any requirement of law that
the disposition thereof shall at all times be within its control.
DATED:_____________________________
________________________________________
(Signature must conform in all
respects to name of holder as
specified on the face of the Warrant)
_______________________________________
_______________________________________
(Address)
____________________
(1) Insert here the number of shares called for on the face of the Warrant (or,
in the case of a partial exercise, the portion thereof as to which the
Warrant is being exercised), in either case without making any adjustment
for additional Common Stock or any other stock or other securities or
property or cash which, pursuant to the adjustment provisions of the
Warrant, may be deliverable upon exercise.
13
ASSIGNMENT
----------
FOR VALUE RECEIVED, the undersigned, the holder of the within Warrant,
hereby sells, assigns and transfers all of the rights of the undersigned under
the within Warrant, with respect to the number of shares of Common Stock covered
thereby set forth hereinbelow, unto:
Name of Assignee Address No. of Shares
--------------------------------------------------------------------------------
DATED:_______________________________
________________________________________
(Signature must conform in all
respects to name of holder as specified
on the face of the Warrant)
14