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EXHIBIT 10.17
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SENIOR SUBORDINATED CONVERTIBLE NOTE PURCHASE AGREEMENT
Among
▇▇▇▇▇▇ SOFTWARE, INC.,
as Company
AND
TA SUBORDINATED DEBT FUND, L.P.
TA INVESTORS LLC
ST. ▇▇▇▇ VENTURE CAPITAL VI, LLC,
as Purchasers
Dated as of February 23, 2001
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▇▇▇▇▇▇ SOFTWARE, INC.
Senior Subordinated Convertible Note Purchase Agreement
Dated as of February 23, 2001
TABLE OF CONTENTS
ARTICLE I - DEFINITIONS..........................................................................1
1.1 Definitions....................................................................1
1.2 Accounting Terms..............................................................10
ARTICLE II - AUTHORIZATION, PURCHASE, SALE AND TERMS OF CONVERTIBLE NOTES; PAYMENTS.............10
2.1 The Securities................................................................10
2.2 Purchase of the Convertible Notes; Conversion into Notes and Warrants.........11
2.3 Issue Price; Original Issue Discount..........................................11
2.4 Use of Proceeds...............................................................11
2.5 Payments and Endorsements.....................................................12
2.6 Redemptions and Mandatory Repurchase..........................................12
2.6.1 Required Redemption................................................12
2.6.2 Optional Redemptions...............................................13
2.6.3 Notice of Redemptions; Pro Rata Redemptions........................13
2.6.4 Mandatory Repurchase of Notes......................................13
2.6.5 No Other Acquisition of Convertible Notes or Notes.................14
2.7 Default Rate of Interest......................................................14
2.8 Maximum Legal Rate of Interest................................................14
2.9 Payment on Non-Business Days..................................................14
2.10 Transfer and Exchange of Convertible Notes or Notes...........................14
2.11 Replacement of Convertible Notes or Notes.....................................15
2.12 Other Notices.................................................................16
2.13 Ranking.......................................................................16
ARTICLE III - CONDITIONS TO NOTEHOLDERS' OBLIGATIONS............................................16
3.1 Representations and Warranties................................................16
3.2 Documentation at Closing......................................................16
3.3 No Default....................................................................18
3.4 Stock Purchase Documents......................................................18
3.5 Use of Proceeds...............................................................18
3.6 Compliance with this Agreement................................................18
3.7 No Material Judgment or Order.................................................19
3.8 Compliance Certificate........................................................19
3.9 Statement of Sources and Uses of Funds........................................19
3.10 Intentionally Omitted.........................................................19
3.11 Financial Statements..........................................................19
3.12 Pro Forma Balance Sheet.......................................................19
ARTICLE IV - REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS...................................19
4.1 Representations and Warranties of the Purchasers..............................19
(i)
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ARTICLE V - REPRESENTATIONS AND WARRANTIES OF THE COMPANY.......................................21
5.1 Organization Standing Etc.....................................................21
5.2 Authorization and Validity....................................................21
5.3 No Conflict: No Default.......................................................21
5.4 Government Consent............................................................22
5.5 Financial Statements and Condition............................................22
5.6 Litigation....................................................................22
5.7 Environmental Health and Safety Laws..........................................22
5.8 ERISA.........................................................................23
5.9 Federal Reserve Regulations...................................................23
5.10 Title to Property; Leases; Liens; Subordination...............................23
5.11 Taxes.........................................................................23
5.12 Trademarks, Patents...........................................................24
5.13 Force Majeure.................................................................24
5.14 Investment Company Act........................................................24
5.15 Public Utility Holding Company Act............................................24
5.16 Retirement Benefits...........................................................24
5.17 Subsidiaries..................................................................24
5.18 No Event of Default...........................................................24
5.19 Use of Proceeds...............................................................24
5.20 No Amendments to Certain Documents............................................24
5.21 Securities Act................................................................25
5.22 Representations and Warranties Incorporated from Other Documents..............25
5.23 Chief Executive Offices.......................................................25
5.24 Reserved Shares...............................................................25
5.25 Government Regulations........................................................25
5.26 Full Disclosure...............................................................25
ARTICLE VI - AFFIRMATIVE COVENANTS OF THE COMPANY...............................................26
6.1 Financial Statements and Reports..............................................26
6.2 Corporate Existence...........................................................27
6.3 Insurance.....................................................................27
6.4 Payment of Taxes and Claims...................................................27
6.5 Inspection....................................................................28
6.6 Maintenance of Properties.....................................................28
6.7 Books and Records.............................................................28
6.8 Compliance....................................................................28
6.9 Notice of Litigation..........................................................28
6.10 ERISA.........................................................................30
6.11 Environmental Matters; Reporting..............................................29
6.12 Punctual Payment..............................................................29
6.13 Maintenance of Office.........................................................29
6.14 Intentionally Omitted.........................................................30
6.15 Subsidiaries, Etc.............................................................30
6.16 Intentionally Omitted.........................................................30
(ii)
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6.17 Intellectual Property.........................................................30
6.18 Further Assurances............................................................30
ARTICLE VII - CERTAIN NEGATIVE COVENANTS OF THE COMPANY.........................................31
7.1 Merger........................................................................31
7.2 Sale of Assets................................................................31
7.3 Plans.........................................................................31
7.4 Changes in Nature of Business.................................................31
7.5 Subsidiaries..................................................................31
7.6 Negative Pledges; Subsidiary Restrictions.....................................32
7.7 Distributions; Restricted Payments............................................32
7.8 Capital Expenditures..........................................................32
7.9 Investments...................................................................32
7.10 Indebtedness..................................................................33
7.11 Liens.........................................................................34
7.12 Contingent Liabilities........................................................35
7.13 Lease Obligations.............................................................35
7.14 Loss Limitation...............................................................35
7.15 Loan Proceeds.................................................................35
7.16 Interest Coverage Ratio.......................................................35
7.17 Cash Flow Leverage Ratio......................................................35
7.18 Intentionally Omitted.........................................................36
7.19 Intentionally Omitted.........................................................36
7.20 Intentionally Omitted.........................................................36
7.21 Transaction Documents.........................................................36
7.22 Intentionally Omitted.........................................................36
7.23 Transactions with Affiliates..................................................36
7.24 Accounting Practices..........................................................36
7.25 Amendments to Charter and Agreements; Subordinated Debt.......................36
ARTICLE VIII - EVENTS OF DEFAULT; ACCELERATION; ETC.............................................37
8.1 Events of Default.............................................................37
8.2 Remedies......................................................................40
8.3 Distribution of Proceeds......................................................40
8.4 Annulment of Defaults.........................................................41
ARTICLE IX - MISCELLANEOUS......................................................................41
9.1 No Waiver; Cumulative Remedies................................................41
9.2 Amendments, Waivers and Consents..............................................41
9.3 Addresses for Notices, Etc....................................................41
9.4 Costs, Expenses and Taxes.....................................................43
9.5 Assignability; Binding Agreement..............................................43
9.6 Payments in Respect of Convertible Notes or Notes.............................44
9.7 Indemnification...............................................................44
9.8 Survival of Representations and Warranties....................................45
9.9 Prior Agreements..............................................................45
9.10 Severability..................................................................45
9.11 Governing Law.................................................................45
(iii)
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9.12 Dispute Resolution............................................................45
9.13 Section Headings and Gender; Construction.....................................46
9.14 Counterparts..................................................................47
9.15 Further Assurances............................................................47
9.16 Intentionally Omitted.........................................................47
9.17 Intentionally Omitted.........................................................47
9.18 Intentionally Omitted.........................................................47
9.19 Specific Performance..........................................................47
9.20 Actions by Noteholders........................................................47
9.21 Limitation of Liability.......................................................47
(iv)
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SCHEDULES AND EXHIBITS
Exhibits
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2.1 Form of Senior Subordinated Convertible Notes
2.1(i) Form of Senior Subordinated Notes
2.1(ii) Form of Warrants
2.2 Allocation of Principal Amount of Convertible Notes
2.2(a) Allocation of Principal Amount of Notes upon Conversion
2.2(b) Allocation of Warrants upon Conversion
2.3 Issue Price and Original Issue Discount
6.1(c) Form of Quarterly Financial Compliance Certificate
Schedules
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1 Description of the Purchasers of Convertible Notes
2 List of Executive Officers
5.1 Organization; Standing, Etc.
5.5 Financial Statements
5.6 Litigation
5.11 Taxes
5.17 Subsidiaries
7.9 Schedule of Investments
7.10 Indebtedness
7.11 Liens
(v)
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▇▇▇▇▇▇ SOFTWARE, INC.
▇▇▇ ▇▇. ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇. ▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Dated as of February 23, 2001
To the Purchasers Named in
Schedule 1 Hereto
Ladies and Gentlemen:
▇▇▇▇▇▇ SOFTWARE, INC., a Delaware corporation (the "Company"), hereby
agrees with you as follows:
ARTICLE I -- DEFINITIONS
1.1 Definitions. As used herein, the following terms shall have the
following meanings (such meanings to be equally applicable to both the singular
and plural forms of the terms defined):
"Affiliate" shall mean when used with reference to any Person, (a) each
Person that, directly or indirectly, controls, is controlled by or is under
common control with, the Person referred to, and (b) each of such Person's
officers, directors, joint venturers and partners. The term control (including
the terms "controlled by" and "under common control with") means the possession,
directly, of the power to direct or cause the direction of the management and
policies of the Person in question.
"Agreement" shall mean this Senior Subordinated Convertible Note
Purchase Agreement as from time to time amended and in effect between the
parties.
"Annualized" shall mean with respect to any calculation of Net Cash
Flow during any period, the amount thereof divided by a fraction, the numerator
of which is the number of days in the relevant period and the denominator of
which is 365.
"applicable laws" shall have the meaning assigned to that term in
Section 2.5(b).
"Balance Sheet Date" shall mean May 31, 2000.
"Board" shall mean the Board of Governors of the Federal Reserve System
or any successor thereto.
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"Business Day" shall mean any day other than a Saturday, Sunday or
public holiday or the equivalent for banks under the laws of the Commonwealth of
Massachusetts.
"Capital Expenditures" shall mean for any period, the sum of all
amounts that would, in accordance with GAAP, be included as capital
expenditures, additions to property, plant and equipment or similar terms having
substantially the same meaning (including expenditures for noncurrent tangible
assets such as software) on a statement of cash flows for the Company during
such period.
"Cash Flow Measurement Period" shall mean (a) the three consecutive
fiscal quarters of the Company ending February 28, 2001, and (b) each period of
four consecutive fiscal quarters of the Company ending thereafter.
"Certificate of Designations" shall mean that certain Certificate of
Designations of the Relative Rights and Preferences of the Series A Convertible
Preferred Stock of the Company dated as of February 23, 2001.
"Closing" shall have the meaning assigned to that term in Section 2.2.
"Closing Date" shall have the meaning assigned to that term in
Section 2.2.
"Code" shall mean the Internal Revenue Code of 1986, as amended.
"Commission" shall mean the United States Securities and Exchange
Commission (or any other federal agency at that time administering the
Securities Act).
"Common Stock" shall mean (i) the Company's voting common stock, $.01
par value, as authorized on the date of this Agreement, (ii) any other common
stock of any class or classes (however designated) of the Company, authorized on
or after the date hereof, and (iii) any other securities into which or for which
any of the securities described in (i) or (ii) above may be converted or
exchanged pursuant to a plan of recapitalization, reorganization, merger, sale
of assets or otherwise.
"Company" shall have the meaning assigned to that term in the first
paragraph of this Agreement.
"Compliance Certificate" shall have the meaning assigned to that term
in Section 3.8.
"Contingent Obligations" shall mean with respect any Person at the time
of any determination, without duplication, any obligation, contingent or
otherwise, of such Person guaranteeing or having the economic effect of
guaranteeing and Indebtedness of any other Person in any manner, whether
directly or otherwise; provided, that the term "Contingent Obligation" shall not
include endorsements for collection or deposit, in each case in the ordinary
course of business.
"Conversion Date" shall have the meaning assigned to that term in
Section 2.2.
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"Convertible Notes" shall have the meaning assigned to that term in
Section 2.1.
"Default" shall mean any event which, with the giving of notice
(whether such notice is required under Section 8.1, or under some other
provision of the Subordinated Notes Documents), lapse of time, or both, would
constitute an Event of Default.
"Earnings Before Interest and Taxes" shall mean for any period of
determination, the consolidated net income of the Company before deductions for
income taxes, Interest Expense, the 1999 Option Payment, 2001 Redemption
Charges, 2001 Stock Charges and the issuance of the HP Warrant and the HCA
Warrant, all as determined in accordance with GAAP.
"EBITDA" shall mean for any period of determination, the consolidated
net income of the Company before deductions for income taxes, Interest Expense,
depreciation and amortization, the 1999 Option Payment, 2001 Redemption Charges,
2001 Stock Charges and the issuance of the HP Warrant and the HCA Warrant, all
as determined in accordance with GAAP.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974,
as amended.
"ERISA Affiliate" shall mean any trade or business (whether or not
incorporated) that is a member of a group of which the Company is a member and
which is treated as a single employer under Section 414 of the Code.
"ESOP" shall mean the ▇▇▇▇▇▇ Software Employee Stock Ownership Plan
(1999 Restatement) dated September 1, 1999.
"Event of Default" shall mean any event described in Section 8.1.
"Financial Statements" shall mean collectively (a) audited consolidated
balance sheets for the fiscal years ended May 31, 1998, May 31, 1999 and May 31,
2000 of the Company and the related audited consolidated statements of income,
retained earnings and cash flows for the fiscal years then ended, with a report
thereon by the independent certified public accountants of the Company, and (b)
an unaudited consolidated balance sheet of the Company as of November 30, 2000
and as of the Balance Sheet Date, and unaudited consolidated statements of
income and cash flows of the Company for the respective periods then ended.
"Founders" shall have the meaning assigned to that term in the
Stockholders' Agreement.
"GAAP" or "generally accepted accounting principles" shall mean
generally accepted accounting principles set forth in the opinions and
pronouncements of the Accounting Principles Board of the American Institute of
Certified Public Accountants and statements and pronouncements of the Financial
Accounting Standards Board or in such other statements by such other entity as
may be approved by a significant segment
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of the accounting profession, which are applicable to the circumstances as of
any date of determination.
"Governmental Authority" shall mean the government of any nation,
state, city, locality or other political subdivision of any thereof, any entity
exercising executive, legislative, judicial, regulatory or administrative
functions of or pertaining to government, and any corporation or other entity
owned or controlled, through stock or capital ownership or otherwise, by any of
the foregoing.
"Guaranteed Pension Plan" shall mean any employee pension benefit plan
within the meaning of Section 3(2) of ERISA maintained or contributed to by the
Company or any ERISA Affiliate, the benefits of which are guaranteed on
termination in full or in part by the PBGC pursuant to Title IV of ERISA, other
than a Multiemployer Plan.
"HCA Warrant" shall mean the warrant to purchase 900,000 shares of
common stock of the Company at an exercise price of $6.67 per share, issued to
CIS Holdings, Inc. under the Warrant Purchase Agreement, dated July 18, 2000, by
and between the Company and CIS Holdings, Inc.
"HP Warrant" shall mean the four-year warrant for the purchase of
900,000 shares of common stock of the Company at an exercise price of $6.67 per
share, subject to adjustment as a result of the transactions contemplated hereby
and under the Stock Purchase Agreement to be granted by the Company to
Hewlett-Packard and the shares of common stock issued upon the exercise thereof
and any antidilution adjustments thereunder.
"Indebtedness" means with respect to any Person, at the time of any
determination, without duplication, all obligations, contingent or otherwise, of
such Person which in accordance with GAAP should be classified upon the balance
sheet of such Person as liabilities, but in any event including: (a) all
obligations of such person for borrowed money, (b) all obligations of such
Person evidenced by bonds, debentures, notes or other similar Instruments, (c)
all obligations of such Person upon which interest charges are customarily paid
or accrued, (d) all obligations of such Person under conditional sale or other
title retention agreements relating to property purchased by such Person, (e)
all obligations of such Person issued or assumed as the deferred purchase price
of property or services, (f) all obligations of others secured by any Lien on
property owned or acquired by such Person, whether or not the obligations
secured thereby have been assumed, (g) all capitalized lease obligations of such
Person, (h) all obligations of such Person in respect of interest rate
protection agreements, (i) all obligations of such Person, actual or contingent,
as an account party in respect of letters of credit or bankers' acceptances, (j)
all obligations of any partnership or joint venture as to which such Person is
or may become personally liable, (k) all Contingent Obligations of such Person,
(l) in the case of the Company or any of its Subsidiaries (without duplication),
the Noteholder Obligations and (m) every obligation of such Person under any
forward contract, futures contract, swap, option or other financing agreement or
arrangement (including, without limitation, caps, floors, collars and similar
agreements), the value of which is dependent upon interest rates, currency
exchange rates, commodities or other indices.
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"Indemnified Liabilities" shall have the meaning assigned to it in
Section 9.7.
"Indemnitees" shall have the meaning assigned to it in Section 9.7.
"Intellectual Property" shall mean all patent, copyright, trade secret,
trademark, trade name, service ▇▇▇▇, Internet domain name, logo or other ▇▇▇▇ or
logo, or other proprietary rights or valid licenses thereof.
"Interest Expense" shall mean for any period of determination, the
aggregate amount, without duplication, of interest expense determined in
accordance with GAAP.
"Interest Coverage Measurement Period" shall mean (a) the two
consecutive fiscal quarters of the Company ending February 28, 2001, (b) the
three consecutive fiscal quarters of the Company ending May 31, 2001, and (c)
each period of four consecutive fiscal quarters of the Company ending
thereafter.
"Investments" shall mean the acquisition, purchase, making or holding
of any stock or other security, any loan, advance, contribution to capital,
extension of credit (except for trade and customer accounts receivable for
inventory sold or services rendered in the ordinary course of business and
payable in accordance with customary trade terms), any acquisitions of real or
personal property (other than real or personal property acquired in the ordinary
course of business and other than Capital Expenditures) and any purchase or
commitment or option to purchase stock or other debt or equity securities of or
any interest in another Person or any integral part of any business or the
assets comprising such business or part thereof. The amount of any Investment
shall be the original cost of such Investment plus the cost of all additions
thereto, without any adjustments for increases or decreases in value, or
write-ups, write-downs or write-offs with respect to such Investment.
"Investors" shall have the meaning assigned to that term in the Stock
Purchase Agreement.
"knowledge of the Company" or "known to the Company" shall mean the
actual knowledge of the executive officers of the Company listed on Schedule 2
hereto after due inquiry.
"Lien" shall mean, with respect to any Person, any security interest,
mortgage, pledge, lien, charge, encumbrance, title retention agreement or
analogous instrument or device (including the interest of each lessor under and
capitalized lease), in, of or on any assets or properties of such Person, now
owned or hereafter acquired, whether arising by agreement or operation of law;
provided, that an escrow agreement covering software entered into for the
benefit of any licensee of such software or any Person marketing licenses of
such software in the ordinary course of business and not as security for
Indebtedness shall not constitute a Lien for purposes of this Agreement.
"Mandatory Repurchase Event" shall mean, at any time prior to or after
a Qualified Public Offering, an event in which (i) any person together with all
affiliates and
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associates of such person, shall become the beneficial owner, directly or
indirectly, of securities of the Company representing 50% or more the combined
voting power of the Company's then outstanding securities having the right to
vote in an election of the Company's Board of Directors; or (ii) persons who
constitute the Company's Board of Directors on the date hereof cease for any
reason, including, without limitation, as a result of a tender offer, proxy
contest, merger or similar transaction, to constitute at least a majority of the
Board of Directors; or (iii) the Board of Directors or stockholders of the
Company shall approve (a) any consolidation or merger of the Company where the
stockholders of the Company, immediately prior to the consolidation or merger,
would not, immediately after the consolidation or merger, beneficially own,
directly or indirectly, shares representing in the aggregate 50% or more of the
voting shares of the corporation issuing cash or securities in the consolidation
or merger (or of its ultimate parent corporation, if any), (b) any sale, lease,
exchange or other transfer (in one transaction or a series of transactions
contemplated or arranged by any party as a single plan) of all or substantially
all of the assets of the Company or (c) any plan or proposal for the liquidation
or dissolution of the Company.
"Multiemployer Plan" shall mean a multiemployer plan, as such term is
defined in Section 4001(a)(3) of ERISA, which is maintained (on the Closing
Date, within five years preceding the Closing Date, or at any time after the
Closing Date) for employees of the Company or any ERISA Affiliate.
"Net Cash Flow" shall mean for any period of determination, the sum of
(a) EBITDA, minus (b) capitalized software, minus (c) income taxes actually paid
in cash, minus (d) Restricted Payments other than the 1999 Option Payment, minus
(e) Interest Expense, plus (f) contributions to the ESOP not made in cash, plus
(g) any other non-cash charges to earnings that are included in the calculation
of EBITDA.
"Noteholder Obligations" shall mean all indebtedness, obligations and
liabilities of the Company and its Subsidiaries to any of the Noteholders,
individually or collectively, existing on the date of this Agreement or arising
thereafter, direct or indirect, joint or several, absolute or contingent,
matured or unmatured, liquidated or unliquidated, secured or unsecured, arising
by contract, operation of law or otherwise, arising or incurred under this
Agreement or any of the other Subordinated Notes Documents or in respect of any
of the Convertible Notes or Notes, or other instruments at any time evidencing
any thereof.
"Noteholders" shall mean the holder or holders from time to time of the
Convertible Notes or Notes, as applicable.
"Notes" shall have the meaning assigned to that term in Section 2.1.
"1999 Option Payment" shall mean that certain one time cash payment of
$2,750,000 made by the Company to a certain former employee on or before
December 29, 1999 in accordance with the Option Cancellation and Release
Agreement between the Company and such former employee dated November 29, 1999.
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"PBGC" shall mean the Pension Benefit Guaranty Corporation, established
pursuant to Subtitle A of Title IV of ERISA, and any successor thereto or to the
functions thereof.
"Person" shall mean a natural person, corporation, partnership, joint
venture, firm, association, trust, unincorporated organization, government or
governmental agency, political subdivision or any other entity, whether acting
in an individual, fiduciary or other capacity.
"Plan" shall mean each employee benefit plan (whether in existence on
the Closing Date or thereafter instituted), as such term is defined in Section 3
of ERISA, maintained for the benefit of employees, officers or directors of the
Company or of any ERISA Affiliate.
"Preferred Stock" shall mean the Company's Series A Convertible
Preferred Stock, par value $.01 per share.
"Pro Forma Balance Sheet" shall have the meaning assigned to that term
in Section 3.12.
"Prohibited Transaction" shall have the respective meanings assigned to
such term in Section 4975 of the Code and Section 406 of ERISA.
"Purchasers" shall mean the initial purchasers of the Notes described
on Schedule 1 hereto.
"Qualified Public Offering" shall have the meaning assigned to that
term in the Company's Certificate of Designations.
"Qualified Sale" shall have the meaning assigned to that term in the
Company's Certificate of Designations.
"Real Estate" shall mean all real property at any time owned or leased
(as lessee or sublessee) by the Company.
"Registration Rights Agreement" shall mean the Registration Rights
Agreement of even date herewith by and among the Company, the Founders and the
Investors.
"2001 Redemption Charges" shall mean all expenses related to the
redemption of outstanding options from existing shareholders in connection with
the transactions contemplated by the Stock Purchase Agreement.
"Reportable Event" shall mean a reportable event as defined in Section
4043 of ERISA and the regulations issued under such Section, with respect to a
Plan, excluding, however, such events as to which the PBGC by regulation has
waived the requirement of Section 4043(a) of ERISA that it be notified within 30
days of the occurrence of such event, provided that a failure to meet the
minimum funding standard of Section 412 of the
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Code and of Section 302 of ERISA shall be a Reportable Event regardless of the
issuance of any such waivers in accordance with Section 412(d) of the Code.
"Requirement of Law" shall mean as to any Person, the certificate of
incorporation and by-laws or other organizational or governing documents of such
Person, and any law, treaty, rule, regulation, right, privilege, qualification,
license or franchise or determination of an arbitrator or a court or other
Governmental Authority, in each case applicable or binding upon such Person or
any of its property or to which such Person or any of its property is subject or
pertaining to any or all of the transactions contemplated or referred to herein.
"Restricted Payment" shall mean, with respect to the Company,
collectively, all dividends or other distributions of any nature (including
cash, securities other than common stock of the Company, assets or otherwise),
and all payments on any class of equity securities (including warrants, options
or rights therefor) issued by the Company, whether such securities are
authorized or outstanding on the Closing Date or at any time thereafter and any
redemption or purchase of, or distribution in respect of, any of the foregoing,
whether directly or indirectly.
"Securities" shall mean, collectively, the Convertible Notes, the
Notes, the Warrants and the Warrant Shares.
"Securities Act" shall mean the Securities Act of 1933, as amended, or
any similar successor federal statute, and the rules and regulations of the
Commission thereunder, all as the same shall be in effect at the time.
"Senior Bank" shall mean the "Bank" as defined under the Senior Credit
Agreement, its successors and assigns, and all other holders of the Senior
Obligations from time to time.
"Senior Credit Agreement" shall mean that certain Amended and Restated
Credit Agreement dated as of October 27, 1999 among the Company and the Senior
Bank as from time to time amended and/or restated, renewed, extended, increased,
decreased, refined, refinanced or replaced and in effect in accordance with the
terms of the Subordination Agreement.
"Senior Credit Documents" shall mean the Senior Credit Agreement, the
notes issued thereunder, the security agreements executed in connection
therewith, the Subordination Agreement, and all other documents, agreements and
certificates executed or delivered in connection therewith from time to time and
any refunding, refinancing or replacement thereof to the extent permitted under
the Subordination Agreement.
"Senior Obligations" shall have the meaning set forth in the
Subordination Agreement.
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"Stockholders' Agreement" shall mean the Stockholders' Agreement of
even date herewith among the Company, the Investors and the Founders, as
amended, modified or supplemented from time to time in accordance with its terms
and the terms hereof.
"Stock Purchase Agreement" shall mean the Stock Purchase and Exchange
Agreement of even date herewith by and among the Company and the Investors, as
amended, modified or supplemented from time to time in accordance with its
terms.
"2001 Stock Charges" shall mean all compensation expenses related to or
arising from the Company's issuance to employees of options to purchase shares
of Common Stock, at an exercise price of $4.12, during January and February of
2001.
"Stock Purchase Documents" shall mean the Stock Purchase Agreement,
Stockholders' Agreement and the Registration Rights Agreement of even date
herewith by and among the Company, the Investors and the Founders, as amended,
modified or supplemented from time to time in accordance with its terms.
"Subordinated Debt" means all Indebtedness of the Company and any of
its Subsidiaries from any Person, including any extensions or renewals thereof,
whether outstanding on the date hereof or hereafter created or incurred, which
is by its terms subordinate and junior to the Noteholder Obligations on terms
acceptable to the Noteholders and which is permitted by this Agreement at the
time it is created or incurred.
"Subordinated Notes Documents" shall mean this Agreement and the
Securities.
"Subordination Agreement" shall mean the Senior Credit Subordination
Agreement of even date herewith by and among the Senior Bank, the Noteholders
and the Company, as the same may be amended and/or restated, modified,
supplemented or replaced from time to time in accordance with its terms.
"Subsidiary" shall mean any Person which the Company or the designated
parent shall, directly or indirectly through a Subsidiary or Subsidiaries, have
the power to vote or direct the voting of sufficient securities to elect a
majority of directors (or persons performing similar functions) or with respect
to which the Company or the designated parent acts as a general partner or
managing member or otherwise controls the day-to-day operations of such Person.
Any reference herein to a Subsidiary of the Company shall include any Subsidiary
of the Company as of the Closing Date or at any time thereafter, including, but
not limited to ▇▇▇▇▇▇ Software Benelux B.V., ▇▇▇▇▇▇ Software France SARL, ▇▇▇▇▇▇
Software GmbH and ▇▇▇▇▇▇ Software Africa (Proprietary) Limited.
"Tangible Net Worth" shall mean as of any date of determination, (a)
the sum of the amounts set forth on the balance sheet of the Company as the
common stock, preferred stock, additional paid-in capital and retained earnings
of the Company (excluding treasury stock), minus (b) the book value of all
assets of the Company that could be treated as intangibles under GAAP, including
all such items as goodwill, trademarks, trade names, service marks, copyrights,
patents, licenses, unamortized debt
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discount and expenses and the excess of the purchase price of the assets of any
business acquired by the Company over the book value of such assets.
"Transaction Documents" shall mean the Subordinated Notes Documents.
"Warrants" shall have the meaning assigned to that term in
Section 2.1(ii).
"Warrant Shares" shall have the meaning assigned to that term in
Section 2.1(ii).
1.2 Accounting Terms. All accounting terms not specifically defined
herein shall be construed in accordance with GAAP, and all financial data
submitted pursuant to this Agreement and all financial tests to be calculated in
accordance with this Agreement shall be prepared and calculated in accordance
with GAAP. All financial tests relating to the Company shall be calculated with
respect to the Company and its Subsidiaries on a consolidated basis.
ARTICLE II -- AUTHORIZATION, PURCHASE, SALE AND TERMS OF
CONVERTIBLE NOTES; PAYMENTS
2.1 The Securities. The Company has authorized the issuance of its 12%
Senior Subordinated Convertible Notes due February 23, 2006 in the aggregate
original principal amount of $10,000,000. The 12% Senior Subordinated
Convertible Notes shall be in the form set forth as Exhibit 2.1 attached hereto
and are herein referred to individually as a "Convertible Note" and collectively
as the "Convertible Notes," which terms shall also include any notes delivered
in exchange or replacement therefor. The Convertible Notes shall (a) be payable
on February 23, 2006 and (b) bear interest compounded daily (based on a 360-day
year of twelve 30-day months) on the unpaid principal amount thereof commencing
February 23, 2001 until, due at the rate of 12% per annum, payable in cash
quarterly in arrears on March 31, June 30, September 30 and December 31 in each
year, and at maturity or prior prepayment of the Convertible Notes in full. The
Convertible Notes shall be convertible at any time, in the sole discretion of
the Noteholder thereof, upon such Noteholder's delivery of notice to the Company
of its intent to convert, into (i) 12% Senior Subordinated Notes due February
23, 2006 in the aggregate principal amount of $9,990,000 plus any interest owed
in arrears on the Convertible Notes on the date of conversion, in the form set
forth as Exhibit 2.1(i) attached hereto (referred to herein individually as a
"Note" and collectively as the "Notes", which terms shall also include any notes
delivered in exchange or replacement therefore), and (ii) Common Stock Purchase
Warrants of the Company for the purchase (subject to adjustment as provided for
therein) of an aggregate of 316,400 of the fully diluted common equity shares of
the Company's Common Stock (the "Warrant Shares") exercisable at a price per
share of $.01 (subject to adjustment), in the form set forth as Exhibit 2.1(ii)
attached hereto (referred to herein individually as a "Warrant" and collectively
as the "Warrants", which terms shall also include any warrants delivered in
exchange or replacement therefor). The Notes shall (Y) be payable on February
23, 2006, and (Z) bear interest compounded daily (based on a 360-day year of
twelve 30-day months) on the unpaid principal amount thereof plus any interest
owed in arrears on the Convertible Note as of the Conversion Date (as defined in
Section 2.2) until due at the
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rate of 12% per annum, payable in cash quarterly in arrears on March 31, June
30, September 30, and December 31 in each year commencing on the Conversion
Date, and at maturity or prior payments of the Notes in full. The Company has
authorized the issuance to the Noteholders of the Convertible Notes, and upon
conversion thereof, the Notes and the Warrants, and upon exercise of the
Warrants the issuance and sale of the Warrant Shares.
2.2 Purchase of the Convertible Notes; Conversion into Notes and
Warrants. Subject to and in reliance upon the representations, warranties, terms
and conditions of this Agreement, each Noteholder severally agrees to purchase
Convertible Notes from the Company in the principal amount set forth opposite
such Noteholder's name on Exhibit 2.2 attached hereto. The Convertible Notes
shall be purchased at a closing (the "Closing") to be held at such location as
agreed to by the Company and the Noteholders, at 10:00 a.m. local time, on the
date on which this Agreement is executed and delivered and upon satisfaction of
the conditions described in Article III (the "Closing Date"). At the Closing,
the Company will initially issue one Convertible Note to each Noteholder,
payable to such Noteholder or its registered assigns, in the principal amount
set forth opposite such Noteholder's name on Exhibit 2.2, against receipt of
immediately available funds by wire transfer to an account or accounts
designated by the Company prior to the Closing in the amount set forth next to
such Noteholder's name on Exhibit 2.2 (or in such other manner as is set forth
on Exhibit 2.2). On the date that a Noteholder delivers notice to the Company of
its intent to convert a Convertible Note (the "Conversion Date"), the
Convertible Note shall be deemed as of such date to be converted into (a) a Note
in the principal amount set forth opposite such Noteholder's name on Exhibit
2.2(a) attached hereto, and (b) a Warrant to purchase the number of Warrant
Shares set forth opposite such Noteholder's name on Exhibit 2.2(b) attached
hereto. On the Conversion Date, the Company will immediately execute and deliver
the Note(s) and the Warrant(s) to the applicable Noteholder(s), and thereafter
any Convertible Notes so converted shall be deemed to be canceled and of no
further force or effect.
2.3 Issue Price; Original Issue Discount. The issue price for each
Convertible Note, within the meaning of Section 1273 of the Code is as set forth
on Exhibit 2.3 attached hereto. The Company and each Noteholder recognize and
agree that the Convertible Notes will not be issued with original issue discount
within the meaning of Section 1273 of the Code. The Company and each Noteholder
agree to comply with all reporting requirements in a manner which is consistent
with the issue price set forth on Exhibit 2.3 and the absence of original issue
discount within the meaning of Section 1273 of the Code. The inclusion of this
Section 2.3 is not an admission by any Noteholder that it is subject to United
States taxation.
2.4 Use of Proceeds. The proceeds from the sale of the Convertible
Notes to the Purchasers under this Agreement and the sale of the Series A
Preferred Shares under the Stock Purchase Agreement shall be used by the Company
to (a) effect the Exchange (as defined in the Stock Purchase Agreement), (b) pay
the fees and expenses of the Company and the Noteholders incurred in connection
with the transactions contemplated hereby, and (c) provide for capital
expenditures, working capital and other corporate purposes.
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2.5 Payments and Endorsements. Payments of principal, interest and
premium, if any, on the Convertible Notes or the Notes, as applicable, shall be
made without set off or counterclaim, directly by wire transfer to an account
designated in writing by each Noteholder, without any presentment or notation of
payment, except that prior to any transfer of any Convertible Note or Note, as
applicable, the holder thereof shall endorse on such Convertible Note or Note,
as applicable, a record of the date to which interest has been paid and all
payments made on account of principal of such Convertible Note or Note, as
applicable. All payments and prepayments of principal of and interest on the
Convertible Note or Notes, as applicable, shall be applied (to the extent
thereof) to all of the Convertible Notes or Notes, as applicable, pro rata based
on the principal amount outstanding and held by each holder thereof.
(a) Anything herein to the contrary notwithstanding, if any
changes in present or future applicable law (which term "applicable law", as
used in this Agreement, includes statutes and rules and regulations thereunder
and interpretations thereof by any competent court or by any governmental or
other regulatory body or official charged with the administration or the
interpretation thereof and requests, directives, instructions and notices at any
time or from time to time heretofore or hereafter made upon or otherwise issued
to any Noteholder by any central bank or other fiscal, monetary or other
authority, whether or not having the force of law), including, without
limitation, any change according to a prescribed schedule of increasing
requirements, shall impose on the Company any obligation with respect to any
amount payable by it hereunder or under any of the other Transaction Documents
to withhold or deduct any taxes, levies, imposts, duties, charges, fees,
deductions or withholdings, the Company will pay to the Noteholders, on the date
on which such amount is due and payable hereunder or under such other
Transaction Document, such additional amount in United States Dollars as shall
be necessary to enable the Noteholders to receive the same net amount which the
Noteholders would have received on such due date if no such obligation had been
imposed upon the Company. The Company will deliver promptly to the Noteholders
certificates or other valid vouchers for all taxes or other charges deducted
from or paid with respect to payments made by the Company hereunder or under
such other Transaction Document.
(b) The obligations of the Company under this Section 2.5
shall survive the payment in full of all amounts due hereunder or under the
Convertible Notes or Notes, as applicable.
2.6 Redemptions and Mandatory Repurchase.
2.6.1 Required Redemption. On the stated or accelerated
maturity of the Convertible Notes or the Notes, as applicable, the Company will
pay the principal amount of the Convertible Notes or the Notes, as applicable,
then outstanding together with all accrued and unpaid interest thereon. No
redemption of less than all of the Convertible Notes or the Notes, as
applicable, shall affect the obligation of the Company to make the redemption
required by this Subsection.
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2.6.2 Optional Redemptions. In addition to the redemption of
the Convertible Notes or the Notes, as applicable, required under Subsection
2.6.1, the Company may at any time and from time to time thereafter, voluntarily
redeem the Convertible Notes or the Notes, as applicable, in whole, or in part
(in integral multiples of $500,000), together with all accrued and unpaid
interest on the amount so redeemed through the date of redemption, at a
redemption price (expressed as a percentage of the sum of the principal amount
to be redeemed equal to the price indicated below corresponding to the period in
which any redemption occurs); provided that the Company must redeem at least
twenty-five percent (25%) of the then outstanding aggregate principal of all of
the Convertible Notes at each time the Company elects to redeem under this
Subsection 2.6.2. Notwithstanding anything to the contrary herein, in the event
the Company elects to redeem the Convertible Notes or Notes, as applicable,
under this Subsection 2.6.2 upon the completion of a Qualified Public Offering
or a Qualified Sale, the redemption premiums indicated below for Year 1, Year 2
and Year 3 (as defined below) shall be reduced by 50%.
Period Redemption Price
------ ----------------
Closing Date through February 23, 2002 ("Year 1") 105%
February 23, 2002 through February 23, 2003 ("Year 2") 102.5%
February 23, 2003 through February 23, 2004 ("Year 3") 101%
February 23, 2004 through February 23, 2005 100%
February 23, 2005 through February 23, 2006 100%
2.6.3 Notice of Redemptions; Pro Rata Redemptions. Written
notice of any redemption pursuant to Subsection 2.6.1 or Subsection 2.6.2 shall
be given to all holders of the Convertible Notes or the Notes, as applicable, at
least thirty (30) Business Days prior to the date of any such redemption and if
any such redemption relates to the Convertible Notes such notice shall also
state that the Noteholders have the right to convert the Convertible Notes at
any time prior to such redemption. Each redemption of the Convertible Notes or
the Notes, as applicable, pursuant to Subsections 2.6.1 and 2.6.2 shall be made
so that the Convertible Notes or the Notes, as applicable, then held by each
holder shall be redeemed in a principal amount which shall bear the same ratio
to the total unpaid principal amount being redeemed on all the Convertible Notes
or the Notes, as applicable, as the unpaid principal amount of the Convertible
Notes or the Notes, as applicable, then held by such holder bears to the
aggregate unpaid principal amount of the Convertible Notes or the Notes, as
applicable, then outstanding.
2.6.4 Mandatory Repurchase of Notes. As soon as possible, and
in any event within five (5) Business Days after the occurrence of a Mandatory
Repurchase Event, the Company shall furnish to each Noteholder written notice
setting forth in reasonable detail the facts and circumstances underlying such
Mandatory Repurchase Event and shall also state if the Convertible Notes are
still outstanding that the Noteholders have the right to convert the Convertible
Notes at any time. The occurrence of any such Mandatory Repurchase Event shall
constitute an irrevocable offer by the Company to purchase all of the
Convertible Notes or the Notes, as applicable, held by such Noteholder, at 100%
of the principal amount thereof, on a date to be specified by the
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Company, which date shall be not less than thirty (30) days nor more than ninety
(90) days after the occurrence of such Mandatory Repurchase Event together with
all accrued and unpaid interest on the amount so purchased through the date of
purchase. Following receipt of any offer to prepay the Convertible Notes or the
Notes, as applicable, hereunder, each Noteholder shall advise the Company, by
written notice, within ten (10) days after receipt of such offer, as to whether
it desires to sell all or any of the Convertible Notes or the Notes, as
applicable, held by it (in integral multiples of $500,000), specifying the
principal amount of the Convertible Notes or the Notes, as applicable, to be
sold by it. If a Noteholder accepts such offer but does not specify an amount it
wishes to receive, it will be deemed to have elected to sell all of the
Convertible Notes or the Notes, as applicable, held by it. If a Noteholder fails
to respond to such offer by the Company within the ten (10) day acceptance
period, such offer shall expire in accordance with its terms.
2.6.5 No Other Acquisition of Convertible Notes or Notes. The
Company will not and will not permit any Affiliate to purchase, redeem, prepay,
tender for or otherwise acquire, directly or indirectly, any of the outstanding
Convertible Notes or Notes, as applicable, except upon the repurchase or
prepayment of the Convertible Notes or Notes, as applicable, in accordance with
the other terms of this Section 2.6. The Company will promptly cancel all
Convertible Notes or Notes, as applicable, acquired by it or any of its
Affiliates pursuant to any purchase, redemption, prepayment or tender for the
Convertible Notes or Notes, as applicable, pursuant to any provision of this
Agreement or otherwise and no Convertible Notes or Notes, as applicable, may be
issued in substitution or exchange for any such Convertible Notes or Notes, as
applicable.
2.7 Default Rate of Interest. If an Event of Default has occurred and
is continuing, from and after the date such Event of Default has occurred the
entire outstanding unpaid principal balance of the Convertible Notes or the
Notes, as applicable, and any unpaid interest from time to time in default shall
bear interest, payable on demand, at the rate of 15% per annum, compounded
quarterly, or such lower rate as then may be the maximum rate permitted by
applicable law; provided, however, that upon the cessation or cure of such Event
of Default, if no other Event of Default is then continuing, the Convertible
Notes or the Notes, as applicable, shall again bear interest at the rate of 12%
per annum as set forth in Section 2.1.
2.8 Maximum Legal Rate of Interest. Nothing in this Agreement or in the
Convertible Notes or Notes, as applicable, shall require the Company to pay
interest at a rate in excess of the maximum rate permitted by applicable law.
2.9 Payment on Non-Business Days. Whenever any payment to be made shall
be due on a day which is not a Business Day, such payment may be made on the
next succeeding Business Day, and such extension of time shall in such case be
included in the computation of payment of interest due.
2.10 Transfer and Exchange of Convertible Notes or Notes. The Company
shall keep a register in which it shall provide for the registration of the
Convertible Notes or the Notes, as applicable, and the registration of transfers
of Convertible Notes or Notes, as applicable. The holder of any Convertible Note
or Note, as applicable, may, prior to maturity or prepayment thereof, surrender
such Convertible Note or Note, as applicable, or Convertible Notes or
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Notes, as applicable, at the principal office of the Company for transfer or
exchange. Any holder desiring to transfer or exchange any Convertible Note or
Note, as applicable, shall first notify the Company in writing at least five (5)
days in advance of such transfer or exchange. Within a reasonable time after
such notice to the Company from a holder of its intention to make such exchange
and without expense (other than transfer taxes, if any) to such holder, the
Company shall issue in exchange therefor another Convertible Note or Note, as
applicable, or Convertible Notes or Notes, as applicable, in denominations of
$100,000 and multiples thereof, except in the case of a Convertible Note or
Note, as applicable, for the balance of the aggregate amount of the Convertible
Note or Note, as applicable, or Convertible Notes or Notes, as applicable, so
transferred which shall be in a minimum denomination of $100,000, all as
requested by the holder, for the same aggregate principal amount, as of the date
of such issuance, as the unpaid principal amount of the Convertible Note or
Note, if applicable, or Convertible Notes or Notes, as applicable, so
surrendered and having the same maturity and rate of interest, containing the
same provisions and subject to the same terms and conditions as the Convertible
Note or Note, as applicable, or Convertible Notes or Notes, as applicable, so
surrendered (provided that no minimum shall apply to a liquidating distribution
of Convertible Notes or Notes, as applicable, to investors in a Noteholder and
any Convertible Notes or Notes, as applicable, so distributed may be
subsequently transferred by such investor and its successors in the original
denomination thereof without restriction under this sentence). Each new
Convertible Note or Note, as applicable, shall be made payable to such Person or
Persons, or assigns, as the holder of such surrendered Convertible Note or Note,
as applicable, or Convertible Notes or Notes, as applicable, may designate, and
such transfer or exchange shall be made in such a manner that no gain or loss of
principal or interest shall result therefrom. The Company shall have no
obligation hereunder or under any Convertible Note or Note, as applicable, to
any person other than the registered holder of each such Convertible Note or
Note, as applicable. Notwithstanding anything to the contrary contained herein,
no Noteholder shall be permitted to transfer any of its Convertible Notes or
Notes, as applicable, unless such Noteholder's transferee has agreed in writing
to be bound by the terms of this Agreement and the other Subordinated Notes
Documents to which such Noteholder is a party, including the representations and
warranties set forth in Section 4.1 hereof.
2.11 Replacement of Convertible Notes or Notes. Upon receipt of
evidence satisfactory to the Company of the loss, theft, destruction or
mutilation of any Convertible Note or Note, as applicable, and, if requested in
the case of any such loss, theft or destruction, upon delivery of an indemnity
bond or other agreement or security reasonably satisfactory to the Company, or,
in the case of any such mutilation, upon surrender and cancellation of such
Convertible Note or Note, as applicable, the Company will issue a new
Convertible Note or Note, as applicable, of like tenor and amount and dated the
date to which interest has been paid, in lieu of such lost, stolen, destroyed or
mutilated Convertible Note or Note, as applicable; provided, however, if any
Convertible Note or Note, as applicable, of which a Noteholder, its nominee, or
any of its partners is
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the holder is lost, stolen or destroyed, the affidavit of an authorized partner
or officer of the holder setting forth the circumstances with respect to such
loss, theft or destruction shall be accepted as satisfactory evidence thereof,
and no indemnification bond or other security shall be required as a condition
to the execution and delivery by the Company of a new Convertible Note or Note,
as applicable, in replacement of such lost, stolen or destroyed Convertible Note
or Note, as applicable, other than the holders written agreement to indemnify
the Company.
2.12 Other Notices. So long as any Convertible Notes are outstanding,
the Company shall provide written notice to each Noteholder at least thirty (30)
Business Days prior to the occurrence or closing of a Mandatory Repurchase Event
or a public offering of securities by the Company setting forth in reasonable
detail the facts and circumstances underlying such Mandatory Repurchase Event or
public offering and also stating that the Noteholders have the right to convert
the Convertible Notes at any time.
2.13 Ranking. The Noteholder Obligations and the rights and remedies of
the Noteholders under the Subordinated Notes Documents shall be senior in right
of payment to all Indebtedness other than Senior Obligations and capitalized
lease obligations of the Company and its Subsidiaries. The Noteholder
Obligations and the rights and remedies of the Noteholders under the
Subordinated Notes Document shall be subordinate and junior in right of payment
to the Company's Senior Obligations in the manner and to the extent provided in
the Subordination Agreement.
THIS AGREEMENT IS SUBJECT TO A SUBORDINATION AGREEMENT, AMONG THE
COMPANY, THE SENIOR BANK AND THE HOLDERS OF THE SENIOR SUBORDINATED
CONVERTIBLE NOTES OR NOTES, AS APPLICABLE, WHICH, AMONG OTHER THINGS,
SUBORDINATES THE COMPANY'S OBLIGATIONS HEREUNDER AND CERTAIN PAYMENT
PROVISIONS OF THE WARRANTS ISSUED IN CONNECTION THEREWITH TO THE
COMPANY'S OBLIGATIONS TO CERTAIN HOLDERS OF SENIOR DEBT, AS MORE FULLY
DESCRIBED IN SAID SUBORDINATION AGREEMENT.
ARTICLE III -- CONDITIONS TO NOTEHOLDERS' OBLIGATIONS
The obligation of the Purchasers to purchase the Convertible Notes at
the Closing is subject to the following conditions, all or any of which may be
waived in writing by the Purchasers:
3.1 Representations and Warranties. Each of the representations and
warranties of the Company and its Subsidiaries set forth in Article V hereof
shall be true and correct in all respects at the time of, and immediately after
giving effect to, the purchase of the Convertible Notes.
3.2 Documentation at Closing. The Purchasers shall have received prior
to or at the Closing all of the following, each in form and substance
satisfactory to the Purchasers and their special counsel:
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(a) Certified copies of all charter documents of the Company;
certified copies of the resolutions of the boards of directors and, to the
extent required, the stockholders of the Company evidencing approval of this
Agreement, the other Transaction Documents and all other matters contemplated
hereby and thereby; certified copies of the bylaws of the Company; certified
copies of all documents evidencing other necessary corporate or other action and
governmental approvals, if any, with respect to this Agreement, the other
Transaction Documents and all other matters contemplated hereby or thereby.
(b) A certificate of the Secretary or an Assistant Secretary
of the Company which shall certify the names of the officers of the Company
authorized to sign this Agreement, the other Transaction Documents and any other
documents or certificates to be delivered pursuant hereto or thereto by the
Company or any of its respective officers, together with the true signatures of
such officers. The Purchasers may conclusively rely on such certificate(s) until
they shall receive a further certificate of the Secretary or an Assistant
Secretary of the Company canceling or amending the prior certificate and
submitting the signatures of the officers named in such further certificate.
(c) A certificate from a duly authorized officer of the
Company stating that (i) the representations and warranties contained in Article
V hereof and otherwise made by the Company in writing in connection with the
transactions contemplated hereby are true and correct, (ii) no condition or
event has occurred or is continuing or will result from the execution and
delivery of this Agreement or the Transaction Documents which constitutes an
Event of Default or would constitute an Event of Default but for the requirement
that notice be given or time elapse or both and (iii) all the conditions set
forth in this Article III have been satisfied (other than those, if any, waived
by Senior Bank and the Purchasers in writing).
(d) The Convertible Notes duly executed by the Company and
registered in respective names of the Purchasers.
(e) The Stock Purchase Documents each duly executed by the
Company, the Investors and the other stockholders of the Company.
(f) Intentionally Omitted.
(g) A reliance letter (or acceptable reliance language within
the opinion) from ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ LLP, the Company's special counsel, that the
Noteholders may rely upon their respective opinions delivered pursuant to the
Stock Purchase Agreement.
(h) Payment for the costs, expenses, taxes and filing fees
identified in Section 9.4 as to which the Purchasers gives the Company notice
prior to or at the Closing, including the reasonable fees and expenses of
▇▇▇▇▇▇▇ Procter LLP, special counsel to the Purchasers.
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(i) Prior to the Closing, the Company shall have adopted the
Certificate of Designations, and such Certificate of Designations, shall have
become effective under the laws of the State of Delaware. The Company shall have
issued the Preferred Stock to the Investors.
(j) A private placement number for the Notes and Warrants
issued by Standard & Poors' CUSIP Service Bureau.
(k) Intentionally Omitted.
(l) A favorable opinion of ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ LLP, special
counsel to the Company dated as of the Closing Date, in form and substance
reasonably satisfactory to the Purchasers and their special counsel.
(m) The Subordination Agreement in form and substance
satisfactory to Purchasers and their special counsel executed by the Senior Bank
and the Company.
(n) A consent from the Senior Bank, authorizing the
transactions contemplated by the Subordinated Notes Documents and the Stock
Purchase Documents.
(o) Certified copies of all documents relating to the
completion of the Company's reincorporation in the State of Delaware.
(p) Copies of all documents relating to the completion of the
Company's offer to repurchase 830,000 shares of the Company's Common Stock from
its stockholders at a purchase price of $3.22 per share, for an aggregate
purchase price of approximately $2,672,600.
(q) Such other documents referenced in any Exhibit hereto or
relating to the transactions contemplated by this Agreement as the Purchasers or
their special counsel may reasonably request.
3.3 No Default. At the time of and immediately following the Closing
there shall exist no Event of Default and no condition, event or act that, with
the giving of notice or lapse of time, or both, would constitute such an Event
of Default.
3.4 Stock Purchase Documents. The Company, the Investors and the
Founders shall have executed and delivered each of the Stock Purchase Documents,
which shall be on terms and conditions acceptable to the Purchasers and all
conditions precedent to the consummation of the transactions set forth therein,
except payment of the purchase price for the stock to be purchased, shall have
been satisfied in full without waiver or modification.
3.5 Use of Proceeds. The Company shall have used, or simultaneously
with the Closing shall use, funds from the sale of the Preferred Stock and the
Convertible Notes for the purposes described in Section 2.4.
3.6 Compliance with this Agreement. The Company shall have performed
and complied with all of its agreements and satisfied the conditions set forth
or
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contemplated herein that are required to be performed or complied with or
satisfied by it on or before the Closing Date.
3.7 No Material Judgment or Order. There shall not be on the Closing
Date any judgment or order of a court of competent jurisdiction or any ruling of
any Governmental Authority or any condition under any Requirement of Law which,
in the judgment of the Purchasers would prohibit the purchase of the Convertible
Notes hereunder or subject the Purchasers to any penalty or other onerous
condition under or pursuant to any Requirement of Law if the Convertible Notes
were to be purchased hereunder.
3.8 Compliance Certificate. The Purchasers shall have received a
Compliance Certificate of the Company dated as of the Closing Date demonstrating
the Company's compliance with the financial covenants set forth in Section 7.8
and Sections 7.13 through 7.17 on a pro forma basis as if such covenants were
tested as of the Closing Date after giving effect to the transactions
contemplated in the Transaction Documents.
3.9 Statement of Sources and Uses of Funds. The Company shall have
provided the Purchasers with a statement of the sources and uses of funds in
connection with the transactions occurring pursuant to the Transaction Documents
on the Closing Date.
3.10 Intentionally Omitted.
3.11 Financial Statements. The Purchasers shall have received copies of
the Financial Statements prior to the Closing Date.
3.12 Pro Forma Balance Sheet. The Company shall have delivered to the
Purchasers a pro forma consolidated balance sheet of the Company and its
Subsidiaries (the "Pro Forma Balance Sheet") certified by the Chief Financial
Officer of the Company that it fairly presents the financial condition of the
Company and its Subsidiaries as at December 31, 2000 modified by pro forma
adjustments reflecting the consummation of the transactions contemplated in this
Agreement and all other Transaction Documents (as of such Closing Date),
including all material fees and expenses in connection therewith.
ARTICLE IV -- REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS
4.1 Representations and Warranties of the Purchasers. Each Purchaser,
for itself only, hereby represents and warrants, which representations and
warranties shall survive the closing, that:
(a) Such Purchaser has duly authorized, executed and delivered
this Agreement and such of the Transaction Documents as require execution by
such Purchaser, and each constitutes the valid and binding obligation of such
Purchaser enforceable in accordance with its terms, except as the enforceability
thereof may be limited by bankruptcy, insolvency, reorganization, moratorium or
other laws relating to or affecting generally the enforcement of creditors'
rights and except to the extent that
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availability of the remedy of specific performance or injunctive relief is
subject to the discretion of the court before which any proceeding therefor may
be brought.
(b) Such Purchaser is an "accredited investor" as such term is
defined in Rule 501 under the Securities Act. Each Purchasers is purchasing the
Securities for its own account, and not as nominee or agent, and for investment
only.
(c) The Securities are being and will be acquired for the
purpose of investment and not with a view to distribution or resale thereof,
subject, nevertheless, to the condition that, except as otherwise provided
herein or in the Stockholders' Agreement and subject to compliance with
applicable securities laws, the disposition of the property of such Purchaser
shall at all times be within its control. Such Purchaser was not formed solely
for the purpose of making an investment in the Company or its Subsidiaries.
(d) Such Purchaser understands that it must bear the economic
risk of its investment for an indefinite period of time because the Securities
are not, and will not be, registered under the Securities Act or any applicable
state securities laws, except as may be provided in this Agreement and the
Stockholders' Agreement, and may not be resold unless subsequently registered
under the Securities Act and such other laws or unless an exemption from such
registration is available. Such Purchaser acknowledges that, in issuing the
Securities, the Company is relying on the representations and warranties of such
Purchaser in this Section 4.1.
(e) No Person has or will have, as a result of the
transactions contemplated by this Agreement, any rights, interest or valid claim
against or upon the Company or any of its Subsidiaries for any commission, fee
or other compensation as a finder or broker because of any act or omission by
such Purchaser or any agent of such Purchaser.
(f) Such Purchaser hereby acknowledges that the Securities
(unless no longer required in the opinion of counsel, which opinion and counsel
shall be reasonably satisfactory to the Company, it being agreed that ▇▇▇▇▇▇▇
Procter LLP shall be satisfactory) shall bear a legend substantially in the
following form (in addition to any other legend required by the Transaction
Documents):
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED, OR ANY APPLICABLE STATE SECURITIES LAWS AND MAY NOT BE SOLD
OR TRANSFERRED WITHOUT COMPLIANCE WITH THE REGISTRATION OR
QUALIFICATION PROVISIONS OF APPLICABLE FEDERAL AND STATE SECURITIES
LAWS OR APPLICABLE EXEMPTIONS THEREFROM.
The acquisition by such Purchaser of the Securities shall constitute a
confirmation by it of the foregoing representations.
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ARTICLE V -- REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to the Purchasers as of the Closing
Date as follows (which representations and warranties shall survive the
Closing), after giving effect to the transactions contemplated by this Agreement
and the other Transaction Documents:
5.1 Organization Standing Etc. Except as disclosed on Schedule 5.1, the
Company is a corporation duly incorporated and validly existing and in good
standing under the laws of the jurisdiction of its incorporation and has all
requisite corporate power and authority to carry on its business as now
conducted and as presently contemplated, to enter into this Agreement, to issue
the Convertible Notes and to perform its obligations under the Transaction
Documents. Except as disclosed on Schedule 5.1, the Company (a) holds all
certificates of authority, licenses and permits necessary to carry on its
business as presently conducted and as presently contemplated in each
jurisdiction in which it is carrying on such business, except where the failure
to hold such certificates, licenses or permits would not have a material adverse
effect on the business, operations, properties, prospects, assets or condition,
financial or otherwise, of the Company and (b) is or will at all times after the
date ninety (90) days from the Closing Date be duly qualified and in good
standing as a foreign corporation in each jurisdiction in which the character of
the properties owned, leased or operated by it or the business conducted by it
makes such qualification necessary and the failure so to qualify would
permanently preclude it from enforcing its rights with respect to any assets or
expose it to any liability, which in either case would be material to the
Company.
5.2 Authorization and Validity. The execution, delivery and performance
by the Company of this Agreement and the other Transaction Documents have been
duly authorized by all necessary corporate action by the Company, and this
Agreement, the other Transaction Documents and the issuance of the Convertible
Notes, and upon conversion thereof, the issuance and delivery of the Notes and
Warrants, and upon the exercise of the Warrants, the issuance and delivery of
the Warrant Shares constitute and will constitute, the legal, valid and binding
obligations of the Company, enforceable against the Company in accordance with
their respective terms, subject to limitations as to enforceability which might
result from bankruptcy, insolvency, moratorium and other similar laws affecting
creditors' rights generally and subject to limitations on the availability of
equitable remedies.
5.3 No Conflict; No Default. The execution, delivery and performance by
the Company of this Agreement, the other Transaction Documents and the issuance
of the Convertible Notes, and upon conversion thereof, the issuance and delivery
of the Notes and Warrants, and upon the exercise of the Warrants, the issuance
and delivery of the Warrant Shares does not and will not (a) violate any
provision of any law, statute, rule or regulation or any order, writ, judgment,
injunction, decree, determination or award of any court, governmental agency or
arbitrator presently in effect having applicability to the Company, (b) violate
or contravene any provision of the articles of incorporation or bylaws of the of
the Company, or (c) result in a breach of or constitute a default under any
indenture, loan or credit agreement or any other agreement, lease or instrument
to
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which the Company is a party or by which it or any of its properties may be
bound or result in the creation of any Lien thereunder. The Company is not in
default under or in violation of any such law, statute, rule or regulation,
order, writ, judgment, injunction, decree, determination or award or any such
indenture, loan or credit agreement or other agreement, lease or instrument in
any case in which the consequences of such default or violation could have a
material adverse effect on the business, operations, properties, prospects,
assets or condition (financial or otherwise) of the Company.
5.4 Government Consent. No order, consent, approval, license,
authorization or validation of, or filing, recording or registration with, or
exemption by, any governmental or public body or authority is required on the
part of the Company to authorize, or is required in connection with the
execution, delivery and performance of, or the legality, validity, binding
effect or enforceability of, the Transaction Documents including the issuance of
the Convertible Notes, and upon conversion thereof, the issuance and delivery of
the Notes and Warrants, and upon the exercise of the Warrants, the issuance and
delivery of the Warrant Shares, except the filing of the Restated and Amended
Articles with the Secretary of State of Delaware and the filings that will be
made and the consents that will be obtained under state securities laws.
5.5 Financial Statements and Condition. The Company's audited year-end
financial statements as at May 31, 2000, as heretofore furnished to the
Purchasers, have been prepared in accordance with GAAP on a consistent basis and
fairly present the financial condition of the Company as at such date and the
results of its operations and cash flow for the period then ended. The Company's
unaudited interim financial statements as at November 30, 2000, as heretofore
furnished to the Purchasers, have been prepared in accordance with GAAP on a
consistent basis and fairly present the financial condition of the Company as at
such date and the results of its operations and cash flow for the period then
ended, subject to year-end audit adjustments. As of the dates of such financial
statements, the Company had no material obligation, contingent liability,
liability for taxes or long-term lease obligation which is not reflected in such
financial statements or in the notes to the year-end financial statements as at
May 31, 2000, except as disclosed on Schedule 5.5. Since May 31, 2000, there has
been no material adverse change in the business, operations, properties,
prospects, assets or condition, financial or otherwise, of the Company, except
as disclosed in the interim financial statements dated November 30, 2000 or
except as disclosed on any Schedule to this Agreement.
5.6 Litigation. Except as set forth on Schedule 5.5 or Schedule 5.6,
there are no actions, suits or proceedings pending or, to the knowledge of the
Company, threatened against or affecting the Company or any of its properties
before any court or arbitrator, or any governmental department, board, agency or
other instrumentality which, if determined adversely to the Company, would have
a material adverse effect on the business, operations, properties, prospects,
assets or condition (financial or otherwise) of the Company or on the ability of
the Company to perform its obligations under the Transaction Documents.
5.7 Environmental Health and Safety Laws. There does not exist any
violation by the Company of any applicable federal, state or local law, rule or
regulation
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or order of any government, governmental department, board, agency or other
instrumentality relating to environmental, pollution, health or safety matters
which will or threatens to impose a material liability on the Company or which
would require a material expenditure by the Company to cure. The Company has not
received any notice to the effect that any part of its operations or properties
is not in material compliance with any such law, rule, regulation or order or
notice that it or its property is the subject of any governmental investigation
evaluating whether any remedial action is needed to respond to any release of
any toxic or hazardous waste or substance into the environment, which
non-compliance or remedial action could reasonably be expected to have a
material adverse effect on the business, operations, properties, prospects,
assets or condition (financial or otherwise) of the Company.
5.8 ERISA. Each Plan complies with all material applicable requirements
of ERISA and the Code and with all material applicable rulings and regulations
issued under the provisions of ERISA and the Code setting forth those
requirements. No Reportable Event has occurred and is continuing with respect to
any Plan. All of the minimum funding standards applicable to such Plans have
been satisfied and there exists no event or condition which would permit the
institution of proceedings to terminate any Plan under Section 4042 of ERISA.
The current value of the Plans' benefits guaranteed under Title IV of ERISA does
not exceed the current value of the Plans assets allocable to such benefits.
5.9 Federal Reserve Regulations. The Company is not engaged principally
or as one of its important activities in the business of extending credit for
the purpose of purchasing or carrying margin stock (as defined in Regulation U
of the Board). The value of all margin stock owned by the Company does not
constitute more than 25% of the value of the assets of the Company on an
individual basis.
5.10 Title to Property; Leases; Liens; Subordination. The Company has
(a) good and marketable title to its real and personal properties referred to as
owned by the Company in the most recent financial statements referred to in
Section 5.5 (other than property disposed of since the date of such financial
statements in the ordinary course of business), and (b) valid, subsisting and
enforceable licenses or leasehold interest in its other real and personal
properties used in its business. None of such properties is subject to a Lien,
except as allowed under Section 7.11. The Company has not subordinated any of
its rights under any obligation owing to it to the rights of any other person.
5.11 Taxes. Except as described on Schedule 5.11, the Company has filed
all federal, state and local tax returns required to be filed and has paid or
made provision for the payment of all taxes due and payable pursuant to such
returns and pursuant to any assessments made against it or any of its property
and all other taxes, fees and other charges imposed on it or any of its property
by any governmental authority (other than taxes, fees or charges the amount or
validity of which is currently being contested in good faith by appropriate
proceedings and with respect to which reserves in accordance with GAAP will have
been, at all times from and after May 31, 2000, provided on the books of the
Company). No tax Liens have been filed against the Company or any of its assets.
The charges, accruals and reserves on the books of the Company in respect of
taxes and
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other governmental charges are adequate. The Company does not know of any
proposed material tax assessment against it or any basis therefor, other than
those with respect to which reserves in accordance with GAAP have been, at all
times from and after May 31, 2000, provided on the books of the Company.
5.12 Trademarks, Patents. The Company possesses or has the right to use
all of the patents, trademarks, trade names, service marks and copyrights, and
applications therefor, and all technology, know-how, processes, methods and
designs used in or necessary for the conduct of its business, without known
conflict with the rights of others.
5.13 Force Majeure. Since the date of the most recent financial
statements referred to in Section 5.5, the business, properties and other assets
of the Company have not been materially and adversely affected in any way as the
result of any fire or other casualty, strike, lockout, or other labor trouble,
embargo, sabotage, confiscation, condemnation, riot, civil disturbance, activity
of armed forces or act of God.
5.14 Investment Company Act. The Company is not an "investment company"
or a company "controlled" by an investment company within the meaning of the
Investment Company Act of 1940, as amended.
5.15 Public Utility Holding Company Act. The Company is not a "holding
company" or a "subsidiary company" of a holding company or an "affiliate" of a
holding company or of a subsidiary company of a holding company within the
meaning of the Public Utility Holding Company Act of 1935, as amended.
5.16 Retirement Benefits. Under the accounting rules proposed as of the
date of this Agreement by the Financial Accounting Standards Board with respect
thereto, the present value of the expected cost to the Company of
post-retirement medical and insurance benefits with respect to employees, as
estimated by the Company in accordance with procedures and assumptions deemed
reasonable by the Purchasers, does not exceed $1,000,000.
5.17 Subsidiaries. Except as described on Schedule 5.17, the Company
has no other Subsidiaries and each such Subsidiary is permitted pursuant to
Section 7.5.
5.18 No Event of Default. No Event of Default has occurred and is
continuing.
5.19 Use of Proceeds. The proceeds of the Securities shall be used for
the purpose described in Section 2.4.
5.20 No Amendments to Certain Documents. Each of the representations
and warranties made by the Company and each of its Subsidiaries in the
Transaction Documents is as at the Closing Date true and correct in all material
respects (without giving duplicative effect to any materiality qualification
therein), except to the extent that any of such representations and warranties
relates, by the express terms thereof, solely to a date falling prior to the
Closing Date.
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5.21 Securities Act. None of the Company nor anyone acting on its
behalf has offered or will offer to sell the Securities or similar securities
to, or solicit offers with respect thereto from, or enter into any preliminary
conversations or negotiations relating thereto with, any Person, so as to bring
the issuance and sale of the Securities to the Purchasers under the registration
provisions of the Securities Act. Assuming the accuracy of the representations
and warranties of each Purchaser set forth herein, the issuance of the
Securities to the Purchasers pursuant to this Agreement is not required to be
registered under the Securities Act or applicable state securities law.
5.22 Representations and Warranties Incorporated from Other Documents.
As of the date hereof, each of the representations and warranties given (i) by
the Company in the Stock Purchase Agreement is true and correct. Each of the
representations and warranties given by the Company in the Stock Purchase
Agreement is incorporated herein as if such representations and warranties were
set forth fully herein and for purposes of this Agreement, and notwithstanding
Section 5 of the Stock Purchase Agreement or any termination of the terms and
provisions of the Stock Purchase Agreement, all such representations and
warranties shall be deemed to survive pursuant to Section 9.8 until the
Convertible Notes or Notes, as applicable, have been redeemed in full pursuant
to Section 2.6 of this Agreement.
5.23 Chief Executive Offices. The chief executive office of the Company
is at ▇▇▇ ▇▇. ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇. ▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇, at which location its books
and records are kept.
5.24 Reserved Shares. Sufficient shares of authorized but unissued
Common Stock have been reserved by appropriate action in connection with the
prospective exercise of the Warrants. None of the purchase of the Convertible
Notes, or issuance of the Notes and Warrants, or the issuance of shares of
Common Stock upon the exercise of the Warrants, is subject to preemptive or
other similar statutory or contractual rights (except for such rights under the
Stockholders' Agreement).
5.25 Government Regulations. The Company is not an "investment
company", or an "affiliated company" or a "principal underwriter" of an
"investment company", as such terms are defined in the Investment Company Act of
1940; nor is it subject to regulation under the Federal Power Act, the
Interstate Commerce Act or any other requirement and law which purports to
regulate or restrict its ability to borrow money.
5.26 Full Disclosure. Subject to the following sentence, neither the
financial statements referred to in Section 5.5 nor any other certificate,
written statement, exhibit or report furnished by or on behalf of the Company in
connection with or pursuant to this Agreement contains any untrue statement of a
material fact or omits to state any material fact necessary in order to make the
statements contained therein not misleading. Certificates or statements
furnished by or on behalf of the Company to the Purchasers consisting of
projections or forecasts of future results or events have been prepared in good
faith and based on good faith estimates and assumptions of the management of the
Company, and the Company has no reason to believe that such projections or
forecasts are not reasonable; provided, that the failure of future results or
events to conform to such
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projections or forecasts shall not, in and of itself, constitute a breach of the
foregoing representation and warranty.
ARTICLE VI -- AFFIRMATIVE COVENANTS OF THE COMPANY
The Company covenants and agrees that so long as any of the Convertible Notes or
Notes is outstanding:
6.1 Financial Statements and Reports. The Company will furnish to the
Noteholders.
(a) As soon as available and in any event within 90 days after
the end of each fiscal year of the Company, (i) the financial statements of the
Company consisting of at least statements of income, cash flow and stockholders'
equity, and a consolidated balance sheet as at the end of such year, prepared in
accordance with GAAP on a consistent basis, setting forth in each case in
comparative form corresponding figures from the previous fiscal year end,
audited by PriceWaterhouseCoopers or other independent certified public
accountants of recognized national standing selected by the Company and
acceptable to the Noteholders, together with any management letters, management
reports or other supplementary comments or reports to the Company or its board
of directors furnished by such accountants.
(b) As soon as available and in any event within 30 days after
the end of each month, unaudited statements of income, cash flow and
stockholders' equity for the Company for such month and for the period from the
beginning of such fiscal year to the end of such month, and a balance sheet of
the Company as at the end of such month prepared in accordance with GAAP on a
consistent basis, setting forth in comparative form figures for the
corresponding period for the preceding fiscal year, accompanied by a certificate
signed by the chief financial officer of the Company stating that such financial
statements present fairly the financial condition of the Company subject to
year-end audit adjustments.
(c) Together with the financial statements delivered pursuant
to Section 6.1(a) and the financial statements delivered pursuant to Section
6.1.(b) for the months of May, August, November and February of each year, a
statement signed by the chief financial officer of the Company in substantially
the form of Exhibit 6.1(c) hereto demonstrating in reasonable detail compliance
(or noncompliance, as the case may be) with Sections 7.8 and Sections 7.13
through 7.17 as at the end of the fiscal period covered thereby and stating that
as at the end of such fiscal period there did not exist any Default or Event of
Default or; if such Default or Event of Default existed, specifying the nature
and period of existence thereof and what action the Company proposes to take
with respect thereto.
(d) As soon as practicable and in any event not later than the
beginning of each fiscal year of the Company, statements of forecasted income
for the Company for each fiscal quarter in such fiscal year and a forecasted
balance sheet of the Company, together with supporting assumptions, as at the
end of each fiscal quarter, all in reasonable detail and reasonably satisfactory
in scope to the Noteholders.
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(e) Immediately upon any officer of the Company becoming aware
of any Default or Event of Default, a notice describing the nature thereof and
what action the Company proposes to take with respect thereto.
(f) Immediately upon any officer of the Company becoming aware
of the occurrence, with respect to any Plan, of any Reportable Event or any
Prohibited Transaction, a notice specifying the nature thereof and what action
the Company proposes to take with respect thereto, and, when received, copies of
any notice from PBGC of intention to terminate or have a trustee appointed for
any Plan.
(g) Together with the financial statements delivered pursuant
to Section 6.1(a), a schedule of any federally registered copyrights registered
or acquired by the Company during the fiscal year covered by such financial
statements.
(h) From time to time, such other information regarding the
business, operation and financial condition of the Company as the Noteholders
may reasonably request.
(i) Within 10 days of the end of each month the Company shall
deliver to the Noteholders a copy of the Borrowing Base Certificate (as such
term is defined in the Senior Credit Agreement).
6.2 Corporate Existence. From and after the Closing Date the Company
will maintain its corporate existence in good standing under the laws of its
jurisdiction of incorporation and its qualification to transact business in each
jurisdiction where failure so to qualify would preclude the Company its rights
with respect to any material asset or would expose the Company to any material
liability.
6.3 Insurance. The Company shall maintain with financially sound and
reputable insurance companies such insurance as may be required by law and such
other insurance including, without limitation, business interruption insurance,
in such amounts and against such hazards as is customary in the case of
reputable firms engaged in the same or similar business and similarly situated.
The Company will keep its tangible assets (including the embodiment of any
intangible assets, but excluding any underlying intellectual property) insured
against "all risks" for the full replacement cost thereof, subject to a
deductible not exceeding $1,000,000, with an insurance company or companies
reasonably satisfactory to the Noteholders. Such policies or certificates with
respect thereto are to be delivered to the Noteholders at their request. Each
such policy or the certificate with respect thereto shall provide that such
policy shall not be canceled or allowed to lapse unless at least 30 days prior
written notice is given to the Noteholders.
6.4 Payment of Taxes and Claims. The Company shall file all tax returns
and reports which are required by law to be filed by it, or any extensions
permitted under such laws, and will pay before they become delinquent all taxes,
assessments and governmental charges and levies imposed upon it or its property
and all claims or
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demands of any kind (including but not limited to those of suppliers, mechanics,
carriers, warehouses, landlords and other like Persons) which, if unpaid, might
result in the creation of a Lien upon its property; provided (a) that the
foregoing items need not be paid if they are being contested in good faith by
appropriate proceedings, and as long as the Company's title to its property is
not materially adversely affected, its use of such property in the ordinary
course of its business is not materially interfered with and adequate reserves
with respect thereto have been, at all times after May 31, 2000, set aside on
the Company's books in accordance with GAAP and (b) that the foregoing items
required under foreign, state or local law need not be filed and paid as long as
(i) the Company's title to its property is not materially adversely affected,
(ii) its use of such property in the ordinary course of its business is not
materially interfered with, (iii) adequate reserves with respect thereto have
been, at all times after May 31, 2000, set aside on the Company's books in
accordance with GAAP and (iv) no Lien has been created upon the Company.
6.5 Inspection. The Company shall permit any Person designated by the
Noteholders to visit and inspect any of the properties, corporate books and
financial records of the Company, to examine and to make copies of the books of
accounts and other financial records of the Company, and to discuss the affairs,
finances and accounts of the Company with, and to be advised as to the same by,
its officers at such reasonable times and intervals as the Noteholders may
designate. So long as no Event of Default exists, the expenses of the
Noteholders for such visits, inspections and examinations shall be at the
expense of the Noteholders, but any such visits, inspections and examinations
made while any Event of Default is continuing shall be at the expense of the
Company.
6.6 Maintenance of Properties. The Company will maintain its properties
used or useful in the conduct of its business in good condition, repair and
working order, normal wear and tear excepted, and supplied with all necessary
equipment, and make all necessary repairs, renewals, replacements, betterments
and improvements thereto, all as may be reasonably necessary so that the
business carried on in connection therewith may be properly and advantageously
conducted at all times.
6.7 Books and Records. The Company will keep adequate and proper
records and books of account in which full and correct entries will be made of
its dealings, business and affairs.
6.8 Compliance. The Company will comply in all material respects with
all laws, rules, regulations, orders, writs, judgments, injunctions, decrees or
awards to which the Company may be subject; provided, however, that failure so
to comply shall not be a breach of this covenant if such failure does not have,
or is not reasonably expected to have, a materially adverse effect on the
properties, business or condition (financial or otherwise) of the Company and
the Company is acting in good faith and with reasonable dispatch to cure such
noncompliance.
6.9 Notice of Litigation. The Company will give prompt written notice
to the Noteholders of the commencement of any action, suit or proceeding before
any court or arbitrator or any governmental department, board, agency or other
instrumentality
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affecting the Company or any property of the Company or to which the Company is
a party in which an adverse determination or result could have a material
adverse effect on the business, operations, properties, prospects, assets or
condition (financial or otherwise) of the Company or on the ability of the
Company to perform its obligations under this Agreement and the other
Transaction Documents, stating the nature and status of such action, suit or
proceeding.
6.10 ERISA. The Company will maintain each Plan in compliance with all
material applicable requirements of ERISA and of the Code and with all material
applicable rulings and regulations issued under the provisions of ERISA and of
the Code and will not and not permit any of the ERISA Affiliates to (a) engage
in any transaction in connection with which the Company or any of the ERISA
Affiliates would be subject to either a civil penalty assessed pursuant to
Section 502(i) of ERISA or a tax imposed by Section 4975 of the Code, in either
case in an amount exceeding $50,000, (b) fail to make full payment when due of
all amounts which, under the provisions of any Plan, the Company or any ERISA
Affiliate is required to pay as contributions thereto, or permit to exist any
accumulated funding deficiency (as such term is defined in Section 302 of ERISA
and Section 412 of the Code), whether or not waived, with respect to any Plan or
(c) fail to make any payments to any Multiemployer Plan that the Company or any
of the ERISA Affiliates may be required to make under any agreement relating to
such Multiemployer Plan or any law pertaining thereto.
6.11 Environmental Matters; Reporting. The Company will observe and
comply with all laws, rules, regulations and orders of any government or
government agency relating to health, safety, pollution, hazardous materials or
other environmental matters to the extent noncompliance could result in a
material liability or otherwise have a material adverse effect on the Company.
The Company will give the Noteholders prompt written notice of any violation as
to any environmental matter by the Company and of the commencement of any
judicial or administrative proceeding relating to health, safety or
environmental matters (a) in which an adverse determination or result could
result in the revocation of or have a material adverse effect on any operating
permits, air emission permits, water discharge permits, hazardous waste permits
or other permits held by the Company which are material to the operations of the
Company, or (b) which will or threatens to impose a material liability on the
Company to any Person or which will require a material expenditure by the
Company to cure any alleged problem or violation.
6.12 Punctual Payment. The Company will duly and punctually pay or
cause to be paid the principal and interest on the Convertible Notes or Notes,
as applicable, and the Company will duly and punctually pay or cause to be paid
all other amounts provided for in this Agreement and the other Subordinated
Notes Documents to which the Company is a party, all in accordance with the
terms of this Agreement and such other Subordinated Notes Documents.
6.13 Maintenance of Office. The Company will maintain its chief
executive office in ▇▇▇ ▇▇. ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇. ▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇ or, at such
other place in the United States of America as the Company shall designate upon
not less than 15 days prior written notice to the Noteholders, where notices,
presentations and demands to or upon the Company in respect of the Subordinated
Notes Documents may be given or made.
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6.14 Intentionally Omitted.
6.15 Subsidiaries, Etc. If, after the Closing Date, the Company or any
of its Subsidiaries creates or acquires, either directly or indirectly, any
Subsidiary, it will immediately notify the Noteholders of such creation or
acquisition, as the case may be.
6.16 Intentionally Omitted.
6.17 Intellectual Property. The Company covenants and agrees that it
will take all necessary and advisable steps to obtain ownership in and/or
protection of all material Intellectual Property owned, used or developed by the
Company and its Subsidiaries in the conduct of their business, and that it will
not do any act, or omit to do any act, nor permit any licensee to do any act,
whereby any material Intellectual Property rights of the Company or any
Subsidiary may become abandoned, invalidated, dedicated to the public domain, or
diminished in value; provided, however, that nothing in this Section 6.17 shall
prevent the Company from taking, or refraining from taking, any action if such
action (or refraining from taking action) is in the judgment of the Company in
its best interest and that would not, individually or in the aggregate, have a
material adverse effect on the business, operations, properties, prospects,
assets or condition (financial or otherwise) of the Company and its
Subsidiaries, considered as a whole. Without limiting the generality of the
foregoing, the Company covenants and agrees that it will diligently prosecute
any applications to obtain registrations of material Intellectual Property,
other than Intellectual Property of a type that is not capable of cost effective
protection or is not eligible for protection through registration; preserve and
maintain all material Intellectual Property rights in all jurisdictions in which
the Company conducts or proposes to conduct business; display appropriate
notices of material Intellectual Property rights on all tangible embodiments;
take reasonable security measures to protect the secrecy and confidentiality of
all valuable information of the Company and its licensors; file all such
applications, renewals, certificates and affidavits as may be reasonably
necessary or advisable to obtain and maintain the ownership, validity and
enforceability of all material Intellectual Property rights of the Company and
its Subsidiaries; appropriately document the Company's ownership of material
Intellectual Property developed by or for the Company and its Subsidiaries; take
all reasonable enforcement actions as may be prudent to protect the material
Intellectual Property of the Company and its Subsidiaries; and conduct the
business of the Company and its Subsidiaries so as not to violate or infringe
the Intellectual Property rights of others.
6.18 Further Assurances. The Company will, and will cause each of its
Subsidiaries to, cooperate with the Noteholders and execute such further
instruments and documents as the Noteholders shall reasonably request to carry
out to their satisfaction the transactions contemplated by this Agreement and
the other Transaction Documents.
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ARTICLE VII -- CERTAIN NEGATIVE COVENANTS OF THE COMPANY
The Company and each of its Subsidiaries covenants and agrees that so
long as any of the Convertible Notes or Notes is outstanding:
7.1 Merger. The Company will not merge or consolidate or enter into any
analogous reorganization or transaction with any Person or liquidate, wind up or
dissolve itself (or suffer any liquidation or dissolution); provided, however,
(a) that any Person acquired by the Company as a result of an Investment
permitted under Section 7.9(h) or any Subsidiary may be merged into the Company
and (b) the Company (if the Company is the surviving entity) or any Subsidiary
may in any fiscal year engage in one or more mergers or consolidations if the
aggregate value of all of such transactions during such fiscal year does not
exceed the greater of $3,000,000 or 15% of Tangible Net Worth.
7.2 Sale of Assets. The Company will not sell, transfer, lease, license
on an exclusive basis or otherwise convey all or any substantial part of its
assets except for (a) sales and leases of inventory in the ordinary course of
business, (b) licenses of intellectual property, including software and
documentation, in the ordinary course of business and (c) other sales of assets
in any fiscal year with an aggregate purchase price or book value, whichever is
greater, of not more than the greater of $3,000,000 or 15% of Tangible Net
Worth. Notwithstanding the foregoing, the Company may transfer assets of the
type described in Section 7.5(a) to wholly-owned Subsidiaries, provided the
requirements of Section 7.5 are satisfied.
7.3 Plans. The Company will permit any event to occur or condition to
exist which would permit any Plan to terminate under any circumstances which
would cause the Lien provided for in Section 4068 of ERISA to attach to any
assets of the Company; and the Company will not permit any underfunded amount of
Plan benefits guaranteed under Title IV of ERISA to exist.
7.4 Changes in Nature of Business. The Company will not make any
material change in the nature of the business of the Company, as carried on at
the date hereof.
7.5 Subsidiaries. The Company shall not permit any Subsidiary to have
any asset or liability unless:
(a) From and after the date any such Subsidiary obtains any
assets or incurs any liabilities, all financial statements required to be
delivered hereunder shall be prepared, and the covenants set forth in Sections
7.8 and 7.13 through 7.17 shall be applied, on a consolidated basis.
(b) All representations and warranties set forth in this
Agreement are true and correct at all times for the Company and all of such
Subsidiaries, and the Company causes all such Subsidiaries to perform and comply
with all covenants set forth in this Agreement except those set forth in
Sections 7.6, 7.7, 7.10 and 7.11, and except as otherwise provided in Section
7.5(b); provided, that all materiality qualifiers in such representations,
warranties and covenants shall apply to the Company and such Subsidiaries, taken
as a whole.
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(c) The aggregate amount of the assets of all such
Subsidiaries does not at any time exceed 20% of the consolidated assets of the
Company and its Subsidiaries.
7.6 Negative Pledges; Subsidiary Restrictions. Except for the interest
of any lessor under any operating or capitalized lease entered into on or after
the Closing Date or purchase money Liens on property granted on or after the
Closing Date (provided that such Liens are limited to the property acquired and
do not secure Indebtedness other than that related to operating or capitalized
lease obligations or the purchase price of such property), the Company will not,
and will not permit any Subsidiary to, enter into any agreement, bond, note or
other instrument with or for the benefit of any Person other than the Senior
Bank or the Noteholders which would (i) prohibit the Company or such Subsidiary
from granting, or otherwise limit the ability of the Company or such Subsidiary
to grant, to the Noteholders any Lien on any assets or properties of the Company
or such Subsidiary, or (ii) require the Company or such Subsidiary to ▇▇▇▇▇ ▇
▇▇▇▇ to any other Person if the Company or such Subsidiary grants any Lien to
the Senior Bank or the Noteholders. The Company will not permit any Subsidiary
to place or allow any restriction, directly or indirectly, on the ability of
such Subsidiary to (a) pay dividends or any distributions on or with respect to
such Subsidiary's capital stock or (b) make loans or other cash payments to the
Company.
7.7 Distributions; Restricted Payments. The Company will not (i)
purchase, redeem or make any payment of principal or interest on any
Subordinated Debt except to the extent expressly permitted in accordance with
the terms of the applicable subordination agreements to which the Noteholders
are parties or (ii) make any Restricted Payments other than: (a) mandatory
redemptions of common stock under Section 409 of the Code, (b) Restricted
Payments which aggregate during any twelve (12) month period less than five
percent (5%) of the Company's Tangible Net Worth or (c) Restricted Payments
using the proceeds from the issuance of securities of the Company, provided that
such Restricted Payments do not result in any decrease in the Tangible Net Worth
of the Company, provided, however, that so long as no Default or Event of
Default shall have occurred immediately before or after giving effect to such
proposed distribution, any Subsidiary may pay dividends to the Company.
7.8 Capital Expenditures. The Company will not make Capital
Expenditures in any fiscal year in excess of $23,000,000.
7.9 Investments. The Company will not acquire for value, make, have or
hold any Investments, except:
(a) Investments existing on the date of this Agreement and
described on Schedule 7.9.
(b) Travel advances to management personnel and employees in
the ordinary course of business.
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(c) Investments in readily marketable direct obligations
issued or guaranteed by the United States or any agency thereof and supported by
the full faith and credit of the United States.
(d) Certificates of deposit or bankers' acceptances issued by
any commercial bank organized under the laws of the United States or any State
thereof which has (i) combined capital and surplus of at least $100,000,000, and
(ii) a credit rating with respect to its unsecured indebtedness from a
nationally recognized rating service that is satisfactory to the Noteholders.
(e) Commercial paper given the highest rating by a nationally
recognized rating service.
(f) Repurchase agreements relating to securities issued or
guaranteed as to principal and interest by the United States of America.
(g) Other readily marketable Investments in debt securities or
mutual funds investing in debt securities that (i) have been assigned the
highest available rating by Standard & Poors Corporation, ▇▇▇▇▇'▇ Investors
Services, Inc. or another nationally recognized rating agency reasonably
acceptable to the Noteholders and (ii) have an average life to maturity or
duration of two years or less from the date of acquisition thereof by the
Company.
(h) Any Investment in the stock or assets of any Person other
than the Company if the aggregate consideration for all such Investments made in
any fiscal year of the Company does not exceed the greater of $3,000,000 or 15%
of Tangible Net Worth.
(i) Other Investments in readily marketable publicly traded
securities to the extent (y) the sum of the aggregate amount of Investments
described in clauses (c), (d), (e), (f) and (g) above plus the aggregate amount
of the Company's funds on deposit in transaction accounts with commercial banks
satisfying the requirements of clause (d) above exceeds (z) the sum of the
outstanding principal amounts of the Company's Indebtedness to the Noteholders.
(j) Other Investments in readily marketable publicly traded
securities made in accordance with an investment policy prepared by the Company
and reasonably acceptable to the Noteholders.
Any Investments under clauses (c), (d), (e) or (f) above, and the securities
subject to Investments made under clause (f) above, shall mature within two
years of the acquisition thereof by the Company.
7.10 Indebtedness. The Company will not incur, create, issue, assume or
suffer to exist any Indebtedness, except:
(a) Noteholder Obligations.
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(b) Senior Obligations together with any capitalized lease
obligation not to exceed in the aggregate $30,000,000.
(c) Current liabilities, other than for borrowed money,
incurred in the ordinary course of business.
(d) Indebtedness existing on the date of this Agreement and
disclosed on Schedule 7.10 hereto, but not including any extension or
refinancing thereof.
(e) Indebtedness secured by Liens permitted under Sections
7.11( a) and (h) hereof.
(f) Indebtedness to shareholders or former shareholders of the
Company in the form of installment obligations for the repurchase of shares of
the Company's capital stock permitted to be made under Section 7.7.
(g) Deferred revenue reflected on the Company's financial
statements as of the date of determination.
(h) Subordinated Debt.
7.11 Liens. Unless otherwise provided in this Agreement, the Company
will not create, incur, assume or suffer to exist any Lien, or enter into, or
make any commitment to enter into, any arrangement for the acquisition of any
property through conditional sale, lease-purchase or other title retention
agreements, with respect to any property now owned or hereafter acquired by the
Company, including but not limited to international assets currently located in
Canada, the United Kingdom, and the Netherlands, except:
(a) Liens granted to the Senior Bank under the Senior Credit
Documents to, and Liens granted to secure any Indebtedness to any Affiliate or
Subsidiary of the Senior Bank with the prior consent of the Senior Bank and the
Noteholders.
(b) Liens existing on the date of this Agreement and disclosed
on Schedule 7.11 hereto.
(c) Deposits or pledges to secure payment of workers'
compensation, unemployment insurance, old age pensions or other social security
obligations, in the ordinary course of business of the Company.
(d) Liens for taxes, fees, assessments and governmental
charges not delinquent or to the extent that payment therefor shall not at the
time be required to be made in accordance with the provisions of Section 6.4.
(e) Liens of carriers, warehousemen, mechanics and
materialmen, and other like Liens arising in the ordinary course of business,
for sums not due or to the extent that payment therefor shall not at the time be
required to be made in accordance with the provisions of Section 6.4.
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(f) Liens incurred or deposits or pledges made or given in
connection with, or to secure payment of, indemnity, performance or other
similar bonds.
(g) Encumbrances in the nature of zoning restrictions,
easements and rights or restrictions of record on the use of real property and
landlord's Liens under leases on the premises rented, which do not materially
detract from the value of such property or impair the use thereof in the
business of the Company.
(h) The interest of any lessor under any operating or
capitalized lease entered into on or after the Closing Date or purchase money
Liens on property granted on or after the Closing Date; provided that such Liens
are limited to the property acquired and do not secure Indebtedness other than
the related operating or capitalized lease obligations or the purchase price of
such property.
7.12 Contingent Liabilities. The Company will not be or become liable
on any Contingent Obligations other than indemnification obligations of the
Company or its Subsidiaries to customers or resellers in the ordinary course of
business.
7.13 Lease Obligations. The Company will not enter into any lease of
real or personal property, whether or not its obligations in respect of such
lease would be capitalized in accordance with GAAP, if the aggregate amount of
the Company's rental and other payments under all such leases in any fiscal year
would exceed $27,600,000.
7.14 Loss Limitation. The Company will not suffer (a) a net loss in
each of any two consecutive fiscal quarters, or (b) a net loss in any fiscal
quarter in excess of $4,600,000, in each case calculated without giving affect
to the 2001 Redemption Charges or the 2001 Stock Charges.
7.15 Loan Proceeds. The Company will not use any part of the proceeds
of the Convertible Notes directly or indirectly, and whether immediately,
incidentally or ultimately, (a) to purchase or carry margin stock (as defined in
Regulation U of the Board) or to extend credit to others for the purpose of
purchasing or carrying margin stock or to refund Indebtedness originally
incurred for such purpose or (b) for any purpose which entails a violation of,
or which is inconsistent with, the provisions of Regulations T, U or X of the
Board.
7.16 Interest Coverage Ratio. The Company will not permit the ratio, as
of the last day of any Interest Coverage Measurement Period, of (a) its Earnings
Before Interest and Taxes for such Interest Coverage Measurement Period to (b)
its Interest Expense for such Interest Coverage Measurement to be less than 2.55
to 1.0.
7.17 Cash Flow Leverage Ratio. The Company will not permit, as of the
end of any fiscal quarter, the ratio of (a) all Indebtedness outstanding as of
such date on which interest is charged, accrued or deemed experienced pursuant
to GAAP, to (b) Net Cash Flow for the Cash Flow Measurement Period ended on such
date (Annualized, in the case
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of the Cash Flow Measurement Periods ending August 31, 2000, November 30, 2000
and February 28, 2001), to exceed 2.30 to 1.00.
7.18 Intentionally Omitted.
7.19 Intentionally Omitted.
7.20 Intentionally Omitted.
7.21 Transaction Documents. The Company will not, and will not permit
any of its Subsidiaries to, amend, supplement or otherwise modify the terms of,
or waive any of the provisions of or any rights under, any of the Transaction
Documents, except for amendments of the Senior Credit Agreement and the other
Senior Credit Documents to the extent permitted under the Subordination
Agreement. The Company will not, and will not permit any of its Subsidiaries to,
prepay, redeem or repurchase any Subordinated Debt.
7.22 Intentionally Omitted.
7.23 Transactions with Affiliates. All material transactions and
agreements (including without limitation any amendment of an existing agreement)
by and between the Company or any of its Subsidiaries and any stockholder,
officer, director or key employee of the Company or any of its Subsidiaries or
any Person, to the best knowledge of the Company, controlling, controlled by,
under common control with or otherwise affiliated with, or a member of the
family of, any such Person, shall be conducted on an arm's length basis, shall
be on terms and conditions no less favorable to the Company or Subsidiaries than
could be obtained from unrelated Persons, and, except to the extent immaterial
(whether viewed alone or aggregated with any other similar transactions), shall
be approved in advance in writing by a majority of the Board of Directors of the
Company after full disclosure of the terms thereof.
7.24 Accounting Practices. The Company shall not, and shall not suffer
or permit any Subsidiary to (a) make any significant change in accounting
treatment or reporting practices, except (i) as required by GAAP, (ii) a change
in the depreciation method employed thereby to straight line depreciation and
(iii) a change in a Subsidiary's accounting treatment or reporting practices to
conform the accounting practices or reporting practices of newly acquired
Subsidiaries to the methods used by the Company, and (b) change the fiscal year
of the Company or of any Subsidiary.
7.25 Amendments to Charter and Agreements; Subordinated Debt. The
Company will not, nor will it permit any Subsidiary to, (a) make any amendment
or modification to any indenture, notes or other agreement evidencing or
governing any of the Senior Obligations, other than those permitted or not
prohibited by the Senior Credit Agreement (b) directly or indirectly prepay,
defease or in substance defease, purchase, redeem, repurchase, retire or
otherwise acquire, any other Subordinated Debt, or (c) make any amendment or
modification to any terms or provisions of its Certificate of
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Designations or bylaws which is adverse to the Noteholders without the prior
written consent of the Noteholders.
ARTICLE VIII -- EVENTS OF DEFAULT; ACCELERATION; ETC.
8.1 Events of Default. If any of the following events (each, an "Event
of Default" or, if the giving of notice or the lapse of time or both is
required, then, prior to such notice or lapse of time, "Default") shall occur:
(a) The Company shall fail to make when due, whether by
acceleration or otherwise, any payment of principal or any premium on the
Convertible Notes, as applicable, or any mandatory repayment or repurchase of
the Convertible Notes or Notes or shall fail to pay within five days after the
same becomes due, whether by acceleration or otherwise, any payment of interest
on the Convertible Notes or Notes or any other payments required to be made to
the Noteholders pursuant to this Agreement or any other Subordinate Notes
Documents.
(b) Any representation or warranty made by or on behalf of the
Company in this Agreement or any other Transaction Document or by or on behalf
of the Company in any certificate, statement, report or document herewith or
hereafter furnished to the Noteholders pursuant to this Agreement or any other
Subordinated Notes Documents shall prove to have been false or misleading in any
material respect on the date as of which the facts set forth are stated or
certified.
(c) The Company shall fail to comply with any Section of
Articles VI or VII hereof.
(d) The Company shall fail to comply with any other agreement,
covenant, condition, provision or term contained in the Subordinated Notes
Documents (other than those hereinabove set forth in this Section 8.1) and such
failure to comply shall continue for thirty calendar days after whichever of the
following dates is the earliest: (i) the date the Company gives notice of such
failure to the Noteholders, (ii) the date the Company should have given notice
of such failure to the Noteholders pursuant to Section 6.1, or (iii) the date
the Noteholders give notice of such failure to the Company.
(e) Intentionally Omitted.
(f) The Company or any of its Subsidiaries shall become
insolvent or shall generally not pay its debts as they mature or shall apply
for, shall consent to, or shall acquiesce in the appointment of a custodian,
trustee or receiver of the Company or any of its Subsidiaries or for a
substantial part of the property thereof or, in the absence of such application,
consent or acquiescence, a custodian, trustee or receiver shall be appointed for
the Company or any of its Subsidiaries or for a substantial part of the property
thereof and shall not be discharged within 60 days, or the Company or any
Subsidiary shall make an assignment for the benefit of creditors.
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(g) Any bankruptcy, reorganization, debt arrangement or other
proceedings under any bankruptcy or insolvency law shall be instituted by or
against the Company or any of its Subsidiaries, and, if instituted against the
Company or any of its Subsidiaries, shall have been consented to or acquiesced
in by the Company or such Subsidiary or shall remain undismissed for 60 days, or
an order for relief shall have been entered against the Company or such
Subsidiary.
(h) Any dissolution or liquidation proceeding shall be
instituted by or against the Company or any of its Subsidiaries and, if
instituted against the Company or any Subsidiary, shall be consented to or
acquiesced in by the Company or such Subsidiary or shall remain for 60 days
undismissed.
(i) The Company or any of its Subsidiaries shall (a) be
indicted and all appeals in connection therewith exhausted for a state or
federal crime, or criminal action shall otherwise have been brought against the
Company or any of its Subsidiaries, a punishment for which in any such case
could include the forfeiture of any assets of the Company or such Subsidiary
having a fair market value in excess $2,000,000 or (b) have a judgment or
judgments for the payment of money in excess of the sum of $2,000,000 in the
aggregate shall be rendered against the Company or any Subsidiary and the
Company or such Subsidiary shall not discharge the same or provide for its
discharge in accordance with its terms, or procure a stay of execution thereof,
prior to any execution on such judgment by such judgment creditor, within 60
days from the date of entry thereof, and within said period of 60 days, or such
longer period during which execution of such judgment shall be stayed, appeal
therefrom and cause the: execution thereof to be stayed during such appeal.
(j) The maturity of any material Indebtedness, including
without limitation the Senior Obligations, of the Company or any Subsidiary
(other than Indebtedness under this Agreement) shall be accelerated, or the
Company or any Subsidiary shall fail to pay any such material Indebtedness when
due (after the lapse of any applicable grace period) or, in the case of such
Indebtedness payable on demand, when demanded (after the lapse of any applicable
grace period). For purposes of this Section, Indebtedness of the Company or any
Subsidiary shall be deemed "material " if it (i) is owed to the Noteholders or
(ii) exceeds $2,000,000 as to any item of Indebtedness or in the aggregate for
all items of Indebtedness with respect to which any of the events described in
this Section 8.1(j) has occurred.
(k) Any execution or attachment shall be issued whereby any
substantial part of the property of the Company or any Subsidiary shall be taken
or attempted to be taken and the same shall not have been vacated or stayed
within 45 days after the issuance thereof.
(l) Any Subordinated Debt or any Preferred Stock shall be (or
shall be required at such time to be) prepaid, redeemed or repurchased in whole
or in part or the Company shall be or become required under the Subordinated
Notes Documents to prepay, redeem or repurchase (or shall be or become required
thereunder to offer to prepay, redeem or repurchase) all or any part of the
Subordinated Debt except to the extent permitted by the applicable subordination
agreement to which the Noteholders are a party.
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(m) Any of the Senior Credit Documents, the Subordinated Notes
Documents, or the other Transaction Documents shall be canceled, terminated,
revoked or rescinded in each case otherwise than in accordance with the terms
thereof or with the express prior written agreement, consent or approval of the
Noteholders, or any action at law, suit or in equity or other legal proceeding
to cancel, revoke or rescind any of the Senior Credit Documents, the
Subordinated Notes Documents, or the other Transaction Documents shall be
commenced by or on behalf of the Company, any of its Subsidiaries or any of
their respective stockholders, or any court or any other governmental or
regulatory authority or agency of competent jurisdiction shall make a
determination that, or issue a judgment, order, decree or ruling to the effect
that, any one or more of the Senior Credit Documents, the Subordinated Notes
Documents, or the other Transaction Documents is illegal, invalid or
unenforceable in accordance with the terms thereof.
(n) The Company or any ERISA Affiliate incurs any liability to
the PBGC or a Guaranteed Pension Plan pursuant to Title IV of ERISA in an
aggregate amount exceeding $1,000,000 or the Company or any ERISA Affiliate is
assessed withdrawal liability pursuant to Title IV of ERISA by a Multiemployer
Plan requiring aggregate annual payments exceeding $1,000,000 or any of the
following occurs with respect to a Guaranteed Pension Plan: (i) an Reportable
Event, or a failure to make a required installment or other payment (within the
meaning of Section 302(f)(1) of ERISA), provided that the Noteholders determine
in their reasonable discretion that such event (A) could be expected to result
in liability of the Company or any of its Subsidiaries to the PBGC or such
Guaranteed Pension Plan in an aggregate amount exceeding $1,000,000 and (B)
could constitute grounds for the termination of such Guaranteed Pension Plan by
the PBGC, for the appointment by the appropriate United States District Court of
a trustee to administer such Guaranteed Pension Plan or for the imposition of a
lien in favor of such Guaranteed Pension Plan; or (ii) the appointment by a
United States District Court of a trustee to administer such Guaranteed Pension
Plan; or (iii) the institution by the PBGC of proceedings to terminate such
Guaranteed Pension Plan.
then, and in any such event,
(1) Noteholders holding greater than 50%,
voting together as a single class, in principal
amount of the Convertible Notes or Notes, as
applicable, may, by notice to the Company, declare
the entire unpaid principal amount of the Convertible
Notes or Notes, as applicable, plus the applicable
premium for voluntary prepayments of the Convertible
Notes or Notes, as applicable, under Section 2.6.2
plus all interest accrued and unpaid thereon and all
other amounts payable under this Agreement to be
forthwith due and payable, whereupon the Convertible
Notes or Notes, as applicable, such premium, all such
accrued interest and all such amounts shall become
and be forthwith due and payable (unless there shall
have occurred an Event of Default under
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Subsections 8.1(f), (g) or (h), in which case all
such amounts shall automatically become due and
payable), without presentment, demand, protest or
further notice of any kind, all of which are hereby
expressly waived by the Company, and
(2) In the case of events of default under
Subsection (a) above, each Noteholder may proceed to
protect and enforce its rights by suit in equity,
action at law and/or other appropriate proceeding
either for specific performance of any covenant,
provision or condition contained or incorporated by
reference in this Agreement or in aid of the exercise
of any power granted in this Agreement.
8.2 Remedies. In case any one or more of the Events of Default shall
have occurred and be continuing, and whether or not the Noteholders shall have
accelerated the maturity of the Convertible Notes or Notes, as applicable,
pursuant to Section 8.1, each Noteholder, if owed any amount with respect to the
Convertible Notes or Notes, as applicable, may, subject to the terms of the
Subordination Agreement, proceed to protect and enforce its rights by suit in
equity, action at law or other appropriate proceeding, whether for the specific
performance of any covenant or agreement contained in this Agreement and the
other Subordinated Notes Documents or any instrument pursuant to which the
Noteholder Obligations to such Noteholder are evidenced, including as permitted
by applicable law the obtaining of the ex parte appointment of a receiver, and,
if such amount shall have become due, by declaration or otherwise, proceed to
enforce the payment thereof or any other legal or equitable right of such
Noteholder. No remedy herein conferred upon any Noteholder is intended to be
exclusive of any other remedy and each and every remedy shall be cumulative and
shall be in addition to every other remedy given hereunder or now or hereafter
existing at law or in equity or by statute or any other provision of law.
8.3 Distribution of Proceeds. In the event that following the
occurrence or during the continuance of any Default or Event of Default, any
Noteholder receives any monies with respect to the amounts due hereunder, such
monies shall be distributed for application as follows:
(a) First, to the payment of, or (as the case may be) the
reimbursement of the Noteholders for or in respect of all reasonable costs,
expenses, disbursements and losses which shall have been incurred or sustained
by the Noteholders in connection with the collection of such monies by the
Noteholders, for the exercise, protection or enforcement by the Noteholders of
all or any of the rights, remedies, powers and privileges of the Noteholders
under this Agreement or any of the other Subordinated Notes Documents pro rata
based on the relative amount so incurred or sustained;
(b) Second, to all other Noteholder Obligations on a pro rata
basis; and
(c) Third, the excess, if any, shall be returned to the
Company or to such other Persons as are entitled thereto.
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8.4 Annulment of Defaults. Section 8.1 is subject to the condition
that, if at any time after the principal of any of the Convertible Notes or
Notes, as applicable, shall have become due and payable, and before any judgment
or decree for the payment of the moneys so due, or any portion thereof, shall
have been entered, then and in every such case the holders of greater than 50%
or more, voting together as a single class, in principal amount of all
Convertible Notes or Notes, as applicable, then outstanding may, by written
instrument filed with the Company, rescind and annul such declaration and its
consequences; but no such rescission or annulment shall extend to or affect any
subsequent default or Event of Default or impair any right consequent thereon.
ARTICLE IX -- MISCELLANEOUS
9.1 No Waiver; Cumulative Remedies. No failure or delay on the part of
any Noteholder, in exercising any right, power or remedy hereunder shall operate
as a waiver thereof; nor shall any single or partial exercise of any such right,
power or remedy preclude any other or further exercise thereof or the exercise
of any other right, power or remedy hereunder. The remedies herein provided are
cumulative and not exclusive of any remedies provided by law.
9.2 Amendments, Waivers and Consents. Any provision in this Agreement,
the Convertible Notes or Notes, as applicable, or the other Subordinated Notes
Documents to the contrary notwithstanding, changes in or additions to this
Agreement may be made, and compliance with any covenant or provision herein set
forth may be omitted or waived, if the Company shall, as long as any Convertible
Notes or Notes, as applicable, are outstanding, obtain consent thereto in
writing from the holder or holders of at least greater than 50%, voting together
as a single class, in principal amount of all Convertible Notes or Notes, as
applicable, then outstanding, and shall, in any case, deliver copies of such
consent in writing to all other holders of Convertible Notes or Notes, as
applicable; provided that no such consent shall be effective to reduce or to
postpone the date fixed for the payment of the principal (including any required
redemption) or interest payable on any Convertible Note or Note, as applicable,
without the consent of the holder thereof, or to alter or amend any provisions
relating to prepayments, mandatory purchase or the terms of subordination, or to
alter or amend the consent mechanism provided for under Section 8.4 or this
Section 9.2. Any waiver or consent may be given subject to satisfaction of
conditions stated therein and any waiver or consent shall be effective only in
the specific instance and for the specific purpose for which given. Written
notice of any waiver or consent effected under this Subsection shall promptly be
delivered by the Company to any holders who did not execute the same.
9.3 Addresses for Notices, Etc. All notices, requests, demands and
other communications provided for hereunder shall be in writing and mailed (by
first class registered or certified mail, postage prepaid), sent by express
overnight courier service or electronic facsimile transmission with a copy by
mail, or delivered to the applicable party at the addresses indicated below:
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If to the Company:
▇▇▇▇▇▇ Software, Inc.
▇▇▇ ▇▇. ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇. ▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: General Counsel
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
With copies to:
▇▇▇▇▇▇ & Whitney LLP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇ ▇▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
If to the Purchasers:
TA Associates, Inc.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
St. ▇▇▇▇ Venture Capital VI, LLC
c/o St. ▇▇▇▇ Venture Capital, Inc.
▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇ ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to:
▇▇▇▇▇▇▇ Procter LLP
Exchange Place
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇▇▇, P.C.
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
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If to any other holder of the Notes:
at such holder's address for notice as set forth in the transfer
records of the Company
or, as to each of the foregoing, at such other address as shall be
designated by such Person in a written notice to the other party complying as to
delivery with the terms of this Section. All such notices, requests, demands and
other communications shall, when mailed or sent, respectively, be effective (i)
three days after being deposited in the mails or (ii) one Business Day after
being deposited with the express overnight courier service or sent by electronic
facsimile transmission (with receipt confirmed), respectively, addressed as
aforesaid.
9.4 Costs, Expenses and Taxes. The Company agrees to pay on demand all
reasonable costs and expenses of the Noteholders in connection with the
preparation, execution and delivery of this Agreement, the Securities, the other
Subordinated Notes Documents and other instruments and documents to be delivered
hereunder, and in connection with the consummation of the transactions
contemplated hereby and thereby, as well as all reasonable costs and expenses of
the Noteholders in connection with the amendment, waiver (whether or not such
amendment or waiver becomes effective) or enforcement of this Agreement, the
Securities, the other Subordinated Notes Documents, and other instruments and
documents to be delivered hereunder and thereunder, including without limitation
the expenses of the Noteholders under Section 6.5 hereof at any time after a
Default has occurred and is continuing. Notwithstanding the preceding sentence,
and in addition to the provisions of such sentence, the Company agrees to pay on
demand all reasonable fees and out of pocket expenses of ▇▇▇▇▇▇▇ Procter LLP,
special counsel to the Noteholders, or other designated counsel to the
Noteholders, in connection with the transactions contemplated by this Agreement,
including any amendment, waiver (whether or not such amendment or waiver becomes
effective) or enforcement of this Agreement, the Securities, the Subordinated
Notes Documents, and other instruments and documents to be delivered hereunder
and thereunder. In addition, the Company agrees to pay (a) the travel and other
reasonable expenses of the Purchasers incurred in connection with the
transactions contemplated by this Agreement, including all expenses incurred by
the Purchasers in performing their due diligence investigation of the Company
and its Subsidiaries, (b) any and all stamp and other similar taxes (expressly
excluding income and capital gain taxes) payable or determined to be payable in
connection with the execution and delivery of this Agreement, the Securities,
the other Subordinated Notes Documents, and the other instruments and documents
to be delivered hereunder or thereunder and (c) the expenses of preparing
Convertible Notes or the Notes from time to time in connection with exchanges
and transfers of notes, the expenses of delivering copies of Transaction
Documents to Noteholders, and the Company agrees to save each Noteholder
harmless from and against any and all liabilities with respect to or resulting
from any delay in paying or omission to pay such taxes and filing fees.
9.5 Assignability; Binding Agreement. Except in connection with a
Qualified Sale, this Agreement may not be assigned by any party hereto without
the prior written consent of each other party hereto; provided, however, that
any Noteholder may assign this Agreement freely without consent. This Agreement
shall be binding upon and
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enforceable by, and shall inure to the benefit of, the parties hereto and their
respective successors and permitted assigns, and no others. Notwithstanding the
foregoing, nothing in this Agreement is intended to give any Person not named
herein the benefit of any legal or equitable right, remedy or claim under this
Agreement.
9.6 Payments in Respect of Convertible Notes or Notes. Each Noteholder
and any successor holder of the Convertible Notes or Notes, as applicable, by
their acceptance thereof, agree that, with respect to all sums received by them
applicable to the payment of principal of or interest on the Convertible Notes
or Notes, as applicable, equitable adjustment will be made among them so that,
in effect, all such sums shall be shared ratably by all of the holders of the
Convertible Notes or Notes, as applicable, whether received by voluntary
payment, by realization upon security, by the exercise of the right of set off,
by counterclaim or cross-action or by the enforcement of any or all of the
Convertible Notes or Notes, as applicable. If any holder of the Convertible
Notes or Notes, as applicable, receives any payment on its Convertible Notes or
Notes, as applicable, in excess of its pro rata portion, then such holder
receiving such excess payment shall purchase for cash from the other holders an
interest in their Convertible Notes or Notes, as applicable, in such amounts as
shall result in a ratable participation by all of the holders in the aggregate
unpaid amount of Convertible Notes or Notes, as applicable, then outstanding.
The Company shall not have any obligation to any Person under this Section 9.6.
9.7 Indemnification. In addition to the payment of expenses pursuant to
Section 9.4, whether or not the transactions contemplated hereby shall be
consummated, the Company agrees to indemnify, pay and hold each Noteholder and
the partners, members, officers, directors, employees and agents of each
Noteholder (collectively, the "Indemnitees") harmless from and against, any and
all liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, claims, costs, expenses and disbursements of any kind or nature
whatsoever (including, without limitation, the reasonable fees and disbursements
of counsel for such Indemnitees in connection with any investigative,
administrative or judicial proceedings, whether or not such Indemnitees shall be
designated a party thereto), which may be imposed on, incurred by, or asserted
against such Indemnitee, in any manner relating to or arising out of (i) this
Agreement, the Convertible Notes or Notes, and the other Transaction Documents
and all other matters related thereto in connection therewith, (ii) the
Noteholders' agreement to purchase the Convertible Notes, or the use or intended
use of the proceeds of the Convertible Notes hereunder, (iii) the violation of
any securities law by the Company, or any of its Subsidiaries, (iv) the failure
of any of the parties (other than the Purchasers) to the Transaction Documents
to comply with any law, rule or regulation applicable to the transactions
contemplated thereby or (v) the violation of an applicable federal, state or
local law, rule or regulation or order of any government, governmental
department, board, agency or other instrumentality relating to environmental,
pollution, health or safety matters by the Company or any of its Subsidiaries
(the "Indemnified Liabilities"); provided that the Company shall have no
obligation to an Indemnitee hereunder with respect to Indemnified Liabilities
which are determined by a final court decision to have resulted from the gross
negligence or willful misconduct of that Indemnitee. To the
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extent that the undertaking to indemnify, pay and hold harmless set forth in the
preceding sentence may be unenforceable because it is violative of any law or
public policy, the Company shall contribute the maximum portion which it is
permitted to pay and satisfy under applicable law, to the payment and
satisfaction of all Indemnified Liabilities incurred by the Indemnitees or any
of them.
9.8 Survival of Representations and Warranties. All representations and
warranties made to the Noteholders in this Agreement, the Convertible Notes or
Notes, the Transaction Documents or any other instrument or document delivered
in connection herewith or therewith, shall survive the execution and delivery
hereof and thereof, regardless of any investigation made by the Noteholders or
on behalf of the Noteholders.
9.9 Prior Agreements. This Agreement and the Transaction Documents
constitutes the entire agreement between the parties and supersedes any prior
understandings or agreements concerning the subject matter hereof or thereof.
9.10 Severability. The invalidity or unenforceability of any provision
hereof shall in no way affect the validity or enforceability of any other
provision.
9.11 Governing Law. This Agreement shall be governed by, and construed
in accordance with, the internal laws of the Commonwealth of Massachusetts.
9.12 Dispute Resolution.
(a) All disputes, claims, or controversies arising out of or
relating to (i) this Agreement or any other agreement executed and delivered
pursuant to this Agreement or the negotiation, breach, termination, validity or
performance hereof and thereof or the transactions contemplated hereby and
thereby or (ii) the Noteholders' loan to the Company, that are not resolved by
mutual agreement shall be resolved solely and exclusively by binding arbitration
to be conducted before J.A.M.S./Endispute, Inc. or its successor. The
arbitration shall be held in Chicago, Illinois before a single arbitrator and
shall be conducted in accordance with the rules and regulations promulgated by
J.A.M.S./Endispute, Inc. unless specifically modified herein.
(b) The parties covenant and agree that the arbitration shall
commence within ninety (90) days of the date on which a written demand for
arbitration is filed by any party hereto. In connection with the arbitration
proceeding, the arbitrator shall have the power to order the production of
documents by each party and any third-party witnesses. In addition, each party
may take up to three (3) depositions as of right, and the arbitrator may in his
or her discretion allow additional depositions upon good cause shown by the
moving party. However, the arbitrator shall not have the power to order the
answering of interrogatories or the response to requests for admission. In
connection with any arbitration, each party shall provide to the other, no later
than seven (7) business days before the date of the arbitration, the identity of
all persons that may testify at the arbitration and a copy of all documents that
may be introduced at the arbitration or considered or used by a party's witness
or expert, and a summary of the expert's opinions and the basis for said
opinions. The arbitrator's decision and award shall be made and
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delivered within six (6) months of the selection of the arbitrator. The
arbitrator's decision shall set forth a reasoned basis for any award of damages
or finding of liability. The arbitrator shall not have power to award damages in
excess of actual compensatory damages and shall not multiply actual damages or
award punitive damages or any other damages that are specifically excluded under
this Agreement, and each party hereby irrevocably waives any claim to such
damages in connection with such arbitration.
(c) The parties covenant and agree that they will participate
in the arbitration in good faith and that they will, except as provided below,
(i) bear their own attorneys' fees, costs and expenses in connection with the
arbitration, and (ii) share equally in the fees and expenses charged by
J.A.M.S./Endispute, Inc. The arbitrator may in his or her discretion assess
costs and expenses (including the reasonable legal fees, costs and expenses of
the prevailing party) against any party to a proceeding. Any party
unsuccessfully refusing to comply with an order of the arbitrators shall be
liable for costs and expenses, including attorneys' fees, incurred by the other
party in enforcing the award. In the case of temporary or preliminary injunctive
relief, any party may proceed in court prior to, during or after arbitration for
the limited purpose of avoiding immediate and irreparable harm; provided, that
the right to equitable relief by a court is not intended to derogate from this
arbitration procedure.
(d) Each of the parties hereto irrevocably and unconditionally
consents to the exclusive jurisdiction of J.A.M.S./Endispute, Inc. to resolve
all disputes, claims or controversies arising out of or relating to this
Agreement or the negotiation, breach, termination, validity or performance
hereof and or the transactions contemplated hereby and further consents to the
jurisdiction of any United States District Court of competent jurisdiction for
the purposes of enforcing the arbitration provisions of Section 9.12 of this
Agreement and the award or decision in any such proceeding. Each party further
irrevocably waives any objection to proceeding before J.A.M.S./Endispute, Inc.
based upon lack of personal jurisdiction or to the laying of venue and further
irrevocably and unconditionally waives and agrees not to make a claim in any
court that arbitration before J.A.M.S./Endispute, Inc. has been brought in an
inconvenient forum. Each of the parties hereto hereby consents to service of
process by registered mail at the address to which notices are to be given. Each
of the parties hereto agrees that its or his submission to jurisdiction and its
or his consent to service of process by mail is made for the express benefit of
the other parties hereto.
9.13 Section Headings and Gender; Construction. The descriptive
headings in this Agreement have been inserted for convenience only and shall not
be deemed to limit or otherwise affect the construction of any provision thereof
or hereof. The use in this Agreement of the masculine pronoun in reference to a
party hereto shall be deemed to include the feminine or neuter, and vice versa,
as the context may require. The parties have participated jointly in the
negotiation and drafting of this Agreement and the other agreements, documents
and instruments executed and delivered in connection herewith with counsel
sophisticated in investment transactions. In the event an ambiguity or question
of intent or interpretation arises, this Agreement and the agreements, documents
and instruments executed and delivered in connection herewith shall be construed
as if drafted jointly by the parties and no presumption or burden of proof shall
arise favoring
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or disfavoring any party by virtue of the authorship of any provisions of this
Agreement and the agreements, documents and instruments executed and delivered
in connection herewith.
9.14 Counterparts. This Agreement may be executed simultaneously in any
number of counterparts, each of which when so executed and delivered shall be
taken to be an original; but such counterparts shall together constitute but one
and the same document.
9.15 Further Assurances. From and after the date of this Agreement,
upon the request of the Noteholders, the Company shall execute and deliver such
instruments, documents and other writings as may be reasonably necessary or
desirable to confirm and carry out and to effectuate fully the intent and
purposes of the Subordinated Notes Documents.
9.16 Intentionally Omitted.
9.17 Intentionally Omitted.
9.18 Intentionally Omitted.
9.19 Specific Performance. Notwithstanding Section 9.12, upon breach or
default by the Company with respect to any obligation hereunder or under the
Convertible Notes or Notes, each Noteholder shall be entitled to protect and
enforce its rights at law, or in equity or by other appropriate proceedings for
specific performance of such obligation, or for an injunction against such
breach or default, or in aid of the exercise of any power or remedy granted
hereby or thereby or by law.
9.20 Actions by Noteholders. Except as provided in Section 9.2,
wherever in this Agreement action is required or permitted to be taken by, or
consent is required of, or a matter requires the satisfaction of, the
Noteholders, such action may be taken by, and/or such consent may be obtained
from, and/or such satisfaction may be expressed by, the holders of greater than
50%, voting together as a single class, of the principal amount of all
Convertible Notes or Notes, as applicable, then outstanding.
9.21 Limitation of Liability. No Noteholder shall have any liability to
the Company and its Subsidiaries (whether sounding in tort, contract, or
otherwise) for consequential damages suffered by the Company and its
Subsidiaries in connection with, arising out of, or in any way related to the
transactions or relationships contemplated by the Subordinated Notes Documents,
or any act, omission or event occurring in connection therewith, or for any
special exemplary or punitive damages, and the Company and its Subsidiaries
hereby waive, to the maximum extent not prohibited by law, any right they may
have to claim or recover any of the foregoing.
[The remainder of this page has been left blank intentionally]
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IN WITNESS WHEREOF, the parties hereto have executed this Senior
Subordinated Convertible Note Purchase Agreement as of the date first above
written.
COMPANY: ▇▇▇▇▇▇ SOFTWARE, INC.
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
-------------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: Chief Financial Officer
55
PURCHASERS: TA SUBORDINATED DEBT FUND, L.P.
By: TA Associates SDF LLC, its General
Partner
By: TA Associates, Inc., its Manager
By: ***
-------------------------------------
Name:
Title:
TA INVESTORS LLC
By: TA Associates, Inc., its Manager
By: ***
-------------------------------------
Name:
Title:
*** /s/ ▇▇▇▇▇ ▇.▇. ▇▇▇▇
-------------------------------------
Name: ▇▇▇▇▇ ▇.▇. ▇▇▇▇
Title: Authorized Signatory
56
PURCHASERS: ST. ▇▇▇▇ VENTURE CAPITAL VI, LLC
By: SPVC Management VI, LLC, its Managing
Member
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
-------------------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: Managing Director