EXHIBIT 10.34
CONCENTRIC NETWORK CORPORATION
NOTE AND WARRANT PURCHASE AGREEMENT
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THIS NOTE AND WARRANT PURCHASE AGREEMENT (this "Agreement") is made and
entered into as of the 19th day of June, 1997, by and among Concentric Network
Corporation, a Florida corporation (the "Company"), and Xxxxxxxx Communications
Group, Inc., a Delaware corporation (the "Purchaser").
In consideration of the mutual promises, covenants, and conditions
hereinafter set forth, the parties hereto mutually agree as follows:
1. The Loan and the Note. The Purchaser hereby agrees to lend to the
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Company, on the date hereof, and on the terms of and conditions hereof, up to an
aggregate principal amount of $3,000,000 (the "Loan"). The Loan made to the
Company by the Purchaser shall be evidenced by a secured promissory note in
substantially the form attached hereto as Exhibit A (the "Note").
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2. The Warrant. As an inducement to the Purchaser to make the Loan, the
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Company shall issue to the Purchaser a warrant to purchase up to the number of
shares of the Common Stock of the Company set forth in the Common Stock Purchase
Warrant in substantially the form attached hereto as Exhibit B (the "Warrant").
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3. Representations and Warranties of the Company. Except as set forth in
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the Schedule of Exceptions attached hereto as Schedule 3, and except as
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otherwise disclosed in the section captioned "Business--Legal Proceedings" of
the Registration Statement on Form S-1 filed with the Securities and Exchange
Commission by the Company, the Company hereby represents and warrants to the
Purchaser as follows:
3.1 Organization and Standing. The Company is a corporation duly
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organized and validly existing under, and by virtue of, the laws of its
jurisdiction of incorporation and is in good standing under the laws of said
jurisdiction. The Company has requisite corporate power and authority to own
and operate its properties and assets and to carry on its business as currently
conducted. The Company is qualified to do business as a foreign corporation in
each jurisdiction in which the failure to be so qualified would have a material
adverse effect on its business.
3.2 Corporate Power; Authorization. The Company has all requisite
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legal and corporate power to execute and deliver the Transaction Documents (as
defined in Section 5.4) and to carry out and perform all of its obligations
under the Transaction Documents. The execution, delivery and performance of the
Transaction Documents by the Company have been duly authorized by all requisite
corporate action. The Transaction Documents constitute the legal, valid and
binding obligations of the Company, enforceable in accordance with their
respective terms, except (i) as limited by applicable bankruptcy, insolvency,
reorganization or similar laws relating to or affecting
the enforcement of creditors' rights, and (ii) as limited by equitable
principles generally.
3.3 Non-Contravention. The execution, delivery and performance of the
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Transaction Documents and the compliance with the provisions thereof by the
Company do not (i) materially conflict with, or result in a material breach or
violation of, or constitute a material default under, or result in the creation
or imposition of any material lien, or (ii) violate, conflict with or result in
the breach of any material terms of, or result in the material modification of,
any material contract or otherwise give any other contracting party the right to
terminate a material contract, or constitute (or with notice or lapse of time
both constitute) a material default under any material contract to which the
Company is a party or by or to which it or any of its assets or properties may
be bound or subject.
3.4 Litigation. There is no material action, proceeding or
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investigation pending against the Company or any of its properties or assets,
nor has the Company received any threat of action, proceeding or investigation,
that questions the validity of the Transaction Documents or any action taken or
to be taken in connection herewith or therewith, or that, alone or in the
aggregate, is reasonably likely to result in any material adverse effect on the
financial condition, assets, liabilities, earnings or business of the Company
and its subsidiaries taken as a whole, nor is the Company aware that there is
any material basis for the foregoing. The Company is not a party to or subject
to the provisions of any material order, writ, injunction judgment or decree of
any court or government agency or instrumentality that will have a material
effect on the operations or business of the Company.
4. Representation and Warranties of the Purchaser. The Purchaser
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represents and warrants to the Company as follows:
4.1 Binding Obligations. The Purchaser has full legal capacity,
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power and authority to execute and deliver this Agreement and to perform its
obligations hereunder. This Agreement is a valid and binding obligation of the
Purchaser, enforceable in accordance with its terms, except as limited by
bankruptcy, insolvency or other laws of general application relating to or
affecting the enforcement of creditors' rights generally and general principles
of equity.
4.2 Securities Law Compliance. The Purchaser has been advised that
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neither the Note nor the Warrant has been registered under the Securities Act of
1933, as amended (the "Act"), or any state securities laws and, therefore,
cannot be resold unless they are registered under the Act and applicable state
securities laws or unless an exemption from such registration requirements is
available. The Purchaser is aware that Company is under no obligation to effect
any such registration with respect to the Note or to file for or comply with any
exemption from registration. The Purchaser has not been formed solely for the
purpose of making this investment and is purchasing the Note to be acquired by
the Purchaser hereunder for its own account for investment, not as a nominee or
agent, and not with a view to, or for resale in connection with, the
distribution thereof. The Purchaser has such knowledge and experience in
financial and business matters that the Purchaser is capable of evaluating the
merits and risks of such investment, is able to incur a complete loss of such
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investment and is able to bear the economic risk of such investment for an
indefinite period of time. The Purchaser is an accredited investor as such term
is defined in Rule 501 of Regulation D under the Securities Act.
4.3 Access to Information. Such Purchaser acknowledges that Company
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has given such Purchaser access to the corporate records and accounts of Company
and to all information in its possession relating to Company, has made its
officers and representatives available for interview by such Purchaser, and has
furnished such Purchaser with all documents and other information required for
such Purchaser to make an informed decision with respect to the purchase of the
Note and Warrant.
5. Conditions to Transaction. The obligation of the Purchaser to make the
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Loan, and the obligations of the Company to issue the Note and Warrant, shall be
subject to each of the following conditions having been fulfilled on or before
such date:
5.1 Blue Sky. The Company shall have obtained all necessary Blue Sky
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law permits and qualifications, or have the availability of exceptions
therefrom, required by any state for the offer and sale of the Note and Warrant
and the issuance of the shares of Common Stock, par value $.001 per share, of
the Company (the "Shares") upon exercise of the Warrant.
5.2 Proceedings and Documents. All corporate and other proceedings in
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connection with the transactions contemplated hereby shall have been completed.
5.3 Consents and Waivers. The Company shall have obtained any and all
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consents and waivers necessary or appropriate for consummation of the
transactions contemplated by this Agreement.
5.4 Transaction Documents. The Company shall have duly executed and
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delivered to the Purchaser the following documents (the "Transaction
Documents"):
(a) this Agreement;
(b) the Note issued hereunder;
(c) the Warrant issued hereunder;
(d) the Security Agreement in the form of Exhibit C hereto (the
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"Security Agreement") and any financing statements on form UCC-1
executed in connection herewith;
(f) the Technology Escrow Agreement in the form of Exhibit D
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hereto; and
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(g) a Term Sheet in the form of Exhibit E hereto setting forth
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the basic terms under which Purchaser would serve as an agent and a
reseller of the Company's products and services.
The agreement of the Purchaser to enter into this Agreement or any of the other
Transaction Documents does not obligate or require the Purchaser to enter into
any other contract, agreement or arrangement with the Company.
5.5 Accounts Payable. The Company shall have no accounts payable
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outstanding to the Purchaser more than sixty days, or the Company shall have
made provision satisfactory to the Purchaser for the payment of such accounts
payable.
5.6 Opinion. The Company shall have delivered an opinion of its
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counsel to the Purchaser in form and substance satisfactory to the Purchaser.
6. Investment Representations; Legends.
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6.1 Investment Representations of the Purchaser. The Purchaser
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hereby represents and warrants to the Company that the Purchaser is acquiring
the Note and the Warrant for its own account for investment and not with a view
toward the distribution thereof. The Purchaser understands that neither of the
Notes, the Warrant or the Shares have been registered under the Securities Act
of 1933, as amended (the "Act"), and that they are being offered and sold
pursuant to an exemption from registration contained in the Act based in part
upon the representations of the Purchaser contained herein.
6.2 Legends.
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(a) The Note, the Warrant, and the certificates representing any
Shares will each be stamped or otherwise imprinted with legends as set forth in
the form of Note and Warrant attached as Exhibits A and B, respectively. Such
legends shall be removed by the Company from the Notes, the Warrant, or the
certificates representing the Shares upon delivery to it of an opinion of
counsel that a registration statement under the Act is at the time in effect
with respect to the legended security or that such security can be freely
transferred without such registration statement being in effect and that such
transfer will not jeopardize the exemption or exemptions from registration
pursuant to which the Note and Warrant were issued.
(b) The Note, the Warrant, and the certificates representing the
Shares shall also bear any legends required under applicable state securities
laws.
7. Modification: Waiver. No modification or waiver of any provision of
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this Agreement or consent to departure therefrom shall be effective unless in
writing and signed by the Company and the Purchaser.
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8. Notices. Any notice or report herein required or permitted to be
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given shall be given by depositing the same in the United States mail, postage
prepaid and addressed or confirmed facsimile transmission to the parties as
follows:
(a) To the Company:
Concentric Network Corporation
00000 X. Xxxxxx Xxxxxx
Xxxxxxxxx, XX 00000
Attn: Xxxxxxx X. Xxxxxxxx
(b) To the Purchaser:
Xxxxxxxx Communications Group, Inc.
000 Xxxx 0xx Xxxxxx
Xxxxx, Xxxxxxxx 00000
Attn: Vice President-Finance
or to such other place or places as any of the parties shall designate by
written notice to the others.
9. Successors and Assigns. All covenants and agreements of the parties
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contained in this Agreement shall be binding and inure to the benefit of their
respective successors and assigns.
10. Governing Law. This Agreement shall in all respects be governed by
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the laws of the State of California.
11. Section Headings. The section and paragraph headings contained herein
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are for reference purposes only and shall not in any way affect the meaning and
interpretation of this Agreement.
12. Execution in Counterparts. This Agreement may be executed in any
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number of counterparts, each of which when so executed and delivered shall be
deemed an original, and such counterparts together shall constitute only one
instrument.
13. Expenses of Agreement. The parties to this Agreement shall each bear
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their own expenses incurred in connection with the preparation, execution and
delivery of Transaction Documents.
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
themselves
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or by their respective representatives thereunto duly authorized the day and
year first above written.
CONCENTRIC NETWORK CORPORATION
By: /s/
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Xxxxx X. Xxxxxxxx, President and CEO
XXXXXXXX COMMUNICATIONS GROUP, INC.
By: /s/
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EXHIBIT A
THIS NOTE AND THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED. THEY MAY NOT BE SOLD, OFFERED FOR SALE,
PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT AS
TO THE SECURITIES UNDER SAID ACT OR AN OPINION OF COUNSEL SATISFACTORY TO THE
CORPORATION THAT SUCH REGISTRATION IS NOT REQUIRED.
CONCENTRIC NETWORK CORPORATION
10% CONVERTIBLE PROMISSORY NOTE
$3,000,000.00 June 19, 0000
Xxxxxxxxx,
Xxxxxxxxxx
FOR VALUE RECEIVED, Concentric Network Corporation, a Florida corporation
(the "Company"), the principal office of which is located at 00000 Xxxxx Xxxxxx
Xxxxxx, Xxxxxxxxx, Xxxxxxxxxx 00000, hereby promises to pay to the order of
Xxxxxxxx Communications Group, Inc., a Delaware corporation ("Holder"), at Xxx
Xxxxxxxx Xxxxxx, Xxxxx, Xxxxxxxx 00000 ("Registered Address), or its registered
assigns, the sum of Three Million Dollars ($3,000,000.00), or such lesser amount
as shall then equal the outstanding principal amount hereof, on the terms and
conditions set forth hereinafter. The principal hereof and any unpaid accrued
interest hereon, unless converted, exchanged or subject to Optional Repayment
(as defined below) as set forth below, shall be due and payable on the earlier
to occur of (i) November 30, 1997 or (ii) when declared due and payable by the
Holder upon the occurrence of an Event of Default (as defined below). Payment
for all amounts due hereunder shall be made by mail to the Registered Address of
the Holder. This 10% Convertible Promissory Note ("Note"), is issued in
connection with the transactions described in the Memorandum of Understanding
(as defined below) and the Note and Warrant Purchase Agreement (as defined
below).
THE OBLIGATIONS DUE UNDER THIS NOTE ARE SECURED BY A SECURITY AGREEMENT
DATED AS OF THE DATE HEREOF AND EXECUTED BY THE COMPANY IN FAVOR OF THE HOLDER.
ADDITIONAL RIGHTS OF THE HOLDER ARE SET FORTH IN THE SECURITY AGREEMENT.
The following is a statement of the rights of the Holder of this Note and
the conditions to which this Note is subject, and to which the Holder hereof, by
the acceptance of this Note, agrees.
1. Definitions. As used in this Note, the following terms, unless the
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context otherwise requires, have the following meanings:
(a) Common Stock shall mean the Company's fully paid and nonassessable
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common stock, $0.01 par value per share, and any capital stock of the
Company which has the right to participate in the distribution of earnings
and assets of the Company without limit as to amount or percentage, into
which Common Stock may hereafter be reclassified by appropriate amendment
to the Company's Certificate of Incorporation.
(b) Company shall mean Concentric Network Corporation, a Florida
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corporation, and includes any corporation which shall succeed to or assume
the obligations of the Company under this Note.
(c) Convertible Securities shall mean any securities of the Company
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convertible into or exchangeable for (through one or more conversions or
exchanges) Common Stock or Options. Convertible Securities shall include
any evidences of indebtedness, any capital stock of the Company or other
securities convertible into or exchangeable for Common Stock.
(d) Direct Placements shall mean the private placement of Common Stock
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in the aggregate purchase price of approximately $15 million that will
occur concurrently with the closing of the Public Offering.
(e) Distribution Agreement shall mean, collectively, the agreement(s)
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between the Company and the Holder to be negotiated and executed pursuant
to a letter agreement of even date herewith pursuant to which the Holder is
entitled to sell some or all of the Company's network and server/host based
products and services.
(f) Holder shall mean Xxxxxxxx Communications Group, Inc., a Delaware
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corporation, and includes any person who shall at the time be the
registered holder of this Note.
(g) Memorandum of Understanding shall mean the Memorandum of
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Understanding between the Company and the Holder dated as of May 30, 1997.
(h) Note and Warrant Purchase Agreement shall mean the Note and
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Warrant Purchase Agreement of even date herewith between the Company and
the Holder.
(i) Obligations shall mean and include all loans, advances, debts,
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liabilities and obligations, howsoever arising, owed by the Company to the
Holder of every kind and description (whether or not evidenced by any this
Note or any note or instrument and whether or not for the payment of
money), now existing or hereafter arising under or pursuant to the terms of
this Note, the Note and Warrant Purchase Agreement and the Transaction
Documents, including all interest, fees, charges, expenses, attorneys' fees
and costs and accountants' fees and costs chargeable to and payable by the
Company hereunder and thereunder, in each case whether direct or indirect,
absolute or contingent, due or to become due, and whether or not arising
after the commencement of a proceeding under Title 11 of
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the United States Code (11 U.S.C. Section 101 et seq.), as amended from
time to time (including post-petition interest) and whether or not allowed
or allowable as a claim in any such proceeding.
(j) Optional Repayment shall mean the dollar for dollar reduction of
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principal and interest hereunder through the application of amounts due to
the Company by the Holder under the terms of the Distribution Agreement of
even date herewith between the Company and the Holder.
(k) Options shall mean rights, options or warrants to subscribe for
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purchase or otherwise acquire either Common Stock or Convertible
Securities.
(l) Original Issue Date shall mean June 19, 1997.
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(m) Preferred Stock Offering shall mean a private offering of the
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Company's authorized and unissued preferred stock having a value of not
less than $40 million (inclusive of an aggregate investment of $17 million
(including $2 million of services to be provided by Holder to the Company)
to be invested by the Holder in connection with such issuance) that
contains rights, preferences, privileges, terms, and conditions reasonably
satisfactory to the Holder and that includes satisfaction of all other
conditions in Section 3.a. of the Memorandum of Understanding.
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(n) Preferred Stock Offering Price shall mean the price per share of
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Preferred Stock to be paid by the lead investor in the Preferred Stock
Offering.
(o) Public Offering shall mean the sale of Common Stock pursuant to the
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Registration Statement on Form S-1 as filed with the Securities and
Exchange Commission on May 16, 1997, as amended from time to time.
(p) Public Offering Price shall mean the initial price to public set
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in the final prospectus of the Company (or in any amendment or supplement
thereto) issued in connection with the Public Offering.
(q) Security Agreement shall mean that Security Agreement even date
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herewith between the Company and the Holder and securing the obligations of
the Company hereunder.
(r) Transaction Documents shall mean the Transaction Documents
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in Section 5.4 of the Note and Warrant Purchase Agreement.
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2. Interest.
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(a) The Company shall pay interest on the unpaid principal
indebtedness evidenced by this Note from the date of this Note until
payment in full of such indebtedness at a per annum rate equal to ten
percent (10%). Interest shall be calculated on the basis of a 360-day year
for the actual number of days elapsed. Except as provided in Section 7 with
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respect to Optional Repayments, interest payable shall be due on November
30, 1997, or at such earlier time that this Note is converted or exchanged
as hereinafter provided.
(b) All agreements between or among the Company and the Holder,
whether now existing or hereafter arising and whether written or oral, are
hereby limited so that in no contingency, whether by reason of demand or
acceleration of the maturity hereof or otherwise, shall the interest
contracted for, charged, received, paid or agreed to be paid to the Holder
exceed the maximum amount permissible under applicable law. If, from any
circumstance whatsoever, interest would otherwise be payable to the Holder
in excess of the maximum lawful amount, the interest payable to the Holder
shall be reduced to the maximum amount permitted under applicable law; and
if from any circumstance the Holder shall ever receive anything of value
deemed interest by applicable law in excess of the maximum lawful amount,
an amount equal to any excessive interest shall be applied to the reduction
of the principal hereof and not to the payment of interest, or if such
excessive interest exceeds the unpaid balance of principal hereof, such
excess shall be refunded to the Company. All interest paid or agreed to be
paid to the Holder shall, to the extent permitted by applicable law, be
amortized, prorated, allocated, and/or spread throughout the full period
until payment in full of the principal (including the period of any renewal
or extension hereof) so that the interest hereon for such full period shall
not exceed the maximum amount permitted by applicable law. This paragraph
shall control all agreements between or among the Holder and the Company.
3. Events of Default.
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3.1 Events of Default. Each of the following events shall
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constitute, and be referred to herein as, an "Event of Default":
(a) the Company shall default in the payment of principal or any part
of the principal of this Note when the same shall become due and payable,
whether at any stated due date, at maturity, or by acceleration or
otherwise; or
(b) the Company shall default in the payment of any interest on this
Note when the same shall become due and payable; or
(c) the Company shall default in the payment when due of any
principal or interest or shall default under or fail to perform or observe
any material term, covenant, or agreement contained in any bank loan or
financing document evidencing an obligation of the Company in excess of
$125,000, including without limitation any obligation for borrowed money,
or
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any other agreement, document, or instrument evidencing an obligation in
excess of $250,000 to which the Company is a party or to which it or its
assets are bound, including without limitation any obligation for the
purchase or lease price of property, and such default or failure to perform
shall continue and remain unwaived by the Company for more than 30 days or
any applicable period of grace therein specified, whichever is longer,
except where the Company is in good faith and through appropriate
proceedings contesting such default or failure to perform; or
(d) the Company shall default in the performance of or compliance with
any material binding covenant, agreement, condition, or term contained in
the Transaction Documents, the escrow agreement described in Section 2.c of
the Memorandum of Understanding, the Employee Services and Staffing
Agreement described in Section 2.d of the Memorandum of Understanding, any
other agreement, understanding, arrangement, or concession described in the
Memorandum of Understanding in effect at any time prior to the satisfaction
of the debt evidenced by this Note, it being understood that an outstanding
account payable of up to sixty days pursuant to any such agreement will not
be deemed an Event of Default under this Section 3.1, and such default
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shall not have been remedied within 10 days after written notice thereof
shall have been given to the Company by the Holder; or
(e) The Company shall make an assignment for the benefit of creditors,
or shall admit in writing its inability to pay its debts as they become
due, or any order for relief is entered against the Company or any
subsidiary under any bankruptcy laws or the Company or any subsidiary shall
file any petition or answer seeking for itself any reorganization,
arrangement, composition, readjustment, dissolution or similar relief under
any present or future statute, law or regulation, or shall file an answer
admitting the material allegation of a petition filed against the Company
in any such proceeding, or shall seek or consent to the acquiesce in the
appointment of any trustee, receiver or liquidator of the Company or of all
or any substantial part of the properties of the Company, or the Company or
its board of directors or a majority of its stockholders shall take any
action looking to the dissolution or liquidation of the Company and such
default shall not have been remedied within 60 days after written notice
thereof shall have been given to the Company; or
(f) within 60 days after the commencement of any proceeding against the
Company seeking any reorganization, arrangement, composition, readjustment,
liquidation, dissolution or similar relief under any present or future
statute, law or regulation, such proceeding shall not have been dismissed
or, within 60 days after the appointment without the consent or
acquiescence of the Company of any trustee, receiver or liquidator of the
Company or of all or any substantial part of the properties of the Company
such appointment shall not have been vacated; or
(g) a final judgment which, together with other outstanding final
judgments against the Company, exceeds an aggregate of $125,000 shall be
rendered against the Company and, within 60 days after entry thereof, such
judgment shall not have been discharged or execution
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thereof stayed pending appeal or, within 10 days after the expiration of
any such stay, such judgment shall not have been discharged.
3.2 Rights of Holder Upon Event of Default. Upon the occurrence or
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existence of any Event of Default and at any time thereafter during the
continuance of such Event of Default, all outstanding Obligations payable by the
Company shall be immediately due and payable without presentment, demand,
protest or any other notice of any kind, all of which are hereby expressly
waived, anything contained herein or in the other Transaction Documents to the
contrary notwithstanding. Upon the occurrence or existence of any Event of
Default, Holder may exercise any other right, power or remedy granted to it by
the Transaction Documents, including the Security Agreement, or otherwise
permitted to it by law or equity, either by suit or by action at law, or both.
4. No Prepayment. Except upon the prior written consent of the Holder,
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the Company may not prepay, in whole or in part, the principal sum, or accrued
interest of this Note.
5. Conversion.
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5.1 Conversion. Upon the closing of the sale of Common Stock in the
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Public Offering totaling no less than $40 million (including, for purposes of
this amount, an aggregate of $17 million (including $2 million of services to
be provided by Holder to the Company) to be invested by Holder in connection
with this Note and a private placement to occur concurrently with the IPO), this
Note shall be automatically converted into shares of Common Sock in accordance
with the provisions of Section 5.2 hereof. The number of shares into which this
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Note shall be converted shall be determined by dividing the aggregate principal
amount of this Note together with all accrued and unpaid interest to the date of
conversion by the Public Offering Price. Other than the automatic conversion of
the Note pursuant to this Section 5, it is understood that the Holder's
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additional investment in the Public Offering is contingent upon satisfactory
completion of due diligence by the Holder and approval by the board of directors
of the Holder.
5.2 Conversion Procedure.
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(a) The conversion of this Note pursuant to Section 5.1 hereof shall
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be deemed to have been effected as of the closing of the Public Offering.
At such time as such conversion has been effected, the rights of the Holder
of this Note will cease and the Holder will be deemed to be the holder of
record of the shares of Common Stock represented thereby.
(b) As soon as possible after a conversion has been effected (but in
any event within ten business days in the case of subparagraph (i) below),
the Company will deliver to the Holder:
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(i) A certificate or certificates representing the number
of shares of Common Stock issuable by reason of such conversion in such
name or names and such denomination or denominations as the converting
Holder has specified; and
(ii) payment in an amount equal to the principal and
interest payable to the Holder in lieu of a fractional share of Common
Stock.
(c) The issuance of certificate(s) for shares of Common Stock upon
conversion of this Note will be made without charge to the Holder for any
issuance tax in respect thereof or other cost incurred by the Company in
connection with such conversion and the related issuance of shares of Common
Stock. Upon conversion of this Note, the Company will take all such actions
as are reasonably necessary in order to insure that the Common Stock
issuable with respect to such conversion will be validly issued, fully paid
and nonassessable.
(d) The Company will not close its books against the transfer of this
Note or of Common Stock issued or issuable upon conversion of this Note in
any manner which interferes with the timely conversion of this Note.
5.3 Reservation of Common Stock Issuable Upon Conversion. The Company shall
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at all times reserve and keep available out of its authorized but unissued
shares of Common Stock, solely for the purpose of effecting the conversion of
this Note, such number of its shares of Common Stock as shall from time to time
be sufficient to effect a conversion of this Note and if at any time the number
of authorized but unissued shares of Common Stock shall not be sufficient to
effect the conversion of this Note, the Company shall promptly seek such
corporate action as may, in the opinion of its counsel, be necessary to increase
its authorized but unissued shares of Common Stock to such number of shares as
shall be sufficient for such purpose.
5.4 Payment of Taxes. The Company shall pay all issue taxes and other
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governmental charges (other than income or other taxes imposed upon interest or
other profits realized by the recipient) that may be imposed in respect of the
issue or delivery of shares of Common Stock or other securities or property upon
conversion of this Note. The Company shall not be obligated to pay any tax or
other charge imposed in connection with any transfer involved in the issue and
delivery of shares of Common Stock or other securities in any name other than
that in which this Note is registered.
5.5 Reclassification; Recapitalization. In the event of any
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reclassification of the Common Stock or recapitalization involving Common Stock
(other than a change in par value or as a result of a stock dividend,
subdivision, or combination of shares), the Holder shall thereafter be entitled
to receive and provisions shall be made therefor in an agreement relating to the
reclassification or recapitalization, upon conversion of this Note, the kind and
number of shares of Common Stock or other securities or property (including
cash) of the Company, to which the Holder would have been entitled if he had
held the number of shares of Common Stock of the Company into which this Note
was convertible immediately prior to such reclassification or recapitalization;
and in any such case
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appropriate adjustment shall be made in the application of the provisions herein
set forth with respect to the rights and interests thereafter of the Holder to
the end that the provisions set forth herein, shall thereafter be applicable, as
nearly as reasonably may be, in relation to any shares, other securities, or
property thereafter receivable upon conversion of this Note.
5.6 Fractional Shares. No fractional share shall be issued upon the
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conversion of this Note. All shares of Common Stock (including fractions
thereof) issuable upon conversion of this Note by the Holder shall be aggregated
for purposes of determining whether the conversion would result in the issuance
of any fractional share. If, after such aggregation, the conversion would
result in the issuance of a fraction of a share of Common Stock, the Company
shall, in lieu of issuing any fractional share, pay the Holder otherwise
entitled to such fraction a sum in cash equal to the remainder of principal and
interest otherwise not convertible pursuant to such conversion.
5.7 Purchase Rights. If at any time the Company grants, issues, or
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sells any Options, Convertible Securities, or rights to purchase stock,
warrants, securities, or other property pro rata to the record holders of any
class of Common Stock except with respect to underwriters in the Public Offering
(the "Purchase Rights"), then the Holder will be entitled to acquire, upon the
terms applicable to such Purchase Rights, the Aggregate Purchase rights which
such Holder could have acquired if such Holder had held the number of shares of
Common Stock acquirable upon conversion of this Note immediately before the date
on which a record is taken, the date as of which the record holders of Common
Stock are to be determined for the grant, issue, or sale of such Purchase
Rights.
6. Conversion to Preferred Stock.
-----------------------------
6.1 Conversion. Upon the closing of the Preferred Stock Offering,
----------
satisfactory completion of due diligence by the Holder, and approval of the
conversion under this Section 6 by the board of directors of the Holder, this
---------
Note shall be automatically converted into shares of Preferred Stock in
accordance with the provisions of this Section 6. The number of shares of
---------
Preferred Stock into which this Note shall be converted shall be determined by
dividing the aggregate principal amount of this Note, together with all accrued
and unpaid interest to the date of conversion by the Preferred Stock Offering
Price. The conversion of the Note pursuant to this Section 6 shall be subject
only to the satisfaction of each of the following:
(a) the company shall have completed the private financing
totaling no less than $40 million (including an aggregate of $17
million (including $2 million of services to be provided by Holder to
the Company) to be provided by Holder in connection with the private
financing) by October 31, 1997, and the conversion shall be effected
in connection therewith;
(b) the Company shall have authorized shares of Preferred Stock
sufficient to effect the conversion;
(c) the Public Offering shall have been terminated and no shares
of Common Stock shall have been sold in connection therewith; and
-8-
(d) the terms applicable to the conversion and the rights and
preferences of the Preferred Stock to be received by the Holder shall, in
the Holder's reasonable judgment, be reasonably satisfactory to Holder and
shall be equivalent to the terms, rights, and preferences of the shares of
Preferred Stock issued to the lead investor, directly or indirectly, in
connection with the exchange.
6.2 Procedure for Exchange. The exchange shall be effected by written
----------------------
notice to the Holder specifying (i) the date of exchange, and (ii) information
regarding the Preferred Stock and the transactions contemplated by the Company,
directly and indirectly, in connection with the exchange. On or after the date
of exchange as specified in such notice and upon the satisfaction of the
conditions set forth in Section 6.1 hereof, the Holder shall surrender to the
-----------
Company, at the place specified in such notice, this Note to effect the
exchange.
7. Optional Repayment. In the event the Note is not converted pursuant
------------------
to Sections 5 or 6 above, the Holder may elect Optional Repayment in lieu of
---------------
payment in principal and interest at maturity in accordance with the terms of
this Note. Optional Repayments shall be applied to the payment of interest
which is due and payable and thereafter to the principal balance. The Holder,
after electing to accept Optional Repayment, may terminate the election upon 30
days written notice to the Company and all remaining principal and interest
hereunder shall be immediately due and payable.
8. Assignment. Subject to the restrictions on transfer described in
-----------
Section 16 below, the rights and obligations of the Company and the Holder of
----------
this Note shall be binding upon and benefit the successors, assigns, heirs,
administrators and transferees of the parties.
9. Waiver and Amendment. Any provision of this Note may be amended,
--------------------
waived or modified upon the written consent of the Company and the Holder.
10. Treatment of Note. To the extent permitted by generally accepted
-----------------
accounting principles, the Company will treat, account and report the Note as
debt and not equity for accounting purposes and with respect to any returns
filed with federal, state or local tax authorities.
11. Notices. Except as otherwise provided herein, any notice, request or
-------
other communication required or permitted hereunder shall be in writing and
shall be deemed to have been duly given if personally delivered or if
telegraphed or mailed by registered or certified mail, postage prepaid, at the
respective addresses of the parties as set forth herein. Any party hereto may
by notice so given change its address for future notice hereunder. Notice shall
conclusively be deemed to have been given when personally delivered or when
deposited in the mail or telegraphed in the manner set forth above and shall be
deemed to have been received when delivered.
-9-
12. No Stockholder Rights. Nothing contained in this Note shall be
---------------------
construed as conferring upon the Holder or any other person the right to vote or
to consent or to receive notice as a stockholder in respect of meetings of
stockholders for the election of directors of the Company or any other matters
or any rights whatsoever as a stockholder of the Company; and no dividends or
interest shall be payable or accrued in respect of this Note or the interest
represented hereby or the Common Stock obtainable hereunder upon conversion
until, and only to the extent that, this Note shall have been converted.
13. Course of Dealing. No course of dealing between the Company and the
-----------------
Holder or any delay on the part of the Holder in exercising any rights hereunder
shall operate as a waiver of any rights of the Holder.
14. Waiver of Notice. Except as otherwise expressly specified in this
----------------
Note, the Company and each surety, guarantor, endorser, or other party liable
for payment on his Note hereby waive diligence, presentment, demand, protest,
and notice of any kind whatsoever, and agree that their liability on this Note
shall not be affected by any renewal or extension in the time of payment hereof,
or any indulgences, or by any taking, release, or change in any security for
payment of this Note.
15. Costs and Fees. If this Note is placed in the hands of an attorney
--------------
for collection after occurrence of an Event of Default, or if it is collected
through legal or bankruptcy proceedings, the Company agrees to pay all costs of
collection, including but not limited to, court costs and reasonable attorneys'
fees.
16. Transfer. With respect to any offer, sale, or other disposition of
--------
this Note, Holder will give written notice to Company prior thereto, describing
briefly the manner thereof, together with a written opinion of Holder's counsel,
to the effect that such offer, sale, or other distribution may be effected
without registration or qualification (under any federal or state law then in
effect). Upon receiving such written notice and reasonably satisfactory
opinion, Company, within seven (7) business days, shall notify Holder that
Holder may sell or otherwise dispose of this Note or such securities, all in
accordance with the terms of the notice delivered to Company. If a
determination has been made pursuant to this Section 16 that the opinion of
----------
counsel for Holder is not reasonably satisfactory to Company, Company shall so
notify Holder promptly after such determination has been made. Each Note thus
transferred shall bear a legend as to the applicable restrictions on
transferability in order to ensure compliance with the Act, unless in the
opinion of counsel for Company such legend is not required in order to ensure
compliance with the Act. Company may issue stop transfer instructions to its
transfer agent in connection with such restrictions. Subject to the foregoing,
transfers of this Note shall be registered upon registration books maintained
for such purpose by or on behalf of Company.
17. Governing Law. This Note shall be governed by and construed in
-------------
accordance with the laws of the State of California, excluding that body of law
relating to conflict of laws.
-10-
18. Heading; References. All headings used herein are sued for
-------------------
convenience only and shall not be used to construe or interpret this Note.
Except where otherwise indicted, all references herein to Sections refer to
Sections hereof.
IN WITNESS WHEREOF, the Company has caused this Note to be issued the 19th
day of June, 1997.
CONCENTRIC NETWORK CORPORATION
By: /s/ Xxxxx Xxxxxxxx
-------------------------------------
Xxxxx Xxxxxxxx, President
-11-
EXHIBIT B
THIS WARRANT HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "ACT") OR ANY STATE SECURITIES LAWS. NO SALE OR DISPOSITION MAY BE
EFFECTED WITHOUT (I) EFFECTIVE REGISTRATION STATEMENTS RELATED THERETO, (II) AN
OPINION OF COUNSEL OR OTHER EVIDENCE, REASONABLY SATISFACTORY TO THE COMPANY,
THAT SUCH REGISTRATIONS ARE NOT REQUIRED, (III) RECEIPT OF NO-ACTION LETTERS
FROM THE APPROPRIATE GOVERNMENTAL AUTHORITIES, OR (IV) OTHERWISE COMPLYING WITH
THE PROVISIONS OF SECTION 7 OF THIS WARRANT.
June 19, 1997
CONCENTRIC NETWORK CORPORATION
COMMON STOCK PURCHASE WARRANT
THIS CERTIFIES THAT, for value received, Xxxxxxxx Communications Group,
Inc., a Delaware corporation, is entitled to subscribe for and purchase, subject
to the provisions and upon the terms and conditions hereinafter set forth, that
number of shares of the fully paid and nonassessable Common Stock of Concentric
Network Corporation, a Florida corporation (the "Company") equal to the quotient
obtained by dividing: (X) where X is the principal amount of the Note (as
defined below) held by the holder of this Warrant plus accrued interest thereon,
by (Y) where Y is the product of (i) 4 and (ii) (Z), where Z is the price per
share of the first to occur of the following: (a) the public offering price per
share of the Company's Common Stock having an aggregate price to the public of
at least $40 million (the "IPO") or (b), the private financing price per share
of the Company's Preferred Stock having an aggregate price of at least $40
million (including for purposes of determining the aggregate price of the
private financing, the principal amount of the Note, a $12 million equity
investment to be made by the Holder in connection with the private financing
and services to be provided by the Holder to the Company valued for purposes of
this Warrant at $2 million) (the "Private Financing"). Each such Share (as
defined below) shall be purchasable at a per share purchase price equal to fifty
percent of the public offering price per share or the private financing price
per share, as the case may be (as defined below), (such price and such other
price as shall result, from time to time, from the adjustments specified in
Section 4 hereof is herein referred to as the "Warrant Price"). As used herein,
(a) the term "Date of Grant" shall mean June 19, 1997, (b) the term "Other
Warrants" shall mean any other warrants issued by the Company in connection with
the transaction with respect to which this Warrant was issued, and any warrant
issued upon transfer or partial exercise of this Warrant, (c) the term "Shares"
shall mean the Common Stock to be issued by the Company hereunder and any stock
into or for which any such Common Stock may hereafter be converted or exchanged,
(d) the term "Warrant" as used herein shall be deemed to include Other Warrants
unless the context clearly requires otherwise, and (e) the term "Note" shall
mean the note issued by the Company to the holder of this Warrant pursuant to
the Note and Warrant Purchase Agreement dated June 19, 1997.
1. Term. The purchase right represented by this Warrant is exercisable,
----
in whole or in part, at any time and from time to time from the Date of Grant
through the earliest to occur of (i) five years after the Date of Grant, or (ii)
immediately prior to any consolidation or merger of the Company with or into any
entity, or any other corporate reorganization in which the Company shall not be
the continuing or surviving
entity of such consolidation, merger or reorganization or any transaction, any
series of related transactions in which in excess of 50% of Company's voting
power is transferred, or any sale of all or substantially all of the assets of
the Company, other than the proposed reincorporation of the Company into
Delaware through the merger of the Company with and into Concentric Network
Corporation, a Delaware Corporation.
2. Method of Exercise; Payment; Issuance of New Warrant. Subject to
----------------------------------------------------
Section 1 hereof, the purchase right represented by this Warrant may be
exercised by the holder hereof, in whole or in part and from time to time, at
the election of the holder hereof, by (a) the surrender of this Warrant (with
the notice of exercise substantially in the form attached hereto as Exhibit A-1
-----------
duly completed and executed) at the principal office of the Company and by the
payment to the Company, by certified or bank check, or by Wire Transfer to an
account designated by the Company (a "Wire Transfer") of an amount equal to the
then applicable Warrant Price multiplied by the number of Shares then being
purchased. The person or persons in whose name(s) any certificate(s)
representing the Shares shall be issuable upon exercise of this Warrant shall be
deemed to have become the holder(s) of record of, and shall be treated for all
purposes as the record holder(s) of, the shares represented thereby (and such
shares shall be deemed to have been issued) immediately prior to the close of
business on the date or dates upon which this Warrant is exercised. In the event
of any exercise of the rights represented by this Warrant, certificates for the
shares of stock so purchased shall be delivered to the holder hereof as soon as
possible and in any event within thirty (30) days after such exercise and,
unless this Warrant has been fully exercised or expired, a new Warrant
representing the portion of the Shares, if any, with respect to which this
Warrant shall not then have been exercised shall also be issued to the holder
hereof as soon as possible and in any event within such thirty-day period.
3. Stock Fully Paid; Reservation of Shares. All Shares that may be issued
---------------------------------------
upon the exercise of the rights represented by this Warrant will, upon issuance
pursuant to the terms and conditions herein, be fully paid and nonassessable,
and free from all taxes, liens and charges with respect to the issue thereof.
During the period within which the rights represented by this Warrant may be
exercised, the Company will at all times have authorized, and reserved for the
purpose of the issue upon exercise of the purchase rights evidenced by this
Warrant, a sufficient number of shares of its capital stock to provide for the
exercise of the rights represented by this Warrant.
4. Adjustment of Warrant Price and Number of Shares. The number and kind
------------------------------------------------
of securities purchasable upon the exercise of this Warrant and the Warrant
Price shall be subject to adjustment from time to time upon the occurrence of
certain events, as follows:
(a) Reclassification. In case of any reclassification or change of
----------------
securities of the class issuable upon exercise of this Warrant (other than a
change in par value, or from par value to no par value, or from no par value to
par value, or as a result of a subdivision or combination), the Company shall
duly execute and deliver to the holder of this Warrant a new Warrant (in form
and substance reasonably satisfactory to the holder of this Warrant), so that
the holder of this Warrant shall have the right to receive, at a total purchase
price not to exceed that payable upon the exercise of the unexercised portion of
this Warrant, and in lieu of the Shares theretofore issuable upon exercise of
this Warrant, the kind and amount of shares of stock, other securities, money
and property receivable upon such reclassification or change by a holder of the
number of Shares then purchasable under this Warrant. Such new Warrant shall
provide for adjustments that shall be as nearly equivalent as may be practicable
to the adjustments provided for in this Section 4. The provisions of this
subparagraph (a) shall similarly apply to successive reclassifications or
changes.
(b) Subdivision or Combination of Shares. If the Company at any
------------------------------------
time while this Warrant remains outstanding and unexpired shall subdivide or
combine its outstanding shares of capital stock
- 2 -
into which this Warrant is exercisable, the Warrant Price shall be
proportionately decreased in the case of a subdivision or increased in the case
of a combination, effective at the close of business on the date the subdivision
or combination becomes effective.
(c) Stock Dividends and Other Distributions. If the Company at any
---------------------------------------
time while this Warrant is outstanding and unexpired shall (i) pay a dividend
with respect to its capital stock issuable hereunder payable in the same class
or series of capital stock, or (ii) make any other distribution of capital stock
with respect to its capital stock (except any distribution specifically provided
for in Sections 4(a) and 4(b)), then the Warrant Price shall be adjusted, from
and after the date of determination of shareholders entitled to receive such
dividend or distribution, to that price determined by multiplying the Warrant
Price in effect immediately prior to such date of determination by a fraction
(i) the numerator of which shall be the total number of shares of the applicable
class or series of capital stock outstanding immediately prior to such dividend
or distribution, and (ii) the denominator of which shall be the total number of
shares of such class or series of capital stock outstanding immediately after
such dividend or distribution.
(d) Adjustment of Number of Shares. Upon each adjustment in the
------------------------------
Warrant Price, the number of Shares purchasable hereunder shall be adjusted, to
the nearest whole share, to the product obtained by multiplying the number of
Shares purchasable immediately prior to such adjustment in the Warrant Price by
a fraction, the numerator of which shall be the Warrant Price immediately prior
to such adjustment and the denominator of which shall be the Warrant Price
immediately thereafter.
5. Notice of Adjustments. Whenever the Warrant Price or the number of
---------------------
Shares purchasable hereunder shall be adjusted pursuant to Section 4 hereof, the
Company shall make a certificate signed by its chief financial officer setting
forth, in reasonable detail, the event requiring the adjustment, the amount of
the adjustment, the method by which such adjustment was calculated, and the
Warrant Price and the number of Shares purchasable hereunder after giving effect
to such adjustment, and shall cause copies of such certificate to be mailed
(without regard to Section 12 hereof, by first class mail, postage prepaid) to
the holder of this Warrant at such holder's last known address.
6. Fractional Shares. No fractional Shares will be issued in connection
-----------------
with any exercise hereunder, but in lieu of such fractional shares the Company
shall make a cash payment therefor based on the fair market value of the Shares
on the date of exercise as reasonably determined in good faith by the Company's
Board of Directors.
7. Compliance with Act; Disposition of Warrant or Shares.
------------------------------------------------------
(a) Compliance with Act. The holder of this Warrant, by acceptance
-------------------
hereof, agrees that this Warrant, and the Shares to be issued upon exercise
hereof are being acquired for investment and that such holder will not offer,
sell or otherwise dispose of this Warrant, or any Shares except under
circumstances which will not result in a violation of the Act or any applicable
state securities laws. Upon exercise of this Warrant, unless the Shares being
acquired are registered under the Act and any applicable state securities laws
or an exemption from such registration is available, the holder hereof shall
confirm in writing that the Shares so purchased are being acquired for
investment and not with a view toward distribution or resale in violation of the
Act and shall confirm such other matters related thereto as may be reasonably
requested by the Company. This Warrant and all Shares issued upon exercise of
this Warrant (unless registered under the Act and any applicable state
securities laws) shall be stamped or imprinted with a legend in substantially
the following form:
- 3 -
"THE SECURITIES EVIDENCED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAWS. NO SALE
OR DISPOSITION MAY BE EFFECTED WITHOUT (i) EFFECTIVE REGISTRATION
STATEMENTS RELATED THERETO, (ii) AN OPINION OF COUNSEL OR OTHER EVIDENCE,
REASONABLY SATISFACTORY TO THE COMPANY, THAT SUCH REGISTRATIONS ARE NOT
REQUIRED, (iii) RECEIPT OF NO-ACTION LETTERS FROM THE APPROPRIATE
GOVERNMENTAL AUTHORITIES, OR (iv) OTHERWISE COMPLYING WITH THE PROVISIONS
OF SECTION 7 OF THE WARRANT UNDER WHICH THESE SECURITIES WERE ISSUED,
DIRECTLY OR INDIRECTLY."
Said legend shall be removed by the Company, upon the request of a holder,
at such time as the restrictions on the transfer of the applicable security
shall have terminated. In addition, in connection with the issuance of this
Warrant, the holder specifically represents to the Company by acceptance of this
Warrant as follows:
1) The holder is aware of the Company's business affairs and financial
condition, and has acquired information about the Company sufficient to
reach an informed and knowledgeable decision to acquire this Warrant. The
holder is acquiring this Warrant for its own account for investment
purposes only and not with a view to, or for the resale in connection with,
any "distribution" thereof in violation of the Act.
2) The holder understands that this Warrant has not been registered
under the Act in reliance upon a specific exemption therefrom, which
exemption depends upon, among other things, the bona fide nature of the
holder's investment intent as expressed herein.
3) The holder further understands that this Warrant must be held
indefinitely unless subsequently registered under the Act and qualified
under any applicable state securities laws, or unless exemptions from
registration and qualification are otherwise available. The holder is aware
of the provisions of Rule 144, promulgated under the Act.
(b) Disposition of Warrant or Shares. With respect to any offer,
--------------------------------
sale or other disposition of this Warrant or any Shares acquired pursuant to the
exercise of this Warrant prior to registration of such Warrant or Shares, the
holder hereof agrees to give written notice to the Company prior thereto,
describing briefly the manner thereof, together with a written opinion of such
holder's counsel, or other evidence, if reasonably requested by the Company, to
the effect that such offer, sale or other disposition may be effected without
registration or qualification (under the Act as then in effect or any federal or
state securities law then in effect) of this Warrant or the Shares and
indicating whether or not under the Act certificates for this Warrant or the
Shares to be sold or otherwise disposed of require any restrictive legend as to
applicable restrictions on transferability in order to ensure compliance with
such law. Promptly upon receiving such written notice and reasonably
satisfactory opinion or other evidence, if so requested, the Company, as
promptly as practicable but no later than fifteen (15) days after receipt of the
written notice, shall notify such holder that such holder may sell or otherwise
dispose of this Warrant or such Shares, all in accordance with the terms of the
notice delivered to the Company. If a determination has been made pursuant to
this Section 7(b) that the opinion of counsel for the holder or other evidence
is not reasonably satisfactory to the Company, the Company shall so notify the
holder promptly with details thereof after such determination has been made.
Notwithstanding the foregoing, this Warrant or such Shares may, as to such
federal laws, be offered, sold or otherwise disposed of in accordance with Rule
144 or 144A under the Act, provided that the
- 4 -
Company shall have been furnished with such information as the Company may
reasonably request to provide a reasonable assurance that the provisions of Rule
144 or 144A have been satisfied. Each certificate representing this Warrant or
the Shares thus transferred (except a transfer pursuant to Rule 144 or 144A)
shall bear a legend as to the applicable restrictions on transferability in
order to ensure compliance with such laws, unless in the aforesaid opinion of
counsel for the holder, such legend is not required in order to ensure
compliance with such laws. The Company may issue stop transfer instructions to
its transfer agent in connection with such restrictions.
(c) Applicability of Restrictions. Neither any restrictions of any
-----------------------------
legend described in this Warrant nor the requirements of Section 7(b) above
shall apply to any transfer or grant of a security interest in, this Warrant (or
the Shares obtainable upon exercise thereof) or any part hereof (i) to a partner
of the holder if the holder is a partnership, or (ii) to a partnership of which
the holder is a partner; provided, however, in any such transfer, if applicable,
-------- -------
the transferee shall agree in writing to be bound by the terms of this Warrant
as if an original signatory hereto.
8. Rights as Shareholders; Information. No holder of this Warrant, as
-----------------------------------
such, shall be entitled to vote or receive dividends or be deemed the holder of
Shares, nor shall anything contained herein be construed to confer upon the
holder of this Warrant, as such, any of the rights of a shareholder of the
Company or any right to vote for the election of directors or upon any matter
submitted to shareholders at any meeting thereof, or to receive notice of
meetings, or to receive dividends or subscription rights or otherwise until this
Warrant shall have been exercised and the Shares purchasable upon the exercise
hereof shall have become deliverable, as provided herein. Notwithstanding the
foregoing, the Company will transmit to the holder of this Warrant such
information, documents and reports as are generally distributed to the holders
of any class or series of the securities of the Company concurrently with the
distribution thereof to the shareholders.
9. Right to Convert Warrant into Stock: Net Issuance.
--------------------------------------------------
(a) Right to Convert. In addition to and without limiting the
----------------
rights of the holder under the terms of this Warrant, the holder shall have the
right to convert this Warrant or any portion thereof (the "Conversion Right")
into Shares as provided in this Section 9 at any time or from time to time after
the sooner of the completion of the Company's IPO or Private Financing during
the term of this Warrant. Upon exercise of the Conversion Right with respect to
a particular number of shares subject to this Warrant (the "Converted Warrant
Shares"), the Company shall deliver to the holder (without payment by the holder
of any exercise price or any cash or other consideration) (X) that number of
fully paid and nonassessable Shares equal to the quotient obtained by dividing
the value of this Warrant (or the specified portion hereof) on the Conversion
Date (as defined in subsection (b) hereof), which value shall be determined by
dividing (Y) the public offering price per share or the private financing price
per share, as the case may be, by 2.
Expressed as a formula, such conversion shall be computed as follows:
Y
X = --
2
Where: X = the number of shares of Common Stock that may
be issued to holder
Y = the IPO price per share or the Private Financing price per
share, as the case may be
- 5 -
No fractional shares shall be issuable upon exercise of the Conversion
Right, and, if the number of shares to be issued determined in accordance with
the foregoing formula is other than a whole number, the Company shall pay to the
holder an amount in cash equal to the fair market value of the resulting
fractional share on the Conversion Date (as hereinafter defined). For purposes
of Section 9 of this Warrant, shares issued pursuant to the Conversion Right
shall be treated as if they were issued upon the exercise of this Warrant.
(b) Method of Exercise. The Conversion Right may be exercised by
------------------
the holder by the surrender of this Warrant at the principal office of the
Company together with a written statement specifying that the holder thereby
intends to exercise the Conversion Right and indicating the number of shares
subject to this Warrant which are being surrendered (referred to in Section 9(a)
hereof as the Converted Warrant Shares) in exercise of the Conversion Right.
Such conversion shall be effective upon receipt by the Company of this Warrant
together with the aforesaid written statement, or on such later date as is
specified therein (the "Conversion Date"), and, at the election of the holder
hereof, may be made contingent upon the closing of the sale of the Company's
Common Stock to the public in a public offering pursuant to a Registration
Statement under the Act (a "Public Offering"). Certificates for the shares
issuable upon exercise of the Conversion Right and, if applicable, a new warrant
evidencing the balance of the shares remaining subject to this Warrant, shall be
issued as of the Conversion Date and shall be delivered to the holder within
thirty (30) days following the Conversion Date.
10. Representations and Warranties. The Company represents and warrants to
------------------------------
the holder of this Warrant as follows:
(a) This Warrant has been duly authorized and executed by the
Company and is a valid and binding obligation of the Company enforceable in
accordance with its terms, subject to laws of general application relating to
bankruptcy, insolvency and the relief of debtors and the rules of law or
principles at equity governing specific performance, injunctive relief and other
equitable remedies;
(b) The Shares have been, or will be upon the closing of the IPO or
Private Financing, duly authorized and reserved for issuance by the Company and,
when issued in accordance with the terms hereof will be validly issued, fully
paid and non-assessable;
(c) The rights, preferences, privileges and restrictions granted to
or imposed upon the Shares and the holders thereof are as set forth in the
Amended and Restated Articles of Incorporation of the Company as they have been
and may be amended from time to time;
(d) The execution and delivery of this Warrant are not, and the
issuance of the Shares upon exercise of this Warrant in accordance with the
terms hereof will not be, inconsistent with the Company's Amended and Restated
Articles of Incorporation or Bylaws, as they have been and may be amended from
time to time, do not and will not contravene any law, governmental rule or
regulation, judgment or order applicable to the Company, and do not and will not
conflict with or contravene any provision of, or constitute a default under, any
indenture, mortgage, contract or other instrument of which the Company is a
party or by which it is bound or require the consent or approval of, the giving
of notice to, the registration or filing with or the taking of any action in
respect of or by, any Federal, state or local
- 6 -
government authority or agency or other person, except for the filing of notices
pursuant to federal and state securities laws, which filings will be effected by
the time required thereby; and
(e) There are no actions, suits, audits, investigations or
proceedings pending or, to the knowledge of the Company, threatened against the
Company in any court or before any governmental commission, board or authority
which, if adversely determined, will have a material adverse effect on the
ability of the Company to perform its obligations under this Warrant.
11. Modification and Waiver. This Warrant and any provision hereof may be
-----------------------
changed, waived, discharged or terminated only by an instrument in writing
signed by the party against which enforcement of the same is sought.
12. Notices. Any notice, request, communication or other document
-------
required or permitted to be given or delivered to the holder hereof or the
Company shall be delivered, or shall be sent by certified or registered mail,
postage prepaid, to each such holder at its address as shown on the books of the
Company or to the Company at the address indicated therefor on the signature
page of this Warrant.
13. Lost Warrants or Stock Certificates. The Company covenants to the
-----------------------------------
holder hereof that, upon receipt of evidence reasonably satisfactory to the
Company of the loss, theft, destruction or mutilation of this Warrant or any
stock certificate and, in the case of any such loss, theft or destruction, upon
receipt of an indemnity reasonably satisfactory to the Company, or in the case
of any such mutilation upon surrender and cancellation of such Warrant or stock
certificate, the Company will make and deliver a new Warrant or stock
certificate, of like tenor, in lieu of the lost, stolen, destroyed or mutilated
Warrant or stock certificate.
14. Descriptive Headings. The descriptive headings of the several
--------------------
paragraphs of this Warrant are inserted for convenience only and do not
constitute a part of this Warrant. The language in this Warrant shall be
construed as to its fair meaning without regard to which party drafted this
Warrant.
15. Governing Law. This Warrant shall be construed and enforced in
-------------
accordance with, and the rights of the parties shall be governed by, the laws of
the State of New York.
16. Severability. The invalidity or unenforceability of any provision of
------------
this Warrant in any jurisdiction shall not affect the validity or enforceability
of such provision in any other jurisdiction, or affect any other provision of
this Warrant, which shall remain in full force and effect.
18. Entire Agreement; Modification. This Warrant constitutes the entire
------------------------------
agreement between the parties pertaining to the subject matter contained in it
and supersedes all prior and contemporaneous agreements, representations, and
undertakings of the parties, whether oral or written, with respect to such
subject matter.
CONCENTRIC NETWORK CORPORATION
a Florida corporation
By: /s/ XXXXX X. XXXXXXXX
-----------------------------------
Name:
---------------------------------
Title:
--------------------------------
Address:
------------------------------
------------------------------
- 7 -
EXHIBIT A-1
NOTICE OF EXERCISE
------------------
To: CONCENTRIC NETWORK CORPORATION (the "Company")
1. The undersigned hereby:
[_] elects to purchase __________ shares of Common Stock of the Company
pursuant to the terms of the attached Warrant, and tenders herewith
payment of the purchase price of such shares in full; or
[_] elects to exercise its net issuance rights pursuant to Section 9 of
the attached Warrant with respect to __________ shares of Common
Stock.
2. Please issue a certificate or certificates representing said shares in
the name of the undersigned or in such other name or names as are specified
below:
________________________________________
(Name)
________________________________________
(Address)
________________________________________
(Address)
3. The undersigned represents that the aforesaid shares being acquired for
the account of the undersigned for investment and not with a view to, or for
resale in connection with, the distribution thereof and that the undersigned has
no present intention of distributing or reselling such shares, all except as in
compliance with applicable securities laws.
_______________
(Date)
__________________________________________________
(Signature)
EXHIBIT C
SECURITY AGREEMENT
THIS SECURITY AGREEMENT (this "Agreement") is executed as of the 19th
day of June, 1997, by Concentric Network Corporation, a Florida corporation,
whose mailing address and principal place of business is 00000 Xxxxx Xxxxxx
Xxxxxx, Xxxxxxxxx, Xxxxxxxxxx 00000 ("Debtor"), in favor of Xxxxxxxx
Communications Group, Inc., a Delaware corporation ("Secured Party").
Section 1. Secured Indebtedness.
--------------------
1.1. This Agreement is executed to create the security interests
hereinafter created for the purpose of providing collateral and security to
secure the payment of all of the Secured Indebtedness, as defined in Section 1.2
below.
1.2. As used herein, "Secured Indebtedness" means all indebtedness,
obligations, and liabilities of Debtor of every kind and character now or
hereafter existing in favor of Secured Party and any affiliates of Secured Party
(including without limitation Critical Technologies, Inc., a Missouri
corporation, referred to herein as "CTI"), howsoever evidenced or created and
whether direct or indirect, primary or secondary, joint or several, or fixed or
contingent, including indebtedness, obligations, and liabilities at any time
evidenced by any note or agreement between Debtor and Secured Party or any of
its affiliates, including any and all extensions, renewals, modifications,
rearrangements, substitutions, and changes in form thereto (referred to
collectively as the "Debt Documents"), together with all lawful interest and
other charges thereon, including without limitation all debts and amounts owed
and default charges and fees incurred pursuant to the following Debt Documents:
a. 10% Convertible Promissory Note in the principal sum of
$3,000,000.00, by Debtor in favor of Secured Party,
dated as of the date first stated above (the "Note");
and
b. Amended and Restated Employee Services and Staffing
Agreement by and between Debtor and CTI of even date
herewith.
Section 2. Creation of Security Interest.
-----------------------------
2.1. In order to secure the prompt and unconditional payment of the
Secured Indebtedness and the performance of the obligations, covenants,
agreements, and undertakings on the part of the Debtor herein described or in
the Debt Documents, Debtor hereby grants to the Secured Party a security
interest in and to all of the property described on Exhibit "A" attached hereto
and made a part hereof, and all interests of the Debtor in and to all of such
property, howsoever and whensoever (now or hereafter) held or acquired and
wherever located (collectively, the "Collateral").
Section 3. Representations and Warranties.
------------------------------
3.1. Debtor represents, warrants, and covenants that (a) Debtor is now
in a solvent condition as defined in Title 11 of the U.S. Code, as amended; (b)
no bankruptcy or insolvency proceedings are pending or contemplated by or
against Debtor; (c) Debtor is the lawful owner of good and marketable title to
the Collateral and has good right and authority to grant a security interest in
the Collateral; (d) the Collateral is free and clear from all security interests
and encumbrances except the security interest evidenced hereby; (e) there is no
financing statement (or similar statement or instrument of registration under
the laws of any jurisdiction) covering the Collateral or its proceeds on file in
any public office in any jurisdictions; (f) to the Company's knowledge, the
Collateral and the intended use thereof by Debtor comply with all applicable
laws, rules, and regulations; (g) the Collateral is free from damage caused by
fire or other casualty; (h) Debtor will warrant and forever defend the title to
the Collateral and its proceeds against the claims of all persons whomsoever
claiming or to claim the same or any part thereof; (i) the location of Debtor is
the address set forth at the beginning of this Agreement and in this regard,
Debtor's location is defined to mean (1) Debtor's place of business if Debtor
has only one such place of business or (2) Debtor's chief executive office if
Debtor has more than one place of business; (j) all of Debtor's books and
records with regard to the Collateral are maintained and kept at the address of
Debtor set forth in this Agreement; (k) Debtor has never changed its name,
whether by amendment of its organizational documents or otherwise, except
Concentric Research Corporation and Engineered Video Concepts, Inc.; (l) no part
of the Collateral is covered by a certificate of title or subject to any
certificate of title law, and (m) no part of the Collateral consists or will
consist of consumer goods, farm products, timber, minerals and the like
(including oil and gas) or accounts resulting from the sale thereof.
Section 4. Representations, Warranties, and Covenants.
------------------------------------------
4.1. The representations and warranties of Debtor set forth in Section
3 of that certain Note and Warrant Purchase Agreement of even date herewith by
and between Debtor and Secured Party and the exceptions thereto are incorporated
and made in this Agreement as if restated herein.
4.2. So long as the Secured Indebtedness or any part thereof remains
unpaid, Debtor covenants and agrees with Secured Party as follows:
a. Debtor will cause the Collateral to be maintained and
operated in a good and workmanlike manner and in accordance with all
applicable laws, rules, regulations, and orders promulgated by all duly
constituted authorities. Debtor will not use, or allow the use of, the
Collateral in any manner which constitutes a public or private nuisance or
which makes void, voidable, or cancelable, or increases the premium of, any
insurance then in force with respect thereto. Debtor will not do or suffer
to be done any act whereby the value of any part of the Collateral may be
materially lessened. Debtor will allow Secured Party or its authorized
representatives to inspect the Collateral and Debtor's books and records
pertaining thereto and Debtor will assist Secured Party or said
representatives upon reasonable notice in whatever way reasonably necessary
to make such inspection. If Debtor receives notice from any federal, state,
or other governmental entity that the Collateral is not in compliance with
any applicable law, rule, regulation, or order, Debtor will promptly furnish
a copy of such notice to Secured Party.
b. Debtor will cause all debts and liabilities of any
character, including without limitation all debts and liabilities for labor,
material, and equipment, incurred in the installation, maintenance, and
operation of the Collateral to be promptly paid.
c. Debtor will cause to be paid prior to delinquency all
taxes and assessments heretofore or hereafter levied or assessed against the
Collateral, or any part thereof, or against the Secured Party for or on
account of the Secured Indebtedness or the interest created by this
Agreement and will furnish Secured Party with receipts showing payment of
such taxes and assessments at least ten days prior to the applicable default
date therefor.
d. Debtor will keep the Collateral in good order, repair,
and operating condition, causing all necessary repairs, renewals,
replacements, additions, and improvements to be promptly made, and will not
allow the Collateral to be misused, abused, or wasted or to deteriorate,
except for the ordinary wear and tear of its intended primary use. In
addition, Debtor will promptly replace all worn-out or obsolete equipment
covered by this Agreement, or components thereof, with equipment or
components comparable to the replaced equipment or components when new.
e. Debtor will keep the Collateral insured in an amount
equal to the full insurable value thereof against loss or damage by fire,
theft, collision, and other hazards as may be required by Secured Party by
policies of fire, extended coverage, and other insurance in such company or
companies, in such amounts, upon such terms and provisions, and with such
indorsements, all as may be acceptable to Secured Party. Such insurance
policies shall also contain a standard mortgagee's indorsement providing for
payment of any loss to Secured Party. All policies of insurance shall
provide for 30 days' written minimum cancellation notice to Secured Party.
All drafts or instruments of any kind evidencing payment under any such
insurance policies which come into the possession of Debtor shall be
immediately delivered to Secured Party. No such policies shall be payable to
any party other than Secured Party and Debtor. Debtor shall furnish Secured
Party with certificates or other evidence satisfactory to Secured Party of
compliance with the foregoing insurance provisions. Duplicate originals of
all policies, verifications, binders and cover notes covering any of the
Collateral shall be delivered to the Secured Party upon demand. Secured
Party may act as attorney for Debtor in obtaining, adjusting, settling and
canceling such insurance and endorsing any drafts drawn by insurers of
the Collateral. Secured Party may apply any proceeds of such insurance which
may be received by it in payment on account of the obligations secured
hereby, whether due or not.
f. If the validity or priority of this Agreement or of any
rights, titles, security interests, or other interest created or evidenced
hereby shall be attacked, endangered or questioned or if any legal
proceedings are instituted with respect thereto, Debtor will give prompt
written notice thereof to Secured Party and at Debtor's own cost and expense
will diligently endeavor to cure any defect that may be developed or
claimed, and will take all necessary and proper steps for the defense of
such legal proceedings. Secured Party (whether or not named as a party to
legal proceedings with respect thereto) is hereby authorized and empowered
to take such additional steps as in its judgment and discretion may be
necessary or proper for the defense of any such legal proceedings or the
protection of the validity or priority of this Agreement and the rights,
titles, security interests, and other interests created or evidenced hereby,
and all expenses so incurred of every kind and character shall be a demand
obligation owing by Debtor and the party incurring such expenses shall be
subrogated to all rights of the person receiving such payment.
g. Debtor will, on request of Secured Party, (1) promptly
correct any defect, error, or omission which may be discovered in the
contents of this Agreement or in any other instrument executed in connection
herewith or in the execution or acknowledgment thereof; (2) execute,
acknowledge, deliver, and record or file such further instruments (including
without limitation further security agreements, financing statements, and
continuation statements) and do such further acts necessary to carry out the
purposes of this Agreement and such other instruments and to subject to the
security interests hereof and thereof any property intended by the terms
hereof and thereof to be covered hereby and thereby including specifically,
but without limitation, any renewals, additions, substitutions,
replacements, or appurtenances to the then Collateral, and (3) execute,
acknowledge, deliver, procure, and record or file any document or instrument
(including specifically any financing statement) deemed advisable by Secured
Party to protect the security interest hereunder against the rights or
interests of third persons, and Debtor will pay all costs connected with any
of the foregoing.
h. Notwithstanding the security interest in proceeds
granted herein, Debtor will not sell, assign, transfer, or otherwise dispose
of all or any part of the Collateral or any interest therein or permit the
title to the Collateral, or any interest therein, to be vested in any other
party, in any manner whatsoever, by operation of law or otherwise, without
the prior written consent of Secured Party, which consent shall not be
unreasonably withheld or delayed.
i. Debtor shall account fully and faithfully for and, if
Secured Party so elects, shall promptly pay or turn over to Secured Party
the proceeds in whatever form received from disposition in any manner of any
of the
Collateral, whether the indebtedness secured hereby is mature or not,
the order and method of application to be in the sole discretion of Secured
Party, except as otherwise specifically authorized herein. Debtor shall at
all times keep the Collateral and its proceeds separate and distinct from
other property of Debtor and shall keep accurate and complete records of the
Collateral and its proceeds.
j. Debtor will not change its address, location, name,
identity, or corporate structure unless Debtor shall have taken such action,
satisfactory to Secured Party, to have caused the security interest of
Secured Party in the Collateral to be at all times fully perfected and in
full force and effect.
k. Debtor shall furnish Secured Party all such information
as Secured Party may request with respect to the Collateral.
4.3. Debtor agrees that, if Debtor fails to perform any act or to take
any action which Debtor is required to perform or take under this Agreement, or
to pay any money which Debtor is required to pay under this Agreement, then
Secured Party, in Debtor's name or in its own name, may, but shall not be
obligated to, perform or cause to be performed such act or take such action or
pay such money, and any expenses so incurred by Secured Party as well as any
money so paid by Secured Party, shall be a demand obligation owing by Debtor to
Secured Party and Secured Party, upon making such payment, shall be subrogated
to all of the rights of the person, corporation, or body politic receiving such
payment. Any amounts due and owing by Debtor to Secured Party pursuant to this
Agreement shall bear interest from the date such amount becomes due until paid
at the highest rate provided by any of the Debt Documents, or the highest rate
allowed by law, whichever is greater, and shall be a part of the Secured
Indebtedness and shall be secured by this Agreement and by any other instrument
securing the Secured Indebtedness.
Section 5. Events of Default and Remedies.
------------------------------
5.1. Debtor shall be in default under this Agreement upon the
occurrence of a breach of this agreement or an Event of Default (as such term is
----------------
defined in the Note).
5.2. Upon the occurrence of an Event of Default, and at any time
thereafter, Secured Party is authorized, in any manner authorized by law and
without breach of the peace, to take possession of the Collateral and of all
data, books, records, and accounts relating thereto and to exercise without
interference from Debtor any and all rights which Debtor has with respect to the
management, possession, operation, protection, or preservation of the
Collateral. If necessary to obtain the possession provided for above, Secured
Party may invoke any and all legal remedies to dispossess Debtor, including
specifically one or more actions for forcible entry and detainer.
5.3. In connection with any action taken by Secured Party pursuant to
this Section 5, Secured Party shall not be liable for any loss sustained by
Debtor unless such loss is caused by the willful misconduct or gross negligence
of Secured Party.
5.4. Upon the occurrence of an Event of Default, and at any time
thereafter, Secured Party shall have all the rights of a secured party after
default under the Uniform Commercial Code as adopted in California and in
conjunction with, in addition to, or in substitution for those rights:
a. Secured Party may, in any legal manner and without
breach of the peace, enter upon Debtor's premises to take possession of,
assemble, and collect the Collateral or to render it unusable; and
b. Secured Party may require Debtor to assemble the
Collateral and make it available at a place Secured Party designates which
is mutually convenient to allow Secured Party to take possession or dispose
of the Collateral; and
c. written notice mailed to Debtor as provided herein ten
days prior to the date of public sale of the Collateral or prior to the date
after which private sale of the Collateral will be made shall constitute
reasonable notice; and
d. it shall not be necessary that the Secured Party take
possession of the Collateral or any part thereof prior to the time that any
sale pursuant to the provisions of this Section is conducted and it shall
not be necessary that the Collateral or any part thereof be present at the
location of such sale; and
e. prior to application of proceeds of disposition of the
Collateral to the Secured Indebtedness, such proceeds shall be applied to
the reasonable expenses of retaking, holding, preparing for sale or lease,
selling, leasing and the like and the attorneys' fees and legal expenses
incurred by Secured Party, Debtor to remain liable for any deficiency; and
f. the sale by Secured Party of less than the whole of the
Collateral shall not exhaust the rights of Secured Party hereunder, and
Secured Party is specifically empowered to make successive sale or sales
hereunder until the whole of the Collateral shall be sold; and, if the
proceeds of such sale of less than the whole of the Collateral shall be less
than the aggregate of the indebtedness secured hereby, this Agreement and
the security interest created hereby shall remain in full force and effect
as to the unsold portion of the Collateral just as though no sale had been
made; and
g. in the event any sale hereunder is not completed or is
defective in the opinion of Secured Party, such sale shall not exhaust the
rights of Secured Party hereunder and Secured Party shall have the right to
cause a subsequent sale or sales to be made hereunder; and
h. any and all statements of fact or other recitals made in
any xxxx of sale or assignment or other instrument evidencing any
foreclosure sale hereunder as to nonpayment of the indebtedness or as to the
occurrence of any
default, or as to Secured Party having declared all of such indebtedness to
be due and payable, or as to notice of time, place, and terms of sale and
the properties to be sold having been duly given, as to any other act or
thing having been duly done by Secured Party, shall be taken as prima facie
evidence of the truth of the facts so stated and recited; and
i. Secured Party may appoint or delegate any one or more
persons as agent to perform any act or acts necessary or incident to any
sale held by Secured Party, including the sending of notices and the conduct
of sale, but in the name and on behalf of Secured Party.
5.5. All remedies expressly provided for in this Agreement are
cumulative of any and all other remedies existing at law or in equity and are
cumulative of any and all other remedies provided for in any other instrument
securing the payment of the Secured Indebtedness, or any part thereof, or any
instrument otherwise benefiting Secured Party or any of its affiliates, and the
resort to any remedy provided for hereunder or under any such other instrument
or provided for by law shall not prevent the concurrent or subsequent employment
of any other appropriate remedy or remedies.
5.6. Subordination of that portion of the Secured Indebtedness
represented by the Note shall in no way limit or delay the availability of
remedies to Secured Party under this Agreement.
5.7. Secured Party may resort to any security given by this Agreement
or to any other security now existing or hereafter given to secure the payment
of the Secured Indebtedness, in whole or in part, and in such portions and in
such order as may seem best to Secured Party in its sole discretion, and any
such action shall not be a waiver of any of the rights, benefits, or security
interests evidenced by this Agreement.
5.8. To the full extent Debtor may do so, Debtor agrees that Debtor
will not at any time insist upon, plead, claim, or take the benefit or advantage
of any law now or hereafter in force providing for any redemption, valuation,
appraisement, stay of execution, or extension and Debtor, for Debtor, Debtor's
successors, receivers, trustees, and assigns, and for any and all persons ever
claiming any interest in the Collateral, to the extent permitted by law, hereby
waives and releases all rights of redemption, valuation, appraisement, stay of
execution, extension, notice of intention to mature, and declaration that the
whole of the Secured Indebtedness is due, and all rights to a marshaling of the
assets of Debtor, including the Collateral, and to a sale in inverse order of
alienation in the event of foreclosure of the security interest hereby created.
Section 6. Miscellaneous.
-------------
6.1. This Agreement shall remain in full force and effect from the date
hereof until satisfaction of the Secured Indebtedness, which shall occur upon:
(i) the payment in full, or conversion of, all obligations pursuant to the Note,
and (ii) the payment of all obligations pursuant to Debt Documents other than
the Note so that no such obligation is more than thirty days past due pursuant
to the terms of any such Debt Document. If all of the Secured Indebtedness is
satisfied as provided in the first sentence of this Section 6.1, and if all of
-----------
the covenants, warranties, undertakings, and agreements made in this Agreement
are kept and performed, then all rights under this Agreement shall terminate and
the Collateral shall become wholly clear of the security interest evidenced
hereby. Promptly following the termination of this Agreement, Secured Party
shall execute and deliver all such documents and instruments as Debtor may
reasonably request to evidence the termination of this Agreement and Secured
Party's rights hereunder.
6.2. Secured Party may remedy any default without waiving the default
remedied. Acceptance by Secured Party of any payment in an amount less than the
amount then due on any Secured Indebtedness shall be deemed an acceptance on
account only and shall not in any way affect the existence of a default under
this Agreement or any of the Debt Documents.
6.3. Secured Party may at any time and from time to time, in writing
which expressly states and describes the same, (a) waive compliance by Debtor
with any covenant made in this Agreement; (b) consent to Debtor's doing any act
which Debtor is prohibited by this Agreement from doing; (c) consent to Debtor's
failing to do any act which Debtor is required by this Agreement to do; or (d)
release any part of the Collateral, or any interest therein, from the security
interest of this Agreement. No such writing shall in any way impair the rights
of Secured Party hereunder except to the extent expressly agreed to by Secured
Party in such writing.
6.4. The security interest and other rights of Secured Party hereunder
shall not be impaired by any indulgence, moratorium, or release granted by
Secured Party, including but not limited to (a) any renewal, extension, or
modification which Secured Party may grant with respect to any Secured
Indebtedness; or (b) any surrender, compromise, release, renewal, extension,
exchange, or substitution which Secured Party may grant in respect of any item
of the Collateral, or any part thereof or any interest therein.
6.5. Secured Party or its representatives may, upon reasonable notice
to Debtor, arrange to inspect the Collateral or any part thereof and inspect,
audit, check, and make copies of the books, records, journals, orders, receipts,
correspondence, and other data relating to the Collateral or to any transaction
between Debtor and Secured Party, and Debtor shall assist Secured Party in
making any such inspection.
6.6. A carbon, photographic, or other reproduction of this Agreement or
of any financing statement relating to this Agreement shall be sufficient as a
financing statement.
6.7. Debtor will cause all financing statements and continuation
statements relating hereto to be recorded and filed in such manner and in such
places as Secured Party shall request and
will pay all expenses of such recording and filing, including re-recording and
refiling taxes, fees, and other charges.
6.8. In the event the ownership of the Collateral or any part thereof
becomes vested in any entity other than Debtor, Secured Party may, without
notice to Debtor, deal with such successor or successors in interest with
reference to this Agreement and to the indebtedness secured hereby in the same
manner as with Debtor, without in any way vitiating or discharging Debtor's
liability hereunder or upon the indebtedness secured hereby. No sale of the
Collateral, no forbearance on the part of Secured Party, and no extension of the
time for the payment of the indebtedness secured hereby given by Secured Party
shall operate to release, discharge, modify, change, or affect, in whole or in
part, the liability of Debtor hereunder for the payment of the indebtedness
secured hereby or the liability of any other person hereunder for the payment of
the indebtedness secured hereby, except as agreed to in writing by Secured
Party.
6.9. If any part of the Secured Indebtedness cannot be lawfully secured
by this Agreement, or if any part of the Collateral cannot be lawfully subject
to the security interest hereof to the full extent of such indebtedness, then
all funds received by Secured Party in partial or full satisfaction of the
Secured Indebtedness shall be applied on said indebtedness first in discharge of
that portion thereof which is not secured by this Agreement.
6.10. Secured Party may assign this Agreement so that the assignee
shall be entitled to the rights and remedies of Secured Party hereunder and, in
the event of such assignment, Debtor will assert no claims or defenses it may
have against the assignee except those granted in this Agreement.
6.11. Any notice, request, demand, or other communication required or
permitted hereunder shall be given in the manner described in the Note.
6.12. This Agreement shall be binding upon Debtor, and its successors,
receivers, trustees, and assigns, including all successors in interest of Debtor
in and to all or any part of the Collateral, and shall inure to the benefit of
Secured Party and the affiliates, successors, and assigns of Secured Party.
6.13. If any one or more of the provisions of this Agreement shall be
declared invalid, illegal, or unenforceable in any respect by a court of
competent jurisdiction, then such provision or provisions shall be severed from
this Agreement and the legality and enforceability of the remaining portions of
this Agreement shall not in any way be affected or impaired thereby.
6.14. Terms in this Agreement, including Exhibit "A" attached hereto,
that are defined in the Uniform Commercial Code as adopted in California shall
have the meanings provided therein.
6.15 Whenever the context requires, the gender of all words used
herein shall include the masculine, feminine, and neuter, and the number of all
words shall include the singular and plural. The headings and captions used in
this Agreement are solely for convenient reference and shall not affect the
meaning or interpretation of any section or paragraph herein, or this Agreement.
IN WITNESS WHEREOF, Debtor has executed this Agreement as of the date
first stated above.
"DEBTOR"
CONCENTRIC NETWORK CORPORATION
By: /s/Xxxxx X. Xxxxxxxx
---------------------------------
Xxxxx X. Xxxxxxxx, President
EXHIBIT A
Collateral:
1. All equipment owned by Debtor, including all Sun Microsystems
file servers owned by Debtor, it being expressly understood
that the Collateral does not include equipment leased by
Debtor from Datacom, Comdisco, or Phoenix;
2. All software products licensed to Secured Party or licensed to
an escrow agent in connection with this transaction, including
without limitation the software products titled Concentric
Host, Concentric View, CityFind, The Concentric Internet
Access Kit and Registration Service, Web University,
FrontLine, Adaptive Call Processing, and Billing, and all
data, information, and material, including but not limited to
object code, source code, user and system documentation,
illustrations, models, drawings, blueprints, and text relating
to the foregoing software products; and
3. All proceeds of the foregoing.