BRIDGE LOAN AGREEMENT
THIS BRIDGE LOAN AGREEMENT (this "Agreement") is dated as of November
15, 1999, by and between CorVu Corporation (the "Company") and Xxxxxx
Management Company-The Network Funds (the "Investor").
RECITALS:
WHEREAS, the Company is in the process of entering into a merger
agreement with Minnesota American, Inc. (the "Reverse Merger") which is not
expected to close until late December 1999; and
WHEREAS, the Company needs cash prior to such expected closing of the
Reverse Merger in order to be able to continue its planned investment in
infrastructure and growth; and
WHEREAS, the Company principal lender has indicated it is unwilling at
this time to increase the Company's line of credit; and
WHEREAS, Investor desires to lend funds to the Company on the terms and
conditions set forth in this Agreement.
AGREEMENT:
Accordingly, in consideration of the foregoing, the mutual promises set
forth herein, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
1. Loan/Promissory Note. Investor agrees to lend to the Company Two
Hundred and Fifty Thousand Dollars ($250,000) and the Company agrees to deliver
to the Investor a subordinated unsecured promissory note, in the form attached
hereto as Exhibit A (the "Note"), in a like amount. The delivery of the Note
shall be made concurrently with delivery of funds to the Company in the amount
set forth above.
2. Conversion of the Note.
(a) Automatic Conversion. To the extent the principal of the
Note is outstanding on the closing of the Reverse Merger transaction,
the entire principal outstanding on the Note and all accrued interest
with respect to such principal shall be automatically converted into
shares of common stock of the Company (or the surviving corporation
pursuant to the Reverse Merger) at a price per share equal to Two
Dollars and No Cents ($2.00), less any shares previously issued on
partial conversion hereof pursuant to subsection (b) below, subject to
adjustment pursuant to sections 4(e) and 4(f) of the Note.
(b) Election to Convert. Notwithstanding the provisions set
forth above, Investor may at any time, at its option, by written notice
(the "Conversion Notice") to the Company, elect to convert all or any
part of the entire outstanding principal amount of the Note plus a pro
rata share of the accrued interest on the then outstanding balance into
common stock of the Company at a price per share equal to Two Dollars
and No Cents ($2.00) per share.
(c) Delivery of Conversion Shares. The Common Stock issued on
conversion of the Note (the "Conversion Shares") shall be delivered as
follows:
As promptly as practicable after conversion, the Company shall
deliver to Investor, or to such person or persons as are
designated by Investor in the Conversion Notice, a certificate
or certificates representing the number of shares of Common
Stock into which the Note or portion thereof is to be
converted in such name or names as are specified in the
Conversion Notice, together with, in the case of conversion of
the entire remaining principal balance hereof, any cash
payable in respect of a fractional share.
In the event that less than the entire outstanding principal
balance of the Note is converted hereunder, the Note shall not
be surrendered for cancellation but shall have the fact and
amount of conversion recorded on the face of the Note by
writing acknowledged by Investor and the Company. If less than
the entire principal balance of the Note is converted, the
amount of principal converted shall be reduced to the nearest
amount that results in no fractional shares.
(d) Reservation of Shares. The Company agrees that, during the
period within which the Note may be converted, the Company will at all
times have authorized and in reserve, and will keep available solely
for delivery upon the conversion of the Note, common stock and other
securities and properties as from time to time shall be receivable upon
the conversion of the Note, free and clear of all restrictions on
issuance, sale or transfer other than those imposed by law and free and
clear of all pre-emptive rights. The Company agrees that the common
stock represented by each and every Conversion Share delivered on the
conversion of the Note shall, at the time of such delivery, be validly
issued and outstanding, fully paid and non-assessable, and the Company
will take all such action as may be necessary to assure that the stated
value or par value per share of the common stock is at all times equal
to or less than the Conversion Price.
3. Warrants. In consideration of the loan, the Company shall issue to
Investor, concurrently with delivery of the Note, stock purchase warrants, in
the form attached hereto as Exhibit B (the "Warrant"), to purchase Two Hundred
and Twenty-Five Thousand (225,000) shares of Company Common Stock at an exercise
price of $.01 per share. If the Note is not paid when due, the number of shares
purchasable under the Warrant shall increase by Twelve Thousand Five Hundred
(12,500) shares, and further increase by an additional Twelve Thousand Five
Hundred (12,500) shares for each 60-day period thereafter that the Note remains
unpaid. The shares of Company Common Stock issuable upon exercise of the Warrant
are referred to hereinafter as the "Warrant Shares."
4. Repayment. All outstanding principal and accrued interest on the
Note shall be due and payable 120 days after the date hereof; provided, however,
that notwithstanding the foregoing, the entire principal outstanding on the Note
and all accrued interest with respect to such principal shall be automatically
converted into shares of common stock of the Company within three business days
after the closing of the Reverse Merger transaction. The Note may be prepaid at
any time without penalty.
5. Use of Proceeds. The Company will use the proceeds of the loan
solely for working capital and general corporate purposes.
6. Subordination. The Note shall be subordinate to all senior debt of
the Company as set forth in Section 6 of the Note.
7. Restrictions on Transfer. The Note, the Warrant, and the Warrant
Shares shall be subject to certain restrictions on transfer identified in the
Note and the Warrant.
8. Representations and Warranties of the Company. The Company
represents and warrants as follows:
(a) This Agreement has been duly authorized by all necessary
corporate action on behalf of the Company, has been duly executed and
delivered by an authorized officer of the Company, and is a valid and
binding agreement on the part of the Company.
(b) All corporate action necessary to the authorization,
issuance, and delivery of the Note, the Warrant, and the Warrant Shares
has been taken on or prior to the date hereof.
(c) As of the date hereof, this Agreement, the Note, and the
Warrant, taken as a whole, do not contain an untrue statement of a
material fact or omit to state a material fact required in light of the
circumstances under which such statements were made to be stated in
such documents to make the statements in such documents, taken as a
whole, not misleading.
9. Representations and Warranties of the Investor. Investor represents
and warrants to the Company as follows:
(a) This Agreement has been duly authorized by all necessary
corporate or partnership action on behalf of Investor, has been duly
executed and delivered by an authorized officer of Investor, and is a
valid and binding agreement on the part of Investor.
(b) Investor is an "accredited investor" as defined in Rule
501(a) of Regulation D of the Securities Act of 1933 (the "Securities
Act"), and was not formed for the purpose of making this investment.
The Note and the Warrant are being purchased by Investor in Investor's
name solely for Investor's own beneficial interest and not as nominee
for, or on behalf of, or for the beneficial interest of, or with the
intention to transfer to, any other person, trust or organization.
(c) Investor has such knowledge and experience in financial
and business matters that Investor is capable of evaluating the merits
and risks of the prospective investment in the Note and Warrants and
has the net worth to undertake such risks. Investor is in a financial
position to hold the Note, the Warrant and the Warrant Shares for an
indefinite period of time and is able to bear the economic risk and
withstand a complete loss of Investor's investment therein. Investor
believes that the investment in the Note and Warrants is suitable for
the Investor based upon Investor's investment objectives and financial
needs.
(d) Investor realizes that (i) the purchase of the Note and
the Warrant is a long-term investment, (ii) Investor must bear the
economic risk of investment for an indefinite period of time because
the Note, the Warrant, and the Warrant Shares have not been registered
under the Securities Act or under the securities laws of any state and,
therefore, none of such securities can be sold unless they are
subsequently registered under said laws or exemptions from such
registrations are available; (iii) Investor may not be able to
liquidate Investor's investment in the event of an emergency or pledge
any of such securities as collateral for loans; and (iv) the
transferability of such securities is restricted and legends will be
placed on the Note and the Warrant and on any certificates representing
the Warrant Shares referring to the applicable restrictions on
transferability.
(e) Investor has been given access to full and complete
information regarding the Company and has utilized such access to
Investor's satisfaction for the purpose of obtaining information
concerning the Company and to obtain any additional information, to the
extent reasonably available, necessary to verify the accuracy of
information provided to Investor.
(f) Investor is not subject to the backup withholding
provisions of Section 3406(a)(i)(C) of the Internal Revenue Code of
1986, as amended (Note: You are subject to backup withholding if (i)
you fail to furnish your Social Security number or taxpayer
identification number herein; (ii) the Internal Revenue Service
notifies the Company that You furnished an incorrect Social Security
number or taxpayer identification number; (iii) you are notified that
you are subject to backup withholding; or (iv) you fail to certify that
you are not subject to backup withholding or you fail to certify your
Social Security number or taxpayer identification number).
(g) Investor does not own voting securities of any brokerage
firm. No director, officer, partner or 5% owner of Investor is also a
director, officer, partner, branch manager, registered representative,
employee, shareholder of, or similarly related to or employed by, a
brokerage firm.
10. Registration Rights.
(a) Each time the Company shall determine to proceed with the
actual preparation and filing of a registration statement under the
Securities Act in connection with the proposed offer and sale for money
of any of its securities by it (other than a registration statement on
Forms S-4 and S-8, or successors thereto), the Company will give
written notice of its determination to Investor. Upon the written
request of Investor given within 30 days after the date of mailing of
any such notice from the Company, the Company will, except as herein
provided, cause all the Conversion Shares and the Warrant Shares issued
and to be issued upon exercise of the Warrants requested by Investor to
be registered, to be included in such registration statement, all to
the extent requisite to permit the sale or other disposition by
Investor of the Conversion Shares and the Warrant Shares to be so
registered; provided, however, that nothing herein shall prevent the
Company from, at any time, abandoning or delaying any such registration
initiated by it. If any such registration shall be underwritten in
whole or in part, the Company may require that the shares requested for
inclusion by Investor pursuant to this paragraph (a) be included in the
underwriting on the same terms and conditions as the securities
otherwise being sold through the underwriters. If in the good faith
judgment of the managing underwriter of such public offering the
inclusion of all of the shares originally covered by a request for
registration made by Investor would reduce the number of shares to be
offered by the Company or interfere with the successful marketing of
the shares of stock offered by the Company, the number of shares owned
by Investor and otherwise to be included in the underwritten public
offering may be reduced; provided, however, that any such required
reduction shall be pro rata among all persons (other than the Company)
who are participating in such offering. Those shares which are thus
excluded from such underwritten public offering shall be withheld from
the market by Investor for a period, not to exceed 180 days, which the
managing underwriter reasonably determines is necessary in order to
effect the underwritten public offering.
(b) With respect to each inclusion of securities in a
registration statement pursuant to this Section 10, the Company shall
bear the following fees, costs and expenses: all registration, filing
and NASD fees, printing expenses, fees and disbursements of counsel and
accountants for the Company, fees and disbursements of counsel for the
underwriter or underwriters of such securities (if the Company is
required to bear such fees and disbursements), all internal expenses,
the premiums and other costs of policies of insurance against liability
arising out of the public offering, and legal fees and disbursements
and other expenses of complying with state securities laws of any
jurisdictions in which the securities to be offered are to be
registered or qualified. Fees and disbursements of special counsel and
accountants for the selling holders, underwriting discounts and
commissions, and transfer taxes for selling holders and any other
expenses relating to the sale of securities by the selling holders not
expressly included above shall be borne by the selling holders.
(c) The Company shall indemnify Investor, its officers and
directors and each person, if any, who controls Investor within the
meaning of Section 15 of the Securities Act against all losses, claims,
damages, and liabilities caused by any untrue statement or alleged
untrue statement of a material fact contained in the registration
statement or prospectus (and as amended or supplemented) relating to
such registration, or caused by any omission or alleged omission to
state a material fact required to be stated therein or necessary to
make the statements therein not misleading in light of the
circumstances under which they are made, unless such statement or
omission was made in reliance upon and in conformity with information
furnished in writing to the Company expressly for use therein by
Investor.
(d) Investor shall indemnify the Company, its officers and
directors and each person, if any, who controls the Company within the
meaning of Section 15 of the Securities Act against all losses, claims,
damages, and liabilities caused by any untrue statement or alleged
untrue statement of a material fact contained in the registration
statement or prospectus (and as amended or supplemented) relating to
such registration, or caused by any omission or alleged omission to
state a material fact required to be stated therein or necessary to
make the statements therein not misleading in light of the
circumstances under which they are made, provided that this paragraph
(d) shall apply only to statements or omissions made in reliance upon
and in conformity with information furnished in writing to the Company
expressly for use therein by the Investor.
(e) The registration rights provided in this section shall
apply to the Conversion Shares and the Warrant Shares of the surviving
company received by the Investor as a result of the terms of the
Reverse Merger.
11. Other.
(a) This Agreement and the rights and obligations of the
parties hereunder shall not be assignable, in whole or in part, by any
party without the prior written consent of the other party, and neither
this Agreement nor any provision hereof may be amended, modified,
waived or discharged without the written consent of the party against
whom enforcement of such amendment, modification, waiver, or discharge
is sought.
(b) This Agreement, including the exhibits attached hereto,
constitutes the entire agreement of the parties relative to the subject
matter hereof and supersedes any and all other agreements and
understandings, whether written or oral, relative to the matters
discussed herein.
(c) This Agreement shall be construed and enforced in
accordance with the laws of the State of Minnesota, except for its
rules relating to conflicts of law.
(d) This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
(e) The Company agrees to reimburse Investor for up to $2,500
of fees or expenses incurred by Investor in connection with this
Agreement.
IN WITNESS WHEREOF, the undersigned have caused this Agreement to be
executed as of the date set forth above.
CORVU CORPORATION
By:
Its:
XXXXXX MANAGEMENT COMPANY-THE NETWORK FUNDS
By:
Its:
Address: ________________
Tax I.D. No.: ________________
EXHIBIT A
THIS NOTE, AND THE SHARES OF COMMON STOCK ISSUABLE UPON CONVERSION HEREOF, HAVE
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE
STATE SECURITIES LAWS AND MAY NOT BE REOFFERED, SOLD, TRANSFERRED, PLEDGED, OR
OTHERWISE DISPOSED OF EXCEPT PURSUANT TO (1) REGISTRATION UNDER SUCH ACT OR LAWS
OR (2) AN OPINION OF COUNSEL FOR THE COMPANY OR OTHER COUNSEL REASONABLY
ACCEPTABLE TO THE COMPANY TO THE EFFECT THAT SUCH REGISTRATION IS NOT REQUIRED.
SUBORDINATED UNSECURED CONVERTIBLE PROMISSORY NOTE
$250,000 Minneapolis, Minnesota
November 15, 1999
FOR VALUE RECEIVED, the undersigned, CorVu Corporation, a Minnesota
corporation (the "Company"), promises to pay to Xxxxxx Management Company--The
Network Funds, or its permitted successors and assigns ("Holder"), at Holder's
address set forth in the Loan Agreement (as defined below), or such other place
as Holder may designate in writing from time to time, the principal sum of Two
Hundred and Fifty Thousand Dollars ($250,000), in lawful money of the United
States, together with simple interest from the date hereof on the unpaid
principal balance outstanding from time to time at the rate of ten percent (10%)
per year (calculated on the basis of the actual number of days elapsed and a
360-day year). The entire unpaid principal balance on this Note and accrued
interest thereon shall be due and payable on 120 days from the date first above
written, unless converted prior thereto pursuant to the terms hereof.
1. Bridge Loan Agreement. This Note has been issued pursuant to the
terms and provisions of the Bridge Loan Agreement (the "Loan Agreement"), dated
as of __________________, between the Company and Holder, and this Note and
Holder are entitled to all the benefits provided for in the Loan Agreement.
2. Prepayment. This Note may be prepaid at any time without penalty.
3. Unsecured Note. This Note is unsecured and the Company and Holder
agree that this Note shall not be secured at any time in the future by a grant
of a security interest in any assets of the Company, whether or not those assets
are owned by the Company at this time or acquired by the Company on a date
subsequent to the date hereof. The provisions of this Section 3 are designed for
the benefit of the third party senior creditors as well as the Company and
Holder.
4. Conversion of this Note.
(a) Automatic Conversion. To the extent the principal of this
Note is outstanding on the closing of the Reverse Merger transaction,
the entire principal outstanding on this Note and all accrued interest
with respect to such principal shall be automatically converted into
shares of common stock of the Company or the surviving corporation
pursuant to the Reverse Merger at a price per share equal to Two
Dollars and No Cents ($2.00), less any shares previously issued on
partial conversion hereof pursuant to subsection (b) below, subject to
the adjustment pursuant to sections 4(e) and 4(f) of the Note.
(b) Election to Convert. Notwithstanding the provisions set
forth above, Investor may at any time, at its option, by written notice
(the "Conversion Notice") to the Company, elect to convert all or any
part of the entire outstanding principal amount of this Note plus a pro
rata share of the accrued interest on the then outstanding balance into
common stock of the Company at a price per share equal to Two Dollars
and No Cents ($2.00) per share.
(c) Delivery of Conversion Shares. The Common Stock issued on
conversion of this Note (the "Conversion Shares") shall be delivered as
follows:
As promptly as practicable after conversion, the Company shall
deliver to Investor, or to such person or persons as are
designated by Investor in the Conversion Notice, a certificate
or certificates representing the number of shares of Common
Stock into which this Note or portion thereof is to be
converted in such name or names as are specified in the
Conversion Notice, together with, in the case of conversion of
the entire remaining principal balance hereof, any cash
payable in respect of a fractional share.
In the event that less than the entire outstanding principal
balance of this Note is converted hereunder, this Note shall
not be surrendered for cancellation but shall have the fact
and amount of conversion recorded on the face of this Note by
writing acknowledged by Investor and the Company. If less than
the entire principal balance of this Note is converted, the
amount of principal converted shall be reduced to the nearest
amount that results in no fractional shares.
(d) Reservation of Shares. The Company agrees that, during the
period within which this Note may be converted, the Company will at all
times have authorized and in reserve, and will keep available solely
for delivery upon the conversion of this Note, common stock and other
securities and properties as from time to time shall be receivable upon
the conversion of this Note, free and clear of all restrictions on
issuance, sale or transfer other than those imposed by law and free and
clear of all pre-emptive rights. The Company agrees that the common
stock represented by each and every Conversion Share delivered on the
conversion of this Note shall, at the time of such delivery, be validly
issued and outstanding, fully paid and non-assessable, and the Company
will take all such action as may be necessary to assure that the stated
value or par value per share of the common stock is at all times equal
to or less than the Conversion Price.
(e) Protection Against Dilution. In case of any consolidation
with or merger of the Company with or into another corporation (other
than a merger or consolidation in which the Company is the surviving or
continuing corporation), or in case of any sale, lease or conveyance to
another corporation of the property of the Company as an entirety or
substantially as an entirety, such successor, leasing or purchasing
corporation, as the case may be, shall (i) execute with the Holder an
agreement providing that the Holder shall have the right thereafter to
receive upon conversion of this Note solely the kind and amount of
shares of stock and other securities, property, cash or any combination
thereof receivable upon such consolidation, merger, sale, lease or
conveyance by a holder of the number of shares of Common Stock for
which this Note might have been converted immediately prior to such
consolidation, merger, sale, lease or conveyance, (ii) make effective
provision in its articles of association or otherwise, if necessary, in
order to effect such agreement, and (iii) set aside or reserve, for the
benefit of the Holder, the stock, securities, property and cash to
which the Holder would be entitled upon conversion of this Note.
(f) Additional Protection Against Dilution. If the Company (i)
pays a dividend or makes a distribution on its Common Stock in shares
of its Common Stock; (ii) subdivides its outstanding shares of Common
Stock into a greater number of shares; (iii) combines its outstanding
shares of Common Stock into a smaller number of shares; (iv) makes a
distribution on its Common Stock in shares of its capital stock other
than Common Stock or (v) issues by reclassification of its Common Stock
any shares of its capital stock; then the conversion privilege and the
Conversion Price in effect immediately prior to such action shall be
adjusted so that the holder of this Note shall, upon conversion,
receive the number of shares of capital stock which such holder would
have owned immediately following such action if the Holder had
converted the Note immediately prior to such action. The adjustment
shall become effective immediately after the record date in the case of
a dividend or distribution and immediately after the effective date in
the case of a subdivision, combination or reclassification.
5. Notification of Reverse Merger. The Company shall notify Holder of
the anticipated closing of the Reverse Merger at least three (3) business days
prior to the date thereof. 6. Subordination. The indebtedness evidenced by this
Note is and shall remain subordinate in right of payment to all Senior Debt to
the extent and in the manner hereinafter set forth. "Senior Debt" shall mean the
principal and interest on indebtedness of the Company to financial institutions
for borrowed money (other than the indebtedness evidenced by this Note), and for
purchase money loans secured by real estate or personal property used in
connection with the business of the Company, whether created, incurred or
assumed before or after the date hereof, except such as by its terms is
expressly not superior in right of payment of this Note, and renewals,
extensions and refundings of any such indebtedness. The subordination provisions
contained in this Section 6 are expressly and only for the benefit of third
party senior creditors of the Company and shall in no way limit the rights or
remedies of Holder against the Company.
No payment of principal or interest on this Note shall be made if the Company is
in default or breach, or such payment would result in a default or breach, with
respect to any Senior Debt. For purposes of this paragraph, default or breach
with respect to any Senior Debt shall refer to a failure of the Company (i) to
pay in full when due the principal of or interest or premium on any such Senior
Debt, or any portion thereof, according to its terms, or (ii) to be in
compliance with any covenant in any loan agreement, security agreement or
related agreement between the Company and the holder of such Senior Debt. Upon
any distribution of assets of the Company, upon dissolution, winding up,
liquidation or reorganization of the Company, whether in bankruptcy, insolvency
or receivership proceedings, or upon an assignment for the benefit of the
Company, or otherwise, Senior Debt shall first be paid in full, or provision
made for such payment in cash, before any payment is made on account of the
principal of or interest on this Note. In such events, upon payment in full of
all Senior Debt, Holder shall be subrogated ratably to all rights of such Senior
Debtors to receive payments or distributions of the assets of the Company
applicable to such Senior Debt until the principal of and interest on this Note
shall be paid in full. If Holder receives any payment on the indebtedness owed
to it by the Company as evidenced by this Note that Holder is not entitled to
receive under the provisions of this Note, Holder will hold the amount so
received in trust for the third party senior creditors and will turn over such
payment to the third party senior creditors in the form received (except for the
endorsement of Holder where necessary) for application to the then-existing
Senior Debt, whether or not due. If Holder exercises any right of setoff which
Holder is not permitted to exercise under the provisions of this Note, Holder
will promptly pay over to the third party senior creditors, in immediately
available funds, an amount equal to the amount of the claims or obligations
offset.
Notwithstanding the foregoing, payment of principal and interest on this Note
shall not be subordinated to the prior payment of such Senior Debt as to all
amounts which actually are paid by the Company under this Note if the Company is
not in default or breach with respect to any Senior Debt at the time or times
such payment or payments are made.
7. Default. "Default" means any event which is, or after notice or
passage of time, or both, would be, an Event of Default. An "Event of Default"
occurs if:
(a) the Company fails to make any payment on this Note when
the same becomes due and payable, and such default continues for a
period of 15 days;
(b) the Company defaults in the payment of interest or
principal on any Senior Debt and such Senior Debt shall, as a result
thereof, have been accelerated (or comparable event shall have
occurred) so that the same shall have become due and payable prior to
the date on which the same would otherwise have become due and payable
and such acceleration has been in effect without rescission or
annulment for a period of 30 days; provided, however, that if such
default in the payment of interest or principal on any Senior Debt
shall be remedied or cured by the Company or waived by the holders of
such Senior Debt, or if such acceleration shall have been rescinded or
annulled by the holders of such Senior Debt, then, unless this Note
shall have been accelerated as provided in this Note, the Event of
Default hereunder by reason thereof shall be deemed likewise to have
been thereupon remedied, cured or waived without further action upon
the part of the Holder.
(c) proceedings under any bankruptcy or insolvency law or
other law for the reorganization, arrangement, composition or similar
relief or aid of debtors or creditors are commenced and such proceeding
remain undismissed and unstayed for a period of 60 days following
notice to the Company by the Holder.
(d) the Company is in material breach of any provision of this
Note, which breach continues for more than 15 days following notice to
the Company by the Holder.
If an Event of Default occurs and is continuing, the principal of and interest
on this Note shall become and be immediately due and payable without any
declaration or other act on the part of Holder.
Holder may waive an existing Default or Event of Default and its consequences.
When a Default or Event of Default is waived, it is cured and ceases.
8. Expenses of Enforcement. The Company agrees to reimburse Holder upon
demand for all reasonable out-of-pocket expenses, including reasonable
attorneys' fees, in connection with Holder's enforcement of the Company's
obligations hereunder.
9. Investment Intent. Holder, by acceptance hereof, agrees to give
written notice to the Company before transferring this Note of Holder's
intention to do so, describing briefly the manner of any proposed transfer of
this Note. Promptly upon receiving such written notice, the Company shall
present copies thereof to counsel for the Company. If, in the opinion of such
counsel, the proposed transfer of this Note may be effected without registration
or qualification (under any federal or state law) of this Note, the Company, as
promptly as practicable, shall notify Holder of such opinion, whereupon Holder
shall be entitled to transfer this Note, all in accordance with the terms of the
notice delivered by Holder to the Company, provided that an appropriate legend
in substantially the form set forth at the end of this Note respecting the
foregoing restrictions on transfer and disposition may be endorsed on this Note.
10. Notices. All demands and notices to be given hereunder shall be
delivered or sent by certified mail, return receipt requested; in the case of
the Company, addressed to its corporate headquarters in Edina, Minnesota, and in
the case of Holder, addressed to the address written above, in either case,
until a new address shall have been substituted by like notice.
11. Amendment. Neither this Note nor any term hereof may be changed,
waived, discharged or terminated orally but only by an instrument in writing
signed by the party against which enforcement of the change, waiver, discharge
or termination is sought.
IN WITNESS WHEREOF, Company has caused this Note to be executed on its
behalf by its duly authorized officer on the day and year first above written.
CORVU CORPORATION
By:
Its:
EXHIBIT B
THIS WARRANT HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 OR ANY
STATE SECURITIES LAWS AND MAY NOT BE SOLD, TRANSFERRED, ASSIGNED, OFFERED,
PLEDGED OR OTHEWISE DISTRIBUTED FOR VALUE UNLESS THERE IS AN EFFECTIVE
REGISTRATION STATEMENT UNDER SUCH ACT OR LAWS COVERING SUCH SECURITY OR THE
COMPANY RECEIVES AN OPINION OF COUNSEL FOR THE HOLDER OF THIS SECURITY
(CONCURRED TO BY COUNSEL FOR THE COMPANY) STATING THAT SUCH SALE, TRANSFER,
ASSIGNMENT, PLEDGE OR DISTRIBUTION IS EXEMPT FROM THE REGISTRATION AND
PROSPECTUS DELIVERY REQUIREMENTS OF THE SECUERITIES ACT OF 1933 AND ALL
APPLICABLE STATE SECURITIES LAWS.
WARRANT
FOR
SHARES OF COMMON STYOCK
OF
CORVU CORPORATION
FOR VALUE RECEIVED, Xxxxxx Management Company-The Network Funds or its
successors or assigns ("Holder"), is hereby entitled to subscribe for and
purchase from CorVu Corporation, a Minnesota corporation (the "Company"), up to
Two Hundred and Twenty-Five Thousand (225,000) fully paid and non assessable
shares (the "Warrant Shares") of the Company's Common Stock, par value $.01 per
share (the "Common Stock") at an exercise price per share equal to $.01 per
share (the "Warrant Exercise Price").
This warrant may be exercised by Investor at any time prior to five
year anniversary of the date hereof.
This warrant is subject to the following provisions, terms and
conditions:
1. (a) The rights represented by this warrant may be exercised by
Holder, in whole or in part, by written notice of exercise substantially in the
form attached hereto delivered to the company at least twenty (20) days prior to
the intended date of exercise and by the surrender of this warrant (properly
endorsed if required) at the principal office of the Company and upon Holder's
payment to the Company by cash, certified check or bank draft of the purchase
price for such shares or by exercise of the Conversion Right as provided in (b)
below. The Warrant Shares so purchased shall be deemed to be issued as the close
of business on the date on which this warrant has been exercised by payment to
the Company of the Warrant Exercise Price, unless the Conversion Right has been
exercised. Certificates for the shares of stock so purchased, bearing the
restrictive legend set forth at the end of this warrant, shall be delivered to
the holder within fifteen (15) days after the rights represented by this warrant
shall have been so exercised, and, unless this warrant has expired, a new
warrant representing the number of Warrant Shares, if any, with respect to which
this warrant has not been exercised shall also be delivered to the Holder hereof
within such time. No fractional shares shall be issued upon the exercise of this
warrant.
(b) In lieu of payment, the rights represented by this warrant
may also be exercised by a written notice of exercise specifying that Holder
wishes to convert all of this warrant (the "Conversion Right") into that number
of shares of Common Stock equal to the quotient obtained by dividing (x) the
value of the shares subject to the warrant (determined by subtracting the
aggregate warrant exercise price in effect immediately prior to the exercise of
the Conversion Right from the aggregate fair market value of the shares of
Common Stock issuable upon exercise of this warrant immediately prior to the
exercise of the Conversion Right) by (y) the fair market value of one share of
Common Stock immediately prior to the exercise of the Conversion Right. For
purposes of this section 1(b), the fair market value of a share of Common Stock
as of a particular date (the "Determination Date") shall; mean:
(i) If the company's Common Stock is traded on an
exchange or is quoted on the Nasdaq Stock Market, then the closing or
last sale price, respectively, reported for the business day
immediately preceding the Determination Date.
(ii) If the company's Common Stock is not traded on
an exchange or on the Nasdaq Stock Market, then the mean of the closing
high bid and low asked prices reported for the business day immediately
preceding the Determination Date.
2. The Company covenants and agrees that all Warrant Shares that may be
issued upon the exercise of the rights represented by this warrant shall, upon
issuance, be duly authorized and issued, fully paid and nonassessable shares.
The Company further covenants and agrees that 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 issue or transfer upon
exercise of the subscription rights evidenced by this warrant, a sufficient
number of shares of its Common Stock to provide for the exercise of the rights
represented by this warrant.
3. The Warrant Exercise Price and the number of Warrant Shares shall be
subject to adjustment from time to time as provided in this Section 3.
(a) If the Company at any time divides the outstanding shares
of its Common Stock into a greater number of shares (whether pursuant to a stock
split, stock dividend or otherwise), and conversely, if the outstanding shares
of its common Stock are combined into a smaller number of shares, the Warrant
Exercise Price in effect immediately prior to such division or combination shall
be proportionately adjusted to reflect the reduction or increase in the value of
each such share.
(b) If any capital reorganization or reclassification of the
capital stock of the Company, or consolidation or merger of the Company with
another corporation, or the sale of all or substantially all of its assets to
another corporation shall be effected in such a way that holders of the
Company's Common Stock shall be entitled to receive stock, securities or assets
with respect to or in exchange for such shares, then, as a condition of such
reorganization, reclassification, consolidation, merger or sale, Holder shall
have the right to purchase and receive upon the basis and upon the terms and
conditions specified in this warrant and in lieu of the shares of the Common
Stock of the Company immediately theretofore purchasable and receivable upon the
exercise of the rights represented hereby, such shares of stock, other
securities or assets as would have been issued or delivered to Holder if it had
exercised this warrant and had received such shares of Common Stock prior to
such reorganization, reclassification, consolidation, merger or sale. The
Company shall not effect any such consolidation, merger or sale, unless prior to
the consummation thereof the successor corporation (if other than the Company)
resulting from such consolidation or merger or the corporation purchasing such
assets shall assume by written instrument executed and mailed to Holder at the
last address of Holder appearing on the books of the Company, the obligation to
deliver to Holder such shares of stock, securities or assets as, in accordance
with the foregoing provisions, Holder may be entitled to purchase.
(c) Upon each adjustment of the Warrant Exercise Price, Holder
shall thereafter be entitled to purchase, at the Warrant Exercise Price
resulting from such adjustment, the number of shares obtained by multiplying the
Warrant Exercise Price in effect immediately prior to such adjustment by the
number of shares purchasable pursuant hereto immediately prior to such
adjustment and dividing the product thereof by the Warrant Exercise Price
resulting from such adjustment.
(d) Upon any adjustment of the Warrant Exercise Price, the
Company shall give written notice thereof, by first class mail, postage prepaid,
addressed to the registered holder of this warrant at the address of such holder
as shown on the books of the Company, which notice shall state the Warrant
Exercise Price resulting from such adjustment and the increase or decrease, if
any, in the number of shares purchasable at such price upon the exercise of this
warrant, setting forth in reasonable detail the method of calculation and the
facts upon which such calculation is based.
(e) This Warrant is issued in connection with a certain Bridge
Loan Agreement between the Company and the Holder and a Subordinated Unsecured
Promissory Note made by the company in favor of Holder, each dated as of the
date hereof. In addition to the foregoing adjustments, if the Company fails to
pay such Subordinated Unsecured Promissory Note when due, the number of shares
of Common Stock which Holder shall be entitled to purchase under this Warrant
shall be increased by 12,500, and further increase by an additional 12,500
shares for each 60-0day period thereafter that such Subordinated Unsecured
Promissory Note remains unpaid. Any adjustment pursuant to this subjection (e)
shall not affect the Warrant Exercise Price.
4. This Warrant shall not entitle Holder to any voting rights or other
rights as a shareholder of the Company.
5. Holder, by acceptance hereof, agrees to give written notice to the
Company before transferring this warrant or transferring any Warrant Shares of
Holder's intention to do so, describing briefly the manner of any proposed
transfer of this warrant or such Warrant Shares. Promptly upon receiving such
written notice, the Company shall present copies thereof to counsel for the
Company. If, in the opinion of such counsel, the proposed transfer of this
warrant or disposition of Warrant Shares may be effected without registration or
qualification (under any federal or state law) of this warrant or the Warrant
Shares, the Company, as promptly as practicable, shall notify Holder of such
opinion, whereupon Holder shall be entitled to transfer this warrant or such
Warrant Shares, all in accordance with the terms of the notice delivered by
Holder to the Company, provided that an appropriate legend in substantially the
form set forth at the end of this warrant respecting the foregoing restrictions
on transfer and disposition may be endorsed on this warrant or the certificates
for such Warrant Shares.
6. Subject to the provision of Section 5, this warrant and all rights
hereunder are transferable, in whole or in part, at the principal office of the
Company by Holder in person or by duly authorized attorney, upon surrender of
this warrant properly endorsed to any person or entity who represents in writing
that he/it is acquiring the warrant for investment and without any view to the
sale or other distribution thereof. Holder, by taking or holding this warrant,
consents and agrees that the bearer of this warrant, when endorsed, may be
treated by the Company and all other persons dealing with this warrant as the
absolute owner hereof for any purpose and as the person entitled to exercise the
rights represented by this warrant, or to the transfer hereof on the books of
the Company, any notice to the contrary notwithstanding; but until such transfer
on such books, the Company may treat the registered owner hereof as the owner
for all purposes.
7. Neither this warrant nor any term hereof my be changed, waived,
discharged or terminated orally but only by an instrument in writing signed by
the party against which enforcement of the change, waiver discharge or
termination is sought.
8. Section 10 of the Bride Loan Agreement, dated as of the date hereof,
between the Company and Holder contains certain registration rights applicable
to the Warrant Shares.
IN WITNESS WHEREOF, the Company has caused this warrant to be signed
and delivered by a duly authorized officer as of the 15th day of November, 1999.
CORVU CORPORATION
By:
Its:
