EXHIBIT 10.21
CONVERTIBLE PROMISSORY NOTE AND WARRANT PURCHASE AGREEMENT
THIS CONVERTIBLE PROMISSORY NOTE AND WARRANT PURCHASE
AGREEMENT ("Agreement") is made and entered into as of the 18th day of January,
2000, by and among [i] PRIMIS, INC., a Georgia corporation ("the Company"), and
[ii] those entities and persons whose names are set forth on SCHEDULE 1 attached
hereto (each an "Investor" and collectively the "Investors").
RECITALS:
WHEREAS, the Company desires to sell and issue, and each
Investor desires to purchase and acquire, convertible promissory notes (the
"Notes") with an aggregate principal amount of Nine Million Seven Hundred
Twenty-One Thousand Eight Hundred Sixty-Two Dollars ($9,721,862.00); and
WHEREAS, in consideration of the purchase by the Investors of
the Notes, the Company desires to sell and issue warrants (the "Warrants") to
purchase shares of Series C Convertible Preferred Stock or Common Stock of the
Company as determined in the Warrants.
NOW, THEREFORE, in consideration of the mutual covenants,
representations and warranties herein contained, and intending to be legally
bound, the Company and the Investors agree as follows:
1. AUTHORIZATION AND ISSUANCE OF NOTES AND WARRANTS.
1.1. AUTHORIZATION. The Company has authorized the sale and
issuance of the Notes and Warrants to the Investors.
1.2. SALE AND ISSUANCE OF NOTES. Subject to the terms and
conditions hereof, the Company agrees to sell and issue to
each of the Investors, and the Investors severally agree to
purchase from the Company, a Note in the form attached as
EXHIBIT A hereto, in the amount set forth opposite such
Investor's name on SCHEDULE 1 hereto.
1.3. SALE AND ISSUANCE OF WARRANTS. Subject to the terms and
conditions hereof, the Company agrees to sell and issue to
each of the Investors, and the Investors severally agree to
purchase from the Company, Warrants in the form attached
hereto as EXHIBIT B.
2. CLOSING.
2.1. CLOSING; CLOSING DATE. The closing of the issuance of the
Notes and Warrants under this Agreement (the "Closing") shall
take place on the date of this
Agreement (the "Closing Date"), in accordance with
arrangements mutually satisfactory to the Investors and
counsel for the Company.
2.2. CLOSING DELIVERY. At the Closing, upon delivery to the Company
by each Investor, by wire transfer or check made payable to
the order of the Company, of the aggregate purchase price for
the Note and the Warrant set forth opposite such Investor's
name on SCHEDULE 1 hereto, the Company will deliver to each
Investor (a) a Note payable to the Investor in the principal
amount set forth opposite such Investor's name on SCHEDULE 1
hereto and (b) a Warrant to purchase that number of shares of
Series C Preferred Stock or Common Stock as provided for in
the Warrant.
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. Except as set forth in
the disclosure letter dated the date hereof delivered by the Company to
each Investor (the "Disclosure Letter"), the Company hereby represents
and warrants to each Investor as follows:
3.1. CORPORATE STANDING. The Company is a corporation duly
organized, validly existing, and in good standing under the
laws of Georgia. The Company has all requisite power and
authority to own, lease and operate its properties and to
carry on its business as now being conducted and as presently
proposed to be conducted, to execute, deliver and perform this
Agreement and any other agreement to which the Company is a
party, the execution and delivery of which is contemplated
hereby (the "Ancillary Agreements"). The Company is duly
qualified and is authorized to transact business and is in
good standing as a foreign corporation in each jurisdiction in
which the failure so to qualify would have a material adverse
effect on its business, properties, prospects, or financial
condition. True and accurate copies of the articles of
incorporation, as amended (the "Amended Articles") and bylaws
of the Company (and all amendments thereto) and minute book of
the Company (containing the records of meetings and written
consents of the stockholders, the board of directors and any
committees of the board of directors) have previously been
made available to Investors upon request.
3.2. AUTHORIZATION. The execution and delivery of this Agreement
and any Ancillary Agreement, and the consummation of the
transactions contemplated hereby and thereby, have been duly
authorized by all necessary corporate action on the part of
the Company. Each of this Agreement and any Ancillary
Agreement have been duly executed and delivered by the Company
and constitutes the legal, valid and binding obligation of the
Company enforceable against it in accordance with its terms.
3.3. CAPITALIZATION. As of the Closing Date, the authorized capital
stock of the Company shall consist of 23,000,000 shares par
value $0.01 per share, divided into: (i) 15,000,000 shares of
Common Stock, and (ii) 8,000,000 shares of preferred stock
("Preferred Stock") of which (a) 1,200,000 shares have been
designated Series A Convertible Preferred Stock ("Series A
Preferred Stock"), (b)
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3,000,000 shares have been designated Series B Convertible
Preferred Stock ("Series B Preferred Stock"), (c) 2,500,000
shares have been designated Series C Convertible Preferred
Stock ("Series C Preferred Stock") and (d) the remaining
1,300,000 shares of which shall have such preferences,
limitations and relative rights as may be determined by the
Board of Directors pursuant to Article IV(B) of the Articles.
Immediately prior to the Closing, 100% of the outstanding
shares of Common Stock of the Company, 100% of the outstanding
shares of Series A Convertible Preferred Stock and 100% of the
outstanding shares of Series B Convertible Preferred Stock are
owned by the stockholders and in the amounts specified in
Section 3.3 of the Disclosure Letter and no shares of Series C
Preferred Stock or other Preferred Stock are outstanding. The
outstanding shares of Common Stock, Series A Preferred Stock
and Series B Preferred Stock have been duly authorized and
validly issued, and fully paid and nonassessable. Except as
set forth in Section 3.3 of the Disclosure Letter, there are
outstanding no subscriptions, options, warrants, calls,
commitments or rights (including conversion or preemptive
rights and rights of first refusal), proxy or stockholder
agreements or agreements of any character relating to shares
of the Company's capital stock or the instruments that can be
converted into shares of the Company's capital stock to be
issued hereunder. None of the shares of the Company's capital
stock have been issued in violation of any preemptive right.
There are no contractual obligations of the Company to
repurchase, redeem or otherwise acquire any shares of capital
stock of the Company. No bonds, debentures, notes or other
indebtedness having the right to vote (or convertible into or
exercisable for securities having the right to vote) on any
matters on which shareholders of the Company may vote are
issued or outstanding. The Company is not a party to or
subject to any agreement or understanding, and, to the
Company's best knowledge, there is no agreement or
understanding between any persons that affects or relates to
the voting or giving of written consents with respect to any
security or the voting by any director of the Company.
3.4. VALIDLY ISSUED SHARES. The Notes and Warrants to be issued,
sold and delivered in accordance with the terms of this
Agreement for the consideration set out herein, will, upon
issuance in accordance with the terms hereof, be duly and
validly issued, fully paid and nonassessable, free of
restrictions on transfer other than restrictions on transfer
under applicable federal and state securities laws. The
issuance of the Notes and Warrants to Investors pursuant to
this Agreement will comply with all applicable laws, including
federal and state securities laws (assuming the accuracy of
the representations and warranties of Investors set forth in
Section 4.1 through 4.6 of this Agreement), and will not
violate the preemptive rights of any person. The shares of
Series C Preferred Stock and/or Common Stock issuable upon
conversion of the Notes and exercise of the Warrants being
purchased under this Agreement will be, upon issuance and
delivery in accordance with the terms of the Amended Articles,
the Notes and the Warrants, duly and validly issued, fully
paid and nonassessable and free of restrictions on transfer
other than restrictions on transfer under this Agreement, the
Amended and
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Restated Shareholders' Agreement dated as of June 16, 1998 by
and among the Company and certain of its shareholders, and
under applicable federal and state securities laws (other than
those restrictions, if any, created by Investors). The
issuance of the shares of Series C Preferred Stock or Common
Stock upon conversion of the Notes or exercise of the Warrants
and upon conversion of such Series C Preferred Stock will
comply with all applicable laws, including federal and state
securities laws (assuming the accuracy of the representations
set forth in Section 4.1 through 4.6 of this Agreement as of
the date of issuance of such shares of Series C Preferred
Stock and Common Stock), and will not violate the preemptive
rights of any person.
3.5. NO CONFLICT. The execution and delivery of this Agreement and
any Ancillary Agreement do not, and the consummation of the
transactions contemplated hereby and thereby will not,
conflict with, or result in any violation of, or default (with
or without notice or lapse of time, or both) under, or give
rise to a right of termination, cancellation or acceleration
of any obligation or the loss of a material benefit under, or
the creation of a lien, pledge, security interest, charge or
other encumbrance on assets (any such conflict, violation,
default, right of termination, cancellation or acceleration,
loss or creation, a "Violation") pursuant to, any provision of
the Amended Articles or the Bylaws of the Company, or result
in any Violation of any material lease, agreement, obligation,
instrument, permit, concession, franchise, license, judgment,
order, decree, statute, law, ordinance, rule or regulation
applicable to the Company or the Company's properties or
assets.
3.6. CONTRACTS AND OTHER COMMITMENTS; COMPLIANCE. The Company is
not in violation or default of any provision of its Amended
Articles or Bylaws of the Company or in any respect of any
provision of any material contract to which the Company is a
party or by which it is bound.
3.7. SUBSIDIARIES. Except as set forth in Section 3.7 of the
Disclosure Letter, the Company does not own or control,
directly or indirectly, any interest in any other corporation,
partnership, limited liability company, association or other
business entity. Except as set forth in Section 3.7 of the
Disclosure Letter, the Company is not a participant in any
joint venture, partnership or similar arrangement.
3.8. CONSENTS. No consent, approval, qualification, order or
authorization of, or registration, declaration or filing with,
any court, administrative agency or commission or other
governmental authority or instrumentality, domestic or
foreign, or other third party is required by or with respect
to the Company in connection with the execution and delivery
of this Agreement or any Ancillary Agreement, or the
consummation by the Company of the transactions contemplated
hereby or thereby, which has not already been obtained, except
for notices of sale required to be filed with the Securities
and Exchange Commission,
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or such post closing filings as may be required under
applicable state securities laws which will be timely filed
within the applicable periods therefor.
3.9. FINANCIAL STATEMENTS. The Company has delivered to the
Investors prior to the date hereof its audited financial
statements for the years ended December 31, 1997 and December
31, 1998, and its unaudited financial statements (balance
sheet and profit and loss statement) for the nine (9) month
period ended September 30, 1999 (the "Financial Statements").
The Financial Statements, including any footnotes thereto,
were prepared in accordance with generally accepted accounting
principles and fairly present the financial position and
operating results of the Company as of the dates and for the
periods indicated therein. Since September 30, 1999, there has
not been any material adverse change in the assets,
liabilities, financial condition, results of operation or
prospects of the Company.
3.10. INDEBTEDNESS FOR BORROWED MONEY; NO UNDISCLOSED LIABILITIES.
Except as and to the extent reflected and adequately reserved
against in the Financial Statements, and except as set forth
in Section 3.10 of the Disclosure Letter, as of the Closing
Date, the Company has no direct or indirect indebtedness for
borrowed money, indebtedness by way of lease-purchase
arrangements, guarantees, undertakings, chattel mortgages or
other security arrangements with any bank, financial
institution or other third party.
3.11. TITLE TO PROPERTY AND ASSETS; LEASES. Except as set forth in
Section 3.11 of the Disclosure Letter, the Company owns no
real property in fee simple. The Company has good, valid and
marketable title to all the personal and mixed, tangible and
intangible properties and assets which it purports to own,
free and clear of all liens, restrictions, claims, charges,
security interests, easements or other encumbrances of any
nature whatsoever, except for liens for current taxes not yet
due and payable. With respect to the property and assets that
it leases, the Company is in compliance with such leases and,
to the Company's knowledge, holds a valid leasehold interest
therein free and clear of any liens, claims and encumbrances.
All properties and assets of the Company are in the possession
or control of the Company, and no other person is entitled to
possession of any such properties and assets. The Company is
not bound or committed to make any capital improvement or
expenditure with respect to its owned or leased real or
personal property.
3.12. LEGAL PROCEEDINGS. Except as set forth in the Disclosure
Letter or which are not material to the Company, there are no
claims of any kind or any actions, suits, proceedings,
arbitrations or investigations pending or, to the Company's
knowledge, threatened against or affecting the Company or
against any asset, interest or right of the Company or which
questions the validity of the transactions contemplated by
this Agreement and the Company knows of no facts which may
constitute a basis therefor.
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3.13. ENVIRONMENTAL MATTERS. The Company is not in violation of any
applicable statute, law or regulation relating to the
environment or occupational health and safety (the
"Environmental Laws"), and, to the Company's knowledge, as of
the date hereof no material expenditures are required to be
made by the Company in order to comply with any of the
Environmental Laws.
3.14. LICENSES AND PERMITS; COMPLIANCE WITH LAWS. Except as set
forth in Section 3.14 of the Disclosure Letter, the Company
holds all franchises, permits, licenses, variances,
exemptions, orders and approvals of all governmental entities
which are material to the operation of the Company's business
and is in compliance with the terms thereof. The Company has
complied with and is not in any default under (and has not
been charged with or received notice with respect to, nor is
threatened with or under investigation with respect to, any
charge concerning any violation of any provision of) any
federal, state or local law, regulation, ordinance, rule or
order (whether executive, judicial, legislative or
administrative) or any order, writ, injunction or decree of
any court, agency or instrumentality and no action, suit,
proceeding, hearing, investigation, charge, complaint, claim,
demand, or notice has been filed or commenced against any of
them alleging any failures to comply.
3.15. EMPLOYEE BENEFIT PLANS. Except as set forth in Section 3.15 of
the Disclosure Letter, the Company has no employee benefit
plans including any profit sharing, deferred compensation,
incentive compensation, stock ownership, stock purchase,
phantom stock, retirement, vacation, severance, disability,
death benefit, hospitalization, medical or other plan,
arrangement or understanding (whether or not legally binding)
providing benefits to any current or former employee, officer
or director of the Company (collectively "Benefit Plans"), or
any employment, consulting, severance, termination or
indemnification agreement, arrangement or understanding
between the Company and any officer, director or employee of
the Company. Each Benefit Plan has been administered in all
material respects in accordance with its terms and all
applicable laws.
3.16. LABOR RELATIONS.
(a) The Company is in compliance in all material respects with
all applicable laws respecting employment and employment
practices, terms and conditions of employment and wages
and hours and occupational safety and health;
(b) There is no unfair labor practice charge or complaint or
any other matter against or involving the Company pending
or, to the Company's knowledge, threatened before the
National Labor Relations Board or any court of law;
(c) There is no labor strike, dispute, slowdown or stoppage
actually pending or, to the Company's knowledge,
threatened against the Company;
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(d) The Company is not a party to or bound by any collective
bargaining agreement or any similar labor union
arrangement;
(e) There are no charges, investigations, administrative
proceedings or formal complaints of discrimination
(including discrimination based upon sex, age, marital
status, race, color, religion, national origin, sexual
preference, disability, handicap or veteran status)
pending or, to the Company's knowledge, threatened, before
the Equal Employment Opportunity Commission or any
federal, state or local agency or court against the
Company. There have been no governmental audits of the
equal employment opportunity practices of the Company and,
to the Company's knowledge, no basis for any such claim
exists; and
(f) To the Company's knowledge, the Company is in compliance
in all material respects with the requirements of the
Americans With Disabilities Act.
3.17. INSURANCE. Section 3.17 of the Disclosure Letter sets forth a
list of all insurance policies, including property, casualty,
liability and other insurance maintained with respect to the
assets and business of the Company (the "Company Insurance").
The Company is not liable for any material retroactive premium
adjustments with respect to any of its insurance policies or
bonds. All such policies and bonds are legal, valid and
enforceable and in full force and effect and the Company is
not in breach or default (including with respect to the
payment of premiums or the giving of notices) and no event has
occurred which, with notice or the lapse of time, would
constitute such a breach or default, or permit termination,
modification or acceleration under the policy. The Company has
not received any notice of premium increases or cancellations
with respect to any of such policies and bonds. The Company
believes the amount and type of such insurance coverage is
adequate for the Company's business and is consistent with
good business practice.
3.18. TAX MATTERS. The Company has timely filed or caused to be
filed all federal, state, foreign and local income, franchise,
gross receipts, payroll, sales, use, withholding, occupancy,
excise, real and personal property, employment and other tax
returns, tax information returns and reports ("Tax Returns")
required to be filed and all such Tax Returns were correct and
complete in all respects. The Company has paid, or made
adequate provisions for the payment of, all taxes, duties or
assessments of any nature whatsoever, interest payments,
penalties and additions (whether or not reflected in the
returns as filed) due and payable (and/or properly accruable
for all periods ending on or before the date of this
Agreement) to any city, county, state, foreign country, the
United States or any other taxing authority. There are no
security interests on any of the assets of the Company that
arise in connection with any failure (or alleged failure) to
pay any tax. The Company has withheld and paid all taxes
required to have been withheld and paid in connection with
amounts paid or owing to any employee, independent
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contractor, creditor, stockholder or other third party. No
deficiencies for any taxes have been proposed, asserted or
assessed against the Company that are not adequately reserved
for.
3.19. PATENTS AND TRADEMARKS. The Company owns or possesses
sufficient legal rights to all patents, trademarks, service
marks, trade names, copyrights, trade secrets, licenses,
information, and proprietary rights and processes necessary
for its business as now conducted and as proposed to be
conducted without any conflict with, or infringement of the
rights of, others. Except for agreements with its own
employees or consultants and standard end-user license
agreements, if any, there are no outstanding options,
licenses, or agreements of any kind relating to the foregoing,
nor is the Company bound by or a party to any options,
licenses, or agreements of any kind with respect to the
patents, trademarks, service marks, trade names, copyrights,
trade secrets, licenses, information, and proprietary rights
and processes of any other person or entity. The Company has
not received any communications alleging that the Company has
violated or, by conducting its business as proposed, would
violate any of the patents, trademarks, service marks, trade
names, copyrights, trade secrets, or other proprietary rights
or processes of any other person or entity. The Company is not
aware that any of its employees is obligated under any
contract (including licenses, covenants, or commitments of any
nature) or other agreement, or subject to any judgment,
decree, or order of any court or administrative agency, that
would interfere with the use of such employee's best efforts
to promote the interests of the Company or that would conflict
with the Company's business as proposed to be conducted.
Neither the execution nor delivery of this Agreement, nor the
carrying on of the Company's business by the employees of the
Company, nor the conduct of the Company's business as
proposed, will, to the Company's knowledge, conflict with or
result in a breach of the terms, conditions, or provisions of,
or constitute a default under, any contract, covenant, or
instrument under which any of such employees is now obligated.
The Company does not believe it is or will be necessary to use
any inventions of any of its employees (or persons it
currently intends to hire) made prior to their employment by
the Company. Each independent contractor, employee and/or
officer of the Company who or which has contributed to the
development of the Computer Software (as defined in Section
3.21) has executed proprietary information/confidentiality
agreements.
3.20. RELATED-PARTY TRANSACTIONS. Except as set forth in Section
3.20 of the Disclosure Letter, no employee, officer, or
director of the Company, or member of his or her immediate
family is indebted to the Company, nor is the Company indebted
(or committed to make loans or extend or guarantee credit) to
any of them. To the Company's knowledge, none of such persons
has any direct or indirect ownership interest in any firm or
corporation with which the Company is affiliated or with which
the Company has a business relationship, or any firm or
corporation that competes with the Company, except that
employees, officers, or directors of the Company, and members
of their immediate families may own stock in publicly
8
traded companies that may compete with the Company. Except as
set forth in Section 3.20 of the Disclosure Letter, no
employee, officer or director of the Company, or, to the
Company's knowledge, any member of their immediate families
is, directly or indirectly, interested in any material
contract with the Company. For purposes of this Agreement, the
Company shall be deemed to have knowledge of a fact, event,
condition, matter or situation if any of the Company's
officers or directors are consciously aware of such fact,
event, condition, matter or situation, as appropriate.
3.21. SOFTWARE PRODUCTS. The Company has received no customer
complaints concerning alleged defects in its computer
appraisal software products, including, without limitation,
Value Express (collectively, the "Computer Software"), that,
if true, would materially adversely affect the operations or
financial condition of the Company.
3.22. BROKERS' AND FINDERS' FEES. The Company has not employed any
broker, finder or financial advisor or incurred any liability
for fees or commissions payable to any broker, finder or
financial advisor in connection with the negotiations relating
to or the transactions contemplated by this Agreement.
3.23. QUALIFIED SMALL BUSINESS STOCK.. As of and immediately
following the Closing, the shares of Series C Preferred Stock
and/or issuable upon conversion of the Notes and exercise of
the Warrants will meet each of the requirements for
qualification as "qualified small business stock" set forth in
Section 1202(c) of the Code, including without limitation the
following: (i) the Company will be a domestic C Corporation;
(ii) the Company will not have made any purchases of its own
stock as described in Code Section 1202(c)(3)(B) during the
one year period preceding the Closing; (iii) the Company's
(and any predecessor's) aggregate gross assets, as defined by
Code Section 1202(d)(2), at no time between August 1, 1997 and
through the Closing have exceeded or will exceed Fifty Million
Dollars ($50,000,000), taking into account the assets of any
corporation required to be aggregated with the Company in
accordance with Code Section 202(d)(3); (iv) as of the
Closing, at least eighty percent (80%) (by value) of the
assets of the Company will, by virtue of Code Section
1202(e)(6), be considered to be used by it in the active
conduct of one or more qualified trades or businesses, as
defined by Code Section 1202(e)(3); and (v) the Company is an
eligible corporation, as defined by Code Section 1202(e)(4).
3.24. MATERIAL FACTS. The Company has provided each Investor with
all the information reasonably available to it that such
Investor has requested for deciding whether to purchase the
Notes and Warrants. This Agreement and the documents or
written statements furnished by the Company to Investors in
connection with the transactions contemplated hereby do not
contain any untrue statement of a material fact or omit to
state any material fact necessary to make the statements
contained
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herein or therein, in light of the circumstances in which they
are made, not misleading.
4. INVESTMENT REPRESENTATIONS. Each Investor hereby represents and
warrants to the Company, severally and not jointly, as of the date
hereof, as follows:
4.1. It is acquiring the Note and Warrants for its own account, not
as nominee or agent, for investment and not with a view to, or
for resale in connection with, any distribution or public
offering of the Note, the Warrants, or any shares deliverable
upon conversion of the Notes or exercise of the Warrants
within the meaning of the Securities Act of 1933, as amended
(the "1933 Act").
4.2. It understands that (i) the Note, Warrants, and any shares
deliverable upon conversion of the Notes or exercise of the
Warrants have not been registered under the 1933 Act by reason
of a specific exemption therefrom, that they must be held by
it indefinitely, and that Investor must, therefor, bear the
economic risk of such investment indefinitely, unless a
subsequent disposition thereof is registered under the 1933
Act or is exempt from such registration; and (ii) the Note,
Warrants, and each certificate representing the Warrant Shares
will be endorsed with the following legends, as applicable:
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE
SECURITIES LAWS. THEY MAY NOT BE SOLD, OFFERED FOR
SALE, TRANSFERRED, PLEDGED OR HYPOTHECATED IN THE
ABSENCE OF A REGISTRATION STATEMENT IN EFFECT WITH
RESPECT TO THE SECURITIES UNDER SUCH ACT AND ANY
APPLICABLE STATE SECURITIES LAW OR PURSUANT TO RULE
144 OR AN OPINION OF COUNSEL SATISFACTORY TO PAYOR
THAT SUCH REGISTRATION IS NOT REQUIRED.
THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE
SUBJECT TO THE TERMS AND CONDITIONS OF A CERTAIN
AMENDED AND RESTATED SHAREHOLDERS' AGREEMENT DATED
JUNE 16, 1998 BY AND BETWEEN PRIMIS, INC. AND CERTAIN
OF ITS SHAREHOLDERS.
4.3. It has been furnished with such materials and has been given
access to such information relating to the Company as it or
its qualified representative has requested and it has been
afforded the opportunity to ask questions regarding the
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Company, the Notes, and the Warrants, all as it has found
necessary to make an informed investment decision.
4.4. It is experienced in evaluating and investing in private
placement transactions of securities of companies in a similar
stage or development and acknowledges that it is able to fend
for itself, can bear the economic risk of such its investment,
and has such knowledge and experience in financial and
business matters that it is capable of evaluating the merits
and risks of the investment in the Notes and Warrants.
4.5. If it is a corporation, partnership, trust, or other entity,
it was not formed for the specific purpose of acquiring the
Notes or Warrants offered hereunder.
4.6. It is an "accredited investor" as provided under the 1933 Act
and regulations adopted thereunder and is a resident of or
domiciled in the state listed on SCHEDULE 1 hereto; and all
information supplied by it to the Company with respect to its
purchase of the Notes and Warrants has been and shall be true,
complete, and accurate.
5. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All representations and
warranties contained in this Agreement by any party to this Agreement
and any certificate or other instrument delivered by or on behalf of
any party pursuant to this Agreement shall be continuous and shall
survive the Closing and the issuance of the Notes, the Warrants and all
shares of the Company's capital stock thereunder. Each party shall have
the right to rely on each other party's representations and warranties
made herein, notwithstanding any investigation conducted by such party.
6. COVENANTS OF THE COMPANY. The Company hereby covenants and agrees as follows:
6.1. USE OF PROCEEDS. The proceeds from the sale of the Notes and
Warrants pursuant to this Agreement shall be used by the
Company for working capital, to make acquisitions and for
other corporate purposes.
6.2. FINANCIAL REPORTING. Subject to Section 6.3, the Company shall
furnish to the Investors:
(a) an audited balance sheet and statements of income and cash
flow within ninety (90) days after the end of each fiscal
year, together with comparative figures for the last
preceding fiscal year prepared by a firm of certified
public accountants acceptable from time to time to a
majority in interest of the outstanding Series A Preferred
Stock, Series B Preferred Stock, Series C Preferred Stock
and Common Stock of the Company voting together as a
single class on an as if converted basis;
(b) as soon as available, and in any event within thirty (30)
days after the close of each calendar month, an unaudited
balance sheet and statement of income and
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cash flows for such month, together with comparative
figures for both the month just ended and the portion of
the fiscal year then ended, and a written one or two page
monthly summary of the Company's operations. Such
financial statements shall be prepared in accordance with
generally accepted accounting principles consistently
applied (subject to audit and year-end adjustments) by the
principal financial or accounting officer of the Company;
(c) as soon as available, and in any event within thirty (30)
days before the close of each fiscal year, a business plan
and projections for the Company's next fiscal year; and
(d) such additional information with respect to the Company's
financial condition as may be reasonably requested by the
Investors.
6.3. TERMINATION OF COVENANTS. The covenants set forth in Section
6.2 shall terminate and be of no further force or effect at
such time as the Company is required to file reports pursuant
to Sections 13 or 15(d) of the Securities Exchange Act of
1934.
6.4. RESERVATION OF SHARES. On and after the Closing Date, the
Company will reserve and keep reserved at all times sufficient
shares of Series C Preferred Stock and/or Common Stock for
issuance upon conversion of the Notes and exercise of the
Warrants (and a correspondingly sufficient number of shares of
Common Stock for issuance upon conversion of such Series C
Preferred Stock). Immediately prior to the occurrence of any
event that would cause the number of shares of Series C
Preferred Stock and/or Common Stock or type of securities into
which the Notes and Warrants would be convertible, to be
adjusted, the Company shall take any and all actions necessary
to permit such conversion or exercise. Upon conversion of the
Notes and/or exercise of the Warrants, the Company will
promptly issue and deliver the shares of Series C Preferred
Stock and/or Common Stock required to be delivered. Upon
conversion of such Series C Preferred Stock, the Company will
promptly issue and deliver the shares of Common Stock in
accordance with the Amended Articles.
7. MISCELLANEOUS.
7.1. CONSTRUCTION; GOVERNING LAW. The section headings contained in
this Agreement are inserted as a matter of convenience and
shall not affect in any way the construction of the terms of
this Agreement. This Agreement shall be governed by and
interpreted in accordance with the laws of the State of
Georgia.
7.2. PARTIES IN INTEREST; ASSIGNMENT. Except as otherwise provided
herein, all covenants and agreements contained in this
Agreement by or on behalf of any of the parties to this
Agreement shall bind and inure to the benefit of their
respective heirs, executors, successors, and assigns, whether
so expressed or not. Nothing in this Agreement, express or
implied, is intended to confer upon any party other than the
parties hereto and their respective successors and assigns any
rights,
12
remedies, obligations or liabilities under or by reason of
this Agreement. This Agreement is not assignable and any
purported assignment shall be null and void.
7.3. ENTIRE AGREEMENT. This Agreement, the Exhibits and Schedules
hereto, the Disclosure Letter and the other documents
delivered pursuant hereto constitute the full and entire
understanding and agreement among the parties with regard to
the subjects hereof and no party shall be liable or bound to
any other party in any manner by any representations,
warranties, covenants, or agreements except as specifically
set forth herein or therein.
7.4. SEPARABILITY. Any invalidity, illegality, or limitation of the
enforceability with respect to any Investor of any one or more
of the provisions of this Agreement, or any part thereof,
whether arising by reason of the law of any such Investor's
domicile or otherwise, shall in no way affect or impair the
validity, legality, or enforceability of this Agreement with
respect to other Investors. In case any provision of this
Agreement shall be invalid, illegal, or unenforceable, the
validity, legality, and enforceability of the remaining
provisions shall not in any way be affected or impaired
thereby.
7.5. AMENDMENT AND WAIVER. Any term of this Agreement may be
amended and the observance of any term of this Agreement may
be waived with the written consent of the Company and the
Investors holding more than two-thirds of the outstanding
principal amount of the Notes. Any amendment or waiver
effected in accordance with this paragraph shall be binding
upon each holder of any securities purchased under this
Agreement at the time outstanding (including securities into
which such securities have been converted), each future holder
of all such securities, and the Company.
7.6. NOTICES. All notices, requests, consents, and other
communications under this Agreement shall be in writing and
shall be mailed by first class, registered, or certified mail,
postage prepaid, or sent via overnight courier service, or
delivered personally:
If to Investors to the address set forth opposite their name
on SCHEDULE 1 hereto.
If to the Company to: Primis, Inc.
Suite 320
00000 Xxxxx Xxxx Xxx
Xxxxxxxxxx, XX 00000
Attn: C. Xxxxx Xxxxxxx,
President and CEO
or to such other address of which the addressee shall have
notified the sender in writing. Notices mailed in accordance
with this section shall be deemed given
13
when mailed, and notices sent by overnight courier service
shall be deemed given when placed in the hands of a
representative of such service.
7.7. ATTORNEYS' FEES. If any action at law or in equity is
necessary to enforce or interpret the terms of this Agreement
or any Ancillary Agreement, the prevailing party shall be
entitled to reasonable attorneys' fees, costs, and
disbursements in addition to any other relief to which such
party may be entitled.
7.8. PUBLIC STATEMENTS. Neither the Company nor Investors shall,
without the prior written approval of the other parties
hereto, make any press release or other public announcement
concerning the transactions contemplated by this Agreement.
Investors and the Company may disclose information with
respect to the transaction contemplated hereby to their
respective employees, agents, consultants and third parties
only to the extent such persons have a need to know such
information.
7.9. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original, but
all of which together shall constitute one instrument.
7.10. RIGHTS OF INVESTORS. Each holder of Notes and Warrants shall
have the absolute right to exercise or refrain from exercising
any right or rights that such holder may have by reason of
this Agreement or any Notes and Warrants, including without
limitation the right to consent to the waiver of any
obligation of the Company under this Agreement and to enter
into an agreement with the Company for the purpose of
modifying this Agreement or any agreement effecting any such
modification, and such holder shall not incur any liability to
any other holder or holders of capital stock of the Company
with respect to exercising or refraining from exercising any
such right or rights.
7.11. EXCULPATION AMONG INVESTORS. Each Investor agrees that no
other Investor nor the respective agents of any other Investor
shall be liable for any action heretofore or hereafter taken
or omitted to be taken by any of them in connection with the
Notes and Warrants.
[COUNTERPART SIGNATURE PAGES TO FOLLOW]
14
IN WITNESS WHEREOF, the Company has caused this counterpart signature
page to this Convertible Promissory Note and Warrant Purchase Agreement to be
signed by its duly authorized officer.
"THE COMPANY"
PRIMIS, INC.
By:___________________________________
C. Xxxxx Xxxxxxx, President and CEO
[COUNTERPART SIGNATURE PAGE TO CONVERTIBLE PROMISSORY NOTE
AND WARRANT PURCHASE AGREEMENT
BETWEEN PRIMIS, INC. AND THE INVESTORS NAMED HEREIN
IN WITNESS WHEREOF, the undersigned Investor has caused this
counterpart signature page to this Convertible Promissory Note and Warrant
Purchase Agreement to be signed by its duly authorized representative.
"THE INVESTOR"
______________________________
J. Xxxxx Xxxxxxx
[COUNTERPART SIGNATURE PAGE TO CONVERTIBLE PROMISSORY NOTE
AND WARRANT PURCHASE AGREEMENT
BETWEEN PRIMIS, INC. AND THE INVESTORS NAMED HEREIN
IN WITNESS WHEREOF, the undersigned Investor has caused this
counterpart signature page to this Convertible Promissory Note and Warrant
Purchase Agreement to be signed by its duly authorized representative.
"THE INVESTOR"
WINDCREST PARTNERS
By:_______________________________
Title: ___________________________
[COUNTERPART SIGNATURE PAGE TO CONVERTIBLE PROMISSORY NOTE
AND WARRANT PURCHASE AGREEMENT
BETWEEN PRIMIS, INC. AND THE INVESTORS NAMED HEREIN]
IN WITNESS WHEREOF, the undersigned Investor has caused this
counterpart signature page to this Convertible Promissory Note and Warrant
Purchase Agreement to be signed by its duly authorized representative.
"THE INVESTOR"
RICHLAND VENTURES II, L.P.
By:_____________________________
Title: _________________________
[COUNTERPART SIGNATURE PAGE TO CONVERTIBLE PROMISSORY NOTE
AND WARRANT PURCHASE AGREEMENT
BETWEEN PRIMIS, INC. AND THE INVESTORS NAMED HEREIN]
IN WITNESS WHEREOF, the undersigned Investor has caused this
counterpart signature page to this Convertible Promissory Note and Warrant
Purchase Agreement to be signed by its duly authorized representative.
"THE INVESTOR"
SOUTH ATLANTIC PRIVATE EQUITY
FUND IV, LIMITED PARTNERSHIP
By: South Atlantic Private Equity
Partners, Limited Partnership, Its
General Partner
By:________________________________________
Its General Partner
[COUNTERPART SIGNATURE PAGE TO CONVERTIBLE PROMISSORY NOTE
AND WARRANT PURCHASE AGREEMENT
BETWEEN PRIMIS, INC. AND THE INVESTORS NAMED HEREIN]
IN WITNESS WHEREOF, the undersigned Investor has caused this
counterpart signature page to this Convertible Promissory Note and Warrant
Purchase Agreement to be signed by its duly authorized representative.
"THE INVESTOR"
SOUTH ATLANTIC PRIVATE EQUITY
FUND IV (Q.P.), LIMITED PARTNERSHIP
By: South Atlantic Private Equity
Partners, Limited Partnership,
Its General Partner
By: _________________________________
Its General Partner
[COUNTERPART SIGNATURE PAGE TO CONVERTIBLE PROMISSORY NOTE
AND WARRANT PURCHASE AGREEMENT
BETWEEN PRIMIS, INC. AND THE INVESTORS NAMED HEREIN]
IN WITNESS WHEREOF, the undersigned Investor has caused this
counterpart signature page to this Convertible Promissory Note and Warrant
Purchase Agreement to be signed by its duly authorized representative.
"THE INVESTOR"
XXXXX GLOBAL INVESTMENTS, LTD.
By: Xxxxx Capital Management, Its Trading
Advisor
By:_______________________________________
Title:____________________________________
[COUNTERPART SIGNATURE PAGE TO CONVERTIBLE PROMISSORY NOTE
AND WARRANT PURCHASE AGREEMENT
BETWEEN PRIMIS, INC. AND THE INVESTORS NAMED HEREIN]
IN WITNESS WHEREOF, the undersigned Investor has caused this
counterpart signature page to this Convertible Promissory Note and Warrant
Purchase Agreement to be signed by its duly authorized representative.
"THE INVESTOR"
REMINGTON INVESTMENTS STRATEGIES, L.P.
By: Xxxxx Capital Advisors, LLC, Its
General Partner
By:_______________________________________
Title: ___________________________________
[COUNTERPART SIGNATURE PAGE TO CONVERTIBLE PROMISSORY NOTE
AND WARRANT PURCHASE AGREEMENT
BETWEEN PRIMIS, INC. AND THE INVESTORS NAMED HEREIN]
IN WITNESS WHEREOF, the undersigned Investor has caused this
counterpart signature page to this Convertible Promissory Note and Warrant
Purchase Agreement to be signed by its duly authorized representative.
"THE INVESTOR"
CHRYSALIS VENTURES LIMITED PARTNERSHIP
By: Chrysalis Ventures, LLC, Its Manager
By: ________________________________
Xxxxx X. Xxxxx, Xx., Manager
[COUNTERPART SIGNATURE PAGE TO CONVERTIBLE PROMISSORY NOTE
AND WARRANT PURCHASE AGREEMENT
BETWEEN PRIMIS, INC. AND THE INVESTORS NAMED HEREIN]
IN WITNESS WHEREOF, the undersigned Investor has caused this
counterpart signature page to this Convertible Promissory Note and Warrant
Purchase Agreement to be signed by its duly authorized representative.
"THE INVESTOR"
JG FUNDING, LLC
By: Chrysalis Ventures, LLC, Its Manager
By:__________________________________________
Xxxxx X. Xxxxx, Xx., Manager
[COUNTERPART SIGNATURE PAGE TO CONVERTIBLE PROMISSORY NOTE
AND WARRANT PURCHASE AGREEMENT
BETWEEN PRIMIS, INC. AND THE INVESTORS NAMED HEREIN]
IN WITNESS WHEREOF, the undersigned Investor has caused this
counterpart signature page to this Convertible Promissory Note and Warrant
Purchase Agreement to be signed by its duly authorized representative.
"THE INVESTOR"
_______________________________________
W. Xxxxxxx Xxxxxx, III
[COUNTERPART SIGNATURE PAGE TO CONVERTIBLE PROMISSORY NOTE
AND WARRANT PURCHASE AGREEMENT
BETWEEN PRIMIS, INC. AND THE INVESTORS NAMED HEREIN]
IN WITNESS WHEREOF, the undersigned Investor has caused this
counterpart signature page to this Convertible Promissory Note and Warrant
Purchase Agreement to be signed by its duly authorized representative.
"THE INVESTOR"
_____________________________
Xxxx Xxxxxxx
[COUNTERPART SIGNATURE PAGE TO CONVERTIBLE PROMISSORY NOTE
AND WARRANT PURCHASE AGREEMENT
BETWEEN PRIMIS, INC. AND THE INVESTORS NAMED HEREIN]
IN WITNESS WHEREOF, the undersigned Investor has caused this
counterpart signature page to this Convertible Promissory Note and Warrant
Purchase Agreement to be signed by its duly authorized representative.
"THE INVESTOR"
_______________________________________
Xxxxxxx Xxxxxxxxx
[COUNTERPART SIGNATURE PAGE TO CONVERTIBLE PROMISSORY NOTE
AND WARRANT PURCHASE AGREEMENT
BETWEEN PRIMIS, INC. AND THE INVESTORS NAMED HEREIN]
SCHEDULE 1
Investor Name and Address Principal Amount of Note
------------------------- ------------------------
J. Xxxxx Xxxxxxx $1,994,877
x/x Xxxxxxx Xxxxxxx
Xxxxx 0000
000 Xxxx Xxxxxx Xxxxxx
Xxxxxxxxxx, XX 00000
Windcrest Partners $ 600,000
49th Floor
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, XX 00000-0000
Richland Ventures II, L.P. $2,698,230
000 00xx Xxxxxx, X.
Xxxxx 000
Xxxxxxxxx, XX 00000-0000
South Atlantic Private Equity Fund IV $ 420,574
Limited Partnership
000 X. Xxx Xxxxxx, Xxxxx 000
Xxxxx, XX 00000
South Atlantic Private Equity Fund IV $ 580,792
(Q.P.), Limited Partnership
000 X. Xxx Xxxxxx, Xxxxx 000
Xxxxx, XX 00000
Xxxxx Global Investments, Ltd. $2,205,287
c/o Citco Fund Services (Bahamas), Ltd.
Bahamas Financial Center
Charlotte & Xxxxxxx Street
P.O. Box CB 13136
Nassau, Bahamas
Remington Investments Strategies, L.P. $ 492,942
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, XX 00000
JG Funding, LLC $ 500,000
1850 National City Tower
000 Xxxxx Xxxxx Xxxxxx
Xxxxxxxxxx, XX 00000
Xxxx Xxxxxxx
c/o Richland Ventures II, L.P. $ 86,107
000 00xx Xxxxxx, X.
Xxxxx 000
Xxxxxxxxx, XX 00000-0000
W. Xxxxxxx Xxxxxx, III
x/x Xxxxxxxx Xxxxxxxx XX, X.X. $ 43,053
000 00xx Xxxxxx, X.
Xxxxx 000
Xxxxxxxxx, XX 00000-0000
Xxxxxxx Xxxxxxxxx $ 100,000
c/o Hacienda Property Valuation
0000 Xxxxx Xxxx Xxxx
Xxxxx 0
Xxxxxxxxxx, XX 00000
EXHIBIT A
Form of Convertible Promissory Note
EXHIBIT B
Form of Warrant
