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EXHIBIT 10.9
SENIOR SUBORDINATED NOTE
AND WARRANT PURCHASE AGREEMENT
THIS SENIOR SUBORDINATED NOTE AND WARRANT PURCHASE AGREEMENT (this
"Agreement") is dated as of December 31, 1999, by and among SALESLOGIX
CORPORATION, a Delaware corporation (the "Company"), BA TECHNOLOGY I, LLC, a
Delaware limited liability company ("BancAmerica") and GE CAPITAL EQUITY
INVESTMENTS, INC., a Delaware corporation ("GE", and, together with BancAmerica,
the "Purchasers").
Statement of Purpose
The Company has entered into a Software License Agreement, dated as of
December 6, 1999 (the "License Agreement"), between the Company and Symantec
Corporation ("Symantec") providing for the purchase by the Company of the ACT!
product line and certain related business (the "Acquired Business") from
Symantec (the "Acquisition"). In addition, the Company has established a new
business strategy involving the creation of a dynamic hosting environment to
support web based implementation of its products.
In connection with the Acquisition and the establishment of the
Company's new business strategy, (a) the Company proposes to issue 11% senior
subordinated notes in the aggregate principal amount of $32,500,000.00 and (b)
the Company proposes to issue from time to time warrants to purchase shares of
Common Stock of the Company, in each case as more particularly described herein.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
contained herein and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto hereby agree as
follows:
ARTICLE I
DEFINITIONS
1.01 Definitions. As used in this Agreement, and unless the context
requires a different meaning, the following terms have the meanings indicated:
"Acquired Business" has the meaning assigned thereto in the Statement
of Purpose.
"Acquisition" has the meaning assigned thereto in the Statement of
Purpose.
"ACT! Documents" means the License Agreement and each other document
and instrument executed pursuant thereto in connection with the Acquisition.
"Adjustment Date" has the meaning assigned thereto in Section 2.01(b).
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"Adjustment Percentage" has the meaning assigned thereto in Section
2.01(b).
"Adjustment Warrants" means any capital stock purchase warrants issued
by the Company to the Purchasers from time to time pursuant to the provisions of
Section 2.01(b).
"Affiliate" means, with respect to any Person, any other Person
directly or indirectly controlling, controlled by, or under direct or indirect
common control with, such Person; provided, that in no event shall any Purchaser
(or any Affiliate of any Purchaser) be deemed to be an Affiliate of the Company.
A Person shall be deemed to control another Person if such Person possesses,
directly or indirectly, the power (a) to vote 10% or more of the securities
having ordinary voting power for the election of directors or other managers of
such other Person or (b) to direct or cause the direction of the management and
policies of such other Person, whether through the ownership of voting
securities, by contract or otherwise.
"Agreement" means this Senior Subordinated Note and Warrant Purchase
Agreement, as amended or supplemented from time to time.
"BancAmerica" has the meaning assigned thereto in the initial paragraph
of this Agreement.
"BHCA" means the Bank Holding Company Act of 1956, as amended (12
U.S.C. Section 1891, et seq.) and the regulations promulgated thereunder, and
any successor provisions thereto.
"Business Day" means any day other than a Saturday, Sunday or other day
on which commercial banks in Charlotte, North Carolina are authorized or
required by law or executive order to close.
"Capital Stock" means, with respect to any Person, any and all shares,
interests, participations, rights in or other equivalents (however designated)
of such Person's capital stock, partnership interests, membership interests or
other equivalent equity interests and any rights, warrants or options
exchangeable for or convertible into such capital stock or other equity
interests.
"Capitalized Lease Obligation" means, with respect to the Company, any
Indebtedness represented by obligations under a lease that is required to be
capitalized for financial reporting purposes in accordance with GAAP.
"Certificate of Incorporation" means the Certificate of Incorporation
of the Company, as amended or supplemented from time to time.
"Change of Control" means (a) the acquisition of ownership, directly or
indirectly (in a single transaction or a series of related transactions),
beneficially or of record, by any Person or group (within the meaning of Section
13(d) and Section 14(d)(2) of the Exchange Act as in effect on the date hereof)
other than a Non-Controlling Investor of shares representing more than 30% of
the issued and outstanding Common Stock of the Company entitled to vote for the
members of the board of directors of the Company; (b) the acquisition of
ownership, directly or indirectly (in
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a single transaction or a series of related transactions), beneficially or of
record, by any Non-Controlling Investor of shares representing more than 50% of
the issued and outstanding Common Stock of the Company entitled to vote for the
members of the board of directors of the Company; (c) occupation of a majority
of the seats (other than vacant seats) on the board of directors of the Company
by Persons who were neither (i) nominated by the board of directors of the
Company nor (ii) appointed by directors so nominated; (d) any Person or group
(other than the group in Control of the Company on the date hereof) shall
otherwise directly or indirectly Control the Company; or (e) Xxxxxxx Xxxxxxxx
shall cease to be the chief executive officer of the Company (i) for any reason
other than his death or disability, or (ii) due to his death or disability, and
a successor reasonably satisfactory to the Required Holders does not assume his
responsibilities and position within one hundred and twenty (120) days of such
cessation.
"Closing" has the meaning assigned thereto in Section 2.04.
"Closing Date" has the meaning assigned thereto in Section 2.04.
"Code" means the Internal Revenue Code of 1986, as amended, or any
successor statute thereto.
"Commission" means the Securities and Exchange Commission or any
similar agency then having jurisdiction to enforce the Securities Act.
"Common Stock" means collectively (a) the Common Stock of the Company,
par value $0.001 per share, as described in the Company Charter Documents, (b)
any other class of capital stock which is not preferred as to dividends or
assets over any other class of any capital stock of the Company or (c) any other
capital stock into which the foregoing is reclassified or reconstituted.
"Company" has the meaning assigned thereto in the initial paragraph of
this Agreement.
"Company Charter Documents" means the Certificate of Incorporation and
the Bylaws of the Company, as amended or supplemented from time to time.
"Consolidated EBITDA" means, for any period, with respect to the
Company and its Subsidiaries on a consolidated basis, the sum of (a)
Consolidated Net Income for such period plus (b) the sum of the following to the
extent deducted in determining Consolidated Net Income: (i) income and franchise
taxes, (ii) interest expense and (iii) amortization, depreciation and other
non-cash charges, less (c) interest income and any extraordinary gains.
"Consolidated Net Income" means, for any period, with respect to the
Company and its Subsidiaries on a consolidated basis, net income after interest
expense, income taxes and depreciation and amortization, all as determined in
accordance with GAAP.
"Contractual Obligation" means, as to any Person, any provision of any
securities issued by such Person or of any indenture or credit agreement or any
agreement, instrument or other
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undertaking to which such Person is a party or by which it or any of its
property is bound or to which it may be subject.
"Control" means the possession, directly or indirectly, of the power to
direct or cause the direction of the management or policies of a Person, whether
through the ability to exercise voting power, by contract or otherwise.
"Controlling" and "Controlled" have meanings correlative thereto.
"Current Assets" means, with respect to the Company, at any date, the
amount at which all of the current assets of the Company would be properly
classified as current assets shown on a balance sheet, determined on a
consolidated basis in accordance with GAAP.
"Employee Benefit Plan" means any employee benefit plan within the
meaning of Section 3(3) of ERISA which (a) is maintained for employees of the
Company or any ERISA Affiliate or (b) has at any time within the preceding six
years been maintained for the employees of the Company or any current or former
ERISA Affiliate.
"Environmental Laws" means any and all federal, state and local laws,
statutes, ordinances, rules, regulations, permits, licenses, approvals,
interpretations and orders of courts or Governmental Authorities (including
common law), relating to the protection of human health or the environment,
including, but not limited to, requirements pertaining to the manufacture,
processing, distribution, use, treatment, storage, disposal, transportation,
handling, reporting, licensing, permitting, investigation or remediation of
Hazardous Materials. Environmental Laws include, without limitation, the
Comprehensive Environmental Response, Compensation, and Liability Act (42 U.S.C.
Section 9601 et. seq.), the Hazardous Material Transportation Act (49 U.S.C.
Section 331 et. seq.), the Resource Conservation and Recovery Act (42 U.S.C.
Section 6901 et. seq.), the Federal Water Pollution Control Act (33 U.S.C.
Section 1251 et. seq.), the Clean Air Act (42 U.S.C. Section 7401 et. seq.), the
Toxic Substances Control Act (15 U.S.C. Section 2601 et. seq.), the Safe
Drinking Water Act (42 U.S.C. Section 300, et. seq.), the Environmental
Protection Agency's regulations relating to underground storage tanks (40 C.F.R.
Parts 280 and 281), and the rules and regulations promulgated under each of
these statutes, each as amended or supplemented.
"Environmental Liability" means any liability, contingent or otherwise
(including any liability for damages, costs of environmental remediation, fines,
penalties or indemnities), of the Company or any Subsidiary directly or
indirectly resulting from or based upon (i) violation of any Environmental Law,
(ii) the generation, use, handling, transportation, storage, treatment or
disposal of any Hazardous Materials, (iii) exposure to any Hazardous Materials,
(iv) the release or threatened release of any Hazardous Materials into the
environment or (v) any contract, agreement or other consensual arrangement
pursuant to which liability is assumed or imposed with respect to any of the
foregoing.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"ERISA Affiliate" means any Person who together with the Company is
treated as a single employer within the meaning of Section 414(b), (c), (m) or
(o) of the Code or Section 4001(b) of ERISA.
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"Event of Default" has the meaning assigned thereto in Article XII
hereof.
"Exchange Act" means the Securities Exchange Act of 1934, as amended,
and the rules and regulations of the Commission thereunder.
"Financial Statements" has the meaning assigned thereto in Section
5.16(a).
"Fully Diluted" means, with respect to the Common Stock, as of a
particular time the total outstanding shares of Common Stock as of such time,
determined by treating all outstanding options, warrants and other rights for
the purchase or other acquisition of shares of Common Stock (whether or not then
vested or exercisable) as having been exercised and by treating all outstanding
securities directly or indirectly convertible into or exchangeable for shares of
Common Stock (whether or not then exercisable or convertible) as having been so
converted or exchanged.
"GAAP" means generally accepted United States accounting principles set
forth in the opinions and pronouncements of the Accounting Principles Board of
the American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board that are applicable
to the circumstances as of the date of determination.
"GAAS" means generally accepted United States auditing standards set
forth in the Professional Standards prescribed by the American Institute of
Certified Public Accountants.
"GE" has the meaning assigned thereto in the initial paragraph of this
Agreement.
"Governmental Approvals" means all authorizations, consents, approvals,
licenses, registrations and filings with, and reports to, all Governmental
Authorities.
"Governmental Authority" means any nation or government, any state or
other political subdivision thereof, any central bank (or similar monetary or
regulatory authority) thereof, any entity exercising executive, legislative,
judicial, regulatory or administrative functions of or pertaining to government,
and any corporation or other entity owned or controlled, through stock or
capital ownership or otherwise, by any of the foregoing.
"Guarantee" means, with respect to any Person, any obligation (except
the endorsement in the ordinary course of business of negotiable instruments for
deposit or collection) of such Person guaranteeing or in effect guaranteeing
(whether by reason of being a general partner of a partnership or otherwise) any
Indebtedness, dividend or other obligation of any other Person in any manner,
whether directly or indirectly, including (without limitation) obligations
incurred through an agreement, contingent or otherwise, by such Person: (a) to
purchase such Indebtedness or obligation or any property constituting security
therefor; (b) to advance or supply funds (i) for the purchase or payment of such
Indebtedness or obligation, or (ii) to maintain any working capital or other
balance sheet condition or any income statement condition of any other Person or
otherwise to advance or make available funds for the purchase or payment of such
Indebtedness or obligation; (c) to lease properties or to purchase properties or
services primarily for the purpose of assuring the owner of
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such Indebtedness or obligation of the ability of any other Person to make
payment of the Indebtedness or obligation; or (d) otherwise to assure the owner
of such Indebtedness or obligation against loss in respect thereof; provided,
that in any computation of the Indebtedness or other liabilities of the obligor
under any Guarantee, the Indebtedness or other obligations that are the subject
of such Guarantee shall be assumed to be direct obligations of such obligor.
"Hazardous Materials" means any substances or materials (a) which are
or become defined as hazardous wastes, hazardous substances, pollutants,
contaminants or toxic substances under any Environmental Law, (b) which are
toxic, explosive, corrosive, flammable, infectious, radioactive, carcinogenic,
mutagenic or otherwise harmful to human health or the environment and are or
become regulated by any Governmental Authority, (c) the presence of which
require investigation or remediation under any Environmental Law, (d) the
discharge or emission or release of which requires a permit or license under any
Environmental Law or other governmental approval, (e) which are deemed by a
Governmental Authority to pose a health or safety hazard to persons or
neighboring properties, (f) which are materials consisting of underground or
aboveground storage tanks, whether empty, filled or partially filled with any
substance, or (g) which contain, without limitation, asbestos, polychlorinated
biphenyls, urea formaldehyde foam insulation, petroleum hydrocarbons, petroleum
derived substances or waste, crude oil, nuclear fuel, natural gas or synthetic
gas.
"Holder" means each Purchaser and any other holder of any Note or, any
portion of the Warrant Securities.
"Indebtedness" means, with respect to any Person, without duplication:
(a) all obligations of such Person for borrowed money; (b) all obligations of
such Person evidenced by bonds, debentures by bonds, debentures, notes or
similar instruments; (c) financial obligations of such Person as the issuer of
capital stock redeemable in whole or in part at the option of any Person other
than such Person as issuer, at a fixed and determinable date or upon the
occurrence of an event or condition not solely within the control of such Person
as issuer; (d) all obligations of such Person under conditional sale or other
title retention agreements relating to property acquired by such Person; (e) all
financial obligations of such Person in respect of the deferred purchase price
of property or services (excluding current trade accounts payable on customary
terms and incurred in the ordinary course of business); (f) financial
obligations under purchase money mortgages; (g) all Capital Lease Obligations of
such Person; (h) all obligations, contingent or otherwise, of such Person in
respect of bankers' acceptances; (i) financial obligations under asset
securitization vehicles; and (j) obligations under direct or indirect Guarantees
in respect of, and obligations (contingent or otherwise) to purchase or
otherwise acquire, or otherwise to assure a creditor against loss in respect of,
indebtedness or financial obligations of others of the kinds referred to in
clauses (a) through (i) above, except to the extent such Guarantees are limited
to a lesser amount. The Indebtedness of any Person shall include, without
duplication, the Indebtedness of any other entity (including any partnership in
which such Person is a general partner) to the extent such Person is liable
therefor as a result of such Person's ownership interest in or other
relationship with such entity, except to the extent the terms of such
Indebtedness provide that such Person is not liable therefor.
"Indemnified Party" has the meaning assigned thereto in Section 13.01.
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"Initial Warrants" means the common stock purchase warrants issued by
the Company to the Purchasers on the Closing Date pursuant to the provisions of
Section 2.01(a).
"Investment" means any investment, made in cash or by delivery of
property, by the Company or any of its Subsidiaries (i) in any Person, whether
by acquisition of stock, Indebtedness, or other obligation or security, or by
loan, guaranty, advance, capital contribution or otherwise, or (ii) in any
property.
"Judgments" has the meaning assigned thereto in Section 12.01(i).
"Junior Preferred Stock" means a series of Junior Participating
Non-Voting Convertible Preferred Stock of the Company having the following
characteristics:
(a) It shall have dividends and liquidation rights identical to
those of Common Stock, and entitling the Holder thereof to
receive dividends and liquidation proceeds in the same amounts
as if it were converted to Common Stock on or before the
record date or other applicable time for determining the
Holders entitled to receive such dividend or distribution;
(b) It shall have no voting rights except to the extent required
by law;
(c) It shall be convertible into Common Stock, at any time and
from time to time, at the option of the Holder, without
payment of any consideration; provided, however, that if the
Holder in any such conversion is subject to the BHCA, such
conversion may only be made if (i) the BHCA would not prohibit
such Holder from holding such shares of Common Stock, and (ii)
such shares of Common Stock to be received upon such
conversion will be held, distributed or sold in any other
manner permitted by the BHCA; and
(d) It shall contain antidilution protection provisions with
respect to such conversion rights comparable to the
antidilution protection provisions in Section 4 of the Form of
Warrant attached hereto as Exhibit B-1.
"Latest Balance Sheet Date" has the meaning assigned thereto in Section
5.16(a).
"Liabilities" has the meaning assigned thereto in Section 13.01.
"License Agreement" has the meaning assigned thereto in the Statement
of Purpose.
"Lien" means any lien, mortgage, pledge, security interest, charge or
encumbrance of any kind (including, in the case of stock, stockholder
agreements, voting trust agreements and all similar arrangements).
"Material Adverse Effect" means a material adverse effect upon (a) the
business, assets, properties, results of operations, condition (financial or
otherwise) or prospects of the Company,
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taken as a whole (after giving effect to the Acquisition), (b) the ability of
the Company to repay the Notes, or (c) the ability of the Company to perform its
material obligations hereunder, or under any Warrant.
"Money Borrowed" means, with respect to the Company and its
Subsidiaries, (a) Indebtedness arising from the lending of money by any Person
to the Company or any of its Subsidiaries; (b) Indebtedness, whether or not in
any such case arising from the lending by any Person of money to the Company or
any of its Subsidiaries, (i) which is represented by notes payable or drafts
accepted that evidence extensions of credit, (ii) which constitutes obligations
evidenced by bonds, debentures, notes or similar instruments, or (iii) upon
which interest charges are customarily paid (other than accounts payable) or
that was issued or assumed as full or partial payment for property; (c)
Indebtedness that constitutes Capitalized Lease Obligations; (d) reimbursement
obligations with respect to letters of credit or guaranties of letters of
credit; and (e) Indebtedness of the Company or any of its Subsidiaries under any
guaranty of obligations that would constitute Indebtedness for Money Borrowed
under clauses (a) through (c) hereof, if owed directly by such Person.
"Multiemployer Plan" means a "multiemployer plan" as defined in Section
4001(a)(3) of ERISA to which the Company or any ERISA Affiliate is making, or is
accruing an obligation to make, or has made or accrued an obligation to make,
contributions within the preceding six years.
"Net Cash Proceeds" means, with respect to any Public Offering or any
asset disposition, the gross cash proceeds received by the Company or any of its
Subsidiaries therefrom less (a) all legal, accounting, consulting and investment
banking and other fees and expenses incurred in connection therewith and (b) in
the case of an asset disposition, the amount of liabilities, if any, which are
required to be repaid concurrently and in connection with the consummation of
such asset disposition.
"Non-Controlling Investor" means a Person that, in connection with its
acquisition of shares of Common Stock, satisfies clauses (i) and (ii) of Rule
13d-1(b)(1) of the Exchange Act and thereafter has not made a filing on Schedule
13D under the Exchange Act in respect of the Common Stock.
"Note" means any Senior Subordinated Promissory Note issued pursuant to
this Agreement, as amended or supplemented from time to time, and "Notes" means
each such Note, collectively.
"Note Register" has the meaning assigned thereto in Section 14.04(b).
"Participant" has the meaning assigned thereto in Section 14.04(c).
"PBGC" means the Pension Benefit Guaranty Corporation or any successor
agency.
"Pension Plan" means any Employee Benefit Plan, other than a
Multiemployer Plan, which is subject to the provisions of Title IV of ERISA or
Section 412 of the Code and which (a) is maintained for employees of the Company
or any ERISA Affiliates or (b) has at any time within the
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preceding six years been maintained for the employees of the Company or any of
its current or former ERISA Affiliates.
"Permitted Acquisitions" has the meaning assigned thereto in Section
9.01(c).
"Permitted Disposition" has the meaning assigned thereto in Section
9.06.
"Permitted Investments" has the meaning assigned thereto in Section
9.07.
"Person" means any individual, firm, corporation, partnership, trust,
limited liability company, incorporated or unincorporated association, joint
venture, joint stock company, Governmental Authority or other entity of any
kind, and shall include any successor (by merger or otherwise) of such entity.
"Preferred Stock" means the preferred stock of the Company, par value
$0.001 per share, as described in the Company Charter Documents.
"Public Offering" means any underwritten primary public offering of any
class or series of Capital Stock of the Company or any of its Subsidiaries
pursuant to a registration statement declared effective under the Securities
Act.
"Purchasers" has the meaning assigned thereto in the initial paragraph
of this Agreement.
"Qualified Public Offering" means a Public Offering resulting in Net
Cash Proceeds in an amount equal to or greater than the principal amount of the
Notes plus any accrued and unpaid interest thereon at the time of consummation
of such Public Offering.
"Redemption Notice" has the meaning assigned thereto in Section
10.03(b).
"Registration Rights Agreement" means the Registration Rights Agreement
dated as of the date hereof, by and among the Company and the Purchasers,
substantially in the form attached hereto as Exhibit C, as amended, supplemented
or otherwise modified from time to time.
"Regulatory Constraint" has the meaning assigned thereto in Section
8.11.
"Regulatory Requirement" has the meaning assigned thereto in Section
8.11.
"Required Holders" means Holders holding at least a majority of the
aggregate principal balance of Notes then outstanding.
"Requirements of Law" means, with respect to a Person, the certificate
of incorporation and bylaws or other organizational or governing documents of
such Person, and any law, treaty, rule, regulation, right, privilege,
qualification, license or franchise or determination of an arbitrator or a court
or other Governmental Authority, in each case applicable to or binding upon such
Person or any of its property or to which such Person or any of its property is
subject or pertaining to any or all of the transactions contemplated or referred
to herein.
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"SEC Documents" has the meaning assigned thereto in Section 5.20.
"Securities Act" means the Securities Act of 1933, as amended, and the
rules and regulations of the Commission thereunder.
"Solvent" means, as to the Company and its Subsidiaries on a particular
date, that any such Person (a) has capital sufficient to carry on its business
and transactions and all business and transactions in which it is about to
engage and is able to pay its debts as they mature, (b) owns property having a
value, both at fair valuation and at present fair saleable value, greater than
the amount required to pay its probable liabilities (including contingencies),
and (c) does not believe that it will incur debts or liabilities beyond its
ability to pay such debts or liabilities as they mature.
"Subsidiary" means, as to any Person, (a) any corporation more than 50%
of whose stock of any class or classes having by the terms thereof ordinary
voting power to elect a majority of the directors of such corporation
(irrespective of whether or not at the time stock of any class or classes of
such corporation shall have or might have voting power by reason of the
happening of any contingency) is at the time owned by such Person and/or one or
more Subsidiaries of such Person and (b) any partnership, limited liability
company, association, joint venture or other entity in which such Person and/or
one or more Subsidiaries of such Person has more than a 50% equity interest at
the time.
"Symantec" has the meaning assigned thereto in the Statement of
Purpose.
"Transaction Documents" means, collectively, this Agreement, the Notes,
the Warrants and the Registration Rights Agreement.
"Warrant Securities" means, collectively, the Warrants and any shares
of Capital Stock the Company issued upon exercise of the Warrants, and any other
shares of the Company's Capital Stock issued with respect to such shares.
"Warrants" means collectively, the Initial Warrants and the Adjustment
Warrants, and any other warrants issued in replacement or substitution thereof.
"Wholly-Owned Subsidiary" means, as to any Person, (a) any corporation
100% of whose Capital Stock (other than director's qualifying shares) is at the
time owned by such Person and/or one or more Wholly-Owned Subsidiaries of such
Person and (b) any partnership, limited liability company, association, joint
venture or other entity in which such Person and/or one or more Wholly-Owned
Subsidiaries of such Person has a 100% equity interest at such time.
1.02 Accounting Terms; Financial Statements. All accounting terms used
herein not expressly defined in this Agreement shall have the respective
meanings given to them in accordance with sound accounting practice. The term
"sound accounting practice" means such accounting practice as, in the opinion of
the independent certified public accountants regularly retained by the Company,
conforms at the time to GAAP applied on a consistent basis except for changes
with which such accountants concur. If any changes in accounting principles are
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hereafter occasioned by promulgation of rules, regulations, pronouncements or
opinions of or are otherwise required by, the Financial Accounting Standards
Board or the American Institute of Certified Public Accountants (or successors
thereto or agencies with similar functions), and any of such changes results in
a change in the method of calculation of, or affects the results of such
calculation of, any of the financial covenants, standards or terms found herein,
then the parties hereto agree to enter into and diligently pursue negotiations
in order to amend such financial covenants, standards or terms so as to reflect
fairly and equitably such changes, with the desired result that the criteria for
evaluating the financial condition and results of operations of the Company
shall be the same after such changes as if such changes had not been made;
provided, that prior to any such amendments, compliance with the financial
covenants contained herein shall continue to be determined in accordance with
GAAP as in effect prior to such change.
ARTICLE II
PURCHASE AND SALE OF NOTES AND WARRANTS
2.01 Purchase and Sale of Notes and Warrants.
(a) Subject to the terms and conditions hereof, on the Closing Date (i)
the Company will issue to the Purchasers, and each Purchaser will, severally and
not jointly, acquire from the Company, Notes in the aggregate principal amounts
set forth opposite their names in Schedule 2.01(a) under the heading "Aggregate
Principal Amount of Notes" and (ii) the Company shall issue to each Purchaser,
and each Purchaser shall acquire from the Company, the Initial Warrants
exercisable for the numbers of shares of Fully Diluted Common Stock (after
taking into effect the issuance of the Initial Warrants) set forth opposite
their names in Schedule 2.01(a) under the heading "Initial Warrants." The Notes
shall be substantially in the form of Exhibit A attached hereto, and the Initial
Warrants shall be substantially in the form of Exhibit B-1 attached hereto, in
each case, as appropriately completed in conformity herewith.
(b) If on any of the dates set forth on Schedule 2.01(b) under the
heading "Adjustment Date" (each such date, an "Adjustment Date") any principal,
interest, or any other amount due under the Notes shall not have been
irrevocably paid in full, then, on any such date, the Company shall issue to
each Purchaser (or, if the Initial Warrants or a portion thereof have been
transferred in accordance with the provisions thereof and of this Agreement, to
the Holder holding such Initial Warrants), and each Purchaser (or each such
Holder) shall acquire from the Company, Adjustment Warrants exercisable for the
number of shares of Fully Diluted Common Stock (the "Aggregate Number", as
defined in the Form of Warrant attached hereto as Exhibit B-2) which, on such
Adjustment Date, would constitute the percentage of all issued and outstanding
Fully Diluted Common Stock of the Company (after taking into effect the issuance
of such Adjustment Warrants) set forth in Schedule 2.01(b) opposite such
Purchaser's name under the heading "Adjustment Percentage" (or, in the case of a
Holder other than a Purchaser, the applicable pro rata portion thereof) (each
such percentage, an "Adjustment Percentage"); provided, however that in the
event the Notes are redeemed in part but not in whole on or before an Adjustment
Date, the Adjustment Percentage applicable to Adjustment Warrants issued on or
after such partial redemption shall be equal to the applicable Adjustment
Percentage set forth on Schedule 2.01(b) multiplied by a fraction, the numerator
of which shall be the principal balance of
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the Notes (including any Pik Notes, as such term is defined in Exhibit A) as of
the Adjustment Date in question and the denominator of which shall be
$32,500,000; and provided, further, that, in the event that the proposed Holder
thereof notifies the Company and any Purchaser who is a Holder at such time (it
being understood that the failure by such proposed Holder to notify any such
Purchaser shall not in any way prejudice its rights hereunder) in writing of a
Regulatory Constraint in connection with the pending issuance of an Adjustment
Warrant and requests that the Capital Stock issuable upon the exercise of such
Adjustment Warrant be Junior Preferred Stock, the Company shall expeditiously
take all necessary action to authorize such Junior Preferred Stock, including
filing appropriate documents with the Delaware Secretary of State, and shall
issue to such proposed Holder (and to any other proposed Holder who so elects in
writing) such Adjustment Warrant as a warrant to purchase shares of Junior
Preferred Stock in a number, which if converted to Common Stock pursuant to the
terms of the Junior Preferred Stock, would constitute the applicable Adjustment
Percentage and with such other conforming changes as are appropriate for the
Holder thereof to realize the benefits originally intended hereunder. In the
Adjustment Warrants, the Exercise Price initially will be the Current Market
Price (as such capitalized terms are defined in the Form of Adjustment Warrant
attached hereto as Exhibit B-2) determined as of the Business Day immediately
preceding the Adjustment Date and will be subject to adjustment as provided in
Section 2 of the Form of Adjustment Warrant attached hereto as Exhibit B-2;
provided, however, in the case of an Adjustment Warrant to purchase Junior
Preferred Stock, the aggregate initial Exercise Price for all the shares of
Junior Preferred Stock subject to such Adjustment Warrant shall equal the
aggregate of such Current Market Price of all the shares of Common Stock into
which such shares of Junior Preferred Stock would be convertible. The Adjustment
Warrants shall be substantially in the form of Exhibit B-2 attached hereto, as
appropriately completed in conformity herewith.
2.02 Purchase Price. The aggregate purchase price of the Notes and the
Warrants shall be Thirty-Two Million Five Hundred Thousand Dollars
($32,500,000.00) which shall be payable by the Purchasers on the Closing Date as
attached in Schedule 2.01(a). The Company hereby acknowledges and agrees that
the purchase price paid by the Purchasers on the Closing Date is an aggregate
purchase price for the Notes and the Warrants, and that no further payments will
be made by the Purchasers or by any other Holder in consideration for any
issuance of the Adjustment Warrants.
2.03 Original Issue Discount. The Company and the Purchasers
acknowledge that under the regulations of the United States Department of
Treasury, the issuance of the Notes and the Warrants for an aggregate, combined
purchase price will result in the creation of "original issue discount" on the
Notes equal to the value of the Warrants. After taking into account all relevant
factors (including the general condition of the financial markets at this time,
the exercise price for shares of Common Stock issuable upon exercise of the
Warrants, the nature of the rights provided for in the Warrants and all other
matters concerning the transactions contemplated by this Agreement), the Company
and the Purchasers agree that the aggregate original issue discount on the Notes
(i.e., the aggregate value of the Warrants) is $5,600,000. Neither the Company
nor the Purchasers will take any position for United States federal income tax
purposes that is inconsistent with the provisions of this Section 2.03
2.04 Closing.
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(a) Subject to the terms and conditions of this Agreement, the issuance
and purchase of the Notes and the Initial Warrants shall take place at the
closing (the "Closing") to be held at the offices of Xxxxxx Xxxxxxx, P.A., The
Phoenix Plaza, 0000 Xxxxx Xxxxxxx Xxxxxx, Xxxxxxx, Xxxxxxx 00000-0000, effective
as of 11:59 p.m. (Arizona time), on December 31, 1999, or at such other time and
place as the Company and the Purchasers may agree in writing (the "Closing
Date"); provided, that in any event the Closing Date shall be on or before
January 3, 2000. At the Closing, the Company shall execute and deliver to each
Purchaser the Notes in the principal amounts and the Initial Warrants
exercisable for the number of shares of Common Stock set forth opposite such
Purchaser's name in Schedule 2.01(a) against delivery to the Company by each
Purchaser of the purchase price therefor, in the amount set forth opposite such
Purchaser's name on Schedule 2.01(a) under the heading "Total Purchase Price,"
by wire transfer of immediately available funds or by delivery of cashier's or
certified check; provided, however, that, subject to the occurrence of the
Closing on or before January 3, 2000, GE shall deliver or cause to be delivered
its purchase price to the Company by wire transfer of immediately available
funds on January 3, 2000. The Closing shall be deemed to have occurred on
December 31, 1999 if all conditions set forth in Article III have been satisfied
or waived on December 31, 1999 other than GE's delivery of the purchase price
pursuant to the proviso of the second sentence of this Section 2.04(a). The
Company and the Purchasers hereby agree that the Closing shall not occur with
respect to any Purchaser, and therefore, such Purchaser shall have no
obligations hereunder, unless and until the Closing occurs with respect to all
Purchasers.
(b) The issuance and purchase of any Adjustment Warrants, if
any, required to be issued by Section 2.01(b) shall be consummated by delivery
by the Company to the applicable Holder of such Adjustment Warrants on a
Business Day no later than five (5) Business Days after the date such Adjustment
Warrants are required to be issued as set forth in Schedule 2.01(b) at the
offices of such Holder at the address set forth in Section 14.02 hereof, or at
such other time and place as the Company and such Holder may agree in writing.
ARTICLE III
CONDITIONS TO THE OBLIGATION
OF THE PURCHASERS TO CLOSE
The obligation of the Purchasers to purchase the Notes and Warrants, to
pay the purchase price therefor at the Closing and to perform any obligations
hereunder, shall be subject to the satisfaction as determined by the Purchasers
of the following conditions on or before the Closing Date:
3.01 Representations and Warranties. The representations and warranties
contained in Article V hereof shall be true and correct in all material respects
on and as of the Closing Date as if made on and as of such date.
3.02 Compliance with this Agreement. The Company shall have performed
and complied in all material respects with all of the agreements and conditions
set forth or
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contemplated herein that are required to be performed or complied with by the
Company on or before the Closing Date.
3.03 Officer's Certificate. Each Purchaser shall have received a
certificate dated as of the Closing Date from the chief executive officer and
chief financial officer of the Company, in form and substance satisfactory to
such Purchaser, to the effect that (a) all representations and warranties of the
Company contained in this Agreement are true, correct and complete in all
material respects, (b) the Company is not in material violation of any of the
covenants contained in this Agreement and (c) all conditions precedent to the
Closing of this Agreement to be performed by the Company have been duly
performed in all material respects.
3.04 Secretary's Certificates. Each Purchaser shall have received a
certificate from the Company dated as of the Closing Date and signed by the
Secretary or an Assistant Secretary of the Company certifying (a) that the
attached copies of the Company Charter Documents and resolutions of the Board of
Directors of the Company approving this Agreement and the transactions
contemplated hereby, are all true, complete and correct and remain unamended and
in full force and effect, (b) as to the incumbency and specimen signature of
each officer of the Company executing this Agreement and any other document
delivered in connection herewith on behalf of the Company and (c) as to the good
standing of the Company in the jurisdiction of its incorporation and in each
other state in which the Company is transacting business.
3.05 Transaction Documents; ACT! Documents. Each Purchaser shall have
received true, complete and correct copies of the Transaction Documents, the
ACT! Documents and such other documents as it may reasonably request in
connection therewith, all in form and substance satisfactory to the Purchaser.
3.06 Financial Matters.
(a) Financial Statements. The Purchasers shall have received copies of
the financial statements referred to in Section 5.16.
(b) Payment at Closing. There shall have been paid by the Company to
each Purchaser any accrued and unpaid fees due each Purchaser (including,
without limitation, all reasonable legal fees and expenses required to be paid
pursuant to Section 14.16, and the commitment fees payable pursuant to Section
14.17), and to any other Person such amount as may be due, including all taxes,
fees and other charges in connection with the execution, delivery, recording,
filing and registration of any of the Transaction Documents.
3.07 Contracts. Each Purchaser shall have received copies of all
contracts and agreements evidencing the Contractual Obligations described in
Section 5.15 to which the Company and its Subsidiaries will be a party
immediately after the Closing Date, each as originally executed and delivered by
the parties thereto and as in effect on the Closing Date.
3.08 Purchase Permitted by Applicable Laws. The acquisition of and
payment for the Notes and the Warrants to be acquired by each Purchaser
hereunder and the consummation of the transactions contemplated hereby (a) shall
not be prohibited by any Requirement of Law and (b)
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shall not subject such Purchaser to any penalty or, in its reasonable judgment,
other onerous condition under or pursuant to any Requirement of Law.
3.09 Consents and Approvals. All consents, exemptions, authorizations
or other actions by, or notices to, or filings with, Governmental Authorities
and other Persons in respect of all Requirements of Law and with respect to
Contractual Obligations of the Company required in connection with the
execution, delivery or performance by the Company or enforcement against the
Company of this Agreement and the other Transaction Documents shall have been
obtained and be in full force and effect, and each Purchaser shall have been
furnished with appropriate evidence thereof, and all waiting periods shall have
lapsed without extension or the imposition of any conditions or restrictions.
3.10 Registration Rights Agreement. The Registration Rights Agreement
shall have been duly executed and delivered by each of the parties thereto.
3.11 No Waivers. The Acquisition and the other transactions
contemplated by the ACT! Documents shall have been consummated prior to or
concurrently with the Closing pursuant to the terms and conditions thereof,
without the waiver of any conditions precedent thereto required to be performed
on or prior to the consummation of the transactions contemplated thereby which
are for the benefit of the Company, or any waiver of any terms thereof other
than the conditions precedent if, in either case, the waiver thereof, in the
reasonable judgment of the Purchasers, could be expected to have a Material
Adverse Effect.
3.12 No Material Adverse Change. Except as disclosed in writing to the
Purchasers, since September 30, 1999, no event shall have occurred which has had
or could reasonably be expected to have a Material Adverse Effect, including any
event having a material adverse effect on the Acquired Business.
3.13 Opinion of Counsel. Each Purchaser shall have received an opinion
of Xxxxxx Xxxxxxx P.A., counsel to the Company, dated the Closing Date and in
substantially the form attached hereto as Exhibit D hereto.
3.14 Disbursement Instructions. The Purchasers shall have received
written instructions from the Company directing the payment of the purchase
price of the Notes and the Warrants.
3.15 Side Letter. The Company shall have delivered to GE a side letter
in form and substance reasonably acceptable to GE regarding the use by the
Company of the name of GE and its Affiliates.
3.16 Other Documents. The Company shall have delivered to each
Purchaser such other documents, certificates and opinions as such Purchaser or
its counsel may reasonably request.
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ARTICLE IV
CONDITIONS TO THE OBLIGATION
OF THE COMPANY TO CLOSE
The obligations of the Company to issue and sell the Notes and to issue
the Warrants to a Purchaser, and the obligations of the Company to perform its
other respective obligations hereunder with respect to such Purchaser, shall be
subject to the satisfaction as determined by the Company of the following
conditions on or before the Closing Date:
4.01 Representations and Warranties. The representations and warranties
of such Purchaser contained in Article VI hereof shall be true and correct in
all material respects on and as of the Closing Date as of made on and as of such
date.
4.02 Compliance with this Agreement. Such Purchaser shall have
performed and complied in all material respects with all of its agreements and
conditions set forth or contemplated herein that are required to be performed or
complied with by such Purchaser on or before the Closing Date.
4.03 Issuance Permitted by Requirements of Laws. The issuance of the
Notes and the Warrants by the Company and the consummation of the transactions
contemplated hereby (a) shall not be prohibited by any Requirement of Law and
(b) shall not subject the Company or such Purchaser to any penalty or, in its
reasonable judgment, other onerous condition under or pursuant to any
Requirement of Law.
4.04 Consents and Approvals. All consents, exemptions, authorizations
or other actions by, or notices to, or filings with, Governmental Authorities
and other Persons in respect of all Requirements of Law and Contractual
Obligations of such Purchaser required in connection with the execution,
delivery or performance by such Purchaser or enforcement against such Purchaser
of this Agreement shall have been obtained and be in full force and effect, and
the Company shall have been furnished with appropriate evidence thereof, and all
waiting periods shall have lapsed without extension or the imposition of any
conditions or restrictions.
ARTICLE V
REPRESENTATIONS AND
WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to each Purchaser, after
giving effect to the Acquisition and the other transactions contemplated by this
Agreement and the other Transaction Documents, as of the Closing Date, as
follows:
5.01 Corporate Existence and Power. Each of the Company and its
Subsidiaries (a) is a corporation duly organized, validly existing and in good
standing under the laws of its jurisdiction of incorporation, (b) has all
requisite corporate power and authority to own and
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operate its property, to lease the property it operates as lessee and to conduct
the business in which it is currently, or is currently proposed to be, engaged
and (c) has the corporate power and authority to execute, deliver and perform
its obligations under this Agreement and each other Transaction Document to
which it is or will be a party.
5.02 Corporate Authorization; Compliance with Laws.
(a) The execution, delivery and performance by the Company of this
Agreement and the other Transaction Documents to which it is or will be a party
and the transactions contemplated hereby and thereby, including without
limitation the issuance by the Company of the Notes and the Warrants, (i) have
been duly authorized by all necessary corporate, and if required, stockholder
action (other than any such action necessary for the authorization of the Junior
Preferred Stock or the issuance of Adjustment Warrants exercisable therefor),
(ii) do not contravene the terms of the Company Charter Documents or the
organizational documents of any of the Company's Subsidiaries and (iii) will not
violate, conflict with or result in any breach or contravention of or the
creation of any Lien under, any Contractual Obligation of the Company or any of
its Subsidiaries, or any Requirement of Law applicable to the Company or any of
its Subsidiaries.
(b) Except to the extent that the failure to do so (individually or in
the aggregate) could not reasonably be expected to have a Material Adverse
Effect, and except as disclosed in Schedule 5.02(b) each of the Company and its
Subsidiaries (i) has all Governmental Approvals required under any Requirement
of Law for it to conduct its business, each of which is in full force and
effect, is final and not subject to review on appeal and is not the subject of
any pending or, to the best of its knowledge, threatened attack by direct or
collateral proceeding, (ii) is in compliance with each Governmental Approval
applicable to it and in compliance with all other Requirements of Law relating
to it or any of its respective properties and (iii) has timely filed all
material reports, documents and other materials required to be filed by it under
any Requirement of Law with any Governmental Authority and has retained all
material records and documents required to be retained by it under any
Requirement of Law.
5.03 Governmental Authorization; Third Party Consents. Except as
contemplated by the Transaction Documents and except to the extent previously
and duly obtained or made and in full force and effect, no approval, consent,
compliance, exemption, authorization or other action by, or notice to, or filing
with, any Governmental Authority or any other Person in respect of any
Requirement of Law or Contractual Obligation, and no lapse of a waiting period
under any Requirement of Law or Contractual Obligation, is necessary or required
in connection with the execution, delivery or performance by the Company or
enforcement against the Company of this Agreement and the other Transaction
Documents to which it is a party or the transactions contemplated hereby or
thereby.
5.04 Binding Effect. This Agreement and the other Transaction Documents
to which the Company is a party will, upon the due execution and delivery
thereof by the Company, constitute the legal, valid and binding obligation of
the Company enforceable against the Company in accordance with their respective
terms except as enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or other similar laws affecting the
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enforcement of creditors' rights generally and by general principles of equity
relating to enforceability.
5.05 Litigation; Environmental Matters.
(a) There are no legal actions, suits, proceedings, claims or disputes
pending, or to the knowledge of the Company, threatened, at law, in equity, in
arbitration or before any Governmental Authority against or affecting the
Company or any of its Subsidiaries (a) which affects the legality, validity or
enforceability of this Agreement or any other Transaction Document or which
seeks to obtain damages or obtain relief as a result of, the transactions
contemplated by this Agreement or any other Transaction Document or (b) which
could reasonably be expected to have a Material Adverse Effect. No injunction,
writ, temporary restraining order, decree or any order of any nature has been
issued by any court or other Governmental Authority purporting to enjoin or
restrain the execution, delivery or performance of this Agreement or any of the
other Transaction Documents.
(b) Except with respect to any other matters that, individually or in
the aggregate, could not reasonably be expected to result in a Material Adverse
Effect, neither the Company nor any of its Subsidiaries (i) has failed to comply
with any Environmental Law or to obtain, maintain or comply with any permit,
license or other approval required under any Environmental Law, (ii) has become
subject to any Environmental Liability, (iii) has received notice of any claim
with respect to any Environmental Liability or (iv) knows of any basis for any
Environmental Liability.
5.06 No Default or Breach. Neither the Company nor any of its
Subsidiaries is in default under or with respect to any Contractual Obligation
in any respect, which, individually or together with all such defaults, could
reasonably be expected to have a Material Adverse Effect.
5.07 ERISA. The execution and delivery of this Agreement and each of
the other Transaction Documents, the purchase and sale of the Notes and the
Warrants hereunder and the consummation of the transactions contemplated hereby
and thereby will not result in any prohibited transaction within the meaning of
Section 406 of ERISA or Section 4975 of the Code or any other violations of
ERISA or any other Requirement of Law related thereto.
5.08 Disclosure. This Agreement and any other document, certificate or
statement furnished to any Purchaser by or on behalf of the Company on or prior
to the Closing Date do not contain any untrue statement of a material fact or
omit to state a material fact necessary in order to make the statements
contained herein or therein, in the light of the circumstances under which they
were made, not misleading. There is no fact known to the Company which the
Company has not disclosed to each Purchaser in writing which has had or could
reasonably be expected to have a Material Adverse Effect.
5.09 Use of Proceeds. No part of the proceeds of the Notes or the
Warrants will be used for any purpose which violates, or which would be
inconsistent with, the provisions of Regulations G, T, U or X of the Board of
Governors of the Federal Reserve System.
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5.10 Taxes. Each of the Company and its Subsidiaries has timely filed
or caused to be filed all tax returns and reports required to have been filed
and has paid or caused to be paid all taxes required to have been paid by it,
except (a) taxes that are being contested in good faith by appropriate
proceedings and for which the Company or such Subsidiary, as applicable, has set
aside on its books adequate reserves or (b) to the extent that the failure to do
so could not reasonably be expected to result in a Material Adverse Effect.
5.11 Capitalization. The authorized Capital Stock of the Company and
each of its Subsidiaries and the issued and outstanding shares thereof are as
described on Schedule 5.11. All outstanding shares of Capital Stock of the
Company and each of its Subsidiaries will be duly authorized and validly issued,
fully paid, nonassessable and free and clear of any Lien created by the Company.
The Common Stock or the Junior Preferred Stock, as the case may be, to be issued
upon exercise of the Warrants will be validly authorized and, when issued upon
due exercise of the Warrants, will be fully paid, nonassessable and free and
clear of any Lien other than Liens created by the Purchasers. Except as
described in Schedule 5.11, (a) no other Capital Stock of the Company or any of
its Subsidiaries is authorized or outstanding, (b) neither the Company nor any
of its Subsidiaries has outstanding any rights (either preemptive or other) or
options to subscribe for or purchase from the Company or any of its Subsidiaries
any warrants or other agreements providing for or requiring the issuance by the
Company or any of its Subsidiaries of, any Capital Stock, (c) none of the
Company, any of its Subsidiaries or any of its shareholders is a party to any
agreement with respect to the voting or transfer of the Capital Stock of the
Company or any of its Subsidiaries and (d) neither the Company nor any of its
Subsidiaries is under any obligation to register under the Securities Act or
under any other securities law, any of its presently outstanding securities or
any securities that may be subsequently issued. The number of shares of Common
Stock set forth in each Initial Warrant as being subject to issuance upon
exercise of such Initial Warrant represents, in the case of the Initial Warrant
to be purchased by BancAmerica, two and eight hundred and thirteen thousandths
percent (2.813%), and, in the case of the Initial Warrant to be purchased by GE,
zero and eight hundred and forty-four thousandths percent (0.844%), of all the
shares of Common Stock of the Company on a Fully Diluted basis as of December 3,
1999 (after taking into effect the issuance of Common Stock in connection with
the Acquisition and the issuance of the Initial Warrants). The number of shares
of Common Stock or Junior Preferred Stock (if converted to Common Stock pursuant
to the terms thereof), as the case may be, subject to issuance upon exercise of
each Adjustment Warrant, will represent, when each such Adjustment Warrant is
issued, a percentage of shares of Common Stock of the Company equal to the
Adjustment Percentage set forth on Schedule 2.01(b) for such Adjustment Warrant
on a Fully Diluted basis as of the Adjustment Date set forth in Schedule 2.01(b)
for such Adjustment Warrant.
5.12 Investments. Set forth in Schedule 5.12 is a complete and correct
list of all Investments (other than Permitted Investments) held by the Company
in any Person on the date hereof and, for each such Investment, (x) the identity
of the Person or Persons holding such Investment and (y) the nature of such
Investment. Except as disclosed in Schedule 5.12, the Company owns, free and
clear of all Liens, all such Investments.
5.13 Private Offering. No form of general solicitation or general
advertising was used by the Company or its representatives in connection with
the offer or sale of the Notes or the
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Warrants. Assuming the truth of the representations made in Article VI, no
registration of the Notes or the Warrants pursuant to the provisions of the
Securities Act or any state securities or "blue sky" laws will be required by
the offer, sale or issuance of the Notes, the Warrants or the shares of Common
Stock issuable upon exercise of the Warrants.
5.14 Broker's, Finder's or Similar Fees. There are no brokerage
commissions, finder's fees or similar fees or commissions payable in connection
with the transactions contemplated hereby or any other Transaction Document to
which the Company is a party, based on any agreement, arrangement or
understanding with the Company or any action taken by the Company, other than
the fees payable pursuant to Section 14.7.
5.15 Contractual Obligations, etc. Except for the Transaction
Documents, Schedule 5.15 hereto sets forth a complete and accurate list of all
material Contractual Obligations (including the Contractual Obligations acquired
or assumed in connection with the Acquisition) of the Company and its
Subsidiaries. Each such Contractual Obligation (including Contractual
Obligations evidencing Indebtedness and Liens) is, and after giving effect to
the consummation of the transactions contemplated by the Transaction Documents
will be, in full force and effect in accordance with the terms thereof and there
are no material defaults by the Company or its Subsidiaries or, to the best
knowledge of the Company and its Subsidiaries, by any other party under any such
Contractual Obligation, except for such defaults that are not reasonably
expected (individually or in the aggregate) to have a Material Adverse Effect.
5.16 Financial Statements.
(a) Schedule 5.16 hereto contains copies of the audited consolidated
balance sheet as of December 31, 1998 and the unaudited interim consolidated
balance sheet as of September 30, 1999 (the "Latest Balance Sheet") for the
Company and its Subsidiaries, and the related audited consolidated statements
(other than the unaudited interim consolidated statements for the period ending
September 30, 1999) of operations, stockholders' deficit and cash flows of the
Company and its Subsidiaries for the fiscal periods then ended (collectively,
the "Financial Statements"). The Financial Statements (i) fairly present, in all
material respects, the financial condition and the results of operations of the
Company as at the dates and for the periods indicated therein, (ii) were based
on the books and records of the Company and were prepared on a consistent basis
for the Company, and (iii) have been prepared in accordance with GAAP. The
Company and its Subsidiaries have no Indebtedness, material contingent
obligation, or other unusual forward or long-term commitment which is not fairly
reflected in the Financial Statements or in the notes thereto. Since September
30, 1999, there has been no material change in the condition, financial or
otherwise, of the Company as shown on the Latest Balance Sheet as of such date,
except the Acquisition and changes in the ordinary course of business, none of
which individually or in the aggregate has been materially adverse. The fiscal
year of the Company and each of its Subsidiaries ends on December 31 of each
year.
(b) The estimated pro forma unaudited balance sheet of the Company as
of the Closing Date adjusted to give effect to the issuance of the Notes, the
Warrants, the Acquisition and the other transactions contemplated to occur on
the Closing Date pursuant to the Transaction Documents and the application of
the proceeds of the Notes, as prepared by the Company and heretofore delivered
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to the Purchasers, presents a good faith estimate of the pro forma financial
condition of the Company and its Subsidiaries (after giving effect to the
Acquisition, the issuance of the Notes, the Warrants, the other transactions
contemplated to occur on the Closing Date pursuant to the Transaction Documents
and the application of the proceeds received in connection therewith) and has
been prepared in accordance with GAAP consistently applied.
(c) The pro forma projected financial statements (including certain
balance sheets and statements of operations and cash flow) prepared by the
Company and heretofore delivered to the Purchasers, were prepared on a basis
consistent with the Financial Statements and based on good faith estimates and
assumptions made by the management of the Company at the time made, and there
are no statements or conclusions in any of such projections which, at the time
made, were based upon or include information known to the Company to be
misleading or which fail to take into account material information regarding the
matters reported therein.
5.17 ACT! Documents. The Company has delivered to each Purchaser true,
complete and correct copies of the License Agreement and the other ACT!
Documents, together with all amendments and modifications thereto. Such
documents (including the schedules and exhibits thereto) comprise a full and
complete copy of all material agreements between the Company and Symantec with
respect to the subject matter thereof and all transactions related thereto, and
there are no material agreements or understandings, oral or written, or side
agreements between the Company and Symantec not contained therein that relate to
or modify the substance thereof. The License Agreement and the other ACT!
Documents have been duly authorized by all necessary corporate action on the
part of the Company, and, when executed and delivered by the Company, will be
the legal, valid and binding obligations of the Company, enforceable in
accordance with their terms, except as limited by bankruptcy, insolvency,
reorganization, moratorium, or other similar laws affecting creditors' rights
generally and by general principles of equity relating to enforceability. To the
best of the Company's knowledge, each of the representations and warranties
contained in Articles 11 and 12 of the License Agreement is true and correct in
all material respects and Symantec is not in default in any material respect
under any covenants thereunder.
5.18 Debt Agreements.
(a) Schedule 5.18(a) is a complete and correct list of each credit
agreement, loan agreement, indenture, purchase agreement, guarantee, letter of
credit or other arrangement providing for or otherwise relating to any
Indebtedness or any extension of credit (or commitment for any extension of
credit) to, or guarantee by, the Company or any of its Subsidiaries, outstanding
on the date hereof, and the aggregate principal or face amount outstanding or
that may become outstanding under each such arrangement is correctly described
in Schedule 5.18(a). There exists no default under the provisions of any
instrument evidencing or securing any Indebtedness of the Company and its
Subsidiaries or of any agreement otherwise relating thereto which has had or
would reasonably be expected to have a Material Adverse Effect.
(b) Schedule 5.18(b) is a complete and correct list of each Lien
securing Indebtedness of any Person outstanding on the date hereof and covering
any property of the Company or any
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of its Subsidiaries, and the aggregate Indebtedness secured (or that may be
secured) by each such Lien and the property covered by each such Lien is
correctly described in Schedule 5.18(b).
5.19 Other Transaction Documents. The Company has delivered to each
Purchaser true, complete and correct copies of each other Transaction Document
together with all amendments and modifications thereto. Such documents
(including the schedules and exhibits thereto) comprise a full and complete copy
of all agreements between the parties thereto with respect to the subject matter
thereof and all transactions related thereto. Such Transaction Documents have
been duly authorized by all necessary corporate action on the part of the
Company and, when executed and delivered by the Company, will be the legal,
valid and binding obligations of the Company, enforceable in accordance with
their terms, except as limited by bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting creditors' rights generally and by
general principles of equity relating to enforceability. Neither the Company nor
any Subsidiary thereof is in default, nor has any event occurred or is any
condition continuing which with the passage of time or giving of notice or both
would constitute a default or event of default by the Company or any Subsidiary
thereof, under any other Transaction Document.
5.20 SEC Documents. The Company has filed in a timely manner all
documents that the Company was required to file with the Commission under
Sections 13, 14(a) and 15(d) of the Exchange Act, since its initial public
offering. As of their respective filing dates, all documents filed by the
Company with the Commission (the "SEC Documents") complied in all material
respects with the requirements of the Exchange Act or the Securities Act, as
applicable. None of the SEC Documents as of their respective dates contained any
untrue statement of a material fact or omitted to state material fact required
to be stated therein or necessary to make the statements made therein, in light
of the circumstances under which they were made, not misleading. The financial
statements of the Company included in the SEC Documents comply as to form in all
material respects with applicable accounting requirements and with the published
rules and regulations of the Commission with respect thereto.
5.21 Year 2000 Compliance. All computer systems and applications of the
Company and its Subsidiaries that are material to the Company's or its
Subsidiaries' business and operations are able to perform as set forth in
Exhibit E hereto.
5.22 Intellectual Property Matters. Each of the Company and its
Subsidiaries owns or possesses rights to use all intellectual property rights
which are required to conduct its business except to the extent that the failure
to do so could not reasonably be expected to have a Material Adverse Effect. No
event has occurred which permits, or after notice or lapse of time or both would
permit, the revocation or termination of any such rights, and neither the
Company nor its Subsidiaries is liable to any Person for infringement under any
Requirement of Law with respect to any such rights as a result of its business
operation except to the extent that the failure to do so could not reasonably be
expected to have a Material Adverse Effect.
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5.23 Solvency. As of the Closing Date and after giving effect to the
issuance of the Notes and the Warrants, and the consummation of the transactions
contemplated by the ACT! Documents, the Company and each of its Subsidiaries on
a consolidated basis will be Solvent.
5.24 Government Regulation. Neither the Company nor any Subsidiary
thereof is an "investment company" or a company "controlled" by an "investment
company" (as each such term is defined or used in the Investment Company Act of
1940, as amended) and neither the Company nor any Subsidiary thereof is, or
after giving effect to the transactions contemplated by the Transaction
Documents, will be, subject to regulation under the Public Utility Holding
Company Act of 1935 or the Interstate Commerce Act, each as amended, or any
other Requirement of Law which limits its ability to incur or consummate the
transactions contemplated hereby.
ARTICLE VI
REPRESENTATIONS AND
WARRANTIES OF THE PURCHASERS
Each Purchaser, severally and not jointly, hereby represents and
warrants to the Company, as of the Closing Date, as follows:
6.01 Authorization; No Contravention. The execution, delivery and
performance by such Purchaser of this Agreement and the other Transaction
Documents to which such Purchaser is a party, and the transactions contemplated
hereby and thereby, (a) is within such Purchaser's power and authority and has
been duly authorized by all necessary action, (b) does not contravene the terms
of such Purchaser's organizational documents or any amendment thereof and (c)
will not violate, conflict with or result in any breach or contravention of any
Contractual Obligation of such Purchaser or any Requirement of Law directly
relating to such Purchaser.
6.02 Binding Effect. This Agreement, and the other Transaction
Documents to which such Purchase is a party have been duly executed and
delivered by such Purchaser, and this Agreement and the other Transaction
Documents to which such Purchase is a party constitute the legal, valid and
binding obligations of such Purchaser enforceable against it in accordance with
its terms, except as enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium, or other similar laws affecting the
enforcement of creditors' rights generally or by general equitable principles
relating to enforceability.
6.03 Accredited Investor; Purchase for Own Account. Such Purchaser is
an "accredited investor" within the meaning of Regulation D under the Securities
Act. The Notes and the Warrants are being or will be acquired for its own
account and with no intention of distributing or reselling such securities or
any part thereof in any transaction that would be in violation of the Securities
Act or the securities laws of any state, without prejudice, however, to the
rights of such Purchaser at all times to sell or otherwise dispose of all or any
part of the Notes, the Warrants or the shares of Common Stock issued upon
exercise of the Warrants under an effective registration statement under the
Securities Act, or under an exemption from such registration available under the
Securities Act. If such Purchaser should in the future decide to dispose of the
Notes, the Warrants or the shares of Common Stock issued upon exercise of the
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Warrants, such Purchaser understands and agrees that it may do so only in
compliance with the Securities Act and applicable state securities laws, as then
in effect. Such Purchaser agrees to the imprinting, so long as required by law,
of a legend on the Notes, the Warrants and the shares of Common Stock issued
upon exercise of the Warrants to the following effect:
"THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE
AND MAY NOT BE SOLD OR OTHERWISE DISPOSED OF EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT AND APPLICABLE STATE
SECURITIES LAWS OR PURSUANT TO AN APPLICABLE EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF SUCH ACT AND SUCH LAWS."
6.04 ERISA. No part of the funds used by such Purchaser to purchase the
Notes or the Warrants hereunder constitutes assets of any Pension Plan or any
"plan" (as defined in Section 4975 of the Code).
6.05 Broker's, Finder's or Similar Fees. Except for the commitment fees
payable pursuant to Section 14.17, there are no brokerage commissions, finder's
fees or similar fees or commissions payable in connection with the transactions
contemplated hereby, or by any other Transaction Document to which such
Purchaser is a party, based on any agreement, arrangement or understanding with
such Purchaser or any action taken by such Purchaser.
6.06 Governmental Authorization; Third Party Consent. Except as
contemplated by the Transaction Documents, no approval, consent, compliance,
exemption, authorization or other action by, or notice to, or filing with, any
Governmental Authority or any other Person in respect of any Requirement of Law
or Contractual Obligation, and no lapse of a waiting period under any
Requirement of Law or Contractual Obligation, is necessary or required in
connection with the execution, delivery or performance by such Purchaser or
enforcement against such Purchaser of this Agreement and the other Transaction
Documents to which it is a party or the transactions contemplated hereby or
thereby.
6.07 Corporate Existence and Power. Such Purchaser (a) is a corporation
or limited liability company, as the case may be, duly organized, validly
existing and in good standing under the laws of its jurisdiction of
incorporation or formation and (b) has the corporate or other power and
authority to execute, deliver and perform its obligations under this Agreement
and each other Transaction Document to which it is a party.
ARTICLE VII
FINANCIAL INFORMATION AND NOTICES
Until the later of (a) such time as the Company has paid all principal
of and interest on the Notes and all other amounts due under this Agreement and
the Notes and (b) such time when no Warrants are outstanding (or in the case of
Section 7.01(c), at such earlier time as set forth therein),
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the Company hereby covenants and agrees as follows with each Purchaser and each
Holder that is an Affiliate of a Purchaser:
7.01 Financial Statements and Other Information. The Company shall
deliver to each Purchaser and each Holder that is an Affiliate of a Purchaser:
(a) Quarterly Financials. As soon as available, but in any event within
thirty (30) days after the end of each fiscal quarter of the Company, the
unaudited consolidated balance sheet of the Company and its Subsidiaries as of
the end of such quarter and the related unaudited consolidated statements of
operations, cash flows and shareholders' equity for such quarter and for the
portion of the fiscal year ended with the last day of such quarter, setting
forth in each case comparative figures for the corresponding quarter in the
prior fiscal year, all of which shall be certified by the chief financial
officer or equivalent officer of the Company, subject to normal year-end audit
adjustments (and the absence of footnotes and presentation items); and
(b) Year-End Financials. As soon as available, but in any event within
ninety (90) days after the end of each fiscal year of the Company, the
consolidating and consolidated balance sheet of the Company and its Subsidiaries
as at the end of such year and the related consolidating and consolidated
statements of operations, cash flows and shareholders' equity for such year,
setting forth in each case comparative figures for the previous year and
budgeted figures for such period as set forth in the respective budget delivered
pursuant to Section 7.01(f). All such financial statements shall be complete and
correct in all material respects and shall be prepared in accordance with GAAP
applied consistently throughout the periods reflected therein and with prior
periods (except as approved by the accountants preparing such statements or the
chief financial officer, as the case may be, and disclosed therein) and, in the
case of the consolidated financial statements, accompanied by a report thereon
of independent certified public accountants of recognized national standing,
which report shall state that such financial statements present fairly the
financial position of the Company and its Subsidiaries as at the dates indicated
and the results of their operations and cash flow for the periods indicated in
conformity with GAAP and that the examination by such accountants in connection
with such financial statements has been made in accordance with GAAS.
(c) Compliance Certificate. Until such time as the Company has paid all
principal of and interest on the Notes and all other amounts due under this
Agreement and the Notes or the earlier termination of this Agreement, together
with each delivery of financial statements pursuant to Sections 7.01(a) and
7.01(b) above, a fully and properly completed compliance certificate signed by
the chief executive officer or chief financial officer or equivalent officer of
the Company certifying that the Company is in compliance in all material
respects with each of the covenants contained in Articles VII, VIII and IX
hereof.
(d) Accountants' Reports. Promptly upon receipt thereof, copies of all
significant reports submitted to the Company or any of its Subsidiaries by
independent public accountants in connection with each annual, interim or
special audit of the financial statements of the Company and its Subsidiaries
made by such accountants, including the comment letter submitted by such
accountants to management in connection with their annual audit.
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(e) Management Report. Together with each delivery of financial
statements pursuant to Section 7.01(a) and (b) above, a management report: (i)
describing the operations and financial condition of the Company and its
Subsidiaries for the quarter then ended and the portion of the current fiscal
year then elapsed (or for the fiscal year then ended in the case of year-end
financials), (ii) setting forth in comparative form the corresponding figures
for the corresponding periods of the previous fiscal year and the corresponding
figures from the most recent board-approved budget for the current fiscal year
delivered to such Purchaser pursuant to Section 7.01(f) and (iii) discussing the
reasons for any significant variations from such projections. The information
above shall be presented in reasonable detail and shall be certified by the
chief financial officer or equivalent officer of the Company to the effect that
such historical information (including the financial statements of the Company
delivered pursuant to Section 7.01(a) and (b)) fairly presents the results of
operations and financial condition of the Company and its Subsidiaries, if any,
as at the dates and for the periods indicated, except for normal year-end audit
adjustments (and absence of footnotes and presentation items, in the case of
quarterly financials).
(f) Budgets. As soon as available and in any event not later than
thirty (30) days after the last day of each fiscal year of the Company, an
annual budget in the form prepared for the Company's board of directors
(including budgeted balance sheets, statements of operations, cash flows and
shareholders' equity) prepared by the Company for each fiscal quarter of the
following fiscal year, prepared in reasonable detail, with appropriate
presentation and discussion of the principal assumptions upon which such budget
is based, which shall be accompanied by the statement of the chief executive
officer or chief financial officer of the Company to the effect that, to the
best of his knowledge, such budget is a reasonable estimate for the periods
respectively covered thereby.
(g) SEC Filings, Stockholder Mailings and Press Releases. Promptly upon
their becoming available, copies of all regular and periodic reports and all
registration statements and prospectuses, if any, filed by the Company or any
Subsidiary thereof with any securities exchange or with the Commission, any
quarterly and annual reports, proxy statements and any other documents which it
mails to its stockholders and any press release or other written or electronic
information publicly disseminated by the Company to the business or financial
media.
(h) Other Information. With reasonable promptness, such other
information and data with respect to the Company and its Subsidiaries as from
time to time may be reasonably requested by any Purchaser or any Holder that is
an Affiliate of a Purchaser.
(i) Notices. Prompt (but in no event later than ten (10) days after an
officer of the Company obtains knowledge thereof) written notice of: (i) the
commencement of all proceedings and investigations by or before any Governmental
Authority (including any notice of violation of any Requirement of Law) and all
actions and proceedings in any court or before any arbitrator against or
involving the Company or any Subsidiary thereof or any of its or their
respective properties, assets or businesses, in each case involving a claim or
liability which could reasonably be expected to have a Material Adverse Effect,
(ii) any labor controversy that has resulted in or threatens to result in, a
strike or other work action against the Company or any Subsidiary thereof that
could reasonably be expected to have a Material Adverse Effect, (iii) any
attachment, judgment,
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levy or order assessed against the Company or any Subsidiary thereof that could
reasonably be expected to have a Material Adverse Effect, (iv) any act or
condition arising under ERISA that would constitute grounds for the termination
of any Plan or for the appointment by the appropriate United States District
Court of a trustee to administer such Plan or for the imposition of any
liability on the Company or any Subsidiary thereof under Title IV of ERISA, (v)
any Event of Default, or any event which constitutes or which with the passage
of time or giving of notice or both would constitute an Event of Default, and
(vi) any notice given or received by the Company of any event of default, or any
event which constitutes or which with the passage of time or giving of notice or
both would constitute a default or event of default under any agreement or
instrument evidencing any Senior Indebtedness (as defined in Article XI of this
Agreement).
7.02 Board of Directors Observation Rights.
(a) The Company shall provide each Purchaser the right to have one
representative present (whether in person or by telephone) at all meetings of
the board of directors of the Company and its executive committee; provided,
that such representative shall not be entitled to vote at such meetings;
provided further, that such representative shall not be entitled to attend that
portion of meetings during which the board of directors shall discuss (a) any
matter which the board of directors believes, in good faith, would represent a
conflict of interest vis-a-vis such Purchaser, or (b) any matter which, in the
reasonable written opinion of the Company's counsel, is entitled to
attorney/client privilege; provided further, that once the Company has paid all
principal of and interest on the Notes and all other amounts due under this
Agreement and the Notes, each Purchaser shall have the right to have one
representative present (whether in person or by telephone) only at the regularly
scheduled quarterly meetings of the board of directors of the Company and its
executive committee (provided that the payment of all principal and interest on
the Notes and all other amounts due under this Agreement and the Notes shall not
affect the Purchasers' rights to receive notices of all meetings and materials
distributed for all meetings of the board of directors of the Company and its
executive committee pursuant to Section 7.02(b)).
(b) The Company shall provide each Purchaser with a notice of each
meeting of the board of directors of the Company or its executive committee as
is distributed to its directors or members, as the case may be, in accordance
with the Company Charter Documents together with all materials that are
distributed to the directors or members, as the case may be, pertaining to such
meeting.
ARTICLE VIII
AFFIRMATIVE COVENANTS
Until such time as the Company has paid all principal of and interest
on the Notes and all other amounts due under this Agreement and the Notes, the
Company hereby covenants and agrees with each Holder as follows:
8.01 Preservation of Corporate Existence and Related Matters. The
Company and each Subsidiary thereof shall preserve and maintain its separate
corporate existence and all rights, franchises, licenses and privileges
necessary to the conduct of its business; and qualify and
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remain qualified as a foreign corporation and authorized to do business in each
jurisdiction in which (a) the character of its properties or the nature of its
business requires such qualification or authorization, and (b) where failure to
qualify would have a Material Adverse Effect.
8.02 Maintenance of Property. The Company and each Subsidiary thereof
shall protect and preserve all properties necessary and material to its
business, including copyrights, patents, trade names and trademarks; maintain in
good working order and condition all buildings, equipment and other tangible
real and personal property; and from time to time make or cause to be made all
renewals, replacements and additions to such property necessary for the conduct
of its business so that the business carried on in connection therewith may be
properly and advantageously conducted at all times.
8.03 Maintenance of Insurance. The Company and each Subsidiary thereof
shall maintain insurance with responsible insurance companies against such risks
and in such amounts as are customarily maintained by similar businesses or as
may be required by any Requirement of Law, and on the Closing Date and from time
to time thereafter deliver to each Holder upon its request a detailed list of
the insurance then in effect, stating the names of the insurance companies, the
amounts and rates of the insurance, the dates of the expiration thereof and the
properties and risks covered thereby.
8.04 Payment and Performance of Obligations. The Company and each
Subsidiary thereof shall (a) pay and perform all its obligations under this
Agreement and the other Transaction Documents, (b) pay or perform all material
taxes, assessments and other governmental charges that may be levied or assessed
upon it or any of its property (including, without limitation, withholding,
social security, payroll and similar employment related taxes on the dates such
taxes are due), (c) pay or perform all other material indebtedness, obligations
and liabilities in accordance with customary trade practices and (d) comply in
all material respects with each material Contractual Obligation entered into in
the conduct of its business; provided, that any such Person may contest any item
described in clauses (b), (c) and (d) hereof in good faith so long as adequate
reserves are maintained with respect thereto in accordance with GAAP.
8.05 Accounting Methods and Financial Records. The Company and each
Subsidiary thereof shall maintain a system of accounting, and keep such books,
records and accounts (which shall be true and complete in all material respects)
as may be required or as may be necessary to permit the preparation of financial
statements in accordance with GAAP consistently applied and in compliance with
the regulations of any Governmental Authority having jurisdiction over it or any
of its properties.
8.06 Compliance With Laws and Obligations. The Company and each
Subsidiary thereof shall observe and remain in compliance with all Requirements
of Law and Contractual Obligations, including, without limitation, the Foreign
Corrupt Practices Act, in each case applicable or necessary to the conduct of
its business, except when the failure to do so could not reasonably expected to
have a Material Adverse Effect.
8.07 Visits and Inspections. The Company and each Subsidiary thereof
shall permit representatives of any Purchaser (but not any other Holders or
Participants other than any such
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Holders or Participants who are Affiliates of the Purchaser), from time to time,
during normal business hours, to visit and inspect its properties; inspect,
audit and make extracts from its books, records and files, including, but not
limited to, management letters prepared by independent accountants; and discuss
with its principal officers and its independent accountants, its business,
assets, liabilities, financial condition, results of operations and business
prospects.
8.08 Use of Proceeds. The Company shall use the proceeds of the sale of
the Notes and the Warrants hereunder only (a) in connection with the Acquisition
and the implementation of the Company's new business strategy and (b) for the
payment of fees and expenses in connection with the transactions contemplated by
the Transaction Documents.
8.09 Pro Forma and Projected Financial Statements.
(a) Within thirty (30) days following the Closing Date, the Company
shall deliver to each Purchaser pro forma projected financial statements
(including balance sheets and statements of operations and cash flow and related
footnotes) prepared after the Closing and reflecting the forecasted financial
condition and results of operations of the Company and each of its Subsidiaries
(A) on an annual basis for the two-year period commencing on January 1, 2000 and
(B) on a quarterly basis for the period commencing on January 1, 2000 through
December 31, 2001, prepared by the Company and adjusted to give effect to the
issuance of the Notes, the Warrants, the Acquisition and the other transactions
contemplated to occur on the Closing Date pursuant to the Transaction Documents
and the application of the proceeds of the Notes, which such pro forma financial
statements shall be in form and substance satisfactory to each Purchaser.
(b) The projections delivered under this Section 8.09 will be prepared
on a basis consistent with the Financial Statements and will be based on good
faith estimates and assumptions made by the management of the Company.
8.10 Reservation of Shares. The Company shall at all times reserve and
keep available out of the aggregate of its authorized but unissued shares, free
of preemptive rights, such number of its duly authorized shares of Common Stock
and Preferred Stock as shall be sufficient to enable the Company to issue Common
Stock, and Junior Preferred Stock to the extent required by the proviso to the
first sentence in Section 2.01(b), upon the exercise of the Warrants.
8.11 Regulatory Requirements and Restrictions. In the event of any
reasonable determination by any Holder that, by reason of any existing or future
federal or state law, statute, rule, regulation, guideline, order, court or
administrative ruling, request or directive (whether or not having the force of
law and whether or not failure to comply therewith would be unlawful) (a
"Regulatory Requirement"), such Holder is effectively restricted or prohibited
from holding its Warrant or the related Warrant Securities (including any shares
of Capital Stock or other securities distributable to such Warrantholder in any
merger, reorganization, readjustment or other reclassification), or otherwise
realize upon or receive the benefits intended under its Warrant (a "Regulatory
Constraint"), the Company shall, and shall use its reasonable efforts to have
its shareholders, take such action as such Holder may deem reasonably necessary
to permit such Holder to comply with such Regulatory Requirement, including the
issuance of one or more
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Adjustment Warrants to purchase Junior Preferred Stock in lieu of warrants to
purchase Common Stock, as contemplated by the proviso to the first sentence of
Section 2.01(b). The costs of taking such action shall be borne by the Company.
Such action to be taken may include, without limitation, the Company's
authorization of one or more new classes of Capital Stock for which such Warrant
may be exercised or to make such modifications and amendments to the Company
Charter Documents, this Agreement, the related Warrant or any other documents
and instruments related to or executed in connection herewith or with the
Warrants as may be deemed reasonably necessary by such Holder. Such Holder shall
give written notice to the Company of any such determination and the action or
actions necessary to comply with such Regulatory Requirement, and the Company
shall take all steps reasonably necessary to comply with such determination as
expeditiously as possible. In the event that any Holder becomes entitled to
receive securities or other property other than Common Stock as a result of a
Regulatory Constraint, the Company shall provide notice to each other Holder of
such event, and each such other Holder shall, at its election, have the right to
receive such other securities or property upon exercise of its Warrants in the
same manner as the Holder subject to such Regulatory Constraint.
ARTICLE IX
NEGATIVE COVENANTS
Until such time as the Company has paid all principal of and interest
on the Notes and all other amounts due under this Agreement and the Notes or
unless the Company has obtained the prior written consent of the Required
Holders, the Company hereby covenants and agrees with each Holder as follows:
9.01 Limitations on Mergers; Consolidations; and Acquisitions. The
Company will not, nor will the Company permit any Subsidiary thereof to, merge
or consolidate with (including any share exchange involving the Company's
shareholders) any Person, acquire all or substantially all of the outstanding
shares of Capital Stock issued by a Person, or acquire all or any substantial
part of the assets of any Person, except for:
(a) any merger or consolidation of the Company with any Wholly-Owned
Subsidiary; provided, that the Company is the surviving Person of such merger;
(b) any merger of a Subsidiary of the Company into a Wholly-Owned
Subsidiary of the Company; and
(c) acquisitions involving consideration (including the assumption of
Indebtedness) aggregating less than $20,000,000 individually and $30,000,000 in
the aggregate; provided, that prior to each such acquisition and after giving
effect thereto, no default or Event of Default shall have occurred and be
continuing hereunder (each, a "Permitted Acquisition").
9.02 Limitations on Loans. Except to fund Permitted Investments, the
Company will not, nor will the Company permit any Subsidiary thereof to, make
any loans or other advances of money (other than for salary, travel advances,
advances against commissions and other similar
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advances in the ordinary course of business) to any Person, except intercompany
loans permitted pursuant to section 9.03 below.
9.03 Limitations on Total Indebtedness. The Company will not, nor will
the Company permit any Subsidiary thereof to, create, incur, assume, or suffer
to exist, any Indebtedness, except:
(a) Obligations hereunder and under the Notes;
(b) Obligations of any Subsidiary of the Company to the Company or
another Subsidiary of the Company; and
(c) Indebtedness not included in paragraphs (a) or (b) above which does
not exceed at any time, in the aggregate for all of the Company and its
Subsidiaries, the greater of (i) $25,000,000 or (ii) an amount equal to three
(3) times Consolidated EBITDA for the then most recently ended period of twelve
(12) consecutive months.
9.04 Limitations on Affiliate Transactions. The Company will not, nor
will the Company permit any Subsidiary thereof to, enter into or be a party to,
any transaction with any Affiliate or stockholder of the Company or Subsidiary,
except in the ordinary course of business and pursuant to the reasonable
requirements of the Company's or such Subsidiary's business and upon fair and
reasonable terms which are (i) fully disclosed to each Purchaser and any Holder
who, together with its Affiliates, holds Notes having a principal balance of at
least $5,000,000.00 and (ii) are no less favorable to the Company or such
Subsidiary than it would obtain in a comparable arm's length transaction with a
Person not an Affiliate or stockholder of the Company or Subsidiary.
9.05 Limitations on Distributions. The Company will not, nor will the
Company permit any Subsidiary thereof, to authorize, declare or pay any
dividends or make any other distributions on its Capital Stock or purchase,
defease, redeem, or otherwise acquire or retire its Capital Stock, except for
the following:
(a) cash dividends paid by any Subsidiary to the Company or any
Wholly-Owned Subsidiary of the Company; and
(b) dividends payable solely in Capital Stock or in options, warrants
or other rights to purchase Capital Stock.
9.06 Limitations on Disposition of Assets. Unless the Company complies
with Section 10.02(c), the Company will not, nor will the Company permit any
Subsidiary thereof to, sell, lease or otherwise dispose of any of its
properties, including any disposition of property as part of a sale and
leaseback transaction, to or in favor of any Person, except for (collectively,
"Permitted Dispositions"):
(a) sales of inventory in the ordinary course of business;
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(b) transfers of property to the Company by a Subsidiary of the
Company;
(c) sales of equipment where such equipment is replaced within 60 days
after the sale with equipment that is comparable or better;
(d) sales or other disposition of obsolete inventory and equipment; or
(e) dispositions of other assets for cash which, in the aggregate
during any consecutive 12-month period, have a fair market value or book value
(whichever is greater) of $2,000,000 or less.
9.07 Limitations on Investments. The Company will not, nor will the
Company permit any Subsidiary thereof to, make or have any investment made in
cash or by delivery of property to any Person, whether by acquisition of Capital
Stock, Indebtedness or other obligation, or by loan, advance or capital
contribution, or otherwise, except the following (collectively, "Permitted
Investments"):
(a) investments by the Company to the extent existing on the Closing
Date, in one or more Subsidiaries of the Company;
(b) Permitted Acquisitions;
(c) property to be used in the ordinary course of business;
(d) Current Assets arising from the sale of goods and services in the
ordinary course of business of the Company and its Subsidiaries;
(e) a convertible promissory note investment in x-xxxxxxxx.xxx, Inc.
("i-tinerary") of up to $500,000.00 pursuant to the term sheet that the Company
has provided to the Purchasers or capital stock of i-tinerary issuable upon
conversion of such promissory note;
(f) (i) interest bearing open-ended or time deposits accounts, money
market accounts, and certificates of deposit of any federally insured bank, (ii)
short-term government securities, and (iii) other similarly liquid investments;
and
(g) up to $1,000,000.00 of loans to or Investments in other Persons at
any time; provided that such loans or Investments (i) are approved by the board
of directors of the Company, (ii) are made for a strategic need of the Company
and (iii) do not entitle the Company to receive more than twenty percent (20%)
of the outstanding capital stock or other equity securities of such Person.
9.08 Limitations on Liens. The Company will not, nor will the Company
permit any Subsidiary thereof to, create, incur, assume or suffer to exist, any
Lien on or with respect to any of its assets or properties (including without
limitation shares of capital stock or other ownership interests of a
Subsidiary), real or personal, whether now owned or hereafter acquired, except:
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(a) Liens for taxes, assessments and other governmental charges or
levies (excluding any Lien imposed pursuant to any of the provisions of ERISA or
Environmental Laws) not yet due or as to which the period of grace (not to
exceed thirty (30) days), if any, related thereto has not expired or which are
being contested in good faith and by appropriate proceedings if adequate
reserves are maintained to the extent required by GAAP;
(b) the claims of materialmen, mechanics, carriers, warehousemen,
processors or landlords for labor, materials, supplies or rentals incurred in
the ordinary course of business, (i) which are not overdue for a period of more
than sixty (60) days or (ii) which are being contested in good faith and by
appropriate proceedings;
(c) Liens consisting of deposits or pledges made in the ordinary course
of business in connection with, or to secure payment of, obligations under
workers' compensation, unemployment insurance or similar legislation;
(d) Liens constituting encumbrances in the nature of zoning
restrictions, easements and rights or restrictions of record on the use of real
property, which in the aggregate are not substantial in amount and which do not,
in any case, detract from the value of such property or impair the use thereof
in the ordinary conduct of business;
(e) Liens in existence on the Closing Date and described on Schedule
5.18(b); and
(f) Liens securing Senior Indebtedness (as defined in Article XI
hereof).
9.09 Limitations on Tax Consolidation. The Company will not, nor will
the Company permit any Subsidiary thereof to, file or consent to the filing of
any consolidated income tax return with any Person other than the Company or its
Wholly-Owned Subsidiaries.
9.10 Limitations on Changes in Fiscal Year End. The Company will not,
nor will the Company permit any Subsidiary thereof to, change its fiscal year
end.
9.11 Limitations or Modifications of Transaction Documents and Certain
Other Agreements. The Company will not, nor will the Company permit any
Subsidiary thereof to, amend, modify or change any Transaction Documents unless
in each case such amendment, modification, change or other action contemplated
by this clause could not reasonably be considered adverse to the interests of
the Holders in any material respect.
ARTICLE X
REDEMPTION OF NOTES
10.01 Optional Redemption of Notes. The Company shall have the right to
redeem the Notes, in whole or in part, at any time or from time to time on a pro
rata basis in accordance with the provisions of Section 10.04, at a redemption
price equal to the unpaid principal thereof, plus accrued and unpaid interest
thereon through the date fixed for redemption.
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10.02 Mandatory Redemption of Notes.
(a) The Company shall redeem the Notes in full on December 31, 2004, at
a redemption price equal to the unpaid principal thereof plus accrued and unpaid
interest thereon through the date fixed for redemption.
(b) Upon any of (i) the consummation of a Qualified Public Offering by
the Company or any of its Subsidiaries, (ii) a Change of Control, (iii) the
occurrence of an Event of Default, or (iv) the consummation by the Company of a
merger, consolidation or share exchange with any other Person (other than as
permitted by Section 9.01), or a sale of substantially all of its assets, the
Company shall, if so directed by the Required Holders, redeem the Notes of all
Holders in full at a redemption price equal to the unpaid principal thereof plus
accrued and unpaid interest thereon through the date fixed for redemption.
(c) The Company shall, if directed by the Required Holders, redeem the
Notes, partially in an amount equal to (i) fifty percent (50%) of the Net Cash
Proceeds of any Public Offering by the Company or any of its Subsidiaries which
is not a Qualified Public Offering and (ii) one hundred percent (100%) of the
Net Cash Proceeds of any asset disposition other than a Permitted Disposition,
in both (i) and (ii), on a pro rata basis in accordance with the provisions of
Section 10.04, at a redemption price equal to the unpaid principal thereof plus
accrued and unpaid interest thereon through the date fixed for redemption.
10.03 Notice of Redemption.
(a) Optional Redemption. Any call for redemption of the Notes pursuant
to Section 10.01 shall be made by giving written notice to the Holders of the
Notes to be redeemed no less than ten (10) Business Days nor more than thirty
(30) days prior to the date fixed for redemption, which notice shall specify the
principal amount of such Notes to be redeemed. If less than all the Notes are to
be redeemed, the notice of redemption shall identify the Notes and portion
thereof to be redeemed. Notice of call for redemption having been given as
aforesaid, the principal amount to be redeemed, together with accrued and unpaid
interest thereon to the date of redemption, shall on the date designated in such
notice become due and payable. From and after such date, unless the Company
shall default in payment of such principal amount when so due and payable,
together with accrued and unpaid interest, interest on such principal amount
shall cease to accrue.
(b) Mandatory Redemption. In the event the Company or any of its
Subsidiaries or any shareholders of the Company propose to effect any
transaction described in Sections 10.02(b) or (c) (other than Section
10.02(b)(iii)), the Company shall give each Holder written notice thereof not
later than twenty (20) days prior to the proposed date of consummation of such
transaction. Each Holder that desires to exercise its option to cause the
Company to redeem its Notes shall give the Company irrevocable written notice (a
"Redemption Notice") of such election not later than ten (10) days after receipt
of such notice from the Company, or, in the case of a redemption pursuant to
Section 10.02(b)(iii), after knowledge of the applicable Event of Default by
such Holder. If the Company shall have received Redemption Notices from the
Required Holders, it shall redeem in full all Notes then outstanding, or, in the
case of a partial redemption pursuant to Section 10.02(c), as set forth in such
Section 10.02(c) and Section 10.04. If any transaction does not occur for any
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reason, the Company shall promptly notify each Holder that such redemption shall
not be made by the Company and no such redemption shall be required.
10.04 Allocation and Application of Payments. In the case of the
redemption of less than all the Notes at the time outstanding, the amount of any
such redemption shall be allocated to the aggregate principal amount of the
Notes to be redeemed among the Holders of all the Notes at the time outstanding
in proportion, as nearly as practicable, to the respective aggregate unpaid
principal amounts of the Notes then held by them.
10.05 Notation of Partial Payments. Upon any partial redemption of any
Note, such Note, at the option of the Company, shall be either (a) surrendered
to the Company in exchange for a new Note in a principal amount equal to the
principal amount remaining unpaid on the Note surrendered and otherwise having
the same terms and provisions as the Note surrendered or (b) made available to
the Company at its office herein provided for notation thereon of the portion of
the principal so redeemed.
ARTICLE XI
SUBORDINATION OF NOTES
11.01 Definitions. As used in this Article XI, the following terms
shall have the following meanings:
"Post-Petition Interest" means interest accruing in respect of Senior
Indebtedness after the commencement of any bankruptcy, insolvency, receivership
or similar proceedings by or against the Company, at the rate applicable to such
Senior Indebtedness pursuant to the terms applicable thereto, whether or not
such interest is allowed as a claim enforceable against the Company in any such
proceedings.
"Senior Covenant Default" means any default under any Senior
Indebtedness (other than a Senior Payment Default) which continues uncured for
the period of grace, if any, with respect thereto.
"Senior Default" means a Senior Payment Default or a Senior Covenant
Default.
"Senior Indebtedness" means the following obligations of the Company:
(a) all principal, interest (including any Post-Petition Interest) and all other
amounts outstanding under or in respect of any instrument evidencing
Indebtedness of the Company; provided, that such Indebtedness is specifically
designated in such instrument as "Senior Indebtedness" for purposes of this
Agreement and (b) any and all refinancings, replacements or refundings of any of
the amounts referred to in clause (a) above; provided, however, that the
aggregate principal amount of Senior Indebtedness permitted under clause (a),
and any refinancing, replacement or refunding thereof permitted under clause (b)
(including the maximum amount of the aggregate commitments of the lenders to
extend any revolving credit facility thereunder) shall not exceed at any time
$15,000,000.
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"Senior Payment Default" means any default in the payment of any Senior
Indebtedness whether upon the scheduled maturity thereof, upon acceleration or
otherwise which, in each case, continues uncured for the period of grace, if
any, with respect thereto.
11.02 Subordination. The Company, for itself and its successors and
assigns, and each Purchaser covenants and agrees, and each Holder, by its
acceptance of any Note, shall be deemed to have agreed, that the payment from
whatever source of the Indebtedness of the Company evidenced by this Agreement
and the Notes, including the principal thereof and interest thereon, and any
other amounts owing hereunder or thereunder, shall be subordinate and subject in
right of payment, to the extent and in the manner hereinafter set forth, to the
prior payment in full of all Senior Indebtedness, and that each holder of such
Senior Indebtedness, with respect to the Senior Indebtedness now existing or
hereafter arising, shall be deemed to have acquired such Senior Indebtedness in
reliance upon the covenants and provisions contained in this Article XI.
11.03 Subordination Upon Distribution of Assets.
(a) Upon any payment or distribution of assets of the Company of any
kind or character, whether in cash, property or securities, to creditors upon
any dissolution or winding-up or total or partial liquidation or reorganization
of the Company, whether voluntary or involuntary, or in bankruptcy, insolvency,
receivership or other proceedings or pursuant to any assignment for the benefit
of creditors or any other marshalling of assets and liabilities of the Company
(including upon any event described in Section 12.01(g) or (h)), all Senior
Indebtedness shall first be paid in full or duly provided for before any payment
is made on account of the Notes, and any such payment or distribution which
otherwise would be payable or deliverable upon or with respect to the Notes
shall be paid or delivered directly to the holders of the Senior Indebtedness or
as otherwise directed by such holders or a court of competent jurisdiction for
application to the payment or prepayment of the Senior Indebtedness (in such
order as the holders of the Senior Indebtedness may elect) until the Senior
Indebtedness shall have been paid in full or duly provided for.
(b) For purposes of this Section 11.03, the words "cash, property or
securities" shall not be deemed to include (i) any payment or distribution of
securities of the Company or any other corporation authorized by an order or
decree giving effect, and stating in such order or decree that effect is given,
to the subordination of the Notes to the Senior Indebtedness, and made by a
court of competent jurisdiction in a reorganization proceeding under any
applicable bankruptcy, insolvency or other similar law, or (ii) securities of
the Company or any other corporation provided for by a plan of reorganization or
readjustment which are subordinated, to at least the same extent as the Notes,
to the payment of all Senior Indebtedness then outstanding.
11.04 Prohibitions and Limitations on Payment.
(a) Subject to Section 11.03 hereof, upon receipt by the Company of a
Blockage Notice (as defined below) in respect of any Senior Payment Default and
unless and until such Senior Payment Default shall have been cured or
effectively waived in writing by the holders of the Senior Indebtedness, no
direct or indirect payment (in cash, property, securities or by set-off or
otherwise) shall be made of or on account of the Notes or in respect of any
redemption, retirement, purchase or
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other acquisition of the Notes and the Holders shall not accept (in cash,
property, securities or by setoff or otherwise) from the Company any payment of
or on account of the Notes. Upon the earlier of the cure or waiver of such
Senior Payment Default, the Company shall, subject to Section 11.03 hereof,
promptly pay to the Holders all sums then due and payable under the Notes as a
result of this Section 11.04(a).
(b) Subject to Section 11.03 hereof, upon receipt by the Company of a
Blockage Notice in respect of any Senior Covenant Default and until the earlier
of (i) such Senior Covenant Default shall have been cured or effectively waived
in writing by the holders of the Senior Indebtedness and (ii) the expiration of
the applicable Blockage Period (as defined below), no direct or indirect payment
(in cash, property, securities or by set-off or otherwise) shall be made of or
on account of the Notes or in respect of any redemption, retirement, purchase or
other acquisition of the Notes and the Holders shall not accept (in cash,
property, securities or by setoff or otherwise) from the Company any payment of
or on account of the Notes. Upon the earlier of the dates described in clauses
(i) and (ii) above, the Company shall, subject to Section 11.03 hereof, promptly
pay to the Holders all sums then due and payable under the Notes as a result of
this Section 11.04(b).
(c) For purposes of this Section 11.04, a "Blockage Notice" is a notice
of a Senior Default given to the Company by the holders of the majority of the
aggregate principal amount of the Senior Indebtedness under which such Senior
Default has occurred (or their authorized agent) and a "Blockage Period" is the
period commencing upon the Company's receipt of such Blockage Notice and ending
on the date one hundred eighty (180) days thereafter; provided that (i) no
Blockage Notice may be given by reason of the continuance of any Senior Default
which existed at the time of the giving of a prior Blockage Notice unless such
Senior Default shall have been cured for a period of not less than sixty (60)
days, and (ii) no more than one Blockage Notice may be given in any three
hundred sixty (360)-day period. Upon receipt of any Blockage Notice, the Company
shall promptly, but in any event with five (5) Business Days of receipt, deliver
the same to each Holder.
11.05 Limitation on Remedies. So long as any Senior Indebtedness
remains outstanding, upon the occurrence of an Event of Default, no Holder shall
declare or join in any declaration of any of the Notes to be due and payable by
reason of such Event of Default or otherwise take or cause to be taken any
action against the Company (including, without limitation, commencing any legal
action against the Company or filing or joining in the filing of any insolvency
petition against the Company) until the expiration of the Remedy Standstill
Period (as defined below) with respect to such Event of Default; provided, that
any Remedy Standstill Period shall expire immediately and, subject to the
provisions of Sections 11.03 and 11.04 hereof, the Holders shall be entitled to
exercise all rights and remedies under Section 12.02 hereof in the event (a) the
holders of a majority of the aggregate principal amount of the Senior
Indebtedness shall have caused such Senior Indebtedness to become due prior to
its stated maturity, (b) the Senior Covenant Default in respect of which any
Blockage Period shall have commenced shall have been cured to the satisfaction
of the holders of a majority of the aggregate principal amount of the Senior
Indebtedness or effectively waived in writing by the holders of a majority of
the aggregate principal amount of the Senior Indebtedness, (c) an Event of
Default pursuant to Section 12.01(g) or (h) shall have occurred and be
continuing, or (d) any holder of the Senior Indebtedness commences any action to
foreclose upon, attach, seize, take control of or otherwise exercise remedies
under any agreement governing such Senior
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Indebtedness or any security therefor on or with respect to a material portion
of the assets of the Company. For the purposes of this Section 11.05, a "Remedy
Standstill Period" is the period commencing on the date a written notice of
intention to exercise remedies on account of the occurrence of an Event of
Default shall have been given by the Required Holders to the Company and
expiring on the later of (i) thirty (30) Business Days after the date of such
notice and (ii) the earlier of (A) the expiration of any Blockage Period in
effect on the last day of such thirty (30) Business Day period or (B) the one
hundred eightieth (180th) day after the date of such notice.
11.06 Payments and Distributions Received. If any Holder shall have
received any payment from, or distribution of assets of, the Company in respect
of any of the Notes in contravention of the terms of this Article XI, then and
in such event such payment or distribution shall be received and held in trust
for and shall be paid over or delivered to the holders of the Senior
Indebtedness (or to the applicable agent on their behalf) for application to the
Senior Indebtedness, to the extent necessary to pay all such Senior Indebtedness
in full in the form received (except for the endorsement or assignment of such
Holder where necessary).
11.07 Proofs of Claim. If, while any Senior Indebtedness is
outstanding, any event described in Section 11.03(a) occurs, the Holders shall
duly and promptly take such action as any holder of the Senior Indebtedness may
reasonably request to collect any payment with respect to the Notes for the
account of the holders of the Senior Indebtedness and to file appropriate claims
or proofs of claim in respect of the Notes and to execute and deliver on demand
such powers of attorney, proofs of claim, assignments of claim or other
instruments as may be required to enforce any and all claims on or with respect
to the Notes. Upon the failure of any Holder to take any such action, each
holder of the Senior Indebtedness is hereby irrevocably authorized and empowered
(in its own name or otherwise), but shall have no obligation, to demand, xxx
for, collect and receive every payment or distribution referred to in respect of
the Notes and to file claims and proofs of claim with respect to the Notes and
each of the Holders hereby appoints each holder of the Senior Indebtedness or
its representative as attorney-in-fact for such Holder to take any and all
actions permitted by this paragraph to be taken by such Holder.
11.08 Subrogation. After all amounts payable under or in respect of the
Senior Indebtedness have been paid in full or duly provided for, the Holders
shall be subrogated to the rights of the holders of the Senior Indebtedness to
receive payments or distributions applicable to the Senior Indebtedness to the
extent that distributions otherwise payable to the Holders have been applied to
the payment of the Senior Indebtedness. A distribution made under this Article
XI to a holder of the Senior Indebtedness which otherwise would have been made
to a Holder is not, as between the Company and such Holder, a payment by the
Company on the Senior Indebtedness.
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11.09 Relative Rights. This Article XI defines the relative rights of
the Holders and the holders of the Senior Indebtedness. Nothing in this Article
XI shall (a) impair, as between the Company and the Holders, the obligations of
the Company, which are absolute and unconditional, to pay principal of and
interest (including default interest) on the Notes in accordance with their
terms, (b) affect the relative rights of the Holders and creditors of the
Company other than holders of the Senior Indebtedness, or (c) prevent the
Holders from exercising their available remedies upon a default or Event of
Default, subject to the rights, if any, under this Article XI of holders of the
Senior Indebtedness.
11.10 Subordination Not Impaired; Benefit of Subordination. Each of the
Holders agrees and consents that without notice to or assent by such Holder, and
without affecting the liabilities and obligations of the Company and any holder
of the Notes and the rights and benefits of the holders of the Senior
Indebtedness set forth in this Article XI:
(a) Subject to the terms and conditions hereof, the obligations and
liabilities of the Company and any other party or parties for or upon the Senior
Indebtedness may, from time to time, be increased, renewed, refinanced,
extended, modified, amended, restated, compromised, supplemented, terminated,
waived or released;
(b) The holders of the Senior Indebtedness, and any representative or
representatives acting on behalf thereof, may exercise or refrain from
exercising any right, remedy or power granted by or in connection with any
agreements relating to the Senior Indebtedness and the subordination provisions
hereof, including, without limitation, accelerating the Senior Indebtedness or
exercising any right of set-off; and
(c) Any balance or balances of funds with any holder of the Senior
Indebtedness at any time outstanding to the credit of the Company may, from time
to time, in whole or in part, be surrendered or released;
all as the holders of the Senior Indebtedness, and any representative or
representatives acting on their behalf, may deem advisable, and all without
impairing, abridging, diminishing, releasing or affecting the subordination of
the Notes to the Senior Indebtedness provided for herein.
11.11 Covenants of the Holders. Until all of the Senior Indebtedness
has been fully paid and discharged:
(a) No Holder shall hereafter (i) give any further subordination to any
other creditor in respect of the Notes, or (ii) sell, assign, transfer or pledge
the Notes or any part thereof unless expressly subject to the terms of this
Article XI.
(b) No Holder shall release, exchange, extend the time of payment of,
compromise, set off or otherwise discharge any part of the Notes or modify or
amend the Notes in such a manner as to have an adverse effect upon the rights of
the holders of the Senior Indebtedness.
(c) Each Holder hereby undertakes and agrees for the benefit of the
holders of the Senior Indebtedness that, upon the occurrence and during the
continuance of a Senior Default, it
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shall take any actions reasonably requested by any holder of the Senior
Indebtedness to effectuate the full benefit of the subordination contained
herein.
11.12 Miscellaneous.
(a) To the extent permitted by applicable law, the Holders and the
Company hereby waive (i) notice of acceptance hereof and reliance hereon by the
holders of the Senior Indebtedness and (ii) all diligence in the collection or
protection of or realization upon the Senior Indebtedness.
(b) The Company and the Holders hereby expressly agree that the holders
of the Senior Indebtedness may enforce any and all rights derived herein by
suit, either in equity or law, for specific performance of any agreement
contained in this Article XI or for judgment at law and any other relief
whatsoever appropriate to such action or procedure.
(c) Each Holder acknowledges and agrees that the foregoing
subordination provisions are, and are intended to be, an inducement and a
consideration to each holder of the Senior Indebtedness, whether such Senior
Indebtedness was created or acquired before or after the date of this Agreement,
and each holder of the Senior Indebtedness shall be deemed conclusively to have
relied upon such subordination provisions in acquiring and continuing to hold
such Senior Indebtedness.
ARTICLE XII
EVENTS OF DEFAULT
12.01 Events of Default. An "Event of Default" shall occur hereunder
if:
(a) the Company shall default in the payment of the principal of the
Notes, when and as the same shall become due and payable, whether at maturity or
at a date fixed for prepayment or by acceleration or otherwise; or
(b) the Company shall default in the payment of any installment of
interest on the Notes according to its terms, when and as the same shall become
due and payable and such default shall continue unremedied for a period of two
(2) Business Days; or
(c) the Company shall default in the due observance or performance of
any covenant, condition or agreement contained in Articles IX or X of this
Agreement; or
(d) (i) the Company shall default in the due observance or performance
of any covenant, condition or agreement contained in Section 2.01(b), 2.04(b) or
8.10, and such default is not remedied or waived within 10 days after receipt by
the Company of written notice from the Required Holders of such default or (ii)
the Company shall default in the due observance or performance of any covenant,
condition or agreement contained herein or in the Notes (other than those
referred to in clauses (a), (b), (c) or (d)(i) of this Section 12.01), and such
default is not remedied or waived within 30 days after receipt by the Company of
written notice from the Required Holders of such default; or
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(e) any representation, warranty, certification or statement made by or
on behalf of the Company herein, in any Note, or in any certificate or other
document delivered by the Company to the Holders pursuant hereto or thereto
shall have been incorrect in any material respect when made; or
(f) (i) the Company or any Subsidiary thereof shall default (as
principal or guarantor) in the payment of any principal or interest (or similar
payment in the case of Capitalized Lease Obligations) of any Indebtedness of the
Company or any of its Subsidiaries (other than the Notes) and such Indebtedness
is in an amount, individually or in the aggregate, in excess of $1,000,000, (ii)
an event of default shall have occurred with respect to any Senior Indebtedness
(as defined in Article XI hereof) and remains uncured after the applicable grace
period, if any, or (iii) any Indebtedness of the Company or any of its
Subsidiaries, which individually or in the aggregate is in excess of $1,000,000,
shall become (whether automatically or by demand of the lender thereof) due and
payable in advance of the stated maturity thereof by virtue of any acceleration
or similar provision relating thereto; or
(g) an involuntary proceeding shall be commenced or an involuntary
petition shall be filed in a court of competent jurisdiction seeking (i) relief
in respect of the Company or any Subsidiary thereof or of a substantial part of
its respective property or assets, under Title 11 of the United States Code, as
now constituted or hereafter amended, or any other Federal or state bankruptcy,
insolvency, receivership or similar law, (ii) the appointment of a receiver,
trustee, custodian, sequestrator, conservator or a similar official for the
Company or any Subsidiary thereof or for a substantial part of its respective
property or assets, or (iii) the winding up or liquidation of the Company or any
Subsidiary thereof; and such proceeding or petition shall continue undismissed
for sixty (60) days, or an order or decree approving or ordering any of the
foregoing shall be entered; or
(h) the Company or any Subsidiary thereof shall (i) voluntarily
commence any proceeding or file any petition seeking relief under Title 11 of
the United States Code, as now constituted or hereafter amended, or any other
Federal or state bankruptcy, insolvency, receivership or similar law, (ii)
consent to the institution of, or fail to contest in a timely and appropriate
manner, any proceeding for the filing of any petition described in paragraph (g)
of this Section 12.01, (iii) apply for or consent to the appointment of a
receiver, trustee, custodian, sequestrator, conservator or similar official for
the Company or Subsidiary, or for a substantial part of its property or assets,
(iv) file an answer admitting the material allegations of a petition filed
against it in any such proceeding, (v) make a general assignment for the benefit
of creditors, (vi) become unable, admit in writing its inability or fail
generally to pay its debts as they become due or (vii) take any action for the
purpose of effecting the foregoing; or
(i) one or more judgments, writs of attachment or similar process
(collectively, "Judgments") (i) in the case of money Judgments, in an amount of
$3,000,000 or more for any single Judgment or $3,000,000 or more for all such
Judgments in the aggregate, in each case in excess of any applicable insurance
with respect to which the insurer has admitted liability and (ii) in the case of
non-monetary Judgments, such Judgment or Judgments (in the aggregate) are
reasonably likely to have a Material Adverse Effect, shall be rendered against
the Company or any
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Subsidiary thereof and the same shall remain undischarged, unpaid, or unstayed
for a period of thirty (30) days.
12.02 Acceleration. If an Event of Default occurs under Section
12.01(g) or 12.01(h), then the outstanding principal of and accrued and unpaid
interest on the Notes and all obligations under this Agreement shall
automatically become immediately due and payable, without presentment, demand,
protest or notice of any kind, all of which are expressly waived. If any other
Event of Default occurs and is continuing, the Required Holders, by written
notice to the Company, may (subject to the terms and conditions of Article XI
hereof) declare the principal of and accrued and unpaid interest on the Notes
and all obligations under this Agreement to be due and payable immediately. Upon
any such declaration of acceleration, such principal, interest and other
obligations shall become immediately due and payable and subject to the terms
and conditions of Article XI hereof, each Holder shall be entitled to exercise
all of its rights and remedies hereunder and under its Note whether at law or in
equity.
12.03 Set-Off. Upon the occurrence of an Event of Default, in addition
to all other rights and remedies that may then be available to any Holder, each
Holder is hereby authorized at any time and from time to time, without notice to
the Company (any such notice being expressly waived by the Company), subject to
Article XI hereof, to set off and apply any and all indebtedness at any time
owing by such Holder to or for the credit or the account of the Company against
all amounts which may be owed to such Holder by the Company in connection with
this Agreement or any Notes. If any Holder shall obtain from the Company payment
of any principal of or interest on any Note or payment of any other amount under
this Agreement or any Note held by it or any other Transaction Document through
the exercise of any right of set-off, and, as a result of such payment, such
Holder shall have received a greater percentage of the principal, interest or
other amounts then due hereunder by the Company to such Holder than the
percentage received by any other Holders, it shall promptly make such
adjustments with such other Holders from time to time as shall be equitable, to
the end that all the Holders shall share the benefit of such excess payment (net
of any expenses which may be incurred by such Holder in obtaining or preserving
such excess payment) pro rata in accordance with the unpaid principal and/or
interest on the Notes or other amounts (as the case may be) owing to each of the
Holders. To such end all the Holders shall make appropriate adjustments among
themselves if such payment is rescinded or must otherwise be restored. Any
Holder taking action under this Section 12.03 shall promptly provide written
notice to the Company of any such action taken; provided, that the failure of
such Holder to provide such notice shall not necessarily prejudice its rights
hereunder.
ARTICLE XIII
INDEMNIFICATION
13.01 Indemnification. In addition to all other sums due hereunder or
provided for in this Agreement, the Company shall indemnify and hold harmless
each Holder and its Affiliates and its officers, directors, agents, employees,
subsidiaries, partners and controlling persons (each, an "Indemnified Party") to
the fullest extent permitted by law, from and against any and all losses,
claims, damages, expenses (including reasonable fees, disbursements and other
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charges of counsel) or other liabilities (collectively, "Liabilities") resulting
from or arising out of any breach of any representation or warranty, covenant or
agreement of the Company in this Agreement, the Notes or any Warrant, including
without limitation, the failure to make payment when due of amounts owing
pursuant to the Notes on the due date thereof (whether at the scheduled
maturity, by acceleration or otherwise) or any legal, administrative or other
actions (including actions brought by any Holder or the Company or any equity
holders of the Company or derivative actions brought by any Person claiming
through or in the Company's name), proceedings or investigations (whether formal
or informal), based upon, relating to or arising out of this Agreement, the
Notes or any Warrant or the transactions contemplated hereby and thereby, or any
Indemnified Party's role therein or in the transactions contemplated thereby;
provided, that the Company shall not be liable under this Section 13.01 to an
Indemnified Party: (a) for any amount paid in settlement of claims without the
prior written consent of the Company, (b) to the extent that it is judicially
determined that such Liabilities resulted from the willful misconduct or gross
negligence of such Indemnified Party or (c) to the extent that it is determined
that such Liabilities resulted from the material breach by such Indemnified
Party of any representation, warranty, covenant or other agreement of such
Indemnified Party contained herein, in any Notes or in any Warrant; and
provided, further, that if and to the extent that such indemnification is
unenforceable for any reason, the Company shall make the maximum contribution to
the payment and satisfaction of such Liabilities which shall be permissible
under applicable laws. In connection with the obligation of the Company to
indemnify for expenses as set forth above, the Company further agrees, upon
presentation of appropriate invoices containing reasonable detail, to reimburse
each Indemnified Party for all such expenses (including reasonable fees,
disbursements and other charges of counsel) as they are incurred by such
Indemnified Party; provided, that if an Indemnified Party is reimbursed
hereunder for any expenses, such reimbursement of expenses shall be refunded to
the extent it is judicially determined that the Liabilities in question resulted
from (i) the willful misconduct or gross negligence of such Indemnified Party or
(ii) the material breach by such Indemnified Party of any representation,
warranty, covenant or other agreement of such Indemnified Party contained in
this Agreement, the Notes or any Warrant.
13.02 Notification. Each Indemnified Party under this Article XIII
will, promptly after the receipt of notice of the commencement of any action,
investigation, claim or other proceeding against such Indemnified Party in
respect of which indemnity may be sought from the Company under this Article
XIII, notify the Company in writing of the commencement thereof. The omission of
any Indemnified Party so to notify the Company of any such action shall not
relieve the Company from any liability which it may have to such Indemnified
Party (a) other than pursuant to this Article XIII or (b) under this Article
XIII unless, and only to the extent that, such omission results in the
forfeiture by the Company of substantive rights or defenses or the Company are
otherwise prejudiced in defending such proceeding. In case any such action,
claim or other proceeding shall be brought against any Indemnified Party and it
shall notify the Company of the commencement thereof, the Company shall be
entitled to assume the defense thereof at its own expense, with counsel
reasonably satisfactory to such Indemnified Party; provided, that such
Indemnified Party may, at its own expense, retain separate counsel to
participate in such defense. Notwithstanding the foregoing, in any action, claim
or proceeding in which both the Company, on the one hand, and an Indemnified
Party, on the other hand, is, or is reasonably likely to become, a party, such
Indemnified Party shall have the right to employ
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separate counsel at the expense of the Company and to control its own defense of
such action, claim or proceeding if, in the reasonable opinion of counsel to
such Indemnified Party, a conflict or potential conflict exists between the
Company, on the one hand, and such Indemnified Party, on the other hand, that
would make such separate representation advisable. The Company agrees that it
will not, without the prior written consent of the Required Holders, settle,
compromise or consent to the entry of any judgment in any pending or threatened
claim, action or proceeding relating to the matters contemplated hereby (if any
Indemnified Party is a party thereto or has been actually threatened to be made
a party thereto) unless such settlement, compromise or consent includes an
unconditional release of each Holder and each other Indemnified Party from all
liability arising or that may arise out of such claim, action or proceeding. The
Company shall not be liable for any settlement of any claim, action or
proceeding effected against an Indemnified Party without the prior written
consent of the Company. The rights accorded to Indemnified Parties hereunder
shall be in addition to any rights that any Indemnified Party may have at common
law, by separate agreement or otherwise.
ARTICLE XIV
MISCELLANEOUS
14.01 Survival of Representations and Warranties. The representation of
the Company set forth in Section 5.11 shall survive indefinitely, regardless of
acceptance of the Notes and the Warrants and payment therefor. All of the other
representations and warranties made herein shall survive until the later of (i)
one year following the payment in full of all principal and interest on the
Notes and all other amounts due under the Notes or (ii) December 31, 2004.
14.02 Notices. Except as otherwise provided herein, all notices,
requests and demands to or upon a party hereto, to be effective, shall be in
writing and shall be sent by certified or registered mail, return receipt
requested, by personal delivery against receipt, by overnight courier or by
facsimile and, unless otherwise expressly provided herein, shall be deemed to
have been validly served, given or delivered immediately by hand, if personally
delivered; when delivered by courier, if delivered by commercial overnight
courier service; five Business Days after being deposited in the mail, postage
prepaid, if mailed; and when receipt is acknowledged, if telecopied, in each
such case if addressed as follows:
(a) if to the Company:
SalesLogix Corporation
0000 Xxxxx Xxxxxx Xxxxxx Xxxxx
Xxxxx 000
Xxxxxxxxxx, XX 00000
Attention: Chief Financial Officer
Telecopy: (000) 000-0000
with a required copy to:
Xxxxxx X. Xxxxxx, Esq.
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Xxxxxx Xxxxxxx, P.A.
0000 Xxxxx Xxxxxxx Xxxxxx
Xxxxx 0000
Xxxxxxx, XX 00000
Telecopy: (000) 000-0000
(b) if to BancAmerica:
BA Technology I, LLC
c/o BancAmerica Capital Investors I, L.P.
000 X. Xxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxxx, XX 00000-000
Attention: Xxx Xxxxx
Telecopy: (000) 000-0000
(c) if to GE:
GE Capital Equity Investments, Inc.
000 Xxxx Xxxxx Xxxx
Xxxxxxxx, XX 00000
Attention: Xxxx Xxxxxxx
Telecopy: (000) 000-0000
with a required copy to:
Paul, Hastings, Xxxxxxxx & Xxxxxx LLP
000 Xxxxx Xxxxxx Xxxxxx
Xxx Xxxxxxx, XX 00000
Attention: Xxxxxxx XxXxxxx Xxxxx, Esq.
Telecopy: (000) 000-0000
(d) if to any other Holder:
At the address designated by such Holder and shown on
the Note Register.
14.03 Payments.
(a) Except to the extent otherwise provided herein, all payments of
principal, interest and other amounts to be made by the Company under this
Agreement, the Notes and each Warrant shall be made in U.S. Dollars, in
immediately available funds, without deduction, set-off or counterclaim, to the
payee thereof not later than 2:00 p.m. Charlotte time on the date on which such
payment shall become due (each such payment made after such time on such due
date to be deemed
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to have been made on the next succeeding Business Day). Each such payment shall
be made in accordance with written payment instructions furnished by such payee
from time to time. If the due date of any payment under this Agreement or any
Note would otherwise fall on a day which is not a Business Day, such date shall
be extended to the next succeeding Business Day and interest shall be payable
for any principal so extended for the period of such extension.
(b) Each payment or prepayment of principal in respect of the Notes
shall be made and applied pro rata, as nearly as may be, to all outstanding
Notes according to the respective unpaid principal amounts thereof, and each
payment of interest in respect of the Notes shall be made and applied pro rata,
as nearly as may be, to all outstanding Notes according to the respective
amounts of such interest then due and payable.
(c) Neither the Company, nor any of its Affiliates shall, directly or
indirectly, acquire any Note, by purchase or otherwise, except by way of payment
or prepayment thereof in accordance with the provisions of the Notes and of this
Agreement (including, without limitation, the provisions of this Agreement
requiring the payment and application of all such payments or prepayments pro
rata to all outstanding Notes).
14.04 Assignments and Participation.
(a) The Company may not assign its rights or obligations hereunder or
under the Notes without the prior consent of the Required Holders. The Company
may not assign its rights or obligations under a Warrant except in accordance
with the terms of such Warrant.
(b) (i) Each Holder may assign to one or more of its Affiliates or
other third parties all or a portion of its interests, rights and obligations
under this Agreement and the Notes; provided, that unless the assignee is a
Holder or an Affiliate of the transferring Holder, the principal amount of the
Notes being assigned must equal or exceed $1,000,000 or represent 100% of the
principal amount of such Holder's Note. The Company will keep at its principal
executive office or at such other office as the Company may designate in writing
to the Holders a register (the "Note Register") in which, subject to such
reasonable regulations as it may prescribe, but at its expense (other than
transfer taxes, if any), it will provide for the registration and transfer of
Notes. Upon registration and transfer of any Note in compliance herewith, the
assignee thereof shall become the Holder thereof (or such portion thereof as
shall have been transferred and registered to such assignee) for purposes of
this Agreement and the other Transaction Documents and shall thereupon, in
respect of such Note (or portion thereof) be entitled to the benefits and liable
for the obligations of a Holder hereunder.
(ii) Whenever any Note shall be surrendered for transfer or
exchange in compliance herewith either at such office of the Company or at the
place of payment named in such Note, within five Business Days thereafter the
Company will deliver in exchange therefor a new Note or Notes, as may be
requested by such Holder, in the same aggregate unpaid principal amount as the
unpaid principal amount of the Note so surrendered, duly executed by the
Company. Each such Note presented or surrendered for registration of transfer or
exchange shall be duly endorsed or accompanied by a written instrument of
transfer, duly executed by the registered Holder or such Holder's attorney duly
authorized in writing. Any Note issued in exchange for any other Note or
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47
upon transfer thereof shall carry the rights to unpaid interest and interest to
accrue which were carried by the Note so exchanged or transferred, and neither
gain nor loss of interest shall result from any such transfer or exchange. Any
transfer tax relating to such transaction shall be paid by the Holder requesting
the exchange.
(iii) The Company and any agent of the Company may deem and
treat the Person in whose name any Note is registered as the owner of such Note
for the purpose of receiving payment of the principal and interest on such Note
and for all other purposes whatsoever.
(c) A Holder may sell or agree to sell to one or more other Persons (a
"Participant") a participation in all or any part of any Notes held by it;
provided, that unless the Participant is a Holder or an Affiliate of the
transferring Holder, the principal amount of the Notes being participated must
equal or exceed $500,000 or represent 100% of the principal amount of such
Holder's Note. The Participant's rights in respect of such participation shall
be those set forth in the agreements executed by such Holder in favor of the
Participant, and such Participant shall have no direct right under the Notes,
this Agreement or the other Transaction Documents, including rights to give
consents or waivers or to execute amendments, and the Company shall have no
obligations whatsoever to any Participant. In no event shall a Holder that sells
a participation agree with the Participant to take or refrain from taking any
action hereunder or under any other Transaction Document, except that such
Holder may agree with the Participant that it will not, without the consent of
the Participant, agree to (i) extend the date fixed for the payment of principal
of or interest on the related Notes, (ii) reduce the amount of any such payment
of principal and (iii) reduce the rate at which interest is payable thereon to a
level below the rate at which the Participant is entitled to receive such
interest. In connection with any sale by a Holder to a Participant of any
interest in any Note, such Holder shall be required to comply with all
Requirements of Law, including without limitation all securities laws and
regulations of any Governmental Authority.
(d) A Holder may furnish any information concerning the Company or any
Subsidiary thereof in the possession of such Holder from time to time to
assignees and Participants (including prospective assignees and Participants) in
a manner reasonably necessary to assure the confidentiality of information
identified as confidential; provided, that if the intended recipient of such
information is not a financial institution or a financial investor, then such
Holder shall notify the Company in writing of the identity of the prospective
assignee or Participant and shall not furnish such information to the
prospective assignee or Participant if within 10 days of such Holder's notice to
the Company, the Company notifies such Holder in writing that the Company has
determined in good faith that such prospective assignee or Participant is a
competitor of the Company or its being an assignee or Participant would
otherwise be materially harmful to the Company. Except as provided in the
preceding sentence, each Holder and its assignees and Participants agree to
maintain in confidence, use only for purposes of analyzing and monitoring its
investment in the Company, and not to disclose to third parties information
regarding the Company furnished to such Holder or its assignees or Participants
by the Company (or in the case of an assignment or participation, by any Holder)
in writing, which writing clearly identifies such information as confidential or
any information that such Purchaser learns through the exercise of its
observation rights pursuant to Section 7.02 hereof or through the exercise of
its inspection rights pursuant to Section 8.07 hereof; provided that this
confidentiality agreement shall not apply (i) to the extent that such Holder or
its assignee or Participant in its sole discretion determines that
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disclosure to one or more third parties is necessary to satisfy any legal or
regulatory obligations or requests or to enforce its rights under any
Transaction Documents, (ii) to disclosures by such Holder or its assignee or
Participant to its directors, officers, employees, attorneys and accountants
(provided that such Persons shall themselves agree to maintain the
confidentiality of such information in accordance with the requirements hereof),
or (iii) to any information (A) which was publicly known or available at the
time of its disclosure to such Holder or its assignee or Participant, (B) which
subsequently becomes publicly known or available other than as a result of a
breach by such Holder or its assignee or Participant of its non-disclosure
obligations under this sentence or (C) which becomes known to such Holder or its
assignee or Participant from a source, other than from the Company, entitled to
disclose the information.
(e) Each Purchaser, and each other Holder by its acceptance of a Note
or a Warrant, acknowledges that so long as the Capital Stock of the Company
continues to be registered under Section 12(g) of the Exchange Act, the Xxxxxxx
Xxxxxxx and Securities Fraud Act of 1988 and other federal statutes impose
Requirements of Laws regarding the purchase and sale of the Capital Stock of the
Company, including by Persons who have received material non-public information.
14.05 Lost, Etc. Notes. Upon receipt by the Company of evidence
reasonably satisfactory to it of the loss, theft, destruction or mutilation of
any Note, and (in case of loss, theft or destruction) of indemnity satisfactory
to it (which indemnity from a party other than the Holder or any Affiliate of
the Holder, in the Company's reasonable judgment, may be a secured indemnity
obligation) and upon surrender and cancellation of such Note, if mutilated,
within five Business Days thereafter the Company will deliver in lieu of such
Note a new Note in a like unpaid principal amount, duly executed by the Company,
dated as of the date to which interest has been paid thereon. The affidavit of
any Holder's treasurer or assistant treasurer (or other responsible official),
setting forth the circumstances with respect to the loss, theft or destruction
of a Note shall be accepted as satisfactory evidence thereof.
14.06 Amendments, Determinations, Requests or Consents. Any amendment,
supplement or modification of or to any provision of this Agreement, any waiver
of any provision of this Agreement, and any consent to any departure by the
Company from the terms of any provision of this Agreement, shall be effective
(a) only if it is made or given in writing and signed by the Company, and the
Holders in accordance with this Section and (b) only in the specific instance
and for the specific purpose for which made or given. All determinations,
requests, consents, waivers or amendments (collectively "consent") to be made by
the Holders pursuant to this Agreement shall be made by the Required Holders and
not all the Holders; provided, that the consent of all Holders is needed to: (i)
reduce the principal of or rate of interest on the Notes, (ii) extend the final
scheduled maturity date of the principal amount of the Notes, (iii) change the
percentage of the Holders or the aggregate principal amount of Notes, as the
case may be, which shall be required for the Holders to take any action
hereunder, (iv) amend the provisions of Article XI hereof or (v) amend or waive
this Section 14.06; and provided, further, that the consent of the Holders of at
least 80% of the aggregate principal balance of Notes then outstanding is needed
with respect to any consent in connection with a transaction in which any Holder
or Holders of 20% or more, in the aggregate, of the outstanding principal amount
of the Notes, or their respective Affiliates, have a direct financial interest
other than as a Holder of Notes or Warrant Securities; and provided, further,
that no Holder shall have the right
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to give any consent hereunder nor shall such Holder's consent be required if
such Holder has acquired any Notes in violation of Section 14.04 hereof.
Notwithstanding anything to the contrary contained herein, the consent of the
holders of the Warrant Securities shall not be required except in connection
with any proposed amendment, supplement or modification of this Agreement, or
waiver or consent hereunder, unless it would materially adversely affect the
rights and privileges pertaining to the Warrant Securities, in which case such
the of the holders of a majority of the then outstanding Warrant Securities
shall also be required.
14.07 Remedies Cumulative. No failure or delay on the part of the
Company or any Holder in exercising any right, power or remedy hereunder shall
operate as a waiver thereof, nor shall any single or partial exercise of any
such right, power or remedy preclude any other or further exercise thereof or
the exercise of any other right, power or remedy. The remedies provided for
herein are cumulative and are not exclusive of any remedies that may be
available to the Company or any Holder at law, in equity or otherwise.
14.08 Counterparts. This Agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
14.09 Headings. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
14.10 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO THE
PRINCIPLES OF CONFLICTS OF LAW OF SUCH STATE.
14.11 Jurisdiction. Each party to this Agreement hereby irrevocably
agrees that any legal action or proceeding arising out of or relating to this
Agreement or any agreements or transactions contemplated hereby may be brought
in the courts of the State of New York or of the United States of America
located in the Borough of Manhattan, the City of New York and hereby expressly
submits to the personal jurisdiction and venue of such courts for the purposes
thereof and expressly waives any claim of improper venue and any claim that such
courts are an inconvenient forum. Each party hereby irrevocably consents to the
service of process of any of the aforementioned courts in any such suit, action
or proceeding by the mailing of copies thereof by registered or certified mail,
postage prepaid, to the address set forth in Section 14.02, such service to
become effective 10 days after such mailing.
14.12 Waiver of Jury Trial. TO THE EXTENT PERMITTED BY APPLICABLE LAW,
EACH HOLDER AND THE COMPANY IRREVOCABLY WAIVE THEIR RESPECTIVE RIGHTS TO A JURY
TRIAL WITH RESPECT TO ANY ACTION, CLAIM OR OTHER PROCEEDING ARISING OUT OF ANY
DISPUTE IN CONNECTION WITH THIS AGREEMENT OR THE NOTES, ANY RIGHTS OR
OBLIGATIONS HEREUNDER OR THEREUNDER, OR THE PERFORMANCE OF SUCH RIGHTS AND
OBLIGATIONS.
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14.13 Severability. If any one or more of the provisions contained
herein, or the application thereof in any circumstance, is held invalid, illegal
or unenforceable in any respect for any reason, the validity, legality and
enforceability of any such provision in every other respect and of the remaining
provisions hereof shall not be in any way impaired, unless the provisions held
invalid, illegal or unenforceable shall substantially impair the benefits of the
remaining provisions hereof.
14.14 Rules of Construction. Unless the context otherwise requires,
"or" is not exclusive, and references to sections or subsections refer to
sections or subsections of this Agreement. All pronouns and any variations
thereof refer to the masculine, feminine or neuter, singular or plural, as the
context may require.
14.15 Entire Agreement. This Agreement, together with the exhibits and
schedules hereto and the other Transaction Documents, is intended by the parties
as a final expression of their agreement and intended to be a complete and
exclusive statement of the agreement and understanding of the parties hereto in
respect of the subject matter contained herein and therein. There are no
restrictions, promises, warranties or undertakings, other than those set forth
or referred to herein or therein. This Agreement, together with the exhibits
hereto, and the other Transaction Documents supersede all prior agreements and
understandings between the parties with respect to such subject matter.
14.16 Certain Expenses. The Company shall pay or reimburse (a)
BancAmerica for all out-of-pocket costs and expenses (including, without
limitation, reasonable attorneys' and consulting fees and expenses, subject,
with respect to the following clause (i) only, to the limits set forth in the
commitment letter dated as of December 17, 1999, from BancAmerica to the
Company) in connection with (i) the negotiation, preparation, execution and
delivery of this Agreement, the Notes and the other Transaction Documents and
the consummation of the transactions contemplated thereby and (ii) any
amendment, modification or waiver of any of the terms of this Agreement, the
Notes or the other Transaction Documents; (b) GE for all out-of-pocket costs and
expenses (including, without limitation, reasonable attorneys' fees and
expenses, subject, with respect to the following clause (i) only, to a limit of
$20,000.00) in connection with (i) the negotiation, preparation, execution and
delivery of this Agreement, the Notes and the other Transaction Documents and
the consummation of the transactions contemplated thereby and (ii) any
amendment, modification or waiver of any of the terms of this Agreement, the
Notes or the other Transaction Documents; (c) each Holder for all costs and
expenses of the Holders (including, without limitation, reasonable attorney's
fees and expenses) in connection with (i) any Event of Default and any
enforcement or collection proceedings resulting therefrom and (ii) the
enforcement of this Section 14.16; and (d) each Holder for transfer, stamp,
documentary or other similar taxes, assessments or charges levied by any
governmental or revenue authority in respect of this Agreement, the Notes or the
Transaction Documents or any other document referred to herein or therein.
14.17 Commitment Fees. At Closing, the Company shall pay each Purchaser
a closing fee equal, in each case, to 1% of the aggregate principal amount of
the Note purchased by such Purchaser.
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14.18 Publicity. Except as may be required by applicable law, none of
the parties hereto shall issue a publicity release or announcement or otherwise
make any public disclosure concerning this Agreement or the transactions
contemplated hereby, without prior approval by the other parties hereto (which
approval will not be unreasonably withheld). If any announcement is required by
law to be made by any party hereto, prior to making such announcement such party
will deliver a draft of such announcement to the other parties and shall give
the other parties an opportunity to comment thereon.
14.19 Further Assurances. Each of the parties shall execute such
documents and perform such further acts (including, without limitation,
obtaining any consents, exemptions, authorizations, or other actions by, or
giving any notices to, or making any filings with, any Governmental Authority or
any other Person) as may be reasonably required or desirable to carry out or to
perform the provisions of this Agreement.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed and delivered by their respective officers hereunto duly authorized as
of the date first above written.
COMPANY:
SALESLOGIX CORPORATION
By:____________________________________________
Name: Xxxx X. Xxxxx
Title: Secretary and Chief Financial Officer
PURCHASERS:
BA TECHNOLOGY I, LLC
By: BancAmerica Capital Investors I, L.P.,
Its sole manager
By: BancAmerica Capital Management I,
L.P., Its general partner
By:_______________________________________
Name:__________________________________
Title:_________________________________
GE CAPITAL EQUITY INVESTMENTS, INC.
By:____________________________________________
Name:
Title:
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SCHEDULE 2.01(a)
-----------------------------------------------------------------------------------------------------------------
Aggregate Principal, Total
Purchaser Amount of Note Total Initial Warrants Purchase Price
-----------------------------------------------------------------------------------------------------------------
BancAmerica $25,000,000.00 647,005 $25,000,000.00
-----------------------------------------------------------------------------------------------------------------
GE 7,500,000.00 194,102 7,500,000.00
-----------------------------------------------------------------------------------------------------------------
Total 32,500,000.00 841,107 32,500,000.00
-----------------------------------------------------------------------------------------------------------------
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SCHEDULE 2.01(b)
-----------------------------------------------------------------------------------------------------------------
Adjustment Date Adjustment Percentage Adjustment Percentage
(BancAmerica) (GE)
-----------------------------------------------------------------------------------------------------------------
June 30, 2000 0.625%(1) .1875%
-----------------------------------------------------------------------------------------------------------------
July 31, 2000 0.625% .1875%
-----------------------------------------------------------------------------------------------------------------
August 31, 2000 0.625% .1875%
-----------------------------------------------------------------------------------------------------------------
April 2, 2001 2.190% .657%
-----------------------------------------------------------------------------------------------------------------
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(1) By way of example, assuming 20,000,000 Fully Diluted shares outstanding on
June 30, 2000 and no prepayments or redemptions of any Notes, the Aggregate
Number for the first Adjustment Warrant would be 125,786 shares (.625% x
(20,000,000 + 125,786) = 125,786).
