THE INDEBTEDNESS EVIDENCED BY THIS NOTE IS SUBORDINATE TO THE OBLIGATION OF THE COMPANY TO PAY THE SENIOR DEBT (AS DEFINED IN SECTION 13 HEREIN BELOW) PURSUANT TO, AND TO THE EXTENT PROVIDED IN, SECTION 13 BELOW.
THE INDEBTEDNESS
EVIDENCED BY THIS NOTE IS SUBORDINATE TO THE OBLIGATION OF THE COMPANY TO PAY
THE SENIOR DEBT (AS DEFINED IN SECTION 13 HEREIN BELOW) PURSUANT TO, AND TO THE
EXTENT PROVIDED IN, SECTION 13 BELOW.
This Note and the Buyer Common Stock issuable
upon conversion hereof (until such time, if any, as such Buyer Common Stock is
registered with the Securities and Exchange Commission pursuant to an effective
registration statement) have not been registered under the Securities Act of
1933, as amended (the “Act”), or any state securities laws, and may not be sold, offered for sale
of otherwise transferred unless registered or qualified under the Act and
applicable state securities laws or unless the Company receives an opinion, in
form and from counsel reasonably acceptable to the Company, that registration,
qualification or other such actions are not required under any such laws.
SUBORDINATED PURCHASE NOTE
| $__________ | Maturity Date: |
| Issue Date: June [___], 2010 | September [__], 2015 |
FOR VALUE RECEIVED, Unify Corporation, a
Delaware corporation (the “Company”) hereby promises to pay to the order of
________________________ or its successors, assigns and legal representatives
(the “Holder”), at ___________________________, or at such
other location as the Holder may designate from time to time, the aggregate
principal sum of $______________ (___________ Dollars), in lawful money of the
United States of America, together with interest thereon at an annual interest
rate of eight percent (8%), provided that upon the occurrence of and during the
continuance of an Event of Default the annual interest rate shall increase to
thirteen percent (13%).
1. 1. Company Notes. This Subordinated Purchase Note (the
“Note”) is one of a series of Notes of like tenor
in the aggregate principal amount of $5,000,000 issued by the Company pursuant
to the terms of that certain Agreement and Plan of Merger (the “Merger Agreement”), dated June ___, 2010 (the “Issue Date”), by and among the Company, Unify
Acquisition Corp., a wholly owned subsidiary of the Company and Strategic Office
Solutions, Inc., a California corporation. Capitalized terms used herein shall
have the respective meanings ascribed thereto in the Merger Agreement unless
otherwise defined herein.
2. Calculation of Interest. Interest hereunder shall be calculated on
the basis of a 365-day year for the actual number of days elapsed. Interest
shall be calculated on a simple interest basis and shall accrue
daily.
3. Payments. Interest shall accrue but not be paid until
Section 13 terminates in accordance with Section 13(n). Accrued but unpaid
interest shall be paid on the first Business Day of the fiscal quarter of the
Company commencing after the termination of Section 13 and shall thereafter be
paid quarterly, in arrears. Subject to Section 13, the principal amount, and any
accrued but unpaid interest, shall be due and payable on the earlier of (x)
September __, 2015 and (y) the date ninety (90) days after the Senior Debt has
been fully and finally paid and all lending and other credit commitments under
the Loan Agreement and the other Loan Documents have terminated (the “Maturity
Date”).
4. Prepayment. Any prepayments hereunder shall be applied
first, to the payment of any expenses then owed to the Holder, second, to
accrued interest on this Note and third, to the payment of the principal amount
outstanding under this Note. The Company shall have no right to make any
prepayment of all or any portion of this Note unless the Company makes a
simultaneous prepayment of the other Notes pari passu. The Note may be prepaid at any time without
penalty, provided that the Company will give the Holder not less than fifteen
(15) days advance written notice of prepayment.
5. Conversion.
(a) Optional Conversion. Subject to the provisions hereof, at any
time following the twenty-first (21st) day after the Company has sent to its
stockholders an information statement under Regulation 14C of the Securities
Exchange Act of 1934 with respect to the action by written consent of holders of
a majority of the outstanding Buyer Common Stock to authorize the issuance of
Buyer Common Stock issuable upon conversion of this Note, and so long as (i) the
Buyer Common Stock is authorized for listing or quotation on a national
securities exchange, Nasdaq or the Over-the-Counter Bulletin Board or the “pink
sheets,” and (ii) all or a portion of the principal amount of this Note remains
outstanding, either the Holder or the Company may at its election convert this
Note into the number of fully paid and non-assessable shares (the “Conversion Shares”) of Buyer Common Stock equal to the
aggregate outstanding principal amount due under this Note (plus accrued
interest) divided by the Conversion Price (as defined below), by notice of
conversion and surrender (or, in the case of a Company-elected conversion,
request for surrender) of this Note at the principal office of the Company, or
such other office or agency of the Company as it may reasonably designate by
written notice to the Holder, during normal business hours on any Business Day.
The “Conversion Price” shall, subject to adjustment as provided in
Section 6 below, mean (x) $3.50 (the “Initial Conversion Price”) if either the Company or the Holder elects
to convert this Note prior to the first anniversary of the date of issuance and
(y) if either the Company or the Holder elects to convert this Note after the
first anniversary of the date of issuance, the lesser of (A) the Initial
Conversion Price (as it may be adjusted in accordance with Section 6) and (B)
the volume weighted average trading price per share of Buyer Common Stock for
the twenty (20) trading days ending on the second trading date prior to the date
of the notice of conversion.
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(b) Stock Certificates. On the date on which the Holder shall have
satisfied in full the Holder’s obligations set forth herein regarding a
conversion of this Note, the Holder (or such other person or persons as directed
by the Holder, subject to compliance with applicable securities laws) shall be
treated for all purposes as the holder of record of such Conversion Shares as of
the close of business on such date. In the event of such conversion of this
Note, certificates for the whole number of shares of Buyer Common Stock
constituting the Conversion Shares shall be delivered to the Holder (or such
other person or persons as directed by the Holder, subject to compliance with
applicable securities laws) as promptly as is reasonably practicable (but not
later than five (5) days) after such conversion at the Company’s expense.
(c) Reservation of Shares; Stock Fully Paid;
Listing. The Company shall
keep reserved a sufficient number of shares of the authorized and unissued
shares of Buyer Common Stock to provide for the conversion of this Note in
compliance with its terms. All Conversion Shares issued upon conversion of this
Note shall be, at the time of delivery of the certificates for such Conversion
Shares upon conversion of this Note in accordance with the terms hereof, duly
authorized, validly issued, fully paid and non-assessable shares of Buyer Common
Stock.
(d) Restricted Securities. The Conversion Shares hereunder may not, at
the time of issuance, have been registered under any federal or state securities
laws, and may constitute “restricted securities” within the meaning of federal
and state securities laws. By its receipt of Conversion Shares, if the shares
are not then the subject of an effective registration statement under the
Securities Act, the Holder will be deemed to acknowledge and confirm that it is
receiving such shares for its own account for investment, and not with a view to
the resale or distribution thereof in violation of any federal or state
securities laws.
6. Adjustments.
6.1 Adjustment Upon Extraordinary Common Stock
Event. Upon the happening
of an Extraordinary Common Stock Event (as hereinafter defined) prior to the
issuance of the Conversion Shares, the Initial Conversion Price shall,
simultaneously with the happening of such Extraordinary Common Stock Event, be
adjusted by multiplying such Initial Conversion Price by a fraction, the
numerator of which shall be the number of shares of Buyer Common Stock
outstanding immediately prior to such Extraordinary Common Stock Event and the
denominator of which shall be the number of shares of Buyer Common Stock
outstanding immediately after such Extraordinary Common Stock Event, and the
product so obtained shall thereafter be the Initial Conversion Price which, as
so adjusted, shall be readjusted in the same manner upon the happening of any
successive Extraordinary Common Stock Event or Events.
An “Extraordinary Common Stock
Event” shall mean (i) the
issue of additional shares of Buyer Common Stock as a dividend or other
distribution on outstanding shares of Buyer Common Stock, (ii) a subdivision of
outstanding shares of Buyer Common Stock into a greater number of shares of
Buyer Common Stock, or (iii) a combination or reverse stock split of outstanding
shares of Buyer Common Stock into a smaller number of shares of the Buyer Common
Stock.
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6.2 Adjustment Upon Certain
Dividends. In the event
the Company shall make or issue, or shall fix a record date for the
determination of holders of Buyer Common Stock entitled to receive, a dividend
or other distribution with respect to the Buyer Common Stock payable in (i)
securities of the Company other than shares of Buyer Common Stock, or (ii) other
assets (excluding cash dividends or distributions), then the Company shall, not
less than thirty (30) days before the record date for such event, give the
Holder notice of such event.
6.3 Adjustment Upon Capital Reorganization or
Reclassification. If the
Buyer Common Stock shall be changed into the same or different number of shares
of any other class or classes of capital stock, whether by capital
reorganization, recapitalization, reclassification or otherwise (other than an
Extraordinary Common Stock Event provided for in Section 6.1, a dividend or
other distribution provided for in Section 6.2, or a merger or other transaction
provided for in Section 6.4), then and in each such event, the Holder shall have
the right thereafter to receive, upon conversion of this Note, in lieu of the
number of shares of Buyer Common Stock which the Holder would otherwise have
been entitled to receive, the kind and amount of shares of capital stock and
other securities and property receivable upon such reorganization,
recapitalization, reclassification or other change by the holders of the number
of shares of Buyer Common Stock for which this Note could have been converted
immediately prior to such reorganization, recapitalization, reclassification or
change, all subject to further adjustment as provided herein.
6.4 Adjustment for Merger or Reorganization,
etc.
(a) In case of any consolidation or merger of
the Company with or into another Company or the sale of all or substantially all
of the assets of the Company to another Company, then this Note shall thereafter
be convertible for the kind and amount of shares of stock or other securities or
property to which a holder of the number of shares of Buyer Common Stock of the
Company deliverable upon conversion of this Note would have been entitled upon
such consolidation, merger or sale; and, in such case, appropriate adjustment
(as determined in good faith by the Board of Directors) shall be made in the
application of the provisions in this Section 6 with respect to the rights and
interest thereafter of the Holder of this Note, to the end that the provisions
set forth in this Section 6 shall thereafter be applicable, as nearly as
reasonably possible, in relation to any shares of stock or other property
thereafter deliverable upon the conversion of this Note.
(b) The provision for such rights with respect
to the Subordinated Purchase Notes shall be a condition precedent to the
consummation by the Company of any such transaction.
6.5 Certificate as to Adjustments; Notice by
Company. In each case of
an adjustment or readjustment of the Initial Conversion Price, the Company at
its expense will, within five (5) days of such adjustment or readjustment,
furnish the Holder with a certificate prepared by the Treasurer or Chief
Financial Officer of the Company, showing such adjustment or readjustment, and
stating in detail the facts upon which such adjustment or readjustment is
based.
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6.6 Further Adjustments. In the event that, as a result of an
adjustment made pursuant to this Section 6, the Holder shall become entitled to
receive any shares of capital stock of the Company other than shares of Buyer
Common Stock, the number of such other shares so receivable upon conversion of
this Note shall be subject thereafter to adjustment from time to time in a
manner and on terms as nearly equivalent as practicable to the provisions with
respect to the Conversion Shares contained in this Note.
7. Transfer Taxes. The Company will pay any documentary stamp
taxes attributable to the initial issuance of Conversion Shares issuable upon
the conversion of this Note; provided, however, that the Company shall not be
required to pay any tax or taxes which may be payable in respect of any transfer
involved in the issuance or delivery of any certificates for Conversion Shares
in a name other than that of the registered holder of this Note in respect of
which such shares are issued, and in such case, the Company shall not be
required to issue or deliver any certificate for Conversion Shares until the
person requesting the same has paid to the Company the amount of such tax or has
established to the Company’s reasonable satisfaction that such tax has been
paid.
8. Events of Default. Each of the following shall constitute an
“Event of Default” hereunder:
(a) The Company shall fail to pay the
principal amount of this Note and accrued interest thereon when due and payable
(whether at the Maturity Date, upon acceleration or otherwise);
(b) The Company shall sell, transfer, lease or
otherwise dispose of all or any substantial portion of its assets in one
transaction or a series of related transactions, participate in any share
exchange, consummate any recapitalization, reclassification, reorganization or
other business combination transaction or adopt a plan of liquidation or
dissolution or agree to do any of the foregoing;
(c) An event of default has occurred and is
continuing for sixty (60) days or more without being cured with respect to any
Senior Debt or the Senior Debt has been accelerated and is due and owing to the
Senior Creditor; or
(d) The Company shall have applied for or
consented to the appointment of a custodian, receiver, trustee or liquidator, or
other court-appointed fiduciary of all or a substantial part of its properties;
or a custodian, receiver, trustee or liquidator or other court appointed
fiduciary shall have been appointed with or without the consent of the Company;
or the Company is generally not paying its debts as they become due by means of
available assets, or has made a general assignment for the benefit of creditors;
or the Company files a voluntary petition in bankruptcy, or a petition or an
answer seeking reorganization or an arrangement with creditors or seeking to
take advantage of any insolvency law, or an answer admitting the material
allegations of a petition in any bankruptcy, reorganization or insolvency
proceeding or has taken action for the purpose of effecting any of the
foregoing; or if, within thirty (30) days after the commencement of any
proceeding against the Company seeking any reorganization, rehabilitation,
arrangement, composition, readjustment, liquidation, dissolution or similar
relief under the Federal bankruptcy code or similar order under future similar
legislation, the appointment of any trustee, receiver, custodian, liquidator, or
other court-appointed fiduciary of the Company or of all or any substantial part
of its properties, such order or appointment shall not have been vacated or
stayed on appeal or otherwise or if, within thirty (30) days after the
expiration of any such stay, such order or appointment shall not have been
vacated (collectively, “Insolvency Events”).
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Upon the occurrence of any Event of Default,
the Holder may, at its option, declare all amounts due hereunder to be due and
payable immediately and, upon any such declaration, the same shall, subject to
Section 13 herein below, become and be immediately due and payable. If an
Insolvency Event occurs with respect to the Company, then all amounts due
hereunder shall become immediately due and payable without any declaration or
other act on the part of the Holder. If an Event of Default occurs, the Company
shall pay to the Holder the reasonable attorneys’ fees and disbursements and all
other reasonable out-of-pocket costs incurred by the Holder in order to collect
amounts due and owing under this Note or otherwise to enforce the Holder’s
rights and remedies hereunder.
9. Right of Off-Set. In accordance with the provisions of Section
2.10(iv) and 2.10(b)(v)(C) of the Merger Agreement, the Company may set off
adjustments made pursuant to that section for Actual Net Cash on Hand and Actual
Working Capital against the Note. Any adjustments will be set off pro rata
against all other Notes of like tenor.
10. Waiver of Presentment, Demand and
Dishonor. The Company
hereby waives presentment for payment, protest, demand, notice of protest,
notice of non-payment and diligence with respect to this Note, and waives and
renounces all rights to the benefit of any statute of limitations or any
moratorium, appraisement, exemption or homestead now provided or that hereafter
may be provided by any federal or applicable state statute, including but not
limited to exemptions provided by or allowed under the Federal Bankruptcy Code,
both as to itself and as to all of its property, whether real or personal,
against the enforcement and collection of the obligations evidenced by this Note
and any and all extensions, renewals and modifications hereof.
No failure on the part of the Holder hereof to
exercise any right or remedy hereunder with respect to the Company, whether
before or after the happening of an Event of Default, shall constitute a waiver
of any future Event of Default or of any other Event of Default. No failure to
accelerate the debt of the Company evidenced hereby by reason of an Event of
Default or indulgence granted from time to time shall be construed to be a
waiver of the right to insist upon prompt payment thereafter; or shall be deemed
to be a novation of this Note or a reinstatement of such debt evidenced hereby
or a waiver of such right of acceleration or any other right, or be construed so
as to preclude the exercise of any right the Holder may have, whether by the
laws of the state governing this Note, by agreement or otherwise; and the
Company hereby expressly waives the benefit of any statute or rule of law or
equity that would produce a result contrary to or in conflict with the
foregoing.
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11. Amendment; Waiver. The terms of this Note may not be amended
unless all Subordinated Purchase Notes are identically amended. The Holder may
waive any of its rights under this Agreement, and no such waiver or consent on
any one instance shall be construed to be a continuing waiver or a waiver in any
other instance unless it expressly so provides.
12. Transfers. The Holder shall have the right to transfer
this Note or any interest herein in any transaction meeting the requirements of
applicable securities laws.
13. Subordination. Notwithstanding anything contained in this
Note to the contrary, until the Payment In Full of the Senior Debt (as each term
is defined herein below), the terms of this Note shall at all times be subject
to the provisions set forth in this Section 13.
(a) Definitions. The following terms shall have the following
meanings in this Section 13:
(i) Loan Agreement. The Loan and Security Agreement, dated as of
June [__], 2010, by and among, Unify Corporation, as the borrower thereunder,
the guarantors party thereto from time to time, and the Senior Creditor, as
lender, as such agreement is amended, restated or otherwise modified and in
effect from time to time.
(ii) Loan Documents. The “Loan Documents” under and as defined in
the Loan Agreement.
(iii) Insolvency Proceeding. Has the meaning ascribed thereto in clause
(g) hereof.
(iv) Payment In Full. (A) The indefeasible payment in full in cash
of the principal of and interest (including interest accruing on or after the
commencement of any Insolvency Proceeding, whether or not such interest would be
allowed in such Insolvency Proceeding) and premium, if any, constituting Senior
Debt, (B) Indefeasible payment in full in cash of all other Senior Debt that is
outstanding and unpaid or otherwise accrued and owing at or prior to the time
the Senior Debt is paid, and (C) termination or expiration of all lending and
other credit commitments to lend under the Loan Agreement and the other Loan
Documents.
(v) Senior Creditor. Hercules Technology II, L.P.
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(vi) Senior Debt. All principal, interest, fees, costs,
enforcement expenses (including reasonable legal fees and disbursements),
collateral protection expenses and other reimbursement or indemnity obligations
created or evidenced by the Loan Agreement or any of the other Loan Documents or
any prior, concurrent, or subsequent notes, instruments or agreements of
indebtedness, liabilities or obligations of any type or form whatsoever relating
to the Loan Agreement or any of the other Loan Documents in favor of the Senior
Creditor. Senior Debt shall expressly include any and all interest accruing or
out of pocket costs or expenses (including reasonable legal fees and
disbursements) incurred after the date of any filing by or against the Company
of any petition under the federal Bankruptcy Code or in connection with any
other Insolvency Proceeding regardless of whether the Senior Creditor’s claim
therefor is allowed or allowable in the case or proceeding relating thereto.
(vii) Subordinated Debt. All principal, interest, fees, costs,
enforcement expenses (including reasonable legal fees and disbursements),
reimbursement and indemnity obligations created or evidenced by this Note or any
prior, concurrent or subsequent notes, instruments or agreements of
indebtedness, liabilities or obligations of any type or form whatsoever relating
to this Note in favor of the Holder and which is unsecured.
(viii) Subordinated Documents. Collectively, the Note and any and all other
documents or instruments evidencing the Subordinated Debt, whether now existing
or hereafter created.
(b) The Subordinated Debt and any and all Subordinated Documents shall be and
hereby are subordinated and the payment thereof is deferred until the Payment In
Full of the Senior Debt, whether now or hereafter incurred or owed by the
Company.
(c) The Holder hereby acknowledges and agrees that the Subordinated Debt is
unsecured and until the Payment In Full of the Senior Debt, the Company shall
not, and shall not permit any of its subsidiaries to, grant to the Holder and
the Holder shall not take any lien on or security interest in any of the
Company’s or any of its subsidiaries’ property, now owned or hereafter acquired
or created to secure the Company’s obligations under the Subordinated Debt. In
addition, the Holder hereby agrees, upon request of the Senior Creditor at any
time and from time to time, to execute such other documents or instruments as
may be reasonably requested by the Senior Creditor further to evidence of public
record or otherwise the priority of the Senior Debt as contemplated hereby.
(d) Until the Payment In Full of the Senior Debt, the Holder shall not take
or permit any action prejudicial to or inconsistent with the Senior Creditor’s
priority position over the Holder created by the provisions of this Section 13.
Without limiting the foregoing, until the Payment In Full of the Senior Debt,
the Holder will not assert, collect or enforce the Subordinated Debt or any part
thereof or take any action to foreclose or realize upon the Subordinated Debt or
any part thereof or enforce any of the Subordinated Documents except to the
extent (but only to such extent) that the commencement of a legal action may be
required to toll the running of any applicable statute of limitation. Until the
Payment In Full of the Senior Debt, the Holder shall not have any right of
subrogation, reimbursement, restitution, contribution or indemnity whatsoever
relating to the Subordinated Debt from any assets of the Company or any
guarantor of or provider of collateral security for the Senior Debt. The Holder
further waives any and all rights with respect to marshalling.
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(e) Until the Payment In Full of the Senior Debt, the Holder will hold in
trust and immediately pay over to the Senior Creditor, in the same form of
payment received, with appropriate endorsements, for application to the Senior
Debt any cash amount that the Company pays to the Holder with respect to the
Subordinated Debt, or as collateral for the Senior Debt any other assets of the
Company that the Holder may receive with respect to the Subordinated Debt.
(f) If the Holder, in contravention of the terms of this Section 13, shall
commence, prosecute or participate in any suit, action or proceeding against the
Company, then the Company may interpose as a defense or plea the provisions of
this Section 13, and the Senior Creditor may intervene and interpose such
defense or plea in its name or in the name of the Company. If the Holder, in
contravention of the terms of the provisions of this Section 13, shall attempt
to collect any of the Subordinated Debt or enforce any of the Subordinated
Documents, then the Senior Creditor or the Company may, by virtue of the
provisions of this Section 13, restrain the enforcement thereof in the name of
the Senior Creditor or in the name of the Company. If the Holder, in
contravention of the terms of this Section 13, obtains any cash or other assets
of the Company in respect of the Subordinated Debt as a result of any
administrative, legal or equitable actions, or otherwise, the Holder agrees
forthwith to pay, deliver and assign to the Senior Creditor, with appropriate
endorsements, any such cash for application to the Senior Debt and any such
other assets as collateral for the Senior Debt.
(g) Until the Payment In Full of the Senior Debt, the Holder will not, with
respect to any claim it may have in respect of its Subordinated Debt, commence
or join with any other creditor or creditors in commencing any Insolvency
Proceeding against the Company. At any meeting of creditors of the Company or in
the event of any case or proceeding, voluntary or involuntary, for the
distribution, division or application of all or part of the assets of the
Company or the proceeds thereof, whether such case or proceeding be for the
liquidation, dissolution or winding up of the Company or its business, a
receivership, insolvency or bankruptcy case or proceeding, an assignment for the
benefit of creditors or a proceeding by or against the Company for relief under
the federal Bankruptcy Code or any other bankruptcy, reorganization or
insolvency law or any other law relating to the relief of debtors, readjustment
of indebtedness, reorganization, arrangement, composition or extension or
marshalling of assets or otherwise (collectively, an “Insolvency Proceeding”), the Senior Creditor is hereby irrevocably
authorized at any such meeting or in any such proceeding to receive or collect
any cash or other assets of the Company distributed, divided or applied by way
of dividend or payment, or any securities issued on account of any Subordinated
Debt, and apply such cash to or to hold such other assets or securities as
collateral for the Senior Debt, and to apply to the Senior Debt any cash
proceeds of any realization upon such other assets or securities that the Senior
Creditor in its discretion elects to effect, until the Payment In Full of all of
the Senior Debt, rendering to the Holder any surplus to which the Holder is then
entitled.
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(h) Notwithstanding the foregoing provisions of Section 13(g) herein above,
the Holder shall be entitled to receive and retain any securities of the Company
or any other corporation or other entity provided for by a plan of
reorganization or readjustment (i) the payment of which securities is
subordinate, at least to the extent provided in this Section 13 with respect to
Subordinated Debt, to the payment of all Senior Debt under any such plan of
reorganization or readjustment and (ii) all other terms of which are reasonably
acceptable to the Senior Creditor.
(i) At any such meeting of creditors or in the event of any such Insolvency
Proceeding, the Holder shall retain the right to vote and otherwise act with
respect to the Subordinated Debt (including, without limitation, the right to
vote to accept or reject any plan of partial or complete liquidation,
reorganization, arrangement, composition or extension), provided that the Holder shall not vote with respect
to any such plan or take any other action in any way so as to contest (i) the
validity of any Senior Debt or any collateral therefor or guaranties thereof,
(ii) the relative rights and duties of any holders of any Senior Debt
established in any instruments or agreements creating or evidencing any of the
Senior Debt with respect to any of such collateral or guaranties, or (iii) the
Holder's obligations and agreements set forth in this Section 13.
(j) The Holder agrees, with respect to the Senior Debt and any and all
collateral therefor or guaranties thereof, that the Company and the Senior
Creditor may agree to increase the amount of the Senior Debt or otherwise modify
the terms of any of the Senior Debt, and the Senior Creditor may grant
extensions of the time of payment or performance to and make compromises,
including releases of collateral or guaranties, and settlements with the Company
and all other persons, in each case without the consent of the Holder or the
Company and without affecting the agreements of the Holder or the Company
contained in this Section 13; provided, however, that nothing contained in this Section
13(j) shall constitute a waiver of the right of the Company itself to agree or
consent to a settlement or compromise of a claim which the Senior Creditor may
have against the Company.
(k) The Holder will not, at any time while the provisions of this Section 13
are in effect, modify any of the terms of any of the Subordinated Debt or any of
the Subordinated Documents nor will the Holder sell, transfer, pledge, assign,
hypothecate or otherwise dispose of any or all of the Subordinated Debt to any
person.
(l) Nothing contained in this Section 13 shall impair, as between the Company
and the Holder, the obligation of the Company to pay to the Holder all amounts
payable in respect of the Subordinated Debt as and when the same shall become
due and payable in accordance with the terms thereof, or prevent the Holder
(except as expressly otherwise provided in Section 13(d) or Section 13(g)) from
exercising all rights, powers and remedies otherwise permitted by the
Subordinated Documents and by applicable law upon a default in the payment of
the Subordinated Debt or under any Subordinated Document, all, however, subject
to the rights of the Senior Creditor as set forth in this Section
13.
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(m) The provisions of this Section 13 shall continue in full force and
effect, and the obligations and agreements of the Holder and the Company
hereunder shall continue to be fully operative, until the Payment In Full of all
of the Senior Debt and such full payment and satisfaction shall be final and not
avoidable. To the extent that the Company or any guarantor of or provider of
collateral for the Senior Debt makes any payment on the Senior Debt that is
subsequently invalidated, declared to be fraudulent or preferential or set aside
or is required to be repaid to a trustee, receiver or any other party under any
bankruptcy, insolvency or reorganization act, state or federal law, common law
or equitable cause (such payment being hereinafter referred to as a
“Voided Payment”), then to the extent of such Voided Payment,
that portion of the Senior Debt that had been previously satisfied by such
Voided Payment shall be revived and continue in full force and effect as if such
Voided Payment had never been made. In the event that a Voided Payment is
recovered from the Senior Creditor, an Event of Default (under and as defined in
the Loan Agreement) shall be deemed to have existed and to be continuing under
the Loan Agreement from the date of the Senior Creditor’s initial receipt of
such Voided Payment until the full amount of such Voided Payment is restored to
the Senior Creditor. During any continuance of any such Event of Default, the
provisions of this Section 13 shall be in full force and effect with respect to
the Subordinated Debt. To the extent that the Holder has received any payments
with respect to the Subordinated Debt subsequent to the date of the Senior
Creditor’s initial receipt of such Voided Payment and such payments have not
been invalidated, declared to be fraudulent or preferential or set aside or are
required to be repaid to a trustee, receiver, or any other party under any
bankruptcy act, state or federal law, common law or equitable cause, the Holder
shall be obligated and hereby agrees that any such payment so made or received
shall be deemed to have been received in trust for the benefit of the Senior
Creditor, and the Holder hereby agrees to pay to the Senior Creditor, upon
demand, the full amount so received by the Holder during such period of time to
the extent necessary fully to restore to the Senior Creditor the amount of such
Voided Payment. Upon the Payment In Full of all of the Senior Debt, which
payment shall be final and not avoidable, the provisions of this Section 13 will
automatically terminate without any additional action by any party
hereto.
14. Governing Law; Dispute
Resolution. This Note
shall be binding upon the Company and its successors, assigns and legal
representatives. The validity, construction and interpretation of this Note will
be governed, and construed in accordance with, the laws of the State of
California. Any Dispute arising out of this Note by and between the Holder and
the Company, shall be resolved in accordance with Section 9.6 (Arbitration) of
the Merger Agreement.
[Signature Page Follows]
-11-
|
HOLDER
ACKNOWLEDGED
AND AGREED:
|
COMPANY
UNIFY
CORPORATION
|
|||
| By: | ||||
| Name: | Name: | |||
| Title: | ||||
Dated: June [___],
2010
