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EXHIBIT 10.1
INTERFACE SYSTEMS, INC.
CONVERTIBLE SUBORDINATED NOTE
PURCHASE AGREEMENT
THIS CONVERTIBLE SUBORDINATED NOTE PURCHASE AGREEMENT (this
"Agreement") is made as of the 28th day of June, 2000, by and between
Interface Systems, Inc., a Michigan corporation ("Interface" or the
"Company"), and Tumbleweed Communications Corp., a Delaware corporation
("Purchaser" or the "Parent").
RECITALS
WHEREAS, the Board of Directors of the Company has approved the issuance
of Common Stock, no par value (the "Common Stock") in accordance with the Notes,
as defined below;
WHEREAS, the Board of Directors of the Company has approved the sale and
issuance of an aggregate of up to $3,000,000 of Convertible Subordinated Notes
(individually, a "Note" and collectively, the "Notes") which can be converted
into Common Stock;
WHEREAS, the Purchaser desires to purchase Notes on the terms and
conditions set forth herein; and
WHEREAS, the Company desires to issue and sell Notes to the Purchaser on
the terms and conditions set forth herein;
NOW, THEREFORE, in consideration of the foregoing recitals and the mutual
promises hereinafter set forth, the parties hereto agree as follows:
1. PURCHASE AND SALE OF STOCK.
1.1 SALE AND ISSUANCE OF NOTES.
(a) Subject to the terms and conditions of this Agreement, the Purchaser
agrees, to purchase at the Closings and the Company agrees to sell and issue to
the Purchaser, a Note for $2,000,000 (the "$2,000,000 Note") and a Note for
$1,000,000 (the "$1,000,000 Note").
1.2 THE CLOSINGS.
(a) The purchase and sale of the $2,000,000 Note shall take place at the
offices of Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP, Palo Alto, California, at
5:00 p.m., on July 3, 2000, or at such other time and place as the Company and
the Purchaser shall mutually agree, either orally or in writing (which time and
place are designated as the "$2,000,000 Closing").
(b) The purchase and sale of the $1,000,000 Note shall take place at the
offices of Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP, Palo Alto, California, at
5:00 p.m., on September 5, 2000, or at such other time and place as the Company
and the Purchaser shall mutually agree, either orally or in writing (which time
and place are designated as the "$1,000,000 Closing" and together with the
$2,000,000 Closing, the "Closings").
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(c) At each of the Closings, the Company shall deliver to the Purchaser a
Note in exchange for payment of the purchase price therefor by check, wire
transfer, or such other form of payment as shall be mutually agreed upon by the
Purchaser and the Company.
2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
Reference is made to that certain Agreement and Plan of Merger by and
among Parent, Maize Acquisition Sub, Inc., a Delaware corporation, and the
Company dated June 28, 2000 (the "Merger Agreement"). The Company hereby
represents, warrants and covenants to the Purchaser each of the representations,
warranties and covenants set forth in Article III of the Merger Agreement
subject to the exceptions set forth in the Disclosure Schedule thereto, which is
incorporated by reference herein, and further represents, warrants, and
covenants, specifically identifying the relevant subparagraph(s) hereof and
attached hereto, as follows:
2.1 REGISTRATION RIGHTS.
Except as provided in the Merger Agreement, the Company is presently not
under any obligation and has not granted any rights to register under the
Securities Act any of its presently outstanding securities or any of its
securities that may subsequently be issued.
2.2 AUTHORIZATION.
All corporate action on the part of the Company, its officers, directors
and shareholders necessary for the authorization, execution and delivery of this
Agreement, that certain Registration Rights Agreement by and between the Company
and Parent (the "Registration Rights Agreement") and the Notes, the performance
of all obligations of the Company hereunder and thereunder at the Closings and
the authorization, issuance (or reservation for issuance), sale, and delivery of
the Notes being sold hereunder and the Common Stock issuable upon conversion
thereof has been taken or will be taken prior to the Closings, and this
Agreement, the Registration Rights Agreement, and the Notes, when executed and
delivered, will constitute valid and legally binding obligations of the Company,
enforceable in accordance with their respective terms except (i) as limited by
applicable bankruptcy, insolvency, reorganization, moratorium, and other laws of
general application affecting enforcement of creditors' rights generally, (ii)
as limited by laws relating to the availability of specific performance,
injunctive relief, or other equitable remedies, and (iii) to the extent that the
indemnification provisions contained in the Registration Rights Agreement may be
limited by applicable laws. The sale of the Notes is not and the subsequent
conversion of the Notes into Common Stock will not be subject to any preemptive
rights or rights of first refusal that have not been properly waived or complied
with.
2.3 OFFERING.
Subject in part to the truth and accuracy of the Purchaser's
representations set forth in this Agreement, the offer, sale and issuance of the
Notes as contemplated by this Agreement are exempt from the registration
requirements of the Securities Act, and neither the Company nor any authorized
agent acting on its behalf will take any action hereafter that would cause the
loss of such exemption.
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2.4 VALID ISSUANCE OF NOTES AND COMMON STOCK.
The Notes that are being purchased by the Investors hereunder, when
issued, sold, and delivered in accordance with the terms of this Agreement for
the consideration expressed herein, will be duly and validly issued, fully paid,
and nonassessable, and will be free of restrictions on transfer other than
restrictions on transfer under this Agreement and the Registration Rights
Agreement and under applicable state and federal securities laws. The Common
Stock issuable upon conversion of the Notes being purchased under this Agreement
has been duly and validly reserved for issuance and will be duly and validly
issued, fully paid, and nonassessable and will be free of restrictions on
transfer other than restrictions on transfer under this Agreement and the
Registration Rights Agreement and under applicable state and federal securities
laws.
2.5 GOVERNMENTAL CONSENTS.
No consent, approval, qualification, order or authorization of, or filing
with, any local, state, or federal governmental authority is required on the
part of the Company in connection with the Company's valid execution, delivery,
or performance of this Agreement, the offer, sale or issuance of the Notes by
the Company or the issuance of Common Stock upon conversion of the Notes, except
such filings as have been made prior to the Closings, except any notices of sale
required to be filed with the Securities and Exchange Commission under
Regulation D of the Securities Act of 1933, as amended (the "Securities Act"),
or such post- closing filings as may be required under applicable state
securities laws, which will be timely filed within the applicable periods
therefor.
2.6 DISCLOSURE.
The Company has provided the Purchaser with all the information reasonably
available to it without undue expense that such Purchaser has requested for
deciding whether to purchase the Notes and all information that the Company
believes is reasonably necessary to enable such Purchaser to make such decision.
To the best of the Company's knowledge after reasonable investigation, neither
this Agreement nor any other agreements, written statements or certificates made
or delivered in connection herewith contains any untrue statement of a material
fact or omits to state a material fact necessary to make the statements herein
or therein not misleading.
3. REPRESENTATIONS AND WARRANTIES OF THE PURCHASER.
The Purchaser hereby represents and warrants to the Company (severally and
not jointly) that:
3.1 AUTHORIZATION.
The Purchaser has full power and authority to enter into this Agreement
and the Registration Rights Agreement, and that this Agreement, when executed
and delivered, will constitute a valid and legally binding obligation of such
Purchaser.
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3.2 LEGENDS.
To the extent applicable, each certificate or other document evidencing
any of the Notes or any Common Stock issued upon conversion thereof shall be
endorsed with the legends substantially in the form set forth below:
(a) The following legend under the Securities Act:
"THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR ANY SECURITIES LAW OF ANY STATE OF THE UNITED STATES
(COLLECTIVELY, THE "SECURITIES LAWS" AND MAY NOT BE TRANSFERRED OR RESOLD
EXCEPT AS PERMITTED UNDER THE SECURITIES LAWS, PURSUANT TO REGISTRATION
UNDER SUCH SECURITIES LAWS OR PURSUANT TO AN EXEMPTION FROM REGISTRATION,
WHICH EXEMPTION FROM REGISTRATION SHALL BE DESCRIBED IN A WRITTEN OPINION
OF COUNSEL REASONABLY SATISFACTORY TO THE PURCHASER AND DELIVERED TO THE
PURCHASER."
(b) Any legend imposed or required by the Company's Bylaws or applicable
state securities laws.
3.3 ACCREDITED INVESTOR.
(a) The Purchaser further represents to the Company that such Purchaser is
an Accredited Investor, as defined in Rule 501 of the Securities Act.
3.4 PURCHASE ENTIRELY FOR OWN ACCOUNT.
This Agreement is made with the Purchaser in reliance upon such
Purchaser's representation to the Company, which by such Purchaser's execution
of this Agreement such Purchaser hereby confirms, that the Note to be purchased
by such Purchaser and the Common Stock issuable upon conversion thereof
(collectively, the "Securities") will be acquired for investment for such
Purchaser's own account, not as a nominee or agent, and not with a view to the
resale or distribution of any part thereof, and that such Purchaser has no
present intention of selling, granting any participation in, or otherwise
distributing the same. By executing this Agreement, the Purchaser further
represents that it does not have any contract, undertaking, agreement or
arrangement with any person to sell, transfer or grant participations to such
person or to any third person, with respect to any of the Notes.
4. CONDITIONS OF PURCHASER'S OBLIGATIONS AT THE CLOSINGS.
The obligations of the Purchaser under subparagraph 1.2 of this Agreement
are subject to the fulfillment on or before each of the Closings of each of the
following conditions:
4.1 REPRESENTATIONS AND WARRANTIES.
The representations and warranties of the Company contained in Section 2
shall be true on and as of each Closing with the same effect as though such
representations and warranties had been made on and as of the date of each
Closing.
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4.2 PERFORMANCE.
The Company shall have performed and complied with all agreements,
obligations, and conditions contained in this Agreement that are required to be
performed or complied with by it on or before each Closing.
4.3 COMPLIANCE CERTIFICATE.
The President of the Company shall deliver to the Purchaser at each
Closing a certificate certifying that the conditions specified in paragraphs
4.1, 4.2, 4.4, 4.5 and 4.6 have been fulfilled.
4.4 QUALIFICATIONS.
All authorizations, approvals, or permits, if any, of any governmental
authority or regulatory body of the United States or of any state that are
required in connection with the lawful issuance and sale of the Notes pursuant
to this Agreement shall be duly obtained and effective as of each Closing.
4.5 PROCEEDINGS AND DOCUMENTS.
All corporate and other proceedings in connection with the transactions
contemplated at each Closing and all documents incident thereto shall be
reasonably satisfactory in form and substance to the Purchaser's special
counsel, which shall have received all such counterpart original and certified
or other copies of such documents as it may reasonably request.
4.6 OPINION OF COMPANY COUNSEL.
The Purchaser shall have received from Xxxxxx Xxxxxxx PLLC, counsel for
the Company, an opinion, dated the date of each of the Closings, in the form
attached hereto as Exhibit A.
4.7 NO MATERIAL ADVERSE CHANGE.
Since the date of this Agreement, there shall not have occurred any event,
change or effect having, or which could be reasonably likely to have,
individually or in the aggregate, a material adverse effect on the Company and
its Subsidiaries.
4.8 NO TERMINATION OF THE MERGER AGREEMENT.
The Merger Agreement shall not have been terminated in accordance with its
terms.
4.9 NO BREACH OF THE MERGER AGREEMENT.
The Company shall not be in material breach of any representation,
warranty, covenant or other agreement contained in this Agreement, the Notes or
the Merger Agreement.
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5. CONDITIONS OF THE COMPANY'S OBLIGATIONS AT CLOSING.
The obligations of the Company to the Purchaser under this Agreement are
subject to the fulfillment on or before each Closings of each of the following
conditions by the Purchaser:
5.1 REPRESENTATIONS AND WARRANTIES.
The representations and warranties of the Purchaser contained in Section 3
shall be true on and as of each Closing with the same effect as though such
representations and warranties had been made on and as of the date of such
Closing.
5.2 QUALIFICATIONS.
All authorizations, approvals, or permits, if any, of any governmental
authority or regulatory body of the United States or of any state that are
required in connection with the lawful issuance and sale of the Notes pursuant
to this Agreement shall be duly obtained and effective as of each Closing.
6. MISCELLANEOUS
6.1 ENTIRE AGREEMENT.
This Agreement and the documents referred to herein constitute the entire
agreement among the parties and no party shall be liable or bound to any other
party in any manner by any warranties, representations, or covenants except as
specifically set forth herein or therein.
6.2 SURVIVAL OF WARRANTIES.
The warranties, representations, and covenants of the Company and the
Purchaser contained in or made pursuant to this Agreement shall survive the
execution and delivery of this Agreement and both Closings.
6.3 SUCCESSORS AND ASSIGNS.
Except as otherwise provided herein, the terms and conditions of this
Agreement shall inure to the benefit of and be binding upon the respective
successors and assigns of the parties (including permitted transferees of any
Notes sold hereunder or any Common Stock issued upon conversion thereof).
Nothing in this Agreement, express or implied, is intended to confer upon any
party other than the parties hereto or their respective successors and assigns
any rights, remedies, obligations, or liabilities under or by reason of this
Agreement, except as expressly provided in this Agreement.
6.4 GOVERNING LAW.
This Agreement shall be governed and construed in accordance with the laws
of the State of Delaware without giving effect to the principles of conflicts of
law thereof.
6.5 COUNTERPARTS.
This Agreement may be executed in two or more counterparts, each of which
shall be deemed an original, but all of which together shall constitute one and
the same instrument.
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6.6 TITLES AND SUBTITLES.
The titles and subtitles used in this Agreement are used for convenience
only and are not to be considered in construing or interpreting this Agreement.
6.7 NOTICES.
Unless otherwise provided, all notices and other communications required
or permitted under this Agreement shall be in writing and shall be mailed by
United States first-class mail, postage prepaid, sent by facsimile or delivered
personally by hand or by a nationally recognized courier addressed to the party
to be notified at the address or facsimile number indicated for such person on
the signature page hereof, or at such other address or facsimile number as such
party may designate by ten (10) days' advance notice to the other parties
hereto. All such notices and other written communications shall be effective on
the date of mailing, confirmed facsimile transfer or delivery.
6.8 FINDER'S FEES.
Each party represents that it neither is nor will be obligated for any
finder's fee or commission in connection with this transaction.
The Purchaser agrees to indemnify and to hold harmless the Company from
any liability for any commission or compensation in the nature of a finder's fee
(and the cost and expenses of defending against such liability or asserted
liability) for which it or any of its officers, partners, employees, or
representatives is responsible.
The Company agrees to indemnify and hold harmless the Purchaser from any
liability for any commission or compensation in the nature of a finder's fee
(and the costs and expenses of defending against such liability or asserted
liability) for which the Company or any of its officers, employees, or
representatives is responsible.
6.9 EXPENSES.
Irrespective of whether either Closing is effected, the Company shall pay
all costs and expenses that it incurs with respect to the negotiation,
execution, delivery, and performance of this Agreement.
6.10 ATTORNEYS' FEES.
If any action at law or in equity is necessary to enforce or interpret the
terms of this Agreement, the prevailing party shall be entitled to reasonable
attorneys' fees, costs, and disbursements in addition to any other relief to
which such party may be entitled.
6.11 AMENDMENTS AND WAIVERS.
Any term of this Agreement may be amended and the observance of any term
of this Agreement may be waived (either generally or in a particular instance
and either retroactively or prospectively), only with the written consent of
both the Company and the Purchaser.
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6.12 SEVERABILITY.
If one or more provisions of this Agreement are held to be unenforceable
under applicable law, such provision shall be excluded from this Agreement and
the balance of the Agreement shall be interpreted as if such provision were so
excluded and shall be enforceable in accordance with its terms.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
INTERFACE SYSTEMS, INC.
By:
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Address:
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PURCHASER:
By:
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Title:
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Address:
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Exhibit A
FORM OF OPINION OF XXXXXX XXXXXXX PLLC
1. The Company has been duly incorporated and is validly existing in good
standing under the laws of the State of Michigan.
2. The Company has the requisite corporate power and authority to own and
operate its properties and assets and to conduct its business as currently
conducted.
3. The Transaction Agreements have been duly authorized, validly executed and
delivered by all requisite corporate action on the part of the Company and
constitute valid and binding obligations of the Company, enforceable against the
Company in accordance with their terms, except that (a) the enforceability
thereof may be limited by (i) bankruptcy, insolvency, reorganization, moratorium
or other similar laws now or hereafter in effect relating to creditors' rights
generally and (ii) general principles of equity (regardless of whether
enforceability is considered in a proceeding in equity or at law) and (b) the
enforceability of rights to indemnification and contribution thereunder may be
limited by federal or state securities laws, rules or regulations or the
policies underlying such laws, rules or regulations.
4. To our knowledge, the authorized capital stock of the Company is as set forth
in Section 3.2 of the Merger Agreement. To our knowledge, and except as set
forth in Section 3.2 of the Merger Agreement and the exhibits and schedules
thereto, there are no outstanding options, warrants, rights (including
conversion or preemptive rights and rights of first refusal) or agreements of
any kind for the purchase or acquisition from the Company of any of its
securities.
5. The Notes have been duly authorized for issuance by the Company. The shares
of Common Stock issuable upon conversion of the Notes have been reserved for
issuance by all requisite corporate action on the part of the Company and, when
issued upon conversion of the Notes in accordance with the terms of the Restated
Articles, will be validly issued, fully paid and nonassessable.
6. The execution and delivery by the Company of each of the Transaction
Agreements and the performance by the Company of its obligations thereunder will
not (i) violate any provision of the Restated Articles, the Bylaws or any
Material Agreement or (ii) contravene any Applicable Order against the Company.
7. No consent or approval of, or other action by or filing with, any
Governmental Authority under any Applicable Law is required to be obtained,
taken or made by the Company in connection with the execution, delivery and
performance by the Company of the transactions contemplated by the Purchase
Agreement, except where a failure to obtain such approval, make such filing or
take such action would not have a material adverse effect on the Company,
subject to the timely filing of a Form D pursuant to Regulation D promulgated
under the Securities Act of 1933, as amended (the "Securities Act").
8. No registration is required under the Securities Act in connection with the
offer and sale of the Notes, subject to the timely filing of a Form D pursuant
to Regulation D promulgated under the Securities Act.
9. Except as may be set forth in the Schedule of Exceptions to the Purchase
Agreement, to the best of our knowledge, there is no action, proceeding or
investigation pending or overtly threatened against the Company before any court
or administrative agency that questions the validity of any of the Transaction
Agreements or might result, either individually or in the aggregate, in any
material adverse change in the assets, financial condition or operations of the
Company.
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THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
OR ANY SECURITIES LAW OF ANY STATE OF THE UNITED STATES (COLLECTIVELY, THE
"SECURITIES LAWS" AND MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER
THE SECURITIES LAWS, PURSUANT TO REGISTRATION UNDER SUCH SECURITIES LAWS OR
PURSUANT TO AN EXEMPTION FROM REGISTRATION, WHICH EXEMPTION FROM REGISTRATION
SHALL BE DESCRIBED IN A WRITTEN OPINION OF COUNSEL REASONABLY SATISFACTORY TO
THE PURCHASER AND DELIVERED TO THE PURCHASER.
FORM OF
INTERFACE SYSTEMS, INC.
CONVERTIBLE SUBORDINATED PROMISSORY NOTE
$ Palo Alto, California
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June 28, 2000
Interface Systems, Inc., a Michigan corporation (the "Company"), the
principal office of which is located at 0000 Xxxxxxxxx Xxxxx, Xxx Xxxxx, XX, for
value received hereby promises to pay to Tumbleweed Communications Corp., a
Delaware corporation ("Parent" or the "Purchaser"), or its registered assigns,
the sum ($ ), or such lesser amount as shall then equal the
outstanding principal amount hereof and any unpaid accrued interest hereon, as
set forth below, shall be due and payable on the earlier to occur of (i) June
28, 2001, or (ii) when declared due and payable by the Holder upon the
occurrence of an Event of Default (as defined below). Payment for all amounts
due hereunder shall be made by mail to the registered address of the Holder.
This Note is issued in connection with that certain Convertible Subordinated
Note Purchase Agreement between the Company and the Purchasers described
therein, dated as of June 28, 2000, as the same may from time to time be
amended, modified or supplemented (the "Purchase Agreement"). The holder of this
Note is subject to certain restrictions set forth in the Purchase Agreement and
shall be entitled to certain rights and privileges set forth in the Purchase
Agreement. This Note is one of the Notes referred to as the "Notes" in the
Purchase Agreement.
The following is a statement of the rights of the Holder of this Note and
the conditions to which this Note is subject, and to which the Holder hereof, by
the acceptance of this Note, agrees:
1. DEFINITIONS.
As used in this Note, the following terms, unless the context otherwise
requires, have the following meanings:
(i) "Company" includes any corporation which shall succeed to or
assume the obligations of the Company under this Note.
(ii) "Holder," when the context refers to a holder of this Note,
shall mean any person who shall at the time be the registered holder of
this Note.
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(iii) "Merger Agreement" shall refer to that certain Agreement and
Plan of Merger by and among the Company, Parent, and Maize Acquisition Sub,
Inc., dated June 28, 2000.
2. INTEREST.
Commencing on December 31, 2000, and on each June 30 and December 31
thereafter until all outstanding principal and interest on this Note shall have
been paid in full, the Company shall pay interest at the rate of ten percent
(10%) per annum (the "Initial Interest Rate") on the principal of this Note
outstanding during the period beginning on the date of issuance of this Note and
ending on the date that the principal amount of this Note becomes due and
payable. In the event that the principal amount of this Note is not paid in full
when such amount becomes due and payable, interest at the same rate as the
Initial Interest Rate plus three percent (3%) shall continue to accrue on the
balance of any unpaid principal until such balance is paid.
3. EVENTS OF DEFAULT.
If any of the events specified in this Section 3 shall occur (herein
individually referred to as an "Event of Default"), the Holder of the Note may,
so long as such condition exists, declare the entire principal and unpaid
accrued interest hereon immediately due and payable, by notice in writing to the
Company:
(i) Default in the payment of the principal and unpaid accrued interest of
this Note when due and payable if such default is not cured by the Company
within ten (10) days after the Holder has given the Company written notice of
such default; or
(ii) The institution by the Company of proceedings to be adjudicated as
bankrupt or insolvent, or the consent by it to institution of bankruptcy or
insolvency proceedings against it or the filing by it of a petition or answer or
consent seeking reorganization or release under the federal Bankruptcy Act, or
any other applicable federal or state law, or the consent by it to the filing of
any such petition or the appointment of a receiver, liquidator, assignee,
trustee or other similar official of the Company, or of any substantial part of
its property, or the making by it of an assignment for the benefit of creditors,
or the taking of corporate action by the Company in furtherance of any such
action; or
(iii) If, within sixty (60) days after the commencement of an action
against the Company (and service of process in connection therewith on the
Company) seeking any bankruptcy, insolvency, reorganization, liquidation,
dissolution or similar relief under any present or future statute, law or
regulation, such action shall not have been resolved in favor of the Company or
all orders or proceedings thereunder affecting the operations or the business of
the Company stayed, or if the stay of any such order or proceeding shall
thereafter be set aside, or if, within sixty (60) days after the appointment
without the consent or acquiescence of the Company of any trustee, receiver or
liquidator of the Company or of all or any substantial part of the properties of
the Company, such appointment shall not have been vacated; or
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(iv) Any declared default of the Company under any Senior Indebtedness
(as defined below) that gives the holder thereof the right to accelerate such
Senior Indebtedness, and such Senior Indebtedness is in fact accelerated by the
holder; or
(v) If the Company or the Purchaser terminates the Merger Agreement under
any section other than section 7.1(c) of the Merger Agreement, sixty (60) days
following such termination..
4. SUBORDINATION.
The indebtedness evidenced by this Note is hereby expressly subordinated,
to the extent and in the manner hereinafter set forth, in right of payment to
the prior payment in full of all the Company's Senior Indebtedness, as
hereinafter defined.
4.1 SENIOR INDEBTEDNESS. As used in this Note, the term "Senior
Indebtedness" shall mean the principal of and unpaid accrued interest on: (i)
all indebtedness of the Company to banks, commercial finance lenders, insurance
companies or other financial institutions regularly engaged in the business of
lending money, which is for money borrowed by the Company (whether or not
secured), and (ii) any such indebtedness or any debentures, notes or other
evidence of indebtedness issued in exchange for or to refinance such Senior
Indebtedness, or any indebtedness arising from the satisfaction of such Senior
Indebtedness by a guarantor.
4.2 DEFAULT ON SENIOR INDEBTEDNESS. If there should occur any receivership,
insolvency, assignment for the benefit of creditors, bankruptcy, reorganization
or arrangements with creditors (whether or not pursuant to bankruptcy or other
insolvency laws), sale of all or substantially all of the assets, dissolution,
liquidation or any other marshalling of the assets and liabilities of the
Company, or if this Note shall be declared due and payable upon the occurrence
of an Event of Default with respect to any Senior Indebtedness, then (i) no
amount shall be paid by the Company in respect of the principal of or interest
on this Note at the time outstanding, unless and until the principal of and
interest on the Senior Indebtedness then outstanding shall be paid in full, and
(ii) no claim or proof of claim shall be filed with the Company by or on behalf
of the Holder of this Note that shall assert any right to receive any payments
in respect of the principal of and interest on this Note, except subject to the
payment in full of the principal of and interest on all of the Senior
Indebtedness then outstanding. If there occurs an event of default that has been
declared in writing with respect to any Senior Indebtedness, or in the
instrument under which any Senior Indebtedness is outstanding, permitting the
holder of such Senior Indebtedness to accelerate the maturity thereof, then,
unless and until such event of default shall have been cured or waived or shall
have ceased to exist, or all Senior Indebtedness shall have been paid in full,
no payment shall be made in respect of the principal of or interest on this
Note, unless within three (3) months after the happening of such event of
default, the maturity of such Senior Indebtedness shall not have been
accelerated.
4.3 EFFECT OF SUBORDINATION. Subject to the rights, if any, of the holders
of Senior Indebtedness under this Section 4 to receive cash, securities or other
properties otherwise payable or deliverable to the Holder of this Note, nothing
contained in this Section 4 shall impair, as between the Company and the Holder,
the obligation of the Company, subject to the terms and conditions hereof, to
pay to the Holder the principal
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hereof and interest hereon as and when the same become due and payable, or shall
prevent the Holder of this Note, upon default hereunder, from exercising all
rights, powers and remedies otherwise provided herein or by applicable law.
4.4 SUBROGATION. Subject to the payment in full of all Senior Indebtedness
and until this Note shall be paid in full, the Holder shall be subrogated to the
rights of the holders of Senior Indebtedness (to the extent of payments or
distributions previously made to such holders of Senior Indebtedness pursuant to
the provisions of Section 4.2 above) to receive payments or distributions of
assets of the Company applicable to the Senior Indebtedness. No such payments or
distributions applicable to the Senior Indebtedness shall, as between the
Company and its creditors, other than the holders of Senior Indebtedness and the
Holder, be deemed to be a payment by the Company to or on account of this Note;
and for the purposes of such subrogation, no payments or distributions to the
holders of Senior Indebtedness to which the Holder would be entitled except for
the provisions of this Section 4 shall, as between the Company and its
creditors, other than the holders of Senior Indebtedness and the Holder, be
deemed to be a payment by the Company to or on account of the Senior
Indebtedness.
4.5 UNDERTAKING. By its acceptance of this Note, the Holder agrees to
execute and deliver such documents as may be reasonably requested from time to
time by the Company or the lender of any Senior Indebtedness in order to
implement the foregoing provisions of this Section 4.
5. PREPAYMENT.
The principal amount of this note plus accrued and unpaid interest may be
prepaid upon thirty (30) days' prior written notice to the Holder.
6. CONVERSION.
6.1 VOLUNTARY CONVERSION. Any Holder of this Note has the right, at the
Holder's option, at any time prior to payment in full of the principal balance
of this Note, to convert this Note, in accordance with the provisions of Section
6.3 hereof, in whole or in part, into fully paid and nonassessable shares of
Common Stock of the Company (the "Company Common Stock"). The number of shares
of Company Common Stock into which this Note may be converted ("Conversion
Shares") shall be determined by dividing the aggregate principal amount together
with all accrued interest to the date of conversion by the Conversion Price (as
defined below) in effect at the time of such conversion. The initial Conversion
Price shall be equal to $9.50.
6.2 AUTOMATIC CONVERSION. If at any time the Merger Agreement is terminated
pursuant to Section 7.1(c) by the Company, the entire principal amount of this
Note shall be automatically converted into shares of Company Common Stock at the
Conversion Price in effect at that time.
6.3 CONVERSION PROCEDURE.
6.3.1 Notice of Conversion Pursuant to Section 6.1. Before the Holder shall
be entitled to convert this Note into shares of Company Common Stock, it shall
surrender this Note at the office of the Company and shall give
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written notice by mail, postage prepaid, to the Company at its principal
corporate office, of the election to convert the same pursuant to this Section
6.1, and shall state therein the name or names in which the certificate or
certificates for shares of Company Common Stock are to be issued. The Company
shall, as soon as practicable thereafter, issue and deliver at such office to
the Holder of this Note a certificate or certificates for the number of shares
of Company Common Stock to which the Holder of this Note shall be entitled as
aforesaid. Such conversion shall be deemed to have been made immediately prior
to the close of business on the date of such surrender of this Note, and the
person or persons entitled to receive the shares of Company Common Stock
issuable upon such conversion shall be treated for all purposes as the record
holder or holders of such shares of Company Common Stock as of such date.
6.3.2 Notice of Conversion Pursuant to Section 6.2. If this Note is
automatically converted, written notice shall be delivered to the Holder of this
Note at the address last shown on the records of the Company for the Holder or
given by the Holder to the Company for the purpose of notice or, if no such
address appears or is given, at the place where the principal executive office
of the Holder is located, notifying the Holder of the conversion to be effected,
specifying the Conversion Price, the principal amount of the Note to be
converted, the amount of accrued interest to be converted, the date on which
such conversion will occur and calling upon such Holder to surrender to the
Company, in the manner and at the place designated, the Note.
6.4 DELIVERY OF STOCK CERTIFICATES. As promptly as practicable after the
conversion of this Note, the Company at its expense will issue and deliver to
the Holder of this Note a certificate or certificates for the number of full
shares of Company Common Stock issuable upon such conversion.
6.5 MECHANICS AND EFFECT OF CONVERSION. No fractional shares of Company
Common Stock shall be issued upon conversion of this Note. In lieu of the
Company issuing any fractional shares to the Holder upon the conversion of this
Note, the Company shall pay to the Holder the amount of outstanding principal
that is not so converted, such payment to be in the form as provided below. Upon
the conversion of this Note pursuant to Section 6.1 above, the Holder shall
surrender this Note, duly endorsed, at the principal office of the Company. At
its expense, the Company shall, as soon as practicable thereafter, issue and
deliver to such Holder at such principal office a certificate or certificates
for the number of shares of such Common Stock to which the Holder shall be
entitled upon such conversion (bearing such legends as are required by the
Purchase Agreement and applicable state and federal securities laws in the
opinion of counsel to the Company), together with any other securities and
property to which the Holder is entitled upon such conversion under the terms of
this Note, including a check payable to the Holder for any cash amounts payable
as described above. In the event of any conversion of this Note pursuant to
Section 6.1 above, such conversion shall be deemed to have been made immediately
prior to the closing of the issuance and sale of such Company Common Stock and
on and after such date the Holder of this Note entitled to receive the shares of
such Company Common Stock issuable upon such conversion shall be treated for all
purpose as the record Holder of such shares and a purchaser of such shares under
the Purchase Agreement and shall be bound by the terms of the Purchase
Agreement. Upon conversion of
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this Note, the Company shall be forever released from all its obligations and
liabilities under this Note, except that the Company shall be obligated to pay
the Holder, within ten (l0) days after the date of such conversion, any interest
accrued and unpaid or unconverted to and including the date of such conversion,
and no more.
7. CONVERSION PRICE ADJUSTMENTS.
7.1 ADJUSTMENTS FOR STOCK SPLITS AND SUBDIVISIONS. In the event the Company
should at any time or from time to time after the date of issuance hereof fix a
record date for the effectuation of a split or subdivision of the outstanding
shares of Company Common Stock or the determination of holders of Company Common
Stock entitled to receive a dividend or other distribution payable in additional
shares of Company Common Stock or other securities or rights convertible into,
or entitling the holder thereof to receive directly or indirectly, additional
shares of Company Common Stock (hereinafter referred to as "Company Common Stock
Equivalents") without payment of any consideration by such holder for the
additional shares of Company Common Stock or the Company Common Stock
Equivalents (including the additional shares of Company Common Stock issuable
upon conversion or exercise thereof), then, as of such record date (or the date
of such dividend distribution, split or subdivision if no record date is fixed),
the Conversion Price of this Note shall be appropriately decreased so that the
number of shares of Company Common Stock issuable upon conversion of this Note
shall be increased in proportion to such increase of outstanding shares.
7.2 ADJUSTMENTS FOR REVERSE STOCK SPLITS. If the number of shares of
Company Common Stock outstanding at any time after the date hereof is decreased
by a combination of the outstanding shares of Company Common Stock, then,
following the record date of such combination, the Conversion Price for this
Note shall be appropriately increased so that the number of shares of Company
Common Stock issuable on conversion hereof shall be decreased in proportion to
such decrease in outstanding shares.
7.3 RESTRICTIONS AND LIMITATIONS. So long as any Notes are outstanding, the
Company shall not, without the prior written consent by the Purchaser, authorize
or issue or obligate itself to issue, any other security (including any security
convertible into or exercisable for any equity security) senior to or on a
parity with the Note, or borrow any funds, or incur any indebtedness.
7.4 NOTICES OF RECORD DATE, ETC. In the event of:
7.4.1 Any taking by the Company of a record of the holders of any
class of securities of the Company for the purpose of determining the holders
thereof who are entitled to receive any dividend (other than a cash dividend
payable out of earned surplus at the same rate as that of the last such cash
dividend theretofore paid) or other distribution, or any right to subscribe for,
purchase or otherwise acquire any shares of stock of any class or any other
securities or property, or to receive any other right; or
7.4.2 Any capital reorganization of the Company, any reclassification
or recapitalization of the capital stock of the Company or any transfer of all
or substantially all of the assets of the Company to any other person or any
consolidation or merger involving the Company; or
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7.4.3 Any voluntary or involuntary dissolution, liquidation or winding up
of the Company, the Company will mail to the holder of this Note at least ten
(10) days prior to the earliest date specified therein, a notice specifying:
7.4.3.1 The date on which any such record is to be taken for the
purpose of such dividend, distribution or right, and the amount and character of
such dividend, distribution or right; and
7.4.3.2 The date on which any such reorganization, reclassification,
transfer, consolidation, merger, dissolution, liquidation or winding up is
expected to become effective and the record date for determining stockholders
entitled to vote thereon.
7.5 RESERVATION OF STOCK ISSUABLE UPON CONVERSION. The Company shall at all
times reserve and keep available out of its authorized but unissued shares of
Company Common Stock solely for the purpose of effecting the conversion of the
Note such number of its shares of Company Common Stock as shall from time to
time be sufficient to effect the conversion of the Note; and if at any time the
number of authorized but unissued shares of Company Common Stock shall not be
sufficient to effect the conversion of the entire outstanding principal amount
of this Note, in addition to such other remedies as shall be available to the
holder of this Note, the Company will use its best efforts to take such
corporate action as may, in the opinion of its counsel, be necessary to increase
its authorized but unissued shares of Company Common Stock to such number of
shares as shall be sufficient for such purposes.
8. WAIVER AND AMENDMENT.
Any provision of this Note may be amended, waived or modified upon the
written consent of the Company and holders of at least two-thirds of the face
amount of all then outstanding Notes issued pursuant to the Purchase Agreement.
9. TREATMENT OF NOTE.
To the extent permitted by generally accepted accounting principles, the
Company will treat, account and report the Note as debt and not equity for
accounting purposes and with respect to any returns filed with federal, state or
local tax authorities.
10. NOTICES.
Any notice, request or other communication required or permitted hereunder
shall be in writing and shall be deemed to have been duly given if personally
delivered or if telegraphed or mailed by registered or certified mail, postage
prepaid, at the respective addresses of the parties as set forth herein. Any
party hereto may by notice so given change its address for future notice
hereunder. Notice shall conclusively be deemed to have been given when
personally delivered or when deposited in the mail or telegraphed in the manner
set forth above and shall be deemed to have been received when delivered.
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11. NO STOCKHOLDER RIGHTS.
Nothing contained in this Note shall be construed as conferring upon the
Holder or any other person the right to vote or to consent or to receive notice
as a stockholder in respect of meetings of stockholders for the election of
directors of the Company or any other matters or any rights whatsoever as a
stockholder of the Company; and no dividends or interest shall be payable or
accrued in respect of this Note or the interest represented hereby or the
Conversion Shares obtainable hereunder until, and only to the extent that, this
Note shall have been converted.
12. GOVERNING LAW.
This Agreement shall be governed by and construed in accordance with the
laws of the State of Delaware, excluding that body of law relating to conflict
of laws.
13. HEADING; REFERENCES.
All headings used herein are used for convenience only and shall not be
used to construe or interpret this Note. Except where otherwise indicated, all
references herein to Sections refer to Sections hereof.
IN WITNESS WHEREOF, the Company has caused this Note to be issued this
day of , 2000.
INTERFACE SYSTEMS, INC.
By:
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Holder: TUMBLEWEED COMMUNICATIONS CORP.
Address: 000 Xxxxxxx Xxxxx, Xxxxxxx Xxxx, XX
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NOTICE OF CONVERSION
TO INTERFACE SYSTEMS, INC.
The undersigned, the holder of the foregoing Note, hereby surrenders such
Note for conversion into shares of Company Common Stock of Interface Systems,
Inc., to the extent of $ unpaid principal amount of such Note, and
requests that the certificates for such shares be issued in the name of, and
delivered to, , whose address is .
Dated:
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Signature
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Address
