WIRELESS RONIN TECHNOLOGIES, INC. NOTE CONVERSION AGREEMENT
EXHIBIT 4.10
WIRELESS RONIN TECHNOLOGIES, INC.
NOTE CONVERSION AGREEMENT entered into and by and between Wireless Ronin Technologies, Inc., a
Minnesota corporation (the “Company”) and the undersigned holder of the Company’s Note (“Lender”).
WHEREAS, the Company is indebted to Lender by reason of one or more loans evidenced the Notes
described in the attached Schedule A (the “Notes”);
WHEREAS, the Company has advised Lender that the Company intends to borrow up to $2,000,000
pursuant to the sale of 12% convertible promissory Notes (the “Bridge Notes”); and
WHEREAS, the Company has advised Lender that it intends to make a public offering of its
common stock pursuant to a registration statement to be filed on or about April 2006 (the “IPO”)
and that the Company is required by the underwriter to cause its outstanding notes or convertible
debentures to be converted into common stock of the Company upon the completion of the IPO; and
WHEREAS, Lender has agreed with the Company that upon the closing of the Company’s IPO to
convert Lender’s Notes into the Company’s common stock on the terms provided below.
NOW THEREFORE, in consideration of the agreements and covenants hereinafter set forth, the
Company and Lender hereby agree as follows:
1. The Notes. References to “Notes” herein means the convertible debenture notes of the Company
held by Lender and, if applicable, short-term notes held by Lender, as specified on Schedule A.
The aggregate amount of the Company’s indebtedness to Lender under the Notes is hereinafter
referred to as the “Principal Indebtedness.”
2. Principal and Interest. The amount of the Company’s Principal Indebtedness to Lender as of
December 31, 2005, and the amount of the Company’s accrued interest due Lender thereon as of
December 31, 2005, is correctly set forth in Schedule A.
3. Amendment of the Notes. Lender agrees to the following amendments to the Notes.
(a) Maturity Dates. The maturity dates of the Notes shall be the agreed upon extension due
dates set forth in Schedule A; provided, however, that the maturity date of the Notes shall
be accelerated to the close of business on the date the Company closes on the IPO (the “IPO
Closing Date”).
(b) Conversion Price. On the IPO Closing Date the Principal Indebtedness on the Notes
shall, without any further action by Lender or the Company, be converted into shares of the
Company’s common stock at a conversion price per share (the “Conversion Price”) equal to 80%
of the initial public offering price of the Company’s common stock
NO.
in the IPO (subject to adjustment as provided in Section 5). If the Company does not
complete the IPO, the Notes will be convertible at the price or prices per share currently
provided in the Notes.
(c) Conversion of Interest. The Company shall give written notice to Lender within five (5)
days after filing a Registration Statement with the Securities and Exchange Commission
relating to the IPO. As soon as practicable after filing such Registration Statement, the
Company shall also furnish Lender with a copy of the prospectus which is a part thereof.
Lender shall have the option, within ten (10) days after receipt of the Company’s notice of
filing the Registration Statement, to notify the Company in writing that Lender desires to
convert accrued interest on the Company’s accrued interest due Lender as of the IPO Closing
Date into common stock. If the Company receives such notice, accrued interest on the
Principal Indebtedness shall be automatically converted into common stock in the same manner
as the Principal Indebtedness is converted.
(d) Deferral of Payments. Payment of all Princicipal Indebtedness due prior to September
30, 2006, and of all accrued interest due on the Notes shall be deferred until the earlier
of the IPO Closing Date or September 30, 2006. If the Company does not complete an IPO by
September 30, 2006, future payments of principal and interest due on the Notes after such
date shall be paid in accordance with their terms from and after such date.
(e) Preferred Stock. The Notes are convertible only into the Common Stock of the Company.
The forgoing supersedes all prior understandings of the Company and Lender concerning the
issuance of preferred shares of the Company.
4. Conversion Procedure. Upon conversion of the Principal Indebtedness, or accrued interest on the
Principal Indebtedness (if Lender elects to convert the same as provided in Section 2(d)), Lender
shall surrender to the Company all of the original Notes at the principal office of the Company,
duly endorsed. As promptly as possible thereafter, and in no event later than ten (10) days after
the Company’s receipt of the Notes, the Company shall issue and deliver to Lender stock
certificates representing the number of shares of common stock into which the indebtedness
evidenced by the Notes has been converted. In the event upon conversion of the Notes, would result
in the issuance of a fractional share of common stock, the Company shall make to Lender a cash
payment of a fractional share based upon the Conversion Price.
5. Conversion Price Adjustments. The provisions of Lender’s Notes relating to conversion of the
Notes are subject to adjustment as provided in this Section 5 during the period in which Lender
owns the Notes.
(a) Adjustments for Dividends and Distributions. In the event the Company at any
time prior to the expiration of the Notes makes or issues, or fixes a record date for the
determination of holders of Common Stock entitled to receive, a dividend or other
distribution payable in securities of the Company other than shares of Common Stock, then
and in each such event provision shall be made so that Lender shall receive upon conversion
thereof, in addition to the number of shares of Common Stock receivable
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thereupon, the amount of securities of the Company which the Lender would have received had
the Notes been converted on the date of such event.
(b) Subdivision or Combination of Common Stock. If the Company at any time
subdivides (by any stock split, stock dividend, recapitalization or otherwise) one or more
classes of its outstanding shares of Common Stock into a greater number of shares, the
number of shares of Common Stock for which issuable upon conversion of the Notes shall
immediately be proportionately increased and the conversion price per share proportionately
decreased, and if the Company at any time combines (by reverse stock split or otherwise) one
or more classes of its outstanding shares of Common Stock into a smaller number of shares,
the number of shares of Common Stock issuable upon conversion of the Notes shall immediately
be proportionately decreased, and the Conversion Price per share proportionately increased.
6. Securities Exemption; Investment Intent. Lender represents that Lender is an “accredited
investor” as that term is defined in Section 501 of Regulation D under the Securities Act of 1933,
as amended. Lender understands that neither this Note nor the securities issuable upon conversion
of the Note have been registered under the Securities Act of 1933, as amended (the “Act”), or
applicable state securities laws. Lender has acquired the Notes for investment and not with a view
to distribution or resale. Other than pursuant to registration under the Act and any applicable
state securities laws or an exemption from registration, the availability of which the Company
shall determine in its sole discretion, the Notes and the shares of common stock into which the
Notes may be converted may not be sold, pledged, assigned or otherwise disposed of (whether
voluntarily or involuntarily) by holder. Lender agrees cause any transferee of the Notes or the
shares of common stock subject to the Notes to be bound by the terms and provisions of this
Agreement.
7. Disclosure. Lender is familiar with the Company’s business and financial condition and has had
an opportunity to obtain, and has received, additional information concerning the Company and has
an opportunity to ask questions of, and receive answers from, the Company, to the extent deemed
necessary by Lender in order to make a decision concerning Lender’s agreement to be a party to this
Agreement. Lender understands that the Company is in an early stage and that the purchase of its
shares involves a high degree of risk, including the risk of receiving no return on Lender’s
investment and of the losing of Lender’s entire investment in the Company. Lender is able to bear
the economic risk of investment in the Notes and any shares acquired upon conversion of the Notes.
Lender is aware that there is not currently any market for the Notes or the Company’s common stock,
and there is no assurance that a public market for the Company’s common stock will develop. Lender
believes that investment in the shares acquired upon conversion of the Notes, and any additional
shares received upon conversion of accrued interest on the Notes, meets Lender’s investment
objectives and financial needs, and Lender has adequate means of providing for Lender’s current
financial needs and contingencies, and has no need for liquidity of investment with respect to
common stock acquired upon conversion of the Notes.
8. Registration Rights. Lender shall have rights to include the shares underlying the Notes in any
registration statement filed with the Securities and Exchange Commission by the Company within one
year following the closing date of the IPO to permit the resale of shares
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NO.
acquired. The Company will notify Lender if it intends to file a registration statement following
the IPO closing date.
9. Effect of Amendments and Allonge. Except for the foregoing amendments set forth in Sections 2,
3 and 4, the terms and conditions of the Notes not inconsistent therewith shall remain in full
force and effect. Lender shall attach and permanently affix this Agreement as an allonge to the
Notes and give notice and a copy of this Agreement to any transferee or pledgee of the Notes.
10. Notices. To be effective, all notices, elections or other communications and deliveries
required or permitted hereunder shall be in writing. A written notice or other communication or
delivery shall be deemed to have been given or made hereunder (i) if delivered by hand, when the
notifying party delivers such notice or other communication to Lender or the Company, as the case
may be, or (ii) if delivered by a nationally known overnight delivery service (such as Fed Ex, UPS
or DHL), on the first business day following the date such notice or other communication or
delivery is timely delivered to the overnight courier. Communications or deliveries shall be
directed to the addresses of the Company or Lender, as applicable, at the addresses set forth below
(or such other address as Lender shall designate in writing from time to time).
11. Governing Law. This Agreement shall be governed by the laws of the State of Minnesota
applicable to contracts made and to be performed wholly within Minnesota, without giving effect to
conflicts of laws principles. Venue for enforcement of this Agreement shall be in any federal
court or Minnesota state court sitting in Minneapolis, Minnesota. Lender and the Company consent
to the jurisdiction and venue of any such court and waives any argument that the venue in such
forums is not convenient.
12. Successors or Assigns. The Company and Lender agree that all of the terms of this Agreement
shall be binding on their respective successors and assigns, and that the term “Company” and the
term “Lender” as used herein shall be deemed to include, for all purposes, the respective
designees, successors, assigns, heirs, executors and administrators.
13. Invalidity of Particular Provisions. The Company and Lender agree that the unenforceability or
invalidity of any provision or provisions of this Note shall not render any other provision or
provisions herein contained unenforceable or invalid.
14. Confidentiality. The information contained in this Agreement relative to the Company’s
proposed bridge debt financing and public offering are highly confidential. Lender agrees that all
discussions with the Company relative to the foregoing financing will be held in the strictest of
confidence and will not be disclosed without the consent of the Company, or as required by law.
Such confidentiality restriction shall continue until the Company advises Lender that it no longer
intends to pursue a public offering, or the Company’s public disclosure of the proposed public
offering. Lender has been advised that a breach of this disclosure obligation may jeopardize the
Company’s proposed financing. Lender may disclose the terms of this Agreement to any attorney or
other advisor of Lender who agrees in writing to be bound by these confidentiality terms.
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NO.
IN WITNESS WHEREOF, the Company and Lender have executed this Agreement effective the day
of , 2006.
| WIRELESS RONIN TECHNOLOGIES, INC. | ||||
| By | ||||
| Xxxxxxx X. Xxxx | ||||
| President and Chief Executive Officer | ||||
| 00000 Xxxxxx Xxxxx | ||||
| Xxxx Xxxxxxx, XX 00000 | ||||
| LENDER: | ||||
| Name of Lender | ||||
| Signature | ||||
| Address: | ||||
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NO.
SCHEDULE A
Date of Note |
Principal Balance as of 12/31/05 |
Accrued Interest as of 12/31/05 |
||
WIRELESS RONIN TECHNOLOGIES, INC.
ADDENDUM TO NOTE CONVERSION AGREEMENT
ADDENDUM TO NOTE CONVERSION AGREEMENT by and between Wireless Ronin Technologies, Inc., a
Minnesota corporation (the “Company”) and the undersigned holder of the Company’s Convertible
Debenture or Note.
WHEREAS, the parties desire to amend the Note Purchase Agreement appended hereto, the Company
and Lender hereby agree as follows:
1. Section 3(b) of the Note Conversion Agreement is hereby amended to read as follows:
(b) Conversion Price. On the IPO Closing Date the Principal Indebtedness on the Notes
shall, without any further action by Lender or the Company, be converted into shares of the
Company’s common stock at a conversion price per share (the “Conversion Price”) equal to the
lesser of (a) the current stated exercise price per share in the respective Notes, or (b)
80% of the initial public offering price of the Company’s common stock in the IPO (subject
to adjustment as provided in Section 5). If the Company does not complete the IPO, the
Notes will be convertible at the price or prices per share currently provided in the Notes.
2. Section 8 of the Note Conversion Agreement is hereby amended to read as follows:
Under the terms of sale of the Bridge Notes, the Company has agreed to file a registration
statement with the Securities and Exchange Commission within 60 days following its initial
public offering to permit the resale of shares acquired by Purchasers of Bridge Notes (the
“Resale Registration Statement”). The Company agrees to include shares of common stock
purchasable by Lender upon conversion of the Note or interest thereon in the Resale
Registration Statement, on the same terms as the Purchasers of the Bridge Notes. In
addition, the Company agrees to include in such registration, any shares of common stock
purchasable by Lender pursuant to any other warrants issued by the Company to Lender prior
to the date of this Agreement.
3. If the Company enters into an underwriting agreement with an underwriter for an initial public
offering and completes such offering prior to September 30, 2006, Lender will enter into a
“lock-up” agreement with such underwriter which shall provide that Lender will not sell or dispose,
or agree to sell or dispose, of any shares of common stock of the Company for a period of 180 days
following the closing of the public offering or, if Lender is an officer, director, employee or ten
percent or more beneficial owner of the Company’s common stock, or is an entity controlled by any
of such persons, 12 months from the date of closing such public offering.
4. Except for the foregoing amendments to the Note Conversion Agreement, the terms and conditions
of the Note Purchase Agreement not inconsistent herewith shall remain in full force and effect.
| WIRELESS RONIN TECHNOLOGIES, INC. | ||||
| By | ||||
| Xxxxxxx X. Xxxx | ||||
| LENDER: | ||||
| Name of Lender | ||||
| Signature | ||||
| Address: | ||||
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