Exhibit 10.12
AMENDMENT TO
CONVERTIBLE DEBT DOCUMENTATION
AND EXERCISE OF
CONVERSION RIGHT
THIS AMENDMENT TO CONVERTIBLE DEBT DOCUMENTATION AND EXERCISE OF CONVERSION
RIGHT (this "Amendment") is made and entered into as of the 31st day of March
1997, by and between NEON Systems, Inc., a Delaware corporation (the "Company"),
and JMI Equity Fund, L.P. (the "Investor").
RECITALS
The Company and the Investor are parties to (i) that certain Secured
Convertible Promissory Note Purchase Agreement dated as of September 29, 1994,
relating to a loan made by the Investor to the Company in the original principal
amount of $300,000 (the "September 1994 NPA"), (ii) that certain Secured
Convertible Promissory Note Purchase Agreement dated as of March 30, 1995,
relating to a loan made by the Investor to the Company in the original principal
amount of $350,000 (the "March 1995 NPA"), and (iii) that certain Secured
Convertible Promissory Note Purchase Agreement between the Company and the
Investor dated as of November 22, 1995 relating to a loan made by the Investor
to the Company in the original principal amount of $480,000. Such loans are
respectively evidenced by (i) the Company's Secured Convertible Promissory Note
dated September 29, 1994 payable to the Investor in the original principal
amount of $300,000 (the "September 1994 Note"), (ii) the Company's Secured
Convertible Promissory Note dated March 30, 1995 payable to the Investor in the
original principal amount of $350,000 (the "March 1995 Note"), and (iii) the
Company's Secured Convertible Promissory Note dated November 22, 1995 payable to
the Investor in the original principal amount of $480,000.
The September 1994 NPA and the September 1994 Note have been amended by the
Company and the Investor pursuant to Amendment Number One to Secured Convertible
Promissory Note Purchase Agreement and Secured Convertible Promissory Note and
Amendment Number Two to Secured Convertible Promissory Note Purchase Agreement,
each dated March 30, 1995, and pursuant to Amendment Number Three to Secured
Convertible Promissory Note Purchase Agreement and Secured Convertible
Promissory Note dated November 22, 1995. The March 1995 NPA and the March 1995
Note have been amended by the Company and the Investor pursuant to an Amendment
Number One to Secured Convertible Promissory Note Purchase Agreement and Secured
Convertible Promissory Note dated November 22, 1995.
The foregoing documents, as amended, are collectively referred to herein as
the "Convertible Debt Documents." The Secured Convertible Promissory Notes
referenced above, as amended, are collectively referred to herein as the
"Convertible Notes." The indebtedness outstanding under the Convertible Debt
Documents is referred to herein as the "Convertible Debt."
The Convertible Debt Documents include provisions for the conversion of
amounts outstanding thereunder into shares of the Company's Series A Preferred
Stock, par value $.01 per share (the "Series A Preferred Stock"). The Company
and the Investor desire to enter into this Amendment to (i) acknowledge and
confirm their agreement on August 7, 1996 that the aggregate amount (principal
and interest) of the Convertible Debt that may be converted into shares of the
Series A Preferred Stock may not exceed $250,000; (ii) provide for the
conversion, as of the date hereof, of $250,000 of such indebtedness into 125,000
shares of the Series A Preferred Stock; and (iii) modify, renew and extend the
remaining balance (principal and interest) of the indebtedness evidenced by the
Convertible Debt Documents.
In consideration of the foregoing and the mutual covenants and agreements
contained herein, the parties hereby agree as follows:
1. CONFIRMATION OF PRIOR AGREEMENT. The Company and the Investor hereby
acknowledge and confirm their agreement on August 7, 1996 that notwithstanding
any provision of the Convertible Debt Documents to the contrary, the aggregate
amount (principal and interest) of the Convertible Debt that may be converted
into shares of the Series A Preferred Stock may not exceed $250,000, and the
Investor hereby waives and relinquishes forever any right it has to convert any
amount of the Convertible Debt in excess of $250,000.
2. CONVERSION. The Investor hereby notifies the Company of its election
to convert into shares of the Series A Preferred Stock $250,000 of the
Convertible Debt, and the Company acknowledges receipt of such election. Such
amount shall be so converted as of the date of this Amendment, and the Company
shall cause 125,000 shares of the Series A Preferred Stock to be issued to the
Investor in respect thereof. The Investor acknowledges and agrees that,
following the issuance of such shares, it has no right to convert any additional
amount of the Convertible Debt into shares of the Series A Preferred Stock.
3. MODIFICATION OF INDEBTEDNESS. The Investor and the Company
acknowledge and agree that, prior to the conversion provided for in paragraph 2
above, the outstanding balance (principal and interest) of the Convertible Debt
was $1,299,100.78, consisting of $1,130,000 of principal and $169,100.78 of
interest. Following such conversion, the outstanding balance of the Convertible
Debt is $1,049,100.78. Such Convertible Debt shall be modified, renewed and
extended by the execution and delivery by the Company of a Secured Promissory
Note in the form of Exhibit A attached hereto (the "Renewal Note"). The Renewal
Note shall be in the principal amount of $1,049,100.78, shall bear interest at
the rate of 8% per annum and shall mature on December 31, 1998; provided,
however, that interest accrued but unpaid thereon shall be payable quarterly in
arrears on the last day of each June, September, December and March prior to the
maturity date and on the maturity date. The Renewal Note shall be executed in
modification, renewal and extension of the existing Convertible Debt and shall
not effect a cancellation thereof. The Company and the Investor also agree that
the indebtedness secured by the security interests granted by the Company to the
Investor pursuant to those two certain Security Agreements dated as of September
29, 1994 and March 30, 1995 by and between the Company and the Investor shall
include, without limitation, all of the indebtedness evidenced by, and accruing
under or in connection with, all of the Convertible Notes, the Renewal Note and
all other obligations of the Company to the Investor, whether now existing or
hereafter arising.
2
4. AMENDMENT OF PRIOR DOCUMENTS. This Amendment shall constitute
Amendment Number Four to the Convertible Debt Documents dated as of September
29, 1994 by and between the Company and the Investor, Amendment Number Two to
the Convertible Debt Documents dated as of March 30, 1995 by and between the
Company and the Investor and Amendment Number One to the Convertible Debt
Documents dated as of November 22, 1995 between the Company and the Investor.
This Amendment also shall constitute the first amendment to each of the Security
Agreements referenced above. As modified hereby, the Convertible Debt Documents
and such Security Agreements shall continue in full force and effect and be
binding on the parties hereto and their respective successors and permitted
assigns. References to the Convertible Debt Documents and such Security
Agreements after the date hereof shall mean the Convertible Debt Documents and
such Security Agreements as amended pursuant to this Amendment (and shall
include the Renewal Note.)
5. MISCELLANEOUS. This Amendment may be executed in any number of
counterparts and by both parties hereto in separate counterparts, with the same
effect as if both parties had signed the same document. All such counterparts
shall be deemed an original, shall be construed together and shall constitute
the same instrument. This Amendment shall be governed by, and construed and
enforced in accordance with, the internal laws of the State of Delaware.
IN WITNESS WHEREOF, the undersigned have executed this Amendment as of the
date first written above.
COMPANY:
NEON SYSTEMS, INC.
By: /s/ F. Xxxxxx Xxxxxx
---------------------------------------
Printed Name: F. Xxxxxx Xxxxxx
-----------------------------
Title: President
----------------------------------
INVESTOR:
JMI EQUITY FUND, L.P.
By: JMI Partners, L.P., its
general partner
By: /s/ Xxxxxxx X. Xxxxx
----------------------------------
Xxxxxxx X. Xxxxx,
a general partner
3
AMENDMENT NUMBER ONE
TO
SECURED CONVERTIBLE PROMISSORY NOTE
NEON Systems, Inc. (the "Company") and JMI Equity Fund, L.P. (the
"Investor") hereby agree that the Secured Convertible Promissory note (the
"Note") by and between the Investor and Company dated as of March 31, 1997, be
and hereby is amended such that the term "Payment Date", as defined therein,
shall mean March 31, 1999 in lieu of December 31, 1998.
In all other respects, the Note is hereby ratified, confirmed and approved,
and all terms thereof remain in full force and effect.
This Amendment may be executed in any number of counterparts and by both
parties hereto in separate counterparts, with the same effect as if both parties
had signed the same document. All such counterparts shall be deemed an
original, shall be construed together and shall constitute the same instrument.
IN WITNESS WHEREOF, the undersigned have executed this Amendment as of the
8th day of December, 1998.
COMPANY:
NEON SYSTEMS, INC.
By: /s/ Xxxx X. Xxxxxxx
Title:CFO
INVESTOR:
JMI EQUITY FUND, L.P.
By: /s/ Xxxxxxx X. Xxxxx
a general partner
4
