Exhibit 10.8
SECURED CONVERTIBLE PROMISSORY
NOTE PURCHASE AGREEMENT
NEON Systems, Inc., a Delaware corporation (the "Company") and JMI Equity
Fund, L.P., a Delaware limited partnership (the "Investor") hereby agree as set
forth below. All capitalized terms used herein and not otherwise defined shall
have the meaning ascribed to such terms in the Stock Purchase Agreement.
1. THE NOTES. The Company has authorized the issuance and sale, in
accordance with the terms hereof, of the Company's Secured Convertible
Promissory Note (the "Note") in the Original aggregate principal amount of Three
Hundred Thousand Dollars ($300,000) payable to the Investor on March 29, 1994
(the "Payment Date"). The Note will be substantially in the form set forth in
EXHIBIT A hereto.
2. THE CLOSING. The Company agrees to issue and sell to the Investor,
and, subject to and in reliance upon the representations, warranties, terms and
conditions contained herein, the Investor agrees to purchase the Note. Such
purchase and sale shall take place at a closing (the "Closing") to be held at
10:00 a.m. eastern time on September 29, 1994 at the offices of Xxxxx, Xxxxxxx
& Xxxxxxxxx, Exchange Place, 00 Xxxxx Xxxxxx, Xxxxxx, Xxxxxxxxxxxxx 00000 (or
such other place and time as shall be mutually agreed upon).
(a) The Closing shall be subject to the execution of this Agreement
by the Company and the Investor.
(b) The Closing shall further be subject to the execution of a
Security Agreement, substantially in the form attached as EXHIBIT B hereto
(the "Security Agreement"), by the Company and the Investor, and the
Financing Statements (Forms UCC-1), in the form attached as EXHIBIT C
hereto (the "Financing Statements), by the Company.
3. CONVERSION. At any time after the Payment Date, and until such time
as any amount of principal or accrued interest remains outstanding and payable
to the Investor pursuant to the Note, a holder of the Note may, at its option
and discretion, elect to convert all of the unpaid principal of, and all accrued
but unpaid interest on, such Note into shares (the "Note Shares") of the
Company's Series A Convertible Preferred Stock, $.01 par value ("Existing
Preferred") at a conversion price of $2.00 per share (the "Existing Preferred
Price") (such price subject to adjustment for stock splits, stock dividends and
the like) upon written notice of such election to the Company.
4. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company hereby
represents and warrants that, as of the Closing:
(a) The Company is a duly organized and validly existing corporation
under the laws of the State of Delaware and, except in the State of
Delaware, is duly licensed or qualified to transact business as a foreign
corporation and is in good standing in each
1
jurisdiction in which the nature of the business transacted by it or the
character of the properties owned or leased by it requires such licensing
or qualification.
(b) Except for the authorization and issuance of (i) the Note Shares
and (ii) shares of the Company's Common Stock issuable upon conversion of
the Note Shares (the "Conversion Shares") (all such securities now or
hereafter reserved or required to be reserved pursuant to (i) or (ii) above
being hereinafter referred to as "Reserved Shares"), the Company has taken
or will take all corporate action required to make all the obligations of
the Company reflected in the provisions of this Agreement, the Note and the
Security Agreement and, the valid and enforceable obligations they purport
to be.
(c) Except as otherwise indicated in paragraph 5(b) above, the
issuance of the Note, the Note Shares and the Conversion Shares will not
require any further corporate action and will not be subject to preemptive
rights of any present or future stockholders of the Company which have not
been waived in writing.
(d) Neither the authorization, execution and delivery of this
Agreement and the Security Agreement, nor the issuance and delivery of the
Note, the Note Shares and the Conversion Shares, has constituted or
resulted in, nor will constitute or result in, a default or violation of
any law or regulation applicable to the Company or any term or provision of
the Company's Certificate of Incorporation or By-laws, both as amended, or
any agreement or instrument by which it is bound or to which its properties
or assets are subject.
(e) Except as set forth on SCHEDULE 2, the representations and
warranties of the Company set forth in the Series A Convertible Preferred
Stock Purchase Agreement of the Company dated May 19, 1993 (the "Stock
Purchase Agreement") are true, complete and correct on and as of the date
hereof with the same effect as though such representations and warranties
had been made on and as of the date hereof.
(f) The Company has good and merchantable title to all of its assets
now carried on its books, free of any material mortgages, pledges, liens,
security interest or other encumbrances (other than mechanics', workmens'
and other liens arising by operation of law). The Company owns or has a
valid right to use the patents, patent rights, licenses, trademarks,
trademark rights, trade names or trade name rights or franchises,
copyrights, inventions and intellectual property rights being used to
conduct its business as now operated. The Company has no obligation to
compensate any person or entity for the use of any such patents.
5. COVENANTS OF THE COMPANY.
(a) Promptly after the execution and delivery of this Agreement and
in no event any later than ten (10) days from the date hereof, the Company
shall make full payment of all franchise taxes due to the State of Delaware
and shall ensure that the Company is in good standing in the State of
Delaware.
(b) Promptly after the execution and delivery of this Agreement and
in no event later than thirty (30) days from the date hereof, the Company
shall cause its Certificate of Incorporation to be amended so as to
increase the number of the Company's authorized
2
but unissued shares, and shall reserve an adequate number of such shares,
in order to provide for the issuance of the Note Shares and Conversion
Shares.
(c) For so long as the Note is outstanding, the Company covenants not
to issue any of its current or future authorized but unissued Reserved
Shares without the unanimous written consent of the Investor of their
Designees on the board of directors of the Company (the "Board
Representatives"), except upon the conversion of the Notes in accordance
with their terms. Further, the Company shall reserve an adequate number of
Reserved Shares for conversion of the Notes and conversion of the Note
Shares, free of any preemptive rights of any present or future stockholders
of the Company, whether or not such securities are currently authorized.
(d) The Company shall keep the collateral for the Note free and clear
of all liens, encumbrances and security interests other than as permitted
in the Security Agreement.
(e) To the extent shares of Existing Preferred shall ultimately be
issued as Note Shares, such shares shall have identical contractual rights
(including, but not limited to, registration rights and rights of first
refusal) as those provided with respect to shares of Existing Preferred
pursuant to the Stock Purchase Agreement and any such Note Shares shall be
deemed to be entitled to the rights, and subject to the obligations, of the
Preferred Shares as set forth in the Registration Rights Agreement, the
Stock Restriction Agreement and the Stockholders Agreement. The Company
shall cause its Certificate of Incorporation and any agreement applicable
to such equity securities to be amended to achieve this result.
6. REPRESENTATIONS AND WARRANTIES OF THE INVESTORS. The Investor hereby
reaffirms its respective representations and warranties contained in Article III
of the Stock Purchase Agreement as the same shall apply to such Investor's
purchase of the Note hereunder.
7. WAIVER AND CONSENT. The Investor further agrees (i) to waive the
provisions of Article VI of the Purchase Agreement; and (ii) to consent,
pursuant to paragraph 5 of the Company's Certificate of Incorporation, in each
case to the issuance of the securities upon the terms and conditions hereof.
8. AMENDMENTS, WAIVERS, ETC. Neither this Agreement nor the Note, nor
any term hereof or thereof may be amended, waived, discharged or terminated
except by a written instrument signed by the Investor expressly referring to
this Agreement and to the provisions and instruments so modified or limited.
9. CHOICE OF LAW. It is the intention of the parties that the internal
laws, and not the laws of conflicts, of the State of Delaware should govern the
enforceability and validity of this Agreement, the construction of its terms and
the interpretation of the rights and duties of the parties pursuant to the
relationships among them contemplated herein, whether or not such rights and
duties arise directly under this Agreement.
10. LEGAL FEES. The Company agrees to pay at the Closing and thereafter
on demand the fees and out-of-pocket expenses of Xxxxx, Xxxxxxx & Xxxxxxxxx,
counsel to the investor, with respect to the transactions contemplated herein.
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11. PARTIES IN INTEREST. The terms and provisions of this Agreement shall
be binding upon and inure to the benefit of, and be enforceable by, the
respective successors and assigns of the parties hereto. This Agreement shall
not run to the benefit of or be enforceable by any person other than a party to
this Agreement and its successors and assigns.
12. HEADINGS. The headings of the Sections and paragraphs of this
Agreement have been inserted for convenience and reference only and do not
constitute a part of this Agreement.
13. COUNTERPARTS. This Agreement may be executed in any number of
counterparts and by different parties hereto in separate counterparts, with the
same effect as if all parties had signed the same document. All such
counterparts shall be deemed an original, shall be construed together and shall
constitute one and the same instrument.
IN WITNESS WHEREOF, the undersigned have executed this Secured Convertible
Promissory Note Purchase Agreement as of the 29th day of September, 1994.
COMPANY:
NEON SYSTEMS, INC.
By: /s/ 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
4
SCHEDULE 2
EXCEPTIONS TO REPRESENTATIONS AND WARRANTIES
5
LIST OF EXHIBITS
Exhibit A -- Form of Note
Exhibit B -- Form of Security Agreement
Exhibit C -- Form of Financing Statements
6
EXHIBIT A
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
OR APPLICABLE STATE SECURITIES LAWS. THIS NOTE MAY NOT BE SOLD, OFFERED FOR
SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
STATEMENT AS TO THIS NOTE UNDER SAID ACT AND APPLICABLE STATE SECURITIES LAWS OR
AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE COMPANY THAT SUCH
REGISTRATION IS NOT REQUIRED.
SECURED CONVERTIBLE PROMISSORY NOTE
$300,000 September __, 1994
FOR VALUE RECEIVED, the undersigned, NEON Systems, Inc., a Delaware
corporation (the "Maker"), hereby promises to pay to JMI Equity Fund, L.P. (the
"Investor"), or order, the principal sum of Three Hundred Thousand Dollars
($300,000), together with interest on the outstanding principal balance until
paid in full, at the rate of eight percent (8%) per annum. All computations of
interest under this Note shall be made on the basis of a year of 365/366 days
and the actual days elapsed (including the first but excluding the last day)
occurring in the period.
Any amount overdue under this Note shall bear interest at a rate of twelve
percent (12%) per annum. In the event that any interest rate provided for
herein shall be determined to be unlawful, such interest rate shall be computed
at the highest rate permitted by applicable law. Any payment by the Maker of
any interest amount in excess of that permitted by law shall be considered a
mistake, with the excess being applied to the principal of this Note without any
prepayment premium or penalty.
The entire outstanding principal balance of this Note, and all accrued and
unpaid interest thereon, shall be due and payable in full on March ____, 1994
(the "Payment Date"). The entire outstanding principal balance of this Note,
and all accrued and unpaid interest thereon, may be payable, in whole or in
part, from time to time, without any prepayment premium or penalty.
Notwithstanding anything to the contrary set forth herein, in the event that all
principal and accrued interest hereunder is not paid in full on or before the
Payment Date, any such payment after the Payment Date shall only be payable upon
thirty (30) days prior written notice by the Maker to the Investor, in which
event the Investor, upon receipt of such notice and prior to the expiration of
such thirty days, may, at its option and discretion, elect to convert any or all
of the principal and interest accrued hereunder into shares of the Maker's
Series A Convertible Preferred Stock pursuant to the Purchase Agreement (as
hereinafter defined).
This Note is a Secured Convertible Promissory Note, issued by the Maker
pursuant to and entitled to the benefits of a certain Secured Convertible
Promissory Note Purchase
7
Agreement, dated as of September ____, 1994 by and between the Maker and the
Investor (as the same may be amended from time to time, hereinafter referred to
as the "Purchase Agreement"). The holder of this Note is entitled to the
benefits of the Purchase Agreement and the Security Agreement (as defined in the
Purchase Agreement) and to the benefits of any other security now or hereafter
granted. Pursuant to the terms of the Purchase Agreement, this Note may be
convertible into shares of Series A Convertible Preferred Stock of the Maker.
Neither this reference to such Purchase Agreement nor any provision thereof
shall affect or impair the absolute and any provision thereof shall affect or
impair the absolute and unconditional obligation of the Maker to pay the
principal of this Note and any interest accrued thereon as provided herein.
This Note is secured by certain assets of the Maker pursuant to the terms
of a Security Agreement dated as of September 29, 1994 by and between the Maker
and the Investor. Upon the occurrence of any Default, as defined in the
Security Agreement, which Default remains uncured for a period of 30 days
following notice of such default from the registered holder of the Note, the
holder hereof may declare any or all obligations or liabilities of the Maker to
such holder (including the unpaid principal hereunder and any interest due
thereon), immediately due and payable without presentment, demand, protest or
notice.
All payments made by the Maker of principal and interest on this Note shall
be made in immediately available funds to the holder.
The Maker hereby promises to pay all of the holder's reasonable costs and
expenses of collection, including without limitation reasonable attorneys' fees
(too the extent permitted by applicable law), disbursements, appraiser's fees
and court costs in the event collection procedures are commenced by the holder
hereof.
Every maker, endorser and guarantor hereof, or of the indebtedness
evidenced hereby, expressly waives presentment, demand, protest, notice of
dishonor, notice of non-payment, notice of maturity, notice of protest,
presentment for the purpose of accelerating maturity, diligence in collection,
and the benefit of any exemption under the homestead exemption law, if any, or
any other exemption under the homestead exemption law, if any, or any other
exemption or insolvency laws, and consents that the holder (i) may release or
surrender, exchange or substitute any real estate or personal property, or both,
or other collateral security now or hereafter held as security for the payment
of this Note, and (ii) may extend the time for payment or otherwise modify the
terms of payment of any part or the whole of the debt evidenced hereby.
The holder may, at its option, provided this Note has been declared due and
payable, demand, xxx, or collect or make any compromise or settlement it deems
desirable with reference to any rights or property securing the obligations
evidenced hereby. The holder shall not have any duty as to collection or
protection of such security or the income therefrom or as to the preservation of
any rights with respect thereto.
No delay or omission of the holder in exercising any right or remedy
hereunder shall constitute a waiver of any such right or remedy. A waiver on
one occasion shall not operate as a bar to or waiver of any such right or remedy
on any future occasion.
8
This Note shall be governed by, and construed and enforced in accordance
with, the laws of the State of Delaware.
IN WITNESS WHEREOF, the Maker has caused this Note to be executed on the
day and year first above written.
NEON SYSTEMS, INC.
By:
---------------------------------------
Name:
---------------------------------------
Title:
---------------------------------------
ATTEST:
By:
------------------------------
Name:
------------------------------
Title:
------------------------------
9
EXHIBIT B
SECURITY AGREEMENT
NEON SYSTEMS, INC., a Delaware corporation, with its principal place of
business at 0000 Xxxxx Xxxxx, Xxxxx 0000, Xxxxxxx, Xxxxx 00000 (the "Debtor"),
subject to the terms and conditions hereof, hereby assigns, mortgages, pledges,
transfers and grants a continuing security interest to JMI Equity Fund, L.P., a
Delaware limited partnership (the "Secured Party"), in all of the Debtor's
properties and assets of every kind, nature and description, real or personal or
mixed, tangible or intangible, wherever located, and whether now owned or
hereafter acquired, including without limitation:
(i) All of the Debtor's inventory, meaning all goods, wares,
merchandise, raw materials, supplies, work in process, finished goods,
and other personal property of every description held for sale or
lease or furnished or to be furnished under any contract of service,
and all goods which are in transit, and all returned, repossessed and
rejected goods of the foregoing description, and any other tangible
personal property held by the Debtor for processing, sale or other
business purpose or to be used or consumed in the Debtor's business;
(ii) All machinery, equipment, furniture, office equipment and
supplies, plant equipment, tools, dies, molds, fixtures and leasehold
improvements of Debtor, of every kind and description, wherever
located and including all additions, improvements, accessions and
substitutions thereto;
(iii) All accounts, accounts receivable and notes receivable of
the Debtor, whether now existing or hereafter arising, as well as all
right, title and interest of the Debtor in the goods which have given
rise thereto, including the rights or reclamation and of stoppage in
transit, all other rights to the payment of money (including without
limitation, tax refunds);
(iv) All contracts and contract rights of the Debtor, now
existing or hereafter arising, under contracts to sell or lease goods
or render services;
(v) All insurance proceeds, whether arising out of any of the
foregoing or otherwise;
(vi) All notes, bills, drafts, acceptances, choses in action,
chattel paper, instruments, and any other forms of obligations and
receivables and rights to payments for credit extended and for goods
sold or leased or services rendered, whether or not earned by
performance, documents, books and records and rights in and to the
name and all goodwill and all other general intangibles of the
10
Debtor, including all customer lists, causes of action, judgments,
rights to performance, licenses, permits, copyrights, trademarks,
trade secrets, patents, patent rights, proprietary processes, software
and related documentation, blueprints, drawings, designs, diagrams,
plans, reports, charts, catalogs, manuals, technical data and any and
all concepts or ideas in any manner related to the design,
development, manufacture, sale, marketing, lease or use of any or all
goods produced or sold or leased or services rendered by the Debtor in
its business;
(vii) All collateral and all guaranties for, and all products,
proceeds, substitutions, and accessions of, any of the foregoing
property.
The property described above shall hereafter be collectively referred to as
the "Collateral."
The Collateral is pledged, assigned, mortgaged and transferred and a
security interest therein is granted to the Secured Party as security for
payment of that certain Secured Convertible Promissory Note (the "Note") of even
date herewith payable to the Secured Party in the aggregate principal amount of
Three Hundred Thousand Dollars ($300,000.00) pursuant to that certain Secured
Convertible Promissory Note Purchase Agreement of even date herewith by and
between Debtor and the Secured Party (the "Purchase Agreement"), all interest
thereon and obligations of the Debtor to the Secured Party, whether now existing
or hereafter arising (hereinafter collectively referred to as the
"Obligations").
1. AGREEMENTS AS TO COLLATERAL. Debtor agrees with the Secured Party
with respect to the particular kinds of Collateral as follows:
(a) DEBTOR AS OWNER OF COLLATERAL. The Debtor will at all times be
the lawful owner of the Collateral free and clear of all liens, charges,
claims, encumbrances and security interests, other than the security
interest hereby granted to the Secured Party or other security interests
hereinafter expressly approved in writing by the Secured Party. All
Collateral is located at Debtor's address shown at the beginning of the
Agreement. Debtor will promptly notify the Secured Party of any change in
the location of such Collateral, including any changes in the location of
any Collateral situated outside the State of Texas.
(b) LOCATION OF RECORDS. The office where Debtor keeps its records
concerning the Collateral will be located at the address shown at the
beginning of this Agreement. The Debtor will not remove said records to
another location without prior written notice to the Secured Party.
(c) COLLECTION OF ACCOUNTS. Except as herein otherwise provided upon
a Default, the Debtor is authorized to collect all accounts receivable and
notes receivable.
(d) COLLECTION UPON DEFAULT. Upon any Default, the Debtor agrees to
deliver to the Secured Party all checks, drafts, notes and other
instruments representing its accounts receivables upon request therefor by
the Secured Party.
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2. MISCELLANEOUS AGREEMENTS.
(a) INSPECTION RIGHTS. Debtor will at all reasonable times and from
time to time allow the Secured party, by or through any of their officers,
agents, employees, attorneys or accountants, to examine and inspect and
make extracts from the Debtor's books and other records, and to arrange,
upon prior written notice to the Debtor, for verification of accounts,
under reasonable procedures, directly with account debtors or by other
methods.
(b) REGISTRATION OF INTELLECTUAL PROPERTY. Debtor will not cause the
registration of any of its Intellectual Property (as defined in the
Purchase Agreement) with any federal or state agency, unless the Company
has provided the Investors with twenty (20) days prior written notice
thereof.
(c) EXECUTION OF FINANCING STATEMENTS. Debtor will join with the
Secured party in executing appropriate financing statements under the
Uniform Commercial Code and will at all times and from time to time, at the
request of the Secured party, do, make, execute and deliver all such
additional and further acts, things, deeds, assurances, instruments and
financing statements as the Secured Party may require, to vest more
completely and assure to the Secured party its rights hereunder in or to
the Collateral, including without limitation, the preparation, execution
and delivery of (i) any additional financing statements and security
agreements extending to any Collateral which is, or may subsequently become
located outside the State of Washington, and (ii) any other documents or
instruments which the Secured party shall reasonably require or request in
connection with the continued perfection of the Secured party's security
interest in any of the Collateral, including without limiting any and all
filings with the United States Copyright Office or the United States patent
and Trademark Office. The Debtor hereby appoints the Secured Party as its
authorized agent and attorney-in-fact to execute and file appropriate
financing statements, continuation statements and termination statements in
each and every jurisdiction in which the Collateral is or may be located,
now or in the future. The Secured Party agrees that upon satisfaction in
full of the obligations, Secured Party will execute all documents necessary
to effect a complete release of the security interest granted hereby.
(d) SECURED PARTY'S RIGHTS TO PROTECT COLLATERAL. The Secured Party
shall be under no obligation to take steps necessary to preserve its rights
in any Collateral against other parties but may do so at its option and at
the expense of the Debtor. At its option and upon prior written notice to
the Debtor, the Secured Party may discharge any taxes, liens, security
interest or other encumbrances to which any Collateral is at any time
subject, an may, upon the failure of the Debtor so to do, purchase
insurance on any Collateral and pay for the preservation thereof, and the
Debtor agrees to reimburse the Secured Party on demand for any payments
made or expenses incurred by the Secured party pursuant to the foregoing
authorization. The Secured Party may, at any time after default hereunder,
take control of any proceeds of Collateral to which the Secured Party is
entitled hereunder or under applicable law.
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3. REPRESENTATIONS.
The Debtor warrants and represents that the Collateral will not be subject
to any security interest having priority over the security interest granted
hereunder. The Debtor further warrants and represents that the grant of this
security interest is not prohibited by, or in violation of, any pre-existing
obligation of the Debtor.
4. RIGHTS AND REMEDIES ON DEFAULT.
Upon the failure by Debtor to pay the Obligations in accordance with their
terms (a "Default"), and at any time thereafter, the Secured Party shall have
the rights and remedies of a secured party under the Uniform Commercial Code of
any applicable state law in addition to the rights and remedies provided herein
or in any other instrument or agreement provided herein or in any other
instrument or agreement executed by Debtor. Wherever notification with respect
to the sale or other disposition of Collateral is required by law, such
notification of the time and place of public sale, or of the date after which a
private sale or other disposition of the time and place of public sale, or of
the date after which a private sale or other intended disposition is to be
made, shall be deemed reasonable if given at least ten (10) business days before
the time of such public sale, or the date after which any such private sale or
other intended disposition is to be made, as the case may be. Expenses of
retaking, holding, preparing for sale, selling or the like with respect to the
Collateral, shall include the Secured Party's reasonable attorneys' fees and
related legal expenses.
5. GENERAL INTANGIBLES AND NAMES.
Upon the failure by Debtor to pay the Obligations when they become due on
demand and at any time thereafter, on request of the Secured Party, the Debtor
shall execute and deliver to the Secured Party any and all instruments as may be
required to further vest in the Secured Party the right to the Collateral.
6. WAIVER OF DEMAND.
DEBTOR WAIVES ANY AND ALL RIGHTS THAT IT MAY HAVE TO NOTICE OF JUDICIAL
HEARING IN ADVANCE OF THE ENFORCEMENT OF ANY OF THE SECURED PARTY'S RIGHTS
HEREUNDER, INCLUDING, WITHOUT LIMITATION, THE SECURED PARTY'S RIGHTS FOLLOWING A
FAILURE BY DEBTOR TO PAY THE OBLGIATIONS ON DEMAND TO TAKE IMMEDIATE POSSESSION
OF THE COLLATERAL AND EXERCISE ITS RIGHTS WITH RESPECT THERETO. With respect
both to the Obligations and the Collateral, Debtor assents to any extension or
postponement of the time of payment or any other indulgence, to any
substitution, exchange or release of any collateral, to the addition or release
of any party or person primarily or secondarily liable, to the acceptance of
partial payment thereon and the settlement, compromising, adjusting or discharge
of any thereof, all in such manner and at such time or times as the Secured
party may deem advisable.
7. WAIVERS, AMENDMENTS. Any conditions or restriction hereinabove
imposed with respect to the Debtor may be waived, modified or suspended by the
Secured Party but only on the Secured Party consent in writing and only as so
expressed in such writing and not otherwise.
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The Secured party shall not be deemed to have waived any of its other rights
hereunder or under any other agreement, instrument or paper signed by Debtor
unless such waiver be in writing and signed by the Secured party. No delay or
omission on the apart of the Secured party in exercising any right shall operate
as a waiver of such right or any other right. A waiver on any one occasion
shall not be construed as a bar to, or waiver of, any right or remedy on any
future occasion. All the Secured party's rights and remedies, whether evidenced
hereby or by any other agreement, instrument or paper, shall be cumulative and
may be exercised separately or concurrently.
8. NOTICES. Any demand upon, or notice to, any part that the other party
may elect to give shall be effective (i) the third business day after dispatch
by United States first class mail, postage prepaid, (ii) the second business day
after dispatch by a reputable express overnight courier service, (iii) the third
business day after dispatch by United States registered or certified mail,
postage prepaid, or (iv) upon delivery in person, in each case addressed to the
Debtor at the address shown at the beginning of this Security Agreement and to
the Secured party at its address set forth below its signature or as modified by
any notice given after the date hereof.
9. MISCELLANEOUS. If any term or condition hereof shall be invalid or
unenforceable to any extent or in any application, then the remainder hereof
shall not be affected thereby, and each and every term and condition hereof
shall be valid and enforced to the fullest extent and in the broadest
application permitted by law. Whenever there are no Obligations outstanding
hereunder, the Debtor may then terminate this Agreement upon written notice to
the Secured party. Prior to such termination, this shall be a continuing
agreement in every respect. This Agreement and all rights and obligations
hereunder, including matters of construction, validity and performance, shall be
governed by the internal laws of the State of Delaware. This Agreement is
intended to take effect when signed by the Debtor and the Secured Party.
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IN WITNESS WHEREOF, this Security Agreement is executed as an instrument
under seal as of this ______ day of September, 1994, by each of the undersigned
Debtor and Secured Party.
DEBTOR:
NEON SYSTEMS,INC.
By:
---------------------------------------
Name:
---------------------------------------
Title:
---------------------------------------
Address:
---------------------------------------
SECURED PARTY
JMI EQUITY FUND, L.P.
By: JMI Partners, L.P.,
Its general partner
By:
----------------------------------
Xxxxxxx X. Xxxxx,
a general partner
15
THIS FINANCIAL STATEMENT IS PRESENTED TO A
FILING OFFICER FOR FILING PURSUANT TO THE
UNIFORM COMMERCIAL CODE.
EXHIBIT C
--------------------------------------------------------------------------------
/ / Check to request same
debtor search certificate
instruction
____.
--------------------------------------------------------------------------------
Debtor (if personal) Last Name First Name M.I. Prefix Suffix
--------------------------------------------------------------------------------
Mailing Address City State Zip Code
--------------------------------------------------------------------------------
Additional Debtor (if First Name M.I. Prefix Suffix
personal) Last Name
--------------------------------------------------------------------------------
Mailing Address City State Zip Code
--------------------------------------------------------------------------------
Additional Debtor (if First Name M.I. Prefix Suffix
personal) Last Name
--------------------------------------------------------------------------------
Mailing Address City State Zip Code
--------------------------------------------------------------------------------
Secured party (if personal) First Name M.I.
Last Name
--------------------------------------------------------------------------------
Mailing Address City State Zip Code
--------------------------------------------------------------------------------
Assignee of Secured Party
(if any)
--------------------------------------------------------------------------------
Mailing Address City State Zip Code
--------------------------------------------------------------------------------
16
--------------------------------------------------------------------------------
This Financing Statement covers the following types of items of property (if
collateral) is crops, futures, timber or minerals, read instruction ____.
--------------------------------------------------------------------------------
Check only if applicable: / / Products of collateral are also covered
/ / This financing statement is to be filed for
record in the real estate records.
___ Number of additional sheets presented
--------------------------------------------------------------------------------
Check appropriate box:
This financing statement is signed by the Secured Party instead of the Debtor
to Perfect a security interest in collateral in accordance with instruction
____ items.
/ / 1 / / 2 / / 3 / / 4 / / 5
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Signature of Debtor(s) This space for use of
filing officer (date,
time, number, filing
officer)
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Signature(s) of Secured Party(ies)
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Mail copy to:
Name
Address
City
State
Zip
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17
EXHIBIT A TO FINANCING STATEMENT
DEBTOR: SECURED PARTY:
NEON Systems, Inc. JMI Equity Fund, L.P.
0000 Xxxxx Xxxxx 00000 Xxxxxxxxx Xxxxxxx
Xxxxx 0000 Xxxxx Xxxx, XX 00000
Xxxxxxx, XX 00000
I. DESCRIPTION OF COLLATERAL
This financing statement covers the types (or items) of property described
below, whether now owned or now due, or in which the Debtor has an interest, or
hereafter, at any time in the future acquired, arising or to become due, or in
which the Debtor obtains an interest, together with any and all additions
thereto and replacements and proceeds (including without limitation insurance
proceeds) thereof, substitutions therefor and accessions thereof or thereto:
(i) All of the Debtor's inventory, meaning all goods, wares,
merchandise, raw materials, supplies, work in process, finished goods,
and other personal property of every description held for sale or
lease or furnished or to be furnished under any contract of service,
and all goods which are in transit, and all returned, repossessed and
rejected goods of the foregoing description, and any other tangible
personal property held by the Debtor for processing, sale or other
business purpose or to be used or consumed in the Debtor's business;
(ii) All machinery, equipment, furniture, office equipment and
supplies, plant equipment, tools, dies, molds, fixtures and leasehold
improvements of Debtor, of every kind and description, wherever
located and including all additions, improvements, accessions and
substitutions thereto;
(iii) All accounts, accounts receivable and notes receivable of
the Debtor, whether now existing or hereafter arising, as well as all
right, title and interest of the Debtor in the goods which have given
rise thereto, including the rights of reclamation and of stoppage in
transit, all other rights to the payment of money (including without
limitation, tax refunds);
(iv) All contracts and contract rights of the Debtor, now
existing or hereafter arising, under contracts to sell or lease goods
or render services;
(v) All insurance proceeds, whether arising out of any of
the foregoing or otherwise;
(vi) All notes, bills, drafts, acceptances, choses in action,
chattel paper, instruments, and any other forms of obligations and
receivables and rights to payment for credit extended and for good
sold or leased or services rendered,
18
whether or not earned by performance, documents, books and records and
rights in and to the name and all goodwill and all other general
intangibles of the Debtor, including all customer lists, causes of
action, judgments, rights to performance, licenses, permits,
copyrights, trademarks, trade secrets, patents, patent rights,
proprietary processes, software and related documentation, blueprints,
drawings, designs, diagrams, plans, reports, charts, catalogs,
manuals, technical data and any and all concepts or ideas in any
manner related to the design, development, manufacture, sale,
marketing, lease or use of any or all goods produced or sold or leased
or services rendered by the Debtor in its business;
(vii) All collateral and all guaranties for, and all products,
proceeds, substitutions, and accessions of, any of the foregoing
property.
19
AMENDMENT NUMBER ONE
TO
SECURED CONVERTIBLE PROMISSORY NOTE PURCHASE AGREEMENT
AND
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 Purchase
Agreement (the "Purchase Agreement") by and between the Investor and the Company
and the Company's Secured Convertible Promissory Note (the "Note"), each dated
as of September 29, 1994, be and hereby are amended such that the term "Payment
Date," as defined therein, shall mean December 31, 1997 in lieu of December 31,
1995.
In all other respects, the Purchase Agreement and the Note are 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
29th day of September, 1994.
COMPANY:
NEON SYSTEMS, INC.
By: /s/ 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
20
AMENDMENT NUMBER TWO
TO
SECURED CONVERTIBLE PROMISSORY NOTE PURCHASE AGREEMENT
NEON Systems, Inc. (the "Company") and JMI Equity Fund, L.P. (the
"Investor") hereby agree that the Secured Convertible Promissory Note Purchase
Agreement (the "Purchase Agreement") dated as of September 20, 1994 between the
Investor and the Company, as amended pursuant to that certain Amendment Number
One to Secured Convertible Promissory Note Purchase Agreement and Secured
Convertible Promissory Note dated as of March 30, 1995 by and between the
Company and the Investor, be and hereby is further amended such that Section 3
thereof shall read in its entirety as follows:
"3. CONVERSION. For so long as any amount of principal or accrued
interest remains outstanding and payable to the Investor pursuant to
the Note, a holder of the Note may at any time, or from time to time,
at its option and discretion, elect to convert all or any portion of
the unpaid principal of, and all or any portion of the accrued but
unpaid interest on, such Note into shares (the "Note Shares") of the
Company's Series A Convertible Preferred Stock, $.01 par value
("Existing Preferred") at a conversion price of $2.00 per share (the
"Existing Preferred") (such price being subject to adjustment for
stock splits, stock dividends and the like) upon written notice of
such election to the Company. In the event that the Investor elects
to convert a portion of the unpaid principal of the Note, or any
accrued interest thereon, as set forth above, the principal amount
outstanding under the Note at such time shall automatically be reduced
by an amount equal to the amount so converted."
In all other respects, the Purchase Agreement is hereby ratified, confirmed
and approved, and all terms thereof shall remain in full force and effect and
shall be binding upon the parties and their respective heirs, successors and
assignees.
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.
[Remainder of Page Intentionally Left Blank]
21
COMPANY:
NEON SYSTEMS, INC.
By: /s/ 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
22
AMENDMENT NUMBER THREE
TO
SECURED CONVERTIBLE PROMISSORY NOTE PURCHASE AGREEMENT
AND
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 Purchase
Agreement (the "Purchase Agreement") by and between the Investor and the Company
and the Company's Secured Convertible Promissory Note (the "Note"), each dated
as of September 29, 1994, each as amended to date, be and hereby are amended
such that the term "Payment Date," as defined therein, shall mean December 31,
1997 in lieu of December 31, 1995.
In all other respects, the Purchase Agreement and the Note are 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
22nd day of November, 1995.
COMPANY:
NEON SYSTEMS, INC.
By: /s/ 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
23
