EXHIBIT 10.14
THIS NOTE HAS BEEN ACQUIRED FOR INVESTMENT AND NOT FOR DISTRIBUTION, AND HAS NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. IT MAY NOT BE
SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED, OR OTHERWISE TRANSFERRED IN THE
ABSENCE OF A REGISTRATION STATEMENT IN EFFECT WITH RESPECT THERETO UNDER SUCH
ACT UNLESS SOLD PURSUANT TO RULE 144 OF SUCH ACT OR UNLESS SUCH SALE, PLEDGE,
HYPOTHECATION, OR TRANSFER IS OTHERWISE EXEMPT FROM REGISTRATION. THE COMPANY
MAY REQUEST A WRITTEN OPINION OF COUNSEL (FROM COUNSEL ACCEPTABLE TO THE
COMPANY) SATISFACTORY TO THE COMPANY, TO THE EFFECT THAT REGISTRATION IS NOT
REQUIRED IN CONNECTION WITH SUCH SALE, PLEDGE OR HYPOTHECATION, OR OTHER
TRANSFER. THIS NOTE MUST BE SURRENDERED TO THE CORPORATION OR ITS TRANSFER AGENT
AS A CONDITION PRECEDENT TO THE SALE, PLEDGE, HYPOTHECATION, OR ANY OTHER
TRANSFER OF ANY INTEREST IN THIS NOTE.
THIS NOTE IS SUBJECT TO RESTRICTIONS ON TRANSFER CONTAINED IN A NOTE AND WARRANT
PURCHASE AGREEMENT BETWEEN THE COMPANY AND THE NOTEHOLDER, A COPY OF WHICH IS ON
FILE WITH THE SECRETARY OF THE COMPANY.
XXXXXXX.XXX, INC.
SUBORDINATED PROMISSORY NOTE
Note No.: SN- July 10, 2001
Los Gatos, California
FOR VALUE RECEIVED, XxxXxxx.xxx, Inc., a Delaware corporation (the
"Company") promises to pay to _________________ ("Holder"), or its registered
assigns, the principal sum of $______________, or such lesser amount as shall
equal the outstanding principal amount hereof, together with interest from the
date of this Note on the unpaid principal balance compounding annually at a rate
of 10% per annum computed on the basis of the actual number of days elapsed and
a year of 365 days. Interest will accrue daily on the outstanding principal
balance of this Note and be payable on the Note Maturity Date (as defined
below). Subject to the provisions in Section 3 and Section 4 of this Note, all
unpaid principal, together with any then unpaid and accrued interest and other
amounts payable hereunder, will be due and payable on the Note Maturity Date (as
defined below) and shall be payable in cash. Upon payment in full of all
principal and interest payable hereunder, this Note must be surrendered to the
Company for cancellation.
The following is a statement of the rights of Xxxxxx and the conditions to
which this Note is subject, and to which Holder, by the acceptance of this Note,
agrees:
1. Definitions.
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(a) "Event of Default" means any of the events specified as such in
Section 5(a) below.
(b) "Holder" means the person or entity specified in the introductory
paragraph of this Note or any transferee that shall at the time be the
registered holder of this Note.
(c) "Note Maturity Date" means the earliest to occur of (i) July
_____, 2011; (ii) the closing of an initial public offering of the Company's
common stock that results in the conversion of all of the Company's outstanding
preferred stock pursuant to the Company's Amended and Restated Certificate of
Incorporation (the "Restated Certificate"), or (iii) a Change in Control (as
defined in the Restated Certificate).
2. Note Subject to Purchase Agreement. This Note is one (1) of a
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series of notes (each a "Note" and collectively, the "Notes") issued or to be
issued by the Company pursuant to the terms of that certain Note and Warrant
Purchase Agreement of even date herewith by and among the Company and the
Investors listed therein (the "Purchase Agreement") having like tenor and
effect, not including variations with respect to the identity of the holder and
the principal amount of each such Note. The Notes shall rank equally without
preference or priority of any kind over one another, and all payments on account
of principal and interest with respect to any of the Notes shall be applied
ratably and proportionately on the outstanding Notes on the basis of the
principal amount of the outstanding indebtedness represented thereby.
3. Acquisition of Note upon Change in Control.
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(a) In connection with any Change in Control, provision shall be made,
and duly executed documents evidencing the same from the Company or its
successor shall be delivered to Holder, so that this Note shall be purchased
from Holder by the acquiring or surviving corporation, for an amount, payable in
the same form of consideration and on the same terms and conditions received by
the Company's preferred stockholders in such Change in Control transaction,
equal to (A) the outstanding principal and accrued interest on this Note, plus
(B) an amount equal to two (2) times the outstanding principal amount of this
Note. The valuation of consideration other than cash shall be made in accordance
with the provisions of the Restated Certificate.
(b) If, for any reason, this Note is not, or cannot be, purchased in a
Change in Control as provided in subsection (a) above, the Company shall redeem
this Note by paying the Holder, in cash, an amount equal to (A) the outstanding
principal and accrued interest in this Note, plus (B) an amount equal to two (2)
times the outstanding principal amount of this Note.
4. Prepayment. The Notes may not be prepaid except with the consent of
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the Company and the holders of a majority of the outstanding principal amount of
the Notes outstanding as of the time of such proposed prepayment. Any prepayment
shall be without premium or penalty except that interest shall be paid to the
date of payment on the outstanding principal amount.
5. Event of Default.
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(a) Event of Default. The following events shall constitute an "Event
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of Default" under this Note:
(i) Failure to Pay. The Company shall fail to pay all amounts
owed within five (5) business days of the Note Maturity Date as required under
the terms of this Note; or
(ii) Bankruptcy or Insolvency Proceedings. The Company shall (a)
apply for or consent to the appointment of a receiver, trustee, liquidator or
custodian of itself or of all or a substantial part of its property, (b) make a
general assignment for the benefit of its creditors, (c) be dissolved or
liquidated in full or in part, (d) commence a voluntary case or other proceeding
seeking liquidation, reorganization or other relief with respect to itself or
its debts under any bankruptcy, insolvency or other similar law now or hereafter
in effect or consent to any such relief or to the appointment of or taking
possession of its property by any official in an involuntary case or other
proceeding commenced against it, (e) an involuntary petition is filed against
the Company under any bankruptcy, reorganization, insolvency or moratorium law,
or any other law or laws for the relief of, or relating to, debtors unless such
petition shall be dismissed, vacated or withdrawn within sixty (60) days of the
date thereof, or (f) take any action or have any action taken against it or any
endorser or guarantor of this Note for the purpose of effecting any of the
foregoing, and an order for relief entered or such proceeding shall not be
dismissed, discharged, stayed or withdrawn within sixty (60) days of
commencement.
(iii) Other Events. The Company shall (a) have its obligations
under the Senior Indebtedness (as defined below) accelerated, or (b) otherwise
fail to observe or perform any of its material obligations under the Notes or
the Purchase Agreement or breach any of its representations and warranties under
the Purchase Agreement the effect of which constitutes a material adverse effect
on the Company or on the ability of the Holders to utilize the Holder's
California usury law exemption under Section 25118 of the California
Corporations Code.
(b) Acceleration. If an Event of Default with respect to the Company
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occurs and is continuing, then Holder may declare the outstanding principal and
accrued interest on this Note and all other payments payable hereunder to be
forthwith due and payable immediately, without presentment, demand, protest or
further notice of any kind, all of which are hereby expressly waived by the
Company, to the fullest extent permitted by applicable law. The Holder by notice
to the Company may rescind an acceleration and its consequences if the
rescission would not conflict with any judgment or decree and if all existing
Events of Default have been cured or waived. No such rescission shall affect any
subsequent default or impair any right thereto.
6. Usury. It is the express intent of the Company and Holder hereto that
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the payment of all or any portion of the outstanding principal amount of and
accrued interest under this Note be exempt from the application of any
applicable usury or similar laws under any state, federal or foreign
jurisdiction. The Company hereby irrevocably waives, to the fullest extent
permitted by law, any objection or defense which the Company may now or
hereafter have to the payment when due of any and all Note principal or accrued
interest arising out of or relating to a claim of usury or similar laws and the
Company hereby agrees that neither it nor any of its affiliates shall in the
future bring,
commence, maintain, prosecute or voluntarily aid in any action at law,
proceeding in equity or other legal proceeding against Holder based on a claim
that the Company's payment obligations under this Note violate the usury or
similar laws of any state, federal or foreign jurisdiction. Notwithstanding the
foregoing, in the event any interest is paid on this Note which is deemed to be
in excess of the then legal maximum rate, then that portion of the interest
payment representing an amount in excess of the then legal maximum rate shall be
deemed a payment of principal and applied against the principal of this Note.
7. Unconditional Obligation: Fees, Waivers, Other. The Company and the
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Holder agree as follows:
(a) No forbearance, indulgence, delay or failure to exercise any right
or remedy with respect to this Note shall operate as a waiver, nor as an
acquiescence in any default, nor shall any single or partial exercise of any
right or remedy preclude any other or further exercise thereof.
(b) The Company hereby expressly waives demand and presentment for
payment, notice of nonpayment, notice of dishonor, protest, notice of protest,
bringing of suit, and diligence in taking any action to collect amounts called
for hereunder, and shall be directly and primarily liable for the payment of all
sums owing and to be owing hereon, regardless of and without any notice,
diligence, act or omission with respect to the collection of any amount called
for hereunder or in connection with any right at any and all times which Holder
had or is existing hereunder.
8. Notices. All notices and other communications required or permitted
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hereunder shall be in writing and delivered, mailed or transmitted by any
standard form of telecommunication. Notices and other communications to the
Holder shall be directed to it at its address noted in the Company's records;
and notices and other communications to the Company shall be directed to it at
its address at XxxXxxx.xxx, Inc., 000 Xxxxxxxxxx Xxxxxx, Xxx Xxxxx, Xxxxxxxxxx
00000, attention: Chief Financial Officer, with a copy to XxxXxxx.xxx, Inc., 000
Xxxxxxxxxx Xxxxxx, Xxx Xxxxx, Xxxxxxxxxx 00000, attention: General Counsel; or
as to each party, at such other address as shall be designated by such party in
a written notice to the other party pursuant hereto. Any such notice or other
communication shall be deemed to have been duly given (a) when sent by Federal
Express or other overnight delivery service of recognized standing, on the
business day following deposit with such service; (b) when mailed by registered
or certified mail, first class postage prepaid and addressed as aforesaid
through the United States Postal Service, upon receipt; (c) when delivered by
hand, upon delivery; and (d) when telecopied, upon confirmation of receipt. Any
party hereto may by notice so given change its address for future notice
hereunder.
9. Payment. Payment shall be made in lawful tender of the United States.
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10. Subordination. The indebtedness evidenced by this Note is hereby
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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. "Senior Indebtedness" shall mean the
principal of (and premium, if any) and unpaid interest on, or other payment
obligation with respect to all indebtedness of the Company to commercial banks
for money borrowed by the Company, to leasing companies, and to similar
financial institutions, whether incurred previously or incurred after the date
the Notes are made. Any and all claims arising under
this Note are and shall be at all times subject and subordinate to the Senior
Indebtedness and any interest thereon.
11. No Third Party Rights. Nothing expressed in or to be implied from this
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Note is intended to give, or shall be construed to give, any person, other than
the parties hereto and their permitted successors and assigns, any benefit or
legal or equitable right, remedy or claim under or by virtue of this Note.
Notwithstanding the foregoing, all references to the "Holder" or the "Company"
shall apply to their respective heirs, successors or assignees. This Note may
not be assigned or transferred by the Company except in the event of a Change in
Control.
12. Replacement of Note. Upon receipt of evidence reasonably satisfactory
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to the Company of the loss, theft, destruction, or mutilation of this Note (or
any security issued on conversion of this Note), the Company will issue a
replacement instrument, at the Holder's expense, representing such securities in
lieu of such lost, stolen, destroyed, or mutilated instrument, provided that the
Holder agrees to indemnify the Company for any losses incurred by the Company
with respect to such instrument.
13. Amendment. Except as expressly provided herein, neither this Note nor
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any term hereof may be amended, waived, discharged, or terminated other than by
a written instrument referencing this Note and signed by the Company and the
holders of a majority of the outstanding principal amount of the Notes. Any such
amendment, waiver, discharge, or termination effected in accordance with the
preceding sentence shall be binding upon the Holder. Xxxxxx acknowledges that by
the operation of this paragraph, the holders of a majority of the outstanding
principal amount of the Notes will have the right and power to diminish or
eliminate all rights of the Holder under this Note. Notwithstanding the
foregoing, Holder may waive any of its rights pursuant to the terms of this Note
without the consent of any of the other holders of the Notes.
14. Governing Law. This Note and all actions arising out of or in
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connection with this Note shall be governed by and construed in accordance with
the laws of the State of California, without application of conflicts of law
principles thereunder.
15. Severability. In the event that any one or more provisions of this
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Note shall be held to be illegal, invalid or otherwise unenforceable, the same
shall not affect any other provision of this Note and the remaining provisions
of this Note shall remain in full force and effect.
16. Expenses. The Company agrees to pay all reasonable costs, fees and
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expenses incurred by the Holder and its assigns (including, without limitation,
costs of collection, court costs and reasonable attorney's fees and
disbursements) in connection with the successful enforcement of the Holder's
rights under this Note in the event of the failure of the Company to pay any
amounts under this Note when due (all such costs, fees and expenses being herein
referred to as "Costs"). The Company agrees that any payments received by the
Holder from the Company hereunder will first be applied to Costs, then to
interest accrued and unpaid on the principal amount and the balance to the
outstanding principal amount.
IN WITNESS WHEREOF, Company has caused this Note to be issued as of the
date first written above.
XXXXXXX.XXX, INC.,
a Delaware corporation
By:
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Xxxxx XxXxxxxx
Chief Financial Officer
By its counter-signature below, Xxxxxx hereby agrees to the foregoing terms
and conditions set forth in this Note.
"HOLDER"
By:
Its:
By:
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Name:
Title:
Address:
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[Signature Page to Subordinated Promissory Note]
