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EXHIBIT 10.3
LOAN AND SECURITY AGREEMENT
THIS LOAN AND SECURITY AGREEMENT is entered into as of January 28,
1999, by and between XxxxXxxxxx.XXX, Inc., a Georgia corporation ("BORROWER"),
and ITC Service Company, a Georgia corporation ("LENDER").
BACKGROUND
WHEREAS, Borrower and Lender desire to enter into a revolving credit
facility pursuant to which Lender will make credit available to Borrower for
working capital purposes;
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements hereinafter set forth, the parties hereby agree as
follows:
1. LOANS
1.1. REVOLVING CREDIT LOAN
Subject to the terms and conditions hereof, during the period
beginning on the date hereof (the "CLOSING DATE") and ending on the Ending Date
(as defined below), Lender shall make advances (each a "BORROWING") to Borrower
in such amounts as Borrower shall reasonably request from time to time, provided
that the maximum outstanding aggregate principal amount of all such Borrowings
shall at no time exceed $3,000,000 (the "COMMITMENT"). The "ENDING DATE" shall
be the earliest of (i) December 31, 1999, (ii) the closing of a public sale of
the Borrower's Common Stock pursuant to the registration provisions of the
Securities Act of 1933, as amended (the "SECURITIES ACT"), at a minimum
aggregate offering price to the public of $20 million, as a result of which a
public trading market for the Common Stock is created (an "INITIAL PUBLIC
OFFERING"), or (iii) any sale, transfer, exchange, pledge or other disposition
of the Borrower's Common Stock not requiring registration under the Securities
Act in excess of $20 million (a "PRIVATE EQUITY FUNDING"). Each Borrowing shall
be made upon written or e-mail notice of the Borrower received by the Lender not
later than 5:00 PM five (5) Business Days (as hereinafter defined) prior to the
date of the proposed Borrowing, and the amount of such proposed Borrowing shall
not be in an amount of less than $100,000. Under the loan facility contemplated
by this SECTION 1.1 (the "REVOLVING CREDIT LOAN"), Borrower may borrow, repay,
and reborrow, subject to the limitations set forth above. The Revolving Credit
Loan shall be evidenced by, and shall be due and payable in accordance with,
that certain Revolving Credit Note of Borrower (the "NOTE"), dated the Closing
Date and in substantially the form of the promissory note attached hereto as
EXHIBIT A (the terms and provisions of which Note are incorporated herein by
reference), and shall be secured as hereinafter set forth.
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1.2. INTEREST
The outstanding principal amount of the Revolving Credit Loan
shall bear interest at the rate of eleven percent (11%) per annum.
Interest shall be due and payable as more fully set forth in
the Note.
1.3. USE OF PROCEEDS
The proceeds of the Revolving Credit Loan shall be used by
Borrower for working capital purposes in accordance with Borrower's then-current
Business Plan (as such Plan has been adopted by Borrower's Board of Directors).
2. REPRESENTATIONS AND WARRANTIES OF BORROWER
In order to induce Lender to enter into this Agreement and to
make the Revolving Credit Loan, Borrower hereby makes the following
representations and warranties to Lender, which representations and warranties
shall survive the execution and delivery hereof and of the Note:
2.1. ORGANIZATION AND STANDING; AUTHORITY
Borrower (a) is a corporation duly organized, validly
existing, and in good standing under the laws of the state of its incorporation,
(b) is qualified to do business as a foreign corporation and is in good standing
in all jurisdictions where its activities or ownership of property require such
qualification, except for any such jurisdictions where the failure to be so
qualified would not have a material adverse effect on the ability of Borrower to
perform or comply with all terms, conditions, and agreements to be performed or
complied with by Borrower under this Agreement or under any of the other Loan
Documents (as hereinafter defined), or to perform the transactions contemplated
hereby or thereby, and (c) has the power and authority to own, operate, and
lease its properties, to carry on its business as currently conducted, to
execute and deliver and perform this Agreement, the Note, each Additional
Warrant (as hereinafter defined), and any other instruments or agreements
executed pursuant hereto or thereto (this Agreement, the Note, each Additional
Warrant, and such other instruments and agreements hereinafter collectively
referred to as the "LOAN DOCUMENTS"), to incur the obligations provided for in
the Loan Documents, and to perform the transactions contemplated in the Loan
Documents (including, without limitation, the creation of a first lien and
security interest in favor of Lender in the Collateral (as hereinafter
defined)), all of which have been duly and validly authorized by all proper and
necessary action (all of which actions are in full force and effect).
2.2. APPROVALS
No approval, consent or other action by any governmental
authority or by any other person or entity, which has not been obtained, is or
will be necessary to permit the valid
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execution, delivery or performance by Borrower of this Agreement or any of the
other Loan Documents.
2.3. BINDING EFFECT, NO VIOLATIONS
Each of the Loan Documents, upon its execution and delivery,
will constitute a legal, valid, and binding obligation of Borrower, enforceable
against Borrower in accordance with its terms. The execution, delivery, and
performance of the Loan Documents will not (a) violate, conflict with, or
constitute a default under, any law, regulation, order or any other requirement
of any court, tribunal, arbitrator, or governmental authority, any terms of the
Borrower's Articles of Incorporation, or any material contract, agreement or
other arrangement binding upon or affecting Borrower or any of its properties,
or (b) result in the creation, imposition or acceleration of any indebtedness or
any mortgage, pledge, lien, charge, reservation, covenant, restriction, security
interest, or other encumbrance (an "ENCUMBRANCE") of any nature upon, or with
respect to, Borrower or any of its properties (other than the Encumbrance
created pursuant to the Loan Documents).
2.4. LITIGATION
There is no claim, litigation, proceeding, or investigation
pending, threatened or reasonably anticipated against or affecting Borrower and
relating to this Agreement, any of the other Loan Documents, or any of the
transactions contemplated hereby or thereby, before or by any court, tribunal,
arbitrator, or governmental authority.
2.5. TITLE TO ASSETS
As of the date hereof, Borrower has good, valid, and
marketable title to all of its properties and assets (whether real or personal),
and there exist no Encumbrances on any of Borrower's properties or assets,
including, without limitation, the Collateral, other than those set forth in
EXHIBIT C attached hereto. All personal property of Borrower is in good
operating condition and repair, and is suitable and adequate for the uses for
which it is being used. Upon the execution and delivery of this Agreement, and
upon the filing of financing statements as referred to in SECTION 3 hereof
and/or the taking by Lender of possession of the Collateral, as the case may be,
Lender will have a good and valid security interest in the Collateral, subject
to no Encumbrance in favor of any other person or entity.
2.6. INFORMATION
The statements made and the documents delivered by Borrower to
Lender in connection with this Agreement and the other Loan Documents are true,
correct and complete in all material respects and omit no material facts which
are necessary to prevent such statements from being misleading.
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2.7. NO CHANGE
No change in the business, operations, properties or condition
(financial or otherwise) of Borrower, or any other event, has occurred since the
date of the most recent information submitted to Lender by Borrower as described
in SECTION 2.6 hereof, which change could reasonably be expected to have a
material adverse effect on the ability of Borrower to perform or comply with all
terms, conditions, and agreements to be performed or complied with by Borrower
under this Agreement or under any of the other Loan Documents, or to perform the
transactions contemplated hereby and thereby.
2.8. TAXES
Both HeadHunters, L.L.C., a Delaware limited liability company
and predecessor to Borrower ("PREDECESSOR"), and Borrower have filed all tax
returns and reports required by any governmental authority to be filed by either
Predecessor or Borrower, and such returns and reports are true and correct in
all material respects. Both Predecessor and Borrower have paid all taxes,
assessments, and other government charges imposed upon them or their income,
profits or properties, or upon any part thereof, other than those presently
payable without penalty or interest and those which are being contested in good
faith.
2.9. NO DEFAULT
No Event of Default (as hereinafter defined), and no event
which with notice, lapse of time or other condition would constitute an Event of
Default, has occurred and is continuing.
2.10. COMPLIANCE WITH LAWS
Borrower has complied and is in compliance with all applicable
laws, regulations, orders, and other requirements of any governmental authority
or arbitrator, and with all terms of Borrower's Articles of Incorporation and
each agreement or other arrangement binding upon or affecting Borrower or any of
its properties, except for any non-compliance with any of the foregoing which
would not have a material adverse effect on the ability of the Borrower to
perform or comply with all terms, conditions, and agreements to be performed or
complied with by Borrower under this Agreement or under any of the other Loan
Documents, or to perform the transactions contemplated hereby or thereby.
2.11. LICENSES AND CONTRACTS
All material franchises, licenses, permits, certificates,
consents, approvals, authorizations, agreements, and contracts necessary to
operate Borrower's business as it currently is being operated have been obtained
and are in full force and effect.
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2.12. CAPITAL STOCK
The capital stock of Borrower (the "Capital Stock") described
on EXHIBIT D hereto constitutes all the issued and outstanding Capital Stock of
the Borrower. Except for each Additional Warrant and as set forth on EXHIBIT D
hereto, no person has conversion rights with respect to, or any subscription
rights, calls, commitments or claims of any character for, or any repurchase or
redemption options relating to the Capital Stock of Borrower. There are no
outstanding contractual obligations of Borrower to repurchase, redeem or
otherwise acquire any of its Capital Stock or make any material investment (in
the form of a loan, capital contribution or otherwise) in any other person. As
of the date hereof, all of the outstanding Capital Stock of Borrower will be
duly issued, fully paid and non-assessable.
3. CONDITIONS PRECEDENT
3.1. CONDITIONS PRECEDENT TO FIRST ADVANCE OF REVOLVING CREDIT
LOAN ON OR AFTER THE DATE HEREOF
The obligation of Lender to make the first advance of the
Revolving Credit Loan on or after the date hereof is subject to the satisfaction
(in the reasonable judgment of Lender), at or before the date of such advance,
of the following conditions precedent:
3.1.1. REPRESENTATIONS AND WARRANTIES; COMPLIANCE
All representations and warranties made by Borrower in this
Agreement or any of the other Loan Documents shall be true and correct in all
material respects on and as of the date of such advance with the same force and
effect as though such representations and warranties had been made on and as of
the date of such advance. All of the agreements, terms, covenants, and
conditions required by this Agreement to be complied with and performed prior to
the date of such advance by Borrower shall have been complied with and
performed.
3.1.2. DOCUMENTS
Borrower shall deliver to Lender copies of all documents and
other items reasonably requested by Lender evidencing Borrower's authority to
enter into and perform this Agreement and the other Loan Documents.
3.1.3. EXECUTED NOTE AND OTHER LOAN DOCUMENTS
Borrower shall deliver to Lender the fully executed Note and
fully executed copies of all other Loan Documents (other than any Additional
Warrant).
3.1.4. FINANCING STATEMENTS
All Financing Statements deemed necessary by Lender under
SECTION 5 hereof shall have been properly filed and shall be effective as
required by Lender.
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3.2. CONDITIONS PRECEDENT TO THE SECOND AND EACH SUBSEQUENT ADVANCE
OF THE REVOLVING CREDIT LOAN
The obligation of Lender to make the second and each
subsequent advance of the Revolving Credit Loan is subject to the satisfaction
(in the reasonable judgment of Lender), as of the date of each such Revolving
Credit Loan advance, of the conditions precedent specified in SECTION 3.1
hereof.
4. COVENANTS OF BORROWER
Until all obligations of Borrower under this Agreement and the
other Loan Documents are paid in full and performed, Borrower hereby covenants
and agrees that it shall, unless Lender otherwise consents in advance in
writing:
4.1. PAYMENT OF NOTE
Punctually pay the principal of and interest on the Note at
the times and places and in the manner specified therein.
4.2. CORPORATE EXISTENCE
Preserve, maintain, and keep in full force and effect its
existence as a corporation in the State of Georgia.
4.3. CORPORATE RIGHTS AND FRANCHISES; QUALIFICATION; CONDUCT OF
BUSINESS
Preserve, maintain, and keep in full force and effect all
franchises, licenses, permits, certificates, consents, approvals,
authorizations, agreements, and contracts material to the operation of
Borrower's business as it currently is being conducted, whether now existing or
hereafter granted to or obtained by Borrower; qualify and remain qualified as a
foreign corporation in each jurisdiction in which such qualification is
necessary in view of its activities and ownership of property; and continue to
engage in a business of the same general type as now conducted by it.
4.4. TAXES, CHARGES, AND OBLIGATIONS
Pay and discharge all taxes, assessments, and governmental
charges or levies imposed upon it or upon its income, profits, properties or any
part thereof, prior to the date on which penalties attach thereto, as well as
all claims which, if unpaid, might become an Encumbrance upon any properties of
Borrower, and pay, discharge or otherwise satisfy at or before maturity or
before they become delinquent, as the case may be, all of the indebtedness and
other obligations of whatever nature of Borrower; provided, however, that
Borrower shall not be required to pay any such tax, assessment, charge, levy,
claim, indebtedness or obligation so long as (a) the validity thereof is being
contested by Borrower in good faith and by proper proceedings, (b) Borrower sets
aside on its books adequate reserves therefor, and (c) in the case where any
such tax, assessment, charge, claim or levy might become an
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Encumbrance upon any item of the Collateral or any part thereof, Borrower makes
arrangements acceptable to Lender to secure the payment thereof.
4.5. MAINTENANCE OF COLLATERAL
Keep all Collateral in good repair, working order, and
condition, and from time to time make all necessary repairs thereof.
4.6. INSURANCE
Maintain and keep in full force and effect, with financially
sound and reputable insurance companies acceptable to Lender, insurance in such
amounts and covering such risks as is usually carried by companies engaged in
similar businesses and owning similar properties in the same general areas in
which Borrower operates. Lender shall be named as an additional insured with
Borrower on all policies insuring any of the Collateral. Additionally, Borrower
shall use its reasonable best efforts to obtain and maintain a key man insurance
policy on the life of Xxxxxx Xxxx, Chief Executive Officer of Borrower (the "KEY
MAN LIFE INSURANCE POLICY"), in the amount of at least $3,500,000. Such policy
must be reasonably satisfactory in form and content to Lender and shall provide
that, in the event a payment is made thereunder, the insurance company shall be
obligated to pay directly to Lender an amount equal to the outstanding amount of
the Obligations (as hereinafter defined).
4.7. COMPLIANCE WITH LAWS
Comply with all applicable laws, regulations, orders, and
other requirements of any court, tribunal, arbitrator, or governmental
authority, non-compliance with which could have a material adverse effect on the
business, operations, property or condition (financial or otherwise) of
Borrower.
4.8. BOOKS AND RECORDS
Keep and maintain adequate and proper records and books of
account, in which complete entries are made in accordance with generally
accepted accounting principles consistently applied and in accordance with all
laws, regulations, orders, and other requirements of any court, tribunal,
arbitrator, or governmental authority, reflecting all financial and other
transactions of Borrower normally and customarily included in records and books
of account of companies engaged in the same or similar businesses and activities
as Borrower.
4.9. ACCESS TO BORROWER'S EMPLOYEES, PROPERTIES, AND BOOKS AND
RECORDS
Permit Lender and any agents or representatives thereof,
during normal business hours and upon reasonable notice to Borrower, to visit
and inspect the properties of Borrower, to examine and make abstracts from any
of Borrower's books and records, and to discuss the business, operations,
properties, and condition (financial or otherwise) of Borrower with any
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of the officers, directors, employees, agents or representatives (including,
without limitation, the independent certified public accountants) of Borrower.
4.10. FINANCIAL STATEMENTS
Furnish to Lender (a) within one hundred twenty (120) days
after the end of each fiscal year of Borrower, the audited balance sheet of
Borrower as of the end of such fiscal year and the related audited statements of
income, changes in stockholders' equity and changes in financial position of
Borrower for such fiscal year, all prepared in accordance with generally
accepted accounting principles consistently applied, and certified without
qualification by an independent certified public accountant of recognized
standing; (b) within sixty (60) days after the end of each quarter of each
fiscal year of Borrower, a balance sheet and related statement of income,
changes in members' equity, and changes in financial position of Borrower, as of
the end of such quarter, certified by Borrower's chief financial officer as
having been prepared in accordance with generally accepted accounting principles
consistently applied; and (c) not later than fifteen (15) days after each
calendar month end, a balance sheet and income statement of Borrower as of the
last day of such month.
4.11. COLLATERAL
Execute, deliver, and file, or cause the execution, delivery,
and filing of, any and all documents (including, without limitation, financing
statements and continuation statements), necessary or desirable for Lender to
create, perfect, preserve, validate, or otherwise protect a first lien and
security interest in the Collateral; maintain, or cause to be maintained, at all
times Lender's first lien and security interest in the Collateral; immediately
upon learning thereof, report to Lender any reclamation, return or repossession
of any goods forming a part of the Collateral, any material claim or dispute
asserted by any debtor with respect to any material account, and any other
matters materially affecting the value or enforceability or collectibility of
any of the Collateral; defend the Collateral against all claims and demands of
all persons at any time claiming the same or any interest therein adverse to
Lender, and pay all costs and expenses (including reasonable attorneys' fees and
expenses) incurred in connection with such defense; at Borrower's sole cost and
expense (including legal costs and reasonable attorneys' fees and expenses),
settle any and all stock claims, demands, and disputes, and indemnify and
protect Lender against any liability, loss or expense arising from any such
claims, demands, or disputes or out of any such reclamation, return or
repossession of goods forming a part of the Collateral and provide Lender with
not less than thirty (30) days prior notice before changing the location of its
chief executive office or any of its places of business.
4.12. NOTICE OF DEFAULT AND LOSS
Give immediate notice to Lender upon the occurrence of any
Event of Default or event which with notice or lapse of time or otherwise would
constitute an Event of Default and of any material loss or damage to any of the
Collateral.
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4.13. INDEBTEDNESS
Not create, incur, assume, or suffer to exist any
indebtedness, except for (a) indebtedness under the Loan Documents; (b)
indebtedness incurred in the normal course of business and payable by its terms
within one (1) year after the incidence thereof; or (c) indebtedness to which
the Lender has consented in writing.
4.14. ENCUMBRANCES
Not create, incur, assume or suffer to exist any Encumbrance
(other than the Encumbrance created by this Agreement) upon any of the
Collateral, whether now owned or hereafter acquired, except for those
Encumbrances set forth in EXHIBIT C attached hereto.
4.15. FUNDAMENTAL CHANGES
Not amend its Articles of Incorporation by any amendment which
would adversely affect Borrower's ability to perform or comply with any of the
terms, conditions or agreements to be performed or complied with by Borrower
hereunder or to perform any of the transactions contemplated hereby, consolidate
or merge with any other limited liability company, corporation, partnership, or
other entity, or purchase, lease or otherwise acquire all or substantially all
of the assets of any other entity, except that Borrower may own notes and other
receivables acquired in the ordinary course of business.
4.16. TRANSFER OF COLLATERAL
Not sell, lease, assign, pledge or otherwise dispose of any of
the Collateral, whether now owned or hereafter acquired, except in the ordinary
course of business and for fair market value.
4.17. USE OF PROCEEDS
Not use, or allow the use of, the proceeds of the Revolving
Credit Loan for any purpose which would cause any violation of Regulations U, T,
or X of the Board of Governors of the Federal Reserve System or for any purpose
other than that specified in SECTION 1.3 hereof.
5. SECURITY
5.1. COLLATERAL
As security (a) for the punctual payment of the principal of
the Note, together with the interest and premium, if any, thereon, including all
advances thereunder, and all modifications, renewals, extensions, and
re-amortizations thereof or any part thereof, however evidenced, (b) for the
punctual payment of all other sums and interest, if any, thereon, becoming due
or payable to Lender under the provisions hereof or of any other Loan Document,
and (c) the due performance and observance by Borrower of all of the covenants,
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conditions and other provisions hereof and of the other Loan Documents (all of
the indebtedness and other obligations of Borrower described in this SECTION 5.1
being hereinafter referred to collectively as the "OBLIGATIONS"), Borrower
hereby grants to Lender a security interest in, and assigns and pledges to
Lender all of the following (collectively, the "COLLATERAL"): (i) all accounts
(as hereinafter defined) now owned or hereafter acquired by Borrower; (ii) all
equipment (as hereinafter defined) now owned or hereafter acquired by Borrower;
and (iii) all proceeds (as hereinafter defined) of the foregoing. For purposes
of this Agreement: "ACCOUNTS," "EQUIPMENT" and "PROCEEDS" have the meanings
ascribed to them in Article 9 of the Uniform Commercial Code as in effect in the
State of Georgia on the date hereof.
5.2. FINANCING STATEMENTS
At the request of Lender, Borrower will join with Lender in
executing financing statements, continuation statements, and other documents
with respect to the Collateral pursuant to the Uniform Commercial Code and
otherwise, in form satisfactory to Lender, and Borrower will pay the cost of
filing the same in all public offices wherever Lender deems filing to be
necessary or desirable. Borrower grants Lender the right, at Lender's option, to
file any or all such continuation statements and such other documents pursuant
to the Uniform Commercial Code and otherwise, without Borrower's signature where
legally permissible, and irrevocably appoints Lender as Borrower's
attorney-in-fact to execute any such statements and documents in Borrower's name
and to perform all other acts which Lender deems appropriate to perfect and
continue the security interests conferred by this Agreement.
5.3. NO RELEASE
No injury to, or loss or destruction of, any item of the
Collateral shall relieve Borrower of any obligation under this Agreement or
under any of the other Loan Documents.
6. EVENTS OF DEFAULT AND REMEDIES
6.1. EVENTS OF DEFAULT
The occurrence of any one or more of the following events
shall constitute an Event of Default hereunder: (a) Borrower shall fail to pay
in full, when due, any five (5) payments under the Note; or (b) Borrower shall
fail to pay in full, when due, any amount due under the Note upon the maturity
thereof; or (c) any representation or warranty made by or on behalf of Borrower
herein or in any other Loan Document shall prove to have been incorrect or
misleading or breached in any material respect on or as of any date as of which
made; or (d) Borrower shall at any time fail to observe, satisfy or perform any
of the covenants or agreements contained in SECTION 4 or 5 hereof and such
failure shall continue unremedied for a period of five (5) Business Days after
written notice of the existence of such failure shall have been received by
Borrower from Lender; or (e) Borrower shall fail to observe or perform any other
term, covenant or agreement contained in this Agreement or in any other Loan
Document to be observed or performed on its part and such failure shall continue
unremedied
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for a period of five (5) Business Days after written notice of the existence of
such failure shall have been received by Borrower from Lender; or (f) any event
of default under any of the Loan Documents shall occur; or (g) a decree or order
for relief of Borrower shall be entered by a court of competent jurisdiction in
any involuntary case involving Borrower under any bankruptcy, insolvency, or
similar law now or hereafter in effect, or a receiver, liquidator, or other
similar agent for Borrower or for any substantial part of Borrower's assets or
property shall be appointed, or the winding up or liquidation of Borrower's
affairs shall be ordered; or (h) Borrower shall commence a voluntary case under
any bankruptcy, insolvency, or similar law now or hereafter in effect, or
Borrower shall consent to the entry of an order for relief in an involuntary
case under any such law or to the appointment of or taking possession by a
receiver, liquidator or other similar agent for Borrower or for any substantial
part of Borrower's assets or property, or Borrower shall make any general
assignment for the benefit of creditors, or Borrower shall take any action
preparatory to or otherwise in furtherance of any of the foregoing, or Borrower
shall fail generally to pay its debts as such debts come due; or (i) one or more
judgments or decrees shall be entered against Borrower involving in the
aggregate a liability (not paid or fully covered by insurance) of $50,000 or
more, and all such judgments or decrees shall not have been vacated, discharged
or stayed or bonded pending appeal within sixty (60) days from the entry
thereof.
6.2. RIGHTS AND REMEDIES OF LENDER
Upon the occurrence of any Event of Default, Lender may, at
its option, exercise any one or more of the following rights and remedies: (a)
declare the Commitment and Lender's obligation to advance the Borrowings to be
terminated, and declare the entire unpaid principal amount of the Note, all
interest accrued and unpaid thereon, and all other amounts payable under this
Agreement and the other Loan Documents to be accelerated, and to be immediately
due and payable, whereupon the Note, all such accrued interest, and all such
amounts shall become and be immediately due and payable, without presentment,
demand, protest or further notice of any kind, all of which are hereby expressly
waived by Borrower, anything contained herein or in any of the other Loan
Documents to the contrary notwithstanding; (b) notify all parties under the
contracts and accounts forming all or any part of the Collateral to make any
payments due to Borrower from such parties directly to Lender; (c) in Lender's
own name, or in the name of Borrower, demand, collect, receive, xxx for, and
give receipts and releases for, any and all amounts due under such contracts and
accounts; (d) endorse as the agent of Borrower any chattel paper, documents, or
instruments forming all or any part of the Collateral; (e) take any other action
which Lender deems necessary or desirable to protect and realize upon its
security interest in the Collateral; and (f) in addition to the foregoing, and
not in substitution therefor, exercise any one or more of the rights and
remedies exercisable by Lender under other provisions of this Agreement, under
the Note, under any of the other Loan Documents, or provided by applicable law
(including, without limitation, the Uniform Commercial Code as in effect in the
State of Georgia).
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6.3. APPLICATION OF PROCEEDS
Any proceeds from the collection or sale or other disposition
of the Collateral shall be applied in the following order of priority: First, to
the payment of all expenses of collecting, storing, leasing, operating,
managing, selling, or disposing of the Collateral, and to the payment of all
sums which Lender may be required or elect to pay, if any, for taxes,
assessments, insurance, and other charges upon such Collateral or any part
thereof, and of all other payments which Lender may be required or authorized to
make under any provision of this Agreement or of any other Loan Document
(including in each such case reasonable legal costs and attorneys' fees and
expenses); Second, to the payment of all Obligations; and Third, to the payment
of any surplus then remaining to Borrower, unless otherwise provided by law or
directed by a court of competent jurisdiction; provided that Borrower shall be
liable for any deficiency if the proceeds are insufficient to satisfy all of the
Obligations.
6.4 ISSUANCE OF ADDITIONAL WARRANTS
Borrower shall issue to Lender an additional stock purchase
warrant (an "ADDITIONAL WARRANT") within five (5) Business Days after each
occurrence of either of the following: (a) the failure by Borrower to pay in
full, when due, three (3) consecutive payments under the Note; or (b) the
failure by Borrower on two (2) occasions to pay in full, when due, two (2)
consecutive payments under the Note (the amount specified in clause (a) or (b)
that Borrower fails to pay when due, the "PAST DUE AMOUNT"). Each Additional
Warrant shall be in substantially the form of the stock purchase warrant
attached hereto as EXHIBIT B, except as set forth in the following sentence.
Pursuant to each Additional Warrant, (i) the holder thereof shall have the right
to purchase that number of shares of Borrower's Common Stock, par value $.01 per
share (the "COMMON STOCK"), which is equal to the quotient of (A) the Past Due
Amount divided by (B) $1.50, and (ii) the exercise price per share of Common
Stock for which such holder may purchase the shares issuable under such
Additional Warrant is $.01 per share; provided that for purposes of computing
the quotient referred to above in this sentence in the case of each Additional
Warrant, if any, to be issued pursuant to this Section 6.4 after the first
Additional Warrant, clause (A) of such quotient shall be deemed to read in its
entirety as follows: "(A) such portion, if any, of the Past Due Amount which
exceeds the largest previous Past Due Amount determined in accordance with the
provisions of this Section 6.4 divided by".
7. MISCELLANEOUS PROVISIONS
7.1. ADDITIONAL ACTIONS AND DOCUMENTS
Borrower shall take or cause to be taken such further actions,
shall execute, deliver, and file or cause to be executed, delivered, and filed
such further documents and instruments, and shall obtain such consents as may be
necessary or as Lender may reasonably request in order fully to effectuate the
purposes, terms, and conditions of this Agreement and the other Loan Documents,
whether before, at or after the closing of transactions contemplated hereby and
thereby or the occurrence of an Event of Default hereunder.
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7.2. EXPENSES
Borrower shall pay all expenses of Lender incident to this
Agreement, including legal and accounting fees and disbursements.
7.3. NOTICES
All notices, demands, requests, or other communications
provided for herein or in the other Loan Documents shall be in writing and shall
be hand delivered, mailed by first-class, registered or certified mail, return
receipt requested, postage prepaid, delivered by overnight air courier, or
transmitted by telegram, telex, or facsimile transmission, addressed as follows:
(a) If to Borrower:
XxxxXxxxxx.XXX, Inc.
0000 Xxxxxxxx Xxxxxxxxx, Xxxxx 000
Xxxxxxxx, XX 00000
Attention: Xxxxxx Xxxx
Facsimile No.: (000) 000-0000
E-mail: xxxxxxx@XxxxXxxxxx.XXX
(b) If to Lender:
ITC Service Company
0000 X.X. Xxxxxxx Xxxxx
Xxxx Xxxxx, XX 00000
Attention: Xxxxx X. Xxxxx
Facsimile No.: (000) 000-0000
E-mail: xxxxxx@xxxxxxx.xxx
with a copy (which shall not constitute notice) to:
Xxxxxxxxx X. Xxxxxxxx
Senior Vice President, General Counsel and Secretary
0000 Xxxxxxx Xxxx
Xxxxxxxxxx, Xxxxxxxx 00000
Facsimile No.: 703/619-9720
E-mail: xxxxxxxxx@xxxxxxx.xxx
or such other address as the addressee may indicate by written notice to the
other parties.
Each notice, demand, request or communication which shall be
given or made in the manner described above shall be deemed sufficiently given
or made for all purposes at such time as it is delivered to the addressee (with
the return receipt, the delivery receipt, the affidavit of messenger or (with
respect to a facsimile) the confirmation being deemed
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conclusive but not exclusive evidence of such delivery) or at such time as
delivery is refused by the addressee upon presentation.
7.4. SEVERABILITY
If any part of any provision of this Agreement or any other
agreement, document or writing given pursuant to or in connection with this
Agreement shall be invalid or unenforceable under applicable law, such part
shall be ineffective to the extent of such invalidity or unenforceability only,
without in any way affecting the remaining parts of such provisions or the
remaining provisions of said agreement.
7.5. SURVIVAL
It is the express intention and agreement of the parties
hereto that all covenants, agreements, statements, representations, warranties,
and indemnities made by Borrower in the Loan Documents shall survive the
execution and delivery of the Loan Documents and the making of all advances and
extensions of credit thereunder.
7.6. WAIVER
No delay or failure on the part of any party hereto in
exercising any right, power or privilege under this Agreement or under any other
instrument or document given in connection with or pursuant to this Agreement
shall impair any such right, power or privilege or be construed as a waiver of
any default or any acquiescence therein. No single or partial exercise of any
such right, power or privilege shall preclude the further exercise of such
right, power or privilege, or the exercise of any other right, power or
privilege. No waiver shall be valid against any party hereto unless made in
writing and signed by the party against whom enforcement of such waiver is
sought and then only to the extent expressly specified therein.
7.7. RIGHTS CUMULATIVE
Except as specifically provided herein, the remedies provided
herein shall be cumulative and shall not preclude the assertion by Borrower or
by Lender of any other rights or the seeking of any other remedies against the
other, or its successors or assigns. Nothing contained herein shall preclude a
party from seeking equitable relief, where appropriate.
7.8. ENTIRE AGREEMENT; MODIFICATION
This Agreement, the exhibits hereto, and the other Loan
Documents constitute the entire agreement of the parties hereto with respect to
the matters contemplated herein, supersede all prior oral and written agreements
with respect to the matters contemplated herein, and may not be modified,
deleted or amended except by written instrument executed by the parties. All
terms of this Agreement and of the other Loan Documents shall be binding upon,
and shall inure to the benefit of and be enforceable by, the parties hereto and
their respective successors and assigns.
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7.9. TERMINATION
This Agreement shall terminate upon payment in full of all
amounts payable and performance of all other obligations owed by Borrower to
Lender under this Agreement and under the other Loan Documents.
7.10. GOVERNING LAW
This Agreement and the other Loan Documents, the rights and
obligations of the parties hereto, and any claims or disputes relating thereto
shall be governed by and construed in accordance with the laws of the State of
Georgia (excluding the choice of law rules thereof).
7.11. PRONOUNS
All pronouns and any variations thereof shall be deemed to
refer to the masculine, feminine, neuter, singular or plural, as the identity of
the person or entity may require.
7.12. HEADINGS
Section and subsection headings contained in this Agreement
are inserted for convenience of reference only, shall not be deemed to be a part
of this Agreement for any purpose, and shall not in any way define or affect the
meaning, construction or scope of any of the provisions hereof.
7.13. PAYMENTS
If any payment or performance of the Note or of any of the
other obligations under this Agreement or any of the other Loan Documents
becomes due on a day other than a Business Day, the due date shall be extended
to the next succeeding Business Day, and interest thereon (if applicable) shall
be payable at the then applicable rate during such extension. For the purposes
of this Agreement, "BUSINESS DAY" means a day other than a Saturday, Sunday or
other day on which commercial banks in Atlanta, Georgia are authorized by law to
close.
7.14. COUNTERPARTS
This Agreement and any of the other Loan Documents may be
executed in as many counterparts as may be required; and it shall not be
necessary that the signatures of, or on behalf of, each party, or the signatures
of all persons required to bind any party, appear on each counterpart; but it
shall be sufficient that the signature of, or on behalf of, each party, or the
signatures of the persons required to bind any party, appear on one or more of
the counterparts. All counterparts shall collectively constitute a single
agreement. It shall not be necessary in making proof of this Agreement or any
other Loan Document to produce or account for any particular number of
counterparts; but rather any number of counterparts shall be sufficient so long
as those counterparts contain the respective signatures of, or on behalf of, all
of the parties hereto.
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IN WITNESS WHEREOF, the undersigned have duly executed this
Agreement, or have caused this Agreement to be duly executed on their behalf, as
of the day and year first hereinabove set forth.
BORROWER:
XxxxXxxxxx.XXX, Inc.
By:
---------------------------------
Name:
Title:
LENDER:
ITC Service Company
By:
---------------------------------
Name:
Title:
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REVOLVING CREDIT NOTE
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAWS. IT HAS BEEN ACQUIRED FOR
INVESTMENT PURPOSES ONLY, WITHOUT A VIEW TO RESALE OR DISTRIBUTION AND MAY NOT
BE OFFERED, SOLD, OR OTHERWISE TRANSFERRED WITHOUT AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS, OR THE
AVAILABILITY OF AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT AND
REGULATIONS PROMULGATED THEREUNDER AND APPLICABLE STATE SECURITIES LAWS.
REVOLVING CREDIT NOTE
$3,000,000 January 28, 1999
FOR VALUE RECEIVED, XxxxXxxxxx.XXX, Inc., a Georgia
corporation (the "MAKER"), promises to pay to the order of ITC Service Company,
a Georgia corporation, or assigns (the "LENDER" or the "HOLDER"), at 0000 X.X.
Xxxxxxx Xxxxx, Xxxx Xxxxx, Xxxxxxx 00000, or at such other place as the Holder
of this Note may from time to time designate, the principal amount of Three
Million Dollars ($3,000,000), or so much thereof as may be advanced from time to
time under that certain Loan and Security Agreement, dated as of January 28,
1999, by and between the Maker and the Lender (the "LOAN AGREEMENT"), and
remains outstanding, together with accrued and unpaid interest on such advances
at the rate of eleven percent (11%) per annum as follows:
In the event the Ending Date, as determined in accordance with
the provisions of the Loan Agreement, is prior to December 31, 1999, then the
entire outstanding principal amount of this Note, together with all interest
accrued thereon, shall be due and payable in full on such Ending Date.
If, however, the Ending Date, as determined in accordance with
the provisions of the Loan Agreement, is December 31, 1999, then the amounts
payable under this Note shall be paid in accordance with the following
provisions: All accrued and unpaid interest under this Note shall be due and
payable in full on the following dates: (i) December 31, 1999; (ii) the last day
of each calendar month thereafter, commencing with January 31, 2000 and
continuing until all amounts due and payable under this Note have been paid in
full, and (iii) in the event the outstanding principal amount of this Note
becomes due and payable in full on a day which is not the last day of a calendar
month, then on such day. Reference is made to Schedule 1 to this Note. On each
date specified on such Schedule 1, the Maker shall make a
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payment to the Holder in an amount equal to the greater of (a) all accrued and
unpaid interest under this Note, and (b) the amount specified on such Schedule 1
opposite such date, provided that in the event this Note is repaid in full prior
to the last date specified on such Schedule 1, the Maker shall have no further
obligation to make the payment or payments contemplated by such Schedule 1 to be
made after the date this Note is repaid in full. In the event that the amount
paid by the Maker to the Holder on any such date exceeds all accrued and unpaid
interest under this Note as of the date such payment is made, the amount of such
payment shall be applied, first, to the payment of such accrued and unpaid
interest, and second, to the outstanding principal amount of this Note. The
entire outstanding principal amount of this Note, together with all accrued and
unpaid interest thereon, shall be due and payable in full on December 31, 2001,
provided that if an Initial Public Offering or a Private Equity Funding shall
occur on or after December 31, 1999 and before the payment in full of the
outstanding principal amount of this Note pursuant to the foregoing provisions
of this paragraph, the entire outstanding principal amount of this Note,
together with all accrued and unpaid interest thereon, shall be due and payable
in full on the closing date of such Initial Public Offering or Private Equity
Funding, as the case may be.
All payments hereunder shall be made in lawful money of the
United States of America, without offset.
All capitalized terms used herein which are not defined herein
shall have the meanings ascribed to them in the Loan Agreement.
The unpaid amount of this Note (principal and interest) may be
prepaid in whole or in part at any time or times without premium or penalty.
Each prepayment shall be applied first to the payment of all interest and other
amounts accrued hereunder on the date of any such prepayment, and the balance of
any such prepayment shall be applied to the principal amount hereof. No
prepayment shall entitle any person to be subrogated to the rights of the Holder
unless and until this Note has been paid in full.
This Note is the Note referred to in the Loan Agreement and
evidences the Revolving Credit Loan advanced or to be advanced by the Lender to
or for the benefit of the Maker as borrower under the Loan Agreement. Neither
the reference to the Loan Agreement nor any provision thereof shall affect or
impair the absolute and unconditional obligation of the Maker to pay the
principal amount hereof, together with interest accrued thereon, when due.
The occurrence of an Event of Default under the Loan Agreement
shall constitute an event of default ("EVENT OF DEFAULT") hereunder. Upon the
occurrence of any such Event of Default hereunder, the entire outstanding
principal amount hereof, and all accrued and unpaid interest thereon, and any
other amounts due under the Loan Agreement, shall be accelerated, and shall be
immediately due and payable, at the option of the Holder, without demand or
notice, and in addition thereto, and not in substitution therefor, the Holder
shall be entitled to exercise any one or more of the rights and remedies
provided by applicable law, or as provided in the Loan Agreement. Failure to
exercise said option or to pursue such
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other remedies or of the right to exercise any of the same in the event of any
subsequent Event of Default.
The Holder may, upon the occurrence of any such Event of
Default hereunder, have resort to the Collateral given as security for this Note
in any order, and may sell and dispose of such Collateral in whole or in part,
at any time or from time to time, with no requirement on the part of the Holder
of this Note to marshal assets. The Holder shall not be required to preserve any
rights in such collateral as against prior parties. In the event that the Holder
is required to give notice of any intended disposition of Collateral held as
security for this Note, ten (10) Business Days' notice given by mail to the last
known address of the Maker shall be deemed to be reasonable notice.
The Maker promises to pay all costs and expenses (including
without limitation reasonable attorneys' fees and disbursements) incurred in
connection with the collection hereof or in the protection or realization of any
collateral now or hereafter given as security for the repayment hereof, and to
perform each and every covenant or agreement to be performed by the Maker under
this Note, under the Loan Agreement, and under any other instrument evidencing
or securing the obligation represented by this Note.
Any payment on this Note coming due on a Saturday, a Sunday,
or a day which is a legal holiday in the place at which a payment is to be made
hereunder shall be made on the next succeeding day which is a business day in
such place, and any such extension of the time of payment shall be included in
the computation of interest hereunder.
The Maker hereby waives presentment, protest, demand, notice
of dishonor, and all other notices, and all defenses and pleas on the grounds of
any extension or extensions of the time of payments or the due dates of this
Note, in whole or in part, before or after maturity, with or without notice. No
renewal or extension of this Note, no release or surrender of any collateral
given as security for this Note, and no delay in enforcement of this Note or in
exercising any right or power hereunder, shall affect the liability of the
Maker.
No single or partial exercise by the Holder of any right
hereunder, under the Loan Agreement, or under any other agreement given as
security for this Note or pertaining hereto, shall preclude any other or further
exercise thereof or the exercise of any other rights. No delay or omission on
the part of the Holder in exercising any right hereunder shall operate as a
waiver of such right or of any other right under this Note.
Whenever used herein, the words "Maker" and "Holder" shall be
deemed to include their respective successors and assigns.
This Note shall be governed by and construed under and in
accordance with the laws of the State of Georgia (but not including the choice
of law rules thereof).
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IN WITNESS WHEREOF, the undersigned has duly executed this
Note, or has caused this Note to be duly executed on its behalf, as of the day
and year first hereinabove set forth.
XXXXXXXXXX.XXX, INC.
By:
------------------------------
Name:
Title:
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EXHIBIT A
SCHEDULE 1
PAYMENT SCHEDULE
DATE AMOUNT
---- ------
DECEMBER 31, 1999 $164,000 (ESTIMATED FOR 1999)
JANUARY 31, 2000 $27,500 (ESTIMATED BASED ON $3 MILLION OUTSTANDING)
FEBRUARY 29, 2000 $27,500 (ESTIMATED BASED ON $3 MILLION OUTSTANDING)
MARCH 31, 2000 $27,500 (ESTIMATED BASED ON $3 MILLION OUTSTANDING)
APRIL 30, 2000 $27,500 (ESTIMATED BASED ON $3 MILLION OUTSTANDING)
MAY 31, 2000 $27,500 (ESTIMATED BASED ON $3 MILLION OUTSTANDING)
JUNE 30, 2000 $27,500 (ESTIMATED BASED ON $3 MILLION OUTSTANDING)
JULY 31, 2000 $27,500 (ESTIMATED BASED ON $3 MILLION OUTSTANDING)
AUGUST 31, 2000 $27,500 (ESTIMATED BASED ON $3 MILLION OUTSTANDING)
SEPTEMBER 30, 2000 $27,500 (ESTIMATED BASED ON $3 MILLION OUTSTANDING)
OCTOBER 31, 2000 $131,441
NOVEMBER 30, 2000 $166,544
DECEMBER 31, 2000 $142,353
JANUARY 31, 2001 $136,107
FEBRUARY 29, 2001 $89,165
MARCH 31, 2001 $124,735
APRIL 30, 2001 $145,893
MAY 31, 2001 $201,995
JUNE 30, 2001 $241,823
JULY 31, 2001 $267,643
AUGUST 31, 2001 $260,387
SEPTEMBER 30, 2001 $315,665
OCTOBER 31, 2001 $285,674
NOVEMBER 30, 2001 $380,505
DECEMBER 31, 2001 $383,531
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EXHIBIT B
WARRANT
THIS WARRANT AND THE SHARES OF COMMON STOCK PURCHASABLE HEREUNDER HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"),
OR ANY STATE SECURITIES LAWS AND CANNOT BE OFFERED, SOLD OR TRANSFERRED IN THE
ABSENCE OF REGISTRATION, OR THE AVAILABILITY OF AN EXEMPTION FROM REGISTRATION
UNDER THE SECURITIES ACT, APPLICABLE STATE SECURITIES LAWS AND REGULATIONS
PROMULGATED THEREUNDER. THE TRANSFERABILITY OF THIS WARRANT ALSO IS RESTRICTED
AS PROVIDED IN SECTION 4 HEREOF.
STOCK PURCHASE WARRANT
This Warrant is issued as of January 7, 1999, by XxxxXxxxxx.XXX, Inc.
(the "COMPANY"), a Georgia corporation, to ITC Service Company ("ITC"), a
Georgia corporation (ITC and any subsequent assignees or transferees hereof are
hereinafter referred to collectively as "HOLDER" or "HOLDERS").
1. ISSUANCE OF WARRANT; TERM.
For and in consideration of ITC's agreement to enter into that certain
Loan and Security Agreement (the "LOAN AGREEMENT"), dated as of January 7, 1999,
by and between the Company and ITC, and other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the Company hereby
grants to Holder the right to purchase that number of shares of Company's Common
Stock, par value $.01 per share (the "COMMON STOCK") as determined under the
provisions of SECTION 2. The shares of Common Stock issuable upon exercise of
this Warrant are hereinafter referred to as the "SHARES". This Warrant shall be
exercisable commencing on the earliest of (i) December 31, 1999, (ii) the
closing of a public sale of the Borrower's Common Stock pursuant to the
registration provisions of the Securities Act of 1933, as amended (the
"SECURITIES ACT"), at a minimum aggregate offering price to the public of $20
million, as a result of which a public trading market for the Common Stock is
created (an "INITIAL PUBLIC OFFERING"), or (iii) any sale, transfer, exchange,
pledge or other disposition of the Borrower's Common Stock not requiring
registration under the Securities Act in excess of $20 million (a "PRIVATE
EQUITY FUNDING"), and ending on December 31, 2009 (the "WARRANT TERM").
2. EXERCISE PRICE; NUMBER OF SHARES.
(a) The exercise price ("EXERCISE PRICE") per share for which all or
any of the Shares may be purchased pursuant to the terms of this Warrant shall
be that per share value as determined under SUBSECTION (B) of SECTION 2(B)(I),
2(B)(II) or 2(B)(III), as applicable.
(b) Subject to the terms set forth in this Warrant (including, without
limitation, the adjustment provisions of SECTION 2(C) and SECTION 7), on any
date during the Warrant Term, the Holder hereof shall be entitled to purchase
such number of Shares as is calculated below:
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(i) if the Company closes an Initial Public Offering before
December 31, 1999, Holder shall be entitled to purchase such number of Shares as
is equal to the quotient of (A) $3,000,000, divided by (B) the per share selling
price to the public of the Common Stock in the Initial Public Offering;
(ii) if the Company closes a Private Equity Funding before
December 31, 1999, Holder shall be entitled to purchase such number of Shares as
is equal to the quotient of (A) $3,000,000, divided by (B) the per share selling
price to investors of the Common Stock in the Private Equity Funding; or
(iii) if the Company does not close an Initial Public Offering
or a Private Equity Funding before December 31, 1999, Holder shall be entitled
to purchase such number of Shares as is equal to the quotient of (A) $3,000,000,
divided by (B) the fair market value of a share of Common Stock as of December
31, 1999, as jointly determined in good faith by the Company and ITC.
The quotient of the applicable calculation set forth in SECTION 2(B)(I),
2(B)(II) or 2(B)(III), as the case may be, as determined in accordance with the
provisions hereof, is hereinafter referred to as the "ORIGINAL SHARE AMOUNT."
(c) If any amounts, whether principal, interest or otherwise, remain
outstanding after December 31, 1999 under that certain Revolving Credit Loan
(the "LOAN") made available pursuant to the Loan Agreement, the number of Shares
purchasable pursuant to this Warrant shall, without adjustment to the per share
Exercise Price, increase from the Original Share Amount to equal the sum of (1)
the Original Share Amount, plus (2) the product of (A) the Original Share
Amount, multiplied by (B) the Loan Factor (as defined below). The adjustment set
forth in this section shall apply whether or not the Holder has exercised its
right to purchase any shares purchasable hereunder prior to the date of any such
adjustment.
"LOAN FACTOR" shall be equal to the product of (A) 0.1, multiplied by
(B) the number of calendar months (with any fraction of a calendar month to be
considered to be a whole calendar month) that any amounts under the Loan,
whether principal, interest or otherwise, remain outstanding after December 31,
1999.
3. EXERCISE.
This Warrant may be exercised by the Holder hereof (but only on the
conditions hereinafter set forth) as to all or any increment or increments of
One Hundred (100) Shares (or the balance of the Shares if less than such
number), upon delivery of written notice of intent to exercise to the Company at
the following address: XxxxXxxxxx.XXX, Inc., 0000 Xxxxxxxx Xxxxxxxxx, Xxxxx 000,
Xxxxxxxx, XX 00000; Attention: Xxxxxx Xxxx, or such other address as the Company
shall designate in a written notice to the Holder hereof, together with this
Warrant and a check payable to the Company (or wire transfer of funds to the
Company) for the aggregate purchase price of the Shares so purchased. Upon
exercise of this Warrant as aforesaid, the Company shall as promptly as
practicable, and in any event within fifteen (15)
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24
days thereafter, execute and deliver to the Holder of this Warrant a certificate
or certificates for the total number of whole Shares for which this Warrant is
being exercised in such names and denominations as are requested by such Holder.
If this Warrant shall be exercised with respect to less than all of the Shares,
the Holder shall be entitled to receive a new Warrant covering the number of
Shares in respect of which this Warrant shall not have been exercised, which new
Warrant shall in all other respects be identical to this Warrant. The Company
covenants and agrees that it will pay when due any and all state and federal
issue taxes which may be payable in respect of the issuance of this Warrant or
the issuance of any Shares upon exercise of this Warrant.
4. COVENANTS AND CONDITIONS.
The above provisions are subject to the following:
(a) Neither this Warrant nor the Shares have been registered
under the Securities Act or any state securities laws ("BLUE SKY
LAWS"). This Warrant has been acquired for investment purposes and not
with a view to distribution or resale and may not be pledged,
hypothecated, sold, made subject to a security interest, or otherwise
transferred without an effective registration statement for such
Warrant under the Securities Act and such applicable Blue Sky Laws, or
the availability of an exemption from registration under the Securities
Act and applicable Blue Sky Laws. Transfer of the shares issued upon
the exercise of this Warrant shall be restricted in the same manner and
to the same extent as the Warrant, and the certificates representing
such Shares shall bear substantially the following legend:
THE SHARES OF COMMON STOCK REPRESENTED BY THIS CERTIFICATE
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT"), OR ANY APPLICABLE STATE
SECURITIES LAW AND MAY NOT BE OFFERED, SOLD OR OTHERWISE
TRANSFERRED IN THE ABSENCE OF REGISTRATION, OR THE
AVAILABILITY OF AN EXEMPTION FROM REGISTRATION, UNDER THE
SECURITIES ACT AND REGULATIONS PROMULGATED THEREUNDER AND
APPLICABLE STATE SECURITIES LAWS.
The Holder hereof and the Company agree to execute such other documents
and instruments as the Company reasonably deems necessary to effect the
compliance of the issuance of this Warrant and any shares of Common
Stock issued upon exercise hereof with applicable federal and state
securities laws.
(b) The Company covenants and agrees that (i) all Shares which
may be issued upon exercise of the Warrant, upon issuance, shall be
fully paid and nonassessable and free from all taxes, liens and charges
with respect to the issuance thereof; (ii) the Company will not close
its books against the exercise of the Warrant or
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the transfer of the Common Stock issued or issuable upon exercise of
the Warrant in any manner which would interfere with the timely
exercise of the Warrant; and (iii) the Company will at all times
reserve and keep available out of its authorized Common Stock, solely
for the purpose of effecting the exercise of the Warrant, the full
number of shares of Common Stock which would be deliverable upon the
exercise of the Warrant.
5. TRANSFER OF WARRANT.
(a) Prior to January 7, 2000, ITC may not transfer, in whole or in
part, without the written consent of the Company (which shall not be
unreasonably delayed or withheld), this Warrant or the Shares to any person or
business entity other than Affiliates (as defined in Rule 144(a) of the
Securities Act) of ITC.
(b) Subject to the provisions of SECTION 4 and SECTION 5(A) hereof,
this Warrant may be transferred, in whole or in part, on or after January 7,
2000, to any person or business entity, by presentation of the Warrant to the
Company with written instructions for such transfer. Upon such presentation for
transfer, the Company shall promptly execute and deliver a new Warrant or
Warrants in the form hereof in the name of the assignee or assignees and in the
denominations specified in such instructions. The Company shall pay all expenses
incurred by it in connection with the preparation, issuance and delivery of
Warrants under this Section.
6. WARRANT HOLDER NOT SHAREHOLDER; RIGHTS OFFERING; PREEMPTIVE RIGHTS;
PREFERENCE RIGHTS.
Except as otherwise provided herein, this Warrant does not confer upon
the Holder, as such, any right whatsoever as a shareholder of the Company.
Notwithstanding the foregoing, if the Company should offer to all of the
Company's shareholders the right to purchase any securities of the Company, then
all shares of Common Stock that are subject to this Warrant shall be deemed to
be outstanding and owned by the Holder and the Holder shall be entitled to
participate in such rights offering.
7. ADJUSTMENT UPON CHANGES IN STOCK.
The Exercise Price and the number of Shares purchasable hereunder are
subject to adjustment from time to time as follows:
(a) Stock Dividend, Stock Split or Subdivision of Shares. If
the number of shares of Common Stock outstanding at any time after the
date hereof is increased by a stock dividend payable in shares of
Common Stock or by a subdivision or split-up of shares of Common Stock,
then, following the record date fixed for the determination of holders
of Common Stock entitled to receive such stock dividend, subdivision or
split-up, the Exercise Price shall be appropriately decreased and the
number of shares of Common Stock issuable on exercise of each Warrant
shall be increased in proportion to such increase in outstanding
shares.
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(b) Combination of Shares. If, at any time after the date
hereof, the number of shares of Common Stock outstanding is decreased
by a combination of the outstanding shares of Common Stock, then,
following the record date for such combination, the Exercise Price
shall be appropriately increased and the number of shares of Common
Stock issuable on exercise of each Warrant shall be decreased in
proportion to such decrease in outstanding shares.
(c) Merger, Consolidation, Share Exchange, Reorganization,
Etc. If all or any portion of this Warrant shall be exercised
subsequent to any merger, consolidation, recapitalization, exchange of
shares, or reorganization of the Company, sale or transfer of
substantially all of the assets of the Company, or other similar event,
occurring after the date hereof, as a result of which shares of Common
Stock shall be changed into the same or a different number of shares of
the same or another class or classes of securities of the Company or
another entity, then lawful provision shall be made by the Company so
that the Holder exercising this Warrant shall receive, for the
aggregate Exercise Price paid upon such exercise, the aggregate number
and class of shares which such Holder would have received if this
Warrant had been exercised immediately prior to such merger,
consolidation, recapitalization, exchange of shares, reorganization,
sale or other similar event.
8. CERTAIN NOTICES.
(a) Adjustment Certificate. Whenever the Exercise Price or
number of shares purchasable hereunder shall be adjusted pursuant to
SECTION 2(C) or SECTION 7, the Company shall issue a certificate to
each Holder setting forth, in reasonable detail, the event requiring
the adjustment, the amount of the adjustment, the method by which such
adjustment was calculated and the Exercise Price and number of shares
purchasable hereunder after giving effect to such adjustment.
(b) Specific Notices. In case:
(i) the Company shall take a record of the holders
of its Common Stock (or other stock or securities at the time
receivable upon the exercise of this Warrant) for the purpose
of entitling them to receive any dividend or other
distribution, or any right to subscribe for or purchase any
shares of stock of any class or any other securities, or to
receive any other right, or
(ii) of any capital reorganization of the Company,
any reclassification of the capital stock of the Company, any
consolidation or merger of the Company with or into another
Company, or any conveyance of all or substantially all of the
assets of the Company to another Company, or
(iii) of any voluntary dissolution, liquidation or
winding-up of the Company,
5
27
then, and in each such case, the Company will notify each Holder of, as the case
may be, (1) the date on which a record is to be taken for the purpose of such
dividend, distribution or right, and stating the amount and character of such
dividend, distribution or right, or (2) the date on which such reorganization,
reclassification, consolidation, merger, conveyance, dissolution, liquidation or
winding-up is to take place, and the time, if any is to be fixed, as of which
the holders of record of Common Stock (or such stock or securities at the time
receivable upon the exercise of this Warrant) shall be entitled to exchange
their shares of Common Stock (or such other stock or securities) for securities
or other property deliverable upon such reorganization, reclassification,
consolidation, merger, conveyance, dissolution, liquidation, or winding-up. For
any such notification required under either (1) or (2) above, the Company shall
provide to Holder written notice at least twenty (20) days prior to the date
specified therein.
9. NO FRACTIONAL SHARES.
No fractional shares shall be issued upon the exercise of this
Warrant. If any adjustment under either SECTION 2(C) or SECTION 7 would create a
fractional share of Common Stock or a right to acquire a fractional share of
Common Stock, such fractional share shall be disregarded and the number of
shares subject to this Warrant shall be the next higher number of shares,
rounding all fractions upward.
10. AMENDMENTS.
The terms and provisions of this Warrant may not be modified
or amended, or any provisions hereof waived, temporarily or permanently, except
by written consent of the Company and a majority in interest of the Holders
hereof.
11. GOVERNING LAW.
This Warrant shall be governed by, and construed in accordance
with, the laws of the State of Georgia (excluding the choice of law rules
thereof).
---------------------------------------
6
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IN WITNESS WHEREOF, the parties hereto have caused this Stock Purchase
Warrant to be duly executed on their behalf as of the date first above written.
XXXXXXXXXX.XXX, INC., a
Georgia corporation
By:
-----------------------------------
Title:
--------------------------------
ITC SERVICE COMPANY, a
Georgia corporation
By:
-----------------------------------
Title:
--------------------------------
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EXHIBIT C
ENCUMBRANCES
Lease on the Xxxxxx XX 4050 copier (Serial No. F127400)
00
XXXXXXX X
XXXXXXX XXXXX
XXXXX
Number of Shares
----------------
Name Title Common Class A Pref TOTAL %
-----------------------------------------------------------------------------------------------------------------
ITC Holding Company n/a 2,750,000 2,750,000 35.87%
Xxxxxx X. Xxxx CEO 1,710,000 50,000 1,760,000 22.96%
Bare Family Trust 225,000 225,000 2.93%
Xxxxxx Xxxx G. R.A. Trust 225,000 225,000 2.93%
Others (gifted by Xxxxxx Xxxx) 40,000 40,000 0.52%
2ND ROUND FINANCING
ITC Holding Company (conversion of $3.5 million debt) 2,333,333 2,333,333 30.43%
Officers of XxxxXxxxxx.XXX and ITC Holding 333,334 333,334 4.35%
SUBTOTAL (SHARES OUTSTANDING) 2,200,000 5,466,667 7,666,667 100.00%
WARRANTS
ITC Holding Company - warrants 416,667
=======
XXXXX XXXX START EXERCISE
DATE DATE PRICE
OPTIONS ----------------------------------------
1 S Xxxxxx, Xxxxxxx Account Executive 500 500 01/28/99 01/28/99 $1.50
2 S Xxx, Xxxxxxx Account Executive 500 500 01/28/99 01/28/99 $1.50
3 M Xxxxxxx, Xxxxx Marketing Sr Manager 3,000 3,000 08/03/98 08/03/98 $1.50
4 0 Xxxxx, Xxxxxx Network Support 500 500 08/26/98 08/26/98 $1.50
5 S Xxxxxxxx, Xxx VP SALES 100,000 100,000 10/22/98 10/22/98 $1.50
6 S Xxxxxx, Xxxxx Account Executive 500 500 12/17/98 12/17/98 $1.50
0 X Xxxxxxxx, Xxxxxxx Account Executive 500 500 09/20/98 10/22/98 $1.50
8 S Xxxx, Xxxxxx Account Executive 500 500 07/28/98 07/28/98 $1.50
9 0 X'Xxxxxx, Xxxxxxxxx Network Support 500 500 07/28/98 07/28/98 $1.50
00 X Xxxxxxx, Xxxxxxx Account Executive 500 500 08/26/98 08/26/98 $1.50
11 G Xxxxxx, Xxx CFO 100,000 100,000 01/14/98 01/14/98 $0.40
12 S Xxxxxxx, Xxxxx Account Executive 500 500 01/28/99 01/28/99 $1.50
13 S Xxxxxx, Xxxxxxxx Account Executive 500 500 05/22/98 05/22/98 $1.40
14 T Field, Colin Senior Software Developer 5,000 5,000 05/22/98 05/22/98 $1.40
15 S Xxxxxxxx, Xxxxx Account Executive 500 500 01/28/99 01/28/99 $1.50
16 0 Fouralker, Xxxx VP OPERATIONS 7,500 7,500 05/22/98 05/22/98 $1.40
0 Xxxxxxxx, Xxxx VP OPERATIONS 17,500 17,500 10/22/98 10/22/98 $1.50
17 S Xxxx, Xxx Account Executive 500 500 10/22/98 10/22/98 $1.50
18 M Xxxxxxx, Xxxx SENIOR VP MARKETING 50,000 50,000 05/22/98 05/22/98 $1.40
19 S Xxxx, Xxxx Administrative Assist 500 500 08/06/98 08/26/98 $1.50
20 S Xxxxxx, Xxxxx Account Executive 500 500 01/28/99 01/28/99 $1.50
21 S Xxxxxx, Xxxxx Sales Team Leader 500 500 02/19/98 02/19/98 $0.40
S Xxxxxx, Xxxxx Sales Team Leader 2,500 2,500 12/17/98 09/24/98 $1.50
22 S Xxxxxxxxx, Xxxxx Account Executive 500 500 03/19/98 03/19/98 $0.40
00 X Xxxxxx, Xxxxxx Account Executive 500 500 03/19/98 03/19/98 $0.40
24 G Keni, Vinod Controller 10,000 10,000 07/28/98 07/28/98 $1.50
25 T Xxx, Xxxxx Senior Software Developer 5,000 5,000 12/17/98 12/17/98 $1.50
26 S XxXxxxxxx, Xxxx Account Executive 500 500 08/26/98 08/26/98 $1.50
27 S XxXxxxxx, Xxxxx Account Executive 500 500 01/28/99 01/28/99 $1.50
28 S Xxxxxx, Xxxxxx Account Executive 500 500 01/28/99 01/28/99 $1.50
31
29 G Xxxxxxxxxx, Xxx COO 100,000 100,000 01/07/99 01/07/99 $1.50
30 G Xxxxx, Xxxxxxx Administrative Assist 2,500 2,500 01/14/98 01/14/98 $0.40
01/14/98 $0.40
XXXXX XXXX START
DATE DATE EXERCISE PRICE
OPTIONS ----------------------------------------------------------
31 T Xxxxx, Xxxx Software Developer 750 1,000 06/15/98 06/18/98 $1.40
32 S Xxxxx, Xxxxxxxx Account Executive 500 500 01/28/99 01/28/99 $1.50
33 T Xxxxxx, Xxxxx Web Editor 1,000 750 06/18/98 06/18/98 $1.40
34 T Xxxx, Xxxxx Software Developer 2,500 2,500 07/28/98 07/28/98 $1.50
35 G Xxxxxx, Xxxxxxx Accountant 1,000 1,000 01/28/99 01/28/99 $1.50
36 T Xxxxxxx, Xxxx VP TECHNOLOGY 50,000 50,000 01/14/98 01/14/98 $0.40
37 T Xxxxxxx, Xxxxx Software Developer 10,000 10,000 01/14/98 01/14/98 $0.40
38 0 Xxxxxxxxxxx, Xxxx Customer Support 500 500 07/28/98 07/28/98 $1.50
00 X Xxxx, Xxxxxx Account Executive 500 500 01/28/99 01/28/99 $1.50
40 S Xxxx, Xxxxx Account Executive 500 500 08/26/98 08/26/98 $1.50
41 M Xxxxx, Xxxxxx Marketing Manager 2,500 2,500 08/26/98 08/26/98 $1.50
42 S Xxxxxxx, Xxxxx Account Executive 500 500 05/22/98 05/22/98 $1.40
43 S Xxxxxxx, Xxxxxxx Account Executive 500 500 07/28/98 07/28/98 $1.50
44 0 Xxxxxxxx, Xxxxxx Customer Support 500 500 02/19/98 02/19/98 $0.40
45 S Xxxxxxxx, Xxxxx Sales Team Leader 500 500 02/19/98 02/19/98 $0.40
S Xxxxxxxx, Xxxxx Sales Team Leader 2,500 2,500 12/17/98 09/24/98 $1.50
46 S Xxxxxx, Xxxxxxx Account Executive 500 500 01/28/99 01/28/99 $1.50
47 T Xxxxxx, Xxxxx Software Developer 50,000 50,000 01/14/98 01/14/98 $0.40
48 S Xxxxxxx, Xxxxxx Account Executive 500 500 10/22/98 10/22/98 $1.50
49 Xxx, Xxxx DIRECTOR 10,000 10,000 03/19/98 03/19/98 $0.40
00 Xxxxxxxxx, Xxxxxx DIRECTOR 10,000 10,000 07/15/98 07/15/98 $1.40
51 Xxxxxxxxxx, Xxx DIRECTOR 10,000 10,000 03/19/98 03/19/98 $0.40
52 Xxxxx, Xxxx DIRECTOR 10,000 10,000 03/19/98 03/19/98 $0.40
53 Xxxxx, Xxx DIRECTOR 10,000 10,000 07/15/98 07/15/98 $1.40
SUBTOTAL (OPTIONS GRANTED) 588,250 $1.0274 weighted avg
POOL AVAILABLE 294,000
---------
TOTAL OPTIONS 882,250
---------
TOTAL SHARES (INCLUDING WARRANTS AND OPTIONS DILUTION) 8,965,584
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