EXHIBIT 10.38
WORKOUT AGREEMENT
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of
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VIADOR, INC.
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This Workout Agreement ("Agreement") is made between Viador, Inc.
("Debtor") and each of the creditors of the Debtor that executes a Consent in
the form attached hereto as Exhibit A (individually, a Creditor and,
collectively, the "Creditors").
RECITALS
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A. As of September 30, 2001 ("Workout Date"), the Debtor was indebted
to the holders of unsecured claims totaling approximately $2.0 million.
B. On October 25, 2001, the Debtor executed a security agreement
("Security Agreement") whereby the Debtor granted a security interest
("Security Interest") in substantially all of its assets to Credit Managers
Association of California ("CMA") as Trustee for its creditors.
C. The Debtor convened a meeting on October 12, 2001, to which all of
its unsecured creditors were invited. At that meeting, the management of
Debtor discussed the Debtor's financial condition and its future prospects. At
the conclusion of that meeting, the creditors who were present formed a
committee of creditors ("Committee") that is currently composed of the
following Creditors: Xxxxxx Xxxxxx Design Group, Expert Planet, Xxxxx,
Polaris, Adecco, and Versata.
D. Thereafter, the Debtor met with the Committee and a plan for
restructuring the obligations of the Debtor was agreed upon between the Debtor
and the Committee. This Agreement embodies such agreement. The Committee
supports this Agreement and recommends that all creditors participate in the
debt restructuring proposed by this Agreement.
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E. On December 6, 2001, the Debtor, the Committee and CMA entered into
the Deposit Agreement pursuant to which the Debtor deposited $525,000 with CMA
to fund the distributions to creditors contemplated by this Agreement.
F. The Debtor is also negotiating with representatives of a group of
investors to provide the Debtor with equity financing of approximately $1
million (the "Investment").
Article I
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DESCRIPTION AND DETERMINATION OF CLAIMS
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1.1 Claims Treated Under This Agreement. Claims subject to this
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Agreement ("Unsecured Claims") shall include all unsecured claims against the
Debtor, whether disputed or undisputed, which existed on the Workout Date and
all claims that existed on such date which are unsecured but for (a) the value
of their beneficial interest under the Security Agreement or (b) any value of
their interest under a judgment lien, attachment lien, or similar charge in
connection with their claim which is subordinate to the Security Interest.
Unsecured Claims shall include (a) all unsecured claims arising under leases or
executory contracts entered into prior to the Workout Date except to the extent
of the reasonable value of the use of goods, services or space actually used or
occupied by the Debtor after the Workout Date and (b) interest, late charges
and other amounts accruing on or before the Workout Date. Unsecured Claims
shall not include those claims described in Exhibit B hereto ("Schedule of
Excluded Claims") or an amendment to such Exhibit B that is delivered to the
Committee by the Debtor on or before the Effective Date, nor interest, late
charges and other amounts accruing after the Workout Date.
1.2 Designation of Claim Amount by Creditor. Upon execution of a
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Consent in the form of the attached Exhibit A (the "Consent"), each Creditor
shall state thereon the amount of its Unsecured Claim. Such Unsecured Claim
shall not include any interest, late charges or similar amounts accruing after
the Workout Date, all of which accruals shall be deemed waived by the execution
of the Consent.
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1.3 Delivery of Consent. The Creditor shall deliver such Consent to
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CMA at the address or facsimile number shown thereon. CMA shall note on each
Consent the date it is received and shall immediately transmit a copy of such
Consent to the Debtor.
1.4 Notice of Dispute. Not later than the later of (a) the Effective
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Date or (b) ten days after receipt of the copy of a Consent from CMA, if the
Debtor disputes all or any portion of the Unsecured Claim asserted by a
Creditor in its Consent, the Debtor shall transmit written notice to the
Creditor stating the amount thereof that is disputed.
1.5 Determination of Allowed Claim. If the Debtor gives timely notice
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of dispute of an Unsecured Claim, the portion of such claim which the Debtor
disputes shall be deemed a "Disputed Claim." Any Unsecured Claim, or portion
thereof, which the Debtor does not timely dispute shall be deemed an Allowed
Claim.
1.6 Treatment of Disputed Claims.
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(a) Resolution Through Arbitration. The allowability of each
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Disputed Claim shall be determined by either (i) agreement between the Debtor
and the Creditor or (ii) binding arbitration pursuant to the Commercial
Arbitration Rules of the American Arbitration Association upon demand submitted
to the Association by either party. The award of the arbitrator in such
proceeding shall be a declaration only of the amount of the Creditor's Allowed
Claim under this Agreement and shall specify that it may be satisfied only in
accordance with this Agreement. The allocation of the cost of such arbitration
(including the fees, if any, of the arbitrator) shall be determined by the
arbitrator in the award.
(b) Reserve for Disputed Claims. At the time when any
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distribution is to be made to the holders of Allowed Claims, the Disbursing
Agent shall withhold an amount equal to the distribution that would have been
made on all Disputed Claims if they had been Allowed Claims at the time of the
distribution. The Disbursing Agent shall hold such amount in an interest
bearing, federally insured deposit account ("Claims Reserve") pending
resolution of the Disputed Claim as provided herein.
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(c) Distributions on Disputed Claims. Not later than thirty
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days after the Disbursing Agent receives written notice that the allowability
of a Disputed Claim is resolved, the Disbursing Agent shall pay to the Creditor
holding such claim , from the Claims Reserve, (a) the portion of the
distributions that were withheld on account of the Disputed Claim to which the
holder thereof is entitled as a result of resolution of the Disputed Claim and
(b) the interest accrued in the Claims Reserve on account of such portion. The
portion of such distributions to which the holder is not entitled shall be
returned to the Debtor.
Article II
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TREATMENT OF CLAIMS
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2.1 Treatment of Unsecured Claim. Each Creditor holding an Allowed
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Claim shall receive a distribution in an amount equal to twenty-five percent
(25%) of the amount of such Creditor's Allowed Claim. Subject to section 2.4,
such distribution shall be in full satisfaction of all claims held by such
Creditor.
2.2 Acceptance of Agreement As Novation; Consideration. By execution
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of their Consents, the Creditors accept this Agreement and the treatments set
forth herein. Subject to section 2.4, the treatment provided to Unsecured
Claims in this Agreement shall supercede and replace all Unsecured Claims held
by the Creditors. The Creditors accept this Agreement for valuable
consideration, receipt of which is hereby acknowledged; such consideration
includes the promises of the Debtor herein, the powers granted to the Committee
and the Investment, which is being made in reliance on the acceptance of this
Agreement by the Creditors.
2.3 Security Interest. As security for the Debtor's performance of
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its obligations hereunder, the Security Interest shall continue in effect until
all Unsecured Claims are satisfied as provided herein. Upon payment by the
Debtor of all Unsecured Claims as provided in this Agreement, the Security
Interest shall be terminated.
2.4 Non-Receipt of Investment. Notwithstanding any other provision of
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this Agreement, in the event that the Debtor does not receive the full amount
of the Investment on or before February 28, 2002, then each Creditor shall be
entitled to assert against the Debtor the full amount of all claims held by
such Creditor against the Debtor, including all accrued interest, costs, fees
and attorneys' fees, less any payments actually received by such Creditor on
account of such claims.
Article III
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DISTRIBUTIONS
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3.1 Not later than five days after the Effective Date, the Debtor
shall provide additional cash to the Disbursing Agent which, when added to the
amounts deposited pursuant to the Deposit Agreement, shall be in an amount
sufficient to pay 25% of all Unsecured Claims and to pay the fees of the
Disbursing Agent. The Disbursing Agent shall forthwith distribute to all
holders of Allowed Claims an amount equal to 25% of such Allowed Claims. The
Disbursing Agent shall make distributions to holders of Disputed Claims as
provided in section 1.6(c).
Article IV
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EFFECTIVE DATE
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4.1 Acceptance of Creditors. This Agreement shall become effective
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only if it is accepted by the holders of 95% or more in dollar amount of
Unsecured Claims or by such lower percentage to which the Debtor and the
Committee agree. In determining such percentage, Unsecured Claims held by
creditors who do not submit Consents shall be deemed to be in the amounts shown
in the Debtor's books and records.
4.2 Definition of Effective Date. The "Effective Date" of this
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Agreement shall be the day on which the Disbursing Agent certifies that the
required percentage of acceptances has been received, provided that if the
Effective Date has not occurred by February 28, 2002 either party may declare
this Agreement null and void.
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Article V
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COVENANTS
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5.1 Affirmative Covenants. Until the obligations of the Debtor under
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this Agreement are satisfied in full, unless the Committee agrees otherwise,
the Debtor shall:
(a) Continuation of Relationships. Continue to conduct
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business with Creditors to the extent that the prices, service, product
availability, and quality of performance by such Creditors are comparable to
those available to the Debtor generally and to the extent this covenant is not
prohibited by antitrust or other applicable law, governmental regulations, or
requirements of customers of the Debtor.
(b) Maintenance of Books and Records. Maintain its books and
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records according to generally accepted accounting principles applied on a
consistent basis.
(c) Payment of Taxes. Promptly pay all taxes, fees, levies
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and charges due and payable to any public authority as they accrue, except to
the extent such nonpayment is due to a bona fide dispute as to liability
therefor.
5.2 Negative Covenants. Until the obligations of the Debtor hereunder
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are satisfied, unless the Committee agrees otherwise, the Debtor shall not:
(a) Payments Outside Agreement. Make any payment on any
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Unsecured Claim other than according to the treatments set forth in this
Agreement.
(b) Distributions To Shareholders. Declare or pay any
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dividend or make any distribution in cash or in kind with respect to any of its
capital stock or take any action to authorize any such dividend or
distribution.
(c) Redemption of Stock. Purchase, redeem, retire or
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otherwise acquire for value any of its capital stock.
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(d) Loans to Others. Make any loan in any amount to any
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person or entity other than travel, expense and/or similar advances made in the
ordinary course of business to existing or prospective employees.
(e) Guaranties. Become obligated as a surety or guarantor on
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behalf of any other person or entity except in the ordinary course of business.
5.3 Confidentiality of Information. The Committee acknowledges that
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substantial portions of the information provided to it may be confidential
information of the Debtor, and the Committee shall safeguard the
confidentiality of all information designated by the Debtor as confidential and
shall not, without the prior written consent of the Debtor, disclose any
information so designated to any third party other than its attorneys.
Article VI
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DEFAULT AND REMEDIES
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6.1 Events of Default. It shall be an "Event of Default" hereunder if
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(a) the Debtor fails to make any payment required hereby within ten days after
the due date thereof or (b) the Debtor fails to perform any other of its
obligations hereunder or under the Security Agreement.
6.2 Remedies on Default. Upon the occurrence of an Event of Default
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and so long as such Event of Default is continuing, the Committee may, at its
election, give notice of such default to the Debtor. The notice shall specify
the Event(s) of Default on which such notice is based. If such Event of
Default is a failure to make any payment required hereby, the Debtor shall have
not more than ten (10) days after giving of such notice to cure such Event of
Default. If such Event of Default is due to a failure to perform any other of
its obligations hereunder or under the Security Agreement, the Debtor shall
have not more than thirty (30) days to cure such Event of Default. If the
Debtor fails to cure such Event of Default within the foregoing periods, the
Committee may exercise all remedies available to it and the Creditors
hereunder, under the
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Security Agreement, and applicable law. In such event, (a) Creditors may
individually pursue their rights and remedies pursuant to applicable law, and
(b) no further notices need be given to the Debtor other than such notices as
are required by applicable law.
Article VII
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COMMITTEE AND DISBURSING AGENT
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7.1 Authority of the Committee. The Committee shall continue to
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represent all Creditors. The Creditors authorize the Committee to act for
them, directly and agents, in all matters related to this Agreement, including
the modification of any terms, conditions, or covenants hereof or thereof.
Creditors shall be bound by all decisions made and actions taken or directed by
the Committee, and neither the Committee nor any of its members shall be liable
to any Creditor for any action taken or not taken by it or them in good faith.
7.2 Resignation and Replacement of Committee Members. In the event
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that one or more members of the Committee shall resign or otherwise become
unable to serve, the remaining members may select replacements from those
Creditors willing to serve. In addition, the Committee may authorize the
addition of Creditors to the Committee and elect the representative of any
Creditor serving on the Committee to serve as the Chair of the Committee. The
Debtor shall be given prompt notice of any changes in the composition of the
Committee.
7.3 Expenses of the Committee. The Debtor shall pay all reasonable
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expenses incurred by the Committee and all fees and expenses of the Disbursing
Agent in the performance of their duties under this Agreement, including
reasonable attorney fees, upon presentation of appropriate evidence thereof.
The Debtor shall not, however, be required to pay any fee to a member of the
Committee for service on the Committee.
7.4 Procedure for Committee Action. Any decision of the Committee to
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take any action or give any consent shall be made by majority vote of the
members of the Committee. Such action or consent shall be effectively
communicated to the Debtor or
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any third party if communicated in a writing signed by the Chair of the
Committee, and the Debtor shall be entitled to rely on any communication from
the Chair of the Committee.
7.5 Appointment of Disbursing Agent. CMA shall be the disbursing
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agent ("Disbursing Agent") under this Agreement and shall continue to serve in
such capacity until completion of its duties under this Agreement or until CMA
resigns or is removed. If CMA ceases to serve as Disbursing Agent, the
Committee shall have the authority to appoint a replacement Disbursing Agent.
7.6 Duties of Disbursing Agent. The Disbursing Agent shall make the
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distributions required under this Agreement and shall perform all duties
incident thereto that the Disbursing Agent is instructed to perform by the
Committee including, but not limited to, maintenance of the Claims Reserve and
records identifying claims and the names and addresses of Creditors. The
Disbursing Agent shall keep the Claims Reserve as a segregated account. As to
all matters relating to the performance of its duties hereunder, the Disbursing
Agent shall be acting as agent for the Creditors. The Disbursing Agent shall
be entitled to rely on instructions received from the Committee, except that
determination of the amounts of Allowed Claims shall be made in accordance with
Article I hereof. The duties of the Disbursing Agent shall be ministerial
only, and neither the Disbursing Agent nor any of its officers, directors or
agents shall be liable to any Creditor for any action taken or not taken by it
or them in good faith.
7.7 Fees and Expenses of the Disbursing Agent. As compensation for
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its services, the Disbursing Agent shall receive a fee of five percent (5%) of
the first $100,000 distributed, 3% of the next $900,000 distributed and .5% of
any amounts over $1,000,000.
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Article VIII
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GENERAL PROVISIONS
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8.1 Governing Law. This Agreement and all controversies relating to
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the subject matter hereof shall be governed by and determined in accordance
with the laws of the State of California without application of any conflict of
laws rules or principles that would refer such controversy to the law of any
other jurisdiction.
8.2 All notices, requests, or other communications required or
permitted under this Agreement shall be effective only if in writing and
delivered personally, by overnight courier, or by facsimile transmission,
addressed as follows:
If to the Debtor, to:
Viador, Inc.
000 Xxxxxxx Xxx.,
Xxxxxxxxx, XX 00000
Attn: Xxxx Xxxxxxx, CFO
Facsimile: (000) 000-0000
With a copy to:
Xxxxxx & Xxxx, A Professional Corporation
000 Xxxxxxxx Xxxxxx, Xxxxx 000
Xxxx Xxxx, Xxxxxxxxxx 00000-0000
Attn: Lincoln X. Xxxxxx
Facsimile: (000) 000-0000
If to the Committee, to:
Xxxx Xxxxxx
Xxxxxx Xxxxxx Design Group
000 Xxxxxxx Xxxxxx
Xxxx Xxxx, XX 00000
Facsimile: (000) 000-0000
With a copy to:
Xxxxxxx X. Xxxxx
LeBoeuf, Lamb, Xxxxxx & XxxXxx, LLP
Xxx Xxxxxxxxxxx Xxxxxx, Xxxxx 000
Xxx Xxxxxxxxx, XX 00000
Facsimile: (000) 000-0000
If to CMA, to:
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CMA Business Credit Services
0000 Xxxxxx Xx.,
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attn: Xx. Xxxxxxxx XxXxxxxxx
Facsimile: (000) 000-0000
Notices to particular Creditors shall be addressed and delivered to the
addresses or facsimile numbers shown on their Consents. Each party may change
its address or facsimile notice by giving notice of such change in the manner
specified in this section. Notice shall be deemed effectively given at the
time it is received if given by personal delivery or overnight courier or at
the time shown on the transmittal confirmation of the sender's facsimile
machine if given by facsimile transmission.
8.3 Counterparts. This Agreement, when executed by the Debtor and the
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Committee, and the Consents, when executed by Creditors, shall constitute a
single agreement.
8.4 Captions. The captions used in this Agreement are for the
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convenience of the parties, and shall not be utilized to construe or interpret
the provisions of this Agreement.
8.5 Entire Agreement. This Agreement, the Consents, and the Security
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Agreement shall constitute the entire agreement of the Debtor, the Creditors
and the Committee, and supersede and replace all prior and contemporaneous
agreements, documents, or understandings, whether written or oral. All such
prior and contemporaneous agreements, documents, and understandings shall have
no legal effect. In the event of any conflict between the terms of this
Agreement and the Security Agreement, the terms of this Agreement shall
prevail.
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IN WITNESS WHEREOF, the Debtor and the Committee have executed this
Agreement as of the date written below and each Creditor shall be deemed to
have executed this Agreement by execution of a Consent.
Dated:
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Viador, Inc.
By:
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Xxxx Xxxx, President
Committee of Creditors of Viador, Inc.
By:
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Xxxx Xxxxxx, Chair
CREDIT MANAGERS ASSOCIATION OF CALIFORNIA
By:
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Xxxxxx Xxxxx
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VIADOR, INC.
WORKOUT AGREEMENT
CONSENT
The undersigned Creditor ("Creditor") hereby accepts all of the terms and
conditions of the Workout Agreement of Viador, Inc. ("Debtor"), dated December
11, 2001 ("Workout Agreement"). I certify that I have read the Workout
Agreement and understand all of its terms, including the provisions that (a)
the cash I receive will be in full satisfaction of my Unsecured Claim (as
defined in the Workout Agreement) and (b) the Committee is authorized to act on
my behalf in connection with all matters related to my Unsecured Claim.
I further certify that, as of September 30, 2001, the amount of my Unsecured
Claim is $_______________. [Do not include charges after September 30, 2001.]
Legal Name of Creditor .................
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Signature of Creditor or Authorized
Representative ....................... /s/
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Printed or Typed Name of Person
Signing ..............................
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Title of Person Signing ................
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Address of Creditor ....................
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Telephone Number ....................... ( )
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Facsimile Number ....................... ( )
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PLEASE SIGN AND RETURN TO: Xx. Xxxxxxxx XxXxxxxxx
CMA Business Credit Services
0000 Xxxxxx Xxxxxx,
Xxx Xxxxxxx, Xxxxxxxxxx 00000-0000
Facsimile: (000) 000-0000
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