EXHIBIT 10.23
VIADOR, INC.
CONVERTIBLE PROMISSORY NOTE AND
WARRANT PURCHASE AGREEMENT
THIS CONVERTIBLE PROMISSORY NOTE AND WARRANT PURCHASE AGREEMENT, is made and
entered into as of the 6th day of July, 2001, between Viador Inc., a Delaware
corporation (the "Company"), and the persons set forth on Schedule A hereto
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(each a "Lender," and collectively, the "Lenders").
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RECITALS
A. The Lenders desire to lend to the Company, and the Company desires to borrow
from the Lenders, the amount of Five Hundred Thousand Dollars ($500,000) (the
"Loan"). The Loan will be evidenced by a series of convertible promissory notes,
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a form of which is attached hereto as Exhibit A, (each a "Note," and
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collectively, the "Notes"). Pursuant to the terms and conditions set forth
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therein, each Note will, at the option of the Lender, be converted into shares
of the Company's common stock, par value $0.001 per share (referred to herein as
the "Common Stock"). The Notes are being issued by the Company to the Lenders as
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a bridge to the Company's next private financing.
B. In connection with the Loan the Company has also agreed to issue
warrants to purchase additional shares of Common Stock, pursuant to Section 2
hereof.
For good and valuable consideration, the receipt and adequacy of which are
hereby acknowledged, the Company and the Lenders agree as follows:
1. Agreement to Lend, Issuance of the Notes. Subject to the terms and conditions
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hereof, (a) each Lender covenants and agrees to purchase from the Company and
the Company agrees to sell to each Lender a Note in a principal amount equal to
the amount set forth opposite such Lender's name in the column titled Note
Amount on Schedule A hereto (for each Lender, its "Note Amount").
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2. Note Conversion. Subject to the terms and conditions set forth in the Notes,
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each Lender shall have the option to convert any or all outstanding principal
amount of its Note and the unpaid interest accrued thereon into the Common Stock
or into equity securities of the Company issued to a third party or third
parties in one or more bona fide, arms-length transactions for the purpose of
raising capital during the term of the Notes.
3. The Warrants. In connection with the purchase and sale of the Notes, the
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Company has also authorized the issuance and sale to the Lenders of warrants to
purchase One Million Two Hundred Fifty Thousand (1,250,000) shares of Common
Stock (each, a "Warrant," and collectively, the "Warrants") at an exercise price
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of $0.40. The Warrants shall be substantially in the form set forth in Exhibit B
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attached hereto. After consideration of all relevant factors, the Company and
each Lender hereby agree that, solely for purposes of IRC Treasury Regulations
Section 1.1273-2(h), the amount of such Lender's investment allocable to such
Lender's Warrant is less than the product of (a) .0025, (b) the number of full
years to maturity of such Lender's Note, and (c) the stated principal amount of
such Lender's Note.
4. Limit on Number of Shares Issuable. In no event shall any Lender be entitled
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to convert its Notes into or exercise its Warrant into a total number of shares
of voting stock of Company that exceeds that number of shares which is equal to
19.9% of the Company's total issued and outstanding shares of voting stock as of
the date of such conversion, less such number of shares of voting stock (if any)
that are then held by any Lender or any other holder of a Note or Warrant (a
"Holder") and that were (a) purchased by a Lender or a Holder from any officers,
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directors or substantial shareholders (as defined by the National Association of
Securities Dealers ("NASD")) of Company, or (b) acquired by a Lender or a Holder
upon exercise of any Note or Warrant, including any shares with respect to which
a Lender or any Holder has exercised any Warrant or converted any Note, but
which have not yet been delivered to such Lender or such Holder, or (c)
otherwise acquired (or other securities convertible into voting stock of the
Company otherwise acquired) by a Lender or a Holder from the Company, or any
officers, directors or substantial shareholders (as defined by the NASD) of
Company, in connection with the transactions represented by the Notes, Warrants
or Purchase Agreement.
5. Closing. The closing of the transactions contemplated by Sections 1 and 2 of
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this Agreement (the "Closing") shall take place at the offices of Xxxxxxx,
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Phleger & Xxxxxxxx LLP, Two Embarcadero Place, 0000 Xxxx Xxxx, Xxxx Xxxx,
Xxxxxxxxxx 00000, at 4:00 P.M. California time, on the date hereof (the "Closing
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Date") or at such other place or different time or day as may be mutually
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acceptable to a majority in interest of the Lenders and the Company. At the
Closing, the Company will deliver to each Lender (i) a Note dated as of the
Closing Date, in substantially the form set forth in Exhibit A, in the Lender's
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Note Amount and (ii) a Warrant dated as of the Closing Date, in substantially
the form set forth in Exhibit B, against payment to the Company by such Lender,
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by wire transfer, of such Lender's Note Amount.
6. Representations and Warranties of the Company. The Company hereby
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represents and warrants to the Lenders that:
6.1 Organization, Good Standing and Qualification. The Company is a corporation
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duly organized, validly existing and in good standing under the laws of the
State of Delaware and has all requisite corporate power and authority to carry
on its business as now conducted and as proposed to be conducted. The Company is
duly qualified to transact business and is in good standing in each jurisdiction
in which the failure to so qualify would have a material adverse effect on its
business.
6.2 Authorization. All corporate action on the part of the Company, its
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officers, directors and stockholders necessary for the authorization, execution
and delivery of this Agreement, the Notes and the Warrants (collectively, the
"Loan Agreements"), the performance of all obligations of the Company hereunder
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and thereunder, the authorization, issuance and delivery of the Notes and the
Warrants, being sold hereunder, and the authorization and issuance (or
reservation for issuance) of the Common Stock issuable upon exercise of the
Warrants and upon conversion of the Notes has been taken or will be taken prior
to the Closing. The Loan Agreements constitute valid and legally binding
obligations of the Company, enforceable in accordance with their respective
terms, except (i) as limited by applicable bankruptcy, insolvency,
reorganization, moratorium, and other laws of general application affecting
enforcement of creditors' rights generally, and (ii) as limited by laws relating
to the availability of specific performance, injunctive relief, or other
equitable remedies.
6.3 Valid Issuance. The Notes and the Warrants, when issued, sold and delivered
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in accordance with the terms hereof for the consideration expressed herein, will
be duly and validly issued and, based in part upon the representations of the
Lenders (and any assignee of any Note or Warrant) contained in this Agreement,
the offer, issue and sale of the Notes and Warrants are exempt from the
registration and prospectus requirements of the Securities Act of 1933 as
amended (the "1933 Act") and have been registered or qualified (or are exempt
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from registration or, qualification) under the registration, permit or
qualification requirements of California Corporate Securities Law of 1968, as
amended.
6.4 Governmental Consents. No consent, approval, qualification, order or
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authorization of, or filing with, any local, state, or federal governmental
authority is required on the part of the Company in connection with the
Company's valid execution, delivery, or performance of this Agreement, or the
offer, sale or issuance of the Notes and the Warrants by the Company, except
such filings as have been made prior to the Closing, any notices of sale
required to be filed with the Securities and Exchange Commission under
Regulation D of the 1933 Act, or such post-closing filings as may be required
under applicable state securities laws, which will be timely filed within the
applicable periods therefor, and any filings required in connection with the
perfection of any security interests.
7. Registration, Transfer and Exchange of Notes and Warrants.
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7.1 Register. The Company shall keep, at its sole cost and expense, books for
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the registration of the Notes as to both principal and interest, and the
registration of any transfer of the Notes and Warrants (the "Register").
Included in the Register shall be notations as to whether Notes have been
converted, accelerated or prepaid or otherwise paid or cancelled, and, in the
case of mutilated, destroyed, lost or stolen Notes or Warrants, whether such
Notes or Warrants have been replaced. The failure of the Company to make a
notation in the Register shall in no way affect the validity of any sale,
transfer or assignment of a Note or Warrants made in compliance with this
Agreement.
7.2 Transfer. Each Lender shall, upon compliance with the conditions to transfer
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set forth in this Agreement and the Loan Agreements, be entitled, to transfer
its Note or Warrant in any manner permitted by applicable law and to the
registration of such transfer by the Company in the name of such transferee or
transferees as shall be specified by the relevant Lender. In connection with any
such transfer and at all other times hereunder, such Lender shall be entitled to
surrender its Note or Warrant to the Company together with a written request for
the issuance of one or more new Notes or Warrants, specifying the denomination
or denominations thereof and, in the case of a transfer of a Note or Warrants,
the name and address of the new transferee or transferees. Promptly thereafter,
the Company shall issue a new Note or Warrant in the same form, in the same
aggregate principal amount as the Note or Warrant being surrendered, registered
in the name specified in the written request from such Lender. Each Note or
Warrant presented or surrendered for reissuance and registration of a new Note
or Warrant shall be endorsed, or, in the case of a transfer of a Note or
Warrants, shall be accompanied by a duly executed written instrument of transfer
in form satisfactory to the Company.
7.3 Reliance on Register. Any notations made by the Company in the Register
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pursuant to the terms of this Section shall, in the absence of manifest error,
be conclusive evidence as among the parties hereto of the matter described in
such notation, and the Company shall be entitled to rely on any information
contained in the Register. The Company may treat the person in whose name any
Note or Warrant is registered on the Register as the absolute owner of such Note
or Warrant for all purposes, and all payments in respect of the Notes or
Warrants made to any such person or upon such person's order shall satisfy and
discharge the liability of the Company on such Note or Warrant to the extent of
the sum or sums so paid.
7.4 Mutilated, Destroyed, Lost or Stolen Notes. In case any Note or Warrant
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shall become mutilated or defaced, or be destroyed, lost or stolen, the Company
shall execute and deliver a new Note or Warrant of like principal amount in
exchange and substitution for the mutilated or defaced Note or Warrant, or in
lieu of and in substitution for the destroyed, lost or stolen Note or Warrant.
In the case of a mutilated or defaced Note or Warrant, the relevant Lender shall
surrender such Note or Warrant to the Company. In the case of any destroyed,
lost or stolen Note or Warrant, such Lender shall furnish to the Company (i)
evidence to the Company's satisfaction of the destruction, loss or theft of such
Note or Warrant, and (ii) such security or indemnity as may be reasonably
required by the Company to hold the Company harmless.
8. Representations and Warranties of Lender. Each Lender, severally and
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not jointly, hereby represents and warrants to the Company, with respect to the
Note and Warrant purchased by such Lender and the Common Stock issuable in
connection therewith, that:
8.1 Purchase Entirely for Own Account. This Agreement is made with Lender in
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reliance upon Lender's representation to the Company, which by Lender's
execution of this Agreement, Lender hereby confirms, that the Note, the Warrant,
the shares of Common Stock issuable upon conversion of the Note and the shares
of Common Stock issuable upon exercise of the Warrant (collectively, the
"Securities") to be received by Lender will be acquired for investment for
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Lender's own account, not as a nominee or agent, and not with a view to the
resale or distribution of any part thereof, and that Lender has no present
intention of selling, granting any participation in, or otherwise distributing
the same. By executing this Agreement, Lender further represents that Lender
does not have any contract, undertaking, agreement or arrangement with any
person to sell, transfer or grant participation to such person or to any third
person, with respect to the Securities. Lender represents that it has full power
and authority to enter into this Agreement, the Note and the Warrant. Lender
represents that it is a resident of, or has its principal place of business in,
the state indicated in its address set forth on the signature page hereto.
8.2 Accredited Investor; Disclosure of Information. Lender is an "accredited
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investor" within the meaning of Rule 501 of Regulation D of the 1933 Act, as
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presently in effect. Lender has received sufficient information concerning the
Company to enable it to evaluate an investment in the Company. Lender has had an
opportunity to ask questions concerning the Company and the transactions
contemplated hereby.
8.3 Restricted Securities. Lender understands that the Securities are
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characterized as "restricted securities" under the federal securities laws
inasmuch as they are being acquired from the Company in a transaction not
involving a public offering and that under such laws and applicable regulations
such securities may be resold without registration under the 1933 Act, only in
certain limited circumstances. In this connection, Lender represents that it is
familiar with Rule 144 promulgated under the 1933 Act, as presently in effect,
and understands the resale limitations imposed thereby and by the 1933 Act.
9. State Securities Laws.
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9.1 California. THE SALE OF THE SECURITIES WHICH ARE THE SUBJECT OF THIS
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AGREEMENT HAS NOT BEEN QUALIFIED WITH THE COMMISSIONER OF CORPORATIONS OF THE
STATE OF CALIFORNIA AND THE ISSUANCE OF SUCH SECURITIES OR THE PAYMENT OR
RECEIPT OF ANY PART OF THE CONSIDERATION FOR SUCH SECURITIES PRIOR TO SUCH
QUALIFICATION IS UNLAWFUL, UNLESS THE SALE OF SECURITIES IS EXEMPT FROM
QUALIFICATION BY SECTION 25100, 25102 OR 25105 OF THE CALIFORNIA CORPORATIONS
CODE. THE RIGHTS OF ALL PARTIES TO THIS AGREEMENT ARE EXPRESSLY CONDITIONED UPON
SUCH QUALIFICATION BEING OBTAINED, UNLESS THE SALE IS SO EXEMPT.
10. Further Limitations on Disposition.
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10.1 Without in any way limiting the representations set forth above, each
Lender further agrees not to make any disposition of all or any portion of the
Securities unless and until each of the following have been satisfied:
10.2 There is then in effect a registration statement under the 1933 Act
covering such proposed disposition and such disposition is made in accordance
with such registration statement, or (i) such Lender shall have notified the
Company of the proposed disposition and shall have furnished the Company with a
detailed statement of the circumstances surrounding the proposed disposition,
and (ii) if requested by the Company, such Lender shall have furnished the
Company with an opinion of counsel, satisfactory to the Company, that such
disposition will not require registration of such Securities under the 0000 Xxx.
10.3 If such transfer is not being made pursuant to Rule 144 or a registration
statement under the 1933 Act, the transferee shall have agreed in writing, for
the benefit of the Company, to be bound by this Section 10, provided and to the
extent this Section 10 is then applicable.
10.4 Each Security may bear one or all of the following legends:
(a) "THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "ACT"). IT MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR
HYPOTHECATED OR OTHERWISE TRANSFERRED IN THE ABSENCE OF A REGISTRATION STATEMENT
IN EFFECT WITH RESPECT TO THIS SECURITY UNDER SUCH ACT OR AN OPINION OF COUNSEL
SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED OR UNLESS
SOLD PURSUANT TO RULE 144 OF SUCH ACT."
(b) Any legend required by the laws of the State of California or required by
applicable corporations or securities laws of any other state.
11. Conditions of Lender's Obligations. The obligations of each Lender
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under this Agreement are subject to the fulfillment before the Closing, of each
of the following conditions:
11.1 Performance. The Company shall have performed and complied with all
agreements, obligations and conditions contained in this Agreement that are
required to be performed or complied with by it on or before the Closing.
11.2 Qualification Under State Securities Laws. All registrations,
qualifications, permits and approvals required under applicable state securities
laws for the lawful execution and delivery of this agreement and the offer,
sale, issuance and delivery to Lender of the Note and Warrant shall have been
obtained.
11.3 Proceedings and Documents. All corporate and other proceedings and actions
taken in connection with the transactions contemplated hereby and all
certificates, agreements, instruments and documents mentioned herein or incident
to any such transaction shall be in form and substance reasonably satisfactory
to legal counsel for Lender.
12. Conditions of the Company's Obligations. The obligations of the
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Company to each and every Lender under this Agreement are subject to the
fulfillment on or before the Closing, of each of the following conditions
by each such Lender:
12.1 Payment of Purchase Price. Each Lender shall have delivered to the
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Company such Lender's Note Amount on or before the Closing.
12.2 Qualification Under State Securities Laws. All registrations,
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qualifications, permits and approvals required under applicable state securities
laws for the lawful execution and delivery of this agreement and the offer,
sale, issuance and delivery to Lender of the Note and the Warrant shall have
been obtained.
13. Miscellaneous.
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13.1 Obligations Several. The obligations of each Lender under the Loan
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Documents are several. The failure of any Lender to carry out its obligations
hereunder or thereunder shall not relieve any other Lender of any obligation
thereunder, nor shall any Lender be responsible for the obligations of, or any
action taken or omitted by, any other person hereunder or thereunder. Nothing
contained in any Loan Document shall be deemed to cause any Lender to be
considered a partner of or joint venturer with any other Lender, or the Company.
13.2 Sharing. The Company and the Lenders agree that all payments on account of
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the Notes shall be made ratably among the Lenders in accordance with the
proportion such Lender's outstanding Note bears to the aggregate amount of all
Notes outstanding. The Company agrees that it shall not, without the prior
consent of Lenders holding a majority of the Notes by outstanding principal
amount (the "Majority Lenders"), amend the provisions of any Note so as to: (i)
increase the rate of interest payable on such Note, (ii) reduce the Maturity
Date (as defined in the Notes) or (iii) reduce the conversion price for any
Note. The Lenders further agree that notwithstanding the date or time of
attachment or perfection of any Lender's security interest in any collateral for
the Loan Documents, the security interests of the Lenders in all assets and
property of Company pursuant to the Notes shall rank pari passu in terms of
priority with respect to Lenders only, and not any other creditor of the
Company.
13.3 Successors and Assigns. Except as otherwise provided herein, the terms and
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conditions of this Agreement shall inure to the benefit of and be binding upon
the respective permitted successors and assigns of the parties. Nothing in this
Agreement, express or implied, is intended to confer upon any party other than
the parties hereto or their respective successors and assigns any rights,
remedies, obligations, or liabilities under or by reason of this Agreement,
except as expressly provided in this Agreement.
13.4 Governing Law. The construction, validity and interpretation of this
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Agreement shall be governed by the laws of the State of California, without
regard to principles of conflicts or choice of law.
13.5 Counterparts. This Agreement may be executed in two or more counterparts,
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each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.
13.6 Finder's Fee. Each party represents that it neither is nor will be
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obligated for any finder's fee or commission in connection with the transactions
contemplated by this Agreement. Each Lender agrees to indemnify and to hold
harmless the Company from any liability for any commission or compensation in
the nature of a finder's fee (and the costs and expenses of defending against
such liability or asserted liability) for which such Lender or any of its
officers, partners, employees, or representatives is responsible. The Company
agrees to indemnify and to hold harmless each Lender from any liability for any
commission or compensation in the nature of a finder's fee (and the costs and
expenses of defending against such liability or asserted liability) for which
the Company or any of its officers, employees, or representatives is
responsible.
13.7 Expenses. Irrespective of whether the Closing is effected, the Company and
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each Lender shall pay their own costs and expenses incurred with respect to the
negotiation, execution, delivery and performance of this Agreement.
13.8 Amendments and Waivers. Any term of this Agreement may be amended and the
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observance of any term of this Agreement may be waived (either generally or in a
particular instance and either retroactively or prospectively), only with the
written consent of the Company and a Majority Lenders. Any amendment or waiver
effected in accordance with this paragraph shall be binding upon each holder of
any securities purchased under this Agreement at the time outstanding (including
securities into which such securities are convertible), each future holder of
all such securities, and the Company.
13.9 Severability. If one or more provisions of this Agreement are held to be
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unenforceable under applicable law, such provision shall be excluded from this
Agreement and the balance of the Agreement shall be interpreted as if such
provision were so excluded and shall be enforceable in accordance with its
terms.
* * * * *
IN WITNESS WHEREOF, the parties have executed this Agreement
as of the date first above written.
COMPANY: VIADOR INC.
By:
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Xxxxx Xxxxx,
Chief Financial Officer
Address: 0000 Xxxxxxxxxx Xx., Xxxxx 0000
Xxxxxxxx Xxxx, XX 00000
(Signature page to Convertible Note and Warrant Purchase Agreement)
LENDERS:
By:
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Name:
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Title:
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Address:
By:
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Name:
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Title:
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Address:
By:
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Name:
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Title:
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Address:
(Signature page to Convertible Note and Warrant Purchase Agreement)
SCHEDULE A
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Name of Lender Commitment Amount
Xxxxxx Xxxx $300,000
Xxxx Xxxxxxxxxx $100,000
Xxx Xxx $100,000
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TOTAL $500,000
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EXHIBIT A
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FORM OF CONVERTIBLE SECURED PROMISSORY NOTE
EXHIBIT 10.__
EXHIBIT B
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FORM OF WARRANT
