STANDBY CONVERTIBLE NOTE PURCHASE AGREEMENT by and among AXS-One Inc. and the parties named herein on Schedule 1, as Purchasers June 26, 2009
Exhibit
10.1
_____________________________________________________________________________
by and
among
AXS-One
Inc.
and
the
parties named herein on Schedule 1, as Purchasers
June 26,
2009
_____________________________________________________________________________
This STANDBY CONVERTIBLE NOTE PURCHASE
AGREEMENT (this “Agreement”) is dated as of
June 26, 2009, among AXS-One Inc., a Delaware corporation (the “Company”), and the purchasers
identified on Schedule
1 hereto (each a “Purchaser” and collectively
the “Purchasers”).
WHEREAS, subject to the terms and
conditions set forth in this Agreement and pursuant to Section 4(2) of the
Securities Act (as defined below), and Rule 506 promulgated thereunder, the
Company desires to issue and sell to the Purchasers, and the Purchasers,
severally and not jointly, desire to purchase from the Company an aggregate
principal amount of up to $250,000 of Series 2009 5% Secured Convertible
Promissory Notes (the “Series
2009 Notes”), convertible, under certain circumstances, at the election
of each holder into shares of common stock, $0.001 par value (the “Unify Common Stock”), of
Unify Corporation, a Delaware corporation (“Unify”), at a conversion
price of $3.00 per share, as more fully set forth herein.
NOW, THEREFORE, in consideration of
the mutual covenants contained in this Agreement, and for other good and
valuable consideration the receipt and adequacy of which are hereby
acknowledged, the Company and each Purchaser agree as follows:
ARTICLE
I
DEFINITIONS AND TERMS OF
NOTES
1.1 Definitions.
In addition to the terms defined
elsewhere in this Agreement, for all purposes of this Agreement, the following
terms have the meanings indicated in this Section 1.1:
“Affiliate” means any Person
that, directly or indirectly through one or more intermediaries, controls or is
controlled by or is under common control with a Person, as such terms are used
in and construed under Rule 144. With respect to a Purchaser, any investment
fund or managed account that is managed on a discretionary basis by the same
investment manager as such Purchaser shall be deemed to be an Affiliate of such
Purchaser.
“Agent” shall have the meaning
ascribed to such term in the Security Agreement.
“Agreement” shall have the
meaning ascribed to such term in the Preamble.
“Blue Sky Laws” shall have the
meaning ascribed to such term in Section 3.1(e)(ii).
“Business Day” means any day
except Saturday, Sunday and any day which shall be a federal legal holiday or a
day on which banking institutions in the State of New Jersey are authorized or
required by law or other governmental action to close.
“Closing” shall have the
meaning ascribed to such term in Section 2.1(a).
“Closing Date” shall have the
meaning ascribed to such term in Section 2.1(a).
“Commission” means the
Securities and Exchange Commission.
“Common Stock” means the
common stock of the Company, $0.01 par value per share, and any securities into
which such common stock may hereafter be reclassified.
“Company” shall have the
meaning ascribed to such term in the Preamble.
“Company IP” shall have the
meaning ascribed to such term in Section 3.1(j)(i).
“Contemplated Transactions”
shall have the meaning ascribed to such term in Section 3.1(a)(ii).
“Disclosure Schedules” means
the Disclosure Schedules concurrently delivered herewith.
“Evaluation Date” shall have
the meaning ascribed to such term in Section 3.1(o).
“Exchange Act” means the
Securities Exchange Act of 1934, as amended.
“Financial Statements” shall
have the meaning ascribed to such term in Section 3.1(g)(iv).
“First Security Agreement
Amendment” means the Security Agreement Amendment, dated as of November
16, 2007, among the Company, each of the Prior Purchasers and certain other
parties to the Prior Security Agreement.
2
“Fourth Security Agreement
Amendment” means the Fourth Security Agreement Amendment among the
Company, each of the Purchasers and certain other parties to the Prior Security
Agreement, the First Security Agreement Amendment, the Second Security Agreement
Amendment and the Third Security Agreement Amendment, in the form of Exhibit B
hereto.
“GAAP” shall have the meaning
ascribed to such term in Section 3.1(g)(v).
“Governmental Body” shall have the meaning
ascribed to such term in Section 3.1(e)(ii).
“Indemnified Party” shall have
the meaning ascribed to such term in Section 5.3(a).
“Indemnifying Party” shall
have the meaning ascribed to such term in Section 5.3(a).
“Investor Rights Agreement”
means the Investor Rights Agreement between Unify and each of the Purchasers and
other parties thereto, in the form of Exhibit A
hereto.
“July 2008 Purchase Agreement”
means that certain Convertible Note and Warrant Purchase Agreement, dated as of
July 24, 2008, by and among the Company and the other parties set forth on
Schedule 1 thereto as purchasers.
“Legal Requirement” shall have
the meaning ascribed to such term in Section 3.1(f).
“Lien” means a lien, charge,
security interest, encumbrance, right of first refusal or other restriction,
except for a lien for current taxes not yet due and payable and a minor
imperfection of title, if any, not material in nature or amount and not
materially detracting from the value or impairing the use of the property
subject thereto or impairing the operations or proposed operations of the
Company.
“Material Adverse Effect”
shall have the meaning ascribed to such term in Section 3.1(a)(i).
“Material Agreements” shall
have the meaning ascribed to such term in Section 3.1(e)(i).
“Material Permits” shall have
the meaning ascribed to such term in Section 3.1(s).
“May 2007 Purchase Agreement”
means that certain Convertible Note and Warrant Purchase Agreement, dated as of
May 29, 2007, by and among the Company and the other parties set forth on
Schedule 1 thereto as purchasers.
“November 2007 Purchase
Agreement” means that certain Convertible Note and Warrant Purchase
Agreement, dated as of November 13, 2007, by and among the Company and the other
parties set forth on Schedule 1 thereto as purchasers.
“October 2008 Purchase
Agreement” means that certain Convertible Note and Warrant Purchase
Agreement, dated as of October 30, 2008, by and among the Company and the other
parties set forth on Schedule 1 thereto as purchasers.
“Person” means an individual
or corporation, partnership, trust, incorporated or unincorporated association,
joint venture, limited liability company, joint stock company, government (or an
agency or subdivision thereof) or other entity of any kind.
“Prior Notes” means the Series
A Secured Convertible Promissory Notes and Series B Secured Convertible
Promissory Notes issued pursuant to the May 2007 Purchase Agreement, the Series
C Secured Convertible Promissory Notes issued pursuant to the November 2007
Purchase Agreement, the Series D Secured Convertible Promissory Notes issued
pursuant to the July 2008 Purchase Agreement and the Series E Secured
Convertible Promissory Notes issued pursuant to the October 2008 Purchase
Agreement.
“Prior Purchase Agreements”
means the May 2007 Purchase Agreement, the November 2007 Purchase Agreement, the
July 2008 Purchase Agreement and the October 2008 Purchase
Agreement.
“Prior Purchaser” means a
purchaser of Prior Notes, in such capacity, pursuant to the Prior Purchase
Agreements or any of them.
“Prior Security Agreement”
means the Security Agreement, dated as of May 29, 2007, among the Company, the
Prior Purchasers and certain other parties as set forth therein, as amended
pursuant to the First Security Agreement Amendment, the Second Security
Agreement Amendment, the Third Security Agreement Amendment and the Fourth
Security Agreement Amendment.
3
“Purchaser” shall have the
meaning ascribed to such term in the Preamble.
“Rule 144” means Rule 144
promulgated by the Commission pursuant to the Securities Act, as such Rule may
be amended from time to time, or any similar rule or regulation hereafter
adopted by the Commission having substantially the same effect as such
Rule.
“Sand Hill Agreement” means
the Financing Agreement, dated as of May 22, 2008, as amended from time to time,
between the Company and Sand Hill Finance, LLC.
“SEC Documents” shall have the
meaning ascribed to such term in Section 3.1(g)(i).
“Second Security Agreement
Amendment” means the Second Security Agreement Amendment, dated as of
July 24, 2008, among the Company, each of the Prior Purchasers and certain other
parties to the Prior Security Agreement and the First Security Agreement
Amendment.
“Securities” means the Series
2009 Notes and the Unify Common Stock.
“Securities Act” means the
Securities Act of 1933, as amended.
“Security Agreement” means the
Security Agreement between the Company and each of the Purchasers, in the form
of Exhibit F
hereto.
“Series 2009 Notes” shall have
the meaning ascribed to such term in the recitals hereto.
“Subordination Agreement”
means the Third Amended and Restated Subordination Agreement between the Agent,
acting on behalf of the Purchasers and the Prior Purchasers, and Sand Hill
Finance, LLC, in the form of Exhibit C
hereto.
“Subscription Amount” means,
as to each Purchaser, the amount set forth beside such Purchaser’s name on Schedule 1 hereto, in
United States dollars.
“Subsidiary” means, with
respect to any entity, any corporation or other organization of which securities
or other ownership interest having ordinary voting power to elect a majority of
the board of directors or other persons performing similar functions, are
directly or indirectly owned by such entity or of which such entity is a partner
or is, directly or indirectly, the beneficial owner of 50% or more of any class
of equity securities or equivalent profit participation interests.
“Third Security Agreement
Amendment” means the Third Security Agreement Amendment, dated as of
October 30, 2008, among the Company, each of the Prior Purchasers and certain
other parties to the Prior Security Agreement, the First Security Agreement
Amendment and the Second Security Amendment.
“Trading Day” means (i) a day
on which the Common Stock is traded on a Trading Market, (ii) if the Common
Stock is not listed on a Trading Market, a day on which the Common Stock is
traded on the over-the-counter market, as reported by the OTC Bulletin Board, or
(iii) if the Common Stock is not quoted on the OTC Bulletin Board, a day on
which the Common Stock is quoted in the over-the-counter market as reported by
Pink Sheets LLC (or any similar organization or agency succeeding to its
functions of reporting prices); provided, that in the event that the Common
Stock is not listed or quoted as set forth in (i), (ii) and (iii) hereof, then
Trading Day shall mean a Business Day.
“Trading Market” means the
following markets or exchanges on which the Common Stock is listed or quoted for
trading on the date in question (or any successors thereto): the NYSE
Amex, the New York Stock Exchange, the Nasdaq Global Market or the Nasdaq
Capital Market.
“Transaction Documents” means
this Agreement, the Series 2009 Notes, the Security Agreement, the Fourth
Security Agreement Amendment, the Subordination Agreement and any other
documents or agreements executed in connection with the transactions
contemplated hereunder.
“Unify Common Stock” shall
have the meaning ascribed to such term in the recitals hereto.
1.2 Terms of
the Series 2009 Notes. The terms and
provisions of the Series 2009 Notes are set forth in the form of Series 2009 5%
Secured Convertible Promissory Note, attached hereto as Exhibit
D.
4
ARTICLE
II
PURCHASE AND
SALE
2.1 Closing.
(a) The
closing of the transactions contemplated under this Agreement (the “Closing”) shall take place
upon the execution of this Agreement by the Company and the Purchasers
immediately following satisfaction or waiver of the conditions set forth in
Sections 2.2 and 2.3 (other than those conditions which by their terms are not
to be satisfied or waived until the Closing), at the offices of Xxxxxx and Xxxx
LLP, 000 Xxxxxxxx Xxxxxx, Xxxxxxxx, XX 00000 (or remotely via exchange of
documents and signatures) or at such other place or day as may be mutually
acceptable to the Purchasers and the Company. The date on which the
Closing occurs is the “Closing
Date”.
(b) At
the Closing, the Purchasers shall purchase, severally and not jointly, and the
Company shall issue and sell, an aggregate maximum principal amount of up to
$250,000 of Series 2009 Notes. Each Purchaser shall purchase from the
Company, and the Company shall issue and sell to each Purchaser, an amount of
Series 2009 Notes in such aggregate principal amount as is set forth next to
such Purchaser’s name on Schedule
1. The Company shall have the right to borrow funds from the
Purchasers from time to time as provided in the Series 2009 Notes.
(c) As
an inducement to the Purchasers to purchase Series 2009 Notes, the Company
agrees to pay a commitment fee on the Closing Date to each Purchaser in an
amount equal to 20% of each Purchaser’s Subscription Amount.
2.2 Conditions
to Obligations of Purchasers to Effect the Closing.
The obligations of each Purchaser to
effect the Closing and the transactions contemplated by this Agreement shall be
subject to the satisfaction at or prior to the Closing of each of the following
conditions, any of which may be waived, in writing, by such
Purchaser:
(a) At
the Closing (unless otherwise specified below) the Company shall deliver or
cause to be delivered to each Purchaser the following:
(i) this Agreement, duly executed by
the Company;
(ii) an original Series 2009 Note for
such Purchaser in the maximum principal amount that is set forth on Schedule 1 hereto
next to such Purchaser’s name, duly executed by the Company;
(iii) the Investor Rights Agreement,
duly executed by Unify;
(iv) the Security Agreement, duly
executed by the Company
(v) the Fourth Security Agreement
Amendment, duly executed by the Company and each of the parties other than
Purchasers required to execute such agreement in order for it to constitute a
valid amendment of the Security Agreement;
(vi) a legal opinion of Xxxxxx and
Xxxx LLP, counsel
to the Company, in the form of Exhibit E
hereto;
(vii) the Subordination Agreement,
duly executed by Sand Hill Finance, LLC and the Company which shall include,
among other things, Sand Hill Finance, LLC’s consent to the Contemplated
Transactions;
(viii) a certificate of the Secretary
of the Company, attaching a true copy of the certificate of incorporation and
bylaws of the Company, as amended to the Closing Date, and attaching true and
complete copies of the resolutions of the Board of Directors of the Company
authorizing the execution, delivery and performance of this Agreement and the
other Transaction Documents;
(ix) a waiver of preemptive rights
duly executed by each of the Prior Purchasers under the Prior Purchase
Agreements pursuant to which such Prior Purchasers waive their preemptive rights
with respect to the Contemplated Transactions; and
(x)
amendments to the Prior Notes, duly executed by the Company.
(b) All
representations and warranties of the Company contained in the Transaction
Documents shall remain true and correct in all material respects as of the
Closing Date as though such representations and warranties were made on such
date (except those representations and warranties that address matters only as
of a particular date will remain true and correct as of such date).
5
(c) As
of the Closing Date, there shall have been no Material Adverse Effect with
respect to the Company since the date hereof.
(d) From
the date hereof to the Closing Date, trading in the Common Stock shall not have
been suspended by the Commission (except for any suspension of trading of
limited duration agreed to by the Company, which suspension shall be terminated
prior to the Closing), and, at any time prior to the Closing Date, trading in
securities generally as reported by Bloomberg Financial Markets shall not have
been suspended or limited, or minimum prices shall not have been established on
securities whose trades are reported by such service, or on any Trading Market,
nor shall a banking moratorium have been declared either by the United States or
New Jersey State authorities.
2.3. Conditions
to Obligations of the Company to Effect the Closing.
The obligations of the Company to
effect the Closing and the transactions contemplated by this Agreement shall be
subject to the satisfaction at or prior to the Closing of each of the following
conditions, any of which may be waived, in writing, by the Company:
(a) At
the Closing, each Purchaser shall deliver or cause to be delivered to the
Company the following:
(i) this Agreement, duly executed by
such Purchaser;
(ii) such Purchaser’s Subscription
Amount, by wire transfer of immediately available funds;
(iii) an original Series 2009 Note
for such Purchaser in the maximum principal amount that is set forth on Schedule 1 hereto
next to such Purchaser’s name, countersigned by such Purchaser;
(iv) the Investor Rights Agreement,
duly executed by such Purchaser;
(v) the Security Agreement, duly
executed by such Purchaser;
(vi) the Fourth Security Agreement
Amendment, duly executed by such Purchaser; and
(vii) the Subordination Agreement,
duly executed by Sand Hill Finance, LLC and the Agent;
(b) All
representations and warranties of each of the Purchasers contained herein shall
remain true and correct as of the Closing Date as though such representations
and warranties were made on such date.
(c) The
Company shall have received the Fourth Security Agreement Amendment, duly
executed by each party other than the Purchasers or the Company to execute such
agreement in order for it to constitute a valid amendment of the Security
Agreement.
(d) The
Company shall have received a waiver of preemptive rights duly executed by each
of the Prior Purchasers under the Prior Purchase Agreements pursuant to which
such Prior Purchasers waive their preemptive rights with respect to the
Contemplated Transactions.
(e) The
Company shall have received amendments to the Prior Notes duly executed by each
of the holders of the Prior Notes.
6
ARTICLE
III
REPRESENTATIONS AND
WARRANTIES
3.1 Representations
and Warranties of the Company. Except as set forth under the
corresponding section of the Disclosure Schedules delivered concurrently
herewith and except as provided in the SEC Documents, the Company hereby makes
the following representations and warranties as of the date hereof and as of the
Closing Date to each Purchaser:
(a) Corporate Organization;
Authority; Due Authorization.
(i) The
Company (A) is a corporation duly organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation, (B) has the
corporate power and authority to own or lease its properties as and in the
places where its business is now conducted and to carry on its business as now
conducted and (C) is duly qualified as a foreign corporation authorized to do
business in every jurisdiction where the failure to so qualify, individually or
in the aggregate, would have a material adverse effect on the operations,
assets, liabilities, financial condition or business of the Company and its
Subsidiaries taken as a whole (a “Material Adverse
Effect”). Set forth in Schedule 3.1(a) is a
complete and correct list of all Subsidiaries. Each Subsidiary is
duly incorporated, validly existing and in good standing under the laws of its
jurisdiction of incorporation and is qualified to do business as a foreign
corporation in each jurisdiction in which qualification is required, except
where failure to so qualify would not have, individually or in the aggregate, a
Material Adverse Effect.
(ii) The
Company (A) has the requisite corporate power and authority to execute, deliver
and perform this Agreement and the other Transaction Documents to which it is a
party and to incur the obligations herein and therein and (B) has been
authorized by all necessary corporate action to execute, deliver and perform
this Agreement and the other Transaction Documents to which it is a party and to
consummate the transactions contemplated hereby and thereby (the “Contemplated
Transactions”). This Agreement is and each of the other
Transaction Documents will be on the Closing Date a valid and binding obligation
of the Company enforceable against the Company in accordance with its terms
except as limited by applicable bankruptcy, reorganization, insolvency,
moratorium or similar laws affecting the enforcement of creditors’ rights and
the availability of equitable remedies (regardless of whether such
enforceability is considered in a proceeding at law or equity).
(b) Capitalization.
(i) As of the
date hereof, the authorized capital stock of the Company consisted of (i)
125,000,000 shares of Common Stock, of which 41,133,925 shares of Common Stock
were outstanding as of April 3, 2009, and (ii) 5,000,000 shares of Preferred
Stock, $0.01 par value, of which no shares were outstanding. All
outstanding shares of capital stock of the Company were issued in compliance
with all applicable federal securities laws, and the issuance of such shares was
duly authorized by all necessary corporate action on the part of the
Company. Except as contemplated by this Agreement or as set forth in
the SEC Documents or in Schedule 3.1(b),
there are (A) no outstanding subscriptions, warrants, options, conversion
privileges or other rights or agreements obligating the Company to purchase or
otherwise acquire or issue any shares of capital stock of the Company (or shares
reserved for such purpose), (B) no preemptive rights contained in the Company’s
certificate of incorporation, as amended, the bylaws of the Company or contracts
to which the Company is a party or rights of first refusal with respect to the
issuance of additional shares of capital stock of the Company other than such
rights as have been duly waived as of the date hereof and (C) no commitments or
understandings (oral or written) of the Company to issue any shares, warrants,
options or other rights to acquire any equity securities of the
Company. To the Company’s knowledge, except as set forth in Schedule 3.1(b), none
of the shares of Common Stock are subject to any stockholders’ agreement, voting
trust agreement or similar arrangement or understanding. Except as
set forth in the SEC Documents or in Schedule 3.1(b), the
Company has no outstanding bonds, debentures, notes or other obligations the
holders of which have the right to vote (or which are convertible into or
exercisable for securities having the right to vote) with the stockholders of
the Company on any matter.
(ii) With
respect to each Subsidiary, except as set forth in Schedule 3.1(b), (i)
all the issued and outstanding shares of each Subsidiary’s capital stock have
been duly authorized and validly issued, are fully paid and nonassessable, have
been issued in compliance with applicable securities laws and were not issued in
violation of or subject to any preemptive rights or other rights to subscribe
for or purchase securities and (ii) there are no outstanding options to
purchase, or any preemptive rights or other rights to subscribe for or to
purchase, any securities or obligations convertible into, or any contracts or
commitments to issue or sell, shares of any Subsidiary’s capital stock or any
such options, rights, convertible securities or obligations. Except
as disclosed in the SEC Documents or Schedule 3.1(b), the
Company beneficially owns 100% of the outstanding equity securities of each
Subsidiary.
(c) Private
Offering. Neither the Company nor anyone acting on its behalf
has within the last 12 months issued, sold or offered any security of the
Company to any Person under circumstances that would cause the issuance and sale
of the Series 2009 Notes, as contemplated by this Agreement, to be subject to
the registration requirements of Section 5 of the Securities Act. The
Company agrees that neither the Company nor anyone acting on its behalf will
offer the Series 2009 Notes or any part thereof or any similar securities for
issuance or sale to, or solicit any offer to acquire any of the same from,
anyone so as to make the issuance and sale of the Series 2009 Notes subject to
the registration requirements of Section 5 of the Securities Act.
(d) Brokers and Finders’
Fees. No brokerage or finder’s fees or commissions are or will
be payable by the Company to any broker, financial advisor or consultant,
finder, placement agent, investment banker, bank or other Person with respect to
the transactions contemplated by this Agreement. The Purchasers shall
have no obligation with respect to any fees or with respect to any claims made
by or on behalf of other Persons for fees of a type contemplated in this Section
that may be due in connection with the transactions contemplated by this
Agreement.
7
(e) No Conflict; Required
Filings and Consents.
(i) The
execution, delivery and performance of this Agreement and the other Transaction
Documents by the Company do not, and the consummation by the Company of the
Contemplated Transactions will not, (A) conflict with or violate the certificate
of incorporation or the bylaws of the Company or its Subsidiaries, (B) conflict
with or violate any law, rule, regulation, order, judgment or decree applicable
to the Company or its Subsidiaries or by which any property or asset of the
Company or its Subsidiaries is bound or affected or (C) result in any breach of
or constitute a default (or an event which with notice or lapse of time or both
would become a default) under, result in the loss of a material benefit under or
give to others any right of purchase or sale, or any right of termination,
amendment, acceleration, increased payments or cancellation of, or result in the
creation of a Lien on any property or asset of the Company or of any of its
Subsidiaries pursuant to, any material note, bond, mortgage, indenture,
contract, agreement, lease, license, permit, franchise or other instrument or
obligation to which the Company or any of its Subsidiaries is a party or by
which the Company or of any of its Subsidiaries is bound or affected (the “Material
Agreements”).
(ii) The
execution and delivery of this Agreement and the other Transaction Documents by
the Company do not, and the performance of this Agreement and the other
Transaction Documents and the consummation by the Company of the Contemplated
Transactions will not, require, on the part or in respect of the Company, any
consent, approval, authorization or permit of, or filing with or notification
to, any Governmental Body (as hereinafter defined) except for the filing of a
Form D with the Commission and applicable requirements, if any, of the Exchange
Act or any state securities or “blue sky” laws (collectively, “Blue Sky Laws”), and any
approval required by applicable rules of the markets in which the Company’s
securities are traded. For purposes of this Agreement, “Governmental Body” shall mean
any: (A) nation, state, commonwealth, province, territory, county,
municipality, district or other jurisdiction of any nature; (B) federal, state,
local, municipal, foreign or other government; or (C) governmental or
quasi-governmental authority of any nature (including any governmental division,
department, agency, commission, instrumentality, official, organization, unit,
body or entity and any court or other tribunal).
(f) Compliance. Except
as set forth in the SEC Documents or in Schedule 3.1(f),
neither the Company nor any Subsidiary is in conflict with, or in default or
violation of (A) any law, rule, regulation, order, judgment or decree applicable
to the Company or such Subsidiary or by which any property or asset of the
Company or such Subsidiary is bound or affected (“Legal Requirement”), or (B)
any Material Agreement, in each case except for any such conflicts, defaults or
violations that would not, individually or in the aggregate, have a Material
Adverse Effect. Neither the Company nor any Subsidiary has received any written
notice or other communication from any Governmental Body regarding any actual or
possible violation of, or failure to comply with, any Legal Requirement, except
any such violations or failures that would not, individually or in the
aggregate, have a Material Adverse Effect.
(g) SEC Documents; Financial
Statements.
(i) The
information contained in the following documents did not, as of the date of the
applicable document, include any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances in which they were made,
not misleading, as of their respective filing dates or, if amended, as so
amended (the following documents, collectively, the “SEC Documents”), provided
that the representation in this sentence shall not apply to any misstatement or
omission in any SEC Document filed prior to the date of this Agreement which was
superseded by a subsequent SEC Document filed prior to the date of this
Agreement: (A) the Company’s Annual Report on Form 10-K for the year
ended December 31, 2008, as amended by Form 10-K/A Amendment No. 1 thereto; (B)
the Company’s definitive Proxy Statement with respect to its 2008 Annual Meeting
of Stockholders, filed with the Commission on April 9, 2008; (C) the Company’s
Quarterly Report on Form 10-Q for the period ended March 31, 2009; and (D) the
Company’s Current Reports on Form 8-K filed February 2, 2009, February 6, 2009,
April 14, 2009, April 21, 2009, May 12, 2009, May 13, 2009 and May 29,
2009.
(ii) In
addition, as of the date of this Agreement, the Disclosure Schedules, when read
together with the SEC Documents and the information, qualifications and
exceptions contained in this Agreement, do not include any untrue statement of a
material fact.
(iii) The
Company has filed all forms, reports and documents required to be filed by it
with the Commission for the 12 months preceding the date of this Agreement,
including without limitation the SEC Documents. As of their
respective dates, the SEC Documents filed prior to the date hereof complied as
to form in all material respects with the applicable requirements of the
Securities Act, the Exchange Act and the rules and regulations
thereunder.
(iv) The
Company’s Annual Report on Form 10-K for the year ended December 31, 2008,
includes consolidated balance sheets as of December 31, 2007 and 2008 and
consolidated statements of income and cash flows for the one year periods then
ended (collectively, the “Financial
Statements”).
(v) The
Financial Statements (including the related notes and schedules thereto) have
been prepared in accordance with generally accepted accounting principles in the
United States, applied on a consistent basis during the periods involved (“GAAP”), except as may be
otherwise specified in such Financial Statements or the notes thereto and except
that unaudited financial statements may not contain all footnotes required by
GAAP, subject to normal year-end audit adjustments. The Financial
Statements (including the related notes and schedules thereto) fairly present in
all material respects the consolidated financial position, the results of
operations, retained earnings or cash flows, as the case may be, of the Company
for the periods set forth therein (subject, in the case of unaudited statements,
to normal year-end audit adjustments that would not be material in amount or
effect), in each case in accordance with GAAP, consistently applied during the
periods involved, except as may be noted therein.
(h) Litigation. Except
as set forth in the SEC Documents or in Schedule 3.1(h),
there are no claims, actions, suits, investigations, inquiries or proceedings
pending against the Company or any of its Subsidiaries or, to the knowledge of
the Company, threatened against the Company or any of its Subsidiaries, at law
or in equity, or before or by any court, tribunal, arbitrator, mediator or any
federal or state commission, board, bureau, agency or instrumentality, that,
individually or in the aggregate, would reasonably be expected to have a
Material Adverse Effect. Except as set forth in the SEC Documents or
in Schedule
3.1(h), neither the Company nor any of its Subsidiaries is a party to or
subject to the provisions of any order, writ, injunction, judgment or decree of
any court or government agency or instrumentality that, individually or in the
aggregate, would reasonably be expected to have a Material Adverse
Effect.
8
(i) Absence of Certain
Changes. Except as specifically contemplated by this Agreement
or as set forth in Schedule 3.1(i) or in
the SEC Documents, since December 31, 2008, there has not been (a) any Material
Adverse Effect; (b) any dividends or other distribution of assets to
stockholders of the Company; (c) any acquisition (by merger, consolidation,
acquisition of stock and/or assets or otherwise) of any Person by the Company;
or (d) any transactions, other than in the ordinary course of business,
consistent in all material respects with past practices, with any of its
officers, directors or principal stockholders or any of their respective
Affiliates.
(j) Intellectual
Property.
(i) The
Company and its Subsidiaries own, or have the right to use, sell or license all
intellectual property reasonably required for the conduct of their respective
businesses as presently conducted (collectively, the “Company IP”) except for any
failure to own or have the right to use, sell or license the Company IP that
would not have a Material Adverse Effect.
(ii) The
execution, delivery and performance of this Agreement and the consummation of
the transactions contemplated hereby will not constitute a breach of any
instrument or agreement governing any Company IP, will not cause the forfeiture
or termination or give rise to a right of forfeiture or termination of any
Company IP or impair the right of Company and its Subsidiaries to use, sell or
license any Company IP.
(iii) (A) None
of the manufacture, marketing, license, sale and use of any product currently
licensed or sold by the Company or any of its Subsidiaries (x) violates any
license or agreement between the Company or any of its Subsidiaries and any
third party, (y) to the knowledge of the Company, infringes any patent of any
other party; or (z) to the knowledge of the Company, infringes any copyright,
trademark or trade secret of any other party, and (B) there is no pending or, to
the knowledge of the Company, threatened claim or litigation contesting the
validity, ownership or right to use, sell, license or dispose of any Company
IP.
(k) No Adverse
Actions. Except as set forth in the SEC Documents or in Schedule 3.1(k),
there is no existing, pending or, to the knowledge of the Company, threatened
termination, cancellation, limitation, modification or change in the business
relationship of the Company or any of its Subsidiaries with any supplier,
customer or other Person except such as would not reasonably be expected,
individually or in the aggregate, to have a Material Adverse
Effect.
(l) Corporate
Documents. The Company’s certificate of incorporation and
bylaws, each as amended to date, which have been requested and previously
provided to the Purchasers are true, correct and complete and contain all
amendments thereto.
(m) Insurance. The
Company and its Subsidiaries are insured by insurers of recognized financial
responsibility against such losses and risks and in such amounts as are prudent
and customary in the businesses in which the Company and the Subsidiaries are
engaged. Neither the Company nor any Subsidiary has any reason to
believe that it will not be able to renew its existing insurance coverage as and
when such coverage expires or to obtain similar coverage from similar insurers
as may be necessary to continue its business without a significant increase in
cost.
(n) Transactions with Affiliates
and Employees. Except as set forth in the SEC Documents, none
of the officers or directors of the Company and, to the Company’s knowledge,
none of the employees of the Company is presently a party to any transaction
with the Company or any Subsidiary (other than for services as employees,
officers and directors), including any contract or other arrangement providing
for the furnishing of services to or by, proving for rental of real or personal
property to or from, or otherwise requiring payments to or from any officer,
director or such employee or, to the Company’s knowledge, any entity in which
any officer, director or any such employee has a substantial interest or is an
officer, director, trustee or partner, in each case in excess of $100,000, other
than (i) for payment of salary or consulting fees for services rendered, (ii)
reimbursement for expenses incurred on behalf of the Company or the Subsidiaries
or (iii) for other employee benefits, including stock option or restricted stock
agreements under any stock option plan of the Company.
(o) Xxxxxxxx-Xxxxx; Internal
Accounting Controls . The Company is in material compliance with all
provisions of the Xxxxxxxx-Xxxxx Act of 2002 which are applicable to it as of
the Closing Date. The Company and the Subsidiaries maintain a system of
internal accounting controls sufficient to provide reasonable assurance that (i)
transactions are executed in accordance with management’s general or specific
authorizations, (ii) transactions are recorded as necessary to permit
preparation of financial statements in conformity with GAAP and to maintain
asset accountability, (iii) access to assets is permitted only in accordance
with management’s general or specific authorization and (iv) the recorded
accountability for assets is compared with the existing assets at reasonable
intervals and appropriate action is taken with respect to any differences. The
Company has established disclosure controls and procedures (as defined in
Exchange Act Rules 13a-15(e) and 15d-15(e)) for the Company and designed such
disclosure controls and procedures to ensure that information required to be
disclosed by the Company in the reports it files or submits under the Exchange
Act is recorded, processed, summarized and reported, within the time periods
specified in the Commission’s rules and forms. The Company’s certifying officers
have evaluated the effectiveness of the Company’s disclosure controls and
procedures as of the end of the period covered by the Company’s most recently
filed periodic report under the Exchange Act (such date, the “Evaluation Date”). The
Company presented in its most recently filed periodic report under the Exchange
Act the conclusions of the certifying officers about the effectiveness of the
disclosure controls and procedures based on their evaluations as of the
Evaluation Date. Since the Evaluation Date, there have been no changes in the
Company’s internal control over financial reporting (as such term is defined in
the Exchange Act) that has materially affected, or is reasonably likely to
materially affect, the Company’s internal control over financial
reporting.
9
(p) Application of Takeover
Protections . The Company and its Board of Directors have taken all
necessary action, if any, in order to render inapplicable any control share
acquisition, business combination, poison pill (including any distribution under
a rights agreement) or other similar anti-takeover provision under the Company’s
certificate of incorporation (or similar charter documents) or the laws of its
state of incorporation that is or could become applicable to the Purchasers as a
result of the Purchasers and the Company fulfilling their obligations or
exercising their rights under the Transaction Documents, including without
limitation as a result of the Company’s issuance of the Series 2009 Notes and
the Purchasers’ ownership thereof.
(q) No Other
Representations. The Company acknowledges and agrees that no
Purchaser makes or has made any representations or warranties with respect to
the Contemplated Transactions other than those specifically set forth in Section
3.2 hereof.
(r) Acknowledgement Regarding
Purchasers’ Trading Activity.
Anything in this Agreement or elsewhere herein to the contrary notwithstanding,
it is understood and acknowledged by the Company that none of the Purchasers
have been asked to agree, nor has any Purchaser agreed, to desist from
purchasing or selling, long and/or short, securities of the Company, or
“derivative” securities based on securities issued by the Company or to hold the
Series 2009 Notes for any specified term. The Company further
understands and acknowledges that (i) one or more Purchasers may engage in
hedging activities at various times during the period that the Series 2009 Notes
are outstanding and (ii) such hedging activities (if any) could reduce the value
of the existing stockholders’ equity interests in the Company at and after the
time that the hedging activities are being conducted. The Company
acknowledges that such aforementioned hedging activities do not constitute a
breach of any of the Transaction Documents.
(s) Regulatory Permits.
The Company and the Subsidiaries possess all certificates, authorizations and
permits issued by the appropriate federal, state, local or foreign regulatory
authorities necessary to conduct their respective businesses as described in the
SEC Documents, except where the failure to possess such permits could not have
or reasonably be expected to result in a Material Adverse Effect (“Material Permits”), and
neither the Company nor any Subsidiary has received any notice of proceedings
relating to the revocation or modification of any Material Permit.
(t) Title to Assets.
Except as set forth in Schedule 3.1(t), the Company and
the Subsidiaries have good and marketable title in fee simple to all real
property owned by them that is material to the business of the Company and the
Subsidiaries and good and marketable title in all personal property owned by
them that is material to the business of the Company and the Subsidiaries, in
each case free and clear of all Liens, except for Liens as do not materially
affect the value of such property and do not materially interfere with the use
made and proposed to be made of such property by the Company and the
Subsidiaries and Liens for the payment of federal, state or other taxes, the
payment of which is neither delinquent nor subject to penalties. Any real
property and facilities held under lease by the Company and the Subsidiaries are
held by them under valid, subsisting and enforceable leases with which the
Company and the Subsidiaries are in compliance.
(u) Disclosure. The
Transaction Documents, and the exhibits and schedules attached thereto, when
taken as a whole, do not contain any untrue statement of a material fact or omit
to state a material fact necessary to make the statements contained therein not
misleading in light of the circumstances under which they were
made.
3.2 Representations and
Warranties of the Purchasers.
Each Purchaser hereby, for itself and
for no other Purchaser, represents and warrants as of the date hereof and as of
the Closing Date to the Company as follows:
(a) Organization; Authority;
Enforceability. Such Purchaser (other than individuals) is an entity duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its organization with full power and authority to enter into and
to consummate the transactions contemplated by the Transaction Documents and
otherwise to carry out its obligations thereunder. The execution, delivery and
performance by such Purchaser of the transactions contemplated by this Agreement
have been duly authorized by all necessary corporate or similar action on the
part of such Purchaser. Each Transaction Document to which it is a party has
been duly executed by such Purchaser, and when delivered by such Purchaser in
accordance with the terms hereof, will constitute the valid and legally binding
obligation of such Purchaser, enforceable against it in accordance with its
terms, subject to laws of general application relating to bankruptcy,
insolvency, reorganization, moratorium or other similar laws affecting
creditors’ rights generally and rules of law governing specific performance,
injunctive relief, or other equitable remedies.
(b) General Solicitation.
Such Purchaser is not purchasing the Series 2009 Notes as a result of any
advertisement, article, notice or other communication regarding the Series 2009
Notes published in any newspaper, magazine or similar media or broadcast over
television or radio or presented at any seminar or any other general
solicitation or general advertisement.
(c) No Public Sale or
Distribution. Such Purchaser is acquiring the Series 2009 Notes for its
own account and not with a view towards, or for resale in connection with, the
public sale or distribution thereof; provided, however, that by
making the representations herein, such Purchaser does not agree to hold any of
the Series 2009 Notes for any minimum or other specific term and reserves the
right to dispose of the Series 2009 Notes at any time in accordance with or
pursuant to a registration statement or an exemption under the Securities
Act. Such Purchaser is acquiring the Series 2009 Notes hereunder in
the ordinary course of its business. Such Purchaser does not have any agreement
or understanding, directly or indirectly, with any Person to distribute any of
the Securities.
(d) Accredited Investor
Status. Such Purchaser is an “accredited investor” as that
term is defined in Rule 501(a) of Regulation D promulgated under the Securities
Act.
(e) Residency. Such Purchaser is a
resident of the jurisdiction set forth below such Purchaser’s name on Schedule 1 attached
hereto.
(f) Reliance on
Exemptions. Such Purchaser understands that the Series 2009 Notes are
being offered and sold to it in reliance on specific exemptions from the
registration requirements of United States federal and state securities laws and
that the Company is relying in part upon the truth and accuracy of, and such
Purchaser’s compliance with, the representations, warranties, agreements,
acknowledgments and understandings of such Purchaser set forth herein in order
to determine the availability of such exemptions and the eligibility of such
Purchaser to acquire the Series 2009 Notes.
10
(g) Information. Such
Purchaser and its advisors, if any, have been furnished with all publicly
available materials (or such materials have been made available to such
Purchaser) relating to the business, finances and operations of the Company and
such other publicly available materials relating to the offer and sale of the
Series 2009 Notes as have been requested by such Purchaser, including without
limitation (i) the SEC Documents, (ii) Unify’s Annual Report on Form 10-K for
the year ended April 30, 2008, as amended by Form 10-K/A Amendment No. 1
thereto, (iii) Unify’s Quarterly Reports on Form 10-Q for the periods ended July
31, 2008, October 31, 2008 and January 31, 2008, (iv) Unify’s definitive Proxy
Statement with respect to its 2009 Annual Meeting of Stockholders, filed with
the Commission on February 27, 2009, and (v) Unify’s Current Reports on Form 8-K
filed June 25, 2008, August 21, 2008, September 5, 2008, November 21, 2008,
February 3, 2009, February 26, 2009, April 20, 2009, May 4, 2009 and May 21,
2009. Each Purchaser acknowledges that it has read and understands
the risk factors set forth in such documents. Neither such review nor
any other due diligence investigations conducted by such Purchaser or its
advisors, if any, or its representatives shall modify, amend or affect such
Purchaser’s right to rely on the Company’s representations and warranties
contained in the Transaction Documents. Such Purchaser understands
that its investment in the Series 2009 Notes involves a high degree of
risk.
(h) No Governmental
Review. Such Purchaser understands that no United States
federal or state agency or any other government or governmental agency has
passed on or made any recommendation or endorsement of the Series 2009 Notes or
the fairness or suitability of the investment in the Series 2009 Notes, nor have
such authorities passed upon or endorsed the merits of the offering of the
Series 2009 Notes.
(i) Experience of Such
Purchaser. Such Purchaser, either alone or together with its
representatives, has such knowledge, sophistication and experience in business
and financial matters, including investing in companies engaged in the business
in which the Company is engaged, so as to be capable of evaluating the merits
and risks of the prospective investment in the Series 2009 Notes, and has so
evaluated the merits and risks of such investment. Such Purchaser is
able to bear the economic risk of an investment in the Series 2009 Notes and, at
the present time, is able to afford a complete loss of such
investment.
(j) No Other
Representations. The Purchaser acknowledges and agrees that
the Company does not make or has not made any representations or warranties with
respect to the Contemplated Transactions other than those specifically set forth
in this Section 3.1.
ARTICLE
IV
OTHER AGREEMENTS OF THE
PARTIES
4.1 Transfer
Restrictions.
(a) The
Securities may only be disposed of in compliance with state and federal
securities laws. In connection with any transfer of Securities, other
than pursuant to an effective registration statement, to the Company (in the
case of a transfer of Series 2009 Notes), to an Affiliate of a Purchaser (who is
an accredited investor and executes a customary representation letter) or in
connection with a pledge as contemplated in Section 4.1(b), the Company may
require the transferor thereof to provide to the Company an opinion of counsel
selected by the transferor and reasonably satisfactory to the Company, the form
and substance of which opinion shall be reasonably satisfactory to the Company,
to the effect that such transfer does not require registration of such
transferred Securities under the Securities Act, provided, however, that in
the case of a transfer pursuant to Rule 144, no opinion shall be required if the
transferor provides the Company with a customary seller’s representation letter,
and if such sale is not pursuant to subsection (b)(1) of Rule 144, a customary
broker’s representation letter and a Form 144. Any such transferee
that agrees in writing to be bound by the terms of this Agreement and the
Investor Rights Agreement shall have the rights of a Purchaser under this
Agreement and the Investor Rights Agreement. Except as required by
federal securities laws and the securities law of any state or other
jurisdiction within the United States, the Securities may be transferred, in
whole or in part, by any of the Purchasers at any time. The Company
shall reissue certificates evidencing the Series 2009 Notes upon surrender of
certificates evidencing the Series 2009 Notes being transferred in accordance
with this Section 4.1(a).
(b) The
Purchasers agree to the imprinting, so long as is required by this Section
4.1(b), of one or more legends, as applicable, on any of the Securities in
substantially the following form:
THIS
SECURITY HAS NOT BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR
THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM
REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES
ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN
AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE
SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO
SUCH EFFECT, SUCH COUNSEL AND THE SUBSTANCE OF SUCH OPINION SHALL BE REASONABLY
ACCEPTABLE TO AXS-ONE INC. UNLESS PROHIBITED BY APPLICABLE LAW, RULE
OR REGULATION, THIS SECURITY MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE
MARGIN ACCOUNT WITH A REGISTERED BROKER-DEALER OR OTHER LOAN WITH A FINANCIAL
INSTITUTION THAT IS AN “ACCREDITED INVESTOR” AS DEFINED IN RULE 501(a) UNDER THE
SECURITIES ACT.
and on
any Series 2009 Note:
“THIS
SECURITY AND THE RIGHTS PROVIDED HEREIN ARE SUBJECT IN ALL RESPECTS TO THE TERMS
OF THE THIRD AMENDED AND RESTATED SUBORDINATION AGREEMENT OF EVEN DATE HEREWITH
BETWEEN THE AGENT OF THE PAYEE AND SAND HILL FINANCE, LLC.”
11
The Company acknowledges and agrees
that, unless prohibited by applicable law, rule or regulation, a Purchaser may
from time to time pledge pursuant to a bona fide margin agreement with a
registered broker-dealer or grant a security interest in some or all of the
Securities to a financial institution that is an “accredited investor” as
defined in Rule 501(a) under the Securities Act and, if required under the terms
of such arrangement, such Purchaser may transfer pledged or secured Securities
to the pledgees or secured parties. Such a pledge or transfer would
not be subject to approval of the Company and no legal opinion of legal counsel
of the pledgee, secured party or pledgor shall be required in connection
therewith; provided, however, that such Purchaser shall provide the Company with
such documentation as is reasonably requested by the Company to ensure that the
pledge is pursuant to a bona fide margin agreement with a registered
broker-dealer or a security interest in some or all of the Securities to a
financial institution that is an “accredited investor” as defined in Rule 501(a)
under the Securities Act.
4.2 Furnishing
of Information. As
long as any Purchaser owns Series 2009 Notes, the Company covenants to timely
file (or obtain extensions in respect thereof and file within the applicable
grace period) all reports required to be filed by the Company after the date
hereof pursuant to the Exchange Act. As long as any Purchaser owns
Series 2009 Notes, if the Company is not required to file reports pursuant to
the Exchange Act, it shall prepare and furnish to the Purchasers and make
publicly available in accordance with Rule 144(c)(2), such information as is
required for the Purchasers to sell the Series 2009 Notes under Rule
144.
4.3 Integration. The
Company shall not sell, offer for sale or solicit offers to buy or otherwise
negotiate in respect of any security (as defined in Section 2 of the Securities
Act) that would be integrated with the offer or sale of the Series 2009 Notes in
a manner that would require the registration under the Securities Act of the
sale of the Series 2009 Notes to the Purchasers or that would be integrated with
the offer or sale of the Series 2009 Notes for purposes of the rules and
regulations of any applicable Trading Market so as to result in a violation
thereof.
4.4 Publicity. The
Company shall, within four Business Days following the Closing Date, file a
Current Report on Form 8-K, disclosing the Contemplated Transactions and make
such other filings and notices regarding the Contemplated Transactions in the
manner and time required by the Commission.
4.5 Negative
Covenants. Unless approved in writing by those Purchasers
holding a majority of the principal amount of the Series 2009 Notes then
outstanding, the Company (a) shall not declare or pay any dividend or
distribution with respect to any common stock or preferred stock of the Company
and (b) shall not incur any secured indebtedness senior to the Series 2009
Notes.
4.6 Senior
Debt. Notwithstanding any other provision of the Transaction
Documents, the Purchasers hereby acknowledge and consent as
follows: (a) the Company may continue to borrow under an accounts
receivable formula based revolving line of credit pursuant to the Sand Hill
Agreement; and (b) the Company may replace the Sand Hill Agreement with another
senior debt facility which shall rank senior to the Series 2009 Notes, provided
that such replacement senior debt facility is an accounts receivable formula
based revolving line of credit secured solely by accounts receivable of the
Company.
ARTICLE
V
INDEMNIFICATION, TERMINATION
AND DAMAGES
5.1 Survival
of Representations.
Except as otherwise provided herein,
the representations and warranties of the Company and the Purchasers contained
in or made pursuant to this Agreement shall survive the execution and delivery
of this Agreement and the Closing Date and shall continue in full force and
effect for a period of two (2) years from the Closing Date. The
Company’s and the Purchasers’ warranties and representations shall in no way be
affected or diminished in any way by any investigation of (or failure to
investigate) the subject matter thereof made by or on behalf of the Company or
the Purchasers.
5.2 Indemnification.
(a) The
Company agrees to indemnify and hold harmless the Purchasers, their Affiliates,
each of their officers, directors, employees and agents and their respective
successors and assigns, from and against any losses, damages or expenses which
are caused by or arise out of (i) any breach or default in the performance by
the Company of any covenant or agreement made by the Company in any of the
Transaction Documents; (ii) any breach of warranty or representation made by the
Company in any of the Transaction Documents; and/or (iii) any and all third
party actions, suits, proceedings, claims, demands, judgments, costs and
expenses (including reasonable legal fees and expenses) incident to any of the
foregoing.
(b) The
Purchasers, severally and not jointly, agree to indemnify and hold harmless the
Company, its Affiliates, each of their officers, directors, employees and agents
and their respective successors and assigns, from and against any losses,
damages or expenses which are caused by or arise out of (i) any breach or
default in the performance by the Purchasers of any covenant or agreement made
by the Purchasers in any of the Transaction Documents; (ii) any breach of
warranty or representation made by the Purchasers in any of the Transaction
Documents; and/or (iii) any and all third party actions, suits, proceedings,
claims, demands, judgments, costs and expenses (including reasonable legal fees
and expenses) incident to any of the foregoing.
12
5.3 Indemnity
Procedure.
(a) A party
or parties hereto agreeing to be responsible for or to indemnify against any
matter pursuant to this Agreement is referred to herein as the “Indemnifying Party” and the
other party or parties claiming indemnity is referred to as the “Indemnified
Party”. An Indemnified Party under this Agreement shall, with
respect to claims asserted against such party by any third party, give written
notice to the Indemnifying Party of any liability which might give rise to a
claim for indemnity under this Agreement within sixty (60) Business Days of the
receipt of any written claim from any such third party, but not later than
twenty (20) days prior to the date any answer or responsive pleading is due, and
with respect to other matters for which the Indemnified Party may seek
indemnification, give prompt written notice to the Indemnifying Party of any
liability which might give rise to a claim for indemnity; provided, however, that any
failure to give such notice shall not waive any rights of the Indemnified Party
except to the extent the rights of the Indemnifying Party are materially
prejudiced.
(b) The
Indemnifying Party shall have the right, at its election, to take over the
defense or settlement of such claim by giving written notice to the Indemnified
Party at least fifteen (15) days prior to the time when an answer or other
responsive pleading or notice with respect thereto is required. If the
Indemnifying Party makes such election, it may conduct the defense of such claim
through counsel of its choosing (subject to the Indemnified Party’s approval of
such counsel, which approval shall not be unreasonably withheld or delayed),
shall be solely responsible for the expenses of such defense and shall be bound
by the results of its defense or settlement of the claim. The Indemnifying Party
shall not settle any such claim without prior notice to and consultation with
the Indemnified Party, and no such settlement involving any equitable relief or
which might have an adverse effect on the Indemnified Party may be agreed to
without the written consent of the Indemnified Party (which consent shall not be
unreasonably withheld or delayed). So long as the Indemnifying Party
is diligently contesting any such claim in good faith, the Indemnified Party may
pay or settle such claim only at its own expense and the Indemnifying Party
shall not be responsible for the fees of separate legal counsel to the
Indemnified Party, unless the named parties to any proceeding include both
parties or representation of both parties by the same counsel would be
inappropriate in the reasonable opinion of counsel to the Indemnified Party, due
to conflicts of interest or otherwise. If the Indemnifying Party does
not make such election, or having made such election does not, in the reasonable
opinion of the Indemnified Party proceed diligently to defend such claim, then
the Indemnified Party may (after written notice to the Indemnifying Party), at
the expense of the Indemnifying Party, elect to take over the defense of and
proceed to handle such claim in its discretion and the Indemnifying Party shall
be bound by any defense or settlement that the Indemnified Party may make in
good faith with respect to such claim. In connection therewith, the Indemnifying
Party shall fully cooperate with the Indemnified Party should the Indemnified
Party elect to take over the defense of any such claim. The parties
agree to cooperate in defending such third party claims and the Indemnified
Party shall provide such cooperation and such access to its books, records and
properties (subject to the execution of appropriate non-disclosure agreements)
as the Indemnifying Party shall reasonably request with respect to any matter
for which indemnification is sought hereunder; and the parties hereto agree to
cooperate with each other in order to ensure the proper and adequate defense
thereof.
(c) With
regard to claims of third parties for which indemnification is payable
hereunder, such indemnification shall be paid by the Indemnifying Party upon the
earlier to occur of: (i) the entry of a judgment against the
Indemnified Party and the expiration of any applicable appeal period, or if
earlier, five (5) days prior to the date that the judgment creditor has the
right to execute the judgment; (ii) the entry of an unappealable judgment or
final appellate decision against the Indemnified Party; or (iii) a settlement of
the claim. Notwithstanding the foregoing, the reasonable expenses of
counsel to the Indemnified Party shall be reimbursed on a current basis by the
Indemnifying Party. With regard to other claims for which
indemnification is payable hereunder, such indemnification shall be paid
promptly by the Indemnifying Party upon demand by the Indemnified
Party.
ARTICLE
VI
MISCELLANEOUS
6.1 Fees and
Expenses.
The Company shall be responsible for the payment of the Purchasers’ reasonable
and documented legal fees and other third-party expenses relating to the
preparation, negotiation and execution of this Agreement and the Transaction
Documents and the consummation of the transactions contemplated herein up to an
aggregate cap of $15,000.
6.2 Entire
Agreement. The Transaction Documents and the Investor Rights
Agreement, together with the exhibits and schedules thereto, contain the entire
understanding of the parties with respect to the subject matter hereof and
supersede all prior agreements and understandings, oral or written, with respect
to such matters, which the parties acknowledge have been merged into such
documents, exhibits and schedules.
13
6.3 Notices. Any
and all notices or other communications or deliveries required or permitted to
be provided hereunder shall be in writing and shall be deemed given and
effective on the earliest of (a) the date of transmission, if such notice or
communication is delivered via facsimile at the facsimile number specified below
or on the signature pages attached hereto prior to 5:00 p.m. (New York City
time) on a Trading Day, (b) the next Trading Day after the date of transmission,
if such notice or communication is delivered via facsimile at the facsimile
number specified below or on the signature pages attached hereto on a day that
is not a Trading Day or later than 5:00 p.m. (New York City time) on any Trading
Day, (c) the Trading Day following the date of mailing, if sent by U.S.
nationally recognized overnight courier service, or (d) upon actual receipt by
the party to whom such notice is required to be given. The address for such
notices and communications shall be as follows:
If to the
Purchasers, at each Purchaser’s address set forth under its name on Schedule 1
attached hereto, or with respect to the Company, addressed to:
AXS-One
Inc.
000 Xxxxx
00 Xxxxx
Xxxxxxxxxx,
Xxx Xxxxxx 00000
Attention:
Chief Financial Officer
Facsimile
No.: (000) 000-0000
or to
such other address or addresses or facsimile number or numbers as any such party
may most recently have designated in writing to the other parties hereto by such
notice. Copies of notices to the Company (which shall not constitute notice)
shall be sent to:
Xxxxxx
and Xxxx LLP
000
Xxxxxxxx Xxxxxx
Xxxxxxxx,
Xxxxxxxxxxx 00000
Attention: Xxxxxxx
Xxxxxxx
Facsimile
No.: (000) 000-0000
Copies of
notices to any Purchaser (which shall not constitute notice) shall be sent to
the addresses, if any, listed on Schedule 1 attached hereto.
6.4 Amendments;
Waivers. No provision of this Agreement may be waived or
amended except in a written instrument signed, in the case of an amendment, by
the Company and each Purchaser or, in the case of a waiver, by the party against
whom enforcement of any such waiver is sought. No waiver of any
default with respect to any provision, condition or requirement of this
Agreement shall be deemed to be a continuing waiver in the future or a waiver of
any subsequent default or a waiver of any other provision, condition or
requirement hereof, nor shall any delay or omission of either party to exercise
any right hereunder in any manner impair the exercise of any such
right. Until such time as that certain Agreement and Plan of Merger,
dated as of April 16, 2009 (the “Merger Agreement”), by and
among Unify, the Company and UCAC, Inc., a wholly-owned subsidiary of Unify, has
been terminated or the transactions contemplated by the Merger Agreement have
been consummated, this Agreement shall not be amended or modified without the
prior written consent of Unify.
6.5 Construction. The
headings herein are for convenience only, do not constitute a part of this
Agreement and shall not be deemed to limit or affect any of the provisions
hereof. The language used in this Agreement shall be deemed to be the language
chosen by the parties to express their mutual intent, and no rules of strict
construction shall be applied against any party.
6.6 Successors
and Assigns. This Agreement shall be binding upon and inure to
the benefit of the parties and their successors and permitted
assigns. The Company may not assign this Agreement or any rights or
obligations hereunder without the prior written consent of each
Purchaser. Any Purchaser may assign any or all of its rights under
this Agreement to any Person to whom it transfers Series 2009 Notes, provided
such transferee agrees in writing to be bound, with respect to the transferred
Series 2009 Notes, by the provisions hereof that apply to the
Purchasers.
6.7 No
Third-Party Beneficiaries. This Agreement is intended for the
benefit of the parties hereto and their respective successors and permitted
assigns and is not for the benefit of, nor may any provision hereof be enforced
by, any other Person, except as otherwise set forth in Section 4.5 and Article
V.
6.8 Governing
Law. All questions concerning the construction, validity,
enforcement and interpretation of the Transaction Documents shall be governed by
and construed and enforced in accordance with the internal laws of the State of
New York, without regard to the principles of conflicts of law
thereof.
6.9 Execution. This
Agreement may be executed in two or more counterparts, all of which when taken
together shall be considered one and the same agreement and shall become
effective when counterparts have been signed by each party and delivered to the
other party, it being understood that both parties need not sign the same
counterpart. In the event that any signature is delivered by
facsimile or other electronic transmission, such signature shall create a valid
and binding obligation of the party executing (or on whose behalf such signature
is executed) with the same force and effect as if such facsimile or other
electronic signature page were an original thereof.
14
6.10 Severability. If
any provision of this Agreement is held to be invalid or unenforceable in any
respect, the validity and enforceability of the remaining terms and provisions
of this Agreement shall not in any way be affected or impaired thereby and the
parties shall attempt to agree upon a valid and enforceable provision that is a
reasonable substitute therefor, and upon so agreeing, shall incorporate such
substitute provision in this Agreement.
6.11 Replacement
of Series 2009 Notes. If any
certificate or instrument evidencing any of the Series 2009 Notes is mutilated,
lost, stolen or destroyed, the Company shall issue or cause to be issued in
exchange and substitution for and upon cancellation thereof, or in lieu of and
substitution therefor, a new certificate or instrument, but only upon receipt of
evidence reasonably satisfactory to the Company of such loss, theft or
destruction and customary and reasonable indemnity, if requested by the
Company.
6.12 Remedies. In
addition to being entitled to exercise all rights provided herein or granted by
law, including recovery of damages, each of the Purchasers and the Company shall
be entitled to specific performance under the Transaction
Documents. The parties agree that monetary damages may not be
adequate compensation for any loss incurred by reason of any breach of
obligations described in the foregoing sentence and hereby agrees to waive in
any action for specific performance of any such obligation the defense that a
remedy at law would be adequate.
6.13 Payment
Set Aside. To the extent that the Company makes a payment or
payments to any Purchaser pursuant to any Transaction Document or a Purchaser
enforces or exercises its rights thereunder, and such payment or payments or the
proceeds of such enforcement or exercise or any part thereof are subsequently
invalidated, declared to be fraudulent or preferential, set aside, recovered
from, disgorged by or are required to be refunded, repaid or otherwise restored
to the Company, a trustee, receiver or any other person under any law
(including, without limitation, any bankruptcy law, state or federal law, common
law or equitable cause of action), then to the extent of any such restoration
the obligation or part thereof originally intended to be satisfied shall, to the
extent permissible under applicable law, be revived and continued in full force
and effect as if such payment had not been made or such enforcement or setoff
had not occurred.
6.14 Independent
Nature of Purchasers' Obligations and Rights. The obligations
of each Purchaser under any Transaction Document are several and not joint with
the obligations of any other Purchaser, and no Purchaser shall be responsible in
any way for the performance of the obligations of any other Purchaser under any
Transaction Document. Nothing contained herein or in any Transaction
Document, and no action taken by any Purchaser pursuant thereto, shall be deemed
to constitute the Purchasers as a partnership, an association, a joint venture
or any other kind of entity, or create a presumption that the Purchasers are in
any way acting in concert or as a group with respect to such obligations or the
transactions contemplated by the Transaction Document. Except to the
extent otherwise specifically provided in the Transaction Documents, each
Purchaser shall be entitled to independently protect and enforce its rights,
including without limitation, the rights arising out of this Agreement or out of
the other Transaction Documents, and it shall not be necessary for any other
Purchaser to be joined as an additional party in any proceeding for such
purpose. Each Purchaser has been represented by its own separate
legal counsel in their review and negotiation of the Transaction
Documents. The Company has elected to provide all Purchasers with the
same terms and Transaction Documents for the convenience of the Company and not
because it was required or requested to do so by the Purchasers.
6.15 Waiver of
Trial by Jury. THE PARTIES HERETO IRREVOCABLY WAIVE TRIAL BY
JURY IN ANY SUIT, ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR THE
TRANSACTIONS CONTEMPLATED HEREBY.
6.16 Further
Assurances. Each party agrees to cooperate fully with the
other parties and to execute such further instruments, documents and agreements
and to give such further written assurances as may be reasonably requested by
any other party to better evidence and reflect the transactions described herein
and contemplated hereby and to carry into effect the intents and purposes of
this Agreement, and further agrees to take promptly, or cause to be taken, all
actions, and to do promptly, or cause to be done, all things necessary, proper
or advisable under applicable law to consummate and make effective the
transactions contemplated hereby, to obtain all necessary waivers, consents and
approvals, to effect all necessary registrations and filings and to remove any
injunctions or other impediments or delays, legal or otherwise, in order to
consummate and make effective the transactions contemplated by this Agreement
for the purpose of securing to the parties hereto the benefits contemplated by
this Agreement.
6.17 Like
Treatment. Neither the Company nor any of its Affiliates
shall, directly or indirectly, pay or cause to be paid any consideration
(immediate or contingent), whether by way of interest, fee, payment for
redemption, conversion or exercise of the Series 2009 Notes, or otherwise, to
any Purchaser or holder of Series 2009 Notes, for or as an inducement to, or in
connection with the solicitation of, any consent, waiver or amendment to any
terms or provisions of this Agreement or the other Transaction Documents, unless
such consideration is offered to all Purchasers or holders of Series 2009 Notes
bound by such consent, waiver or amendment. The Company shall not,
directly or indirectly, redeem any Series 2009 Notes unless such offer of
redemption is made pro rata to all Purchasers or holders of Series 2009 Notes,
as the case may be, on identical terms.
[Signature pages
follow.]
15
IN
WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date
first above written.
COMPANY:
AXS-ONE
INC.
By: /s/ Xxxxxxx X.
Xxxxx
Name:
Xxxxxxx X. Xxxxx
Title: CEO
PURCHASERS:
Print
Exact Name: BlueLine Capital Partners
III, LP
By: /s/ Xxxxx
Xxxxx
Name:
Xxxxx Xxxxx
Title: Managing
Director
Address:
000 Xxxxxxxx Xxxxxx,
Xxxxx 000
Xxxxxxxx,
XX 00000
Telephone:
Facsimile:
Email:
SSN/EIN:
Amount of
Investment: $75,000
[Omnibus
AXS-One Inc. Convertible Note and Warrant Purchase Agreement Signature
Page]
16
PURCHASERS:
Print
Exact Name: Jurika
Family Trust U/A 1989
By: /s/ Xxxxxxx X.
Xxxxxx
Name: Xxxxxxx
X. Xxxxxx
Title:
Trustee
Address:
00 Xxxx Xxxxxx
Xx.
Xxxxxxxx, XX
00000
Telephone:
Facsimile:
Email:
SSN/EIN:
Amount of
Investment: $75,000
[Omnibus
AXS-One Inc. Convertible Note and Warrant Purchase Agreement Signature
Page]
PURCHASERS:
Print
Exact Name: Xxxxxx X.
Xxxxxxxxx
By:
/s/ Xxxxxx X.
Xxxxxxxxx
Name:
Title:
Address:
0000 Xxxxxxxxx
Xxx
Xxxxxx, XX
00000
Telephone:
Facsimile:
Email:
SSN/EIN:
Amount of
Investment: $50,000.00
[Omnibus
AXS-One Inc. Convertible Note and Warrant Purchase Agreement Signature
Page]
17
PURCHASERS:
Print
Exact Name: Primafides
(Suisse) S.A. as
Trustees of Sirius
Trust
By: /s/ X.
XxXxxxx /s/ X.
Xxxxx
Name:
Primafides (Suisse) SA as Trustees of Sirius Trust
Title: Directors
Address:
Stonehage
XX
Xxx xx Xxxxx-Xxxxx
00
X.X Xxx
000
0000
Xxxxxxxxx
Xxxxxxxxxxx
Attn,
IAD
Telephone:
Facsimile:
Email:
SSN/EIN:
Amount of
Investment: $50,000.00
[Omnibus
AXS-One Inc. Convertible Note and Warrant Purchase Agreement Signature
Page]
18
Schedule
1
to
Standby Convertible Note Purchase Agreement
|
Name, Address and Fax
Number
of
Purchaser
|
Aggregate Principal Amount of
Series 2009 Notes Purchased
|
Purchase
Price
|
|
BlueLine
Capital Partners III, LP
000
Xxxxxxxx Xxxxxx, Xxxxx 000
Xxxxxxxx,
XX 00000
Attn: Xxxxx
Xxxxx
(000)
000-0000 (fax)
|
$75,000
|
$75,000
|
|
Jurika
Family Trust U/A 3/17/1989
00
Xxxx Xxxxxx Xxxx
Xxxxxxxx,
XX 00000
Attn: Xxxxxxx
Xxxxxx
(000)
000-0000 (fax)
|
$75,000
|
$75,000
|
|
Xxxxxx
X. Xxxxxxxxx
2804
Tarflower Way
Naples,
FL 00000
(000)
000-0000 (fax)
|
$50,000
|
$50,000
|
|
Sirius
Trust
c/o
Stonehage XX
Xxx
xx Xxxxx-Xxxxx 00
0000
Xxxxxxxxx, Xxxxxxxxxxx
Attn: Xxxxxxx
Xxxxx
(00)
00-000-0000 (fax)
|
$50,000
|
$50,000
|
|
Totals:
|
$250,000
|
$250,000
|
19
