EXHIBIT 10.62
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SUBORDINATION AGREEMENT
This Subordination Agreement (the "Agreement") is made as of May 15, 2007
by and between Xxxxxx Xxxxxx & Co., LLC, as agent for certain Noteholders
("Creditor"), and Sand Hill Finance, LLC ("SHF").
RECITALS
To induce SHF to purchase accounts and extend credit to Bridgeline
Software, Inc., a Delaware corporation ("Borrower"), from time to time, or to
grant such renewals or extension of any such credit or purchase, Creditor is
willing to subordinate, subject to and to the extent set forth below: (i)
Borrower's indebtedness and obligations to Creditor, whether presently existing
or arising in the future, to the extent and insofar as such amount does not
exceed Three Hundred Seventy Five Thousand dollars (US$375,000) (the
"Subordinated Debt") to all of Borrower's indebtedness and obligations to SHF;
and (ii) all of Creditor's security interests, if any, in the Borrower's
property, to all of SHF's security interests in the Borrower's property.
In consideration of the aforesaid existing loans and extensions of credit
and financial accommodations previously made by SHF to the Borrower and of any
and all future loans extensions of credit and financial accommodations that
hereafter may be made by SHF for the benefit of the Borrower, and for other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the undersigned hereby agree as follows:
1. Creditor subordinates any security interest or lien that Creditor may
have in any property of Borrower subject to and to the extent that the
Borrower's indebtedness and obligations to Creditor, whether presently existing
or arising in the future, does not or shall not exceed Three Hundred Seventy
Five Thousand dollars (US$375,000). Notwithstanding the respective dates of
attachment or perfection of the security interest of Creditor and the security
interest of SHF, the security interest of SHF in the Collateral, as defined in
the Financing Agreement between Borrower and SHF, dated as of the date hereof,
as amended from time to time (the "Financing Agreement"), shall at all times be
prior to the security interest of Creditor. Capitalized terms not otherwise
defined herein shall have the same meaning as in the Financing Agreement.
2. The Subordinated Debt is subordinated in right of payment to all
obligations of Borrower to SHF now existing or hereafter arising, together with
all costs of collecting such obligations (including attorneys' fees), including,
without limitation, all interest accruing after the commencement by or against
Borrower of any Bankruptcy, reorganization or similar proceeding, and all
obligations under the Financing Agreement (the "Senior Debt").
3. Creditor will not demand or receive from Borrower (and Borrower will not
pay to Creditor) all or any part of the Subordinated Debt, by way of payment,
prepayment, setoff, lawsuit or otherwise, nor will Creditor exercise any remedy
with respect to the Collateral, nor will Creditor commence, or cause to
commence, prosecute or participate in any administrative, legal or equitable
action against Borrower, for so long as any portion of the Senior Debt remains
outstanding; PROVIDED, HOWEVER, that, notwithstanding the foregoing, Creditor,
without the consent of or notice to SHF, may (a) in any insolvency or
liquidation proceeding, assert its
claims with respect to its rights and security interest in the Collateral owing
to it (including, without limitation, filing any proof of claim) and vote such
claims, (b) take any action to preserve or protect the validity and
enforceability of its security interests in the Collateral so long as such
action is not inconsistent with this Agreement, (c) file any necessary
responsive or defensive pleadings in opposition to any pleading objecting to or
seeking disallowance of the Creditor's claims or otherwise make any agreements
or file any motions pertaining to the secured obligations owing to it, in each
case to the extent not inconsistent with the terms of this Agreement, (d)
exercise rights and remedies available to an unsecured creditor with respect to
the Collateral, and (e) exercise any rights or remedies with respect to the
property and assets of the Borrower other than the Collateral, subject in all
cases to SHF's first priority security interest and right to receive the
proceeds of any Collateral before Creditor. SHF shall not collect, take
possession of, foreclose upon, or exercise any other rights or remedies with
respect to the property and assets of the Borrower other than the Collateral,
judicially or non-judicially, or attempt to do any of the foregoing, without the
prior written consent of the Creditor, which shall be a matter of the Creditor's
sole discretion. Creditor shall be entitled to receive each regularly scheduled
payment of interest under any promissory note issued by Borrower to Creditor
evidencing the Subordinated Debt, provided that no Event of Default (as defined
in the Financing Agreement) has occurred under the Financing Agreement that is
continuing or would exist immediately after giving effect to such payment.
Creditor shall promptly deliver to SHF in the form received (except for
endorsement or assignment by Creditor where required by SHF) for application to
the Senior Debt any payment, distribution, security or proceeds received by
Creditor with respect to the Subordinated Debt other than in accordance with
this Agreement.
4. This Agreement shall remain effective for so long as SHF has any
obligation to make credit extensions to Borrower or Borrower owes any amounts to
SHF under the Financing Agreement or otherwise. If, at any time after payment in
full of the Senior Debt any payments of the Senior Debt must be disgorged by SHF
for any reason (including, without limitation, the Bankruptcy of Borrower), this
Agreement and the relative rights and priorities set forth herein shall be
reinstated as to all such disgorged payments as though such payments had not
been made and Creditor shall immediately pay over to SHF all payments received
with respect to the Subordinated Debt to the extent that such payments would
have been prohibited hereunder. At any time and from time to time, SHF may take
such actions with respect to the Senior Debt as SHF, in its sole discretion, may
deem appropriate, including, without limitation, terminating advances to
Borrower, increasing the principal amount, extending the time of payment,
increasing applicable interest rates, renewing, compromising or otherwise
amending the terms of any documents affecting the Senior Debt and any collateral
securing the Senior Debt, and enforcing or failing to enforce any rights against
Borrower or any other person. No such action or inaction shall impair or
otherwise affect SHF's rights hereunder.
5. Notwithstanding any provision herein to the contrary, nothing contained
in this Agreement shall apply to or restrict any portion of the Subordinated
Debt from being converted into Borrower's equity securities in accordance with
its existing terms.
6. This Agreement shall bind any successors or assignees of Creditor and
shall benefit any successors or assigns of SHF. This Agreement is solely for the
benefit of Creditor and SHF and not for the benefit of Borrower or any other
party. This Agreement may be executed in two or more counterparts, each of which
shall be deemed an original and all of which
together shall constitute one instrument. This Agreement represents the entire
agreement with respect to the subject matter hereof, and supersedes all prior
negotiations, agreements and commitments. Creditor is not relying on any
representations by SHF or Borrower in entering into this Agreement, and Creditor
has kept and will continue to keep itself fully apprised of the financial and
other condition of Borrower. This Agreement may be amended only by written
instrument signed by Creditor and SHF.
7. This Agreement shall be governed by and construed in accordance with the
laws of the State of California, without giving effect to conflicts of laws
principles. Creditor and SHF submit to the jurisdiction of the state and federal
courts located in San Mateo County, California. CREDITOR AND SHF WAIVE THEIR
RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR
ARISING OUT OF THIS AGREEMENT OR ANY OF THE TRANSACTIONS CONTEMPLATED HEREIN. If
the jury waiver set forth in this Section is not enforceable, then any dispute,
controversy or claim arising out of or relating to this Agreement or any of the
transactions contemplated herein shall be settled by final and binding
arbitration held in Menlo Park, California in accordance with the then
applicable Commercial Arbitration Rules of the American Arbitration Association.
Judgment upon any award resulting from arbitration may be entered into and
enforced by any state of federal court having jurisdiction thereof. In the event
of any legal action to enforce the rights of a party under this Agreement, the
party prevailing in such action shall be entitled, in addition to such other
relief as may be granted, all reasonable costs and expenses, including
reasonable attorneys' fees, incurred in such action.
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IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the
date first above written.
"Creditor"
XXXXXX XXXXXX & CO., LLC., As Agent for
certain Noteholders
By: /S/ XXXXXXX XXXXX
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Title: CHIEF OPERATING OFFICER
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"SHF"
SAND HILL FINANCE, LLC
By: /S/ XXXX XXXXXXX
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Title: PRESIDENT
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The undersigned approves of the terms of this Agreement.
"Borrower"
BRIDGELINE SOFTWARE, INC.
By: /S/ XXXX XXXXXX
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Title: CHIEF FINANCIAL OFFICER
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