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EXHIBIT 10.14
CONVERSION AGREEMENT
CONVERSION AGREEMENT (this "Agreement"), dated as of March 31, 1999 by
and among NewsReal, Inc., a Delaware corporation (the "Company"), and each of
the investors listed on Schedule I attached hereto (each, a "QIP Investor" and,
collectively, the "QIP Investors").
RECITALS
A. In December 1997, the Company borrowed from Bayerische Hypo- Und
Vereinsbank AG, New York Branch (formerly known as Bayerische Vereinsbank AG,
New York Branch) ("Vereinsbank"), the principal amount of $1,000,000 (the "Term
Loan"), pursuant to that certain Term Loan Agreement, dated as of December 11,
1997, and related Promissory Note, dated December 12, 1997, which Term Loan is
payable in full on December 12, 1999.
B. One of the QIP Investors, Quantum Industrial Partners, LDC ("QIP"),
guaranteed prepayment of the Term Loan, pursuant to that certain Guaranty,
dated December 11, 1997 (the "12/97 Guaranty").
C. In February 1998, pursuant to an Amendment to the Term Loan
Agreement, dated as of February 27, 1998, the Company and Vereinsbank amended
the Term Loan Agreement to extend to the Company an additional revolving line
of credit in the aggregate principal amount of $3,000,000 (the "Line of
Credit"), which amount the Company has borrowed and is payable in full on May
28, 1999.
D. QIP also guaranteed repayment of the Line of Credit, pursuant to that
certain Guaranty, dated February 27, 1998 (the "2/98 Guaranty").
E. In October 1998, the Company borrowed from the QIP Investors the
aggregate principal amount of $600,000 (the "10/98 Loan"), pursuant to that
certain Senior Secured Demand Promissory Note (the "10/98 Note") and that
certain Security Agreement (the "10/98 Security Agreement"), each dated October
28, 1998, which amount is payable in full on demand after the earlier of March
31, 1999 or the sale of substantially all of the Company's assets or capital
stock.
F. In November 1998, the Company borrowed from the QIP Investors the
aggregate principal amount of $600,000 (the "11/98 Loan"), pursuant to that
certain Senior Secured Demand Promissory Note (the "11/98 Loan") and that
certain Security Agreement (the "11/98 Security Agreement"), each dated
November 24, 1998, which amount is payable in full on demand after the earlier
of March 31, 1999 or the sale of substantially all of the Company's assets or
capital stock.
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G. In January 1999, the Company borrowed from the QIP Investors the
aggregate principal amount of $600,000 (the "1/99 Loan"), on the same terms and
conditions as the 10/98 Loan and the 11/98 Loan, except that the 1/99 Loan is
payable in full on demand at any time.
H. Subsequent to the 1/99 Loan, the Company agreed to grant to the QIP
Investors certain conversion rights, in exchange for which the QIP Investors
agreed not to demand any prepayment of the 1/99 Loan until after March 31, 1999.
I. In February 1999, the Company borrowed from the QIP Investors the
aggregate principal amount of $400,000 (the "2/99 Loan"), on the same terms and
conditions as the 1/99 Loan as modified, including certain conversion rights.
J. In March 1999, the Company borrowed from the QIP Investors the
aggregate principal amount of $400,000 (the "3/99 Loan"), on the same terms and
conditions as the 1/99 Loan as modified, including certain conversion rights.
NOW THEREFORE, in consideration of the premises and the agreements
contained herein and for other good and valuable consideration, the parties
hereto hereby agree as follows:
1. 1/99, 2/99 and 3/99 Loans.
(a) 1/99 Loan. In connection with the transactions contemplated
hereby, as evidence of the 1/99 Loan, the Company shall execute and
deliver a Senior Secured Demand Promissory Note (the "1/99 Note") and a
Security Agreement (the "1/99 Security Agreement"), in the forms
attached hereto as Exhibits A and B, respectively.
(b) 2/99 Loan. In connection with the transactions contemplated
hereby, as evidence of the 2/99 Loan, the Company shall execute and
deliver a Senior Secured Demand Promissory Note (the "2/99 Note") and a
Security Agreement (the "2/99 Security Agreement"), in the forms
attached hereto as Exhibits C and D, respectively.
(c) 3/99 Loan. In connection with the transactions contemplated
hereby, as evidence of the 3/99 Loan, the Company shall execute and
deliver a Senior Secured Demand Promissory Note (the "3/99 Note") and a
Security Agreement (the "3/99 Security Agreement"), in the forms
attached hereto as Exhibits E and F, respectively.
2. Conversion Rights. The Company and the QIP Investors hereby agree to
the following conversion rights:
(a) Term Loan. At any time after the Term Loan becomes due and
payable (i.e., December 12, 1999) on or before the earlier of December
31, 1999 or prepayment in full of the Term Loan, the Company may, at its
option, require that the QIP Investors, on behalf of the Company, pay to
Vereinsbank all or a portion of the outstanding principal
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and any accrued but unpaid interest owed by the Company to Vereinsbank under
the Term Loan. In exchange for any such payment by any QIP Investors, the
Company agrees to issue to such QIP Investors or their designees that number of
shares of the Company's common stock, $.001 par value per share ("Common
Stock"), equal to the amount of principal and interest so paid by such QIP
Investors divided by a conversion price of $2.47 per share. Upon payment in
full of the Term Loan and issuance of shares pursuant to this subsection (if
required), the Company shall have no further obligations to QIP or the other
QIP Investors with respect to the Term Loan or the 12/97 Guaranty.
(b) Line of Credit. (i) At any time after the Line of Credit becomes due and
payable (i.e., May 28, 1999) on or before December 31, 1999, the Company may, at
its option, require that the QIP Investors, on behalf of the Company, pay to
Vereinsbank up to $1,000,000 of the outstanding principal, together with the
amount of any unpaid interest due thereon, owed by the Company to Vereinsbank
under the Line of Credit. In exchange for any such payment by any QIP Investors,
the Company agrees to issue to such QIP Investors or their designees that number
of shares of Common Stock equal to the amount of principal and interest so paid
by such QIP Investors divided by a conversion price of $2.47 per share.
(ii) At any time after March 31, 1999 but before the earlier of 5:00
p.m., New York time, on December 31, 1999 or payment in full of the Line of
Credit, the QIP Investors may, at their option and on behalf of the Company,
pay to Vereinsbank up to $2,000,000 of the outstanding principal, together with
the amount of any unpaid interest due thereon, owed by the Company to
Vereinsbank under the Line of Credit. In exchange for any such payment by any
QIP Investors, the Company agrees to issue to such QIP Investors that number of
shares of Common Stock equal to the amount of principal and interest so paid by
such QIP Investors divided by a conversion price of $1.00 per share.
(iii) Upon payment in full of the Line of Credit and issuance of shares
pursuant to this subsection (if required), the Company shall have no further
obligations to QIP or the other QIP Investors with respect to the Line of
Credit or the 2/98 Guaranty.
(c) Investor Loans. (i) 10/98 Loan. At any time after March 31, 1999 but
before the earlier of 5:00 p.m., New York time, on December 31, 1999 or payment
in full of the 10/98 Loan, the QIP Investors may, at their option, elect to
convert into Common Stock up to $600,000 of the outstanding principal, together
with the amount of any interest due thereon, owed by the Company to the QIP
Investors under the 10/98 Loan. If the QIP Investors elect to so convert, the
Company agrees to issue to such QIP Investors that number of shares of Common
Stock equal to the amount of principal and interest to be converted by such QIP
Investors divided by a conversion price of $1.00 per share. Upon payment in full
of the 10/98 Loan and issuance of shares pursuant to this subsection (if
required), the QIP Investors shall release the Company from any obligations
arising
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under, and the Company shall have no further obligations to the QIP Investors
with respect to, the 10/98 Loan, the 10/98 Note and the 10/98 Security
Agreement.
(ii) 11/98 Loan,. At any time after March 31, 1999 but before the earlier
of 5:00 p.m., New York time, on December 31, 1999 or payment in full of the
11/98 Loan, the QIP Investors may, at their option, elect to convert into Common
Stock [up to] $600,000 of the outstanding principal, together with the amount of
any interest due thereon, owed by the Company to the QIP Investors under the
11/98 Loan. If the QIP Investors elect to so convert, the Company agrees to
issue to such QIP Investors that number of shares of Common Stock equal to the
amount of principal and interest to be converted by such QIP Investors divided
by a conversion price of $1.00 per share. Upon payment in full of the 11/98 Loan
and issuance of shares pursuant to this subsection (if required), the QIP
Investors shall release the Company from any obligations arising under, and the
Company shall have no further obligations to the QIP Investors with respect to,
the 11/98 Loan, the 11/98 Note and the 11/98 Security Agreement.
(iii) 1/99 Loan. At any time after March 31, 1999 but before the earlier
of 5:00 p.m., New York time, on December 31, 1999 or payment in full of the 1/99
Loan, the QIP Investors may, at their option, elect to convert into Common Stock
up to $600,000 of the outstanding principal, together with the amount of any
interest due thereon, owed by the Company to the QIP Investors under the 1/99
Loan. If the QIP Investors elect to so convert, the Company agrees to issue to
such QIP Investors that number of shares of Common Stock equal to the amount of
principal and interest to be converted by such QIP Investors divided by a
conversion price of $1.00 per share. Upon payment in full of the 1/99 Loan and
issuance of shares pursuant to this subsection (if required), the QIP Investors
shall release the Company from any obligations arising under, and the Company
shall have no further obligations to the QIP Investors with respect to, the 1/99
Loan, the 1/99 Note and the 1/99 Security Agreement.
(iv) 2/99 Loan. At any time after March 31, 1999 but before the earlier
of 5:00 p.m., New York time, on December 31, 1999 or payment in full of the 2/99
Loan, the QIP Investors may, at their option, elect to convert into Common Stock
up to $400,000 of the outstanding principal, together with the amount of any
interest due thereon, owed by the Company to the QIP Investors under the 2/99
Loan. If the QIP Investors elect to so convert, the Company agrees to issue to
such QIP Investors that number of shares of Common Stock equal to the amount of
principal and interest to be converted by such QIP Investors divided by a
conversion price of $1.00 per share. Upon payment in full of the 2/99 Loan and
issuance of shares pursuant to this subsection (if required), the QIP Investors
shall release the Company from any obligations arising under, and the Company
shall have further obligations to the QIP Investors with respect to, the 2/99
Loan, the 2/99 Note and the 2/99 Security Agreement.
(v) 3/99 Loan. At any time after March 31, 1999 but before the earlier of
5:00 p.m., New York time, on December 31, 1999 or payment in full of the 3/99
Loan,
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the QIP Investors may, at their option, elect to convert into Common Stock up
to $400,000 of the outstanding principal, together with the amount of any
interest due thereon, owed by the Company to the QIP Investors under the 3/99
Loan. If the QIP Investors elect to so convert, the Company agrees to issue to
such QIP Investors that number of shares of Common Stock equal to the amount of
principal and interest to be converted by such QIP Investors divided by a
conversion price of $1.00 per share. Upon payment in full of the 3/99 Loan and
issuance of shares pursuant to this subsection (if required), the QIP Investors
shall release the Company from any obligations arising under, and the Company
shall have no further obligations to the QIP Investors with respect to, the
3/99 Loan, the 3/99 Note and the 3/99 Security Agreement.
(d) Future Borrowings. To the extent the Company borrows up to an
additional $1,400,000 from the QIP Investors, the QIP Investors will be
entitled to similar conversion rights with respect to such additional loans to
the Company.
3. Conversion Mechanics.
(a) Adjustment of Conversion Price. Each of the conversion prices
specified in Section 2 above shall be adjusted proportionately for any and all
stock splits, stock dividends, reorganizations, recapitalizations or other
similar actions taken or effected by the Company.
(b) Conversion Procedure. (i) To exercise an option granted in Section 2
above, the exercising party must deliver written notice to the other party of
the specific option(s) being exercised, including the amount(s) of principal
and interest to be converted and the names and addresses in which the stock
certificates(s) are to be registered and delivered. Delivery of this written
notice shall constitute a waiver of any and all defaults by the Company under
any promissory notes, security agreements or other documents between the
Company and the QIP Investors with respect to the loan(s) being converted.
(ii) The Company will issue to the QIP Investors shares of Common
Stock in accordance with the appropriate subsection of Section 2 above within
two (2) business days of receipt by the Company of (x) in the case of Section
2(a) or 2(b), the appropriate original promissory notes(s) for cancellation from
Vereinsbank, together with written confirmation of the amount(s) paid to
Vereinsbank by the QIP Investors, on behalf of the Company, or (y) in the case
of Section 2(c), the appropriate original promissory note(s) for cancellation
and conversion from the QIP Investors. If an original promissory note has been
lost, stolen or destroyed, the holder of such promissory note may instead
deliver an affidavit of that fact, containing such indemnity provisions as the
Company may reasonably require.
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(c) Partial Exercise. to the extent an option granted in Section 2
above is exercised in part, the option shall continue to exist with
respect to any amounts covered by such option which have not been
converted.
(d) Waiver of Rights. The QIP Investors waive any and all
subscription, approval or other rights they may have pursuant to the
Shareholders Agreement, dated as of December 11, 1997, as a result of any
issuance of Common Stock hereunder.
4. Assignment. No party hereto may assign or otherwise transfer any of
their rights or obligations hereunder without the prior written consent of the
other parties hereto, except that (i) any QIP Investor may assign his or its
rights hereunder to any other QIP Investor and (ii) the Company may assign or
transfer its rights and obligations hereunder to a successor entity.
5. Amendment. This Agreement shall not be amended or modified except
by a writing duly executed by the parties hereto.
6. Entire Agreement. This Agreement, together with the other
instruments, agreements and documents referred to herein, contain all the terms
and conditions agreed upon by the parties relating to the subject matter of this
Agreement and supersede all prior or contemporaneous agreements, negotiations,
correspondence, undertakings and communications of the parties, oral or written,
respecting such subject matter.
7. Further Assurances. If at any time after the date hereof any
further action is necessary or desirable to carry out the purposes of this
Agreement, each of the parties hereto will take such further action (including
the execution and delivery of such further instruments and documents) as the
other party hereto reasonably may request, all at the sole cost and expense of
the requesting party.
8. Severability. Any provision of this Agreement which is held to be
invalid and unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective only to the extent of such prohibition or unenforceability,
without invalidating the remaining provisions hereof or affecting the validity
or enforceability of such provision in any other jurisdiction.
9. Waiver. Waiver of the breach of any term or the failure of any
condition of this Agreement by any party shall only be effective if in writing
and shall not be construed as a waiver of any subsequent breach or failure of
the same term or condition, or a waiver of any other term or condition of this
Agreement.
10. Governing Law. This Agreement shall be governed by and construed
and interpreted in accordance with the laws of the State of New York (without
regard to principles of conflicts of law).
11. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original but all of which shall
together constitute one and the same
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instrument. For purposes of this Agreement, a facsimile copy of a party's
signature shall be sufficient to bind such party.
[THE NEXT PAGE IS THE SIGNATURE PAGE.]
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first written above.
NEWSREAL, INC.
By: /s/ XXXXX X. XXXXXXXX
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Name: Xxxxx X. Xxxxxxxx
Title: President & CEO
QUANTUM INDUSTRIAL PARTNERS, LDC
By: /s/ XXXX XXXXXXXXX
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Name:
Title:
GEOSOR CORPORATION
By: /s/ XXXX XXXXXXXXX
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Name: Xxxx Xxxxxxxxx
Title: President
/s/ XXXX XXXXXXXXX
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XXXX XXXXXXXXX
/s/ XXXXXXX XXXXXXX
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XXXXXXX XXXXXXX
/s/ XXXXXXX XXXX
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XXXXXXX XXXX
