EXHIBIT 10.37
SENIOR SUBORDINATED SECURED BRIDGE
NOTE PURCHASE AGREEMENT
This Senior Subordinated Secured Bridge Note
Purchase Agreement, dated as of September 1, 2005 (the “
Agreement ”), by and among Axeda Systems Inc., a
Delaware corporation (the “ Company ”), Axeda
Systems Operating Company, Inc., a Massachusetts corporation and an
indirect wholly owned subsidiary of the Company (“
ASOC ”), and Axeda IP, Inc., a Nevada corporation and
an indirect wholly owned subsidiary of the Company (“
AIP ” and, together with ASOC, the “
Guarantors ”), and the persons listed on Schedule
1 hereto (the “ Purchasers ”):
WITNESSETH:
WHEREAS, pursuant to the terms of the Senior
Secured Bridge Note Purchase Agreement, dated as of July 8, 2005
and as amended from time to time, among the Company, the Guarantors
and the Purchasers (the “ Senior Bridge Agreement
”), the Purchasers made senior secured loans to, and received
promissory notes representing an aggregate principal amount of
$600,000 (the “ Senior Bridge Notes ”) from, the
Company (the “ Senior Bridge Debt ”);
WHEREAS, the Company, ASOC and AIP (“
Sellers ”) and ASOC Acquisition Corp., an affiliate of
the Purchasers (“ Buyer ”), entered into the
Asset Purchase Agreement dated as of the date hereof (as it may be
amended from time to time, the “ Asset Purchase
Agreement ”), pursuant to which the Buyer has agreed to
purchase substantially all of the assets of Sellers’ device
relationship management software and applications business subject
to the terms and conditions set forth in the Asset Purchase
Agreement; and
WHEREAS, in connection with the execution of the
Asset Purchase Agreement, the Purchasers have agreed to make senior
subordinated secured loans of up to an aggregate principal amount
of $900,000 to the Company and the Guarantors, upon the terms and
subject to the conditions set forth herein;
NOW, THEREFORE, in consideration of the
foregoing premises and the mutual covenants hereinafter set forth,
and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto,
intending to be legally bound, do hereby agree as
follows:
1. The
Notes and the Guaranty .
(a) The Company
has authorized the issuance and sale, in accordance with the terms
hereof, of the Company’s 7% Senior Subordinated Secured
Bridge Notes in the original aggregate principal amount of up to
$900,000 (each individually, a “ Note ” and
collectively, the “ Notes ”). Each Note will be
substantially in the form set forth in Exhibit A
hereto.
(b) The
Company’s obligations under the Notes shall be guarantied by
the Guarantors. The Guarantors shall execute and deliver to the
Purchasers the Amended and Restated Subsidiary Guaranty (the
“ Guaranty ”) in substantially the form set
forth in Exhibit B hereto.
2. Purchase
and Sale of Notes . At the Closing (as defined below), the
Company shall issue and sell to the Purchasers, and, subject to and
in reliance upon the representations, warranties, terms and
conditions contained herein, each Purchaser, severally and not
jointly, shall purchase from the Company, a Note in up to the
aggregate principal amount set forth opposite such
Purchaser’s name on Schedule 1 hereto under the
heading “ Maximum Principal Amount .” Subject to
the terms and conditions hereof, the Maximum Principal Amount for
each Purchaser shall be payable in separate installments by each
Purchaser in the amounts set forth opposite such Purchaser’s
name on Schedule 1 hereto under the headings “
First Installment Amount ” and “ Subsequent
Installment Amount ,” respectively (collectively for each
Purchaser, the “ Installment Amounts ”). The
Installment Amounts shall be payable in accordance with the terms
of Sections 3 and 4 hereof.
3.
Closing .
(a) The
consummation of the purchase and sale of the Notes (the “
Closing ”) shall be held at 10:00 a.m. on September
1, 2005 (the “ Closing Date ”), or such
other date and time as shall be mutually agreed upon. At the
Closing, (i) the Company shall issue the Notes, dated as of the
Closing Date, payable to the order of each Purchaser in the
aggregate principal amount set forth opposite such
Purchaser’s name on Schedule 1 hereto under the
heading “ Maximum Principal Amount ,” and (ii)
the Guarantors shall execute and deliver to the Purchasers the
Guaranty. Promptly following the Closing (but in any event within
five (5) days following the Closing), in exchange for the issuance
of the Notes and the Guaranty, each Purchaser shall deliver to the
Company, by way of wire transfer of immediately available United
States funds, the amount set forth opposite such Purchaser’s
name on Schedule 1 hereto under the heading “ First
Installment Amount ” (the “ First
Installment ”).
(b) The
obligations of the Purchasers to purchase the Notes and pay the
First Installment Amount at the Closing are subject to the
following conditions:
(i) The
representations and warranties of the Company set forth in this
Agreement, the Security Agreement (defined below) and in the Asset
Purchase Agreement shall be true and correct on and as of the date
hereof and on and as of the Closing Date with the same effect as
though such representations and warranties had been made on and as
of such date, and the President of the Company shall have certified
to the Purchasers in writing to such effect;
(ii) The Company shall have performed and complied
with all agreements contained in this Agreement and the other
Bridge Loan Documents (defined below) required to be performed or
complied with by it prior to or at the date of such Closing, and
the President of the Company shall have certified to the Purchasers
in writing to such effect;
(iii) The Company and the Guarantors shall have duly
executed and delivered to the Purchasers an Amended and Restated
Security Agreement substantially in the form attached as
Exhibit C (the “ Security Agreement
”);
(iv) The Guarantors shall have duly executed and
delivered to the Purchasers the Guaranty;
(v) The Purchasers shall have received evidence in
form and substance reasonably satisfactory to them that all
filings, recordings and registrations, including, without
limitation, the filing of duly executed financing statements on
form UCC-1 and the requisite filings with the U.S. Patent &
Trademark Office, necessary or desirable to perfect the liens
created by the Security Agreement shall have been
completed;
(vi) The Company shall have obtained and delivered to
the Purchasers, in form satisfactory to the Purchasers, all
necessary consents of governmental agencies and third parties
(including Laurus Master Fund, Ltd. (“ Laurus
”)) to permit the Company to enter into and perform its
obligations under this Agreement, the other Bridge Loan Documents
and the Asset Purchase Agreement;
(vii) All corporate and other proceedings to be taken
by the Company in connection with the transactions contemplated
hereby and all documents incident thereto shall be satisfactory in
form and substance to the Purchasers, and the Purchasers shall have
received all such counterpart originals or certified or other
copies of such documents as they reasonably may request;
(viii) The Company and Laurus shall have duly executed
and delivered to the Purchasers an Amended and Restated
Subordination Agreement substantially in the form attached as
Exhibit D (the “ Subordination Agreement
”); and
(ix) The Company and the Guarantors shall have
(A) duly executed and delivered to the Buyer the Asset
Purchase Agreement and (B) delivered to the Buyer the Voting
Agreements (as defined in the Asset Purchase Agreement) (the Asset
Purchase Agreement and the Voting Agreement collectively, the
“ Acquisition Documents ”) duly executed and
delivered by the parties thereto other than the Buyer.
For purposes of this Agreement, “
Bridge Loan Documents ” shall mean this Agreement, the
Notes, the Senior Bridge Agreement, the Senior Bridge Notes, the
Security Agreement, the Guaranty, the Subordination Agreement and
that certain Grant of Security Interest in Patents and Trademarks,
dated as of July 8, 2005 (the “ P&T Security
Agreement ”), in each case as may be amended from time to
time.
4.
Subsequent Installments .
(a) Each of the
Purchasers shall, subject to the terms and conditions hereof, make
one or more additional advances to the Company in the aggregate
amount up to (and not to exceed) the amount set forth opposite such
Purchaser’s name on Schedule 1 hereto under the
heading “ Subsequent Installment Amount ,” in
one or more fundings from time to time from the Closing Date
through the business day immediately preceding the Maturity Date
(as defined below) (each such advance, a “ Subsequent
Installment ” and, collectively, the “
Subsequent Installments ”).
(b) If the
Company desires the Purchasers to make a Subsequent Installment, it
shall deliver a written request to the Purchasers, which request
shall specify the amount of such Subsequent Installment (which
shall be in minimum increments of no less than $100,000), the
intended use of such Subsequent Installment funds and shall certify
that the none of the events specified in clauses (i) through (iv)
in Section 4(c) below shall have occurred (the “ Funding
Request Notice ”); provided, however , that
in no event shall the Company make a
request for a Subsequent Installment sooner than fifteen (15) days
following the funding of the most recent First Installment or any
Subsequent Installment, as the case may be.
(c) No Purchaser
shall be obligated to fund any Subsequent Installment if any of the
following shall have occurred: (i) any representation or warranty
by the Company contained in the Bridge Loan Documents or in the
Acquisition Documents shall be untrue or incorrect in any way on
the date of such Subsequent Installment; (ii) the Company has not
performed or has otherwise breached the covenants set forth in the
Acquisition Documents required to be performed on or before the
date of such Subsequent Installment; (iii) any breach or default
(including an Event of Default (defined below)) shall have occurred
and be continuing under this Agreement or any of the Bridge Loan
Documents, or (iv) the Company shall have received any
proposal or expression of interest relating to an Acquisition
Proposal (as defined in the Asset Purchase Agreement) which
Acquisition Proposal has not been rejected by the Company within
five (5) business days of receipt (or prior to delivery of the
Funding Request Notice (if earlier)).
(d) Subject to
the satisfaction of the conditions contained in this Section 4, the
funding of any Subsequent Installment shall occur within five
business days after the receipt of the applicable Funding Request
Notice by delivery by Purchasers to the Company via wire transfer
of immediately available United States funds, the amount listed in
the Funding Request Notice delivered to such Purchaser. All
Installment Amounts and all payments of principal and interest
under each Note (or any portion, installment or drawdown thereon)
shall be recorded by the applicable Purchaser and endorsed on the
grid which is part of such Purchaser’s Note. The entries on
the grid which is part of such Note shall be prima facie
evidence of amounts outstanding thereunder. The failure to make any
such endorsement or any error in any such endorsement shall not
affect the obligations of the Company or the Guarantors in respect
of the First Installment or any Subsequent Installment. In no event
shall the aggregate amount of all Subsequent Installments advanced
by any Purchaser exceed the amount set forth opposite such
Purchaser’s name on Schedule 1 hereto under the
heading “ Subsequent Installment Amount .” On or
before the date of any Subsequent Installment, the Company shall
deliver to the Purchasers such documents as may be requested by
them.
(a)
Maturity . The aggregate principal amount of the Notes,
together with all accrued interest thereon, shall be due and
payable in full (without notice, demand or presentment) on the
earliest to occur of the following (the earliest of such events,
the “ Maturity Date ”): (i) the date on which
the Asset Purchase Agreement shall have been terminated (the
payment in full of the Notes shall be a condition precedent to such
termination of the Asset Purchase Agreement); (ii) the date on
which the Company or any of its subsidiaries or affiliates enters
into a letter of intent, written understanding or definitive
agreement relating to an Acquisition Proposal or the Company
otherwise takes any action adverse to the transactions contemplated
under the Asset Purchase Agreement; (iii) the date on which
the Asset Sale (as defined in the Asset Purchase Agreement) is
consummated; (iv) the occurrence of an Event of Default (as
defined below) and (v) December 15, 2005.
(b)
Interest . The aggregate principal amount of the Notes, from
time to time outstanding, shall bear interest at a rate per annum
equal to seven percent (7%). All accrued interest on the Notes
shall be due and payable on the Maturity Date. All interest shall
be computed for the actual number of days elapsed on the basis of a
360-day year and shall compound annually. From and after the
occurrence of an Event of Default, the unpaid principal balance of
the Notes and, to the extent permitted by law, the overdue interest
thereon, shall bear interest at a rate per annum equal to ten
percent (10%).
(c) Payment;
Usury .
(i) All payments
by the Company under this Agreement shall be made in United States
dollars without set-off or counterclaim and be free and clear and
without any deduction or withholding for any taxes or fees of any
nature whatever, unless the obligation to make such deduction or
withholding is imposed by law. The Company, to the extent permitted
by applicable law, waives presentment for payment, protest and
demand, and notice of protest, demand and/or dishonor and
nonpayment of the Notes, notice of any Event of Default, and all
other notices or demands otherwise required by law that the Company
may lawfully waive. If any day on which a payment is due pursuant
to the terms of this Note is not a day on which banks in the
Commonwealth of Massachusetts are generally open (a “
Business Day ”), such payment shall be due on the next
Business Day following, and such extension of time shall in such
case be included in the computation of payment of interest
due.
(ii) For so long as any of the Notes remain
outstanding, the Company covenants (to the extent that it may
lawfully do so) that it will not at any time insist upon, plead, or
in any manner whatsoever claim or take the benefit or advantage of
any stay, extension or usury law wherever enacted, now or at any
time hereafter in force, which may affect the covenants or the
performance of this Agreement; and the Company (to the extent that
it may lawfully do so) hereby expressly waives all benefit or
advantage of any such law and covenants that it will not, by resort
to any such law, hinder, delay or impede the execution of any power
herein granted to the Purchasers, but will suffer and permit the
execution of every such power as though no such law has been
enacted.
(iii) Notwithstanding anything herein or in the Notes
which may be to the contrary, in no event, contingency, or
circumstances whatsoever shall the interest or any amount deemed to
be interest payable by the Company hereunder with respect to the
Notes exceed the maximum amount permitted by applicable law and, to
the extent that any payments in excess of such permitted amount are
finally determined to have been received by the Purchasers, such
excess shall be considered payments in respect of the principal of
the Notes and, if the principal of the Notes has been paid in full,
shall be refunded to the Company.
(d)
Security . The Notes shall be secured by and entitled to the
benefits of the Security Agreement and the P&T Security
Agreement.
6. Use of
Proceeds . The Company shall use, and shall cause it
subsidiaries (including the Guarantors) to use, the proceeds from
the sale of the Notes first to pay the accounts payable, operating
expenses and other liabilities directly attributable to the
operation of the Business (as defined in the Asset Purchase
Agreement) and thereafter to pay such other expe
