Exhibit 10.2
THIS
NOTE AND THE SECURITIES ISSUABLE UPON CONVERSION HEREOF HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR
UNDER THE PROVISIONS OF ANY APPLICABLE STATE SECURITIES LAWS. THIS
NOTE AND THE SECURITIES ISSUABLE UPON CONVERSION HEREOF MAY NOT BE
SOLD, OFFERED FOR SALE, PLEDGED, HYPOTHECATED OR OTHERWISE
TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN OPINION OF
COUNSEL REASONABLY SATISFACTORY TO THE COMPANY THAT SUCH
REGISTRATION IS NOT REQUIRED.
CONVERTIBLE SENIOR SUBORDINATED PROMISSORY NOTE
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Promissory Note No.
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January 17, 2008 |
FOR VALUE RECEIVED, Goldleaf
Financial Solutions, Inc., a Tennessee corporation (the “
Company ”), hereby promises to pay to
(herein, together with any assignee or holder hereof, called the
“ Holder ”), the principal sum of
DOLLARS ($[
]), together with interest as provided for herein and all other
amounts, fees and expenses which may accrue under applicable law
from the date hereof until the date of payment in full or
conversion as provided herein, in lawful currency of the United
States of America.
This Convertible Senior Subordinated
Promissory Note (this “ Note ”) is one of a
series of $7,000,000 in convertible senior subordinated promissory
notes (together with the Note, the “ Notes ”)
issued pursuant to, and is entitled to the benefits of the
provisions of, that certain Agreement and Plan of Merger, dated as
of January 17, 2008 (the “ Merger Agreement
”), by and among the Company, GLF Sub, Inc. and Alogent
Corporation. Capitalized terms used herein and not otherwise
defined herein shall have the meaning ascribed to them in the
Merger Agreement.
SECTION 1
Terms
Section 1.1 Interest
Rate . The Company agrees that interest shall accrue on the
outstanding principal amount of this Note from the date hereof
until the principal has either been converted in accordance with
the provisions hereof or paid in full, with interest accruing at a
fixed simple rate per annum equal to seven percent (7.0%).
Such interest shall be computed on the basis of actual days elapsed
and a year of 365 days.
Section 1.2 Payments .
Unless earlier converted in accordance with Section 1.3
hereof, subject to the Section 4 hereof, the principal
amount of this Note shall be immediately due and payable in full on
the earliest to occur of (a) the second anniversary of the
date of this Note, (b) any Event of Default (as defined in
Section 2.1 below) under Section 2.1(a)-(d)
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inclusive, and (c) the date of acceleration of this Note
pursuant to the second sentence of Section 2.2(a) as a result
of any other Event of Default (the earliest of such dates being the
“ Maturity Date ”). The interest accrued on this
Note from the date of this Note through the Maturity Date shall be
payable to the Holder in arrears on the Maturity Date, when all
accrued and unpaid interest, and all other outstanding amounts,
fees and expenses due hereunder, shall be due and payable. The
Company may elect, however, to pay accrued and unpaid interest on
this Note in cash on the 17th day of each April, July, October and
January after the date hereof. Payment of principal on this Note
shall be made by wire transfer or ACH to the Holder according to
written instructions provided by the Holder, provided that if the
Holder fails to provide such instructions at least four business
days before such payment is due, then payment may be made by check
delivered to the Holder at the address of the Holder reflected on
the investor agreement delivered to the Company pursuant to the
Merger Agreement, or at such other place as the Holder may
designate and notify the undersigned in writing, on or before the
date due.
Section 1.3 Conversion into
Common Stock at Election of Holder . At any time and from time
to time when any principal amount of this Note remains outstanding,
whether before or after the Maturity Date, the Holder may elect to
covert the entire outstanding principal amount of this Note, or any
lesser amount of this Note that is convertible into a number of
Shares (as defined below) that is divisible by one
hundred (100), into that number of fully paid and
nonassessable shares (the “ Shares ”) of the
Company’s Common Stock, no par value (the “ Common
Stock ”), as is obtained by dividing (A) the amount
to be converted by (B) Four Dollars and Fifty
Cents ($4.50) (the “ Conversion Price ”).
The Holder shall give five (5) days’ written notice to
the Company of such election to convert this Note, and such
conversion shall be deemed to have been made on the fifth (5
th )
day after such notice is delivered to the Company. On conversion,
all of the accrued but unpaid interest on the Note, together with
all outstanding fees and expenses due under this Note, shall be
paid to the Holder in cash as provided in Section 1.2 above
(or a pro rata amount of such interest, fees and expenses if less
than all of this Note is converted), and such interest shall not be
convertible into Shares. No fractional shares or scrip representing
fractional shares shall be issued upon the conversion of this Note.
In lieu of issuing such fractional shares, the Company shall pay
all of the cash value of any fractional interest to the Holder.
Notwithstanding the foregoing, the Company shall not be obligated
to pay accrued and unpaid interest on conversion as provided above
if such payment would cause, or in the Company’s reasonable
judgment be likely to cause, a default under the Credit Agreement
(as such term is defined below). In such event, such accrued and
unpaid interest shall be payable to the Holder (or the
Holder’s assignee) on the Maturity Date, and the
Company’s failure to pay such interest on conversion shall
not be deemed to be an Event of Default as defined below.
Section 1.4 Optional
Prepayment with the Consent of the Holder . At the option of
the Company with the prior written consent of the Holder, the
Company may, without premium or penalty, prepay the unpaid
principal amount of this Note, in whole or in part, together with
interest accrued thereon and all other outstanding amounts, fees
and expenses to the date of prepayment. The Company shall make the
same prepayment offer to the Holders of all outstanding Notes, with
such prepayment to be pro rated among the holders of Notes in
accordance with their respective portions of the outstanding
aggregate principal amount of the Notes that are then outstanding,
but if the Holder of this or any other Note grants such
consent,
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then the
Company may prepay such Note notwithstanding the refusal of the
holders of other Notes to grant such consent. Further, the Company
may, subject to the Holder’s conversion rights under
Section 1.3, prepay the Note without the consent of the Holder
if the Company proposes, during the final six months of the term of
the Senior Debt (as defined below and as in effect on the date
hereof), to amend, restate, supplement, modify, refinance or
replace the Senior Debt under terms that would violate
Section 1.5(a), and the Majority Holders (as defined below)
decline to consent. Any such prepayment shall be applied first to
the payment of accrued interest and then to repayment of
principal.
Section 1.5 Restrictive
Covenants. From the date of this Note until all amounts
outstanding under this Note, including principal, interests, fees,
expenses and other amounts, have been indefeasibly paid in full or
converted as provided herein, the Company hereby covenants and
agrees with the Holder as follows:
(a)
Senior Debt . The principal amount of the Company’s
and its subsidiaries’ “Senior Debt” (as defined
in the following sentence) shall not exceed $55,000,000 as reduced
by the amount of all commitment reductions on revolving loans (the
“ Senior Debt Limit ”) in the aggregate. “
Senior Debt ” means the principal of any indebtedness
now existing or hereafter incurred under that certain Second
Amended and Restated Credit Agreement dated as of November 30,
2006 among the Company, Bank of America, N.A., Wachovia Bank, N.A.,
The Peoples Bank of Winder and the other lenders from time to time
party thereto, as amended and in effect as of the date hereof (the
“ Credit Agreement ”), including, without
limitation, the loan or loans thereunder and any
debtor-in-possession financing provided by the Senior Lenders. The
term Credit Agreement includes any amendments, restatements,
supplements or modifications thereto and any refinancing or
replacement thereof with a credit facility led or provided by a
commercial bank; provided that the terms of such amendment,
restatement, supplement, modification, refinancing or replacement
are not prohibited or restricted pursuant to the terms of this
Note. The Company shall not agree, nor shall it permit any
subsidiary to agree, to any amendment to the Credit Agreement or
the agreements and documents executed and delivered in connection
therewith (the “ Senior Credit Documents ”)
(including, without limitation, any refinancing of the Senior Debt)
which (i) increases the principal amount of the Senior Debt
above the Senior Debt Limit, (ii) increases the interest rates
payable with respect to any amount owed thereunder (other than as a
result of an event of default thereunder) by more than three
hundred basis points above the interest rates set forth in the
Credit Agreement as in effect as of the date of this Note,
(iii) shortens the maturity of the Senior Debt (unless the
maturity of the Note is shortened by an equal length of time), or
(iv) extends the maturity of the Senior Debt, unless, in each
case, the Company obtains the prior written consent of the Holders
of Notes representing at least 66.67% of the principal amount of
all Notes then outstanding (the “ Majority Holders
”).
(b)
No Other Liens . Without the prior written consent of the
Majority Holders, the Company shall not, nor shall it permit any of
its subsidiaries to, directly or indirectly, create, incur, assume
or suffer to exist, any “Lien” (as defined in the next
sentence) upon any of its property, assets or revenues, whether now
owned or hereafter acquired, other than Liens granted pursuant to
the Credit Agreement and any other Senior Credit Document as in
existence on the date hereof, and Liens permitted without consent
or waiver of any other party to
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the
Credit Agreement under Section 7.1 of the Credit Agreement as
such Section 7.1 (including any schedule thereto) exists on
the date hereof. “ Lien ” means any mortgage,
pledge, hypothecation, assignment, deposit arrangement intended as
security (and expressly excluding the Company’s and the
subsidiaries’ operating and investment bank accounts),
encumbrance, lien (statutory or otherwise), charge, or preference,
priority or other security interest or preferential arrangement of
any kind or nature whatsoever (including any conditional sale or
other title retention agreement), and any capital lease having
substantially the same economic effect as any of the
foregoing.
(c)
No Other Senior Indebtedness . Without the prior written
consent of the Majority Holders, the Company shall not, nor shall
it permit any of its subsidiaries to, directly or indirectly,
create, incur, assume or suffer to exist, any
“Indebtedness” (as defined in the next sentence) unless
such Indebtedness is either (i) expressly permitted under
Section 7.3 of the Credit Agreement (as such Section 7.3
exists as of the date hereof) or without consent or waiver of any
other party thereto, (ii) capital leases not exceeding
$500,000 in aggregate amount for each “Acquisition” (as
such term is defined in the Credit Agreement) or (iii) junior
and subordinate in every material respect to the debt evidenced by
this Note, including but not limited to the following: such debt
(x) has a maturity that is at least sixty (60) days
beyond the Maturity Date, (y) is unsecured; and (z) has
no greater remedies, rights or priorities than the remedies, rights
and priorities granted to the Holder in this Note. “
Indebtedness ” means all of the following, whether or
not included as indebtedness or liabilities in accordance with
GAAP: (1) all obligations for borrowed money and all
obligations evidenced by bonds, debentures, promissory notes, loan
agreements or other similar instruments; (2) all direct or
contingent obligations arising under letters of credit,
bankers’ acceptances, bank guaranties, surety bonds and
similar instruments; (3) net obligations under any hedge,
forward, derivative, swap or other similar contract or transaction;
(4) all obligations to pay the deferred purchase price of
property or services (other than (x) trade accounts payable in
the ordinary course of business and (y) earn-out arrangements
previously entered into by the Company in connection with the
acquisitions of certain assets of Community Banking Systems, Ltd.
and DataTrade L.L.C.); (5) indebtedness (excluding prepaid
interest thereon) secured by a Lien on property owned or being
purchased (including indebtedness arising under conditional sales
or other title retention agreements), whether or not such
indebtedness shall have been assumed or is limited in recourse;
(6) capital leases; and (7) all guarantees or other
obligations, contingent or otherwise, having the economic effect of
guaranteeing any indebtedness described above or other obligation
payable or performable by another person or entity in any manner,
whether direct or indirect.
(d)
Restricted Payments . Without the prior written consent of
the Majority Holders and except as permitted below, the Company
shall not, nor shall it permit any of its subsidiaries to declare
or make, directly or indirectly, (i) any dividend or other
distribution (whether in cash, securities or other property) with
respect to any of its capital stock or other equity interest, or
(ii) any payment (whether in cash, securities or other
property) on account of the purchase, redemption, retirement,
acquisition, cancellation or termination of any such capital stock
or other equity interest or of any option, warrant or other right
to acquire any such capital stock or other equity interest
(collectively, “ Restricted Payments ”), or
incur any obligation (contingent or otherwise) to do so, except
that: (x) each subsidiary of the Company may make Restricted
Payments to the Company and to any other subsidiary of the Company;
and (y) the
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Company
and each of its subsidiaries may declare and make dividend payments
or other distributions payable solely on its common stock or other
common equity interests (subject to the terms of
Section 1.7(c) below).
(e)
Cessation of Business . Without the prior written consent of
the Majority Holders, the Company shall not, nor shall it permit
any of its material subsidiaries (for this purpose meaning
subsidiaries having more than $2,000,000 in revenues in the past
12 months) to, dissolve, liquidate (unless the successor to
the subsidiary’s assets in such dissolution or liquidation is
the Company or another subsidiary), cease to do business or suspend
normal business operations, provided that the sale or other
disposition of a subsidiary in a transaction approved by the
Company’s board of directors shall not be deemed to be a
cessation of doing business or a suspension of normal business
operations.
(f)
Restrictive Agreements . Without the prior written consent
of the Majority Holders, neither Company nor any of its
subsidiaries will enter into or become obligated under any
agreement or contract including, without limitation, any loan
agreement, promissory note (or other evidence of indebtedness),
mortgage, security agreement or lease, which by its terms prevents
or restricts Company or its subsidiaries from performing its
obligations under this Note, other than the Senior Credit
Documents.
Section 1.6 Rights Upon
Certain Transactions . In the event the Company proposes to
engage in any reclassification of the Common Stock (other than a
change in par value, or as a result of a subdivision or
combination), or in any consolidation or merger of the Company with
or into another corporation (other than a consolidation or merger
with another corporation in which the Company is a continuing
corporation and in which the Company’s shareholders
immediately preceding such consolidation or merger own at least 50%
of the voting securities of the Company following such
consolidation or merger and that does not result in any
reclassification of the Shares issuable upon conversion of this
Note), or in any sale of all or substantially all of the assets of
the Company, or in any “ Rule 13e-3 transaction
” as defined in SEC Rule 13e-3 (the foregoing
transactions and events being referred to collectively as a “
Major Event ”), then the Holder of this Note shall
have the option to elect, contingent upon the closing of such Major
Event, either (a) to convert this Note as provided in
Section 1.3 above, contingent upon the effectiveness of the
Major Event, and to receive the consideration payable to the
holders of Common Stock as a result of such Major Event;
(b) to have the entire outstanding balance hereunder
accelerated and to be paid in full in cash all amounts owed
hereunder on or before the closing of such Major Event; or
(c) if and only if the Company so consents, to receive a
“New Note” (the Company may grant or withhold such
consent in its sole discretion). “ New Note ”
means a new Note, providing that the Holder shall have the right to
convert such new Note, and procure upon such conversion, in lieu of
the Shares theretofore issuable upon conversion of this Note, the
kind and amount of shares of stock, other securities, money and
property receivable upon such Major Event by a holder of an
equivalent number of shares of Common Stock. Such New Note shall
provide for adjustments that shall be as nearly equivalent as may
be practicable to the adjustments provided for in Section 1.7.
The Holder shall be entitled to receive the same prior notice of
any shareholders’ meeting as provided to the holders of
Common Stock in accordance with the Bylaws of the Company with
respect to any Major Event and, in any event, shall receive at
least ten (10) days advance written notice of any Major
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Event,
together with such information about the Major Event and the other
parties thereto as is available to the Company and as may be
reasonably requested by the Holder to enable the Holder to evaluate
which option above the Holder wants to select.
Section 1.7 Adjustment
.
The number of Shares into which this
Note is convertible and the Conversion Price are subject to
adjustment from time to time upon the occurrence of certain events,
as follows:
(a) If
the Company at any time while any amounts remain outstanding under
this Note shall subdivide or combine the Common Stock, the
Conversion Price shall be proportionately decreased in the case of
a subdivision or increased in the case of a combination.
(b) If
the Company at any time while any amounts remain outstanding under
this Note shall pay a dividend with respect to the shares of Common
Stock payable in, or make any other distribution with respect to,
the Common Stock (except any distribution specifically provided for
in the foregoing Section 1.7(a)), then the Conversion Price
shall be adjusted, from and after the date of determination of
shareholders entitled to receive such dividend or distribution, to
that price determined by multiplying the Conversion Price in effect
immediately prior to such date of determination by a fraction
(1) the numerator of which shall be the total number of shares
of Common Stock outstanding immediately prior to such dividend or
distribution, and (2) the denominator of which shall be the
total number of shares of Common Stock outstanding immediately
after such dividend or distribution.
(c) Notwithstanding
anything to the contrary in this Note, under no circumstances shall
the Company be required to make any adjustment to the Conversion
Price or the number of equity securities issuable upon conversion
of this Note that would duplicate an adjustment that is afforded to
the Common Stock generally pursuant to the Company’s articles
of incorporation.
SECTION 2
Events of Default
Section 2.1 Events of
Default . The outstanding balance of this Note, including
principal, interest and all other amounts, fees and expenses, shall
automatically be and become immediately due and payable without any
action on the part of the Holder upon the happening of any of the
following events (each, an “ Event of Default
”):
(a) The
Company or any of its subsidiaries institutes or consents to the
institution of any proceeding under any federal bankruptcy law, or
any other applicable federal or state bankruptcy, insolvency,
liquidation, creditors’ rights or other similar law, as now
or hereafter constituted (“ Bankruptcy Law ”);
or makes an assignment for the benefit of creditors; or applies for
or consents to the appointment of any receiver, trustee, custodian,
conservator, liquidator, rehabilitator or similar officer for it or
for all or any material part of its property; or any receiver,
trustee, custodian, conservator, liquidator, rehabilitator or
similar officer is
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appointed and the appointment continues undischarged or unstayed
for ninety (90) calendar days; or any proceeding under any
Bankruptcy Law relating to the Company or any of its subsidiaries
or to all or any material part of its or their property is
instituted by any person or entity and continues undismissed or
unstayed for ninety (90) calendar days; or an order for relief
is entered in any such proceeding; the Company or any of its
subsidiaries becomes unable or admits in writing its inability or
fails generally to pay its debts as they become due, or any
writ
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