EXHIBIT 10.2
FIRST AMENDMENT TO SECOND AMENDED
AND RESTATED SECURED ADVANCE FACILITY LOAN AGREEMENT
This FIRST AMENDMENT TO THE SECOND AMENDED AND RESTATED SECURED ADVANCE
FACILITY LOAN AGREEMENT (the "First Amendment") is entered into as of this 31st
day of December, 1998 (the "First Amendment Date") by and between XYVISION,
INC., a Delaware corporation with its principal office at ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇,
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ (the "Borrower"), and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ as trustee of
the Tudor Trust u/d/t December 12, 1997, with an address of ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇
Drive, 4th Floor, Beverly Hills, California (the "Lender").
WHEREAS, the Board of Directors of the Borrower has approved a plan of
corporate restructuring whereby, among other things, substantially all of the
assets (the "Assets") and certain of the liabilities of the Borrower will be
transferred to a newly formed subsidiary (the "Subsidiary") of the Borrower
(the "Restructuring");
WHEREAS, the Borrower and the Lender are parties to a Second Amended and
Restated Secured Advance Facility Loan Agreement dated July 1, 1998 (the
"Agreement");
WHEREAS, pursuant to the Restructuring, the Lender has, contemporaneously
herewith, converted a portion of the principal indebtedness incurred by the
Borrower pursuant to the Agreement into the Borrower's Series C Convertible
Preferred Stock (the "Series C Stock");
WHEREAS, the Lender and the Borrower have agreed that the Lender shall
have the option, exercisable on and after June 1, 1999, to convert an
additional $5,000,000 of the principal indebtedness incurred by the Borrower
pursuant to the Agreement into the Borrower's Series C Stock at a conversion
ratio of $10.00 per share (as adjusted); and
WHEREAS, the parties hereto desire to make further amendments and
modifications to the Agreement as provided herein;
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, and with the specific intent to
be bound hereby, the Borrower and the Lender hereby agree as follows:
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1. Definition. Each term in the First Amendment not otherwise defined
herein shall be deemed to have the same meaning ascribed to that term in the
Agreement.
2. Confirmation of Loan Amount. The Borrower and the Lender confirm and
acknowledge that afer giving effect to the contemporaneous conversion of
$1,750,000 of the principal amount of the Liabilities hereunder into 175,000
shares of Series C Stock, the outstanding Liabilities of the Borrower under the
Agreement as of the date of this First Amendment are as follows:
Principal $11,750,000
Accrued Interest $875,747
Lender's costs and Expenses
Associated with the Restructuring $26,620
3. Amendments to the Agreement. The provisions of the Agreement are hereby
amended as follows:
(a) A new section 1.8(3) is hereby added to the Agreement as follows:
"(e) Default shall be made by Xyvision Enterprise Solutions, Inc.
("XES") under that certain Secured Advance Facility Loan Agreement between XES
and the Lender, dated as of December 31, 1998, and as amneded from time to time
(the "XES" Loan Agreement")."
(b) Section 1.19 of the Agreement is amended and restated in its entirety
as follows:
"1.19. Maximum Loan Amount. Twelve Million Two Hundred Twenty-Six
Thousand Six Hundred Twenty Dollars ($12,226,620) less the principal amount of
any Liabilities of the Borrower converted from time to time into the Borrower's
Series C Convertible Preferred Stock (the "Series C Stock") pursuant to Section
3.7 of this Agreement."
(c) Section 1.25 of the Agreement is amended and restated in its entirety
as follows:
"1.25. Secured Promissory Note. The amended and restated secured
promissory note in the amount of Twelve Million Two Hundred Twenty-Six Thousand
Six Hundred Twenty Dollars ($12,226,620) dated December 31, 1998, executed by
the Borrower and delivered to the Lender."
(d) Section 2.1 of the Agreement is amended and restated in its entirety
as follows:
"2.1. Loan. Subject to the terms and conditions set forth herein and
prior to any Default hereunder and so long as no Insolvency Proceedings have
commenced against the Borrower, the Lender agrees that it shall lend to the
Borrower and the Borrower agrees that it may borrow and repay from time to time
amounts not to exceed the Maximum Loan Amount (the "Loan")."
(e) Section 2.2 of the Agreement is amended and restated in its entirety
as follows:
"2.2. Interest. Amounts advanced to the Borrower by the Lender under
this Agreement shall bear interest, payable as set forth in Section 3.1 of this
Agreement, from the date of each such Advance on the unpaid principal balance
thereof until paid in full at a rate of thirteen percent (13%) per annum;
provided, however, that from and after December 3, 1993, all of the unpaid
principal balance outstanding from time to time shall bear interest at the rate
of ten percent (10%) per annum provided, further, that from and after May 31,
1996, all of the unpaid principal balance outstanding from time to time shall
bear interest at the rate of eight percent (8%) per annum; provided, further,
that from and after November 10, 1997, all of the unpaid principal baance
outstanding from time to time shall bear interest at six percent (6%) per
annum; provided, further, that from and after December 1, 1997, all of the
unpaid principal balance outstanding from time to time shall bear interest at
eight percent (8%) per annum; and provided, further, that from and after
December 31, 1998, the first $5 million of the unpaid principal balance
outstanding hereunder, less any amounts converted from time to time into Series
C Stock pursuant to Section 3.7 hereof, shall bear interest at six percent (6%)
per annum and the remaining unpaid principal balance outstanding from time to
time shall bear interest at eight percent (8%) per annum. Notwithstanding the
foregoing, after any Default, amounts advanced to the Borrower by the Lender
under this Agreement shall bear interest from the date of such Default on the
unpaid principal balance thereof until paid in full at a rate of twelve percent
(12%) per annum."
(f) Section 2.4 of the Agreement is amended and restated in its entirety
as follows:
"2.4. Advances. The Lender agrees to make Advances to the Borrower upon
the Borrower's request, as
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set forth herein, provided that the Lender does not intend to make all or part
of any Advance requested by the Borrower which would cause the aggregate
principal balance of unpaid Advances made under this Agreement to exceed the
Maximum Loan Amount. Notwithstanding anything to the contrary herein, if the
Lender lends to the Borrower amoutns in excess of the Maximum Loan Amount, such
amounts shall be deemed amounts advanced under this Agreement and shall
constitute a portion of the Loan."
(g) Section 3.1 of the Agreement is amended and restated in its entirety
as follows:
"3.1. Scheduled Principal Payment. Except as provided in Sections 5.2
and 8, all Liabilities shall be paid in full on March 31, 2000; provided, that
in the event of (i) any Insolvency Proceeding, (ii) any acceleration of
payments by XES to the Lender under the XES Loan Agreement, or (iii) the sale
of all or substantially all of the assets of the Borrower or the merger or
consolidation of the Borrower with or into another corporation in which the
beneficial owners of the Borrower's voting stock immediately before the merger
or consolidation own less than a majority of the surviving or acquiring
entity's voting stock immediately after the merger or consolidation, the Lender
may by notice in writing to the Borrower declare all Liabilities due and
payable immediately prior to the cosummation of such Insolvency Proceeding,
sale, merger, or consolidation, withou presentment, demand, protest or further
notice of any kind, all of which are hereby expressly waived."
(h) Section 3.2 of the Agreement is hereby amended and restated in its
entirety as follows:
"3.2 Scheduled Interest Payments. Interest accrued shall be due and
payable in full on March 31, 2000, unless otherwise provided in this Section
3.2. For the period from December 1, 1997 through and including December 31,
1998, interest shall be paid in cash. For each calendar quarter during the
period from January 1, 1999 through and including March 31, 2000, Lender shall
have the option to receive the interest in cash or in shares of Common Stock of
the Borrower (the "Common Stock"). The number of shares of Common Stock
issuable in payment of interest shall be determined by dividing accrued
interest for the applicable quarter by the fair market value of the Common
Stock as of the end of such quarter determined based on the average fair market
value of the Common Stock on the last ten business days of such quarter. "Fair
market value" shall be deemed to equal the mean between the low bid and high
asked prices of the Common Stock as quoted on the OTC Bulletin Board display
service operated by the National Association of Securities Dealers, Inc., or
the closing market price of the Common Stock on a natioanl securities exchange
or the Nasdaq National Market on each applicable trading day, whichever is
applicable, or if none of these are applicable, as shall be reasonably
determined in good faith by the Board of Directors of the Borrower. If interest
is payable in shares of Common Stock, Borrower shall deliver such shares to
Lender on or before the 15th day following the end of such quarter. Cash
intereste payments shall be sent by wire transfer to an account specified by
Lender."
(i) A new Section 3.7 is hereby added to the Agreement as follows:
"3.7. Conversion of Liabilities.
(a) Optional Conversion. At any time from and after June 1, 1999, the
Lender may, at its written election, convert up to $5,000,000 of the unpaid
principal balance of the Liabilities (the "Convertible Liabilities") into the
Borrower's Series C Stock at a conversion ration of $10.00 per share (the
"Conversion Price").
(b) Adjustment for Dividends, Subdivisions, Stock Spits and Combinations.
In case the Borrower shall: (i) declare a dividend of Series C Stock on
its Series C Stock, (ii) subdivide outstanding Series C Stock into a
larger number of shares of Series C Stock by reclassification, stock
split or otherwise, or (iii) combine outstanding Series C Stock into a
smaller number of shares of Series C Stock by reclassification or
otherwise, the number of shares of Series C Stock issuable upon
conversion of the Convertible Liabilities immediately prior to any such
event shall be adjusted proportionately so that thereafter the Lender
shall be entitiled to receive upon conversion of the Convertible
Liabilities the number of shares of Series C Stock which the Lender would
have owned after the happending of any of the events decribed above had
the Convertible Liabilities been converted immediately prior to the
happening of such event, provided that the Conversion Price shall in no
event be reduced to less than the par value of the shares issuable upon
conversion. An adjustment made pursuant to this Section 3.7 shall become
effective immediately after the record date in the case of a dividend and
shall become effective immediately after the effective date in the case
of a subdivision or combination. If, prior to June 1, 1999, the Borrower
shall at any time consolidate or merge with another corporation (other
than a merger or consolidation in which the Borrower is the surviving
corporation), the Lender will thereafter be entitled to receive, upon the
conversion of the Covnertible Liabilities, the securities or property to
which a holder of the number of shares of Series C Stock then deliverable
upon the conversion of the Convertible Liabilities would have
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been entitled upon such consolidation or merger, and the Borrower shall
take such steps in connection with such consolidation or merger as may be
necessary to ensure that the provisions hereof shall thereafter be
applicable, as nearly as reasonably may be, in relation to any securities
or property thereafter deliverable upon the conversion of the Convertible
Liabilities."
(j) A new Section 3.8 is hereby added to the Agreement as follows:
"3.8. Application of Payments. All payments by the Borrower to the
Lender under this Article III shall be applied first to principal and then to
interest."
4. Waiver of Defaults. The Lender confirms and agrees that any and all
Defaults arising under or in connection with the Agreement or any document or
instrument executed from time to time in connection therewith, existing as of
the date of this Agreement, are hereby waived and released.
5. Confirmation of Security. The Borrower confirms and agrees that all of
the Liabilities constitute "Obligations" as defined in the Security Agreement,
constitute "Secured Obligations" as defined in the Intellectual Property
Agreement, and are secured pursuant to the terms of the Security Agreement and
the Intellectual Property Agreement and the Pledge Agreement of even date
herewith executed by the Borrower in favor of the Lender.
6. Consent to Restructuring and Release of Liens. Subject to, and
expressly conditioned upon, the execution and delivery by each of the Borrower
and the Subsidiary of the Contribution and Assumption Agreement of equal date
herewith (the "Contribution Agreement"), and compliance by each therewith, and
pursuant to Section 11.5 of the Agreement and Section 4 of the Intellectual
Property Agreement, the Lender hereby consents to the Restructuring and the
transactions contemplated thereby. Subject to, and expressly conditioned upon,
the execution and delivery by each of the borrower and the Subsidiary of the
Contribution Agreement, and compliance by each therewith, the Lender hereby
irrevocably releases any and all security interests in the Assets and hereby
undertakes to take such further actions and execute such additional documents,
instruments and certificates as may be necessary, appropriate adn reasonably
requested by the Borrower or the Subsidiary in order to effect the transfer of
the Assets to the Subsidiary free and clear of any and all liens and
encumbrances of the Borrower.
7. Effective Date. The changes effected by this First Amendment shall be
deemed to take effect as of the close of business on December 31, 1998.
8. Except as amended hereby, the Agreement shall remain in full force and
effect and is in all respects hereby ratified and affirmed.
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Witnessed: XYVISION, INC.
/s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇
--------------------- By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
---------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: President
/s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇
---------------------
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
---------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇▇ as trustee of
the Tudor Trust u/d/t
December 12, 1997 and not
individually
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PLEDGE AGREEMENT
This is a Pledge Agreement made as of the 31st day of December, 1998,
between XYVISION, INC., a Delaware corporation with its principal office at ▇▇
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ("Pledgor") and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ as
trustee of the Tudor Trust u/d/t December 12, 1997, with an address of ▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇ Drive, 4th Floor, Beverly Hills, California ("Pledgee").
1. Pledge of Collateral. Pledgor hereby grants Pledgee a security interest
in Two Million Eight Hundred Thousand (2,800,000) shares of the Common Stock of
Xyvision Enterprise Solutions, Inc. (the "Issuer"), $.001 par value (the
"Common Stock"), and all products and proceeds thereof including all other
instruments, documents, stock certificates, money and goods as may be issued or
distributed to Pledgee by the Issuer from time to time on or account of the
Common Stock (the "Collateral").
2. Obligations Secured. The security interest in the Collateral granted
hereby secures payment and performance of all debts, loans and liabilities of
Pledgor to Pledgee of every kind and description, whether now existing or
hereafter arising, under that certain Second Amended and Restated Secured
Advance Facility Loan Agreement, dated July 1, 1998, as amended to date and as
further amended from time to time (the "Loan Agreement"), together with all
interest, fees, charges and expenses with respect to any such debt, loan or
liability (the "Obligations").
3. Pledgee's Rights and Duties with Respect to the Collateral. Pledgee's
only duty with respect to the
Collateral shall be to exercise reasonable care to secure the safe custody
thereof. Upon the occurrence of a default hereunder, Pledgee shall have the
right but not the obligation to (a) demand, ▇▇▇ for, receive and collect all
money or money damages payable on account of any Collateral, (b) protect,
preserve or assert any other rights of Pledgor or take any other action with
respect to the Collateral, and (c) pay any taxes, liens, assessments, insurance
premiums or other charges pertaining to Collateral. Any expenses incurred by
Pledgee under the preceding sentence shall be paid by Pledgor upon demand,
become part of the Obligations secured by the Collateral and bear interest at
the rate provided in the Loan Agreement until paid. Pledgee shall be relieved
of all responsibility for the Collateral upon surrendering it to Pledgor.
4. Pledgor's Warranties and Indemnity. Pledgor represents, warrants and
covenants (a) that it is and will be the lawful owner of the Collateral, (b)
that the Collateral is and will be fully paid and non-assessable, (c) that the
Collateral is and will remain free and clear of all liens, encumbrances and
security interests other than the security interest granted by Pledgor
hereunder, (d) that Pledgor has the sole right and lawful authority to pledge
the Collateral and otherwise to comply with the provisions hereof, and (e) that
Pledgor has obtained the consent and agreement of the Issuer, and all other
persons who have contractual rights or restrictions with respect to the
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Collateral, to the pledge, disposition and other rights of Pledgee herein. In
the event that any adverse claim is asserted in respect of the Collateral or
any portion thereof, except such as may result from an act of Pledgee not
authorized hereunder, Pledgor promises and agrees to indemnify Pledgee and hold
Pledgee harmless from and against any losses, liabilities, damages, expenses,
costs and reasonable counsel fees incurred by Pledgee in exercising any right,
power or remedy of Pledgee hereunder or defending, protecting or enforcing the
security interests created hereunder. Any such loss, liability or expense so
incurred shall be paid by Pledgor upon demand, become part of the Obligations
secured by the Collateral and bear interest at the rate provided in the Loan
Agreement until paid.
5. Voting of Collateral. While Pledgor is not in default hereunder,
Pledgor may vote stock and other securities pledged as Collateral.
6. Dividends and Other Distributions. While Pledgor is not in default
hereunder, Pledgor may receive cash dividends, payments of principal and
interest, and other cash distributions payable with respect to Collateral,
provided, however, that Pledgor shall immediately inform Pledgee of the receipt
of any such dividend, payment or other distribution and shall hold the amount
thereof in trust for Pledgee unless and until Pledgee shall in writing release
Pledgor from such trust. Pledgor shall cause all non-cash dividends and
distributions with respect to Collateral to be distributed directly to Pledgee,
to be held by Pledgee as additional Collateral, and if any such distribution is
made to Pledgor, Pledgor shall receive such distribution in trust for Pledgee
and shall immediately transfer it to Pledgee.
7. Pledgor's Default. Pledgor shall be in default hereunder upon the
occurrence of a Default under the Loan Agreement.
8. Pledgee's Rights upon Default. Upon the occurrence of any default as
defined in the preceding section, Pledgee may, if Pledgee so elects in its sole
option:
(a) at any time and from time to time, sell, assign and deliver the whole
or any part of the Collateral at a sale through a broker in a public market
where securities of the type constituting such Collateral are usually traded,
without any advertisement, presentment, demand for performance, protest, notice
of protest, notice of dishonor or any other notice;
(b) at any time and from time to time sell, assign and deliver all or any
part of the Collateral, or any interest therein, at any other public or private
sale, for cash, on credit or for other property, for immediate or future
delivery
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without any assumption of credit risk, and for such price or prices and on such
terms as Pledgee in its absolute discretion may determine, provided that (i) at
least ten days' notice of the time and place of any such sale shall be given to
Pledgor, and (ii) in the case of any private sale, such notice shall also
contain the minimum terms of the proposed sale;
(c) exercise the right to vote, the right to receive cash dividends and
other distributions, and all other rights with respect to the Collateral as
though Pledgee were the absolute owner thereof, whether or not such rights were
retained by Pledgor as against Pledgee before default; and
(d) exercise all other rights available to a secured party under the
Uniform Commercial Code and other applicable law.
9. Application of Sale Proceeds. In the event of a sale of Collateral, the
proceeds shall first be applied to the payment of the expenses of the sale,
including brokers' commissions, counsel fees, any taxes or other charges
imposed by law upon the Collateral or the transfer thereof and all other
charges paid or incurred by Pledgee pertaining to the sale; and, second, to
satisfy outstanding Obligations, in the order in which Pledgee elects in its
sole discretion; and, third, the surplus (if any) shall be paid to Pledgor.
10. Notices. All notices made or required to be made hereunder shall be
sent by United States first class or certified or registered mail, with postage
prepaid, or delivered by hand to Pledgee or to Pledgor at the addresses first
above written. Notice by mail shall be deemed to have been made on the date
when the notice is deposited in the mail.
11. Successors and Assigns. This Pledge Agreement and all of its terms and
provisions shall benefit and bind the heirs, successors, assigns, transferees,
executors and administrators of each of the parties hereto.
12. Pledgee's Forbearance. Any forbearance, failure or delay by Pledgee in
exercising any right, power or remedy hereunder shall not be deemed a waiver of
such right, power or remedy. Any single or partial exercise of any right, power
or remedy of Pledgee shall continue in full force and effect until such right,
power or remedy is specifically waived in writing by Pledgee.
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EXECUTED under seal as of the date first above written.
XYVISION, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
---------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇
President
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
---------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ as trustee of
the Tudor Trust u/d/t
December 12, 1997 and not
individually
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SECURED PROMISSORY NOTE
$12,226,620
Boston, Massachusetts December 31, 1998
FOR VALUE RECEIVED, the undersigned XYVISION, INC., a Delaware corporation
with a principal place of business located at ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇▇▇▇ (hereinafter, the "Borrower") promises to pay in good U.S. funds
to the order of ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ as trustee of the Tudor Trust u/d/t dated
December 12, 1997 (hereinafter, with any subsequent holder, the "Lender"), at
the Lender's principal office located at ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, the Liabilities then outstanding under the loan made by the
Lender to the Borrower pursuant to that certain Second Amended and Restated
Secured Advance Facility Loan Agreement executed between the Borrower and the
Lender dated July 1, 1998, as amended through the date hereof (the
"Agreement"). Advances made pursuant to the Agreement shall, from and after the
date hereof, bear interest at the rate from time to time provided in the
Agreement, and after any Default at the rate of twelve (12) percent per annum,
calculated based upon a 360-day year and actual day months.
Interest at the rate set forth above shall be paid as provided in Section
3.2 of the Agreement. Unless a Default under the Agreement shall have occurred
earlier, the principal balance of this Note shall be due and payable in full on
March 31, 2000.
All payments by the Borrower to the Lender under Article III of the
Agreement shall be applied first to principal and then to interest.
To secure the obligations of the Borrower under this Note, (i) the Lender
has been granted a security interest in substantially all of the Borrower's
presently existing and hereafter acquired property pursuant to that certain
Sixth Amended and Restated Security Agreement executed between the Borrower and
the Lender dated November 10, 1997 (the "Security Agreement"), and (ii) the
Lender has been granted a security interest in 2,800,000 shares of Common Stock
of Xyvision Enterprise Solutions, Inc. held of record by the Borrower pursuant
to that certain Pledge Agreement executed between the Borrower and the Lender
dated as of December 31, 1998. All capitalized terms used herein, unless
otherwise defined herein, shall have the meanings ascribed to them in the
Security Agreement.
No delay or omission by the Lender in exercising or enforcing any of the
Lender's powers, rights, privileges, remedies or discretions hereunder shall
operate as a waiver thereof on that occasion nor on any other occasion.
After demand by the Lender, the Borrower will pay on demand all reasonable
attorneys' fees and out-of-pocket expenses incurred by the Lender in recovering
the amounts due to the Lender by the Borrower hereunder.
This Note shall be binding upon the Borrower and upon its heirs,
successors, assigns, and representatives, and shall inure to the benefit of the
Lender and its successors, endorsees, and assigns.
This Note shall be governed by the laws of the Commonwealth of
Massachusetts and shall take effect as a sealed instrument.
WITNESS XYVISION, INC.
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
--------------------- By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
---------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: President
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