Exhibit 10.24
Optika Inc.
0000 Xxxxxx Xxxxx, 0xx Xxxxx
Xxxxxxxx Xxxxxxx, Xxxxxxxx 00000
May 7, 2001
Xxxxxx Xxxxxx Capital Partners, L.P.
x/x Xxxxxx Xxxxxx Xxxxxxx Xxxxxxxx, X.X.X.
Xxx Xxxxxxxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
Reference is made to that certain Exchange Agreement dated as of May 7,
2001 (the "Exchange Agreement"), by and between Optika Inc. (the "Company") and
the investors listed on the signature pages thereto (the "Investors"), including
Xxxxxx Xxxxxx Capital Partners, L.P. and/or certain affiliated entities
(collectively, "TWCP"). All capitalized terms used in this letter without
definition have the meaning set forth for such terms in the Exchange Agreement
and the Certificate of Designation attached as Exhibit A thereto (the
"Certificate of Designation").
This letter will confirm our mutual agreement and understanding that if,
subsequent to the date hereof, the Securities Exchange Commission issues a
written clarification or modification of its current position regarding the
accounting treatment of redeemable preferred stock and such interpretation
would enable the terms of the Series A-1 Preferred Stock to be modified to
provide the holders thereof with the right to receive the Liquidation Preference
(as defined therein) in cash upon a Change of Control of the Company the "Cash
Liquidation Right" without causing a change in the then current accounting
treatment or classification of the Series A-1 Preferred Stock as "permanent
equity" on the financial statements of the Company, as determined by the
Company's independent certified public accountants in their reasonable
discretion (as determined by a majority of the "Big 5" accounting firms), then
the Company shall, as promptly as practicable upon its becoming aware of such
interpretation, amend the terms of the Series A-1 Preferred Stock to provide
the holders thereof with the Cash Liquidation Right (or exchange the Series A-1
Preferred Stock for an identical class of preferred stock having such right) and
obtain, if necessary, stockholder approval for such amendment or exchange;
provided, however, that (i) such amendment or exchange does not otherwise
increase, in any material respect, the rights, privileges and preferences of the
Series A-1 Preferred Stock as currently set forth in the Certificate of
Designation, (ii) such amendment or exchange does not require the Company to
book any accounting charges which would decrease net income by in excess of $1
million that would otherwise have been reported for SEC accounting purposes in
accordance with GAAP and consistent with past practices and (iii) TWCP
cooperates with the Company as reasonably requested and otherwise negotiates in
good faith to effectuate such amendment or exchange. In connection with such
amendment or exchange, TWCP agrees to remove the protective provisions set forth
in Sections 4(b)(iv) from the Certificate of Designation. In addition, the
Company agrees to use its reasonable best
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efforts to implement a shareholder rights plan in form and substance reasonably
acceptable to TWCP as promptly as practicable following the date hereof;
provided, however, that until such plan is implemented as evidenced by formal
board approval thereof and the execution by the Company of the documents related
thereto, the 65% threshold set forth in the proviso in the definition of "Change
of Control" as set forth in the Certificate of Designation shall be 50%.
This letter agreement constitutes the entire agreement of the parties
hereto with respect to the subject matter hereof and supersedes any prior or
contemporaneous written or oral understandings or agreements related thereto.
This Agreement may only be modified by a written agreement executed by each of
the parties hereof, and shall inure solely to the benefit of the parties hereto.
This Agreement shall be binding upon the successors, and assigns of the parties
hereto; provided, however, that TWCP can assign its rights hereunder only in
connection with the sale of all or substantially all of the Series A-1 Preferred
Stock held by it to a single purchaser or group of affiliated purchasers.
Except as set forth in the preceding sentence, the rights of TWCP hereunder are
personal to it and shall not inure to the benefit of any other holder of the
Series A-1 Preferred Stock. Any disputes hereunder shall be governed by the
laws of the State of New York.
Please indicate your agreement to the foregoing on behalf of TWCP by
executing this letter (or a copy hereof) in the space provided below and
returning it to the Company.
Sincerely,
Optika Inc.
By: /s/ Xxxx Xxxxxx
---------------
Name: Xxxx Xxxxxx
Title: President
Agreed and Accepted:
Xxxxxx Xxxxxx Capital Partners, L.P.
By: /s/ Xxxx X. Xxxxxx
------------------
Name:
Title:
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