EXHIBIT 10.16
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THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
OR ANY STATE SECURITIES LAWS AND THIS NOTE AND ANY INTEREST HEREIN MAY NOT BE
OFFERED, SOLD, TRANSFERRED, PLEDGED OR OTHERWISE DISPOSED OF EXCEPT PURSUANT TO
AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT OR SUCH LAWS OR AN EXEMPTION
FROM REGISTRATION UNDER SUCH ACT AND SUCH LAWS, WHICH, IN THE OPINION OF COUNSEL
FOR THE HOLDER, WHICH COUNSEL AND OPINION ARE REASONABLY SATISFACTORY TO THE
BORROWER, IS AVAILABLE.
BRIDGELINE SOFTWARE, INC.
CONVERTIBLE TERM NOTE
***$200,000.00*** Woburn, Massachusetts
September 3, 2002
For value received, the undersigned, BRIDGELINE Software Inc., a
Delaware corporation (referred to herein as the "Borrower"), the principal
executive offices of which are located at ▇▇▇ ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇▇▇▇, hereby unconditionally promises to pay to the order of ▇▇▇▇▇▇
▇▇▇▇▇▇ (the "Lender"), at such address as the Lender shall specify in writing
from time to time, the principal sum of ***$200,000.00*** or such lesser amount
as shall have been advanced to the Borrower to the Lender in cash from time to
time and that remains unpaid (the "Loan"), together with interest thereon at
***10%*** per annum payable as set forth herein. This Note will mature and
become due and payable in full on September 7, 2006 (the "Maturity Date").
This Note is secured by a Security Agreement between the Lender and the
Borrower of even date herewith.
1. Terms of Repayment. Principal of and interest upon this Note will
be paid by the Borrower as follows:
(a) Principal and Interest. Principal and Interest on the Note,
in the amount of $5,072.52 per month for forty-eight (48) months shall be
payable on the seventh (7th) day of each calendar month, beginning on October 7,
2002 until this Note has been paid in full in accordance with the payment
schedule attached as Exhibit A. If payment of any amount owing on this Note
shall be payable on a day that is not a business day in Boston, Massachusetts,
then payment will be made by the Borrower by the next succeeding business day.
(b) Optional Prepayments. The Borrower may prepay this Note at
any time or from time to time, in whole or in part, upon five days' prior
written notice to the Lender.
(c) Change in Control. This Note shall be prepaid in full
simultaneously with the occurrence of a Change in Control, as defined below.
(d) Maturity. On the Maturity Date, payment of the entire
unpaid principal of, interest on and all other sums due under this Note will
become due and payable.
(e) Order of Payments. Except as specifically set forth
otherwise herein, all payments will be applied first to any late charges due
hereunder, then to accrued interest, and then to principal.
(f) Change in Control. For purposes of this Note, "Change in
Control" shall mean (A) any sale, lease, exchange or other transfer (in one
transaction or series of transactions) of all or substantially all of the assets
of the Borrower; (ii) any consolidation or merger of the Borrower with any other
entity (including, without limitation, a triangular merger) where the
stockholders of the Borrower, immediately prior to the consolidation or merger,
would not, immediately after the consolidation or merger, beneficially own,
directly or indirectly, shares representing a majority of the combined voting
power of all of the outstanding securities of the entity issuing cash or
securities in the consolidation or merger (or its ultimate parent corporation,
if any); (iv) a person or entity (other than the Lender) becomes the owner,
directly or indirectly, of securities of the Borrower representing forty percent
(40%) or more of the total voting power represented by the Borrower's then
outstanding voting securities.
2. Conversion.
(a) The Lender shall have the option, at any time or from time
to time until this Note shall have been paid in full to convert the outstanding
principal and accrued interest of this Note into fully-paid and nonassessable
shares of the Borrower's voting common stock (the "Shares") at the rate of one
(1) Share for every One Dollar ($1.00) of such indebtedness then outstanding.
(b) As promptly as practicable after the surrender of this Note
by the Lender, the Borrower shall deliver or cause to be delivered to the
holder, certificates for the full number of Shares issuable upon conversion of
this Note, in accordance with the provisions hereof. Such conversion shall be
deemed to have been made at the time that this Note was surrendered for
conversion and the notice specified herein shall have been received by the
Borrower.
(c) The number of Shares issuable upon conversion of this Note
or repayment by the Borrower in Shares shall be proportionately adjusted if the
Borrower shall declare a dividend of capital stock on its capital stock, or
subdivide its outstanding capital stock into a larger number of Shares by
reclassification, stock split or otherwise, which adjustment shall be made
effective immediately after the record date in the case of a dividend, and
immediately after the effective date in the case of a subdivision. The number of
Shares issuable upon conversion of this Note or any part thereof shall be
proportionately adjusted in the amount of securities for which the Shares has
been changed or exchanged in another transaction for other stock or securities,
cash and/or any other property pursuant to a merger, consolidation or other
combination. The Borrower shall promptly provide the holder of this Note with
notice of any events mandating an adjustment to the conversion ratio, or for any
planned merger, consolidation, Share exchange or sale of the Borrower.
2
3. Events of Default. Each and any of the following will constitute
a default and, after expiration of a grace period, if any, will constitute an
"Event of Default" hereunder:
(a) failure to pay any amount as herein set forth, which
default is not cured within five (5) days after notice of default is given in
writing;
(b) default in the performance of any other obligation of the
Borrower to the Lender under this Note, which default is not cured within thirty
(30) days after notice of default is given in writing;
(c) insolvency (however evidenced) or the commission of any act
of insolvency;
(d) the making of a general assignment for the benefit of
creditors;
(e) the filing of any petition or the commencement of any
proceeding by the Borrower for any relief under any bankruptcy or insolvency
laws, or any laws relating to the relief of debtors, readjustment of
indebtedness, reorganizations, compositions, or extensions; or
(f) the filing of any petition or the commencement of any
proceeding against the Borrower for any relief under any bankruptcy or
insolvency laws, or any laws relating to the relief of debtors, readjustment of
indebtedness, reorganizations, compositions, or extensions, which proceeding is
not dismissed within sixty (60) days.
4. Lender's Rights Upon Default. Upon the occurrence of any Event of
Default, the Lender may, at its sole and exclusive option, but subject to the
provisions of Section 2, (a) accelerate the maturity of this Note and demand
immediate payment in full, whereupon the outstanding principal amount of this
Note and all obligations of the Borrower to Lender, together with accrued
interest thereon and accrued charges and costs, will become immediately due and
payable without presentment, demand, protest or further notice of any kind, all
of which are hereby expressly waived and (b) exercise all legally available
rights and privileges.
5. Default Interest Rate. Upon an Event of Default, without any
further action on the part of the Lender, interest will thereafter accrue on the
unpaid principal balance (and on any accrued but unpaid interest) at a default
rate equal to the stated interest rate hereof plus five percentage points (5%)
per annum (the "Default Rate"), until all outstanding principal, interest and
fees under this Note are repaid in full by the Borrower.
6. Usury. In no event will the amount of interest paid or agreed to
be paid hereunder exceed the highest lawful rate permissible under applicable
law. Any excess amount of deemed interest will be null and void and will not
interfere with or affect the Borrower's obligation to repay the principal of and
interest on this Note.
7. Covenant. Until payment in full on this Note, the Borrower will
provide to the Lender: (i) as soon as available and, in any event, within
forty-five (45) days after the end of each of the first three quarters of each
fiscal year of the Borrower, a consolidated balance sheet of the Borrower as of
the end of such quarter and the related consolidated statements of income and
stockholders' equity and of cash flows of the Borrower for the period commencing
at the end of the previous fiscal year and ending with the end of such quarter,
setting forth in each case in comparative form the corresponding figures for the
corresponding period of the preceding fiscal year, all in reasonable detail and
prepared in accordance with generally accepted accounting principles
consistently applied, and duly certified (subject to year-end audit adjustments)
by the chief financial officer of the Borrower; and (ii) as soon as available
and, in any event, within sixty (60) days after the end of each fiscal year of
the Borrower, a copy of the annual audit report for such year for the Borrower,
including therein a consolidated balance sheet of the Borrower as of the end of
such fiscal year and consolidated statements of income and stockholders' equity
and of cash flows of the Borrower for such fiscal year, setting forth in each
case in comparative form the corresponding figures for the preceding fiscal
year, all duly certified by independent public accountants of recognized
national standing;
8. Costs of Enforcement. The Borrower hereby covenants and
agrees to indemnify, defend and hold the Lender harmless from and against all
costs and expenses, including reasonable attorneys' fees and their costs,
together with interest thereon at the annual prime rate of interest (the "Prime
Rate") (as published in the Wall Street Journal), incurred by the Lender in
enforcing its rights under this Note; or if the Lender is made a party as a
defendant in any action or proceeding arising out of or in connection with its
status as a lender, or if the Lender is requested to respond to any subpoena or
other legal process issued in connection with this Note; or the Lender's
reasonable disbursements arising out of any costs and expenses, including
reasonable attorneys' fees and their costs incurred in any bankruptcy case
involving the Borrower; or for any legal or appraisal reviews, advice or counsel
performed for the Lender following a request by the Borrower for waiver,
modification or amendment of this Note.
9. Governing Law. This Note will be governed by and construed in
accordance with the laws of the Commonwealth of Massachusetts without regard to
conflicts of law principles. The Lender and the Borrower consent and agree to
the exclusive jurisdiction of the federal and state courts located in Boston,
Massachusetts in connection with any matter arising hereunder, including the
collection and enforcement hereof. The Borrower hereby waives any and all right
to trial by jury in any civil action arising out of, or based upon, this Note.
10. Miscellaneous.
(a) The Borrower hereby waives protest, notice of protest,
presentment, dishonor, and demand.
(b) Time is of the essence for each of the Borrower's covenants
under this Note.
(c) The rights and privileges of the Lender under this Note
will inure to the benefit of its corporate successors. All obligations of the
Borrower in connection with this Note will bind the Borrower's successors and
assigns.
(d) If any provision of this Note will for any reason be held
to be invalid or unenforceable, such invalidity or unenforceability will not
affect any other provision hereof, but this Note will be construed as if such
invalid or unenforceable provision had never been contained herein.
4
(e) The waiver of any Event of Default or the failure of the
Lender to exercise any right or remedy to which it may be entitled will not be
deemed a waiver of any subsequent Event of Default or the Lender's right to
exercise that or any other right or remedy to which the Lender is entitled. No
delay or omission by the Lender in exercising, or failure by the Lender to
exercise on any one or more occasions, any rights hereunder will be construed as
a waiver or novation of this Note or prevent the subsequent exercise of any or
all such rights.
(f) This Note may not be waived, changed, modified, or
discharged orally, but only in writing.
IN WITNESS WHEREOF, the undersigned has executed this Note as of the
date first set forth above.
SIGNATURE OF LENDER: SIGNATURE OF BORROWER:
-------------------- ----------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ BRIDGELINE SOFTWARE INC.
By: /S/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ By: /S/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------------- -------------------------------
Date: 9-3-02 Its: Sr. V.P. & CFO
----------------------------- ------------------------------
Date: 9-3-02
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*Not Personally Guaranteed
5
EXHIBIT A
LOAN DATA
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Loan amount: | $200,000.00
Annual interest rate: | 10.000%
Term in years: | 4
Payments per year: | 12
Principal & Interest Pmt | $5,072.52
First payment due: | 10/07/2002
TABLE
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PAYMENT BEGINNING ENDING CUMULATIVE
NO. DATE BALANCE INTEREST PRINCIPAL BALANCE INTEREST
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1 10/07/02 200,000.00 1,666.67 3,405.85 196,594.15 1,666.67
2 11/07/02 196,594.15 1,638.28 3,434.24 193,159.91 3,304.95
3 12/07/02 193,159.91 1,609.67 3,462.85 189,697.06 4,914.62
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4 01/07/03 189,697.06 1,580.81 3,491.71 186,205.35 6,495.43
5 02/07/03 186,205.35 1,551.71 3,520.81 182,684.54 8,047.14
6 03/07/03 182,684.54 1,522.37 3,550.15 179,134.39 9,569.51
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7 04/07/03 179,134.39 1,492.79 3,579.73 175,554.66 11,062.30
8 05/07/03 175,554.66 1,462.96 3,609.56 171,945.10 12,525.26
9 06/07/03 171,945.10 1,432.88 3,639.64 168,305.46 13,958.14
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10 07/07/03 168,305.46 1,402.55 3,669.97 164,635.49 15,360.69
11 08/07/03 164,635.49 1,371.96 3,700.56 160,934.93 16,732.65
12 09/07/03 160,934.93 1,341.12 3,731.40 157,203.53 18,073.77
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13 10/07/03 157,203.53 1,310.03 3,762.49 153,441.04 19,383.80
14 11/07/03 153,441.04 1,278.68 3,793.84 149,647.20 20,662.48
15 12/07/03 149,647.20 1,247.06 3,825.46 145,821.74 21,909.54
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16 01/07/04 145,821.74 1,215.18 3,857.34 141,964.40 23,124.72
17 02/07/04 141,964.40 1,183.04 3,889.48 138,074.92 24,307.76
18 03/07/04 138,074.92 1,150.62 3,921.90 134,153.02 25,458.38
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19 04/07/04 134,153.02 1,117.94 3,954.58 130,198.44 26,576.32
20 05/07/04 130,198.44 1,084.99 3,987.53 126,210.91 27,661.31
21 06/07/04 126,210.91 1,051.76 4,020.76 122,190.15 28,713.07
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22 07/07/04 122,190.15 1,018.25 4,054.27 118,135.88 29,731.32
23 08/07/04 118,135.88 984.47 4,088.05 114,047.83 30,715.79
24 09/07/04 114,047.83 950.40 4,122.12 109,925.71 31,666.19
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25 10/07/04 109,925.71 916.05 4,156.47 105,769.24 32,582.24
26 11/07/04 105,769.24 881.41 4,191.11 101,578.13 33,463.65
27 12/07/04 101,578.13 846.48 4,226.04 97,352.09 34,310.13
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28 01/07/05 97,352.09 811.27 4,261.25 93,090.84 35,121.40
29 02/07/05 93,090.84 775.76 4,296.76 88,794.08 35,897.16
30 03/07/05 88,794.08 739.95 4,332.57 84,461.51 36,637.11
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31 04/07/05 84,461.51 703.85 4,368.67 80,092.84 37,340.96
32 05/07/05 80,092.84 667.44 4,405.08 75,687.76 38,008.40
33 06/07/05 75,687.76 630.73 4,441.79 71,245.97 38,639.13
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34 07/07/05 71,245.97 593.72 4,478.80 66,767.17 39,232.85
6
EXHIBIT A
(CONTINUED)
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PAYMENT BEGINNING ENDING CUMULATIVE
NO. DATE BALANCE INTEREST PRINCIPAL BALANCE INTEREST
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35 08/07/05 66,767.17 556.39 4,516.13 62,251.04 39,789.24
36 09/07/05 62,251.04 518.76 4,553.76 57,697.28 40,308.00
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37 10/07/05 57,697.28 480.81 4,591.71 53,105.57 40,788.81
38 11/07/05 53,105.57 442.55 4,629.97 48,475.60 41,231.36
39 12/07/05 48,475.60 403.96 4,668.56 43,807.04 41,635.32
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40 01/07/06 43,807.04 365.06 4,707.46 39,099.58 42,000.38
41 02/07/06 39,099.58 325.83 4,746.69 34,352.89 42,326.21
42 03/07/06 34,352.89 286.27 4,786.25 29,566.64 42,612.48
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43 04/07/06 29,566.64 246.39 4,826.13 24,740.51 42,858.87
44 05/07/06 24,740.51 206.17 4,866.35 19,874.16 43,065.04
45 06/07/06 19,874.16 165.62 4,906.90 14,967.26 43,230.66
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46 07/07/06 14,967.26 124.73 4,947.79 10,019.47 43,355.39
47 08/07/06 10,019.47 83.50 4,989.02 5,030.45 43,438.89
48 09/07/06 5,030.45 41.92 5,030.45 0.00 43,480.81
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7
