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EXHIBIT 10
THIS CONVERTIBLE PROMISSORY NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933. NO SALE OR DISPOSITION MAY BE EFFECTED EXCEPT IN COMPLIANCE WITH
RULE 144 UNDER SAID ACT OR AN EFFECTIVE REGISTRATION STATEMENT RELATED THERETO
OR AN OPINION OF COUNSEL FOR THE HOLDER, SATISFACTORY TO THE COMPANY, THAT SUCH
REGISTRATION IS NOT REQUIRED UNDER THE ACT OR RECEIPT OF A NO-ACTION LETTER FROM
THE SECURITIES AND EXCHANGE COMMISSION.
SECURED SUBORDINATED CONVERTIBLE PROMISSORY NOTE
$10,000,000 1:00 a.m. PDT, July 28, 1998
Santa Monica, California
For value received CYBERMEDIA, INC., a Delaware corporation
("Borrower"), promises to pay to NETWORKS ASSOCIATES, INC., a Delaware
corporation ("Holder"), or order, the principal sum of Ten Million Dollars
($10,000,000) together with accrued interest on the outstanding principal amount
at the applicable rate as follows. The balance of the unpaid principal and all
accrued interest thereon from time to time is the "Loan Amount."
1. SECURED NOTE. The repayment of this note (the "Note") is evidenced
and secured by that certain Note Purchase and Security Agreement of even date
herewith, executed by Borrower in favor of Holder (as the same may from time to
time be amended, modified or supplemented or restated, the "Security
Agreement"). Additional rights and remedies of Holder are set forth in the
Security Agreement. All capitalized terms used herein and not otherwise defined
herein shall have the meanings given to them in the Security Agreement.
2. PAYMENT. All payments shall be applied first to accrued interest,
and thereafter to principal.
(i) SCHEDULED PAYMENT. The principal indebtedness shall be payable
in full on the second anniversary of the date hereof. Interest shall be due and
payable in arrears on the first day of each calendar quarter and upon maturity
or prepayment of any principal amount, commencing on October 1, 1998.
(ii) ACQUISITION. The principal outstanding hereunder and the
interest accrued and unpaid shall be due and payable, without payment of any
premium or penalty, upon (i) the closing of the sale or transfer of all or
substantially all of Borrower's assets; or (ii) the closing of a merger or
consolidation of Borrower or other transaction or series of related transactions
in which Borrower's shareholders immediately prior to such transaction or
transactions do not own a majority of the voting securities of Borrower or the
surviving corporation, as applicable.
(iii) PREPAYMENT. Borrower may not prepay any part of the Loan
Amount without the prior written consent of Holder, unless and until that
certain Agreement and Plan of Merger by and among Holder and Borrower of even
date herewith (the "Merger Agreement") shall have been terminated in accordance
with its terms: Thereafter, Borrower shall have the right at any
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time and from time to time, upon ten (10) business days' prior written notice to
Holder (during which notice period Holder will remain entitled to elect to
convert all or part of the Loan Amount in accordance with Section 4), to prepay,
in whole or in part, the principal of this Note, without payment of any premium
or penalty. Any principal prepayment shall be accompanied by a payment of all
interest accrued on the amount prepaid through the date of such prepayment.
(iv) FORM OF PAYMENT. Principal and interest and all other amounts
due hereunder are to be paid in lawful money of the United States of America in
federal or other immediately available funds.
3. INTEREST. Interest shall accrue with respect to the principal sum
hereunder at the per annum rate equal to LIBOR (3-month) as in effect on the
first day of each calendar quarter, plus two percent (2%). However, if an Event
of Default, as defined herein, occurs, then interest shall accrue at the rate
per annum equal to two percent (2%) plus the rate that would otherwise be in
effect (the "Default Rate"). Interest payable hereunder shall be calculated on
the basis of a three hundred sixty (360) day year for actual days elapsed.
4. CONVERSION RIGHT.
(i) CONVERSION RIGHT. Holder shall have the right (the "Conversion
Right"), in its sole discretion, at any time and from time to time to elect to
convert all or any part of the Loan Amount into such number of fully paid and
nonassessable shares of Common Stock as determined by dividing the total amount
of the Loan Amount being converted by the Conversion Price. The Conversion Price
is Six Dollars and Sixty-Six Cents ($6.66) per share, subject to adjustment as
provided in below.
(ii) EXERCISE OF CONVERSION RIGHT. To convert any of the Loan Amount
into shares of Common Stock, Holder shall deliver to Borrower a written notice
of election to exercise the Conversion Right (the "Conversion Notice"). Borrower
shall, as soon as practicable thereafter, issue and deliver to Holder a
certificate or certificates, registered in Holder's name, for the number of
shares of Common Stock to which Holder shall be entitled by virtue of such
exercise (such shares the "Conversion Shares"). The conversion of the Loan
Amount shall be deemed to have been made on the date that Borrower receives the
Conversion Notice (the "Conversion Date") and Holder shall be treated for all
purposes as the record holder of the Conversion Shares as of such date.
(iii) FRACTIONAL SHARES. Borrower shall not issue fractional shares
of Common Stock or scrip representing fractional shares of Common Stock upon
exercise of the Conversion Right. As to any fractional share of Common Stock
which Holder would otherwise be entitled to purchase from Borrower upon such
exercise, Borrower shall purchase from Holder such fractional share at a price
equal to an amount calculated by multiplying such fractional share (calculated
to the nearest 1/100th of a share) by the fair market value of a share of Common
Stock on the Conversion Date. Payment of such amount shall be made in cash or by
check payable to the order of Holder at the time of delivery of any certificate
or certificates arising upon such exercise.
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(iv) CONVERSION PRICE ADJUSTMENTS
(a) Adjustments for Stock Splits and Subdivisions. If Borrower
at any time or from time to time after the date hereof fixes a record date for
the effectuation of a split or subdivision of the outstanding shares of Common
Stock or the determination of holders of Common Stock entitled to receive a
dividend or other distribution payable in additional shares of Common Stock or
other securities or rights convertible into, or entitling the holder thereof to
receive directly or indirectly, additional shares of Common Stock (hereinafter
referred to as "Common Stock Equivalents") without payment of any consideration
by such holder for the additional shares of Common Stock or the Common Stock
Equivalents (including the additional shares of Common Stock issuable upon
conversion or exercise thereof), then, as of such record date (or the date of
such dividend distribution, split or subdivision if no record date is fixed),
the Conversion Price shall be appropriately decreased so that the number of
shares of Common Stock issuable upon conversion of this Note shall be increased
in proportion to such increase of outstanding shares.
(b) ADJUSTMENTS FOR REVERSE STOCK SPLITS. If the number of
shares of Common Stock outstanding at any time after the date hereof is
decreased by a combination of the outstanding shares of Common Stock, then,
following the record date of such combination, the Conversion Price shall be
appropriately increased so that the number of shares of Common Stock issuable on
conversion hereof shall be decreased in proportion to such decrease in
outstanding shares.
5. INSPECTION RIGHTS; CONFIDENTIALITY.
(i) INSPECTION RIGHTS. Until the Loan Amount is repaid in full, in
cash, or the Conversion Right is fully exercised, Holder shall be entitled to
visit and inspect Borrower's properties, to examine its books of account and
financial records and to discuss Borrower's financial affairs, finances and
accounts with its officers, all at such reasonable times as may be requested by
Holder; provided, however, that, unless an Event of Default has occurred and is
continuing, such visitation and inspection shall be limited to once per fiscal
quarter within two weeks of the Borrower's public announcement of its earnings
for such quarter.
(ii) CONFIDENTIALITY. Holder shall not disclose to any third party
any Confidential Information disclosed to Holder pursuant to this Section 5, or
use such Confidential Information other than for purposes of this Agreement,
except that (i) Holder may disclose Confidential Information to a third party to
the extent compelled by law, subpoena, civil investigative demand,
interrogatories or similar legal process, (ii) Holder may disclose Confidential
Information if such disclosure is required by Holder's reporting obligations
under federal securities laws, rules and regulations, and (iii) Holder may
disclose Confidential Information to a potential transferee of this Note,
provided that the potential transferee is not a competitor of Borrower and that
the potential transferee agrees to be bound by the same confidentiality
obligations as Holder under this Section 5. For purposes of this Note,
"Confidential Information" is information disclosed by Borrower to Holder
pursuant hereto that is not information which (i) becomes generally available to
the public, other than as a result of
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disclosure by Holder, (ii) was available on a non-confidential basis prior to
its disclosure to Holder by Borrower, or (iii) becomes available to Holder on a
non-confidential basis from a source other than Borrower.
6. REGISTRATION RIGHTS. The Conversion Shares shall be subject to the
Registration Rights provided in the Security Agreement.
7. COLLATERAL. The full amount of this Note is secured by the
Collateral identified and described as security therefor in the Security
Agreement. Borrower shall not, directly or indirectly, create, permit or suffer
to exist, and shall defend the Collateral against and take such other action as
is necessary to remove, any lien or encumbrance on or in the Collateral, or in
any portion thereof, except as permitted pursuant to the Security Agreement.
8. EVENTS OF DEFAULT. The occurrence of any one or more of the
following events shall constitute an "Event of Default" hereunder:
(i) Borrower's breach of the obligation to pay any amount payable
hereunder within ten (10) days of the date of written notice from Holder to
Borrower of such breach;
(ii) Borrower's failure to perform, keep or observe any of its
covenants, conditions, promises, agreements or obligations under any agreement
with any third person or entity, after the expiration of any applicable grace
period under such agreement, or after any period of forbearance acknowledged in
writing by the other party to such agreement, if such failure has a material
adverse effect on Borrower's assets, operations or financial condition;
(iii) Borrower's institution of proceedings against itself, or
Borrower's filing of a petition or answer or consent seeking reorganization or
release, under the federal Bankruptcy Code, or any other applicable federal or
state law relating to creditor rights and remedies, or Borrower's consent to the
filing of any such petition or the appointment of a receiver, liquidation,
assignee, trustee or other similar official of Borrower or of any substantial
part of its property, or Borrower's making of an assignment for the benefit of
creditors, or the taking of corporate action in furtherance of such action;
(iv) the creation (whether voluntary or involuntary) of, or any
attempt to create, any lien or encumbrance upon any of the Collateral, other
than Permitted Liens and Liens in favor of Senior Debt, or the making or any
attempt to make any levy, seizure or attachment thereof and such lien,
encumbrance, levy, seizure or attachment has not been removed, discharged or
rescinded within ten (10) days after Borrower is notified of or learns of such
lien, encumbrance, levy, seizure or attachment;
(v) the occurrence and continuance of any default under any lease or
agreement for borrowed money that gives the lessor or the creditor of such
indebtedness, as applicable, the right to accelerate the lease payments or the
indebtedness, as applicable, in an amount in excess of $1,000,000 or the right
to exercise any rights or remedies with respect to any of the Collateral;
(vi) the entry of any judgment or order against Borrower in an
amount in excess of
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$1,000,000 which remains unsatisfied or undischarged and in effect for thirty
(30) days without a stay of enforcement or execution; or
(vii) the Borrower breaches any warranty or agreement made by the
Borrower in the Security Agreement and, as to any breach that is capable of
cure, the Borrower fails to cure such breach within twenty (20) days of notice
from Holder of the occurrence of such breach.
9. RIGHTS AND REMEDIES ON EVENT OF DEFAULT.
(i) During the continuance of an Event of Default, Holder shall have
the right, itself or through any of its agents, with or without notice to
Borrower (as provided below), as to any or all of the Collateral, by any
available judicial procedure, or without judicial process (provided, however,
that it is in compliance with the California Uniform Commercial Code), to
exercise any and all rights afforded to a secured party under the California
Uniform Commercial Code or other applicable law. Without limiting the generality
of the foregoing, Holder shall have the right to sell or otherwise dispose of
all or any part of the Collateral, either at public or private sale, in lots or
in bulk, for cash or for credit, with or without warranties or representations,
and upon such terms and conditions, all as Holder, in its sole discretion, may
deem advisable, and it shall have the right to purchase at any such sale.
Borrower agrees that a notice sent at least fifteen (15) days before the time of
any intended public sale or of the time after which any private sale or other
disposition of the Collateral is to be made shall be reasonable notice of such
sale or other disposition. The proceeds of any such sale, or other Collateral
disposition shall be applied, first to the reasonable expenses of retaking,
holding, storing, processing and preparing for sale, selling, and the like, and
to Holder's reasonable attorneys' fees and legal expenses, and then to the
repayment hereof and to the payment of any other amounts required by applicable
law, after which Holder shall account to Borrower for any surplus proceeds. If,
upon the sale or other disposition of the Collateral, the proceeds thereof are
insufficient to pay all amounts to which Holder is legally entitled, Borrower
shall be liable for the deficiency, together with interest thereon at the
Default Rate, and the reasonable fees of any attorneys Holder's employs to
collect such deficiency; provided, however, that the foregoing shall not be
deemed to require Holder to resort to or initiate proceedings against the
Collateral prior to the collection of any such deficiency from Borrower. To the
extent permitted by applicable law, Borrower waives all claims, damages and
demands against Holder arising out of the retention or sale or lease of the
Collateral or other exercise of Holder's rights and remedies with respect
thereto.
(ii) To the extent permitted by law, Borrower covenants that it will
not at any time insist upon or plead, or in any manner whatever claim or take
any benefit or advantage of, any stay or extension law now or at any time
hereafter in force, nor claim, take or insist upon any benefit or advantage of
or from any law now or hereafter in force providing for the valuation or
appraisal of the Collateral or any part thereof, prior to any sale or sales
thereof to be made pursuant to any provision herein contained, or the decree,
judgment or order of any court of competent jurisdiction; or, after such sale or
sales, claim or exercise any right under any statute now or hereafter made or
enacted by any state or otherwise to redeem the property so sold or any part
thereof, and, to the full extent legally permitted, hereby expressly waives all
benefit and advantage of any such law or laws, and covenants that it will not
invoke or utilize any such law
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or laws or otherwise hinder, delay or impede the execution of any power herein
granted and delegated to Holder, but will suffer and permit the execution of
every such power as though no such power, law or laws had been made or enacted.
(iii) Any sale, whether under any power of sale hereby given or by
virtue of judicial proceedings, shall operate to divest all Borrower's right,
title, interest, claim and demand whatsoever, either at law or in equity, in and
to the Collateral sold, and shall be a perpetual bar, both at law and in equity,
against Borrower, its successors and assigns, and against all persons and
entities claiming the Collateral sold or any part thereof under, by or through
Borrower, its successors or assigns.
(iv) Borrower appoints Holder, and any officer, employee or agent of
Holder, with full power of substitution, as Borrower's true and lawful
attorney-in-fact, effective as of the date hereof, with power, in its own name
or in the name of Borrower, during the continuance of an Event of Default, to
endorse any notes, checks, drafts, money orders, or other instruments of payment
in respect of the Collateral that may come into Holder's possession, to sign and
endorse any drafts against debtors, assignments, verifications and notices in
connection with accounts, and other documents relating to Collateral; to pay or
discharge taxes or Liens at any time levied or placed on or threatened against
the Collateral; to demand, collect, issue receipt for, compromise, settle and
sue for monies due in respect of the Collateral; to notify persons and entities
obligated with respect to the Collateral to make payments directly to Holder;
and, generally, to do, at Holder's option and at Borrower's expense, at any
time, or from time to time, all acts and things which Holder deems necessary to
protect, preserve and realize upon the Collateral and Holder's security interest
therein to effect the intent of this Note, all as fully and effectually as
Borrower might or could do; and Borrower hereby ratifies all that said attorney
shall lawfully do or cause to be done by virtue hereof. This power of attorney
shall be irrevocable as long as any of the Loan Amount is outstanding.
(v) All of Holder's rights and remedies with respect to the
Collateral, whether established hereby or by any other agreements, instruments
or documents or by law shall be cumulative and may be exercised singly or
concurrently.
10. SUBORDINATION.
(i) SUBORDINATION TO SENIOR DEBT.
(a) PAYMENT LIMITATIONS. Holder, by accepting this Note, agrees
for itself and its successors and assigns that payment of principal, interest
and other amounts due to Holder under this Note is subordinated in right of
payment to the prior payment in full in cash (or cash equivalents) of the Senior
Debt on the terms set forth herein.
(b) LIEN SUBORDINATION. Any Lien of Holder on any assets or
property of Borrower or any proceeds or revenues therefrom which Holder may have
at any time as security for any amounts due and obligations under this Note
shall be subordinate to all Liens now or hereafter granted to a holder of Senior
Debt by Borrower or by law, notwithstanding the date or order of attachment or
perfection of any such Lien or the provisions of any applicable law. Until
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payment in full in cash of all of Senior Debt, Holder agrees that a holder of
Senior Debt may dispose of any or all of the collateral for the Senior Debt held
by such holder free and clear of any and all Liens in favor of Holder in
accordance with applicable law including taking title to such collateral after
notice to Holder. Holder agrees that any such sale or other disposition by a
holder of Senior Debt as is necessary to satisfy in full, all of the principal
of, interest on and reasonable costs of collection of the Senior Debt shall be
made free and clear of any Lien granted to Holder, provided that the entire
proceeds (after deducting reasonable expenses of sale) are applied to reduce the
Senior Debt. Upon the request of a holder of Senior Debt, Holder shall execute
and deliver or cause to be executed and delivered any releases or other
documents and agreements that a holder of Senior Debt may reasonably request to
dispose of the collateral for the Senior Debt free of any Lien of Holder in such
collateral.
(ii) PERMITTED PAYMENTS. Notwithstanding the subordination of the
Note to the Senior Debt hereunder, (i) principal of the Note may be paid to
Holder as it becomes due and payable, without acceleration, in accordance with
the terms hereof, as amended from time to time in accordance with the terms
hereof, (ii) accrued interest with respect to the Note may be paid to Holder as
such interest becomes due and payable in accordance with the terms hereof, as
amended from time to time in accordance with the terms hereof, and (iii) other
fees, expenses or other amounts payable under or with respect to the Note may be
paid to Holder as such fees, expenses and amounts become due and payable,
without acceleration, in accordance with the terms hereof, as amended from time
to time in accordance with the terms hereof, provided that, in the case of each
such Note payment, on the date of payment such payments are not prohibited
pursuant to Section 10(iii), Section 10(iv), Section 10(v), or Section 10(vii).
(iii) SUBORDINATION ON DISSOLUTION, LIQUIDATION OR REORGANIZATION
OF BORROWER.
(a) PRIORITY OF PAYMENT UPON DISTRIBUTION OF ASSETS. Upon any
Distribution of Assets in the event of any dissolution or winding up or total or
partial liquidation or reorganization, whether voluntary or involuntary, or
adjustment or protection or relief or composition of Borrower or Borrower's
debts, or in any bankruptcy, insolvency, receivership, arrangement,
reorganization, relief or other proceeding of Borrower or upon an arrangement
for the benefit of creditors of Borrower or any other marshaling of the assets
and liabilities of Borrower:
A. all amounts payable under or on account of the Senior
Debt shall first be paid in full, in cash or cash equivalents, before Holder
shall be entitled to receive any Distribution of Assets with respect to the
Note; and
B. before any payment may be made on account of the
Note, any such Distribution of Assets to which Holder would be entitled, except
for the provisions of this Section 10(iii)(a), shall be made directly to
Senior Debtholders to the extent necessary to pay all Senior Debt in full, in
cash or cash equivalents, after giving effect to any concurrent payment or
distribution to Senior Debtholders.
(b) NOTICE OF DISTRIBUTION OF ASSETS. Borrower shall give
prompt written notice to Senior Debtholders and Holder of any Distribution of
Assets of the nature described in
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this Section 10(iii).
(d) HOLDER RELIANCE. Upon any Distribution of Assets, Holder
shall be entitled to rely upon any order or decree made by any court of
competent jurisdiction in which such dissolution, winding-up, liquidation,
bankruptcy or reorganization proceeding is pending, or a certificate of the
liquidating trustee or the Senior Debtholders or other Person making such
distribution to Holder, for the purpose of ascertaining the Persons entitled to
participate in such Distribution of Assets, the Senior Debtholders, the amount
thereof or payable thereon, the amount or amounts paid or distributed thereon
and all other facts pertinent thereto and this Section 10(iii).
(iv) SUBORDINATION ON SENIOR PAYMENT DEFAULT. If there has occurred
and is continuing a Senior Payment Default, the obligation of Borrower to make
payment under or on account of the Note, directly or indirectly, in cash or
other property or by set-off or in any other manner, shall be suspended for the
period commencing upon the date Senior Debtholder notifies Holder of the
commencement of such period, which notice shall either be: (1) in writing,
including telex, telegram, telecopy or other form of electronic transmission; or
(2) telephonic, in which case a written confirmation thereof complying with
clause (1) above must be delivered to Holder on or prior to the date upon which
the payment would otherwise be due and payable in order for such telephonic
notice to be sufficient and within five (5) Business Days after such telephonic
notice is given. Such payment suspension period shall continue until (1) the
Senior Payment Default is cured or waived by Senior Debtholder or (2) Senior
Debtholder waives the benefit of this subsection (ii), unless Senior Debtholder
accelerates payment of the Senior Debt, in which case the obligation of Borrower
to make payment under or on account of the Note shall continue to be suspended
under this Section 10(iv) until such acceleration is rescinded by Senior
Debtholder.
(v) SUBORDINATION ON NONPAYMENT DEFAULT. If there has occurred and
is continuing a Senior Default which is not a Senior Payment Default, the
obligation of Borrower to make payment under or on account of the Note, directly
or indirectly, in cash or other property or by set-off or in any other manner,
may be suspended by Senior Debtholder for the period and in the manner specified
below (the "Standstill Period"). The Standstill Period shall commence upon the
date Senior Debtholder notifies Holder of the commencement of such period (a
"Standstill Notice"), which notice shall either be: (1) in writing, including
telex, telegram, telecopy or other form of electronic transmission; or (2)
telephonic, in which case a written confirmation thereof complying with clause
(1) above must be delivered to Holder on or prior to the date upon which the
payment would otherwise be due and payable in order for such telephonic notice
to be sufficient and within five (5) Business Days after such telephonic notice
is given. So long as the Senior Debt is not totally accelerated by Senior
Debtholder, the Standstill Period shall end on the earlier of (1) the waiver of
the Senior Default by Senior Debtholder, (2) the cure of the Senior Default, or
(3) the one hundred-eightieth (180th) calendar day after the commencement of the
Standstill Period; if the Senior Debt is totally accelerated, the Standstill
Period shall end on the earlier of (1) recission of the acceleration, or (2)
payment in full of the Senior Debt. No more than one (1) Standstill Period can
be declared in any 360-day period.
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(vi) DISCONTINUANCE OF PAYMENT BLOCK. Immediately following the
expiration of any payment suspension period under Section 10(iv) or any
Standstill Period under Section 10(v), all installments of Note which, but for
such suspension, would have become due and payable, shall become immediately due
and payable. Notwithstanding anything to the contrary contained herein, Borrower
may pay and Holder may demand, sue for, or take and retain any payment on the
Note before notice of a payment suspension is given to Holder in accordance with
Section 10(iv) and before a Standstill Notice is given to Holder in accordance
with Section 10(v).
(vii) FORBEARANCE BY HOLDER. Until the Senior Debt is paid in full,
in cash or cash equivalents, or unless requested by Senior Debtholder, Holder
shall not without Senior Debtholder's prior written consent, given in its sole
and absolute discretion: (i) assert, collect or enforce the Note or any of the
amounts due thereunder, exercise any right of set-off; (ii) exercise its right
of possession of any Collateral securing the Note or attach, seize, or realize
upon any Collateral securing the Note or enforce any lien against the
Collateral; (iii) exercise any right under the California Uniform Commercial
Code, including, but not limited to, the right of strict foreclosure, but
excluding the right of redemption; or (iv) commence, or cause to commence,
prosecute or participate in (other than participate in an action, once
commenced, to protect and pursue its rights and remedies as, for example,
exercising its rights in a bankruptcy proceeding) any administrative, legal or
equitable action against Borrower or any administrative, legal or equitable
action that might adversely affect Borrower or its interest, including, but not
limited to, the entry of a decree or order for relief in respect of Borrower
under the Bankruptcy Code or any applicable bankruptcy, insolvency or other
similar law now or hereafter in effect or the appointment of a receiver,
liquidator, assignee, custodian, trustee, sequestrator or similar official of
Borrower or for any substantial part of the Assets; provided, however, that
Holder may undertake any of the above actions following the passage of one
hundred eighty (180) days after Holder or its agents have given written notice
to Senior Debtholder of the intent to take such action.
(viii) DISPOSITION OF COLLATERAL. Upon any foreclosure upon, or
realization or collection in respect of any Collateral whether such action is
taken by or on behalf of Senior Debtholder or Holder or otherwise, all Senior
Debt shall first by satisfied in full in cash or cash equivalents before Holder
shall be entitled to receive or retain any proceeds or assets from such
foreclosure, realization or collection.
(ix) SUBROGATION. Subject to the payment in full of all Senior Debt
in cash or cash equivalents, Holder shall be subrogated to the Senior
Debtholders' rights (to the extent of the payments or distributions made to the
Senior Debtholders pursuant to the provisions of this Section 10 to receive
payments and Distributions of Assets applicable to the Senior Debt. No such
payments or Distributions of Assets applicable to the Senior Debt shall, as
between Borrower and its creditors, other than the Senior Debtholders and
Holder, be deemed to be a payment by Borrower to or on account of this Note; and
for purposes of such subrogation, no payments or Distributions of Assets to the
Senior Debtholders to which Holder would be entitled except for the provisions
of this Section 10 shall, as between Borrower and its creditors, other than the
Senior Debtholders and Holder, be deemed to be a payment by Borrower to or on
account of the Senior Debt.
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(x) NO IMPAIRMENT. Nothing contained in this Section 10 shall
impair, as between Borrower and Holder, the obligation of Borrower, subject to
the terms and conditions of this Section 10, to pay to Holder the principal
hereof and interest hereon as and when the same become due and payable, or shall
prevent Holder, upon an Event of Default, from exercising all rights, powers and
remedies otherwise provided herein or by applicable law, subject to the Senior
Debtholders' rights under this Section 10.
(xi) RELIANCE OF SENIOR DEBTHOLDERS. Holder, by its acceptance
hereof, shall be deemed to acknowledge and agree that the foregoing
subordination provisions are, and are intended to be, an inducement to and a
consideration of each Senior Debtholder, whether such Senior Debtholder's Senior
Debt was created or acquired before or after the creation of the indebtedness
evidenced by this Note, and each such Senior Debtholder shall be deemed
conclusively to have relied on such subordination provisions in acquiring and
holding, or in continuing to hold, such Senior Debt.
(xii) NO IMPAIRMENT OF SUBORDINATION. No right of any present or
future Senior Debtholder to enforce the subordination provisions of this Section
10 shall at any time in any way be prejudiced or impaired by any act or failure
to act on Borrower's part or by any act or failure to act, in good faith, by
such Senior Debtholder, or by any noncompliance by Borrower with the terms,
provisions and covenants of this Note or the Purchase Agreement, regardless of
any knowledge thereof which such Senior Debtholder may have or otherwise be
charged with.
(xiii) AMENDMENT RESTRICTIONS. No amendment of this Note shall
directly or indirectly modify the provisions of this Section 10 in any manner
which might terminate or impair the subordination of the Note to the Senior
Debt; provided, however, that such amendments may be effected with the written
consent of the Senior Debtholders.
(xiv) DISGORGEMENT. If, at any time after payment in full of the
Senior Debt any payments of the Senior Debt must be disgorged by a Senior
Debtholder for any reason (including, without limitation, Borrower's
bankruptcy), this Note and the relative rights and priorities set forth herein
shall be reinstated as to all such disgorged payments as though such payments
had not been made and Holder shall immediately pay over to Senior Debtholder all
payments received with respect to the Note to the extent that such payments
would have been prohibited hereunder.
(xv) SENIOR DEBTHOLDER ACTIONS. At any time and from time to time,
without notice to Holder, Senior Debtholders may take such actions with respect
to the Senior Debt as Senior Debtholders, in their sole discretion, may deem
appropriate, including, without limitation, terminating advances to Borrower,
increasing the principal amount, extending the time of payment, increasing
applicable interest rates, renewing, compromising or otherwise amending the
terms of any documents affecting the Senior Debt and any collateral securing the
Senior Debt, and enforcing or failing to enforce any rights against Borrower or
any other party. No such action or inaction shall impair or otherwise affect
Senior Debtholders' rights under the subordination provisions of this Note.
Holder waives the benefits, if any, of California Civil Code Sections 2809,
2810, 2819, 2845, 2847, 2848, 2849, 2850, 2899 and 3433.
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(xvi) DEFINITIONS. For purposes of this Section 10, the following
terms shall have the following meanings:
"Distribution of Assets": any distribution of Borrower's
assets of any kind or character, whether in cash, property, or securities, and
whether in respect of repayment of indebtedness or otherwise, including, but not
limited to, adequate protection payments under the Bankruptcy Code.
"Lien": any lien (statutory or other), mortgage, pledge,
hypothecation, assignment, deposit arrangement, security interest, charge or
other encumbrance of any kind (including any conditional sale or other title
retention agreement, any lease in the nature thereof, and any agreement to give
any security interest) and any agreement to give or refrain from giving a lien,
mortgage, pledge, hypothecation, assignment, deposit arrangement, security
interest, charge or other encumbrance of any kind.
"Permitted Liens": means the following:
(a) Any Liens existing on the Closing Date disclosed in the
Merger Agreement or arising under this Agreement;
(b) Leases or subleases and licenses and sublicenses granted
to others in the ordinary course of Borrower's business not interfering in any
material respect with the business of Borrower, and any interest or title of a
lessor or licensor under any such lease or license;
(c) Liens on assets (including the proceeds thereof and
accessions thereto) that existed at the time such assets were or are acquired by
Borrower (including Liens on assets of any corporation that existed at the time
it became or becomes a Subsidiary); provided such Liens are not granted in
contemplation of or in connection with the acquisition of such asset by
Borrower;
(d) Liens arising from judgments, decrees or attachments in
circumstances not constituting an Event of Default under Section 8(vi);
(e) Easements, reservations, rights-of-way, restrictions,
minor defects or irregularities in title and other similar charges or
encumbrances affecting real property not materially interfering with the
business of Borrower;
(f) Liens in favor of customs and revenue authorities arising
as a matter of law to secure payments of customs duties in connection with the
importation of goods;
(g) Liens which constitute rights of set-off of a customary
nature or banker's Liens with respect to amounts on deposit, whether arising by
operation of law or by contract, in connection with arrangements entered into
with banks in the ordinary course of business;
(h) Liens on insurance proceeds in favor of insurance
companies granted solely as security for financed premiums;
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(i) Liens for taxes, fees, assessments or other governmental
charges or levies, either not delinquent or being contested in good faith by
appropriate proceedings; and
(j) Liens (i) upon or in any equipment acquired or held by
Borrower to secure the purchase price of such equipment or indebtedness incurred
solely for the purpose of financing the acquisition of such equipment, or (ii)
existing on such equipment at the time of its acquisition, provided that the
Lien is confined solely to the property so acquired and improvements thereon,
and the proceeds of such equipment.
"Person": any natural person, sole proprietorship, general
partnership, limited partnership, joint venture, trust, unincorporated
organization, association, corporation, governmental or public authority, or any
other organization, irrespective of whether it is a legal entity.
"Senior Debt": the principal of (and premium, if any) and
unpaid interest on and other indebtedness under (i) indebtedness of Borrower,
whether outstanding on the date hereof or hereafter created, to banks, insurance
companies, lease financing institutions, savings and loan associations, credit
unions, or holding companies or subsidiaries thereof, which is for money
borrowed (or purchase or lease of equipment in the case of lease financing) by
Borrower, including any indebtedness incurred after the filing of a petition
with respect to Borrower under the Bankruptcy Code (including any interest
accruing with respect to any such indebtedness after the filing of any such
petition whether or not allowed or allowable as a claim in the bankruptcy
proceeding), and (ii) obligations of Borrower as lessee under leases required to
be capitalized on the balance sheet of the lessee under GAAP and leases of
property or assets made as part of any sale and lease-back transaction to which
Borrower is a party, and (iii) any deferrals, renewals or extensions of any such
indebtedness or any debentures, notes or other evidence of indebtedness issued
in exchange for such Senior Debt; provided, however, that the aggregate
principal amount of the Senior Debt outstanding shall not exceed Six Million
Dollars ($6,000,000).
"Senior Debtholder": any holder of the Senior Debt.
"Senior Default": any event of default or default with
respect to any of the Senior Debt.
"Senior Payment Default": a default in payment of principal,
interest or premium which constitutes a Senior Default.
11. COSTS OF COLLECTION. In the event of any default hereunder,
Borrower shall pay all reasonable attorneys' fees and court costs incurred by
Holder in enforcing and collecting this Note.
12. HOLDER'S RIGHTS; BORROWER WAIVERS. Holder's acceptance of partial
or delinquent payment from Borrower hereunder, or Holder's failure to exercise
any right hereunder, shall not constitute a waiver of any obligation of Borrower
hereunder, or any right of Holder hereunder, and shall not affect in any way the
right to require full performance at any time thereafter. Except as otherwise
specifically provided herein, Borrower waives presentment, diligence,
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demand of payment, notice, protest and all other demands and notices in
connection with the delivery, acceptance, performance, default or enforcement of
this Note.
13. GOVERNING LAW. The terms of this Note shall be construed in
accordance with the laws of the State of California, as applied to contracts
entered into by California residents within the State of California, which
contracts are to be performed entirely within the State of California.
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14. AMENDMENT. Any term of this Note may be amended or waived with the
written consent of Borrower and Holder.
BORROWER:
CYBERMEDIA, INC.
a Delaware Corporation
By: /s/ Kanwal Rekhi
-----------------------------
Name: Kanwal Rekhi
Title: Chief Executive Officer and
Chairman of the Board
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