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EXHIBIT 10.31
FIRST AMENDED AND RESTATED
CONVERTIBLE PROMISSORY NOTE
DUE NOVEMBER 16, 2001
February 8, 2001 $67,000,000
Unisphere Networks, Inc., a corporation organized under the laws of the
State of Delaware (the "MAKER"), promises to pay to the order of Siemens
Corporation (the "HOLDER"), the principal sum of $67,000,000, plus any other
amounts due under this Convertible Promissory Note (this "NOTE") on November 16,
2001 (the "MATURITY DATE").
1. INTEREST. Maker acknowledges that Holder has made advances to Maker in
the amount of: (i) $3,750,000, on November 10, 2000 (the "FIRST ADVANCE"), (ii)
$8,000,000, on December 1, 2000 (the "SECOND ADVANCE"), (iii) 2,000,000, on
January 8, 2001 (the "THIRD ADVANCE") and (iv) $28,250,000, on January 10, 2001
(the "FOURTH Advance"); and that Holder will make an advance to Maker in the
amount of $25,000,000 on February 12, 2001 (the "FIFTH ADVANCE"). Maker promises
to pay interest on the outstanding principal amount of this Note for the period
from: (i) in the case of the First Advance, November 16, 2000, (ii) in the case
of the Second Advance, December 1, 2000, (iii) in the case of the Third Advance,
January 8, 2001, (iv) in the case of the Fourth Advance, January 10, 2001, and
(v) in the case of the Fifth Advance, February 12, 2001, until, in each case,
the date upon which this Note is repaid in full or converted as provided herein,
at a rate equal to 7.25% per annum. Interest will be computed on the basis of a
360-day year of twelve 30-day months. Accrued interest shall be payable in
arrears on the date that the principal amount of this Note is paid. Amounts not
paid when due shall bear interest at a rate per annum equal to 2.0% above the
otherwise applicable rate.
2. PAYMENTS; TAXES; ENFORCEMENT COSTS.
(a) The Maker will pay all amounts payable with respect to this Note by
crediting before 12:00 Noon, New York time, by bank wire transfer of same day
funds, the Holder's account in any bank in the United States as may be
designated and specified in writing by the Holder.
(b) All payments in respect of this Note shall be made without set-off,
defense, or counterclaim. Subject to the second sentence of Section 10, if the
Maker is required by law to withhold any amounts (for taxes or otherwise), the
Maker shall gross-up payments under this Note so that the Holder receives the
full amount of the payment as if the Maker was not required to withhold any
amounts.
(c) The Maker shall pay all costs and expenses, including reasonable
fees and disbursements of counsel, incurred by the Holder in connection with the
enforcement of this Note, including costs of collection.
3. CONVERSION OF NOTE.
(a) CONVERSION RIGHT; NUMBER OF SHARES. On the closing date (the "IPO
CLOSING DATE") of a registered public offering by the Maker of its common stock,
par value $.01 per share (the "COMMON STOCK"), this Note shall automatically
convert into shares of the Common Stock. On the earlier to occur of the Maturity
Date and the date, if any, upon which the Holder accelerates the maturity of
this Note pursuant to Section 6, and on any date subsequent to the Maturity Date
or such date of acceleration, as the case may be, the Holder may, at its option,
convert this Note into shares of the Common Stock. Upon any such conversion, the
Holder shall be entitled to receive a number of shares of Common Stock
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equal to (x) the principal amount of this Note plus accrued interest to the date
of conversion divided by (y) if the conversion occurs on the IPO Closing Date, a
number equal to the price per share at which the Common Stock was sold to the
public in the offering (without taking into account any underwriting discount),
and if the conversion occurs on any other date, a number equal to the fair
market value per share of the Common Stock as of such date, determined by the
Holder and the Maker acting together and in good faith.
If the Holder and the Maker cannot agree on such fair market value
within five business days of the date of conversion, the Holder and the Maker
will engage Credit Suisse First Boston ("CSFB") and UBS Warburg LLC ("UBS") to
select, within ten business days of the date of conversion, a third person that
is an internationally recognized investment bank (the "APPRAISING BANK") to make
such determination. If CSFB is unwilling to so act, the Maker will select, and
if UBS is unwilling to so act, the Holder will select, another internationally
recognized investment bank to select the Appraising Bank. The Holder and the
Maker will then engage the Appraising Bank to determine, within 30 days of the
date of such engagement, the fair market value per share of the Common Stock as
of the date of conversion. The determination by the Appraising Bank shall be
conclusive, absent manifest error. The Holder and the Maker will each pay one
half of the fees and expenses of the Appraising Bank.
(b) MANNER OF EXERCISE. In order to convert this Note, the Holder shall
surrender this Note to the Maker, accompanied by written notice to the Maker
(the "CONVERSION NOTICE") that the Holder elects to convert this Note or, in the
case of a conversion on the IPO Closing Date, that this Note has automatically
converted. The Conversion Notice shall also state the name or names, together
with address or addresses, in which the certificate or certificates for shares
of Common Stock which shall be issuable on such conversion shall be issued. As
promptly as practicable after the surrender of this Note, as aforesaid, the
Maker shall issue and shall deliver to the Holder a certificate or certificates
for the number of full shares of Common Stock issuable upon the conversion of
this Note in accordance with the provisions hereof, and any fractional interest
in respect of a share of Common Stock arising upon such conversion shall be
settled as provided below. Any conversion shall be deemed to have been effected
(i) immediately prior to the close of business on the date on which this Note
shall have been surrendered and the Conversion Notice received by the Maker as
aforesaid or (ii) in the case of a conversion on the IPO Closing Date, on the
IPO Closing Date, and the person or persons in whose name or names any
certificate or certificates for shares of Common Stock shall be issuable upon
such conversion shall be deemed to have become the holder or holders of record
of the shares represented thereby at such time.
(c) PAYMENT IN LIEU OF FRACTIONAL SHARES. No fractional shares of Common
Stock shall be issued upon conversion of this Note. In lieu of issuing a
fractional share of Common Stock, the Maker shall pay to the Holder cash in an
amount equal to the product of the price per share applicable to the conversion
and a fraction representing the portion of a share of Common Stock that the
Maker would have otherwise issued upon such conversion.
(d) TAXES UPON CONVERSION. The Maker will pay any and all documentary
stamp or similar issue or transfer taxes payable in respect of the issue or
delivery of shares of Common Stock upon conversion of this Note.
4. REPRESENTATIONS AND WARRANTIES OF MAKER. The Maker represents and
warrants to the Holder that:
(a) The Maker is a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware. The Maker has the
corporate power and authority to execute, deliver and carry out its obligations
under this Note. The Maker has taken all necessary action to authorize the
execution and delivery of this Note and the performance of its obligations
hereunder. This
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Note has been executed and delivered by the Maker and constitutes the legal,
valid and binding obligation of the Maker enforceable in accordance with its
terms.
(b) The execution and delivery of this Note and the performance by the
Maker of its obligations hereunder does not and will not violate any existing
law or regulation or any decree of any court or governmental agency applicable
to the Maker, the certificate of incorporation or by-laws of the Maker or any
agreement or undertaking to which the Maker is a party or by which it or its
properties are bound.
(c) The Maker is in compliance with all applicable laws, rules,
regulations and orders of any governmental authority, except for such instances
of non-compliance which, individually or in the aggregate, could not reasonably
be expected to have a material adverse effect on the condition (financial or
otherwise), business, operations or properties of the Maker (a "MATERIAL ADVERSE
EFFECT").
(d) Each share of Common Stock to be issued upon conversion of this
Note, when issued, will be duly authorized, validly issued, fully paid,
nonassessable, free of any Lien or encumbrance and not subject to any preemptive
or similar right. "LIEN" means any mortgage, pledge, security interest,
encumbrance, lien or charge of any kind (including any conditional sale or other
title retention agreement or lease in the nature thereof).
5. COVENANTS OF MAKER. The Maker covenants and agrees that, until its
obligations under this Note have been satisfied in full:
(a) The Maker will maintain its corporate existence, rights, franchises,
privileges and good standing.
(b) The Maker will not, without the prior written consent of the Holder,
dissolve, liquidate, or merge or consolidate with any other person or transfer
all or substantially all of its assets to any other entity; provided that the
Maker or any of its subsidiaries may merge with Broadsoft, Inc., a Delaware
corporation.
(c) The Maker will comply with the requirements of all applicable laws,
rules, regulations of any governmental authority, except for instances of
non-compliance that, individually or in the aggregate, could not reasonably be
expected to have a Material Adverse Effect.
(d) The Maker will use the proceeds of this Note only to meet its cash
requirements arising in the ordinary course of business.
(e) The Maker will not, without the prior written consent of the Holder,
(i) declare or pay any dividend or make any distribution on or in respect of its
Capital Stock or similar payment to the direct or indirect holders of its
Capital Stock; (ii) purchase, redeem, retire or otherwise acquire for value any
of its Capital Stock; or (iii) make any investment in, or loan to, any person;
PROVIDED that the Maker may (x) make loans to employees to be used by such
employees to exercise options granted by the Maker to such employees in July,
September and November of 1999 and February of 2000 if such loans have been
approved by the Maker's Board of Directors and do not exceed, in the aggregate,
an amount equal to $14,000,000 and (y) repurchase shares of Common Stock from
employees, if approved by the Maker's Board of Directors. "CAPITAL STOCK" means,
with respect to any person, shares, interests, rights to purchase, warrants,
options, participations or other equivalents of or interests in (however
designated) equity of such person, including preferred stock.
(f) The Maker will, as soon as practicable after the date hereof,
reserve and keep available, free from preemptive rights, out of the aggregate of
its authorized but unissued shares of
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Common Stock or its issued shares of Common Stock held in its treasury, or both,
for the purpose of effecting conversions of this Note, the full number of shares
of Common Stock deliverable upon the conversion of this Note. Prior to the
delivery of any shares of Common Stock upon conversion of this Note, the Maker
shall comply with all laws and regulations requiring the registration of such
securities with, or any approval of or consent to the delivery thereof by, any
governmental authority, unless an exemption from registration is available.
(g) The Maker will ensure that all shares of Common Stock delivered upon
conversion of this Note will upon delivery be duly and validly issued, fully
paid and nonassessable, free of all Liens as defined below and charges and not
subject to any preemptive or similar right.
(h) The Maker will not, and will not permit any of its subsidiaries to,
directly or indirectly, create, incur, assume or suffer to exist any Lien upon
any of its property, assets or revenues, whether now owned or hereafter
acquired, unless, prior to or simultaneously with the creation, incurrence or
assumption of such Lien, the Maker causes its obligations under this Note to be
secured on terms that are at least as favorable as to the beneficiary of such
Lien.
6. DEFAULTS AND REMEDIES. If an Event of Default (as defined below) occurs
and is continuing, the Holder may declare this Note to be immediately due and
payable without presentment, demand, protest or notice of any other kind, all of
which the Maker expressly waives; PROVIDED that if an Event of Default set forth
in (a) or (b) below occurs, then this Note shall become immediately due and
payable without any action by the Holder (and the Maker waives presentment,
demand, protest or notice of any other kind in connection therewith). Upon the
occurrence of an Event of Default, the Holder shall be entitled to exercise any
remedies available at law.
Each of the following events shall be an "Event of Default:"
(a) the Maker commences a voluntary case or other proceeding seeking
liquidation, reorganization or other relief with respect to itself or its debts
under any bankruptcy, insolvency or other similar law now or hereafter in effect
or seeking the appointment of a trustee, receiver, liquidation, custodian or
other similar official of it or any substantial part of its property, or
consents to any such relief or to the appointment of or taking possession by any
such official in an involuntary case or other proceeding commenced against it,
or makes a general assignment for the benefit of creditors, or fails generally
to pay its debts as they become due, or takes any action to authorize any of the
foregoing; or
(b) an involuntary case or other proceeding is commenced against the
Maker seeking liquidation, reorganization or other relief with respect to it or
its debts under any bankruptcy, insolvency or other similar law now or hereafter
in effect or seeking the appointment of a trustee, receiver, liquidator,
custodian or other similar official of it or any substantial part of its
property or an order for relief is entered against the Maker under any such law,
and such involuntary case or order relief or other proceeding remains
undismissed and unstayed for a period of 45 days; or
(c) a final judgment or order for the payment of money in excess of
$5,000,000 or its equivalent in other currencies is rendered against the Maker,
and the Maker does not discharge the same or provide for its discharge in
accordance with its terms, or procure a stay of execution thereof, within 45
days after the date of entry thereof and within such 45-day period (or such
longer period during which execution of such judgment is stayed) appeal
therefrom and cause the execution thereof to be stayed during such appeal; or
(d) the Maker shall repudiate any of its obligations under this Note; or
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(e) any representation or warranty made by the Maker shall be inaccurate
in any material respect at the time such representation or warranty is made; or
(f) the Maker shall fail to comply with any provision in Section 5; or
(g) the Maker shall fail to comply with any other covenant contained
herein, and such failure is not rectified or cured within 30 days after notice
from the Holder or after the Maker acquires knowledge of such failure; or
(h) the Maker shall default in the payment when due of any amount owing
under an instrument or agreement evidencing Indebtedness (as defined below) of
the Maker in excess of $20,000,000 or shall fail to perform any other obligation
under any such instrument if the effect of such failure is to cause or permit
the acceleration of such Indebtedness.
"INDEBTEDNESS" means, with respect to any person:
(i) the principal of and premium (if any) in respect of indebtedness
of such person for money borrowed and indebtedness evidenced by notes,
indentures, bonds, other similar instruments for the payment of which such
person is responsible or liable;
(ii) capital lease obligations of such person;
(iii) obligations of such person issued or assumed as the deferred
purchase price of property or services (other than trade payables incurred
in the ordinary course of business);
(iv) obligations of such person for the reimbursement of any obligor
on any letter of credit or similar credit transaction;
(v) all obligations under or in respect of interest rate protection or
other hedging agreements;
(vi) all obligations of the type referred to in clauses (i) through
(v) above of third parties secured by any lien on any property or asset of
such person;
(vii) Indebtedness secured by any lien existing on property acquired
by such person subject to such lien, whether or not the Indebtedness
secured thereby shall have been assumed; and
(viii) guarantees, endorsements and other obligations, whether or not
contingent, in respect of, or agreements to purchase or otherwise acquire,
Indebtedness of other persons.
7. NO WAIVERS BY HOLDER. No failure on the part of the Holder to exercise,
and no delay in exercising, any right, power or remedy hereunder shall operate
as a waiver thereof, nor shall any single or partial exercise by the Holder of
any right, power, or remedy hereunder preclude any other or further exercise
thereof or the exercise of any right, power or remedy by the Holder. No
modification or waiver of any provision of this Note or consent to any departure
herefrom shall in any event be effective unless the same shall be in writing and
signed by the Holder, and then such waiver or consent shall be effective only in
the specific instance and for the purpose given. No notice or demand on the
Maker in any case shall, of itself, entitle the Maker to any other or further
notice or demand in similar or other circumstances.
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8. INDEMNIFICATION. The Maker will indemnify the Holder against, and on
demand reimburse the Holder and each of its officers, directors, employees and
agents (collectively, the "INDEMNIFIED PARTIES") for, any and all liabilities,
obligations, losses, damages, penalties, taxes, actions, judgments, costs,
expenses or disbursements of any kind or nature whatsoever, which may at any
time be imposed on, incurred by or asserted against any Indemnified Party
directly relating to or arising out of this Note; PROVIDED that the Maker shall
not be liable for any of the foregoing in respect of an Indemnified Party to the
extent they arise from the gross negligence or willful misconduct of such
Indemnified Party.
9. WAIVERS BY MAKER. The Maker hereby expressly waives presentment for
payment, demand for payment, notice of dishonor, protest, notice of protest,
notice of nonpayment, and all lack of diligence or delays in collection or
enforcement of this Note.
10. TRANSFERS AND ASSIGNMENTS. This Note may not be assigned by the Maker
and any purported assignment shall be null and void. The Holder may not transfer
this Note without the consent of the Maker; PROVIDED that the Holder may
transfer this Note to any affiliate without the Maker's consent; PROVIDED,
FURTHER that the Maker shall not be required to pay a greater amount under the
second sentence of Section 2(b), as a result of such a transfer to an affiliate
without the Maker's consent, than the Maker would have been required to pay
under the second sentence of Section 2(b) in the absence of such a transfer.
Following any transfer of this Note, the transferee shall be deemed to be the
"Holder" hereunder. "AFFILIATE" means any person or legal entity directly or
indirectly controlling, controlled by or under common control with such
specified person or legal entity.
11. VALIDITY. If any part of this Note is contrary to, prohibited by or
deemed invalid under any applicable law or regulation, such provision shall be
inapplicable and deemed omitted to the extent so contrary, prohibited or
invalid, but the remainder hereof shall not be invalidated thereby and shall be
given full force and effect as far as possible. No provision of this Note shall
require the payment, or permit the collection, of interest in excess of the
highest rate permitted by law.
12. NOTICES. All notices, consents, request, demands, offers, and other
communications required or permitted to be given pursuant to this Note shall be
in writing and shall be considered properly given and received when personally
delivered to the Maker or when sent by facsimile or by overnight courier, or
four (4) business days after being sent by certified mail, return receipt
requested, in a sealed envelope, with postage prepaid, addressed to: Unisphere
Networks, Inc., One Executive Drive, Chelmsford, MA, 01824, Attn: James A.
Dolce, Jr., Tel. (978) 848-0300, Fax (978) 848-0399; PROVIDED that any notice
sent by facsimile shall be promptly followed by a copy of such notice sent by
mail or overnight courier in the manner described herein.
13. AMENDMENTS AND WAIVERS. Any provision of this Note may be amended or
waived if, but only if, such amendment or waiver is in writing and signed by the
Maker and the Holder.
14. GOVERNING LAW. THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
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15. SUBMISSION TO JURISDICTION. The Maker hereby submits to the
jurisdiction of the United States District Court for the Southern District of
New York and of any New York state court sitting in New York City, with respect
to any action, suit or proceeding brought against it arising out of or relating
to this Note and the transactions contemplated hereby. The Maker hereby
irrevocably waives, to the fullest extent permitted by applicable law, any
objection which it may now or hereafter have to the laying of the venue of any
such action, suit or proceeding brought in such a court and any claim that any
such action, suit or proceeding brought in such a court has been brought in an
inconvenient forum.
Unisphere Networks, Inc.
By: /s/ Mark Nasiff
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Name: Mark Nasiff
Title: Vice President of Finance
and Administration
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