Document:

Exhibit
10.1

 

PROMISSORY NOTE PURCHASE
AGREEMENT

 

This
Promissory Note Purchase Agreement dated as of April 15, 2005 (the “Agreement”)
by and between John J. Moores (“Purchaser”), NEON Systems, Inc., a
Delaware corporation (“Seller”) and Neon Enterprise Software, Inc., a
Delaware corporation formerly known as Peregrine/Bridge Transfer Corporation
(the “Company”):

 

WITNESSETH:

 

WHEREAS,
Seller owns the convertible promissory note dated August 14, 2002 made by
the Company, payable to the order of Seller with a principal amount of
$3,000,000 (the “Convertible Note”);

 

WHEREAS,
Seller also owns the non-convertible promissory note dated August 14, 2002
made by the Company and payable to the order of Seller with a principal amount
of $3,584,028 (the “Non-Convertible Note”), which Non-Convertible Note
together with the Convertible Note are hereinafter referred to as the “Notes”;

 

WHEREAS,
the Company’s obligations under the Notes are secured by the security interests
granted pursuant to the Security Agreement dated effective as of August 14,
2002 by and between the Company and Seller (the “Security Agreement”);

 

WHEREAS,
the Notes have matured and the Company is in default under the Notes; and

 

WHEREAS,
Seller desires to sell to Purchaser, and Purchaser desires to purchase from
Seller, all of Seller’s right, title and interest in and to the Notes, the
Security Agreement and all related agreements and instruments on the terms and
subject to the conditions set forth in this Agreement;

 

NOW,
THEREFORE, in consideration of these premises and the representations,
warranties and covenants set forth in this Agreement, the parties agree as
follows:

 

1.                                       Purchase of Assets.  On
the terms and conditions set forth in this Agreement, at the Closing (as
defined below), Seller shall GRANT, BARGAIN, CONVEY, SELL, ASSIGN, TRANSFER AND
DELIVER to Purchaser, and Purchaser shall purchase, accept and assume from
Seller, all of Seller’s right, title and interest in and to the following
(collectively, the “Purchased Assets”):

 

(a)                                  the Notes and the indebtedness of the Company
payable thereunder;

 

(b)                                 all rights, titles, interests, liens,
securing interests, privileges, claims, demands and equities now existing or
hereafter arising under or out of the agreements and instruments listed on Schedule I
to this Agreement (the “Assumed Contracts”); and

 

(c)                                  all rights, claims, credits, causes of action
or rights of set-off of Seller against third parties relating to the Notes and
the Assumed Contracts, including those relating to any breaches or defaults by
the Company prior to the Closing,

 

TO
HAVE AND TO HOLD the Purchased Assets unto the Purchaser, for the benefit of
his successors and assigns, forever; provided, however, the Purchaser does not
assume and shall not be obligated to pay, perform or discharge any claim, debt,
obligation, expense or liability of the Seller of any kind, whether known or
unknown, absolute or contingent, under the Notes, Assumed Contracts or
otherwise, arising out of any act or omission occurring on or before the
Closing Date.

 

2.                                       Assumption of Liabilities.  As
partial consideration for the sale, transfer, assignment and delivery of the
Purchased Assets and on the terms and subject to the conditions set forth in
this Agreement, Purchaser shall assume and

 

 

perform the liabilities and obligations of Seller
under the Notes and the Assumed Contracts (collectively, the “Assumed
Liabilities”) arising from and after the Closing and no others.

 

3.                                       Purchase Price.  On
the terms and subject to the conditions set forth in this Agreement, in
reliance on the representations, warranties and agreements of Seller set forth
in this Agreement, and in consideration of the sale, transfer, assignment and
delivery by Seller of the Purchased Assets, at the Closing Buyer shall
(i) assume the Assumed Liabilities, (ii) pay to Seller an amount in
cash equal to $4,350,000 (the “Cash Purchase Price”), and (iii) execute
a promissory note between Purchaser and Seller in the principal amount of
$2,234,028 in the form attached hereto as Exhibit B (the “Purchase
Note”).

 

4.                                       Closing.  (a)  The closing
(the “Closing”) shall take place at the office of Seller at
10:00 a.m., Sugar Land, Texas time, on April 15, 2005, or at such
other date, time and place as may be agreed upon between Purchaser and Seller
(the date on which the Closing occurs, the “Closing Date”).

 

(b)                                 At the Closing, Seller shall (i) deliver
to Purchaser the Notes, duly endorsed (or accompanied by an instrument duly
endorsed) in blank for transfer and (ii) execute and deliver to Purchaser
an instrument of assignment for effecting the grant, bargain, conveyance, sale,
assignment, transfer and delivery of the Purchased Assets, which shall be in
the form attached to this Agreement as Exhibit D.

 

(c)                                  At the Closing, Purchaser shall
(i) deliver to Seller the Cash Purchase Price by wire transfer of
immediately available funds to a bank account designated by Seller, which
designation shall be made at least two business days before the Closing, (ii)
execute and deliver to Seller an instrument of assumption for effecting the
assumption of the Assumed Liabilities, which shall be in the form attached to
this Agreement as Exhibit E, and (ii) execute and deliver to Seller the
Purchase Note.

 

5.                                       Closing Conditions. 
(a)  The obligations of Purchaser
under this Agreement to purchase the Purchased Assets at the Closing are, at
its option, subject to the satisfaction of the following conditions:

 

(i)                                     The representations and warranties of Seller
set forth in this Agreement shall be true and correct in all material respects
both on the date of this Agreement and as of the Closing Date with the same
force and effect as if such representations and warranties were made anew at
and as of the Closing Date.

 

(ii)                                  Seller shall
have performed and complied in all material respects with all agreements, obligations and conditions set
forth in this Agreement that are to be performed
by or complied with by Seller at or
before the Closing.

 

(iii)                               Seller
shall have furnished to Purchaser a certificate dated the Closing Date, signed
by or on behalf of Seller, to the effect that the conditions set forth in
clauses (i) and (ii) of this Section 5(a) have been satisfied.

 

(b)                                 The obligations of Seller under this
Agreement to grant, bargain, convey, sell, assign, transfer and deliver the
Purchased Assets at the Closing are, at its option, subject to the satisfaction
of the following conditions:

 

(i)                                     The representations and warranties of
Purchaser set forth in this Agreement shall be true and correct in all material
respects both on the date of this Agreement and as of the Closing Date with the
same force and effect as if such representations and warranties were made anew
at and as of the Closing Date.

 

(ii)                                  Purchaser shall
have performed and complied in all material respects with all agreements, obligations and conditions set
forth in this Agreement that are to be performed
by or complied with by Purchaser at or
before the Closing.

 

(iii)                               Purchaser
shall have furnished to Seller a certificate dated the Closing Date, signed by
Purchaser, to the effect that the conditions set forth in clauses (i) and (ii)
of this Section 5(b) have been satisfied.

 

 

6.                                       Representation and Warranties of Seller. 
Seller hereby represents and warrants to Purchaser as follows:

 

(a)                                  This Agreement has been duly authorized,
executed and delivered by Seller and constitutes the legal, valid and binding
obligation of Seller, enforceable in accordance with its terms.

 

(b)                                 The execution, delivery and performance of
this Agreement by Seller, and the consummation of the transactions contemplated
by this Agreement by Seller, do not and will not, with or without the giving of
notice, the lapse of time or both: (i) contravene or conflict with the
certificate of incorporation or by-laws of Seller, (ii) contravene or
conflict with or constitute a violation of any law, rule, regulation, judgment,
injunction, order or decree binding upon or applicable to the Purchased Assets
or Seller in a manner that could impair Seller’s ability to perform its
obligations under this Agreement or to consummate the transactions contemplated
by this Agreement, (iii) require any consent, approval or other action by
any person, contravene or conflict with or constitute a violation of or a
default under, or give rise to any right of termination, cancellation or
acceleration of any right or obligation of Seller or to a loss of any benefit
to which Seller is entitled, under any Assumed Liability, or (iv) result
in the creation or imposition of any lien on any of the Purchased Assets.

 

(c)                                  The execution, delivery and performance of
this Agreement by Seller, and the consummation of the transactions contemplated
by this Agreement by Seller, do not and will not require any consent, approval
or action by or in respect of, or any declaration, filing or registration with,
any government, court, regulatory or administrative agency or commission, or
other governmental authority, agency or instrumentality, whether federal, state
or local.

 

(d)                                 Seller owns all right, title and interest
(legal and beneficial) in and to the Purchased Assets free and clear of all
liens, charges, restrictions, claims and encumbrances of any nature.  At the Closing, Seller shall have granted,
bargained, conveyed, sold, assigned, transferred and delivered to Purchaser,
and Purchaser shall have acquired, good and marketable title to, the Purchased
Assets free and clear of all of liens, charges, restrictions, claims and
encumbrances of any nature arising through, or by reason of any action or
omission by, Seller.

 

(e)                                  The principal amount outstanding under the
Notes is $6,584,028, and Seller has not received any payments of principal or
interest under the Notes.

 

(f)                                    Schedule I to this Agreement sets forth an accurate and
complete list of all agreements and instruments relating to the Notes, the
Security Agreement, or the rights or obligations of Seller or the Company
relating to the Notes, the Security Agreement or any such other agreement or
instrument.  Seller has previously
delivered to Purchaser accurate and complete copies of all the Assumed Contracts.

 

7.                                       Representations and Warranties of Purchaser. 
Purchaser hereby represents and warrants to Seller that:

 

(a)                                  Authority. 
Purchaser has the legal capacity to enter into this Agreement, and this
Agreement has been duly executed and delivered by Purchaser and constitutes the
legal, valid and binding obligation of Purchaser, enforceable in accordance
with its terms.

 

(b)                                 The execution, delivery and performance of
this Agreement by Purchaser, and the consummation of the transactions
contemplated by this Agreement by Purchaser, do not and will not, with or
without the giving of notice, the lapse of time or both, contravene or
conflict with or constitute a violation of any law, rule, regulation, judgment,
injunction, order or decree binding upon or applicable to Purchaser in a manner
that could impair Purchaser’s ability to perform its obligations under this
Agreement or to consummate the transactions contemplated by this Agreement.

 

(c)                                  The execution, delivery and performance of
this Agreement by Purchaser, and the consummation of the transactions
contemplated by this Agreement by Purchaser, do not and will not require any
consent, approval or action by or in respect of, or any declaration, filing or
registration with, any government, court, regulatory or administrative agency
or commission, or other governmental authority, agency or instrumentality,
whether federal, state or local.

 

8.                                       Taxes.  Seller acknowledges that it is
responsible for any tax consequences arising from the sale of the

 

 

Purchased
Assets to Purchaser pursuant to this Agreement.

 

9.                                       Expenses.  Each party hereto will pay its
own costs and expenses in connection with the transactions contemplated hereby.

 

10.                                 Publicity.  No public release or
announcement concerning this Agreement or the transactions contemplated hereby
shall be issued by any party, without the prior consent of the other party
hereto (which consent shall not be unreasonably withheld), except as such
release or announcement may be required by any applicable laws or the rules or
regulations of any United States or foreign securities exchange.  On or promptly after the date hereof, Seller
shall issue a press release in a form agreed to by Seller and Purchaser on
before the date hereof.

 

11.                                 Entire Agreement.  This
Agreement (together with the schedules and exhibits hereto) and the documents
and agreements referred to herein constitute the sole and entire agreement of
the parties with respect to the subject matter hereof and supersedes all prior
agreements and understandings relating to the subject matter hereof.   There are no oral agreements between the
parties..

 

12.                                 Governing Law.  This
Agreement shall be governed by and construed and enforced in accordance with
the laws of the State of Texas, without giving effect to the principles of
conflicts of law thereof.

 

13.                                 Counterparts.  This
Agreement may be executed in two or more counterparts, each of which shall be
deemed an original, but all of which together shall constitute one and the same
instrument.  This Agreement shall become
effective when each party hereto shall have received a counterpart, or
facsimile of a counterpart, of this Agreement, each signed by the other party
hereto.

 

14.                                 Further Assurances.  If
at any time after the Closing, Purchaser shall consider it advisable that any
further conveyance, agreements, documents, instruments and assurances of law or
any other things are necessary or desirable to vest, perfect, confirm or record
in Purchaser the title to any of the Purchased Assets, Seller shall execute and
deliver, upon Purchaser’s request, any and all proper conveyances, agreements,
documents, instruments and assurances of law, and do all things reasonably
necessary or proper to vest, perfect, confirm or record title to the Purchased
Assets in Purchaser and otherwise to carry out the provisions of this
Agreement.

 

15.                                 Nonassignable Contracts and Authorizations.  To
the extent that the assignment of any Assumed Contract shall require the
consent of any other party thereto, or shall be subject to any option in any other
person by virtue of a request for permission to assign or transfer or by reason
of or pursuant to any transfer to Purchaser, this Agreement shall not
constitute a contract to assign the same to the extent that an attempted
assignment would either constitute a breach thereof or in any way adversely
affect the rights or obligations of Purchaser or Seller thereunder.  Seller and Purchaser shall each use all
reasonable efforts to procure consent to any such assignment.  If any such consent is not obtained, Seller
shall cooperate with Purchaser in any reasonable arrangement requested by
Purchaser designed to provide for Purchaser the benefit, monetary or otherwise,
of any such Assumed Contract, including enforcement of any and all rights of
Seller against the other party thereto arising out of breach or cancellation
thereof by such party or otherwise; provided, however, that Seller shall
not have any obligation to compensate Purchaser for the value, if any, of the
benefits Purchaser fails to receive as a result of such consent not being
obtained as long as Seller complies with this Section 15.  Seller shall promptly pay to Purchaser when
received all monies received by Seller under any Purchased Asset or any claim
or right or any benefit arising thereunder.

 

16.                                 Continuing Indebtedness.     The indebtedness arising under the evidenced
by the Notes is continuing indebtedness and has been assigned to the Purchaser
pursuant to the terms hereof.  Nothing
contained herein shall be construed to have paid any of such outstanding
indebtedness as of the date hereof or to have released or terminated an lien or security interest relating thereto. The Company
hereby acknowledges that the liens and security interest created pursuant to
the Security Agreement remain in full force and effect after giving effect to
the sale and assignment contemplated herein and secures the Notes and other
indebtedness held by the Purchaser after giving effect to such sale and
assignment.

 

 

17.                                 Authorization. 
Seller hereby authorizes and empowers the Purchaser to make any
necessary filings, including UCC assignments and filings with the U.S. Patent
and Trademark Office, as may be necessary to make the assignments contemplated
hereby of record in the appropriate jurisdictions.

 

18.                                 Schedules.                                      The Schedules are hereby incorporated into
this Agreement by references and constitute a part of this Agreement.

 

19.                                 Invalidity.                                          In the event that any one or more of the
provisions contained herein shall, for any reason, be held invalid, illegal or
unenforceable in any respect, such invalidity, illegality or unenforceability
shall not affect any other provisions hereof.

 

IN
WITNESS WHEREOF, each of the parties below has executed this Agreement as of
the date first above written.

 

 

	
   

  	
  “PURCHASER’

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  s/John J. Moores

  	
   

  
	
   

  	
   

  	
  John J. Moores

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  NEON
  SYSTEMS, INC.

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  s/Brian D. Helman

  	
   

  
	
   

  	
   

  	
  Brian D. Helman

  
	
   

  	
   

  	
  Chief Financial Officer

  

 

 

ACKNOWLEDGEMENT

 

Neon
Enterprise Software, Inc. (the “Company”) hereby consents to and
acknowledges the sale and assignment contemplated herein and agrees to be bound
by the provisions hereof to the extent applicable to it.  The Company hereby acknowledges that the
principal amount outstanding under the Notes is $6,584,028, the Notes remain
valid and enforceable obligations of the Company and that the liens and
security interest created pursuant to the Security Agreement remain in full
force and effect after giving effect to the sale and assignment contemplated
herein and secure the Notes and other indebtedness held by the Purchaser after
giving effect to such sale and assignment.

 

 

	
   

  	
  NEON
  ENTERPRISE SOFTWARE, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
  s/Donald
  L. Townsend III

  	
   

  
	
   

  	
  Name:

  	
   

  	
  Donald
  L. Townsend III

  	
   

  
	
   

  	
  Title:

  	
   

  	
  Vice
  President and CFO

  	
   

  
							

 

 

SCHEDULE I

 

Assumed Contracts

 

The
convertible promissory note dated August 14, 2002 made by the Company
payable to the order of Seller with a principal amount of up to $3,000,000 (the
“Convertible Note”)

 

The
non-convertible promissory note dated August 14, 2002 made by the Company
payable to the order of Seller with a principal amount of up to $3,584,028 (the
“Non-Convertible Note”)

 

The
Security Agreement dated as of August 14, 2002 by and between the Company
and Seller together with any and all financing statements or other filings
relating thereto (the “Security Agreement”)

 

The
Subordination Agreement dated as of August 14, 2002 by and between Seller
and Skunkware, Inc., an affiliate of the Company.Exhibit 10.2

 

NON-NEGOTIABLE
PROMISSORY NOTE

 

	
  $2,234,028.00

  	
   

  	
  Houston, Texas

  	
   

  	
  April 15, 2005

  

 

John J. Moores (hereinafter called “Maker”),
an individual resident of San Diego, California, For Value Received, promises
and agrees to pay on the payment schedule set forth below to NEON Systems,
Inc., a Delaware corporation, (hereinafter called “Payee”), at its
offices at 14100 Southwest Freeway, Suite 500, Sugar Land, Texas 77478, in
lawful money of the United States of America the aggregate principal sum of TWO
MILLION, TWO HUNDRED THIRTY-FOUR THOUSAND, TWENTY-EIGHT AND NO/100 DOLLARS
($2,234,028.00), together with interest thereon from and after the date hereof
on the unpaid principal balance at the rate of FOUR PERCENT (4.0%) per annum
(but in no event to exceed the maximum rate of nonusurious interest allowed by
applicable law).  Maker shall pay to
Payee TWO HUNDRED FIFTY THOUSAND AND NO/100 DOLLARS ($250,000) on the 15th
day of the first month of each calendar quarter hereafter beginning on June 15,
2005, representing the payment of all interest accrued on the outstanding
principal amount through such date, and the payment of principal, until the
principal balance plus accrued interest is fully paid.  All payments made as scheduled on this Note
shall be applied, to the extent thereof, first to accrued but unpaid interest
and the balance to unpaid principal. 
This Note may be prepaid, in whole or in part, at any time without
penalty or premium.

 

If Payee at any time receives or
accepts payment from or for the account of Maker of less than the full amount
when due on this Note, such receipt or acceptance shall, unless Payee expressly
agrees otherwise in writing, be deemed a payment on account only, and shall not
cure any default existing by reason of failure to pay the full amount when due,
nor preclude the exercise of any remedy of Payee including, but not limited to,
acceleration of any unmatured portion hereof, or foreclosure on any security.

 

THIS NOTE IS GIVEN in consideration of
the covenants, promises, rights, obligations and other good and valuable
consideration set forth in that certain Promissory Note Purchase Agreement
dated April 15, 2005 (the “Purchase Agreement”).

 

IF DEFAULT is made in the payment of
any installment of principal and interest hereof, as and when the same is or
becomes due, or if default occurs under any instrument securing the payment
hereof or executed in connection herewith, including the Purchase Agreement,
the owner and holder of this note may, without notice or demand (both of which
are expressly waived by Maker), declare all sums owing hereon at once due and
payable.  If default is made in the
payment of this note, and the same is placed in the hands of an attorney for
collection, or suit is filed hereon, or proceedings are had in bankruptcy,
probate, receivership or other judicial proceedings for the establishment or
collection of any amount called for hereunder, or any amount payable or to be
payable hereunder is collected through any such proceedings, Maker agrees to
reimburse the Payee for any reasonable attorney’s or collection fees incurred
by Payee.

 

MAKER, co-makers, sureties, endorsers
and guarantors, and each of them, expressly waive demand and presentment for
payment, notice of nonpayment, protest, notice of protest, notice of dishonor,
notice of intent to accelerate the maturity hereof, notice of the acceleration
of the maturity hereof, bringing of suit and diligence in taking any action to
collect amounts called for hereunder and in the handling of securities at any
time existing in connection herewith; and are and shall be jointly, severally,
directly and primarily liable for the payment of all sums owing and to be owing
hereon, regardless of and without any notice, diligence, act or omission as or
with respect to the collection of any amount called for hereunder or in
connection with any right, lien, interest or property at any and all times had
or existing as security for any amount called for hereunder.

 

IT IS the intention of Maker and Payee
to conform strictly to applicable usury laws. 
Accordingly, if the transactions contemplated hereby would be usurious
under applicable law (including the laws of the State of Texas and the laws of
the United States of America), then, in that event, notwithstanding anything to
the contrary herein or in any agreement entered into in connection with or as
security for this note, it is agreed as follows:  (i) the aggregate of all consideration which
constitutes interest under applicable law that is taken, reserved, contracted
for, charged or received under this note or under any of the other aforesaid
agreements or otherwise in connection with this note shall under no
circumstances exceed the maximum

 

 

amount of interest allowed by
applicable law, and any excess shall be cancelled automatically and, if
theretofore paid, shall be credited on the note by the holder hereof (or, to
the extent that this note shall have been or would thereby be paid in full,
refunded to the Maker); and (ii) in the event that maturity of this note is
accelerated by reason of an election by the holder hereof resulting from any
default hereunder or otherwise, or in the event of any required or permitted
prepayment, then such consideration that constitutes interest may never include
more than the maximum amount allowed by applicable law, and excess interest, if
any, provided for in this note or otherwise shall be cancelled automatically as
of the date of such acceleration or prepayment and, if theretofore paid, shall
be credited on this note (or, to the extent that this note shall have been or
would thereby be paid in full, refunded to the Maker).

 

This Note will be binding upon and inure to the benefit of the Payee
and its successors and permitted assigns, but neither this Note nor any of the
rights, interests or obligations hereunder may be assigned by the Payee without
the prior written consent of the Maker; provided, however, that this Note may
be assigned by Payee to a successor-in-interest in connection with the merger
or other acquisition of Payee, or the purchase of substantially all of Payee’s
assets, by a third party.

 

THIS NOTE SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS AND THE LAWS OF THE
UNITED STATES APPLICABLE TO TRANSACTIONS IN TEXAS.

 

 

	
  By:

  	
    s/John J.
  Moores

  	
   

  
	
   

  	
  John J. Moores

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