10.5 Amendment No. 2 to Secured Convertible Term Note (the "Omnibus
Amendment")
OMNIBUS AMENDMENT
This Omnibus Amendment, dated August 17, 2005, by and between Datalogic
International, Inc., a Delaware corporation (the "Company"), and Laurus Master
Fund, Ltd., a Cayman Islands company (the "Purchaser"), amends that certain
Securities Purchase Agreement, dated June 25, 2004, by and between the Company
and Purchaser (as amended, modified or supplemented from time to time, the
"Securities Purchase Agreement"); that certain Registration Rights Agreement,
dated June 25, 2004, by and between the Company and the Purchaser (as amended,
modified or supplemented from time to time, the "Registration Rights
Agreement"); and that certain Secured Convertible Term Note, dated June 25,
2004, by the Company in favor of Purchaser for the total principal amount of
$3,000,000 (as amended, modified or supplemented from time to time, the
"Note"); that certain Master Security Agreement, dated June 25, 2004, by and
between the Company and the Purchaser (as amended, modified or supplemented
from time to time, the "Master Security Agreement"); the Restricted Account
Side Agreement, dated June 25, 2004, by and between the Company and Purchaser
(the "Restricted Account Side Letter", collectively, with the Securities
Purchase Agreement, the Related Agreements (as defined in the Securities
Purchase Agreement), the Note, the Master Security Agreement and the
Registration Rights Agreement, the "Funding Documents"). Capitalized terms
used but not defined herein shall have the meanings given them in the
Securities Purchase Agreement.
PREAMBLE
WHEREAS, pursuant to the Funding Documents, the Purchaser agreed to loan
the Company a total principal amount of $3,000,000 ("Loan Amount"), $1,750,000
of which was funded to the Company on June 25, 2004 and the remaining
$1,250,000 of which was funded to the Restricted Account (as defined in the
Securities Purchase Agreement); the Note is convertible into shares of the
Company's common stock (the "Note Shares") at an initial fixed conversion
price of $0.66;
WHEREAS, in connection with the Funding Documents, the Purchaser was
granted a warrant to purchase 705,000 shares the Company's common stock (the
"Warrant");
WHEREAS, pursuant to the terms of the Funding Documents, the Company
filed a registration statement with the United States Securities and Exchange
Commission ("SEC") on July 26, 2004 (the "Existing Registration Statement");
WHEREAS, the Purchaser and the Company desire to amend the transactions
contemplated by the Funding Documents, to release, as of the date hereof, the
sum of $974,902.20 representing all of the funds held in the Restricted
Account as of the date hereof, which such funds shall be disbursed as follows:
(a) $888,375.04 will be wired to the Company; and (b) $86,527.16 will be wired
to the Purchaser in satisfaction of accrued and unpaid interest on the Loan
Amount;
WHEREAS, the Company has established a new wholly owned subsidiary,
Datalogic New Mexico, Inc., a New Mexico corporation ("DLGI NM") and pursuant
to the terms of the Master Security Agreement is required to join, or cause
DLGI NM to be joined to the Master Security Agreement as an Assignor (as
defined in the Master Security Agreement) pursuant to a Joinder Agreement
substantially in the form attached hereto as Exhibit A; and
NOW, THEREFORE, in consideration of the covenants, agreements and
conditions hereinafter set forth, and other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the parties
hereto agree as follows:
1. Terms of this Supplement.
1.1 Disbursement of Funds. As of the date hereof, the Purchaser
shall disburse the sum of $974,902.20 ("the Funds") representing all of the
funds held in the Restricted Account as of the date hereof, which such funds
will be disbursed as follows: $888,375.04 will be wired to the Company; and
$86,527.16 will be wired to the Purchaser in satisfaction of accrued and
unpaid interest on the Loan Amount. Upon release of the Funds from the
Restricted Account, the Restricted Account shall be closed and the Restricted
Account Agreement and the Restricted Account Side Letter shall be deemed
automatically terminated without further action by either party hereto or
thereto.
1.2 All references to the Restricted Account or the Restricted
Account Side Letter contained in any of the Securities Purchase Agreement or
the Related Agreements referred to in the Purchase Agreement, are hereby
deleted and of no further force or effect.
1.3 Amended and Restated Note. The Company shall issue the Purchaser
an Amended and Restated Note which is attached and incorporated herein as
Exhibit A in substitution and not in satisfaction of the Note.
1.4 The Company hereby agrees if required by applicable securities
law to, on or prior to August 19, 2005, file a Rule 424(b) supplement (the
"Post-Effective Supplement") to the Existing Registration Statement relating
to Term Note and the warrants issued in connection therewith, which
Post-Effective Supplement shall state the change of the Fixed Conversion
Prices applicable to the Term Note. Any additional Registrable Securities
that shall be issuable as a result of the amendments contemplated by Section
1.3 above, shall be registered as required by the terms of the registration
Rights Agreement.
1.5 This Amendment shall be effective as of the date hereof
following the execution and delivery of same by each of the Company and
Laurus.
1.6 Except as specifically set forth in this Amendment, there are no
other amendments to the Note, and all of the other forms, terms and provisions
of the Note remain in full force and effect.
1.7 This Amendment shall be binding upon the parties hereto and
their respective successors and permitted assigns and shall inure to the
benefit of and be enforceable by each of the parties hereto and its successors
and permitted assigns. THIS AMENDMENT SHALL BE CONSTRUED AND ENFORCED IN
ACCORDANCE WITH AND GOVERNED BY THE LAW OF THE STATE OF NEW YORK. This
Amendment may be executed in any number of counterparts, each of which shall
be an original, but all of which shall constitute one instrument.
[signature page follows]
IN WITNESS WHEREOF, each of the parties hereto has executed this
Amendment or has caused this Amendment to be executed on its behalf by a
representative duly authorized, all as of the date first above set forth.
COMPANY: PURCHASER:
DATALOGIC INTERNATIONAL, INC. LAURUS MASTER FUND, LTD.
By: /s/ Xxxxx X. Xxxxx By: /s/ Xxxxx Grin
Name: Xxxxx X. Xxxxx Name: Xxxxx Grin
Title: Chief Executive Officer Title: Director
THIS NOTE AND THE COMMON SHARES ISSUABLE UPON CONVERSION OF THIS NOTE HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE
SECURITIES LAWS. THIS NOTE AND THE COMMON SHARES ISSUABLE UPON CONVERSION OF
THIS NOTE MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE
ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT AS TO THIS NOTE UNDER SAID ACT
AND ANY APPLICABLE STATE SECURITIES LAWS OR AN OPINION OF COUNSEL REASONABLY
SATISFACTORY TO DATALOGIC INTERNATIONAL, INC. THAT SUCH REGISTRATION IS NOT
REQUIRED.
AMENDED AND RESTATED SECURED CONVERTIBLE TERM NOTE
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FOR VALUE RECEIVED, DATALOGIC INTERNATIONAL, INC., a Delaware corporation
(the "Borrower"), hereby promises to pay to LAURUS MASTER FUND, LTD., c/o
Ironshore Corporate Services Ltd., X.X. Xxx 0000 G.T., Queensgate House, South
Church Street, Grand Cayman, Cayman Islands, Fax: 000-000-0000 (the "Holder")
or its registered assigns or successors in interest, on order, the sum of
Three Million Dollars ($3,000,000), together with any accrued and unpaid
interest hereon, on June 25, 2007 (the "Maturity Date") if not sooner paid.
The original principal amount of this Note subject to amortizing payments
pursuant to Section 1.2 hereof is hereinafter referred to as the "Amortizing
Principal Amount". This Note amends and restates in its entirety, and is given
in substitution for and not in satisfaction of) that certain promissory note
in the original principal amount of $3,000,000 issued by the Company in favor
of the Holder on June 25, 2004.
Capitalized terms used herein without definition shall have the meanings
ascribed to such terms in that certain Securities Purchase Agreement dated as
of the date hereof between the Borrower and the Holder (the "Purchase
Agreement").
The following terms shall apply to this Note:
ARTICLE I
INTEREST & AMORTIZATION
1.1 (a) Interest Rate. Subject to Sections 1.1(b), 4.12 and 5.6
hereof, interest payable on this Note shall accrue at a rate per annum (the
"Interest Rate") equal to the "prime rate" published in The Wall Street
Journal from time to time, plus two percent (2.0%). The prime rate shall be
increased or decreased as the case may be for each increase or decrease in the
prime rate in an amount equal to such increase or decrease in the prime rate;
each change to be effective as of the day of the change in such rate. Subject
to Section 1.1(b) hereof, the Interest Rate shall not be less than six percent
(6.0%). Interest shall be calculated on the basis of a 360 day year.
Interest shall accrue but not be payable during the period commencing on the
date hereof and ending on July 31, 2004. Commencing on August 1, 2004,
interest on the outstanding principal amount of this Note (the "Principal
Amount") shall be payable monthly, in arrears, commencing on August 1, 2004
and on the first business day of each consecutive calendar month thereafter
(each, a "Repayment Date") and on the Maturity Date, whether by acceleration
or otherwise.
1.1 (b) Interest Rate Adjustment. The Interest Rate shall be subject to
adjustment on the last business day of each month hereafter until the Maturity
Date (each a "Determination Date"). If on any Determination Date (i) the
Borrower shall have registered under the Securities Act of 1933, as amended
(the "Securities Act"), the shares of Common Stock underlying each of the
conversion of this Note and the exercise of the Warrant issued on a
registration statement declared effective by the Securities and Exchange
Commission (the "SEC"), and (ii) the market price (the "Market Price") of the
Common Stock as reported by Bloomberg, L.P. on the Principal Market (as
defined below) for the five (5) consecutive trading days immediately preceding
such Determination Date exceeds the then applicable Fixed Conversion Price by
at least twenty five percent (25%), the Interest Rate for the succeeding
calendar month shall automatically be reduced by 200 basis points (200 b.p.)
(2.0%) for each incremental twenty five percent (25%) increase in the Market
Price of the Common Stock above the then applicable Fixed Conversion Price.
If on any Determination Date (i) the Borrower shall not have registered under
the Securities Act the shares of Common Stock underlying the conversion of
this Note and the exercise of the Warrant on a registration statement declared
effective by the SEC or the Borrower shall have registered such shares under
the Securities Act but on such Determination Date the related registration
statement is not effective, and (ii) the Market Price of the Common Stock as
reported by Bloomberg, L.P. on the Principal Market for the five (5)
consecutive trading days immediately preceding such Determination Date exceeds
the then applicable Fixed Conversion Price by at least twenty five percent
(25%), the Interest Rate for the succeeding calendar month shall automatically
be decreased by 100 basis points (100 b.p.) (1.0.%) for each incremental
twenty five percent (25%) increase in the Market Price of the Common Stock
above the then applicable Fixed Conversion Price. Notwithstanding the
foregoing (and anything to the contrary contained in herein), in no event
shall the Interest Rate be less than zero percent (0%).
1.2 Minimum Monthly Principal Payments. Any Principal Amount that
remains outstanding on the Maturity Date shall be due and payable on the
Maturity Date. Amortizing payments of the aggregate principal amount
outstanding under this Note at any time (the "Principal Amount") shall be made
by the Company on September 1, 2005_and on the first business day of each
succeeding month thereafter through and including the Maturity Date (each, an
"Amortization Date"). Subject to Article III below, commencing on the first
Amortization Date, the Company shall make monthly payments to the Holder on
each Repayment Date, each such payment in the amount of $107,323.23 together
with any accrued and unpaid interest on such portion of the Principal Amount
plus any and all other unpaid amounts which are then owing under this Note,
the Purchase Agreement and/or any other Related Agreement (collectively, the
"Monthly Amount"). Any outstanding Principal Amount together with any accrued
and unpaid interest and any and all other unpaid amounts which are then owing
by the Company to the Holder under this Note, the Purchase Agreement and/or
any other Related Agreement shall be due and payable on the Maturity Date.
ARTICLE II
CONVERSION REPAYMENT
2.1 (a) Payment of Monthly Amount in Cash or Common Stock. Not later
than the fifth (5th) business day prior to each Repayment Date (the "Notice
Date"), the Holder may deliver to Borrower a written notice in the form of
Exhibit B attached hereto directing the Borrower to pay the Monthly Amount
payable on the next Repayment Date in either cash or Common Stock, or a
combination of both (each, a "Repayment Notice"). If a Repayment Notice is
not delivered by the Holder on or before the applicable Notice Date for such
Repayment Date, then, subject to Section 2.1(b), the Borrower shall pay the
Monthly Amount due on such Repayment Date in cash. In the event the Borrower
shall be required to pay any portion of the Monthly Amount in cash, the
Borrower shall pay to the Holder in respect to such payment an amount equal to
102% of such Monthly Amount. If the Holder elects to convert all or a portion
of any Monthly Amount into shares of Common Stock as provided herein, the
number of such shares to be issued by the Borrower to the Holder on such
Repayment Date shall be the number determined by dividing (x) the portion of
the Monthly Amount to be paid in shares of Common Stock, by (y) the then
applicable Fixed Conversion Price. For purposes hereof, the initial "Fixed
Conversion Price" means $0.60, provided, however, that the first Nine Hundred
Fifty Thousand Dollars ($950,000) aggregate principal amount (the "Reduced
Price Conversion Amount") of the Note converted into shares of Common Stock on
or after August 17, 2005 (the "Effective Date") (including all interest and
fees converted on or prior to the date of conversion in full of the Reduced
Price Conversion Amount) shall be converted at a Fixed Conversion Price equal
to $.32, provided, further, that the Fixed Conversion Price shall in all cases
be subject to adjustment as set forth herein.
(b) Monthly Amount Conversion Guidelines. Subject to Sections
2.1(a), 2.2, and 3.2 hereof, the Holder shall convert all or a portion of
the Monthly Amount due on each Repayment Date in shares of Common Stock if
the average closing price of the Common Stock as reported by Bloomberg, L.P.
on the Principal Market for the five (5) trading days immediately preceding
such Repayment Date was greater than or equal to 110% of the Fixed Conversion
Price, provided, however, that such conversions shall not exceed twenty five
percent (25%) of the aggregate dollar trading volume of the Common Stock for
the five (5) day trading period immediately preceding delivery of a Notice of
Conversion to the Borrower. Any part of the Monthly Amount due on a
Repayment Date that the Holder has not converted into shares of Common Stock
shall be paid by the Borrower in cash on such Repayment Date. Any part of the
Monthly Amount due on such Repayment Date which must be paid in cash shall be
paid in cash at the rate of 102% of the Monthly Amount otherwise due on such
Repayment Date, within three (3) business days of the applicable Repayment
Date.
(c) Application of Conversion Amounts. Any amounts converted by
the Holder pursuant to Section 2.1(b) shall be deemed to constitute payments
of, or applied against, (i) first, outstanding fees, (ii) second, accrued
interest on the Amortizing Principal Amount, and (iii) third, the Amortizing
Principal Amount.
2.2 No Effective Registration. Notwithstanding anything to the contrary
herein, no amount payable hereunder may be converted into Common Stock
unless (a) either (i) an effective current Registration Statement (as defined
in the Registration Rights Agreement) covering the shares of Common Stock to
be issued in satisfaction of such obligations exists, or (ii) an exemption
from registration of the Common Stock is available pursuant to Rule 144 of the
Securities Act, and (b) no Event of Default hereunder exists and is
continuing, unless such Event of Default is cured within any applicable cure
period or is otherwise waived in writing by the Holder in whole or in part at
the Holder's option.
2.3 Optional Redemption of Amortizing Principal Amount. The Borrower
will have the option of prepaying the outstanding Amortizing Principal Amount
("Optional Amortizing Redemption"), in whole or in part, by paying to the
Holder a sum of money equal to one hundred thirty percent (130%) of the
Amortizing Principal Amount to be redeemed, together with accrued but unpaid
interest thereon and any and all other sums due, accrued or payable to the
Holder arising under this Note, the Purchase Agreement or any Related
Agreement (the "Amortizing Redemption Amount") on the day written notice of
redemption (the "Notice of Amortizing Redemption") is given to the Holder.
The Notice of Amortizing Redemption shall specify the date for such Optional
Amortizing Redemption (the "Amortizing Redemption Payment Date"), which date
shall be not less than seven (7) business days after the date of the Notice of
Amortizing Redemption (the "Redemption Period"). A Notice of Amortizing
Redemption shall not be effective with respect to any portion of the
Amortizing Principal Amount for which the Holder has a pending election to
convert pursuant to Section 3.1, or for conversions initiated or made by the
Holder pursuant to Section 3.1 during the Redemption Period. The Amortizing
Redemption Amount shall be determined as if such Holder's conversion elections
had been completed immediately prior to the date of the Notice of Amortizing
Redemption. On the Amortizing Redemption Payment Date, the Amortizing
Redemption Amount shall be paid in good funds to the Holder. In the event the
Borrower fails to pay the Amortizing Redemption Amount on the Amortizing
Redemption Payment Date as set forth herein, then such Notice of Amortizing
Redemption will be null and void.
ARTICLE III
CONVERSION RIGHTS
3.1 Holder's Conversion Rights. Subject to Section 2.2, the Holder
shall have the right, but not the obligation, to convert all or any portion of
the then aggregate outstanding Principal Amount of this Note, together with
interest and fees due hereon, into shares of Common Stock, subject to the
terms and conditions set forth in this Article III. The Holder may exercise
such right by delivery to the Borrower of a written Notice of Conversion
pursuant to Section 3.3.
3.2 Conversion Limitation. Notwithstanding anything contained herein to
the contrary, the Holder shall not be entitled to convert pursuant to the
terms of this Note an amount that would be convertible into that number of
Conversion Shares which would exceed the difference between the number of
shares of Common Stock beneficially owned by such Holder or issuable upon
exercise of Warrants held by such Holder and 4.99% of the outstanding shares
of Common Stock. For the purposes of the immediately preceding sentence,
beneficial ownership shall be determined in accordance with Section 13(d) of
the Exchange Act and Regulation 13d-3 thereunder. The Holder may void the
Conversion Share limitation described in this Section 3.2 upon 75 days prior
notice to the Borrower or without any notice requirement upon an Event of
Default.
3.3 Mechanics of Holder's Conversion. (a) In the event that the Holder
elects to convert this Note into Common Stock, the Holder shall give notice of
such election by delivering an executed and completed notice of conversion
("Notice of Conversion") to the Borrower and such Notice of Conversion shall
provide a breakdown in reasonable detail of the Principal Amount, accrued
interest and fees being converted. On each Conversion Date (as hereinafter
defined) and in accordance with its Notice of Conversion, the Holder shall
make the appropriate reduction to the Principal Amount, accrued interest and
fees as entered in its records and shall provide written notice thereof to the
Borrower within two (2) business days after the Conversion Date. Each date on
which a Notice of Conversion is delivered or telecopied to the Borrower in
accordance with the provisions hereof shall be deemed a Conversion Date (the
"Conversion Date"). A form of Notice of Conversion to be employed by the
Holder is annexed hereto as Exhibit A.
(b) Pursuant to the terms of the Notice of Conversion, the Borrower
will issue instructions to the transfer agent accompanied by an opinion of
counsel within one (1) business day of the date of the delivery to Borrower of
the Notice of Conversion and shall cause the transfer agent to transmit the
certificates representing the Conversion Shares to the Holder by crediting the
account of the Holder's designated broker with the Depository Trust
Corporation ("DTC") through its Deposit Withdrawal Agent Commission ("DWAC")
system within three (3) business days after receipt by the Borrower of the
Notice of Conversion (the "Delivery Date"). In the case of the exercise of
the conversion rights set forth herein the conversion privilege shall be
deemed to have been exercised and the Conversion Shares issuable upon such
conversion shall be deemed to have been issued upon the date of receipt by the
Borrower of the Notice of Conversion. The Holder shall be treated for all
purposes as the record holder of such Common Stock, unless the Holder provides
the Borrower written instructions to the contrary.
3.4 Conversion Mechanics.
(a) The number of shares of Common Stock to be issued upon each
conversion of this Note pursuant to this Article III shall be determined by
dividing that portion of the Principal Amount and interest and fees to be
converted, if any, by the then applicable Fixed Conversion Price. In the
event of any conversions of outstanding obligations under this Note in part
pursuant to this Article III, such conversions shall be deemed to constitute
conversions (i) first, of the Monthly Amount for the current calendar month,
(ii) then of outstanding Amortizing Principal Amount by applying the
conversion amount to Monthly Amounts for the remaining Repayment Dates in
chronological order.
(b) The Fixed Conversion Price and number and kind of shares or
other securities to be issued upon conversion is subject to adjustment from
time to time upon the occurrence of certain events, as follows:
A. Stock Splits, Combinations and Dividends. If the shares of
Common Stock are subdivided or combined into a greater or smaller number of
shares of Common Stock, or if a dividend is paid on the Common Stock in shares
of Common Stock, the Fixed Conversion Price or the Conversion Price, as the
case may be, shall be proportionately reduced in case of subdivision of shares
or stock dividend or proportionately increased in the case of combination of
shares, in each such case by the ratio which the total number of shares of
Common Stock outstanding immediately after such event bears to the total
number of shares of Common Stock outstanding immediately prior to such event.
B. During the period the conversion right exists, the Borrower
will reserve from its authorized and unissued Common Stock a sufficient number
of shares to provide for the issuance of Common Stock upon the full conversion
of this Note. The Borrower represents that upon issuance, such shares will be
duly and validly issued, fully paid and non-assessable. The Borrower agrees
that its issuance of this Note shall constitute full authority to its
officers, agents, and transfer agents who are charged with the duty of
executing and issuing stock certificates to execute and issue the necessary
certificates for shares of Common Stock upon the conversion of this Note.
C. Share Issuances. Subject to the provisions of this Section
3.4, if the Borrower shall at any time prior to the conversion or repayment in
full of the Principal Amount issue any shares of Common Stock or securities
convertible into Common Stock to a person other than the Holder (except (i)
pursuant to Subsections A or B above; (ii) pursuant to options, warrants or
other obligations to issue shares outstanding on the date hereof as disclosed
to Holder in writing; or (iii) pursuant to options that may be issued under
any employee incentive stock option and/or any qualified stock option plan
adopted by the Borrower) for a consideration per share (the "Offer Price")
less than the Fixed Conversion Price in effect at the time of such issuance,
then the Fixed Conversion Price shall be immediately reset to such lower Offer
Price at the time of issuance of such securities.
D. Reclassification, etc. If the Borrower at any time shall,
by reclassification or otherwise, change the Common Stock into the same or a
different number of securities of any class or classes, this Note, as to the
unpaid Principal Amount and accrued interest thereon, shall thereafter be
deemed to evidence the right to purchase an adjusted number of such securities
and kind of securities as would have been issuable as the result of such
change with respect to the Common Stock immediately prior to such
reclassification or other change.
3.5 Issuance of Replacement Note. Upon any partial conversion of this
Note, a replacement Note containing the same date and provisions of this Note
shall, at the written request of the Holder, be issued by the Borrower to the
Holder for the outstanding Principal Amount of this Note and accrued interest
which shall not have been converted or paid. Subject to the provisions of
Article IV, the Borrower will pay no costs, fees or any other consideration to
the Holder for the production and issuance of a replacement Note.
ARTICLE IV
EVENTS OF DEFAULT
Upon the occurrence and continuance of an Event of Default beyond any
applicable grace period, the Holder may make all sums of principal, interest
and other fees then remaining unpaid hereon and all other amounts payable
hereunder immediately due and payable. In the event of such an acceleration,
within five (5) days after written notice from Holder to Borrower (each
occurrence being a "Default Notice Period") the amount due and owing to the
Holder shall be 130% of the outstanding principal amount of the Note (plus
accrued and unpaid interest and fees, if any) (the "Default Payment"). If,
with respect to any Event of Default, the Borrower cures the Event of Default
within any applicable grace period, the Event of Default will be deemed to no
longer exist and any rights and remedies of Holder pertaining to such Event of
Default will be of no further force or effect. The Default Payment shall be
applied first to any fees due and payable to Holder pursuant to the Note or
the Related Agreements, then to accrued and unpaid interest due on the Note
and then to outstanding principal balance of the Note.
The occurrence of any of the following events set forth in Sections 4.1
through 4.10, inclusive, is an "Event of Default":
4.1 Failure to Pay Principal, Interest or other Fees. The Borrower
fails to pay when due any installment of principal, interest or other fees
hereon in accordance herewith, or the Borrower fails to pay when due any
amount due under any other promissory note issued by Borrower, and in any such
case, such failure shall continue for a period of three (3) days following the
date upon which any such payment was due.
4.2 Breach of Covenant. The Borrower breaches any covenant or any other
term or condition of this Note or the Purchase Agreement in any material
respect, or the Borrower or any of its Subsidiaries breaches any covenant or
any other term or condition of any Related Agreement in any material respect
and, any such case, such breach, if subject to cure, continues for a period of
fifteen (15) days after the occurrence thereof.
4.3 Breach of Representations and Warranties. Any representation or
warranty made by the Borrower in this Note or the Purchase Agreement, or by
the Borrower or any of its Subsidiaries in any Related Agreement, shall, in
any such case, be false or misleading in any material respect on the date that
such representation or warranty was made or deemed made.
4.4 Receiver or Trustee. The Borrower or any of its Subsidiaries shall
make an assignment for the benefit of creditors, or apply for or consent to
the appointment of a receiver or trustee for it or for a substantial part of
its property or business; or such a receiver or trustee shall otherwise be
appointed.
4.5 Judgments. Any money judgment, writ or similar final process shall
be entered or filed against the Borrower or any of its Subsidiaries or any of
their respective property or other assets for more than $50,000, and shall
remain unvacated, unbonded or unstayed for a period of thirty (30) days.
4.6 Bankruptcy. Bankruptcy, insolvency, reorganization or liquidation
proceedings or other proceedings or relief under any bankruptcy law or any law
for the relief of debtors shall be instituted by or against the Borrower or
any of its Subsidiaries.
4.7 Stop Trade. An SEC stop trade order or Principal Market trading
suspension of the Common Stock shall be in effect for five (5) consecutive
days or five (5) days during a period of ten (10) consecutive days, excluding
in all cases a suspension of all trading on a Principal Market, provided that
the Borrower shall not have been able to cure such trading suspension within
thirty (30) days of the notice thereof or list the Common Stock on another
Principal Market within sixty (60) days of such notice. The "Principal
Market" for the Common Stock shall include the NASD OTC Bulletin Board, NASDAQ
SmallCap Market, NASDAQ National Market System, American Stock Exchange, or
New York Stock Exchange (whichever of the foregoing is at the time the
principal trading exchange or market for the Common Stock, or any securities
exchange or other securities market on which the Common Stock is then being
listed or traded.
4.8 Failure to Deliver Common Stock or Replacement Note. The Borrower
shall fail (i) to timely deliver Common Stock to the Holder pursuant to and in
the form required by this Note, and Section 9 of the Purchase Agreement, if
such failure to timely deliver Common Stock shall not be cured within two (2)
business days or (ii) to deliver a replacement Note to Holder within seven (7)
business days following the required date of such issuance pursuant to this
Note, the Purchase Agreement or any Related Agreement (to the extent required
under such agreements).
4.9 Default Under Related Agreements or Other Agreements. The
occurrence and continuance of any Event of Default (as defined in the Purchase
Agreement or any Related Agreement) or any event of default (or similar term)
under any other indebtedness.
4.10 Change in Control. The occurrence of a change in the controlling
ownership of the Borrower.
DEFAULT RELATED PROVISIONS
4.11 Payment Grace Period. Following the occurrence and continuance of
an Event of Default beyond any applicable cure period hereunder, the Borrower
shall pay the Holder a default interest rate of two percent (2%) per month on
all amounts due and owing under the Note, which default interest shall be
payable upon demand.
4.12 Conversion Privileges. The conversion privileges set forth in
Article III shall remain in full force and effect immediately from the date
hereof and until this Note is paid in full.
4.13 Cumulative Remedies. The remedies under this Note shall be
cumulative.
ARTICLE V
MISCELLANEOUS
5.1 Failure or Indulgence Not Waiver. No failure or delay on the part
of the Holder hereof in the exercise of any power, right or privilege
hereunder shall operate as a waiver thereof, nor shall any single or partial
exercise of any such power, right or privilege preclude other or further
exercise thereof or of any other right, power or privilege. All rights and
remedies existing hereunder are cumulative to, and not exclusive of, any
rights or remedies otherwise available.
5.2 Notices. Any notice herein required or permitted to be given shall
be in writing and shall be deemed effectively given: (a) upon personal
delivery to the party notified, (b) when sent by confirmed telex or facsimile
if sent during normal business hours of the recipient, if not, then on the
next business day, (c) five days after having been sent by registered or
certified mail, return receipt requested, postage prepaid, or (d) one day
after deposit with a nationally recognized overnight courier, specifying next
day delivery, with written verification of receipt. All communications shall
be sent to the Borrower at the address provided in the Purchase Agreement
executed in connection herewith, and to the Holder at the address provided in
the Purchase Agreement for such Holder, with a copy to Xxxx X. Xxxxxx, Esq.,
000 Xxxxx Xxxxxx, 00xx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000, facsimile number (212)
541-4434, or at such other address as the Borrower or the Holder may designate
by ten days advance written notice to the other parties hereto. A Notice of
Conversion shall be deemed given when made to the Borrower pursuant to the
Purchase Agreement.
5.3 Amendment Provision. The term "Note" and all reference thereto, as
used throughout this instrument, shall mean this instrument as originally
executed, or if later amended or supplemented, then as so amended or
supplemented, and any successor instrument issued pursuant to Section 3.5
hereof, as it may be amended or supplemented.
5.4 Assignability. This Note shall be binding upon the Borrower and its
successors and assigns, and shall inure to the benefit of the Holder and its
successors and assigns, and may be assigned by the Holder in accordance with
the requirements of the Purchase Agreement. This Note shall not be assigned
by the Borrower without the consent of the Holder.
5.5 Governing Law. This Note shall be governed by and construed in
accordance with the laws of the State of New York, without regard to
principles of conflicts of laws. Any action brought by either party against
the other concerning the transactions contemplated by this Agreement shall be
brought only in the state courts of New York or in the federal courts located
in the state of New York. Both parties and the individual signing this Note
on behalf of the Borrower agree to submit to the jurisdiction of such courts.
The prevailing party shall be entitled to recover from the other party its
reasonable attorney's fees and costs. In the event that any provision of this
Note is invalid or unenforceable under any applicable statute or rule of law,
then such provision shall be deemed inoperative to the extent that it may
conflict therewith and shall be deemed modified to conform with such statute
or rule of law. Any such provision which may prove invalid or unenforceable
under any law shall not affect the validity or unenforceability of any other
provision of this Note. Nothing contained herein shall be deemed or operate to
preclude the Holder from bringing suit or taking other legal action against
the Borrower in any other jurisdiction to collect on the Borrower's
obligations to Holder, to realize on any collateral or any other security for
such obligations, or to enforce a judgment or other court in favor of the
Holder.
5.6 Maximum Payments. Nothing contained herein shall be deemed to
establish or require the payment of a rate of interest or other charges in
excess of the maximum permitted by applicable law. In the event that the rate
of interest required to be paid or other charges hereunder exceed the maximum
permitted by such law, any payments in excess of such maximum shall be
credited against amounts owed by the Borrower to the Holder and thus refunded
to the Borrower.
5.7 Security Interest and Guarantee. The Holder has been granted a
security interest (i) in certain assets of the Borrower and its Subsidiaries
as more fully described in the Master Security Agreement dated as of the date
hereof and (ii) pursuant to the Stock Pledge Agreement dated as of the date
hereof. The obligations of the Borrower under this Note are guaranteed by
certain Subsidiaries of the Borrower pursuant to the Subsidiary Guaranty dated
as of the date hereof.
5.8 Construction. Each party acknowledges that its legal counsel
participated in the preparation of this Note and, therefore, stipulates that
the rule of construction that ambiguities are to be resolved against the
drafting party shall not be applied in the interpretation of this Note to
favor any party against the other.
5.9 Cost of Collection. If default is made in the payment of this Note,
the Borrower shall pay to Holder reasonable costs of collection, including
reasonable attorney's fees.
[Balance of page intentionally left blank; signature page follows.]
IN WITNESS WHEREOF, the Borrower has caused this Convertible Term Note to
be signed in its name effective as of this 17th day of August, 2005.
DATALOGIC INTERNATIONAL, INC.
By: /s/ Xxxxx X. Xxxxx
Name: Xxxxx X. Xxxxx
Title: Chief Executive Officer
WITNESS:
/s/ Xxxxx Xxxxxx
EXHIBIT A
NOTICE OF CONVERSION
(To be executed by the Holder in order to convert all or part of the Note into
Common Stock)
[Name and Address of Holder]
The Undersigned hereby converts $_________ of the principal due on [specify
applicable Repayment Date] under the Convertible Term Note issued by DataLogic
International, Inc. dated June 25, 2004 by delivery of Shares of Common Stock
of DataLogic International, Inc.on and subject to the conditions set forth in
Article III of such Note.
1. Date of Conversion _______________________
2. Shares To Be Delivered: _______________________
By:_________________________________
Name:_______________________________
Title:______________________________
EXHIBIT B
CONVERSION NOTICE
(To be executed by the Holder in order to convert all or part of a Monthly
Amount into Common Stock)
[Name and Address of Holder]
Holder hereby converts $_________ of the Monthly Amount due on [specify
applicable Repayment Date] under the Convertible Term Note issued by DataLogic
International, Inc.dated June 25, 2004 by delivery of Shares of Common Stock
of DataLogic International, Inc. on and subject to the conditions set forth in
Article III of such Note.
1. Fixed Conversion Price: $_______________________
2. Amount to be paid: $_______________________
3. Shares To Be Delivered (2 divided by 1): __________________
4. Cash payment to be made by Borrower: $_____________________
Date: ____________ LAURUS MASTER FUND, LTD.
By:_______________________________
Name:_____________________________
Title:____________________________
