Exhibit 10.2
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR ANY STATE SECURITIES LAWS. 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.
SECURED TERM NOTE
FOR VALUE RECEIVED, DATALOGIC INTERNATIONAL, INC., a Delaware (the
"Company"), promises to pay to LAURUS MASTER FUND, LTD., c/o M&C Corporate
Services Limited, P.O. Box 309 GT, Xxxxxx House, South Church Street, Xxxxxx
Town, Grand Cayman, Cayman Islands, Fax: 000-000-0000 (the "Holder") or its
registered assigns or successors in interest, the sum of THREE MILLION TWO
HUNDRED FIFTY THOUSAND Dollars ($3,250,000), together with any accrued and
unpaid interest hereon, on December 31, 2007 (the "Maturity Date") if not
sooner paid.
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 by and between the Company and the Holder (as
amended, modified and/or supplemented from time to time, the "Purchase
Agreement").
The following terms shall apply to this Secured Convertible Term
Note (this "Note"):
ARTICLE I
CONTRACT RATE AND AMORTIZATION
1.1 Contract Rate. Subject to Sections 4.2 and 5.10, interest
payable on the outstanding principal amount of this Note (the "Principal
Amount") shall accrue at a rate per annum equal to the "prime rate" published
in The Wall Street Journal from time to time (the "Prime Rate"), plus two
percent (2.0%) (the "Contract Rate"). The Contract 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 the Prime Rate. The Contract
Rate shall not at any time be less than eight percent (8.0%). Interest shall
be (i) calculated on the basis of a 360 day year, and (ii) payable monthly, in
arrears, commencing on February 1, 2006, on the first business day of each
consecutive calendar month thereafter through and including the Maturity Date,
and on the Maturity Date, whether by acceleration or otherwise.
1.2 Principal Payments. Amortizing payments of the aggregate
principal amount outstanding under this Note at any time (the "Principal
Amount") shall be made in cash by the Company on April 1, 2006 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 Amortization Date, each such payment in
the amount of $154,761.90 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.
1.3 Optional Redemption in Cash. The Company may prepay this
Note ("Optional Redemption") by paying to the Holder a sum of money equal to
one hundred three percent (103%) of the Principal Amount outstanding at such
time 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 other Related Agreement (the "Redemption Amount")
outstanding on the Redemption Payment Date (as defined below). The Company
shall deliver to the Holder a written notice of redemption (the "Notice of
Redemption") specifying the date for such Optional Redemption (the "Redemption
Payment Date"), which date shall be seven (7) business days after the date of
the Notice of Redemption (the "Redemption Period. On the Redemption Payment
Date, the Redemption Amount must be paid in good funds to the Holder. In the
event the Company fails to pay the Redemption Amount on the Redemption Payment
Date as set forth herein, then such Redemption Notice will be null and void.
1.4 Issuance of New Note. Upon any partial payment of this
Note, a new Note containing the same date and provisions of this Note shall,
at the request of the Holder, be issued by the Company to the Holder for the
principal balance of this Note and interest which shall not have been paid.
Subject to the provisions of Article IV of this Note, the Company shall not
pay any costs, fees or any other consideration to the Holder for the
production and issuance of a new Note.
ARTICLE II
EVENTS OF DEFAULT
2.1 Events of Default. The occurrence of any of the following
events set forth in this Section 4.1 shall constitute an event of default
("Event of Default") hereunder:
(a) Failure to Pay. The Company fails to pay when due any
installment of principal, interest or other fees hereon in accordance
herewith, or the Company fails to pay any of the other Obligations (under and
as defined in the Master Security Agreement) when due, 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.
(b) Breach of Covenant. The Company or any of its
Subsidiaries breaches any covenant or any other term or condition of this Note
in any material respect and such breach, if subject to cure, continues for a
period of fifteen (15) days after the occurrence thereof.
(c) Breach of Representations and Warranties. Any
representation, warranty or statement made or furnished by the Company or any
of its Subsidiaries in this Note, the Purchase Agreement or any other Related
Agreement shall at any time be false or misleading in any material respect on
the date as of which made or deemed made.
(d) Default Under Other Agreements. The occurrence of any
default (or similar term) in the observance or performance of any other
agreement or condition relating to any indebtedness or contingent obligation
of the Company or any of its Subsidiaries (including, without limitation, the
indebtedness evidenced by the Subordinated Debt Documentation beyond the
period of grace (if any), the effect of which default is to cause, or permit
the holder or holders of such indebtedness or beneficiary or beneficiaries of
such contingent obligation to cause, such indebtedness to become due prior to
its stated maturity or such contingent obligation to become payable;
(e) Material Adverse Effect. Any change or the occurrence
of any event which could reasonably be expected to have a Material Adverse
Effect;
(f) Bankruptcy. The Company or any of its Subsidiaries
shall (i) apply for, consent to or suffer to exist the appointment of, or the
taking of possession by, a receiver, custodian, trustee or liquidator of
itself or of all or a substantial part of its property, (ii) make a general
assignment for the benefit of creditors, (iii) commence a voluntary case under
the federal bankruptcy laws (as now or hereafter in effect), (iv) be
adjudicated a bankrupt or insolvent, (v) file a petition seeking to take
advantage of any other law providing for the relief of debtors, (vi) acquiesce
to, without challenge within ten (10) days of the filing thereof, or failure
to have dismissed, within thirty (30) days, any petition filed against it in
any involuntary case under such bankruptcy laws, or (vii) take any action for
the purpose of effecting any of the foregoing;
(g) Judgments. Attachments or levies in excess of
$100,000 in the aggregate are made upon the Company or any of its Subsidiary's
assets or a judgment is rendered against the Company's property involving a
liability of more than $100,000 which shall not have been vacated, discharged,
stayed or bonded within thirty (30) days from the entry thereof;
(h) Insolvency. The Company or any of its Subsidiaries
shall admit in writing its inability, or be generally unable, to pay its debts
as they become due or cease operations of its present business;
(i) Change of Control. A Change of Control (as defined
below) shall occur with respect to the Company, unless Holder shall have
expressly consented to such Change of Control in writing. A "Change of
Control" shall mean any event or circumstance as a result of which (i) any
"Person" or "group" (as such terms are defined in Sections 13(d) and 14(d) of
the Exchange Act, as in effect on the date hereof), other than the Holder, is
or becomes the "beneficial owner" (as defined in Rules 13(d)-3 and 13(d)-5
under the Exchange Act), directly or indirectly, of 35% or more on a fully
diluted basis of the then outstanding voting equity interest of the Company,
(ii) the Board of Directors of the Company shall cease to consist of a
majority of the Company's board of directors on the date hereof (or directors
appointed by a majority of the board of directors in effect immediately prior
to such appointment) or (iii) the Company or any of its Subsidiaries merges or
consolidates with, or sells all or substantially all of its assets to, any
other person or entity;
(j) Indictment; Proceedings. The indictment or threatened
indictment of the Company or any of its Subsidiaries or any executive officer
of the Company or any of its Subsidiaries under any criminal statute, or
commencement or threatened commencement of criminal or civil proceeding
against the Company or any of its Subsidiaries or any executive officer of the
Company or any of its Subsidiaries pursuant to which statute or proceeding
penalties or remedies sought or available include forfeiture of any of the
property of the Company or any of its Subsidiaries;
(k) The Purchase Agreement and Related Agreements. (i) An
Event of Default shall occur under and as defined in the Purchase Agreement or
any other Related Agreement and be continuing beyond any applicable grace
period., (ii) the Company or any of its Subsidiaries shall breach any term or
provision of the Purchase Agreement or any other Related Agreement in any
material respect and such breach, if capable of cure, continues unremedied for
a period of fifteen (15) days after the occurrence thereof, (iii) the Company
or any of its Subsidiaries attempts to terminate, challenges the validity of,
or its liability under, the Purchase Agreement or any Related Agreement, (iv)
any proceeding shall be brought to challenge the validity, binding effect of
the Purchase Agreement or any Related Agreement or (v) the Purchase Agreement
or any Related Agreement ceases to be a valid, binding and enforceable
obligation of the Company or any of its Subsidiaries (to the extent such
persons or entities are a party thereto); or
(l) 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 Company 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.
2.2 Default Interest. Following the occurrence and during the
continuance of an Event of Default, the Company shall pay additional interest
on this Note in an amount equal to two percent (2%) per month, and all
outstanding obligations under this Note, the Purchase Agreement and each other
Related Agreement, including unpaid interest, shall continue to accrue
interest at such additional interest rate from the date of such Event of
Default until the date such Event of Default is cured or waived.
2.3 Default Payment. Following the occurrence and during the
continuance of an Event of Default, the Holder, at its option, may demand
repayment in full of all obligations and liabilities owing by Company to the
Holder under this Note, the Purchase Agreement and/or any other Related
Agreement and/or may elect, in addition to all rights and remedies of the
Holder under the Purchase Agreement and the other Related Agreements and all
obligations and liabilities of the Company under the Purchase Agreement and
the other Related Agreements, to require the Company to make a Default Payment
("Default Payment"). The Default Payment shall be 130% of the outstanding
principal amount of the Note, plus accrued but unpaid interest, all other fees
then remaining unpaid, and all other amounts payable hereunder. The Default
Payment shall be applied first to any fees due and payable to the Holder
pursuant to this Note, the Purchase Agreement, and/or the other Related
Agreements, then to accrued and unpaid interest due on this Note and then to
the outstanding principal balance of this Note. The Default Payment shall be
due and payable immediately on the date that the Holder has exercised its
rights pursuant to this Section 2.3.
ARTICLE III
MISCELLANEOUS
3.1 Cumulative Remedies. The remedies under this Note shall be
cumulative.
3.2 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.
3.3 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 Company 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, xxxxxxxxx number (212)
541-4434, or at such other address as the Company 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 Company pursuant to the
Purchase Agreement.
3.4 Amendment Provision. The term "Note" and all references
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 as such successor instrument may
be amended or supplemented.
3.5 Assignability. This Note shall be binding upon the Company
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. The Company may
not assign any of its obligations under this Note without the prior written
consent of the Holder, any such purported assignment without such consent
being null and void.
3.6 Cost of Collection. In case of any Event of Default under
this Note, the Company shall pay the Holder reasonable costs of collection,
including reasonable attorneys' fees.
3.7 Governing Law, Jurisdiction and Waiver of Jury Trial.
(a) THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED AND ENFORCED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO
PRINCIPLES OF CONFLICTS OF LAW.
(b) THE COMPANY HEREBY CONSENTS AND AGREES THAT THE STATE OR
FEDERAL COURTS LOCATED IN THE COUNTY OF NEW YORK, STATE OF NEW YORK SHALL HAVE
EXCLUSIVE JURISDICTION TO HEAR AND DETERMINE ANY CLAIMS OR DISPUTES BETWEEN
THE COMPANY, ON THE ONE HAND, AND THE HOLDER, ON THE OTHER HAND, PERTAINING TO
THIS NOTE OR ANY OF THE OTHER RELATED AGREEMENTS OR TO ANY MATTER ARISING OUT
OF OR RELATED TO THIS NOTE OR ANY OF THE RELATED AGREEMENTS; PROVIDED, THAT
THE COMPANY ACKNOWLEDGES THAT ANY APPEALS FROM THOSE COURTS MAY HAVE TO BE
HEARD BY A COURT LOCATED OUTSIDE OF THE COUNTY OF NEW YORK, STATE OF NEW YORK;
AND FURTHER PROVIDED, THAT NOTHING IN THIS NOTE SHALL BE DEEMED OR OPERATE TO
PRECLUDE THE HOLDER FROM BRINGING SUIT OR TAKING OTHER LEGAL ACTION IN ANY
OTHER JURISDICTION TO COLLECT THE OBLIGATIONS, TO REALIZE ON THE COLLATERAL OR
ANY OTHER SECURITY FOR THE OBLIGATIONS, OR TO ENFORCE A JUDGMENT OR OTHER
COURT ORDER IN FAVOR OF THE HOLDER. THE COMPANY EXPRESSLY SUBMITS AND
CONSENTS IN ADVANCE TO SUCH JURISDICTION IN ANY ACTION OR SUIT COMMENCED IN
ANY SUCH COURT, AND THE COMPANY HEREBY WAIVES ANY OBJECTION WHICH IT MAY HAVE
BASED UPON LACK OF PERSONAL JURISDICTION, IMPROPER VENUE OR FORUM NON
CONVENIENS. THE COMPANY HEREBY WAIVES PERSONAL SERVICE OF THE SUMMONS,
COMPLAINT AND OTHER PROCESS ISSUED IN ANY SUCH ACTION OR SUIT AND AGREES THAT
SERVICE OF SUCH SUMMONS, COMPLAINT AND OTHER PROCESS MAY BE MADE BY REGISTERED
OR CERTIFIED MAIL ADDRESSED TO THE COMPANY AT THE ADDRESS SET FORTH IN THE
PURCHASE AGREEMENT AND THAT SERVICE SO MADE SHALL BE DEEMED COMPLETED UPON THE
EARLIER OF THE COMPANY'S ACTUAL RECEIPT THEREOF OR THREE (3) DAYS AFTER
DEPOSIT IN THE U.S. MAILS, PROPER POSTAGE PREPAID.
(c) THE COMPANY DESIRES THAT ITS DISPUTES BE RESOLVED BY A JUDGE
APPLYING SUCH APPLICABLE LAWS. THEREFORE, TO ACHIEVE THE BEST COMBINATION OF
THE BENEFITS OF THE JUDICIAL SYSTEM AND OF ARBITRATION, THE COMPANY HERETO
WAIVES ALL RIGHTS TO TRIAL BY JURY IN ANY ACTION, SUIT, OR PROCEEDING BROUGHT
TO RESOLVE ANY DISPUTE, WHETHER ARISING IN CONTRACT, TORT, OR OTHERWISE
BETWEEN THE HOLDER AND THE COMPANY ARISING OUT OF, CONNECTED WITH, RELATED OR
INCIDENTAL TO THE RELATIONSHIP ESTABLISHED BETWEEN THEM IN CONNECTION WITH
THIS NOTE, ANY OTHER RELATED AGREEMENT OR THE TRANSACTIONS RELATED HERETO OR
THERETO.
3.8 Severability. 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 enforceability of any other provision of
this Note.
3.9 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
rate permitted by such law, any payments in excess of such maximum rate shall
be credited against amounts owed by the Company to the Holder and thus
refunded to the Company.
3.10 Security Interest and Guarantee. The Holder has been
granted a security interest (i) in certain assets of the Company and its
Subsidiaries as more fully described in the Master Security Agreement dated as
of the date hereof and (ii) in the equity interests of the Companies'
Subsidiaries pursuant to the Stock Pledge Agreement dated as of the date
hereof. The obligations of the Company under this Note are guaranteed by
certain Subsidiaries of the Company pursuant to the Subsidiary Guaranty dated
as of the date hereof.
3.11 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.
5.13 Registered Obligation. This Note is intended to be a
registered obligation within the meaning of Treasury Regulation Section 1.871-
14(c)(1)(i) and the Company (or its agent) shall register this Note (and
thereafter shall maintain such registration) as to both principal and any
stated interest. Notwithstanding any document, instrument or agreement
relating to this Note to the contrary, transfer of this Note (or the right to
any payments of principal or stated interest thereunder) may only be effected
by (i) surrender of this Note and either the reissuance by the Company of this
Note to the new holder or the issuance by the Company of a new instrument to
the new holder, or (ii) transfer through a book entry system maintained by the
Company (or its agent), within the meaning of Treasury Regulation Section
1.871-14(c)(1)(i)(B).
[Balance of page intentionally left blank; signature page follows]
IN WITNESS WHEREOF, the Company has caused this Secured Term Note to
be signed in its name effective as of this 20th day of January, 2006.
DATALOGIC INTERNATIONAL, INC.
By: /s/ Xxxxx Xxxxx
Name: Xxxxx Xxxxx
Title: CEO
WITNESS:
/s/Xxxxx X. Xxxxxx
__________________________________
