Contract
THIS
SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 OR ANY STATE
SECURITIES LAWS. IT MAY NOT BE OFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED
OR
OTHERWISE DISPOSED OF IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT
UNDER SUCH ACT AND SUCH LAWS OR UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR
NOT
SUBJECT TO, SUCH REGISTRATION AND, IF REQUESTED BY THE COMPANY, UPON DELIVERY
OF
AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS
NOT
REQUIRED. THE TRANSFER OF THIS SECURITY IS ALSO SUBJECT TO CERTAIN TRANSFER
RESTRICTIONS CONTAINED IN THAT CERTAIN NOTE PURCHASE AGREEMENT, DATED AS OF
AUGUST 13, 2008, BETWEEN THE COMPANY AND THE HOLDER.
US
DATAWORKS, INC.
REFINANCING
SECURED NOTE
|
Issuance
Date: August 13, 2008
|
Original
Principal Amount: U.S.
$_________
|
FOR
VALUE RECEIVED,
US
DATAWORKS, INC., a Nevada corporation (the “Company”)
hereby
promises to pay to __________ or registered assigns (“Holder”)
the
amount set out above as the Original Principal Amount (the “Principal”)
when
due, whether upon the Maturity Date (as defined below) and to pay interest
(“Interest”)
on any
outstanding Principal at the applicable Interest Rate, from the date set out
above as the Issuance Date (the “Issuance
Date”)
until
the same becomes due and payable, whether upon an Interest Date (as defined
below), the Maturity Date, pursuant to Section (3)(c) or otherwise. This
Refinancing Secured Note (including all Refinancing Secured Notes issued in
exchange, transfer or replacement hereof, this “Note”)
is one
of an issue of Refinancing Secured Notes issued pursuant to the Note Purchase
Agreement dated August 13, 2008 (collectively, the “Notes”).
Certain capitalized terms used herein are defined in
Section 20.
1. MATURITY.
On the
Maturity Date, the Company shall pay to the Holder an amount in cash
representing all outstanding Principal, accrued and unpaid Interest. The
“Maturity
Date”
shall
be August 13, 2009, as may be extended at the option of the Holder in the
event that, and for so long as, an Event of Default (as defined in
Section 3(a)) shall have occurred and be continuing on the Maturity Date
(as may be extended pursuant to this Section 1) or any event shall have
occurred and be continuing on the Maturity Date (as may be extended pursuant
to
this Section 1) that with the passage of time and the failure to cure would
result in an Event of Default. The Company may prepay any portion of the
outstanding Principal, accrued and unpaid Interest, without
penalty.
2. INTEREST;
INTEREST RATE.
Interest on this Note shall commence accruing on the Issuance Date and shall
be
computed on the basis of a 360-day year comprised of twelve (12) thirty (30)
day
months and shall be payable in arrears monthly on October 15, November 15,
December 15, January 15, February 15, March 15, April 15, May 15, June 15,
July 15, August 15 and September 15 of each year (each, an “Interest
Date”)
with
the first Interest Date being September 15, 2008. Interest shall be payable
on each Interest Date, to the record holder of this Note on the applicable
Interest Date, in cash.
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3. RIGHTS
UPON EVENT OF DEFAULT.
(a) Event
of Default.
Each of
the following events shall constitute an “Event
of Default”:
(i) the
Company’s failure to pay to the Holder any amount of Principal, , Interest, or
other amounts when and as due under this Note or any other Transaction Document
(as defined in the Note Purchase Agreement) or any other agreement, document,
certificate or other instrument delivered in connection with the transactions
contemplated hereby and thereby to which the Holder is a party;
(ii) the
Company or any of its Subsidiaries, pursuant to or within the meaning of
Title 11, U.S. Code, or any similar Federal, foreign or state law for
the relief of debtors (collectively, “Bankruptcy
Law”),
(A)
commences a voluntary case, (B) consents to the entry of an order for relief
against it in an involuntary case, (C) consents to the appointment of a
receiver, trustee, assignee, liquidator or similar official (a “Custodian”),
(D)
makes a general assignment for the benefit of its creditors or (E) admits in
writing that it is generally unable to pay its debts as they become due;
or
(iii) a
court
of competent jurisdiction enters an order or decree under any Bankruptcy Law
that (A) is for relief against the Company or any of its Subsidiaries in an
involuntary case, (B) appoints a Custodian of the Company or any of its
Subsidiaries or (C) orders the liquidation of the Company or any of its
Subsidiaries.
(b) In
the
event an Event of Default occurs under Section 3(a)(i), the Interest shall
be
increased to eighteen percent (18.0%) per annum. In the event that such Event
of
Default is subsequently cured, the adjustment referred to in the preceding
sentence shall cease to be effective as of the date of such cure; provided
that
the Interest as calculated and unpaid at such increased rate during the
continuance of such Event of Default shall continue to apply to the extent
relating to the days after the occurrence of such Event of Default through
and
including the date of cure of such Event of Default.
(c) In
the
event an Event of Default occurs under Sections 3(a)(ii) and 3(a)(iii), the
Company shall within four (4) Business Days deliver written notice thereof
via
facsimile and overnight courier ( an “Event
of Default Notice”)
to the
Holder. At any time after the earlier of the Holder’s receipt of an Event of
Default Notice and the Holder becoming aware of an Event of Default, the
Required Holders may require the Company to redeem all or any portion of this
Note by delivering written notice thereof (the “Event
of Default Redemption Notice”)
to the
Company, which Event of Default Redemption Notice shall indicate the outstanding
principal and accrued Interest (including any increased interest pursuant to
Section 3(b)above) (the “Redemption
Amount”)
of
this Note the Required Holders are electing to require the Company to redeem.
Each portion of this Note subject to redemption by the Company pursuant to
this
Section 3(c) shall be redeemed by the Company at the Redemption Amount. To
the
extent redemptions required by this Section 3(c) are deemed or determined by
a
court of competent jurisdiction to be prepayments of the Note by the Company,
such redemptions shall be deemed to be voluntary prepayments. The parties hereto
agree that in the event of the Company’s redemption of any portion of the Note
under this Section 3(c), the Holder’s damages would be uncertain and difficult
to estimate because of the parties’ inability to predict future interest rates
and the uncertainty of the availability of a suitable substitute investment
opportunity for the Holder.
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4. NONCIRCUMVENTION.
The
Company hereby covenants and agrees that the Company will not, by amendment
of
its Articles of Incorporation, Bylaws or through any reorganization, transfer
of
assets, consolidation, merger, scheme of arrangement, dissolution, issue or
sale
of securities, or any other voluntary action, avoid or seek to avoid the
observance or performance of any of the terms of this Note, and will at all
times in good faith carry out all of the provisions of this Note and take all
action as may be required to protect the rights of the Holder of this
Note.
5. SECURITY.
This
Note is secured to the extent and in the manner set forth in the Security
Agreement and Collateral Agency Agreement (as defined in the Note Purchase
Agreement).
6. VOTING
RIGHTS.
The
Holder shall have no voting rights as the holder of this Note, except as
required by law, including but not limited to the General Corporation Law of
the
State of Nevada, and as expressly provided in this Note.
7. COVENANTS.
(a) Rank.
All
payments due under this Note shall rank senior to all Permitted Indebtedness
of
the Company and its Subsidiaries under clause (ii) of the definition of
“Permitted Indebtedness” in Section 20(h).
(b) Indebtedness.
So long
as this Note is outstanding, the Company shall not, and the Company shall not
permit any of its Subsidiaries to, directly or indirectly, incur or guarantee,
assume or suffer to exist any Indebtedness, other than (i) the Indebtedness
evidenced by this Note and (ii) Permitted Indebtedness.
(c) Existence
of Liens.
So long
as this Note is outstanding, the Company shall not, and the Company shall not
permit any of its Subsidiaries to, directly or indirectly, allow or suffer
to
exist any mortgage, lien, pledge, charge, security interest or other encumbrance
upon or in any property or assets (including accounts and contract rights)
owned
by the Company or any of its Subsidiaries (collectively, “Liens”)
other
than Permitted Liens.
(d) Transactions
with Affiliates.
The
Company shall not, nor shall it permit any of its Subsidiaries to, enter into,
renew, extend or be a party to, any transaction or series of related
transactions (including, without limitation, the purchase, sale, lease, transfer
or exchange of property or assets of any kind or the rendering of services
of
any kind) with any Affiliate, except in the ordinary course of business in
a
manner and to an extent consistent with past practice and necessary or desirable
for the prudent operation of its business, for fair consideration and on terms
no less favorable to it or its Subsidiaries than would be obtainable in a
comparable arm’s length transaction with a Person that is not an Affiliate
thereof.
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(e) Change
in Nature of Business.
The
Company shall not make, or permit any of its Subsidiaries to make, any change
in
the nature of its business as described in the Company’s most recent annual
report filed on Form 10-KSB with the SEC. The Company shall not modify its
corporate structure or purpose.
(f) Preservation
of Existence, Etc.
The
Company shall maintain and preserve, and cause each of its Subsidiaries to
maintain and preserve, its existence, rights and privileges, and become or
remain, and cause each of its Subsidiaries to become or remain, duly qualified
and in good standing in each jurisdiction in which the character of the
properties owned or leased by it or in which the transaction of its business
makes such qualification necessary.
(g) Maintenance
of Properties, Etc.
The
Company shall maintain and preserve, and cause each of its Subsidiaries to
maintain and preserve, all of its properties which are necessary or useful
in
the proper conduct of its business in good working order and condition, ordinary
wear and tear excepted, and comply, and cause each of its Subsidiaries to
comply, at all times with the provisions of all leases to which it is a party
as
lessee or under which it occupies property, so as to prevent any loss or
forfeiture thereof or thereunder.
(h) Maintenance
of Insurance.
The
Company shall maintain, and cause each of its Subsidiaries to maintain,
insurance with responsible and reputable insurance companies or associations
(including, without limitation, comprehensive general liability, hazard, rent
and business interruption insurance) with respect to its properties (including
all real properties leased or owned by it) and business, in such amounts and
covering such risks as is required by any governmental authority having
jurisdiction with respect thereto or as is carried generally in accordance
with
sound business practice by companies in similar businesses similarly situated
and in any event in amount, adequacy and scope reasonably satisfactory to the
Collateral Agent. All policies covering the Collateral are to be made payable
to
the Collateral Agent for the benefit of the Holders, as its interests may
appear, in case of loss, under a standard non-contributory “lender” or “secured
party” clause and are to contain such other provisions as the Collateral Agent
may require to fully protect the Holders’ interest in the Collateral and to any
payments to be made under such policies. All certificates of insurance are
to be
delivered to the Collateral Agent and the policies are to be premium prepaid,
with the loss payable and additional insured endorsement in favor of the
Collateral Agent and such other Persons as the Collateral Agent may designate
from time to time, and shall provide for not less than 30 days’ prior written
notice to the Collateral Agent of the exercise of any right of cancellation.
If
the Company or any of its Subsidiaries fails to maintain such insurance, the
Collateral Agent may arrange for such insurance, but at the Company’s expense
and without any responsibility on the Collateral Agent’s part for obtaining the
insurance, the solvency of the insurance companies, the adequacy of the
coverage, or the collection of claims. Upon the occurrence and during the
continuance of an Event of Default, the Collateral Agent shall have the sole
right, in the name of the Holders, the Company and its Subsidiaries, to file
claims under any insurance policies, to receive, receipt and give acquittance
for any payments that may be payable thereunder, and to execute any and all
endorsements, receipts, releases, assignments, reassignments or other documents
that may be necessary to effect the collection, compromise or settlement of
any
claims under any such insurance policies.
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(i) Change
in Collateral; Collateral Records.
The
Company shall (i) give the Collateral Agent not less than 30 days’ prior written
notice of any change in the location of any Collateral (as defined in the
Security Documents), (ii) advise the Collateral Agent promptly, in sufficient
detail, of any material adverse change relating to the type, quantity or quality
of the Collateral or the Lien granted thereon and (iii) execute and deliver,
and
cause each of its Subsidiaries to execute and deliver, to the Collateral Agent
for the benefit of the Holders of the Senior Bonds from time to time, solely
for
the Collateral Agent’s convenience in maintaining a record of Collateral, such
written statements and schedules as the Collateral Agent may reasonably require,
designating, identifying or describing the Collateral.
8. VOTE
TO ISSUE, OR CHANGE THE TERMS OF, NOTES.
The
affirmative vote at a meeting duly called for such purpose or the written
consent without a meeting of the Required Holders shall be required for any
change or amendment to this Note. No consideration shall be offered or paid
to
any holder of Notes to amend or consent to a waiver or modification of the
Notes
unless the same consideration also is offered to all of the holders of
Notes.
9. TRANSFER.
This
Note may not be offered, sold, assigned or transferred by the Holder without
the
prior written consent of the Company.
10. REISSUANCE
OF THIS NOTE.
(a) Transfer.
If this
Note is to be transferred, the Holder shall surrender this Note to the Company,
whereupon the Company will forthwith issue and deliver upon the order of the
Holder a new Note (in accordance with Section 10(d)), registered as the
Holder may request, representing the outstanding Principal being transferred
by
the Holder and, if less then the entire outstanding Principal is being
transferred, a new Note (in accordance with Section 10(d)) to the Holder
representing the outstanding Principal not being transferred. The Holder and
any
assignee, by acceptance of this Note, acknowledge and agree that, by reason
of
the provisions of this Section 10(a), the outstanding Principal represented
by this Note may be less than the Principal stated on the face of this
Note.
(b) Lost,
Stolen or Mutilated Note.
Upon
receipt by the Company of evidence reasonably satisfactory to the Company of
the
loss, theft, destruction or mutilation of this Note, and, in the case of loss,
theft or destruction, of any indemnification undertaking by the Holder to the
Company in customary form and, in the case of mutilation, upon surrender and
cancellation of this Note, the Company shall execute and deliver to the Holder
a
new Note (in accordance with Section 10(d)) representing the outstanding
Principal.
(c) Note
Exchangeable for Different Denominations.
This
Note is exchangeable, upon the surrender hereof by the Holder at the principal
office of the Company, for a new Note or Notes (in accordance with
Section 10(d) and in principal amounts of at least $100,000) representing
in the aggregate the outstanding Principal of this Note, and each such new
Note
will represent such portion of such outstanding Principal as is designated
by
the Holder at the time of such surrender.
(d) Issuance
of New Notes.
Whenever the Company is required to issue a new Note pursuant to the terms
of
this Note, such new Note (i) shall be of like tenor with this Note,
(ii) shall represent, as indicated on the face of such new Note, the
Principal remaining outstanding (or in the case of a new Note being issued
pursuant to Section 10(a) or Section 10(c), the Principal designated
by the Holder which, when added to the principal represented by the other new
Notes issued in connection with such issuance, does not exceed the Principal
remaining outstanding under this Note immediately prior to such issuance of
new
Notes), (iii) shall have an issuance date, as indicated on the face of such
new Note, which is the same as the Issuance Date of this Note, (iv) shall have
the same rights and conditions as this Note, and (v) shall represent
accrued and unpaid Interest on the Principal and Interest of this Note, if
any,
from the Issuance Date.
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11. REMEDIES,
CHARACTERIZATIONS, OTHER OBLIGATIONS, BREACHES AND INJUNCTIVE
RELIEF.
The
remedies provided in this Note shall be cumulative and in addition to all other
remedies available under this Note and any of the other Transaction Documents
at
law or in equity (including a decree of specific performance and/or other
injunctive relief), and nothing herein shall limit the Required Holders’ right
to pursue actual and consequential damages for any failure by the Company to
comply with the terms of this Note. Amounts set forth or provided for herein
with respect to payments shall be the amounts to be received by the Holder
and
shall not, except as expressly provided herein, be subject to any other
obligation of the Company (or the performance thereof). The Company acknowledges
that a breach by it of its obligations hereunder will cause irreparable harm
to
the Holder and that the remedy at law for any such breach may be inadequate.
The
Company therefore agrees that, in the event of any such breach or threatened
breach, the Required Holders shall be entitled, in addition to all other
available remedies, to an injunction restraining any breach, without the
necessity of showing economic loss and without any bond or other security being
required.
12. PAYMENT
OF COLLECTION. ENFORCEMENT AND OTHER COSTS.
If (a)
this Note is placed in the hands of an attorney for collection or enforcement
or
is collected or enforced through any legal proceeding or the Required Holders
otherwise takes action to collect amounts due under this Note or to enforce
the
provisions of this Note or (b) there occurs any bankruptcy, reorganization,
receivership of the Company or other proceedings affecting Company creditors’
rights and involving a claim under this Note, then the Company shall pay the
costs incurred by the Required Holders for such collection, enforcement or
action or in connection with such bankruptcy, reorganization, receivership
or
other proceeding, including, but not limited to, attorneys’ fees and
disbursements.
13. CONSTRUCTION;
HEADINGS.
This
Note shall be deemed to be jointly drafted by the Company and all the Purchasers
and shall not be construed against any person as the drafter hereof. The
headings of this Note are for convenience of reference and shall not form part
of, or affect the interpretation of, this Note.
14. FAILURE
OR INDULGENCE NOT WAIVER.
No
failure or delay on the part of the Required Holders 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.
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15. NOTICES;
PAYMENTS.
(a) Notices.
Whenever notice is required to be given under this Note, unless otherwise
provided herein, such notice shall be given in accordance with Section 6.4
of the Note Purchase Agreement. The Company shall provide the Holder with prompt
written notice of all actions taken pursuant to this Note, including in
reasonable detail a description of such action and the reason therefore.
(b) Payments.
Whenever any payment of cash is to be made by the Company to any Person pursuant
to this Note, such payment shall be made in lawful money of the United States
of
America by a check drawn on the account of the Company and sent via overnight
courier service to such Person at such address as previously provided to the
Company in writing (which address, in the case of each of the Purchasers, shall
initially be as set forth on the Schedule of Buyers attached to the Note
Purchase Agreement); provided that the Holder may elect to receive a payment
of
cash via wire transfer of immediately available funds by providing the Company
with prior written notice setting out such request and the Holder’s wire
transfer instructions. Whenever any amount expressed to be due by the terms
of
this Note is due on any day which is not a Business Day, the same shall instead
be due on the next succeeding day which is a Business Day and, in the case
of
any Interest Date which is not the date on which this Note is paid in full,
the
extension of the due date thereof shall not be taken into account for purposes
of determining the amount of Interest due on such date.
16. CANCELLATION.
After
all Principal, accrued Interest and other amounts at any time owed on this
Note
has been paid in full, this Note shall automatically be deemed canceled, shall
be surrendered to the Company for cancellation and shall not be
reissued.
17. WAIVER
OF NOTICE.
To the
extent permitted by law, the Company hereby waives demand, notice, protest
and
all other demands and notices in connection with the delivery, acceptance,
performance, default or enforcement of this Note and the Note Purchase
Agreement.
18. GOVERNING
LAW, JURISDICTION; JURY TRIAL.
This
Note shall be construed and enforced in accordance with, and all questions
concerning the construction, validity, interpretation and performance of this
Note shall be governed by, the internal laws of the State of New York, without
giving effect to any choice of law or conflict of law provision or rule (whether
of the State of New York or any other jurisdictions) that would cause the
application of the laws of any jurisdictions other than the State of New York.
The Company hereby irrevocably submits to the exclusive jurisdiction of the
state and federal courts sitting in The City of New York, Borough of Manhattan,
for the adjudication of any dispute hereunder or in connection herewith or
with
any transaction contemplated hereby or discussed herein, and hereby irrevocably
waives, and agrees not to assert in any suit, action or proceeding, any claim
that it is not personally subject to the jurisdiction of any such court, that
such suit, action or proceeding is brought in an inconvenient forum or that
the
venue of such suit, action or proceeding is improper. Nothing contained herein
shall be deemed to limit in any way any right to serve process in any manner
permitted by law. The Company hereby irrevocably waives personal service of
process and consents to process being served in any such suit, action or
proceeding by mailing a copy thereof to such party at the address as provided
in
Section 15 hereof and agrees that such service shall constitute good and
sufficient service of process and notice thereof. Nothing contained herein
shall
be deemed or operate to preclude the Holder from bringing suit or taking other
legal action against the Company in any other jurisdiction to collect on the
Company’s obligations to the Holder, to realize on any collateral or any other
security for such obligations, or to enforce a judgment or other court ruling
in
favor of the Holder. THE
COMPANY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE, AND AGREES NOT TO
REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN
CONNECTION WITH OR ARISING OUT OF THIS NOTE OR ANY TRANSACTION CONTEMPLATED
HEREBY.
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19. SEVERABILITY.
If any
provision of this Note is prohibited by law or otherwise determined to be
invalid or unenforceable by a court of competent jurisdiction, the provision
that would otherwise be prohibited, invalid or unenforceable shall be deemed
amended to apply to the broadest extent that it would be valid and enforceable,
and the invalidity or unenforceability of such provision shall not affect the
validity of the remaining provisions of this Note so long as this Note as so
modified continues to express, without material change, the original intentions
of the parties as to the subject matter hereof and the prohibited nature,
invalidity or unenforceability of the provision(s) in question does not
substantially impair the respective expectations or reciprocal obligations
of
the parties or the practical realization of the benefits that would otherwise
be
conferred upon the parties. The parties will endeavor in good faith negotiations
to replace the prohibited, invalid or unenforceable provision(s) with a valid
provision(s), the effect of which comes as close as possible to that of the
prohibited, invalid or unenforceable provision(s).
20. CERTAIN
DEFINITIONS.
For
purposes of this Note, the following terms shall have the following
meanings:
(a) “Business
Day”
means
any day other than Saturday, Sunday or other day on which commercial banks
in
The City of New York are authorized or required by law to remain
closed.
(b) “Closing
Date”
shall
have the meaning set forth in the Note Purchase Agreement, which corresponds
to
the date this Note and the Other Notes were initially issued by the Company
pursuant to the terms of the Note Purchase Agreement.
(c) “Collateral
Agent”
has
the
meaning ascribed to such term in the Note Purchase Agreement, and shall include
all successors thereto.
(d) “Contingent
Obligation”
means,
as to any Person, any direct or indirect liability, contingent or otherwise,
of
that Person with respect to any Indebtedness, lease, dividend or other
obligation of another Person if the primary purpose or intent of the Person
incurring such liability, or the primary effect thereof, is to provide assurance
to the obligee of such liability that such liability will be paid or discharged,
or that any agreements relating thereto will be complied with, or that the
holders of such liability will be protected (in whole or in part) against loss
with respect thereto.
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(e) “GAAP”
means
United States generally accepted accounting principles, consistently
applied.
(f) “Indebtedness”
of
any
Person means, without duplication (i) all indebtedness for borrowed money,
(ii)
all obligations issued, undertaken or assumed as the deferred purchase price
of
property or services, including (without limitation) “capital leases” in
accordance with GAAP (other than trade payables entered into in the ordinary
course of business), (iii) all reimbursement or payment obligations with respect
to letters of credit, surety bonds and other similar instruments, (iv) all
obligations evidenced by notes, bonds, debentures or similar instruments,
including obligations so evidenced incurred in connection with the acquisition
of property, assets or businesses, (v) all indebtedness created or arising
under
any conditional sale or other title retention agreement, or incurred as
financing, in either case with respect to any property or assets acquired with
the proceeds of such indebtedness (even though the rights and remedies of the
seller or bank under such agreement in the event of default are limited to
repossession or sale of such property), (vi) all monetary obligations under
any
leasing or similar arrangement which, in connection with GAAP, consistently
applied for the periods covered thereby, is classified as a capital lease,
(vii)
all indebtedness referred to in clauses (i) through (vi) above secured by (or
for which the holder of such Indebtedness has an existing right, contingent
or
otherwise, to be secured by) any mortgage, lien, pledge, charge, security
interest or other encumbrance upon or in any property or assets (including
accounts and contract rights) owned by any Person, even though the Person which
owns such assets or property has not assumed or become liable for the payment
of
such indebtedness, and (viii) all Contingent Obligations in respect of
indebtedness or obligations of others of the kinds referred to in clauses (i)
through (vii) above.
(g) “Interest
Rate”
means
twelve percent (12.0%). The Interest Rate shall be re-calculated as of the
first
day of each month or, initially, as of the Issuance Date.
(h) “Permitted
Indebtedness”
means
(i) Indebtedness evidenced by this Note and the Other Notes, (ii) other
unsecured Indebtedness incurred by the Company and/or any of its Subsidiaries
that is made expressly subordinate in right of payment to the Indebtedness
evidenced by this Note, as reflected in a written agreement acceptable to the
Holder and approved by the Holder in writing, and which Indebtedness does not
provide at any time for (A) the payment, prepayment, repayment, repurchase
or
defeasance, directly or indirectly, of any principal or premium, if any, thereon
until ninety-one (91) days after the Maturity Date or later and (B) total
interest and fees at a rate in excess of the maximum applicable Interest Rate
hereunder, (iii) Indebtedness secured by Permitted Liens, (iv) Indebtedness
to
trade creditors incurred in the ordinary course of business and not outstanding
for more than 120 days after the date such payable was created, and (v)
extensions, refinancings and renewals of any items of Permitted Indebtedness,
provided that the principal amount is not increased or the terms modified to
impose more burdensome terms upon the Company or its Subsidiary, as the case
may
be.
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(i) “Permitted
Liens”
means
(i) any Lien for taxes not yet due or delinquent or being contested in good
faith by appropriate proceedings for which adequate reserves have been
established in accordance with GAAP, (ii) any statutory Lien arising in the
ordinary course of business by operation of law with respect to a liability
that
is not yet due or delinquent, (iii) any Lien created by operation of law, such
as materialmen’s liens, mechanics’ liens and other similar liens, arising in the
ordinary course of business with respect to a liability that is not yet due
or
delinquent or that are being contested in good faith by appropriate proceedings,
(iv) Liens (A) upon or in any equipment (as defined in the Security Agreement)
acquired or held by the Company or any of its Subsidiaries to secure the
purchase price of such equipment or Indebtedness incurred solely for the purpose
of financing the acquisition or lease of such equipment, or (B) existing on
such
equipment at the time of its acquisition, provided that the Lien is confined
solely to the property so acquired and improvements thereon, and the proceeds
of
such equipment, (v) Liens incurred in connection with the extension, renewal
or
refinancing of the Indebtedness secured by Liens of the type described in
clauses (i) and (iv) above, provided that any extension, renewal or replacement
Lien shall be limited to the property encumbered by the existing Lien and the
principal amount of the Indebtedness being extended, renewed or refinanced
does
not increase, (vi) Liens securing the obligations under the Notes; (vii) leases
or subleases and licenses and sublicenses granted to others in the ordinary
course of the Company’s business, not interfering in any material respect with
the business of the Company and its Subsidiaries taken as a whole, (ix) Liens
in
favor of customs and revenue authorities arising as a matter of law to secure
payments of custom duties in connection with the importation of goods and (viii)
Liens arising from judgments, decrees or attachments.
(j) “Person”
means
an individual, a limited liability company, a partnership, a joint venture,
a
corporation, a trust, an unincorporated organization, any other entity and
a
government or any department or agency thereof.
(k) “Required
Holders”
means
the holders of Notes representing 100% of the aggregate principal amount of
the
Notes then outstanding.
(l) “SEC”
means
the United States Securities and Exchange Commission.
(m) “Note
Purchase Agreement”
means
that certain Note Purchase Agreement dated as of the Subscription Date by and
among the Company and the initial holders of the Notes pursuant to which the
Company issued the Notes.
(n) “Security
Documents”
has
the
meaning ascribed to such term in the Note Purchase Agreement, and shall include
all successors thereto.
(o) “Subscription
Date”
means
August 13, 2008.
(p) “Subsidiary”
means
any entity in which the Company, directly or indirectly, owns any of the capital
stock or holds an equity or similar interest.
21. DISCLOSURE.
Upon
receipt or delivery by the Company of any notice in accordance with the terms
of
this Note, unless the Company has in good faith determined that the matters
relating to such notice do not constitute material, nonpublic information
relating to the Company or its Subsidiaries, the Company shall within four
(4)
Business Daya after any such receipt or delivery publicly disclose such
material, nonpublic information on a Current Report on Form 8-K or otherwise.
In
the event that the Company believes that a notice contains material, nonpublic
information, relating to the Company or its Subsidiaries, the Company shall
indicate to the Holder contemporaneously with delivery of such notice, and
in
the absence of any such indication, the Holder shall be allowed to presume
that
all matters relating to such notice do not constitute material, nonpublic
information relating to the Company or its Subsidiaries.
[Signature
Page Follows]
10
IN
WITNESS WHEREOF, the Company has caused this Note to be duly executed as of
the
Issuance Date set out above.
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DATAWORKS, INC.
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