Exhibit 10.13
THIS SECURITY HAS BEEN
ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO, OR FOR SALE IN
CONNECTION WITH, ANY DISTRIBUTION THEREOF WITHIN THE MEANING OF THE
SECURITIES ACT OF 1933, AS AMENDED (THE “ ACT ”).
THE SECURITIES
REPRESENTED BY THIS NOTE HAVE NOT BEEN REGISTERED UNDER THE ACT OR
REGISTERED OR QUALIFIED UNDER ANY OTHER APPLICABLE FEDERAL OR STATE
SECURITIES LAWS. THESE SECURITIES MAY NOT BE OFFERED FOR
SALE, SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF AN EFFECTIVE
REGISTRATION UNDER SUCH LAWS OR AN OPINION OF COUNSEL ACCEPTABLE TO
THE PARENT TO THE EFFECT THAT SUCH REGISTRATION IS NOT
REQUIRED.
RIPTIDE SOFTWARE, INC.
CONVERTIBLE SUBORDINATE NOTE
Riptide Software,
Inc., a Florida corporation, with its registered office at 3452
Lake Lynda Drive, #350, Orlando, Florida 32817 (the “
Obligor ”, which
term, as used herein, shall include any successor thereto), for
value received, hereby executes and delivers this Convertible
Subordinate Note (this “ Note ”) in favor of
(the “ Holder
”), and hereby promises to pay to Holder, his designees or
his successors and permitted assigns, the principal sum of
US$ (the
“ Principal Amount
”) together with any accrued and unpaid interest through and
including the Maturity Date as herein provided at a rate per annum
equal to the Prime Rate (the “ Accrued Interest ”) in accordance
with Section 2 hereof. This Note is issued in connection with the
transactions described in that certain Agreement and Plan of
Merger, dated as of April 4, 2007, by and among Shea Development
Corp., a Nevada corporation (“ Parent ”), Shea Development
Acquisition No. 2 Corp., a Nevada corporation (“ Merger Sub ”), Obligor, and
holders of the outstanding capital stock of Obligor including
Holder (the “ Merger
Agreement ”). Interest hereunder shall be
computed on the basis of a 360-day year consisting of twelve 30-day
months for the actual number of days elapsed.
Capitalized terms
used and not otherwise defined herein shall have the respective
meanings ascribed to such terms in Section 10.
1.
Maturity Date.
The then Principal
Balance, together with the Accrued Interest thereon as set forth
above (subject to any reductions per Section 8), shall become due
and payable on
(the
“ Maturity Date
”).
2.
Payment Schedule
(a)
Principal Payments . Principal payments in the amount
of
$
shall be made by the Obligor to the Holder on the first anniversary
and the second anniversary of the Issue Date, with the remaining
principal payment in the amount of
$
being made by the Obligor to the Holder on the third anniversary of
the Issue Date. Each such principal payment
shall, upon payment as provided in this
paragraph, be subtracted from the Principal Amount to arrive at the
then outstanding principal balance hereunder (the “
Principal Balance
”).
(b)
Interest Payments . Interest payments hereunder shall
accrue commencing on the Issue Date and shall be paid by the
Obligor to the Holder in the form of Parent Common Stock on each of
the first, second and third anniversary of the Issue Date.
Interest hereunder will accrue commencing on the Issue Date and
thereafter on each applicable interest payment date pursuant to the
foregoing sentence and be paid by the Obligor to the Holder on each
subsequent anniversary date. For the purpose of calculating
the number of shares of Parent Common Stock due to the Holder at
each interest payment date, the Accrued Interest shall be divided
by the Note Conversion Price. Notwithstanding any provision
of this Note to the contrary, interest will accrue and be payable
under and pursuant to this Note until all indebtedness under this
Note (including, but not limited to, all unpaid principal and all
accrued but unpaid interest) is paid in full, unless Holder shall
have otherwise converted this Note in accordance with the terms set
forth in Section 8 hereof. In the event that any indebtedness
under this Note (including, but not limited to, all unpaid
principal and all accrued but unpaid interest) remains unpaid after
the Maturity Date or Default Date, then Obligor shall be in default
under this Note and such indebtedness shall bear interest at the
rate of the Prime Rate plus
percent
( %) per annum (the
“ Default Rate
”) until such indebtedness is paid in full.
3.
Acceleration.
Notwithstanding
any provision hereof to the contrary, the obligations of Obligor
hereunder shall forthwith mature and immediately accelerate and
shall be immediately due and payable on the Default Date (as
hereinafter defined) in the event that any of the following occurs
(each, a “ Default
Event ”): (i) the business of Obligor is
discontinued, sold, liquidated or otherwise disposed of, including
by merger, consolidation, sale of all or substantially all of the
assets, liquidation or dissolution; (ii) Obligor’s
(A) admission in writing of its inability to pay its
obligations as they become due, (B) assignment for the benefit
of its creditors, or (C) application for, consent to or
acquiescence in, the appointment of a trustee, receiver or other
custodian for Obligor, the property of Obligor or any part thereof
or, in the absence of any application, consent or acquiescence, the
appointment of a trustee, receiver or other custodian for Obligor
or a substantial part of the property of Obligor, which appointment
is not discharged within sixty (60) days; (iii)
commencement of any case under Title 11 of the United States Code
or any other bankruptcy, reorganization, receivership,
custodianship or similar proceeding under any state or federal law
by or against Obligor and, with respect to any such case or
proceeding that is involuntary, such case or proceeding is not
dismissed within ninety (90) days of the filing thereof;
(iv) Obligor defaults in the full, prompt and complete performance
of all terms, conditions, covenants and obligations contained in
this Note (including Obligor’s failure to pay any amounts
under this Note when due), or instrument executed and delivered by
Obligor to Holder in connection with this Note; or (v)
commencement of any litigation or proceeding before any court,
government or governmental agency, body or instrumentality
(federal, state, local or foreign) against or affecting Obligor,
and such litigation or proceeding substantially impairs the ability
of Obligor to perform its obligations under this Note. The date on
which any Default Event occurs is referred to herein as the “
Default Date .”
No remedy herein conferred upon or reserved to the Holders is
intended to be exclusive of any other remedy or remedies,
and
2
each and every such
remedy shall be cumulative, and shall be in addition to every other
remedy given hereunder, or now or hereafter existing at law or in
equity.
4.
Prepayments.
The Principal
Amount or Principal Balance, as applicable, of this Note may be
prepaid by Obligor at any time.
5.
Method of Payment.
Obligor shall pay
the Principal Amount and any other amounts payable in cash
hereunder (including, at Holder’s option, any amounts payable
under the Default Rate) in cash by wire transfer of immediately
available funds to an account designated by Holder or, if no
account has been designated, by certified check delivered to Holder
at such place as Holder shall designate to Obligor in
writing.
6.
Presentment Waived.
Obligor hereby
expressly waives presentment for payment, demand, notice of
dishonor, protest, notice of protest, notice of default, notice of
demand, notice of nonpayment, notice of intent to accelerate and
any other notice required to be given under the law to Obligor in
connection with the delivery, acceptance, performance default or
enforcement of this Note. In any action on this Note, Holder
need not produce or file the original of this Note but only need
produce or file a photocopy of this Note certified by the Holder to
be a true and correct copy of this Note. Acceptance by Holder
of any payment that is less than the full amount then due and owing
hereunder shall not constitute a waiver of Holder’s right to
receive payment in full at such time or at any prior or subsequent
time.
7.
Order of Priority.
Prior to the
Maturity Date, except for the obligations of Obligor upon any
payment or conversion of the Principal Amount or Principal Balance,
as applicable, in accordance with the terms of this Note, all
indebtedness evidenced by this Note shall be:
(a)
With respect to all money and property of Obligor (the “
Property ”),
subordinated to (i) all other existing secured indebtedness of
Obligor to financial institutions (and specifically excluding trade
debt, inter-company debt or debt owing to affiliates), and (ii) to
the extent consented to by the Holder in writing, indebtedness
incurred after the Issue Date but prior to the Maturity Date (the
“ Senior Indebtedness
”);
(b)
Not subject to any right of set-off; and
(c)
Except upon the Maturity Date or the Default Date, Holder shall not
claim, request, demand, sue for, take or receive (whether by way of
set-off or in any other manner and whether from Obligor or any
other person) any Property which is subject to any Senior
Indebtedness.
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8.
Conversion Rights.
(a)
Optional Conversion .
(i)
At any time prior to the Maturity Date, at the option of Holder in
his sole discretion, all or any portion of the Principal Amount or
Principal Balance, as applicable, of this Note may be converted (an
“ Optional Conversion
”) into a number of shares of Parent Common Stock (the
“ Optional Conversion
Shares ”) equal to the amount of the Principal Amount
or Principal Balance, as applicable, to be converted divided by the
Note Conversion Price.
(ii)
In order to exercise the right of Optional Conversion, Holder shall
surrender this Note at the principal office of Obligor and shall
give written notice of such exercise, substantially in the form of
Appendix 1 attached hereto (the “ Conversion Notice ”), to Obligor
at such office. Such Optional Conversion shall be deemed to
have been effected at the close of business on the date on which
such Conversion Notice, duly completed and executed, shall have
been given as aforesaid, and, at such time, such portion of the
Principal Amount or Principal Balance, as applicable, as is subject
to such Optional Conversion shall be applied by Parent for and on
behalf of Obligor in full payment of the Optional Conversion Shares
to be issued by Parent to Holder as a result of the Optional
Conversion and such application shall discharge Obligor from all
liability in respect of such portion of the Principal Amount or
Principal Balance, as applicable, that is converted, and Holder
shall be deemed for all purposes to have become the holder of the
Optional Conversion Shares.
(iii)
As promptly as practicable, but in no event later than five (5)
Business Days, after an Optional Conver