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RIPTIDE SOFTWARE, INC. CONVERTIBLE SUBORDINATE NOTE

Subordinated Loan Agreement

RIPTIDE SOFTWARE, INC.
CONVERTIBLE SUBORDINATE NOTE | Document Parties: Riptide Software, Inc | Shea Development Acquisition No 2 Corp | SHEA DEVELOPMENT CORP You are currently viewing:
This Subordinated Loan Agreement involves

Riptide Software, Inc | Shea Development Acquisition No 2 Corp | SHEA DEVELOPMENT CORP

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Title: RIPTIDE SOFTWARE, INC. CONVERTIBLE SUBORDINATE NOTE
Date: 7/20/2007

RIPTIDE SOFTWARE, INC.
CONVERTIBLE SUBORDINATE NOTE, Parties: riptide software  inc , shea development acquisition no 2 corp , shea development corp
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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

US $                    

             , 2007

 

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









 
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