6.0% SECURED TERM NOTE
605285 ONTARIO INC.
in favour of
DATALINK SYSTEMS CORPORATION
6.0% TERM NOTE MADE AS OF May 6, 1997.
Principal Sum: $14,027,500 Canadian
Due Date: May 6, 2007
ARTICLE 1
INTERPRETATION
1.1 Definitions
In this Note, unless the context otherwise requires:
a. "Application Software Purchase Agreement" means the
Application Software Purchase Agreement made as of May 6, 1997, among the
Corporation and the Holder;
b. "Corporation" means 605285 Ontario Inc. and its permitted
assignees;
c. "Default" means any event which after notice or lapse of time
or both, would constitute an Event of Default;
d. "Event of Default" means any of the events specified in
Article 8;
e. "Holder" means DataLink Systems Corporation or its permitted
assignees;
f. "Interest Amount" has the meaning specified in Section 1.1j
of the Management and Marketing Agreement;
g. "Management and Marketing Agreement" means the Management and
Marketing Agreement made as of May 6, 1997, between 605285 Ontario Inc. and
DataLink Systems Corporation;
h. "Note" means this 6.0% Secured Term Note as originally
executed, or as amended or supplemented as herein provided;
i. "Person" includes any individual, firm, corporation, company,
joint venture, partnership, association, trust or unincorporated body of
persons;
j. "Principal Sum" has the meaning specified above;
k. "Sale Proceeds" has the meaning specified in Section 8.3;
l. "Service" means a service that provides for the delivery of
real time stock quotes utilizing the Application Software (as defined in the
Application Software Purchase Agreement), wireless technology and
alphanumeric paging services, and commonly known as the "QUOTEXPRESS."
m. "Service Proceeds" means the Interest Amount and the
Principal Payments, as these terms are defined in the Management and Marketing
Agreement, paid to the Corporation pursuant to that agreement;
n. "Security Agent Agreement" means the Security Agent Agreement
entered into by the Corporation, the Holder and Morris/Rose Ledgett, as
security agent, for the purpose of holding the Technology pursuant to the
terms hereof; and
o. "Technology" means the Purchased Assets, as defined in the
Application Software Purchase Agreement.
1.2 Interpretation
a. The terms "this Note, "hereof" thereunder" and similar
expressions refer to this Note and not to any particular Section, Subsection
or other portion of this Note and include any agreement amending or
supplementing this Note. Unless something in the subject matter or context is
inconsistent therewith, reference herein to Sections and Subsections are to
Sections and Subsections of this Note.
b. Except as specifically stated in this Agreement, all
references to currency is to Canadian dollars. Any currency conversion
required or contemplated by this Agreement with respect to Canadian and United
States of America currency will be based on the rate published by the Bank of
Canada as the noon spot rate applicable for the purchase of United States of
America dollars on the business day immediately before the date of conversion.
c. Except as set forth in Section 8.2, this Note shall be
governed by and interpreted in accordance with the laws of the Province of
Ontario and the laws of Canada applicable therein, except the conflict of law
rules, and the parties attorn to the jurisdiction of the courts of the
Province of Ontario and the Federal Court of Canada.
d. Wherever the singular, plural, masculine, feminine or neuter
is used throughout this Note the same will be construed as meaning the
singular, plural, masculine, feminine, neuter, body politic or body corporate
where the fact or context so requires and the provisions hereof and all
covenants herein will be construed to be joint and several when applicable to
more than one party.
e. Headings are inserted in the Note for convenience of
reference only and are not intended to affect the Note's interpretation.
ARTICLE 2
PROMISE TO PAY
2.1 The Corporation, for value received, and in consideration of
these premises hereby acknowledges itself indebted to the Holder and promises
and covenants with the Holder to pay to the Holder:
a. the Principal Sum outstanding from time to time;
b. interest on the Principal Sum outstanding from time to time,
such interest to be calculated, payable and paid as set forth in Section 3.2;
and
c. all other moneys which may be owing by the Corporation to the
Holder pursuant to this Note, subject to the terms and conditions of this
Note.
ARTICLE 3
PAYMENT OF PRINCIPAL AND INTEREST
3.1 Principal
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a. The Principal Sum outstanding on May 6, 2007 will be paid on
___, 2007.
b. Prepayment of the Principal Sum outstanding, from time to
time for each year ended December 31 will be made annually, within sixty (60)
days of receipt of Service Proceeds for the year, if the amount of Service
Proceeds received for such year exceeds the amount of accrued and unpaid
interest as at the end of such year. The amount of the annual prepayment, if
any, against the Principal Sum outstanding from time to time will be equal to
the difference between the Service Proceeds received for the year and the
amount of accrued and unpaid interest as at the end of such year.
3.2 Interest
a. Interest on the Principal Sum outstanding from time to time
pursuant to this Note will accrue from the date hereof up to and including the
date of payment at the rate of 6.0% per annum calculated, but not compounded,
yearly, and not in advance.
b. Interest accrued and unpaid at May 1, 2007 will be paid on
_______, 2007.
c. Interest accrued and unpaid at December 31 of each year, will
be prepaid annually within thirty (30) days of receipt by the Corporation of
Service Proceeds for the year, to the extent of the Service Proceeds, if any.
d. Accrued interest, if any, that is not paid in any year will
continue to accrue and be outstanding until paid but will not be added to the
Principal Sum payable under this Note and will not bear interest.
e. The covenant of the Corporation to pay interest at the rate
provided herein will not merge in any judgment in respect of any obligation of
the Corporation hereunder and such judgment will bear interest as aforesaid
and be payable in the same manner.
3.3 Principal and Interest Acceleration
Notwithstanding Section 3.2 c., but subject to the limitation of
liability set forth in section 8.4 upon the occurrence of a Management
Agreement Termination Event:
a. outstanding Principal Sum and accrued and unpaid interest at
the Management Agreement Termination Date will be prepaid within 30 days of
the Management Agreement Termination Date; and
b. interest accruing and due under this Note, will be payable
annually and will be paid on December 31 of each year.
For the purposes of Section 3.3, the following terms have the meanings
set out below:
"Management Agreement Termination Date" means the date of the occurrence
of a Management Agreement Termination Event; and
"Management Agreement Termination Event" means the termination of the
Management and Marketing Agreement by the Corporation, pursuant to Section 5,
of the Management and Marketing Agreement.
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ARTICLE 4
ASSIGNMENT
4.1 Assignment of Service Proceeds
The Corporation hereby assigns the Service Proceeds to the Holder as
security for payment of the Corporation's obligations to the Holder under this
Note.
The provisions of this Section 4.1 and the rights of the Holder hereunder
will, notwithstanding any other provisions of this Note, wholly terminate on
the earlier of the date upon which this Note is retired or the indebtedness
hereunder is otherwise extinguished.
ARTICLE 5
SECURITY
5.1 Security for the Note
In consideration for the premises and for other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged by
the Corporation, and the due payment of all principal and interest on this
Note from time to time outstanding and on all other monies from time to time
owing on the security hereof and to secure the due performance by the
Corporation of obligations herein contained, the Corporation does hereby
grant, assign, mortgage, pledge, charge, hypothecate and create a security
interest in, to and in favour of the Holder in the Technology provided that
the charge hereby created will in no way hinder or prevent the Corporation at
any time and from time to time (until an Event of Default occurs pursuant to
Article 8 hereof and the Holder will have determined to enforce the same) from
managing, developing, utilizing or dealing with all or any part of the subject
matter of the said charge in the ordinary course of its business and for the
purpose of carrying on or extending the same or from entering into the
Management and Marketing Agreement; provided further that during any period in
which there is any outstanding principal or any accrued and unpaid interest on
this Note, the Corporation will not, and the Corporation hereby covenants that
it will not, without the prior written consent of the Holder, sell or transfer
all or any part of the technology, or make, give, create, assume or allow to
subsist any mortgage, pledge, hypothecation, lien, charge, encumbrance,
assignment or other security, whether fixed or floating, upon the Technology
or any part thereof.
TO HAVE AND TO HOLD such assets and interests and all rights hereby
conferred unto the Holder, its successors and assigns forever, but in trust
nevertheless, for the uses and purposes and with the powers and authorities
subject to the terms and conditions mentioned and set forth in this Note.
5.2 Further Assurances
The Corporation will forthwith, and from time to time at its sole cost
and expense, execute and do or cause to be executed and done all deeds,
documents and things which, in the reasonable opinion of the Holder, are
necessary or advisable for giving the Holder (so far as may be possible under
the local laws of the places where the Technology is situated) a valid
mortgage, pledge, charge and hypothecation of the nature herein specified upon
the Technology to secure payment of monies intended to be secured by this
Note, and for better assuring, mortgaging, pledging, charging, assigning,
hypothecating and confirming unto the Holder the Technology, and for
conferring upon the Holder such power of sale and other powers over the
Technology as are hereby expressed to be conferred.
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5.3 Defeasance
The Holder will at the written request and sole cost and expense of the
Corporation cancel and discharge the lien of this Note and execute and deliver
to the Corporation such deeds or other instruments as will be requisite to
discharge the lien hereof and to reconvey to the Corporation any part of the
Technology subject to the lien of this Note and to release the Corporation
from the covenants herein contained and upon delivery of such written request
to the Holder, rights hereby granted will cease, terminate and be void,
provided that the Corporation will have satisfied the payment of all principal
monies, and interests due or to become due on this Note.
5.4 Possession and Use of Technology
Until an Event of Default occurs pursuant to Article 8 hereof and the
Holder will have determined to enforce the same pursuant to the provisions of
this Note, the Corporation will, subject however to the express terms hereof,
be suffered and permitted to possess, manage, develop, operate and enjoy the
Technology, and freely to control the conduct of its business and to take and
use any income, rents, issues and profits thereof in the same manner, to the
same extent and with the same effect, except as provided herein, as if this
Note had not been made.
5.5 Escrow
Notwithstanding Section 5.4 hereof the source code version of the
Application Software, as defined in the Application Software Purchase
Agreement, will be held by the Security Agent pursuant to the terms and
conditions of the Security Agent Agreement.
ARTICLE 6
REPRESENTATIONS AND WARRANTIES
6.1 Corporation's Representations and Warranties
The Corporation hereby represents and warrants to the Holder for the
benefit of the Holder as follows:
a. the Corporation is a corporation duly incorporated, organized
and validly subsisting in good standing under the laws of the jurisdiction of
its incorporation, and has the requisite power and authority to carry on the
business now carried on by it, to own and to license the properties used in
its business, to execute and deliver this Note, to consummate the transactions
contemplated hereby and to duly observe and perform all its covenants and
obligations herein set forth;
b. the execution and delivery of this Note does not and will not
conflict with or result in a breach of or violate any of the terms, conditions
or provisions of any agreement governing the Corporation or violate any of the
terms, conditions or provisions of any law, judgment, order, injunction,
decree, regulation or ruling of any court or governmental authority, domestic
or foreign, to which the Corporation is subject or constitute or result in a
default under any agreement, contract or commitment to which the Corporation
is a party, the effect of which conflict, breach, violation or default might
materially adversely affect the financial condition of the Corporation or
would impair the ability of the Corporation to duly observe and perform their
respective obligations contained herein;
c. the execution and delivery of this Note will not constitute
an event of default or an event which, with the giving of notice or lapse of
time
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or both, would constitute an event of default, under any agreement, contract,
indenture or other instrument relating to any indebtedness (whether for
borrowed money or otherwise) of the Corporation which would give any party to
any such agreement, contract, indenture or other instrument the right to
accelerate maturity for the payment of any monies under any such agreement,
contract, indenture or other instrument; and
d. no authorization, approval, order, license, permit or consent
of any governmental authority, regulatory body or court, and no registration,
declaration or filing by the Corporation with any such governmental authority,
regulatory body or court is required in order for the Corporation:
i. to incur the obligations expressed to be incurred by the
Corporation in or pursuant to this Note;
ii. to execute and deliver all documents and instruments to
be delivered by the Corporation pursuant to this Note;
iii. to duly perform and observe the terms and provisions
of this Note; and
iv. to render this Note legal, valid, binding and
enforceable against the Corporation in accordance with its terms.
ARTICLE 7
COVENANTS OF THE CORPORATION
The Corporation hereby covenants and agrees with the Holder for the
benefit of the Holder as follows:
7.1 To Pay Principal and Interest
The Corporation will duly and punctually pay or cause to be paid to the
Holder the Principal Sum and accrued interest thereon and all other moneys
from time to time owing hereunder, on the dates, at the places, in the moneys
and in the manner mentioned herein.
7.2 To Carry on Business
The Corporation will carry on and conduct its business in a proper and
efficient manner; and at all reasonable times it will furnish or cause to be
furnished to the Holder or its duly authorized agent or attorney such
information relating to the business of the Corporation involving the Service
as the Holder may reasonably require; and, subject to the express provisions
hereof, it will do or cause to be done all things necessary to preserve and
keep in full force and effect its existence and rights.
ARTICLE 8
DEFAULT
8.1 Events of Default
If any one or more of the following events has occurred and is
continuing:
a. the non-payment when due of the Principal Sum, accrued
interest thereon and any other amounts due under this Note;
b. the breach by the Corporation of any material provision of
this Note;
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c. any representation or warranty made by the Corporation herein
or in any financial statements, reports or other documents supplied to the
Holder by the Corporation hereunder is false, incorrect or inaccurate in any
materially adverse respect;
d. if proceedings for the dissolution, liquidation or winding-up
of the Corporation or for the suspension of the business or operations of the
Corporation are commenced, unless such proceedings are being actively and
diligently contested by the Corporation in good faith, or in the event a
bankruptcy, liquidation, receivership or dissolution of the Corporation will
occur;
e. provided that the Corporation will not have remedied such
default within thirty (30) days (five (5) days in the case of a monetary
default) following receipt by the Corporation from the Holder of notice of the
default, the Holder may, by written notice declare the Principal Sum and
accrued interest thereon and any other amounts payable to it under this Note
to be immediately due and payable without further presentation, notice or
demand and the Corporation will immediately pay to the Holder all indebtedness
of the Corporation owing to it pursuant to this Note.
8.2 Remedies
If an Event of Default will occur and be continuing and the Corporation
will fail forthwith to pay the amounts owing hereunder, or remedy any breach
of any of its obligations secured by this Note as herein outlined, the Holder
shall have all of the rights and remedies of a secured party under the
California Uniform Commercial Code or other applicable California law then in
effect. Without limiting the generality of the foregoing, the Holder, in
addition to any other rights and remedies it may have, in its own name will be
entitled and empowered to sell the Technology as provided in Section 8.3
below, as well as institute action or proceeding at law or in equity for the
collection of the sums so due and unpaid and may prosecute any such action or
proceedings to judgment or final decree, and may enforce any such judgment or
final decree against the Corporation or other obligor upon this Note and
collect in the manner provided by law out of the Technology, as provided for
in this Note wherever situated the monies adjudged or decreed to be payable.
Notwithstanding anything else contained in this Note, the Holder
covenants and agrees that its recourse for payment of any obligations of the
Corporation to the Holder under this Note and funds available from the
Corporation will be limited to the Service Proceeds and the Sale Proceeds
received by the Corporation which will be paid by the Corporation to the
Holder in the following order of priority:
a. to pay interest due and payable under this Note;
b. to pay the Principal Sum outstanding from time to time; and
c. to pay any other amounts owing by the Corporation to the
Holder under this Note.
8.3 Sale of Technology
a. If an Event of Default has occurred and is continuing as
provided in Section 8.2 hereof or the indebtedness created hereby either with
respect to principal or interest remains in whole or in part unpaid as of the
Due Date, the Holder will be entitled and empowered to dispose of the
Technology or any part thereof: i. at public sale, which public sale may be
conducted at the
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location designated by the trustee for cash or on credit and on such terms as
the
trustee may in its sole discretion, elect after giving at least five days
notice of the time and place of sale in the manner provided by law, or ii. at
private sale upon like notice for cash or on credit and on such other terms as
the Holder may in its sole discretion elect.
b. The proceeds of the sale ("Sale Proceeds") of the Technology
will be allocated as follows:
i. to reimburse the Holder (to a maximum of 20% of the
gross proceeds of sale), for all costs and expenses incurred as the result of
an Event of Default and in connection with re-possession, storing,
advertising, marketing and selling the Technology including, without
limitation, reasonable attorneys' fees and costs;
ii. to the Holder as a reduction of amounts owing by the
Corporation under this Note allocated firstly as to interest and the remainder
as to principal; and
iii. the balance to the Corporation.
c. Any balance owing by the Corporation under this Note after
the allocation of the Sale Proceeds will be forgiven by the Holder and the
Corporation will have no further liability under this Note.
d. This Note is non-negotiable. The Holder will have no right or
recourse against any legal person in respect of the covenants contained in
this Note other than the Corporation, and its assigns but only severally and
not jointly and only to the extent of each person's interest in the
Technology.
8.4 Limitation of Liability
Notwithstanding anything contained in this Note, the Corporation will not
have any obligation to pay the Principal Sum outstanding from time to time
under the Note if any one or more of the following events has occurred and is
continuing with respect to the Holder of its rights or obligations under the
Management and Marketing Agreement:
a. the non-payment when due of amounts owing by the Holder to
the Corporation under the Management and Marketing Agreement, provided that
the Holder will not have remedied such default within ten (10) days following
receipt by the Holder from the Corporation of notice of the default.
b. if proceedings for the bankruptcy, receivership, dissolution,
liquidation or winding-up of the Holder or for the suspension of the business
or operations of the Holder are commenced, unless such proceedings are, being
actively and diligently contested by the Holder in good faith.
ARTICLE 9
WAIVER
9.1 Either the Holder or the Corporation may waive any breach of any
of the provisions contained in this Note or any default by the other person in
the observance or performance of any covenant, condition or obligation
required to be observed or performed by such person under the terms of this
Note, provided any such waiver shall only be effective upon the delivery of
written notice by the waiving party. No waiver, consent, act or omission by
the Holder or the Corporation will extend to or be taken in any manner
whatsoever to affect any subsequent breach or default or the rights resulting
therefrom and no waiver or
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consent by the Holder will bind the Holder or the Corporation unless it is in
writing. The inspection or approval by the Holder or the Corporation of any
document or matter or thing done by the other will not be deemed to be a
warranty or holding out of the adequacy, effectiveness, validity, or binding
effect of such document, matter or thing or a waiver of the obligations of the
other.
ARTICLE 10
TIME OF THE ESSENCE
10.1 Time will be of the essence of this Note.
ARTICLE 11
NOTICES
11.1 Any notice required or permitted by any of the provisions of
this Note may be given to the Corporation or the Holder in writing at the
following addresses, or such other addresses as they may specify in writing
from time to time:
To the Corporation at:
605825 Ontario Inc.
1350 Martin Grove Road
Etobicoke, Ontario
M9W 4X3
CANADA
Fax No. (905) 880-4123
Attention: Secretary-Treasurer
To the Holder at:
DataLink Systems Corporation
2105 Hamilton Avenue, Ste. 240
San Jose, California 95125
Fax No. (408) 558-0816
Attention: President
Notices shall be effective on delivery if delivered personally to the
Corporation or Holder.
ARTICLE 12
MISCELLANEOUS
12.1 Severability
If any one or more of the provisions or parts thereof contained in this
Note should be or become invalid, illegal or unenforceable in any respect in
any jurisdiction, the remaining provisions or parts thereof contained herein
will be and will be conclusively deemed to be, as to such jurisdiction,
severable therefrom and:
a. the validity, legality or enforceability of such remaining
provisions or parts thereof will not in any way be affected or impaired by the
severance of the provisions or parts thereof severed; and
b. the invalidity, illegality or unenforceability of any
provision or part thereof contained in this Note in any jurisdiction will not
affect or
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impair such provision or part thereof or any other provisions of this Note in
any other jurisdiction.
12.2 Further Assurances
The Corporation and the Holder will, at any time and from time to time at
the request of the other, execute and deliver any and all such further
instruments or assurances as may be necessary or desirable to give effect to
the terms and conditions of this Note.
12.3 Counterpart Execution
This Note, and any and all ancillary documents contemplated herein, may
be executed in one or more counterparts and may be executed by facsimile
signatures and all such counterparts and facsimile signatures taken together
will constitute one and the same Note and will be binding on the Corporation
and the Holder as if they had originally signed one copy of this Note.
12.4 Assignment
The Corporation may assign all or any part of its interest in Technology,
except that any assignment to a competitor of Systems requires the prior
written consent of the Holder. An assignment shall be effected by:
a. by giving written notice of the names and addresses of the
assignees; and
b. by delivering to the Holder a written undertaking of the
assignees acknowledging receipt of a copy of the Note and agreeing to be bound
by the terms and conditions of the Note.
The Holder may assign this Note in whole, but not in part, and only with
an assignment of all of its rights and obligations under the Management and
Marketing Agreement by giving the Corporation written notice of the name and
address of the assignee.
12.5 Binding Effect
This Note and all of its provisions will enure to the benefit of the
Holder and the Corporation and will be binding upon the Holder and the
Corporation. The expressions the "Holder" and the "Corporation" as used herein
will include the Holder's and the Corporation's assigns, whether immediate or
derivative, respectively.
12.6 Amendment
This Note may be altered or amended in any of its provisions when any
such changes are reduced to writing and signed by the parties hereto but not
otherwise.
12.7 Costs
Each party hereto will bear its own legal, accounting and other costs
relating to all matters involved in the preparation, delivery and enforcement
of this Note.
12.8 Remedies Not Exclusive
No right or remedy herein is exclusive of any other right or remedy. Each
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and every right and 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, and may be exercised from time to time as often as deemed expedient,
separately or concurrently.
IN WITNESS WHEREOF the Corporation and the Holder have duly executed
these presents under the hands of their proper officers in that behalf.
605285 ONTARIO INC.
By:/s/ Gino DiGioacchino
Gino DiGioacchino
Secretary-Treasurer
DATALINK SYSTEMS CORPORATION
By:/s/ Anthony LaPine
Anthony LaPine
Chief Executive Officer
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