{"id":41282,"date":"2015-09-17T11:25:58","date_gmt":"2015-09-17T16:25:58","guid":{"rendered":"https:\/\/content.findlaw-admin.com\/ability-legal\/contracts\/uncategorized\/secured-convertible-promissory-note-accrue-software.html"},"modified":"2015-09-17T11:25:58","modified_gmt":"2015-09-17T16:25:58","slug":"secured-convertible-promissory-note-accrue-software","status":"publish","type":"corporate_contracts","link":"https:\/\/corporate.findlaw.com\/contracts\/finance\/secured-convertible-promissory-note-accrue-software.html","title":{"rendered":"Secured Convertible Promissory Note – Accrue Software"},"content":{"rendered":"

THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
\nREGISTERED UNDER THE SECURITIES ACT OF 1933, AND HAVE BEEN ACQUIRED FOR
\nINVESTMENT AND NOT WITH A VIEW TO, OR IN CONNECTION WITH, THE SALE OR
\nDISTRIBUTION THEREOF. EXCEPT IN COMPLIANCE WITH RULE 144 PROMULGATED UNDER THE
\nSECURITIES ACT OF 1933 OR ANY OTHER AVAILABLE EXEMPTION FROM REGISTRATION, NO
\nSUCH SALE OR DISTRIBUTION MAY BE EFFECTED WITHOUT AN EFFECTIVE REGISTRATION
\nSTATEMENT RELATED THERETO OR AN OPINION OF COUNSEL IN A FORM SATISFACTORY TO THE
\nCOMPANY THAT SUCH REGISTRATION IS NOT REQUIRED UNDER THE SECURITIES ACT OF 1933.\n<\/p>\n

<\/u><\/strong><\/p>\n

SECURED CONVERTIBLE PROMISSORY NOTE<\/p>\n

<\/u><\/strong><\/p>\n\n\n\n
\n

$250,000.00<\/p>\n<\/td>\n

\n

May 19, 2003<\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

Fremont, California<\/p>\n

For value received, Accrue Software, Inc., a Delaware
\ncorporation (the “Company<\/u>“), promises to pay to Red Fox Investment
\nPartners, LLC (the “Holder<\/u>“), the principal sum of Two Hundred Fifty
\nThousand and 00\/100 Dollars ($250,000.00). Interest shall accrue from the date
\nof this Note on the unpaid principal amount at a rate equal to 6.0% per annum,
\ncompounded annually. This Note is one of a series of Secured Convertible
\nPromissory Notes containing substantially identical terms and conditions issued
\npursuant to that certain Secured Convertible Promissory Note Purchase Agreement
\ndated February 4, 2003 (the “Purchase Agreement<\/u>“). Such Notes are
\nreferred to herein as the “Notes<\/u>,” and the holders thereof are referred
\nto herein as the “Holders<\/u>.” All other capitalized terms not defined
\nherein shall have the meanings ascribed to such terms in the Purchase Agreement.
\nThis Note is subject to the following terms and conditions.<\/p>\n

1. Maturity<\/u>.<\/strong> Unless converted as
\nprovided in Section 2, this Note will automatically mature and be due and
\npayable on May 9, 2006 (the “Maturity Date<\/u>“). Subject to Section 2 below,
\ninterest shall accrue on this Note but shall not be due and payable until the
\nMaturity Date. Notwithstanding the foregoing, the entire unpaid principal sum of
\nthis Note, together with accrued and unpaid interest thereon, shall become
\nimmediately due and payable upon the occurrence of any Event of Default (as
\ndefined herein).<\/p>\n

2. Conversion<\/u>. <\/strong>The Notes shall be
\nconverted into equity securities of the Company (each a “Conversion<\/u>“)
\nupon the terms and conditions set forth below:<\/p>\n

(a) Optional Conversion<\/u><\/strong>. Upon the
\nwritten request of the Holders of a majority of the outstanding principal amount
\nof the Notes (the “Majority Holders<\/u>“), the entire principal amount of and
\n(if requested by the Majority Holders) accrued interest on this and all other
\nNotes shall be converted at the option of the Majority Holders either into
\nshares of the Company’s Common Stock or, in the event that there is a series of
\nPreferred Stock of the Company issued or proposed to be issued, into the most
\nsenior series of such Preferred Stock. If the Majority Holders, as the case may
\nbe, elect to convert accrued interest into equity securities upon a Conversion,
\nthis election shall apply equally to all of the Notes.<\/p>\n

(b) Automatic Conversion<\/u><\/strong>. In the
\nevent that the closing bid or sales prices (whichever is applicable) of the
\nCompany’s Common Stock is at least $0.20 per share (as adjusted for stock
\nsplits, stock dividends, recapitalizations and like transactions) for a period
\nof 60 consecutive trading days, the entire principal amount of and accrued
\ninterest on this and all other Notes shall automatically be converted (an
\n“Automatic Conversion<\/u>“) into shares of the Company’s Common Stock. The
\nCompany shall promptly thereafter provide the Holder written notice of the
\nterms, effect and mechanics of such Automatic Conversion.<\/p>\n

(c) Conversion Price<\/u><\/strong>. The number of
\nshares of Common Stock or Preferred Stock, as applicable, to be issued upon a
\nConversion shall be equal to the quotient obtained by dividing (i) the entire
\nprincipal amount of this Note plus (as applicable) accrued interest by (ii)
\n$0.06 (as adjusted pursuant to Section 2(d)) (the “Conversion Price<\/u>“),
\nrounded to the nearest whole share.<\/p>\n

(d) Conversion Price Adjustments<\/u>.<\/strong> The Conversion
\nPrice shall be subject to adjustment from time to time as follows:<\/p>\n

(i) Issuance of Additional Stock below Purchase
\nPrice<\/u><\/strong>. If the Company should issue, at any time after the date on
\nwhich the first Note was sold (the “Purchase Date<\/u>“), any Additional Stock
\n(as defined below) without consideration or for a consideration per share less
\nthan the Conversion Price in effect immediately prior to the issuance of such
\nAdditional Stock, the Conversion Price in effect immediately prior to each such
\nissuance shall automatically be adjusted as set forth in this Section 2(d),
\nunless otherwise provided in this Section 2(d).<\/p>\n

(A) Price Adjustment Formula<\/u>. <\/strong>Whenever the Conversion
\nPrice is adjusted pursuant to this Section 2(d), the Conversion Price shall be
\nadjusted to a price equal to the price paid per share for such Additional Stock.\n<\/p>\n

(B) Definition of “Additional Stock”<\/u>.<\/strong> For purposes of
\nthis Section 2(d), “Additional Stock<\/u>” shall mean any shares of Common
\nStock issued (or deemed to have been issued pursuant to Section 2(d)(D) by the
\nCompany after the Purchase Date) other than<\/p>\n

(1) Common Stock issued pursuant to stock dividends, stock splits or similar
\ntransactions;<\/p>\n

(2) Shares of Common Stock issued or issuable to employees, consultants or
\ndirectors of the Company pursuant to a stock option plan or restricted stock
\nplan or incentive arrangement approved by the Board of Directors of the Company;\n<\/p>\n

(3) Capital stock, or options or warrants to purchase capital stock, issued
\nto financial institutions or lessors in connection with commercial credit
\narrangements, equipment financings, commercial property lease transactions or
\nsimilar transactions approved by the Board of Directors where the principal
\npurpose thereof is not to raise additional equity capital for the Company;<\/p>\n

(4) Capital stock, or warrants or options to purchase capital stock, issued
\nin connection with bona fide acquisitions, mergers or similar transactions, the
\nterms of which are approved by the Board of Directors of the Company;<\/p>\n

(5) Shares of Common Stock issued or issuable upon conversion of the
\nPreferred Stock of the Company; and<\/p>\n

(6) Capital stock issued or issuable to an entity as a component of any
\nbusiness relationship with such entity for the purpose of (A) joint venture,
\ntechnology licensing or development activities, (B) distribution, supply or
\nmanufacture of the Company’s products or services or (C) any other arrangements
\ninvolving corporate partners that are primarily for purposes other than raising
\ncapital, the terms of which business relationship with such entity are approved
\nby the Board of Directors.<\/p>\n

(C) Determination of Consideration<\/u>.<\/strong> In the case of
\nthe issuance of Common Stock for cash, the consideration shall be deemed to be
\nthe amount of cash paid therefor before deducting any reasonable discounts,
\ncommissions or other expenses allowed, paid or incurred by the Company for any
\nunderwriting or otherwise in connection with the issuance and sale thereof. In
\nthe case of the issuance of the Common Stock for a consideration in whole or in
\npart other than cash, the consideration other than cash shall be deemed to be
\nthe fair value thereof as determined by the Board of Directors.<\/p>\n

(D) Deemed Issuances of Common Stock<\/u>.<\/strong> In the case of
\nthe issuance after the Purchase Date of securities or rights convertible into,
\nor entitling the holder thereof to receive directly or indirectly, additional
\nshares of Common Stock (the “Common Stock Equivalents<\/u>“), the following
\nprovisions shall apply for all purposes of this Section 2(d):<\/p>\n

(1) The aggregate maximum number of shares of Common Stock deliverable upon
\nconversion, exchange or exercise (assuming the satisfaction of any conditions to
\nconvertibility, exchangeability or exercisability, including, without
\nlimitation, the passage of time, but without taking into account potential
\nantidilution adjustments) of any Common Stock Equivalents and subsequent
\nconversion, exchange or exercise thereof shall be deemed to have been issued at
\nthe time such securities were issued or such Common Stock Equivalents were
\nissued and for a consideration equal to the consideration, if any, received by
\nthe Company for any such securities and related Common Stock Equivalents
\n(excluding any cash received on account of accrued interest or accrued
\ndividends), plus the minimum additional consideration, if any, to be received by
\nthe Company (without taking into account potential antidilution adjustments)
\nupon the conversion, exchange or exercise of any Common Stock Equivalents (the
\nconsideration in each case to be determined in the manner provided in Section
\n2(d)(i)(C).<\/p>\n

(2) In the event of any change in the number of shares of Common Stock
\ndeliverable or in the consideration payable to the Company upon conversion,
\nexchange or exercise of any Common Stock Equivalents including, but not limited
\nto, a change resulting from the antidilution provisions thereof, the Conversion
\nPrice, to the extent in any way affected by or computed using such Common Stock
\nEquivalents, shall be recomputed to reflect such change, but no further
\nadjustment shall be made for the actual issuance of Common Stock or any payment
\nof such consideration upon the conversion, exchange or exercise of such Common
\nStock Equivalents.<\/p>\n

(3) Upon the termination or expiration of the convertibility, exchangeability
\nor exercisability of any Common Stock Equivalents, the Conversion Price, to the
\nextent in any way affected by or computed using such Common Stock Equivalents,
\nshall be recomputed to reflect the issuance of only the number of shares of
\nCommon Stock (and Common Stock Equivalents that remain convertible, exchangeable
\nor exercisable) actually issued upon the conversion, exchange or exercise of
\nsuch Common Stock Equivalents.<\/p>\n

(4) The number of shares of Common Stock deemed issued and the consideration
\ndeemed paid therefor pursuant to Section 2(d)(i)(D)(1) shall be appropriately
\nadjusted to reflect any change, termination or expiration of the type described
\nin either Section 2(d)(i)(D)(2) or 2(d)(i)(D)(3).<\/p>\n

(E) Limits on Conversion Price Adjustments<\/u>.<\/strong>
\nNotwithstanding any other provisions of this Section (2)(d)(i), no adjustment of
\nthe Conversion Price pursuant to this Section 2(d)(i) shall (1) except to the
\nlimited extent provided for in Sections 2(d)(i)(D)(2) and 2(d)(i)(D)(3), have
\nthe effect of increasing the Conversion Price above the Conversion Price in
\neffect immediately prior to such adjustment, and (2) have the effect of
\ndecreasing the Conversion Price below the fair market value of the Company’s
\nCommon Stock as of the Closing (as defined in the Purchase Agreement)(as
\nadjusted for stock splits, stock dividends, recapitalizations and like
\ntransactions).<\/p>\n

(ii) Stock Splits and Dividends<\/u>. <\/strong>In the event the
\nCompany should at any time after the Purchase Date fix a record date for the
\neffectuation of a split or subdivision of the outstanding shares of Common Stock
\nor the determination of holders of Common Stock entitled to receive a dividend
\nor other distribution payable in additional shares of Common Stock or Common
\nStock Equivalents without payment of any consideration by such holder for the
\nadditional shares of Common Stock or the Common Stock Equivalents (including the
\nadditional shares of Common Stock issuable upon conversion or exercise thereof),
\nthen, as of such record date (or the date of such dividend distribution, split
\nor subdivision if no record date is fixed), the Conversion Price shall be
\nappropriately decreased so that the number of shares of Common Stock issuable on
\nconversion of this Note shall be increased in proportion to such increase in
\noutstanding shares of Common Stock and Common Stock Equivalents.<\/p>\n

(iii) Reverse Stock Splits<\/u>. <\/strong>If the number of shares
\nof Common Stock outstanding at any time after the Purchase Date is decreased by
\na combination of the outstanding shares of Common Stock, then, following the
\nrecord date of such combination, the Conversion Price shall be appropriately
\nincreased so that the number of shares of Common Stock issuable on conversion of
\nthis Note shall be decreased in proportion to such decrease in outstanding
\nshares.<\/p>\n

(e) Mechanics and Effect of
\nConversion<\/u>.<\/strong> No fractional shares of the Company’s capital stock
\nwill be issued upon conversion of this Note. In lieu of any fractional share to
\nwhich the Holder would otherwise be entitled, the Company will pay to the Holder
\nin cash the amount of the unconverted principal and interest balance of this
\nNote that would otherwise be converted into such fractional share. Upon
\nconversion of this Note pursuant to this Section 2, the Holder shall surrender
\nthis Note, duly endorsed, at the principal offices of the Company or any
\ntransfer agent of the Company. At its expense, the Company will, as soon as
\npracticable thereafter, issue and deliver to such Holder, at such principal
\noffice, a certificate or certificates for the number of shares to which such
\nHolder is entitled upon such conversion, together with any other securities and
\nproperty to which the Holder is entitled upon such conversion under the terms of
\nthis Note, including a check payable to the Holder for any cash amounts payable
\nas described herein. Upon conversion of this Note, the Company will be forever
\nreleased from all of its obligations and liabilities under this Note with regard
\nto that portion of the principal amount and accrued interest being converted
\nincluding without limitation the obligation to pay such portion of the principal
\namount and accrued interest.<\/p>\n

(f) Payment of Interest<\/u>.<\/strong> Upon
\nconversion of the principal amount of this Note into the Company’s equity
\nsecurities, any interest accrued on this Note that is not by reason of Section
\n2(a) or 2(b) hereof simultaneously converted into equity securities shall be
\nimmediately paid to the Holder.<\/p>\n

(g) Regulatory Compliance<\/u><\/strong>. Notwithstanding the
\nforegoing, in the event that the Company’s Common Stock is listed on the Nasdaq
\nStock Market or another national securities exchange (or a listing application
\nis pending with any such exchange), a Conversion of this Note (or a conversion
\ninto Common Stock of Preferred Stock issued pursuant to a Conversion of this
\nNote) shall only be effective to the maximum extent permissible under the
\napplicable rules and regulations of such an exchange without the approval of the
\ntransaction by the Company’s stockholders. In the event such stockholder
\napproval is required to give full effect to the Conversion of this Note, the
\nmaximum amount of principal and accrued interest (or the maximum number of
\nshares of convertible Preferred Stock) that is permissible to be converted
\nwithout the approval of the Company’s stockholders shall be converted as
\notherwise provided herein and the Company shall promptly seek to obtain the
\nstockholder approval necessary to give full effect to the Conversion.<\/p>\n

3. Payment<\/u>.<\/strong><\/p>\n

(a) Payment<\/u><\/strong>.<\/u> Except as
\nexpressly contemplated herein, all payments shall be made in lawful money of the
\nUnited States of America at such place as the Holder hereof may from time to
\ntime designate in writing to the Company. Payment shall be credited first to the
\naccrued interest then due and payable and the remainder applied to principal.\n<\/p>\n

(b) Mandatory Prepayment on
\nLiquidation<\/u>.<\/strong> If a Liquidation Event (as defined below) is
\nconsummated prior to the Maturity Date or a Conversion, the Company shall pay
\nthe Holder an amount (the “Liquidation Amount<\/u>“) equal to 150% of the
\nprincipal amount of this Note, plus accrued interest. The Liquidation Amount
\nshall be paid in cash unless the Majority Holders consent in writing to the
\npayment of all or any portion of the Liquidation Amount in consideration other
\nthan cash. The value of any such consideration other than cash shall be deemed
\nto be the fair value thereof as determined by the Board of Directors
\nirrespective of any accounting treatment. Upon payment of the Liquidation
\nAmount, the Company will be forever released from all of its obligations and
\nliabilities under this Note. For purposes of this Note, a “Liquidation
\nEvent<\/u>” shall mean (i) a sale of all or substantially all of the assets or
\nbusiness of the Company whether by merger, sale of assets, sale of stock or
\notherwise, (ii) any reorganization, consolidation or merger of the Company where
\nthe outstanding voting securities of the Company immediately before the
\ntransaction represent or are converted into less than 50% of the outstanding
\nvoting power of the surviving entity (or its parent entity) immediately after
\nthe transaction, (iii) a sale or exchange of the Company’s capital stock by the
\nstockholders of the Company in one transaction or a series of related
\ntransactions where more than 50% of the outstanding voting power of the Company
\nis acquired by a person or entity or group of related persons or entities, or
\n(iv) any liquidation or dissolution of the Company, whether by bankruptcy, a
\ngeneral assignment for the benefit of creditors, receivership or otherwise.<\/p>\n

(c) Notices of Certain Transactions<\/u>.<\/strong>
\nIn case of any consolidation or merger of the Company, any consolidation or
\nmerger of the Company with or into another corporation (other than a
\nconsolidation or merger in which the Company is the surviving entity), or any
\ntransfer of all or substantially all of the assets of the Company (a “Change
\nof Control<\/u>“), the Company will mail or cause to be mailed to the Holder a
\nnotice specifying the effective date on which such consolidation, merger or
\ntransfer, and the time, if any is to be fixed, as of which the holders of record
\nof Common Stock are to be determined. Such notice shall be mailed at least
\ntwenty (20) days prior to the record date or effective date for the event
\nspecified in such notice. In the event that the Majority Holders submit a
\nwritten request for Conversion in connection with a Change of Control (a
\n“Change of Control Conversion Request<\/u>“), such Change of Control
\nConversion Request will be conditioned on, and will be effected immediately
\nprior to, the occurrence of such Change of Control. At such time, the respective
\nHolders of the Notes shall be deemed to have become the respective holders of
\nrecord of the capital stock of the Company issued pursuant to the Conversion.\n<\/p>\n

4. Events of Default<\/u><\/strong>.<\/p>\n

(a) Definition.<\/strong> The occurrence of any of the
\nfollowing shall constitute an “Event of Default” under this Note:<\/p>\n

(i) Failure to Pay<\/u>.<\/strong> The Company’s
\nfailure to pay any principal or interest or any other amount required to be paid
\nby it under the terms of this Note on the date due, and such failure shall
\ncontinue for five (5) business days after the Holder has given written notice of
\nsuch default to the Company;<\/p>\n

(ii) Failure to Comply With
\nCovenants<\/u>.<\/strong> The Company’s failure to perform or observe any other
\nmaterial covenant or agreement contained in any Note or the Purchase Agreement,
\nand such failure shall continue for fifteen (15) business days after the Holder
\nhas given written notice of such failure to the Company (provided, however, that
\nno notice from the Holder shall be required to commence the 15 business day cure
\nperiod if the Company has knowledge of failure to perform or observe any such
\nmaterial covenant or agreement and has not complied with Section 4(b) hereof);\n<\/p>\n

(iii) Voluntary Bankruptcy or Insolvency
\nProceedings<\/u>.<\/em><\/strong> The Company’s (A) applying for or consenting
\nto the appointment of a receiver, trustee, liquidator or custodian of itself or
\nof all or a substantial part of its property, (B) making a general assignment
\nfor the benefit of all or any of its creditors, (C) commencing dissolution or
\nliquidation proceedings, (D) commencing any voluntary case or other proceeding
\nseeking liquidation, reorganization or other relief with respect to itself or
\nits debts under any bankruptcy, insolvency or other similar law now or hereafter
\nin effect or consenting to any such relief or to the appointment of or taking
\npossession of its property by any official in an involuntary case or other
\nproceeding commenced against it, or (E) taking any action for the purpose of
\neffecting any of the foregoing; or<\/p>\n

(iv) Involuntary Bankruptcy or Insolvency
\nProceedings<\/u>. <\/strong>Commencement of any proceedings for the appointment of
\na receiver, trustee, liquidator or custodian of Company or of all or a
\nsubstantial part of the property thereof, or an involuntary case or other
\nproceedings seeking liquidation, reorganization or other relief with respect to
\nthe Company or the debts thereof under any bankruptcy, insolvency or other
\nsimilar law now or hereafter in effect shall be commenced and an order for
\nrelief entered or such proceeding shall not be dismissed or discharged within
\nthirty (30) days of commencement.<\/p>\n

(v) Default on Other Obligations<\/u>.<\/strong> The occurrence of a
\ndefault or event of default in any agreement between the Company and a third
\nparty that gives the third party the right to accelerate any indebtedness
\nexceeding $500,000 or more or that could have a Material Adverse Effect (as
\ndefined in the Purchase Agreement) on the Company; and such failure shall
\ncontinue for fifteen (15) business days after written notice of such default to
\nthe Company.<\/p>\n

(vi) Failure to Obtain Stockholder Approval<\/u>.<\/strong> The
\nCompany does not receive the requisite approval of its stockholders pursuant to
\nSection 2(g) hereof within 120 days of written request to obtain such approval
\nfrom the Majority Holders.<\/p>\n

(b) Notice<\/u>.<\/strong> The Company shall, as
\npromptly as possible and in any event within three (3) business days of the
\noccurrence thereof, notify the Holder of the occurrence of an Event of Default
\n(i.e. upon the occurrence of one of the events described in Section 4(a) above
\nwithout giving effect to the cure periods or notices required under clauses (i),
\n(ii) and (v) thereof).<\/p>\n

(c) Remedies<\/u>.<\/strong> Upon the occurrence of
\nany Event of Default, the Majority Holders, at their option, may (i) by notice
\nto the Company, declare the unpaid principal amount of this Note, all interest
\naccrued and unpaid hereon and all other amounts payable hereunder to be
\nimmediately due and payable, whereupon the unpaid principal amount of this Note,
\nall such interest and all such other amounts shall become immediately due and
\npayable, without presentment, demand, protest or further notice of any kind,
\nprovided that if an event described in Section 4(a)(iii) or (iv) shall occur,
\nall interest and all such other amounts shall become immediately due and payable
\nautomatically, without the giving of any such notice; and (ii) whether or not
\nthe actions referred to in clause (i) have been taken, exercise any or all of
\nthe Holders’ rights and remedies under the Purchase Agreement and proceed to
\nenforce all other rights and remedies available to the Holders under applicable
\nlaw.<\/p>\n

5. Transfer; Successors and Assigns<\/u>.<\/strong>
\nThe terms and conditions of this Note shall inure to the benefit of and be
\nbinding upon the respective successors and assigns of the parties.
\nNotwithstanding the foregoing, the Holder may not assign, pledge, or otherwise
\ntransfer this Note without the prior written consent of the Company, which
\nconsent shall not be unreasonably withheld. Subject to the preceding sentence,
\nthis Note may be transferred only upon surrender of the original Note for
\nregistration of transfer, duly endorsed, or accompanied by a duly executed
\nwritten instrument of transfer in form satisfactory to the Company. Thereupon, a
\nnew note for the same principal amount and interest will be issued to, and
\nregistered in the name of, the transferee. Interest and principal are payable
\nonly to the registered holder of this Note.<\/p>\n

6. Governing Law<\/u>.<\/strong> This Note and all
\nacts and transactions pursuant hereto and the rights and obligations of the
\nparties hereto shall be governed, construed and interpreted in accordance with
\nthe laws of the State of California, without giving effect to principles of
\nconflicts of law.<\/p>\n

7. Notices<\/u>.<\/strong> Any notice required or
\npermitted by this Agreement shall be in writing and shall be deemed sufficient
\nupon receipt, when delivered personally or by courier, overnight delivery
\nservice or confirmed facsimile, or 48 hours after being deposited in the U.S.
\nmail as certified or registered mail with postage prepaid, if such notice is
\naddressed to the party to be notified at such party’s address or facsimile
\nnumber as set forth below or as subsequently modified by written notice.<\/p>\n

8. Amendments and Waivers<\/u>.<\/strong> Any term
\nof this Note may be amended only with the written consent of the Company and the
\nMajority Holders. Any amendment or waiver effected in accordance with this
\nSection 8 shall be binding upon the Company, each Holder and each transferee of
\nany Note.<\/p>\n

9. Stockholders, Officers and Directors Not
\nLiable<\/u>.<\/strong> In no event shall any stockholder, officer or director of
\nthe Company be liable for any amounts due or payable pursuant to this Note.<\/p>\n

10. Seniority<\/u>.<\/strong> The indebtedness
\nevidenced by this Note is hereby expressly senior in right of payment to the
\nprior payment of all other indebtedness of the Company other than Permitted
\nSenior Indebtedness (as defined in the Purchase Agreement), and the Company
\nshall not be permitted to incur secured indebtedness which is senior in right of
\npayment to the Notes other than Permitted Senior Indebtedness while this Note is
\noutstanding.<\/p>\n

11. Subordination.<\/u><\/strong> The indebtedness
\nevidenced by this Note is hereby expressly subordinated, to the extent and in
\nthe manner hereinafter set forth, in right of payment to the prior payment in
\nfull of all of the Company’s Permitted Senior Indebtedness. Upon any
\nreceivership, insolvency, assignment for the benefit of creditors, bankruptcy,
\nreorganization, or arrangement which creditors (whether or not pursuant to
\nbankruptcy or other insolvency laws), sale of all or substantially all of the
\nassets, dissolution, liquidation, or any other marshaling of the assets and
\nliabilities of the Company or in the event this Note shall be declared due and
\npayable, (i) no amount shall be paid by the Company, whether in cash or property
\nin respect of the principal of or interest on this Note at the time outstanding,
\nunless and until the full amount of any Permitted Senior Indebtedness then
\noutstanding shall be paid in full (but only to the extent of the value of the
\ncollateral securing any such Permitted Senior Indebtedness), and (ii) no claim
\nor proof of claim shall be filed with the Company by or on behalf of the holder
\nof this Note which shall assert any right to receive any payments in respect of
\nthe principal of and interest on this Note except subject to the payment in full
\nall of the Permitted Senior Indebtedness then outstanding (but only to the
\nextent of the value of the collateral securing any such Permitted Senior
\nIndebtedness).<\/p>\n

Nothing contained in the preceding paragraphs shall impair,
\nas between the Company and the Holder, the obligation of the Company, which is
\nabsolute and unconditional, to pay to the Holder hereof the principal hereof and
\ninterest hereon as and when the same shall become due and payable, or shall
\nprevent the Holder, upon default hereunder, from exercising all rights, powers
\nand remedies otherwise provided herein or by applicable law, all subject to the
\nrights, if any, of the holders of Permitted Senior Indebtedness under the
\npreceding paragraphs to receive cash or other properties otherwise payable or
\ndeliverable to the Holder pursuant to this Note.<\/p>\n

At any time and from time to time, upon the written request
\nof the Company, the Holders will promptly and duly authenticate and deliver such
\ninstruments and documents and take such further action as the Company may
\nreasonably request to give effect to the purpose and intent of this Section 11,
\nincluding without limitation to permit the creation of Permitted Liens (as
\ndefined in the Purchase Agreement).<\/p>\n

12. Security Interest<\/u>. <\/strong>The Company hereby grants to
\nthe Holder a first priority security interest (subject to Permitted Liens
\ncreated to secure Senior Permitted Indebtedness) in all assets and property now
\nor hereafter owned or held by the Company, including without limitation:
\naccounts, inventory, goods, equipment, fixtures, general intangibles (including
\ngoodwill and all intellectual property, including without limitation patents,
\npatent applications, copyrights, trademarks and trade names), contract rights,
\nroyalties, documents, cash, securities, letters of credit, certificates of
\ndeposit, notes, instruments, chattel paper, deposit accounts, other financial
\nassets, claims (whether by litigation, settlement, payment through insurance or
\notherwise, and including claims of past, present and future infringement) and
\nall proceeds of the foregoing (the “Collateral<\/u>“). In addition, the
\nCompany hereby appoints Holder as its attorney-in-fact for the purpose of
\nsigning and filing any uniform commercial code financial statements or other
\ndocuments considered necessary or appropriate by Holder to perfect or enhance
\nthe foregoing grant of Holder’s security interest, or deliver any notices
\nrequired thereunder.<\/p>\n

13. Usury<\/u>.<\/strong> Anything herein to the contrary
\nnotwithstanding, if during any period for which interest is computed hereunder,
\nthe amount of interest computed on the basis provided for in this Note, together
\nwith all fees, charges and other payments which are treated as interest under
\napplicable law, as provided for herein or in any other document executed in
\nconnection herewith, would exceed the amount of such interest computed on the
\nbasis of the Highest Lawful Rate, the Company shall not be obligated to pay, and
\nthe Holder shall not be entitled to charge, collect, receive, reserve or take,
\ninterest in excess of the Highest Lawful Rate, and during any such period the
\ninterest payable hereunder shall be computed on the basis of the Highest Lawful
\nRate. As used herein, “Highest Lawful Rate<\/u>” means the maximum
\nnon-usurious rate of interest, as in effect from time to time, which may be
\ncharged, contracted for, reserved, received or collected by the Holder in
\nconnection with this Note under applicable law.<\/p>\n

14. Expenses<\/u>.<\/strong> The Company agrees to pay on demand all
\nthe losses, costs, and expenses (including, without limitation, attorneys’ fees
\nand disbursements) which the Holder incurs in connection with enforcement or
\nattempted enforcement of this Note, or the protection or preservation of the
\nHolder’s rights under this Note, whether by judicial proceedings or otherwise.
\nSuch costs and expenses include, without limitation, those incurred in
\nconnection with any workout or refinancing, or any bankruptcy, insolvency,
\nliquidation or similar proceedings.<\/p>\n

15. Waivers<\/u>.<\/strong> The Company hereby waives diligence,
\ndemand, presentment, protest or further notice of any kind. The Company agrees
\nto make all payments under this Note without setoff or deduction and regardless
\nof any counterclaim or defense. No single or partial exercise of any power under
\nthis Note shall preclude any other or further exercise of such power or exercise
\nof any other power. No delay or omission on the part of the Holder in exercising
\nany right under this Note shall operate as a waiver of such right or any other
\nright hereunder.<\/p>\n

16. Counterparts<\/u>. <\/strong>This Note may be executed in any
\nnumber of counterparts, each of which will be deemed to be an original and all
\nof which together will constitute a single agreement.<\/p>\n

17. Loss of Note<\/u><\/strong>. Upon receipt by the
\nCompany of evidence satisfactory to it of the loss, theft, destruction or
\nmutilation of this Note or any Note exchanged for it, and indemnity satisfactory
\nto the Company (in case of loss, theft or destruction) or surrender and
\ncancellation of such Note (in the case of mutilation), the Company will make and
\ndeliver in lieu of such Note a new Note of like tenor.<\/p>\n\n\n\n\n\n\n\n\n\n\n
<\/td>\n\n

COMPANY:<\/strong><\/p>\n<\/td>\n<\/tr>\n

<\/td>\n\n

ACCRUE SOFTWARE, INC.<\/strong><\/p>\n<\/td>\n<\/tr>\n

<\/td>\n\n

By:\/s\/ ACCRUE SOFTWARE, INC.<\/p>\n<\/td>\n<\/tr>\n

<\/td>\n\n

Name:<\/p>\n<\/td>\n<\/tr>\n

<\/td>\n\n

(print)<\/p>\n<\/td>\n<\/tr>\n

<\/td>\n\n

Title:<\/p>\n<\/td>\n<\/tr>\n

<\/td>\n\n

Address: 48634 Milmont Drive<\/p>\n

Fremont, CA 94538-7353<\/p>\n<\/td>\n<\/tr>\n

<\/td>\n\n

Facsimile: (510) 580-4501<\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

AGREED TO AND ACCEPTED:<\/p>\n

Red Fox Investment Partners, LLC<\/p>\n

By: \/s\/ Robert M. Smelick<\/u>
\nName: Robert M. Smelick<\/u>
\n (print)
\nTitle: Managing Partner<\/u><\/p>\n

Address: 65 Cloudview Road, Sausalito, CA 94965<\/p>\n

Facsimile: (415) 289-2541<\/p>\n","protected":false},"template":"","meta":{"_acf_changed":false,"_stopmodifiedupdate":true,"_modified_date":"","_cloudinary_featured_overwrite":false},"corporate_contracts_companies":[6556],"corporate_contracts_industries":[9513],"corporate_contracts_types":[9560,9568],"class_list":["post-41282","corporate_contracts","type-corporate_contracts","status-publish","hentry","corporate_contracts_companies-accrue-software-inc","corporate_contracts_industries-technology__software","corporate_contracts_types-finance","corporate_contracts_types-finance__note"],"acf":[],"_links":{"self":[{"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts\/41282","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts"}],"about":[{"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/types\/corporate_contracts"}],"wp:attachment":[{"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/media?parent=41282"}],"wp:term":[{"taxonomy":"corporate_contracts_companies","embeddable":true,"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts_companies?post=41282"},{"taxonomy":"corporate_contracts_industries","embeddable":true,"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts_industries?post=41282"},{"taxonomy":"corporate_contracts_types","embeddable":true,"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts_types?post=41282"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}