Exhibit 10.1

THIS PROMISSORY NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THIS PROMISSORY NOTE MAY NOT BE
SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE
REGISTRATION STATEMENT AS TO THIS PROMISSORY NOTE UNDER SAID ACT AND APPLICABLE
STATE SECURITIES LAWS OR AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE
BORROWER THAT SUCH REGISTRATION IS NOT REQUIRED.

PROMISSORY NOTE

 

          New York, NY $20,000,000.00       September 16, 2011

FOR VALUE RECEIVED, MOTRICITY, INC., a Delaware corporation (the “Borrower”),
hereby unconditionally promises to pay to the order of High River Limited
Partnership, a Delaware limited partnership (the “Lender”), at the offices of
Lender at 767 Fifth Avenue 46th Floor, New York, NY 10153, or at such other
place as the Lender or any holder hereof may from time to time designate, the
principal sum of TWENTY MILLION DOLLARS ($20,000,000.00) in lawful money of the
United States of America and in immediately available funds, on March 16, 2012,
or earlier as hereinafter provided (including, without limitation, as provided
in Sections 4(d) and 6(b) of this Note), together with any capitalized interest
that is added to the principal balance hereof as provided herein, together with
interest as set forth herein and all other Obligations. This Promissory Note
(the “Note”) evidences loans advanced for the benefit of the Borrower on the
date hereof and the amounts of such capitalized interest and all other
Obligations described herein.

1. Interest; Paid-in-Kind Interest. Borrower hereby promises to pay interest to
Lender on the unpaid principal balance hereof and on all other outstanding
Obligations hereunder at an interest rate equal to nine percent (9.00%) per
annum. Such interest shall accrue from and after the date hereof and be paid in
lawful money of the United States of America at said office or place on the
first day of each third calendar month, in arrears, commencing on October 1,
2011, until the Obligations evidenced by this Note are paid in full in lawful
money of the United States of America, provided that until the principal of this
Note becomes due, any such interest payments required hereunder shall be “paid
in kind” by capitalizing such interest amounts and adding them to the principal
balance of this Note such that interest shall become payable thereon as it is
with respect to the initial principal amount hereof; provided further that any
unpaid interest, together with all other Obligations, shall become due and
payable in lawful money of the United States of America and in immediately
available funds, on March 16, 2012, or earlier as hereinafter provided
(including, without limitation, as provided in Sections 4(d) and 6(b) of this
Note). Immediately upon the occurrence and during the continuation of an Event
of Default, without

 

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notice by Lender, all Obligations outstanding hereunder shall accrue interest at
a rate equal to two percent (2%) per annum in excess of the interest rate in
effect immediately prior to the occurrence of such Event of Default. Any payment
of interest or any other Obligation that becomes due on a day that is not a
Business Day shall become due on the next following Business Day.
Notwithstanding the foregoing, interest payable upon and after the occurrence of
an Event of Default, together with principal and all other Obligations shall be
payable upon demand (provided, that, upon the occurrence of any Event of Default
described in Sections 5(c), 5(d) and 5(e) of this Note, all Obligations shall
automatically become immediately due and payable).

2. Security. All Obligations outstanding hereunder shall be secured by the
Collateral, as defined in the Security Agreement.

3. Representations and Warranties. Borrower hereby represents and warrants to
Lender the following (which shall survive the execution and delivery of this
Note):

(a) Corporate Existence, Power and Authority. Borrower is a corporation duly
organized and in good standing under the laws of the State of Delaware and is
duly qualified as a foreign corporation and in good standing in all states or
other jurisdictions where the nature and extent of the business transacted by it
or the ownership of assets makes such qualification necessary, except for those
jurisdictions in which the failure to so qualify would not have a Material
Adverse Effect on Borrower’s financial condition, results of operation or
business or the rights of Lender in or to any of the Collateral. The execution,
delivery and performance of this Note, the other Loan Documents and the
transactions contemplated hereunder and thereunder (i) are all within Borrower’s
powers, (ii) have been duly authorized, (iii) are not in contravention of law or
the terms of Borrower’s certificate of incorporation/organization, by laws, or
other organizational documentation, or any indenture, agreement or undertaking
to which Borrower is a party or by which Borrower or its property are bound and
(iv) will not result in the creation or imposition of, or require or give rise
to any obligation to grant, any lien, security interest, charge or other
encumbrance upon any property of Borrower or any of its subsidiaries (except
pursuant to the Security Agreement).

(b) Enforceability. This Note and the other Loan Documents to which Borrower is
a party constitute legal, valid and binding obligations of Borrower enforceable
in accordance with their respective terms, except as limited by applicable
bankruptcy, insolvency, reorganization, moratorium, or other laws of general
application effecting creditors’ rights or general principles of equity.

(c) Name. The exact legal name of Borrower is as set forth on the signature page
of this Note.

(d) Approvals. No permit, authorization, consent or approval of or by, or any
notification of or filing with, any person (governmental or private) is required
in connection with the execution, delivery, performance, issuance, sale and
delivery of this Note and consummation by the Borrower of the transactions
contemplated hereby except those which have been obtained.

 

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(e) Accounts Receivable. As of the date hereof, the face amount of the accounts
receivable held by the Borrower is equal to at least 70% of the face amount of
the aggregate consolidated accounts receivable held by the Borrower and its
subsidiaries.

(f) Survival of Warranties; Cumulative. All representations and warranties
contained in this Note or any of the other Loan Documents shall survive the
execution and delivery of this Note and shall be conclusively presumed to have
been relied on by Lender regardless of any investigation made or information
possessed by Lender. The representations and warranties set forth herein shall
be cumulative and in addition to any other representations or warranties which
Borrower shall now or hereafter give, or cause to be given, to Lender.

4. Affirmative and Negative Covenants.

(a) Maintenance of Existence; Changes to Name and Type of Organization. Borrower
shall at all times preserve, renew and keep in full force and effect its
corporate existence and rights and franchises with respect thereto, as
applicable, and maintain in full force and effect all approvals, authorizations,
leases, contracts and permits necessary to carry on the business as presently or
proposed to be conducted. Borrower shall not change its name unless Lender shall
have received not less than thirty (30) days prior written notice of such
proposed change of name, which notice shall accurately set forth the new legal
name of Borrower. Borrower shall not change its type of organization,
jurisdiction of organization or other legal structure.

(b) Financial Statements and Other Information.

(i) Borrower shall keep proper books and records in which true and complete
entries shall be made of all dealings or transactions of or in relation to its
assets and the business of Borrower, in accordance with GAAP.

(ii) Borrower shall promptly notify Lender in writing of the details of: (A) any
order, judgment or decree in excess of $50,000.00 shall have been entered
against Borrower’s assets; (B) any notification of a material violation of laws
or regulations received by Borrower; and (C) the occurrence of any Default or
Event of Default.

(c) Consolidation, Merger, Dissolution, Etc. The Borrower shall not directly or
indirectly do any of the following, or permit any of its subsidiaries to do any
of the following:

(i) merge into or with or consolidate with any other entity or person or permit
any other entity or person to merge into or with or consolidate with Borrower
(provided that a subsidiary of Borrower may merge with another subsidiary or
with Borrower, as long as the Borrower is the entity surviving any such merger
involving the Borrower);

(ii) wind up, liquidate or dissolve; or

(iii) agree to do any of the foregoing.

 

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(d) Mandatory Prepayment. If at any time that any Obligation is outstanding, a
Corporate Transaction occurs, the Borrower shall pay, or cause to be paid, in
each case simultaneously with the consummation of such Corporate Transaction to
Lender an amount equal to the entire amount of Cash Net Proceeds, up to the
amount of the Obligations then outstanding. If all Obligations are so repaid as
a consequence thereof, the Lender shall promptly following such repayment
deliver this Note to the Borrower for cancellation.

(e) Encumbrances. The Borrower shall not, nor shall it permit any of its
subsidiaries to, create, incur or assume after the date hereof any security
interest, mortgage, pledge, lien, charge or other encumbrance of any nature
whatsoever (a “Lien”) on any of the assets or properties of the Borrower or any
subsidiary or file or authorize any other person or entity to file, on or after
the date hereof, any financing statement or other similar notice of any security
interest or lien with respect to any such assets or properties, other than
security interest, mortgage, pledge, lien, charge or other encumbrance that
constitutes (each of the following items, “Permitted Liens”):

 

  (i) Liens existing on the date hereof (other than Liens in favor of Silicon
Valley Bank which must be discharged in connection with the repayment on the
date hereof of Indebtedness owed to it, such discharge to occur promptly
following such repayment except to the extent described in the payoff letter
from Silicon Valley Bank dated as of or about even date herewith with respect to
cash collateral arrangements) or arising under this Agreement and the other Loan
Documents;

 

  (ii) Liens for taxes, fees, assessments or other government charges or levies,
either not delinquent or being contested in good faith and for which Borrower or
the applicable subsidiary maintains adequate reserves on its books, provided
that no notice of any such Lien has been filed or recorded under the Internal
Revenue Code of 1986, as amended, and the Treasury Regulations adopted
thereunder;

 

  (iii) purchase money Liens (A) on equipment acquired or held by Borrower or
its subsidiaries incurred for financing the acquisition of the equipment
securing no more than Fifty Thousand Dollars ($50,000) at any time in the
aggregate, or (B) existing on equipment when acquired, if the Lien is confined
to the property and improvements and the proceeds of the equipment;

 

  (iv) Liens of carriers, warehousemen, suppliers, or other Persons that are
possessory in nature arising in the ordinary course of business so long as such
Liens attach only to inventory, securing liabilities not to exceed Fifty
Thousand Dollars ($50,000) at any time in the aggregate and which are not
delinquent or remain payable without penalty or which are being contested in
good faith and by appropriate proceedings which proceedings have the effect of
preventing the forfeiture or sale of the property subject thereto;

 

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  (v) Liens to secure payment of workers’ compensation, employment insurance,
old-age pensions, social security and other like obligations incurred in the
ordinary course of business (other than Liens imposed by ERISA);

 

  (vi) Liens incurred in the extension, renewal or refinancing of the
indebtedness secured by Liens described in (i) through (iii) (other than the
Liens in favor of Silicon Valley Bank), but any extension, renewal or
replacement Lien must be limited to the property encumbered by the existing Lien
and the principal amount of the indebtedness may not increase;

 

  (vii) leases or subleases of real property granted in the ordinary course of
business, and leases, subleases, non-exclusive licenses or sublicenses of
property (other than real property or intellectual property) granted in the
ordinary course of Borrower’s or a subsidiary’s business, if the leases,
subleases, licenses and sublicenses do not prohibit granting Lender a security
interest;

 

  (viii) non-exclusive license of intellectual property granted to third parties
in the ordinary course of business; and

 

  (ix) Liens arising from attachments or judgments, orders, or decrees in an
amount less than $50,000 at any time in the aggregate.

(f) Indebtedness. The Borrower shall not, nor shall it permit any of its
subsidiaries to, incur, create, assume, become or be liable in any manner with
respect to, any Indebtedness, or guarantee, assume, endorse, or otherwise
hereafter become responsible for (directly or indirectly), the Indebtedness,
performance, obligations or dividends of any other entity or person, in each
case, other than Indebtedness that constitutes (each of the following items,
“Permitted Indebtedness”):

 

  (i) Borrower’s Indebtedness to Lender under this Note and the other Loan
Documents;

 

  (ii) Indebtedness existing on the date hereof (other than the Indebtedness to
Silicon Valley Bank that is being repaid as of the date hereof, except to the
extent described in the payoff letter from Silicon Valley Bank dated as of or
about even date herewith with respect to cash collateral arrangements);

 

  (iii) unsecured Indebtedness to trade creditors incurred in the ordinary
course of business;

 

  (iv) Indebtedness incurred as a result of endorsing negotiable instruments
received in the ordinary course of business;

 

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  (v) Indebtedness secured by Permitted Liens;

 

  (vi) unsecured Indebtedness in principal amount not to exceed $50,000 at any
time in the aggregate; or

 

  (vii) extensions, refinancings, modifications, amendments and restatements of
any items of Permitted Indebtedness described in (i) through (v) above (other
than the Silicon Valley Bank Indebtedness), provided that the principal amount
thereof is not increased or the terms thereof are not modified to impose more
burdensome terms upon Borrower or the applicable subsidiary, as the case may be.

(g) Dividends/Distributions. Borrower shall not pay any dividends or make any
distribution or payment or redeem, retire or purchase any capital stock provided
that (i) Borrower may convert any of its convertible securities into other
securities pursuant to the terms of such convertible securities or otherwise in
exchange thereof, (ii) Borrower may pay dividends solely in common stock of
Borrower; and (iii) Borrower may repurchase the stock of former employees or
consultants pursuant to stock repurchase agreements so long as an Event of
Default does not exist at the time of such repurchase and would not exist after
giving effect to such repurchase, provided such repurchase does not exceed in
the aggregate of Fifty Thousand Dollars ($50,000) per fiscal year.

(h) Guaranties and Accounts Receivable. In the event that as of the last day of
any month, the face amount of the accounts receivable held by the Borrower is
equal to less than 70% of the face amount of the aggregate consolidated accounts
receivable held by the Borrower and its subsidiaries, the Borrower shall within
three (3) Business Days cause one or more of its subsidiaries to execute and
deliver a guaranty to Lender with respect to the Obligations, in form and
substance reasonably acceptable to Lender, such that after delivering such
guaranty or guaranties, the face amount of the accounts receivable held by the
Borrower and such guarantor(s) is equal to at least 70% of the face amount of
the aggregate consolidated accounts receivable held by the Borrower and its
subsidiaries.

(i) Sale Leasebacks. Borrower shall not enter, and shall not permit any of its
subsidiaries to enter, into any sale leaseback or similar transactions whereby
Borrower leases back assets that it has sold.

(j) Use of Proceeds. Borrower shall use the proceeds of the loan evidenced
hereby to repay all indebtedness outstanding to Silicon Valley Bank (other than
contingent obligations, as to which the Borrower shall use the proceeds of the
loan evidenced hereby to cash collateralize such contingent obligations), and
thereafter for corporate purposes of Borrower or its subsidiaries.

(k) Costs and Expenses. Borrower shall pay to Lender on demand all reasonable
costs, expenses, filing fees and taxes paid or payable in connection with the
administration, collection, liquidation, enforcement and defense of the
Obligations, Lender’s rights in the Collateral, this Note, the other Loan
Documents and all other documents related hereto or

 

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thereto, including any amendments, supplements or consents which may hereafter
be contemplated (whether or not executed) or entered into in respect hereof and
thereof, including: i) all costs and expenses of filing or recording (including
Uniform Commercial Code financing statement filing taxes and fees, documentary
taxes and intangibles taxes, if applicable); ii) costs and expenses and fees for
insurance premiums, appraisal fees and search fees, together with Lender’s
customary charges and fees with respect thereto; iii) costs and expenses of
preserving and protecting the Collateral; iv) costs and expenses paid or
incurred in connection with obtaining payment of the Obligations, enforcing the
security interests and liens of Lender, selling or otherwise realizing upon the
Collateral, and otherwise enforcing the provisions of this Note and the other
Loan Documents (including, without limitation, the Guaranties) or defending any
claims made or threatened against Lender arising out of the transactions
contemplated hereby and thereby (including preparations for and legal and other
consultations concerning any of the foregoing matters); and v) the fees and
disbursements of counsel (including legal assistants) to Lender in connection
with any of the foregoing.

(l) Further Assurances. At the request of Lender at any time and from time to
time, Borrower shall, at Borrower’s expense, duly execute and deliver, or cause
to be duly executed and delivered, such further agreements, documents and
instruments, and do or cause to be done such further acts as may be necessary or
proper to evidence, perfect, maintain and enforce the security interests and the
priority thereof in the Collateral and to otherwise effectuate the provisions or
purposes of this Note or any of the other Loan Documents, including, without
limitation to reform this Note to re-confirm any payment obligation that is
found to be invalid or unenforceable, in a manner such that it becomes valid and
enforceable.

5. Events of Default. The occurrence or existence of any one or more of the
following events are referred to herein individually as an “Event of Default”,
and collectively as “Events of Default”:

(a) Borrower fails to pay any of the Obligations when due;

(b) any representation, warranty or statement of fact made by Borrower or any
Guarantor to Lender in this Note, the other Loan Documents or any other written
agreement, schedule, confirmatory assignment or otherwise shall when made or
deemed made be false or misleading in any material respect;

(c) Borrower or any Guarantor makes an assignment for the benefit of creditors,
makes or sends notice of a bulk transfer or calls a meeting of its creditors or
principal creditors in connection with a moratorium or adjustment of the
Indebtedness due to them;

(d) a case or proceeding under the bankruptcy laws of the United States of
America now or hereafter in effect or under any insolvency, reorganization,
receivership, readjustment of debt, dissolution or liquidation law or statute of
any jurisdiction now or hereafter in effect (whether at law or in equity) is
filed against Borrower or any Guarantor or all or any part of its properties and
such petition or application is not dismissed within thirty (30) days after the
date of its filing or Borrower or any Guarantor shall file any answer admitting
or not contesting such petition or application or indicates its consent to,
acquiescence in or approval of, any such action or proceeding or the relief
requested is granted sooner;

 

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(e) a case or proceeding under the bankruptcy laws of the United States of
America now or hereafter in effect or under any insolvency, reorganization,
receivership, readjustment of debt, dissolution or liquidation law or statute of
any jurisdiction now or hereafter in effect (whether at a law or equity) is
filed by Borrower or any Guarantor or for all or any part of its property;

(f) any material provision hereof or of any of the other Loan Documents shall
for any reason cease to be valid, binding and enforceable with respect to any
party hereto or thereto (other than Lender) in accordance with its terms, or any
such party shall challenge the enforceability hereof or thereof, or shall assert
in writing, or take any action or fail to take any action based on the assertion
that any provision hereof or of any of the other Loan Documents has ceased to be
or is otherwise not valid, binding or enforceable in accordance with its terms,
or any security interest provided for herein or in any of the other Loan
Documents shall cease to be a valid and perfected first priority security
interest in any of the Collateral purported to be subject thereto (except as
otherwise permitted herein or therein);

(g) Borrower shall fail to perform or observe any term, covenant or agreement
contained herein or in any of the other Loan Documents on its part to be
performed or observed if such failure is not remedied to the reasonable
satisfaction of Lender within 10 days after the earlier of the date on which
(i) any officer of Borrower becomes aware of such failure or (ii) written notice
thereof shall have been given to the Borrower by Lender; or

(h) any Guarantor revokes or terminates or purports to revoke or terminate or
fails to perform any of the terms, covenants, conditions or provisions of the
applicable Guaranty or any other agreement of such party in favor of Lender.

6. Remedies.

(a) At any time an Event of Default exists or has occurred and is continuing,
Lender shall have all rights and remedies provided in this Note, the other Loan
Documents, the UCC and other applicable law, all of which rights and remedies
may be exercised without notice to or consent by Borrower or any Guarantor
except as such notice or consent is expressly provided for hereunder or required
by applicable law. All rights, remedies and powers granted to Lender hereunder,
under any of the other Loan Documents, the UCC or other applicable law, are
cumulative, not exclusive and enforceable, in Lender’s discretion,
alternatively, successively, or concurrently on any one or more occasions, and
shall include, without limitation, the right to apply to a court of equity for
an injunction to restrain a breach or threatened breach by Borrower or any
Guarantor of this Note or any of the other Loan Documents. Lender may at any
time or times, proceed directly against Borrower or any Guarantor to collect the
Obligations without prior recourse to the Collateral or any other collateral.

(b) Without limiting the generality of the foregoing, at any time an Event of
Default exists or has occurred and is continuing, Lender may upon notice to
Borrower, accelerate the

 

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payment of all Obligations and demand immediate payment thereof to Lender
(provided, that, upon the occurrence of any Event of Default described in
Sections 6(c), 6(d) and 6(e) of this Note, all Obligations shall automatically
become immediately due and payable).

(c) Without limiting the foregoing, or any of the Lender’s rights under the
Security Agreement, at any time an Event of Default exists or has occurred and
is continuing, Lender may, in its discretion (i) collect, foreclose, receive,
appropriate, setoff and realize upon any and all Collateral and/or (ii) sell,
lease, transfer, assign, deliver or otherwise dispose of any and all Collateral
(including entering into contracts with respect thereto, public or private sales
at any exchange, broker’s board, at any office of Lender or elsewhere) at such
prices or terms as Lender may deem reasonable, for cash, upon credit or for
future delivery, with the Lender having the right to purchase the whole or any
part of the Collateral at any such public sale, all of the foregoing being free
from any right or equity of redemption of Borrower, which right or equity of
redemption is hereby expressly waived and released by Borrower.

(d) Borrower shall remain liable to Lender for the payment of any deficiency
with interest at the highest rate provided for herein and all costs and expenses
of collection or enforcement, including attorneys’ fees and expenses as set
forth in Section 4(k) hereof.

7. Waivers.

(a) Lender shall not have any liability to Borrower (whether in tort, contract,
equity or otherwise) for losses suffered by Borrower in connection with, arising
out of, or in any way related to the transactions or relationships contemplated
by this Note, any other Loan Documents, or any act, omission or event occurring
in connection herewith, unless it is determined by a final and non-appealable
judgment or court order binding on Lender, that the losses were the result of
acts or omissions constituting Lender’s gross negligence or willful misconduct.
In any such litigation, Lender shall be entitled to the benefit of the
rebuttable presumption that it acted in good faith and with the exercise of
ordinary care in the performance by it of the terms of this Note or the other
Loan Documents. Borrower: (i) certifies that neither Lender nor any
representative, agent or attorney acting for or on behalf of Lender has
represented, expressly or otherwise, that Lender would not, in the event of
litigation, seek to enforce any of the waivers provided for in this Note or any
of the other Loan Documents and (ii) acknowledges that in entering into this
Note and the other Loan Documents, Lender is relying upon, among other things,
the waivers and certifications set forth in this Section and elsewhere herein
and in the other Loan Documents.

(b) Borrower (i) waives diligence, demand, presentment, protest and all other
demands and notices of any kind or nature whatsoever with respect to the
Obligations, the Collateral, this Note and/or any of the other Loan Documents,
except such as are expressly provided for herein, (ii) agrees that it will not
be necessary for Lender to first institute suit in order to enforce payment of
this Note and (iii) consents to any one or more extensions or postponements of
time of payment, release, surrender or substitution of collateral security, or
forbearance or other indulgence, without notice or consent. The pleading of any
statute of limitations as a defense to any demand against Borrower is expressly
hereby waived by Borrower. No notice to or demand on Borrower which Lender may
elect to give shall entitle Borrower to any other or further notice or demand in
the same, similar or other circumstances.

 

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(c) Lender shall not, by any act, delay, omission or otherwise be deemed to have
expressly or impliedly waived any of its rights, powers and/or remedies unless
such waiver shall be in writing and signed as provided herein. Any such waiver
shall be enforceable only to the extent specifically set forth therein. A waiver
by Lender of any right, power and/or remedy on any one occasion shall not be
construed as a bar to or waiver of any such right, power and/or remedy which
Lender would otherwise have on any future occasion, whether similar in kind or
otherwise.

(d) Borrower waives all rights to interpose any claims, deductions, setoffs or
counterclaims of any nature (other than compulsory counterclaims) in any action
or proceeding with respect to this Note, any of the other Loan Documents, the
Obligations, the Collateral or any matter arising therefrom or relating hereto
or thereto.

8. Amendments and Waivers.

Neither this Note nor any other Loan Documents nor any terms hereof or thereof
may be amended, waived, discharged or terminated unless such amendment, waiver,
discharge or termination is in writing signed by Lender, and as to amendments to
any of the Loan Documents, also by Borrower and such amendment, waiver,
discharger or termination shall be effective and binding as to Lender only in
the specific instance and for the specific purpose for which given.

9. Indemnification. (a) Subject to Section 9(b) of this Note, Borrower shall
indemnify and hold Lender, and its officers, directors, agents, employees,
advisors and counsel and their respective Affiliates (each such person being an
“Indemnitee”), harmless from and against any and all losses, claims, damages,
liabilities, costs or expenses (including attorneys’ fees and expenses) imposed
on, incurred by or asserted against any of them in connection with any
litigation, investigation, claim or proceeding commenced or threatened related
to the negotiation, preparation, execution, delivery, enforcement, performance
or administration of this Note, any other Loan Documents, the Collateral or any
undertaking or proceeding related to any of the transactions contemplated hereby
or thereby or any act, omission, event or transaction related or attendant
thereto, including amounts paid in settlement, court costs, and the fees and
expenses of counsel except that Borrower shall not have any obligation under
this Section to indemnify an Indemnitee with respect to a matter covered hereby
resulting from the gross negligence or willful misconduct of such Indemnitee as
determined pursuant to a final, non-appealable order of a court of competent
jurisdiction (but without limiting the obligations of Borrower as to any other
Indemnitee). To the extent that the undertaking to indemnify, pay and hold
harmless set forth in this Section may be unenforceable because it violates any
law or public policy, Borrower shall pay the maximum portion which it is
permitted to pay under applicable law to such Indemnitee in satisfaction of
indemnified matters under this Section. To the extent permitted by applicable
law, Borrower shall not assert, and Borrower hereby waives, any claim against
any Indemnitee, on any theory of liability, for special, indirect, consequential
or punitive damages (as opposed to direct or actual damages) arising out of, in
connection with, or as a result of, this Note, any of the other Loan Documents,
the Collateral or any undertaking or transaction contemplated hereby and/or

 

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thereby. No Indemnitee referred to above shall be liable for any damages arising
from the use by unintended recipients of any information or other materials
distributed by it through telecommunications, electronic or other information
transmission systems in connection with this Note, any of the other Loan
Documents, the Collateral or the transaction contemplated hereby or thereby. All
amounts due under this Section shall be payable upon demand. The foregoing
indemnity shall survive the payment of the Obligations and the termination of
the Loan Documents.

(b) (i) Notice. Promptly after receipt by Indemnitee of written notice of the
commencement of any matter for which Indemnitee is entitled to payment under
Section 9(a) of this Note, Indemnitee will, if a claim in respect thereof is to
be made against the Borrower under this Note, notify the Borrower thereof; but
the omission so to notify the Borrower will not relieve it from any liability
that it may have to Indemnitee, except as provided in Section 9(b)(iii). The
Borrower shall pay such indemnifiable amounts to Indemnitee within ten
(10) Business Days following receipt of the request.

(ii) Defense. With respect to any matter as to which Indemnitee notifies the
Borrower thereof, the Borrower will be entitled to participate in any proceeding
at its own expense and except as otherwise provided below, to the extent the
Borrower so wishes, it may assume the defense thereof with counsel reasonably
satisfactory to Indemnitee. After notice from the Borrower to Indemnitee of its
election to assume the defense of any proceeding, the Borrower will not be
liable to Indemnitee under this Note or otherwise for any expenses subsequently
incurred by Indemnitee under this Note with respect to such defense except as
otherwise provided below. Indemnitee shall have the right to employ its own
counsel in such proceeding, but all expenses related thereto incurred after
notice from the Borrower of its assumption of the defense shall be at
Indemnitee’s expense unless: (A) the employment of counsel by Indemnitee has
been authorized by the Borrower, (B) counsel to Indemnitee has reasonably
determined that there may be a conflict of interest between Indemnitee and the
Borrower in the defense of the proceeding, or (C) the Borrower shall not in fact
have employed counsel to assume the defense of such proceeding within three
(3) Business Days after being requested to do so by Indemnitee, in each of which
case all expenses of the proceeding shall be borne by the Borrower. The Borrower
shall not be entitled to assume the defense of any proceeding brought by or on
behalf of the Borrower or as to which Indemnitee shall have made the
determination provided for in clause (B) above.

(iii) Settlement of Claims. The Borrower shall not be liable to indemnify
Indemnitee under this Note for any amounts paid in settlement of any proceeding
effected without the Borrower’s written consent. The Borrower shall not settle
any proceeding in any matter that would impose any penalty or limitation on
Indemnitee, without Indemnitee’s written consent. Either Borrower or Indemnitee
may withhold their consent in their sole discretion; provided that neither the
Borrower nor Indemnitee will unreasonably withhold their consent to the amount
of any proposed settlement. The Borrower shall not be liable to indemnify
Indemnitee under this Note with regard to any judicial award if the Borrower was
not given a reasonable and timely opportunity, at its expense, to participate in
the defense of such action; provided that the Borrower’s

 

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liability hereunder shall not be excused if participation in the proceeding by
the Borrower was barred by this Note or to the extent that the Borrower’s lack
of such opportunity did not prejudice the Borrower.

10. Interpretive Provisions.

(a) All terms used herein which are defined in Article 1, Article 8 or Article 9
of the UCC shall have the meanings given therein unless otherwise defined in
this Note.

(b) All references to the plural herein shall also mean the singular and to the
singular shall also mean the plural unless the context otherwise requires.

(c) All references to Borrower, Lender and/or any other Indemnitee pursuant to
the definitions set forth in the recitals hereto, or to any other person herein,
shall include their respective successors and assigns.

(d) Unless otherwise expressly provided herein, (i) references herein to any
agreement, document or instrument shall be deemed to include all subsequent
amendments, modifications, supplements, extensions, renewals, restatements or
replacements with respect thereto, but only to the extent the same are not
prohibited by the terms hereof or of any other Loan Documents, and
(ii) references to any statute or regulation are to be construed as including
all statutory and regulatory provisions consolidating, amending, replacing,
recodifying, supplementing or interpreting the statute or regulation.

11. Notices. All notices, requests and demands hereunder shall be in writing and
deemed to have been given or made: if delivered in person, immediately upon
delivery; if by telex, telegram or facsimile transmission, immediately upon
sending and confirmation of receipt; if by nationally recognized overnight
courier service with instructions to deliver the next Business Day, one
(1) Business Day after sending; and if by certified mail, return receipt
requested, five (5) days after mailing. All notices, requests and demands upon
the parties are to be given to the following addresses (or to such other address
as any party may designate by notice in accordance with this Section):

 

If to Borrower:   

Motricity, Inc.

601 108th Avenue NE, Suite 900

Bellevue, WA 98004

Attn: CEO

Telephone No.: 425-638-8200

Fax: 425-957-6201

with a copy to:   

Brown Rudnick LLP

One Financial Center

Boston, MA 02111

Attn: Nina G. Andersson, Esq.

Fax: 617-856-8201

Email: nandersson@brownrudnick.com

 

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If to Lender:   

High River Limited Partnership

c/o Icahn Associates Corp.

47th Floor

767 Fifth Avenue

New York, NY 10153

Attn: General Counsel

Telephone No.: 212-702-4300

Telecopy No.: 212-688-1158

12. Miscellaneous.

(a) Partial Invalidity. If any provision of this Note is held to be invalid or
unenforceable, such invalidity or unenforceability shall not invalidate this
Note as a whole, but this Note shall be construed as though it did not contain
the particular provision held to be invalid or unenforceable, reformed as
provided in Section 4(l) hereof if appropriate, and the rights and obligations
of the parties shall be construed and enforced only to such extent as shall be
permitted by applicable law.

(b) Successors. This Note and the other Loan Documents shall be binding upon and
inure to the benefit of and be enforceable by Lender and Borrower and their
respective successors and assigns, except that Borrower shall not assign any of
its rights under this Note and the other Loan Documents without the prior
written consent of Lender. Any such purported assignment without such express
prior written consent of Lender shall be void. Lender may assign all or a
portion of the rights and Obligations evidenced by this Note at any time, each
of which assignees shall become a party to this Note as a lender by execution of
an assignment and acceptance and to the extent that rights and Obligations
hereunder have been assigned to such assignee pursuant to such assignment and
acceptance such assignee shall have the rights and Obligations of Lender
hereunder and the assigning Lender shall, to the extent that rights and
Obligations hereunder have been assigned by it pursuant to such assignment and
acceptance, relinquish its rights and be released from its obligations under
this Note.

(c) Entire Agreement. This Note, the other Loan Documents, any supplements
hereto or thereto, and any instruments or documents delivered or to be delivered
in connection herewith or therewith represents the entire agreement and
understanding concerning the subject matter hereof and thereof between the
parties hereto, and supersede all other prior agreements, understandings,
negotiations and discussions, representations, warranties, commitments,
proposals, offers and contracts concerning the subject matter hereof, whether
oral or written. In the event of any inconsistency between the terms of this
Note and any schedule or exhibit hereto, the terms of this Note shall govern.

(d) Prepayment. This Note may be prepaid in whole or part at any time, without
penalty or premium provided that any prepayments made shall be applied to the
Obligations then outstanding in the order and manner determined by Lender in its
sole discretion.

 

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(e) Setoff. Upon the occurrence and during the continuation of any Event of
Default, Lender shall have the right, but not the obligation to setoff against
this Note any monetary obligations owed by Lender to Borrower, if any.

13. Governing Law; Choice of Forum; Service of Process; Jury Trial Waiver

(a) The validity, interpretation and enforcement of this Note and the other Loan
Documents and any dispute arising in connection herewith or therewith shall be
governed by the internal laws of the State of New York (without giving effect to
principles of conflicts of law).

(b) Borrower irrevocably consents and submits to the non-exclusive jurisdiction
of the Superior Courts located within New York County, New York and the United
States District Court for the Southern District of New York and waives any
objection based on venue or forum non conveniens with respect to any action
instituted therein arising under this Note or any of the other Loan Documents or
in any way in connection with or related or incidental to the dealings of
Borrower and Lender in respect of this Note or any of the other Loan Documents
or the transactions related hereto or thereto, in each case whether now existing
or hereafter arising, and whether in contract, tort, equity or otherwise, and
agrees that any dispute arising out of the relationship between Borrower and
Lender or the conduct of such persons in connection with this Note or any of the
other Loan Documents shall be heard only in the courts described above (except
that Lender shall have the right to bring any action or proceeding against
Borrower or any of its property in the courts of any other jurisdiction which
Lender deems necessary or appropriate in order to realize on such assets or to
otherwise enforce its rights against Borrower or any of its property).

(c) Borrower hereby waives personal service of any and all process upon it and
consents that all such service of process may be made by certified mail (return
receipt requested) directed to it and service so made shall be deemed to be
completed five (5) days after the same shall have been so deposited in the U.S.
mails, or, at Lender’s option, by service upon Borrower in any other manner
provided under the rules of any such courts. Within thirty (30) days after such
service, Borrower shall appear in answer to such process, failing which Borrower
shall be deemed in default and judgment may be entered by Lender against
Borrower for the amount of the claim and other relief requested.

(d) BORROWER WAIVES ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR
CAUSE OF ACTION,

(i) ARISING UNDER THIS NOTE AND/OR THE OTHER LOAN DOCUMENTS, OR

(ii) IN ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS BETWEEN
BORROWER AND LENDER IN RESPECT OF THIS NOTE OR ANY OF THE OTHER LOAN DOCUMENTS
OR THE TRANSACTIONS RELATED HERETO OR THERETO IN EACH CASE WHETHER NOW EXISTING
OR HEREAFTER ARISING, AND WHETHER IN CONTRACT, TORT, EQUITY OR OTHERWISE.
BORROWER AGREES AND CONSENTS THAT ANY SUCH CLAIM, DEMAND, ACTION OR CAUSE OF
ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT A JURY.

 

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BORROWER HEREBY ACKNOWLEDGES THAT THE TRANSACTION OF WHICH THIS NOTE AND THE
OTHER LOAN DOCUMENTS ARE A PART IS A COMMERCIAL TRANSACTION, AND HEREBY
VOLUNTARILY AND KNOWINGLY WAIVES SUCH RIGHTS AS IT MAY HAVE TO NOTICE AND/OR
HEARING UNDER ANY APPLICABLE FEDERAL OR STATE LAWS PERTAINING TO THE EXERCISE BY
LENDER OF SUCH RIGHTS AS THE LENDER MAY HAVE REGARDING THE RIGHT TO SEEK
PREJUDGMENT REMEDIES AND/OR DEPRIVE BORROWER OF OR AFFECT THE USE OF OR
POSSESSION OR ENJOYMENT OF BORROWER’S PROPERTY PRIOR TO THE RENDITION OF A FINAL
JUDGMENT AGAINST BORROWER. BORROWER FURTHER WAIVES ANY RIGHT IT MAY HAVE TO
REQUIRE LENDER TO PROVIDE A BOND OR OTHER SECURITY AS A PRECONDITION TO OR IN
CONNECTION WITH ANY PREJUDGMENT REMEDY SOUGHT BY LENDER, AND WAIVES ANY
OBJECTION TO THE ISSUANCE OF SUCH PREJUDGMENT REMEDY BASED ON ANY OFFSETS,
CLAIMS, DEFENSES OR COUNTERCLAIMS TO ANY ACTION BROUGHT BY THE LENDER.

14. Definitions. For purposes of this Note, the following terms shall have the
respective meanings given to them below:

“Affiliate” of any Person is a Person that owns or controls directly or
indirectly the Person, any Person that controls or is controlled by or is under
common control with the Person, and each of that Person’s senior executive
officers, directors, partners and, for any Person that is a limited liability
company, that Person’s managers and members.

“Business Day” shall mean any day other than a Saturday, Sunday, or other day on
which commercial banks are authorized or required to close under the laws of the
State of New York or the State of Washington, so long as it is a day on which
Lender is open for the transaction of business.

“Cash Net Proceeds” shall mean the excess, if any, of (a) the sum of cash and
cash equivalents received in connection with a Corporate Transaction over
(b) the sum of (i) the amount required to pay any Permitted Indebtedness secured
by a Permitted Lien on the assets subject to such Corporate Transaction,
(ii) the fees and expenses (including, without limitation, attorneys’ fees,
investment banking fees, brokerage fees, consultant fees and other customary
fees) incurred by the Borrower or any of its subsidiaries in connection with
such Corporate Transaction, (iii) taxes paid or reasonably estimated to be
payable in connection with or attributable to such Corporate Transaction and
(iv) any reserve for adjustment in respect of the sale price or any liabilities
associated with such Corporate Transaction retained by the Borrower or any of
its subsidiaries, including, without limitation, pension and other
post-employment benefit liabilities, liabilities related to environmental
matters and any indemnification obligations associated with such transaction.

“Collateral” shall have the meaning set forth in the Security Agreement.

 

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“Contingent Obligation” is, for any Person, any direct or indirect liability,
contingent or not, of that Person for (a) any indebtedness, lease, dividend,
letter of credit or other obligation of another such as an obligation directly
or indirectly guaranteed, endorsed, co-made, discounted or sold with recourse by
that Person, or for which that Person is directly or indirectly liable; (b) any
obligations for undrawn letters of credit for the account of that Person; and
(c) all obligations from any interest rate, currency or commodity swap
agreement, interest rate cap or collar agreement, or other agreement or
arrangement designated to protect a Person against fluctuation in interest
rates, currency exchange rates or commodity prices; but “Contingent Obligation”
does not include endorsements in the ordinary course of business. The amount of
a Contingent Obligation is the stated or determined amount of the primary
obligation for which the Contingent Obligation is made or, if not determinable,
the maximum reasonably anticipated liability for it determined by the Person in
good faith; but the amount may not exceed the maximum of the obligations under
any guarantee or other support arrangement.

“Corporate Transaction” shall mean any merger, reorganization, consolidation,
sale, assignment, transfer, or other disposition of all or any material portion
of the assets of the Borrower or of any of its subsidiaries (other than in the
ordinary course or consisting of intellectual property licenses or transfers or
intellectual property), any sale/leaseback transaction, any sale or issuance of
indebtedness (other than Permitted Indebtedness), equity securities, or
convertible or derivative instruments (whether for debt or equity), including
without limitation in connection with any rights offering, other than: (i) a
disposition to the Borrower or a subsidiary from the Borrower or a subsidiary;
(ii) a disposition of cash or cash equivalents; (iii) a disposition of damaged,
worn-out, surplus, or obsolete assets, (iv) any event of loss or settlement of
litigation; (v) the creation of any lien permitted by the terms hereof; (vi) any
sale to the lessor of property subject to a capital lease; (vii) in connection
with the issuance of directors’ qualifying shares; (viii) the issuance of equity
securities pursuant to the exercise of any stock purchase warrants outstanding
as of the date hereof, (ix) the issuance of any equity securities pursuant to
awards granted to employees or directors of the Company pursuant to any of the
Company’s equity incentive plans existing as of the date hereof, or ( ix ) with
respect to which the Cash Net Proceeds would be less than $50,000.

“Default” shall mean the occurrence of an event that would be an Event of
Default but for the passage of time or the giving of notice, or both.

“GAAP” shall mean generally accepted accounting principles in the United States
of America as in effect from time to time as set forth in the opinions and
pronouncements of the Accounting Principles Board and the American Institute of
Certified Public Accountants and the statements and pronouncements of the
Financial Accounting Standards Board which are applicable to the circumstances
as of the date of determination consistently applied.

“Guarantor” shall mean each Person, if any, that executes and delivers to Lender
a guaranty of any or all of the Obligations and “Guarantors” shall mean all
Guarantors, collectively.

 

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“Guaranty” shall mean each guaranty delivered to Lender by a Guarantor in
respect of the Obligations, as amended, restated, supplemented and/or otherwise
modified from time to time as permitted thereunder.

“Indebtedness” is (a) indebtedness for borrowed money or the deferred price of
property or services, such as reimbursement and other obligations for surety
bonds and letters of credit, (b) obligations evidenced by notes, bonds,
debentures or similar instruments, (c) capital lease obligations, and
(d) Contingent Obligations.

“Loan Documents” shall mean, collectively, this Note, the Guaranties, and all
other notes, guarantees, security agreements, deposit account control
agreements, investment property control agreements, intercreditor agreements and
all other agreements, documents and instruments now or at any time hereafter
executed and/or delivered by Borrower or Guarantors in connection with this
Note.

“Material Adverse Effect” shall mean a material adverse effect on (a) the
financial condition, business, prospects, performance or operations of Borrower
or its subsidiaries, considered as a whole; (b) the legality, validity or
enforceability of this Note or any of the other Loan Documents; (c) the
legality, validity, enforceability, perfection or priority of the security
interests and liens of Lender upon the Collateral; (d) the Collateral or its
value; (e) the ability of Borrower to repay the Obligations or of Borrower to
perform its obligations under this Note or any of the other Loan Documents as
and when to be performed; or (f) the ability of Lender to enforce the
Obligations or realize upon the Collateral or otherwise with respect to the
rights and remedies of Lender under this Note or any of the other Loan
Documents.

“Obligations” shall mean any and all loans and all other obligations,
liabilities and Indebtedness of every kind, nature and description owing by any
or all of Borrower to Lender that arises under this Note and/or any of the other
Loan Documents, including principal, interest, charges, fees, costs and
expenses, however evidenced, whether as principal, surety, endorser, guarantor
or otherwise, whether now existing or hereafter arising, whether arising before,
or after the commencement of any case with respect to Borrower under the United
States Bankruptcy Code or any similar statute (including the payment of interest
and other amounts which would accrue and become due but for the commencement of
such case, whether or not such amounts are allowed or allowable in whole or in
part in such case), whether direct or indirect, absolute or contingent, joint or
several, due or not due, primary or secondary, liquidated or unliquidated, or
secured or unsecured.

“Person” or “person” wherever used herein shall mean any individual, sole
proprietorship, partnership, corporation (including, without limitation, any
corporation which elects subchapter S status under the Internal Revenue Code of
1986, as amended), limited liability company, limited liability partnership,
business trust, unincorporated association, joint stock corporation, trust,
joint venture or other entity or any government or any agency or instrumentality
or political subdivision thereof.

“Security Agreement” shall mean Security Agreement dated as of even date hereof
by and between Borrower and Lender, as amended, restated, supplemented and/or
otherwise modified from time to time.

 

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“UCC” shall mean the Uniform Commercial Code as in effect in the State of New
York, and any successor statute, as in effect from time to time (except that
terms used herein which are defined in the Uniform Commercial Code as in effect
in the State of New York on the date hereof shall continue to have the same
meaning notwithstanding any replacement or amendment of such statute).

[Remainder of Page Intentionally Left Blank]

 

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WITNESS:      

MOTRICITY, INC.

   

/s/ Charles Scullion

    By:  

/s/ C. Stephen Cordial

  Charles Scullion     Name:   C. Stephen Cordial       Title:   Interim CFO and
Treasurer  

 

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