On November 6, 2014, Rainmaker Systems Inc. received a notice of default from investors holding revolving line of credit promissory notes in the outstanding principal amount of $200,000 (the Revolving Notes). The notice of default stated that an event of default had occurred under the Revolving Notes as a result of the Company's failure to repay principal when due, and declared all principal and accrued interest outstanding under the Revolving Notes to be immediately due and payable. The Revolving Notes were issued by the Company on September 2, 2014 and permit the Company to borrow up to an aggregate principal amount of $200,000 on a revolving basis, with borrowings due 30 days following the date of each advance.

The Company borrowed $200,000 under the Revolving Notes on September 2, 2014 and failed to repay such borrowing within 30 days following the advance date. Amounts outstanding under the Revolving Notes accrue interest at a non-default rate of 5% per annum and a default rate of 7% per annum. At November 6, 2014 accrued interest on the Revolving Notes was $2,176.

The Revolving Notes are secured by a second lien on substantially all of the Company's consolidated assets.