EXHIBIT 10.67
PROMISSORY NOTE
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Principal Amount: $500,000 Date of Note: January 22, 2003
FOR VALUE RECEIVED, SSP Solutions, Inc., a Delaware corporation
("Borrower") hereby promises to pay to the order of Xxxxxxx X. Xxxxxxx
("Holder"), in lawful money of the United States of America, the principal
amount of five hundred thousand and 00/100 dollars ($500,000) ("Principal
Amount"), or so much as may be outstanding, together with interest on the
Principal Amount outstanding from the date hereof until this Note is paid in
full at such place as the holder hereof may from time to time designate.
1. MATURITY: The outstanding Principal Amount of this Note, and all accrued
interest and other sums due hereunder, shall be due and payable in full upon: a)
Borrower's closing an equity or debt financing with lead investor, Shelter
Capital Partners, of $5.0 million or more ("Shelter Financing"); or b) December
31, 2005 ("Maturity Date"). At Holder's election, repayment upon closing of the
Shelter Financing may be accomplished by using the outstanding Principal Amount
of this Note and all accrued interest and other sums due hereunder as payment
for securities issuable in the Shelter Financing.
2. INTEREST: Borrower shall pay Holder interest at the rate of fifteen percent
(15%) per annum (with a minimum of fifty thousand dollars ($50,000) interest to
be paid to Holder regardless of the amount of interest actually accrued). Unless
the Principal Amount is sooner re-paid, Interest shall be paid quarterly.
Accrued interest shall be paid within five (5) days following the close of each
quarter beginning March 31, 2003.
3. EVENTS OF DEFAULT. If any of the following events takes place before the
Maturity Date (each, an "Event of Default"), Holder, at his option, may declare
all principal and accrued and unpaid interest thereon and all other amounts
payable under this Note immediately due and payable; PROVIDED, HOWEVER, that
this Note shall automatically become due and payable without any declaration in
the case of an Event of Default specified in clause 3 or 5, below:
(1) Borrower fails to make payment of the full amount due under
this Note on demand at the Maturity Date; or
(2) A receiver, liquidator or trustee is appointed by a court
order (i) of Borrower or (ii) for any part of Borrower's
assets or properties; or
(3) Borrower is adjudicated bankrupt or insolvent; or
(4) Any of Borrower's property is sequestered by or in consequence
of a court order and such order remains in effect for more
than thirty (30) days; or
(5) Borrower files a petition in voluntary bankruptcy or requests
reorganization under any provision of any bankruptcy,
reorganization or insolvency law or consents to the filing of
any petition against it under such law, or
(6) Any petition against Xxxxxxxx is filed under bankruptcy,
receivership or insolvency law and remains undismissed for a
period of sixty (60) days; or
(7) Borrower makes a formal or informal general assignment for the
benefit of its creditors, or admits in writing its inability
to pay debts generally when they become due, or consents to
the appointment of a receiver, liquidator or trustee of
Borrower or for all or any part of its property; or
(8) An attachment or execution is levied against any part of
Borrower's assets that is not released within thirty (30)
days; or
(9) Borrower dissolves, liquidates or ceases business activity, or
transfers any major portion of its assets other than in the
ordinary course of business; or
(10) Borrower breaches any covenant or agreement on its part
contained in this Note;
(11) There exists any material inaccuracy or untruthfulness of any
representation or warranty of Borrower set forth in this Note;
or
(12) Borrower defaults under any promissory note, credit agreement,
loan agreement, conditional sales contract, guarantee, lease,
indenture, bond, debenture or other material obligation to
which it is a party whatsoever and a party thereto or a holder
thereof is entitled to accelerate the obligations of Borrower.
4. WARRANT: Should this Note not be re-paid prior to June 30, 2003, Borrower
will issue a warrant to Holder to purchase 125,000 shares of common stock of
Borrower with an exercise price of $1.30 per share exercisable for a period of
three years.
Borrower will file with the Securities and Exchange Commission a registration
statement covering the resale of the shares underlying the warrant within one
hundred twenty (120) days of date of issuance of the warrant. If Borrower fails
to file a registration statement covering the resale of the shares underlying
the warrant within one hundred twenty (120) days of the date of issuance of the
warrant, Borrower shall pay to Holder $1,000 for each day until the registration
statement is filed.
5. LAWFUL RATE OF INTEREST: It is expressly stipulated and agreed to be the
intent of Borrower and Holder at all times to comply with applicable state law
or applicable United States federal law (to the extent that it permits Holder to
contract for, charge, or receive a greater amount of interest than under state
law) and that this section shall control every other covenant and agreement in
this Note. If the applicable law (state or federal) is ever judicially
interpreted so as to render usurious any amount called for under this Note or
received with respect to the indebtedness evidenced by this Note, then it is
Xxxxxxxx's and Xxxxxx's express intent that all excess amounts theretofore
collected by Holder be credited on the Principal Amount of this Note (or, if
this Note has been or would thereby be paid in full, refunded to Borrower), and
the provisions of this Note immediately be deemed reformed and the amounts
thereafter collectible hereunder and there under reduced, without the necessity
of the execution of any new document, so as to comply with the applicable law,
but so as to permit the recovery of the fullest amount otherwise called for
hereunder and there under.
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6. PREPAYMENT: Borrower may prepay this Note at any time, in whole or in part,
provided Xxxxxxxx first gives a fifteen (15) day notice of intent to pre-pay.
7. SEVERABLE PROVISIONS: Every provision of this Note is intended to be
severable. If any term or provision hereof is declared by a court of competent
jurisdiction to be illegal, invalid or unenforceable for any reason whatsoever,
such illegality, invalidity or unenforceability shall not affect the balance of
the terms and provisions hereof, which terms and provisions shall remain binding
and enforceable.
8. TIME OF ESSENCE: Time is of the essence of this Note and the performance of
each of the covenants and agreements contained herein.
9. GOVERNING LAW: This note shall be governed by and construed in accordance
with the laws of the State of Illinois. In the event of any dispute regarding
the subject matter of this Note, such dispute shall be submitted to arbitration
before a single arbitrator in the city of Chicago in accordance with the rules
of the American Arbitration Association. Any decision or award shall be final
and binding upon the parties hereto. All legal fees, arbitration fees, filing
fees, collection fees and expenses shall be paid to the prevailing party by the
losing party.
10. EXPENSES: Borrower shall pay Holder $1,000 for legal fees incurred.
11. COLLATERAL: Holder shall have a senior secured interest in all the assets of
Borrower and any subsidiary or affiliate thereof (including, without limitation,
intellectual property assets and any and all receivables due to Borrower from
its SSP Gaming subsidiary) that are unencumbered, to be perfected by the filing
by Borrower of a UCC financing statement in the State of Delaware within three
(3) days of the execution of this Note. Holder shall have the right to inspect
the books and records of Borrower and its subsidiaries at any time with
twenty-four (24) hours notice to Borrower.
IN WITNESS WHEREOF, Xxxxxxxx has caused this Note to be duly executed and
delivered as of the date first above written
SSP Solutions, Inc.
By: /S/ XXXXXX X. XXXXXXX
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Its: co-Chief Executive Officer
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