EXHIBIT 10.65
PROMISSORY NOTE
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Principal Amount: $_______ Date of Note: November 14, 2002
FOR VALUE RECEIVED, SSP Solution, Inc., a California corporation (the
"Borrower") (there is only one borrower) hereby promise to pay to the order of
___________ ("Holder"), in lawful money of the United States of America, the
principal amount of ___________ and 00/100 DOLLARS ($_________) ("Principal
Amount"), or so much as may be outstanding, together with interest on said
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 balance of this Note, and all accrued
interest and other sums due hereunder, shall be due and payable in full upon the
sooner of a) SSP Solutions raising no less than $3.5 million in equity or debt
financing, or b) 364 days from the date of this Note ("Maturity Date"). Holder
shall have the right at any time after the Note has been outstanding for a
period of six months to convert the principal sum of the note or a part there of
into common stock of the Company at a conversion price of $1.30.
2. INTEREST: Borrower Shall pay Lender interest according to the following
schedule:
o If note is repaid within 6 months, 15% (i.e., the balance due
is $345,000)
o Within 9 months, 20%
o Within 12 months, 25%
o After 12 months, 30%
2A. EVENTS OF DEFAULT. If any of the following events takes
place before the Maturity Date (each, an "EVENT OF DEFAULT"), Holder at its
option may declare all principal and accrued and unpaid interest thereon and all
other amounts payable under this Promissory Note immediately due and payable;
PROVIDED, HOWEVER, that this Promissory 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) The Borrower fails to make payment of the full amount
due under this Promissory Note on demand at the
Maturity Date; or
(2) A receiver, liquidator or trustee is appointed by a
court order (i) of the Borrower or (ii) for any part
of the Borrower's assets or properties; or
(3) The Borrower is adjudicated bankrupt or insolvent; or
(4) Any of the Borrower's property is sequestered by or
in consequence of a court order and such order
remains in effect for more than 30 days; or
(5) The 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 the Borrower is filed under
bankruptcy, receivership or insolvency law; or
(7) The 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
the Borrower or for all or any part of its property;
or
(8) An attachment or execution is levied against any part
of the Borrower's assets that is not released within
30 days; or
(9) The 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) The Borrower breaches any covenant or agreement on
its part contained in this Promissory Note;
(11) There exists any material inaccuracy or
untruthfulness of any representation or warranty of
the Borrower set forth in this Promissory Note; or
(12) The Borrower shall default 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
the Borrower.
3. WARRANT: The Borrower will issue a warrants to the Holder to
purchase shares of common stock of the Borrower with a strike price of
$1.30 exercisable for a period of five years. The numbers of warrants
to be issued by Borrower will be based on the following schedule:
a. Upon execution of the note- 60,000 warrants at $1.30 for five years
b. If note is repaid within 90 days-90,000 warrants at $1.30 for five
years
c. If note is repaid within 120 days-120,000 warrants at $1.30 for five
years
d. If note is repaid within 150 days-150,000 warrants at $1.30 for five
years
e. If note is repaid within 180 days-180,000 warrants at $1.30 for five
years
f. If note not repaid within 360 days-300,000 warrants at $1.30 for
five years
The warrant issuance is cumulative. i.e. If Borrower has not redeemed the Note
within 90 days Borrower will issue and additional 30,000 warrants to Holder.
The Borrower will file a registration statement for the shares underlying the
warrants and those shares issued if Holder elects to convert within 120 days of
Holders election to convert or within 120 days of the Warrants being issued. If
Borrower fails to file a registration statement for the shares underlying the
warrants or common stock issued upon conversion within 120 days, Borrower shall
pay to Holder $1,000 for every day that the shares have not been registered.
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4. LAWFUL RATE OF INTEREST: It is expressly stipulated and agreed to be the
intent of The 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, or if
Xxxxxx's exercise of the option to accelerate the maturity of this Note, results
in The Borrower having paid any interest in excess of that permitted by
applicable law, then it is The Borrower's and Xxxxxx's express intent that all
excess amounts theretofore collected by Holder be credited on the principal
balance of this Note (or, if this Note has been or would thereby be paid in
full, refunded to The 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.
5. PREPAYMENT: The Borrower may prepay this Note at any time, in whole or in
part, provided Borrower has issued the Warrants to Holder.
6. 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.
7. TIME OF ESSENCE: Time is of the essence of this Note and the performance of
each of the covenants and agreements contained herein.
8. 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.
9. EXPENSES: Borrower shall pay Holder $1,000 for legal fees incurred.
10. COLLATERAL: Holder shall have a Senior secured interest in all the assets of
SSP Solution s and any subsidiary or affiliate thereof that are unencumbered,
furthermore these notes shall be evidenced by a UCC Filing to made by the
Company within 3 days of the execution of the Note, the filing shall include the
this instrument as secured by the Intellectual Property assets of the Company
and if necessary shall be evidenced with a filing and the Office of patents and
Trademarks. The note shall also be secured by any and all receivables due SSP
from its SSP Gaming subsidiary, and Holder shall have the right to inspect the
books and records of said Companies at any time with twenty-four hours notice to
Borrower. Security Interest shall evidenced by UCC filing in the State of
Illinois and California.
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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_________________
Its: co-Chief Executive Officer
SSP Gaming, LLC
By: _/s/ Xxxxxx X. Xxxxxxx__________________
Its: Executive Manager
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