EXHIBIT 10.54
THIS NOTE HAS BEEN ACQUIRED FOR INVESTMENT AND HAS NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT") NOR IS SUCH REGISTRATION
CONTEMPLATED. THIS NOTE MAY NOT BE SOLD, PLEDGED, HYPOTHECATED OR OTHERWISE
TRANSFERRED AT ANY TIME WHATSOEVER UNLESS REGISTERED UNDER THE ACT AND
APPLICABLE STATE SECURITIES LAWS OR AN EXEMPTION FROM SUCH REGISTRATION IS
AVAILABLE, EXCEPT UPON DELIVERY TO THE COMPANY OF AN OPINION OF COUNSEL
SATISFACTORY TO THE COMPANY THAT REGISTRATION IS NOT REQUIRED FOR SUCH
TRANSFER OR THE SUBMISSION TO THE COMPANY OF SUCH OTHER EVIDENCE AS MAY BE
SATISFACTORY TO IT AND TO ITS COUNSEL TO THE EFFECT THAT ANY SUCH TRANSFER
WILL NOT BE IN VIOLATION OF THE ACT, OR APPLICABLE STATE SECURITIES LAWS OR
ANY RULE OR REGULATION PROMULGATED THEREUNDER.
TAG-IT PACIFIC, LLC
SENIOR SUBORDINATED SECURED NOTE
DUE JANUARY 20, 1999
$103,125 Irvine, California
January 20, 1998
FOR VALUE RECEIVED, the undersigned, TAG-IT PACIFIC, LLC, a Delaware
limited liability company (the "COMPANY"), hereby promises to pay to THE
CRUTTENDEN XXXX BRIDGE FUND, LLC, a California limited liability company
("PAYEE") or registered assigns ("HOLDER"), the principal sum of ONE
HUNDRED THREE THOUSAND ONE HUNDRED TWENTY-FIVE DOLLARS ($103,125) (or so much
thereof as shall not have been prepaid) on earlier of (i) January 20, 1999,
or (ii) the effective date of a Refinancing (as such term is defined in that
certain Securities Purchase Agreement between the Company and Payee dated
December 31, 1997 (the "Agreement")) (the "Maturity Date"), together with
interest (computed on the basis of actual days in the 360-day year) on the
unpaid principal balance hereof at the rate of twelve percent (12%) from the
date hereof except as provided below, under the terms of the Agreement,
payable monthly in arrears, commencing February 28, 1998 (which first payment
shall include accrued interest from the date hereof to and including such
date), until said principal shall have become due and payable in accordance
with the Agreement, and to pay interest at the foregoing rate per annum on
any overdue principal and, to the extent permitted by applicable law, on any
interest overdue (without regard to any applicable grace period), until the
same shall be paid. Notwithstanding the foregoing, in the event that the
amounts under this note become due and payable upon a Refinancing, then the
Company shall be obligated to pay, and the Holder shall accept in full
satisfaction of the obligations hereunder, an amount equal to $103,125.00
together with all accrued and unpaid interest as of such date, less amounts
withheld in accordance with Section 13.1 of the Agreement.
Payments of principal, prepayment charges (if any) and interest are to
be made at the office of Holder at the address for notice set forth in the
Agreement or such other address of which Holder informs Company in writing,
in lawful money of the United States of America.
The indebtedness evidenced by this Note is secured by, and this Note is
the "Note" referred to in, that certain Security Agreement dated as of the
date hereof between the Company and Payee.
This Note is issued pursuant to the Agreement and is also entitled to
the benefits thereof. As provided in the Agreement, this Note is subject to
mandatory prepayment requirements, and is further subject to optional
prepayments in whole or in part, without any prepayment charge, all as
specified in the Agreement.
Upon surrender of this Note for registration of transfer or assignment,
duly endorsed, or accompanied by a written instrument of transfer or
assignment duly executed, by the registered Holder hereof or such Holder's
attorney duly authorized in writing, a new Note for a like principal amount
will be issued to, and, at the option of the Holder, registered in the name
of, the transferee or assignee. The Company may deem and treat the person in
whose name this Note is registered as the Holder and owner hereof for the
purpose of receiving payments and for all other purposes whatsoever, and the
Company shall not be affected by any notice to the contrary.
If an Event of Default (as defined in the Agreement) shall occur and be
continuing, the principal of this Note may, under certain circumstances,
become or be declared due and payable in the manner and with the effect
provided in said Agreement.
Upon the occurrence of any Event of Default (as defined in the
Agreement), the principal interest rate shall increase from 12% to 13 1/2%.
All agreements between the Company and the Payee are hereby expressly
limited so that in no contingency or event whatsoever, whether by reason of
acceleration of maturity of the indebtedness evidenced hereby or otherwise,
shall the amount paid or agreed to be paid to the Payee for the use,
forbearance or detention of the indebtedness evidenced hereby exceed the
maximum permissible under applicable law. As used herein, the term
"applicable law" shall mean the law in effect as of the date hereof,
PROVIDED, HOWEVER, that in the event there is a change in the law which
results in a higher permissible rate of interest than the highest permissible
rate under applicable law in effect as of the date hereof, then this Note
shall be governed by such new law as of its effective date. If, from any
circumstance whatsoever, fulfillment of any provision hereof or the Agreement
at the time performance of such provision shall be due, shall involve
transcending the limit of validity prescribed by law, then the obligation to
be fulfilled shall automatically be reduced to the limit of such validity,
and if from any circumstances the Payee should ever receive as interest an
amount which would exceed the highest lawful rate, such amount which would be
excessive interest shall be applied to the reduction of the principal balance
evidenced hereby and not to the payment of interest, and if the principal
amount of this Note has been paid in full, shall be refunded to the Company.
This provision shall control every other provision of all agreements between
the Company and the Payee.
TAG-IT PACIFIC, LLC, a Delaware
limited liability company
By: __________________________
Name: __________________________
Title:__________________________
3
