EXHIBIT 4.3
SECURED PROMISSORY NOTE
Principal Amount: $200,000 November 24, 2004
The following Secured Promissory Note represents and evidences the "Note
Two Consideration" referred to in the Agreement and Plan of Merger between
and among Best Circuit Boards, Inc., a Texas corporation, Integrated
Performance Systems, Inc., and its wholly-owned subsidiary, the LSC Merger
Corp., a Texas corporation, originally executed on October 22, 2004 (the
"Purchase Agreement"), and subsequently modified by an Addendum executed
on an even date herewith. The Purchase Agreement and any amendments
thereto are hereby incorporated herein as if fully set out.
THE SECURITIES ISSUABLE PURSUANT TO THE CONVERSION RIGHTS HEREIN HAVE BEEN
ACQUIRED FOR INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933 OR UNDER ANY STATE SECURITIES OR BLUE SKY LAWS. THEY MAY NOT
BE SOLD, OFFERED FOR SALE, PLEDGED, HYPOTHECATED OR OTHERWISE TRANSFERRED
EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE
SECURITIES ACT OF 1933, OR AN OPINION OF COUNSEL SATISFACTORY TO THE
COMPANY THAT REGISTRATION IS NOT REQUIRED UNDER SUCH ACT OR UNLESS SOLD
PURSUANT TO RULE 144 UNDER SUCH ACT.
FOR VALUE RECEIVED, the undersigned, INTEGRATED PERFORMANCE SYSTEMS,
INC. ("Integrated"), a New York corporation, and LSC Merger Corp.
("LSCMC"), a Texas corporation, and any successor entities to Integrated
or to LSCMC, or surviving entities pursuant to merger with Integrated or
LSCMC, (collectively "Maker"), enters this Secured Promissory Note (the
"Note") and does hereby promise to pay to the order of Brad Jacoby
("Payee"), or a designee of Payee the principal sum TWO HUNDRED THOUSAND
AND NO/100THS DOLLARS ($200,000.00), together with interest on the unpaid
principal balance from time to time outstanding hereunder at the rates
hereinafter set forth. All sums payable hereunder are payable to Payee's
attention as Payee may designate in writing. Note that, if this amount
shall be adjusted pursuant to the terms of the Purchase Agreement and
Schedule 7.3 therein, then this promissory note shall automatically be
amended to reflect such adjustment, and Maker hereby waives any right
which would result in the note not being automatically so amended.
The payment of accrued interest and principal required to be made
hereunder shall be due on the next following business day, post-closing of
the contemplated merger between Best Circuit Boards, Inc. and Integrated
as described herein and per the Purchase Agreement agreed to by the
parties dated October 22, 2004, including all addendums, schedules, and
attachments thereto and where time is extended for the payment of
principal by virtue of the due date thereof falling on a Saturday, Sunday
or public holiday, such extended time shall be included in the computation
of interest.
1. Interest. Interest shall accrue on the unpaid principal balance
outstanding hereunder at an annual rate equal to eight percent (8%) per
annum computed daily on the basis of a 365/366 day year for the actual
number of days elapsed during which the principal is outstanding until the
entire indebtedness evidenced by this Note (including, without limitation,
principal and accrued unpaid interest) is paid in full.
2. Terms of Payment (Principal and Interest). Interest is payable
monthly. The first payment of interest is due and payable on December 31,
2004, and interest payments shall continue to be due monthly until
February 28, 2005, when this Note matures and the principal and all
accrued and unpaid interest are due and payable in full.
3. Right of Conversion. Payee shall have the right to convert this Note,
either in whole or part, into common stock of Integrated. The Note shall
be convertible at a stock price of $0.15 per common share (the "Conversion
Price").
In addition, Maker shall pay to Payee on the Conversion Date, in cash, any
accrued and unpaid interest on the Note being converted not included at
the option of Payee.
Upon the conversion of the Note, Maker shall, at its own cost and expense,
take all necessary action (including the issuance of an opinion of
counsel) to assure that the Maker's transfer agent shall issue stock
certificates in the name of Payee (or its nominee) or such other persons
as designated by Payee and in such denominations to be specified at
conversion representing the number of shares of common stock issuable upon
such conversion.
(i) Exercise of Conversion Privilege. Payee my exercise his
conversion privilege on this Note on any business day by telecopying or
presenting an executed and completed Conversion Notice to the Maker.
Each date on which a Conversion Notice is telecopied or presented to
Maker in accordance with this provision shall constitute a Conversion
Date. Maker shall immediately convert this Note and issue the common
stock in the manner provided herein, and all voting and other rights
associated with the beneficial ownership of the common stock shall vest
with Payee, effective as of the Conversion Date at the time specified
in the Conversion Notice. The Conversion Notice also shall state the
name or names (with addresses) of the person who are to become the
holders of the common stock in connection with such conversion. As
promptly as practicable after the receipt of the Conversion Notice as
aforesaid, but in any event not more than three (3) business days after
the Maker's receipt of such Conversion Notice, Maker shall (a) issue
the common stock in accordance with the provisions of Section 3 herein;
and (b) Cause to be mailed for delivery by overnight courier, or if a
Registration Statement covering the common stock has been declared
effective by the SEC cause to be electronically transferred, to Payee a
certificate or certificate(s) representing the number of common shares
to which the Payee is entitled by virtue of such conversion. Such
conversion shall be deemed to have been effected at the time at which
the Conversion Notice indicates, and at such time the rights of the
Payee of this Note, as such (except if and to the extent that any
principal amount thereof remains unconverted), shall cease and the
person and persons in whose name or names the common stock shall be
issuable shall be deemed to have become the holder or holders of record
of the common shares represented thereby, and all voting and other
rights associated with the beneficial ownership of such common shares
shall at such time vest with such person or persons. The Conversion
Notice shall constitute a contract between the Payee and Maker, whereby
the Payee shall be deemed to subscribe for the number of common shares
which it will be entitled to receive upon such conversion and, in
payment and satisfaction of such subscription (and for any cash
adjustment to which it is entitled), to surrender this Note and to
release Maker from all liability thereon (except if and to the extent
that any principal amount thereof remains unconverted).
(ii) Challenge or Dispute. If, at any time after the date of this
Note, (a) Maker challenges, disputes, or denies the right of Payee
hereof to effect the conversion of this Note into common shares or
otherwise dishonors or rejects any Conversion Notice delivered in
accordance with this Section 3; or (b) any third party who is not and
has never been an affiliate of Payee commences any lawsuit or legal
proceeding or otherwise asserts any claim before any court or public or
governmental authority which seeks to challenge, deny, enjoin, limit,
modify, delay, or dispute the right of the Payee hereof to effect the
conversion of this Note into common shares, then the Payee shall have
the right, by written notice to the Maker, to require the Maker to
promptly redeem this Note for cash at one hundred twenty-five percent
(125%) of the principal amount thereof, together with all accrued and
unpaid interest thereon to the date of redemption. Under any of the
circumstances set forth above, the Maker shall be responsible for the
payment of all costs and expenses of Payee, including reasonable legal
fees and expenses, as and when incurred in defending itself in any such
action or pursuing its rights hereunder (in addition to any other
rights of Payee).
(iii) In Event of Bankruptcy Proceeding. The Payee shall be entitled
to exercise its conversion privilege notwithstanding the commencement
of any case under the Bankruptcy Code. In the event the Maker is a
debtor under the Bankruptcy Code, Maker hereby waives to the fullest
extent permitted any rights to relief it may have under 11 U.S.C. S362
in respect of Payee's conversion privilege. Maker hereby waives to the
fullest extent permitted any rights to relief it may have under 11
U.S.C. S362 in respect of the conversion of this Note. The Maker
agrees, without cost or expense to Payee, to take or consent to any and
all action necessary to effectuate relief under 11 U.S.C. S362.
4. Pledge and Security. This Note is secured by all instruments
heretofore, now or hereafter executed by Maker or any guarantors in favor
of Payee and by their terms securing the payment of any then existing
indebtedness and future advances, including, without limitation, advances
of the type represented by this Note (hereinafter "Security Documents")
including, without limitation, the following:
a. Security Agreements _ This Note shall be secured by the Pledge of
the following tangible and intangible assets (which shall collectively
be referred to as the "Collateral"):
(1) IPFS stock owned by D. Ronald Allen and held in escrow pursuant
to the Stock Escrow and Security Agreement originally dated September
16, 2004, and subsequently modified pursuant to the terms of the
Purchase Agreement dated October 22, 2004 (the "Purchase Agreement");
(2) All the stock of Best Circuit Boards, Inc., and any successor
company held by IPFS or any IPFS successor (see Security Agreement #1
attached and executed of even date herewith); and
(3) The tangible assets held by Best Circuit Boards, Inc. (see
Security Agreement #2 attached and executed of even date herewith).
These Security Agreements are hereby acknowledged by and among Maker,
for itself, and as agent for all shareholders named in the Purchase
Agreement, from Maker, as Pledgor, to Payee as Secured Party, in
which Maker grants to Payee a security interest in the collateral
more fully described therein.
Security Agreement #1 and Security Agreement #2 are hereinafter
referred to collectively as the "Security Agreements."
b. One or more UCC Financing Statements perfecting the security interest
granted by Maker, as Pledgor, to Payee, as Secured Party, in the
Collateral
5. Priority and Other Liens. Except as otherwise set forth in the
Security Agreements set forth in Section 3 above, the security interests
securing this Note and on the Collateral described in the Security
Agreements are subject only to the priority claims of parties whose
security interest were perfected prior to the effective date of this Note.
Additionally, Maker will not assign, transfer, sell, or grant, or permit
any lien or security interest in the Collateral to or in favor of any
other party, without Payee's prior written consent.
6. Events of Default. An "Event of Default" means one more of the
following events has occurred and Payee has given Maker written notice of
the event and the time period required to cure same, and the event remains
uncured after the expiration of the period indicated hereinbelow:
a. Maker fails to pay any amount required to be paid under this Note,
the Security Agreements, or any other promissory note issued by
Maker and such failure continues for ten (10) days from the date of
Payee's written notice to Maker of such failure to pay;
b. Any material breach of a representation or warranty made by Maker
in this Note or the Security Agreements that continues for ten (10)
days from the date of Payee's written notice to Maker of such
material breach;
c. Maker defaults under the terms of this Note, the Security
Agreements, or any other promissory note or security agreement to
which Maker is a party and such failure continues for ten (10) days
from the date Maker receives written notice thereof from any party
to one or more of those documents;
d. Maker commences any "Insolvency Proceeding" (hereinafter defined)
with respect to itself or takes any action to effectuate or au-
thorize an Insolvency Proceeding; and
e. Any involuntary Insolvency Proceeding is commenced or filed
against Maker or any writ, judgment, warrant of attachment, exe-
cution or similar process is issued or levied against all or a
substantial part of its properties, and any such involuntary
Insolvency Proceeding or petition shall not be dismissed, or such
writ, judgment, warrant of attachment, execution or similar process
shall not be released, vacated or fully bonded within sixty (60)
days after commencement, filing or levy.
The term "Insolvency Proceeding" means (a) any case, action or
proceeding relating to bankruptcy, reorganization, insolvency,
liquidation, receivership, dissolution, winding-up or relief of
debtors, or (b) any general assignment for the benefit of
creditors, composition, marshaling of assets for creditors, or
other similar arrangement in respect of its creditors generally or
any substantial portion of its creditors undertaken under United
States Federal, state of foreign law, including the Federal
Bankruptcy Reform Act of 1978 (11 U.S.C.A. S 101 et seq.);
f. Maker defaults under any note, security agreement, or other
document related to a security interest superior to Payee's
security interest described herein and that default gives the
superior interest holder the right to accelerate its debt and such
default continues for ten (10) days from the date of Maker's
receipt from any party of such failure;
g. Maker contractually grants any other party a security interest or
otherwise encumbers the Collateral without first obtaining the
express written consent of Payee:
h. Maker fails to pay any tax, resulting in the attachment of a
security interest in or against all or any part of the Collateral;
i. The entry of a judgment against Maker or the issuance of any
attachment, sequestration, or similar writ is levied upon any of
Maker's property which is not remedied within twenty (20) days;
j. Any required permit, license, certificate or approval with
respect to the Collateral ceases to be in full force and effect; or
k. Payee determines, in its sole and absolute discretion, that a
material adverse change has occurred in the financial condition of
Maker or that there is a danger to or impairment of the Collateral.
7. Remedies Upon Default. At any time after an Event of Default has
occurred and is continuing, Payee shall have the right to declare all
amounts due and owing hereunder, including, without limitation, principal
and accrued unpaid interest, immediately due and payable in full without
presentment, demand, protest or notice (except as stated above and in the
Security Agreements), all of which are hereby expressly waived by Maker to
the extent indicated. Payee shall also have the right upon the occurrence
and continuance of an Event of Default to exercise any one or more of its
remedies under this Agreement or any other applicable Security Agreement.
If Maker fails to make any payment when due under this Note, then, in
addition to any and all other relief to which Payee may be entitled, Maker
agrees to pay (or reimburse Payee for) any and all reasonable costs,
expenses and fees incurred by Payee to enforce this Note or otherwise
collect indebtedness evidenced by this Note, including, without
limitation, reasonable attorney's fees and court costs.
Upon an Event of Default, Payee at its election may (but shall not be
obligated to), without notice, do any one or more of the following: (a)
terminate its commitment to extend any additional monies under this Note;
(b) terminate any obligation to extend any other credit to or for the
account of Maker; (c) reduce any claim to judgment; (d) exercise any and
all rights and remedies afforded by this Note, the other Security
Documents, law, equity or otherwise, including, without limitation,
obtaining appointment of a receiver (to which Maker hereby consents)
and/or judicial or non-judicial foreclosure under the Security Agreement
or the Second Security Agreement; (e) in its own name or in the name of
Maker, enter into possession of the Collateral, perform all work necessary
to complete any, or all of Maker's outstanding contracts substantially in
accordance with said contract(s) (as modified as deemed necessary by
Payee), the Security Documents, and all applicable laws, and governmental
requirements pursuant to the applicable contracts or otherwise; or (f)
set-off and apply, to the extent thereof and to the maximum extent
permitted by law, any and all deposits, funds, or assets at any time held
and any and all other indebtedness at any time owing by Payee to or for
the credit or account of Maker against any indebtedness.
Maker hereby appoints Payee as Maker's attorney-in-fact, which
power of attorney is irrevocable and coupled with an interest, with full
power of substitution, to do any of the following in Maker's name upon the
occurrence of an Event of Default: (i) use such sums as are necessary,
including, without limitation, any proceeds of this Note and any
Collateral, make such changes or corrections in the Maker's existing
contracts as may be required, or as Payee may otherwise consider
desirable, for the purpose of completing any outstanding contracts or
obligations substantially in accordance with the terms thereof (as
modified as deemed necessary by Payee), the Security Documents, and all
applicable laws, and governmental requirements; (ii) execute all
applications and certificates in the name of Payee which may be required
for completion of any contract; (iii) endorse the name of Maker on any
checks or drafts representing proceeds of any insurance policies, or other
payments or instruments payable to Maker with respect to the Collateral;
(iv) do every act with respect to the Collateral that Maker may do; (v)
prosecute or defend any action or proceeding incident to the Collateral,
(vi) pay, settle, or compromise all bills and claims so as to clear title
to the Collateral; and (vii) take over and use all or any part of the
labor, materials, supplies and equipment contracted for, owned by, or
under the control of Maker, whether or not previously incorporated into
the Collateral. Any amounts expended by Payee to complete the foregoing
on Maker's behalf or in connection with the exercise of its remedies
herein shall be deemed to have been advanced to Maker hereunder as a
demand obligation owing by Maker to Payee and shall constitute a portion
of the indebtedness under this Note, regardless of whether such amounts
exceed any limits for indebtedness otherwise set forth herein. Payee
shall have no liability to Maker for the sufficiency or adequacy of any
such actions taken by Payee. THE EXCULPATION PROVISION OF THE IMMEDIATELY
PRECEDING SENTENCE IS INTENDED TO APPLY TO ANY ACT OR FAILURE TO ACT BY
PAYEE WHICH CONSTITUTES PAYEE'S OWN ORDINARY NEGLIGENCE.
No delay or omission of Payee to exercise any right, power or
remedy accruing upon the happening of an Event of Default shall impair any
such right, power or remedy or shall be construed to be a waiver of any
such Event of Default or any acquiescence therein. No delay or omission
on the part of Payee to exercise any option for acceleration of the
maturity of the indebtedness, or for foreclosure or sale of the Collateral
following any Event of Default as aforesaid, or any other option granted
to Payee hereunder in any one or more instances, or the acceptances by
Payee of any partial payment on account of the indebtedness, shall
constitute a waiver of any such Event of Default, and each such option
shall remain continuously in full force and effect. No remedy herein
conferred upon or reserved to Payee is intended to be exclusive of any
other remedies provided for in this Note or any of the other Security
Documents, and each and every such remedy shall be cumulative, and shall
be in addition to every other remedy given hereunder, or under this Note
or any of the other Security Documents, or now or hereafter existing at
law or in equity or by statute. Every right, power and remedy given to
Payee by this Note or any of the other Security Documents shall be
concurrent, and may be pursued separately, successively or together
against Maker, guarantor, or any personal property granted as security
under the Security Documents, and every right, power and remedy given by
this Note or any of the other Security Documents may be exercised from
time to time as often as may be deemed expedient by Payee.
8. Annual Interest Rate Upon Default. All past due installments of
principal and interest due and owing on this Note, shall bear interest
from maturity thereof until paid at the lesser of (i) Eighteen percent
(18.00%) per annum or (ii) the Maximum Rate as defined herein. Upon
acceleration or maturity of the entire outstanding principal balance of
this Note, the said principal amount shall bear interest from the date of
acceleration or maturity until paid at the rate of Eighteen percent (18%)
per annum calculated and applied on the basis of actual days elapsed and a
365/366 day year, subject to Paragraph 1 hereof, PROVIDED, HOWEVER, that
the interest payable under this Paragraph shall in no way exceed the
Maximum Rate as defined herein.
9. Conversion upon Default. In the event that it is determined that the
Maker is in default of its indebtedness to the Payee, then payee, at its
sole option, shall be entitled to convert all or a portion of the
indebtedness represented by the Note into equity of Maker or reduce by
offset all or any portion of the outstanding balance of this Note in cash
in an amount necessary to satisfy all or a portion of such indebtedness
owed to Payee by Maker.
To the extent that funds are either not readily available to satisfy the
Payee's entire claim for payment, upon notice of demand, as described in
Section 13, the Maker agrees to provide a payment solution acceptable to
Payee, utilizing a cash equivalent which would include but not be limited
to: unrestricted common stock of the Maker.
Should Payee elect to convert all or a portion of the indebtedness
represented by the Note into equity of Maker, Maker and Payee agree that
the equity shall carry a value equal to $0.15 per share. At the effective
time of conversion, without any action on the part of the Maker Payee
shall receive shares of Maker in a number equal to the total indebtedness
due the Payee at the time of closing.
10. Usury Savings and Spreading. It is expressly stipulated and agreed to
be the intent of Maker and Payee at all times to comply with applicable
law governing the Maximum Rate or amount of interest payable on or in
connection with this Note and the loan evidenced hereby (or applicable
United States federal law to the extent that it permits Payee to contract
for, charge, take, reserve or receive a greater amount of interest than
under applicable state law). If the applicable state or federal law is
ever judicially interpreted so as to render usurious any amount called for
under this Note or under the Security Documents, or contracted for,
charged, taken, reserved or received with respect to the Note, or if
acceleration of the maturity of this Note or if any prepayment by Maker
results in Maker having paid any interest in excess of that permitted by
law, then it is Maker's and Payee's express intent that (i) all excess
amounts theretofore collected by Payee be credited on the principal
balance of this Note (or, if this Note has been or would thereby be paid
in full, refunded to Maker); and (ii) the provisions of this Note and the
Security Documents immediately be deemed reformed and the amounts
thereafter collectible hereunder and thereunder 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 thereunder. The right to accelerate
maturity of this Note does not include the right to accelerate any
interest which has not otherwise accrued on the date of such acceleration,
and Payee does not intend to collect any unearned interest in the event of
acceleration. All sums paid or agreed to be paid to Payee for the use,
forbearance or detention of the indebtedness evidenced hereby shall, to
the extent permitted by applicable law, be amortized, prorated, allocated
and spread throughout the full term of such indebtedness until payment in
full so that the rate or amount of interest on account of such
indebtedness does not exceed the applicable usury ceiling.
Notwithstanding any provision contained in this Note or in any of the
Security Documents that permits the compounding of interest, including
without limitation any provision by which any of the accrued interest is
added to the principal amount of this Note, the total amount of interest
that Maker is obligated to pay and Payee is entitled to receive with
respect to this Note shall not exceed the amount calculated on a simple
(i.e., non-compounded) interest basis at the Maximum Rate (as defined
hereinafter) on principal amounts actually advanced to or for the account
of Maker, including any initial funds advanced contemporaneously herewith
and any advances made pursuant to any of the Security Documents (such as
for the payment of taxes, insurance premiums and the like). As used
herein, the term "Maximum Rate" shall mean the maximum non-usurious rate
of interest which may be lawfully contracted for, charged, taken, reserved
or received by Payee from Maker in connection with the Note evidenced
hereby under applicable state law (or applicable United States federal law
to the extent that it permits Payee to contract for, charge, take, reserve
or receive a greater amount of interest than under state law).
11. Prepayment and Recoupment. Maker hereby reserves the right at any
time to make payments of principal or interest before they are due without
penalty or premium. All prepayments shall be applied first to accrued,
unpaid interest, and the balance of any prepayment shall be applied to
reduce the amount of principal payments due under this Note in the order
of their maturity.
12. Representations and Warranties of Maker. Maker represents and
warrants that (i) Maker has obtained any consents necessary to execute,
deliver and perform its obligations under this Note; (ii) this Note
constitutes the valid and binding obligation of Maker and is enforceable
against Maker in accordance with its terms; (iii) Maker has taken all
corporate action necessary to authorize the execution and delivery of this
Note and each legal agent who may be executing this Note on behalf of
Maker has authority to execute and deliver this Note; (iv) neither the
execution or delivery by Maker of this Note nor the performance by Maker
of its obligations hereunder violates, conflicts with, results in a breach
of, or constitutes a default under, or will result in the creation or
imposition of any lien against or upon the assets or property of Maker,
except as expressly stated herein, pursuant to, or results in a change in
any material term of (a) the Articles of Incorporation or Bylaws, as
amended, of any Maker, (b) any and all applicable laws, rules, and
regulations; (c) any judgment, decree or order of any court or any other
agency of the government or (d) any material agreement to which any Maker
is a party or by which Maker's property or assets are bound; (v) all of
Maker's filings with the Securities and Exchange Commission made pursuant
to Sections 13(a) or 15(d) of the Securities Exchange Act of 1934, as
amended, are true and correct as of the date hereof; and (vi) Maker has
been represented by separate legal counsel in the negotiation and
execution of this Note.
13. Notices. All notices, demand, communications and requests of any kind
(each a "Notice") which either party may be required or may desire to
serve upon the other party hereto in connection with this Note shall be
delivered only by courier or other means of personal service which
provides written verification of receipt or by registered or certified
mail, return receipt requested. Any such notice (i) if sent by registered
or certified mail, shall be deposited in the United States mail, or (ii)
if delivered by courier, shall be deposited with the courier, in each case
with postage or delivery charges thereon fully prepaid. All Notices shall
be addressed to the parties to be served therewith as follows:
If to Maker: If to Payee:
Law Office of Gregory W. Mitchell, P.L.L.C. Brad Jacoby
Integrated Performance Systems, Inc.
4201 Shadybrook Ln.
Rowlett, Texas 75088
Service of any Notice so made shall be deemed complete on the day of
receipt thereof as shown by the addressee's registry, certification
receipt or other evidence of receipt or first rejection. Either party
hereto may from time to time by notice in writing served upon the other as
aforesaid designate a different mailing address or a different or
additional person to which all such notices or demands hereafter are to be
addressed.
14. Waivers. Except as otherwise provided in this Note, Maker and all
endorsers, guarantors, sureties and accommodation parties of this Note,
both before and after maturity, hereby expressly (i) waive all protest,
notice of protest, demand for payment, presentment for payment, notice of
intention to accelerate maturity, notice of acceleration of maturity,
notice of dishonor, bringing of suit, and diligence in taking any action
to collect any amounts called for hereunder and in the handling of
properties, rights or collateral at any time existing in connection
herewith; (ii) consent to and waive notice of any one or more renewals,
extensions or modifications of this Note, whether made to or in favor of
Maker or any other person or persons, regardless whether any such renewal,
extension or modification modifies the terms, interest rate or time for
payment of this Note and regardless of the length of term of the renewal,
extension or modification; (iii) consent to and waive notice of any
substitution, exchange or release of any security now or hereafter given
for this Note; (iv) consent to and waive notice of the release of any
party primarily or secondarily liable hereon; (v) consent to and waive
notice of any other indulgences, none of which shall otherwise affect the
liability of any of said parties for the indebtedness evidenced by this
Note; and (vi) agree that it will not be necessary for Payee, in order to
enforce payment of this Note, first to institute suit against or to
exhaust Payee's remedies against Maker or any other party liable
hereunder, or to proceed against any other security for this Note.
15. Remedies Cumulative. All rights and remedies of Payee hereunder are
cumulative of each other and of every other right or remedy which Payee
may otherwise have at law or in equity or under any other contract or
document for the enforcement of or the collection of this Note, and the
exercise of one or more rights or remedies shall not prejudice or impair
the concurrent or subsequent exercise of other rights or remedies. The
failure of Payee at any time to assert or exercise any rights granted by
this Note shall not render the Payee liable to any person concerned herein
or deprive Payee of any rights granted herein. All rights of Payee
hereunder may be assigned or transferred in whole or in part by Payee, as
it deems advisable, and the rights of Payee hereunder shall inure to the
benefit of its successors and assigns. All obligations of Maker hereunder
shall bind the heirs, legal representatives, successors and assigns of
Maker.
16. Assignment. No party to this Note may assign or delegate any of its
rights or obligations hereunder without first obtaining the written
consent of the other party, which consent shall be in the sole discretion
of such other party.
17. Definitions; Applicable Law. The terms "Maker" and "Payee" and other
nouns and pronouns include the singular and/or plural, as appropriate.
The terms "Maker" and "Payee" also include their respective heirs,
personal representatives, successors and assigns. This Note shall be
governed and construed in accordance with the internal laws, and not the
laws of conflicts, of the State of Texas. Performance by the parties
hereunder shall be deemed occur exclusively in Wylie, Texas.
18. Commercial Purpose. Maker warrants and represents that the loan
evidenced by this Note is being made solely to acquire or carry on a
business or commercial enterprise, and/or Maker is a business or
commercial organization. Maker further warrants and represents that all
of the proceeds of this Note shall be used for business, commercial,
investment or other similar purposes and shall not be used for personal,
family, household or agricultural purposes.
19. Attorney's Fees and Expenses. In the event that Payee or any other
holder of this Note brings suit hereon, or employs an attorney or incurs
expenses to compel payment of this Note or any portion of the indebtedness
evidenced hereby, or to cure any Event of Default under this Note or
any of the Security Documents, whether through suit, insolvency,
reorganization, bankruptcy, or any other legal or informal proceeding,
Maker and all endorsers, guarantors and sureties agree additionally to pay
all reasonable attorney's fees, court costs and other reasonable expenses
thereby incurred by Payee.
19. Entire Agreement. THIS NOTE, THE SECURITY AGREEMENTS, AND ALL
INSTRUMENTS OR DOCUMENTS DELIVERED PURSUANT HERETO OR THERETO, TOGETHER
WITH ALL EXHIBITS AND SCHEDULES HERETO AND THERETO, REPRESENT THE FINAL
AGREEMENT BETWEEN THE PARTIES HERETO AND THERETO RELATING TO THE SUBJECT
MATTER HEREOF AND THEREOF AND MAY NOT BE CONTRADICTED BY EVIDENCE OF
PRIOR, CONTEMPORANEOUS OR ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO
UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES. DEBTOR REPRESENTS THAT IS
HAS BEEN REPRESENTED BY SEPARATE LEGAL COUNSEL RELATING TO THE NEGOTIATION
AND EXECUTION OF THIS NOTE AND THE PLEDGE AND SECURITY AGREEMENT.
EXECUTED to be effective as of the day and year first written above.
MAKER:
INTEGRATED PERFORMANCE SYSTEMS, INC.,
a New York corporation
By: /s/ D. Ronald Allen
----------------------
Name: D. Ronald Allen
Its: President/Chairman
PAYEE:
BRAD JACOBY,
Individually
By: /s/ Brad Jacoby
----------------------
Name: Brad Jacoby
Its: President/Chairman