THIS NOTE
HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE “SECURITIES ACT”), OR ANY STATE SECURITIES
LAW AND MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF
UNLESS REGISTERED UNDER THE SECURITIES ACT AND UNDER APPLICABLE
STATE SECURITIES LAWS OR THE COMPANY SHALL HAVE RECEIVED AN OPINION
OF ITS COUNSEL THAT REGISTRATION OF SUCH SECURITIES UNDER THE
SECURITIES ACT AND UNDER THE PROVISIONS OF APPLICABLE STATE
SECURITIES LAWS IS NOT REQUIRED.
MISSION TECHNOLOGY GROUP,
INC.
SECURED PROMISSORY NOTE
$2,500,000
Issuance Date: April 16,
2007
FOR VALUE
RECEIVED , the undersigned, Mission Technology Group, Inc., a
California corporation (the “ Company ”), hereby
promises to pay to the order of Mobility California, Inc., a
Delaware corporation or any future permitted holder of this
promissory note (the “ Payee ”), at the
principal office of the Payee set forth herein, or at such other
place as the Payee may designate in writing to the Company, the
principal sum of $2,500,000, and such other amount as may be
outstanding hereunder, together with all accrued but unpaid
interest, in United States dollars, as provided in this Secured
Promissory Note (the “ Note ”).
1.
Principal and Interest Payments .
(a) The
principal of this Note shall be due and payable in 20 consecutive
quarterly installments (each, a “ Quarterly
Installment ”) of $125,000 each, commencing on
May 1, 2008, and continuing on each August 1,
November 1, February 1 and May 1 thereafter until this Note is
paid in full. Additionally, commencing on May 1, 2008, and
continuing until this Note has been paid in full, the Company shall
make a payment equal to five percent (5%) of the net profit of the
Company for the prior calendar quarter (with “net
profit” being determined in accordance with generally
accepted accounting principles, consistently applied) (each, a
“ Prepayment ”). Each Prepayment shall be
applied to the last Quarterly Installment due under this Note at
the time of such Prepayment.
(b) Interest
on the outstanding principal balance of this Note shall accrue at a
rate of six percent (6%) per annum, subject to increase as provided
below. Interest on the outstanding principal balance of the Note
shall be computed on the basis of the actual number of days elapsed
and a year of three hundred and sixty (360) days. Accrued but
unpaid interest on this Note shall be due and payable at the same
time that each Quarterly Installment is due and payable under this
Note. Furthermore, upon the occurrence of an Event of Default (as
defined below), then to the extent permitted by law, the Company
will pay interest to the Payee, payable on demand, on the
outstanding principal balance of the Note from the date of the
Event of Default until payment in full at the rate of twelve
percent (12%) per annum.
2.
Security Interests . The payment of the principal of, and
interest on, this Note, as well as other amounts that may become
due and payable under this Note, is secured by: (i) a security
interest in certain assets of the Company as provided in that
certain Security Agreement, of even date herewith, by and between
the Company and Payee (the “ Security Agreement
”); and (ii) a security interest in certain securities
of Payee as provided in that certain Pledge Agreement, of even date
herewith, by and between Randy Jones, the controlling shareholder
of the Company, and Payee (the “ Pledge Agreement
”).
3.
Non-Business Days . Whenever any payment to be made shall be
due on a Saturday, Sunday or a public holiday under the laws of the
State of Arizona and/or California, such payment may be due on the
next succeeding business day and such next succeeding day shall be
included in the calculation of the amount of accrued interest
payable on such date.
4. Events
of Default . The occurrence of any of the following events
shall be an “ Event of Default ” under this
Note:
(a) the
Company shall fail to make the payment of any amount of any
principal outstanding for a period of three (3) business days
after the date such payment shall become due and payable hereunder;
or
(b) the
Company shall fail to make any payment of interest for a period of
three (3) business days after the date such interest shall
become due and payable hereunder; or
(c) the
Company breaches any representation, warranty, covenant, agreement
or certification made by the Company herein, in the Security
Agreement, in the Pledge Agreement or in that certain Secured
Inventory Promissory Note, of even date herewith, in the original
principal amount of $1,430,000.00, and with the Company as
“maker” and Payee as “payee” (the “
2 nd Note ”); or
(d) the
holder of any indebtedness of the Company or any of its
subsidiaries shall accelerate any payment of any amount or amounts
of principal or interest on any indebtedness (the “
Indebtedness ”) (other than the indebtedness
hereunder) prior to its stated maturity or payment date, whether
such Indebtedness now exists or shall hereinafter be created, and
such accelerated payment entitles the holder thereof to immediate
payment of such Indebtedness which is due and owing and such
indebtedness has not been discharged in full or such acceleration
has not been stayed, rescinded or annulled within ten
(10) business days of such acceleration; or
(e) a
judgment or order for the payment of money shall be rendered
against the Company or any of its subsidiaries in excess of
$100,000 in the aggregate (net of any applicable insurance
coverage) for all such judgments or orders against all such persons
(treating any deductibles, self insurance or retention as not so
covered) that shall not be discharged, and all such judgments and
orders remain outstanding, and there shall be any period of sixty
(60) consecutive days following entry of the judgment or order
in excess of $100,000 or the judgment or order which causes the
aggregate amount described above to exceed $100,000 during which a
stay of enforcement of such judgment or order, by reason of a
pending appeal or otherwise, shall not be in effect; or
2
(f) the
Company shall (i) apply for or consent to the appointment of,
or the taking of possession by, a receiver, custodian, trustee or
liquidator of itself or of all or a substantial part of its
property or assets, (ii) make a general assignment for the
benefit of its creditors, (iii) commence a voluntary case
under the Bankruptcy Code or under the comparable laws of any
jurisdiction (foreign or domestic), (iv) file a petition
seeking to take advantage of any bankruptcy, insolvency,
moratorium, reorganization or other similar law affecting the
enforcement of creditors’ rights generally,
(v) acquiesce in writing to any petition filed against it in
an involuntary case under the Bankruptcy Code or under the
comparable laws of any jurisdiction (foreign or domestic), or
(vi) take any action under the laws of any jurisdiction
(foreign or domestic) analogous to any of the foregoing;
or
(g) a
proceeding or case shall be commenced in respect of the Company or
any of its subsidiaries without its application or consent, in any
court of competent jurisdiction, seeking (i) the liquidation,
reorganization, moratorium, dissolution, winding up, or composition
or readjustment of its debts, (ii) the appointment of a
trustee, receiver, custodian, liquidator or the like of it or of
all or any substantial part of its assets or (iii) similar
relief in respect of it under any law providing for the relief of
debtors, and such proceeding or case described in clause (i),
(ii) or (iii) shall continue undismissed, or unstayed and
in effect, for a period of
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