Exhibit 10.2

 

THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE “SECURITIES ACT”), OR THE SECURITIES LAWS OF ANY STATE OR OTHER
JURISDICTION. NEITHER THE NOTE NOR ANY INTEREST OR PARTICIPATION THEREIN MAY BE
OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED: (I) IN THE ABSENCE OF AN
EFFECTIVE REGISTRATION STATEMENT FOR THE NOTE OR ANY SUCH INTEREST OR
PARTICIPATION UNDER THE SECURITIES ACT OR APPLICABLE STATE SECURITIES LAWS; OR
(II) IN THE ABSENCE OF AN OPINION OF COUNSEL, IN A FORM ACCEPTABLE TO THE
ISSUER, THAT REGISTRATION IS NOT REQUIRED UNDER THE 1933 ACT OR; (III) UNLESS
SOLD, TRANSFERRED OR ASSIGNED PURSUANT TO RULE 144 UNDER THE 1933 ACT.

 

PROMISSORY NOTE

 

June 2, 2017                              
                              $450,000.00

 

FOR VALUE RECEIVED, Microphase Corporation, a corporation incorporated under the
laws of the State of Delaware and located at 100 Trap Falls Road Extension,
Suite 400, Shelton, CT 06484 (the “Company”), hereby promises to pay to the
order of Lucosky Brookman LLP, a limited liability partnership organized and
existing under the laws of the State of New Jersey and located at 101 Wood
Avenue South, 5th Floor, Woodbridge, New Jersey 08830, or its successors or
assigns (the “Holder”), the principal amount of Four Hundred Fifty Thousand and
00/100 United States Dollars (US$450,000.00) on or before November 25, 2017 (the
“Maturity Date”), and to pay interest on the unpaid principal balance hereof at
the rate of eight percent (8%) per annum commencing on the date hereof (the
“Issuance Date”), in accordance with the terms hereof.

 

This Promissory Note (as may be amended or supplemented from time to time, the
“Note”) is being issued by the Company to memorialize legal fees owed to the
Holder as of the date hereof for legal services rendered by the Holder to the
Company.

 

1.             Payments of Principal and Interest.

 

(a)     Payment of Principal. The principal amount of this Note shall be paid to
the Holder on the Maturity Date.

 

(b)     Payment of Interest. Interest on the unpaid principal balance of this
Note shall accrue at a rate of eight percent (8%) per annum commencing on the
Issuance Date. Interest shall be computed on the basis of a 360-day year and
paid for the actual number of days elapsed. Interest shall be paid in full on
the Maturity Date.

 

(c)     Payment of Default Interest. Any amount of principal or interest on this
Note which is not paid when due shall bear interest until such past due amount
is paid at the rate that is the highest permissible non-usurious interest rate
(the “Default Rate”).

 

(d)     General Payment Provisions. All payments of principal and interest on
this Note shall be made in lawful money of the United States of America by
certified bank check or wire transfer to such account as the Holder may
designate by written notice to the Company in accordance with the provisions of
this Note. Whenever any amount expressed to be due by the terms of this Note is
due on any day which is not a Business Day, the same shall instead be due on the
next succeeding Business Day. For purposes of this Note, “Business Day” shall
mean any day other than a Saturday, Sunday or a day on which commercial banks in
the State of New York are authorized or required by law or executive order to
remain closed.

 

(e)     Optional Prepayment. At any time, upon receiving the written consent of
the Holder, the Company may pre-pay this Note without penalty and, upon such
prepayment in full, the Holder shall have no further rights under this Note.

 

2.             Defaults and Remedies.

 

(a)     Events of Default. An “Event of Default” means: (i) a default for three
(3) months (the “Cure Period”) in payment of principal or interest on this Note;
(ii) the failure by the shareholders of Digital Power Corporation (“DPC”) to
approve the conversion of DPC’s Series E Preferred Stock into DPC’s Common Stock
on or before August 1, 2017; (iii) failure by the Company to comply with any
material provision of this Note, as set forth in such notice, and such breach
remain uncured after the lapse of the Cure Period; (iii) the Company, pursuant
to or within the meaning of any Bankruptcy Law (as defined herein): (A)
commences a voluntary case; (B) consents to the entry of an order for relief
against it in an involuntary case; (C) consents to the appointment of a
Custodian (as defined herein) of it or for all or substantially all of its
property; or (D) makes a general assignment for the benefit of its creditors, or
(iv) a court of competent jurisdiction enters an order or decree under any
Bankruptcy Law that: (A) is for relief against the Company in an involuntary
case; (B) appoints a Custodian of the Company for all or substantially all of
its property; or (C) orders the liquidation of the Company, and the order or
decree remains unstayed and in effect for ninety (90) days. “Bankruptcy Law”
means Title 11, U.S. Code, or any similar Federal or state law for the relief of
debtors. The term “Custodian” means any receiver, trustee, assignee, liquidator
or similar official under any Bankruptcy Law.

 

 

 
 

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(b)     Remedies. If an Event of Default occurs and is continuing, the Holder,
may declare all of this Note, including any interest and other amounts due, to
be due and payable immediately. The Holder, shall have all rights available to
it at law or in equity. Upon the occurrence of an Event of Default, the interest
on this Note shall immediately accrue at the Default Rate. The Holder, may
assess reasonable attorneys’ fees, paralegals’ fees and costs and expenses
incurred or anticipated by the Holder in collecting or enforcing payment hereof
(whether such fees, costs or expenses are incurred in negotiations, all trial
and appellate levels, administrative proceedings, bankruptcy proceedings or
otherwise), and together with all other sums due by the Company hereunder, all
without any relief whatsoever from any valuation or appraisement laws, and
payment thereof may be enforced and recovered in whole or in part at any time by
one or more of the remedies provided to the Holder at law, in equity, or under
this Note. In connection with the Holder’s rights hereunder upon an Event of
Default, the Holder need not provide, and the Borrower hereby waives, any
presentment, demand, protest or other notice of any kind, and the Lender, may
immediately enforce any and all of its rights and remedies hereunder and all
other remedies available to it in equity or under applicable law.

 

3.             Voting Rights. The Holder shall have no voting rights, except as
required by applicable law, including, but not limited to, the General
Corporation Law of the State of Delaware, and as expressly provided in this
Note.

 

4.             Short Sales. Holder represents and agrees, as applicable, (i)
Holder has not prior to the date hereof, entered into or effected any Short
Sales and (ii) so long as the Note remains outstanding, Holder will not enter
into or effect any Short Sales. For purposes hereof, “Short Sales” shall mean
entering into any short sale or other hedging transaction which establishes a
net short position with respect to the Company.

 

5.             Lost or Stolen Note. Upon notice to the Company of the loss,
theft, destruction or mutilation of this Note, and, in the case of loss, theft
or destruction, of an indemnification undertaking by the Holder to the Company
in a form reasonably acceptable to the Company and, in the case of mutilation,
upon surrender and cancellation of the Note, the Company shall execute and
deliver a new Note of like tenor and date and in substantially the same form as
this Note; provided, however, the Company shall not be obligated to re-issue a
Note if the Holder contemporaneously requests the Company to convert such
remaining principal amount and interest into Common Stock.

 

6.             Cancellation. After all principal and accrued interest at any
time owed on this Note has been paid in full, this Note shall automatically be
deemed canceled, shall be surrendered to the Company for cancellation and shall
not be re-issued.

 

7.             Waiver of Notice. To the extent permitted by law, the Company
hereby waives demand, notice, protest and all other demands and notices in
connection with the delivery, acceptance, performance, default or enforcement of
this Note.

 

 

 
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8.             Governing Law. This Note shall be construed and enforced in
accordance with, and all questions concerning the construction, validity,
interpretation and performance of this Note shall be governed by, the laws of
the State of New Jersey, without giving effect to provisions thereof regarding
conflict of laws. Each party hereto hereby irrevocably submits to the
non-exclusive jurisdiction of the state and federal courts sitting in Middlesex
County in the State of New Jersey for the adjudication of any dispute hereunder
or in connection herewith or with any transaction contemplated hereby or
discussed herein, and hereby irrevocably waives, and agrees not to assert in any
suit, action or proceeding, any claim that it is not personally subject to the
jurisdiction of any such court, that such suit, action or proceeding is brought
in an inconvenient forum or that the venue of such suit, action or proceeding is
improper. Each party hereto hereby irrevocably waives personal service of
process and consents to process being served in any such suit, action or
proceeding by sending by certified mail or overnight courier a copy thereof to
such party at the address indicated in the preamble hereto and agrees that such
service shall constitute good and sufficient service of process and notice
thereof. Nothing contained herein shall be deemed to limit in any way any right
to serve process in any manner permitted by law. THE COMPANY AND THE HOLDER
HEREBY IRREVOCABLY WAIVE ANY RIGHT IT MAY HAVE, AND AGREES NOT TO REQUEST, A
JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION
HEREWITH OR ARISING OUT OF THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED
HEREBY.

 

9.             Remedies, Characterizations, Other Obligations, Breaches and
Injunctive Relief. The remedies provided in this Note shall be cumulative and in
addition to all other remedies available under this Note, at law or in equity

 

10.           Advice of Counsel. In connection with the preparation of this
Note, each of the Company, its stockholders, officers, agents, and
representatives acknowledges and agrees that the attorney that prepared this
Note acted as legal counsel to the Holder only. Each of the Company, its
stockholders, officers, agents, and representatives hereby acknowledges that (i)
such party has been, and hereby is, advised to seek legal counsel and to review
this Note with legal counsel of such party’s choice, and (ii) such party has
sought such legal counsel, which such legal counsel has reviewed the Note, or
hereby waives the right to do so. LUCOSKY BROOKMAN LLP DID NOT PROVIDE LEGAL
ADVICE TO THE COMPANY IN CONNECTION WITH THIS NOTE.

 

11.           Usury Savings Clause. Notwithstanding any provision in this Note,
the total liability for payments of interest and payments in the nature of
interest, including, without limitation, all charges, fees, exactions, or other
sums which may at any time be deemed to be interest, shall not exceed the limit
imposed by the usury laws of the jurisdiction governing this Note or any other
applicable law. In the event the total liability of payments of interest and
payments in the nature of interest, including, without limitation, all charges,
fees, exactions or other sums which may at any time be deemed to be interest,
shall, for any reason whatsoever, result in an effective rate of interest, which
for any month or other interest payment period exceeds the limit imposed by the
usury laws of the jurisdiction governing this Note, all sums in excess of those
lawfully collectible as interest for the period in question shall, without
further agreement or notice by, between, or to any party hereto, be applied to
the reduction of the outstanding principal balance of this Note immediately upon
receipt of such sums by the Holder hereof, with the same force and effect as
though the Company had specifically designated such excess sums to be so applied
to the reduction of such outstanding principal balance and the Holder hereof had
agreed to accept such sums as a penalty-free payment of principal; provided,
however, that the Holder of this Note may, at any time and from time to time,
elect, by notice in writing to the Company, to waive, reduce, or limit the
collection of any sums in excess of those lawfully collectible as interest
rather than accept such sums as a prepayment of the outstanding principal
balance. It is the intention of the parties that the Company does not intend or
expect to pay nor does the Holder intend or expect to charge or collect any
interest under this Note greater than the highest non-usurious rate of interest
which may be charged under applicable law.

 

12.           Specific Shall Not Limit General; Construction. No specific
provision contained in this Note shall limit or modify any more general
provision contained herein. This Note shall be deemed to be jointly drafted by
the Company and the Holder and shall not be construed against any person as the
drafter hereof.

 

13.           Failure or Indulgence Not Waiver. No failure or delay on the part
of this Note in the exercise of any power, right or privilege hereunder shall
operate as a waiver thereof, nor shall any single or partial exercise of any
such power, right or privilege preclude other or further exercise thereof or of
any other right, power or privilege.

 

14.           Notice. Notice shall be given to each party at the address
indicated in the preamble hereto or at such other address as provided to the
other party in writing.

 

[signature page follows]

 

 

 
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IN WITNESS WHEREOF, the Company has caused this Note to be executed on and as of
the Issuance Date.

 

 

 

MICROPHASE CORPORATION

 

 

 

By: /s/ Necdet Ergul

Name: Necdet Ergul

Title: Chief Executive Officer

 

 

 

Date: June 2, 2017

 

Principal Amount: US$450,000

 

 

 

 

[signature page to Promissory Note]