Exhibit 10.15
 
THIS SECURITY HAS NOT BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE
COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN
EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
“SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT
TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO
AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH
APPLICABLE STATE SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO
THE TRANSFEROR TO SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY
ACCEPTABLE TO THE MAKER.  THIS SECURITY AND THE SECURITIES ISSUABLE UPON
CONVERSION OF THIS SECURITY MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN
ACCOUNT OR OTHER LOAN SECURED BY SUCH SECURITIES.
 
8 1/4% SECURED PROMISSORY NOTE

 

$200,000  October 10, 2013 

 
FOR VALUE RECEIVED, Airtronic USA, Inc., an Illinois corporation (the “Company”
or “Maker”), with its primary offices located at 1860 Jarvis Avenue, Elk Grove
Village, IL 60007, promises to pay to the order of Global Digital Solutions,
Inc., (the “Lender”) or its registered assigns (with the “Lender”, the
“Holder”), upon the terms set forth below, the principal sum of Two Hundred
Thousand Dollars ($200,000) plus interest on the unpaid principal sum
outstanding at the rate of 8¼% per annum (this “Note”).  Defined terms not
otherwise defined herein shall have the meanings ascribed to such terms in that
certain debtor in possession note purchase agreement dated as of October 22,
2012 among the Maker and the Holder (the “Purchase Agreement”) and modified by
that certain First Bridge Loan Modification and Ratification Agreement between
Lender and Maker dated as of March 15, 2013 (“First Modification”) that certain
Second Bridge Loan Modification and Ratification Agreement between Lender and
Maker of dated August 5, 2013 (“Second Modification”) and that certain Third
Bridge Loan Modification and Ratification Agreement between Lender and Maker of
even date herewith (“Third Modification”).

1.             Payments.
 
(a)           Unless an Event of Default shall have previously occurred and be
continuing, the full amount of principal and accrued interest under this Note
shall be due and payable on March 31, 2014 (the “Maturity Date”).
 
(b)           The Maker shall pay interest to the Holder on the aggregate and
then outstanding principal amount of this Note at the rate of 8¼% per annum,
payable in arrears on the earlier of (i) the Maturity Date or (ii) acceleration
of this Note following an Event of Default pursuant to Section 3(b).  Interest
on this Note shall commence to accrue as of the date an advance on funds is made
by Lender pursuant to the terms of this Note.

(c)           Interest shall be calculated on the basis of a 360-day year,
consisting of twelve 30 calendar day periods, and shall accrue monthly
commencing on the effective date of this Note until payment in full of the
outstanding principal, together with all accrued and unpaid interest, and other
amounts which may become due hereunder, has been made. Interest hereunder will
be paid to the Person in whose name this Note is registered on the records of
the Maker regarding registration and transfers of this Note.
 
 
 

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(d)           All overdue accrued and unpaid principal and interest to be paid
hereunder shall entail a late fee at the rate of 12% per annum (or such lower
maximum amount of interest permitted to be charged under applicable law) which
will accrue daily, from the date such principal and/or interest is due hereunder
through and including the date of payment.  Except as otherwise set forth in
this Note, the Maker may not prepay any portion of the principal amount of this
Note without the 10 Business Day advance written notice to the Holder.

2.             Secured Obligation.  The obligations of the Maker under this Note
are secured by all of the assets of the Maker pursuant to the Security Agreement
between Maker and Lender dated as of October 22, 2012 (the “Security Agreement”)
and the Security Agreement between Merriellyn Kett and Lender dated as of August
5, 2013 (the “Kett Security Agreement”).
 
3.             Events of Default.

(a)           “Event of Default”, wherever used herein, means any one of the
following events (whatever the reason and whether it shall be voluntary or
involuntary or effected by operation of law or pursuant to any judgment, decree
or order of any court, or any order, rule or regulation of any administrative or
governmental body):

i.    If the Maker fails to pay when due and payable, or when declared due and
payable, all or any portion of the Obligations (whether of principal, interest
(including any interest which, but for the provisions of the Bankruptcy Code,
would have accrued on such amounts), fees and charges due Holder, reimbursement
of Holder Expenses, or other amounts constituting Obligations); or

ii.   If the Maker fails to (a) perform, keep, or observe any covenant or other
provision contained in Section 6(d)(iii) and 6(d)(iv) of the Purchase Agreement
and such failure or neglect continues for a period of 10 Business Days after the
date on which such failure or neglect first occurs, or (b) perform, keep, or
observe any covenant or other provision contained in Sections 6(d) and (e) of
the Purchase Agreement or any comparable provision contained in any of the other
Loan Documents;

iii.          If any material portion of the Maker’s assets are attached,
seized, subjected to a writ or distress warrant, levied upon, or comes into the
possession of any third Person; or

iv.          If the Maker is enjoined, restrained, or in any way prevented by
court order from continuing to conduct all or any material part of its business
affairs; or

v.           If a notice of Lien, levy, or assessment is filed of record with
respect to any of the Maker’s assets by the United States, or any department,
agency, or instrumentality thereof, or by any state, county, municipal, or
governmental agency, or if any taxes or debts owing at any time hereafter to any
one or more of such entities becomes a Lien, whether choate or otherwise, upon
any of the Maker’s assets and the same is not paid before such payment is
delinquent; or

vi.          If a judgment or other claim in an amount equal to or greater than
$5,000 individually or $25,000 in the aggregate becomes a lien of encumbrance
upon any material portion of the Maker’s assets and the same is not discharged
or bonded against within thirty (30) days of the date of the attachment of such
lien or encumbrance; or
 
 
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vii.         If there is a default in any material agreement to which the Maker
is a party and such default (a) occurs at the final maturity of the obligations
thereunder, or (b) results in a right by the other party thereto, irrespective
of whether exercised, to accelerate the maturity of the Maker’s obligations
thereunder, to terminate such agreement, or to refuse to renew such agreement
pursuant to an automatic renewal right therein, unless in such case enforcement
of such agreement is stayed by virtue of commencement of the Bankruptcy Case; or

viii.        If there shall be a Change of Control; or

ix.           If this Note or any other Loan Document that purports to create a
Lien with regard to this Note, shall, for any reason, fail or cease to create a
valid and perfected and, except to the extent permitted by the terms hereof or
thereof, first priority Lien on or security interest in the Collateral covered
hereby or thereby; or

x.           Except as may have been modified by the terms of the Amended Plan
of Reorganization confirmed by the Bankruptcy Court on October 2, 2013 in the
Bankruptcy Case (the “Plan”), (A) the Loan Documents and the Financing Order
shall, for any reason, cease to create a valid Lien on any of the Collateral
(other than any immaterial portion) purported to be covered thereby or such Lien
shall cease to be a perfected Lien having the priority provided herein pursuant
to Section 364 of the Bankruptcy Code against the Maker, or the Maker shall so
allege in any pleading filed in any court or (B) any material provision of any
Loan Document shall, for any reason, cease to be valid and binding on the Maker
or the Maker shall so state in writing; or

xi.           An order with respect to the Bankruptcy Case shall be entered by
the Bankruptcy Court, (A) appointing a trustee or an examiner with enlarged
powers relating to the operation of the Maker’s business, (B) converting the
Bankruptcy Case to a Chapter 7 case, (C) dismissing or suspending the Bankruptcy
Case, which order does not contain a provision for the termination of Holder’s
obligation to make Advances and the payment in full in cash of all Obligations
or is not otherwise satisfactory to Holder thereunder, (D) confirming a plan or
plans of reorganization in the Chapter 11 Case which does not contain a
provision for the termination of all of Holder’s obligation to make Advances and
payment in full in cash of all Obligations in a manner satisfactory to Holder,
or (E) authorizing the use of cash collateral; or

xii.         Other than as contemplated by the First Day Orders or the Plan,
there shall be any material payment on, or application by the Maker for
authority to pay, any material pre-petition claim, other than payroll, other
employee related expenses, ordinary course rebates and credits to customers,
sales, and other “use” type taxes, insurance obligations, trade debt incurred in
the ordinary course of business, and other ordinary course expenses, in each
instance without the express prior written consent of Holder; or

xiii.         [intentionally omitted]

xiv.        An order shall be entered by the Bankruptcy Court, other than the
Financing Order or as provided in the Plan, granting material relief from the
automatic stay to the holder or holders of any Liens on or security interests in
any material assets of the Maker; or

xv.         An application for any of the orders described in Sections 3(a)xi,
3(a)xii, 3(a)xiii, and 3(a)xiv shall be made (A) by the Maker, or (B) in the
case of Section 3(a)xi((E) only, by any other Person, and such application is
expressly supported by the Maker; or
 
 
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xvi.        Except as provided in the Plan, any provision of any Loan Document
shall at any time for any reason be declared to be null and void, or the
validity or enforceability thereof shall be contested by the Maker, or a
proceeding shall be commenced by the Maker, or by any Governmental Authority
having jurisdiction over the Maker, seeking to establish the invalidity or
unenforceability thereof, or the Maker shall deny that such Borrower has any
liability or obligation purported to be created under any Loan Document.

xvii.       Any material adverse change in Company’s sales and revenue outlook,
financial condition or prospects for reorganization under Chapter 11; or

xviii.      Lender deems itself insecure for any reason; or

xviv.      Company breaches any of the terms of the Plan, or any Loan Document
term remaining in effect under the terms of the Plan.

(b)            If any Event of Default occurs and shall be continuing, the full
principal amount of this Note, together with all accrued interest thereon, shall
become, at the Holder's election, immediately due and payable in cash.  The
Holder need not provide and the Maker hereby waives any presentment, demand,
protest or other notice of any kind, and the Holder may immediately and without
expiration of any grace period enforce any and all of its rights and remedies
hereunder and all other remedies available to it under applicable law. Such
declaration may be rescinded and annulled by the Holder at any time prior to
payment hereunder. No such rescission or annulment shall affect any subsequent
Event of Default or impair any right consequent thereon.

4.            Affirmative Covenants.  The Maker covenants and agrees that, so
long as any credit hereunder shall be available and until full and final payment
of the Obligations, the Maker shall do all of the following:

(a)           Return.  Cause returns and allowances, as between the Maker and
its Account Debtors, to be on the same basis and in accordance with the usual
customary practices of the Maker, as they exist at the time of the execution and
delivery of this Note. If, at a time when no Event of Default has occurred and
is continuing, any Account Debtor returns any Inventory to the Maker, the Maker
promptly shall determine the reason for such return and, if the Maker accepts
such return, issue a credit memorandum (with a copy to be sent to Holder) in the
appropriate amount to such Account Debtor.

(b)           Taxes.  Cause all assessments and taxes, whether real, personal,
or otherwise, due or payable by the Maker, or imposed, levied, or assessed
against the Maker or any of its assets to be paid in full, before delinquency or
before the expiration of any extension period, except to the extent that the
validity of such assessment or tax shall be the subject of a Permitted
Protest.  The Maker will make timely payment or deposit of all tax payments and
withholding taxes required of it by applicable laws, including those laws
concerning F.I.C.A., F.U.T.A., state disability, and local, state, and federal
income taxes, and will, upon request, furnish Holder with proof satisfactory to
Holder indicating that the Maker has made such payments or deposits.  The Maker
shall deliver satisfactory evidence of payment of applicable excise taxes in
each jurisdiction in which the Maker is required to pay any such excise tax.

(c)           Compliance with Laws and Orders.  Comply with the requirements of
all applicable laws, rules, regulations, and orders of any Governmental
Authority, including the Fair Labor Standards Act, and the Americans With
Disabilities Act, other than laws, rules, regulations, and orders the
non-compliance with which, individually or in the aggregate, would not result in
and reasonably could not be expected to result in a Material Adverse Effect.
 
 
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(d)           Leases.  Pay when due all rents and other amounts payable under
any leases to which the Maker is a party or by the Maker's properties and assets
are bound, unless such payments are the subject of a Permitted Protest.

(e)           [intentionally omitted]

(f)            Maintain Operating Accounts.  Maintain its operating accounts and
cash management arrangements consistent with its current procedures in
accordance with the terms of the First Day Orders and the Plan.

5.            Negative Covenants.  The Maker covenants and agrees that so long
as the Lender has not advanced the Maximum Amount to the Maker, and until full
and final payment of the Obligations, the Maker will not do any of the
following:

(a)           Indebtedness. Create, incur, assume, permit, guarantee, or
otherwise become or remain, directly or indirectly, liable with respect to any
Indebtedness, except:

(i)           Indebtedness evidenced by, or arising under or in connection with,
this Note, the Plan and the other Loan Documents, and

(ii)          Refinancings, renewals, or extensions of Indebtedness permitted
under clauses (b) and (c) of this Section 5 (and continuance or renewal of any
Permitted Liens associated therewith) so long as: (i) the terms and conditions
of such refinancings, renewals, or extensions do not, in Holder’s judgment,
materially impair the prospects of repayment of the Obligations by the Maker or
materially impair the Maker’s creditworthiness, (ii) such refinancings,
renewals, or extensions do not result in an increase in the principal amount of,
or interest rate with respect to, the Indebtedness so refinanced, renewed, or
extended, (iii) such refinancings, renewals, or extensions do not result in a
shortening of the average weighted maturity of the Indebtedness so refinanced,
renewed, or extended, nor are they on terms or conditions that, taken as a
whole, are materially more burdensome or restrictive to the Maker, and (iv) if
the Indebtedness that is refinanced, renewed, or extended was by its terms
subordinated in right of payment to the Obligations, then the terms and
conditions of the refinancing, renewal, or extension Indebtedness must include
contractual subordination terms and conditions that are at least as favorable to
Holder as those that were applicable to the refinanced, renewed, or extended
Indebtedness.

(b)           Liens.  Create, incur, assume, or permit to exist, directly or
indirectly, any Lien on or with respect to any of its assets, of any kind,
whether now owned or hereafter acquired, or any income or profits therefrom
except for Permitted Liens (including Liens that are replacements of Permitted
Liens to the extent that the original Indebtedness is refinanced, renewed, or
extended under Section 5(a) and so long as the replacement Liens only encumber
those assets that secured the refinanced, renewed, or extended Indebtedness).

(c)           Restrictions on Fundamental Changes.

(i)          Enter into any merger, consolidation, reorganization, or
recapitalization, or reclassify its Stock.
 
 
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 (ii)         Liquidate, wind up, or dissolve itself (or suffer any liquidation
or dissolution).

 (iii)        Convey, sell, lease, license, assign, transfer, or otherwise
dispose of, in one transaction or a series of transactions, all or any
substantial part of its assets.

(d)            Disposal of Assets. Other than with Holder’s express written
consent, convey, sell, lease, license, assign, transfer, or otherwise dispose of
any assets.

(e)            Change Name. Change its name, FEIN, corporate structure, or
identity, or add any new fictitious name.

(f)             Guarantee. Guarantee or otherwise become in any way liable with
respect to the obligations of any third Person and except for the endorsement of
instruments or items of payment for deposit to the account of the Maker or which
are promptly transmitted or turned over to Holder.

(g)            Prepayments and Amendments.

 (i)           Except in connection with a refinancing permitted by Section
5(a), prepay, redeem, defease, purchase, or otherwise acquire any Indebtedness
of the Maker, other than the Obligations in accordance with this Note, and

 (ii)           Except in connection with a refinancing permitted by Section
5(a), directly or indirectly, amend, modify, alter, increase, or change any of
the terms or conditions of any agreement, instrument, document, indenture, or
other writing evidencing or concerning Indebtedness permitted under this Note.

(h)            [intentionally omitted]

(i)             Consignments. Consign any Inventory or sell any Inventory on
bill and hold, sale or return, sale on approval, or other conditional terms of
sale.

j)              Distributions. Make any distribution or declare or pay any
dividends (in cash or other property) on, or purchase, acquire, redeem, or
retire any of the Maker's stockholder interests in any class of stock, whether
now or hereafter outstanding.

(k)            The Orders. Make or permit to be made any change, amendment or
modification, or any application or motion for any change, amendment or
modification, to the Plan except for modifications and amendments that are
reasonably satisfactory to Holder.

(l)             Application to Bankruptcy Court. Apply to the Bankruptcy Court
for the authority to take any action that is prohibited by or inconsistent with
the terms of this Note or the Plan or refrain from taking any action that is
required to be taken by the terms of this Note or the Plan.

(m)           Cancellation of Indebtedness Owed to It. Cancel any Indebtedness
owed to it.

(n)           Chapter 11 Claims. Incur, create, assume, suffer to exist or
permit any administrative expense, unsecured claim, indebtedness or other
super-priority claim or lien which is pari passu with or senior to the claims or
Liens of Holder against the Maker hereunder, or apply to the Bankruptcy Court
for authority to do so, except for the Permitted Liens.
 
 
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(o)           Plan of Reorganization. Modify or seek to modify the Plan without
the prior written consent of Holder.

(p)           Filings. File any motion, application, objection, plan or
reorganization, response, adversary complaint or similar pleading in the
Bankruptcy Cases that would adversely affect the right or ability of Holder or
the Holders to receive indefeasible payment in full in cash of all of the
Obligations.

6.      No Waiver of the Holder's Rights. All payments of principal and interest
shall be made without setoff, deduction or counterclaim.  No delay or failure on
the part of the Holder in exercising any of its options, powers or rights, nor
any partial or single exercise of its options, powers or rights shall constitute
a waiver thereof or of any other option, power or right, and no waiver on the
part of the Holder of any of its options, powers or rights shall constitute a
waiver of any other option, power or right. Maker hereby waives presentment of
payment, protest, and all notices or demands in connection with the delivery,
acceptance, performance, default or endorsement of this Note.  Acceptance by the
Holder of less than the full amount due and payable hereunder shall in no way
limit the right of the Holder to require full payment of all sums due and
payable hereunder in accordance with the terms hereof.

7.      Modifications.  No term or provision contained herein may be modified,
amended or waived except by written agreement or consent signed by the party to
be bound thereby.

8.      Cumulative Rights and Remedies: Usury.  The rights and remedies of the
Holder expressed herein are cumulative and not exclusive of any rights and
remedies otherwise available under this Note, or applicable law (including at
equity).  The election of the Holder to avail itself of anyone or more remedies
shall not be a bar to any other available remedies, which the Maker agrees the
Holder may take from time to time. If it shall be found that any interest due
hereunder shall violate applicable laws governing usury, the applicable rate of
interest due hereunder shall be reduced to the maximum permitted rate of
interest under such law.

9.      Use of Proceeds.  Maker shall use the proceeds from this Note hereunder
for working capital purposes or as otherwise contemplated by the Purchase
Agreement and not for the satisfaction of any portion of the Maker’s debt (other
than payment of trade payables in the ordinary course of the Maker's business
and prior practices), to redeem any of the Maker’s equity or equity-equivalent
securities or to settle any outstanding litigation.

10.   Severability.  If any provision of this Note is declared by a court of
competent jurisdiction to be in any way invalid, illegal or unenforceable, the
balance of this Note shall remain in effect, and if any provision is
inapplicable to any person or circumstance, it shall nevertheless remain
applicable to all other persons and circumstances.  If it shall be found that
any interest or other amount deemed interest due hereunder shall violate
applicable laws governing usury, the applicable rate of interest due hereunder
shall automatically be lowered to equal the maximum permitted rate of interest.

11.           Successors and Assigns.  This Note shall be binding upon the Maker
and its successors and shall inure to the benefit of the Holder and its
successors and assigns.  The term “Holder” as used herein, shall also include
any endorsee, assignee or other holder of this Note.

12.           Lost or Stolen Promissory Note.  If this Note is lost, stolen,
mutilated or otherwise destroyed, the Maker shall execute and deliver to the
Holder a new promissory note containing the same terms, and in the same form, as
this Note.  In such event, the Maker may require the Holder to deliver to the
Maker an affidavit of lost instrument and customary indemnity in respect thereof
as a condition to the delivery of any such new promissory note.
 
 
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13.           Governing Law.

(a)           All questions concerning the construction, validity, enforcement
and interpretation of this Note shall be governed by and construed and enforced
in accordance with the internal laws of the State of Illinois, without regard to
the principles of conflicts of law thereof. Each of the Maker and the Holder
agree that all legal proceedings concerning the interpretations, enforcement and
defense of this Note shall be commenced in the state and federal courts sitting
in the Cook County, Illinois; (the “Illinois Courts”); provided, however, that
any suit seeking enforcement against any Collateral or other property may be
brought, at Holder’s option, in the courts of any jurisdiction where Holder
elects to bring such action or where such Collateral or other property may be
found.  Maker and Holder waive, to the extent permitted under applicable law,
any right each may have to assert the doctrine of forum non conveniens or to
object to venue to the extent any proceeding is brought in accordance with this
Section 13(a).

(b)           Except as set forth above, each of the Maker and the Holder hereby
irrevocably submit to the exclusive jurisdiction of the Illinois Courts for the
adjudication of any dispute hereunder (including with respect to the enforcement
of this Note), 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
improper.  Each of the Maker and the Holder hereby irrevocably waive personal
service of process and consents to process being served in any such suit, action
or proceeding by mailing a copy thereof via registered or certified mail or
overnight delivery (with evidence of delivery) to the other at the address in
effect for notices to it under this Note 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.  Each of the Maker and the Holder hereby
irrevocably waive, to the fullest extent permitted by applicable law, any and
all right to trial by jury in any legal proceeding arising out of or relating to
this Note or the transactions contemplated hereby.

14.   Notice. Whenever notice is required to be given under this Note, unless
otherwise provided herein, such notice shall be given in accordance with Section
9(b) of the Purchase Agreement.

15.   Required Notice to the Holder. The Holder is to be notified by the Maker,
within five (5), Business Days, in accordance with Section 14, of the existence
or occurrence, of any Event of Default.

[SIGNATURE PAGE FOLLOWS]
 
 
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The undersigned has executed this Note as a maker and not as a surety or
guarantor or in any other capacity.
 

 
“MAKER”
AIRTRONIC USA, INC.
           
By:
/s/ Merriellyn Kett     Printed Name: Merriellyn Kett     Printed Title: CEO  

 
 
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