**Exhibit 10.1**

** **

**UNSECUREDPROMISSORY NOTE**

 
| $274,410 –  Original Principal Amount |   | Issue Date – August 10, 2009 |
|--------------------------------------------|--------|----------------------------------------|
|                                       |   | Santa Ana, California                  |

 

For valuereceived, MAXxess Systems, Inc., a California corporation and itssuccessors and assigns (the “***Company***”),hereby promises to pay to Iteris, Inc., a Delaware corporation (togetherwith its successors and assigns, the “***Holder***”),in lawful money of the United States at the address of Holder set forth below,the principal sum of Two Hundred Seventy-Four Thousand Four Hundred Ten Dollars($274,410), together with all accrued but unpaid interest thereon.  This Unsecured Promissory Note (the “***Note***”) memorializes the Company’spre-existing business obligation owed to Holder for prior sublease payments andother services previously rendered to the Company.

 

1.                                       DueDate.

 

Unless thisNote is extended with the written consent of the Holder or is accelerated inaccordance with the terms of this Note, the entire outstanding principalbalance of this Note, together with all accrued and unpaid interest, shall bedue and payable on August 10, 2014 (the “***Due Date***”).

 

2.                                       Termsof Payment; Interest.

 

2.1                                 Interestshall accrue on the principal outstanding under this Note from time to time,commencing from the Issue Date of this Note and continuing until repayment ofthis Note in full, at a rate equal to six percent (6%) per annum, compoundedannually (computed on the basis of a year of three hundred sixty-five (365)days of actual days elapsed).  Accruedinterest shall be payable annually on the first business day of each calendaryear.  Notwithstanding anything herein tothe contrary, if during any period for which interest is computed under thisNote, the amount of interest computed on the basis provided for in this Note,together with all fees, charges and other payments that are treated as interestunder applicable law, would exceed the amount of such interest computed on thebasis of the Highest Lawful Rate, the Company’s obligations hereunder shall,automatically and retroactively, be deemed reduced to the Highest Lawful Rate(as defined below), and during any such period the interest payable under thisNote shall be computed on the basis of the Highest Lawful Rate.  In the event Holder receives as interest anamount that would exceed the Highest Lawful Rate, then the amount of any excessinterest shall not be applied to the payment of interest hereunder, but shallbe applied to the reduction of the unpaid principal balance due hereunder.  As used herein, “***HighestLawful Rate***” means the maximum non-usurious rate of interest, asin effect from time to time, which may be charged, contracted for, reserved,received or collected by the Holder in connection with this Note underapplicable law.

 

2.2                                 Allpayments under this Note shall be made (i) in lawful money of the UnitedStates of America at the principal office of the Company, or at such otherplace as Holder may from time to time designate in writing to the Company; or (ii) inbona fide services rendered by the Company to the Holder, provided that thenature and value of such services are approved in writing in advance by theHolder and the Company.  Payments underthis Note shall be applied first to the payment of all accrued and unpaidinterest and then to the payment of principal. Prepayment of the principal amount of this Note, together with allaccrued and unpaid interest on the portion of principal so prepaid, may be madein whole or in part at any time without penalty.

 

3.                                       Subordination.

 

3.1                                 SubordinatedAmount.  The Holder and theCompany agree that this Note and the Company’s obligations under this Noteshall be subordinated to any debt financing by the Company with one or morelenders subsequent to the Issue Date of this Note, but only up to an aggregatesubordinated amount of Five Million Dollars ($5,000,000) (the “***Subordinated Amount****”*).  The Holder agreesto execute any documents reasonably requested by the investors in suchfinancings to give effect to such subordination.

 

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**UNSECUREDPROMISSORY NOTE**

 

3.2                                 PariPassu Amount.  The Company and theHolder agree that this Note and the Company’s obligations under this Note shallbe on *pari passu* with any debt financing bythe Company in excess of the Subordinated Amount, and the Company agrees toexecute (and to have such investor in the excess investor to execute as acondition to such financing) any documents (including, but not limited to, anyrelated intercreditor agreements, security agreements. and financingstatements) reasonably requested by the Holder to give effect to such *pari passu* treatment.

 

3.3                                 Noticeof Financings.  For so long as anyamount of this Note remains outstanding, the Company agrees to notify theHolder in writing at least five (5) business days prior to the closing ofany debt or equity financing by the Company. For the purposes of this Note, the term “***financing***”shall not include (a) any option exercises or stock issuance under theCompany’s benefit plans, (b) trade payables incurred in the ordinarycourse of the Company’s business or (c) short-term bank borrowings orreceivable factoring.

 

4.                                       Representationsand Warranties of Company.

 

The Companyhereby represents and warrants to the Holder that this Note has been duly andvalidly executed and delivered by Company and constitutes a legal, valid andbinding obligation of Company enforceable against Company in accordance withits terms, except as the enforceability thereof may be limited by bankruptcy,insolvency, fraudulent conveyance, or other similar laws relating to theenforcement of creditors’ rights generally and by general principles of equity.

 

5.                                       Acceleration Upon Change inControl or Significant Financing.

 

For the purposes of this Note, a “***Change in Control***” shall be deemedto occur upon (i) the sale, lease, license or transfer, in a singletransaction or a series of transactions, of all or substantially all of theCompany’s assets; (ii) the sale or transfer, in a single transaction or aseries of transactions, of 50% or more of the presently outstanding shares ofcapital stock of the Company, or (iii) the issuance by the Company ofstock, whether in one or more transactions, which individually or in theaggregate results in the ownership, following such transaction or transactions,by the present stockholders of the Company of less than 50% of the issued andoutstanding shares of voting stock of the Company.  In the event of a Change in Control or aSignificant Financing (as defined below) while the Note is outstanding, all ofthe Company’s obligations under this Note shall be immediately accelerated andthe Company shall pay to the Holder the outstanding principal balance under theNote and all accrued interest thereunder, which payments shall be paid in cash(by cashier’s check or wire transfer) to the Holder at the closing of suchChange in Control or Significant Financing, as the case may be. For thepurposes of this Note, a “***Significant Financing***”shall be deemed to occur upon the closing of one or a more debt or equityfinancings by the Company after the Issue Date with gross proceeds to theCompany in the aggregate of at least $10.0 million.

 

6.                                       General

 

6.1                                 Saturdays,Sundays, or Holidays. If any payment of principal or interest on this Noteshall become due on a Saturday, Sunday, or a public holiday under the laws ofthe State of California, such payment shall be made on the next succeedingbusiness day and such extension of time shall be included in computing interestin connection with such payment.

 

6.2                                 Assignment.This Note may be transferred only upon surrender of the original Note forregistration of transfer, duly endorsed, or accompanied by a duly executedwritten instrument of transfer in form reasonably satisfactory to the Company.Thereupon, a new Note for like principal amount and interest will be issued to,and registered in the name of, the transferee. Interest and principal arepayable only to the registered holder of the Note.

 

6.3                                 CancellationUpon Payment in Full. Upon payment in full of all principal and interestpayable hereunder, this Note shall be surrendered to the Company forcancellation.

 

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**UNSECUREDPROMISSORY NOTE**

 

6.4                                 Presentment,Notice, etc. The Company waives presentment, demand for performance, noticeof nonperformance, protest, notice of protest, and notice of dishonor. No delayon the part of Holder in exercising any right hereunder shall operate as awaiver of such right under this Note.

 

6.5                                 Events of Default andAcceleration.  Notwithstanding the provisions set forthabove, the entire unpaid principal balance of this Note, together with allaccrued and unpaid interest, shall become immediately due and payable prior tothe Due Date upon the occurrence of one or more of the following events (eachan “***Event of Default***”):

 

(a)                                  The execution by the Companyof a general assignment for the benefit of creditors, the filing by or againstthe Company of any petition in bankruptcy or any petition for relief under theprovisions of the Federal bankruptcy act or any other state or Federal law forthe relief of debtors and the continuation of such petition without dismissalfor a period of 60 days or more, the appointment of a receiver or trustee totake possession of any property or assets of the Company or the attachment ofor execution against any property or assets of the Company which is notdischarged within 60 days from its inception;

 

(b)                             The Company approves oreffects (i) the dissolution or liquidation of the Company, or (ii) thecessation or termination of all or substantially all of the Company’soperations or business; or

 

(c)                              The Company’s failure totimely make any payment of principal and/or interest hereunder or the Company’sbreach of any material agreement, covenant, representation or warranty setforth in this Note or the Security Agreement, and the failure to make suchpayment or remedy such breach for a period of 15 days from the receipt ofnotice of such failure or breach.

 

6.6**                                **AttorneysFees.  If any party hereto incurs anylegal fees, whether or not an action is instituted, to enforce the terms ofthis Note or to recover damages or injunctive relief for breach of this Note,it is agreed that the successful or prevailing parties shall be entitled toreasonable attorneys fees, expert witness fees and other costs in addition toany other relief to which it or they may be entitled.

 

6.7                                 Notices.  Except as set forth below, all notices,deliveries or other communications required or permitted hereunder shall be inwriting and shall be deemed to have been given: (i) upon personal deliveryto the party to be notified; (ii) when sent by confirmed facsimile if sentduring the normal business hours of the recipient, if not, then on the nextbusiness day; (iii) one (1) business day after deposit with anationally recognized overnight courier designating next business day delivery;or (iv) five (5) days after having been sent by registered orcertified mail, return receipt requested, postage prepaid.  All notices, deliveries or othercommunications shall be sent to the address or facsimile number as set forthbelow or at such other address as such party may designate by ten (10) days’advance written notice to the other parties.

 
| If to Holder:       |   | Iteris, Inc.              |
|---------------------|--------|--------------------------------|
|                |   | 1700 Carnegie Ave., Ste. 100   |
|                |   | Santa Ana, CA 92705            |
|                |   | Attn: Chief Executive Officer  |
|                |   |                           |
| If to the  Company: |   | MAXxess  Systems, Inc.    |
|                |   | 1040 N.  Tustin Ave.           |
|                |   | Anaheim, CA  92087             |
|                |   | Attn: Chief  Executive Officer |

 

Notwithstandingthe foregoing, any payment under this Note shall be deemed made upon receipt byHolder. Holder or the Company may change their address for purposes of this Section bygiving to the other party notice in conformance with this Section of suchnew address.

 

6.8                                 GoverningLaw; Counterparts; Assignability. This Note shall be governed by andconstrued under the laws of the State of California as applied to agreementsamong California residents entered into and to be performed entirely withinCalifornia.  This Note may be executed incounterparts, each of which shall be deemed an original, but all of which togethershall constitute one and the same instrument, and a document signed and 

 

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**UNSECUREDPROMISSORY NOTE**

 

transmitted byfacsimile shall be treated as an original document.  This Note shall be assignable by Holder (assecurity or otherwise), provided that Holder shall provide to the Company withten (10) days’ advance written notice of its intention so to assign thisNote, which notice shall identify the proposed assignee.

 

6.9                                 Timeof the Essence; Remedies.  Time is ofthe essence of this Note.  The rights andremedies under this Note are cumulative and not exclusive of any rights,remedies, powers and privileges that may otherwise be available to the Holder.

 

6.10                           EntireAgreement.  This Note and the SecurityAgreement constitute the full and entire understanding, promise and agreementbetween the Company and the Holder with respect to the subject matter hereofand thereof, and supersede, merge and render void every other prior writtenand/or oral understanding, promise or agreement between the Company and theHolder with respect to the subject matter hereof and thereof.

 

6.11                           Severability.  If one or more provisions of this Note areheld to be unenforceable under applicable law, such provision shall be excludedfrom this Note, the balance of the Note shall be interpreted as if suchprovision were so excluded and shall be enforceable in accordance with itsterms.  The Company and the Holder shalluse good faith to negotiate to substitute (or a court may a substitute) a validand enforceable provision that replaces the excluded provision and that mostnearly effects the parties’ intent in entering into this Note.

 

6.12                           Waiver;Amendment; Successors and Assigns. Neither this Note nor any term hereof may be waived, amended,discharged, modified, changed or terminated except by an instrument in writingsigned by the Company and the Holder.  Nodelay or omission by the Holder in exercising its rights under this Note shallconstitute a waiver of or bar to exercising such right or any other rights inthe future.  This Note shall be bindingupon, inure to the benefit of and be enforceable by the Company, the Holder andtheir respective heirs, personal representatives, successors and assigns.

 

[SIGNATURE PAGE FOLLOWS]

 

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**UNSECUREDPROMISSORY NOTE**

 

IN WITNESSWHEREOF, the Company has caused this Note to be duly executed and delivered onand as of the Issue Date set forth above.

 

 
|                                   |                |   | MAXxess  Systems, Inc. |
|----------------------------------------|---------------------|--------|-----------------------------|
|                                   |                |   |                        |
|                                   |                |   |                        |   |
|                                   |                |   | By:                         | /s/ Kevin C.  Daly |
|                                   |                |   | Name:                       | Kevin C.  Daly |
|                                   |                |   | Title:                      | CEO |
|                                   |                |   |                        |   |
| Accepted and  agreed upon              |                |   |                        |
| as of the  Issue Date set forth above. |                |   |                        |
|                                   |                |   |                        |
| Iteris, Inc.                      |                |   |                        |
|                                   |                |   |                        |   |
|                                   |                |   |                        |   |
| By:                                    | /s/ Abbas  Mohaddes |   |                        |   |
| Name:                                  | Abbas  Mohaddes     |   |                        |   |
| Title:                                 | CEO                 |   |                        |   |

 

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