Document:

Unassociated Document

    EXHIBIT
      10.3

    PROMISSORY
      NOTE

    

    

    THIS
      NOTE
      HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
      "ACT"), OR UNDER ANY STATE SECURITIES LAW AND MAY NOT BE PLEDGED, SOLD, ASSIGNED
      OR TRANSFERRED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT WITH
      RESPECT THERETO UNDER THE ACT AND ANY APPLICABLE STATE SECURITIES LAW OR AN
      EXEMPTION FROM SUCH REGISTRATION.

     

     

    
      	$____,000	
               New
                York, New York

            
	 	
               November
                13,
                2006

            

    

    

    FOR
      VALUE
      RECEIVED, the undersigned, GPS Industries, Inc., a Nevada corporation, with
      principal executive offices located at Suite 214, 5500 152nd Street. Surrey,
      British Columbia, Canada V35 S59 (the "Borrower"), hereby PROMISES TO PAY THE
      ORDER OF________________ ("Lender"), the principal sum of
      ________________________________ U.S. DOLLARS ($_____,000), at the time and
      place and in the manner provided in this Note. 

     

    The
      Borrower shall repay the principal of this Note and all accrued and unpaid
      interest on the earliest to occur of (i) March 31, 2007, and (ii) the closing
      of
      the purchase by Lender of the Borrower's Series B Convertible Preferred Stock
      and Warrants (the "Securities") pursuant to that certain Securities Purchase
      Agreement, dated as of the date of this Note (the “Securities Purchase
      Agreement”) (the earliest of such dates being hereinafter referred to as the
      "Maturity Date"). Upon the consummation of the sale of the Securities under
      the
      Securities Purchase Agreement on the Maturity Date, the outstanding principal
      sum of this Note, together with all accrued interest, shall be applied to the
      purchase price of the Securities as set forth in the Securities Purchase
      Agreement.

     

    The
      principal of this Note may be prepaid at any time, in whole but not in part,
      without penalty or premium; provided, however, that any such prepayment shall
      not affect the right of the Lender under the Securities Purchase Agreement
      to
      purchase the Securities. 

     

    The
      Borrower shall pay interest to Lender on the outstanding unpaid principal amount
      of this Note at a rate which at all times when no Event of Default has occurred
      shall be 4.83% per annum (the Applicable Federal Rates for six-month obligations
      as of November 2006), and at all times after the occurrence of an Event of
      Default shall be (both before and after judgment) eleven percent (11%) per
      annum. All such interest shall be computed on the basis of a year of 360 days
      and the number of days actually elapsed and shall be added on the due date
      thereof to the then outstanding principal amount of this Note. Any such interest
      added to principal shall thereafter bear interest as provided above. Anything
      herein to the contrary notwithstanding, if an Event of Default occurs, all
      interest accruing from and after the date of such Event of Default shall be
      payable at the rate provided above in cash on the Lender's demand. 

     

    Notwithstanding
      the foregoing or any other provision contained in this Note, nothing herein
      contained shall authorize or permit the exaction or payment of interest by
      the
      Borrower where the same would be unlawful or prohibited by any applicable law
      or
      would violate the applicable usury law of any jurisdiction. In any such event,
      this Note shall automatically be deemed amended to permit interest charged
      at an
      amount equal to, but not greater than, the maximum permitted by
      law.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

       

    

    All
      principal (and any interest) shall be payable in the lawful money of the United
      States at the offices of Lender at _______________,
      or at
      such other place as may be designated in writing by the holder of this Note.
      All
      payments hereunder shall be made without reduction by reason of set-off,
      counter-claim or otherwise.

     

    The
      Borrower represents and warrants to the Lender that it is a corporation duly
      organized and validly existing in good standing under the laws of the
      jurisdiction of incorporation with full power and authority to execute, deliver
      and perform this Note, that this Note has been duly authorized, executed and
      delivered by it and constitutes its legal, valid, binding and enforceable
      obligation and that the execution, delivery and performance of this Note does
      not and will not violate, constitute a default under or result in a breach
      of
      its constitutive documents, any applicable Requirements (as defined below)
      or
      any contract, agreement or instrument to which it is a party or by which it
      or
      its property may be bound or subject.

     

    The
      Borrower covenants and agrees that so long as the Borrower shall have any
      obligation for moneys owing to Lender under this Note, the Borrower
      shall:

     

    (a) pay
      and
      discharge all taxes, assessments and governmental charges or levies imposed
      upon
      it or upon its income and profits, or upon any properties belonging to it before
      the same shall be in default; provided, however, that the Company shall not
      be
      required to pay any such tax, assessment, charge or levy that is being contested
      in good faith by proper proceedings and for which adequate reserves for the
      same
      are maintained if required by generally accepted accounting
      principles;

     

    (b) preserve
      its corporate existence and continue to engage in business of the same general
      type as conducted as of the date hereof; 

     

    (c) comply
      with all statutes, laws, ordinances, orders, judgments, decrees, injunctions,
      rules, regulations, permits, licenses, authorizations and requirements
      ("Requirement(s)") of all governmental bodies, departments, commissions, boards,
      companies or associations insuring the premises, courts, authorities, officials,
      or officers, that are applicable to the Company; except where the failure to
      comply would not have a material adverse effect on the Company; provided
      that
      nothing contained herein shall prevent the Company from contesting the validity
      or the application of any Requirements;

     

    (d) 
      within
      three (3) days after becoming aware of the existence of any Event of Default
      or
      after becoming aware of any developments or other information which may
      materially or adversely affect the Borrower or its properties, business,
      prospects or condition (financial or otherwise) or its ability to perform its
      obligations under this Note, provide Lender with telephonic or electronic notice
      specifying and describing the nature of such Event of Default or development
      or
      information, and the anticipated effect, which telephonic or electronic notice
      shall be promptly confirmed in writing within (5) days; 

     

    (e) use
      the
      proceeds of this Note only in accordance with the schedule of payments (the
“Use
      of Proceeds”) previously disclosed to Lender and approved in writing by
      Lender;

     

    (f) provide
      Lender with such other information regarding Borrower or any property of
      Borrower as Lender may, from time to time, reasonably request. Without limiting
      the generality of the foregoing, the Lender shall be entitled to receive from
      the Borrower all public, non-proprietary non-confidential information of the
      Borrower which is published or otherwise disseminated to the Borrower’s
      officers, directors, shareholders, and affiliates. Further, the Borrower shall
      deliver notice to the Lender of all Board of Director meetings held by the
      Borrower, which notice shall be given by the Borrower not less than fifteen
      days
      prior to the date of any Board of Directors meeting. Lender shall have the
      right
      to be an observer at all such Board of Director meetings. 

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

       

    

    In
      addition, Borrower covenants and agrees that so long as Borrower shall have
      any
      obligation for moneys owing to Lender under this Note, Borrower will not,
      without the express written consent of Lender in each instance:

     

    (a) Amend,
      waive or repeal any provision of, or add any provision to, Borrower’s Articles
      of Incorporation or Bylaws, except as specifically contemplated by the
      Securities Purchase Agreement;

     

    (b) Authorize,
      create and/or issue any class or series of Borrower’s capital stock or any
      rights, options, warrants or other securities that are convertible into or
      exchangeable for any capital stock of Borrower, except as specifically
      contemplated by the Securities Purchase Agreement;

     

    (c) Pay,
      declare or set aside for payment any dividends or distributions on any shares
      of
      capital stock of Borrower; 

     

    (d) Redeem,
      repurchase, acquire, declare a dividend (or set aside money for such purchase)
      with respect to any security of Borrower, except that Borrower may repurchase
      shares of its capital stock issued pursuant to Borrower’s stock compensation
      plans already in effect at such time in accordance with the terms of such
      plans;

     

    (e) Proceed
      with any merger, consolidation, or business combination or other acquisition
      involving Borrower;

     

    (f) Recapitalize
      or reorganize Borrower or voluntarily liquidate, dissolve or wind up
      Borrower;

     

    (g) Incur
      any
      new indebtedness or refinance any existing indebtedness for borrowed money
      (which shall include for purposes hereof capital lease obligations and
      guarantees or other contingent obligations for borrowed money) other than trade
      payables and accrued expenses incurred in the ordinary course of business;
      provided,
      however,
      that
      Borrower may extend the payment dates or the maturity date of any indebtedness
      for borrowed money; 

     

    (h) Incur
      or
      commit to incur any operating expenditures in excess of (a) $50,000 in one
      or a
      series of related expenditures, or (b) in excess of $250,000 in the aggregate,
      other than in accordance with the Use of Proceeds;

     

    (i) Hire
      or
      fire the (a) Corporation’s Chief Executive Officer, (b) Borrower’s Chief
      Financial Officer, or (c) any other officer or employee of Borrower who, at
      the
      time, earns or is expected to earn a salary (excluding bonuses) of $100,000
      or
      more per year (a “Qualified Employee”), enter into or approve any employment
      agreement or consulting agreement or arrangement with a Qualified Employee,
      or
      amend or waive or approve the amendment or waiver of any material provision
      of
      any employment agreement or consulting agreement or other arrangement with
      a
      Qualified Employee;

     

    (j) Acquire
      any assets or equity securities of any other business or entity, or sell any
      assets of Borrower (other than in the ordinary course of business);

     

    (k) Issue
      equity securities or options to any employees, directors, consultants or other
      persons eligible to participate in Borrower’s stock compensation, bonus or other
      compensation plan (collectively, “Company Plans”) other than pursuant to such
      Company Plans;

     

    (l) Alter
      or
      amend any existing Company Plan, or adopt or enter into any new Company Plan;
      or

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

       

    

    (m) Enter
      into any agreement, or effect a transaction with any of the Company's affiliates
      or stockholders or any of the Company’s stockholders' affiliates or any family
      member of an officer or director of the Company, except for transactions and
      agreements that exist as of the date hereof.

     

    In
      the
      case of the happening of any of the following events (herein called "Events
      of
      Default"):

     

    (i) if
      the
      Borrower shall fail to make any payment of principal or interest on this Note
      when due; or

     

    (ii) if
      the
      Borrower shall fail to comply with any term, condition, covenant, warranty
      or
      representation of or in this Note or the Securities Purchase Agreement;
      or

     

    (iii) if
      the
      Borrower shall make an assignment for the benefit of creditors, call a meeting
      of creditors to obtain any general financial accommodation, suspend business,
      liquidate, dissolve, wind down its business or agree to or adopt or approve
      any
      plan or action to liquidate, dissolve or wind down its business, or if any
      case
      under any provision of the U.S. Bankruptcy Code, including provision for
      reorganizations, or under any other bankruptcy, insolvency, reorganization,
      moratorium or other similar law of any jurisdiction, shall be commenced by
      or
      against the Borrower; or 

     

    (iv) if
      a
      receiver shall be appointed for the Borrower or for all or any material portion
      of the assets of Borrower and the same shall not have been discharged within
      thirty (30) days; or

     

    (v) if
      a
      judgment for more than two hundred and fifty thousand dollars ($250,000) shall
      be entered against the Borrower and shall not be appealed, stayed, vacated,
      bonded, paid or discharged within thirty (30) days; or

     

    (vi) if
      the
      Borrower should default under any agreement or instrument to which it is a
      party
      with respect to any secured indebtedness for borrowed money; or 

     

    (vii) if
      the
      Borrower elects not to proceed with, or fails in the Lender's good faith
      judgment to expeditiously proceed with, the sale of the Securities under the
      Securities Purchase Agreement (including failing to use its best efforts to
      file
      the Amended Articles (as such term is defined in the Securities Purchase
      Agreement)
      and to
      take all actions necessary to ensure that the Amended Articles are in full
      force
      and effect as soon as possible after the date hereof),

     

    THEN,
      Lender may declare all amounts payable by the Borrower to Lender under this
      Note
      to be forthwith due and payable, whereupon such amounts shall immediately become
      due and payable, without presentment, demand, protest or any other notice of
      any
      kind, all of which are expressly waived hereby, provided,
      however,
      that
      upon the occurrence of any Event of Default described in (c) or (d) of this
      paragraph, all amounts payable by the Borrower to Lender under this Note shall
      become automatically immediately due and payable, without presentment, demand,
      protest or any other notice of any kind, all of which are expressly waived
      hereby. The rights given hereunder are cumulative with all of the other rights
      and remedies of Lender, including other rights of set-off, under this Note
      or
      any other agreement, by operation of law or otherwise. Lender shall promptly
      notify the Borrower of any such set-off and application but failure so to do
      shall not affect the validity of such set-off. 

     

    Should
      the indebtedness represented by this Note, or any part thereof, be collected
      in
      law or in equity or in bankruptcy, receivership or other court proceedings,
      or
      this Note be placed in the hands of attorneys for collection after default,
      the
      Borrower agrees to pay, in addition to the principal, interest and other amounts
      due and payable hereon and hereunder, all costs and expenses incurred in
      connection with such collection, including, without limitation, reasonable
      attorneys’ and collection fees.

     

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

       

    

    The
      Borrower hereby waives, to the fullest extent permitted by law, diligence,
      presentment, demand for payment, protest, notice of dishonor and any and all
      other notices or demands of every kind and the right to plead the statute of
      limitations as a defense to any action hereunder. No delay on the part of the
      holder hereof in exercising any rights hereunder shall operate as a waiver
      of
      such rights.

     

    All
      notices and other communications provided for hereunder shall be in writing
      and
      shall be sent by (a) registered or certified mail postage prepaid, return
      receipt requested (b) messenger or (c) telecopy, followed by first-class mail,
      to the party to whom addressed at the following respective addresses or telecopy
      numbers or to such other address or telecopy number as the party affected may
      hereafter designate:

     

    (i)    If
      to the
      Borrower:

    

    GPS
      Industries, Inc.

    Suite
      214

    5500
      152nd Street

    Surrey,
      British Columbia

    Canada
      V35 S59

    Attn:
      Chief Executive Officer

    Telecopier:
      (604) 576-7460 

    

    (ii)    If
      to the
      Lender:

    

     

    This
      Note
      may not be changed orally, but only by an agreement in writing, which is signed
      by the party or parties against whom enforcement of any waiver, change,
      modification or discharge is sought.

     

    THIS
      NOTE
      AND THE RIGHTS AND OBLIGATIONS OF THE BORROWER AND LENDER HEREUNDER SHALL BE
      GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW
      YORK.

     

    BORROWER:

    

    GPS
      INDUSTRIES, INC., a Nevada corporation

    

    

    By:________________________________

    Name:

    Title:

     

    
      
        
        

      

      
        5EXHIBIT
      10.4

     

    AGREEMENT

     

    Agreement
      (this “Agreement”) dated as of November 8, 2006 by and among GPS
      Industries, Inc., a Nevada corporation (the “Company”) and each of the note
      purchasers set forth on the signature pages hereto (the “Buyers”) is made with
      reference to the following:

     

    A. The
      Company and Buyers have entered into a Securities Purchase Agreement dated
      as of
      September 20, 2005 (the “Purchase Agreement”) pursuant to which the Buyers
      purchased from the Company secured convertible notes of the Company (the
“Notes”) in the initial aggregate amount of $3,720,000 (including prepaid
      interest) which aggregate amount (including unpaid interest) as of the date
      hereof is $2,527,603.

     

    B. The
      Company wishes to prepay the Notes and the Buyers are willing to accept the
      prepayment in full satisfaction of the Notes and all other obligations of
      Company to NIR of any nature including pursuant to the Purchase Agreement and
      all documents executed in connection therewith.

     

    C. Defined
      terms not expressly defined herein shall have the same meanings as ascribed
      to
      them in the Purchase Agreement.

     

    NOW
      THEREFORE, the Company and each of Buyers hereby agree as follows:

     

    1.     Prepayment
      of the Notes.
      The
      Company agrees to pay, and the Buyers agree to accept, in full satisfaction
      of
      all amounts owing under the Notes, including outstanding principal amount and
      accrued and unpaid interest thereon, the amount of $2,800,000 (the “Payoff
      Amount”). The parties acknowledge that the Payoff Amount is less than the
      Optional Prepayment Amount set forth in Section 5.1 of each of the Notes.
      In consideration of the Buyers accepting such reduced amount, within
      five (5) business days from the payment of the Payoff Amount, the Company
      shall deliver to the Buyers (pro rata in accordance with the amount being paid
      to the applicable Buyer) five year warrants to purchase an aggregate of
      3,000,000 shares of the Company’s common stock at an exercise price of $0.122
      per share (the “New Warrants”). The New Warrants will be substantially in the
      form of the warrants previously delivered to the Buyers (the “Existing
      Warrants”) except that the New Warrants will contain customary piggyback
      registration rights subject to priority to the New Investors (as defined below)
      in the case of cutbacks. The Payoff Amount shall be paid to the Buyers by wire
      transfer within five (5) business days from the execution of this Agreement
      by the parties in accordance with instructions to be provided to the Company
      by
      the Buyers.

     

    2.     Release.
      Subject
      only to the payment of the Payoff Amount and delivery of Warrants, each of
      the
      Buyers hereby agrees to release the Company and each entity providing to the
      Company funds for the Payoff Amount (the “New Investors”) and their respective
      officers, agents, employees, subsidiaries, related entities, affiliates,
      divisions, successors, persons acting on their behalf in connection with the
      matter set forth above and/or assigns, of and from any and all claims,
      counterclaims, rights, demands, costs, damages, losses, liabilities, actions
      and
      causes of action including attorneys’ fees and court costs of every nature and
      description, whether known or unknown, suspected or unsuspected, foreseen or
      unforeseen, real or imaginary, actual or potential, and whether arising in
      tort
      or contract or at law or in equity, under common law, state law, federal law
      or
      any other law, or otherwise, including but not limited to the Purchase
      Agreement, the Notes, the Security Agreement, the Intellectual Property Security
      Agreement, the Existing Warrants, the Guaranty and Pledge Agreement and all
      documents and instruments executed pursuant thereto.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

       

    

    3.     Representations
      and Warranties of the Company.
      The
      Company represents and warrants to each Buyer that: (i) it has all
      requisite corporate power and authority to enter into and perform this Agreement
      and to consummate the transactions contemplated hereby; (ii) that the
      execution and delivery of this Agreement has been duly authorized by this
      Company’s Board of Directors and no further consent or authorization of Company
      or its Board of Directors is required; and (iii) this Agreement constitutes
      the legal, valid and binding obligation of the Company enforceable against
      the
      Company in accordance with its terms.

     

    4.     Representations
      of Buyers.
      Each of
      Buyers represents or warrants to the Company that: (i) such Buyer has all
      requisite power and authority to enter into and perform this Agreement;
      (ii) the execution and delivery of this Agreement and the consummation by
      such Buyer of the transactions contemplated hereby have been duly authorized
      and
      no further consent or authorization of Buyer or its Board of Directors, managers
      or its equity holders is required; (iii) this Agreement constitutes the
      legal, valid and binding obligation of such Buyer enforceable against such
      Buyer
      in accordance with its terms; and (iv) such Buyer has not assigned,
      transferred, sold or pledged the Note issued to such Buyer and such Buyer has
      the right and authority to accept in full payment of the applicable Note the
      Prepayment Amount applicable thereto.

     

    5.     Waiver.
      Without
      limiting the scope of the release hereunder, each Buyer hereby expressly waives
      any claim that such Buyer may have pursuant to the Purchase Agreement or the
      applicable Note, including, without limitation, any requirement that Company
      provide such Buyer a notice with respect to any Future Offerings or that the
      Company failed to honor any conversion requests.

     

    6.     Release
      of Security; Delivery of Notes and Stock.
      Upon
      payment of Payoff Amount and delivery of the New Warrants, the security interest
      granted to each of Buyers with respect to any property of the Company shall
      be
      automatically terminated and the Buyers shall promptly execute any and all
      documents required and take any and all reasonable actions to effect such
      termination. In connection herewith, each Buyer hereby appoints the Company
      its
      attorney-in-fact, to file all termination statements with respect to any
      security interest or lien over the Company’s assets or take such other action to
      effect such termination or release of security interest. Additionally, the
      Buyers shall promptly return to any pledgor of securities any stock pledged
      by
      such pledgor in connection with the Notes pursuant to the Guaranty and Pledge
      Agreement, and shall promptly deliver to the Company the original of the Notes
      marked cancelled.

     

    7.     Miscellaneous.

     

    (a) This
      Agreement may be executed in one or more counterparts, each of which shall
      be
      deemed an original, but all of which shall constitute one and the same Agreement
      and shall become effective when counterparts have been signed by each party
      and
      delivered to the other parties. This Agreement, once executed by a party, may
      be
      delivered to any other party hereto by facsimile transmission of a copy of
      this
      Agreement bearing the signature of the party so delivering this
      Agreement.

     

    
      
         

      

      
        -
          2 -

        
          

        

      

      
         

      

       

    

    (b) Entire
      Agreement.
      This
      Agreement contains the entire understanding of the parties with respect to
      the
      matters covered herein.

     

    (c) Amendments.
      No
      provision of this Agreement may be amended or waived other than by an instrument
      in writing signed by the parties hereto and by the New Investors.

     

    (d) Successors
      and Assignees.
      This
      Agreement shall be binding upon and inure to the benefit of the parties and
      their successors and assigns. Neither the Company nor any Buyer shall assign
      this Agreement or any rights or obligations hereunder without the prior written
      consent of the other.

     

    IN
      WITNESS WHEREOF, the undersigned Buyers and Company have caused this Agreement
      to be duly executed as of the date first above written.

     

    
      	
              Dated: ___________________,
                2006

            	
              GPS
                INDUSTRIES, INC.

               

              By:                     

              Robert
                C. Silzer, Sr.

              Chief
                Executive Officer

               

            
	 	
              BUYERS:

               

            
	
              Dated: ___________________,
                2006

            	
              AJW
                PARTNERS, LLC

               

              By:         
                SMS
                GROUP, LLC

              Its:                 

               

               

              By:                 

              Cory
                S. Ribotsky

              Manager

               

            

    

     

    
      
         

      

      
        -
          3 -

        
          

        

      

      
         

      

    

     

    
      	
              Dated: ___________________,
                2006

            	
              AJW
                OFFSHORE, LTD.

               

              By:         
                FIRST
                STREET MANAGER II, LLC

              Its:
                           

               

               

              By: 
                          

              Cory
                S. Ribotsky

              Manager

               

            
	
              Dated: ___________________,
                2006

            	
              AJW
                QUALIFIED PARTNERS, LLC

               

              By:         
                AJW
                MANAGER, LLC

              Its: 
                          

               

              By: 
                          

              Cory
                S. Ribotsky

              Manager

               

            
	
              Dated: ___________________,
                2006

            	
              NEW
                MILLENNIUM CAPITAL 

              PARTNERS II,
                LLC

               

              By:         
                FIRST
                STREET MANAGER II, LLP

              Its: 
                          

               

               

              By: 
                          

              Cory
                S. Ribotsky

              Manager

               

            

    

    

    

    
      
         

      

      
        -
          4 -

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00113-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00113-of-00352.parquet"}]]