Applied Energy
Management, Inc.
16810 Kenton Drive, Suite 201
Huntersville, North Carolina 28078
(Hereinafter referred to as “Borrower”)
Wachovia Bank,
National Association
Charlotte, North Carolina 28202
(Hereinafter referred to as “Bank”)
Borrower
promises to pay to the order of Bank, in lawful money of the United
States of America by mailing to the address specified hereinafter
or wherever else Bank may specify, the sum of Two Million, One
Hundred Fifteen Thousand, Seven Hundred Seventy-Five and No/100
Dollars ($2,115,775.00) or such sum as may be advanced and
outstanding from time to time, with interest on the unpaid
principal balance at the rate and on the terms provided in this
Promissory Note (including all renewals, extensions or
modifications hereof, this “Note”).
RENEWAL/MODIFICATION. This Promissory Note renews, extends and/or
modifies that certain Promissory Note dated June 10, 2008, in
the original amount of $2,115,775.00, as renewed and/or extended
from time to time (the “Original Promissory Note”).
This Promissory Note is not a novation.
TERMINATION
OF LOAN AGREEMENT. The
Loan Agreement between Bank and Borrower dated June 10, 2008,
as modified from time to time, is hereby terminated and of no
further force or effect.
LINE OF
CREDIT. Borrower may
borrow, repay and reborrow, and, upon the request of Borrower, Bank
shall advance and readvance under this Note from time to time until
the maturity hereof (each an “Advance” and together the
“Advances”), so long as the total principal balance
outstanding under this Note at any one time does not exceed the
principal amount stated on the face of this Note, subject to the
limitations described in any loan agreement to which this Note is
subject. Bank’s obligation to make Advances under this Note
shall terminate if As of the date of each proposed Advance,
Borrower shall be deemed to represent that each representation made
in the Loan Documents is true as of such date.
If Borrower
subscribes to Bank’s cash management services and such
services are applicable to this line of credit, the terms of such
service shall control the manner in which funds are transferred
between the applicable demand deposit account and the line of
credit for credit or debit to the line of credit.
USE OF
PROCEEDS. Borrower shall
use the proceeds of the loan(s) evidenced by this Note for the
commercial purposes of Borrower, as follows: for working
capital.
SECURITY. Stephen Glick has granted or will grant Bank a
security interest in the collateral described in the Loan Documents
and such other security instruments as are executed from time to
time, including, but not limited to, personal property collateral
described in that certain Security Agreement, dated June 10,
2008, as modified, restated or replaced from time to
time.
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INTEREST
RATE. Interest shall
accrue on the unpaid principal balance of this Note from the date
hereof at the Bank’s Prime Rate, as that rate may change from
time to time in accordance with changes in the Bank’s Prime
Rate (“Interest Rate”). “Bank’s Prime
Rate” means that rate announced by Bank from time to time as
its prime rate and is one of several interest rate bases used by
Bank. Bank lends at rates both above and below Bank’s Prime
Rate, and Borrower acknowledges that Bank’s Prime Rate is not
represented or intended to be the lowest or most favorable rate of
interest offered by Bank.
DEFAULT
RATE. In addition to all
other rights contained in this Note, if a Default (as defined
herein) occurs and as long as a Default continues, all outstanding
Obligations, other than Obligations under any swap agreements (as
defined in 11 U.S.C. § 101, as in effect from time to time)
between Borrower and Bank or its affiliates, shall bear interest at
the Interest Rate plus 3% (“Default Rate”), except if
the Note is governed by the laws of the State of North Carolina and
the original principal amount is less than or equal to $300,000.00.
The Default Rate shall also apply from acceleration until the
Obligations or any judgment thereon is paid in full.
INTEREST AND
FEE(S) COMPUTATION (ACTUAL/360). Interest and fees, if any, shall be computed on
the basis of a 360-day year for the actual number of days in the
applicable period (“Actual/360 Computation”). The
Actual/360 Computation determines the annual effective interest
yield by taking the stated (nominal) rate for a year’s
period and then dividing said rate by 360 to determine the daily
periodic rate to be applied for each day in the applicable period.
Application of the Actual/360 Computation produces an annualized
effective rate exceeding the nominal rate.
REPAYMENT
TERMS. This Note shall be
due and payable in consecutive monthly payments of accrued interest
only, commencing on November 30, 2008, and continuing on the
last day of each month thereafter until fully paid. In any event,
all principal and accrued interest shall be due and payable on
October 31, 2009.
APPLICATION
OF PAYMENTS. Monies
received by Bank from any source for application toward payment of
the Obligations shall be applied to accrued interest and then to
principal. If a Default occurs, monies may be applied to the
Obligations in any manner or order deemed appropriate by
Bank.
If any payment
received by Bank under this Note or other Loan Documents is
rescinded, avoided or for any reason returned by Bank because of
any adverse claim or threatened action, the returned payment shall
remain payable as an obligation of all persons liable under this
Note or other Loan Documents as though such payment had not been
made.
DEFINITIONS.
Loan Documents. The term
“Loan Documents”, as used in this Note and the other
Loan Documents, refers to all documents executed in connection with
or related to the loan evidenced by this Note and any prior notes
which evidence all or any portion of the loan evidenced by this
Note, and any letters of credit issued pursuant to any loan
agreement to which this Note is subject, any applications for such
letters of credit and any other documents executed in connection
therewith or related thereto, and may include, without limitation,
a commitment letter that survives closing, a loan agreement, this
Note, guaranty agreements, security agreements, security
instruments, financing statements, mortgage instruments, any
renewals or modifications, whenever any of the foregoing are
executed, but does not include swap agreements (as defined in 11
U.S.C. § 101, as in effect from time to time).
Obligations. The term “Obligations”, as used in
this Note and the other Loan Documents, refers to any and all
indebtedness and other obligations under this Note, all other
obligations under any other Loan Document(s), and all obligations
under any swap agreements (as defined in 11 U.S.C. § 101, as
in
Page 2
effect from
time to time) between Borrower and Bank, or its affiliates,
whenever executed. Certain Other Terms. All terms that are
used but not otherwise defined in any of the Loan Documents shall
have the definitions provided in the Uniform Commercial
Code.
LATE
CHARGE. If any payments
are not timely made, Borrower shall also pay to Bank a late charge
equal to 5% of each payment past due for 10 or more days. This late
charge shall not apply to payments due at maturity or by
acceleration hereof.
Acceptance by
Bank of any late payment without an accompanying late charge shall
not be deemed a waiver of Bank’s right to collect such late
charge or to collect a late charge for any subsequent late payment
received. ATTORNEYS’ FEES AND OTHER COLLECTION COSTS.
Borrower shall pay all of Bank’s reasonable expenses actually
incurred to enforce or collect any of the Obligations including,
without limitation, reasonable arbitration, paralegals’,
attorneys’ and experts’ fees and expenses, whether
incurred without the commencement of a suit, in any trial,
arbitration, or administrative proceeding, or in any appellate or
bankruptcy proceeding.
USURY. If at any time the effective interest rate under
this Note would, but for this paragraph, exceed the maximum lawful
rate, the effective interest rate under this Note shall be the
maximum lawful rate, and any amount received by Bank in excess of
such rate shall be applied to principal and then to fees and
expenses, or, if no such amounts are owing, returned to
Borrower.
DEFAULT. If any of the following occurs, a default
(“Default”) under this Note shall exist: Nonpayment;
Nonperformance. The failure of timely payment or performance of
the Obligations or Default under this Note or any other Loan
Documents. False Warranty. A warranty or representation made
or deemed made in the Loan Documents or furnished Bank in
connection with the loan evidenced by this Note proves materially
false, or if of a continuing nature, becomes materially false.
Cross Default. At Bank’s option, any default in
payment or performance of any obligation under any other loans,
contracts or agreements of Borrower, any Subsidiary or Affiliate of
Borrower, any general partner of or the holder(s) of the majority
ownership interests of Borrower with Bank or its affiliates
(“Affiliate” shall have the meaning as defined in 11
U.S.C. § 101, as in effect from time to time, except that the
term “Borrower” shall be substituted for the term
“Debtor” therein; “Subsidiary” shall mean
any business in which Borrower holds, directly or indirectly, a
controlling interest). Cessation; Bankruptcy. The death of,
appointment of a guardian for, dissolution of, termination of
existence of, loss of good standing status by, appointment of a
receiver for, assignment for the benefit of creditors of, or
commencement of any bankruptcy or insolvency proceeding by or
against Borrower, its Subsidiaries or Affiliates, if any, or any
general partner of or the holder(s) of the majority ownership
interests of Borrower, or any party to the Loan Documents.
Material Capital Structure or Business Alteration. Without
prior written consent of Bank, (i) a material alteration in
the kind or type of Borrower’s business or that of
Borrower’s Subsidiaries or Affiliates, if any; (ii) the
sale of substantially all of the business or assets of Borrower,
any of Borrower’s Subsidiaries or Affiliates or any
guarantor, or a material portion (10% or more) of such business or
assets if such a sale is outside the ordinary course of business of
Borrower, or any of Borrower’s Subsidiaries or Affiliates or
any guarantor, or more than 50% of the outstanding stock or voting
power of or in any such entity in a single transaction or a series
of transactions; (iii) the acquisition of substantially all of
the business or assets or more than 50% of the outstanding stock or
voting power of any other entity; or (iv) should any Borrower
or any of Borrower’s Subsidiaries or Affiliates or any
guarantor enter into any merger or consolidation. Material
Adverse Change. Bank determines in good faith, in its sole
discretion, that the prospects for payment or performance of the
Obligations are impaired or there has occurred a material adverse
change in the business or prospects of Borrower, financial or
otherwise.
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REMEDIES
UPON DEFAULT. If a
Default occurs under this Note or any Loan Documents, Bank may at
any time thereafter, take the following actions: Bank Lien.
Foreclose its security interest or lien against Bor
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