Exhibit 4.26
SECURED PROMISSORY
NOTE
THE ISSUANCE AND SALE OF THE
SECURITIES REPRESENTED BY THIS SECURED PROMISSORY NOTE HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR
APPLICABLE STATE SECURITIES LAWS. THE SECURITIES MAY NOT
BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED (I) IN THE
ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE
SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR
(B) AN OPINION OF COUNSEL, IN A FORM REASONABLY
ACCEPTABLE TO BORROWER, THAT REGISTRATION IS NOT REQUIRED UNDER
SAID ACT OR (II) UNLESS SOLD PURSUANT TO RULE 144 OR RULE 144A
UNDER SAID ACT. NOTWITHSTANDING THE FOREGOING, THE SECURITIES
MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT
OR OTHER LOAN OR FINANCING ARRANGEMENT SECURED BY THE
SECURITIES.
OPEN ENERGY
CORPORATION
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Date: April 30, 2008
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U.S. $3,500,000
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FOR VALUE RECEIVED,
Open Energy Corporation, a Nevada
corporation (“ Borrower ”), hereby promises to
pay to The Quercus Trust, or its registered assigns (“
Lender ”), the sum of Three Million Five Hundred
Thousand Dollars ($3,500,000.00) or such lesser amount as shall
equal the outstanding amount of advances made by Lender to Borrower
(the “Loan”) pursuant to Section 1.2 of the Loan
and Security Agreement (the “ Advances
”).
(1)
PAYMENTS OF
PRINCIPAL . On the Maturity Date,
Borrower shall pay to Lender, in cash, all outstanding principal
under this Secured Promissory Note (this “
Note ”). The
“ Maturity
Date ” shall be
October 30, 2008. Borrower may prepay all or any portion
of the outstanding principal at any time without fee, charge or
premium.
(2)
MANDATORY
PREPAYMENTS OF PRINCIPAL .
(a)
Prepayments
Upon Failure of Meet Borrowing Conditions. For so long as any
amount remains outstanding under this Note, Borrower shall provide
Lender with a written report (each a “ Borrowing Base Report ”) within five
(5) Business Days immediately following the end of each week,
which Borrowing Base Report shall specify the carried value of the
Qualified Accounts Receivable, Inventory and cash accounts on
Borrower’s financial records as of the last day of the
applicable week (each a “ Reporting Date ”), and shall certify
that the Borrowing Conditions continue to be satisfied as of such
Reporting Date. In the event that any Borrowing Base Report
indicates that the Borrowing Conditions are not satisfied as of the
applicable Reporting Date, then, within five (5) Business Days
immediately following such Reporting Date (each a “
Mandatory Prepayment Date
”),
Borrower shall prepay an amount of principal under the Loan as
shall be required to satisfy the Borrowing Conditions in full as of
such Mandatory Prepayment Date.
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(b)
Prepayments
Upon Receipt of Rebates. Upon the receipt by
Borrower of funds in respect of Rebates (as defined in herein),
Borrower shall prepay an amount of principal under the Loan equal
to such funds received in respect of such Rebates.
Prepayments pursuant to this Section 1.5(ii) shall be
made within five (5) Business Days of the receipt of the
applicable Rebate funds.
(3)
INTEREST
. This Note
shall bear interest at the rate of 18% per annum payable as
follows: Lender shall receive warrants (“Interest
Warrants”) in the form attached to the Loan and Security
Agreement as Exhibit A to purchase that number of shares of
common stock of the Borrower (“Common Stock”) that will
equate to an 18% annual percentage rate return on the Loan,
assuming it is repaid upon maturity (which equates to 1,389,096
shares of Common Stock as of the date hereof assuming the Loan is
fully funded at $3.5 million), at an exercise price per share of
$0.506, exercisable for seven (7) years commencing six months
from the closing of the Loan. In the event that the Loan is funded
at less than $3.5 million, a ratably lower number of Interest
Warrants shall be issued. In the event Subsequent Advances
are made, Borrower shall issue to Lender a ratable number of
additional Interest Warrants.
(4)
SECURITY
.
Borrower’s performance of the obligations and covenants of
this Note, including but not limited to repayment, shall be secured
by the lien and security interest in the Collateral, as set forth
in the Loan and Security Agreement.
(5)
EVENT OF
DEFAULT .
(a)
Event of
Default . Each of the following
events shall constitute an “ Event of Default ”
hereunder:
(i)
Borrower’s failure to pay to the Lender any amount when and
as due under this Note; or
(ii) any
Event of Default under the Loan and Security Agreement.
(b)
Acceleration
. Upon the
occurrence of an Event of Default under this Note, Lender shall
have, at its option, the right, without further notice or demand,
which Borrower hereby expressly waives, to declare the unpaid
principal immediately due and payable and to exercise any other
rights and remedies that Lender may have; provided, however, that
Lender has delivered to Borrower written notice of such default and
Borrower has not cured said default within five (5) business
days after said notice. Lender’s failure to accelerate
the payment of this Note upon the occurrence of one or more events
of default shall not constitute a waiver of Lender’s right to
exercise such options at any subsequent time with respect to the
same or any other event of default. Lender’s acceptance
of any payment under this Note which is less than payment in full
of all amounts then due and payable shall not constitute a waiver
by Lender of any right to declare a default hereunder or to pursue
any remedy available under this Note, at law or in equity, or under
any other agreement, instrument or document entered into by and
between Borrower and Lender.
(6)
LOST, STOLEN
OR MUTILATED NOTE . Upon receipt by
Borrower of evidence reasonably satisfactory to Borrower of the
loss, theft, destruction or mutilation of this Note, and, in the
case of loss, theft or destruction, of any indemnification
undertaking by the Lender to Borrower in customary form and, in the
case of mutilation, upon surrender and cancellation of this Note,
Borrower shall execute and deliver to the Lender a new Note
representing the outstanding principal.
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(7)
CUMULATIVE RIGHTS AND INJUNCTIVE RELIEF . The remedies
provided in this Note shall be cumulative and in addition to all
other remedies available under this Note, or any other agreement
between Lender and Borrower, at law or in equity (including a
decree of specific performance and/or other injunctive relief) and
nothing herein shall limit the Lender’s right to pursue
actual and consequential damages for any failure by Borrower to
comply with the terms of this Note. Borrower acknowledges
that a breach by it of its obligations hereunder will cause
irreparable harm to the Lender and that the remedy at law for any
such breach may be inadequate. Borrower therefore agrees
that, in the event of any such breach or threatened breach, the
Lender shall be entitled, upon posting a bond and demonstrating
economic loss, in addition to all other available remedies, to an
injunction restraining any breach.
(8)
PAYMENT OF
COLLECTION, ENFORCEMENT AND OTHER COSTS . If (a) this Note
is placed in the hands of an attorney for collection or enforcement
or is collected or enforced through any legal proceeding or the
Lender otherwise takes action to collect amounts due under this
Note or to enforce the provisions of this Note or (b) there
occurs any bankruptcy, reorganization, receivership of Borrower or
other proceedings affecting Company creditors’ rights and
involving a claim under this Note, then Borrower shall pay the
costs incurred by the Lender for such collection, enforcement or
action or in connection with such bankruptcy, reorganization,
receivership or other proceeding, including, but not limited to,
financial advisory fees and attorneys’ fees and
disbursements.
(9)
CONSTRUCTION;
HEADINGS . This Note shall be
deemed to be jointly drafted by Borrower and the Lender and shall
not be construed against any person as the drafter hereof.
The headings of this Note are for convenience of reference and
shall not form part of, or affect the interpretation of, this
Note.
(10)
FAILURE OR
INDULGENCE NOT WAIVER . No failure or delay
on the part of the Lender in the exercise of any power, right or
privilege hereunder shall operate as a waiv
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