PROMISSORY NOTE
EXHIBIT
4.1
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Borrower:
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Lender:
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TELKONET,
INC. and Subsidiaries
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THERMO
CREDIT, LLC
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00000
Xxxxxx Xxxxxxx Xxxxxxx
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000
Xxxxxx Xxxxxx
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Xxxxxxxxxx,
XX 00000
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Xxxxx
0000
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Xxx
Xxxxxxx, XX 00000
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Principal
Amount:
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Maturity Date of
Note:
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Date of
Note:
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U.S.
$1,000,000.00
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September
9, 2010
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September
9, 2008
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PROMISE
TO PAY. For value received, the undersigned makers
(hereinafter referred to as “Borrower,” which term means individually,
collectively, and interchangeably any, each and/or all of them), promises to pay
to the order of THERMO CREDIT LLC (“Lender”), or its registered assigns, in
lawful money of the United States of America the sum of One Million and No/100
($1,000,000.00) Dollars, or such other or lesser amounts as may be reflected
from time to time on the books and records of Lender as evidencing the aggregate
unpaid principal balance of loan advances made to Borrower on a revolving line
of credit basis as provided in the Loan Documents.
LOAN
AGREEMENT. This Note is made
and executed pursuant to, and is subject to, that certain Loan Agreement among
the Borrower and Lender, dated as of September 9, 2008 (as amended from time to
time, the “Loan Agreement”). All capitalized terms used in this Note
(and not otherwise defined herein) shall have the meanings defined in the Loan
Agreement.
INTEREST
RATE. The aggregate
outstanding principal shall bear interest at the greater of (i) the Wall Street
Journal Prime Rate plus nine (9%) percent per annum, adjusted on the date of any
change in such prime or base rate or (ii) Sixteen percent (16%). The
term "Wall Street Journal Prime Rate" is and shall mean the variable rate of
interest, on a per annum basis, which is announced and/or published in the Money
Rates Section of The Wall Street Journal from time to time. All payments of
interest shall be computed on the per annum basis of a year of 360 days for the
actual number of days (including the first day, but excluding the last day)
elapsed. Interest shall accrue from date of advance.
MAXIMUM INTEREST
RATE. Anything to the contrary contained herein
notwithstanding, no provision of this Note shall require the payment or permit
the collection of interest in excess of the maximum permitted by applicable law
("the MAXIMUM RATE"). If interest in excess of the Maximum Rate is
provided for in this Note or otherwise in connection with the loan transaction
represented by this Note, or is adjudicated to be so provided, the provisions of
this paragraph shall govern and prevail, and no Borrower or any guarantor shall
be obligated to pay the excess amount of such interest or any other excess sum
paid for the use, forbearance, or detention of advances made under the Loan
Agreement. In the event Lender ever receives, collects or applies, as
interest due and payable under this Note, any sum in excess of the Maximum Rate,
the amount of the excess shall be applied as a payment and reduction
of the principal of the indebtedness represented by this Note;
and if the principal of the indebtedness represented by this Note has been fully
paid, any remaining excess shall forthwith be paid to Borrowers. In
determining whether or not interest paid or payable exceeds the Maximum Rate,
Borrower and Lender shall, to the extent permitted by applicable law,
(a) characterize any non-principal payment as an expense, fee or premium rather
than as interest, (b) exclude voluntary prepayments and the effects thereof, and
(c) amortize, prorate, allocate and spread, in equal or unequal parts, the total
amount of interest throughout the entire contemplated term of the
indebtedness represented by this Note so that interest for the entire
term does not exceed the Maximum Rate.
MONITORING
FEE. Borrower
will pay a monitoring fee on the amount of the Credit Facility for the period
from and including the date of this Agreement to and including the Maturity
Date, at the rate of ONE TWENTIETH OF ONE PERCENT (0.05%) of the Principal
Amount per week or portion thereof.
ADVANCES. This Note is a
revolving commercial line of credit “master note.” Advances under
this Note may be requested only as provided in the Loan
Agreement. Borrower agrees to be liable for all sums, on the
instructions of an authorized person, either advanced or credited to any deposit
account of Borrower. The following party or parties are authorized to request
advances under the line of credit until Lender receives from Borrower written
notice of revocation of their authority:
Name Office/Position
Xxxx
Xxxxxxxx Chief
Financial Officer
The
unpaid principal balance owing on this Note at any time may be evidenced by
endorsements on this Note or by Lender’s internal records, including daily
computer print-outs. Lender will have no obligation to advance funds
under this Note if: (a) a Default has occurred and is continuing; (b) Borrower
or Guarantor cease doing business or are insolvent; (c) Guarantor seeks, claims
or otherwise attempts to limit, modify or revoke Guarantor’s guarantee of this
Note or any other loan with Lender; or (d) Borrower has applied funds provided
pursuant to this Note for purposes other than those permitted by the Loan
Agreement.
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PAYMENT
SCHEDULE. Interest,
computed on a 365/360 simple interest basis, and fees on this Note
shall be payable monthly in arrears on the last day of each month, beginning
August, 2008 and continuing on the last day of each month until the maturity
date. The balance of all outstanding principal and accrued but unpaid
interest and fees shall be due and payable on the Maturity
Date. If any payment on this Note shall become due on a day
other than a Business Day (defined as a day when financial markets are open for
trading), such payment shall be made on the next succeeding Business Day and
such extension of time shall in such case be included in computing interest in
connection with such payment. Payments are to be made via wire transfer to an
account specified by Lender, or by having such amounts deducted from amounts due
to under that certain Factoring and Security Agreement dated as of January 25,
2008 between Telkonet, Inc. and Thermo Credit, LLC.
PREPAYMENT. Borrower may
prepay this Note as may be provided for and on such terms and conditions as set
forth in the Loan Agreement.
LATE
CHARGE. The
Borrower agrees to pay Lender, on demand, a late charge equal to 5% of any
installment that is not paid within 10 days after it is due and 5% of the
interest portion of the payment due upon the final maturity date of this Note if
that payment is not paid within 10 days after it is due. This late
charge will never be less than $50.00. This provision shall not be
deemed to excuse a late payment or be deemed a waiver of any other right Lender
may have, including, without limitation, the right to declare the entire unpaid
principal and interest immediately due and payable.
ADDITIONAL
INTEREST. If Borrower
defaults under this Note or the Loan Agreement, Lender shall have the right to
prospectively increase the interest rate under this Note by 3% per annum during
the continuance of such default.
LENDER’S
RIGHTS UPON DEFAULT. Upon the
occurrence of and during the continuation of any Event of Default, Lender shall
have all of the rights and remedies provided in the Loan Agreement.
COLLATERAL. This Note is
secured by the Collateral (as defined in the Loan Agreement).
ATTORNEYS’
FEES. If Lender refers
this Note to an attorney for collection, or files suit against Borrower to
collect this Note, or if Borrower files for bankruptcy or other relief from
creditors, Borrower agrees to pay Lender’s reasonable attorneys’
fees.
NSF CHECK
CHARGES. In the event that
Borrower makes any payment under this Note by check and Borrower’s check is
returned to Lender unpaid due to nonsufficient funds in Borrower’s deposit
account, Borrower agrees to pay Lender an additional NSF check charge in the
amount of $30.
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GOVERNING
LAW. Borrower agrees
that this Note and the loan evidenced hereby shall be governed under the laws of
the State of Louisiana. Specifically, this business or commercial
Note is subject to La. R.S. 9:3509, et seq.
WAIVERS. Borrower and each
guarantor (if any) of this Note hereby waive presentment for payment, protest,
notice of protest and notice of nonpayment, and all pleas of division and
discussion, and severally agree that their obligations and liabilities to Lender
hereunder shall be on a “solidary” or “joint and several”
basis. Borrower and each guarantor further severally agree that
discharge or release of any party who is or may be liable to Lender for the
indebtedness represented hereby, or the release of any collateral directly or
indirectly securing repayment hereof, shall not have the effect of releasing an
other party or parties, who shall remain liable to Lender, or of releasing any
other collateral that is not expressly released by Lender. Borrower
and each guarantor additionally agree that Lender’s acceptance of payment other
than in accordance with the terms of this Note, or Lender’s subsequent agreement
to extend or modify such repayment terms, or Lender’s failure or delay in
exercising any rights or remedies granted to Lender, shall likewise not have the
effect of releasing Borrower or any other party or parties from their respective
obligations to Lender, or of releasing any collateral that directly or
indirectly secures repayment hereof. In addition, any failure or delay on the
part of Lender to exercise any of the rights and remedies granted to Lender
shall not have the effect of waiving any of Lender’s rights and
remedies. Any partial exercise of any rights and/or remedies granted
to Lender shall furthermore not be construed as a waiver of any other rights and
remedies; it being Borrower’s intent and agreement that Lender’s rights and
remedies shall be cumulative in nature. Borrower and each guarantor
further agree that, should any event of default occur or exist under this Note,
any waiver or forbearance on the part of Lender to pursue the rights and
remedies available to Lender, shall be binding upon Lender only to the extent
that Lender specifically agrees to any such waiver or forbearance in
writing. A waiver or forbearance on the part of Lender as to one
event of default shall not be construed as a waiver or forbearance as to any
other default. Borrower and each guarantor of this Note further agree
that any late charges provided for under this Note will not be charges for
deferral of time for payment and will not and are not intended to compensate
Lender for a grace or cure period, and no such deferral, grace or cure period
has been or will be granted to Borrower in return for the imposition of any late
charge. Borrower recognizes that Borrower’s failure to make timely
payment of amounts due under this Note will result in damages to Lender,
including but not limited to Lender’s loss of the use of amounts due, and
Borrower agrees that any late charges imposed by Lender hereunder will represent
reasonable compensation to Lender for such damages. Failure to pay in
full any installment or payment timely when due under this Note, whether or not
a late charge is assessed, will remain and shall constitute an Event of Default
hereunder.
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SUCCESSORS
AND ASSIGNS LIABLE. Borrower’s
obligations and agreements under this Note shall be binding upon Borrower’s
successors, heirs, legatees, devisees, administrators, executors and
assigns. The rights and remedies granted to Lender under this Note
shall inure to the benefit of Lender’s successors and assigns, as well as to any
subsequent holder or holders of this Note.
CAPTION
HEADINGS. Caption headings
of the sections of this Note are for convenience purposes only and are not to be
used to interpret or to define their provisions. In this Note,
whenever the context so requires, the singular includes the plural and the
plural also includes the singular.
SEVERABILITY. If any provision
of this Note is held to be invalid, illegal or unenforceable by any court, that
provision shall be deleted from this Note and the balance of this Note shall be
interpreted as if the deleted provision never existed.
ENTIRE
AGREEMENT. The Loan Documents set forth the entire agreement of the
parties with respect to the subject matter hereof and supersede all prior
written understandings between the Borrower and Lender.
PRIOR TO
SIGNING THIS NOTE, BORROWER READ AND UNDERSTOOD ALL THE PROVISIONS OF THIS
NOTE. BORROWER AGREES TO THE TERMS OF THE NOTE AND ACKNOWLEDGES
RECEIPT OF A COMPLETED COPY OF THE NOTE.
BORROWER:
TELKONET, INC.
By: ________________________________
Title: _______________________________
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