PROMISSORY NOTE
Principal Loan Date Maturity Loan No Call Collateral Account Officer Int
$8,500,000.00 07-27-1998 06-30-1999 47886 220 40,42 0206190 DRB
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References in the shaded area are for Lender's use only and do not limit
the applicability of this document to any particular loan or item.
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Borrower: Tower Tech, Inc. (TIN: 000000000)
P.O. Box 891810
Oklahoma City, OK 73173
Lender: Southwestern Bank & Trust Company
0000 Xxxxx Xxxxxxx Xxx.
P.O. Box 19100
Oklahoma City, OK 73139
________________________________________________________________________________
Principal Amount-$8,500,000.00 Initial Rate: 10.500% Date of Note: July 27,1998
PROMISE TO PAY. Tower Tech, Inc. ("Borrower") promises to pay to Southwestern
Bank & Trust Company ("Lender"), or order, in lawful money of the United States
of America, the principal amount of Eight Million Five Hundred Thousand & 00/100
Dollars ($8,500,000.00) or so, much as may be outstanding, together with
interest on the unpaid outstanding principal balance of each advance. Interest
shall be calculated from the date of each advance until repayment of each
advance. The maximum principal amount of this Note shall be reduced to
(Initials: DRB, CDW) $5,000,000.00 on October 31, 1998, and if necessary,
Borrower shall make a mandatory prepayment as set forth below. PAYMENT. Borrower
will pay this loan on demand, or if no demand is made, in one payment of all
outstanding principal plus all accred unpaid interest on June 30, 1999. In
addition, Xxxxxxxx will pay regular monthly payments of accrued unpaid interest
beginning August 30, 1998, and all subsequent Interest payments are due on the
same day of each month after that. The annual interest rate for this Note is
computed on a 365/360 basis; that is, by applying the ratio of the annual
interest rate over a year of 360 days, multiplied by the outstanding principal
balance, multiplied by the actual number of days the principal balance is
outstanding. Borrower will pay Lender at Xxxxxx's address shown above or at such
other place as Lender may designate in writing. Unless otherwise agreed or
required by applicable law, payments will be applied first to accrued unpaid
interest, then to principal, and any remaining amount to any unpaid collection
costs and late charges.
VARIABLE INTEREST RATE. The interest rate on this Note is subject to change from
time to time based on changes in an independent index which is the National
Prime (the "Index"). The index is not necessarily the lowest rate charged by
Lender on its loans. If the Index becomes unavailable during the term of this
loan, Lender may designate a substitute index after notice to Borrower. Lender
will tell Borrower the current Index rate upon Xxxxxxxx's request. Borrower
understands that Lender may make loans based on other rates as well. The
interest rate change will not occur more often than each day. The Index
currently is 8.500% per annum. The Interest rate to be applied to the unpaid
principal balance of this Note will be at a rate of 2.000 percentage points over
the Index, resulting in an initial rate of 10.500% per annum. NOTICE: Under no
circumstances will the interest rate on this Note be more than the maximum rate
allowed by applicable law.
PREPAYMENT; MINIMUM INTEREST CHARGE. In any event, even upon full prepayment of
this Note, Borrower understands that Lender is entitled to a minimum interest
charge of $7.50. Other than Xxxxxxxx's obligation to pay any minimum interest
charge, Borrower may pay without penalty all or a portion of the amount owed
earlier than it is due. Early payments will not, unless agreed to by Xxxxxx in
writing, relieve Xxxxxxxx of Xxxxxxxx's obligation to continue to make payments
of accrued unpaid interest. Rather, they will reduce the principal balance due.
DEFAULT. Borrower will be in default if any of the following happens: (a)
Borrower fails to make any payment when due. (b) Borrower breaks any promise
Borrower has made to Lender, or Borrower fails to comply with or to perform when
due any other term, obligation, covenant, or condition contained in this Note or
any agreement related to this Note, or in any other agreement or loan Borrower
has with Lender. (c) Borrower defaults under any loan, extension of credit,
security agreement, purchase or sales agreement, or any other agreement, in
favor of any other creditor or person that may materially affect any of
Borrower's property or Borrower's ability to repay this Note or perform
Borrower's obligations under this Note or any of the Related Documents. (d) Any
representation or statement made or furnished to Lender by Borrower or on
Xxxxxxxx's behalf is false or misleading in any material respect either now or
at the time made or furnished. (e) Xxxxxxxx becomes insolvent, a receiver is
appointed for any part of Xxxxxxxx's property, Xxxxxxxx makes an assignment for
the benefit of creditors, or any proceeding is commenced either by Borrower or
against Borrower under any bankruptcy or insolvency laws. (f) Any creditor tries
to take any of Xxxxxxxx's property on or in which Xxxxxx has a lien or security
interest. This includes a garnishment of any of Xxxxxxxx's accounts with Xxxxxx.
(g) Any guarantor dies or any of the other events described in this default
section occurs with respect to any guarantor of this Note or any guarantor
seeks, claims or otherwise attempts to limit, modify or revoke such guarantor's
guarantee of this Note. (h) A material adverse change occurs in Borrower's
financial condition, or Xxxxxx believes the prospect of payment or performance
of the Indebtedness is impaired. (I) Lender in good xxxxx xxxxx itself insecure.
LENDER'S RIGHTS. Upon default, Xxxxxx may declare the entire unpaid principal
balance on this Note and all accrued unpaid interest immediately due, without
notice, and then Borrower will pay that amount Upon default, including failure
to pay upon final maturity, Lender, at its option, may also, if permitted under
applicable law, increase the variable interest rate on this Note to 7.000
percentage points over the Index. The interest rate will not exceed the maximum
rate permitted by applicable law. Lender may hire or pay someone else to help
collect this Note if Borrower does not pay. Xxxxxxxx also will pay Lender that
amount. This includes, subject to any limits under applicable law, Xxxxxx's
attorneys' fees and Xxxxxx's legal expenses whether or not there is a lawsuit,
including attorneys' fees and legal expenses for bankruptcy proceedings
(including efforts to modify or vacate any automatic stay or injunction),
appeals, and any anticipated post-judgment collection services. If not
prohibited by applicable law, Xxxxxxxx also will pay any court costs, in
addition to all other sums provided by law. This Note has been delivered to
Lender and accepted by Xxxxxx in the State of Oklahoma. If there is a lawsuit,
Xxxxxxxx agrees upon Xxxxxx's request to submit to the jurisdiction of the
courts of Oklahoma County, the State of Oklahoma. This Note shall be governed by
and construed in accordance with the laws of the State of Oklahoma.
RIGHT OF SETOFF. Borrower grants to Lender a contractual security interest in,
and hereby assigns, conveys, delivers, pledges, and transfers to Lender all
Borrower's right, title and interest in and to, Xxxxxxxx's accounts with Lender
(whether checking, savings, or some other account), including without limitation
all accounts held jointly with someone else and all accounts Borrower may open
in the future, excluding however all IRA and Xxxxx accounts, and all trust
accounts for which the grant of a security interest would be prohibited by law.
Borrower authorizes Xxxxxx, to the extent permitted by applicable law, to charge
or setoff all sums owing on this Note against any and all such accounts.
COLLATERAL. This Note is secured by All Borrower's accounts (excluding accounts
arising from sales to foreign (i.e. not U.S.) nationals); inventory; general
intangibles; rental fleet inventory; U.S. Patent no.5,487,849 and U.S. Patent
no.5,487,531; and Assignment of Life Insurance on Xxxxxx X. Xxxxxx.
LINE OF CREDIT. This Note evidences a revolving line of credit. Advances under
this Note may be requested orally by Borrower or as provided in this paragraph.
Lender may, but need not, require that all oral requests be confirmed in
writing. All communications, instructions, or directions by telephone or
otherwise to Lender are to be directed to Xxxxxx's office shown above. The
following party or parties are authorized as provided in this paragraph to
request advances under the line of credit until Xxxxxx receives from Borrower at
Xxxxxx's address shown above written notice of revocation of their authority
Xxxxxxx X. Xxxxxxxx, Chief Financial Officer. Advances under this note are
subject to the conditions and limitations set forth in the Business Loan
Agreement of even date herewith. Xxxxxxxx agrees to be liable for all sums
either: (a) advanced in accordance with the instructions of an authorized person
or (b) credited to any of Xxxxxxxx's accounts with Xxxxxx. The unpaid principal
balance owing on this Note at any time may be evidenced by endorsements on this
Note or by Xxxxxx's internal records, including daily computer print-outs.
Lender will have no obligation to advance funds under this Note if: (a) Borrower
or any guarantor is in default under the terms of this Note or any agreement
that Borrower or any guarantor has with Lender, including any agreement made in
connection with the signing of this Note; (b) Borrower or any guarantor ceases
doing business or is insolvent; (c) any guarantor seeks, claims or otherwise
attempts to limit, modify or revoke such guarantor's guarantee of this Note or
any other loan with Lender; (d) Borrower has applied funds provided pursuant to
this Note for purposes other than those authorized by Lender; or (e) Lender in
good xxxxx xxxxx itself insecure under this Note or any other agreement between
Lender and Borrower.
MANDATORY PREPAYMENT. On October 31,1998, the maximum principal amount of this
Note shall be reduced to $5,000,000.00. In the event the principal amount
advanced on this Note on October 31,1998, exceeds $5,000,000.00, Borrower shall,
on October 31,1998, pay to Lender the amount necessary to reduce the principal
amount outstanding on this Note to the lesser of: (i) $5,000,000.00 or (ii) the
Borrowing Base, as set forth in the Business Loan Agreement of even date
herewith. Thereafter, the maximum principal amount eligible to be advanced on
this Note shall not exceed the lesser of (I) $5,000,000.00, or (ii) the
Borrowing Base.
PRIOR NOTE. This Note is executed end delivered to increase the face amount of
that certain Promissory Note #47886 from Tower Tech, Inc. to Southwestern Bank
dated April 17, 1998 in the principal amount of $6,500,000.00 to mature June
30,1999, and not in payment, release or discharge of such prior note.
GENERAL PROVISIONS. This Note is payable on demand. The Inclusion of specific
default provisions or rights of Lender shall not preclude Lender's right to
declare payment of this Note on its demand. Lender may delay or forgo enforcing
any of its rights or remedies under this Note without losing them. Borrower and
any other person who signs, guarantees or endorses this Note, to the extent
allowed by law, waive presentment, demand for payment, protest and notice of
dishonor. Upon any change in the terms of this Note, and unless otherwise
expressly stated in writing, no party who signs this Note, whether as maker,
guarantor, accommodation maker or endorser, shall be released from liability.
All such parties agree that Lender may renew or extend (repeatedly and for any
length of time) this loan, or release any party or guarantor or collateral; or
impair, fail to realize upon or perfect Xxxxxx's security interest in the
collateral; and take any other action deemed necessary by Lender without the
consent of or notice to anyone. All such parties also agree that Xxxxxx may
modify this loan without the consent of or notice to anyone other than the party
with whom the modification is made.
07-27-1998 PROMISSORY NOTE Page 2
(Continued)
PRIOR TO SIGNING THIS NOTE, XXXXXXXX READ AND UNDERSTOOD ALL THE PROVISIONS OF
THIS NOTE, INCLUDING THE VARIABLE INTEREST RATE PROVISIONS. XXXXXXXX AGREES TO
THE TERMS OF THE NOTE AND ACKNOWLEDGES RECEIPT OF A COMPLETED COPY OF THE NOTE.
BORROWER:
Tower Tech, Inc.
By: ss/XXXXXXX X. XXXXXXXX
_______________________
Xxxxxxx X. Xxxxxxx
Chief Financial Officer
