EXECUTION COPY
PROMISSORY NOTE
Principal Amount: $225,560.00
Interest Rate: 7.00% FOR INITIAL TERM
Effective Date of Note: JANUARY 26, 2007
Initial Term: THREE YEARS
FOR VALUE RECEIVED, COMPLETE POWER SOLUTIONS, LLC, a Florida limited
liability company, 1288 SW 29th Avenue, Pompano Beach, Florida 33069 hereinafter
referred to as the "Borrower," promises to pay to the order of CHINA DIRECT
TRADING CORP., located at 10400 Griffin Road, Suite 109, Cooper City, Florida
33328, hereinafter referred to as the "Lender," the principal sum ("Principal")
of TWO HUNDRED TWENTY-FIVE THOUSAND FIVE HUNDRED SIXTY DOLLARS AND NO CENTS
($225,560.00), in lawful currency of the United States of America, together with
interest on the principal balance of this Note at seven percent (7.00%) interest
per annum ("Interest").
Principal and Interest pursuant to the terms of this note (the "Note")
shall be due and payable as follows:
PRINCIPAL & INTEREST: The entire principal shall be due and payable on
or before January 26, 2010. All Interest computed at the rate herein specified
shall be paid quarterly on April 1, July 1, October 1 and January 1, except that
the initial Interest payment will be made on July 1, 2007, together with
Interest for the second quarterly Interest period.
The quarterly interest payments for each quarter, other than the
initial quarter, will equal $3,947.30. The initial and final Interest payment
will be calculated based on the actual number of days elapsed in a 360 day year
comprised of 30 day months. In the case of the first quarter, this is 64 days or
$2,806.97 for the first quarter and together with the second quarter payment
equalling a total Interest payment of $6,754.27. On January 26, 2010, the
Principal Amount plus interest due shall be paid in lawful currency of the
United States of America unless automatically extended for additional one year
periods ("Additional Terms") on the terms set forth below (the "Initial Due
Date").
If all Principal and accrued and unpaid Interest with respect to this
Note is not paid in full on or before the Initial Due Date then Interest shall
increase to twelve percent (12%) per annum for each Additional Term or portion
thereof.
The principal amount of this Note may be increased by up to $7,500.00
in the event that the claim by a customer for the costs ("Remediation Costs")
for removal of a garden required by Howard Ullman in connection with the
installation of a generator is abandoned or settled for an amount less than
$7,500.00.
PREPAYMENT: Provided none of the terms, conditions, covenants,
warranties and agreements of this Note or other instruments delivered on the
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effective date of this Note or subsequent thereto by the Borrower to Lender
shall be in default, the Borrower shall have the right, at any time and from
time to time, to prepay the unpaid principal evidenced by this Note in whole or
in part without premium or penalty but with accrued Interest to the date of such
pre-payment on any amount prepaid. Any such prepayment shall be applied first to
accrued Interest with the balance, if any, to be applied to the then outstanding
principal balance. The Borrower shall pay Lender a late charge of six percent
(6.00%) of any installment not received by the Lender within fifteen (15)
calendar days after the due date of the payment, whether of Interest or
Principal; provided, however, such late charge shall not apply to failure to pay
Principal on the Initial Due Date.
All payments made by the Borrower to Lender shall be applied first to
accrued and unpaid Interest and the balance, if any, to Principal.
1. The occurrence of any one or more of the following events, circumstances, or
conditions shall constitute a default hereunder ("Event of Default"): (a)
failure of the Borrower to pay to the Lender promptly when the same shall become
due (whether at scheduled maturity, upon acceleration or otherwise) any portion
of the obligations including, but not limited to, any installment of Principal
or Interest due under this Note or any fees owing to the Lender and such failure
shall continue for more than fifteen (15) days; (b) the filing of any petition
under the U.S. Bankruptcy Code, or any similar federal or state debtor-creditor
statutes, by or against the Borrower; (d) an application for the appointment of
a receiver for, the making of a general assignment for the benefit of creditors
by, or the insolvency of the Borrower; (e) the entry of a judgment in excess of
$100,000.00 against the Borrower which is not vacated or bonded within thirty
(30) days after its entry; (f) the issuance of any writ of attachment or the
filing of any encumbrance against any property of the Borrower; (g) the taking
of possession of any substantial part of the property of the Borrower at the
instance of any governmental authority; (h) the dissolution, merger,
consolidation, or reorganization of the Borrower; (i) the occurrence of any
material change in the financial conditions or affairs of any of the Borrower as
in the reasonable but sole opinion of the Lender materially impairs the Lender's
security or materially increases its risk. At any time after the occurrence of
any such default, the indebtedness evidenced hereby or thereby shall, at the
option of the Lender, immediately become due and payable without demand upon or
notice to the Borrower, and the Lender shall be entitled to exercise all
remedies as provided by applicable law.
2. Upon the occurrence and during the continuance of an Event of Default, the
Lender is authorized, without notice to the Borrower (the giving of notice being
expressly waived by the Borrower) to set off and apply any indebtedness owing by
the Lender to the Borrower or any one of them against the indebtedness evidenced
by this Note, although then contingent or unmatured. The Lender agrees to notify
the Borrower after any such setoff and application; provided, however, the
failure to give such right of setoff and to have made a charge against any such
money immediately upon the occurrence of such default even though such charge is
made or entered on the books of Lender subsequent thereto. The rights of the
Lender under this Paragraph 2 are in addition to any other rights and remedies
which the Lender may have.
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3. The Lender may transfer this Note and the transferee(s) shall thereupon
become vested with all the powers and rights herein given to the Lender with
respect thereto; and the Lender shall thereafter be forever relieved and fully
discharged from any liability or responsibility in the matter, but the Lender
shall retain all rights and powers hereby given with respect to any property not
so transferred; provided, however, that in connection with any transfer of this
Note, Lender shall obtain and provide Borrower with a written acknowledgement by
the transferee of Borrower's right of offset against this Note provided under
that certain Purchase and Settlement Agreement dated as of December 31, 2006
(the "Purchase Agreement"). Lender hereby acknowledges and agrees that under
Section 4.05 of the Purchase Agreement Borrower has the right but not the
obligation to offset any amounts owed to Borrower for payment of indemnication
obligations under the Purchase Agreement.
4. The Borrower hereby waives presentment for payment, demand, notice of
dishonor, protest, extension of time without notice and/or any and all
requirements necessary to hold Borrower liable as maker and agrees that (i) any
collateral, lien and/or right of setoff securing any indebtedness evidenced by
this Note may, from time to time, in whole or in part, be exchanged or released,
and any person liable on or with respect to this Note may be released all
without notice to or further reservations of rights against the Borrower, and
(ii) none of the terms or provisions hereof may be waived, altered, modified or
amended except as the Lender may consent thereto in writing.
5. The Borrower hereby agrees to pay all reasonable out-of-pocket costs and
expenses, including reasonable attorneys' fees, incurred by the Lender in the
collection of the indebtedness evidenced by this Note or in enforcing any of the
rights, powers, remedies, and privileges of the Lender hereunder. As used in
this Note, the term "attorneys' fees" shall mean reasonable charges and expenses
for legal services rendered to or on behalf of the Lender in connection with the
collection of the indebtedness evidenced by this Note at any time whether prior
to the commencement of judicial proceedings and/or thereafter at the trial
and/or appellate level and/or in pre- and post-judgment or bankruptcy
proceedings.
6. Both Principal and Interest evidenced by this Note shall be payable in lawful
currency of the United States of America to the Lender at 10400 Griffin Road,
Suite 109, Cooper City, Florida 33328, or at such other place designated by
Lender in writing, in immediately available funds without deduction for or on
account of any present or future taxes, duties or other charges levied or
imposed on this Note, the proceeds hereof, or on the Borrower or holder hereof
by any government, or any instrumentality, authority or political subdivision
thereof. The Borrower agrees upon the request of the Lender, to pay all such
taxes (other than taxes on or measured by income of the holder hereof), duties,
and other charges in addition to the principal and interest evidenced by this
Note.
7. Nothing contained in this Note or any other instrument between the parties
hereto shall be deemed to establish or require the payment of a rate of interest
in excess of the rate (whether limited or unlimited) that may legally be charged
on loans or extension of credit made by any bank and/or lender or creditor under
the laws (whether codified or not) applicable to this Note ("Maximum Rate"). In
the event that the rate of interest so contracted to be paid should exceed the
Maximum Rate, whether as a result of its fluctuation, acceleration of the
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maturity hereof or otherwise, the rate of interest to be paid hereunder shall be
automatically reduced to the Maximum Rate and so much of any interest reserved,
charged or taken as would cause the same to exceed the Maximum Rate shall be
deemed not to be a credit against interest but rather a prepayment on account of
and be automatically credited against outstanding principal evidenced hereby
regardless of how the same may appear on the Lender's or the Borrower's books or
records or any memoranda of whatever nature evidencing the same; provided,
however, no such application shall operate to cure or act as a waiver of any
event of default occasioning acceleration to which the Lender is entitled
hereunder.
8. Notwithstanding anything to the contrary stated herein or in any of the
documents executed concurrently herewith or hereafter by the Borrower, any
amount of principal and/or interest evidenced by this Note which is not paid
when due, and is, therefore, delinquent whether at stated maturity, by
acceleration or otherwise, shall bear interest from the day when due until such
amount is paid in full, payable on demand, at the Maximum Rate not to exceed the
lower of (a) eighteen percent (18%) per annum; or (b) the maximum rate of
interest permissible by law; provided, however, that if at any time it is
determined that an amount in excess of the Maximum Rate has been charged, then
in such event the excess over the Maximum Rate shall ipso facto be applied
toward the reduction of the principal balance.
9. Any default by the Borrower hereunder shall constitute a default under any
other loan or loans outstanding between the Borrower or any one of them and
lender (excepting herefrom outstanding loans to affiliates of the Borrower) and
any such default shall constitute a default under all outstanding loans and
shall entitle Lender to exercise all the rights and remedies which may be stated
in the loan documentation governing such loans, including specifically, but
without limitation, the right of acceleration and foreclosure of all property
which is collateralized to the Lender, if any.
10. If any provision of this Note shall be deemed unenforceable under applicable
law, such provision shall be ineffective, but only to the extent of such
unenforceability, without invalidating the remainder of such provision or the
remaining provisions of this Note. All of the terms and provisions of this Note
shall be applicable to and be binding upon each and every maker, endorser,
surety, guarantor, all other persons who are or may become liable for the
payment hereof and their heirs, personal representatives, successors or assigns.
11. This Note shall be construed and applied pursuant to the laws of the state
of Florida.
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IN WITNESS WHEREOF, this Note shall be effective as of the day and year
first above written.
BORROWER:
COMPLETE POWER SOLUTIONS, LLC,
a Florida limited liability company
By: /s/
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Name: William Dato
Title: Manager
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