EXHIBIT 10.09
Baltimore, Maryland $2,000,000.00
September , 2003
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DEMAND PROMISSORY NOTE
FOR VALUE RECEIVED, the undersigned, AVATECH SOLUTIONS SUBSIDIARY, INC., a
Delaware corporation ("BORROWER"), promises to pay to the order of KEY BANK AND
TRUST ("LENDER"), at the LENDER'S offices at 7F Gwynns Mill Court, Owings Mills,
Maryland 21117, or at such other places as the holder of this Promissory Note
may from time to time designate, the principal sum of Two Million Dollars
($2,000,000.00), or so much as may have been advanced to the BORROWER as
proceeds of the "LOAN," as such term is defined and described in the Loan And
Security Agreement ("AGREEMENT") of even date herewith between the LENDER and
the BORROWER, together with interest thereon at the rate or rates hereafter
specified until paid in full and any and all other sums which may be owing to
the holder of this Promissory Note by the BORROWER pursuant to this Promissory
Note. The following terms shall apply to this Promissory Note.
1. Interest Rate. Interest shall accrue on the unpaid principal balance
of this Promissory Note until paid in full at the higher of: (a) seven and
one-half percent (7.5%); or (b) the annual fluctuating rate of interest which
shall equal the rate obtained by adding two percent (2.0%) to the "PRIME RATE OF
INTEREST" of the LENDER in effect from time to time. The term "PRIME RATE OF
INTEREST" means the highest prime rate of interest on corporate loans at large
U.S. Money Center Banks as presently published by The Wall Street Journal
(Eastern Edition) under the heading or column entitled "Money Rates" or in a
future substitute heading, column, or subheading published by The Wall Street
Journal, or succeeding nationally recognized publication selected by the LENDER.
Changes in the applicable interest rate shall be made as of, and immediately
upon, the occurrence of changes in the PRIME RATE OF INTEREST.
2. Calculation Of Interest. Interest shall be calculated on the basis of a
three hundred sixty (360) days per year factor applied to the actual days on
which there exists an unpaid balance hereunder.
3. Repayment. Accrued and unpaid interest, plus any then due applicable
late payment charges or default interest, shall be paid in consecutive monthly
payments beginning on the fifteenth calendar day of the first month immediately
following the date of this Promissory Note and continuing on the fifteenth
calendar day of each succeeding month. ALL SUMS OUTSTANDING HEREUNDER, INCLUDING
PRINCIPAL, INTEREST, CHARGES AND FEES, ARE PAYABLE IN FULL ON THAT DAY OCCURRING
SIXTY (60) CALENDAR DAYS AFTER THE DEMAND OF THE HOLDER OF THIS PROMISSORY NOTE;
PROVIDED, HOWEVER, THAT IF THERE IS AN "EVENT OF DEFAULT" (AS SUCH TERM IS
DEFINED IN THE AGREEMENT) ALL SUMS OUTSTANDING HEREUNDER ARE PAYABLE IN FULL
IMMEDIATELY UPON THE DEMAND OF THE LENDER. DEMAND FOR PAYMENT IN FULL OF ALL
SUMS DUE HEREUNDER MAY BE MADE AT ANY TIME BY THE HOLDER OF THIS PROMISSORY
NOTE, WITHOUT PRIOR NOTICE AND WITHOUT REGARD AS TO WHETHER OR NOT A DEFAULT OR
VIOLATION OF ANY OF THE BORROWER'S OBLIGATIONS UNDER THIS PROMISSORY NOTE IS
THEN EXISTING OR CONTINUING.
4. Late Payment Charge. If any payment due hereunder, other than any
principal payment due on acceleration or demand, is not received by the holder
within fifteen (15) calendar days after its due date, the BORROWER shall pay a
late payment charge equal to five percent (5%)
of the amount (excluding any principal due as a result of acceleration or
demand) then due and payable. The late payment charge shall be due whether or
not the holder declares this Promissory Note in default or accelerates and
demands immediate payment of the sums due hereunder. The existence of the right
by the holder to receive a late payment charge shall not constitute a grace
period or provide any right in the BORROWER to make a payment other than on its
due date.
5. Application Of Payments. All payments made hereunder shall be applied
first to late payment charges or other sums owed to the holder, next to accrued
interest, and then to principal, or in such other order or proportion as the
holder, in the holder's sole discretion, may elect from time to time.
6. Prepayment. The BORROWER may prepay this Promissory Note in whole or in
part at any time without premium or additional interest. All prepayments made
upon the unpaid principal balance of this Promissory Note shall be applied to
the unpaid principal balance in the inverse order of scheduled maturities.
7. Rights Upon Occurrence Of An Event Of Default. Upon the occurrence of an
"EVENT OF DEFAULT," as such term is defined in the AGREEMENT, the holder of this
Promissory Note shall have the following rights in addition to such other rights
and remedies as are authorized by the AGREEMENT or otherwise available to the
holder under applicable laws:
7.1. Acceleration. The holder of this Promissory Note, in the holder's
sole discretion and without notice or demand, may accelerate and declare due and
immediately owing the entire unpaid principal balance plus accrued interest and
all other sums payable to the holder in accordance with the terms of any of
the "LOAN DOCUMENTS," as such term is defined in the AGREEMENT.
7.2. Default Interest Rate. The holder of this Promissory Note, in the
holder's sole discretion and without notice or demand, may raise the rate of
interest accruing on the unpaid principal balance by two (2) percentage points
above the rate of interest otherwise applicable, independent of whether the
holder elects to accelerate the unpaid principal balance as a result of such
default, unless prior to the imposition of the default rate of interest, the
BORROWER cures such event to the satisfaction of the holder hereof. Any
individual waiver of the holder's right to impose the default rate of interest
shall not be considered a waiver of this section or any future right of the
holder to impose the default rate of interest pursuant to this Section.
7.3. Confession Of Judgment. The BORROWER authorizes any attorney
admitted to practice before any court of record in the United States to appear
on its behalf in any court in one or more proceedings, or before any clerk
thereof or prothonotary or other court official, and to confess judgment against
the BORROWER in favor of the holder of this Promissory Note in the full amount
due on this Promissory Note (including principal, accrued interest and any and
all charges, fees and costs) plus attorneys' fees equal to fifteen percent (15%)
of the amount due, plus court costs, all without prior notice or opportunity of
the BORROWER for prior hearing. The BORROWER agrees and consents that venue and
jurisdiction shall be proper in the Circuit Court of any County of the State of
Maryland or of Baltimore City, Maryland, or in the United States District Court
for the District of Maryland. The BORROWER waives the benefit of any and every
statute, ordinance, or rule of court which may be lawfully waived conferring
upon it any right or privilege of exemption, homestead rights, stay of
execution, or supplementary proceedings, or other relief from the enforcement or
immediate enforcement of a judgment or related proceedings on a judgment. The
authority and power to appear for and enter judgment against the BORROWER shall
not be
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exhausted by one or more exercises thereof, or by any imperfect exercise
thereof, and shall not be extinguished by any judgment entered pursuant thereto;
such authority and power may be exercised on one or more occasions from time to
time, in the same or different jurisdictions, as often as the holder shall deem
necessary, convenient, or proper. In the event that the holder receives, as a
result of execution on a judgment confessed hereunder, attorneys' fees which
exceed the actual legal fees incurred by the holder in connection with the
unpaid balance due to the holder pursuant to this Promissory Note, then, upon
full and final payment of all other sums due and owing to the holder pursuant to
this Promissory Note and payment of the actual attorneys' fees incurred by the
holder, the holder shall remit such excess amount of attorneys' fees to the
BORROWER.
8. Expenses Of Collection And Attorneys' Fees. Should this Promissory Note
be referred to an attorney for collection, whether or not judgment has been
confessed or suit has been filed, the BORROWER shall pay all of the holder's
reasonable costs, fees and expenses, including reasonable attorneys' fees,
resulting from such referral.
9. Waiver Of Defenses. In the event any one or more holders of this
Promissory Note transfer this Promissory Note for value, the BORROWER agrees
that all subsequent holders of this Promissory Note who take for value and
without actual knowledge of a claim or defense of the BORROWER against a prior
holder shall not be subject to any claims or defenses which the BORROWER may
have against a prior holder, all of which are waived as to the subsequent
holder, and that all such subsequent holders shall have all rights of a holder
in due course with respect to the BORROWER even though the subsequent holder may
not qualify, under applicable law, absent this section, as a holder in due
course. The BORROWER shall retain all rights and claims which the BORROWER may
have against prior holders despite any such transfers and the waiver of defenses
provided in this section as to subsequent holders.
10. Waiver Of Protest. The BORROWER, and all other parties to this
Promissory Note, whether maker, indorser, or guarantor, waive presentment,
notice of dishonor and protest.
11. Extensions Of Maturity. All parties to this Promissory Note, whether
maker, indorser, or guarantor, agree that the maturity of this Promissory Note,
or any payment due hereunder, may be extended at any time or from time to time
without releasing, discharging, or affecting the liability of such party.
12. Manner And Method Of Payment. All payments called for in this
Promissory Note shall be made in lawful money of the United States of America.
If made by check, draft, or other payment instrument, such check, draft, or
other payment instrument shall represent immediately available funds. In the
holder's discretion, any payment made by a check, draft, or other payment
instrument shall not be considered to have been made until such time as the
funds represented thereby have been collected by the holder. Should any payment
date fall on a non-banking day, the BORROWER shall make the payment on the next
succeeding banking day.
13. Maximum Rate Of Interest. Any provision contained in any of the LOAN
DOCUMENTS to the contrary notwithstanding, the holder of this Promissory Note
shall not be entitled to receive or collect, nor shall the BORROWER be obligated
to pay, interest hereunder in excess of the maximum rate of interest permitted
by the laws of any state determined to be applicable thereto or the laws of the
United States of America applicable to loans in such applicable state or states,
and if any provisions of this Promissory Note or of any of the other LOAN
DOCUMENTS shall ever be construed or held to permit or require the charging,
collection or payment of any amount of interest in excess of that permitted by
such laws applicable thereto, the provisions of this paragraph shall
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control and shall override any contrary or inconsistent provision. The intention
of the parties is to at all times conform strictly with all applicable usury
laws, and other applicable laws regulating the rates of interest which may be
lawfully charged upon the credit facility evidenced by this Promissory Note. The
interest to be paid in accordance with the terms of this Promissory Note shall
be held subject to reduction to the amount allowed under any usury or other laws
as now or hereafter construed by the courts having jurisdiction, and any sums of
money paid in excess of the interest rate allowed by law shall be applied in
reduction of the principal amounts owing under this Promissory Note.
14. Notices. Any notice or demand required or permitted by or in connection
with this Promissory Note shall be given in the manner specified in the
AGREEMENT for the giving of notices under the AGREEMENT. Notwithstanding
anything to the contrary, all notices and demands for payment from the holder
actually received in writing by the BORROWER shall be considered to be effective
upon the receipt thereof by the BORROWER regardless of the procedure or method
utilized to accomplish delivery thereof to the BORROWER.
15. Assignability. This Promissory Note may be assigned by the LENDER or
any holder at any time or from time to time without notice to or consent from
the BORROWER.
16. Binding Nature. This Promissory Note shall inure to the benefit of and
be enforceable by the LENDER and the LENDER'S successors and assigns and any
other person to whom the LENDER or any holder may grant an interest in the
BORROWER'S obligations hereunder, and shall be binding and enforceable against
the BORROWER and the BORROWER'S successors and assigns.
17. Invalidity Of Any Part. If any provision or part of any provision of
this Promissory Note shall for any reason be held invalid, illegal or
unenforceable in any respect, such invalidity, illegality or unenforceability
shall not affect any other provisions of this Promissory Note and this
Promissory Note shall be construed as if such invalid, illegal or unenforceable
provision or part thereof had never been contained herein, but only to the
extent of its invalidity, illegality, or unenforceability.
18. Choice Of Law. The laws of the State of Maryland (excluding, however,
conflict of law principles) shall govern and be applied to determine all issues
relating to this Promissory Note and the rights and obligations of the parties
hereto, including the validity, construction, interpretation, and enforceability
of this Promissory Note and its various provisions and the consequences and
legal effect of all transactions and events which resulted in the issuance of
this Promissory Note or which occurred or were to occur as a direct or indirect
result of this Promissory Note having been executed.
19. Consent To Jurisdiction; Agreement As To Venue. The BORROWER
irrevocably consents to the non-exclusive jurisdiction of the courts of the
State of Maryland and of the United States District Court for the District of
Maryland, if a basis for federal jurisdiction exists. The BORROWER agrees that
venue shall be proper in any circuit court of the State of Maryland selected by
the LENDER or in the United States District Court for the District of Maryland
if a basis for federal jurisdiction exists and waives any right to object to the
maintenance of a suit in any of the state or federal courts of the State of
Maryland on the basis of improper venue or of inconvenience of forum.
20. Unconditional Obligations. The BORROWER'S obligations under this
Promissory Note shall be the unconditional duty and obligation of the BORROWER
and shall be independent
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of any rights of set-off, recoupment or counterclaim which the BORROWER might
otherwise have against the holder of this Promissory Note. The BORROWER shall
pay absolutely the payments of principal, interest, fees and expenses required
hereunder, free of any deductions and without abatement, diminution or set-off.
21. Seal And Effective Date. This Promissory Note is an instrument executed
under seal and is to be considered effective and enforceable as of the date set
forth on the first page hereof, independent of the date of actual execution and
delivery.
22. Tense; Gender; Defined Terms; Section Headings. As used herein, the
singular includes the plural and the plural includes the singular. A reference
to any gender also applies to any other gender. Defined terms are entirely
capitalized throughout. The section headings are for convenience only and are
not part of this Promissory Note.
23. Actions Against Lender. Any action brought by the BORROWER against the
LENDER which is based, directly or indirectly, on this Promissory Note or any
matter in or related to this Promissory Note, including but not limited to the
making of the loan evidenced hereby or the administration or collection thereof,
shall be brought only in the courts of the State of Maryland. The BORROWER may
not file a counterclaim against the LENDER in a suit brought by the LENDER
against the BORROWER in a state other than the State of Maryland unless under
the rules of procedure of the court in which the LENDER brought the action the
counterclaim is mandatory, and not merely permissive, and will be considered
waived unless filed as a counterclaim in the action instituted by the LENDER.
The BORROWER agrees that any forum other than the State of Maryland is an
inconvenient forum and that a suit brought by the BORROWER against the LENDER in
a court of any state other than the State of Maryland should be forthwith
dismissed or transferred to a court located in the State of Maryland by that
Court.
24. Waiver Of Jury Trial. The BORROWER (by execution of this Promissory
Note) and the LENDER (by acceptance of this Promissory Note) agree that any
suit, action, or proceeding, whether claim or counterclaim, brought or
instituted by or against the BORROWER or the LENDER, or any successor or assign
of the BORROWER or the LENDER, on or with respect to this Promissory Note or any
of the other LOAN DOCUMENTS, or which in any way relates, directly or
indirectly, to the obligations of the BORROWER to the LENDER under this
Promissory Note or any of the other LOAN DOCUMENTS, or the dealings of the
parties with respect thereto, shall be tried only by a court and not by a jury.
THE BORROWER AND THE LENDER HEREBY EXPRESSLY WAIVE ANY RIGHT TO A TRIAL BY JURY
IN ANY SUCH SUIT, ACTION, OR PROCEEDING.
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IN WITNESS WHEREOF, the BORROWER has duly executed this Promissory Note
under seal as of the date first above written.
WITNESS/ATTEST: THE BORROWER:
AVATECH SOLUTIONS SUBSIDIARY, INC.,
A Delaware Corporation
By: (SEAL)
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