EXHIBIT 10.9
MODIFICATION AND EXTENSION PROMISSORY NOTE AND SECURITY AGREEMENT NO. 2
     THIS MODIFICATION AND EXTENSION PROMISSORY NOTE AND SECURITY AGREEMENT NO.
2 (together with that certain Modification and Extension Promissory Note and
Security Agreement No. 1 of even date herewith in the principal amount of ONE
HUNDRED FIFTY THOUSAND AND NO/100 DOLLARS ($150,000.00) (the “Related Note”)) is
an amendment, restatement, renewal, modification and extension of that certain
Consolidated, Amended and Restated Renewal Note and Security Agreement dated
December 18, 2003, by and among National Loan Investors, L.P., The Wheatstone
Energy Group, Inc. and WEGI Acquisition, LLC (the “2003 Consolidation Note”).
Atlanta, Georgia

Effective Date: January 19, 2011
  Principal Amount: $857,215.49 (the “Total Principal Amount”)

     THIS MODIFICATION AND EXTENSION PROMISSORY NOTE AND SECURITY AGREEMENT NO.
2 (this “Note”) is dated as of the 9th day of March, 2011 (the “Agreement
Date”), and made effective as of the 19th day of January, 2011 (the “Effective
Date”), between and among NATIONAL LOAN INVESTORS, L.P., a Delaware Limited
Partnership (“Lender”), having an address of 5619 North Classen Blvd., Oklahoma
City, Oklahoma 73118, as assignee of Wachovia Bank, National Association
(“Wachovia”); and SERVIDYNE SYSTEMS, LLC, a Georgia Limited Liability Company
(the “Borrower”) having an address of 1945 The Exchange, Suite 325, Atlanta,
Cobb County, Georgia 30339-2029.
RECITALS:
     WHEREAS, pursuant to that certain Assumption Agreement dated as of
December 18, 2003, by and between Lender, The Wheatstone Energy Group, Inc.
(“Wheatstone”), The Wheatstone Group, LLC, f/k/a WEGI Acquisition, LLC (“WEGI”)
and other parties signatory thereto (the “2003 Assumption Agreement”), WEGI
assumed and agreed to pay certain loans and related obligations, liabilities,
indebtedness and responsibilities as more particularly set forth and described
in said 2003 Assumption Agreement (collectively, the “Loans”).
     WHEREAS, pursuant to the 2003 Assumption Agreement the indebtedness
evidenced by the Loans and certain documents, agreements, instruments and/or
other writings related to the Loans were consolidated, amended, restated and
renewed by virtue of the 2003 Consolidation Note.
     WHEREAS, on or about April 29, 2009, WEGI was merged into Borrower and
Borrower remained as the surviving entity of such merger, all in accordance with
and pursuant to: (i) those certain Articles of Merger of The Wheatstone Energy
Group, LLC with and into Servidyne Systems, LLC, dated April 29, 2009 (the
“Articles of Merger”); and (ii) that certain Plan of Merger of The Wheatstone
Energy Group, LLC with and into Servidyne Systems, LLC, dated April 29, 2009
(the “Plan of Merger;” the Articles of Merger and the Plan of Merger, together
with all transactions concerning or related thereto shall hereinafter sometimes
be referred to as the “Merger Transaction”).
     WHEREAS, pursuant to the Merger Transaction and O.C.G.A § 14-11-905,
Borrower has succeeded to and acquired all of the assets and property of WEGI,
including, but not limited to, the Collateral (as such term is hereinafter
defined).
     WHEREAS, pursuant to that certain Loan Modification, Extension,
Reaffirmation and Assumption Agreement of even date herewith by and between
Lender and Borrower and other applicable signatory parties thereto (the “2011
Assumption Agreement”), Borrower has assumed and is liable for all obligations,
liabilities, indebtedness and payments of all sums due under the Loan Documents,
as well as the performance of any and all obligations of WEGI under the Loan
Documents.

 

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     WHEREAS, Borrower is executing and delivering this Note in accordance with
the terms, provisions, and requirements of the 2011 Assumption Agreement and to
further evidence the indebtedness of Borrower under the Loan Documents as so
modified, extended, reaffirmed and assumed pursuant to the 2011 Assumption
Agreement, this Note, the Related Note and other applicable Loan Documents. (The
2003 Assumption Agreement, the 2003 Consolidation Note, this Note, the Related
Note and the 2011 Assumption Agreement, together with any and all other
documents, agreements, instruments and/or other writings of any kind or nature
whatsoever related to, concerning and/or arising from any of the foregoing
and/or the Loans, however evidenced, and as may now or hereafter be
consolidated, amended modified, restated and/or renewed, and whether now or
hereafter existing, and all documents, agreements, instrument and/or other
writings to be executed and/or delivered pursuant to the terms, conditions,
provisions and/or requirements hereof, shall hereinafter each be referred to as
a “Loan Document” or collectively as the “Loan Documents.”)
     NOW, THEREFORE, for and in consideration of the mutual benefits to be
derived herefrom and the further consideration of the sum of TEN AND NO/100
DOLLARS ($10.00), paid by Borrower, and other good and valuable consideration,
receipt and sufficiency of which is hereby acknowledged, the parties do hereby
agree as follows:
     1. All terms, conditions and provisions of the various documents (including
but not limited to the Loan Documents) evidencing the Loans as referenced above
as well as the recitals set forth hereinabove in this Note, are specifically
incorporated herein by this reference, and are deemed amended and modified by
virtue of this Note and accompanying 2011 Assumption Agreement.
     2. Effective as of the Effective Date of this Note, the Loan Documents for
each of the Loans, the 2003 Consolidation Note and the 2003 Assumption Agreement
shall be amended and modified as set forth herein, In the event of conflict
between the terms, covenants and conditions of the prior Loan Documents for the
Loans, the 2003 Consolidation Note and/or the 2003 Assumption Agreement, the
terms of the documents executed in connection with this Note shall control. By
virtue of this Note, the Related Note and the 2011 Assumption Agreement,
Borrower and Lender hereby amend and modify the 2003 Consolidation Note in its
entirety as follows:
FOR VALUE RECEIVED, SERVIDYNE SYSTEMS, LLC, a Georgia Limited Liability Company
(hereinafter the “Borrower”), as successor by merger and assumption (pursuant to
the 2011 Assumption Agreement) to The Wheatstone Energy Group, LLC, f/k/a WEGI
Acquisition, LLC, hereby promises to pay to the order of National Loan
Investors, L.P., a Delaware Limited Partnership (hereinafter the “Lender”),
transferee and assignee of Wachovia Bank, N.A., at its office where borrowed or
at such other place as Lender hereafter may direct from time to time in writing,
Lender’s initial office being 5619 North Classen Blvd., Oklahoma City, Oklahoma
73118, in immediately available funds of lawful money of the United States, the
principal sum of EIGHT HUNDRED FIFTY-SEVEN THOUSAND TWO HUNDRED FIFTEEN AND
49/100 DOLLARS ($857,215.49) together with any unpaid interest hereon from date
of advance, in accordance with the terms contained in this Note. The optional
provisions applicable to this Note are checked below.
Repayment:

þ   Monthly payments of principal and interest in the amount of SEVEN THOUSAND
SEVEN HUNDRED SEVENTY-ONE AND 44/100 DOLLARS ($7,771.44) (each a “Monthly
Payment Amount”), beginning on February 19, 2011 and continuing on the
nineteenth (19th) day of each month thereafter, until the amended and modified
maturity date of January 19, 2016 (the “Maturity Date”), when the entire
principal amount then outstanding and unpaid, accrued and unpaid interest and
all other charges, fees, costs and/or expenses not previously paid; provided,
however, that at any time from the Effective Date through the Maturity Date (the
“Discounted Payoff Time Period”), that as an accommodation to Borrower and in
consideration of the transactions contemplated and agreed to pursuant to the
2011 Assumption Agreement, and further provided that none of the following has
occurred at any time during the Discounted Payoff Time Period: (i) the Borrower
has failed to make any payment required under the Related Note and/or this Note
in strict accordance and compliance with the terms thereof; (ii) a default,
breach, violation or other instance of non-compliance has occurred with respect
to the Related Note, the 2011 Assumption Agreement or any other Loan Documents;
or (iii) an Event of Default or other default has occurred under this Note (each
of the conditions, occurrences and/or events described in (i) through
(iii) above shall hereinafter sometimes each be

 

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    referred to as a “Discounted Payoff Rescission Event” or collectively as the
“Discounted Payoff Rescission Events”), then in such event and provided that no
Discounted Payoff Rescission Event has occurred at any time during the
Discounted Payoff Time Period, Lender hereby agrees to accept a discounted
principal payoff (but not a discounted payoff of any other charges, fees, costs
of expenses provided hereunder or under any other Loan Documents) in the amount
of SEVEN HUNDRED THOUSAND AND 00/100 DOLLARS ($700,000.00) (the “Discounted
Principal Payoff Amount”), which Discounted Principal Payoff Amount shall be
accompanied by the full, complete and indefeasible payoff and payment of all
accrued and unpaid interest and all other charges, fees, costs and/or expenses
not previously paid on the entire balance of this Note, and which accrued and
unpaid interest shall be calculated based on the Discounted Principal Payoff
Amount rather than the Total Principal Amount provided that no Discounted Payoff
Rescission Event has occurred at any time during the Discounted Payoff Time
Period. Borrower acknowledges and agrees that the Monthly Payment Amount is
based upon an assumed term of One Hundred and Twenty Months (120) as to the
Discounted Principal Payoff Amount (rather than the Total Principal Amount)
based on a fixed per annum interest rate of Six Percent (6%) as set forth below.
Notwithstanding the foregoing or any other term of any other Loan Document to
the contrary, in the event of the occurrence of a Discounted Payoff Rescission
Event at any time during the Discounted Payoff Time Period, then in such event:
(i) Borrower shall have no right or ability whatsoever to avail itself of the
Discounted Principal Payoff Amount and Lender shall have no obligation and/or
responsibility to accept the Discounted Principal Payoff Amount in satisfaction
of the outstanding principal balance of this Note; (ii) all interest accruing
from and after the Effective Date, whether previously paid or not, shall be
retroactively recalculated from the Effective Date based on the Total Principal
Amount (not the Discounted Principal Payoff Amount) and Borrower shall
immediately make payment to Lender for all additional interest so retroactively
assessed and calculated, with credit given for interest previously paid;
(iii) Lender, at Lender’s sole option and discretion shall have the option to
recalculate and recast the Monthly Payment Amount based upon the Total Principal
Amount (rather than the Discounted Principal Payment Amount); (iv) Borrower
shall be responsible, liable and obligated for the full, complete and
indefeasible payment of the Total Principal Amount (without right or regard to
the Discounted Principal Payoff Amount), all in accordance with the terms and
provisions of this Note, the 2011 Assumption Agreement and all other applicable
Loan Document, including and giving effect to any and all right and remedies
contained therein that may result from the occurrence of Discounted Payoff
Rescission Event, any default or Event of Default of this Note or other Loan
Documents, including but not limited to any rights to accelerate the
indebtedness evidenced by this Note. The Borrower may NOT borrow, repay and
reborrow sums up to the Total Principal Amount set forth above, as this is
considered a term loan, not a revolving line of credit loan.

Interest:
Payable at the rate per annum of:

þ   Six Percent (6%) Fixed.

In no case shall interest exceed the maximum rate permitted by applicable law.

þ   In addition, Borrower agrees to pay to lender a non-refundable assumption
and modification loan fee of ZERO AND 00/100 DOLLARS ($0.00).

Interest will be calculated on the basis of a year of 360 days and paid for the
actual number of days elapsed.
After demand or maturity (whether by acceleration or otherwise), as applicable,
interest on any unpaid balance hereof shall be payable on demand at a rate per
annum equal to FIVE PERCENT (5%) above the rate applicable prior to demand or
maturity, not to exceed the maximum rate permitted by applicable law.
To the extent not prohibited by law, a late charge of FIVE PERCENT (5%) or the
applicable statutory maximum, whichever is greater, shall be assessed on any
payment remaining past due for TEN (10) days or more unless; provided, however,
that if any applicable statute allows a shorter minimum time period for the
imposition of a late charge, such shorter time period shall prevail.

 

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All payments on this Note shall be applied, in accordance with the then current
billing statement applicable to this Note, first to accrued interest, then to
fees, then to principal due, and then to late charges. Any remaining funds shall
be applied to the further reduction’ of principal. Notwithstanding the
foregoing, upon the occurrence of a default hereunder or any other Event of
Default, payments shall be applied as determined by Lender in its sole
discretion.

þ   The terms and conditions in Security Agreements dated July 26, 2001, dated
October 14, 1999, August 24, 2001, October 11, 2001, December 5, 2001, letter
agreement dated October 31, 2002, Line of Credit Extension and Modification
Agreement dated February 28, 2003, the May 12 and August 25, 2003 Extension
Letters, the 2003 Consolidation Note, the 2003 Assumption Agreement, all between
the parties hereto and such other parties as may be signatories thereto, as the
same may be amended and/or modified from time to time whether by this Note, the
Related Note, the 2011 Assumption Agreement and/or otherwise, shall be
considered a part hereof to the same extent as if written herein.   þ   The
terms and conditions in a Letter Agreement dated January 19, 2011, as revised
and/or amended by letter dated March 9, 2011, and 2011 Assumption Agreement of
even date herewith between the Lender, the Borrower and other parties as may be
signatories thereto, as the same may be amended, extended or replaced from time
to time, shall be considered a part hereof to the same extent as if written
herein. It is expressly intended that the 2011 Assumption Agreement shall
survive closing and delivery of this Note, the Related Note and all other Loan
Documents executed in delivered in connection therewith and/or as a requirement
thereof.

     In addition to any other collateral specified herein and in other
agreements, to secure the indebtedness evidenced by this Note, together with any
extensions, modifications, amendments, restatements or renewals thereof, in
whole or in part, as well as all other indebtedness, obligations and liabilities
of the Borrower to the Lender, now existing or hereafter incurred or arising,
including, without limitation, all sums arising under any ISDA Master Agreement
now or hereafter executed between Borrower and Lender and any related schedules
and confirmations thereto (hereinafter sometimes referred to as the
“Obligations”), except for other indebtedness, obligations and liabilities owing
to Lender that constitute: (a) consumer credit as defined in Federal Reserve
Board Regulation Z and either subject to the disclosure requirements of Federal
Reserve Board Regulation Z or state consumer protection laws; or
(b) non-consumer credit if under applicable state law the maximum interest rate
for such credit is reduced when secured (herein collectively referred to as
“Restricted Debt”), the Borrower does hereby grant to the Lender a security
interest in, and does hereby pledge to Lender the following described property:
(i) all collateral more particularly described in Security Agreement-Commercial
dated July 26, 2001, the Term Loans evidenced by the Note and Security
Agreements dated October 14, 1999, August 24, 2001, October 11, 2001 and
December 5, 2001, as revised by the Extension Agreement, the May 12, 2003 and
August 25, 2003 Extension Letters, the 2003 Consolidation Note, the 2003
Assumption Agreement, the 2011 Assumption Agreement, the Related Note and all
other Loan Documents that describe the collateral, between Borrower and Lender,
and also that certain Borrower Vehicle Collateral (as such term is defined in
the 2011 Assumption Agreement), more fully described in the 2011 Assumption
Agreement of even date herewith; and (ii) all property and other collateral
described and set forth in Schedule 1, attached hereto and by this reference
incorporated herein and made a part hereof, all of which described in (i) and
(ii) above whether now owned or hereafter acquired, together with any and all
additions and accessions thereto or replacements thereof, returned or unearned
premiums from any insurance written in connection with this Note and any
products and/or proceeds of any of the foregoing. In no event, however, shall
the Lender have a security interest in any goods acquired by the Borrower for
personal, family or household purposes more than 10 days after the date of this
Note, unless such goods are added to or attached to the Collateral (as
hereinafter defined). In addition, to the extent not prohibited by law, the
Borrower hereby grants to the Lender a security interest in, and does hereby
pledge to Lender: (i) all other property of the Borrower now or hereafter in the
possession or control of the Lender (exclusive of any such property in the
possession or control of the Lender as a fiduciary other than as agent),
including, without limitation, all cash, stock or other dividends and all
proceeds thereof, and all rights to subscribe for securities incident thereto
and any substitutions or replacements for, or other rights in connection with,
any of the Collateral; and (ii) any of Borrower’s deposit accounts (as such term
is defined in the Uniform Commercial Code of the State of Georgia, as the same
may be amended from time to time (the “Code”), whether such accounts be general
or special, or individual or multiple party, held by Lender and upon all drafts,
notes, or other items-deposited for collection or presented for payment by the
Borrower with the Lender, and the Lender may at any time, without demand or
notice, appropriate and apply any of such to the payment of any of the
Obligations (except for Restricted Debt), whether or not due. All property
described in this paragraph (including but not limited

 

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to Schedule 1 of this Note), in which the Borrower, Wheatstone, WEGI or any
other party to which Borrower has previously, hereby is, or hereafter becomes a
successor thereof (whether by merger, assumption or otherwise) has granted to
the Lender a security interest or security title hereunder, is herein
collectively referred to as the “Collateral.” If, with respect to any Collateral
in the form of investment securities, a stock dividend is declared or any stock
split-up made or right to subscribe issued, all the certificates for the shares
representing such stock dividend or split-up or right to subscribe will be
immediately delivered, duly endorsed, to the Lender as additional Collateral.
The Lender shall be deemed to have possession, control and custody of any
Collateral actually in transit to it or to any of its officers or agents.
     If at any time the Collateral pledged as security for any of the
Obligations shall be or become unsatisfactory to the Lender or should the Lender
deem itself insecure, the Borrower will immediately furnish such further
property to be held by the Lender as if originally pledged as Collateral
hereunder or make such payment on account as will be satisfactory to the Lender.
     The Lender shall have, but shall not be limited to, the following rights,
each of which may be exercised at any time or from time to time: (i) to transfer
this Note and the Collateral, and any transferee shall have all the rights of
the Lender hereunder and the Lender shall be thereafter relieved from any
liability with respect to any Collateral so transferred; (ii) to execute at any
time in the name of any party hereto and to file one or more financing
statements describing the Collateral, which financing statement’s may contain a
generic collateral description that is broader than the Collateral and which may
describe any agricultural liens or other statutory liens held by Lender; and
(iii) to request and receive current financial information from any party liable
for all or any part of the Obligations.
     The Lender shall have, but shall not be limited to, the following rights,
each of which may be exercised during which time an Event of Default has
occurred and is continuing: (i) to receive or take control of any income or
other proceeds of any of the Collateral; (ii) to transfer the whole or any part
of the Collateral in the name of itself or its nominees; (iii) to vote any
investment securities forming a part of the Collateral; and (iv) to notify the
obligors on any Obligation to make payment to the Lender of any amounts due
thereon.
     Borrower will at Lender’s request maintain insurance on the Collateral in
amounts at least equal to the fair market value of the Collateral and against
casualty, public liability and property damage risks and such other risks as
Lender may request; provided, however, if the Collateral described above is a
vehicle(s), Borrower agrees to obtain and maintain liability insurance as
required by law and collision and comprehensive insurance with a deductible not
exceeding FIVE HUNDRED AND NO/100 DOLLARS ($500.00). All insurance shall be with
companies with a Best Insurance Report Rating of B+ or better, and Borrower will
pay all premiums for insurance when due. Unless and until requested by Lender,
Borrower shall not be required to name Lender as additional insured in such
policy or to provide Lender a copy of the policy for or certificate evidencing
such insurance, but when and if requested by Lender, the Borrower shall
immediately (but no later than five (5) business days): (i) cause all policies
of such insurance to specify that Lender is an additional insured as its
interests may appear and to provide that such insurance shall not be cancellable
by Borrower or the insurer without at least 30 days advance written notice to
Lender and that proceeds are payable to Lender regardless of any act or omission
of Borrower which would otherwise result in a denial of a claim; and
(ii) deliver all policies or certificates thereof (with copies of such policies)
to Lender. Borrower is authorized to receive the proceeds of any insurance loss
and shall apply such proceeds toward either the repair or replacement of the
Collateral or the payment of the Obligations secured hereby, so long as no Event
of Default exists hereunder. The undersigned will also pay all taxes and other
impositions on the Collateral as well as the cost of repairs or maintenance to
the Collateral. If the undersigned fails to maintain such insurance or fails to
pay any and all amounts for taxes, repairs, maintenance and other costs, Lender
may, at its option, but shall not be required to, purchase such insurance or pay
any premium owing with respect to such insurance or pay such amounts for taxes,
repairs, maintenance and other costs, and any such sum paid by Lender shall be
payable by the Borrower on demand by Lender or at its option may be added to the
Obligations and secured hereby. The loss, injury or destruction of the
Collateral, with or without the fault of Borrower, shall not release the
Borrower from any liability hereunder or in any way affect Borrower’s liability
hereunder.
     The occurrence of any one or more of the following conditions or events
shall constitute an “Event of Default” hereunder: (i) any failure of any Obligor
(which term shall include the Borrower and each endorser, surety or guarantor of
this Note) to pay any of the Obligations when due or to observe or perform any
agreement, covenant or promise hereunder, in any of the Loan Documents or in any
other agreement, note, instrument or certificate of

 

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any Obligor to the Lender, now existing or hereafter executed in connection with
any of the Obligations, including, but not limited to, a loan agreement, if
applicable, and any agreement guaranteeing payment of any of the Obligations;
(ii) any default of any Obligor in the payment or performance of any other
liabilities, indebtedness or obligations to Lender or to allow or permit any
other liabilities, indebtedness or obligations to Lender to be accelerated;
(iii) any failure of any Obligor to furnish Lender current financial information
within a reasonable time after receipt of a written request; (iv) any failure of
any Obligor or any Pledgor of any security interest in the Collateral (the
“Pledgor”) to observe or perform any agreement, covenant or promise contained in
any agreement, instrument or certificate executed in connection with the
granting of a security interest in property to secure the Obligations or any
guaranty securing the Obligations; (v) any warranty, representation or statement
made or furnished to the Lender by or on behalf of any Obligor or Pledgor in
connection with the extension of credit evidenced by this Note proving to have
been false in any material respect when made or furnished; (vi) any sale,
foreclosure of or material encumbrance to any of the Collateral, or the making
of any material levy, seizure or attachment thereof or thereon or the rendering
of any material judgment or lien or garnishment or attachment against any
Obligor or Pledgor or its Collateral property (the term “material” as used in
this subparagraph (vi) shall mean that which would materially impair the ability
of Borrower to repay the Obligations when due); (vii) the dissolution, change in
control (other than a transfer of control to an affiliate of Borrower; provided
that Lender is notified in advance of said transfer and by which Lender consents
to and approves in writing and further provided that the transferee assumes the
indebtedness evidenced hereby), change of status to an organization, change of
type of organization, termination of existence, insolvency, business failure, or
appointment of a receiver of any part of the property of, assignment for the
benefit of creditors by, or the commencement of any proceeding under any
bankruptcy or insolvency laws, state or federal, by or against, the Borrower or
any other Obligor or Pledgor; (viii) if Borrower, any Pledgor or any Obligor
shall change its name, change its principal residence, change its chief
executive office, change its status to an organization, change its state of
organization, change its type of organization, or change its organizational
identification number, as applicable, without giving Secured Party at least
thirty (30) days’ prior written notice; (ix) the occurrence of any Discounted
Payoff Rescission Event at any time during the Discounted Payoff Time Period;
(x) the occurrence of any default or Event of Default (as such term is defined
in the Related Note) under the Related Note; or (xi) any discontinuance or
termination of any guaranty of any of the Obligations by a guarantor.
     Upon the occurrence of an Event of Default (and the expiration of any
applicable notice and/or grace periods), to the extent permitted by law, the
Lender at its option may terminate any obligation to extend any additional
credit or make any other financial accommodation to the Borrower and/or may
declare all of the Obligations to be immediately due and payable, all without
notice or demand, and shall have in addition to and independent of the right to
declare the Obligations to be due and payable and any other rights of the Lender
under this Note or any other agreement with any Obligor or any Pledgor, the
remedies of a secured party under the Code, including, without limitation
thereto, the right to take possession of the Collateral, or the proceeds thereof
and to sell or otherwise dispose thereof; and for this purpose, to sign in the
name of any Obligor or Pledgor any transfer, conveyance or instrument necessary
or appropriate in order for the Lender to sell or dispose of any of the
Collateral, and the Lender may, so far as the Borrower can give, authority
therefor, enter upon the premises on which the Collateral or any part thereof
may be situated and remove the same therefrom, without being liable in any way
to any Obligor on account of entering any premises. The Lender may require the
Borrower to assemble the Collateral and make the Collateral available to the
Lender at a place to be designated by the Lender which is reasonably convenient
to both parties. Unless the Collateral is perishable or threatens to decline
speedily in value or is of a type customarily sold on a recognized market, the
Lender shall give the Borrower written notice of the time and place of any
public sale thereof or of the time after which any private sale or other
intended disposition thereof is to be. made. The requirement of sending
reasonable notice shall be met if such notice is mailed, postage prepaid, or
otherwise given, to the Borrower or Pledgor at the last address shown on the
Lender’s records at least ten (10) days before such disposition. Lender may:
(i) comply with any applicable state or federal law requirements in connection
with a disposition of the Collateral; (ii) sell the Collateral without giving
any warranties as to the Collateral; and (iii) specifically disclaim any
warranties of title or the like and in so doing any of the foregoing will not be
considered adversely to affect the commercial reasonableness of any sale of the
Collateral. If any Obligation (including but not limited to the Note) is a
demand instrument, the statement of a maturity date, the requirement for the
payment of periodic interest or the recitation of defaults and the right of
Lender to declare any Obligation due and payable shall not constitute an
election by Lender to waive its right to demand payment under a demand at any
time and in any event as Lender in its sole discretion may deem appropriate.

 

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     The rights of the Lender specified herein shall be in addition to, and not
in limitation of the Lender’s rights under the Code, or any other statute or
rules of law conferring rights similar to those conferred by the Code, and under
the provisions of any Loan Documents or any other instrument or agreement
executed by the Borrower, any other Obligor or any Pledgor to the Lender. All
prior agreements to the extent inconsistent with the terms of this Note shall be
construed in accordance with the provisions hereof. Any rights or remedies of
the Lender may be exercised or taken in any order or sequence whatsoever, at the
sole option of the Lender. This agreement shall bind and inure to the benefit of
the heirs, legatees, executors, administrators and assigns of Lender and shall
bind all persons who become bound as a debtor to this security agreement.
     The security agreement set forth herein and the security interest in the
Collateral created hereby shall terminate only when all of the Obligations have
been indefeasibly paid in full and such payments are no longer subject to
rescission, recovery or repayment upon the bankruptcy, insolvency,
reorganization, moratorium, receivership or similar proceeding affecting the
Borrower or any other person. No waiver by the Lender of any default shall be
effective unless in writing nor operate as a waiver of any other default or of
the same default on a future occasion. All rights of the Lender hereunder shall
inure to the benefit of its successors and assigns, and all obligations of the
Borrower shall bind the heirs, legal representatives, successors and assigns of
the Borrower. The Borrower and each endorser, surety or guarantor of this Note,
whether bound by this or by separate instrument or agreement, shall be jointly
and severally liable for the indebtedness evidenced by this Note and hereby
severally: (i) waive presentment for payment, demand, protest, notice of
nonpayment or dishonor and of protest and any and all other notices and demands
whatsoever, to the fullest extent permitted by applicable law; (ii) consent that
at any time, or from time to time, payment of any sum payable under this Note
may be extended without notice whether for a definite or indefinite time; and
(iii) agree to remain liable until all of the Obligations are paid in full
notwithstanding any impairment, substitution, release or transfer of Collateral
or any one or more Borrower or Obligor by the Lender, with or without
consideration, or of any extension, modification or renewal. No conduct of the
holder shall be deemed a waiver or release of such liability, unless the holder
expressly releases such party in writing, The Borrower shall pay to the holder
on demand all expenses, including reasonable attorneys’ fees and expenses of
legal counsel, incurred by the holder in any way arising from or relating to the
enforcement or attempted enforcement of the Note, any Loan Document and/or any
related guaranty, collateral document or other document and the collection or
attempted collection, whether by litigation or otherwise, of the Note. Time is
of the essence.
     Borrower acknowledges and agrees that this Note and the Related Note are
cross-collateralized; specifically, Borrower agrees that, in the event that any
of the security instruments are realized upon, and the proceeds of such
realization exceed the primary indebtedness secured thereby, the excess proceeds
shall be retained by Lender and applied to the outstanding indebtedness secured
by the other security instruments in the order of due date. Lender shall be
entitled to retain all proceeds of any realization until all indebtedness
secured by either this Note, the Related Note or any other Loan Documents shall
have been paid in full. Lender shall have no obligation to release any
Collateral pledged pursuant to this Note, the Related Note or any of the other
Loan Documents until the entire indebtedness due and payable to Lender has been
paid in full.
     Borrower acknowledges and agrees that Borrower shall be solely and
exclusively responsible for, and that Lender shall not have any liability,
obligation or responsibility of any kind or nature whatsoever, any discharge of
indebtedness and/or cancellation of debt income that may be asserted, charged,
imposed or assessed against Borrower, by any means or authority whatsoever, by
virtue of this Note, the 2011 Assumption Agreement, any of the other Loan
Document or otherwise, including but not limited to the terms and provision
contained herein in this Note relating to the Discounted Principal Payoff
Amount.
     Borrower acknowledges that Lender may reproduce by electronic means or
otherwise any of the documents evidencing and/or securing the Obligations and
thereafter may destroy the original documents. Borrower does hereby agree that
any document so reproduced shall be and remain the binding obligation of
Borrower, enforceable and admissible in evidence ageing it to the same extent as
if the original documents had not been destroyed.
     This Note, and the rights and obligations of the parties hereunder, shall
be governed and construed in accordance with the laws of the State of Georgia,
except to the extent that the Code provides for the application of other law
with respect to the Collateral. No delay or omission to exercise any right or
power accruing upon any default, omission, or failure of performance shall
impair any such right or power, or shall such delay or omission be construed to
be a waiver thereof by the Lender. This Agreement may be executed simultaneously
in several

 

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counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
     In executing this Agreement, each of the parties hereto represents,
warrants and certifies that it has received independent legal counsel and advice
from its respective attorneys with regard to the facts involved in connection
with the controversies set forth in this Agreement and subject matter hereof,
and with regard to the rights or asserted rights arising out of said
controversies, if any. In accepting the consideration referred to herein and in
executing and delivering this Agreement, each of the parties does so with the
full knowledge of any and all rights which each now has or, in the future, may
have in connection with the aforementioned controversies, if any. This Agreement
shall not be construed against the drafter.
     Whenever in this Agreement reference is made to any party or other person
or entity such reference shall be deemed to include a reference to the heirs,
executors, representatives, successors, assigns, and affiliates of such party.
Whenever used, the singular number shall include the plural, the plural shall
include the singular, and the use of any gender shall be applicable to all
genders. This Agreement may not be changed, discharged or terminated orally, but
only by an instrument in writing signed by the parties against whom the
enforcement of the change, waiver, discharge or termination is sought. This
Agreement is intended to be performed in accordance with and only to the extent
permitted by all applicable laws, ordinances, rules, and regulations. If any
provision of this Agreement, or the application thereof to any person or
circumstance, shall be invalid or unenforceable, for any reason and to any
extent, the remainder of this Agreement and the application of such provision to
other persons or circumstances shall not be affected thereby, but rather shall
be enforced to the greatest extent permitted by law. The parties hereto do
further agree that the provisions contained herein constitute the entire
agreement of the parties as of this date, except as outlined by the 2011
Assumption Agreement, and that the terms hereof are contractual and not mere
recitals.
     IN WITNESS WHEREOF, the Borrower and Lender have executed this Modification
and Extension Promissory Note and Security Agreement No. 2 under seal as of the
Agreement Date and made and agreed to be effective as of the Effective Date.

                                  BORROWER:         Signed, sealed and delivered
in the presence of:       SERVIDYNE SYTEMS, LLC, a Georgia limited
liability company, for itself and as successor by merger to         THE
WHEATSTONE ENERGY GROUP LLC, a Georgia limited
liability company, f/k/a WEGI Acquisition, LLC
 
                                By:    Abrams Power, Inc., a Georgia            
        Corporation, its Sole Member and Manager        
 
                       
/s/ [illegible]
          By:   /s/ Alan R. Abrams   (SEAL)    
 
                       
Witness
              Title: Chairman        
 
                       
/s/ Donna Kelley
        Attest:  /s/ Mark Thomas   (SEAL)    
 
                       
Notary Public
            Title: CFO          
 
              [CORPORATE SEAL]        
 
                                LENDER:         Signed, sealed and delivered in
the       NATIONAL LOAN INVESTORS, L.P.        
presence of:
                       
 
                       
/s/ Freeda Stone
      By:   /s/ [illegible]   (SEAL)    
 
                   
Witness
          Title: Managing General Partner        
 
                       
/s/ Ramona L. Klopfenstein
 
              [COMPANY SEAL]         
Notary Public
                       

 

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SCHEDULE 1 TO MODIFICATION AND EXTENSION PROMISSORY NOTE AND
SECURITY AGREEMENT NO. 2
DESCRIPTION OF ADDITIONAL AND OTHER PROPERTY CONSTITUTING COLLATERAL

(a)   All “Receivables” which means and includes

  (1)   any and all rights to the payment of money or other forms of
consideration of any kind (whether classified under the Uniform Commercial Code
as accounts, contract rights, chattel paper, general intangibles (including
payment intangibles), or otherwise) including, but not limited to, accounts
receivable, letters of credit and the right to receive payment thereunder,
chattel paper, tax refunds, insurance proceeds, contract rights, notes, drafts,
instruments, documents, acceptances, and all other debts, obligations and
liabilities in whatever form from any person,

  (2)    all guarantees, security and liens for payment thereof,

  (3)   all goods, whether now owned or hereafter acquired, and whether sold,
delivered, undelivered, in transit or returned, which may be represented by, or
the sale or lease of which may have given rise to, any such right to payment or
other debt, obligation or liability,

  (4)   all insurance, whether now in existence or hereafter acquired relating
in any manner whatsoever to a Receivable, and

  (5)   all proceeds of any of the foregoing.

(b)   All “Equipment” which means and includes, all machinery, apparatus,
equipment, fittings, fixtures and other tangible personal property of every kind
and description used in the Borrower’s business operations or owned by the
Borrower or in which the Borrower has an interest, and all parts, accessories
and special tools and all increases and accessions thereto and substitutions and
replacements therefor, and shall include, without limitation, all property that
would be included in the terms “equipment” or “fixture” as defined in the
Uniform Commercial Code and shall further include but not be limited to, all
items described and listed on Addendum 1 attached hereto and by this reference
made a part hereof.   (c)   All “Inventory” which means and includes all present
and future goods in which Borrower has any interest, including merchandise, raw
materials, other materials, parts, supplies, work in process and finished
products, intended for sale or lease or for display or demonstration or to be
furnished under a contract of service, used or which might be used in connection
with the manufacture, printing, packing, shipping, advertising, selling, leasing
or furnishing of such goods or otherwise used or consumed in Borrower’s
business, of every kind and description now or at any time hereafter owned by or
in the custody or possession, actual or constructive, of Borrower, including
such inventory as is temporarily out of its custody or possession or in transit
and including any returns upon any accounts or other proceeds, including
insurance proceeds, resulting from a sale or disposition of any of the foregoing
and all documents evidencing and general intangibles relating to any of the
foregoing, and Borrower’s books relating to any of the foregoing.   (d)   All
“Contracts” which means and includes any agreement, contract, lease, consensual
obligation, promise or undertaking irrespective of whether written or oral,
whether express or implied, and whether or not legally binding, and any and all
rights under any one or more Contracts, whether or not yet earned by
performance, and whether or not evidenced by an instrument or chattel paper.  
(e)   All “Intellectual Property” which means and includes all rights,
priorities and privileges relating to any and all copyright rights, copyright
applications, copyright registrations and like protections in each work or
authorship and derivative work thereof, whether published or unpublished and
whether or not the same also constitutes a trade secret, now or hereafter
existing, created, acquired or held; all patents, patent applications and like
protections including without limitation improvements, divisions, continuations,
renewals, reissues, extensions and continuations-in-part of the same; and any
trademark and servicemark rights, whether registered or not, applications to
register and registrations of the same and like protections, and the entire
goodwill of the business of Borrower connected with and symbolized by such
trademarks, each of the foregoing whether arising under United States of
America, multinational or foreign laws or otherwise, and including, without
limitation, any and all trade secrets, and any and all intellectual property
rights in computer software and computer software products now or hereafter
existing, created, acquired or held; any and all design rights which may be
available to Borrower now or hereafter existing, created, acquired or held; any
and all claims for damages by way of past, present and future infringement of
any of the rights included above, with the right, but not the obligation, to sue
for and collect such damages for said use or infringement of the intellectual
property rights identified above; all licenses or other rights to use any of the
foregoing, and all license fees and royalties arising from such use to the
extent permitted by such license or rights; all amendments, renewals and
extensions of any of the

 

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    foregoing; and all proceeds and products of the foregoing, including without
limitation all payments under insurance or any indemnity or warranty payable in
respect of any of the foregoing.

(f)   All balances, credits, deposits, accounts, items, and money of Borrower
now or hereafter in the possession or control of or otherwise with Secured
Party, including all dividends and distributions on such property or other
rights in connection therewith.   (g)   All books and records (including,
without limitation, customer lists, credit files, computer programs, print-outs,
and other computer materials and records) of Borrower pertaining to any of (a),
(b), (c), (d), (e), or (f) above.   (h)   All general intangibles.   (i)   All
securities and all other investment property, supporting obligations, any other
contract rights or rights to the payment of money.   (j)   All letter-of-credit
rights (whether or not the letter of credit is evidenced by a writing).   (k)  
Any and all products and proceeds of the foregoing (including, but not limited
to, any claim to any item referred to in this definition, and any claim against
any third party for loss of, damage to or destruction of any or all of, the
collateral or for proceeds payable under, or unearned premiums with respect to,
policies of insurance) in whatever form, including, but not limited to, cash,
negotiable instruments and other instruments for the payment of money, chattel
paper, security agreements and other documents.   (l)   All goods and other
property, whether or not delivered,

  (1)   the sale or lease of which gives or purports to give rise to any
receivable, including, but not limited to, all merchandise returned or rejected
by or repossessed from customers, or

  (2)   securing any receivable,

    including without limitation all rights as an unpaid vendor or lienor
(including without limitation stoppage in transit, replevin and reclamation)
with respect to such goods and other property.

(m)   All items and property listed and described on Addendum 2 attached hereto
and by this reference made a part hereof.

All accessions to, substitutions for, additions to, and all replacements,
products and cash and non-cash proceeds of (a), (b), (c), (d), (e), (h), (i),
(j), (l) or (m) above, including, without limitation, proceeds of and unearned
premiums with respect to insurance policies insuring any of the collateral, and
any inventory of Borrower now or hereafter acquired with proceeds of any
equipment.