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EXHBIIT 10.3(b)
LOAN AGREEMENT
THIS LOAN AGREEMENT (the "Agreement") is made as of the date hereof by and
between Surrey, Inc., Texas corporation whose address is 00000 Xxxxxx Xxx Xxxx,
Xxxxxxx, Xxxxx 00000 ("Borrower") and Liberty National Bank, a national banking
association, whose address is 000 Xxxxxxxx Xxxxxx, Xxxxxx, Xxxxx 00000
("Lender"). At the request of Borrower, Lender will make available to Borrower
a revolving line of credit loan (the "Loan"), provided that the aggregate
outstanding principal amount of all Advances (hereinafter defined) under the
Loan shall never exceed the lesser of $250,000.00 or the Borrowing Base as
defined below. Advances under the Loan will be available from time to time
during the Commitment Period (hereinafter defined). The Loan will be evidenced
by a promissory note executed by Borrower, dated the date hereof and payable to
the order of Lender in the original principal amount of Two Hundred Fifty
Thousand Dollars ($250,000.00), (such promissory note, and all renewals,
extensions, and other modifications thereof, is herein referred to as the
"Note"). To induce Lender to make the Loan upon and subject to the terms set
forth herein, Borrower hereby agrees with Lender as follows:
DEFINITIONS. When used herein, the following terms shall have the following
meanings:
"Advance" - an advance by Lender to Borrower pursuant to the Note.
"Borrowing Base" - at any particular time, an amount equal to seventy percent
(70%) of Eligible Accounts. Lender shall have the right at any time and from
time to time in its sole discretion to revise the percentages upon the
Borrowing Base is calculated.
"Commitment Period" - the period commencing on the date hereof and ending on
November 17, 1995, unless sooner terminated by Lender upon an Event of
Default.
"Eligible Accounts" - at any time an amount equal to the aggregate net
invoice or ledger amount owing on all trade accounts receivable of Borrower
for goods sold or leased or services rendered, in which Lender has a
perfected, first priority lien or security interest, after deducting (a) the
amount on all such accounts unpaid for sixty (60) days or more after the date
of original invoice, (b) the amount of all discounts, allowances, rebates,
credits and adjustments to such accounts, (c) amount on goods of sale which
have been returned, rejected, repossessed, lost or damaged; (d) all
contra-accounts, setoffs, disputes, defenses or counterclaims asserted by or
available to the Persons obligated on such accounts, (e) all such accounts
owing by officers or employees of Borrower or have an equity interest, (f)
all such accounts
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owed by account debts which are insolvent, in any bankruptcy proceeding, in
financial difficulty or otherwise which Lender, in its sole discretion, deems
not acceptable, and (g) all such accounts for which the majority of the
outstanding aggregate balance owed by any account debtor, is unpaid for sixty
(60) days or more after the date of the original invoices, and (h) the amount
owed by any account debtor on such accounts which exceeds twenty-five percent
(25%) of the total of all Eligible Accounts of Borrower, and (i) all accounts
owed by a Person or Persons that is not a citizen of or organized under the
laws of the United States of America or any political subdivision thereof.
Standards of eligibility may be set and may be revised from time to time
solely by Lender in its exclusive judgment.
FINANCIAL REPORTS. Borrower will furnish or cause to be furnished to Lender:
A. Quarterly Reports. As soon as available, and in any event within thirty
(30) days after the close of each quarterly period of each fiscal year of
Borrower a financial report balance sheet as of the end of such period, a
profit and loss statement, a schedule of accounts payable, an accounts
receivable aging schedule, and the consolidated and consolidating balance
sheets of Borrower and its subsidiaries for such quarter (showing income,
expenses, and surplus for such quarter and for the period from the
beginning of the fiscal year to the end of such quarter), all prepared in
such form and detail as Lender may request and in conformity with GAAP and
certified to be true and correct by Borrower's chief financial officer;
B. Borrowing Base Report. With each request for an Advance and, if no
Advance is requested in the first fifteen (15) days of a particular month,
then within those fifteen (15) days, a borrowing base authorization, in
the form of Exhibit "A" attached hereto, showing a calculation of the
Borrowing Base at the end of the prior month.
C. Accounts Receivable. As soon as available, and in any event within
fifteen (15) days after the end of each month, an aging of all of
Borrower's accounts receivable as of the end of such month.
MANDATORY PREPAYMENTS. Borrower hereby agrees to pay Lender on demand, at any
time that the outstanding principal amount of the Loan exceeds the Borrowing
Base, a prepayment on the Loan in such amount as is necessary to reduce the
outstanding principal of the Loan to an amount equal to or less than the
Borrowing Base. Such prepayment shall be without premium or penalty, and shall
be made together with the payment of accrued interest on the amount paid.
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ENTIRE AGREEMENT; AMENDMENT. THIS AGREEMENT, THE NOTE AND THE OTHER LOAN
DOCUMENTS REFERRED TO HEREIN EMBODY THE FINAL, ENTIRE AGREEMENT AMONG THE
PARTIES HERETO AND SUPERSEDE ANY AND ALL PRIOR COMMITMENTS, AGREEMENTS,
REPRESENTATIONS, AND UNDERSTANDINGS, WHETHER WRITTEN OR ORAL, RELATING TO THE
SUBJECT MATTER HEREOF AND MAY NOT BE CONTRADICTED OR VARIED BY EVIDENCE OF
PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OR DISCUSSIONS OF THE
PARTIES HERETO. THERE ARE NO ORAL AGREEMENTS AMONG THE PARTIES HERETO. The
provisions of this Agreement and the other Loan Documents to which Borrower is
a party may be amended or waived only by an instrument in writing signed by the
parties hereto.
Executed as of the date first written above.
BORROWER: SURREY, INC.
By: /s/Xxxxx X. Xxxxx
--------------------------------------------
Name: Xxxxx X. Xxxxx
Title: CEO
-----------------------------------------
LENDER: LIBERTY NATIONAL BANK
By: /s/Xxxxxxx X. Xxxxxx
--------------------------------------------
Name: Xxxxxxx X. Xxxxxx
Title: SBA Lending Officer
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XXXX XX XXXXX
XXXXX XX XXXXX )
) ss.
COUNTY OF XXXXXX )
KNOW ALL MEN BY THESE PRESENTS:
That SURREY, INC., a Texas corporation (hereinafter called the "Grantors,"
whether one or more), acting by and through its duly authorized officer(s) for
the purpose of securing the indebtedness hereinafter described, and in
consideration of the sum of TEN AND NO/100 DOLLARS ($10.00) to us in hand paid
by the Trustee hereinafter named, the receipt and sufficiency of which is
acknowledged, and for the further consideration of the uses, purposes and
trusts hereinafter set forth, have GRANTED, SOLD and CONVEYED, and by these
presents do GRANT, SELL and CONVEY unto X. Xxxxxx Xxxxxxxx, Trustee (the
"Trustee"), of Xxxxxx County, Texas, and his or her substitutes or successors,
all of the following described property situated in Xxxxxx County, Texas,
to-wit:
Lots Two (2), Three (3) and Four (4), NORTH RIM SUBDIVISION, a subdivision in
Xxxxxx County, Texas, according to the map or plat thereof, recorded in
Volume 83, Pages 161A-164A of the Plat Records of Xxxxxx County, Texas.
TO HAVE AND TO HOLD the above-described property, together with any and all
improvements now or hereafter located thereon; all equipment and appliances now
or hereafter attached thereto or used in connection therewith; all heating,
plumbing, refrigeration, lighting fixtures, and articles of personal property
now or hereafter attached to or used in and about the improvements thereon; and
the rights, privileges and appurtenances belonging thereto, including all of
the Grantors' right, title and interest in and to any development or use
rights, applications, permits, approvals, licenses, authorizations, refunds,
credits and offsets granted by or obtainable from governmental authorities and
related to or for the benefit of the above-described property, unto the Trustee
and his or her substitutes or successors forever (said real property,
improvements, privileges, appurtenances and other property described herein
being hereinafter collectively referred to as the "Mortgaged Property"). The
Grantors do hereby bind themselves and their heirs, executors, administrators
and assigns to warrant and forever defend the Mortgaged Property unto the
Trustee and his or her substitutes or successors and assigns forever, against
the claim, or claims, of all persons claiming or to claim the same or any part
thereof.
This conveyance, however, is made in TRUST to secure payment of one (1)
promissory note (the "Note") of even date herewith in the principal sum of ONE
MILLION FOUR HUNDRED THOUSAND AND NO/100 DOLLARS ($1,400,000.00), executed by
the Grantors, payable to the
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order of LIBERTY NATIONAL BANK (hereinafter called the "Beneficiary") as
specified therein, bearing interest as therein stipulated, and providing for
acceleration of maturity and for attorneys' fees, as well as to secure any and
all renewals, extensions and rearrangements of the Note and payment of all
interest accrued on the Note and all amounts due under the Deed of Trust or any
security agreements, assignments or other instruments relating to the Note or
to any other indebtedness secured hereby (all such amounts secured by this Deed
of Trust are hereinafter collectively referred to as the "Indebtedness").
This Deed of Trust also secures the Beneficiary in the payment of any and all
indebtedness other than the indebtedness evidenced by the Note now owing or
hereafter to become owing by the Grantors (or any one or more of them, if more
than one) to the Beneficiary (the "Other Indebtedness"), which amounts,
together with all interest thereon, shall be a part of the Indebtedness. Any
default ln the payment of the Other Indebtedness, or any portion thereof, or
under any of the instruments securing the Other Indebtedness, or any portion
thereof, at the option of the Beneficiary, shall constitute a default under
this Deed of Trust; and any default in the payment of any of the Indebtedness
or under this Deed of Trust, at the option of the Beneficiary, shall mature all
of the Other Indebtedness.
Should the Grantors perform and comply with all of the covenants and
agreements herein contained and make prompt payment of the Indebtedness as the
same shall become due and payable, then this conveyance shall become of no
further force and effect, and shall be released, at the expense of the
Grantors, by the Beneficiary.
As authorized by Section 12.009 of the Texas Property Code, a Master Form
Deed of Trust (the "Master Form") is recorded by Clark, Thomas, Xxxxxxx &
Xxxxxx in Volume 10944, Pages 807-822, of the Real Property Records of Xxxxxx
County, Texas; in Volume 4574, Pages 1709-1724, of the Official Public
Records of Bexar County, Texas; and in Volume 1782, Pages 006-021, of the
official Records of Xxxxxxxxxx County, Texas. All Sections numbered 1 - 28
of the Master Form are incorporated by reference and made a part hereof as
though set out verbatim. THE GRANTORS' SIGNATURES ON THIS DEED OF TRUST ARE
CONCLUSIVE EVIDENCE THAT THE GRANTORS HAVE RECEIVED A COPY OF THE MASTER
FORM.
The Grantors expressly represent that this Deed of Trust and the Note are
given for the following purpose, to-wit:
The Note (i) is given in renewal, extension and rearrangement, but not in
extinguishment, of the unpaid balance of the following:
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a. as to Lot 3 only, a promissory note in the original principal sum of
$385,000.00, dated March 20, 1987, executed by Xxxx Xxxxxxxx, Xxxxx
Xxxxxxxx and Xxxxxxx X. Xxxxxxx and payable to the order of Windsor
Savings Association, more fully described in and secured by a deed of
trust of even date therewith to Xxxx X. Xxxxxxx, Trustee, duly recorded in
Volume 10171, Page 733, of the Real Property Records of Xxxxxx County,
Texas, which promissory note and deed of trust were transferred to North
Rim Development by instrument duly recorded ln the Real Property Records
of Xxxxxx County, Texas, and which promissory note and deed of trust were
subsequently transferred to the Beneficiary by instrument duly recorded ln
the Real Property Records of Xxxxxx County, Texas;
b. as to Lot 3 only, a promissory note in the original principal sum of
$450,000.00, dated February 25, 1988, executed by the Grantors and payable
to the order of The Money Store Investment Corporation, more fully
described in and secured by a deed of trust of even date therewith to
Xxxxxx X. Xxxxx, Trustee, duly recorded in Volume 10596, Page 89 and
re-recorded in Volume 10621, Page 79 of the Real Property Records of
Xxxxxx County, Texas, which promissory note and deed of trust were
transferred to Marine Midland Bank, N.A. by instrument duly recorded in
Volume 11865, Page 43 of the Real Property Records of Xxxxxx County,
Texas, and which promissory note and deed of trust were subsequently
transferred to the Beneficiary by instrument duly recorded in the Real
Property Records of Xxxxxx County, Texas;
c. as to Lot 3 only, a promissory note in the original principal sum of
$375,000.00, dated August 21, 1991, executed by the Grantors and payable
to the order of the Beneficiary, more fully described in and secured by a
deed of trust of even date therewith to Xxxxxx X. Xxxxxx, Trustee, duly
recorded in Volume 11508, Page 79 of the Real Property Records of Xxxxxx
County, Texas; and
d. as to Lots 3 and 4, a promissory note in the original principal sum of
$150,000.00, dated June 26, 1992, executed by the Grantors and payable to
the order of the Beneficiary, more fully described in and secured by a
deed of trust of even date therewith to X. Xxxxxx Xxxxxxxx, Trustee, duly
recorded in Volume 11717, Page 1649 of the Real Property Records of
Xxxxxx County, Texas;
upon said portions of the Mortgaged Property, which liens are hereby expressly
acknowledged by the Grantors to be valid and subsisting liens against the
Mortgaged Property, and which liens
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are renewed, extended and continued in full force and effect to secure the
payment of the Note; (ii) represents additional cash advanced to the Grantors
to refinance other indebtedness owed to the Beneficiary and other creditors and
for general working capital purposes at the Grantors' special instance and
request; and (iii) represents funds advanced and to be advanced to the Grantors
at the Grantors' special instance and request for the purpose of providing
financing for the construction of certain improvements on the Mortgaged
Property, and this conveyance is made in trust to secure the payment of the
Note, including any and all advances now or hereafter made under the Note.
SURREY, INC., a Texas corporation expressly represents and warrants to the
Beneficiary that it is a corporation duly organized and existing in good
standing under the laws oL. the State of Texas; that it possesses full power
and authority to own its property and to conduct its business as now conducted
and as presently proposed to be conducted; that the execution and delivery of
the Note and this Deed of Trust and the performance of its obligations
thereunder and hereunder will not contravene any provisions of its articles of
incorporation or by-laws; and that the officers executing the Note and this
Deed of Trust are the legally elected, qualified, and acting officers of the
corporation and are expressly authorized to execute the Note and this Deed of
Trust by resolution of the board of directors of the corporation.
The Grantors agree and consent to the jurisdiction of the District Court of
Xxxxxx County, Texas, and of the United States District Court for the Western
District of Texas (Austin Division) and acknowledge that such courts shall
constitute proper and convenient forums for the resolution of any actions
between the Grantors and the Beneficiary with respect to the subject matter of
this Deed of Trust, and agree that such courts shall be the sole and exclusive
forums for the resolution of any actions between the Grantors and the
Beneficiary with respect to the subject matter of this Deed of Trust unless
another forum is available to either the Grantors or the Beneficiary by
applicable state or federal law and such party's choice of such forum cannot be
waived.
All notices, demands and requests made under any provision of this Deed of
Trust or the Master Form shall be in writing and shall be deemed to have been
properly delivered as of the time of delivery if personally delivered, or as of
the time deposited in the mail system if sent by United States certified mail,
return receipt requested and postage prepaid. All notices, demands and
requests shall be addressed to the Beneficiary at X.X. Xxx 0000, Xxxxxx, Xxxxx
00000 and to the Grantors at 00000 Xxxxxx Xxx Xxxx, Xxxxxxx, Xxxxx 00000, or to
such other addresses that either the Beneficiary or the Grantors may designate
to the other by written notice sent in the manner required hereby.
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EXECUTED this the 17th day of November, 1994.
SURREY, INC., a Texas corporation
By: /s/Xxxx X. van der Xxxxx
-----------------------------------------
Name: Xxxx X. van der Xxxxx
Title: President
Mailing Address of Trustee:
X. Xxxxxx Xxxxxxxx, Trustee
x/x XXXXXXX XXXXXXXX XXXX
X.X. Xxx 0000
Xxxxxx, Texas 00000
XXX XXXXX XX XXXXX )
) ss.
THE COUNTY OF XXXXXX )
This instrument was acknowledged before me on this 17th day of November, 1994
by Xxxx X. van der Xxxxx, the President of SURREY, INC., a Texas corporation,
on behalf of said corporation.
/s/Xxxxxxxx Xxxxxxx
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Notary Public, State of Texas
XXXXXXXX XXXXXXX
My Commission Expires
December 31, 1994
AFTER RECORDING, PLEASE RETURN TO:
LIBERTY NATIONAL BANK
ATTN: Loan Operations
X.X. Xxx 0000
Xxxxxx, Xxxxx 00000
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