PROMISSORY NOTE
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THIS IS A BALLOON NOTE AND THE FINAL PAYMENT OR THE BALANCE DUE IS
$1,180,000 PLUS ACCRUED INTEREST.
$1,180,000 _______, ______
February 23, 2005
FOR VALUE RECEIVED, the undersigned XRG, INC., ("Maker") promise to pay
to the order of XXXXXX PARTNERS, LP, or its assigns (hereinafter sometimes
referred to herein as "Lender" and together with any holder hereof called
"Holder") at such place or to such accounts as the Holder may from time to time
designate in writing, the principal sum of One Million One Hundred Eighty
Thousand Dollars ($1,180,000) plus interest.
This Note shall bear simple interest at a rate per annum of ten percent
(10%). Interest shall be calculated on the basis of a 365 day year. Interest on
this Note shall begin to accrue from the date set forth above. All interest is
due and payable with the principal.
All principal advanced under this Note, and accrued interest thereon,
is payable within sixty (60) days from the date of this Note.
"Event of Default", wherever used in this Note, means any one of the
following events:
(1) failure to pay any installment of interest or the
principal balance due under this Note when such installment or principal amount
becomes due and payable;
(2) the Maker shall commence (or take any action for the
purpose of commencing) any proceeding under any bankruptcy, reorganization,
arrangement, readjustment of debt, moratorium or similar law or statute;
(3) a proceeding shall be commenced against Maker under any
bankruptcy, reorganization, arrangement, readjustment of debt, moratorium or
similar law or statute and relief is ordered against it, or the proceeding is
controverted but it is not dismissed within sixty (60) days after the
commencement thereof; or
(4) Maker consents to or suffers the appointment of a
receiver, trustee or custodian for any substantial part of its assets that is
not vacated within thirty (30) days.
(5) An event of default or an acceleration of indebtedness
occurs under any other obligation between Maker and Holder, including any other
past or future promissory notes and the Security Agreement (as defined below).
If an Event of Default occurs, then and in every such case, the Holders
may declare the entire unpaid principal balance of this Note, together with all
accrued interest, due and payable immediately by a notice in writing to the
Maker.
If an Event of Default occurs, the Holder of this Note shall be
entitled to any and all of the remedies provided under New York Law. Upon
declaration of acceleration by the Holder hereof, the entire principal balance
plus interest accrued shall become immediately due and payable in full. The
rights, powers, privileges and remedies of the Holder of this Note are
cumulative.
This Note is secured by a Security Agreement (the "Security
Agreement"), encumbering all equipment, inventory, accounts receivable and
general intangibles and all other assts of Maker, all proceeds thereof, whether
now owned or hereafter acquired, including all additions and replacements
thereof of the Maker.
This Note may be prepaid at any time without penalty or premium at the
sole option of the Maker. If after the date hereof, Maker receives additional
financing of any kind whatsoever (including, without limitation, secured or
unsecured borrowings of money, equity, or any combination thereof) from any
source, including without limitation, from either of Holder or Xxx Steel
("Steel"), in excess of $800,000 (such amount, the "Base Amount") in the
aggregate, then 70% of the aggregate amount of any or all proceeds of any such
financing(s) received above the Base Amount shall be applied immediately upon
receipt to repay, first, accrued but unpaid interest on, and second, all or part
of the principal balance of all outstanding indebtedness under (i) this Note
together with any other promissory note evidencing borrowed money, owed by Maker
to Holder and (ii) that certain promissory note, dated as of January 5, 2005, in
the principal amount of $500,000 made by Maker to Steel, such payments to be
made on a pro rata basis based on the then outstanding principal amounts of all
such indebtedness referred to in such clauses (i) and (ii). For purposes hereof,
any and all amounts from financings currently held in escrow (other than the
financing received to date from Holder or Steel) and released to Maker on or
after the date hereof shall be considered in determining the Base Amount and any
excess thereof.
If an Event of Default occurs, this Note shall bear interest at
seventeen percent (17%)per annum until paid.
In no event shall the amount of interest due or payments in the nature
of interest payable hereunder exceed the maximum contract rate of interest
allowed by applicable law, as amended from time to time. In the event any such
payment is paid by the Maker or received by the Holder, then, upon discovery of
such overcharge, the Holder shall immediately notify the Maker of such
overcharge and shall refund the amount thereof to the Maker; provided, however,
the Maker has the right to elect to have such overcharge applied to the
reduction of principal due hereunder.
Time is of the essence of this contract and, if an Event of Default
occurs or if this Note is collected by law or through an attorney at law, or
under advice therefrom, the Maker agrees to pay all costs of collection,
including reasonable attorney's fees. Such attorney's fees and costs shall
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include, but not be limited to, fees and costs incurred in all matters of
collection and enforcement, construction and interpretation, before, during and
after suit, trial, proceedings and appeals, including time spent and supervision
of paralegal work and paralegal time, as well as appearances in and connected
with any bankruptcy proceedings or creditor's reorganization or arrangement
proceedings.
No act of omission or commission of the Holder, including specifically
any failure to exercise any right, remedy or recourse, shall be deemed to be a
waiver or release of the same, such waiver or release to be effected only
through a written document executed by the Holder and then only to the extent
specifically recited therein. A waiver or release with reference to any one
event shall not be construed as continuing, as a bar to, or as a waiver or
release of, any subsequent right, remedy or recourse as to a subsequent event.
The Maker, for itself, its successors and assigns, hereby (a) expressly
waive presentment, demand for payment, notice of dishonor, protest, notice of
non-payment or protest, and diligence in collection; (b) consent that the time
of all payments or any part thereof may be extended, rearranged, renewed or
postponed by the Holder hereof; (c) agree that the Holder, in order to enforce
payment of this Note, shall not be required first to institute any suit or to
exhaust any of its remedies against the undersigned.
In this Note, whenever the context so requires, the neuter gender
includes the feminine and/or masculine, as the case may be, and the singular
number includes the plural. The headings used in this Note are used for
convenience only and are not to be considered in construing or interpreting this
Note.
This Note shall be governed by and construed under the laws of the
State of New York.
This Note may not be assigned by Maker without the prior written
consent of Holder.
This Note shall not be subject to offset or deduction for any reason.
Maker will not, by amendment of its charter or through reorganization,
consolidation, merger, dissolution, sale of assets or any other voluntary
action, avoid or seek to avoid the observance or performance of any of the terms
of this Note, but will at all times in good faith assist in the carrying out of
all such terms and in the taking of all such action as may be necessary or
appropriate in order to protect the rights of Holder against impairment.
Maker agrees to promptly pay and discharge all lawful taxes (including,
without limitation, any Florida Documentary Stamp Tax), assessments, and
governmental charges or levies imposed upon this Note at any time on or after
the date hereof. This provision shall survive repayment of the obligations
under, and / or cancellation of, this Note
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IN WITNESS WHEREOF, the undersigned has executed this Note on the day
and year first above written.
XRG, INC., a Delaware corporation
By:
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Its Authorized Officer for Purposes of Executing
this Promissory Note
42967.104797
#338345 v4 - XRG / Prom. Note
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