EXHIBIT 10.3
NOTE
Houston, Texas
$900,000.00 , 1997
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FOR VALUE RECEIVED, INDUSTRIAL HOLDINGS, INC., a Texas corporation,
LSS-LONE STAR-HOUSTON, INC., a Texas corporation, AMFLOW MASTER ENVIRONMENTAL,
INC., a Texas corporation, AMERICAN RIVET COMPANY, INC., an Illinois
corporation, XXXXXXXX ENGINEERING COMPANY, a Texas corporation, PIPELINE VALVE
SPECIALTY, INC., a Texas corporation, THE XXX GROUP, INC., a Texas corporation,
XXX SUPPLY CORPORATION, a Texas corporation, XXX MACHINERY SALES, INC., a Texas
corporation, XXX MACHINERY MOVERS, INC., a Texas corporation, U.S. CRATING,
INC., a Texas corporation, XXX INTERNATIONAL CORPORATION, a Texas corporation,
FIRST TEXAS CREDIT CORPORATION, a Texas corporation, XTEL CORPORATION, a Texas
corporation, and XXXXX, INC., a Texas corporation, jointly and severally,
promise to pay to the order of COMERICA BANK-TEXAS, a Texas corporation, at P.O.
Box 4167, Houston, Texas 77210-4167 (or such other place as the holder hereof
may hereafter designate in writing), in immediately available funds and in
lawful money of the United States of America, the principal sum of Nine Hundred
Thousand and No/100 Dollars ($900,000.00) (or the unpaid balance of all
principal advanced against this note, if that amount is less), together with
interest as follows: (a) interest on the unpaid principal balance of this note
from time to time outstanding at the Stated Rate and interest on all past due
amounts, both principal and accrued interest, from the respective due dates
thereof until paid at the Past Due Rate and (b) the Additional Interest;
PROVIDED, that for the full term of this note the interest rate produced by the
aggregate of all sums paid or agreed to be paid to the holder of this note for
the use, forbearance or detention of the debt evidenced hereby (including, but
not limited to, all interest on this note at the Stated Rate plus the Additional
Interest) shall not exceed the Ceiling Rate.
16. DEFINITIONS. As used in this note, the following terms shall have the
respective meanings indicated:
(1) "ACCOUNTS," "EQUIPMENT," "GENERAL INTANGIBLES" and "INVENTORY" shall
have the meanings assigned to them in the Uniform Commercial Code in force and
effect in the State of Texas on the date of this Agreement.
(2) "ADDITIONAL INTEREST" means the aggregate of all amounts accrued or
paid pursuant to this note or any of the other Loan Documents (other than
interest on this note at the Stated Rate) which, under applicable laws, are or
may be deemed to constitute interest on the indebtedness evidenced by this note.
(3) "ANNIVERSARY DATE" shall have the meaning assigned thereto in SECTION
4 hereof.
(4) "BUSINESS DAY" means any day, other than a Saturday or a Sunday, when
Payee is open for business.
Ex-4
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(5) "CEILING RATE" means, on any day, the maximum nonusurious rate of
interest permitted for that day by whichever of applicable federal or Texas laws
permits the higher interest rate, stated as a rate per annum. On each day, if
any, that Chapter One establishes the Ceiling Rate, the Ceiling Rate shall be
the "indicated rate ceiling" (as defined in Chapter One) for that day. Payee may
from time to time, as to current and future balances, implement any other
ceiling under Chapter One by notice to any Maker, if and to the extent permitted
by Chapter One. Without notice to any Maker or any other person or entity, the
Ceiling Rate shall automatically fluctuate upward and downward as and in the
amount by which such maximum nonusurious rate of interest permitted by
applicable law fluctuates.
(6) "CHAPTER ONE" means Chapter One of Title 79, Texas Revised Civil
Statutes, 1925, as amended.
(7) "CONSOLIDATED LEC NOTE" means that certain promissory note dated
November 1, 1996 in the original principal sum of $578,152.63 executed by
Makers, payable to the order of Payee, as the same may be amended, restated,
modified, rearranged, renewed and extended from time to time.
(8) "DEBT" means the indebtedness evidenced by this note and the
indebtedness to Payee incurred under or evidenced by the Other Notes and the
other Loan Documents.
(9) "DEED OF TRUST" means the Deed of Trust and Security Agreement (with
Assignment of Rents) dated concurrently herewith from LSS-Loan Star-Houston,
Inc., f/k/a Loan Star Screw Company of Houston, to Payee, covering, among other
property, certain real property located in Xxxxxx County, Texas, together with
any and all improvements thereon from time to time and the personal property
related to the real property covered by the Deed of Trust, as the same may be
amended, supplemented, restated or replaced from time to time.
(10)"EQUIPMENT NOTE A" means that certain promissory note dated November
1, 1996 in the original principal sum of $1,800,000.00, executed by Makers,
payable to the order of Payee, as the same may be amended, restated, modified,
rearranged, renewed and extended from time to time.
(11)"EQUIPMENT NOTE B" means that certain promissory note dated of even
date herewith in the original principal sum of $800,000.00, executed by Makers,
payable to the order of Payee, as the same may be amended, restated, modified,
rearranged, renewed and extended from time to time.
(12)"GAAP" shall mean, as of any applicable date of determination,
generally accepted accounting principles consistently applied.
(13)"GENERAL SECURITY AGREEMENT" means that certain Security Agreement of
even date herewith from Makers, in favor of Xxxxx, covering, among other
property more fully described therein, all of Makers' Accounts, General
Intangibles, Inventory and Equipment, as the same may be amended, modified,
renewed, extended, ratified, confirmed and supplemented from time to time.
(14)"IHI" means Industrial Holdings, Inc., a Texas corporation.
(15)"LINE OF CREDIT NOTE" means that certain Master Note dated of even
date herewith executed by Makers, payable to the order of Payee, in the original
principal sum of $14,000,000.00, as the same may be amended, restated, modified,
rearranged, renewed and extended from time to time.
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(16)"LOAN DOCUMENTS" means any and all papers now or hereafter governing,
evidencing, guaranteeing or securing or otherwise relating to all or any part of
the indebtedness evidenced by this note or any of the Other Notes.
(17)"MAKERS" means IHI, LSS-Loan Star-Houston, Inc., a Texas corporation,
Amflow Master Environmental, Inc., a Texas corporation, American Rivet Company,
Inc., an Illinois corporation, Xxxxxxxx Engineering Company, a Texas
corporation, Pipeline Valve Specialty, Inc., a Texas corporation, The Xxx Group,
Inc., a Texas corporation, Xxx Supply Corporation, a Texas corporation, Xxx
Machinery Sales, Inc., a Texas corporation, Xxx Machinery Movers, Inc., a Texas
corporation, U.S. Crating, Inc., a Texas corporation, Xxx International
Corporation, a Texas corporation, First Texas Credit Corporation, a Texas
corporation, XTEL Corporation, a Texas corporation, and Xxxxx, Inc., a Texas
corporation. "MAKER" means any one of them.
(18)"MATURITY DATE" means the maturity of this note, fifteen (15) calendar
years from the date hereof, as the same may hereafter be accelerated pursuant to
the provisions of this note or any of the other Loan Documents.
(19)"ORIGINAL XXXXXXXX NOTE" means that certain promissory note in the
original principal sum of $506,783.40, dated as of October 26, 1992, executed by
Xxxxxxxx, payable to the order of Payee, as the same may be amended, restated,
modified, rearranged, renewed and extended from time to time.
(20)"OTHER NOTES" means Line of Credit Note, Equipment Note A, Equipment
Note B, the Consolidated LEC Note, the Xxx/Mach Note, the Original Xxxxxxxx Note
and any and all other promissory notes now or hereafter executed by any of the
Makers in connection with the specific advance loan facility in favor of Makers,
established by Xxxxx, including (i) that certain promissory note dated December
5, 1994 in the original principal sum of $16,400, executed by Makers payable to
the order of Payee; (ii) that certain promissory noted dated January 23, 1995 in
the original principal sum of $22,400, executed by Makers payable to the order
of Payee; (iii) that certain promissory noted dated August 20, 1996 in the
original principal sum of $31,600.00, executed by Makers payable to the order of
Payee; (iv) that certain promissory noted dated October 18, 1996 in the original
principal sum of $35,500.00, executed by Makers payable to the order of Payee;
(v) that certain promissory noted dated January 10, 1997 in the original
principal sum of $11,400.00 executed by Makers payable to the order of Payee, as
any of the same may be amended, modified, restated, renewed, extended, replaced
or substituted for from time to time.
(21)"PAST DUE RATE" means, on any day, a rate per annum equal to the
Ceiling Rate for that day, or only if applicable law imposes no maximum
nonusurious rate of interest for that day, then the Past Due Rate for that day
shall be a rate per annum equal to the Stated Rate plus five percent (5%) per
annum.
(22)"PAYEE" means Comerica Bank-Texas, a Texas banking corporation, and
any other holder or holders of this note from time to time and, upon acquisition
of this note by any holder or holders other than the named payee, effective as
of the time of such acquisition, the term "Payee" shall mean all of the then
holders of this note, to the exclusion of all prior holders not then retaining
or reserving an interest in this note, to the end that all the rights, powers,
remedies, liens, benefits and privileges accruing and to accrue hereunder to
Payee, as such term is used herein, shall inure to the benefit of and be owned
and held by the holder or holders of this note from time to time, whether such
holder acquires this note through succession to or assignment from
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a prior Payee.
(23)"PRIME RATE" means, on any day, the rate established from time to time
by Payee for the guidance of its loan officers, whether otherwise published or
announced. Without notice to any Maker or any other person or entity, the Prime
Rate shall automatically fluctuate upward and downward as and in the amount by
which said prime rate fluctuates, with each change to be effective as of the
date of each change in said prime rate. THE PRIME RATE IS A REFERENCE RATE AND
DOES NOT NECESSARILY REPRESENT THE LOWEST OR BEST RATE ACTUALLY CHARGED TO ANY
CUSTOMER, AND PAYEE DISCLAIMS ANY STATEMENT, REPRESENTATION OR WARRANTY TO THE
CONTRARY. PAYEE MAY MAKE COMMERCIAL LOANS OR OTHER LOANS AT RATES OF INTEREST
AT, ABOVE OR BELOW THE PRIME RATE.
(24)"XXX/MACH NOTE" means that certain promissory note in the original
principal sum of $848,592.00, dated as of July 11, 1996, executed by Makers,
payable to the order of Payee, as the same may be amended, restated, modified,
rearranged, renewed and extended from time to time.
(25)"STATED RATE" means, on any day, a rate per annum equal to the Prime
Rate; PROVIDED, that if on any day the Prime Rate for that day shall exceed the
Ceiling Rate for that day, the Stated Rate shall be fixed at the Ceiling Rate on
that day and on each day thereafter until the total amount of interest accrued
at the Stated Rate on the unpaid principal balance of this note plus the
Additional Interest equals the total amount of interest which would have accrued
if there had been no Ceiling Rate. If this note matures (or is prepaid) before
such equality is achieved, then, in addition to the unpaid principal and accrued
interest then owing pursuant to the other provisions of this note, Makers,
jointly and severally, promise to pay on demand to the order of the holder of
this note interest in an amount equal to the excess (if any) of (a) the lesser
of (i) the total interest which would have accrued on this note if the Stated
Rate had been defined as equal to the Ceiling Rate from time to time in effect
and (ii) the total interest which would have accrued on this note if the Stated
Rate were not so prohibited from exceeding the Ceiling Rate, over (b) the total
interest actually accrued hereon to such maturity (or prepayment) date. Without
notice to any Maker or any other person or entity, the Stated Rate shall
automatically fluctuate upward and downward in accordance with the provisions of
this Subsection.
17. SECURITY; NOTATION OF LOANS AND PAYMENTS. This note is secured or
guaranteed by, among other security, the Deed of Trust and the General Security
Agreement. The unpaid principal balance of this note at any time shall be the
total of all amounts lent or advanced against this note less the amount of all
payments or permitted prepayments made on this note and by or for the account of
any Maker. All loans and advances and all payments and permitted prepayments
made hereon may be endorsed by the holder of this note on a schedule which may
be attached hereto (and thereby made a part hereof for all purposes) or
otherwise recorded in the holder's records; PROVIDED, that any failure to make
notation of (a) any advance shall not cancel, limit or otherwise affect any
Maker's obligations or any holder's rights with respect to that advance, or (b)
any payment or permitted prepayment of principal shall not cancel, limit or
otherwise affect any Maker's entitlement to credit for that payment as of the
date received by the holder. The obligation (if any) of Payee to make any
further advances against this note shall cease and terminate upon the occurrence
of a default under this note or an event which, with notice, the passage of time
or both would constitute such a default under this note. Payee may condition any
advance against this note upon delivery to Payee of a written request for
advance, in form and substance satisfactory to Payee, accompanied by such
supporting evidence as Payee may require. Amounts paid or prepaid under this
note may not be reborrowed.
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18. COMPUTATION OF INTEREST. Interest on the amount of each advance
against this note shall be computed on the amount of that advance and from the
date it is made. Such interest shall be computed for the actual number of days
elapsed in a year consisting of 360 days, unless the Ceiling Rate would thereby
be exceeded, in which event, to the extent necessary to avoid exceeding the
Ceiling Rate, interest shall be computed on the basis of the actual number of
days elapsed in the applicable calendar year in which accrued.
19. MANDATORY PAYMENTS OF PRINCIPAL AND INTEREST.
(1) Accrued and unpaid interest on the unpaid principal balance of this
note shall be due and payable (i) on March 1, 1997, and (ii) on the first (1st)
day of each succeeding calendar month thereafter before the Maturity Date. In
addition, all accrued and unpaid interest on the unpaid principal balance of
this note shall be due and payable at the Maturity Date.
(2) The principal of this note shall be due and payable in monthly
installments of Five Thousand and No/100 Dollars ($5,000.00) each. The first
installment shall be due and payable on March 1, 1997, and a like installment
shall be due and payable on the first (1st) day of each succeeding calendar
month thereafter until this note shall have been fully paid and satisfied;
PROVIDED, that on the Maturity Date, the entire unpaid principal balance of this
note and all accrued and unpaid interest on the unpaid principal balance of this
note shall be finally due and payable.
(3) All payments hereon made pursuant to this Section shall be applied
first to accrued interest, the balance to principal.
(4) If any payment provided for in this note shall become due on a day
other than a Business Day, such payment may be made on the next succeeding
Business Day (unless the result of such extension of time would be to extend the
date for such payment into another calendar month or beyond the Maturity Date,
and in either such event such payment shall be made on the Business Day
immediately preceding the day on which such payment would otherwise have been
due), and such extension of time shall in such case be included in the
computation of interest on this note.
(5) Notwithstanding anything contained in this note or any of the other
Loan Documents (and without limiting any other provision contained in any of
them for the acceleration of the maturity of this note), beginning with the
fifth (5th) Anniversary Date and with respect to each Anniversary Date occurring
thereafter, Xxxxx, in its sole and absolute discretion, with or without cause,
may elect to accelerate the final stated maturity of this note to any such
Anniversary Date by giving written notice to Maker of such election no later
than thirty (30) days prior to the applicable Anniversary Date.
20. NO USURY INTENDED; SPREADING. Notwithstanding any provision to the
contrary contained in this note or any of the other Loan Documents, it is
expressly provided that in no case or event shall the aggregate of (i) all
interest on the unpaid balance of this note, accrued or paid from the date
hereof and (ii) the aggregate of any other amounts accrued or paid pursuant to
this note or any of the other Loan Documents, which under applicable laws are or
may be deemed to constitute interest upon the indebtedness evidenced by this
note from the date hereof, ever exceed the Ceiling Rate. In this connection,
each Maker and Payee stipulate and agree that it is their common and overriding
intent to contract in strict compliance with applicable usury laws. In
furtherance thereof, none of the terms of this note or any of the other Loan
Documents shall ever be construed to create a contract to pay, as consideration
for the use, forbearance or
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construed to create a contract to pay, as consideration for the use, forbearance
or detention of money, interest at a rate in excess of the Ceiling Rate. No
Maker or any other parties now or hereafter becoming liable for payment of the
indebtedness evidenced by this note shall ever be liable for interest in excess
of the Ceiling Rate. If, for any reason whatever, the interest paid or received
on this note during its full term produces a rate which exceeds the Ceiling
Rate, the holder of this note shall credit against the principal of this note
(or, if such indebtedness shall have been paid in full, shall refund to the
payor of such interest) such portion of said interest as shall be necessary to
cause the interest paid on this note to produce a rate equal to the Ceiling
Rate. All sums paid or agreed to be paid to the holder of this note for the use,
forbearance or detention of the indebtedness evidenced hereby shall, to the
extent permitted by applicable law, be amortized, prorated, allocated and spread
in equal parts throughout the full term of this note, so that the interest rate
is uniform throughout the full term of this note. The provisions of this Section
shall control all agreements, whether now or hereafter existing and whether
written or oral, between any Maker and Payee.
21. Financial and Other Information. From the date hereof until the
principal of and interest on this note, the Other Notes and other indebtedness
is paid in full, and the ability, if any, of Makers to obtain loans under the
Line of Credit Note or any of the Other Notes has irrevocably terminated, each
Maker covenants and agrees that it will (or will cause each other Maker to):
(1) SEC REPORTS. Furnish to Payee within five (5) days after the
filing with the Securities and Exchange Commission by any Maker, true,
correct and complete copies of all such filings, of any financial
statements, registration statements, reports and proxy statements.
(2) ANNUAL AUDITED FINANCIAL REPORTS. Furnish to Payee in form
satisfactory to Payee not later than ninety (90) days after the close of
each fiscal year of Makers, a balance sheet as at the close of each such
fiscal year and statements of income and statements of cash flows for each
such fiscal year and for Makers, and such other comments and financial
details as are usually included in similar reports. Such reports shall be
prepared in accordance with GAAP by independent certified public
accountants of recognized standing selected by Makers and acceptable to
Payee and shall contain unqualified opinions as to the fairness of the
statements therein contained.
(3) MAKERS'S MONTHLY FINANCIAL STATEMENTS. Furnish to Payee not later
than twenty (20) days after the close of each month of each fiscal year of
Makers, financial statements containing the balance sheet of Makers as of
the end of each such period, statements of income and statements of cash
flows of Makers up to the end of such period. These statements shall be
prepared on substantially the same accounting basis as the statements
required in SECTION 6(B) of this Agreement and shall be in such detail as
Payee may reasonably require, and the accuracy of the statements shall be
certified by the chief executive or financial officer of Makers.
(4) ADVERSE EVENTS. Promptly inform Xxxxx of the occurrence of any
Event of Default or Default, or of any occurrence which has or could
reasonably be expected to have a materially adverse effect upon any
Maker's business, properties, financial condition or ability to comply
with its obligations hereunder.
(5) OTHER MAKERS' FINANCIAL INFORMATION. Furnish or cause to be
furnished to Payee as soon as available and in any event (a) within 90
days after the end of each calendar year, the current
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and complete financial statement and cash flow statement of each Maker
(other than Makers) prepared on a form approved by Payee and completed in
such detail as Payee shall require and (b) as soon as it has been filed
with the United States Internal Revenue Service, each Maker's federal tax
return for each calendar year.
(6) OTHER INFORMATION AS REQUESTED. Promptly furnish (or cause to be
furnished) to Payee such other information regarding the operations,
business affairs and financial condition of the Makers as Payee may
reasonably request from time to time and permit Payee, its employees,
attorneys and agents, to inspect all of the books, records and properties
of the Makers at any reasonable time.
22. DEFAULT. The occurrence of any of the following events shall
constitute default under this note, whereupon the obligation (if any) of Payee
to make any further advances against this note shall cease and terminate and the
owner or holder hereof may, at its, his or her option, exercise any or all
rights, powers and remedies afforded under any of the Loan Documents and by law,
including the right to declare the unpaid balance of principal and accrued
interest on this note at once mature and payable:
(1) any part of the Debt is not paid when due, whether by lapse of time or
acceleration or otherwise.
(2) any Maker fails to perform, observe or comply with--or defaults
under--any of the terms, covenants, conditions or provisions contained in any
Loan Document.
(3) any representation or warranty made in this note or any of the other
Loan Documents or in any other report or other paper now or hereafter provided
to Payee pursuant or incident to this note or any other Loan Document or the
Debt proves to have been untrue or misleading in any material respect as of the
date made or deemed made.
(4) any Maker: (i) voluntarily suspends transaction of business; (ii)
becomes insolvent or unable to pay its debts as they mature; (iii) commences a
voluntary case in bankruptcy or a voluntary petition seeking reorganization or
to effect a plan or other arrangement with creditors; (iv) makes an assignment
for the benefit of creditors; (v) applies for or consents to the appointment of
any receiver or trustee for any such party or for any substantial portion of its
property; or (vi) make an assignment to an agent authorized to liquidate any
substantial part of its assets.
(5) in respect of any Maker: (i) an involuntary case shall be commenced
with any court or other authority seeking liquidation, reorganization or a
creditor's arrangement of any such party; (ii) an order of any court or other
authority shall be entered appointing any receiver or trustee for any such party
or for any substantial portion of its property; or (iii) a writ or warrant of
attachment or any similar process shall be issued by any court or other
authority against any substantial portion of the property of any such party and
such petition seeking liquidation, reorganization or a creditor's arrangement or
such order appointing a receiver or trustee is not vacated or stayed, or such
writ, warrant of attachment or similar process is not vacated, released or
bonded off within thirty (30) days after its entry or levy.
(6) a conveyance, transfer, assignment or pledge of a controlling interest
in any Maker shall occur, in a single transaction or a series of transactions,
without Xxxxx's prior written consent.
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(7) the death, legal incompetency, dissolution, liquidation or termination
of any Maker.
(8) any action, suit or proceeding shall be commenced against or affecting
any Maker or involving the validity or enforceability of this note or any other
Loan Document, at law or in equity, or before any governmental authority, which
in Payee's judgment, impairs or would impair Xxxxx's ability to collect the Debt
when due or the enforceability of this note or any other Loan Document.
(9) any one or more final judgments for the payment of money shall be
rendered against any Maker and the same shall remain unstayed or undischarged
for a period of thirty (30) days.
(10)any Maker shall be prevented or relieved by any governmental authority
from performing or observing any material term, covenant or condition of this
note or any other Loan Document.
(11)any material adverse change shall occur in the assets, financial
condition, business, operations, affairs or circumstances of any Maker.
(12)any Maker shall fail to pay when due any principal of or interest on
any borrowed money obligation or the holder of such other obligation
declares--or may declare--such obligation due before its stated maturity because
of default.
(13)any Maker shall be in default under or in violation of any law,
statute, ordinance, decree, requirement, order, judgment, rule or regulation (or
interpretation of any of them) of the United States of America, any State of the
United States of America or any political subdivision of any of them, or of any
agency, department, commission, board, bureau or court or other tribunal having
jurisdiction over any such party or any such party's property.
(14)any Maker shall claim--or any court shall find or rule--that Payee
does not have a valid lien on any security which may have been provided by such
Maker.
(15)the sale, encumbrance or abandonment (except as otherwise expressly
agreed to in writing by Xxxxx) of any property now or hereafter covered by any
instrument now or hereafter securing the Debt, the making of any levy, seizure
or attachment of or on any such property or the loss, theft, substantial damage
or destruction of any such property.
(16)any Maker shall have concealed, removed, or permitted to be concealed
or removed, any part of its property, with intent to hinder, delay or defraud
any of its creditors, or made or suffered a transfer of any of its property
which may be fraudulent under any bankruptcy, fraudulent conveyance or similar
law, or shall have made any transfer of its property to or for the benefit of a
creditor at a time when other creditors similarly situated have not been paid,
or, while insolvent, shall have suffered or permitted any creditor to obtain a
lien upon any of its property through legal proceedings or distraint which is
not vacated within thirty (30) days from its date.
(17)any Maker fails to pay when due any amount which he or it is liable to
pay to the Pension Benefit Guaranty Corporation ("PBGC") or its successor or to
any plan (a "PLAN") maintained for any of the such Maker's employees subject to
Title IV of the Employee Retirement Benefit Act of 1974, as amended, and
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related regulations ("ERISA"), or notice of intent to terminate any Plan is
filed under ERISA, or PBGC commences proceedings under ERISA to terminate any
Plan or to cause a trustee to be appointed to administer any Plan, or a
proceeding is commenced by any fiduciary of any Plan to enforce Section 515 or
Section 4219(c)(5) of ERISA, or PBGC becomes entitled to obtain a decree
adjudicating that any Plan must be terminated.
(18)a default, an event of default or a similar event (however
denominated) shall occur under the terms and conditions of any other Loan
Document.
(19)Makers shall have a consolidated net loss (determined in accordance
with generally accepted accounting principles) from operations for any fiscal
year of Makers.
(20)Demand for payment shall be made by Payee under the Other Notes or the
Line of Credit Note shall be fully paid and satisfied and the rights of Makers,
if any, to borrow sums under the Other Notes shall be irrevocably terminated,
either voluntarily or involuntary.
23. NO WAIVER BY XXXXX. No delay or omission of Payee or any other holder
hereof to exercise any power, right or remedy accruing to Payee or any other
holder hereof shall impair any such power, right or remedy or shall be construed
to be a waiver of the right to exercise any such power, right or remedy. Xxxxx's
right to accelerate this note for any late payment or any Maker's failure to
timely fulfill its other obligations hereunder or under the other Loan Documents
shall not be waived or deemed waived by Payee by Xxxxx's having accepted a late
payment or late payments in the past or Payee otherwise not accelerating this
note or exercising other remedies for any Maker's failure to timely perform its
obligations hereunder or under the other Loan Documents. Payee shall not be
obligated or be deemed obligated to notify any Maker that it is requiring any
Maker to strictly comply with the terms and provisions of this note and the
other Loan Documents before accelerating this note and exercising its other
remedies hereunder or under the other Loan Documents because of any Maker's
failure to timely perform its obligations under this note and the other Loan
Documents.
24. COSTS AND ATTORNEYS' FEES. If any holder of this note retains an
attorney in connection with any default or to collect, enforce or defend this
note or any of the Loan Documents in any lawsuit or in any probate,
reorganization, bankruptcy or other proceeding, or if any Maker sues any holder
in connection with this note or any of the Loan Documents and does not prevail,
then any Maker agrees to pay to each such holder, in addition to principal and
interest, all reasonable costs and expenses incurred by such holder in trying to
collect this note or in any such suit or proceeding, including reasonable
attorneys' fees. To the extent not prohibited by applicable law, Makers, jointly
and severally, will pay all costs and expenses and reimburse Payee for any and
all expenditures of every character incurred or expended from time to time,
regardless of whether or not a default has occurred, in connection with (a) the
preparation, negotiation, documentation, closing, renewal, revision,
modification, increase, review or restructuring of this note or any loan or
credit facility evidenced by or relating to this note, including legal,
accounting, auditing, architectural engineering and inspection services and
disbursements, or in connection with collecting or attempting to enforce or
collect this note or any of the other Loan Documents, (b) Payee's evaluating,
monitoring, administrating and protecting any collateral ("COLLATERAL") now or
hereafter securing payment of any part of this note and (c) Payee's creating,
perfecting and realizing upon Payee's security interests in and liens on any
Collateral, and all costs and expenses relating to Xxxxx's exercising any of its
rights and remedies hereunder or under any other Loan Document or at law,
including, without limitation, all appraisal fees, consulting fees, filing fees,
taxes, brokerage fees and
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commissions, title review and abstract fees, Uniform Commercial Code search
fees, other fees and expenses incident to title searches, reports and security
interests, escrow fees, attorneys' fees, legal expenses, court costs, other fees
and expenses incurred in connection with any complete or partial liquidation of
any Collateral and all fees and expenses for any professional services relating
to the Collateral or any operations conducted in connection with it; PROVIDED,
that no right or option granted by any Maker to Payee or otherwise arising
pursuant to any provision of this or any other instrument shall be deemed to
impose or admit a duty on Payee to supervise, monitor or control any aspect of
the character or condition of the Collateral or any operations conducted in
connection with it for the benefit of any Maker or any other person or entity
other than Payee. Each Maker agrees to indemnify, defend and hold Payee, its
shareholders, directors, officers, agents, attorneys, advisors and employees
(collectively "INDEMNIFIED PARTIES") harmless from and against any and all loss,
liability, obligation, damage, penalty, judgment, claim, deficiency, expense,
action, suit, cost and disbursement of any kind or nature whatsoever (including
interest, penalties, attorneys' fees and amounts paid in settlement), REGARDLESS
OF WHETHER CAUSED IN WHOLE OR IN PART BY THE NEGLIGENCE OF ANY OF THE
INDEMNIFIED PARTIES, imposed on, incurred by or asserted against the Indemnified
Parties growing out of or resulting from this note, any Loan Document or any
transaction or event contemplated herein or therein (except that such indemnity
shall not be paid to any Indemnified Party to the extent that such loss, etc.
directly results from the gross negligence or willful misconduct of that
Indemnified Party). Any amount to be paid under this Section by Maker to Payee
shall be a demand obligation owing by Maker to Payee and shall bear interest
from the date of expenditure until paid at the Past Due Rate.
25. WAIVERS BY MAKERS AND OTHERS. Except to the extent, if any, that
notice of default is expressly required herein or in any of the other Loan
Documents, each Maker and any and all co-makers, endorsers, guarantors and
sureties severally waive notice (including, but not limited to, notice of intent
to accelerate and notice of acceleration, notice of protest and notice of
dishonor), demand, presentment for payment, protest, diligence in collecting and
the filing of suit for the purpose of fixing liability and consent that the time
of payment hereof may be extended and re-extended from time to time without
notice to any of them. Each such person agrees that his, her or its liability on
or with respect to this note shall not be affected by any release of or change
in any guaranty or security at any time existing or by any failure to perfect or
to maintain perfection of any lien against or security interest in any such
security or the partial or complete unenforceability of any guaranty or other
surety obligation, in each case in whole or in part, with or without notice and
before or after maturity.
26. SECTION HEADINGS. Section headings appearing in this note are for
convenient reference only and shall not be used to interpret or limit the
meaning of any provision of this note.
27. VENUE; CHOICE OF LAW. This note is performable in Dallas County,
Texas, which shall be a proper place of venue for suit on or in respect of this
note. Each Maker hereby irrevocably agrees that any legal proceeding in respect
of this note shall be brought in the district courts of Dallas County, Texas, or
in the United States District Court for the Northern District of Texas, Dallas
Division (collectively, the "SPECIFIED COURTS"). Each Maker hereby irrevocably
submits to the nonexclusive jurisdiction of the state and federal courts of the
State of Texas. Maker hereby irrevocably waives, to the fullest extent permitted
by law, any objection which it may now or hereafter have to the laying of venue
of any suit, action or proceeding arising out of or relating to this note or any
of the Loan Documents brought in any Specified Court, and hereby further
irrevocably waives any claims that any such suit, action or proceeding brought
in any such court has been brought in an inconvenient forum. Each Maker further
irrevocably consents to the service of process out of
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any of the Specified Courts in any such suit, action or proceeding by the
mailing of copies thereof by certified mail, return receipt requested, postage
prepaid, to each Maker. Nothing herein shall affect the right of Payee to
commence legal proceedings or otherwise proceed against any Maker in any
jurisdiction or to serve process in any manner permitted by applicable law. Any
Maker agrees that a final judgment in any such action or proceeding shall be
conclusive and may be enforced in other jurisdictions by suit on the judgment or
in any other manner provided by law. THIS NOTE SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE APPLICABLE LAWS OF THE STATE OF TEXAS AND THE
UNITED STATES OF AMERICA FROM TIME TO TIME IN EFFECT.
28. OFFSET RIGHTS. Payee is hereby authorized at any time and from time to
time, without notice to any person or entity (and each Maker hereby WAIVES any
such notice) to the fullest extent permitted by law, to set-off and apply any
and all monies, securities and other properties of such Maker now or in the
future in the possession, custody or control of Payee, or on deposit with or
otherwise owed to such Maker by Payee--including without limitation all such
monies, securities and other properties held in general, special, time, demand,
provisional or final accounts or for safekeeping or as collateral or otherwise
(but excluding those accounts clearly designated as escrow or trust accounts
held by such Maker for others unaffiliated with such Maker)--against any and all
of such Maker's obligations to Payee now or hereafter existing under this note,
irrespective of whether Payee shall have made any demand under this note. Xxxxx
agrees to use reasonable efforts to promptly notify the applicable Maker after
any such set-off and application made by Payee, PROVIDED that failure to
give--or delay in giving--any such notice shall not affect the validity of such
set-off and application or impose any liability on Payee. Xxxxx's rights under
this Section are in addition to other rights and remedies (including, without
limitation, other rights of set-off) which Payee may have.
29. SUCCESSORS AND ASSIGNS. This note and all the covenants and agreements
contained herein shall be binding upon, and shall inure to the benefit of, the
respective legal representatives, heirs, successors and assigns of each Maker
and Payee.
30. RECORDS OF PAYMENTS. The records of Payee shall be prima facie
evidence of the amounts owing on this note.
31. SEVERABILITY. If any provision of this note is held to be illegal,
invalid or unenforceable under present or future laws, the legality, validity
and enforceability of the remaining provisions of this note shall not be
affected thereby, and this note shall be liberally construed so as to carry out
the intent of the parties to it. Each waiver in this note is subject to the
overriding and controlling rule that it shall be effective only if and to the
extent that (a) it is not prohibited by applicable law and (b) applicable law
neither provides for nor allows any material sanctions to be imposed against
Payee for having bargained for and obtained it.
32. SALE AND ASSIGNMENT. Payee reserves the right, exercisable in its sole
discretion and without notice to any Maker or any other person, to sell
participations or assign its interest, or both, in all or any part of this note
or any loan evidenced by this note.
33. NOTICES. Any notice, request or other communication required or
permitted to be given hereunder shall be given in writing by delivering it
against receipt for it, by depositing it with an overnight delivery service or
by depositing it in a receptacle maintained by the United States Postal Service,
postage prepaid, registered or certified mail, return receipt requested,
addressed to the respective parties as follows (and if so given, shall
Page 11 of 13 pages
be deemed given when mailed):
If to any Maker: If to Payee:
0000 Xxxxxxx Xxxxxxxx Xxxx-Xxxxx
Xxxxxxx, Xxxxx 00000 0000 Xxx Xxxxxx
Attn: Robert Xxxx Xxxxxx, Xxxxx 00000
Attention: Xxxx X. Xxx
with a copy to:
Comerica Bank-Texas
P. O. Box 4167
Houston, Texas 77210-4167
Attention: Xxxx X. Xxxxxxxx
Any Maker's address for notice may be changed at any time and from time to time,
but only after thirty (30) days' advance written notice to Payee and shall be
the most recent such address furnished in writing by such Maker to Payee.
Xxxxx's address for notice may be changed at any time and from time to time, but
only after ten (10) days' advance written notice to Makers and shall be the most
recent such address furnished in writing by Payee to Makers. Actual notice,
however and from whomever given or received, shall always be effective when
received.
34. PREPAYMENT. Makers may at any time pay the full amount or any part of
this note without the payment of any premium or fee. All prepayments hereon
shall be applied first to accrued interest and the balance to the remaining
principal installments in inverse order of their maturity.
35. CAPITAL ADEQUACY. If, after the date of this note, Payee shall have
determined that the adoption or effectiveness of any applicable law, rule or
regulation regarding capital adequacy, or any change therein, or any change in
the interpretation or administration thereof by any governmental authority,
central bank or comparable agency charged with the interpretation or
administration thereof, or compliance by Payee with any request or directive
regarding capital adequacy (whether or not having the force of law) of any such
authority, central bank or comparable agency, has or would have the effect of
reducing the rate of return on Payee's capital (or on the capital of any person
or entity owning or holding a participation interest in the indebtedness
evidenced by this note (each a "PARTICIPANT")) as a consequence of its
obligations to any Maker with respect to the loans evidenced or to be evidenced
by this note to a level below that which could have been achieved but for such
adoption, effectiveness, change or compliance (taking into consideration Payee's
policies (or the policies of any applicable Participant) with respect to capital
adequacy) by an amount deemed by Payee to be material, then from time to time,
Makers, jointly and severally, shall pay to Payee such additional amount or
amounts as will compensate Payee (and each applicable Participant) for such
reduction. A certificate of Payee setting forth such amount or amounts as shall
be necessary to compensate Payee (and each applicable Participant) as specified
in this Section shall be delivered as soon as practicable to Makers and shall be
conclusive and binding, absent manifest error. Makers, jointly and severally,
shall pay Payee the amount shown as due on any such certificate within fifteen
(15) days after Payee delivers such certificate. In preparing such certificate,
Payee may employ such assumptions and allocations of costs and expenses as it
shall in good
Page 12 of 13 pages
xxxxx xxxx reasonable and may use any reasonable averaging and attribution
method.
36. BUSINESS LOANS. Each Maker warrants and represents to Payee and all
other holders of this note that all loans evidenced by this note are and will be
for business, commercial, investment or other similar purpose and not primarily
for personal, family, household or agricultural use, as such terms are used in
Chapter One.
37. ENTIRE AGREEMENT. This note and the other Loan Documents embody the
entire agreement and understanding between Payee and Makers and other parties
with respect to their subject matter and supersede all prior conflicting or
inconsistent agreements, consents and understandings relating to such subject
matter. Each Maker acknowledges and agrees that there is no oral agreement
between such Maker and Payee which has not been incorporated in this note and
the other Loan Documents.
INDUSTRIAL HOLDINGS, INC., a Texas corporation
By: /s/ XXXXXX X. XXXX
Xxxxxx X. Xxxx, President
LSS-LONE STAR-HOUSTON, INC.
AMFLOW MASTER ENVIRONMENTAL, INC.
AMERICAN RIVET COMPANY, INC.
XXXXXXXX ENGINEERING COMPANY
PIPELINE VALVE SPECIALTY, INC.
THE XXX GROUP, INC.
XXX SUPPLY CORPORATION
XXX MACHINERY SALES, INC.
XXX MACHINERY MOVERS, INC.
U.S. CRATING, INC.
XXX INTERNATIONAL CORPORATION
FIRST TEXAS CREDIT CORPORATION
XTEL CORPORATION
XXXXX, INC.
By: /s/ XXXXXX X. XXXX
Xxxxxx X. Xxxx,
Chief Executive Officer of each of them
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