EXHIBIT 10.3
BORROWER
FLARE KING, INC.
XXXXXXX XXXXXXXX
ADDRESS
PO BOX 60757
MIDLAND, TX 79711
TELEPHONE NO.
000-000-0000
IDENTIFICATION NO.
[LOGO] MIDLAND AMERICAN BANK
000 XXXX TEXAS
MIDLAND, TEXAS 00000 (000) 000-0000
MIDLAND COUNTY "LENDER"
COMMERCIAL
REVOLVING OR DRAW
NOTE-VARIABLE RATE
PRINCIPAL
OFFICER INTEREST AMOUNT/ FUNDING/ MATURITY CUSTOMER LOAN
INITIALS RATE CREDIT LIMIT AGREEMENT DATE DATE NUMBER NUMBER
CJH VARIABLE $125,000.00 06/19/97 06/19/98 72931 67021
PROMISE TO PAY
FOR VALUE RECEIVED, Xxxxxxxx promises to pay to the order of Lender indicated
above the principal amount of ONE HUNDRED TWENTY-FIVE THOUSAND AND NO/100
Dollars ($125,000.00) or, if less, the aggregate unpaid principal amount of all
advances made by the Lender to the Borrower, plus interest on the unpaid
principal balance at the rate and in the manner described below. All amounts
received by Lender shall be applied first to expenses, then to accrued unpaid
interest, and then to outstanding principal, or in any other manner as
determined by Xxxxxx, in Xxxxxx's sole discretion, as permitted by law.
INTEREST RATE: This Note has a variable rate feature. Interest on the Note may
change from time to time if the Index Rate identified below changes. Interest
shall be computed on the basis of 360 days and the actual number of days per
year (and in any event, 365 or 366 days per year during periods when the Maximum
Lawful Rate which is defined on the reverse is in effect) and the actual number
of days elapsed. So long as there is no default under this Note, interest on
this Note shall be calculated at the variable rate of TWO AND 750/1000 percent
(2.750%) per annum over the Index Rate, provided that such rate shall not exceed
the Maximum Lawful Rate. The initial Index Rate is currently EIGHT AND 500/1000
percent (8.500%) per annum. Therefore, the initial interest rate on this Note
shall be ELEVEN AND 250/1000 percent (11.250%) per annum. Any change in the
interest rate resulting from a change in the Index Rate will be effective on:
SAME DAY AS WALL STREET JOURNAL PRIME CHANGES.
INDEX RATE: The Index Rate for this Note shall be: WALL STREET JOURNAL PRIME.
If the index becomes unavailable during the term of the loan, Lender may
substitute another index which is similar.
MINIMUM RATE/MAXIMUM RATE: The minimum interest rate on this Note shall be n/a
percent (n/a %) per annum. The maximum interest rate on this Note shall not
exceed EIGHTEEN AND NO/1000 percent (18.000%) per annum, or the Maximum Lawful
Rate, whichever is less.
DEFAULT RATE: In the event of a default under this Note, the Lender may, in its
sole discretion, determine that all amounts owing to Lender shall bear interest
as follows: EIGHTEEN PERCENT, or the Maximum Lawful Rate, whichever is less.
PAYMENT SCHEDULE: Borrower shall pay the principal and interest according to the
following schedule:
ON DEMAND, BUT IF NO DEMAND IS MADE, THEN INTEREST ONLY PAYMENTS
BEGINNING JULY 19, 1997 AND CONTINUING AT MONTHLY TIME INTERVALS
THEREAFTER. A FINAL PAYMENT OF THE UNPAID PRINCIPAL BALANCE PLUS
ACCRUED INTEREST IS DUE AND PAYABLE ON JUNE 19, 1998.
All payments will be made to Lender at its address in the county described above
and in lawful currency of the United States of America.
RENEWAL: If checked [ ] this Note is given in renewal of, but not in novation or
discharge of, Loan Number ______________________________.
SECURITY: To secure the payment and performance of obligations incurred under
this Note, Borrower grants Lender a security interest in, and pledges and
assigns to Lender all of Borrower's rights, title, and interest in all monies,
instruments, and savings, checking, and other deposit accounts of Borrower's,
(excluding IRA, Xxxxx, and trust accounts and deposits subject to tax penalties
if so assigned), that are now or in the future in Xxxxxx's custody or control.
Upon default, and to the extent permitted by applicable law, Lender may exercise
its security interest in all such property which shall be in addition to
Lender's right of common law setoff. [X] If checked, the obligations under this
Note are also secured by a lien and/or security interest in the property
described in the documents executed in connection with this Note as well as any
other property designated as security for this Note now or in the future.
PREPAYMENT: This Note may be prepaid in part or in full on or before its
maturity date. If this Note contains more than one installment, all prepayments
shall be applied as determined by Xxxxxx and as permitted by law.
REVOLVING OR DRAW FEATURE: This Note possesses a revolving or draw feature as
indicated below.
[X] This Note possesses a revolving feature. Borrower shall be entitled to
borrow up to the full principal amount of the Note from time to time during
the term of this Note.
[ ] This Note possesses a draw feature. Borrower shall be entitled to make one
or more draws under this Note. The aggregate amount of such draws shall not
exceed the full principal amount of this Note.
Lender shall maintain a written ledger of the amounts loaned to and repaid by
Borrower under this Note. The aggregate unpaid principal amount shown on such
ledger shall be rebuttable presumptive evidence of the outstanding principal
amount owing and unpaid on this Note. The Lender's failure to record the date
and amount of any advance on such ledger shall not limit or otherwise affect the
obligations of the Borrower under this Note to repay the outstanding principal
amount of the advances together with all accrued, unpaid interest thereon.
Lender shall not be obligated to provide Borrower with a copy of the ledger on a
periodic basis, however, Borrower shall be entitled to inspect or obtain a copy
of the ledger during Xxxxxx's business hours.
CONDITIONS FOR ADVANCES: Xxxxxxxx shall be entitled to borrow monies under this
Note (subject to the limitations described above) under the following
conditions:
CUSTOMER REQUEST/OFFICER APPROVAL
--------------------------------------------------------------------------------
XXXXXXXX ACKNOWLEDGES THAT XXXXXXXX HAS READ, UNDERSTANDS, AND AGREES TO THE
TERMS AND CONDITIONS OF THIS NOTE INCLUDING THE PROVISIONS ON THE REVERSE SIDE.
BORROWER ACKNOWLEDGES RECEIPT OF AN EXACT COPY OF THIS NOTE.
THIS NOTE AND RELATED DOCUMENTS HAVE BEEN SIGNED IN THE COUNTY OF XXXXXX'S
ADDRESS UNLESS OTHERWISE SPECIFIED: MIDLAND
NOTE DATE: JUNE 19, 1997
BORROWER: FLARE KING, INC. BORROWER: XXXXXXX XXXXXXXX
/s/ XXXXXXX XXXXXXXX /s/ XXXXXXX XXXXXXXX
XXXXXXX XXXXXXXX XXXXXXX XXXXXXXX
CHAIRMAN OF THE BOARD INDIVIDUALLY
BORROWER: BORROWER:
BORROWER: BORROWER:
BORROWER: BORROWER:
TERMS AND CONDITIONS
1. COMPLIANCE WITH APPLICABLE LAW: It is Xxxxxx's intention to comply fully with
Texas law, and federal law as applicable, regulating credit terms, interest,
fees, charges, expenses, and other amounts. For purposes of determining Lender's
compliance with such laws, the following shall apply to the extent permitted by
law: (a) any contract, charge or receipt by Lender, whether occurring now or in
the future, shall be strictly limited by this provision; (b) the "Maximum Lawful
Rate" shall mean the maximum lawful ceiling, rate or amount that Lender could
have contracted to charge or receive under Texas law or applicable federal law,
whichever permits the highest maximum ceiling, rate or amount; (c) to the extent
Texas Article 5069-1.04, as amended, provides the Maximum Lawful Rate, the
"indicated rate ceiling" shall apply unless changed by Lender in accordance with
Texas Law; (d) Lender may calculate rates or amounts by aggregating, amortizing,
prorating, allocating, and spreading amounts contracted for, charged or received
over the full term of the transaction; (e) no contract, charge or receipt shall
obligate Borrower or any obligor to pay any amount in excess of the Maximum
Lawful Rate or waive any right under Texas Article 5069; and (f) any contract,
charge or receipt that in the event of acceleration or under any other
contingency purports to require the payment or collection of any amount in
excess of the Maximum Lawful Rate shall automatically be reformed to not
obligate Borrower or any other obligor to pay any amount in excess of the
Maximum Lawful Rate. If Lender ever contracts for, charges or receives a rate or
amount in excess of the Maximum Lawful Rate, the excess (whether denominated
principal, interest or otherwise) shall be automatically subject to
reallocation, cancellation, credit, application, or refund to eliminate any
amount in excess of the Maximum Lawful Rate.
2. DEFAULT: Borrower will be in default under this Note in the event that
Borrower or any guarantor:
(a) fails to make any payment on this Note or any other indebtedness to
Lender when due;
(b) fails to perform any obligation or breaches any warranty or covenant
to Lender contained in this Note or any other present or future
written agreement regarding this or any indebtedness of Borrower to
Lender;
(c) provides or causes any false or misleading signature or representation
to be provided to Lender;
(d) allows any loss, diminution, or impairment of the physical condition,
value, title, priority, possession, or control of any collateral
securing this Note or Borrower's or Lender's rights therein,
including, but not limited to, allowing any part of the collateral to
be placed into receivership, removed, impaired, lost, stolen,
destroyed, damaged, seized, confiscated or affected in any material
way;
(e) permits the entry or service of any garnishment, judgment, tax levy,
attachment or lien against Xxxxxxxx, any guarantor, or any of their
property;
(f) dies, becomes legally incompetent, is dissolved or terminated, ceases
to operate its business, becomes insolvent, makes an assignment for
the benefit of creditors, or becomes the subject of any bankruptcy,
insolvency or debtor rehabilitation proceeding; or
(g) causes Lender to deem itself insecure in good faith.
3. RIGHTS OF LENDER ON DEFAULT: If there is a default under this Note, Lender
will be entitled to exercise one or more of the following remedies without
notice or demand (except as required by law):
(a) to declare the principal amount plus accrued interest under this Note
and all other present and future obligations of Borrower immediately
due and payable in full;
(b) to collect the outstanding obligations of Borrower with or without
resorting to judicial process;
(c) to lawfully and peaceably take possession of any collateral;
(d) to require Borrower to deliver and make available to Lender any
collateral at a place reasonably convenient to Borrower and Lender;
(e) to sell, lease or otherwise dispose of any collateral and collect any
deficiency balance in the manner permitted by law;
(f) to set-off Borrower's obligations (including past due installments)
against any amounts due to Borrower including, but not limited to,
monies, instruments, and deposit accounts maintained with Lender; and
(g) to exercise all other rights available to Lender under any other
written agreement or applicable law.
Xxxxxx's rights are cumulative and may be exercised together, separately, and in
any order.
4. DEMAND FEATURE: If this Note contains a demand feature, then
notwithstanding anything to the contrary contained in this Note, Xxxxxx's
rights with respect to the events of default identified above shall not be
limited, restricted, impaired or otherwise adversely affected by the demand
feature of this Note. Xxxxxx's right to demand payment, at any time and
from time to time, shall be in Lender's sole and absolute discretion,
whether or not default has occurred.
5. FINANCIAL INFORMATION: Borrower will provide Lender with current
financial statements including, but not limited to, balance sheets and
profit and loss statements and other information upon request.
6. MODIFICATION AND WAIVER: The modification or waiver of any of Borrower's
obligations or Xxxxxx's rights under this Note must be contained in a
writing signed by Xxxxxx. Lender may perform any of Borrower's obligations
or delay or fail to exercise any of its rights without causing a waiver of
those obligations or rights. A waiver on one occasion will not constitute a
waiver on any other occasion. Borrower's obligations under this Note shall
not be affected if Lender amends, compromises, exchanges, fails to
exercise, impairs or releases any of the obligations belonging to any
co-borrower or guarantor or any of its rights against any co-borrower,
guarantor or collateral.
7. SEVERABILITY: If any provision of this Note violates the law or is
unenforceable, the rest of the Note will remain valid.
8. ASSIGNMENT: Borrower will not be entitled to assign any of its rights,
remedies or obligations described in this Note without the prior written
consent of Lender which may be withheld by Xxxxxx in its sole discretion.
Lender will be entitled to assign some or all of its rights and remedies
described in this Note without notice to or the prior consent of Borrower
in any manner.
9. NOTICE. Any notice or other communication to be provided to Borrower or
Lender under this Note shall be in writing and sent to the parties at the
addresses described in this Note or such other address as the parties may
designate in writing from time to time.
10. APPLICABLE LAW: THIS NOTE SHALL BE GOVERNED BY THE LAWS OF THE STATE OF
TEXAS AND APPLICABLE FEDERAL LAWS. BORROWER CONSENTS TO THE JURISDICTION
AND VENUE OF ANY COURT LOCATED IN THE COUNTY IN WHICH THIS NOTE IS SIGNED
OR IN WHICH XXXXXXXX RESIDES IN THE EVENT OF ANY LEGAL PROCEEDING UNDER
THIS NOTE.
11. COLLECTION EXPENSES: If Xxxxxx hires an attorney (who is not a salaried
employee of Xxxxxx) to assist in collecting any amount due or enforcing any
right or remedy under this Note, Borrower Agrees to pay Xxxxxx's reasonable
attorneys' fees and collection costs subject to court award.
12. MISCELLANEOUS: This Note is being executed for commercial purposes.
Xxxxxxxx and Xxxxxx agree that time is of the essence. Borrower waives
presentment, demand for payment, notice of intent to accelerate, notice of
acceleration, notice of dishonor and protest. All references to Borrower in
this Note shall include all of the parties signing this Note. If there is
more than one Borrower, their obligations will be joint and several. This
Note and any related documents represent the complete and integrated
understanding between Borrower and Lender pertaining to the terms and
conditions of those documents.
13. ADDITIONAL TERMS:
PURPOSE: READVANCING LOC TO PYOFF DEBT AT COMMUNITY BK & WORKING CAPITAL
CARRY A/R
SECURED BY: 1ST D/T 4925 SCR 1303 MIDLAND/EQUIP/RENTAL EQP/OFFICE
FURN/MACH. A/R
