PROMISSORY NOTE
Date: September 1, 1997 $4,500,000
FOR VALUE RECEIVED, the undersigned, OXFORD CAPITAL CORP., a Nevada
corporation (herein called "Maker"), promises to pay to the order of A.P., JR.
IRREVOCABLE TRUST AGREEMENT NUMBER ONE (1) and XXXXX X. XXXXX, (herein
collectively called "Payee" and which term refers to any owner or holder of this
Note) the principal sum of FOUR MILLION FIVE HUNDRED THOUSAND AND NO/100 DOLLARS
($4,500,000.00), together with interest on the principal hereof, on or before
September 1, 2000, at the per annum rate and in accordance with the terms
hereinafter stated.
I. INTEREST AND PENALTIES
1.01 Subject to Section 1.03, the principal balance hereof advanced and
from time to time remaining unpaid shall bear interest during each day of the
term of the loan evidenced hereby at the rate of 8% per annum.
1.02 Computations of interest on the unpaid principal amount of this Note,
from time to time outstanding, at the rates provided in this Note shall be made
on the basis of actual number of days elapsed. To the extent permitted by
applicable law, such interest shall be computed as if each year consisted of
three hundred sixty (365) days.
1.03 All past due principal and interest of this Note, whether due as the
result of acceleration of maturity or otherwise, shall bear interest at the per
annum rate equal to the lesser of (a) eighteen percent (18%) per annum, and (b)
the maximum rate allowed by applicable law, from the date the payment thereof
shall have become due until the same shall have been fully discharged by
payment.
II. PAYMENTS
2.01 This Note is payable in accordance with its terms as follows:
(a) Annual payments commencing not earlier than September 30, 1998,
shall be due as follows: (i) in an amount which is the greater of 30%
of the gross profit of PRC Enterprises, Inc. ("PRC"), a Texas
Corporation, or Four Hundred Fifty Thousand Dollars ($450,000), (ii)
on the earlier of the completion of the audit of PRC or September 30,
of that auditing year. For purposes of this section "Gross Profits" is
defined as: the remainder of all revenues generated by PRC's business
activities less expenses incurred that are directly related to those
business activities, but excluding general administrative expenses and
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overhead. In the event of any dispute or inquiry as to the calculation
of PRC's gross profits during the term hereof, the method and manner
of calculating same during the calendar year 1996 shall control.
(b) The Maker shall pay the remaining principal balance and all
accrued and unpaid interest due on the Maturity Date.
2.02 All payments shall be applied first to interest and the balance to
principal, and will be paid to the Payee as provided herein.
2.03 The principal of, and interest on, this Note are payable in such coin
or currency of the United States of America as at the time of payment is legal
tender for payment of public and private debts, at 0000 Xxxxxxx Xxxxx, Xxxxxxx,
Xxxxx 00000, or at such other place as Payee may hereinafter designate in
writing.
2.04 Any check, draft, money order or other instrument (including
securities issued pursuant to Article III herein) given in payment of all or any
portion hereof may be accepted by Payee and handled in the collection in the
customary manner, but the same shall not constitute payment hereunder or
diminish any rights of Payee except to the extent that actual cash proceeds of
such instrument are unconditionally received by Payee. Payee may accept any
payment tendered by Maker after the due date of such payment or after
acceleration of maturity of this Note and may apply the same to the principal,
interest thereon or attorney's fees and expenses of collection, or any
combination thereof, as determined by Payee, whether such payment was designated
as a payment of principal, interest or otherwise, and any such acceptance of the
late payment shall not constitute a waiver of the rights of Payee thereafter to
accelerate the maturity of this Note because of such default and foreclose the
liens securing the payment thereof or, if the maturity of this Note has
theretofore been accelerated, such acceptance of late payment shall not
constitute a reinstatement of this Note or otherwise affect the rights of Payee
to proceed with foreclosure of any liens securing the payment hereof.
III. CONVERSION
3.01 Subject to all of the following provisions, the Payee of this Note is
entitled, at its option, to convert all or part of the entire remaining
principal amount (the "Principal Amount") of this Note into fully paid and
non-assessable shares of common stock, $.001 par value, of the OXFORD CAPITAL
CORP. (the "Common Stock") at a conversion price (the "Conversion Price") equal
to the average closing bid price of the OXFORD CAPITAL CORP.'s Common Stock as
reported by NASDAQ over the twenty (20) trading-day period ending on the day
prior to the date of the written notice, as provided below, from Payee of this
Note of such conversion.
3.02 All conversions by Payee shall be in an amount of at least $250,000 of
the remaining unpaid principal unless such amount represents the entire
remaining principal on the Note; and each such conversation shall occur no more
frequently than once during any one six month period.
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3.03. Each conversion by Payee shall be effectuated by delivering the
original Note and the Form of Conversion Notice (attached hereto as Exhibit A)
executed by the Payee, evidencing such Xxxxx's intention to convert, and
accompanied, if required by OXFORD CAPITAL CORP., by proper assignment hereof in
blank, to OXFORD CAPITAL CORP. No fractional or scrip representing fractions of
shares will be issued on conversion, but the number of shares issuable shall be
rounded up to the nearest whole number of shares. The date on which notice of
conversion is given shall be deemed to be the date on which OXFORD CAPITAL CORP.
receives the Note and conversion notice, or if received by facsimile, the date
set forth in such notice of conversion if the Note and notice are received by
OXFORD CAPITAL CORP. within three business days thereafter. Thereafter, OXFORD
CAPITAL CORP. shall cause the requisite number of fully paid, non-assessable and
legally issued shares of its common stock to be issued in the name of the Payee,
and shall issue and deliver a new Promissory Note, with identical terms,
evidencing the remaining unpaid principal amount to Payee.
3.04 No amount of accrued but unpaid interest otherwise payable by Maker
shall be subject to conversion except as the Payee and Maker may mutually agree
in writing.
3.05 Provided that the Maker is not in default under the terms of this
Note, and after paying the principal of $3,500,000 ("Last Principal Payment"),
under the terms hereof, the Maker, at its sole option, may elect to convert the
remaining principal amount of $1,000,000 as follows:
(1) If the Maker pays the Last Principal Payment and all accrued and
unpaid interest ("Last Payment") to Payee, then upon written notice of
its election to convert hereunder, the remaining balance of $1,000,000
shall be converted at a conversion price equal to the average closing
bid price of the OXFORD CAPITAL CORP.'s common stock as reported by
NASDAQ over the 20-day period ending on the day prior to the date on
which the Last Payment is delivered to the Payee.
(2) If the Maker pays the Last Principal Payment and defers payment of
accrued and unpaid interest until a later date, then upon receipt of
all accrued and unpaid interest and written notice of election to
convert hereunder, the remaining principal balance of $1,000,000 shall
be converted at a conversion price equal to the lower of (i) the
average closing bid price of the OXFORD CAPITAL CORP.'s common stock
as reported by NASDAQ over the 20-day period ending on the day prior
to the date on which the Last Payment is delivered to the Payee, or
(ii) the average Closing bid price of OXFORD CAPITAL CORP.'s common
stock as reported by NASDAQ over the 20-day period ending on the date
of delivery of the Last Principal Payment.
(3) For purposes of this Section 3.05, delivery is deemed to have been
made upon deposit of a check or money order, constituting good funds,
with the United States mail, certified and postage pre-paid, addressed
to the Payee at the address given hereunder, or if properly notified
of a changed address as required hereunder, then to that address. Upon
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receipt of delivery of the Last Payment, the Payee shall promptly
return this Note to Maker and, upon receipt of this Note, Maker shall
issue the shares issuable as a result of such Forced Conversion.
3.06 If at any time after the issuance of any common shares of OXFORD
CAPITAL CORP. to Payee in accordance with this Article Three, and such shares
are not eligible for sale under Rule 144 of the Securities Act, and if OXFORD
files a registration statement (the "Registration Statement") with respect to
the sale of any of its shares of common stock, then OXFORD shall give written
notice thereof to Payee as well as a copy of the Registration Statement. If the
Payee shall propose to offer or sell any of its shares issued pursuant hereto
under circumstances requiring registration, Payee, within ten days after the
date of its receipt of such notice from OXFORD CAPITAL CORP. may request in
writing to include in the Registration Statement, shares of OXFORD CAPITAL
CORP.'s stock proposed to be offered or sold by Payee (the "Offered Securities")
and OXFORD CAPITAL CORP. shall use its best efforts to include the Offered
Securities in the registration. If the Offered Securities are included in a
Registration Statement pursuant to this Section 3.06, then OXFORD CAPITAL CORP.
shall indemnify and hold Payee harmless against any loss, claim, expense or
liability which Payee may be subject to in connection with any material mistake
or material misrepresentation in such Registration Statement, provided that such
mistake or misrepresentation was not made or caused to be made or omitted by any
officer or director of PRC.
IV. WAIVER
4.01 Maker waives grace, demand, presentment for payment, protest, notice
of any kind (including, but not limited to, notice of dishonor, notice of
protest, notice of intention to accelerate and notice of acceleration) and
diligence in collecting and bringing suit against any party hereto and agrees
(i) to all extensions and partial payments, with or without notice, before or
after maturity, (ii) to any substitution, subordination, exchange or release of
any security now or hereafter given for this Note, (iii) to the release of any
party primarily or secondarily liable hereon, and (iv) that it will not be
necessary for Payee, in order to enforce payment of this Note, to first
institute or exhaust Xxxxx's remedies against Maker or any responsible party or
against any security for this Note.
V. ATTORNEYS FEES
5.01 If this Note or any installment hereof is not paid when due (whether
the same becomes due by acceleration or otherwise) and it is placed in the hands
of an attorney for collection in accordance with the terms of the Security
Documents as defined below, (whether or not suit is filed), or if collected
through any legal proceedings including but not limited to suit, probate,
insolvency or bankruptcy proceedings, Maker agrees to pay all reasonable
attorney's fees and all expenses of collection and costs of court.
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VI. USURY LAWS
6.01 It is the intention of the parties hereto to comply strictly with
applicable usury laws; accordingly, notwithstanding any provision to the
contrary in this Note or in any of the Security Documents, in no event, shall
this Note or any of the other Security Documents require or permit the payment,
charging, taking, reserving, or receiving of any sums constituting interest
under applicable laws which exceed the maximum amount permitted by such laws. If
any such excess interest is contracted for, charged, taken, reserved, or
received in connection with the loan evidenced by this Note or in any of the
other Security Documents or otherwise relating hereto, or in any communication
by Payee or any other person to Maker or any responsible party liable for
payment of this Note, or in the event all or part of the principal or interest
hereof shall be prepaid or accelerated, so that under any of such circumstances
or under any other circumstance whatsoever the amount of interest contracted
for, charged, taken, reserved, or received on the amount of principal actually
outstanding from time to time under this Note shall exceed the maximum amount of
interest permitted by applicable usury laws, then in any such event it is agreed
as follows: (i) the provisions of this paragraph shall govern and control, (ii)
any such excess shall be canceled automatically to the extent of such excess,
and shall not be collected or collectible, (iii) any such excess which is or has
been received shall be credited against the then unpaid principal balance hereof
or refunded to Maker, at Payee's option, and (iv) the effective rate of interest
shall be automatically reduced to the maximum lawful rate allowed under
applicable laws as construed by courts having jurisdiction hereof or thereof.
6.02 Without limiting the foregoing, all calculations of the rate of
interest contracted for, charged, taken, reserved, or received in connection
herewith which are made for the purpose of determining whether such rate exceeds
the maximum lawful rate shall be made to the extent permitted by applicable laws
by amortizing, prorating, allocating and spreading during the period of the full
term of the loan including all prior and subsequent renewals and extensions, all
interest at any time contracted for, charged, taken, reserved, or received. The
terms of this paragraph shall be deemed to be incorporated in every loan
document and communication relating to this Note and loan. The "applicable usury
laws" shall mean such laws of the State of Texas or the laws of the United
States, whichever laws allow the higher rate of interest, as such laws now
exist; provided, however, that if such laws shall hereafter allow higher rates
of interest, then the applicable usury laws shall be the laws allowing the
higher rates, to be effective as of the effective date of such laws.
VII. MISCELLANEOUS
7.01 Maker shall use 15% of the net proceeds derived from any completed
underwriting of its stock, in a secondary offering, as payment on this Note, by
delivering same to Payee within fourteen days of its receipt of the actual net
proceeds.
7.02 For so long as any amount payable under this Note remains unpaid, the
Maker shall furnish to the Payee the following information:
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(a) No later than ninety (90) days following the end of each fiscal
year, beginning with the fiscal year ending June 30, 1996,
consolidated balance sheets, statements of income and statements
of cash flow and shareholders equity of the Maker and its
subsidiaries, if any, prepared in accordance with generally
accepted accounting principles ("GAAP"), and audited by a firm of
independent public accountants (i.e., Form 10-K or Form 10-KSB).
(b) Within forty-five (45) days after the end of each quarter (except
the fourth quarter) of each fiscal year, consolidated balance
sheets, statements of income and statements of cash flow of the
Maker and its subsidiaries, if any (i.e., Form 10-Q or Form
10-QSB).
7.03 The Maker covenants and agrees that until all amounts due under this
Note have been paid in full, by conversion or otherwise, unless the Payee waives
compliance in writing, the Maker shall:
(a) Give prompt written notice to the Payee of any Event of Default
as defined in this Note or of any other matter which has resulted
in, or could reasonably be expected to result in, a materially
adverse change in its financial condition or operations.
(b) Give prompt written notice to the Payee of any claim, action or
proceeding which, in the event of any unfavorable outcome, would
or could reasonably be expected to have a material adverse effect
on the financial condition of the Maker.
(c) At all times reserve and keep available out of its authorized but
unissued stock, for the purpose of effecting the conversion of
this Note such number of its duly authorized shares of Common
Stock as shall from time to time be sufficient to effect the
conversion of the outstanding principal balance of this Note into
shares of Common Stock.
(d) Upon receipt by the Maker of evidence reasonably satisfactory to
it of the loss, theft, destruction or mutilation of this Note and
(i) in the case of loss, theft or destruction, of indemnity
reasonably satisfactory to it, or (ii) in the case of mutilation,
upon surrender and cancellation of this Note, the Maker, at its
expense, will execute and deliver a new Note, dated the date of
the lost, stolen, destroyed or mutilated Note.
7.04 No recourse shall be had for the payment of the principal of, or the
interest on, this Note, or for any claim based hereon, or otherwise in respect
hereof, against any incorporator, shareholder, officer or director, as such,
past, present or future, of the Maker or any successor corporation, whether by
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virtue of any constitution, statute or rule of law, or by the enforcement of any
assessment or penalty or otherwise, all such liability being, by the acceptance
hereof and as part of the consideration for the issue hereof, expressly waived
and released.
7.05 No provision of this Note shall alter or impair the obligation of the
Maker, which is absolute and unconditional, to pay the principal of, and
interest on, this Note at the time, place and rate, and in the coin or currency,
herein prescribed.
VIII. DEFAULT
8.01 The following shall constitute "Events of Default" under this Note:
(a) Any default in the payment of principal or interest on this Note;
(b) If any of the representations or warranties made by the Maker
herein, in the Purchase Agreement between OXFORD CAPITAL CORP.
and PRC Enterprises, Inc. ("PRC") and X.X., Xx. Irrevocable Trust
and Xxxxx Xxxxx, relating to the purchase and sale of securities
between the Maker and the Payee (the "Purchase Agreement"), or in
any certificate or financial or other statements heretofore or
hereafter furnished by or on behalf of the Maker in connection
with the execution and delivery of this Note or the Purchase
Agreement, shall be false or misleading in any material respect
at the time made;
(c) If the Maker shall fail to perform or observe any other covenant,
term, provision, condition, agreement or obligation of the Maker
under this Note and such failure shall continue uncured for a
period of seven (7) days after notice from the Payee of such
failure;
(d) If the Maker shall (i) become insolvent, (ii) admit in writing
its inability to pay its debts as they mature, (iii) make an
assignment for the benefit of creditors or commence proceedings
for its dissolution, or (iv) apply for or consent to the
appointment of a trustee, liquidator or receiver for it or for a
substantial part of its property or business;
(e) If a trustee, liquidator or receiver shall be appointed for the
Maker or for a substantial part of its property or business
without its consent and shall not be discharged within thirty
(30) days after such appointment;
(f) If any governmental agency or any court of competent jurisdiction
at the instance of any governmental agency shall assume custody
or control of the whole or any substantial portion of the
properties or assets of the Maker and shall not be dismissed
within thirty (30) days thereafter;
(g) If any money judgment, writ or warrant of attachment, or similar
process, except mechanics and materialmen's liens incurred in the
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ordinary course of business, in excess of $750,000 in the
aggregate shall be entered or filed against the Maker or any of
its properties or other assets and shall remain unvacated,
unbonded or unstayed for a period of fifteen (15) days or in any
event later than five (5) days prior to the date of any proposed
sale thereunder;
(h) If bankruptcy, reorganization, insolvency or liquidation
proceedings or other proceedings for relief under bankruptcy or
any law for the relief of debtors shall be instituted by or
against the Maker and, if instituted against the Maker, shall not
be dismissed, stayed or bonded within ninety days after such
institution or the Maker shall by any action or answer approve
of, consent to, or acquiesce in any such proceedings or admit the
material allegations of, or default in answering a petition filed
in any such proceeding; or
(i) If the Maker shall have its Common Stock delisted from an
exchange or NASDAQ.
8.02 Upon the occurrence of an Event of Default, then, or at any time
thereafter, and in each and every such case, unless such Event of Default shall
have been waived in writing by the Payee (which waiver shall not be deemed to be
a waiver of any subsequent default) at the option of the Payee and in the
Payee's sole discretion, the Payee may consider this Note immediately due and
payable, and the Payee may immediately, and without expiration of any period of
grace, enforce any and all of the Payee's rights and remedies provided herein or
any other rights or remedies afforded by law.
IX. COLLATERAL
9.01 The payment of this Note is secured by the certain Security/Pledge
Agreement and Irrevocable Voting Trust (herein collectively called the "Security
Documents ") of even date herewith from OXFORD CAPITAL CORP. to Payees.
X. MISCELLANEOUS
10.01 In case any provision of this Note is held by a court of competent
jurisdiction to be excessive in scope or otherwise invalid or unenforceable,
such provision shall be adjusted rather than voided, if possible, so that it is
enforceable to the maximum extent possible, and the validity and enforceability
of the remaining provisions of this Note will not in any way be affected or
impaired thereby.
10.02 This Note constitutes the full and entire understanding and agreement
between the Maker and the Payee with respect to the subject hereof. Neither this
Note nor any term hereof may be amended, waived, discharged or terminated other
than by a written instrument signed by the Maker and the Payee.
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10.03 The parties agree and contract that any and all claims, disputes, or
controversies arising out of or in any way relating to this Note or the claimed
breach of termination of any provision of any of same, whether based on the
Constitution, statutes, Code(s) or at common law of the United States or of any
State, including the arbitrability of any claim, dispute or controversy, shall
be exclusively resolved by the parties first trying to settle the dispute in
mediation under the Mediation Rules administered by and conducted by the
Neutrals of the National Association for Dispute Resolution, Inc., failing
which, settlement of the dispute shall be by binding arbitration conducted under
the Arbitration Rules of, and before an Arbitration tribunal of the National
Association for Dispute Resolution, Inc. The arbitrator(s) shall have full and
complete discretion and authority to do substantial justice for the parties to
the dispute. In the event that the National Association for Dispute Resolution,
Inc. is not available or is no longer in business, the arbitration provided
hereunder shall be conducted by the American Arbitration Association under their
rules and procedures.
10.04 This Agreement shall be governed by, enforced, and construed under
and in accordance with the laws of the United States of America and, with
respect to the matters of state law, with the laws of the State of Texas,
without giving effect to principles of conflicts of law thereunder.
NOTICE: THIS DOCUMENT AND ALL OTHER DOCUMENTS RELATING TO THE INDEBTEDNESS
EVIDENCED BY THIS NOTE CONSTITUTE A WRITTEN AGREEMENT WHICH REPRESENTS THE FINAL
AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO
UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES RELATING TO THE INDEBTEDNESS
EVIDENCED BY THIS NOTE.
OXFORD CAPITAL CORP.
By: /s/ illegible
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Xxxxxx Xxxxxx
Chairman and Chief Executive Officer
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CONVERSION CERTIFICATE
OXFORD CAPITAL CORP.
$4,500,000 Note
The undersigned holder (the "Holder") is hereby surrendering to Oxford
Capital Corp., a Nevada Corporation (the "Company"), the Promissory Note, dated
__________ in the principal amount of $____________ ("Note") and hereby elects
to convert all or a portion of the remaining unpaid principal balance in
accordance with the terms of the Note as set forth below.
1. The Holder understands that the certificates evidencing the securities issued
as a result of this conversion shall bear a legend restricting the transfer of
such securities except in accordance with an effective registration statement or
a valid exemption from registration under the Securities Act.
2. The Holder acknowledges that any shares received in accordance with this
Conversion Certificate shall constitute a credit against the principal balance
of the Note.
Aggregate Amount of Principal Being Converted: $____________
Applicable Market Price: $____________
Determined as follows:
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Number of Common Shares to be issued: ______________
New Note to be issued in the amount of: ______________
Delivery Instructions: ______________________________________
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Dated: _______________
Name of Holder:
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