EXHIBIT 10.36
PROMISSORY NOTE
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Principal Loan Date Maturity Loan No. Call Collateral Account Officer Initials
$1,250,000.00 04-24-2000 04-24-2001 9001 500 6073 3105442 952
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References in the shaded area are for Lender's use only and do not
limit the applicability of this document to any particular loan or item.
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Borrower: INDUSTRIAL DATA SYSTEMS CORPORATION (TIN: Lender: THE FROST NATIONAL BANK
88-0322261); ET. AL. P.O. BOX 1600
600 CENTURY PLAZA DRIVE, BUILDING 140 SAN ANTONIO, TX 78296
HOUSTON, TX 77073
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Principal Amount: $1,250,000.00 Initial Rate: 9.500% Date of Note: April 24, 2000
PROMISE TO PAY. INDUSTRIAL DATA SYSTEMS CORPORATION, INDUSTRIAL DATA
SYSTEMS, INC., THERMAIRE, INC. dba THERMAL CORPORATION. CONSTANT POWER
MANUFACTURING, INC. and IDS ENGINEERING, INC. (referred to in this Note
individually and collectively as "Borrower") jointly and severally promise to
pay to THE FROST NATIONAL BANK ("Lender"), or order, in lawful money of the
United States of America, the principal amount of One Million Two Hundred
Fifty Thousand & 00/100 Dollars ($1,250,000.00) or so much as may be
outstanding, together with interest on the unpaid outstanding principal
balance of each advance. Interest shall be calculated from the date of each
advance until repayment of each advance or maturity, whichever occurs first.
CHOICE OF USURY CEILING AND INTEREST RATE. The interest rate on this Note has
been implemented under the "Weekly Ceiling" as referred to in Sections 303.002
and 303.003 of the Texas Finance Code. The terms, including the rate, or
index, formula, or provision of law used to compute the rate on the Note, will
be subject to revision as to current and future balances, from time to time by
notice from Lender in compliance with Section 303.103 of the Texas Finance
Code.
PAYMENT. Borrower will pay this loan in one payment of all outstanding
principal plus all accrued unpaid interest on April 24, 2001. In addition,
Borrower will pay regular monthly payments of accrued unpaid interest
beginning May 24, 2000, and all subsequent interest payments are due on the
same day of each month after that. The annual interest rate for this Note is
computed on a 365/360 basis; that is, by applying the ratio of the annual
interest rate over a year of 360 days, multiplied by the outstanding principal
balance, multiplied by the actual number of days the principal balance is
outstanding, unless such calculation would result in a usurious rate, in which
case interest shall be calculated on a per diem basis of a year of 365 or 366
days, as the case may be. Borrower will pay Lender at Lender's address shown
above or at such other place as Lender may designate in writing. Unless
otherwise agreed or required by applicable law, payments will be applied first
to any unpaid collection costs and any late charges, then to any accrued
unpaid interest, and any remaining amount to principal. Notwithstanding any
other provision of this Note, Lender will not charge interest on any
undisbursed loan proceeds. No scheduled payment, whether of principal or
interest or both, will be due unless sufficient loan funds have been disbursed
by the scheduled payment date to justify the payment.
VARIABLE INTEREST RATE. The interest rate on this Note is subject to change
from time to time based on changes in an index which is Lender's Prime Rate
(the "Index"). This is the rate Lender charges, or would charge, on 90-day
unsecured loans to the most creditworthy corporate customers. This rate may or
may not be the lowest rate available from Lender at any given time. Lender
will tell Borrower the current Index rate upon Borrower's request. Borrower
understands that Lender may make loans based on other rates as well. The
interest rate change will not occur more often than each day. The Index
currently is 9.000% per annum. The interest rate to be applied prior to
maturity to the unpaid principal balance of this Note will be at a rate of
0.500 percentage points over the Index, resulting in an initial rate of 9.500%
per annum. NOTICE: Under no circumstances will the interest rate on this Note
be more than the maximum rate allowed by applicable law. For purposes of this
Note, the "maximum rate allowed by applicable law" means the greater of (a)
the maximum rate of interest permitted under federal or other law applicable
to the indebtedness evidenced by this Note, or (b) the "Weekly Ceiling" as
referred to in Section 303.002 and 303.003 of the Texas Finance Code.
PREPAYMENT. Borrower may pay without penalty all or a portion of the
amount owed earlier than it is due. Early payments will not, unless agreed
to by Lender in writing, relieve Borrower of Borrower's obligation to
continue to make payments of accrued unpaid interest. Rather, they will
reduce the principal balance due.
POST MATURITY RATE. The Post Maturity Rate on this Note is the maximum rate
allowed by applicable law. Borrower will pay interest on all sums due after
final maturity, whether by acceleration or otherwise, at that rate, with the
exception of any amounts added to the principal balance of this Note based on
Lender's payment of insurance premiums, which will continue to accrue interest
at the pre-maturity rate.
DEFAULT. Borrower will be in default if any of the following happens: (a)
Borrower fails to make any payment when due. (b) Borrower breaks any promise
Borrower has made to Lender, or Borrower fails to comply with or to perform
when due any other term, obligation, covenant, or condition contained in this
Note or any agreement related to this Note, or in any other agreement or loan
Borrower has with Lender. (c) Borrower defaults under any loan, extension of
credit, security agreement, purchase or sales agreement, or any other
agreement, in favor of any creditor or person that may materially affect any
of Borrower's property or Borrower's ability to repay this Note or perform
Borrower's obligations under this Note or any of the Related Documents. (d)
Any representation or statement made or furnished to Lender by Borrower or on
Borrower's behalf is false or misleading in any material respect either now or
at the time made or furnished. (e) Borrower becomes insolvent, a receiver is
appointed for any part of Borrwer's property, Borrower makes an assignment for
the benefit of creditors, or any proceeding is commenced either by Borrower or
against Borrower under any bankruptcy or insolvency laws. (f) Any creditor
tries to take any of Borrower's property on or in which Lender has a lien or
security interest. This includes a garnishment of any of Borrower's accounts
with Lender. (g) Any guarantor dies or any of the other events described in
this default section occurs with respect to any guarantor of this Note. (h) A
material adverse change occurs in Borrower's financial condition, or Lender
believes the prospect of payment or performance of the Indebtedness is
impaired. (i) Lender in good faith deems itself insecure.
LENDER'S RIGHTS. Upon default, Lender may declare the entire indebtedness,
including the unpaid principal balance on this Note, all accrued unpaid
interest, and all other amounts, costs and expenses for which Borrower is
responsible under this Note or any other agreement with Lender pertaining to
this loan, immediately due, without notice, and then Borrower will pay that
amount. Lender may hire an attorney to help collect this Note if Borrower does
not pay, and Borrower will pay Lender's reasonable attorneys' fees. Borrower
also will pay Lender all other amounts actually incurred by Lender as court
costs, lawful fees for filing, recording, or releasing to any public office
any instrument securing this loan; the reasonable cost actually expended for
repossessing, storing, preparing for sale, and selling any security; and
fees for noting a lien on or transferring a certificate of title to any
motor vehicle offered as security for this loan, or premiums or
identifiable charges received in connection with the sale of authorized
insurance. This Note has been delivered to Lender and accepted by Lender in
the State of Texas. If there is a lawsuit, and if the transaction evidenced
by this Note occurred in Bexar County, Borrower agrees upon Lender's request
to submit to the jurisdiction of the courts of Bexar County, the State of
Texas. This Note shall be governed by and construed in accordance with the
laws of the State of Texas and applicable Federal laws.
RIGHT OF SETOFF. Borrower grants to Lender a contractual security interest
in, and hereby assigns, conveys delivers, pledges, and transfers to Lender
all Borrower's right, title and interest in and to, Borrower's account with
Lender (whether checking, savings, or some other account), including
04-24-2000 PROMISSORY NOTE
Loan No 9001 (Continued) Page 2
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without limitation all accounts held jointly with someone else and all accounts
Borrower may open in the future, excluding however all IRA and Keogh accounts,
and all trust accounts for which the grant of a security interest would be
prohibited by law. Borrower authorizes Lender, to the extent permitted by
applicable law, to charge or setoff all sums owing on this Note against any and
all such accounts.
LINE OF CREDIT. This Note evidences a revolving line of credit. Advances under
this Note may be requested orally by Borrower or by an authorized person. Lender
may, but need not, require that all oral requests be confirmed in writing. All
communications, instructions, or directions by telephone or otherwise to Lender
are to be directed to Lender's office shown above. Borrower agrees to be liable
for all sums either: (a) advanced in accordance with the instructions of an
authorized person or (b) credited to any of Borrower's accounts with Lender. The
unpaid principal balance owing on this Note at any time may be evidenced by
endorsements on this Note or by Lender's internal records, including daily
computer print-outs. Lender will have no obligation to advance funds under this
Note if: (a) Borrower or any guarantor is in default under the terms of this
Note or any agreement that Borrower or any guarantor has with Lender, including
any agreement made in connection with the signing of this Note; (b) Borrower or
any guarantor ceases doing business or is insolvent; (c) any guarantor seeks,
claims or otherwise attempts to limit, modify or revoke such guarantor's
guarantee of this Note or any other loan with Lender; (d) Borrower has applied
funds provided pursuant to this Note for purposes other than those authorized by
Lender; or (e) Lender in good faith deems itself insecure under this Note or any
other agreement between Lender and Borrower. This revolving line of credit shall
not be subject to Chapter 346 of the Texas Finance Code.
DISHONORED CHECK CHARGE. In the event a check offered in full or partial payment
on this loan is returned unpaid, Lender may charge a fee for the purpose of
defraying the expense incident to handling such returned check, and Borrower
agrees to pay such fee. The fee shall not exceed the maximum amount permitted
under applicable law.
OTHER CREDITS AFFECTING AVAILABILITY. Any other credits made available to
Borrower by Lender, such as other loans or letters or credit, may be advanced to
Borrower and/or issued under this line of credit commitment, and any such
advances or issuances shall, in addition to the outstanding advances on this
Note, reduce the outstanding availability on the line of credit.
FACSIMILE DOCUMENTS AND SIGNATURES. For purposes of negotiating and finalizing
this document, if this document is transmitted by facsimile machine ("fax"), it
shall be treated for all purposes as an original document. Additionally, the
signature of any party on this document transmitted by way of a fax machine
shall be considered for all purposes as an original signature. Any such faxed
document shall be considered to have the same binding legal effect as an
original document. At the request of any party, any faxed document shall be re-
executed by each signatory party in an original form.
WAIVER OF RIGHT TO TRIAL BY JURY. THE PARTIES TO THIS AGREEMENT HEREBY WAIVE
TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM BROUGHT BY EITHER OF THE
PARTIES HERETO AGAINST THE OTHER TO ENFORCE THIS AGREEMENT, TO COLLECT DAMAGES
FOR THE BREACH OF THIS AGREEMENT, OR WHICH IN ANY OTHER WAY ARISE OUT OF, ARE
CONNECTED TO OR ARE RELATED TO THIS AGREEMENT OR THE SUBJECT MATTER OF THIS
AGREEMENT. ANY SUCH ACTION SHALL BE TRIED BY THE JUDGE WITHOUT A JURY.
LATE CHARGE. If a payment is made 10 days or more late, Borrower will be
charged, in addition to interest, a delinquency charge of (i) 5% of the unpaid
portion of the regularly scheduled payment, or (ii) $250.00, whichever is less.
Additionally, upon maturity of this Note, if the outstanding principal balance
(plus all accrued but unpaid interest) is not paid within 10 days of the
maturity date, Borrower will be charged a delinquency charge of (i) 5% of the
sum of the outstanding principal balance (plus all accrued but unpaid interest),
or (ii) $250.00, whichever is less. Borrower agrees with Lender that the charges
set forth herein are reasonable compensation to Lender for the handling of such
late payments.
FINANCIAL INFORMATION. Borrower agrees to promptly furnish such financial
information and statements, including financial statements in a format
acceptable to Lender, lists of assets and liabilities, agings of receivables and
payables, inventory schedules, budgets, forecasts, tax returns, and other
reports with respect to Borrower's financial condition and business operations
as Lender may request from time to time. This provision shall not alter the
obligation of Borrower to deliver to Lender any other financial statements or
reports pursuant to the terms of any other loan documents executed in connection
with this Note.
ARBITRATION. The parties to this agreement agree that all disputes, claims and
controversies between them, whether individual, joint, or class in nature,
arising from the Note or otherwise, including without limitation contract and
tort disputes, shall be arbitrated pursuant to the Commercial Arbitration Rules
of the American Arbitration Association, upon written request of either party.
The party that requests arbitration has the burden to initiate the arbitration
proceedings pursuant to and by complying with the Commercial Arbitration Rules
of the American Arbitration Association and shall pay all associated
administrative and filing fees. The arbitration shall be conducted in the City
of San Antonio, Bexar County, Texas, and administered by the American
Arbitration Association. All arbitration hearings will be commenced within sixty
(60) days of the written request for arbitration, and if the arbitration hearing
is not commenced within the sixty (60) days, the party that requested
arbitration shall have waived its election to arbitrate. No act to take or
dispose of any collateral securing the Note shall constitute a waiver of this
arbitration agreement or be prohibited by this arbitration agreement. This
includes, without limitation, obtaining injunctive relief or a temporary
restraining order; invoking a power of sale under any deed of trust or mortgage;
obtaining a writ of attachment or imposition of a receiver; or exercising any
rights relating to personal property, including taking or disposing of such
property with or without judicial process pursuant to Article 9 of the Uniform
Commercial Code. Any disputes, claims, or controversies concerning the
lawfulness or reasonableness of any act, or exercise of any right, concerning
any collateral securing the Note, including any claim to rescind, reform, or
otherwise modify any agreement relating to the collateral securing the Note,
shall also be arbitrated, provided however that no arbitrator shall have the
right or the power to enjoin or restrain any act of any party. Judgment upon any
award rendered by any arbitrator may be entered in any court having
jurisdiction. Nothing in the Note shall preclude any party from seeking
equitable relief from a court of competent jurisdiction. The statute of
limitations, estoppel, waiver, laches, and similar doctrines which would
otherwise be applicable in an action brought by a party shall be applicable in
any arbitration proceeding, and the commencement of an arbitration proceeding
shall be deemed the commencement of an action for these purposes. The Federal
Arbitration Act shall apply to the construction interpretation, and enforcement
of this arbitration provision.
GENERAL PROVISIONS. If any part of this Note cannot be enforced, this fact will
not affect the rest of the Note. In particular, this section means (among other
things) that Borrower does not agree or intend to pay, and Lender does not agree
or intend to contract for, charge, collect, take, reserve or receive
(collectively referred to herein as "charge or collect"), any amount in the
nature of interest or in the nature of a fee for this loan, which would in any
way or event (including demand, prepayment, or acceleration) cause Lender to
charge or collect more for this loan than the maximum Lender would be permitted
to charge or collect by federal law or the law of the State of Texas (as
applicable). Any such excess interest or unauthorized fee shall, instead of
anything stated to the contrary, be applied first to reduce the principal
balance of this loan, and when the principal has been paid in full, be refunded
to Borrower. The right to accelerate maturity of sums due under this Note does
not include the right to accelerate any interest which has not otherwise accrued
on the date of such acceleration, and Lender does not intend to charge or
collect any unearned interest in the event of acceleration. All sums paid or
agreed to be paid to Lender for the use, forebearance or detention of sums due
hereunder shall, to the extent permitted by applicable law, be amortized,
prorated, allocated and spread throughout the full term of the loan evidenced by
this Note until payment in full so that the rate or amount of interest on
account of the loan evidenced hereby does not exceed the applicable usury
ceiling. Lender may delay or forgo enforcing any of its rights or remedies under
this Note without losing them. Each Borrower understands and agrees that, with
or without notice to Borrower, Lender may with respect to any other Borrower (a)
make one or more additional secured or unsecured loans or otherwise extend
additional credit; (b) alter, compromise, renew, extend, accelerate, or
otherwise change one or more times the time for payment or other terms any
indebtedness, including increases and decreases of the rate of interest on the
indebtedness; (c) exchange, enforce, waive, subordinate, fail or decide not to
perfect,
04-24-2000 PROMISSORY NOTE Page 3
Loan No 9001 (Continued)
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and release any security, with or without the substitution of new collateral;
(d) apply such security and direct the order or manner of sale thereof,
including without limitation, any nonjudicial sale permitted by the terms of the
controlling security agreements, as lender in its discretion may determine; (e)
release, substitute, agree not to sue, or deal with any one or more of
Borrower's sureties, endorsers, or other guarantors on any terms or in any
manner Lender may choose; and (f) determine how, when and what application of
payments and credits shall be made on any other indebtedness owing by such other
borrower. Borrower and any other person who signs, guarantees or endorses this
Note, to the extent allowed by law, waive presentment, demand for payment,
protest, notice of dishonor, notice of intent to accelerate the maturity of this
Note, and notice of acceleration of the maturity of this Note. Upon any change
in the terms of this Note, and unless otherwise expressly stated in writing, no
party who signs this Note, whether as maker, guarantor, accommodation maker or
endorser, shall be released from liability. All such parties agree that Lender
may renew or extend (repeatedly and for any length of time) this loan, or
release any party or guarantor or collateral; or impair, fail to realize upon or
perfect Lender's security interest in the collateral without the consent of or
notice to anyone. All such parties also agree that Lender may modify this loan
without the consent of or notice to anyone other than the party with whom the
modification is made. The obligations under this Note are joint and several.
PRIOR TO SIGNING THIS NOTE, EACH BORROWER READ AND UNDERSTOOD ALL THE
PROVISIONS OF THIS NOTE, INCLUDING THE VARIABLE INTEREST RATE PROVISIONS.
EACH BORROWER AGREES TO THE TERMS OF THE NOTE AND ACKNOWLEDGES RECEIPT OF A
COMPLETED COPY OF THE NOTE.
The below listed Texas Corporations, each being bound by their President,
William A. Coskey:
INDUSTRIAL DATA SYSTEMS CORPORATION, Borrower
INDUSTRIAL DATA SYSTEMS, INC., Co-Borrower
THERMAIRE, INC., dba THERMAL CORPORATION, Co-Borrower
CONSTANT POWER MANUFACTURING, INC., Co-Borrower
IDS ENGINEERING, INC., Co-Borrower
/s/ William A. Coskey
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WILLIAM A. COSKEY
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