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PROMISSORY NOTE
$1,000,000.00 Houston, Texas January 16, 1997
FOR VALUE RECEIVED, on or before January 31, 1999 ("Maturity Date"),
the undersigned and if more than one, each of them, jointly and severally
(hereinafter referred to as "Borrower"), promises to pay to the order of BANK
ONE, TEXAS, N.A. ("Bank") at its offices in Harris County, Texas, at 910
Travis, Houston, Texas 77002, the principal amount of ONE MILLION AND NO/100
DOLLARS ($1,000,000.00) ("Total Principal Amount"), or such amount less than
the Total Principal Amount which has been advanced to Borrower if the total
amount advanced under this Promissory Note ("Note") is less than the Total
Principal Amount, together with interest on such portion of the Total Principal
Amount which has been advanced to Borrower from the date advanced until paid at
a fluctuating rate per annum which shall from day to day be equal to the lesser
of (a) the Maximum Rate (as hereinafter defined), or (b) a rate ("Contract
Rate"), calculated on the basis of actual days elapsed but computed as if each
year consisted of 365 days, equal to the sum of (i) the Bank One Base Rate of
interest ("Base Rate") as established from time to time by Bank (which may not
be the lowest, best or most favorable rate of interest which Bank may charge on
loans to its customers) plus (ii) one-half of one percent (0.5%), each change
in the rate to be charged on this Note to become effective without notice to
Borrower on the effective date of each change in the Maximum Rate or the Base
Rate, as the case may be; provided, however that if at any time the Contract
Rate shall exceed the Maximum Rate, thereby causing the interest on this Note
to be limited to the Maximum Rate, then any subsequent reduction in the Base
Rate shall not reduce the rate of interest on this Note below the Maximum Rate
until the total amount of interest accrued on this Note equals the amount of
interest which would have accrued on this Note if the Contract Rate had at all
times been in effect.
The term "Maximum Rate," as used herein, shall mean at the particular
time in question the maximum rate of interest which, under applicable law, may
then be charged on this Note. If such maximum rate of interest changes after
the date hereof and this Note provides for a fluctuating rate of interest, the
Maximum Rate shall be automatically increased or decreased, as the case may be,
without notice to Borrower from time to time as of the effective date of each
change in such maximum rate. If applicable law ceases to provide for such a
maximum rate of interest, the Maximum Rate shall be equal to eighteen percent
(18%) per annum.
The principal of and all accrued but unpaid interest on this Note
shall be due and payable as follows: The principal of this Note shall be due
and payable in twenty-four (24) equal monthly installments, together with all
accrued but unpaid interest thereon, commencing on the 1st day of February,
1997, and continuing on the 1st day of each successive month thereafter until
January ____, 1999, when the outstanding principal balance of this
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Note, together with all accrued but unpaid interest, shall be due and payable
without demand.
The indebtedness evidenced by this Note may be prepaid, in whole or in
part, any time during the term hereof.
To the extent that any interest is not paid on or before the fifth day
after it becomes due and payable, Bank may, at its option, add such accrued
interest to the principal of this Note. Notwithstanding anything herein to the
contrary, upon an Event of Default (as hereinafter defined) or at maturity,
whether by acceleration or otherwise, all principal of this Note shall, at the
option of Bank, bear interest at the Maximum Rate until paid.
All regularly scheduled payments of the indebtedness evidenced by this
Note and by any of the other Loan Documents shall be applied first to any
accrued but unpaid interest then due and payable hereunder or thereunder and
then to the principal amount then due and payable. All non-regularly scheduled
payments shall be applied to such indebtedness in such order and manner as the
holder of this Note may from time to time determine in its sole discretion.
All payments and prepayments of principal of or interest on this Note shall be
made in lawful money of the United States of America in immediately available
funds, at the address of Bank indicated above, or such other place as the
holder of this Note shall designate in writing to Borrower. If any payment of
principal of or interest on this Note shall become due on a day which is not a
Business Day (as hereinafter defined), such payment shall be made on the next
succeeding Business Day and any such extension of time shall be included in
computing interest in connection with such payment. As used herein, the term
"Business Day" shall mean any day other than a Saturday, Sunday or any other
day on which national banking associations are authorized to be closed. The
books and records of Bank shall be prima facie evidence of all outstanding
principal of and accrued and unpaid interest on this Note.
This Note has been executed and delivered pursuant to that certain
Letter Loan Agreement, of even date herewith, by and between Borrower and Bank
("Loan Agreement"), and is secured by (i) inter alia, a Security Agreement of
even date herewith, by and among Borrower, its Subsidiaries and Affiliates (as
defined in the Loan Agreement) and Bank, covering certain collateral as more
particularly described therein, (ii) an Assignment of Leases, of even date
herewith, and (iii) all liens and security interests granted by Borrower
pursuant to, and in connection with, that certain Letter Loan Agreement dated
January 31, 1996 entered into by and among Borrower, Bank and Banc One Leasing
Corporation, as amended by that certain First Amendment to Letter Loan
Agreement dated of even date herewith (such loan agreement, together with the
first amendment, and any future amendments, the "Leasing Loan Agreement");
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This Note, the Loan Agreement, and all other documents evidencing,
securing, governing, guaranteeing and/or pertaining to this Note, including but
not limited to those documents described above, are hereinafter collectively
referred to as the "Loan Documents." The holder of this Note is entitled to
the benefits and security provided in the Loan Documents.
Borrower agrees that no advances under this Note shall be used for
personal, family or household purposes, and that all advances hereunder shall
be used solely for business, commercial, investment, or other similar purposes.
Borrower agrees that upon the occurrence of any one or more of the
following events of default ("Event of Default"):
(a) failure of Borrower to pay any installment of
principal of or interest on this Note or on any other indebtedness of
Borrower to Corporation when due; or
(b) the occurrence of any event of default specified in
any of the other Loan Documents; or
(c) the bankruptcy or insolvency of, the assignment for
the benefit of creditors by, or the appointment of a receiver for any
of the property of, or the liquidation, termination, dissolution or
death or legal incapacity of, any party liable for the payment of this
Note, whether as maker, endorser, guarantor, surety or otherwise; or
(d) an Event of Default as that term is defined in the
Leasing Loan Agreement;
the holder of this Note may, at its option, without further notice or demand,
(i) declare the outstanding principal balance of and accrued but unpaid
interest on this Note at once due and payable, (ii) refuse to advance any
additional amounts under this Note, (iii) foreclose all liens securing payment
hereof, (iv) pursue any and all other rights, remedies and recourses available
to the holder hereof, including but not limited to any such rights, remedies or
recourses under the Loan Documents, at law or in equity, or (v) pursue any
combination of the foregoing.
The failure to exercise the option to accelerate the maturity of this
Note or any other right, remedy or recourse available to the holder hereof upon
the occurrence of an Event of Default hereunder shall not constitute a waiver
of the right of the holder of this Note to exercise the same at that time or at
any subsequent time with respect to such Event of Default or any other Event of
Default. The rights, remedies and recourses of the holder hereof, as provided
in this Note and in any of the other Loan Documents, shall be cumulative and
concurrent and may be pursued separately, successively or together as often as
occasion therefore shall arise, at the sole discretion of the holder hereof.
The acceptance
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by the holder hereof of any payment under this Note which is less than the
payment in full of all amounts due and payable at the time of such payment
shall not (i) constitute a waiver of or impair, reduce, release or extinguish
any right, remedy or recourse of the holder hereof, or nullify any prior
exercise of any such right, remedy or recourse, or (ii) impair, reduce, release
or extinguish the obligations of any party liable under any of the Loan
Documents as originally provided herein or therein.
This Note and all of the other Loan Documents are intended to be
performed in accordance with, and only to the extent permitted by, all
applicable usury laws. If any provision hereof or of any of the other Loan
Documents or the application thereof to any person or circumstance shall, for
any reason and to any extent, be invalid or unenforceable, neither the
application of such provision to any other person or circumstance nor the
remainder of the instrument in which such provision is contained shall be
affected thereby and shall be enforced to the greatest extent permitted by law.
It is expressly stipulated and agreed to be the intent of the holder hereof to
at all times comply with the usury and other applicable laws now or hereafter
governing the interest payable on the indebtedness evidenced by this Note. If
the applicable law is ever revised, repealed or judicially interpreted so as to
render usurious any amount called for under this Note or under any of the other
Loan Documents, or contracted for, charged, taken, reserved or received with
respect to the indebtedness evidenced by this Note, or if Bank's exercise of
the option to accelerate the maturity of this Note, or if any prepayment by
Borrower results in Borrower having paid any interest in excess of that
permitted by law, then it is the express intent of Borrower and Bank that all
excess amounts theretofore collected by Bank be credited on the principal
balance of this Note (or, if this Note and all other indebtedness arising under
or pursuant to the other Loan Documents have been paid in full, refunded to
Borrower), and the provisions of this Note and the other Loan Documents
immediately be deemed reformed and the amounts thereafter collectable hereunder
and thereunder reduced, without the necessity of the execution of any new
document, so as to comply with the then applicable law, but so as to permit the
recovery of the fullest amount otherwise called for hereunder or thereunder.
All sums paid, or agreed to be paid, by Borrower for the use, forbearance,
detention, taking, charging, receiving or reserving of the indebtedness of
Borrower to Bank under this Note or arising under or pursuant to the other Loan
Documents shall, to the maximum extent permitted by applicable law, be
amortized, prorated, allocated and spread throughout the full term of such
indebtedness until payment in full so that the rate or amount of interest on
account of such indebtedness does not exceed the usury ceiling from time to
time in effect and applicable to such indebtedness for so long as such
indebtedness is outstanding. To the extent federal law permits Bank to
contract for, charge or receive a greater amount of interest, Bank will rely on
federal law instead of Tex. Rev. Civ. Stat. Ann. art. 5069-1.04, as amended,
for the purpose of determining the Maximum Rate. Additionally, to
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the maximum extent permitted by applicable law now or hereafter in effect, Bank
may, at its option and from time to time, implement any other method of
computing the Maximum Rate under such Article 5069-1.04, as amended, or under
other applicable law by giving notice, if required, to Borrower as provided by
applicable law now or hereafter in effect. Notwithstanding anything to the
contrary contained herein or in any of the other Loan Documents, it is not the
intention of Bank to accelerate the maturity of any interest that has not
accrued at the time of such acceleration or to collect unearned interest at the
time of such acceleration.
In no event shall Tex. Rev. Civ. Stat. Ann. art. 5069 Ch. 15 (which
regulates certain revolving loan accounts and revolving tri-party accounts)
apply to this Note. To the extent that Tex. Rev. Civ. Stat. Ann. art.
5069-1.04, as amended, is applicable to this Note, the "indicated rate ceiling"
specified in such article is the applicable ceiling; provided that, if any
applicable law permits greater interest, the law permitting the greatest
interest shall apply.
If this Note is placed in the hands of an attorney for collection, or
is collected in whole or in part by suit or through probate, bankruptcy or
other legal proceedings of any kind, Borrower agrees to pay, in addition to all
other sums payable hereunder, all costs and expenses of collection, including
but not limited to reasonable attorneys' fees.
Borrower and any and all endorsers and guarantors of this Note
severally waive presentment for payment, notice of nonpayment, protest, demand,
notice of protest, notice of intent to accelerate, notice of acceleration and
dishonor, diligence in enforcement and indulgences of every kind and without
further notice hereby agree to renewals, extensions, exchanges or releases of
collateral, taking of additional collateral, indulgences or partial payments,
either before or after maturity.
THIS NOTE HAS BEEN EXECUTED UNDER, AND SHALL BE CONSTRUED AND ENFORCED
IN ACCORDANCE WITH, THE LAWS OF THE STATE OF TEXAS, EXCEPT AS SUCH LAWS ARE
PREEMPTED BY APPLICABLE FEDERAL LAWS.
BORROWER:
MITCHAM INDUSTRIES, INC.
By: /s/ BILLY F. MITCHAM, JR.
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Billy F. Mitcham, Jr., President
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