EXHIBIT 3.0
PROMISSORY NOTE
$2,500,000.00 August 13, 1999
Dallas Gold & Silver Exchange, Inc. 2817 Forest Lane
Dallas, Texas 75234
(Individually and collectively "Borrower")
First Union National Bank
201 South College Street, CP-13
Charlotte, North Carolina 28288-M9 (Hereinafter referred to as the "Bank!)
Borrower premises to pay to the order of Bank, In lawful money Of the United
States of America, at Its office indicated above or wherever else Bank may
specify in writing, the sum of Two Million Five Hundred Thousand Dollars
($2,500,000.00) or such sum as may be advanced and outstanding from time to time
with interest on the unpaid principal balance at the rate and on the terms
provided in this Promissory Note (including all renewals, extensions or
modifications hereof, this "Note'.).
INTEREST RATE. Interest shall accrue on the unpaid principal balance of this
Note from the date hereof at the rate of 8.75% ("Interest Rate").
DEFAULT RATE. In addition to all other rights contained in this Note, if a
Default (defined herein) occurs and as long as a Default continues, all
outstanding Obligations shall bear interest at the Interest Rate plus 3%
("Default Rate"). The Default Rate shall also apply from acceleration until the
Obligations or any judgment thereon Is paid In full.
INTEREST AND FEE(S) COMPUTATION. (Actual/360). Interest and fees, If any, shall
be computed on the basis of a 360-day year for the actual number of days In the
applicable period ("Actual/360 Computation"). The Actual/360 Computation
determines the annual effective yield by taking the stated (nominal) rate for a
year's period and then dividing said rate by 360 to determine the daily periodic
rate to be applied for each day in the applicable period. Application of the
Actual/360 Computation produces an annualized effective rate exceeding that of
the nominal rate.
PREPAYMENT. Principal may be prepaid in whole or in part at any time without
premium or penalty. No partial prepayment shall affect the obligation of
Borrower to make any payment of principal or Interest due under this Note on the
due dates specified.
REPAYMENT TERMS. Borrower shall make mandatory prepayments of principal on this
Note on each Monday prior to the Maturity Date In amounts equal to ninety (90%)
percent of the actual sales price of all Collateral securing this Note sold
during the immediately preceding seven day period. Interest on this Note shall
be payable on the Maturity Date. The unpaid principal balance, and all accrued
and unpaid interest, if any, on this Note shall be due and., payable in full on
December 24, 1999 (the "Maturity Date").
APPLICATION OF PAYMENTS. Monies received by Bank from any source for application
toward payment of the Obligations shall be applied to accrued interest and then
to principal. If a Default occurs, monies may be applied to the Obligations in
any manner or order deemed appropriate by Bank
If any payment received by Bank under this Note or other Loan Documents is
rescinded, avoided or for any reason returned by Bank because of any adverse
claim or threatened action, the returned payment shall remain payable as an
obligation of all persons liable under this Note or other Loan Documents as
though such payment had not been made.
LOAN DOCUMENTS AND OBLIGATIONS. The term "Loan Documents" used In this Note and
other Loan Documents refers to all documents executed in connection with the
loan evidenced by this Note and any security agreements, security instruments,
financing statements, any renewals or modifications, whenever any of the
foregoing are executed, but does not include swap agreements (as defined in 11
U.S.C, _ 101). Obligations. The term "Obligations" used in this Note refers to
any and all Indebtedness and other obligations under this Note, all other
obligations under any other Loan Document(s). Certain Other Terms. All terms
that are used but not other wise defined In any of the Loan Documents shall have
the definitions provided in the Uniform Commercial Code.
Limited Recourse. Notwithstanding any other term or provision of this Note,
except for recourse to the Collateral, the obligation of Borrower hereunder is
limited to the sum of la) all amounts required to be paid by Borrower under the
paragraph entitled "Repayment Terms" on the first page of this Note up to the
Maturity Date and lb) $1,250,000 and, except for recourse against the
Collateral, Bank shall not seek to procure payment out of any other assets of
the Debtor or to procure any judgment or any sum of money against Borrower In
excess of such amount. It Is the Intent of the parties hereto that Borrower
shall not have any personal liability with respect to 11118 Not& for any amount
in excess of the sum of (a) all amounts required to be paid by Borrower under
the paragraph entitled "Repayment Terms" on the first page of this Note up to
the Maturity Date and (b) $1,250,000.
LATE CHARGE. If any payments are not timely made, Borrower shall also pay to
Bank a late charge equal to 4% of each payment past due for 15 or more days.
Acceptance by Bank of any late payment without an accompanying late charge shall
not be deemed a waiver of Banks right to collect such late charge or to collect
a late charge for any subsequent late payment received.
ATTORNEYS' FEES AND OTHER COLLECTION COSTS. Borrower shall pay all of Bank's
reasonable expenses incurred to enforce or collect any of the Obligations,
including, without limitation, reasonable arbitration, paralegal, attorneys! and
experts fees and expenses, whether incurred without the commencement of a suit,
in any trial, arbitration, or administrative proceeding, or in any appellate or
bankruptcy proceeding.
USURY, If at any lime the effective interest rate under this Note would, but for
this paragraph, exceed the maximum lawful rate, the effective interest rate
under this Note shall be the maximum lawful rate, and any amount received by
Bank in excess of such rate shall be applied to principal and then to fees and
expenses, or, if no such amounts are owing, returned to Borrower.
DEFAULT, If any of the following occurs and continues unremedied for a period of
ten(10) day after notice thereof(except for a payment default, as to which no
notice shall be required), a default ("Default") under this Note shall exist:
Nonpayment; Nonperformance. The failure of timely payment or performance of the
Obligations, however denominated, under this Note or any other Loan Documents.
False Warranty. A warranty or representation made or deemed made In the Loan
Documents or furnished Bank in connection Win the loan evidenced by this Note
proves materially false Men made, or V of a continuing nature, becomes
materially false. Cross Default, At Banks option, any default in payment or
performance of any obligation under any other loans. contracts or agreements of
Borrower, any Subsidiary or Affiliate of Borrower. any general partner of or the
holder(s) of the majority ownership interests of Borrower with Bank or its
affiliates ("Affiliate" shall have the meaning as defined in 11 U.S.C. _ 101,
except that the term "debtor" therein shall be substituted by the term
"Borrower" herein; "Subsidiary" shall mean any business in which Borrower holds.
directly or indirectly, a controlling interest). Cessation; Bankruptcy. The
death of, appointment of guardian for, dissolution of, termination of existence
of, loss of good standing status by, appointment of a receiver for, assignment
for the benefit of creditors of, or commencement of any bankruptcy or insolvency
proceeding by or against the Borrower, its Subsidiaries or Affiliates, if any,
or any general partner of or the holder(s) of the majority ownership Interests
of Borrower, or any party to the Loan Documents. Material Capital Structure or
Business Alteration. Without prior written consent of Bank, (1) a material
alteration In the kind or type of Borrower's business or that of Borrower's
Subsidiaries or Affiliates, If any; (11) the sale of substantially all of the
business or assets of Borrower, any of Borrower's Subsidiaries or Affiliates or
guarantor or a material portion (10% or more) of such business or assets if such
a sale Is outside the ordinary course of business of Borrower, or any of
Borrower's Subsidiaries or Affiliates or any guarantor or more than 50% of the
outstanding stock or voting power of or In any such entity in a single
transaction or a series of transactions; (iii) the acquisition of substantially
all of the business or assets or more than 50% of the outstanding stock or
voting power of any other entity; or iv) should any Borrower, or any of
Borrower's Subsidiaries or Affiliates or any guarantor enter into any merger or
consolidation.
REMEDIES UPON DEFAULT. If a Default occurs under this Note or any Loan
Documents, Bank may at any time thereafter, during its continuation, take the
following actions: Bank Lien. Foreclose its security interest or lien against
Borrower's accounts without notice. Acceleration Upon Default. Accelerate the
maturity of this Note and all other Obligations, and all of the Obligations
shall be immediately due and payable. Cumulative. Exercise any rights and
remedies as provided under the Note and other Loan Documents, or as provided by
law or equity.
FINANCIAL AND OTHER INFORMATION. Borrower shall deliver to Bank such publicly
available Information as Bank may reasonably request from time to time,
Including without limitation, financial statements and Information pertaining to
Borrower's financial condition. Such Information shall be true, complete, and
accurate.
YEAR 2000 COMPATIBILITY. Borrower shall take all action necessary to ensure that
Borrower's computer based systems are able to operate and effectively process
data including dates an and after January 1, 20OO. At the request of Bank,
Borrower shall provide Bank assurance acceptable to Bank of Borrower's Year 2000
compatibility.
WAIVERS AND AMENDMENTS. No waivers, amendments or modifications of this Note and
other Loan Documents shall be valid unless in writing and signed by an officer
of Bank. No waiver by Bank of any Default shall operate as a waiver of any other
Default or the same Default on a future occasion. Neither the failure nor any
delay on the part of Bank in exercising any right, power, or remedy under this
Note and other Loan Documents shall operate as a waiver thereof, nor shall a
single or partial exercise thereof preclude any other or further exercise
thereof or the exercise of any other right, power or remedy.
Each Borrower or any person liable under this Note waives presentment, protest,
notice of dishonor, demand for payment, notice of Intention to accelerate
maturity, notice of acceleration of maturity, notice of sale and all other
notices of any kind. Further, each agrees that Bank Mai extend, modify or renew
this Note or make a novation of the loan evidenced by this Note for an@ period
and grant any releases, compromises or indulgences with respect to any
collateral securing this Note, or with respect to any other Borrower or any
other person liable under this Note or other Loan Documents, all without notice
to or consent of each Borrower or each person Mo may be liable under this Note
or other Loan Documents and without affecting the liability of Borrower or any
person who may be liable under this Note or other Loan Documents.
MISCELLANEOUS PROVISIONS. Assignment. This Note and other Loan Documents shall
inure to the benefit of and be binding upon the parties and their respective
heirs, legal representatives, successors and assigns. Banks interests in and
rights under this Note and other Loan Documents are freely assignable, in whole
or In part, by Bank. In addition, nothing in this Note or any of the Loan
Documents shall prohibit Bank from pledging or assigning this Note or any of the
Loan Documents or any Interest therein to any Federal Reserve Bank. Borrower
shall not assign its rights and interest hereunder without the prior written
consent of Bank, and any attempt by Borrower to assign without Bank's prior
written consent is null and void. Any assignment shall not release Borrower from
the Obligations. Applicable Law, Conflict Between Documents. This Note and other
Loan Documents shall be governed by and construed under the lam of the state
named In Bank's address shown above without regard to that states conflict of
laws principles. If the terms of this Note should conflict with the terms of the
loan agreement or any commitment letter that survives closing, the terms of this
Note shall control. Borrower's Accounts. Except as prohibited by law, Borrower
grants Bank a security interest in all of Borrowers accounts with Bank and any
of Its affiliates. Jurisdiction. Borrower Irrevocably agrees to non-exclusive
personal jurisdiction In the state named In Bank's address shown above.
Severability. If any provision of this Note or of the other Loan Documents shall
be prohibited or Invalid under applicable law, such provision shall be
ineffective but only to the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or the remaining provisions of this
Note or other such document. Notices. Any notices to Borrower shall be
sufficiently given, It In writing and mailed or delivered to the Borrower's
address sham above or such other address as provided hereunder, and to Bank, If
in writing and mailed or delivered to Barites office address shown above or such
other address as Bank may specify in writing from time to time. In the event
that Borrower changes Borrower's address at any time prior to the date the
Obligations are paid In full, Borrower agrees to promptly give written notice of
said change of address by registered or certified mail, return receipt
requested, all charges prepaid. Plural; Captions. All references In the Loan
Documents to Borrower, guarantor, person, document or other nouns of reference
mean both the singular and plural form, as the case may be, and the term
"person" shall mean any individual, person or entity. The Captions contained in
the Loan Documents are inserted for convenience only and shall not affect the
meaning or interpretation of the Loan Documents. Binding Contract. Borrower by
execution of and Bank by acceptance of this Note agree that each party is bound
to all terms and provisions of this Note. Advances. Bank in its sole discretion
may make other Advances under this Note pursuant hereto. Posting of Payments.
All payments received during normal banking hours after 2:00 pm. local time at
the office of Bank first shown above shall be deemed received at the opening of
the next banking day. Joint and Several Obligations. Each Borrower is jointly
and severally obligated under this Note.
ARBITRATION. Upon demand of any party hereto, Mother made before or after
institution of any judicial proceeding, any claim or controversy arising out of
or relating to the Loan Documents between parties hereto (a "Dispute") shall be
resolved by binding arbitration conducted under and governed by the Commercial
Financial Disputes Arbitration Rules (the "Arbitration Rules") of the American
Arbitration Association (the "AAA") and the Federal Arbitration Act. Disputes
may Include, without limitation, tort claims, counterclaims, a dispute as to
Mother a matter is subject to arbitration, claims brought as Class actions, or
claims arising from documents executed In the future. A judgment upon the award
may be entered in any court having jurisdiction. Special Rules. All arbitration
hearings shall be conducted In the city named in the address of Bank first
stated above. A hearing shall begin within 90 days of demand for arbitration and
all healings shall conclude within 120 days of demand for arbitration. These
time limitations may not be extended unless a party shows cause for extension
and then for no more than a total of 60 days. The expedited procedures set forth
In Rule 51 et seg. of the Arbitration Rules shall be applicable to claims of
less than $1,000,000.00. Arbitrators shall be licensed attorneys selected from
the Commercial Financial Dispute Arbitration Panel of the AAA. The parties do
not Volvo applicable Federal or state substantive law except as provided herein.
Preservation and Limitation of Remedies. Notwithstanding the preceding binding
arbitration provisions, the parties agree to preserve, without diminution,
certain remedies that any party may exercise before or after an arbitration
proceeding is brought. The parties shall have the right to proceed In any court
of proper jurisdiction or by self-help to exercise or prosecute the following
remedies, as applicable: (1) all rights to foreclose against any real or
personal property or other security by exercising a power of sale or under
applicable law by judicial foreclosure Including a proceeding to confirm the
sale; (11) all rights of self-help Including peaceful occupation of real
properly and collection of rents, set-off, and peaceful possession of personal
property; (III) obtaining provisional or ancillary remedies Including injunctive
relief, sequestration, garnishment, attachment, appointment of receiver and
filing an involuntary bankruptcy proceeding; and (iv) Men applicable, a judgment
by confession of judgment. Any claim or controversy with regard to any party's
entitlement to such remedies is a Dispute. Waiver of Exemplary Damages. The
parties agree that they shall not have a remedy of punitive or exemplary damages
against other parties in any Dispute and hereby waive any right or claim to
punitive or exemplary damages they have now or which may arise In the future In
connection with any Dispute whether the Dispute Is resolved by arbitration or
judicially. Waiver of Jury Trial. THE PARTIES ACKNOWLEDGE THAT BY AGREEING TO
BINDING ARBITRATION THEY HAVE IRREVOCABLY WAIVED ANY RIGHT THEY MAY HAVE TO JURY
TRIAL NTH REGARD TO A DISPUTE.
IN WITNESS WHEREOF, Borrower, on the day and year first above written, has
caused this Note to be executed under seal.
Dallas Gold & Silver Exchange, Inc.
By:________________________________
L.S. Smith, Chairman