NON-NEGOTIABLE PROMISSORY NOTE
$1,875,000.00 September __, 1998
FOR VALUE RECEIVED, U.S. Commercial Funding Corporation.,an Illinois
corporation ("Maker"), promises to pay to Harold Goodman, an individual resident
in Texas ("Payee"), in lawful money of the United States of America, the
principal sum of One Million Eight Hundred Seventy Five Thousand Dollars
($1,875,000.00), together with interest in arrears on the unpaid principal
balance at an interest rate described below, in the manner provided below.
Interest shall be calculated on the basis of a year of 365 or 366 days, as
applicable, and charged for the actual number of days elapsed.
This Note has been executed and delivered pursuant to and in accordance
with the terms and conditions of the Stock Purchase Agreement, dated May 19 and
May 20, 1998, by and between Maker, Payee and Keith Reid, (the "Agreement"), and
is subject to the terms and conditions of the Agreement, which are, by this
reference, incorporated herein and made a part hereof. Capitalized terms used in
this Note without definition shall have the respective meanings set forth in the
Agreement.
1. Payments.
1.1 Principal And Interest. The principal amount of this Note shall be
due and payable in sixty (60) equal consecutive monthly installments commencing
on _______________, 1998, and on the ___ day of each month thereafter until paid
in full. Interest on the unpaid principal balance of this Note shall be due and
payable monthly, together with each payment of principal. The rate of interest
shall be that rate which is equal to the sum of the Prime Rate of NationsBank of
Texas, N.A. in effect on the date of this Note, subject to adjustment annually,
plus 200 basis points. The rate of interest payable hereunder shall change on
each anniversary date of this Note. Notwithstanding anything else contained in
this Note to the contrary, the entire unpaid principal balance of the Note,
together with accrued interest, shall be paid in full within one hundred and
twenty (120) days from the death of the Payee.
1.2 Manner of Payment. All payments of principal and interest on this
Note shall be made by check at _______________________, ___________________,
__________________ or at such other place in the United States of America as
Payee shall designate to Maker in writing. If any payment of principal or
interest on this Note is due on a day which is not a Business Day, such payment
shall be due on the next succeeding Business Day, and such extension of time
shall be taken into account in calculating the amount of interest payable under
this Note. "Business Day" means any day other than a Saturday, Sunday or legal
holiday in the State of Texas.
1.3 Prepayment. Maker may, without premium or penalty, at any time and
from time to time, prepay all or any portion of the outstanding principal
balance due under this Note, provided that each such prepayment is accompanied
by accrued interest on the amount of principal prepaid calculated to the date of
such prepayment. Any partial prepayments shall be applied to installments of
principal in inverse order of their maturity.
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Notwithstanding anything else contained in this Note to the contrary,
in the event the Employment Agreement dated _______, 1998 by and between Goodman
Factors, Inc. and Payee (the "Employment Agreement") is Terminated Without Cause
as defined in Section 1.8 of the Employment Agreement, the entire unpaid
principal balance of this Note, and all accrued interest, shall be due and
payable in full within fifteen (15) days from the date of such Termination
Without Cause.
In the event the Employment Agreement is Terminated for Good Cause, as
defined in Section 1.7 of the Employment Agreement, this Note shall continue to
be payable according to the terms set forth in paragraph 1.1 above, provided
however, that if Payee commences arbitration proceedings pursuant to Section 7.3
of the Employment Agreement and the arbitrator(s) determines that the
termination of Payee's employment was not For Good Cause, then in such event,
the entire unpaid principal balance of this Note, and all accrued interest,
shall be due and payable in full within fifteen (15) days from the date of such
determination by the arbitrator.
1.4. Offset of Note for Damages. In the event Payee's employment is
terminated under the Employment Agreement and such termination is determined, in
arbitration proceedings under Section 7.3 of the Employment Agreement, to be a
Termination for Good Cause, as defined in Section 1.7 of the Employment
Agreement, and if such arbitrator(s) determines that Goodman Factors, Inc. has
suffered financial damages as a result of Payee's action which gives rise to
such Termination for Cause, then this Note shall be reduced pursuant to Section
1.4. The amount of such reduction shall be that amount which the arbitrator(s)
has determined to be the amount of financial damages suffered by Goodman Factors
as a result of Payee's actions.
1.5 Security. This Note is secured by a grant of a security interest in
certain shares of Goodman Factors, Inc. which were acquired on the date of this
Note by Maker. The security interest is fully described in a Pledge Agreement
entered into between Maker and Payee on the date of this Note.
2. Defaults
2.1 Events of Default. The occurrence of any one or more of the
following events with respect to Maker shall constitute an event of default
hereunder ("Event of Default"):
(a) If Maker shall fail to pay when due any payment of
principal or interest on this Note and such failure continues for
fifteen (15) days after Payee notifies Maker therein writing.
(b) If, pursuant to or within the meaning of the United States
Bankruptcy Code or any other federal or state law relating to
insolvency or relief of debtors (a "Bankruptcy Law") (i) Maker shall
commence a voluntary case or proceeding; (ii) an involuntary case shall
commence and such case is not dismissed within sixty (60) days from the
date of such commencement; ; (iii) consent to the appointment of a
trustee, receiver, assignee, liquidator or similar official; (iv) make
an assignment for the benefit of its creditors; or (v) admit in writing
its inability to pay its debts as they become due.
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2.2 Notice by Maker. Maker shall notify Payee in writing within five
days after the occurrence of any Event of Default of which Maker acquires
knowledge.
2.3 Remedies. Upon the occurrence of an Event of Default hereunder
(unless all Events of Default have been cured or waived by Payee), Payee may, at
his option, (i) by written notice to Maker, declare the entire unpaid principal
balance of this Note, together with all accrued interest thereon, immediately
due and payable regardless of any prior forbearance, and (ii) exercise any and
all rights and remedies available to him under applicable law, including,
without limitation, the right to collect from Maker all sums due under this
Note. Maker shall pay all reasonable costs and expenses incurred by or on behalf
of Payee in connection with Payee's exercise of any or all of his rights and
remedies under this Note, including, without limitation, reasonable attorneys'
fees. Upon the occurrence of an event of default, Payee may institute
appropriate legal proceedings against Maker to obtain judgement on the Note
and/or otherwise exercise his rights and remedies under the Security Agreement
or applicable law. In the event Maker breaches this Note, and such breach is not
cured within the terms hereof, the restrictions set forth in Article X of the
Stock Purchase Agreement and paragraph 6.1 and 6.3 of the Employment Agreement
entered into this day by Maker and Payee, shall be of no further force or
effect.
3. Miscellaneous
3.1 Waiver. The rights and remedies of Payee under this Note shall be
cumulative and not alternative. No waiver by Payee of any right or remedy under
this Note shall be effective unless in a writing signed by Payee. Neither the
failure nor any delay in exercising any right, power or privilege under this
Note will operate as a waiver of such right, power or privilege and no single or
partial exercise of any such right, power or privilege by Payee will preclude
any other or further exercise of such right, power or privilege or the exercise
of any other right, power or privilege. To the maximum extent permitted by
applicable law, (a) no claim or right of Payee arising out of this Note can be
discharged by Payee, in whole or in part, by a waiver or renunciation of the
claim or right unless in a writing, signed by Payee; (b) no waiver that may be
given by Payee will be applicable except in the specific instance for which it
is given; and (c) no notice to or demand on Maker will be deemed to be a waiver
of any obligation of Maker or of the right of Payee to take further action
without notice or demand as provided in this Note. Maker hereby waives
presentment, demand, protest and notice of dishonor and protest.
3.2 Notices. Any notice required or permitted to be given hereunder
shall be given in accordance with Section 12.1 of the Agreement.
3.3 Severability. If any provision in this Note is held invalid or
unenforceable by any court of competent jurisdiction, the other provisions of
this Note will remain in full force and effect. Any provision of this Note held
invalid or unenforceable only in part or degree will remain in full force and
effect to the extent not held invalid or unenforceable.
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3.4 Parties in Interest. This Note shall bind Maker and its successors
and assigns. This Note shall not be assigned or transferred by Payee without the
express prior written consent of Maker, except by will or, in default thereof,
by operation of law.
3.5 Section Headings, Construction. The headings of Sections in this
Note are provided for convenience only and will not affect its construction or
interpretation. All references to "Section" or "Sections" refer to the
corresponding Section or Sections of this Note unless otherwise specified.
3.6. Governing Law and Jurisdiction. The provisions of this Note shall
be construed according to the laws of the State of Texas. Any action or
proceeding seeking to enforce any provision of, or based on any right arising
out of, this Note shall be brought in the federal or state courts of Dallas
County, Texas.
IN WITNESS WHEREOF, Maker has executed and delivered this Note as of
the date first stated above.
U.S. Commercial Funding Corporation,
an Illinois corporation
By__________________________
Larry Meek, President
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