PROMISSORY NOTE
$202,468.67 Harris County, Texas November 29, 2007
The undersigned, Colony Energy, Inc., a Delaware corporation (hereinafter
called "Maker"), whose address for the purposes of this Note is 2100 West Loop
South, Suite 900, Houston, Texas 77027, for value received, without grace, in
the manner, on the dates and in the amounts herein stipulated, promises to pay
to the order of CEI Ventures, LLC, a Texas limited liability company
(hereinafter called "Payee"), at Payee's principal place of business located at
2100 West Loop South, Suite 900, Houston, Texas 77027, or at such other place as
Payee may hereafter designate, the sum of TWO HUNDRED TWO THOUSAND, FOUR HUNDRED
SIXTY-EIGHT DOLLARS AND SIXTY-SEVEN CENTS ($202,468.67), in lawful money of the
United States of America, with interest at the rate herein specified.
The unpaid principal balance from time to time outstanding hereunder shall
bear interest from and after the date hereof until such balance is paid in full
at a fixed rate equal to TEN PERCENT (10%) per annum. Interest on this Note
shall be computed on the basis of a 365- day (or 366-day, as the case may be)
year for the actual number of days elapsed.
The unpaid principal balance of this Note with all accrued but unpaid
interest thereon shall be due and payable in full on DEMAND, or in the event
there is no demand, on or before midnight on fifth annual anniversary of the
date of this Note.
Maker reserves the right of prepaying the principal of and accrued interest
on this Note, in full or in part, at any time without the payment of any
prepayment premium or fee. Payee may, at Payee's option, apply any prepayments
received by Payee hereunder to the payment of accrued but unpaid interest and/or
principal, in any order, manner or proportion that Payee deems appropriate.
If this Note is not paid at maturity and said Note is placed in the hands
of an attorney for collection or if collection by suit or through the probate
court, bankruptcy court, or by any other legal or judicial proceeding is sought,
Maker agrees to pay all expenses incurred, including reasonable attorneys' fees,
all of which shall become a part of the principal hereof.
Maker and each and all other liable parties expressly and specifically, (i)
severally waive grace, presentment for payment, demand for payment, notice of
intent to accelerate and notice of acceleration, notice of dishonor, protest and
notice of protest, notice of nonpayment, and any and all other notices, the
filing of suit and diligence in collecting this Note or enforcing any of the
security herefor, (ii) severally agree to any substitution, subordination,
exchange or release of any security held for the payment of this Note or any
other obligation to Payee and release of any party primarily or secondarily
liable hereon, (iii) severally agree that Payee shall not be required first to
institute suit or exhaust Payee's remedies hereon against Maker or other parties
liable hereon or to enforce Payee's rights against them or any security herefor
in order to enforce payment of this Note by any of them, and (iv) severally
agree to any extension or postponement of time of payment of this Note and to
any other indulgence with respect hereto without notice thereof to any of them.
The invalidity, or unenforceability in particular circumstances, of any
provision of this Note shall not extend beyond such provision or such
circumstances and no other provision of this Note shall be affected thereby.
This Note is secured by a security interest in and general lien upon all of
Maker's assets, as such security interest in and general lien were created in
that certain Security Agreement of even date herewith executed by Maker in favor
of Payee.
THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF
THE STATE OF TEXAS AND THE APPLICABLE LAWS OF THE UNITED STATES OF AMERICA.
COLONY ENERGY, INC.
By:_______________________________________
Kent E. Lovelace, Jr., President