EXHIBIT 10.31
PROMISSORY NOTE
PROMISSORY NOTE
PRINCIPAL LOAN DATE MATURITY LOAN NO COLLATERAL
$75,000.00 12/19/97 12/19/2002 1 50,000 shares of
Reconditioned Systems,
Inc. Common Stock
BORROWER: Xxxx X. Xxxxxxxx LENDER: Reconditioned Systems, Inc.
0000 X. Xxxxx #0000 000 Xxxx Xxxxxxxx
Xxxxx, XX 00000 Xxxxx, XX 00000
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PRINCIPAL AMOUNT: $75,000.00 INITIAL RATE: 11.000%
DATE OF NOTE: DECEMBER 19, 1997
PROMISE TO PAY. XXXX X. XXXXXXXX ("BORROWER") PROMISES TO PAY TO RECONDITIONED
SYSTEMS, INC., AN ARIZONA CORPORATION ("LENDER"), OR ORDER, IN LAWFUL MONEY OF
THE UNITED STATES OF AMERICA, THE PRINCIPAL AMOUNT OF SEVENTY-FIVE THOUSAND &
00/100 DOLLARS ($75,000.00) OR SO MUCH AS MAY BE OUTSTANDING, TOGETHER WITH
INTEREST ON THE UNPAID PRINCIPAL BALANCE FROM DECEMBER 19, 1997, UNTIL PAID IN
FULL.. INTEREST SHALL BE CALCULATED FROM THE DATE OF THE LOAN UNTIL REPAYMENT OF
THE LOAN.
PAYMENT. Borrower will pay this loan in one payment of all outstanding principal
plus all accrued unpaid interest on December 19, 2002. In addition, Borrower
will pay annual payments of accrued unpaid interest beginning December 19, 1998,
and all subsequent interest payments are due on the same day of each year after
that. Borrower will pay Lender at Xxxxxx'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 unpaid interest, and any remaining amount to
principal.
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 Xxxxxx's Bank's Prime RaTe
(the "Index"). The interest rate to be applied to the unpaid principal balance
of this Note will be at a rate of 2.500 percentage points over the Index,
resulting in an initial rate of 11% per annum. NOTICE: Under no circumstances
will the interest rate on this Note be more than the maximum rate allowed by
applicable law.
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 Xxxxxx in
writing, relieve Xxxxxxxx of Xxxxxxxx's obligation to continue to make payments
of accrued unpaid interest. Rather, they will reduce the principal balance due.
LATE CHARGE. If a payment is 10 days or more late, Borrower will be charged
5.000% of the regularly scheduled payment.
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.
If any default, other than a default in payment, is curable and if Borrower has
not been given a notice of a breach of the same provision of this Note within
the preceding twelve (12) months, it may be cured (and no event of default will
have occurred) if Borrower, after receiving written notice from Lender demanding
cure of such default: (a) cures the default within fifteen (15) days; or (b) if
the cure requires more than fifteen (15) days, immediately initiates steps with
Lender deems in Xxxxxx's sole discretion to be sufficient to cure the default
and thereafter continues and completes all reasonable and necessary steps
sufficient to produce compliance as soon as reasonably practical.
LENDER'S RIGHTS. Upon default, Xxxxxx may declare the entire unpaid principal
balance on this Note and all accrued unpaid interest immediately due, without
notice, and then Borrower will pay that amount. Lender may hire or pay someone
else to help collect this Note if Borrower does not pay. Xxxxxxxx also will pay
Lender that amount. This includes, subject to any limits under applicable law,
Xxxxxx's attorneys' fees and Xxxxxx's legal expenses whether or not there is a
lawsuit, including attorneys' fees and legal expenses for bankruptcy proceedings
(including efforts to modify or vacate any automatic stay or injunction),
appeals, and any anticipated post-judgment collection services. If not
prohibited by applicable law, Xxxxxxxx also will pay any court costs, in
addition to all other sums provided by law. This Note has been delivered to
Lender and accepted by Xxxxxx in the State of Arizona. If there is a lawsuit,
Xxxxxxxx agrees upon Xxxxxx's request to submit to the jurisdiction of the
courts of Maricopa County, the State of Arizona. This Note shall be governed by
and construed in accordance with the laws of the State of Arizona.
COLLATERAL. For valuable consideration, the Borrower grants to Lender a security
interest in the Collateral to secure the Indebtedness and agrees that Xxxxxx
shall have the rights stated in the agreement with respect to the Collateral, in
addition to all other rights which Lender may have by law. The word "Collateral"
means the following described property of Borrower, whether now owned or
hereafter acquired, whether now existing or hereafter arising, and wherever
located: 50,000 shares of Reconditioned Systems, Inc. Common Stock. Borrower
shall not sell, offer to sell, or otherwise transfer or dispose of the
Collateral. Borrower shall not pledge, mortgage, encumber or otherwise permit
the Collateral to be subject to any lien, security interest, encumbrance, or
charge, other than the security interest provided for in this agreement. Unless
waived by Xxxxxx, all proceeds from any disposition of the Collateral (for
whatever reason) shall be held in trust for Lender and shall not be commingled
with any other funds; provided however, this requirement shall not constitute
consent by Lender to any sale or other disposition. Upon receipt, Xxxxxxxx shall
immediately deliver any such proceeds to Lender.
Borrower represents and warrants to Lender that it holds good and marketable
title to the Collateral, free and clear of all liens and encumbrances except for
the lien of this agreement. No financing statement covering any of the
Collateral is on file in any public office other than those which reflect the
security interest created by this agreement or to which Xxxxxx has specifically
consented. Xxxxxxxx shall defend Xxxxxx's rights in the Collateral against the
claims and demands of all other persons.
RIGHTS AND REMEDIES ON DEFAULT. If an Event of Default occurs under this
agreement, at any time thereafter, Lender shall have all the rights of a secured
party under the Arizona Uniform Commercial Code. In addition and without
limitations, Lender may exercise any one or more of the following rights and
remedies:
ACCELERATE INDEBTEDNESS. Xxxxxx may declare the entire indebtedness
immediately due and payable, without notice.
ASSEMBLE COLLATERAL. Lender may require Borrower to deliver to Lender all
or any portion of the Collateral and any and all certificates of title and
other documents relating to the Collateral.
SELL THE COLLATERAL. Lender shall have full power to sell, transfer, or
otherwise deal with the collateral or proceeds thereof in its own name or
that of Borrower.
GENERAL PROVISIONS. Lender may delay or forgo enforcing any of its rights or
remedies under this Note without losing them. Borrower and any other person who
signs, guarantees or endorses this Note, to the extent allowed by law, waive
presentment, demand for payment, protest and notice of dishonor. 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 Xxxxxx's security interest in the collateral; and take any other action
deemed necessary by Lender without the consent of or notice to anyone. All such
parties also agree that Xxxxxx may modify this loan without the consent of or
notice to anyone other than the party with whom the modification is made.
PRIOR TO SIGNING THIS NOTE, XXXXXXXX READ AND UNDERSTOOD ALL THE PROVISION OF
THIS NOTE, INCLUDING THE VARIABLE INTEREST RATE PROVISIONS. XXXXXXXX AGREES TO
THE TERMS OF THE NOTE AND ACKNOWLEDGES RECEIPT OF A COMPLETED COPY OF THE NOTE.
BORROWER:
XXXX X. XXXXXXXX
X: /s/ Xxxx X. Xxxxxxxx
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