Exhibit 10.2

 

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PROMISSORY NOTE

 

 

 

Borrower:  Surge Components, Inc. Lender: Citibank, N.A.   95 East Jefryn
Boulevard   6801 Colwell Boulevard   Deer Park, NY 11729   Irving, TX 75039

 

 

 

Principal Amount: $3,000,000.00   Date of Note: February 22, 2017

 

PROMISE TO PAY. To repay Borrower’s loan, Surge Components, Inc. (“Borrower”)
promises to pay to Citibank, N.A. (“Lender”), or order, In lawful money of the
United States of America, on demand, the principal amount of Three Million &
00/100 Dollars ($3,000,000.00) or so much as may be outstanding, together with
interest on the unpaid outstanding principal balance calculated from the date of
the first advance until repayment of all advances.

 

PAYMENT. Borrower will pay this loan In full Immediately upon Lender’s demand.
Borrower will pay regular monthly payments of all accrued unpaid interest due as
of each payment date, beginning March 22, 2017, with all subsequent interest
payments to be due on the same day of each month after that. Unless otherwise
agreed or required by applicable law, payments will be applied to the loan in
the following order: (1) interest; (2) principal; and (3) charges, fees and
penalties. Borrower will pay Lender at Lender’s address shown above or at such
other place as Lender may designate in writing.

 

ADVANCES. Borrower understands and agrees that all advances under this Note are
at Lender’s sole and absolute discretion and Lender, without notice to the
Borrower, may decline to make any advance requested by Borrower, regardless of
the manner in which the request is made.

 

VARIABLE INTEREST RATE. The interest rate on this Note is subject to change from
time to time based on changes in an independent index which is the greater of
the Prime Rate or the Minimum Interest Rate, each as hereafter defined (the
“Index”). The Index is not necessarily the lowest rate charged by Lender on its
loans. If the Index becomes unavailable during the term of this loan, Lender may
designate a substitute index after notifying Borrower. Lender will tell Borrower
the current Index rate upon Borrower’s request. The interest rate change will
not occur more often than each day the Index changes. Borrower understands that
Lender may make loans based on other rates as well. Interest on the unpaid
principal balance of this Note will be calculated as described in the “INTEREST
CALCULATION METHOD” paragraph using a rate equal to the Index. NOTICE: Under no
circumstances will the interest rate on this Note be more than the maximum rate
allowed by applicable law.

 

INTEREST CALCULATION METHOD. Interest on this Note is computed on a 365360
basis; that is, by applying the ratio of the interest rate over a year of 360
days, multiplied by the outstanding principal balance, multiplied by the actual
number of days the principal balance is outstanding. All interest payable under
this Note is computed using this method.

 

PRIME RATE. “Prime Rate” shall mean the prime rate of interest announced by
Lender from time to time at its principal office as its prime commercial lending
rate.

 

MINIMUM INTEREST RATE. “Minimum Interest Rate” shall mean two hundred (200)
basis points in excess of the rate of Interest determined by Lender in
accordance with its customary procedures and utilizing such electronic or other
quotation sources as it considers appropriate to be the prevailing rate per
annum in effect each banking day at which deposits in United States dollars for
a one month period, determined by Lender in its sole discretion, are offered to
Lender by first class banks in the London Interbank Market shortly after 11:00
a.m. (London time) two banking days prior to the date such rate of interest
shall be effective and applied to existing and future advances with respect to
this Note.

 

PREPAYMENT. Borrower may pay without fee all or a portion of the amount owed
earlier than it is due. Early payments will not, unless agreed to by Lender in
writing, relieve Borrower of Borrower’s obligation to continue to make payments
of accrued unpaid interest. Rather, early payments will reduce the principal
balance due. Borrower agrees not to send Lender payments marked “paid in full”,
“without recourse”, or similar language. If Borrower sends such a payment,
Lender may accept it without losing any of Lenders rights under this Note, and
Borrower will remain obligated to pay any further amount owed to Lender. All
written communications concerning disputed amounts, including any check or other
payment instrument that indicates that the payment constitutes “payment in full”
of the amount owed or that is tendered with other conditions or limitations or
as full satisfaction of a disputed amount must be mailed or delivered to:
Citibank, N.A.; 6801 Colwell Boulevard; Irving, TX 75039.

 

INTEREST AFTER DEFAULT - RELATED DOCUMENTS. Upon the failure by Borrower to
repay all amounts due under this Note upon Lender’s demand or observe or comply
with any of the terms or conditions herein or in any Related Documents, Lender,
at its option, may, if permitted under applicable law, increase the Interest
rate on this Note by 3.00%. The interest rate will not exceed the maximum rate
permitted by applicable law. The words “Related Documents” mean all promissory
notes, credit agreements, loan agreements, environmental agreements, guaranties,
security agreements, mortgages, deeds of trust, security deeds, collateral
mortgages, and all other instruments, agreements and documents, whether now or
hereafter existing, executed in connection with any and all loans and financial
accommodations from Lender to Borrower whether now or hereafter existing, and
however evidenced, including without limitation those loans and financial
accommodations described herein or described on any exhibit or schedule attached
to this Agreement from time to time. This section replaces and supersedes the
section below entitled “Interest After Default,” which shall be disregarded and
have no force or effect.

 

 

 

 

  PROMISSORY NOTE     (Continued) Page 2

 

 

LATE CHARGE. If a regularly scheduled interest payment is 15 days or more late,
Borrower will be charged 4.000% of the unpaid portion of the regularly scheduled
payment. If Lender demands payment of this loan, and Borrower does not pay the
loan in full within 15 days after Lender’s demand, Borrower also will be charged
4.000% of the unpaid portion of the sum of the unpaid principal plus accrued
unpaid interest.

 

INTEREST AFTER DEFAULT. Upon the failure of the Borrower to pay any amount
hereunder on demand, Lender, at its option. may, if permitted under applicable
law, increase the interest rate on this Note to 3.000 percentage points above
the index. The interest rate will not exceed the maximum rate permitted by
applicable law.

 

LENDER’S RIGHTS. Upon the failure of the borrower to pay any amount hereunder on
demand, Lender may declare the entire unpaid principal balance on this Note and
all accrued unpaid interest immediately due and payable.

 

ATTORNEYS’ FEES; EXPENSES. Borrower agrees to pay all costs and expenses Lender
incurs to collect this Note. This includes, subject to any limits under
applicable law, Lenders reasonable attorneys’ fees and Lender’s legal expenses
whether or not there is a lawsuit, including reasonable attorneys’ fees and
expenses for bankruptcy proceedings (including efforts to modify or vacate any
automatic stay or injunction), and appeals. If not prohibited by applicable law,
Borrower also will pay any court costs, in addition to all other sums provided
by law.

 

GOVERNING LAW. This Note will be governed by federal law applicable to Lender
and, to the extent not preempted by federal law, the laws of the State of New
York without regard to Its conflicts of law provisions.

 

CHOICE OF VENUE. If there is a lawsuit, Borrower agrees upon Lender’s request to
submit to the jurisdiction of the courts of New York County, State of New York.
Nothing herein shall affect the right of the Lender to bring any action or
proceeding against the Borrower or its property in the courts of any other
jurisdiction.

 

RIGHT OF SETOFF. To the extent permitted by applicable law, Lender reserves a
right of setoff in all Borrowers accounts with Lender and its subsidiaries and
affiliates (whether checking, savings, or some other account and whether
evidenced by a certificate of deposit). This includes all accounts Borrower
holds jointly with someone else and all accounts Borrower may open in the
future. However, this does not include any IRA or Keogh accounts, or any trust
accounts for which setoff would be prohibited by law. Borrower authorizes
Lender, to the extent permitted by applicable law, to charge or setoff all sums
owing on the indebtedness against any and all such accounts, and, at Lender’s
option, to administratively freeze all such accounts to allow Lender to protect
Lender’s charge and setoff rights provided in this paragraph.

 

LINE OF CREDIT. This Note evidences a revolving line of credit. Advances under
this Note, as well as directions for payment from Borrower’s accounts, may be
requested orally or in writing by Borrower or by an authorized person. Lender
may, but need not, require that all oral requests be confirmed in writing.
Borrower agrees to be liable for all sums either” (A) advanced in accordance
with the instructions of an authorized person or (B) credited to any of
Borrower’s accounts with Lender. The unpaid principal balance owing on this Note
at any time may be evidenced by endorsements on this Note or by Lender’s
internal records, including daily computer print-outs. Lender will have no
obligation to advance funds under this Note if: (A) Borrower or any guarantor is
in default under the terms of this Note or any agreement that Borrower or any
guarantor has with Lender, including any agreement made in connection with the
signing of this Note; (B) Borrower or any guarantor ceases doing business or is
insolvent; (C) any guarantor seeks, claims or otherwise attempts to limit,
modify or revoke such guarantor’s guarantee of this Note or any other loan with
Lender; (D) Borrower has applied funds provided pursuant to this Note for
purposes other than those authorized by Lender; or (E) Lender in good faith
believes itself insecure.

 

 

 

 

  PROMISSORY NOTE     (Continued) Page 3

 

 

LINE OF CREDIT - ONLINE ACCESS. Requests for advances under this Note to bear
interest at the Prime Rate or the Minimum Interest Rate, as well as payments
from Borrower’s accounts, may also be made on Lender’s online banking system.
Borrower agrees to be liable for all sums either (A) advanced in accordance with
the online instructions or (B) credited to any of Borrower’s accounts with
Lender.

 

JURY WAIVER. BORROWER HEREBY WAIVES THE RIGHT TO A TRIAL BY JURY IN ANY ACTION,
PROCEEDING, OR COUNTERCLAIM ARISING HEREUNDER OR IN CONNECTION HEREWITH TO THE
EXTENT PERMITTED BY APPLICABLE LAW.

 

SUCCESSOR INTERESTS. The terms of this Note shall be binding upon Borrower, and
upon Borrower’s heirs, personal representatives, successors and assigns, and
shall inure to the benefit of Lender and its successors and assigns.

 

GENERAL PROVISIONS. This Note is payable on demand. The inclusion of specific
default provisions or rights of Lender shall not preclude Lender’s right to
declare payment of this Note on its demand. If any part of this Note cannot be
enforced, this fact will not affect the rest of the Note. 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, 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 Lender’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 Lender may
modify this loan without the consent of or notice to anyone other than the party
with whom the modification is made. The obligations under this Note are joint
and several.

 

BORROWER:

 

SURGE COMPONENTS, INC.                 By: /s/ Ira Levy   By: /s/ Steven Lubman
  Ira Levy, President/Chief Executive Officer of Surge Components, Inc.    
Steven Lubman, Vice President of Surge Components, Inc.