Exhibit 10(p)

 

[GRAPHIC APPEARS HERE]

 

REVOLVING PROMISSORY NOTE

 

$6,500,000.00

      March 15, 2004

 

For value received, EQUUS II INCORPORATED, a Delaware corporation (“Borrower”,
whether one or more) does hereby promise to pay to the order of THE FROST
NATIONAL BANK (“Lender”), at P.O. Box 1600, San Antonio, Texas 78296, or at such
other address as Lender shall from time to time specify in writing, in lawful
money of the United States of America, the sum of SIX MILLION FIVE HUNDRED
THOUSAND AND NO/100 DOLLARS ($6,500,000.00), or so much thereof as from time to
time may be disbursed by Lender to Borrower under the terms of that certain Loan
Agreement dated of even date herewith between Borrower and Lender (the “Loan
Agreement”), and be outstanding, together with interest from date hereof on the
principal balance outstanding from time to time as hereinafter provided.
Interest shall be computed on a per annum basis of a year of 360 days and for
the actual number of days elapsed, unless such calculation would result in a
rate greater, than the highest rate permitted by applicable law, in which case
interest shall be computed on a per annum basis of a year of 365 days or 366
days in a leap year, as the case may be.

 

1. Payment Terms. Interest only on amounts outstanding hereunder shall be due
and payable quarterly as it accrues, on the 15th day of each June, September,
December and March during the term hereof, beginning June 15, 2004, and
continuing regularly and quarterly thereafter until March 31, 2005, when the
entire amount hereof, principal and interest then remaining unpaid, shall be
then due and payable; interest being calculated on the unpaid principal each day
principal is outstanding and all payments made credited to any collection costs
and late charges, to the discharge of the interest accrued and to the reduction
of the principal, in such order as Lender shall determine.

 

2. Late Charge. If a payment is made 10 days or more late, Borrower will be
charged, in addition to interest, a delinquency charge of (i) 5% of the unpaid
portion of the regularly scheduled payment, or (ii) $250.00, whichever is less.
Additionally, upon maturity of this Note, if the outstanding principal balance
(plus all accrued but unpaid interest) is not paid within 10 days of the
maturity date, Borrower will be charged a delinquency charge of (i) 5% of the
sum of the outstanding principal balance (plus all accrued but unpaid interest),
or (ii) $250.00, whichever is less. Borrower agrees with Lender that the charges
set forth herein are reasonable compensation to Lender for the handling of such
late payments.

 

3. Interest Rate. Interest on the outstanding and unpaid principal balance
hereof shall be computed at a per annum rate equal to the lesser of (a) a rate
equal to the Prime Rate of Lender, plus 50/100 percent (.50%) per annum, with
said rate to be adjusted to reflect any change in said Prime Rate at the time of
any such change or (b) the highest rate permitted by applicable law, but in no
event shall interest contracted for, charged or received hereunder plus any
other charges in connection herewith which constitute interest exceed the
maximum interest permitted by applicable law, said rate to be effective prior to
maturity (however such maturity is brought about). The “Prime Rate” shall mean
the prime rate of interest charged by Lender as established from time to time.
The Prime Rate is a reference rate and does not necessarily represent the lowest
or best rate actually charged to any customer.

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4. Default Rate. Matured unpaid principal and interest shall bear interest from
date of maturity until paid at the highest rate permitted by applicable law, or
if no such maximum rate is established by applicable law, at the rate stated
above plus five percent (5%) per annum.

 

5. Revolving Line of Credit. Under the Loan Agreement, Borrower may request
advances and make payments hereunder from time to time, provided that it is
understood and agreed that the aggregate principal amount outstanding from time
to time hereunder shall not at any time exceed $6,500,000.00. The unpaid balance
of this Note shall increase and decrease with each new advance or payment
hereunder, as the case may be. This Note shall not be deemed terminated or
canceled prior to the date of its maturity, although the entire principal
balance hereof may from time to time be paid in full. Borrower may borrow, repay
and re-borrow hereunder. All payments and prepayments of principal or interest
on this Note shall be made in lawful money of the United States of America in
immediately available funds, at the address of Lender indicated above, or such
other place as the holder of this Note shall designate in writing to Borrower.
If any payment of principal or interest on this Note shall become due on a day
which is not a Business Day (as hereinafter defined), such payment shall be made
on the next succeeding Business Day and any such extension of time shall be
included in computing interest in connection with such payment. As used herein,
the term “Business Day” shall mean any day other than a Saturday, Sunday or any
other day on which national banking associations are authorized to be closed.
The books and records of Lender shall be prima facie evidence of all outstanding
principal of and accrued and unpaid interest on this Note.

 

6. Prepayment. Borrower reserves the right to prepay, prior to maturity, all or
any part of the principal of this Note without penalty. Any prepayments shall be
applied first to accrued interest and then to principal. Borrower will provide
written notice to the holder of this Note of any such prepayment of all or any
part of the principal at the time thereof. All payments and prepayments of
principal or interest on this Note shall be made in lawful money of the United
States of America in immediately available funds, at the address of Lender
indicated above, or such other place as the holder of this Note shall designate
in writing to Borrower. All partial prepayments of principal shall be applied to
the last installments payable in their inverse order of maturity.

 

7. Default. It is expressly provided that upon default in the punctual payment
of this Note or any part hereof, principal or interest, as the same shall become
due and payable, and such default continues for a period of five (5) days after
written notice to Borrower given in accordance with the provisions of this Note,
or upon the occurrence of an event of default specified in any of the other Loan
Documents (as defined below), and such default continues for a period of fifteen
(15) days after written notice to Borrower given in accordance with the
provisions of this Note, the holder of this Note may, at its option, without
further notice or demand, (i) declare the outstanding principal balance of and
accrued but unpaid interest on this Note at once due and payable, (ii) refuse to
advance any additional amounts under this Note, (iii) foreclose all liens
securing payment hereof, (iv) pursue any and all other rights, remedies and
recourses available to the holder hereof, including but not limited to any such
rights, remedies or recourses under the Loan Documents, at law or in equity, or
(v) pursue any combination of

 

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the foregoing; and in the event default is made in the prompt payment of this
Note when due or declared due, and the same is placed in the hands of an
attorney for collection, or suit is brought on same, or the same is collected
through probate, bankruptcy or other judicial proceedings, then the Borrower
agrees and promises to pay all costs of collection, including reasonable
attorney’s fees.

 

8. No Usury Intended; Usury Savings Clause. In no event shall interest
contracted for, charged or received hereunder, plus any other charges in
connection herewith which constitute interest, exceed the maximum interest
permitted by applicable law. The amounts of such interest or other charges
previously paid to the holder of the Note in excess of the amounts permitted by
applicable law shall be applied by the holder of the Note to reduce the
principal of the indebtedness evidenced by the Note, or, at the option of the
holder of the Note, be refunded. To the extent permitted by applicable law,
determination of the legal maximum amount of interest shall at all times be made
by amortizing, prorating, allocating and spreading in equal parts during the
period of the full stated term of the loan and indebtedness, all interest at any
time contracted for, charged or received from the Borrower hereof in connection
with the loan and indebtedness evidenced hereby, so that the actual rate of
interest on account of such indebtedness is uniform throughout the term hereof.

 

9. Security. This Note has been executed and delivered pursuant the Loan
Agreement, and is secured by, inter alia, by a Pledge and Security Agreement
(the “Security Agreement”) of even date herewith by and between Borrower and
Lender, covering certain collateral as more particularly described therein.

 

This Note, the Loan Agreement, the Security Agreement and all other documents
evidencing, securing, governing, guaranteeing and/or pertaining to this Note,
including but not limited to those documents described above, are hereinafter
collectively referred to as the “Loan Documents.” The holder of this Note is
entitled to the benefits and security provided in the Loan Documents.

 

10. Joint and Several Liability; Waiver. Each maker, signer, surety and endorser
hereof, as well as all heirs, successors and legal representatives of said
parties, shall be directly and primarily, jointly and severally, liable for the
payment of all indebtedness hereunder. Lender may release or modify the
obligations of any of the foregoing persons or entities, or guarantors hereof,
in connection with this loan without affecting the obligations of the others.
Except as specifically provided herein all such persons or entities expressly
waive presentment and demand for payment, notice of default, notice of intent to
accelerate maturity, notice of acceleration of maturity, protest, notice of
protest, notice of dishonor, and all other notices and demands for which waiver
is not prohibited by law, and diligence in the collection hereof; and agree to
all renewals, extensions, indulgences, partial payments, releases or exchanges
of collateral, or taking of additional collateral, with or without notice,
before or after maturity. No delay or omission of Lender in exercising any right
hereunder shall be a waiver of such right or any other right under this Note.

 

11. Texas Finance Code. In no event shall Chapter 346 of the Texas Finance Code
(which regulates certain revolving loan accounts and revolving tri-party
accounts) apply to this Note. To the extent that Chapter 303 of the Texas
Finance Code is applicable to this Note, the “weekly ceiling” specified in such
article is the applicable ceiling; provided that, if any applicable law permits
greater interest, the law permitting the greatest interest shall apply.

 

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12. Governing Law, Venue. This Note is being executed and delivered, and is
intended to be performed in the State of Texas. Except to the extent that the
laws of the United States may apply to the terms hereof, the substantive laws of
the State of Texas shall govern the validity, construction, enforcement and
interpretation of this Note. In the event of a dispute involving this Note or
any other instruments executed in connection herewith, the undersigned
irrevocably agrees that venue for such dispute shall lie in any court of
competent jurisdiction in Bexar County, Texas.

 

13. Purpose of Loan. Borrower agrees that no advances under this Note shall be
used for personal, family or household purposes, and that all advances hereunder
shall be used solely for business, commercial, investment, or other similar
purposes.

 

14. Captions. The captions in this Note are inserted for convenience only and
are not to be used to limit the terms herein.

 

15. Financial Information. Borrower agrees to promptly furnish such financial
information and statements, including financial statements in a format
acceptable to Lender, lists of assets and liabilities, agings of receivables and
payables, inventory schedules, budgets, forecasts, tax returns, and other
reports with respect to Borrower’s financial condition and business operations
as Lender may request from time to time. This provision shall not alter the
obligation of Borrower to deliver to Lender any other financial statements or
reports pursuant to the terms of any other loan documents executed in connection
with this Note.

 

16. Notices. All notices, requests, demands and other communications required or
permitted hereunder shall be in writing, and shall be deemed to be given or
delivered when actually received by the party to whom directed, or, if earlier
and regardless of whether actually received, upon deposit in a regularly
maintained receptacle for the United States mail, registered or certified,
postage fully prepaid, addressed to the party to whom directed at its address
set forth below or at such other address as such party may have specified
previously by notice actually received by the other party:

 

If to Borrower:   

Equus II Incorporated

2929 Allen Parkway, Suite 2500

Houston, Texas 77019

Attn: Nolan Lehmann

If to Lender:   

The Frost National Bank

P.O. Box 1600

San Antonio, Texas 78296

Attn: Scott Baxter

Loan Number: 3259421-9001

 

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BORROWER:

EQUUS II INCORPORATED,

a Delaware corporation

By:   /s/    Nolan Lehmann

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Name:

 

Nolan Lehmann

Title:

 

President

 

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