PROMISSORY NOTE

 

$3,074,021.00

Dallas, Texas May 20, 2019

 

FOR VALUE RECEIVED, the undersigned, DGSE Companies, LLC, a Delaware limited
liability company (“Maker”), promises to pay to the order of John R. Loftus
(together with all subsequent holders of this Promissory Note, “Payee”) the
principal sum of Three Million Seventy-Four Thousand Twenty-One and No/100
Dollars ($3,074,021.00), together with interest on the unpaid principal balance
from time to time outstanding, as herein specified.

 

The principal of and accrued interest on this Promissory Note shall be due and
payable as set forth herein in lawful money of the United States of America in
Dallas, Texas at the office of Payee at 15850 Dallas Parkway, Dallas, Texas
75248, or such other place as Payee may from time to time designate in writing
to Maker. All payments on this Promissory Note shall, at the option of Payee, be
applied, first, to the payment of accrued but unpaid interest and any remainder
shall be applied to the reduction of the principal balance hereof.

 

1. Payments of Interest and Principal. The outstanding principal balance hereof
and accrued but unpaid interest shall be due and payable as follows:

 

A. Monthly Payments. Payments of principal and accrued but unpaid interest in
the amount of $41,866.05 shall be due and payable in monthly installments,
commencing June 16, 2019, with like installments of principal and accrued but
unpaid interest in the amount of $41,866.05 being due and payable on the 16th
day of each successive month thereafter, through and including April 16, 2024;
and

 

B. Maturity. The entire outstanding principal balance of this Promissory Note,
together with all accrued but unpaid interest shall be fully due and payable on
May 16, 2024.

 

 2. Interest. The outstanding principal balance of this Promissory Note shall
bear interest prior to maturity at a fixed rate of six percent (6%) per annum
based on a 365 day year and the actual number of days elapsed. All past due
principal and interest shall bear interest at the Maximum Lawful Rate. All
payments shall be applied first to accrued but unpaid interest and then to
principal.

 

3. Prepayments. Maker may prepay the principal of this Promissory Note, in whole
or in part, at any time without penalty or premium. All prepayments to principal
shall be applied to principal in the inverse order of its stated maturity.

 

4. Events of Default and Remedies. Without further notice or demand, all of
which are hereby waived, the entire unpaid principal balance of, and all accrued
interest on, this Promissory Note shall immediately become due and payable at
the option of the holder hereof upon the occurrence of an Event of Default (as
hereinafter defined). Upon the occurrence of an Event of Default, Payee may
exercise any and all remedies available at equity or under applicable law
(including, without limitation, acceleration of the indebtedness evidenced by
this Promissory Note and commencement of foreclosure proceedings), may offset
against this Promissory Note any sum or sums owed by the holder hereof to Maker
or any guarantor, and/or may proceed to protect and enforce its rights either by
suit in equity and/or by action at law, or by other appropriate proceedings,
whether for the specific performance of any covenant or agreement contained in
this Promissory Note or in any of the other Loan Documents, or in aid of the
exercise of any power or right granted by this Promissory Note or to enforce any
other legal or equitable right of the holder of this Promissory Note.

 

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Any one or more of the following events shall constitute an “Event of Default”
hereunder:

 

(a) The failure or refusal of Maker to pay within five (5) days of when due any
amount payable hereunder;

 

(b) The failure or refusal of Maker to punctually and properly to perform,
observe and comply with any covenant, agreement or condition contained herein or
in any other document executed by Maker in connection herewith (together with
this Promissory Note, the “Loan Documents”), which remains uncured thirty (30)
days after the receipt of written notice of such from Payee;

 

(c) Any representation or warranty made by Maker to Payee in any of the Loan
Documents or in furtherance of the requirements of any of the Loan Documents
shall be incorrect or misleading in any material respect at the time when made;

 

(d) If a receiver, liquidator or trustee of Maker or of any substantial portion
of Maker’s properties, shall be appointed; if a petition in bankruptcy or for
reorganization or for protection under any applicable law shall have been filed
against Maker and the same is not withdrawn, dismissed, cancelled or terminated
within sixty (60) days; if Maker make an assignment for the benefit of creditors
or files or consent to the filing of a petition in bankruptcy or for protection
under any applicable law or commence or consent to the commencement of any
proceeding under the Federal Bankruptcy Code or any other federal or state law,
now or hereafter in effect, relating to the reorganization of Maker or the
arrangement or rearrangement or readjustment of the debts of Maker or having the
effect of enjoining or staying the exercise of rights or remedies by creditors;
if there is an attachment or sequestration of or relating to any substantial
portion of any assets of Maker and the same is not promptly discharged;

 

(e) If Maker shall cause, institute or fail to contest any proceeding for the
dissolution or termination of Maker;

 

(f) If Maker ceases to do business or terminates its business as presently
conducted for any reason whatsoever; or

 

(g) The sale, encumbrance or other transfer of a substantial portion of the
assets without Payee’s prior written consent.

 

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5. Cumulative Rights. No delay on the part of the holder of this Promissory Note
in the exercise of any power or right under this Promissory Note, or under any
of the other Loan Documents, shall operate as a waiver thereof, nor shall a
single or partial exercise of any such power or right. Enforcement by the holder
of this Promissory Note of any security for the payment hereof shall not
constitute any election by it of remedies so as to preclude the exercise of any
other remedy available to it.

 

6. Waiver. Maker, and each surety, endorser, guarantor and other party ever
liable for the payment of any sum of money payable on this Promissory Note,
jointly and severally waive demand, presentment, protest, notice of nonpayment,
notice of intention to accelerate, notice of protest, notice of acceleration and
any and all lack of notice or diligence or any delay in collection or the filing
of suit hereon which may occur, and agree that their liability on this
Promissory Note shall not be affected by any renewal or extension in the time of
payment hereof, by any indulgences, by any release of any party primarily or
secondarily liable hereon, or by any release, substitution, subordination or
change in any security for the payment of this Promissory Note.

 

7. Late Fee; NSF Fee. If Payee has not received the full amount of any monthly
payment within fifteen (15) days after the payment is due, Maker shall pay to
Payee a late charge equal to the lesser of (i) Nine Hundred Ninety-Nine and
99/100 Dollars ($999.99) or (ii) five percent (5%) of the overdue payment, but
not to exceed the maximum amount permitted by law. This charge may only be
assessed once on each late payment. For any check returned for insufficient
funds, Maker shall pay to Payee an NSF fee of $30.00 per item.

 

8. Attorneys’ Fees and Costs. In the event this Promissory Note is placed in the
hands of an attorney for collection, or in the event this Promissory Note is
collected in whole or in part through legal proceedings of any nature, then and
in any such case, Maker promises to pay all costs of collection, including, but
not limited to, reasonable attorneys’ fees incurred by the holder hereof on
account of such collection, whether or not suit is filed.

 

9. Notices. Any notice, consent or other communication required or permitted to
be given under any of the Loan Documents to Payee or Maker must be in writing
and delivered in person or mailed by registered or certified mail, return
receipt requested, postage prepaid, as follows:

 

  If to Maker: DGSE Companies, LLC     Attention: CFO     13022 Preston Road    
Dallas, Texas 75240         If to Payee:  John R. Loftus   15850 Dallas Parkway
    Dallas, Texas 75248

 

or such other address as shall be set forth in a notice from the appropriate
party given in compliance with this Section 9. Any such notice, consent or other
communication shall be deemed given when delivered in person or, if mailed, when
duly deposited in the United States mail.

 

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10. GOVERNING LAW. THE LAWS OF THE STATE OF TEXAS SHALL GOVERN THE CONSTRUCTION,
VALIDITY, ENFORCEMENT, AND INTERPRETATION HEREOF, EXCEPT TO THE EXTENT FEDERAL
LAWS OTHERWISE GOVERN THE VALIDITY, CONSTRUCTION, ENFORCEMENT AND INTERPRETATION
HEREOF.

 

11. Headings; Construction. The headings of the sections of this Promissory Note
are inserted for convenience only and shall not be deemed to constitute a part
hereof, words used herein of any gender shall be construed to include any other
gender where appropriate, and words used herein which are either singular or
plural shall be construed to include the other where appropriate.

 

12. Successors and Assigns. All of the covenants, stipulations, promises and
agreements in this Promissory Note contained by or on behalf of Maker shall bind
its successors and assigns, whether so expressed or not; provided, however, that
Maker may not, without the prior written consent of Payee, assign any rights,
duties, or obligations under this Promissory Note. Without the consent of Maker,
Payee may, in its sole discretion, at any time or from time to time while any
portion of the indebtedness evidenced hereby remains unpaid, transfer, sell,
assign or pledge this Promissory Note (or any portion thereof) and any of the
other Loan Documents, and in connection therewith Payee may provide information
concerning the Loan Documents to any future transferee or participant
(including, without limitation, financial information for Maker).

 

13. Maximum Interest Rate. It is expressly stipulated and agreed to be the
intent of Maker and Payee at all times to comply strictly with the applicable
Texas law governing the maximum rate or amount of interest payable on this
Promissory Note (or applicable United States federal law to the extent that it
permits Payee to contract for, charge, take, reserve or receive a greater amount
of interest than under Texas law). If the applicable law is ever judicially
interpreted so as to render usurious any amount: (i) contracted for, charged,
taken, reserved or received pursuant to this Promissory Note, any of the other
Loan Documents or any other communication or writing by or between Maker and
Payee related to the transaction or transactions that are the subject matter of
the Loan Documents; (ii) contracted for, charged or received by reason of
Payee’s exercise of the option to accelerate the maturity of this Promissory
Note; or (iii) Maker will have paid or Payee will have received by reason of any
voluntary prepayment by Maker of this Promissory Note, then it is Maker’s and
Payee’s express intent that all amounts charged in excess of the Maximum Lawful
Rate shall be automatically cancelled, ab initio, and all amounts in excess of
the Maximum Lawful Rate theretofore collected by Payee shall be credited on the
principal balance of this Promissory Note (or, if this Promissory Note has been
or would thereby be paid in full, refunded to Maker), and the provisions of this
Promissory Note and the other Loan Documents immediately be deemed reformed and
the amounts thereafter collectible hereunder and thereunder reduced, without the
necessity of the execution of any new document, so as to comply with the
applicable law, but so as to permit the recovery of the fullest amount otherwise
called for hereunder and thereunder; provided, however, if this Promissory Note
has been paid in full before the end of the stated term of this Promissory Note,
then Maker and Payee agree that Payee shall, with reasonable promptness after
Payee discovers or is advised by Maker that interest was received in an amount
in excess of the Maximum Lawful Rate, either refund such excess interest to
Maker and/or credit such excess interest against this Promissory Note then owing
by Maker to Payee. Maker hereby agrees that as a condition precedent to any
claim seeking usury penalties against Payee, Maker will provide written notice
to Payee, advising Payee in reasonable detail of the nature and amount of the
violation, and Payee shall have sixty (60) days after receipt of such notice in
which to correct such usury violation, if any, by either refunding such excess
interest to Maker or crediting such excess interest against this Promissory Note
then owing by Maker to Payee. All sums contracted for, charged or received by
Payee for the use, forbearance or detention of any debt evidenced by this
Promissory Note shall, to the extent permitted by applicable law, be amortized
or spread, using the actuarial method, throughout the stated term of this
Promissory Note (including any and all renewal and extension periods) until
payment in full so that the rate or amount of interest on account of this
Promissory Note does not exceed the Maximum Lawful Rate from time to time in
effect and applicable to this Promissory Note for so long as debt is
outstanding. In no event shall the provisions of Chapter 346 of the Texas
Finance Code (which regulates certain revolving credit loan accounts and
revolving triparty accounts) apply to this Promissory Note. Notwithstanding
anything to the contrary contained herein or in any of the other Loan Documents,
it is not the intention of Payee to accelerate the maturity of any interest that
has not accrued at the time of such acceleration or to collect unearned interest
at the time of such acceleration. As used herein, the term “Maximum Lawful Rate”
shall mean the maximum lawful rate of interest which may be contracted for,
charged, taken, received or reserved by Payee in accordance with the applicable
laws of the State of Texas (or applicable United States federal law to the
extent that it permits Payee to contract for, charge, take, receive or reserve a
greater amount of interest than under Texas law), taking into account all
Charges (hereinafter defined) made in connection with the transaction evidenced
by this Promissory Note and the other Loan Documents. As used herein, the term
“Charges” shall mean all fees, charges and/or any other things of value, if any,
contracted for, charged, received, taken or reserved by Payee in connection with
the transactions relating to this Promissory Note and the other Loan Documents,
which are treated as interest under applicable law. To the extent that Payee is
relying on Chapter 303 of the Texas Finance Code to determine the Maximum Lawful
Rate payable on this Promissory Note, Payee will utilize the weekly ceiling from
time to time in effect as provided in such Chapter 303, as amended. To the
extent United States federal law permits Payee to contract for, charge, take,
receive or reserve a greater amount of interest than under Texas law, Payee will
rely on United States federal law instead of such Chapter 303 for the purpose of
determining the Maximum Lawful Rate. Additionally, to the extent permitted by
applicable law now or hereafter in effect, Payee may, at its option and from
time to time, utilize any other method of establishing the Maximum Lawful Rate
under such Chapter 303 or under other applicable law by giving notice, if
required, to Maker as provided by applicable law now or hereafter in effect.

 

14. Payments; Business Day. Each payment or prepayment hereon must be paid at
the office of Payee specified above in lawful money as therein specified and in
funds which are or will be available for immediate use by Payee at such office
on or before 1:00 p.m., Dallas, Texas time, on the day such payment or
prepayment is due. In any case where a payment of principal or interest hereof
is due on a day which is not a Business Day, Maker, shall be entitled to delay
such payment until the next succeeding Business Day, but interest shall continue
to accrue until the payment is, in fact, made. As used herein “Business Day”
means every day on which banking associations located in Texas are allowed to be
open for general lending business.

 

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15. Loan Payable at Maturity. IT IS EXPRESSLY UNDERSTOOD AND AGREED THAT THIS
PROMISSORY NOTE WILL REQUIRE A “BALLOON” PAYMENT OF ALL UNPAID PRINCIPAL AND
ACCRUED BUT UNPAID INTEREST ON THE MATURITY DATE. THE PRINCIPAL INDEBTEDNESS
EVIDENCED BY THIS PROMISSORY NOTE IS PAYABLE IN FULL AT MATURITY. MAKER MUST
REPAY THE ENTIRE PRINCIPAL BALANCE OF THIS PROMISSORY NOTE AND ACCRUED BUT
UNPAID INTEREST THEN DUE. PAYEE IS UNDER NO OBLIGATION TO REFINANCE THIS
PROMISSORY NOTE AT THAT TIME.

 

IN WITNESS WHEREOF, the undersigned has executed this Promissory Note as of the
date and year first above written.

 

 

MAKER: 

      DGSE Companies, LLC, a Delaware limited liability company         By: /s/
Marshall Scott Mosley   Name: Marshall Scott Mosley   Title: President/Manager

 

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