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Exhibit 10.4
 
REVOLVING PROMISSORY DEMAND NOTE

   
$1,062,000.00
Ashland, Kentucky
 
April 30, 2012

 
FOR VALUE RECEIVED, the undersigned, TX HOLDINGS, INC., herein referred to as
“Debtor”, promises to pay to the order of WILLIAM L. SHREWSBURY, of 9413 Collier
Road, Catlettsburg, KY 41129, herein referred to as “Lender”, the principal sum
of ONE MILLION SIXTY-TWO THOUSAND and NO/100 DOLLARS ($1,062,000.00) (or, if
less, the unpaid principal balance shown on an attachment to this note or on
Lender’s loan account records, this Note evidencing a revolving credit line and
the aggregate unpaid principal amount of all advances and/or re-advances to
Debtor), together with interest thereon at the rate of FIVE PERCENT (5%) per
annum, the entire outstanding indebtedness, together with all interest accrued
thereon and other amounts that may then be owing hereunder, shall mature and
become due and payable on DEMAND or on April 30, 2015, whichever shall first
occur.
 
Debtor reserves the right to prepay the whole or any part of this Note at any
time without penalty or premium.
 
This Note represents and evidences an arrangement that allows the Debtor to
obtain advances without giving Lender a separate note for each advance. Lender
will record the date and amount of each advance on an attachment to this Note or
on Lender’s loan account records. Debtor agrees that each advance so recorded
shall be prima facie evidence that an advance was made on the date and in the
amount indicated. The number of advances and the amount of each advance are not
limited, except that the principal balance outstanding at any time shall not
exceed the face amount of this Note. However, in no event shall Lender be
obligated to advance or loan any funds to Debtor. Rather, this Note sets forth
the terms of Debtor’s obligations to repay Lender for advances or loans made by
Lender to Debtor. Amounts once borrowed and repaid under this Note may be
re-borrowed. Debtor acknowledges Lender has advanced the sum of ONE MILLION
SIXTY-TWO THOUSAND and NO/100 DOLLARS ($1,062,000.00) to Debtor in accordance
with Debtor’s request and Debtor agrees to repay, in accordance with the terms
of this Note, said sum as well as any additional advances made by Lender to
Debtor after the date hereof, not to exceed the total principal sum of ONE
MILLION SIXTY-TWO THOUSAND and NO/100 DOLLARS ($1,062,000.00), including all
sums advanced to Debtor by Lender prior to the date hereof.
 
Prior to maturity, principal and any overdue interest shall bear interest
computed daily (on the basis of a 360-day year and actual days elapsed) as
herein set forth.
 
Concurrently with any prepayment of the principal of this Note, Debtor shall pay
the unpaid interest accrued on the principal being prepaid.

 
 

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If Debtor fails to pay any amount due hereunder, or any fee in connection
herewith, in full within ten (10) days after its due date, Debtor, in each case,
will incur and shall pay a late fee equal to the greater of Twenty Five and
No/100 Dollars ($25.00) or Five Percent (5%) of the unpaid amount. The payment
of a late charge will not cure or constitute a waiver of any Event of Default
under this Note.
 
Except as otherwise agreed in writing, payments will be applied first to accrued
but unpaid interest and fees, in that order, in the order of their respective
due dates, until paid in full, then to late charges and then to principal;
provided, however, that if a payment so applied would pay the principal of this
Note in full, but leave late charges outstanding, such payment shall instead be
applied to the principal portion of the final installment.
 
In its discretion, Lender may, from time to time, unilaterally change any
provision for the application of payments by mailing a written notice to Debtor
of the change. The notice shall be mailed to the address indicated herein or
such other address that Debtor may furnish in writing to Lender and shall be
mailed not less than fifteen (15) days prior to the effective date of such
change.
 
If this Note is not paid in full at maturity (whether by Lender’s demand for
payment, lapse of time, acceleration of maturity or otherwise), the interest
rate otherwise in effect hereunder shall be increased by Three Percent (3%) per
annum.
 
The occurrence of any of the following shall constitute an Event of Default
hereunder: (a) this Debt or any part thereof shall not be paid in full promptly
when due (whether by Lender’s demand for payment, lapse of time, acceleration of
maturity or otherwise); (b) any Obligor shall be dissolved; (c) any
representation or warranty made by any Obligor in this Note or any Related
Writing shall be false or erroneous in any material respect; (d) any Obligor
shall fail or omit to perform or observe any agreement made by that Obligor in
this Note or any Related Writing; (e) a judgment shall be entered against any
Obligor in any court of record; (f) any deposit account of any Obligor is
attached or levied upon; (g) any voluntary petition by or involuntary petition
against any Obligor shall be filed pursuant to any chapter of any bankruptcy
code or any Obligor shall make an assignment for the benefit of creditors, or
there shall be any other marshalling of the assets and liabilities of any
Obligor for the benefit of the Obligor’s creditors; or, (h) any Obligor enters
into any merger or consolidation or sells, leases or otherwise disposes of all
or substantially all of such Obligor’s assets in any manner other than in the
ordinary course of business. Upon the occurrence of an Event of Default, the
holder of this Note may, in its sole discretion, declare this Note to be due and
payable and, if applicable, that Debtor no longer be permitted to obtain
advances; and the principal of and interest on this Note shall thereupon become
immediately payable in full, without any presentment, demand or notice of any
kind, which Debtor hereby waives. Debtor will pay to Lender all costs and
expenses of collection of this Note, including, without limitation, attorneys’
fees.

 
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In this Note, (a) Debt means, collectively, all monetary liabilities, and any
charges or expenses incurred in connection therewith, now or hereafter owing by
the Debtor or Obligor in question, including, without limitation, every such
liability whether owing by such Person or one (1) of such Persons alone or
jointly, severally or jointly and severally, whether owing absolutely or
contingently, or directly or indirectly, and whether created by loan, guaranty
or other contract or by quasi-contract, tort, statute or other operation of law;
(b) Obligor means any Person who is, or shall become, obligated, or whose
property is, or shall serve as, collateral for the payment of the debt evidenced
by this Note, or any part hereof in any manner and, in addition to Debtor,
includes, without limitation, any maker, endorser, guarantor, subordinating
creditor, assignor, pledgor, mortgagor or hypothecator of property; (c) Related
Writing means a writing of any form or substance signed by any Obligor (whether
as principal or agent) or by any attorney, accountant or other representative of
any Obligor and received by Lender in respect of Debtor’s Lender Debt or any
part thereof, including, without limitation, the resolution of Debtor’s Board of
Directors dated December 10, 2011, all documentation evidencing Lender’s
advances made to Debtor since December 12, 2011, and thereafter, any credit
application, credit agreement, request for advance, reimbursement agreement,
financial statement, promissory note, guaranty, indenture, mortgage, security
agreement, authorization, subordination agreement, certificate, opinion or any
similar writing, but shall not include any commitment letter issued by Lender,
without regard to whether Debtor or any other Person signed or acknowledged
receipt thereof; and, (d) Person means a natural person or entity of any kind,
including, without limitation, any corporation, partnership, trust, governmental
body or any other form or kind of entity.
 
Debtor hereby authorizes Lender to share all information, including, without
limitation, all credit and financial information, and all loan applications and
information provided in connection therewith, pertaining or relating to Debtor,
with Lender, or with any actual or proposed participant in or assignee of all or
any part of Lender’s interest in or rights under this Note, or with any other
person or entity reasonably deemed incidental by Lender to the administration of
the indebtedness evidenced hereby. Debtor expressly waives, releases and
relinquishes any and all claims, demands and/or causes of action against Lender,
his successors and/or assigns arising from or pertaining in any way to any such
disclosure of information.
 
In no event shall the interest rate in effect on this Note exceed the maximum
rate permissible under the law governing this Note.
 
If Debtor consists of more than one Person, Debtor shall be jointly and
severally liable on this Note.
 
Any holder’s delay or omission in the exercise of any right under this Note
shall not operate as a waiver of that right or of any other right under this
Note.
 
If any provision of this Note is determined by a court of competent jurisdiction
to be invalid, illegal or unenforceable, that determination shall not affect any
other provision of this Note, and each such other provision shall be construed
and enforced as if the invalid, illegal or unenforceable provision were not
contained herein.

 
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This Note and the Related Writings set forth the entire agreement between the
parties regarding the transactions contemplated hereby, and supercede all prior
agreements, commitments, discussions, representations and understandings,
whether written or oral, and any and all contemporaneous oral agreements,
commitments, discussions, representations and understandings between the parties
relating to the subject matter hereof.
 
No amendment, modification or supplement to this Note or any Related Writing
shall be binding unless executed in writing by all parties thereto, and this
provision shall not be subject to waiver by any party and shall be strictly
enforced.
 
This Note shall be governed by the laws of the Commonwealth of Kentucky.

     
DEBTOR:
     
TX HOLDINGS, INC.
       
By
/s/ Richard Novack
   
Richard Novack
 
Its President

 
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