exv10w1



 





Exhibit 10.1




AZLIFE Loan No. 10074




PROMISSORY NOTE




			
	$11,000,000.00
	 	November 14, 2007






     FOR VALUE RECEIVED, CM REAL ESTATE,
LLC, a Texas limited liability company (“Maker”), having
an office and usual place of business at 650 S. Royal Lane, Coppell, Texas 75019, promises to pay
to the order of ALLIANZ LIFE INSURANCE COMPANY OF NORTH AMERICA, a Minnesota corporation
(“Lender”), the principal sum of Eleven Million and No/l00 Dollars (US $11,000,000.00), together
with interest from the date hereof on the principal amount outstanding from time to time at the
interest rate and payable on the dates set forth below. The payment of such sum is secured by a
Deed of Trust, Mortgage and Security Agreement of even date herewith (“Deed of Trust”) on real
estate located in Dallas County, Texas, legally described in the Deed of Trust, the Loan Documents
(as defined in the Deed of Trust), and other security (collectively, the “Mortgaged Property”).



I.  Rates and Calculation of Interest




     The principal balance outstanding from time to time shall bear interest at the rate of six and
one-half percent (6.50%) per year (the “Note Rate”). Except to the extent otherwise required by
paragraph III.G below, interest shall be computed on the basis of a 360-day year comprised of
twelve (12) months of thirty (30) days each.



II.  Payment of Principal and Interest




     Principal and interest shall be payable in lawful money of the United States to Lender c/o
Allianz of America, Inc., Attention: Real Estate Department, 55 Greens Farms Road, P.O. Box 5160,
Westport, Connecticut 06881-5160, or at such other place as the Lender may from time to time
designate in writing, such principal sum and interest to be paid in the following manner:



     A. For purposes
hereof, “Payment Date” means the tenth (10th) day of each consecutive calendar
month during the term of this Note commencing January 10, 2008. Interest only from and including
the date of this Note through and including December 9, 2007, shall be paid in advance on the date
of this Note.



     B. On each Payment Date during the period from and including January 10, 2008, through and
including November 10, 2017, payments of principal and interest in the amount of Ninety Five
Thousand Eight Hundred Twenty Two and No/100 Dollars ($95,822.00) shall be due and payable (the
“Monthly Installment”).



     C. The entire remaining principal amount, together with any accrued and unpaid interest and
all other amounts due under the Loan Documents (the “Final Installment”), shall be due and payable
in full on December 10, 2017 (the “Maturity Date”). All amounts due under this Note shall be
payable without setoff, counterclaim or any other deduction whatsoever.



     D. 1. Upon fifteen (15) days advance written notice to Lender, this Note may be prepaid in
full at any time subject to a prepayment premium that may be substantial. Such premium represents
consideration to Lender for loss of yield and reinvestment cost. The “Prepayment Premium” shall be an amount
equal to the positive difference, if any, between





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(a) the present value at the time of prepayment of the remaining scheduled Monthly Installments,
plus the present value at the time of prepayment of the Final Installment, both such present values
to be determined by discounting on a monthly basis at a rate equal to the Index Rate (as
hereinafter defined), and (b) the unpaid principal balance of this Note at the time of prepayment.
The Index Rate is defined as the current yield at the time of prepayment of the Treasury Constant
Maturity (“TCM”) referenced in the weekly Federal Reserve Statistical Release H-15 (519) for the
week immediately preceding the date on which written request for prepayment is received by Lender
for the maturity most closely corresponding to the remaining term of this Note, as appropriately
interpolated. The determination by Lender of the Index Rate (and any interpolation made by Lender
in connection with such determination) shall be binding upon Maker absent manifest error.



          2. If the TCM ceases to be published during the term of this Note, then the Index Rate shall
be the average of the yield, for the five (5) business days preceding the date of prepayment of
this Note, of the US Treasury Note or Bond having a remaining term to maturity and coupon rate most
closely corresponding to the remaining term to maturity and interest rate of this Note. The Index
Rate will apply for any prepayment made within thirty (30) days after such request is received by
Lender, after which a more recent Index Rate may be used at the sole discretion of Lender. If
Lender exercises its right to accelerate the maturity date following default by Maker, tender of
payment of the amount necessary to satisfy the entire indebtedness made thereafter at any time
prior to the completion of transfer of ownership of the Mortgaged Property to Lender pursuant to a
foreclosure sale, either by Maker, its successors or assigns or by anyone on behalf of Maker, shall
be deemed to constitute an evasion of the prepayment provisions of this Note and shall be deemed to
be a voluntary prepayment, and to the extent permitted by law such prepayment shall include the
Prepayment Premium required to be paid as a result of the exercise of the prepayment privilege set
forth herein. No prepayment premium will be payable if prepayment is scheduled to be and is
received during the last three (3) months of the scheduled term of this Note. To the extent
permitted by law, the Prepayment Premium shall be payable regardless of whether the loan evidenced
by this Note is prepaid voluntarily or involuntarily.



          3. Notwithstanding anything to the contrary contained herein, no Prepayment Premium shall be
due and payable to the extent Lender elects in accordance with the terms of the Deed of Trust to
apply proceeds of insurance or condemnation awards to amounts due under this Note.



     E. All payments shall be applied first to Costs (as hereinafter defined), and interest accrued
thereon; then to the payment of any escrows for taxes and insurance required by the Deed of Trust;
then to late charges as defined below, and interest accrued thereon to the extent permitted by
applicable law; then to accrued and unpaid interest, and the remainder to the reduction of the
principal balance of this Note outstanding from time to time. The term “Costs” shall mean any sums
advanced by Lender pursuant to paragraph III.A. below. Each installment of principal and
interest, unless received by Lender within ten (10) days after the Payment Date when such
installment is due, shall bear interest from such Payment Date at an annual rate of interest (the
“Default Rate”) equal to the lesser of (a) the Note Rate plus five percent (5%), or (b) the maximum
nonusurious rate of interest allowed by applicable law.





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III.
Additional Terms and Conditions




     A. Lender
may at its sole discretion and without notice to or demand on Maker
advance funds to pay any of the obligations of Maker hereunder not paid before the expiration of
applicable grace periods that arise under this Note or under the Loan Documents, including tax
and insurance payments. Lender may also, at its sole discretion and without notice to or
demand on Maker, perform any act required of Maker under this Note or under the Loan Documents,
including specifically, without limiting its general powers, appearing in and defending any action
and performing any obligation of the lessor under any leases assigned to Lender as
security for the payment of this Note, and in exercising any such powers paying necessary costs and
expenses, employing counsel and incurring and paying attorneys’ fees. Any sums advanced, spent or
incurred by Lender pursuant to this paragraph shall be added to the principal due under this Note
and shall accrue interest at the Default Rate; provided, however, that upon notice and demand from
Lender, any advance made will be due on the next Payment Date, and if not paid at that time, shall
constitute a default hereunder. Any sums advanced or action taken by Lender pursuant to this
paragraph shall not release Maker from any of its obligations under this Note or the other Loan
Documents.



     B. If (I) Maker shall default in the payment when due of any installment or other payment
becoming due under this Note, or (2) there shall occur any other “Event of Default” defined in the
Deed of Trust, then, or at any time thereafter, the entire principal of this Note, irrespective of
the maturity date specified in this Note, together with the then accrued interest and, to the
extent permitted by law, the Prepayment Premium, shall at the election of Lender become immediately
due and payable, together with interest after the date of such default, whether resulting from
acceleration or not, at the Default Rate.



     C. Maker acknowledges that late payment by Maker to Lender of any sums due under this Note
will cause Lender to incur costs not otherwise contemplated, the exact amount of which will be
difficult to ascertain. Such costs include, but are not limited to, processing and accounting
charges. Accordingly, if any installment payment or any other sum due from Maker shall not be
received by Lender or Lender’s designee when due, Maker shall
pay to Lender a “Late Charge” equal
to five percent (5%) of such overdue amount. The parties agree that the Late Charge represents a
fair and reasonable estimate of the costs Lender will incur by reason of late payment by Maker. The
Late Charge shall be due immediately upon accrual and shall bear interest at the Default Rate to
the extent permitted by applicable law. Acceptance of such Late Charge by Lender shall in no event
constitute a waiver of Maker’s default with respect to such overdue amount nor prevent Lender from
exercising any of the other rights and remedies granted under this Note.



     D. The rights or remedies of Lender as provided in this Note and any Loan Documents shall be
cumulative and concurrent, and may be pursued singly, successively, or together against Maker, the
Mortgaged Property, any guarantor of this Note and any other funds, property or security held by
Lender for the payment of the indebtedness due under this Note or otherwise, at the sole discretion
of Lender. The failure to exercise any such right or remedy shall in no event be construed as a
waiver or release of such rights or remedies or of the right to exercise them at any later time.




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     E. Except as may be otherwise expressly provided in this Note or the other Loan
Documents, all makers, endorsers, guarantors, sureties, accommodation parties of this Note and all
other persons liable or to become liable for all or any part of this indebtedness, jointly or
severally waive diligence, presentment, protest and demand, and also notice of intent to accelerate
maturity, notice of acceleration of maturity, notice of protest, notice of demand, notice of
nonpayment, notice of dishonor, and notice of maturity, and also recourse to suretyship defenses
generally; and they also jointly and severally consent to any and all renewals, extensions or
modifications of the terms of this Note, including time for payment, and further agree that any
such renewal, extension or modification of the terms of this Note or the release or substitution of
any security for the indebtedness evidenced
by this Note or any other indulgences shall not affect the liability of any of such parties
for the indebtedness evidenced by this Note. Any such renewals, extensions or modifications may be
made without notice to any of such parties.



     F. Maker, endorsers, guarantors, sureties, accommodation parties of this Note and all other
persons liable or to become liable on this Note, agree jointly and severally to pay all costs of
collection, including attorneys’ fees and all costs of suit, in case the unpaid principal sum of
this Note or any payment of interest, principal and interest, Late Charge, other payment, or
Prepayment Premium is not paid when due, or in case it becomes necessary to protect the security
for the indebtedness evidenced by this Note, or for the foreclosure by Lender of the Deed of Trust
or other Loan Documents, or if Lender is made party to any litigation because of the existence of
the indebtedness of this “Note or the Deed of Trust or other Loan Documents whether suit be brought
or not, and whether through courts of original jurisdiction, as well as in courts of appellate
jurisdiction, or through any bankruptcy court or other legal proceedings, which costs and fees may
be added to the amount due under and be recoverable with this Note.



     G. The provisions of this Note and of all agreements between Maker and Lender, whether now
existing or hereafter arising and whether written or oral, including, but not limited to, the Loan
Documents, are hereby expressly limited so that in no contingency or
event whatsoever, whether by
reason of demand or acceleration of the maturity of this Note or otherwise, shall the amount
contracted for, charged, taken, reserved, paid, or agreed to be paid to Lender for the use,
forbearance, retention or detention of the money loaned under this Note and related indebtedness
exceed the maximum amount permissible under applicable law. If, from any circumstance whatsoever
(including, without limitation, the receipt of any Late Charge or similar amount), performance or
fulfillment of any provision hereof or of any agreement between Maker and Lender shall, at the time
performance or fulfillment of such provision shall be due, exceed the limit for interest prescribed
by law or otherwise transcend the limit of validity prescribed by
applicable law, then ipso facto
the obligation to be performed or fulfilled shall be reduced to such limit and if, from any
circumstance whatsoever, Lender shall ever receive anything of value deemed interest by applicable
law in excess of the maximum lawful amount, an amount equal to any excessive interest shall be
applied to the reduction of the principal balance owing under this Note in the inverse order of its
maturity (whether or not then due) or at the option of Lender be paid over to Maker, and not to the
payment of interest. All interest (including any amounts or payments judicially or otherwise under
the law deemed to be interest) contracted for, charged, taken,
reserved, paid or agreed to be paid
to Lender shall, to the extent permitted by applicable law, be
amortized, prorated, allocated and
spread throughout the full term of this Note, including any extensions or renewals hereof, until
payment in full of the





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principal balance of this Note so that the interest thereof for such full period will not
exceed at any time the maximum amount permitted by applicable law. Maker hereby agrees that as a
condition precedent to any claim seeking usury penalties against Lender, Maker will provide written
notice to Lender, advising Lender in reasonable detail of the nature and amount of the violation,
and Lender 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 Note and/or any other indebtedness then owing by Maker to Lender. To the
extent that Lender is relying on Chapter 303, as amended, of the Texas Finance Code to determine
the maximum amount of interest permitted by applicable law on the principal of this Note, Lender
will utilize the weekly rate ceiling from time to time in effect as provided in such Chapter 303,
as amended. To the extent United States federal law permits a greater amount of interest than is
permitted under Texas law, Lender will rely on United States federal law instead of such Chapter
303, as amended, for the purpose of determining the maximum amount permitted by applicable
law. Additionally, to the extent permitted by applicable law now or hereafter in
effect, Lender may, at its option and from time to time, implement any other method of
computing the maximum lawful rate under such Chapter 303, as amended, or under other applicable law
by giving notice, if required, to Maker as provided by applicable law now or hereafter in effect.
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 the indebtedness evidenced
hereby. This paragraph III.G. will control all agreements between Maker and Lender.



     H. As a part of this transaction, Maker has specifically agreed that this Note shall be
governed by and interpreted in accordance with the laws of the State of Texas and the applicable
laws of the United States of America. Maker hereby irrevocably submits to the jurisdiction of any
court of competent jurisdiction located in the State of Texas in connection with any proceeding
arising out of or relating to this Note. To the fullest extent permitted by applicable law, Maker
hereby agrees not to elect a trial by jury of any issue triable of right by jury, and waives any
right to trial by jury fully to the extent that any such right shall now or hereafter exist with
regard to this Note or the other Loan Documents, or any claim, counterclaim or other action arising
in connection therewith (to the extent permitted by applicable law) including, but not limited to
those relating to (1) allegations that a partnership exists between Lender and Maker; (2) usury or
penalties or damages therefor; (3) allegations of unconscionable acts, deceptive trade practice,
lack of good faith or fair dealing, lack of commercial reasonableness, or special relationships
(such as fiduciary, trust or confidential relationship); (4) allegations of dominion, control,
alter ego, instrumentality, fraud, real estate fraud, misrepresentation, duress, coercion, undue
influence, interference or negligence; (5) allegations of tortious interference with present or
prospective business relationships or of antitrust; or (6) slander, libel or damage to reputation.
This waiver of right to trial by jury is given knowingly and voluntarily by Maker, and is intended
to encompass individually each instance and each issue as to which the right to a trial by jury
would otherwise accrue. Lender is hereby authorized to file a copy of this paragraph in any
proceeding as conclusive evidence of this waiver by Maker.



     I. This Note may not be amended, modified or changed, nor shall any waiver of any provisions
of this Note be effective, except by an instrument in writing and signed by the party against whom
enforcement of any waiver, amendment, change, modification or discharge is sought.





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     J. Whenever used in this Note, the words “Maker” and “Lender” shall be deemed to
include their respective heirs, personal representatives, successors and assigns, and the word
“Lender” shall be deemed to include subsequent holders of this Note.



     K, As a material inducement to Lender to advance the proceeds of the loan evidenced
by this Note, Craftmade International, Inc, a Delaware corporation (“Principal of Borrower”) has
executed that certain Guaranty Agreement of even date herewith guaranteeing the obligations of
Borrower under this Note and the other Loan Documents. Borrower and Guarantor shall be fully and
personally liable. on a joint and several basis, for the payment of all indebtedness and the
performance of all obligations payable or performable by Borrower under this Note or the other Loan
Documents. Borrower agrees that Lender shall not be required to perfect or enforce its
rights against the Mortgaged Property or any other collateral, or to exhaust any other remedies,
prior to filing suit against Borrower to enforce this Note or any of the other Loan Documents.



     L. Upon receipt of evidence reasonably satisfactory to Maker of the loss, theft, destruction
or mutilation of this Note, and in the case of any such loss, theft or destruction, upon delivery
of an indemnity agreement reasonably satisfactory to Maker or, in the case of any such mutilation,
upon surrender and cancellation of this Note, Maker will execute and deliver to
Lender in lieu thereof, a replacement note dated as of the date of this Note, identical in
form and substance to this Note and upon such execution and delivery all references in the Deed of
Trust and other Loan Documents to this Note shall be deemed to refer to such replacement note.



     THIS NOTE AND ALL THE OTHER LOAN DOCUMENTS EMBODY THE FINAL, ENTIRE AGREEMENT OF MAKER AND
LENDER AND SUPERSEDE ANY AND ALL PRIOR COMMITMENTS, AGREEMENTS, REPRESENTATIONS AND UNDERSTANDINGS,
WHETHER WRITTEN OR ORAL, RELATING TO THE SUBJECT MATTER HEREOF AND THEREOF AND MAY NOT BE
CONTRADICTED OR VARIED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OR
DISCUSSIONS OF MAKER AND LENDER. THERE ARE NO ORAL AGREEMENTS BETWEEN MAKER AND LENDER.



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     IN WITNESS WHEREOF, Maker has executed this Note effective as of the day and year first
above written.



	 	 	 	 	 
	 	 	CM REAL ESTATE, LLC,
a Texas limited liability company
	 
	 	 	 	 
	 

	 	By:
	 	/s/ James R. Ridings
	 

	 	 	 	 
	 

	 	Name:
	 	James R. Ridings
	 

	 	 	 	 
	 

	 	Title:	 	 
	 

	 	 	 	 







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	STATE OF TEXAS

	 	§
	 	 
	 

	 	§	 	 
	COUNTY OF DALLAS

	 	§	 	 






     This instrument was acknowledged before me on the 13th day of November, 2007, by James Ridings,                      of CM Real Estate, LLC, a Texas
limited liability company, on behalf of said limited liability company.



	 	 	 	 	 
	 	 	/s/ Susan B. Peresh
	 	 	 
		 	Notary Public in and for

the State of Texas
	 	 	Printed Name of Notary
	 
	 	 	 	 
	 	 	Susan B. Peresh
	 	 	 
	 

	 	My Commission Expires:
	 	3/20/2009
	 

	 	 	 	 







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