Exhibit 10.1
Prepared by:
/s/ XXXXXXX X. XXXXXXXXX
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Xxxxxxxxx Xxxx
00 Xxxxxx Xxxxxx, X.X. Xxx 000
Xxxxxxxx, XX 00000
(000)000-0000
NOTE
$4,000,000.00 WOODBURY, NEW JERSEY
JUNE 9, 2004
BETWEEN the Borrower K-TRON INTERNATIONAL, INC., A NEW JERSEY CORPORATION,
whose address is Routes 55 and 553, X.X. Xxx 000, Xxxxxx, Xxx Xxxxxx 00000-0000,
referred to as "Borrower".
AND the Lender, THE BANK, whose address is 000 Xxxx Xxxxxx, Xxxxxxxx, Xxx
Xxxxxx 00000, referred to as "THE BANK".
The phrase "THE BANK" means the original Lender and anyone else who takes
this Note by transfer.
BORROWER'S PROMISE TO PAY PRINCIPAL AND INTEREST. In return for a loan to
be funded by THE BANK to Borrower on this date, Borrower promises to
pay$4,000,000.00 (called "principal"), plus interest, to the order of THE BANK.
Of this amount, Borrower will borrow $1,600,000.00 at a per annum fixed
interest rate of 5.75%; and shall borrow the balance thereof, being
$2,400,000.00, on a floating rate basis equal to the one (1) month LIBOR rate
plus 185 basis points. The proceeds of the loan will be used to repay
approximately $4,000,000.00 of debt owed by Borrower to the former stockholders
of Pennsylvania Crusher Corporation. Interest will be charged on the outstanding
principal balance due on this Note from time to time as required herein until
all principal has been paid. Interest shall be calculated hereunder for the
actual number of days that principal is outstanding based on a year of 360 days.
PAYMENTS. All payments made hereunder shall be paid on the sixth (6th) day
of each month beginning July 6, 2004. The loan shall be repaid as follows:
Interest-only payments shall be made monthly beginning July 6, 2004 through
December 6, 2004. Thereafter, forty-eight (48) principal payments of
$50,000.00, plus interest, shall be due monthly beginning January 6, 2005
through December 6, 2008 . Thereafter, eleven (11) principal payments of
$133,333.00, plus interest, shall be due monthly beginning January 6, 2009
through November 6, 2009, with one final payment of all outstanding principal
and interest due December 6, 2009. All scheduled principal and interest payments
shall be applied to the variable and fixed interest rate portions of the loan in
the same ratio as those floating and fixed rate portions bear to each other
(initially 60/40). Borrower will pay all amounts owed under this Note no later
than DECEMBER 6, 2009. All payments will be made to THE BANK at the address
shown above or to a different place if required by THE BANK.
LIBOR RATE. For the floating rate portion of the Note, the variable
interest rate will equal the one (1) month LIBOR rate plus 185 basis points. The
rate of interest shall be established on the twenty-fifth (25th) day of each
calendar month, during the term of this Note, or the next business day
thereafter, with such rate of interest to be effective on the first business day
of the next calendar month. For purposes of this Note, the one (1) month LIBOR
rate shall be defined as the London Interbank Offered Rate (LIBOR) for
maturities of one (1) month, expressed as an annual yield, as reported in the
Wall Street Journal or a comparable source on the date the quote by THE BANK is
given (the "LIBOR Index Rate"). The rate of interest so established shall remain
in effect until the first business day of the succeeding calendar month, at
which time the rate of interest shall be reestablished as provided herein. The
interest rate established at time of funding under the terms of this Note shall
be the same as if established on the first of said month.
SECURITY. As security for this instrument, Borrower's subsidiary, K-Tron
America, Inc., has delivered its Guaranty; a third mortgage bearing even date
herewith covering premises designated on the official tax map as Xxx 0.00, Xxxxx
000, Xxxxxxxx xx Xxxxxx, Xxxxxxxxxx Xxxxxx, New Jersey, which Mortgage is about
to be recorded in the office of the Clerk of Gloucester County; and a third lien
security interest, subject only to THE BANK'S first and second lien perfected
security interests, in the accounts receivable, inventory, and equipment now
owned or hereafter acquired by Guarantor located at Xxxxxx 00
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xxx 000, Xxxxxx, Xxx Xxxxxx 00000. The provisions of any mortgage or security
agreement given as security for this Note are incorporated herein by reference.
COVENANTS AND CONDITIONS:
1. Borrower has provided to THE BANK acceptable current financial
statements and will provide annual updates on the Borrower and Guarantor. The
updates for financial statements and tax returns are to be submitted within
thirty (30) days of the date requested by THE BANK, but not earlier than the
dates that any such statements are required by the U.S. Securities and Exchange
Commission. Should the Borrower or Guarantor fail to submit required financial
information within the required time period,THE BANK may, at its sole option,
increase the interest rate on this Note by one-half (1/2) of one (1) percent per
annum.
2. The Borrower and the Guarantor must continue to maintain with THE
BANK a meaningful deposit relationship.
3. Borrower and Guarantor agree that until all obligations hereunder
are fully paid and discharged, Borrower will not without the prior written
consent of THE BANK:
A. Permit the consolidated debt to net worth ratio of Borrower to
be more than 1.25 at fiscal year-end 2004 and each fiscal year-end thereafter.
B. Permit the consolidated net worth of Borrower to be less than
$34 million at fiscal year-end 2004 and each fiscal year-end thereafter.
C. Both of the above covenants set forth in paragraphs A and B
above shall be calculated exclusive of declines due to changes in foreign
exchange rates subsequent to January 3, 2004.
D. Permit the consolidated annual debt coverage ratio of Borrower
at each fiscal year end to be less than 1.50.
E. Each of covenants set forth in paragraphs A, B, and D above
shall be calculated without taking into account Pennsylvania Crusher Corporation
and its subsidiaries.
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F. Permit upstreaming of funds from Guarantor to Borrower or
K-Tron Technologies, Inc. or downstreaming of funds from Borrower to
Pennsylvania Crusher Corporation or its subsidiaries, except for (i) management
fees consistent with past practice and royalties paid in the ordinary course of
business, (ii) dividends or other advances paid or made to enable Borrower to
pay any obligation to THE BANK in connection with this or any other loan, and
(iii) the settlement of inter-company accounts in the ordinary course of
business consistent with past practice.
G. Permit any merger or acquisition by Borrower or its
subsidiaries involving consideration of more than $4 million without the written
approval of THE BANK.
PREPAYMENT: As to the amount borrowed under the fixed interest rate
portion of this Note, Borrower shall have the right at any time during the term
hereof to prepay all or a part of the principal balance of such portion then
outstanding under this Note upon payment of the premiums and charges, if any,
hereinafter set forth. A principal prepayment requiring such a premium or charge
shall be deemed to have occurred upon Borrower's payment to THE BANK in any Loan
Year of any sum in reduction of the principal which exceeds one-third (1/3) of
the original principal amount borrowed under the fixed interest rate portion,
excluding principal payments (including scheduled amortization) the Borrower is
obligated to make under any other terms or provisions of this Note or any other
document constituting a part of the loan transaction evidenced by this Note.
Upon the occurrence of such a principal prepayment, including prepayment of the
entire debt, THE BANK shall be entitled to charge and Borrower shall be
obligated to pay, in addition to interest and all other charges then properly
due, a prepayment premium equal to 2% of the amount prepaid. The term "Loan
Year" as used herein is defined as any period of one year commencing on the date
of the Note or on any anniversary of such date. Except as provided above, there
shall be no prepayment premium or charge on a prepayment of any amount borrowed
under the fixed interest rate portion.
At no time will there by a prepayment penalty on the variable interest
rate portion of the loan, which portion may be prepaid in full or in part at any
time.
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LATE CHARGE: The effective date of the receipt by the holder of any
installment of this Note shall be the day on which the holder receives cash or
collected funds at the place of payment as specified herein in payment of any
such installment. Borrower shall be entitled to a FIFTEEN (15) DAY grace period
after which period a "late charge" of $0.05 FOR EACH $1.00 OVERDUE may be
charged by the holder for the purpose of defraying the expense incident to
handling such delinquent payment.
DEFAULT: If any installment of this Note or interest payment is not paid
within 15 days of the date and at the place herein specified and after THE BANK
has given Borrower 15 days' written notice to cure said default, THE BANK may at
its option, and without further notice declare this Note to be in default and
the entire principal balance then remaining unpaid together with all interest
which shall have accrued on the unpaid principal balance from and after the date
of such default shall be due and payable in full without notice.
It shall be a default of this Note if Borrower shall default in any
payment of principal or interest on any indebtedness or contingent obligation
for money borrowed (other than Borrower's obligations under this Note) or any
other event shall occur, the effect of which is to permit such indebtedness or
contingent obligation to be declared or such indebtedness or contingent
obligation shall otherwise become due prior to its stated maturity, provided,
however, that this provision shall not apply concerning obligations other than
Borrower's obligations under this Note unless the amount involved exceeds
$50,000.00.
If a default shall occur in this loan and not be cured as provided in the
loan documents or otherwise agreed to by THE BANK, THE BANK shall, after
declaring the loan to be in default, have the right to increase the interest
rate TWO (2%) PERCENT PER YEAR in excess of the note rate. This provision is in
addition to any late charges that may be due.
ATTORNEY'S FEE: If this Note is placed in the hands of an attorney for
collection because of a default in the terms hereof or in the terms of any
documents given as security for the within obligation, the undersigned agrees to
pay the reasonable fees and costs of such attorney, whether or not legal action
is
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instituted and further consents that if a judgment is entered in any action the
amount of such fees shall form a part of such judgment in addition to any fees
allowed by Statute or Rule of the Court.
COMMITMENT LETTER COMPLIANCE: This Note is contingent upon Borrower's
compliance with all of the terms and conditions contained in the commitment
letter issued by THE BANK to Borrower on May 28, 2004. Upon breach of any term
or condition contained therein,THE BANK shall have the right to declare this
loan in default and demand payment in full of the principal balance remaining
unpaid, together with all interest which shall have accrued thereon. Further,
providing the said commitment letter so provides, THE BANK reserves the right to
increase the interest rate in accordance with the provisions of the loan
commitment for failure of the Borrower or any guarantor to submit required
financial information within thirty days of the date of request by THE BANK.
Should there be any conflict between the provisions of said commitment letter
and this Note, the provisions of this Note shall apply.
PAYMENT AT MATURITY: THIS LOAN IS PAYABLE IN FULL AT MATURITY OR UPON
DEMAND IN THE EVENT OF A DEFAULT HEREUNDER OR UNDER THE TERMS OF ANY OTHER
APPLICABLE LOAN INSTRUMENT. YOU MUST REPAY THE ENTIRE PRINCIPAL BALANCE OF THE
LOAN AND UNPAID INTEREST THEN DUE. THE BANK IS UNDER NO OBLIGATION TO REFINANCE
THE LOAN AT THAT TIME. YOU WILL THEREFORE BE REQUIRED TO MAKE PAYMENT OUT OF
OTHER ASSETS YOU MAY OWN OR YOU WILL HAVE TO FIND A LENDER WILLING TO LEND YOU
THE MONEY. IF YOU REFINANCE THIS LOAN AT MATURITY, YOU MAY HAVE TO PAY SOME OR
ALL OF THE CLOSING COSTS NORMALLY ASSOCIATED WITH A NEW LOAN EVEN IF YOU OBTAIN
REFINANCING FROM THE BANK.
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WAIVER OF PRESENTMENT: EACH AND ALL PARTIES hereto whether maker,
endorsers, sureties, guarantor or otherwise do hereby jointly and severally
waive presentment and demand for payment, notice of dishonor, protest and notice
of protest.
IN WITNESS WHEREOF, the Borrower hereunder has hereunto set its hand and
seal the day and year first above written.
Attest: K-Tron International, Inc.
By:
/s/ Xxxx X. Xxxxxxx /s/ Xxxxxx X. Xxxxxx, XX
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Xxxx X. Xxxxxxx, Secretary Xxxxxx X. Xxxxxx, XX, Chairman and Chief
Executive Office
Sworn to and Subscribed
before me on June 9, 2004
___________________________
XXXXXXX X. XXXXXXXXX, ESQ.
ATTORNEY AT LAW
STATE OF NEW JERSEY
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