EXHIBIT 10.13
MORTGAGE NOTE
$3,200,000.00 January 14, 2004
FOR VALUE RECEIVED, and without defalcation or setoff, Transnational
Industries, Inc., a Delaware corporation, and Spitz, Inc., a Delaware
corporation (individually, collectively, jointly and severally referred to as
the "Maker"), with an address of P.O. Box 198, Route 1, Chadds Ford,
Pennsylvania 19317 promises to pay to the order of FIRST KEYSTONE BANK
("Payee"), a federally chartered stock savings bank organized and existing under
the laws of the United States of America, at Xxxxx's office located at 00 Xxxx
Xxxxx Xxxxxx, Xxxxx, Xxxxxxxxxxxx, 19063, the principal amount of Three Million
Two Hundred Thousand ($3,200,000.00) Dollars, advanced pursuant to the terms,
conditions, and provisions of a certain Loan Agreement dated even date herewith,
by and between Maker and Payee (the "Loan Agreement"), together with interest on
the outstanding principal balance of this Mortgage Note (the Note) from the date
hereof at the rate of five and three quarter (5.750%) percent per annum,
provided, however, effective January 14, 2006, and on that same day every thirty
sixth (36th) month thereafter the rate of interest will adjust to a fixed per
annum rate equal to the greater of (i) five and three quarter (5.750%) percent,
or (ii) three hundred (300) basis points (3.00%) over the Three (3) Year
Constant Maturity Treasury Rate, the said fixed rate to be set five (5) days
prior to the effective date of the rate change; provided, however, that should
the fifth day fall on a Saturday, Sunday or a bank holiday, the said fixed rate
shall be set on the last day prior to such the fifth day for which a Three (3)
Year Constant Maturity Treasury Rate is available. The rate of interest from
time to time charged on the outstanding balance of this Note is hereinafter
referred to as the Rate.
1. Payment. The principal amount of this Note shall be payable, together with
interest thereon, in lawful money of the United States, in the following manner:
(a) On January 1, 2004, a payment of interest only scheduled to accrue
on the principal balance outstanding from the date hereof to January 31,
2004.
(b) Commencing on the first day of March, 2004 and on the first day of
each and every month thereafter, Maker shall pay to Payee the principal,
together with interest accruing hereunder at the Rate, in arrears, in
amortized, consecutive, and successive monthly installments sufficient to
repay the principal balance of this Note, together with interest accruing
thereon at the Rate, in full over a twenty (20) year amortization period
(the "Amortization Period"), provided, however, interest on this Note shall
be calculated on the basis of a three hundred sixty (360) day year, and
charged for the actual number of days elapsed. Provided, however, Xxxxx
shall recalculate the amount of the monthly principal and interest
installment due on this Note on the first day of the first month following
the effective date of any change in the Rate. The recalculated monthly
installment shall be equal to the monthly installment sufficient to repay
the principal balance Maker is expected to owe as of the effective date of
any change in the Rate, together with interest accruing thereon at the
Rate, in full over the remaining portion of the original Amortization
Period.
(c) Notwithstanding the foregoing, and unless sooner paid, the entire
outstanding principal amount of this Note, together with all interest
accrued and not theretofore paid, and all other sums payable hereunder,
shall be due and payable in full on January 13, 2024 (the "Maturity Date").
2. Security. The payment of this Note, and the performance by Maker of all of
its obligations under the commitment letter dated December 19, 2003 (the
"Commitment Letter"), and the Loan Agreement are secured by, among other things:
(a) a certain Open-End Mortgage and Security Agreement, dated even
date herewith (the Mortgage), secured upon certain real property premises
currently occupied by Spitz, Inc., located at Xxxxx 0, Xxxxxx Xxxx
Xxxxxxxx, Xxxxxxxx Xxxxxx, Xxxxxxxxxxxx, being Folio No. 04-00-00034-02,
and more specifically described on the metes and bounds legal description,
attached to the Mortgage and labeled Exhibit A, and all improvements now or
hereafter placed or made thereon and thereto (the Mortgage Premises), and
creating a security interest under the Pennsylvania Uniform Commercial Code
in all fixtures, equipment and other tangible personal property, including,
but not limited to, all machinery, appliances, furnishings, tools and
building materials now or hereafter acquired by Maker and installed or to
be installed upon, or used or to be used in connection with, the Mortgaged
Premises;
(b) those certain UCC-1 Financing Statements, dated even date
herewith, identifying Maker as Debtorand Payee as the Secured Party,
securing Payee's interest in and to all fixtures, equipment and other
tangible personal property, including, but not limited to, all machinery,
appliances, furnishings, tools and building materials now or hereafter
acquired by Maker and installed or to be installed upon, or used or to be
used in connection with the Mortgaged Premises;
(c) an Assignment of Rents, Profits and Leases, dated even date
herewith, pursuant to which Spitz, Inc. has collaterally assigned to Payee
all of its right, title and interest in and to all rents, profits and
income arising from the Mortgaged Premises and from all leases now or
hereafter in effect pertaining to all or any portion of the Mortgaged
Premises, and;
(d) a Collateral Assignment of Agreements Affecting Real Estate, dated
even date herewith, pursuant to which Maker has collaterally assigned to
Payee all of Maker's right, title and interest in and to all approvals,
permits, contracts and warranties, now or hereafter in effect, pertaining
to all or any portion of the Mortgaged Premises.
All of the agreements, conditions, covenants and provisions contained in
the Commitment Letter, the Loan Agreement, and the documents listed in clauses
(a) through (d) above (hereinafter referred to collectively as the "Loan
Documents) are hereby made a part of this Note to the same extent and with the
same force and effect as if they were fully set forth herein. Maker covenants
and agrees to keep and perform, or cause to be kept and performed, all such
agreements, conditions, covenants and provisions, strictly in accordance with
their terms.
3. Late Charge. Maker is obligated to make payments of interest or principal or
both on the above specified due dates in accordance with the terms of this Note
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without defalcation or setoff and without notice or demand, and the failure to
receive any notice or demand from Payee shall not be a defense to, or excuse
for, the failure to make such payments on the due dates. If any installment of
interest or principal or both, or any other payment required hereunder or under
any of the Loan Documents is not paid within fifteen (15) days after the due
date of such installment, or payment, a late charge equal to the greater of: (a)
five percent (5.00%) of such overdue amount; or (b) seventy-five ($75.00)
Dollars will be due and payable to Payee to cover the additional expense
incident to such delinquency. This shall not be construed to obligate Payee to
accept any overdue installment (i.e., any payment remaining unpaid for a period
of five (5) days after written notice of failure to pay the same when due) nor
to limit Xxxxx's rights and remedies for Maker's default, as hereinafter set
forth.
4. Default. Maker shall be in default hereunder upon the occurrence of any of
the following events (an "Event of Default): (i) any installment of interest or
principal and interest, or any other sum required hereunder, or any other
payment required under any of the Loan Documents, remains unpaid for the period
of five (5) days after written notice of failure to pay the same when due in
accordance with the provisions hereof or under any of the Loan Documents; (ii)
after the expiration of any applicable notice and cure periods, if any, the
default by Maker under any of the Loan Documents; (iii) the institution by or
against Maker of any bankruptcy, insolvency, reorganization, arrangement, debt
adjustment, receivership, liquidation or dissolution proceeding which, if
instituted against any such party, is consented to by such party or remains not
dismissed or stayed for sixty (60) days; (iv) the adjudication of Maker as a
bankrupt or the appointment of a trustee or receiver for all or any part of
Maker's property; (v) the making by Maker of an assignment for the benefit of
creditors; (vi) the admission by Maker of an inability to pay his/her/its or
their debts as they become due; (vii) after the expiration of any applicable
notice and cure periods, if any, the default by Maker or any affiliate, owner or
subsidiary thereof, in making any payment for money owed or borrowed by Maker or
any affiliate, owner or subsidiary thereof including, without limitation, the
occurrence of an event of default under that certain Line Of Credit Agreement
dated June 12, 1997 between Payee and Maker, amended by that certain
Modification Agreement dated July 7, 2000, and further amended by that certain
Second Modification Agreement dated July 18, 2002, respecting a Two Million
($2,000,000.00) Dollar commercial revolving line of credit; (viii) the untruth,
in any respect regarded by Payee as material, of any warranty, representation,
certification, financial statement or other information made or furnished by
Maker in connection with the loan made by Payee to Maker pursuant to the
Commitment Letter and the Loan Agreement; or (ix) the sale or transfer of any
right, title, or interest, legal or equitable, in the Mortgaged Premises or any
part or parcel thereof or a change of the majority of the members of the board
of directors of Maker during any twelve (12) month period.
5. Remedies. Upon the occurrence of any Event of Default, the entire unpaid
balance of principal (including any additional loans or advances and all other
sums paid by Xxxxx to or on behalf of Maker or added to the principal hereof
pursuant to the terms of this Note or any of the Loan Documents), with all
accrued interest thereon, together with an attorney's commission for collection
of the greater of Five Thousand ($5,000.00) Dollars or five (5%) percent of the
total indebtedness, and all other sums due and owing hereunder or under the Loan
Documents, shall, at the option of Payee, become immediately due and payable
without presentment, demand or further action of any kind, and one or more
executions may forthwith issue on any judgment or judgments obtained by virtue
of any provision of this Note or otherwise obtained and any security given to
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secure the obligation evidenced by this Note may thereupon forthwith be
enforced, and Xxxxx may also recover all costs of suit and other expenses of
collection involving, but not limited to, reasonable attorney's fees, the costs
of title searches, the costs of eviction of any tenants and re-appraisals.
The rights and remedies provided herein or in the Loan Documents shall be
cumulative and concurrent and shall not be exclusive of any right or remedy
provided by law, in equity or otherwise. Said rights and remedies may, at the
sole discretion of Payee, be pursued singly, successively or together as often
as occasion therefor shall arise, against Maker and/or the Mortgaged Premises or
any other security for this Note, as applicable. No failure on the part of Payee
to exercise any of such rights or remedies shall be deemed a waiver of any such
rights or remedies or of any Event of Default hereunder.
Upon the occurrence of an Event of Default, Payee shall have the right, but
not the duty, to cure such default, in part or in its entirety, and all amounts
expended or debts incurred by Payee, including reasonable attorneys' fees, shall
be deemed to be advances to Maker, shall be added to the principal due under
this Note, shall be secured by the security for this Note, and shall be payable
by Maker to Payee upon demand with interest at the Default Rate (hereinafter
defined).
6. Default Rate. Upon the occurrence of an Event of Default, interest shall
continue to accrue thereafter at the default rate of the Rate plus five (5%)
percent per annum (the Default Rate) until this Note, and all sums due
hereunder, are paid in full, including the period following the entry of any
judgment. Interest after the occurrence of an Event of Default at the Default
Rate shall be calculated on the basis of a three hundred sixty (360) day year,
but charged for the actual number of days elapsed.
7. WARRANT OF ATTORNEY. THE FOLLOWING SECTION SETS FORTH WARRANTS OF ATTORNEY
FOR ANY ATTORNEY TO CONFESS JUDGMENTS AGAINST MAKER. IN GRANTING THESE WARRANTS
OF ATTORNEY TO CONFESS JUDGMENTS AGAINST MAKER, MAKER HEREBY KNOWINGLY,
INTENTIONALLY, VOLUNTARILY, AND UNCONDITIONALLY WAIVE(S) ANY AND ALL RIGHTS
MAKER MAY HAVE TO PRIOR NOTICE AND AN OPPORTUNITY FOR HEARING UNDER THE
RESPECTIVE CONSTITUTIONS AND LAWS OF THE COMMONWEALTH OF PENNSYLVANIA AND THE
UNITED STATES OF AMERICA.
UPON THE OCCURRENCE OF AN EVENT OF DEFAULT, MAKER, WITHOUT FURTHER CONSENT
OR NOTICE, DOES HEREBY IRREVOCABLY AND UNCONDITIONALLY AUTHORIZE AND EMPOWER ANY
ATTORNEY OF THE PROTHONOTARY OF ANY COURT OF RECORD OF THE COMMONWEALTH OF
PENNSYLVANIA OR ELSEWHERE TO APPEAR FOR MAKER IN ANY SUCH COURT, AND WITH OR
WITHOUT A COMPLAINT OR DECLARATION FILED, IN AN APPROPRIATE ACTION BROUGHT
AGAINST MAKER ON THIS NOTE, TO ENTER AND CONFESS JUDGMENT AGAINST MAKER IN FAVOR
OF PAYEE OR ITS SUCCESSORS AND ASSIGNS, FOR ALL OR ANY PORTION OF THE ENTIRE
AMOUNT DUE TO PAYEE UPON SUCH EVENT OF DEFAULT AS PROVIDED HEREIN, TOGETHER WITH
COSTS OF SUIT AND ATTORNEYS' COMMISSION IN AN AMOUNT EQUAL TO FIVE (5%) PERCENT
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OF THE PRINCIPAL AMOUNT OUTSTANDING UNDER THIS NOTE, BUT IN NO EVENT LESS THAN
FIVE THOUSAND ($5,000.00) DOLLARS; AND FOR SO DOING THIS NOTE OR A COPY HEREOF
VERIFIED BY AFFIDAVIT SHALL BE A SUFFICIENT WARRANT. THE AUTHORITY HEREIN
GRANTED TO APPEAR, ENTER AND CONFESS JUDGMENT SHALL NOT BE EXHAUSTED BY ANY ONE
OR MORE EXERCISE THEREOF OR BY ANY DEFECTIVE EXERCISE THEREOF, BUT SHALL
CONTINUE AND BE EXERCISABLE FROM TIME TO TIME UNTIL THE FULL PAYMENT OF ALL
AMOUNTS DUE FROM MAKER TO PAYEE HEREUNDER AND UNDER THE LOAN DOCUMENTS IS MADE.
THE FOREGOING RIGHT AND REMEDY IS IN ADDITION TO AND NOT IN LIEU OF ANY OTHER
RIGHT OR REMEDY AVAILABLE TO PAYEE UNDER THIS NOTE OR OTHERWISE.
MAKER ACKNOWLEDGES HAVING HAD THE ASSISTANCE OF LEGAL COUNSEL OR THE
OPPORTUNITY TO RETAIN LEGAL COUNSEL IN THE REVIEW AND EXECUTION OF THIS NOTE FOR
THE PURPOSE OF EXPLAINING THE MEANING AND EFFECT OF THE FOREGOING PROVISIONS
CONCERNING CONFESSION OF JUDGMENT, AND FURTHER ACKNOWLEDGES THAT THE MEANING AND
EFFECT OF THE FOREGOING PROVISIONS CONCERNING CONFESSION OF JUDGMENT HAVE BEEN
EITHER FULLY EXPLAINED TO MAKER BY SUCH COUNSEL OR FULLY UNDERSTOOD BY MAKER
WITHOUT RELIANCE ON PAYEE IF MAKER HAS ELECTED NOT TO BE REPRESENTED BY LEGAL
COUNSEL AND AS EVIDENCE OF SUCH FACT SIGNS HIS/HER/THEIR/ITS INITIALS.
/s/ PLD /s/ XXX
(Initials of Maker) (Initials of Maker)
Maker hereby waives the benefit of any laws now or hereafter enacted
providing for any stay of execution, marshaling of assets, exemption from civil
process, redemption, extension of time for payment, or valuation or appraisement
of all or any part of the Mortgaged Premises or any other security for this
Note, exempting all or any part of the Mortgaged Premises, any other security
for this Note or any other property of Maker from attachment, levy or sale upon
any such execution or conflicting with any provision of this Note or any of the
Loan Documents. Maker waives and releases Xxxxx and said attorney or attorneys
from all errors, defects and imperfections whatsoever in confessing any such
judgment or in any proceedings relating thereto or instituted by Payee hereunder
or under any of the Loan Documents. Maker hereby agrees that any property that
may be levied upon pursuant to a judgment obtained under this Note may be sold
upon any execution thereon in whole or in part, and in any manner and order that
Payee, in its sole discretion may elect.
8. Prepayment. Upon giving Payee at least thirty (30) days prior written notice,
Maker may prepay all or any portion of the outstanding principal balance of this
Note by paying, in addition to (i) the prepaid principal amount, (ii) all
accrued and unpaid interest to the date of prepayment, and (iii) all other
amounts due under this Note, a prepayment premium ("Prepayment Premium) equal to
the greater of:
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(a) the product obtained multiplying (1) the difference between the then
Rate and the yield rate of that U.S. Treasury Note the due date of
which is closest to (either before, after or on) the end of the
current three (3) year fixed rate period of this Note (the Period End
Date) (however, if the period between the Period End Date and the due
date exceeds six(6) months, the average of the yield rates of the two
U.S. Treasury Notes with due dates next preceding and following the
Period End Date shall be used to compute such difference; and if there
are two or more U.S. Treasury Notes with the same due dates, that one
with a whole yield rate closest to the Rate shall be used to compute
such difference) as reported in the Wall Street Journal or similar
publication on the fifth (5th) business day preceding the prepayment
date, and (2) the number of whole and fractional years remaining
between the prepayment date and the Period End Date, and (3) the
prepaid principal amount; or
(b) one (1%) percent of the prepaid principal amount.
Prepayment shall mean any event whereby the indebtedness evidenced by this
Note is paid in advance of the payment schedule or fully satisfied prior to the
Maturity Date in any manner, whether voluntary or involuntary, including without
limitation any payment after default, any payment after the Maturity Date is
accelerated, or any payment under court order or bankruptcy proceeding. Payee
shall not be required to accept ay prepayment if it does not include payment of
the required Prepayment Premium. Notwithstanding anything herein to the
contrary, Maker may during each calendar year, upon giving Payee thirty (30)
days prior written notice, prepay, in the aggregate, an amount equal to or less
than ten (10%) percent of the outstanding principal balance of the indebtedness
evidenced by this Note determined as of January 1 of each calendar year without
liability for the payment of any Prepayment Premium.
Notwithstanding the foregoing, no Prepayment Premium will be due and
payable (i) in the event of the receipt and retention by the Payee of proceeds
from any casualty loss or condemnation (ii) during the last 120 days of any
three (3) year term of this Note or (iii) as a result of the sale of all or a
portion of the Mortgaged Premises to an unaffiliated third party in an arms
length transaction.
All prepayments shall first be applied to the Prepayment Premium, then on
account of interest accrued hereunder and other sums due hereunder other than
principal, with the balance applied to principal. No partial prepayment shall
postpone or interrupt payments of interest or the payment of the remaining
principal balance, all of which shall continue to be due and payable at the
times and in the manner set forth above.
9. Waiver. The Maker and all other endorsers, sureties and guarantors hereby
jointly and severally waive presentment and demand for payment, notice of
demand, notice of default (except as required in this Note), notice of dishonor,
protest and notice of protest of this Note, and all other notices in connection
with the delivery, acceptance, performance, default or enforcement of the
payment of this Note, and also waive notice of the exercise of any options on
the part of Payee hereunder.
The granting, with or without notice, of any extension or extensions of
time for payment of any sum or sums due hereunder, or under any of the Loan
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Documents, or for the performance of any covenant, provision, condition or
agreement contained herein or therein, or the granting of any other indulgence,
or the taking or releasing or subordinating of any security for the indebtedness
evidenced hereby, or any other modification or amendment of this Note or any of
the Loan Documents, will in no way release or discharge the liability of Maker,
whether or not granted or done with the knowledge or consent of Maker.
Payee shall not be deemed, by any act of omission or commission, to have
waived any of its rights or remedies hereunder, under any of the Loan Documents,
at law or in equity, unless such waiver is in writing and signed by Xxxxx, and
then only to the extent specifically set forth in the writing. A waiver as to
one event shall not be construed as continuing or as a bar to or waiver of any
right or remedy as to a subsequent event.
10. Joint and Several Liability. The obligations and liabilities hereunder of
the persons or entities referred to as "Maker" shall be joint and several.
11. Notice. Regular monthly payment invoices and notice of any change in the
monthly installment of principal and interest due under this Note shall be sent
by regular mail, postage prepaid, to the address of Maker set forth above. All
other notices and other communications required or given under this Note shall
be given in the manner and to the addresses set forth in the Loan Agreement
12. Miscellaneous. Notwithstanding any other provision contained herein, if, at
any time, the Rate or the Default Rate shall be deemed by any competent court of
law, governmental agency or tribunal to exceed the maximum rate of interest
permitted by any applicable laws, then, for such time as the Rate or the Default
Rate would be deemed excessive, its application shall be suspended and there
shall be charged instead the maximum rate of interest permitted under such laws.
Any amounts theretofore received by Payee hereunder in excess of the maximum
rate of interest so permitted shall be applied by Payee in reduction of the
outstanding principal balance of this Note, or if this Note shall have
theretofore been paid in full, the amount of such excess shall promptly be
returned by Payee to Maker.
In the event any portion of this Note shall be declared by any court of
competent jurisdiction to be invalid or unenforceable, such portion shall be
deemed severable from this Note, and the remaining parts hereof shall remain in
full force and effect, as fully as though such invalid or unenforceable portion
was never part of this Note.
The obligations of Maker hereunder shall be binding on the successors and
assigns of Maker, and the benefits of this Note shall inure to Payee, its
successors and assigns and to any holder of this Note.
Each and every person or entity signing this Note as an endorser binds
himself, herself or itself as principal not as surety, and agrees to be bound by
and comply with all of the terms, conditions and provisions of this Note.
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Nothing herein contained or contained in any of the Loan Documents shall be
construed to create a partnership or joint venture between Payee and
Maker, or to render Payee in any way responsible for the debts or losses of
Maker.
This Note, and all issues arising hereunder, shall be governed by and
construed according to the laws of the Commonwealth of Pennsylvania.
MAKER AND PAYEE HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE ANY
RIGHT EITHER MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED
HEREON, OR ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS NOTE, THE MORTGAGE,
ANY OTHER DOCUMENT OR INSTRUMENT RELATING HERETO OR THERETO, ANY OTHER
TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY OR ANY COURSE OF CONDUCT, COURSE OF
DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTIONS OF THE PAYEE OR THE
MAKER IN CONNECTION HEREWITH OR THEREWITH. THIS PROVISION IS A MATERIAL
INDUCEMENT FOR THE PAYEE TO MAKE THE LOAN EVIDENCED BY THIS NOTE.
[THIS SPACE INTENTIONALLY LEFT BLANK. SIGNATURE PAGE FOLLOWS.]
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IN WITNESS WHEREOF, Xxxxx has caused this Note to be duly executed and
sealed this 14th day of January, 2004.
WITNESSES: MAKER:
SPITZ, INC.
/s/ Xxxxx Xxxxxxx Xxxxx
/s/ Xxxx X. Xxxxxxx
WITNESS AS TO ALL
BY: /s/ Xxxxxxxx Xxxx (SEAL)
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ATTEST: /s/ Xxxx Xxxxxx (SEAL)
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TRANSNATIONAL INDUSTRIES, INC.
BY: /s/ Xxxxxxxx Xxxx (SEAL)
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ATTEST: /s/ Xxxx Xxxxxx (SEAL)
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