Exhibit 10.1
The Xxxxx Electronics Corporation
NOTE MODIFICATION AGREEMENT
This Agreement made this 9th day of November, 2005 by and between The
Xxxxx Electronics Corporation, having an address of 00 Xxxxxx Xxxx,
Xxxxxxx, XX 00000, (the "Borrower") and Sovereign Bank, having an
address of 000 Xxxxxxx Xxxxxx, Xxxxxxxxx, XX 00000 (the "Lender").
Whereas, on November 1, 1999, the Borrower made and delivered to the
Lender a line of Credit evidenced by Promissory Note in the sum of Five
Hundred Thousand and 00/100 Dollars ($500,000.00) bearing the same date
(the "Note"). The Note has a maturity date due and payable on Demand
(the "Maturity Dare"); and
Whereas, the Review Date of the Note is October 31,2005 (the "Estimated
Maturity Date"); and
Whereas, the Note provided for a variable Interest Rate of the Sovereign
Bank Prime Rate plus .25% to change as and when the Sovereign Bank Prime
Rate changes (the "Interest Rate"); and
Whereas, the outstanding principal balance owing on the Note as of
October 31, 2005 is Zero and 00/100 Dollars ($0.00) (the "Outstanding
Principal "Balance") and
Whereas, it is mutually beneficial and agreeable to the Borrower and
Lender that the Note be modified.
Now Therefore, in consideration of the mutual benefits inuring to
Borrowers and Lender the premises and other good and valuable
consideration, the receipt and sufficiency of which are hereby
acknowledged and intending to be legally bound hereby, it is agreed that
the Note is hereby modified as described below.
1. Upon execution of this Agreement, the Estimated Maturity Date of the
Note shall be changed to December 1, 2006.
2. All terms of the Note will continue to be fully effective, except to
the extent that any of them are expressly changed by this Agreement. The
undersigned Borrower hereby confirms and acknowledges that he has no
defense, counterclaim or setoff which could effect the enforceability of
the Note and all other Loan Documents and hereby reaffirm the validity
of the Note and all other Loan Documents.
In Witness hereof, the parties hereto have hereunto set their hands and
seal this 9th day of November, 2005.
WITNESS: LENDER:
Sovereign Bank
By /s/ Xxxx X. Xxxxxx, Vice President
Xxxx X. Xxxxxx, Vice President
WITNESS: BORROWER:
The Xxxxx Electronics Corporation
/s/ Xxxx X. Xxxxx By: /s/ Xxxx H.D. Xxxxx, President/CEO
Xxxx X. Xxxxx Xxxx H.D. Xxxxx, President/CEO
PROMISSORY NOTE
Borrower: The Xxxxx Electronics Corporation Lender: Sovereign Bank
(TIN: 000 000000) Fairfield Xxxxxx
00 Xxxxxx Xxxx 000 Xxxxxxx Xxxxxx
Xxxxxxx, XX 00000 Xxxxxxxxx, XX 00000
Principal Amount: $500,000.00
Initial Rate: 9.000%
Date of Note: November 1, 1999
PROMISE TO PAY. The Xxxxx Electronics Corporation ("Borrower") promises
to pay to Sovereign Bank ("Lender"), or order, in lawful money of the
United States of America, on demand, the principal amount of Five
Hundred Thousand & 00/100 Dollars ($500,000.00) or so much as may be
outstanding, together with interest on the unpaid outstanding principal
balance of each advance. Interest shall be calculated from the date of
each advance until repayment of each advance. Borrower also promises to
pay all applicable fees and expenses.
PAYMENT. Borrower will pay this loan immediately upon Lender's demand.
In addition, Borrower will pay regular monthly payments of all accrued
unpaid interest due as of each payment date, beginning November 30,
1999, with all subsequent interest payments to be due on the last day of
each month after that. The annual interest rate for this Note is
computed on a 365/360 basis; that is, by applying the ratio of the
annual interest rate over a year of 360 days, multiplied by the
outstanding principal balance, multiplied by the actual number of days
the principal balance is outstanding. Borrower will pay Lender at
Lender's address shown above or at such other place as Lender may
designate in writing. Unless otherwise agreed or required by applicable
law, payments will be applied first to accrued unpaid interest, then to
principal, and any remaining amount to any unpaid collection costs and
late charges.
VARIABLE INTEREST RATE. The interest rate on this Note is subject to
change from time to time based on changes in an index which is Lender's
Prime Rate (the "Index"). This is the rate of interest announced from
time to time by Lender as its "Prime Rate" or "Prime Lending Rate". This
rate of interest is determined from time to time by Lender as a means of
pricing some loans to its customers, and it is neither tied to any
external rate of interest or index nor does it necessarily reflect the
lowest rate of interest actually charged by Lender to any particular
class or category of customers of Lender. Lender will tell Borrower the
current index rate upon Borrower's request. Borrower understands that
Lender may make loans based on other rates as well. The interest rate
change will not occur more often than each DAY. The Index currently is
8.250% per annum. The interest rate to be applied to the unpaid
principal balance of this Note will be at a rate of 0.750* percentage
points over the Index, resulting in an initial rate of 9.000% per annum.
NOTICE: Under no circumstances will the interest rate on this Note be
more than the maximum rate allowed by applicable law.
*Changed to 0.250 effective November 28, 2000.
PREPAYMENT. Borrower may pay without penalty all or a portion of the
amount owed earlier than it is due. Early payments will not, unless
agreed to by Lender in writing, relieve Borrower of Borrower's
obligation to continue to make payments of accrued unpaid interest.
Rather, they will reduce the principal balance due.
LATE CHARGE. If a regularly scheduled interest payment is 15 days or
more late, Borrower will be charged 5.000% of the unpaid portion of the
regularly scheduled payment. This late charge shall be paid to Lender by
Borrower for the purpose of defraying the expense incident to the
handling of the delinquent payment. If Lender demands payment of this
loan, and Borrower does not pay the loan within 15 days after Lender's
demand, Borrower also will be charged 5.000% of the unpaid portion of
the sum of the unpaid principal plus accrued unpaid interest.
DEFAULT. Borrower will be in default if any of the following happens:
(a) Borrower fails to make any payment when due. (b) Borrower breaks any
promise Borrower has made to Lender, or Borrower fails to comply with or
to perform when due any other term, obligation, covenant, or condition
contained in this Note or any agreement related to this Note, or in any
other agreement or loan Borrower has with Lender. (c) Borrower defaults
under any loan, extension of credit, security agreement, purchase or
sales agreement, or any other agreement, in favor of any other creditor
or person that may materially affect any of Borrower's property or
Borrower's ability to repay this Note or perform Borrower's obligations
under this Note or any of the Related Documents. (d) Any representation
or statement made or furnished to Lender by Borrower or on Borrower's
behalf is false or misleading in any material respect either now or at
the time made or furnished. (e) Borrower becomes insolvent, a receiver
is appointed for any part of Borrower's property, Borrower makes an
assignment for the benefit of creditors, or any proceeding is commenced
either by Borrower or against Borrower under any bankruptcy or
insolvency laws. (1) Any creditor tries to take any of Borrower's
property on or in which Lender has a lien or security interest. This
includes a garnishment of or levy on any of Borrower's accounts with
Lender. (g) Any guarantor dies or any of the other events described in
this default section occurs with respect to any guarantor of this Note.
(h) A material adverse change occurs in Borrower's financial condition,
or Lender believes the prospect of payment or performance of the
Indebtedness is impaired. (i) Lender in good xxxxx xxxxx itself
insecure.
If any default, other than a default in payment, is curable and if
Borrower has not been given a notice of a breach of the same provision
of this Note within the preceding twelve (12) months, it may be cured
(and no event of default will have occurred) if Borrower, after
receiving written notice from Lender demanding cure of such default: (a)
cures the default within fifteen (15) days; or (b) if the cure requires
more than fifteen (15) days, immediately initiates steps which Lender
deems in Lender's sole discretion to be sufficient to cure the default
and thereafter continues and completes all reasonable and necessary
steps sufficient to produce compliance as soon as reasonably practical.
LENDER'S RIGHTS. Upon default, Lender may declare the entire unpaid
principal balance on this Note and all accrued unpaid interest
immediately due, without notice, and then Borrower will pay that amount.
Upon default, including failure to pay upon final maturity, Lender, at
its option, may also, if permitted under applicable law, increase the
variable interest rate on this Note to 3.750 percentage points over the
Index. The interest rate will not exceed the maximum rate permitted by
applicable law. Lender may hire or pay someone else to help collect this
Note if Borrower does not pay. Borrower also will pay Lender that
amount. This includes, subject to any limits under applicable law,
Lender's attorneys' fees and Lender's legal expenses whether or not
there is a lawsuit, including attorneys' fees and legal expenses for
bankruptcy proceedings (including efforts to modify or vacate any
automatic stay or injunction), appeals, and any anticipated post-
judgment collection services. If not prohibited by applicable law,
Borrower also will pay any court costs, in addition to all other sums
provided by law. This Note has been delivered to Lender and accepted by
Lender in the State of New Jersey. If there is a lawsuit, Borrower
agrees upon Lender's request to submit to the jurisdiction of the courts
of Xxxxxx County, the State of New Jersey. Lender and Borrower hereby
waive the right to any jury trial in any action, proceeding, or
counterclaim brought by either Lender or Borrower against the other.
This Note shall be governed by and construed in accordance with the laws
of the State of New Jersey.
RIGHT OF SETOFF. Borrower grants to Lender a contractual security
interest in, and hereby assigns, conveys, delivers, pledges, and
transfers to Lender all Borrower's right, title and interest in and to,
Borrower's accounts with Lender (whether checking, savings, or some
other account), including without limitation all accounts held jointly
with someone else and all accounts Borrower may open in the future,
excluding however all XXX and Xxxxx accounts, and all trust accounts for
which the grant of a security interest would be prohibited by law.
Borrower authorizes Lender, to the extent permitted by applicable law,
to charge or setoff all sums owing on this Note against any and all such
accounts.
COLLATERAL. This Note is secured by UCC's filed with the New Jersey
Secretary of State and Bergen County Clerk's office with a lien on all
business assets: Subordination of officer debt I/N/O Xxxxxx X. Xxxxx
I/A/O $200,000.00; Cross-Collateralization and Cross-Defaulted with
existing loans.
LINE OF CREDIT. This Note evidences a revolving line of credit.
Advances under this Note may be requested orally by Borrower or by an
authorized person. Lender may, but need not, require that all oral
requests be confirmed in writing. All communications, instructions, or
directions by telephone or otherwise to Lender are to be directed to
Lender's office shown above. The following party or parties are
authorized to request advances under the line of credit until Lender
receives from Borrower at Lender's address shown above written notice of
revocation of their authority: Xxxxxx X. Xxxxx, President. Borrower
agrees to be liable for all sums either: (a) advanced in accordance with
the instructions of an authorized person or (b) credited to any of
Borrower's accounts with Lender. The unpaid principal balance owing on
this Note at any time may be evidenced by endorsements on this Note or
by Lender's internal records, including daily computer print-outs.
Lender will have no obligation to advance funds under this Note if: (a)
Borrower or any guarantor is in default under the terms of this Note or
any agreement that Borrower or any guarantor has with Lender, including
any agreement made in connection with the signing of this Note; (b)
Borrower or any guarantor ceases doing business or is insolvent; (c) any
guarantor seeks, claims or otherwise attempts to limit, modify or revoke
such guarantors guarantee of this Note or any other loan with Lender;
(d) Borrower has applied funds provided pursuant to this Note for
purposes other than those authorized by Lender; or (e) Lender in good
xxxxx xxxxx itself insecure under this Note or any other agreement
between Lender and Borrower.
REQUEST FOR FINANCIALS. Borrower and Guarantor(s) agree to provide
signed financial statements in a form satisfactory to the Lender within
ninety (90) days of fiscal year end and tax returns within fifteen (15)
days of filing on an annual basis. Failure to provide updated financial
statements and tax returns shall be considered as a default of the Note.
LINE OF CREDIT RENEWAL. This Line of Credit is subject to annual review.
Renewal will be based on Lender's ongoing satisfaction with Borrower's
financial condition.
11-01-1999 PROMISSORY NOTE Page 2
Loan No (Continued)
GENERAL PROVISIONS. This Note is payable on demand. The inclusion of
specific default provisions or rights of Lender shall not preclude
Lender's right to declare payment of this Note on its demand. Lender may
delay or forgo enforcing any of its rights or remedies under this Note
without losing them. Borrower and any other person who signs, guarantees
or endorses this Note, to the extent allowed by law, waive presentment,
demand for payment, protest and notice of dishonor. Upon any change in
the terms of this Note, and unless otherwise expressly stated in
writing, no party who signs this Note, whether as maker, guarantor,
accommodation maker or endorser, shall be released from liability. All
such parties agree that Lender may renew or extend (repeatedly and for
any length of time) this loan, or release any party or guarantor or
collateral; or impair, fail to realize upon or perfect Lender's security
interest in the collateral; and take any other action deemed necessary
by Lender without the consent of or notice to anyone. All such parties
also agree that Lender may modify this loan without the consent of or
notice to anyone other than the party with whom the modification is
made.
PRIOR TO SIGNING THIS NOTE, BORROWER READ AND UNDERSTOOD ALL THE
PROVISIONS OF THIS NOTE, INCLUDING THE VARIABLE
INTEREST RATE PROVISIONS. BORROWER AGREES TO THE TERMS OF THE NOTE AND
ACKNOWLEDGES RECEIPT OF A COMPLETED
COPY OF THE NOTE.
BORROWER:
The Xxxxx Electronics Corporation
By /s/ Xxxxxx X. Xxxxx
Xxxxxx X. Xxxxx, President
ATTEST:
/s/ Xxxx X. Xxxxx
Xxxx X. Xxxxx, Treasurer
LENDER:
Sovereign Bank
By /s/ Xxxxxx Xxxxxxxxx
Authorized Officer
