$60,000,000.00 October 18, 1996
TWELFTH REPLACEMENT REVOLVING LOAN NOTE
FOR VALUE RECEIVED, PIERCING PAGODA, INC. ("Borrower"), a Delaware
corporation having its chief executive office at ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ to pay to the order of SUMMIT BANK,
successor-in-interest to First Valley Bank ("Bank"), its successors and assigns,
at the office of Bank located at ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ or at such other location as designated by Bank from time to time, on or
before December 31, 1996, the principal sum of Sixty Million ($60,000,000.00)
Dollars or, if less, the unpaid principal amount of all loans and advances made
by Bank to or for the benefit of Borrower under and as part of the Revolving
Loan described in that certain Third Amended and Restated Loan Agreement dated
February 13, 1995 between Borrower and Bank (under its former name), as amended
by that certain letter agreement dated April 21, 1995 between Borrower and Bank
(under its former name), that certain Amendment to Third Amended and Restated
Loan Agreement dated August 4, 1995 between Borrower and Bank (under its former
name), that certain Second Amendment to Third Amended and Restated Loan
Agreement dated November 21, 1995 between Borrower and Bank (under its former
name), that certain Third Amendment to Third Amended and Restated Loan Agreement
dated September 5, 1996, and that certain Fourth Amendment to Third Amended and
Restated Loan and Security Agreement of even date herewith (the "Fourth
Amendment") between Borrower and Bank (as amended, the "Loan Agreement"),
together with interest thereon as specified herein.
This Note is that certain Twelfth Replacement Revolving Loan Note issued in
accordance with the terms and subject to the conditions of, and referred to in,
the Fourth Amendment and the Loan Agreement and all related instruments,
agreements and documents. All capitalized terms not otherwise defined in this
Note shall have the meanings ascribed to such terms in the Loan Agreement. The
outstanding principal balance of all loans made hereunder pursuant to the Loan
Agreement at any time shall be evidenced by Bank's books and records, which
shall be deemed to be conclusive and irrefutable evidence of the correctness
thereof unless Borrower objects thereto within thirty (30) days of receiving
notice thereof.
Notwithstanding the face amount of this Note the Line Limit shall be Sixty
Million ($60,000,000.00) Dollars and the Cash Advance Sublimit shall be
Thirty-Six Million ($36,000,000.00) Dollars.
Interest on the outstanding principal balance of the Revolving Loan shall
accrue and be payable at a per annum rate equal to the Prime Rate in effect from
time to time minus three-quarters (3/4%) percent (the "Variable Revolving Loan
Rate"). Each time the Prime Rate shall change, the Variable Revolving Loan Rate
shall change contemporaneously with such change in the Prime Rate.
Interest on all Loans shall be calculated on the basis of a year of 360
days for the actual number of days elapsed, and shall be due and payable
monthly, in arrears, on the fifteenth day of each month, commencing November 15,
1996.
Except as hereinafter provided, interest shall continue to accrue and be
payable on the unpaid principal balance of this Note at the aforesaid rate of
interest notwithstanding any demand for payment, acceleration and/or entry of
judgment for such sums. If any scheduled payment of principal or interest is not
made within five (5) days after Bank mails notice of non-payment to Borrower,
there shall become immediately due and payable, and Borrower shall pay to Bank,
an additional sum equal to five (5%) percent of the amount of such payment.
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Each installment shall be applied on account of the interest,
principal, late charges, or other sums payable hereunder in such order as the
Bank may, in its sole discretion, determine.
DISBURSEMENT OF PROCEEDS - Borrower hereby represents and warrants to Bank that
the principal of this Note will be used solely for business and/or commercial
purposes.
RIGHT TO COMPLETE NOTE - Bank may at any time from time to time, without notice
to any obligor for the Obligations: (1) date this Note as of the date when the
loan evidenced hereby was made; (2) complete any blank spaces according to the
terms upon which Bank has granted such loan; and (3) cause the signature of one
or more Persons to be added as additional borrowers without in any way affecting
or limiting the liability of the existing obligors for the Obligations to Bank.
EVENTS OF DEFAULT - Each of the following shall be an "Event of Default"
hereunder: (1) Borrower shall fail to pay when due any installment of principal
or interest payable hereunder or any Obligations and such failure shall continue
for a period of five (5) Business Days after the mailing of notice of such
default by Bank; (2) Borrower shall fail to observe or perform any other
Obligation to be observed or performed by them hereunder, under the Loan
Agreement or under any other agreement between Borrower and Bank.
BANK'S RIGHTS UPON DEFAULT - Upon the occurrence of an Event of Default, Bank
shall have all rights and remedies set forth in the Loan Agreement including,
but not limited to:
(1) the right to accelerate the maturity of this Note and demand
immediate payment of all outstanding principal and accrued interest thereon;
(2) the right to exercise its right of set-off and all of the rights,
privileges and remedies under the Pennsylvania Uniform Commercial Code and all
of its rights and remedies under the Loan Agreement, this Note or any other
note, or other agreement, instrument or document issued in connection with or
arising out of any of the Obligations, or at law or in equity, all of which
remedies shall be cumulative and not alternative. Borrower and each other
obligor for the Obligations waives and releases any right to require Bank to
collect any of the Obligations from any other collateral under any theory of
marshalling of assets or otherwise, and specifically authorizes Bank to apply
any collateral in which any such obligor has any right, title or interest
against any of the Obligations in any manner that Bank may determine; and
(3) the right upon five (5) days written notice to Borrower forwarded
to the address of Borrower on the books of Bank, to begin accruing interest, in
addition to the interest provided for above, at a rate not to exceed five
percent (5%) per annum on the unpaid principal balance of this Note; provided,
however, that no interest shall accrue hereunder in excess of the maximum amount
of interest then allowed by law. Such interest shall accrue notwithstanding the
entry or obtaining of any judgment and shall be added to and become part of the
Obligations. ▇▇▇▇▇▇▇▇ agrees to pay such accrued interest upon demand. The
waiver of any Event of Default shall not be a waiver of any subsequent Event of
Default.
WARRANT OF ATTORNEY - Borrower hereby irrevocably authorizes and empowers any
Attorney or any Clerk of any court of record upon or after the occurrence of any
Event of Default to appear for and CONFESS JUDGMENT against ▇▇▇▇▇▇▇▇, (A) for
such sums as are due and/or may become due on the Obligations, and/or (B) in any
action of replevin instituted by Bank to obtain possession on any collateral
securing this Note or securing any of the Obligations, in either case with or
without declaration, with costs of suit, without stay of execution and with an
amount not to exceed five (5%) percent of the unpaid principal amount of the
Obligations, but not less than Five Thousand ($5,000.00) Dollars, added for
attorney's collection fees. Borrower: (1) waives the right of inquisition on any
real estate levied on, voluntarily condemns the same, authorizes the
Prothonotary or Clerk to enter upon the Writ of Execution said voluntary
condemnation and agrees that said real estate may be sold on a Writ of
Execution; (2) to the extent permitted by law, waives and releases all relief
from all redemption, appraisement, stay,
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exemption or appeal laws of any state now in force or hereafter enacted; and (3)
releases all errors in such proceedings. If a copy of this Note, verified by
affidavit by or on behalf of Bank shall have been filed in such action, it shall
not be necessary to file the original Note as a Warrant of Attorney. The
authority and power to appear for and enter judgment against Borrower shall not
be exhausted by the initial exercise thereof, and the same may be exercised,
from time to time, as often as Bank shall deem necessary and desirable, and this
Note shall be a sufficient Warrant therefore. Bank may enter one or more
judgments in the same or different counties for all or part of the Obligations,
without regard to whether judgment has been entered on more than one occasion
for the same Obligations. In the event any judgment entered against Borrower
hereunder is stricken or opened upon application by or on ▇▇▇▇▇▇▇▇'s behalf for
any reason whatsoever, Bank is hereby authorized and empowered to again appear
for and Confess Judgment against Borrower; subject, however, to the limitation
that such subsequent entry or entries of judgment by Bank may only be done to
cure any errors in prior proceedings, only and to the extent that such errors
are subject to cure in the later proceedings.
MISCELLANEOUS - Borrower hereby waives protest, notice of protest, presentment,
dishonor, notice of dishonor and demand. ▇▇▇▇▇▇▇▇ agrees to reimburse Bank for
all costs, including court costs (whether incurred in any bankruptcy,
insolvency, appellate or other proceeding) and reasonable attorneys' fees,
incurred by Bank in connection with the collection and enforcement hereof.
Interest shall be calculated hereunder for the actual number of days that the
principal is outstanding, based on a year of three hundred sixty (360) days.
Changes in the rate of interest hereon shall become effective on the days on
which Bank announces changes in its Prime Rate. The rights and privileges of
Bank under this Note shall inure to the benefit of its successors and assigns.
All representations, warranties and agreements of Borrower and each obligor for
the Obligations made in connection with this Note shall bind ▇▇▇▇▇▇▇▇'s and such
obligor's personal representatives, heirs, successors and assigns. If any
provision of this Note shall for any reason be held to be invalid or
unenforceable, such invalidity or unenforceability shall not affect any other
provision hereof, but this Note shall be construed as if such invalid or
unenforceable provision had never been contained herein. The waiver of any Event
of Default or the failure of Bank to exercise any right or remedy to which it
may be entitled shall not be deemed a waiver of any subsequent Event of Default
or of Bank's right to exercise that or any other right or remedy to which Bank
is entitled. This Note has been delivered to and accepted by Bank in, and shall
be governed by, the laws of the Commonwealth of Pennsylvania. This Note replaces
and supersedes (but does not extinguish any unpaid Obligations evidenced by or
constitute a novation of) that certain Eleventh Replacement Revolving Loan Note
dated September 5, 1996 in the principal sum of Sixty Million ($60,000,000.00)
Dollars executed and delivered by Borrower to Bank. The parties agree to the
jurisdiction of the federal and state courts located in Pennsylvania in
connection with any matter arising hereunder, including the collection and
enforcement hereof.
▇▇▇▇▇▇▇▇ has duly executed this Note the day and year first above
written and has hereunto set ▇▇▇▇▇▇▇▇'s hand and seal.
ATTEST: PIERCING PAGODA, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ By:/s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
------------------------------ ---------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Title: Treasurer Title: President
[Affix Corporate Seal]
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