Exhibit 10.16
EQUIPMENT LINE OF CREDIT NOTE
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$150,000.00 Bala Cynwyd, Pennsylvania
August 31, 2002
FOR VALUE RECEIVED, without defalcation, X. X. XXXX CO., INC., a Delaware
corporation ("Maker"), in accordance with the terms and conditions set forth
below, hereby promises to pay to the order of SOVEREIGN BANK (the "Bank"), the
principal sum of One Hundred Fifty Thousand Dollars ($150,000.00) or such lesser
amount as may be advanced to Maker, in lawful money of the United States of
America, together with interest thereon at an annual rate equal to the "Prime
Rate" (as defined herein) plus one-quarter percent (.25%); provided, however,
that the amount advanced by Bank in each instance shall not exceed eighty
percent (80%) of the lesser of the net book value or the current market value of
the specific equipment being purchased and, in the aggregate, shall not exceed
$150,000.00.
(a) The "Prime Rate" is the floating annual rate of interest that is
announced from time to time by the Bank as the Prime Rate and is used by the
Bank as a reference base with respect to different rates charged to borrowers.
The Prime Rate shall change simultaneously and automatically upon the Bank's
designation of any change in such Prime Rate. The Bank's determination and
designation from time to time of the referenced rate shall not in any way
preclude the Bank from making loans to other borrowers at a rate which is higher
or lower than or different from the Prime Rate.
(b) Interest shall be due and payable monthly in arrears commencing
September 1, 2003 and continuing on the first day of each month thereafter until
the Bank's credit availability evidenced by this Note has expired or been
terminated, and the principal amount of and all accrued interest with regard to
this Note have been paid in full (it being understood that interest shall again
accrue upon any subsequent borrowing under the Equipment Line of Credit).
(c) Interest shall be computed on the basis of a 360-day year for the
actual number of days elapsed (365/360 or 366/360 as appropriate).
(d) Principal shall be due and payable in full on the earlier to occur of
an Event of Default or June 30, 2004.
(e) Upon the occurrence of a default hereunder, which default remains
uncured after five (5) days notice to Maker from the Bank, the rate of interest
shall be increased to a rate equal to two percent (2%) above the Prime Rate,
payable on the date of default (the "Default Rate"). Interest at the rate
provided for herein, or the Default Rate, shall continue to accrue at such rate,
and continue to be paid even after default, maturity, acceleration, recovery of
judgment, bankruptcy or insolvency proceeding of any kind.
(f) If any of the aforesaid payments of interest shall become overdue for
a period in excess of ten (10) days, Maker shall pay the Bank a "late charge" of
five percent (5%) of the monthly interest payment then past due.
(g) All payments of principal and interest with regard to this Note shall
be made in lawful money of the United States of America in immediately available
funds at the Bank's office at 0000 Xxxxxxxxx Xxxxxxxxx, Xxxxxxxxxx, Xxxxxxxxxxxx
19610 or at such other place as the Bank shall designate in writing.
(h) Maker shall not be obligated to pay and the Bank shall not collect
interest at a rate in excess of the maximum permitted by law or the maximum that
will not subject the Bank to any civil or criminal penalties. If, because of the
acceleration of maturity, the payment of interest in advance or any other
reason, Maker is required, under the provisions of the Loan and Security
Agreement dated March 31, 2000, as amended (the "Loan Agreement"), to pay
interest at a rate in excess of such maximum rate, the rate of interest under
such provisions shall immediately and automatically be reduced to such maximum
rate, and any payment made in excess of such maximum rate, together with
interest thereon at a rate provided herein from the date of such payment, shall
be immediately and automatically applied to the reduction of the unpaid
principal balance of this Note as of the date on which such excess payment is
made. If the amount to be so applied to reduction of the unpaid principal
balance exceeds the unpaid principal balance, the amount of such excess shall be
refunded by the Bank to Maker.
(i) Notwithstanding the face amount of this Note, the liability of Maker
under this Note shall be limited at all times to the unpaid principal amount of,
all accrued unpaid interest on, all late charges with respect to, and all costs
incurred in the collection of any sum due under and in connection with the
Equipment Line of Credit Facility (as provided in Section 2.6 of the Loan
Agreement) and as reflected on the records of the Bank.
(j) This Note is the Note referred to in Section 2.7 of the Loan Agreement
and is entitled to all the benefits of such Loan Agreement and all the security
referred to therein. In the event of a conflict between the terms of this Note
and the terms of the Loan Agreement, the terms of the Loan Agreement shall
control.
(k) All of the agreements, conditions, covenants, provisions and
stipulations contained in the Loan Agreement which are to be kept and performed
by Maker 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, and Maker
covenants and agrees to keep and perform them, or cause them to be kept and
performed, strictly in accordance with their terms.
(l) Upon the occurrence of an Event of Default as that term is defined in
Article 8 of the Loan Agreement, then, and in such event, the Bank may declare
this Note to be due and payable, whereupon the entire unpaid balance of
principal, together with all accrued interest thereon, shall become immediately
due and payable without presentment, demand, protest or other notice of any
kind, all of which are hereby expressly waived, anything herein or in the Loan
Agreement to the contrary notwithstanding.
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(m) UPON THE OCCURRENCE OF AN EVENT OF DEFAULT AS THAT TERM IS DEFINED IN
ARTICLE 8 OF THE LOAN AGREEMENT, MAKER HEREBY IRREVOCABLY AUTHORIZES AND
EMPOWERS THE PROTHONOTARY OR ANY ATTORNEY OF ANY COURT OF THE COMMONWEALTH OF
PENNSYLVANIA TO APPEAR AT ANY TIME FOR MAKER IN ANY ACTION BROUGHT AGAINST MAKER
ON THIS NOTE AT THE SUIT OF THE BANK, WITH OR WITHOUT DECLARATION FILED, AS OF
ANY TERM, AND THEREIN TO CONFESS OR ENTER JUDGMENT AGAINST MAKER FOR THE ENTIRE
UNPAID PRINCIPAL OF THIS NOTE AND ALL OTHER SUMS PAYABLE BY OR ON BEHALF OF
MAKER PURSUANT TO THE TERMS OF THIS NOTE OR THE LOAN AGREEMENT, AND ALL
ARREARAGES OF INTEREST THEREON, TOGETHER WITH COSTS OF SUIT, REASONABLE
ATTORNEY'S COMMISSION FOR COLLECTION OF THE TOTAL AMOUNT THEN DUE BY MAKER TO
THE BANK (BUT IN ANY EVENT NOT LESS THAN THREE THOUSAND DOLLARS ($3,000.00)),
AND FOR SO DOING THIS NOTE OR A COPY HEREOF VERIFIED BY AFFIDAVIT SHALL BE A
SUFFICIENT WARRANT. THE AUTHORITY GRANTED HEREIN TO CONFESS JUDGMENT SHALL NOT
BE EXHAUSTED BY ANY EXERCISE THEREOF BUT SHALL CONTINUE FROM TIME TO TIME AND AT
ALL TIMES UNTIL PAYMENT IN FULL OF ALL AMOUNTS DUE HEREUNDER.
(n) The remedies of the Bank as provided herein or in the Loan Agreement,
and the warranties contained herein or in the Loan Agreement, shall be
cumulative and concurrent, and may be pursued singly, successively, or together
at the sole discretion of the Bank, and may be exercised as often as occasion
therefor shall occur; and the failure to exercise any such right or remedy shall
in no event be construed as a waiver or release thereof.
(o) Maker hereby waives and releases all errors, defects and imperfections
in any proceedings instituted by the Bank under the terms of this Note or of the
Loan Agreement, as well as all benefit that might accrue to Maker by virtue of
any present or future laws exempting any property, real or personal, or any part
of the proceeds arising from any sale of any such property, from attachment,
levy, or sale under execution, or providing for any stay of execution, exemption
from civil process, or extension of time for payment; and Maker agrees that any
real estate that may be levied upon pursuant to a judgment obtained by virtue
hereof, on any writ of execution issued thereon, may be sold upon any such writ
in whole or in part in any order desired by the Bank.
(p) Maker and all endorsers, sureties and guarantors hereby jointly and
severally waive presentment for payment, demand, notice of demand, 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 they agree that the liability of each of them shall be
unconditional, without regard to the liability of any other party, and shall not
be affected in any manner by any indulgence, extension of time, renewal, waiver
or modification granted or consent to any and all extensions of time, renewals,
waivers, or modifications that may be granted by the Bank with respect to the
payment or other provisions of this Note, and to the release of the collateral
or any part thereof, with or without substitution, and agree that additional
makers, endorsers, guarantors, or sureties may become parties hereto without
notice to them or affecting their liability hereunder.
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(q) The Bank shall not be deemed, by any act of omission or commission, to
have waived any of its rights or remedies hereunder unless such waiver is in
writing and signed by the Bank, and then only to the extent specifically set
forth in the writing. A waiver on one event shall not be construed as continuing
or as a bar to or waiver of any right or remedy to a subsequent event.
(r) This instrument shall be governed by and construed according to the
domestic internal laws (but not the law of conflict of laws) of the Commonwealth
of Pennsylvania.
(s) Whenever used, the singular number shall include the plural, the
plural the singular, the use of any gender shall be applicable to all genders,
and the words the "Bank" and "Maker" shall be deemed to include the respective
successors and assigns of the Bank and Maker.
(t) Any provision contained in this Note which is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability, without invalidating the
remaining provisions hereof and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.
IN WITNESS WHEREOF, Maker, intending to be legally bound hereby, has
caused this Note to be duly executed by an authorized officer, and its corporate
seal to be affixed and attested, the day and year first above written.
X. X. XXXX CO., INC.
By: /S/ Xxxxx X. Xxxxxx
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Xxxxx X. Xxxxxx, President
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