Exhibit 10.2
PROMISSORY NOTE
$4,000,000.00
December 15, 2006
White Bear Lake, Minnesota
FOR VALUE RECEIVED, the undersigned, Blue
Ridge Real Estate Company, a Pennsylvania corporation, ("Maker")
promises to pay to the order of STATE FARM BANK, F.S.B., a Federal
Savings Bank, its successors or assigns ("State Farm"), the
principal sum of Four Million and 00/100 Dollars ($4,000,000.00)
("Principal"), together with interest on the unpaid Principal
balance outstanding from the date hereof until paid at the Interest
Rate (defined below). Interest shall be computed on the basis of
the actual number days in the relevant Interest Period. Principal
and interest accrued thereon, together with all other sums which
may be at any time due, owing or required to be paid by the terms
of the Mortgage (hereinafter defined) and other Loan Documents (as
defined in the Mortgage) are hereinafter collectively called the
"Indebtedness" .
I.
Terms: Definitions.
A.
"Interest Rate" shall mean the Initial
Interest Rate or the Revised Rate, as applicable, and the following
terms shall apply:
1.
The initial interest rate (the "Initial
Interest Rate") which shall be in effect during the Initial
Interest Period shall be six and twenty five hundredths percent
(6.25%) per annum, which has been calculated by State Farm by
adding the LIBOR Rate plus the Applicable Percentage.
2.
The Initial Interest Rate shall be
revised for the subsequent Interest Period (the "Initial Rate
Revision") and for all other subsequent Interest Periods at the
then-applicable LIBOR Rate plus the Applicable Percentage (the
"Revised Rate"). State Farm shall provide notice to
advise the Maker as to the Initial Rate Revision or the Revised
Rate (as applicable) for the then-subsequent Interest Period no
later than the close of business on the day that the Initial Rate
Revision or the Revised Rate (as applicable) is determined by State
Farm. The determination of the Initial Rate Revision or
the Revised Rate (as applicable) shall occur two (2) business days
prior to the end of the then-current Interest Period. The Initial
Rate Revision shall become effective on the first day of the month
following the expiration of the Initial Interest Period. The
Revised Rate shall become effective on the first day of the month
following the expiration of the then-applicable Interest
Period.
B.
"Applicable Percentage" shall mean nine
tenths percent (.90%).
C.
"Business Day" shall mean any day that is
not a Saturday, a Sunday or a day on which banks are required or
permitted to be closed in the State of Illinois.
D.
"Initial Interest Period" shall mean the
period of time beginning on the date State Farm funds the Loan
("Loan Funding Date") and ending on the last calendar day of the
month in which the Loan Funding Date occurred.
Initial: EDD
E.
"Interest Period" shall mean for any
period for which interest is to be calculated or paid, the period
commencing on the first day of the month following the expiration
of the Initial Interest Period or the preceding Interest Period (as
applicable) and continuing up to the last calendar day of the month
in which the Initial Interest Period or Interest Period (as the
case may be) expires. Other than the Initial Interest Period, each
Interest Period shall be three (3) calendar months in
length.
F.
"LIBOR Business Day" shall mean a
Business Day on which dealings in U.S. dollars are carried on in
the London Interbank Market.
G.
"LIBOR Rate" means, for any Interest
Period, the rate per annum (rounded upwards, if necessary, to the
next higher one hundred-thousandth of a percentage point) for
deposits in U.S. Dollars for a 3-month period that appears on the
Bloomberg Financial Markets Service Page BBAM-l (or if such page is
not available, the Reuters Screen LIBO Page) as of 11:00 A.M.
(London, England time) two (2) LIBOR Business Days before the
commencement of such Initial Interest Period or Interest Period (as
the case may be).
The LIBOR Rate shall be: (i) determined;
and (ii) Notice (the "Notice") provided to the Maker by State Farm
as indicated in this Article I. The Notice shall include a
copy of the relevant screen used for the determination of LIBOR, a
calculation of the LIB OR Rate for such Interest Period and the
number of days in such Interest Period. If the Maker does not
concur with terms contained in the above Notice, the Maker shall
provide a Response (the "Response") within three (3) business days
to State Farm after its receipt of the Notice. In the absence of a
timely Response the terms of the Notice shall be deemed accepted by
the Maker.
H.
"Reuters Screen LIBO Page" means the
display designated as the "LIBO" page on the Reuters Monitory Money
Rates Service (or such other page as may replace the LIBO page on
that service or such other service as may be nominated by the
British Bankers' Association as the information vendor for the
purpose of displaying British Bankers' Association Interest
Settlement Rates for U.S. Dollar Deposits).
II.
Payments.
A.
Principal and interest shall be payable
as follows:
1.
On the date of disbursement, Maker shall
pay, in advance, all interest at the Initial Interest Rate from the
date of disbursement to and including December 31, 2006 (said time
period being the Initial Interest Period);
2.
On the first (1st) day of February, 2007,
and on the first (1st) day of each succeeding month thereafter
until this Note matures (each a "Regular Payment Date"), Maker
shall pay interest only (each, a "Monthly Payment"), in arrears,
accruing on the outstanding Principal balance, at the Revised Rate
effective during the applicable Interest Period;
3.
On or before the Maturity Date, which
shall be January 1, 2009, subject to Paragraph XV below, Maker
shall pay the entire unpaid Principal balance and any interest
accrued but remaining unpaid and all other Indebtedness. Maker
acknowledges that the Monthly
2
Initial: EDD
Payments will not be sufficient to fully
amortize the Principal amount of this Note and that a "balloon"
payment will be due on the Maturity Date.
B.
All required payments are to be made to
State Farm at One State Farm Plaza, Bloomington, Illinois 61710,
Attention: Investment Accounting, D-3, or at any other place State
Farm shall designate in writing.
C.
All Obligations (as defined in the
Mortgage) are payable in lawful money of the United States of
America which is legal tender for public and private
debts.
D.
Capitalized terms not otherwise defined
herein shall have the meanings ascribed to such terms in the
Mortgage and other Loan Documents.
III.
Events of Default
A.
It shall constitute an event of default
("Event of Default") of and under this Promissory Note ("Note") if
any of the following events shall occur:
1.
Maker shall fail to pay any installment
of Principal and interest when due under this Note. However,
Monthly Payments received by State Farm within ten (10) days of the
Regular Payment Date shall be considered made as required. If
payment is not received by State Farm by the tenth day of the month
when due, the Default Rate (as defined below) shall apply from the
first day of such month.
2.
Maker shall fail to perform or observe
any of the other covenants, agreements or conditions of this Note
and all applicable notice and cure periods, if any, have expired or
an Event of Default shall occur under any of the other Loan
Documents now or hereafter evidencing or securing the
Indebtedness.
B.
While any Event of Default exists, the
Interest Rate shall be increased to five percent (5%) per annum in
excess of the Interest Rate then applicable (the "Default Rate")
from the date of the Event of Default until such Event of Default
is cured. The fluctuating Default Rate at which interest accrues
shall be adjusted simultaneously, at each change of the LIBOR Rate.
Failure to charge such increased interest shall not be a waiver of
the right to do so at any future time or with respect to any other
Event of Default. It is a condition precedent to the cure of
any Event of Default that Maker shall pay all Principal and accrued
interest required under this Note (i.e. that would have been paid
but for the Event of Default) to the most current Regular Payment
Date, and the difference between the Default Rate and the Interest
Rate from the date of the first occurrence of the Event of Default
to the date upon which the Event of Default is cured.
C.
Prior to an Event of Default, payments
received by State Farm shall be applied first to interest and the
remainder to Principal. After an Event of Default, State Farm may,
at its option, apply any payments or other amounts received first
to the payment of State Farm's expenses incurred in accordance with
the provisions of the Loan Documents, then to interest, and the
remainder to Principal.
3
Initial: EDD
D.
In case of an Event of Default by Maker
in the performance or observance of any of the covenants,
agreements or conditions of this Note or the other Loan Documents
and the expiration of any applicable cure periods, State Farm, at
its option and without further notice, may declare the
Indebtedness, including the entire Principal balance, together with
all interest accrued and unpaid thereon, to be immediately due and
payable. Failure to exercise this option for a particular Event of
Default shall not constitute a waiver of the right to exercise same
in case of any subsequent Event of Default.
IV.
Security.
This Note is secured by, among other Loan
Documents, (i) a Mortgage and Security Agreement executed by Maker
to and in favor of State Farm of even date with this Note
("Mortgage") which encumbers and constitutes a lien upon and
security interest in certain real property and fixtures located in
City of White Bear Lake, County of Washington, State of Minnesota
(the "State") and certain other properties, rights and interests,
all as more fully described in the Mortgage (the "Premises") and
(ii) an Assignment of Rents and Leases executed by Maker to and in
favor of State Farm of even date herewith (the "Assignment of Rents
and Leases") in which Rents (as defined therein) and the Lease (as
defined therein) are absolutely and unconditionally assigned by
Maker to State Farm, the terms and provisions of which Mortgage and
Assignment of Rents and Leases are incorporated herein by reference
and made a part hereof.
V.
Prepayment.
A.
This Loan shall be open to prepayment
during the term of the Loan provided Maker first gives State Farm
written notice at least thirty (30) days but no more than sixty
(60) days before the Payment Date selected by Maker for prepayment
(the "Prepayment Date"), Maker may prepay the entire outstanding
Principal on said Prepayment Date; provided that all other amounts
due under the Loan Documents as Indebtedness are also
paid.
Failure to prepay on the selected
Prepayment Date shall not be a default by Borrower hereunder but
shall be considered a waiver by Maker of the present right to
prepay on such Prepayment Date.
B.
If State Farm declares the entire
Indebtedness to be immediately due and payable, pursuant to the
terms of the Loan Documents, Maker agrees that a fee ("Prepayment
Fee") equal to one percent (1 %) of the entire Principal amount of
the Loan then outstanding, calculated as if the Prepayment Date
were the date of acceleration, shall apply if allowed by Applicable
Law (as hereinafter defined). The Loan may be voluntarily prepaid
without a Prepayment Fee on any Prepayment Date. No Prepayment Fee
shall be payable in the event that the Loan is prepaid in whole or
in part by application of insurance or condemnation proceeds as
required by the Loan Documents.
VI.
Limitat
