EXHIBIT 10.26
MORTGAGE NOTE
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$3,200,000.00
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January 14, 2004
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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 Payee’s office located at 22
West State Street, Media, Pennsylvania, 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, Payee 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.
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(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 Route 1, Chadds Ford Township,
Delaware County, Pennsylvania, 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
Payee’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,
