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DEMAND GRID PROMISSORY NOTE
PRIME RATE

 
 

$2,800,000.00      September 22, 2010    New York, New York 

 

FOR VALUE RECEIVED, the undersigned, Freundlich Supply Company, Inc. (the
“Borrower”) HEREBY PROMISES TO PAY to the order of ISRAEL DISCOUNT BANK OF NEW
YORK, its successors and assigns (hereinafter the “Bank”), the principal amount
of  Two Million Eight Hundred Thousand ($2,800,000.00), in lawful money of the
United States (the “Loan”), or the aggregate unpaid principal amount of all
revolving credit advances (hereinafter each being referred to as an “Advance”
and collectively, the “Advances”) made to Borrower, as set forth on Bank’s
computer system on the Loan Enquiry Page(s) (the “Loan Enquiry Page(s)”) ON
DEMAND or on the maturity date of each such Advance as shown on the Loan Enquiry
Page(s), and in no event later than the Maturity Date, and to pay interest on
the unpaid principal balance of this Demand Grid Promissory Note (this “Note”)
in the manner and at the rate as hereinafter specified and such amounts due
hereunder.

Borrower acknowledges that this Note is an obligation which is payable on demand
and that notwithstanding anything to the contrary in any other instrument,
agreement or other document to which Borrower and/or Bank is a party, the
enumeration in any such document of specific events of default, conditions
and/or covenants relating to the Advances evidenced by this Note or to any other
Obligations, shall not be construed to qualify, define or otherwise limit in any
way Bank's right, power or ability, at any time, to make demand for payment of
the principal of and interest on this Note, and Borrower agrees that the
occurrence of any event of default or breach of any condition or covenant in any
such document is not the only basis for demand to be made on this Note.

1.           Defined Terms.  As used in this Note the following terms shall have
the following meanings:

The term “Additional Costs” shall have the meaning as defined in Section 17.

The terms “Advance” or “Advances” shall have the meanings as defined in the
introductory paragraph.

The term “Bank” shall have the meaning as defined in the introductory paragraph.

The term “Bankruptcy Code” shall mean Title 11 of the United States Code, as
amended.
 
The term “Borrower” shall have the meaning as defined in the introductory
paragraph.
 
 

 

ISRAEL DISCOUNT BANK OF NEW YORK · MEMBER FDIC
511 FIFTH AVE. NEW YORK, NY 10017-4997 · TEL: (212) 551-8500
 
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The term “Business Day” shall mean any day other than a Saturday, Sunday, or
other day on which commercial banks in New York are authorized or required to
close under the laws of the State of New York.

The term “Collateral” shall mean any and all of Borrower’s right, title and
interest in and to all properties, assets and rights of Borrower, whether now
owned or hereafter created, acquired or arising and wheresoever located together
with all of the proceeds and products thereof in which the Bank has been granted
or otherwise obtained a security interest.

The term “Default Interest Rate” shall have the meaning as defined in Section 4.

The term “Event of Default” shall mean any of the events or conditions specified
in Section 12 hereof.

The term “Guarantor” means each endorser, guarantor and surety of this Note or
the Obligations evidenced hereby and any person who is primarily or secondarily
liable, in whole or in part, for the repayment of the Obligations or any portion
thereof (including without limitation each Guarantor), any person who has
granted security for the repayment of the Obligations, together with such
person’s heirs, personal representatives, successors and assigns.

The term “Indebtedness” shall mean all items of indebtedness, obligation or
liability, whether matured or unmatured, liquidated or unliquidated, funded or
unfunded, direct or contingent, joint or several, which would properly be
included in the liability section of a balance sheet or in a footnote to a
financial statement in accordance with generally accepted accounting principles,
and shall also include (a) all indebtedness guaranteed, directly or indirectly
in any manner, or endorsed (other than for collection or deposit in the ordinary
course of business) or sold with recourse, (b) all indebtedness in effect
guaranteed, directly or indirectly, through agreements, contingent or otherwise,
and (c) all indebtedness secured by (or for which the holder of such
indebtedness has a right, contingent or otherwise, to be secured by) any
mortgage, deed of trust, pledge, assignment, lien, security interest or other
charge or encumbrance upon property owned or acquired subject thereto, whether
or not the liabilities secured thereby have been assumed or guaranteed.

The terms “Indemnified Party” or “Indemnified Parties” shall have the meanings
as defined in Section 27.

The term “Interest” means the annual rate of interest payable on the outstanding
Advances in accordance with Sections 3 and 4.

The term “Loan” shall have the meaning as defined in the introductory paragraph.

The term “Loan Documents” shall mean this Note and any other document,
instrument or agreement and any amendments thereto, evidencing or securing the
Obligations, or now or at any time hereafter executed, delivered or recorded in
connection with the Obligations, any other note, any loan commitment,
requisition, letter agreement, line of credit agreement, commercial financing
agreement, security agreement, guaranty of payment, mortgage, deed of trust,
pledge agreement, loan agreement, loan and security agreement, hypothecation
agreement, indemnity agreement, letter of credit application and agreement, and
assignment, all as amended, restated, extended, renewed, supplemented, modified
or replaced from time to time.
 
 

 

ISRAEL DISCOUNT BANK OF NEW YORK · MEMBER FDIC
511 FIFTH AVE. NEW YORK, NY 10017-4997 · TEL: (212) 551-8500
 
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The term “Loan Enquiry Page(s)” shall have the meaning as defined in the
introductory paragraph.

The term “Margin” shall mean: (i) one hundred basis points (100 bps)

The term “Maturity Date” shall mean July 31, 2011.

The term “Minimum Advance” shall have the meaning as defined in Section 2(c).

The term “Note” shall mean this Demand Grid Promissory Note.

The term “Obligations” shall mean all existing and future debts, liabilities and
obligations of every kind or nature at any time owing by Borrower to Bank,
whether under this Note or under any other existing or future instrument,
document or agreement, between Borrower and Bank, whether joint or several,
related or unrelated, primary or secondary, matured or contingent, due or to
become due, including, without limitation, the debts, liabilities and
obligations in respect of this Note and any extensions, modifications,
substitutions, increases and renewals thereof.  Without limiting the generality
of the foregoing, Obligations shall include any other loan, advance or extension
of credit, under any existing or future loan agreement, promissory note, or
other instrument, document or agreement either arising directly between Borrower
and Bank or acquired out­right, conditionally or as collateral security from
another person or entity by Bank.

The term “Obligor” shall mean individually and collectively Borrower, each
endorser and surety of this Note, any person who is primarily or secondarily
liable for the repayment of this Note or any portion thereof (including without
limitation each Guarantor), any person who has granted security for the
repayment of the Note, together with such person’s heirs, personal
representatives, successors and assigns.

The term “Prime Rate” shall mean a fluctuating rate per annum equal to the rate
of interest publicly announced by Bank at its principal office from time to time
as its Prime Rate.  Any change in the Prime Rate shall be effective on the date
such change is announced by Bank.
 
 

 

ISRAEL DISCOUNT BANK OF NEW YORK · MEMBER FDIC
511 FIFTH AVE. NEW YORK, NY 10017-4997 · TEL: (212) 551-8500
 
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The term “Prior Note” shall mean that certain grid promissory note referenced
and described in paragraph 26 below.

2.           Advances.

(a)           Each request by Borrower for an Advance shall be received by Bank
not later than 12:00 noon, New York local time, on the date of such request.

(b)           Each request for an Advance shall specify inter alia (i) the
requested date of such Advance and (ii) the requested amount of such Advance.

(c)           A request for an Advance shall be irrevocable upon Bank’s first
receiving notification thereof and shall be in a minimum amount (“Minimum
Advance”) of: (i) $50,000.00; or (ii) the remaining amount of the available
undrawn balance under the Loan if such amount is less than $50,000.00.
 
(d)           Subject to the terms and conditions hereof and the terms and
conditions set forth in the Loan Documents, Advances that are repaid or prepaid
may be reborrowed on a revolving basis up to the maximum amount of this Note.

(e)           Borrower shall utilize the Advances for working capital purposes.

3.           Principal and Interest.

(a)           Interest shall be payable on the outstanding daily unpaid
principal amount of each Advance from the date hereof until payment in full is
made and shall accrue and be payable at the rates set forth or provided for
herein, before and after default, before and after maturity, before and after
judgment and before and after the commencement of any proceeding under the
Bankruptcy Code, with interest on overdue interest to bear interest and to be
compounded at the Default Interest Rate, in each case, to the fullest extent
permitted by applicable laws.

(b)           Interest accrued on each Advance shall be due and payable in
arrears on the first day of each calendar month commencing on the first day of
the first full month following the date of such Advance and at maturity (whether
as stated or by acceleration). Except as otherwise provided in Section 4, the
unpaid principal amount of each Advance shall bear interest at a rate per annum
equal to the Prime Rate plus 100 bps.

(c)           If not sooner paid, the unpaid principal amount of each Advance
shall be due and payable on the date set forth on Bank’s Loan Enquiry Page(s) as
the due date for such Advance.

(d)           The unpaid principal amount of any Advance may, at any time and
from time to time, be voluntarily paid or prepaid in whole or in part except
that, with respect to any voluntary prepayment, (i) Bank shall have received
written notice of any prepayment by 12:00 noon, New York local time on a
Business Day on the date of prepayment which notice shall identify the date and
amount of the prepayment and  (ii) each prepayment of an Advance shall be
accompanied by payment of interest accrued to the date of payment on the amount
of principal paid.
 
 

 

ISRAEL DISCOUNT BANK OF NEW YORK · MEMBER FDIC
511 FIFTH AVE. NEW YORK, NY 10017-4997 · TEL: (212) 551-8500
 
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(e)           Bank may act without liability upon the basis of telephonic notice
believed by Bank in good faith to be from Borrower.  Borrower shall immediately
confirm to Bank, in writing, each telephonic notice.  All Advances are made at
Bank’s sole and absolute discretion and Bank may, at its option and in its sole
and absolute discretion and without notice to the undersigned, decline to make
any Advance requested by Borrower.  Borrower hereby expressly authorizes Bank to
record in its computer system the amount and date of each Advance, the
applicable rate of interest, the applicable Interest Period, the maturity date,
and each payment of principal and interest thereon.  In the event of any
discrepancy between any such notation by Bank and any records of Borrower, the
records of Bank shall be controlling and conclusive.

(f)           All amounts due and owing hereunder shall be paid in full no later
than the earlier of: (i) demand by Bank; (ii) Maturity Date; or (iii) the
occurrence and continuation of an Event of Default.
 
4.           Default Rate.  At the option of the Bank, upon the occurrence and
during the continuance of any Event of Default, and in any event if any
installment of principal or interest or any fee or cost or other amount payable
under this Note, or any other Loan Document, is not paid when due, the
Obligations shall thereafter bear interest at a fluctuating interest rate per
annum at all times equal to the rate otherwise applicable thereto plus five (5%)
percent per annum (the “Default Interest Rate”), to the fullest extent permitted
by applicable law.  Accrued and unpaid interest on past due amounts (including
interest on past due interest) shall be compounded monthly, on the last day of
each calendar month, to the fullest extent permitted by applicable law.

5.           Computation of Interest and Fees.

(a)           Computation of interest on the Loan and all fees under this Note
shall be calculated on the basis of a year of 360 days and the actual number of
days elapsed.  Borrower acknowledges that such latter calculation method will
result in a higher yield to the Bank than a method based on a year of 365 or 366
days.
 
(b)           Under no circumstances or event whatsoever shall the aggregate of
all amounts deemed interest hereunder and charged or collected pursuant to the
terms of this Note exceed the highest rate permissible under any law which a
court of competent jurisdiction shall, in a final determination, deem applicable
hereto.  In the event that such court determines Bank has charged or received
interest hereunder in excess of the highest applicable rate, Bank shall apply,
in its sole discretion, and set off such excess interest received by Bank
against other Obligations due or to become due and such rate shall automatically
be reduced to the maximum rate permitted by such law.
 
 

 

ISRAEL DISCOUNT BANK OF NEW YORK · MEMBER FDIC
511 FIFTH AVE. NEW YORK, NY 10017-4997 · TEL: (212) 551-8500
 
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                  6.        Manner and Treatment of Payments.

(a)           Each payment due on this Note, or under any other Loan Document,
shall be made to Bank, at Bank’s office located at 511 Fifth Avenue, New York,
New York 10017-4997, for the account of Bank, in immediately available funds not
later than 3:00 p.m., New York local time, on the day of payment (which must be
a Business Day).  All payments received after these deadlines shall be deemed
received on the next succeeding Business Day.  All payments shall be made in
lawful money of the United States of America.
 
(b)           Bank shall have the unconditional right and discretion (and
Borrower hereby authorizes Bank) to charge Borrower’s operating and/or deposit
account(s) for all of Borrower’s Obligations as they become due from time to
time under this Note, or any other Loan Document, including, without limitation,
interest, principal, fees, indemnification obligations and reimbursement of
expenses.
 
(c)           Any payment due under this Note which is paid by check or draft
shall be subject to the condition that any receipt issued therefore shall be
ineffective unless and until the amount due is actually received by Bank.  Each
payment received by Bank shall be applied as follows: first, to the payment of
any and all costs, fees and expenses incurred by or payable to Bank in
connection with the collection or enforcement of this Note; second, to the
payment of all unpaid late charges (if any); third, to the payment of all
accrued and unpaid interest hereunder; and fourth, to the payment of the unpaid
principal balance of this Note, or in any other manner which Bank may, in its
sole discretion, elect from time to time.
 
7.           Security Interest in Collateral.

(a)           To secure payment to Bank and performance of the Obligations,
Borrower hereby grants to Bank a continuing security interest in, a general lien
upon and a right of set-off against the Collateral.

(b)           Borrower hereby authorizes Bank, at any time and from time to
time, to file financing statements, continuation statements and amendments
thereto under the Uniform Commercial Code naming Borrower as debtor and Bank as
secured party and indicating therein the types or describing the items of
Collateral herein specified.  Borrower will not, without the prior written
consent of Bank, file or authorize or permit to be filed in any jurisdiction any
such financing or like statement in which Bank is not named as the sole secured
party covering the Collateral set forth herein.

(c)           Bank, at its discretion, whether any of the Obligations be due
may, in its name or in the name of Borrower or otherwise, demand, sue for,
collect or receive any money or property at any time payable or receivable on
account of or in exchange for, or make any compromise or settlement deemed
desirable with respect to, any of the Collateral, but shall be under no
obligation so to do, or Bank may extend the time of payment, arrange for payment
in installments, or otherwise modify the terms of, or release, any of the
Collateral, without thereby incurring responsibility to, or discharging or
otherwise affecting any liability of Borrower.  Bank shall not be required to
take any steps necessary to preserve any rights of prior parties to any of the
Collateral.  Upon default hereunder or in connection with any of the Obligations
(whether such default be that of Borrower or of any other party obligated
thereon), Bank shall have the rights and remedies provided by law and Bank may
sell or cause to be sold in the Borough of Manhattan, New York City, or
elsewhere, in one or more sales or parcels, at such price as Bank may deem best,
and for cash or on credit or for future delivery, without assumption of any
credit risk, all or any of the Collateral, at any brokers’ board or at public or
private sale, without demand of performance or notice of intention to sell or of
time or place of sale (except such notice as is required by applicable statute
and cannot be waived), and Bank or anyone else may be the purchaser of any or
all of the Collateral so sold and thereafter hold the same, absolutely free from
any claim or right of whatsoever kind, including any equity of redemption, of
Borrower, any such demand, notice or right and equity being hereby waived and
released.  Borrower will pay to Bank all reasonable out of pocket expenses
(including reasonable expense for legal services of every kind) of, or
incidental to, the enforcement of any of the provisions hereof or of any of the
Obligations, or any actual or attempted sale, or any exchange, enforcement,
collection, compromise or settlement of any of the Collateral or receipt of the
proceeds thereof, and for the care of the Collateral and defending or asserting
the rights and claims of Bank in respect thereof, by litigation or otherwise,
including expense of insurance, and all such expenses shall be indebtedness
within the terms of this Note.  Bank, at any time, at its option, may apply the
net cash receipts from the Collateral to the payment of principal of and/or
interest on any of the Obligations, whether or not then due, making proper
rebate of interest or discount.  Notwithstanding that Bank, whether in its own
behalf and/or in behalf of another and/or of others, may continue to hold
Collateral and regardless of the value thereof, Borrower shall be and remain
liable for the payment in full, principal and interest, of any balance of the
Obligations and expenses at any time unpaid.
 
 

 

ISRAEL DISCOUNT BANK OF NEW YORK · MEMBER FDIC
511 FIFTH AVE. NEW YORK, NY 10017-4997 · TEL: (212) 551-8500
 
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8.           Right of Set-Off.  To secure payment of this Note and all other
Obligations of Borrower to Bank, Borrower and any Obligor of this Note hereby
grant Bank a continuing lien and/or right of set-off upon any and all deposit
and/or operating accounts now or hereafter maintained with Bank, any and all
securities and other property of Borrower and any Obligor and the proceeds
thereof now or hereafter coming into the possession or control of Bank, hereby
authorizing Bank, at any time, without prior notice, to appropriate and apply
such deposits or the proceeds of the sale of such securities or other property
to any such Obligations, although contingent and although unmatured, it being
understood that Bank shall be under no obligation to effect any such
appropriation and application.

9.           Repayment Extension.  If any payment of principal or interest shall
be due on a Saturday, Sunday or any other day on which banking institutions in
the State of New York are required or permitted to be closed, such payment shall
be made on the next succeeding Business Day, and such extension of time shall in
such case be included in the computation of the payment of interest.

10.           Late Charge.  Borrower shall unconditionally pay to Bank a late
charge (the “Late Charge”) equal to the greater of (a) five (5%) percent of the
payment then due or (b) $200.00, if any such payment in whole or in part is not
received by Bank within ten (10) days after its due date.  The Late Charge is in
addition to the Default Interest Rate, if applicable, and shall be payable
together with the next payment due hereunder or, at Bank’s option, upon demand
by Bank, provided, however, that if any such late charge is not recognized as
liquidated damages for such delinquency, and if deemed to be interest in excess
of the amount permitted by applicable law, Bank shall be entitled to collect a
late charge only at the highest rate permitted by law, and any payment actually
collected by Bank in excess of such lawful amount shall be deemed a payment in
reduction of the principal sum then outstanding, and shall be so applied.
 
 
 
 
 

 

ISRAEL DISCOUNT BANK OF NEW YORK · MEMBER FDIC
511 FIFTH AVE. NEW YORK, NY 10017-4997 · TEL: (212) 551-8500
 
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11.           Representations and Warranties.  Borrower represents and warrants
to Bank that:

                                              Existence and Qualification; Power
- Borrower is a corporation or limited liability company duly formed, validly
existing and in good standing under the laws of the state of its
organization.  Borrower is duly qualified or registered to transact business and
is in good standing in each jurisdiction in which the conduct of its business or
the ownership or leasing of its properties makes such qualification or
registration necessary.  Borrower has all requisite corporate power and/or other
authority to conduct its business, to own and lease its properties and to
execute and deliver this Note and each Loan Document to which it is a party and
to perform its Obligations;

 
               Compliance with Laws - Borrower is in compliance with all laws,
regulations and other legal requirements applicable to its business, has
obtained all authorizations, consents, approvals, orders, licenses and permits
from, and has accomplished (or obtained exemptions from) all filings,
registrations and qualifications that are necessary for the transaction of its
business;

Authority; Compliance With Other Agreements and Instruments - the execution,
delivery and performance by Borrower of this Note and the other Loan Documents
to which it is a party has been duly authorized by all necessary corporate,
partnership or membership action, as applicable, and does not and will not: (i)
require any consent or approval not heretofore obtained of any manager,
director, stockholder, member, partner, security holder or creditor of such
party; (ii) violate or conflict with any provision of Borrower’s partnership
agreement, articles of organization, operating agreement, articles of
incorporation, charter, by-laws or other comparable instruments; or (iii) result
in a breach by Borrower or constitute a default by Borrower under, or cause or
permit the acceleration of any obligation owed under, any indenture or loan or
credit agreement or any other contractual obligation to which Borrower is a
party or by which Borrower or any of its property is bound or affected;

Financial Statements - the financial statements of Borrower
previously  furnished to Bank are complete and correct and fairly present the
financial condition of Borrower through to the date for such fiscal period, and
the result of Borrower’s operations as of the end of the most recent fiscal
quarter reflect no material adverse change in the financial condition of
Borrower;
 
 
 

 

ISRAEL DISCOUNT BANK OF NEW YORK · MEMBER FDIC
511 FIFTH AVE. NEW YORK, NY 10017-4997 · TEL: (212) 551-8500
 
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No Default - no event has occurred and no event is continuing which with the
giving of notice or the lapse of time or both would constitute an Event of
Default;

Representations and Warranties - prior to the making of each Advance all
representations and warranties contained herein, or the other Loan Documents,
shall be true and correct and of the same force and effect as though such
representations and warranties had been made as of the date of the making of
such Advance.

Regulations T, U and X; Investment Company Act - no part of the proceeds of the
Loan will be used to purchase or carry, or to extend credit to others for the
purpose of purchasing or carrying, any margin stock within the meaning of
Regulations T, U or X of the Board of Governors of the Federal Reserve
System.  Borrower is not or is not required to be registered as an “investment
company” under the Investment Company Act of 1940; and

Patriot Act Compliance - Borrower is not involved in any activity, directly or
indirectly, which would constitute a violation of applicable laws concerning
money laundering, the funding of terrorism or similar activities.  No part of
the proceeds of the Loan will be used to fund activities which would constitute
a violation of the United States Bank Secrecy Act, the United States Money
Laundering Control Act of 1986, the United States International Money Laundering
Abatement and Anti-terrorist Financing Act of 2001.

12.           Events of Default.  The occurrence of any one or more of the
following events shall constitute an “Event of Default” under this Note:

Payments – if Borrower, or any other Obligor, fails to make any payment of
principal or interest under the Obligations when such payment is due and
payable; or

Other Charges - if Borrower, or any other Obligor, fails to pay any other
charges, fees, expenses or other monetary obligations owing to Bank arising out
of or incurred in connection with this Note within ten (10) Business Days after
the date such payment is due and payable; or

Particular Covenant Defaults - if Borrower fails to perform, comply with or
observe any covenant or undertaking contained in any Loan Document and such
failure continues for ten (10) Business Days after the occurrence thereof; or

Financial Information – if (i) any statement, report, financial statement, or
certificate made or delivered by Borrower, or any other Obligor, to Bank is not
true and correct in all material respect when made or delivered, (ii) the
Borrower’s financial statements issued for the reported fiscal year materially
deviate from the projected profit and loss statement provided by the Borrower to
the Bank for such period; or (iii) otherwise fails to comply with such other
requirement or covenants set forth in the line letter agreement executed
contemporaneously herewith.
 
 
 

 

ISRAEL DISCOUNT BANK OF NEW YORK · MEMBER FDIC
511 FIFTH AVE. NEW YORK, NY 10017-4997 · TEL: (212) 551-8500
 
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Warranties or Representations - if any warranty, representation or other
statement by or on behalf of Borrower contained in or pursuant to this Note, the
other Loan Documents or in any document, agreement or instrument furnished in
compliance with, relating to, or in reference to this Note, is false, erroneous,
or misleading in any material respect when made; or

Agreements with Others - (i) if Borrower shall default beyond any grace period
in the payment of principal or interest of any Indebtedness of Borrower; or (ii)
if Borrower otherwise defaults under the terms of any such Indebtedness if the
effect of such default is to enable the holder of such Indebtedness to
accelerate the payment of Borrower’s obligations, which are the subject thereof,
prior to the maturity date or prior to the regularly scheduled date of payment;
or

Other Agreements with Bank - if any Obligor breaches or violates the terms of,
or if a default occurs under, any other existing or future agreement (related or
unrelated) (including, without limitation, the other Loan Documents) between any
Obligor and Bank; or

Judgments - if any final judgment exceeding $50,000 for the payment of money (i)
which is not fully and unconditionally covered by insurance or (ii) for which
Borrower has not established a cash or cash equivalent reserve in the full
amount of such judgment, shall be rendered by a court of record against Borrower
and such judgment shall continue unsatisfied and in effect for a period of
thirty (30) consecutive days without being vacated, discharged, satisfied or
bonded pending appeal; or

Assignment for Benefit of Creditors, etc. - if Borrower makes or proposes in
writing, an assignment for the benefit of creditors generally, offers a
composition or extension to creditors, or makes or sends notice of an intended
bulk sale of any business or assets now or hereafter owned or conducted by
Borrower; or

Bankruptcy, Dissolution, etc. - upon the commencement of any action for the
dissolution or liquidation of Borrower, or the commencement of any proceeding to
avoid any transaction entered into by Borrower, or the commencement of any case
or proceeding for reorganization or liquidation of Borrower’s debts under the
Bankruptcy Code or any other state or federal law, now or hereafter enacted for
the relief of debtors, whether instituted by or against Borrower; provided
however, that Borrower shall have twenty (20) Business Days to obtain the
dismissal or discharge of involuntary proceedings filed against it, it being
understood that during such twenty (20) Business Day period, Bank may seek
adequate protection in any bankruptcy proceeding; or

Receiver - upon the appointment of a receiver, liquidator, custodian, trustee or
similar official or fiduciary for Borrower or for Borrower’s property; or

Execution Process, etc. - the issuance of any execution or distraint process
against any property of Borrower; or
 
 
 

 

ISRAEL DISCOUNT BANK OF NEW YORK · MEMBER FDIC
511 FIFTH AVE. NEW YORK, NY 10017-4997 · TEL: (212) 551-8500
 
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Termination of Business - if Borrower ceases any material portion of its
business operations as presently conducted; or

Investigations - any indication or evidence received by Bank that reasonably
leads it to believe Borrower may have directly or indirectly been engaged in any
type of activity which, would be reasonably likely to result in the forfeiture
of any material property of Borrower to any governmental entity, federal, state
or local; or

Liens - if any lien in favor of Bank shall cease to be valid, enforceable and
perfected and prior to all other liens other than permitted liens; or

Concealment/Removal of Property - if Borrower, or any other Obligor, conceals,
removes or permits to be concealed or removed any part of Borrower’s property
with intent to hinder, delay, or defraud any of its creditors; or

Fraudulent Conveyance - the making or suffering by Borrower, or any other
Obligor, of a transfer of any property, which is fraudulent under the law of any
applicable jurisdiction; or

Security – if all or any part of any security granted by Borrower for the
Obligations shall, in the sole discretion of Bank, have become unsatisfactory
and Borrower fails upon demand of Bank to furnish such further security or to
make payment on account of any of the Obligations as would be satisfactory to
Bank; or

Material Adverse Effect – if there is any change in Borrower’s financial
condition which, in Bank’s reasonable opinion, has or would be reasonably likely
to have a material adverse effect with respect to (a) the assets, properties,
financial condition, credit worthiness, business prospects, material agreements
or results of business operations of Borrower, or (b) Borrower’s ability to pay
the Obligations in accordance with the terms hereof, or (c) the validity or
enforceability of this Note or any of the other Loan Documents or the rights and
remedies of Bank hereunder or thereunder.

13.           Rights and Remedies upon Demand or Default.  Upon demand or
following the occurrence of an Event of Default hereunder, Bank, in Bank’s sole
discretion and without notice or demand to Borrower or any other Obligor, may:
(a) declare the entire outstanding principal balance of this Note, together with
all accrued interest and all other sums due under this Note to be immediately
due and payable, and the same shall thereupon become immediately due and payable
without presentment, demand or notice, which are hereby expressly waived (b)
exercise its right of set-off against any money, funds, credits or other
property of any nature whatsoever of Borrower  or any other Obligor now or at
any time hereafter in the possession of, in transit to or from, under the
control or custody of, or on deposit with, Bank or any affiliate of Bank in any
capacity whatsoever, including without limitation, any balance of any deposit
account and any credits with Bank or any affiliate of Bank; (c) terminate any
outstanding commitments of Bank to Borrower or any Obligor; and (d) exercise any
or all rights, powers, and remedies provided for in the Loan Documents or now or
hereafter existing at law, in equity, by statute or otherwise.
 
 

 

ISRAEL DISCOUNT BANK OF NEW YORK · MEMBER FDIC
511 FIFTH AVE. NEW YORK, NY 10017-4997 · TEL: (212) 551-8500
 
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14.           Remedies Cumulative.  Each right, power and remedy of Bank
hereunder, under the other Loan Documents or now or hereafter existing at law,
in equity, by statute or otherwise shall be cumulative and concurrent, and the
exercise or the beginning of the exercise of any one or more of them shall not
preclude the simultaneous or later exercise by Bank of any or all such other
rights, powers or remedies.  No failure or delay by Bank to insist upon the
strict performance of any one or more provisions of this Note or of the Loan
Documents or to exercise any right, power or remedy consequent upon a breach
thereof or a default hereunder shall constitute a waiver thereof, or preclude
Bank from exercising any such other rights, powers or remedy.  By accepting full
or partial payment after the due date of any amount of principal or interest on
this Note, or other amounts payable on demand, Bank shall not be deemed to have
waived the right either to require prompt payment when due and payable of all
other amounts of principal or interest on this Note or other amounts payable on
demand, or to exercise any rights and remedies available to it in order to
collect all such other amounts due and payable under this Note.

15.           Intentionally Omitted

16.           Intentionally Omitted

17.           Additional Costs.  If, as a result of any change in applicable
law, regulation, guideline or order, or in the interpretation or application
thereof by any governmental authority charged with the administration thereof,
there shall be imposed upon or made applicable to Bank any reserve requirement
against this Note or any other costs or assessments (hereinafter “Additional
Costs”), Borrower shall pay to Bank, on demand (which demand shall be in writing
and which will set forth a calculation of such Additional Costs), an amount
sufficient to compensate Bank for such Additional Cost.  Bank’s calculation of
the amount of such Additional Costs shall be presumed correct absent manifest
error.

18.           Collection Expenses.  If this Note is placed in the hands of an
attorney for collection following the occurrence of an Event of Default
hereunder, Borrower agrees to pay to Bank upon demand costs and expenses,
including all attorney’s fees and court costs, paid or incurred by Bank in
connection with the enforcement or collection of this Note (whether or not any
action has been commenced by Bank to enforce or collect this Note) or in
successfully defending any counterclaim or other legal proceeding brought by
Borrower contesting Bank’s right collect the outstanding principal balance of
this Note.  The obligation of Borrower to pay all such costs and expenses shall
not be merged into any judgment by confession against Borrower.  All of such
costs and expenses shall bear interest at the highest rate of Interest permitted
under this Note from the date of payment by Bank until repaid in full by the
Obligor.

19.           Interest Rate after Judgment.  If judgment is entered against
Borrower on this Note, the amount of the judgment entered (which may include
principal, interest, fees and costs) shall bear interest at the higher of (i)
the legal rate of interest then applicable to judgments in the jurisdiction in
which judgment was entered, or (ii) if otherwise permitted by applicable law,
the Default Interest Rate provided herein.
 
 

 

ISRAEL DISCOUNT BANK OF NEW YORK · MEMBER FDIC
511 FIFTH AVE. NEW YORK, NY 10017-4997 · TEL: (212) 551-8500
 
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20.           Certain Waivers by Borrower.  Borrower waives demand, presentment,
protest and notice of demand, of non-payment, of dishonor, and of protest of
this Note.  Bank, without notice to or further consent of Borrower or any other
Obligor and without in any respect compromising, impairing, releasing, lessening
or affecting the obligations of Borrower hereunder or under of the Loan
Documents, may: (a) release, surrender, waive, add, substitute, settle,
exchange, compromises, modify, extend or grant indulgences with respect to (i)
this Note, (ii) any of the Loan Documents, and/or (iii) all or any part of any
collateral or security for this Note; and/or (iv) any Obligor; (b) complete any
blank space in this Note according to the terms upon which the loan evidenced
hereby is made; and (c) grant any extension or other postponements of the time
of payment hereof.

21.           Choice of Law: Forum Selection: Consent to Jurisdiction.  This
Note shall be governed by, construed and interpreted in accordance with the laws
of the State of New York (excluding the choice of law rules thereof).  Borrower
hereby irrevocably submits to the jurisdiction of any New York court or federal
court sitting in the State of New York in any action or proceeding arising out
of or relating to this Note, and hereby irrevocably waives any objection to the
laying of venue of any such action or proceeding in any such court and any claim
that any such action or proceeding has been brought in an inconvenient forum.  A
final judgment in any such action or proceeding shall be conclusive and may be
enforced in any other jurisdiction by suit on the judgment or in any other
manner provided by law.

22.           Subsequent Holders.  In the event that any holder of this Note
transfers this Note for value, Borrower agrees that except with respect to a
subsequent holder with actual knowledge of a claim or defense, no subsequent
holder of this Note shall be subject to any claims or defenses which Borrower
may have against a prior holder (which claims or defenses are not waived as to
prior holder), all of which are waived as to the subsequent holder, and that all
such subsequent holders shall have all of the rights of a holder in due course
with respect to Borrower even though the subsequent holder may not qualify,
under applicable law, absent this paragraph, as a holder in due course.

23.           Invalidity of Any Part.  If any provision or part of any provision
of this Note shall for any reason be held invalid, illegal or unenforceable in
any respect, such invalidity, illegality or unenforceability shall not affect
any other provision (or any remaining part of any provision) of this Note, and
this Note shall be construed as if such invalid, illegal or unenforceable
provision (or part thereof) had never been contained in this Note, but only to
the extent of its invalidity, illegality, or unenforceability.  In any event, if
any such provision pertains to the repayment of the Obligations evidenced by
this Note, then and in such event, at Bank’s option, the outstanding principal
balance of this Note, together with all accrued and unpaid interest thereon,
shall become immediately due and payable.
 

 
 

ISRAEL DISCOUNT BANK OF NEW YORK · MEMBER FDIC
511 FIFTH AVE. NEW YORK, NY 10017-4997 · TEL: (212) 551-8500
 
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24.           WAIVER OF JURY TRIAL.  BORROWER HEREBY (i)  COVENANTS AND AGREES
NOT TO ELECT A TRIAL BY JURY OF ANY ISSUE TRIABLE OF RIGHT BY A JURY, AND (ii)
WAIVES TRIAL BY JURY IN ANY ACTION OR PROCEEDING TO WHICH BANK AND BORROWER MAY
BE PARTIES ARISING OUT OF, IN CONNECTION WITH OR IN ANY WAY PERTAINING TO THIS
NOTE, ANY OF THE LOAN DOCUMENTS AND/OR ANY TRANSACTIONS, OCCURRENCES,
COMMUNICATIONS, OR UNDERSTANDINGS (OR THE LACK OF ANY OF THE FOREGOING) RELATING
IN ANY WAY TO BORROWER-BANK RELATIONSHIP BETWEEN THE PARTIES.  IT IS UNDERSTOOD
AND AGREED THAT THIS WAIVER CONSTITUTES A WAIVER OF TRIAL BY JURY OF ALL CLAIMS
AGAINST ALL PARTIES TO SUCH ACTIONS OR PROCEEDINGS, INCLUDING CLAIMS AGAINST
PARTIES WHO ARE NOT PARTIES TO THIS NOTE.  THIS WAIVER OF JURY TRIAL IS
SEPARATELY GIVEN, KNOWINGLY, WILLINGLY AND VOLUNTARILY MADE BY BORROWER AND
BORROWER HEREBY AGREES THAT NO REPRESENTATIONS OF FACT OR OPINION HAVE BEEN MADE
BY ANY INDIVIDUAL TO INDUCE THIS WAIVER OF TRIAL BY JURY OR TO IN ANY WAY MODIFY
OR NULLIFY ITS EFFECT.  BANK IS HEREBY AUTHORIZED TO SUBMIT THIS NOTE TO ANY
COURT HAVING JURISDICTION OVER THE SUBJECT MATTER AND BORROWER SO AS TO SERVE AS
CONCLUSIVE EVIDENCE OF SUCH WAIVER OF RIGHT TO TRIAL BY JURY.  BORROWER
REPRESENTS AND WARRANTS THAT IT HAS BEEN REPRESENTED IN THE SIGNING OF THIS NOTE
AND IN THE MAKING OF THIS WAIVER BY INDEPENDENT LEGAL COUNSEL, SELECTED OF ITS
OWN FREE WILL, AND/OR THAT IT HAS HAD THE OPPORTUNITY TO DISCUSS THIS WAIVER
WITH COUNSEL.

25.           Waiver of Defenses, Counterclaims, etc.  Borrower hereby waives,
in any litigation (whether or not arising out of or related to this note or any
other obligation or liabilities to Bank) in which Borrower and Bank shall be
adverse parties, the right to interpose any defense, set-off or counterclaim of
any nature or description.

26.           Prior Note(s).  This Note amends, replaces, restates and relates
back to the Grid Promissory Note dated August 19, 2009 in the principal amount
of $2,800,000.00 (“Prior Note”), and all sums outstanding under the Prior Note
shall be deemed outstanding under this Note as of the date hereof and in the
amounts set forth on the Bank’s records.

27.           Indemnification.  The Borrower agrees: (i) to pay and reimburse
Bank for all of its  reasonable and documented out-of-pocket costs and expenses
incurred in connection with the preparation and execution of, and any amendment,
supplement or modification to, this Note and the other Loan Documents, and the
consummation and administration of the transactions contemplated hereby and
thereby, including the reasonable fees, disbursements and other charges of
internal and external counsel, (ii) to pay and reimburse Bank for reasonable and
documented out-of-pocket costs and expenses incurred in connection with the
enforcement or preservation of any rights under this Note, Loan Documents and
any such other documents, including the reasonable fees, disbursements and other
charges of its counsel, whether internal or external, (iii) to pay, indemnify
and hold harmless the Bank and its directors, officers and agents (each, an
“Indemnified Party” and collectively, “Indemnified Parties”) from and against
any and all other liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements of any kind or nature
whatsoever, including reasonable and documented fees, disbursements and other
charges internal or external counsel for all Indemnified Parties in connection
with the execution, delivery, enforcement, performance and administration of
this Note or the Loan Documents and any such other documents or the use of the
proceeds thereof, including any of the foregoing relating to the violation of,
noncompliance with or liability applicable to the operations of the Borrower,
any of its subsidiaries; provided that the Borrower shall have no obligation
hereunder to any Indemnified Party with respect to damages caused directly by
the gross negligence or willful misconduct of such Indemnified Party as
determined by a non-appealable final judgment.
 
 

 

ISRAEL DISCOUNT BANK OF NEW YORK · MEMBER FDIC
511 FIFTH AVE. NEW YORK, NY 10017-4997 · TEL: (212) 551-8500
 
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28.           Miscellaneous.  Time is of the essence under this Note.  The
paragraph headings of this Note are for convenience only, and shall not limit or
otherwise affect any of the terms hereof.  This Note and the other Loan
Documents, if any, constitute the entire agreement between the parties with
respect to their subject matter and supersede all prior letters,
representations, or agreements, oral or written, with respect thereto. No
modification, release, or waiver of this Note shall be deemed to be made by Bank
unless in writing signed by Bank, and each such waiver, if any, shall apply only
with respect to the specific instance involved.  No course of dealing or conduct
shall be effective to modify, release or waive any provisions of this Note or
any of the other Loan Documents.  Borrower acknowledges that this Note is an
instrument for the payment of money only within the meaning of Section 3213 of
the New York Civil Practice Law & Rules.  This Note shall inure to the benefit
of and be enforceable by Bank and Bank’s successors and assigns and any other
person to whom Bank may grant an interest in the obligations evidenced by this
Note and shall be binding upon and enforceable against Borrower and Borrower’s
successors and assigns.  Whenever used herein, the singular number shall include
the plural, the plural the singular, and the use of the masculine, feminine, or
neuter gender shall include all genders.

29.           Joint and Several.  Each of the undersigned shall be jointly and
severally liable hereunder and all provisions shall apply to all of them.

Borrower:

Freundlich Supply Company, Inc.

By:  _____________________________
Name: Andrew Prince
Title: President & CEO
 
 
 
 
 
 

 
 

ISRAEL DISCOUNT BANK OF NEW YORK · MEMBER FDIC
511 FIFTH AVE. NEW YORK, NY 10017-4997 · TEL: (212) 551-8500
 
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