EXHIBIT 10.53
PROMISSORY NOTE
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PROMISSORY NOTE
$1,000,000 January 4, 1995
FOR VALUE RECEIVED AND INTENDING TO BE LEGALLY BOUND HEREBY, Joseph R.
Spalliero and Patricia Spalliero (together, "Borrower"), residing at 5114
Blackhawk Drive, Danville, California 94506, promise to pay to the order of
Electronic Associates, Inc., a New Jersey corporation ("Lender"), at Lender's
offices located at 185 Monmouth Parkway, West Long Branch, New Jersey, the
principal sum of One Million Dollars ($ 1,000,000.00) in lawful money of the
United States with interest thereon as provided herein on June 30, 1997 (or
earlier as provided in the Section of this Note entitled "MANDATORY PAYMENTS").
Subject to mandatory prepayments as set forth in the Section entitled "Mandatory
Payments" below, the entire outstanding principal balance hereof shall be paid
in a lump sum together with all accrued and unpaid interest thereon. Interest on
the principal shall accrue from the date of this Note at the lowest available
federal rate for a 30 month loan made on the date of this Note. All capitalized
terms used herein shall have the meanings ascribed to them in the Merger
Agreement (hereafter defined) unless the context clearly requires the contrary.
MERGER AGREEMENT.
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This Promissory Note ("Note") and the loan evidenced hereby (the
"Loan") is given under and subject to the Agreement and Plan of Reorganization
dated as of December 12, 1994 by and among Borrower, Lender, EA Acquisition
Corp., a Pennsylvania corporation and a wholly-owned subsidiary of Lender, and
Tanon Manufacturing, Inc., a California corporation (the "Merger Agreement"),
which Merger Agreement may be amended, modified, renewed or substituted without
affecting in any way the validity or enforceability of this Note.
NON-RECOURSE LIABILITY.
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Notwithstanding the above or anything to the contrary contained or
implied in the Merger Agreement or this Note, Borrower's liability hereunder
shall be non-recourse, and shall be secured solely by a pledge by Borrower of
192,308 shares of common stock of Lender (the "Collateral"), pursuant to a
Collateral Pledge Agreement of even date herewith (the "Pledge Agreement").
Subject to the immediately preceding paragraph, Borrower's liability
under the Loan and this Note shall be unconditional and without regard to the
liability of any other person, and shall not be affected by any indulgence,
extension of time, renewal, waiver
or modification of the Loan or this Note, or the release, substitution and/or
addition of collateral security for the Loan or this Note. Borrower consents to
any and all extensions of time, renewals or waivers, as well as the release
substitution or addition of persons liable hereunder without affecting
Borrower's liability hereunder provided that Borrower shall have received three
(3) days' prior notice from Lender of the same.
EVENT OF DEFAULT.
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A material default under or material breach of the Pledge Agreement
which remains uncured for a period of ten days after receipt by Borrower of
written notice thereof shall be an Event of Default hereunder.
LENDER'S RIGHTS UPON DEFAULT.
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Upon the occurrence and continuation of any Event of Default, Lender
may do any or all of the following:
(a) accelerate the maturity of this Note and demand immediate
payment of all outstanding indebtedness hereunder, including but
not limited to principal and accrued interest.
(b) exercise all of the rights, privileges and remedies of a secured
party under the Uniform Commercial Code of Pennsylvania (or of any other
applicable state) with respect to the Collateral and all of its rights and
remedies under the Collateral Pledge Agreement, all of which remedies shall be
cumulative and not alternative.
MANDATORY PAYMENTS.
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Pursuant to the Merger Agreement, Spalliero received 992,259 shares of
common stock of Lender of which 496,130 shares are not registered under the 1933
Act (the latter shares being the "Unregistered Shares"). The Collateral consists
of Unregistered Shares. All proceeds of the sale, if any, of any of the
Unregistered Shares other than the Collateral prior to the date the indebtedness
hereunder is due shall immediately upon receipt be paid to Lender (the
"Mandatory Payments"), notwithstanding that the principal and interest hereunder
is not otherwise due until June 30, 1997. All such Mandatory Payments shall be
applied first to accrued interest and then on account of principal. Spalliero is
not hereby obligated to sell the Unregistered Shares in order to repay the Loan
or otherwise satisfy his obligations under this Note. The effectiveness of this
Section shall terminate on June 30, 1997.
PREPAYMENTS.
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This Note may be prepaid in whole or in part, at any time without
penalty. Any such prepayments shall be applied first to accrued interest to the
date of prepayment and then on account of principal.
MISCELLANEOUS.
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(a) Borrower hereby waives protest, notice of protest,
presentment, dishonor, notice of dishonor and demand.
(b) Lender shall not be deemed to have waived any of the terms,
agreements, conditions and covenants hereof, except by a writing signed by an
officer of Lender and delivered to Borrower.
(c) This Note may be amended only by a written instrument which is
signed by the parties hereto and which specifically refers to this Note and
states that it is an amendment hereto.
(d) This Note and all rights hereunder shall be governed by the
internal laws of the Commonwealth of Pennsylvania (without regard to laws of
conflict) and shall be binding upon Borrower, its successors and assigns, and
shall inure to the benefit of Lender, and its successors and assigns.
(e) If any term of this Note shall be held to be invalid, illegal or
unenforceable, the validity of all other terms hereof shall in no way be
affected thereby.
(f) If Borrower shall pay any interest under the terms of this Note at
a rate higher than the maximum rate allowed by applicable law, then such excess
payment shall be credited as a payment of principal of the Loan, unless Borrower
notifies Lender in writing to return any excess payment to Borrower.
(g) Any notices required or permitted to be given pursuant to this Note
or the Loan shall be sufficiently given if delivered in person or by overnight
delivery service or sent by United States mail, postage prepaid to the addresses
set forth on the first page hereof. If sent by mail, notice shall be deemed
received on the third day following deposit in the mail.
IN WITNESS WHEREOF, Borrower has duly executed this Note the day and
year first above written and has hereunto set Borrower's hand and seal.
Witness:_______________________ /s/ Joseph R. Spalliero
Joseph R. Spalliero
Witness:_______________________ /s/ Patricia Spalliero
Patricia Spalliero