EXHIBIT 10.16
LOAN AGREEMENT
THIS IS A LOAN AGREEMENT (the "Agreement"), dated as of the 14th day of
January, 2004, between Transnational Industries, Inc., a Delaware corporation,
and Spitz, Inc., a Delaware corporation (individually, collectively, jointly and
severally referred to as the "Borrower"), with an address of X.X. Xxx 000, Xxxxx
0, Xxxxxx Xxxx, Xxxxxxxxxxxx 00000, and FIRST KEYSTONE BANK ("Lender"), a
federally chartered stock savings bank organized and existing under the laws of
the United States of America, with a principal business office located at 00
Xxxx Xxxxx Xxxxxx, Xxxxx, Xxxxxxxxxxxx, 00000.
1. DEFINITIONS. The following terms when used in this Agreement shall have
the respective meanings set forth below:
1.1. Assignments: Additional collateral for the Loan, including,
without limitation, (i) a Collateral Assignment of Agreements Affecting
Real Estate,including without limitation, all approvals, permits, contracts
and warranties related to the Land; and (ii) an Assignment of Rents,
Profits and Leases.
1.2 Borrower: Transnational Industries, Inc., a Delaware corporation,
and Spitz, Inc., a Delaware corporation, individually, collectively,
jointly and severally.
1.3. Closing Date: The date of the execution and delivery of this
Agreement by Borrower and Lender.
1.4. Collateral: The real property and personal property pledged to
Lender to secure the Loan pursuant to the Mortgage and the Assignments,
including, without limitation, the Land and the improvements thereon.
1.5. Commitment Letter: A certain Commitment Letter from Lender to
Borrower dated December 19, 2004
1.6. Event of Default: The occurrence of any event described in
Paragraph 5.1 hereof.
1.7. Governmental Authority: The United States of America, the
Commonwealth of Pennsylvania, and any political subdivision thereof in
which the Land is located including without limitation the County of
Delaware, the Township of Chadds Ford, and any agency, department, court,
commission, board, bureau or instrumentality of any of them which exercises
jurisdiction over the Land or Borrower.
1.8. Land: The real property currently occupied by Borrower located at
Xxxxx 0, Xxxxxx Xxxx Xxxxxxxx, Xxxxxxxx County, Pennsylvania, being Folio
No. 04-00-00034-02, as more particularly described on Exhibit "A" to the
Mortgage, together with all of the property rights, title, interests,
easements and other rights appurtenant to such real property and defined in
the Mortgage as the Mortgaged Property.
1.9. Legal Requirements: All applicable laws, statutes, ordinances,
rulings, regulations, codes, decrees, orders, judgments, conditions,
restrictions and requirements of any Governmental Authority, including,
without limitation, agreements, requirements, restrictions and conditions
related to any permit, approval or other grant of authority.
1.10. Loan: The credit facility of Three Million Two Hundred Thousand
($3,200,000.00) Dollars to be advanced by Lender to Borrower pursuant to
this Agreement and to be evidenced by the Note and secured by, among other
things, the Mortgage and the Assignments.
1.11. Loan Documents: All agreements, documents, instruments,
certificates, legal opinions and other papers executed and delivered or
otherwise furnished by Borrower to Lender in connection with the Loan
including, without limitation, this Agreement, the Commitment Letter, the
Note, the Mortgage, and the Assignments.
1.12. Maturity Date: January 13, 2024.
1.13. Mortgage: The mortgage of even date herewith from Borrower to
Lender granting a first lien mortgage and security interest in, among other
things, (i) the Land, and (ii) all personal property of Borrower located on
the Land.
1.14. Note: The mortgage note of even date herewith from Borrower to
Lender evidencing the Loan in the amount of Three Million Two Hundred
Thousand ($3,200,000.00) Dollars and all extensions, renewals and
modifications thereof.
1.15. Permitted Exceptions: The title exceptions not removed at the
closing of the Loan from Title Insurance Commitment No. 03-1156 dated
effective October 30, 2003, issued by Strong Abstract, Inc. agent for First
American Title Insurance Company, as approved by Lender in its sole
discretion.
1.16. Title Agent: Strong Abstract, Inc., agent for First American
Title Insurance Company.
2. LOAN.
2.1. General. Borrower is the owner in fee of the Land. The Loan shall
be repaid in full no later than the Maturity Date, in accordance with this
Agreement and the other Loan Documents.
2.2. Loan Amount. Subject to the terms and conditions of this
Agreement, Lender shall lend to Borrower and Borrower shall borrow from
Lender Three Million Two Hundred Thousand ($3,200,000.00) Dollars, which
shall bear interest and be repaid as set forth in the Note.
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2.3. Loan Disbursement. The purpose of the Loan is to finance
Borrower's acquisition of the Land. The proceeds of the Loan shall be fully
disbursed of even date herewith by check or wire transfer to the Title
Agent to be applied on account of the purchase price for the Land.
3. REPRESENTATIONS AND WARRANTIES. Borrower represents and warrants to
Lender as of the date hereof and at all times when this Agreement shall remain
in effect or the indebtedness evidenced by the Note shall remain outstanding
that:
3.1. Organization and Good Standing. Borrower is/are duly organized,
validly existing and in good standing under the laws of the State of
Delaware and Spitz, Inc. is registered as a foreign corporation and is in
good standing in the Commonwealth of Pennsylvania and in any other
jurisdiction in which Borrower was organized. The character of the
properties owned or leased by Borrower and the nature of Borrower's.
businesses do not require Borrower to be qualified and in good standing in
any other state in order to avoid material liability or disadvantage.
Certified copies of Borrower's organizational documents and all amendments
thereto have been delivered to Lender and are current, correct and complete
as of the date hereof
3.2. Power and Authority. Borrower has full power and authority (i) to
own Borrower's properties, and Spitz, Inc, has full power and authority to
own the Land, and (ii) to conduct Borrower's businesses as now conducted
and as to be conducted in connection with the operation of the Land.
Borrower has full power and authority to execute, deliver and comply with
the provisions of each of the Loan Documents executed by Borrower. Each of
the Loan Documents executed by Borrower constitute the legally binding
obligation of Borrower enforceable against Borrower in accordance with its
terms.
3.3. No Litigation. There is no action, suit or proceeding pending or,
to the knowledge of Borrower, threatened against or affecting Borrower or
all or any portion of the Land or Borrower's business, except actions,
suits and proceedings fully covered (except for deductibles) by insurance.
3.4. Conflict. Neither the execution nor the delivery of any of the
Loan Documents, nor the performance or satisfaction by Borrower of any of
the provisions thereof, will conflict with or result in a breach of any of
the provisions of any applicable Legal Requirements, or any agreement or
other instrument to which Borrower is a party or by which Borrower is
bound, or result in the creation or imposition of any lien, charge or
encumbrance upon any property of Borrower, or the Land other than any lien
created pursuant to any of the Loan Documents.
3.5. Consent. No consent, approval or other authorization of or by any
Governmental Authority is required in connection with the execution or
delivery by Borrower of any of the Loan Documents, or compliance with or
performance of any of the provisions thereof.
3.6. Permits and Approvals. Borrower has secured all licenses,
permits, authorizations, consents and approvals required by any
Governmental Authority for the use and occupation of the Land as commercial
real estate and the operation of Borrower's business thereon.
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3.7. Compliance: Zoning. Borrower has complied with all Legal
Requirements and all recorded instruments affecting the Land and the use
thereof complies with all zoning and use-related Legal Requirements.
0.0.Xxxxxxxxx Statements.
3.8.1. The financial statements of Borrower delivered to Lender
prior to the date hereof are Borrower's most current financial
statements and fully and accurately present the financial condition of
Borrower as of the date thereof, in accordance with generally accepted
accounting principles consistently applied. There are no liabilities
or obligations of Borrower which are individually or in the aggregate
material, either accrued, absolute, contingent or otherwise, except
(i) to the extent set forth in the balance sheets and the notes
thereto and not heretofore paid or discharged, and (ii) those incurred
subsequent to the date of the foregoing financial statements, which
are consistent with past business practice and in the normal and
ordinary course of business.
3.8.2. Since the dates of the foregoing financial statements,
there has not been (i) any material adverse change in the financial
condition or in the operations, business or property of Borrower or
(ii) any damage, destruction or loss, whether or not covered by
insurance, materially and adversely affecting the operations, business
or property of Borrower. Borrower is not aware of any fact or
circumstance, which (with or without the passage of time or the giving
of notice or both) would or could result in any such change.
3.9. Taxes and Assessments. All federal, state and other tax returns
and reports of Borrower required to be filed have been duly filed, and all
federal, state and other taxes, assessments (including assessments for
municipal improvements), fees or other governmental charges imposed upon
Borrower or the Land which are due and payable have been paid. Borrower is
not aware of any proposed material tax or other assessments against it, or
the Land, and no extension of time for assessment or payment of any
federal, state or local tax by the Borrower is in effect, unless an
extension has been applied for and granted and any taxes due with such
extension paid.
3.10. Title.
3.10.1. Spitz, Inc. holds good, indefeasible and marketable fee
simple title to the Land, free and clear of all mortgages, liens,
encumbrances, ground rents, leases, tenancies, licenses, security
interests, covenants, conditions, restrictions, rights-of-way,
easements, encroachments and any other matters affecting title except
(i) the Permitted Exceptions, and (ii) the liens and encumbrances
created in favor of Lender pursuant to the Loan Documents.
3.10.2. Lender's right, title and interest in and to each of the
agreements, documents, instruments, contracts, permits, licenses and
other materials and assets, if any, assigned to Lender pursuant to
this Agreement and the other Loan Documents are free and clear of all
liens, encumbrances, leases, licenses, covenants, conditions,
restrictions, security interests, other assignments and other matters
affecting title (except the Permitted Exceptions), and Borrower is
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permitted to assign such agreements, documents, instruments,
contracts, permits, licenses and other materials and assets. Borrower
is without knowledge of the existence of any default under or breach
of any of the foregoing.
3.10.3 Spitz, Inc. is lawfully authorized to mortgage and
encumber the Land.
3.10.4 Borrower has not created, and will not create, or permit
or suffer to be created, any liens, encumbrances or security interests
in or on the Land other than the Mortgage, or create, or permit or
suffer to be created, any reservation of title by any party other than
Lender with respect to any portion of the Land, other than liens in
favor of Lender.
3.11. Utilities. All utility services necessary for the full use,
development and enjoyment of the Land as currently improved, are
available at no cost or expense at the title lines of the Land (or, if
they pass through adjoining private land, in accordance with valid
public or unencumbered private easements which inure to the benefit of
Borrower and run with the Land, copies of which have been delivered to
Lender) including, without limitation, sanitary sewers, storm sewers,
water, electricity, and telephone.
3.12. Roads. The Land is located along a dedicated public street,
and if not located a dedicated public street, access to the Land is
insured, and all curb-cut and street opening permits or licenses
required for vehicular access to and from the Land to any adjoining
public street or highway have been obtained and paid for by Borrower
and are in full force and effect. All roads necessary for the full
utilization of the Land for its intended purposes have either been
completed or the necessary rights of way therefore have been acquired
by Borrower or by the appropriate Governmental Authority having
jurisdiction.
3.13. Insurance. No notice has been received from any insurance
company which issued any of the insurance policies or any of their
agents, brokers or representatives, stating in effect that any such
policy (i) will not be renewed, (ii) will be renewed only at a higher
premium that is presently payable therefore, or (iii) will be renewed
only with lesser or less complete coverage than is presently provided.
3.14. No Default. No event has occurred and is continuing that is
an Event of . Default or which would be an Event of Default with the
passage of time or the giving of notice or both.
3.15. Condemnation. There is no pending condemnation,
expropriation, eminent domain or similar proceeding affecting the Land
or any portion thereof, and Borrower had not received any written or
oral notice of any thereof and has no knowledge that any such
proceeding is contemplated.
3.16. Leases: Agreements for Purchase. There are no leases or
agreements of purchase and sale for all or any portion of the Land.
3.17. Representations and Warranties True and Correct. The
representations and warranties of Borrower made to Lender are true,
correct and complete in every material respect. No representation,
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warranty or statement of Borrower contained herein or in any of the
Loan Documents or in any other document, instrument or certificate
delivered to Lender pursuant hereto or in connection with the
transactions contemplated hereunder contains any untrue statement of
any material fact, or omits or shall omit to state a material fact the
absence of which makes such representation, warranty or statement
misleading.
3.18 Compliance With Laws Respecting Acquisition. Borrower shall and
has complied with all requirements of local and state law in connection
with the acquisition ofthe Land.
4.COVENANTS OF BORROWER
4.1. Affirmative Covenants. Borrower covenants and agrees that, from
the date hereof and so long as this Agreement shall remain in effect or the
indebtedness evidenced by the Note shall remain outstanding, Borrower
shall:
4.1.1. Existence. Do or cause to be done all things necessary to
preserve and keep Borrower's legal existence in full force and effect
under the laws of the State of Delaware and Spitz, Inc.'s foreign
registration in full force and effect under the laws of the
Commonwealth of Pennsylvania and in any other jurisdiction in which
Borrower may have been organized, and to remain and cause Borrower to
remain qualified and licensed in all jurisdictions in which such
qualification or licensing is required for the conduct of Borrower's
business, including, without limitation, Pennsylvania. Borrower shall
promptly deliver to Lender any and all documents evidencing an
amendment to or modification of the articles of incorporation,
certificate of organization, bylaws, operating agreements or other
organization documents respecting Borrower.
4.1.2. Required Notices. Give, or cause to be given, prompt
written notice to Lender of (i) any action or proceeding instituted by
or against Borrower or the Land by or before any Governmental
Authority, or any such proceeding threatened against Borrower, the
Land which, if adversely determined, could have a material and adverse
effect upon the business, assets or condition (financial, legal or
otherwise) of Borrower or the Land, (ii) any other action, event or
condition of any nature which may have a material and adverse effect
upon the business or assets of Borrower or which, with the giving of
notice or the passage of time or both, would constitute an Event of
Default under this Agreement or a default under any other material
contract, instrument or agreement to which Borrower is a party or by
which Borrower or any of Borrower's properties or assets may be bound
or subject, or (iii) any action or proceeding respecting the current
development and use of the Land for commercial purposes.
4.1.3. Payment of Debts, Taxes. Pay and discharge or cause to be
paid and discharged when due and prior to the accrual thereon of
interest or penalty, all taxes, assessments and governmental charges
or levies imposed upon the Land, Borrower or their income or receipts,
or any of their properties, as well as all lawful claims for labor,
materials and supplies or otherwise which, if unpaid, might become a
lien or charge upon such properties or any part thereof, unless the
same shall be contested by Borrower in good faith and with due
diligence by appropriate proceedings and Borrower shall have posted a
bond or escrow with Lender equal to such contested amount.
4.1.4. Compliance. Promptly and faithfully comply with, conform
to and obey all present and future Legal Requirements applicable to
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Borrower, or the Land, all present and future requirements affecting
title to the Land, the Loan Documents, all" agreements of purchase, if
any, for all or any portion of the Land, and all leases now or
hereafter entered into from time to time, and all other agreements and
covenants to which Borrower is bound or subject. Promptly and
faithfully comply with, conform to and obey all present and future
orders, rules, regulations and requirements of any national or local
board of fire underwriters relating in any way to the Land or any
portion thereof. Promptly pay all license and permit fees and similar
municipal charges relating in any way to the Land or any portion
thereof or the construction or use of any building and improvement
placed or to be placed upon and forming a part of the Land. Borrower
shall immediately notify Lender of Borrower' s receipt of notice from
any Governmental Authority or any national or local board of fire
underwriters relating to the construction, use or occupancy of the
Land or any part thereof, or which requires any action to be taken
with respect to the Land or any part thereof or which could have an
adverse effect on the Land or any part thereof.
4.1.5. Maintenance. Cause the Land to be kept in good condition
and repair as set forth in the Mortgage, and operate the same
properly, efficiently and in compliance with all Legal Requirements.
4.1.6. Books and Records. Keep, or cause to be kept, in
accordance with generally accepted accounting principles consistently
applied, proper and complete books of record and account concerning
affairs of Borrower and the Land and make such records available in
Borrower's offices at all reasonable times upon reasonable prior
notice for inspection by Lender. Borrower agrees to maintain
accounting records for the Land separate from any other accounting
records which Borrower may maintain. Borrower agrees to retain all
such books and records for a period of two (2) years after the
repayment in full of the Loan.
4.1.7. Financial Statements. So long as the Loan or any portion
thereof remains outstanding, Borrower, at Borrower's sole cost and
expense, shall deliver or cause to be delivered to Lender current and
complete financial statements and other information on a consolidated
basis as follows:
a. Within ninety (90) days following the end of Borrower's
fiscal year and each fiscal quarter, respectively, in each
year, Borrower shall deliver to Lender the Borrower's Annual
Report on Form 10-KSB and quarterly report on Form 10-QSB,
each of which will include financial statements consisting
of a balance sheet, income statement and statement of source
and application of funds for Borrower. Such financial
statements for Borrower (i) shall, in the case of the annual
statements be accompanied by an audit opinion by a certified
public accounting firm selected and paid for by Borrower and
satisfactory to Lender (it being agreed that the Borrower's
certified public accounting firm as of the Closing Date is
acceptable to the Lender), (ii) shall be prepared in
accordance with generally accepted accounting principles
consistently applied, (iii) shall be in form reasonably
satisfactory to Lender and (iv) shall be" certified as true,
correct and complete by the Borrower's chief financial
officer.
b. Borrower shall deliver to Lender such other financial
information as to Borrower as Lender from time to time may
request, all such information to be provided in form and
time frame reasonably satisfactory to Lender.
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c. Within thirty (30) days of the date the same are due for
filing (including any available extensions properly applied
for) Borrower shall deliver to Lender copies of Borrower's
Federal Income Tax Returns. All copies of such returns shall
be certified by Borrower as true and correct and as actually
filed with the Internal Revenue Service.
All such financial statements required by Lender hereunder shall
be prepared in accordance with generally accepted accounting
principles consistently applied by an independent certified public
accountant acceptable to Lender. Borrower shall promptly notify Lender
in writing if there is any material adverse change since the date of
the last preceding statement submitted to Lender in the financial
position of Borrower, and if there has been such a change, a detailed
explanation thereof.
4.1.8. Change in Circumstances. Promptly notify Lender in writing
of any change in any fact or circumstance represented or warranted by
Borrower herein or in any other documents furnished to Lender in
connection with this Agreement.
4.1.9. Additional Instruments. Execute such additional
instruments as may be requested by Lender in order to carry out the
intent of this Agreement and the other Loan Documents and to perfect
or give further assurances of any of the rights granted or provided
for hereunder or under any of the other Loan Documents.
4.1.10. Indemnification. Indemnify, defend and hold harmless
Lender and its officers, directors, employees and agents from and
against any and all liabilities, losses, claims, damages and expenses,
including reasonable attorneys' fees and expenses, of any kind or
nature directly or indirectly resulting from or arising out of the
Loan, or the Loan Documents, or any act or omission by Lender or its
officers, directors, employees or agents, in connection therewith,
including, without limitation, all claims for commissions by any
broker or intermediary, disputes between or among Borrower, any
Governmental Authorities, subcontractors, material suppliers,
purchasers and tenants, unless caused by the gross negligence or
willful malfeasance of Lender or its officers, directors, employees or
agents.
4.1.11. Reimbursement of Costs. Reimburse Lender for all of
Lender's costs payable to third parties incidental to the preparation
and making of the Loan, including, without limitation, monthly credit
reports, recording fees, filing fees, surveys and premiums for title
insurance as may be required by Lender, the fees and expenses of any
consultant employed by Lender, and all costs and expenses of Lender's
counsel relating to preparation or approval of any of the Loan
Documents, examination of matters subject to Lender's approval and
legal services rendered in connection with Borrower's failure to
perform in accordance with the Loan Documents or otherwise relating to
the transaction. All such costs billed at or prior to the Closing Date
shall be paid on or before the Closing Date.
4.1.12. Notices. Forward to Lender copies of all notices given or
received by Borrower to or from; (i) any purchaser or tenant for any
portion of the Land, (ii) any subcontractor or material supplier
respecting the Land, (iv) any insurer or insurance underwriters
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respecting the Land or Borrower's business, (v) any utility company
respecting the Land or the Borrower's business, or (vi) any
Governmental Authority respecting the Land or the Borrower's business
(including, without limitation, notices of nonconforming construction,
notices relating to Hazardous Materials and any Environmental Laws as
those terms are defined in the Note and Mortgage, and notice of
inability to perform the terms of any contract or agreement), promptly
upon the giving or receipt of such notice.
4.1.13. Loan Proceeds. Use Loan proceeds for the purposes
identified in the Commitment and this Loan Agreement.
4.1.14. Bank Accounts. Borrower shall maintain all deposit,
operating and escrow accounts relating to the Land with Lender.
4.1.15. Inspection. Permit Lender, its agents, employees and
representatives, to enter and to inspect the Land at any reasonable
time upon one (1) business day prior notice for the purposes of making
site and building investigations and performing soil, groundwater,
structural and other tests. Lender, or any persons designated by it,
shall have the right to call at Borrower's place or places of business
at any reasonable time upon one (1) business day notice, and without
hindrance or delay, to inspect, audit, check and make extracts from
Borrower's books, records, journals, orders, receipts and any
correspondence and other data relating to the Borrower's business or
to any other transactions between the parties hereto, and shall have
the right to make direct verification from the account debtors with
respect to any or all accounts.
4.2. _ Negative Covenants. Borrower covenants and agrees that from the
date hereof and for so long as this Agreement shall remain in effect or the
indebtedness evidenced by the Note shall remain outstanding, Borrower shall
not:
4.2.1. Amendment or Modification. Amend, vary or modify, or
permit to be amended, varied or modified, any agreement, document or
instrument assigned to Lender.
4.2.2. Conveyance. Sell, assign, transfer, convey, lease or
otherwise dispose of the Land, or any part thereof or interest or
estate therein, or otherwise permit ownership or control of the Land
or any portion thereof to be other than in Spitz, Inc.
4.2.3. Governing Documents, Directors. Amend, or permit to be
amended, the governing documents pursuant to which Borrower was
organized and is operating or permit a change of the majority of the
members of the board of directors of Borrower during any twelve (12)
month period.
4.2.4. Encumbrances. Create by mortgage, pledge, assignment,
security agreement or otherwise, or suffer to exist, any security
interest, pledge, lien, charge or other encumbrance upon the Land or
any portion thereof, except (i) the liens or security interests
created pursuant to the Loan Documents or other liens or security
interests in favor of Lender; (ii) mechanics or tax liens being
contested by Borrower in good faith and due diligence in appropriate
proceedings with the approval of Lender, a bond or escrow having been
posted with Lender for the full amount of such contested lien; and
(iii) with the prior written consent of Lender, easements and licenses
for the operation of the Land.
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4.2.5. Other Borrowing and Guaranties. Undertake any additional
financing in connection with the purchase or improvement of the Land
or any part thereof, or borrow, in the aggregate, any sum in excess of
Two Hundred Thousand ($200,000.00) from any person or persons, or
assume, guaranty, endorse or otherwise become contingently liable
upon, or responsible for, the obligation of any person other than as
expressly provided in the Loan Documents, if to do so in the judgment
of Lender would have a material adverse impact on the financial
condition or status of Borrower.
5. EVENTS OF DEFAULT AND REMEDIES.
5.1. Events of Default. The occurrence of anyone or more of the
following shall constitute an "Event of Default" hereunder:
5.1.1. The occurrence of an event of default under the Note or
any other Loan Document.
5.1.2. The issuance of any levy, writ or process of execution or
attachment against Borrower or any property or assets of Borrower,
including without imitation the Land, or the levy or service of any
such writ.
5.1.3. The entry or filing of any judgment, lien, encumbrance,
notice oflien, attachment, levy or any other adverse charge against
Borrower or the Land or any portion thereof which is not discharged
within twenty (20) days unless it is being contested by Borrower in
good faith and due diligence in appropriate proceedings with the
approval of Lender, a bond or escrow having been posted with Lender
for the full amount of such contested lien.
5.1.4. The failure of Borrower to comply with the requirements of
any Governmental Authority concerning the Land unless the same shall
be contested by Borrower in good faith and with due diligence by
appropriate proceedings and Borrower shall have posted a bond or
escrow with Lender in an amount satisfactory to Lender.
5.1.5. The failure of Borrower to maintain any insurance or
policy of insurance required by this Agreement or the Mortgage for a
period in excess often (10) days from the date of written notice from
Lender of the lapse or absence of any such insurance or policy of
insurance.
5.1.6. The failure of Borrower to provide or furnish to Lender
within thirty (30) days of written request, proof of any insurance or
policy of insurance required by this Agreement or the Mortgage.
5.1.7. The failure of Borrower to provide or furnish to Lender
within thirty (30) days of written request, any financial statement,
tax return or other information required to be delivered to Lender
pursuant to this Agreement or any other Loan Document.
5.1.8. The failure of Borrower to comply, after any applicable
notice or cure period, with any requirements of any recorded
instrument or other agreement concerning the Land.
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5.1.9. The making by Borrower of any amendment to or modification
to any document, instrument or item which has been approved by Lender
in accordance with the provisions hereof
5.1.10. The failure by Borrower to pursue promptly and with due
diligence and in good faith any remedy under any contract or agreement
with respect to the Land available as the result of any material
default by the other party thereto.
5.1.11. The failure of Borrower to perform or comply with any of
the terms, conditions, provisions, agreements and covenants contained
herein or in any of the Loan Documents or in any other document,
agreement or instrument given by or in behalf of Borrower in
connection with the Loan.
5.1.12. The default by Borrower or any affiliate, owner or
subsidiary thereof, under any other loans or indebtedness between
Lender and Borrower 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 Lender and Borrower, 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.
5.1.13. The falsity or incorrectness, regarded by Lender as
material, of any representation or warranty made to Lender, or any
financial statement given to Lender, by Borrower in or in connection
with the Loan, this Agreement or any of the Loan Documents.
5.2. Remedies. Upon the occurrence of any Event of Default, Lender may
exercise as it may deem necessary or appropriate, any one or more of the
following rights and remedies:
5.2.1. Declare immediately due and payable all sums under the
Note which are then unpaid, together with all accrued interest.
5.2.2. Exercise any other right or remedy provided herein, in any
of the Loan Documents, at law or in equity.
5.3. Verification of Amounts Due/Declaration of No Set-Off. In any
action or proceeding for recovery of any sums expended by Lender in
connection with the operation and/or maintenance of the Land or otherwise
due to Lender pursuant to the terms hereof, a statement of such
expenditures, verified by the affidavit of an officer of Lender, shall be
prima facie evidence of the amounts so expended and of the propriety of and
necessity for such expenditures, and the burden of proving the contrary
shall be upon Borrower. Within ten (10) days after being requested to do so
by Lender, Borrower shall furnish to Lender or to any assignee of the Note
and/or the Mortgage, a written statement in form and substance satisfactory
to Lender stating the entire outstanding amount of the indebtedness
evidenced by the Note and stating that Borrower has no offsets,
recoupments, counterclaims or defenses or, if such offsets, recoupments,
counterclaims or defenses are alleged to exist, the nature and extent
thereof. In the event Borrower fails to furnish to Lender a written
statement within ten (10) days after being requested to do so, or if such
11
statement does not contain all of the information required, then except to
the extent set forth in Borrower's timely delivered written statement,
Borrower shall be deemed to accept and concur with Lender's statement of
the entire outstanding amount of the indebtedness evidenced by the Note and
agree that Borrower has no offsets, recoupments, counterclaims or defenses.
5.4. Borrower's Property. As security for the Loan and for the
obligation and liabilities of Borrower hereunder and under each of the Loan
Documents, Lender is hereby given a lien upon and a security interest in
all funds and property of Borrower which may hereafter be deposited with or
come into the possession of Lender, and for such purpose this Agreement
shall constitute a security agreement under the Pennsylvania Uniform
Commercial Code and Lender shall have all rights and may exercise all of
the remedies of a secured party under the applicable provisions of the
Pennsylvania Uniform Commercial Codes with respect to such funds and
property of Borrower.
5.5. Remedies Cumulative. The rights and remedies of Lender provided
for in this Agreement, in any of the other Loan Documents, and in any other
instrument, document or agreement given by or on behalf of Borrower in
connection with the Loan, shall be cumulative and concurrent and shall not
be exclusive of any right or remedy provided by law, in equity or
otherwise. Said rights and remedies may, at the sole and exclusive
discretion of Lender, be pursued singly, successively or together, and may
be exercised as often as occasion therefore shall arise. No grace period,
qualification or condition stated with respect to any Event of Default
shall change, modify, amend or extend, or will be construed as an
undertaking by Lender to change, modify, amend or extend the time for
making any installment due under the Note or the Maturity Date, which time
for making any installment and Maturity Date remain always of the essence
of this Agreement.
5.6. Lender's Right to Remedy Defaults. If Borrower fails to pay when
due any sum required to be paid by Borrower or fails to perform any
obligation of Borrower hereunder, Lender, at its option; upon at least ten
(10) days prior notice to Borrower, shall have the right, but not the
obligation, to pay any such sum and to perform any such obligation and
Lender shall have the right, but not the obligation, to pay any sum or to
take any action which Lender deems necessary or advisable to protect the
security for the Loan including without limitation the Mortgage and the
Land, all without prejudice to any of Lender's rights or remedies available
hereunder or under any of the Loan Documents or under any other documents
or instrument given by or on behalf of Borrower in connection with the
Loan, at law, or in equity. The amount of all payments so made by Lender,
together with all costs so incurred by Lender, shall immediately be due and
payable from Borrower to Lender, together with interest at the rate set
forth in the Note in the event of a default. All such amounts, together
with interest as aforesaid, shall be added to and evidenced by the Note and
be secured by the Mortgage, and Lender may charge all such amounts and
interest as advances of the Loan and may deduct such amounts and interest
as advances of the Loan thereafter to be advanced hereunder from any funds
or property deposited by Borrower with Lender.
0.XXXXXXXXX.
6.1. Coverage. Borrower shall, from and after the date hereof and at
all times while this Agreement is in effect or the Note remains
outstanding, maintain at Borrower's sole expense, insurance in amounts,
with deductibles satisfactory to Lender written by stock or nonassessable
12
mutual carriers licensed in Pennsylvania with a general policy holders
rating of "A" or better and a financial rating of VI or better in the most
recent edition of "Best's Key Rating Guide, Property-Casualty", published
by Xxxxxx X. Best Co., Inc. Without limiting the generality of the
foregoing, Borrower shall maintain the following minimum coverages, unless
otherwise agreed to in writing by Lender:
6.1.1. All risk, fire, hazard and extended coverage insurance
with vandalism and malicious mischief endorsements on all buildings
and structures to the extent of one hundred percent (100%) of the
replacement value thereof pursuant to full replacement value
endorsements naming Lender as mortgagee and additional insured
pursuant to a standard mortgagee loss payable clause, and;
6.1.2. Commercial general public liability insurance covering all
operations of Borrower in connection with the Collateral, with
contractual liability endorsement, naming Lender as additional insured
in amounts not less than: (i) bodily injury: $3,000,000,000 for each
occurrence, $3,000,000,900 in the aggregate, and (ii) property damage:
$1,000,000,000 for each occurrence, and $3,000,000_000 in the
aggregate; and
6.1.3. Rent insurance against loss of income arising out of
damage or destruction by fire or the perils of extended coverage
insurance, in an amount equal to one (1) year's gross rental income to
the owner of the Land, or business interruption insurance in an amount
as required by Lender from time to time, but not to exceed Mortgagee's
reasonable estimate of the annual cost of debt service on the Note,
taxes; insurance and maintenance for the Land.
6.2.Certificates; Notices.
6.2.1. Borrower shall furnish to Lender, certificates certifying
to the insurance required by Paragraph 6.1, (as Lender may request)
and expressly granting Lender the same protections as if Lender held
the original policies, (i) on or before the closing date, (ii) no
fewer than twenty (20) days prior to the renewal or replacement of
existing coverage or the obtaining of additional coverage, and (iii)
at any other time upon the request of Lender.
6.2.2. Each insurance policy of Borrower shall contain a
provision (i) requiring the insurer to notify Lender, in writing and
at least thirty (30) days in advance of any cancellation, expiration
or material change in the policy, and (ii) stating that any loss
otherwise payable thereunder shall be payable notwithstanding any act
or neglect of the insured and notwithstanding ( a) any change in title
to or ownership of the Land or (b) any provision of the policy
relieving the insurer thereunder of liability for any loss by reason
of the existence of other policies of insurance covering the Land
against the peril involved, whether or not collectible, provided such
coverage is available to Borrower at reasonable cost.
6.2.3. If the insurance, or any part thereof, shall expire, or be
withdrawn, or become void or unsafe, in the opinion of Lender, by
reason of Borrower's breach of any condition thereof, or become void
or unsafe, in the opinion of Lender, by reason of the failure or
impairment of the capital of any company issuing such certificates,
Borrower shall place new insurance in accordance with this Agreement.
All renewal policies, with premiums paid, shall be delivered to Lender
at least thirty (30) days prior to the expiration of the existing
policies.
13
6.2.4. The insurance described in Paragraph 6.1 hereof shall not
provide for deductibles in excess of amounts approved by Lender and,
though obtained, maintained and paid for by Borrower, shall provide
that loss thereunder shall be payable to Lender under a standard
mortgagee's loss payee clause.
6.3. Lender May Provide Insurance. In any instance where insurance is
not provided by Borrower as required hereunder, Lender may at its option,
but shall not be required to, secure such insurance as Lender deems
appropriate to cover Lender's interests, without obligation to insure
Borrower's interests, and charge the cost of the same to Borrower, to be
secured by the Loan Documents.
7.MISCELLANEOUS.
7.1. Lender's Discretion. If any condition of this Agreement requires
the submission of evidence of the existence or non-existence of a specified
fact or facts, or implies as a condition the existence or non-existence of
such fact or facts, Lender will, at all times, be free independently to
establish to its satisfaction and in its discretion (unless otherwise
specified) such existence or non-existence. Where any matter herein
requires the approval or consent of the Lender, the decision to give or
refuse to give such approval or consent shall be within Lender's discretion
unless otherwise specified.
7.2. No Third-Party Beneficiary. The parties do not intend the
benefits of this Agreement to inure to any third party or any of their
respective creditors for debts or claims accruing to any such persons
against Borrower. Lender shall not be liable for the manner in which any
advance may be applied by Borrower. Notwithstanding anything contained
herein or in any of the other Loan Documents, or any conduct or course of
conduct by or between Borrower and Lender before or after the execution of
this Agreement, this Agreement shall not be construed as creating any
right, claim or cause of action against Lender or any of its officers,
directors, agents or employees, in favor of any other person other than
Borrower. Without limiting the generality of the foregoing, any advances
made to any insurer, contractor, subcontractor or supplier of labor or
materials or other creditor of Borrower, whether or not such advances are
approved by Lender, shall not be deemed a recognition by Lender of third
party beneficiary status of any such person. No part of the Loan will be at
any time subject or liable to attachment or levy at the suit of any
creditor of Borrower, or of any contractor, subcontractor or supplier of
labor, materials or services, or any of their respective creditors, and
regardless of any other term, condition or provision hereof, no such third
party will have any status, right or entitlement hereunder.
7.3. Reliance on Representations and Warranties. Lender shall be
entitled to rely upon the representations and warranties of Borrower set
forth in any of the Loan Documents without any investigation by Lender and
notwithstanding any investigation conducted by Lender or on its behalf
before or after the date hereof.
7.4. Assignment.
7.4.1. The rights of Borrower hereunder and under any other Loan
Document shall not be assignable in any respect without the prior
14
written consent of Lender, which consent may be granted or withheld in
Lender's sole discretion. In any case, Borrower shall remain liable
for repayment of all sums advanced hereunder before and after such
assignment.
7.4.2. All or any portion of the Loan or any of the Loan
Documents may be endorsed, assigned or transferred in whole or in part
by Lender, and any such holder or assignee thereof shall succeed to
and be possessed of the rights of Lender under the Loan Documents to
the extent so endorsed, transferred or assigned.
7.4.3. Subject to the foregoing, this Agreement shall be binding
upon, and shall inure to the benefit of, Borrower and Lender and their
respective personal representatives, heirs, successors and assigns.
7.5. Communications. All communications required or permitted by this
Agreement shall be in writing and shall be deemed to have been given or
made when hand delivered or delivered by guaranteed overnight delivery, or
upon deposit in the United States mail, postage prepaid, certified or
registered mail, return receipt requested, addressed as follows:
7.5.1. If to Lender:
First Keystone Bank
00 Xxxx Xxxxx Xxxxxx
Xxxxx, Xxxxxxxxxxxx 00000
Attention: A. Xxxxxxx Xxxxxx, Xx.
Senior Vice President, Lending
With a required copy to:
Xxxx X. Xxxxxxx, Esquire
00 Xxxxxx Xxxx
Xxxxx, Xxxxxxxxxxxx 00000
7.5.2. If to Borrower:
Transnational Industries, Inc. and
Spitz, Inc.
X.X. Xxx 000
Xxxxx 0
Xxxxxx Xxxx, Xxxxxxxxxxxx 00000
With a required copy to:
Xxxxxx X.Xxxxx, Esquire
Petrikin, Wellman, Damico, Xxxxx & Petrosa
000 Xxxxxxx Xxxxx
Xxxxx, Xxxxxxxxxxxx 00000
15
or in any case to such other address as either party may
designate from time to time by notice to the other in the manner set
forth herein.
7.6. Headings. The headings preceding the text of the sections and
subsections of this Agreement are used solely for convenience of reference
and shall not affect the meaning or interpretation of this Agreement.
7.7. Time of the Essence. All dates and times for performance set
forth herein or in any of the other Loan Documents (whether or not
elsewhere so stated) are of the essence.
7.8. No Brokers. Borrower represents and warrants that Borrower has
taken no action which would or might render it liable for payment of any
brokerage or placement fees or commissions on account of the transactions
contemplated by the Loan Documents, and Borrower will indemnify, defend and
hold harmless Lender from any claims made in connection therewith.
7.9. Governing Law. The Agreement and all questions relating to its
validity, interpretation, performance and enforcement (including, without
limitation, provisions concerning limitations of actions), shall be
governed by and construed in accordance with the laws of the Commonwealth
of Pennsylvania, notwithstanding any conflict-of-laws doctrines of such
state or other jurisdiction to the contrary, and without the aid of any
canon, custom or rule of law requiring construction against the draftsman.
7.10. Severability. Any provision in any of the Loan Documents which
is determined to be unenforceable or invalid shall be ineffective to the
extent of such unenforceability or invalidity without affecting the
remaining provisions thereof.
7.11. Survival. All agreements, representations and warranties made in
this Agreement shall survive the closing hereunder and the making of all
advances hereunder.
7.12. Entire Agreement: Controlling Document; Amendment. This
Agreement, together with the exhibits hereto, which are incorporated herein
by reference, and the other Loan Documents embody the entire agreement and
understanding between Borrower and Lender with respect to the subject
matter hereof and supersede all prior commitments, agreements and
understandings relating to the subject matter hereof. The provisions of
this Agreement (including the exhibits attached hereto) shall be deemed
complementary to the provisions of the other Loan Documents, but in the
event of conflict, the provisions hereof shall be deemed to modify and
supersede the conflicting provisions in such other Loan Documents and to
control to the extent enforceable under applicable law. Neither this
Agreement nor any of the other Loan Documents may be modified or amended
except by a written agreement executed by the party against which
enforcement is sought.
7.13. Indulgences, Etc. Neither the failure nor any delay on the part
of either party to exercise any right, remedy, power or privilege under
this Agreement (a "Right") shall operate as a waiver thereof, nor shall any
single or partial exercise of any Right preclude any other or further
16
exercise of the same or of any other Right, nor shall any waiver of any
Right with respect to any occurrence be construed as a waiver of such Right
with respect to any other occurrence. No waiver shall be effective unless
it is in writing and. is signed by the party asserted to have granted such
Waiver.
7.14 Counterparts. This Agreement may be executed in one or more
counterparts, via facsimile transmission or otherwise, each of which will
be deemed an original, but all of which together will constitute one and
the same instrument.
7.15. TRIAL BY JURY. BORROWER AND LENDER HEREBY KNOWINGLY, VOLUNTARILY
AND INTENTIONALLY WAIVE ANY RIGHT EITHER MAY HAVE TO A TRIAL BY JURY IN
RESPECT OF ANY LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER OR IN
CONNECTION WITH, THIS AGREEMENT, THE NOTE, THE MORTGAGE, ANY OTHER DOCUMENT
OR INSTRUMENT RELATING HERETO OR THERETO, ANY OTHER TRANSACTIONS
CONTEMPLATED HEREBY OR THEREBY OR ANY COURSE OF CONDUCT, COURSE OF DEALING,
STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTIONS OF THE LENDER OR BORROWER
IN CONNECTION HEREWITH OR THEREWITH. THIS PROVISION IS A MATERIAL
INDUCEMENT FOR THE LENDER TO MAKE THE LOAN EVIDENCED BY THE NOTE.
[THIS SPACE INTENTIONALLY LEFT BLANK. SIGNATURE PAGE FOLLOWS.]
17
IN WITNESS WHEREOF, and intending to be legally bound hereby, Borrower and
Lender, have caused this Agreement to be duly executed under seal as of the date
first above written.
LENDER:
FIRST KEYSTONE BANK
BY: /s/ A. Xxxxxxx Xxxxxx, Xx.
--------------------------------------------------
BORROWER:
TRANSNATIONAL INDUSTRIES, INC.
BY: /s/ Xxxxxxxx Xxxx
--------------------------------------------------
ATTEST: /s/ Xxxx Xxxxxx
---------------------------------------------------
[Corporate Seal]
SPITZ, INC.
BY: /s/ Xxxxxxxx Xxxx
--------------------------------------------------
ATTEST: /s/ Xxxx Xxxxxx
--------------------------------------------------
[Corporate Seal]
18
