UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q
(X) Quarterly Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the Quarter ended June 30, 1995
( ) Transition Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the transition period from _______________ to _______________
Commission file number 0-7885
UNIVERSAL SECURITY INSTRUMENTS, INC.
(Exact name of registrant as specified in its charter)
Maryland 52-0898545
State of Incorporation I.R.S. Employer Identification Number
10324 S. Dolfield Road, Owings Mills, MD 21117
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code 410-363-3000
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 and 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months and
(2) has been subject to the filing requirements for at least the
past 90 days.
YES X NO _____
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date:
Date Class Shares Outstanding
August 4, 1995 Common Stock, $.01 par value 3,245,577<PAGE>
UNIVERSAL SECURITY INSTRUMENTS, INC. AND SUBSIDIARIES
INDEX
Part I - FINANCIAL INFORMATION
Item l. Financial Statements
Consolidated balance sheets at June 30, 1995 and March
31, 1995
Consolidated statements of operations for the three
months ended June 30, 1995 and 1994
Consolidated statements of cash flows for the three
months ended June 30, 1995 and 1994
Notes to consolidated financial statements
Item 2. Management's discussion and analysis of results
of operations and financial condition
Part II - OTHER INFORMATION
Item 6. Exhibits and Reports<PAGE>
UNIVERSAL SECURITY INSTRUMENTS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(unaudited)
ASSETS
<TABLE>
June 30, 1995 March 31, 1995 <S>
<C> <C>
CURRENT ASSETS
Cash and cash equivalents $ 238,659 $ 173,809
Time deposits 8,399 8,322
Accounts receivable:
Trade (less allowance for doubtful
accounts of $45,000 at June 30, 1995
and $50,000 at March 31, 1995) 1,570,117 3,129,869
Officers and employees 65,430 33,192
1,635,547 3,163,061
Inventories:
Finished goods 3,719,901 4,252,825
Raw materials-foreign locations 200,437 163,756
3,920,338 4,416,581
Prepaid expenses 519,703 427,716
TOTAL CURRENT ASSETS 6,322,646 8,189,489
INVESTMENT IN JOINT VENTURE 3,500,854 3,366,951
PROPERTY, PLANT AND EQUIPMENT 2,073,964 2,074,073
OTHER ASSETS 102,333 102,333
$11,999,797 $13,732,846
/TABLE
<PAGE>
UNIVERSAL SECURITY INSTRUMENTS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(unaudited)
LIABILITIES AND SHAREHOLDERS' EQUITY
<TABLE>
June 30, 1995 March 31, 1995 <S>
<C> <C>
CURRENT LIABILITIES
Short-term borrowings $ 1,880,975 $ 3,869,711
Current maturity of long-term debt 11,238 106,666
Accounts payable 450,064 560,064
Accounts payable - joint venture 784,552 750,000
Accrued liabilities:
Payroll, commissions and payroll taxes 114,578 128,600
Other 16,750 46,043
131,328 174,643
TOTAL CURRENT LIABILITIES 3,258,157 5,461,084
LONG-TERM DEBT, less current portion 1,288,762 497,222
SHAREHOLDERS' EQUITY
Common stock, $.01 par value per share;
authorized 20,000,000 shares; issued
3,245,559 shares at June 30, 1995
and 3,245,382 shares at March 31, 1995 32,456 32,454
Additional paid-in capital 10,429,580 10,429,398
Retained earnings (deficit) (3,009,158) (2,687,312)
7,452,878 7,774,540
$11,999,797 $13,732,846
See notes to consolidated financial statements
/TABLE
<PAGE>
UNIVERSAL SECURITY INSTRUMENTS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
<TABLE>
For the Three Months Ended
June 30, 1995 June 30, 1994 <S>
<C> <C>
Net sales $5,037,361 $5,827,621
Cost of goods sold 4,408,179 5,006,389
629,182 821,232
Research and development expense 57,316 119,601
Selling, general and administrative expense 900,047 1,010,754
Operating (loss) (328,181) (309,123)
Other income (expense):
Interest income 1,636 1,351
Interest expense (127,699) (125,662)
Other (1,505) (1,295)
(127,568) (125,606)
EARNINGS (LOSS) BEFORE EQUITY
IN EARNINGS OF JOINT VENTURE (455,749) (434,729)
Equity in earnings of joint venture 133,903 465,282
NET (LOSS) INCOME $ (321,846) $ 30,553
Per common share amounts:
Primary $ (.10) $ .01
Fully diluted (.10) .01
Weighted average number of common
shares outstanding
Primary 3,245,470 3,240,329
Fully diluted 3,245,470 3,240,329
See notes to consolidated financial statements
/TABLE
<PAGE>
UNIVERSAL SECURITY INSTRUMENTS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
<TABLE>
For the Three Months Ended
June 30, 1995 June 30, 1994 <S>
<C> <C>
OPERATING ACTIVITIES
Net (loss) income $ (321,846) $ 30,553
Adjustments to reconcile net (loss) income to
net cash used in operating activities:
Depreciation and amortization 43,782 48,942
Undistributed earnings of joint venture (133,903) (465,282)
Changes in operating assets and liabilities:
Decrease in accounts receivable 1,527,514 674,067
Decrease (increase) in inventories and
prepaid expenses 404,256 (836,173)
(Decrease) in accounts payable
and accrued expenses (118,763) (142,380)
Decrease in other assets 7,286
NET CASH PROVIDED BY (USED IN)
OPERATING ACTIVITIES 1,401,040 (682,987)
INVESTING ACTIVITIES
Purchases of property, plant and equipment (43,673) (75,443)
(Increase) in time deposits (77) (66)
NET CASH (USED IN) INVESTING ACTIVITIES (43,750) (75,509)
FINANCING ACTIVITIES
Net (repayment) issuance of short-term debt (1,988,736) 916,124
Proceeds from issuance of long-term debt 1,300,000 110,000
Principal payments on long-term debt (603,888) (23,611)
Proceeds from issuance of common stock
under stock option plan and employee
stock purchase plan 184 208
NET CASH (USED IN) PROVIDED
BY FINANCING ACTIVITIES (1,292,440) 1,002,721
INCREASE IN CASH AND CASH EQUIVALENTS 64,850 244,225
Cash and cash equivalents at beginning of period 173,809 275,138
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 238,659 $ 519,363
Supplemental information:
Interest paid $ 127,699 $ 125,662
Income taxes paid - -
See notes to consolidated financial statements
/TABLE
<PAGE>
UNIVERSAL SECURITY INSTRUMENTS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
Statement of Management - The financial information included herein is
unaudited and does not include all disclosures normally included in
financial statements presented in accordance with generally accepted
accounting principles. The interim financial information should be read
in connection with the financial statements and related notes in the
Company's annual report on Form 10-K for the year ended March 31, 1995.
The results for the interim period are not necessarily indicative of the
results expected for the year. The accompanying interim information
reflects all adjustments (consisting of normal recurring accruals),
which are, in the opinion of management, necessary to a fair statement
of the results for the interim periods.
Per Share Data - Primary and fully diluted net income per share is
computed by dividing net income by the weighted average number of common
and common equivalent shares outstanding. Common equivalent shares
include the dilutive effect of outstanding stock options calculated
under the treasury stock method.
Cash Equivalents - The Company considers all highly liquid investments
with a maturity of three months or less when purchased to be cash
equivalents.
Long-Term Debt - During the quarter ended June 30, 1995, the Company
refinanced the mortgage on its headquarters building. The terms of the
new financing are a $1,300,000 loan repayable in 60 equal monthly
installments of principal and interest, based on a 25 year amortization
schedule, with an interest rate of 10%. The full outstanding balance is
due at the end of the 60 month period.
Joint Venture - The Company maintains a 50% interest in a joint venture
with a Hong Kong corporation (Hong Kong joint venture) which has
manufacturing facilities in the People's Republic of China, for the
manufacturing of consumer electronic products. Additionally, the Hong
Kong joint venture has a 30% interest in a separate joint venture with
a People's Republic of China company to design and develop a portable
cellular phone for manufacture and sale in China. Included in the
results of the Hong Kong joint venture for the period June 30, 1994 is
$500,000 of profit related to a $3.5 million contract for the design and
development of the cellular telephone. The contract is being accounted
for under the percentage of completion method. The following represents
summarized income statement information of the Hong Kong joint venture
for the periods ended June 30, 1995 and 1994:
1995 1994
Net sales $3,217,892 $4,730,516
Gross profit 581,363 1,353,346
Net income 267,805 930,564
Commitments - The Company has employment agreements with two of its
officers, both expiring on March 31, 1998. The combined fixed aggregate
annual remuneration under these agreements is $500,000 per year. In
addition, the agreements provide incentive compensation to these
officers based on the Company's achievement of certain levels of
earnings. Outstanding letter of credit commitments approximated
$539,000 at June 30, 1995.<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL CONDITION
Three Months Ended June 30, 1995 Compared to
Three Months Ended June 30, 1994
Sales - Net sales for the three months ended June 30, 1995 were
$5,037,361 compared to $5,827,621 for the comparable three months in the
prior fiscal year, a decrease of $790,260. Net sales of security
products increased by $503,477 as compared to the quarter ended June 30,
1994. Net sales of telecommunications and video products decreased by
$656,272 and $637,465, respectively, as compared to the quarter ended
June 30, 1994. The increase in security sales was due primarily to a
significant sale of smoke detectors to an existing customer. The
decrease in telecommunications and video sales was due to a decreased
demand for certain of the Company's telecommunications and video
products by its private label customers.
Net Income - The Company reported a net loss of $321,846 for the quarter
ended June 30, 1995 compared to net income of $30,553 for the
corresponding quarter of the prior fiscal year. The decrease in net
income was due primarily to a decrease in the Company's equity in its
joint venture's earnings and the decrease in sales, partially offset by
a reduction in operating expenses.
Expenses - Research, selling, general and administrative expenses
decreased by approximately $173,000 from the comparable three months in
the prior year. As a percentage of sales, research, selling, general
and administrative expenses were 19% for the three months ended June 30,
1995 and 19% for the same period in the last fiscal year. The decrease
in expenses was primarily due to the Company's recently implemented
major cost reduction programs.
Interest Expense and Income - The Company's interest expense, net of
interest income, increased from $124,311 for the quarter ended June 30,
1994 to $126,063 for the quarter ended June 30, 1995.
Financial Condition and Liquidity - Cash needs of the Company are
currently met by funds generated from operations and the Company's line
of credit with a financial institution, which supplies both short-term
borrowings and letters of credit to finance foreign inventory purchases.
The Company's maximum bank line of credit is currently the lower of
$7,500,000 or specified percentages of the Company's accounts receivable
and inventory. Approximately $2,420,000 has been utilized in letter of
credit commitments and short-term borrowings as of June 30, 1995.
As of June 30, 1995, the amount available for borrowings under the line was
approximately $250,000 based on the specified percentages.
The outstanding principal balance of the revolving credit line is
payable upon demand. The interest rate on the revolving credit line is
equal to 1% in excess of the prime rate of interest charged by the
Company's lender. The loan is secured by the Company's accounts
receivable and inventory. During the three months ended June 30, 1995,
working capital increased by $336,084.
Operating activities provided cash of $1,401,040 for the quarter ended
June 30, 1995. This was primarily due to a decrease in accounts
receivable of $1,527,514 and a decrease in inventories of $496,243,
partially offset by the net loss of $321,846. For the same period last
year, operating activities used cash of $682,987, primarily due to an <PAGE>
increase in inventories of $829,701 and the undistributed earnings
of the joint venture of $465,282 offset by a decrease in accounts
receivable of $674,067. The increase in inventories was partially
due to the negative impact on sales due to the nationwide
Teamster's trucking strike.
Investing activities used cash of $43,750 in the current quarter
and $75,509 in the same quarter last year, consisting primarily of
purchases of equipment.
Financing activities used cash of $1,292,440 primarily due to the
net repayment of short-term debt of $1,988,736 and the retirement
of long-term debt of $603,888, partially offset by the issuance of
long-term debt of $1,300,000. For the same period last year,
financing activities provided cash of $1,002,721 primarily due to
the net issuance of short-term debt.
During the quarter ended June 30, 1995, the Company refinanced the
mortgage on its headquarters building. The terms of the new
financing are a $1,300,000 loan repayable in 60 equal monthly
installments of principal and interest based on a 25 year
amortization schedule, with an interest rate of 10%. The full
outstanding balance is due at the end of the 60 month period. The
refinancing resulted in an increase in cash available to the
Company of approximately $700,000.
The Company believes that its line of credit and its working
capital provide it with sufficient resources to meet its
requirements for liquidity and working capital in the ordinary
course of its business over the next twelve months.
Hong Kong Joint Venture - Net sales of the joint venture for the
three months ended June 30, 1995 were $3,217,892 compared to
$4,730,516 for the comparable three months in the prior fiscal
year. The decrease in sales was primarily due to decreased sales
of telecommunications and video products to the Company.
Net income was $267,805 for the quarter ended June 30, 1995
compared to $930,564 in the comparable quarter last year. Included
in the results for the quarter ended June 30, 1994 is $500,000 of
profit related to a $3.5 million contract for the design and
development of the cellular telephone under a separate joint
venture arrangement. Exclusive of this item, the decrease in net
income is due to the decrease in sales.
Selling, general and administrative expenses were $384,669 and
$479,861 for the quarter ended June 30, 1995 and 1994,
respectively. As a percentage of sales, expenses were 12% and 11%
for 1995 and 1994, respectively.
Interest income net of interest expense was $38,154 for the quarter
ended June 30, 1995 compared to $18,888 for the same quarter last
year.
Cash needs of the Hong Kong joint venture are currently met by
funds generated from operations. During the quarter ended June 30,
1995, working capital increased by $267,055 from $2,656,378 on
March 31, 1995 to $2,923,433 on June 30, 1995.<PAGE>
UNIVERSAL SECURITY INSTRUMENTS, INC. AND SUBSIDIARIES
PART II
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits included herein:
Exhibit Number
10.17 Deed of Trust with respect to the refinancing
of the Registrant's facility in Owings Mills,
Maryland.
10.18 Promissory Note with respect to the refinancing
of the Registrant's facility in Owings Mills,
Maryland.
11.1 Statement of computation of per share earnings.
(b) No reports on Form 8-K were filed during the quarter for
which this report is filed.<PAGE>
UNIVERSAL SECURITY INSTRUMENTS, INC.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized.
UNIVERSAL SECURITY INSTRUMENTS, INC.
Dated: August 11, 1995 Harvey Grossblatt
HARVEY GROSSBLATT
Executive Vice President
Dated: August 11, 1995 Ira Bormel
IRA BORMEL
Principal Financial Officer<PAGE>
EXHIBIT 11.1
UNIVERSAL SECURITY INSTRUMENTS, INC. AND SUBSIDIARIES
COMPUTATION OF EARNINGS PER SHARE
(UNAUDITED)
<TABLE>
For the Three Months Ended
June 30, 1995 June 30, 1994
Per Per
Amount Share Amount Share <S>
<C> <C> <C> <C>
PRIMARY:
Average shares
outstanding 3,245,470 3,239,899
Dilutive stock
options-based
on the treasury
stock method
using the average
market price 430
Adjusted shares
outstanding 3,245,470 3,240,329
Net (loss) income $ (321,846) $(.10) $ 30,553 $.01
</TABLE>
<TABLE>
For the Three Months Ended
June 30, 1995 June 30, 1994
Per Per
Amount Share Amount Share <S>
<C> <C> <C> <C>
FULLY DILUTED:
Average shares
outstanding 3,245,470 3,239,899
Dilutive stock
options-based
on the treasury
stock method
using the
quarter-end
market price
if higher than
the average
market price 430
Adjusted shares
outstanding 3,245,470 3,240,329
Net (loss) income $ (321,846) $(.10) $ 30,553 $.01
</TABLE>
EXHIBIT 10.18
PROMISSORY NOTE
Baltimore, Maryland
June 26, 1995
$1,300,000.00
FOR VALUE RECEIVED, Universal Security Instruments,
Inc., a Maryland Corporation, (hereinafter called "Maker")
promises to pay to the order of Loyola Federal Savings Bank
(hereinafter, together with all subsequent holders of this Note,
called "Lender") the principal sum of One Million Three Hundred
Thousand Dollars ($1,300,000.00), together with interest on the
unpaid principal balance from time to time outstanding at the
rate of ten per cent (10%) per annum, principal and interest
being due and payable in the following manner.
(1) Unless this Note is executed on the first day of a
calendar month, on the first day of the first calendar month
following the date hereof, a payment of interest on the principal
balance at the rate aforesaid shall be due and payable.
(2) Commencing as of the first day of the calendar
month immediately succeeding the first full calendar month after
the date hereof (or on the first day of the first calendar month
after the date hereof if this Note is executed on the first day
of a calendar month), and continuing thereafter on the first day
of each calendar month thereafter until and including the first
day of the first calendar month prior to the final payment date
provided in subparagraph (3) below, the unpaid principal and
accrued balance of this Note shall be due and payable in equal
monthly installments of Eleven Thousand Eight Hundred Thirteen
and 11/100 Dollars ($11,813.11) each, for a total of sixty (60)
equal and consecutive monthly payments.
(3) A final payment equal to the outstanding principal
balance of this Note, together with all accrued but unpaid
interest thereon at the rate aforesaid shall be due and payable,
in full, on July 1, 2000 (the "Maturity Date").
THIS NOTE CALLS FOR A BALLOON PAYMENT OF PRINCIPAL. ON
THE MATURITY DATE, A PORTION OR ALL OF THE PRINCIPAL AMOUNT OF
THE NOTE MAY REMAIN UNPAID AND THEN BE DUE.
All past due principal and interest shall bear interest
at a rate of two (2) percentage points in excess of the interest
rate hereinbefore provided. The Maker shall also pay (i) a late
charge equal to five percent (5%) of the aggregate monthly
payment if such payment is made more than fifteen (15) days after
the due date thereof, and (ii) costs of collection, including
attorney's fees as hereinafter provided, if this Note is referred
to an attorney for collection after default, whether or not any
action shall be instituted to enforce or collect this Note.<PAGE>
All payments on this Note shall be applied to (i)
first, the Escrow Account for taxes and assessments (as provided
in the Deed of Trust as hereinafter defined), (ii) second,
payment of accrued but unpaid interest, and (iii) third, any
remainder shall be applied to reduction of the principal balance
hereof. All payments hereunder shall be payable in lawful money
of the United States of America and shall be made to the Lender
at 1300 North Charles Street, Baltimore, Maryland 21201 or at
such other address as the Lender may from time to time designate
in writing to Maker during regular business hours. Any payment
of principal and interest received after 2:00 p.m., Baltimore
time, shall be deemed to have been received by Lender on the next
business day and shall bear interest accordingly. Any payment
tendered other than in coin or currency as aforesaid shall be
accepted by Lender subject to collection, and interest shall
accrue until the business day on which good funds are available
for immediate use by Lender on or before 2:00 p.m. Baltimore
time, of said business day.
This Note may be prepaid in its entirety at any time
without penalty.
Maker and any endorsers or guarantors hereof severally
waive presentment and demand for payment, notice of intent to
accelerate maturity, notice of acceleration of maturity, protest
or notice of protest and nonpayment, bringing of suit and
diligence in taking any action to collect any sums owing
hereunder or in proceeding against any of the rights and
properties securing payment hereof. From time to time, without
affecting the obligation of the Maker to pay the outstanding
principal balance of this Note and to observe the covenants of
the Maker contained herein, without affecting the duties and
obligations of any endorser hereto, without affecting the duties
and obligations of any guarantor hereof, without giving notice to
or obtaining the consent of the Maker or any endorser hereto or
guarantor hereof, and without liability on the part of the
Lender, the Lender may, at the option of the Lender, extend the
time for payment of interest hereon and/or principal hereof,
reduce the payments hereunder, release anyone liable on this
Note, accept a renewal of this Note, modify the terms and time of
payment of this Note, join in any extension or subordination or
exercise any option or election hereunder, modify the rate of
interest or period of amortization or principal due date of this
Note or exercise any option or election hereunder. No one or
more of such actions shall constitute a novation.<PAGE>
If default be made in the payment in whole or in part
of any sum provided for herein, or a Default or an Event of
Default shall occur under any Loan Document (as defined in the
Deed of Trust) including all current and future supplements,
amendments and attachments thereto, then Lender may, at its
option, without further notice or demand, declare the unpaid
principal balance and accrued interest on this Note at once due
and payable, foreclose all liens securing payment hereof, pursue
any and all other rights, remedies, and recourses available to
Lender, or pursue any combination of the foregoing, all remedies
hereunder and under the Loan Documents being cumulative. Lender
shall have the right to rescind any acceleration in payment.of
this Note for default, as aforesaid, if Lender so elects, in
which event this Note shall be construed, interpreted and
enforced in the same manner as if Lender had never elected to
declare the unpaid principal balance and accrued interest of this
Note at once due and payable.
Failure to exercise any of the foregoing options upon
the happening of one or more of the foregoing events shall not
constitute a waiver of the right to exercise the same or any
other option at any subsequent time in respect to the same or any
other event, and no single or partial exercise of any right or
remedy shall preclude other or further exercise of the same or
any other right or remedy. Lender shall have no duty to exercise
any or all of the rights and remedies herein provided or
contemplated. The acceptance by Lender of any payment hereunder
that is less than payment in full of all amounts due and payable
at the time of such payment shall not constitute a waiver of the
right to exercise any of the foregoing options at that time or at
any subsequent time, or nullify any prior exercise of any such
option without the express written consent of the Lender.
This Note is secured, inter alia by a Deed of Trust,
Assignment of Rents and Security Agreement (the "Deed of Trust")
of even date herewith executed by Maker in favor of Thomas R.
Marvel and A. Gregory Manuel, Trustees, for the benefit of the
Lender, covering certain real and personal property situated in
Baltimore County, Maryland, as more particularly described
therein and to which Deed of Trust reference is hereby made for a
definition of terms, for the nature and extent of the security
afforded thereby, and for the rights of the Lender with respect
to such security.
This Note shall be governed by and construed according
to the laws of the State of Maryland, without regard to
principles of conflict of laws.<PAGE>
IF THIS NOTE IS NOT PAID WHEN DUE, OR ANY OTHER DEFAULT
SHALL OCCUR HEREUNDER OR UNDER THE DEED OF TRUST OR ANY OF THE
OTHER LOAN DOCUMENTS, MAKER DOES HEREBY AUTHORIZE ANY CLERK OF
ANY COURT OF RECORD OR ANY ATTORNEY TO ENTER IN ANY COURT OF
COMPETENT JURISDICTION IN THE STATE OF MARYLAND OR ANY OTHER
STATE OR TERRITORY OF THE UNITED STATES, JUDGMENT BY CONFESSION
AGAINST MAKER AND IN FAVOR OF LENDER FOR THE ENTIRE PRINCIPAL
AMOUNT OF THIS NOTE THEN REMAINING UNPAID WITH INTEREST THEREON,
TOGETHER WITH ATTORNEY'S FEES OF FIFTEEN PERCENT (15%) OF THE
ORIGINAL PRINCIPAL AMOUNT OF THIS NOTE AND COURT COSTS, WITHOUT
STAY OF EXECUTION OR RIGHT OF APPEAL EXPRESSLY WAIVING THE
BENEFIT OF ALL EXEMPTION LAWS AND ALL IRREGULARITY OR ERROR IN
ENTERING SAID JUDGMENT OR THE EXECUTION THEREON. NO SINGLE
EXERCISE OF THE FOREGOING POWER TO CONFESS JUDGMENT SHALL BE
DEEMED TO EXHAUST THE POWER, WHETHER OR NOT ANY SUCH EXERCISE
SHALL BE HELD BY ANY COURT TO BE INVALID, VOIDABLE OR VOID, BUT
THE POWER SHALL CONTINUE UNDIMINISHED, AND IT MAY BE EXERCISED
FROM TIME TO TIME AS OFTEN AS LENDER SHALL ELECT, UNTIL SUCH TIME
AS LENDER SHALL HAVE RECEIVED PAYMENT IN FULL OF ALL INDEBTEDNESS
OF MAKER TO LENDER.
It is expressly stipulated and agreed that the loan
evidenced by this Note is a "commercial loan" as defined in the
Commercial Law Article of the Annotated Code of Maryland.
All notices hereunder shall be given at the following
addresses: if to Maker, Universal Security Instruments, Inc.,
10324 S. Dolfield Road, Owings Mills, Maryland 21117, with a copy
to Edward E. Obstler, Esquire, c/o Gordon, Feinblatt, Rothman,
Hoffberger & Hollander, The Garrett Building, 233 E. Redwood
Street, Baltimore, Maryland 21202; if to Lender, Loyola Federal
Savings Bank, 1300 North Charles Street, Baltimore, Maryland
21201, Attn: A. Gregory Manuel, Vice President, with a copy to
Searle E. Mitnick, Esquire, c/o Kaplan, Heyman, Greenberg,
Engelman & Belgrad, P.A., 20 S. Charles Street, 10th Floor,
Baltimore, Maryland 21201. Either party may change its address
for notice purposes upon giving fifteen (15) days prior notice
thereof in accordance with this paragraph. All notices given
hereunder shall be in writing and shall be considered properly
given if mailed by first class United States Mail, postage
prepaid, registered or certified with return receipt requested,
or by delivering the notice in person to the intended addressee.
Any notice mailed as above provided shall be effective the day
following the day of deposit in the custody of the U. S. Postal
Service; notice personally delivered shall be effective upon
receipt.<PAGE>
Lender and Maker each, on behalf of itself and its
successors and assigns, WAIVES to the fullest extent permitted by
law, all right to TRIAL BY JURY of any and all claims between
them arising under this Note, the Deed of Trust, or any other
Loan Documents executed, and any and all claims arising under
common law or under any statute of any state or the United States
of America, whether any such claims be now existing or hereafter
arising, now known or unknown. In making this waiver, Lender and
Maker acknowledge and agree that any and all claims made by
Lender against Maker and all claims made against Lender by Maker
shall be heard by a judge or a court of proper jurisdiction, and
shall not be heard by a jury. Lender and Maker acknowledge and
agree that THIS WAIVER OF TRIAL BY JURY IS A MATERIAL ELEMENT OF
THE CONSIDERATION FOR THIS TRANSACTION. Lender and Maker, with
advice of counsel, each acknowledges that it is knowingly and
voluntarily waiving a legal right by agreeing to this waiver
provision.
If this Note is executed by more than one party, each
such party shall be jointly and severally liable for the
obligations of Maker under this Note.
The use of any gender, tense or conjugation herein
shall be applicable to all genders, tenses and conjugations. The
use of the singular shall include the plural, and the plural
shall include the singular.
Executed in Baltimore, Maryland, as of the date and
year first above written.
Time is of the essence.
WITNESS: UNIVERSAL SECURITY INSTRUMENTS, INC.,
Maker
By: (SEAL)
Vice President
This is to certify that this is the Note described in a
certain Deed of Trust of even date herewith from Maker as Grantor
therein to the Trustees named therein.
Notary Public
My Commission Expires:
EXHIBIT 10.17
DEED OF TRUST, ASSIGNMENT OF RENTS AND SECURITY AGREEMENT
THIS DEED OF TRUST, ASSIGNMENT OF RENTS AND
SECURITY AGREEMENT is made as of this 26th day of June, 1995,
from Universal Security Instruments, Inc. ("Grantor") to Thomas
R. Marvel and A. Gregory Manuel ("Trustees") as Trustees for the
benefit of Loyola Federal Savings Bank ("Beneficiary").
Capitalized terms herein are defined in Section 2.
1. RECITALS
1.1 The Loan -- Grantor is indebted to Beneficiary for
the Loan in the principal sum of One Million Three Hundred
Thousand Dollars ($1,300,000.00) as evidenced by the Note of
Grantor as further described in Section 2.14.
1.2 Obligations Secured -- This Deed of Trust secures (a)
the full and punctual payment of the Loan according to the terms
of the Note, (b) the payment of all sums due to Beneficiary or
Trustees according to the terms of any of the Loan Documents, and
(c) the performance of, and compliance with, all of
the obligations of the Grantor (express or implied) contained in
the Loan Documents.
2. DEFINITIONS -- Whenever capitalized in this Deed of
Trust, the following terms shall have the meaning given in this
Section 2, unless the context clearly indicates a contrary
intent.
2.1 Beneficiary -- "Beneficiary" means Loyola
Federal Savings Bank, its successors and assigns, and any
subsequent holder of the Note.
2.2 Deed of Trust -- "Deed of Trust" means
this instrument, including all current and future
supplements, amendments, and attachments thereto.
2.3 Default -- "Default" means: (a) the failure of Grantor
to perform, cause to be performed, abide by, comply with, or
observe any duty or obligation imposed upon Grantor by the Loan
Documents; (b) the breach of any of Grantor's warranties or
covenants contained in any of the Loan Documents; (c) a
misrepresentation by Grantor, its counsel, or any other Person on
behalf of Grantor, in any of the Loan Documents; and (d)
any event, happening, or condition which would constitute an
Event of Default if not cured within any applicable grace period.<PAGE>
2.4 Encumbrances -- "Encumbrances" includes all
liens, mortgages, rights, Leases, restrictions, easements, deeds
of trust, covenants, agreements, rights of way, rights
of redemption, security interests, conditional sales
agreements, land installment contracts, options, and all other
burdens or charges.
2.5 Event of Default -- "Event of Default" has the meaning
given and provided in Section 12.1.
2.6 Expense Account -- "Expense Account" means the Account
which will be maintained pursuant to Section 6.2.
2.7 Grantor -- "Grantor" means the Person identified
as such in the introductory paragraph of this Deed of Trust,
its successors and assigns, including any subsequent owner of all
or any portion of Grantor's interest in the Trust Property.
2.8 Land -- "Land" means the land more particularly
described in Exhibit A to this Deed of Trust.
2.9 Law -- "Law" means all federal, state, county, and
municipal laws, regulations, rules, and ordinances, and
all rules, regulations and orders of any other
governmental authority including common law and rulings,
decisions and interpretations of all judicial, quasi-judicial,
and administrative bodies.
2.10 Lease -- "Lease" means each lease which purports to
convey any interest of Grantor in any portion of the
Trust Property and includes subleases and assignments of leases.
2.11 Legal Action -- "Legal Action" includes all suits or
other proceedings brought at law or in equity or before any
administrative agency, governmental body, or arbitrator which in
any manner relate to the Trust Property or arise out of or relate
to any of the Loan Documents.
2.12 Loan -- "Loan" means the loan by the Beneficiary
to the Grantor as set forth in Section 1.1 as evidenced by the
Note.
2.13 Loan Documents -- "Loan Documents" means this Deed of
Trust, the Note and any and all certificates,
opinions, assignments and other documents executed in connection
herewith or therewith, and all current and future supplements,
amendments, and attachments thereto.
2.14 Note of Grantor or Note -- "Note of Grantor" or "Note"
means the promissory note of Grantor of even date herewith in the
principal sum of One Million Three Hundred Thousand Dollars
($1,300,000.00), payable to the order of Beneficiary
and evidencing the Loan, including all current and
future supplements, amendments and attachments thereto.<PAGE>
2.15 Operate -- "Operate" means to operate, use,
manage, lease, contract, and control, including the right to
repair, renew, replace, alter, add, better, and improve.
2.16 Penalty Rate -- "Penalty Rate" means an interest
rate of two (2) percentage points per annum above the
interest rate otherwise payable on the Loan pursuant to the terms
and provisions of the Note, during the time period that the
Penalty Rate is applicable.
2.17 Permitted Encumbrances -- "Permitted
Encumbrances" means this Deed of Trust and all Encumbrances as to
which Beneficiary has given its prior written approval, liens
arising for real estate taxes or public charges for sewage,
water, drainage or other public improvements not yet due and
payable, liens being contested as permitted herein, and Leases
not in violation of Section 9.
2.18 Person -- "Person" means any individual, corporation,
limited liability company, partnership, association, trust, joint
venture, or any other legal entity.
2.19 Property -- "Property" has the meaning given
in Section 3.3.
2.20 Real Property -- "Real Property" means the Land,
together with the improvements and rights identified in Section
3.1 and all other portions of the Trust Property which may
legally be deemed to be real property under Section 3.7.
2.21 Rents -- "Rents" includes all rents,
profits, royalties, issues, revenues, income, proceeds, earnings,
and products generated by or arising out of the Trust Property.
2.22 Risk -- "Risk" includes risk of loss or damage
by fire, lightening, windstorm, hail, explosion, riot,
riot attending a strike, civil strife, civil commotion,
aircraft, vehicles, smoke, vandalism, malicious mischief, boiler
explosion, and any other risk customarily insured against by
persons operating property similar in kind to the Trust Property.
2.23 Substances -- "Substances" has the meaning given in
Section 10.1.
2.24 Taking -- "Taking" includes any taking by condemnation
or eminent domain, any sale in lieu of condemnation under threat
thereof, the alteration of the grade of any street, or any other
injury to or decrease in the value of the Trust Property by any
public or quasi-public authority or corporation or any other
Person having the power of eminent domain.<PAGE>
2.25 Taxes -- "Taxes" includes all taxes, excises,
documentary stamp, recordation taxes and transfer
taxes, recording taxes, assessments, water rents, sewer
rents, metropolitan district charges, sanitary district charges,
public dues, and other public charges levied or assessed upon the
Trust Property, upon the Loan, or upon any Loan Document.
2.26 Tenant -- "Tenant" means any lessee of Grantor
under any Lease, and any sub-lessee or assignee of a Lease.
2.27 Trustees -- "Trustees" means those Persons named in the
introductory paragraph including any additional, successor,
replacement, or substitute trustees permitted by Section 11.3.
2.28 Trust Property -- "Trust Property" has the
meaning given in Section 3.6.
2.29 Uniform Commercial Code -- "Uniform Commercial Code"
means Title 9 of the Commercial Law Article of the Annotated Code
of Maryland and any amendments thereto or reenactments thereof.
3. GRANTING CLAUSES
3.1 Lien on Real Property -- The Grantor, in consideration
of the Loan and other valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, grants and assigns
to the Trustees, all the Land described more particularly in
Exhibit A attached hereto as a part hereof together with (a) all
buildings and improvements now or hereafter, located thereon, (b)
all and singular the rights, alleys, ways, waters, easements,
tenements, privileges, advantages, accessions, hereditaments and
appurtenances belonging or in any way appertaining to the Land
and other property described herein, and the reversions and
remainders, earnings, revenues, rents, issues and profits thereof
and including any right, title, interest or estate hereafter
acquired by Grantor in the Land and other property described
herein.
3.2 Lien on Fixtures and Personal Property -- The Grantor
further grants and assigns to the Trustees, all of the machines,
apparatus, equipment, fixtures and articles of personal property
now or hereafter located on the Land or in any improvements
thereon (other than that owned by any Tenant), but limited to the
following: all the walks, fences, shrubbery, driveways, fixtures,
equipment, machinery, apparatus, fittings, building materials,
now or hereafter ordered for eventual delivery to the Land herein
described (whether or not delivered thereto), and all such as are
now or hereafter located in or upon any interest or estate in the
Land or any part thereof and used or usable in connection with
any present or future operation of the Land now owned or
hereafter acquired by Grantor, but limited to the following: all
heating, lighting, incinerating and power equipment, engines,
pipes, tanks, motors, conduits, switchboards, plumbing, lifting,
cleaning, fire-prevention, fire-extinguishing, refrigerating,
ventilating, air-cooling and air-conditioning apparatus,<PAGE>
elevators, escalators, shades, awnings, draperies curtains, fans,
furnishings, carpeting, linoleum and other floor coverings,
screens, doors and windows, sump pumps, attached cabinets,
partitions, ducts and compressors, landscaping,
outdoor equipment, security systems and including all equipment
installed or to be installed or used or usable in the operation
of the building or buildings or appurtenant facilities erected or
to be erected in or upon the Land; it being understood that all
the aforesaid shall be deemed to be fixtures and part of the
Land, but whether or not of the nature of fixtures, they shall
be deemed and shall constitute part of the security for the
indebtedness herein mentioned and shall be covered by this Deed
of Trust. Disposition of any of the aforesaid or of any interest
therein is prohibited; however, if any disposition is made in
violation hereof, the Trustees shall have a security interest in
the proceeds therefrom to the fullest extent permitted by the
laws of Maryland, and all the right, title and interest of the
Grantor in and to any of such property which may be subject to
any title retention or security agreement or instrument having
priority over this Deed of Trust.
3.3 Property -- All of the property described in Sections
3.1 and 3.2 is hereinafter collectively called the "Property".
3.4 Lien on Leases and Rents and Other Rights --
The Grantor further grants and assigns to the Trustees (a) all
Leases and Rents, including, without limitation, all cash or
security deposits to secure performance by Tenants (whether such
cash or securities are to be held until the expiration of the
terms of Leases or are to be applied to one or more of the
installments of rent coming due immediately prior to the
expiration of such terms), (b) all of the estate, right, title,
use, claim and demand of every nature whatsoever, at law or in
equity, which the Grantor may now have or may hereafter acquire
in and to the Property, (c) all right, title and interest of the
Grantor in and to all extensions, betterments, renewals,
substitutes and replacements of, and all additions and
appurtenances to, the Property, hereafter acquired by or released
to the Grantor, or constructed, assembled or placed by or for the
Grantor on the Property, and all conversions of the security
constituted thereby, and (d) all documents, instruments, general
intangibles, chattel paper, contract rights, accounts, plans,
specifications, licenses, permits, books and records pertaining
to tenants, if any.
3.5 Lien on Insurance Policies and Condemnation Awards --
The Grantor further grants and assigns to the Trustees, all
insurance policies and insurance proceeds pertaining to the
Property including, but not limited to, those insurance policies
described in Section 8, and all awards or payments, including
interest thereon and the right to receive the same, which may be
made with respect to any of the Property as a result of any
taking or any injury to or decrease in the value of the Property.<PAGE>
3.6 The Trust Property -- All of the property described in
this Section 3 is collectively called the "Trust Property."
3.7 Security Interest Under the Uniform Commercial Code --
Any portion of the Trust Property which by law is or may be real
property shall be deemed to be a part of the Real Property for
the purposes of this Deed of Trust. The remainder of the Trust
Property shall be subject to the Uniform Commercial Code.
Grantor hereby grants to the Beneficiary, a security interest
in that portion of the Trust Property not deemed a part of
the Real Property for the purpose of securing performance of
all of Grantor's obligations under the Loan Documents. With
respect to such security interest (a) the Beneficiary may
exercise all rights granted or to be granted a secured party
under the Uniform Commercial Code and (b) upon the occurrence of
an Event of Default, the Beneficiary shall have a right of
possession superior to any right of possession of the Grantor or
any person claiming through or on behalf of the Grantor. Grantor
executes this instrument as a Debtor under the Maryland Uniform
Commercial Code, it being intended that this Deed of Trust shall
constitute and be a security agreement and financing statement
under the laws of Maryland.
4. HABENDUM CLAUSE AND DEFEASANCES
4.1 Habendum Clause -- The Trustees shall have and
hold the Trust Property in fee simple, upon the terms and trust
herein set forth.
4.2 Termination of the Trust -- If Grantor shall pay or
cause to be paid to the Beneficiary, all sums secured hereby in
the manner stipulated in the Note and this Deed of Trust, and if
all of Borrower's obligations under the Loan Documents have been
fully and completely satisfied, then and in such case,
the estate, right, title and interest of the Trustees in the
Property shall cease, determine and become void, and upon proof
being given to the satisfaction of the Trustees that the Note has
been paid or satisfied, in accordance with its terms, that all
of Borrower's obligations under the Loan Documents have been
fully and completely satisfied and upon payment of all fees,
costs, charges, expenses and liabilities chargeable or incurred
or to be incurred by the Trustees and of any other sums as in
this Deed of Trust provided, the Trustees shall, upon receipt of
the written request of Beneficiary, and at the expense of
Grantor, release and discharge this Deed of Trust of record, and
shall transfer and deliver up to Grantor, any property at the
time subject to this Deed of Trust which may be then in their
possession.<PAGE>
5. REPRESENTATIONS AND WARRANTIES
5.1 Warranty of Title and Further Assurances --
The Grantor warrants that it has the right and authority to
convey the Trust Property and warrants specially title to the
Trust Property and that it will execute such further assurances
as may be requisite.
5.2 Purpose of the Loan -- The Grantor warrants that the
Loan is a "commercial loan" as defined in the Commercial Law
Article of the Annotated Code of Maryland.
5.3 Existence, Good Standing, Power and Authority
of Grantor -- Grantor is a corporation of the State of Maryland,
is in good standing in the State of Maryland, and will maintain
its good standing and existence until all of Grantor's
obligations under the Loan Documents have been performed and
satisfied. The execution and delivery of the Loan Documents, the
carrying out of the transactions contemplated by the Loan
Documents, and the performance of Grantor's obligations under the
Loan Documents, have been duly authorized by all necessary action
and will not conflict with or result in a breach of Law or
any agreement or other instrument to which Grantor is bound.
The Loan Documents are valid and binding on Grantor and
are enforceable against Grantor in accordance with their
respective terms, as applicable.
6. COVENANTS, RIGHTS, AND DUTIES OF GRANTOR GENERALLY
6.1 Covenant to Pay Loan and to Perform Obligations
Under the Terms of the Loan Documents -- The Grantor covenants
that it will punctually (a) pay to the Beneficiary the principal
and interest of the Loan and all other costs and indebtedness
secured hereby according to the terms of the Note and other
Loan Documents, and (b) perform and satisfy all other obligations
of the Grantor under the Loan Documents.
6.2 Expense Account -
6.2.1 The Grantor will pay to the Beneficiary,
monthly installments, each of which shall be equal to one-twelfth
(1/12) of the estimated annual Taxes pertaining to the Trust
Property, to be held by the Beneficiary in the Expense Account
and disbursed by the Beneficiary to pay the Taxes before any
penalty or interest shall accrue thereon. Estimates are to be
made solely by the Beneficiary, and payments shall be made on the
day of the month when payments of interest and principal are due
on the Note. No interest shall be payable by the Beneficiary on
the Expense Account unless, and then only to the extent that,
applicable Law shall otherwise require. All overpayments to the
Expense Account shall be applied to reduce future payments to the
Expense Account, if any, or shall be returned to the Grantor, in
the sole discretion of the Beneficiary.<PAGE>
6.2.2 Upon written request of the Beneficiary,
the Grantor shall immediately pay such additional sums into
the Expense Account as the Beneficiary determines are necessary,
so that one month prior to the date the Beneficiary is required
to make payments of Taxes; payments can be made therefor out of
the Expense Account.
6.2.3 The Grantor hereby grants the Beneficiary,
a security interest in the sums on deposit in the Expense
Account to secure the obligations secured hereby, and upon the
occurrence of an Event of Default, the Beneficiary may, unless
prohibited by applicable Law, apply the balance of the Expense
Account to Operate the Trust Property or to satisfy Grantor's
obligations under the Loan Documents, as the Beneficiary may
elect.
6.2.4 Any amounts deposited pursuant to the
provisions of this Section shall not be, nor be deemed to be,
trust funds, nor shall they operate to curtail or reduce the
indebtedness secured hereby, and all such amounts may be
commingled with the general funds of the depositor and be
deposited at the Beneficiary or at an institution designated by
Beneficiary. Beneficiary shall not be responsible for the
solvency of such institution, provided it is insured by the
Federal Deposit Insurance Corporation or other regulatory agency
at the time of designation.
6.3 Compliance with Laws -- The Grantor shall comply
with all Laws, a breach of which would adversely affect (a)
the financial condition of the Grantor, (b) the ability to
use buildings and other improvements on the Land for the purposes
for which they were designed or intended, (c) the value or status
of the Trust Property, or (d) the value or status of the
Trustees' title to the Trust Property.
6.4 Statement of Amount Owing and Defenses -- Within
ten (10) days after request from the Beneficiary, the Grantor
shall certify, in writing, the amount of principal and interest
then owing on the Loan and whether the Grantor has any defenses
or offsets to the Loan and such other information as
Beneficiary shall reasonably request.
6.5 Changes in Applicable Tax Laws -- In the event (a)
any Law is hereafter enacted which imposes a Tax upon the Loan,
any of the Loan Documents, or the transactions evidenced or
contemplated by any of the Loan Documents, or (b) any Law now in
force governing the taxation of deeds of trust, debts secured by
deeds of trust, or the manner of collecting any such Tax shall be
changed or modified, in any manner, so as to impose a Tax upon
the Loan, any of the Loan Documents, or the transactions
evidenced or contemplated by any of the Loan Documents,
(including, without limitation, a requirement that revenue stamps
be affixed to any or all of the Loan Documents), the Grantor will
promptly pay any such Tax. If the Grantor fails to make prompt<PAGE>
payment, or if any Law either prohibits the Grantor from making
the payment or would penalize the Beneficiary if Grantor makes
the payment, then the failure, prohibition, or penalty, shall
entitle the Beneficiary to exercise all rights hereunder as
though an Event of Default had occurred.
6.6 Further Assurances and Continuation Statements --
The Grantor from time to time will execute, acknowledge, deliver
and record, at the Grantor's sole cost and expense, all
further instruments, deeds, conveyances, supplemental deeds of
trust, assignments, financing statements, transfers, and
assurances as in the opinion of the Beneficiary's counsel may be
necessary (a) to preserve, continue, and protect the interest of
the Trustees or the Beneficiary in the Trust Property, (b) to
perfect the grant to the Trustees of every part of the Trust
Property, (c) to facilitate the execution of this trust, (d) to
secure the rights and remedies of the Trustees and the
Beneficiary under this Deed of Trust and the other Loan
Documents, or (e) to transfer to any new Trustees or purchaser at
a sale hereunder the Trust Property, funds, and powers now or
hereafter held in trust hereunder. The Grantor, at the request
of the Beneficiary, shall promptly execute
any continuation statements required by the Uniform Commercial
Code to maintain the lien on any portion of the Trust Property
subject to the Uniform Commercial Code.
6.7 Expenses -- The Grantor shall reimburse
the Beneficiary and the Trustees for any sums, including
attorney's fees and expenses, incurred or expended by them (a) in
connection with any action or proceeding to sustain the lien,
security interest, priority, or validity of any Loan Document,
(b) to protect, enforce, interpret, or construe any of their
rights under the Loan Documents, (c) for any title examination or
title insurance policy relating to the title to the Trust
Property, or (d) for any other purpose contemplated by or arising
in connection with the Loan Documents. The Grantor shall, upon
demand, pay all such sums together with interest thereon at the
Penalty Rate accruing from the time the expense is paid. All
such sums so expended by the Beneficiary and/or the Trustees
shall be secured by this Deed of Trust. In any action or
proceeding to foreclose this Deed of Trust or to recover or
collect the Loan, the provisions of Law allowing the recovery of
costs, disbursements, and allowances shall be in addition to the
rights given by this Section 6.7.
6.8 Appraisals -- At any time after an Event of
Default, Beneficiary shall have the right from time to time, to
have appraisals of the Property performed. Grantor will
fully cooperate in the conduct and completion of such appraisals.
All such appraisals will be done at the sole cost and expense of
Grantor.<PAGE>
7. RIGHTS AND DUTIES OF GRANTOR WITH RESPECT TO MANAGEMENT AND
USE OF THE TRUST PROPERTY
7.1 Control by the Grantor -- Until the happening of
an Event of Default, the Grantor shall have the right to possess
and enjoy the Trust Property and, except as prohibited by the
Loan Documents, to receive the Rents.
7.2 Financial Statements; Books and Records -- The
Grantor shall furnish to the Beneficiary, quarterly financial
statements and an audited annual financial statement of the
Grantor. Such statements shall be prepared in accordance with
generally accepted accounting principles applied on a consistent
basis. All such financial and operating statements will be
furnished to Beneficiary by no later than ninety (90) days after
the date of each calendar quarter and the end of Grantor's fiscal
year, as the case may be. Grantor will not change its fiscal
year without Beneficiary's prior written consent. The Grantor
agrees to make its books and records available for inspection by
the Beneficiary, upon request at any reasonable time, at
Grantor's principal place of business or at such other location
in the State of Maryland as Beneficiary may reasonably request.
All such statements, reports and records shall be in form
reasonably acceptable to Beneficiary.
7.3 Alterations and Additional Improvements -- The
Grantor shall make no structural alterations or material
nonstructural alterations to the Trust Property or construct any
additional improvements on the Land without the prior written
consent of the Beneficiary. All alterations or improvements
shall be completed and paid for by the Grantor within a
reasonable time. All alterations or improvements shall be
erected (a) in a good and workmanlike manner strictly in
accordance with all applicable Law, (b) entirely on the Land, (c)
without encroaching upon any easement, right of way, or land of
others, (d) so as not to violate any applicable use, height,
setback or other applicable restriction, and (e) without
permitting any mechanic's lien to attach to the Trust Property
which is not being contested as permitted in Section 7.8. All
alterations, additions, and additional improvements to the Trust
Property shall automatically be a part of the Trust Property and
shall be subject to this Deed of Trust.
7.4 Restrictions on Sale and Transfer of the Trust
Property -- The Grantor shall not permit the Trust Property, or
any part or portion thereof or any interest therein, to be
transferred (whether by voluntary or involuntary conveyance,
merger, operation of law, or otherwise) without the prior written
consent of the Beneficiary. Any transferee of the Trust Property
or any part or portion thereof or any interest therein, by virtue
of its acceptance of the transfer, shall (without in any way
affecting Grantor's liability under the Loan Documents) be
conclusively deemed to have agreed to assume primary personal
liability for the performance of the Grantor's obligations under<PAGE>
the Loan Documents. This Section shall not apply to any Taking,
any disposition permitted by Section 7.7, any Lease entered into
in compliance with Section 9.1, or any disposition by the
Trustees or the Beneficiary by foreclosure hereunder or as
otherwise permitted by the Loan Documents.
7.5 Restriction on Encumbrances -- The Grantor shall not allow any
Encumbrances on the Trust Property except the
Permitted Encumbrances. The Grantor shall give the Beneficiary
prompt notice of any default in or under any Permitted
Encumbrances and any notice of foreclosure or threat of
foreclosure. The Grantor shall comply with its obligations under
all Permitted Encumbrances. The Beneficiary may, at its
election, satisfy any Encumbrance (other than a Permitted
Encumbrance not then in default), and the Grantor shall, on
demand, reimburse the Beneficiary for any sums advanced for such
satisfaction together with interest at the Penalty Rate accruing
from the date of satisfaction, which sums shall
be secured hereby.
7.6 Maintenance, Waste, Repair and
Inspection -- Grantor shall (a) keep and maintain the Trust
Property in good order, condition, and repair and make all
equipment replacements and repairs necessary to insure that the
security for the Loan is not impaired; (b) not commit or suffer
any waste of the Trust Property; (c) promptly protect and
conserve any portion of the Trust Property remaining after any
damage to, or partial destruction of, the Trust Property; (d)
promptly repair, restore, replace or rebuild any portion of the
Trust Property which is damaged or destroyed; (e) promptly
restore the balance of the Trust Property remaining after any
Taking; (f) permit the Beneficiary or its designee to inspect the
Trust Property at all reasonable times; and (g) not make
any material change in the grade of the Trust Property or permit
any excavation of or on the Trust Property.
7.7 Removal and Replacement of Equipment and Improvements -- No
part of the Trust Property, except supplies consumed in the normal course of
business and operations, shall be removed from the Land,
demolished, or materially altered without the prior
written consent of the Beneficiary. The Grantor may, without
consent and free from the lien and security interest of this Deed
of Trust, remove and dispose of any worn out or obsolete fixtures
or equipment which are a part of the Trust Property upon thirty
(30) days prior written notice to the Beneficiary. Prior to
or simultaneously with their removal, such fixtures and
equipment shall be replaced with fixtures or equipment of equal
or greater value. The replacement fixtures or equipment shall be
free of all Encumbrances, shall automatically be subject to the
lien and security interest of this Deed of Trust, and shall
automatically be subject to the granting clauses hereof. Upon
the sale of any removed fixtures and equipment which are not
replaced, the proceeds shall be applied as a prepayment of the
Loan, to be applied in inverse order of installments. All sales
shall be conducted in a commercially reasonable manner with a
bona fide effort to obtain a sale price of at least market value.<PAGE>
7.8 Taxes and Permitted Contests -- The Grantor shall
pay (a) all Taxes (other than those payable by the Beneficiary
from the Expense Account) on or before the date any interest or
penalty begins to accrue or attach thereto; and (b) all claims
which, if unpaid, might become a lien or charge upon the Trust
Property to such an extent as to materially and adversely affect
the Grantor's ability to use the Trust Property for the purposes
for which it was designed or intended. Provided, however, that
the Grantor shall not be required to pay any Taxes or claim, the
amount, validity or payment of which is being contested, in good
faith, by appropriate legal proceedings, and so long as, in the
sole opinion of the Beneficiary, no part of the Trust Property is
in danger of being sold, forfeited or lost and the contest is not
impairing the security for the Loan. Upon payment thereof, the
Grantor shall promptly supply the Beneficiary with receipts
showing the payment of the Taxes, assessment or claim.
7.9 Restrictive Covenants, Zoning, etc. -- No
restrictive covenant, zoning change, or other restriction
affecting the Trust Property may be entered into, requested by or
consented to by Grantor without the prior written consent of the
Beneficiary.
7.10 Preservation of Appurtenances -- The Grantor will
do all things necessary to preserve intact and unimpaired,
all easements, appurtenances, and other interests and rights in
favor of, or constituting any portion of, the Trust Property.
7.11 Partial Release -- Grantor contemplates
subdividing the Land by recording a subdivision plat among the
land records of Baltimore County. One of the parcels which shall
be created by recordation of said plat is described in Exhibit B
attached hereto and made a part hereof. Prior to recording of
such plat, it shall be presented to Beneficiary for approval,
which approval will not be unreasonably withheld. Beneficiary
will release the land described in Exhibit B without payment on
account of the principal balance of the Loan, upon presentation
of the approved plat as recorded among said land records, if and
only if no Event of Default shall exist under any of the Loan
Documents on the date that the Grantor requests such release and
no event shall have occurred and be continuing which, with the
lapse of time or the giving of notice, or both, would constitute
an Event of Default under any of the Loan Documents. The cost of
preparing and recording the partial release and the reasonable
review fee of Beneficiary' s counsel shall be paid by Grantor.<PAGE>
8. INSURANCE AND CONDEMNATION
8.1 Casualty Insurance and Allocation in Event of Loss
- -- Grantor shall at all times maintain in full effect,
industry standard "all-risk" property insurance covering the
Property under forms and by companies approved by Beneficiary.
Such insurance shall cover all risks of direct physical loss to
the Property, including but not limited to all loss or damage
caused by fire, lightning, explosion, windstorm, hail, smoke,
aircraft, vehicles, riot or civil commotion, vandalism, malicious
mischief, sprinkler leakage, weight of snow, ice or sleet, water
damage, and sinkhole collapse. Such property insurance shall
contain an agreed amount endorsement, and in any event, in
amounts not less than one hundred percent (100%) of the
replacement value of the Property. Grantor shall require
annually, the fire underwriters rating bureau, or equivalent
organization acceptable to Beneficiary, to establish value for
the Property and to furnish an executed copy thereof
to Beneficiary. Grantor shall cause a non-contributing
Standard Mortgagee Clause, with Beneficiary named as first
mortgagee, satisfactory to Beneficiary, to be attached to each
such policy providing that all payments thereunder shall be made
to the sole order of Beneficiary as its interest may appear, and
a clause providing that such policy may not be surrendered,
canceled or modified without thirty (30) days prior written
notice to Beneficiary. During any construction, repair,
restoration or replacement of improvements on the Land, Grantor
shall obtain and keep in effect, a standard all-risk builder's
risk policy with extended coverage in the amount of one hundred
percent (100%) of the completed value of the improvements, with a
non-contributing mortgagee clause and non-surrender,
non-cancellation, non-modification clause as aforesaid, and such
insurance shall be written in such manner and by such companies
as are approved by Beneficiary.
All proceeds under such policies shall be paid to
the Trustees and the Beneficiary to be applied (a) if funds
sufficient to restore the Trust Property are available from such
insurance proceeds (together with other funds supplied or caused
to be supplied by, Grantor) and no Default or Event of Default is
then outstanding, to the restoration of the Trust Property; or
(b) if sufficient funds are not available to restore the Trust
Property or a Default or Event of Default is then outstanding, to
prepayment of amounts due under the Note, in inverse order of
installments. All moneys not utilized for the restoration of the
Trust Property shall be applied as a prepayment of amounts due
under the Note, in inverse order of installments. If proceeds of
insurance are used to restore the Trust Property, as aforesaid,
neither Trustees nor the Beneficiary shall be obligated to see to
the proper allocation thereof, nor shall any such amount so used
be deemed a payment of any indebtedness secured by this Deed of
Trust. Proceeds of insurance to be used for restoration purposes
shall be held by the Beneficiary and disbursed under such terms
and conditions, to such Persons, and at such times, as<PAGE>
Beneficiary may determine in its sole discretion
In the event of a foreclosure sale of Property or
part thereof or other transfer of title to the Property in lieu
of foreclosure, Beneficiary is authorized, but not obligated, to
cancel any or of the aforesaid policies, and any unearned premium
or premiums returned shall be applied to the payment of the
indebtedness secured hereby.
8.2 Liability Insurance -- The Grantor will
maintain liability and indemnity insurance with respect to the
Trust Property in such amounts, with such companies, and subject
to such terms and conditions as the Beneficiary may direct and
approve. Such policies of insurance shall name the Trustees and
the Beneficiaries as additional insureds thereunder and within
thirty (30) days prior to the expiration of any such policy, the
Grantor shall supply the Beneficiary with a renewal policy
marked "Premium Paid". Said liability insurance shall be written
on an occurrence basis with combined single limits of at least
Ten Million Dollars ($10,000,000.00) per occurrence and in the
aggregate. Such liability insurance shall include broad form
endorsement coverage, including automobile liability, contractual
liability, property damage and personal injury coverage. Such
policy may not be surrendered, canceled or modified without
thirty (30) days prior written notice to Beneficiary.
8.3 Rental Interruption and Other Insurance -- If
the Trust Property is rented, unless waived by Beneficiary, the
Grantor shall also carry and maintain rental interruption and
such other types of insurance as Beneficiary shall require on the
Trust Property in the same manner and under the same conditions
(to the extent applicable) as provided in Section 8.2.
8.4 Condemnation and Allocation of Condemnation Awards
- -- Grantor, immediately upon obtaining knowledge of the threat
or institution of any proceeding for a Taking, will notify
the Trustees and the Beneficiary of such proceeding. The
Trustees and/or the Beneficiary, may participate in any such
proceeding, and Grantor will, from time to time, deliver to the
Trustees and the Beneficiary, all instruments requested by them
to permit such participation. Any award or payment made as a
result of any Taking shall be paid to the Trustees and the
Beneficiary, jointly, to be applied to prepayment of amounts due
under the Note in inverse order of installments. The application
of any award or payment as a prepayment of amounts due under the
Note shall take effect only on the actual date of the receipt of
the payment or award by the Trustees and the Beneficiary.<PAGE>
9. LEASES
9.1 Compliance with Leases -- Grantor shall carry out
all of its agreements and covenants as landlord contained in any
Leases and not permit a lien or other encumbrance superior to
such Leases other than this Deed of Trust. No Lease shall
include any space, or grant to any tenant any right or interest
in any area outside of the limits of the Property. Upon demand
of Beneficiary, Grantor shall furnish Beneficiary an executed
copy of each Lease immediately upon its execution. All future
Leases shall be written on the standard form accepted by
Beneficiary, with only such changes as Beneficiary shall have
approved in writing or on a Lease agreement approved by
Beneficiary. Beneficiary will not enter into any Lease without
the prior written approval of Beneficiary, which approval will
not be unreasonably withheld. All Leases will prohibit
subleasing or assigning by any Tenant without the prior written
approval of the Beneficiary.
9.2 Assignment of Leases -- Grantor hereby
grants, conveys, assigns, and transfers unto the Trustees, for
the benefit of Beneficiary, all the right, title, interest and
privileges which the Grantor has or may hereafter have in any and
all of said Leases now existing or hereafter made affecting all
or a part of the Property, as said Leases may have been or may
from time to time be hereafter modified, extended or renewed with
all the Rents (which word when used in this Deed of Trust shall
include, without limitation, all income and profits) due and
becoming due therefrom and including without limitation the right
of Beneficiary to inspect the Leased areas of tenants. Grantor
shall, upon written request by Beneficiary or the Trustees,
execute assignments (in any form customarily used by Beneficiary)
of any present or future Leases, together with the Rents due and
becoming due therefrom, which affect in any way all or any part
of the Property No such assignment made or required hereby shall
be construed as a consent by Trustees or Beneficiary to any Lease
or to impose on Trustees or Beneficiary any obligation with
respect thereto. Grantor shall not make any other assignment,
hypothecation or pledge of any Rents under any Lease of part or
all of the Property. Grantor shall not, without the prior
written approval of Beneficiary, cancel any of the Leases, nor
terminate or accept a surrender thereof, nor reduce the payment
of Rent thereunder, nor modify any of said Leases, nor accept any
prepayment of Rent other than the usual prepayment as would
result from the acceptance by landlord more than
fifteen (15) days before the first day of each month for the
ensuing month under Leases approved by Beneficiary according to
the terms of such Leases. The covenants and restrictions of this
subsection shall be deemed covenants and restrictions running
with the land.<PAGE>
9.3 Limitation on Subordinate Lienors -- Grantor
covenants that the holder of any subordinate lien shall have no
right, and shall acquire no right, to terminate or modify any
Lease affecting the Property whether or not such Lease is
subordinate to the legal operation and effect of this Deed of
Trust.
9.4 Assignment of Bankruptcy Awards -- Grantor
hereby assigns to Trustees for the benefit of Beneficiary, any
award made hereafter to it in any court procedure involving any
of the tenants in any bankruptcy, insolvency or reorganization
proceeding in any state or federal court and any and all payments
by any tenant in lieu of Rent.
9.5 Limitation of Liability under Leases -- Neither
the Trustees nor Beneficiary shall be obligated to perform
or discharge any obligation or duty to be performed or discharged
by Grantor under any Lease; and Grantor hereby agrees to
indemnify the Trustees and Beneficiary for and to save them
harmless from, any and all liability arising from any Lease, or
this assignment thereof, and this assignment shall not place the
responsibility for the control, care, management or repair of the
Property upon the Trustees or Beneficiary, nor make said Trustees
or Beneficiary liable for any negligence in the management,
operation, upkeep, repair or control of the Property resulting in
loss or injury or death to any tenant, agent, guest, or stranger.
9.6 Enforcement of Leases, Amendment, Waiver, etc. --
The Grantor will enforce all Leases according to their terms
and shall take such action to that end as may be requested by the
Trustees or the Beneficiary, regardless of whether any such Lease
has been assigned to the Beneficiary or the Trustees. The
Grantor shall not, without the prior written consent of the
Beneficiary (a) cancel or terminate, or consent to or accept any
cancellation, termination, or surrender of any Lease, or permit
any event within the Grantor's control to occur which would
terminate or cancel any Lease, (b) amend or modify any Lease, (c)
waive any default under or breach of any Lease, (d) consent to or
permit any prepayment or discount of Rent or advance Rent under
any Lease, or (e) give any consent, waiver, or approval under any
Lease or take any other action with respect to any Lease which
may impair the value of the Beneficiary's interest in the Trust
Property or the position or interest of the Trustees with respect
to the Trust Property. Grantor shall comply with and perform all
duties and obligations imposed upon or assumed by it in all
Leases.<PAGE>
9.7 Subordination and Attornment -- In the event of
a foreclosure sale pursuant to this Deed of Trust, each
Tenant shall, upon request and with assurance of non-disturbance,
attorn to and acknowledge any purchaser at foreclosure or grantee
in lieu of foreclosure as landlord and the purchaser will not be
required to credit any Tenant under any Lease with Rent paid more
than one (1) month in advance. All Leases shall be subject and
subordinate to modifications of and amendments to the Loan
Documents and any additional financing or refinancing of the
Trust Property by or for the Beneficiary.
9.8 Restriction on Assignment of Rents -- The
Grantor shall not assign the Rents arising from the Trust
Property or any part thereof or any interest therein without the
prior written consent of the Beneficiary. Any attempted
assignment, pledge, hypothecation, or grant without such consent
shall be null and void.
10. ENVIRONMENTAL MATTERS
10.1 No Substances Present -- Grantor hereby represents
and warrants to Beneficiary that to the best of Grantor's
knowledge, there are not now and have never been any materials or
substances located on or near the Property that, under federal,
state, or local law, statute, ordinance, or regulation, or
administrative or court order or decree, or private agreement,
are regulated as to use, generation, collection, storage,
treatment, or disposal (such materials or substances are
hereinafter collectively referred to as "Substances"). The term
"Substances" includes any materials or substances whose release
or threatened release may pose a risk to human health or the
environment and shall also include without limitation (i)
asbestos in any form, (ii) urea formaldehyde foam insulation,
(iii) paint containing lead, (iv) transformers or other equipment
which contains dielectric fluid containing levels
of polychlorinated biphenyls of 50 parts per million or more,
and (v) any other chemical, material or substance which is
prohibited by any federal, state, county, regional, local or
other governmental authority or which is in excess of any
limitations set by such authority or in violation of regulations
promulgated by such authority including, without limitation, the
following: (a) "oil, petroleum products, and their byproducts" as
defined by Maryland Natural Resources Code Ann., Section 4-1
(a)(3) (1987), as amended from time to time, and regulations
promulgated thereunder; (b) any "hazardous waste", "hazardous
substance" or "release" as defined by the Comprehensive
Environmental Response, Compensation, and Liability Act of 1980,
as amended from time to time, and regulations promulgated
thereunder ("CERCLA"); (c) any "hazardous substance" or
"hazardous waste" as defined by Maryland Environment Code Ann.,
Title 7, Subtitle 2, as amended from time to time,
and regulations promulgated thereunder; and (d) any "solid waste"
or "disposal" as defined in the Resource Conservation and
Recovery Act of 1976, as amended from time to time, and the<PAGE>
regulations promulgated thereunder ("RCRA"). Grantor further
represents and warrants to Beneficiary that the Property is not
now being used nor has it ever been used in the past for any
activities involving the use, generation, collection, storage,
treatment, or disposal of any Substances. Grantor will not place
or permit to be placed any Substances on or near the Property
except for those Substances that are typically used in projects
of the type Operated currently on the Property, provided the same
are in appropriately small quantities and are stored, used, and
disposed of properly; or Substances that are approved in writing
by Beneficiary.
10.2 Acting Upon Presence of Substances -- Grantor
hereby covenants and agrees that, if at any time (i) Substances
are spilled, emitted, disposed, or leaked in any amount; or (ii)
it is determined that there are Substances located on, in, or
under the Property other than those of which Beneficiary has
approved in writing or which are permitted to be used on the
Property without Beneficiary's written approval pursuant to
Section 10.1, Grantor shall immediately notify Beneficiary and
any authorities required by law to be notified, and shall, within
thirty (30) days thereafter or sooner if required by Beneficiary
or any governmental authority, take or cause to be taken, at
Grantor's sole expense, such action as may be required by any
governmental authority. If Grantor shall fail to take such
action, Beneficiary may make advances or payments towards
performance or satisfaction of the same but shall be under no
obligation whatsoever so to do; and all sums so advanced or paid,
including all sums advanced or paid in connection with any
investigation or judicial or administrative proceeding relating
thereto, including, without limitation, reasonable attorneys
fees, expert fees, fines, or other penalty payments, shall be at
once repayable by Grantor and shall bear interest at the Penalty
Rate from the date advanced or paid by Beneficiary until the date
paid by Grantor to Beneficiary, and all sums so advanced or paid,
with interest as aforesaid, shall come a part of the indebtedness
secured hereby.
10.3 Environmental Audits -- Grantor, promptly upon
the written request of Beneficiary from time to time, shall
provide Beneficiary, at Grantor's expense, from time to time with
an environmental site assessment or environmental audit report,
or an update of such an assessment or report, all in scope, form,
and content, satisfactory to Beneficiary. Prior to an Event
of Default, Beneficiary will not make such a request
unless Beneficiary has reasonable grounds to believe that
Substances are or may be present on the Property or that Grantor
is not in full and complete compliance with all applicable
environmental laws and regulations.<PAGE>
10.4 Environmental Notices -- Grantor shall furnish
to Beneficiary duplicate copies of all correspondence, notices,
or reports it receives from any federal, state, or local agency
or any other person regarding environmental matters or Substances
at or near the Property, immediately upon Grantor's receipt
thereof.
10.5 Condition of Property -- Grantor hereby represents
and warrants that there are no wells or septic tanks on the
Property serving any other property; no wells or septic tanks on
other property serving the Property; no burial grounds,
archeological sites, or habitats of endangered or threatened
species on the Property; and that no part of the Property is
subject to tidal waters; has been designated as wetlands by any
federal, state, or local law or governmental agency; or is
located in a special flood hazard area.
10.6 Environmental Indemnity -- The Grantor
expressly acknowledges and agrees that it will reimburse, defend,
indemnify and hold harmless the Trustees and the Beneficiary,
their successors, assigns and other parties claiming any interest
in the Property, through or under them or either of them, from
and against any and all liabilities, claims, damages, demands,
causes of action, administrative orders, consent agreements,
penalties, expenditures, losses or charges (including, but not
limited to, all costs of investigation, monitoring, legal fees,
remedial response removal, restoration or permit acquisition)
which may, now or in the future being undertaken, suffered, paid,
awarded, assessed, or otherwise incurred as the result of or a
connection with:
(i) claims relating directly or indirectly, in
whole or in part, to the presence or removal of any
Substances;
(ii) any investigation, monitoring, clean up, removal,
restoration, remedial response or remedial work undertaken on the
Property by or on behalf of Grantor subsequent to the date
hereof;
(iii) any activity on or off the Property, whether
prior to or during the term of this Loan, and whether such
activity was carried on by Grantor or any predecessor in title or
any employees, agents, contractors or third parties, if such
activity involved Substances, in whole or in part, directly
or indirectly;
(iv) noncompliance with any applicable federal, state,
or local laws, rules or regulations relating to the Substances;
or<PAGE>
(v) Grantor's breach of any warranty given
or agreement set forth in this Section 10. In case any claim,
action, suit or proceeding is brought against any of the Trustees
or the Beneficiary for which indemnification is sought hereunder,
the Trustees or the Beneficiary shall give timely notice of such
proceeding to the Grantor, and the Grantor will, at the Grantor's
expense, resist and defend such claim, action, suit or proceeding
or will cause the same to be resisted and defended by counsel
designated by the Grantor and approved by the Trustees or the
Beneficiary, or both as the case may be, provided that
such approval shall not be required in the case of defense by
counsel designated by any insurance company undertaking such
defense pursuant to any applicable policy of insurance. The
foregoing indemnification and agreements shall survive the
release or other termination of this Deed of Trust (by operation
of law or otherwise). The Grantor acknowledges and agrees that
its grant of the Property to the Trustees shall not and does not
relieve or release it of any legal liability and responsibility
(under common law, statute or regulation) it would otherwise have
as the owner of the Property, whether by way of damages,
penalties, remedial actions, or otherwise for any adverse effects
or consequences resulting at any time from any contamination of
the soil, facilities, buildings, and/or groundwaters which
existed on, above or under the Property.
11. THE TRUSTEES
11.1 Endorsement and Execution of Documents -- Upon
the written request of the Beneficiary, the Trustees shall,
without liability or notice to the Grantor, execute, consent to,
or join in any instrument or agreement in connection with or
necessary to effectuate the purposes of the Loan Documents. Upon
the happening of an Event of Default, the Grantor hereby
irrevocably designates the Trustees as its attorneys-in-fact to
execute, acknowledge, and deliver, on the Grantor's behalf and in
the Grantor's name, all instruments or agreements necessary to
effectuate the purposes of the Loan Documents, or implement the
provisions of Section 3.7, contemplated by Section 6.6, or
necessary to further perfect the lien created by this Deed of
Trust on the Trust Property. This power of attorney shall be
deemed to be coupled with an interest and shall survive any
disability of the Grantor.
11.2 Actions of Trustee -- The Trustees shall be
protected in acting upon any notice, request, consent, demand,
statement, note or other paper or document believed by them to be
genuine and to have been signed by the party or parties
purporting to sign the same. The Trustees shall not be liable
for any error of judgment, nor for any act done or step taken or
omitted, nor for any mistake of law or fact, nor for anything
which they may do or refrain from doing in good faith nor
generally shall a Trustee have any accountability hereunder
except for his own individual willful misconduct.<PAGE>
11.3 Substitution of Trustees -- The Beneficiary may,
by filing a deed of appointment in the office where this
instrument is recorded, appoint additional or replacement
trustees and may remove the Trustees, from time to time, without
notice to the Grantor or the Trustees and without specifying any
reason.
11.4 Multiple Trustees -- Any Trustee, individually,
may exercise all powers granted to the Trustees collectively,
without the necessity of the joinder of any other Trustee.
11.5 Terms of Trustees ' Acceptance -- The Trustees
accept the trust created by this Deed of Trust upon the following
terms and conditions:
11.5.1 The Trustees may exercise any of their
powers through appointment of attorneys-in-fact or agents.
11.5.2 The Trustees shall not be liable for any
matter or cause arising under this Deed of Trust or in
connection therewith except by reason of their own willful
misconduct.
11.5.3 The Trustees may select and employ
legal counsel at the expense of Grantor.
11.5.4 The Trustees shall be under no obligation
to take any action upon any Event of Default unless they are
furnished security or indemnity, in form satisfactory to the
Trustees, against costs, expenses, and liabilities which may be
incurred by the Trustees.
11.5.5 The Trustees shall have no duty to take
any action except upon written demand of the parties to whom is
then owed fifty-one percent (51%) or more of the then
outstanding principal balance of the Note.
11.5.6 A Trustee may resign upon thirty (30)
days written notice to the Beneficiary. 11.6 Trustees'
Reimbursement -- The Grantor shall reimburse the Trustees for all
reasonable disbursements and expenses incurred by reason of this
Deed of Trust.
11.7 Save Harmless Clause -- The Grantor shall
indemnify and save harmless the Beneficiary and the Trustees,
singularly and jointly, from all costs and expenses, including
reasonable attorneys' fees, incurred by them or any of them by
reason of this Deed of Trust, including any Legal Action to which
Beneficiary or the Trustees shall become a party. Any money so
paid or expended by Beneficiary or the Trustees shall be due and
payable upon demand together with interest at the Penalty Rate
from the date incurred and shall be secured by this Deed of
Trust. The obligation set forth in this Section 11.7 is in
addition to all other obligations of Grantor to indemnify and<PAGE>
save Beneficiary harmless as set forth in other provisions of
this Deed of Trust.
12. DEFAULT
12.1 Event of Default -- The occurrence of any of
the following shall constitute an Event of Default:
12.1.1 Monetary Defaults -- The failure of the
Grantor to pay any amounts due under any of the Loan Documents
when due and payable, whether at maturity, by obligation or
election to prepay, or otherwise.
12.1.2 Breach of Representations and Warranties --
Any statement, representation or warranty made by the Grantor
herein or any statement, representation or warranty made in any
of the Loan Documents shall prove to have been incorrect, false,
incomplete or misleading in any material respect when made or
shall be breached.
12.1.3 Insurance Provisions -- The failure of
Grantor to perform its obligations set forth in Section 8.1, 8.2
or 8.3.
12.1.4 Receiver; Bankruptcy -- If the Grantor
(a) applies for, or consents in writing to, the appointment of
a receiver, trustee, or liquidator for it of the Trust Property,
or of all or substantially all of its assets, (b) files a
voluntary petition in bankruptcy or admits in writing its
inability to pay its debts as they become due, (c) makes an
assignment for benefit of creditors, (d) files a petition or an
answer seeking a reorganization, composition, adjustment,
arrangement with creditors, or takes advantage of any insolvency
law, (e) files an answer admitting the material allegations of a
petition filed against it in any bankruptcy, reorganization,
composition, adjustment, arrangement, or insolvency proceeding,
or (f) petitions for dissolution or is dissolved as a result of
an adversary suit or proceeding.
12.1.5 Receiver; Bankruptcy (Involuntary) -- If
(a) any execution or attachment levied against the assets of the
Grantor is not set aside, discharged, or stayed within thirty
(30) days after the same was levied or within ten (10) days after
the expiration of any stay thereof, (b) an order, judgment, or
decree is entered by any court of competent jurisdiction on the
application of a creditor, adjudicating the Grantor a bankrupt or
insolvent, or appointing a receiver, trustee, or liquidator for
the Grantor, or of all or substantially all of its assets, or (c)
an order of relief is entered against the Grantor pursuant to any
bankruptcy statute or law and such order, judgment, or decree
continues unstayed and in effect for a period of thirty (30) days
and is not discharged within ten (10) days after the expiration
of any stay thereof.<PAGE>
12.1.6 Assignment of Rents -- Any attempted
assignment by the Grantor of the whole or any part of the Rents
in contravention of Section 9.8.
12.1.7 Prohibited Transfer or Encumbrance --
Any transfer or event in violation of Sections 7.4. 7.5. or
7.6.
12.1.8 Loss of License -- The loss of any
franchise agreement, license or permit necessary for the
operation, occupancy, or use of the Trust Property, if the same
is not restored within thirty (30) days after the loss.
12.1.9 Judgments -- Any judgment against the
Grantor for an amount in excess of Seventy Five Thousand Dollars
($75,000.00) is not paid, stayed, discharged, bonded or dismissed
for a period of thirty (30) days following the date which the
judgment becomes final and any appeal thereof is finally
determined.
12.1.10 Other Obligations -- Any obligation of
the Grantor (other than the obligations secured hereunder) in
excess of Twenty Thousand Dollars ($20,000.00) becomes or is
declared to be due and payable prior to the expressed maturity
thereof and the same is not paid stayed, discharged, bonded or
dismissed within thirty (30) days of the accelerated maturity
date.
12.1.11 Other Defaults -- The failure of the
Grantor to perform or observe any of its obligations or covenants
under this Deed of Trust not previously specifically referred to
in this Section 12.
12.1.12 Default under Other Loan Documents --
The failure of the Grantor to perform or observe any of
its obligations or covenants in any Loan Document other than this
Deed of Trust.
12.1.13 Event of Default under Other Loan Documents
- -- An "Event of Default" (if so defined) or, if not so defined,
a default occurs under a Loan Document other than this Deed
of Trust. However, with regard to any such default which is not
a monetary default as described in Section 12.1.1, such default
will not be deemed to have occurred if it is completely remedied
within fifteen (>15) days after Beneficiary has sent written
notice of such default to the Grantor.
12.1.14 Substances -- The Grantor fails to
promptly perform or comply with any of the terms and conditions
set forth in Section 10.
12.1.15 Dissolution of Grantor -- If
Grantor dissolves, or permits its dissolution.<PAGE>
12.1.16 Tax Matters -- An event occurs of the
type described in Section 6.5 hereof.
12.2 Payment or Performance by Trustees or Beneficiary
- -- Upon an Event of Default, the Trustees or the Beneficiary may,
at their option, make any payments or take any other actions
they deem necessary or desirable to cure the Event of Default
and/or conserve the Trust Property. The Grantor shall, upon
demand, reimburse the Trustees or the Beneficiary for all sums so
advanced or expenses incurred by them, together with interest at
the Penalty Rate from the date of advance or payment of the same,
which sums shall be secured by this Deed of Trust. The Trustees
or the Beneficiary may enter upon the Trust Property without
prior notice to the Grantor or judicial process and may take any
action to enforce its rights under this Section 12.2 without
liability to the Trustees or the Grantor.
12.3 Possession by Trustees or Beneficiary -- Upon
the occurrence of an Event of Default, the Trustees or
the Beneficiary may enter upon and take possession of the Trust
Property without notice to the Grantor, judicial process, or the
appointment of a receiver. The Trustees or the Beneficiary may
exclude all persons from the Trust Property and may Operate the
Trust Property and receive all Rents. The Trustees or the
Beneficiary and the Trustees shall have the right, as agent for
the Grantor, to Operate the Trust Property and carry on the
business of the Grantor, either in the name of the Grantor or
otherwise. Neither the Trustees nor the Beneficiary shall be
liable to the Grantor for taking possession of the Trust
Property, as aforesaid, nor shall they be required to make
repairs or replacements, and they shall be liable to account only
for Rents actually received by them. All Rents collected by the
Trustees or the Beneficiary shall be applied (a) first, to pay
all expenses incurred in taking possession of the Trust Property,
(b) second, to pay costs and expenses to Operate the Trust
Property and/or to comply with the terms of the Loan Documents,
(c) third, to pay all sums secured by the Loan Documents in the
order of priority determined by Beneficiary, and (d) fourth, the
balance, if any, to the Grantor or such other Person as
may be entitled thereto.
12.4 Acceleration of the Note -- Upon an Event of
Default, Beneficiary may, at its option and by written notice to
the Grantor, declare the entire balance of the Note and all
other amounts due under the Loan Documents, immediately due
and payable. Acceleration of maturity, once claimed by the
Beneficiary, may at the option of the Beneficiary, be rescinded
by written acknowledgment to that effect by the Beneficiary, but
the tender and acceptance of partial payments alone shall not in
any way affect or rescind such acceleration of maturity.<PAGE>
12.5 Collection of Rents -- Upon the occurrence of an
Event of Default and written demand by the ,Beneficiary to the
Tenants, all Rents shall be payable directly to the Beneficiary.
12.6 Assent to a Decree and Power of Sale -- The
Grantor assents to the passage of a decree for the sale of the
Trust Property upon the occurrence of an Event of Default, by any
court having jurisdiction and the Grantor authorizes and empowers
the Trustees, upon the occurrence of an Event of Default, to sell
the Grantor's interest in the Trust Property, in accordance with
the Maryland Rules of Procedure or any other Law. The Trust
Property or any interest therein may be sold upon such terms and
in as many parcels as the Person conducting the sale may, in its
sole discretion, elect. No readvertisement of any sale shall
be required if the sale is adjourned by announcement, at the
time and place set therefor, of the date, time, and place to
which the same is to be adjourned.
12.7 Foreclosure Sale -
12.7.1 If one or more of the Events of Default
shall occur, the Trustees, at the direction of Beneficiary, shall
sell and, in the case of default of any purchaser or purchasers,
shall resell all the Trust Property as an entirety, or in such
parcels and in such order as Beneficiary shall in writing
request, or, in the absence of such request, as the Trustees may
determine (Grantor hereby waiving for itself and for any person
claiming by or through it, the application of the doctrine of
marshaling of assets), at public auction at some convenient place
or places in the jurisdiction in the State of Maryland where the
Trust Property is situate, or in such other place or places as
may be permitted by law, at such time, in such manner and upon
such terms as the Trustees may fix and briefly specify in each
notice of sale, which notice of sale shall state the time when,
and the place where, the same is to be made, shall contain a
brief general description of the property to be sold, and shall
be sufficiently given if published as frequently and in such
publication as may be required by law, and Beneficiary or the
Trustees may cause such further public advertisement to be made
as they may deem advisable, and any such sale may be adjourned by
the Trustees by announcement at the time and place appointed for
such sale or for such adjourned sale, and, without further notice
or publication, such sale may be made at the time and place to
which the same shall be so adjourned. If one or more Leases are
entered into or recorded subsequent to the recording of this Deed
of Trust or are otherwise subordinate to this Deed of Trust, the
Trustees shall sell, at the direction of the Beneficiary, subject
to any one or more of such tenancies that are designated and
selected by the Beneficiary.<PAGE>
12.7.2 Upon the completion of any sale and
compliance with all the terms thereof, the Trustees shall execute
and deliver to the purchaser or purchasers, a good and sufficient
deed of conveyance, assignment and transfer, lawfully
conveying, assigning and transferring the property sold. Payment
to the Trustees of the entire purchase money shall be full and
sufficient discharge of any purchaser or purchasers of the
property, sold as aforesaid, for the purchase money; and no such
purchaser, or his representatives, successors or assigns, after
paying such purchase money and receiving the deed shall be bound
to see to the application of such purchase money.
12.7.3 In the case of any sale of the Trust
Property or of any part thereof, whether under the power of sale
herein granted, assent to decree or through other judicial
proceedings, the proceeds thereof, together with any other sums
which may then be held as security hereunder or be due under any
of the provisions hereof as a part of the Property, shall be
applied as follows:
FIRSTLY, to pay all proper costs,
charges, fees and expenses, including the fees
and costs herein provided for and to pay the
costs of appraisals of the Property and the
costs of title examination; and to pay or
repay to Beneficiary or the Trustees, all
moneys advanced by them or either of them for
taxes, insurance or otherwise, with interest
thereon as provided herein; and to pay all
taxes due upon the Trust Property at the time
of sale; and to pay any other lien or
encumbrance prior to the legal operation and
effect of this Deed of Trust unless said sale
is made subject to any such taxes or other
lien or encumbrance; and to pay a counsel fee
of Three Thousand Dollars ($3,000.00) for
conducting the proceedings if without contest,
but if legal services are rendered to Trustees
or to Beneficiary in connection with any
contested matter in the proceedings, then such
additional counsel fees and expenses shall be
allowed out of the proceeds of sale or sales
as the court may deem proper; and also to pay
a commission to the Trustees or other party
making the sale equal to five percent (5%) of
the gross sale price; and also to pay a
reasonable commission to the auctioneer
conducting the sale;<PAGE>
SECONDLY, to pay whatever may then remain
unpaid under the Note and the interest thereon
to the date of payment, whether the same shall
be due or not, it being agreed that the Note
shall, upon such sale being made before the
maturity of the Note, be and become
immediately due and payable at the election of
Beneficiary and to pay all of the indebtedness
secured hereby;
THIRDLY, to pay the remainder of said
proceeds, if any, less the expense, if any, of
obtaining possession, to Grantor or other
party lawfully entitled to receive the same,
upon the delivery and surrender of possession
of the property sold and conveyed and delivery
of all records, books, bank accounts, Leases,
agreements, security deposits of the tenants
and all other material relating to the
Operation of the Trust Property to the said
purchaser or purchasers.
12.7.4 Immediately upon the filing or docketing
of suit preliminary to a foreclosure sale of the Property, or any
part thereof under this Deed of Trust, there shall be and become
due and owing by Grantor, a Trustees commission on the total
amount of the indebtedness secured hereby of two and one-half
(21/2%) of the total amount of the indebtedness and a reasonable
auctioneer's commission, and Beneficiary shall not be required to
receive the principal and interest in satisfaction of the
indebtedness secured hereby, but said sale may be proceeded with
unless, prior to the day appointed therefor, tender is made of
said principal, interest, commissions and all expenses and costs
incident to such sale and all other sums that are part of the
indebtedness secured hereby.
12.7.5 Beneficiary may bid and become the purchaser
at any sale under this Deed of Trust. If Beneficiary is
the purchaser at any such sale, Beneficiary may apply the
outstanding indebtedness against all or any portion of the
purchase price, including the deposit.
12.8 Deficiency of Proceeds -- If, after a
foreclosure sale, a deficiency exists in the net proceeds of such
sale, the Beneficiary shall be entitled to a deficiency judgment
or decree against Grantor for such deficiency which shall bear
interest at the Penalty Rate.<PAGE>
12.9 Insurance or Condemnation After Deficiency -- If
the Trust Property is sold at a foreclosure sale prior to receipt
of an insurance or a condemnation award or payment, the
Beneficiary shall receive and apply the proceeds of the award or
payment toward the satisfaction of any deficiency resulting from
the foreclosure sale, whether or not a deficiency judgment is
sought, recovered, or denied.
12.10 Trustee's Bond -- The Grantor waives any right
to require the Person authorized to make the sale to post a bond
in any foreclosure proceeding.
12.11 Appointment of a
Receiver -- Upon the occurrence of an Event of Default, the
Beneficiary shall be entitled to the immediate appointment of a
receiver for the Trust Property, without regard to the value of
the Trust Property or the solvency of any person liable for
payment of the amounts due under the Loan Documents.
12.12 Remedies Cumulative -- All rights, powers,
and remedies of the Beneficiary or the Trustees provided for in
the Loan Documents are cumulative and concurrent and shall be in
addition to and not exclusive of any appropriate legal or
equitable remedy provided by Law or contract. Exercise of any
right, power, or remedy shall not preclude the simultaneous or
subsequent exercise of any other by the Beneficiary or the
Trustees.
12.13 Rights Under the Uniform Commercial Code -- Upon
the occurrence of an Event of Default, the Grantor shall assemble
and make available to the Beneficiary and the Trustees,
those portions of the Trust Property which consist of personal
property at a place to be designated by the Trustees, and the
Beneficiary and the Trustees may exercise all the rights and
remedies of a secured party under the Uniform Commercial Code.
Any notices required by the Uniform Commercial Code shall be
deemed reasonable if mailed certified mail, return receipt
requested, postage prepaid, by the Beneficiary or the Trustees to
the Grantor. Disposition of the Trust Property shall be deemed
commercially reasonable if made pursuant to a public offering
advertised at least twice in a newspaper of general circulation
in the County (or Baltimore City) where the Trust Property is
located. Nothing herein shall preclude Beneficiary and Trustees
from proceeding as to all of the Trust Property in accordance
with the rights and remedies of Beneficiary and Trustees in
respect of real property, as provided in Section 9-501(4) of the
Commercial Law Article of the Annotated Code of Maryland, as
amended from time to time.<PAGE>
13. MISCELLANEOUS
13.1 Waivers -- No term of any Loan Document shall
be deemed waived unless the waiver shall be in writing and signed
by the parties making the waiver. Any failure by the Beneficiary
or the Trustees to insist upon the Grantor's strict performance
of any of the terms of the Loan Documents shall not be deemed or
construed as a waiver of those or any other terms. Any delay in
exercising or enforcing any rights with respect to a Default or
an Event of Default shall not bar the Beneficiary or the Trustees
from exercising any rights under the Loan Documents, or at law or
in equity.
13.2 Consents -
13.2.1 The Beneficiary may (a) release any
Person liable under the Loan Documents, (b) release any part of
the Trust Property, (c) extend the time of payment of the Loan,
and/or (d) modify the terms of the Loan Documents, regardless
of consideration and without notice to or consent by the holder
of any subordinate lien on the Trust Property. No release,
extension or modification of the Trust Property held under the
Loan Documents shall impair or affect the lien of this Deed of
Trust or the priority of such lien over any subordinate lien.
13.2.2 Regardless of whether a Person has been
given notice or has given its prior consent, it shall not be
relieved of any obligation under any Loan Documents by reason of
(a) the failure of the Beneficiary, the Trustees, or any other
Person to take any action, foreclose, or otherwise enforce any
provision of the Loan Documents, (b) the release of any other
Person liable under any Loan Document, (c) the release of any
portion of the Trust Property under the Loan Documents, or (d)
any agreement or stipulation between any subsequent owners of the
Trust Property and Beneficiary extending the time of payment or
modifying the terms of any Loan Document.
13.3 Headings -- All Article and Section headings are
for convenience only and shall not be interpreted to enlarge
or restrict the provisions of this Deed of Trust. 13.4
Notices -- All notices shall be in writing and, unless otherwise
specified in a written notice, shall be sent to the respective
addresses of the parties as follows:
Beneficiary: Loyola Federal Savings Bank
1300 North Charles Street
Baltimore, Maryland 21201
ATTN: A. Gregory Manuel, Vice President<PAGE>
With a copy to: Searle E. Mitnick, Esquire
Kaplan, Heyman, Greenberg,
Engelman & Belgrad, P.A.
20 S. Charles Street, 10th Floor
Baltimore, Maryland 21201
Trustees: Thomas R. Marvel and A. Gregory Manuel
1300 North Charles Street
Baltimore, Maryland 21201
Grantor: Universal Security Instruments, Inc.
10324 S. Dolfield Road
Owings Mills, Maryland 21117
With a copy to: Edward E. Obstler, Esquire
c/o Gordon, Feinblatt, Rothman,
Hoffberger & Hollander, LLC
The Garrett Building
233 E. Redwood Street
Baltimore, Maryland 21202
A notice may be hand-delivered or mailed, postage
prepaid, first-class, registered or certified mail, return
receipt requested. Any notice sent by mail shall be deemed to
have been received on the second business day following the date
of mailing.
13.5 Binding Effect -- The terms and conditions agreed
to by Grantor and the covenants of Grantor shall be binding upon
the personal representatives, successors and assigns of Grantor
and of each of them, but this provision does not waive any
prohibition of assignment or any requirement of consent to an
assignment under the other provisions of this Deed of Trust; any
consent to an assignment shall not be consent to any further
assignment, each of which must be specifically obtained in
writing.
13.6 Amendment -- No Loan Document may be modified
except in writing signed by (a) the Beneficiary and/or the
Trustees, and (b) Grantor.
13.7 Severability -- In the event any provision of
this Deed of Trust shall be held invalid or unenforceable by a
court of competent jurisdiction, such holding shall not
invalidate or render unenforceable any other provision hereof.
13.8 Notices from Governmental Authorities Affecting
the Trust Property -- Any notice from any governmental
or quasi-governmental authority or corporation with respect to
the Trust Property sent to or known by the Grantor shall be
promptly transmitted to the Beneficiary and the Trustees.<PAGE>
13.9 Legal Construction -- The Note, this Deed of Trust
and the other Loan Documents shall be construed according to the
laws of the State of Maryland (excluding Maryland conflict of
laws) and any court of competent jurisdiction of the State of
Maryland shall have jurisdiction over any action regarding the
Loan including, but not limited to, any proceeding instituted to
enforce this Deed of Trust, and any objections to venue are
hereby waived.
13.10 Usury Limitations -- No provision of this Deed
of Trust or of the Note shall require the payment or permit the
collection of interest or other sum in excess of the maximum
permitted by applicable law, including a judicial determination.
If any excess of interest or other sum in such respect is herein
or in the Note provided for, or shall be adjudicated to be so
provided for herein or in the Note, neither Grantor nor its
successors or assigns shall be obligated to pay such interest or
other sum in excess of the amount permitted by applicable law,
including a judicial determination, and the right to demand the
payment of any such excess shall be and hereby is waived. The
provisions of this Section shall control all other provisions of
this Deed of Trust and the Note.
13.11 Mutual Waiver of Jury Trial -- Beneficiary
and Grantor each, on behalf of itself and its successors and
assigns, WAIVES to the fullest extent permitted by law, all right
to TRIAL BY JURY of any and all claims between them arising under
this Deed of Trust, the Note, or any other Loan Documents, and
any and all claims arising under common law under any statute of
any state or the United States of America, whether any such
claims be now existing or hereafter arising, now known or
unknown. In making this waiver, Beneficiary and Grantor
acknowledge and agree that any and all claims made by Beneficiary
against Grantor and all claims made by Grantor against
Beneficiary shall be heard by a judge of a court of proper
jurisdiction, and shall not be heard by a jury. Beneficiary and
Grantor acknowledge and agree that THIS WAIVER OF TRIAL
BY JURY IS A MATERIAL ELEMENT OF THE CONSIDERATION FOR THIS
TRANSACTION. Beneficiary and Grantor, with advice of counsel,
each acknowledges that it is knowingly and voluntarily waiving a
legal right by agreeing to this waiver provision.
13.12 Time of the Essence -- Time is of the essence
with respect to the Loan Documents.
13.13 Effect of Payments -- Any payment or
other performance made in accordance with the Loan Documents by
any Person other than Grantor shall not entitle such Person to
any right of subrogation under the Loan Documents, unless
expressly consented to in writing by the Beneficiary.<PAGE>
13.14 Word Forms -- The use of any gender, tense,
or conjugation herein shall be applicable to all genders,
tenses, and conjugations. The use of the singular shall include
the plural and the plural shall include the singular.
WITNESS the execution hereof by the Grantor and the
affixing of the Grantor's seal.
WITNESS: UNIVERSAL SECURITY INSTRUMENTS, INC.
Grantor
__________________________ By:__________________________(SEAL)
STATE OF MARYLAND )
) to wit:
CITY OF BALTIMORE )
I HEREBY CERTIFY, that on the ___________ day of June,
1995, before me, a Notary Public of the State of Maryland,
personally appeared __________________________________ of
Universal Security Instruments, Inc. known to me (or
satisfactorily proven) to be the person whose name is subscribed
to the within instrument, who acknowledged that he executed the
same for the purpose therein contained.
WITNESS my hand and Notarial Seal.
___________________________________
Notary Public
My Commission Expires:______________________
This instrument has been prepared by Searle E. Mitnick,
an attorney admitted to practice before the Court of Appeals
of Maryland, under such attorney's supervision. or by one or
more parties named in this instrument.
___________________________________
SEARLE E. MITNICK <PAGE>
DESCRIPTION
ALL THAT CERTAIN PIECE PARCEL OR TRACT OF LAND SITUATED IN
THE FOURTH ELECTION DISTRICT OF BALTIMORE COUNTY MARYLAND AND
BEING KNOWN AS 10324 SOUTH DOLFIELD ROAD AND BEING MORE
PARTICULARLY DESCRIBED AS FOLLOWS:
BEGINNING FOR THE SAME AT THE SOUTHEAST END OF THE GUSSET
LINE BETWEEN THE WEST SIDE OF NEW PLANT COURT, 60 FEET WIDE, AND
THE SOUTH SIDE OF SOUTH DOLFIELD ROAD, 70 FEET WIDE, AS SHOWN ON
THE PLAT ENTITLED "SECTION 2, OWINGS MILLS INDUSTRIAL PARK"
AND RECORDED AMONG THE LAND RECORDS OF BALTIMORE COUNTY, MARYLAND
IN PLAT BOOK 29 PAGE 14, RUNNING THENCE BINDING ON SAID WEST SIDE
OF NEW PLANT COURT THE FOLLOWING TWO (2) COURSES: (1) S03
57'34"W 229.00 FEET AND (2) SOUTHEASTERLY, BY A CURVE TO THE LEFT
WITH THE RADIUS OF 330.00 FEET, THE ARC DISTANCE OF 352.64 FEET,
THE CHORD OF SAID ARC BEING S26 39'14"E 336.10 FEET, THENCE
CONTINUING TO BIND ON SAID WEST SIDE OF NEW PLANT COURT, AS SHOWN
ON THE PLAT ENTITLED "FIRST AMENDED RESUBDIVISION OF PART OF
PARCEL "E" REALIGNMENT OF NEW PLANT COURT, OWINGS MILLS
INDUSTRIAL PARK" AND RECORDED AMONG SAID LAND RECORDS IN PLAT
BOOK 34 PAGE 80 (3) S57 16'00"E 144.00 FEET, THENCE LEAVING SAID
NEW PLANT COURT (4) S32 44'00"W 189.22 FEET TO THE NORTHEAST SIDE
OF NORTHWESTERN EXPRESSWAY AS SHOWN ON SAID PLAT ENTITLED
"SECTION 2, OWINGS MILLS INDUSTRIAL PARK", THENCE BINDING ON PART
OF SAID NORTHEAST SIDE THE FOLLOWING TWO (2) COURSES: (5) N60
56'52"W 160.38 FEET AND (6) NORTHWESTERLY, BY A CURVE TO THE LEFT
WITH THE RADIUS OF 7789.44 FEET, THE ARC DISTANCE OF 362.00 FEET,
THE CHORD OF SAID OF ARC BEING N58 49'45"W 361.97 FEET TO THE
SOUTHERLY MOST CORNER OF PARCEL E-1 AS SHOWN ON THE PLAT ENTITLED
"AMENDED, RESUBDIVISION OF PART OF PARCEL "E", SECTION 2, OWINGS
MILLS INDUSTRIAL PARK", AND RECORDED IN THE AFORESAID LAND
RECORDS IN PLAT BOOK 48 PAGE 32, THENCE BINDING ON THE EAST
OUTLINE OF SAID PARCEL "E-1" THE FOLLOWING TWO (2) COURSES: (7)
N31 15'50"E 132.67 FEET AND (8) N03 57'34"E 418.00 FEET TO SAID
SOUTH SIDE SOUTH DOLFIELD ROAD, THENCE BINDING ON SAID SOUTH SIDE
(9) S86 02'26"E 179.00 FEET TO THE NORTHWEST END OF SAID GUSSET
LINE, THENCE BINDING ON SAID GUSSET LINE (10) S48 44'31"E 26.40
FEET TO THE PLACE OF BEGINNING.
CONTAINING 189,836 SQ.FT. OR 4.358 ACRES OF LAND.
BEING THE SAME PROPERTY CONVEYED TO UNIVERSAL
SECURITY INSTRUMENTS, INC. BY BALTIMORE COUNTY, MARYLAND BY DEED
DATED MARCH 14, 1994 AND RECORDED AMONG SAID LAND RECORDS IN
LIBER 10849 FOLIO 317.<PAGE>
DESCRIPTION
ALL THAT CERTAIN PIECE, PARCEL, OR TRACT OF LAND SITUATED IN
THE FOURTH ELECTION DISTRICT OF BALTIMORE COUNTY, MARYLAND AND
BEING KNOWN AS PARCEL "A" PROPERTY OF UNIVERSAL SECURITY
INSTRUMENTS AND BEING MORE PARTICULARLY DESCRIBED AS FOLLOWS:
BEGINNING FOR THE SAME AT A POINT ON THE SOUTH SIDE OF NEW
PLANT COURT, 60 FEET WIDE, AS SHOWN ON THE PLAT ENTITLED
"FIRST AMENDED; RESUBDIVISION OF PART OF PARCEL "E"; REALIGNMENT
OF NEW PLANT COURT, OWINGS MILLS INDUSTRIAL PARK" AND RECORDED
AMONG THE LAND RECORDS OF BALTIMORE COUNTY, MARYLAND IN PLAT BOOK
34 PAGE 80, SAID POINT OF BEGINNING BEING DISTANT S57 16'00"E
144.00 FEET FROM THE SOUTHERN END OF CURVE "B" AS SHOWN ON SAID
PLAT, RUNNING THENCE LEAVING SAID SOUTH SIDE (1) S32 44'00"W
189.22 FEET TO THE NORTH SIDE OF NORTHWESTERN EXPRESSWAY AS SHOWN<PAGE>
ON SAID PLAT, THENCE BINDING ON THE SAID NORTH SIDE THE FOLLOWING
TWO (2) COURSES; (2) N60 56'52"W 160.38 FEET AND (3)
NORTHWESTERLY BY A CURVE TO THE LEFT WITH THE RADIUS OF 7,789.44
FEET, THE ARC DISTANCES OF 362.00 FEET, THE CHORD OF SAID ARC
BEING N58 49'45"W 361.97 FEET TO THE SOUTHERLY MOST CORNER OF
PARCEL "E-1" AS SHOWN ON THE PLAT ENTITLED "AMENDED,
RESUBDIVISION OF PART OF PARCEL "E", SECTION 2, OWINGS MILLS
INDUSTRIAL PARK", AND RECORDED IN SAID LAND RECORDS IN PLAT BOOK
48 PAGE 32, THENCE BINDING ON PART OF THE EAST OUTLINE
OF SAID PARCEL "E-1" (4) N31 15'50"E 128.68 FEET, THENCE FOR NEW
LINE OF DIVISION (5) S85 01'00"E 256.03 FEET TO SAID SOUTH SIDE
NEW PLANT COURT, THENCE BINDING ON SAID SOUTH SIDE THE FOLLOWING
TWO (2) COURSE: (6) SOUTHEASTERLY, BY A CURVE TO THE LEFT WITH
THE RADIUS OF 330.00 FEET, THE ARC DISTANCE OF 160.91 FEET, THE
CHORD OF SAID ARC BEING S43 17'55"E 159.32 FEET AND (7) S57
16'00"E 144.00 FEET TO THE PLACE OF BEGINNING.
CONTAINING 102,199 SQUARE FEET OR 2.3462 ACRES OF LAND.
BEING PART OF THE PROPERTY CONVEYED TO UNIVERSAL
SECURITY INSTRUMENTS, INC. BY BALTIMORE COUNTY, MARYLAND BY DEED
DATED MARCH 14, 1994 AND RECORDED AMONG SAID LAND RECORDS IN
LIBER 10849 PAGE 317.
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000102109
<PERIOD START> MAR-31-1995
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> MAR-31-1995
<PERIOD-END> JUN-30-1995
<CASH> 238,659
<SECURITIES> 8,399
<RECEIVABLES> 1,680,547
<ALLOWANCES> 45,000
<INVENTORY> 3,920,338
<CURRENT-ASSETS> 6,322,646
<PP&E> 2,765,422
<DEPRECIATION> 691,478
<TOTAL-ASSETS> 11,999,797
<CURRENT-LIABILITIES> 3,258,157
<BONDS> 0
<COMMON> 32,456
0
0
<OTHER-SE> 7,420,422
<TOTAL-LIABILITY-AND-EQUITY> 11,999,797
<SALES> 5,037,361
<TOTAL-REVENUES> 5,037,361
<CGS> 4,408,179
<TOTAL-COSTS> 4,408,179
<OTHER-EXPENSES> 957,363
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 127,699
<INCOME-PRETAX> (321,846)
<INCOME-TAX> 0
<INCOME-CONTINUING> (321,846)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (321,846)
<EPS-PRIMARY> (.10)
<EPS-DILUTED> (.10)
</TABLE>
