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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities and Exchange Act of 1934
(Amendment No. )*
Brandywine Realty Trust
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(Name of Issuer)
Shares of Beneficial Interest
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(Title of Class of Securities)
105368-10-4
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(CUSIP Number)
Marc C. Krantz, Kohrman Jackson & Krantz,
1375 East 9th Street, Cleveland, Ohio 44114, 216-736-7204
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(Name, Address and Telephone Number of Person Authorized
to Receive Notices and Communications)
January 19, 1996
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(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(b)(3) or (4), check the following box [ ].
Check the following box if a fee is being paid with the statement [X]. (A fee
is not required only if the reporting person: (1) has a previous statement on
file reporting beneficial ownership of more than five percent of the class of
securities described in Item 1; and (2) has filed no amendment subsequent
thereto reporting beneficial ownership of five percent or less of such class.)
(See Rule 13d-7.)
Note: Six copies of this statement, including all exhibits, should be filed
with the Commission. See Rule 13d-1(a) for other parties to whom copies are to
be sent.
*The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities,
and for any subsequent amendment containing information which would alter
disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be
deemed to be "filed" for the purpose of Section 18 of the Securities Exchange
Act of 1934 ("Act") or otherwise subject to the liabilities of that section of
the Act but shall be subject to all other provisions of the Act (however, see
the Notes).
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<TABLE>
SCHEDULE 13D
CUSIP NO. 105368-10-4
<S> <C>
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1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Richard M. Osborne Trust
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [ ]
(b) [ ]
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3 SEC USE ONLY
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4 SOURCE OF FUNDS*
AF,PF,BK
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5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEMS 2(d) or 2(e) [ ]
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6 CITIZENSHIP OR PLACE OF ORGANIZATION
Ohio
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NUMBER OF 7 SOLE VOTING POWER
SHARES 538,800
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BENEFICIALLY 8 SHARED VOTING POWER
OWNED BY
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EACH 9 SOLE DISPOSITIVE POWER
REPORTING 538,800
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PERSON 10 SHARED DISPOSITIVE POWER
WITH
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11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
538,800
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12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES*[ ]
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13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
29.0%
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14 TYPE OF REPORTING PERSON*
OO
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</TABLE>
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CUSIP No. 105368-10-4
This original Schedule 13D Statement is filed on behalf of the Richard M.
Osborne Trust (the "Trust") for the purpose of reporting certain acquisitions
by the Trust of shares of beneficial interest, $0.01 par value per share, of
Brandywine Realty Trust, a Maryland real estate investment trust.
Item 1. Security and Issuer.
This Schedule 13D Statement relates to the shares of beneficial interest,
$0.01 par value per share (the "Shares"), of Brandywine Realty Trust, a
Maryland real estate investment trust ("Brandywine"), which has its principal
executive offices at 200 Berwyn Park, Suite 100, Berwyn, Pennsylvania.
Item 2. Identity and Background.
(a) The person filing this Schedule 13D is the Richard M. Osborne Trust.
Richard M. Osborne ("Mr. Osborne") is the sole trustee of the Trust.
(b) The address of the Trust and the business address of Mr. Osborne is
7001 Center Street, Mentor, Ohio 44060.
(c) The Trust was established by Mr. Osborne for estate planning
purposes. Mr. Osborne's principal occupation is President and Chairman of the
Board of OsAir, Inc., a property developer and manufacturer of industrial gases
for pipeline delivery. OsAir, Inc. is located at 7001 Center Street, Mentor,
Ohio 44060.
(d) Negative with respect to the Trust and Mr. Osborne.
(e) Negative with respect to the Trust and Mr. Osborne.
(f) The Trust is a trust organized under the laws of the State of Ohio.
Mr. Osborne is a citizen of the United States of America.
Item 3. Source and Amount of Funds or Other Consideration.
The Shares reported herein as having been acquired by the Trust were
acquired for the aggregate purchase price of approximately $2.7 million, which
amount was contributed to the Trust by Mr. Osborne. The source of Mr.
Osborne's contribution, with respect to the Shares reported herein as having
been acquired by the Trust in open market transactions, is personal funds.
The source of Mr. Osborne's contribution, with respect to the Shares
reported herein as being acquired on January 19, 1996, is a bank loan from
First National Bank of Ohio (the "First National Loan"). The First National
Loan is a revolving line of credit, dated June 23, 1995, and amended December
18, 1995, in the principal amount of $3.0 million and is secured by a first
mortgage on certain real property owned by Mr. Osborne and by certain
securities (other than the Shares) owned by Mr. Osborne. Interest on the First
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CUSIP No. 105368-10-4
National Loan accrues at the rate of 8.75% per annum and is due and payable
monthly until June 23, 1996. The First National Loan matures on June 23, 1996,
at which date it will become a term loan, payable in 60 equal installments of
principal and interest, which interest will accrue at (i) a rate based upon the
5 year U.S. Treasury rate plus 300 basis points, or (ii) the First National
Bank of Ohio's prime rate plus 1.0%. A copy of the Business Loan Agreement and
a copy of the Promissory Note, as amended, executed by Mr. Osborne in
connection with the First National Loan are attached hereto as Exhibits 7.1 and
7.2, respectively.
The source of Mr. Osborne's contribution, with respect to the Shares
reported herein as being acquired on January 25, 1996, is a bank loan from
American National Bank (the "American Loan"). The American Loan is a line of
credit, dated June 25, 1995, in the principal amount of $500,000 (the "American
Loan") and is unsecured. The American Loan matures June 24, 1996. Interest on
the American Loan is payable monthly at the rate of 10.0% per annum, subject to
adjustment quarterly at the discretion of American National Bank. A copy of
the American Loan is attached hereto as Exhibit 7.3.
Item 4. Purpose of Transaction.
The Trust purchased the Shares to acquire a significant minority interest
in Brandywine for the purposes of investment. Mr. Osborne intends to seek a
meeting with the management of Brandywine to discuss its business strategies
and to seek representation on the Board of Trustees of Brandywine. In
connection with seeking such representation, Mr. Osborne may, upon review of
relevant information about the business and operations of Brandywine, propose
changes in the business strategies and structure of Brandywine, including, but
not limited to, proposing a merger, consolidation or other business combination
involving Brandywine and other real estate investment trusts ("REIT"),
including REITs in which Mr. Osborne or his affiliates are shareholders. Mr.
Osborne has no present plans or proposals relating to such a transaction.
Depending on market conditions, developments with respect to Brandywine's
business and other factors, the Trust and Mr. Osborne reserve the right to
acquire additional Shares. The Trust is aware that because Brandywine is a
REIT the Internal Revenue Code of 1986, as amended (the "Code"), may govern the
acquisition of additional Shares by the Trust. In particular, the Code
provides that to qualify as a REIT an entity must (1) throughout each taxable
year have at least 100 shareholders and (2) during the last half of each
taxable year have not more than 50% in value of the outstanding shares of the
entity owned, directly or indirectly, by five or fewer individuals. In the
event that the Trust determines to make additional purchases of the Shares, it
will continue to review such provisions of the Code to insure that the REIT
status of Brandywine is not jeopardized.
Pursuant to the instructions for items (a) through (j) of Item 4 of
Schedule 13D and except as set forth above in this Item 4, neither the Trust
nor Mr. Osborne presently has plans or proposals that relate to or would result
in any of the following:
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CUSIP 105368-10-5
(i) the liquidation of Brandywine;
(ii) the sale or disposition of a material amount of assets of
Brandywine;
(iii) a material change in the present capitalization or dividend policy
of Brandywine;
(iv) a material change in the business or corporate structure of
Brandywine;
(v) a change to the declaration of trust or bylaws of Brandywine or an
impediment to the acquisition of control of Brandywine by any person;
(vi) the delisting from any national securities exchange of the Shares;
(vii) a class of equity securities of Brandywine becoming eligible for
termination of registration pursuant to Section 12(g)(4) of the Securities
Exchange Act of 1934, as amended; or
(viii) any action similar to any of those enumerated in (i) through (vii)
above.
Mr. Osborne and the Trust reserve the right to modify their plans and
proposals described in this Item 4. Further, subject to applicable laws and
regulations, they may formulate plans and proposals that may result in the
occurrence of an event set forth in (i) through (viii) above.
Item 5. Interest in Securities of the Issuer.
(a) According to the most recently available filing with the Securities
and Exchange Commission by Brandywine, there are 1,856,200 Shares outstanding.
The Trust beneficially owns 538,800 Shares, or approximately 29.0% of the
outstanding Shares. As sole trustee of the Trust, Mr. Osborne may be deemed to
beneficially own such Shares.
(b) Mr. Osborne, as sole trustee of the Trust, has sole power to vote, or
to direct the voting of, and the sole power to dispose or to direct the
disposition of, the 538,800 Shares owned by the Trust.
(c) and (d) During the past 60 days, the Trust purchased 538,800
Shares. 421,100 of the Shares were purchased by the Trust from Dennis O'Leary
in a private transaction on January 19, 1996, for a price of $5.00 per share,
plus the $0.05 per share dividend payable to Brandywine shareholders of record
on January 24, 1996. 86,000 of the Shares were purchased by the Trust from
Asset Value Fund, Ltd. in a private transaction on January 25, 1996, for a
price of $5.00 per share. 31,700 of the Shares were purchased by the Trust in
open market transactions as set forth below:
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CUSIP No. 105368-10-4
<TABLE>
Approximate Per Share Price
Date Number of Shares (Excluding Commissions)
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<S> <C> <C>
January 18, 1996 24,700 $3.80
January 19, 1996 7,000 $4.09
</TABLE>
(e) Not Applicable.
Item 6. Contracts, Arrangements, Understandings or Relationships With Respect
to Securities of the Issuer.
Not applicable.
Item 7. Material to be Filed as Exhibits.
Exhibit 7.1 -- Business Loan Agreement between Mr. Osborne and the
First National Bank of Ohio, dated June 23, 1995
Exhibit 7.2 -- Promissory Note executed by Mr. Osborne in favor of
the First National Bank of Ohio, dated June 23, 1995,
as amended December 18, 1995
Exhibit 7.3 -- Promissory Note executed by Mr. Osborne in favor of
the American National Bank, dated June 24, 1995
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CUSIP No. 105368-10-4
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
Dated: January 29, 1996 The Richard M. Osborne Trust
/s/ Richard M. Osborne
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Richard M. Osborne, Trustee
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CUSIP No. 105368-10-4
Exhibit Index
<TABLE>
<S> <C> <C>
Exhibit 7.1 -- Business Loan Agreement between Mr. Osborne and the
First National Bank of Ohio, dated June 23, 1995
Exhibit 7.2 -- Promissory Note executed by Mr. Osborne in favor of
the First National Bank of Ohio, dated June 23, 1995,
as amended December 18, 1995
Exhibit 7.3 -- Promissory Note executed by Mr. Osborne in favor of
the American National Bank, dated June 24, 1995
</TABLE>
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Exhibit 7.1
BUSINESS LOAN AGREEMENT
<TABLE>
<CAPTION>
Principal Loan Date Maturity Loan No Call Collateral Account Officer Initials
<S> <C> <C> <C> <C> <C> <C> <C> <C>
$3,000,000.00 6/23/95 C1 8019583 JFN
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References in the shaded area are for Lender's use only and do not limit the
applicability of this document to any particular loan or item.
</TABLE>
Borrower: RICHARD M. OSBORNE Lender: First National Bank of Ohio
7001 CENTER STREET 123 West Prospect Avenue
MENTOR, OH 44060 Cleveland OH 44115
THIS BUSINESS LOAN AGREEMENT between RICHARD M. OSBORNE ("Borrower") and First
National Bank of Ohio ("Lender") is made and executed on the following terms
and conditions. Borrower has received prior commercial loans from Lender or has
applied to Lender for a commercial loan or loans and other financial
accommodations, including those which may be described on any exhibit or
schedule attached to this Agreement. All such loans and financial
accommodations, together with all future loans and financial accommodations
from Lender to Borrower, are referred to in this Agreement individually as the
"Loan" and collectively as the "Loans." Borrower understands and agrees that:
(a) in granting, renewing, or extending any Loan, Lender is relying upon
Borrower's representations, warranties, and agreements, as set forth in this
Agreement; (b) the granting, renewing, or extending of any Loan by Lender at
all times shall be subject to Lender's sole judgment and discretion; and (c)
all such Loans shall be and shall remain subject to the following terms and
conditions of this Agreement.
TERM. This Agreement shall be effective as of June 22, 1995 and shall continue
thereafter until all Indebtedness of Borrower to Lender has been performed in
full and the parties terminate this Agreement in writing.
DEFINITIONS. The following words shall have the following meanings when used in
this Agreement. Terms not otherwise defined in this Agreement shall have the
meanings attributed to such terms in the Uniform Commercial Code. All
references to dollar amounts shall mean amounts in lawful money of the United
States of America.
Agreement. The word "Agreement" means this Business Loan Agreement, as
this Business Loan Agreement may be amended or modified from time to time,
together with all exhibits and schedules attached to this Business Loan
Agreement from time to time.
Borrower. The word "Borrower" means RICHARD M. OSBORNE. The word
"Borrower" also includes, as applicable, all subsidiaries and affiliates
of Borrower as provided below in the paragraph titled "Subsidiaries and
Affiliates."
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CERCLA. The word "CERCLA" means the Comprehensive Environmental Response,
Compensation, and Liability Act of 1980, as amended.
Cash Flow. The words "Cash Flow" mean net income after taxes, and
exclusive of extraordinary gains and income, plus depreciation and
amortization.
Collateral. The word "Collateral" means and includes without limitation
all property and assets granted as collateral security for a Loan, whether
real or personal property, whether granted directly or indirectly, whether
granted now or in the future, and whether granted in the form of a
security interest, mortgage deed of trust, assignment, pledge, chattel
mortgage, chattel trust, factor's lien, equipment trust, conditional sale,
trust receipt, lien charge, lien or title retention contract, lease or
consignment intended as a security device, or any other security or lien
interest whatsoever, whether created by law, contract, or otherwise.
Debt. The word "Debt" means all of Borrower's liabilities excluding
Subordinated Debt.
ERISA. The word "ERISA" means the Employee Retirement Income Security Act
of 1974, as amended.
Event of Default. The words "Event of Default" mean and include without
limitation any of the Events of Default set forth below in the section
titled "EVENTS OF DEFAULT."
Grantor. The word "Grantor" means and includes without limitation each and
all of the persons or entities granting a Security Interest in any
Collateral for the Indebtedness, including without limitation all
Borrowers granting such a Security Interest.
Guarantor. The word "Guarantor" means and includes without limitation each
and all of the guarantors, sureties, and accommodation parties in
connection with any Indebtedness.
Indebtedness. The word "Indebtedness" means and includes without
limitation all Loans, together with all other obligations, debts and
liabilities of Borrower to Lender, or any one or more of them, as well as
all claims by Lender against Borrower, or any one or more of them; whether
now or hereafter existing, voluntary or involuntary, due or not due,
absolute or contingent, liquidated or unliquidated; whether Borrower may
be liable individually or jointly with others; whether Borrower may be
obligated as a guarantor, surety or otherwise; whether recovery upon such
Indebtedness may be or hereafter may become barred by any statute of
limitations; and whether such Indebtedness may be or hereafter may become
otherwise unenforceable.
Lender. The word "Lender" means First National Bank of Ohio, its
successors and assigns.
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Liquid Assets. The words "Liquid Assets" mean Borrower's cash on hand plus
Borrower's receivables.
Loan. The word "Loan" or "Loans" means and includes without limitation any
and all commercial loans and financial accommodations from Lender to
Borrower, whether now or hereafter existing, and however evidenced,
including without limitation those loans and financial accommodations
described herein or described on any exhibit or schedule attached to this
Agreement from time to time.
Note. The word "Note" means and includes without limitation Borrower's
promissory note or notes, if any, evidencing Borrower's Loan obligations
in favor of Lender, as well as any substitute, replacement or refinancing
note or notes therefor.
Related Documents. The words "Related Documents" mean and include without
limitation all promissory notes, credit agreements, loan agreements,
environmental agreements, guaranties, security agreements, mortgages,
deeds of trust, and all other instruments, agreements and documents,
whether now or hereafter existing, executed in connection with the
Indebtedness.
Security Agreement. The words "Security Agreement" mean and include
without limitation any agreements, promises, covenants, arrangements,
understandings or other agreements, whether created by law, contract, or
otherwise, evidencing, governing, representing, or creating a Security
Interest.
Security Interest. The words "Security Interest" mean and include without
limitation any type of collateral security, whether in the form of a lien,
charge, mortgage, deed of trust, assignment, pledge, chattel mortgage,
chattel trust, factor's lien, equipment trust, conditional sale, trust
receipt, lien or title retention contract, lease or consignment intended
as a security device, or any other security or lien interest whatsoever,
whether created by law, contract or otherwise.
SARA. The word "SARA" means The Superfund Amendments and Reauthorization
Act of 1986 as now or hereafter amended.
Subordinated Debt. The words "Subordinated Debt" mean indebtedness and
liabilities of Borrower which have been subordinated by written agreement
to indebtedness owed by Borrower to Lender in form and substance
acceptable to Lender.
Tangible Net Worth. The words "Tangible Net Worth" mean Borrower's total
assets excluding all intangible assets (i.e., goodwill, trademarks,
patents, copyrights, organizational expenses, and similar intangible
items, but including leaseholds and leasehold improvements) less total
Debt.
Working Capital. The words "Working Capital" mean Borrower's current
assets, excluding prepaid expenses, less Borrower's current liabilities.
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<PAGE> 4
REPRESENTATIONS AND WARRANTIES. Borrower represents and warrants to Lender as
of the date of this Agreement and as of the date of each disbursement of Loan
proceeds:
Organization. Borrower is an individual borrowing for commercial purposes.
Authorization. The execution, delivery, and performance of this Agreement
and all Related Documents by Borrower, to the extent to be executed,
delivered or performed by Borrower, have been duly authorized by all
necessary action by Borrower; do not require the consent or approval of
any other person, regulatory authority or governmental body; and do not
conflict with, result in a violation of, or constitute a default under (a)
any provision of any agreement or other instrument binding upon Borrower
or (b) any law, governmental regulation, court decree, or order applicable
to Borrower.
Financial Information. Each financial statement of Borrower supplied to
Lender truly and completely disclosed Borrower's financial condition as of
the date of the statement, and there has been no material adverse change
in Borrower's financial condition subsequent to the date of the most
recent financial statement supplied to Lender. Borrower has no material
contingent obligations except as disclosed in such financial statements.
Legal Effect. This Agreement constitutes, and any instrument or agreement
required hereunder to be given by Borrower when delivered will constitute,
legal, valid and binding obligations of Borrower enforceable against
Borrower in accordance with their respective terms.
Properties. Except as contemplated by this Agreement or as previously
disclosed in Borrower's financial statements or in writing to Lender and
as accepted by Lender, and except for property tax liens for taxes not
presently due and payable, Borrower owns and has good title to all of
Borrower's properties free and clear of all Security Interests, and has
not executed any security documents or financing statements relating to
such properties. All of Borrower's properties are titled in Borrower's
legal name and Borrower has not used, or filed a financing statement
under, any other name for at least the last five (5) years.
Hazardous Substances. The terms "hazardous waste," "hazardous substance,"
"disposal," "release," and "threatened release," as used in this
Agreement, shall have the same meanings as set forth in the "CERCLA,"
"SARA," the Hazardous Materials Transportation Act, 49 U.S.C. Section
1801, et seq., the Resource Conservation and Recovery Act, 49 U.S.C.
Section 6901, et seq., or other applicable state or Federal laws, rules,
or regulations adopted pursuant to any of the foregoing. Except as
disclosed to and acknowledged by Lender in writing, Borrower represents
and warrants that: (a) During the period of Borrower's ownership of the
properties, there has been no use, generation, manufacture, storage,
treatment, disposal, release or threatened release of any hazardous waste
or substance by any person on, under, or about any of the properties. (b)
Borrower has no knowledge of, or reason to believe that there has been (i)
any use, generation, manufacture, storage, treatment, disposal, release,
<PAGE>
<PAGE> 5
or threatened release of any hazardous waste or substance by any prior
owners or occupants of any of the properties, or (ii) any actual or threatened
litigation or claims of any kind by any person relating to such matters. (c)
Neither Borrower nor any tenant, contractor, agent or other authorized user of
any of the properties shall use, generate, manufacture, store, treat, dispose
of, or release any hazardous waste or substance on, under, or about any of the
properties; and any such activity shall be conducted in compliance with all
applicable federal, state, and local laws, regulations, and ordinances,
including without limitation those laws, regulations and ordinances described
above. Borrower authorizes Lender and its agents to enter upon the properties
to make such inspections and tests as Lender may deem appropriate to determine
compliance of the properties with this section of the Agreement. Any
inspections or tests made by Lender shall be at Borrower's expense and for
Lender's purposes only and shall not be construed to create any responsibility
or liability on the part of Lender to Borrower or to any other person. The
representations and warranties contained herein are based on Borrower's due
diligence in investigating the properties for hazardous waste. Borrower hereby
(a) releases and waives any future claims against Lender for indemnity or
contribution in the event Borrower becomes liable for cleanup or other costs
under any such laws, and (b) agrees to indemnify and hold harmless Lender
against any and all claims, losses, liabilities, damages, penalties, and
expenses which Lender may directly or indirectly sustain or suffer resulting
from a breach of this section of the Agreement or as a consequence of any use,
generation, manufacture, storage, disposal, release, or threatened release
occurring prior to Borrower's ownership or interest in the properties, whether
or not the same was or should have been known to Borrower. The provisions of
this section of the Agreement, including the obligation to indemnify, shall
survive the payment of the Indebtedness and the termination or expiration of
this Agreement and shall not be affected by Lender's acquisition of any
interest in any of the properties, whether by foreclosure or otherwise.
Litigation and Claims. No litigation, claim, investigation, administrative
proceeding, or similar action (including those for unpaid taxes) against
Borrower is pending or threatened, and no other event has occurred which
may materially adversely affect Borrower's financial condition or
properties, other than litigation, claims, or other events, if any, that
have been disclosed to and acknowledged by Lender in writing.
Taxes. To the best of Borrower's knowledge, all tax returns and reports of
Borrower that are or were required to be filed, have been filed and all
taxes, assessments and other governmental charges have been paid in full,
except those presently being or to be contested by Borrower in good faith
in the ordinary course of business and for which adequate reserves have
been provided.
Lien Priority. Unless otherwise previously disclosed to Lender in writing,
Borrower has not entered into or granted any Security Agreements, or
permitted the filing or attachment of any Security Interests on or
affecting any of the Collateral directly or indirectly securing repayment
of Borrower's Loan and Note, that would be prior or that may in any way be
superior to Lender's Security Interests and rights in and to such
Collateral.
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<PAGE> 6
Binding Effect. This Agreement, the Note and all Security Agreements
directly or indirectly securing repayment of Borrower's Loan and Note are
binding upon Borrower as well as upon Borrower's successors,
representatives and assigns, and are legally enforceable in accordance
with their respective terms.
Commercial Purposes. Borrower intends to use the Loan proceeds solely for
business or commercial related purposes.
Employee Benefit Plans. Each employee benefit plan as to which Borrower
may have any liability complies in all material respects with all
applicable requirements of law and regulations, and (i) no Reportable
Event nor Prohibited Transaction (as defined in ERISA) has occurred with
respect to any such plan, (ii) Borrower has not withdrawn from any such
plan or initiated steps to do so, and (iii) no steps have been taken to
terminate any such plan.
Location of Borrower's Offices and Records. The chief place of business of
Borrower and the office or offices where Borrower keeps its records
concerning the Collateral is located at 7001 CENTER STREET, MENTOR, OH
44060.
Information. All information heretofore or contemporaneously herewith
furnished by Borrower to Lender for the purposes of or in connection with
this Agreement or any transaction contemplated hereby is, and all
information hereafter furnished by or on behalf of Borrower to Lender will
be, true and accurate in even material respect on the date as of which
such information is dated or certified; and none of such information is or
will be incomplete by omitting to state any material fact necessary to
make such information not misleading.
Survival of Representation and Warranties. Borrower understands and agrees
that Lender is relying upon the above representations and warranties in
extending Loan Advances to Borrower. Borrower further agrees that the
foregoing representations and warranties shall be continuing in nature and
shall remain in full force and effect until such time as Borrower's Loan
and Note shall be paid in full, or until this Agreement shall be
terminated in the manner provided above, whichever is the last to occur.
AFFIRMATIVE COVENANTS. Borrower covenants and agrees with Lender that, while
this Agreement is in effect, Borrower will:
Litigation. Promptly inform Lender in writing of (a) all material adverse
changes in Borrower's financial condition, and (b) all litigation and
claims and all threatened litigation and claims affecting Borrower or any
Guarantor which could materially affect the financial condition of
Borrower or the financial condition of any Guarantor.
Financial Records. Maintain its books and records in accordance with
generally accepted accounting principles, applied on a consistent basis,
and permit Lender to examine and audit Borrower's books and records at all
reasonable times.
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<PAGE> 7
Financial Statements. Furnish Lender with, as soon as available, but in no
event later than ninety (90) days after the end of each fiscal year,
Borrower's balance sheet and income statement for the year ended, compiled
by a certified public accountant satisfactory to Lender. All financial
reports required to be provided under this Agreement shall be prepared in
accordance with generally accepted accounting principles, applied on a
consistent basis, and certified by Borrower as being true and correct.
Additional Information. Furnish such additional information and
statements, lists of assets and liabilities, agings of receivables and
payables, inventory schedules, budgets, forecasts, tax returns, and other
reports with respect to Borrower's financial condition and business
operations as Lender may request from time to time.
Financial Covenants and Ratios. Comply with the following covenants and
ratios:
For the purposes of this Agreement and to the extent the following terms
are utilized in this Agreement, the term "Tangible Net Worth" shall mean
Borrower's total assets excluding all intangible assets (i.e. goodwill,
trademarks, patents, copyrights, organizational expenses, and similar
intangible items, but including leaseholds and leasehold improvements)
less total Debt. The term "Debt" shall mean all of Borrower's liabilities
excluding Subordinated Debt. The term "Subordinated Debt" shall mean
indebtedness and liabilities of Borrower which have been subordinated by
written agreement to indebtedness owed by Borrower to Lender in form and
substance acceptable to Lender. The term "Working Capital" shall mean
Borrower's current assets, excluding prepaid expenses, less Borrower's
current liabilities. The term "Liquid Assets" shall mean Borrower's cash
on hand plus Borrower's receivables. The term "Cash Flow" shall mean net
income after taxes, and exclusive of extraordinary gains and income, plus
depreciation and amortization. Except as provided above, all computations
made to determine compliance with the requirements contained in this
paragraph shall be made in accordance with generally accepted accounting
principles, applied on a consistent basis, and certified by Borrower as
being true and correct.
Insurance. Maintain fire and other risk insurance, public lability
insurance, and such other insurance as Lender may require with respect to
Borrower's properties and operations, in form, amounts, coverages and with
insurance companies reasonably acceptable to Lender. Borrower, upon
request of Lender, will deliver to Lender from time to time the policies
or certificates of insurance in form satisfactory to Lender, including
stipulations that coverages will not be cancelled or diminished without at
least ten (10) days' prior written notice to Lender. Each insurance policy
also shall include an endorsement providing that coverage in favor of
Lender will not be impaired in any way by any act, omission or default of
Borrower or any other person. In connection with all policies covering
assets in which Lender holds or is offered a security interest for the
Loans, Borrower will provide Lender with such loss payable or other
endorsements as Lender may require.
<PAGE>
<PAGE> 8
Insurance Reports. Furnish to Lender, upon request of Lender, reports on
each existing insurance policy showing such information as Lender may
reasonably request, including without limitation the following: (a) the
name of the insurer; (b) the risks insured; (c) the amount of the policy;
(d) the properties insured; (e) the then current property values on the
basis of which insurance has been obtained, and the manner of determining
those values; and (f) the expiration date of the policy. In addition, upon
request of Lender (however not more often than annually), Borrower will
have an independent appraiser satisfactory to Lender determine, as
applicable, the actual cash value or replacement cost of any Collateral.
Other Agreements. Comply with all terms and conditions of all other
agreements, whether now or hereafter existing, between Borrower and any
other party and notify Lender immediately in writing of any default in
connection with any other such agreements.
Loan Fees and Charges. In addition to all other agreed upon fees and
charges, pay the following: $15,000.00 PLUS ANY OUT-OF-POCKET COSTS
ASSOCIATED WITH THE CLOSING OF THIS TRANSACTION.
Loan Proceeds. Use all Loan proceeds solely for Borrower's business
operations, unless specifically consented to the contrary by Lender in
writing.
Taxes, Charges and Liens. Pay and discharge, when due all of its
indebtedness and obligations, including without limitation all
assessments, taxes, governmental charges, levies and liens, of every kind
and nature, imposed upon Borrower or its properties, income, or profits,
prior to the date on which penalties would attach, and all lawful claims
that, if unpaid, might become a lien or charge upon any of Borrower's
properties, income, or profits. Provided however, Borrower will not be
required to pay and discharge any such assessment, tax, charge, levy, lien
or claim so long as (a) the legality of the same shall be contested in
good faith by appropriate proceedings, and (b) Borrower shall have
established on its books adequate reserves with respect to such contested
assessment, tax, charge, levy, lien, or claim in accordance with generally
accepted accounting practices. Borrower, upon demand of Lender, will
furnish to Lender evidence of payment of the assessments, taxes, charges,
levies, liens and claims and will authorize the appropriate governmental
official to deliver to Lender at any time a written statement of any
assessments, taxes, charges, levies, liens and claims against Borrower's
properties, income or profits.
Performance. Perform and comply with all terms, conditions, and provisions
set forth in this Agreement and in all other instruments and agreements
between Borrower and Lender in a timely manner, and promptly notify Lender
if Borrower learns of the occurrence of any event which constitutes an
Event of Default under this Agreement.
Operations. Substantially maintain its present executive and management
personnel; conduct its business affairs in a reasonable and prudent
manner and in compliance with all applicable federal, state and municipal
<PAGE>
<PAGE> 9
laws, ordinances, rules and regulations respecting its properties,
charters, businesses and operations, including without limitation,
compliance with the Americans With Disability Act and with all minimum
funding standards and other requirements of ERISA and other laws
applicable to Borrower's employee benefit plans.
Inspection. Permit employees or agents of Lender at any reasonable time to
inspect any and all Collateral for the Loan or Loans and Borrower's other
properties and to examine or audit Borrower's books, accounts, and records
and to make copies and memoranda of Borrower's books, accounts, and
records. If Borrower now or at any time hereafter maintains any records
(including without limitation computer generated records and computer
software programs for the generation of such records) in the possession of
a third party, Borrower, upon request of Lender, shall notify such
party to permit Lender free access to such records at all reasonable times
and to provide Lender with copies of any records it may request, all at
Borrower's expense.
Compliance Certificate. Unless waived in writing by Lender, provide Lender
at least annually and at the time of each disbursement of Loan proceeds
with a certificate executed by Borrower's chief financial officer, or
other officer or person acceptable to Lender, certifying that the
representations and warranties set forth in this Agreement are true and
correct as of the date of the certificate and further certifying that, as
of the date of the certificate, no Event of Default exists under this
Agreement.
Environmental Compliance and Reports. Borrower shall comply in all
respects with all environmental protection federal, state and local laws,
statutes, regulations and ordinances; not cause or permit to exist, as a
result of an intentional or unintentional action or omission on its part
or on the part of any third party, on property owned and/or occupied by
Borrower, any environmental activity where damage may result to the
environment, unless such environmental activity is pursuant to and in
compliance with the conditions of a permit issued by the appropriate
federal, state or local governmental authorities; shall furnish to Lender
promptly and in any event within thirty (30) days after receipt thereof a
copy of any notice, summons, lien, citation, directive, letter or other
communication from any governmental agency or instrumentality concerning
any intentional or unintentional action or omission on Borrower's part in
connection with any environmental activity whether or not there is damage
to the environment and/or other natural resources.
Additional Assurances. Make, execute and deliver to Lender such promissory
notes, mortgages, deeds of trust, security agreements, financing
statements, instruments, documents and other agreements as Lender or its
attorneys may reasonably request to evidence and secure the Loans and to
perfect all Security Interests.
NEGATIVE COVENANTS. Borrower covenants and agrees with Lender that while this
Agreement is in effect, Borrower shall not, without the prior written consent
of Lender:
<PAGE>
<PAGE> 10
Indebtedness and Liens. (a) Except for trade debt incurred in the normal
course of business and indebtedness to Lender contemplated by this
Agreement, create, incur or assume indebtedness for borrowed money,
including capital leases, (b) sell, transfer, mortgage, assign, pledge,
lease, grant a security interest in, or encumber any of Borrower's assets,
or (c) sell with recourse any of Borrower's accounts, except to Lender.
Continuity of Operations. (a) Engage in any business activities
substantially different than those in which Borrower is presently engaged,
or (b) cease operations, liquidate, merge, transfer, acquire or
consolidate with any other entity, change ownership, dissolve or transfer
or sell Collateral out of the ordinary course of business.
Loans, Acquisitions and Guarantees. (a) Loan, invest in or advance money
or assets, (b) purchase, create or acquire any interest in any other
enterprise or entity, or (c) incur any obligation as surety or guarantor
other than in the ordinary course of business.
CESSATION OF ADVANCES. If Lender has made any commitment to make any Loan to
Borrower, whether under this Agreement or under any other agreement, Lender
shall have no obligation to make Loan Advances or to disburse Loan proceeds if:
(a) Borrower or any Guarantor is in default under the terms of this Agreement
or any of the Related Documents or any other agreement that Borrower or any
Guarantor has with Lender; (b) Borrower dies, becomes incompetent or insolvent,
files a petition in bankruptcy or similar proceedings, or is adjudged a
bankrupt; (c) there occurs a material adverse change in Borrower's financial
condition, in the financial condition of any Guarantor, or in the value of any
Collateral securing any Loan; (d) any Guarantor seeks, claims or otherwise
attempts to limit, modify or revoke such Guarantor's guaranty of the Loan or
any other loan with Lender; or (e) Lender in good faith deems itself insecure,
even though no Event of Default shall have occurred.
EVENTS OF DEFAULT. Each of the following shall constitute an Event of Default
under this Agreement:
Default on Indebtedness. Failure of Borrower to make any payment when due
on the Loans.
Other Defaults. Failure of Borrower or any Grantor to comply with or to
perform when due any other term, obligation, covenant or condition
contained in this Agreement or in any of the Related Documents, or failure
of Borrower to comply with or to perform any other term, obligation,
covenant or condition contained in any other agreement between Lender and
Borrower.
Default in Favor of Third Parties. Should Borrower or any Grantor default
under any loan, extension of credit, security agreement, purchase or sales
agreement, or any other agreement, in favor of any other creditor or
person that may materially affect any of Borrower's property or Borrower's
or any Grantor's ability to repay the Loans or perform their respective
obligations under this Agreement or any of the Related Documents.
<PAGE>
<PAGE> 11
False Statements. Any warranty, representation or statement made or
furnished to Lender by or on behalf of Borrower or any Grantor under this
Agreement or the Related Documents is false or misleading in any material
respect, either now or at the time made or furnished.
Defective Collateralization. This Agreement or any of the Related
Documents ceases to be in full force and effect (including failure of any
Security Agreement to create a valid and perfected Security Interest) at
any time and for any reason.
Death or Insolvency. The death of Borrower or the dissolution or
termination of Borrower's existence as a going business, the insolvency of
Borrower, the appointment of a receiver for any part of Borrower's
property, any assignment for the benefit of creditors, any type of
creditor workout, or the commencement of any proceeding under any
bankruptcy or insolvency laws by or against Borrower.
Creditor or Forfeiture Proceedings. Commencement of foreclosure or
forfeiture proceedings, whether by judicial proceeding, self-help,
repossession or any other method, by any creditor of Borrower, any
creditor of any Grantor against any collateral securing the Indebtedness,
or by any governmental agency. This includes a garnishment, attachment, or
levy on or of any of Borrower's deposit accounts with Lender. However,
this Event of Default shall not apply if there is a good faith dispute by
Borrower or Grantor, as the case may be, as to the validity or
reasonableness of the claim which is the basis of the creditor or
forfeiture proceeding, and if Borrower or Grantor gives Lender written
notice of the creditor or forfeiture proceeding and furnishes reserves or
a surety bond for the creditor or forfeiture proceeding satisfactory to
Lender.
Events Affecting Guarantor. Any of the preceding events occurs with
respect to any Guarantor of any of the indebtedness or such Guarantor dies
or becomes incompetent or any Guarantor revokes any guaranty of the
indebtedness. Lender, at its option, may, but shall not be required to,
permit the Guarantor's estate to assume unconditionally the obligations
arising under the guaranty in a manner satisfactory to Lender, and, in
doing so, cure the Event of Default.
Insecurity. Lender, in good faith, deems itself insecure.
Right to Cure. It any default, other than a Default on Indebtedness, is
curable and if Borrower or Grantor, as the case may be, has not been
given a notice of a similar default within the preceding twelve (12)
months, it may be cured (and no Event of Default will have occurred) if
Borrower or Grantor, as the case may be, after receiving written notice
from Lender demanding cure of such default: (a) cures the default within
fifteen (15) days; or (b) if the cure requires more than fifteen (15)
days, immediately initiates steps which Lender deems in Lender's sole
discretion to be sufficient to cure the default and thereafter continues
and completes all reasonable and necessary steps sufficient to produce
compliance as soon as reasonably practical.
<PAGE>
<PAGE> 12
EFFECT OF AN EVENT OF DEFAULT. If any Event of Default shall occur, all
commitments and obligations of Lender under this Agreement or the Related
Documents or any other agreement immediately will terminate (including any
obligation to make Loan Advances or disbursements), and, at Lender's option,
all Loans immediately will become due and payable, all without notice of any
kind to Borrower, except that in the case of an Event of Default of the type
described in the "Insolvency" subsection above, such acceleration shall be
automatic and not optional.
MISCELLANEOUS PROVISIONS. The following miscellaneous provisions are a part of
this Agreement:
Amendments. This Agreement, together with any Related Documents,
constitutes the entire understanding and agreement of the parties as to
the matters set forth in this Agreement. No alteration of or amendment to
this Agreement shall be effective unless given in writing and signed by
the party or parties sought to be charged or bound by the alteration or
amendment.
Applicable Law. This Agreement has been delivered to Lender and accepted
by Lender in the State of Ohio. If there is a lawsuit, Borrower agrees
upon Lender's request to submit to the jurisdiction of the courts of
Cuyahoga County, the State of Ohio. Lender and Borrower hereby waive the
right to any jury trial in any action, proceeding, or counterclaim
brought by either Lender or Borrower against the other. This Agreement
shall be governed by and construed in accordance with the laws of the
State of Ohio.
Caption Headings. Caption headings in this Agreement are for convenience
purposes only and are not to be used to interpret or define the provisions
of this Agreement.
Consent to Loan Participation. Borrower agrees and consents to Lender's
sale or transfer, whether now or later, of one or more participation
interests in the Loans to one or more purchasers, whether related or
unrelated to Lender. Lender may provide, without any limitation
whatsoever, to any one or more purchasers, or potential purchasers, any
information or knowledge Lender may have about Borrower or about any other
matter relating to the Loan, and Borrower hereby waives any rights to
privacy it may have with respect to such matters. Borrower additionally
waives any and all notices of sale of participation interests, as well as
all notices of any repurchase of such participation interests. Borrower
also agrees that the purchasers of any such participation interests will
be considered as the absolute owners of such interests in the Loans and
will have all the rights granted under the participation agreement or
agreements governing the sale of such participation interests. Borrower
further waives all rights of offset or counterclaim that it may have now
or later against Lender or against any purchaser of such a participation
interest and unconditionally agrees that either Lender or such purchaser
may enforce Borrower's obligation under the Loans irrespective of the
failure or insolvency of any holder of any interest in the Loans. Borrower
further agrees that the purchaser of any such participation interests may
<PAGE>
<PAGE> 13
enforce its interests irrespective of any personal claims or defenses that
Borrower may have against Lender.
Costs and Expenses. Borrower agrees to pay upon demand all of Lender's
out-of-pocket expenses, including without limitation attorneys' fees,
incurred in connection with the preparation, execution, enforcement and
collection of this Agreement or in connection with the Loans made pursuant
to this Agreement. Lender may pay someone else to help collect the Loans
and to enforce this Agreement, and Borrower will pay that amount. This
includes, subject to any limits under applicable law, Lender's attorneys'
fees and Lender's legal expenses, whether or not there is a lawsuit,
including attorneys' fees for bankruptcy proceedings (including efforts to
modify or vacate any automatic stay or injunction), appeals, and any
anticipated post-judgment collection services. Borrower also will pay any
court costs, in addition to all other sums provided by law.
Notices. All notices required to be given under this Agreement shall be
given in writing and shall be effective when actually delivered or when
deposited with a nationally recognized overnight courier or deposited in
the United States mail, first class, postage prepaid, addressed to the
party to whom the notice is to be given at the address shown above. Any
party may change its address for notices under this Agreement by giving
formal written notice to the other parties, specifying that the purpose of
the notice is to change the party's address. To the extent permitted by
applicable law, if there is more than one Borrower, notice to any Borrower
will constitute notice to all Borrowers. For notice purposes, Borrower
agrees to keep Lender informed at all times of Borrower's current
address(es).
Severability. If a court of competent jurisdiction finds any provision of
this Agreement to be invalid or unenforceable as to any person or
circumstance, such finding shall not render that provision invalid or
unenforceable as to any other persons or circumstances. If feasible, any
such offending provision shall be deemed to be modified to be within the
limits of enforceability or validity; however, if the offending provision
cannot be so modified, it shall be stricken and all other provisions of
this Agreement in all other respects shall remain valid and enforceable.
Subsidiaries and Affiliates of Borrower. To the extent the context of any
provisions of this Agreement makes it appropriate, including without
limitation any representation, warranty or covenant, the word "Borrower"
as used herein shall include all subsidiaries and affiliates of Borrower.
Notwithstanding the foregoing however, under no circumstances shall this
Agreement be construed to require Lender to make any Loan or other
financial accommodation to any subsidiary or affiliate of Borrower.
Successors and Assigns. All covenants and agreements contained by or on
behalf of Borrower shall bind its successors and assigns and shall inure
to the benefit of Lender, its successors and assigns. Borrower shall not,
however, have the right to assign its rights under this Agreement or any
interest therein, without the prior written consent of Lender.
<PAGE>
<PAGE> 14
Survival. All warranties, representations, and covenants made by Borrower
in this Agreement or in any certificate or other instrument delivered by
Borrower to Lender under this Agreement shall be considered to have been
relied upon by Lender and will survive the making of the Loan and delivery
to Lender of the Related Documents, regardless of any investigation made
by Lender or on Lender's behalf.
Time is of the Essence. Time is of the essence in the performance of this
Agreement.
Waiver. Lender shall not be deemed to have waived any rights under this
Agreement unless such waiver is given in writing and signed by Lender. No
delay or omission on the part of Lender in exercising any right shall
operate as a waiver of such right or any other right. A waiver by Lender
of a provision of this Agreement shall not prejudice or constitute a
waiver of Lender's right otherwise to demand strict compliance with that
provision or any other provision of this Agreement. No prior waiver by
Lender, nor any course of dealing between Lender and Borrower, or between
Lender and any Grantor shall constitute a waiver of any of Lender's rights
or of any obligations of Borrower or of any Grantor as to any future
transactions. Whenever the consent of Lender is required under this
Agreement, the granting of such consent by Lender in any instance shall
not constitute continuing consent in subsequent instances where such
consent is required, and in all cases such consent may be granted or
withheld in the sole discretion of Lender.
BORROWER ACKNOWLEDGES HAVING READ ALL THE PROVISIONS OF THIS BUSINESS LOAN
AGREEMENT, AND BORROWER AGREES TO ITS TERMS. THIS AGREEMENT IS DATED AS OF.
BORROWER:
x /s/ Richard M. Osborne
------------------------
RICHARD M. OSBORNE
LENDER:
First National Bank of Ohio
By: /s/ John F. Neumann
------------------------
Authorized Officer
<PAGE>
Exhibit 7.2
PROMISSORY NOTE
<TABLE>
<CAPTION>
Principal Loan Date Maturity Loan No Call Collateral Account Officer Initials
<S> <C> <C> <C> <C> <C> <C> <C> <C>
$3,000,000.00 6/23/95 C1 8019583 JFN
- ---------- --------- -------- ------- ---- ---------- ------- ------- -------
References in the shaded area are for Lender's use only and do not limit the
applicability of this document to any particular loan or item.
</TABLE>
Borrower: RICHARD M. OSBORNE Lender: First National Bank of Ohio
7001 CENTER STREET 123 West Prospect Avenue
MENTOR, OH 44060 Cleveland OH 44115
Principal Amount: $3,000,000.00 Interest Rate: 8.750% Date of Note: 6/23/95
PROMISE TO PAY. RICHARD M. OSBORNE ("Borrower") promises to pay to First
National Bank of Ohio ("Lender"), or order, in lawful money of the United
States of America, on demand, the principal amount of Three Million & 00/100
Dollars ($3,000,000.00) or so much as may be outstanding, together with
interest at the rate of 8.750% per annum on the unpaid outstanding principal
balance of each advance. Interest shall be calculated from the date of each
advance until repayment of each advance.
PAYMENT. Borrower will pay this loan immediately upon Lender's demand. In
addition, Borrower will pay regular monthly payments of all accrued unpaid
interest due as of each payment date, beginning August 1, 1995, with all
subsequent interest payments to be due on the same day of each month after
that. Interest on this Note is computed on a 365/360 simple interest basis;
that is, by applying the ratio of the annual interest rate over a year of 360
days, multiplied by the outstanding principal balance, multiplied by the actual
number of days the principal balance is outstanding. Borrower will pay Lender
at Lender's address shown above or at such other place as Lender may designate
in writing. Unless otherwise agreed or required by applicable law, payments
will be applied first to accrued unpaid interest, then to principal, and any
remaining amount to any unpaid collection costs and late charges.
PREPAYMENT. Borrower may pay all or a portion of the amount owed earlier than
it is due. Early payments will not, unless agreed to by Lender in writing,
relieve Borrower of Borrower's obligation to continue to make payments of
accrued unpaid interest. Rather, they will reduce the principal balance due.
LATE CHARGE. If a payment is 10 days or more late, Borrower will be charged
5.000% of the unpaid portion of the regularly scheduled payment or $35.00,
whichever is greater.
DEFAULT. Borrower will be in default if any of the following happens: (a)
Borrower fails to make any payment when due. (b) Borrower breaks any promise
Borrower has made to Lender or Borrower fails to perform promptly at the time
and strictly in the manner provided in this Note or any agreement related to
this Note, or in any other agreement or loan Borrower has with Lender. (c)
<PAGE>
<PAGE> 2
Borrower defaults under any loan, extension of credit, security agreement,
purchase or sales agreement, or any other agreement, in favor of any other
creditor or person that may materially affect any of Borrower's property or
Borrower's ability to repay this Note or perform Borrower's obligations under
this Note or any of the Related Documents. (d) Any representation or statement
made or furnished to Lender by Borrower or on Borrower's behalf is false or
misleading in any material respect. (e) Borrower dies or becomes insolvent, a
receiver is appointed for any part of Borrower's property, Borrower makes an
assignment for the benefit of creditors, or any proceeding is commenced either
by Borrower or against Borrower under any bankruptcy or insolvency laws. (f)
Any creditor tries to take any of Borrower's property on or in which Lender has
a lien or security interest. This includes a garnishment of any of Borrower's
accounts with Lender. (g) Any of the events described in this default section
occurs with respect to any guarantor of this Note. (h) Lender in good faith
deems itself insecure.
If any default, other than a default in payment is curable and if Borrower has
not been given a notice of a breach of the same provision of this Note within
the preceding twelve (12) months, it may be cured (and no event of default will
have occurred) if Borrower, after receiving written notice from Lender
demanding cure of such default: (a) cures the default within fifteen (15) days;
or (b) if the cure requires more than fifteen (15) days, immediately initiates
steps which Lender deems in Lender's sole discretion to be sufficient to cure
the default and thereafter continues and completes all reasonable and necessary
steps sufficient to produce compliance as soon as reasonably practical.
LENDER'S RIGHTS. Upon default, Lender may declare the entire unpaid principal
balance on this Note and all accrued unpaid interest immediately due, without
notice, and then Borrower will pay that amount. Lender may hire or pay someone
else to help collect this Note if Borrower does not pay. Borrower also will pay
Lender that amount. This includes, subject to any limits under applicable law,
Lender's attorneys' fees and Lender's legal expenses whether or not there is a
lawsuit, including attorneys' fees and legal expenses for bankruptcy
proceedings (including efforts to modify or vacate any automatic stay or
injunction), appeals, and any anticipated post-judgment collection services. If
not prohibited by applicable law, Borrower also will pay any court costs, in
addition to all other sums provided by law. This Note has been delivered to
Lender and accepted by Lender in the State of Ohio. If there is a lawsuit,
Borrower agrees upon Lender's request to submit to the jurisdiction of the
courts of Cuyahoga County, the State of Ohio. Lender and Borrower hereby waive
the right to any jury trial in any action, proceeding, or counterclaim brought
by either Lender or Borrower against the other. This Note shall be governed by
and construed in accordance with the laws of the State of Ohio.
COLLATERAL. This Note is secured by a first mortgage on 237.7655 acres of
vacant land located in Mentor, Ohio and possession of 301,077 shares of First
Merit stock owned by Richard M. Osborne. (Note: First Merit stock also secures
Richard M. Osborne's line of credit).
LINE OF CREDIT. This Note evidences a revolving line of credit. Advances under
this Note may be requested orally by Borrower or by an authorized person.
<PAGE>
<PAGE> 3
Lender may, but need not, require that all oral requests be confirmed in
writing. All communications, instructions, or directions by telephone or
otherwise to Lender are to be directed to Lender's office shown above. The
following party or parties are authorized to request advances under the line of
credit until Lender receives from Borrower at Lender's address shown above
written notice of revocation of their authority: RICHARD M. OSBORNE. Borrower
agrees to be liable for all sums either: (a) advanced in accordance with the
instructions of an authorized person or (b) credited to any of Borrower's
accounts with Lender. The unpaid principal balance owing on this Note at any
time may be evidenced by endorsements on this Note or by Lender's internal
records, including daily computer print-outs. Lender will have no obligation to
advance funds under this Note if: (a) Borrower or any guarantor is in default
under the terms of this Note or any agreement that Borrower or any guarantor
has with Lender, including any agreement made in connection with the signing of
this Note; (b) borrower or any guarantor ceases doing business or is insolvent;
(c) any guarantor seeks, claims or otherwise attempts to limit, modify or
revoke such guarantor's guarantee of this Note or any other loan with Lender;
(d) Borrower has applied funds provided pursuant to this Note for purposes
other than those authorized by Lender; or (e) Lender in good faith deems itself
insecure under this Note or any other agreement between Lender and Borrower.
GENERAL PROVISIONS. This Note is payable on demand. The inclusion of specific
default provisions or rights of Lender shall not preclude Lender's right to
declare payment of this Note on its demand. If any part of this Note cannot be
enforced, this fact will not affect the rest of the Note. In particular, this
section means (among other things) that Borrower does not agree or intend to
pay, and Lender does not agree or intend to contract for, charge, collect,
take, reserve or receive (collectively referred to herein as "charge or
collect"), any amount in the nature of interest or in the nature of a fee for
this loan, which would in any way or event (including demand, prepayment, or
acceleration) cause Lender to charge or collect more for this loan than the
maximum Lender would be permitted to charge or collect by federal law or the
law of the State of Ohio (as applicable). Any such excess interest or
unauthorized fee shall, instead of anything stated to the contrary, be applied
first to reduce the principal balance of this loan, and when the principal has
been paid in full, be refunded to Borrower. Lender may delay or forgo enforcing
any of its rights or remedies under this Note without losing them. Borrower and
any other person who signs, guarantees or endorses this Note, to the extent
allowed by law, waive presentment, demand for payment, protest and notice of
dishonor. Upon any change in the terms of this Note, and unless otherwise
expressly stated in writing, no party who signs this Note, whether as maker,
guarantor, accommodation maker or endorser, shall be released from liability.
All such parties agree that Lender may renew or extend (repeatedly and for any
length of time) this loan, or release any party or guarantor or collateral; or
impair, fail to realize upon or perfect Lender's security interest in the
collateral. All such parties also agree that Lender may modify this loan
without the consent of or notice to anyone other than the party with whom the
modification is made.
<PAGE>
<PAGE> 4
PRIOR TO SIGNING THIS NOTE, BORROWER READ AND UNDERSTOOD ALL THE PROVISIONS OF
THIS NOTE. BORROWER AGREES TO THE TERMS OF THE NOTE AND ACKNOWLEDGES RECEIPT OF
A COMPLETED COPY OF THE NOTE.
NOTICE: FOR THIS NOTICE "YOU" MEANS THE BORROWER. WARNING: BY SIGNING THIS
PAPER YOU GIVE UP YOUR RIGHT TO NOTICE AND COURT TRIAL. IF YOU DO NOT PAY ON
TIME, A COURT JUDGMENT MAY BE TAKEN AGAINST YOU WITHOUT YOUR PRIOR KNOWLEDGE
AND THE POWERS OF A COURT CAN BE USED TO COLLECT FROM YOU REGARDLESS OF ANY
CLAIMS YOU MAY HAVE AGAINST THE CREDITOR WHETHER FOR RETURNED GOODS, FAULTY
GOODS, FAILURE ON CREDITOR'S PART TO COMPLY WITH THE AGREEMENT, OR ANY OTHER
CAUSE.
BORROWER:
X /S/ Richard M. Osborne
------------------------
RICHARD M. OSBORNE
<PAGE>
<PAGE> 5
AMENDMENT TO NOTE
DATE: December 18, 1995
First National Bank of Ohio, is the holder of Note No. 06066 dated June 23,
1995 in the original principal amount of $3,000,000.00. Said Note is between
Richard M. Osborne and FIRST NATIONAL BANK OF OHIO and has a current principal
balance due of $1,338,500.00. FOR VALUE RECEIVED, the undersigned and First
National Bank of Ohio hereby acknowledge and consent to amend said Note as
follows:
(1) The line of credit maturity date has been extended until June 23,
1996, at which time the balance will term out in sixty equal payments
of principal and interest at a rate based upon the 5 Year Treasury
Bill plus 300 Basis points or First National Bank of Ohio's Prime
Rate + 1%.
It is expressly agreed by the parties hereto that this Amendment to Note does
not change any other terms or conditions of said Note not specifically amended
herein, and that all such terms and conditions not amended shall remain in full
force and effect and are expressly applicable to the terms of this Amendment to
Note.
The makers, sureties, guarantors and endorsers hereby authorize and empower any
Attorney-at-Law in the State of Ohio, in our names and behalf, or in the name
and behalf of any of us to appear before any court in the State of Ohio having
statutory jurisdiction to render a cognovit judgment against any of the makers
or endorsers at any time after this obligation becomes due, and waive process
and service thereof, and, without notice, confess judgment against us, or any
of us, in favor of us, in favor of the Bank, for the amount that may appear to
be due hereon for principal, interest, damages, and cost of suit, releasing all
errors in judgment so confessed and waiving all right and benefit of appeal,
and any and all proceedings to set aside vacate, open, suspend, or reverse such
judgment or any execution issued for the collection thereof.
FIRST NATIONAL BANK OF OHIO RICHARD M. OSBORNE
By: /s/ John F. Neumann X /s/ Richard M. Osborne
------------------------------- -------------------------
John F. Neumann, Vice President Richard M. Osborne
WARNING-BY SIGNING THIS PAPER, YOU GIVE UP YOUR RIGHT TO NOTICE AND COURT
TRIAL. IF YOU DO NOT PAY ON TIME, A COURT JUDGMENT MAY BE TAKEN AGAINST YOU
WITHOUT YOUR PRIOR KNOWLEDGE AND THE POWERS OF A COURT CAN BE USED TO COLLECT
FROM YOU REGARDLESS OF ANY CLAIMS YOU MAY HAVE AGAINST THE CREDITOR WHETHER FOR
RETURNED GOODS, FAULTY GOODS, FAILURE ON HIS PART TO COMPLY WITH THE AGREEMENT,
OR ANY OTHER CAUSE.
<PAGE>
Exhibit 7.3
RICHARD M. OSBORNE AMERICAN NATIONAL BANK ACCOUNT #80059
8060 JACKSON STREET 5603 RIDGE ROAD Loan No. 64460
MENTOR, OH 44060 PARMA, OH 44129 Date June 24, 1995
Maturity Date June 24, 1996
Loan Amount $500,000.00
Renewal Of
BORROWER'S NAME AND LENDER'S NAME AND ADDRESS
ADDRESS "You" means the lender,
"I" includes each its successors and assigns
borrower above,
jointly and severally
For value received, I promise to pay to you, or your order, at your address
listed above the PRINCIPAL sum of FIVE HUNDRED THOUSAND AND NO/100
*********************Dollars $500,000.00.
[ ] Single Advance: I will receive all of this principal sum on
_______________. No additional advances are contemplated under this note.
[x] Multiple Advance: The principal sum shown above is the maximum amount of
principal I can borrow under this note. On June 24, [1994] I will receive the
amount of $_____________ and future principal advances are contemplated.
Conditions: The conditions for future advances are
______________________________________________________________
[x] Open End Credit: You and I agree that I may borrow up to the maximum amount
of principal more than one time. This feature is subject to all other
conditions and expires on June 24, 1996.
[ ] Closed End Credit: You and I agree that I may borrow up to the maximum only
one time (and subject to all other conditions).
INTEREST: I agree to pay interest on the outstanding principal balance from
June 24, 1995 at the rate of 10.000% per year until SEPTEMBER 1, 1994.
[X] Variable Rate: This rate may then change as stated below.
[ ] Index Rate: The future rate will be ______________ the following index
rate: _________________________________________
[x] No Index: The future rate will not be subject to any internal or
external index. It will be entirely in your control.
[x] Frequency and Timing: The rate on this note may change as often as
DAILY.
A change in the interest rate will take effect QUARTERLY COMMENCING
SEPTEMBER 1, 1995.
[ ] Limitations: During the term of this loan, the applicable annual
interest rate will not be more than _______% or less than __________%.
Effect of Variable Rate: A change in the interest rate will have the
following effect on the payments:
[x] The amount of each scheduled payment will change.
[x] The amount of the final payment will change.
[ ] ___________________________________________________.
ACCRUAL METHOD: Interest will be calculated on a ACTUAL/360 basis.
POST MATURITY RATE: I agree to pay interest on the unpaid balance of this note
owing after maturity, and until paid in full, as stated below:
<PAGE>
<PAGE> 2
[x] On the same fixed or variable rate basis in effect before maturity (as
indicated above).
[ ] at a rate equal to ________________________________.
[x] LATE CHARGE: If a payment is made more than 10 days after it is due, I
agree to pay a late charge of 10.000% OF THE LATE PAYMENT WITH A MAXIMUM OF
$30.00.
[ ] ADDITIONAL CHARGES: In addition to interest, I agree to pay the following
charges which [ ] are [ ] are not included in the principal amount
above:________________________________________.
PAYMENTS: I agree to pay this note as follows:
[x] Interest: I agree to pay accrued interest MONTHLY BEGINNING JULY 24, 1995.
[x] Principal: I agree to pay the principal JUNE 24, 1996.
[ ] Installments: I agree to pay this note in ______ payments. The first
payment will be in the amount of $_____________________
and will be due ___________________. A payment of $_____________ will be due
________________________________ thereafter. The final payment of the entire
unpaid balance and interest will be due ______________________________.
ADDITIONAL TERMS:
SIGNATURES: I AGREE TO THE TERMS OF THIS
NOTE (INCLUDING THOSE ON PAGE 2). I have
received a copy on today's date.
FOR THIS NOTICE "YOU" MEANS THE BORROWER.
WARNING: BY SIGNING THIS PAPER YOU GIVE
UP YOUR RIGHT TO NOTICE AND COURT TRIAL.
IF YOU DO NOT PAY ON TIME A COURT JUDGMENT
MAY BE TAKEN AGAINST YOU WITHOUT YOUR
PRIOR KNOWLEDGE AND THE POWERS OF A COURT
PURPOSE: The purpose of CAN BE USED TO COLLECT FROM YOU REGARDLESS
this loan is BUSINESS: ANNUAL OF ANY CLAIMS YOU MAY HAVE AGAINST THE
REVIEW-LINE USED FOR BUSINESS CREDITOR WHETHER FOR RETURNED GOODS,
INVEST. FAULTY GOODS, FAILURE ON HIS PART TO
COMPLY WITH THE AGREEMENT, OR ANY OTHER
CAUSE.
Signature for Lender /s/ Richard M. Osborne
----------------------
RICHARD M. OSBORNE
/s/ Richard B. Wise
- --------------------------
RICHARD B. WISE, PRESIDENT
<PAGE>
<PAGE> 3
[PAGE 2 OF NOTE]
APPLICABLE LAW: The law of the state of Ohio will govern this note. Any term
of this note which is contrary to applicable law will not be effective, unless
the law permits you and me to agree to such a variation. If any provision of
this agreement cannot be enforced according to its terms, this fact will not
affect the enforceability of the remainder of this agreement. No modification
of this agreement may be made without your express written consent. Time is of
the essence in this agreement.
PAYMENTS: Each payment I make on this note will first reduce the amount I owe
you for charges which are neither interest nor principal. The remainder of
each payment will then reduce accrued unpaid interest, and then unpaid
principal. If you and I agree to a different application of payments, we will
describe our agreement on this note. I may prepay a part of, or the entire
balance of this loan without penalty, unless we specify to the contrary on this
note. Any partial prepayment will not excuse or reduce any later scheduled
payment until this note is paid in full (unless, when I make the prepayment,
you and I agree in writing to the contrary).
INTEREST: If I receive the principal in more than one advance, each advance
will start to earn interest only when I receive the advance. The interest rate
in effect on this note at any given time will apply to the entire principal
advance at that time. Notwithstanding anything to the contrary, I do not agree
to pay and you do not intend to charge any rate of interst that is higher than
the maximum rate of interest you could charge under applicable law for the
extension of credit that is agreed to here (either before or after maturity).
If any notice of interest accrual is sent and is in error, we mutually agree to
correct it, and if you actually collect more interest than allowed by law and
this agreement, you agree to refund it to me.
INDEX RATE: The index will serve only as a device for setting the rate on this
note. You do not guarantee by selecting this index, or the margin, that the
rate on this note will be the same rate you charge on any other loans or class
of loans to me or other borrowers.
ACCRUAL METHOD: The amount of interest that I will pay on this loan will be
calculated using the interest rate and accrual method stated on page 1 of this
note. For the purpose of interest calculation, the accrual method will
determine the number of days in a "year." If no accrual method is stated, then
you may use any reasonable accrual method for calculating interest.
POST MATURITY RATE: For purposes of deciding when the "Post Maturity Rate"
(shown on page 1) applies, the term "maturity" means the date of the last
scheduled payment indicated on page 1 of this note or the date you accelerate
payment on the note, whichever is earlier.
SINGLE ADVANCE LOANS: If this is a single advance loan, you and I expect that
you will make only one advance of principal. However, you may add other
amounts to the principal if you make any payments described in the "PAYMENTS BY
LENDER" paragraph below.
MULTIPLE ADVANCE LOANS: If this is a multiple advance loan, you and I expect
that you will make more than one advance of principal. If this is closed end
credit, then repaying a part of the principal will not entitle me to additional
credit.
PAYMENTS BY LENDER: If you are authorized to pay, on my behalf, charges I am
obligated to pay (such as property insurance premiums), then you may treat
those payments made by you as advances and add them to the unpaid principal
under this note, or you may demand immediate payment of the charges.
<PAGE>
<PAGE> 4
SET-OFF: I agree that you may set off any amount due and payable under this
note against any right I have to receive money from you.
"Right to receive money from you" means:
(1) any deposit account balance I have with you:
(2) any money owed to me on an item presented to you or in your possession
for collection or exchange; and
(3) any repurchase agreement or other nondeposit obligation.
"Any amount due and payable under this note" means the total amount of which
you are entitled to demand payment under the terms of this note at the time you
set off. This total includes any balance the due date for which you properly
accelerate under this note.
If my right to receive money from you is also owned by someone who has not
agreed to pay this note, your right of set-off will apply to my interest in the
obligation and to any other amounts I could withdraw on my sole request or
endorsement. Your right of set-off does not apply to an account or other
obligation where my rights are only as a representative. It also does not
apply to any Individual Retirement Account or other tax-deferred retirement
account.
You will not be liable for the dishonor of any check when the dishonor
occurs because you set off this debt against any of my accounts. I agree to
hold you harmless from any such claims arising as a result of your exercise of
your right of set-off.
REAL ESTATE OR RESIDENCE SECURITY: If this note is secured by real estate or a
residence that is personal property, the existence of a default and your
remedies for such a default will be determined by applicable law, by the terms
of any separate instrument creating the security interest and, to the extent
not prohibited by law and not contrary to the terms of the separate security
instrument, by the "Default" and "Remedies" paragraphs herein.
DEFAULT: I will be in default if any one or more of the following occur: (1) I
fail to make a payment on time or in the amount due; (2) I fail to keep the
property insured, if required; (3) I fail to pay, or keep any promise on any
debt or agreement I have with you; (4) any other creditor of mine attempts to
collect any debt I owe him through court proceedings; (5) I die, am declared
incompetent, make an assignment for the benefit of creditors, or become
insolvent (either because my liabilities exceed my assets or I am unable to pay
my debts as they become due); (6) I make any written statement or provide any
financial information that is untrue or inaccurate at the time it was provided;
(7) I do or fail to do something which causes you to believe that you will have
difficulty collecting the amount I owe you; (8) any collateral securing this
note is used in a manner or for a purpose which threatens confiscation by a
legal authority; (9) I change my name or assume an additional name without
first notifying you before making such a change; (10) I fail to plant,
cultivate and harvest crops in due season; (11) any loan proceeds are used for
a purpose that will contribute to excessive erosion of highly erodible land or
to the conversion of wetlands to produce an agricultural commodity, as further
explained in 7 C.F.R. Part 1940, Subpart G, Exhibit M.
REMEDIES: If I am in default on this note you have, but are not limited to, the
following remedies:
(1) You may demand immediate payment of all I owe you under this note
(principal, accrued unpaid interest and other charges).
(2) You may set off this debt against any right I have to the payment of
money from you, subject to the terms of the "Set-Off" paragraph herein.
<PAGE>
<PAGE> 5
(3) You may demand security, additional security, or additional parties to be
obligated to pay this note as a condition for not using any other remedy.
(4) You may refuse to make advances to me or allow purchases on credit by me.
(5) You may use any remedy you have under state or federal law.
By selecting any one or more of these remedies, you do not give up your right
to later use any other remedy. By waiving your right to declare an event to be
a default, you do not waive your right to later consider the event as a default
if it continues or happens again.
COLLECTION COSTS AND ATTORNEY'S FEES: I agree to pay all costs of collection,
replevin or any other or similar type of cost if I am in default. In addition,
if you hire an attorney to collect this note, I also agree to pay any fee you
incur with such attorney plus court costs (except where prohibited by law). To
the extent permitted by the United States Bankruptcy Code, I also agree to pay
the reasonable attorney's fees and costs you incur to collect this debt as
awarded by any court exercising jurisdiction under the Bankruptcy Code.
WAIVER: I give up my rights to require you to do certain things. I will not
require you to:
(1) demand payment of amounts due (presentment);
(2) obtain official certification of nonpayment (protest); or
(3) give notice that amounts due have not been paid (notice of dishonor).
OBLIGATIONS INDEPENDENT: I understand that I must pay this note even if someone
else has also agreed to pay it (by, for example, signing this form or a
separate guarantee or endorsement). You may sue me alone, or anyone else who
is obligated on this note, or any number of us together, to collect this note.
You may do so without any notice that it has not been paid (notice of
dishonor). You may without notice release any party to this agreement without
releasing any other party. If you give up any of your rights, with or without
notice, it will not affect my duty to pay this note. Any extension of new
credit to any of us, or renewal of this note by all or less than all of us will
not release me from my duty to pay it. (Of course, you are entitled to only one
payment in full.) I agree that you may at your option extend this note or the
debt represented by this note, or any portion of the note or debt, from time to
time without limit or notice and for any term without affecting my liability
for payment of the note. I will not assign my obligation under this agreement
without your prior written approval.
CREDIT INFORMATION: I agree and authorize you to obtain credit information
about me from time to time (for example, by requesting a credit report) and to
report to others your credit experience with me (such as a credit reporting
agency). I agree to provide you, upon request, any financial statement or
information you may deem necessary. I warrant that the financial statements
and information I provide to you are or will be accurate, correct and complete.
NOTICE: Unless otherwise required by law, any notice to me shall be given by
delivering it or by mailing it by first class mail, addressed to me at my last
known address. My current address is on page 1. I agree to inform you in
writing of any change in my address. I will give any notice to you by mailing
it first class to your address stated on page 1 of this agreement, or to any
other address that you have designated.
CONFESSION OF JUDGMENT: In addition to your remedies listed herein, I authorize
any attorney to appear in a court of record and confess judgment, without
process, against me, in favor of you, for any sum unpaid and due on this note,
together with costs of suit.
