July 7, 2000
Transnational Industries, Inc. and
Spitz, Inc.
P.O. Box 198
Route 1
Chadds Ford, PA 19317
Re: Amendment to Commercial Revolving Line of Credit
To: Transnational Industries, Inc. and Spitz, Inc.
First Keystone Federal Savings Bank ("Lender") is pleased to inform you
that the request of Transnational Industries, Inc. and Spitz, Inc.
(individually, collectively, jointly and severally, the "Borrower") to amend the
terms of the existing commercial revolving line of credit loan facility to
increase the Maximum Credit Limit (as defined in that certain Line Of Credit
Agreement dated June 12, 1997 between Lender and Borrower, and hereinafter
referred to as the "Loan Agreement") from Eight Hundred Thousand ($800,000.00)
Dollars (the "Initial Credit Line") to One Million One Hundred Thousand
($1,100,000.00) Dollars (the "Credit Line") has been approved in accordance with
the terms and conditions set forth below, all of which, unless modified by
Lender prior to closing of the Credit Line (hereinafter sometimes referred to as
the "Loan"), and accepted by Borrower, shall survive such loan closing.
1. Loan Amount. The Initial Credit Line shall be increased to an amount
not to exceed One Million One Hundred Thousand ($1,100,000.00) Dollars (the
"Maximum Credit Line Limit"), and shall be disbursed pursuant to the Loan
Agreement, as hereafter amended pursuant to an Amendment No. 1 to the Loan
Agreement.
2. Interest. Interest on the outstanding principal balance of the
Credit Line shall accrue at a floating rate equal to the Wall Street Prime Rate
plus one-half (0.50%) percent (the "Credit Line Rate"), it being understood that
the Rate of interest on the Credit Line shall change as of the date of change of
the Wall Street Prime Rate. The Wall Street Prime Rate is the "Prime Rate"
published in the "Money Rates" section of the Wall Street Journal, or the
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average "Prime Rate" if more than one is published. If the Wall Street Journal
ceases to be published or goes on strike or is otherwise not published for any
time period, or if it ceases to publish a "Prime Rate", then Lender may use any
similar published prime or base rate.
3. Repayment. The Credit Line will provide for monthly payments of
interest only on funds advanced. The entire outstanding principal balance of the
Credit Line and accrued interest, together with any other sums payable under the
Credit Line Documents shall be due and payable on the 60th month anniversary of
the consummation of the amendments contemplated hereby (the "Credit Line
Maturity Date"). Monthly installments of interest due under the Credit Line
shall be due and payable on the first day of each calendar month. It is
expressly agreed and understood that nothing contained herein shall be construed
to amend or modify the terms of that certain Term Note (as defined in the Loan
Agreement) or otherwise extend the Maturity Date (as defined in the Term Note)
of the Term Loan (as defined in the Loan Agreement) beyond July 1, 2002.
4. Loan Fees. Unless otherwise specified, Loan fees shall be paid at
the Loan closing, and are as follows:
(a) Lender's Attorney's Fee. Borrower shall pay the legal fees of
Lender's counsel (hereinafter "Lender's Counsel") incident to
the preparation and review of this commitment and the
Additional Credit Line Documents and closing of the Loan. The
estimated amount of Lender's Counsel fee is $2,500.00, which
shall be paid at the time of Loan closing.
5. Other Costs. Borrower shall pay all other costs and expenses
incidental to amendment of the Initial Credit Line as contemplated hereby or the
preparation, execution, acknowledgment, delivery and/or recording of the
Additional Credit Line Documents including, without limitation, filing,
recording, notary fees and credit fees.
6. Loan Documents. In addition to the Credit Line Documents which have
already been executed by Borrower and delivered to Lender in connection with the
Initial Credit Line, the following additional documents (the "Additional Credit
Line Documents") shall be executed by Borrower and delivered to Lender, in form
and substance satisfactory to Lender and its counsel, as a condition precedent
to the Loan Closing, and which Additional Credit Line Documents shall, when
executed by Borrower and delivered to Lender, constitute Credit Line Documents:
(a) Renewal Line of Credit Note indicating a Maximum Credit Limit
of $1,100,000.00 (containing Confession of Judgment
provisions);
(b) Modification Agreement dated as of July 7, 2000;
(c) Affidavit of Business Purpose executed by Borrower;
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(d) UCC-1 financing statements to be filed with the Secretary of
State of Delaware against the Borrowers; and
(e) Such other documents as Lender or Lender's Counsel may
require.
7. Loan Closing Date. Closing on the Loan shall occur on or before July
15, 2000 at such time and place as shall be designated by Lender, or Lender
shall have no obligation hereunder.
8. Time of the Essence. The closing date and all other dates and times
specified herein are of the essence.
9. Conditions of the Loan. The obligations of Lender to fund the Loan
are expressly subject to the following conditions which must be met to Lender's
satisfaction prior to the closing of the Loan:
(a) The receipt by Lender of all documents, which, in the opinion
of Lender's counsel are necessary to perfect the lien and
security interest of Lender; and
(b) Execution and delivery of the Additional Credit Line
Documents; and
(c) Borrower providing Lender, no less than five (5) days before
Loan Closing, at Borrower's sole cost and expense, current
financial statements of Borrower compiled by an independent
certified public accountant satisfactory to Lender in its
discretion, together with evidence satisfactory to Lender that
there have been no material adverse changes in the financial
conditions of Borrower since the submission of their
respective financial statements of Lender; and
(d) Borrower providing to Lender, no less than five (5) days
before Loan closing, at Borrower's sole cost and expense, a
secretary's certificate, a Certificate of Good Standing issued
by the Secretary of State of the Commonwealth of Pennsylvania
and the State of Delaware issued not more than fifteen (15)
days prior to the date of Loan closing, and appropriate
authorizing resolutions; and
(e) Borrower's payment of taxes, documentary stamps, filing fees,
and other expenses incurred by Lender and arising from this
transaction; and
(f) The inclusion of provisions in the Renewal Line of Credit Note
waiving Borrower's right to a jury trial and such other
standard warranties and covenants as shall be required by
Lender; and
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(g) The opinion of counsel to Borrower, dated the date of the Loan
closing, addressed to Lender, and in form and substance
satisfactory to Lender's Counsel, to the effect that the
Borrower is validly organized, existing, authorized to conduct
business, and in good standing in Pennsylvania and Delaware;
that the execution and delivery of the Additional Credit Line
Documents shall be binding upon the Borrower and enforceable
against Borrower in accordance with their respective
provisions; that such counsel is without any knowledge or
information contrary to the representations and warranties
made by Borrower as are more fully set forth in the Credit
Line Documents; that no consent of any governmental authority
or third party is required with regard to the execution of the
Additional Credit Line Documents; that Borrower has the power
and authority to enter into the Additional Credit Line
Documents and perform Borrower's obligations thereunder, and
that Borrower has duly authorized the execution of delivery of
the Additional Credit Line Documents; that there are no
agreements or instruments to which Borrower is bound or any
law, administrative regulation or court decree to which
Borrower is bound which was or shall be breached or violated
by Borrower having executed, delivered or performed under the
Additional Credit Line Documents, and that there is no pending
or threatened litigation which would affect the Collateral,
Borrower's ability to perform its obligations under the Credit
Line Documents.
10. Expenses Incident to Closing. All Costs associated with the making
and closing of the Loan, including, without limitation, legal fees and
disbursements of Lender's Counsel, recording and filing costs, shall be the
responsibility of Borrower. Such fees and expenses as are actually incurred by
Lender shall be paid to Lender whether or not the Loan closing takes place.
11. Other Financing. It is a condition precedent to closing of the Loan
that the Collateral securing this Loan, be free of liens and encumbrances,
except as to those liens which have been executed by Borrower in favor of Lender
and those liens which have been approved by Lender. Borrower shall not create or
permit to exist any other lien on, or security interest in, the Collateral or
any other property of Borrower, without the prior written consent of Lender.
12. Assignment. This Commitment may not be assigned by Borrower without
the prior written consent of Lender.
13. Entire Agreement. This commitment letter expresses the entire
agreement of Lender and Borrower with respect to amending the Initial Credit
Line as contemplated hereby and supersedes all prior written or oral
understandings; provided, however, that all written and oral representations
made by Borrower to Lender with respect to the provisions made hereunder shall
survive the issuance of this letter. It is expressly agreed and understood that
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except as specifically provided for herein, all of the terms, conditions, and
provisions set forth in that certain Commitment Letter dated May 15, 1997
executed by Lender and Borrower in connection with the initial Credit Line (the
"Original Commitment Letter") shall remain in full force and effect and shall
apply to this Commitment as if fully set forth herein. Time is of the essence
with respect to this letter and documentation required hereunder.
14. Expiration Date. Lender's offer of commitment will expire and
become null and void on July 10, 2000 and Lender shall have no further liability
hereunder unless, on or prior to such date, this offer of commitment is accepted
in writing by Borrower and returned to Lender.
15. Omissions or Misstatements. If there are any omissions or
misstatements in the applications for the Loan or Borrower's financial
statements or if any information contained therein or otherwise relied upon by
Lender in making the Loan becomes inaccurate or misleading between the date of
the Loan application and the closing date, Lender may terminate this Commitment,
whereupon Lender shall have no further liability hereunder.
16. Governing Law. This Commitment, the Loan Documents and all other
documents which may be required to complete the Loan transaction contemplated
herein shall be subject to and shall be construed according to the substantive
laws of the Commonwealth of Pennsylvania.
17. Capitalized Terms. Unless otherwise defined herein, all capitalized
terms shall have the meaning set forth in the Original Commitment Letter.
This Commitment is delivered for immediate acceptance by Borrower. It
is understood and agreed that, when accepted, this Commitment shall constitute a
contract between Borrower, and Lender to which the parties intend to be legally
bound. It is expressly agreed by the parties that this Commitment Letter and the
agreements herein shall survive the Loan Closing and become one of the documents
evidencing the Loan.
Very truly yours,
/s/ A. Charles Amentt
A. CHARLES AMENTT, JR.
Vice President
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Intending to be legally bound hereby the undersigned hereby agree to the above
terms and conditions of this Loan Commitment:
BORROWER:
TRANSNATIONAL INDUSTRIES, INC.
By: /s/ Charles H. Holmes Jr. (SEAL)
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ATTEST: /s/ Paul L Dailey (SEAL)
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BORROWER:
SPITZ, INC.
By: /s/ Charles H. Holmes Jr. (SEAL)
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ATTEST: /s/ Paul L Dailey (SEAL)
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