UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[ X ] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the period ended October 31, 1996
Commission File Number 33-7870-NY
Travel Ports of America, Inc.
New York 16-1128554
3495 Winton Place, Building C, Rochester, New York 14623
716-272-1810
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has
been subject to such filing requirements for the past 90 days.
[ X ] Yes [ ] No
Class Outstanding at October 31, 1996
Common Stock, Par Value
$.01 Per Share 5,254,424
TRAVEL PORTS OF AMERICA, INC.
INDEX
Page
PART I Financial Information
Balance Sheets, October 31, 1996 (unaudited) and
April 30, 1996................................... 3
Statement of Income (unaudited), quarter and six months ended
October 31, 1996 and 1995........................ 4
Statement of Cash Flows (unaudited), six months
ended October 31, 1996 and 1995.................. 5
Notes to Financial Information..................... 6
Management's Discussion and Analysis of Financial
Condition and Results of Operations.............. 7
PART II Other Information
Index to Exhibits and Legal Proceedings............. 10
Signatures.......................................... 15
TRAVEL PORTS OF AMERICA, INC.
BALANCE SHEET
(UNAUDITED)
10/31/96 4/30/96
ASSETS
CURRENT ASSETS:
CASH AND EQUIVALENTS $ 2,208,911 $ 1,667,062
ACCOUNTS RECEIVABLE, LESS ALLOWANCE
FOR DOUBTFUL ACCOUNTS OF $223,516 AT
OCTOBER 1996 AND $208,414 AT
APRIL 1996 5,196,127 4,357,246
NOTES RECEIVABLE 51,871 56,915
INVENTORIES 6,367,505 5,333,829
PREPAID AND OTHER CURRENT ASSETS 1,233,703 1,052,626
DEFERRED TAXES - CURRENT 371,800 371,800
TOTAL CURRENT ASSETS 15,429,917 12,839,478
NOTES RECEIVABLE, DUE AFTER ONE YEAR 2,056,752 2,071,671
PROPERTY, PLANT AND EQUIPMENT, NET 40,406,664 35,976,800
COST IN EXCESS OF UNDERLYING NET ASSET
VALUE OF ACQUIRED COMPANIES 1,936,401 1,968,496
OTHER ASSETS, NET 2,361,308 2,422,159
$62,191,042 $55,278,604
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
SHORT-TERM DEBT $ 2,550,000 $
CURRENT PORTION OF LONG-TERM DEBT 2,895,524 2,756,102
ACCOUNTS PAYABLE 8,018,010 5,994,740
ACCOUNTS PAYABLE - AFFILIATE 941,083 747,939
INCOME TAXES PAYABLE 64,523
ACCRUED COMPENSATION 1,254,527 1,460,862
ACCRUED SALES AND FUEL TAX 2,396,530 1,247,586
ACCRUED EXPENSES AND OTHER
CURRENT LIABILITIES 1,014,381 1,156,856
TOTAL CURRENT LIABILITIES 19,134,578 13,364,085
LONG TERM DEBT 22,175,793 22,284,257
CONVERTIBLE SUBORDINATED DEBENTURES 4,650,000 4,650,000
DEFERRED INCOME TAXES 894,200 894,200
TOTAL LIABILITIES 46,854,571 41,192,542
SHAREHOLDERS' EQUITY
COMMON STOCK, $.01 PAR VALUE
AUTHORIZED - 10,000,000 SHARES, ISSUED
AND OUTSTANDING AT OCTOBER 1996 -
5,254,424 AND APRIL 1996 - 5,239,124 52,544 52,391
ADDITIONAL PAID-IN CAPITAL 3,836,546 3,813,429
RETAINED EARNINGS 11,447,381 10,220,242
TOTAL SHAREHOLDERS' EQUITY 15,336,471 14,086,062
$62,191,042 $55,278,604
TRAVEL PORTS OF AMERICA, INC.
STATEMENT OF INCOME
(UNAUDITED)
QUARTER ENDED SIX MONTHS ENDED
OCTOBER 31 OCTOBER 31
1996 1995 1996 1995
NET SALES AND
OPERATING
REVENUE $52,698,998 $39,619,638 $99,187,934 $77,746,306
COST OF
GOODS
SOLD 40,627,845 29,855,321 75,468,223 58,251,951
GROSS
PROFIT 12,071,153 9,764,317 23,719,711 19,494,355
OPERATING
EXPENSE 9,381,477 7,307,127 18,121,616 14,604,285
GENERAL AND
ADMINISTRATIVE
EXPENSE 1,104,156 891,828 2,254,854 1,865,663
INTEREST
EXPENSE 772,950 610,460 1,386,954 1,287,659
OTHER INCOME,
NET (123,078) (93,661) (177,462) (392,782)
11,135,505 8,715,754 21,585,962 17,364,825
INCOME BEFORE
TAXES 935,648 1,048,563 2,133,749 2,129,530
PROVISION FOR
TAXES ON
INCOME 398,900 447,200 906,600 907,900
NET INCOME $ 536,748 $ 601,363 $ 1,227,149 $ 1,221,630
PER SHARE DATA:
NET INCOME PER
SHARE -
PRIMARY $0.10 $0.11 $0.23 $0.23
NET INCOME PER SHARE
- - FULLY
DILUTED $0.09 $0.09 $0.19 $0.19
WEIGHTED AVERAGE SHARES
OUTSTANDING -
PRIMARY 5,397,397 5,439,066 5,397,473 5,399,919
WEIGHTED AVERAGE SHARES
OUTSTANDING -
FULLY
DILUTED 6,947,397 6,991,823 6,964,347 6,962,915
TRAVEL PORTS OF AMERICA, INC.
STATEMENT OF CASH FLOWS
(UNAUDITED)
SIX MONTHS ENDED OCTOBER 31
1996 1995
OPERATING ACTIVITIES:
NET INCOME $1,227,139 1,221,630
DEPRECIATION AND AMORTIZATION 1,562,065 1,299,342
PROVISION FOR LOSSES ON ACCOUNT
RECEIVABLE 26,415 34,118
(GAIN) LOSS ON SALE OF ASSETS (193,880)
CHANGES IN OPERATING ASSETS AND LIABILITIES -
ACCOUNTS RECEIVABLE (865,296) (482,229)
INVENTORIES (1,033,676) 8,940
PREPAID AND OTHER CURRENT ASSETS (181,077) (347,959)
ACCOUNTS PAYABLE 2,216,414 (856,030)
ACCRUED COMPENSATION (206,335) (491,851)
ACCRUED SALES AND FUEL TAX 1,148,944 541,639
ACCRUED EXPENSES AND OTHER CURRENT
LIABILITIES (142,475) (148,681)
CHANGES IN INCOME TAXES PAYABLE 64,523 90,055
CHANGES IN OTHER NON-CURRENT ASSETS (18,129) 29,220
NET CASH PROVIDED BY OPERATING
ACTIVITIES 3,798,512 704,314
INVESTING ACTIVITIES:
EXPENDITURES FOR PROPERTY,
PLANT & EQUIPMENT (5,880,854) (5,319,963)
PROCEEDS FROM DISPOSITION OF PROPERTY,
PLANT AND EQUIPMENT 269,461
NET PROCEEDS RECEIVED ON
NOTES RECEIVABLE 19,963 177,202
NET CASH USED IN INVESTING
ACTIVITIES (5,860,891) (4,873,300)
FINANCING ACTIVITIES:
NET SHORT-TERM BORROWING 2,550,000
PRINCIPAL PAYMENTS ON
LONG-TERM DEBT (1,258,042) (1,230,384)
PROCEEDS FROM LONG-TERM BORROWING 1,289,000
PROCEEDS FROM EXERCISE OF
STOCK OPTIONS 23,270 41,940
NET CASH PROVIDED (USED) IN
FINANCING ACTIVITIES 2,604,228 (1,188,444)
NET (DECREASE) INCREASE IN CASH
AND EQUIVALENTS 541,849 (5,357,430)
CASH AND EQUIVALENTS -
BEGINNING OF PERIOD 1,667,062 7,593,798
CASH AND EQUIVALENTS - END OF PERIOD $2,208,911 $2,236,368
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
CASH PAID DURING THE PERIOD:
INTEREST PAID $1,437,262 $1,283,090
INCOME TAXES PAID $ 711,480 $ 764,326
TRAVEL PORTS OF AMERICA, INC.
NOTES TO FINANCIAL INFORMATION
OCTOBER 31, 1996
NOTE 1 BASIS OF PRESENTATION
The unaudited financial information has been prepared in accordance with the
Summary of Accounting Policies of the Company as outlined in Form 10-K filed
for the year ended April 30, 1996, and should be read in conjunction with
the Notes to Financial Statements appearing therein. In the opinion of
management, the unaudited financial information contains all adjustments
(consisting only of normal recurring adjustments) necessary to present fairly
the Company's financial position as of October 31, 1996 and April 30, 1996,
and for the three months and six months ended October 31, 1996 and 1995. The
financial information is based in part on estimates and has not been audited
by independent accountants. The annual statements will be audited by Price
Waterhouse LLP.
NOTE 2 INVENTORIES
Major classifications of inventories are as follows:
October 31, 1996 April 30, 1996
At first-in, first-out (FIFO) cost:
Petroleum Products $1,417,483 $ 925,239
Store Merchandise 2,366,683 1,960,961
Parts for repairs and tires 2,144,665 1,884,512
Other 438,674 563,117
$6,367,505 $5,333,829
NOTE 3 EARNINGS PER SHARE
Primary earnings per share is computed by dividing net income by the weighted
average number of common, and when applicable, common equivalent shares
outstanding during the period. Fully diluted earnings per share include the
dilutive impact of common equivalent shares and the convertible debentures.
NOTE 4 FINANCING AGREEMENTS
The Company's primary lending institution has renewed its commitment for the
Company's existing line of credit until August 31, 1997. The line of credit
is limited to the lesser of $2,750,000 or the sum of 80% of the Company's
accounts receivable under 90 days old, plus 45% of the Company's inventory.
On October 4, 1996, the Company completed the financing of its Harborcreek,
Pennsylvania facility with its primary lender in accordance with the Restated
and Amended Credit Agreement dated December 21, 1995 in the amount of
$6,000,000. Interest is fixed at 9.44% for ten years with level principal
payments based upon a 15 year amortization.
On November 6, 1996, the Company entered into an agreement with its secondary
lender that (a) refinances a mortgage loan due 2001 covering two travel
plazas in Pennsylvania, and a term loan due in 1997 and (b) provides
$5,000,000 available for 1996/97 capital expenditures. The loan calls for the
payment of interest only for six months. After six months the loan will be
amortized over 15 years with a balloon payable after five years. At the time
amortization commences, interest can be fixed at 210 basis points in excess
of the five year United States Treasury Note or variable at prime plus 1/2.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS:
Second Quarter ended October 31, 1996 and 1995
Sales from operations were $52,698,998 for the second quarter of fiscal 1997,
up $13,079,360, or 33%, from the second quarter of last year. In comparing to
last year, this year we added facilities in Baltimore, Maryland and
Harborcreek, Pennsylvania. The impact from these two new locations was a
$8,212,000 increase in sales as compared to the second quarter of 1996. The
increase in sales for same units was $4,868,000 or 12%.
Gross profit for the second quarter was $12,071,153, an increase of
$2,306,836, or 23.6%, from the prior year. The two new locations accounted
for $2,074,000 of this increase. Gross profit was impacted by lower diesel
margins caused by product cost increases that could not be immediately
reflected in increased retail pricing.
Operating expenses of $9,381,477 for the second quarter were $2,074,350 or
28.4% more than last year. The two new locations accounted for $1,955,000 of
the increase. Same units increased $119,000 or 1.6%. Startup expenses
incurred at the two new locations had an impact on the profitability for the
quarter.
General and administrative expenses for the quarter of $1,104,156 increased
$212,328 or 23.8% from last year. The increase relates primarily to increased
compensation. Other income increased $29,417 from last year. Interest expense
increased from last year by $162,501 as a result of increased level of debt.
Six months ended October 31, 1996 and 1995
Sales from operations were $99,187,934 for the first six months of fiscal
1997, up $21,441,628, or 27.6%, from the first six months of last year. In
comparing to last year, this year we added facilities in Baltimore, Maryland
and Harborcreek, Pennsylvania and last year we had a facility in Fairplay,
South Carolina that was sold in June 1995. The impact from the changes in
locations was a $13,152,000 increase in sales as compared to the first six
months of 1996. The increase in sales for same units was $8,290,000 or 10.7%.
Gross profit for the first six months was $23,719,711, an increase of
$4,225,356, or 21.6%, from the prior year. The change in locations accounted
for $3,397,000 of this increase. Same unit gross profit increased $829,000 or
4.3%. As noted in the discussion of second quarter gross profit, lower diesel
margins impacted the earnings for the first six months.
Operating expenses of $18,121,616 for the first six months were $3,517,331 or
24.1% more than last year. The change in locations accounted for $3,175,000
of the increase. Same units increased $342,000 or 2.4%. As noted in the
discussion of expenses for the second quarter, startup expenses at the two
new locations impacted earnings for the first six months.
General and administrative expenses for the first six months of $2,254,854
increased $389,191 or 20.9% from last year. The increase relates primarily to
increased compensation. Other income decreased $215,320 from last year as a
result of (a) gains from sale of properties last year and (b) a decrease in
interest income as a result of lower cash levels this year. Interest expense
increased from last year by $99,295 as a result of increased level of debt.
FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES
The Company's cash position increased by $541,849 to $2,208,911 during the
six months ended October 31, 1996. Accounts receivable increased $865,296
from greater sales activity. Inventories increased $1,033,676 primarily due
to the two new facilities and increased fuel costs. Accounts payable
increased $2,216,414 as a result of increased inventories, increased fuel
costs and payments on capital expenditures. Accrued compensation decreased
$206,335 due to the payment of bonuses. Accrued sales and fuel taxes
increased $1,148,944 due to amount and timing of tax payments. Overall
operating activities for the six months ended October 31, 1996, provided
$3,798,512 in cash compared to last year's $704,314.
Investing activities resulted in a net use of $5,860,891. Capital
expenditures during the first six months of 1997 were $5,880,854. The
renovation projects at Fultonville and Maybrook, New York, paving projects
at several locations and the completion of a travel plaza on land owned by
the Company in Harborcreek, Pennsylvania accounted for the majority of these
expenditures. Proceeds from notes receivable provided cash of $19,963.
Financing activities for the first six months of 1997 resulted in a net
provision of $2,604,228 after repayment of principal.
The Company's primary lending institution has renewed its commitment for the
Company's existing line of credit until August 31, 1997. The line of credit
is limited to the lesser of $2,750,000 or the sum of 80% of the Company's
accounts receivable under 90 days old, plus 45% of the Company's inventory.
As of October 31, 1995, the Company has utilized $200,000 of its available
line of credit as collateral for various letters of credit.
On October 4, 1996, the Company completed the financing of its Harborcreek,
Pennsylvania facility with its primary lender in accordance with the Restated
and Amended Credit Agreement dated December 21, 1995 in the amount of
$6,000,000. Interest is fixed at 9.44% for ten years with level principal
payments based upon a 15 year amortization.
On November 6, 1996, the Company entered into an agreement with its secondary
lender that (a) refinances a mortgage loan due 2001 covering two travel
plazas in Pennsylvania, and a term loan due in 1997 and (b) provides
$5,000,000 available for 1996/97 capital expenditures. The loan calls for the
payment of interest only for six months. After six months the loan will be
amortized over 15 years with a balloon payable after five years. At the time
amortization commences, interest can be fixed at 210 basis points in excess
of the five year United States Treasury Note or variable at prime plus 1/2.
Authorized, but unissued stock is available for financing needs; however,
there are no current plans to use this source.
TRAVEL PORTS OF AMERICA, INC.
PART II -- OTHER INFORMATION
Item 1. LEGAL PROCEEDINGS
The Company is not presently a party to any other litigation (i) that
is not covered by insurance or (ii) which singly or in the aggregate would
have a material adverse effect on the Company's financial condition and
results of operations, and management has no knowledge that any other
litigation has been threatened.
Item 2. CHANGES IN SECURITIES
None
Item 3. DEFAULTS UPON SENIOR SECURITIES
None
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
On October 22, 1996, at the annual meeting of the Company's
shareholders, the shareholders voted to adopt the 1996 Employee Incentive
Stock Option Plan and reserve 500,000 shares of the Company's Common Stock
for issuance under the Plan. The results of the voting were as follows:
In Favor 2,965,401
Against 167,919
Abstain 22,500
Not Voted 2,098,604
Item 5. OTHER INFORMATION
None
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) EXHIBITS
(2) Plan of acquisition, reorganization, agreement, liquidation,
or succession
Not applicable
(3) Articles of Incorporation and By-laws
Exhibit 3-a and exhibit 3-b to the Company's Registration Statement
on Form S-18, File No. 33-7870-NY are incorporated herein by reference with
respect to the Restated Certificate of Incorporation and By-laws of the
Company.
Certificate of Amendment of Certificate of Incorporation changing
the name of the Corporation, is incorporated herein by reference to Exhibit
3-c of the Company's report of Form 10-K dated July 27, 1993.
(4) Instruments defining the rights of security holders,
including indentures
Exhibit 4-a, Form of Common Stock Certificate, to the Company's
Registration Statement on Form S-18, File No. 33-7870-NY is incorporated
herein by reference with respect to instruments defining the rights of
security holders.
Exhibit 4-c, Form of Indenture dated as of January 24, 1995, between
Travel Ports of America, Inc. and American Stock Transfer and Trust Company,
as Trustee, with respect to up to $5,000,000 principal amount of 8.5%
Convertible Senior Subordinated Debentures due January 15, 2005 is
incorporated by reference to Exhibit 4-c to the Company's Current Report on
Form 8-K dated February 15, 1995.
Exhibit 4-d, Form of Warrant to purchase Common Stock is incorporated
by reference to Exhibit 4-d to the Company's Current Report on Form 8-K
dated February 15, 1995.
(10) Material contracts
Exhibit 10.17, Loan Agreement dated November 6, 1996, executed and
delivered to PNC Bank is set forth on page 17 of this report.
(11) Statement re: computation of earnings per share
Computation of earnings per share is set forth in Exhibit (11) on
page 12 of this report.
(15) Letter re: unaudited interim financial information
Not applicable
(18) Letter re: change in accounting principals
Not applicable
(19) Previously unfiled documents
None
(20) Report furnished to security holders
Not applicable
(22) Published report regarding matters submitted to vote of security
holders
None
(23) Consents of experts and counsel
Not applicable
(24) Power of attorney
None
(27) Supplemental Financial Information
Exhibit (27) on page 15 of this report.
(99) Additional exhibits
None
(b) REPORT ON FORM 8-K
None
EXHIBIT (11)
COMPUTATION OF PRIMARY EARNINGS PER SHARE
FOR THE QUARTER ENDED OCTOBER 31, 1996
Net income per share was computed by dividing net income by the weighted
average number of common shares outstanding and common stock equivalents.
Total Options
and Warrants Average Average
Qtr. Ended Below Market Exercise Price Market Price Shares
10/31/96 495,676 $2.12 $2.98 142,973
Average number of shares outstanding 5,254,424
5,397,397
Net income per common and common equivalent shares $.10
COMPUTATION OF FULLY DILUTED EARNINGS PER SHARE
FOR THE QUARTER ENDED OCTOBER 31, 1996
Net income per share was computed by dividing net income by the weighted
average number of common shares outstanding, common stock equivalents, and
the assumed conversion of the convertible debentures.
Total Options
and Warrants Average
Qtr. Ended Below Market Exercise Price Market Price * Shares
10/31/96 495,676 $2.12 $2.98 142,973
Additional shares due to assumed exercise of convertible debentures 1,550,000
Average number of shares outstanding 5,254,424
6,947,397
Net income for quarter ended 10/31/96 $536,748
Interest on convertible debentures 59,288
$596,036
Net income per common and common equivalent shares - fully diluted $.09
COMPUTATION OF PRIMARY EARNINGS PER SHARE
FOR THE SIX MONTHS ENDED OCTOBER 31, 1996
Net income per share was computed by dividing net income by the weighted
average number of common shares outstanding and common stock equivalents.
Total Options
and Warrants Average Average
Qtr. Ended Below Market Exercise Price Market Price Shares
7/31/96 499,176 $2.12 $2.97 143,124
10/31/96 495,676 $2.12 $2.98 142,973
Total for Two Quarters 286,097
Average common stock equivalents outstanding during
six months ended October 31, 1996 143,049
Average number of shares outstanding 5,254,424
5,397,473
Net income per common and common equivalent shares $.23
COMPUTATION OF FULLY DILUTED EARNINGS PER SHARE
FOR THE SIX MONTHS ENDED OCTOBER 31, 1996
Net income per share was computed by dividing net income by the weighted
average number of common shares outstanding, common stock equivalents, and
the assumed conversion of the convertible debentures.
Total Options
and Warrants Average
Qtr. Ended Below Market Exercise Price Market Price * Shares
7/31/96 499,176 $2.12 $3.281 176,873
10/31/96 495,676 $2.12 $2.98 142,973
Total for Two Quarters 319,846
Average common stock equivalents outstanding during
six months ended October 31, 1996 159,923
Additional shares due to assumed exercise of convertible debentures 1,550,000
Average number of shares outstanding 5,254,424
6,964,347
Net income for six months ended 10/31/96 $1,227,149
Interest on convertible debentures 118,576
$1,345,725
Net income per common and common equivalent shares - fully diluted $.19
* Amount reflects higher of average or period end market price.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
TRAVEL PORTS OF AMERICA, INC.
Date: December 13, 1996 s/ John M. Holahan
John M. Holahan, President
Date: December 13, 1996 s/ William Burslem III
William Burslem III
Vice President
LOAN AGREEMENT
THIS LOAN AGREEMENT (the "Agreement"), is entered into as of the ____
day of _______________, 1996, by and between TRAVEL PORTS OF AMERICA, INC., a
New York corporation having business offices located at 3495 Winton Place,
Building C, Rochester, New York 14623 ("Borrower"), and PNCBANK, NATIONAL
ASSOCIATION (the "Bank").
The Borrower and the Bank, with the intent to be legally bound, agree
as follows:
1.Loan.The following loans, lines of credit and credit facilities (if
one or more, collectively, the "Loan"), made for the purpose indicated below
shall be subject to and governed by this Agreement:
Date and Type
November 6, 1996, $6,655,227.52 Term Loan
Purpose
To refinance existing Bank Credit Facility 00018 in the amount of One
Million, Three Hundred Forty-Four Thousand, One Hundred Sixty-five and 97/100
Dollars ($1,344,165.97) and 00026 in the amount of Three Hundred Eleven
Thousand, Sixty-one and 55/100 Dollars ($311,061.55), and to provide Five
Million Dollars ($5,000,000.00) for repairs and upgrades to Borrower's
properties (as more fully set forth on Schedule 1 attached hereto).
The Loan is or will be evidenced by a promissory note or notes of the
Borrower (if one or more, collectively, the "Note") acceptable to the Bank,
which shall set forth the interest rate, repayment and other provisions, the
terms of which are incorporated into this Agreement by reference.
2. Security.
A. The security for repayment of the Loan shall include
but not be limited to the collateral, guaranties and other documents
heretofore, contemporaneously or hereafter executed and delivered to the Bank
(the "Security Documents"), which shall secure repayment of the Loan, the
Note and all other loans, advances, debts, liabilities, obligations,
covenants and duties owing by the Borrower to the Bank of any kind or nature,
present or future, whether or not evidenced by any note, guaranty or other
instrument, whether arising under any agreement, instrument or document,
whether or not for the payment of money, whether arising by reason of an
extension of credit, opening of a letter of credit, loan or guarantee or in
any other manner, whether arising out of overdrafts on deposit or other
accounts or electronic funds transfers (whether through automatic clearing
houses or otherwise) or out of the Bank's non-receipt of or inability to
collect funds or otherwise not being made whole in connectionwith depository
transfer check or other similar arrangements, whether direct or indirect
(including those acquired by assignment or participation), absolute or
contingent, joint or several, due or to become due, now existing or hereafter
arising, and any amendments, extensions, renewals or increases and all costs
and expenses of the Bank incurred in the documentation, negotiation,
modification, enforcement, collection or otherwise in connection with any of
the foregoing, including but not limited to reasonable attorneys' fees and
expenses (hereinafter referred to collectively as the "Obligations"). Unless
expressly provided to the contrary in documentation for any other loan or
loans, it is the express intent of the Bank and the Borrower that all
Obligations including those included in the Loan be cross-collateralized and
cross-defaulted, such that collateral securing any of the Obligations shall
secure repayment of all Obligations and a default under any Obligation shall
be a default under all Obligations.
B. The collateral to be provided by Borrower for the
Loan is as follows: (1) first lien priority mortgages in the property
described on the attached Schedule 2B (hereinafter referred to as the
"Property"); and (2) first lien priority security interests in all of
Borrower's personal property in, at or on the Property used or useful in the
Borrower's business at the Property, together with all replacements,
substitutions and proceeds thereof (hereinafter referred to as "UCC Property").
C. This Agreement, the Note and the Security Documents
are collectively referred to as the "Loan Documents".
3.Representations and Warranties.The Borrower hereby makes the
following representations and warranties, which shall be continuing in nature
and remain in full force and effect until the Obligations are paid in full,
and which shall be true and correct except as otherwise set forth on the
Addendum attached hereto and incorporated herein by reference (the "Addendum"):
3.1. Existence, Power and Authority.If not a natural person,
the Borrower is duly organized, validly existing and in good standing under
the laws of the State of its incorporation or organization and has the power
and authority to own and operate its assets and to conduct its business as
now or proposed to be carried on, and is duly qualified, licensed and in good
standing to do business in all jurisdictions where its ownership of property
or the nature of its business requires such qualification or licensing. The
Borrower is duly authorized to execute and deliver the Loan Documents, all
necessary action to authorize the execution and delivery of the Loan
Documents has been properly taken, and the Borrower is and will continue to
be duly authorized to borrow under this Agreement and to perform all of the
other terms and provisions of the Loan Documents.
3.2. Financial Statements.If the Borrower is not a natural
person, it has delivered or caused to be delivered its most recent balance
sheet, income statement and statement of cash flows, or if the Borrower is a
natural person, its personal financial statement and tax returns (as
applicable, the "Historical Financial Statements"). The Historical Financial
Statements are true, complete and accurate in all material respects and
fairly present the financial condition, assets and liabilities, whether
accrued, absolute, contingent or otherwise and the results of the Borrower's
operations for the period specified therein. The Historical Financial
Statements have been prepared in accordance with generally accepted
accounting principles ("GAAP") consistently applied from period to period
subject in the case of interim statements to normal year-end adjustments and
to any comments and notes acceptable to the Bank in its sole discretion.
3.3. No Material Adverse Change.Since the date of the most
recent Financial Statements, the Borrower has not suffered any material
damage, destruction or loss, and to the best of Borrower's knowledge no
event or condition has occurred or exists, which has resulted or could
result in a material adverse change in its business, assets, operations,
financial condition or results of operation.
3.4. Binding Obligations.The Borrower has full power and
authority to enter into the transactions provided for in this Agreement and
has been duly authorized to do so by appropriate action of its Board of
Directors if the Borrower is a corporation, all its general partners if the
Borrower is a partnership or otherwise as may be required by law, charter,
other organizational documents or agreements; and the Loan Documents, when
executed and delivered by the Borrower, will constitute the legal, valid and
binding obligations of the Borrower enforceable in accordance with their
terms.
3.5. No Defaults or Violations.There does not exist any
Event of Default under this Agreement or any material default or violation
by the Borrower of or under any of the terms, conditions or obligations of:
(i)its partnership agreement if the Borrower is a partnership, its articles
or certificate of incorporation, regulations or bylaws if the Borrower is a
corporation or its other organizational documents as applicable; (ii)any
indenture, mortgage, deed of trust, franchise, permit, contract, agreement,
or other instrument to which it is a party or by which it is bound; or
(iii)any law, regulation, ruling, order, injunction, decree, condition or
other requirement applicable to or imposed upon it by any law, the action by
any court or any governmental authority or agency; and the consummation of
this Agreement and the transactions set forth herein will not result in any
such default or violation.
3.6. Title to Assets.The Borrower has good and marketable
title to the assets reflected on the most recent Financial Statements, free
and clear of all liens and encumbrances, except for (i) current taxes and
assessments not yet due and payable, (ii) liens and encumbrances, if any,
reflected or noted in the Historical Financial Statements or matters of
public record, (iii) assets disposed of by the Borrower in the ordinary
course of business since the date of the most recent Financial Statements,
and (iv) those liens or encumbrances specified on the Addendum.
3.7. Litigation.There are no actions, suits, proceedings or
governmental investigations pending or, to the knowledge of the Borrower,
threatened against the Borrower, none of which could result in a material
adverse change in its business, assets, operations, financial condition or
results of operations and there is no basis known to the Borrower for any
action, suit, proceedings or investigation which could result in such a
material adverse change. All pending or to the best of Borrower's knowledge
threatened litigation against the Borrower which is material in nature and
which is not fully covered by insurance is listed on the Addendum.
3.8. Tax Returns.The Borrower has filed all returns and
reports that are required to be filed by it in connection with any federal,
state or local tax, duty or charge levied, assessed or imposed upon it or
its property or withheld by it, including unemployment, social security and
similar taxes and all of such taxes, have been either paid or adequate
reserve or other provision has been made.
3.9. Employee Benefit Plans. Each employee benefit plan as
to which the Borrower may have any liability complies in all material
respects with all applicable provisions of the Employee Retirement Income
Security Act of 1974 ("ERISA"), including minimum funding requirements, and
to the best of Borrower's knowledge (i) no Prohibited Transaction (as defined
under ERISA) has occurred with respect to any such plan, (ii) no Reportable
Event (as defined under Section 4043 of ERISA) has occurred with respect to
any such plan which would cause the Pension Benefit Guaranty Corporation to
institute proceedings under Section 4042 of ERISA, (iii) the Borrower has
not withdrawn from any such plan or initiated steps to do so, and (iv) no
steps have been taken to terminate any such plan.
3.10. Environmental Matters. With respect to the Property,
except as otherwise disclosed on the Addendum, the Borrower is in compliance,
in all material respects, with all Environmental Laws. Except as otherwise
disclosed on the Addendum, no litigation or proceeding arising under,
relating to or in connection with any Environmental Law is pending or, to
the best of the Borrower's knowledge, threatened against the Borrower, the
Property or any past or present operation of the Borrower at the Property.
No release, threatened release or disposal of hazardous waste, solid waste or
other wastes is occurring, or to the best of the Borrower's knowledge has
occurred on, under or to the Property, in violation of any Environmental Law
which has not been fully remediated or is proposed to be fully remediated
pursuant to applicable governmental guidelines and procedures. As used in
this Section, "litigation or proceeding" means any demand, claim notice,
suit, suit in equity, action, administrative action, investigation or
inquiry whether brought by a governmental authority or other person, and
"Environmental Laws" means all provisions of laws, statutes, ordinances,
rules, regulations, permits, licenses, judgments, writs, injunctions,
decrees, orders, awards and standards promulgated by any governmental
authority concerning health, safety and protection of, or regulation of the
discharge of substances into, the environment.
3.11. Intellectual Property. The Borrower owns or is
licensed to use all patents, patent rights, trademarks, trade names, service
marks, copyrights, intellectual property, technology, know-how and processes
necessary for the conduct of its business as currently conducted that are
material to the condition (financial or otherwise), business or operations of
the Borrower.
3.12. Regulatory Matters. No part of the proceeds of the
Loan will be used for "purchasing" or "carrying" any "margin stock" within
the respective meanings of each of the quoted terms under Regulation U of the
Board of Governors of the Federal Reserve System as now and from time to time
in effect or for any purpose which violates the provisions of the Regulations
of such Board of Governors.
3.13. Solvency. As of the date hereof and after giving
effect to the transactions contemplated by the Loan Documents, (i) the
aggregate value of the Borrower's assets will exceed its liabilities
(including contingent, subordinated, unmatured and unliquidated liabilities),
(ii) the Borrower will have sufficient cash flow to enable it to pay its
debts as they mature, and (iii) the Borrower will not have unreasonably small
capital for the business in which it is engaged.
3.14. Disclosure. None of the Loan Documents contains or
will contain any untrue statement of material fact or omits or will omit to
state a material fact necessary in order to make the statements contained in
this Agreement or the Loan Documents not misleading. There is no fact known
to the Borrower which materially adversely affects or, so far as the Borrower
can now foresee, might materially adversely affect the business, assets,
operations, financial condition or results of operation of the Borrower and
which has not otherwise been fully set forth in this Agreement or in the
Loan Documents.
4.Affirmative Covenants.The Borrower agrees that from the date of
execution of this Agreement until all Obligations have been fully paid and
any commitments of the Bank to the Borrower have been terminated,
the Borrower will:
4.1.Books and Records. Maintain books and records in
accordance with GAAP and give representatives of the Bank access thereto at
all reasonable times, upon reasonable notice from Bank to Borrower including
permission to examine, copy and make abstracts from any of such books and
records and such other information as the Bank may from time to time
reasonably request, and the Borrower will make available to the Bank for
examination copies of any reports, statements or returns which the Borrower
may make to or file with any governmental department, bureau or agency,
federal or state.
4.2.Certificate of No Default. Furnish the Bank: as soon as
available and, in any event, within ninety (90) days after the end of each
fiscal year during the term of the Loan, Borrower's annual audited Financial
Statements and 10K Reports; within forty-five (45) days of the end of each
month during the term of the Loan, Borrower's monthly management prepared
unaudited Financial Statements; and within fifty (50) days of the end of each
of the first three fiscal quarters during the term, Borrower's 10Q Reports;
all prepared in reasonable detail, certified by an authorized officer of the
Borrower and prepared in accordance with GAAP applied from period to period.
The Borrower shall also deliver a certificate as to its compliance with
applicable financial covenants for the period then ended and whether any
Event of Default exists, and, if so, the nature thereof and the corrective
measures the Borrower proposes to take. The phrase "Financial Statements"
means the Borrower's consolidated and, if required by the Bank in its sole
discretion, consolidating balance sheets, income statements and statements of
cash flows for the year, month or quarter together with year-to-date figures
and comparative figures for the corresponding periods of the prior year.
4.3.Annual Financial Statements. The Financial Statements
referenced in Section 4.2 hereinabove will be prepared on an audited basis
in accordance with GAAP by an independent certified public accountant (when
and as referenced by Section 4.2 hereinabove) selected by the Borrower and
satisfactory to the Bank. Audited Financial Statements shall contain the
unqualified opinion of an independent certified public accountant and its
examination shall have been made in accordance with GAAP consistently applied
from period to period. In addition to the foregoing, Borrower shall provide
to Bank, on or before January 31st of each year during the term of the Loan,
Borrower's annual Federal income tax return for the prior fiscal year.
4.4.Payment of Taxes and Other Charges. Pay and discharge
when due all indebtedness and all taxes, assessments, charges, levies and
other liabilities imposed upon the Borrower, its income, profits, property or
business, except those which currently are being contested in good faith by
appropriate proceedings and for which the Borrower shall have set aside
adequate reserves or made other adequate provision with respect thereto
acceptable to the Bank in its sole discretion.
4.5.Maintenance of Existence, Operation and Assets. Do all
things necessary to maintain, renew and keep in full force and effect its
organizational existence and all rights, permits and franchises necessary to
enable it to continue its business; continue in operation in substantially
the same manner as at present; keep its properties in good operating
condition and repair; and make all necessary and proper repairs, renewals,
replacements, additions and improvements thereto.
4.6.Insurance. Maintain with financially sound and reputable
insurers, insurance with respect to its property and business against such
casualties and contingencies, of such types and in such amounts as more
specifically set forth on the attached Addendum. In the event of a conflict
between the provisions of this Section and the terms of any Security
Documents relating to insurance, the provisions in the Security Documents
will control.
4.7.Compliance with Laws. So as to preclude any materially
adverse change in Borrower's business, assets, operations, financial
condition or results of operation of the Borrower, comply with all laws
applicable to the Borrower and to the operation of its business (including
any statute, rule or regulation relating to employment practices and pension
benefits or to environmental, occupational and health standards and controls).
4.8. Financial Covenants. Comply with all of the financial
and other covenants, if any, set forth on the Addendum.
4.9. Additional Reports. Provide prompt written notice to
the Bank of the occurrence of any of the following (together with a
description of the action which the Borrower proposes to take with respect
thereto): (i) any Event of Default or potential Event of Default, (ii) any
litigation filed by or against the Borrower, (iii) any Reportable Event or
Prohibited Transaction with respect to any Employee Benefit Plan(s) (as
defined in ERISA) or (iv) any event which might result in a material adverse
change in the business, assets, operations, financial condition or results of
operation of the Borrower.
5.Negative Covenants.The Borrower covenants and agrees that from the
date of execution of this Agreement until all Obligations have been fully
paid and any commitments of the Bank to the Borrower have been terminated,
the Borrower will not, except as set forth in the Addendum, without the
Bank's prior written consent:
5.1.Indebtedness. Incur any indebtedness for borrowed money
other than: (i)the Loan and any subsequent indebtedness to the Bank; and
(ii)indebtedness disclosed to Bank and referenced in the Borrower's Historical
Financial Statements referred to in Section 3.2.
5.2.Liens and Encumbrances. Except as provided in Section 3.6,
create, assume or permit to exist any mortgage, pledge, encumbrance or other
security interest or lien upon the Property or the UCC Property or enter into
any arrangement for the acquisition of property subject to any conditional
sales agreement outside of the ordinary cause of Borrower's business.
5.3.Guarantees. Guarantee, endorse or become contingently
liable for the obligations of any person, firm or corporation, except in
connection with the endorsement and deposit of checks in the ordinary course
of business for collection.
5.4.Loans or Advances. Except in the ordinary course of
business purchase or hold beneficially any stock, other securities or
evidences of indebtedness of any loans or advances to, or make any investment
or acquire any interest whatsoever in, any other person, firm or corporation,
except investments disclosed on the Borrower's Historical Financial
Statements or acceptable to the Bank in its sole discretion.
5.5.Merger or Transfer of Assets. Merge or consolidate with
or into any person, firm or corporation or lease, sell, transfer or otherwise
dispose of all, or substantially all, of its property, assets and business
whether now owned or hereafter acquired.
5.6. Change in Business, Management or Ownership. Make or
permit any material change in the nature of its business as carried on as of
the date hereof or in its equity ownership, or sell, convey or otherwise
transfer any of Borrower's interest in the Property.
5.7. Dividends. Declare or pay any dividends on or make any
distribution with respect to any class of its equity or ownership interest,
or purchase, redeem, retire or otherwise acquire any of its equity, except
for the amount of federal and state income tax of the principals of the
Borrower attributable to the earnings of the Borrower where the Borrower is
an S corporation or a partnership.
6.Events of Default.The occurrence of any of the following will be
deemed to be an "Event of Default":
6.1.Covenant Default. The Borrower shall default in the
performance of any of the covenants or agreements contained in this Agreement.
6.2. Breach of Warranty. Any Financial Statement,
representation, warranty or certificate made or furnished by the Borrower to
the Bank in connection with this Agreement shall be false, incorrect or
incomplete when made.
6.3.Other Default. The occurrence of an Event of Default as
defined in the Note, any of the Security Documents.
6.4. Cross Default. Any default under this Agreement or the
loan documents shall constitute a default under any other loan agreement,
mortgage, note, security agreement or other document or instrument relating
to any other indebtedness from Borrower to Bank now existing or hereafter
arising and any default under any other loan agreement, note, mortgage,
security agreement or other document or instrument relating to any other
indebtedness from Borrower to Bank now existing or hereafter arising shall be
a default under this Agreement and the Loan Documents. Any default under any
loan agreement, note, mortgage, security agreement or other document or
instrument between Borrower and Fleet Bank, N.A., both now existing or
hereafter arising, shall be a default under this Agreement and the Loan
Documents.
Upon the occurrence of an Event of Default, the Bank will have all rights and
remedies specified in the Note and the Security Documents and all rights and
remedies (which are cumulative and not exclusive) available under applicable
law or in equity.
7.Conditions.The Bank's obligation to make any advance under the Loan
is subject to the conditions that as of the date of the advance:
7.1. No Event of Default. No Event of Default or event
which with the passage of time, provision of notice or both would constitute
an Event of Default shall have occurred and be continuing.
7.2.Authorization Documents. The Bank shall have been
furnished certified copies of resolutions of the board of directors or the
general partners of any partnership or corporation that executes this
Agreement, the Note or any of the Security Documents; or other proof of
authorization satisfactory to the Bank.
7.3.Receipt of Loan Documents. The Bank shall have received
the Loan Documents and such other instruments and documents which the Bank
may reasonably request in connection with the transactions provided for in
this Agreement, which may include an opinion of counsel for any party
executing any of the Loan Documents in form and substance satisfactory to the
Bank.
7.4. Title Insurance. The Borrower will provide the Bank,
at the Borrower's expense, with an ALTA (1992 Form) policy of title insurance
in favor of the Bank as Mortgagee in an amount not less than the combined
amount of the Loan with premium paid thereon, ensuring that the Bank's lien
on the Property is a valid first lien, and with only such substance as the
Bank deems acceptable.
7.5. Survey. The Borrower will provide the Bank, at the
Borrower's sole cost and expense, with a current survey of the Property in
form and substance and by a surveyor acceptable to the Bank. The survey
shall be certified to the title insurance company and the Bank.
8.Expenses.The Borrower agrees to pay the Bank, upon the closing of
this Agreement, and otherwise on demand, all costs and expenses incurred by
the Bank in connection with the (i) preparation, negotiation and delivery of
this Agreement and the other Loan Documents, and any modifications thereto,
and (ii) collecting the loan or instituting, maintaining, preserving,
enforcing and foreclosing the security interest in any of the collateral
securing the Loan, whether through judicial proceedings or otherwise, or in
defending or prosecuting any actions or proceedings arising out of or
relating to this Agreement, including reasonable fees and expenses of
counsel (which may include costs of in-house counsel), expenses for auditors,
appraisers and environmental consultants, lien searches, recording and filing
fees and taxes. In addition to the foregoing, Borrower shall pay Bank's
commitment fee in the amount of $25,000.00 on or before the closing date.
9. Increased Costs. On written demand, together with the written
evidence of the justification therefor, the Borrower agrees to pay the Bank,
all direct costs incurred and any losses suffered or payments made by the
Bank as a consequence of making the Loan by reason of any change in law or
regulation or its interpretation imposing any reserve, deposit, allocation of
capital or similar requirement (including without limitation, Regulation D of
the Board of Governors of the Federal Reserve System) on the Bank, its
holding company or any of their respective assets.
10.Miscellaneous.
10.1. Notices.All notices, demands, requests, consents,
approvals and other communications required or permitted hereunder must be in
writing and will be effective upon receipt if delivered personally to such
party, or if sent by facsimile transmission with confirmation of delivery, or
by nationally recognized overnight courier service, to the address set forth
below or to such other address as any party may give to the other in writing
for such purpose:
To the Bank: PNC Bank, National Association
11 West Market Street
Wilkes-Barre, Pennsylvania 18701
Attention: Gary H. Williams
Fax No.: (717) 831-2831
Telephone No.: (717) 826-4993
With a copy to: Timothy J. Siegfried, Esquire
Tallman, Hudders & Sorrentino, P.C.
The Paragon Centre
1611 Pond Road
Suite 300
Allentown, PA 18104-2256
Fax No.: (610) 391-1805
Telephone No.: (610) 391-1800
To the Borrower:3495 Winton Place
Building C
Rochester, New York 14623
Attention: William Burslem III, Vice President
Fax No.: (716) 272-9952
Telephone No.: (716) 272-1810 ext. 106
With a copy to: Parker Weld, Esquire
Gullace, Easton & Weld
1829 Marine Midland Plaza
Rochester, NY 14604
Fax No.: (716) 546-4241
Telephone No.: (716) 546-1980
10.2.Preservation of Rights.No delay or omission on the part
of the Bank to exercise any right or power arising hereunder will impair any
such right or power or be considered a waiver of any such right or power or
any acquiescence therein, nor will the action or inaction of the Bank impair
any right or power arising hereunder. The Bank's rights and remedies
hereunder are cumulative and not exclusive of any other rights or remedies
which the Bank may have under other agreements, at law or in equity.
10.3. Illegality. In case any one or more of the provisions
contained in this Agreement should be invalid, illegal or unenforceable in
any respect, the validity, legality and enforceability of the remaining
provisions contained herein shall not in any way be affected or impaired
thereby.
10.4. Changes in Writing. No modification, amendment or
waiver of any provision of this Agreement nor consent to any departure by the
Borrower therefrom, will in any event be effective unless the same is in
writing and signed by the Bank, and then such waiver or consent shall be
effective only in the specific instance and for the purpose for which given.
No notice to or demand on the Borrower in any case will entitle the Borrower
to any other or further notice or demand in the same, similar or other
circumstance.
10.5. Entire Agreement. This Agreement (including the
documents and instruments referred to herein) constitutes the entire
agreement and supersedes all other prior agreements and understandings, both
written and oral, between the parties with respect to the subject matter
hereof.
10.6. Counterparts. This Agreement may be signed in any
number of counterpart copies and by the parties hereto on separate
counterparts, but all such copies shall constitute one and the same
instrument.
10.7. Successors and Assigns. This Agreement will be binding
upon and inure to the benefit of the Borrower and the Bank and their
respective heirs, executors, administrators, successors and assigns; provided,
however, that the Borrower may not assign this Agreement in whole or in part
without the prior written consent of the Bank and the Bank at any time may
assign this Agreement in whole or in part.
10.8. Interpretation. In this Agreement, unless the Bank and
the Borrower otherwise agree in writing, the singular includes the plural and
the plural the singular; words importing any gender include the other genders;
references to statutes are to be construed as including all statutory
provisions consolidating, amending or replacing the statute referred to;
the word "or" shall be deemed to include "and/or", the words "including",
"includes" and "include" shall be deemed to be followed by the words "without
limitation"; references to articles, sections (or subdivisions of sections)
or exhibits are to those of this Agreement unless otherwise indicated; and
references to agreements and other contractual instruments shall be deemed to
include all subsequent amendments and other modifications to such instruments,
but only to the extent such amendments and other modifications are not
prohibited by the terms of this Agreement. Section headings in this
Agreement are included for convenience of reference only and shall not
constitute a part of this Agreement for any other purpose. Unless otherwise
specified in this Agreement, all accounting terms shall be interpreted and
all accounting determinations shall be made in accordance with GAAP. If this
Agreement is executed by more than one party as Borrower, the obligations of
such persons or entities will be joint and several.
10.9. Indemnity. The Borrower agrees to indemnify each of
the Bank, its directors, officers and employees and each legal entity, if
any, who controls the Bank (the "Indemnified Parties") and to hold each
Indemnified Party harmless from and against any and all claims, damages,
losses, liabilities and expenses (including, without limitation, all fees of
counsel with whom any Indemnified Party may consult and all expenses of
litigation or preparation therefor) which any Indemnified Party may incur or
which may be asserted against any Indemnified Party in connection with or
arising out of the matters referred to in this Agreement or in the other Loan
Documents by any person, entity or governmental authority (including any
person or entity claiming derivatively on behalf of the Borrower), whether
(a) arising from or incurred in connection with any breach of a
representation, warranty or covenant by the Borrower, or (b) arising out of
or resulting from any suit, action, claim, proceeding or governmental
investigation, pending or threatened, whether based on statute, regulation or
order, or tort, or contract or otherwise, before any court or governmental
authority, which arises out of or relates to this Agreement, any other Loan
Document, or the use of the proceeds of the Loan; provided, however, that the
foregoing indemnity agreement shall not apply to claims, damages, losses,
liabilities and expenses solely attributable to an Indemnified Party's gross
negligence or willful misconduct. The indemnity agreement contained in this
Section shall survive the termination of this Agreement, payment of any Loan
and assignment of any rights hereunder. The Borrower may participate at its
expense in the defense of any such action or claim.
10.10. Assignments and Participations. At any time, without
any notice to the Borrower, the Bank may sell, assign, transfer, negotiate,
grant participations in, or otherwise dispose of all or any part of the
Bank's interest in the Loan. The Borrower hereby authorizes the Bank to
provide, without any notice to the Borrower, any information concerning the
Borrower, including information pertaining to the Borrower's financial
condition, business operations or general creditworthiness, to any person or
entity which may succeed to or participate in all or any part of the Bank's
interest in the Loan.
10.11. Governing Law and Jurisdiction. This Agreement has
been delivered to and accepted by the Bank and will be deemed to be made in
the State where the Bank's office indicated above is located. This Agreement
will be interpreted and the rights and liabilities of the parties hereto
determined in accordance with the laws of the State where the Bank's office
indicated above is located, excluding its conflict of laws rules. The
Borrower hereby irrevocably consents to the exclusive jurisdiction of any
state or federal court for the county or judicial district where the Bank's
office indicated above is located, and consents that all service of process
be sent by nationally recognized overnight courier service directed to the
Borrower at the Borrower's address set forth herein and service so made will
be deemed to be completed on the business day after deposit with such courier;
provided that nothing contained in this Agreement will prevent the Bank from
bringing any action, enforcing any award or judgment or exercising any rights
against the Borrower individually, against any security or against any
property of the Borrower within any other county, state or other foreign or
domestic jurisdiction. The Bank and the Borrower agree that the venue
provided above is the most convenient forum for both the Bank and the
Borrower. The Borrower waives any objection to venue and any objection based
on a more convenient forum in any action instituted under this Agreement.
10.12. WAIVER OF JURY TRIAL. EACH OF THE BORROWER AND THE
BANK IRREVOCABLY WAIVES ANY AND ALL RIGHT IT MAY HAVE TO A TRIAL BY JURY IN
ANY ACTION, PROCEEDING OR CLAIM OF ANY NATURE RELATING TO THIS AGREEMENT, ANY
DOCUMENTS EXECUTED IN CONNECTION WITH THIS AGREEMENT OR ANY TRANSACTION
CONTEMPLATED IN ANY OF SUCH DOCUMENTS. THE BORROWER AND THE BANK ACKNOWLEDGE
THAT THE FOREGOING WAIVER IS KNOWING AND VOLUNTARY.
The Borrower acknowledges that it has read and understood all the provisions
of this Agreement, including the waiver of jury trial, and has been advised
by counsel as necessary or appropriate.
WITNESS the due execution hereof as a document under seal, as of the date
first written above.
ATTEST/WITNESS: TRAVEL PORTS OF AMERICA, INC.
By:_________________________________ By:____________________________________
Name: Name:
Title: Title:
(SEAL)
PNC BANK, NATIONAL ASSOCIATION
By:__________________________________
Name: Gary H. Williams
Title: Vice President
ADDENDUM to that certain Loan Agreement dated November 6, 1996, between
TRAVEL PORTS OF AMERICA, INC., as the Borrower and PNC BANK, NATIONAL
ASSOCIATION, as the Bank. Capitalized terms used in this Addendum and not
otherwise defined shall have the meanings given them in the Agreement.
Section numbers below refer to the sections of the Agreement.
3.6 Title to Assets. Describe additional liens and encumbrances below:
None, other than as described in 3.6(i)-(iii) inclusive hereof
3.7 Litigation. Describe pending or threatened litigation, proceedings,
etc. below:
None
3.10 Environmental Matters. Describe pending or threatened litigation,
proceedings, etc., below relative to the Property.
A. As listed in that Phase I environmental report dated July 3, 1996,
prepared by RKR Hess relative to the real property referenced
therein (a copy of which has been provided to Bank).
B. As set forth in that letter dated October 30, 1996, from Apex
Environmental, Inc. to Jerry L. Beiermann (a copy of which has
been provided to Bank).
C. As set forth in that letter dated November 7, 1995, from the
Commonwealth of Pennsylvania, Department of Environmental
Protection to Jerry L. Beiermann (a copy of which has been
previously provided to the Bank).
D. As set forth in that letter dated December 19, 1995, from the
Commonwealth of Pennsylvania, Department of Environmental
Protection to Travel Ports of America, Inc. (a copy of which has
been previously provided to the Bank).
4.6. Insurance
4.8. Financial Covenants. During the term of the Loan, Borrower shall
maintain the following Financial Covenants, which shall be defined pursuant
to generally accepted accounting principles, shall be measured on a quarterly
basis shall be subject to review and revision upon receipt of annual
Financial Statements, and shall be the same as required of Borrower by Fleet
Bank, N.A., to wit: (1) minimum net worth of $13,850,000.00; (2) maximum
debt to worth of no less than 2.50:1.00, which ratio shall be determined as
follows: total liabilities divided by the sum of (i) Borrower's worth, and
(ii) balance on Borrower's 8.5% Subordinated Debentures; and (3) debt service
coverage ratio of 1.20:1.00 or greater.
The Financial Covenants set forth herein shall be modified when and to the
extent Fleet Bank, N.A. modifies Fleet Bank, N.A.'s Financial Covenants set
forth in Fleet Bank, N.A.'s Credit Facilities with Borrower; provided that,
however, the modifications of the Financial Covenants increase net worth
minimum requirements, reduce the allowable debt to worth ratio or increase
the required debt service coverage ratio. All other Financial Covenant
modifications made by Fleet Bank, N.A. shall not be applicable to Borrower
under this Loan Agreement unless previously approved in writing by Bank.
SCHEDULE 1
REPAIRS TO BORROWER'S PROPERTIES
SCHEDULE 2B
BORROWER'S PROPERTY
TERM/TIME NOTE
$6,655,227.52 November 6, 1996
FOR VALUE RECEIVED, TRAVEL PORTS OF AMERICA, INC., a New York corporation
having business offices located at 3495 Winton Place, Building C, Rochester,
New York 14623, promises to pay to the order of PNC BANK, NATIONAL
ASSOCIATION (the "Bank"), in lawful money of the United States of America in
immediately available funds at its offices located at 11 West Market Street,
Wilkes-Barre, Pennsylvania 18701, or at such other location as the Bank may
designate from time to time, the principal sum of SIX MILLION SIX HUNDRED
FIFTY-FIVE THOUSAND TWO HUNDRED TWENTY-SEVEN AND 52/100 DOLLARS
($6,655,227.52), or so much thereof that is advanced by Bank to Borrower,
together with interest accruing on the outstanding principal balance from the
date hereof, as provided below:
1.Rate of Interest.
A. Amounts outstanding under this Note from the date hereof
until May 10, 1997 shall bear interest at a rate per annum which is equal to
the Bank's Prime Rate. As used herein, "Prime Rate" shall mean the rate
publicly announced by the Bank from time to time as its prime rate. The
Prime Rate is not tied to any external rate or index and does not necessarily
reflect the lowest rate of interest actually charged by the Bank to any
particular class or category of customers. If and when the Prime Rate
changes, the rate of interest on this Note will change automatically without
notice to the Borrower, effective on the day of any such change. In no event
will the rate of interest hereunder exceed a maximum rate allowed by law. On
and after May 10, 1997, amounts outstanding under this Note shall bear
interest at a fixed rate per annum of two hundred ten (210) basis points in
excess of the five (5) year United States Treasury Note then in effect one
(1) week prior to May 10, 1997.
B. Interest will be calculated on the basis of a year of 360 days for
the actual number of days in each interest period.
2. Payment Terms.
A. From the date hereof until May 10, 1997, Borrower shall pay
interest only on a monthly basis in such amount as billed by Bank. On and
after May 10, 1997, principal shall be due and payable in fifty-nine (59)
equal consecutive monthly installments in the amount of $36,973.49 each
commencing on May 10, 1997 and continuing on the 10th day of each month
thereafter to and including March 10, 2002 and a final installment of all
outstanding principal on April 10, 2002. Interest shall be payable at the
same time as the principal payments in such amounts as billed by Bank based
upon the interest rate set forth in paragraph 1A hereof. Any outstanding
principal and accrued interest shall be due and payable in full on April 10,
2002.
B. If any payment under this Note shall become due on a
Saturday, Sunday or public holiday under the laws of the State where the
Bank's office indicated above is located, such payment shall be made on the
next succeeding business day and such extension of time shall be included in
computing interest in connection with such payment. The Borrower hereby
authorizes the Bank to charge the Borrower's deposit account at the Bank for
any payment when due hereunder. Payments received will be applied to
charges, fees and expenses (including attorneys' fees), accrued interest and
principal in any order the Bank may choose, in its sole discretion.
3. Late Payments; Default Rate. If the Borrower fails to make any payment
of principal, interest or other amount coming due pursuant to the provisions
of this Note within fifteen (15) calendar days of the date due and payable,
the Borrower also shall pay to the Bank a late charge equal to five percent
(5%) of the amount of such monthly payment. Such fifteen (15) day period
shall not be construed in any way to extend the due date of any such payment.
The late charge is imposed for the purpose of defraying the Bank's expenses
incident to the handling of delinquent payments and is in addition to, and
not in lieu of, the exercise by the Bank of any rights and remedies
hereunder, under the other Loan Documents or under applicable laws, and any
fees and expenses of any agents or attorneys which the Bank may employ.
Upon maturity, whether by acceleration, demand or otherwise, and at the
option of the Bank upon the occurrence of any Event of Default
(as hereinafter defined) and during the continuance thereof, this Note shall
bear interest at a rate per annum (based on a year of 360 days and actual
days elapsed) which shall be five percentage points (5%) in excess of the
interest rate in effect from time to time under this Note but not more than
the maximum rate allowed by law (the "Default Rate"). The Default Rate shall
continue to apply whether or not judgment shall be entered on this Note.
4. Prepayment. Upon any prepayment by or on behalf of the Borrower (whether
voluntary, on default or otherwise), the Bank may require, if it so elects,
the Borrower to pay the Bank as compensation for the cost of being prepared
to advance fixed rate funds hereunder an amount equal to the Cost of
Prepayment. "Cost of Prepayment" means an amount equal to the present value,
if positive, of the product of (a) the difference between (i) the yield, on
the beginning date of the applicable interest period, of a U.S. Treasury
obligation with a maturity similar to the applicable interest period minus
(ii) the yield on the prepayment date, of a U.S. Treasury obligation with a
maturity similar to the remaining maturity of the applicable interest period,
and (b) the principal amount to be prepaid, and (c) the number of years,
including fractional years, from the prepayment date to the end of the
applicable interest period. The yield on any U.S. Treasury obligation shall
be determined by reference to Federal Reserve Statistical Release H.15(519) "
Selected Interest Rates". For purposes of making present value calculations,
the yield to maturity of a similar maturity U.S. Treasury obligation on the
prepayment date shall be deemed the discount rate. The Cost of Prepayment
shall also apply to any payments made after acceleration of the maturity of
this Note while a Fixed Rate is in effect.
5. Other Loan Documents. This Note is issued in connection with the Loan
Agreement, Open-End Mortgages, Environmental Indemnity Agreement, Security
Agreements and UCC-1 Financing Statements, the terms of which are
incorporated herein by reference (the "Loan Documents"), and is secured by
the property described in the Loan Documents (if any) and by such other
collateral as previously may have been or may in the future be granted to the
Bank to secure this Note.
6.Events of Default. The occurrence of any of the following events will be
deemed to be an "Event of Default" under this Note: (i) the nonpayment of
any principal, interest or other indebtedness under this Note within fifteen
(15) calendar days of the date due; (ii) the occurrence of any event of
default or default and the lapse of any notice or cure period under any Loan
Document or any other debt, liability or obligation to the Bank of any
Obligor; (iii) the filing by or against any Obligor of any proceeding in
bankruptcy, receivership, insolvency, reorganization, liquidation,
conservatorship or similar proceeding, (and, in the case of any such
proceeding instituted against any Obligor, such proceeding is not dismissed
or stayed within forty-five (45) days of the commencement thereof); (iv) any
assignment by any Obligor for the benefit of creditors, or any levy,
garnishment, attachment or similar proceeding is instituted against any
property of any Obligor held by or deposited with the Bank; (v) a default
with respect to any other indebtedness of any Obligor for borrowed money, if
the effect of such default is to cause or permit the acceleration of such
debt; (vi) the commencement of any foreclosure proceeding, execution or
attachment against any collateral securing the obligations of any Obligor to
the Bank; (vii) the entry of a final judgment against any Obligor and the
failure of such Obligor to discharge the judgment within thirty (30) days of
the entry thereof; (viii) [intentionally deleted] (ix) any material adverse
change in the business, assets, operations, financial condition or results of
operations of any Obligor; (x) the Borrower ceases doing business as a going
concern; (xi) the revocation or attempted revocation, in whole or in part, of
any guarantee by any Guarantor; (xii) the death or legal incompetency of any
individual Obligor or, if any Obligor is a partnership, the death or legal
incompetency of any individual general partner; (xiii) any representation or
warranty made by any Obligor to the Bank in any Loan Document, or any other
documents now or in the future securing the obligations of any Obligor to the
Bank, is, at the time made, false, erroneous or misleading in any material
respect; or (xiv) the failure of any Obligor to observe or perform any
covenant or other agreement with the Bank contained in any Loan Document or
any other documents now or in the future securing the obligations of any
Obligor to the Bank which causes a materially adverse change in Borrower's
business, assets, operations, financial condition or results of the operation
of the Borrower. As used herein, the term "Obligor" means any Borrower and
any Guarantor, and the term "Guarantor" means any guarantor of the
obligations of the Borrower to the Bank existing on the date of this Note or
arising in the future.
Upon the occurrence of an Event of Default: (a) the Bank shall be under no
further obligation to make advances hereunder; (b) if an Event of Default
specified in clause (iii) or (iv) above shall occur, the outstanding
principal balance and accrued interest hereunder together with any additional
amounts payable hereunder shall be immediately due and payable without demand
or notice of any kind; (c)if any other Event of Default shall occur, the
outstanding principal balance and accrued interest hereunder together with
any additional amounts payable hereunder, at the option of the Bank and
without demand or notice of any kind may be accelerated and become
immediately due and payable; (d) at the option of the Bank, this Note will
bear interest at the Default Rate from the date of the occurrence of the
Event of Default; and (e)the Bank may exercise from time to time any of the
rights and remedies available to the Bank under the Loan Documents or under
applicable law.
7. Right of Setoff. In addition to all liens upon and rights of setoff
against the money, securities or other property of the Borrower given to the
Bank by law, the Bank shall have, with respect to the Borrower's obligations
to the Bank under this Note and to the extent permitted by law, a contractual
possessory security interest in and a right of setoff against, and the
Borrower hereby assigns, conveys, delivers, pledges and transfers to the Bank
all of the Borrower's right, title and interest in and to, all deposits,
moneys, securities and other property of the Borrower now or hereafter in the
possession of or on deposit with the Bank whether held in a general or
special account or deposit, whether held jointly with someone else, or
whether held for safekeeping or otherwise, excluding, however, all IRA,
Keogh, and trust accounts. Every such security interest and right of setoff
may be exercised without demand upon or notice to the Borrower.
8.Miscellaneous.No delay or omission of the Bank to exercise any right or
power arising hereunder shall impair any such right or power or be considered
to be a waiver of any such right or power or any acquiescence therein nor
shall the action or inaction of the Bank impair any right or power hereunder.
The Borrower agrees to pay on demand, to the extent permitted by law, all
costs and expenses incurred by the Bank in the enforcement of its rights in
this Note and in any security therefor, including without limitation
reasonable fees and expenses of the Bank's counsel. If any provision of
this Note is found to be invalid by a court, all the other provisions of this
Note will remain in full force and effect. The Borrower and all other makers
and indorsers of this Note hereby forever waive presentment, protest, notice
of dishonor and notice of non-payment. The Borrower also waives all defenses
based on suretyship or impairment of collateral. If this Note is executed by
more than one Borrower, the obligations of such persons or entities hereunder
will be joint and several. This Note shall bind the Borrower and the heirs,
executors, administrators, successors and assigns of the Borrower, and the
benefits hereof shall inure to the benefit of Bank and its successors and
assigns.
This Note has been delivered to and accepted by the Bank and will be deemed
to be made in the State where the Bank's office indicated above is located.
This Note will be interpreted and the rights and liabilities of the parties
hereto determined in accordance with the laws of the State where the Bank's
office indicated above is located, excluding its conflict of laws rules.
The Borrower hereby irrevocably consents to the exclusive jurisdiction of
any state or federal court for the county or judicial district where the
Bank's office indicated above is located, and consents that all service of
process be sent by nationally recognized overnight courier service directed
to the Borrower at the Borrower's address set forth herein and service so
made will be deemed to be completed on the business day after deposit with
such courier; provided that nothing contained in this Note will prevent the
Bank from bringing any action, enforcing any award or judgment or exercising
any rights against the Borrower individually, against any security or against
any property of the Borrower within any other county, state or other foreign
or domestic jurisdiction. The Borrower acknowledges and agrees that the
venue provided above is the most convenient forum for both the Bank and the
Borrower. The Borrower waives any objection to venue and any objection based
on a more convenient forum in any action instituted under this Note.
9. WAIVER OF JURY TRIAL. The Borrower irrevocably waives any and all rights
the Borrower may have to a trial by jury in any action, proceeding or claim
of any nature relating to this Note, any documents executed in connection
with this Note or any transaction contemplated in any of such documents. The
Borrower acknowledges that the foregoing waiver is knowing and voluntary.
The Borrower acknowledges that it has read and understood all the provisions
of this Note, including the waiver of jury trial, and has been advised by
counsel as necessary or appropriate.
WITNESS the due execution hereof as a document under seal, as of the date
first written above, with the intent to be legally bound hereby.
ATTEST/WITNESS: TRAVEL PORTS OF AMERICA, INC.
By:_________________________________ By:____________________________________
Name: Name:
Title: Title:
(SEAL)
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