UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark one)
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934.
For the quarterly period ended March 31, 1998
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934.
For the transition period from _______________ to ______________
Commission file number 0-25424
Semitool, Inc.
(Exact Name of Registrant as Specified in Its Charter)
Montana 81-0384392
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
655 West Reserve Drive
Kalispell, Montana 59901
(Address of principal executive offices, zip code)
Registrant's telephone number, including area code: (406)752-2107
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. YES X NO __
(APPLICABLE ONLY TO CORPORATE REGISTRANTS)
Indicate the number of shares outstanding of each of the registrant's classes of
common stock, as of the latest practical date:
Title Outstanding as of May 7, 1998
Common Stock 13,789,473
<PAGE>
Part I. Financial Information
Item 1. Financial Statements
SEMITOOL, INC.
CONSOLIDATED BALANCE SHEETS
March 31, 1998 and September 30, 1997
(Amounts in Thousands, Except for Share Amounts)
<TABLE>
<S> <C> <C>
March 31, September 30,
ASSETS 1998 1997
---------------- ---------------
(Unaudited)
Current assets:
Cash and cash equivalents $ 4,172 $ 5,060
Trade receivables, less allowance for doubtful
accounts of $224 and $224 35,365 40,896
Inventories 41,661 41,124
Prepaid expenses and other current assets 2,324 1,771
Deferred income taxes 5,902 5,902
---------------- ---------------
Total current assets 89,424 94,753
Property, plant and equipment, net 37,310 33,685
Intangibles, less accumulated amortization of $1,812 and $1,460 2,946 2,142
Other assets, net 1,091 1,145
---------------- ---------------
Total assets $ 130,771 $ 131,725
================ ===============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Note payable to bank $ 5,000 $ 4,000
Accounts payable 12,943 16,735
Accrued commissions 1,085 1,850
Accrued warranty and installation 9,575 9,820
Accrued payroll and related benefits 5,456 6,164
Other accrued liabilities 818 1,029
Customer advances 2,138 1,722
Income taxes payable 1,570 2,986
Long-term debt, due within one year 479 393
Payable to shareholder 46 7
---------------- ---------------
Total current liabilities 39,110 44,706
Long-term debt, due after one year 4,184 3,364
Deferred income taxes 2,075 2,075
---------------- ---------------
Total liabilities 45,369 50,145
---------------- ---------------
Contingency (Note 5)
Shareholders' equity:
Preferred stock, no par value, 5,000,000 shares authorized,
no shares issued and outstanding -- --
Common stock, no par value, 30,000,000 shares authorized,
13,789,286 and 13,755,514 shares issued and outstanding 40,908 40,590
Retained earnings 44,968 40,949
Foreign currency translation adjustment (474) 41
---------------- ---------------
Total shareholders' equity 85,402 81,580
---------------- ---------------
Total liabilities and shareholders' equity $ 130,771 $ 131,725
================ ===============
The accompanying notes are an integral part of the consolidated financial statements.
</TABLE>
<PAGE>
SEMITOOL, INC.
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
for the three and six months ended March 31, 1998 and 1997
(Amounts in Thousands, Except for Per Share Amounts)
<TABLE>
Three Months Ended Six Months Ended
March 31, March 31,
--------------------------- ---------------------------
<S> <C> <C> <C> <C>
1998 1997 1998 1997
----------- ----------- ----------- -----------
Net sales $ 45,241 $ 45,227 $ 92,243 $ 87,735
Cost of sales 21,399 24,320 44,497 47,745
----------- ----------- ----------- -----------
Gross profit 23,842 20,907 47,746 39,990
----------- ----------- ----------- -----------
Operating expenses:
Selling, general and administrative 14,496 11,341 28,200 21,822
Research and development 6,896 5,315 13,023 10,303
----------- ----------- ----------- -----------
Total operating expenses 21,392 16,656 41,223 32,125
----------- ----------- ----------- -----------
Income from operations 2,450 4,251 6,523 7,865
Other income (expense), net (204) (17) (143) (72)
----------- ----------- ----------- -----------
Income before income taxes 2,246 4,234 6,380 7,793
Provision for income taxes 831 1,608 2,361 2,961
----------- ----------- ----------- -----------
Net income $ 1,415 $ 2,626 $ 4,019 $ 4,832
=========== =========== =========== ===========
Earnings per share:
Basic $ 0.10 $ 0.19 $ 0.29 $ 0.35
=========== =========== =========== ===========
Diluted $ 0.10 $ 0.19 $ 0.29 $ 0.35
=========== =========== =========== ===========
Average common shares:
Basic 13,780 13,667 13,775 13,662
=========== =========== =========== ===========
Diluted 13,926 13,809 13,971 13,767
=========== =========== =========== ===========
The accompanying notes are an integral part of the consolidated financial statements.
</TABLE>
<PAGE>
SEMITOOL, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
for the six months ended March 31, 1998 and 1997
(Amounts in Thousands)
<TABLE>
Six Months Ended
March 31,
-----------------------------
<S> <C> <C>
1998 1997
----------- -----------
Operating activities:
Net income $ 4,019 $ 4,832
Adjustments to reconcile net income to net cash provided by
(used in) operating activities:
Depreciation and amortization 5,035 2,840
Other 37 19
Change in:
Trade receivables 4,709 3,054
Inventories (2,074) (9,776)
Prepaid expenses and other current assets (553) 469
Other assets (110) (207)
Accounts payable (3,375) 3,017
Accrued commissions (765) (918)
Accrued warranty and installation (245) 1,015
Accrued payroll and related benefits (708) 691
Other accrued liabilities (211) 66
Customer advances 416 (373)
Income taxes payable (1,416) (837)
Shareholder payable 39 (16)
----------- -----------
Net cash provided by operating activities 4,798 3,876
----------- -----------
Investing activities:
Purchases of property, plant and equipment (6,764) (2,156)
Increase in intangible assets (1,172) (351)
Proceeds from sale of equipment 52 17
----------- -----------
Net cash used in investing activities (7,884) (2,490)
----------- -----------
Financing activities:
Proceeds from exercise of stock options 318 115
Borrowings under line of credit 44,975 17,865
Repayments under line of credit (43,975) (17,865)
Proceeds from long-term debt 1,100 11
Repayments of long-term debt (194) (185)
----------- -----------
Net cash provided by (used in) financing activities 2,224 (59)
----------- -----------
Effect of exchange rate changes on cash and cash equivalents (26) --
----------- -----------
Net increase (decrease) in cash and cash equivalents (888) 1,327
Cash and cash equivalents at beginning of period 5,060 3,058
----------- -----------
Cash and cash equivalents at end of period $ 4,172 $ 4,385
=========== ===========
The accompanying notes are an integral part of the consolidated financial statements.
</TABLE>
<PAGE>
SEMITOOL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 1. Basis of Presentation
The consolidated financial statements included herein have been prepared by
Semitool, Inc., (the "Company") without audit, pursuant to the rules and
regulations of the United States Securities and Exchange Commission (the "SEC").
Certain information and footnote disclosures, normally included in financial
statements prepared in accordance with generally accepted accounting principles,
have been condensed or omitted as permitted by such rules and regulations. The
Company believes the disclosures included herein are adequate; however, these
consolidated statements should be read in conjunction with the consolidated
financial statements and the notes thereto for the year ended September 30, 1997
previously filed with the SEC on Form 10-K.
Financial information as of September 30, 1997 has been derived from the audited
financial statements of the Company. In the opinion of management, these
unaudited financial statements contain all of the adjustments (normal and
recurring in nature) necessary to present fairly the consolidated financial
position of the Company and subsidiaries and the consolidated results of their
operations and their cash flows. The results of operations for the periods
presented may not be indicative of those which may be expected for the full
year.
In June 1997, the Financial Accounting Standards Board (FASB) issued Statement
of Financial Accounting Standards (SFAS) NO. 130, "Reporting Comprehensive
Income." SFAS No. 130 establishes standards for the reporting and display of
comprehensive income and its components in a full set of general purpose
financial statements. Comprehensive income is defined as the change in equity of
a business enterprise during a period from transactions and other events and
circumstances from nonowner sources. The adoption of SFAS No. 130 is effective
for the Company in fiscal 1999.
In June 1997, the FASB issued SFAS No. 131, "Disclosures about Segments of an
Enterprise and Related Information." SFAS No. 131 requires publicly-held
companies to report financial and other information about key revenue-producing
segments of the entity for which such information is available and is utilized
by the chief operation decision maker. Specific information to be reported for
individual segments includes profit or loss, certain revenue and expense items
and total assets. A reconciliation of segment financial information to amounts
reported in the financial statements is also to be provided. SFAS No. 131 is
effective for the Company in fiscal 1999 and the form of the presentation of the
Company's financial statements has not yet been determined.
Note 2. Principles of Consolidation
The consolidated financial statements include the accounts of Semitool, Inc. and
its wholly-owned subsidiaries. All significant intercompany and affiliated
accounts and transactions are eliminated in consolidation.
Note 3. Inventories
Inventories are summarized as follows (in thousands):
March 31, 1998 September 30, 1997
-------------- ------------------
Parts and raw materials $ 22,618 $ 22,028
Work-in-process 14,989 14,869
Finished goods 4,054 4,227
-------------- ------------------
$ 41,661 $ 41,124
============== ==================
During the six months ended March 31, 1998 and 1997, $1,486,000 and $1,128,000,
respectively, of finished goods inventory was transferred to property, plant and
equipment.
Note 4. Income Taxes
The components of the Company's income tax provision (benefit) are as follows,
(in thousands):
Three Months Ended Six Months Ended
March 31, March 31,
--------------------------- --------------------------
1998 1997 1998 1997
----------- ----------- ----------- -----------
Federal $ 673 $ 1,381 $ 2,295 $ 2,452
State 83 196 278 288
Foreign 75 31 (212) 221
----------- ----------- ----------- -----------
Total $ 831 $ 1,608 $ 2,361 $ 2,961
=========== =========== =========== ===========
Note 5. Contingency
A class action lawsuit (Case No. DV-96-124A) was filed on February 26, 1996, in
the Montana Eleventh Judicial District Court, Flathead County, Kalispell,
Montana against the Company and certain of its officers and directors. The
complaint includes allegations that the Company issued misleading statements
concerning its business and prospects. The suit seeks injunctive relief,
damages, costs and other relief as the court may find appropriate. The Company
believes the lawsuit to be without merit and is contesting the action
vigorously. However, given the inherent uncertainty of litigation, insurance
issues, and the current stage of discovery, there can be no assurance that the
ultimate outcome will be in the Company's favor, or that if the ultimate outcome
is not in the Company's favor, that such an outcome, the diversion of
management's attention, and any costs associated with the lawsuit, will not have
a material adverse effect on the Company's financial condition or results of
operations.
Note 6. Earnings Per Common Share
In 1997, the Financial Accounting Standards Board issued Statement of Financial
Accounting Standards No. 128 (SFAS 128), "Earnings per Share." The Company
adopted SFAS 128 during the first quarter of fiscal 1998. SFAS 128 replaced the
previously required primary and fully diluted earnings per share with basic and
diluted earnings per share. Unlike primary earnings per share, basic earnings
per share excludes any dilutive effects of options, warrants and convertible
securities. Diluted earnings per share is calculated in a manner that is similar
to the previously reported fully diluted earnings per share. All earnings per
share amounts for all periods have been presented to conform to the requirements
of SFAS 128.
The following table sets forth the computation of basic and diluted earnings per
share (in thousands):
<TABLE>
Three Months Ended Six Months Ended
March 31, March 31,
-------------------------- --------------------------
<S> <C> <C> <C> <C>
1998 1997 1998 1997
----------- ---------- ----------- -----------
Numerator:
Net income for basic and diluted earnings
per share $ 1,415 $ 2,626 $ 4,019 $ 4,832
=========== ========== =========== ===========
Denominator:
Average common shares used for basic
earnings per share 13,780 13,667 13,775 13,662
Effect of diluted securities:
Stock options 146 142 196 105
----------- ---------- ----------- -----------
Denominator for diluted earnings per share 13,926 13,809 13,971 13,767
=========== ========== =========== ===========
</TABLE>
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
CAUTION
Statements contained in this "Management's Discussion and Analysis of Financial
Condition and Results of Operations" and elsewhere in this report which are not
historical facts are forward-looking statements within the meaning of Section
21E of the Securities Exchange Act of 1934, as amended. A forward-looking
statement may contain words such as "will continue to be," "will be," "continue
to," "expect to," "anticipates that," "to be" or "can impact." Forward looking
statements include: the Company's statement in Part I, Item 2 under the heading
"Liquidity and Capital Resources" regarding its belief that cash and cash
equivelents, funds generated from operations, and borrowings under the Company's
line of credit agreements will be sufficient to meet the Company's planned
requirements for the balance of the fiscal year. Management cautions that
forward-looking statements are subject to risks and uncertainties that could
cause the Company's actual results to differ materially from those projected in
such forward-looking statements. These risks and uncertainties include, but are
not limited to, the cyclical nature of the semiconductor industry in general,
lack of market acceptance for new products, decreasing demand for the Company's
existing products, impact of competitive products and pricing, product
development, commercialization and technological difficulties, capacity and
supply constraint difficulties and other risks detailed herein. The Company's
future results will depend on its ability to continue to enhance its existing
products and to develop and manufacture new products and to finance such
activities. There can be no assurance that the Company will be successful in the
introduction, marketing and cost-effective manufacture of any new products or
that the Company will be able to develop and introduce in a timely manner new
products or enhancements to its existing products and processes which satisfy
customer needs or achieve widespread market acceptance.
The Company undertakes no obligation to release revisions to forward-looking
statements to reflect subsequent events, changed circumstances, or the
occurrence of unanticipated events.
RESULTS OF OPERATIONS
SECOND QUARTER OF FISCAL YEAR 1998 COMPARED WITH SECOND QUARTER OF
FISCAL YEAR 1997
Net Sales. Net sales consist of revenues from sales of equipment, including
associated spare parts and service contracts, and software products. Net sales
were $45.2 million in the second quarter of fiscal year 1998 essentially even
with sales for the same period in fiscal year 1997. Sales of vertical thermal
processors, spare parts, single wafer processors, including electrochemical
deposition tools, and software were higher in the current quarter but that
increase was offset by lower shipments of batch wet processing tools.
Gross Profit. Gross profit margin was 52.7% of net sales in the second quarter
of fiscal year 1998 compared to 46.2% of net sales for the same period in fiscal
year 1997. Lower warranty and manufacturing costs were the primary factors in
this increase. The Company's gross profit margin has been, and will continue to
be, affected by a variety of factors, including the mix and average selling
price of products sold, and the cost to manufacture, service and support new and
enhanced products.
Selling, General and Administrative. Selling, general and administrative
expenses were $14.5 million or 32.0% of net sales in the second quarter of
fiscal year 1998 compared to $11.3 million or 25.1% of net sales for the same
period in fiscal year 1997. The increase in selling, general and administrative
expense is primarily attributable to the larger infrastructure put in place to
support the Asian and domestic markets, and the growing installed base of a
broader range of equipment. A substantial portion of the Company's selling,
general and administrative expenses are fixed in the short term and as such may
fluctuate as a percentage of net sales from period to period.
Research and Development. Research and development expenses consist of salaries,
project materials, laboratory costs, professional fees, and other costs
associated with the Company's research and development efforts. Research and
development expense was $6.9 million or 15.2% of net sales in the second quarter
of fiscal year 1998 compared to $5.3 million or 11.8% of net sales in the same
period in fiscal year 1997. The Company's development efforts associated with
its electrochemical deposition tool and software products for fab equipment data
collection, analysis and control accounted for most of the increase.
The Company is committed to technology leadership in the semiconductor equipment
industry and expects to continue to fund research and development with a
multiyear perspective. The Company's research and development expenses have
fluctuated from quarter to quarter in the past and this fluctuation is expected
to continue in the future, both in the absolute dollar amount and as a
percentage of net sales.
Other Income (Expense), Net. Other income (expense), net was a net expense of
$204,000 in the second quarter of fiscal year 1998 compared to a net expense of
$17,000 for the same period in fiscal year 1997. Interest expense is the largest
contributor to the increase and interest expense exceeded interest income in
both periods.
Provision for Income Taxes. Income tax provisions are made based on the blended
estimate of federal, state and foreign effective income tax rates.
Orders Backlog. The Company includes in its orders backlog those customer orders
for which it has received purchase orders or purchase order numbers and shipment
is scheduled within the next twelve months. Orders backlog was approximately
$63.2 million at March 31, 1998 compared to approximately $81.7 million at March
31, 1997 and $63.8 million at the beginning of the current fiscal year.
Orders are generally subject to cancellation or rescheduling by customers with
limited or no penalty. As the result of tools ordered and shipped in the same
quarter, changes in customer delivery schedules, cancellations of orders and
delays in product shipments, the Company's orders backlog at any particular date
is not necessarily indicative of actual sales for any succeeding period.
SIX MONTHS OF FISCAL YEAR 1998 COMPARED WITH SIX MONTHS OF FISCAL YEAR 1997
Net Sales. Net sales increased 5.1% to $92.2 million in the first half of fiscal
year 1998 from $87.7 million for the same period in fiscal year 1997. Increased
shipments of vertical thermal processors, spare parts, single wafer processors,
including electrochemical deposition tools, and software products were partially
offset by decreases in shipments of batch wet processing tools.
Gross Profit. Gross profit margin was 51.8% of net sales in the first half of
fiscal year 1998 compared to 45.6% of net sales for the same period in fiscal
year 1997. Reduced manufacturing costs, lower warranty costs in the second
quarter and performance based incentives earned in the first quarter were the
most significant factors in the increase in gross profit margin. The Company's
gross profit margin has been, and will continue to be, affected by a variety of
factors, including the mix and average selling price of products sold, and the
cost to manufacture, service and support new and enhanced products.
Selling, General and Administrative. Selling, general and administrative
expenses were $28.2 million or 30.6% of net sales in the first half of fiscal
year 1998 compared to $21.8 million or 24.9% of net sales for the same period in
fiscal year 1997. The 5.7% increase in selling, general and administrative
expenses relative to net sales consists primarily of a 4.7% increase in sales
and service expenses due to the larger infrastructure put in place to support
both the Asian and domestic markets, and the larger installed base of a broader
range of equipment.
Research and Development. Research and development expense was $13.0 million or
14.1% of net sales in the first half of fiscal year 1998 compared to $10.3
million or 11.7% of net sales for the same period in fiscal year 1997. The
increase in spending on research and development for the first six months of the
current fiscal year was primarily associated with the Company's electrochemical
deposition tool development and the development of software products by Semy
Engineering, Inc., a wholly-owned subsidiary of the Company.
Other Income (Expense), Net. Other income (expense), net was a net expense of
$143,000 in the first half of fiscal year 1998 compared to a net expense of
$72,000 for the same period in fiscal year 1997. Interest expense exceeded
interest income in the first half of fiscal year 1998 and accounted for the
majority of the change.
Provision for Income Taxes. Income tax provisions are made based on the blended
estimate of federal, state and foreign effective income tax rates. The effective
income tax rate for the first half of fiscal year 1998 was 37% compared to 38%
for the comparable period in fiscal year 1997.
Year 2000 Software System Status. The Company has conducted a preliminary review
of its software systems for year 2000 compliance. This includes software used by
the Company and the software developed by the Company that is incorporated in
the tools that it sells to customers. The tests completed to date show that most
of the Company's software is year 2000 compliant and will operate as is, or with
minor modifications. The Company will continue to test its software, but does
not anticipate major year 2000 compliance problems at this time. There can be no
assurance, however, that the Company will not experience unanticipated year 2000
compliance difficulties that could have a material negative impact on the
Company's operations.
Recently Issued Accounting Standards. Recently issued accounting standards
include Statement of Financial Accounting Standards (SFAS) No. 128 "Earnings Per
Share," issued by the Financial Accounting Standards Board (FASB) in February
1997, SFAS No. 130 "Reporting Comprehensive Income" and SFAS No. 131
"Disclosures about Segments of an Enterprise and Related Information," issued by
the FASB in June 1997. SFAS No. 128 was first effective for the Company for its
interim period ended December 31, 1997. Basic and diluted earnings per share
pursuant to the requirements of SFAS No. 128 are presented on the face of the
income statement and in the notes to the financial statements. Descriptions of
SFAS No. 130 and SFAS No. 131 are included in the notes to the financial
statements.
LIQUIDITY AND CAPITAL RESOURCES
Cash provided by operations was $4.8 million during the first six months of
fiscal year 1998, compared to $3.9 million provided in the same period in fiscal
year 1997. Inventories rose slightly to $41.7 million during the first six
months of fiscal year 1998 from $41.1 million at September 30, 1997. During the
same period, trade receivables decreased $4.7 million, net of foreign currency
translation effects, mainly due to the timing of collections. The Company
expects future working capital components to fluctuate based on net sales and
the manufacturing cycle time of the specific equipment types being produced.
Investing activities consisted primarily of $6.8 million of property, plant and
equipment acquisitions, and $1.0 million for internally developed software
products included in intangible assets. The expenditures for property, plant and
equipment included the purchase of land to be used as a site for an office
building for Semy Engineering, Inc., a wholly-owned subsidiary, which markets
software products for semiconductor fab automation, and a manufacturing facility
for Rhetech, Inc., a wholly-owned subsidiary, which refurbishes and markets used
semiconductor equipment. New financing in the amount of $1.1 million was
obtained for the Rhetech facility purchase. The financing included a $540,000,
ten year loan with monthly pricipal and interest payments, a fixed interest rate
of 7.50% for seven years, and a variable interest rate of one percentage point
above the lender's then current prime rate for the remaining three years. A
$560,000 bridge loan was provided by the same lender with a maturity date of
September 3, 1998 and it is expected to be repaid from the proceeds of an
industrial development association loan. Financing activity under the Company's
revolving line of credit resulted in new net borrowings of $1.0 million, and
borrowings of $5.0 million were outstanding under this credit facility at March
31, 1998.
As of March 31, 1998, the Company's principal sources of liquidity consisted of
approximately $4.2 million of cash and cash equivalents, $5.0 million available
under the Company's $10.0 million revolving line of credit, and $15.0 million
under its long-term credit facility. The revolving line of credit facility
expires on March 31, 1999, when all principal amounts owing are due. The
long-term credit facility expires on December 31, 1999, with amounts outstanding
repayable in monthly principal and interest payments over a five-year period
ending December 2004.
The Company believes that cash and cash equivalents, funds generated from
operations, and borrowings under its line of credit agreements will be
sufficient to meet the Company's planned capital requirements for the balance of
the fiscal year. Total purchases of property, plant and equipment for fiscal
year 1998 are expected to be approximately $13.0 million excluding any major
facility expansion. The Company has plans to build an office building for its
software business but has not determined when, or if, that project will move
forward. Additionally, the Company has formulated preliminary expansion plans
for other areas of its business which can be triggered quickly. Any decision to
implement a major facility expansion, to add an additional facility, to invest
in or acquire complementary businesses, products, or technology, or any
significant increase in working capital to fund such growth could result in the
Company effecting additional equity or debt financing. The sale of additional
equity securities or the issuance of equity securities in a business combination
could result in dilution to the Company's shareholders.
LITIGATION
A class action lawsuit (Case No. DV-96-124A) was filed February 26, 1996, in the
Montana Eleventh Judicial District Court, Flathead County, Kalispell, Montana
against the Company and certain of its officers and directors. The complaint
includes allegations that the Company issued misleading statements concerning
its business and prospects. The suit seeks injunctive relief, damages, costs and
other relief as the court may find appropriate. The Company believes the lawsuit
to be without merit and is contesting the action vigorously. However, given the
inherent uncertainty of litigation, insurance issues, and the current stage of
discovery, there can be no assurance that the ultimate outcome will be in the
Company's favor, or that if the ultimate outcome is not in the Company's favor,
that such an outcome, the diversion of management's attention, and any costs
associated with the lawsuit, will not have a material adverse effect on the
Company's financial condition or results of operations.
<PAGE>
SEMITOOL, INC.
Part II. OTHER INFORMATION
Item 1. Legal Proceedings
A class action lawsuit (Case No. DV-96-124A) was filed February 26, 1996, in the
Montana Eleventh Judicial District Court, Flathead County, Kalispell, Montana
against the Company and certain of its officers and directors. The complaint
includes allegations that the Company issued misleading statements concerning
its business and prospects. The suit seeks injunctive relief, damages, costs and
other relief as the court may find appropriate. The Company believes the lawsuit
to be without merit and is contesting the action vigorously. However, given the
inherent uncertainty of litigation, insurance issues, and the current stage of
discovery, there can be no assurance that the ultimate outcome will be in the
Company's favor, or that if the ultimate outcome is not in the Company's favor,
that such an outcome, the diversion of management's attention, and any costs
associated with the lawsuit, will not have a material adverse effect on the
Company's financial condition or results of operations.
Item 4. Submission of Matters to a Vote of Security Holders
At the Company's Annual Meeting of Shareholders held on February 9, 1998, the
following proposals were adopted:
1. To elect six directors of the Company to serve until the 1999 Annual
Meeting of Shareholders or until their successors are elected and
qualified. All director nominees received votes which exceeded the minimum
number of votes to be elected. The table below summarizes voting results:
Votes Votes
For Withheld
----------- --------
Raymon F. Thompson 8,480,438 42,677
Howard E. Bateman 8,479,988 43,127
Richard A. Dasen 8,479,988 43,127
Daniel J. Eigeman 8,479,988 42,627
John F. Osborne 8,480,588 42,527
Calvin S. Robinson 8,476,738 46,377
2. To ratify and approve an amendment to the Amended and Restated Semitool,
Inc. 1994 Stock Option Plan, as amended to increase the number of shares of
Common Stock available for issuance thereunder by 200,000 shares from
1,100,000 shares to 1,300,000 shares.
For Against Abstain
--------- ------- -------
8,355,508 146,429 21,178
3. To ratify the appointment of Coopers & Lybrand L.L.P. independent auditors
for the Company for the fiscal year ending September 30, 1998.
For Against Abstain
--------- ------- -------
8,494,468 15,244 13,403
<PAGE>
Item 5. Other Information
Timothy C. Dodkin, Senior Vice President, was appointed to the Board of Direc-
tors of Semitool, Inc. in February 1998, to serve until the 1999 Annual Meeting
of Shareholders. Mr. Dodkin joined the Company in 1985 and served as the Com-
pany's European Sales Manager from 1985 to 1986. Since 1986, Mr. Dodkin has
served as Managing Director of Semitool Europe, Ltd. Prior to joining the Com-
pany, Mr. Dodkin worked at Cambridge Instruments, Ltd., a semiconductor
equipment manufacturer, for ten years in national and international sales.
William A. Freeman was appointed Vice President, Finance and Chief Financial
Officer on April 22, 1998. Prior to joining Semitool and since 1995, Mr. Freeman
was a management consultant providing finance and general management services to
private companies. Before that, he was President of Zurn Industries, Inc., a
diversified manufacturing, engineering, and construction company. In his
twenty-two years at Zurn, Mr. Freeman served in division management positions
before his appointment as Senior Vice President and Chief Financial Officer in
1986, and President in 1991. Mr. Freeman is a certified public accountant and
has a bachelor's degree from Pittsburg State University, Pittsburg, Kansas. He
also serves on the Board of NPC International, Inc., a Nasdaq-listed company.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits:
(3.5) Amended By-Laws of Semitool, Inc.
(10.21) Promissory Note, dated March 26, 1998 between Rhetech, Inc.
and CoreStates Bank, N.A.
(10.22) Mortgage, Assignment of Leases and Security Agreement, dated
March 26, 1998 between Rhetech Inc. and CoreStates Bank, N.A.
(10.23) Promissory Note, dated March 26, 1998 between Rhetech, Inc.
and CoreStates Bank, N.A.
(10.24) Mortgage, Assignment of Leases and Security Agreement, dated
March 26, 1998 between Rhetech, Inc.and CoreStates Bank, N.A.
(10.25) Employment Agreement between William A. Freeman and
Semitool, Inc. dated February 20, 1998.
(27.1) Financial Data Schedule for Form 10-Q dated March 31, 1998.
(27.2) Restated Financial Data Schedule.
(99.2) Amended and Restated Semitool, Inc. 1994 Stock Option Plan.
(b) Reports on Form 8-K:
There were no reports on Form 8-K filed during the three months ended
March 31, 1998.
<PAGE>
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.
SEMITOOL, INC.
(Registrant)
Date: May 13, 1998 By /s/Larry Viano
-------------------------------
Larry A. Viano
Controller, Treasurer and
Chief Accounting Officer
Date: May 13, 1998 By /s/W. A. Freeman
-------------------------------
William A. Freeman
Vice President, Finance
and Chief Financial Officer
EXHIBIT 3.5
AMENDED BYLAWS
OF
SEMITOOL, INC.
(February 9, 1998)
ARTICLE I.
Offices
The principal office of the corporation in the State of Montana shall
be located in the City of Kalispell, County of Flathead. The corporation may
have such other offices, either within or without the State of Montana as the
Board of Directors may designate or as the business of the corporation may
require from time to time.
The registered office of the corporation required by the Montana
Business Corporation Act to be maintained in the State of Montana may be, but
need not be, identical with the principal office in the State of Montana, and
the registered agent and the address of the registered office may be changed
from time to time by the Board of Directors.
ARTICLE II.
Shareholders
Section 1. Annual Meeting. The annual meeting of the shareholders shall
be held in the month of February, beginning with the year 1996, and at such
date, and at such hour, and at such place as shall be determined by the Board of
Directors, and such meeting shall be held for the purpose of electing directors
and for the transaction of such other business as may come before the meeting.
If the election of directors shall not be held on the date designated by the
action of the Board of Directors at the annual meeting of the shareholders, or
at any adjournment thereof, the Board of Directors shall cause the election to
be held at a special annual meeting of the shareholders as soon thereafter as
conveniently may be and as determined by the Board of Directors in accordance
with the statutes of the State of Montana.
Section 2. Special Meetings. Special meetings of the shareholders for
any purpose or purposes, unless otherwise prescribed by statute, may be called
by the President, Vice President, Secretary, or by the Board of Directors, or by
the holders of not less than one-fourth of all shares entitled to vote at the
meeting.
Section 3. Place of Meeting. The Board of Directors may designate any
place either within or without the State of Montana, as the place of meeting for
any annual meeting or for any special meeting called by the Board of Directors.
A Waiver of Notice signed by all shareholders entitled to vote at a meeting may
designate any place, either within or without the State of Montana, as the place
for the holding of such meeting. If no designation is made, or if a special
meeting be otherwise called, the place of meeting shall be the registered office
of the corporation in the State of Montana.
Section 4. Notice of Meeting. Written or printed notice stating the
place, day and hour of the meeting and, in case of a special meeting the purpose
or purposes for which the meeting is called, shall be delivered not less than
ten (10) nor more than sixty (60) days before the date of the meeting, either
personally or by mail, by or at the direction of the President, or the
Secretary, or the officer or persons calling the meeting, to each shareholder of
record entitled to vote at such meeting. If mailed, such notice shall be deemed
to be delivered when deposited in the Unites States mail, addressed to the
shareholder at his address as it appears on the stock transfer books of the
corporation, with postage thereon prepaid.
Section 5. Closing of Transfer Books or Fixing of Record Date. For the
purpose of determining shareholders entitled to notice of or to vote at any
meeting of shareholders or any adjournment thereof or shareholders entitled to
receive payment of any dividend, or in order to make a determination of
shareholders for any other proper purpose, the Board of Directors of the
corporation may provide that the stock transfer books shall be closed for a
stated period, but not to exceed, in any case, sixty (60) days. If the stock
transfer books shall be closed for the purpose of determining shareholders
entitled to notice of or to vote at a meeting of the shareholders, such books
shall be closed for a period of at least ten (10) days immediately preceding
such meeting and not to exceed sixty (60) days preceding such meeting. In lieu
of closing the stock transfer books, the Board of Directors may fix in advance a
date as the record date for any such determination of shareholders, such date in
any case to be not more than sixty (60) days and, in case of a meeting of
shareholders, not less than ten (10) days prior to the date on which the
particular action requiring such determination of shareholders is to be taken.
If the stock transfer books are not closed and no record date is fixed for the
determination of shareholders entitled to receive payment of a dividend, the
date on which the resolution of the Board of Directors declaring such dividend
is adopted, as the case may be, shall be the record date for such determination
of shareholders. When a determination of shareholders entitled to vote at any
meeting of shareholders has been made as provided in this section, such
determination shall apply to any adjournment thereof.
Section 6. Voting Right. The officer or agent having charge of the
stock transfer books for shares of the corporation shall make, at least ten (10)
days before each meeting of the stockholders, a complete list of the
shareholders entitled to vote at such meeting, or any adjournment thereof,
arranged in alphabetical order, with the address of and the number of shares
held by each, which list, for a period of ten (10) days prior to such meeting,
shall be kept on file at the registered office of the corporation and shall be
subject to inspection by any shareholder at any time during usual business
hours. Such list shall also be produced and kept open at the time and place of
the meeting and shall be subject to the inspection of any shareholder during the
whole time of the meeting. The original stock transfer book shall be prima facie
evidence as to who are the shareholders entitled to examine such list or
transfer books or to vote at any meeting of shareholders.
Section 7. Quorum. A majority of the outstanding shares of the
corporation entitled to vote, represented in person or by proxy, shall
constitute a quorum at a meeting of the shareholders, but in no event shall a
quorum consist of less than one-third (1/3) of the shares entitled to vote at
the meeting. If a meeting cannot be organized because a quorum has not attended,
those present may adjourn the meeting from time to time until a quorum is
present, at which time any business may be transacted that may have been
transacted at the meeting as originally called. The shareholders present at a
duly organized meeting may continue to transact business until adjournment,
notwithstanding the withdrawal of enough shareholders to leave less than a
quorum.
Section 8. Voting of Shares. Subject to the provisions of Section 10 of
this Article II, each outstanding share shall be entitled to one vote, and each
fractional share shall be entitled to a corresponding fractional vote, on each
matter submitted to a vote at a meeting of shareholders. Neither treasury shares
nor shares of its own stock held by the corporation in a fiduciary capacity nor
shares held by another corporation if a majority of the shares entitled to vote
for the election of director of such other corporation is held by the
corporation shall be voted at any meeting or counted in determining the total
number of outstanding shares at any given time.
Shares held by an administrator, executor, guardian or conservator may
be voted by him, either in person or by proxy, without a transfer of such shares
into his name. Shares standing in the name of the trustee may be voted by him,
either in person or by proxy, but no trustee shall be entitled to vote shares
held by him without a transfer of such shares into his name.
Shares standing in the name of a receiver may be voted by such
receiver, and shares held by or under the control of a receiver may be voted by
such receiver without the transfer thereof into his name if authority so to do
be contained in an appropriate order of the court by which such receiver was
appointed.
A shareholder whose shares are pledged shall be entitled to vote such
shares until the shares have been transferred into the name of the pledgee, and
thereafter the pledgee shall be entitled to vote the shares so transferred.
Shares of its own stock belonging to the corporation or held by it in a
fiduciary capacity shall not be voted, directly or indirectly, at any meeting,
and shall not be counted in determining the total number of outstanding shares
at any given time.
Section 9. Proxies. At all meetings of shareholders, a shareholder may
vote by proxy executed in writing by the shareholder or by his duly authorized
attorney in fact. Such proxy shall be filed with the Secretary of the
corporation before or at the time of the meeting. No proxy shall be valid after
eleven (11) months from the date of its execution, unless otherwise provided in
the proxy.
Section 10. Cumulative Voting. At each election for directors every
shareholder entitled to vote at such election shall have the right to vote, in
person or by proxy, the number of shares and fractional shares owned by him for
as many persons as there are directors to be elected and for whose election he
has a right to vote, or to cumulate his votes by giving a candidate as many
votes as the number of such directors multiplied by the number of his shares
including fractional shares shall equal, or by distributing such votes and
fractional votes on the same principal among any number of candidates.
ARTICLE III.
Board of Directors
Section 1. General Powers. The business and affairs of the corporation
shall be managed by its Board of Directors.
Section 2. Number, Tenure and Qualifications. The number of directors
of the corporation shall be seven (7). Each director shall hold office until the
next annual meeting of shareholders and until his successor shall have been
elected and qualified. Directors need not be residents of the State of Montana
or shareholders of the corporation.
Section 3. Annual Meeting. The annual meeting of the Board of Directors
shall be held without other notice than this Bylaw immediately after, and at the
same place as, the annual meeting of shareholders.
Section 3a. Regular Meetings. Regular meetings of the Board of
Directors shall be held at such time as shall be determined by the President or
by resolution of the Board. No notice need be given of meetings held pursuant to
the determination by the President or by resolution of the Board.
Section 4. Special Meetings. Special meetings of the Board of Directors
may be called by or at the request of the President or any two directors. The
person or persons authorized to call special meetings of the Board of Directors
may fix any place, either within or without the State of Montana, as the place
for holding any special meeting of the Board of Directors called by them.
Section 5. Notice. Notice of any Special Meeting shall be given at
least two (2) days previously thereto by written notice delivered personally,
mailed or faxed to each director at his business address, or by telegram. If
mailed, such notice shall be deemed to be delivered when deposited in the United
States mail so addressed, with postage prepaid thereon. If notice is given by
fax, the notice shall be deemed to be delivered when the fax is sent to the fax
number maintained in the records of the corporation for each director. If notice
be given by telegram, such notice shall be deemed to be delivered when the
telegram is delivered to the telegraph company. Any director may waive notice of
any meeting. The attendance of a director at a meeting shall constitute a waiver
of notice of such meeting, except where a director attends a meeting for the
express purpose of objecting to the transaction of any business because the
meeting is not lawfully called or convened. The notice is not required to
describe the purpose of the meeting.
Section 6. Quorum. A majority of the number of directors fixed by
Section 2 of this Article III shall constitute a quorum for the transaction of
business at any meeting of the Board of Directors, but if less than such
majority is present at the meeting, a majority of the directors present may
adjourn the meeting from time to time without further notice.
Section 7. Vacancies. Any vacancy occurring in the Board of Directors
may be filled by the affirmative vote of a majority of the remaining directors
though less than a quorum of the Board of Directors.
Section 8. Compensation. By resolution of the Board of Directors,
directors may be paid their expenses, if any, of attendance at each meeting of
the Board of Directors, and non-employee directors may be paid an annual
retainer plus a fixed sum for attendance at each meeting of the Board of
Directors. No such payment shall preclude any director from serving the
corporation in any other capacity and receiving compensation therefor.
ARTICLE IV.
Officers
Section 1. Number. The officers of the corporation shall be a
President, one or more Vice Presidents (the number, qualification and titles
thereof to be determined by the Board of Directors from time to time), a
Secretary and a Treasurer, each of whom shall be elected by the Board of
Directors. Such other officers, assistant officers, and agents as may be
necessary may be elected or appointed by the Board of Directors. Any two or more
offices may be held by the same person, except the offices of President and
Secretary.
Section 2. Election and Term of Office. The officers of the corporation
to be elected by the Board of Directors shall be elected annually by the Board
of Directors at the first meeting of the Board of Directors held after each
annual meeting of the shareholders. If the election of officers shall not be
held at such meeting, such election shall be held as soon thereafter as
conveniently may be. Each officer shall hold office until his successor shall
have been duly elected and shall have qualified or until his death or until he
shall resign or shall have been removed in the manner hereinafter provided.
Section 3. Removal. Any officer or agent elected or appointed by the
Board of Directors may be removed by the Board of Directors whenever in its
judgment the best interests of the corporation would be served thereby, but such
removal shall be without prejudice to the contract rights, if any, of the person
so removed. Election or appointment of an officer or agent shall not in itself
create contract rights.
Section 4. Vacancies. A vacancy in any office because of death,
resignation, removal, disqualification or otherwise, may be filled by the Board
of Directors for the unexpired portion of the term.
Section 5. President. The President shall be the principal executive
officer of the corporation and, subject to the control of the Board of Directors
shall, in general, supervise and control all of the business and affairs of the
corporation. He shall, when present, preside at all meetings of the shareholders
and of the Board of Directors. He may sign, with the Secretary or any other
proper officer of the corporation thereunto authorized by the Board of
Directors, certificates for shares of the corporation, any deeds, mortgages,
bonds, contracts, or other instruments which the Board of Directors has
authorized to be executed, except in cases where the signing and execution
thereof shall be expressly delegated by the Board of Directors or by these
Bylaws to some other officer or agent of the corporation, or shall be required
by law to be otherwise signed or executed; and, in general, shall perform all
duties incident to the office of President and such other duties as may be
prescribed by the Board of Directors from time to time.
Section 6. Vice President. In the absence of the President or in the
event of his death, inability or refusal to act, the Vice President (or in the
event there be more than one Vice President, the Vice Presidents in the order
designated at the time of their election, or in the absence of any designation,
then in the order of their election) shall perform the duties of the President,
and when so acting, shall have all the powers of and be subject to all the
restrictions upon the President.
Section 7. Secretary. The Secretary shall: (a) keep the minutes of the
shareholders and the Board of Directors' meetings in one or more books provided
for that purpose; (b) see that all notices are duly given in accordance with the
provisions of these Bylaws or as required by law; (c) be custodian of the
corporate records and of the seal of the corporation and see that the seal of
the corporation is affixed to all documents, the execution of which on behalf of
the corporation under its seal is duly authorized; (d) keep a register of the
post office address of each shareholder which shall be furnished to the
Secretary by such shareholder; (e) sign with the President, or a Vice President,
certificates for shares of the corporation, the issuance of which shall have
been authorized by resolution of the Board of Directors; (f) have general charge
of the stock transfer books of the corporation; and (g) in general, perform all
duties incident to the office of Secretary and such other duties as from time to
time may be assigned to him by the President or by the Board of Directors.
Section 8. Treasurer. The Treasurer shall have charge and supervision
and be responsible for all funds and securities of the corporation and shall
have charge and supervision of the deposits of all monies due and payable to the
corporation from any source whatsoever in such banks or depositories as shall be
selected by the Board of Directors, and shall, in general, perform all the
duties incident to the office of Treasurer and such other duties as from time to
time may be assigned to him by the President or by the Board of Directors.
Section 9. Assistant Secretaries and Assistant Treasurers. The
Assistant Secretaries shall exercise the duties of the Secretary and those
duties incident to the office of the Secretary when the Secretary is absent or
not available and such other duties as shall be assigned by the President or by
the Board of Directors. The Assistant Treasurers shall perform those duties
incident to the office of Treasurer and those assigned to the Treasurer in the
absence or unavailability of the Treasurer and such other duties as from time to
time may be assigned to him by the President or by the Board of Directors.
ARTICLE V.
Certificates for Shares and Their Transfer
Section 1. Certificates for Shares. Certificates representing shares of
the corporation shall be in such form as shall be determined by the Board of
Directors. Such certificates shall be signed by the President or a Vice
President and by the Secretary or an Assistant Secretary. The names and
addresses of the persons to whom the shares represented thereby are issued, with
the number of shares and dates of issue, shall be entered on the stock transfer
books of the corporation. All certificates surrendered to the corporation for
transfer shall be canceled and no new certificate shall be issued until the
former certificate for a like number of shares shall have been surrendered and
canceled, except that in case of a lost, destroyed or mutilated certificate, a
new one may be issued therefor upon such terms and indemnity to the corporation
as the Board of Directors may prescribe.
Section 2. Transfer of Shares. Transfer of shares of the corporation
shall be made only on the stock transfer books of the corporation by the holder
of record thereof or by his legal representative, who shall furnish proper
evidence of authority to transfer, or by his attorney thereunto authorized by
power of attorney duly executed and filed with the Secretary of the corporation,
and on surrender for cancellation of the certificate for such shares. The person
in whose name shares stand on the books of the corporation shall be deemed by
the corporation to be the owner thereof for all purposes.
ARTICLE VI.
Fiscal Year
The fiscal year of the corporation shall begin on the 1st day of
October and end on the 30th day of September in each year.
ARTICLE VII.
Dividends
The Board of Directors may from time to time declare, and the
corporation may pay dividends on its outstanding shares in the manner and upon
the terms and conditions provided by law.
ARTICLE VIII.
Seal
The Board of Directors shall provide a corporate seal which shall be
circular in form and shall have inscribed thereon the name of the corporation
and the state of incorporation and the words "Corporate Seal".
ARTICLE IX.
Waiver of Notice
Whenever any notice is required to be given to any shareholder or
director of the corporation under the provisions of these Bylaws or under the
provisions of the Montana Business Corporation Act, a waiver therefor in
writing, signed by the person or persons entitled to such notice, whether before
or after the time stated therein, shall be deemed equivalent to the giving of
such notice.
ARTICLE X.
Action Without a Meeting
Any action required to be taken at a meeting of the shareholders or
directors of the corporation or any action which may be taken at a meeting of
the shareholders or directors, may be taken without a meeting if a consent, in
writing, setting forth the action so taken, shall be signed by all the
shareholders or directors entitled to vote with respect to the subject matter
thereof. Such consent shall have the same effect as a unanimous vote and may be
stated in any articles or documents filed with the Secretary of State under the
Montana Business Corporation Act.
ARTICLE XI.
Amendments
These Amended Bylaws may be altered, amended or repealed and new Bylaws
may be adopted by the Board of Directors at any regular or special meeting of
the Board of Directors.
We, the undersigned, being all of the directors of SEMITOOL, INC., do
hereby formally and regularly adopt, ratify and sign the foregoing Amended
Bylaws as the Bylaws of this corporation for the guidance of the corporation and
regulation of its business and as evidence of such adoption and ratification, we
do hereby set our hands this 9th day of February, 1998.
/s/Raymon F. Thompson /s/C. S. Robinson
- ------------------------- -------------------------
Raymon F. Thompson C.S. Robinson
/s/Daniel Eigeman /s/Richard Dasen
- ------------------------- -------------------------
Daniel Eigeman Richard Dasen
/s/Howard Bateman /s/John Osborne
- ------------------------- -------------------------
Howard Bateman John Osborne
EXHIBIT 10.21
Meridian Bank Meridian Bank has merged Promissory Note (Business)
with CoreStates Bank, N.A.
$ 560,000.00 March 26, 1998
- ------------------ ------------------------
FOR VALUE RECEIVED, Undersigned, intending to be legally bound, promises to pay
to the order of Meridian Bank ("Bank"), a Pennsylvania banking corporation
having an office at 35 North Sixth Street, Reading, Pennsylvania, the principal
sum of Five Hundred Sixty Thousand and 00/100 Dollars payable as provided below,
with interest accruing at the rate of the Bank's National Commercial Rate +
.50% per annum until paid. Interest shall be computed on the basis of the
actual number of day in the calendar year divided by 360.
If the interest rate set forth above is referenced to either Bank's
National Commercial Rate, Local Commercial Rate or Agricultural Commercial Rate,
Undersigned acknowledges and agrees that (i) such referenced rate is a floating
annual rate of interest that is designated from time to time by Bank as the
"National Commercial Rate," "Local Commercial Rate" or "Agricultural Commercial
Rate," as the case may be, and is used by Bank as a reference rate with respect
to different interest rates charged to borrower; (ii) the rate of interest
payable hereunder shall change simultaneously and automatically upon any change
in such referenced rate; and (iii) such referenced rate may not be the lowest
rate at which Bank makes loans to other borrowers.
REPAYMENT TERMS
1. (Single Principal Payment Loan) Interest on the unpaid principal is due
and payable monthly beginning April 30, 1998 . The full sum of the
unpaid principal and interest is due and payable on September 3, 1998 .
2. (Discounted Time Note) The full sum is due and payable in days on
_______________.
3. (Demand Loan) Interest on the unpaid principal is due and payable
_______________ beginning __________. The full sum of the unpaid
principal and interest is due and payable on demand.
4. (Credit Availability) Interest on the unpaid principal is due and
payable _______________ beginning _______________. The full sum of the
unpaid principal and interest is due and payable on _______________.
Bank may make advances and readvances to Undersigned as Undersigned may
request in accordance with, and subject to, the provisions of this Note
and any other agreements, documents or instruments executed in
connection herewith and related thereto, and any extensions,
modifications or renewals thereof and substitutions therefor, provided
however, that the credit so extended shall not exceed the principal sum
stated above and such commitment may terminate at Bank's option.
5. (Installment Loan) Principal and interest are due and payable in
__________ consecutive _______________ installments of $_______________
each, beginning _______________. One final payment of any remaining
unpaid principal and interest is due and payable on _______________.
6. (Principal Plus Interest Loan) Principal is due and payable in
__________ consecutive _______________ installments of $_______________
each, beginning _______________. Interest on the unpaid principal is
due and payable _______________ beginning _______________. One final
payment of $_______________ together with any remaining principal and
accrued interest is due and payable on _______________.
Undersigned authorizes Bank to charge its deposit account
#_______________ for the payment of principal and/or interest hereunder.
Undersigned shall owe a late payment charge equal to the greater of 5% of the
unpaid amount of any scheduled payment or $15.00, whenever payment of the entire
amount due on any date is not received by Bank on such date.
LIABILITIES
The term "Liabilities" means the principal and interest evidenced by this
note and all other liabilities of Undersigned to Bank, whether hereunder or
otherwise, whether now existing or hereafter incurred, matured or unmatured,
direct or contingent, joint or several, whether created directly or acquired by
assignment or otherwise, including all past and future advances or readvances,
and any extensions, modifications or renewals thereof and substitutions
therefor; all amounts advanced by Bank hereunder on behalf of Undersigned; all
late charges, penalties, fees and other such sums due under this Note or
otherwise; all liabilities (including Professional Fees and Costs, as
hereinafter defined) incurred by Bank arising from or related to any hazardous
materials or dangerous environmental conditions at any real property owned or
occupied by Undersigned; and all of Bank's costs and expenses incurred in
connection with the enforcement and collection of the foregoing liabilities,
whether or not suit is instituted, and whether or not bankruptcy or insolvency
proceedings have been instituted by or against Undersigned, including, without
limitation, reasonable fees and costs of attorneys, appraisers, accountants,
consultants and other professionals ("Professional Fees and Costs"). All amounts
advanced by Bank hereunder on behalf of Undersigned and all other fees, costs,
and expenses incurred by Bank and included in the Liabilities shall be due and
payable upon demand, with interest at an annual rate which shall be two percent
(2%) above the rate of interest otherwise payable hereunder, from the date of
payment by Bank until paid in full.
COLLATERAL
All Collateral (as defined) is security for the Liabilities. The term
"Collateral" includes all tangible and intangible property (i) described in any
mortgage or other security document separately executed by Undersigned in
connection with the Liabilities in favor of Bank ("Security Documents") , and
(ii) in which Undersigned has granted a security interest to Bank pursuant to
this Note. Undersigned grants Bank a security interest in all monies, securities
and other property of Undersigned and the proceeds thereof, now or hereafter in
the possession or custody of, or in transit to, Bank, or any of its affiliates
or subsidiaries, for safekeeping, collection, pledge or any other purpose
including, without limitation, all deposits (whether general or special) and
credits now or hereafter maintained by Undersigned with Bank, or any of its
affiliates or subsidiaries, and in any claims of Undersigned against Bank, or
any of its affiliates or subsidiaries, and Bank may, at its option and without
notice, set off toward the payment of any Liabilities, in such order as Bank may
determine, the balance of each such account with, and each claim against Bank,
or any of its affiliates or subsidiaries. Bank is deemed to have exercised such
right of set off and to have made a charge against any such account immediately
upon the occurrence of a Default (as hereinafter defined) even though such
charge is made or entered on the books subsequently by Bank. Bank has, but is
not limited to, the right at any time and from time to time, without notice to:
(a) pledge, assign or transfer this Note or the Collateral or any portion
thereof; (b) transfer into its own name or that of its nominee all or any part
of the Collateral; (c) exercise voting rights on any Collateral; (d) take
control of the proceeds of any Collateral.
DEFAULT
The occurrence of any one or more of the following shall constitute a
Default by the Undersigned: (a) non-payment of any of the Liabilities, or any
portion thereof, when and in the manner due, whether by acceleration or
otherwise; (b) failure by Undersigned to observe or perform any covenant,
agreement, condition or term of any agreement, document or Security Document
executed and delivered by Undersigned in connection with any of the Liabilities;
(c) breach by any of Undersigned of any obligation or duty to Bank; (d) any
representation or warranty in any financial or other statement, schedule,
certificate or other document delivered to Bank by or on behalf of Undersigned
shall prove to be false, misleading or incomplete in any material respect; (e) a
material adverse change occurs in the financial condition of Undersigned which
is unacceptable to Bank in its sole discretion from the condition most recently
disclosed to Bank in any manner; (f) Undersigned dies, dissolves, liquidates,
merges, reorganizes, changes its name, sells or otherwise disposes of
substantially all of its assets or ceases to conduct operations, or prepares or
attempts to do any of the foregoing; (g) a trustee or receiver is appointed for
Undersigned or for a substantial part of its property, or Undersigned commences
any bankruptcy or other similar proceedings under any insolvency law, state or
federal, or any such proceeding is commenced against Undersigned or Undersigned
becomes insolvent, or generally fails to pay or is generally unable to pay its
debts, or makes an assignment for the benefit of creditors or admits in writing
its insolvency or inability or failure to pay its debts generally as they become
due, or fails within 30 days to pay or bond or otherwise discharge any judgment
which is unstayed pending appeal; (h) Undersigned expresses an intent to
terminate, revoke, or challenge responsibility for any Liabilities or any
material term of any document executed in connection with the Liabilities is
found or declared to be invalid by a court of competent jurisdiction; (i) any
property of Undersigned becomes the subject of any attachment, garnishment, levy
or lien (unless expressly permitted in writing signed by Bank); (j) any
substantial part of the property of Undersigned is taken or condemned by any
governmental authority; (k) Undersigned assigns or otherwise transfers, or
attempts to assign or transfer, any of its right, title and interest in any of
the Collateral without the prior written consent of Bank; (l) Undersigned fails
to furnish financial or other information as Bank may reasonably request; (m) if
there is any change in Undersigned's officers, principal owners or partners, as
the case may be, which is unacceptable to Bank in its sole discretion; (n) Bank,
in the reasonable and good faith exercise of its sole discretion, deems itself
insecure for any reason whatsoever; or (o) Undersigned defaults under any other
agreement or instrument applicable to it representing a material obligation and
such default is not remedied within the grace period provided in such agreement
or instrument or waived.
REMEDIES
Upon the occurrence of a Default (a) Bank shall have no further obligations
to advance funds to Undersigned hereunder; (b) all Liabilities shall, at the
option of Bank, be immediately due and payable; and (c) Bank may exercise its
right of set-off as set forth herein, any and all remedies available to Bank
under this Note and the Security Documents, and all rights and remedies
available to it under any applicable law, including, without limitation, the
rights and remedies of a secured party under the Uniform Commercial Code.
Undersigned hereby waives notice of presentment for payment, demand, nonpayment
or dishonor, protest, acceleration and all further notice of any kind in
connection with the delivery, acceptance, default or enforcement of this Note,
and hereby waives all notice or right of approval of extensions, renewals,
modifications or forebearances which may be allowed.
Upon the occurrence of any Default and the continuance thereof, and
upon prior written notice to Undersigned by Bank, interest shall accrue at an
annual rate which shall be two percent (2%) above the rate of interest otherwise
payable hereunder. At the option of Bank, interest which is not paid when due
shall be added to principal. If any of the Liabilities or any portion thereof
owing to Bank is not paid in full when due, Bank may, at its option and without
notice, withdraw from any account of Undersigned with Bank an amount equal to
such overdue amount and to apply such amount to the payment of the overdue
Liabilities.
All rights or remedies of Bank set forth or otherwise existing are
cumulative. Neither any delay or failure by Bank, in exercising any of its
options, powers or rights herein, nor any partial or single exercise thereof
shall constitute a waiver of the right to exercise the same or any other right
at any other time or from time to time thereafter. Bank is not required to
resort to any particular security or persons to enforce payment, and Bank is not
subject to any marshalling requirements of equities among Undersigned, if more
than one, and among it or them.
CONFESSION OF JUDGMENT
UNDERSIGNED HEREBY IRREVOCABLY AUTHORIZES AND EMPOWERS BANK, BY ANY
AUTHORIZED OFFICER, EMPLOYEE OR AGENT, OR BY ITS ATTORNEY, OR BY THE
PROTHONOTARY OR CLERK OF ANY COURT OF RECORD IN THE COMMONWEALTH OF PENNSYLVANIA
OR ELSEWHERE WHERE PERMITTED BY LAW, UPON THE OCCURRENCE OF A DEFAULT, TO APPEAR
FOR AND CONFESS JUDGMENT AGAINST UNDERSIGNED IN FAVOR OF BANK IN ANY
JURISDICTION IN WHICH UNDERSIGNED OR ANY OF ITS PROPERTY IS LOCATED FOR THE
AMOUNT OF ANY OR ALL OF THE LIABILITIES, TOGETHER WITH THE COSTS OF SUIT AND
WITH ACTUAL COLLECTION COSTS, INCLUDING REASONABLE ATTORNEYS' FEES, WITH OR
WITHOUT DECLARATION, WITH RELEASE OF ALL ERRORS, WITHOUT STAY OF EXECUTION AND
THE RIGHT TO ISSUE EXECUTION FORTHWITH, AND FOR DOING SO THIS NOTE OR A COPY
VERIFIED BY AFFIDAVIT SHALL BE A SUFFICIENT WARRANT. UNDERSIGNED HEREBY WAIVES
AND RELEASES ALL RELIEF FROM ANY AND ALL APPRAISEMENT, STAY OR EXEMPTION LAW OF
ANY STATE NOW IN FORCE OR HEREINAFTER ENACTED.
UNDERSIGNED ACKNOWLEDGES THAT BY AGREEING THAT BANK MAY CONFESS
JUDGMENT HEREUNDER, IT WAIVES THE RIGHT TO NOTICE IN A PRIOR JUDICIAL PROCEEDING
TO DETERMINE ITS RIGHTS AND LIABILITIES, AND UNDERSIGNED FURTHER ACKNOWLEDGES
THAT BANK MAY OBTAIN A JUDGMENT AGAINST UNDERSIGNED WITHOUT UNDERSIGNED'S PRIOR
KNOWLEDGE OR CONSENT AND WITHOUT THE OPPORTUNITY TO RAISE ANY DEFENSE, SET OFF,
COUNTERCLAIM OR OTHER CLAIM UNDERSIGNED MAY HAVE, AND UNDERSIGNED EXPRESSLY
WAIVES SUCH RIGHTS AS AN EXPLICIT AND MATERIAL PART OF THE CONSIDERATION. THE
FOREGOING POWER TO CONFESS JUDGMENT MAY BE EXERCISED AGAINST UNDERSIGNED AT ONE
TIME OR AT DIFFERENT TIMES AS BANK ELECTS UNTIL THE LIABILITIES ARE FULLY
DISCHARGED.
MISCELLANEOUS
The invalidity of any portion of this Note shall not affect the
remaining portions, or any portion thereof, and in the case of any such
invalidity, this Note shall be construed as if such portion had not been
inserted. Undersigned, if more than one, are jointly and severally liable, and
the term "Undersigned" whenever used means each of the parties executing this
Note. All of the terms and provisions of this Note inure to and are binding upon
the heirs, executors, administrators, successors, representatives, receivers,
trustees and assigns of Bank and Undersigned.
Undersigned irrevocably waives the right to interpose any defense
(other than payment), set-off or counterclaim of any nature or description in
any and all disputes between Undersigned and Bank, whether under this Note or
under any other agreement heretofore or hereafter executed.
Undersigned irrevocably agrees and consents to the exclusive
jurisdiction of the Courts of Common Pleas for any county in Pennsylvania where
Bank has an office and/or the United States District Court for the Eastern
District of Pennsylvania in any and all disputes, actions or proceedings between
Undersigned and Bank, whether arising hereunder or under any other agreement or
undertaking and irrevocably agrees to service of process by certified mail,
return receipt requested, to Undersigned at the address listed on the records of
Bank and, if more than one Undersigned, that service upon any of them shall
constitute service upon all of them, each, hereby appointing the other(s) their
attorney-in-fact for the purpose of service. However, Bank is not precluded from
bringing an action against any of Undersigned in any jurisdiction in the United
States or elsewhere in which Undersigned, or any of their property is located.
Undersigned further agrees not to make any objection in any such action or
proceeding that the venue is improper or the forum is inconvenient.
All terms, obligations and provisions hereof are governed by and
construed in accordance with the internal laws of the Commonwealth of
Pennsylvania, without reference to conflict of laws principles.
All notices, comments and other communications required by or given
under this Note shall be in writing and shall be given by either (i) hand
delivery, (ii) first class mail (postage prepaid), (iii) reliable overnight
commercial courier (charges prepaid), or (iv) telecopy or other means of
electronic transmission, if confirmed promptly by any of methods specified in
clauses (i), (ii), and (iii) of this sentence and shall be sufficient, in the
case of Undersigned, if sent to the attention of its proprietor, general partner
or any executive officer at the address on the records of Bank, and, in the case
of Bank, if sent to the address and attention of the loan officer servicing the
account of Undersigned.
IN WITNESS WHEREOF, Undersigned has executed this Note the day and year
first above written.
Meridian Bank has merged
with CoreStates Bank, N.A.
BORROWER (if individuals, partnership, etc.) BORROWER (if corporation)
Rhetech, Inc.
- ---------------------------------- ----------------------------------
Business Name, if any Corporate Name
By: /s/Charles D. Brown
- ---------------------------------- ----------------------------------
Title: Charles D. Brown,
President/CEO
By: /s/Joseph A. Yurgosky
- ---------------------------------- ----------------------------------
Title: Joseph A. Yurgosky,
Secretary
Attest:
- ---------------------------------- ----------------------------------
Title:
(Corporate Seal)
- ----------------------------------
Witness: /s/Cheryl Davis
- ---------------------------------- ----------------------------------
<PAGE>
CORPORATE ACKNOWLEDGMENT
STATE OF PENNSYLVANIA :
: ss.
COUNTY OF LEHIGH :
On this the 26th day of MARCH, 1998 before me, a Notary Public in and for
said County and State, personally appeared CHARLES D. BROWN, known to me (or
satisfactorily proven) to be the PRESIDENT and CHIEF EXECUTIVE OFFICER (C.E.O)
of RHETECH, INC., a Delaware Corporation, and that he as such officer, being
authorized to do so, executed the foregoing instrument for the purposes therein
contained by signing the name of the Corporation by himself as such officer.
WITNESS my hand and notarial seal the day and year aforesaid.
/s/Robin L. Cunconan-Lahr My Commission Expires: March 12, 2001
- ------------------------------------
Notary Public
NOTARIAL SEAL
CORPORATE ACKNOWLEDGMENT
STATE OF PENNSYLVANIA :
: ss.
COUNTY OF LEHIGH :
On this the 26th day of MARCH, 1998 before me, a Notary Public in and for
said County and State, personally appeared JOSEPH A. YURGOSKY, known to me (or
satisfactorily proven) to be the Secretary of RHETECH, INC., a Delaware
Corporation, and that he as such officer, being authorized to do so, executed
the foregoing instrument for the purposes therein contained by signing the name
of the Corporation by himself as such officer.
WITNESS my hand and notarial seal the day and year aforesaid.
/s/Robin L. Cunconan-Lahr My Commission Expires: March 12, 2001
- ------------------------------------
Notary Public
NOTARIAL SEAL
EXHIBIT 10.22
Meridian Bank Mortgage, Assignment of Leases
Meridian Bank has merged And Security Agreement
with CoreStates Bank, N.A.
I hereby certify that the address
of the Mortgagee is:
35 North Sixth Street
Reading, Pennsylvania 19601
Attention: Quality Control - SQ0725 Dept.
/s/Cheryl Davis
- -------------------------
On behalf of the Mortgagee
IF CHECKED HERE _____:
THIS IS AN OPEN-END MORTGAGE SECURING FUTURE ADVANCES UP TO A MAXIMUM PRINCIPAL
AMOUNT OF $______________ PLUS ACCRUED INTEREST AND OTHER INDEBTEDNESS AS
DESCRIBED IN 42 PA. C.S.A. 8143
This document prepared by: Tammy Walters
Tax Parcel Identification No.: L11NW3C-5-3B and L11NW3C-5-3
Mortgage Amount: $560,000.00
Date: March 26, 1998
Mortgagee: Meridian Bank
35 North Sixth Street
Reading, PA 19601
Mortgagor: Rhetech, Inc.
___ Individual(s)
___ Husband and wife
___ General partnership/joint venture State: ___________
___ Limited partnership State:___________________
X Corporation State: DE
Address of 416 South 4th Street
Mortgagor: Coopersburg, PA 18032
416 South 4th Street and 401 Linden Street
Address of Coopersburg
Mortgaged County: Lehigh
Property: State: PA
Obligations
Secured: Loan(s) in the aggregate principal amount of $______________ described
in Loan Agreement (if any) dated __________
between____________________ and Mortgagee. Note(s) dated __________ in
favor of Mortgagee in the aggregate principal amount of $ 560,000 made
by Rhetech, Inc. in favor of Mortgagee. Surety dated __________ in
favor of Mortgagee of the obligations of ____________________ in the
aggregate principal amount of $__________.
ARTICLE 1
OBLIGATIONS: SECURITY
1.1 Obligations: Loan Documents. Mortgagor shall pay and perform all of
the Obligations in accordance with the provisions of this Mortgage and the Loan
Documents (hereafter defined). The term "Obligations" means, collectively, all
of the following:
(a) The "Liabilities" of Mortgagor or any other obligor under the
Obligations Secured specifically identified above, together with all other sums
now or in the future advanced or to become due under the Obligations Secured or
other Loan Documents, or under any extensions, renewals, replacements or
modifications of, or amendments or additions to, the Obligations Secured or
other Loan Documents; whether for principal, interest, fees, charges, expenses,
or other amounts owing under reimbursement or indemnification obligations under
the Obligations Secured or other Loan Documents; whether such advances are
voluntary or obligatory and whether such obligations presently exist or come
into existence at some future time; and
(b) The performance of all of the covenants, conditions,
agreements, obligations and liabilities of Mortgagor or any other obligor or
surety under (i) the Obligations Secured, this Mortgage, and any other documents
referred to as "Loan Documents" in any of the Obligations Secured; (ii) any
other documents or instruments evidencing or securing present or future advances
made by Mortgagee to or for the benefit of Mortgagor or the Mortgaged Property
or otherwise intended to be secured by this Mortgage; and (iii) all extensions,
renewals, replacements or modifications of, or amendments or additions to, any
of the foregoing (the items described in clauses (i), (ii) and (iii) are
collectively referred to in this Mortgage as the "Loan Documents".)
1.2 Grant of Mortgage; Mortgaged Property. For the purpose of securing
payment and performance of all Obligations, Mortgagor hereby grants, conveys,
bargains, sells, and mortgages unto Mortgagee all of the following whether
presently in existence or to come into existence at some future time
(collectively, the "Mortgaged Property"):
(a) the parcel(s) of land situated generally at the Address of the
Mortgaged Property set forth above and more fully describe in Exhibit "A"
attached hereto and made a part hereof;
(b) All buildings, structures and improvements of every kind
erected on, under or over the above-described land;
(c) All fixtures, machinery, equipment and other articles of real,
personal or mixed property attached to, situated or installed in or upon, or
used in the operation or maintenance of, the Mortgaged Property or any plant or
business situated thereon, whether or not such real, personal or mixed property
is or shall be affixed to the same, and all replacements, substitutions,
accretions and proceeds of the foregoing (collectively, "Fixtures") including:
(i) all furnishings, furniture, and appliances; all articles
of interior decoration, floor, wall and window coverings; all office,
restaurant, bar, kitchen and laundry fixtures, utensils, appliances and
equipment; all supplies, tools, accessories; all storm and screen windows,
shutters, doors, awnings, signs, trees, and other plantings; and
(ii) all building service fixtures, machinery and equipment of
any kind whatsoever; all lighting, heating, ventilating, air conditioning,
refrigerating, sprinkling, plumbing, security, cleaning, incinerating, waste
disposal, communications, alarm, fire prevention and extinguishing systems,
fixtures, apparatus, machinery and equipment; all elevators, escalators, lifts,
cranes, hoists and platforms; all pipes, conduits, pumps, boilers, tanks,
motors, engines, furnaces and compressors; all dynamos, transformers,
generators; and all parts, fittings, accessories, accessions, substitutions and
replacements thereof;
(d) All leases, licenses, occupancy agreements or agreements to
lease all or any part of the Mortgaged Property and all extensions, renewals,
amendments, and modifications thereof, and any options, rights of first refusal,
or guarantees relating thereto (collectively, "Leases"); all rents, income,
receipts, revenues, security deposits, escrow accounts, reserves, issues,
profits, and payments of any kind payable under the Leases or otherwise arising
from the Mortgaged Property (collectively, the "Income"); all contract rights,
accounts receivable and general intangibles relating to the Mortgaged Property
or the use, occupancy, maintenance, construction, repair or operation thereof;
all management agreements, franchise agreements, utility agreements and
deposits, building service contracts, maintenance contracts, construction
contracts, architect's agreements, and plans and specifications; all warranties
and guaranties; and all permits, licenses and approvals;
(e) All estates, rights, privileges, easements, and appurtenances
of any kind benefitting the Mortgaged Property; all means of access to and from
the Mortgaged Property, whether public or private; all water and mineral rights;
and all rights of Mortgagor as declarant under any declaration of condominium or
association applicable to the Mortgaged Property; and
(f) All "Proceeds" of any of the above-described Mortgaged
Property, which term shall have the meaning given to it in the Uniform
Commercial Code of the state in which the Mortgaged Property is located and
shall additionally include whatever is received upon the use, lease, sale,
exchange, collection, or other utilization or any disposition of any of the
Mortgaged Property, voluntary or involuntary, whether cash or non-cash,
including proceeds of insurance and condemnation awards, rental or lease
payments, accounts, chattel paper, instruments, documents, contract rights,
general intangibles, equipment and inventory.
TO HAVE AND TO HOLD the Mortgaged Property unto the Mortgagee to and
for the use of the Mortgagee forever.
1.3 Security Agreement. This Mortgage is also a security agreement
under the Uniform Commercial Code of the state in which the Mortgaged Property
is located. Mortgagor grants, and Mortgagee shall have and may enforce, a
security interest in all those property interests included in the Mortgaged
Property which may be "personal property" to secure payment and performance of
all Obligations. If the Mortgaged Property is located in the Commonwealth of
Pennsylvania, this Mortgage is intended to be an industrial plant mortgage
within the broadest interpretation of the "industrial plant mortgage doctrine"
under the laws of the Commonwealth of Pennsylvania. Mortgagor shall execute,
deliver, file and refile any financing statements, continuation statements, or
other security agreements Mortgagee may require to confirm the lien of this
Mortgage with respect to such property. Mortgagor irrevocably appoints Mortgagee
attorney-in-fact for Mortgagor to execute, deliver and file such instruments.
1.4 Assignment of Leases and Income.
(a) This Mortgage is also an absolute assignment to Mortgagee of
all Leases and Income. Mortgagor hereby assigns, transfers and sets over to
Mortgagee all Leases, all income and all rights of Mortgagor to enforce the
Leases and collect the income.
(b) Mortgagor Irrevocably appoints Mortgagee the attorney-in-fact
of Mortgagor to enforce the Leases and collect the income and the sole and
exclusive agent of Mortgagor to agree to any modification of the Leases. This
power is coupled with an interest and is therefore irrevocable . Mortgagor shall
notify any person which Mortgagee may from time to time specify that the income
should be paid directly to mortgagee and that any modification of the Leases
must be approved by Mortgagee.
(c) So long as Mortgagor is not in default in any respect under
the Loan Documents, Mortgagor shall have a license, revocable at the will of
Mortgagee, to enforce the Leases and collect the income subject to any
applicable provisions contained in the Loan Documents.
(d) All security deposits, prepaid rent permitted to be collected
by Mortgagor, if any (other than prepaid rent for the next succeeding calendar
month), and similar payments under any Lease shall be deposited in a separate
escrow account with Mortgagee. Mortgagor shall notify Mortgagee of the
identification of the escrow account. Such sums shall be disbursed only upon the
prior written consent of Mortgagee except such consent shall not be required
when by law or by the terms of the Lease Mortgagor is required to, and does,
return such sums to the party entitled to same under the Lease.
1.5 Open-End Mortgage. If the Mortgaged Property is located in the
Commonwealth of Pennsylvania, this is an Open-End Mortgage and shall be entitled
to all benefits as such under 42 Pa. C.S.A. 8143 (the "Open-End Mortgage
Statute").
(a) If (i) this Mortgage secures a line of credit or other loan
facility pursuant to which advances are made from time to time by Mortgagee to
Mortgagor, and (ii) Mortgagee receives written notice pursuant to Section
8143(b) of the Open-End Mortgage Statute from a holder of a lien or encumbrance
on the Mortgaged Property which is subordinate to the lien of the Mortgage, then
and notwithstanding any provision to the contrary contained in any Loan
Document, Mortgagor agrees that Mortgagee shall not be responsible to make any
further advances to Mortgagor (and Mortgagee is released from all liability for
failure to make such advances) if Mortgagee determines in its sole discretion
that any such advance requested by Mortgagor could be construed to be an
unobligated advance under Section 8143(b) of the Open-End Mortgage Statute.
(b) If (i) this Mortgage secures a loan facility the proceeds of
which are used to provide funds to pay toward all or part of the cost of
completing any erection, construction, alteration or repair of any part of the
Mortgaged Property, and (ii) Mortgagee receives written notice pursuant to
Section 8143(b) of the Open-End Mortgage Statute from a holder of a mechanic's
lien for labor performed or to be performed or materials furnished or to be
furnished for the erection, construction, alteration or repair of any part of
the Mortgaged Property, then and notwithstanding any provision to the contrary
contained in any Loan Document, Mortgagor agrees that Mortgagee shall have the
right to suspend (until such time as the lien is fully released) any further
advances to Mortgagor (and Mortgagee is released from all liability for failure
to make such advances) except advances which Mortgagee determines in its sole
discretion are for the purpose of paying toward all or part of the cost of
completing any erection, construction, alteration or repair of any part of the
Mortgaged Property the financing of which, in whole or in part, the Mortgage was
given to secure.
(c) If Mortgagor should at any time elect to limit the Obligations
secured by this Mortgage pursuant to Section 8143(c) of the Open-End Mortgage
Statute, Mortgagor agrees that notice of such election shall (i) not be
effective unless and until it is served upon Mortgagee in accordance with the
requirements of Section 8143(d) of the Open-End Mortgage Statute and fully
complies with the requirements for the giving of notices under any Loan
Document; (ii) release Mortgagee from all obligation to make any further
advances under the Loan Documents notwithstanding anything to the contrary
contained in such notice or the Loan Documents; (iii) constitute, at the
election of Mortgagee, an Event of Default under the Loan Documents; and (iv)
not be effective to limit Mortgagor's liability for payment and performance of
all Obligations for which Mortgagor is responsible under this Mortgage or the
other Loan Documents (including all reimbursement and indemnification
agreements) whether such Obligations arise prior or subsequent to the date of
such notice.
1.6 Purchase Money Mortgage. If all or any part of the Obligations
secured by this Mortgage were used in whole or in part to fund the acquisition
of all or any part of the Mortgaged Property, this Mortgage shall constitute a
purchase money mortgage and shall be entitled to all benefits as such under
applicable laws of the state in which the Mortgaged Property is located.
ARTICLE II
TITLE MATTERS
2.1 Warranty of Title. Until the Obligations are fully satisfied,
Mortgagor represents, warrants and covenants that:
(a) Mortgagor has good and marketable fee simple absolute title to
the Mortgaged Property subject only to those exceptions to title more
particularly describe in the title commitment issued to, and accepted by,
Mortgagee in connection with this transaction or described in Exhibit "B"
attached hereto, (the "Permitted Encumbrances") and Mortgagor shall defend the
validity, priority and enforceability of the lien of this Mortgage against the
claims of all persons excepting only those claiming under Permitted
Encumbrances;
(b) Mortgagor has full power and lawful authority to subject the
Mortgaged Property to the lien of this Mortgage;
(c) The execution, delivery and performance of this Mortgage and
the other Loan Documents will not contravene any Legal Requirements (hereafter
defined) or any agreement, document or instrument to which Mortgagor is a party
or by which Mortgagor or the Mortgaged Property is bound;
(d) Mortgagor shall make, execute, acknowledge and deliver all
such further or other deeds, documents, instruments or assurances and cause to
be done all such further acts and things as may at any time be required by
Mortgagee to confirm and fully protect the lien and priority of this Mortgage;
and
(e) Mortgagor shall make such payments, when due, and perform all
obligations as are required under any Permitted Encumbrances affecting the
Mortgaged Property.
2.2 No Transfer. Without the prior written consent of Mortgagee in each
instance, which consent may be given or withheld in Mortgagee's sole discretion,
Mortgagor will abstain from, and will not cause or permit, any transfer of title
to the Mortgaged Property or any part thereof, or any transfer of ownership
interests in Mortgagor (if Mortgagor is a partnership, joint venture or
corporation), voluntarily or by operation of law, nor shall Mortgagor enter into
any agreement or transaction to do or accomplish in form or substance any of the
foregoing.
2.3 No Other Financing or Liens. Without the prior written consent of
Mortgagee in each instance, which consent may be given or withheld in
Mortgagee's sole discretion, Mortgagor shall not create or cause or permit to
exist any lien on the Mortgaged Property whether superior to or subject to the
lien of this Mortgage except the Permitted Encumbrances (if any) and such other
liens or security interests as are expressly and specifically agreed to be
permitted upon the Mortgaged Property by Mortgagee under the Loan Documents.
2.4 Leases. Mortgagor represents and warrants that there are no Leases
affecting the Mortgaged Property other than the Leases (if any) listed in the
schedule of Leases and Income delivered by Mortgagor to Mortgagee in connection
with this transaction. Mortgagor shall not enter into any Leases without the
prior written consent of Mortgagee being obtained in each instance unless all of
the following are satisfied; (a) Mortgagee has approved a standard form of lease
and a then-current schedule of minimum rental terms for the Mortgaged Property;
(b) the Leases are in accordance with the pre-approved lease form and rent
schedule without material variation; and (c) Mortgagor provides to Mortgagee
copies of all executed Leases within ten (10) days after execution.
ARTICLE III
OBLIGATIONS REGARDING MORTGAGED PROPERTY
3.1 Legal Requirements Generally. Mortgagor represents and warrants
that, to the best of Mortgagor's knowledge, the Mortgaged Property is, as of the
date of this Mortgage, in compliance with Legal Requirements (hereafter
defined). Mortgagor shall promptly comply with all present and future laws,
statutes, codes, ordinances, orders, judgments, decrees, injunctions, rules,
regulations, restrictions and requirements (collectively "Legal Requirements")
of the United States of America, the state in which the Mortgaged Property is
located and any political subdivision thereof or any town, city, county, or
municipality in which the Mortgaged Property is located or any agency,
department, bureau, board, commission or instrumentality of any of the foregoing
now existing or hereafter created (individually, a "Government Authority" and,
collectively, "Government Authorities") having jurisdiction over Mortgagor or
the Mortgaged Property or the construction, use, occupancy, operation,
maintenance, or improvement of the Mortgaged Property, whether foreseen or
unforeseen, ordinary or extraordinary.
3.2 Land Use Approvals. Mortgagor represent and warrants to Mortgagee
that the Mortgaged Property is and shall remain one or more zoning lots separate
and apart from all other premises and Mortgagor shall not, by any act or
omission, impair the integrity of the Mortgaged Property as such separate zoning
lot or lots. Mortgagor shall not, without the prior written consent of
Mortgagee, submit or cause to be submitted to any Governmental Authority an
application for zoning, subdivision or development approval affecting the
Mortgaged Property if any of the following would result from such proposed
zoning change, subdivision or development: (a) the separate transfer, use and
ownership of the Mortgaged Property is not permitted as a matter of right under
applicable Legal Requirements; (b) the use of the Mortgaged Property as of the
date of this Mortgage is no longer permitted as a matter of right under
applicable Legal Requirements; or (c) any portion of the Mortgaged Property is
used to fulfill a Legal Requirement of other property not subject to the lien of
this Mortgage.
3.3 Environmental Matters.
(a) Mortgagor represents and warrants that neither Mortgagor nor,
to the best of its knowledge, any other person has (i) used, installed or
disposed of any Hazardous Materials (hereafter defined) on, from, or affecting
the Mortgaged Property except in full compliance with Applicable Environmental
Laws (hereafter defined); or (ii) received any notice from any Governmental
Authority with regard to Hazardous Materials on, from or affecting the Mortgaged
Property.
(b) Mortgagor shall not use the Mortgaged Property, nor allow it
to be used, to generate, manufacture, refine, transport, treat, store, handle,
dispose, transfer, produce or process Hazardous Materials except in full
compliance with Applicable Environmental Laws. Mortgagor shall not cause or
permit, as a result of any intentional or unintentional act or omission on the
part of Mortgagor or any other person, a release of Hazardous Materials onto,
from or affecting the Mortgaged Property or any other use, installation, or
disposition of Hazardous Materials in violation of Applicable Environmental
Laws. Mortgagor shall comply, and enforce compliance by all tenants and
subtenants, with all Applicable Environmental Laws and shall keep the Mortgaged
Property free and clear of any liens imposed pursuant to any Applicable
Environmental Laws.
(c) If Mortgagor receives any notice from any Governmental
Authority with regard to Hazardous Materials on, from or affecting the Mortgaged
Property, or any notice of violation of Applicable Environmental Laws, Mortgagor
shall promptly notify Mortgagee. Mortgagor shall conduct and complete all
investigations, studies, sampling, and testing, and all remedial, removal, and
other actions necessary to clean up and remove all Hazardous Materials on, from
or affecting the Mortgaged Property in accordance with all Applicable
Environmental Laws and to the satisfaction of Mortgagee.
(d) The term "Applicable Environmental Laws" shall mean, without
limitation, all Legal Requirements of any Governmental authority pertaining to
the preservation or enhancement of the quality of the environment or regulating
or restricting the use, transfer, storage or remediation of Hazardous Materials
including the Comprehensive Environmental Response, Compensation, and Liability
act of 1980, as amended (42 U.S.C. Section 9601, et seq.), the Hazardous
Materials Transportation Act, as amended (49 U.S.C. Sections 1801, et seq.), the
Resource Conservation and Recovery Act, as amended (42 U.S.C. Section 6901 et
seq.), the Pennsylvania Hazardous Sites Cleanup Act (35 P.S. 6020.101 et seq.),
the New Jersey Spill Compensation and Control Act, as amended (N.J.S.A.
58:10-23.11 et seq.) and the rules, regulations adopted and publications
promulgated pursuant thereto at any time. The term "Hazardous Materials" shall
mean, without limitation, any flammable explosives, radioactive materials,
hazardous materials, hazardous wastes, hazardous or toxic substances, or related
materials, asbestos or any material containing asbestos, or any other substance
or material regulated under any Applicable Environmental Laws.
3.4 General Obligations. Until the Obligations are fully satisfied,
Mortgagor shall:
(a) Perform all maintenance, repair, restoration and rebuilding
required to keep the Mortgaged Property in good repair, order and condition in
full compliance with the requirements of the Loan Documents, any Leases
affecting the Mortgaged Property and all Legal Requirements;
(b) Complete any improvements to the Mortgaged Property required
under the Loan Documents, any Leases affecting the Mortgaged Property, or
required by any Governmental Authority or Insurer Insuring the Mortgaged
Property, in a good and workmanlike manner and free of mechanics' liens;
(c) Permit, and cause any lessee or occupant of the Mortgaged
Property to permit, Mortgagee and its agents and representatives, to enter upon
the Mortgaged Property at any reasonable time to appraise and photograph the
Mortgaged Property and to inspect for compliance with Legal Requirements,
Insurance requirements, and the Obligation of Mortgagor under this Mortgage and
the other Loan Documents;
(d) Make the books and accounts relating to the Mortgaged Property
available for inspection by Mortgagee, or its representatives, upon request at
any reasonable time; and
(e) Deliver to Mortgagee within ninety (90) days after the end of
each fiscal year of Mortgagor, or on a more frequent basis if requested by
Mortgagee, a schedule of Leases and Income as of the end of the preceding year,
an income and expense statement for the Mortgaged Property as of the end of the
preceding year, and a projected Income and expense statement for the Mortgaged
Property for the then-current fiscal year.
3.5 General Restrictions. Until the Obligations are fully satisfied,
Mortgagor shall not, without prior written consent of Mortgagee being obtained
in each instance:
(a) Abandon the Mortgaged Property or any portion thereof or allow
the same to become vacant;
(b) Commit or suffer waste with respect to the Mortgaged Property;
(c) Impair or diminish the value or integrity of the Mortgaged
Property or the priority or security of the lien of this Mortgage;
(d) Remove, demolish or materially alter any of the Mortgaged
Property except that Mortgagor shall have the right to remove and dispose of,
free of the lien of this Mortgage, such Fixtures as may, from time to time,
become worn out or obsolete, provided that, simultaneously with or prior to such
removal, any such Fixtures shall be replaced with other Fixtures which shall
have a value and utility at least equal to that of the replaced Fixtures and, by
such removal and replacement, Mortgagor shall be deemed to have subjected such
replacement Fixtures to the lien and priority of this Mortgage;
(e) Make, install or permit to be made or installed, any additions
or improvements to the Mortgaged property except in a good and workmanlike
manner, free of mechanic's liens, in compliance with Legal Requirements, and in
accordance with plans and specifications approved by Mortgagee; or
(f) Make, suffer or permit any nuisance to exist on the Mortgaged
Property or any portion thereof.
3.6 Required Notices. Mortgagor shall notify Mortgagee promptly of the
occurrence of any of the following:
(a) A fire or other casualty causing damage to the Mortgaged
Property,
(b) A pending or threatened condemnation of the Mortgaged
Property,
(c) A violation of a Legal Requirement or other notice from or to
a Governmental Authority relating to the Mortgaged Property,
(d) Receipt or giving of any notice of default or cancellation
under any Lease of all or a material portion of the Mortgaged Property,
(e) Commencement of any litigation affecting the Mortgaged
Property,
(f) Discovery, discharge or release of any Hazardous Material for
which Mortgagor is or may be responsible under any Applicable Environmental
Laws;
(g) The existence of any event or condition which presents a risk
of creating material liability in Mortgagor under ERISA (Public Law 93-406, as
amended); or
(h) The occurrence of a default under, or the receipt or giving of
any notice under, any Permitted Encumbrance.
ARTICLE IV
TAXES AND INSURANCE
4.1 Real Estate Taxes and Assessments.
(a) Mortgagor shall pay when due and before interest or penalties
commence to accrue thereon, all taxes, assessments, water and sewer rents,
levies, encumbrances and all other charges or claims of any nature and kind,
whether public or private, which may be assessed, levied, imposed, suffered,
placed or filed at any time against the Mortgaged Property or any part thereof
or which by any present or future law may have priority (either in lien or in
distribution out of the proceeds of any sale) over the lien of this Mortgage
(individually, an "imposition" and, collectively, "impositions").
(b) Mortgagor shall produce to Mortgagee, not later than the last
date any such imposition is due and payable without interest or penalty,
official receipts evidencing payment of such imposition. If Mortgagor is not in
default under this Mortgage or any Loan Document and in good faith and by
appropriate legal action shall contest the validity or amount of any imposition
and shall have established a reserve for the payment thereof in such form and
amount as Mortgagee may require (including any interest and penalties which may
be payable in connection therewith), then Mortgagor shall not be required to pay
the imposition or to produce the receipts while the reserve is maintained and so
long as the contest operates to prevent collection, is maintained and prosecuted
with diligence, and shall not have been terminated or discontinued adversely to
Mortgagor.
4.2 Taxes on Mortgagee. If any Governmental Authority shall levy,
assess or charge any tax, assessment or imposition upon this Mortgage or any
other Loan Document (including any requirement to have affixed to this Mortgage
any revenue, documentary or similar stamps) or upon the interest of Mortgagee in
the Mortgaged Property by reason of this Mortgage or any other Loan Document,
Mortgagor shall pay the same directly to such Governmental Authority as an
imposition. If Mortgagor is not legally permitted to pay such imposition or to
reimburse Mortgagee for amounts advanced on account of such payment, then
Mortgagee may declare the entire amount of the Obligations immediately due and
payable on demand.
4.3 Corporate or Partnership Mortgagor. If Mortgagor (or any successor
or grantee of Mortgagor) is a corporation or partnership, Mortgagor shall at all
times until the Obligations are satisfied in full:
(a) Keep in effect and in good standing its existence and rights
as a corporation or partnership, as the case may, be under the laws of the state
of its incorporation or constitution and its right to own property and transact
business in the state in which the Mortgaged Property is situated; and
(b) File returns for all federal, state and local taxes with the
proper Governmental Authorities, and pay, when due and payable and before
interest or penalties are due thereon, all taxes owing by Mortgagor to any
Governmental Authorities.
4.4 Insurance Coverages. Until the Obligations are fully satisfied,
Mortgagor shall maintain and keep in force the following policies of insurance
with respect to the Mortgaged Property:
(a) Insurance against loss or damage to the Mortgaged Property by
fire and any of the risks covered by insurance of the type commonly known as
"all-risk coverage," in an amount not less than the full replacement value
(evidenced by a "Replacement Cost Endorsement") of the Mortgaged Property;
(b) During the course of any construction or repair of any
improvements on the Mortgaged Property, builder's completed value risk insurance
against "all risks of physical loss," including collapse and transit coverage,
during construction of such improvements, in non-reporting form;
(c) Boiler and machinery insurance (to the extent the Mortgaged
Property includes items covered by such insurance), in such amounts as are
reasonably satisfactory to Mortgagee;
(d) Coverage against sprinkler leakage;
(e) Vandalism and malicious mischief insurance;
(f) Comprehensive public liability insurance on an "occurrence
basis" against claims for personal injury including bodily injury, death or
property damage occurring on or about the Mortgaged Property and the adjoining
streets, sidewalks and passageways, with minimum protection to a limit of not
less than $1,000,000 (or such higher amounts as are required under any other
Loan Document) with respect to personal injury or death to any one or more
persons or damage to property;
(g) Worker's compensation insurance (including employer's
liability insurance) for all employees of Mortgagor engaged on or with respect
to the Mortgaged Property in such amount as is reasonably satisfactory to
Mortgagee, or, if such limits are established by law, in such amounts;
(h) Flood insurance, in accordance with National Flood Insurance
Act of 1968, as amended by the Flood Disaster Protection Act of 1973, if any
portion of the Mortgaged Property lies within a flood hazard area designated by
the Department of Housing and Urban Development, Federal Insurance
Administration as a "Flood Hazard Area";
(i) Business interruption and/or rental loss coverage for a period
equal to the reasonable period of time required to rebuild and restore the
Mortgaged Property upon the occurrence of a substantial destruction; and
(j) Such other insurance, and in such amounts, as may from time to
time be required by Mortgagee.
4.5 Policy Requirements. The insurance coverages required above shall
be insured under policies; (a) in form satisfactory to Mortgagee; (b) issued by
companies satisfactory to Mortgagee; (c) endorsed with a standard mortgagee
clause in favor of the Mortgagee providing not less than thirty days' notice to
Mortgagee of any cancellation or change in coverage; (d) endorsed to name
Mortgagee as additional insured and, subject only to Permitted Encumbrances (if
any), as loss payee; and (e) not subject to contribution or co-insurance.
Certificates of Insurance, addressed to Mortgagee, evidencing such insurance
coverage, may be delivered to Mortgagee in lieu of the policies therefor, but
only if Mortgagor provides to Mortgagee copies of such policies. Certificates
shall be delivered to Mortgagee on or before the date of this Mortgage and,
thereafter, at least thirty (30) days before expiration of the existing
policies. If any insurance required under this Mortgage is cancelled, expires,
becomes void or voidable or otherwise becomes unsatisfactory to Mortgagee,
Mortgagor shall place or cause to be placed new insurance on the Mortgaged
Property reasonably satisfactory to Mortgagee. In the event of any loss,
Mortgagee may make proof of loss if not made promptly by Mortgagor. Each
insurance company concerned is hereby authorized and directed to make payment
under such insurance including return of unearned premiums, directly to
Mortgagee instead of to Mortgagor and Mortgagee jointly, and Mortgagor appoints
Mortgagee, irrevocably, as Mortgagor's attorney-in-fact to endorse any draft
therefor.
4.6 Installments for Insurance, Taxes and Other Charges. Without
limiting the effect of the other provisions of this Article, Mortgagor, if
required by Mortgagee, shall pay to Mortgagee monthly an amount equal to
one-twelfth (1/12) of the annual amount of all impositions and premiums for
insurance policies required under this Article plus any additional sums
necessary to pay, or establish adequate reserves for, the payment of, such
premiums and impositions as and when due. The amount so paid shall be security
for the premiums and impositions and shall be used in payment thereof if
Mortgagor is not otherwise in default under this or any other Loan document. No
amount so paid shall be deemed to be trust funds but may be commingled with
general funds of Mortgagee and no interest shall be payable thereon. Upon the
occurrence of an Event of Default under this Mortgage or any Loan Document,
Mortgagee shall have the right, at its election, to apply any amount so held
against the Obligations. At Mortgagee's option, Mortgagee from time to time may
waive, and after any such waiver may reinstate, the provisions of this section
requiring installment payments.
ARTICLE V
CASUALTY; CONDEMNATION
5.1 Casualty. If the Mortgaged Property is damaged by fire or other
casualty, Mortgagor shall promptly repair and restore the same to its condition
prior to the damage. If, and only for so long as, the following terms and
conditions are fully satisfied by Mortgagor, Mortgagee shall release insurance
proceeds for repair and restoration of the Mortgaged Property; otherwise, and to
the extent of any excess proceeds, Mortgagee shall have the right to apply the
proceeds toward reduction of the Obligations;
(a) No default under this or any other Loan Document shall have
occurred and be continuing uncured;
(b) Mortgagor shall have delivered evidence satisfactory to
Mortgagee that the Mortgaged Property can be fully repaired and restored within
a period of time during which all payments coming due under the Obligations are
fully covered by the proceeds of business interruption or rental loss insurance
applicable to the loss or damage to the Mortgaged Property;
(c) No holder of a Permitted Encumbrance has a right to apply
insurance proceeds to the obligations secured by such Permitted Encumbrance or,
if it does, the holder has waived in writing its right to do so;
(d) No lease is cancellable by the lessee on account of the
casualty or, if it is, the lessee has waived in writing its right to cancel;
(e) The work is performed by a reputable general contractor
satisfactory to Mortgagee under a fixed price or guaranteed maximum price
contract satisfactory to Mortgagee, in accordance with plans and specifications
satisfactory to Mortgagee and in compliance with all Legal Requirements, and no
work shall commence until waivers of mechanics' liens have been filed by the
general contractor and all those claiming by, through, or under the general
contractor;
(f) Mortgagor shall have deposited with Mortgagee for disbursement
in connection with the restoration the greater of (i) the applicable deductible
under the insurance policies covering the loss; or (ii) the amount by which the
cost of restoration is estimated by Mortgagee to exceed the insurance proceeds
available for restoration;
(g) The insurance proceeds are held by Mortgagee (or an escrowee
satisfactory to Mortgagee) in trust, to be disbursed periodically as the work
progresses in amounts not exceeding 90% of the value of labor and materials
incorporated into the restoration. The remaining 10% will be released upon final
completion of the work in accordance with the aforesaid plans and
specifications, and upon a receipt of a release of liens from all contractors
and subcontractors engaged in the restoration; and
(h) Mortgagor has paid as and when due all of Mortgagee's costs
and expenses incurred in connection with the collection of insurance proceeds,
approval of plans, charges of Mortgagee's inspection representative and such
reasonable fee as may be charged by Mortgagee to monitor the restoration and
disburse the insurance proceeds.
5.2 Condemnation.
(a) In the event of any condemnation or taking of any part of the
Mortgaged Property by eminent domain, alteration of the grade of any street, or
other injury to or decrease in the value of the Mortgaged Property by any public
or quasi-public authority or corporation, all proceeds (that is, the award or
agreed compensation for the damages sustained) allocable to Mortgagor, after
deducting therefrom all costs and expenses (regardless of the particular nature
thereof and whether incurred with or without suit) including attorney's fees
incurred by Mortgagee in connection with the collection of such proceeds, shall
be paid to Mortgagee and applied, at Mortgagee's election, (i) toward
restoration of the Mortgaged Property (in which case the terms and conditions
applicable to restoration in the case of casualty shall apply); or (ii) to the
Obligations. No settlement for damages sustained shall be made by Mortgagor
without Mortgagee's prior written approval.
(b) If prior to the receipt of the proceeds by Mortgagee, the
Mortgaged Property shall have been sold on foreclosure of this Mortgage,
Mortgagee shall have the right to receive the proceeds to the extent of:
(i) the full amount of all such proceeds if Mortgagee is the
successful purchaser at the foreclosure sale, or
(ii) if anyone other than Mortgagee is the successful
purchaser at the foreclosure sale, in addition to the net sale proceeds to be
received by Mortgagee in connection with the sale, any deficiency (as
hereinafter defined) due to Mortgagee in connection with the foreclosure sale,
with legal interest thereon, and reasonable counsel fees, costs and
disbursements incurred by Mortgagee in connection with collection of such
proceeds of condemnation and the establishment of such deficiency. For purposes
of this section, the word "deficiency" shall be deemed to mean the difference
between (A) the net sale proceeds actually received by Mortgagee as a result of
such foreclosure sale less any costs and expenses incurred by Mortgagee in
connection with enforcement of its rights under the Loan Documents, and (B) the
aggregate amount of all sums which Mortgagee is entitled to collect under the
Loan Documents.
(c) Mortgagee shall have the right to prosecute to final
determination, or settlement, an appeal or other appropriate proceedings in the
name of Mortgagee or Mortgagor, for which Mortgagee will then be appointed as
attorney-in-fact for Mortgagor, which appointment, being for security, is
irrevocable. In that event, the expenses of the proceedings, including
reasonable counsel fees, shall be paid first out of the proceeds, and only the
excess, if any, paid to Mortgagee shall be applied to the Obligations.
(d) Nothing herein shall limit the rights otherwise available to
Mortgagee, at law or in equity, including the right to intervene as a party to
any condemnation proceeding.
<PAGE>
ARTICLE VI
DEFAULTS; REMEDIES
6.1 Right to Make Advances. If Mortgagor should fail to pay or perform
any of its Obligations with respect to the Mortgaged Property as required under
Article III and Article IV of this Mortgage, or otherwise fails to pay or
perform any of its other Obligations under this or any other Loan Document, then
Mortgagee, at its election, shall have the right, but not the obligation, to
made any payment or expenditure and to take any action which Mortgagor should
have made or taken or which Mortgagee deems advisable to protect the security of
this Mortgage or the Mortgaged Property. Such action shall be without prejudice
to any of Mortgagee's rights or remedies available under this Mortgage or the
other Loan Documents or otherwise at law or in equity. All such sums, as well as
costs and expenses, advanced by Mortgagee shall be due immediately from
Mortgagor to Mortgagee, shall become part of the Obligations secured by this
Mortgage and the other Loan Documents, and shall bear interest at the applicable
rate provided in the Loan Documents in effect after maturity or default (the
"Default Rate") until repayment in full to Mortgagee.
6.2 Events of Default. The occurrence of any one or more of the
following events shall, at the election of Mortgagee, constitute an Event of
Default under this Mortgage:
(a) Any Event of Default under any other Loan Document;
(b) Failure to pay any sum required to be paid under this Mortgage
as and when due;
(c) Any breach of warranty or other violation of any provision
contained in Article II of this Mortgage;
(d) The commencement by Mortgagor of any bankruptcy,
reorganization, debt arrangement, or other case or proceeding under any state or
federal bankruptcy or insolvency law or any dissolution or liquidation
proceeding;
(e) Any bankruptcy, reorganization, debt arrangement, or other
case or proceeding under any state or federal bankruptcy or insolvency law, or
any dissolution or liquidation proceeding, involuntarily commenced against or in
respect of Mortgagor, or an order for relief entered in such proceeding and not
dismissed within the period of time, if any, expressly permitted by Mortgagee
under the Loan Documents; or
(f) Nonperformance of, or noncompliance with, any of the
agreements, covenants, conditions, warranties, representations or other
provisions contained in this Mortgage (if and only to the extent not included in
any of the occurrences listed above), which nonperformance or noncompliance is
not cured and remedied within fifteen (15) days after notice thereof is given to
Mortgagor.
6.3 Remedies; Execution. Upon the occurrence of an Event of Default,
Mortgagee shall have the right to accelerate all Obligations (including interest
thereon at the Default Rate) pursuant to the terms of the Loan Documents and to
enforce its rights under this Mortgage and the other Loan Documents by
exercising such remedies as are available to Mortgagee under applicable law,
either by suit in equity or action at law, or both, whether for specific
performance of any provision contained in this Mortgage or any of the other Loan
Documents or in aid of the exercise or any power granted in this Mortgage or the
other Loan Documents.
(a) Mortgagee shall have the right to obtain judgment for the
Obligations (including all amounts advanced or to be advanced by Mortgagee under
Section 6.1 above, all costs and expenses of collection and suit, including any
bankruptcy or insolvency proceeding affecting Mortgagor, and reasonable
attorneys' fees incurred in connection with any of the foregoing) together with
interest on such judgment at the Default Rate until payment in full is received
by Mortgagee and Mortgagee shall have the right to obtain execution upon the
Mortgaged Property on account of such judgment.
(b) Mortgagee shall have the right to institute an action of
mortgage foreclosure against the Mortgaged Property or take such other action
for realization on the security intended to be provided under Article I of this
Mortgage as applicable law or the provisions of the Loan Documents may allow.
6.4 Remedies; Collection of Income. Mortgagee may, with or without
entering into possession of the Mortgaged Property, and with or without legal
action, collect all income (which term shall also include amounts determined by
Mortgagee as fair rental value for use and occupation of the Mortgaged Property
by any person, including Mortgagor) and, after deducting all costs of collection
and administration expense, apply the net income to the Obligations or any or
all of the following in such order and amounts as Mortgagee, in Mortgagee's sole
discretion, may elect: the payment of any sums due, or accumulation of necessary
reserves for, payment of all costs and expenses arising from or incurred in
connection with (a) the preservation and protection of the validity and priority
of the lien of this Mortgage; (b) the preservation and protection of the
Mortgaged Property; (c) compliance with Legal Requirements; or (d) fulfilling
any Obligations of Mortgagor under the Permitted Encumbrances, the Leases, this
Mortgage or the Loan Documents.
6.5 Remedies; Possession. Mortgagee may, with or without legal action,
take possession and control of the Mortgaged Property to the exclusion of
Mortgagor and all others excepting only those claiming under Permitted
Encumbrances. Mortgagee shall have the authority while so in possession to
insure (at Mortgagor's expense) against all risks by reason of having taken such
possession and Mortgagor will transfer and deliver to the Mortgagee all policies
of insurance upon the Mortgaged Property not theretofore transferred and
delivered to Mortgagee. FOR THE PURPOSE OF OBTAINING POSSESSION OF THE MORTGAGED
PROPERTY UPON THE OCCURRENCE OF ANY EVENT OF DEFAULT, MORTGAGOR HEREBY
AUTHORIZES AND EMPOWERS ANY ATTORNEY OF ANY COURT OF RECORD IN THE STATE IN
WHICH THE MORTGAGED PROPERTY IS LOCATED OR ELSEWHERE AS ATTORNEY FOR MORTGAGOR
AND ALL PERSONS CLAIMING UNDER OR THROUGH MORTGAGOR, TO SIGN AN AGREEMENT FOR
ENTERING IN ANY COMPETENT COURT AN AMICABLE ACTION IN EJECTMENT FOR POSSESSION
OF THE MORTGAGED PROPERTY AND TO APPEAR FOR AND CONFESS JUDGMENT AGAINST
MORTGAGOR, AND ALL PERSONS CLAIMING UNDER OR THROUGH MORTGAGOR IN FAVOR OF
MORTGAGEE FOR RECOVERY BY MORTGAGEE OF POSSESSION THEREOF, FOR WHICH THIS
MORTGAGE, OR A COPY THEREOF VERIFIED BY AFFIDAVIT, SHALL BE SUFFICIENT WARRANT;
AND THEREUPON A WRIT OF POSSESSION MAY IMMEDIATELY ISSUE FOR POSSESSION OF THE
MORTGAGED PROPERTY, WITHOUT ANY PRIOR WRIT OR PROCEEDING WHATSOEVER AND WITHOUT
ANY STAY OF EXECUTION. IF FOR ANY REASON AFTER SUCH ACTION HAS BEEN COMMENCED IT
SHALL BE DISCONTINUED, OR POSSESSION OF THE MORTGAGED PROPERTY SHALL REMAIN IN
OR BE RESTORED TO MORTGAGOR, MORTGAGEE SHALL HAVE THE RIGHT FOR THE SAME DEFAULT
OR ANY SUBSEQUENT DEFAULT TO BRING ONE OR MORE FURTHER AMICABLE ACTIONS AS ABOVE
PROVIDED TO RECOVER POSSESSION OF THE MORTGAGED PROPERTY. MORTGAGEE MAY BRING AN
AMICABLE ACTION IN EJECTMENT BEFORE OR AFTER THE INSTITUTION OF PROCEEDINGS TO
FORECLOSE THIS MORTGAGE OR TO ENFORCE ANY LOAN DOCUMENT, OR AFTER ENTRY OF
JUDGMENT THEREON OR ON ANY LOAN DOCUMENT, OR AFTER A SHERIFF'S SALE OF THE
MORTGAGED PROPERTY IN WHICH MORTGAGEE IS THE SUCCESSFUL BIDDER, IT BEING THE
UNDERSTANDING OF THE PARTIES THAT THE AUTHORIZATION TO PURSUE SUCH PROCEEDINGS
FOR OBTAINING POSSESSION IS AN ESSENTIAL PART OF THE REMEDIES FOR ENFORCEMENT OF
THIS MORTGAGE AND THE OTHER LOAN DOCUMENTS, AND SHALL SURVIVE ANY EXECUTION SALE
TO MORTGAGEE.
BY AGREEING THAT MORTGAGEE MAY CONFESS JUDGMENT HEREUNDER MORTGAGOR,
FOR ITSELF AND ANY OTHER PERSONS OR ENTITIES NOW OR HEREAFTER IN POSSESSION OF
ALL OR ANY PART OF THE MORTGAGED PROPERTY, WAIVES THE RIGHT TO NOTICE IN A PRIOR
JUDICIAL PROCEEDING TO DETERMINE THEIR RIGHTS AND LIABILITIES AND THE
OPPORTUNITY TO RAISE ANY DEFENSE, SET OFF, COUNTERCLAIM OR OTHER CLAIM AGAINST
SUCH ACTION BY MORTGAGEE.
6.6 Remedies; Repossession. Mortgagee shall have the right to take
possession of any portion of the Mortgaged Property constituting fixtures or
personal property subject to the Uniform Commercial Code of the state in which
the Mortgaged Property is located, and any records pertaining thereto. Mortgagee
shall have the right to use, operate, manage, lease or otherwise control the
Mortgaged Property in any lawful manner and, in its sole discretion but without
any obligation to do so, insure, maintain, repair, renovate, alter or remove
such Mortgaged Property; use, in connection with any assembly, use or
disposition of such Mortgaged Property any trade mark, trade name, trade style,
copyright, brand, patent right or technical process used or utilized by
Mortgagor; sell or otherwise dispose of all or any of such Mortgaged Property at
any public or private sale at any time or times without advertisement or demand
upon or notice to Mortgagor, all of which are expressly waived to the extent
permitted by law, with the right of Mortgagee or its nominee to become purchaser
at any sale (unless prohibited by statute) free from any equity of redemption
and from all other claims, and after deducting all legal and other expenses for
maintaining or selling such Mortgaged Property, and all attorneys' fees, legal
or other expenses for collection, sale and delivery, apply the remaining
proceeds of any sale to pay (or hold as a reserve against) the Obligations and
exercise all rights and remedies of a secured party under the Uniform Commercial
Code of the state in which the Mortgaged Property is located or any other
applicable law.
6.7 Remedies; Actions Prior to Acceleration. Mortgagee shall have the
right, from time to time, to bring an appropriate action or actions to recover
any sums required to be paid by Mortgagor under the terms of this Mortgage, as
they become due, without regard to whether or not the Obligations shall be due
and payable in full, and without prejudice to the right of Mortgagee thereafter
to bring an action of mortgage foreclosure, or any other action, for any default
by Mortgagor existing at the time the earlier action was commenced.
6.8 No Marshalling. Any of the Mortgaged Property sold pursuant to any
writ of execution issued on a judgment obtained on the Obligations or pursuant
to any other judicial proceeding relating to the Loan Documents or this
Mortgage, may be sold in one parcel, as an entirety, or in such parcels, and in
such manner or order as Mortgagee, in its sole discretion, may elect.
6.9 Rights and Remedies Cumulative.
(a) All rights and remedies of Mortgagee as provided in this
Mortgage and the other Loan Documents shall be cumulative and concurrent, may be
pursued separately, successively or together against Mortgagor or the Mortgaged
Property, or both, at the sole discretion of Mortgagee and may be exercised as
often as occasion therefor shall arise. The failure to exercise any such right
or remedy shall in no event be construed as a waiver or release thereof.
(b) Any failure by Mortgagee to insist upon strict performance by
Mortgagor of any of the terms and provisions of this Mortgage or the other Loan
Documents shall not be deemed to be a waiver of any of the terms or provisions
of this Mortgage or the other Loan Documents and Mortgagee shall have the right
thereafter to insist upon strict performance by Mortgagor of any and all of
them.
ARTICLE VII
MISCELLANEOUS
7.1 Costs, Fees and Expenses. If the Mortgagee becomes a party to any
suit or proceeding affecting the Mortgaged Property, title thereto, the lien
created by this Mortgage or Mortgagee's interest therein, or in the event of the
commencement of any bankruptcy or insolvency proceedings involving Mortgagor, or
if Mortgagee engages counsel to collect or to enforce performance of the
Obligations, Mortgagee's reasonable counsel fees, and all other costs and
expenses paid or incurred by Mortgagee, including reasonable fees of appraisers,
accountants, consultants, and other professionals, costs of title and lien
searches, and environmental assessments, investigations, and other environmental
costs and expenses, whether or not suit is instituted, shall be paid to
Mortgagee, on demand, with interest at the Default Rate and until paid they
shall be deemed to be part of the Obligations secured by this Mortgage.
7.2 Indemnity. Mortgagor shall indemnify, defend and hold Mortgagee
harmless from and against any claims, expenses, demands, losses, costs, fines or
liabilities of any kind (including those involving death, personal injury or
property damage and including reasonable attorneys' fees and costs) arising from
or in any way related to the failure of Mortgagor to comply with, or the failure
of the Mortgaged Property to be kept in compliance with, the Legal Requirements,
Applicable Environmental laws, the Leases and the Permitted Encumbrances. The
Indemnification of Mortgagor under this section shall survive the release or
termination of this Mortgage and shall remain effective notwithstanding any
foreclosure of this Mortgage or other execution against the Mortgaged Property
or acceptance of a deed in lieu of foreclosure. The indemnification agreement of
Mortgagor under this section is specifically excepted from any limitation of
liability provision contained in this or any other Loan Document.
7.3 Declaration of No Set-Off. Within ten (10) days after requested to
do so by Mortgagee, Mortgagor shall certify to Mortgagee or to any proposed
assignee of this Mortgage or participant in the Obligations in a writing duly
acknowledged, the amount of principal, interest and other charges then owing on
the Obligations secured by this Mortgage and whether there are set-offs or
defenses against them.
7.4 Communications. All notices required under this Mortgage shall be
in writing and shall be delivered in accordance with the applicable provisions
contained in the Obligations Secured. If the Obligations Secured do not contain
any applicable provisions for the giving of notices, then notices under this
Mortgage shall be in writing and shall be given by either (a) hand-delivery; (b)
first class mail (postage prepaid); (c) reliable overnight commercial courier
(charges prepaid); or (d) telecopy or other means of electronic transmission, if
confirmed promptly by any of the methods specified in clauses (a), (b) and (c)
of this sentence to the parties at their respective addresses set forth at the
beginning of this Mortgage. A party may change its address by giving written
notice to the other party as specified herein.
7.5 Covenant Running with the Land. Any act or agreement specified
herein to be done or performed by Mortgagor shall be construed as a covenant
running with the land and shall be binding upon Mortgagor and its successors and
assigns as if each had personally made such agreement.
7.6 Amendment. Any amendment, modification, consent or waiver which may
be hereafter requested by Mortgagor or otherwise required must be in writing and
signed by both Mortgagor and Mortgagee. Mortgagor shall promptly pay ( or
reimburse, as Mortgagee may elect) all costs and expenses which Mortgagee may
incur in connection with any amendment, modification, consent or waiver,
including the fees and reimbursements of professional advisors and consultants
to Mortgagee (including legal counsel), title information and premiums,
recording costs and appraisal fees (including any reappraisal deemed necessary
by Mortgagee).
7.7 Applicable Law. This Mortgage shall be governed by and construed in
accordance with the law of the state chosen by the parties under the applicable
provision contained in the Obligations Secured except to the extent that rights,
remedies and warrants of attorney which relate to realizing upon the security
covered by this Mortgage are governed by the laws of the state in which the
Mortgaged Property is located. Whenever possible, each provision of this
Mortgage shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Mortgage shall be prohibited by, or
invalid under, applicable law, such provision shall be ineffective to the extent
of such prohibition and invalidity without invalidating the remaining provisions
of this Mortgage. Nothing contained in this Mortgage or in any other Loan
Document shall require Mortgagor to pay, or Mortgagee to accept, interest in an
amount which would subject Mortgagee to penalty under applicable law.
7.8 Construction. Whenever used in this Mortgage, unless the context
clearly indicates a contrary intent:
(a) The word "Mortgagor" shall mean the persons who execute this
Mortgage and any subsequent fee owner of the Mortgaged Property and their
respective heirs, executors, administrators, personal representatives,
successors, and assigns;
(b) The word "Mortgagee" shall mean, collectively, all of the
entities listed as Mortgagee hereinabove or any subsequent holder of this
Mortgage or participant in the Loan;
(c) The word "person" shall mean individual, corporation,
partnership or unincorporated association;
(d) The use of any gender shall include all genders;
(e) The singular number shall include the plural and the plural
the singular as the context may require;
(f) The word "including" shall mean "including but not limited to"
or "including without limitation" as the context may require.
7.9 Liability. If Mortgagor, or any successor or grantee of Mortgagor,
shall be more than one person, all Obligations of Mortgagor under this Mortgage
shall be joint and several and shall bind and affect all persons who are defined
as "Mortgagor" as fully as though all of them were specifically named herein
wherever the word "Mortgagor" is used. Any Mortgagor who signs this Mortgage but
does not sign the Obligations Secured: (a) is signing this Mortgage to mortgage,
grant and convey that Mortgagor's interest in the Mortgaged Property to
Mortgagee under the terms of this Mortgage, (b) is not personally obligated to
pay the principal sum evidenced by the Obligations Secured (but is obligated to
reimburse Mortgagee with interest at the Default Rate for advances made by the
Mortgagee to protect the security of this Mortgage arising from or related to
the failure of Mortgagor to pay or perform its obligations with respect to the
Mortgaged Property under this Mortgage), and (c) agrees that Mortgagee and any
obligor may agree to extend, modify, forbear or make any other accommodations
with regard to the terms of this Mortgage or the Obligations Secured without
Mortgagor's consent.
7.10 Headings. The headings of sections have been included in this
Mortgage for convenience of reference only and shall not be considered in
interpreting this Mortgage.
7.11 Severability. If any provision of this Mortgage shall be held for
any reason to be invalid, illegal or unenforceable, such impairment shall not
affect any other provision of this Mortgage.
7.12 Incorporation by References. The legal description of the
Mortgaged Property attached as Exhibit "A", the list of Permitted Encumbrances
(if any) attached as Exhibit "B", and any Rider(s) executed by Mortgagor and
attached to this Mortgage are incorporated into this Mortgage by this reference.
7.13 Receipt of Copy. Mortgagor acknowledges receipt of conformed
copies of the Obligations Secured and this Mortgage.
<PAGE>
IN WITNESS WHEREOF, Mortgagor, intending to be legally bound hereby, has duly
executed this Mortgage, under seal, as of the day and year first above written.
Meridian Bank has merged
with CoreStates Bank, N.A.
MORTGAGOR (If individuals, partnership, etc.,) MORTGAGOR (If corporation)
Rhetech, Inc.
- ------------------------------- -------------------------------
Business Name, if any Corporate Name
By: /s/Charles D. Brown
- ------------------------------- -------------------------------
Title: Charles D. Brown,
President/CEO
By: /s/Joseph A. Yurgosky
- ------------------------------- -------------------------------
Title: Joseph A. Yurgosky,
Secretary
Attest:
- ------------------------------- -------------------------------
Title:
(Affix Corporate Seal)
- -------------------------------
Witness:
- ------------------------------- -------------------------------
<PAGE>
CORPORATE ACKNOWLEDGMENT
STATE OF PENNSYLVANIA :
: ss.
COUNTY OF LEHIGH :
On this the 26th day of MARCH, 1998 before me, a Notary Public in and
for said County and State, personally appeared CHARLES D. BROWN, known to me (or
satisfactorily proven) to be the PRESIDENT and CHIEF EXECUTIVE OFFICER (C.E.O.)
of RHETECH, INC., a Delaware Corporation, and that he as such officer, being
authorized to do so, executed the foregoing instrument for the purposes therein
contained by signing the name of the Corporation by himself as such officer.
WITNESS my hand and notarial seal the day and year aforesaid.
/s/Robin L. Cunconan-Lahr My Commission Expires: March 12, 2001
- -------------------------------
Notary Public
NOTARIAL SEAL
CORPORATE ACKNOWLEDGMENT
STATE OF PENNSYLVANIA :
: ss.
COUNTY OF LEHIGH :
On this the 26th day of MARCH, 1998 before me, a Notary Public in and
for said County and State, personally appeared JOSEPH A. YURGOSKY, known to me
(or satisfactorily proven) to be the Secretary of RHETECH, INC., a Delaware
Corporation, and that he as such officer, being authorized to do so, executed
the foregoing instrument for the purposes therein contained by signing the name
of the Corporation by himself as such officer.
WITNESS my hand and notarial seal the day and year aforesaid.
/s/Robin L. Cunconan-Lahr My Commission Expires: March 12, 2001
- -------------------------------
Notary Public
NOTARIAL SEAL
<PAGE>
EXHIBIT "A"
LEGAL DESCRIPTION OF MORGAGED PROPERTY
PARCEL A
- --------
All that certain tract of land and the improvements thereon located on
the south side of Cherry Street, west of South Fourth Street, in the Borough of
Coopersburg, Lehigh County, Commonwealth of Pennsylvania, known as 416 South
Fourth Street and designated Lot 1 on the Subdivision Plan of property of John
J. Horvath, recorded in Minor Subdivision Map Book 2, Page 223, being bounded
and described, in accordance with a survey (#17194) by Bascom & Sieger, as
follows, to wit:
Beginning at an iron pipe (set) on the southerly property line of
Cherry Street, apparently in line with the westerly property of South Fourth
Street extended southward,
Thence, along the westerly and northerly property lines of Lot 4 of
said subdivision:
(1) S 17 degrees 20' 00" W, 340.00 feet to an iron pipe, and
(2) N 61 degrees 28' 50" W, 452.19 feet to an iron pipe,
Thence, along the easterly property line of land now or late of John F.
Bliss, the following two courses and distances:
(1) N 41 degrees 31' 15" E, 55.48 feet to a drill hole in the base of a
sanitary sewer manhole, and
(2) N 11 degrees 06' 30" E, 202.86 feet to an iron pipe (set),
Thence, along the southerly property line of Cherry Street, S 72
degrees 40' 00" E, 502.87 feet to the place of beginning.
Containing 2.9481 Acres.
Subject to easements shown on recorded plan.
BEING THE SAME PREMISES which Lehigh County Industrial Development Authority, a
body corporate and politic, by its Deed dated December 18, 1997, and recorded in
the Office of the Recorder of Deeds in and for Lehigh County, in Deed Book
Volume 1602, Page 1040 granted and conveyed unto Rhetech, Inc., a Delaware
corporation, Grantor herein.
PARCEL B
- --------
All that certain tract of land and the improvements thereon located on
the south side of Cherry Street, at the extension of South Fourth Street, in the
Borough of Coopersburg, Lehigh County, Commonwealth of Pennsylvania, designated
Lot 4 on the Subdivision Plan of property of John J. Horvath, recorded in Minor
Subdivision Map Book 2, Page 223, being bounded and described, in accordance
with a survey (#17194) by Bascom & Sieger, as follows, to wit:
Beginning at an iron pipe (set) on the southerly property line of
Cherry Street, apparently in line with the westerly property of South Fourth
Street extended southward,
Thence, along the southerly property line of Cherry Street, S 72
degrees 40' 00" E, 60.00 feet to an iron pipe (set),
Thence, along the westerly property line of land now or late of Fred W.
Derby, the following two courses and distances:
(1) S 17 degrees 20' 00" W, 341.62 feet to an iron pipe (set), and,
(2) S 43 degrees 57' 10" W, 342.39 feet to an iron pipe,
Thence, along the northwesterly property lines of land now or late of
Valley Manor Nursing and Convalescence Center Inc. and of land now or late of
Harold Dieterly, S 65 degrees 23' 30" W, 470.29 feet to an iron pipe (set),
Thence, along the northeasterly property line of the latter and of land
now or late of Edna W. Cooper, passing through an "T" iron at 244.51 feet, N 38
degrees 28' 40" W, 495.05 feet to an iron pipe,
Thence, along the southeasterly property lines of land now or late of
Perry Howard Ruth and of land now or late of Leonard R. Reinhard Sr., N 55
degrees 29' 40" E, 149.98 feet to a point in Saucon Creek, 11.81 feet from an
iron pipe (set on line),
Thence, along the southerly property line of land now or late of Donna
M. Sandy, N 77 degrees 18' 45" E, 273.68 feet to a drill hole (set) in the base
of sanitary sewer manhole,
Thence, along the southeasterly property line of the same and of land
now or late of John F. Bliss, N 41 degrees, 31' 15" E, 220.6 feet to an iron
pipe,
Thence, along the southerly and easterly property lines of Lot 1 of
said subdivision:
(1) S 61 degrees 28' 50" E, 452.19 feet to an iron pipe, and
(2) N 17 degrees 20' 00" E, 340.00 feet to the place of beginning.
Containing 8.5758 Acres.
Subject to easements shown on recorded plan.
BEING THE SAME PREMISES which John J. Horvath and Shriley E. Horvath, husband
and wife, and Wendell F. Horvath and Stella R. Horvath, husband and wife, by its
Deed dated March 16, 1998, and recorded in the Office of the Recorder of Deeds
in and for Lehigh County, in Deed Book Volume 1602, Page 1037 granted and
conveyed unto Rhetech, Inc., a Delaware corporation, Grantor herein.
EXHIBIT 10.23
Meridian Bank Meridian Bank has merged Promissory Note (Business)
with CoreStates Bank, N.A.
$ 540,000.00 March 26, 1998
- ------------ --------------
FOR VALUE RECEIVED, Undersigned, intending to be legally bound, promises to pay
to the order of Meridian Bank ("Bank"), a Pennsylvania banking corporation
having an office at 35 North Sixth Street, Reading, Pennsylvania, the principal
sum of Five Hundred Forty Thousand and 00/100 Dollars payable as set forth
below, with interest accruing at the rate of 7.50% per annum until 3/30/05 and
thereafter at the Bank's National Commercial Rate + 1.00% per annum until paid.
Interest shall be computed on the basis of the actual number of days in the
calendar year divided by 360.
If the interest rate set forth above is referenced to either Bank's
National Commercial Rate, Local Commercial Rate or Agricultural Commercial Rate,
Undersigned acknowledges and agrees that (i) such referenced rate is a floating
annual rate of interest that is designated from time to time by Bank as the
"National Commercial Rate," "Local Commercial Rate" or "Agricultural Commercial
Rate," as the case may be, and is used by Bank as a reference rate with respect
to different interest rates charged to borrowers; (ii) the rate of interest
payable hereunder shall change simultaneously and automatically upon any change
in such referenced rate; and (iii) such referenced rate may not be the lowest
rate at which Bank makes loans to other borrowers.
REPAYMENT TERMS
Principal and interest are due and payable in 84 consecutive monthly
installments of $6,438.83 each, beginning 4/30/98 until 3/30/05 and, thereafter,
the then unpaid principal balance shall be due and payable in 35 equal monthly
installments, together with interest at the rate referred to above. One final
payment of any remaining unpaid principal and interest is due and payable on
3/30/08.
Prepayment of this Note is subject to payment of a prepayment fee as set forth
in the rider attached hereto and made a part hereof.
Undersigned authorizes Bank to charge its deposit account #_______________
for the payment of principal and/or interest hereunder. Undersigned shall owe a
late payment charge equal to the greater of 5% of the unpaid amount of any
scheduled payment or $15.00, whenever payment of the entire amount due on any
date is not received by Bank on such date.
LIABILITIES
The term "Liabilities" means the principal and interest evidenced by this
note and all other liabilities of Undersigned to Bank, whether hereunder or
otherwise, whether now existing or hereafter incurred, matured or unmatured,
direct or contingent, joint or several, whether created directly or acquired by
assignment or otherwise, including all past and future advances or readvances,
and any extensions, modifications or renewals thereof and substitutions
therefor; all amounts advanced by Bank hereunder on behalf of Undersigned; all
late charges, penalties, fees and other such sums due under this Note or
otherwise; all liabilities (including Professional Fees and Costs, as
hereinafter defined) incurred by Bank arising from or related to any hazardous
materials or dangerous environmental conditions at any real property owned or
occupied by Undersigned; and all of Bank's costs and expenses incurred in
connection with the enforcement and collection of the foregoing liabilities,
whether or not suit is instituted, and whether or not bankruptcy or insolvency
proceedings have been instituted by or against Undersigned, including, without
limitation, reasonable fees and costs of attorneys, appraisers, accountants,
consultants and other professionals ("Professional Fees and Costs"). All amounts
advanced by Bank hereunder on behalf of Undersigned and all other fees, costs,
and expenses incurred by Bank and included in the Liabilities shall be due and
payable upon demand, with interest at an annual rate which shall be two percent
(2%) above the rate of interest otherwise payable hereunder, from the date of
payment by Bank until paid in full.
COLLATERAL
All Collateral (as defined) is security for the Liabilities. The term
"Collateral" includes all tangible and intangible property (i) described in any
mortgage or other security document separately executed by Undersigned in
connection with the Liabilities in favor of Bank ("Security Documents") , and
(ii) in which Undersigned has granted a security interest to Bank pursuant to
this Note. Undersigned grants Bank a security interest in all monies, securities
and other property of Undersigned and the proceeds thereof, now or hereafter in
the possession or custody of, or in transit to, Bank, or any of its affiliates
or subsidiaries, for safekeeping, collection, pledge or any other purpose
including, without limitation, all deposits (whether general or special) and
credits now or hereafter maintained by Undersigned with Bank, or any of its
affiliates or subsidiaries, and in any claims of Undersigned against Bank, or
any of its affiliates or subsidiaries, and Bank may, at its option and without
notice, set off toward the payment of any Liabilities, in such order as Bank may
determine, the balance of each such account with, and each claim against Bank,
or any of its affiliates or subsidiaries. Bank is deemed to have exercised such
right of set off and to have made a charge against any such account immediately
upon the occurrence of a Default (as hereinafter defined) even though such
charge is made or entered on the books subsequently by Bank. Bank has, but is
not limited to, the right at any time and from time to time, without notice to:
(a) pledge, assign or transfer this Note or the Collateral or any portion
thereof; (b) transfer into its own name or that of its nominee all or any part
of the Collateral; (c) exercise voting rights on any Collateral; (d) take
control of the proceeds of any Collateral.
DEFAULT
The occurrence of any one or more of the following shall constitute a
Default by the Undersigned: (a) non-payment of any of the Liabilities, or any
portion thereof, when and in the manner due, whether by acceleration or
otherwise; (b) failure by Undersigned to observe or perform any covenant,
agreement, condition or term of any agreement, document or Security Document
executed and delivered by Undersigned in connection with any of the Liabilities;
(c) breach by any of Undersigned of any obligation or duty to Bank; (d) any
representation or warranty in any financial or other statement, schedule,
certificate or other document delivered to Bank by or on behalf of Undersigned
shall prove to be false, misleading or incomplete in any material respect; (e) a
material adverse change occurs in the financial condition of Undersigned which
is unacceptable to Bank in its sole discretion from the condition most recently
disclosed to Bank in any manner; (f) Undersigned dies, dissolves, liquidates,
merges, reorganizes, changes its name, sells or otherwise disposes of
substantially all of its assets or ceases to conduct operations, or prepares or
attempts to do any of the foregoing; (g) a trustee or receiver is appointed for
Undersigned or for a substantial part of its property, or Undersigned commences
any bankruptcy or other similar proceedings under any insolvency law, state or
federal, or any such proceeding is commenced against Undersigned or Undersigned
becomes insolvent, or generally fails to pay or is generally unable to pay its
debts, or makes an assignment for the benefit of creditors or admits in writing
its insolvency or inability or failure to pay its debts generally as they become
due, or fails within 30 days to pay or bond or otherwise discharge any judgment
which is unstayed pending appeal; (h) Undersigned expresses an intent to
terminate, revoke, or challenge responsibility for any Liabilities or any
material term of any document executed in connection with the Liabilities is
found or declared to be invalid by a court of competent jurisdiction; (i) any
property of Undersigned becomes the subject of any attachment, garnishment, levy
or lien (unless expressly permitted in writing signed by Bank); (j) any
substantial part of the property of Undersigned is taken or condemned by any
governmental authority; (k) Undersigned assigns or otherwise transfers, or
attempts to assign or transfer, any of its right, title and interest in any of
the Collateral without the prior written consent of Bank; (l) Undersigned fails
to furnish financial or other information as Bank may reasonably request; (m) if
there is any change in Undersigned's officers, principal owners or partners, as
the case may be, which is unacceptable to Bank in its sole discretion; (n) Bank,
in the reasonable and good faith exercise of its sole discretion, deems itself
insecure for any reason whatsoever; or (o) Undersigned defaults under any other
agreement or instrument applicable to it representing a material obligation and
such default is not remedied within the grace period provided in such agreement
or instrument or waived.
REMEDIES
Upon the occurrence of a Default (a) Bank shall have no further obligations
to advance funds to Undersigned hereunder; (b) all Liabilities shall, at the
option of Bank, be immediately due and payable; and (c) Bank may exercise its
right of set-off as set forth herein, any and all remedies available to Bank
under this Note and the Security Documents, and all rights and remedies
available to it under any applicable law, including, without limitation, the
rights and remedies of a secured party under the Uniform Commercial Code.
Undersigned hereby waives notice of presentment for payment, demand, nonpayment
or dishonor, protest, acceleration and all further notice of any kind in
connection with the delivery, acceptance, default or enforcement of this Note,
and hereby waives all notice or right of approval of extensions, renewals,
modifications or forebearances which may be allowed.
Upon the occurrence of any Default and the continuance thereof, and
upon prior written notice to Undersigned by Bank, interest shall accrue at an
annual rate which shall be two percent (2%) above the rate of interest otherwise
payable hereunder. At the option of Bank, interest which is not paid when due
shall be added to principal. If any of the Liabilities or any portion thereof
owing to Bank is not paid in full when due, Bank may, at its option and without
notice, withdraw from any account of Undersigned with Bank an amount equal to
such overdue amount and to apply such amount to the payment of the overdue
Liabilities.
All rights or remedies of Bank set forth or otherwise existing are
cumulative. Neither any delay or failure by Bank, in exercising any of its
options, powers or rights herein, nor any partial or single exercise thereof
shall constitute a waiver of the right to exercise the same or any other right
at any other time or from time to time thereafter. Bank is not required to
resort to any particular security or persons to enforce payment, and Bank is not
subject to any marshalling requirements of equities among Undersigned, if more
than one, and among it or them.
CONFESSION OF JUDGMENT
UNDERSIGNED HEREBY IRREVOCABLY AUTHORIZES AND EMPOWERS BANK, BY ANY
AUTHORIZED OFFICER, EMPLOYEE OR AGENT, OR BY ITS ATTORNEY, OR BY THE
PROTHONOTARY OR CLERK OF ANY COURT OF RECORD IN THE COMMONWEALTH OF PENNSYLVANIA
OR ELSEWHERE WHERE PERMITTED BY LAW, UPON THE OCCURRENCE OF A DEFAULT, TO APPEAR
FOR AND CONFESS JUDGMENT AGAINST UNDERSIGNED IN FAVOR OF BANK IN ANY
JURISDICTION IN WHICH UNDERSIGNED OR ANY OF ITS PROPERTY IS LOCATED FOR THE
AMOUNT OF ANY OR ALL OF THE LIABILITIES, TOGETHER WITH THE COSTS OF SUIT AND
WITH ACTUAL COLLECTION COSTS, INCLUDING REASONABLE ATTORNEYS' FEES, WITH OR
WITHOUT DECLARATION, WITH RELEASE OF ALL ERRORS, WITHOUT STAY OF EXECUTION AND
THE RIGHT TO ISSUE EXECUTION FORTHWITH, AND FOR DOING SO THIS NOTE OR A COPY
VERIFIED BY AFFIDAVIT SHALL BE A SUFFICIENT WARRANT. UNDERSIGNED HEREBY WAIVES
AND RELEASES ALL RELIEF FROM ANY AND ALL APPRAISEMENT, STAY OR EXEMPTION LAW OF
ANY STATE NOW IN FORCE OR HEREINAFTER ENACTED.
UNDERSIGNED ACKNOWLEDGES THAT BY AGREEING THAT BANK MAY CONFESS
JUDGMENT HEREUNDER, IT WAIVES THE RIGHT TO NOTICE IN A PRIOR JUDICIAL PROCEEDING
TO DETERMINE ITS RIGHTS AND LIABILITIES, AND UNDERSIGNED FURTHER ACKNOWLEDGES
THAT BANK MAY OBTAIN A JUDGMENT AGAINST UNDERSIGNED WITHOUT UNDERSIGNED'S PRIOR
KNOWLEDGE OR CONSENT AND WITHOUT THE OPPORTUNITY TO RAISE ANY DEFENSE, SET OFF,
COUNTERCLAIM OR OTHER CLAIM UNDERSIGNED MAY HAVE, AND UNDERSIGNED EXPRESSLY
WAIVES SUCH RIGHTS AS AN EXPLICIT AND MATERIAL PART OF THE CONSIDERATION. THE
FOREGOING POWER TO CONFESS JUDGMENT MAY BE EXERCISED AGAINST UNDERSIGNED AT ONE
TIME OR AT DIFFERENT TIMES AS BANK ELECTS UNTIL THE LIABILITIES ARE FULLY
DISCHARGED.
MISCELLANEOUS
The invalidity of any portion of this Note shall not affect the
remaining portions, or any portion thereof, and in the case of any such
invalidity, this Note shall be construed as if such portion had not been
inserted. Undersigned, if more than one, are jointly and severally liable, and
the term "Undersigned" whenever used means each of the parties executing this
Note. All of the terms and provisions of this Note inure to and are binding upon
the heirs, executors, administrators, successors, representatives, receivers,
trustees and assigns of Bank and Undersigned.
Undersigned irrevocably waives the right to interpose any defense
(other than payment), set-off or counterclaim of any nature or description in
any and all disputes between Undersigned and Bank, whether under this Note or
under any other agreement heretofore or hereafter executed.
Undersigned irrevocably agrees and consents to the exclusive
jurisdiction of the Courts of Common Pleas for any county in Pennsylvania where
Bank has an office and/or the United States District Court for the Eastern
District of Pennsylvania in any and all disputes, actions or proceedings between
Undersigned and Bank, whether arising hereunder or under any other agreement or
undertaking and irrevocably agrees to service of process by certified mail,
return receipt requested, to Undersigned at the address listed on the records of
Bank and, if more than one Undersigned, that service upon any of them shall
constitute service upon all of them, each, hereby appointing the other(s) their
attorney-in-fact for the purpose of service. However, Bank is not precluded from
bringing an action against any of Undersigned in any jurisdiction in the United
States or elsewhere in which Undersigned, or any of their property is located.
Undersigned further agrees not to make any objection in any such action or
proceeding that the venue is improper or the forum is inconvenient.
All terms, obligations and provisions hereof are governed by and
construed in accordance with the internal laws of the Commonwealth of
Pennsylvania, without reference to conflict of laws principles.
All notices, comments and other communications required by or given
under this Note shall be in writing and shall be given by either (i) hand
delivery, (ii) first class mail (postage prepaid), (iii) reliable overnight
commercial courier (charges prepaid), or (iv) telecopy or other means of
electronic transmission, if confirmed promptly by any of methods specified in
clauses (i), (ii), and (iii) of this sentence and shall be sufficient, in the
case of Undersigned, if sent to the attention of its proprietor, general partner
or any executive officer at the address on the records of Bank, and, in the case
of Bank, if sent to the address and attention of the loan officer servicing the
account of Undersigned.
<PAGE>
IN WITNESS WHEREOF, Undersigned has executed this Note the day and year first
above written.
Meridian Bank has merged
with CoreStates Bank, N.A.
BORROWER (if individuals, partnership, etc.) BORROWER (if corporation)
Rhetech, Inc.
- -------------------------------- ---------------------------------
Business Name, if any Corporate Name
By: /s/Charles D. Brown
- -------------------------------- ---------------------------------
Title: Charles D. Brown,
President/CEO
By: /s/Joseph A. Yurgosky
- -------------------------------- ---------------------------------
Title: Joseph A. Yurgosky,
Secretary
Attest:
- -------------------------------- ---------------------------------
Title:
(Corporate Seal)
- -------------------------------
Witness: /s/Cheryl Davis
- -------------------------------- ---------------------------------
<PAGE>
CORPORATE ACKNOWLEDGMENT
STATE OF PENNSYLVANIA :
: ss.
COUNTY OF LEHIGH :
On this the 26th day of MARCH, 1998 before me, a Notary Public in and for
said County and State, personally appeared CHARLES D. BROWN, known to me (or
satisfactorily proven) to be the PRESIDENT and CHIEF EXECUTIVE OFFICER (C.E.O)
of RHETECH, INC., a Delaware Corporation, and that he as such officer, being
authorized to do so, executed the foregoing instrument for the purposes therein
contained by signing the name of the Corporation by himself as such officer.
WITNESS my hand and notarial seal the day and year aforesaid.
/s/Robin L. Cunconan-Lahr My Commission Expires: March 12, 2001
- ------------------------------------
Notary Public
NOTARIAL SEAL
CORPORATE ACKNOWLEDGMENT
STATE OF PENNSYLVANIA :
: ss.
COUNTY OF LEHIGH :
On this the 26th day of MARCH, 1998 before me, a Notary Public in and for
said County and State, personally appeared JOSEPH A. YURGOSKY, known to me (or
satisfactorily proven) to be the Secretary of RHETECH, INC., a Delaware
Corporation, and that he as such officer, being authorized to do so, executed
the foregoing instrument for the purposes therein contained by signing the name
of the Corporation by himself as such officer.
WITNESS my hand and notarial seal the day and year aforesaid.
/s/Robin L. Cunconan-Lahr My Commission Expires: March 12, 2001
- ------------------------------------
Notary Public
NOTARIAL SEAL
<PAGE>
Meridian Bank
Meridian Bank has merged
with CoreStates Bank, N.A.
RIDER TO NOTE
Reference is made to that certain Promissory Note (the "Note") dated the date
hereof in the principal amount of $540,000.00, executed by the undersigned
Borrower. Without otherwise modifying any provisions of the Note, it is
understood and agreed that any prepayment of principal (including any principal
repayment as a result of acceleration of the Note by Bank) shall require
immediate payment to Bank of a prepayment fee equal to the amount, if any, by
which the aggregate present value of the scheduled principal and interest
payments eliminated by the prepayment exceeds the principal amount being
prepaid. Said present value shall be calculated by application of a discount
rate determined by Bank in its reasonable judgment to be the yield-to-maturity
at the time of prepayment on U.S. Treasury securities having a maturity which
most closely approximates the final maturity of the principal balance then
outstanding. Prepayments shall be applied to scheduled payments of principal in
the inverse order of their maturity, shall be accompanied by accrued interest on
the amount being prepaid and, unless payment of the Note has been accelerated by
Bank, shall not be permitted in an amount less than the amount of the scheduled
principal payment due immediately prior to final maturity of the outstanding
principal balance.
This Rider is dated March 26, 1998 and shall be attached to and made part of the
Note.
Meridian Bank
/s/Cheryl Davis
- -----------------------------------
By: Cheryl L. Davis, Vice President
BORROWER:
Rhetech, Inc.
/s/Charles D. Brown
- -----------------------------------
By: Charles D. Brown, President/CEO
/s/Joseph A. Yurgosky
- -----------------------------------
By: Joseph A. Yurgosky, Secretary
WITNESS: /s/Cheryl Davis
- -----------------------------------
<PAGE>
CORPORATE ACKNOWLEDGMENT
STATE OF PENNSYLVANIA :
: ss.
COUNTY OF LEHIGH :
On this the 26th day of MARCH, 1998 before me, a Notary Public in and for
said County and State, personally appeared CHARLES D. BROWN, known to me (or
satisfactorily proven) to be the PRESIDENT and CHIEF EXECUTIVE OFFICER (C.E.O)
of RHETECH, INC., a Delaware Corporation, and that he as such officer, being
authorized to do so, executed the foregoing instrument for the purposes therein
contained by signing the name of the Corporation by himself as such officer.
WITNESS my hand and notarial seal the day and year aforesaid.
/s/Robin L. Cunconan-Lahr My Commission Expires: March 12, 2001
- ------------------------------------
Notary Public
NOTARIAL SEAL
CORPORATE ACKNOWLEDGMENT
STATE OF PENNSYLVANIA :
: ss.
COUNTY OF LEHIGH :
On this the 26th day of MARCH, 1998 before me, a Notary Public in and for
said County and State, personally appeared JOSEPH A. YURGOSKY, known to me (or
satisfactorily proven) to be the Secretary of RHETECH, INC., a Delaware
Corporation, and that he as such officer, being authorized to do so, executed
the foregoing instrument for the purposes therein contained by signing the name
of the Corporation by himself as such officer.
WITNESS my hand and notarial seal the day and year aforesaid.
/s/Robin L. Cunconan-Lahr My Commission Expires: March 12, 2001
- ------------------------------------
Notary Public
NOTARIAL SEAL
EXHIBIT 10.24
Meridian Bank Mortgage, Assignment of Leases
Meridian Bank has merged And Security Agreement
with CoreStates Bank, N.A.
I hereby certify that the address
of the Mortgagee is:
35 North Sixth Street
Reading, Pennsylvania 19601
Attention: Quality Control - SQ0725 Dept.
/s/Cheryl Davis
- ------------------------
On behalf of the Mortgagee
IF CHECKED HERE _____:
THIS IS AN OPEN-END MORTGAGE SECURING FUTURE ADVANCES UP TO A MAXIMUM PRINCIPAL
AMOUNT OF $______________ PLUS ACCRUED INTEREST AND OTHER INDEBTEDNESS AS
DESCRIBED IN 42 PA. C.S.A. 8143
This document prepared by: Tammy Walters
Tax Parcel Identification No.: L11NW3C-5-3B and L11NW3C-5-3
Mortgage Amount: $540,000.00
Date: March 26, 1998
Mortgagee: Meridian Bank
35 North Sixth Street
Reading, PA 19601
Mortgagor: Rhetech, Inc.
___ Individual(s)
___ Husband and wife
___ General partnership/joint venture State: _____________
___ Limited partnership State:____________________
X Corporation State: DE
Address of 416 South 4th Street
Mortgagor: Coopersburg, PA 18032
416 South 4th Street and 401 Linden Street
Address of Coopersburg
Mortgaged County: Lehigh
Property: State: PA
Obligations
Secured: Loan(s) in the aggregate principal amount of $__________ described
in Loan Agreement (if any) dated __________
between____________________ and Mortgagee. Note(s) dated __________ in
favor of Mortgagee in the aggregate principal amount of $ 540,000 made
by Rhetech, Inc. in favor of Mortgagee. Surety dated __________ in
favor of Mortgagee of the obligations of ____________________ in the
aggregate principal amount of $___________.
ARTICLE 1
OBLIGATIONS: SECURITY
1.1 Obligations: Loan Documents. Mortgagor shall pay and perform all of
the Obligations in accordance with the provisions of this Mortgage and the Loan
Documents (hereafter defined). The term "Obligations" means, collectively, all
of the following:
(a) The "Liabilities" of Mortgagor or any other obligor under the
Obligations Secured specifically identified above, together with all other sums
now or in the future advanced or to become due under the Obligations Secured or
other Loan Documents, or under any extensions, renewals, replacements or
modifications of, or amendments or additions to, the Obligations Secured or
other Loan Documents; whether for principal, interest, fees, charges, expenses,
or other amounts owing under reimbursement or indemnification obligations under
the Obligations Secured or other Loan Documents; whether such advances are
voluntary or obligatory and whether such obligations presently exist or come
into existence at some future time; and
(b) The performance of all of the covenants, conditions,
agreements, obligations and liabilities of Mortgagor or any other obligor or
surety under (i) the Obligations Secured, this Mortgage, and any other documents
referred to as "Loan Documents" in any of the Obligations Secured; (ii) any
other documents or instruments evidencing or securing present or future advances
made by Mortgagee to or for the benefit of Mortgagor or the Mortgaged Property
or otherwise intended to be secured by this Mortgage; and (iii) all extensions,
renewals, replacements or modifications of, or amendments or additions to, any
of the foregoing (the items described in clauses (i), (ii) and (iii) are
collectively referred to in this Mortgage as the "Loan Documents".)
1.2 Grant of Mortgage; Mortgaged Property. For the purpose of securing
payment and performance of all Obligations, Mortgagor hereby grants, conveys,
bargains, sells, and mortgages unto Mortgagee all of the following whether
presently in existence or to come into existence at some future time
(collectively, the "Mortgaged Property"):
(a) the parcel(s) of land situated generally at the Address of the
Mortgaged Property set forth above and more fully describe in Exhibit "A"
attached hereto and made a part hereof;
(b) All buildings, structures and improvements of every kind
erected on, under or over the above-described land;
(c) All fixtures, machinery, equipment and other articles of real,
personal or mixed property attached to, situated or installed in or upon, or
used in the operation or maintenance of, the Mortgaged Property or any plant or
business situated thereon, whether or not such real, personal or mixed property
is or shall be affixed to the same, and all replacements, substitutions,
accretions and proceeds of the foregoing (collectively, "Fixtures") including:
(i) all furnishings, furniture, and appliances; all articles
of interior decoration, floor, wall and window coverings; all office,
restaurant, bar, kitchen and laundry fixtures, utensils, appliances and
equipment; all supplies, tools, accessories; all storm and screen windows,
shutters, doors, awnings, signs, trees, and other plantings; and
(ii) all building service fixtures, machinery and equipment of
any kind whatsoever; all lighting, heating, ventilating, air conditioning,
refrigerating, sprinkling, plumbing, security, cleaning, incinerating, waste
disposal, communications, alarm, fire prevention and extinguishing systems,
fixtures, apparatus, machinery and equipment; all elevators, escalators, lifts,
cranes, hoists and platforms; all pipes, conduits, pumps, boilers, tanks,
motors, engines, furnaces and compressors; all dynamos, transformers,
generators; and all parts, fittings, accessories, accessions, substitutions and
replacements thereof;
(d) All leases, licenses, occupancy agreements or agreements to
lease all or any part of the Mortgaged Property and all extensions, renewals,
amendments, and modifications thereof, and any options, rights of first refusal,
or guarantees relating thereto (collectively, "Leases"); all rents, income,
receipts, revenues, security deposits, escrow accounts, reserves, issues,
profits, and payments of any kind payable under the Leases or otherwise arising
from the Mortgaged Property (collectively, the "Income"); all contract rights,
accounts receivable and general intangibles relating to the Mortgaged Property
or the use, occupancy, maintenance, construction, repair or operation thereof;
all management agreements, franchise agreements, utility agreements and
deposits, building service contracts, maintenance contracts, construction
contracts, architect's agreements, and plans and specifications; all warranties
and guaranties; and all permits, licenses and approvals;
(e) All estates, rights, privileges, easements, and appurtenances
of any kind benefitting the Mortgaged Property; all means of access to and from
the Mortgaged Property, whether public or private; all water and mineral rights;
and all rights of Mortgagor as declarant under any declaration of condominium or
association applicable to the Mortgaged Property; and
(f) All "Proceeds" of any of the above-described Mortgaged
Property, which term shall have the meaning given to it in the Uniform
Commercial Code of the state in which the Mortgaged Property is located and
shall additionally include whatever is received upon the use, lease, sale,
exchange, collection, or other utilization or any disposition of any of the
Mortgaged Property, voluntary or involuntary, whether cash or non-cash,
including proceeds of insurance and condemnation awards, rental or lease
payments, accounts, chattel paper, instruments, documents, contract rights,
general intangibles, equipment and inventory.
TO HAVE AND TO HOLD the Mortgaged Property unto the Mortgagee to and
for the use of the Mortgagee forever.
1.3 Security Agreement. This Mortgage is also a security agreement
under the Uniform Commercial Code of the state in which the Mortgaged Property
is located. Mortgagor grants, and Mortgagee shall have and may enforce, a
security interest in all those property interests included in the Mortgaged
Property which may be "personal property" to secure payment and performance of
all Obligations. If the Mortgaged Property is located in the Commonwealth of
Pennsylvania, this Mortgage is intended to be an industrial plant mortgage
within the broadest interpretation of the "industrial plant mortgage doctrine"
under the laws of the Commonwealth of Pennsylvania. Mortgagor shall execute,
deliver, file and refile any financing statements, continuation statements, or
other security agreements Mortgagee may require to confirm the lien of this
Mortgage with respect to such property. Mortgagor irrevocably appoints Mortgagee
attorney-in-fact for Mortgagor to execute, deliver and file such instruments.
1.4 Assignment of Leases and Income.
(a) This Mortgage is also an absolute assignment to Mortgagee of
all Leases and Income. Mortgagor hereby assigns, transfers and sets over to
Mortgagee all Leases, all income and all rights of Mortgagor to enforce the
Leases and collect the income.
(b) Mortgagor Irrevocably appoints Mortgagee the attorney-in-fact
of Mortgagor to enforce the Leases and collect the income and the sole and
exclusive agent of Mortgagor to agree to any modification of the Leases. This
power is coupled with an interest and is therefore irrevocable . Mortgagor shall
notify any person which Mortgagee may from time to time specify that the income
should be paid directly to mortgagee and that any modification of the Leases
must be approved by Mortgagee.
(c) So long as Mortgagor is not in default in any respect under
the Loan Documents, Mortgagor shall have a license, revocable at the will of
Mortgagee, to enforce the Leases and collect the income subject to any
applicable provisions contained in the Loan Documents.
(d) All security deposits, prepaid rent permitted to be collected
by Mortgagor, if any (other than prepaid rent for the next succeeding calendar
month), and similar payments under any Lease shall be deposited in a separate
escrow account with Mortgagee. Mortgagor shall notify Mortgagee of the
identification of the escrow account. Such sums shall be disbursed only upon the
prior written consent of Mortgagee except such consent shall not be required
when by law or by the terms of the Lease Mortgagor is required to, and does,
return such sums to the party entitled to same under the Lease.
1.5 Open-End Mortgage. If the Mortgaged Property is located in the
Commonwealth of Pennsylvania, this is an Open-End Mortgage and shall be entitled
to all benefits as such under 42 Pa. C.S.A. 8143 (the "Open-End Mortgage
Statute").
(a) If (i) this Mortgage secures a line of credit or other loan
facility pursuant to which advances are made from time to time by Mortgagee to
Mortgagor, and (ii) Mortgagee receives written notice pursuant to Section
8143(b) of the Open-End Mortgage Statute from a holder of a lien or encumbrance
on the Mortgaged Property which is subordinate to the lien of the Mortgage, then
and notwithstanding any provision to the contrary contained in any Loan
Document, Mortgagor agrees that Mortgagee shall not be responsible to make any
further advances to Mortgagor (and Mortgagee is released from all liability for
failure to make such advances) if Mortgagee determines in its sole discretion
that any such advance requested by Mortgagor could be construed to be an
unobligated advance under Section 8143(b) of the Open-End Mortgage Statute.
(b) If (i) this Mortgage secures a loan facility the proceeds of
which are used to provide funds to pay toward all or part of the cost of
completing any erection, construction, alteration or repair of any part of the
Mortgaged Property, and (ii) Mortgagee receives written notice pursuant to
Section 8143(b) of the Open-End Mortgage Statute from a holder of a mechanic's
lien for labor performed or to be performed or materials furnished or to be
furnished for the erection, construction, alteration or repair of any part of
the Mortgaged Property, then and notwithstanding any provision to the contrary
contained in any Loan Document, Mortgagor agrees that Mortgagee shall have the
right to suspend (until such time as the lien is fully released) any further
advances to Mortgagor (and Mortgagee is released from all liability for failure
to make such advances) except advances which Mortgagee determines in its sole
discretion are for the purpose of paying toward all or part of the cost of
completing any erection, construction, alteration or repair of any part of the
Mortgaged Property the financing of which, in whole or in part, the Mortgage was
given to secure.
(c) If Mortgagor should at any time elect to limit the Obligations
secured by this Mortgage pursuant to Section 8143(c) of the Open-End Mortgage
Statute, Mortgagor agrees that notice of such election shall (i) not be
effective unless and until it is served upon Mortgagee in accordance with the
requirements of Section 8143(d) of the Open-End Mortgage Statute and fully
complies with the requirements for the giving of notices under any Loan
Document; (ii) release Mortgagee from all obligation to make any further
advances under the Loan Documents notwithstanding anything to the contrary
contained in such notice or the Loan Documents; (iii) constitute, at the
election of Mortgagee, an Event of Default under the Loan Documents; and (iv)
not be effective to limit Mortgagor's liability for payment and performance of
all Obligations for which Mortgagor is responsible under this Mortgage or the
other Loan Documents (including all reimbursement and indemnification
agreements) whether such Obligations arise prior or subsequent to the date of
such notice.
1.6 Purchase Money Mortgage. If all or any part of the Obligations
secured by this Mortgage were used in whole or in part to fund the acquisition
of all or any part of the Mortgaged Property, this Mortgage shall constitute a
purchase money mortgage and shall be entitled to all benefits as such under
applicable laws of the state in which the Mortgaged Property is located.
ARTICLE II
TITLE MATTERS
2.1 Warranty of Title. Until the Obligations are fully satisfied,
Mortgagor represents, warrants and covenants that:
(a) Mortgagor has good and marketable fee simple absolute title to
the Mortgaged Property subject only to those exceptions to title more
particularly describe in the title commitment issued to, and accepted by,
Mortgagee in connection with this transaction or described in Exhibit "B"
attached hereto, (the "Permitted Encumbrances") and Mortgagor shall defend the
validity, priority and enforceability of the lien of this Mortgage against the
claims of all persons excepting only those claiming under Permitted
Encumbrances;
(b) Mortgagor has full power and lawful authority to subject the
Mortgaged Property to the lien of this Mortgage;
(c) The execution, delivery and performance of this Mortgage and
the other Loan Documents will not contravene any Legal Requirements (hereafter
defined) or any agreement, document or instrument to which Mortgagor is a party
or by which Mortgagor or the Mortgaged Property is bound;
(d) Mortgagor shall make, execute, acknowledge and deliver all
such further or other deeds, documents, instruments or assurances and cause to
be done all such further acts and things as may at any time be required by
Mortgagee to confirm and fully protect the lien and priority of this Mortgage;
and
(e) Mortgagor shall make such payments, when due, and perform all
obligations as are required under any Permitted Encumbrances affecting the
Mortgaged Property.
2.2 No Transfer. Without the prior written consent of Mortgagee in each
instance, which consent may be given or withheld in Mortgagee's sole discretion,
Mortgagor will abstain from, and will not cause or permit, any transfer of title
to the Mortgaged Property or any part thereof, or any transfer of ownership
interests in Mortgagor (if Mortgagor is a partnership, joint venture or
corporation), voluntarily or by operation of law, nor shall Mortgagor enter into
any agreement or transaction to do or accomplish in form or substance any of the
foregoing.
2.3 No Other Financing or Liens. Without the prior written consent of
Mortgagee in each instance, which consent may be given or withheld in
Mortgagee's sole discretion, Mortgagor shall not create or cause or permit to
exist any lien on the Mortgaged Property whether superior to or subject to the
lien of this Mortgage except the Permitted Encumbrances (if any) and such other
liens or security interests as are expressly and specifically agreed to be
permitted upon the Mortgaged Property by Mortgagee under the Loan Documents.
2.4 Leases. Mortgagor represents and warrants that there are no Leases
affecting the Mortgaged Property other than the Leases (if any) listed in the
schedule of Leases and Income delivered by Mortgagor to Mortgagee in connection
with this transaction. Mortgagor shall not enter into any Leases without the
prior written consent of Mortgagee being obtained in each instance unless all of
the following are satisfied; (a) Mortgagee has approved a standard form of lease
and a then-current schedule of minimum rental terms for the Mortgaged Property;
(b) the Leases are in accordance with the pre-approved lease form and rent
schedule without material variation; and (c) Mortgagor provides to Mortgagee
copies of all executed Leases within ten (10) days after execution.
ARTICLE III
OBLIGATIONS REGARDING MORTGAGED PROPERTY
3.1 Legal Requirements Generally. Mortgagor represents and warrants
that, to the best of Mortgagor's knowledge, the Mortgaged Property is, as of the
date of this Mortgage, in compliance with Legal Requirements (hereafter
defined). Mortgagor shall promptly comply with all present and future laws,
statutes, codes, ordinances, orders, judgments, decrees, injunctions, rules,
regulations, restrictions and requirements (collectively "Legal Requirements")
of the United States of America, the state in which the Mortgaged Property is
located and any political subdivision thereof or any town, city, county, or
municipality in which the Mortgaged Property is located or any agency,
department, bureau, board, commission or instrumentality of any of the foregoing
now existing or hereafter created (individually, a "Government Authority" and,
collectively, "Government Authorities") having jurisdiction over Mortgagor or
the Mortgaged Property or the construction, use, occupancy, operation,
maintenance, or improvement of the Mortgaged Property, whether foreseen or
unforeseen, ordinary or extraordinary.
3.2 Land Use Approvals. Mortgagor represent and warrants to Mortgagee
that the Mortgaged Property is and shall remain one or more zoning lots separate
and apart from all other premises and Mortgagor shall not, by any act or
omission, impair the integrity of the Mortgaged Property as such separate zoning
lot or lots. Mortgagor shall not, without the prior written consent of
Mortgagee, submit or cause to be submitted to any Governmental Authority an
application for zoning, subdivision or development approval affecting the
Mortgaged Property if any of the following would result from such proposed
zoning change, subdivision or development: (a) the separate transfer, use and
ownership of the Mortgaged Property is not permitted as a matter of right under
applicable Legal Requirements; (b) the use of the Mortgaged Property as of the
date of this Mortgage is no longer permitted as a matter of right under
applicable Legal Requirements; or (c) any portion of the Mortgaged Property is
used to fulfill a Legal Requirement of other property not subject to the lien of
this Mortgage.
3.3 Environmental Matters.
(a) Mortgagor represents and warrants that neither Mortgagor nor,
to the best of its knowledge, any other person has (i) used, installed or
disposed of any Hazardous Materials (hereafter defined) on, from, or affecting
the Mortgaged Property except in full compliance with Applicable Environmental
Laws (hereafter defined); or (ii) received any notice from any Governmental
Authority with regard to Hazardous Materials on, from or affecting the Mortgaged
Property.
(b) Mortgagor shall not use the Mortgaged Property, nor allow it
to be used, to generate, manufacture, refine, transport, treat, store, handle,
dispose, transfer, produce or process Hazardous Materials except in full
compliance with Applicable Environmental Laws. Mortgagor shall not cause or
permit, as a result of any intentional or unintentional act or omission on the
part of Mortgagor or any other person, a release of Hazardous Materials onto,
from or affecting the Mortgaged Property or any other use, installation, or
disposition of Hazardous Materials in violation of Applicable Environmental
Laws. Mortgagor shall comply, and enforce compliance by all tenants and
subtenants, with all Applicable Environmental Laws and shall keep the Mortgaged
Property free and clear of any liens imposed pursuant to any Applicable
Environmental Laws.
(c) If Mortgagor receives any notice from any Governmental
Authority with regard to Hazardous Materials on, from or affecting the Mortgaged
Property, or any notice of violation of Applicable Environmental Laws, Mortgagor
shall promptly notify Mortgagee. Mortgagor shall conduct and complete all
investigations, studies, sampling, and testing, and all remedial, removal, and
other actions necessary to clean up and remove all Hazardous Materials on, from
or affecting the Mortgaged Property in accordance with all Applicable
Environmental Laws and to the satisfaction of Mortgagee.
(d) The term "Applicable Environmental Laws" shall mean, without
limitation, all Legal Requirements of any Governmental authority pertaining to
the preservation or enhancement of the quality of the environment or regulating
or restricting the use, transfer, storage or remediation of Hazardous Materials
including the Comprehensive Environmental Response, Compensation, and Liability
act of 1980, as amended (42 U.S.C. Section 9601, et seq.), the Hazardous
Materials Transportation Act, as amended (49 U.S.C. Sections 1801, et seq.), the
Resource Conservation and Recovery Act, as amended (42 U.S.C. Section 6901 et
seq.), the Pennsylvania Hazardous Sites Cleanup Act (35 P.S. 6020.101 et seq.),
the New Jersey Spill Compensation and Control Act, as amended (N.J.S.A.
58:10-23.11 et seq.) and the rules, regulations adopted and publications
promulgated pursuant thereto at any time. The term "Hazardous Materials" shall
mean, without limitation, any flammable explosives, radioactive materials,
hazardous materials, hazardous wastes, hazardous or toxic substances, or related
materials, asbestos or any material containing asbestos, or any other substance
or material regulated under any Applicable Environmental Laws.
3.4 General Obligations. Until the Obligations are fully satisfied,
Mortgagor shall:
(a) Perform all maintenance, repair, restoration and rebuilding
required to keep the Mortgaged Property in good repair, order and condition in
full compliance with the requirements of the Loan Documents, any Leases
affecting the Mortgaged Property and all Legal Requirements;
(b) Complete any improvements to the Mortgaged Property required
under the Loan Documents, any Leases affecting the Mortgaged Property, or
required by any Governmental Authority or Insurer Insuring the Mortgaged
Property, in a good and workmanlike manner and free of mechanics' liens;
(c) Permit, and cause any lessee or occupant of the Mortgaged
Property to permit, Mortgagee and its agents and representatives, to enter upon
the Mortgaged Property at any reasonable time to appraise and photograph the
Mortgaged Property and to inspect for compliance with Legal Requirements,
Insurance requirements, and the Obligation of Mortgagor under this Mortgage and
the other Loan Documents;
(d) Make the books and accounts relating to the Mortgaged Property
available for inspection by Mortgagee, or its representatives, upon request at
any reasonable time; and
(e) Deliver to Mortgagee within ninety (90) days after the end of
each fiscal year of Mortgagor, or on a more frequent basis if requested by
Mortgagee, a schedule of Leases and Income as of the end of the preceding year,
an income and expense statement for the Mortgaged Property as of the end of the
preceding year, and a projected Income and expense statement for the Mortgaged
Property for the then-current fiscal year.
3.5 General Restrictions. Until the Obligations are fully satisfied,
Mortgagor shall not, without prior written consent of Mortgagee being obtained
in each instance:
(a) Abandon the Mortgaged Property or any portion thereof or allow
the same to become vacant;
(b) Commit or suffer waste with respect to the Mortgaged Property;
(c) Impair or diminish the value or integrity of the Mortgaged
Property or the priority or security of the lien of this Mortgage;
(d) Remove, demolish or materially alter any of the Mortgaged
Property except that Mortgagor shall have the right to remove and dispose of,
free of the lien of this Mortgage, such Fixtures as may, from time to time,
become worn out or obsolete, provided that, simultaneously with or prior to such
removal, any such Fixtures shall be replaced with other Fixtures which shall
have a value and utility at least equal to that of the replaced Fixtures and, by
such removal and replacement, Mortgagor shall be deemed to have subjected such
replacement Fixtures to the lien and priority of this Mortgage;
(e) Make, install or permit to be made or installed, any additions
or improvements to the Mortgaged property except in a good and workmanlike
manner, free of mechanic's liens, in compliance with Legal Requirements, and in
accordance with plans and specifications approved by Mortgagee; or
(f) Make, suffer or permit any nuisance to exist on the Mortgaged
Property or any portion thereof.
3.6 Required Notices. Mortgagor shall notify Mortgagee promptly of
the occurrence of any of the following:
(a) A fire or other casualty causing damage to the Mortgaged
Property,
(b) A pending or threatened condemnation of the Mortgaged
Property,
(c) A violation of a Legal Requirement or other notice from or to
a Governmental Authority relating to the Mortgaged Property,
(d) Receipt or giving of any notice of default or cancellation
under any Lease of all or a material portion of the Mortgaged Property,
(e) Commencement of any litigation affecting the Mortgaged
Property,
(f) Discovery, discharge or release of any Hazardous Material for
which Mortgagor is or may be responsible under any Applicable Environmental
Laws;
(g) The existence of any event or condition which presents a risk
of creating material liability in Mortgagor under ERISA (Public Law 93-406, as
amended); or
(h) The occurrence of a default under, or the receipt or giving of
any notice under, any Permitted Encumbrance.
ARTICLE IV
TAXES AND INSURANCE
4.1 Real Estate Taxes and Assessments.
(a) Mortgagor shall pay when due and before interest or penalties
commence to accrue thereon, all taxes, assessments, water and sewer rents,
levies, encumbrances and all other charges or claims of any nature and kind,
whether public or private, which may be assessed, levied, imposed, suffered,
placed or filed at any time against the Mortgaged Property or any part thereof
or which by any present or future law may have priority (either in lien or in
distribution out of the proceeds of any sale) over the lien of this Mortgage
(individually, an "imposition" and, collectively, "impositions").
(b) Mortgagor shall produce to Mortgagee, not later than the last
date any such imposition is due and payable without interest or penalty,
official receipts evidencing payment of such imposition. If Mortgagor is not in
default under this Mortgage or any Loan Document and in good faith and by
appropriate legal action shall contest the validity or amount of any imposition
and shall have established a reserve for the payment thereof in such form and
amount as Mortgagee may require (including any interest and penalties which may
be payable in connection therewith), then Mortgagor shall not be required to pay
the imposition or to produce the receipts while the reserve is maintained and so
long as the contest operates to prevent collection, is maintained and prosecuted
with diligence, and shall not have been terminated or discontinued adversely to
Mortgagor.
4.2 Taxes on Mortgagee. If any Governmental Authority shall levy,
assess or charge any tax, assessment or imposition upon this Mortgage or any
other Loan Document (including any requirement to have affixed to this Mortgage
any revenue, documentary or similar stamps) or upon the interest of Mortgagee in
the Mortgaged Property by reason of this Mortgage or any other Loan Document,
Mortgagor shall pay the same directly to such Governmental Authority as an
imposition. If Mortgagor is not legally permitted to pay such imposition or to
reimburse Mortgagee for amounts advanced on account of such payment, then
Mortgagee may declare the entire amount of the Obligations immediately due and
payable on demand.
4.3 Corporate or Partnership Mortgagor. If Mortgagor (or any successor
or grantee of Mortgagor) is a corporation or partnership, Mortgagor shall at all
times until the Obligations are satisfied in full:
(a) Keep in effect and in good standing its existence and rights
as a corporation or partnership, as the case may, be under the laws of the state
of its incorporation or constitution and its right to own property and transact
business in the state in which the Mortgaged Property is situated; and
(b) File returns for all federal, state and local taxes with the
proper Governmental Authorities, and pay, when due and payable and before
interest or penalties are due thereon, all taxes owing by Mortgagor to any
Governmental Authorities.
4.4 Insurance Coverages. Until the Obligations are fully satisfied,
Mortgagor shall maintain and keep in force the following policies of insurance
with respect to the Mortgaged Property:
(a) Insurance against loss or damage to the Mortgaged Property by
fire and any of the risks covered by insurance of the type commonly known as
"all-risk coverage," in an amount not less than the full replacement value
(evidenced by a "Replacement Cost Endorsement") of the Mortgaged Property;
(b) During the course of any construction or repair of any
improvements on the Mortgaged Property, builder's completed value risk insurance
against "all risks of physical loss," including collapse and transit coverage,
during construction of such improvements, in non-reporting form;
(c) Boiler and machinery insurance (to the extent the Mortgaged
Property includes items covered by such insurance), in such amounts as are
reasonably satisfactory to Mortgagee;
(d) Coverage against sprinkler leakage;
(e) Vandalism and malicious mischief insurance;
(f) Comprehensive public liability insurance on an "occurrence
basis" against claims for personal injury including bodily injury, death or
property damage occurring on or about the Mortgaged Property and the adjoining
streets, sidewalks and passageways, with minimum protection to a limit of not
less than $1,000,000 (or such higher amounts as are required under any other
Loan Document) with respect to personal injury or death to any one or more
persons or damage to property;
(g) Worker's compensation insurance (including employer's
liability insurance) for all employees of Mortgagor engaged on or with respect
to the Mortgaged Property in such amount as is reasonably satisfactory to
Mortgagee, or, if such limits are established by law, in such amounts;
(h) Flood insurance, in accordance with National Flood Insurance
Act of 1968, as amended by the Flood Disaster Protection Act of 1973, if any
portion of the Mortgaged Property lies within a flood hazard area designated by
the Department of Housing and Urban Development, Federal Insurance
Administration as a "Flood Hazard Area";
(i) Business interruption and/or rental loss coverage for a period
equal to the reasonable period of time required to rebuild and restore the
Mortgaged Property upon the occurrence of a substantial destruction; and
(j) Such other insurance, and in such amounts, as may from time to
time be required by Mortgagee.
4.5 Policy Requirements. The insurance coverages required above shall
be insured under policies; (a) in form satisfactory to Mortgagee; (b) issued by
companies satisfactory to Mortgagee; (c) endorsed with a standard mortgagee
clause in favor of the Mortgagee providing not less than thirty days' notice to
Mortgagee of any cancellation or change in coverage; (d) endorsed to name
Mortgagee as additional insured and, subject only to Permitted Encumbrances (if
any), as loss payee; and (e) not subject to contribution or co-insurance.
Certificates of Insurance, addressed to Mortgagee, evidencing such insurance
coverage, may be delivered to Mortgagee in lieu of the policies therefor, but
only if Mortgagor provides to Mortgagee copies of such policies. Certificates
shall be delivered to Mortgagee on or before the date of this Mortgage and,
thereafter, at least thirty (30) days before expiration of the existing
policies. If any insurance required under this Mortgage is cancelled, expires,
becomes void or voidable or otherwise becomes unsatisfactory to Mortgagee,
Mortgagor shall place or cause to be placed new insurance on the Mortgaged
Property reasonably satisfactory to Mortgagee. In the event of any loss,
Mortgagee may make proof of loss if not made promptly by Mortgagor. Each
insurance company concerned is hereby authorized and directed to make payment
under such insurance including return of unearned premiums, directly to
Mortgagee instead of to Mortgagor and Mortgagee jointly, and Mortgagor appoints
Mortgagee, irrevocably, as Mortgagor's attorney-in-fact to endorse any draft
therefor.
4.6 Installments for Insurance, Taxes and Other Charges. Without
limiting the effect of the other provisions of this Article, Mortgagor, if
required by Mortgagee, shall pay to Mortgagee monthly an amount equal to
one-twelfth (1/12) of the annual amount of all impositions and premiums for
insurance policies required under this Article plus any additional sums
necessary to pay, or establish adequate reserves for, the payment of, such
premiums and impositions as and when due. The amount so paid shall be security
for the premiums and impositions and shall be used in payment thereof if
Mortgagor is not otherwise in default under this or any other Loan document. No
amount so paid shall be deemed to be trust funds but may be commingled with
general funds of Mortgagee and no interest shall be payable thereon. Upon the
occurrence of an Event of Default under this Mortgage or any Loan Document,
Mortgagee shall have the right, at its election, to apply any amount so held
against the Obligations. At Mortgagee's option, Mortgagee from time to time may
waive, and after any such waiver may reinstate, the provisions of this section
requiring installment payments.
ARTICLE V
CASUALTY; CONDEMNATION
5.1 Casualty. If the Mortgaged Property is damaged by fire or other
casualty, Mortgagor shall promptly repair and restore the same to its condition
prior to the damage. If, and only for so long as, the following terms and
conditions are fully satisfied by Mortgagor, Mortgagee shall release insurance
proceeds for repair and restoration of the Mortgaged Property; otherwise, and to
the extent of any excess proceeds, Mortgagee shall have the right to apply the
proceeds toward reduction of the Obligations;
(a) No default under this or any other Loan Document shall have
occurred and be continuing uncured;
(b) Mortgagor shall have delivered evidence satisfactory to
Mortgagee that the Mortgaged Property can be fully repaired and restored within
a period of time during which all payments coming due under the Obligations are
fully covered by the proceeds of business interruption or rental loss insurance
applicable to the loss or damage to the Mortgaged Property;
(c) No holder of a Permitted Encumbrance has a right to apply
insurance proceeds to the obligations secured by such Permitted Encumbrance or,
if it does, the holder has waived in writing its right to do so;
(d) No lease is cancellable by the lessee on account of the
casualty or, if it is, the lessee has waived in writing its right to cancel;
(e) The work is performed by a reputable general contractor
satisfactory to Mortgagee under a fixed price or guaranteed maximum price
contract satisfactory to Mortgagee, in accordance with plans and specifications
satisfactory to Mortgagee and in compliance with all Legal Requirements, and no
work shall commence until waivers of mechanics' liens have been filed by the
general contractor and all those claiming by, through, or under the general
contractor;
(f) Mortgagor shall have deposited with Mortgagee for disbursement
in connection with the restoration the greater of (i) the applicable deductible
under the insurance policies covering the loss; or (ii) the amount by which the
cost of restoration is estimated by Mortgagee to exceed the insurance proceeds
available for restoration;
(g) The insurance proceeds are held by Mortgagee (or an escrowee
satisfactory to Mortgagee) in trust, to be disbursed periodically as the work
progresses in amounts not exceeding 90% of the value of labor and materials
incorporated into the restoration. The remaining 10% will be released upon final
completion of the work in accordance with the aforesaid plans and
specifications, and upon a receipt of a release of liens from all contractors
and subcontractors engaged in the restoration; and
(h) Mortgagor has paid as and when due all of Mortgagee's costs
and expenses incurred in connection with the collection of insurance proceeds,
approval of plans, charges of Mortgagee's inspection representative and such
reasonable fee as may be charged by Mortgagee to monitor the restoration and
disburse the insurance proceeds.
5.2 Condemnation.
(a) In the event of any condemnation or taking of any part of the
Mortgaged Property by eminent domain, alteration of the grade of any street, or
other injury to or decrease in the value of the Mortgaged Property by any public
or quasi-public authority or corporation, all proceeds (that is, the award or
agreed compensation for the damages sustained) allocable to Mortgagor, after
deducting therefrom all costs and expenses (regardless of the particular nature
thereof and whether incurred with or without suit) including attorney's fees
incurred by Mortgagee in connection with the collection of such proceeds, shall
be paid to Mortgagee and applied, at Mortgagee's election, (i) toward
restoration of the Mortgaged Property (in which case the terms and conditions
applicable to restoration in the case of casualty shall apply); or (ii) to the
Obligations. No settlement for damages sustained shall be made by Mortgagor
without Mortgagee's prior written approval.
(b) If prior to the receipt of the proceeds by Mortgagee, the
Mortgaged Property shall have been sold on foreclosure of this Mortgage,
Mortgagee shall have the right to receive the proceeds to the extent of:
(i) the full amount of all such proceeds if Mortgagee is the
successful purchaser at the foreclosure sale, or
(ii) if anyone other than Mortgagee is the successful
purchaser at the foreclosure sale, in addition to the net sale proceeds to be
received by Mortgagee in connection with the sale, any deficiency (as
hereinafter defined) due to Mortgagee in connection with the foreclosure sale,
with legal interest thereon, and reasonable counsel fees, costs and
disbursements incurred by Mortgagee in connection with collection of such
proceeds of condemnation and the establishment of such deficiency. For purposes
of this section, the word "deficiency" shall be deemed to mean the difference
between (A) the net sale proceeds actually received by Mortgagee as a result of
such foreclosure sale less any costs and expenses incurred by Mortgagee in
connection with enforcement of its rights under the Loan Documents, and (B) the
aggregate amount of all sums which Mortgagee is entitled to collect under the
Loan Documents.
(c) Mortgagee shall have the right to prosecute to final
determination, or settlement, an appeal or other appropriate proceedings in the
name of Mortgagee or Mortgagor, for which Mortgagee will then be appointed as
attorney-in-fact for Mortgagor, which appointment, being for security, is
irrevocable. In that event, the expenses of the proceedings, including
reasonable counsel fees, shall be paid first out of the proceeds, and only the
excess, if any, paid to Mortgagee shall be applied to the Obligations.
(d) Nothing herein shall limit the rights otherwise available to
Mortgagee, at law or in equity, including the right to intervene as a party to
any condemnation proceeding.
<PAGE>
ARTICLE VI
DEFAULTS; REMEDIES
6.1 Right to Make Advances. If Mortgagor should fail to pay or perform
any of its Obligations with respect to the Mortgaged Property as required under
Article III and Article IV of this Mortgage, or otherwise fails to pay or
perform any of its other Obligations under this or any other Loan Document, then
Mortgagee, at its election, shall have the right, but not the obligation, to
made any payment or expenditure and to take any action which Mortgagor should
have made or taken or which Mortgagee deems advisable to protect the security of
this Mortgage or the Mortgaged Property. Such action shall be without prejudice
to any of Mortgagee's rights or remedies available under this Mortgage or the
other Loan Documents or otherwise at law or in equity. All such sums, as well as
costs and expenses, advanced by Mortgagee shall be due immediately from
Mortgagor to Mortgagee, shall become part of the Obligations secured by this
Mortgage and the other Loan Documents, and shall bear interest at the applicable
rate provided in the Loan Documents in effect after maturity or default (the
"Default Rate") until repayment in full to Mortgagee.
6.2 Events of Default. The occurrence of any one or more of the
following events shall, at the election of Mortgagee, constitute an Event of
Default under this Mortgage:
(a) Any Event of Default under any other Loan Document;
(b) Failure to pay any sum required to be paid under this Mortgage
as and when due;
(c) Any breach of warranty or other violation of any provision
contained in Article II of this Mortgage;
(d) The commencement by Mortgagor of any bankruptcy,
reorganization, debt arrangement, or other case or proceeding under any state or
federal bankruptcy or insolvency law or any dissolution or liquidation
proceeding;
(e) Any bankruptcy, reorganization, debt arrangement, or other
case or proceeding under any state or federal bankruptcy or insolvency law, or
any dissolution or liquidation proceeding, involuntarily commenced against or in
respect of Mortgagor, or an order for relief entered in such proceeding and not
dismissed within the period of time, if any, expressly permitted by Mortgagee
under the Loan Documents; or
(f) Nonperformance of, or noncompliance with, any of the
agreements, covenants, conditions, warranties, representations or other
provisions contained in this Mortgage (if and only to the extent not included in
any of the occurrences listed above), which nonperformance or noncompliance is
not cured and remedied within fifteen (15) days after notice thereof is given to
Mortgagor.
6.3 Remedies; Execution. Upon the occurrence of an Event of Default,
Mortgagee shall have the right to accelerate all Obligations (including interest
thereon at the Default Rate) pursuant to the terms of the Loan Documents and to
enforce its rights under this Mortgage and the other Loan Documents by
exercising such remedies as are available to Mortgagee under applicable law,
either by suit in equity or action at law, or both, whether for specific
performance of any provision contained in this Mortgage or any of the other Loan
Documents or in aid of the exercise or any power granted in this Mortgage or the
other Loan Documents.
(a) Mortgagee shall have the right to obtain judgment for the
Obligations (including all amounts advanced or to be advanced by Mortgagee under
Section 6.1 above, all costs and expenses of collection and suit, including any
bankruptcy or insolvency proceeding affecting Mortgagor, and reasonable
attorneys' fees incurred in connection with any of the foregoing) together with
interest on such judgment at the Default Rate until payment in full is received
by Mortgagee and Mortgagee shall have the right to obtain execution upon the
Mortgaged Property on account of such judgment.
(b) Mortgagee shall have the right to institute an action of
mortgage foreclosure against the Mortgaged Property or take such other action
for realization on the security intended to be provided under Article I of this
Mortgage as applicable law or the provisions of the Loan Documents may allow.
6.4 Remedies; Collection of Income. Mortgagee may, with or without
entering into possession of the Mortgaged Property, and with or without legal
action, collect all income (which term shall also include amounts determined by
Mortgagee as fair rental value for use and occupation of the Mortgaged Property
by any person, including Mortgagor) and, after deducting all costs of collection
and administration expense, apply the net income to the Obligations or any or
all of the following in such order and amounts as Mortgagee, in Mortgagee's sole
discretion, may elect: the payment of any sums due, or accumulation of necessary
reserves for, payment of all costs and expenses arising from or incurred in
connection with (a) the preservation and protection of the validity and priority
of the lien of this Mortgage; (b) the preservation and protection of the
Mortgaged Property; (c) compliance with Legal Requirements; or (d) fulfilling
any Obligations of Mortgagor under the Permitted Encumbrances, the Leases, this
Mortgage or the Loan Documents.
6.5 Remedies; Possession. Mortgagee may, with or without legal action,
take possession and control of the Mortgaged Property to the exclusion of
Mortgagor and all others excepting only those claiming under Permitted
Encumbrances. Mortgagee shall have the authority while so in possession to
insure (at Mortgagor's expense) against all risks by reason of having taken such
possession and Mortgagor will transfer and deliver to the Mortgagee all policies
of insurance upon the Mortgaged Property not theretofore transferred and
delivered to Mortgagee. FOR THE PURPOSE OF OBTAINING POSSESSION OF THE MORTGAGED
PROPERTY UPON THE OCCURRENCE OF ANY EVENT OF DEFAULT, MORTGAGOR HEREBY
AUTHORIZES AND EMPOWERS ANY ATTORNEY OF ANY COURT OF RECORD IN THE STATE IN
WHICH THE MORTGAGED PROPERTY IS LOCATED OR ELSEWHERE AS ATTORNEY FOR MORTGAGOR
AND ALL PERSONS CLAIMING UNDER OR THROUGH MORTGAGOR, TO SIGN AN AGREEMENT FOR
ENTERING IN ANY COMPETENT COURT AN AMICABLE ACTION IN EJECTMENT FOR POSSESSION
OF THE MORTGAGED PROPERTY AND TO APPEAR FOR AND CONFESS JUDGMENT AGAINST
MORTGAGOR, AND ALL PERSONS CLAIMING UNDER OR THROUGH MORTGAGOR IN FAVOR OF
MORTGAGEE FOR RECOVERY BY MORTGAGEE OF POSSESSION THEREOF, FOR WHICH THIS
MORTGAGE, OR A COPY THEREOF VERIFIED BY AFFIDAVIT, SHALL BE SUFFICIENT WARRANT;
AND THEREUPON A WRIT OF POSSESSION MAY IMMEDIATELY ISSUE FOR POSSESSION OF THE
MORTGAGED PROPERTY, WITHOUT ANY PRIOR WRIT OR PROCEEDING WHATSOEVER AND WITHOUT
ANY STAY OF EXECUTION. IF FOR ANY REASON AFTER SUCH ACTION HAS BEEN COMMENCED IT
SHALL BE DISCONTINUED, OR POSSESSION OF THE MORTGAGED PROPERTY SHALL REMAIN IN
OR BE RESTORED TO MORTGAGOR, MORTGAGEE SHALL HAVE THE RIGHT FOR THE SAME DEFAULT
OR ANY SUBSEQUENT DEFAULT TO BRING ONE OR MORE FURTHER AMICABLE ACTIONS AS ABOVE
PROVIDED TO RECOVER POSSESSION OF THE MORTGAGED PROPERTY. MORTGAGEE MAY BRING AN
AMICABLE ACTION IN EJECTMENT BEFORE OR AFTER THE INSTITUTION OF PROCEEDINGS TO
FORECLOSE THIS MORTGAGE OR TO ENFORCE ANY LOAN DOCUMENT, OR AFTER ENTRY OF
JUDGMENT THEREON OR ON ANY LOAN DOCUMENT, OR AFTER A SHERIFF'S SALE OF THE
MORTGAGED PROPERTY IN WHICH MORTGAGEE IS THE SUCCESSFUL BIDDER, IT BEING THE
UNDERSTANDING OF THE PARTIES THAT THE AUTHORIZATION TO PURSUE SUCH PROCEEDINGS
FOR OBTAINING POSSESSION IS AN ESSENTIAL PART OF THE REMEDIES FOR ENFORCEMENT OF
THIS MORTGAGE AND THE OTHER LOAN DOCUMENTS, AND SHALL SURVIVE ANY EXECUTION SALE
TO MORTGAGEE.
BY AGREEING THAT MORTGAGEE MAY CONFESS JUDGMENT HEREUNDER MORTGAGOR,
FOR ITSELF AND ANY OTHER PERSONS OR ENTITIES NOW OR HEREAFTER IN POSSESSION OF
ALL OR ANY PART OF THE MORTGAGED PROPERTY, WAIVES THE RIGHT TO NOTICE IN A PRIOR
JUDICIAL PROCEEDING TO DETERMINE THEIR RIGHTS AND LIABILITIES AND THE
OPPORTUNITY TO RAISE ANY DEFENSE, SET OFF, COUNTERCLAIM OR OTHER CLAIM AGAINST
SUCH ACTION BY MORTGAGEE.
6.6 Remedies; Repossession. Mortgagee shall have the right to take
possession of any portion of the Mortgaged Property constituting fixtures or
personal property subject to the Uniform Commercial Code of the state in which
the Mortgaged Property is located, and any records pertaining thereto. Mortgagee
shall have the right to use, operate, manage, lease or otherwise control the
Mortgaged Property in any lawful manner and, in its sole discretion but without
any obligation to do so, insure, maintain, repair, renovate, alter or remove
such Mortgaged Property; use, in connection with any assembly, use or
disposition of such Mortgaged Property any trade mark, trade name, trade style,
copyright, brand, patent right or technical process used or utilized by
Mortgagor; sell or otherwise dispose of all or any of such Mortgaged Property at
any public or private sale at any time or times without advertisement or demand
upon or notice to Mortgagor, all of which are expressly waived to the extent
permitted by law, with the right of Mortgagee or its nominee to become purchaser
at any sale (unless prohibited by statute) free from any equity of redemption
and from all other claims, and after deducting all legal and other expenses for
maintaining or selling such Mortgaged Property, and all attorneys' fees, legal
or other expenses for collection, sale and delivery, apply the remaining
proceeds of any sale to pay (or hold as a reserve against) the Obligations and
exercise all rights and remedies of a secured party under the Uniform Commercial
Code of the state in which the Mortgaged Property is located or any other
applicable law.
6.7 Remedies; Actions Prior to Acceleration. Mortgagee shall have the
right, from time to time, to bring an appropriate action or actions to recover
any sums required to be paid by Mortgagor under the terms of this Mortgage, as
they become due, without regard to whether or not the Obligations shall be due
and payable in full, and without prejudice to the right of Mortgagee thereafter
to bring an action of mortgage foreclosure, or any other action, for any default
by Mortgagor existing at the time the earlier action was commenced.
6.8 No Marshalling. Any of the Mortgaged Property sold pursuant to any
writ of execution issued on a judgment obtained on the Obligations or pursuant
to any other judicial proceeding relating to the Loan Documents or this
Mortgage, may be sold in one parcel, as an entirety, or in such parcels, and in
such manner or order as Mortgagee, in its sole discretion, may elect.
6.9 Rights and Remedies Cumulative.
(a) All rights and remedies of Mortgagee as provided in this
Mortgage and the other Loan Documents shall be cumulative and concurrent, may be
pursued separately, successively or together against Mortgagor or the Mortgaged
Property, or both, at the sole discretion of Mortgagee and may be exercised as
often as occasion therefor shall arise. The failure to exercise any such right
or remedy shall in no event be construed as a waiver or release thereof.
(b) Any failure by Mortgagee to insist upon strict performance by
Mortgagor of any of the terms and provisions of this Mortgage or the other Loan
Documents shall not be deemed to be a waiver of any of the terms or provisions
of this Mortgage or the other Loan Documents and Mortgagee shall have the right
thereafter to insist upon strict performance by Mortgagor of any and all of
them.
ARTICLE VII
MISCELLANEOUS
7.1 Costs, Fees and Expenses. If the Mortgagee becomes a party to any
suit or proceeding affecting the Mortgaged Property, title thereto, the lien
created by this Mortgage or Mortgagee's interest therein, or in the event of the
commencement of any bankruptcy or insolvency proceedings involving Mortgagor, or
if Mortgagee engages counsel to collect or to enforce performance of the
Obligations, Mortgagee's reasonable counsel fees, and all other costs and
expenses paid or incurred by Mortgagee, including reasonable fees of appraisers,
accountants, consultants, and other professionals, costs of title and lien
searches, and environmental assessments, investigations, and other environmental
costs and expenses, whether or not suit is instituted, shall be paid to
Mortgagee, on demand, with interest at the Default Rate and until paid they
shall be deemed to be part of the Obligations secured by this Mortgage.
7.2 Indemnity. Mortgagor shall indemnify, defend and hold Mortgagee
harmless from and against any claims, expenses, demands, losses, costs, fines or
liabilities of any kind (including those involving death, personal injury or
property damage and including reasonable attorneys' fees and costs) arising from
or in any way related to the failure of Mortgagor to comply with, or the failure
of the Mortgaged Property to be kept in compliance with, the Legal Requirements,
Applicable Environmental laws, the Leases and the Permitted Encumbrances. The
Indemnification of Mortgagor under this section shall survive the release or
termination of this Mortgage and shall remain effective notwithstanding any
foreclosure of this Mortgage or other execution against the Mortgaged Property
or acceptance of a deed in lieu of foreclosure. The indemnification agreement of
Mortgagor under this section is specifically excepted from any limitation of
liability provision contained in this or any other Loan Document.
7.3 Declaration of No Set-Off. Within ten (10) days after requested to
do so by Mortgagee, Mortgagor shall certify to Mortgagee or to any proposed
assignee of this Mortgage or participant in the Obligations in a writing duly
acknowledged, the amount of principal, interest and other charges then owing on
the Obligations secured by this Mortgage and whether there are set-offs or
defenses against them.
7.4 Communications. All notices required under this Mortgage shall be
in writing and shall be delivered in accordance with the applicable provisions
contained in the Obligations Secured. If the Obligations Secured do not contain
any applicable provisions for the giving of notices, then notices under this
Mortgage shall be in writing and shall be given by either (a) hand-delivery; (b)
first class mail (postage prepaid); (c) reliable overnight commercial courier
(charges prepaid); or (d) telecopy or other means of electronic transmission, if
confirmed promptly by any of the methods specified in clauses (a), (b) and (c)
of this sentence to the parties at their respective addresses set forth at the
beginning of this Mortgage. A party may change its address by giving written
notice to the other party as specified herein.
7.5 Covenant Running with the Land. Any act or agreement specified
herein to be done or performed by Mortgagor shall be construed as a covenant
running with the land and shall be binding upon Mortgagor and its successors and
assigns as if each had personally made such agreement.
7.6 Amendment. Any amendment, modification, consent or waiver which may
be hereafter requested by Mortgagor or otherwise required must be in writing and
signed by both Mortgagor and Mortgagee. Mortgagor shall promptly pay ( or
reimburse, as Mortgagee may elect) all costs and expenses which Mortgagee may
incur in connection with any amendment, modification, consent or waiver,
including the fees and reimbursements of professional advisors and consultants
to Mortgagee (including legal counsel), title information and premiums,
recording costs and appraisal fees (including any reappraisal deemed necessary
by Mortgagee).
7.7 Applicable Law. This Mortgage shall be governed by and construed in
accordance with the law of the state chosen by the parties under the applicable
provision contained in the Obligations Secured except to the extent that rights,
remedies and warrants of attorney which relate to realizing upon the security
covered by this Mortgage are governed by the laws of the state in which the
Mortgaged Property is located. Whenever possible, each provision of this
Mortgage shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Mortgage shall be prohibited by, or
invalid under, applicable law, such provision shall be ineffective to the extent
of such prohibition and invalidity without invalidating the remaining provisions
of this Mortgage. Nothing contained in this Mortgage or in any other Loan
Document shall require Mortgagor to pay, or Mortgagee to accept, interest in an
amount which would subject Mortgagee to penalty under applicable law.
7.8 Construction. Whenever used in this Mortgage, unless the context
clearly indicates a contrary intent:
(a) The word "Mortgagor" shall mean the persons who execute this
Mortgage and any subsequent fee owner of the Mortgaged Property and their
respective heirs, executors, administrators, personal representatives,
successors, and assigns;
(b) The word "Mortgagee" shall mean, collectively, all of the
entities listed as Mortgagee hereinabove or any subsequent holder of this
Mortgage or participant in the Loan;
(c) The word "person" shall mean individual, corporation,
partnership or unincorporated association;
(d) The use of any gender shall include all genders;
(e) The singular number shall include the plural and the plural
the singular as the context may require;
(f) The word "including" shall mean "including but not limited to"
or "including without limitation" as the context may require.
7.9 Liability. If Mortgagor, or any successor or grantee of Mortgagor,
shall be more than one person, all Obligations of Mortgagor under this Mortgage
shall be joint and several and shall bind and affect all persons who are defined
as "Mortgagor" as fully as though all of them were specifically named herein
wherever the word "Mortgagor" is used. Any Mortgagor who signs this Mortgage but
does not sign the Obligations Secured: (a) is signing this Mortgage to mortgage,
grant and convey that Mortgagor's interest in the Mortgaged Property to
Mortgagee under the terms of this Mortgage, (b) is not personally obligated to
pay the principal sum evidenced by the Obligations Secured (but is obligated to
reimburse Mortgagee with interest at the Default Rate for advances made by the
Mortgagee to protect the security of this Mortgage arising from or related to
the failure of Mortgagor to pay or perform its obligations with respect to the
Mortgaged Property under this Mortgage), and (c) agrees that Mortgagee and any
obligor may agree to extend, modify, forbear or make any other accommodations
with regard to the terms of this Mortgage or the Obligations Secured without
Mortgagor's consent.
7.10 Headings. The headings of sections have been included in this
Mortgage for convenience of reference only and shall not be considered in
interpreting this Mortgage.
7.11 Severability. If any provision of this Mortgage shall be held for
any reason to be invalid, illegal or unenforceable, such impairment shall not
affect any other provision of this Mortgage.
7.12 Incorporation by References. The legal description of the
Mortgaged Property attached as Exhibit "A", the list of Permitted Encumbrances
(if any) attached as Exhibit "B", and any Rider(s) executed by Mortgagor and
attached to this Mortgage are incorporated into this Mortgage by this reference.
7.13 Receipt of Copy. Mortgagor acknowledges receipt of conformed
copies of the Obligations Secured and this Mortgage.
<PAGE>
IN WITNESS WHEREOF, Mortgagor, intending to be legally bound hereby, has duly
executed this Mortgage, under seal, as of the day and year first above written.
Meridian Bank has merged
with CoreStates Bank, N.A,
MORTGAGOR (If individuals, partnership, etc.,) MORTGAGOR (If corporation)
Rhetech, Inc.
- ------------------------------ -------------------------------
Business Name, if any Corporate Name
By: /s/Charles D. Brown
- ------------------------------ -------------------------------
Title: Charles D. Brown,
President/CEO
By: /s/Joseph A. Yurgosky
- ------------------------------ -------------------------------
Title: Joseph A. Yurgosky,
Secretary
Attest:
- ------------------------------ -------------------------------
Title:
(Affix Corporate Seal)
- ------------------------------
Witness:
- ------------------------------ -------------------------------
<PAGE>
CORPORATE ACKNOWLEDGMENT
STATE OF PENNSYLVANIA :
: ss.
COUNTY OF LEHIGH :
On this the 26th day of MARCH, 1998 before me, a Notary Public in and
for said County and State, personally appeared CHARLES D. BROWN, known to me (or
satisfactorily proven) to be the PRESIDENT and CHIEF EXECUTIVE OFFICER (C.E.O.)
of RHETECH, INC., a Delaware Corporation, and that he as such officer, being
authorized to do so, executed the foregoing instrument for the purposes therein
contained by signing the name of the Corporation by himself as such officer.
WITNESS my hand and notarial seal the day and year aforesaid.
/s/Robin L. Cunconan-Lahr My Commission Expires: March 12, 2001
- -------------------------------
Notary Public
NOTARIAL SEAL
CORPORATE ACKNOWLEDGMENT
STATE OF PENNSYLVANIA :
: ss.
COUNTY OF LEHIGH :
On this the 26th day of MARCH, 1998 before me, a Notary Public in and
for said County and State, personally appeared JOSEPH A. YURGOSKY, known to me
(or satisfactorily proven) to be the Secretary of RHETECH, INC., a Delaware
Corporation, and that he as such officer, being authorized to do so, executed
the foregoing instrument for the purposes therein contained by signing the name
of the Corporation by himself as such officer.
WITNESS my hand and notarial seal the day and year aforesaid.
/s/Robin L. Cunconan-Lahr My Commission Expires: March 12, 2001
- -------------------------------
Notary Public
NOTARIAL SEAL
<PAGE>
EXHIBIT "A"
LEGAL DESCRIPTION OF MORGAGED PROPERTY
PARCEL A
- --------
All that certain tract of land and the improvements thereon located on
the south side of Cherry Street, west of South Fourth Street, in the Borough of
Coopersburg, Lehigh County, Commonwealth of Pennsylvania, known as 416 South
Fourth Street and designated Lot 1 on the Subdivision Plan of property of John
J. Horvath, recorded in Minor Subdivision Map Book 2, Page 223, being bounded
and described, in accordance with a survey (#17194) by Bascom & Sieger, as
follows, to wit:
Beginning at an iron pipe (set) on the southerly property line of
Cherry Street, apparently in line with the westerly property of South Fourth
Street extended southward,
Thence, along the westerly and northerly property lines of Lot 4 of
said subdivision:
(1) S 17 degrees 20' 00" W, 340.00 feet to an iron pipe, and
(2) N 61 degrees 28' 50" W, 452.19 feet to an iron pipe,
Thence, along the easterly property line of land now or late of John F.
Bliss, the following two courses and distances:
(1) N 41 degrees 31' 15" E, 55.48 feet to a drill hole in the base of a
sanitary sewer manhole, and
(2) N 11 degrees 06' 30" E, 202.86 feet to an iron pipe (set),
Thence, along the southerly property line of Cherry Street, S 72
degrees 40' 00" E, 502.87 feet to the place of beginning.
Containing 2.9481 Acres.
Subject to easements shown on recorded plan.
BEING THE SAME PREMISES which Lehigh County Industrial Development Authority, a
body corporate and politic, by its Deed dated December 18, 1997, and recorded in
the Office of the Recorder of Deeds in and for Lehigh County, in Deed Book
Volume 1602, Page 1040 granted and conveyed unto Rhetech, Inc., a Delaware
corporation, Grantor herein.
PARCEL B
- --------
All that certain tract of land and the improvements thereon located on
the south side of Cherry Street, at the extension of South Fourth Street, in the
Borough of Coopersburg, Lehigh County, Commonwealth of Pennsylvania, designated
Lot 4 on the Subdivision Plan of property of John J. Horvath, recorded in Minor
Subdivision Map Book 2, Page 223, being bounded and described, in accordance
with a survey (#17194) by Bascom & Sieger, as follows, to wit:
Beginning at an iron pipe (set) on the southerly property line of
Cherry Street, apparently in line with the westerly property of South Fourth
Street extended southward,
Thence, along the southerly property line of Cherry Street, S 72
degrees 40' 00" E, 60.00 feet to an iron pipe (set),
Thence, along the westerly property line of land now or late of Fred W.
Derby, the following two courses and distances:
(1) S 17 degrees 20' 00" W, 341.62 feet to an iron pipe (set), and,
(2) S 43 degrees 57' 10" W, 342.39 feet to an iron pipe,
Thence, along the northwesterly property lines of land now or late of
Valley Manor Nursing and Convalescence Center Inc. and of land now or late of
Harold Dieterly, S 65 degrees 23' 30" W, 470.29 feet to an iron pipe (set),
Thence, along the northeasterly property line of the latter and of land
now or late of Edna W. Cooper, passing through an "T" iron at 244.51 feet, N 38
degrees 28' 40" W, 495.05 feet to an iron pipe,
Thence, along the southeasterly property lines of land now or late of
Perry Howard Ruth and of land now or late of Leonard R. Reinhard Sr., N 55
degrees 29' 40" E, 149.98 feet to a point in Saucon Creek, 11.81 feet from an
iron pipe (set on line),
Thence, along the southerly property line of land now or late of Donna
M. Sandy, N 77 degrees 18' 45" E, 273.68 feet to a drill hole (set) in the base
of sanitary sewer manhole,
Thence, along the southeasterly property line of the same and of land
now or late of John F. Bliss, N 41 degrees, 31' 15" E, 220.6 feet to an iron
pipe,
Thence, along the southerly and easterly property lines of Lot 1 of
said subdivision:
(1) S 61 degrees 28' 50" E, 452.19 feet to an iron pipe, and
(2) N 17 degrees 20' 00" E, 340.00 feet to the place of beginning.
Containing 8.5758 Acres.
Subject to easements shown on recorded plan.
BEING THE SAME PREMISES which John J. Horvath and Shriley E. Horvath, husband
and wife, and Wendell F. Horvath and Stella R. Horvath, husband and wife, by its
Deed dated March 16, 1998, and recorded in the Office of the Recorder of Deeds
in and for Lehigh County, in Deed Book Volume 1602, Page 1037 granted and
conveyed unto Rhetech, Inc., a Delaware corporation, Grantor herein.
EXHIBIT 10.25
One of two
February 20, 1998
Mr. William A. Freeman
345 Ridgeview Drive
Erie, Pennsylvania 16505
Dear Bill,
It is my pleasure to offer you the position of Vice President Chief Financial
Officer for Semitool, Inc. reporting to me. The terms of this offer are as
follows:
1. Your start date will be as soon as possible, but no later than
April 1, 1998.
2. Your base salary will be $180k per year, paid semi-monthly.
3. As a member of the management team, you would be entitled to a bonus
based upon personal and company performance. This bonus is decided
annually by the compensation committee.
4. The company will cover the costs of moving your family and household
goods to MT from PA. This item not to exceed $25k. The company will
be involved in these transactions to the extent of securing the best
possible cost and solution for you as well as the company.
5. The company will provide temporary housing accommodations or a
housing allowance to cover your rent for the first six months of your
employment. In addition the company will provide a company car or car
allowance.
6. As part of your incentive package you will receive options on 40,000
shares of Semitool stock. It will be issued according to the current
distribution plan.
7. You will be entitled to three weeks vacation within the first year of
employment and every year thereafter, with scheduling subject to
company approval. After five years of employment you will be entitled
to four weeks of vacation per year.
8. You will be entitled to all standard benefits offered to Semitool
employees, some of which have waiting periods. They include life,
medical and dental insurance (eligibility the first of the month
following employment).
---------------------
You will be eligible for the 401(k) Profit Sharing plan on April 1,
1998. However, if you have funds currently in a qualified plan, you
may roll those funds over into the Semitool 401(k) Plan prior to that
date.
9. As a condition of your employment you will be required to sign a
confidentiality/conflict of interest agreement.
<PAGE>
Two of two
W. Freeman
10. None of the above terms of this offer represents an agreement by you
or Semitool, Inc. for any specific length of employment. Either you
or Semitool may, at any time, terminate the employment relationship
upon notice to the other party. As with all Semitool employment
positions, there is a 90 day probationary period.
Any controversy or claim arising out of termination of employment
after your probationary period has expired shall be settled by arbi-
tration as provided in Montana's Uniform Arbitration Act, 27-5-211 et
seq., MCA. The laws of Montana shall apply.
11. In the unlikely event you or Semitool determines this working
relationship is not to continue, we will provide a six month
severance package to defray the cost of your relocation.
Sincerely, Acceptance: I have read and understand
all of the above and accept the terms
SEMITOOL, INC. of employment with Semitool, Inc.
/s/R. Thompson William A. Freeman
- -----------------------------
Ray Thompson
President Date /s/W.A. Freeman
---------------------------
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
Exhibit 27.1
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM FORM
10-Q AS OF MARCH 31, 1998 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> SEP-30-1998
<PERIOD-END> MAR-31-1998
<CASH> 4,172
<SECURITIES> 0
<RECEIVABLES> 35,589
<ALLOWANCES> 224
<INVENTORY> 41,661
<CURRENT-ASSETS> 89,424
<PP&E> 57,128
<DEPRECIATION> 19,818
<TOTAL-ASSETS> 130,771
<CURRENT-LIABILITIES> 39,110
<BONDS> 4,184
0
0
<COMMON> 40,908
<OTHER-SE> 44,494
<TOTAL-LIABILITY-AND-EQUITY> 130,771
<SALES> 90,308
<TOTAL-REVENUES> 92,243
<CGS> 44,158
<TOTAL-COSTS> 44,497
<OTHER-EXPENSES> 13,023
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 283
<INCOME-PRETAX> 6,380
<INCOME-TAX> 2,361
<INCOME-CONTINUING> 4,019
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 4,019
<EPS-PRIMARY> 0.29
<EPS-DILUTED> 0.29
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
Exhibit 27.2
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM FORM 10-Q AS
OF JUNE 30, 1996 AND FORM 10-K AS OF SEPTEMBER 30, 1996 AND SEPTEMBER 30, 1997
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. SEE
NOTE 6 OF NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C> <C> <C>
<PERIOD-TYPE> 9-MOS 12-MOS 12-MOS
<FISCAL-YEAR-END> SEP-30-1996 SEP-30-1996 SEP-30-1997
<PERIOD-END> JUN-30-1996 SEP-30-1996 SEP-30-1997
<CASH> 1,991 3,058 5,060
<SECURITIES> 0 0 0
<RECEIVABLES> 33,667 39,416 41,120
<ALLOWANCES> 231 233 224
<INVENTORY> 37,187 36,909 41,124
<CURRENT-ASSETS> 77,748 85,846 94,753
<PP&E> 36,357 38,409 49,145
<DEPRECIATION> 11,108 12,072 15,460
<TOTAL-ASSETS> 105,810 114,954 131,725
<CURRENT-LIABILITIES> 36,488 42,049 44,706
<BONDS> 3,733 3,637 3,364
0 0 0
0 0 0
<COMMON> 39,552 39,577 40,590
<OTHER-SE> 25,157 28,426 40,990
<TOTAL-LIABILITY-AND-EQUITY> 105,810 114,954 131,725
<SALES> 120,773 171,689 191,471
<TOTAL-REVENUES> 122,676 174,204 193,952
<CGS> 60,659 88,949 102,422
<TOTAL-COSTS> 61,145 89,573 102,862
<OTHER-EXPENSES> 13,692 19,503 21,179
<LOSS-PROVISION> 0 0 0
<INTEREST-EXPENSE> 390 540 499
<INCOME-PRETAX> 18,837 24,026 20,198
<INCOME-TAX> 6,970 8,890 7,675
<INCOME-CONTINUING> 11,867 15,136 12,523
<DISCONTINUED> 0 0 0
<EXTRAORDINARY> 0 0 0
<CHANGES> 0 0 0
<NET-INCOME> 11,867 15,136 12,523
<EPS-PRIMARY> 0.87 <F1> 1.11 <F1> 0.92 <F1>
<EPS-DILUTED> 0.86 1.09 0.91
<FN>
<F1>Item consists of basic earnings per share
</FN>
</TABLE>
EXHIBIT 99.2
AMENDED AND RESTATED SEMITOOL, INC.
1994 STOCK OPTION PLAN
(as of February 9, 1998)
1. Establishment, Purpose, and Definitions.
(a) There is hereby adopted the 1994 Stock Option Plan
(the "Plan") of Semitool, Inc. (the "Company").
(b) The purpose of the Plan is to provide a means whereby eligible
individuals (as defined in Section 4, below) can acquire Common Stock of the
Company (the "Stock"). The Plan provides employees (including officers and
directors who are employees) of the Company and of its Affiliates an opportunity
to purchase shares of Stock pursuant to options which may qualify as incentive
stock options (referred to as "incentive stock options") under Section 422 of
the Internal Revenue Code of 1986, as amended (the "Code"), and employees,
officers, directors, independent contractors, and consultants of the Company and
of its Affiliates an opportunity to purchase shares of Stock pursuant to options
which are not described in Sections 422 or 423 of the Code (referred to as
"nonqualified stock options").
(c) The term "Affiliates" as used in the Plan means parent or
subsidiary corporations, as defined in Sections 424(e) and (f) of the Code (but
substituting "the Company" for "employer corporation"), including parents or
subsidiaries which become such after adoption of the Plan.
2. Administration of the Plan.
(a) The Plan shall be administered by the Board of Directors of
the Company (the "Board"). Subject to Section 2(e) below, the Board may delegate
the responsibility for administering the Plan to a committee, under such terms
and conditions as the Board shall determine (the "Committee"). The Committee
shall consist of two or more members of the Board or such lesser number of
members of the Board as permitted by Rule 16b-3 promulgated under the Securities
Exchange Act of 1934, as amended ("Rule 16b-3"). None of the members of the
Committee shall receive, while serving on the Committee, or during the one-year
period preceding appointment to the Committee, a grant or award of equity
securities under (i) the Plan or (ii) any other plan of the Company or its
affiliates under which the participants are entitled to acquire Stock (including
restricted Stock), stock options, stock bonuses, related rights or stock
appreciation rights of the Company or any of its affiliates, other than pursuant
to the grant of automatic options provided in Section 7 below and pursuant to
transactions in any such other plan which do not disqualify a director from
being a disinterested person under Rule 16b-3. The limitations set forth in this
Section 2(a) shall automatically incorporate any additional requirements that
may in the future be necessary for the Plan to comply with Rule 16b-3. Members
of the Committee shall serve at the pleasure of the Board. The Committee shall
select one of its members as chairman, and shall hold meetings at such times and
places as it may determine. A majority of the Committee shall constitute a
quorum and acts of the Committee at which a quorum is present, or acts reduced
to or approved in writing by all the members of the Committee, shall be the
valid acts of the Committee. If the Board does not delegate administration of
the Plan to the Committee, then each reference in this Plan to "the Committee"
shall be construed to refer to the Board.
(b) Except for options granted to Non-Employee Directors pursuant
to Section 7, the Committee shall determine which eligible individuals (as
defined in Section 4, below) shall be granted options under the Plan, the timing
of such grants, the terms thereof (including any restrictions on the Stock), and
the number of shares subject to such options.
(c) Except for options granted to Non-Employee Directors pursuant
to Section 7, the Committee may amend the terms of any outstanding option
granted under this Plan, but any amendment which would adversely affect the
optionee's rights under an outstanding option shall not be made without the
optionee's written consent. The Committee may, with the optionee's written
consent, cancel any outstanding stock option or accept any outstanding stock
option in exchange for a new option.
(d) The Committee shall have the sole authority, in its absolute
discretion to adopt, amend, and rescind such rules and regulations as, in its
opinion, may be advisable in the administration of the Plan, to construe and
interpret the Plan, the rules and the regulations, and the instruments
evidencing options or Stock granted under the Plan and to make all other
determinations deemed necessary or advisable for the administration of the Plan.
All decisions, determinations, and interpretations of the Committee shall be
binding on all participants. Notwithstanding the foregoing, the Committee shall
not exercise any discretionary functions with respect to options granted to
Non-Employee Directors pursuant to Section 7.
(e) Notwithstanding the foregoing provisions of this Section 2,
grants of options to any "Covered Employee," as such term is defined by Section
162(m) of the Code shall be made only by a subcommittee of the Committee which,
in addition to meeting other applicable requirements of this Section 2, is
composed solely of two or more "outside directors," within the meaning of
Section 162(m) of the Code and the regulations thereunder (the "Subcommittee")
to the extent necessary to qualify such grants as "performance-based
compensation" under Section 162(m). In the case of such grants to Covered
Employees, references to the "Committee" shall be deemed to be references to the
Subcommittee as specified above.
3. Stock Subject to the Plan.
(a) An aggregate of not more than 1,300,000 shares of Stock shall
be available for the grant of stock options under the Plan, of which not more
than 90,000 shares shall be available for the grant of options under Section 7
of the Plan. If an option is surrendered (except surrender for shares of Stock)
or for any other reason ceases to be exercisable in whole or in part, the shares
which were subject to such option but as to which the option had not been
exercised shall continue to be available under the Plan.
(b) If there is any change in the Stock subject to any option
granted under the Plan, through merger, consolidation, reorganization,
recapitalization, reincorporation, stock split, stock dividend (in excess of two
percent), or other change in the capital structure of the Company, appropriate
adjustments shall be made by the Committee in order to preserve but not to
increase the benefits to the individual, including adjustments to the number and
kind of shares and the price per share subject to outstanding options.
4. Eligible Individuals. The persons eligible to participate in the Plan
(other than pursuant to Section 7) are such employees, officers, independent
contractors, and consultants of the Company or an Affiliate as the Committee ,
in its discretion, shall designate from time to time. Notwithstanding the
foregoing, only employees of the Company or an Affiliate (including officers and
directors who are bona fide employees) shall be eligible to receive incentive
stock options. Except for grants pursuant to Section 7, Eligible Individuals
shall not include Non-Employee Directors.
5. The Option Price. The exercise price of each incentive stock option
shall be not less than the per share fair market value of the Stock subject to
such option on the date the option is granted. Except as provided in Section 7,
the exercise price of each nonqualified stock option shall be as determined by
the Committee. Notwithstanding the foregoing, (i) in the case of an incentive
stock option granted to a person possessing more than ten percent of the
combined voting power of the Company or an Affiliate, the exercise price shall
be not less than 110 percent of the fair market value of the Stock on the date
the option is granted. The exercise price of an option shall be subject to
adjustment to the extent provided in Section 3(b), above.
6. Terms and Conditions of Options.
(a) Each option granted pursuant to the Plan will be evidenced by
a written Stock Option Agreement executed by the Company and the person to whom
such option is granted.
(b) The Committee shall determine the term of each option granted
under the Plan; provided, however, that (i) the term of an incentive stock
option shall not be more than 10 years, (ii) in the case of an incentive stock
option granted to a person possessing more than ten percent of the combined
voting power of the Company or an Affiliate, the term of each incentive stock
option shall be no more than five years, and (iii) the term of an option granted
pursuant to Section 7 shall be as provided in Section 7.
(c) In the case of incentive stock options, the aggregate fair
market value (determined as of the time such option is granted) of the Stock
with respect to which incentive stock options are exercisable for the first time
by an eligible employee in any calendar year (under this Plan and any other
plans of the Company or its Affiliates) shall not exceed $100,000.
Notwithstanding the designation in an option agreement, to the extent that the
$100,000 limit is exceeded for any calendar year, the excess options shall be
nonqualified stock options.
(d) Except for grants to Non-Employee Directors pursuant to
Section 7, which shall be granted on the form of Stock Option Agreement attached
hereto as Exhibit A, the Stock Option Agreement may contain such other terms,
provisions, and conditions as may be determined by the Committee not
inconsistent with this Plan. If an option, or any part thereof is intended to
qualify as an incentive stock option, the Stock Option Agreement shall contain
those terms and conditions which are necessary to so qualify it.
(e) The maximum amount of Stock for which options may be granted
pursuant to any individual per calendar year under the Plan shall be 375,000
shares, subject to adjustment pursuant to Section 3(b). To the extent required
by Section 162(m) of the Code and the regulations thereunder, in applying the
foregoing limitation with respect to an employee, if any option is canceled, the
canceled option shall continue to count against the maximum number of shares for
which options may be granted to the employee under this Section 6(e). For this
purpose, the repricing of an option shall be treated as a cancellation of the
existing option and the grant of a new option.
7. Stock Options for Non-Employee Directors
(a) Automatic Grant of Options. An option to purchase 3,000 shares
of Stock shall be granted ("Initial Grant") to each director who is not an
employee of the Company ("Non-Employee Director"), such Initial Grant to be made
(i) to the then existing Non-Employee Directors upon the closing of the
Company's initial public offering of its Stock in an underwriting pursuant to a
registration statement filed under the Securities Act of 1933 ("IPO") and (ii)
to other Non-Employee Directors elected or appointed to the Board after the IPO
upon the date each first becomes a Non-Employee Director of the Company.
Thereafter, immediately following each annual meeting of the Company's
stockholders, each Non-Employee Director who continues as a Non-Employee
Director following such annual meeting shall be granted an option to purchase
2,000 shares of Stock ("Subsequent Grant"); provided that no Subsequent Grant
shall be made to any Non-Employee Director who has not served as a director of
the Company and attended at least two (2) meetings of the Board of Directors, as
of the time of such annual meeting. Each such Subsequent Grant shall be made on
the date of the annual stockholders' meeting in question; provided, however,
that as to Subsequent Grants made to Non-Employee Directors in connection with
the Company's 1996 annual stockholders' meeting (the "1996 Annual Meeting"), (x)
Non-Employee Directors who have served as a director of the Company, as of the
time of the 1996 Annual Meeting, for at least one year, shall be granted an
option to purchase 1,500 shares of Stock on the date of the 1996 Annual Meeting
and shall be granted an option to purchase 500 shares of Stock on May 20, 1996,
and (y) Non-Employee Directors who have not served as a director of the Company
for at least one year, as of the time of such annual meeting, but have attended
at least two (2) meetings of the Board of Directors, as of the time of the 1996
Annual Meeting, shall be granted an option to purchase 2,000 shares of Stock on
May 20, 1996. If any option ceases to be exercisable in whole or in part, the
shares which were subject to such option but as to which the option had not been
exercised shall continue to be available under the Plan. All options granted to
Non-Employee Directors shall be nonqualified stock options.
(b) Option Exercise Price. The exercise price per share of Stock
covered by each option shall be the per-share fair market value of the Stock on
the date the option is granted; provided that the exercise price per share of
Stock covered by options constituting Initial Grants under Section 7(a)(i) above
shall be the per-share price to the public in the IPO; provided further,
however, that the exercise price per share of Stock covered by options granted
on May 20, 1996 under Section 7(a)(x) and (y) above shall be the lesser of the
per-share fair market value of the Stock on February 16, 1996 or the per-share
fair market value of the Stock on the date the option is granted. The exercise
price of an option granted under the Plan shall be subject to adjustment to the
extent provided in Section 3(b) hereof.
(c) Exercisability. Each Initial Grant shall vest and become
exercisable as of the date of grant. Each Subsequent Grant shall vest and become
exercisable as to 1/4 of the shares covered thereby on a quarterly basis on the
last day of each three-month period following the date of grant such that the
option will be fully exercisable twelve (12) months after its date of grant.
8. Use of Proceeds. Cash proceeds realized from the sale of Stock under
the Plan or pursuant to options granted under the Plan shall constitute general
funds of the Company.
9. Amendment, Suspension, or Termination of the Plan.
(a) The Board may at any time amend, suspend or terminate the Plan
as it deems advisable; provided that such amendment, suspension or termination
complies with all applicable requirements of state and federal law, including
any applicable requirement that the Plan or an amendment to the Plan be approved
by the shareholders, and provided further that, except as provided in Section
3(b), above, the Board shall in no event amend the Plan in the following
respects without the consent of stockholders then sufficient to approve the Plan
in the first instance:
(i) To increase the maximum number of shares subject to
incentive stock options issued under the Plan; or
(ii) To change the designation or class of persons eligible
to receive incentive stock options under the Plan.
(b) No option may be granted nor any Stock issued under the Plan
during any suspension or after the termination of the Plan, and no amendment,
suspension, or termination of the Plan shall, without the affected individual's
consent, alter or impair any rights or obligations under any option previously
granted under the Plan. The Plan shall terminate with respect to the grant of
incentive stock options on the tenth anniversary of the date of adoption of the
Plan, unless previously terminated by the Board pursuant to this Section 9.
(c) Notwithstanding the provisions of Sections 9(a) and 9(b),
above, the provisions set forth in Section 7 of the Plan (and any other sections
of the Plan that affect the formula award terms of option grants to Non-Employee
Directors required to be specified in the Plan by Rule 16b-3) shall not be
amended periodically and in no event more than once every six months, other than
to comport with changes to the Code, the Employee Retirement Income Security Act
of 1974, as amended, or any applicable rules and regulations thereunder.
10. Assignability. To the extent required by Rule 16b-3, no option granted
pursuant to this Plan shall be transferable by the holder except by operation of
law or by will or the laws of descent and distribution; provided, that, if Rule
16b-3 is amended after the date of the Board's adoption of the Plan to permit
broader transferability of options under that Rule, (i) options granted under
Section 7 to Non-Employee Directors shall be transferable to the fullest extent
permitted by Rule 16b-3 as so amended, (ii) any other option shall be
transferable to the extent provided in the option agreement covering the option,
and the Committee shall have discretion to amend any such outstanding option to
provide for broader transferability of the option as the Committee may authorize
within the limitations of Rule 16b-3. Notwithstanding the foregoing, if required
by the Code, each incentive stock option under the Plan shall be transferable by
the optionee only by will or the laws of descent and distribution, and, during
the optionee's lifetime, shall be exercisable only by the optionee. In the event
of any Rule 16b-3 permitted transfer of an option hereunder, the transferee
shall be entitled to exercise the option in the same manner and only to the same
extent as the optionee (or his personal representative or the person who would
have acquired the right to exercise the option by bequest or intestate
succession) would have been entitled to exercise the option under Sections 6, 7
and 11 had the option not been transferred.
11. Payment Upon Exercise of Options.
(a) Payment of the purchase price upon exercise of any option
granted under this Plan shall be made in cash, by optionee's personal check, a
certified check, bank draft, or postal or express money order payable to the
order of the Company in lawful money of the United States (collectively, "Cash
Consideration'); provided, however, that, except for options granted under
Section 7, the Committee, in its sole discretion, may permit an optionee to pay
the option price in whole or in part (i) with shares of Stock owned by the
optionee or with shares of Stock withheld from the shares otherwise deliverable
to the optionee upon exercise of the option; (ii) by delivery on a form
prescribed by the Committee of an irrevocable direction to a securities broker
approved by the Committee to sell shares of Stock and deliver all or a portion
of the proceeds to the Company in payment for the Stock; (iii) by delivery of
the optionee's promissory note with such recourse, interest, security, and
redemption provisions as the Committee in its discretion determines appropriate;
or (iv) in any combination of the foregoing. The exercise price of any options
granted under Section 7 shall be paid in Cash Consideration, the consideration
specified in clauses (i) or (ii) of the preceding sentence, or in any
combination thereof. Any Stock used to exercise options shall be valued at its
fair market value on the date of the exercise of the option. In addition, the
Committee, in its sole discretion, may authorize the surrender by an optionee of
all or part of an unexercised option (excluding options granted under Section 7,
above) and authorize a payment in consideration thereof of an amount equal to
the difference between the aggregate fair market value of the Stock subject to
such option and the aggregate option price of such Stock. In the Committee's
discretion, such payment may be made in cash, shares of Stock with a fair market
value on the date of surrender equal to the payment amount, or some combination
thereof.
(b) In the event that the exercise price is satisfied by shares
withheld from the shares of Stock otherwise deliverable to the optionee, the
Committee may issue the optionee an additional option, with terms identical to
the option agreement under which the option was exercised, entitling the
optionee to purchase additional shares of Stock equal to the number of shares so
withheld but at an exercise price equal to the fair market value of the Stock on
the grant date of the new option; provided, however, that no such additional
options may be granted with respect to options granted pursuant to Section 7,
above. Any additional option shall be subject to the provisions of Section 6(e),
above.
12. Withholding Taxes.
(a) No Stock shall be delivered under the Plan to any participant
until the participant has made arrangements acceptable to the Committee (or in
the case of exercise of options granted to Named Executives, the Subcommittee)
for the satisfaction of federal, state, and local income and social security tax
withholding obligations, including, without limitation, obligations incident to
the receipt of Stock under the Plan or to the failure to satisfy the conditions
for treatment as incentive stock options under applicable tax law. Upon exercise
of a stock option the Company shall withhold from the optionee an amount
sufficient to satisfy federal, state and local income and social security tax
withholding obligations.
(b) In the event that such tax withholding is satisfied by the
Company or the optionee's employer withholding shares of Stock otherwise
deliverable to the optionee, the Committee may issue the optionee an additional
option, with terms identical to the option agreement under which the option was
exercised, entitling the optionee to purchase additional shares of Stock equal
to the number of shares so withheld but at an exercise price equal to the fair
market value of the Stock on the grant date of the new option; provided,
however, that no such additional options may be granted with respect to options
granted pursuant to Section 7, above. Any additional option shall be subject to
the provisions of Section 6(e), above.
13. Change in Control.
(a) For purposes of this Section 13, a "Change in Control" shall
be deemed to occur upon:
(i) The direct or indirect acquisition by any person or
related group of persons (other than an acquisition from or by the Company or
by a Company-sponsored employee benefit plan or by a person that directly or
indirectly controls, is controlled by, or is under common control with, the
Company) of beneficial ownership (within the meaning of Rule 13d-3 of the
Securities Exchange Act of 1934, as amended) of securities possessing more than
fifty percent (50%) of the total combined voting power of the Company's
outstanding Stock;
(ii) A change in the composition of the Board over a period
of thirty-six (36) months or less such that a majority of the Board members
cease, by reason of one or more contested elections for Board membership or by
one or more actions by written consent of stockholders, to be comprised of
individuals who either (A) have been Board members continuously since the
beginning of such period or (B) have been elected or nominated for election as
Board members during such period by at least a majority of the Board members
described in clause (A) who were still in office at the time such election or
nomination was approved by the Board;
(iii) Approval by the Company's stockholders of a merger or
consolidation in which the Company is not the surviving entity, except for a
transaction the principal purpose of which is to change the state in which the
Company is incorporated;
(iv) Approval by the Company's stockholders of (A) the
sale, transfer or other disposition of all or substantially all of the assets
of the Company (including the capital stock of the Company's subsidiary
corporations) or (B) the complete liquidation or dissolution of the Company; or
(v) Approval by the Company's stockholders of any reverse
merger in which the Company survives as an entity but in which securities
possessing more than fifty percent (50%) of the total combined voting power of
the Company's outstanding securities are transferred to a person or persons
different from those who held such securities immediately prior to such merger.
(vi) For the purpose of this Section 13, "Approval by the
Company's Stockholders" shall mean approval by a majority of those shares of
Stock voting at a stockholder's meeting at which a quorum is present, excluding
shares beneficially owned (within the meaning of Rule 13d-3 under the Exchange
Act) by the Non-Employee Directors.
(b) Except for options granted to Non-Employee Directors under
Section 7, the Committee may provide in any stock option agreement (or in an
amendment thereto) that, in the event of any Change in Control, any outstanding
options covered by such an agreement shall be fully vested, nonforfeitable and
become exercisable, as of the date of the Change in Control.
(c) If the Committee determines to incorporate a Change in Control
provision in any option agreement hereunder, the agreement shall provide that,
(i) in the event of a Change in Control described in clauses (i), (ii) and (v)
of paragraph (a) above, the option shall remain exercisable for the remaining
term of the option and (ii) in the event of a Change in Control described in
clauses (iii) or (iv) of paragraph (a) above, the option shall terminate as of
the effective date of the merger, disposition of assets, liquidation or
dissolution described therein.
(d) As to any options granted under Section 7 to Non-Employee
Directors, (i) in the event of a Change in Control described in clauses (i),
(ii) or (v) of paragraph (a) above, any such outstanding options under the Plan
shall become fully vested and remain exercisable for the remaining term of such
options and (ii) in the event of a Change in Control described in clauses (iii)
or (iv) of paragraph (a) above, outstanding options under the Plan shall
terminate as of the effective date of the merger, disposition of assets,
liquidation or dissolution described therein.
(e) Notwithstanding the foregoing provisions of this Section 13,
an outstanding option may not be accelerated under this Section 13 if and to the
extent (i) such option is, in connection with the transaction giving rise to a
Change of Control, either to be assumed by the successor or parent thereof or to
be replaced with a comparable option to purchase shares of the capital stock of
the successor corporation or parent thereof, or (ii) such option is to be
replaced with a cash incentive program of the successor corporation that
preserves the option spread existing at the time of the corporate transaction
giving rise to the Change of Control and provides for subsequent payment in
accordance with the same vesting schedule applicable to such option.
14. Stockholder Approval. The Plan and any options granted pursuant to
Section 7 and options granted to Covered Employees hereunder shall become
effective only upon approval by the holders of a majority of the Company's
shares voting (in person or by proxy) at a stockholders' meeting held within 12
months of the Board's adoption of the Plan. The Committee may grant stock
options under the Plan prior to the stockholders' meeting, but until stockholder
approval of the Plan is obtained, no such option shall be exercisable. In the
event that stockholder approval is not obtained within the period provided
above, all options described in this Section 14 previously granted above, shall
terminate.
15. Rule 16b-3 Compliance. Transactions under the Plan are intended to
comply with all applicable conditions of Rule 16b-3 or its successors under the
Exchange Act. To the extent any provision of the Plan or action by the Board or
the Committee fails to so comply, it shall be deemed null and void, to the
extent permitted by law and deemed advisable by the Board or the Committee.
Moreover, in the event the Plan does not include a provision required by Rule
16b-3 to be stated therein in order to qualify the grants under Section 5 hereof
as grants under a non-discretionary formula under Rule 16b-3 such provision
(other than one relating to eligibility requirements, or the price and amount of
awards) shall be deemed automatically to be incorporated by reference into the
Plan with respect to grants of options to Non-Employee Directors.
