Exhibit 10.7
OPEN-END MORTGAGE AND SECURITY AGREEMENT
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ENVIRONMENTAL TECTONICS CORPORATION
Mortgagor
AND
PNC BANK, NATIONAL ASSOCIATION,
Mortgagee
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Return to:
PNC Bank, National Association
1600 Market Street
Philadelphia, Pennsylvania 19103
Attention: John Siegrist
OPEN-END MORTGAGE AND SECURITY AGREEMENT
(This Mortgage Secures Future Advances)
THIS OPEN-END MORTGAGE AND SECURITY AGREEMENT (this "Mortgage") is made
as of the 18th day of February, 2003, by ENVIRONMENTAL TECTONICS CORPORATION, a
Pennsylvania corporation (the "Mortgagor"), with an address at 125 James Way,
Southampton, Pennsylvania 18966 in favor of PNC BANK, NATIONAL ASSOCIATION (the
"Mortgagee"), with an address at 1600 Market Street, Philadelphia, PA 19103.
WHEREAS, the Mortgagor is the owner of a certain tract or parcel of
land described in Exhibit A attached hereto and made a part hereof, together
with the improvements now or hereafter erected thereon; and
WHEREAS, pursuant to the terms of that certain Credit Agreement, dated
as of the date hereof (the "Credit Agreement"), between the Mortgagor and the
Mortgagee, the Mortgagor is executing and delivering this Mortgage as collateral
security for a borrowing from the Mortgagee, in an aggregate amount not to
exceed Nineteen Million Eight Hundred Thousand Dollars ($19,800,000)
(collectively, the "Loan"), which Loan is evidenced in part by one or more
promissory notes in favor of the Mortgagee (the "Note");
NOW, THEREFORE, for the purpose of securing the payment and performance
of the following obligations (collectively called the "Obligations"):
(A) the Loan, the Note and all other loans, advances, debts,
liabilities, obligations, covenants and duties owing by the Mortgagor to the
Mortgagee or to any other direct or indirect subsidiary of The PNC Financial
Services Group, Inc., of any kind or nature, present or future (including any
interest accruing thereon after maturity, or after the filing of any petition in
bankruptcy, or the commencement of any insolvency, reorganization or like
proceeding relating to the Mortgagor, whether or not a claim for post-filing or
post-petition interest is allowed in such proceeding), whether or not evidenced
by any note, guaranty or other instrument, whether arising under any agreement,
instrument or document, whether or not for the payment of money, whether arising
by reason of an extension of credit, opening of a letter of credit, loan,
equipment lease or guarantee, under any interest or currency swap, future,
option or other interest rate protection or similar agreement, or in any other
manner, whether arising out of overdrafts on deposit or other accounts or
electronic funds transfers (whether through automated clearing houses or
otherwise) or out of the Mortgagee's non-receipt of or inability to collect
funds or otherwise not being made whole in connection with depository transfer
check or other similar arrangements, whether direct or indirect (including those
acquired by assignment or participation), absolute or contingent, joint or
several, due or to become due, now existing or hereafter arising, and any
amendments, extensions, renewals or increases and all reasonable costs and
expenses of the Mortgagee incurred in the documentation, negotiation,
modification, enforcement, collection or otherwise in connection with any of the
foregoing, including reasonable attorneys' fees and expenses.
(B) Any sums advanced by the Mortgagee or which may otherwise become
due pursuant to the provisions of the Credit Agreement, the Note or this
Mortgage or pursuant to any other document or instrument at any time delivered
to the Mortgagee to evidence or secure any of the Obligations or which otherwise
relate to any of the Obligations (as the same may be amended, supplemented or
replaced from time to time, the "Loan Documents").
The Mortgagor, for good and valuable consideration, receipt of which is hereby
acknowledged, and intending to be legally bound hereby, does hereby give, grant,
bargain, sell, convey, assign, transfer, mortgage, hypothecate, pledge, set over
and confirm unto the Mortgagee and does agree that the Mortgagee shall have a
security interest in the following described property, all accessions and
additions thereto, all substitutions therefor and replacements and proceeds
thereof, and all reversions and remainders of such property now owned or held or
hereafter acquired (the "Property"), to wit:
(a) All of the Mortgagor's estate in the premises described in
Exhibit A, together with all of the easements, rights of way, privileges,
liberties, hereditaments, gores, streets, alleys, passages, ways, waters,
watercourses, rights and appurtenances thereunto belonging or appertaining, and
all of the Mortgagor's estate, right, title, interest, claim and demand therein
and in the public streets and ways adjacent thereto, either in law or in equity
(the "Land");
(b) All the buildings, structures and improvements of every kind
and description now or hereafter erected or placed on the Land, and all
facilities, fixtures, machinery, apparatus, appliances, installations, machinery
and equipment, including all building materials to be incorporated into such
buildings, all electrical equipment necessary for the operation of such
buildings and heating, air conditioning and plumbing equipment now or hereafter
attached to, located in or used in connection with those buildings, structures
or other improvements (the "Improvements");
(c) All rents, issues and profits arising or issuing from the Land
and the Improvements (the "Rents") including the Rents arising or issuing from
all leases and subleases now or hereafter entered into covering all or any part
of the Land and Improvements (the "Leases"), all of which Leases and Rents are
hereby assigned to the Mortgagee by the Mortgagor. The foregoing assignment
shall include all cash or securities deposited under Leases to secure
performance of lessees of their obligations thereunder, whether such cash or
securities are to be held until the expiration of the terms of such leases or
applied to one or more installments of rent coming due prior to the expiration
of such terms. The foregoing assignment extends to Rents arising both before and
after the commencement by or against the Mortgagor of any case or proceeding
under any Federal or State bankruptcy, insolvency or similar law, and is
intended as an absolute assignment and not merely the granting of a security
interest. The Mortgagor, however, shall have a license to collect retain and use
the Rents so long as no Event of Default shall have occurred and be continuing
or shall exist. The Mortgagor will execute and deliver to the Mortgagee, on
demand, such additional assignments and instruments as the Mortgagee may require
to implement, confirm, maintain and continue the assignment of Rents hereunder;
(d) All proceeds of the conversion, voluntary or involuntary, of
any of the foregoing into cash or liquidated claims;
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(e) And without limiting any of the other provisions of this
Mortgage, the Mortgagor, as debtor, expressly grants unto the Mortgagee, as
secured party, a security interest in all those portions of the Property which
may be subject to the Uniform Commercial Code provisions applicable to secured
transactions under the laws of the state in which the Property is located (the
"UCC"), and the Mortgagor will execute and deliver to the Mortgagee on demand
such financing statements and other instruments as the Mortgagee may require in
order to perfect and maintain such security interest under the UCC on the
aforesaid collateral.
To have and to hold the same unto the Mortgagee, its successors and
assigns, forever.
Provided, however, that if the Mortgagor shall pay to the Mortgagee the
Obligations, and if the Mortgagor shall keep and perform each of its other
covenants, conditions and agreements set forth herein and in the other Loan
Documents, then, upon the termination of all obligations, duties and commitments
of the Mortgagor under the Obligations and this Mortgage, and subject to the
provisions of the paragraph entitled "Survival; Successors and Assigns", the
estate hereby granted and conveyed shall become null and void.
This Mortgage is an "Open-End Mortgage" as set forth in 42 Pa. C.S.A.
ss. 8143 and secures obligations up to a maximum principal amount of
indebtedness outstanding at any time equal to double the face amount of the
Note, plus accrued and unpaid interest, including advances for the payment of
taxes and municipal assessments, maintenance charges, insurance premiums, costs
incurred for the protection of the Property or the lien of this Mortgage,
expenses incurred by the Mortgagee by reason of default by the Mortgagor under
this Mortgage and advances for construction, alteration or renovation on the
Property or for any other purpose, together with all other sums due hereunder or
secured hereby. All notices to be given to the Mortgagee pursuant to 42 Pa.
C.S.A. ss. 8143 shall be given as set forth in Section 18.
1. Representations and Warranties. The Mortgagor represents and
warrants to the Mortgagee that the Mortgagor has good and marketable title to an
estate in fee simple absolute in the Land and Improvements and has all right,
title and interest in all other property constituting a part of the Property, in
each case free and clear of all liens and encumbrances, except as may otherwise
be set forth on an Exhibit B hereto. This Mortgage is a valid and enforceable
first lien on the Property (except as set forth on Exhibit B). The Mortgagor
shall preserve such title as it warrants herein and the validity and priority of
the lien hereof and shall forever warrant and defend the same to the Mortgagee
against the claims of all persons claiming by, through or under Mortgagor.
2. Affirmative Covenants. Until all of the Obligations shall have been
fully paid, satisfied and discharged the Mortgagor shall:
(a) Payment and Performance of Obligations. Pay or cause to be paid
and perform all Obligations when due as provided in the Loan Documents.
(b) Legal Requirements. Promptly comply with and conform in all
material respects to all present and future laws, statutes, codes, ordinances,
orders and regulations and all covenants, restrictions and conditions which may
be applicable to the Mortgagor or to any of the Property (the "Legal
Requirements").
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(c) Impositions. Before interest or penalties are due thereon and
otherwise when due, the Mortgagor shall pay all taxes of every kind and nature,
all charges for any easement or agreement maintained for the benefit of any of
the Property, all general and special assessments (including any condominium or
planned unit development assessments, if any), levies, permits, inspection and
license fees, all water and sewer rents and charges, and all other charges and
liens, whether of a like or different nature, imposed upon or assessed against
the Mortgagor or any of the Property (the "Impositions") unless the amount
thereof is being contested in good faith by the Mortgagor by appropriate
proceedings with adequate reserves made for the payment thereof. Within thirty
(30) days after the payment of any Imposition if requested by Mortgagee, the
Mortgagor shall deliver to the Mortgagee evidence acceptable to the Mortgagee of
such payment. The Mortgagor's obligations to pay the Impositions shall survive
the Mortgagee's taking title to the Property through foreclosure, deed-in-lieu
or otherwise.
(d) Maintenance of Security. Use, and permit others to use, the
Property only for its present use or such other uses as permitted by applicable
Legal Requirements and approved in writing by the Mortgagee. The Mortgagor shall
keep the Property in good condition and order and in a rentable and tenantable
state of repair and will make or cause to be made, as and when necessary, all
repairs, renewals, and replacements, structural and nonstructural, exterior and
interior, foreseen and unforeseen, ordinary and extraordinary, provided,
however, that no structural repairs, renewals or replacements in excess of
$100,000 shall be made without the Mortgagee's prior written consent. The
Mortgagor shall not remove, demolish or alter any material portion of the
Property or any of the Property in a manner that materially adversely affects
the same, nor commit or suffer waste with respect thereto, nor permit the
Property to become deserted or abandoned. The Mortgagor covenants and agrees not
to take or permit any action with respect to the Property which will in any
manner impair the security of this Mortgage.
3. Leases. Except as permitted by the Loan Documents, the Mortgagor
shall not (a) execute an assignment or pledge of the Rents or the Leases other
than in favor of the Mortgagee; (b) accept any prepayment of an installment of
any Rents more than 30 days prior to the due date of such installment; or (c)
enter into or amend any of the terms of any of the Leases without the
Mortgagee's prior written consent. Any or all leases or subleases of all or any
part of the Property shall be subject in all respects to the Mortgagee's prior
written consent, shall be subordinated to this Mortgage and to the Mortgagee's
rights and, together with any and all rents, issues or profits relating thereto,
shall be assigned at the time of execution to the Mortgagee as additional
collateral security for the Obligations, all in such form, substance and detail
as is satisfactory to the Mortgagee in its sole discretion.
4. Due on Sale Clause. The Mortgagor shall not sell, convey or
otherwise transfer any interest in the Property (whether voluntarily or by
operation of law), or agree to do so, without the Mortgagee's prior written
consent, including (a) any sale, conveyance, assignment, or other transfer of
(including installment land sale contracts), or the grant of a security interest
in, all or any part of the legal or equitable title to the Property, except as
otherwise permitted hereunder; (b) any lease of all or any portion of the
Property; or (c) any sale, conveyance, assignment, or other transfer of, or the
grant of a security interest in, any share of stock of the Mortgagor, except as
otherwise permitted by the Loan Documents. Any default under this
Section shall cause an immediate acceleration of the Obligations without any
demand by the Mortgagee.
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5. Insurance. The Mortgagor shall keep the Improvements continuously
insured, in an amount not less than the cost to replace the Improvements or an
amount not less than eighty percent (80%) of the full insurable value of the
Property, whichever is greater, against loss or damage by fire, with extended
coverage and against other hazards as the Mortgagee may from time to time
require. With respect to any property under construction or reconstruction, the
Mortgagor shall maintain builder's risk insurance. The Mortgagor shall also
maintain comprehensive general public liability insurance, in an amount of not
less than One Million Dollars ($1,000,000) per occurrence and Two Million
Dollars ($2,000,000) general aggregate per location, which includes contractual
liability insurance for the Mortgagor's obligations under the Leases, and
worker's compensation insurance. All property and builder's risk insurance shall
include protection for continuation of income for a period of twelve (12)
months, in the event of any damage caused by the perils referred to above. All
policies, including policies for any amounts carried in excess of the required
minimum and policies not specifically required by the Mortgagee, shall be with
an insurance company or companies satisfactory to the Mortgagee, shall be in
form satisfactory to the Mortgagee, shall meet all coinsurance requirements of
the Mortgagee, shall be maintained in full force and effect, with premiums
satisfied as collateral security for payment of the Obligations, shall be
endorsed with a standard mortgagee clause in favor of the Mortgagee and shall
provide for at least thirty (30) days notice of cancellation to the Mortgagee.
Such insurance shall also name the Mortgagee as an additional insured under the
comprehensive general public liability policy and the Mortgagor shall also
deliver to the Mortgagee a copy of the replacement cost coverage endorsement. If
the Property is located in an area which has been identified by any governmental
agency, authority or body as a flood hazard area or the like, then the Mortgagor
shall maintain a flood insurance policy covering the Improvements in an amount
not less than the appraised value of the Property or the maximum limit of
coverage available under the federal program, whichever amount is less.
6. Rights of Mortgagee to Insurance Proceeds. In the event of loss,
the Mortgagee shall have the exclusive right to adjust, collect and compromise
all Material Insurance Claims (as defined below), and the Mortgagor shall not
adjust, collect or compromise any Material Insurance Claims under said policies
without the Mortgagee's prior written consent. Each insurer is hereby authorized
and directed to make payment under said policies, including return of unearned
premiums, directly to the Mortgagee instead of to the Mortgagor and the
Mortgagee jointly, and the Mortgagor appoints the Mortgagee as the Mortgagor's
attorney- in-fact to endorse any draft therefor. All Material Insurance Claims
proceeds may, at the Mortgagee's sole option, be applied to all or any part of
the Obligations and in any order (notwithstanding that such Obligations may not
then otherwise be due and payable) or to the repair and restoration of any of
the Property under such terms and conditions as the Mortgagee may impose. All
other insurance claim proceeds must be applied to the repair and restoration of
the Property under terms and conditions satisfactory to the Mortgagee. For
purposes of this paragraph 6, the term "Material Insurance Claim" means any
insurance claim in excess of $500,000.
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7. Installments for Insurance, Taxes and Other Charges. Upon the
Mortgagee's request at any time following the occurrence of an Event of Default,
the Mortgagor shall pay to the Mortgagee monthly, an amount equal to one-twelfth
(1/12) of the annual premiums for the insurance policies referred to hereinabove
and the annual Impositions and any other item which at any time may be or become
a lien upon the Property (the "Escrow Charges"). The amounts so paid shall be
used in payment of the Escrow Charges so long as no Event of Default shall have
occurred. No amount so paid to the Mortgagee shall be deemed to be trust funds,
nor shall any sums paid bear interest. The Mortgagee shall have no obligation to
pay any insurance premium or Imposition if at any time the funds being held by
the Mortgagee for such premium or Imposition are insufficient to make such
payments. If, at any time, the funds being held by the Mortgagee for any
insurance premium or Imposition are exhausted, or if the Mortgagee determines,
in its sole discretion, that such funds will be insufficient to pay in full any
insurance premium or Imposition when due, the Mortgagor shall promptly pay to
the Mortgagee, upon demand, an amount which the Mortgagee shall estimate as
sufficient to make up the deficiency. Upon the occurrence of an Event of
Default, the Mortgagee shall have the right, at its election, to apply any
amount so held against the Obligations due and payable in such order as the
Mortgagee may deem fit, and the Mortgagor hereby grants to the Mortgagee a lien
upon and security interest in such amounts for such purpose.
8. Condemnation. The Mortgagor, immediately upon obtaining knowledge of
the institution of any proceedings for the condemnation or taking by eminent
domain of any of the Property, shall notify the Mortgagee of the pendency of
such proceedings. The Mortgagee may participate in any such proceedings and the
Mortgagor shall deliver to the Mortgagee all instruments requested by it to
permit such participation. Any award or compensation for property taken or for
damage to property not taken in excess of $500,000, whether as a result of such
proceedings or in lieu thereof, is hereby assigned to and shall be received and
collected directly by the Mortgagee, and any award or compensation shall be
applied, at the Mortgagee's option, to any part of the Obligations and in any
order (notwithstanding that any of such Obligations may not then be due and
payable) or to the repair and restoration of any of the Property under such
terms and conditions as the Mortgagee may impose.
9. Environmental Matters. (a) For purposes of this Section 9, the term
"Environmental Laws" shall mean all federal, state and local laws, regulations
and orders, whether now or in the future enacted or issued, pertaining to the
protection of land, water, air, health, safety or the environment. The term
"Regulated Substances" shall mean all substances regulated by Environmental
Laws, or which are known or considered to be harmful to the health or safety of
persons, or the presence of which may require investigation, notification or
remediation under the Environmental Laws. The term "Contamination" shall mean
the discharge, release, emission, disposal or escape of any Regulated Substances
into the environment other than as permitted under applicable Environmental
Laws.
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(b) The Mortgagor represents and warrants (i) that no Contamination is
present at, on or under the Property and that no Contamination is being or, to
the best of the Mortgagor's knowledge, has been emitted onto any surrounding
property other than as permitted under applicable Environmental Laws; (ii) all
operations and activities on the Property have been and are being conducted in
accordance with all Environmental Laws, and the Mortgagor has all permits and
licenses required under the Environmental Laws; (iii) no underground or
aboveground storage tanks are or have been located on or under the Property; and
(iv) no legal or administrative proceeding is pending or, to the best of the
Mortgagor's knowledge, threatened relating to any environmental condition,
operation or activity on the Property regulated under any applicable
Environmental Laws, or any violation or alleged violation of Environmental Laws.
These representations and warranties shall be true as of the date hereof, and
shall be deemed to be continuing representations and warranties which must
remain true, correct and accurate during the entire duration of the term of this
Mortgage.
(c) The Mortgagor shall ensure, at its sole cost and expense, that
the Property and the conduct of all operations and activities thereon comply and
continue to comply with all Environmental Laws. The Mortgagor shall notify the
Mortgagee promptly and in reasonable detail in the event that the Mortgagor
becomes aware of any violation of any Environmental Laws, the presence or
release of any Contamination with respect to the Property, or any governmental
or third party claims under applicable Environmental Laws relating to the
environmental condition of the Property or the conduct of operations or
activities thereon. The Mortgagor also agrees not to permit or allow the
presence of Regulated Substances on any part of the Property, except (i) to the
extent such Regulated Substances are used without violating any Environmental
Laws; and (ii) those Regulated Substances which are naturally occurring on the
Property. The Mortgagor agrees not to cause, allow or permit the presence of any
Contamination on the Property except to the extent such Contamination is in
compliance with all applicable Environmental Laws.
(d) The Mortgagee shall not be liable for, and the Mortgagor shall
indemnify, defend and hold the Mortgagee and all of its officers, directors,
employees and agents, and all of their respective successors and assigns
harmless from and against all losses, costs, liabilities, damages, fines,
claims, penalties and expenses (including reasonable attorneys', consultants'
and contractors' fees, costs incurred in the investigation, defense and
settlement of claims, as well as costs incurred in connection with the
investigation, remediation or monitoring of any Regulated Substances or
Contamination) that the Mortgagee may suffer or incur (including as holder of
the Mortgage, as mortgagee in possession or as successor in interest to the
Mortgagor as owner of the Property by virtue of a foreclosure or acceptance of a
deed in lieu of foreclosure) as a result of or in connection with (i) any
Environmental Laws (including the assertion that any lien existing or arising
pursuant to any Environmental Laws takes priority over the lien of the
Mortgage); (ii) the breach of any representation, warranty, covenant or
undertaking by the Mortgagor in this Section 9; (iii) the presence on or the
migration of any Contamination or Regulated Substances on, under or through the
Property; or (iv) any litigation or claim by the government or by any third
party in connection with the environmental condition of the Property or the
presence or migration of any Regulated Substances or Contamination on, under, to
or from the Property.
(e) Upon the Mortgagee's request, the Mortgagor shall execute and
deliver an Environmental Indemnity Agreement satisfactory in form and substance
to the Mortgagee, to more fully reflect the Mortgagor's representations,
warranties, covenants and indemnities with respect to the Environmental Laws.
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10. Inspection of Property. The Mortgagee shall have the right to
enter the Property at any reasonable hour for the purpose of inspecting the
order, condition and repair of the buildings and improvements erected thereon,
as well as the conduct of operations and activities on the Property. The
Mortgagee may enter the Property (and cause the Mortgagee's employees, agents
and consultants to enter the Property), upon reasonable prior written notice to
the Mortgagor, to conduct any and all environmental testing deemed appropriate
by the Mortgagee in its sole but reasonable discretion. The environmental
testing shall be accomplished by whatever means the Mortgagee may deem
appropriate, including the taking of soil samples and the installation of ground
water monitoring wells or other intrusive environmental tests. The Mortgagor
shall provide the Mortgagee (and the Mortgagee's employees, agents and
consultants) reasonable rights of access to the Property as well as such
information about the Property and the past or present conduct of operations and
activities thereon as the Mortgagee shall reasonably request.
11. Events of Default. The occurrence of any one or more of the
following events shall constitute an "Event of Default" hereunder: (a) any Event
of Default (as defined in the Credit Agreement); (b) the failure by the
Mortgagor to perform its obligations set forth in Section 2(a) hereof; (c) the
failure by the Mortgagor to perform any of its other obligations under this
Mortgage or under any Environmental Indemnity Agreement executed and delivered
pursuant to Section 9(e) for a period of fifteen (15) days or more; (d) falsity,
inaccuracy or material breach by the Mortgagor of any written warranty,
representation or statement made herein by the Mortgagor; (e) an uninsured
material loss, theft, damage, or destruction to any of the Property, or any lien
against or the making of any levy, seizure or attachment of or on the Property;
(f) the failure of the Mortgagee to have a mortgage lien on the Property with
the priority required under Section 1; (g) any indication or evidence received
by the Mortgagee that the Mortgagor may have directly or indirectly been engaged
in any type of activity which, in the Mortgagee's discretion, might result in
the forfeiture of any property of the Mortgagor to any governmental entity,
federal, state or local; (h) foreclosure proceedings are instituted against the
Property upon any other lien or claim, whether alleged to be superior or junior
to the lien of this Mortgage; (i) the failure by the Mortgagor to pay any
Impositions as required under Section 2(c), or to maintain in full force and
effect any insurance required under Section 5; or (j) the Mortgagor or any other
obligor or guarantor of any of the Obligations, shall at any time deliver or
cause to be delivered to the Mortgagee a notice pursuant to 42 Pa. C.S.A. ss.
8143 electing to limit the indebtedness secured by this Mortgage.
12. Rights and Remedies of Mortgagee. If an Event of Default occurs,
the Mortgagee may, at its option and without demand, notice or delay, do one or
more of the following:
(a) The Mortgagee may declare the entire unpaid principal balance of
the Obligations, together with all interest thereon, to be due and payable
immediately.
(b) The Mortgagee may (i) institute and maintain an action of
mortgage foreclosure against the Property and the interests of the Mortgagor
therein, (ii) institute and maintain an action on any instruments evidencing the
Obligations or any portion thereof, and (iii) take such other action at law or
in equity for the enforcement of any of the Loan Documents as the law may allow,
and in each such action the Mortgagee shall be entitled to all costs of suit and
attorneys fees.
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(c) The Mortgagee may, in its sole and absolute discretion: (i) collect
any or all of the Rents, including any Rents past due and unpaid, (ii) perform
any obligation or exercise any right or remedy of the Mortgagor under any Lease,
or (iii) enforce any obligation of any tenant of any of the Property. The
Mortgagee may exercise any right under this subsection (c), whether or not the
Mortgagee shall have entered into possession of any of the Property, and nothing
herein contained shall be construed as constituting the Mortgagee a "mortgagee
in possession", unless the Mortgagee shall have entered into and shall continue
to be in actual possession of the Property. The Mortgagor hereby authorizes and
directs each and every present and future tenant of any of the Property to pay
all Rents directly to the Mortgagee and to perform all other obligations of that
tenant for the direct benefit of the Mortgagee, as if the Mortgagee were the
landlord under the Lease with that tenant, immediately upon receipt of a demand
by the Mortgagee to make such payment or perform such obligations. The Mortgagor
hereby waives any right, claim or demand it may now or hereafter have against
any such tenant by reason of such payment of Rents or performance of obligations
to the Mortgagee, and any such payment or performance to the Mortgagee shall
discharge the obligations of the tenant to make such payment or performance to
the Mortgagor.
(d) The Mortgagee shall have the right, in connection with the
exercise of its remedies hereunder, to the appointment of a receiver to take
possession and control of the Property or to collect the Rents, without notice
and without regard to the adequacy of the Property to secure the Obligations. A
receiver while in possession of the Property shall have the right to make
repairs and to make improvements necessary or advisable in its or his opinion to
preserve the Property, or to make and keep it rentable to the best advantage,
and the Mortgagee may advance moneys to a receiver for such purposes. Any moneys
so expended or advanced by the Mortgagee or by a receiver shall be added to and
become a part of the Obligations secured by this Mortgage.
13. Application of Proceeds. The Mortgagee shall apply the proceeds of
any foreclosure sale of, or other disposition or realization upon, or Rents or
profits from, the Property to satisfy the Obligations in such order of
application as the Mortgagee shall determine in its exclusive discretion.
14. Confession of Judgment in Ejectment. At any time after the
occurrence and during the continuance of an Event of Default, without further
notice, regardless of whether the Mortgagee has asserted any other right or
exercised any other remedy under this Mortgage or any of the other Loan
Documents, it shall be lawful for any attorney of any court of record as
attorney for the Mortgagor to confess judgment in ejectment against the
Mortgagor and all persons claiming under the Mortgagor for the recovery by the
Mortgagee of possession of all or any part of the Property, for which this
Mortgage shall be sufficient warrant. If for any reason after such action shall
have commenced the same shall be discontinued and the possession of the Property
shall remain in or be restored to the Mortgagor, the Mortgagee shall have the
right upon any subsequent default or defaults to bring one or more amicable
action or actions as hereinbefore set forth to recover possession of all or any
part of the Property.
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15. Mortgagee's Right to Protect Security. The Mortgagee is hereby
authorized to do any one or more of the following, irrespective of whether an
Event of Default has occurred: (a) appear in and defend any action or proceeding
purporting to affect the security hereof or the Mortgagee's rights or powers
hereunder if the Mortgagor fails to so defend such action or proceeding to the
satisfaction of the Mortgagee; (b) purchase such insurance policies covering the
Property as it may elect if the Mortgagor fails to maintain the insurance
coverage required hereunder; and (c) take such action as the Mortgagee may
determine to pay, perform or comply with any Impositions or Legal Requirements,
to cure any Events of Default and to protect its security in the Property.
16. Appointment of Mortgagee as Attorney-in-Fact. The Mortgagee, or any
of its officers, is hereby irrevocably appointed attorney-in-fact for the
Mortgagor (without requiring any of them to act as such), such appointment being
coupled with an interest, to do any or all of the following: (a) collect the
Rents after the occurrence of an Event of Default; (b) settle for, collect and
receive any awards payable under Section 8 from the authorities making the same;
and (c) execute, deliver and file such financing statements and other
instruments as the Mortgagee may require in order to perfect and maintain its
security interest under the Uniform Commercial Code on any portion of the
Property.
17. Certain Waivers. The Mortgagor hereby waives and releases all
benefit that might accrue to the Mortgagor by virtue of any present or future
law exempting the Property, or any part of the proceeds arising from any sale
thereof, from attachment, levy or sale on execution, or providing for any stay
of execution, exemption from civil process or extension of time for payment or
any rights of marshalling in the event of any sale hereunder of the Property,
and, unless specifically required herein, all notices of the Mortgagor's default
or of the Mortgagee's election to exercise, or the Mortgagee's actual exercise
of any option under this Mortgage or any other Loan Document.
18. Notices. All notices, demands, requests, consents, approvals and
other communications required or permitted hereunder must be in writing and will
be effective upon receipt by the Mortgagor or the Mortgagee. Such notices and
other communications may be hand-delivered, sent by facsimile transmission with
confirmation of delivery and a copy sent by first-class mail, or sent by
nationally recognized overnight courier service, to a party's address set forth
above or to such other address as the Mortgagor or the Mortgagee may give to the
other in writing for such purpose.
19. Further Acts. The Mortgagor will, at the cost of the Mortgagor, and
without expense to the Mortgagee, do, execute, acknowledge and deliver all
further acts, deeds, conveyances, mortgages, assignments, notices of assignment,
transfers and assurances as the Mortgagee shall, from time to time, reasonably
require for the better assuring, conveying, assigning, transferring or
confirming unto the Mortgagee the property and rights hereby mortgaged, or which
Mortgagor may be or may hereafter become bound to convey or assign to the
Mortgagee, or for carrying out the intent of or facilitating the performance of
the terms of this Mortgage or for filing, registering or recording this
Mortgage. The Mortgagor grants to the Mortgagee an irrevocable power of attorney
coupled with an interest for the purpose of exercising and perfecting any and
all rights and remedies available to the Mortgagee under the Note, this
Mortgage, the other Loan Documents, at law or in equity, including, without
limitation, the rights and remedies described in this paragraph.
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20. Changes in the Laws Regarding Taxation. If any law is enacted or
adopted or amended after the date of this Mortgage which deducts the Obligations
from the value of the Property for the purpose of taxation or which imposes a
tax, either directly or indirectly, on the Mortgagor or the Mortgagee's interest
in the Property, the Mortgagor will pay such tax, with interest and penalties
thereon, if any. If the Mortgagee determines that the payment of such tax or
interest and penalties by the Mortgagor would be unlawful or taxable to the
Mortgagee or unenforceable or provide the basis for a defense of usury, then the
Mortgagee shall have the option, by written notice of not less than ninety (90)
days, to declare the entire Obligations immediately due and payable.
21. Documentary Stamps. If at any time the United States of America,
any State thereof or any subdivision of any such State shall require revenue or
other stamps to be affixed to the Note or this Mortgage, or impose any other tax
or charge on the same, the Mortgagor will pay for the same, with interest and
penalties thereon, if any.
22. Preservation of Rights. No delay or omission on the Mortgagee's part
to exercise any right or power arising hereunder will impair any such right or
power or be considered a waiver of any such right or power, nor will the
Mortgagee's action or inaction impair any such right or power. The Mortgagee's
rights and remedies hereunder are cumulative and not exclusive of any other
rights or remedies which the Mortgagee may have under other agreements, at law
or in equity. The Mortgagee may exercise any one or more of its rights and
remedies without regard to the adequacy of its security.
23. Illegality. In case any one or more of the provisions contained in
this Mortgage should be invalid, illegal or unenforceable in any respect, the
validity, legality and enforceability of the remaining provisions contained
herein shall not in any way be affected or impaired thereby.
24. Changes in Writing. No modification, amendment or waiver of any
provision of this Mortgage nor consent to any departure by the Mortgagor
therefrom will be effective unless made in a writing signed by the Mortgagee,
and then such waiver or consent shall be effective only in the specific instance
and for the purpose for which given. No notice to or demand on the Mortgagor in
any case will entitle the Mortgagor to any other or further notice or demand in
the same, similar or other circumstance.
25. Entire Agreement. This Mortgage (including the documents and
instruments referred to herein) constitutes the entire agreement and supersedes
all other prior agreements and understandings, both written and oral, between
the Mortgagor and the Mortgagee with respect to the subject matter hereof.
26. Survival; Successors and Assigns. This Mortgage will be binding
upon and inure to the benefit of the Mortgagor and the Mortgagee and their
respective heirs, executors, administrators, successors and assigns; provided,
however, that the Mortgagor may not assign this Mortgage in whole or in part
without the Mortgagee's prior written consent and the Mortgagee at any time may
assign this Mortgage in whole or in part; and provided, further, that the rights
and benefits under the Paragraphs entitled "Environmental Matters", "Inspection
of Property" and "Indemnity" shall also inure to the benefit of any persons or
entities who acquire title or ownership of the Property from or through the
Mortgagee or through action of the Mortgagee (including a foreclosure, sheriff's
or judicial sale). The provisions of Paragraphs entitled "Environmental
Matters", "Inspection of Property" and "Indemnity" shall survive the
termination, satisfaction or release of this Mortgage, the foreclosure of
this Mortgage or the delivery of a deed in lieu of foreclosure.
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27. Interpretation. In this Mortgage, the singular includes the plural
and the plural the singular; references to statutes are to be construed as
including all statutory provisions consolidating, amending or replacing the
statute referred to; the word "or" shall be deemed to include "and/or", the
words "including", "includes" and "include" shall be deemed to be followed by
the words "without limitation" and references to sections or exhibits are to
those of this Mortgage unless otherwise indicated. Section headings in this
Mortgage are included for convenience of reference only and shall not constitute
a part of this Mortgage for any other purpose. If this Mortgage is executed by
more than one party as Mortgagor, the obligations of such persons or entities
will be joint and several.
28. Indemnity. The Mortgagor agrees to indemnify each of the Mortgagee,
its directors, officers and employees and the Mortgagee's holding company, if
any, (the "Indemnified Parties") and to hold each Indemnified Party harmless
from and against any and all claims, damages, losses, liabilities and expenses
(including all reasonable fees and charges of internal or external counsel with
whom any Indemnified Party may consult and all reasonable expenses of litigation
or preparation therefor) which any Indemnified Party may incur or which may be
asserted against any Indemnified Party in connection with or arising out of the
matters referred to in this Mortgage or in the other Loan Documents by any
person, entity or governmental authority (including any person or entity
claiming derivatively on behalf of the Mortgagor), whether (a) arising from or
incurred in connection with any breach of a representation, warranty or covenant
by the Mortgagor, or (b) arising out of or resulting from any suit, action,
claim, proceeding or governmental investigation, pending or threatened, whether
based on statute, regulation or order, or tort, or contract or otherwise, before
any court or governmental authority, which arises out of or relates to this
Mortgage, any other Loan Document, or the use of the proceeds of the Loan;
provided, however, that the foregoing indemnity agreement shall not apply to
claims, damages, losses, liabilities and expenses solely attributable to an
Indemnified Party's gross negligence or willful misconduct. The indemnity
agreement contained in this Section shall survive the termination of this
Mortgage, payment of any Loan and assignment of any rights hereunder. The
Mortgagor may participate at its expense in the defense of any such action or
claim.
29. Governing Law and Jurisdiction. This Mortgage has been delivered to
and accepted by the Mortgagee and will be deemed to be made in the State where
the Mortgagee's office indicated above is located. THIS MORTGAGE WILL BE
INTERPRETED AND THE RIGHTS AND LIABILITIES OF THE MORTGAGOR AND THE MORTGAGEE
DETERMINED IN ACCORDANCE WITH THE LAWS OF THE STATE WHERE THE MORTGAGEE'S OFFICE
INDICATED ABOVE IS LOCATED, EXCEPT THAT THE LAWS OF THE STATE WHERE THE PROPERTY
IS LOCATED (IF DIFFERENT FROM THE STATE WHERE SUCH OFFICE OF THE MORTGAGEE IS
LOCATED) SHALL GOVERN THE CREATION, PERFECTION AND FORECLOSURE OF THE LIENS
CREATED HEREUNDER ON THE PROPERTY OR ANY INTEREST THEREIN. The Mortgagor hereby
irrevocably consents to the exclusive jurisdiction of any state or federal court
in the county or judicial district where the Mortgagee's office indicated above
is located; provided that nothing contained in this Mortgage will prevent the
Mortgagee from bringing any action, enforcing any award or judgment or
exercising any rights against the Mortgagor individually, against any security
or against any property of the Mortgagor within any other county, state or other
foreign or domestic jurisdiction. The Mortgagor acknowledges and agrees that the
venue provided above is the most convenient forum for both the Mortgagee and the
Mortgagor. The Mortgagor waives any objection to venue and any objection based
on a more convenient forum in any action instituted under this Mortgage.
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30. WAIVER OF JURY TRIAL. THE MORTGAGOR IRREVOCABLY WAIVES ANY AND ALL
RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING OR CLAIM OF ANY
NATURE RELATING TO THIS MORTGAGE, ANY DOCUMENTS EXECUTED IN CONNECTION WITH THIS
MORTGAGE OR ANY TRANSACTION CONTEMPLATED IN ANY OF SUCH DOCUMENTS. THE MORTGAGOR
ACKNOWLEDGES THAT THE FOREGOING WAIVER IS KNOWING AND VOLUNTARY.
The Mortgagor acknowledges that it has read and understood all the provisions of
this Mortgage, including the waiver of jury trial, and has been advised by
counsel as necessary or appropriate.
WITNESS the due execution hereof as a document under seal, as of the date first
written above, with the intent to be legally bound hereby.
ENVIRONMENTAL TECTONICS
CORPORATION
ATTEST: /s/ Ann M. Allen By: /s/ Duane Deaner
------------------------- --------------------------
(SEAL)
Print Name: Ann M. Allen Print Name: Duane Deaner
---------------------- ------------------
Title: Corporate Secretary Title: C.F.O.
--------------------------- -----------------------
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CERTIFICATE OF RESIDENCE
The undersigned certifies that the residence of the Mortgagee is 1600
Market Street, Philadelphia, PA 19103.
/s/ John G. Siegrist
------------------------------------
On behalf of the Mortgagee
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COMMONWEALTH OF PENNSYLVANIA )
) ss:
COUNTY OF PHILADELPHIA )
On this, the 18th day of February, 2003, before me, a Notary Public,
the undersigned officer, personally appeared Duane Deaner, who acknowledged
himself/herself to be the Chief Financial Officer of Environmental Tectonics
Corporation, a Pennsylvania corporation, and that he/she, in such capacity,
being authorized to do so, executed the foregoing instrument for the purposes
therein contained by signing on behalf of said corporation.
IN WITNESS WHEREOF, I hereunto set my hand and official seal.
/s/ Ann M. Allen
------------------------------------
Notary Public
My commission expires:
---------------------------------------
| NOTARIAL SEAL |
| ANN M. ALLEN, Notary Public |
| Upper Southampton Twp., Bucks County |
| My Commission Expires Sept. 26, 2004 |
| |
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EXHIBITS
A. Legal Description
B. Permitted Encumbrances
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