Exhibit 10.12
OPEN-END MORTGAGE AND SECURITY AGREEMENT
________________________________________________
ENVIRONMENTAL TECTONICS CORPORATION
Mortgagor
AND
H.F. LENFEST,
Mortgagee
________________________________________________
Return to:
The Lenfest Group
1332 Enterprise Drive
West Chester, PA 19380
Attention: H.F. Lenfest
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 H.F. LENFEST, an individual (the
"Mortgagee"), with an address c/o The Lenfest Group, 1332 Enterprise Drive, West
Chester, Pennsylvania 19380.
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 Convertible Note and
Warrant Purchase Agreement, dated as of the date hereof (the "Note Purchase
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 Ten Million Dollars
($10,000,000) (the "Loan"), which Loan is evidenced in part by Mortgagor's 10%
Senior Subordinated Convertible Note Due February 18, 2009 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 affiliate of Mortgagee, 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 Note Purchase 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, under and subject to the Open-End Mortgage and Security
Agreement of even date herewith by Mortgagor in favor of PNC Bank, National
Association (the "Prior Mortgagee") recorded immediately prior to this Mortgage
(the "Prior Mortgage"). All of the duties and obligations of the Mortgagor and
the rights and remedies of the Mortgagee hereunder are under and subject in all
respects to performance of the duties and obligations of the Mortgagor to the
Prior Mortgagee and to the rights and remedies of the Prior Mortgagee under the
Prior Mortgage. The failure by Mortgagor to perform or comply with any of the
provisions of this Mortgage shall not be an Event of Default hereunder if such
failure arises solely from Mortgagor's performance or compliance with comparable
obligations under the Prior Mortgage and performance or compliance with both the
Prior Mortgage and this Mortgage is impossible.
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.
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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").
(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.
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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.
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.
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(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.
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 Note Purchase 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.
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(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.
(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.
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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.
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.
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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.
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.
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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.
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: Corp. Secty. Title: C.F.O.
----------------------------- ------------------------------
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CERTIFICATE OF RESIDENCE
------------------------
The undersigned certifies that the residence of the Mortgagee is 2445
Oaks Circle, Huntingdon Valley, PA 19006.
/s/ Thomas K. Pasch
-----------------------------------
On behalf of the Mortgagee
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COMMONWEALTH OF PENNSYLVANIA )
) ss:
COUNTY OF PHILADELPHIA )
On this, the 19th day of February, 2003, before me, a Notary Public,
the undersigned officer, personally appeared Duane Deaner, who acknowledged
himself/herself to be the C.F.O. 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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