Document:

exhibit10_4.htm

Exhibit 10.4

 

OPEN-END MORTGAGE

THIS MORTGAGE SECURES

FUTURE ADVANCES

 

Record and Return To:

Ballard Spahr LLP

1735 Market Street, 51st Floor

Philadelphia, PA 19103

Attention:  Carl H. Fridy, Esq.

Property Tax ID No. 04-00-00034-02

Chadds Ford, Delaware County

 

OPEN-END MORTGAGE, SECURITY AGREEMENT, ASSIGNMENT OF LEASES AND RENTS AND FIXTURE FILING

___________________________________________________________

THIS INSTRUMENT IS AN OPEN-END MORTGAGE AND SECURES PRESENT

AND FUTURE INDEBTEDNESS, OBLIGATIONS, AND ADVANCES UP TO A

MAXIMUM AMOUNT OF TWO HUNDRED PERCENT (200%) OF THE ORIGINAL PRINCIPAL AMOUNT STATED IN THE FIRST PARAGRAPH BELOW,

PURSUANT TO 42 PA.C.S.A. §§ 8143-8144.

THIS INSTRUMENT IS ALSO A FINANCING STATEMENT FILED AS A FIXTURE

FILING PURSUANT TO §§ 9334 AND 9502 OF THE PENNSYLVANIA UNIFORM

COMMERCIAL CODE.

THIS OPEN-END MORTGAGE, SECURITY AGREEMENT, ASSIGNMENT OF LEASES AND RENTS AND FIXTURE FILING (this “Security Instrument”) is given on April __, 2015 (the “Effective Date”), by SPITZ, INC., a Delaware corporation (“Mortgagor”) having an address at P.O. Box 198 Chadds Ford, Pennsylvania 19317, to PENSION BENEFIT GUARANTY CORPORATION, a wholly-owned United States government corporation (“Mortgagee”) having an address at 1200 K Street N.W., Washington, D.C. 20005.  Mortgagor is indebted to Mortgagee in the aggregate amount of $10,500,000 incurred under Mortgagee’s settlement agreement with Mortgagor and Evans & Sutherland Computer Company (collectively, with Mortgagor, the “Obligors”) dated April __, 2015 (the “Settlement Agreement”).  This Security Instrument secures to Mortgagee the payment of such amount and all other Secured Obligations (as defined in the Security Agreement between Obligors and Mortgagee dated April __, 2015 and executed in connection with the Settlement Agreement; such Security Agreement the “Security Agreement”, and, collectively with this Security Instrument and the Settlement Agreement, the “Settlement Documents”) including the payment of any and all other sums advanced under Paragraph 4 hereof to protect the security of this Security Instrument and the performance of Mortgagor’s covenants and agreements under the Settlement Documents.

 

  

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For these purposes, and upon the terms and conditions set forth in this Security Instrument, Mortgagor irrevocably mortgages, grants, conveys and assigns to Mortgagee, with the right of entry and possession, Mortgagor’s interest in and to the following (collectively, the “Property”):

	
  

	
(a)

	
All real property located in Delaware County, Pennsylvania, and described on Exhibit A attached hereto (the “Land”).

	
  

	
(b)

	
All easements, rights-of-way and rights used in connection with or as a means of access to any portion of the Land.

	
  

	
(c)

	
All tenements, hereditaments and appurtenances with respect to the Land.

	
  

	
(d)

	
All right, title and interest of Mortgagor, now owned or hereafter acquired, in and to any land lying within the right-of-way of any street, open or proposed, adjoining the Land, and any and all sidewalks, alleys and strips and gores of land adjacent to or used in connection with the Land.

	
  

	
(e)

	
All buildings, improvements and landscaping now or hereafter erected or located on the Land.

	
  

	
(f)

	
All development rights, governmental or quasi-governmental licenses, permits or approvals, zoning rights and other similar rights or interests which relate to the development, use or operation of, or that benefit or are appurtenant to, the Land.

	
  

	
(g)

	
All mineral rights, oil and gas rights, air rights, water or water rights, including without limitation, all wells, canals, ditches and reservoirs of any nature and all rights thereto, appurtenant to or associated with the Land, whether decreed or undecreed, tributary or non-tributary, surface or underground, appropriated or unappropriated, and all shares of stock in any water, canal, ditch or reservoir company, and all well permits, water service contracts, drainage rights and other evidences of any such rights.

	
  

	
(h)

	
All reversions, remainders, rents, issues, income and profits arising or issuing from the Land and/or the buildings, structures and improvements now or hereafter erected or placed thereon, or any portion thereof (all such rents, issues, income and profits, the “Rents”), including, but not limited to, the rents, issues, income and profits arising or issuing from all insurance policies, sale agreements, licenses, options, leases and subleases now or hereafter entered into covering any part of the Land and/or the buildings, structures and improvements now or hereafter erected or placed thereon, or any portion thereof, all of which insurance policies, sale agreements, licenses, options, leases,  subleases, rents, issues, income and profits are hereby assigned to Mortgagee by Mortgagor.  Mortgagor will execute and deliver to Mortgagee, on demand, such separate, specific assignments and instruments as Mortgagee may reasonably require to implement, confirm, maintain and continue the assignment hereunder.  Mortgagor hereby appoints Mortgagee, its designees and nominees, as Mortgagor’s agents and attorneys-in-fact to collect such rents, issues and profits.

 

  

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(i)

	
All awards, damages, payments and other compensation, and any and all claims therefor, and rights thereto, which may result from taking or injury by virtue of the exercise of the power of eminent domain of, or to, or any damage, injury or destruction in any manner caused to, the Land and/or the buildings, structures and improvements now or hereafter  erected or placed thereon, or any portion thereof, all of which award, damages, payments, compensation, claims and rights are hereby assigned to Mortgagee to the fullest extent that Mortgagor may do so under law.  Mortgagor hereby appoints Mortgagee, its designees and nominees, as Mortgagor’s agents and attorneys-in-fact to, subject to Paragraphs 5(a) and 5(b), collect any such awards, damages, payments and compensation.

	
  

	
(j)

	
All fixtures, fittings, furnishings, furniture, trade fixtures, machinery, equipment, apparatus, building materials, appliances,  goods, supplies, tools, chattels, and all articles of tangible personal property of whatever kind and nature, together with all replacements thereof, substitutions therefor and additions and accessions thereto, and all proceeds and profits thereof and therefrom, now or at any time hereafter, affixed or attached to, installed upon, included within, or used in any way in connection with the construction, use, enjoyment, operation, maintenance or occupancy of the Land and the buildings, structures and improvements now or hereafter erected or placed thereon; and all agreements, contract rights, chattel paper, negotiable instruments, general intangibles, accounts, instruments,  and documents (as those terms are defined in the Pennsylvania Uniform Commercial Code) in connection with the Land and the buildings, structures and improvements now or hereafter erected or placed thereon.  Any item referred to in this paragraph (j) shall hereinafter, for purposes of creating a security interest therein under the Pennsylvania Uniform Commercial Code, sometimes be referred to as the “Personal Property”.

	
  

	
(k)

	
All interest or estate which Mortgagor now has or may hereafter acquire in the Land and all additions and accretions thereto.

SECURITY AGREEMENT. This Security Instrument creates a continuing security interest in the personal property and fixtures included among the Property and constitutes a security agreement under the Uniform Commercial Code as enacted in the Commonwealth of Pennsylvania.  In addition to the other purposes of this Security Instrument, the recording of this Security Instrument constitutes the filing of a financing statement as to property which is or becomes a fixture related to the Land.

 

UNDER AND SUBJECT to the liens and security interests of The Bryn Mawr Trust Company (together with its successors and assigns, the “Senior Creditor”) on the Property as provided in that certain Intercreditor Agreement of even date herewith between Senior Creditor and Mortgagee (the “Intercreditor Agreement”).

 

MORTGAGOR’S COVENANTS.  Mortgagor hereby covenants and agrees as follows:

 

  

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1.           Payment of Principal.  Mortgagor shall promptly pay when due all Installments (as defined in the Settlement Agreement) in accordance with the terms of the Settlement Agreement.

 

2.           Charges; Liens; Title; Assignment of Rents.  Mortgagor warrants, covenants and represents that it has good and marketable and unencumbered fee simple title to the Property subject only to customary exceptions included in policies issued by a title company issuing the current standard ALTA form of owner's title insurance policy in use in the Commonwealth of Pennsylvania and those liens and encumbrances (x) referred to in Section 26 hereof or described in Exhibit B attached hereto (“Disclosed Liens”) and/or (y) granted after the Effective Date and permitted pursuant to the terms of any other Settlement Documents that do not have priority over this Security Instrument ((x) and (y), collectively, “Permitted Liens”).  Mortgagor will forever warrant and defend the title to the Property unto the Mortgagee, its successors and assigns, against all persons and all claims of every kind and nature whatsoever except the Permitted Liens.  Mortgagor shall pay, directly and on time, all taxes, assessments, charges, fines and impositions attributable to the Property that may attain priority over this Security Instrument.  Upon request from Mortgagee to Mortgagor, Mortgagor shall promptly furnish to Mortgagee receipts evidencing such payments.  Mortgagor shall promptly discharge any lien (except for Disclosed Liens) which has priority over this Security Instrument unless Mortgagee consents in writing to the payment of the obligation secured by the lien in a manner reasonably acceptable to Mortgagee.  Mortgagor hereby assigns to Mortgagee all Rents as further security for the payment of and performance of the Secured Obligations, and Mortgagor grants to Mortgagee the right to enter the Property for the purpose of collecting the same and to let the Property or any part thereof, and to apply the Rents to the Secured Obligations, whether or not then due, subject to Senior Creditor’s rights under the Intercreditor Agreement. The foregoing assignment and grant is present, irrevocable and absolute and shall continue in effect until the Secured Obligations are fully paid and performed, but Mortgagee hereby grants Mortgagor a revocable license to collect, receive, use and retain the Rents until the occurrence of an Event of Default (as defined below); such license to collect, receive, use and retain the Rents will be immediately and automatically deemed revoked by Mortgagee without the necessity of any action of Mortgagee upon the occurrence of any Event of Default; in the event such license is revoked, Mortgagor shall, subject to Senior Creditor’s rights under the Intercreditor Agreement, pay over to Mortgagee, or to any receiver appointed to collect the Rents, any lease security deposits, and shall pay monthly in advance to Mortgagee, or to any such receiver, the fair and reasonable rental value as determined by Mortgagee for the use and occupancy of such part of the Property as may be in the possession of Mortgagor or any affiliate of Mortgagor, and upon default in any such payment Mortgagor and any such affiliate will vacate and surrender the possession of the Property to Mortgagee or to such receiver, and in default thereof may be evicted by summary proceedings or otherwise.

 

3.           Preservation and Maintenance of Property.

 

(a)           Waste. Mortgagor agrees not to materially alter, remove or demolish the Property.  Mortgagor shall keep the Property in good repair, reasonable wear and tear excepted, and shall not commit or suffer waste thereof.  Mortgagor agrees to entries upon and inspections of the Property by Mortgagee.

 

  

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(b)           Insurance.  Mortgagor shall insure the Property against loss or damage by fire and such other risks as Mortgagee shall from time to time require, but in no event for a sum less than the Property’s full insurable value (“Minimum Insurance”).  Mortgagor shall carry public liability insurance, flood insurance as required by applicable law and such other insurance as Mortgagee may reasonably require, including without limitation, business interruption insurance or loss of rental value insurance.  Mortgagor shall maintain all required insurance at Mortgagor’s expense, under policies issued by companies and in form and substance satisfactory to Mortgagee and all such policies and renewals thereof shall include a standard mortgagee clause in favor of and in form acceptable to Mortgagee (“Standard Mortgagee Clause”). Mortgagee, by reason of accepting, rejecting, approving or obtaining insurance, shall not incur any liability for: (i) the existence, nonexistence, form or legal sufficiency thereof; (ii) the solvency of any insurer; or (iii) the payment of losses.  All policies and certificates of insurance shall name Mortgagee as mortgagee/lender loss payee, and shall provide that the insurance cannot be terminated as to Mortgagee except upon a minimum of thirty (30) days’ prior written notice to Mortgagee.  At least thirty (30) days prior to the expiration date of a policy, Mortgagor shall deliver to Mortgagee a renewal policy in form satisfactory to Mortgagee.  In the event of loss, Mortgagor shall promptly give written notice to the insurance carrier and to Mortgagee.  Except for the Minimum Insurance and the Standard Mortgagee Clause requirements of this Paragraph 3(b), Mortgagee hereby agrees that, until payment of all Loan Debt (as defined in the Intercreditor Agreement) to Senior Creditor, compliance by Mortgagor with the insurance requirements imposed by Senior Creditor’s mortgage lien on the Property shall be deemed compliance with the requirements of this Paragraph 3(b). To the extent not held by the holder of such a mortgage lien and promptly upon any request by Mortgagee, Mortgagor shall deliver to Mortgagee the original of all such policies or certificates, with receipts evidencing annual prepayment of the premiums.

 

4.           Protection of Mortgagee’s Rights in the Property.  If Mortgagor fails to perform the covenants and agreements contained in this Security Instrument within the timeframes provided herein, or there is a legal proceeding that may materially affect Mortgagee’s rights in the Property (such as a proceeding in foreclosure, bankruptcy, probate, for condemnation or to enforce laws or regulations), then Mortgagee, upon not less than five (5) days’ prior written notice to Mortgagor, may do and pay for whatever is reasonably necessary to protect the value of the Property and Mortgagee’s rights in the Property.  Mortgagee’s actions may include paying any sums secured by a lien that has priority over this Security Instrument, appearing in court, paying reasonable attorneys’ fees and entering on the Property to make repairs.  Although Mortgagee may take action under this Paragraph 4, Mortgagee shall be under no obligation to do so.  Any amounts disbursed by Mortgagee under this Paragraph 4 shall become additional debt of Mortgagor secured by this Security Instrument.

 

5.           Condemnation or Insurance Proceeds.

 

(a)  The proceeds of any award or claim for damages, direct or consequential, in connection with any condemnation or other taking of any part of the Property, or for conveyance in lieu of condemnation, shall be applied as provided in this Paragraph 5(a), subject to the rights of any Senior Creditor.  In the event of a total taking of the Property, be applied to the sums secured by this Security Instrument, whether or not then due, with any excess paid to Mortgagor or as otherwise required by law. 

 

  

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In the event of a partial taking of the Property, if (i) no event of default has occurred under this Security Instrument or under any other Settlement Document, and (ii) Mortgagee is satisfied that there are sufficient proceeds to complete the restoration of the improvements constructed on the Land to the same value and condition as existed prior to such partial taking, then the proceeds shall be applied first to the repair and restoration of the Property, second to the payment of the sums secured by this Security Instrument, and third to Mortgagor.

 

(b)  Subject to the payment of all Loan Debt, the proceeds of any insurance on the Property shall be applied as provided in this Paragraph 5(b).  Such proceeds shall be applied to the sums secured by this Security Instrument, whether or not then due, with any excess paid to Mortgagor or as otherwise required by law.  Notwithstanding the immediately preceding sentence, if (i) no event of default has occurred under this Security Instrument or under any other Settlement Document, and (ii) Mortgagee is satisfied that there are sufficient insurance proceeds to complete the restoration of the improvements constructed on the Land to the same value and condition as existed prior to the insurable loss, then the proceeds shall be applied first to the repair and restoration of the Property, second to the payment of the sums secured by this Security Instrument, and third to Mortgagor.

 

6.           Forbearance by Mortgagee Not a Waiver.  Any forbearance by Mortgagee in exercising any right or remedy shall not be a waiver of or preclude the exercise of any right or remedy.

 

7.           Successors and Assigns Bound.  The covenants and agreements of this Security Instrument shall bind and benefit the successors and assigns of Mortgagee and Mortgagor, respectively.

 

8.           Notices.  All notices made or required to be made under this Security Instrument must be provided in the same manner as required by Section 15 of the Settlement Agreement.

 

9.           Notices to Mortgagee.  Notwithstanding Paragraph 8 hereof, Mortgagor agrees that any notice given by Mortgagor to Mortgagee purportedly pursuant to 42 Pa. C.S.A. §8143 shall be given by registered or certified mail, return receipt requested, to the address of the Mortgagee set forth on the signature page of this Security Instrument and only to such address, and such notice shall be deemed to have been received no earlier than the date actually and physically received at such address.

10.           Governing Law; Severability.  This Security Instrument shall be governed by the internal laws of the Commonwealth of Pennsylvania.  In the event that any provision or clause of this Security Instrument conflicts with applicable law, such conflict shall not affect other provisions of this Security Instrument which can be given effect without the conflicting provision.  To this end the provisions of this Security Instrument are declared to be severable.

 

11.           Due on Sale.  Except to any extent otherwise expressly provided in any other Settlement Document, Mortgagor shall not sell or transfer all or any part of the Property without Mortgagee’s prior written consent, and upon any such sale or transfer in contravention hereof, Mortgagee may, at its option, require immediate payment in full of all sums secured by this Security Instrument; provided, however, that the foregoing shall not apply to leases of, or other occupancy agreements relating to, all or a portion of the Property.

 

  

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12.           Default.  For purposes hereof, “Event of Default” shall mean: (i) the failure of Mortgagor to timely perform or comply with any other of the terms, conditions, provisions, agreements, covenants and conditions of this Security Instrument and the continuation of such failure for more than ten (10) days after written notice of such failure is received by Mortgagor from Mortgagee, (ii) the occurrence of a “Default” under the Security Agreement (as defined therein) or an “Event of Default” under any other Settlement Document, (iii) the existence of any security interest, pledge, consensual lien, or other consensual encumbrance in favor of any party in the Property, except that of Mortgagee, Senior Creditor or any other Permitted Lien, (iv) the filing of any non-consensual lien or encumbrance, mechanic’s or materialmen’s lien or municipal claim against all or any portion of the Property which is not discharged within 30 days unless (1)  such lien, encumbrance or claim is being contested by Mortgagor in good faith and due diligence in appropriate proceedings with the approval of Mortgagee and (2) a bond or escrow has been posted with Mortgagee for the full amount of such contested lien, encumbrance or claim, in which case Mortgagee shall have such longer period as may reasonably be necessary in which to discharge such contested lien, encumbrance or claim and (v) Mortgagor at any time delivers or causes to be delivered to Mortgagee a notice pursuant to 42 Pa. C.S.A. 8143.

 

13.           Acceleration; Remedies.  Upon the occurrence and continuance of an Event of Default, Mortgagee, at its option, may exercise any or all or any combination of the rights, powers and remedies (i) under this Mortgage or any other Settlement Document, (ii) described in Paragraph 19 of the First Mortgage (as defined below and as in effect on the date hereof), or (iii) now or hereafter existing at law, in equity or by statute including, without limitation, requiring immediate payment in full of all sums secured by this Security Instrument without further demand, electing to enforce the Settled ERISA Liabilities (as defined in the Settlement Agreement), foreclosing this Security Instrument by judicial proceeding or any other means permitted by law, or exercising any rights, powers, or remedies Mortgagee may have as a secured party under the Pennsylvania Uniform Commercial Code.

 

14.           Defeasance.  Upon payment of all sums secured by this Security Instrument, Mortgagee, without warranty, shall deliver to Mortgagor for recording in the appropriate real property records a discharge, satisfaction or release of Security Instrument for the Property, or that portion thereof then covered hereby, prepared by Mortgagor at Mortgagor’s sole expense.

15.           Intentionally deleted.

 

16.           Right of Inspection.  Mortgagee or its agents or employees may enter onto the Property at any reasonable time and upon at least one (1) business day’s prior notice to Mortgagor for the purpose of inspecting the Property and ascertaining Mortgagor’s compliance with the terms hereof.

 

17.           Changes in Writing.  No modification, amendment or waiver of any provision of this Security Instrument will be effective unless made in a writing signed by Mortgagor and Mortgagee.

 

  

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18.           Duplicate Originals; Counterparts.  This Security Instrument may be executed in any number of duplicate originals and each duplicate original shall be deemed to be an original.  The failure of Mortgagee to execute this Security Instrument, or any counterpart hereof, shall not relieve Mortgagor from its obligations hereunder.

 

19.           Fixture Filing.  This Security Instrument constitutes a fixture filing as to all of the Property which is or which hereafter becomes a “fixture” under applicable law and shall be filed for recording in the applicable land records.  A carbon, photographic or other reproduction of this Security Instrument or any financing statement relating thereto shall be sufficient as a financing statement and shall be filed and indexed in the real estate records of each county in which the Land or any part thereof is located.

20.           Future Advances.  This Security Instrument is an Open-End Mortgage as defined in 42 Pa.C.S.A. §8143(f).  Without the limiting of any other provisions of this Security Instrument, Mortgagee may make future advances, and this Security Instrument shall secure repayment of such advances, for the payment of taxes, assessments, maintenance charges, insurance premiums, or costs similar or dissimilar, incurred for the protection and preservation of the Property or for the lien of this Security Instrument, or expenses incurred by Mortgagee by reason of default by Mortgagor.

21.           Intentionally deleted.

22.           Environmental Laws.  No deed prepared for the Property will be required to include a notice regarding the presence or disposal of hazardous materials pursuant to 35 P.S. §6018.405 of the Pennsylvania Solid Waste Management Act, 35 P.S. §6020.513 of the Pennsylvania Hazardous Sites Cleanup Act or pursuant to any other applicable environmental law and the Property has no such notice or restriction in its deed.

23.           Intentionally deleted.

24.           Survival.  All covenants of Mortgagor contained herein providing for the indemnification, defense or release of Mortgagee, or for the payment of costs or expenses by Mortgagor, including without limitation the payment or reimbursement of attorneys’ fees or costs, or for the payment of any expenses for the protection, upkeep or maintenance of the Property, including the payment of taxes or any other expenses, are intended to be severable from the other provisions of this Security Instrument, shall survive the entry of any judgment hereunder, and shall not be deemed merged into the judgment.  In particular and without limiting the foregoing, any attorneys’ fees incurred in the enforcement of any judgment obtained hereunder shall be recoverable as a separate item and shall not be merged into the judgment.

25.           WAIVER OF JURY TRIAL.  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 SECURITY INSTRUMENT, ANY DOCUMENTS EXECUTED IN CONNECTION WITH THIS SECURITY INSTRUMENT OR ANY TRANSACTION CONTEMPLATED IN ANY OF SUCH DOCUMENTS.  MORTGAGOR ACKNOWLEDGES THAT THE FOREGOING WAIVER IS KNOWING AND VOLUNTARY.

 

  

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26.           BMT Mortgages.  This Security Instrument and Mortgagee’s rights in the Property and any proceeds thereof (including, without limitation, rents, issues and profits, insurance proceeds and condemnation proceeds are subject and subordinate, to the extent provided in the Intercreditor Agreement, to the following mortgages:  (i) that certain Open-End Mortgage and Security Agreement executed by Mortgagor in favor of First Keystone Bank (“FKB”) (predecessor to Senior Creditor) dated January 14, 2004, recorded on January 20, 2004 in the official records of the Recorder of Deeds of Delaware County (the “Recorder of Deeds”) in Book No. 03066, Page 1588 (the “First Mortgage”); (ii) that certain Open-End Mortgage and Security Agreement executed by Mortgagor in favor of FKB (predecessor to Senior Creditor) dated September 11, 2008, recorded on September 19, 2008 in the official records of the Recorder of Deeds in Book No. 04433, Page 528; (iii) that certain Open-End Mortgage and Security Agreement executed by Mortgagor in favor of Senior Creditor dated March 15, 2012, recorded on April 9, 2012 in the official records of the Recorder of Deeds in Book No. 05095, Page 1858 and (iv) to the extent provided in the Intercreditor Agreement, any new mortgage hereafter created in favor of Senior Creditor .

27.           Construction.  In this Security Instrument, unless specifically otherwise provided or the context otherwise requires, the singular includes the plural and the plural the singular; the word “or” is deemed to include “and/or”; the words “including”, “includes” and “include” are deemed to be followed by the words “without limitation”; pronouns in masculine, feminine, or neuter genders include any other gender; and references to sections or exhibits are to those of this Security Instrument.  The words “herein,” “hereof,” “hereby,” “hereunder,” “herewith,” and words of similar import refer to this Security Instrument as a whole and not to any particular subdivision unless expressly so limited.  Headings and captions in this Security Instrument are included for convenience of reference only and do not constitute a part of this Security Instrument for any other purpose.  A reference to any statute is deemed also to refer to all rules and regulations promulgated under the statute, unless the context requires otherwise

 [Signatures Follow]

 

  

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Mortgagor acknowledges that it has read and understood all the provisions of this Security Instrument, including the waiver of jury trial, and has been advised by counsel as necessary or appropriate.

BY SIGNING BELOW Mortgagor has executed this Security Instrument as of the Effective Date, intending to be legally bound hereby.

 

MORTGAGOR:

SPITZ, INC., a Delaware Corporation

By:           /s/ Paul L. Dailey

Name: Paul L. Dailey

Title: Executive Vice President

[Acknowledgment follows]

/s/ Dana Cann, who further, by his/her/its signature hereto certifies that the address of the within Mortgagee is as follows:

1200 K Street N.W.

Washington, D.C. 20005

 

  

SIGNATURE PAGE- OPEN-END MORTGAGE, SECURITY AGREEMENT, ASSIGNMENT OF LEASES AND RENTS AND FIXTURE FILING

  

	
COMMONWEALTH OF PENNSYLVANIA

	
:

	  
	  	
:

	
SS

	
COUNTY OF DELAWARE

	
:

	  

On the 16 day of April, 2015, before me, the subscriber, a Notary Public in and for the Commonwealth and County aforesaid, personally appeared Paul L. Dailey, who acknowledged himself [herself/themselves] to be the Executive Vice President, of Spitz, Inc., a Delaware corporation, and that he [she/they], being authorized to do so, executed the foregoing Instrument for the purposes therein contained by signing the name of the corporation by himself [herself/themselves] as such officer.

 

WITNESS my hand and seal the day and year aforesaid.

 

   /s/  Donna L Tinney

Notary Public

My Commission Expires: May 15, 2017

 

  

ACKNOWLEDGMENT PAGE- OPEN-END MORTGAGE, SECURITY AGREEMENT, ASSIGNMENT OF LEASES AND RENTS AND FIXTURE FILING

  

 

EXHIBIT “A”

LEGAL DESCRIPTION

 

ALL THAT CERTAIN lot or parcel of land with building and improvements thereon erected, situated in the Township of Chadds Ford, County of Delaware, State of Pennsylvania, bounded and described according to a Final Subdivision Plan for Chadds Ford Plaza, made by Brandywine Valley Engineers, Aston, PA, dated 1/19/1998 and last revised 10/2/2002 as follows, to wit:

BEGINNING at a point of curve on the Southwesterly side of Brandywine Drive (60 feet wide), being a corner of Proposed Lot #2 (as shown on said plan): thence from said point of beginning extending along said drive the three following courses and distances: (1) on a line curving to the  left having a radius of 425.00 feet an arc distance of 74.78 feet to a point; thence (2) South 48 degrees 55 minutes 22 seconds East 467.61 feet to a point of curve; thence (3) on a line curving to the right having a radius of 250.00 feet an arc distance of 101.40 feet to a point, being a corner of lands now or late of Thomas Hannum; thence leaving said drive extending along lands of Hannum the two following courses and distances; (1) South 64 degrees 18 minutes 55 seconds West 229.98 feet to a point; thence (2) South 25 degrees 41 minutes 05 seconds East 261.49 feet to a point on the title line in the bed of Baltimore Pike, being a corner of lands of Hannum; thence extending along said title line the three following courses and distances; (1) South 66 degrees 53 minutes 00 seconds West 33.53 feet to a point; thence (2) South 60 degrees 12 minutes 00 seconds West 210.00 feet to a point; thence (3) South 57 degrees 55 minutes 00 seconds West 371.81 feet to a point, being a corner of other lands of Brandy Partners; thence leaving said pike extending along said lands the three following courses and distances; (1) North 20 degrees 56 minutes 06 seconds West 317.68 feet to a point; thence (2) North 52 degrees 44 minutes 03 seconds West 339.59 feet to a point; thence (3) North 25 degrees 49 minutes 00 seconds West 295.00 feet to a point; thence still along said lands and along Lot #2 North 64 degrees 11 minutes 00 seconds East 743.13 feet to the first mentioned point and place of beginning.

BEING Lot #3 on the above mentioned Plan.

BEING Folio #04-00-00034-02

  

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EXHIBIT “B”

 

LIENS AND ENCUMBRANCES OF RECORD

 

	
  

	
1.

	
Open-End Mortgage and Security Agreement executed by Mortgagor in favor of FKB (predecessor to Senior Creditor) dated January 14, 2004, recorded on January 20, 2004 in the official records of the Recorder of Deeds in Book No. 03066, Page 1588;

 

	
  

	
2.

	
Assignment of Rents, Profits and Leases executed by Mortgagor in favor of FKB (predecessor to Senior Creditor) dated January 14, 2004, recorded on January 20, 2004 in the official records of the Recorder of Deeds in Book No. 03066, Page 1607;

 

	
  

	
3.

	
UCC-1 Financing Statement by Mortgagor in favor of FKB (predecessor to Senior Creditor) recorded on July 12, 2006 in the official records of the Recorder of Deeds in Book No. 03849, Page 605 as financing statement no. 2006063937.  Most recent UCC-3 Financing Statement (Continuation) for financing statement 2006063937 by Mortgagor in favor of Senior Creditor recorded on October 9, 2014 in the official records of the Recorder of Deeds in Book No. 05557, Page 405 as financing statement no. 2014052061;

 

	
  

	
4.

	
Open-End Mortgage and Security Agreement executed by Mortgagor in favor of FKB (predecessor to Senior Creditor) dated September 11, 2008, recorded on September 19, 2008 in the official records of the Recorder of Deeds in Book No. 04433, Page 528;

 

	
  

	
5.

	
Assignment of Rents, Profits and Leases executed by Mortgagor in favor of FKB (predecessor to Senior Creditor) dated September 11, 2008, recorded on September 19, 2008 in the official records of the Recorder of Deeds in Book No. 004433, Page No. 548;

 

	
  

	
6.

	
Open-End Mortgage and Security Agreement executed by Mortgagor in favor of Senior Creditor dated March 15, 2012, recorded on April 9, 2012 in the official records of the Recorder of Deeds in Book No. 05095, Page 1858;

 

	
  

	
7.

	
Lien in connection with judgment in case number 2013-011482 against Mortgagor in favor of Evans & Sutherland Computer Corporation Pension Plan in the amount of $1,782,394, entered November 18, 2013 by the Court of Common Pleas of Delaware County, Pennsylvania; and

 

	
  

	
8.

	
Lien in connection with judgment in case number 2014-000660 against Mortgagor in favor of Mortgagee in the amount of $280,664, entered January 23, 2014 by the Court of Common Pleas of Delaware County, Pennsylvania.

 

  

13Exhibit 4.25

 

LOAN AGREEMENT

 

This Loan Agreement (the “Agreement”) is entered into in Hangzhou as of March 23, 2009 by the following parties.

 

Party A:                                                NetEase (Hangzhou) Network Co., Ltd.

 

Registration Address: Room 103-105, 1/F, Building 18, No.1 Jiaogong Road, Hangzhou, Zhejiang Province, P. R. China

 

Party B:                                                Hu Zhipeng

 

ID No.:  330106197812210436

Address:  Foreign Enterprise Service Co., Ltd., No. 14, Chaoyangmen Nandajie, Chaoyang District, Beijing, P. R. China

 

WHEREAS,

 

1.                                      Party A is a wholly-owned foreign enterprise incorporated in the People’s Republic of China (the “PRC”); and

 

2.                                      Party B is a citizen of the PRC and owns 50% of the equity interests of Hangzhou Leihuo Network Co., Ltd. (the “Company”) incorporated in Hangzhou.

 

In this Agreement, Party A and Party B are called collectively as the “Parties” and each of them is a “Party.”

 

NOW THEREFORE, through friendly negotiations, the parties hereto agree as follows:

 

1.                                      Party A agrees to provide an interest-free loan to Party B with an aggregate principal amount of RMB 5,000,000 (the “Loan”) in accordance with the terms and conditions set forth in this Agreement.

 

2.                                      Party B confirms that he has received the total amount of the Loan and has invested it into the Company as a capital contribution.

 

3.                                      The term of the Loan starts from the date when Party B received the Loan until twenty (20) years after the execution of this Agreement and may be extended upon written agreement of the parties hereto. During the term of the Loan or any extension thereof, Party A may notify Party B in writing that the Loan under this Agreement is due and payable immediately and request Party B to repay the Loan in the manner specified herein, if any of the following events occurs:

 

(a)                                 Party B resigns from or is dismissed by Party A or its affiliates;

 

(b)                                 Party B dies or becomes a person without capacity or with limited capacity for civil acts;

 

(c)                                  Party B commits a crime or is involved in a crime;

 

(d)                                 Any other third party claims more than RMB100,000 against Party B; or

 

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(e)                                  Subject to PRC laws, Party A or its designated person(s) is permitted to invest in the business of value-added telecommunications services, such as Internet information services, as well as other businesses that the Company is engaged in, and Party A has given a written notice to the Company to exercise its option to purchase equity in the Company (the “Equity Option”) in accordance with an Exclusive Purchase Option Agreement (the “Option Agreement”) executed by Party A, Party B and the Company.

 

4.                                      Both Parties hereby agree and confirm that, subject to PRC laws, Party A shall have the right, but not the obligation, to exercise, or designate other persons (including natural persons, legal persons or other entities) to exercise the Equity Option in the manner and at the purchase price specified in the Option Agreement.

 

5.                                      Both Parties hereby agree and confirm that Party B may repay the Loan only in one of the following repayment methods, and Party B agrees to take all actions (including executing and delivering documents or calling shareholders’ meetings) necessary or advisable to implement either of these methods.

 

(a)                                 Offset Payment with Equity Option

 

Each time Party A exercises the Equity Option, the Purchase Price (as defined in Article 1.3 of the Option Agreement) payable by Party A or its designated person(s) for such Equity Option exercise shall be applied by Party A, as provided for in Article 1.5.1 of the Option Agreement, to offset the outstanding amount of the Loan (with such offset payment applied to the principal, interest and capital utilization costs for the Loan as set forth in Article 6 of this Agreement), provided that the portion of the Purchase Price payable in cash to Party B for any tax obligation incurred by Party B in connection with the Equity Option exercise shall not be applied to offset any amount outstanding under the Loan.  The portion of the Purchase Price applied to offset any amount outstanding under the Loan is referred to as an “Offset Payment”.

 

(b)                                 Mutual Agreement.

 

When Article 5(a) above does not apply, if Party A in its sole discretion decides that the Loan may be repaid by another method, then Party B may pay to Party A the outstanding amount of the Loan (including any interest and capital utilization costs) in cash or other property, as determined by Party A, following any conditions or procedures specified by Party A.

 

6.                                      Both Parties hereby agree and confirm that the Loan is interest-free, except as  otherwise provided for herein.  Each time an Offset Payment occurs pursuant to Article 5(a), the Offset Payment shall be applied to the outstanding amount of the Loan in the following manner.

 

(a)                                 If all of Party B’s equity interests in the Company are transferred to Party A or its designated person(s) in accordance with the Option Agreement, then at the time such transfer is completed, the Loan shall be deemed to have been repaid in full by the Offset Payment.

 

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(b)                                 If the Loan is not repaid in full under Article 6(a) because less than all of Party B’s equity interests in the Company were transferred to Party A or its designated person(s), then the Offset Payment shall repay a portion of the principal outstanding on the Loan, with such portion equal to the outstanding Loan principal multiplied by the percentage of Party B’s total equity interests in the Company transferred in the Equity Option exercise.

 

(c)                                  If the Offset Payment exceeds the principal deemed fully repaid by Article 6(b), the amount of such excess shall be deemed, to the maximum extent permitted by applicable law, as a repayment to Party A of interest and capital utilization costs for the Loan.

 

7.                                      Both Parties hereby agree and confirm that Party B shall be deemed to have fully performed his obligations under this Agreement, and the Loan shall be deemed to have been fully repaid, if and only if one of the following occurs:

 

(a)                                 pursuant to Articles 5(a) and 6, after one or more exercises of the Equity Option, Party B has transferred all his equity interests in the Company to Party A and/or its designated person(s) and the total proceeds from such transfer(s) or the maximum amount (including principal, interest and capital utilization costs) allowed by applicable law have been applied to the Loan as one or more Offset Payments under Article 5(a); or

 

(b)                                 pursuant to Article 5(b), the Loan is fully repaid in the manner determined by Party A, following any conditions or procedures specified by Party A.

 

8.                                      To secure the performance of his obligations under this Agreement, Party B agrees to pledge all his equity interests in the Company to Party A (the “Equity Pledge”). Both Parties agree to execute an Equity Pledge Agreement (the “Equity Pledge Agreement”) in connection with this pledge.

 

9.                                      Party A hereby represents and warrants to Party B that, as of the execution date of this Agreement:

 

(a)                                 Party A is a wholly foreign-owned enterprise incorporated and validly existing under the laws of PRC;

 

(b)                                 Party A has the right to execute and perform this Agreement. The execution and performance of this Agreement by Party A comply with its business scope, articles of association and other organizational documents. Party A has obtained all necessary and appropriate approvals and authorizations for the execution and performance of this Agreement;

 

(c)                                  The principal of the Loan to Party B is legally owned by Party A;

 

(d)                                 The execution and performance of this Agreement by Party A do not violate any laws, regulations, approvals, authorizations, notices, other governmental documents to which Party A is subject, any agreement signed by it with any third party or any undertaking made by it to any third party; and

 

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(e)                                  When executed by the Parties hereto, this Agreement shall constitute the legal, valid and binding obligations of Party A.

 

10.                               Party B hereby represents and warrants to Party A that, from the execution date of this Agreement until this Agreement terminates:

 

(a)                                 The Company is a limited liability company incorporated and validly existing under the laws of PRC and Party B is a legal holder of the equity interest of the Company;

 

(b)                                 Party B has the right to execute and perform this Agreement. The execution and performance of this Agreement by Party B comply with its business scope, articles of association and other organizational documents. Party B has obtained all necessary and appropriate approvals and authorizations for the execution and performance of this Agreement;

 

(c)                                  The execution and the performance of this Agreement by Party B do not violate any laws, regulations, approvals, authorizations, notices, other governmental documents to which Party B is subject, any agreement signed by Party B with any third party or any undertaking made by Party B to any third party;

 

(d)                                 When executed by the Parties hereto, this Agreement shall constitute the legal, valid and binding obligations of Party B;

 

(e)                                  Party B has paid contribution in full for its equity interests in the Company in accordance with applicable laws and regulations;

 

(f)                                   Except pursuant to the Equity Pledge Agreement and Option Agreement, Party B has not pledged or created any other security interest on, made any offer to any third party to transfer, accepted the offer of any third party to purchase, or execute agreement with any third party to transfer, Party B’s equity interests in the Company;

 

(g)                                  There are no pending or threatened disputes, litigation, arbitration or other administrative proceedings or other legal proceedings in connection with the equity interests of the Company held by Party B; and

 

(h)                                 The Company has completed all necessary governmental approval, license, registration and filing.

 

11.                               Party B covenants that it shall, during the term of this Agreement:

 

(a)                                 Not sell, transfer, pledge or dispose in any other manner of his equity or other interests in the Company, or allow the creation of other security interests thereon, without Party A’s prior written consent, except for equity pledges or other rights created for the benefit of Party A;

 

(b)                                 Not vote at any shareholders’ meeting of the Company or execute any shareholders’ resolutions approving the sale, transfer, pledge, disposition in any other manner, or the creation of any other security interest on, any legal or beneficial interest in the equity of the Company without Party A’s prior  written consent, except to or for the benefit of Party A or its designated person(s);

 

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(c)                                  Not vote at any shareholders’ meeting of the Company or execute any shareholders’ resolutions approving the Company to merge or combine with, acquire or invest in any person without Party A’s prior written consent;

 

(d)                                 Promptly inform Party A of any pending or threatened litigation, arbitration or regulatory proceeding concerning the equity interests of the Company;

 

(e)                                  Execute all necessary or appropriate documents, take all necessary or appropriate actions, bring all necessary or appropriate lawsuits or assert all necessary and appropriate defenses against all claims in order to maintain his equity interests of the Company;

 

(f)                                   Not commit any act or omission that may materially affect the assets, business and liabilities of the Company without Party A’s prior written consent;

 

(g)                                  Appoint any person nominated by Party A to be the director of the Company;

 

(h)                                 Upon Party A’s exercise of the Equity Option, promptly take any actions (including signing and delivering documents) necessary or advisable to effect such exercise of the Equity Option;

 

(i)                                     Not request the Company to distribute dividends or profits;

 

(j)                                    Once he has transferred his equity interests in the Company to Party A or its designated person(s), promptly repay, subject to applicable laws, the proceeds received for such transfer in full, as the Loan principal and Loan interests or capital utilization costs allowed by laws, to Party A; and

 

(k)                                 Comply strictly with the terms of this Agreement, and perform the obligations pursuant to this Agreement and not commit any act or omission that would affect the validity and enforceability of this Agreement.

 

12.                               Party B, as the shareholder of the Company, covenants that he shall cause the Company, during the term of this Agreement:

 

(a)                                 Not to supplement, amend or modify its articles of association, or to increase or decrease its registered capital, or to change its capital structure in any way without Party A’s prior written consent;

 

(b)                                 To maintain and operate its business and deal with matters prudently and effectively, in accordance with good financial and business rules and practices;

 

(c)                                  Not to sell, transfer, mortgage, dispose of in any other manner, or to create other security interest on, any of its assets, business or legal or beneficial right to its revenues without Party A’s prior written consent;

 

(d)                                 Not to create, succeed to, guarantee or permit any liability, without the Party A’s prior written consent, except (i) the liability arising from the ordinary  course of business, but not arising through Party B; and (ii) the liability reported to and approved by Party A in writing;

 

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(e)                                  To operate all the business of the Company so as to maintain the value of its assets;

 

(f)                                   Not to execute any material contracts (for the purpose of this paragraph, a contract will be deemed material if the value of it exceeds RMB100,000), without Party A’s prior written consent, other than those executed during the ordinary course of business;

 

(g)                                  To provide information concerning all of its operation and financial affairs upon Party A’s request;

 

(h)                                 Not to merge or combine with, acquire or invest in, any other person without Party A’s prior written consent;

 

(i)                                     Not to issue dividends to shareholders in any form without Party A’s prior written consent. However, the Company shall promptly distribute all its distributable profits to each of its shareholders upon Party A’s request;

 

(j)                                    To inform promptly Party A of any pending or threatened suit, arbitration or regulatory proceeding concerning the assets, business or revenue of the Company;

 

(k)                                 To execute all necessary or appropriate documents, take all necessary or appropriate actions, bring all necessary or appropriate lawsuits or assert all necessary and appropriate defenses against all claims in order to maintain the ownership of all its assets;

 

(l)                                     To comply strictly with the terms of the Cooperation Agreement and other agreements between Party A and the Company, perform its obligations under aforesaid agreements, and not commit any act or omission that would affect the validity and enforceability of such agreements;

 

(m)                             To promptly take any actions (including signing and delivering documents) necessary or advisable to effect any exercise by Party A of the Equity Option.

 

13.                               This agreement shall inure to the benefit of and be binding upon the Parties hereto and their respective successors and assignees. Without prior written approval of Party A, Party B cannot assign, pledge or otherwise transfer any right, benefit or obligation under this agreement.  In the event of Party B’s death or incapacity, the terms of this Agreement shall be binding upon the executors, administrators, heirs and successors of Party B.

 

14.                               Party B agrees that Party A can assign its rights and duties under this Agreement to a third party when it thinks necessary, in which case Party A only needs to give a written notice to Party B and no further consent of Party B is required.

 

15.                              The execution, validity, interpretation, performance, amendment, termination and resolution of disputes in connection with this Agreement shall be governed by the laws of the PRC.

 

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16.                               Any dispute, conflict, or claim arising in connection with the interpretation and performance of the provisions of this Agreement (including any issue relating to the existence, validity, and termination of this Agreement) shall be resolved by the Parties in good faith through negotiations. In case no resolution can be reached by the Parties within thirty (30) days after a Party makes a request for dispute resolution through negotiations, any Party may refer such dispute to a competent court having legal jurisdiction over Hangzhou, PRC.  The Parties agree to submit to the jurisdiction of such court.

 

17.                               This Agreement shall be formed on the date of execution. Both Parties hereto agree that the terms and conditions of this Agreement shall be effective as of the date on which Party B has obtained the Loan and shall expire when both Parties have fully performed their obligations under this Agreement.

 

18.                               This Agreement may not be amended or modified except with a written agreement reached by both Parties. In case of anything not covered herein, both Parties may sign a written supplementary agreement. Any amendment, modification, supplement or annex to this Agreement shall form an integral part of this Agreement.

 

19.                               This Agreement and any agreement referenced herein constitute the entire agreement of the Parties hereto with respect to the subject matters hereof and supersedes all prior verbal discussions or written agreements between the Parties with respect to subject matters hereof.

 

20.                               This Agreement is severable. If any clause of this Agreement is held to be invalid or unenforceable, such invalidity or unenforceability shall have no effect on the validity or enforceability of the remainder of this Agreement.

 

21.                               Confidentiality.

 

Both Parties acknowledge and confirm that any oral or written materials exchanged pursuant to this Agreement are confidential. Each Party shall keep confidential all such materials and not disclose any such materials to any third party without the prior written consent from the other Party except in the following situations: (a) such materials are or will become known by the public (through no fault of the receiving Party); (b) any materials as required to be disclosed by the applicable laws or rules of any stock exchange or governmental entity; and (c) any materials disclosed by each Party to its legal or financial advisors relating to the transactions contemplated by this Agreement, and such legal or financial advisors shall comply with the confidentiality provisions set forth in this Article 21. Any disclosure of confidential information by the personnel of any Party or by the institutions engaged by such Party shall be deemed as a disclosure by such Party, and such Party shall be liable for the breach under this Agreement. Both Parties agree that this Article 21 shall survive the invalidity, cancellation, termination or unenforceability of this Agreement.

 

22.                               Any obligation arising from or becoming due under this Agreement before the expiration or early termination of this Agreement shall survive such expiration or early termination. Articles 15, 16 and 21 of this Agreement shall survive the termination of this Agreement.

 

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23.                               This Agreement shall be executed in two originals, with each Party holding one original. All originals shall have the same legal effect.

 

IN WITNESS WHEREOF, each Party has caused this Agreement to be executed by himself, its legal representative or its duly authorized representative as of the date first written above.

 

[No text below on this page]

 

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[Signature Page]

 

	
Party A: NetEase   (Hangzhou) Network Co., Ltd. (seal)
    
	
 
    
	
Legal   Representative/Authorized Representative:
    	
/s/ William Lei   Ding
    	
 
    
	
 
    
	
 
    
	
Party B: Hu Zhipeng
    
	
 
    
	
Signature:
    	
/s/ Hu Zhipeng
    	
 
    
					

 

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