Document:

Exhibit 10.10

 

THIS MORTGAGE IS AN OPEN-END MORTGAGE AND SECURES FUTURE ADVANCES

 

(All notices to be given to Mortgagee
pursuant to

42 Pa. C.S.A. ‘8143 shall be given as set
forth

in Paragraph 25 of this Mortgage.)

 

OPEN-END MORTGAGE AND SECURITY AGREEMENT

 

THIS OPEN-END MORTGAGE AND SECURITY AGREEMENT
(this “Mortgage”), made this 28th day of April, 2006, by and between
Spitz, Inc., a Delaware corporation, with an address of P.O. Box 198, Route 1,
Chadds Ford, Pennsylvania 19317 (the “Mortgagor”), and FIRST KEYSTONE BANK (“Mortgagee”),
a federally chartered stock savings bank organized and existing under the laws
of the United States of America, at Mortgagee’s office located at 22 West State
Street, Media, Pennsylvania, 19063.

 

WITNESSETH:

 

WHEREAS, this Mortgage is an “Open-End
Mortgage” as set forth in 42 Pa. C.S.A. ‘8143 and secures obligations of
Mortgagor to Mortgagee up to a maximum amount of principal indebtedness
outstanding at any time of up to Three Million Dollars ($3,000,000.00) together
with, but not limited to, advances for the payment of taxes and municipal
assessments, maintenance charges, insurance premiums, costs incurred for the
protection of the Mortgaged Property (hereinafter defined) or the lien of this
Mortgage, expenses incurred by Mortgagee by reason of default by Mortgagor
under this Mortgage the Note (hereinafter defined), and all other sums due
hereunder or secured hereby, plus accrued and unpaid interest due under the
Note; and

 

WHEREAS, Mortgagor, as part of the foregoing
obligations, has executed and delivered to Mortgagee its Line of Credit Note,
dated even date herewith (the “Note”), evidencing Mortgagor’s indebtedness to
Mortgagee in the principal amount of up to Three Million Dollars
($3,000,000.00) in accordance with a certain Commitment Letter from Mortgagee
to Mortgagor dated February 8, 2006, (the “Commitment Letter”), and a certain
Line of Credit Agreement (the “Loan Agreement”), dated even date herewith, by
and between Mortgagor, Evans & Sutherland Computer Corporation, a Utah
corporation, and Mortgagee, together with interest thereon payable at the rate
and times, in the manner, and according to the terms and conditions specified
in the Note which provides for interest rate adjustments based on a formula
therein set forth; and

 

WHEREAS, all of the terms, conditions and
provisions of the Note, the Commitment Letter and the Loan Agreement are by
reference incorporated herein as if fully set forth; and

 

WHEREAS, Mortgagor has duly executed and
delivered this Mortgage to secure all of Mortgagor’s obligations under the Note
and the Loan Agreement.

 

	
  JONES,
  STROHM & GUTHRIE

  	
   

  	
  10 Beatty Road

  
	
  A
  Professional Corporation

  	
   

  	
  Media, Pennsylvania 19063

  
	
  Attorneys
  At Law

  	
   

  	
  Telephone (610) 565-7100

  
	
   

  	
   

  	
  Fax (610) 565-7180

  

 

 

NOW, THEREFORE, in consideration of the
aforesaid indebtedness, and to secure the payment of all sums due or to become
due under the Note, under the Commitment Letter, under the Loan Agreement, and
under the terms of this Mortgage, and to secure the payment of all sums advanced
by Mortgagee to Mortgagor, as well as to secure the performance and observance
of all of the terms, conditions and provisions of the Note, the Commitment
Letter, the Loan Agreement, this Mortgage, the Assignment of Rents (hereinafter
defined), the Environmental Indemnity Agreement (hereinafter defined) and all
other agreements and instruments given by or on behalf of Mortgagor to
Mortgagee in connection with the Note, the Commitment Letter, the Loan
Agreement, or this Mortgage (collectively the “Loan Documents”), Mortgagor has
granted, bargained, conveyed, sold, aliened, enfeoffed, released, confirmed and
mortgaged, and by these presents does hereby grant, bargain, convey, sell,
alien, enfeoff, release, confirm and mortgage unto Mortgagee, its successors
and assigns all that certain parcel of real property known as Route 1, Chadds
Ford Township, Delaware County, Pennsylvania, 
being Folio No. 04-00-00034-02, and more specifically described on the
metes and bounds legal description, attached hereto, made a part of hereof, and
labeled Exhibit “A” (the “Real Estate”).

 

TOGETHER WITH all of Mortgagor’s right, title
and interest now owned or hereafter acquired in:

 

(i)            All
buildings, structures and improvements of every kind and description now or
hereafter erected or placed on the Real Estate.

 

(ii)           All
tenements, hereditaments, appurtenances and all the estates and rights of
Mortgagor in and to the Real Estate or any part thereof.

 

(iii)         All
streets, roads, passages, ways, waters, water courses, easements, and
privileges of whatsoever kind or character, belonging to, and adjoining, used
in connection with or in any way appertaining to the Real Estate.

 

(iv)          All
reversions, remainders, easements, rents, issues, income and profits arising or
issuing from the Real Estate and/or the buildings, structures and improvements
now or hereafter erected or placed thereon, or any portion thereof, 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 Real Estate
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 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.

 

(v)            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 Real Estate 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 collect any such awards, damages,
payments and compensation.

 

(vi)          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 anytime 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 Real Estate 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). Any item
referred to in this paragraph (vi) shall hereinafter, for purposes of creating
a security interest therein under the Pennsylvania Uniform Commercial Code,
sometimes be referred to as the “Personal Property”.

 

The Real Estate, and all of the right, title
and interest of Mortgagor therein and thereto, and all of the property rights,
title and interest referred to in paragraphs (i) through (vi) above shall
hereinafter sometimes be referred to collectively as the “Mortgaged Property”.

 

TO HAVE AND TO HOLD the Mortgaged Property
hereby granted and conveyed, or mentioned and intended so to be, unto
Mortgagee, its successors and assigns, to its and their own use and benefit
forever.

 

PROVIDED, HOWEVER, that if Mortgagor pays to
Mortgagee the principal interest to become due under the Note at the time and
in the manner stipulated therein, and pays all other sums payable by
Mortgagor  to Mortgagee as are secured
hereby, and if Mortgagor perform and comply with all the agreements,
conditions, covenants and provisions contained in the Note, the Loan Agreement,
this Mortgage and the other Loan Documents, and if Mortgagor pay all
satisfaction costs, including the recording costs for any Mortgage satisfaction
and termination statements, then this Mortgage and the estate, right, title and
interest of Mortgagee in and to the Mortgaged Property shall cease and become
void. Until such time, Mortgagor covenants, represents, promises, warrants and
agrees to and with Mortgagee as follows:

 

1.             Mortgagor’s Title. Mortgagor warrants,
covenants and represents as follows:

 

1.1          Mortgagor
has good and marketable and unencumbered fee simple title to the Mortgaged Property
subject only to the title exceptions not removed from Title

 

3

 

Insurance Commitment No. 03-1156 dated effective October 30, 2003,
issued by Strong Abstract, Inc. agent for First American Title Insurance
Company, at the time of closing the loan evidenced by the Note (other than the
prior liens in favor of Mortgagee); and

 

1.2          Mortgagor
will forever warrant and defend the title to the Mortgaged Property unto the
Mortgagee, its successors and assigns, against all persons and all claims of
every kind and nature whatsoever.

 

2.             Payment and Performance by Mortgagor.

 

2.1          Mortgagor
shall pay to Mortgagee all principal, interest and other sums now or hereafter
due and payable to Mortgagee under the terms of the Note, this Mortgage, and
all other Loan Documents, as and when the same shall become due and payable by
the terms thereof and hereof.

 

2.2          Mortgagor
shall perform and comply with all terms, condition, provisions, covenants and
agreements on the part of Mortgagor to be observed and performed under this
Mortgage, the Note, the Loan Agreement, and all other Loan Documents. All the
terms, conditions and provisions of the Loan Documents are by reference
incorporated herein as if fully set forth.

 

2.3          Mortgagor
shall timely perform all of its obligations and duties under any present or
future lease, easement, license, permit, approval, covenant or agreement
relating to, affecting, created for the benefit of or used in connection with
the operation of all or any portion of the Mortgaged Property.

 

2.4          This
mortgage secures obligations of Mortgagor to Mortgagee which obligations shall
include, but not be limited to, expenses and attorneys fees incurred by
Mortgagee by reason of default by Mortgagor hereunder, under the Note or under
any of the other Loan Documents, the payment of taxes, municipal assessments
and insurance premiums whether advanced prior to or after the entry of judgment
in any action to enforce this security instrument, together with all other sums
due hereunder or secured hereby, plus accrued and unpaid interest.

 

3.             Maintenance and Repair. Mortgagor shall keep
and maintain the Mortgaged Property and the sidewalks, curbs and drives
abutting and adjacent thereto, if any, in good and tenantable order, condition
and repair, and will make as and when necessary all repairs, renewals and
replacements, structural and not structural, exterior and interior, ordinary
and extraordinary, foreseen and unforseen. All such repairs, renewals and
replacements made by Mortgagor shall be at least equal in quality to the
original portion of the Mortgaged Property being repaired, renewed or replaced.
Mortgagor shall abstain from and shall not permit the commission of waste in or
about the Mortgaged Property.

 

4

 

4.             Removal, Demolition and Alteration. Mortgagor
shall not undertake or permit the removal or demolition of any building at any
time erected on or forming a part of the Mortgaged Property, nor shall
Mortgagor, without Mortgagee’s prior written consent, undertake or permit any
material alteration in the design or structural character of any such building.

 

5.             Inspection by Mortgagee. Mortgagor will permit
Mortgagee and Mortgagee’s agents and representatives to enter the Mortgaged
Property and all parts thereof for the purposes of making site and building
investigations, performing soil, groundwater, structural and other tests, and
generally to inspect. and photograph the condition and state of repair of the
Mortgaged Property at any reasonable time upon one (1) business day prior
notice.

 

6.             Insurance. Mortgagor shall from and after the
date hereof and at all times while the indebtedness secured hereby is
outstanding maintain at Mortgagor’s sole expense, insurance in amounts, with
deductibles satisfactory to Mortgagee as more fully set forth in the Loan
Agreement, including, without limitation, all risk, fire, hazard and extended
coverage insurance with vandalism and malicious mischief endorsements on all
buildings, structures and improvements now existing or hereafter erected on or
forming a part of the Mortgaged Property, and all of the Personal Property, to
the extent of one hundred percent (100%) of the replacement value thereof
pursuant to full replacement value endorsements naming Mortgagee as mortgagee
and additional insured pursuant to a standard mortgagee loss payable clause,
without co-insurance. Mortgagor shall also insure against such other hazards as
Mortgagee may require from time to time and shall maintain rent insurance
against loss of income arising out of damage or destruction by fire or the
perils of extended coverage insurance, in an amount equal to one (1) year’s
gross rental income to the owner of the Mortgaged Premises, or business
interruption insurance in an amount as required by Mortgagee from time to time,
but not to exceed Mortgagee’s reasonable estimate of the annual cost of debt
service on the Note, taxes, insurance and maintenance for the Mortgaged
Premises. All such insurance shall be in such amounts as is necessary to comply
with co-insurance requirements and otherwise as Mortgagee shall require, and
shall be written by stock or nonassessable mutual carriers acceptable to
Mortgagee. Mortgagor shall deliver to Mortgagee upon demand, and in the absence
of demand not less than twenty (20) days prior to the expiration date of each
such insurance policy, proof of the renewal and continuance of all required
insurance coverages, with premiums prepaid. As additional security for the
payment of the indebtedness secured by this Mortgage, shall name Mortgagee as
an additional insured or be endorsed with a standard mortgagee clause, shall
not be subject to contribution, shall be for a term of at least one (1) year,
and shall provide for cancellation or modification only upon at least thirty
(30) days prior written notice to Mortgagee.

 

6.1          If
any of the insurance referred to herein, or any part thereof, shall expire, or
be canceled, or become void or voidable by reason of the breach of any
condition thereof, or if Mortgagee determines that such coverage is
unsatisfactory due to the failure or impairment of the capital of any company
in which the insurance may then be carried such that its AM Best Rating is not
satisfactory to Mortgagee, or if for any reason whatever the

 

5

 

insurance shall be or become unsatisfactory to Mortgagee, Mortgagor
shall place new insurance on the Mortgaged Property, satisfactory to Mortgagee.

 

6.2          If
Mortgagee acquires title to the Mortgaged Property either by virtue of a
judicial sale thereof pursuant to proceedings under the Note or upon this
Mortgage or by virtue of a deed in lieu of foreclosure, or otherwise, then, and
in any such event, all of Mortgagor’s right, title and interest in and to all
insurance policies referred to herein, including unearned premiums thereon and
the proceeds thereof, shall vest in Mortgagee.

 

7.             Taxes, Assessments and Other Charges. If
requested by Mortgagee, in addition to the monthly installment of interest
and/or principal due to Mortgagee, Mortgagor shall pay to Mortgagee, on the
payment date of  installments due under
the Note, until the Note is fully paid, a sum (the “Escrow Payment”) equal to
one-twelfth (1/12) of the annual real estate taxes, other municipal assessments
and the estimated annual premiums for all insurance required hereunder (the “Escrow
Charges”), with an initial deposit to cover the months which will have elapsed
between the last date such taxes, charges and premiums were due and payable and
the first date on which an installment shall be due hereunder. The Escrow
Payments may be commingled with other funds of Mortgagee and no interest
thereon shall be due of payable to Mortgagor. Mortgagee shall apply the Escrow
Payments to the payment of the Escrow Charges in such order or priority as
Mortgagee shall determine. If, at any time, the Escrow Payments theretofore
paid to Mortgagee shall be insufficient for the payment of the Escrow Charges,
Mortgagor, within ten (10) days after demand, shall pay the amount of the
deficiency to Mortgagee.

 

Mortgagor shall pay, prior to the accrual of
any interest or penalties, without any deduction, defalcation or abatement, and
shall furnish to Mortgagee proper receipts for, within five (5) days after their
respective due dates, all ground rents, taxes, assessments, water and sewer
rents, licenses or permit fees, and all other charges or claims which may be
assessed, levied charged, imposed or filed at any time against Mortgagor, the
Mortgaged Property or any part thereof, or against the interest of Mortgagee
therein, by any governmental instrumentality or agency or other lawful
authority or by any deed restriction, private agreement or declaration,
recorded or otherwise, or which by any present or future law may have priority
over the indebtedness secured hereby either in lien or in distribution out of
the proceeds of any judicial sale. Mortgagor will pay, when due, all charges
for utilities, whether public or private, used or consumed upon, in or in
connection with the Mortgaged Property.

 

8.             Sale or Transfer of the Mortgaged Property. Mortgagor
shall not, without the prior written consent of Mortgagee: (i) sell, transfer,
convey or assign the Mortgaged Property, or any part thereof, or any interest
therein, including but not limited to, an equitable interest in the Mortgaged
Property, or any part thereof, to any party; or (ii) permit the sale, transfer,
conveyance or assignment of the Mortgaged Property or any part thereof or any
interest therein, either voluntarily or by operation of law.

 

9.             Internal Revenue Stamps. If at any time the
United States Government or any department or bureau thereof shall require
Internal Revenue stamps on the Note or other

 

6

 

indebtedness secured hereby, Mortgagor shall, upon demand made by
Mortgage, pay for such stamps together with any interest and penalties payable
with respect thereto.

 

10.          Taxation of Note and Mortgage. If any law is
hereafter enacted: (i) deducting from the value of real estate, for purposes of
taxation, any lien or encumbrance thereon; (ii) revising or changing in any way
the laws and ordinances now in force for the taxation of mortgages or the debts
secured thereby, or the manner of collections of such taxes; (iii) imposing a
tax directly or indirectly on Mortgagee with respect to the Mortgaged Property,
the value of Mortgagor’s equity therein, the indebtedness evidenced by the Note
and/or secured by this Mortgage; (iv) requiring Mortgagee to pay, in whole or
in part, any tax, assessment, charge or lien required to be paid by Mortgagor
pursuant to the terms of this Mortgage; then, and in any such event, the entire
unpaid balance of the indebtedness secured by this Mortgage shall, at the
option of Mortgagee, without notice to Mortgagor, become immediately due and
payable, unless, to the extent permitted by such law or ordinance, Mortgagor is
authorized to, and does, pay or reimburse Mortgagee for the full amount of any
such tax, assessment, charge or lien.

 

11.          Protection of Mortgage Lien. Mortgagor will
promptly perform and observe, or cause to be performed and observed, all of the
terms, covenants and condition of all instruments of record affecting the
Mortgaged Property, or imposing any duty or obligation upon Mortgagor or any
occupant or tenant of the Mortgaged Property or any part thereof. Mortgagor
shall do or cause to be done all things necessary to preserve intact and
unimpaired any and all easements, appurtenances and other interests and rights
in favor of or constituting any portion of the Mortgaged Property.

 

12.          Costs, Expenses and Counsel Fees. Mortgagor
shall pay all reasonable third party expenses incurred by Mortgagee incident to
the preparation, execution, delivery and/or recording of the Note, this
Mortgage and all of the other Loan Documents. Mortgagor shall, upon demand made
by Mortgagee, promptly pay to Mortgagee all expenses and costs, including
reasonable attorneys’ fees, incurred by Mortgagee to collect any of the
indebtedness secured hereby or to enforce the performance of the terms,
conditions, provisions, agreements and covenants contained herein, in the Note,
the Loan Agreement, or in any other Loan Document, whether or not suit is
instituted, or incurred by Mortgagee in connection with any action, proceeding,
litigation or claim instituted or asserted by or against Mortgagee or in which
the Mortgagee becomes engaged, wherein it becomes necessary, in the opinion of
Mortgagee, to enforce, defend or uphold the lien of this Mortgage or the validity
or effectiveness of any assignment of any claim, award, payment, insurance
recovery or any other right or property conveyed, encumbered or assigned by
Mortgagor to Mortgagee hereunder, or the priority of any of the same or
otherwise. All such expenses, costs and attorneys’ fees, together with interest
thereon at the rate set forth in the Note in the event of a default thereunder,
shall be deemed to be part of the principal indebtedness evidenced by the Note
on a pro rata basis and secured by this Mortgage.

 

7

 

13.          Security Interest in the Personal Property. Mortgagor
and Mortgagee hereby acknowledge that this Mortgage constitutes a security
agreement under the Pennsylvania Uniform Commercial Code, and Mortgagor hereby
grants to Mortgagee a security interest in every item of the Personal Property
and the proceeds thereof and profits therefrom, replacements and substitutions
therefor and additions and accessions thereto. Mortgagor shall, upon demand
made by Mortgagee, execute, deliver and file any financing statements,
continuation statements and other instruments as Mortgagee may from time to
time require in order to perfect, confirm and maintain such perfected security
interest under the Pennsylvania Uniform Commercial Code. Mortgagor hereby
irrevocably appoints Mortgagee, its designees and nominees, as Mortgagor’s
agents and attorneys-in-fact to execute, deliver and file, on Mortgagor’s
behalf and in its name, any such financing statements, continuation statements,
and other instruments as Mortgagee, in its sole discretion, deems necessary.

 

13.1        Mortgagor
hereby warrants and represents to Mortgagee that Mortgagor is and will be the
owner of every item of the Personal Property, free from any leases, conditional
sales, chattel mortgages, security interests, liens or encumbrances other than
the security interest hereby created. Mortgagor further hereby represents and
warrants to Mortgagee that, unless Mortgagee gives its prior written consent to
the contrary, every item of the Personal Property has been, and shall be
created thereon except the security interest hereby created.

 

14.          Rents, Profits and Leases. Mortgagor hereby
assigns and transfers unto Mortgagee, its successors and assigns: (i) all
rights, title, interest and privileges which Mortgagor has or may have as
lessor in any lease now existing or hereafter made and affecting the Mortgaged
Property or any part thereof, together with any extensions or renewals of such
leases (collectively, the “Leases” and individually, a “Lease”); and (ii) all
rents, income, and profits due or to become due under the Leases, or any of
them, or arising or accruing from or relating to the Mortgaged Property, or any
portion thereof, or the use thereof, and Mortgagor hereby confers upon
Mortgagee, immediately upon Mortgagor’s default in any respect under this
Mortgage, the Note or any other Loan Document, the right to enter upon and take
possession of the Mortgaged Property, or any portion thereof, and the right,
with or without taking possession of the Mortgaged Property, to collect and
receive all rents, income and profits accruing from the Leases and from the
Mortgaged Property.

 

14.1        Mortgagor
hereby warrants, certifies, covenants and represents to Mortgagee as follows:

 

14.1.1     That
Mortgagor has or will have title to and full right to assign the Leases and the
rents, income and profits due and to become due arising from and due pursuant
to the Leases and from the Mortgaged Property.

 

14.1.2     That
Mortgagor will not, without the prior written consent of Mortgagee in each
instance, enter into any Lease for all or any portion of the Mortgaged Property
for a term of more than three (3) years or alter or modify any Lease, consent
to any

 

8

 

subletting of any Lease, or subordinate any Lease to any mortgage or
other encumbrance other than this Mortgage. Each and every Lease shall be for
fair market rental and on other than commercially reasonable terms between
unrelated parties at arms length dealing. All such leases shall be subject and
subordinate in lien and payment to the Mortgage and any extension, renewal,
modification or replacement thereof

 

14.1.3     That
Mortgagor has not executed, and will not execute, any prior or other assignment
of any of its rights under any of the Leases or its rights to the rent, income
and profits therefrom or from the Mortgaged Property.

 

14.1.4     That
as of the date of this Mortgage, there are no Leases respecting all of any
portion of the Mortgaged Property.

 

14.2        Mortgagor
has executed, acknowledged and delivered to Mortgagee a specific separate
Assignment of Rents, Profits and Leases with respect to the Mortgaged Property
dated even date herewith (the “Assignment of Rents”). In the event of any
conflict between the terms of this Mortgage, including without limitation this
paragraph 14, and the terms of any separate Assignment of Rents, the terms of
the Assignment of Rents shall control.

 

15.          Destruction of the Mortgaged Property. In the
event of any loss, damage or destruction to or of the Mortgaged Property, or
any part thereof, Mortgagor shall give written notice thereof to Mortgagee, and
Mortgagee may make proof of loss thereof if proof of loss is not made promptly
by Mortgagor; provided, however, that any adjustment of a proof of loss shall
require the prior written consent of Mortgagee which shall not be unreasonably
withheld, conditioned or delayed. Each insurance company concerned is hereby
authorized and directed to make payment under its insurance policies directly
to Mortgagee. Mortgagee may, with the consent of Mortgagor, on behalf of
Mortgagor, adjust and compromise any claims under any insurance policies. Mortgagor
hereby irrevocably constitutes and appoints Mortgagee, its designees and
nominees after an Event of Default, as Mortgagor’s agents and attorneys-in-fact
to adjust and compromise claims and to collect and receive proceeds and to
endorse drafts therefor. Any proceeds paid to or collected by Mortgagee in
connection with collecting such proceeds, shall be applied, in such order and
amounts as Mortgagee, in Mortgagee’s sole discretion, may elect, in reduction
of the outstanding principal balance of the Note, accrued and unpaid interest,
or any other sum due under and/or secured by the Note or this Mortgage, whether
or not then due. Mortgagee shall deliver written notice to Mortgagor of the
amount so applied and of the then outstanding balance of the indebtedness
secured by this Mortgage if the insurance proceeds are insufficient to pay the
entire amount hereof. In the event a balance remains outstanding on the Note
and Mortgagee receives proceeds of rent insurance or business interruption
insurance beyond those required to be applied for the current monthly
installment due under the Note, Mortgagee may retain such additional proceeds
in escrow, for the account of Mortgagor, and so apply such proceeds on a
monthly basis, provided that any such proceeds not needed to be applied to keep
the Mortgagor current and not in default hereunder during  the reasonably estimated period of time when
the rents from the Mortgaged Premises will be inadequate to provide Mortgagor
with sufficient funds with which to pay

 

9

 

Mortgagee the amounts falling due each month shall be paid over to
Mortgagor to met the other expenses of the Mortgaged Premises.

 

15.1        Repair and Restoration. Notwithstanding the
provision of paragraph 15,  and provided
that (i) no event of default has occurred hereunder or under the Note or other
Loan Documents, (ii) Mortgagee is satisfied that the there are sufficient
proceeds  to complete the restoration of
the improvements constructed on the Mortgaged Premises to the same value and
character as existed prior to such damage, and (iii) the insurers do not deny
liability as to the insureds, Mortgagee shall apply the insurance proceeds for
the repair and restoration of the Mortgaged Property in accordance in
accordance with the following conditions:

 

15.1.1     Prior
to commencement of repair and restoration, the contracts, contractors, and
plans and specifications thereof shall be approved by Mortgagee which approval
shall not be unreasonably withheld, conditioned or delayed, and Mortgagee shall
be provided with mechanics’ lien waivers.

 

15.1.2     At
the time of any disbursement of the proceeds, Mortgagor shall not be in default
under the Note, or this Mortgage, no mechanics’ or materialmen’s liens shall
have been filed and remain undischarged and/or not bonded against and a
satisfactory bring down of title insurance shall be delivered to Mortgagee.

 

15.1.3     Disbursement
shall be made from time to time in an amount not exceeding the cost of the work
completed since the last disbursement, upon receipt of satisfactory evidence of
the stage of completion and or performance of the work in a good and
workmanlike manner in accordance with the contracts and the plans and
specifications.

 

15.1.4     Mortgagee
shall retain ten percent (10%) of the proceeds until the repair and restoration
is fully completed.

 

15.1.5     The
proceeds shall not bear interest and may be commingled with Mortgagee’s other
funds.

 

15.1.6     Mortgagee
may impose such other conditions as are customarily imposed by construction
lenders.

 

15.1.7     Prior
to commencement of and at any time during repair and restoration, if the
estimated cost thereof as determined by Mortgagee exceeds the amount of the
proceeds, Mortgagor shall, immediately upon demand by Mortgagee, pay the amount
of such excess to Mortgagee to be added to the proceeds held by Mortgagee. Any
sum so added by Mortgagor which remains upon completion of repair and
restoration shall be refunded to Mortgagor. If any sum remains after the
completion and any refund to Mortgagor aforesaid, such sum remaining shall, at
Mortgagee’s option, be applied on account of the outstanding balance of the
Note.

 

10

 

16.          Environmental Matters. Mortgagee shall, if it
has reason to believe a problem exists, have the right to conduct or have
conducted by its agents or contractors such environmental inspections, audits
and testing as Mortgagee shall deem necessary or advisable at any reasonable
time upon at least one (1) business day prior notice, at the sole cost and
expense of Mortgagor. Mortgagor and each lessee of any property encumbered by
the lien of the Loan Documents, shall cooperate or, in the case of any such
lessee shall be caused to cooperate, with such inspection efforts; such
cooperation shall include, without limitation, supplying such information
concerning the operations conducted and hazardous substances or hazardous waste
located on any of such properties. In the event that Mortgagor shall fail to
comply with any applicable state or federal environmental law, then Mortgagee
may, in addition to any of its other remedies hereunder and the other Loan
Documents, cause each such property to be brought into compliance and all
expenses incurred by Mortgagee added to the sum secured by the Loan Documents
and evidenced by the Note, and shall bear interest from the date of demand at
the interest rate then in effect thereunder, plus five (5%) percent. Further,
in the event Mortgagee, in order to protect the priority of this Mortgage, or
to preserve the value of the Mortgaged Property, or in any situation in which
Mortgagee is required, by court order or otherwise, to pay any costs, fees,
expenses, settlements, damages, fines (civil or criminal) or penalties,
including but not limited to, clean-up costs, attorney’s fees and court costs,
because of a past, present or future violation of the Environmental Laws (as
defined in that certain Environmental Indemnity Agreement made by Mortgagor and
Guarantor and delivered to Mortgagee even date herewith) on, in, under from or
about the Mortgaged Property, all such sums shall be added to the amount
secured hereby, shall be secured hereby (if this Mortgage is at that time in
existence), shall be payable on demand by Mortgagor and  shall bear interest from the date of demand
at the interest rate then in effect thereunder, plus five (5%) percent. The
terms of this paragraph  shall survive
the payment in full of all other sums secured hereby and the satisfaction of
record of this Mortgage. Mortgagor  has
executed and delivered to Mortgagee that certain Environmental Indemnity
Agreement dated even date herewith (the “Environmental Indemnity Agreement”)
setting forth certain representations, warranties, covenants and obligations of
Mortgagor respecting environmental matters at the Mortgaged Property. In the
event of any conflict between this Mortgage and the Environmental Indemnity
Agreement. the terms of the Environmental Indemnity Agreement shall control. The
terms of the Environmental Indemnity Agreement are incorporated herein by
reference.

 

17.          Eminent Domain. In the event that the
Mortgaged Property, or any part thereof, shall be taken in condemnation
proceedings or by the exercise of any right of eminent domain or bona fide sale
in lieu thereof (hereinafter collectively referred to as “condemnation
proceedings”), Mortgagor and Mortgagee shall have the right to participate in
any such condemnation proceedings and the award that may be made in any such
condemnation proceedings or the proceeds thereof or the agreed upon
compensation for damages sustained shall be applied by Mortgagee, in such order
and amounts as Mortgagee, in its sole discretion, may elect, in reduction of
the outstanding principal balance of the Note, all accrued and unpaid interest,
or any other sum due under and/or secured by the Note or this Mortgage, whether
or not then due. In the event  the whole
of the Mortgaged Property is taken and the

 

11

 

amount of the awards, proceeds or compensation received by Mortgagee is
insufficient to pay the then unpaid principal balance of the Note, together
with all accrued and unpaid interest thereon, and all other sums then due to
Mortgagee from Mortgagor, Mortgagor shall, within ten (10) days after the
application of the award, proceeds or compensation as aforesaid, pay such
deficiency to Mortgagee. In the event less than the whole of the Mortgaged
Property is taken, and the amount of the awards, proceeds or compensation
received by Mortgagee is insufficient to reduce the outstanding balance of the
Note to an amount equal to or less than eighty-five (85%) percent of the
appraised value of the Mortgaged Property after the taking determined by an
appraisal of the Mortgaged Property by a qualified appraiser approved by
Mortgagee, then Mortgagor shall, within ten (10) days after the application of
the award, proceeds or compensation as aforesaid, pay to Mortgagee the amount
necessary to reduce the outstanding balance of the Note to an amount equal to
eighty-five (85%) percent of the appraised value of the Mortgaged Property
after the taking. The cost of such appraisal shall be the responsibility of
Mortgagor.

 

17.1        Repair and Restoration. Notwithstanding the
provisions of paragraph 17, in the event of a partial taking, and provided that
(i) no event of default has occurred hereunder or under the Note or other Loan
Documents, and (ii) Mortgagee is satisfied that the there are sufficient
proceeds  to complete the restoration of
the improvements constructed on the Mortgaged Premises to the same value and
character as existed prior to such taking, Mortgagee shall apply the
condemnation proceeds for the repair and restoration of the Mortgaged Property
in accordance with the following conditions:

 

17.1.1     Prior
to commencement of repair and restoration, the contracts, contractors, and
plans and specifications thereof shall be approved by Mortgagee, which approval
shall not be unreasonably withheld, conditioned or delayed, and Mortgagee shall
be provided with mechanics’ lien waiver.

 

17.1.2     At
the time of any disbursement of the proceeds, Mortgagor shall not be in default
under the Note, or the Mortgage, no mechanics’ or materialmen’s liens shall
have been filed and remain undischarged and or properly bonded against and a
satisfactory bring down of title insurance shall be delivered to Mortgagee.

 

17.1.3     Disbursement
shall be made from time to time in an amount not exceeding the cost of the work
completed since the last disbursement, upon receipt of satisfactory evidence of
the stage of completion and of performance of the work in a good and
workmanlike manner in accordance with the contracts and the plans and
specifications.

 

17.1.4     Mortgagee
shall retain ten percent (10%) of the proceeds until the repair and restoration
is fully completed.

 

17.1.5     The
proceeds shall not bear interest and may be commingled with Mortgagee’s other
funds.

 

12

 

17.1.6     Mortgagee
may impose such other conditions as are customarily imposed by construction
lenders.

 

17.1.7     Prior
to commencement of and at any time during repair and restoration, if the
estimated cost thereof as determined by Mortgagee exceeds the amount of the
proceeds, Mortgagor shall, immediately upon demand by Mortgagee, pay the amount
of such excess to Mortgagee to be added to the proceeds held by Mortgagee. Any
sum so added by Mortgagor which remains upon completion of repair and
restoration shall be refunded to Mortgagor. If any sum remains after the
completion and any refund to Mortgagor aforesaid, such sum remaining shall, at
Mortgagee’s option, be applied on account of the outstanding balance of the
Note.

 

18.          Events of Default. The occurrence of any one
or more of the following shall constitute an “Event of Default” hereunder:

 

18.1        The
failure to cure an event of default under the Note, the Loan Agreement, the
Assignment of Rents, the Environmental Indemnity Agreement or any other Loan
Document prior to the expiration of any applicable cure period.

 

18.2        The
failure of Mortgagor to perform or comply with any other of the terms,
conditions, provisions, agreements, covenants and conditions contained herein, which
failure to perform was not the result of the affirmative action of Debtor and
is susceptible to cure, remains uncured for a period of thirty (30) days from
Mortgagee’s notice to Mortgagor.

 

18.3        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 Mortgaged Property
which is not discharged within thirty (30) days unless it is being contested by
Mortgagor in good faith and due diligence in appropriate proceedings with the
approval of Mortgagee, a bond or escrow having been posted with Mortgagee for
the full amount of such contested lien.

 

18.4        The
existence of any security interest, pledge, consensual lien, or other
consensual encumbrance in favor of any party other than Mortgagee in the
Mortgaged Property.

 

18.5        If
Mortgagor shall at any time deliver or cause to be delivered to Mortgagee a
notice pursuant to 42 Pa. C.S.A. Sec. 8143(c) electing to limit the
indebtedness secured by this Mortgage, without the prior consent of Mortgagee.

 

In the event of any conflict between the
terms of this Mortgage, including without limitation this paragraph 18, and the
terms of the Note, the terms of the Note shall control.

 

19.          Remedies. Upon the happening of any Event of
Default, the entire unpaid balance of principal, and all accrued and unpaid
interest under the Note and all other sums

 

13

 

due under or secured by this Mortgage shall, at the option of
Mortgagee, become immediately due and payable, without notice or demand. Mortgagee
may forthwith, and without delay:

 

19.1        Institute
an action of mortgage foreclosure against the Mortgaged Property, or any
portion thereof, or take such other action at law or in equity for the
enforcement of this Mortgage and realization on the mortgage security or any
other security herein or elsewhere provided for, and proceed therein to final
judgment and execution thereon for the entire accelerated indebtedness as aforesaid,
together with all costs of suit and attorney’s fees, together with interest at
the default rate set forth in the Note on any judgment obtained by mortgagee
from and after the date of any Sheriff’s Sale of the Mortgaged Property until
actual payment is made by the Sheriff of the full amount due to Mortgagee. The
obligations of the Mortgagor, and the rights and remedies of the Mortgagee
hereunder, shall survive the entry of judgment hereunder or under the
obligation this Mortgage secures; it being the intention of parties hereto that
such rights, remedies and obligations shall not merge into or be extinguished
by any such judgment but shall continue until all sums secured hereby have been
paid in full.

 

19.1.1     The
Mortgaged Property, or any portion thereof, may be sold pursuant to any Writ of
Execution issued on a judgment obtained by virtue of the Note or this Mortgage
or pursuant to any other judicial proceedings, whether or not under this
Mortgage, in one parcel as an entirety, or in such parcels, manner and order as
Mortgagee, in its sole discretion, may elect.

 

19.2        Enter
and take possession of the Mortgaged Property and manage and operate the same,
let or re-let the Mortgaged Property or any part thereof, cancel, modify, and
grant indulgences with respect to the Leases, evict tenants, bring or defend
any suits in Mortgagee’s name or in Mortgagor’s name in connection with
possession of the Mortgaged Property, make repairs, alterations and
improvements as Mortgagee deems appropriate, and perform such other acts in
connection with the management and operation of the Mortgaged Property as
Mortgagee, in its sole discretion, deems appropriate, and demand, sue for,
collect and receive all or any rents, income and profits accruing from the
Mortgaged Property and from the Leases shall be applied by Mortgagee, in such
order and amounts as Mortgagee shall elect, to the costs of operation and
maintenance of the Mortgaged Property, the expenses (including attorney’s fees)
incident to taking and retaining possession of the Mortgaged Property and
collecting the rents, issues and profits therefrom and from any Lease, any
other expenses as Mortgagee shall determine and monies necessary to satisfy all
indebtedness due under and/or secured by the Note and this Mortgage.

 

19.2.1     THE
FOLLOWING SECTION SETS FORTH WARRANTS OF ATTORNEY FOR ANY ATTORNEY TO CONFESS
JUDGMENTS AGAINST MORTGAGOR. IN GRANTING THESE WARRANTS OF ATTORNEY TO CONFESS
JUDGMENTS AGAINST MORTGAGOR, MORTGAGOR HEREBY KNOWINGLY, INTENTIONALLY,
VOLUNTARILY, AND UNCONDITIONALLY WAIVES ANY AND ALL RIGHTS MORTGAGOR MAY HAVE
TO PRIOR NOTICE AND AN OPPORTUNITY

 

14

 

FOR HEARING UNDER THE RESPECTIVE CONSTITUTIONS AND LAWS OF THE
COMMONWEALTH OF PENNSYLVANIA AND THE UNITED STATES OF AMERICA.

 

FOR THE PURPOSE OF OBTAINING POSSESSION OF
THE MORTGAGED PROPERTY UPON THE OCCURRENCE OF AN EVENT OF DEFAULT, MORTGAGOR
HEREBY AUTHORIZES AND EMPOWERS ANY ATTORNEY OF ANY COURT OF RECORD OF THE
COMMONWEALTH OF PENNSYLVANIA OR ELSEWHERE, AS ATTORNEY FOR MORTGAGOR AND ALL
PERSONS CLAIMING UNDER OR THROUGH MORTGAGOR, TO, BY COMPLAINT OR OTHERWISE,
APPEAR FOR AND ENTER AND CONFESS JUDGMENT IN FAVOR OF MORTGAGEE AND AGAINST
MORTGAGOR, AND AGAINST ALL PERSONS CLAIMING UNDER OR THROUGH MORTGAGOR, FOR
RECOVERY BY MORTGAGEE OF POSSESSION OF THE MORTGAGED PROPERTY, FOR WHICH THIS
MORTGAGE, OR A COPY HEREOF VERIFIED BY AFFIDAVIT, SHALL BE A SUFFICIENT
WARRANT; WHEREUPON, IF MORTGAGEE SO DESIRES, A WRIT OF POSSESSION MAY
IMMEDIATELY ISSUE FOR POSSESSION OF THE MORTGAGED PROPERTY, WITHOUT ANY WRIT OR
PROCEEDING WHATSOEVER AND WITHOUT ANY STAY OF EXECUTION. IF FOR ANY REASON
AFTER SUCH ACTION HAS BEEN COMMENCED IT SHALL BE DISCONTINUED, OR POSSESSION OF
THE MORTGAGED PROPERTY SHALL REMAIN IN OR BE RESTORED TO MORTGAGOR, MORTGAGEE
SHALL HAVE THE RIGHT IN CONNECTION WITH THE SAME DEFAULT OR ANY SUBSEQUENT
DEFAULT TO BRING ONE OR MORE FURTHER ACTIONS OR ENTER AND CONFESS JUDGMENT ONE
OR MORE TIMES AS HEREIN PROVIDED TO RECOVER POSSESSION OF THE MORTGAGED
PROPERTY. MORTGAGEE MAY BRING AN ACTION IN EJECTMENT AND CONFESS JUDGMENT
THEREIN BEFORE OR AFTER THE INSTITUTION OF PROCEEDINGS TO FORECLOSE THIS
MORTGAGE OR TO ENFORCE THE NOTE, OR AFTER ENTRY OF JUDGMENT IN ANY PROCEEDINGS
TO FORECLOSE THIS MORTGAGE OR ON THE NOTE, OR AFTER A SHERIFF’S SALE OF THE
MORTGAGED PROPERTY IN WHICH MORTGAGEE IS THE SUCCESSFUL BIDDER.

 

MORTGAGOR ACKNOWLEDGES THAT MORTGAGOR  HAS HAD THE ASSISTANCE OF LEGAL COUNSEL IN
THE REVIEW AND EXECUTION OF THIS MORTGAGE AND FURTHER ACKNOWLEDGES THAT THE
MEANING AND EFFECT OF THE FOREGOING PROVISIONS CONCERNING CONFESSION OF
JUDGMENT HAVE BEEN FULLY EXPLAINED TO MORTGAGOR BY SUCH COUNSEL, AND AS
EVIDENCE OF SUCH FACT THE MORTGAGOR SIGN(S) HIS/HER/THEIR/ITS INITIALS BELOW.

 

	
   

  	
   

  	
  /s/ JAS

  	
   

  	
   

  	
  /s/PLD

  	
   

  
	
   

  	
  (Initials of Mortgagor)

  	
  (Initials of Mortgagor)

  

 

19.3        Have
a receiver appointed to enter into possession of the Mortgaged Property and to
collect the rents, issues, profits and income therefrom and to apply such
rents,

 

15

 

issues, profits and income as provided for in subparagraph 19.2.1
hereof or as the court may otherwise direct. Mortgagee shall be entitled to the
appointment of a receiver without the necessity of proving either the
inadequacy of the security for the indebtedness secured hereby or the
insolvency of Mortgagor or any other person who may be legally or equitably
liable to pay money secured hereby and the Mortgagor and each such other person
shall be deemed to have waived such proof and to have consented to the
appointment of such receiver. Should the Mortgagee or any receiver collect
rents, issues, profits or income from the Mortgaged Property, monies so
collected shall not be substituted for the payment of the indebtedness secured
hereby, nor can they be used to cure the default, without the prior written
consent of Mortgagee. Any receiver shall be liable to account only for the
rents, issues, profits and income actually received by such receiver.

 

19.4        Exercise
all of the remedies of a secured party under the Pennsylvania Uniform
Commercial Code, including, but not limited to, the right and power to sell, or
otherwise dispose of, the Personal Property or any part thereof, and for that
purpose Mortgagee shall take immediate and exclusive possession of the Personal
Property or any part thereof as Mortgagee elects and, with or without judicial
process, enter upon any portion of the Mortgaged Property on which the Personal
Property, or any part thereof, may be situated and remove the same without
being guilty of trespass and without liability for damages thereby occasioned.

 

19.5        Exercise
any other right or remedy otherwise available to Mortgagee and resort to any
other security held by Mortgagee for the payment of the indebtedness secured
hereby in such order and manner as Mortgagee, in its sole discretion, may
elect.

 

20.          Remedies Cumulative. The rights and remedies
of Mortgagee provided for in this Mortgage, in the Note, in the Loan Agreement,
and in any other Loan Document, shall be cumulative and concurrent and shall
not be exclusive of any right or remedy provided by law, in equity or otherwise.
Said rights and remedies may, at the sole and exclusive discretion of
Mortgagee, be pursued singly, successively or together, and may be exercised as
often as occasion therefor shall arise.

 

21.          Mortgagor’s Waivers. Mortgagor hereby waives
and releases: (i) all errors, defects and imperfections (except as to notice
required hereunder or in the Loan Documents), in any proceeding instituted by
Mortgagee under this Mortgage, the Note, the Loan Agreement, or any other Loan
Document; (ii) all notices of default or of Mortgagee’s exercise, or election
to exercise, any right or remedy referred to in paragraph 19 hereof; and (iii)
the benefit of any laws now or hereafter enacted extending the time for payment
of any sum due under or secured hereby or affording any right to a stay of any
execution to be issued on any judgment obtained under the Note, the Loan
Agreement, this Mortgage or any other Loan Document, or exempting any property
from levy and sale upon any such execution.

 

22.          No Waiver. No failure or delay by Mortgagee in
insisting upon the strict performance by Mortgagor of any of the terms, covenants,
conditions, agreements and

 

16

 

provisions contained herein, in the Note, the Loan Agreement, or in any
other Loan Document shall constitute or operate as an estoppel or a waiver of
any such terms, covenants, conditions, agreements and provisions, nor shall any
such failure or delay preclude Mortgagee from thereafter insisting upon such
strict performance by Mortgagor. Neither Mortgagor nor any guarantor or surety
or other person obligated for the payment of the indebtedness secured hereby
shall be relieved of such obligation by reason of the failure of Mortgagee to
comply with any request of Mortgagor or of any such guarantor, surety or other
person to take action to foreclose this Mortgage or to otherwise enforce any of
the provisions of this Mortgage or any of the obligations secured by this
Mortgage, or by reason of the release, regardless of consideration, of the
whole or any part of the security held for the indebtedness secured by this
Mortgage, or by reason of any agreement or stipulation between any subsequent
owner or owners or the Mortgaged Property and Mortgagee extending the time of
payment or modifying the terms of the Note or this Mortgage without first
having obtained the consent of Mortgagor or any such guarantor, surety or other
person, and Mortgagor and each such guarantor, surety and other person shall
continue to be liable to make payments according to the terms of any such
extension or modification agreement, unless expressly released and discharged
in writing by Mortgagee. Mortgagee may release, regardless of consideration,
the obligation of any party at any time liable for any of the indebtedness
secured by this Mortgage without, as to any other person so obligated or the
remainder of such security, in any way affecting such other person’s obligation
or impairing or affecting the lien of this Mortgage or the priority of the lien
of this Mortgage.

 

23.          Mortgagee’s Right to Remedy Defaults. If,
after the expiration of all applicable notice and cure periods, Mortgagor fails
to pay when due any sum required to be paid by Mortgagor or fails to perform
any obligation of Mortgagor hereunder, Mortgagee, at its option, shall have the
right, but not the obligation, to pay any such sum or to take any action which
Mortgagee deems necessary or advisable to protect the security of this Mortgage
or the Mortgaged Property, all without prejudice to any of Mortgagee’s rights
or remedies available hereunder or under the Note, the Loan Agreement, or under
any other Loan Document, at law, or in equity. The amount of all payments so
made by Mortgagee, together with all costs so incurred by Mortgagee, shall
immediately be due and payable from Mortgagor to Mortgagee, together with
interest at the rate set forth in the Note in the event of a default
thereunder, from the date such payment was made of cost incurred by Mortgagee
until the date of repayment by Mortgagor. All such amounts, together with
interest as aforesaid, shall be add to and evidenced by the Note and secured by
this Mortgage.

 

24.          Further Assurances. Mortgagor will execute and
deliver such further instruments and documents, and perform such further acts
as may be requested by Mortgagee from time to time to confirm the provisions
of, or to carry out more effectively the purposes of this Mortgage, the Note,  the Loan Agreement, or any other Loan
Documents. Mortgagor hereby authorizes Mortgagee to execute and deliver such
further instruments and documents and to perform such further acts at any time
and from time to time, on behalf of Mortgagor. Mortgagor hereby irrevocably
appoints Mortgagee, its designees and nominees, as Mortgagor’s agents and
attorneys-in-fact, to execute, from time to time, on behalf of Mortgagor, one
or more such instruments and documents.

 

17

 

25.          Notices and Other Communications. All notices
and other communications hereunder shall be 
given in the manner specified in the Loan Agreement. All notices to be
given to Mortgagee pursuant to 42 Pa. C.S.A. ‘8143 shall be given to Mortgagee
by certified mail to Mortgagee’s address set forth below.

 

26.          Captions. The heading and captions herein are
inserted for convenience of reference only and shall not control or affect the
meaning or construction of any of the provisions of this Mortgage.

 

27.          Binding Effect. This Mortgage shall bind
Mortgagor and its successors and assigns and shall inure to the benefit of
Mortgagee and Mortgagor and their respective successors and assigns.

 

28.          No Amendment. This Mortgage shall not be
modified or amended except in writing signed by the party against whom the
enforcement of such amendment or modification is sought.

 

29.          Severability. If any term, covenant or
condition of this Mortgage or the application thereof to any party or
circumstance shall, to any extent, be invalid, or unenforceable, the remainder
of this Mortgage, or the application of such term, covenant or condition to
parties or circumstances other than those as to which it is held invalid or
unenforceable shall not be affected thereby and each term, covenant or
condition of this Mortgage shall be valid and be enforced to the fullest extent
permitted by law.

 

30.          Governing Law. This Mortgage shall be
construed and enforced in accordance with the laws of the Commonwealth of
Pennsylvania.

 

31.          Waiver of Jury Trial. MORTGAGOR AND MORTGAGEE
HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE ANY RIGHT EITHER MAY HAVE
TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED HEREON, OR ARISING OUT
OF, UNDER OR IN CONNECTION WITH, THE NOTE, THIS MORTGAGE, AND OTHER LOAN
DOCUMENTS, ANY OTHER TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY OR ANY COURSE
OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN) OR
ACTIONS OF THE MORTGAGEE OR THE MORTGAGOR IN CONNECTION HEREWITH OR THEREWITH. THIS
PROVISION IS A MATERIAL INDUCEMENT FOR THE MORTGAGEE TO MAKE THE LOAN EVIDENCED
BY THE NOTE AND SECURED BY, INTER  ALIA, THIS MORTGAGE.

 

18

 

IN WITNESS WHEREOF, Mortgagor has caused this
Mortgage to be duly executed the day and year first above written.

 

 

	
   

  	
  MORTGAGOR:

  
	
   

  	
   

  
	
   

  	
  SPITZ,
  INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  /s/ Donn L.
  Guthrie

  	
   

  	
  BY:

  	
  /s/ Jonathan
  Shaw

  	
   

  
	
  (As to Both)  Witness

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
  ATTEST:

  	
  /s/ Paul L.
  Dailey

  	
   

  
	
  Witness

  	
   

  	
   

  
	
   

  	
  [Corporate Seal]

  	
   

  
									

 

 

I hereby certify that the address of the above-named Mortgagee is 22
West State Street, Media, Delaware County, Pennsylvania, 19063.

 

 

	
   

  	
  /s/ Donn L.
  Guthrie

  	
   

  
	
   

  	
  Donn L.
  Guthrie, Esquire

  

 

19

 

	
  COMMONWEALTH
  OF PENNSYLVANIA

  	
  :

  
	
   

  	
   

  	
   

  
	
   

  	
  :SS

  	
   

  
	
   

  	
   

  	
   

  
	
  COUNTY
  OF Delaware

  	
   

  	
  :

  

 

 

On this, the 28th day of April,
2006, before me, the undersigned officer, appeared Jonathan Shaw and Paul
Dailey, who acknowledged themselves to be the President and Vice President
of, Spitz, Inc., a Delaware corporation, and that they as such, being
authorized to do so, executed the foregoing instrument and acknowledged that he
executed the same for the purpose therein contained.

 

IN WITNESS WHEREOF, I hereunto set my hand
and official seal.

 

 

	
   

  	
  /s/
  Gwnedolyn M. Beebe

  	
   

  
	
   

  	
  NOTARY
  PUBLIC

  
	
   

  	
   

  
	
  My
  Commission Expires:

  	
   

  
	
   

  	
   

  
	
   

  	
  (Notary Seal)

  	
   

  
	
   

  	
   

  
	
   

  
	
  RECORDING
  INFORMATION:

  

 

20Exhibit 10.11

 

FIRST MODIFICATION AGREEMENT

 

THIS FIRST MODIFICATION AGREEMENT (the
“Agreement”) is made and entered into
this  28th
day of July, 2006, by and between First Keystone Bank
(the “Bank”), chartered under the Laws of the United States of America, having
its principal office at 22 West State Street, Media, Pennsylvania, 19063, Spitz, Inc., a Delaware corporation (the “Borrower”), with
an address of P.O. Box 198, Route 1, Chadds Ford, Pennsylvania, 19317, and Evans & Sutherland Computer Corporation, a Utah
corporation (the “Guarantor”).

 

Background

 

A.                                    Bank
extended to Borrower a line of credit facility on April 28, 2006, (the “Loan”)
in the maximum principal sum of Three Million Dollars
($3,000,000.00) evidenced by that certain Line of Credit Note (the
“Note”) made by Borrower and delivered to Bank on April 28, 2006. The Loan is
to be advanced pursuant to the terms of a Line of Credit Agreement between
Bank, Borrower and Guarantor dated June 12, 1997 (the “Line of Credit
Agreement”).

 

B.                                    The
Line of Credit Agreement sets forth certain financial covenants of the
Borrower, including without limitation a covenant to maintain at all times
during the term of the Loan a minimum Tangible Net Worth (as defined in the
Line of Credit Agreement) of One Million Seven Hundred Thousand Dollars
($1,700,000.00), and a covenant to deliver to Bank within thirty (30) days of
each calendar quarter end, management prepared quarterly financial statements
for the immediately preceding quarter.

 

C.                                    Borrower
has requested that: (i) the computation of Tangible Net Worth exclude any and
all loans from the Guarantor to the Borrower; (ii) Borrower shall have sixty
(60) days from the end of each calendar quarter to deliver management prepared
quarterly financial statements for the immediately preceding quarter; and (iii)
the first measurement of Tangible Net Worth will be as of the calendar quarter
ending September 30, 2006.

 

D.                                    As
of the date hereof the outstanding principal balance of the Line of Credit is Five Hundred Ninety Nine Thousand Nine Hundred Eighty Dollars and Six
Cents ($599,980.06).

 

E.                                      Bank
has no obligation to modify the terms of the Loan. Bank is willing to grant
Borrower’s aforementioned requests on the terms and conditions set forth in
this Agreement, including without limitation the reduction of the Maximum
Credit Limit (as defined in the Line of Credit Agreement) to the lesser of (i) One Million One Hundred Thousand Dollars ($1,100,000.00), or
(ii) the sum of (a) eighty (80%) percent of the Borrower’s Qualified Accounts
Receivable and (b) fifty (50%) percent of Borrower’s Qualified Inventory (as
the terms Qualified Accounts Receivable and Qualified Inventory are defined in
the Line of Credit Agreement).

 

 

	
  JONES,
  STROHM & GUTHRIE

  	
   

  	
  10 Beatty Road

  
	
  A
  Professional Corporation

  	
   

  	
  Media, Pennsylvania 19063

  
	
  Attorneys
  At Law

  	
   

  	
  Telephone (610) 565-7100

  
	
   

  	
   

  	
  Fax (610) 565-7180

  

 

 

Agreement

 

NOW THEREFORE, in
consideration of the sum of One ($1.00) Dollar and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
and intending to be legally bound hereby, the parties hereto hereby covenant
and agree as follows:

 

1.                                      The
Background recitals are incorporated herein by reference.

 

2.                                      Contemporaneous
with the execution of this Agreement, Borrower shall pay to Bank on account of
the outstanding principal balance of the Loan an amount sufficient to reduce
the outstanding principal balance of the Loan to an amount not in excess of the
Maximum Credit Limit as reduced pursuant to the terms of this Agreement.

 

3.                                      For
purposes of determining Borrower’s compliance the Tangible Net Worth covenant
set in Section 4.1.20 of the Line of Credit Agreement, any and all loans from
the Guarantor to the Borrower shall be excluded from the computation of Borrower’s
Tangible Net Worth.

 

4.                                      Section
4.1.6.1 of the Line of Credit Agreement is amended to increase the period of
time within which Borrower must deliver management prepared quarterly financial
statements for the immediately preceding quarter from thirty (30) days to sixty
(60) days.

 

5.                                      The
first measurement of Borrower’s Tangible Net Worth for purposes of determining
Borrower’s compliance the Tangible Net Worth covenant set in Section 4.1.20 of
the Line of Credit Agreement will be as of the calendar quarter ending
September 30, 2006.

 

6.                                      Effective
the date of this Agreement, the Maximum Credit Limit shall equal the lesser of
(i) One Million One Hundred Thousand Dollars
($1,100,000.00), or (ii) the sum of (a) eighty (80%) percent of the
Borrower’s Qualified Accounts Receivable and (b) fifty (50%) percent of
Borrower’s Qualified Inventory.

 

7.                                      Borrower
and Guarantor hereby ratify and affirm all of the terms, conditions and
provisions of the Line of Credit Agreement, the Note, and all other documents
executed and delivered by Borrower or Guarantor in connection with the Loan, to
the extent the same are not otherwise expressly modified herein. It is
expressly agreed and understood that except as expressly provided in this
Agreement, the terms, conditions and provisions set forth in the Line of Credit
Agreement, the Note, and all other documents executed and delivered by Borrower
or Guarantor in connection with the Loan shall remain in full force and effect
in accordance with their respective terms, conditions and provisions. Without
limiting the generality of the foregoing, nothing in this Agreement shall be
construed to:

 

(i)                                    impair
the validity, perfection or priority of any lien or security interest securing
the Loan;

 

(ii)                                waive
or impair any rights, powers or remedies of Bank under the Line of Credit
Agreement, the Note, and all other documents executed and delivered by Borrower
or Guarantor in connection with the Loan with respect to any defaults
thereunder which may occur;

 

2

 

(iii)                            require
Bank to hereafter amend or modify the terms of the Line of Credit Agreement,
the Note, or any other documents executed and delivered by Borrower or
Guarantor in connection with the Loan; or

 

(iv)                               make
any other loan or other extension of credit to Borrower or Guarantor.

 

In the event of any inconsistency between the terms of this Agreement
and the Line of Credit Agreement, this Agreement shall govern. Borrower and
Guarantor each acknowledge that it has consulted with counsel in connection
with the negotiation and delivery of this Agreement. This Agreement shall be
construed without regard to any presumption or rule requiring that it be
construed against the party causing this Agreement or any part of this
Agreement to be drafted.

 

8.                                      Borrower
and Guarantor hereby acknowledge and agree that no setoff or counterclaim to
Borrower’s and Guarantor’s obligations evidenced by the Line of Credit
Agreement, the Note, and all other documents executed and delivered by Borrower
or Guarantor in connection with the Loan exists, and no agreement has been made
with any person under which any deduction or discount may be claimed, that to
the best of Borrower’s and Guarantor’s knowledge, information and belief, no
Event of Default (as defined in the Line of Credit Agreement) has occurred
which is continuing and no event has occurred which with the passage of time or
the giving of notice or both, could become an Event of Default under the Line
of Credit Agreement.

 

IN WITNESS WHEREOF, the
parties hereto have caused this Agreement to be executed on the day and year
first above written.

 

	
   

  	
  BANK:

  
	
   

  	
  FIRST
  KEYSTONE BANK

  
	
   

  
	
   

  
	
   

  	
  BY:

  	
  /s/ Robert
  Latshaw

  	
   

  
	
   

  
	
   

  	
  BORROWER:

  
	
   

  	
  SPITZ,
  INC., A Delaware Corporation

  
	
   

  
	
   

  
	
  /s/ Vera L.
  Camillo

  	
   

  	
  BY:

  	
  /s/ Jonathan
  Shaw

  	
   

  
	
  Witness

  	
   

  	
   

  
	
   

  	
   

  
	
  /s/ Vera L.
  Camillo

  	
   

  	
  ATTEST:

  	
  /s/ Paul L.
  Dailey

  	
   

  
	
  Witness

  	
   

  	
   

  
	
   

  
	
   

  	
  [Corporate
  Seal]

  
										

 

3

 

	
   

  	
   

  	
  GUARANTOR:

  
	
   

  	
   

  	
  EVANS
  & SUTHERLAND COMPUTER

  CORPORATION, a Utah Corporation

  
	
   

  	
   

  
	
   

  	
   

  
	
  /s/ Carol
  Young

  	
   

  	
  BY:  

  	
  /s/ David
  Bateman

  	
   

  
	
  Witness

  	
   

  	
   

  
	
   

  	
   

  
	
  /s/ Carol
  Young

  	
   

  	
  ATTEST:  

  	
  /s/ Lance
  Sessions

  	
   

  
	
  Witness

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
  [Corporate
  Seal]

  
						

 

4

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00109-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00109-of-00352.parquet"}]]