Exhibit 10.9
Recording requested
by
and when recorded mail to:
Jason J. Oster,
Esq.
Cook, Little, Rosenblatt & Manson,
P.L.L.C.
1000 Elm Street, 20
th
Floor
Manchester, New Hampshire 03101
MORTGAGE AND SECURITY
AGREEMENT
KNOW ALL MEN BY THESE PRESENTS that
MICRONETICS, INC., a Delaware corporation, with a principal place
of business at 26 Hampshire Drive, Hudson, NH 03051 (hereinafter
individually and collectively with its successors and assigns
referred to as “Mortgagor”) for consideration paid by
RBS CITIZENS NATIONAL ASSOCIATION, a national banking association
with a place of business at 875 Elm Street, Manchester, New
Hampshire 03101 (hereinafter collectively with its successors,
assigns and participants, if any, referred to as
“Mortgagee”), the receipt and sufficiency of which
Mortgagor does hereby acknowledge, hereby grants, bargains, sells,
conveys and assigns to Mortgagee, with MORTGAGE
COVENANTS:
The premises located in the Town of
Hudson, County of Hillsborough, State of New Hampshire, as more
particularly described in Schedule A attached hereto and
made a part hereof; together with all buildings, structures,
replacements, and other improvements now or hereafter situated
thereon; together with all rents, issues, profits, privileges,
easements, rights, covenants, rights of way, licenses,
appurtenances, and any and all other appurtenant rights thereto of
all kind and nature whatsoever; all right, title and interest of
Mortgagor in and to any vacated or hereafter vacated streets or
roads adjoining the subject property; and all right, title and
interest of Mortgagor in and to all air and riparian rights
associated with, belonging to or inuring to the benefit of the
subject property (all of the foregoing collectively, the
“Premises”);
AND transfers, assigns, sets over
and grants a first priority security interest in the following
(collectively, the “Personal Property”);
(1) All fixtures, machinery and all
other tangible personal property used in the buildings and other
improvements on the Premises, now or hereafter owned by the
Mortgagor and now affixed or hereafter affixed to the Premises,
including all appurtenant easements. The foregoing shall include,
without limitation, all machinery, plant, plumbing, heating,
lighting, refrigerating, ventilating and air conditioning apparatus
and equipment, elevators and elevator machinery, boilers, tanks,
motors, sprinkler and fire extinguishing systems, alarm systems,
screens, awnings, screen doors, storm and other detachable windows
and doors, perennial
flowers, signage, irrigation systems, and other
equipment, machinery, furniture and furnishings, fixtures, and
articles of personal property now and hereafter owned by the
Mortgagor and now and hereafter affixed to, placed upon or used in
connection with the operation of the Premises, and all other
purposes whether or not included in the foregoing enumeration,
together with cash proceeds and non-cash proceeds of all of the
foregoing, all of which are covered by this Mortgage, whether or
not such property is subject to prior conditional sales agreements,
chattel mortgages or other liens, excepting inventory and personal
property to be consumed or sold in the normal course of business of
the Mortgagor. If the lien hereof on any fixtures or personal
property is subject to a conditional sales agreement or chattel
mortgage or security agreement covering such property, then upon
the occurrence of an Event of Default hereunder all the rights,
title and interest of the Mortgagor in and to any and all deposits
made thereon or therefor are hereby assigned to the Mortgagee,
together with the benefit of any payments now or hereafter made
thereon. There are also transferred, set over and assigned to the
Mortgagee, its successors and assigns, all conditional sales
agreements, leases, and use agreements of machinery, equipment and
other personal property of the Mortgagor in the categories
hereinabove set forth and now and hereafter affixed to, placed upon
or used in connection with the operation of the Premises under
which the Mortgagor is the owner, lessee, or licensee of, and the
Mortgagor agrees to execute and deliver to the Mortgagee specific
separate assignments thereof to the Mortgagee of such leases and
agreements when requested by the Mortgagee; and nothing herein
shall obligate the Mortgagee to perform any obligations of the
Mortgagor under such leases or agreements, unless it so chooses,
which obligations the Mortgagor hereby covenants and agrees to well
and punctually perform;
(2) All of the Mortgagor’s
right, title and interest in and to any governmental approvals,
licenses, franchises, permits, grants, etc. with respect to the
Premises, including, but not limited to, all approvals, licenses,
and permits for the use and occupancy of the Premises;
(3) All eminent domain awards made
and insurance proceeds paid with respect to the
Premises;
(4) All trade names of Mortgagor
associated with the use or occupancy of the Premises;
(5) All books, records, contracts,
management contracts, and other general intangibles relating to
Mortgagor’s operation of the Premises;
(6) All plans, specifications,
contracts, warranties and survey plans relating to the
construction, use or occupancy of the Premises;
(7) Any and all additions,
accessions, substitutions or replacements to or for any of the
foregoing;
(8) Any and all products and
proceeds of any or all of the foregoing, including, without
limitation, cash and cash equivalents, tax refunds and the
proceeds, including interest, of insurance policies providing
coverage against the loss or destruction of or damage to any of
such collateral;
2
(9) All of the Mortgagor’s
after-acquired property of the kinds and types described in the
foregoing paragraphs;
(10) All rents, instruments,
security deposits, issues and profits, revenues, royalties,
bonuses, rights and benefits under any and all leases or tenancies
now existing or hereafter created with respect to the Mortgaged
Property or any part thereof and all contracts, agreements,
deposits, proceeds and rights with respect to any disposition,
transfer or sale of the Mortgaged Property;
(11) All judgments, awards of
damages, insurance proceeds and settlements hereafter made as a
result or in lieu of any taking of the Mortgaged Property or any
interest therein or part thereof under the power of eminent domain
or for any damage or casualty (whether caused by such taking or
otherwise) to the Mortgaged Property or any part thereof, including
any award for change of grade of streets; and
(12) All right, title and interest
of Mortgagor in any ISDA Master Agreement between Mortgagor and
Mortgagee (including any replacement or successor interest rate
swap agreements or other interest rate protection instruments,
individually or collectively, the “Swap Agreement”),
and each transaction entered into thereunder (including, without
limitation, all amounts payable or deliverable thereunder, and the
benefit of any guarantee or other credit support in connection
therewith);
(collectively, the Premises and the
Personal Property are hereinafter sometimes referred to as the
“Mortgaged Property”);
FOR THE PURPOSE OF SECURING the
following obligations of Mortgagor to Mortgagee:
(1) The payment of
(a) $5,000,000.00 together with interest thereon, all as
provided in the Revolving Credit Note dated March 30, 2007 of
Mortgagor to Mortgagee in such principal amount (as amended,
extended, modified or renewed, the “RLOC Note”), and
(b) $6,500,000.00 together with interest thereon, all as
provided in the Term Note dated March 30, 2007 of Mortgagor to
Mortgagee in such principal amount as amended, extended, modified
or renewed, the “Term Note” and together with the RLOC
Note, individually or collectively, the “Note”), which
Note has been issued subject and pursuant to the provisions of the
Commercial Loan Agreement dated March 30, 2007 by and among
Mortgagor, Mortgagee, and the Guarantors (as defined therein) (as
amended, extended, modified or renewed, the “Loan
Agreement”), and
(2) Payment of such sums expended or
advanced by Mortgagee in accordance herewith to protect the
security, priority or validity of this Mortgage;
(3) Due, prompt and complete
observance, performance, fulfillment and discharge by Mortgagor of
each and every obligation, covenant, condition, warranty, agreement
and representation of Mortgagor contained in the Loan Agreement,
the Note and this Mortgage, and any other document, instrument or
agreement given by Mortgagor as additional security for
the
3
payment of the indebtedness hereby secured, or
otherwise executed in connection therewith (all of the foregoing,
together with any extensions, renewals, modifications, amendments,
substitutions or replacements thereof, are hereinafter collectively
referred to as the “Loan Documents”); and
(4) Payment of any obligations owed
by the Mortgagor to Mortgagee pursuant to the Swap
Agreement.
PROVIDED, NEVERTHELESS, and this
Mortgage is granted upon the express condition, that if the
Mortgagor pays to the Mortgagee all amounts due under the Note,
this Mortgage and the other Loan Documents, complies with and
performs fully all terms and obligations as set forth in this
Mortgage, the Note and the other Loan Documents, then this Mortgage
shall be void. Otherwise it shall remain in full force and
effect.
1. Representations, Warranties,
and Covenants of the Mortgagor . In addition to the MORTGAGE
COVENANTS, the Mortgagor represents, warrants, covenants, and
agrees with the Mortgagee as follows:
(a) Power and Authority . The
Mortgagor is duly organized and validly existing under the laws of
its state of formation, and has full power, authority, and legal
right to execute and deliver the Mortgage and the other Loan
Documents and to consummate the transactions contemplated herein
without the consent or approval of any third party, court or
governmental body or other third party; and, the execution and
delivery of the Mortgage and the other Loan Documents and the
consummation of the transactions contemplated herein will not
conflict with or result in a breach of the terms of any agreement
or law or order of any court or governmental body;
(b) Title . Upon the
recording hereof, Mortgagor is the lawful owner of the Mortgaged
Property seized and possessed thereof in its own right in fee
simple or in easements as specified in Schedule A , has full
power and lawful authority to grant and convey the same in manner
aforesaid; the Mortgaged Property is free and clear from any
encumbrance whatsoever, except for the exceptions identified in the
Mortgagee’s title insurance commitment issued to and accepted
by Mortgagee insuring this Mortgage (the “Permitted
Encumbrances”); Mortgagor shall warrant and defend the same
to the Mortgagee against the lawful claims and demands of any
person or persons whatsoever; Mortgagor will not cause or permit
any lien to arise against the Mortgaged Property which is superior
to the lien or security interest granted herein;
(c) Payment and Performance .
Mortgagor shall pay the Note hereby secured and interest thereon as
the same shall become due and payable, and also any other
indebtedness that may accrue to the Mortgagee under the terms of
this Mortgage and the other Loan Documents, and shall perform all
other covenants, undertakings and agreements set forth herein and
in the other Loan Documents;
(d) Insurance . Mortgagor
shall obtain and keep in force, with one or more insurers
acceptable to Mortgagee, such insurance as Mortgagee may from time
to time specify by notice to Mortgagor, including, as a minimum,
insurance providing (i) commercial general
liability
4
(including death or bodily injury and property
damage coverage) with a broad form coverage endorsement and a
combined single limit of at least $2,000,000, and
(ii) protection against fire, “extended coverage”
and other “All Risk” perils, including, if specifically
required by Mortgagee, flood, if in a flood hazard area, with a
full replacement cost endorsement (such cost to be subject to
annual review and increased if necessary so as to provide coverage
at all times in an amount necessary to restore the Mortgaged
Premises to the condition existing just prior to the destruction or
damage). All fire and casualty insurance policies shall include the
standard mortgagee clause for the State of New Hampshire naming
Mortgagee as the first mortgagee with loss payable to Mortgagee as
such mortgagee and all other policies shall include Mortgagee as
its interest may appear. All insurance policies shall not be
cancelable or modifiable without thirty (30) days prior
written notice to Mortgagee and shall not have more than a
$25,000.00 deductible for any single Casualty (as defined below).
Mortgagor shall provide Mortgagee with evidence of compliance with
this Paragraph as required from time to time by Mortgagee, such
evidence to include insurance certificates and, upon
Mortgagee’s written request, copies of policies, each bearing
notations evidencing the prior payment of premiums or accompanied
by other evidence satisfactory to Mortgagee that such payment shall
be delivered by Mortgagor to Mortgagee.
Mortgagor shall keep, observe and
satisfy, and not suffer violations of, the requirements of
insurance companies and any bureau or agency which establishes
standards of insurability affecting the Mortgaged Property, and
pertaining to acts committed or conditions existing
thereon.
Upon foreclosure of this Mortgage or
other transfer of title or assignment of the Mortgaged Property in
discharge, in whole or part, of the indebtedness secured hereby,
all right, title and interest of Mortgagor in and to all policies
of insurance required by this Paragraph shall inure to the benefit
of and pass to Mortgagee;
(e) Taxes and Assessments .
The Mortgagor will pay, before the same become delinquent or any
penalty attached thereto for nonpayment, all taxes, condominium
association assessments, and other assessments and charges of every
nature that may now or hereafter be levied or assessed, upon the
Premises or any part thereof, or upon the rents, issues, income or
profits thereof, whether any or all of said taxes, assessments or
charges be levied directly or indirectly, and will pay, before the
same become delinquent or any penalty attached thereto for the
nonpayment, all taxes which by reason of nonpayment create a lien
prior to the lien of the Mortgage; and will thereupon submit to the
Mortgagee such evidence of the due and punctual payment of such
taxes, etc. as the Mortgagee may require;
(f) Maintenance of the
Premises . The Personal Property is in good working order and
condition, and to the best of Mortgagor’s knowledge, the
Premises are free from structural defects. The Mortgagor will keep
the Mortgaged Property protected in good order, repair and
condition (reasonable wear and tear and casualty insured against
excepted) at all times, promptly replacing any part thereof which
may become lost, destroyed or unsuitable for use; and will not
commit or suffer any strip or waste of the Mortgaged Property, or
any violation of any law, regulation, ordinance or contract
affecting the Mortgaged Property, will not commit or suffer any
demolition, removal or material alteration of the Mortgaged
Property without the written consent of the Mortgagee, which
consent shall not be unreasonably withheld. Mortgagor will afford
the
5
Mortgagee the opportunity to inspect the
Mortgaged Property at any time upon reasonable prior notice; and
Mortgagor, its officers, agents, and representatives shall fully
cooperate with Mortgagee, its agents, and representatives in
conducting such inspection. The Mortgagor shall maintain and
preserve the parking areas, passageways and drives, now or
hereafter existing on the Premises, and, without prior written
consent of the Mortgagee, which shall not be unreasonably withheld,
no building or other structure other than those currently in
existence on the Premises shall be erected thereon and no additions
to existing buildings shall be erected, except as contemplated by
the Loan Agreement, without the prior written consent of the
Mortgagee, which consent shall not be unreasonably
withheld;
(g) Real Estate Tax and Insurance
Escrow . The Mortgagor shall, following the occurrence of an
Event of Default and after request therefor by the Mortgagee, which
request may be withdrawn and remade from time to time at the
discretion of the Mortgagee, pay to the Mortgagee on a monthly
basis as hereafter set forth a sum equal to the municipal and other
governmental real estate taxes, personal property taxes, other
assessments next due on the Mortgaged Property and all premiums
next due for fire and other casualty insurance required of the
Mortgagor hereunder, less all sums already paid therefor, divided
by the number of months to lapse not less than one (1) month
prior to the date when said taxes and assessments will become
delinquent and when such premiums will become due. Such sums as
estimated by the Mortgagee shall be paid with monthly payments of
principal and/or interest due pursuant to the terms of the Note and
such sums shall be held by the Mortgagee to pay said taxes,
assessments and premiums before the same become delinquent. The
Mortgagor agrees that should there be insufficient funds so
deposited with the Mortgagee for said taxes, assessments and
premiums when due, it will upon demand by the Mortgagee promptly
pay to the Mortgagee amounts necessary to make such payments in
full; any surplus funds may be applied toward the payment of
principal and/or interest on the Note (such payment shall not be
subject to any prepayment penalty or premium) or credited toward
future such taxes, assessments and premiums. If the Mortgagee shall
have commenced foreclosure proceedings, the Mortgagee may apply
such funds toward the payment of the Mortgage indebtedness without
causing thereby a waiver of any rights, statutory or otherwise, and
specifically such application shall not constitute a waiver of the
right of foreclosure hereunder. The Mortgagor hereby assigns to the
Mortgagee all the foregoing sums so held hereunder for such
purposes;
(h) Books and Records . The
Mortgagor shall maintain full and correct books and records showing
in detail the earnings and expenses of the Mortgaged Property in
accordance with generally accepted accounting principles, and full
and accurate entries of all dealings and transactions relating to
the Mortgaged Property, and will permit the Mortgagee and its
agents, accountants and representatives to examine said books and
records and all supporting vouchers and data any time from time to
time upon request by the Mortgagee;
(i) Financial Statement and
Reports . Mortgagor shall furnish to Mortgagee such financial
statements and other information required pursuant to Section II of
Schedule B of the Loan Agreement;
(j) Other Proceedings . If
any action or proceeding shall be commenced, excepting an action to
foreclose the Mortgage or to collect the debt hereby secured, to
which action or
6
proceeding the Mortgagee is made a party by
reason of the execution of the Mortgage or the Note, or in which it
becomes necessary to defend or uphold the lien of the Mortgage, all
reasonable sums paid by the Mortgagee for the expense of any
litigation to prosecute or defend the rights and lien created
hereby, including attorneys’ fees, shall be paid by the
Mortgagor on demand, together with interest thereon from date of
demand at the rate specified in the Note, and any such sum, and the
interest thereon, shall be immediately due and payable and be
secured hereby, having the benefit of the lien hereby created, as a
part thereof and of its priority. The Mortgagee shall give the
Mortgagor prompt notice of the initiation of any such action or
proceeding;
(k) Consent to Release, Etc .
Without affecting the liability of the Mortgagor or any other
person (except to the extent such liability is expressly modified
in writing or except for any person expressly released in writing)
for payment of any indebtedness secured hereby or for performance
of any obligation contained herein or in the other Loan Documents,
and without affecting the rights of the Mortgagee with respect to
any security not expressly released in writing, the Mortgagee may
at any time and from time to time, either before or after the
maturity of the Note and without notice or consent:
(i) Release any person liable for
payment of all or any part of the indebtedness evidenced by the
Note or for performance of any obligation contained in the other
Loan Documents;
(ii) Make any agreement extending
the time or otherwise altering the terms of payment of all or any
part of the Note indebtedness, or modifying or waiving any
obligation in the Loan Documents, or subordinating, modifying or
otherwise dealing with the lien or charge hereof;
(iii) Exercise or refrain from
exercising or waive any right the Mortgagee may have hereunder, in
the other Loan Documents, or by law;
(iv) Accept additional security of
any kind; or
(v) Release or otherwise deal with
any property, real or personal, securing the indebtedness,
including all or any part of the Premises;
(l) Leases . The terms and
conditions pursuant to which any leases respecting the Premises are
assigned to Mortgagee may be set forth in the assignment of leases
and rents from Mortgagor to Mortgagee;
(m) Due on Sale . This
Mortgage is not assignable or assumable and if all or any part of
the Mortgaged Property is sold, transferred, or otherwise conveyed,
then the Mortgagee may, at its option, require immediate payment in
full of all sums secured by this Mortgage (for purposes of this
paragraph, a net lease having a term of ten (10) years or more
shall constitute a sale);
7
(n) Liens and Other Mortgages
. The Mortgagor shall not grant any other mortgage, lien or
security interest in the Mortgaged Property;
(o) Underground Tanks . The
Mortgagor will comply with applicable laws and regulations relating
to the inspection and replacement of underground fuel storage tanks
located on the Premises including without limitation; New Hampshire
Water Supply and Pollution Control Commission Regulation WS-411,
et seq.
(p) Flood Hazard; Hazardous
Materials . None of the buildings located on the Premises are
located in an “area of Special Flood Hazard”, as that
term is defined in the National Flood Insurance Act of 1968 (as
amended and supplemented by the Flood Disaster Protection Act of
1973), and, to the Mortgagor’s knowledge as of the date
hereof, except as used in the ordinary course of Mortgagor’s
or any occupant’s business and then in accordance with
applicable law in all material respects, the Premises do not
contain any oil, hazardous wastes, hazardous substances, hazardous
materials, toxic substances or toxic pollutants (collectively,
“Hazardous Materials”), as those terms are used in the
Resource Conservation and Recovery Act, the Comprehensive
Environmental Response, Compensation and Liability Act, the
Hazardous Materials Transportation Act and the Toxic Substances
Control Act, the Clean Air Act, the Clean Water Act, or any similar
applicable state or local law, (including, but not limited to, New
Hampshire Revised Statutes Annotated Chapters 147-A, 147-B, and
147-C et seq. ), or in any regulations promulgated pursuant
thereto, or in any other applicable law (collectively,
“Hazardous Waste Laws”), or any asbestos, in violation
of Hazardous Waste Laws. The Mortgagor covenants to comply with the
requirements of all Hazardous Waste Laws and to promptly notify the
Mortgagee of the commencement or threat to commence any enforcement
action by any federal or state environmental agency relative to the
presence in or on the Premises of any materials, the use, storage,
transportation or disposal of which is regulated by the Hazardous
Waste Laws (and immediately to notify Mortgagee if at any
future time there is a discharge, deposit, injection, dumping,
spilling, leaking, incineration or placing of any Hazardous
Materials into or on the Premises or if, at any time, the use,
generation, storage, treatment, disposal, or transportation of any
Hazardous Materials in, on, to, or from the Premises is in
violation of any law). The Mortgagor hereby covenants to protect,
indemnify, and hold the Mortgagee harmless from and against all
loss, cost, damage and liability, including attorneys’ fees
and costs of litigation, suffered or incurred by the Mortgagee on
account of the presence of any Hazardous Materials in, on, or under
the Premises, including, without limitation, any such loss, cost,
damage or liability arising from a violation of any Hazardous Waste
Laws, except for fines or penalties incurred by Mortgagee for its
failure to comply with any lawful order from an environmental
agency directed to Mortgagee. The Mortgagor covenants not to permit
any tenants or other occupants of the Premises to use any portion
or all of the Premises for the use, generation, treatment, storage,
disposal, or transportation of Hazardous Materials, except with the
prior written consent of the Mortgagor, which consent shall not be
unreasonably withheld, and in compliance with all appli
