Exhibit 10.53
Record and return to:
Principal Life Insurance Company
801 Grand Avenue
Des Moines, IA 50392-1360
Attn: David L. Graves
MORTGAGE AND SECURITY AGREEMENT
THE NOTE SECURED BY THIS MORTGAGE CONTAINS
AN ADJUSTABLE INTEREST RATE
752834
A. THIS MORTGAGE AND SECURITY AGREEMENT (as the same may from time to time
hereafter be modified, supplemented or amended, this "Mortgage") is made as of
March 16, 2001, by and between NEW BRIGHTON BUSINESS CENTER LLC, a Delaware
limited liability company, having its principal place of business and post
office address at c/o Medtox Scientific, Inc., 402 West County Road D., St.
Paul, Minnesota 55112, Attention: Chief Financial Officer, as "Borrower"
("Borrower" to be construed as "Borrowers" if the context so requires), and
Principal Life Insurance Company, an Iowa corporation, having a principal place
of business and post office address c/o Principal Capital Management, LLC at 801
Grand Avenue, Des Moines, Iowa 50392-1450, as "Lender".
WITNESSETH:
B. Borrower is justly indebted to Lender for money borrowed (the "Loan") in the
original principal sum of Six Million Two Hundred Thousand and 00/100 Dollars
($6,200,000.00) (the "Loan Amount") evidenced by Borrower's secured promissory
note of even date herewith, made payable and delivered to Lender (as may be
modified, amended, supplemented, extended or consolidated in writing and any
note(s) issued in exchange therefor or replacement thereof) (the "Note"), in
which Note Borrower promises to pay to Lender the Loan Amount together with all
accrued and unpaid interest thereon, interest accrued at the Default Rate (if
any), Late Charges (if any), the Make Whole Premium (if any), and all other
obligations and liabilities due or to become due to Lender pursuant to the Loan
Documents and all other amounts, sums and expenses paid by or payable to Lender
pursuant to the Loan Documents and the Environmental Indemnity (collectively the
"Indebtedness") until the Indebtedness has been paid, but in any event, the
unpaid balance (if any) remaining due on the Note shall be due and payable on
April 1, 2011 or such earlier date resulting from the acceleration of the
Indebtedness by Lender (the "Maturity Date"). Capitalized terms used herein and
not otherwise defined shall have those meanings given to them in the other Loan
Documents.
C. NOW, THEREFORE, to secure the payment of the Indebtedness in accordance with
the terms and conditions of the Loan Documents, and all extensions,
modifications and renewals thereof and the performance of the covenants and
agreements contained therein, and also to secure the payment of any and all
other Indebtedness, direct or contingent, that may now or hereafter become owing
from Borrower to Lender in connection with the Loan Documents, and in
consideration of the Loan Amount in hand paid, receipt of which is hereby
acknowledged, Borrower does by these presents Mortgage unto Lender, its
successors and assigns forever, that certain real estate and all of Borrower's
estate, right, title and interest therein, located in the county of Ramsey,
state of Minnesota, more particularly described in Exhibit A attached hereto and
made a part hereof (the "Land"), which Land, together with the following
described property, rights and interests, is collectively referred to herein as
the "Premises".
D. Together with Borrower's interest as lessor in and to all Leases and all
Rents, which are pledged primarily and on a parity with the Land and not
secondarily.
E. Together with all and singular the tenements, hereditaments, easements,
appurtenances, passages, waters, water courses, riparian rights, sewer rights,
rights in trade names, licenses, permits and contracts, and all other rights,
liberties and privileges of any kind or character in any way now or hereafter
appertaining to the Land, including but not limited to, homestead and any other
claim at law or in equity as well as any after-acquired title, franchise or
license and the reversion and reversions and remainder and remainders thereof.
F. Together with the right in the case of foreclosure hereunder of the
encumbered property for Lender to take and use the name by which the buildings
and all other improvements situated on the Premises are commonly known and the
right to manage and operate the said buildings under any such name and variants
thereof.
G. Together with all right, title and interest of Borrower in any and all
buildings and improvements of every kind and description now or hereafter
erected or placed on the said Land and all materials intended for construction,
reconstruction, alteration and repairs of such buildings and improvements now or
hereafter erected thereon, all of which materials shall be deemed to be included
within the Premises immediately upon the delivery thereof to the Premises, and
all fixtures now or hereafter owned by Borrower and attached to or contained in
and used in connection with the Premises including, but not limited to, all
machinery, motors, elevators, fittings, radiators, awnings, shades, screens, and
all plumbing, heating, lighting, ventilating, refrigerating, incinerating,
air-conditioning and sprinkler equipment and fixtures and appurtenances thereto;
and all items of furniture, furnishings, equipment and personal property owned
by Borrower used or useful in the operation of the Premises; and all renewals or
replacements of all of the aforesaid property owned by Borrower or articles in
substitution therefor, whether or not the same are or shall be attached to said
buildings or improvements in any manner (collectively, the "Improvements"); it
being mutually agreed, intended and declared that all the aforesaid property
owned by Borrower and placed by it on the Land or used in connection with the
operation or maintenance of the Premises shall, so far as permitted by law, be
deemed to form a part and parcel of the Land and for the purpose of this
Mortgage to be Land and covered by this Mortgage, and as to any of the property
aforesaid which does not form a part and parcel of the Land or does not
constitute a "fixture" (as such term is defined in the Uniform Commercial Code)
this Mortgage is hereby deemed to be, as well, a security agreement under the
Uniform Commercial Code for the purpose of creating hereby a security interest
in such property which Borrower hereby grants to Lender as secured party.
H. Together with all right, title and interest of Borrower, now or hereafter
acquired, in and to any and all strips and gores of land adjacent to and used in
connection with the Premises and all right, title and interest of Borrower, now
owned or hereafter acquired, in, to, over and under the ways, streets, sidewalks
and alleys adjoining the Premises.
I. Together with all funds now or hereafter held by Lender under any escrow
security agreement or under any of the terms hereof, including but not limited
to funds held under the provisions of paragraph 5 hereof, insurance proceeds
from all insurance policies required to be maintained by Borrower under the Loan
Documents, and all awards, decrees, proceeds, settlements or claims for damage
now or hereafter made to or for the benefit of Borrower by reason of any damage
to, destruction of or taking of the Premises or any part thereof, whether the
same shall be made by reason of the exercise of the right of eminent domain or
by condemnation or otherwise (a "Taking").
J. TO HAVE AND TO HOLD the same unto the Lender, its successors and assigns
forever, for the purposes and uses herein expressed.
K. Borrower represents that it is the absolute owner in fee simple of the
Premises described in Exhibit A, which Premises are free and clear of any liens
or encumbrances except as set out in Exhibit B attached hereto, and except for
taxes which are not yet due or delinquent. Borrower shall forever warrant and
defend the title to the Premises against all claims and demands of all persons
whomsoever and will on demand execute any additional instrument which may be
required to give Lender a valid first lien on all of the Premises, subject to
the "Permitted Encumbrances" set forth in Exhibit B.
L. Borrower further represents that (i) the Premises is not subject to any
casualty damage; (ii) Borrower has not received any written notice of any
eminent domain or condemnation proceeding affecting the Premises; and (iii) to
the best of Borrower's knowledge, following due and diligent inquiry, there are
no actions, suits or proceedings pending, completed or threatened against or
affecting Borrower or any person or entity owning an interest (directly or
indirectly) in Borrower ("Interest Owner(s)") or any property of Borrower or any
Interest Owner in any court or before any arbitrator of any kind or before or by
any governmental authority (whether local, state, federal or foreign) that,
individually or in the aggregate, could reasonably be expected by Lender to be
materially adverse to the transaction contemplated hereby.
BORROWER COVENANTS AND AGREES AS FOLLOWS:
1. Borrower shall
(a) pay each item of Indebtedness secured by this Mortgage when
due according to the terms of the Loan Documents;
(b) pay a Late Charge on any payment of principal, interest, Make
Whole Premium or Indebtedness which is not paid on or before the due
date thereof to cover the expense involved in handling such late
payment;
(c) pay on or before the due date thereof any Indebtedness
permitted to be incurred by Borrower pursuant to the Loan Documents
and any other claims which could become a lien on the Premises (unless
otherwise specifically addressed in paragraph 1(e) hereof), and upon
request of Lender exhibit satisfactory evidence of the discharge
thereof;
(d) complete within a reasonable time, the construction of any
Improvements now or at any time in process of construction upon the
Land;
(e) manage, operate and maintain the Premises and keep the
Premises, including but not limited to, the Improvements, in good
condition and repair and free from mechanics' liens or other liens or
claims for liens, provided however, that Borrower may in good faith,
with reasonable diligence and upon written Notice to Lender within ten
(10) days after Borrower has knowledge of such lien or claim, contest
the validity or amount of any such lien or claim and defer payment and
discharge thereof during the pendency of such contest in the manner
provided by law, provided that (i) such contest may be made without
the payment thereof; (ii) such contest shall prevent the sale or
forfeiture of the Premises or any part thereof, or any interest
therein, to satisfy such lien or claim; (iii) Borrower shall have
obtained a bond over such lien or claim from a bonding company
acceptable to Lender which has the effect of removing such lien or
collection of the claim or lien so contested; and (iv) Borrower shall
pay all costs and expenses incidental to such contest; and further
provided, that in the event of a ruling or adjudication adverse to
Borrower, Borrower shall promptly pay such claim or lien, shall
indemnify and hold Lender and the Premises harmless from any loss for
damage arising from such contest and shall take whatever action
necessary to prevent sale, forfeiture or any other loss or damage to
the Premises or to the Lender;
(f) comply, and use commercially reasonable efforts to cause
each lessee or other user of the Premises to comply, with
all requirements of law and ordinance, and all rules and
regulations, now or hereafter enacted, by authorities having
jurisdiction of the Premises and the use thereof, including
but not limited to all covenants, conditions and
restrictions of record pertaining to the Premises, the
Improvements, and the use thereof (collectively, "Legal
Requirements");
(g) subject to the provisions of paragraph 6 hereof, promptly
repair, restore or rebuild any Improvements now or hereafter
a part of the Premises which may become damaged or be
destroyed by any cause whatsoever, so that upon completion
of the repair, restoration and rebuilding of such
Improvements there will be no liens of any nature arising
out of the construction and the Premises will be of
substantially the same character and quality as it was prior
to the damage or destruction;
(h) if other than a natural person, do all things necessary to
preserve and keep in full force and effect its existence,
franchises, rights and privileges under the laws of the
state of its formation and, if other than its state of
formation, the state where the Premises is located;
(i) do all things necessary to preserve and keep in full force
and effect Lender's title insurance coverage insuring the
lien of this Mortgage as a first and prior lien, subject
only to the Permitted Encumbrances stated in Exhibit B and
any other exceptions after the date of this Mortgage
approved in writing by Lender, including without limitation,
delivering to Lender not less than 30 days prior to the
effective date of any rate adjustment, modification or
extension of the Note or any other Loan Document, any new
policy or endorsement which may be required to assure Lender
of such continuing coverage; and
(j) execute any and all documents which may be required to
perfect the security interest granted by this Mortgage.
2. Borrower shall not:
(a) make any alteration or addition exceeding $50,000.00 (other
than normal repair and maintenance) to (i) the roof or any
structural component of any Improvements on the Premises, or
(ii) the building operating systems, including but not
limited to the mechanical, electrical, heating, cooling or
ventilation systems (other than replacement with equal or
better quality and capacity), without the prior written
consent of Lender, except such as are required by applicable
Legal Requirements;
(b) remove or demolish any material Improvements, or any portion
thereof, which at any time constitutes a part of the Premises;
(c) cause or permit any change to be made in the general use of
the Premises without Lender's prior written consent;
(d) initiate any or acquiesce to a zoning reclassification or
material change in zoning without Lender's prior written consent.
Borrower shall use all reasonable efforts to contest any such zoning
reclassification or change;
(e) make or permit any use of the Premises that could with the
passage of time result in the creation of any right of use, or any
claim of adverse possession or easement on, to or against any part of
the Premises in favor of any person or entity or the public;
(f) allow any of the following to occur (unless a Permitted
Transfer):
(i) a Transfer of all or any portion of the Premises or any
interest in the Premises;
(ii) a Transfer of any ownership interest in Borrower or
any entity which owns, directly or indirectly, an
interest in Borrower at any level of the ownership
structure; or
(iii) in addition to (i) and (ii) above, if the Borrower is
a trust or if a trust owns an interest, directly or
indirectly, in any entity which owns an interest in
Borrower at any level of the ownership structure, the
addition, deletion or substitution of a trustee of
such trust.
If any of such events occur, it shall be null and void and
shall constitute an Event of Default under the Loan
Documents.
It is understood and agreed that the Indebtedness evidenced
by the Note is personal to Borrower and in accepting the
same Lender has relied upon what it perceived as the
willingness and ability of Borrower to perform its
obligations under the Loan Documents and the Environmental
Indemnity and as lessor under the Leases of the Premises.
Furthermore, Lender may consent to a Transfer and expressly
waive Borrower's covenants contained in this paragraph 2(f),
in writing to Borrower; however any such consent and waiver
shall not constitute any consent or waiver of such covenants
as to any Transfer other than that for which the consent and
waiver was expressly granted. Furthermore, Lender's
willingness to consent to any Transfer and waive Borrower's
covenants contained in this paragraph 2(f), implies no
standard of reasonableness in determining whether or not
such consent shall be granted and the same may be based upon
what Lender solely deems to be in its best interest.
For purposes of the Loan Documents, the following terms
shall have the respective meanings set forth below:
"Transfer" or "Transferred" shall mean with respect to the
Premises, an interest in the Premises, or an ownership
interest or interest therein:
(i) a sale, assignment, transfer, conveyance or other
disposition (whether voluntary, involuntary or by operation
of law);
(ii) the creation, sufferance or granting of any lien,
encumbrance, security interest or collateral assignment
(whether voluntarily, involuntarily or by operation of law),
other than the lien hereof, the leases of the Premises
assigned to Lender, the Permitted Encumbrances and those
liens which Borrower is contesting in accordance with the
provisions of paragraph 1(e);
(iii) the issuance or other creation of ownership
interests in an entity;
(iv) the reconstitution or conversion from one entity
to another type of entity; or
(v) a merger, consolidation, reorganization or any
other business combination.
"Permitted Transfer" shall mean:
(i) a minor (as determined by Lender) conveyance of an
interest in the Premises by Borrower, such as a
utility easement, and for which Lender has given its
prior written consent and imposed such conditions as
Lender deems advisable and appropriate;
(ii) a sale, assignment, transfer or conveyance of all or
any portion of the Premises or an interest in the
Premises for which Borrower has complied with all of
the Property Transfer Requirements;
(iii) any of the following Transfers for which Borrower has
complied with all of the Ownership Transfer
Requirements as applicable and Lender has given its
prior written consent (and in connection with such
consent, Lender may impose any conditions it wishes
in its sole discretion);
(A) a sale, assignment, transfer, or conveyance of an
ownership interest or interest therein;
(B) the issuance or other creation of ownership
interests in an entity;
(C) the reconstitution or conversion from one entity to
another type of entity; or
(D) a merger, consolidation, reorganization or any
other business combination; or
(iv) transfers of shares in Medtox Scientific, Inc.
"Property Transfer Requirements" are all of the following:
1. Prior review and approval of the proposed purchaser
or other transferee and the subject transaction by
Lender, at Lender's sole discretion. Review of the
proposed purchaser or other transferee and the
subject transaction shall encompass various factors,
including, but not limited to, the proposed
purchaser's or other transferee's creditworthiness,
financial strength, and real estate management and
leasing expertise as well as the proposed
transaction's effect on the Premises, the Borrower,
and other security for the Loan;
2. Payment to Lender of an assumption fee equal to the
greater of: (a) one percent (1%) of the principal
balance of the Note; or (b) $15,000.00; provided,
however, that Lender will require $15,000.00 of such
fee to be paid at the beginning of Lender's review
process, and such sum shall be nonrefundable and
earned upon receipt by Lender whether or not the
transaction is ultimately completed or Lender
ultimately approves the proposed purchaser or other
transferee;
3. Receipt, at Borrower's expense, of either (at
Lender's discretion) a new ALTA standard loan policy
or an endorsement updating the Lender's existing loan
policy in the full amount of the Loan, in form and by
an issuer satisfactory to Lender, and which insures
this Mortgage to be a first and prior lien subject
only to those exceptions which were previously
approved by Lender and provides coverage against
usury and mechanic's liens;
4. Receipt by Lender of copies of all relevant information
and documentation relating to or required by Lender in
connection with the proposed transfer including but not
limited to (a) the organizational documents of the proposed
transferee and an opinion of counsel satisfactory to Lender
as to its due formation, valid existence and authority to
enter into and carry out the proposed transaction; (b) the
deeds or other instruments of transfer and documents
relating to the assignment and assumption of Leases; (c)
evidence of compliance with the insurance requirements
contained in the Loan Documents; and (d) compliance with
such other closing requirements as are customarily imposed
by Lender in connection with such transactions;
5. Execution, delivery, acknowledgment and recordation,
as applicable, of new, revised and/or replacement
assumption agreements, loan modification agreements,
indemnification agreements, escrow security
agreements, security instruments, financing
statements, UCCs, new or revised letters of credit
and/or guarantees in form and substance satisfactory
to Lender;
6. Payment of outside counsel fees and costs, other
applicable professional's fees and costs, taxes, recording
fees and the like, and any other fees and costs incurred;
and
7. Receipt by Lender of 60 days advance written notice of
the proposed Transfer in question.
"Ownership Transfer Requirements" are all of the Property
Transfer Requirements which Lender deems appropriate in its
discretion, as well as a reasonable processing fee to be
determined by Lender; provided, however, that (i) with
respect to item 2 of the Property Transfer Requirements, the
1% component of the fee shall be prorated (subject, however,
to the $15,000 minimum) based on Lender's calculation of the
effective percentage interest in Borrower transferred, and
(ii) item 3 of the Property Transfer Requirements shall be
required, at Lender's discretion, only in the event of (A) a
merger, consolidation, reorganization or any other business
combination, or (B) a reconstitution or conversion from one
entity to another type of entity.
3. (a) Except as provided in Section 5, Borrower shall pay or cause to be
paid when due and before any penalty attaches or interest accrues all
general taxes, special taxes, assessments (including assessments for
benefits from public works or improvements whenever begun or completed),
utility charges, water charges, sewer service charges, common area
maintenance charges, if any, vault or space charges and all other like
charges against or affecting the Premises or against any property or
equipment located on the Premises, or which might become a lien on the
Premises, and shall, within 10 days following Lender's request, furnish to
Lender a duplicate receipt of such payment. If any such tax, assessment or
charge may legally be paid in installments, Borrower may, at its option,
pay such tax, assessment or charge in installments.
(b) If Borrower desires to contest any tax, assessment or charge relating
to the Premises, Borrower may do so by paying the same in full, under
protest, in the manner provided by law; provided, however, that
(i) if contest of any tax, assessment or charge may be made without
the payment thereof, and
(ii) such contest shall have the effect of preventing the collection
of the tax, assessment or charge so contested and the sale or
forfeiture of the Premises or any part thereof or any interest therein
to satisfy the same,
then Borrower may in its discretion and upon the giving of written notice
to Lender of its intended action and upon the furnishing to Lender of such
security or bond as Lender may require, contest any such tax, assessment or
charge in good faith and in the manner provided by law. All costs and
expenses incidental to such contest shall be paid by Borrower. In the event
of a ruling or adjudication adverse to Borrower, Borrower shall promptly
pay such tax, assessment or charge. Borrower shall indemnify and save
harmless the Lender and the Premises from any loss or damage arising from
any such contest and shall, if necessary to prevent sale, forfeiture or any
other loss or damage to the Premises or to Lender, pay such tax, assessment
or charge or take whatever action is necessary to prevent any sale,
forfeiture or loss.
4. (a) Borrower shall at all times keep in force (i) property insurance
insuring all Improvements which now are or hereafter become a part of the
Premises for perils covered by a causes of loss-special form insurance
policy with an ordinance or law coverage endorsement containing both
replacement cost and agreed amount endorsements or options; (ii) commercial
general liability insurance naming Lender as an additional insured
protecting Borrower and Lender against liability for bodily injury or
property damage occurring in, on or adjacent to the Premises in
commercially reasonable amounts; (iii) boiler and machinery insurance if
the property has a boiler or is an office building; (iv) rental value
insurance for the perils specified herein for one hundred percent (100%) of
the Rents (including operating expenses, real estate taxes, assessments and
insurance costs which are lessee's liability) for a period of twelve (12)
months; (v) builders risk insurance during all periods of construction; and
(vi) insurance against all other hazards as may be reasonably required by
Lender, including, without limitation, insurance against loss or damage by
flood and earthquake.
(b) All insurance shall be in form, content and amounts approved by Lender
and written by an insurance company or companies rated A, class size X or
better in the most current issue of Best's Insurance Reports and which is
licensed to do business in the state in which the Premises are located and
domiciled in the United States or a governmental agency or instrumentality
approved by Lender. The policies for such insurance shall have attached
thereto standard mortgagee clauses in favor of and permitting Lender to
collect any and all proceeds payable thereunder and shall include a 30 day
(except for nonpayment of premium, in which case, a 10 day) notice of
cancellation clause in favor of Lender. All policies or certificates of
insurance shall be delivered to and held by Lender as further security for
the payment of the Note and any other obligations arising under the Loan
Documents, with evidence of renewal coverage delivered to Lender at least
30 days before the expiration date of any policy. Borrower shall not carry
separate insurance, concurrent in kind or form and contributing in the
event of loss, with any insurance required in the Loan Documents.
5. (a) Borrower shall deposit with and pay to Lender, on the Closing Date and/or
on each payment date specified in the Note, sums calculated by Lender for
payment of the following as they become due and payable: (i) the estimated taxes
and assessments assessed or levied against the Premises, and (ii) the estimated
premiums for insurance required by the Loan Documents, excluding commercial
general liability insurance. Lender shall use such deposits to pay the taxes,
assessments and premiums when the same become due. Borrower shall procure and
deliver to Lender, in advance, statements for such charges. If the total
payments made by Borrower under this paragraph exceed the amount of payments
actually made by Lender for taxes, assessments and insurance premiums, such
excess shall be credited by Lender on subsequent deposits to be made by
Borrower. If, however, the deposits are insufficient to pay the taxes,
assessments and insurance premiums when the same shall be due and payable,
Borrower will pay to Lender any amount necessary to make up the deficiency, five
(5) business days before the date when payment of such taxes, assessments and
insurance premiums shall be due. If at any time Borrower shall tender to Lender,
in accordance with the provisions of the Note secured by this Mortgage, full
payment of the entire Indebtedness represented thereby, Lender shall, in
computing the amount of such Indebtedness, credit to the account of Borrower any
balance remaining in the funds accumulated and held by Lender under the
provisions of this paragraph. If there is an Event of Default resulting in a
public sale of the Premises, or if Lender otherwise acquires the Premises after
an Event of Default, Lender shall apply, at the time of commencement of such
proceedings, or at the time the Premises is otherwise acquired, the balance then
remaining in the funds accumulated under this paragraph as a credit toward any
delinquent or accrued taxes and then in such priority as Lender elects to the
other Indebtedness.
(b) Any funds held under this paragraph shall not constitute any deposit or
account of the Borrower or moneys to which the Borrower is entitled upon
demand, or upon the mere passage of time. Lender shall not be required to
segregate such deposits and may hold such deposits in its general account
or any other account and may commingle such deposits with any other moneys
of Lender or moneys which Lender is holding on behalf of any other person
or entity.
6. In the event of any damage to or destruction of the Premises, or any part
thereof:
(a) Borrower will immediately notify Lender thereof in the manner provided
in this Mortgage for the giving of notices. Lender shall have the right
(which may be waived by Lender in writing) to settle and adjust any claim
under such insurance policies required to be maintained by Borrower. In all
circumstances, the proceeds thereof shall be paid to Lender and Lender is
authorized to collect and to give receipts therefor. Borrower agrees and
acknowledges that such proceeds shall be held by Lender without any
allowance of interest and that in any bankruptcy proceeding of Borrower,
all such proceeds shall be deemed to be "Cash Collateral" as that term is
defined in Section 363 of the Bankruptcy Code. Provided that no Event of
Default exists, Borrower shall have the right to participate in any
settlement or adjustment; provided, however, that any settlement or
adjustment shall be subject to the written approval of Lender, not to be
unreasonably withheld.
(b) Such proceeds, after deducting therefrom any expenses incurred by
Lender in the collection thereof (including but not limited to reasonable
attorneys' fees and costs), shall be applied by Lender to pay the
Indebtedness secured hereby including, but not limited to the Make Whole
Premium, whether or not then due and payable, provided, however, that if no
Event of Default exists at the time of such application, no Make Whole
Premium shall be due.
Notwithstanding anything hereinabove to the contrary,
(i) in the event the casualty occurs more than six (6)
months prior to the Maturity Date and no Event of
Default exists, Lender shall apply such proceeds as
follows:
(A) If the aggregate amount of such proceeds is
less than $50,000, Lender shall pay such
proceeds directly to Borrower, to be held in
trust for Lender and applied to the cost of
rebuilding and restoring the Premises.
(B) If the aggregate amount of such proceeds
equals or exceeds $50,000 Lender shall
disburse such amounts of the proceeds as
Lender reasonably deems necessary for the
repair or replacement of the Premises,
subject to the conditions set forth in
paragraph 6(c) below.
(ii) in the event (x) an Event of Default exists, or (y)
the casualty occurs during the last six (6) months
prior to the Maturity Date and Lender determines that
the repair and restoration of such casualty cannot be
completed prior to the Maturity Date, or (z) the
conditions set forth in paragraph 6(c) are not met,
then Lender, in its sole and absolute discretion may
either:
(A) declare the entire Indebtedness to be
immediately due and payable and apply all
such proceeds to pay the Indebtedness in
such priority as Lender elects, provided,
however, that if no Event of Default exists
at the time of such application, no Make
Whole Premium shall be due; or
(B) disburse such proceeds as Lender reasonably
deems necessary for the repair or
replacement of the Premises subject to those
conditions set forth in paragraph 6(c) which
Lender in its sole and absolute discretion
may require.
(c) (i) In the event that Borrower is to be reimbursed out of the
insurance proceeds or out of any award or payment received with
respect to a Taking, Lender shall from time to time make
available such proceeds, subject to the following conditions: (a)
there continues to exist no Event of Default; (b) the delivery to
Lender of satisfactory evidence of the estimated cost of
completion of such repair and restoration work and any
architect's certificates, waivers of lien, contractor's sworn
statements, and other evidence of cost and of payment and of the
continued priority of the lien hereof over any potential liens of
mechanics and materialmen (including, without limitation, title
policy endorsements) as Lender may require and approve; (c) the
time required to complete the repair and restoration work and for
the income from the Premises to return to the level it was prior
to the loss will not exceed the coverage period of the rental
value insurance required hereunder; (d) the annual net operating
income from all approved executed Leases, having at least two
years remaining prior to the expiration of their term, with no
uncured defaults, shall equal or exceed 1.35 times the annual
debt service on the Note, and Medtox Laboratories confirms in
writing to Lender that it will occupy the Premises after the
restoration is completed, its lease is in full force and effect,
and no defaults have occurred and are continuing thereunder; (e)
Lender approves the plans and specifications of such work before
such work is commenced if the estimated cost of rebuilding and
restoration exceeds 25% of the Indebtedness or involves any
structural changes or modifications. If said plans and
specifications substantially comply with those previously
approved by Lender, Lender's approval shall not be unreasonably
withheld; (f) if the amount of any insurance proceeds, award or
other payment is insufficient to cover the cost of restoring and
rebuilding the Premises, Borrower shall pay such cost in excess
of such proceeds, award or other payment before being entitled to
reimbursement out of such funds; (g) Borrower pays to Lender a
non-refundable processing fee equal to the greater of $5,000.00
or .25% of the amount of such proceeds within sixty (60) days of
the occurrence of any such damage or destruction and before
Lender disburses any proceeds; and (h) such other conditions to
such disbursements, in Lender's discretion, as would be
customarily required by a construction lender doing business in
the area where the Premises is located or which are otherwise
required by any rating agency rating a securitization transaction
with respect to the Loan.
(ii) No payment made by Lender prior to the final completion of
the repair or restoration work shall, together with all payments
theretofore made, exceed 90% of the cost of such work performed
to the time of payment, and at all times the undisbursed balance
of said proceeds shall be at least sufficient to pay for the cost
of completion of such work free and clear of all liens. Any
proceeds remaining after payment of the cost of rebuilding and
restoration shall, at the option of Lender, either be (a) applied
in reduction of the Indebtedness secured hereby, provided,
however, that if no Event of Default exists at the time of such
application, no Make Whole Premium shall be due, or (b) paid to
Borrower.
(iii) Repair and restoration of the Premises shall be commenced
promptly after the occurrence of the loss and shall be prosecuted
to completion diligently, and the Premises shall be so restored
and rebuilt to substantially the same character and quality as
prior to such damage and destruction and shall comply with all
building codes and zoning requirements.
(d) Should such damage or destruction occur after foreclosure or
sale proceedings have been instituted, the proceeds of any such
insurance policy or policies, if not applied in rebuilding or
restoration of the Improvements, shall be used to pay (i) the
Indebtedness then due and owing in the event of a non-judicial
sale in such priority as Lender elects, or (ii) the amount due in
accordance with any decree of foreclosure or deficiency judgment
that may be entered in connection with such proceedings, and the
balance, if any, shall be paid to the owner of the equity of
redemption if he shall then be entitled to the same, or otherwise
as any court having jurisdiction may direct.
7. In the event of the commencement of a Taking affecting the
Premises:
(a) Borrower shall notify Lender thereof in the manner provided
in this Mortgage for the giving of notices. Lender may
participate in such proceeding, and Borrower shall deliver
to Lender all documents requested by it to permit such
participation.
(b) Borrower shall cause the proceeds of any award or other
payment made relating to a Taking, to be paid directly to
Lender. Lender, in its sole and absolute discretion: (i) may
apply all such proceeds to pay the Indebtedness in such
priority as Lender elects, provided however, that if no
Event of Default exists at the time of such application no
Make Whole Premium shall be due; or (ii) subject to and in
accordance with the provisions set forth in paragraph 6(c)
above, may disburse such amounts of the proceeds as Lender
reasonably deems necessary for the repair or replacement of
the Premises.
8. If by the laws of the United States of America or of any state or
governmental subdivision having jurisdiction over Borrower or of the
Premises or of the Loan evidenced by the Loan Documents or any amendments
or modifications thereof, any tax or fee is due or becomes due or is
imposed upon Lender in respect of the issuance of the Note hereby secured
or the making, recording and registration of this Mortgage or otherwise in
connection with the Loan Documents, the Environmental Indemnity or the
Loan, except for Lender's income or franchise tax, Borrower covenants and
agrees to pay such tax or fee in the manner required by such law, and to
hold harmless and indemnify Lender, its successors and assigns, against any
liability incurred by reason of the imposition of any such tax or fee.
9. (a) Upon the occurrence of any Event of Default, Lender may, but need
not, make any payment or perform any act herein required of Borrower, in
any form and manner deemed expedient and may, but need not, make full or
partial payments of principal or interest on prior encumbrances, if any,
and purchase, discharge, compromise or settle any tax lien or other prior
lien or title or claim thereof, or redeem from any tax sale or forfeiture
affecting said Premises, or contest any tax or assessment. All moneys paid
for any of the purposes herein authorized and all reasonable expenses paid
or incurred in connection therewith, including but not limited to,
reasonable attorneys' fees and costs and reasonable attorneys' fees and
costs on appeal, and any other money advanced by Lender to protect the
Premises and the lien hereof, shall be so much additional Indebtedness
secured hereby and shall become immediately due and payable without notice
and with interest thereon at the Default Rate from the date of expenditure
or advance until paid.
(b) In making any payment hereby authorized relating to taxes or
assessments or for the purchase, discharge, compromise or settlement of any
prior lien, Lender may make such payment according to any bill, statement
or estimate secured from the appropriate public office without inquiry into
the accuracy thereof or into the validity of any tax, assessment, sale,
forfeiture, tax lien or title or claim thereof or without inquiry as to the
validity or amount of any claim for lien which may be asserted.
10. If one or more of the following events (herein called "Event(s) of Default")
shall have occurred:
(a) failure to pay when due any principal, interest, Make Whole Premium or
other Indebtedness, utilities, taxes or assessments or insurance premiums
required pursuant to the Loan Documents or the Environmental Indemnity, and
such failure shall have continued for 10 days, provided, however, that if
(i) the default provided for in this subparagraph 10(a) is due solely to
the negligence of Borrower's bank, (ii) the amount necessary to make the
payment in question was in the bank account from which the payment was to
be made, (iii) Borrower had properly authorized and instructed its bank to
make such payment, and (iv) payment is made within two business days of
written Notice from Lender, then there shall be no Event of Default and no
Late Charges shall be assessed on said payment; but further provided that
in the event two such Notices are given over the term of the Mortgage,
thereafter an Event of Default shall occur and Late Charges shall be
assessed both without notice by Lender to Borrower; or
(b) Borrower, Interest Owner or any guarantor voluntarily brings or
acquiesces to any of the following: (A) any action for dissolution, act of
dissolution or dissolution or the like of Borrower, Interest Owner or any
guarantor under the Federal Bankruptcy Code as now or hereafter
constituted; (B) the filing of a petition or answer proposing the
adjudication of Borrower, Interest Owner or any guarantor as a bankrupt or
its reorganization or arrangement, or any composition, readjustment,
liquidation, dissolution or similar relief with respect to it pursuant to
any present or future federal or state bankruptcy or similar law; or (C)
the appointment by order of a court of competent jurisdiction of a
receiver, trustee or liquidator of the Premises or any part thereof or of
Borrower, Interest Owner or any guarantor or of substantially all of the
assets of Borrower, Interest Owner or any guarantor; or
(c) one or more of the items set forth in paragraph 10(b) above occur which
were either not (i) voluntarily brought by Borrower, Interest Owner or any
guarantor or (ii) acquiesced in by Borrower, Interest Owner or any
guarantor, and which are not discharged or dismissed within 90 days after
the action, filing or appointment, as the case may be; or
With respect to the matters in (b) and (c) above for an Interest Owner
only, no Event of Default shall occur until an interested party or Interest
Owner asserts a claim or right against Borrower or the Premises which in
any manner may affect Lender's rights, remedies, or interests granted under
the Loan Documents (whether or not such assertion is successful).
(d) with respect to the matters not described in the other subparagraphs of
this paragraph 10, failure to duly observe or perform any covenant,
condition or agreement of the Borrower or any guarantor contained in this
Mortgage, the Note or the Assignment of Leases from Borrower to Lender or
in any other instrument or agreement which evidences or secures the Loan
(the "Loan Documents"), or in the Environmental Indemnity, and such failure
shall have continued for 30 days after Notice specifying such failure is
given by Lender to Borrower; or
If any failure to observe or perform under (d) above shall be of such
nature that it cannot be cured or remedied within 30 days, Borrower shall
be entitled to a reasonable period of time to cure or remedy such failure
(not to exceed 90 days following the giving of Notice), provided Borrower
commences the cure or remedy thereof within the 30 day period following the
giving of Notice and thereafter proceeds with diligence, as determined by
Lender, to complete such cure or remedy.
(e) the failure of Borrower to duly observe or perform any of the
covenants, conditions and agreements of the Borrower contained in paragraph
2(f) of this Mortgage; or
(f) any representation made by or on behalf of Borrower,
Interest Owner or any guarantor regarding the Premises, the
making or delivery of any of the Loan Documents or the
Environmental Indemnity or in any material written
information provided by or on behalf of Borrower, Interest
Owner or any guarantor in connection with the Loan shall
prove to be untrue or inaccurate in any material respect; or
(g) the failure of Borrower to give Notice to Lender within 60
days after the death of any individual who is personally
liable for any obligation under the Loan Documents or the
Environmental Indemnity, as Borrower, indemnitor or
guarantor, whether or not such individual had executed the
Note or this Mortgage; or
(h) subject to the provisions of paragraph 2(f), the failure of
Borrower to provide Lender with an assumption agreement in
form and substance and executed by a person(s) or
entity(ies) acceptable to Lender in its sole discretion to
assume the obligations of any deceased individual who is
personally liable for any obligation under the Loan
Documents or the Environmental Indemnity, as Borrower,
indemnitor or guarantor, whether or not such individual had
executed the Note or this Mortgage, and such failure shall
have continued for 60 days after the death of such
individual
then, in each and every such case, the whole of said principal sum
hereby secured shall, at the option of the Lender and without
further notice to Borrower, become immediately due and payable
together with accrued interest thereon, a Make Whole Premium
calculated in accordance with the provisions of the Loan Documents
and all other Indebtedness, and whether or not Lender has
exercised said option, interest shall accrue on the entire
principal balance and any interest or Make Whole Premium or other
Indebtedness then due, at the Default Rate until fully paid or if
Lender has not exercised said option, for the duration of any
Event of Default.
11. Borrower agrees that if Lender accelerates the whole or any part
of the principal sum hereby secured, or applies any proceeds
pursuant to the provisions hereof, Borrower waives any right to
prepay the principal sum hereby secured in whole or in part
without premium and agrees to pay, as yield maintenance protection
and not as a penalty, a "Make Whole Premium". However, in the
event any proceeds from a casualty or Taking of the Premises are
applied to reduce the principal balance under the Note, no Make
Whole Premium shall be due so long as no Event of Default exists
at the time of such application.
The Make Whole Premium shall be the greater of one percent (1%) of
the principal amount to be prepaid or a premium calculated as
follows:
(a) Determine the "Reinvestment Yield." The Reinvestment Yield
will be equal to the yield on the applicable* U.S. Treasury
Issue ("Primary Issue")** published one week prior to the
date of prepayment and converted to an equivalent monthly
compounded nominal yield.
**In the event there is no market activity involving the
Primary Issue at the time of prepayment, Lender shall choose
a comparable Treasury Bond, Note or Bill ("Secondary Issue")
which Lender reasonably deems to be similar to the Primary
Issue's characteristics (i.e., rate, remaining time to
maturity, yield).
(b) Calculate the "Present Value of the Mortgage." The Present
Value of the Mortgage is the present value of the payments to be
made in accordance with the Note (all installment payments and
any remaining payment due on the Call Date, or if the Call Date
has already passed, on the Maturity Date) discounted at the
Reinvestment Yield for the number of months remaining from the
date of prepayment to the Call Date, or if the Call Date has
already passed, to the Maturity Date. In the event of a partial
prepayment as a result of the aforementioned application of
proceeds, the Present Value of the Mortgage shall be calculated
in accordance with the preceding sentence multiplied by the
fraction which results from dividing the amount of the prepaid
proceeds by the principal balance immediately prior to
prepayment.
(c) Subtract the amount of the prepaid proceeds from the Present
Value of the Mortgage as of the date of prepayment. Any resulting
positive differential shall be the premium.
As set forth above, the U.S. Treasury Issue applicable for each
prepayment period is as follows:
Prepayment Period U.S. Treasury Issue
To March 1, 2006 *
March 1, 2006 to March 1, 2011 *
**At this time there is not a U.S. Treasury Issue for this
prepayment period. At the time of prepayment, Lender shall select
in its sole and absolute discretion a U.S. Treasury Issue with
similar remaining time to the end of the applicable prepayment
period.
12. Upon the occurrence of any Event of Default, in addition to any other rights
or remedies provided in the Loan Documents, at law, in equity or otherwise,
Lender shall have the right to foreclose the lien hereof, and to the extent
permitted herein and by applicable law to sell the Premises by sale independent
of the foreclosure proceedings. In any suit to foreclose the lien hereof, and in
any sale of the Premises, there shall be allowed and included as additional
Indebtedness payable by Borrower to Lender and secured hereby all expenditures
and expenses which may be paid or incurred by or on behalf of Lender for
attorneys' fees and costs, including attorneys' fees and costs on appeal,
appraisers' fees, expenditures for documentary and expert evidence,
stenographer's charges, publication and advertising costs, survey costs,
environmental audits and costs (which may be estimated as to items to be
expended after the entry of any decree) of procuring all such abstracts of
title, title searches and examinations, title insurance policies, torrens
certificates and similar data and assurances with respect to title as Lender
deems reasonably necessary either to prosecute such suit or to consummate such
sale or to evidence to bidders at any sale the true condition of the title to or
the value of the Premises.
13. The proceeds of any foreclosure sale, or other sale of the Premises in
accordance with the terms hereof or as permitted by law, shall be distributed
and applied in the following order of priority: first, to the payment of all
costs and expenses incident to the foreclosure and/or sale proceedings,
including all items as are mentioned in any preceding or succeeding paragraph
hereof; second, to the payment of all other items which under the terms hereof
constitute secured Indebtedness in addition to that evidenced by the Note, with
interest thereon as herein provided; third, to the payment of all principal,
accrued interest remaining unpaid on the Note and Make Whole Premium; fourth,
any surplus to the Borrower or Borrower's successors or assigns, as their rights
may appear.
14. Following the occurrence of an Event of Default, unless the same has been
specifically waived in writing, Borrower shall forthwith upon demand of Lender
surrender to Lender possession of the Premises, and Lender shall be entitled to
take actual possession of the Premises or any part thereof personally or by its
agents or attorneys, and Lender in its discretion may, with or without force and
with or without process of law, enter upon and take and maintain possession of
all or any part of the Premises together with all documents, books, records,
papers and accounts of the Borrower or the then owner of the Premises relating
thereto, and may exclude Borrower, its agents or assigns wholly therefrom, and
may as attorney-in-fact or agent of the Borrower, or in its own name as Lender
and under the powers herein granted:
(a) hold, operate, maintain, repair, rebuild, replace, alter, improve,
manage or control the Premises as it deems judicious, insure and
reinsure the same and any risks related to Lender's possession,
operation and management thereof and receive all Rents, either
personally or by its agents, and with full power to use such measures,
legal or equitable, as in its discretion it deems proper or necessary
to enforce the payment or security of the Rents, including actions for
the recovery of Rent, actions in forcible detainer and actions in
distress for Rents, hereby granting full power and authority to
exercise each and every of the rights, privileges and powers herein
granted at any and all times hereafter, without notice to Borrower;
and
(b) conduct leasing activity pursuant to the provisions of the
Assignment of Leases.
Lender shall not be obligated to perform or discharge, nor does it hereby
undertake to perform or discharge, any obligation, duty or liability under any
Lease. Should Lender incur any liability, loss or damage under any Leases, or
under or by reason of the Assignment of Leases, or in the defense of any claims
or demands whatsoever which may be asserted against Lender by reason of any
alleged obligations or undertakings on its part to perform or discharge any of
the terms, covenants or agreements in any Lease, the amount thereof, including
costs, expenses and reasonable attorneys' fees and costs, including reasonable
attorneys' fees and costs on appeal, shall be added to the Indebtedness and
secured hereby.
15. Lender in the exercise of the rights and powers conferred upon it shall have
the full power to use and apply the Rents, less costs and expenses of collection
to the payment of or on account of the items listed in (a) - (c) below, at the
election of Lender and in such order as Lender may determine unless otherwise
specifically provided in the Assignment. The manner of the application of Rents,
the reasonableness of the costs and charges to which such Rents are applied and
the item or items which shall be credited thereby shall be within the sole and
unlimited discretion of Lender unless otherwise specifically provided in the
Assignment.
(a) to the payment of (i) the expenses of operating and maintaining the
Premises, including, but not limited to the cost of management, leasing
(which shall include reasonable compensation to Lender and its agent or
agents if management and/or leasing is delegated to an agent or agents),
repairing, rebuilding, replacing, altering and improving the Premises, (ii)
premiums on insurance as hereinabove authorized, (iii) taxes and special
assessments now due or which may hereafter become due on the Premises and
(iv) expenses of placing the Premises in such condition as will, in the
sole judgment of Lender, make it readily rentable;
(b) to the payment of any principal, interest or any other
Indebtedness secured hereby or any deficiency which may result from any
foreclosure sale;
(c) to the payment of established claims for damages, if any,
reasonable attorneys' fees and costs and reasonable attorneys' fees and
costs on appeal.
To the extent that the costs and expenses in (a) - (c) above exceed the
amounts collected, the excess shall be added to the Indebtedness and
secured hereby.
16. Upon the occurrence of any Event of Default, unless the same has been
specifically waived in writing, Lender may apply to any court having
jurisdiction for the appointment of a receiver of the Premises. Such appointment
may be made either before or after sale, without notice, without regard to the
solvency or insolvency of Borrower at the time of application for such receiver
and without regard to the then value of the Premises or the adequacy of Lender's
security. Lender may be appointed as such receiver. The receiver shall have
power to collect the Rents during the pendency of any foreclosure proceedings
and, in case of a sale, during the full statutory period of redemption, if any,
as well as during any further times when Borrower, except for the intervention
of such receiver, would be entitled to collect such Rents. In addition, the
receiver shall have all other powers which shall be necessary or are usual in
such cases for the protection, possession, control, management and operation of
the Premises during the whole of said period. The court from time to time may
authorize the receiver to apply the net income in its possession at Lender's
election and in such order as Lender may determine in payment in full or in part
of those items listed in paragraph 15.
17. (a) Borrower agrees that all reasonable costs, charges and expenses,
including but not limited to, reasonable attorneys' fees and costs, incurred or
expended by Lender arising out of or in connection with any action, proceeding
or hearing, legal, equitable or quasi-legal, including the preparation therefor
and any appeal therefrom, in any way affecting or pertaining to the Loan
Documents, the Environmental Indemnity or the Premises, shall be promptly paid
by Borrower. All such sums not promptly paid by Borrower shall be added to the
Indebtedness secured hereby and shall bear interest at the Default Rate from the
date of such advance and shall be due and payable on demand.
(b) Borrower hereby agrees that upon the occurrence of an Event of Default and
the acceleration of the principal sum secured hereby pursuant to this Mortgage,
to the full extent that such rights can be lawfully waived, Borrower hereby
waives and agrees not to insist upon, plead, or in any manner take advantage of,
any notice of acceleration, any stay, extension, exemption, homestead,
marshaling or moratorium law or any law providing for the valuation or
appraisement of all or any part of the Premises prior to any sale or sales
thereof under any provision of this Mortgage or before or after any decree,
judgment or order of any court or confirmation thereof, or claim or exercise any
right to redeem all or any part of the Premises so sold and hereby expressly
waives to the full extent permitted by applicable law on behalf of itself and
each and every person or entity acquiring any right, title or interest in or to
all or any part of the Premises, all benefit and advantage of any such laws
which would otherwise be available to Borrower or any such person or entity, and
agrees that neither Borrower nor any such person or entity will invoke or
utilize any such law to otherwise hinder, delay or impede the exercise of any
remedy granted or delegated to Lender herein but will permit the exercise of
such remedy as though any such laws had not been enacted. Borrower hereby
further expressly waives to the full extent permitted by applicable law on
behalf of itself and each and every person or entity acquiring any right, title
or interest in or to all or any part of the Premises any and all rights of
redemption from any sale or any order or decree of foreclosure obtained pursuant
to provisions of this Mortgage.
18. Borrower hereby assigns to Lender directly and absolutely, and not merely
collaterally, the interest of Borrower as lessor under the Leases of the
Premises, and the Rents payable under any Lease and/or with respect to the use
of the Premises, or portion thereof, including any oil, gas or mineral lease, or
any installments of money payable pursuant to any agreement or any sale of the
Premises or any part thereof, subject only to a license, if any, granted by
Lender to Borrower with respect thereto prior to the occurrence of an Event of
Default. Borrower has executed and delivered the Assignment of Leases which
grants to Lender specific rights and remedies in respect of said Leases and
governs the collection of Rents thereunder and from the use of the Premises, and
such rights and remedies so granted shall be cumulative of those granted herein.
The collection of such Rents and the application thereof as aforesaid shall not
cure or waive any Event of Default or notice of default hereunder or invalidate
any act done pursuant to such notice, except to the extent any such Event of
Default is fully cured. Failure or discontinuance of Lender at any time, or from
time to time, to collect any such moneys shall not impair in any manner the
subsequent enforcement by Lender of the right, power and authority herein
conferred on Lender. Nothing contained herein, including the exercise of any
right, power or authority herein granted to Lender, shall be, or be construed to
be, an affirmation by Lender of any tenancy, Lease or option, or an assumption
of liability under, or the subordination of the lien or charge of this Mortgage
to any such tenancy, Lease or option. Borrower hereby agrees that, in the event
Lender exercises its rights as provided for in this paragraph or in the
Assignment of Leases, Borrower waives any right to compensation for the use of
Borrower's furniture, furnishings or equipment in the Premises for the period
such assignment of rents or receivership is in effect, it being understood that
the Rents derived from the use of any such items shall be applied to Borrower's
obligations hereunder as above provided.
19. All rights and remedies granted to Lender in the Loan Documents shall be in
addition to and not in limitation of any rights and remedies to which it is
entitled in equity, at law or by statute, and the invalidity of any right or
remedy herein provided by reason of its conflict with applicable law or statute
shall not affect any other valid right or remedy afforded to Lender. No waiver
of any default or Event of Default under any of the Loan Documents shall at any
time thereafter be held to be a waiver of any rights of the Lender hereunder,
nor shall any waiver of a prior Event of Default or default operate to waive any
subsequent Event of Default or default. All remedies provided for in the Loan
Documents are cumulative and may, at the election of Lender, be exercised
alternatively, successively, or concurrently. No act of Lender shall be
construed as an election to proceed under any one provision herein to the
exclusion of any other provision or to proceed against one portion of the
Premises to the exclusion of any other portion. Time is of the essence under
this Mortgage and the Loan Documents.
20. By accepting payment of any sum secured hereby after its due date, Lender
does not waive its right either to require prompt payment when due of all other
sums or installments so secured or to declare a default for failure to pay such
other sums or installments.
21. The usury provisions of paragraph 6 of the Note and the limitation of
recourse liability provisions of paragraph 9 of the Note are fully incorporated
herein by reference as if the same were specifically stated here.
22. In the event one or more provisions of the Loan Documents shall be held to
be invalid, illegal or unenforceable in any respect, such invalidity, illegality
or unenforceability shall not affect any other provision hereof, and the Loan
Documents shall be construed as if any such provision had never been contained
herein.
23. If the payment of the Indebtedness secured hereby or of any part thereof
shall be extended or varied, or if any part of the security be released, all
persons now or at any time hereafter liable therefor, or interested in said
Premises, shall be held to assent to such extension, variation or release, and
their liability and the lien and all provisions hereof shall continue in full
force, the right of recourse against all such persons being expressly reserved
by Lender notwithstanding such variation or release.
24. Upon payment in full of the principal sum, interest and other Indebtedness
secured by the Loan Documents, these presents shall be null and void, and Lender
shall release this Mortgage and the lien hereof by proper instrument executed in
recordable form.
25. (a) Borrower hereby grants to Lender and its respective agents, attorneys,
employees, consultants, contractors and assigns an irrevocable license and
authorization to enter upon and inspect the Premises and all facilities located
thereon at reasonable times. Lender shall make reasonable efforts to ensure that
the operations of the tenants are not disrupted.
(b) In connection with any sale or conveyance of this Mortgage, Borrower
grants to Lender and its respective agents, attorneys, employees,
consultants, contractors and assigns an irrevocable license and
authorization to conduct, at Lender's expense, a Phase I environmental
audit of the Premises.
(c) In the event there has been an Event of Default or in the event Lender
has formed a reasonable belief, based on its inspection of the Premises or
other factors known to it, that Hazardous Materials may be present on the
Premises, then Borrower grants to Lender and its respective agents,
attorneys, employees, consultants, contractors and assigns an irrevocable
license and authorization to conduct, at Borrower's expense, environmental
tests of the Premises, including without limitation, a Phase I
environmental audit, subsurface testing, soil and ground water testing, and
other tests which may physically invade the Premises or facilities (the
"Tests"). The scope of the Tests shall be such as Lender, in its sole -----
discretion, determines is necessary to (i) investigate the condition of the
Premises, (ii) protect the security interests created under this Mortgage,
or (iii) determine compliance with Environmental Laws, the provisions of
the Loan Documents and the Environmental Indemnity and other matters
relating thereto. Notwithstanding anything contained hereinabove to the
contrary, except in the event there has been an Event of Default, Lender
shall provide prior written notice prior to conducting any tests in the
Premises.
(d) The foregoing licenses and authorizations are intended to be a means of
protection of Lender's security interest in the Premises and not as
participation in the management of the Premises.
26. Within 15 days after any written request by either party to this Mortgage,
the requested party shall certify, by a written statement duly acknowledged, the
amount of principal, interest and other Indebtedness then owing on the Note, the
terms of payment, Maturity Date and the date to which interest has been paid.
Borrower shall further certify whether any defaults, offsets or defenses exist
against the Indebtedness secured hereby. Borrower shall also furnish to Lender,
within 30 days of its request therefor, tenant estoppel letters from such
tenants of the Premises as Lender may require; which Lender shall not request
more than one (1) time per annum nor more than one (1) time prior to the date of
the Securitization Transaction.
27. (a) Borrower shall furnish to Lender within 90 days after the end of each
fiscal year of Borrower, a detailed and analytical financial report prepared in
accordance with generally accepted accounting principles consistently applied,
certified in a manner and otherwise in form reasonably acceptable to Lender
covering the full and complete operation of the Premises, including without
limitation: (i) income and expense statements, and (ii) a report of the leasing
status of the Premises as of the end of such year, identifying the lessee,
square footage leased, rental amount, base rental increases, rental concessions
and/or rental deferments, if any, an commencement and expiration dates under
each Lease of the Premises, and (iii) a budget and an aged accounts receivable
report. Such reports shall be prepared by an accountant who may be an employee
of Borrower, or of an affiliate of Borrower, acceptable to Lender. In addition
to the reports referred to herein, Borrower shall promptly supply any additional
information or records relating to the Premises or its operation as Lender may
from time to time reasonably request. Notwithstanding anything hereinabove to
the contrary, Lender agrees to accept the financial reports referenced herein,
prepared by the Chief Financial Officer of Borrower's parent company, Medtox
Scientific, Inc., or such other designee acceptable to Lender.
(b) Borrower shall submit to Lender, within 90 days following the end of
each fiscal year, annual balance sheets and income statements for Borrower.
28. Each notice, consent, request, report or other communication under this
Mortgage or any other Loan Document (each a "Notice") which any party hereto may
desire or be required to give to the other ------ shall be deemed to be an
adequate and sufficient notice if given in writing and service is made by either
(i) registered or certified mail, postage prepaid, in which case notice shall be
deemed to have been received three (3) business days following deposit to U.S.
mail; or (ii) nationally recognized overnight air courier, next day delivery,
prepaid, in which case such notice shall be deemed to have been received one (1)
business day following delivery to such nationally recognized overnight air
courier. All Notices shall be addressed to Borrower at its address given on the
first page hereof or to Lender at c/o Principal Capital Management, LLC, 801
Grand Avenue, Des Moines, Iowa 50392-1450, Attn: Commercial Real Estate
Servicing, Loan No. 752834, or to such other place as either party may by
written notice to the other hereafter designate as a place for service of
notice.
29. This Mortgage and all provisions hereof shall inure to the benefit of the
heirs, successors and assigns of Lender and shall bind the heirs and permitted
successors and assigns of Borrower.
30. Borrower has had the opportunity to fully negotiate the terms hereof and
modify the draftsmanship of this Mortgage. Therefore, the terms of this Mortgage
shall be construed and interpreted without any presumption, inference, or rule
requiring construction or interpretation of any provision of this Mortgage
against the interest of the party causing this Mortgage or any portion of it to
be drafted. Borrower is entering into this Mortgage freely and voluntarily
without any duress, economic or otherwise.
31. This Mortgage shall be governed by, and construed in accordance with the
laws of the state of Minnesota, without regard to its conflicts of law
principles.
32. As used herein, the term "Default Rate" means a rate equal to the lesser of
(i) four percent (4%) per annum above the then applicable interest rate payable
under the Note or (ii) the maximum rate allowed by applicable law.
33. BORROWER AND LENDER EACH KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE, TO
THE EXTENT PERMITTED BY LAW, TRIAL BY JURY IN ANY ACTIONS BROUGHT BY BORROWER OR
LENDER IN CONNECTION WITH THIS MORTGAGE, ANY OF THE LOAN DOCUMENTS, THE
INDEBTEDNESS SECURED HEREBY, OR ANY OTHER STATEMENTS OR ACTIONS OF LENDER.
34. This Mortgage and the Indebtedness secured hereby is for the sole purpose of
conducting or acquiring a lawful business, professional or commercial activity
or for the acquisition or management of real or personal property as a
commercial investment, and all proceeds of such Indebtedness shall be used for
said business or commercial investment purpose. Such proceeds will not be used
for the purchase of any security within the meaning of the Securities Exchange
Act of 1934, as amended, or any regulation issued pursuant thereto, including
without limitation, Regulations U, T and X of the Board of Governors of the
Federal Reserve System. This is not a purchase money mortgage where a seller is
providing financing to a buyer for the payment of all or any portion of the
purchase price, and the Premises secured hereby is not a residence or homestead
or used for mining, grazing, agriculture, timber or farming purposes.
35. Unless Lender shall otherwise direct in writing, Borrower shall appear in
and defend all actions or proceedings purporting to affect the security
hereunder, or any right or power of the Lender. The Lender shall have the right
to appear in such actions or proceedings. Borrower shall save Lender harmless
from all costs and expenses, including but not limited to, reasonable attorneys'
fees and costs, and costs of a title search, continuation of abstract and
preparation of survey incurred by reason of any action, suit, proceeding,
hearing, motion or application before any court or administrative body in and to
which Lender may be or become a party by reason hereof. Such proceedings shall
include but not be limited to condemnation, bankruptcy, probate and
administration proceedings, as well as any other action, suit, proceeding,
right, motion or application wherein proof of claim is by law required to be
filed or in which it becomes necessary to defend or uphold the terms of this
Mortgage or the Loan Documents or otherwise purporting to affect the security
hereof or the rights or powers of Lender. All money paid or expended by Lender
in that regard, together with interest thereon from date of such payment at the
Default Rate shall be additional Indebtedness secured hereby and shall be
immediately due and payable by Borrower without notice.
36. Upon the occurrence of an Event of Default, unless the same has been
specifically waived in writing, all Rents collected or received by Borrower
shall be accepted and held for Lender in trust and shall not be commingled with
the funds and property of Borrower, but shall be promptly paid over to Lender.
37. If more than one, all obligations and agreements of Borrower and of any
general partner of Borrower are joint and several.
38. This Mortgage may be executed in counterparts, each of which shall be deemed
an original; and such counterparts when taken together shall constitute but one
agreement.
39. Borrower has delivered to Lender an irrevocable letter of credit in the
amount of $300,000.00 having an expiration date not earlier than 1 year after
its issue date, to be held by Lender as additional security for the Loan;
Borrower shall deliver to Lender not later than 30 days prior to
the expiration date of said letter of credit and any renewal or
replacement letter of credit, a renewal or replacement irrevocable
bank letter of credit identical in terms and amount, issued by a
United States bank acceptable to Lender.
Except as hereinafter provided and so long as no Event of Default
has occurred under the Loan Documents, the Letter of Credit shall
be released at which time Medtox Scientific, Inc. has achieved
audited net income after taxes in excess of $1,000,000.00 for two
consecutive fiscal years as determined by Lender.
Upon the occurrence of an Event of Default under the Loan
Documents, Lender may, with respect to the letter of credit or any
renewal or replacement thereof, exercise all enforcement rights
and remedies granted to Lender under the Loan Documents and in
addition to all other rights and remedies granted to Lender under
the Loan Documents, Lender may, at its option, draw upon the
letter of credit and any renewal or replacement letter of credit
and the proceeds of such letter of credit shall constitute
additional security for the Loan. Lender may, at its option, use
such funds to (1) cure or partially cure any Event of Default; (2)
prepay the principal amount of the Loan or any part thereof; (3)
pay any interest accrued under the terms of the Note; (4) pay any
other Indebtedness; (5) pay the Make Whole Premium, if any, due
and payable; or (6) hold such funds in a non-interest-bearing
account as additional security for the Loan, all in such order as
Lender may determine. In the event the funds or any portion
thereof are applied to prepay the principal amount of the Loan or
any part thereof, Borrower waives any right to prepay the
principal amount in whole or in part without premium, and agrees
to pay, as liquidated damages and not as a penalty, a Make Whole
Premium on any principal amount prepaid. The Make Whole Premium on
any principal amount prepaid shall be calculated in accordance
with the provisions of the Loan Documents.
The letter of credit and any renewal or replacement letter of
credit shall be returned to Borrower and Borrower's obligation to
deliver such letter of credit shall expire, upon payment in full
of all sums due to Lender under the Loan Documents.
Notwithstanding anything contained herein to the contrary, Lender
will accept $300,000 to be deposited with and held by Lender
pursuant to an escrow security agreement between Borrower and
Lender under terms acceptable to Lender in lieu of the
above-referenced letter of credit.
40. From the date of its recording, this Mortgage shall be effective
as a financing statement filed as a fixture financing with respect
to all goods constituting part of the Premises (as more
particularly described in the granting clause of this Mortgage)
which are or are to become fixtures related to the Land described
herein. For this purpose, the following information is set forth:
(a) Name and Address of Debtor:
Medtox Scientific, Inc.
402 West County Road
St. Paul, Minnesota 55112
Attention: Chief Financial Officer
(b) Name and Address of Secured Party:
Principal Life Insurance Company
c/o Principal Capital Management, LLC
801 Grand Avenue
Des Moines, Iowa 50392-1450
(c) This document covers goods which are or are to become
fixtures.
(d) The name of the record owner of the Premises is the Debtor
described above.
(e) Borrowers tax identification number is 41-1997061.
41. The maximum principal amount of indebtedness secured by this
Mortgage at any one time, excluding advances made by Lender in
protection of the Premises or the lien of this Mortgage and other
indeterminate amounts shall be $12,400,000.00.
(Signatures on next page)
IN WITNESS WHEREOF, Borrower has caused this Mortgage to be duly executed
and delivered as of the date first above written.
NEW BRIGHTON BUSINESS CENTER LLC,
a Delaware limited liability company
By ____________________________________
Name:
Title:
STATE OF __________________ )
) ss.
COUNTY OF ________________ )
The foregoing instrument was acknowledged before me this
______ day of ______________________, ________________ by
______________________________, the ____________________ of
_______________________________________, a
____________________________________________ organized under the laws of the
state of ____________________, on behalf of said _____________________________.
-----------------------------------
Notary Public