EXHIBIT 99.8
THIS INSTRUMENT PREPARED BY:
Gibson Dunn & Crutcher LLP
333 S. Grand Avenue
Los Angeles, CA 90071
Attn: Janna Jenkins
AND WHEN RECORDED MAIL TO:
Commercial Banking Group (AU #2702)
201 Third Street, 8th Floor
San Francisco, CA 94013
Attn: Records Management / Team 2
Loan No. 8079119402
THIS MORTGAGE SECURES NOTES WHICH PROVIDE FOR A VARIABLE INTEREST RATE
MORTGAGE
WITH ABSOLUTE ASSIGNMENT OF LEASES AND RENTS,
SECURITY AGREEMENT AND FIXTURE FILING
THE PARTIES TO THIS MORTGAGE WITH ABSOLUTE ASSIGNMENT OF LEASES AND RENTS,
SECURITY AGREEMENT AND FIXTURE FILING ("Mortgage"), made as of January __, 2004,
are VIRCO MFG. CORPORATION ("Mortgagor") and Wells Fargo Bank, National
Association ("Mortgagee"). The mailing address of Mortgagor and Mortgagee are
the addresses for those parties set forth or referred to in Section 7.10 below.
ARTICLE 1. GRANT OF MORTGAGE
1.1 GRANT. For the purposes of and upon the terms and conditions
in this Mortgage and for good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged,
Mortgagor irrevocably grants, bargains, sells, conveys and
assigns to Mortgagee, with power of sale and right of entry
and possession, all of that real property located in the City
of Conway, County of Faulkner, State of Arkansas, described on
Exhibit A attached hereto, together with all right, title,
interest, and privileges of Mortgagor in and to all streets,
ways, roads, and alleys used in connection with or pertaining
to such real property, all development rights or credits, air
rights, water, water rights and water stock related to the
real property, and all minerals, oil and gas, and other
hydrocarbon substances in, on or under the real property, and
all appurtenances, easements, rights and rights of way
appurtenant or related thereto; all buildings, other
improvements and fixtures now or hereafter located on the real
property, including, but not limited to, all apparatus,
equipment, and appliances used in the operation or occupancy
of the real property, it being intended by the parties that
all such items shall be conclusively considered to be a part
of the real property, whether or not attached or affixed to
the real property (the "Improvements"); all interest or estate
which Mortgagor may hereafter acquire in the property
described above, and all additions and accretions thereto, and
the proceeds of any of the foregoing; (all of the foregoing
being collectively referred to as the "Subject Property"). The
listing of specific rights or property shall not be
interpreted as a limit of general terms.
1.2 ADDRESS. The addresses of the Subject Property are (i) 1701
Sturgis Road, (ii) 900 Robbins Street, and (iii) 701 Bruce
Street. However, neither the failure to designate an address
nor any inaccuracy in the addresses designated shall affect
the validity or priority of the lien of this Mortgage on the
Subject Property as described on Exhibit A.
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Loan No. 8079119402
ARTICLE 2. OBLIGATIONS SECURED
2.1 OBLIGATIONS SECURED. Mortgagor makes this Mortgage for the
purpose of securing the following obligations ("Secured
Obligations"):
(a) Payment to Mortgagee of all sums at any time owing
under (i) that certain Revolving Line of Credit Note
of even date herewith in the principal amount of
Forty Five Million Dollars ($45,000,000) (the "Credit
Note"), and (ii) that certain Term Note of even date
herewith in the principal amount of Twelve Million
Five Hundred Thousand Dollars ($12,500,000) (the
"Term Note"; and, together with the Credit Note, the
"Notes") executed by VIRCO MFG. CORPORATION, a
Delaware corporation ("Borrower"), and payable to the
order of Mortgagee, as lender; and
(b) Payment to Mortgagee of all sums representing Bank
Product Obligations, as defined in the Credit
Agreement referred to below; and
(c) Payment and performance of all covenants and
obligations of Mortgagor under this Mortgage; and
(d) Payment and performance of all covenants and
obligations on the part of Borrower under that
certain Amended and Restated Credit Agreement
("Credit Agreement") of even date herewith by and
between Borrower and Mortgagee, as lender, and each
other Loan Document executed in connection therewith;
and
(e) Payment and performance of all future advances and
other obligations that the then record owner of all
or part of the Subject Property may agree to pay
and/or perform (whether as principal, surety or
guarantor) for the benefit of Mortgagee, when such
future advance or obligation is evidenced by a
writing which recites that it is secured by this
Mortgage; and
(f) All modifications, extensions and renewals of any of
the obligations secured hereby, however evidenced,
including, without limitation: (i) modifications of
the required principal payment dates or interest
payment dates or both, as the case may be, deferring
or accelerating payment dates wholly or partly; or
(ii) modifications, extensions or renewals at a
different rate of interest whether or not in the case
of a note, the modification, extension or renewal is
evidenced by a new or additional promissory note or
notes.
2.2 OBLIGATIONS. The term "obligations" is used herein in its
broadest and most comprehensive sense and shall be deemed to
include, without limitation, all interest and charges,
prepayment charges (if any), late charges and loan fees at any
time accruing or assessed on any of the Secured Obligations,
including, without limitation, any interest or other payment
obligations that would have accrued on the Secured Obligations
but for the application of the United States Bankruptcy Code.
2.3 INCORPORATION. All terms of the Secured Obligations and the
documents evidencing such obligations are incorporated herein
by this reference. All persons who may have or acquire an
interest in the Subject Property shall be deemed to have
notice of the terms of the Secured Obligations and to have
notice, if provided therein, that: (a) the Notes or the Credit
Agreement may permit borrowing, repayment and re-borrowing so
that repayments shall not reduce the amounts of the Secured
Obligations; and (b) the rate of interest on one or more
Secured Obligations may vary from time to time.
ARTICLE 3. ASSIGNMENT OF LEASES AND RENTS
3.1 ASSIGNMENT. Mortgagor hereby irrevocably assigns to Mortgagee
all of Mortgagor's right, title and interest in, to and under:
(a) all leases of the Subject Property or any portion thereof,
and all other agreements of any kind relating to the use or
occupancy of the Subject Property or any portion thereof,
whether now existing or entered into after the date hereof
("Leases"); and (b) the rents, revenue, income, issues,
deposits and profits of the Subject Property, including,
without limitation, all amounts payable and all rights and
benefits accruing to Mortgagor under the Leases ("Payments").
The term "Leases" shall also include all guarantees of and
security for the lessees' performance thereunder, and all
amendments,
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Loan No. 8079119402
extensions, renewals or modifications thereto which are
permitted hereunder. This is a present and absolute
assignment, not an assignment for security purposes only, and
Mortgagee's right to the Leases and Payments is not contingent
upon, and may be exercised without possession of, the Subject
Property.
3.2 GRANT OF LICENSE. Mortgagee confers upon Mortgagor a license
("License") to collect and retain the Payments as they become
due and payable, until the occurrence of a Default (as
hereinafter defined). Upon a Default, the License shall be
automatically revoked and Mortgagee may collect and apply the
Payments pursuant to Section 6.4 without notice and without
taking possession of the Subject Property. Mortgagor hereby
irrevocably authorizes and directs the lessees under the
Leases to rely upon and comply with any notice or demand by
Mortgagee for the payment to Mortgagee of any rental or other
sums which may at any time become due under the Leases, or for
the performance of any of the lessees' undertakings under the
Leases, and the lessees shall have no right or duty to inquire
as to whether any Default has actually occurred or is then
existing hereunder. Mortgagor hereby relieves the lessees from
any liability to Mortgagor by reason of relying upon and
complying with any such notice or demand by Mortgagee.
3.3 EFFECT OF ASSIGNMENT. The foregoing irrevocable assignment
shall not cause Mortgagee to be: (a) a mortgagee in
possession; (b) responsible or liable for the control, care,
management or repair of the Subject Property or for performing
any of the terms, agreements, undertakings, obligations,
representations, warranties, covenants and conditions of the
Leases; or (c) responsible or liable for any waste committed
on the Subject Property by the lessees under any of the Leases
or any other parties; for any dangerous or defective condition
of the Subject Property; or for any negligence in the
management, upkeep, repair or control of the Subject Property
resulting in loss or injury or death to any lessee, licensee,
employee, invitee or other person. Mortgagee shall not
directly or indirectly be liable to Mortgagor or any other
person as a consequence of: (i) the exercise or failure to
exercise by Mortgagee, or any of its employees, agents,
contractors or subcontractors, any of the rights, remedies or
powers granted to Mortgagee hereunder; or (ii) the failure or
refusal of Mortgagee to perform or discharge any obligation,
duty or liability of Mortgagor arising under the Leases.
3.4 REPRESENTATIONS AND WARRANTIES. Mortgagor represents and
warrants that: (a) the Schedule of Leases attached hereto as
Schedule 1 is, as of the date hereof, a true, accurate and
complete list of all Leases; (b) all existing Leases are in
full force and effect and are enforceable in accordance with
their respective terms, and no breach or default, or event
which would constitute a breach or default after notice or the
passage of time, or both, exists under any existing Leases on
the part of any party; (c) no rent or other payment under any
existing Lease has been paid by any lessee for more than one
(1) month in advance; and (d) none of the lessor's interests
under any of the Leases has been transferred or assigned.
3.5 COVENANTS. Mortgagor covenants and agrees at Mortgagor's sole
cost and expense to: (a) perform the obligations of lessor
contained in the Leases and enforce by all available remedies
performance by the lessees of the obligations of the lessees
contained in the Leases; (b) give Mortgagee prompt written
notice of any default which occurs with respect to any of the
Leases, whether the default be that of the lessee or of the
lessor; (c) exercise Mortgagor's best efforts to keep all
portions of the Subject Property that are capable of being
leased at all times at rentals not less than the fair market
rental value; (d) deliver to Mortgagee fully executed,
counterpart original(s) of each and every Lease if requested
to do so; and (e) execute and record such additional
assignments of any Lease or specific subordinations (or
subordination, attornment and non-disturbance agreements
executed by the lessor and lessee) of any Lease to the
Mortgage, in form and substance acceptable to Mortgagee, as
Mortgagee may request. Mortgagor shall not, without
Mortgagee's prior written consent or as otherwise permitted by
any provision of the Credit Agreement: (i) enter into any
Leases after the date thereof; (ii) execute any other
assignment relating to any of the Leases; (iii) discount any
rent or other sums due under the Leases or collect the same in
advance, other than to collect rentals one (1) month in
advance of the time when it becomes due; (iv) terminate,
modify or amend any of the terms of the Leases or in any
manner release or discharge the lessees from any obligations
thereunder; (v) consent to any assignment or subletting by any
lessee; or (vi) subordinate or agree to subordinate any of the
Leases to any other Mortgage or encumbrance. Any such
attempted action in violation of the provisions of this
Section 3.5 shall be null and void. Without in any way
limiting the requirement of Mortgagee's consent hereunder, any
sums received by Mortgagor in consideration of any termination
(or the release or discharge
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Loan No. 8079119402
of any lessee) modification or amendment of any Lease shall be
applied to reduce the outstanding Secured Obligations and any
such sums received by Mortgagor shall be held in trust by
Mortgagor for such purpose.
3.6 ESTOPPEL CERTIFICATES. Within thirty (30) days after written
request by Mortgagee, Mortgagor shall deliver to Mortgagee and
to any party designated by Mortgagee estoppel certificates
executed by Mortgagor and by each of the lessees, in
recordable form, certifying (if such be the case): (a) that
the foregoing assignment and the Leases are in full force and
effect; (b) the date of each lessee's most recent payment of
rent; (c) that there are no defenses or offsets outstanding,
or stating those claimed by Mortgagor or lessees under the
foregoing assignment or the Leases, as the case may be; and
(d) any other information reasonably requested by Mortgagee.
ARTICLE 4. SECURITY AGREEMENT AND FIXTURE FILING
4.1 SECURITY INTEREST. Mortgagor hereby grants and assigns to
Mortgagee as of the "Closing Date" (defined in the Credit
Agreement) a security interest, to secure payment and
performance of all of the Secured Obligations, in all of the
following described personal property in which Mortgagor now
or at any time hereafter has any interest (collectively, the
"Collateral"):
All goods, building and other materials, supplies,
inventory, work in process, equipment, machinery,
fixtures, furniture, furnishings, signs and other
personal property and embedded software included
therein and supporting information, wherever
situated, which are or are to be incorporated into,
used in connection with, or appropriated for use on
(i) the real property described on Exhibit A attached
hereto and incorporated by reference herein or (ii)
any existing or future improvements on the real
property (which real property and improvements are
collectively referred to herein as the "Subject
Property"); together with all rents and security
deposits derived from the Subject Property; all
inventory, accounts, cash receipts, deposit accounts,
accounts receivable, contract rights, licenses,
agreements, general intangibles, payment intangibles,
software, chattel paper (whether electronic or
tangible), instruments, documents, promissory notes,
drafts, letters of credit, letter of credit rights,
supporting obligations, insurance policies, insurance
and condemnation awards and proceeds, proceeds of the
sale of promissory notes, any other rights to the
payment of money, trade names, trademarks and service
marks arising from or related to the ownership,
management, leasing, operation, sale or disposition
of the Subject Property or any business now or
hereafter conducted thereon by Mortgagor; all
development rights and credits, and any and all
permits, consents, approvals, licenses,
authorizations and other rights granted by, given by
or obtained from, any governmental entity with
respect to the Subject Property; all water and water
rights, wells and well rights, canals and canal
rights, ditches and ditch rights, springs and spring
rights, and reservoirs and reservoir rights
appurtenant to or associated with the Subject
Property, whether decreed or undecreed, tributary,
non-tributary or not non-tributary, surface or
underground or appropriated or unappropriated, and
all shares of stock in water, ditch, lateral and
canal companies, well permits and all other evidences
of any of such rights; all deposits or other security
now or hereafter made with or given to utility
companies by Mortgagor with respect to the Subject
Property; all advance payments of insurance premiums
made by Mortgagor with respect to the Subject
Property; all plans, drawings and specifications
relating to the Subject Property; all loan funds held
by Mortgagee, whether or not disbursed; all funds
deposited with Mortgagee pursuant to any loan
agreement; all reserves, deferred payments, deposits,
accounts, refunds, cost savings and payments of any
kind related to the Subject Property or any portion
thereof; together with all replacements and proceeds
of, and additions and accessions to, any of the
foregoing; together with all books, records and files
relating to any of the foregoing.
As to all of the above described personal property
which is or which hereafter becomes a "fixture" under
applicable law, this Mortgage constitutes a fixture
filing under the Arkansas Uniform Commercial Code, as
amended or recodified from time to time ("UCC").
4.2 REPRESENTATIONS AND WARRANTIES. Mortgagor represents and
warrants that: (a) Mortgagor has, or will have, good title to
the Collateral; (b) Mortgagor has not previously assigned or
encumbered the
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Loan No. 8079119402
Collateral, and no financing statement covering any of the
Collateral has been delivered to any other person or entity;
(c) Mortgagor's principal place of business is located at the
address shown in Section 7.10; and (d) Mortgagor's legal name
is exactly as set forth on the first page of this Mortgage and
all of Mortgagor's organizational documents or agreements
delivered to Mortgagee are complete and accurate in every
respect.
4.3 COVENANTS. Mortgagor agrees: (a) to execute and deliver such
documents as Mortgagee deems necessary to create, perfect and
continue the security interests contemplated hereby; (b) not
to change its name, and as applicable, its chief executive
office, its principal residence or the jurisdiction in which
it is organized and/or registered without giving Mortgagee
prior written notice thereof; (c) to cooperate with Mortgagee
in perfecting all security interests granted herein and in
obtaining such agreements from third parties as Mortgagee
deems necessary, proper or convenient in connection with the
preservation, perfection or enforcement of any of its rights
hereunder; and (d) that Mortgagee is authorized to file
financing statements in the name of Mortgagor to perfect
Mortgagee's security interest in Collateral.
4.4 RIGHTS OF MORTGAGEE. In addition to Mortgagee's rights as a
"Secured Party" under the UCC, Mortgagee may, but shall not be
obligated to, at any time without notice and at the expense of
Mortgagor: (a) give notice to any person of Mortgagee's rights
hereunder and enforce such rights at law or in equity; (b)
insure, protect, defend and preserve the Collateral or any
rights or interests of Mortgagee therein; (c) inspect the
Collateral; and (d) endorse, collect and receive any right to
payment of money owing to Mortgagor under or from the
Collateral. Notwithstanding the above, in no event shall
Mortgagee be deemed to have accepted any property other than
cash in satisfaction of any obligation of Mortgagor to
Mortgagee unless Mortgagee shall make an express written
election of said remedy under UCC Section 9-620, or other
applicable law.
4.5 RIGHTS OF MORTGAGEE ON DEFAULT. Upon the occurrence of a
Default (hereinafter defined) under this Mortgage, then in
addition to all of Mortgagee's rights as a "Secured Party"
under the UCC or otherwise at law:
(a) Mortgagee may (i) upon written notice, require
Mortgagor to assemble any or all of the Collateral
and make it available to Mortgagee at a place
designated by Mortgagee; (ii) without prior notice,
enter upon the Subject Property or other place where
any of the Collateral may be located and take
possession of, collect, sell, lease, license and
dispose of any or all of the Collateral, and store
the same at locations acceptable to Mortgagee at
Mortgagor's expense; (iii) sell, assign and deliver
at any place or in any lawful manner all or any part
of the Collateral and bid and become the purchaser at
any such sales;
(b) Mortgagee may, for the account of Mortgagor and at
Mortgagor's expense: (i) operate, use, consume, sell,
lease, license or dispose of the Collateral as
Mortgagee deems appropriate for the purpose of
performing any or all of the Secured Obligations;
(ii) enter into any agreement, compromise, or
settlement, including insurance claims, which
Mortgagee may deem desirable or proper with respect
to any of the Collateral; and (iii) endorse and
deliver evidences of title for, and receive, enforce
and collect by legal action or otherwise, all
indebtedness and obligations now or hereafter owing
to Mortgagor in connection with or on account of any
or all of the Collateral; and
(c) In disposing of Collateral hereunder, Mortgagee may
disclaim all warranties of title, possession, quiet
enjoyment and the like. Any proceeds of any
disposition of any Collateral may be applied by
Mortgagee to the payment of expenses incurred by
Mortgagee in connection with the foregoing, including
reasonable attorneys' fees, and the balance of such
proceeds may be applied by Mortgagee toward the
payment of the Secured Obligations in such order of
application as Mortgagee may from time to time elect.
Notwithstanding any other provision hereof, Mortgagee
shall not be deemed to have accepted any property
other than cash in satisfaction of any obligation of
Mortgagor to Mortgagee unless Mortgagor shall make an
express written election of said remedy under UCC ss.
9-620, or other applicable law. Mortgagor agrees that
Mortgagee shall have no obligation to process or
prepare any Collateral for sale or other disposition.
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Loan No. 8079119402
4.6 POWER OF ATTORNEY. Mortgagor hereby irrevocably appoints
Mortgagee as Mortgagor's attorney-in-fact (such agency being
coupled with an interest), and as such attorney-in-fact
Mortgagee may, without the obligation to do so, in Mortgagee's
name, or in the name of Mortgagor, prepare, execute and file
or record financing statements, continuation statements,
applications for registration and like papers necessary to
create, perfect or preserve any of Mortgagee's security
interests and rights in or to any of the Collateral, and, upon
a Default hereunder, take any other action required of
Mortgagor; provided, however, that Mortgagee as such
attorney-in-fact shall be accountable only for such funds as
are actually received by Mortgagee.
4.7 POSSESSION AND USE OF COLLATERAL. Except as otherwise provided
in this Section or the other Loan Documents (as defined in the
Credit Agreement), so long as no Default exists under this
Mortgage or any of the Loan Documents, Mortgagor may possess,
use, move, transfer or dispose of any of the Collateral in the
ordinary course of Mortgagor's business and in accordance with
the Credit Agreement.
ARTICLE 5. RIGHTS AND DUTIES OF THE PARTIES
5.1 TITLE. Mortgagor represents and warrants that, except as
disclosed to Mortgagee in a writing which refers to this
warranty, Mortgagor lawfully holds and possesses fee simple
title to the Subject Property without limitation on the right
to encumber, and that this Mortgage is a first and prior lien
on the Subject Property.
5.2 TAXES AND ASSESSMENTS. Subject to Mortgagor's rights to
contest payment of taxes as may be provided in the Credit
Agreement, Mortgagor shall pay prior to delinquency all taxes,
assessments, levies and charges imposed by any public or
quasi-public authority or utility company which are or which
may become a lien upon or cause a loss in value of the Subject
Property or any interest therein. Mortgagor shall also pay
prior to delinquency all taxes, assessments, levies and
charges imposed by any public authority upon Mortgagee by
reason of its interest in any Secured Obligation or in the
Subject Property, or by reason of any payment made to
Mortgagee pursuant to any Secured Obligation; provided,
however, Mortgagor shall have no obligation to pay taxes which
may be imposed from time to time upon Mortgagee and which are
measured by and imposed upon Mortgagee's net income.
5.3 TAX AND INSURANCE IMPOUNDS. At any time following the
occurrence of a Default, at Mortgagee's option and upon its
demand, Mortgagor, shall, until all Secured Obligations have
been paid in full, pay to Mortgagee monthly, annually or as
otherwise directed by Mortgagee an amount estimated by
Mortgagee to be equal to: (a) all taxes, assessments, levies
and charges imposed by any public or quasi-public authority or
utility company which are or may become a lien upon the
Subject Property or Collateral and will become due for the tax
year during which such payment is so directed; and (b)
premiums for fire, hazard and insurance required or requested
pursuant to the Loan Documents when same are next due. If
Mortgagee determines that any amounts paid by Mortgagor are
insufficient for the payment in full of such taxes,
assessments, levies, charges and/or insurance premiums,
Mortgagee shall notify Mortgagor of the increased amounts
required to pay all amounts when due, whereupon Mortgagor
shall pay to Mortgagee within thirty (30) days thereafter the
additional amount as stated in Mortgagee's notice. All sums so
paid shall not bear interest, except to the extent and in any
minimum amount required by law; and Mortgagee shall, unless
Mortgagor is otherwise in Default hereunder or under any Loan
Document, apply said funds to the payment of, or at the sole
option of Mortgagee release said funds to Mortgagor for the
application to and payment of, such sums, taxes, assessments,
levies, charges, and insurance premiums. Upon Default by
Mortgagor hereunder or under any Secured Obligation, Mortgagee
may apply all or any part of said sums to any Secured
Obligation and/or to cure such Default, in which event
Mortgagor shall be required to restore all amounts so applied,
as well as to cure any other events or conditions of Default
not cured by such application. Upon assignment of this
Mortgage, Mortgagee shall have the right to assign all amounts
collected and in its possession to its assignee whereupon
Mortgagee shall be released from all liability with respect
thereto. Within ninety-five (95) days following full repayment
of the Secured Obligations (other than full repayment of the
Secured Obligations as a consequence of a foreclosure or
conveyance in lieu of foreclosure of the liens and security
interests securing the Secured Obligations) or at such earlier
time as Mortgagee may elect, the balance of all amounts
collected and in Mortgagee's possession shall be paid to
Mortgagor and no other party shall have any right or claim
thereto.
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Loan No. 8079119402
5.4 PERFORMANCE OF SECURED OBLIGATIONS. Mortgagor shall promptly
pay and perform each Secured Obligation when due.
5.5 LIENS, ENCUMBRANCES AND CHARGES. Mortgagor shall immediately
discharge any lien not approved by Mortgagee in writing that
has or may attain priority over this Mortgage. Subject to the
provisions of the Credit Agreement regarding mechanics' liens,
Mortgagor shall pay when due all obligations secured by or
which may become liens and encumbrances which shall now or
hereafter encumber or appear to encumber all or any part of
the Subject Property or Collateral, or any interest therein,
whether senior or subordinate hereto.
5.6 DAMAGES; INSURANCE AND CONDEMNATION PROCEEDS.
(a) The following (whether now existing or hereafter
arising) are all absolutely and irrevocably assigned
by Mortgagor to Mortgagee and, at the request of
Mortgagee, shall be paid directly to Mortgagee: (i)
all awards of damages and all other compensation
payable directly or indirectly by reason of a
condemnation or proposed condemnation for public or
private use affecting all or any part of, or any
interest in, the Subject Property or Collateral; (ii)
all other claims and awards for damages to, or
decrease in value of, all or any part of, or any
interest in, the Subject Property or Collateral;
(iii) all proceeds of any insurance policies (whether
or not expressly required by Mortgagee to be
maintained by Mortgagor, including, but not limited
to, earthquake insurance and terrorism insurance, if
any) payable by reason of loss sustained to all or
any part of the Subject Property or Collateral; and
(iv) all interest which may accrue on any of the
foregoing. Subject to applicable law, and without
regard to any requirement contained in Section
5.7(d), Mortgagee may at its discretion apply all or
any of the proceeds it receives to its expenses in
settling, prosecuting or defending any claim and may
apply the balance to the Secured Obligations in any
order acceptable to Mortgagee, and/or Mortgagee may
release all or any part of the proceeds to Mortgagor
upon any conditions Mortgagee may impose. Mortgagee
may commence, appear in, defend or prosecute any
assigned claim or action and may adjust, compromise,
settle and collect all claims and awards assigned to
Mortgagee; provided, however, in no event shall
Mortgagee be responsible for any failure to collect
any claim or award, regardless of the cause of the
failure, including, without limitation, any
malfeasance or nonfeasance by Mortgagee or its
employees or agents.
(b) At its sole option, Mortgagee may permit insurance or
condemnation proceeds held by Mortgagee to be used
for repair or restoration but may condition such
application upon reasonable conditions, including,
without limitation: (i) the deposit with Mortgagee of
such additional funds which Mortgagee determines are
needed to pay all costs of the repair or restoration,
(including, without limitation, taxes, financing
charges, insurance and rent during the repair
period); (ii) the establishment of an arrangement for
lien releases and disbursement of funds acceptable to
Mortgagee; (iii) the delivery to Mortgagee of plans
and specifications for the work, a contract for the
work signed by a contractor acceptable to Mortgagee,
a cost breakdown for the work and a payment and
performance bond for the work, all of which shall be
acceptable to Mortgagee; and (iv) the delivery to
Mortgagee of evidence acceptable to Mortgagee (aa)
that after completion of the work the income from the
Subject Property will be sufficient to pay all
expenses and debt service for the Subject Property;
(bb) of the continuation of Leases acceptable to and
required by Mortgagee; (cc) that upon completion of
the work, the size, capacity and total value of the
Subject Property will be at least as great as it was
before the damage or condemnation occurred; (dd) that
there has been no material adverse change in the
financial condition or credit of Mortgagor since the
date of this Mortgage; and (ee) of the satisfaction
of any additional conditions that Mortgagee may
reasonably establish to protect its security.
Mortgagor hereby acknowledges that the conditions
described above are reasonable, and, if such
conditions have not been satisfied within thirty (30)
days of receipt by Mortgagee of such insurance or
condemnation proceeds, then Mortgagee may apply such
insurance or condemnation proceeds to pay the Secured
Obligations in such order and amounts as Mortgagee in
its sole discretion may choose.
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Loan No. 8079119402
5.7 INSURANCE, MAINTENANCE AND PRESERVATION OF THE SUBJECT
PROPERTY. Subject to the provisions of the Credit Agreement,
while any obligation of Mortgagor or any guarantor under any
Loan Document remains outstanding, Mortgagor covenants:
(a) to maintain at Mortgagor's sole expense, with
licensed insurers approved by Mortgagee, the
following policies of insurance in form and substance
satisfactory to Mortgagee, with Mortgagee named as
first mortgagee on all such policies: (i) title
insurance (including a Title Policy, together with
any endorsements which Mortgagee may require,
insuring Mortgagee in the principal amount of the
Notes), (ii) property insurance (including, without
limitation, such endorsements as Mortgagee may
require, insuring Mortgagee against damage to the
Subject Property in an amount acceptable to
Mortgagee, with Mortgagee named on the policy under a
Lender's Loss Payable Endorsement), (iii) flood
hazard insurance, as required by applicable
governmental regulations, or as deemed necessary by
Mortgagee, (iv) liability insurance (including a
policy of comprehensive general liability insurance)
with limits as required by Mortgagee, insuring
against liability for injury and/or death to any
person and/or damage to any property occurring on the
Subject Property and/or from any cause whatsoever.
Mortgagor shall provide to Mortgagee the originals of
all required insurance policies, or other evidence of
insurance acceptable to Mortgagee. All insurance
policies shall provide that the insurance shall not
be cancelable or materially changed without thirty
(30) days' prior written notice to Mortgagee.
Mortgagee shall be named under a Lender's Loss
Payable Endorsement (form #438BFU or equivalent) on
all insurance policies which Mortgagor actually
maintains with respect to the Property. Mortgagor
shall provide to Mortgagee evidence of any other
hazard insurance Mortgagee may deem necessary at any
time during the loan secured by this Mortgage;
(b) to keep the Subject Property and Collateral in good
condition and repair;
(c) not to remove or demolish the Subject Property or
Collateral or any part thereof, not to alter, restore
or add to the Subject Property or Collateral (except
in the ordinary course of business) and not to
initiate or acquiesce in any change in any zoning or
other land classification which affects the Subject
Property without the Mortgagee's prior written
consent;
(d) in the event of any damage or other casualty relating
to the Subject Property or the Collateral and so long
as Mortgagee has released any insurance claim
proceeds relating thereto in accordance with Section
5.6 hereof, to complete or restore promptly and in
good and workmanlike manner the Subject Property and
Collateral, or any part thereof which may be damaged
or destroyed;
(e) to comply with all laws, ordinances, regulations and
standards, and all covenants, conditions,
restrictions and equitable servitudes, whether public
or private, of every kind and character which affect
the Subject Property or Collateral and pertain to
acts committed or conditions existing thereon,
including, without limitation, any work, alteration,
improvement or demolition mandated by such laws,
covenants or requirements;
(f) not to commit or permit waste of the Subject Property
or Collateral; and
(g) to do all other acts which from the character or use
of the Subject Property or Collateral may be
reasonably necessary to maintain and preserve its
value.
5.8 INTENTIONALLY OMITTED.
5.9 APPROVAL OF LEASES. All leases of all or any part of the
Subject Property shall: (a) be upon terms and with tenants
approved by Mortgagee prior to Mortgagor's execution of any
such lease; and (b) include estoppel, subordination,
attornment and mortgagee protection provisions satisfactory to
Mortgagee. All standard lease forms and any material deviation
from any form, shall be approved by Mortgagee prior to
execution of any lease using such form.
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Loan No. 8079119402
5.10 DEFENSE AND NOTICE OF LOSSES, CLAIMS AND ACTIONS. At
Mortgagor's sole expense, Mortgagor shall protect, preserve
and defend the Subject Property and Collateral and title to
and right of possession of the Subject Property and
Collateral, the security hereof and the rights and powers of
Mortgagee hereunder against all adverse claims. Mortgagor
shall give Mortgagee prompt notice in writing of the assertion
of any claim, of the filing of any action or proceeding, of
the occurrence of any damage to the Subject Property or
Collateral and of any condemnation offer or action.
5.11 CERTAIN POWERS OF MORTGAGEE.
(a) From time to time and without affecting the personal
liability of any person for payment of any
indebtedness or performance of any obligations
secured hereby, Mortgagee may, without liability
therefor and without notice: (a) release from the
lien of this Mortgage all or any part of the Subject
Property; (b) consent to the making of any map or
plat thereof; and (c) join in any grant of easement
thereon, any declaration of covenants and
restrictions, or any extension agreement or any
agreement subordinating the lien or charge of this
Mortgage.
(b) Except as may be required by applicable law,
Mortgagee may from time to time apply to any court of
competent jurisdiction for aid and direction in the
enforcement of the rights and remedies available
hereunder, and may obtain orders or decrees directing
or confirming or approving the enforcement of said
remedies.
(c) INTENTIONALLY OMITTED.
(d) INTENTIONALLY OMITTED.
(e) INTENTIONALLY OMITTED.
(f) INTENTIONALLY OMITTED.
(g) INTENTIONALLY OMITTED.
5.12 COMPENSATION; EXCULPATION; INDEMNIFICATION.
(a) Mortgagor shall pay to Mortgagee reasonable
compensation for services rendered concerning this
Mortgage, including without limit any statement of
amounts owing under any Secured Obligation. Mortgagee
shall not directly or indirectly be liable to
Mortgagor or any other person as a consequence of (i)
the exercise of the rights, remedies or powers
granted to Mortgagee in this Mortgage; (ii) the
failure or refusal of Mortgagee to perform or
discharge any obligation or liability of Mortgagor
under any agreement related to the Subject Property
or Collateral or under this Mortgage; or (iii) any
loss sustained by Mortgagor or any third party
resulting from Mortgagee's failure (whether by
malfeasance, nonfeasance or refusal to act) to lease
the Subject Property after a Default (hereinafter
defined) or from any other act or omission
(regardless of whether same constitutes negligence)
of Mortgagee in managing the Subject Property after a
Default unless the loss is caused by the gross
negligence or willful misconduct of Mortgagee and no
such liability shall be asserted against or imposed
upon Mortgagee, and all such liability is hereby
expressly waived and released by Mortgagor.
(b) MORTGAGOR INDEMNIFIES MORTGAGEE AGAINST, AND HOLDS
MORTGAGEE HARMLESS FROM, ALL LOSSES, DAMAGES,
LIABILITIES, CLAIMS, CAUSES OF ACTION, JUDGMENTS,
COURT COSTS, ATTORNEYS' FEES AND OTHER LEGAL
EXPENSES, COST OF EVIDENCE OF TITLE, COST OF EVIDENCE
OF VALUE, AND OTHER EXPENSES WHICH IT MAY SUFFER OR
INCUR: (I) BY REASON OF THIS MORTGAGE; (II) BY REASON
OF THE EXECUTION OF THIS MORTGAGE OR IN PERFORMANCE
OF ANY ACT REQUIRED OR PERMITTED HEREUNDER OR BY LAW;
(III) AS A RESULT OF ANY FAILURE OF MORTGAGOR TO
PERFORM MORTGAGOR'S OBLIGATIONS; OR (IV) BY REASON OF
ANY ALLEGED OBLIGATION OR
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Loan No. 8079119402
UNDERTAKING ON MORTGAGEE'S PART TO PERFORM OR
DISCHARGE ANY OF THE REPRESENTATIONS, WARRANTIES,
CONDITIONS, COVENANTS OR OTHER OBLIGATIONS CONTAINED
IN ANY OTHER DOCUMENT RELATED TO THE SUBJECT
PROPERTY. THE ABOVE OBLIGATION OF MORTGAGOR TO
INDEMNIFY AND HOLD HARMLESS MORTGAGEE SHALL SURVIVE
THE RELEASE AND CANCELLATION OF THE SECURED
OBLIGATIONS AND THE RELEASE OR PARTIAL RELEASE OF
THIS MORTGAGE.
(c) Mortgagor shall pay all amounts and indebtedness
arising under this Section 5.12 immediately upon
demand by Mortgagee together with interest thereon
from the date the indebtedness arises at the rate of
interest then applicable to the principal balance of
the Notes as specified therein.
5.13 INTENTIONALLY OMITTED.
5.14 DUE ON SALE OR ENCUMBRANCE. If the Subject Property or any
interest therein shall be sold, transferred (including,
without limitation, through sale or transfer of a majority or
controlling interest of the corporate stock or general
partnership interests or limited liability company interests
of Mortgagor), mortgaged, assigned, further encumbered or
leased, whether directly or indirectly, whether voluntarily,
involuntarily or by operation of law, without the prior
written consent of Mortgagee, THEN Mortgagee, in its sole
discretion, may declare all Secured Obligations immediately
due and payable.
5.15 RELEASES, EXTENSIONS, MODIFICATIONS AND ADDITIONAL SECURITY.
Without notice to or the consent, approval or agreement of any
persons or entities having any interest at any time in the
Subject Property and Collateral or in any manner obligated
under the Secured Obligations ("Interested Parties"),
Mortgagee may, from time to time, release any person or entity
from liability for the payment or performance of any Secured
Obligation, take any action or make any agreement extending
the maturity or otherwise altering the terms or increasing the
amount of any Secured Obligation, or accept additional
security or release all or a portion of the Subject Property
and Collateral and other security for the Secured Obligations.
None of the foregoing actions shall release or reduce the
personal liability of any of said Interested Parties, or
release or impair the priority of the lien of and security
interests created by this Mortgage upon the Subject Property
and Collateral.
5.16 INTENTIONALLY OMITTED.
5.17 SUBROGATION. Mortgagee shall be subrogated to the lien of all
encumbrances, whether released of record or not, paid in whole
or in part by Mortgagee pursuant to the Loan Documents or by
the proceeds of any loan secured by this Mortgage.
5.18 RIGHT OF INSPECTION. Mortgagee, its agents and employees, may
enter the Subject Property at any reasonable time for the
purpose of inspecting the Subject Property and Collateral and
ascertaining Mortgagor's compliance with the terms hereof.
5.19 INTENTIONALLY OMITTED.
5.20 HAZARDOUS MATERIALS. Mortgagor agrees as follows:
(a) NO HAZARDOUS ACTIVITIES. Mortgagor shall not cause or
permit the Subject Property to be used as a site for
the use, generation, manufacture, storage, treatment,
release, discharge, disposal, transportation or
presence of any "hazardous substances," "hazardous
wastes," "hazardous materials," "toxic substances,"
"wastes," "regulated substances," "industrial solid
wastes," or "pollutants" under the Hazardous
Materials Laws, as described below, and/or other
applicable environmental laws, ordinances and
regulations (collectively, the "Hazardous
Materials"). "Hazardous Materials" shall not include
commercially reasonable amounts of such materials
used in the ordinary course of operation of the
Property which are used and stored in accordance with
all applicable environmental laws, ordinances and
regulations. "Hazardous Materials Laws" are defined
as laws, ordinances and regulations relating to
Hazardous Materials, including, without limitation:
the Clean Air Act, as amended, 42 U.S.C. Section 7401
et seq.; the Federal Water Pollution Control
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Loan No. 8079119402
Act, as amended, 33 U.S.C. Section 1251 et seq.; the
Resource Conservation and Recovery Act of 1976, as
amended, 42 U.S.C. Section 6901 et seq.; the
Comprehensive Environment Response, Compensation and
Liability Act of 1980, as amended (including the
Superfund Amendments and Reauthorization Act of 1986,
"CERCLA"), 42 U.S.C. Section 9601 et seq.; the Toxic
Substances Control Act, as amended, 15 U.S.C. Section
2601 et seq.; the Occupational Safety and Health Act,
as amended, 29 U.S.C. Section 651, the Emergency
Planning and Community Right-to-Know Act of 1986, 42
U.S.C. Section 11001 et seq.; the Mine Safety and
Health Act of 1977, as amended, 30 U.S.C. Section 801
et seq.; the Safe Drinking Water Act, as amended, 42
U.S.C. Section 300f et seq.; and all comparable state
and local laws, laws of other jurisdictions or orders
and regulations.
(b) COMPLIANCE. Mortgagor shall comply and cause the
Subject Property to comply with all Hazardous
Materials Laws.
(c) NOTICES. Mortgagor shall immediately notify Mortgagee
in writing of: (i) the discovery of any Hazardous
Materials on, under or about the Property; (ii) any
knowledge by Mortgagor that the Property does not
comply with any Hazardous Materials Laws; and (iii)
any claims or actions ("Hazardous Materials Claims")
pending or threatened against Mortgagor or the
Property by any governmental entity or agency or by
any other person or entity relating to Hazardous
Materials or pursuant to the Hazardous Materials
Laws.
(d) REMEDIAL ACTION. In response to the presence of any
Hazardous Materials on, under or about the Property,
Mortgagor shall immediately take, at Mortgagor's sole
expense, all remedial action required by any
Hazardous Materials Laws or any judgment, consent
decree, settlement or compromise in respect to any
Hazardous Materials Claims.
5.21 HAZARDOUS MATERIALS INDEMNITY. MORTGAGOR HEREBY AGREES TO
DEFEND, INDEMNIFY AND HOLD HARMLESS MORTGAGEE, ITS DIRECTORS,
OFFICERS, EMPLOYEES, AGENTS, SUCCESSORS AND ASSIGNS FROM AND
AGAINST ANY AND ALL LOSSES, DAMAGES, LIABILITIES, CLAIMS,
ACTIONS, JUDGMENTS, COURT COSTS AND LEGAL OR OTHER EXPENSES
(INCLUDING, WITHOUT LIMITATION, ATTORNEYS' FEES AND EXPENSES)
WHICH MORTGAGEE MAY INCUR AS A DIRECT OR INDIRECT CONSEQUENCE
OF THE USE, GENERATION, MANUFACTURE, STORAGE, DISPOSAL,
THREATENED DISPOSAL, TRANSPORTATION OR PRESENCE OF HAZARDOUS
MATERIALS IN, ON, UNDER OR ABOUT THE PROPERTY. MORTGAGOR SHALL
IMMEDIATELY PAY TO MORTGAGEE UPON DEMAND ANY AMOUNTS OWING
UNDER THIS INDEMNITY, TOGETHER WITH INTEREST FROM THE DATE THE
INDEBTEDNESS ARISES UNTIL PAID AT THE RATE OF INTEREST
APPLICABLE TO THE PRINCIPAL BALANCE OF THE NOTES. MORTGAGOR'S
DUTY AND OBLIGATIONS TO DEFEND, INDEMNIFY AND HOLD HARMLESS
MORTGAGEE SHALL SURVIVE THE CANCELLATION OF THE NOTES AND THE
RELEASE, OR PARTIAL RELEASE OF THIS MORTGAGE.
5.22 LEGAL EFFECT OF SECTION. Mortgagor and Mortgagee agree that
Mortgagor's duty to indemnify Mortgagee hereunder shall
survive: (a) any judicial or non-judicial foreclosure under
this Mortgage, or transfer of the Subject Property in lieu
thereof, (b) the release or cancellation of this Mortgage; and
(c) the satisfaction of all of Mortgagor's obligation under
the Loan Documents.
ARTICLE 6. DEFAULT PROVISIONS
6.1 DEFAULT. For all purposes hereof, the term "Default" shall
mean (a) at Mortgagee's option, the failure of Mortgagor to
make any payment of principal or interest on the Notes or to
pay any other amount due hereunder or under the Notes when the
same is due and payable, whether at maturity, by acceleration
or otherwise; (b) the failure of Mortgagor to perform any
non-monetary obligation hereunder, or the failure to be true
of any representation or warranty of Mortgagor contained
herein and the continuance of such failure for ten (10) days
after notice, or within any longer grace period, if any,
allowed in the Credit Agreement for such failure, (c) the
condemnation, seizure or appropriation of, or occurrence of an
uninsured casualty with
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Loan No. 8079119402
respect to any material portion of the Subject Property; (d)
the sequestration or attachment of, or any levy or execution
upon any of the Subject Property, which sequestration,
attachment, levy or execution is not released, expunged or
dismissed prior to the earlier of thirty (30) days or the sale
of the assets affected thereby; (e) the failure at any time of
this Mortgage to be a valid first lien upon the Subject
Property or any portion thereof, other than as a result of any
release of the Mortgage with respect to all or any portion of
the Subject Property pursuant to the terms and conditions of
the Credit Agreement; (f) the discovery of any Hazardous
Materials, which in Mortgagee's sole discretion, have a
materially adverse impact on the value of the Subject
Property, in, on or about the Subject Property subsequent to
the Closing Date, as defined in the Credit Agreement; or (g)
the existence of any Default as defined in the Credit
Agreement.
6.2 RIGHTS AND REMEDIES. At any time after Default, Mortgagee
shall have all the following rights and remedies:
(a) With or without notice, to declare all Secured
Obligations immediately due and payable.
(b) With or without notice, and without releasing
Mortgagor from any Secured Obligation, and without
becoming a mortgagee in possession, to cure any
breach or Default of Mortgagor and, in connection
therewith, to enter upon the Subject Property and do
such acts and things as Mortgagee deems necessary or
desirable to protect the security hereof, including,
without limitation: (i) to appear in and defend any
action or proceeding purporting to affect the
security of this Mortgage or the rights or powers of
Mortgagee under this Mortgage; (ii) to pay, purchase,
contest or compromise any encumbrance, charge, lien
or claim of lien which, in the sole judgment of
Mortgagee, is or may be senior in priority to this
Mortgage, the judgment of Mortgagee being conclusive
as between the parties hereto; (iii) to obtain
insurance; (iv) to pay any premiums or charges with
respect to insurance required to be carried under
this Mortgage; or (v) to employ counsel, accountants,
contractors and other appropriate persons.
(c) To commence and maintain an action or actions in any
court of competent jurisdiction to foreclose this
instrument as a mortgage or to obtain specific
enforcement of the covenants of Mortgagor hereunder,
and Mortgagor agrees that such covenants shall be
specifically enforceable by injunction or any other
appropriate equitable remedy and that for the
purposes of any suit brought under this subparagraph,
Mortgagor waives the defense of laches and any
applicable statute of limitations.
(d) To the fullest extent permitted by law, to seek
non-judicial foreclosure pursuant to Ark. Code Ann.
Section 18-50-101, et seq.
(e) To apply to a court of competent jurisdiction for and
obtain appointment of a receiver of the Subject
Property as a matter of strict right and without
regard to the adequacy of the security for the
repayment of the Secured Obligations, the existence
of a declaration that the Secured Obligations are
immediately due and payable, or the filing of a
notice of default, and Mortgagor hereby consents to
such appointment.
(f) To enter upon, possess, manage and operate the
Subject Property or any part thereof, to take and
possess all documents, books, records, papers and
accounts of Mortgagor or the then owner of the
Subject Property, to make, terminate, enforce or
modify Leases of the Subject Property upon such terms
and conditions as Mortgagee deems proper, to make
repairs, alterations and improvements to the Subject
Property as necessary, in Mortgagee's sole judgment,
to protect or enhance the security hereof.
(g) To give such notice of such Default and of its
election to cause the Subject Property to be sold as
may be required by law or as may be necessary to
cause the Mortgagee to exercise the power of sale
granted herein. As a condition precedent to any such
sale, Mortgagee shall give and record such notice as
the law then requires. When the minimum period of
time required by law after such notice has elapsed,
Mortgagee, without notice to or demand upon Mortgagor
except as required by law, shall sell the Subject
Property at the time and place of sale fixed by it in
the notice of sale, at one or several sales, either
as a whole or in separate parcels and in such manner
and order, as deemed
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Loan No. 8079119402
advisable by Mortgagee, or by Mortgagor to the extent
required by law, at public auction to the highest
bidder for cash, in lawful money of the United
States, payable at time of sale. Except as required
by law, neither Mortgagor nor any other person or
entity other than Mortgagee shall have the right to
direct the order in which the Subject Property is
sold. Subject to requirements and limits imposed by
law, Mortgagee may from time to time postpone sale of
all or any portion of the Subject Property by public
announcement at such time and place of sale.
Mortgagee shall deliver to the purchaser at such sale
a deed conveying the Subject Property or portion
thereof so sold, but without any covenant or
warranty, express or implied. The recitals in the
deed of any matters or facts shall be conclusive
proof of the truthfulness thereof. Any person,
including Mortgagor or Mortgagee may purchase at the
sale. Mortgagor hereby expressly waives any right of
redemption, including any rights under the Act passed
by the Arkansas General Assembly on May 8, 1899, and
all acts amendatory or in replacement thereof or
supplemental thereto.
(h) To resort to and realize upon the security hereunder
and any other security now or later held by Mortgagee
concurrently or successively and in one or several
consolidated or independent judicial actions or
lawfully taken non-judicial proceedings, or both, and
to apply the proceeds received upon the Secured
Obligations all in such order and manner as Mortgagee
determines in its sole discretion.
(i) Upon sale of the Subject Property at any judicial or
non-judicial foreclosure, Mortgagee may credit bid
(as determined by Mortgagee in its sole and absolute
discretion) all or any portion of the Secured
Obligations. In determining such credit bid,
Mortgagee may, but is not obligated to, take into
account all or any of the following: (i) appraisals
of the Subject Property as such appraisals may be
discounted or adjusted by Mortgagee in its sole and
absolute underwriting discretion; (ii) expenses and
costs incurred by Mortgagee with respect to the
Subject Property prior to foreclosure; (iii) expenses
and costs which Mortgagee anticipates will be
incurred with respect to the Subject Property after
foreclosure, but prior to resale, including, without
limitation, costs of structural reports and other due
diligence, costs to carry the Subject Property prior
to resale, costs of resale (e.g. commissions,
attorneys' fees, and taxes), costs of any hazardous
materials clean-up and monitoring, costs of deferred
maintenance, repair, refurbishment and retrofit,
costs of defending or settling litigation affecting
the Subject Property, and lost opportunity costs (if
any), including the time value of money during any
anticipated holding period by Mortgagee; (iv)
declining trends in real property values generally
and with respect to properties similar to the Subject
Property; (v) anticipated discounts upon resale of
the Subject Property as a distressed or foreclosed
property; (vi) the fact of additional collateral (if
any), for the Secured Obligations; and (vii) such
other factors or matters that Mortgagee (in its sole
and absolute discretion) deems appropriate. In regard
to the above, Mortgagor acknowledges and agrees that:
(w) Mortgagee is not required to use any or all of
the foregoing factors to determine the amount of its
credit bid; (x) this Section does not impose upon
Mortgagee any additional obligations that are not
imposed by law at the time the credit bid is made;
(y) the amount of Mortgagee's credit bid need not
have any relation to any loan-to-value ratios
specified in the Loan Documents or previously
discussed between Mortgagor and Mortgagee; and (z)
Mortgagee's credit bid may be (at Mortgagee's sole
and absolute discretion) higher or lower than any
appraised value of the Subject Property.
(j) Upon the completion of any foreclosure sale of all or
a portion of the Subject Property, commence an action
to recover any of the Secured Obligations that
remains unpaid or unsatisfied.
6.3 APPLICATION OF FORECLOSURE SALE PROCEEDS. Except as may be
otherwise required by applicable law, after deducting all
costs, fees and expenses including, without limitation, cost
of evidence of title and attorneys' fees in connection with
sale and costs and expenses of sale and of any judicial
proceeding wherein such sale may be made, all proceeds of any
foreclosure sale shall be applied: (a) to payment of all sums
expended by Mortgagee under the terms hereof and not then
repaid, with accrued interest at four percent (4%) above the
Prime Rate in effect from time to time; (b) to payment of all
other Secured Obligations; and (c) the remainder, if any, to
the person or persons legally entitled thereto. As used
herein, the term "Prime Rate" means at any time the rate of
interest most recently announced within Wells Fargo Bank,
National Association ("WFB") at its principal office, as its
Prime Rate, with the understanding that the Prime Rate is one
of WFB's base rates and serves as the basis upon which
effective rates of interest
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Loan No. 8079119402
are calculated for those loans making reference thereto, and
is evidenced by the recording thereof after its announcement
in such internal publication or publications as WFB may
designate.
6.4 APPLICATION OF OTHER SUMS. All sums received by Mortgagee
under Section 6.2 or Section 3.2, less all costs and expenses
incurred by Mortgagee or any receiver under Section 6.2 or
Section 3.2, including, without limitation, attorneys' fees,
shall be applied in payment of the Secured Obligations in such
order as Mortgagee shall determine in its sole discretion;
provided, however, Mortgagee shall have no liability for funds
not actually received by Mortgagee.
6.5 NO CURE OR WAIVER. Neither Mortgagee's nor any receiver's
entry upon and taking possession of all or any part of the
Subject Property and Collateral, nor any collection of rents,
issues, profits, insurance proceeds, condemnation proceeds or
damages, other security or proceeds of other security, or
other sums, nor the application of any collected sum to any
Secured Obligation, nor the exercise or failure to exercise of
any other right or remedy by Mortgagee or any receiver shall
cure or waive any breach, Default or notice of default under
this Mortgage, or nullify the effect of any notice of default
or sale (unless all Secured Obligations then due have been
paid and performed and Mortgagor has cured all other
defaults), or impair the status of the security, or prejudice
Mortgagee in the exercise of any right or remedy, or be
construed as an affirmation by Mortgagee of any tenancy, lease
or option or a subordination of the lien of or security
interests created by this Mortgage.
6.6 PAYMENT OF COSTS, EXPENSES AND ATTORNEYS' FEES. Mortgagor
agrees to pay to Mortgagee immediately and without demand all
costs and expenses incurred by Mortgagee pursuant to Section
6.2 (including, without limitation, court costs and attorneys'
fees, whether incurred in litigation or not) with interest
from the date of expenditure until said sums have been paid at
the rate of interest then applicable to the principal balance
of the Notes as specified therein. In the event of any legal
proceedings, court costs and attorneys' fees shall be set by
the court and not by jury and shall be included in any
judgment obtained by Mortgagee.
6.7 POWER TO FILE NOTICES AND CURE DEFAULTS. Mortgagor hereby
irrevocably appoints Mortgagee and its successors and assigns,
as its attorney-in-fact, which agency is coupled with an
interest, (a) to execute and/or record any notices of
completion, cessation of labor, or any other notices that
Mortgagee deems appropriate to protect Mortgagee's interest,
(b) upon the issuance of a deed pursuant to the foreclosure of
the lien of this Mortgage or the delivery of a deed in lieu of
foreclosure, to execute all instruments of assignment or
further assurance with respect to the Subject Property and
Collateral, Leases and Payments in favor of the grantee of any
such deed, as may be necessary or desirable for such purpose,
(c) to prepare, execute and file or record financing
statements, continuation statements, applications for
registration and like papers necessary to create, perfect or
preserve Mortgagee's security interests and rights in or to
any of the Subject Property and Collateral, and (d) upon the
occurrence of an event, act or omission which, with notice or
passage of time or both, would constitute a Default, Mortgagee
may perform any obligation of Mortgagor hereunder; provided,
however, that: (i) Mortgagee as such attorney-in-fact shall
only be accountable for such funds as are actually received by
Mortgagee; and (ii) Mortgagee shall not be liable to Mortgagor
or any other person or entity for any failure to act (whether
such failure constitutes negligence) by Mortgagee under this
Section.
6.8 REMEDIES CUMULATIVE. All rights and remedies of Mortgagee
provided hereunder are cumulative and are in addition to all
rights and remedies provided by applicable law (including
specifically that of foreclosure of this instrument as though
it were a mortgage) or in any other agreements between
Mortgagor and Mortgagee. No failure on the part of Mortgagee
to exercise any of its rights hereunder arising upon any
Default shall be construed to prejudice its rights upon the
occurrence of any other or subsequent Default. No delay on the
part of Mortgagee in exercising any such rights shall be
construed to preclude it from the exercise thereof at any time
while that Default is continuing. Mortgagee may enforce any
one or more remedies or rights hereunder successively or
concurrently. By accepting payment or performance of any of
the Secured Obligations after its due date, Mortgagee shall
not thereby waive the agreement contained herein that time is
of the essence, nor shall Mortgagee waive either its right to
require prompt payment or performance when due of the reminder
of the Secured Obligations or its right to consider the
failure to so pay or perform a Default.
Page 14 of 20
Loan No. 8079119402
ARTICLE 7. MISCELLANEOUS PROVISIONS
7.1 ADDITIONAL PROVISIONS. The Loan Documents contain or
incorporate by reference the entire agreement of the parties
with respect to matters contemplated herein and supersede all
prior negotiations. The Loan Documents grant further rights to
Mortgagee and contain further agreements and affirmative and
negative covenants by Mortgagor which apply to this Mortgage
and to the Subject Property and Collateral and such further
rights and agreements are incorporated herein by this
reference.
7.2 MERGER. No merger shall occur as a result of Mortgagee's
acquiring any other estate in, or any other lien on, the
Subject Property unless Mortgagee consents to a merger in
writing.
7.3 OBLIGATIONS OF MORTGAGOR, JOINT AND SEVERAL. If more than one
person has executed this Mortgage as "Mortgagor", the
obligations of all such persons hereunder shall be joint and
several.
7.4 WAIVER OF MARSHALLING RIGHTS. Mortgagor, for itself and for
all parties claiming through or under Mortgagor, and for all
parties who may acquire a lien on or interest in the Subject
Property and Collateral, hereby waives all rights to have the
Subject Property and Collateral and/or any other property,
which is now or later may be security for any Secured
Obligation ("Other Property") marshaled upon any foreclosure
of the lien of this Mortgage or on a foreclosure of any other
lien or security interest against any security for any of the
Secured Obligations. Mortgagee shall have the right to sell,
and any court in which foreclosure proceedings may be brought
shall have the right to order a sale of, the Subject Property
and any or all of the Collateral or Other Property as a whole
or in separate parcels, in any order that Mortgagee may
designate.
7.5 RULES OF CONSTRUCTION. When the identity of the parties or
other circumstances make it appropriate the masculine gender
includes the feminine and/or neuter, and the singular number
includes the plural. The term "Subject Property" and
"Collateral" means all and any part of the Subject Property
and Collateral, respectively, and any interest in the Subject
Property and Collateral, respectively.
7.6 SUCCESSORS IN INTEREST. The terms, covenants, and conditions
herein contained shall be binding upon and inure to the
benefit of the heirs, successors and assigns of the parties
hereto; provided, however, that this Section 7.6 does not
waive or modify the provisions of Section 5.14.
7.7 EXECUTION IN COUNTERPARTS. To facilitate execution, this
document may be executed in as many counterparts as may be
convenient or required. It shall not be necessary that the
signature or acknowledgment of, or on behalf of, each party,
or that the signature of all persons required to bind any
party, or the acknowledgment of such party, appear on each
counterpart. All counterparts shall collectively constitute a
single document. It shall not be necessary in making proof of
this document to produce or account for more than a single
counterpart containing the respective signatures of, or on
behalf of, and the respective acknowledgments of, each of the
parties hereto. Any signature or acknowledgment page to any
counterpart may be detached from such counterpart without
impairing the legal effect of the signatures or
acknowledgments thereon and thereafter attached to another
counterpart identical thereto except having attached to it
additional signature or acknowledgment pages.
7.8 CHOICE OF LAW. The entire transaction contemplated by this
Mortgage and the Credit Agreement and all terms and provisions
of this Mortgage, the Credit Agreement and the other Loan
Documents shall be governed by the laws of the State of
California, except for the creation, perfection and
enforcement of certain lien rights and remedies provided
herein which must be governed by the laws of the situs of the
Subject Property, that being Arkansas, regarding which lien
rights and remedies Arkansas law shall govern.
7.9 INCORPORATION. Exhibit A and Schedule 1, all as attached, are
incorporated into this Mortgage by this reference.
7.10 NOTICES. All notices, demands or other communications required
or permitted to be given pursuant to the provisions of this
Mortgage shall be in writing and shall be considered as
properly given if delivered personally or sent by first class
United States Postal Service mail, postage prepaid, except
that notice of
Page 15 of 20
Loan No. 8079119402
Default may be sent by certified mail, return receipt
requested, or by Overnight Express Mail or by overnight
commercial courier service, charges prepaid. Notices so sent
shall be effective three (3) days after mailing, if mailed by
first class mail, and otherwise upon receipt at the address
set forth below; provided, however, that non-receipt of any
communication as the result of any change of address of which
the sending party was not notified or as the result of a
refusal to accept delivery shall be deemed receipt of such
communication. For purposes of notice, the address of the
parties shall be:
Mortgagor: VIRCO MFG. CORPORATION
2027 Harpers Way
Torrance, California 90501
Attn: Robert E. Dose,
Chief Financial Officer
Mortgagee: WELLS FARGO BANK, NATIONAL ASSOCIATION
Commercial Banking Group (AU #2702)
201 Third Street, 8th Floor
San Francisco, CA 94013
Attn: Records Management / Team 2
Loan #: 8079119402
With a copy to: WELLS FARGO BANK, NATIONAL ASSOCIATION
San Gabriel Valley Regional Commercial
Banking Office
1000 Lakes Drive, Suite 250
West Covina, CA 91790
Attn: Randall J. Repp
With a copy to: WELLS FARGO BANK, NATIONAL ASSOCIATION
Disbursement and Operations Center
2120 East Park Place, Suite 100
El Segundo, CA 90245
Attention: DISBURSEMENT REPRESENTATIVE
Any party shall have the right to change its address for notice hereunder to any
other location within the continental United States by the giving of thirty (30)
days notice to the other party in the manner set forth hereinabove. Mortgagor
shall forward to Mortgagee, without delay, any notices, letters or other
communications delivered to the Subject Property or to Mortgagor naming
Mortgagee, "Lender" or any similar designation as addressee, or which could
reasonably be deemed to affect the ability of Mortgagor to perform its
obligations to Mortgagee under the Notes or the Credit Agreement.
7.11 ARBITRATION. THE PROVISIONS OF SECTION 7.11 OF THE CREDIT
AGREEMENT ARE INCORPORATED HEREIN IN THEIR ENTIRETY, MUTATIS
MUTANDIS.
[Signature Page Follows]
Page 16 of 20
IN WITNESS WHEREOF, Mortgagor has executed this Mortgage as of the day and year
set forth above.
VIRCO MFG. CORPORATION, a Delaware corporation
By: /s/ Robert E. Dose
------------------
Name: Robert E. Dose
Title: VP Finance
(ALL SIGNATURES MUST BE ACKNOWLEDGED)
Page 17 of 20
EXHIBIT A
Loan No. 8079119402
DESCRIPTION OF SUBJECT PROPERTY
Exhibit A to Mortgage with Absolute Assignment of Leases and Rents, Security
Agreement and Fixture Filing executed by VIRCO MFG. CORPORATION, as Mortgagor to
Wells Fargo Bank, National Association, as Mortgagee, dated as of DATE OF
DOCUMENTS.
All the certain real property located in the County of PROPERTY COUNTY, State of
Arkansas, described as follows:
APN
Page 18 of 20
SCHEDULE 1
Loan No. LOAN NO.
SCHEDULE OF LEASES
Schedule 1 to Mortgage with Absolute Assignment of Leases and Rents, Security
Agreement and Fixture Filing executed by VIRCO MFG. CORPORATION, as Mortgagor to
Wells Fargo Bank, National Association, as Mortgagee, dated as of DATE OF
DOCUMENTS.
Not applicable
Page 19 of 20
STATE OF ____________) ACKNOWLEDGMENT
)
COUNTY OF ___________)
On this day before me, a Notary Public, duly commissioned, qualified
and acting within and for said county and state, appeared in person the within
named ______________, being the _____________ of VIRCO MFG. CORPORATION, a
Delaware corporation, and who had been designated by said corporation to execute
the foregoing instrument, to me personally well known, who stated that he/she
was the ______________ of VIRCO MFG. CORPORATION, and was duly authorized in
his/her capacity to execute the foregoing instrument for and in the name and
behalf of said corporation, and further stated and acknowledged that he/she had
so signed, executed, and delivered said foregoing instrument for the
consideration, uses and purposes therein mentioned and set forth.
IN TESTIMONY WHEREOF, I have hereunto set my hand and seal this _____
day of __________, 20___.
NOTARY PUBLIC
My Commission expires:
Page 20 of 20