Exhibit 10.43
PREPARED BY:
ANDREW M. CONDLIN
WILLIAMS, MULLEN, CHRISTIAN & DOBBINS
PO BOX 1320
RICHMOND, VA 23210-1320
DEED OF TRUST
AND
SECURITY AGREEMENT
Granted By
SPURLOCK ADHESIVES, INC.
a Virginia Corporation
TO
OTTO W. KONRAD
and
BRUCE H. MATSON
Trustees
Securing
KEYBANK NATIONAL ASSOCIATION
DATE: As of October 1, 1997
DEED OF TRUST
AND
SECURITY AGREEMENT
(COLLATERAL INCLUDES FIXTURES)
THIS DEED OF TRUST AND SECURITY AGREEMENT is made as of the 1st day of
October, 1997, from SPURLOCK ADHESIVES, INC., a Virginia corporation ("Grantor")
to OTTO W. KONRAD and BRUCE H. MATSON (collectively, the "Trustee") as Trustee
for the benefit of KEYBANK NATIONAL ASSOCIATION, and its successors and assigns
("Beneficiary").
Capitalized terms herein are defined in Article II.
ARTICLE I
RECITALS
1.1 The Loan--Grantor is indebted to Beneficiary for the Loan in the
aggregate principal sum of Seven Million Six Hundred Eighty Thousand Eight
Hundred Twenty Two Dollars ($7,680,822) as evidenced by the Note of Grantor.
1.2 Obligations Secured--This Deed of Trust is partial security for (a)
the full and punctual payment of the Loan according to the terms of the Note,
(b) the payment of all sums due to Beneficiary or Trustee according to the terms
of any of the Loan Documents, and (c) the performance of, and compliance with,
all of the obligations of the Grantor contained in the Loan Documents.
ARTICLE II
DEFINITIONS
Whenever capitalized in this Deed of Trust, the following terms shall
have the meaning given in this Article II, unless the context clearly indicates
a contrary intent.
2.1 Beneficiary--"Beneficiary" means KEYBANK NATIONAL ASSOCIATION, its
successors and assigns, and any subsequent holder of the Note.
2.2 Controlling Party--"Controlling Party" means any Person, directly
or indirectly, possessing the power to direct or cause the direction of the
management and policies of any trust or entity comprising the Grantor, whether
through the ownership or control of voting securities or rights, by contract or
otherwise.
2.3 Deed of Trust--"Deed of Trust" means this instrument,
including all current and future supplements, amendments, and attachments
thereto.
2.4 Default--"Default" means: (a) the failure of Grantor to perform,
cause to be performed, abide by, comply with, or observe any duty or obligation
imposed upon Grantor by the Loan Documents; (b) the breach of any of Grantor's
warranties or covenants contained in any of the Loan Documents; (c) a
misrepresentation by Grantor, its counsel, or any other Person on behalf of
Grantor, in any of the Loan Documents; and (d) any event, happening, or
condition which would constitute an Event of Default if not cured within any
applicable grace period.
2.5 Encumbrances--"Encumbrances" include all liens, mortgages, rights,
leases, restrictions, easements, deeds of trust, covenants, agreements, rights
of way, rights of redemption, security interests, conditional sales agreements,
land installment contracts, options, and all other burdens or charges.
2.6 Event of Default--"Event of Default" has the meaning given and
provided in Section 10.1.
2.7 Grantor--"Grantor" means, jointly and severally, the parties
identified as such in the introductory paragraph of this Deed of Trust, their
successors and assigns, including any subsequent owner of all or any portion of
Grantor's interest in the Trust Property.
2.8 Guaranty--"Guaranty" means the Guaranty Payment and Performance in
favor of the Beneficiary executed by Spurlock Industries, Inc., a Virginia
corporation, pursuant to which it guaranties, among other things, the full and
prompt payment and performance of the Grantor's obligations under the Loan
Documents, subject, however, to the limitations therein contained.
2.9 Land--"Land" means the land more particularly described in Exhibit
A to this Deed of Trust.
2.10 Law--"Law" means all federal, state, county, and municipal laws,
regulations, rules, and ordinances, and all rules, regulations and orders of any
other governmental authority including common law and rulings, decisions and
interpretations of all judicial, quasi-judicial, and administrative bodies.
2.11 Lease--"Lease" means each lease which purports to convey any
interest of Grantor in any portion of the Trust Property and includes subleases
and assignments of leases and Rents.
2.12 Legal Action--"Legal Action" includes all suits or other
proceedings brought at law or in equity or before any
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administrative agency, governmental body, or arbitrator which in any manner
relate to the Trust Property or arise out of or relate to any of the Loan
Documents.
2.13 Loan--"Loan" means the extension of credit by the Beneficiary to
the Grantor in the aggregate principal amount of Seven Million Six Hundred
Eighty Thousand Eight Hundred Twenty Two Dollars ($7,680,622) as evidenced by
the Reimbursement Agreement and the Term Loan Note.
2.14 Loan Documents--"Loan Documents" means this Deed of Trust, the
Term Loan Note, the Reimbursement Agreement, the Guaranty, and any and all other
certificates, opinions, assignments and documents executed in connection
herewith or therewith, and all current and future supplements, amendments, and
attachments thereto.
2.15 Note of Grantor or Note--"Note of Grantor" or "Note" means
collectively, the Term Loan Note and the Reimbursement Agreement, evidencing the
Loan, including all current and future supplements, amendments, extensions and
attachments thereto.
2.16 Operate--"Operate" means to operate, use, manage, lease, contract,
and control, including the right to repair, renew, replace, alter, add, better,
and improve.
2.17 Intentionally omitted.
2.18 Permitted Encumbrances--"Permitted Encumbrances" means this Deed
of Trust and all Encumbrances as to which Beneficiary has given its prior
written approval, liens arising for real estate taxes or public charges for
sewage, water, drainage or other public improvements not yet due and payable,
Leases not in violation of Section 7.4 and all liens permitted under the Loan
Documents. Permitted Encumbrances shall include those exceptions specified on
Exhibit B.
2.19 Person--"Person" means any individual, corporation, partnership,
association, trust, joint venture, or any other legal entity.
2.20 Property--"Property" has the meaning given in Section 3.3.
2.21 Real Property--"Real Property" means the Land, together with the
improvements and rights identified in Section 3.1 and all other portions of the
Trust Property which may legally be deemed to be real property under Section
3.7.
2.22 Reimbursement Agreement--means the letter of credit reimbursement
agreement dated as of October 1, 1997 by and between
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the Grantor and the Beneficiary, pursuant to which, among other things, the
Beneficiary agrees to issue the Letter of Credit (as defined therein) and the
Grantor agrees to reimburse the Beneficiary for amounts drawn under the Letter
of Credit, as said reimbursement agreement may be supplemented as amended from
time to time.
2.23 Rents--"Rents" includes all rents, profits, royalties, issues,
revenues, income, proceeds, earnings, and products generated by or arising out
of the Trust Property.
2.24 Risk--"Risk" includes risk of loss or damage by fire, lightning,
windstorm, hail, explosion, riot, riot attending a strike, civil strife, civil
commotion, aircraft, vehicles, smoke, vandalism, malicious mischief, boiler
explosion, and any other risk customarily insured against by persons operating
property similar in kind to the Trust Property.
2.25 Taking--"Taking" includes any taking by condemnation or eminent
domain, any sale in lieu of condemnation under threat thereof, the alteration of
the grade of any street, or any other injury to or decrease in the value of the
Trust Property by any public or quasi-public authority or corporation or any
other person having the power of eminent domain.
2.26 Taxes--"Taxes" includes all taxes, excises, documentary stamp and
transfer taxes, recording taxes, assessments, water rents, sewer rents,
metropolitan district charges, sanitary district charges, public dues, and other
public charges levied or assessed upon the Trust Property, upon the Loan, or
upon any Loan Document.
2.27 Tenant--"Tenant" means any lessee of Grantor under any Lease, and
any sub-lessee or assignee of a Lease.
2.28 Term Loan Note--"Term Loan Note" means the $1,500,000 Promissory
Note dated as of October 10, 1997 from the Grantor to the Beneficiary.
2.29 Trustee--"Trustee" means that person or entity named in the
introductory paragraph including any additional, successor, replacement, or
substitute trustee appointed pursuant to Section 9.2.
2.30 Trust Property--"Trust Property" has the meaning given in Section
3.6.
2.31 Uniform Commercial Code--"Uniform Commercial Code" means Virginia
Uniform Commercial Code - Secured Transactions (Virginia Code Section 8.9-101
et. seq.) and any amendments thereto or reenactments thereof.
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ARTICLE III
GRANTING CLAUSES
3.1 Lien on Real Property--The Grantor, in consideration of the Loan
and other valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, has granted, bargained, sold and conveyed and by these
presents does hereby grant, bargain, sell and convey unto the Trustee, its
heirs, successors and assigns in trust, with power of sale, for the benefit and
security of the Beneficiary and subject to the terms and conditions hereinafter
set forth, in fee simple, forever, the property described in Exhibit A attached
hereto as a part hereof, together with (a) all buildings and improvements now or
hereafter located thereon, (b) all rights, rights of way, air rights, riparian
rights, franchises, licenses, easements, tenements, hereditaments,
appurtenances, accessions and other rights and privileges now or hereafter
belonging to the Land or the buildings and improvements thereupon, now owned or
hereafter acquired by the Grantor.
3.2 Lien on Fixtures and Personal Property--The Grantor further grants
and assigns to the Trustee for the benefit and security of the Beneficiary all
of the machines, apparatus, equipment, fixtures and articles of personal
property now or hereafter located on the Land or in any improvements thereon
(other than that owned by any Tenant), and all the right, title and interest of
the Grantor in and to any of such property which may be subject to any title
retention or security agreement or instrument having priority over this Deed of
Trust.
3.3 Property--All of the property described in Sections 3.1 and 3.2 is
hereinafter collectively called the "Property".
3.4 Lien on Leases and Rents and Other Rights--The Grantor further
grants and assigns to the Trustee for the benefit and security of the
Beneficiary (a) all Leases and Rents, including, without limitation, all cash or
security deposits to secure performance by Tenants (whether such cash or
securities are to be held until the expiration of the terms of Leases or are to
be applied to one or more of the installments of rent coming due immediately
prior to the expiration of such terms), (b) all of the estate, right, title,
use, claim and demand of every nature whatsoever, at law or in equity, which the
Grantor may now have or may hereafter acquire in, to or with respect to, the
Property, and (c) all right, title and interest of the Grantor in and to all
extensions, betterments, renewals, substitutes and replacements of, and all
additions and appurtenances to, the Property, hereafter acquired by or released
to the Grantor, or constructed, assembled or placed by or for the Grantor on the
Property, and all
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conversions of the security constituted thereby.
3.5 Lien on Insurance Policies and Condemnation Awards--The Grantor
further grants and assigns to the Trustee all insurance policies and insurance
proceeds pertaining to the Property and all awards or payments, including
interest thereon and the right to receive the same, which may be made with
respect to any of the Property as a result of any Taking or any injury to or
decrease in the value of the Property.
3.6 The Trust Property--All of the property described in this Article
III is collectively called the "Trust Property."
3.7 Security Interest Under the Uniform Commercial Code--Any portion of
the Trust Property which by law is or may be real property shall be deemed to be
a part of the Real Property for the purposes of this Deed of Trust. The
remainder of the Trust Property shall be subject to the Uniform Commercial Code,
and this Deed of Trust shall constitute a Security Agreement with respect
thereto. Grantor hereby grants to the Beneficiary a security interest in that
portion of the Trust Property not deemed a part of the Real Property for the
purpose of securing performance of all of Grantor's obligations under the Loan
Documents. With respect to such security interest (a) the Beneficiary may
exercise all rights granted or to be granted a secured party under the Uniform
Commercial Code as enacted in Virginia, and (b) upon the occurrence of an Event
of Default as defined hereunder, the Beneficiary shall have a right of
possession superior to any right of possession of the Grantor or any person
claiming through or on behalf of the Grantor.
3.8 Limitation on Security--Notwithstanding any amount otherwise due
Beneficiary pursuant to the terms of the Note, the maximum principal
indebtedness secured hereby is Two Million Dollars ($2,000,000).
ARTICLE IV
HABENDUM CLAUSE AND DEFEASANCES
4.1 Habendum Clause--TO HAVE AND TO HOLD the Trust Property unto the
Trustee and its heirs, successors and assigns, in fee simple forever, upon the
terms and trust herein set forth.
4.2 Termination of the Trust--If all obligations of Grantor under this
Deed of Trust and the other Loan Documents, are paid and satisfied in accordance
with the terms hereof and thereof, the estate hereby granted shall cease and the
Trust Property shall be released to the Grantor, at the cost of the Grantor.
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ARTICLE V
REPRESENTATIONS AND WARRANTIES
5.1 Warranty of Title and Further Assurances--The Grantor covenants and
warrants that the Grantor is seized of the Trust Property in fee simple and that
it has the right and authority to convey the Trust Property in fee simple; that
the same are free and clear of all Encumbrances except for Permitted
Encumbrances; that Grantor warrants generally title to the Trust Property
against the claims of all persons whomsoever with English covenants of title;
and that it will execute such further assurances as may be requested by the
Trustee or Beneficiary.
5.2 Existence, Good Standing, Power and Authority of Grantor--The
Grantor is a Virginia corporation organized and in good standing under the laws
of the Commonwealth of Virginia, and will maintain its good standing and
existence until all of Grantor's obligations under the Loan Documents have been
performed and satisfied. The execution and delivery of the Loan Documents, the
performance of the transactions contemplated by the Loan Documents, and the
performance of Grantor's and any guarantor's obligations under the Loan
Documents, have been duly authorized by all necessary action and will not
conflict with or result in a breach of Law or any agreement or other instrument
to which Grantor or any guarantor is bound. The Loan Documents are valid and
binding on Grantor and any guarantor thereof and are enforceable against Grantor
and each such guarantor in accordance with their respective terms, as
applicable.
5.3 Environmental Protection. The Grantor represents and warrants that:
(i) the Grantor has no knowledge of the presence of or of any discharge,
spillage, uncontrolled loss, seepage or filtration of oil, petroleum or chemical
liquids or solids, liquid or gaseous products or any hazardous waste or
hazardous substance (the "Hazard"), as those terms are used in the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, 42 U.S.C
ss.ss.9601 et seq., as amended by the Superfund Amendments and Reauthorization
Act of 1986; the Resource Conservation and Recovery Act of 1976. (the Solid
Waste Disposal Act or RCRA), 42 U.S.C. ss.ss.6901 et seq., as amended; the Toxic
Substance Control Act (TSCA) 15 U.S.C. ss.ss.2601 et seq., or in any other
federal, state or local law governing hazardous substances, as such laws may be
amended from time to time, (collectively, the "Act"), at, upon, under or within
the Property; and (ii) the Grantor has not caused or permitted to occur and
shall use its best efforts not to permit to exist, any condition which may cause
or constitute a Hazard at, upon, under or within the Property. The term "Hazard"
includes but is not limited to asbestos, polychlorinated biphenyl (PCBs) and
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lead based paints. Notwithstanding the foregoing, the Grantor makes no
representation or warranty under Section 5.3(i) with respect to (a) those items
set forth in the Findings Report Preliminary Environmental Inspections, prepared
by Froehling & Robertson, Inc., dated June 25, 1996, a copy of which has been
delivered to the Beneficiary, (b) discharges made in the normal course of
business pursuant to applicable permits for the benefit of Grantor pursuant to
applicable law, and (c) discharge, spillage, uncontrolled loss, seepage or
filtration of any Hazard which is deminimus and is occurring during the normal
course of business.
5.3.1 The Grantor further represents and warrants that (i)
neither the Grantor nor, to the best of its knowledge, any other party, is or
will be involved in operations upon the Property, which operations could lead to
(a) the imposition of liability on the Grantor or on any other subsequent or
former owner of the Property under the Act; or (b) the creation of a lien on the
Property under the Act or under any similar laws or regulations; and (ii) the
Grantor has not permitted, and will not permit, any tenant or occupant of the
Property to engage in any activity that could impose liability under the Act on
such tenant or occupant, on the Grantor or on any other owner of any of the
Property.
5.3.2 The Grantor has complied, and shall comply, in all
material respects with the requirements of the Act and related regulations and
with all similar laws and regulations and shall notify the Beneficiary
immediately in the event of any Hazard or the discovery of any Hazard at, upon,
under or within the Property. The Grantor shall promptly forward to the
Beneficiary copies of all orders, notices, permits, applications or other
communications and reports in connection with any Hazard or the presence of any
Hazard or any other matters relating to the Act or any similar laws or
regulations, as they may affect the Property.
5.3.3 Promptly upon the written request of the Beneficiary
from time to time, when the Beneficiary has a reasonable basis therefor, the
Grantor shall provide to the Beneficiary, at the Grantor's expense, an
environmental site assessment or environmental audit report, prepared by an
environmental engineering firm acceptable in the reasonable opinion of the
Beneficiary, to assess with a reasonable degree of certainty the presence or
absence of any Hazard and the potential costs in connection with abatement,
cleanup or removal of any Hazard found on, under, at or within the Property.
5.3.4 The Grantor shall defend and indemnify the Beneficiary
and hold the Beneficiary harmless from and against all actual loss, liability,
damage and expense, including reasonable attorneys' fees, suffered or incurred
by the Beneficiary, whether as holder of this Deed of Trust, as mortgagee in
possession, or as successor-in-interest to Grantor by foreclosure deed or deed
in
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lieu of foreclosure, under or on account of the Act or any similar laws or
regulations, including the assertion of any lien thereunder: (i) with respect to
any Hazard, or the presence of any Hazard affecting the Property whether or not
the same originates or emanates from the Property, including any loss of value
of the Property as a result of the foregoing; and (ii) with respect to any other
matter affecting the Property within the jurisdiction of the Environmental
Protection Agency, any other federal agency, or any state or local environmental
agency. Provided, however, the Grantor's obligations under this Section shall
not apply to any loss, liability, damage or expense which is attributable to any
Hazard resulting from actions on the part of the Beneficiary, whether as holder
of this Deed of Trust, as mortgagee in possession, or as successor-in-interest
to Grantor by foreclosure deed or deed in lieu of foreclosure, under or on
account of the Act or any similar laws or regulations, including the assertion
of any lien thereunder, or any successor-in-interest to or assignee of the
Beneficiary. The Grantor's obligation under this Section shall arise upon the
discovery of the presence of any Hazard under the Act whether or not the
Environmental Protection Agency, any other federal agency or any state or local
environmental agency has taken or threatened any action in connection with the
presence of any Hazard.
5.3.5 In the event of any Hazard, or the presence of any
hazardous substance affecting the Property, whether or not the same originates
or emanates from the Property or any contiguous real estate, and if the Grantor
shall fail to comply with any of the requirements of the Act or related
regulations or any other environmental law or regulation within the time
established by any regulatory agency, the Beneficiary may at its election, but
without the obligation to do so: (i) give such notices and/or cause such work to
be performed at the Property; and/or (ii) take any and all other actions as the
Beneficiary shall reasonably deem necessary or advisable in order to abate the
Hazard, remove the hazardous substance or cure the Grantor's noncompliance. Any
amounts so paid by the Beneficiary pursuant to this Section, together with
interest thereon at the highest rate of interest permitted under the Promissory
Note from the date of payment by the Beneficiary, shall be immediately due and
payable by the Grantor to the Beneficiary and until paid shall be added to and
become a part of the indebtedness under the Loan Documents and shall be secured
by this Deed of Trust.
5.3.6 The provisions of this Section 5.3 are for the benefit
of the Beneficiary only and cannot be assigned to any other party, whatsoever,
except by assignment of the Note and the Loan Documents by the current
Beneficiary to a successor lender.
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ARTICLE VI
COVENANTS, RIGHTS, AND DUTIES OF GRANTOR GENERALLY
6.1 Covenant to Pay Loan and to Perform Obligations under the Terms of
the Loan Documents--The Grantor covenants that it will punctually (a) pay to the
Beneficiary the principal and interest of the Loan and all other costs and
indebtedness secured hereby according to the terms of the Note and other Loan
Documents, and (b) perform and satisfy all other obligations of the Grantor
under the Loan Documents.
6.2 Compliance with Laws--The Grantor shall comply with all Laws a
breach of which would materially and adversely affect (a) the financial
condition of the Grantor, (b) the ability to use buildings and other
improvements on the Land for the purposes for which they were designed or
intended, (c) the value or status of the Trust Property, or (d) the value or
status of the Trustee's title to the Trust Property.
6.3 Notice with Respect to Ownership and Control of Grantor--
6.3.1 If Grantor is a corporation, it will at all times
promptly notify Beneficiary of all changes in the ownership of the stock of
Grantor. At any time Beneficiary may request, Grantor shall furnish a complete
statement, sworn to under penalty of perjury by an officer of Grantor, setting
forth all of the stockholders, officers, directors and Controlling Parties of
Grantor, and the extent of their respective stock ownership or control. In the
event the Grantor is aware of any other Person having a beneficial interest in
such stock, the statement shall also set forth the name of such Person and the
extent of their interest.
6.3.2 If Grantor is a partnership, it will at all times
promptly notify Beneficiary of all changes in ownership of partnership interests
of Grantor and the ownership interest of the Grantor's general partner. At any
time Beneficiary may request, Grantor shall furnish a complete statement, sworn
to under penalty of perjury by a general partner of Grantor setting forth all of
the partners of Grantor and the extent of their respective partnership interest
or control and the equity holders of the Grantor's general partner and the
extent of their equity interests. In the event any other Person has a beneficial
interest in such partnership or general partnership interests, the statement
shall also set forth the name of such Person and the extent of their interest.
6.4 Statement of Amount Owing and Defenses--Within ten (10) days after
request from the Beneficiary, the Grantor shall certify, in writing, the amount
of principal and interest then owing on the Loan and whether the Grantor has any
defenses or offsets with
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respect to the Loan.
6.5 Changes in Applicable Tax Laws--In the event (a) any Law is
hereafter enacted which imposes a Tax upon the Loan, any of the Loan Documents,
or the transactions evidenced or contemplated by any of the Loan Documents, or
(b) any Law now in force governing the taxation of deeds of trust, debts secured
by deeds of trust, or the manner of collecting any such Tax shall be changed or
modified, in any manner, so as to impose a Tax upon the Loan, any of the Loan
Documents, or the transactions evidenced or contemplated by any of the Loan
Documents, (including, without limitation, a requirement that revenue stamps be
affixed to any or all of the Loan Documents), the Grantor will pay any such Tax
promptly upon notice from Beneficiary that such Tax is due. If the Grantor fails
to make prompt payment, or if any Law either prohibits the Grantor from making
the payment or would penalize the Beneficiary if Grantor makes the payment, then
the failure, prohibition, or penalty shall entitle the Beneficiary, after ninety
(90) days notice and failure of the Grantor to pay off the Loan in full, without
penalty or premium, to exercise all rights hereunder as though an Event of
Default had occurred.
6.6 Further Assurances and Continuation Statements--The Grantor from
time to time will execute, acknowledge, deliver and record, at the Grantor's
sole cost and expense, all further instruments, deeds, conveyances, supplemental
deeds of trust, assignments, financing statements, transfers, and assurances as
in the opinion of the Beneficiary's counsel, reasonably exercised, may be
necessary (a) to preserve, continue, and protect the interest of the Trustee or
the Beneficiary in the Trust Property, (b) to perfect the grant to the Trustee
of every part of the Trust Property, (c) to facilitate the execution of this
trust, (d) to secure the rights and remedies of the Trustee and the Beneficiary
under this Deed of Trust and the other Loan Documents, or (e) to transfer to any
new Trustee or purchaser at a sale hereunder the Trust Property, funds, and
powers now or hereafter held in trust hereunder. The Grantor, at the request of
the Beneficiary, shall promptly execute any continuation statements required by
the Uniform Commercial Code to maintain the lien on any portion of the Trust
Property subject to the Uniform Commercial Code.
6.7 Expenses--The Grantor shall reimburse the Beneficiary and the
Trustee for any sums, including reasonable attorney's fees and expenses,
incurred or expended by them (a) in connection with any action or proceeding
reasonably necessary or prudent to sustain the lien, security interest,
priority, or validity of any Loan Document, (b) to protect or enforce any of
their rights under the Loan Documents, (c) for any title examination relating to
the title to the Trust Property undertaken after a Default, or (d) for any other
purpose contemplated by the Loan Documents. The Grantor shall, upon demand, pay
all such sums accruing from the time the
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expense is paid and notice thereof is received if such expense is not paid by
the Grantor within seven (7) days of receipt of such notice. All such sums so
expended by the Beneficiary and/or the Trustee shall be secured by this Deed of
Trust. In any action or proceeding to foreclose this Deed of Trust or to recover
or collect the Loan, the provisions of Law allowing the recovery of costs,
disbursements, and allowances shall be in addition to the rights given by this
Section 6.7.
ARTICLE VII
RIGHTS AND DUTIES OF GRANTOR WITH RESPECT TO
MANAGEMENT AND USE OF THE TRUST PROPERTY
7.1 Control by the Grantor--Until the happening of an Event of Default,
the Grantor shall have the right to possess and enjoy the Trust Property and,
except as prohibited by the Loan Documents, to receive the Rents.
7.2 Intentionally Omitted.
7.3 Intentionally Omitted.
7.4 Leases--The Grantor will comply with its obligations under all
Leases. The Grantor, within ten (10) days after written request from the
Beneficiary, shall deliver to the Beneficiary a detailed list and description of
all Leases with copies thereof and such additional information as may be
reasonably requested by the Beneficiary. Grantor will transfer and assign to the
Beneficiary, in a form satisfactory to the Beneficiary, Grantor's interest in
any Lease as further security for the obligations secured hereby. No such
assignment shall impose upon the Beneficiary any liability to perform the
Grantor's obligations under any Lease. The Beneficiary reserves the right, at
its request, to review and approve any and all Leases of any portion of the
Trust Property.
7.5 Enforcement of Leases, Amendment, Waiver, etc.--The Grantor will
enforce all Leases according to their terms. The Grantor shall not (a) cancel or
terminate, or consent to or accept any cancellation, termination, or surrender
of any Lease, or permit any event within the Grantor's control to occur which
would terminate or cancel any Lease, (b) amend or modify any Lease, (c) waive
any default under or breach of any Lease, (d) consent to or permit any
prepayment or discount of rent or advance rent under any Lease, except for the
current month or following month, or (e) give any consent, waiver, or approval
under any Lease or take any other action with respect to any Lease which may
impair the value of the Beneficiary's interest in the Trust Property or the
position or interest of the Trustee with respect to the Trust Property. Grantor
shall comply with and perform all duties and obligations
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imposed upon or assumed by it in all Leases.
7.6 Subordination and Attornment--In the event of a sale pursuant to
this Deed of Trust, each Tenant shall, upon request, attorn to and acknowledge
any purchaser at foreclosure or grantee in lieu of foreclosure as landlord and
the purchaser will not be required to credit any Tenant under any Lease with
rent paid more than one (1) month in advance. All Leases shall be subject and
subordinate to the Loan Documents (including any modifications and amendments)
and any additional financing or refinancing of the Trust Property by or for the
Beneficiary.
7.7 Restriction on Assignment of Rents--The Grantor shall not assign
the Rents arising from the Trust Property or any part thereof or any interest
therein without the prior written consent of the Beneficiary. Any attempted
assignment, pledge, hypothecation, or grant without such consent shall be null
and void.
7.8 Alterations and Additional Improvements--The Grantor shall make no
structural alterations or material nonstructural alterations to the Trust
Property or construct any additional improvements on the Land, without the prior
written consent of the Beneficiary, which consent shall not be unreasonably
delayed or withheld. All alterations or improvements consented to by Beneficiary
shall be completed and paid for by the Grantor within a reasonable time. All
such alterations or improvements shall be erected (a) in a good and workmanlike
manner strictly in accordance with all applicable Law, (b) entirely on the Land,
(c) without encroaching upon any easement, right of way, or land of others, (d)
so as not to violate any applicable use, height, set-back or other applicable
restriction, and (e) without permitting any mechanic's lien to attach to the
Trust Property which is not being contested as permitted in Section 7.13. All
alterations, additions, and new improvements to the Trust Property shall
automatically be a part of the Trust Property and shall be subject to this Deed
of Trust.
7.9 Restrictions on Sale and Transfer of the Trust Property--It shall
be a Default if Grantor shall permit the Trust Property or the corporate
interests in the Grantor, or any part or portion thereof or any interest
therein, to be transferred (whether by voluntary or involuntary conveyance,
merger, operation of law, or otherwise) without the prior written consent of the
Beneficiary which the Beneficiary shall not be obligated to give. Any transferee
of the Trust Property or interest in the Grantor or any part or portion thereof
or any interest therein, by virtue of its acceptance of the transfer, shall
(without in any way affecting Grantor's liability under the Loan Documents) be
conclusively deemed to have agreed to assume primary personal liability for the
performance of the Grantor's obligations under the Loan Documents. This section
shall not apply to any Taking, any disposition
13
permitted by Section 7.12, any Lease entered into in compliance with Section
7.4, or any disposition by the Trustee or the Beneficiary by foreclosure
hereunder or as otherwise permitted by the Loan Documents.
7.10 Restriction on Encumbrances--It shall be a Default if Grantor
shall allow any Encumbrances, including secondary and supplemental financing
liens, on the Trust Property except the Permitted Encumbrances. The Grantor
shall give the Beneficiary prompt notice of any defaults in or under any
Permitted Encumbrances and any notice of foreclosure or threat of foreclosure.
The Grantor shall comply with its obligations under all Permitted Encumbrances.
The Beneficiary may, at its election, satisfy any Encumbrance (other than an
Permitted Encumbrance not then in default), and the Grantor shall, on demand,
reimburse the Beneficiary for any sums advanced for such satisfaction accruing
from the date of satisfaction, which sums shall be secured hereby.
7.11 Maintenance, Waste, Repair and Inspection--Grantor shall (a) keep
and maintain the Trust Property in good order, condition, and repair and make
all equipment replacements and repairs necessary to insure that the security for
the Loan is not impaired, (b) not commit or suffer any waste of the Trust
Property, (c) promptly protect and conserve any portion of the Trust Property
remaining after any damage to, or partial destruction of, the Trust Property,
provided any insurance proceeds which may have been received by the Beneficiary
as a result of such damage or destruction of the Trust Property are given to the
Grantor for such purposes, (d) promptly repair, restore, replace or rebuild any
portion of the Trust Property which is damaged or destroyed, provided any
insurance proceeds which may have been received by the Beneficiary as a result
of such damage or destruction of the Trust Property are given to the Grantor for
such purposes, (e) promptly restore the balance of the Trust Property remaining
after any Taking, provided any insurance proceeds which may have been received
by the Beneficiary as a result of such damage or destruction of the Trust
Property are given to the Grantor for such purposes, (f) permit the Beneficiary
or its designee to inspect the Trust Property at all reasonable times, and (g)
not make any material change in the grade of the Trust Property or permit any
excavation of or on the Trust Property.
7.12 Removal and Replacement of Equipment and Improvements--No part of
the Trust Property, except supplies consumed in the normal course of business
and operations, shall be removed from the Land, demolished, or materially
altered without the prior written consent of the Beneficiary, which shall not be
unreasonably withheld. Prior to or simultaneously with their removal, such
fixtures and equipment shall be replaced with fixtures or equipment of equal or
greater value. The replacement fixtures or equipment shall be free of all
Encumbrances, shall automatically be subject to the lien and security interest
of this Deed of Trust, and shall
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automatically be subject to the granting clauses hereof. Upon the sale of any
removed fixtures and equipment which are not replaced, the proceeds shall be
applied as a prepayment of the Loan, to be applied to installments in inverse
order of maturity. All sales shall be conducted in a commercially reasonable
manner with a bona fide effort to obtain a sale price of at least market value.
7.13 Taxes and Permitted Contests--The Grantor will pay and discharge,
as the same shall become due and payable, (i) all its obligations and
liabilities, including all claims or demands of materialmen, mechanics,
carriers, warehousemen, landlords and other like persons which, in any such
case, if unpaid, might by law give rise to a lien upon the Trust Property, and
(ii) all lawful Taxes, assessments and charges or levies made upon it or its
property or assets, by any Government except where any of the items in clause
(i) or (ii) of this Section 7.13 may be diligently contested in good faith by
appropriate proceedings, and the Grantor shall have set aside on its books, if
required under generally accepted accounting principles in the United States,
appropriate reserves for the accrual of any such items.
7.14 Restrictive Covenants, Zoning, etc.--No restrictive covenant,
zoning change, or other restriction affecting the Trust Property may be entered
into, requested by or consented to by Grantor without the prior written consent
of the Beneficiary which consent shall not be unreasonably withheld or delayed.
7.15 Preservation of Appurtenances--The Grantor will do all things
necessary to preserve intact and unimpaired, all easements, appurtenances, and
other interests and rights in favor of, or constituting any portion of, the
Trust Property.
7.16 Real Estate Tax Service--Beneficiary may require the Grantor, at
its sole cost and expense, to cause to be furnished to Beneficiary a prepaid
real estate tax service contract to annually check and report on the status of
real estate taxes for the Trust Property throughout the term of the Loan.
7.17. Escrow. If required by the Beneficiary, the Grantor shall deposit
with the Beneficiary, on the tenth (10) day of each month during the term of
this Deed of Trust, an additional amount as determined by the Beneficiary in its
reasonable discretion, to sufficiently discharge the obligations of the Grantor
for: (a) the payment of Taxes, assessments, levies, fees, rents, and other
public charges imposed upon or assessed against the Trust Property or the
revenues, rents, issues, income, or profits thereof, as provided in Section
7.13; (b) the payment of premiums for fire, casualty, and other hazard insurance
and flood insurance, as provided by Sections 8.1, 8.2, 8.3 and 8.4, for the
purpose of
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providing a fund to assure the payment of the aforesaid expenses when and as
they come due; and (c) if applicable, any owner's association fee, condominium
association fee, or any other similar fee, cost, assessment or charge. Such
amounts shall be applied to the payment of the obligations in respect to which
such amounts were deposited or, at the option of the Beneficiary, to the payment
of such obligations in such order of priority as the Beneficiary shall
determine, on or before the date they become delinquent. If the Beneficiary
determines, prior to the due date of any of the aforementioned obligations, that
the amount then on deposit shall be insufficient for the payment of such
obligations in full, the Grantor, within ten (10) days after demand, shall
deposit the amount of the deficiency with the Beneficiary. The Beneficiary may
also pay any amount as provided herein and add the amount to the indebtedness
hereby secured.
Any amounts deposited with the Beneficiary or the Trustees pursuant to
this Section are hereby pledged as additional security for the payment of the
Loan and other obligations under the Loan Documents (collectively, the "Loan
Obligations") and the Grantor does hereby grant a security interest to the
Beneficiary in such amounts. Any amounts deposited with the Beneficiary pursuant
to the provisions of this Section shall not be, nor be deemed to be, trust
funds, nor shall they operate to curtail or reduce the Loan Obligations. Such
funds so deposited with the Beneficiary or the Trustee pursuant to this Section
shall be maintained in an escrow account with the Beneficiary, without interest,
separate and apart from the Grantor's other funds. The Beneficiary shall not be
liable for any failure to apply to the payment of the obligations in respect to
which such amounts were deposited unless the Grantor, while no Event of Default
exists hereunder, shall have requested the Beneficiary in writing to make
application of such deposits then on hand to the payment of particular escrow
items, which request shall be accompanied by the bills therefor. The Beneficiary
may, in its sole discretion, at any time and from time to time, waive the
requirements of this Section 7.17.
Notwithstanding any other provision of this Section 7.17, the Grantor
shall not be required to make any payment required under this Section 7.17 if
such payment is required to be paid to or on behalf of any beneficiary by any
deed of trust encumbering the Trust Property (each a "Senior Trust") as of the
date hereof.
ARTICLE VIII
INSURANCE AND CONDEMNATION
8.1 Casualty Insurance and Allocation in Event of Loss-- The Grantor
shall keep any improvements constructed on the Land and personalty thereon
insured against loss by fire casualty, and such other hazards and contingencies,
including but not limited to
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lightning, hail, windstorm, explosion, malicious mischief and vandalism, as are
covered by extended coverage policies in effect in the area where the Land is
located and such other risks as may be reasonably specified by the Beneficiary
from time to time, all for the benefit of the Beneficiary. Coverage for the
peril of sprinkler leakage must be included as a covered cause of loss for
buildings equipped with automatic sprinkler systems designed to discharge water,
or a chemical gas, or any other extinguishing agents. Beneficiary may require
boiler and machinery insurance to cover sudden and accidental breakdown of
specific types of equipment, including for example, boilers, heating and
ventilating systems, refrigeration equipment, air conditioning units, pumps,
compressors, motors, blowers, generators and transformers. All insurance shall
be written on policy forms and by insurance companies licensed and lawfully
operating in the jurisdiction in which the Real Property is located with a
rating of "A-" or better and Class IX or better according to A.M. Best Co.
Insurance Guide and reasonably satisfactory to the Beneficiary or the
beneficiary of any Senior Trust, and with respect to casualty insurance, shall
be in an amount equal or greater to the full replacement value of any
improvements and personalty upon the Land, as determined by an appraisal of such
improvements and personalty, acceptable to the Beneficiary and paid for by the
Grantor, but in any event all insurance policies shall be in an amount
sufficient to prevent co-insurance liability, shall name the Beneficiary as a
mortgagee and loss payee, as its interest may appear, shall state that the
insurance coverage shall not be affected by any act or neglect of the Grantor or
owner of the insured Trust Property and shall be endorsed such that the losses
thereunder shall be payable to the Beneficiary, as its interest may appear, and
not to the Grantor and the Beneficiary or the Trustee, jointly. The policy or
policies of insurance shall include a replacement cost or restoration
endorsement and a waiver of subrogation endorsement reasonably satisfactory to
the Beneficiary. Originals or certified true copies of the policy or policies of
such insurance, any endorsements thereto and all renewals thereof shall be
manually signed and delivered to and retained by the Beneficiary, and the
Grantor shall provide the Beneficiary with receipts evidencing the payment of
all premiums due on such policies and the renewals thereof not less than thirty
(30) days prior to the renewal or expiration date thereof. All policies required
hereby shall provide and shall bear an endorsement that they shall not be
canceled, terminated, endorsed or amended without not less than thirty (30) days
prior written notice to the Beneficiary. The Grantor shall give the Beneficiary
prompt notice of any loss covered by such insurance, and, the Beneficiary shall
have the right to adjust and compromise such loss, to collect, receive and
receipt the proceeds of insurance for such loss and to endorse the Grantor's
name upon any check in payment thereof and, for such purposes the Grantor hereby
constitutes and appoints the Beneficiary as its attorney in fact with the power
of attorney granted hereby deemed to be coupled
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with an interest and irrevocable. All monies received as payment for a loss
covered by an insurance policy shall be paid over to the Beneficiary to be
applied, at the option of the Beneficiary, either to the prepayment of the Loan
or to the payment of other charges or expenses actually incurred by the Grantor
in the restoration, reconstruction, repair, renovation or replacement of the
affected portion of the Trust Property, provided that any election by the
Beneficiary to apply insurance proceeds to the cost of restoration,
reconstruction, renovation, repair or replacement shall be subject to
satisfaction of the following conditions: (i) such restoration, renovation,
repair or rebuilding shall, in the judgment of the Beneficiary, attain
completion within the term of the Loan; (ii) such insurance proceeds, together
with undisbursed Loan proceeds and any amounts the Grantor deposits with the
Beneficiary for such purpose are sufficient to fully restore, renovate, repair
or rebuild the damaged or destroyed Trust Property; and (iii) no event or
circumstance has occurred and is existing which with the giving of notice, the
passing of time or both would constitute an Event of Default under this Deed of
Trust or the other Loan Documents, otherwise, such proceeds shall be applied in
payment of the Loan. The Beneficiary reserves the right to require the escrow of
insurance premiums during the term of the Loan.
8.2 Liability Insurance--The Grantor will maintain liability and
indemnity insurance with respect to the Trust Property in an amount not less
than $2,000,000 and with such companies, and subject to the same terms and
conditions specified in Section 8.1 above (excepting that such insurance shall
not have to list Beneficiary as mortgagee and loss payee or state that insurance
coverage shall not be affected by any act or neglect of the Grantor or owner of
the insured property), and as the Beneficiary may reasonably direct and approve.
Evidence of such coverage in the form of a certified copy of the policy or an
insurance certificate must be supplied to Beneficiary.
8.3 Business Interruption Insurance--The Grantor shall also carry and
maintain rental interruption insurance on the Trust Property in the same manner
and under the same conditions as provided in Section 8.1 covering debt service,
real estate taxes and insurance premiums for a period of at least six (6)
months.
8.4 Flood Insurance. In the event that all or any portion of the Real
Property currently or at any time in the future is determined to be located in a
specially designated flood hazard area by the Secretary of Housing and Urban
Development or the Director of the Federal Emergency Management Agency, pursuant
to the provisions of the National Flood Insurance Act of 1968, or the Flood
Disaster Protection Act of 1973, as amended, the Grantor shall obtain and
maintain flood hazard insurance in the full insurable value of the Trust
Property or any portion of the Real Property located within such area, or the
full amount of flood
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insurance available, naming the Beneficiary as loss payee, as its interest may
appear, and complying with all other conditions as provided in Section 8.1
above. The Grantor shall be required to provide flood hazard insurance as
described, unless the Grantor's insurance broker certifies to the Beneficiary in
writing that the Real Property is not in a flood hazard area. The proceeds of
any loss payable under a flood insurance policy shall be applied, at the option
of the Beneficiary, as set forth in Section 8.1 above with respect to casualty
insurance proceeds.
8.5 Condemnation and Allocation of Condemnation Awards--Grantor,
immediately upon obtaining knowledge of the institution of any proceeding for a
Taking, will notify the Beneficiary of such proceedings. The Trustee or the
Beneficiary may participate in any such proceedings, and Grantor will, from time
to time, deliver to the Trustee or the Beneficiary all instruments requested by
them to permit such participation. Any award or payment made as a result of any
Taking shall be paid to the Beneficiary, to be applied by the Beneficiary in
it's sole discretion to restore or repair the Trust Property or to repayment of
the amounts due under the Note and the other Loan Documents, in inverse order of
maturity. The application of any award or payment as a repayment of amounts due
under the Note and the other Loan Documents shall take effect only on the actual
date of the receipt of the payment or award by the Beneficiary. In the event any
payment or award is used to restore the Trust Property, as aforesaid, neither
the Trustee nor the Beneficiary shall be obligated to see to the proper
allocation thereof nor shall any amount so used be deemed a payment of any
indebtedness secured by this Deed of Trust. Payments or awards to be used for
restoration purposes, as aforesaid, shall be held by the Beneficiary and
disbursed under the same terms and conditions as provided for disbursement of
insurance proceeds in Section 8.1.
8.6 Senior Trust--Notwithstanding anything to the contrary in this
Article VIII, all rights of Beneficiary set forth in this Article VIII shall be
limited by the rights of any beneficiary of any Senior Trust, if any.
ARTICLE IX
THE TRUSTEE
9.1 Endorsement and Execution of Documents--Upon the written request of
the Beneficiary, the Trustee may, without liability or notice to the Grantor,
execute, consent to, or join in any instrument or agreement in connection with
or necessary to effectuate the purposes of the Loan Documents. The Grantor
hereby irrevocably designates the Beneficiary as its attorney-in-fact to
execute, acknowledge, and deliver, on the Grantor's behalf and in
19
the Grantor's name, all instruments or agreements necessary to implement the
provisions of Section 3.7, contemplated by Section 6.6, or necessary to further
perfect the lien created by this Deed of Trust on the Trust Property. This power
of attorney shall be deemed to be coupled with an interest and shall survive any
disability of the Grantor.
9.2 Substitution of Trustee--The Beneficiary shall at any time have the
irrevocable right to remove the Trustee herein named without notice or cause and
to appoint its successor by an instrument in writing, duly acknowledged, in such
form as to entitle such written instrument to be recorded in Virginia, and in
the event of the death or resignation of the Trustee herein named, the
Beneficiary shall have the right to appoint his successor by such written
instrument, and any Trustee so appointed shall be vested with the title to the
Trust Property hereinbefore described, and shall possess all the powers, duties
and obligations herein conferred on the Trustee in the same manner and to the
same extent as though it were named herein as Trustee.
9.3 Multiple Trustees--Any Trustee, individually, may exercise all
powers granted to two or more Trustees collectively, without the necessity of
the joinder of the other Trustees.
9.4 Terms of Trustee's Acceptance--The Trustee accepts the trust
created by this Deed of Trust upon the following terms and conditions:
9.4.1 The Trustee may exercise any of its powers through
appointment of attorneys-in-fact or agents.
9.4.2 The Trustee shall not be liable for any matter or cause
arising under this Deed of Trust or in connection therewith except by reason of
its own willful misconduct.
9.4.3 The Trustee, after an Event of Default, may select and
employ legal counsel at the expense of Grantor.
9.4.4 The Trustee shall be under no obligation to take any
action upon any Event of Default unless it is furnished security or indemnity,
in form satisfactory to the Trustee, against costs, expenses, and liabilities
which may be incurred by the Trustee.
9.4.5 The Trustee shall have no duty to take any action except
upon written demand of the parties to whom is then owed fifty-one percent (51%)
or more of the then outstanding principal balance of the Note.
9.4.6 The Trustee may resign upon thirty (30) days
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written notice to the Beneficiary.
9.5 Trustee's Reimbursement--The Grantor shall reimburse the Trustee
for all reasonable disbursements and expenses incurred by reason of this Deed of
Trust.
9.6 Save Harmless Clause--The Grantor shall indemnify and save harmless
the Beneficiary and the Trustee, singularly and jointly, from all costs and
expenses, including reasonable attorneys' fees, incurred by them or any of them
by reason of this Deed of Trust, including any Legal Action brought by a third
party or the Grantor to which Beneficiary or the Trustee shall become a party.
Any money so paid or expended by Beneficiary or the Trustee shall be due and
payable upon demand together with interest, if not paid within seven (7) days of
receipt of demand by the Grantor, accruing from the time the expense is paid and
notice thereof is received by the Grantor and shall be secured by this Deed of
Trust.
ARTICLE X
DEFAULT
10.1 Event of Default--The occurrence of any of the following shall
constitute an Event of Default.
10.1.1 Breach of Representations and Warranties--Any
representation or warranty made by the Grantor herein which shall prove to have
been incorrect in any material respect when made or shall be breached.
10.1.2 Insurance Provisions--The failure of Grantor to perform
its obligations set forth in Section 8.1, 8.2, 8.3 or 8.4.
10.1.3 Assignment of Rents--Any attempted assignment by the
Grantor of the whole or any part of the Rents in contravention of Section 7.7.
10.1.4 Prohibited Transfer or Encumbrance--Any transfer or
event in violation of the provisions of Sections 7.9 or 7.10.
10.1.5 Loss of License--The loss of any franchise agreement,
license or permit necessary for the operation, occupancy, or use of the Trust
Property, other than as a result of casualty or condemnation, which loss
continues for a period thirty (30) days after receipt by Grantor (or refusal of
delivery) of written notice given in accordance with the provisions of this Deed
of Trust.
10.1.6 Cross Default. The default by the Grantor or
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by any guarantor of payment or performance of the Grantor under any obligation
or indebtedness to the Beneficiary, whether now existing or hereafter arising,
which default is not cured within any applicable cure or grace period.
10.1.7 Default Under Mortgage--The occurrence of an Event of
Default under (i) the certain Arkansas Mortgage with Power of Sale between
Grantor and Beneficiary dated as of October 1, 1997, or (ii) any Senior Trust or
(iii) the certain Mortgage and Security Agreement dated as of October 1, 1997
from the County of Saratoga Industrial Development Agency and the Grantor to the
Beneficiary.
10.1.8 Default Under Loan Documents--The occurrence of an
Event of Default under any of the other Loan Documents.
10.1.9 Other Defaults--The failure of the Grantor to perform
or observe any of its obligations or covenants under this Deed of Trust not
previously specifically referred to in this Article X, which failure continues
for a period of seven (7) days after receipt by Grantor (or refusal of delivery)
of written notice given in accordance with the provisions of this Deed of Trust
in the event of a monetary default or for a period of thirty (30) days after
receipt by Grantor (or refusal of delivery) of written notice given in
accordance with the provisions of this Deed of Trust in the event of a
non-monetary default. The failure of the Grantor to perform or observe any of
its obligations or covenants constituting an Event of Default under any Loan
Document not previously specifically referred to in this Article X, subject to
any applicable cure period.
10.2 Payment or Performance by Beneficiary--Upon the occurrence of an
Event of Default, Beneficiary may, at its option, make any payments or take any
other actions it deems necessary or desirable to cure the Event of Default or
conserve the Trust Property. The Grantor shall, upon demand, reimburse the
Beneficiary for all sums so advanced or expenses incurred by it, from the date
of advance or payment of the same, which sums shall be secured by this Deed of
Trust. The Trustee or the Beneficiary may enter upon the Trust Property without
prior notice to the Grantor in the event of an emergency (but otherwise after
reasonable prior notice to the Grantor) or judicial process and may take any
action to enforce its rights under this Section 10.2 without liability to the
Grantor, except for its gross negligence or willful misconduct.
10.3 Possession by Beneficiary--Upon the occurrence of an Event of
Default, the Beneficiary may enter upon and take possession of the Trust
Property without notice to the Grantor, judicial process, or the appointment of
a receiver. The Beneficiary may exclude all persons from the Trust Property and
may
22
proceed to Operate the Trust Property and receive all Rents. The Beneficiary
shall have the right to Operate the Trust Property and carry on the business of
the Grantor, either in the name of the Grantor or otherwise. The Beneficiary
shall not be liable to the Grantor for taking possession of the Trust Property,
as aforesaid, nor shall Beneficiary be required to make repairs or replacements,
and Beneficiary shall be liable to account only for Rents actually received by
it. All Rents collected by the Beneficiary shall be applied (a) first, to pay
all expenses incurred in taking possession of the Trust Property, (b) second, to
pay costs and expenses to operate the Trust Property, and/or to comply with the
terms of the Loan Documents, including reasonable attorney's fees, (c) third, to
pay all sums secured by the Loan Documents in the order of priority selected by
Beneficiary, and (d) fourth, with the balance, if any, to the Grantor or such
other Person as may be entitled thereto. No assignment of Leases shall impose
upon Trustee or Beneficiary any liability to perform Grantor's obligations under
such Leases.
10.4 Acceleration of the Note--Upon an Event of Default, Beneficiary
may, at its option and without further notice or demand, declare the entire
balance of the Note and all other amounts due under the Loan Documents,
immediately due and payable. Acceleration of maturity, once claimed by the
Beneficiary, may at the option of the Beneficiary, be rescinded by written
acknowledgment to that effect by the Beneficiary, but the tender and acceptance
of partial payments alone shall not in any way affect or rescind such
acceleration of maturity.
10.5 Collection of Rents--Upon the occurrence of an Event of Default
and written demand by the Beneficiary to the Tenants, all Rents shall be payable
directly to the Beneficiary.
10.6 Foreclosure--Except as otherwise specifically provided herein, any
sale of the Trust Property shall be made in accordance with the provisions of
Section 55-59, 55-59.1, 55-59.2, 55-59.3, 55-59.4 and 55-63 of the Code of
Virginia, as amended, or other applicable general local laws of the Commonwealth
of Virginia and/or judicial rules of procedure relating to the foreclosure of
deeds of trust, either by strict foreclosure or foreclosure by sale, or in part
by each such method. Any sale of the Trust Property may be made after
advertising the time, terms and place of sale if permitted by law for three (3)
consecutive days, in a daily newspaper, which is published in, or has a general
circulation in, the county or city wherein the Trust Property is situated. Any
such sale may be made by the payment of cash upon settlement of the sale or upon
such terms, including payment terms, as the Trustees may deem necessary, proper
or advisable, except as specifically limited by applicable law or court rule.
Any such sale may be of the entire Trust Property as the Trustees, in their sole
and absolute discretion, deem necessary, proper, or convenient. The
23
Trust Property conveyed hereby shall constitute security for the Loan to the
full extent of the value of the Trust Property without limitation and without
regard to the value upon which any state, city, or county recordation taxes have
been computed and/or paid.
10.6.1 Rights Incident to Sale. The Grantor agrees that the
Beneficiary or the Trustees may, incident to any sale of the Trust Property
under this Deed of Trust, exercise the powers and rights as herein set forth:
(a) Application of Proceeds. Upon the sale of
the Trust Property, the proceeds shall be applied in accordance with Section
55.59.4(3) of the Code of Virginia, as amended.
(b) Payment Before Sale. In the event the amount
due on the principal debt hereby secured and the interest thereon shall be paid
after the commencement of any foreclosure proceeding, including any proceeding
in connection with an assent to decree or power of sale, but before sale of the
Trust Property, the Grantor shall be required to pay all costs and expenses
incident to or resulting from any such foreclosure proceeding, including, but
not limited to the expenses of any advertisement or notice, all court costs, the
counsel fees incurred by the Beneficiary and the Trustee, and a trustees' fee
based on a reasonable hourly rate.
(c) Beneficiary May Bid. At any sale made under
this Deed of Trust, whether made under the power of sale herein granted or under
or by virtue of judicial proceedings, by assent to decree or power of sale, the
Beneficiary, or any wholly-owned subsidiary of the Beneficiary, may bid for and
acquire the Trust Property or any part thereof and in lieu of paying cash
therefor may, if permitted by law, make settlement for the purchase price by
crediting upon the indebtedness of the Grantor secured by this Deed of Trust the
net sales price after deducting therefrom the expenses and costs of the sale and
any other sums which the Beneficiary is authorized to deduct under this Deed of
Trust. Furthermore, in the event the Beneficiary, or any wholly-owned subsidiary
of the Beneficiary, is the successful bidder at any sale made under this Deed of
Trust, the Beneficiary, or any wholly-owned subsidiary of the Beneficiary, if
permitted by law, shall not be required to pay either an initial deposit or any
interest in connection with such sale.
10.6.2 Automatic Acceleration. Should there occur an event
which would, with the giving of notice, the passage of time, or both, constitute
an Event of Default hereunder and if a voluntary or involuntary petition under
the United States Bankruptcy Code thereafter is filed by or against the Grantor
while such event remains uncured, to the extent permitted by law, the entire
principal balance of the Promissory Note then outstanding,
24
all accrued interest thereon and all other amounts secured by this Deed of Trust
shall be automatically accelerated and due and payable and the default interest
rate provided for in the Promissory Note shall automatically apply as of the
date of the first occurrence of the event which, with the giving of notice, the
passage of time or both, would constitute an Event of Default, without any
notice, demand or action of any type of the part of the Trustee or Beneficiary.
10.7 Deficiency of Proceeds--If, after a foreclosure sale, a deficiency
exists in the net proceeds of such sale, the Beneficiary shall be entitled to
collect the deficiency from the Grantor and other persons liable therefor.
10.8 Insurance or Condemnation After Deficiency--If the Trust Property
is sold at a foreclosure sale prior to receipt of an insurance or a condemnation
award or payment, the Beneficiary shall receive and apply the proceeds of the
award or payment toward the satisfaction of any deficiency resulting from the
foreclosure sale, whether or not a deficiency judgment is sought, recovered, or
denied.
10.9 Remedies Cumulative--All rights, powers, and remedies of the
Beneficiary or the Trustee provided for in the Loan Documents are cumulative and
concurrent and shall be in addition to and not exclusive of any appropriate
legal or equitable remedy provided by Law or contract. Exercise of any right,
power, or remedy shall not preclude the simultaneous or subsequent exercise of
any other by the Beneficiary or the Trustee.
10.10 Rights under the Uniform Commercial Code--Upon the occurrence of
an Event of Default, the Beneficiary may, at its option, proceed against any
portion of the Trust Property which consists of personal property in accordance
with Beneficiary's rights and remedies under the Uniform Commercial Code. The
Grantor shall, upon request of Beneficiary, assemble and make available to the
Beneficiary those portions of the Trust Property which consist of personal
property at a place to be designated by the Beneficiary and the Beneficiary may
exercise all the rights and remedies of a secured party under the Uniform
Commercial Code. Any notices required by the Uniform Commercial Code shall be
deemed reasonable if mailed certified mail, return receipt requested, postage
prepaid, by the Beneficiary to the Grantor at least five (5) days prior to the
event as to which notice is given.
10.11 Incorporation of Statutory Provisions--Except as otherwise
expressly provided herein, this Deed of Trust shall be construed to impose and
confer upon the parties hereto, and the Beneficiary hereunder, all duties,
rights and obligations prescribed in Section 55-59 and Section 55-59.1 through
55-59.4 of the Code of Virginia (1950), as amended, and in effect as of the
25
date of acknowledgment hereof, and further to incorporate herein the following
provisions by short form references below, of Section 55-60 of the Code of
Virginia (1950), as amended:
Exemptions waived.
Subject to all (call) upon default.
Renewal, extension or reinstatement not permitted.
Any Trustee may act.
10.12 Trustee's Bond--The Grantor waives any right to require the
person authorized to make the sale to post a bond in any foreclosure proceeding.
10.13 Appointment of a Receiver--Upon the occurrence of an Event of
Default, the Beneficiary shall be entitled without giving notice to the Grantor
(the Grantor hereby waiving any requirement of such notice) to the immediate
appointment of a receiver for the Trust Property, without regard to the value of
the Trust Property or the solvency of any person liable for payment of the
amounts due under the Loan Documents.
ARTICLE XI
MISCELLANEOUS
11.1 Waivers--No term of any Loan Document shall be deemed waived
unless the waiver shall be in writing and signed by the parties making the
waiver. Any failure by the Beneficiary to insist upon the Grantor's strict
performance of any of the terms of the Loan Documents shall not be deemed or
construed as a waiver of those or any other terms. Any delay in exercising or
enforcing any rights with respect to a Default or an Event or Default shall not
bar the Beneficiary from exercising any rights under the Loan Documents, or at
law or in equity.
11.2 Consents--
11.2.1 The Beneficiary may (a) release any person liable under
the Loan Documents, (b) release any part of the security, (c) extend the time of
payment of the Loan, and/or (d) modify the terms of the Loan Documents,
regardless of consideration and without notice to or consent by the holder of
any subordinate lien on the Trust Property. No release, extension or
modification of the security held under the Loan Documents shall impair or
affect the lien of this Deed of Trust or the priority of such lien over any
subordinate lien.
11.2.2 Regardless of whether a Person has been given
26
notice or has given its prior consent, such Person shall not be relieved of any
obligation under any Loan Documents by reason of (a) the failure of the
Beneficiary, the Trustee, or any other Person to take any action, foreclose, or
otherwise enforce any provision of the Loan Documents, (b) the release of any
other Person liable under any Loan Document, (c) the release of any portion of
the security under the Loan Documents, or (d) any agreement or stipulation
between any subsequent owners of the Trust Property and Beneficiary extending
the time of payment or modifying the terms of any Loan Document.
11.3 Headings--All Article and Section headings are for convenience
only and shall not be interpreted to enlarge or restrict the provisions of this
Deed of Trust.
11.4 Notices--All notices shall be sent to the respective addresses of
the parties as follows:
If to the Beneficiary or Trustee:
KEYBANK NATIONAL ASSOCIATION
66 South Pearl Street
Albany, New York 12207
Attention: Corporate Banking Division
With a copy to:
Kevin J. Kelley
CRANE, KELLEY, GREENE AND PARENTE
90 State Street
Albany, New York 12207
If to the Grantor:
H. Norman Spurlock
P.O. Box 8
Route 460 East
Waverly, Virginia 23890
With a copy to:
c/o William L. Pitman
Williams, Mullen, Christian & Dobbins
1021 E. Cary Street
P.O. Box 1320
Richmond, Virginia 23210
Any notice or demand required or permitted in connection with this Deed
of Trust shall be in writing and made by in person delivery or registered or
certified mail, return receipt requested,
27
postage prepaid, addressed to the appropriate party at the appropriate address
set forth below or to such other address as may be hereafter specified by the
party entitled to notice by at least ten (10) days' prior written notice, and
shall be considered given as of the date of delivery, in the case of in person
delivery, or mailing, in the case of registered or certified mail.
11.5 Binding Effect--No transfer of any portion of the Trust Property
or any interest therein shall relieve any transferor of its obligations under
the Loan Documents. No transferor of any obligation under any Loan Document
shall be relieved of its obligations by any modification of any Loan Document
subsequent to the transfer.
11.6 Amendment--No Loan Document may be modified except in writing
signed by (a) the Beneficiary and (b) the Grantor.
11.7 Severability--In the event any provision of this Deed of Trust
shall be held invalid or unenforceable by any court of competent jurisdiction,
such holding shall not invalidate or render unenforceable any other provision
hereof.
11.8 Notices from Governmental Authorities Affecting The Trust
Property--Any notice from any governmental or quasi-governmental authority or
corporation with respect to the Trust Property sent to or known by the Grantor
shall be promptly transmitted to the Beneficiary.
11.9 Applicable Law--This Deed of Trust and Assignment of Leases shall
be governed by the Laws of the State of Virginia.
11.10 Time of the Essence--Time is of the essence with respect to the
Loan Documents.
11.11 Effect of Payments--Any payment or other performance made in
accordance with the Loan Documents by any Person other than Grantor shall not
entitle such Person to any right of subrogation under the Loan Documents, unless
expressly consented to in writing by the Beneficiary.
11.12 Word Forms--The use of any gender, tense, or conjugation herein
shall be applicable to all genders, tenses and conjugations. The use of the
singular shall include the plural and the plural shall include the singular. For
example, whenever the term "Grantor" is used herein, the term shall refer to
each party constituting the Grantor jointly and severally and individually and
collectively.
11.13 WAIVER OF JURY TRIAL--THE GRANTOR WAIVES THE RIGHT TO A TRIAL BY
JURY IN ANY ACTION OR PROCEEDING BASED UPON, OR RELATED
28
TO, THE LOAN OR THIS DEED OF TRUST. THIS WAIVER IS KNOWINGLY, INTENTIONALLY, AND
VOLUNTARILY MADE BY THE GRANTOR AND THE GRANTOR ACKNOWLEDGES THAT EXCEPT FOR
BENEFICIARY'S AND TRUSTEE'S AGREEMENT TO LIKEWISE WAIVE THEIR RIGHTS TO A TRIAL
BY JURY NEITHER THE BENEFICIARY, THE TRUSTEE NOR ANY PERSON ACTING ON THEIR
BEHALF HAS MADE ANY REPRESENTATIONS OF FACT TO INDUCE THIS WAIVER OF TRIAL BY
JURY OR IN ANY WAY TO MODIFY OR NULLIFY ITS EFFECT. THE GRANTOR FURTHER
ACKNOWLEDGES THAT IT HAS BEEN REPRESENTED (OR HAS HAD THE OPPORTUNITY TO BE
REPRESENTED) IN THE SIGNING OF THIS DEED OF TRUST NOTE AND ALL OTHER LOAN
DOCUMENTS AND IN THE MAKING OF THIS WAIVER BY INDEPENDENT LEGAL COUNSEL,
SELECTED OF ITS OWN FREE WILL, AND THAT IT HAS HAD THE OPPORTUNITY TO DISCUSS
THIS WAIVER WITH COUNSEL. THE GRANTOR FURTHER ACKNOWLEDGES THAT IT HAS READ AND
UNDERSTANDS THE MEANING AND RAMIFICATIONS OF THIS WAIVER PROVISION AND AS
EVIDENCE OF THIS FACT SIGNS THIS DEED OF TRUST BELOW.
11.14 Conflict Between This Instrument and Reimbursement Agreement--To
the extent a conflict exists between the provisions of this instrument and the
Reimbursement Agreement, the provisions of the Reimbursement Agreement shall
control, excepting conflicts arising between the definition of capitalized terms
occurring in both this instrument and the Reimbursement Agreement, in which case
this instrument shall control.
SIGNATURES APPEAR ON NEXT PAGE
29
WITNESS the execution hereof by the Grantor and the affixing of the
Grantor's seal.
GRANTOR:
SPURLOCK ADHESIVES, INC.
By: /s/ Phillip S. Sumpter
-------------------------------------
Name: Phillip S. Sumpter
-----------------------------------
Its: Exec. Vice President
------------------------------------
[SEAL]
COMMONWEALTH OF VIRGINIA )
) to-wit:
COUNTY OF SUSSEX )
I hereby certify that on this 7th day of November, 1997, came Phillip
S. Sumpter, as Exec Vice President of SPURLOCK ADHESIVES, Inc., a Virginia
corporation, acknowledged the execution of this Deed of Trust on behalf of the
corporation.
/s/
-----------------------------------
Notary Public
(Notarial Seal)
My Commission Expires: 11/30/00.
30
Exhibit A
All that certain lot, piece or parcel of land lying and being situate in Waverly
Magisterial District, Sussex County, Virginia, and fronting 1078.63 feet, more
or less, on the southwest side of Route U.S. 460, containing 10.00 acres, as
shown on that certain plat of survey entitled "MAP SHOWING A PARCEL OF LAND
SITUATED WAVERLY DISTRICT SUSSEX COUNTY, VIRGINIA OWNED BY AND SURVEYED FOR
HAROLD N. & DAPHNE R. SPURLOCK", made by Irving H. Pritchett, III, C.L.S., dated
October 27, 1987, a copy of which said survey is attached to deed in Deed Book
132, page 211 and recorded in Plat Book 18, page 122, and to which reference is
made for a more particular description of the property herein conveyed, together
with any appurtenances thereunto appertaining.
Being the same real estate conveyed to Spurlock Adhesives, Inc., a Virginia
corporation, by deed from Harold N. Spurlock and Daphne R. Spurlock, dated July
21, 1992, recorded August 13, 1992, Clerk's Office, Circuit Court, Sussex
County, Virginia, Deed Book 132, page 211.
31
Exhibit B
1. Easement granted Chesapeake and Potomac Telephone Company dated October 27,
1967 recorded in Deed Book 70, Page 183, grants easement to place telephone
apparatus cabinet and right of way adjacent to Route 460.
Easement includes right of access and the right to trim trees and to
remove obstructions.
2. Deed in Deed Book 24, page 273 contains reference to an unrecorded easement
to Postal Telegraph Cable Company. A plat recorded with deed into Wright
Chemical Corporation in Deed Book 72, page 616 locates said easement along
southern parcel line.
Easement includes right of access and the right to trim trees and to
remove obstructions.
3. Easement granted County of Sussex dated July 21, 1997, recorded in Deed
Book 156, page 478, which grants a 20' easement for sanitary sewer
and/or a water distribution system and to operate and maintain all such
pipes, improvements, conduits, manholes, equipment, accessories,
sensors, and appurtenances desirable in connection therewith. Easement
dedication includes the right to make use of adjoining land for
construction and maintenance of public facilities within the boundaries
of said easements Easement includes right of access and right to trim
trees and to remove obstructions.
4. Deed of Trust from Spurlock Industries, Inc., a Virginia corporation,
to Otto W. Konrad and Bruce H. Matson, Trustee(s), dated July 11, 1996,
recorded July 15, 1996, Deed Book 150, page 626, to secure the original
principal sum of $3,639,000.00, as corrected by Deed of Correction of
Deed of Trust dated October 1st, 1997 and recorded immediately prior
hereto.
32
THIS INSTRUMENT PREPARED BY:
DONALD M. SPEARS, Attorney At Law, ABA #75119
ARKANSAS MORTGAGE
WITH POWER OF SALE
KNOW ALL MEN BY THESE PRESENTS:
That this Arkansas Mortgage With Power of Sale (hereinafter referred to
as MORTGAGE) made and entered into as of the 1st day of October, 1997 by
SPURLOCK ADHESIVES, INC., a Virginia Corporation located in Waverly, Virginia
and whose principal place of business in Arkansas is located in Hot Spring
County, Arkansas (hereinafter referred to as BORROWER), in favor of KEYBANK
NATIONAL ASSOCIATION (hereinafter referred to as LENDER).
WITNESSETH:
That BORROWER, for valuable consideration, does hereby grant, bargain,
sell, convey and deliver unto LENDER and unto its successors and assigns, the
real property in Hot Spring County, Arkansas and described as follows, to wit
(hereinafter referred to as REAL ESTATE):
THE SE1/4 OF THE NE1/4 AND ALSO ALL OF THE SW1/4 OF THE NE1/4 EAST OF
THE MISSOURI PACIFIC RAILROAD, ALL IN SECTION 16, TOWNSHIP 4 SOUTH,
RANGE 16 WEST, HOT SPRING COUNTY, ARKANSAS
(A) Together with all buildings and improvements now or at any time
hereafter located on any land hereinabove described, together with all of the
following equipment now or at any time hereafter located in any such building
regardless of method of annexation or removability, including but not limited
to, all
1
electrical equipment including lighting equipment, refrigeration and heating
equipment, ceiling fans, attic and window fans, motors and all other electrical
equipment except items attached merely by plugging in wall sockets; all
furnaces, heaters, radiators and all other heating equipment; all bathtub,
toilets, sinks, basins, pipes and other plumbing equipment; all screens,
awnings, and window shades; permanent floor coverings; all engines and
elevators.
(B) BORROWER also pledges any and all mineral rights related to the
REAL ESTATE and any and all profits and income accruing in regard to any mineral
rights related to the REAL ESTATE that may be owned by it.
(C) In addition to pledging the properties as hereinbefore mentioned,
BORROWER also pledges any and all profits, rents and income accruing in
connection with said properties including, but not limited to, insurance,
proceeds and condemnation awards, and all ledgers, books or accounts and records
relating thereto. However, the right is reserved to the BORROWER to collect the
profits, rents and income as the same mature and become due and payable, but in
the event of default as to any of the covenants herein contained, then at its
option the LENDER shall have the right, without notice, to take over said
properties, manage same, rent same and collect the rent thereon, with the net
income so collected being applied to the indebtedness secured by this MORTGAGE.
TO HAVE AND TO HOLD the aforesaid property together with all the
hereditament and appurtenances thereunto belonging or in any wise appertaining,
unto same unto the said LENDER, its successors and assigns forever.
Except for and specifically excluding the aforesaid mineral
2
rights, the aforesaid property is hereinafter referred to as the PROPERTY.
And BORROWER covenants with LENDER, its successors and assigns, that
BORROWER will forever warrant and defend the title to the PROPERTY against any
and all lawful claims whatever.
PROVIDED, however, the foregoing conveyance is given as a MORTGAGE for
the purpose of securing:
(a) The payment of (i) a promissory note dated as of October 10, 1997
(the "Term Loan Note") evidencing a loan in the sum of One Million Five Hundred
Thousand Dollars ($1,500,000) and (ii) the Borrower's obligations to the Lender
under a letter of credit reimbursement agreement by and between Borrower and
Lender and dated as of October 1, 1997 (the "Reimbursement Agreement" and
collectively with the Term Loan Note, the "Note") in a maximum principal amount
of Six Million Dollars ($6,000,000) both of which are incorporated herein by
reference (hereinafter referred to as the LOAN), and all successive extensions
and renewals of the indebtedness represented thereby, evidencing an indebtedness
being due and payable as to principal and interest as follows:
Payable according to the terms of the Term Loan Note and the
Reimbursement Agreement executed in connection with the REAL ESTATE
(b) and the repayment to the LENDER of the indebtedness secured hereby
of all reimbursable expense at any time accruing to such LENDER under the
provisions hereof; and
(c) The payment of all future and additional indebtedness, direct or
indirect, created after the date of this MORTGAGE, which may be owing by
BORROWER (or by any of the persons herein
3
designated under the term "BORROWER") to the LENDER at any time prior to the
payment in full with interest of the indebtedness or the foreclosure of this
MORTGAGE therefore (the event occurring first to be controlling); such
additional indebtedness to be secured hereby regardless of whether it shall be
predicated upon future loans or advances hereafter made by the LENDER, or
obligations hereafter acquired by such LENDER, through assignment or subrogation
or otherwise, or shall represent indirect obligations (created after the date of
this MORTGAGE), based upon any endorsements, guaranties or suretyship; and it is
agreed that this MORTGAGE shall stand as security for all such future and
additional indebtedness, whether it be incurred for any business purpose that
was related or wholly unrelated to the purpose of the original loan, or whether
it was incurred for some personal or non-business purpose, or for any other
purpose related or unrelated, or similar or dissimilar, to the purpose of the
original loan.
(d) NOTWITHSTANDING ANY AMOUNT OTHERWISE DUE BENEFICIARY PURSUANT TO
THE TERMS OF THE NOTE, THE MAXIMUM PRINCIPAL INDEBTEDNESS SECURED HEREBY IS TWO
MILLION DOLLARS ($2,000,000).
(1) The BORROWER Agrees as follows:
(a.1) The BORROWER covenants and warrants that the BORROWER is
seized of the PROPERTY in fee simple and that it has the right and authority to
convey the PROPERTY in fee simple; that the same are free and clear of all
ENCUMBRANCES, as hereinafter defined, except for PERMITTED ENCUMBRANCES, as
hereinafter defined; that BORROWER warrants generally title to the PROPERTY
against claims of all persons whomsoever; and that it will execute such further
assurances as may be requested by the LENDER.
(a.2) The BORROWER is in good standing under the laws of the
State of Arkansas, and will maintain its good standing and
4
existence until all of BORROWER's obligations under this MORTGAGE, the NOTE, the
VIRGINIA DEED OF TRUST, as hereinafter defined, and any and all other
certificates, opinions, assignments and documents executed in connection
herewith or therewith, and all current and future supplements, amendments, and
attachments thereto (hereinafter referred to as the LOAN DOCUMENTS) have been
performed and satisfied. The execution and delivery of the LOAN DOCUMENTS, the
performance of the transactions contemplated by the LOAN DOCUMENTS, and the
performance of BORROWER's and any guarantor's obligations under the LOAN
DOCUMENTS, have been duly authorized by all necessary action and will not
conflict with or result in a breach of law or any agreement or other instrument
to which BORROWER or any guarantor is bound. The LOAN DOCUMENTS are valid and
binding on BORROWER and any guarantor thereof and are enforceable against
BORROWER and each such guarantor in accordance with their respective terms, as
applicable.
(b) The BORROWER represents and warrants that: (i) the
BORROWER has no knowledge of the presence of or of any discharge, spillage,
uncontrolled loss, seepage or filtration of oil, petroleum or chemical liquids
or solids, liquid or gaseous products or any hazardous waste or hazardous
substance (hereinafter referred to as the HAZARD), as those terms are used in
the Comprehensive Environmental Response, Compensation and Liability Act of
1980, 42 U.S.C ss.ss.9601 et seq., as amended by the Superfund Amendments and
Reauthorization Act of 1986; the Resource Conservation and Recovery Act of 1976.
(the Solid Waste Disposal Act or RCRA), 42 U.S.C. ss.ss.6901 et seq., as
amended; the Toxic Substance Control Act (TSCA) 15 U.S.C. ss.ss.2601 et seq., or
in any other federal, state or local law governing hazardous substances, as such
laws may be amended from time to time, (hereinafter referred to as the ACT), at,
upon, under or within the PROPERTY; and (ii) the BORROWER has not caused or
permitted to occur and shall use its best efforts not to permit to exist,
5
any condition which may cause or constitute a HAZARD at, upon, under or within
the PROPERTY. The term "HAZARD" includes but is not limited to asbestos,
polychlorinated biphenyl (PCBs) and lead based paints. Notwithstanding the
foregoing, the BORROWER makes no representation or warranty under Section
(1)(b)(i) with respect to (a) those items set forth in the Phase I Environmental
Audit performed by Sherwood Environmental Consultants, Inc., dated June 26,
1996, a copy of which has been delivered to the LENDER, (b) discharges made in
the normal course of business pursuant to applicable permits for the benefit of
BORROWER pursuant to applicable law, and (c) discharge, spillage, uncontrolled
loss, seepage or filtration of any HAZARD, which is deminimus and is occurring
during the normal course of business,
(c) The BORROWER further represents and warrants that (i)
neither the BORROWER nor, to the best of its knowledge, any other party, is or
will be involved in operations upon the PROPERTY, which operations could lead to
(a) the imposition of liability on the BORROWER or on any other subsequent or
former owner of the PROPERTY under the ACT; or (b) the creation of a lien on the
PROPERTY under the ACT or under any similar laws or regulations; and (ii) the
BORROWER has not permitted, and will not permit, any tenant or occupant of the
PROPERTY to engage in any activity that could impose liability under the ACT on
such tenant or occupant, on the BORROWER or on any other owner of any of the
PROPERTY.
(d) The BORROWER has complied, and shall comply, in all
material respects with the requirements of the ACT and related regulations and
with all similar laws and regulations and shall notify the LENDER immediately in
the event of any HAZARD or the discovery of any HAZARD at, upon, under or within
the PROPERTY. The BORROWER shall promptly forward to the LENDER copies of all
orders, notices, permits, applications or other communications and reports in
connection with any HAZARD or the presence of any HAZARD or any other matters
relating to the ACT
6
or any similar laws or regulations, as they may affect the PROPERTY.
(e) Promptly upon the written request of the LENDER from time
to time, when the LENDER has a reasonable basis therefor, the BORROWER shall
provide to the LENDER, at the BORROWER's expense, an environmental site
assessment or environmental audit report, prepared by an environmental
engineering firm acceptable in the reasonable opinion of the LENDER, to assess
with a reasonable degree of certainty the presence or absence of any HAZARD and
the potential costs in connection with abatement, cleanup or removal of any
HAZARD found on, under, at or within the PROPERTY.
(f) The BORROWER shall defend and indemnify the LENDER and
hold the LENDER harmless from and against all actual loss, liability, damage and
expense, including reasonable attorneys' fees, suffered or incurred by the
LENDER, whether as holder of this MORTGAGE, as mortgagee in possession, or as
successor-in-interest to BORROWER by foreclosure deed or deed in lieu of
foreclosure, under or on account of the ACT or any similar laws or regulations,
including
7
the assertion of any lien thereunder: (i) with respect to any HAZARD, or the
presence of any HAZARD affecting the PROPERTY whether or not the same originates
or emanates from the PROPERTY, including any loss of value of the PROPERTY as a
result of the foregoing; and (ii) with respect to any other matter affecting the
PROPERTY within the jurisdiction of the Environmental Protection Agency, any
other federal agency, or any state or local environmental agency. Provided,
however, the BORROWER's obligations under this Section shall not apply to any
loss, liability, damage or expense which is attributable to any HAZARD resulting
from actions on the part of the LENDER, whether as holder of this MORTGAGE, as
mortgagee in possession, or as successor-in-interest to BORROWER by foreclosure
deed or deed in lieu of foreclosure, under or on account of the ACT or any
similar laws or regulations, including the assertion of any lien thereunder, or
any successor in interest to or assignee of the LENDER. The BORROWER's
obligation under this Section shall arise upon the discovery of the presence of
any HAZARD under the ACT whether or not the Environmental Protection Agency, any
other federal agency or any state or local environmental agency has taken or
threatened any action in connection with the presence of any HAZARD.
(g) In the event of any HAZARD, or the presence of any
hazardous substance affecting the PROPERTY, whether or not the same originates
or emanates from the PROPERTY or any contiguous real estate, and if the BORROWER
shall fail to comply with any of the requirements of the ACT or related
regulations or any other environmental law or regulation within the time
established by any regulatory agency, the LENDER may at its election, but
without the obligation to do so: (i) give such notices and/or cause such work to
be performed at the PROPERTY; and/or (ii) take any and all other actions as the
LENDER shall reasonably deem necessary or advisable in order to abate the
HAZARD, remove the hazardous substance or cure the BORROWER's noncompliance. Any
amounts so paid by the LENDER pursuant to this Section, together with interest
thereon at the highest rate of interest permitted under the NOTE from the date
of payment by the LENDER, shall be immediately due and payable by the BORROWER
to the LENDER and until paid shall be added to and become a part of the
indebtedness under the LOAN DOCUMENTS and shall be secured by this MORTGAGE.
(h) The provisions of Section (1)(b), (c), (d), (e) (f) and
(g) are for the benefit of the LENDER only and cannot be assigned to any other
party, whatsoever, except by assignment of the NOTE and the LOAN DOCUMENTS by
the current LENDER to a successor lender.
(i) The BORROWER covenants that it will punctually (i) pay to
the LENDER the principal and interest of the LOAN and all other costs and
indebtedness secured hereby according to the
8
terms of the NOTE and other LOAN DOCUMENTS, and (ii) perform and satisfy all
other obligations of the BORROWER under the LOAN DOCUMENTS.
(j) The BORROWER shall comply with all laws a breach of which
would materially and adversely affect (a) the financial condition of the
BORROWER, (b) the ability to use buildings and other improvements on the REAL
ESTATE for the purposes for which they were designed or intended, (c) the value
or status of the PROPERTY, or (d) the value or status of the LENDER's title to
the PROPERTY.
(k) BORROWER will at all times promptly notify LENDER of all
changes in the ownership of the stock of BORROWER. At any time LENDER may
request, BORROWER shall furnish a complete statement, sworn to under penalty of
perjury by an officer of BORROWER, setting forth all of the stockholders,
officers, directors and Controlling Parties of BORROWER, and the extent of their
respective stock ownership or control. In the event the BORROWER is aware of any
other individual, corporation, partnership, association, trust, joint venture,
or any other legal entity (hereinafter referred to as PERSON) having a
beneficial interest in such stock, the statement shall also set forth the name
of such PERSON and the extent of their interest.
(l) Within ten (10) days after request from the LENDER, the
BORROWER shall certify, in writing, the amount of principal and interest then
owing on the LOAN and whether the BORROWER has any defenses or offsets with
respect to the LOAN.
(m) In the event (a) any law is hereafter enacted which
imposes any taxes, excises, documentary stamp and transfer taxes, recording
taxes, assessments, water rents, sewer rents, metropolitan district charges,
sanitary district charges, public dues, and other public charges levied or
assessed upon the PROPERTY, upon the LOAN, or the transactions evidenced or
contemplated by any of the LOAN DOCUMENTS (hereinafter referred to as TAXES), or
(b) any law now in force governing the taxation
9
of mortgages, debts secured by mortgages, or the manner of collecting any such
TAX shall be changed or modified, in any manner, so as to impose a TAX upon the
LOAN, any of the LOAN DOCUMENTS, or the transactions evidenced or contemplated
by any of the LOAN DOCUMENTS, (including, without limitation, a requirement that
revenue stamps be affixed to any or all of the LOAN DOCUMENTS), the BORROWER
will pay any such TAX promptly upon notice from LENDER that such TAX is due. If
the BORROWER fails to make prompt payment, or if any law either prohibits the
BORROWER from making the payment or would penalize the LENDER if BORROWER makes
the payment, then the failure, prohibition, or penalty shall entitle the LENDER,
after ninety (90) days notice and failure of the BORROWER to pay off the LOAN in
full, without penalty or premium, to exercise all rights hereunder as though an
EVENT OF DEFAULT, as hereinafter defined, had occurred.
(n) The BORROWER from time to time will execute, acknowledge,
deliver and record, at the BORROWER's sole cost and expense, all further
instruments, deeds, conveyances, supplemental mortgages, assignments, financing
statements, transfers, and assurances as in the opinion of the LENDER's counsel,
reasonably exercised, may be necessary (a) to preserve, continue, and protect
the interest of the LENDER in the PROPERTY, (b) to perfect the grant to the
LENDER of every part of the PROPERTY, (c) to facilitate the execution of this
MORTGAGE, (d) to secure the rights and remedies of the LENDER under this
MORTGAGE and the other LOAN DOCUMENTS, or (e) to transfer to any purchaser at a
sale hereunder the PROPERTY, funds, and powers now or hereafter held hereunder.
The BORROWER, at the request of the LENDER, shall promptly execute any
continuation statements required by the Uniform Commercial Code effective in the
State of Arkansas and any amendments thereto or reenactments thereof
(hereinafter referred to as the UNIFORM COMMERCIAL CODE) to maintain the lien on
any portion of the PROPERTY subject to the UNIFORM COMMERCIAL CODE.
10
(o) The BORROWER shall reimburse the LENDER for any sums,
including reasonable attorney's fees and expenses, incurred or expended by them
(a) in connection with any action or proceeding reasonably necessary or prudent
to sustain the lien, security interest, priority, or validity of any LOAN
DOCUMENT, (b) to protect or enforce any of their rights under the LOAN
DOCUMENTS, (c) for any title examination relating to the title to the PROPERTY
undertaken after an EVENTS OF DEFAULT, or (d) for any other purpose contemplated
by the LOAN DOCUMENTS. The BORROWER shall, upon demand, pay all such sums
accruing from the time the expense is paid and notice thereof is received if
such expense is not paid by the BORROWER within seven (7) days of receipt of
such notice. All such sums so expended by the LENDER shall be secured by this
MORTGAGE. In any action or proceeding to foreclose this MORTGAGE or to recover
or collect the LOAN, the provisions of law allowing the recovery of costs,
disbursements, and allowances shall be in addition to the rights given by this
Section.
(p) The BORROWER will comply with its obligations under any
lease which purports to convey any interest of BORROWER in any portion of the
PROPERTY, including, without limitation, subleases and assignments of leases and
rents (hereinafter referred to as LEASES). The BORROWER, within ten (10) days
after written request from the LENDER, shall deliver to the LENDER a detailed
list and description of all LEASES with copies thereof and such additional
information as may be reasonably requested by the LENDER. BORROWER will transfer
and assign to the LENDER, in a form satisfactory to the LENDER, BORROWER's
interest in any LEASE as further security for the obligations secured hereby. No
such assignment shall impose upon the LENDER any liability to perform the
BORROWER's obligations under any LEASE. The LENDER reserves the right, at its
request, to review and approve any and all LEASES of any portion of the
PROPERTY.
(q) The BORROWER will enforce all LEASES according to
11
their terms. The BORROWER shall not (a) cancel or terminate, or consent to or
accept any cancellation, termination, or surrender of any LEASE, or permit any
event within the BORROWER's control to occur which would terminate or cancel any
LEASE, (b) amend or modify any LEASE, (c) waive any default under or breach of
any LEASE, (d) consent to or permit any prepayment or discount of rent or
advance rent under any LEASE, except for the current month or following month,
or (e) give any consent, waiver, or approval under any LEASE or take any other
action with respect to any LEASE which may impair the value of the LENDER's
interest in the PROPERTY. BORROWER shall comply with and perform all duties and
obligations imposed upon or assumed by it in all LEASES.
(r) In the event of a sale pursuant to this MORTGAGE, each
lessee of BORROWER under any LEASE, and any sub-lessee or assignee of a LEASE
(hereinafter referred to as TENANT) shall, upon request, attorn to and
acknowledge any purchaser at foreclosure or grantee in lieu of foreclosure as
landlord and the purchaser will not be required to credit any TENANT under any
LEASE with rent paid more than one (1) month in advance. All LEASES shall be
subject and subordinate to the LOAN DOCUMENTS (including any modifications and
amendments) and any additional financing or refinancing of the PROPERTY by or
for the LENDER.
(s) The BORROWER shall not assign any rents, profits,
royalties, issues, revenues, income, proceeds, earnings, and products generated
by or arising out of the PROPERTY or any part thereof or any interest therein
(hereinafter referred to as the RENTS) without the prior written consent of the
LENDER. Any attempted assignment, pledge, hypothecation, or grant without such
consent shall be null and void.
(t) The BORROWER shall make no structural alterations or
material nonstructural alterations to the PROPERTY or construct any additional
improvements on the REAL ESTATE, without the prior written consent of the
LENDER, which consent shall not be unreasonably delayed or withheld. All
alterations or
12
improvements consented to by LENDER shall be completed and paid for by the
BORROWER within a reasonable time. All such alterations or improvements shall be
erected (a) in a good and workmanlike manner strictly in accordance with all
applicable law, (b) entirely on the REAL ESTATE, (c) without encroaching upon
any easement, right of way, or land of others, (d) so as not to violate any
applicable use, height, set-back or other applicable restriction, and (e)
without permitting any mechanic's lien to attach to the PROPERTY which is not
being contested as permitted hereunder. All alterations, additions, and new
improvements to the PROPERTY shall automatically be a part of the PROPERTY and
shall be subject to this MORTGAGE.
(u) It shall be an EVENT OF DEFAULT if BORROWER shall permit
the PROPERTY or the corporate interests in the BORROWER, or any part or portion
thereof or any interest therein, to be transferred (whether by voluntary or
involuntary conveyance, merger, operation of law, or otherwise) without the
prior written consent of the LENDER which the LENDER shall not be obligated to
give. Any transferee of the PROPERTY or interest in the BORROWER or any part or
portion thereof or any interest therein, by virtue of its acceptance of the
transfer, shall (without in any way affecting BORROWER's liability under the
LOAN DOCUMENTS) be conclusively deemed to have agreed to assume primary personal
liability for the performance of the BORROWER's obligations under the LOAN
DOCUMENTS. This Section shall not apply to any disposition permitted by Section
(1)(x), any LEASE entered into in compliance with Section (1)(p), or any
disposition by the LENDER by foreclosure hereunder or as otherwise permitted by
the LOAN DOCUMENTS.
(v) It shall be an EVENT OF DEFAULT if BORROWER shall allow
any liens, mortgages, rights, leases, restrictions, easements, deeds of trust,
covenants, agreements, rights of way, rights of redemption, security interests,
conditional sales agreements, land installment contracts, options, and all other
13
burdens or charges, including secondary and supplemental financing liens
(hereinafter referred to as the ENCUMBRANCES), on the PROPERTY, except this
MORTGAGE and all ENCUMBRANCES as to which borrower has given its prior written
approval, liens arising for real estate taxes or public charges for sewage,
water, drainage or other public improvements not yet due and payable, LEASE not
in violation of Section (1)(p) and all liens permitted under the LOAN DOCUMENTS,
as hereinafter defined, including, without limitation, those exceptions
specified on Schedule A (hereinafter referred to as the PERMITTED ENCUMBRANCES).
The BORROWER shall give the LENDER prompt notice of any defaults in or under any
PERMITTED ENCUMBRANCES and any notice of foreclosure or threat of foreclosure.
The BORROWER shall comply with its obligations under all PERMITTED ENCUMBRANCES.
The LENDER may, at its election, satisfy any ENCUMBRANCE (other than an
PERMITTED ENCUMBRANCE not then in default), and the BORROWER shall, on demand,
reimburse the LENDER for any sums advanced for such satisfaction accruing from
the date of satisfaction, which sums shall be secured hereby.
(w) BORROWER shall (i) keep and maintain the PROPERTY in good
order, condition, and repair and make all equipment replacements and repairs
necessary to insure that the security for the LOAN is not impaired, (ii) not
commit or suffer any waste of the PROPERTY, (iii) promptly protect and conserve
any portion of the PROPERTY remaining after any damage to, or partial
destruction of, the PROPERTY, provided any insurance proceeds which may have
been received by the LENDER as a result of such damage or destruction of the
PROPERTY are given to the BORROWER for such purposes, (iv) promptly repair,
restore, replace or rebuild any portion of the PROPERTY which is damaged or
destroyed, provided any insurance proceeds which may have been received by the
LENDER as a result of such damage or destruction of the PROPERTY are given to
the BORROWER for such purposes, (v) promptly restore the balance of the PROPERTY
remaining after any
14
taking by condemnation or eminent domain, any sale in lieu of condemnation under
threat thereof, the alteration of the grade of any street, or any other injury
to or decrease in the value of the PROPERTY by any public or quasi-public
authority or corporation or any other person having the power of eminent domain
(hereinafter referred to as a TAKING), provided any insurance proceeds which may
have been received by the LENDER as a result of such damage or destruction of
the PROPERTY are given to the BORROWER for such purposes, (vi) permit the LENDER
or its designee to inspect the PROPERTY at all reasonable times, and (vii) not
make any material change in the grade of the PROPERTY or permit any excavation
of or on the PROPERTY.
(x) No part of the PROPERTY, except supplies consumed in the
normal course of business and operations, shall be removed from the REAL ESTATE,
demolished, or materially altered without the prior written consent of the
LENDER, which shall not be unreasonably withheld. Prior to or simultaneously
with their removal, such fixtures and equipment shall be replaced with fixtures
or equipment of equal or greater value. The replacement fixtures or equipment
shall be free of all ENCUMBRANCES, shall automatically be subject to the lien
and security interest of this MORTGAGE, and shall automatically be subject to
the granting clauses hereof. Upon the sale of any removed fixtures and equipment
which are not replaced, the proceeds shall be applied as a prepayment of the
LOAN, to be applied to installments in inverse order of maturity. All sales
shall be conducted in a commercially reasonable manner with a bona fide effort
to obtain a sale price of at least market value.
(y) The BORROWER will pay and discharge, as the same shall
become due and payable, (i) all its obligations and liabilities, including all
claims or demands of materialmen, mechanics, carriers, warehousemen, landlords
and other like persons which, in any such case, if unpaid, might by law give
rise to a lien upon the PROPERTY, and (ii) all lawful TAXES,
15
assessments and charges or levies made upon it or its property or assets, by any
Government except where any of the items in clause (i) or (ii) of this Section
may be diligently contested in good faith by appropriate proceedings, and the
BORROWER shall have set aside on its books, if required under generally accepted
accounting principles in the United States, appropriate reserves for the accrual
of any such items.
(z) No restrictive covenant, zoning change, or other
restriction affecting the PROPERTY may be entered into, requested by or
consented to by BORROWER without the prior written consent of the LENDER which
consent shall not be unreasonably withheld or delayed.
(aa) The BORROWER will do all things necessary to preserve
intact and unimpaired, all easements, appurtenances, and other interests and
rights in favor of, or constituting any portion of, the PROPERTY.
(bb) LENDER may require the BORROWER, at its sole cost and
expense, to cause to be furnished to LENDER a prepaid real estate tax service
contract to annually check and report on the status of real estate taxes for the
REAL ESTATE throughout the term of the LOAN.
(cc) If required by the LENDER, the BORROWER shall deposit
with the LENDER, on the tenth (10) day of each month during the term of this
MORTGAGE, an additional amount as determined by the LENDER in its reasonable
discretion, to sufficiently discharge the obligations of the BORROWER for: (a)
the payment of TAXES, assessments, levies, fees, rents, and other public charges
imposed upon or assessed against the PROPERTY or the revenues, rents, issues,
income, or profits thereof, as provided in (1)(y); (b) the payment of premiums
for fire, casualty, and other hazard insurance and flood insurance, as provided
by Sections (1)(dd), (ee), (ff), and (gg), for the purpose of providing a fund
to assure the payment of the aforesaid expenses when and as they come due; and
(c) if
16
applicable, any owner's association fee, condominium association fee, or any
other similar fee, cost, assessment or charge. Such amounts shall be applied to
the payment of the obligations in respect to which such amounts were deposited
or, at the option of the LENDER, to the payment of such obligations in such
order of priority as the LENDER shall determine, on or before the date they
become delinquent. If the LENDER determines, prior to the due date of any of the
aforementioned obligations, that the amount then on deposit shall be
insufficient for the payment of such obligations in full, the BORROWER, within
ten (10) days after demand, shall deposit the amount of the deficiency with the
LENDER. The LENDER may also pay any amount as provided herein and add the amount
to the indebtedness hereby secured.
Any amounts deposited with the LENDER pursuant to this Section are
hereby pledged as additional security for the payment of the LOAN and other
obligations under the LOAN DOCUMENTS (hereinafter collectively referred to as
the LOAN OBLIGATIONS) and the BORROWER does hereby grant a security interest to
the LENDER in such amounts. Any amounts deposited with the LENDER pursuant to
the provisions of this Section shall not be, nor be deemed to be, trust funds,
nor shall they operate to curtail or reduce the LOAN OBLIGATIONS. Such funds so
deposited with the LENDER or pursuant to this Section shall be maintained in an
escrow account with the LENDER, without interest, separate and apart from the
BORROWER's other funds. The LENDER shall not be liable for any failure to apply
to the payment of the obligations in respect to which such amounts were
deposited unless the BORROWER, while no EVENT OF DEFAULT exists hereunder, shall
have requested the LENDER in writing to make application of such deposits then
on hand to the payment of particular escrow items, which request shall be
accompanied by the bills therefor. The LENDER may, in its sole discretion, at
any time and from time to time, waive the requirements of this Section.
Notwithstanding any other provision of this Section, the
17
BORROWER shall not be required to make any payment required under this Section
if such payment is required to be paid pursuant to the terms of any PERMITTED
ENCUMBRANCE.
(dd) The BORROWER shall keep any improvements constructed on
the REAL ESTATE and personalty thereon insured against loss by fire casualty,
and such other hazards and contingencies, including but not limited to
lightning, hail, windstorm, explosion, malicious mischief and vandalism, as are
covered by extended coverage policies in effect in the area where the REAL
ESTATE is located and such other risks as may be reasonably specified by the
LENDER from time to time, all for the benefit of the LENDER. Coverage for the
peril of sprinkler leakage must be included as a covered cause of loss for
buildings equipped with automatic sprinkler systems designed to discharge water,
or a chemical gas, or any other extinguishing agents. LENDER may require boiler
and machinery insurance to cover sudden and accidental breakdown of specific
types of equipment, including for example, boilers, heating and ventilating
systems, refrigeration equipment, air conditioning units, pumps, compressors,
motors, blowers, generators and transformers. All insurance shall be written on
policy forms and by insurance companies licensed and lawfully operating in the
jurisdiction in which the REAL ESTATE is located with a rating of "A-" or better
and Class IX or better according to A.M. Best Co. Insurance Guide and reasonably
satisfactory to the LENDER or pursuant to the terms of the VIRGINIA DEED OF
TRUST, and with respect to casualty insurance, shall be in an amount equal or
greater to the full replacement value of any improvements and personalty upon
the REAL ESTATE, as determined by an appraisal of such improvements and
personalty, acceptable to the LENDER and paid for by the BORROWER, but in any
event all insurance policies shall be in an amount sufficient to prevent
co-insurance liability, shall name the LENDER as a mortgagee and loss payee, as
its interest may appear, shall state that the insurance coverage shall not be
18
affected by any act or neglect of the BORROWER or owner of the insured PROPERTY
and shall be endorsed such that the losses thereunder shall be payable to the
LENDER, as its interest may appear, and not to the BORROWER and the LENDER. The
policy or policies of insurance shall include a replacement cost or restoration
endorsement and a waiver of subrogation endorsement reasonably satisfactory to
the LENDER. Originals or certified true copies of the policy or policies of such
insurance, any endorsements thereto and all renewals thereof shall be manually
signed and delivered to and retained by the LENDER, and the BORROWER shall
provide the LENDER with receipts evidencing the payment of all premiums due on
such policies and the renewals thereof not less than thirty (30) days prior to
the renewal or expiration date thereof. All policies required hereby shall
provide and shall bear an endorsement that they shall not be canceled,
terminated, endorsed or amended without not less than thirty (30) days prior
written notice to the LENDER. The BORROWER shall give the LENDER prompt notice
of any loss covered by such insurance, and, the LENDER shall have the right to
adjust and compromise such loss, to collect, receive and receipt the proceeds of
insurance for such loss and to endorse the BORROWER's name upon any check in
payment thereof and, for such purposes the BORROWER hereby constitutes and
appoints the LENDER as its attorney in fact with the power of attorney granted
hereby deemed to be coupled with an interest and irrevocable. All monies
received as payment for a loss covered by an insurance policy shall be paid over
to the LENDER to be applied, at the option of the LENDER, either to the
prepayment of the LOAN or to the payment of other charges or expenses actually
incurred by the BORROWER in the restoration, reconstruction, repair, renovation
or replacement of the affected portion of the PROPERTY, provided that any
election by the LENDER to apply insurance proceeds to the cost of restoration,
reconstruction, renovation, repair or replacement shall be subject to
satisfaction of the following
19
conditions: (i) such restoration, renovation, repair or rebuilding shall, in the
judgment of the LENDER, attain completion within the term of the LOAN; (ii) such
insurance proceeds, together with undisbursed LOAN proceeds and any amounts the
BORROWER deposits with the LENDER for such purpose are sufficient to fully
restore, renovate, repair or rebuild the damaged or destroyed PROPERTY; and
(iii) no event or circumstance has occurred and is existing which with the
giving of notice, the passing of time or both would constitute an EVENT OF
DEFAULT under this MORTGAGE or the other LOAN DOCUMENTS, otherwise, such
proceeds shall be applied in payment of the LOAN. The LENDER reserves the right
to require the escrow of insurance premiums during the term of the LOAN.
(ee) The BORROWER will maintain liability and indemnity
insurance with respect to the PROPERTY in an amount not less than $2,000,000 and
with such companies, and subject to the same terms and conditions specified in
Section (1)(dd) above (excepting that such insurance shall not have to list
LENDER as first mortgagee and loss payee or state that insurance coverage shall
not be affected by any act or neglect of the BORROWER or owner of the insured
property), and as the LENDER may reasonably direct and approve. Evidence of such
coverage in the form of a certified copy of the policy or an insurance
certificate must be supplied to LENDER.
(ff) The BORROWER shall also carry and maintain rental
interruption insurance on the PROPERTY in the same manner and under the same
conditions as provided in Section (1)(dd) covering debt service, real estate
taxes and insurance premiums for a period of at least six (6) months.
(gg) In the event that all or any portion of the REAL ESTATE
currently or at any time in the future is determined to be located in a
specially designated flood hazard area by the Secretary of Housing and Urban
Development or the Director of the Federal Emergency Management Agency, pursuant
to the provisions
20
of the National Flood Insurance Act of 1968, or the Flood Disaster Protection
Act of 1973, as amended, the BORROWER shall obtain and maintain flood hazard
insurance in the full insurable value of the PROPERTY or any portion of the REAL
ESTATE located within such area, or the full amount of flood insurance
available, naming the LENDER as sole loss payee and complying with all other
conditions as provided in Section (1)(dd) above. The BORROWER shall be required
to provide flood hazard insurance as described, unless the BORROWER's insurance
broker certifies to the LENDER in writing that the REAL ESTATE is not in a flood
hazard area. The proceeds of any loss payable under a flood insurance policy
shall be applied, at the option of the LENDER, as set forth in (1)(dd) above
with respect to casualty insurance proceeds.
(hh) BORROWER, immediately upon obtaining knowledge of the
institution of any proceeding for a TAKING, will notify the LENDER of such
proceedings. The LENDER may participate in any such proceedings, and BORROWER
will, from time to time, deliver to the LENDER all instruments requested by them
to permit such participation. Any award or payment made as a result of any
TAKING shall be paid to the LENDER, to be applied by the LENDER in it's sole
discretion to restore or repair the PROPERTY or to repayment of the amounts due
under the NOTE and the other LOAN DOCUMENTS, in inverse order of maturity. The
application of any award or payment as a repayment of amounts due under the NOTE
and the other LOAN DOCUMENTS shall take effect only on the actual date of the
receipt of the payment or award by the LENDER. In the event any payment or award
is used to restore the PROPERTY, as aforesaid, the LENDER shall not be obligated
to see to the proper allocation thereof nor shall any amount so used be deemed a
payment of any indebtedness secured by this MORTGAGE. Payments or awards to be
used for restoration purposes, as aforesaid, shall be held by the LENDER and
disbursed under the same terms and conditions as provided for disbursement of
insurance proceeds
21
in Section (1)(dd).
(ii) Notwithstanding anything to the contrary in this Section
(1), all rights of LENDER set forth herein shall be limited by the rights of any
beneficiary of any PERMITTED ENCUMBRANCE, if any.
(2) The LENDER may, at its option, declare the entire unmatured portion
of all indebtedness secured hereby, together with all interest accrued on the
entire secured debt, to be immediately due and payable, and the same shall
forewith become immediately due and payable (which acceleration of maturity may
be accomplished without notice to anyone), in any of the following events (each,
hereinafter referred to as an EVENT OF DEFAULT), the occurrence of any of which
shall constitute an EVENT OF DEFAULT:
(a) Any representation or warranty made by the BORROWER herein
which shall prove to have been incorrect in any material respect when made or
shall be breached.
(b) The failure of BORROWER to perform its obligations set
forth in Sections (1)(dd), (ee), (ff), or (gg) (insurance).
(c) Any attempted assignment by the BORROWER of the whole or
any part of the RENTS in contravention of Section (1)(s).
(d) Any transfer or event in violation of the provisions of
Sections (1)(u) or (v).
(e) The loss of any franchise agreement, license or permit
necessary for the operation, occupancy, or use of the PROPERTY, other than as a
result of casualty or condemnation, which loss continues for a period thirty
(30) days after receipt by BORROWER (or refusal of delivery) of written notice
given in accordance with the provisions of this MORTGAGE.
(f) The default by the BORROWER or by any guarantor of payment
or performance of the BORROWER under any obligation or indebtedness to the
LENDER, whether now existing or hereafter arising, which default is not cured
within any applicable cure or
22
grace period.
(g) The occurrence of an Event of Default under the DEED OF
TRUST, from BORROWER to OTTO W. KONRAD and BRUCE H. MATSON, Trustees, for the
benefit of KEYBANK NATIONAL ASSOCIATION, dated as of October 1, 1997 (the
"Virginia Deed of Trust"), and recorded simultaneously herewith in the Clerk's
Office of the Circuit Court of the County of Sussex, Virginia.
(h) The occurrence of an EVENT OF DEFAULT under the Mortgage
and Security Agreement dated as of October 1, 1997 from the County of Saratoga
Industrial Development Agency and the Borrower to the Lender, recorded on or
about October 10, 1997 in the Clerk's Office of Saratoga County, New York.
(i) the occurrence of an EVENT OF DEFAULT under any Loan
Document.
(j) The failure of the BORROWER to perform or observe any of
its obligations or covenants under this MORTGAGE not previously specifically
referred to in this Section (2), which failure continues for a period of seven
(7) days after receipt by BORROWER (or refusal of delivery) of written notice
given in accordance with the provisions of this MORTGAGE in the event of a
monetary default or for a period of thirty (30) days after receipt by BORROWER
(or refusal of delivery) of written notice given in accordance with the
provisions of this MORTGAGE in the event of a non-monetary default. The failure
of the BORROWER to perform or observe any of its obligations or covenants
constituting an Event of Default under any LOAN DOCUMENT, not previously
specifically referred to in this Section (2), subject to any applicable cure
period.
(3) In the EVENT OF DEFAULT hereunder, the LENDER hereby shall be
entitled to the following remedies:
(a) The LENDER may enforce the lien of this MORTGAGE in
respect to all real and personal property encumbered hereby by foreclosure or
otherwise in proceedings that are prosecuted simultaneously or are prosecuted
separately in such order as the
23
LENDER may select.
(b) The LENDER may require the BORROWER to assemble at
BORROWER's expense any or all of the personal property encumbered hereby and
make it available to LENDER at a place specified by LENDER which is reasonably
convenient to both parties; and LENDER may enforce all of its remedies in
respect to the encumbered personal property that may be available under the
UNIFORM COMMERCIAL CODE. In this latter event all expenses or retaking, holding,
preparing for sale, selling or the like, as well as all reasonable attorneys'
fees and lawful expenses incurred by said LENDER in enforcing such remedies
shall be payable to said LENDER by BORROWER and shall constitute a part of the
secured indebtedness.
(4) The BORROWER hereby waives any and all rights of appraisement,
sale, redemption and homestead under the laws of Arkansas, and especially under
the Act of May 8, 1899, and Acts amendatory thereto.
(5) All representations, warranties, covenants, duties, provisions
concerning insurance and condemnation and all Events of Default specified in the
VIRGINIA DEED OF TRUST, including such provisions contained in Articles V, VI,
VII, VIII and X of the VIRGINIA DEED OF TRUST, are incorporated herein by
reference and made applicable to real property conveyed hereunder. In the event
of a conflict between the provisions of the VIRGINIA DEED OF TRUST and the
provisions contained herein, the provisions of the VIRGINIA DEED OF TRUST shall
control unless applicable law otherwise dictates. In construing the provision of
the VIRGINIA DEED OF TRUST and this MORTGAGE, such provisions shall be read to
afford LENDER the maximum rights hereunder.
(6) This MORTGAGE shall be governed by the laws of the State of
Arkansas.
SIGNATURES APPEAR ON NEXT PAGE
24
Executed on this 7th day of November, 1997.
SPURLOCK ADHESIVES, INC.
By: /s/ Phillip S. Sumpter
--------------------------------
Its: Exec Vice President
-------------------------------
ATTEST:
/s/ Warren E. Beam
- ------------------------------
Assistant Secretary
- ---------------------, --------
ACKNOWLEDGMENT
STATE OF VA )
)ss.
COUNTY OF SUSSEX )
Before me, the undersigned Notary Public, in and for said County and
State on this day personally appeared Phillip S. Sumpter and Warren E. Beam,
known to me to be the persons whose names are subscribed to the foregoing
instrument and acknowledged that they were the Exec. Vice President and Asst.
Secretary, respectively, of Spurlock Adhesives, Inc. and as such officers were
authorized to execute the foregoing and had executed the foregoing and had
executed same for the uses and purposes set forth herein.
WITNESS my hand and seal on this 7th day of November, 1997
/s/
------------------------------
NOTARY PUBLIC
My Commission expires: 11/30/00
--------
25
Schedule A
1. 1998 Real Estate Taxes, taxes and special assessments of subsequent years
which are due and payable but not delinquent until October 10, 1998.
2. Encroachment, overlaps, discrepancies or conflicts in boundary lines,
shortage in area, or other matters which would be disclosed by an
accurate survey of the land or by making inquiry of persons in possession
thereof.
3. Rights of way in favor of all County, State and Municipal roadways.
4. Loss arising from oil, gas or other minerals, or any other activity
concerning the sub-surface right or ownership, including but not limited
to the right of egress or ingress for said sub-surface purposes.
5. Any right of way in favor of Missouri Pacific Railroad.
6. Arkansas Mortgage With Power of Sale, dated July 11, 1996, by Spurlock
Adhesives, Inc., a Virginia corporation, in favor of National Canada
Finance Corporation, and filed July 15, 1996 and recorded in Mortgage
Book 209, page 945 of the records of Hot Spring County, Arkansas.