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EXHIBIT 10.4(c)
When Recorded, Return To:
BANK OF AMERICA TEXAS, N.A.
▇▇▇▇ ▇. ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
DEED OF TRUST, SECURITY AGREEMENT AND
ASSIGNMENT OF RENTS AND LEASES
STATE OF TEXAS )
) KNOW ALL MEN BY THESE PRESENTS:
COUNTIES OF BRAZORIA, )
DALLAS, COLLIN, FORT BEND, )
GALVESTON, ▇▇▇▇▇▇, ▇▇▇▇▇▇ )
▇▇▇▇▇▇▇▇▇▇ AND TARRANT )
THAT, NEWMARK HOMES, L.P., a Texas limited partnership ("GRANTOR"),
whose address is ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇ for and in
consideration of the sum of TEN DOLLARS ($10.00) to Grantor in hand paid by
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Trustee, of Dallas County, Texas ("TRUSTEE"), in order to
secure the payment of the Indebtedness (as hereinafter defined) and the
performance of the obligations, covenants, agreements and undertakings of
Grantor hereinafter described, does hereby GRANT, BARGAIN, SELL, CONVEY,
TRANSFER, ASSIGN and SET OVER to Trustee the real estate (the "LAND") described
on Exhibit "A" attached to each Supplemental Deed of Trust, Security Agreement
and Assignment of Rents and Leases now or hereafter executed by Grantor and
incorporating by its terms this Deed of Trust (a "Supplemental Deed of Trust"),
TOGETHER WITH the following, whether now owned or hereafter acquired by
Grantor:
(a) all buildings and other improvements now or hereafter
attached to or placed, erected, constructed or developed on the Land
(the "IMPROVEMENTS") during the existence of this lien;
(b) all materials, equipment, fixtures, furnishings,
inventory and articles of personal property (the "PERSONAL PROPERTY")
whatsoever now or hereafter delivered to, attached to, installed in,
or used in or about the Improvements or which are necessary or useful
for the complete and comfortable use and occupancy of the Improvements
for the purposes for which they were or are to be attached, placed,
erected, constructed or developed, or which Personal Property is or
may be used in the development of the
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Improvements, and all renewals of or replacements or substitutions for
any of the foregoing whether or not the same shall be attached to the
Land or Improvements;
(c) all water and water rights, timber, crops, and
minerals and equipment now of hereafter delivered to and intended to
be installed in or on the Land or Improvements;
(d) all building materials and equipment now or hereafter
delivered to and intended to be installed in or on the Land or
Improvements;
(e) all security deposits and advance rentals under any
lease agreements now or at any time hereafter arising from or by
virtue of any transactions related to the Land, Improvements or the
Personal Property and held by or for the benefit of Grantor;
(f) all monetary deposits which Grantor has been required
to give to any public or private utility with respect to utility
services furnished to the Land or Improvements;
(g) all rents, issues, profits, revenues, royalties,
bonuses or other benefits of the Land, the Improvements or the
Personal Property, including, without limitation, cash or securities
deposited pursuant to leases of all or any part of the Land,
Improvements or Personal Property;
(h) all proceeds (including premium refunds) of each
policy of insurance relating to the Land, Improvements or Personal
Property;
(i) all proceeds from the taking of the Land,
Improvements, Personal Property or any part thereof or any interest or
right or estate appurtenant thereto by eminent domain or by purchase
in lieu thereof;
(j) all Grantor's rights (but not its obligations) under
any contracts related to the Land or Improvements;
(k) all Grantor's rights (but not its obligations) under
any documents, contract rights, commitments, accounts, general
intangibles (including trademarks, trade names and symbols used in
connection therewith) arising by virtue of any transactions related to
the Land, Improvements or Personal Property;
(l) all deposits, bank accounts, funds, instruments,
notes or chattel paper arising from or related to the Land,
Improvements or Personal Property;
(m) all permits, licenses, franchises, certificates and
other rights and privileges obtained in connection with the Land,
Improvements or Personal Property;
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(n) all plans, specifications, maps, surveys, reports,
architectural, engineering and construction contracts, books of
account, insurance policies and other documents, of whatever kind or
character, relating to the use, construction upon, occupancy, leasing,
sale or operation of the Land or Improvements;
(o) all oil, gas and other hydrocarbons and other
minerals produced from or allocated to the Land or Improvements and
all products processed or obtained therefrom, the proceeds thereof,
and all accounts and general intangibles under which such proceeds may
arise and all proceeds of the Personal Property;
(p) all easements and rights of way used in connection
with the Land or Improvements or as a means of ingress to or egress
from said Land or Improvements;
(q) all right, title and interest of Grantor in and to
all streets, roads, ways, alleys, public places, easements and
rights-of-way, existing or proposed, public or private, adjacent to or
used in connection with, belonging or pertaining to the Land or any
part thereof; and
(r) all rights, estates, powers, privileges and interests
of whatever kind or character appurtenant or incident to the
foregoing. If the estate of Grantor in any of the above-described
property is a leasehold estate (the "LEASEHOLD ESTATE"), this
conveyance shall include and the lien and security interest created
hereby shall encumber all additional title, estate, interest, and
other rights that may hereafter be acquired by Grantor in the property
demised under the Leasehold Estate. The above-described property is
collectively herein referred to as the "MORTGAGED PROPERTY."
TO HAVE AND TO HOLD the Mortgaged Property, together with the rights,
privileges and appurtenances thereto belonging unto the Trustee and his
successors or substitutes, forever in this trust and to his or their successors
and assigns, IN TRUST, however, upon the terms, provisions and conditions
herein set forth.
ARTICLE I
SECURED INDEBTEDNESS
1.1 SECURED INDEBTEDNESS. This Deed of Trust, Security Agreement
and Assignment of Rents and Leases (the "MORTGAGE") is made to secure and
enforce the payment of the following note, obligations, indebtedness and
liabilities:
(a) one certain promissory note dated November 29, 1996
in the original principal amount of FIFTEEN MILLION AND NO/100 DOLLARS
($15,000,000.00), made by Grantor and payable to the order of BANK OF
AMERICA TEXAS, N.A., whose
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address is ▇▇▇▇ ▇. ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇, Attention:
Real Estate Group, with interest at the rate or rates therein
provided, both principal and interest being payable as therein
provided, and containing a provision for the payment of a reasonable
additional amount as attorneys' fees, and all modifications,
increases, renewals or extensions thereof, in whole or in part, and
all other notes given in substitution therefor or in modification,
increase, renewal or extension thereof, in whole or in part,
hereinafter referred to as the "NOTE" (said payee and all subsequent
holders of the Note or any part thereof or any of the Indebtedness [as
hereinafter defined] are hereinafter referred to as "NOTEHOLDER");
(b) that certain Loan Agreement dated November 29, 1996
between Grantor and Bank of America Texas, N.A., as the same may be
amended or modified from time to time (the "LOAN AGREEMENT"); and
(c) all future loans and advances made by Noteholder to
Grantor and all other debts, obligations and liabilities of every kind
and character of Grantor now or hereafter existing in favor of
Noteholder incurred or arising pursuant to the provisions of this
Mortgage or the Loan Agreement, whether such debts, obligations or
liabilities be direct or indirect, primary or secondary, joint or
several, fixed or contingent, and whether originally payable to
Noteholder or to a third party and subsequently acquired by Noteholder
and whether such debts, obligations and liabilities are evidenced by
note, open account, overdraft, endorsement, surety agreement, guaranty
or otherwise, it being contemplated that Grantor may hereafter become
indebted to Noteholder in further sum or sums.
The indebtedness referred to in this Article I is hereinafter collectively
referred to as the "INDEBTEDNESS." This Mortgage, the Note, the Loan Agreement
(as hereinafter defined) and any other instruments now or hereafter evidencing,
securing, governing, guaranteeing and/or, pertaining to the Indebtedness or any
part hereof are hereinafter collectively referred to as the "LOAN DOCUMENTS."
ARTICLE II
REPRESENTATIONS, WARRANTIES, COVENANTS AND AGREEMENTS
OF GRANTOR
2.1 REPRESENTATIONS AND WARRANTIES. Grantor does hereby represent
and warrant to Noteholder as follows:
(a) FINANCIAL MATTERS. Grantor is solvent, is not
bankrupt and has no outstanding liens, suits, garnishments,
bankruptcies or court actions which could render Grantor insolvent or
bankrupt. There has not been filed by or against Grantor a petition
in bankruptcy or a petition or answer seeking an assignment for the
benefit of creditors, the appointment of a receiver, a trustee,
custodian or liquidator with respect to Grantor or
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any substantial portion of Grantor's property, reorganization,
arrangement, rearrangement, composition, extension, liquidation or
dissolution or similar relief under the United States Bankruptcy Code
or any state law. All reports, statements and other data furnished by
Grantor to Noteholder in connection with the loan evidenced by the
Note are true and correct in all material respects and do not omit to
state any fact or circumstance necessary to make the statements
contained therein not misleading. No material adverse change has
occurred since the dates of such reports, statements and other data in
the financial condition of Grantor or of any tenant under leases
described in such reports, statements and other data. For the
purposes of this Paragraph, Grantor shall also include any
guarantor(s), surety(ies) and any joint venturer or general partner of
Grantor.
(b) TITLE AND AUTHORITY. Grantor is the lawful owner of
good, indefeasible and marketable title to the Land and Improvements
and has good right and authority to grant, bargain, sell, transfer,
assign and mortgage the Land and Improvements and to grant a security
interest in the Personal Property. Grantor does not do business with
respect to the Mortgaged Property under any trade name other than
"▇▇▇▇▇▇▇▇ - ▇▇▇▇▇▇ Estate Homes".
(c) PERMITTED ENCUMBRANCES. The Mortgaged Property is
free and clear from all liens, security interests and encumbrances
except the lien and security interest evidenced hereby and the
Permitted Encumbrances (as defined in the Loan Agreement). There are
no mechanic's or materialmen's liens, lienable bills or other claims
constituting or that may constitute a lien on the Mortgaged Property,
or any part thereof.
(d) NO FINANCING STATEMENTS. There is no financing
statement covering all or any part of the Mortgaged Property or its
proceeds on file in any public office, which has not been terminated
or assigned to Noteholder.
(e) LOCATION OF PERSONAL PROPERTY. All tangible Personal
Property is located on the Land.
(f) NO HOMESTEAD. No portion of the Mortgaged Property
is being used as Grantor's business or residential homestead.
(g) NO DEFAULT OR VIOLATION. The execution, delivery and
performance of this Mortgage, the Note and all other Loan Documents do
not contravene, result in a breach of or constitute a default under
any mortgage, deed of trust, lease, promissory note, loan agreement or
other contract or agreement to which Grantor is a party or by which
Grantor or any of its properties may be bound or affected and do not
violate or contravene any law, order, decree, rule or regulation to
which Grantor is subject.
(h) COMPLIANCE WITH COVENANTS AND LAWS. The Mortgaged
Property and the intended use thereof by Grantor comply with all
applicable restrictive covenants, zoning
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ordinances and building codes, flood disaster laws, applicable health
and environmental laws and regulations and all other applicable laws,
statutes, ordinances, rules, regulations, orders, determinations and
court decisions, including, without limitation, the Americans With
Disabilities Act of 1990 and TEX. REV. CIV. STAT. ▇▇▇. art. 9102, as
amended, (all of the foregoing hereinafter sometimes collectively
referred to as "APPLICABLE LAWS") without reliance upon grandfather
provisions or adjacent or other properties. Grantor has obtained all
requisite zoning, utility, building, health and operating permits from
the governmental authority or municipality having jurisdiction over
the Mortgaged Property. All engineering specifications with respect
to the Mortgaged Property are within applicable environmental
standards.
(i) ENVIRONMENTAL. To the best knowledge of Grantor,
without investigation, no asbestos, material containing asbestos which
is or may become friable or material containing asbestos deemed
hazardous by Applicable Laws has been installed in the Mortgaged
Property. Grantor is not in violation of or subject to any existing,
pending or, to the best knowledge of Grantor, threatened investigation
or inquiry by any governmental authority or to any remedial
obligations under any Applicable Laws pertaining to health or the
environment (such Applicable Laws as they now exist or are hereafter
enacted and/or amended hereinafter sometimes collectively referred to
as "APPLICABLE ENVIRONMENTAL LAWS") , including without limitation,
the Comprehensive Environmental Response, Compensation, and Liability
Act of 1980, as amended by the Superfund Amendments and
Reauthorization Act of 1986 (collectively, together with any
subsequent amendments hereinafter referred to as "CERCLA"), the
Resource Conservation and Recovery Act of 1976, as amended by the Used
Oil Recycling Act of 1980, the Solid Waste Disposal Act Amendments of
1980, and the Hazardous and Solid Waste Amendments of 1984
(collectively, together with any subsequent amendments hereinafter
called "RCRA"), the Texas Water Code and the Texas Solid Waste
Disposal Act, and, to the best knowledge of Grantor, without
investigation, this representation would continue to be true and
correct following disclosure to the applicable governmental
authorities of all relevant facts, conditions and circumstances, if
any, pertaining to the Mortgaged Property and Grantor. Grantor has
not obtained and, to the best knowledge of Grantor, without
investigation, is not required to obtain any permits, licenses or
similar authorizations to construct, occupy, operate or use any
buildings, improvements, fixtures or equipment forming a part of the
Mortgaged Property by reason of any Applicable Environmental Laws.
The use which Grantor makes and intends to make of the Mortgaged
Property will not result in the disposal or other release of any
hazardous substance or solid waste on or to the Mortgaged Property.
The terms "HAZARDOUS SUBSTANCE" and "RELEASE" as used in this Mortgage
shall have the meanings specified in CERCLA, and the terms "SOLID
WASTE" and "DISPOSAL" (or "DISPOSED") shall have the meanings
specified in RCRA; provided, in the event either CERCLA or RCRA is
amended so as to broaden the meaning of any term defined thereby, such
broader meaning shall apply subsequent to the effective date of such
amendment and provided further, to the extent that the laws of the
State of Texas establish a meaning for the terms "HAZARDOUS
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SUBSTANCE," "RELEASE," "SOLID WASTE," or "DISPOSAL," (or "DISPOSED")
which is broader than that specified in either CERCLA or RCRA, such
broader meaning shall apply.
(j) NO SUITS. There are no judicial or administrative
actions, suits or proceedings pending or, to the best of Grantor's
knowledge, threatened against or affecting Grantor, any other person
liable, directly or indirectly, for the Indebtedness, or the Mortgaged
Property or involving the validity, enforceability or priority of any
of the Loan Documents.
(k) CONDITION OF PROPERTY. The Mortgaged Property is
served by electric, storm and sanitary sewers, sanitary water supply,
telephone and other utilities required for the use thereof as
represented by Grantor at or within the boundary lines of the
Mortgaged Property. All streets, alleys and easements necessary to
serve the Mortgaged Property for the use represented by Grantor have
been completed and are serviceable and such streets have been
dedicated and accepted by applicable governmental entities. The
Mortgaged Property is in good condition and repair with no deferred
maintenance and is free from damage caused by fire or other casualty.
Grantor is aware of no latent or patent structural or other
significant defect or deficiency in the Mortgaged Property. Design
and as-built conditions of the Mortgaged Property are such that no
drainage or surface or other water will drain across or rest upon
either the Mortgaged Property or land of others. None of the
Mortgaged Property is within a flood plain. None of the improvements
on the Mortgaged Property create an encroachment over, across or upon
any of the Mortgaged Property boundary lines, rights of way or
easements and no buildings or other improvements on adjoining land
create such an encroachment.
(l) ORGANIZATION. Grantor is a limited partnership duly
organized and validly existing under the laws of the State of Texas.
Grantor has all requisite power and all governmental certificates of
authority, licenses, permits, qualifications and other documentation
to own, lease and operate its properties and to carry on its business
as now conducted and as contemplated to be conducted.
(m) ENFORCEABILITY. The Note, this Mortgage and all
other Loan Documents constitute the legal, valid and binding
obligations of Grantor enforceable in accordance with their terms.
The execution and delivery of, and performance under, the Note, this
Mortgage and all other Loan Documents are within Grantor's powers and
have been duly authorized by all requisite action and are not in
contravention of the powers of Grantor's charter, bylaws or other
corporate papers if Grantor is a corporation, or of Grantor's
partnership or joint venture agreement if Grantor is a partnership or
joint venture, or of Grantor's limited partnership agreement if
Grantor is a limited partnership.
(n) NOT A FOREIGN PERSON. Grantor is not a "FOREIGN
PERSON" within the meaning of the Internal Revenue Code of 1986, as
amended (hereinafter called the "CODE"), Sections 1445 and 7701 (i.e.,
Grantor is not a non-resident alien, foreign
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corporation, foreign partnership, foreign trust or foreign estate, as
those terms are defined in the Code and regulations promulgated
thereunder).
2.2 COVENANTS AND AGREEMENTS. So long as the Indebtedness or any
part thereof remains unpaid, Grantor covenants and agrees with Noteholder as
follows:
(a) PAYMENT AND PERFORMANCE. Grantor will make prompt
payment, as the same becomes due, of the Indebtedness and shall
punctually and properly perform all of Grantor's covenants,
obligations and liabilities under the Loan Documents.
(b) EXISTENCE. Grantor will continuously maintain its
existence and its right to do business in the State of Texas together
with its franchises and trade names.
(c) TAXES ON NOTE AND OTHER TAXES. Grantor will promptly
pay all income, franchise and other taxes owing by Grantor and any
stamp taxes which may be required to be paid with respect to the Note,
this Mortgage or any other Loan Documents.
(d) OPERATION OF MORTGAGED PROPERTY. Grantor will
construct and maintain the Mortgaged Property in a good and
workmanlike manner and in accordance with all Applicable Laws and will
pay all fees or charges of any kind in connection therewith. Grantor
will keep the Mortgaged Property occupied so as not to impair the
insurance carried thereon. Grantor will not use or occupy, or allow
the use or occupancy of, the Mortgaged Property in any manner which
violates any Applicable Law or which constitutes a public or private
nuisance or which makes void, voidable or cancelable, or increases the
premium of, any insurance then in force with respect thereto. Grantor
will not initiate or permit any zoning reclassification of the
Mortgaged Property or seek any variance under existing zoning
ordinances applicable to the Mortgaged Property or use or permit the
use of the Mortgaged Property in such a manner which would result in
such use becoming a nonconforming use under applicable zoning
ordinances or other Applicable Laws. Grantor will not impose any
restrictive covenants or encumbrances upon the Mortgaged Property,
execute or file any subdivision plat affecting the Mortgaged Property
or consent to the annexation of the Mortgaged Property to any
municipality, without the prior written consent of Noteholder.
Grantor shall not cause or permit any drilling or exploration for, or
extraction, removal or production of, minerals from the surface or
subsurface of the Mortgaged Property. Grantor will not do or suffer
to be done any act whereby the value of any part of the Mortgaged
Property may be lessened. Grantor will allow Noteholder or its
authorized representative to enter the Mortgaged Property at any
reasonable time to inspect the Mortgaged Property and Grantor's books
and records pertaining thereto and Grantor will assist Noteholder or
said representative in whatever way necessary to make such inspection.
If Grantor receives a notice or claim from any federal, state or other
governmental entity pertaining to the Mortgaged Property, including,
without limitation, a notice that the Mortgaged Property is not in
compliance
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with any Applicable Law, Grantor will promptly furnish a copy of such
notice or claim to Noteholder.
(e) DEBTS FOR CONSTRUCTION. Grantor will cause all debts
and liabilities of any character, including without limitation all
debts and liabilities for labor, material and equipment and all debts
and charges for utilities servicing the Mortgaged Property, incurred
in the construction, maintenance, operation and development of the
Mortgaged Property to be promptly paid.
(f) AD VALOREM TAXES. Grantor will cause to be paid
prior to delinquency all taxes and assessments heretofore or hereafter
levied or assessed against the Mortgaged Property, or any part
thereof, or against Trustee or Noteholder for or on account of the
Note or any other Indebtedness or the interest created by this
Mortgage and will furnish Noteholder with receipts showing payment of
such taxes and assessments at least ten (10) days prior to the
applicable default date therefor; provided that Grantor may in good
faith, by appropriate proceedings, contest the validity,
applicability, or amount of any asserted tax or assessment, and
pending such contest Grantor shall not be deemed in default hereunder
if:
(i) Grantor shall diligently prosecute such
contest in a manner not prejudicial to the rights, liens and
security interests of Noteholder;
(ii) prior to delinquency of the asserted tax or
assessment Grantor establishes with Noteholder an escrow
acceptable to Noteholder adequate to cover the payment of such
tax or assessment with interest, costs and penalties and a
reasonable additional sum to cover possible costs, interest
and penalties (which escrow shall be returned to Grantor upon
payment of all such taxes, assessments, interest, costs and
penalties or disbursed in accordance with the resolution of
the contest to the claimant) or furnishes Noteholder with an
indemnity bond secured by a deposit in cash or other security
acceptable to Noteholder, or with a surety acceptable to
Noteholder, in the amount of the tax or assessment being
contested by Grantor plus a reasonable additional sum to pay
all costs, interests and penalties which may be imposed or
incurred in connection therewith;
(iii) Grantor pays to Noteholder promptly after
demand therefor all costs and expenses incurred by Noteholder
in connection with such contest; and
(iv) Grantor promptly causes to be paid any amount
adjudged by a court of competent jurisdiction to be due, with
all costs, penalties and interest thereon, promptly after such
judgment becomes final and unappealable;
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provided, however, that in any event each such contest shall be
concluded and the tax, assessment, penalties, interest and costs shall
be paid prior to the date any writ or order is issued under which the
Mortgaged Property may be sold.
(g) CONDEMNATION. Immediately upon obtaining knowledge
of the institution of any proceedings for the condemnation of the
Mortgaged Property or any portion thereof, or any other proceedings
arising out of injury or damage to the Mortgaged Property, or any
portion thereof, Grantor will notify Noteholder of the pendency of
such proceedings. Noteholder may participate in any such proceedings,
and Grantor shall from time to time deliver to Noteholder all
instruments requested by it to permit such participation. Grantor
shall, at its expense, diligently prosecute any such proceedings, and
shall consult with Noteholder, its attorneys and experts, and
cooperate with them in the carrying on or defense of any such
proceedings. All proceeds of condemnation awards or proceeds of sale
in lieu of condemnation with respect to the Mortgaged Property and all
judgments, decrees and awards for injury or damage to the Mortgaged
Property shall be paid to Noteholder and shall be applied, first, to
reimburse Noteholder or Trustee for all costs and expenses, including,
without limitation, reasonable attorneys' fees, incurred in connection
with collection of such proceeds and, second, the remainder of said
proceeds shall be applied, at the sole discretion of Noteholder, to
the payment of the Indebtedness (without premium or penalty) in the
order determined by Noteholder in its sole discretion or paid out to
repair or restore the Mortgaged Property so affected by such
condemnation, injury or damage. In any event the unpaid portion of
the Indebtedness shall remain in full force and effect and Grantor
shall not be excused in the payment thereof. In the event any of the
foregoing proceeds are applied to the repair, restoration or
replacement of the Mortgaged Property, Grantor shall promptly commence
and complete such repair, restoration or replacement of the Mortgaged
Property as nearly as possible to its value, condition and character
immediately prior to such damage or taking in accordance with plans
and specifications submitted to and approved by Noteholder. Grantor
hereby assigns and transfers all such proceeds, judgments, decrees and
awards to Noteholder and agrees to execute such further assignments of
all such proceeds, judgments, decrees and awards as Noteholder may
request. Noteholder is hereby authorized, in the name of Grantor, to
execute and deliver valid acquittances for, and to appeal from, any
such judgment, decree or award. Noteholder shall not be, in any event
or circumstances, liable or responsible for failure to collect, or
exercise diligence in the collection of, any such proceeds, judgments,
decrees or awards.
(h) PROTECTION AND DEFENSE OF LIEN. If the validity or
priority of this Mortgage or of any rights, titles, liens or security
interests created or evidenced hereby with respect to the Mortgaged
Property or any part thereof shall be endangered or questioned or
shall be attacked directly or indirectly or if any legal proceedings
are instituted against Grantor with respect thereto, Grantor will give
prompt written notice thereof to Noteholder and at Grantor's own cost
and expense will diligently endeavor to cure any defect that may be
developed or claimed, and will take all necessary and proper
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steps for the defense of such legal proceedings, including, without
limitation, the employment of counsel, the prosecution or defense of
litigation and the release or discharge of all adverse claims, and
Trustee and Noteholder, or either of them (whether or not named as
parties to legal proceedings with respect thereto) are hereby
authorized and empowered to take such additional steps as in their
judgment and discretion may be necessary or proper for the defense of
any such legal proceedings or the protection of the validity or
priority of this Mortgage and the rights, titles, liens and security
interests created or evidenced hereby, including, without limitation,
the employment of counsel, the prosecution or defense of litigation,
the compromise or discharge of any adverse claims made with respect to
the Mortgaged Property, the purchase of any tax title and the removal
of prior liens or security interests (including, without limitation,
the payment of debts as they mature or the payment in full of matured
or unmatured debts, which are secured by these prior liens or security
interests), and all expenses so incurred of every kind and character
shall be subject to and covered by the provisions of Paragraph 2.3
hereof.
(i) NO OTHER LIENS. Grantor will not, without the prior
written consent of Noteholder, create, place or permit to be created
or placed, or through any act or failure to act, acquiesce in the
placing of, or allow to remain, any deed of trust, mortgage, voluntary
or involuntary lien, whether statutory, constitutional or contractual
(except for the lien for ad valorem taxes on the Mortgaged Property
which are not delinquent), security interest, encumbrance or charge,
or conditional sale or other title retention document, against or
covering the Mortgaged Property, or any part thereof, other than the
Permitted Encumbrances, regardless of whether the same are expressly
or otherwise subordinate to the lien or security interest created in
this Mortgage, and should any of the foregoing become attached
hereafter in any manner to any part of the Mortgaged Property without
the prior written consent of Noteholder, Grantor will cause the same
to be promptly discharged and released. Grantor will own all parts of
the Mortgaged Property and will not acquire any fixtures, equipment or
other property forming a part of the Mortgaged Property pursuant to a
lease, license or similar agreement, without the prior written consent
of Noteholder.
(j) FURTHER ASSURANCES. Grantor will, on request of
Noteholder, promptly:
(i) correct any defect, error or omission which
may be discovered in the contents of this Mortgage or in any
other instrument now or hereafter executed in connection
herewith or in the execution of acknowledgment thereof;
(ii) execute, acknowledge, deliver and record or
file such further instruments (including, without limitation,
further deeds of trust, security agreements, financing
statements, continuation statements and assignments of rents
or leases) and do such further acts as may be necessary,
desirable or proper to carry out more effectively the purposes
of this Mortgage and such other instruments and to subject to
the liens and security interests hereof and thereof any
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property intended by the terms hereof and thereof to be
covered hereby and thereby including, without limitation, any
renewals, additions, substitutions, replacements or
appurtenances to the Mortgaged Property;
(iii) execute, acknowledge, deliver, procure and
record or file any document or instrument (including, without
limitation, any financing statement) deemed advisable by
Noteholder to protect the lien or the security interest
hereunder against the rights or interests of third persons;
and
(iv) provide such certificates, documents,
reports, information, affidavits and other instruments and do
such further acts as may be necessary, desirable or proper in
the reasonable determination of Noteholder to enable
Noteholder to comply with the requirements or requests of any
agency having jurisdiction over Noteholder or any examiners of
such agencies with respect to the Indebtedness.
Grantor or the Mortgaged Property and Grantor will pay all costs
connected with any of the foregoing.
(k) FEES AND EXPENSES; INDEMNIFICATION. Grantor will pay
all appraisal fees, filing and recording fees, inspection fees, survey
fees, taxes, brokerage fees and commissions, abstract fees, title
policy fees, uniform commercial code search fees, escrow fees,
attorneys' fees, and all other costs and expenses of every character
incurred by Grantor or Noteholder in connection with the Indebtedness,
either at the closing thereof or at any time during the term thereof,
or otherwise attributable or chargeable to Grantor as owner of the
Mortgaged Property, and will reimburse Noteholder for all such costs
and expenses incurred by Noteholder. Grantor shall pay all expenses
and reimburse Noteholder for any expenditures, including, without
limitation, reasonable attorneys' fees and legal expenses, incurred or
expended in connection with:
(i) the breach by Grantor of any covenant herein
or in any other Loan Document;
(ii) Noteholder's exercise of any of its rights
and remedies hereunder or under the Note or any other Loan
Document or Noteholder's protection of the Mortgaged Property
and its lien and security interest therein; or
(iii) any amendments to this Mortgage, the Note or
any other Loan Document or any matter requested by Grantor or
any approval required hereunder.
Grantor will indemnify and hold harmless Trustee and Noteholder (for
purposes of this Subparagraph, the terms "TRUSTEE" and "NOTEHOLDER"
shall include the directors, officers, partners, employees,
representatives and agents of Trustee and Noteholder, respectively,
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and any persons or entities owned or controlled by, owning or
controlling, or under common control or affiliated with Trustee and
Noteholder, respectively) from and against, and reimburse them for,
all claims, demands, liabilities, losses, damages, causes of action,
judgments, penalties, costs and expenses (including, without
limitation, reasonable attorneys' fees) which may be imposed upon,
asserted against or incurred or paid by them by reason of, on account
of, or in connection with any bodily injury or death or property
damage occurring in or upon or in the vicinity of the Mortgaged
Property through any cause whatsoever or asserted against them on
account of any act performed or omitted to be performed hereunder by
Grantor or any of its partners, employees, agents, licensees or
invitees or on account of any transaction arising out of or in any way
connected with the Mortgaged Property or with this Mortgage, the Note
or any other Loan Documents. Without limitation of the foregoing, it
is the intention of Grantor and Grantor agrees that the foregoing
indemnities shall apply to each indemnified party with respect to
claims, demands, liabilities, losses, damages, causes of action,
judgments, penalties, costs and expenses (including, without
limitation, reasonable attorneys' fees) which in whole or in part are
caused by or arise out of the negligence of such (and/or any other)
indemnified party. However, such indemnities shall not apply to any
indemnified party to the extent the subject of the indemnification is
caused by or arises out of the gross negligence or willful misconduct
of such indemnified party. The foregoing indemnities shall not
terminate upon release, foreclosure or other termination of this
Mortgage but will survive foreclosure of this Mortgage or conveyance
in lieu of foreclosure and the repayment of the Indebtedness and the
discharge and release of this Mortgage and the other Loan Documents.
Any amount to be paid hereunder by Grantor to Noteholder and/or
Trustee shall be subject to and governed by the provisions of
Paragraph 2.3 hereof.
(l) WARRANTY. Grantor will warrant and forever defend
the title to the Mortgaged Property against the claims of all persons
whomsoever claiming or to claim the same or any part thereof, subject
to the Permitted Encumbrances.
(m) TAX ON LIEN. In the event of the enactment after
this date of any law of the State of Texas or of any other
governmental entity deducting from the value of property for the
purpose of taxation any lien or security interest thereon, or imposing
upon Noteholder the payment of the whole or any part of the taxes or
assessments or charges or liens herein required to be paid by Grantor,
or changing in any way the laws relating to the taxation of deeds of
trust or mortgages or security agreements or debts secured by deeds of
trust or mortgages or security agreements or the interest of the
mortgagee or secured party in the property covered thereby, or the
manner of collection of such taxes, so as to affect this Mortgage or
the Indebtedness or Noteholder, then, and in any such event,
Noteholder may, if, in the opinion of counsel for Noteholder, it is
lawful to require Grantor to make such payment and the making of such
payment would not result in the contracting for, charging or receiving
of interest beyond the maximum amount permitted by law, demand that
Grantor pay such taxes, assessments, charges or liens, or reimburse
Noteholder therefor, and if demanded by Noteholder, Grantor shall pay
such taxes,
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assessments, charges or liens, or reimburse Noteholder therefor,
immediately upon demand.
(n) CHANGE OF NAME, IDENTITY OR STRUCTURE. Grantor will
not change Grantor's name, identity (including its trade name or
names) or structure without notifying Noteholder of such change in
writing at least thirty (30) days prior to the effective date of such
change. Grantor will execute and deliver to Noteholder, prior to or
contemporaneously with the effective date of any such change, any
financing statement or financing statement change required by
Noteholder to establish or maintain the validity, perfection and
priority of the security interest granted herein. At the request of
Noteholder, Grantor shall execute a certificate in form satisfactory
to Noteholder listing the trade names under which Grantor intends to
operate the Mortgaged Property, and representing and warranting that
Grantor does business under no other trade name with respect to the
Mortgaged Property.
(o) ESTOPPEL CERTIFICATE. Grantor shall at any time and
from time to time furnish promptly upon request by Noteholder a
written statement in such form as may be required by Noteholder
stating that the Note, this Mortgage and the other Loan Documents are
valid and binding obligations of Grantor, enforceable against Grantor
in accordance with their terms; the unpaid principal balance of the
Note; the date to which interest on the Note is paid; that the Note,
this Mortgage and the other Loan Documents have not been released,
subordinated or modified; and that there are no offsets or defenses
against the enforcement of the Note, this Mortgage or any other Loan
Documents, or if any of the foregoing statements are untrue,
specifying the reasons therefor.
(p) PROCEEDS OF PERSONAL PROPERTY. Grantor shall account
fully and faithfully for and, if Noteholder so elects, shall promptly
pay or turn over to Noteholder the proceeds in whatever form received
from disposition in any manner of any of the Personal Property, except
as otherwise specifically authorized herein. Grantor shall at all
times keep the Personal Property and its proceeds separate and
distinct from other property of Grantor and shall keep accurate and
complete records of the Personal Property and its proceeds.
(q) LOAN AGREEMENT. Grantor will punctually perform and
discharge each and every obligation and undertaking of Grantor under
the Loan Agreement.
(r) PERMITTED ENCUMBRANCES. Grantor will comply with and
will perform all of the covenants, agreements and obligations imposed
upon it or the Mortgaged Property in the Permitted Encumbrances in
accordance with their respective terms and provisions. Grantor will
not modify or permit any modification of any Permitted Encumbrance,
without the prior written consent of Noteholder.
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(s) ENVIRONMENTAL. Grantor will not cause or permit the
Mortgaged Property or Grantor to be in violation of, or do anything or
permit anything to be done which will subject the Mortgaged Property
to any remedial obligations under, any Applicable Environmental Laws,
including without limitation CERCLA, RCRA, the Texas Water Code and
the Texas Solid Waste Disposal Act, assuming disclosure to the
applicable governmental authorities of all relevant facts, conditions
and circumstances, if any, pertaining to Grantor and/or the Mortgaged
Property, and Grantor will notify Noteholder in writing promptly (but
in any event within five (5) days of knowledge thereof) of any
existing, pending or, to the best knowledge of Grantor, threatened
investigation or inquiry by any governmental authority in connection
with any Applicable Environmental Laws or the occurrence of any event
which may result in the violation of any Applicable Environmental
Laws, including, without limitation, the spill or other release of any
hazardous substance or solid waste onto the Mortgaged Property.
Grantor shall obtain any permits, licenses or similar authorizations
to construct, occupy, operate or use any buildings, improvements,
fixtures and equipment forming a part of the Mortgaged Property by
reason of any Applicable Environmental Laws. Grantor shall take all
steps necessary to determine that no hazardous substances or solid
waste are being disposed of or otherwise released on or to the
Mortgaged Property. Grantor will not cause or permit the disposal or
other release of any hazardous substance or solid waste on or to the
Mortgaged Property and covenants and agrees to keep or cause the
Mortgaged Property to be kept free of any hazardous substance or solid
waste and to remove the same (or if removal is prohibited by law, to
take whatever action is required by law) promptly upon discovery at
its sole expense. Upon Noteholder's reasonable request, at any time
and from time to time during the existence of this Mortgage, but no
more often than once during any calendar year unless Noteholder has a
reasonable suspicion that a violation of an applicable Environmental
Law has occurred with respect to the Mortgaged Property, Grantor will
provide at Grantor's sole expense an inspection or audit of the
Mortgaged Property from an engineering or consulting firm approved by
Noteholder, indicating the presence or absence of hazardous substances
and solid wastes on the Mortgaged Property. If Grantor fails to
provide same after ten (10) days' notice, Noteholder may order same,
and Grantor grants to Noteholder and its agents, employees,
contractors and consultants access to the Mortgaged Property and a
license (which is coupled with an interest and irrevocable while this
Mortgage is in effect) to perform inspections and tests. The cost of
such inspections and tests shall be a demand obligation owing by
Grantor to Noteholder pursuant to this Mortgage and shall be subject
to and covered by the provisions of Paragraph 2.3 hereof.
(t) ASBESTOS. Grantor covenants and agrees that it will
not install in the Mortgaged Property, nor permit to be installed in
the Mortgaged Property, asbestos, material containing asbestos which
is or may become friable or material containing asbestos deemed
hazardous by Applicable Environmental Law, and that, if any such
asbestos or material containing asbestos exists in or on the Mortgaged
Property, whether installed by Grantor or others, Grantor will remove
the same (or if removal is prohibited by law, will take whatever
action is required by law, including without limitation
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implementing any required operation and maintenance program) promptly
upon discovery at its sole expense. Upon Noteholder's reasonable
request, at any time and from time to time during the existence of
this Mortgage, Grantor shall provide at Grantor's sole expense an
inspection or audit of the Mortgaged Property from an engineering or
consulting firm approved by Noteholder, indicating the presence or
absence of asbestos or material containing asbestos on the Mortgaged
Property. If Grantor fails to provide same after ten (10) days'
notice, Noteholder may order same, and Grantor grants to Noteholder
and its agents, employees, contractors and consultants access to the
Mortgaged Property and a license (which is coupled with an interest
and irrevocable while this Mortgage is in effect) to perform
inspections and tests. The cost of such inspections and tests shall
be subject to and covered by the provisions of Paragraph 2.3 hereof.
2.3 RIGHT OF NOTEHOLDER TO PERFORM. Grantor agrees that, if after
prior request by Noteholder Grantor fails to perform any act or to take any
action which hereunder Grantor is required to perform or take, or to pay any
money which hereunder Grantor is required to pay, or takes any action
prohibited hereby, Noteholder, in Grantor's name or in its own name, may but
shall not be obligated to perform or cause to be performed such act or take
such action, including, without limitation, entering the Mortgaged Property for
such purpose and to take all such action thereon as it may deem necessary or
appropriate, or pay such money or remedy any action so taken, and any expenses
so incurred by Noteholder, and any money paid by Noteholder in connection
therewith, shall be a demand obligation owing by Grantor to Noteholder and
Noteholder, upon making such payment, shall be subrogated to all of the rights
of the party receiving such payment. Any amounts due and owing by Grantor to
Noteholder pursuant to this Mortgage shall bear interest from the date such
amount becomes due until paid at the rate of interest payable on matured but
unpaid principal of or interest on the Note and shall be a part of the
Indebtedness and shall be secured by this Mortgage and by any other Loan
Documents.
2.4 INDEMNIFICATION REGARDING ENVIRONMENTAL MATTERS. Grantor
agrees to indemnify and hold Noteholder and Trustee (for purposes of this
Paragraph, the terms "NOTEHOLDER" and "TRUSTEE" shall include the directors,
officers, partners, employees, representatives and agents of Noteholder and
Trustee, respectively, and any persons or entities owned or controlled by,
owning or controlling, or under common control or affiliated with Noteholder
and Trustee, respectively) harmless from and against, and to reimburse
Noteholder and Trustee with respect to, any and all claims, demands, losses,
damages (including consequential damages), liabilities, causes of action,
judgments, penalties, costs and expenses (including attorneys' fees and court
costs) of any and every kind or character, known or unknown, fixed or
contingent, imposed on, asserted against or incurred by Noteholder and/or the
Trustee at any time and from time to time by reason of, in connection with or
arising out of:
(a) the breach of any representation or warranty of
Grantor as set forth herein regarding asbestos, material containing
asbestos or Applicable Environmental Laws;
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(b) the failure of Grantor to perform any obligation
herein required to be performed by Grantor regarding asbestos,
material containing asbestos or Applicable Environmental Laws;
(c) any violation during the time Grantor holds title to
the Mortgaged Property of any Applicable Environmental Law in effect
on or before the date Grantor disposes of the Mortgaged Property;
(d) the removal of hazardous substances or solid wastes
from the Mortgaged Property (or if removal is prohibited by law, the
taking of whatever action is required by law) at any time during the
time Grantor holds title to the Mortgaged Property;
(e) the removal of asbestos or material containing
asbestos from the Mortgaged Property (or if removal is prohibited by
law, the taking of whatever action is required by law including
without limitation the implementation of any required operation and
maintenance program) at any time during the time Grantor holds title
to the Mortgaged Property;
(f) any act, omission, event or circumstance existing or
occurring during the time Grantor holds title to the Mortgaged
Property (including without limitation the release from the Mortgaged
Property of any hazardous substance or solid waste disposed of or
otherwise released during the time Grantor holds title to the
Mortgaged Property), resulting from or in connection with the
ownership, construction, occupancy, operation, use and/or maintenance
of the Mortgaged Property, regardless of whether the act, omission,
event or circumstance constituted a violation of any Applicable
Environmental Law at the time of its occurrence; and
(g) any and all claims or proceedings (whether brought by
private party or governmental agency) for bodily injury, property
damage, abatement or remediation, environmental damage or impairment
or any other injury or damage resulting from or relating to any
hazardous substance or solid waste located upon or migrating into,
from or through the Mortgaged Property during the time Grantor holds
title to the Mortgaged Property (whether or not any or all of the
foregoing was caused by Grantor or any tenant or subtenant of Grantor,
or any third party and whether or not the alleged liability is
attributable to the handling, storage, generation, transportation or
disposal of such substance or waste or the mere presence of such
substance or waste on the Mortgaged Property).
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However, such indemnities shall not be available to any indemnified party:
(i) to the extent the subject of the
indemnification is caused by or arises out of the negligence,
gross negligence or willful misconduct of such indemnified
party; or
(ii) if the subject of the indemnification is not
caused by or does not arise out of the negligence, gross
negligence or willful misconduct of Grantor, any director,
officer, employee, representative, agent, contractor or
subcontractor of Grantor, and (1) Grantor gives written notice
of the occurrence giving rise to such right of indemnification
within five (5) days of Grantor's knowledge thereof; (2)
Grantor diligently pursues collection efforts against the
person or persons responsible for the occurrence giving rise
to such indemnification claim; and (3) the Deed of Trust
Amount (as defined in the Loan Agreement) with respect to the
affected portion of the Mortgaged Property is removed from the
Borrowing Base (as defined in the Loan Agreement).
The foregoing indemnities shall not terminate upon the disposition of the
Mortgaged Property by Grantor or upon the release, foreclosure or other
termination of this Mortgage but will survive such disposition, foreclosure or
other termination, and the repayment of the Indebtedness and the discharge and
release of this Mortgage and the other Loan Documents. Any amount to be paid
hereunder by Grantor to Noteholder and/or Trustee shall be a demand obligation
owing by Grantor to Noteholder and/or Trustee and shall be subject to and
covered by the provisions of Paragraph 2.3 hereof. Nothing in this Paragraph,
elsewhere in this Mortgage or in any other Loan Document shall limit or impair
any rights or remedies of Noteholder and/or Trustee against Grantor or any
third party under Applicable Environmental Laws, including without limitation
any rights of contribution or indemnification available hereunder or
thereunder.
ARTICLE III
ASSIGNMENT OF RENTS, LEASES, PROFITS, INCOME,
CONTRACTS AND BONDS
3.1 ASSIGNMENT OF RENTS. Grantor does hereby absolutely and
unconditionally assign, transfer and set over to Noteholder all rents, income,
receipts, revenues, issues, profits and proceeds to be derived from the
Mortgaged Property, including without limitation the immediate and continuing
right to collect and receive all of the rents, income, receipts, revenues,
issues, profits and other sums of money that may now or at any time hereafter
become due and payable to Grantor under the terms of any leases now or
hereafter covering the Mortgaged Property, or any part thereof, including, but
not limited to, minimum rents, additional rents, percentage rents, deficiency
rents and liquidated damages following default, all proceeds payable under any
policy of insurance covering the loss of rents resulting from untenantability
caused by destruction or damage to the Mortgaged Property, and all of Grantor's
rights to recover monetary amounts from
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any tenant in bankruptcy including, without limitation, rights of recovery for
use and occupancy and damage claims arising out of lease defaults, including
rejections, under any Applicable Bankruptcy Law (as hereinafter defined),
together with any sums of money that may now or at any time hereafter become
due and payable to Grantor by virtue of any and all royalties, overriding
royalties, bonuses, delay rentals and any other amount of any kind or character
arising under any and all present and future oil, gas and mining leases
covering the Mortgaged Property or any part thereof (collectively, the
"RENTS"); and all proceeds and other amounts paid or owing to Grantor under or
pursuant to any and all contracts and bonds relating to the construction,
erection or renovation of the Mortgaged Property; subject, however, to a
license hereby granted by Noteholder to Grantor to collect and receive all of
the foregoing (such license evidenced by Noteholder's acceptance of the
Mortgage), subject to the terms and conditions hereof. Notwithstanding
anything contained herein or in any of the Loan Documents to the contrary, the
assignment in this Paragraph is an absolute, unconditional and presently
effective assignment and not merely a security interest; provided, however,
upon the occurrence of a Default (as hereinafter defined) hereunder or upon the
occurrence of any event or circumstance which with the lapse of time or the
giving of notice or both would constitute a Default hereunder, such license
shall automatically and immediately terminate and Grantor shall hold all Rents
paid to Grantor thereafter in trust for the use and benefit of Noteholder and
Noteholder shall have the right, power and authority, whether or not it takes
possession of the Mortgaged Property, to seek enforcement of any such lease,
contract or bond and to demand, collect, receive, ▇▇▇ for and recover in its
own name any and all of the above described amounts assigned hereby and to
apply the sum(s) collected, first to the payment of expenses incident to the
collection of the same, and the balance to the payment of the Indebtedness;
provided further, however, that Noteholder shall not be deemed to have taken
possession of the Mortgaged Property except on the exercise of its option to do
so, evidenced by its demand and overt act for such purpose. It shall not be
necessary for Noteholder to institute any type of legal proceedings or take any
other action whatsoever to enforce the assignment provisions in this Paragraph
3.1.
3.2 ASSIGNMENT OF LEASES. Grantor hereby assigns to Noteholder
all existing and future leases, including, without limitation, all subleases
thereof, and any and all extensions, renewals, modifications, and replacements
thereof, upon any part of the Mortgaged Property (collectively, the "LEASES").
Grantor hereby further assigns to Noteholder all guaranties of tenants'
performance under the Leases. Prior to a Default, Grantor shall have the
right, without joinder of Noteholder, to enforce the Leases, unless Noteholder
directs otherwise.
3.3 WARRANTIES CONCERNING LEASES AND RENTS. Grantor represents
and warrants that:
(a) Grantor has good title to the Leases and Rents and
authority to assign them, and no other person or entity has any right,
title or interest therein;
(b) all existing Leases are valid, unmodified and in full
force and effect, except as indicated herein, and no default exists
thereunder;
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(c) unless otherwise provided herein, no Rents have been
or will be assigned, mortgaged or pledged;
(d) no Rents have been or will be anticipated, waived,
released, discounted, set off or compromised; and
(e) except as indicated in the Leases, Grantor has not
received any funds or deposits from any tenant for which credit has
not already been made on account of accrued Rents.
3.4 GRANTOR'S COVENANTS OF PERFORMANCE. Grantor covenants to:
(a) perform all of its obligations under the Leases and
give prompt notice to Noteholder of any failure to do so;
(b) give immediate notice to Noteholder of any notice
Grantor receives from any tenant or subtenant under any Leases,
specifying any claimed default by any party under such Leases,
excluding, however, notices of default under residential leases;
(c) enforce the tenant's obligations under the Leases;
(d) defend, at Grantor's expense, any proceeding
pertaining to the Leases, including, if Noteholder so requests, any
such proceeding to which Noteholder is a party; and
(e) neither create nor permit any encumbrance upon its
interest as lessor of the Leases, except this Mortgage and any other
encumbrances permitted by this Mortgage.
3.5 PRIOR APPROVAL FOR ACTIONS AFFECTING LEASES. Grantor shall
not, without the prior written consent of Noteholder:
(a) receive or collect Rents more than one month in
advance;
(b) encumber or assign future Rents;
(c) waive or release any obligation of any tenant under
the Leases;
(d) cancel, terminate or modify any of the Leases; cause
or permit any cancellation, termination or surrender of any of the
Leases; or commence any proceedings for dispossession of any tenant
under any of the Leases, except upon default by the tenant thereunder;
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(e) renew or extend any of the Leases, except pursuant to
terms in existing Leases;
(f) permit any assignment of the Leases; or
(g) enter into any Leases after the date hereof.
3.6 SETTLEMENT FOR TERMINATION. Grantor agrees that no settlement
for damages for termination of any of the Leases under the Federal Bankruptcy
Code, or under any other federal, state or local statute, shall be made without
the prior written consent of Noteholder, and any check in payment of such
damages will be made payable to both Grantor and Noteholder. Grantor hereby
assigns any such payment to Noteholder to be applied to the Indebtedness as
Noteholder may elect and agrees to endorse any check for such payment to the
order of Noteholder.
3.7 NOTEHOLDER IN POSSESSION. Noteholder's acceptance of this
assignment shall not, prior to entry upon and taking possession of the
Mortgaged Property by Noteholder, be deemed to constitute Noteholder a
"mortgagee in possession," nor obligate Noteholder to appear in or defend any
proceedings relating to any of the Leases or to the Mortgaged Property, take
any action hereunder, expend any money, incur any expenses, or perform any
obligation or liability under the Leases, or assume any obligation for any
deposits delivered to Grantor by any tenant and not delivered to Noteholder.
Noteholder shall not be liable for any injury or damage to person or property
in or about the Mortgaged Property.
3.8 APPOINTMENT OF ATTORNEY. Grantor hereby appoints Noteholder
its attorney-in-fact, coupled with an interest, empowering Noteholder to
subordinate any Leases to this Mortgage.
3.9 INDEMNIFICATION. Grantor hereby indemnifies and holds
Noteholder (which shall include the directors, officers, partners, employees,
representatives and agents of Noteholder and any persons or entities owned or
controlled by, owning or controlling, or under common control or affiliated
with Noteholder) harmless from all liability, damage or expense imposed on or
incurred by Noteholder from any claims under the Leases, including, without
limitation, any claims by Grantor with respect to payments of Rents made
directly to Noteholder after Default and claims by tenant for security deposits
or for rental payments more than one (1) month in advance and not delivered to
Noteholder. All amounts indemnified against hereunder, including, without
limitation, attorneys' fees, if paid by Noteholder shall bear interest at the
maximum lawful rate and shall be payable by Grantor in accordance with
Paragraph 2.3 hereof. The foregoing indemnities shall not terminate upon the
foreclosure, release or other termination of this Mortgage but will survive
foreclosure of this Mortgage or conveyance in lieu of foreclosure and the
repayment of the Indebtedness and the discharge and release of this Mortgage
and the other Loan Documents.
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3.10 RECORDS. Upon request by Noteholder, Grantor shall deliver to
Noteholder executed originals of all Leases and copies of all records relating
thereto.
3.11 MERGER. There shall be no merger of the leasehold estates,
created by the Leases, with the fee estate of the Land without the prior
written consent of Noteholder.
3.12 RIGHT TO RELY. Grantor hereby authorizes and directs the
tenants under the Leases to pay Rents to Noteholder upon written demand by
Noteholder without further consent of Grantor, and the tenants may rely upon
any written statement delivered by Noteholder to the tenants. Any such payment
to Noteholder shall constitute payment to Grantor under the Leases. The
provisions of this Paragraph are intended solely for the benefit of the tenants
and shall never inure to the benefit of Grantor or any person claiming through
or under Grantor, other than a tenant who has not received such notice. The
assignment of Rents set forth in Paragraph 3.1 is not contingent upon any
notice or demand by Noteholder to the tenants.
ARTICLE IV
EVENTS OF DEFAULT
DEFAULTS. The term "DEFAULT" as used in this Mortgage shall mean the
occurrence of any of the following events:
4.1 EXECUTION ON MORTGAGED PROPERTY. The Mortgaged Property or
any part thereof is taken on execution or other process of law in any action
against Grantor; or
4.2 ABANDONMENT. Grantor abandons all or a portion of the
Mortgaged Property; or
4.3 ACTION BY OTHER LIENHOLDER. The holder of any lien or
security interest on the Mortgaged Property (without hereby implying the
consent of Noteholder to the existence or creation of any such lien or security
interest) declares a default thereunder or institutes foreclosure or other
proceedings for the enforcement of its remedies thereunder; or
4.4 TRANSFER OF MORTGAGED PROPERTY. Except for sales permitted in
accordance with the terms of Paragraph 6.29 hereof, or without the prior
written consent of Noteholder, Grantor sells, leases, exchanges, assigns,
transfers, conveys or otherwise disposes of all or any part of the Mortgaged
Property or any interest therein, or legal or equitable title to the Mortgaged
Property, or any interest therein, is vested in any other party, in any manner
whatsoever, by operation of law or otherwise, it being understood that the
consent of Noteholder required hereunder may be refused by Noteholder in its
sole discretion or may be predicated upon any terms, conditions and covenants
deemed advisable or necessary in the sole discretion of Noteholder, including,
without limitation, the right to change the interest rate, date of maturity or
payments of principal and/or interest on the Note, to require payment of any
amount as additional consideration as a transfer fee or otherwise and to
require assumption of the Note and this Mortgage; or
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4.5 DESTRUCTION OF MORTGAGED PROPERTY. The Mortgaged Property is
so demolished, destroyed or damaged that, in the judgment of Noteholder, it
cannot be restored or rebuilt with available funds to a profitable condition
within a reasonable period of time; or
4.6 CONDEMNATION. So much of the Mortgaged Property is taken in
condemnation, or sold in lieu of condemnation, or the Mortgaged Property is so
diminished in value due to any injury or damage to the Mortgaged Property, that
the remainder thereof cannot, in the judgment of Noteholder, continue to be
operated profitably for the purpose for which it was being used immediately
prior to such taking, sale or diminution; or
4.7 LOAN AGREEMENT. The occurrence of an Event of Default, as
defined in the Loan Agreement.
ARTICLE V
REMEDIES AND RELATED RIGHTS
If a Default shall occur, Noteholder may exercise any one or more of the
following remedies and shall, in addition to any other rights, have the
following related rights, without notice (unless notice is required by
Applicable Laws):
5.1 ACCELERATION. Upon the occurrence of a Default, Noteholder
shall have the option of declaring all Indebtedness in its entirety to be
immediately due and payable, and the liens and security interests evidenced
hereby shall be subject to foreclosure in any manner provided for herein or
provided for by law as Noteholder may elect.
5.2 POSSESSION. Upon the occurrence of a Default, or any event or
circumstance which, with the lapse of time or the giving of notice, or both,
would constitute a Default hereunder, Noteholder is authorized prior or
subsequent to the institution of any foreclosure proceedings to enter upon the
Mortgaged Property, or any part thereof, and to take possession of the
Mortgaged Property and of all books, records and accounts relating thereto and
to exercise without interference from Grantor any and all rights which Grantor
has with respect to the management, possession, operation, protection or
preservation of the Mortgaged Property, including the right to rent the same
for the account of Grantor and to deduct from such rents all costs, expenses
and liabilities of every character incurred by Noteholder in collecting such
rents and in managing, operating, maintaining, protecting or preserving the
Mortgaged Property and to apply the remainder of such rents to the Indebtedness
in such manner as Noteholder may elect in its sole discretion. All such costs,
expenses and liabilities incurred by Noteholder in collecting such rents and in
managing, operating, maintaining or preserving the Mortgaged Property, if not
paid out of rents as hereinabove provided, shall constitute a demand obligation
owing by Grantor and shall be subject to and covered by Paragraph 2.3 hereof.
If necessary to obtain the possession provided for above, Noteholder may invoke
any and all legal remedies to dispossess Grantor,
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including, without limitation, one or more actions for forcible entry and
detainer, trespass to try title and restitution. In connection with any action
taken by Noteholder pursuant to this Paragraph 5.2, Noteholder shall not be
liable for any loss sustained by Grantor resulting from any failure to let the
Mortgaged Property, or any part thereof, or from any other act or omission of
Noteholder in managing the Mortgaged Property unless such loss is caused by the
willful misconduct and bad faith of Noteholder, nor shall Noteholder be
obligated to perform or discharge any obligation, duty or liability under any
Lease covering the Mortgaged Property or any part thereof or under or by reason
of this instrument or the exercise of rights or remedies hereunder. Grantor
shall and does hereby agree to indemnify Noteholder for, and to hold Noteholder
(which shall include the directors, officers, partners, employees,
representatives and agents of Noteholder and any persons or entities owned or
controlled by, owning or controlling or under common control or affiliated with
Noteholder) harmless from any and all liability, loss or damage which may or
might be incurred by Noteholder under any such Lease or under or by reason of
this Mortgage or the exercise of rights or remedies hereunder and from any and
all claims and demands whatsoever which may be asserted against Noteholder by
reason of any alleged obligations or undertakings on its part to perform or
discharge any of the terms, covenants or agreements contained in any such
Lease. Should Noteholder incur any such liability, the amount thereof,
including costs, expenses and reasonable attorneys' fees, shall be subject to
and covered by Paragraph 2.3 hereof. Nothing in this Paragraph 5.2 shall
impose any duty, obligation or responsibility upon Noteholder for the control,
care, management or repair of the Mortgaged Property, nor for the carrying out
of any of the terms and conditions of any such Lease; nor shall it operate to
make Noteholder responsible or liable for any waste committed on the Mortgaged
Property by the tenants or by any other parties or for any dangerous or
defective condition of the Mortgaged Property, or for any negligence in the
management, upkeep, repair or control of the Mortgaged Property resulting in
loss or injury or death to any tenant, licensee, employee or stranger;
provided, however, Noteholder shall be liable for its own gross negligence or
wilfull misconduct in the management, upkeep, repair or control of the
Mortgaged Property which directly results in loss or injury or death to any
tenant, licensee, employee or stranger. Grantor hereby assents to, ratifies
and confirms any and all actions of Noteholder with respect to the Mortgaged
Property taken under this Paragraph 5.2 and agrees that the foregoing indemnity
shall not terminate upon release, foreclosure or other termination of this
Mortgage.
5.3 FORECLOSURE. Upon the occurrence of a Default, Trustee, his
successor or substitute, is authorized and empowered and it shall be his
special duty at the request of Noteholder to sell the Mortgaged Property or any
part thereof situated in the State of Texas at the courthouse of any county in
the State of Texas in which any part of the Mortgaged Property is situated, at
public venue to the highest bidder for cash. The sale shall take place at such
area of the courthouse as shall be properly designated from time to time by the
commissioners court (or, if not so designated by the commissioners court, at
the courthouse door) of the specified county, between the hours of 10 o'clock
a.m. and 4 o'clock p.m. (the commencement of such sale to occur within three
hours following the time designated in the hereinafter described notice of sale
as the earliest time at which such sale shall occur, if required by Applicable
Laws) on the first Tuesday in any month after having given notice of such sale
at least twenty-one (21) days before
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the day of sale of the time, place and terms of said sale (including the
earliest time at which such sale shall occur) in accordance with the statutes
of the State of Texas then in force governing sales of real estate under powers
conferred by deeds of trust. Notice of a sale of all or part of the Mortgaged
Property by Trustee shall be given by posting written notice thereof at the
courthouse door (or other area in the courthouse as may be designated for such
public notices) of the county in which the sale is to be made, and by filing a
copy of the notice in the office of the county clerk of the county in which the
sale is to be made at least twenty-one (21) days preceding the date of the
sale, and if the Mortgaged Property to be sold is in more than one county, a
notice shall be posted at the courthouse door and filed with the county clerk
of each county in which the Mortgaged Property is situated. In addition,
Noteholder shall, at least twenty-one (21) days preceding the date of sale,
serve written notice of the proposed sale by certified mail on Grantor and each
debtor obligated to pay the Indebtedness or any portion thereof according to
the records of Noteholder. Service of such notice shall be completed upon
deposit of the notice, enclosed in a postpaid certified mail wrapper, properly
addressed to Grantor and each such debtor at the most recent address as shown
by the records of Noteholder, in a post office or official depository under the
care and custody of the United States Postal Service. The affidavit of any
person having knowledge of the facts to the effect that such service was
completed shall be prima facie evidence of the fact of service. Any sale made
by Trustee hereunder may be as an entirety or in such parcels as Noteholder may
request, and any sale may be adjourned by announcement at the time and place
appointed for such sale without further notice except as may be required by
law. The sale by Trustee of less than the whole of the Mortgaged Property
shall not exhaust the power of sale herein granted, and Trustee is specifically
empowered to make successive sale or sales under such power until the whole of
the Mortgaged Property shall be sold; and, if the proceeds of such sale of less
than the whole of the Mortgaged Property shall be less than the aggregate of
the Indebtedness and the expense of executing this trust as provided herein,
this Mortgage and the lien hereof shall remain in full force and effect as to
the unsold portion of the Mortgaged Property just as though no sale had been
made; provided, however, that Grantor shall never have any right to require the
sale of less than the whole of the Mortgaged Property but Noteholder shall have
the right, at its sole election, to request Trustee to sell less than the whole
of the Mortgaged Property. After each sale, Trustee shall make to the
purchaser or purchasers at such sale good and sufficient conveyances in the
name of Grantor, conveying the property so sold to the purchaser or purchasers
in fee simple with general warranty of title, and shall receive the proceeds of
said sale or sales and apply the same as herein provided. Payment of the
purchase price to Trustee shall satisfy the obligation of purchaser at such
sale therefor, and such purchaser shall not be responsible for the application
thereof. The power of sale granted herein shall not be exhausted by any sale
held hereunder by Trustee or his substitute or successor, and such power of
sale may be exercised from time to time and as many times as Noteholder may
deem necessary until all of the Mortgaged Property has been duly sold and all
Indebtedness has been fully paid. In the event any sale hereunder is not
completed or is defective in the opinion of Noteholder, such sale shall not
exhaust the power of sale hereunder and Noteholder shall have the right to
cause a subsequent sale or sales to be made hereunder. Any and all statements
of fact or other recitals made in any deed or deeds given by Trustee or any
successor or substitute appointed hereunder as to nonpayment of the
Indebtedness, or as to the occurrence of any Default, or as to Noteholder
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having declared all of such Indebtedness to be due and payable, or as to the
request to sell, or as to notice of time, place and terms of sale and of the
properties to be sold having been duly given, or as to the refusal, failure or
inability to act of Trustee or any substitute or successor, or as to the
appointment of any substitute or successor Trustee, or as to any other act or
thing having been duly done by Noteholder or by Trustee or any substitute or
successor, shall be taken as prima facie evidence of the truth of the facts so
stated and recited. Trustee, his successor or substitute, may appoint or
delegate any one or more persons as agent to perform any act or acts necessary
or incident to any sale held by Trustee, including, without limitation, the
posting of notices and the conducting of sales, but in the name and on behalf
of Trustee, his successor or substitute.
5.4 JUDICIAL FORECLOSURE. This Mortgage shall be effective as a
mortgage as well as a deed of trust and upon the occurrence of a Default may be
foreclosed as to any of the Mortgaged Property in any manner permitted by the
laws of the State of Texas or of any other state in which any part of the
Mortgaged Property is situated, and any foreclosure suit may be brought by
Trustee or by Noteholder. In the event a foreclosure hereunder shall be
commenced by Trustee, or his substitute or successor, Noteholder may at any
time before the sale of the Mortgaged Property direct Trustee to abandon the
sale, and may then institute suit for the collection of the Indebtedness, and
for the foreclosure of this Mortgage. It is agreed that if Noteholder should
institute a suit for the collection of the Indebtedness and for the foreclosure
of this Mortgage, Noteholder may at any time before the entry of a final
judgment in said suit dismiss the same, and require Trustee, his substitute or
successor to sell the Mortgaged Property in accordance with the provisions of
this Mortgage.
5.5 RECEIVER. In addition to all other remedies herein provided
for, Grantor agrees that upon the occurrence of a Default, or any event or
circumstance which, with the lapse of time or the giving of notice, or both,
would constitute a Default, Noteholder shall as a matter of right be entitled
to the appointment of a receiver or receivers for all or any part of the
Mortgaged Property, whether such receivership be incident to a proposed sale of
the Mortgaged Property or otherwise, and without regard to the value of the
Mortgaged Property or the solvency of any person or persons liable for the
payment of the Indebtedness, and Grantor does hereby consent to the appointment
of such receiver or receivers, waives any and all defenses to such appointment
and agrees not to oppose any application therefor by Noteholder, but nothing
herein is to be construed to deprive Noteholder of any other right, remedy or
privilege it may now have under the law to have a receiver appointed; provided,
however, that the appointment of such receiver, Trustee or other appointee by
virtue of any court order, statute or regulation shall not impair or in any
manner prejudice the rights of Noteholder to receive payment of the Rents
pursuant to Paragraph 3.1 hereof. Any money advanced by Noteholder in
connection with any such receivership shall be subject to and covered by
Paragraph 2.3 hereof.
5.6 PROCEEDS OF SALE. The proceeds of any sale held by Trustee or
any receiver or public officer in foreclosure of the liens evidenced hereby
shall be applied:
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FIRST, to the payment of all necessary costs and
expenses incident to such foreclosure sale, including but not
limited to all court costs and charges of every character in
the event foreclosed by suit, attorneys' fees and a reasonable
fee to Trustee acting under the provisions of Paragraph 5.3 if
foreclosed by power of sale as provided in said paragraph, not
exceeding five percent (5%) of the proceeds of such sale;
SECOND, to the payment in full of the Indebtedness
(including, without limitation, the principal and interest due
and unpaid on the Note, attorneys' fees and any other amounts
due and unpaid and owed to Noteholder under this Mortgage) in
such order as Noteholder may elect in its sole direction; and
THIRD, the remainder, if any there shall be paid to
Grantor or to such other party or parties as may be entitled
thereto by law.
5.7 NOTEHOLDER AS PURCHASER. Noteholder shall have the right to
become the purchaser at any sale held by any Trustee or substitute or successor
or by any receiver or public officer, and any Noteholder purchasing at any such
sale shall have the right to credit upon the amount of the bid made therefor,
to the extent necessary to satisfy such bid, the Indebtedness owing to such
Noteholder.
5.8 ADDITIONAL REMEDIES UNDER THE BUSINESS CODE. Upon the
occurrence of a Default, Noteholder may exercise its rights of enforcement with
respect to the Personal Property under the Texas Business and Commerce Code, as
amended, (the "BUSINESS CODE") and in conjunction with, in addition to or in
substitution for those rights and remedies:
(a) Noteholder may enter upon the Mortgaged Property to
take possession of, assemble and collect the Personal Property or to
render it unusable; and
(b) Noteholder may require Grantor to assemble the
Personal Property and make it available at a place Noteholder
designates which is mutually convenient to allow Noteholder to take
possession or dispose of the Personal Property; and
(c) written notice mailed to Grantor as provided herein
five (5) days prior to the date of public sale of the Personal
Property or prior to the date after which any private sale of the
Personal Property will be made shall constitute reasonable notice; and
(d) any sale made pursuant to the provisions of this
Paragraph shall be deemed to have been a public sale conducted in a
commercially reasonable manner if held contemporaneously with the sale
of the Mortgaged Property under power of sale as provided herein upon
giving the same notice with respect to the sale of the Personal
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Property hereunder as is required for such sale of the Mortgaged
Property under power of sale; and
(e) in the event of a foreclosure sale, whether made by
Trustee under the terms hereof, or under judgment of a court, the
Personal Property and the Mortgaged Property may, at the option of
Noteholder, be sold as a whole; and
(f) it shall not be necessary that Noteholder take
possession of the Personal Property or any part thereof prior to the
time that any sale pursuant to the provisions of this Paragraph is
conducted and it shall not be necessary that the Personal Property or
any part thereof be present at the location of such sale; and
(g) prior to application of proceeds of disposition of
the Personal Property to the Indebtedness, such proceeds shall be
applied to the reasonable expenses of retaking, holding, preparing for
sale or lease, selling, leasing and the like and the reasonable
attorneys' fees and legal expenses incurred by Noteholder; and
(h) any and all statements of fact or other recitals made
in any ▇▇▇▇ of sale or assignment or other instrument evidencing any
foreclosure sale hereunder as to nonpayment of the Indebtedness or as
to the occurrence of any Default, or as to Noteholder having declared
all of such Indebtedness to be due and payable, or as to notice of
time, place and terms of sale and of the properties to be sold having
been duly given, or as to any other act or thing having been duly done
by Noteholder, shall be taken as prima facie evidence of the truth of
the facts so stated and recited; and
(i) Noteholder may appoint or delegate any one or more
persons as agent to perform any act or acts necessary or incident to
any sale held by Noteholder, including the sending of notices and the
conduct of the sale, but in the name and on behalf of Noteholder.
5.9 PARTIAL FORECLOSURE. In the event of a Default in the payment
of any part of the Indebtedness, Noteholder shall have the right to proceed
with foreclosure of the liens and security interests evidenced hereby without
declaring the entire Indebtedness due, and in such event any such foreclosure
sale may be made subject to the unmatured part of the Indebtedness; and any
such sale shall not in any manner affect the unmatured part of the
Indebtedness, but as to such unmatured part this Mortgage shall remain in full
force and effect just as though no sale had been made. The proceeds of any
such sale shall be applied as provided in Paragraph 5.6 except that the amount
paid under subparagraph SECOND thereof shall be only the matured portion of the
Indebtedness and any proceeds of such sale in excess of those provided for in
subparagraphs FIRST and SECOND (modified as provided above) shall be applied to
installments of principal of and interest on the Note in the inverse order of
maturity. Several sales may be made hereunder without exhausting the right of
sale for any unmatured part of the Indebtedness.
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5.10 REMEDIES CUMULATIVE. All remedies herein expressly provided
for are cumulative of any and all other remedies existing at law or in equity
and are cumulative of any and all other remedies provided for in any of the
other Loan Documents, or any part thereof, or otherwise benefiting Noteholder,
and Trustee and Noteholder shall, in addition to the remedies herein provided,
be entitled to avail themselves of all such other remedies as may now or
hereafter exist at law or in equity for the collection of the Indebtedness and
the enforcement of the covenants herein and the foreclosure of the liens and
security interests evidenced hereby, and resort to any remedy provided for
hereunder or under any such Loan Documents or provided for by law shall not
prevent the concurrent or subsequent employment of any other appropriate remedy
or remedies.
5.11 RESORT TO ANY SECURITY. Noteholder may resort to any security
given by this Mortgage or to any other security now existing or hereafter given
to secure the payment of the Indebtedness, in whole or in part, and in such
portions and in such order as may seem best to Noteholder in its sole and
uncontrolled discretion, and any such action shall not in anywise be considered
as a waiver of any of the rights, benefits, liens or security interests
evidenced by this Mortgage.
5.12 WAIVER. To the full extent Grantor may do so, Grantor agrees
that Grantor will not at any time insist upon, plead, claim or take the benefit
or advantage of any law now or hereafter in force pertaining to the rights and
remedies of sureties or providing for any appraisement, valuation, stay,
extension or redemption, and Grantor, for Grantor and Grantor's heirs,
devisees, representatives, successors and assigns, and for any and all persons
ever claiming any interest in the Mortgaged Property, to the extent permitted
by law, hereby waives and releases all rights of redemption, valuation,
appraisement, stay of execution, notice of intention to mature or declare due
the whole of the Indebtedness, notice of election to mature or declare due the
whole of the Indebtedness and all rights to a marshaling of the assets of
Grantor, including, without limitation, the Mortgaged Property, or to a sale in
inverse order of alienation in the event of foreclosure of the liens and
security interests hereby created. Grantor shall not have or assert any right
under any statute or rule of law pertaining to the marshaling of assets, sale
in inverse order of alienation, the exemption of homestead, the administration
of estates of decedents or other matters whatever to defeat, reduce or affect
the right of Noteholder under the terms of this Mortgage to a sale of the
Mortgaged Property for the collection of the Indebtedness without any prior or
different resort of collection, or the right of Noteholder under the terms of
this Mortgage to the payment of such Indebtedness out of the proceeds of sale
of the Mortgaged Property in preference to every other claimant whatever. If
any law referred to in this Paragraph and now in force, of which Grantor or
Grantor's heirs, devisees, representatives, successors and assigns and such
other persons claiming any interest in the Mortgaged Property might take
advantage despite this Paragraph, shall hereafter be repealed or cease to be
enforced, such law shall not thereafter be deemed to preclude the application
of this Paragraph.
5.13 DELIVERY OF POSSESSION AFTER FORECLOSURE. In the event there
is a foreclosure sale hereunder and at the time of such sale Grantor or
Grantor's heirs, devisees, representatives,
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successors or assigns or any other persons claiming any interest in the
Mortgaged Property by, through or under Grantor are occupying or using the
Mortgaged Property, or any part thereof, each and all shall immediately become
the tenant of the purchaser at such sale, which tenancy shall be a tenancy from
day-to-day, terminable at the will of either landlord or tenant, at a
reasonable rental per day based upon the value of the property occupied, such
rental to be due daily to the purchaser. In the event the tenant fails to
surrender possession of said property upon demand, the purchaser shall be
entitled to institute and maintain an action for forcible entry and detainer of
said property in the appropriate court having jurisdiction.
5.14 TENDER AFTER ACCELERATION. If, following the occurrence of a
Default and the acceleration of the Indebtedness but prior to the foreclosure
of this Mortgage, Grantor shall tender to Noteholder payment of an amount
sufficient to pay the entire Indebtedness, such tender shall be deemed to be a
voluntary prepayment under the Note.
ARTICLE VI
MISCELLANEOUS
6.1 DEFEASANCE. If all of the Indebtedness is paid as the same
becomes due and payable and if all of the covenants, warranties, undertakings
and agreements made in this Mortgage are kept and performed, then and in that
event only, all rights under this Mortgage shall terminate and the Mortgaged
Property shall become wholly clear of the liens, security interests,
conveyances and assignments evidenced hereby, which shall be released by
Noteholder in due form at Grantor's cost.
6.2 SUCCESSOR TRUSTEE. Trustee may resign by an instrument in
writing addressed to Noteholder, or Trustee may be removed at any time with or
without cause by an instrument in writing executed by Noteholder. In case of
the death, resignation, removal or disqualification of Trustee or if for any
reason Noteholder shall deem it desirable to appoint a substitute or successor
Trustee to act instead of the herein named Trustee or any substitute or
successor Trustee, then Noteholder shall have the right and is hereby
authorized and empowered to appoint a successor Trustee, or a substitute
Trustee, without other formality than appointment and designation in writing
executed by Noteholder and the authority hereby conferred shall extend to the
appointment of other successor and substitute Trustees successively until the
Indebtedness has been paid in full or until the Mortgaged Property is sold
hereunder. In the event the Indebtedness is owned by more than one person or
entity, the holders of not less than a majority in the amount of such
Indebtedness shall have the right and authority to make the appointment of a
successor or substitute Trustee provided for in the preceding sentence. Such
appointment and designation by Noteholder or by the holder or holders of not
less than a majority of the Indebtedness shall be full evidence of the right
and authority to make the same and of all facts therein recited. If Noteholder
is a national banking association or corporation and such appointment is
executed in its behalf by an officer of such national banking association or
corporation, such appointment shall be conclusively presumed to be executed
with authority and shall be valid and sufficient without
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proof of any action by the board of directors or any superior officer of the
corporation. Upon the making of any such appointment and designation, all of
the estate and title of Trustee in the Mortgaged Property shall vest in the
named successor or substitute Trustee and he shall thereupon succeed to and
shall hold, possess and execute all the rights, powers, privileges, immunities
and duties herein conferred upon Trustee; but nevertheless, upon the written
request of Noteholder or of the successor or substitute Trustee, Trustee
ceasing to act shall execute and deliver an instrument transferring to such
successor or substitute Trustee all of the estate and title in the Mortgaged
Property of Trustee so ceasing to act, together with all the rights, powers,
privileges, immunities and duties herein conferred upon Trustee, and shall duly
assign, transfer and deliver any of the properties and moneys held by said
Trustee hereunder to said successor or substitute Trustee. All references
herein to Trustee shall be deemed to refer to Trustee (including any successor
or substitute appointed and designated as herein provided) from time to time
acting hereunder. Grantor hereby ratifies and confirms any and all acts which
the herein named Trustee or his successor or successors, substitute or
substitutes, in this trust, shall do lawfully by virtue hereof.
6.3 LIABILITY AND INDEMNIFICATION OF TRUSTEE. Trustee shall not
be liable for any error of judgment or act done by Trustee in good faith, or be
otherwise responsible or accountable under any circumstances whatsoever
(including, without limitation, Trustee's negligence), except for Trustee's
gross negligence or willful misconduct. Trustee shall have the right to rely
on any instrument, document or signature authorizing or supporting any action
taken or proposed to be taken by him hereunder, believed by him in good faith
to be genuine. All moneys received by Trustee shall, until used or applied as
herein provided, be held in trust for the purposes for which they were
received, but need not be segregated in any manner from any other monies
(except to the extent required by law), and Trustee shall be under no liability
for interest on any monies received by him hereunder. Grantor will reimburse
Trustee for, and indemnify and save him harmless against, any and all liability
and expenses (including, without limitation, reasonable attorneys' fees) which
may be incurred by him in the performance of his duties hereunder. (Trustee
shall include the directors, officers, partners, employees, representatives and
agents of Trustee and any persons or entities owned or controlled by, owning or
controlling or under common control or affiliated with Trustee.) The foregoing
indemnity shall not terminate upon release, foreclosure or other termination of
this Mortgage.
6.4 WAIVER BY NOTEHOLDER. Noteholder may at any time and from
time to time in writing:
(a) waive compliance by Grantor with any covenant herein
made by Grantor to the extent and in the manner specified in such
writing;
(b) consent to Grantor doing any act which hereunder
Grantor is prohibited from doing, or consent to Grantor failing to do
any act which hereunder Grantor is required to do, to the extent and
in the manner specified in such writing;
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(c) release any part of the Mortgaged Property, or any
interest therein, from the lien and security interest of this Mortgage
without the joinder of Trustee; or
(d) release any party liable, either directly or
indirectly, for the Indebtedness or for any covenant herein or in any
of the other Loan Documents now or hereafter securing the payment of
the Indebtedness, without impairing or releasing the liability of any
other party. No such act shall in any way impair the rights of
Noteholder hereunder except to the extent specifically agreed to by
Noteholder in such writing.
6.5 ACTIONS BY NOTEHOLDER. The lien, security interest and other
security rights of Noteholder hereunder shall not be impaired by any
indulgence, moratorium or release granted by Noteholder, including but not
limited to:
(a) any renewal, extension, increase or modification
which Noteholder may grant with respect to any of the Indebtedness;
(b) any surrender, compromise, release, renewal,
extension, exchange or substitution which Noteholder may grant in
respect of the Mortgaged Property, or any part thereof or any interest
therein; or
(c) any release or indulgence granted to any endorser,
guarantor or surety of any of the Indebtedness.
The taking of additional security by Noteholder shall not release or impair the
lien, security interest or other security rights of Noteholder hereunder or
affect the liability of Grantor or of any endorser or guarantor or other surety
or improve the rights of any permitted junior lienholder in the Mortgaged
Property.
6.6 RIGHTS OF NOTEHOLDER. Noteholder may waive any Default
without waiving any other prior or subsequent Default. Noteholder may remedy
any default without waiving the Default remedied. Neither the failure by
Noteholder to exercise, nor the delay by Noteholder in exercising, any right,
power or remedy upon any Default shall be construed as a waiver of such Default
or as a waiver of the right to exercise any such right, power or remedy at a
later date. No single or partial exercise by Noteholder of any right, power or
remedy hereunder shall exhaust the same or shall preclude any other or further
exercise thereof, and every such right, power or remedy hereunder may be
exercised at any time and from time to time. No modification or waiver of any
provision hereof nor consent to any departure by Grantor therefrom shall in any
event be effective unless the same shall be in writing and signed by Noteholder
and then such waiver or consent shall be effective only in the specific
instances, for the purpose for which given and to the extent therein specified.
No notice to nor demand on Grantor in any case shall of itself entitle Grantor
to any other or further notice or demand in similar or other circumstances.
Acceptance by Noteholder of any payment in an amount less than the amount then
due on any of
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the Indebtedness shall be deemed an acceptance on account only and shall not in
any way affect the existence of a Default hereunder.
6.7 NOTIFICATION OF ACCOUNT DEBTORS. Noteholder may at any time
after Default by Grantor notify the account debtors or obligors of any
accounts, chattel paper, negotiable instruments or other evidences of
indebtedness included in the Personal Property to pay Noteholder directly.
6.8 REPRODUCTION AS FINANCING STATEMENT. A carbon, photographic
or other reproduction of this Mortgage or of any financing statement relating
to this Mortgage shall be sufficient as a financing statement.
6.9 FIXTURE FILING. This Mortgage shall be effective as a
financing statement filed as a fixture filing with respect to all fixtures
included within the Mortgaged Property and is to be filed for record in the
real property records in the Office of the County Clerk for the county or
counties where the Mortgaged Property (including said fixtures) is situated.
This Mortgage shall also be effective as a financing statement covering
minerals or the like (including oil and gas) and accounts subject to Subsection
9.103(e) of the Uniform Commercial Code as in effect from time to time in the
State of Texas (the "CODE") and is to be filed for record in the real property
records of the county where the Mortgaged Property is situated. The mailing
address of Grantor is set forth on the first page of this Mortgage and the
address of Noteholder from which information concerning the security interest
may be obtained is the address of Noteholder set forth in Paragraph 1.1 of this
Mortgage.
6.10 FILING AND RECORDATION. Grantor will cause this Mortgage and
all amendments and supplements thereto and substitutions therefor and all
financing statements and continuation statements relating hereto to be
recorded, filed, re-recorded and refiled in such manner and in such places as
Trustee or Noteholder shall reasonably request, and will pay all such
recording, filing, re-recording and refiling taxes, fees and other charges.
6.11 DEALING WITH SUCCESSOR. In the event the ownership of the
Mortgaged Property or any part thereof becomes vested in a person other than
Grantor, Noteholder may, without notice to Grantor, deal with such successor or
successors in interest with reference to this Mortgage and to the Indebtedness
in the same manner as with Grantor, without in any way vitiating or discharging
Grantor's liability hereunder or for the payment of the Indebtedness; provided,
however, nothing in this Paragraph shall be construed as permitting any
transfer of the Mortgaged Property which would constitute a Default under this
Mortgage. No sale of the Mortgaged Property, no forbearance on the part of
Noteholder and no extension of the time for the payment of the Indebtedness
given by Noteholder shall operate to release, discharge, modify, change or
affect, in whole or in part, the liability of Grantor hereunder or for the
payment of the Indebtedness or the liability of any other person hereunder or
for the payment of the Indebtedness, except as agreed to in writing by
Noteholder.
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6.12 PLACE OF PAYMENT. The Indebtedness shall be payable at the
place designated in the Note, or if no such designation is made, at the office
of Noteholder at the address indicated in this Mortgage, or at such other place
as Noteholder may designate in writing.
6.13 SUBROGATION. To the extent that proceeds of the Note are used
to pay indebtedness secured by any outstanding lien, security interest, charge
or prior encumbrance against the Mortgaged Property, such proceeds have been
advanced by Noteholder at Grantor's request and Noteholder shall be subrogated
to any and all rights, security interests and liens owned or held by any owner
or holder of such outstanding liens, security interests, charges or
encumbrances, irrespective of whether said liens, security interests, charges
or encumbrances are released; provided, however, that the terms and provisions
of this Mortgage shall govern the rights and remedies of Noteholder and shall
supersede the terms, provisions, rights and remedies under and pursuant to the
instruments creating the liens, security interests, charges or encumbrances to
which Noteholder is subrogated hereunder.
6.14 APPLICATION OF INDEBTEDNESS. If any part of the Indebtedness
cannot be lawfully secured by this Mortgage or if any part of the Mortgaged
Property cannot be lawfully subject to the lien and security interest hereof to
the full extent of the Indebtedness, then all payments made shall be applied on
said Indebtedness first in discharge of that portion thereof which is unsecured
by this Mortgage.
6.15 USURY. This Mortgage has been executed under, and shall be
construed and enforced in accordance with, the laws of the State of Texas,
except as such laws are preempted by federal law. This Mortgage and all of the
other Loan Documents are intended to be performed in accordance with, and only
to the extent permitted by, all applicable usury laws. If any provision hereof
or of any of the other Loan Documents or the application thereof to any person
or circumstance shall, for any reason and to any extent, be invalid or
unenforceable, neither the application of such provision to any other person or
circumstance nor the remainder of the instrument in which such provision is
contained shall be affected thereby and shall be enforced to the greatest
extent permitted by Applicable Laws. It is expressly stipulated and agreed to
be the intent of Grantor and Noteholder to at all times comply with the usury
and other applicable laws now or hereafter governing the interest payable on
the Indebtedness. If the applicable law is ever revised, repealed or
judicially interpreted so as to render usurious any amount called for under the
Note or under any of the other Loan Documents, or contracted for, charged,
taken, reserved or received with respect to the Indebtedness, or if
Noteholder's exercise of the option to accelerate the maturity of the
Indebtedness, or if any prepayment of the Indebtedness results in the payment
of any interest in excess of that permitted by law, then it is the express
intent of Grantor and Noteholder that all excess amounts theretofore collected
by Noteholder be credited on the principal balance of the Note (or, if the Note
and all of such other Indebtedness have been paid in full, refunded), and the
provisions of the Note and the other Loan Documents immediately be deemed
reformed and the amounts thereafter collectable hereunder and thereunder
reduced, without the necessity of the execution of any new document, so as to
comply with the then Applicable Laws, but so as to permit the recovery of the
fullest amount otherwise called for
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hereunder or thereunder. All sums paid, or agreed to be paid, for the use,
forbearance, detention, taking, charging, receiving or reserving on the
Indebtedness shall, to the extent permitted by Applicable Laws, be amortized,
prorated, allocated and spread throughout the full term of such Indebtedness
until payment in full so that the rate or amount of interest on account of such
Indebtedness does not exceed the usury ceiling from time to time in effect and
applicable thereto for so long as debt is outstanding under the Indebtedness.
To the extent that Noteholder is relying on TEX. REV. CIV. STAT. ▇▇▇. art.
5069-1.04, as amended, to determine the maximum rate ("MAXIMUM RATE") payable
on the Indebtedness, Noteholder will utilize the indicated rate ceiling from
time to time in effect as provided in such article. To the extent federal law
permits Noteholder to contract for, charge or receive a greater amount of
interest, Noteholder will rely on federal law instead of such article, as
amended, for the purpose of determining the Maximum Rate. Additionally, to the
extent permitted by applicable law now in effect, Noteholder may, at its option
and from time to time, implement any other method of computing the Maximum Rate
under such article, as amended, or under other applicable law by giving notice,
if required, to Grantor as provided by applicable law now or hereafter in
effect. In no event shall the provisions of TEX. REV. CIV. STAT. ▇▇▇. art.
5069, ch. 15 (which regulates certain revolving credit loan accounts and
revolving triparty accounts) apply to the Indebtedness. Notwithstanding
anything to the contrary contained herein or in any of the other Loan
Documents, it is not the intention of Noteholder to accelerate the maturity of
any interest that has not accrued at the time of such acceleration or to
collect unearned interest at the time of such acceleration.
6.16 NOTICE. Any notice, request, demand or other communication
required or permitted hereunder, or under the Note, or under any of the other
Loan Documents (unless otherwise expressly provided therein) shall be given in
writing by (a) personal delivery, (b) expedited delivery service with proof of
delivery, or (c) United States mail, postage prepaid, registered or certified
mail, return receipt requested, sent to the intended addressee at the address
shown in this Mortgage, or to such different address as the addressee shall
have designated by written notice sent in accordance herewith, and shall be
deemed to have been given and received either at the time of personal delivery
or, in the case of delivery service, as of the date of first attempted delivery
at the address and in the manner provided herein, or in the case of mail upon
deposit in a receptacle of United States mail; provided that, service of a
notice required by Texas Property Code Section 51.002 shall be considered
complete when the requirements of that statute are met.
6.17 HEIRS, SUCCESSORS AND ASSIGNS. The terms, provisions,
covenants and conditions hereof shall be binding upon Grantor, and the
successors and assigns of Grantor including all successors in interest of
Grantor in and to all or any part of the Mortgaged Property, and shall inure to
the benefit of Trustee and Noteholder and their respective heirs, successors,
substitutes and assigns and shall constitute covenants running with the Land.
All references in this Mortgage to Grantor, Trustee or Noteholder shall be
deemed to include all such heirs, devisees, representatives, successors,
substitutes and assigns.
6.18 SEVERABILITY. A determination that any provision of this
Mortgage is unenforceable or invalid shall not affect the enforceability or
validity of any other provision and any
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determination that the application of any provision of this Mortgage to any
person or circumstance is illegal or unenforceable shall not affect the
enforceability or validity of such a provision as it may apply to any other
persons or circumstances.
6.19 GENDER AND NUMBER. Within this Mortgage, words of any gender
shall be held and construed to include any other gender, and words in the
singular number shall be held and construed to include the plural and words in
the plural number shall be held and construed to include the singular, unless
in each instance the context otherwise requires.
6.20 COUNTERPARTS. This Mortgage may be executed in any number of
counterparts with the same effect as if all parties hereto had signed the same
document. All such counterparts shall be construed together and shall
constitute one instrument, but in making proof hereof it shall only be
necessary to produce one such counterpart.
6.21 NEGATION OF PARTNERSHIP. Nothing contained in the Loan
Documents is intended to create any partnership, joint venture or association
between Grantor and Noteholder, or in any way make Noteholder a co-principal
with Grantor with reference to the Mortgaged Property, and any inferences to
the contrary are hereby expressly negated.
6.22 REPORTING REQUIREMENTS. Grantor agrees to comply with any and
all reporting requirements applicable to the transaction evidenced by the Note
and secured by this Mortgage which are set forth in any law, statute,
ordinance, rule, regulation, order or determination of any governmental
authority, including but not limited to The International Investment Survey Act
of 1976, The Agricultural Foreign Investment Disclosure Act of 1978, The
Foreign Investment in Real Property Tax Act of 1980 and the Tax Reform Act of
1984 and further agrees upon request of Noteholder to furnish Noteholder with
evidence of such compliance.
6.23 HEADINGS. The Paragraph headings contained in this Mortgage
are for convenience only and shall in no way enlarge or limit the scope or
meaning of the various and several Paragraphs hereof.
6.24 CONSENT OF NOTEHOLDER. Except where otherwise provided
herein, in any instance hereunder where the approval, consent or the exercise
of judgment of Noteholder is required, the granting or denial of such approval
or consent and the exercise of such judgment shall be within the sole
discretion of Noteholder, and Noteholder shall not, for any reason or to any
extent, be required to grant such approval or consent or exercise such judgment
in any particular manner, regardless of the reasonableness of either the
request or Noteholder's judgment.
6.25 MODIFICATION OR TERMINATION. The Loan Documents may only be
modified or terminated by a written instrument or instruments executed by the
party against which enforcement of the modification or termination is asserted.
Any alleged modification or termination which is not so documented shall not be
effective as to any party. Grantor agrees that it shall be bound by any
modification of this Mortgage or any of the other Loan Documents made by
Noteholder and
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EXHIBIT 10.4(c)
any subsequent owner of the Mortgaged Property, with or without notice to or
consent of Grantor, and no such modification shall impair the obligations of
Grantor under this Mortgage or under any other Loan Document.
6.26 ENTIRE AGREEMENT. The Loan Documents constitute the entire
understanding and agreement between Grantor and Noteholder with respect to the
transactions arising in connection with the Indebtedness and supersede all
prior written or oral understandings and agreements between Grantor and
Noteholder with respect thereto. Grantor hereby acknowledges that, except as
incorporated in writing in the Loan Documents, there are not, and were not, and
no persons are or were authorized by Noteholder to make, any representations,
understandings, stipulations, agreements or promises, oral or written, with
respect to the transaction which is the subject of the Loan Documents.
6.27 CONSTRUCTION MORTGAGE. This Mortgage is a construction
mortgage (as that term is defined in Subsection 9.313 (a) (3) of the Business
Code) and secures an obligation incurred for the construction of improvements
on the Land including the acquisition cost of the Land. It is understood and
agreed that funds to be advanced upon the Note are to be used in the
construction of certain improvements on the Land in accordance with the Loan
Documents.
6.28 LOAN AGREEMENT. This Mortgage is executed and delivered
pursuant to, and is entitled to the benefits of, the Loan Agreement.
6.29 PARTIAL RELEASES. Noteholder agrees that, upon compliance by
Grantor with the provisions of Section 4.3 of the Loan Agreement, Noteholder
will execute one or more partial releases prepared by Grantor, releasing all or
a part of the Mortgaged Property from the lien and security interests of this
Mortgage.
EXECUTED on the 29th day of November, 1996.
NEWMARK HOMES, L.P.,
a Texas limited partnership
By: Newmark Home Corporation,
a Nevada corporation,
General Partner
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇
---------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇
-----------------------------
Title: Senior Vice President
---------------------------
THE STATE OF TEXAS )
COUNTY OF _______________)
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This instrument was acknowledged before me on the _______ day of
___________________, 1996, by ____________________, ______________________ of
Newmark Home Corporation, a Nevada corporation, General Partner of NEWMARK
HOMES, L.P., a Texas limited partnership, on behalf of said limited
partnership.
[SEAL] ---------------------------------------------
Notary Public, State of Texas
---------------------------------------------
Printed Name of Notary
My Commission Expires:
---------------------
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