REAL ESTATE CONTRACT
This Contract is entered into by and between Elecsys Corporation, a Kansas
corporation ("Buyer"), and Rose Construction Company, a Kansas corporation
("Seller") effective as of the "Effective Date," which is hereby defined as the
last date upon which both Buyer and Seller have executed this Contract.
1. Purchase and Sale. Seller hereby agrees to sell and convey and Buyer
agrees to purchase the real property comprised of approximately 5 acres of land
legally described on Exhibit A attached hereto and incorporated herein, and all
improvements to be constructed thereon consisting primarily of an approximately
60,100 sq. foot single story building made primarily of pre-cast concrete and
glass (the "Building") (the Building and all appurtenant parking areas,
infrastructure and other improvements are hereinafter collectively referred to
as the "Improvements"), together with all and singular the rights and
appurtenances pertaining to the property, and all right, title and interest of
Seller in and to parking, adjacent streets, easements, gaps and gores,
appurtenances and rights of way relating to such real estate (collectively, the
"Property").
2. Purchase Price. Subject to Sections 5(e), 5(g), and 8(e) below, the
Purchase Price for the Property shall be (a) Four Million Three Hundred Eighty
Six Thousand and 00/100 Dollars ($4,386,000.00), and (b) the aggregate
construction interest owed on the Construction Financing for the period prior to
the "Target Date" (defined in Section 5(a) below), which shall be paid in cash
or by wire transfer at "Closing" (defined in Section 9 below).
3. Entry on Property. Buyer, its agents, employees, and representatives,
are hereby granted the right to immediately enter upon all or any portion of the
Property for the purpose of making any structural, mechanical, engineering,
geological, ecological, environmental, soil, surveying, or other inspections,
tests, or work as Buyer, in its discretion, may deem necessary or appropriate.
Buyer shall give advance written notice to Seller prior to entering the
Property. Buyer agrees to indemnify and hold Seller harmless from all
liabilities, damages and claims arising out of injury to persons or property as
a result of Buyer's inspections and entry onto the Property pursuant to this
Section 3.
4. Seller's Deliveries. Seller shall within ten (10) days from the date
this Contract is executed by Buyer, at Seller's expense, deliver to Buyer
legible, accurate and complete copies of any and all documents and agreements
relating to the Property which are in Seller's possession or control, including,
without limitation, the following (together, the "Seller's Deliveries"): a
current standard form ALTA Owner's Title Commitment ("Title Commitment")
covering the Property and issued by Kansas Title, as agent for First American
Title Insurance Company (the "Title Company"), along with copies of all
documents referred to as exceptions therein; a current ALTA/ASCM survey of the
Property (the "Survey"); any existing environmental study or report; any
existing soil reports; and building permits.
5. Construction; Construction Financing.
(a) Seller shall construct the Improvements at its expense in
accordance with the "Approved Plans and Specifications" attached hereto as
Exhibit B and incorporated herein,
any "Approved Change Orders" (defined in Section 5(e) below), and all governing
laws and codes. Without limiting the foregoing, Seller shall be responsible for
any and all impact or tap-in fees, municipal charges and assessments, and permit
fees relating to the construction or occupancy of the Improvements. Seller shall
use only contractors and subcontractors approved in writing by Buyer, such
approval not to be unreasonably withheld. Seller shall use reasonable efforts to
complete such construction on or before August 21, 2006 (the "Target Date").
(b) This section intentionally deleted.
(c) Seller shall keep Buyer apprised of the ongoing status of
construction, and shall promptly furnish to Buyer copies of all material
documents relating to the Property and construction of the Improvements
generated or obtained by or for Seller. Upon completion of construction, Seller
shall deliver to Buyer the following items (together, "Seller's
Post-Construction Deliveries"): architectural reports and reviews (including,
without limitation, an AIA certificate from Seller's architect certifying that
the Improvements were constructed in substantial accordance with the Approved
Plans and Specifications, as modified by any Approved Change Orders, and laws
and codes; an updated "as built" survey; unconditional lien waivers from all
contractors, subcontractors, and suppliers of materials, "as-built" plans and
specifications, any engineering reports, and a temporary or permanent
certificate of occupancy.
(d) Buyer and Seller and their respective agents and consultants shall
conduct a walk through of the Improvements on or before substantial completion
thereof, and Buyer shall submit a list of any incomplete items to Seller within
ten (10) days of the date thereof. Seller shall promptly cure such punch-list
items.
(e) If on one or more occasions following execution of this Contract,
Buyer requests that Seller deviate from the Approved Plans and Specifications (a
"Requested Change Order"), Seller shall incorporate the Requested Change Order
into the Improvements, and, subject to the terms of this Section 5(e), the
Purchase Price at Closing shall be increased by the cost of the Requested Change
Order. If any Requested Change Order individually or in the aggregate would
cause an increase in the cost of construction of more than $10,000.00, Seller
shall notify Buyer in writing within five (5) business days of the request for
the Requested Change Order of the cost of the Requested Change Order and Buyer
has three (3) business days to elect to withdraw such request. Any Requested
Change Order proposed by Buyer and not withdrawn by Buyer shall be an "Approved
Change Order". If Seller fails to timely notify Buyer of the cost of any
Requested Change Order as required herein, the Purchase Price shall not be
increased to reflect such cost.
(f) Seller shall and hereby does warrant the good and complete
performance of its construction obligations hereunder, and shall indemnify and
hold Buyer harmless from and against all costs, expenses, claims, damages,
demands and liabilities relating to the Property which accrue or arise prior to
the Closing Date, or accrue or arise at any time arising out of Seller's failure
to perform (or cause to be performed) Seller's construction obligations as set
forth herein. Without limiting the foregoing, Seller shall cure all labor and
material defects in the Improvements of which Seller has written notice prior to
one year after the Closing Date. Nothing set forth herein shall limit any claim
against Seller arising from the negligent performance of its construction
obligations.
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(g) Seller shall obtain and be solely responsible for any financing
required to construct the Improvements (the "Construction Financing"); provided,
however, Buyer(s) agrees to guarantee that portion of the Construction Financing
that does not exceed the Purchase Price so long as (i) Buyer has approved in
writing in advance the amount financed, interest rate, and other terms of the
Construction Financing, and Seller accepts or agrees to no modifications thereof
without Buyer's prior written consent; (ii) any amount Buyer is required to pay
under said guaranty shall (A) constitute a debt from Seller to Buyer in such
amount, which contingent debt and the Seller's obligations under this Contract
shall be secured by a mortgage in favor of Buyer in the form attached hereto as
Exhibit C (the "Mortgage") to be recorded against the Property (all costs of
such recording shall be borne by Seller) on the Effective Date, and (B) at
Closing, in lieu of the foregoing debt described in (A), cause a reduction in
the Purchase Price at Closing; and (iii) the guaranty shall be released at
Closing. Buyer and Seller acknowledge and agree that the Mortgage shall be
junior to any mortgage securing the Construction Financing, but to no other lien
or security instrument.
(h) All obligations of this Section 5 shall survive Closing.
6. Title Insurance. Buyer shall deliver to Seller its written objections
to any matters shown or indicated in the Title Commitment, exception documents,
or the Survey, within thirty (30) days after receipt of all of said items.
Seller shall have until Closing to remove all such defects or objections to
Buyer's reasonable satisfaction. In the event Seller is unable to cure or remove
such objections to Buyer's reasonable satisfaction prior to or at Closing, Buyer
may, at its option, terminate this Contract, waive its objections and proceed to
Closing, or delay Closing until Seller has cured such objections. Effective as
of the date and time of recording of the Deed (as defined below), there shall be
issued to Buyer by the Title Company, an ALTA Owner's Title Insurance Policy
(the "Title Policy") in the amount of the Purchase Price. The Title Policy shall
insure good and marketable fee simple title to the Property in favor of Buyer.
The Title Policy shall contain as exceptions to title only those matters
approved or waived by Buyer ("Permitted Exceptions"). The Title Policy shall not
have any exceptions for mechanics or material liens, survey matters or the
Construction Financing. The costs and expenses of the Title Commitment, Title
Policy, and the surveys shall be borne by Seller.
7. Conditions Precedent. In addition to Seller's performance of its
obligations under this Contract, including the delivery of all documents at
Closing, Buyer's obligation to purchase the Property is subject to Buyer's
satisfaction in its sole discretion with the Property in all respects,
including, without limitation, the physical condition of the Property, the
Seller's Deliveries, the economic viability of the Property, and any other
matters pertaining to the Property within forty-five (45) days after the
Effective Date (the "Due Diligence Period"). If Buyer deems this condition to be
unsatisfied, Buyer may, at its option, terminate this Contract by written notice
to Seller given at any time at or before 5:00 p.m. on the last day of the Due
Diligence Period. Buyer acknowledges that Seller is not obligated to commence
construction until the Due Diligence Period has elapsed, or Buyer has waived its
rights to terminate the Contract pursuant to this Section. If Buyer terminates
the Contract in accordance with the terms of this Section 7, Buyer agrees to
reimburse Seller within twenty (20) days of Seller's demand any and all expenses
approved by Buyer in writing in connection with the construction of the
Improvements.
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8. Additional Conditions Precedent. In addition to the conditions
precedent set forth in Section 7 above, Buyer's obligation to purchase the
Property and pay the Purchase Price is expressly conditioned upon the following
conditions precedent being in effect or complied with on the Closing Date:
(a) The Improvements shall be completed in a good and workmanlike
manner, lien free, in good condition, and in accordance with the Approved Plans
and Specifications, any Approved Change Orders, and all applicable laws and
codes.
(b) No title defects or encumbrances objectionable to Buyer shall have
arisen after the date of delivery of the Title Commitment to Buyer, and the
title exceptions relating to Seller's acquisition or construction financing,
survey matters, and mechanics and material liens shall be deleted from the Title
Policy.
(c) Seller shall have delivered to Buyer all of Seller's
Post-Construction Deliveries required by Section 4 to be delivered after
completion of construction, and such items shall be acceptable to Buyer in its
reasonable discretion.
(d) Buyer shall have obtained prior to Seller's commencement of
construction Buyer's permanent financing for the acquisition described herein on
terms satisfactory to Buyer in its sole discretion (Buyer hereby agreeing to use
reasonable efforts to obtain financing). Buyer acknowledges that Seller is not
obligated to commence construction until Buyer has waived its rights to
terminate the Contract pursuant to this Section.
(e) Buyer shall have closed on the sale of its existing real property
located at ▇▇▇▇▇ ▇. ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇ (the "Current Facility").
Buyer agrees to place the Current Facility on the market and to forward copies
of any offers it receives to Seller. Buyer may accept or reject such offers as
Buyer determines in its sole discretion; provided, however, if Buyer's sole
reason for rejecting such offer is based on an insufficient sale price, Seller
may notify Buyer that it will pay Seller at the closing of the sale of the
Current Facility the deficiency between $1,760,000 and the net sale proceeds to
be received by Buyer upon such sale, in which event Buyer shall accept such
offer, execute a sale contract on such terms and proceed to close the sale of
the Current Facility, and Seller shall be obligated to furnish the amount of the
deficiency at such closing. If Buyer has not closed its sale of the Current
Facility with a third party buyer on or before the Closing Date, Buyer may elect
in its sole discretion to cause Seller to purchase at Closing the Current
Facility for $1,760,000.00. In the event of such election, marketable title
shall be conveyed by special warranty deed, subject to all matters of record,
and on an "AS IS" basis. Buyer shall pay for Seller's title policy (except
Seller shall pay for any endorsements). Seller shall be responsible for any
costs associated with its financing, and all other closing costs shall be borne
by the party that customarily pays such costs in ▇▇▇▇▇▇▇ County, Kansas. In the
event Seller is unable to obtain financing for such acquisition or otherwise
close on the acquisition of the Current Facility, Buyer may offset $1,760,000
against the Purchase Price, in addition to pursuing any other remedy available
at law or equity. In the event Seller closes on the purchase of the Current
Facility, Buyer shall deliver possession of the Current Facility to Seller in
its current condition, reasonable wear and tear excepted, with all personal
property removed; provided, however, that in the event of a fire or other
casualty, Buyer shall reasonably remove the debris and convey the Current
Facility in its "as-is" condition, and
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assign the rights to Buyer's insurance proceeds to Seller at the closing. Buyer
agrees to maintain commercially reasonable all-risk insurance on the Current
Facility until the closing of the sale to Seller, if applicable.
9. Closing. This Contract shall close (the "Closing") ten (10) days
following satisfaction of the conditions precedent set forth in Sections 7 and 8
above, or such earlier date as may be agreed upon by the parties ("Closing
Date"); provided, however, Buyer may extend the Closing Date for up to ninety
(90) days to accommodate Buyer's permanent financing and/or a Section 1031
tax-deferred exchange. The Closing shall occur in escrow at the Title Company.
If one or more of the conditions precedent set forth in Section 8 have not been
satisfied by October 31, 2006, Buyer may at its election either (i) waive the
outstanding condition precedents and close, (ii) terminate this Contract, in
which case all obligations set forth herein shall be null and void, (iii) close
and escrow the amount of proceeds reasonably determined by Buyer to pay for the
outstanding items required to complete the Improvements plus a 20% overage
contingency, which escrowed funds shall be released to Seller only upon
completion of the outstanding items. Nothing set forth in this Section 9 shall
limit Buyer's remedies in the event of a default by Seller. Seller and Buyer
shall equally share all escrow fees and closing costs but Buyer shall be fully
responsible for all fees and expenses in connection with its lender and
recording the deed. Each party shall be responsible for and shall pay for its
own legal fees.
At Closing:
(a) Seller shall deliver to Buyer the following:
(i) A Special Warranty Deed (the "Deed") in form acceptable to
Buyer and Seller, duly executed and acknowledged by Seller, conveying fee simple
title to Buyer free and clear of any lien, encumbrance or exception other than
the Permitted Exceptions.
(ii) A ▇▇▇▇ of Sale and Assignment in form acceptable to Buyer
and Seller, duly executed and acknowledged by Seller, conveying to Buyer all
permits, agreements and warranties and all of Seller's interest in any personal
property.
(iii) The Title Policy.
(iv) Possession of the Property.
(v) Lien Waivers from all contractors, subcontractors, and
suppliers.
(vi) The FIRPTA Tax Affidavit.
(vii) Such other affidavits or documents required by the Title
Company to close this transaction.
(viii) Such other documents and funds required of Seller to
purchase the Current Facility from Buyer, if required pursuant to Section 8(e)
above.
(b) Buyer shall deliver to Seller the following:
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(i) The consideration required pursuant to Section 2 above, in
cash or by Buyer's certified or cashier's check in U.S. funds available
immediately to Seller.
(ii) Such other affidavits or documents required by the Title
Company to close this transaction.
(iii) Such other documents and funds required to sell the Current
Facility to Seller, if required pursuant to Section 8(e) above.
10. Prorations and Taxes. General real property taxes, and installments of
current year special assessments (other than those associated with the
construction of the Property, which shall be borne by Seller) shall be prorated
to the Closing, based upon actual days involved. Seller shall be responsible for
all of such expenses, taxes, installments of special assessments, and any other
charges and shall receive all income for any period prior to and including the
date of Closing. If the assessed value for the year of Closing is not available
at Closing, the parties shall prorate using the prior year's taxes, and within
sixty (60) days of receiving the updated tax ▇▇▇▇, the parties shall reconcile
the tax proration.
11. Seller's Representations and Warranties. Seller makes the following
representations and warranties to Buyer which shall be true, accurate and
complete as of the date hereof and as of Closing:
(a) Rose Construction Company is a Kansas corporation in good standing
and is duly qualified to transact business under the laws of the State of
Kansas, and the person executing this Contract on behalf of said company is
authorized to do so.
(b) Neither Seller is a foreign person selling property as described
in the Foreign Investment in Real Property Tax Act and agree to deliver an
affidavit at Closing reflecting that Seller is not such a foreign person and
providing Seller's tax identification number ("FIRPTA Tax Affidavit").
(c) The Improvements and all components thereof shall be constructed
and completed in a good and workmanlike manner, lien-free, in good condition,
and in accordance with the Approved Plans and Specifications, any Approved
Change Orders, and all applicable laws and codes.
(d) Any and all of Seller's Deliveries delivered to Buyer shall be
true, accurate, and complete in all material respects.
(e) Seller is a bondable construction company.
(f) There are no Hazardous Substances on or at the Property, and (ii)
there are no underground storage tanks at the Property. For purposes of this
paragraph, Hazardous Substances means (i) any "hazardous substance," "hazardous
material," "toxic substance," or "solid waste" as such terms are presently
defined in CERCLA, RCRA and the Hazardous Materials Transportation Act (49
U.S.C. Section 1801 et seq.); (ii) any material, waste or substance which is (A)
petroleum, (B) asbestos or asbestos containing material, (C) poly-chlorinated
biphenyls, (D) designated as a "hazardous substance" pursuant to Section 311 of
the
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Clean Water Act, 33 U.S.C. 1251 et seq. (33 U.S.C. 1321) or listed pursuant to
Section 307 of the Clean Water Act (33 U.S.C. 1317); (E) flammable explosives;
or (F) radioactive materials; and (iii) any additional substances or materials
which are now considered to be "hazardous substances" (including, without
limitation, any asbestos containing materials) under any applicable law, rule or
regulation (whether local, state or federal) relating to the Property.
12. Notices. All notices, deliveries or other communications required or
permitted to be given hereunder shall be in writing and shall be faxed (with
electronic confirmation of receipt), hand delivered by independent courier
service, mailed by registered or certified mail, postage prepaid, or sent by
overnight delivery service, to the following addresses:
Seller: Rose Construction Company Buyer: Elecsys Corporation
▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇. ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ Attn: ▇▇▇▇ ▇▇▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇ Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇ Fax: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to:
▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Norton, Hubbard, Ruzicka, et al. ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Fax #: ▇▇▇-▇▇▇-▇▇▇▇ Fax #: (▇▇▇) ▇▇▇-▇▇▇▇
13. Brokers. The parties each represent and warrant to the other that no
real estate broker, salesman or finder has been involved in this transaction,
except for Sight Commercial Realty, which shall be paid by Seller. If any claim
for brokerage fees in connection with this transaction is made by any broker,
salesman or finder claiming to have dealt through or on behalf of one of the
parties hereto, such party shall indemnify, defend and hold harmless the other
party hereunder from and against all liabilities, damages, claims, costs, fees
and expenses whatsoever with respect to said claim for brokerage fees.
14. Risk of Loss. All risk of loss shall be borne by Seller until Closing.
Seller agrees to give Buyer prompt notice of any fire or other casualty
affecting the Property between the date hereof and Closing or of any actual or
threatened taking or condemnation of all or any portion of the Property. If
prior to the Closing there shall occur any such damage, or actual or threatened
taking or condemnation, then in any such event Buyer may at its option terminate
this Contract by written notice to Seller within twenty (20) days after Buyer
has received the notice referred to above or at the Closing, whichever is
earlier. If Buyer does not so elect to terminate this Contract, then the Closing
shall take place as provided herein without abatement of the Purchase Price,
except there shall be (i) a reduction in the Purchase Price equal to Seller's
insurance
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deductible (unless Seller has paid such deductible) and (ii) Seller shall assign
to Buyer at the Closing all of Seller's interest in and to all insurance
proceeds or condemnation award.
15. Default and Remedies. If Seller defaults hereunder, Buyer may (a)
terminate this Contract by written notice delivered to Seller at or prior to the
Closing, (b) pursue an action for specific performance against Seller and
recover actual damages suffered by Buyer arising from the delay in performance,
(c) foreclose on the Mortgage; (d) close on the Property and either postpone or
release Seller's obligation to purchase the Current Facility, provided, however,
in the event of a release, Seller shall remain liable for the difference between
the gross proceeds of the sale of the Current Facility to a third party and
$1,760,000; and/or (e) in addition to one or more of the foregoing, pursue any
remedy available at law and equity. If Buyer defaults hereunder, Seller, as
Seller's sole and exclusive remedy for such default, shall be entitled to pursue
any remedy available at law or equity, including an action for specific
performance against Buyer. If either Buyer or Seller obtains a judgment against
the other party, attorney's fees incurred by the prevailing party, as fixed by
the court, shall be included in such judgment and paid by the non-prevailing
party. Notwithstanding the foregoing, any default occurring hereunder relating
to a post-closing obligation shall entitle the non-defaulting party to all
remedies available at law and equity.
16. Section 1031 Exchange. Buyer and Seller agree to cooperate with the
other (the "Exchanging Party") if the Exchanging Party desires to effectuate a
Section 1031 tax deferred exchange; provided, however, the non-Exchanging Party
shall not be required to bear any expense associated with such exchange.
17. Miscellaneous. This Contract shall be construed and governed in
accordance with the laws of the State of Kansas. All the parties to this
Contract have participated fully in the negotiation and preparation hereof; and
accordingly, this Contract shall not be more strictly construed against any one
of the parties hereto. In the event any term or provision of this Contract is
determined by an appropriate judicial authority to be illegal or otherwise
invalid, such provision shall be construed as such authority determines, and the
remainder of this Contract shall be construed to be in full force and effect. In
construing this Contract, the singular shall be held to include the plural, the
plural shall be held to include the singular, the use of any gender shall be
held to include every other and all genders, and captions and paragraph headings
shall be disregarded. All exhibits attached hereto are incorporated in, and made
a part of, this Contract. In the event any obligation is enforceable against
Seller, such obligation may be enforceable jointly and severally against both
parties designated as Seller. This Contract constitutes the entire understanding
and agreement between the parties, and there are no understandings, agreements,
representations or warranties except as specifically set forth herein. This
Contract may not be changed, altered or modified except by an instrument in
writing signed by the party against whom enforcement such change would be
sought. This Contract shall be binding upon the parties hereto and their
respective successors and assigns. Seller shall not assign this Contract without
the prior written consent of Buyer. Time is of the essence with respect to all
obligations of this Contract. All obligations and representations hereunder
shall survive the Closing and delivery of the Deed. In the event Buyer assigns
this Contract to another party, Buyer shall remain obligated to perform its
obligations hereunder.
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, THE PARTIES HAVE EXECUTED THIS CONTRACT AS OF THE
LATEST DATE SHOWN BELOW. THIS CONTRACT MAY BE SIGNED IN MULTIPLE COUNTERPART
ORIGINALS.
Seller: Rose Construction Company Buyer: Elecsys Corporation
By: _________________________ By: _________________________
Name: _________________________ Name: _________________________
Title: _________________________ Title: _________________________
Date _________________________ Date _________________________
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EXHIBIT A
(Legal Description)
▇▇▇ ▇▇, ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇, a subdivision in Olathe, ▇▇▇▇▇▇▇ County,
Kansas.
(See attached plat)
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EXHIBIT B
(Approved Plans and Specifications)
(To be Attached)
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EXHIBIT C
(Mortgage)
(Attached)
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NOTWITHSTANDING ANYTHING TO THE CONTRARY SET FORTH HEREIN, THE MAXIMUM PRINCIPAL
AMOUNT SECURED BY THIS MORTGAGE IS $4,386,000.
MORTGAGE AND SECURITY AGREEMENT
THIS MORTGAGE AND SECURITY AGREEMENT ("Mortgage"), made as of the
______ day of October, 2005, by and among ROSE CONSTRUCTION COMPANY, a Kansas
corporation ("Borrower"), with a mailing address of ▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇▇▇▇▇,
▇▇▇▇▇▇ ▇▇▇▇▇, in favor of ELECSYS CORPORATION, a Kansas corporation, with a
mailing address of ▇▇▇▇▇ ▇. ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇ ("Lender"),
WITNESSETH: That
WHEREAS, pursuant to that certain "Real Estate Contract" dated as of
the date hereof between Borrower and Lender (the "Contract"), Borrower has
agreed to construct certain improvements (the "Improvements') on the land in
▇▇▇▇▇▇▇ County, Kansas, legally described on Exhibit A attached hereto (the
"Premises") and to sell the Land and Improvements to Lender; and
WHEREAS, Borrower has agreed to secure and be responsible for any
financing necessary to construct the Improvements and perform its other
obligations under the Contract ("Construction Financing"); and
WHEREAS, Lender has agreed, subject to certain limitations and
conditions, to guarantee the Construction Financing; and
WHEREAS, Borrower and Lender have agreed, by way of the Contract, that
any amount Lender is required to pay under said guaranty shall constitute a debt
and obligation from Borrower to Lender in such amount ("Debt"); and
WHEREAS, Borrower and Lender have agreed to secure the Debt, the
principal amount of which could equal or exceed $4,386,000, with this Mortgage.
NOW, THEREFORE, Borrower, in consideration of the Debt, Lender's
obligations under the Contract, and other legally sufficient consideration, the
receipt whereof is hereby acknowledged, and in order to secure the payment of
the principal, interest and premium, if any, on the Debt, together with all
other sums due hereunder or under any other instrument securing the Debt, and to
declare the terms and provisions upon and subject to which the Debt is to be
secured and repaid, has executed and delivered this Mortgage.
GRANTING CLAUSE
The Grant. Borrower does by these presents grant, bargain,
warrant, sell, convey, assign, grant a security interest in, mortgage and
warrant unto Lender and to its successors and assigns forever:
1. All of the Premises, and all tenements and
hereditaments thereunto appertaining and all after acquired interests
of every kind and nature therein, together with all buildings,
structures, fixtures, appurtenances, and improvements thereon situated
or which may hereafter be erected or placed thereon, in whole or in
part, including, without limitation, the Improvements, all remainders
and reversions in the Premises and all right, title and interest of
Borrower in and to all ▇▇▇▇▇▇▇, ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ or other
public thoroughfares in front of and adjoining the Premises, including
all easements, licenses and rights-of-way thereunto appurtenant,
attached or belonging, and also all right, title and interest of
Borrower in and to all strips and gores of land adjacent to the
Premises; and
2. All engines and machinery, all heating, lighting,
ventilating, cooling, refrigeration, water supply apparatus and
fixtures, all water closets, basins, pipes, faucets, mantels,
elevators, escalators, and snow and dirt removal equipment and all
other apparatus, fixtures, equipment, personal property, and all
replacements thereof, now or hereafter located upon and used or
furnished in connection with the letting or operation of the Premises,
which are and shall be deemed to be a portion of the security for the
indebtedness herein mentioned and covered by this Mortgage; and
3. All rents, royalties, profits, revenues, income and
other benefits of and from the property subject or required to be
subject to the lien of this Mortgage, and all of the estate, right,
title and interest of every nature whatsoever of Borrower in and to
the same and every part and parcel thereof; and
4. All right, title and interest of Borrower in and to the
following, including the right to receive the same, to-wit:
(a) All proceeds of insurance paid or payable as a
result of damage to or destruction of the property described
above; and
(b) Any and all awards or payments, including interest
thereon, which may be made with respect to the property described
above as a result of: (i) the exercise of the right of eminent
domain; (ii) the alteration of the grade of any streets or roads;
and
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(iii) any other damage or injury to or decrease in the value of
the property described above,
in each such instance to the extent of all amounts which may be secured
by this Mortgage on the date of receipt of any such insurance proceeds,
awards or payments by Lender, and to the extent of reasonable counsel
fees (to the extent now or hereafter permitted by law), costs and
disbursements incurred by Lender in connection with the collection of
any such insurance proceeds, award or payment;
all of the same being hereinafter collectively called the "Mortgaged Property".
TO HAVE AND TO HOLD all the above granted Mortgaged Property,
whether now owned or hereafter acquired, unto Lender and its successors and
assigns.
ARTICLE 1
PARTICULAR COVENANTS OF BORROWER
Borrower covenants and agrees with Lender as follows:
1.1 Payment of Debt. That Borrower will pay the Debt, if any, in
full as herein and in the Contract provided and will perform and keep all the
covenants and agreements in this Mortgage and in all other instruments securing
payment of the Debt.
1.2 Title and Lien. That at the delivery hereof, Borrower is the
lawful owner of the Mortgaged Property hereinabove granted and is seised of a
good and indefeasible estate of inheritance therein, free and clear of all liens
and encumbrances, that it has full power to subject the same to the lien hereof
and that it will warrant and defend the title thereto forever against the claims
and demands of all persons whomsoever.
That the lien created by this Mortgage shall be junior to any
mortgage securing the Construction Financing, but to no other lien or security
interest on the Mortgaged Property and that it will protect and defend the title
and possession thereof so that this Mortgage shall be and remain a valid lien
thereon until said debt be fully paid, or if foreclosure sale be had hereunder
so that the purchaser at the said sale shall acquire good title in fee simple to
the Mortgaged Property free and clear of all liens and encumbrances.
1.3 Further Assurances. That Borrower will, at its expense, do
all such further acts and execute, acknowledge, deliver and record financing and
continuation statements and all such further instruments as Lender shall require
to:
(a) continue, preserve and maintain this Mortgage as a valid
and subsisting security interest upon the Mortgaged Property
enforceable in accordance with the terms and provisions of this
Mortgage;
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(b) preserve and maintain the rights created by any other
instruments securing the payment of the Debt; and
(c) preserve and maintain the priority of this Mortgage and
all such other instruments securing the payment of the Debt and the
record notice thereof so that no rights or liens of others shall gain
parity with or priority over this Mortgage and the other instruments
securing the payment of the Debt.
1.4 Protection of Mortgaged Property and Rights. Lender shall
have the right and power to institute and maintain or defend or intervene in
such suits and proceedings as it may reasonably and in good ▇▇▇▇▇ ▇▇▇▇ necessary
to:
(a) prevent any impairment of the Mortgaged Property by any
acts which may be unlawful or constitute any violation of this
Mortgage;
(b) enforce, defend, preserve or protect its interest
(including the priority of the lien created hereby) in and to the
Mortgaged Property and the income and other benefits arising therefrom
and its rights and remedies under this Mortgage;
(c) restrain the enforcement of or compliance with any
legislation or other governmental enactment, rule or order that may be
unconstitutional or otherwise invalid, if the enforcement of or
compliance with such enactment, rule or order would substantially
impair the security hereunder or be substantially prejudicial to the
interest of Lender; and
(d) defend, preserve or protect its interests should Lender
become a party to any suit or proceeding by reason of this Mortgage.
All of Lender's costs and expenses (including attorneys' fees to the extent
permitted by law) incurred in any such actions shall be secured hereby and be
paid by Borrower on demand.
1.5 Damage to Mortgaged Property. If all or any part of the
Mortgaged Property shall be damaged by fire or other casualty, Borrower will
promptly restore the Mortgaged Property to the equivalent of its original
condition, regardless of whether or not there shall be any insurance proceeds
therefor, and, provided no Event of Default then exists, Lender shall make
insurance proceeds, if any, available to Borrower for such restoration. If a
part of the Mortgaged Property shall be taken or physically damaged through
condemnation, Borrower will promptly restore, repair or alter that portion of
the Mortgaged Property remaining after such condemnation in a manner
satisfactory to Lender, and, provided no Event of Default then exists, Lender
shall make condemnation proceeds, if any, available to Borrower for such
restoration.
1.6 Maximum Interest. No provision of this Mortgage, the
Contract or any other instrument securing the Debt shall require the payment or
permit the collection of interest in excess of the maximum amount permitted by
law. If any excess of interest in such respect is herein, in the Contract or in
such other instrument provided for, or shall be adjudicated to be so provided
for herein, in the Contract or in such other instrument, neither Borrower nor
its successors in title
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shall be obligated to pay such interest in excess of the maximum amount not
prohibited by law and the right to demand the payment of any such excess shall
be and hereby is waived. This provision shall control any other provision of the
Contract, this Mortgage or such other instrument. If any such excess interest
shall have been paid by Borrower, it shall automatically be treated as a
permitted additional prepayment of principal, but no premium for such payment
shall be charged to Borrower.
1.7 Security Agreement. This Mortgage, in addition to being a
lien on the Mortgaged Property, is also a security agreement by and between
Borrower, as debtor, and Lender, as secured party, with respect to that portion
of the Mortgaged Property which is subject to the Uniform Commercial Code, and
this Mortgage creates and grants to Lender a lien and security interest in all
such property until the obligations hereunder and the Contract are paid and
performed in full. Borrower hereby grants to Lender a security interest in all
such property as security for the payment and performance of said obligations.
Upon the occurrence of any Event of Default, Lender shall have all the rights
and remedies of a secured party under the Uniform Commercial Code and any other
applicable laws. This Mortgage will also constitute a Uniform Commercial Code
financing statement for purposes of perfecting Lender's interest in the personal
property and fixtures described herein.
1.8 Transfer or Further Encumbrance of Mortgaged Property. If
Borrower sells, assigns, conveys, transfers or otherwise alienates or further
mortgages or encumbers the Mortgaged Property or any part thereof or interest
therein, whether legal or equitable, and whether voluntarily or involuntarily
(by foreclosure or otherwise) or by operation of law, without in each such
instance obtaining the prior written consent of Lender (which consent may be
withheld for any reason), Lender may, at its option, declare the Debt
immediately due and payable.
1.9 Legal Status of Borrower. Prior to the maturity or
satisfaction of the Debt, Borrower will not merge or consolidate with or into
another corporation or entity, make any change in its Articles of Incorporation
or operating agreement, dissolve its corporate status, or in any way distribute
or liquidate its assets.
1.10 Waiver of Redemption. In the event of a default by Borrower
in the performance of the obligations imposed upon it by the terms of this
Mortgage or any other instrument securing the Debt, neither Borrower nor anyone
claiming through or under it shall or will set up, claim or seek to take
advantage of any stay, extension or redemption laws or redemption periods or
grace periods (except as provided for herein) now or hereafter in force and
affecting the Mortgaged Property in order to prevent or hinder enforcement,
foreclosure, sale, confirmation of sale or conveyance of the Mortgaged Property
upon foreclosure or the final and absolute putting in possession thereof
immediately after any such sale of the purchaser or purchasers thereat, and
Borrower, for itself and its successors in title, to the full extent that it may
lawfully do so for itself and its successors in title, hereby waives the benefit
of all such laws.
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ARTICLE 2
DEFEASANCE - DEFAULTS
Borrower covenants and agrees as follows:
2.1 Defeasance. If the Debt and interest thereon be paid when
due and the covenants and agreements in the Contract, this Mortgage and all
other instruments securing the payment thereof be faithfully kept and performed,
then these presents shall be null and void and the Mortgaged Property shall be
released from the lien hereof at the cost of Borrower.
2.2 Defaults. If any one or more of the following events of
default (each an "Event of Default") shall occur:
(a) if default shall be made in the payment of principal,
interest or premium, if any, on the Debt or any payment required
pursuant to paragraph 1.6 of this Mortgage, when and as the same shall
become due and payable, or in any other payment on the Debt, when and
as the same shall become due and payable, whether at maturity, by
acceleration or as a part of any prepayment or otherwise, as in the
Contract or this Mortgage provided, and the same is not cured within
10 days after written notice from Lender; or
(b) if default shall be made in the due observance or
performance of any covenant or agreement contained in this Mortgage or
in the Contract; provided, as to non-monetary defaults, such default
is not cured within thirty (30) days written notice from Lender to
Borrower; or
(c) if default shall be made in the due observance or
performance of any covenant, condition or agreement of Borrower
contained in any other instrument securing the Debt or in any document
evidencing or securing any indebtedness of Borrower to Lender; or
(d) if a receiver, trustee or liquidator (or other similar
official) of Borrower or of the Mortgaged Property or any portion
thereof, shall be appointed in any proceeding or by any federal or
state officer or agency and shall not be discharged within 90 days
after such appointment or if Borrower shall consent to such
appointment; or
(e) if Borrower shall file a petition in bankruptcy or for
reorganization or for an arrangement pursuant to the Bankruptcy Act or
any similar federal or state law, now or hereafter in effect, or shall
make an assignment for the benefit of its creditors or shall admit in
writing its inability to pay its debts generally as they become due,
or shall be dissolved, or shall suspend payment of its obligations or
shall take any action in furtherance of any of the foregoing; or if a
petition or an answer shall be filed proposing the adjudication of
Borrower as a bankrupt or its reorganization or for arrangement under
the Bankruptcy Act or any similar federal or state law, now or
hereafter in effect, and (i) such party shall consent to the filing
thereof, or (ii) such petition or answer shall not be discharged or
denied within ninety (90) days after the filing thereof; or
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(f) if final judgment for the payment of money shall be
rendered against Borrower and such party shall not discharge the same
or provide for its discharge in accordance with its terms or procure a
stay of execution thereon within the period following such final
judgment and prior to the execution thereon, or such longer period
during which execution on such judgment shall have been stayed, or
appeal from such judgment or from the order, decree or process upon or
pursuant to which such judgment shall have been granted, passed or
entered and cause the execution thereof to be stayed during such
appeal, and if on appeal such judgment, order, decree or process shall
be affirmed and such party shall not discharge such judgment or
provide for its discharge in accordance with its terms within ninety
(90) days after the entry of the order or decree of affirmance; or
(g) Any failure to comply with the terms of or any default
under the Construction Financing by Borrower, or any amendment to the
Construction Financing agreed upon by Borrower which increases the
principal indebtedness or interest rate thereunder, or adds security
thereto beyond the Mortgaged Property.
then, and in every such case, this Mortgage shall stay in force and during the
continuance of any such Event of Default:
(1) Lender may declare the entire principal of the Debt (if
not then due and payable) and all accrued and unpaid interest thereon
(and premium, if any), to be due and payable immediately, and upon any
such declaration the principal of the Debt and said accrued and unpaid
interest (and premium, if any) shall become and be immediately due and
payable, anything in the Contract or in this Mortgage to the contrary
notwithstanding;
(2) Lender shall be entitled to foreclose this Mortgage as a
mortgage and shall be entitled to a judgment for a sum equal to the
Debt and any additional sums paid by virtue of this Mortgage,
including all costs and expenses of enforcing the same and reasonable
attorneys' fees, to the extent permitted by law, and shall be entitled
to a decree for the sale of the Mortgaged Property in satisfaction of
said judgment foreclosing all of the rights and equities of Borrower
in and to the Mortgaged Property, as well as all persons claiming
under them and at which sale appraisement of the Mortgaged Property is
hereby expressly waived by Borrower;
(3) Lender shall continue to have the optional rights to
exercise any or all other powers, rights and remedies given Lender by
this Mortgage and the repayment of all such funds with interest
thereon as hereinabove provided shall be secured by this Mortgage;
(4) Lender shall have all the rights and remedies of a
secured party under the Uniform Commercial Code; and
(5) Lender shall have, in addition to the foregoing, all
rights and remedies given by law and equity, including the right to
have a receiver appointed for the Mortgaged Property.
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No remedy granted or conferred by this Mortgage is intended to be
exclusive of any other remedy or remedies and each and every remedy shall be
cumulative and shall be in addition to every remedy given hereunder or now or
hereafter existing at law or in equity or by statute. No delay or omission of
Lender to exercise any right or power accruing upon any default shall impair any
such right or power or shall be construed to be a waiver of any such default or
any acquiescence therein and every right, power and remedy given by this
Mortgage or now or hereafter existing at law or in equity or by statute may be
exercised from time to time and as often as may be deemed expedient by Lender.
ARTICLE 3
MISCELLANEOUS
Borrower covenants and agrees as follows:
3.1 No Waiver of Provisions. No failure by Lender to insist upon
the strict performance of any covenant, agreement, term or condition of this
Mortgage or to exercise any right or remedy consequent upon a breach thereof,
and no acceptance of full or partial payment on the Debt during the continuance
of any such breach, shall constitute a waiver of any such breach or of such
covenant, agreement, term or condition. No covenant, agreement, term or
condition of this Mortgage to be performed or complied with by Borrower, and no
breach thereof, shall be waived, altered or modified except by an instrument
executed by Lender. No waiver of any breach shall affect or alter this Mortgage,
but each and every covenant, agreement, term and condition of this Mortgage
shall continue in full force and effect with respect to any other then existing
or subsequent breach hereof.
3.2 Extensions. That any extension of the time for payment of
the indebtedness secured hereby, release of security or any modification of the
instrument or instruments evidencing the indebtedness secured hereby, granted to
any future owner of the Mortgaged Property or to any other party or entity
liable in any capacity for such indebtedness, shall not relieve Borrower or any
other such party or entity from liability to pay said indebtedness nor release
Borrower or any such party or entity liable for such indebtedness with respect
thereto and Borrower does hereby waive presentment and demand for payment,
notice of nonpayment and notice of protest.
3.3 Powers not Exhausted. No right or power given to Lender by
this instrument shall be exhausted by the exercise thereof on one or more
occasions, but the same shall be a continuing right or power during the entire
term of this Mortgage and may be exercised from time to time in accordance with
the provisions of this instrument.
3.4 Covenants Run with Land. The covenants and agreements
hereinabove contained shall run with the land and shall bind and inure to the
benefit of the respective heirs, executors, administrators, legal
representatives, successors and assigns of the parties hereto, but neither this
Section 3.4 nor Section 3.6 of this Article III shall be construed as
constituting Lender's consent to any assignment, conveyance or other transfer by
Borrower of its interest in the Mortgaged Property.
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3.5 Subrogation. Lender, before a sale hereunder, and the
purchaser at the sale hereunder, shall be subrogated to the lien of any prior
encumbrance or vendor's lien, if any, on the Mortgaged Property paid out of the
money secured by this Mortgage, whether or not such prior lien or encumbrance
has been released of record.
3.6 Successors and Assigns, Etc. Whenever the singular or plural
number, or masculine, feminine or neuter gender is used herein, it shall equally
include the other, and every mention of Lender or Borrower shall include the
heirs, executors, legal representatives, administrators, successors and assigns
of the party so designated. The term "Mortgage" shall include all amendments,
modifications and supplements thereto.
3.7 Invalid Provisions to Affect No Others. In case any one or
more of the covenants, agreements, terms or provisions contained in this
Mortgage or in the Contract shall be invalid, illegal or unenforceable in any
respect, the validity of the remaining covenants, agreements, terms or
provisions contained herein and in the Contract shall be in no way affected,
prejudiced, limited or impaired thereby.
3.8 Notice. All notices to be given pursuant to this Mortgage
shall be sufficient if mailed postage prepaid, United States certified or
registered mail, return receipt requested, to the above-described addresses of
the parties hereto, or to such other addresses as a party may request in
writing. Any notice given hereunder shall be deemed to have been received on the
date such notice is deposited in the mail as aforesaid.
3.9 Headings. The headings of the subdivisions of this Mortgage
are for convenience of reference only, are not to be considered a part hereof,
and shall not limit or otherwise affect any of the terms hereof or the
interpretation hereof.
3.10 Governing Law. This Mortgage is to be construed and enforced
according to and governed by the laws of the State of Kansas.
3.11 Time of Essence. With respect to all obligations under this
Mortgage, time is of the essence.
[The remainder of this page intentionally left blank.]
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IN WITNESS WHEREOF, Borrower has executed these presents as of
the day and year first above written.
ROSE CONSTRUCTION COMPANY
By:
--------------------------------------
Name:
------------------------------------
Title:
-----------------------------------
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STATE OF _____________ )
) SS.
COUNTY OF ___________ )
On this _____ day of _____________, 2005, before me, a Notary Public,
in and for said County and State, personally appeared __________________,
_________________ of Rose Construction Company, a Kansas corporation, known to
me to be the person who executed the within instrument, and that he executed the
same as his free act and deed.
_________________________________________
(Signature of notarial officer)
_________________________________________
Title (and Rank)
(Seal, if any)
My appointment expires:
_______________________
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EXHIBIT A
LEGAL DESCRIPTION
▇▇▇ ▇▇, ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇, a subdivision in Olathe, ▇▇▇▇▇▇▇ County,
Kansas
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