THIS MORTGAGE SECURES A NOTE THAT PROVIDES FOR A VARIABLE INTEREST RATE AMENDED AND RESTATED MORTGAGE WITH ABSOLUTE ASSIGNMENT OF LEASES AND RENTS, SECURITY AGREEMENT AND FIXTURE FILING
EXHIBIT 10.4
Loan No. 8079119402
THIS INSTRUMENT PREPARED BY:
▇▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP
▇▇▇ ▇. ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇ ▇. ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
AND WHEN RECORDED MAIL TO:
Commercial Banking Group (AU #2702)
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: Records Management / Team 2
Loan No. 8079119402
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: Records Management / Team 2
Loan No. 8079119402
THIS MORTGAGE SECURES A NOTE THAT
PROVIDES FOR A VARIABLE INTEREST RATE
AMENDED AND RESTATED MORTGAGE
WITH ABSOLUTE ASSIGNMENT OF LEASES AND RENTS,
SECURITY AGREEMENT AND FIXTURE FILING
WITH ABSOLUTE ASSIGNMENT OF LEASES AND RENTS,
SECURITY AGREEMENT AND FIXTURE FILING
THE PARTIES TO THIS AMENDED AND RESTATED MORTGAGE WITH ABSOLUTE ASSIGNMENT OF LEASES AND
RENTS, SECURITY AGREEMENT AND FIXTURE FILING (this “Mortgage”), made as of March 12, 2008, are
VIRCO MFG. CORPORATION, a Delaware corporation (“Mortgagor”), and ▇▇▇▇▇ FARGO BANK, NATIONAL
ASSOCIATION (“Mortgagee”). The mailing address of Mortgagor and Mortgagee are the addresses for
those parties set forth or referred to in Section 7.10 below.
RECITALS
WHEREAS, Mortgagor did execute and deliver that certain Mortgage with Absolute Assignment of
Leases and Rents, Security Agreement and Fixture Filing dated January 26, 2004 (as amended,
restated, supplemented or otherwise modified, the “Original Mortgage”) to and for the benefit of
Mortgagee; and
WHEREAS, the Original Mortgage was recorded and filed in the Official Records of the County of
▇▇▇▇▇▇▇▇, Arkansas (the “Official Records”) on January 28, 2004, as Document No. 2004-1700 and
re-recorded and filed February 27, 2004, as Document No. 2004-3958, as modified by that certain
Modification Agreement (Secured Loan) executed by Mortgagor on January 27, 2005, which was recorded
and filed in the Official Records on February 3, 2005, as Document No. 2005-2338, and by that
certain Modification Agreement (Secured Loan) executed
by Mortgagor on December 8, 2005, which was recorded and filed in the Official Records on
1
December 15, 2005, as Document No. 2005-27794, and by that certain Modification Agreement (Secured
Loan) executed by Mortgagor on March 26, 2007, which was recorded and filed in the Official Records
on April 10, 2007, as Document No. 2007-7273; and
WHEREAS, Mortgagor and Mortgagee are parties to that certain Second Amended and Restated
Credit Agreement dated as of the date hereof (as amended, restated, supplemented or otherwise
modified, from time to time, the “Credit Agreement”), which amends and restates, in its entirety,
that certain Amended and Restated Credit Agreement dated as of January 27, 2004; and
WHEREAS, Mortgagor and Mortgagee, now desire to amend and restate the Original Mortgage, in
its entirety, and replace it with this Mortgage.
ARTICLE 1. GRANT OF MORTGAGE
1.1 GRANT. For the purposes of and upon the terms and conditions in this Mortgage and
for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged,
Mortgagor irrevocably grants, bargains, sells, conveys and assigns to Mortgagee, with power of sale
and right of entry and possession, all of that real property located in the City of ▇▇▇▇▇▇, County
of ▇▇▇▇▇▇▇▇, State of Arkansas, described on Exhibit A attached hereto, together with all
right, title, interest, and privileges of Mortgagor in and to all streets, ways, roads, and alleys
used in connection with or pertaining to such real property, all development rights or credits, air
rights, water, water rights and water stock related to the real property, and all minerals, oil and
gas, and other hydrocarbon substances in, on or under the real property, and all appurtenances,
easements, rights and rights of way appurtenant or related thereto; all buildings, other
improvements and fixtures now or hereafter located on the real property, including, but not limited
to, all apparatus, equipment, and appliances used in the operation or occupancy of the real
property, it being intended by the parties that all such items shall be conclusively considered to
be a part of the real property, whether or not attached or affixed to the real property (the
“Improvements”); all interest or estate which Mortgagor may hereafter acquire in the property
described above, and all additions and accretions thereto, and the proceeds of any of the
foregoing; (all of the foregoing being collectively referred to as the “Subject Property”). The
listing of specific rights or property shall not be interpreted as a limit of general terms.
1.2 ADDRESS. The addresses of the Subject Property are (i) ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇, (ii)
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, and (iii) ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇. However, neither the failure to designate an
address nor any inaccuracy in the addresses designated shall affect the validity or priority of the
lien of this Mortgage on the Subject Property as described on Exhibit A.
1.3 INCORPORATION OF RECITALS. The Recitals (above) are true and correct and are
hereby incorporated herein by this reference.
ARTICLE 2. OBLIGATIONS SECURED
2.1 OBLIGATIONS SECURED. Mortgagor makes this Mortgage for the purpose of securing
the following obligations (“Secured Obligations”):
2
(a) Payment to Mortgagee of all sums at any time owing under that certain Revolving Line of
Credit Note of even date herewith in the principal amount of Sixty-Five Million and No/100 Dollars
($65,000,000) (the “Note”), executed by Mortgagor, as “Borrower,” and payable to the order of
Mortgagee, as “Lender;” and
(b) Payment to Mortgagee of all sums representing Bank Product Obligations, as defined in the
Credit Agreement; and
(c) Payment and performance of all covenants and obligations of Mortgagor under this Mortgage;
and
(d) Payment and performance of all covenants and obligations on the part of Mortgagor under
the Credit Agreement and each other Loan Document executed in connection therewith; and
(e) Payment and performance of all future advances and other obligations that the then record
owner of all or part of the Subject Property may agree to pay and/or perform (whether as principal,
surety or guarantor) for the benefit of Mortgagee, when such future advance or obligation is
evidenced by a writing which recites that it is secured by this Mortgage; and
(f) All amendments, restatements, modifications, extensions and renewals of any of the
obligations secured hereby, however evidenced, including, without limitation: (i) modifications of
the required principal payment dates or interest payment dates or both, as the case may be,
deferring or accelerating payment dates wholly or partly; or (ii) amendments, restatements,
modifications, extensions or renewals at a different rate of interest whether or not in the case of
a note, the amendment, restatement, modification, extension or renewal is evidenced by a new or
additional promissory note or notes.
2.2 OBLIGATIONS. The term “obligations” is used herein in its broadest and most
comprehensive sense and shall be deemed to include, without limitation, all interest and charges,
prepayment charges (if any), late charges and loan fees at any time accruing or assessed on any of
the Secured Obligations, including, without limitation, any interest or other payment obligations
that would have accrued on the Secured Obligations but for the application of the United States
Bankruptcy Code.
2.3 INCORPORATION. All terms of the Secured Obligations and the documents evidencing such obligations are
incorporated herein by this reference. All persons who may have or acquire an interest in the
Subject Property shall be deemed to have notice of the terms of the Secured Obligations and to have
notice, if provided therein, that: (a) the Note or the Credit Agreement may permit borrowing,
repayment and re-borrowing so that repayments shall not reduce the amounts of the Secured
Obligations; and (b) the rate of interest on one or more Secured Obligations may vary from time to
time.
ARTICLE 3. ASSIGNMENT OF LEASES AND RENTS
3.1 ASSIGNMENT. Mortgagor hereby irrevocably assigns to Mortgagee all of Mortgagor’s
right, title and interest in, to and under: (a) all leases of the Subject Property or any
3
portion
thereof, and all other agreements of any kind relating to the use or occupancy of the Subject
Property or any portion thereof, whether now existing or entered into after the date hereof
(“Leases”); and (b) the rents, revenue, income, issues, deposits and profits of the Subject
Property, including, without limitation, all amounts payable and all rights and benefits accruing
to Mortgagor under the Leases (“Payments”). The term “Leases” shall also include all guarantees of
and security for the lessees’ performance thereunder, and all amendments, extensions, renewals or
modifications thereto which are permitted hereunder. This is a present and absolute assignment,
not an assignment for security purposes only, and Mortgagee’s right to the Leases and Payments is
not contingent upon, and may be exercised without possession of, the Subject Property.
3.2 GRANT OF LICENSE. Mortgagee confers upon Mortgagor a license (“License”) to
collect and retain the Payments as they become due and payable, until the occurrence of a Default
(as hereinafter defined). Upon a Default, the License shall be automatically revoked and Mortgagee
may collect and apply the Payments pursuant to Section 6.4 without notice and without taking
possession of the Subject Property. Mortgagor hereby irrevocably authorizes and directs the
lessees under the Leases to rely upon and comply with any notice or demand by Mortgagee for the
payment to Mortgagee of any rental or other sums which may at any time become due under the Leases,
or for the performance of any of the lessees’ undertakings under the Leases, and the lessees shall
have no right or duty to inquire as to whether any Default has actually occurred or is then
existing hereunder. Mortgagor hereby relieves the lessees from any liability to Mortgagor by
reason of relying upon and complying with any such notice or demand by Mortgagee.
3.3 EFFECT OF ASSIGNMENT. The foregoing irrevocable assignment shall not cause
Mortgagee to be: (a) a mortgagee in possession; (b) responsible or liable for the control, care,
management or repair of the Subject Property or for performing any of the terms, agreements,
undertakings, obligations, representations, warranties, covenants and conditions of the Leases; or
(c) responsible or liable for any waste committed on the Subject Property by the lessees under any
of the Leases or any other parties; for any dangerous or defective condition of the Subject
Property; or for any negligence in the management, upkeep, repair or control of the Subject
Property resulting in loss
or injury or death to any lessee, licensee, employee, invitee or other person. Mortgagee
shall not directly or indirectly be liable to Mortgagor or any other person as a consequence of:
(i) the exercise or failure to exercise by Mortgagee, or any of its employees, agents, contractors
or subcontractors, any of the rights, remedies or powers granted to Mortgagee hereunder; or (ii)
the failure or refusal of Mortgagee to perform or discharge any obligation, duty or liability of
Mortgagor arising under the Leases.
3.4 REPRESENTATIONS AND WARRANTIES. Mortgagor represents and warrants that: (a) the
Schedule of Leases attached hereto as Schedule 1 is, as of the date hereof, a true, accurate and
complete list of all Leases; (b) all existing Leases are in full force and effect and are
enforceable in accordance with their respective terms, and no breach or default, or event which
would constitute a breach or default after notice or the passage of time, or both, exists under any
existing Leases on the part of any party; (c) no rent or other payment under any existing Lease has
been paid by any lessee for more than one (1) month in advance; and (d) none of the lessor’s
interests under any of the Leases has been transferred or assigned.
4
3.5 COVENANTS. Mortgagor covenants and agrees at Mortgagor’s sole cost and expense
to: (a) perform the obligations of lessor contained in the Leases and enforce by all available
remedies performance by the lessees of the obligations of the lessees contained in the Leases; (b)
give Mortgagee prompt written notice of any default which occurs with respect to any of the Leases,
whether the default be that of the lessee or of the lessor; (c) exercise Mortgagor’s best efforts
to keep all portions of the Subject Property that are capable of being leased at all times at
rentals not less than the fair market rental value; (d) deliver to Mortgagee fully executed,
counterpart original(s) of each and every Lease if requested to do so; and (e) execute and record
such additional assignments of any Lease or specific subordinations (or subordination, attornment
and non-disturbance agreements executed by the lessor and lessee) of any Lease to the Mortgage, in
form and substance acceptable to Mortgagee, as Mortgagee may request. Mortgagor shall not, without
Mortgagee’s prior written consent or as otherwise permitted by any provision of the Credit
Agreement: (i) enter into any Leases after the date thereof; (ii) execute any other assignment
relating to any of the Leases; (iii) discount any rent or other sums due under the Leases or
collect the same in advance, other than to collect rentals one (1) month in advance of the time
when it becomes due; (iv) terminate, modify or amend any of the terms of the Leases or in any
manner release or discharge the lessees from any obligations thereunder; (v) consent to any
assignment or subletting by any lessee; or (vi) subordinate or agree to subordinate any of the
Leases to any other Mortgage or encumbrance. Any such attempted action in violation of the
provisions of this Section 3.5 shall be null and void. Without in any way limiting the requirement
of Mortgagee’s consent hereunder, any sums received by Mortgagor in consideration of any
termination (or the release or discharge of any lessee) modification or amendment of any Lease
shall be applied to reduce the outstanding Secured Obligations and any such sums received by
Mortgagor shall be held in trust by Mortgagor for such purpose.
3.6 ESTOPPEL CERTIFICATES. Within thirty (30) days after written request by Mortgagee, Mortgagor shall deliver to
Mortgagee and to any party designated by Mortgagee estoppel certificates executed by Mortgagor and
by each of the lessees, in recordable form, certifying (if such be the case): (a) that the
foregoing assignment and the Leases are in full force and effect; (b) the date of each lessee’s
most recent payment of rent; (c) that there are no defenses or offsets outstanding, or stating
those claimed by Mortgagor or lessees under the foregoing assignment or the Leases, as the case may
be; and (d) any other information reasonably requested by Mortgagee.
ARTICLE 4. SECURITY AGREEMENT AND FIXTURE FILING
4.1 SECURITY INTEREST. Mortgagor hereby grants and assigns to Mortgagee as of the
“Closing Date” (defined in the Credit Agreement) a security interest, to secure payment and
performance of all of the Secured Obligations, in all of the following described personal property
in which Mortgagor now or at any time hereafter has any interest (collectively, the “Collateral”):
(a) All goods, building and other materials, supplies, inventory, work in process, equipment,
machinery, fixtures, furniture, furnishings, signs and other personal property and embedded
software included therein and supporting information, wherever situated, which are or are to be
incorporated into, used in connection with, or appropriated for use on (i) the real
5
property
described on Exhibit A attached hereto and incorporated by reference herein or (ii) any
existing or future improvements on the real property (which real property and improvements are
collectively referred to herein as the “Subject Property”); together with all rents and security
deposits derived from the Subject Property; all inventory, accounts, cash receipts, deposit
accounts, accounts receivable, contract rights, licenses, agreements, general intangibles, payment
intangibles, software, chattel paper (whether electronic or tangible), instruments, documents,
promissory notes, drafts, letters of credit, letter of credit rights, supporting obligations,
insurance policies, insurance and condemnation awards and proceeds, proceeds of the sale of
promissory notes, any other rights to the payment of money, trade names, trademarks and service
marks arising from or related to the ownership, management, leasing, operation, sale or disposition
of the Subject Property or any business now or hereafter conducted thereon by Mortgagor; all
development rights and credits, and any and all permits, consents, approvals, licenses,
authorizations and other rights granted by, given by or obtained from, any governmental entity with
respect to the Subject Property; all water and water rights, ▇▇▇▇▇ and well rights, canals and
canal rights, ditches and ditch rights, springs and spring rights, and reservoirs and reservoir
rights appurtenant to or associated with the Subject Property, whether decreed or undecreed,
tributary, non-tributary or not non-tributary, surface or underground or appropriated or
unappropriated, and all shares of stock in water, ditch, lateral and canal companies, well permits
and all other evidences of any of such rights; all deposits or other security now or hereafter made
with or given to utility companies by Mortgagor with respect to the Subject Property; all advance
payments of insurance premiums made by Mortgagor with respect to the Subject Property; all plans,
drawings and specifications relating to the Subject Property; all loan funds held by Mortgagee,
whether or not disbursed; all funds deposited with Mortgagee pursuant to any loan agreement; all
reserves, deferred payments, deposits, accounts, refunds, cost savings and payments of any kind
related to the Subject Property or any portion thereof; together with all
replacements and proceeds of, and additions and accessions to, any of the foregoing; together
with all books, records and files relating to any of the foregoing.
(b) As to all of the above described personal property which is or which hereafter becomes a
“fixture” under applicable law, this Mortgage constitutes a fixture filing under the Arkansas
Uniform Commercial Code, as amended or recodified from time to time (“UCC”).
4.2 REPRESENTATIONS AND WARRANTIES. Mortgagor represents and warrants that: (a)
Mortgagor has, or will have, good title to the Collateral; (b) Mortgagor has not previously
assigned or encumbered the Collateral, and no financing statement covering any of the Collateral
has been delivered to any other person or entity; (c) Mortgagor’s principal place of business is
located at the address shown in Section 7.10; and (d) Mortgagor’s legal name is exactly as set
forth on the first page of this Mortgage and all of Mortgagor’s organizational documents or
agreements delivered to Mortgagee are complete and accurate in every respect.
4.3 COVENANTS. Mortgagor agrees: (a) to execute and deliver such documents as
Mortgagee deems necessary to create, perfect and continue the security interests contemplated
hereby; (b) not to change its name, and as applicable, its chief executive office, its principal
residence or the jurisdiction in which it is organized and/or registered without giving Mortgagee
prior written notice thereof; (c) to cooperate with Mortgagee in perfecting all security interests
granted herein and in obtaining such agreements from third parties as Mortgagee deems
6
necessary,
proper or convenient in connection with the preservation, perfection or enforcement of any of its
rights hereunder; and (d) that Mortgagee is authorized to file financing statements in the name of
Mortgagor to perfect Mortgagee’s security interest in Collateral.
4.4 RIGHTS OF MORTGAGEE. In addition to Mortgagee’s rights as a “Secured Party” under
the UCC, Mortgagee may, but shall not be obligated to, at any time without notice and at the
expense of Mortgagor: (a) give notice to any person of Mortgagee’s rights hereunder and enforce
such rights at law or in equity; (b) insure, protect, defend and preserve the Collateral or any
rights or interests of Mortgagee therein; (c) inspect the Collateral; and (d) endorse, collect and
receive any right to payment of money owing to Mortgagor under or from the Collateral.
Notwithstanding the above, in no event shall Mortgagee be deemed to have accepted any property
other than cash in satisfaction of any obligation of Mortgagor to Mortgagee unless Mortgagee shall
make an express written election of said remedy under UCC § 9-620, or other applicable law.
4.5 RIGHTS OF MORTGAGEE ON DEFAULT. Upon the occurrence of a Default (hereinafter
defined) under this Mortgage, then in addition to all of Mortgagee’s rights as a “Secured Party”
under the UCC or otherwise at law:
(a) Mortgagee may (i) upon written notice, require Mortgagor to assemble any or all of the
Collateral and make it available to Mortgagee at a place designated by Mortgagee; (ii) without
prior notice, enter upon the Subject Property or other place where any of the Collateral may be
located and take possession of, collect, sell, lease, license and dispose of any or all of the
Collateral, and store the same at locations acceptable to Mortgagee at Mortgagor’s expense; (iii)
sell, assign and deliver at any place or in any lawful manner all or any part of the Collateral and
bid and become the purchaser at any such sales;
(b) Mortgagee may, for the account of Mortgagor and at Mortgagor’s expense: (i) operate, use,
consume, sell, lease, license or dispose of the Collateral as Mortgagee deems appropriate for the
purpose of performing any or all of the Secured Obligations; (ii) enter into any agreement,
compromise, or settlement, including insurance claims, which Mortgagee may deem desirable or proper
with respect to any of the Collateral; and (iii) endorse and deliver evidences of title for, and
receive, enforce and collect by legal action or otherwise, all indebtedness and obligations now or
hereafter owing to Mortgagor in connection with or on account of any or all of the Collateral; and
(c) In disposing of Collateral hereunder, Mortgagee may disclaim all warranties of title,
possession, quiet enjoyment and the like. Any proceeds of any disposition of any Collateral may be
applied by Mortgagee to the payment of expenses incurred by Mortgagee in connection with the
foregoing, including reasonable attorneys’ fees, and the balance of such proceeds may be applied by
Mortgagee toward the payment of the Secured Obligations in such order of application as Mortgagee
may from time to time elect.
(d) Notwithstanding any other provision hereof, Mortgagee shall not be deemed to have accepted
any property other than cash in satisfaction of any obligation of Mortgagor to Mortgagee unless
Mortgagor shall make an express written election of said remedy
7
under UCC § 9-620, or other applicable law. Mortgagor agrees that Mortgagee shall have no obligation to process or prepare any
Collateral for sale or other disposition.
4.6 POWER OF ATTORNEY. Mortgagor hereby irrevocably appoints Mortgagee as Mortgagor’s
attorney-in-fact (such agency being coupled with an interest), and as such attorney-in-fact
Mortgagee may, without the obligation to do so, in Mortgagee’s name, or in the name of Mortgagor,
prepare, execute and file or record financing statements, continuation statements, applications for
registration and like papers necessary to create, perfect or preserve any of Mortgagee’s security
interests and rights in or to any of the Collateral, and, upon a Default hereunder, take any other
action required of Mortgagor; provided, however, that Mortgagee as such attorney-in-fact shall be
accountable only for such funds as are actually received by Mortgagee.
4.7 POSSESSION AND USE OF COLLATERAL. Except as otherwise provided in this Section or
the other Loan Documents (as defined in the Credit Agreement), so long as no Default exists under
this Mortgage or any of the Loan Documents, Mortgagor may possess, use, move, transfer or dispose
of any of the Collateral in the ordinary course of Mortgagor’s business and in accordance with the
Credit Agreement.
ARTICLE 5. RIGHTS AND DUTIES OF THE PARTIES
5.1 TITLE. Mortgagor represents and warrants that, except as disclosed to Mortgagee
in a writing which refers to this warranty, Mortgagor lawfully holds and possesses fee simple title
to the Subject Property without limitation on the right to encumber, and that this Mortgage is a
first and prior lien on the Subject Property.
5.2 TAXES AND ASSESSMENTS. Subject to Mortgagor’s rights to contest payment of taxes
as may be provided in the Credit Agreement, Mortgagor shall pay prior to delinquency all taxes,
assessments, levies and charges imposed by any public or quasi-public authority or utility company
which are or which may become a lien upon or cause a loss in value of the Subject Property or any
interest therein. Mortgagor shall also pay prior to delinquency all taxes, assessments, levies and
charges imposed by any public authority upon Mortgagee by reason of its interest in any Secured
Obligation or in the Subject Property, or by reason of any payment made to Mortgagee pursuant to
any Secured Obligation; provided, however, Mortgagor shall have no obligation to pay taxes which
may be imposed from time to time upon Mortgagee and which are measured by and imposed upon
Mortgagee’s net income.
5.3 TAX AND INSURANCE IMPOUNDS. At any time following the occurrence of a Default, at
Mortgagee’s option and upon its demand, Mortgagor, shall, until all Secured Obligations have been
paid in full, pay to Mortgagee monthly, annually or as otherwise directed by Mortgagee an amount
estimated by Mortgagee to be equal to: (a) all taxes, assessments, levies and charges imposed by
any public or quasi-public authority or utility company which are or may become a lien upon the
Subject Property or Collateral and will become due for the tax year during which such payment is so
directed; and (b) premiums for fire, hazard and insurance required or requested pursuant to the
Loan Documents when same are next due. If Mortgagee determines that any amounts paid by Mortgagor
are insufficient for the payment in full of such taxes, assessments, levies, charges and/or
insurance premiums, Mortgagee shall notify
8
Mortgagor of the increased amounts required to pay all
amounts when due, whereupon Mortgagor shall pay to Mortgagee within thirty (30) days thereafter the
additional amount as stated in Mortgagee’s notice. All sums so paid shall not bear interest,
except to the extent and in any minimum amount required by law; and Mortgagee shall, unless
Mortgagor is otherwise in Default hereunder or under any Loan Document, apply said funds to the
payment of, or at the sole option of Mortgagee release said funds to Mortgagor for the application
to and payment of, such sums, taxes, assessments, levies, charges, and insurance premiums. Upon
Default by Mortgagor hereunder or under any Secured Obligation, Mortgagee may apply all or any part
of said sums to any Secured Obligation and/or to cure such Default, in which event Mortgagor shall
be required to restore all amounts so applied, as well as to cure any other events or conditions of
Default not cured by such application. Upon assignment of this Mortgage, Mortgagee shall have the
right to assign all amounts collected and in its possession to its assignee whereupon Mortgagee
shall be released from all liability with respect thereto. Within ninety-five (95) days following
full repayment of the Secured
Obligations (other than full repayment of the Secured Obligations as a consequence of a
foreclosure or conveyance in lieu of foreclosure of the liens and security interests securing the
Secured Obligations) or at such earlier time as Mortgagee may elect, the balance of all amounts
collected and in Mortgagee’s possession shall be paid to Mortgagor and no other party shall have
any right or claim thereto.
5.4 PERFORMANCE OF SECURED OBLIGATIONS. Mortgagor shall promptly pay and perform each
Secured Obligation when due.
5.5 LIENS, ENCUMBRANCES AND CHARGES. Mortgagor shall immediately discharge any lien
not approved by Mortgagee in writing that has or may attain priority over this Mortgage. Subject
to the provisions of the Credit Agreement regarding mechanics’ liens, Mortgagor shall pay when due
all obligations secured by or which may become liens and encumbrances which shall now or hereafter
encumber or appear to encumber all or any part of the Subject Property or Collateral, or any
interest therein, whether senior or subordinate hereto.
5.6 DAMAGES; INSURANCE AND CONDEMNATION PROCEEDS.
(a) The following (whether now existing or hereafter arising) are all absolutely and
irrevocably assigned by Mortgagor to Mortgagee and, at the request of Mortgagee, shall be paid
directly to Mortgagee: (i) all awards of damages and all other compensation payable directly or
indirectly by reason of a condemnation or proposed condemnation for public or private use affecting
all or any part of, or any interest in, the Subject Property or Collateral; (ii) all other claims
and awards for damages to, or decrease in value of, all or any part of, or any interest in, the
Subject Property or Collateral; (iii) all proceeds of any insurance policies (whether or not
expressly required by Mortgagee to be maintained by Mortgagor, including, but not limited to,
earthquake insurance and terrorism insurance, if any) payable by reason of loss sustained to all or
any part of the Subject Property or Collateral; and (iv) all interest which may accrue on any of
the foregoing. Subject to applicable law, and without regard to any requirement contained in
Section 5.7(d), Mortgagee may at its discretion apply all or any of the proceeds it receives to its
expenses in settling, prosecuting or defending any claim and may apply the balance to the Secured
Obligations in any order acceptable to Mortgagee, and/or Mortgagee may release all or any part of
the proceeds to Mortgagor upon any conditions Mortgagee may impose. Mortgagee may commence, appear
in, defend or prosecute
9
any assigned claim or action and may adjust, compromise, settle and collect
all claims and awards assigned to Mortgagee; provided, however, in no event shall
Mortgagee be responsible for any failure to collect any claim or award, regardless of the cause of
the failure, including, without limitation, any malfeasance or nonfeasance by Mortgagee or its
employees or agents.
(b) At its sole option, Mortgagee may permit insurance or condemnation proceeds held by
Mortgagee to be used for repair or restoration but may condition such application upon reasonable
conditions, including, without limitation: (i) the deposit with Mortgagee of such additional funds
which Mortgagee determines are needed to pay all costs of
the repair or restoration, (including, without limitation, taxes, financing charges, insurance
and rent during the repair period); (ii) the establishment of an arrangement for lien releases and
disbursement of funds acceptable to Mortgagee; (iii) the delivery to Mortgagee of plans and
specifications for the work, a contract for the work signed by a contractor acceptable to
Mortgagee, a cost breakdown for the work and a payment and performance bond for the work, all of
which shall be acceptable to Mortgagee; and (iv) the delivery to Mortgagee of evidence acceptable
to Mortgagee (aa) that after completion of the work the income from the Subject Property will be
sufficient to pay all expenses and debt service for the Subject Property; (bb) of the continuation
of Leases acceptable to and required by Mortgagee; (cc) that upon completion of the work, the size,
capacity and total value of the Subject Property will be at least as great as it was before the
damage or condemnation occurred; (dd) that there has been no material adverse change in the
financial condition or credit of Mortgagor since the date of this Mortgage; and (ee) of the
satisfaction of any additional conditions that Mortgagee may reasonably establish to protect its
security. Mortgagor hereby acknowledges that the conditions described above are reasonable, and,
if such conditions have not been satisfied within thirty (30) days of receipt by Mortgagee of such
insurance or condemnation proceeds, then Mortgagee may apply such insurance or condemnation
proceeds to pay the Secured Obligations in such order and amounts as Mortgagee in its sole
discretion may choose.
5.7 INSURANCE, MAINTENANCE AND PRESERVATION OF THE SUBJECT PROPERTY. Subject to the
provisions of the Credit Agreement, while any obligation of Mortgagor or any guarantor under any
Loan Document remains outstanding, Mortgagor covenants:
(a) to maintain at Mortgagor’s sole expense, with licensed insurers approved by Mortgagee, the
following policies of insurance in form and substance satisfactory to Mortgagee, with Mortgagee
named as first mortgagee on all such policies: (i) title insurance (including a Title Policy,
together with any endorsements which Mortgagee may require, insuring Mortgagee in the principal
amount of the Notes), (ii) property insurance (including, without limitation, such endorsements as
Mortgagee may require, insuring Mortgagee against damage to the Subject Property in an amount
acceptable to Mortgagee, with Mortgagee named on the policy under a Lender’s Loss Payable
Endorsement), (iii) flood hazard insurance, as required by applicable governmental regulations, or
as deemed necessary by Mortgagee, (iv) liability insurance (including a policy of comprehensive
general liability insurance) with limits as required by Mortgagee, insuring against liability for
injury and/or death to any person and/or damage to any property occurring on the Subject Property
and/or from any cause whatsoever. Mortgagor shall provide to Mortgagee the originals of all
required insurance policies, or other evidence of insurance acceptable to Mortgagee. All insurance
policies shall provide that the
10
insurance shall not be cancelable or materially changed without
thirty (30) days’ prior written notice to Mortgagee. Mortgagee shall be named under a Lender’s
Loss Payable Endorsement (form #438BFU or equivalent) on all insurance policies which Mortgagor
actually maintains with respect to the Property. Mortgagor shall provide to Mortgagee evidence of
any other hazard insurance Mortgagee may deem necessary at any time during the loan secured by this
Mortgage;
(b) to keep the Subject Property and Collateral in good condition and repair;
(c) not to remove or demolish the Subject Property or Collateral or any part thereof, not to
alter, restore or add to the Subject Property or Collateral (except in the ordinary course of
business) and not to initiate or acquiesce in any change in any zoning or other land classification
which affects the Subject Property without the Mortgagee’s prior written consent;
(d) in the event of any damage or other casualty relating to the Subject Property or the
Collateral and so long as Mortgagee has released any insurance claim proceeds relating thereto in
accordance with Section 5.6 hereof, to complete or restore promptly and in good and workmanlike
manner the Subject Property and Collateral, or any part thereof which may be damaged or destroyed;
(e) to comply with all laws, ordinances, regulations and standards, and all covenants,
conditions, restrictions and equitable servitudes, whether public or private, of every kind and
character which affect the Subject Property or Collateral and pertain to acts committed or
conditions existing thereon, including, without limitation, any work, alteration, improvement or
demolition mandated by such laws, covenants or requirements;
(f) not to commit or permit waste of the Subject Property or Collateral; and
(g) to do all other acts which from the character or use of the Subject Property or Collateral
may be reasonably necessary to maintain and preserve its value.
5.8 INTENTIONALLY OMITTED.
5.9 APPROVAL OF LEASES. All leases of all or any part of the Subject Property shall:
(a) be upon terms and with tenants approved by Mortgagee prior to Mortgagor’s execution of any such
lease; and (b) include estoppel, subordination, attornment and mortgagee protection provisions
satisfactory to Mortgagee. All standard lease forms and any material deviation from any form,
shall be approved by Mortgagee prior to execution of any lease using such form.
5.10 DEFENSE AND NOTICE OF LOSSES, CLAIMS AND ACTIONS. At Mortgagor’s sole expense,
Mortgagor shall protect, preserve and defend the Subject Property and Collateral and title to and
right of possession of the Subject Property and Collateral, the security hereof and the rights and
powers of Mortgagee hereunder against all adverse claims. Mortgagor shall give Mortgagee prompt
notice in writing of the assertion of any claim, of the filing of any action or proceeding, of the
occurrence of any damage to the Subject Property or Collateral and of any condemnation offer or
action.
5.11 CERTAIN POWERS OF MORTGAGEE.
11
(a) From time to time and without affecting the personal liability of any person for payment
of any indebtedness or performance of any obligations secured hereby, Mortgagee may, without
liability therefor and without notice: (a) release from the lien of this Mortgage all or any part
of the Subject Property; (b) consent to the making of any map or plat thereof; and (c) join in any
grant of easement thereon, any declaration of covenants and restrictions, or any extension
agreement or any agreement subordinating the lien or charge of this Mortgage.
(b) Except as may be required by applicable law, Mortgagee may from time to time apply to any
court of competent jurisdiction for aid and direction in the enforcement of the rights and remedies
available hereunder, and may obtain orders or decrees directing or confirming or approving the
enforcement of said remedies.
5.12 COMPENSATION; EXCULPATION; INDEMNIFICATION.
(a) Mortgagor shall pay to Mortgagee reasonable compensation for services rendered concerning
this Mortgage, including without limit any statement of amounts owing under any Secured Obligation.
Mortgagee shall not directly or indirectly be liable to Mortgagor or any other person as a
consequence of (i) the exercise of the rights, remedies or powers granted to Mortgagee in this
Mortgage; (ii) the failure or refusal of Mortgagee to perform or discharge any obligation or
liability of Mortgagor under any agreement related to the Subject Property or Collateral or under
this Mortgage; or (iii) any loss sustained by Mortgagor or any third party resulting from
Mortgagee’s failure (whether by malfeasance, nonfeasance or refusal to act) to lease the Subject
Property after a Default (hereinafter defined) or from any other act or omission (regardless of
whether same constitutes negligence) of Mortgagee in managing the Subject Property after a Default
unless the loss is caused by the gross negligence or willful misconduct of Mortgagee and no such
liability shall be asserted against or imposed upon Mortgagee, and all such liability is hereby
expressly waived and released by Mortgagor.
(b) MORTGAGOR INDEMNIFIES MORTGAGEE AGAINST, AND HOLDS MORTGAGEE HARMLESS FROM, ALL LOSSES,
DAMAGES, LIABILITIES, CLAIMS, CAUSES OF ACTION, JUDGMENTS, COURT COSTS, ATTORNEYS’ FEES AND OTHER
LEGAL EXPENSES, COST OF EVIDENCE OF TITLE, COST OF EVIDENCE OF VALUE, AND OTHER EXPENSES WHICH IT
MAY SUFFER OR INCUR: (i) BY REASON OF THIS MORTGAGE; (ii) BY REASON OF THE EXECUTION OF THIS
MORTGAGE OR IN PERFORMANCE OF ANY ACT REQUIRED OR PERMITTED HEREUNDER OR BY LAW; (iii) AS A RESULT
OF ANY FAILURE OF MORTGAGOR TO PERFORM MORTGAGOR’S OBLIGATIONS; OR (iv) BY REASON OF ANY ALLEGED
OBLIGATION OR UNDERTAKING ON MORTGAGEE’S PART TO PERFORM OR DISCHARGE ANY OF THE REPRESENTATIONS,
WARRANTIES, CONDITIONS, COVENANTS OR OTHER OBLIGATIONS CONTAINED IN ANY OTHER DOCUMENT RELATED TO
THE SUBJECT PROPERTY. THE ABOVE OBLIGATION OF MORTGAGOR TO INDEMNIFY AND HOLD HARMLESS MORTGAGEE
SHALL SURVIVE THE
RELEASE AND CANCELLATION OF THE SECURED OBLIGATIONS AND THE RELEASE OR PARTIAL RELEASE OF THIS
MORTGAGE.
12
(c) Mortgagor shall pay all amounts and indebtedness arising under this Section 5.12
immediately upon demand by Mortgagee together with interest thereon from the date the indebtedness
arises at the rate of interest then applicable to the principal balance of the Notes as specified
therein.
5.13 INTENTIONALLY OMITTED.
5.14 DUE ON SALE OR ENCUMBRANCE. If the Subject Property or any interest therein
shall be sold, transferred (including, without limitation, through sale or transfer of a majority
or controlling interest of the corporate stock or general partnership interests or limited
liability company interests of Mortgagor), mortgaged, assigned, further encumbered or leased,
whether directly or indirectly, whether voluntarily, involuntarily or by operation of law, without
the prior written consent of Mortgagee, THEN Mortgagee, in its sole discretion, may declare all
Secured Obligations immediately due and payable.
5.15 RELEASES, EXTENSIONS, MODIFICATIONS AND ADDITIONAL SECURITY. Without notice to
or the consent, approval or agreement of any persons or entities having any interest at any time in
the Subject Property and Collateral or in any manner obligated under the Secured Obligations
(“Interested Parties”), Mortgagee may, from time to time, release any person or entity from
liability for the payment or performance of any Secured Obligation, take any action or make any
agreement extending the maturity or otherwise altering the terms or increasing the amount of any
Secured Obligation, or accept additional security or release all or a portion of the Subject
Property and Collateral and other security for the Secured Obligations. None of the foregoing
actions shall release or reduce the personal liability of any of said Interested Parties, or
release or impair the priority of the lien of and security interests created by this Mortgage upon
the Subject Property and Collateral.
5.16 INTENTIONALLY OMITTED.
5.17 SUBROGATION. Mortgagee shall be subrogated to the lien of all encumbrances,
whether released of record or not, paid in whole or in part by Mortgagee pursuant to the Loan
Documents or by the proceeds of any loan secured by this Mortgage.
5.18 RIGHT OF INSPECTION. Mortgagee, its agents and employees, may enter the Subject Property at any reasonable time
for the purpose of inspecting the Subject Property and Collateral and ascertaining Mortgagor’s
compliance with the terms hereof.
5.19 INTENTIONALLY OMITTED.
5.20 HAZARDOUS MATERIALS. Mortgagor agrees as follows:
(a) No Hazardous Activities. Mortgagor shall not cause or permit the Subject Property
to be used as a site for the use, generation, manufacture, storage, treatment, release, discharge,
disposal, transportation or presence of any “hazardous substances,” “hazardous wastes,” “hazardous
materials,” “toxic substances,” “wastes,” “regulated substances,” “industrial solid wastes,” or
“pollutants” under the Hazardous Materials Laws, as described below, and/or other applicable
environmental laws, ordinances and regulations (collectively, the “Hazardous Materials”).
“Hazardous Materials” shall not include commercially reasonable
13
amounts of such materials used in
the ordinary course of operation of the Property which are used and stored in accordance with all
applicable environmental laws, ordinances and regulations. “Hazardous Materials Laws” are defined
as laws, ordinances and regulations relating to Hazardous Materials, including, without limitation:
the Clean Air Act, as amended, 42 U.S.C. Section 7401 et seq.; the Federal Water Pollution
Control Act, as amended, 33 U.S.C. Section 1251 et seq.; the Resource Conservation and
Recovery Act of 1976, as amended, 42 U.S.C. Section 6901 et seq.; the Comprehensive
Environment Response, Compensation and Liability Act of 1980, as amended (including the Superfund
Amendments and Reauthorization Act of 1986, “CERCLA”), 42 U.S.C. Section 9601 et seq.; the
Toxic Substances Control Act, as amended, 15 U.S.C. Section 2601 et seq.; the Occupational
Safety and Health Act, as amended, 29 U.S.C. Section 651, the Emergency Planning and Community
Right-to-Know Act of 1986, 42 U.S.C. Section 11001 et seq.; the Mine Safety and Health Act
of 1977, as amended, 30 U.S.C. Section 801 et seq.; the Safe Drinking Water Act, as
amended, 42 U.S.C. Section 300f et seq.; and all comparable state and local laws, laws of
other jurisdictions or orders and regulations.
(b) Compliance. Mortgagor shall comply and cause the Subject Property to comply with
all Hazardous Materials Laws.
(c) Notices. Mortgagor shall immediately notify Mortgagee in writing of: (i) the
discovery of any Hazardous Materials on, under or about the Property; (ii) any knowledge by
Mortgagor that the Property does not comply with any Hazardous Materials Laws; and (iii) any claims
or actions (“Hazardous Materials Claims”) pending or threatened against Mortgagor or the Property
by any
governmental entity or agency or by any other person or entity relating to Hazardous Materials
or pursuant to the Hazardous Materials Laws.
(d) Remedial Action. In response to the presence of any Hazardous Materials on, under
or about the Property, Mortgagor shall immediately take, at Mortgagor’s sole expense, all remedial
action required by any Hazardous Materials Laws or any judgment, consent decree, settlement or
compromise in respect to any Hazardous Materials Claims.
5.21 HAZARDOUS MATERIALS INDEMNITY. MORTGAGOR HEREBY AGREES TO DEFEND, INDEMNIFY AND
HOLD HARMLESS MORTGAGEE, ITS DIRECTORS, OFFICERS, EMPLOYEES, AGENTS, SUCCESSORS AND ASSIGNS FROM
AND AGAINST ANY AND ALL LOSSES, DAMAGES, LIABILITIES, CLAIMS, ACTIONS, JUDGMENTS, COURT COSTS AND
LEGAL OR OTHER EXPENSES (INCLUDING, WITHOUT LIMITATION, ATTORNEYS’ FEES AND EXPENSES) WHICH
MORTGAGEE MAY INCUR AS A DIRECT OR INDIRECT CONSEQUENCE OF THE USE, GENERATION, MANUFACTURE,
STORAGE, DISPOSAL, THREATENED DISPOSAL, TRANSPORTATION OR PRESENCE OF HAZARDOUS MATERIALS IN, ON,
UNDER OR ABOUT THE PROPERTY. MORTGAGOR SHALL IMMEDIATELY PAY TO MORTGAGEE UPON DEMAND ANY AMOUNTS
OWING UNDER THIS INDEMNITY, TOGETHER WITH INTEREST FROM THE DATE THE INDEBTEDNESS ARISES UNTIL PAID
AT THE RATE OF INTEREST APPLICABLE TO THE PRINCIPAL BALANCE OF THE NOTES. MORTGAGOR’S DUTY AND
OBLIGATIONS TO DEFEND, INDEMNIFY AND HOLD HARMLESS MORTGAGEE SHALL SURVIVE THE CANCELLATION OF THE
NOTES AND THE RELEASE, OR PARTIAL RELEASE OF THIS MORTGAGE.
14
5.22 LEGAL EFFECT OF SECTION. Mortgagor and Mortgagee agree that Mortgagor’s duty to
indemnify Mortgagee hereunder shall survive: (a) any judicial or non-judicial foreclosure under
this Mortgage, or transfer of the Subject Property in lieu thereof, (b) the release or cancellation
of this Mortgage; and (c) the satisfaction of all of Mortgagor’s obligation under the Loan
Documents.
ARTICLE 6. DEFAULT PROVISIONS
6.1 DEFAULT. For all purposes hereof, the term “Default” shall mean (a) at
Mortgagee’s option, the failure of Mortgagor to make any payment of principal or interest on the
Notes or to pay any other amount due hereunder or under the Notes when the same is due and payable,
whether at maturity, by acceleration or otherwise; (b) the failure of Mortgagor to perform any
non-monetary obligation hereunder, or the failure to be true of any representation or warranty of
Mortgagor contained herein and the continuance of such failure for ten (10) days after notice, or
within any longer grace period, if any, allowed in the Credit Agreement for such failure, (c) the
condemnation, seizure or appropriation of, or occurrence of an uninsured casualty with respect
to any material portion of the Subject Property; (d) the sequestration or attachment of, or any
levy or execution upon any of the Subject Property, which sequestration, attachment, levy or
execution is not released, expunged or dismissed prior to the earlier of thirty (30) days or the
sale of the assets affected thereby; (e) the failure at any time of this Mortgage to be a valid
first lien upon the Subject Property or any portion thereof, other than as a result of any release
of the Mortgage with respect to all or any portion of the Subject Property pursuant to the terms
and conditions of the Credit Agreement; (f) the discovery of any Hazardous Materials, which in
Mortgagee’s sole discretion, have a materially adverse impact on the value of the Subject Property,
in, on or about the Subject Property subsequent to the Closing Date, as defined in the Credit
Agreement; or (g) the existence of any Default as defined in the Credit Agreement.
6.2 RIGHTS AND REMEDIES. At any time after Default, Mortgagee shall have all the
following rights and remedies:
(a) With or without notice, to declare all Secured Obligations immediately due and payable.
(b) With or without notice, and without releasing Mortgagor from any Secured Obligation, and
without becoming a mortgagee in possession, to cure any breach or Default of Mortgagor and, in
connection therewith, to enter upon the Subject Property and do such acts and things as Mortgagee
deems necessary or desirable to protect the security hereof, including, without limitation: (i) to
appear in and defend any action or proceeding purporting to affect the security of this Mortgage or
the rights or powers of Mortgagee under this Mortgage; (ii) to pay, purchase, contest or compromise
any encumbrance, charge, lien or claim of lien which, in the sole judgment of Mortgagee, is or may
be senior in priority to this Mortgage, the judgment of Mortgagee being conclusive as between the
parties hereto; (iii) to obtain insurance; (iv) to pay any premiums or charges with respect to
insurance required to be carried under this Mortgage; or (v) to employ counsel, accountants,
contractors and other appropriate persons.
(c) To commence and maintain an action or actions in any court of competent jurisdiction to
foreclose this instrument as a mortgage or to obtain specific enforcement of the
15
covenants of
Mortgagor hereunder, and Mortgagor agrees that such covenants shall be specifically enforceable by
injunction or any other appropriate equitable remedy and that for the purposes of any suit brought
under this subparagraph, Mortgagor waives the defense of laches and any applicable statute of
limitations.
(d) To the fullest extent permitted by law, to seek non-judicial foreclosure pursuant to Ark.
Code ▇▇▇. Section ▇▇-▇▇-▇▇▇, et seq.
(e) To apply to a court of competent jurisdiction for and obtain appointment of a receiver of
the Subject Property as a matter of strict right and without regard to the adequacy of the security
for the repayment of the Secured Obligations, the existence of a declaration that the Secured
Obligations are immediately due and payable, or the filing of a notice of default, and Mortgagor
hereby consents to such appointment.
(f) To enter upon, possess, manage and operate the Subject Property or any part thereof, to
take and possess all documents, books, records, papers and accounts of Mortgagor or the then owner
of the Subject Property, to make, terminate, enforce or modify Leases of the Subject Property upon
such terms and conditions as Mortgagee deems proper, to make repairs, alterations and improvements
to the Subject Property as necessary, in Mortgagee’s sole judgment, to protect or enhance the
security hereof.
(g) To give such notice of such Default and of its election to cause the Subject Property to
be sold as may be required by law or as may be necessary to cause the Mortgagee to exercise the
power of sale granted herein. As a condition precedent to any such sale, Mortgagee shall give and
record such notice as the law then requires. When the minimum period of time required by law after
such notice has elapsed, Mortgagee, without notice to or demand upon Mortgagor except as required
by law, shall sell the Subject Property at the time and place of sale fixed by it in the notice of
sale, at one or several sales, either as a whole or in separate parcels and in such manner and
order, as deemed advisable by Mortgagee, or by Mortgagor to the extent required by law, at public
auction to the highest bidder for cash, in lawful money of the United States, payable at time of
sale. Except as required by law, neither Mortgagor nor any other person or entity other than
Mortgagee shall have the right to direct the order in which the Subject Property is sold. Subject
to requirements and limits imposed by law, Mortgagee may from time to time postpone sale of all or
any portion of the Subject Property by public announcement at such time and place of sale.
Mortgagee shall deliver to the purchaser at such sale a deed conveying the Subject Property or
portion thereof so sold, but without any covenant or warranty, express or implied. The recitals in
the deed of any matters or facts shall be conclusive proof of the truthfulness thereof. Any
person, including Mortgagor or Mortgagee may purchase at the sale. Mortgagor hereby expressly
waives any right of redemption, including any rights under the Act passed by the Arkansas General
Assembly on May 8, 1899, and all acts amendatory or in replacement thereof or supplemental thereto.
(h) To resort to and realize upon the security hereunder and any other security now or later
held by Mortgagee concurrently or successively and in one or several consolidated or independent
judicial actions or lawfully taken non-judicial proceedings, or both, and to apply the proceeds
received upon the Secured Obligations all in such order and manner as Mortgagee determines in its
sole discretion.
16
(i) Upon sale of the Subject Property at any judicial or non-judicial foreclosure, Mortgagee
may credit bid (as determined by Mortgagee in its sole and absolute discretion) all or any portion
of the Secured Obligations. In determining such credit bid, Mortgagee may, but is not obligated
to, take into account all or any of the following: (i) appraisals of the Subject Property as such
appraisals may be discounted or adjusted by Mortgagee in its sole and absolute underwriting
discretion; (ii) expenses and costs incurred by Mortgagee with respect to the Subject Property
prior to foreclosure; (iii) expenses and costs which Mortgagee anticipates will be incurred with
respect to the Subject Property after foreclosure, but prior to resale, including, without
limitation, costs of structural reports and other due diligence, costs to carry the Subject
Property prior to resale, costs of resale (e.g. commissions, attorneys’ fees, and taxes), costs of
any hazardous materials clean-up and monitoring, costs of deferred maintenance, repair,
refurbishment and retrofit, costs of defending or settling litigation affecting the Subject
Property, and lost opportunity costs (if any), including
the time value of money during any anticipated holding period by Mortgagee; (iv) declining
trends in real property values generally and with respect to properties similar to the Subject
Property; (v) anticipated discounts upon resale of the Subject Property as a distressed or
foreclosed property; (vi) the fact of additional collateral (if any), for the Secured Obligations;
and (vii) such other factors or matters that Mortgagee (in its sole and absolute discretion) deems
appropriate. In regard to the above, Mortgagor acknowledges and agrees that: (w) Mortgagee is not
required to use any or all of the foregoing factors to determine the amount of its credit bid; (x)
this Section does not impose upon Mortgagee any additional obligations that are not imposed by law
at the time the credit bid is made; (y) the amount of Mortgagee’s credit bid need not have any
relation to any loan-to-value ratios specified in the Loan Documents or previously discussed
between Mortgagor and Mortgagee; and (z) Mortgagee’s credit bid may be (at Mortgagee’s sole and
absolute discretion) higher or lower than any appraised value of the Subject Property.
(j) Upon the completion of any foreclosure sale of all or a portion of the Subject Property,
commence an action to recover any of the Secured Obligations that remains unpaid or unsatisfied.
6.3 APPLICATION OF FORECLOSURE SALE PROCEEDS. Except as may be otherwise required by
applicable law, after deducting all costs, fees and expenses including, without limitation, cost of
evidence of title and attorneys’ fees in connection with sale and costs and expenses of sale and of
any judicial proceeding wherein such sale may be made, all proceeds of any foreclosure sale shall
be applied: (a) to payment of all sums expended by Mortgagee under the terms hereof and not then
repaid, with accrued interest at four percent (4%) above the Prime Rate in effect from time to
time; (b) to payment of all other Secured Obligations; and (c) the remainder, if any, to the person
or persons legally entitled thereto. As used herein, the term “Prime Rate” means at any time the
rate of interest most recently announced within ▇▇▇▇▇ Fargo Bank, National Association (“WFB”) at
its principal office, as its Prime Rate, with the understanding that the Prime Rate is one of WFB’s
base rates and serves as the basis upon which effective rates of interest are calculated for those
loans making reference thereto, and is evidenced by the recording thereof after its announcement in
such internal publication or publications as WFB may designate.
6.4 APPLICATION OF OTHER SUMS. All sums received by Mortgagee under Section 6.2 or
Section 3.2, less all costs and expenses incurred by Mortgagee or any receiver
17
under Section 6.2 or
Section 3.2, including, without limitation, attorneys’ fees, shall be applied in payment of the
Secured Obligations in such order as Mortgagee shall determine in its sole discretion; provided,
however, Mortgagee shall have no liability for funds not actually received by Mortgagee.
6.5 NO CURE OR WAIVER. Neither Mortgagee’s nor any receiver’s entry upon and taking
possession of all or any part of the Subject Property and Collateral, nor any collection of rents,
issues, profits, insurance proceeds, condemnation proceeds or damages, other security or proceeds
of other security, or other sums, nor the application of any collected sum to any Secured
Obligation, nor the exercise
or failure to exercise of any other right or remedy by Mortgagee or any receiver shall cure or
waive any breach, Default or notice of default under this Mortgage, or nullify the effect of any
notice of default or sale (unless all Secured Obligations then due have been paid and performed and
Mortgagor has cured all other defaults), or impair the status of the security, or prejudice
Mortgagee in the exercise of any right or remedy, or be construed as an affirmation by Mortgagee of
any tenancy, lease or option or a subordination of the lien of or security interests created by
this Mortgage.
6.6 PAYMENT OF COSTS, EXPENSES AND ATTORNEYS’ FEES. Mortgagor agrees to pay to
Mortgagee immediately and without demand all costs and expenses incurred by Mortgagee pursuant to
Section 6.2 (including, without limitation, court costs and attorneys’ fees, whether incurred in
litigation or not) with interest from the date of expenditure until said sums have been paid at the
rate of interest then applicable to the principal balance of the Notes as specified therein. In
the event of any legal proceedings, court costs and attorneys’ fees shall be set by the court and
not by jury and shall be included in any judgment obtained by Mortgagee.
6.7 POWER TO FILE NOTICES AND CURE DEFAULTS. Mortgagor hereby irrevocably appoints
Mortgagee and its successors and assigns, as its attorney-in-fact, which agency is coupled with an
interest, (a) to execute and/or record any notices of completion, cessation of labor, or any other
notices that Mortgagee deems appropriate to protect Mortgagee’s interest, (b) upon the issuance of
a deed pursuant to the foreclosure of the lien of this Mortgage or the delivery of a deed in lieu
of foreclosure, to execute all instruments of assignment or further assurance with respect to the
Subject Property and Collateral, Leases and Payments in favor of the grantee of any such deed, as
may be necessary or desirable for such purpose, (c) to prepare, execute and file or record
financing statements, continuation statements, applications for registration and like papers
necessary to create, perfect or preserve Mortgagee’s security interests and rights in or to any of
the Subject Property and Collateral, and (d) upon the occurrence of an event, act or omission
which, with notice or passage of time or both, would constitute a Default, Mortgagee may perform
any obligation of Mortgagor hereunder; provided, however, that: (i) Mortgagee as such
attorney-in-fact shall only be accountable for such funds as are actually received by Mortgagee;
and (ii) Mortgagee shall not be liable to Mortgagor or any other person or entity for any failure
to act (whether such failure constitutes negligence) by Mortgagee under this Section.
6.8 REMEDIES CUMULATIVE. All rights and remedies of Mortgagee provided hereunder are
cumulative and are in addition to all rights and remedies provided by applicable law (including
specifically that of foreclosure of this instrument as though it were a mortgage) or in any other
agreements between Mortgagor and Mortgagee. No failure on the part of Mortgagee
18
to exercise any of
its rights hereunder arising upon any Default shall be construed to prejudice its rights upon the
occurrence of any other or subsequent Default. No delay on the part of Mortgagee in exercising any
such rights shall be construed to preclude it from the exercise thereof at any time while that
Default is continuing. Mortgagee may enforce any one or more remedies or rights hereunder
successively
or concurrently. By accepting payment or performance of any of the Secured Obligations after
its due date, Mortgagee shall not thereby waive the agreement contained herein that time is of the
essence, nor shall Mortgagee waive either its right to require prompt payment or performance when
due of the reminder of the Secured Obligations or its right to consider the failure to so pay or
perform a Default.
ARTICLE 7. MISCELLANEOUS PROVISIONS
7.1 ADDITIONAL PROVISIONS. The Loan Documents contain or incorporate by reference the
entire agreement of the parties with respect to matters contemplated herein and supersede all prior
negotiations. The Loan Documents grant further rights to Mortgagee and contain further agreements
and affirmative and negative covenants by Mortgagor which apply to this Mortgage and to the Subject
Property and Collateral and such further rights and agreements are incorporated herein by this
reference.
7.2 MERGER. No merger shall occur as a result of Mortgagee’s acquiring any other
estate in, or any other lien on, the Subject Property unless Mortgagee consents to a merger in
writing.
7.3 OBLIGATIONS OF MORTGAGOR, JOINT AND SEVERAL. If more than one person has executed
this Mortgage as “Mortgagor”, the obligations of all such persons hereunder shall be joint and
several.
7.4 WAIVER OF MARSHALLING RIGHTS. Mortgagor, for itself and for all parties claiming
through or under Mortgagor, and for all parties who may acquire a lien on or interest in the
Subject Property and Collateral, hereby waives all rights to have the Subject Property and
Collateral and/or any other property, which is now or later may be security for any Secured
Obligation (“Other Property”) marshaled upon any foreclosure of the lien of this Mortgage or on a
foreclosure of any other lien or security interest against any security for any of the Secured
Obligations. Mortgagee shall have the right to sell, and any court in which foreclosure
proceedings may be brought shall have the right to order a sale of, the Subject Property and any or
all of the Collateral or Other Property as a whole or in separate parcels, in any order that
Mortgagee may designate.
7.5 RULES OF CONSTRUCTION. When the identity of the parties or other circumstances
make it appropriate the masculine gender includes the feminine and/or neuter, and the singular
number includes the plural. The term “Subject Property” and “Collateral” means all and any part of
the Subject Property and Collateral, respectively, and any interest in the Subject Property and
Collateral, respectively.
7.6 SUCCESSORS IN INTEREST. The terms, covenants, and conditions herein contained shall be binding upon and inure to
the benefit of the heirs, successors and assigns of
19
the parties hereto; provided, however, that
this Section 7.6 does not waive or modify the provisions of Section 5.14.
7.7 EXECUTION IN COUNTERPARTS. To facilitate execution, this document may be executed
in as many counterparts as may be convenient or required. It shall not be necessary that the
signature or acknowledgment of, or on behalf of, each party, or that the signature of all persons
required to bind any party, or the acknowledgment of such party, appear on each counterpart. All
counterparts shall collectively constitute a single document. It shall not be necessary in making
proof of this document to produce or account for more than a single counterpart containing the
respective signatures of, or on behalf of, and the respective acknowledgments of, each of the
parties hereto. Any signature or acknowledgment page to any counterpart may be detached from such
counterpart without impairing the legal effect of the signatures or acknowledgments thereon and
thereafter attached to another counterpart identical thereto except having attached to it
additional signature or acknowledgment pages.
7.8 CHOICE OF LAW. The entire transaction contemplated by this Mortgage and the
Credit Agreement and all terms and provisions of this Mortgage, the Credit Agreement and the other
Loan Documents shall be governed by the laws of the State of California, except for the creation,
perfection and enforcement of certain lien rights and remedies provided herein which must be
governed by the laws of the situs of the Subject Property, that being Arkansas, regarding which
lien rights and remedies Arkansas law shall govern.
7.9 INCORPORATION. Exhibit A and Schedule 1, all as attached, are
incorporated into this Mortgage by this reference.
7.10 NOTICES. All notices, demands or other communications required or permitted to
be given pursuant to the provisions of this Mortgage shall be in writing and shall be considered as
properly given if delivered personally or sent by first class United States Postal Service mail,
postage prepaid, except that notice of Default may be sent by certified mail, return receipt
requested, or by Overnight Express Mail or by overnight commercial courier service, charges
prepaid. Notices so sent shall be effective three (3) days after mailing, if mailed by first class
mail, and otherwise upon receipt at the address set forth below; provided, however, that
non-receipt of any communication as the result of any change of address of which the sending party
was not notified or as the result of a refusal to accept delivery shall be deemed receipt of such
communication. For purposes of notice, the address of the parties shall be:
| Mortgagor: | VIRCO MFG. CORPORATION | |||
| ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇ | ||||
| ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ | ||||
| Attn: ▇▇▇▇▇▇ ▇. Dose, | ||||
| Chief Financial Officer |
20
| Mortgagee: | ▇▇▇▇▇ FARGO BANK, NATIONAL ASSOCIATION | |||
| Commercial Banking Group (AU #2702) | ||||
| ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇ | ||||
| ▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ | ||||
| Attn: Records Management / Team 2 | ||||
| Loan #: 8079119402 | ||||
| With a copy to: | ▇▇▇▇▇ FARGO BANK, NATIONAL ASSOCIATION | |||
| San ▇▇▇▇▇▇▇ Valley Regional Commercial Banking ▇▇▇▇▇▇ | ||||
| ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇ | ||||
| ▇▇▇▇ ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ | ||||
| Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇ | ||||
| With a copy to: | ▇▇▇▇▇ FARGO BANK, NATIONAL ASSOCIATION | |||
| Disbursement and Operations Center | ||||
| ▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇ | ||||
| ▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ | ||||
| Attention: DISBURSEMENT REPRESENTATIVE |
Any party shall have the right to change its address for notice hereunder to any other location
within the continental United States by the giving of thirty (30) days notice to the other party in
the manner set forth hereinabove. Mortgagor shall forward to Mortgagee, without delay, any
notices, letters or other communications delivered to the Subject Property or to Mortgagor naming
Mortgagee, “Lender” or any similar designation as addressee, or which could reasonably be deemed to
affect the ability of Mortgagor to perform its obligations to Mortgagee under the Notes or the
Credit Agreement.
7.11 ARBITRATION. THE PROVISIONS OF SECTION 7.11 OF THE CREDIT AGREEMENT ARE
INCORPORATED HEREIN IN THEIR ENTIRETY, MUTATIS MUTANDIS.
7.12 PATRIOT ACT NOTICE COMPLIANCE. The USA Patriot Act of 2001 (Public Law 107-56)
and federal regulations issued with respect thereto require all financial institutions to obtain,
verify and record certain information that identifies individuals or business entities which open
an “account” with such financial institution. Consequently, Lender may from time-to-time request,
and Mortgagor shall provide to Lender, Mortgagor’s name, address, tax identification number and/or
such other identification information as shall be necessary for Lender to comply with federal law.
An “account” for this purpose may include, without limitation, a deposit account, cash management
service, a
transaction or asset account, a credit account, a loan or other extension of credit, and/or
other financial services product.
[Signature Page Follows]
21
IN WITNESS WHEREOF, Mortgagor has executed this Mortgage as of the day and year set forth
above.
| MORTGAGOR: VIRCO MFG. CORPORATION, a Delaware corporation |
||||
| By: | /s/ ▇▇▇▇▇▇ ▇. Dose | |||
| Name: | ▇▇▇▇▇▇ ▇. Dose | |||
| Title: | Chief Financial Officer | |||
(ALL SIGNATURES MUST BE ACKNOWLEDGED)
22
]
Loan No. 8079119402
TABLE OF CONTENTS
| Page | ||||
ARTICLE 1. GRANT OF MORTGAGE |
2 | |||
1.1 GRANT |
2 | |||
1.2 ADDRESS |
2 | |||
1.3 INCORPORATION OF RECITALS |
2 | |||
ARTICLE 2. OBLIGATIONS SECURED |
2 | |||
2.1 OBLIGATIONS SECURED |
2 | |||
2.2 OBLIGATIONS |
3 | |||
2.3 INCORPORATION |
3 | |||
ARTICLE 3. ASSIGNMENT OF LEASES AND RENTS |
3 | |||
3.1 ASSIGNMENT |
3 | |||
3.2 GRANT OF LICENSE |
4 | |||
3.3 EFFECT OF ASSIGNMENT |
4 | |||
3.4 REPRESENTATIONS AND WARRANTIES |
4 | |||
3.5 COVENANTS |
5 | |||
3.6 ESTOPPEL CERTIFICATES |
5 | |||
ARTICLE 4. SECURITY AGREEMENT AND FIXTURE FILING |
5 | |||
4.1 SECURITY INTEREST |
5 | |||
4.2 REPRESENTATIONS AND WARRANTIES |
6 | |||
4.3 COVENANTS |
6 | |||
4.4 RIGHTS OF MORTGAGEE |
7 | |||
4.5 RIGHTS OF MORTGAGEE ON DEFAULT |
7 | |||
4.6 POWER OF ATTORNEY |
8 | |||
4.7 POSSESSION AND USE OF COLLATERAL |
8 | |||
ARTICLE 5. RIGHTS AND DUTIES OF THE PARTIES |
8 | |||
5.1 TITLE |
8 | |||
5.2 TAXES AND ASSESSMENTS |
8 | |||
5.3 TAX AND INSURANCE IMPOUNDS |
8 | |||
5.4 PERFORMANCE OF SECURED OBLIGATIONS |
9 | |||
5.5 LIENS, ENCUMBRANCES AND CHARGES |
9 | |||
5.6 DAMAGES; INSURANCE AND CONDEMNATION PROCEEDS |
9 | |||
5.7 INSURANCE, MAINTENANCE AND PRESERVATION OF THE SUBJECT PROPERTY |
10 | |||
5.8 INTENTIONALLY OMITTED |
11 | |||
5.9 APPROVAL OF LEASES |
11 | |||
Loan No. 8079119402
Table of Contents
(Continued)
(Continued)
| Page | ||||
5.10 DEFENSE AND NOTICE OF LOSSES, CLAIMS AND ACTIONS |
11 | |||
5.11 CERTAIN POWERS OF MORTGAGEE |
11 | |||
5.12 COMPENSATION; EXCULPATION; INDEMNIFICATION |
12 | |||
5.13 INTENTIONALLY OMITTED |
13 | |||
5.14 DUE ON SALE OR ENCUMBRANCE |
13 | |||
5.15 RELEASES, EXTENSIONS, MODIFICATIONS AND ADDITIONAL SECURITY |
13 | |||
5.16 INTENTIONALLY OMITTED |
13 | |||
5.17 SUBROGATION |
13 | |||
5.18 RIGHT OF INSPECTION |
13 | |||
5.19 INTENTIONALLY OMITTED |
13 | |||
5.20 HAZARDOUS MATERIALS |
13 | |||
5.21 HAZARDOUS MATERIALS INDEMNITY |
14 | |||
5.22 LEGAL EFFECT OF SECTION |
15 | |||
ARTICLE 6. DEFAULT PROVISIONS |
15 | |||
6.1 DEFAULT |
15 | |||
6.2 RIGHTS AND REMEDIES |
15 | |||
6.3 APPLICATION OF FORECLOSURE SALE PROCEEDS |
17 | |||
6.4 APPLICATION OF OTHER SUMS |
17 | |||
6.5 NO CURE OR WAIVER |
18 | |||
6.6 PAYMENT OF COSTS, EXPENSES AND ATTORNEYS’ FEES |
18 | |||
6.7 POWER TO FILE NOTICES AND CURE DEFAULTS |
18 | |||
6.8 REMEDIES CUMULATIVE |
18 | |||
ARTICLE 7. MISCELLANEOUS PROVISIONS |
19 | |||
7.1 ADDITIONAL PROVISIONS |
19 | |||
7.2 MERGER |
19 | |||
7.3 OBLIGATIONS OF MORTGAGOR, JOINT AND SEVERAL |
19 | |||
7.4 WAIVER OF MARSHALLING RIGHTS |
19 | |||
7.5 RULES OF CONSTRUCTION |
19 | |||
7.6 SUCCESSORS IN INTEREST |
19 | |||
7.7 EXECUTION IN COUNTERPARTS |
20 | |||
7.8 CHOICE OF LAW |
20 | |||
7.9 INCORPORATION |
20 | |||
7.10 NOTICES |
20 | |||
7.11 ARBITRATION |
21 | |||
7.12 PATRIOT ACT NOTICE COMPLIANCE |
21 | |||