EXHIBIT 10.5
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MORTGAGE, SECURITY AGREEMENT, ASSIGNMENT
OF RENTS AND LEASES AND FIXTURE FILING
by
WAHLCO, INC.,
Mortgagor,
to
WEXFORD MANAGEMENT LLC,
Mortgagee,
for the benefit of the Lenders described herein
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This instrument was prepared by the
attorney listed below, in
consultation with counsel in the
State, and after recording should
be returned to:
▇▇▇▇▇▇, ▇▇▇▇▇ & ▇▇▇▇▇ LLP
▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇, Esq.
TABLE OF CONTENTS
PAGE
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ARTICLE I
DEFINITIONS
SECTION 1.1. Terms Defined in Credit Agreement.......................... 5
SECTION 1.2. Terms Defined in This Mortgage............................. 6
SECTION 1.3. Terms Defined in Uniform Commercial Code................... 10
SECTION 1.4. Rules of Interpretation.................................... 10
ARTICLE II
COVENANTS AND AGREEMENTS OF MORTGAGOR
SECTION 2.1. Payment of Secured Obligations............................. 11
SECTION 2.2. Further Assurances......................................... 11
SECTION 2.3. Care of the Mortgaged Property............................. 11
(a) Operation and Maintenance........................................ 11
(b) Repair and Replacement........................................... 12
(c) Use.............................................................. 12
SECTION 2.4. Compliance With Laws and Payment of Impositions............ 12
SECTION 2.5. Insurance and Casualty..................................... 12
(a) Required Insurance............................................... 12
(b) Form............................................................. 12
(c) Notice of Loss................................................... 13
(d) No Separate Insurance............................................ 13
(e) Assignment of Policies On Foreclosure............................ 13
SECTION 2.6. Condemnation............................................... 13
(a) Notice of Loss................................................... 13
(b) Protection of Mortgaged Property................................. 13
SECTION 2.7. Application of Insurance Proceeds and Condemnation Proceeds 14
(a) Proceeds Payable to Mortgagee.................................... 14
(b) Prosecution of Claim for Loss..................................... 14
SECTION 2.8. Transfer Restrictions....................................... 14
SECTION 2.9. Mortgagee's Right to Perform................................ 14
SECTION 2.10. Subrogation................................................. 15
SECTION 2.11. Inspection of Mortgaged Property............................ 15
SECTION 2.12. Certain Tax Law Changes..................................... 15
SECTION 2.13. Future Advances............................................. 16
(a) Future Advances................................................... 16
(b) Future Advances................................................... 16
(c) Maximum Secured Amount............................................ 16
SECTION 2.14. Covenants in Loan Documents................................. 16
ARTICLE III
REPRESENTATIONS AND WARRANTIES
SECTION 3.1. Title....................................................... 16
SECTION 3.2. Valid Lien and Security Interest............................ 16
ARTICLE IV
SECURITY AGREEMENT AND FIXTURE FILING
SECTION 4.1. Security Agreement.......................................... 17
(a) Grant of Security Interest........................................ 17
(b) Remedies.......................................................... 17
SECTION 4.2. Fixture Filing.............................................. 18
SECTION 4.3. Security Deposit Collateral................................. 18
SECTION 4.4. Additional Covenants........................................ 18
ARTICLE V
ASSIGNMENTS OF RENTS AND LEASES
SECTION 5.1. Assignment of Rents and Leases.............................. 19
(a) Assignment of Rents............................................... 19
(b) License to Collect Rents.......................................... 19
(c) Termination of License Upon Event of Default...................... 19
(d) Direction to Tenants.............................................. 20
(e) No Release of Tenants............................................. 20
(f) No Liability of Mortgagee......................................... 20
(g) No Existing Leases................................................ 20
ARTICLE VI
DEFAULTS AND REMEDIES
SECTION 6.1. Events of Defaults.......................................... 20
SECTION 6.2. Remedies.................................................... 21
(a) General........................................................... 21
(b) Foreclosure....................................................... 21
(c) Mortgagee May Bid................................................. 22
(d) Acceleration of Secured Obligations............................... 22
SECTION 6.3. Possession of Property...................................... 22
(a) Mortgagor to Vacate Property...................................... 22
(b) Payment for Use and Occupancy..................................... 23
SECTION 6.4. Appointment of Receiver..................................... 23
SECTION 6.5. Waiver of Stay, Extension, Moratorium and
Marshalling Laws and Equity of Redemption................... 23
SECTION 6.6. Mortgagee Authorized to Execute Documents................... 23
SECTION 6.7. Collateral Situated in More than One County................. 24
SECTION 6.8. Collateral in Other States.................................. 24
SECTION 6.9. Application of Proceeds..................................... 25
SECTION 6.10. Setoff...................................................... 25
SECTION 6.11. Receipt a Sufficient Discharge to Purchaser................. 25
SECTION 6.12. Sale a Bar Against Mortgagor................................ 25
SECTION 6.13. Remedies Cumulative; Waiver................................. 25
SECTION 6.14. No Liability of Secured Parties............................. 26
ARTICLE VII
CONCERNING MORTGAGEE
SECTION 7.1. [Intentionally Omitted]..................................... 26
ARTICLE VIII
MISCELLANEOUS
SECTION 8.1. Termination; Defeasance..................................... 27
SECTION 8.2. Rights Cumulative; Waivers.................................. 27
SECTION 8.3. Fees and Expenses........................................... 27
SECTION 8.4. Indemnification............................................. 27
(a) Indemnity......................................................... 27
(b) Third-Party Beneficiaries......................................... 28
SECTION 8.5. Notices..................................................... 28
SECTION 8.6. Amendment and Waiver........................................ 29
SECTION 8.7. Expenses of Mortgagor's Agreements and Duties............... 29
SECTION 8.8. Mortgagee's Right to Use Agents and to Act in Name
of Mortgagor................................................ 30
SECTION 8.9. No Compensation or Expense.................................. 30
SECTION 8.10. Limitation of Obligations with Respect to Mortgaged Property 30
(a) Reasonable Care................................................... 30
(b) No Obligations.................................................... 30
SECTION 8.11. Time of the Essence......................................... 30
SECTION 8.12. Inconsistency with Loan Documents........................... 30
SECTION 8.13. Severability................................................ 31
SECTION 8.14. Headings.................................................... 31
SECTION 8.15. Assignment; Benefit......................................... 31
SECTION 8.16. GOVERNING LAW............................................... 31
SECTION 8.17. WAIVER OF JURY TRIAL........................................ 31
SECTION 8.18. CONSENT TO JURISDICTION..................................... 32
SECTION 8.19. Limitation on Interest Payable.............................. 33
SECTION 8.20. Covenants To Run With the Land.............................. 33
SECTION 8.21. No Merger................................................... 33
SECTION 8.22. Relationship................................................ 33
ARTICLE IX
ENVIRONMENTAL MATTERS
SECTION 9.1. Notice of Environmental Matters............................. 34
(a) Delivery of Notice................................................ 34
(b) Contents of Notice................................................ 34
SECTION 9.2. Obligations of Mortgagor.................................... 34
EXHIBITS
EXHIBIT A - DESCRIPTION OF LAND
EXHIBIT B - MATERIAL AGREEMENTS
EXHIBIT C - PERMITTED ENCUMRANCES
EXHIBIT D - INFORMATION FOR FINANCING STATEMENTS
MORTGAGE, SECURITY AGREEMENT, ASSIGNMENT
OF RENTS AND LEASES AND FIXTURE FILING
MORTGAGE, SECURITY AGREEMENT, ASSIGNMENT OF RENTS AND LEASES AND
FIXTURE FILING (this "Mortgage"), dated as of February 25, 1999, is given by
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WAHLCO INC., a California corporation (together with its successors and
permitted assigns, "Mortgagor"), to WEXFORD MANAGEMENT LLC, a Connecticut
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limited liability company (together with its successors and permitted assigns,
"Mortgagee"), for the benefit of the Lenders (as hereinafter defined).
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BACKGROUND:
A. On January 13, 1999, pursuant to an Agreement and Plan of Merger,
dated November 9, 1998 (the "Merger Agreement"), among Wahlco Environmental
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Systems, Inc. ("Wahlco"), Thermatrix Inc. ("Thermatrix") and TMX Acquisition Sub
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I, Inc., a wholly-owned subsidiary of Thermatrix ("Merger Sub"), Merger Sub
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merged with and into Wahlco (the "Merger"), and Wahlco became a wholly-owned
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subsidiary of Thermatrix at the effective time of the Merger (the "Effective
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Date").
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B. Concurrently with the execution and delivery hereof, Wahlco and
Thermatrix (the "Borrowers") are entering into a Second Amended and Restated
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Credit Agreement, dated as of the date hereof, with the Lenders and the
Mortgagee (as the same may hereafter be modified, extended, replaced or
otherwise amended, the "Credit Agreement"), pursuant to which the Borrowers
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shall be jointly and severally liable for the payment and performance of all of
the obligations and liabilities to the Lenders and the Mortgagee set forth
therein and in the other Loan Documents (as hereinafter defined).
C. Prior to the Merger, Mortgagor was, and after the Merger
Mortgagor remains, a subsidiary of Wahlco.
D. Concurrently with the execution and delivery of the Credit
Agreement, Mortgagor is executing and delivering the Guarantee (as hereinafter
defined) to Mortgagee and the Lenders.
E. It is a condition to the effectiveness of the Credit Agreement
that, among other things, Mortgagor execute and deliver this Mortgage granting
to Mortgagee, for the benefit of the Lenders, the liens and security interests
in the collateral described herein, all as set forth in the Credit Agreement.
F. Mortgagor will receive substantial direct and indirect benefits
from the Lenders and the Mortgagee entering into the Credit Agreement.
GRANT OF LIEN:
NOW THEREFORE, to secure the full and timely payment and performance
of all of the Secured Obligations (as hereinafter defined), Mortgagor hereby
irrevocably grants, bargains, sells, mortgages, warrants, aliens, devises,
releases, hypothecates, pledges, transfers and conveys to Mortgagee, as agent
and representative of, and for the equal and ratable benefit of, the Lenders,
and to the extent the same constitutes Personal Property (as hereinafter
defined) grants to Mortgagee, a security interest in, forever, any and all the
following (collectively, the "Mortgaged Property"):
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A. Land. The land described on Exhibit A, together with all and
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singular the tenements, rights, easements, hereditaments, rights of way,
privileges, liberties, appendages and appurtenances now or hereafter belonging
or in any way appertaining to such land (including, without limitation, all
rights relating to storm and sanitary sewer, water, gas, electric, railway and
telephone services); all estate, claim, demand, right, title or interest of
Mortgagor in and to any street, road, highway, or alley (vacated or otherwise)
adjoining such land or any part thereof; and all Mortgagor's right, title and
interest, if any, in and to any strips and gores belonging, adjacent or
pertaining to such land (collectively, the "Land").
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B. Improvements and Fixtures. All buildings, structures,
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replacements, fixtures and fittings and other improvements and property of every
kind and description now or hereafter affixed or attached to the Land, including
water, sanitary and storm sewer, drainage, electricity, steam, gas, telephone
and other utility facilities, parking areas, roads, driveways, walks and other
site improvements together with all estate, right, title and interest, if any,
of Mortgagor in, to or under all equipment, appliances, machinery, tools,
accessories, apparatus, building or construction materials, and other articles
of any kind or nature whatsoever affixed or attached to the Land, including all
motors, boilers, engines, pumps, compressors, tanks and similar devices, all
heating, electrical, lighting, power, plumbing, air conditioning, refrigeration,
ventilation and mechanical equipment, all pipes, ducts, conduits, cables and
other transmission devices and equipment, and all elevators, escalators, lifts,
walls, partitions, doors, windows and other equipment and property affixed to
the Land that is real estate or real property or fixtures under applicable law
of the State (as hereinafter defined) (collectively, the "Improvements", and
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together with the Land, the "Property").
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C. Minerals and Related Rights. All of Mortgagor's right, title and
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interest in, to and under all rights, royalties and profits with respect to all
minerals, coal, oil and gas and other substances of any kind or character on or
underlying the Land, together with all water and water rights (whether riparian,
appropriative, or otherwise and whether or not appurtenant).
D. Air and Development Rights. All of Mortgagor's right, title and
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interest in, to and under all air rights, development rights or credits, zoning
rights or other similar rights or interests which benefit or are appurtenant to
the Property.
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E. Parking Rights. All estate, right, title, interest and other
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claim of Mortgagor, if any, with respect to any parking facilities located other
than on the Property and used or intended to be used in connection with the
operation, ownership or use of the Property, any and all replacements and
substitutions for the same, and any other parking rights, easements, covenants
and other interests in parking facilities acquired by Mortgagor for the use of
tenants or occupants of the Improvements.
F. Tangible Property. All building materials, goods, construction
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materials, appliances (including, without limitation, stoves, ranges, ovens,
disposals, refrigerators, water fountains, water coolers, fans, heaters,
dishwashers, clothes washers and dryers, water heaters, hood and fan
combinations, kitchen equipment, laundry equipment, kitchen cabinets and other
similar equipment), stocks, beds, mattresses, bedding and linens, supplies,
blinds, window shades, drapes, carpets, floor coverings, office equipment,
trees, timber, crops, growing plants and shrubberies, control devices, equipment
and machinery (including window cleaning, building cleaning, swimming pool,
recreational, monitoring, garbage, pest control and other equipment), motor
vehicles, tools, furnishings, furniture, lighting, all nonstructural additions
to the Property and all other tangible property of any kind or character,
together with all replacements thereof, located on or in or used in connection
with the complete and comfortable use, enjoyment, occupation, operation,
development and maintenance of the Property, regardless of whether or not
located on or in the Property or located elsewhere for purposes of storage,
fabrication or otherwise, exclusive of any of the foregoing items leased by
Mortgagor or owned by tenants (other than Mortgagor) of portions of the Property
(collectively, the "Tangible Property").
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G. Material Agreements. All estate, right, title and interest of
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Mortgagor in, to or under all contracts and agreements (including those, if any,
described on Exhibit B) and all title insurance policies, guarantees and
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warranties and other contracts and agreements including any agreements taken by
Mortgagor by assignment, now or hereafter relating to the Property, including
all water, sanitary and storm sewer, drainage, electricity, steam, gas,
telephone and other utility supply and service contracts (collectively,
"Material Agreements").
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H. Leases and Rents. All Leases (as hereinafter defined), now or
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hereafter in effect for the use, possession or occupancy of the Property or any
part thereof, and all estate, right, title and interest of Mortgagor in and to
any and all rents, profits, issues, royalties, revenues and other benefits
derived from the sale or lease of the Property or any other portion of the
Mortgaged Property or from or under any of the Leases (collectively, "Rents").
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I. Security Deposit Collateral. All cash, securities, letters of
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credit, guarantees, surety bonds and similar instruments (collectively, the
"Security Deposit Collateral") from time to time delivered to Mortgagor as
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security for the performance of any tenant under a Lease, but excluding any
Security Deposit Collateral which, by its terms, is unassignable or may not be
pledged or transferred.
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J. Intangibles. All goodwill, trademarks, trade names, option
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rights, purchase contracts, books and records and general intangibles of
Mortgagor relating to the Property and all accounts, contract rights,
instruments, chattel paper and other rights of Mortgagor for the payment of
money for property sold or lent, for services rendered, for money lent, or for
advances or deposits made, and any other intangible property of Mortgagor
relating to the Property, but specifically excluding rights of Mortgagor in, to
and under any Material Agreements (collectively, the "Intangibles").
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K. Plans. All plans and specifications, designs, drawings and other
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information, materials and matters heretofore or hereafter prepared relating to
the Property.
L. Permits. All licenses, authorizations, certificates, variances,
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consents, approvals and other permits now or hereafter relating to the Property
(collectively, the "Permits"), excluding from the grant under this Granting
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Clause (but not from the definition of the term "Permits" for the other purposes
hereof) Permits that cannot be transferred or encumbered by Mortgagor without
causing a default thereunder or a termination thereof.
M. Leases of Furniture, Furnishings and Equipment. All right, title
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and interest of Mortgagor as lessee in, to and under any leases of furniture,
furnishings and equipment now or hereafter installed in or at any time used in
connection with the Property.
N. Condemnation Proceeds. All Condemnation Proceeds (as hereinafter
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defined).
O. Insurance Proceeds. All Insurance Proceeds (as hereinafter
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defined).
P. Awards. All rights and interests of Mortgagor against others,
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including adjoining property owners and governmental entities arising out of
damage to the Mortgaged Property, including damage due to environmental injury
or release of Hazardous Materials (as hereinafter defined).
Q. Further Interests. All greater or additional estate, right, title
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and interest of Mortgagor in, to or under any of the Mortgaged Property
hereafter acquired by Mortgagor, and all right, title and interest of Mortgagor
in, to, under or derived from all extensions, improvements, betterments,
renewals, substitutions and replacements of, and additions and appurtenances to,
any of the Mortgaged Property hereafter acquired by or released to Mortgagor
(including any Mortgaged Property acquired by Mortgagor by foreclosure or deed
in lieu of foreclosure pursuant to the terms of any mortgage note held by
Mortgagor) or constructed or located on, or attached to, the Property, in each
case, immediately upon such acquisition, release, construction, location or
attachment, without any further conveyance, mortgage, assignment or other act by
Mortgagor; and all right, title and interest of Mortgagor in, to, under or
derived from all other property and rights which by any instrument executed by
Mortgagor or any Person on its behalf are otherwise subjected to the lien of
this Mortgage.
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R. Proceeds. All proceeds of any voluntary or involuntary conversion
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of any of the foregoing into cash or other property, including, without
limitation, proceeds of insurance and condemnation awards and liquidated claims.
S. Other Property. All other property and rights of Mortgagor of
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every kind and character relating to and used in connection with the Mortgaged
Property, and all proceeds and products of any of the foregoing; provided, that
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the Mortgaged Property shall not include (i) any property, rights or licenses to
the extent the granting of a Lien thereon would be contrary to applicable law or
(ii) any rights under any license agreement where such license agreement would
be terminable by the counterparty thereto if Mortgagor's interest therein were
subject to the security interest created hereby (but only to the extent such
right to terminate is enforceable under applicable law). Each such license
agreement existing on the date hereof is set forth in Schedule 3(b) of the
Disclosure Letter.
TO HAVE AND TO HOLD the Mortgaged Property unto Mortgagee, and its
successors and assigns, forever, under and subject to the terms and conditions
of the Credit Agreement and this Mortgage, for the benefit of the Secured
Parties and for the security and enforcement of the prompt and complete payment,
performance and observance when due of all of the Secured Obligations.
PROVIDED ALWAYS that this Mortgage is upon the express condition that
the Mortgaged Property shall be released from the lien of this Mortgage in the
manner and at the time provided in Section 8.1 of this Mortgage.
MORTGAGOR FURTHER COVENANTS AND AGREES WITH
MORTGAGEE AS FOLLOWS:
ARTICLE I
DEFINITIONS
SECTION 1.1. Terms Defined in Credit Agreement. The following terms,
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and all other terms defined in the Credit Agreement and not otherwise defined
herein, have, as used herein, the respective meanings provided for in the Credit
Agreement:
Affiliate
Business Days
Collateral
Disclosure Letter
Liens
Loans
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Loan Documents
Loan Party
Material Adverse Effect
Note
Overdue Rate
Person
Required Lenders
Responsible Officer
Subsidiary
SECTION 1.2. Terms Defined in This Mortgage. The following terms, as
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used herein, have the following meanings:
"Bankruptcy Code" means the United States Bankruptcy Code, Title 11 of
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the United States Code, (S) 101 et seq., as amended from time to time.
"Casualty" means any damage to, destruction or loss of or other
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casualty with respect to any of the Mortgaged Property.
"Condemnation" means any actual or threatened condemnation, taking or
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exercise of the power of eminent domain or similar action or proceeding.
"Condemnation Proceeds" means, at any time, any award or payment paid
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or payable by reason of any Condemnation, whether from the exercise of the right
of Condemnation or any transfer made in lieu thereof or any injury to or
decrease in value of any property in connection with a Condemnation, including
all amounts paid pursuant to any agreement with any condemning authority that
has been made in settlement of any proceeding relating to a Condemnation and any
interest earned on such award, payment or amounts, less the reasonable costs and
expenses (including reasonable attorneys' fees and expenses) of Mortgagor and
Mortgagee in collecting such award payment or amounts, which costs and expenses
shall be paid out of such award, payment or amounts.
"Credit Agreement" is defined in Recital Paragraph B.
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"Effective Date" is defined in Recital Paragraph A.
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"Event of Default" is defined in Section 6.1.
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"Flood Zone" is defined in Section 3.5.
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"Guarantee" means the Amended and Restated Guaranty, dated as of the
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date hereof, by Mortgagor (among others) to Mortgagee and the Lenders, as the
same may hereafter be modified, extended, replaced or otherwise amended.
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"Impositions" means all taxes (including real estate taxes and sales
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and use taxes), assessments (including all assessments for public improvements
or benefits, whether or not commenced or completed prior to the date hereof),
water, sewer or other rents, rates and charges, excises, levies, license fees,
permit fees, inspection fees and other authorization fees and other charges, in
each case whether general or special, ordinary or extraordinary, foreseen or
unforeseen, of every character (including all interest and penalties thereon),
which at any time may be assessed, levied, confirmed or imposed on or in respect
of, or be a Lien upon, (i) the Mortgaged Property or any interest therein, (ii)
any occupancy, use or possession of, or activity conducted on, the Mortgaged
Property, (iii) the Rents from the Mortgaged Property or the use or occupancy
thereof, or (iv) the Secured Obligations, but excluding income, excess profits,
franchise, capital stock, estate, inheritance, succession, gift or similar taxes
of Mortgagor or Mortgagee, except to the extent that such taxes of Mortgagor or
Mortgagee are imposed in whole or in part in lieu of, or as a substitute for,
any taxes which are or would otherwise be Impositions.
"Improvements" is defined in Granting Clause B.
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"Indemnified Party" means, with respect to a Person entitled to the
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benefit of an indemnity, such Person's officers, directors, shareholders,
partners, members, employees, agents and representatives.
"Insurance Policies" means the insurance policies and coverages
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required to be maintained by Mortgagor pursuant to Section 2.5.
"Insurance Proceeds" means, at any time, (x) all proceeds or payments
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to which Mortgagor may be or become entitled under any of the Insurance Policies
and any and all unearned premiums accrued, accruing or to accrue under any
Insurance Policies and all proceeds of the conversion, voluntary or involuntary,
of any of the foregoing into cash or liquidated claims, plus any interest earned
on such proceeds, payments or amounts, less (y) the reasonable costs and
expenses of Mortgagor and Mortgagee in collecting such proceeds, payments or
amounts, which costs and expenses shall be paid out of such proceeds, payments
or amounts.
"Insurance Requirements" means all provisions of the Insurance
----------------------
Policies, all requirements of the issuer of any of the Insurance Policies and
all orders, rules, regulations and any other requirements of the National Board
of Fire Underwriters (or any other body exercising similar functions) binding
upon Mortgagor or applicable to the Mortgaged Property, any adjoining vaults,
sidewalks, parking areas or driveways or any use or condition thereof.
"Intangibles" is defined in Granting Clause J.
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"Land" is defined in Granting Clause A.
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"Lease" means any lease, tenancy, subtenancy, license, franchise,
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concession or
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other use or occupancy agreement relating to the Property, together with any
guarantee of the obligations of the landlord or the tenant thereunder, or any
occupancy or right to possession under Section 365 of the Bankruptcy Code in the
event of the rejection of any of the foregoing by the landlord or its trustee
pursuant to such Section; "landlord" means the landlord, sublandlord, lessor,
sublessor, franchisor or other grantor of a right of use or occupancy under a
Lease and any guarantor of its obligations thereunder; and "tenant" means the
tenant, subtenant, lessee, sublessee, licensee, franchisee, concessionaire or
other occupant under a Lease and any guarantor of its obligations thereunder.
"Legal Requirements" means all provisions of all laws, statutes,
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codes, acts, ordinances, orders, judgments, decrees, injunctions, rules,
regulations, directions and requirements of, restrictions by, and agreements
with, Federal, State or local governmental bodies, agencies or officials, now or
hereafter applicable to the Mortgaged Property or any part thereof or any use or
condition thereof.
"Lenders" means Wexford Capital Partners II, L.P., a Delaware limited
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partnership, Wexford Overseas Partners I, L.P., a Delaware limited partnership,
Wexford Special Situations 1996, L.P., a Delaware limited partnership, Wexford
Special Situations 1996 Institutional, L.P., a Delaware limited partnership,
Wexford Special Situations 1996 Limited, a Cayman Islands exempted company, and
Wexford-Euris Special Situations 1996, L.P., a Delaware limited partnership, and
their respective successors and assigns.
"Loss" is defined in Section 8.4.
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"Material Agreements" is defined in Granting Clause G.
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"Mortgage" is defined in the Preamble.
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"Mortgaged Property" is defined in the Preamble to the Grant of Lien.
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"Mortgagee" is defined in the Preamble.
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"Mortgagor" is defined in the Preamble.
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"Other Mortgaged Properties" means the Mortgaged Property described in
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one or more of the Other Mortgages.
"Other Mortgages" means those certain Mortgage, Security Agreement and
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Assignment of Rents and Leases, if any, and those certain Deed of Trust,
Security Agreement and Assignment of Rents and Leases, if any, or other similar
agreements, granted from time to time by Mortgagor to Mortgagee concurrently
herewith or otherwise pursuant to the Credit Agreement with respect to
collateral not described in this Mortgage, as the same may hereafter be
modified, extended, replaced or otherwise amended.
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"Permits" is defined in Granting Clause L.
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"Permitted Encumbrances" means those matters described on Exhibit C
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hereto.
"Personal Property" means all of the items described in the definition
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of Mortgaged Property that constitute personal property under the Uniform
Commercial Code or other applicable law (including common law) of the State.
"Property" is defined in Granting Clause B.
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"Receiver" means any receiver, trustee liquidator, conservator,
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custodian or similar Person.
"Rents" are defined in Granting Clause H.
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"Secured Obligations" means all of the Liabilities of Mortgagor to the
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Secured Parties (or any of them) under and as defined in the Guarantee,
including:
(i) all loans, advances, debts, liabilities, and other obligations
for monetary amounts (whether or not such amounts are liquidated, contingent or
otherwise determinable) owing by either Wahlco or Thermatrix or any of their
respective Subsidiaries or all of them to Mortgagee or any Lender, or any
Subsidiary or Affiliate of Mortgagee or a Lender, and all covenants, duties and
obligations regarding such amounts, of any kind or nature, present or future,
whether or not evidenced by any note, agreement or other instrument, arising
under the Credit Agreement or any of the other Loan Documents, whether at
maturity or by prepayment, acceleration, declaration of default or otherwise,
including, without limitation, the principal amount of the Loans, as well as all
interest thereon (including all amounts owed in respect of interest that accrues
after the commencement of any case, proceeding or other action relating to the
bankruptcy, insolvency or reorganization of any Loan Party), and all charges,
costs, expenses, attorneys' fees and any other sum chargeable to either Wahlco
or Thermatrix or any or all of their respective Subsidiaries under any of the
Loan Documents,
(ii) all other amounts payable by Mortgagor hereunder (including all
amounts owed in respect of interest that accrues after the commencement of any
case, proceeding or other action relating to the bankruptcy, insolvency or
reorganization of any of Mortgagor, Wahlco or Thermatrix), and
(iii) any renewals or extensions of any of the foregoing.
"Secured Parties" means, collectively, the Lenders and Mortgagee.
---------------
"Security Agreement" means the Amended and Restated Security
------------------
Agreement, dated as of the date hereof, among Wahlco Environmental Systems,
Inc., each Subsidiary party thereto and Wexford Management LLC.
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"Security Deposit Collateral" is defined in Granting Clause I.
---------------------------
"State" means the State of Illinois.
-----
"Tangible Property" is defined in Granting Clause F.
-----------------
"Thermatrix" is defined in Background Paragraph A.
----------
"Unavoidable Delays" means delays due to acts of God, governmental
------------------
restrictions, enemy actions, civil commotion, fire, casualty, strikes, shortages
of supplies or labor or other causes beyond the reasonable control of Mortgagor,
but lack of funds shall not be a cause beyond the reasonable control of
Mortgagor.
"Uniform Commercial Code" means the Uniform Commercial Code of the
-----------------------
State as in effect from time to time.
"Unmatured Default" means an event which but for the lapse of time or
-----------------
the giving of notice, or both, would constitute a Default or an Event of Default
hereunder or under any other Loan Document.
"Wahlco" is defined in Background Paragraph A.
------
SECTION 1.3. Terms Defined in Uniform Commercial Code. Unless
----------------------------------------
otherwise defined herein or in the Credit Agreement, or unless the context
otherwise requires, when used in this Mortgage, terms defined in the Uniform
Commercial Code have the same meanings.
SECTION 1.4. Rules of Interpretation. In this Mortgage, unless
-----------------------
otherwise specified, (i) singular words include the plural and plural words
include the singular, (ii) words that include a number of constituent parts,
things or elements, including the terms "Land", "Improvements," "Property" and
"Mortgaged Property" (and each element thereof) shall be construed as referring
separately to each constituent part, thing or element thereof, as well as to all
of such constituent parts, things or elements as a whole, (iii) words importing
any gender include the other gender, (iv) references to any Person include such
Person's successors and assigns and, in the case of an individual, the word
"successor" includes such Person's heirs, devisees, legatees, executors,
administrators and personal representatives, (v) references to any statute or
other law include all applicable rules, regulations and orders adopted or made
thereunder and all statutes or other laws amending, consolidating or replacing
the statute or law referred to, (vi) the words "include" and "including," and
words of similar import, shall be deemed to be followed by the words ", without
limitation," (vii) the words "hereto," "herein," "hereof," and "hereunder," and
words of similar import, refer to this Mortgage in its entirety, (viii) unless
otherwise specified, references to Articles, Sections, Exhibits, Schedules,
paragraphs and clauses are to the Articles, Sections, Exhibits, Schedules,
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paragraphs and clauses of this Mortgage, (ix) the Exhibits and Schedules to this
Mortgage are incorporated herein by reference, (x) the titles and headings of
Articles, Sections, Exhibits, Schedules, paragraphs and clauses are inserted as
a matter of convenience and shall not affect the construction of this Mortgage
and (xi) unless otherwise specified, references to this Mortgage and to any
other Loan Document include all amendments, modifications, supplements,
consolidations, replacements, extensions and renewals thereof from time to time.
ARTICLE II
COVENANTS AND AGREEMENTS OF MORTGAGOR
To protect the security of this Mortgage, so long as this Mortgage is
in effect, Mortgagor further covenants and agrees with Mortgagee as follows:
SECTION 2.1. Payment of Secured Obligations. Mortgagor shall duly
------------------------------
and punctually pay and perform all of the Secured Obligations in accordance with
the terms thereof and hereof, as if each of the same was set forth at length
herein. The Secured Obligations have been incurred for business purposes only.
SECTION 2.2. Further Assurances. At the request of Mortgagee,
------------------
Mortgagor shall, at Mortgagor's sole cost and expense (a) promptly correct any
defect or error which may be discovered in this Mortgage or any financing
statement or other document relating hereto, (b) promptly execute, acknowledge,
deliver, record and re-record, register and re-register, and file and re-file
this Mortgage and any financing statements or other documents or instruments
which Mortgagee may require from time to time, all in form and substance
reasonably satisfactory to Mortgagee, in order (i) to effectuate, complete,
perfect, continue or preserve the Lien and priority of this Mortgage as a
perfected mortgage lien and security interest on the Mortgaged Property, or (ii)
to effectuate, complete, perfect, continue or preserve any right, power or
privilege granted to Mortgagee hereunder, and (c) pay all filing, registration
and recording taxes, fees, dues, imposts, assessments and charges in connection
with the execution, delivery, filing, registration or recording of any of the
foregoing.
SECTION 2.3. Care of the Mortgaged Property.
------------------------------
(a) Operation and Maintenance. Mortgagor (i) shall not cause or
-------------------------
permit the Mortgaged Property to be injured, wasted, disfigured or damaged or to
deteriorate (except for reasonable wear and tear and obsolescence) and (ii)
shall maintain and preserve all of the Mortgaged Property in good repair,
working order and condition (taking into consideration ordinary wear and tear)
and from time to time make, or cause to be made, all repairs, renewals and
replacements, betterments and improvements thereto reasonably necessary,
consistent with applicable industry practices, so that the business carried on
in connection therewith may be properly and advantageously conducted at all
times, in each case except to the extent that the failure to do so could not
reasonably be expected to have a Material Adverse Effect.
-11-
(b) Repair and Replacement. Mortgagor shall not remove, demolish or
----------------------
materially alter any of the Mortgaged Property. Whether or not it shall have
received or otherwise be entitled to receive any Insurance Proceeds or
Condemnation Proceeds under the Credit Agreement, Mortgagor shall promptly
repair, replace and rebuild any part of the Mortgaged Property which may be
damaged or destroyed by any Casualty (including any casualty for which insurance
was not obtained or obtainable) or which may be affected by any Condemnation,
and shall complete and pay for, within a reasonable time, any structure at any
time in the process of construction or repair on the Property, all in a
commercially reasonable manner reasonably satisfactory to Mortgagee, unless the
failure to repair, replace or rebuild the same could not reasonably be expected
to have a Material Adverse Effect.
(c) Use. Mortgagor shall not, without the prior written consent of
---
Mortgagee, which will not be unreasonably withheld, initiate, join in or consent
to any restrictive covenant, zoning ordinance, or other public or private
restrictions, limiting or defining the uses which may be made of the Property or
any part thereof.
SECTION 2.4. Compliance With Laws and Payment of Impositions.
-----------------------------------------------
Contests. Except to the extent provided otherwise in the Credit Agreement,
--------
Mortgagor shall (i) at all times comply with, and shall cause the Mortgaged
Property at all times to comply with, all applicable Legal Requirements and
Insurance Requirements; and (ii) promptly pay all Impositions and all charges
for utilities and other services to the Mortgaged Property on or before the date
on which the same shall become due and payable.
SECTION 2.5. Insurance and Casualty.
----------------------
(a) Required Insurance. During the term of this Mortgage, Mortgagor
------------------
shall maintain, or cause to be maintained (including by one or more blanket
and/or umbrella policies which meet the requirements of this Section), the
property and liability insurance with respect to the Mortgaged Property
described in Schedule 3(b) of the Disclosure Letter.
(b) Form. All insurance required by this Mortgage shall be taken out
----
and maintained with an insurer, shall have such deductibles, and shall otherwise
be in form and substance, as required by the Credit Agreement. In addition, each
such policy shall name Mortgagee as an additional insured and loss payee and
shall contain standard clauses waiving all rights of subrogation against
Mortgagee and requiring that all Insurance Proceeds resulting from any claim be
paid to Mortgagee, notwithstanding (i) any act or negligence of either Mortgagor
or its agents or employees which might, absent such agreement, result in a
forfeiture of all or part of such insurance payment, (ii) the occupation or use
of the Mortgaged Property or any part thereof for purposes more hazardous than
permitted by the terms of such policy, (iii) any foreclosure or other action or
proceeding taken pursuant to the Mortgage or (iv) any change in title to or
ownership of the Mortgaged Property or any part thereof. Each policy shall
contain an undertaking by the insurer that such policy shall not be modified
without at least thirty (30) days' prior notice to, and the prior written
consent of, Mortgagee.
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(c) Notice of Loss. If a Casualty occurs, Mortgagor shall immediately
--------------
take such action or cause such action to be taken as may be reasonably necessary
or appropriate to protect the remaining Mortgaged Property. Mortgagor will also
give Mortgagee prompt notice of any material damage to or destruction of any of
the Mortgaged Property and in case of loss covered by policies of insurance,
Mortgagee is hereby authorized to make proof of loss if not made promptly by
Mortgagor. Any reasonable expenses incurred by Mortgagee in the collection of
the proceeds of such policies of insurance, together with interest thereon from
date of any such expense at the Overdue Rate (or such lesser rate of interest as
may be the maximum not prohibited by applicable law), shall be added to and
become part of the Secured Obligations and shall be reimbursed to Mortgagee
immediately upon demand.
(d) No Separate Insurance. Mortgagor shall not take out separate
---------------------
insurance concurrent in form or contributing in the event of loss with that
required to be maintained hereunder unless Mortgagee is named as an additional
insured thereon under a standard mortgagee clause reasonably acceptable to
Mortgagee and each such policy is otherwise in form and substance reasonably
acceptable to Mortgagee. Mortgagor shall notify Mortgagee at least 30 days prior
to the date that any such separate insurance is to be taken out and, if such
insurance is permitted by Mortgagee, shall promptly deliver to Mortgagee a copy
of the policy or policies of such insurance.
(e) Assignment of Policies On Foreclosure. In the event of the
-------------------------------------
foreclosure of this Mortgage, or other transfer of title to the Mortgaged
Property, or any part thereof, by foreclosure sale, or by power of sale, or deed
in lieu of foreclosure, the purchaser of the Mortgaged Property, or such part
thereof, shall succeed to all of each Mortgagor's rights with respect to the
Mortgaged Property, including any rights to unexpired, unearned or returnable
insurance premiums, subject to limitations on the assignment of blanket
policies, but limited to such rights as relate to the Mortgaged Property or such
part thereof. If Mortgagee acquires title to the Mortgaged Property, or any part
thereof, in any manner, it shall thereupon (as between each Mortgagor and
Mortgagee) become the sole and absolute owner of the insurance policies, and all
proceeds payable thereunder with respect to the Mortgaged Property with the sole
right to collect and retain all unearned or returnable premiums thereon with
respect to the Mortgaged Property, or such part thereof, if any.
SECTION 2.6. Condemnation.
------------
(a) Notice of Loss. In the event of any Condemnation or the
--------------
commencement of any proceedings or negotiations that might result in a
Condemnation, Mortgagor shall give notice thereof to Mortgagee, generally
describing the nature and extent of such Condemnation or the nature of such
proceedings or negotiations and the nature and extent of the proposed
Condemnation, as the case may be.
(b) Protection of Mortgaged Property. If a Condemnation occurs,
--------------------------------
Mortgagor shall immediately take such action or cause such action to be taken as
may be reasonably necessary or appropriate to protect the remaining Mortgaged
Property.
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SECTION 2.7. Application of Insurance Proceeds and Condemnation
--------------------------------------------------
Proceeds.
--------
(a) Proceeds Payable to Mortgagee. Notwithstanding any Casualty or
-----------------------------
Condemnation, Mortgagor shall continue to pay the Secured Obligations at the
time and in the manner provided for in the Loan Documents and this Mortgage, and
the Secured Obligations shall not be reduced until any Insurance Proceeds or
Condemnation Proceeds shall have been actually received and applied by Mortgagee
to the discharge of the Secured Obligations. Except as expressly provided in the
Credit Agreement, Mortgagee may apply the entire amount of any Insurance
Proceeds or Condemnation Proceeds to the discharge of the Secured Obligations
whether or not then due and payable in such priority and proportions as
Mortgagee in its discretion shall deem proper. If the Mortgaged Property is
sold, through foreclosure or otherwise, prior to the receipt by Mortgagee of
such Insurance Proceeds or Condemnation Proceeds, Mortgagee shall have the
right, whether or not a deficiency judgment on any Loan Document shall have been
sought, recovered or denied, to receive such Insurance Proceeds or Condemnation
Proceeds, or a portion thereof sufficient to pay the Secured Obligations,
whichever is less.
(b) Prosecution of Claim for Loss. If a Casualty or a Condemnation
-----------------------------
shall occur, Mortgagor shall file and prosecute its claim or claims for any such
Insurance Proceeds or Condemnation Proceeds in good faith and with due diligence
and cause the same to be collected and paid over to Mortgagee, and hereby
irrevocably authorizes and empowers Mortgagee, in the name of Mortgagor or
otherwise to collect and receipt for any such Insurance Proceeds or Condemnation
Proceeds and to adjust any insurance claims and to file and prosecute such claim
or claims, and although it is hereby expressly agreed that the same shall not be
necessary in any event, Mortgagor shall, upon demand of Mortgagee, make, execute
and deliver any and all assignments and other instruments sufficient for the
purpose of assigning any such Insurance Proceeds or Condemnation Proceeds to
Mortgagee, free and clear of any Liens whatsoever. Mortgagor hereby irrevocably
appoints Mortgagee as Mortgagor's attorney-in-fact for each such purpose (which
appointment is coupled with an interest) and authorizes any Person to act upon
the foregoing appointment.
SECTION 2.8. Transfer Restrictions. Except as expressly permitted by
---------------------
the Credit Agreement, Mortgagor shall not further mortgage, hypothecate, pledge
or suffer to exist any Lien on, or sell, transfer, convey or lease, all or any
part of the Mortgaged Property (or any interest therein).
SECTION 2.9. Mortgagee's Right to Perform. If Mortgagor shall
----------------------------
fail to pay or perform any of the Secured Obligations, then Mortgagee, upon ten
(10) days' prior notice to Mortgagor may, but shall not be obligated to, make
(or cause to be made) any such payment or perform (or cause to be performed) any
such Secured Obligation of Mortgagor, in any form and manner deemed reasonably
appropriate by Mortgagee as agent or attorney-in-fact of Mortgagor, and any
amount so paid or extended, plus reimbursement to Mortgagee for its
-14-
reasonable out-of-pocket and other expenses, including legal expenses, for each
matter for which it acts under this Mortgage, shall be added to the Secured
Obligations and shall be repaid to Mortgagee upon demand. By way of illustration
and not in limitation of the foregoing, Mortgagee may, but need not, make
payments of principal, interest or other charges on any obligations secured by
any Permitted Encumbrance or other Lien or charge; purchase, discharge,
compromise or settle any tax Lien or any other Lien, encumbrance, suit,
proceeding, title or claim thereof; pay any premium owing on any insurance
policy covering the Mortgaged Property; or redeem from any tax sale or
forfeiture affecting the Property or contest any tax or assessment. In making
any payment or securing any performance relating to any such obligation of
Mortgagor hereunder or thereunder, Mortgagee, so long as it acts in good faith,
shall be the sole judge of the legality, validity and amount of any Lien or
encumbrance and of all other matters necessary to be determined in satisfaction
thereof. No such action of Mortgagee shall be considered as a waiver of any
right accruing to it on account of the occurrence of any default on the part of
Mortgagor under this Mortgage, any Event of Default or any default or event of
default under any other Loan Document.
SECTION 2.10. Subrogation. To the extent that Mortgagee, after the
-----------
date hereof, pays pursuant to the terms of this Mortgage, the Credit Agreement
or any other Loan Document any sum due under any provision of law or any
instrument or document creating any Lien prior or superior to the Lien of this
Mortgage, Mortgagee shall have and be entitled to a Lien on the Mortgaged
Property equal in priority to that discharged, and Mortgagee shall be subrogated
to, and receive and enjoy all rights and Liens possessed, held or enjoyed by the
holder of such Lien, which shall remain in existence for the benefit of
Mortgagee to secure the amount expended by Mortgagee on account of or in
connection with such Lien. Mortgagee shall be subrogated, notwithstanding their
release of record, to mortgages, trust deeds, superior titles, vendor's Liens,
Liens, charges, encumbrances, rights and equities on the Property to the extent
that any obligation under any thereof is paid or discharged by Mortgagee.
SECTION 2.11. Inspection of Mortgaged Property. Mortgagor shall
--------------------------------
permit Mortgagee and Mortgagee's agents, as frequently as Mortgagee reasonably
determines to be appropriate, during normal business hours (or at such other
times as may be reasonably be requested by Mortgagee), to enter upon the
Property for the purpose of inspecting and/or appraising the Mortgaged Property
and all books, records and documents of Mortgagor relating thereto, and for the
purpose of performing any of the acts that Mortgagee is authorized to perform
under the terms of any of the Loan Documents; provided, that Mortgagee shall
--------
have no duty to make such inspections and shall not incur any liability or
obligation for making or not making inspections. In exercising the foregoing
rights, Mortgagee shall use reasonable efforts to minimize any disruption of
Mortgagor's operations and shall be subject to Mortgagor's reasonable security
and operating measures.
SECTION 2.12. Certain Tax Law Changes. In the event of the passage
-----------------------
after the date of this Mortgage of any law deducting from the value of real
property, for the purpose of taxation, amounts in respect of any lien thereon or
changing in any way the laws for the
-15-
taxation of mortgages or debts secured by mortgages for state or local purposes
or the manner of the collection of any such taxes, and in any such event
imposing a tax, either directly or indirectly, on this Mortgage, Mortgagor shall
pay such tax on or before the later of the date the same is due and the tenth
day after Mortgagor obtains actual knowledge of the same.
SECTION 2.13. Future Advances.
---------------
(a) Future Advances. All future advances under this Mortgage or under
---------------
any other agreements at any time made between Mortgagor and Mortgagee shall have
the same priority as if the future advance was made on the date that this
Mortgage was recorded. Notice is hereby given that the Secured Obligations may
increase as a result of any defaults hereunder by Mortgagor due to, for example,
and without limitation, unpaid interest or late charges, unpaid Impositions or
insurance premiums or other charges which Mortgagee elects to advance, defaults
under Leases that Mortgagee elects to cure, attorneys' fees or costs incurred in
enforcing the Loan Documents or other expenses. Except as otherwise provided in
the Credit Agreement, interest shall be payable on any future advances at the
Overdue Rate.
(b) Maximum Secured Amount. It is expressly understood and agreed
----------------------
that the total amount of the Secured Obligations secured hereby will in no event
exceed Two Hundred percent (200%) of (i) the total face amounts of the Note;
plus (ii) the total interest which may hereafter accrue under the Note on such
face amount; plus (iii) any fees, costs or expenses which may be payable
hereunder or under the Guarantee.
SECTION 2.14. Covenants in Loan Documents. Mortgagor shall also
---------------------------
comply with all other covenants and obligations (a) which either Wahlco or
Thermatrix is obligated under the Credit Agreement to cause Mortgagor to comply
with, and (b) set forth in the Security Agreement, as if each of the same was
set forth at length herein as the direct obligation of Mortgagor hereunder.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
Mortgagor represents and warrants to and agrees with the Secured
Parties as follows:
SECTION 3.1. Title. Mortgagor owns and will at all times own good
-----
and marketable fee simple title to the Property, and good and valid title to the
balance of the Mortgaged Property, in each case free and clear of all Liens,
other than the Lien and security interests created by this Mortgage and any
Permitted Encumbrances.
SECTION 3.2. Valid Lien and Security Interest. This Mortgage
--------------------------------
creates (a) a valid and enforceable lien on the Property under the laws of the
State in favor of Mortgagee for the benefit of the Secured Parties as security
for the Secured Obligations, and (b) a valid and
-16-
enforceable security interest in the Personal Property under the laws of the
State in favor of Mortgagee for the benefit of the Secured Parties as security
for the Secured Obligations. All necessary actions have been taken to establish
a duly perfected first priority lien and security interest in favor of Mortgagee
in respect of Mortgagor's interest in the Mortgaged Property (other than only
the recording of this Mortgage in the appropriate land records therefor),
including, if required under State law, the filing of record of financing
statements in the appropriate form, properly describing the Personal Property,
duly executed by Mortgagor, in the offices listed on Exhibit D hereto and the
---------
payment of all taxes and filing fees in connection therewith. The description of
the Personal Property set forth in such financing statements is sufficient to
perfect a security interest in those items of Personal Property in which a
security interest may be perfected by the filing of a financing statement under
the Uniform Commercial Code. No further or subsequent filing, refiling,
recording, rerecording, registration or reregistration is necessary, except as
provided under applicable law with respect to the filing of continuation
statements. No mortgage, deed of trust or similar instrument and no financing
statement or other similar document has been signed, recorded or filed covering
Mortgagor's right, title or interest in or to any Mortgaged Property, other than
(a) those naming Mortgagee as mortgagee or secured party thereunder and (b)
those creating Permitted Encumbrances.
ARTICLE IV
SECURITY AGREEMENT AND FIXTURE FILING
SECTION 4.1. Security Agreement.
------------------
(a) Grant of Security Interest. To the extent that the Mortgaged
--------------------------
Property includes Personal Property under applicable State law, this Mortgage
shall also be construed as a security agreement and the grant to the Mortgagee,
for the benefit of the Lenders, of a security interest in such Personal Property
under the Uniform Commercial Code.
(b) Remedies. If an Event of Default shall occur, Mortgagee may
--------
exercise from time to time and at any time any rights and remedies available to
it under applicable law upon default in the payment of indebtedness, including,
without limitation, any right or remedy available to it as a secured party under
the Uniform Commercial Code. Mortgagor shall, promptly upon request by
Mortgagee, assemble the Mortgaged Property, or any portion thereof generally
described in such request, and make the same available to Mortgagee at such
place or places designated by Mortgagee and reasonably convenient to Mortgagee
and Mortgagor. If Mortgagee elects to proceed under the Uniform Commercial Code
to dispose of all or any portion of the Mortgaged Property, Mortgagee, at its
option, may give Mortgagor notice of the time and place of any public sale of
any such property, or of the date after which any sale or other disposition
thereof is to be made, by sending notice by registered or certified first class
mail, postage prepaid, to Mortgagor at least ten (10) days prior to the time of
the sale or other disposition. If any notice of any proposed sale, assignment or
transfer by Mortgagee of any portion of the Collateral or any interest therein
is required by law, Mortgagor conclusively agrees that, unless any longer period
shall then be required by the
-17-
Uniform Commercial Code, ten (10) days' notice to Mortgagor of the date, time
and place (and, in the case of a sale, the terms) thereof is reasonable.
Mortgagee may, at its option, appoint any other Person as the agent of Mortgagee
for the purpose of disposition of the Personal Property in accordance with the
Uniform Commercial Code. Mortgagor acknowledges and agrees that a disposition of
the Personal Property in accordance with Mortgagee's rights and remedies in
respect of the Personal Property as provided in this Section is a commercially
reasonable disposition thereof.
SECTION 4.2. Fixture Filing. To the extent that the Mortgaged
--------------
Property includes items of Personal Property that are or are to become fixtures
under applicable law, and to the extent permitted under applicable law, the
filing of this Mortgage in the land records of the county in which such
Mortgaged Property is located shall also operate from the time of filing as a
fixture filing with respect to such Mortgaged Property, the information required
for the purpose of such fixture filing being as set forth in this Mortgage.
SECTION 4.3. Security Deposit Collateral. So long as no Event of
---------------------------
Default shall have occurred and shall be continuing, Mortgagor shall have the
exclusive right, as between Mortgagor and Mortgagee (and the Lenders), to apply,
draw, make demand, ▇▇▇ for, or amend any Security Deposit Collateral or waive or
release any party from its obligations under or in respect of any Security
Deposit Collateral. If an Event of Default shall occur and shall be continuing,
Mortgagee shall (at its option) have the exclusive right, as between Mortgagor
and Mortgagee, upon notice to Mortgagor, to apply, draw, make demand, ▇▇▇ for,
or amend any Security Deposit Collateral.
SECTION 4.4. Additional Covenants. All other covenants and
--------------------
obligations of Mortgagor contained herein relating to the Mortgaged Property
(including those incorporated by reference under Section 2.14 hereof) shall be
deemed to apply to the Personal Property whether or not expressly referred to in
this Article IV, as if the same were the direct obligation of Mortgagor set
forth at length herein.
-18-
ARTICLE V
ASSIGNMENTS OF RENTS AND LEASES
SECTION 5.1. Assignment of Rents and Leases.
------------------------------
(a) Assignment of Rents. Mortgagor hereby presently, absolutely and
-------------------
irrevocably assigns to Mortgagee, for the benefit of the Lenders, subject to the
license of Mortgagor under subsection (b) of this Section, all Leases and the
Rents, and Mortgagee and, if a Receiver has been appointed under this Mortgage,
such Receiver, shall have the absolute, immediate and continuing right, subject
to mandatory provisions of applicable law, to collect and receive all Rents now
or hereafter, including during any period of redemption, accruing with respect
to the Property. The Lien on the Leases and the Rents made under Granting Clause
H hereof shall be in addition to and subject to the foregoing assignment. At the
request of Mortgagee or such Receiver, Mortgagor shall promptly execute,
acknowledge, deliver, record, register and file any additional general
assignment of the Leases or specific assignment of any Lease which Mortgagee or
such Receiver may require from time to time (all in form and substance
reasonably satisfactory to Mortgagee and such Receiver) to effectuate, complete,
perfect, continue or preserve this assignment of the Leases and the Rents and
the Lien upon the Leases and the Rents made under Granting Clause H.
(b) License to Collect Rents. As long as no Event of Default has
------------------------
occurred, Mortgagor shall have the right under a license granted hereby, subject
to subsection (c) of this Section, to collect the Rents upon the due date
thereof, but not prior to such due date.
(c) Termination of License Upon Event of Default. If an Event of
--------------------------------------------
Default shall occur, the license granted under subsection (b) of this Section
shall immediately and automatically terminate, without the necessity of any
action by any Person, and Mortgagee and any Receiver appointed under this
Mortgage shall have the right to exercise the rights and remedies provided under
this Mortgage or otherwise under applicable law. If an Event of Default shall
occur, upon demand by the Person exercising the rights under this Section,
Mortgagor shall promptly pay to such Person all security deposits under the
Leases and all Rents allocable to any period after the occurrence of such Event
of Default. Subject to any applicable Legal Requirement, any Rents received
hereunder by the Person exercising the rights under this Section shall be
promptly paid to Mortgagee, and any Rents received hereunder by Mortgagee shall
be applied and disbursed as provided in Section 6.9; provided that, subject to
any applicable requirement of law, any security deposits actually received by
Mortgagee shall be held, applied and disbursed as provided in the applicable
Leases.
-19-
(d) Direction to Tenants. Upon the occurrence of an Event of Default,
--------------------
Mortgagor shall, at the direction of Mortgagee, further authorize and direct, in
writing, the tenant under each Lease to pay directly to, or as directed by,
Mortgagee all Rents accruing or due under its Lease without proof to the tenant
of the occurrence and continuance of such Event of Default. Mortgagor hereby
authorizes the tenant under each Lease to rely upon and comply with any notice
or demand from Mortgagee for payment of Rents to Mortgagee and Mortgagor shall
have no claim against any tenant for Rents paid by such tenant to Mortgagee
pursuant to such notice or demand.
(e) No Release of Tenants. Neither this Mortgage nor any action or
---------------------
inaction on the part of Mortgagee shall release any tenant under any lease, any
guarantor of any Lease or Mortgagor from any of their respective obligations
under the Leases or constitute an assumption of any such obligation on the part
of Mortgagee. No action or failure to act on the part of Mortgagor shall
adversely affect or limit the rights of Mortgagee under this Mortgage or,
through this Mortgage, under the Leases.
(f) No Liability of Mortgagee. Neither the acceptance hereof nor the
-------------------------
exercise of the rights and remedies hereunder nor any other action on the part
of Mortgagee or any Person exercising the rights of Mortgagee hereunder shall be
construed to (i) be an assumption by Mortgagee or any such Person or to
otherwise make Mortgagee or such Person liable or responsible for the
performance of any of the obligations of Mortgagor under or with respect to the
Leases or for any Rent, security deposit or other amount delivered to Mortgagor;
provided that Mortgagee or any such Person exercising the rights of Mortgagee
shall be accountable as provided in subsection (c) of this Section for any
Rents, security deposits or other amounts actually received by Mortgagee or such
Person, as the case may be; or (ii) obligate Mortgagee or any such Person to
take any action under or with respect to the Leases or with respect to the
Mortgaged Property, to incur any expense or perform or discharge any duty or
obligation under or with respect to the Leases or with respect to the Mortgaged
Property, to appear in or defend any action or proceeding relating to the Leases
or the Mortgaged Property, to constitute Mortgagee as a mortgagee in possession
(unless Mortgagee actually enters and takes possession of the Mortgaged
Property), or to be liable in any way for any injury or damage to person or
property sustained by any Person in or about the Mortgaged Property, other than
to the extent caused by the willful misconduct or gross negligence of Mortgagee
or any Person exercising the rights of Mortgagee hereunder.
(g) No Existing Leases. Mortgagor represents and warrants that as of
------------------
the date hereof, no Leases exist with respect to the Mortgaged Property.
ARTICLE VI
DEFAULTS AND REMEDIES
SECTION 6.1. Events of Defaults. The following shall be an Event of
------------------
Default hereunder (an "Event of Default"): any Event of Default by or with
respect to
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respect to Mortgagor, either Borrower or any other Loan Party under and as
defined in the Credit Agreement or any other Loan Document.
SECTION 6.2. Remedies.
(a) General. If an Event of Default shall occur and shall be
-------
continuing, Mortgagee, with or without entry onto the Property, shall have the
following rights:
(i) to immediately foreclose this Mortgage and the lien
hereof;
(ii) to sell Mortgagor's right, title and interest in and
to the Mortgaged Property, as a whole or in separate parcels, at one or
more public sales, at such time and place and upon such terms and
conditions as may be required or permitted by applicable law. Such power
shall not be exhausted until the Secured Obligations have been paid in
full. Mortgagee may execute and deliver to the purchaser or purchasers at
any sale a sufficient conveyance of the Mortgaged Property sold thereby
divesting Mortgagor of all right, title or interest that it may have in and
to such Mortgaged Property and vesting the same in the purchaser or
purchasers at such sale or sales, free of the security interest and lien of
this Mortgage and free of all rights of redemption in Mortgagor;
(iii) to take such steps to protect and enforce its rights
and the lien of this Mortgage whether by action, suit or proceeding in
equity or at law for the specific performance of any provision in the Loan
Documents, or in aid of the execution of any power granted in this
Mortgage, or for any foreclosure hereunder, or for the enforcement of any
other appropriate legal or equitable remedy Mortgagee shall elect;
(iv) to apply for the appointment of a Receiver for the
Mortgaged Property in accordance with Section 6.4; and
(v) to take all such other steps and to assert and
exercise all such other rights and remedies as shall be permitted by
applicable law.
(b) Foreclosure. This Mortgage may be foreclosed once against
-----------
all or successively against any part or parts of the Mortgaged Property as
Mortgagee may elect. This Mortgage and the right of foreclosure hereunder shall
not be impaired or exhausted by one or any foreclosure or by one or any sale,
and may be foreclosed successively and in parts, until all of the Mortgaged
Property has been foreclosed against and sold. The purchase money proceeds or
avails of any foreclosure or sale after default and any other sums which then
may be held by Mortgagee under this Mortgage shall be applied as provided in
Section 6.9 hereof.
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(c) Mortgagee May Bid. In connection with any such foreclosure or
-----------------
sale, Mortgagee may bid for and acquire Mortgagor's interest in the Mortgaged
Property or any part thereof and in lieu of paying cash therefor, may make
settlement for the purchase price by crediting upon the Secured Obligations the
net sale price after deducting therefrom the amounts referred to in clause
"first" of Section 6.9. Mortgagee may adjourn from time to time any sale by it
to be made under or by virtue of this Mortgage by announcement at the time and
place appointed for such sale or for such adjourned sale or sales, and,
Mortgagee, without further notice or publication, may make such sale at the time
and place to which the same shall be so adjourned.
(d) Acceleration of Secured Obligations. In the event of any sale
-----------------------------------
made under or by virtue of this Article, the entire principal of, interest and
other amounts in respect of the Secured Obligations, if not previously due and
payable, shall, at the option of Mortgagee, immediately become due and payable,
anything in this Mortgage to the contrary notwithstanding.
SECTION 6.3. Possession of Property.
----------------------
(a) Mortgagor to Vacate Property. Mortgagor hereby waives, if an
----------------------------
Event of Default shall occur and shall be continuing, all right to the
possession and Rents of the Property, and Mortgagor hereby expressly authorizes
and empowers Mortgagee, upon such occurrence and continuation, for the purpose
of protecting and preserving the Property and the interest of Mortgagee therein,
and to the extent permitted by law, (i) to enter upon and take possession of the
Property, to remove and exclude Mortgagor and its agents and servants wholly
therefrom, by summary proceeding, ejectment or other legal proceeding, and to
take possession of all books, records and accounts relating thereto, and
Mortgagor agrees to surrender possession of the Property and of such books,
records and accounts to Mortgagee on demand and (ii) with or without the entry
upon or taking possession of the Property, to hold, operate, manage, repair and
maintain the Mortgaged Property and to collect and receive all Rents derived
from the Property, and after deducting therefrom all reasonable costs, expenses
and liabilities (including reasonable attorneys' fees and expenses) incurred by
Mortgagee in collecting the same and in using, managing, preserving and
controlling the Property for the purpose of protecting and preserving the
Mortgaged Property and the interest of Mortgagee therein, and otherwise in
exercising Mortgagee's rights hereunder, including all amounts necessary to pay
Impositions and reasonable other charges in connection with the Property, as
well as reasonable compensation for Mortgagee's agents and employees, and to
apply the remainder as set forth in Section 6.9. Without limiting any other
right or remedy of Mortgagee pursuant to any other provision of this Mortgage or
the Credit Agreement, upon or at any time after the filing of a suit to
foreclose this Mortgage, the court in which such suit is filed shall have full
power to enter an order placing Mortgagee in possession of the Property with the
same power granted to a Receiver pursuant to the applicable Sections of this
Mortgage and with all other rights and privileges of a mortgagee-in-possession
under applicable State law. All such costs, expenses and liabilities incurred by
Mortgagee shall be Secured Obligations.
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(b) Payment for Use and Occupancy. Following an Event of Default and
-----------------------------
the exercise by Mortgagee of its remedies hereunder, if at any time Mortgagee
shall have (and shall exercise) the right, following such summary proceeding,
ejectment or other proceeding pursuant to Section 6.3(a), to exclude Mortgagor
from all or any part of the Property and Mortgagor shall fail to vacate all or
such portion of the Property, then, Mortgagor shall pay the fair and reasonable
rental value for the use and occupancy of the Property or any portion thereof
that is being occupied by Mortgagor for such period and, upon default of any
such payment Mortgagor may be evicted by any summary action or proceeding for
the recovery of possession of such portion of the Property for nonpayment of
rent, however designated.
SECTION 6.4. Appointment of Receiver. If an Event of Default shall
-----------------------
occur and shall be continuing, Mortgagee shall, to the fullest extent permitted
by law, and without regard to the adequacy or value of any security for the
Secured Obligations or the solvency of Mortgagor, or the occupancy of the
Property or any part thereof as a homestead, and without the requirement of any
bond, be entitled to the appointment of a Receiver for all or any part of the
Mortgaged Property and all Rents therefrom (the inclusion in this Mortgage of
the provisions for the appointment of a Receiver and the assignment of Rents
being an express condition upon which Mortgagee agreed to execute the Credit
Agreement and to accept this Mortgage), whether or not such receivership is
incidental to a proposed sale of the Mortgaged Property or otherwise, and, to
the fullest extent permitted by law, Mortgagor hereby consents to the
appointment of such a Receiver and will not oppose any such appointment.
SECTION 6.5. Waiver of Stay, Extension, Moratorium and Marshalling
-----------------------------------------------------
Laws and Equity of Redemption. To the maximum extent permitted by law, Mortgagor
-----------------------------
shall not at any time insist upon, or plead, or in any manner whatever claim or
take any benefit or advantage of any applicable present or future stay,
extension or moratorium law, which may affect observance or performance of the
provisions of this Mortgage; nor claim, take or insist upon any benefit or
advantage of any present or future law providing for the valuation or appraisal
of, or rights of marshalling with respect to, the Mortgaged Property or any
portion thereof prior to or in connection with any sale or sales thereof which
may be made under or by virtue of this Mortgage; and Mortgagor, to the extent
that it lawfully may, hereby waives all benefit or advantage of any such law or
laws. Mortgagor, for itself and all who may claim under it, hereby waives, to
the maximum extent permitted by applicable law, any and all rights and equities
of redemption from sale under the power of sale created hereunder or from sale
under any order or decree of foreclosure of this Mortgage and (if an Event of
Default shall occur) all notice or notices of seizure, and all right to have the
Mortgaged Property marshalled upon any foreclosure hereof. Mortgagee shall not
be obligated to pursue or exhaust its rights or remedies as against any other
part of the Mortgaged Property and Mortgagor hereby waives any right or claim of
right to have Mortgagee proceed against any portion of the Mortgage Property in
any particular order.
SECTION 6.6. Mortgagee Authorized to Execute Documents. Mortgagor
-----------------------------------------
irrevocably appoints Mortgagee the true and lawful attorney of Mortgagor (which
appointment
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is coupled with an interest and shall be irrevocable), in its name and stead and
on its behalf, for the purpose of effectuating any sale, assignment, transfer or
delivery for the enforcement hereof, whether pursuant to power of sale,
foreclosure or otherwise, to execute and deliver all deeds, bills of sale,
assignments, releases and other instruments as Mortgagee may consider necessary
or appropriate, with full power of substitution, Mortgagor hereby ratifying and
confirming all that its said attorney or any substitute shall lawfully do by
virtue hereof. Nevertheless, if so requested by Mortgagee or any purchaser,
Mortgagor will immediately ratify and confirm, without any cost or charge
therefor, any such sale, assignment, transfer or delivery by executing and
delivering to the grantee or such purchaser all such proper deeds, bills of
sale, assignments, releases and other instruments as may be designated in any
such request.
SECTION 6.7. Collateral Situated in More than One County. If the
-------------------------------------------
Mortgaged Property is situated in two or more counties in the State, or in two
judicial districts of the same county, Mortgagee shall have the full power to
select in which county or counties, or in which judicial district or districts,
the sale of the Mortgaged Property is to be made, and Mortgagee's selection
shall be binding upon Mortgagor and shall permit the sale of the whole to be
made in any of the counties or judicial districts in which part of the Mortgaged
Property is located. Mortgagor hereby waives any right it might otherwise have
or assert to object to foreclosure, through the use of a single Mortgage, upon
all of the Mortgaged Property in the State.
SECTION 6.8. Collateral in Other States. Mortgagor acknowledges and
--------------------------
agrees that the Other Mortgaged Properties may be located in states other than
the State, and Mortgagor therefore waives and relinquishes any and all rights it
may have, whether at law or equity, to require Mortgagee to proceed to enforce
or exercise any rights, powers and remedies that Mortgagee or any trustee may
have under this Mortgage and the Other Mortgages in any particular manner, in
any particular order, or in any particular state or other jurisdiction. Without
limiting the generality of the foregoing, (a) Mortgagee shall not be precluded
from or restricted in exercising any of its rights and remedies hereunder due to
the prior or concurrent exercise by Mortgagee or any trustee of any of its
rights and remedies under any Other Mortgage, (b) neither Mortgagee nor any
trustee shall be precluded from or restricted in exercising any of its rights
and remedies under any Other Mortgage due to the prior or concurrent exercise by
Mortgagee of any of its rights and remedies hereunder, and (c) neither Mortgagee
nor any trustee shall be required to exercise or enforce any of its rights and
remedies under any Other Mortgage before or concurrently with the exercise by
Mortgagee of any of its rights and remedies hereunder. Mortgagor further agrees
that any particular proceeding, including foreclosure through court action (in a
state or federal court) or power of sale, may be brought and prosecuted in the
local or federal courts of any one or more of the states in which any of the
Mortgaged Property and the Other Mortgaged Properties may be located, without
regard to the fact that any one or more prior or contemporaneous proceedings
have been instituted elsewhere with respect to the same or any other portion of
the Mortgaged Properties or the Other Mortgaged Properties.
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SECTION 6.9. Application of Proceeds. Following the occurrence of an
-----------------------
Event of Default, any proceeds of any of the Mortgaged Property shall be applied
first, to the costs and expenses of the Secured Parties payable
-----
pursuant to the Credit Agreement and this Mortgage,
second, to the payment of all other Secured Obligations other than
------
principal and interest,
third, to interest accrued and unpaid on the Secured Obligations, on a
-----
pro rata basis among the Secured Parties determined by the amount of
interest accrued and unpaid on the Secured Obligations of each Secured
Party,
fourth, to the satisfaction of the principal amount of the Secured
------
Obligations, on a pro rata basis among the Secured Parties determined by
principal amount of the Secured Obligations of each Secured Party then
outstanding, and
fifth, the remainder, if any, to Mortgagor or such other Person as may
-----
entitled thereto by law.
Mortgagor shall remain liable for any deficiency.
SECTION 6.10. Setoff. To the fullest extent permitted by applicable
------
law, at any time while an Event of Default has occurred and is continuing, any
and all deposits (including all account balances, whether provisional or final
and whether or not collected or available) and any other Secured Obligations at
any time held or owing by the Secured Parties to or for the credit or account of
Mortgagor, except accounts with respect to which Mortgagor is a trustee or an
escrow agent in respect of bona fide third parties, may be offset and applied
toward the payment of the Secured Obligations owing to such Secured Party,
whether or not the Secured Obligations, or any part thereof, shall then be due.
SECTION 6.11. Receipt a Sufficient Discharge to Purchaser. Upon any
-------------------------------------------
sale of the Mortgaged Property or any part thereof or any interest therein,
whether pursuant to power of sale, foreclosure or otherwise, the receipt by
Mortgagee or the officer making the sale under judicial proceedings of the
purchase money therefor shall be a sufficient discharge to the purchaser for
such purchase money, and such purchaser shall not be obligated to see to the
application thereof.
SECTION 6.12. Sale a Bar Against Mortgagor. Any sale of the Mortgaged
----------------------------
Property or any part thereof or any interest therein under or by virtue of this
Mortgage, whether pursuant to power of sale, foreclosure or otherwise, shall
forever be a bar against Mortgagor.
SECTION 6.13. Remedies Cumulative; Waiver. No remedy or right of
---------------------------
-25-
Mortgagee hereunder, under the Credit Agreement, or any other Loan Document or
otherwise, or available under applicable law, shall be exclusive of any other
right or remedy, but each such remedy or right shall be in addition to every
other remedy or right now or hereafter existing at law or in equity under any
such document or under applicable law. No delay in the exercise of, or omission
to exercise, any remedy or right accruing on any default or Event of Default
shall impair any such remedy or right or be construed to be a waiver of any such
default or Event of Default or an acquiescence therein, nor shall it affect any
subsequent default or Event of Default of the same or a different nature. Every
such remedy or right may be exercised concurrently or independently, and when
and as often as may be deemed proper by Mortgagee. All obligations of Mortgagor,
and all rights, powers and remedies of Mortgagee expressed herein, shall be in
addition to, and not in limitation of, those provided by law or in the Credit
Agreement, any other Loan Document or any other written instrument relating to
any of the Secured Obligations or any security therefor. Any and all covenants
of Mortgagor in this Mortgage may from time to time, by instrument in writing
signed by Mortgagee, be waived to such extent and in such manner as Mortgagee
may desire, but no such waiver will ever affect or impair the rights of
Mortgagee hereunder, except to the extent specifically stated in such written
instrument.
SECTION 6.14. No Liability of Secured Parties. Notwithstanding
-------------------------------
anything contained in this Mortgage, this Mortgage is only intended as security
for the Secured Obligations and the Secured Parties shall not be obligated to
perform or discharge, and does not hereby undertake to perform or discharge, any
obligation, duty or liability of Mortgagor with respect to any of the Mortgaged
Property. Unless and until a Secured Party takes actual possession of the
Mortgaged Property, either through foreclosure, the taking of a deed in lieu
thereof or otherwise, the Secured Parties shall not have responsibility for the
control, care, management or repair of the Property nor shall such Secured Party
be responsible or liable for any negligence in the management, operation,
upkeep, repair or control of the Property resulting in loss or injury or death
to any licensee, employee, tenant or stranger or other Person. Mortgagor shall
indemnify and hold harmless the Secured Parties from and against any and all
loss, cost and liability incurred by Mortgagee in connection with any of the
foregoing which are not the responsibility of the Secured Parties in accordance
with this Section; provided, however, that Mortgagor shall not be liable for
such indemnification to any Secured Party to the extent that any such suit,
action, proceeding, claim, damage, loss, liability or expense results from such
Secured Party's gross negligence or willful misconduct.
ARTICLE VII
CONCERNING MORTGAGEE
SECTION 7.1. [Intentionally Omitted]
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ARTICLE VIII
MISCELLANEOUS
SECTION 8.1. Termination; Defeasance. This Mortgage and the security
-----------------------
interests created hereby shall terminate when the Secured Obligations due and to
become due shall have been paid or performed in full. Upon termination,
Mortgagee shall execute and deliver to Mortgagor an appropriate release and such
other documents reasonably required by Mortgagor, and shall turn over to
Mortgagor any of the Mortgaged Property and any other files, documents or
material held by Mortgagee. Mortgagor shall pay Mortgagee's reasonable expenses
(including attorneys' fees and expenses) in connection with the termination
hereof and any transfer of such property.
SECTION 8.2. Rights Cumulative; Waivers. To the fullest extent
--------------------------
permitted by law, the rights and remedies of the Secured Parties under this
Mortgage and the other Loan Documents shall be cumulative. The exercise, failure
to exercise or delay in exercising any right or remedy by any of the Secured
Parties shall not prevent any of them from exercising any other right or remedy
or exercising such right or remedy at a later time.
SECTION 8.3. Fees and Expenses. Subject to Section 10.2 of the
-----------------
Credit Agreement (to the extent applicable), Mortgagor shall pay upon demand all
fees and expenses (including reasonable attorneys' fees and expenses) incurred
by Mortgagee in connection with (a) the administration of this Mortgage and any
amendment or modification hereof, (b) the custody or preservation of, or the
sale of, collection from, or other realization upon, any of the Mortgaged
Property or (c) the failure by Mortgagor to perform or observe any of the
provisions hereof and the exercise or enforcement of any of the rights of, and
collection of amounts due to, the Secured Parties hereunder.
SECTION 8.4. Indemnification.
---------------
(a) Indemnity. Mortgagor shall protect, indemnify and hold
---------
harmless Mortgagee and each of its Indemnified Parties from and against all
liabilities, obligations, claims, damages, penalties, causes of action, costs,
fees, charges and expenses (including reasonable attorneys' fees and expenses
and further including in connection with the enforcement of this indemnity)
(each, a "Loss") imposed upon or incurred by or asserted against any such
----
Secured Party or Indemnified Party by reason of (i) any accident, injury or
death of persons or loss of or damage to property occurring on or about the
Property or any part thereof; (ii) any use or nonuse of the Property or any part
thereof; (iii) any failure on the part of Mortgagor to perform or comply with
any of the terms of this Mortgage (including with respect to environmental
matters under Article IX of this Mortgage); (iv) the performance of any labor or
services or the furnishing of any materials or other property in respect of the
Mortgaged Property or any part thereof; (v) any negligent or tortious act or
omission on the part of Mortgagor or any of its agents, employees, contractors,
licensees, lessees or invitees;
-27-
(vi) any contest of any Legal Requirement, Imposition or other matter or (vii)
any other matter or thing arising from or attributable to Mortgagor's interest
in the Mortgaged Property and/or receipt of any income therefrom, other than
Losses resulting from Mortgagee's gross negligence or willful misconduct, as
determined by a court of competent jurisdiction. If any action, suit or
proceeding is brought against Mortgagee or any Indemnified Party by reason of
any such occurrence, Mortgagor, upon such Person's request, will at Mortgagor's
expense resist and defend such action, suit or proceeding or will cause the same
to be resisted and defended by counsel for the insurer of the liability or by
counsel approved by such Person. Any amounts payable to Mortgagee or any
Indemnified Party pursuant to the indemnity contained in this Section shall be
due within ten (10) days after demand therefor, and if not paid when due shall
bear interest at the Overdue Rate from and including the date due to the date of
payment by Mortgagor; and all such amounts, together with all such interest,
shall be deemed part of the Secured Obligations secured by this Mortgage. The
indemnity set forth in this Section shall survive the repayment in full of the
Secured Obligations and the release of any and all liens of Mortgagee, the
transfer of any and all right, title and interest in and to the Mortgaged
Property, or any part thereof, to any Person and the satisfaction of the Secured
Obligations.
(b) Third-Party Beneficiaries. Each Indemnified Party shall be a
-------------------------
third-party beneficiary hereof and shall be entitled to, and to enforce, all of
the rights, benefits and protections afforded herein to an Indemnified Party, as
if such Indemnified Party were a party hereto.
SECTION 8.5. Notices. All notices and other communications provided
-------
to any party in connection with this Mortgage shall be given and effective as
follows:
(a) If to the Lenders or to Mortgagee, at:
Wexford Management LLC
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
and
Attention: ▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
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With a copy to:
▇▇▇▇▇▇, ▇▇▇▇▇ & ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
(b) If to Mortgagor, at:
c/o Thermatrix Inc.
▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇,
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
or at such other address as may be substituted by notice given as herein
provided. The giving of any notice required hereunder may be waived in writing
by the party entitled to receive such notice. Every notice, demand, request,
consent, approval, declaration or other communication hereunder shall be deemed
to have been duly given or served on the date on which personally delivered,
with receipt acknowledged, telecopied and confirmed by telecopy answerback or
three (3) Business Days after the same shall have been deposited in the United
States mail. Failure or delay in delivering copies of any notice, demand,
request, consent, approval, declaration or other communication to the persons
designated above to receive copies shall in no way adversely affect the
effectiveness of such notice, demand, request, consent, approval, declaration or
other communication.
SECTION 8.6. Amendment and Waiver. Except as otherwise provided
--------------------
herein, this Mortgage may be amended, and observance of any term of this
Mortgage may be waived, with (and only with) the written consent of Mortgagor
and Mortgagee.
SECTION 8.7. Expenses of Mortgagor's Agreements and Duties. The
---------------------------------------------
terms, conditions, covenants and agreements to be observed or performed by
Mortgagor under this Mortgage shall be observed or performed by it at its sole
cost and expense.
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SECTION 8.8. Mortgagee's Right to Use Agents and to Act in Name of
-----------------------------------------------------
Mortgagor. Mortgagee may exercise its rights and remedies under this Mortgage
---------
through an agent or other designee and, in the exercise thereof, Mortgagee or
any such other Person may act in its own name or in the name and on behalf of
Mortgagor.
SECTION 8.9. No Compensation or Expense. Mortgagee may exercise its
--------------------------
rights and remedies under this Mortgage (a) without payment of any rent, license
fee or compensation of any kind to Mortgagor and (b) for the account, and at the
expense, of Mortgagor.
SECTION 8.10. Limitation of Obligations with Respect to Mortgaged
---------------------------------------------------
Property.
--------
(a) Reasonable Care. Neither Mortgagee nor any other Secured Party
---------------
shall have any duty or liability to protect or preserve any Mortgaged Property
or to preserve rights pertaining thereto other than the duty to use reasonable
care in the custody and preservation of any Mortgaged Property in its actual
possession. Mortgagee shall be deemed to have exercised reasonable care in the
custody and preservation of any Mortgaged Property in its possession if such
Mortgaged Property is accorded treatment substantially equal to that which
Mortgagee accords its own like property. Mortgagee shall be relieved of all
responsibility for any Mortgaged Property in its possession upon surrendering
it, or tendering surrender of it, to Mortgagor.
(b) No Obligations. Nothing contained in this Mortgage shall be
--------------
construed as requiring or obligating Mortgagee or any other Secured Party, and
neither Mortgagee nor any other Secured Party shall be required, or obligated,
to (i) make any demand, or to make any inquiry as to the nature or sufficiency
of any payment received by it, or to present or file any claim or notice or take
any action, with respect to any Mortgaged Property or the monies due or to
become due thereunder or in connection therewith, (ii) ascertain or take action
with respect to calls, conversions, exchanges, maturities, tenders, offers or
other matters relating to any Mortgaged Property, whether or not Mortgagee or
any other Secured Party has or is deemed to have knowledge or notice thereof,
(iii) take any necessary steps to preserve rights against any prior parties with
respect to any Mortgaged Property or (iv) notify Mortgagor or any other Person
of any decline in the value of any Mortgaged Property.
SECTION 8.11. Time of the Essence. Time is of the essence with
-------------------
respect to the various obligations of Mortgagor and rights and remedies of
Mortgagee under this Mortgage.
SECTION 8.12. Inconsistency with Loan Documents. Mortgagor and
---------------------------------
Mortgagee are parties to the Security Agreement. If any term or provision hereof
with respect to any Mortgaged Property hereunder which is Personal Property and
which is the subject of and covered by the Security Agreement is inconsistent
with any term or provision of the
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Security Agreement shall govern and control with respect to such Personal
Property to the extent of such inconsistency.
SECTION 8.13. Severability. If any provision of this Mortgage shall be
------------
invalid, illegal or unenforceable in any jurisdiction, the remaining provisions
shall continue to be valid and enforceable and such provision shall continue to
be valid and enforceable in any other jurisdiction.
SECTION 8.14. Headings. The headings of the Sections and subsections
--------
are for convenience and shall not affect the meaning of this Mortgage.
SECTION 8.15. Assignment; Benefit. Mortgagor may not sell, convey,
-------------------
assign, transfer or otherwise dispose of all or any portion of its rights and
obligations under this Mortgage. Each Lender may assign all or any part of its
rights under this Mortgage as provided in the Credit Agreement. Mortgagor,
Mortgagee, the Lenders and their permitted successors and assigns shall be bound
by this Mortgage. They (and their Indemnified Parties) shall be the only persons
entitled to its benefits.
SECTION 8.16. GOVERNING LAW. THIS MORTGAGE SHALL BE GOVERNED BY, AND
-------------
CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
NOTWITHSTANDING THE FOREGOING, (A) MATTERS RESPECTING TITLE TO THE MORTGAGED
PROPERTY AND THE CREATION, PERFECTION, PRIORITY AND FORECLOSURE OF LIENS ON, AND
SECURITY INTERESTS IN, THE MORTGAGED PROPERTY SHALL BE GOVERNED BY, AND
CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAW OF THE STATE WITHOUT
GIVING EFFECT TO THE CONFLICTS-OF-LAW RULES AND PRINCIPLES OF THE STATE; (B)
MORTGAGOR AGREES THAT WHETHER OR NOT DEFICIENCY JUDGMENTS ARE AVAILABLE UNDER
THE LAWS OF THE STATE AFTER A FORECLOSURE OR SALE (JUDICIAL OR NONJUDICIAL) OF
THE MORTGAGED PROPERTY, OR ANY PORTION THEREOF, OR ANY OTHER REALIZATION THEREON
BY MORTGAGEE, MORTGAGEE SHALL HAVE THE RIGHT, TO THE FULLEST EXTENT PERMITTED BY
APPLICABLE LAW, TO SEEK SUCH A DEFICIENCY JUDGMENT AGAINST MORTGAGOR IN OTHER
STATES OR FOREIGN JURISDICTIONS; AND (C) MORTGAGOR AGREES THAT, TO THE EXTENT
MORTGAGEE OBTAINS A DEFICIENCY JUDGMENT IN ANY OTHER STATE OR FOREIGN
JURISDICTION THEN, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, SUCH PARTY
SHALL HAVE THE RIGHT TO ENFORCE SUCH JUDGMENT IN THE STATE, AS WELL AS IN OTHER
STATES OR FOREIGN JURISDICTIONS.
SECTION 8.17. WAIVER OF JURY TRIAL. MORTGAGOR HEREBY KNOWINGLY,
--------------------
VOLUNTARILY AND INTENTIONALLY WAIVES ANY RIGHTS IT MAY HAVE TO A TRIAL BY JURY
IN RESPECT OF ANY LITIGATION BASED
-31-
HEREON, OR ARISING OUT OF, UNDER OR IN CONNECTION WITH, THIS MORTGAGE OR ANY
OTHER LOAN DOCUMENT, OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS
(WHETHER ORAL OR WRITTEN) OR ACTIONS OF MORTGAGEE OR MORTGAGOR IN CONNECTION
HEREWITH. MORTGAGOR ACKNOWLEDGES AND AGREES THAT IT HAS RECEIVED FULL AND
SUFFICIENT CONSIDERATION FOR THIS PROVISION (AND EACH OTHER PROVISION OF EACH
NOTE DOCUMENT TO WHICH IT IS A PARTY) AND THAT THIS PROVISION IS A MATERIAL
INDUCEMENT FOR MORTGAGEE ENTERING INTO THIS MORTGAGE.
SECTION 8.18. CONSENT TO JURISDICTION. EACH OF THE MORTGAGOR AND
-----------------------
MORTGAGEE IRREVOCABLY SUBMITS TO THE NON-EXCLUSIVE JURISDICTION OF (I) THE
SUPREME COURT OF THE STATE OF NEW YORK, NEW YORK COUNTY AND (II) THE UNITED
STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK, FOR THE PURPOSES OF
ANY SUIT, ACTION OR OTHER PROCEEDING ARISING OUT OF THIS MORTGAGE OR ANY
TRANSACTION CONTEMPLATED HEREBY. EACH OF THE MORTGAGOR AND MORTGAGEE FURTHER
AGREES THAT SERVICE OF ANY PROCESS, SUMMONS, NOTICE OR DOCUMENTS BY UNITED
STATES REGISTERED MAIL TO SUCH PARTY'S RESPECTIVE ADDRESS FOR NOTICES SET FORTH
IN SECTION 8.5 SHALL BE EFFECTIVE SERVICE OF PROCESS FOR ANY ACTION, SUIT OR
PROCEEDING IN NEW YORK WITH RESPECT TO ANY MATTERS TO WHICH IT HAS SUBMITTED TO
JURISDICTION IN THIS SECTION. EACH OF THE MORTGAGOR AND MORTGAGEE IRREVOCABLY
AND UNCONDITIONALLY WAIVES ANY OBJECTION TO THE LAYING OF VENUE OF ANY ACTION,
SUIT OR PROCEEDING ARISING OUT OF THIS MORTGAGE OR THE TRANSACTIONS CONTEMPLATED
HEREBY IN (A) THE SUPREME COURT OF THE STATE OF NEW YORK, NEW YORK COUNTY AND
(B) THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK, AND
HEREBY FURTHER IRREVOCABLY AND UNCONDITIONALLY WAIVES AND AGREES NOT TO PLEAD OR
CLAIM IN ANY SUCH COURT THAT ANY SUCH ACTION, SUIT OR PROCEEDING BROUGHT IN ANY
SUCH COURT (OR IN ANY COURT DESCRIBED BELOW) HAS BEEN BROUGHT IN AN INCONVENIENT
FORUM. MORTGAGOR ACKNOWLEDGES THAT IN ANY ACTION OR PROCEEDING TO ENFORCE
PAYMENT OF THE SECURED OBLIGATIONS OR ANY OTHER RIGHT OF THE MORTGAGEE OR THE
LENDERS UNDER THIS MORTGAGE, IT WAIVES THE RIGHT TO ASSERT ANY COUNTERCLAIM OF
ANY KIND OTHER THAN A COMPULSORY COUNTERCLAIM. NOTWITHSTANDING THE FOREGOING,
NOTHING HEREIN SHALL AFFECT THE RIGHT OF MORTGAGEE TO SERVE PROCESS IN ANY
MANNER PERMITTED BY STATE LAW OR TO COMMENCE PROCEEDINGS OR OTHERWISE PROCEED
AGAINST MORTGAGOR OR OTHERWISE TO FORECLOSE THIS MORTGAGE OR EXERCISE ANY OTHER
REMEDIES HEREUNDER IN ANY APPROPRIATE STATE COURT OR FEDERAL COURT IN THE STATE.
-32-
SECTION 8.19. Limitation on Interest Payable. It is the intention of
------------------------------
the parties to conform strictly to the usury laws, whether State or federal,
that are applicable to the transaction of which this Mortgage is a part. All
agreements between Mortgagor and Mortgagee (and the Lenders) whether now
existing or hereafter arising and whether oral or written, are hereby expressly
limited so that in no contingency or event whatsoever shall the amount paid or
agreed to be paid by Mortgagor for the use, forbearance or detention of the
money to be loaned under the Credit Agreement or any Loan Document, or for the
payment or performance of any covenant or obligation contained herein or in the
Credit Agreement or any related document or other Loan Document, exceed the
maximum amount permissible under applicable federal or state usury laws. If
under any circumstances whatsoever fulfillment of any such provision, at the
time performance of such provision shall be due, shall involve exceeding the
limit of validity prescribed by law, then the obligation to be fulfilled shall
be reduced to the limit of such validity. If under any circumstances Mortgagor
shall have paid an amount deemed interest by applicable law, which would exceed
the highest lawful rate, such amount that would be excessive interest under
applicable usury laws shall be applied to the reduction of the principal amount
owing in respect of the Secured Obligations and not to the payment of interest,
or if such excessive interest exceeds the unpaid balance of principal and any
other amounts due hereunder, the excess shall be refunded to Mortgagor. All sums
paid or agreed to be paid for the use, forbearance or detention of the principal
under any extension of credit by Mortgagee shall, to the extent permitted by
applicable law, and to the extent necessary to preclude exceeding the limit of
validity prescribed by law, be amortized, prorated, allocated and spread from
the date of this Mortgage until payment in full of the Secured Obligations so
that the actual rate of interest on account of such principal amounts is uniform
throughout the term hereof.
SECTION 8.20. Covenants To Run With the Land. All of the grants,
------------------------------
covenants, terms, provisions and conditions in this Mortgage shall run with the
Land and shall apply to, and bind the successors and assigns of Mortgagor. If
there shall be more than one mortgagor, the covenants and warranties hereof
shall be joint and several.
SECTION 8.21. No Merger. The rights and estate created by this
---------
Mortgage shall not, under any circumstances, be held to have merged into any
other estate or interest now owned or hereafter acquired by Mortgagee unless
Mortgagee shall have consented to such merger in writing.
SECTION 8.22. Relationship. The relationship of Mortgagee to Mortgagor
------------
hereunder is strictly and solely that of mortgagor and mortgagee and nothing
contained in this Mortgage, or any other document or instrument now existing and
delivered in connection therewith or otherwise in connection with the Secured
Obligations is intended to create, or shall in any event or under any
circumstance be construed as creating a partnership, joint venture, tenancy-in-
common, joint tenancy or other relationship of any nature whatsoever between
Mortgagee and Mortgagor other than as mortgagee and mortgagor.
-33-
ARTICLE IX
ENVIRONMENTAL MATTERS
SECTION 9.1. Notice of Environmental Matters.
(a) Delivery of Notice. Mortgagor shall notify Mortgagee promptly
------------------
after, and in any event within three (3) Business Days after, any Responsible
Officer of Mortgagor obtains knowledge of one or more of the matters described
in Section 6.2(i) of the Credit Agreement with respect to the Property or
Mortgagor, as if the same was a direct obligation of Mortgagor set forth at
length herein.
(b) Contents of Notice. All such notices shall comply with the
------------------
requirements of such Section. In addition, Mortgagor shall provide Mortgagee
with copies of all communications between Mortgagor and any Person required by
or otherwise relating to any of the matters described in such Section.
SECTION 9.2. Obligations of Mortgagor. Mortgagor hereby covenants to
------------------------
comply with, and to cause its officers, directors, shareholders, partners,
agents, servants and employees and each tenant of the Property to comply with,
all of the obligations applicable to Mortgagor, the Property and each such
tenant with respect to the Property set forth in Section 6.6(b) of the Credit
Agreement, as if each of the same was a direct obligation of Mortgagor set forth
at length herein.
-34-
IN WITNESS WHEREOF, Mortgagor has duly executed and delivered this
Mortgage as of the date first written above.
WAHLCO, INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
--------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Executive Vice President and
and Chief Financial Officer
Attest:
__________________________
Name:
Title:
-▇▇-
▇▇▇▇▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇ )
) ss.:
COUNTY OF NEW YORK )
I, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, a Notary Public in and for said County, in
the State aforesaid, do hereby certify that ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ Executive Vice
President and Chief Financial Officer of Wahlco, Inc., a California corporation,
who is personally known to me to be the same person whose name is subscribed to
the foregoing instrument appeared before me this day in person and acknowledged
that he/she signed and delivered the said instrument as his/her own free and
voluntary act and as the free and voluntary act and deed of said corporation for
the uses and purposes therein set forth.
Given under my hand and notarial seal, this 25th day of February,
1999.
/s/ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
-------------------------
Notary Public
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
-------------------------
(Type or Print Name)
(Seal)
My Commission Expires: ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Notary Public, State of New York
No. 01J05088551
Qualified in New York County
Commission Expires 11/17/1999
-36-
Exhibit A
to Mortgage
DESCRIPTION OF LAND
▇▇▇ ▇▇▇▇ ▇▇▇/▇▇/ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
described more particularly as follows:
Lot 15 in ▇▇▇▇▇ ▇▇▇▇▇▇'▇ third addition to Washington Park, being a subdivision
of the West 2 of the East 30 Rods of the Northwest 3 of Section 28, Township 36
North, Range 14, East of the Third Principal Meridian, Plat thereof recorded
August 16, 1930, as Document ▇▇. ▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇.
Real Estate Index No.: ▇▇-▇▇-▇▇▇-▇▇▇
A-1
Exhibit B
to Mortgage
MATERIAL AGREEMENTS
None.
B-1
Exhibit C
to Mortgage
PERMITTED ENCUMBRANCES
1. Liens created or permitted by the Credit Agreement.
2. Zoning laws and regulations.
3. Any charges, liens or encumbrances existing as of the Effective Date.
C-1
Exhibit D
to Mortgage
INFORMATION FOR FINANCING STATEMENTS
Chief Executive Office: ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Principal Place of Business: ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Location of Each Required Filing Office:
1. Secretary of State of Illinois
2. Secretary of State of California
3. Recorder of Deeds, ▇▇▇▇ County, Illinois
D-1