Common use of Covenants and Warranties Clause in Contracts

Covenants and Warranties. Mortgagor covenants, warrants and agrees as follows: 1.1 Mortgagor is lawfully seized of the Mortgaged Property and has the right to encumber it with the lien created by this Mortgage, which lien is subject only to the Permitted Exceptions. Mortgagor will defend the title thereto in any action affecting the rights of the Mortgagee hereunder and pay all costs of any such action (including, but not limited to, reasonable attorneys' fees actually incurred), whether or not such action (a) progresses to judgment, or (I)) is brought by or against Mortgagee. 1.2 Subject to the terms of Section 5.11 of the Loan Agreement, Mortgagor will pay or cause to be paid (before they become delinquent) all taxes and exhibit the receipts therefor to Mortgagee. The term "taxes" as used in this Section 1.2 shall be deemed to include all assessments, impositions and other governmental charges, ordinary or extraordinary, foreseen or unforeseen, that may be levied, assessed or otherwise become a lien upon or charge against the Mortgaged Property, or the interest created therein by this Mortgage. After the occurrence of an Event of Default and upon written demand by Mortgagee, Mortgagor will deposit or cause to be deposited monthly with Mortgagee or its duly authorized agent an amount that will create a fund sufficient to make each and every payment of taxes in the future as the same shall become due and payable. Such deposits shall be received and held by Mortgagee or its agent, in a non- interest bearing account, unless othenvise required by law, and applied to the payment of each installment of such taxes as it becomes due and payable and Mortgagor shall furnish to Mortgagee or its agent, promptly upon receipt, the tax bills with respect thereto. If Mortgagor shall have deposited amounts in the aggregate more than sufficient to pay such taxes, the excess shall be applied by Mortgagee toward the deposits next required to be made hereunder or at its election shall be repaid to Mortgagor. All of Mortgagor's interest in such deposits is hereby assigned by Mortgagor to Mortgagee, and Mortgagor hereby pledges to Mortgagee an interest in such deposits, as additional security for the performance of the obligations secured hereby. Upon performance in full of all indebtedness secured hereby, any monthly deposits then held by Mortgagee or its agent shall be repaid to Mortgagor, or as otherwise may be required by law.

Covenants and Warranties. Mortgagor covenants, warrants Section 2.1. The Guarantor hereby absolutely and agrees as follows: 1.1 Mortgagor is lawfully seized of the Mortgaged Property and has the right to encumber it with the lien created by this Mortgage, which lien is subject only unconditionally guarantees to the Permitted Exceptions. Mortgagor will defend the title thereto in any action affecting the rights of the Mortgagee hereunder and pay all costs of any such action (including, but not limited to, reasonable attorneys' fees actually incurred), whether or not such action Bank (a) progresses to judgment, or (I)) is brought by or against Mortgagee. 1.2 Subject to the terms of Section 5.11 full and prompt payment of the Loan Agreementprincipal, Mortgagor will pay or cause interest, premiums, penalties and late charges, if any, and other amounts required to be paid (before they become delinquent) by Borrower pursuant to each Note, Agreement and/or Mortgage, and all taxes renewals1 replacements, extensions and/or modifications thereof, when and exhibit the receipts therefor to Mortgagee. The term "taxes" as used in this Section 1.2 shall be deemed to include all assessments, impositions and other governmental charges, ordinary or extraordinary, foreseen or unforeseen, that may be levied, assessed or otherwise become a lien upon or charge against the Mortgaged Property, or the interest created therein by this Mortgage. After the occurrence of an Event of Default and upon written demand by Mortgagee, Mortgagor will deposit or cause to be deposited monthly with Mortgagee or its duly authorized agent an amount that will create a fund sufficient to make each and every payment of taxes in the future as the same shall become due due, whether at the stated maturity thereof, by acceleration or otherwise, and payable(b) the full and prompt performance of all other obligations, if any, required to be performed by the Borrower pursuant to each Note, Agreement and/or Mortgage, and all renewals, replacements, extensions and/or modifications thereof, as and when the same shall become due, including any such amounts thereafter paid by the Bank to any trustee, receiver or any other person pursuant to any bankruptcy, insolvency, reorganization, moratorium, fraudulent transfer or conveyance or similar statute, common law or equitable doctrine. Section 2.2. Such deposits If any obligation of Guarantor under the guarantee in Section 2.1 above is at any time and for any reason void or unenforceable, the Guarantor, as an additional and independent obligation, hereby agrees to indemnify and hold harmless Bank against and from any and all loss, cost, damage or expense (including attorneys' fees in all trial, bankruptcy and appellate proceedings, and whether or not litigation has been commenced) suffered or incurred by Bank as a result of any such obligation being void or unenforceable against Guarantor, and the Guarantor expressly agrees that in such event the Guarantor shall be received liable to the Bank as principal obligor on each Note, the Agreement and Mortgage to the same extent as if Guarantor had been the original signer and obligor thereof and said instruments were fully enforceable as written against said Guarantor. Section 2.3. The obligations of Guarantor under this Guaranty shall be absolute and unconditional and shall remain in full force and effect and shall not be discharged, affected, modified or impaired upon the happening from time to time of any event, including, without limitation, any of the following, whether or not with notice to or the consent of the Guarantor: (a) the waiver, compromise, settlement, release, termination, modification or amendment (including extending the time for payment or performance) of any or all of the obligations, covenants or agreements of the Borrower or any obligor under any Note, Agreement or Mortgage or of any or all of the obligations, covenants or agreements of any other guarantor of the Loan; (b) the failure to give notice to Guarantor of the occurrence of a default under the terms and provisions of any Note, Agreement or Mortgage; (c) the release by the holder of any Note of any security held by Mortgagee it for the payment of any amount due pursuant thereto or its agentto this Guaranty, or of the liabilities or obligations of the Borrower with respect thereto (whether with or without consideration), or the acceptance by the holder of any Note of any additional security for any such payments or obligations or the availability or claimed availability of any other security, collateral or source of payment therefor; (d) the voluntary or involuntary liquidation, dissolution, sale or other disposition of all or substantially all the assets, marshalling of assets and liabilities, receivership, insolvency, bankruptcy, assignment for the benefit of creditors, reorganization, arrangement, composition with creditors or readjustment of or other similar proceedings affecting the Guarantor or the Borrower or any of their assets; (e) Any merger or consolidation involving Borrower, any sale, assignment, transfer, conveyance or issuance of any stock or any other equity interest by Borrower, or any sale, assignment, transfer or conveyance by Guarantor or any other person of all or any part of his interest in a non- interest bearing accountBorrower or any affiliate of Borrower; (f) any failure, unless othenvise required omission or delay by the Bank in enforcing, asserting or exercising any right, power or remedy under any Note, Agreement or Mortgage, this Guaranty, or at law or in equity; (g) to the extent permitted by law, and applied any event or action that would, in the absence of this clause, result in the release or discharge of the Guarantor from the performance or observance of any obligation covenant or agreement contained in this Guaranty; (h) any assignment or transfer by the Bank or any other person entitled to the payment benefit of each installment this Guaranty of such taxes as all or any interest in any Note without the express assignment of this Guaranty; or (i) the invalidity or unenforceability of any term or provision in any Note, Agreement, Mortgage or this Guaranty. Without limiting the foregoing, it becomes due is the intention of the parties that any modification, limitation, or discharge of the obligations of the Guarantor arising out of or by virtue of any bankruptcy, reorganization or similar proceeding for relief of debtors under Federal or state law shall not affect, modify, limit, or discharge the liability of any other guarantor of the Loan in any manner whatsoever, and payable this Guaranty shall remain and Mortgagor shall furnish to Mortgagee or its agent, promptly upon receipt, the tax bills with respect thereto. If Mortgagor shall have deposited amounts continue in the aggregate more than sufficient to pay such taxes, the excess full force and effect and shall be applied enforceable against Guarantor to the same extent and with the same force and effect as if any such proceedings had not been instituted; and the Guarantor shall be liable to the Bank under this Guaranty for the full amount payable hereunder irrespective of any modification, limitation, or discharge of the liability of any other guarantor that may result from any such proceeding. The Guarantor's obligations to Bank pursuant hereto include and apply to any payment or payments received by Mortgagee toward Bank on account of the deposits next liabilities guaranteed hereby, which payment or payments or any part thereof are subsequently invalidated, declared to be fraudulent or preferential, set aside and/or required to be made hereunder paid to a trustee, receiver, or at its election shall be repaid any other person or entity under any bankruptcy, insolvency, reorganization, moratorium, fraudulent transfer or conveyance or similar law, common law or equitable doctrine. The Guarantor's obligations to Mortgagor. All of Mortgagor's interest in such deposits is hereby assigned by Mortgagor to MortgageeBank and this Guaranty, and Mortgagor hereby pledges to Mortgagee an interest any security therefor, shall remain in such deposits, as additional security for the performance of the obligations secured hereby. Upon performance full force and effect (or be reinstated) until Bank has received payment in full of all indebtedness secured herebyamounts payable to it pursuant to the Notes, Agreements, Mortgages and this Guaranty and the expiration of any monthly deposits applicable preference or similar period pursuant to any bankruptcy, insolvency, reorganization, moratorium, fraudulent transfer or conveyance or similar law, or at law or equity, without any claim to all or any part of any such payment being made before the expiration of such period. If any action or proceeding seeking such repayment is pending or, in Bank's sole judgment, threatened, this Guaranty and any security interest therefor shall remain in full force and effect notwithstanding that Borrower or Guarantor may not then be otherwise obligated to Bank. Section 2.4. No set-off, counterclaim, reduction or diminution of any obligation, or any defense of any kind or nature which Guarantor has or may have against the Borrower shall affect modify or impair its obligations hereunder. Section 2.5. In the event of a default in the payment of the principal, penalties and late charges, if any, or interest on any Note when and as the same shall become due, whether at the stated maturity thereof1 by acceleration or otherwise, or in the event of any Event of default under any Mortgage or Agreement or any instrument collateral or supplemental thereto, the Bank may proceed first and directly against the Guarantor without proceeding first or concurrently against the Borrower or exercising, pursuing or exhausting any other rights, powers or remedies which it may have and without resorting to any other security held or available to it. Section 2.6. This Guaranty shall constitute a continuing guarantee, and the Bank may continue, without notice to the Guarantor, to make loans to the Borrower subsequent to the date of this Guaranty. The Guarantor hereby expressly waives notice in writing, or otherwise, from the Bank at any time or from time to time of its acceptance and reliance on this Guaranty. The Guarantor also waives presentment, demand for payment, protest and notice of nonpayment or dishonor relating to any Note or this Guaranty and all other notices to which the undersigned might otherwise be entitled by Mortgagee law. The Guarantor agrees to pay all costs, expenses and fees, including all reasonable attorneys' fees (whether in trial, appellate, bankruptcy or its agent other proceedings), which may be incurred in enforcing or attempting to enforce this Guaranty, whether the same shall be repaid enforced by suit or otherwise. Section 2.7. All rights and claims of Guarantor (collectively the "Guarantor Claims") against Borrower or any of Borrower's property, now or hereafter existing, shall be subordinate and subject in right of payment to Mortgagorthe prior payment in full of Borrower's and Guarantor's obligations to Bank. Until such obligations have been paid in full and Guarantor shall have performed all of its obligations hereunder, Guarantor shall not receive or collect, directly or indirectly, from Borrower or any other party any payment upon the Guarantor Claims nor seek to realize upon any collateral securing any such Guarantor Claim. Notwithstanding the foregoing, if Guarantor should receive any such payment, Guarantor agrees to hold same in trust for Bank, and agrees that it shall have absolutely no rights in or to such payments except to pay them promptly to Bank, and Guarantor hereby covenants to do so. Guarantor will not assert any right to which it may be or may become entitled, whether by subrogation, contribution or otherwise, against the Borrower or against its properties, by reason of the performance by the Guarantor of its obligations under this Guaranty, except after satisfaction and discharge in full of the obligations to Bank under the Notes, the Agreement, Mortgage and this Guaranty. Section 2.8. Guarantor shall at all times during the term of the Loan (i) own all of the outstanding stock of the Borrower; (ii) maintain its common stock effectively registered under the Securities Exchange Act of 1 934; (iii) maintain at all times a tangible net worth as hereinafter defined ("Tangible Net Worth") of not less than $3,800,000.00 (which requirement may be adjusted by Bank twelve (12) months after the date hereof and each anniversary thereafter); and iv) have thirty five percent (35%) of its common stock issued and outstanding individually owned of record by Xxxxx Xxxxxxx. Bank agrees to reduce the ownership requirement in clause (iv) to thirty percent (30%), provided all of Guarantor's other lenders also reduce the ownership covenants in their lending agreements to thirty percent (30%). Tangible Net Worth is defined as the excess of the consolidated net book value (after deducting all amounts due from subsidiaries and affiliates, if any all applicable reserves and any value attributable to the re-appraisal or write-up of any asset) of assets of Guarantor and its subsidiaries (other that patents, copyrights, trademarks, franchises, licenses, goodwill, customer lists, employees1 and similar intangibles, treasury stock and amounts due from directors, stockholders or affiliates) over all their liabilities (other than (i) any liabilities or indebtedness subordinated by written agreement in form and substance satisfactory to Bank in favor of the prior payment in full of the Loan, (ii) non recourse purchase money financing to Borrower for the Subdivision or Project, and (iii) other nonrecourse financing to Guarantor not to exceed $2,000,000.00 in the aggregate) as determined on an accrual basis and in accordance with generally accepted accounting principles consistently applied. Section 2.9. Not later than ninety (90) days after the close of each fiscal year of Guarantor, Guarantor shall furnish to Bank a Certificate from the auditors of Guarantor, (i) briefly setting forth the scope of their review which shall include a review of the relevant provisions of Guarantor's Agreements with its lenders and stating that in their judgment such review is sufficient to enable them to give the Certificate, and (ii) stating whether or not their review has disclosed the existence of any condition or event which constitutes an Event of Default under any such Agreements, or as otherwise may be required which, with the passage of time or service of notice or both, would constitute such an Event of Default, and, if their review has disclosed such a condition or event, specifying the nature and period of the existence thereof. Section 2.10. Guarantor shall deliver to Bank complete copies (with all schedules and exhibits) of each of the Form 10-K Annual Reports and Form 10-Q Quarterly Reports filed by lawGuarantor with the United States Securities and Exchange Commission (the "SEC") no later than five (5) business days following the earlier of actual delivery to the SEC or the last date of timely filing thereof with the SEC or within any legally permitted unconditional extension up to a maximum of thirty (30) days. Section 2.11. Guarantor shall pay no cash dividends without the prior written consent of Bank. Section 2.12. Xxxxx Xxxxxxx shall remain chief executive officer of Guarantor at all times during the term of the Loan.

Covenants and Warranties. Mortgagor covenants, The Borrower covenants with and warrants and agrees as followsto the Bank: 1.1 Mortgagor is lawfully seized of the Mortgaged Property and has the right to encumber it with the lien created by this Mortgage, which lien is subject only to the Permitted Exceptions. Mortgagor will defend the title thereto in any action affecting the rights of the Mortgagee hereunder and pay all costs of any such action (including, but not limited to, reasonable attorneys' fees actually incurred), whether or not such action (a) progresses That all Inventory in which the Bank is now or hereafter given a security interest pursuant to judgmentthis Agreement will at all times be kept and maintained in good order and condition at the sole cost and expense of the Borrower. (b) That the Borrower will maintain in force one or more policies of insurance on all Inventory against risks of fire (with customary extended coverage), sprinkler leakage, theft, loss or damage and other risks customarily insured against by companies engaged in businesses similar to that of the Borrower in such amounts, containing such terms, in such form, for such periods, covering such hazards and written by such companies as may be satisfactory to the Bank, such insurance to be payable to the Bank as its interest may appear in the event of loss; the policies for the same shall be deposited with the Bank; no loss shall be adjusted thereunder without the Bank's approval; and all such policies shall provide that they may not be cancelled without first giving at least ten (10) days' written notice of cancellation to the Bank. In the event that the Borrower fails to provide evidence of the maintenance of such insurance satisfactory to the Bank, the Bank may, at is option, secure such insurance and charge the cost thereof to the Borrower and as a debit charge in the Borrower's Loan Account, if any, or (I)) is brought by any other account of the Borrower with the Bank. At the option of the Bank, all insurance proceeds received from any loss or against Mortgagee. 1.2 Subject damage to any of the Collateral shall be applied either to the terms of Section 5.11 replacement or repair thereof or as a payment on account of the Loan Agreement, Mortgagor will pay or cause to be paid (before they become delinquent) all taxes Obligations. From and exhibit the receipts therefor to Mortgagee. The term "taxes" as used in this Section 1.2 shall be deemed to include all assessments, impositions and other governmental charges, ordinary or extraordinary, foreseen or unforeseen, that may be levied, assessed or otherwise become a lien upon or charge against the Mortgaged Property, or the interest created therein by this Mortgage. After after the occurrence of an Event of Default Default, or after demand respecting any Obligations payable upon demand, the Bank is authorized to cancel any insurance maintained hereunder and upon written demand by Mortgageeapply any returned or unearned premiums, Mortgagor all of which are hereby assigned to the Bank, as a payment on account of the Obligations. (c) That at the date hereof the Borrower is (and as to Collateral that the Borrower may acquire after the date hereof, will deposit or cause be) the lawful owner of the Collateral, and that the Collateral, and each item thereof, is, will be, and shall continue to be deposited monthly with Mortgagee free of all restrictions, liens, encumbrances, or its duly authorized agent an amount other rights, title or interests (other than the security interest therein granted to the Bank hereby), credits, defenses, recoupments, set-offs or counterclaims whatsoever; that the Borrower has and will create have full power and authority to grant to the Bank a fund sufficient security interest therein, and that the Borrower has not transferred, assigned, sold, pledged, encumbered, subjected to make each lien or granted any security interest in, and every payment of taxes will not transfer, assign, sell (except sales or other dispositions in the future ordinary course of business in respect to Inventory as expressly permitted in this Agreement), pledge, encumber, subject to lien or grant any security interest in any of the Collateral (or any of the Borrower's right, title or interest therein), to any person other than the Bank; that the Collateral is and will be valid and genuine in all respects; that all accounts arise out of legally enforceable and existing contracts in accordance with their tenor; and that upon the Borrower's acquisition of any interest in contract rights, it shall in writing immediately notify the Bank thereof, specifically identifying the same as contract rights, and, except for such contract rights, no part of the Collateral (or the validity or enforceability by the Bank thereof) is or shall be contingent upon the fulfillment of any agreement or condition whatsoever and that the Collateral, other than Inventory and Equipment, shall represent unconditional and undisputed bona fide indebtedness by the Debtor for sales or leases of Inventory shipped and delivered or services rendered by the Borrower to Debtor, and is not and will not be subject to any discount (except such cash or trade discount as may be shown on any invoice, contract or other writing delivered to the Bank); and that the Borrower will warrant and defend the Bank's right to and interest in the Collateral against all claims and demands of all persons whatsoever. (d) That no contract right, account, general intangible or chattel paper is or will be represented by any note or other instrument (negotiable or otherwise), and that no contract right, account or general intangible is, or will be represented by any conditional or installment sales obligation or other chattel paper, except such instruments or chattel paper as have been or forthwith upon receipt by the Borrower will be delivered to the Bank (duly endorsed or assigned, as may be appropriate), such delivery, in the case of chattel paper, to include all executed copies except those in the possession of the installment buyer and that any security for or guaranty of any of the Collateral shall be delivered to the Bank immediately upon receipt thereof by the Borrower, with such assignments and endorsements thereof as the Bank may request. (e) That, except for sale, processing, use consumption or other disposition in the ordinary course of business, the Borrower will keep all Inventory only at locations specified in this Agreement; that the Borrower shall, during the term of this Agreement, keep the Bank currently and accurately informed in writing of each location where the Borrower's records relating to its accounts and contract rights, respectively, are kept, and shall not remove such records, or any of them, to another state without giving the Bank at least thirty (30) days prior written notice thereof; that the Borrower's chief executive office is correctly stated in the preamble to this Agreement, and Borrower shall, during the term of this Agreement, keep the Bank currently and accurately informed in writing of each of its other places of business, and shall not change the location of such chief executive office or open any new, or close, move or change any existing of new place of business without giving the Bank at least thirty (30) days prior written notice thereof. (f) That the Bank shall not be deemed to have assumed any liability or responsibility to the Borrower or any third person for the correctness, validity or genuineness of any instruments or documents that may be released or endorsed to the Borrower by the Bank (which shall automatically be deemed to be without recourse to the Bank in any event) or for the existence, character, quantity, quality, condition, value or delivery of any goods purporting to be represented by any such documents; and that the Bank, by accepting such security interest in the Collateral, or by releasing any Collateral to the Borrower, shall not be deemed to have assumed any obligation or liability to any supplier or Debtor or to any other third party, and the Borrower agrees to indemnify and defend the Bank and hold it harmless in respect to any claim or proceeding arising out of any matter referred to in this Paragraph. (g) That each account or other item of Collateral, other than Inventory and Equipment, will be paid in full on or before the date shown as its due date in the schedule of Collateral, in the copy of the invoice(s) relating to the account or other Collateral or in contracts relating thereto; that upon any suspension of business, assignment or trust mortgage for the benefit of creditors, dissolution, petition in receivership or under any chapter of the Bankruptcy Code as amended from time to time by or against any Debtor, any Debtor becoming insolvent or unable to pay its debts as they mature, or any other act of the same shall become or different nature amounting to a business failure, the Borrower will forthwith notify the Bank thereof. (h) That the Borrower will immediately notify the Bank of any loss or damage to, or material diminution in or any occurrence which would adversely affect the value of, the Inventory, the Equipment or other Collateral. (i) That the Bank may from time to time in the Bank's discretion hold and treat any deposits or other sums at any time credited by or due from the Bank to the Borrower and payableany securities or other property of the Borrower in the possession of the Bank, whether for safekeeping or otherwise, as collateral security for and apply or set the same off against any Obligations whether or not an Event of Default has occurred or demand has been made. Such deposits Without limiting the generality of the foregoing, if at any time the amount of the revolving credit as then set by the Bank shall be received exceeded, the Borrower shall pay cash to the Bank in the amount of such excess if the Bank so requests, or the Bank may charge such amount against any deposit account of the Borrower with the Bank. (j) That if any of the Collateral includes a charge for, or if any loan by the Bank to the Borrower shall be subject to any tax payable to any governmental taxing authority, the Borrower shall pay such tax independently when due. The Bank may retain the full proceeds of the Collateral and held by Mortgagee the Borrower will indemnify and save the Bank harmless from any loss, cost, liability or its agentexpense (including, without limitation, reasonable attorney's fees), in connection therewith. (k) That at any time or times and whether or not an Event of Default has occurred or demand has been made, the Bank may notify any Debtor or Debtors of its security interest in the Collateral and collect all amounts due thereon; and the Borrower agrees, at the request of the Bank, to notify all or any of the Debtors in writing of the Bank's security interest in the Collateral in whatever manner the Bank requests and, if the Bank so requests, to permit the Bank to mail such notices at the Borrower's expense. (l) That the Bank may, at its option, from time to time, discharge any taxes, liens or encumbrances of any of the Collateral, or take any other action that the Bank may deem proper to repair, maintain or preserve any of the Collateral, and the Borrower will pay to the Bank on demand or the Bank in its sole discretion may charge to the Borrower all amounts so paid or incurred by it or as a non- interest bearing debit charge against the Borrower's loan account, unless othenvise required if any, or any other deposit account of the Borrower with the Bank. (m) That all representations now or hereafter made by lawthe Borrower to the Bank, whether in this Agreement or in any supporting or supplemental reports, statements or documentation, including, without limitation, statements relating to the Collateral and financial statements, are, will be, and applied to the payment of each installment of such taxes as it becomes due and payable and Mortgagor shall furnish to Mortgagee or its agent, promptly upon receipt, the tax bills with respect thereto. If Mortgagor shall have deposited amounts in the aggregate more than sufficient to pay such taxes, the excess shall be applied by Mortgagee toward the deposits next required continue to be made hereunder or at its election shall be repaid to Mortgagor. All of Mortgagor's interest true and correct in such deposits is hereby assigned by Mortgagor to Mortgagee, and Mortgagor hereby pledges to Mortgagee an interest in such deposits, as additional security for the performance of the obligations secured hereby. Upon performance in full of all indebtedness secured hereby, any monthly deposits then held by Mortgagee or its agent shall be repaid to Mortgagor, or as otherwise may be required by lawrespects.

Covenants and Warranties. Mortgagor The Borrower covenants, warrants and agrees as follows: 1.1 Mortgagor is lawfully seized 3.1 The Borrower has and will maintain good record and marketable leasehold title to the Property, free and clear of all liens and encumbrances except for the Mortgaged Property Permitted Encumbrances, and has the right to encumber it the Property with the lien created by this Mortgageinstrument, which lien is subject only to the Permitted ExceptionsEncumbrances. Mortgagor The Borrower will defend the title thereto hereto in any action affecting the rights of the Mortgagee Agent hereunder and pay all costs of any such action (including, but not limited to, reasonable attorneys' fees actually incurred), whether ' 3.2 The Borrower and each endorser or not such action (a) progresses to judgment, or (I)) is brought by or against Mortgagee. 1.2 Subject to guarantor of the Note shall perform and observe all of the terms of Section 5.11 and conditions of the Loan AgreementDocuments, Mortgagor will the Ground Lease and the loan documents of the Other Lenders, including the obligation to make any payments as required therein. 3.3 The Borrower shall pay or cause to be paid (before they become delinquent) prior to the time when interest or penalties would accrue thereon all taxes and exhibit the receipts therefor to Mortgagee. The term "taxes" as used in this Section 1.2 shall be deemed to include all assessments, impositions water, sewer and other governmental utility charges, ordinary and all other charges or extraordinary, foreseen assessments relating to the Property or unforeseen, that the materials stored thereon or therein and other charges and encumbrances which are or may be levied, assessed or otherwise become a lien upon on the Property. 3.4 The Borrower shall keep the Property in good order, repair and condition, reasonable wear and tear thereof excepted, and will not permit, commit or charge against suffer any waste, impairment, deterioration or environmental contamination of the Mortgaged PropertyProperty or any part thereof. 3.5 The Borrower shall promptly repair, restore, rebuild, replace or alter as necessary any portion of the Property which may be damaged or destroyed by fire or other casualty, or taken by condemnation, as nearly as possible to the interest created therein by condition such improvements were in prior to such damage, destruction or taking, subject to the provisions of Sections 5 and 6 of this Mortgage. After The Borrower shall give the occurrence Agent notice of any damage to the Property within five (5) business days of any such occurrence. 3.6 The Borrower shall comply with and observe its obligations as tenant under the Ground Lease and as landlord under leases affecting the Property or any part thereof. The Borrower hereby assigns to the Agent as additional security, conditional upon default and subject to the Borrower's prior assignment to the Senior Lender, if any, any and all leases for housing units at the Property, whether now existing or hereafter created, including, without limitation, all rents, royalties, issues and profits of the Property from time to time accruing; and does agree that after an Event of Default and upon written demand by Mortgageewhile such Event of Default continues, Mortgagor will deposit the Agent may, subject to the rights of the Senior Lender, if any, and the landlord under the Ground Lease, modify and otherwise deal with all such leases or subleases with the same power and discretion which the Agent would have if the Agent were the owner of the Property free from any trust; and, after an Event of Default, the Agent shall also have the power, subject to the rights of the Senior Lender, if any, and the landlord under the Ground Lease, to make, execute and deliver new leases of all and any portion of the Property in the name of the Borrower, or in the name of any person or persons claiming under the Borrower on such terms and conditions as the Agent may in its reasonable judgment deem proper. 3.7 The Borrower shall cause the Property to be deposited monthly with Mortgagee or its duly authorized agent an amount that will create a fund sufficient to make each and every payment of taxes used only for the Permitted Uses, as defined in the future Affordable Housing Restriction. 3.8 The Borrower hereby assigns to the Agent, subject to the rights of the Senior Lender, if any, all of the Borrower's right, title and interest in all contracts, licenses, permits, financing commitments, guarantees, warranties, plans and other agreements or undertakings acquired by the Borrower (the "Project Documents") in connection with the development and operation of the Project. The Borrower hereby agrees to perform in a timely manner all its obligations under the Project Documents and to permit no default on its part to exist thereunder. So long as no Event of Default shall 3.9 With respect to any and all commercial leases of any portion of the Property, the Borrower shall, within thirty (30) days of the written request of the Agent made from time to time, deliver to the Agent a lease estoppel, in form and substance satisfactory to the Agent and executed by the tenant, setting forth the commencement and occupancy dates of such lease, and providing such information with respect thereto as the same shall become due Agent may require, including, without limitation, confirmation that the lease is in full force and payable. Such deposits shall effect without modification, that the tenant is in possession and paying full rent, that no rental payments have been made in advance, and that there is no default, and no condition which, with the giving of notice and/or the passage of time could ripen into a default, by the Borrower or the tenant thereunder (or specifying such modifications of the foregoing as may be received appropriate). 3.10 The Borrower shall, within thirty (30) days of the written request of the Agent made from time to time, execute and held by Mortgagee or its agentdeliver a written statement, in a non- interest bearing account, unless othenvise the form required by lawthe Agent, setting forth the amount of the indebtedness that Borrower acknowledges to be due on the Note and under this Mortgage and the other Loan Documents, specifying any claims of offset or defense which the Borrower asserts against the indebtedness or other obligations secured hereby, and applied a description of relevant facts regarding the condition of the Property and such other matters as may be requested by the Agent. 3.11 The Borrower shall give all notices and take all other actions necessary or appropriate in order that this Mortgage shall be, and shall continue to be for so long as this Mortgage is outstanding, a permitted leasehold mortgage under the Ground Lease, and in order to assure that the holder of this Mortgage shall receive all notices from the landlord under the Ground Lease and shall have all other rights of a permitted leasehold mortgagee. The Borrower shall (i) promptly and faithfully observe, perform and comply with all the terms, covenants and provisions of the Ground Lease, at the times set forth therein; (ii) not do, permit, suffer or refrain from doing anything, as a result of which, there could be a default under or breach of any of the terms thereof; (iii) not cancel, surrender, modify, amend or in any way alter or permit the alteration of any of the terms thereof, without the prior written consent of the Agent in each instance; and (iv) give the Agent immediate notice of any default by the landlord under the Ground Lease and promptly deliver to the payment Agent copies of each installment notice of such taxes default by either party to the Ground Lease and all other formal notices with respect to the Ground Lease. 3.12 Simultaneously with the execution hereof and from time to time hereafter at the request of the Agent, the Borrower shall furnish to the Agent a certificate executed by the Borrower and by the landlord under the Ground Lease as it becomes to whether (i) the Ground Lease is in full force and effect, and any amendments thereto, (ii) all rents, additional rent and other amounts then due and payable and Mortgagor shall furnish under the Ground Lease have been paid, (iii) to Mortgagee the best of their knowledge, there are no defaults, defenses or its agent, promptly upon receipt, offsets under the tax bills with respect thereto. If Mortgagor shall have deposited amounts in the aggregate more than sufficient to pay such taxes, the excess shall be applied by Mortgagee toward the deposits next required to be made hereunder or at its election shall be repaid to Mortgagor. All of Mortgagor's interest in such deposits is hereby assigned by Mortgagor to MortgageeGround Lease, and Mortgagor hereby pledges to Mortgagee an interest in such deposits, as additional security for there are no circumstances or conditions which with the performance of the obligations secured hereby. Upon performance in full of all indebtedness secured hereby, any monthly deposits then held by Mortgagee or its agent shall be repaid to Mortgagor, or as otherwise may be required by law.giving of

Covenants and Warranties. Mortgagor covenants, warrants and agrees as follows: 1.1 Mortgagor is lawfully seized of the Mortgaged Property and has the right to encumber it with the lien created by this Mortgageinstrument, which lien is subject only to the Permitted ExceptionsEncumbrances. Mortgagor will defend the title thereto in any action affecting the rights of the Mortgagee hereunder and pay all costs of any such action (including, but not limited to, reasonable attorneys' fees actually incurredfees), whether or not such action (ai) progresses to judgment, or (I)ii) is brought by or against the Mortgagee. 1.2 Subject to the terms of Section 5.11 of the Loan Agreement, Mortgagor will pay or cause to be paid (before they become delinquent) all taxes and exhibit the receipts therefor to the Mortgagee. The term "taxes" as used in this Section 1.2 the paragraph shall be deemed to include all assessments, impositions and other governmental charges, ordinary or extraordinary, foreseen or unforeseen, that which may be levied, assessed or otherwise become a lien upon or charge against the Mortgaged Property, or the interest created therein by this Mortgageinstrument. After the occurrence of If an Event of Default and as defined in Article V hereof shall occur, then, upon written demand by the Mortgagee, the Mortgagor will deposit or cause to be deposited monthly with the Mortgagee or its duly authorized agent an amount that which will create a fund sufficient to make each and every payment of taxes in the future as the same shall become due and payable. Such deposits shall be received and held by the Mortgagee or its agent, in a non- interest noninterest bearing account, unless othenvise required by law, and applied to the payment of each installment of such taxes as it becomes due and payable and Mortgagor shall furnish to the Mortgagee or its agent, promptly upon receipt, the tax bills with respect thereto. If Mortgagor shall have deposited amounts in the aggregate more than sufficient to pay such taxes, the excess shall be applied by the Mortgagee toward the deposits next required to be made hereunder or at its election shall be repaid to Mortgagor. All of Mortgagor's interest in such deposits is hereby assigned by Mortgagor to the Mortgagee, and the Mortgagor hereby pledges to the Mortgagee an interest in such deposits, as additional security for the performance payment of the obligations indebtedness secured herebyhereby in the event that an Event of Default shall occur hereunder. Upon performance payment in full of all indebtedness secured hereby, any monthly deposits then held by the Mortgagee or its agent shall be repaid to Mortgagor, or as otherwise may be required by law. 1.3 Mortgagor will also pay (before they become delinquent) any and all assessments, water, sewer and other utility charges and all other charges and encumbrances which are or may be a lien upon the Mortgaged Property. 1.4 Mortgagor will commit or permit no waste on the Mortgaged Property and will keep all Improvements now or hereafter erected on the Premises in a sound condition and in a first-class state of decoration and repair.

Covenants and Warranties. Mortgagor covenants, warrants Section 2.1. The Guarantor hereby absolutely and agrees as follows: 1.1 Mortgagor is lawfully seized of the Mortgaged Property and has the right to encumber it with the lien created by this Mortgage, which lien is subject only unconditionally guarantees to the Permitted Exceptions. Mortgagor will defend the title thereto in any action affecting the rights of the Mortgagee hereunder and pay all costs of any such action (including, but not limited to, reasonable attorneys' fees actually incurred), whether or not such action Bank (a) progresses to judgment, or (I)) is brought by or against Mortgagee. 1.2 Subject to the terms of Section 5.11 full and prompt payment of the Loan Agreementprincipal, Mortgagor will pay or cause interest, premiums, penalties and late charges, if any, and other amounts required to be paid (before they become delinquent) by Borrower pursuant to each Note, Agreement and/or Mortgage, and all taxes renewals, replacements, extensions and/or modifications thereof, when and exhibit the receipts therefor to Mortgagee. The term "taxes" as used in this Section 1.2 shall be deemed to include all assessments, impositions and other governmental charges, ordinary or extraordinary, foreseen or unforeseen, that may be levied, assessed or otherwise become a lien upon or charge against the Mortgaged Property, or the interest created therein by this Mortgage. After the occurrence of an Event of Default and upon written demand by Mortgagee, Mortgagor will deposit or cause to be deposited monthly with Mortgagee or its duly authorized agent an amount that will create a fund sufficient to make each and every payment of taxes in the future as the same shall become due due, whether at the stated maturity thereof, by acceleration or otherwise, and payable(b) the full and prompt performance of all other obligations, if any, required to be performed by the Borrower pursuant to each Note, Agreement and/or Mortgage, and all renewals, replacements, extensions and/or modifications thereof, as and when the same shall become due, including any such amounts thereafter paid by the Bank to any trustee, receiver or any other person pursuant to any bankruptcy, insolvency, reorganization, moratorium, fraudulent transfer or conveyance or similar statute, common law or equitable doctrine. Section 2.2. Such deposits If any obligation of Guarantor under the guarantee in Section 2.1 above is at any time and for any reason void or unenforceable, the Guarantor, as an additional and independent obligation, hereby agrees to indemnify and hold harmless Bank against and from any and all loss, cost, damage or expense (including attorneys' fees in all trial, bankruptcy and appellate proceedings, and whether or not litigation has been commenced) suffered or incurred by Bank as a result of any such obligation being void or unenforceable against Guarantor, and the Guarantor expressly agrees that in such event the Guarantor shall be received liable to the Bank as principal obligor on each Note, the Agreement and Mortgage to the same extent as if Guarantor had been the original signer and obligor thereof and said instruments were fully enforceable as written against said Guarantor. Section 2.3. The obligations of Guarantor under this Guaranty shall be absolute and unconditional and shall remain in full force and effect and shall not be discharged, affected, modified or impaired upon the happening from time to time of any event, including, without limitation, any of the following, whether or not with notice to or the consent of the Guarantor: (a) the waiver, compromise, settlement, release, termination, modification or amendment (including extending the time for payment or performance) of any or all of the obligations, covenants or agreements of the Borrower or any obligor under any Note, Agreement or Mortgage or of any or all of the obligations, covenants or agreements of any other guarantor of the Loan; (b) the failure to give notice to Guarantor of the occurrence of a default under the terms and provisions of any Note, Agreement or Mortgage; (c) the release by the holder of any Note of any security held by Mortgagee it for the payment of any amount due pursuant thereto or its agentto this Guaranty, or of the liabilities or obligations of the Borrower with respect thereto (whether with or without consideration), or the acceptance by the holder of any Note of any additional security for any such payments or obligations or the availability or claimed availability of any other security, collateral or source of payment therefor; (d) the voluntary or involuntary liquidation, dissolution, sale or other disposition of all or substantially all the assets, marshalling of assets and liabilities, receivership, insolvency, bankruptcy, assignment for the benefit of creditors, reorganization, arrangement, composition with creditors or readjustment of, or other similar proceedings affecting the Guarantor or the Borrower or any of their assets; (e) Any merger or consolidation involving Borrower, any sale, assignment, transfer, conveyance or issuance of any stock or any other equity interest by Borrower, or any sale, assignment, transfer or conveyance by Guarantor or any other person of all or any part of his interest in a non- interest bearing accountBorrower or any affiliate of Borrower; (f) any failure, unless othenvise required omission or delay by the Bank in enforcing, asserting or exercising any right, power or remedy under any Note, Agreement or Mortgage, this Guaranty, or at law or in equity; (g) to the extent permitted by law, and applied any event or action that would, in the absence of this clause, result in the release or discharge of the Guarantor from the performance or observance of any obligation, covenant or agreement contained in this Guaranty; (h) any assignment or transfer by the Bank or any other person entitled to the payment benefit of each installment this Guaranty of such taxes as all or any interest in any Note without the express assignment of this Guaranty; or (i) the invalidity or unenforceability of any term or provision in any Note, Agreement, Mortgage or this Guaranty. Without limiting the foregoing, it becomes due is the intention of the parties that any modification, limitation, or discharge of the obligations of the Guarantor arising out of or by virtue of any bankruptcy, reorganization or similar proceeding for relief of debtors under Federal or state law shall not affect, modify, limit, or discharge the liability of any other guarantor of the Loan in any manner whatsoever, and payable this Guaranty shall remain and Mortgagor shall furnish to Mortgagee or its agent, promptly upon receipt, the tax bills with respect thereto. If Mortgagor shall have deposited amounts continue in the aggregate more than sufficient to pay such taxes, the excess full force and effect and shall be applied enforceable against Guarantor to the same extent and with the same force and effect as if any such proceedings had not been instituted; and the Guarantor shall be liable to the Bank under this Guaranty for the full amount payable hereunder irrespective of any modification, limitation, or discharge of the liability of any other guarantor that may result from any such proceeding. The Guarantor's obligations to Bank pursuant hereto include and apply to any payment or payments received by Mortgagee toward Bank on account of the deposits next liabilities guaranteed hereby, which payment or payments or any part thereof are subsequently invalidated, declared to be fraudulent or preferential, set aside and/or required to be made hereunder paid to a trustee, receiver, or at its election shall be repaid any other person or entity under any bankruptcy, insolvency, reorganization, moratorium, fraudulent transfer or conveyance or similar law, common law or equitable doctrine. The Guarantor's obligations to Mortgagor. All of Mortgagor's interest in such deposits is hereby assigned by Mortgagor to MortgageeBank and this Guaranty, and Mortgagor hereby pledges to Mortgagee an interest any security therefor, shall remain in such deposits, as additional security for the performance of the obligations secured hereby. Upon performance full force and effect (or be reinstated) until Bank has received payment in full of all indebtedness secured herebyamounts payable to it pursuant to the Notes, Agreements, Mortgages and this Guaranty and the expiration of any monthly deposits applicable preference or similar period pursuant to any bankruptcy, insolvency, reorganization, moratorium, fraudulent transfer or conveyance or similar law, or at law or equity, without any claim to all or any part of any such payment being made before the expiration of such period. If any action or proceeding seeking such repayment is pending or, in Bank's sole judgment, threatened, this Guaranty and any security interest therefor shall remain in full force and effect notwithstanding that Borrower or Guarantor may not then be otherwise obligated to Bank. Section 2.4. No set-off, counterclaim, reduction or diminution of any obligation, or any defense of any kind or nature which Guarantor has or may have against the Borrower shall affect, modify or impair its obligations hereunder. Section 2.5. In the event of a default in the payment of the principal, penalties and late charges, if any, or interest on any Note when and as the same shall become due, whether at the stated maturity thereof, by acceleration or otherwise, or in the event of any Event of Default under any Mortgage or Agreement or any instrument collateral or supplemental thereto, the Bank may proceed first and directly against the Guarantor without proceeding first or concurrently against the Borrower or exercising, pursuing or exhausting any other rights, powers or remedies which it may have and without resorting to any other security held or available to it. Section 2.6. This Guaranty shall constitute a continuing guarantee, and the Bank may continue, without notice to the Guarantor, to make loans to the Borrower subsequent to the date of this Guaranty. The Guarantor hereby expressly waives notice in writing, or otherwise, from the Bank at any time or from time to time of its acceptance and reliance on this Guaranty. The Guarantor also waives presentment, demand for payment, protest and notice of nonpayment or dishonor relating to any Note or this Guaranty and all other notices to which the undersigned might otherwise be entitled by Mortgagee law. The Guarantor agrees to pay all costs, expenses and fees, including all reasonable attorneys' fees (whether in trial, appellate, bankruptcy or its agent other proceedings), which may be incurred in enforcing or attempting to enforce this Guaranty, whether the same shall be repaid enforced by suit or otherwise. Section 2.7. All rights and claims of Guarantor (collectively the "Guarantor Claims") against Borrower or any of Borrower's property, now or hereafter existing, shall be subordinate and subject in right of payment to Mortgagorthe prior payment in full of Borrower's and Guarantor's obligations to Bank. Until such obligations have been paid in full and Guarantor shall have performed all of its obligations hereunder, Guarantor shall not receive or collect, directly or indirectly, from Borrower or any other party any payment upon the Guarantor Claims nor seek to realize upon any collateral securing any such Guarantor Claim. Notwithstanding the foregoing, if Guarantor should receive any such payment, Guarantor agrees to hold same in trust for Bank, and agrees that it shall have absolutely no rights in or to such payments except to pay them promptly to Bank, and Guarantor hereby covenants to do so. Guarantor will not assert any right to which it may be or may become entitled, whether by subrogation, contribution or otherwise, against the Borrower or against its properties, by reason of the performance by the Guarantor of its obligations under this Guaranty, except after satisfaction and discharge in full of the obligations to Bank under the Notes, the Agreement, Mortgage and this Guaranty. Section 2.8. Guarantor shall at all times during the term of the Loan (i) own all of the outstanding stock of the Borrower; (ii) maintain its common stock effectively registered under the Securities Exchange Act of 1934; (iii) maintain at all times a tangible net worth as hereinafter defined ("Tangible Net Worth") of not less than $3,500,000.00 (which requirement may be adjusted by Bank twelve (12) months after the date hereof and each anniversary thereafter); and (iv) have thirty five percent (35%) of its common stock issued and outstanding individually owned of record by Xxxxx Xxxxxxx, including shares owned by Xxxxx Xxxxxxx indirectly through his ownership interest in HAI Capital, Ltd. Bank agrees to reduce the ownership requirement in clause (iv) to thirty percent (30%), provided all of Guarantor's other lenders also reduce the ownership covenants in their lending agreements to thirty percent (30%). Tangible Net Worth is defined as the excess of the consolidated net book value (after deducting all amounts due from subsidiaries and affiliates, if any, all applicable reserves and any value attributable to the re-appraisal or write- up of any asset) of assets of Guarantor and its subsidiaries (other that patents, copyrights, trademarks, franchises, licenses, goodwill, customer lists, employees, and similar intangibles, treasury stock and amounts due from directors, stockholders or affiliates) over all their liabilities (other than nonrecourse financing to Guarantor not to exceed $2,000,000.00 in the aggregate) as determined on an accrual basis and in accordance with generally accepted accounting principles consistently applied. Within thirty (30) days after the close of each fiscal quarter of Guarantor, Guarantor shall deliver to Bank a Certificate in a form reasonably acceptable to Bank and substantially similar to the form of Certificate attached hereto as Exhibit "A", signed by the chief executive or chief financial officer of Guarantor, certifying Guarantor's compliance with the financial covenants contained in this Section 2.8 as of the end of such fiscal quarter, and containing the data (dollar amounts, ratios, identity and equity interest in each subsidiary of Guarantor). Section 2.9. Not later than ninety (90) days after the close of each fiscal year of Guarantor, Guarantor shall furnish to Bank a Certificate from the auditors of Guarantor, (i) briefly setting forth the scope of their review which shall include a review of the relevant provisions of Guarantor's Agreements with its lenders and stating that in their judgment such review is sufficient to enable them to give the Certificate, and (ii) stating whether or not their review has disclosed the existence of any condition or event which constitutes an Event of Default under any such Agreements, or as otherwise may be required which, with the passage of time or service of notice or both, would constitute such an Event of Default, and, if their review has disclosed such a condition or event, specifying the nature and period of the existence thereof. Section 2.10. Guarantor shall deliver to Bank complete copies (with all schedules and exhibits) of each of the Form 10-K Annual Reports and Form 10-Q Quarterly Reports filed by lawGuarantor with the United States Securities and Exchange Commission (the "SEC") no later than five (5) business days following the earlier of actual delivery to the SEC or the last date of timely filing thereof with the SEC or within any legally permitted unconditional extension up to a maximum of thirty (30) days. Section 2.11. Guarantor shall pay no cash dividends without the prior written consent of Bank. Section 2.12. Xxxxx Xxxxxxx shall remain chief executive officer of Guarantor at all times during the term of the Loan.

Covenants and Warranties. Mortgagor covenants, The Guarantor covenants with and warrants and agrees as followsto the Lender: 1.1 Mortgagor is lawfully seized of the Mortgaged Property and has the right to encumber it with the lien created by this Mortgage, which lien is subject only to the Permitted Exceptions. Mortgagor will defend the title thereto in any action affecting the rights of the Mortgagee hereunder and pay all costs of any such action (including, but not limited to, reasonable attorneys' fees actually incurred), whether or not such action (a) progresses That all Inventory in which the Lender is now or hereafter given a security interest pursuant to judgmentthis Agreement will at all times be kept and maintained in good order and condition at the sole cost and expense of the Guarantor. (b) That the Guarantor will maintain in force one or more policies of insurance on all Inventory against risks of fire (with customary extended coverage), sprinkler leakage, theft, loss or damage and other risks customarily insured against by companies engaged in businesses similar to that of the Guarantor in such amounts, containing such terms, in such form, for such periods, covering such hazards and written by such companies as may be satisfactory to the Lender, such insurance to be payable to the Lender as its interest may appear in the event of loss; the policies for the same shall be deposited with the Lender; no loss shall be adjusted thereunder without the Lender's approval; and all such policies shall provide that they may not be cancelled without first giving at least ten (10) days' written notice of cancellation to the Lender. In the event that the Guarantor fails to provide evidence of the maintenance of such insurance satisfactory to the Lender, the Lender may, at is option, secure such insurance and charge the cost thereof to the Guarantor and as a debit charge in the Guarantor's Loan Account, if any, or (I)) is brought by any other account of the Guarantor with the Lender. At the option of the Lender, all insurance proceeds received from any loss or against Mortgagee. 1.2 Subject damage to any of the Collateral shall be applied either to the terms of Section 5.11 replacement or repair thereof or as a payment on account of the Loan Agreement, Mortgagor will pay or cause to be paid (before they become delinquent) all taxes Obligations. From and exhibit the receipts therefor to Mortgagee. The term "taxes" as used in this Section 1.2 shall be deemed to include all assessments, impositions and other governmental charges, ordinary or extraordinary, foreseen or unforeseen, that may be levied, assessed or otherwise become a lien upon or charge against the Mortgaged Property, or the interest created therein by this Mortgage. After after the occurrence of an Event of Default Default, or after demand respecting any Obligations payable upon demand, the Lender is authorized to cancel any insurance maintained hereunder and upon written demand by Mortgageeapply any returned or unearned premiums, Mortgagor all of which are hereby assigned to the Lender, as a payment on account of the Obligations. (c) That at the date hereof the Guarantor is (and as to Collateral that the Guarantor may acquire after the date hereof, will deposit or cause be) the lawful owner of the Collateral, and that the Collateral, and each item thereof, is, will be, and shall continue to be deposited monthly with Mortgagee free of all restrictions, liens, encumbrances, or its duly authorized agent an amount other rights, title or interests (other than the security interest therein granted to the Lender hereby), credits, defenses, recoupments, set-offs or counterclaims whatsoever; that the Guarantor has and will create have full power and authority to grant to the Lender a fund sufficient security interest therein, and that the Guarantor has not transferred, assigned, sold, pledged, encumbered, subjected to make each lien or granted any security interest in, and every payment of taxes will not transfer, assign, sell (except sales or other dispositions in the future ordinary course of business in respect to Inventory as expressly permitted in this Agreement), pledge, encumber, subject to lien or grant any security interest in any of the Collateral (or any of the Guarantor's right, title or interest therein), to any person other than the Lender; that the Collateral is and will be valid and genuine in all respects; that all accounts arise out of legally enforceable and existing contracts in accordance with their tenor; and that upon the Guarantor's acquisition of any interest in contract rights, it shall in writing immediately notify the Lender thereof, specifically identifying the same as contract rights, and, except for such contract rights, no part of the Collateral (or the validity or enforceability by the Lender thereof) is or shall be contingent upon the fulfillment of any agreement or condition whatsoever and that the Collateral, other than Inventory and Equipment, shall represent unconditional and undisputed bona fide indebtedness by the Debtor for sales or leases of Inventory shipped and delivered or services rendered by the Guarantor to Debtor, and is not and will not be subject to any discount (except such cash or trade discount as may be shown on any invoice, contract or other writing delivered to the Lender); and that the Guarantor will warrant and defend the Lender's right to and interest in the Collateral against all claims and demands of all persons whatsoever. (d) That no contract right, account, general intangible or chattel paper is or will be represented by any note or other instrument (negotiable or otherwise), and that no contract right, account or general intangible is, or will be represented by any conditional or installment sales obligation or other chattel paper, except such instruments or chattel paper as have been or forthwith upon receipt by the Guarantor will be delivered to the Lender (duly endorsed or assigned, as may be appropriate), such delivery, in the case of chattel paper, to include all executed copies except those in the possession of the installment buyer and that any security for or guaranty of any of the Collateral shall be delivered to the Lender immediately upon receipt thereof by the Guarantor, with such assignments and endorsements thereof as the Lender may request. (e) That, except for sale, processing, use consumption or other disposition in the ordinary course of business, the Guarantor will keep all Inventory only at locations specified in this Agreement; that the Guarantor shall, during the term of this Agreement, keep the Lender currently and accurately informed in writing of each location where the Guarantor's records relating to its accounts and contract rights, respectively, are kept, and shall not remove such records, or any of them, to another state without giving the Lender at least thirty (30) days prior written notice thereof; that the Guarantor's chief executive office is correctly stated in the preamble to this Agreement, and Guarantor shall, during the term of this Agreement, keep the Lender currently and accurately informed in writing of each of its other places of business, and shall not change the location of such chief executive office or open any new, or close, move or change any existing of new place of business without giving the Lender at least thirty (30) days prior written notice thereof. (f) That the Lender shall not be deemed to have assumed any liability or responsibility to the Guarantor or any third person for the correctness, validity or genuineness of any instruments or documents that may be released or endorsed to the Guarantor by the Lender (which shall automatically be deemed to be without recourse to the Lender in any event) or for the existence, character, quantity, quality, condition, value or delivery of any goods purporting to be represented by any such documents; and that the Lender, by accepting such security interest in the Collateral, or by releasing any Collateral to the Guarantor, shall not be deemed to have assumed any obligation or liability to any supplier or Debtor or to any other third party, and the Guarantor agrees to indemnify and defend the Lender and hold it harmless in respect to any claim or proceeding arising out of any matter referred to in this Paragraph. (g) That each account or other item of Collateral, other than Inventory will be paid in full on or before the date shown as its due date in the schedule of Collateral, in the copy of the invoice(s) relating to the account or other Collateral or in contracts relating thereto; that upon any suspension of business, assignment or trust mortgage for the benefit of creditors, dissolution, petition in receivership or under any chapter of the Bankruptcy Code as amended from time to time by or against any Debtor, any Debtor becoming insolvent or unable to pay its debts as they mature, or any other act of the same shall become or different nature amounting to a business failure, the Guarantor will forthwith notify the Lender thereof. (h) That the Guarantor will immediately notify the Lender of any loss or damage to, or material diminution in or any occurrence which would adversely affect the value of, the Inventory, or other Collateral. (i) That the Lender may from time to time in the Lender's discretion hold and treat any deposits or other sums at any time credited by or due from the Lender to the Guarantor and payableany securities or other property of the Guarantor in the possession of the Lender, whether for safekeeping or otherwise, as collateral security for and apply or set the same off against any Obligations whether or not an Event of Default has occurred or demand has been made. Such deposits Without limiting the generality of the foregoing, if at any time the amount of the revolving credit as then set by the Lender shall be received exceeded, the Guarantor shall pay cash to the Lender in the amount of such excess if the Lender so requests, or the Lender may charge such amount against any deposit account of the Guarantor with the Lender. (j) That if any of the Collateral includes a charge for, or if any loan by the Lender to the Guarantor shall be subject to any tax payable to any governmental taxing authority, the Guarantor shall pay such tax independently when due. The Lender may retain the full proceeds of the Collateral and held by Mortgagee the Guarantor will indemnify and save the Lender harmless from any loss, cost, liability or its agentexpense (including, without limitation, reasonable attorney's fees), in connection therewith. (k) That at any time or times and whether or not an Event of Default has occurred or demand has been made, the Lender may notify any Debtor or Debtors of its security interest in the Collateral and collect all amounts due thereon; and the Guarantor agrees, at the request of the Lender, to notify all or any of the Debtors in writing of the Lender's security interest in the Collateral in whatever manner the Lender requests and, if the Lender so requests, to permit the Lender to mail such notices at the Guarantor's expense. (l) That the Lender may, at its option, from time to time, discharge any taxes, liens or encumbrances of any of the Collateral, or take any other action that the Lender may deem proper to repair, maintain or preserve any of the Collateral, and the Guarantor will pay to the Lender on demand or the Lender in its sole discretion may charge to the Guarantor all amounts so paid or incurred by it or as a non- interest bearing debit charge against the Guarantor's loan account, unless othenvise required by lawif any, or any other deposit account of the Guarantor with the Lender. (m) That the Lender in its sole discretion from time to time shall have the right to demand and receive from the Guarantor additional property of nature and types not included in this Agreement, including, without limitation, interests in real property, and applied thereupon the words "Collateral" and "security interest" shall be deemed to include, any and all such additional property and the Lender's interests therein. The Guarantor shall promptly, upon request of the Lender, deliver, transfer, assign and make over to the payment of each installment of Lender all the Guarantor's right, title and interest in any such taxes as it becomes due additional property; and payable shall execute and Mortgagor shall furnish deliver to Mortgagee the Lender any writings and do all things necessary, effectual or requested by the Lender to vest fully in or assure to the Lender (including, without limitation, all steps to create and perfect) its agent, promptly upon receipt, the tax bills with respect thereto. If Mortgagor shall have deposited amounts in the aggregate more than sufficient to pay such taxes, the excess shall be applied by Mortgagee toward the deposits next required to be made hereunder or at its election shall be repaid to Mortgagor. All of Mortgagor's security interest in such deposits is hereby assigned by Mortgagor additional property. The Lender shall have in respect to Mortgageesuch additional property all the rights, powers, privileges, discretions and immunities granted to it under this Agreement with the same force and effect as if said additional property had been listed herein, including, without limitation, the right to apply such property, or any part thereof, and Mortgagor hereby pledges any proceeds thereof to Mortgagee an interest any Obligation. (n) That all representations now or hereafter made by the Guarantor to the Lender, whether in such depositsthis Agreement or in any supporting or supplemental reports, as additional security for statements or documentation, including, without limitation, statements relating to the performance of the obligations secured hereby. Upon performance Collateral and financial statements, are, will be, and shall continue to be true and correct in full of all indebtedness secured hereby, any monthly deposits then held by Mortgagee or its agent shall be repaid to Mortgagor, or as otherwise may be required by lawrespects.