RESTATED MORTGAGE AND SECURITY AGREEMENT Mortgage Short-Term Redemption Dated as of September 15, 1998 From AMERICAN CRYSTAL SUGAR COMPANY (the "Company") To ST. PAUL BANK FOR COOPERATIVES, as Collateral Agent (the "Mortgagee")
Prepared by XXXXXXX CORPORATION xxx.xxxxxxxxxxxxxx.xxxQuickLinks
Exhibit 10.26
RESTATED MORTGAGE AND SECURITY AGREEMENT Mortgage Short-Term Redemption Dated as of September 15, 1998
From AMERICAN CRYSTAL SUGAR COMPANY (the "Company") To ST. XXXX BANK FOR COOPERATIVES, as Collateral Agent (the "Mortgagee")
Drafted by and after recording, return to: Xxxxxxxxx X. Xxxxxx, Esq. XxXxxxxxx, Will & Xxxxx 000 Xxxx Xxxxxx Xxxxxx Xxxxxxx, Xxxxxxxx 00000 Tax statements for the real property described herein and situate in the State of Minnesota should be sent to: American Crystal Sugar Company 000 Xxxxx Xxxxx Xxxxxx Xxxxxxxx, XX 00000 THIS RESTATED MORTGAGE AND SECURITY AGREEMENT-MORTGAGE-SHORT-TERM REDEMPTION dated as of September 15, 1998 (the or this"Mortgage'), is from AMERICAN CRYSTAL SUGAR COMPANY, a Minnesota cooperative corporation (the "Company"), having its principal office at 000 Xxxxx 0000 Xxxxxx, Xxxxxxxx, Xxxxxxxxx 00000, to ST. XXXX BANK FOR COOPERATIVES, for itself, and as Collateral Agent for each of the holders of the hereinafter described Senior Secured Notes and the bank lenders which are signatories to the Credit Facility (collectively, the "Banks") (together with its permitted successors and assigns, the "Mortgagee") whose post office address is 000 Xxxxxxx Xxxxxx, Xx. Xxxx, Xxxxxxxxx 00000-0000 restating the Original Mortgages (as hereinafter defined).RECITALS: A. Pursuant to those separate Note Purchase Agreements, each dated as of September 15, 1998 (collectively, the "Note Agreements"), entered into by the Company, with each of the Purchasers listed on Schedule A thereto (the "Noteholders"), the Noteholders will purchase $12,500,000 7.32% Senior Secured Notes, Series A, Due August 31, 2018, $15,000,000 7.37% Senior Secured Notes, Series B, Due August 31, 2023 and $22,500,000 7.42% Senior Secured Notes, Series C, due August 31, 2028 (collectively, the "Senior Secured Notes") of the Company. B. The Company has entered into that certain Term Loan Agreement dated September 17, 1998, as amended (the "Credit Facility"), with the Banks, pursuant to which the Banks are providing to the Company various credit facilities. Pursuant to the Credit Facility, the Company may fix the rate of interest for multiple periods, which rate is currently 6.25%. The Company has previously executed and delivered to the St. Xxxx Bank for Cooperatives various mortgages, as supplemented to date and as recorded in the appropriate county records of the State of Minnesota and the State of North Dakota (as so supplemented, the "Original Mortgages'). The Saint Xxxx Bank for Cooperatives is designated as an instrumentality of the United States under federal law, and as such, all mortgages securing repayment of debt held by the Saint Xxxx Bank for Cooperatives are exempt from payment of mortgage registration tax pursuant to United States Code, Title 12, Section 2134 and Minnesota Statutes, Section 287.06. Prior to the date of execution and delivery hereof, St. Xxxx Bank for Cooperatives was the holder of $231,000,000.00 in aggregate principal indebtedness secured in part by the Original Mortgages, which principal indebtedness is continuing hereunder and is the same debt secured by this Mortgage, without modification to the terms thereof The Noteholders are issuing an additional $50,000,000.00 of new indebtedness pursuant to the Note Agreements, which debt is subject to payment of mortgage registration tax, such that on the date of execution and delivery hereof, the aggregate of principal of all indebtedness issued and secured hereunder, including such continuing and new indebtedness, is $281,000,000.00. C. Pursuant to the Intercreditor and Collateral Agency Agreement, dated as of September 15, 1998 (the "Intercreditor and Collateral Agency Agreement") entered into by the Noteholders, the Banks and the Mortgagee, the Mortgagee was appointed as collateral agent to act on behalf of the Secured Parties (as hereinafter defined) regarding the Collateral (as hereinafter defined) and the obligations of the Company to the Noteholders under the Note Agreements and under the Senior Note Documents (as hereinafter defined) including, without limitation, the obligations evidenced by the Senior Secured Notes, and the obligations of the Company to the Banks under the Credit Facility and under the Loan Documents (as hereinafter defined) including, without limitation, the obligations evidenced by the promissory notes issued under the Credit Facility (together with amendments, modifications and replacements thereof, the "Credit Facility Notes"), and the obligations of the Company to the Additional Creditors (as hereinafter defined) under the Additional Facilities (as hereinafter defined) are to be secured pari passu pursuant to this Mortgage. D. All principal, premium and interest and all fees and additional amounts and other sums at any time due and owing from and all other obligations of any nature of the Company now or hereafter existing, or required to be paid by the Company under the terms of the Senior Secured Notes, the Credit Facility, the Note Agreements, this Mortgage, or any other document, mortgage or security agreement executed and delivered by the Company pursuant to the Note Agreements or Credit Facility and any extensions, renewals or modifications of any of the above are hereinafter sometimes referred to as the "Senior Secured Obligations". E. The Company is duly authorized under all applicable provisions of law, its Articles of Incorporation and By laws to issue the Senior Secured Notes and the Credit Facility Notes and to execute and deliver this Mortgage and to mortgage, convey, assign and grant a security interest in the Collateral (as hereinafter defined) to the Mortgagee, as security for the Senior Secured Obligations and all corporate action and all consents, approvals and other authorizations and all other acts and things necessary to make this Mortgage the valid, binding and legal instrument for the security of the Senior Secured Obligations have been done and performed. NOW, THEREFORE, THIS MORTGAGE WITNESSETH that the Company, in consideration of the premises, the purchase and acceptance of the Senior Secured Notes by the Purchasers, the making of loans and other financial accommodations by the Banks, and of the sum of Ten Dollars received by the Company from the Mortgagee and other good and valuable consideration, receipt whereof is hereby acknowledged, and in order to secure the payment of all of the Senior Secured Obligations, the Company does hereby warrant, mortgage, pledge, assign, bargain, hypothecate, convey, grant, transfer, grant a first perfected security interest in and set over unto the Mortgagee and its successors and assigns, all of its estate, right, title and interest in and to all and singular the following described properties, rights, interest and privileges and all of the Company's estate, right, title and interest therein, thereto and thereunder, if any (all of which properties hereby mortgaged, assigned, pledged and in which a first perfected security interest has been granted or intended so to be are hereinafter collectively referred to as the "Collateral"):
GRANTING CLAUSE FIRST REAL PROPERTY The parcels of land in Clay County and Polk County in the State of Minnesota and Pembina County and Trail County, in the State of North Dakota described in Annex A attached hereto and made a part hereof, together with the entire interest of the Company in and to all buildings, structures, improvements and appurtenances now standing, or at any time hereafter constructed or placed, upon such land, including all right, title and interest of the Company, if any, in and to all building material, building equipment and fixtures of every kind and nature whatsoever on said land or in any building, structure or improvement now or hereafter standing on said land which are classified as fixtures under applicable law and which are used in connection with the operation, maintenance or protection of said buildings, structures and improvements as such (including, without limitation, all boilers, air conditioning, ventilating, plumbing, heating, lighting and electrical systems and apparatus, all communications equipment and intercom systems and apparatus, all sprinkler equipment and apparatus and all elevators and escalators) and the reversion or reversions, remainder or remainders, in and to said land, and together with the entire interest of the Company in and to all and singular the tenements, hereditaments, easements, rights of way, rights, privileges and appurtenances to said land, belonging or in anywise appertaining thereto, including, without limitation, the entire right, title and interest of the Company in, to and under any xxxxxxx, xxxx, xxxxxx, xxxxx or strips of land adjoining said land, and all claims or demands whatsoever of the Company either in law or in equity, in possession or expectancy, of, in and to said land, it being the intention of the parties hereto that, so far as may be permitted by law, all property of the character hereinabove described, which is now owned or is hereafter acquired by the Company and is affixed or attached or annexed to said land, shall be and remain or become and constitute a portion of said land and the security covered by and subject to the Lien of this Mortgage, together with all accessions, parts and appurtenances appertaining or attached thereto and all substitutions, renewals or replacements of and additions, improvements, accessions and accumulations to any and all thereof, and together with all rights, powers, privileges, options and other benefits of the Company, as lessor, under any leases including the right to collect any and all rents, profits or other income and the present and continuing right to make claim for, collect, receive and receipt for any and all of such rents, profits or other income (all of which properties are hereinafter referred to as the "Real Property"'.
GRANTING CLAUSE SECOND TRADE PROPERTY All materials, furniture, furnishings, machinery, fixtures and equipment now or hereafter erected on or affixed to the Real Property and including, but not limited to, all heating, plumbing, lighting, water heating, cooking, laundry, refrigerating, incinerating, communications, ventilating and air conditioning equipment, building signs, disposals, dishwashers, telephone systems, sprinkler systems, fire extinguishing apparatus and equipment, water tanks, engines, machines, boilers, dynamos, stokers, elevators, motors, cabinets, shades, blinds, partitions, window screens, screen doors, storm windows, awnings, drapes, rugs and other floor coverings, furniture, furnishings, radios and television sets and wiring and antennae therefor, and all fixtures, accessions and appurtenances thereto, and all renewals or replacements of or substitutions for any of the foregoing, together with all other goods, equipment, furnishings, fixtures, machinery and furniture owned by the Company now or hereafter attached or affixed to or used in and about the building or buildings now erected or hereafter to be erected on the Real Property, or otherwise located on the Real Property, and all fixtures, accessions and appurtenances thereto, and all renewals or replacements of or substitutions for any of the foregoing (all of which properties are hereinafter referred to as "Trade Property").
GRANTING CLAUSE THIRD GENERAL INTANGIBLES All general intangibles, whether now owned or hereafter acquired or arising, or in which the Company now has or hereafter acquires any rights, including without limitation all causes of action, goodwill and similar intangibles and all income tax refunds, all privileges, franchises, immunities, licenses (to the extent a security interest can be granted in particular licenses), permits, similar intangibles, any rights to receive any payments in connection with a termination of any pension plan or employees stock ownership plan or trust established for the benefit of employees of the Company, patents, patent applications, patent licenses, trademarks, trademark registrations and trademark licenses, and tradenames, and all other intangible personal property (including things in action) not otherwise covered by this Mortgage (collectively, "General Intangibles").
GRANTING CLAUSE FOURTH CONDEMNATION AWARDS AND PAYMENTS All judgments, awards of damages, settlements and other compensation heretofore or hereafter made resulting from condemnation proceedings or the taking of the Real Property or any part thereof or any improvements now or at any time hereafter located thereon or any easement or other appurtenance thereto under the power of eminent domain, or any similar power or right (including any award from the United States Government at any time after the allowance of the claim therefor, the ascertainment of the amount thereof and the issuance of the warrant for the payment thereof), whether permanent or temporary, or for any damage (whether caused by such taking or otherwise) to said Real Property or any part thereof or the improvements thereon or any part thereof, or to any rights appurtenant thereto, including severance and consequential damage, and any award for change of grade of streets (collectively, "Condemnation Awards").
GRANTING CLAUSE FIFTH PROCEEDS All proceeds of the conversion, voluntary or involuntary, of any of the foregoing into cash or other liquidated claims, including, without limitation, all proceeds and payments of insurance related to the Collateral.
EXCEPTED PROPERTY There is, however, to the extent included in the Lien and operation of this Mortgage, expressly excepted and excluded from the Lien and operation of this Mortgage the following described property of the Company, now owned or hereafter acquired (herein called "Excepted Property"): (a) all Inventory of the Company, wherever located, now or hereafter existing; (b) the Specified Pledged Stock; (c) all Accounts of the Company, including without limitation monies due to the Company in respect of such Accounts; (d) all Instruments, Documents, Securities or Chattel Paper of the Company including, without limitation, investments in United Sugars Corporation, Midwest AgriCommodities Company, Crystech LLC and ProGold Limited Liability Company, and (e) all licenses, government permits and motor vehicle title certificates now owned or hereafter acquired by the Company individually or with others and wherever located. SUBJECT HOWEVER, as to all property or rights in property at any time subject to the Lien hereof (whether now owned or hereafter acquired), to Permitted Encumbrances, as defined in §1 hereof. To HAVE AND TO HOLD the Collateral unto the Mortgagee and its successors and assigns forever for the purpose of securing performance of each agreement, covenant and warranty of the Company contained in the Senior Secured Notes, the Credit Facility, this Mortgage, the other Senior Security Documents and the Note Agreements and payment of the Senior Secured Obligations. It is understood and agreed that this Mortgage is to secure the obligation of the Company to repay, without preference or priority, all Senior Secured Obligations. PROVIDED, NEVERTHELESS, and these presents are upon the express condition that if the Company performs the covenants herein contained and the Senior Secured Obligations are paid in full and all other sums due or payable hereunder, under the Note Agreements, the Credit Facility or under the other Senior Security Documents, the estate, right and interest of the Mortgagee in the property hereby conveyed and granted a first perfected security interest in shall cease and this Mortgage shall become null and void, but otherwise to remain in full force and effect. It is agreed and understood by the parties hereto that: 1. The Senior Secured Obligations are also secured by the other Senior Security Documents. The other Senior Security Documents are intended to and shall constitute security for the entire indebtedness represented by the Notes and all other Senior Secured Obligations without allocation. 2. Any part of the security herein described, and any security described in the other Senior Security Documents or any other mortgage or other instrument now or hereafter given to secure the Senior Secured Obligations, may be released pursuant to the terms of the Senior Secured Obligations, or by or at the direction of the Mortgagee without affecting the Lien hereof on the remainder of the obligations of the Company on and in respect of the Senior Secured Obligations and any person acquiring any direct or indirect interest in the security herein described or in any security described in the other Senior Security Documents or any other mortgage or other instrument now or hereafter given to secure the Senior Secured Obligations shall take the same subject to all of the provisions hereof. 3. The Company for itself and all who may claim through or under it waives to the extent permitted by law any and all right to have the property and estates comprising the Collateral or any other property of the Company constituting security for the Senior Secured Obligations marshaled upon any foreclosure of the Lien hereof, or to have the Collateral hereunder and the property covered by any other mortgage or deed of trust securing the Senior Secured Obligations marshaled upon any foreclosure of any of said mortgages or deeds of trust, and agrees that any court having jurisdiction to foreclose such Lien may order the Collateral sold as an entirety. 4. Upon the occurrence and during the continuance of an Event of Default hereunder the Mortgagee has, among other things, the right to foreclose on the Collateral and dispose of the same. The Mortgagee's deed (if permitted by law) or Sheriffs deed or other instrument of conveyance, transfer or release (which, if permitted by law, may be executed by the Mortgagee in its own name or as attorney-in-fact for the Company and the Mortgagee is hereby irrevocably appointed attorney-in-fact for the Company to, in the event that an Event of Default hereunder shall have occurred and be continuing, so execute such deed or other instruments of conveyance, transfer or release) shall be effective to convey and transfer to the grantee an indefeasible title to the property covered thereby, discharged of all rights of redemption (to the extent permitted by law) by the Company or any person claiming under it, and to bar forever all claims by the Company or the Mortgagee to the property covered thereby and no grantee from the Mortgagee or Sheriff shall be under any duty to inquire as to the authority of the Mortgagee or Sheriff to execute the same, or to see to the application of the purchase money. SECTION 1. DEFINIITIONS. The following terms shall have the following meanings for all purposes of this Mortgage: "Account", "Chattel Paper", "Documents", "Equipment", "General Intangibles", "Instruments", "Inventory", "Patents", "Securities", "Trademarks" and "Tradenames" shall each have the meaning set forth in the Uniform Commercial Code. "Additional Creditors" shall have the meaning assigned thereto in the Intercreditor and Collateral Agency Agreement. "Additional Facilities" shall have the meaning assigned thereto in the Intercreditor and Collateral Agency Agreement. "Capitalized Leases" shall have the meaning assigned thereto in the Note Agreements. "CERCLA" shall mean the Comprehensive Environmental Response, Compensation, and Liability Act of 1980, as amended. "Collateral" shall have the meaning assigned thereto in the paragraph immediately preceding the Granting Clause First hereof. "Company" shall mean American Crystal Sugar Company, a Minnesota cooperative corporation and its successors and assigns. "Credit Facility Notes" shall have the meaning assigned thereto in Recitals hereof "Default" shall mean any event which would constitute an Event of Default if all requirements in connection therewith for the giving of notice, the lapse of time and the happening of any further condition, event or act had been satisfied. "Eligible Investments" shall mean: (a) Investments in commercial paper maturing in 270 days or less from the date of issuance which, at the time of acquisition thereof, is accorded the highest rating by at least two of the following rating agencies: Standard & Poor's Corporation, Xxxxx'x Investors Service, Inc. or Duff & Xxxxxx; (b) Investments in direct obligations of the United States of America or any agency or instrumentality of the United States of America, the payment or guarantee of which constitutes a full faith and credit obligation of the United States of America, in either case, maturing in twelve months or less from the date of acquisition thereof; (c) Investments in certificates of deposit maturing within one year from the date of issuance thereof, issued by a bank or trust company organized under the laws of the United States or any state thereof, having capital, surplus and undivided profits aggregating at least $500,000,000 and whose long-term certificates of deposit are, at the time of acquisition thereof, rated AA or better by Standard & Poor's Corporation or Aa or better by Xxxxx'x Investors Service, Inc.; and (d) Investments in Federally tax-exempt municipal bonds maturing in twelve months or less from the date of acquisition thereof and, at the time of acquisition, is rated "AAA" or better by Standard & Poor's Corporation or "Aaa" or better by Xxxxx'x Investors Service, Inc.; "Environmental Claim" shall mean all claims, however, asserted, by any Governmental Authority or other Person alleging potential liability or responsibility for violation of any Environmental Law, or for release or injury to the environment. "Environmental Law" shall have the meaning assigned thereto in the Note Agreements. "Event of Default" shall have the meaning specified in §5.1 hereof "Funded Debt" shall have the meaning assigned thereto in the Note Agreements. "GAAP" shall have the meaning assigned thereto in the Note Agreements. "Governmental Approvals" shall mean any written permit, license, variance, certification, consent, no-action letter, clearance, exemption or other approval granted by a Governmental Authority. "Governmental Authority" shall mean any international, foreign, federal, state, regional, county, local or other governmental authority. "Hazardous Materials" shall have the meaning assigned thereto in the Note Agreements. "Impositions" shall have the meaning assigned thereto in §2.7(a) hereof Intercreditor and Collateral Agency Agreement" shall have the meaning assigned thereto in Recitals hereof "Lien" shall mean any interest in property securing an obligation owed to, or a claim by, a Person other than the owner of the property, whether such interest is based on the common law, statute or contract, and including but not limited to the security interest lien arising from a mortgage, encumbrance, pledge, conditional sale or trust receipt or a lease consignment or bailment for security purposes. The term "Lien" shall include reservations, exceptions, encroachments, easements, rights-of-way, covenants, conditions, restrictions, leases and other title exceptions and encumbrances (including, with respect to stock, stockholder agreements, voting trust agreements, buy-back agreements and all similar arrangements) affecting property. "Material Adverse Effect" shall have the meaning assigned thereto in the Note Agreements. "Motor Vehicle" shall mean all trucks, trailers, automobiles, rolling stock, forklifts and vehicles of every kind and description, whether now owned or hereafter acquired by the Company, or in which the Company may acquire an interest. "Note Agreements" shall have the meaning ascribed to it in the Recitals hereof this Mortgage. "Notes" and "Note" shall mean the Credit Facility Notes and the Senior Secured Notes. "Overdue Rate" shall mean the lesser of (a) the maximum interest rate permitted by law and (b) the annual percentage rate of interest which is established by Citibank, N.A. from time to time as its prime rate plus 2%. "Permitted Encumbrances" shall mean the liens described in clauses (a) through (j) of §2.8. "Person" shall mean an individual, partnership, corporation, trust or unincorporated organization. "RCRA" shall mean the Resource Conservation and Recovery Act, as amended. "Release" shall have the meaning assigned thereto in the Note Agreements. "Rentals" shall have the meaning assigned thereto in the Note Agreements. "Replacement Items of Trade Property" shall have the meaning assigned thereto in §3.3(a)(1) hereof. "Securities" shall have the meaning assigned thereto in the Note Agreements. "Secured Parties" shall have the meaning assigned thereto in the Intercreditor and Collateral Agency Agreement. "Senior Note Documents" shall mean the Note Agreements, the Senior Secured Notes, and all other mortgages, security agreements, documents, certificates and instruments relating to, arising out of, or in any way connected therewith or any of the transactions contemplated thereby. "Senior Secured Obligations" shall have the meaning assigned thereto in Recitals hereof "Senior Security Documents" shall have the meaning assigned to the term "Security Documents" in the Note Agreements. "Senior Secured Notes" shall have the meaning assigned thereto in the Note Agreements. "Specified Pledged Stock" shall mean the stock and all other equity interests of St. Xxxx Bank owned by the Company and subject to the St. Xxxx Xxxxx Lien (as defined in the Note Agreements). "Subsidiary" shall have the meaning assigned thereto in the Note Agreements. "Trade Property" shall have the meaning ascribed to it in Granting Clause Second of this Mortgage. "Uniform Commercial Code" shall mean the Uniform Commercial Code as in effect in the States of Minnesota and North Dakota, as amended, as the case may be. "Voting Stock" shall mean securities of any class or classes of a corporation, the holders of which are ordinarily, in the absence of contingencies, entitled to elect a majority of the corporate directors (or Persons performing similar functions), SECTION 2. GENERAL COVENANTS ANT) WARRANTIES. The Company covenants, warrants and agrees as follows: Section 2.1. Agreement and Mortgage Covenants. Each and all of the terms, provisions, restrictions, covenants and agreements set forth in the Note Agreements and in each and every supplement thereto or amendment thereof which at any time or from time to time may be executed and delivered by the parties thereto or their successors and assigns, are incorporated herein by reference to the same extent as though each and all of said terms, provisions, restrictions, covenants and agreements were fully set out herein and as though any amendment or supplement to the Note Agreements and the Credit Facility were fully set out in an amendment or supplement to this Mortgage; and the Company does hereby covenant and agree well and truly to abide by, perform and be governed and restricted by each and all of the matters provided for by the Note Agreements and the Credit Facility and so incorporated herein to the same extent and with the same force and effect as if each and all of said terms, provisions, restrictions, covenants and agreements so incorporated herein by reference were set out and repeated herein at length. Without limiting the foregoing, the Company covenants and agrees to pay all taxes, assessments and governmental charges or levies imposed upon this Mortgage or the Senior Secured Obligations (other than income taxes of the Mortgagee or of the Secured Parties). If any such sums shall be advanced by the Mortgagee or any Secured Party, they shall bear interest, shall be paid and shall be secured as provided in §2.9 hereof. Section 2.2. Ownership of Collateral. The Company covenants and warrants that it has fee simple title to the Real Property and good and marketable title to the other Collateral hereinbefore conveyed to the Mortgagee free and clear of all liens, charges and encumbrances whatever except Permitted Encumbrances, and the Company has full right, power and authority to convey, transfer, mortgage and grant a first perfected security interest in the same to the Mortgagee for the uses and purposes in this Mortgage set forth; and the Company will warrant and defend the title to the Collateral against all claims and demands whatsoever except Permitted Encumbrances. Section 2.3. Further Assurances. The Company will, at its own expense, do, execute, acknowledge and deliver all and every further reasonable act, deed, conveyance, transfer and assurance necessary or proper for (a) the better assuring, conveying, assigning and confirming unto the Mortgagee all of the Collateral, or property intended so to be, whether now owned or hereafter acquired and (b) the perfection of the first security interest provided for in the Collateral whether now owned or hereafter acquired. The Mortgagee, as secured party, may file one or more financing statements disclosing its security interest in any or all of the Collateral without the Company's signature appearing thereon. The Company also hereby grants the Mortgagee, as such secured party a power of attorney to execute any such financing statement, or amendments and supplements to financing statements, on behalf of the Company without notice thereof to the Company, which power of attorney is coupled with an interest and is irrevocable until the Senior Secured Obligations have been fully satisfied. Section 2.4. Payment of Principal, Premium and Interest The Company will duly and punctually pay the principal of, and premium and interest on all Notes secured hereby according to the terms thereof. Section 2.5. Maintenance of Collateral, Other Liens, Compliance with Laws, Environmental Matters, Etc. Without limiting the provisions of the Note Agreements and the Credit Facility, (a) The Company shall (1) promptly repair, restore, replace or rebuild any material buildings, improvements or Trade Property now or hereafter on the Real Property which may become damaged or be destroyed, (2) keep the Collateral in good condition and repair, ordinary wear and tear excepted, without waste, and free from all claims, liens, charges and encumbrances (except for claims, liens, charges and encumbrances that are being contested under and in compliance with §2.7(c) hereof) other than Permitted Encumbrances, (3) pay when due any indebtedness which may be secured by a Lien or charge on the Collateral and upon request provide satisfactory evidence of the discharge of such Lien to the Mortgagee (unless such payment is being contested under and in compliance with §2.7(c) hereof), (4) comply with all requirements of law or municipal ordinances, including without limitation all Environmental Laws, with respect to the Collateral and the use thereof, failure to comply with which would be reasonably likely to result in any material interference with the use or operation of the Collateral by the Company or would materially adversely affect the assets, business, operations, income or condition (financial or otherwise) of the Company and its Subsidiaries, taken as a whole, and (5) make no material alterations in said Collateral except as required by law or municipal ordinance; provided that the Company may make such other material alterations so long as such alterations are completed in compliance with the requirements of paragraphs (b) and (c) of this §2.5. (b) The Company may, at its expense, (1) construct upon the Collateral additional buildings, structures and other improvements and (2) install, assemble and place upon the Collateral any items of Trade Property, signs, furniture, furnishings, equipment, machinery and other tangible personal property used or useful in the Company's business, in each case upon compliance with the provisions of paragraph (a) of this §2.5. All such buildings, structures and other improvements shall be and remain part of the realty and shall be subject to this Mortgage with respect thereto. (c) Any repair, restoration, rebuilding, substitution, replacement, modification, alteration of or addition to the Collateral pursuant to §2.5(b) hereof must not materially impair the market value, structural integrity or usefulness of the Collateral for use in the ordinary course of business; shall be performed in a good and workmanlike manner and be expeditiously completed in compliance in all material respects with all laws, ordinances, orders, rules, regulations and requirements applicable thereto, including to the extent necessary to maintain in full force and effect the policies of insurance required by §2.6 hereof All costs and expenses of each such repair, restoration, rebuilding, substitution, replacement, the discharge of all liens filed against the Collateral arising out of the same, together with all costs and expenses necessary to obtain any permits or licenses required in connection therewith shall be promptly paid by the Company (except to the extent such costs and expenses are being contested under and in compliance with §2.7(c) hereof). (d) The Company: (1) shall, as soon as reasonably practicable, maintain the Collateral in compliance in all material respects with any applicable Environmental Law; (2) shall require that all of its tenants and subtenants at the Collateral, as soon as reasonably practicable, comply in all material respects with any applicable Environmental Law; (3) shall obtain and maintain in full force and effect all material Governmental Approvals required for its operations at or on the Collateral by any applicable Environmental Law; (4) shall, as soon as reasonably practicable, cure any material violation of applicable Environmental Laws by any Person at the Collateral; (5) shall not, and shall not permit any other Person to, own or operate on the Collateral any (i) landfill or dump or (ii) hazardous waste treatment, storage or disposal facility as defined pursuant to RCRA or any comparable state law; (6) shall not use, generate, treat, store, release or dispose Hazardous Materials at or on the Collateral except in the ordinary course of its business; (7) shall within ten (10) Business Days notify the Mortgagee in writing of and provide any reasonably requested documents upon learning of any of the following which arise in connection with the Collateral: (A) any material liability for response or corrective action, natural resource damage or other harm pursuant to CERCLA, RCR.A or any comparable state law; (B) any material Environmental Claim; (C) any material violation of an Environmental Law or material Release of a Hazardous Material; (D) any material restriction on the ownership, occupancy, use or transferability arising pursuant to any (i) Release, threatened Release or disposal of a Hazardous Material or (ii) Environmental Law; or, (E) any other environmental, natural resource, health or safety condition, which would reasonably be expected to have a Material Adverse Effect; and, (8) at its expense, will conduct any investigation, study, sampling and testing, and undertake any cleanup, removal, remedial or other response action necessary to remove, clean up or xxxxx any material quantity of Hazardous Material Released or disposed at or on the Collateral as required by any applicable Environmental Law and any order or directive from a Governmental Authority having jurisdiction, except to the extent the Company is reasonably contesting any Environmental Law or any order or directive from a Governmental Authority, so long as (i) such contest is in good faith and by appropriate proceedings, (ii) adequate reserves are maintained in accordance with GAAP and (iii) no forfeiture will result from a failure to comply with the contested requirement. (e) The Company at its own expense and at the reasonable written request of the Mortgagee shall provide reasonably expeditiously an environmental report of reasonable scope, form and depth by a consultant reasonably acceptable to the Mortgagee as to any matter for which notice is provided pursuant to §2.5(d)(7) above or which may reasonably be believed by the Mortgagee to form the basis of a material Environmental Claim in connection with the Collateral. If such a requested environmental report is not delivered within seventy-five (75) days after receipt of the Mortgagee's request, then the Mortgagee may arrange for same, and the Company hereby grants to the Mortgagee and its representatives access to the Collateral and a license to undertake such an assessment. The reasonable cost of any assessment arranged for by the Mortgagee pursuant to this provision will be payable by the Company on demand and added to the obligations secured by the Senior Security Documents. (f) The Company may use and operate the Collateral for any lawful purpose not inconsistent with the provisions of §10.7 of the Note Agreements and the applicable provisions of the Credit Facility and any Additional Credit Facility. Section 2.6. Insurance. (a) Insurance against Loss, Damage and Liability. Without limiting the provisions of the Note Agreements and the Credit Facility, the Company will insure the Collateral against such perils and hazards, and in such amounts and with such limits as the Mortgagee may from time to time reasonably require, and in any event will continuously maintain the following-described policies of insurance: (1) insurance against loss and damage by all risks of direct physical loss or damage, including fire, windstorm, earthquake and other risks covered by the so-called "all risk" form of property policy with replacement cost and agreed amount endorsements; provided, however, that the amount of such insurance with respect to the Collateral shall not at any time be less than the full insurable replacement value of the Collateral from time to time; and provided further that such insurance policy shall provide that not more than $5,000,000 may be deductible from the loss payable per occurrence for any casualty and that such insurance shall not be subject to a co-insurance clause; (2) business interruption insurance, covering loss of earnings due to any direct physical loss of real property owned by the Company, in an amount, as of the Closing Date, as is customary for corporations of established reputation engaged in the same or similar business and owning and operating similar properties; provided, however, such insurance policy may provide for an exclusion (or waiting period) of not more than 30 consecutive days following such shutdown; (3) during the course of any material construction, repair or improvements on the Collateral, commercial general public liability insurance (including coverage for elevators and escalators, if any, on the Collateral and, if any construction of new improvements occurs after execution of this Mortgage, completed operations coverage for two years after construction of the improvements has been completed) on an "occurrence basis" or a "claims made basis" against claims for "personal injury" including without limitation bodily injury, death or property damage occurring on, in or about the Collateral and the adjoining streets, sidewalks and passageways, such insurance to afford immediate minimum protection to a limit of not less than the greater of $1,000,000 or such amount as may be reasonably required by the Mortgagee with respect to personal injury or death to any one or more persons or damage to property; (4) workmen's compensation insurance, unless the Company is an authorized self-insurer, (including employer's liability insurance, if requested by the Mortgagee) for all employees of the Company engaged on or with respect to the Collateral in such amount as is reasonably satisfactory to the Mortgagee or, if such amounts are established by law, in such amounts; (5) during the course of any material construction or repair of improvements on the Collateral, builder's completed value risk insurance against "all risks of direct physical costs", including collapse, with deductibles not to exceed $1,000,000, in nonreporting form, covering the total value of work performed and equipment, supplies and materials furnished as part of the work. Such policy of insurance shall contain the "permission to occupy upon completion of work or occupancy" endorsement; (6) boiler and machinery insurance covering pressure vessels, air tanks, boilers, machinery, pressure piping, heating, air conditioning and elevator equipment and escalator equipment and insurance against loss or occupancy or use arising from any such breakdown, in such amounts and with such terms as are customary for companies of established size and reputation engaged in substantially the same business as the Company and similarly situated; (7) flood insurance in such amounts as are reasonably satisfactory to the Mortgagee; provided, however, that the Company shall not be required to maintain such flood insurance if and so long as and to the extent that the Collateral shall not be located in a flood hazard area, as designated as such pursuant to the Flood Disaster Protection Act of 1973, as amended, or other applicable law with such insurance to be at least the amount available under the National Flood Insurance Program and if available under policies issued by other sources, then in such additional amounts as the Mortgagee may reasonably require; (8) insurance against liability for injury to a person and loss or damage to the property of others from such risks and in such amounts as are customarily carried by companies owning property of a similar character and engaged in a business similar to that engaged in by the Company; provided, however, that in no event shall the insurance maintained in accordance with this paragraph be less than an aggregate of $1,000,000 under single limit liability for such loss; and provided, further, that such insurance shall provide that not more than $100,000 may be deductible from the loss payable for any loss thereunder; and (9) such other insurance against such risks as is customary to be carried by companies of established size and reputation engaged in substantially the same business as the Company and similarly situated and owning Properties in the states in which the Collateral is located. (b) Form of Policies. Any insurance policies carried in accordance with this §2.6 shall be written by companies of recognized national standing rated "A-", Class X or better by A.M. Best Company and shall be authorized to do business in the state in which the Collateral is located. Such insurers shall be accorded a similar rating by another nationally recognized insurance rating agency of similar standing acceptable to the Mortgagee if A.M. Best Company ceases to rate insurers. In the event that an insurer meeting the requirements set forth above is subsequently downgraded so as to no longer meet such requirements, the Company shall have 60 days from the date of such downgrading to obtain insurance from an insurer rated at least "A-", Class X by A.M. Best Company. All premiums on such insurance shall be paid by the Company and the policies of such insurance (or certificates therefor) delivered to the Mortgagee. All such policies of insurance: (1) shall name the Mortgagee, the Banks, the Noteholders and each other holder of the Senior Secured Notes as additional insureds, as their interests may appear, (2) in the case of policies covering loss or damage to the Collateral, shall provide that losses, if any, shall be payable solely to the Mortgagee under a standard mortgage loss payable clause satisfactory to the Mortgagee, (3) shall provide that the Mortgagee's, the Banks' and the Noteholders' interests shall be insured regardless of any breach or violation by the Company of any warranties, declarations or conditions contained in such policies, (4) the insurers shall waive any right of subrogation of the insurers to any set-off or counterclaim or any other deduction, whether by attachment or otherwise, in respect of any liability of the Company, (5) such insurance, as to the interest of the Mortgagee, the Banks and/or the Noteholders, as the case may be, therein, shall not be invalidated by the use or operation of the Collateral for purposes which are not permitted by such policies, nor by any foreclosures or other proceedings relating to the Collateral, nor by change in title to or ownership of the Collateral, (6) if any premium or installment is not paid when due, or if such insurance would lapse or be cancelled, terminated or changed for any reason whatsoever, the insurers will promptly notify the Mortgagee and any such lapse, cancellation, termination or change shall not be effective as to the Mortgagee, the Banks and/or the Noteholders, as the case may be, for 10 Business Days after receipt of such notice, and (7) appropriate certification shall be made to the Mortgagee by each insurer with respect thereto. The Company hereby authorizes the Mortgagee, upon the occurrence and during the continuation of any Event of Default hereunder, at the Mortgagee's option to adjust, compromise and settle any losses under any insurance afforded, and the Company does hereby irrevocably constitute the Mortgagee, its officers, agents and attorneys, as its attorneys-in-fact, with full power and authority, upon the occurrence and during the continuation of any Event of Default hereunder, to effect such adjustment, compromise and/or settlement and to endorse any drafts drawn by an insurer of the Collateral or any part thereof and to do everything necessary to carry out such purposes and to receive and receipt for any unearned premiums due under policies of such insurance; but unless the Mortgagee elects to adjust, compromise or settle losses as aforesaid, such adjustment, compromise and/or settlement shall be made by the Company, subject to final approval of the Mortgagee in the case of losses exceeding $5,000,000. Section 2.7. Payment of Taxes and Other Charges; Contests Thereof (a) Without limiting the provisions of the Note Agreements and the Credit Facility, the Company will pay and discharge, before the same shall become delinquent, together with interest and penalties thereon, if any, (1) all taxes, assessments (including assessments for benefits from public works or improvements whenever begun or completed), levies, fees, water and sewer rents and charges, and all other governmental charges, general and special, ordinary and extraordinary, and whether or not within the contemplation of the parties hereto, which are at any time levied upon or assessed against it or the Collateral or any part thereof or upon this Mortgage or the Senior Secured Obligations secured hereby, or upon the revenues, rents, issues, income and profits in respect of the Collateral, or arising in respect of the occupancy, use or possession thereof, which failure to pay would result in the creation of a Lien upon the Collateral or any part thereof, or upon the revenues, rents, issues, income and profits of the Collateral or in the diminution thereof or would result in any material interference with the use or operation of the Collateral by the Company, (2) all corporate franchise, excise and other taxes, fees and charges assessed, levied or imposed in respect of its corporate existence or its right to do business in any state, (3) all income, excess profits, excise, sales, franchise, gross receipts and other taxes, duties or imposts, whether of a like or different nature, assessed, levied or imposed by any Governmental Authority on it or the Collateral, or any portion thereof, or upon the revenues, rents, issues, income and profits of the Collateral whether or not the failure to pay any such tax, duty or impost might result in the creation of a Lien upon any asset of the Company or the Collateral or any part thereof or upon the revenues, rents, issues, income and profits of the Collateral or in the diminution thereof, and whether or not any such tax, duty or impost is payable directly by the Company or is subject to withholding at the source and (4) all lawful claims and demands of mechanics, laborers, materialmen and others which, if unpaid, might result in the creation of a Lien on the Collateral or upon the revenues, rents, issues, income and profits of the Collateral and, in general, will do or cause to be done everything necessary so that the Lien hereof shall be fully preserved, at the cost of the Company, without expense to the Mortgagee (all of which taxes, assessments, levies, fees and other governmental or nongovernmental charges, claims and demands of like nature are hereinafter referred to as "Impositions"). The Company shall discharge any claim or Lien relating to Impositions upon the Collateral. (b) The Company will pay when due all utility charges which are incurred by the Company for the benefit of the Collateral or which may become a charge or Lien against the Collateral for gas, electricity, water or sewer services furnished to the Collateral and all other assessments or charges of a similar nature, whether public or private, affecting the Collateral or any portion thereof, whether or not such taxes, assessments or charges are or may become Liens thereon. (c) Contest. Without limiting the provisions of the Note Agreements and the Credit Facility, and always subject to the terms and conditions thereof, the Company may, in good faith and with reasonable diligence and by appropriate proceedings diligently prosecuted, contest or cause to be contested the validity or amount of any such Impositions,