When Recorded, Return To:
Texas Bank
000 Xxxx Xxxxx Xxxxx
Xxxxxx, Xxxxx 00000
Attn: Xxxxx Xxxxxxxx
TEXAS BANK
DEED OF TRUST, SECURITY AGREEMENT AND
ASSIGNMENT OF RENTS AND LEASES
STATE OF TEXAS ss.
ss. KNOW ALL MEN BY THESE PRESENTS:
COUNTY OF XXXXXX xx.
THAT, International Isotopes, Inc. ("Grantor," whether one or more), whose
address is 0000 Xxx Xxxxxxxx Xxxx, Xxxxxx, Xxxxx 00000, for and in consideration
of the sum of TEN DOLLARS ($10.00) to Grantor in hand paid by Xxxx Xxxxx,
Trustee, of Xxxxxx County, Texas ("Trustee"), in order to secure the payment of
the Indebtedness (as hereinafter defined) and the performance of the
obligations, covenants, agreements and undertakings of Grantor hereinafter
described, does hereby GRANT, BARGAIN, SELL, CONVEY, TRANSFER, ASSIGN and SET
OVER to Trustee the real estate (the "Land") situated in the County of Xxxxxx
and State of Texas described in Exhibit "A" attached hereto and made a part
hereof, TOGETHER WITH the following, whether now owned or hereafter acquired by
Grantor: (a) all buildings and other improvements now or hereafter attached to,
erected, constructed or developed on the Land (the "Improvements"); (b) all
fixtures (the "Personal Property") whatsoever now or hereafter delivered to,
attached to the Improvements or which are necessary or useful for the complete
and comfortable use and occupancy of the Improvements for the purposes for which
they were or are to be attached, erected, constructed or developed, or which
Personal Property is or may be used in the development of the Improvements, and
all renewals of or replacements or substitutions for any of the foregoing
whether or not the same shall be attached to the Land or Improvements; (c) all
water and water rights and minerals related to the Land or Improvements; (d) all
building materials and equipment now or hereafter delivered to and intended to
be installed in or on the Land or Improvements; (e) all security deposits and
advance rentals under any lease agreements now or at any time hereafter arising
from or by virtue of any transactions related to the Land, Improvements or the
Personal Property and held by or for the benefit of Grantor; (f) all monetary
deposits which Grantor has given to any public or private utility with respect
to utility services furnished to the Land or Improvements; (g) all rents,
issues, revenues, royalties, bonuses or other benefits of the Land, the
Improvements or the Personal Property, including, without limitation, cash or
securities deposited pursuant to leases of all or any part of the Land,
Improvements or Personal Property; (h) all proceeds (including premium refunds)
of each policy of insurance relating to the Land, Improvements or Personal
Property; (i) all proceeds from the taking of the Land, Improvements, Personal
Property or any part thereof or any interest or right or estate appurtenant
thereto by eminent domain or by purchase in lieu thereof; (j) all Grantor's
rights (but not its obligations) under any contracts related to the Land or
Improvements; (k) all Grantor's rights (but not its obligations) under any
documents, contract rights, commitments, accounts, general intangibles
(excluding trademarks, trade names and symbols used in connection therewith)
arising by virtue of any transactions related to the Land, Improvements or
Personal Property; (l) all deposits, bank accounts, funds, instruments, notes or
chattel paper arising from or related to the Land, Improvements or Personal
Property; (m) all permits, licenses, franchises, certificates and other rights
and privileges obtained in connection with the Land, Improvements or Personal
Property; (n) all plans, specifications, maps, surveys, reports, architectural,
engineering and construction contracts, books of account, insurance policies and
other documents, of whatever kind or character, relating to the use,
construction upon, occupancy, leasing, sale or operation of the Land or
Improvements; (o) all oil, gas and other hydrocarbons and other minerals
produced from or allocated to the Land or Improvements and all products
processed or obtained therefrom, the proceeds thereof, and all accounts and
general intangibles under which such proceeds may arise and all proceeds of the
Personal Property; (p) all easements and rights of way used in connection with
the Land or Improvements or as a means of ingress to or egress from said Land or
Improvements; (q) all right, title and interest of Grantor in and to all
streets, roads, ways, alleys, public places, easements and rights-of-way,
existing or proposed, public or private, adjacent to or used in connection with,
belonging or pertaining to the Land or any part thereof; and (r) all rights,
estates, powers, privileges and interests of whatever kind or character
appurtenant or incident to the foregoing. The above-described property is
collectively herein referred to as the "Mortgaged Property."
TO HAVE AND TO HOLD the Mortgaged Property, together with the rights,
privileges and appurtenances thereto belonging unto the Trustee and his
successors or substitutes, forever in this trust and to his or their successors
and assigns, IN TRUST, however, upon the terms, provisions and conditions herein
set forth.
ARTICLE I
SECURED INDEBTEDNESS
1.1 Secured Indebtedness. This Deed of Trust, Security Agreement and
Assignment of Rents and Leases (the "Mortgage") is made to secure and enforce
the payment of the following promissory note, obligations, indebtedness and
liabilities: (a) one certain promissory note of even date herewith in the
original principal amount of Five Million and no/100 DOLLARS ($5,000,000.00),
made by Grantor and payable to the order of TEXAS BANK, whose address is 000
Xxxx Xxxxx Xxxxx, Xxxxxx, Xxxxx 00000, with interest at the rate or rates
therein provided, both principal and interest being payable as therein provided,
and containing a provision for the payment of a reasonable additional amount as
attorneys' fees (such promissory note and all modifications, increases, renewals
or extensions thereof, in whole or in part, and all other notes given in
substitution therefor or in modification, increase, renewal or extension
thereof, in whole or in part, are collectively referred to herein as the "Note",
and said payee and all subsequent holders of the Note or any part thereof or any
of the Indebtedness, as hereinafter defined, are collectively referred to herein
as "Noteholder"); and (b) all future loans and advances and all other
indebtedness, obligations and liabilities of every kind and character of Grantor
now or hereafter existing in favor of Noteholder arising pursuant to the
provisions of this Mortgage or any other Loan Document (defined below), it being
contemplated that Grantor may hereafter become indebted to Noteholder in further
sum or sums. The indebtedness, obligations, and liabilities referred to in this
Paragraph are hereinafter collectively referred to as the "Indebtedness." This
Mortgage, the Note, the Loan Agreement (as hereinafter defined) and any other
instruments, documents and agreements now or hereafter evidencing, securing,
governing, guaranteeing and/or pertaining to the Indebtedness or any part
thereof are hereinafter collectively referred to as the "Loan Documents."
ARTICLE II
REPRESENTATIONS, WARRANTIES, COVENANTS AND AGREEMENTS OF GRANTOR
2.1 Representations and Warranties. Grantor does hereby represent and
warrant to Noteholder as follows:
(a) Intentionally Omitted.
(b) Title and Authority. Grantor is the lawful owner of good and
indefeasible title to the Land and Improvements and has good right and authority
to grant, bargain, sell, transfer, assign and mortgage the Land and Improvements
and to grant a security interest in the Personal Property. Grantor does not do
business with respect to the Mortgaged Property under any trade name.
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(c) Permitted Encumbrances. The Mortgaged Property is free and clear from
all liens, security interests and encumbrances except the lien and security
interest evidenced hereby and, as applicable, (i) the liens and/or encumbrances
set forth in Exhibit "B" attached hereto and made a part hereof, if any, or (ii)
the matters, if any, set forth as exceptions on Schedule B of the Policy (as
defined hereinbelow), if any, or (iii) if no Exhibit "B" is attached hereto and
no Policy is issued, then any liens and/or encumbrances affecting the Mortgaged
Property appearing in the Real Property Records of the county(ies) in which the
Land is situated, but only to the extent the same are valid and subsisting
(hereinafter called the "Permitted Encumbrances"). There are no mechanic's or
materialmen's liens, lienable bills or other claims constituting or that may
constitute a lien on the Mortgaged Property, or any part thereof.
(d) No Financing Statement. There is no financing statement covering all
or any part of the Mortgaged Property or its proceeds on file in any public
office which has not been terminated or assigned to Noteholder.
(e) Intentionally Omitted.
(f) Intentionally Omitted.
(g) No Default or Violation. The execution, delivery and performance of
this Mortgage, the Note and all of the other Loan Documents do not contravene,
result in a breach of or constitute a default under any mortgage, deed of trust,
lease, promissory note, loan agreement or other contract or agreement to which
Grantor is a party or by which Grantor or any of its properties may be bound or
affected and, to the best of Grantor's knowledge, do not violate or contravene
any law, order, decree, rule or regulation to which Grantor is subject.
(h) Compliance with Covenants and Laws. The Mortgaged Property and the
intended use thereof by Grantor comply with all applicable restrictive
covenants, zoning ordinances and building codes, flood disaster laws, applicable
health and environmental laws and regulations and all other applicable laws,
statutes, ordinances, rules, regulations, orders, determinations and court
decisions, including, without limitation, the Americans With Disabilities Act of
1990 and TEX. REV. CIV. STAT. XXX. art. 9102, as amended (all of the foregoing
hereinafter sometimes collectively referred to as "Applicable Laws"), without
reliance upon grandfather provisions or adjacent or other properties. Grantor
has obtained all requisite zoning, utility, building, health and operating
permits from each governmental authority or municipality having jurisdiction
over the Mortgaged Property. All engineering specifications with respect to the
Mortgaged Property are within applicable environmental standards.
(i) Environmental. To the best of Grantor's knowledge, without limitation
of any of the foregoing, no asbestos, material containing asbestos which is or
may become friable or material containing asbestos deemed hazardous by
Applicable Laws has been installed in the Mortgaged Property and the Mortgaged
Property and Grantor are not in violation of or subject to any existing, pending
or, to the best knowledge of Grantor, threatened investigation or inquiry by any
governmental authority or to any remedial obligations under any Applicable Laws
pertaining to health or the environment (such Applicable Laws as they now exist
or are hereafter enacted and/or amended hereinafter sometimes collectively
referred to as "Applicable Environmental Laws"), including without limitation,
the Comprehensive Environmental Response, Compensation, and Liability Act of
1980, as amended by the Superfund Amendments and Reauthorization Act of 1986
(collectively, together with any subsequent amendments hereinafter referred to
as "CERCLA"), the Resource Conservation and Recovery Act of 1976, as amended by
the Used Oil Recycling Act of 1980, the Solid Waste Disposal Act Amendments of
1980, and the Hazardous and Solid Waste Amendments of 1984 (collectively,
together with any subsequent amendments hereinafter called "RCRA"), the Texas
Water Code and the Texas Solid Waste Disposal Act, and this representation would
continue to be true and correct following disclosure to the applicable
governmental authorities of all relevant facts, conditions and circumstances, if
any, pertaining to the Mortgaged Property and Grantor. Grantor has not obtained
and is not required to obtain any permits, licenses or similar authorizations to
construct, occupy, operate or use any buildings, improvements, fixtures and
equipment forming a part of the Mortgaged Property by reason of any Applicable
Environmental Laws. Grantor undertook, at the time of acquisition of the
Mortgaged Property, all appropriate inquiry into the previous ownership and uses
of the Mortgaged Property consistent with good commercial or customary practice
to determine that the Mortgaged Property and the uses therefor are in compliance
with all Applicable Environmental Laws. Grantor has taken all steps reasonably
necessary to determine and has determined that no hazardous substances or solid
wastes have been disposed of or otherwise released on or to the Mortgaged
Property. The use which Grantor makes and intends to make of the Mortgaged
Property will not result in the disposal or other release of any hazardous
substance or solid waste on or to the Mortgaged Property. The terms "hazardous
substance" and "release" as used in this Mortgage shall have the meanings
specified in CERCLA, and the terms "solid waste" and "disposal" (or "disposed")
shall have the meanings specified in RCRA; provided, in the event either CERCLA
or RCRA is amended so as to broaden the meaning of any term defined thereby,
then such broader meaning shall apply subsequent to the effective date of such
amendment and provided further, to the extent that the laws of the State of
Texas establish a meaning for the terms "hazardous substance," "release," "solid
waste," or "disposal" (or "disposed") which is broader than that specified in
either CERCLA or RCRA, such broader meaning shall apply.
(j) No Suits. There are no judicial or administrative actions, suits or
proceedings pending or, to the best of Grantor's knowledge, threatened against
or affecting Grantor, any other person liable, directly or indirectly, for the
Indebtedness, or the Mortgaged Property or involving the validity,
enforceability or priority of any of the Loan Documents.
(k) Condition of Property. None of the improvements on the Mortgaged
Property will create an encroachment over, across or upon any of the Mortgaged
Property boundary lines, rights of way or easements and no buildings or other
improvements on adjoining land create such an encroachment.
(l) Intentionally Omitted.
(m) Intentionally Omitted.
(n) Intentionally Omitted.
2.2 Covenants and Agreements. So long as the Indebtedness or any part
thereof remains unpaid, Grantor covenants and agrees with Noteholder as follows:
(a) Payment and Performance. Grantor will make prompt payment, as the same
becomes due, of the Indebtedness and shall punctually and properly perform all
of Grantor's covenants, obligations and liabilities under the Loan Documents.
(b) Intentionally Omitted.
(c) Intentionally Omitted.
(d) Operation of Mortgaged Property. Grantor will operate the Mortgaged
Property in a good and workmanlike manner and in accordance with all Applicable
Laws and will pay all fees or charges of any kind in connection therewith
(subject to Grantor's right to contest fees, charges, liens and/or taxes set
forth herein, or under the Loan Agreement). Grantor will keep the Mortgaged
Property occupied, if necessary, so as not to impair the insurance carried
thereon. Grantor will not use or occupy, or allow the use or occupancy of, the
Mortgaged Property in any manner which violates any Applicable Law or which
constitutes a public or private nuisance or which makes void, voidable or
cancelable, or increases the premium of, any insurance then in force with
respect thereto. Grantor will not initiate or permit any zoning reclassification
of the Mortgaged Property or seek any variance under existing zoning ordinances
applicable to the Mortgaged Property or use or permit the use of the Mortgaged
Property in such a manner which would result in such use becoming a
nonconforming use under applicable zoning ordinances or other Applicable Laws.
Grantor will not impose any restrictive covenants or encumbrances upon the
Mortgaged Property, execute or file any subdivision plat affecting the
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Mortgaged Property or consent to the annexation of the Mortgaged Property to any
municipality, without the prior written consent of Noteholder, not be
unreasonably delayed, withheld or conditioned. Grantor shall not cause or permit
any drilling or exploration for, or extraction, removal or production of,
minerals from the surface or subsurface of the Mortgaged Property. Grantor will
not do or suffer to be done any act whereby the value of any part of the
Mortgaged Property may be lessened. Grantor will allow, after receiving
reasonable prior written notice, Noteholder or its authorized representative to
enter the Mortgaged Property at any reasonable time to inspect the Mortgaged
Property and Grantor's books and records pertaining thereto and Grantor will
assist Noteholder or said representative in whatever way reasonably necessary to
make such inspection. If Grantor receives a notice or claim from any federal,
state or other governmental entity pertaining to the Mortgaged Property,
including, without limitation, a notice that the Mortgaged Property is not in
compliance with any Applicable Law, Grantor will promptly furnish a copy of such
notice or claim to Noteholder.
(e) Debts for Construction. Grantor will cause all debts and liabilities
of any character, including without limitation, all debts and liabilities for
labor, material and equipment and all debts and charges for utilities servicing
the Mortgaged Property, incurred in the construction, maintenance, operation and
development of the Mortgaged Property (subject to retainage), to be paid before
past due.
(f) Ad Valorem Taxes. Grantor will cause to be paid prior to delinquency
all taxes and assessments heretofore or hereafter levied or assessed against the
Mortgaged Property, or any part thereof, or against Trustee or Noteholder for or
on account of the Note or any other Indebtedness or the interest created by this
Mortgage and will furnish Noteholder with receipts showing payment of such taxes
and assessments at least ten (10) days prior to the applicable default date
therefor; provided that Grantor may in good faith, by appropriate proceedings,
contest the validity, applicability, or amount of any asserted tax or
assessment, and pending such contest Grantor shall not be deemed in default
hereunder if (i) Grantor shall diligently prosecute such contest in a manner not
prejudicial to the rights, liens and security interests of Noteholder; (ii)
prior to delinquency of the asserted tax or assessment Grantor establishes with
Noteholder an escrow acceptable to Noteholder adequate to cover the payment of
such tax or assessment with interest, costs and penalties and a reasonable
additional sum to cover possible costs, interest and penalties (which escrow
shall be returned to Grantor upon payment of all such taxes, assessments,
interest, costs and penalties or disbursed in accordance with the resolution of
the contest to the claimant) or furnishes Noteholder with an indemnity bond
secured by a deposit in cash or other security acceptable to Noteholder, or with
a surety acceptable to Noteholder, in the amount of the tax or assessment being
contested by Grantor plus a reasonable additional sum to pay all costs,
interests and penalties which may be imposed or incurred in connection
therewith; (iii) Grantor pays to Noteholder promptly after demand therefor all
costs and expenses incurred by Noteholder in connection with such contest; and
(iv) Grantor promptly causes to be paid any amount adjudged by a court of
competent jurisdiction to be due, with all costs, penalties and interest
thereon, promptly after such judgment becomes final and non-appealable;
provided, however, that in any event each such contest shall be concluded and
the tax, assessment, penalties, interest and costs shall be paid prior to the
date any writ or order is issued under which the Mortgaged Property or any part
thereof may be sold.
(g) Repair and Maintenance. Grantor will keep the Mortgaged Property in
first class order, repair, operating condition and appearance, causing all
necessary repairs, renewals, replacements, additions and improvements to be
promptly made, and will not allow any of the Mortgaged Property to be misused,
abused or wasted or to deteriorate. Grantor will promptly replace all worn-out
or obsolete fixtures covered by this Mortgage with fixtures comparable to the
replaced fixtures when new, and will repaint the Mortgaged Property when needed.
Grantor will make all renovations, modifications and alterations to the
Mortgaged Property in compliance with all Applicable Laws. Notwithstanding any
of the foregoing, Grantor will not, without the prior written consent of
Noteholder, (i) remove from the Mortgaged Property any fixtures covered by this
Mortgage except those replaced by Grantor by an article of equal suitability and
value, owned by Grantor, free and clear of any lien or security interest (except
that created by this Mortgage); (ii) make any structural alteration to the
Mortgaged Property or any other alterations thereto which impair the value
thereof; or (iii) make any alteration to the Mortgaged Property involving an
estimated expenditure exceeding $20,000 except pursuant to plans and
specifications approved in writing by Noteholder. Upon request of Noteholder,
Grantor will promptly deliver to Noteholder an inventory describing and showing
the make, model, serial number and location of all fixtures used in the
management, maintenance and operation of the Mortgaged Property with a
certification by Grantor that said inventory is a true and complete schedule of
all such fixtures and personal property used in the management, maintenance and
operation of the Mortgaged Property, that such items specified in the inventory
constitute all of the fixtures required in the management, maintenance and
operation of the Mortgaged Property, and that all such items are owned by
Grantor free and clear of any lien or security interest (except that created by
this Mortgage).
(h) Insurance and Casualty. Grantor will keep the Mortgaged Property
insured against loss or damage by fire, explosion, windstorm, hail, flood (if
the Mortgaged Property shall at any time be located in an identified "flood
prone area" in which flood insurance has been made available pursuant to the
Flood Disaster Protection Act of 1973), tornado and such other hazards as may be
required by Noteholder by policies of fire, extended coverage and other
insurance in such company or companies, in such amounts, upon such terms and
provisions, and with such endorsements, all as may be acceptable to Noteholder.
Grantor will also provide such other insurance as Noteholder may from time to
time require, in such companies, upon such terms and provisions, in such
amounts, and with such endorsements, all as are approved by Noteholder. Grantor
further agrees that Grantor will deliver to Noteholder the original policies
evidencing such insurance and any additional insurance which shall be taken out
upon any part of the Mortgaged Property and receipts evidencing the payment of
all premiums, and will deliver certificates evidencing renewals of all such
policies of insurance to Noteholder at least fifteen (15) days before any such
insurance shall expire. Without limiting the discretion of Noteholder with
respect to required endorsements to insurance policies, Grantor further agrees
that all such policies shall provide that proceeds thereunder will be payable to
Noteholder as its interest may appear pursuant and subject to a mortgage clause
(without contribution) of standard form attached to or otherwise made a part of
the applicable policy. In the event of foreclosure of this Mortgage, or other
transfer of title to the Mortgaged Property in extinguishment in whole or in
part of the Indebtedness, all right, title and interest of Grantor in and to
such policies then in force concerning the Mortgaged Property and all proceeds
payable thereunder shall thereupon vest in the purchaser at such foreclosure or
Noteholder or other transferee in the event of such other transfer of title. In
the event any of the Mortgaged Property covered by such insurance is destroyed
or damaged by fire, explosion, windstorm, hail or by any other casualty against
which insurance shall have been required hereunder, (i) Noteholder may, but
shall not be obligated to, make proof of loss if not made promptly by Grantor;
(ii) each insurance company concerned is hereby authorized and directed to make
payment for such loss directly to Noteholder instead of to Grantor; and (iii)
Noteholder shall have the right to apply the insurance proceeds first, to
reimburse Noteholder or Trustee for all costs and expenses, including, without
limitation, reasonable attorneys' fees, incurred in connection with the
collection of such proceeds and, second, the remainder of said proceeds shall be
applied as set forth in the Loan Agreement. In any event the unpaid portion of
the Indebtedness shall remain in full force and effect and Grantor shall not be
excused in the payment thereof. If any act or occurrence of any kind or nature
(including any casualty on which insurance was not obtained or obtainable) shall
result in damage to or loss or destruction of the Mortgaged Property, Grantor
shall give immediate written notice thereof to Noteholder and, unless otherwise
so instructed by Noteholder, shall promptly, at Grantor's sole cost and expense
and regardless of whether the insurance proceeds, if any, shall be sufficient
for the purpose, restore, repair, replace and rebuild the Mortgaged Property as
nearly as possible to its value, condition and character immediately prior to
such damage, loss or destruction in accordance with plans and specifications
submitted to and approved by Noteholder.
(i) Condemnation. Immediately upon obtaining knowledge of the institution
of any proceedings for the condemnation of the Mortgaged Property or any portion
thereof, or any other proceedings arising out of injury or damage to the
Mortgaged Property, or any portion thereof, Grantor will notify Noteholder of
the pendency of such proceedings. Noteholder may participate in any such
proceedings, and Grantor shall from time to time deliver to Noteholder all
instruments requested by it to permit such participation. Grantor shall, at its
expense, diligently prosecute any such proceedings, and shall consult with
Noteholder, its attorneys and experts, and cooperate with them in the carrying
on or defense of any such proceedings. All proceeds of condemnation awards or
proceeds of sale in lieu of condemnation with respect to the Mortgaged Property
and all judgments, decrees and awards for injury or damage to the Mortgaged
Property shall be paid to Noteholder and shall be applied, first, to reimburse
Noteholder or Trustee for all costs and expenses, including, without limitation,
reasonable attorneys' fees, incurred in connection with collection of such
proceeds and,
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second, the remainder of said proceeds shall be applied, at the sole discretion
of Noteholder, to the payment of the Indebtedness (without premium or penalty)
in the order determined by Noteholder in its sole discretion or paid out to
repair or restore the Mortgaged Property so affected by such condemnation,
injury or damage. In any event the unpaid portion of the Indebtedness shall
remain in full force and effect and Grantor shall not be excused in the payment
thereof. In the event any of the foregoing proceeds are applied to the repair,
restoration or replacement of the Mortgaged Property, Grantor shall promptly
commence and complete such repair, restoration or replacement of the Mortgaged
Property as nearly as possible to its value, condition and character immediately
prior to such damage or taking in accordance with plans and specifications
submitted to and approved by Noteholder. Grantor hereby assigns and transfers
all such proceeds, judgments, decrees and awards to Noteholder and agrees to
execute such further assignments of all such proceeds, judgments, decrees and
awards as Noteholder may reasonably request. Noteholder is hereby authorized, in
the name of Grantor, to execute and deliver valid acquittances for, and to
appeal from, any such judgment, decree or award. Noteholder shall not be, in any
event or circumstances, liable or responsible for the failure to collect, or the
failure to exercise diligence in the collection of, any such proceeds,
judgments, decrees or awards.
(j) Protection and Defense of Lien. If the validity or priority of this
Mortgage or of any rights, titles, liens or security interests created or
evidenced hereby with respect to the Mortgaged Property or any part thereof
shall be endangered or questioned or shall be attacked directly or indirectly or
if any legal proceedings are instituted against Grantor with respect thereto,
Grantor will give prompt written notice thereof to Noteholder and at Grantor's
own cost and expense will diligently endeavor to cure any defect that may be
developed or claimed, and will take all necessary and proper steps for the
defense of such legal proceedings, including, without limitation, the employment
of counsel, the prosecution or defense of litigation and the release or
discharge of all adverse claims, and Trustee and Noteholder, or either of them
(whether or not named as parties to legal proceedings with respect thereto) are
hereby authorized and empowered to take such additional steps as in their
judgment and discretion may be necessary or proper for the defense of any such
legal proceedings or the protection of the validity or priority of this Mortgage
and the rights, titles, liens and security interests created or evidenced
hereby, including, without limitation, the employment of counsel, the
prosecution or defense of litigation, the compromise or discharge of any adverse
claims made with respect to the Mortgaged Property, the purchase of any tax
title and the removal of prior liens or security interests (including, without
limitation, the payment of debts as they mature or the payment in full of
matured or unmatured debts, which are secured by these prior liens or security
interests), and all expenses so incurred of every kind and character shall be
subject to and covered by the provisions of Paragraph 2.3 hereof.
(k) No Other Liens. Grantor will not, without the prior written consent of
Noteholder, create, place or permit to be created or placed, or through any act
or failure to act, acquiesce in the placing of, or allow to remain, any deed of
trust, mortgage, voluntary or involuntary lien, whether statutory,
constitutional or contractual (except for the lien for ad valorem taxes on the
Mortgaged Property which are not delinquent), security interest, encumbrance or
charge, or conditional sale or other title retention document, against or
covering the Mortgaged Property, or any part thereof, other than the Permitted
Encumbrances, regardless of whether the same are expressly or otherwise
subordinate to the lien or security interest created in this Mortgage, and
should any of the foregoing become attached hereafter in any manner to any part
of the Mortgaged Property without the prior written consent of Noteholder,
Grantor will cause the same to be promptly discharged and released as set forth
in the Loan Agreement. Grantor will own all parts of the Mortgaged Property and
will not acquire any fixtures, equipment or other property forming a part of the
Mortgaged Property pursuant to a lease, license or similar agreement, without
the prior written consent of Noteholder.
(l) Intentionally Omitted.
(m) Intentionally Omitted.
(n) Escrow. If requested by Noteholder at any time during the term the
Indebtedness (but only after a Default has occurred) is outstanding in order to
secure the performance and discharge of Grantor's obligations under
Subparagraphs (f) and (h) of this Paragraph 2.2, but not in lieu of such
obligations, Grantor will deposit with Noteholder a sum equal to ad valorem
taxes, assessments and charges (which charges for the purpose of this
Subparagraph shall include without limitation ground rents and water and sewer
rents and any other recurring charge which could create or result in a lien
against the Mortgaged Property) against the Mortgaged Property for the current
year and the premiums for such policies of insurance for the current year, all
as estimated by Noteholder and prorated to the end of the calendar month
following the month during which this Mortgage is executed and delivered, and
thereafter will deposit with Noteholder, on each date when an installment of
principal and/or interest is due on the Note, sufficient funds (as estimated
from time to time by Noteholder) to permit Noteholder to pay, at least fifteen
(15) days prior to the due date thereof, the next maturing ad valorem taxes,
assessments and charges and premiums for such policies of insurance. Noteholder
shall have the right to rely upon tax information furnished by applicable taxing
authorities in the payment of such taxes or assessments and shall have no
obligation to make any protest of any such taxes or assessments. Any excess over
the amounts required for such purposes shall be held by Noteholder for future
use, applied to any Indebtedness or refunded to Grantor, at Grantor's option,
and any deficiency in such funds so deposited shall be made up by Grantor upon
written demand of Noteholder. All such funds so deposited shall bear no interest
whatsoever, may be mingled with the general funds of Noteholder and shall be
applied by Noteholder toward the payment of such taxes, assessments, charges and
premiums when statements therefor are presented to Noteholder by Grantor (such
statements to be presented by Grantor to Noteholder within a reasonable time
before the applicable amount is due); provided, however, that, if a Default (as
hereinafter defined) shall have occurred hereunder, such funds may at
Noteholder's option be applied to the payment of the Indebtedness in the order
determined by Noteholder in its sole discretion, and that Noteholder may at any
time, in its sole discretion, apply all or any part of such funds toward the
payment of any such taxes, assessments, charges or premiums which are past due,
together with any penalties or late charges with respect thereto being protested
as permitted in the Loan Agreement. The conveyance or transfer of Grantor's
interest in the Mortgaged Property for any reason (including, without
limitation, the foreclosure of a subordinate lien or security interest or a
transfer by operation of law) shall constitute an assignment or transfer of
Grantor's interest in and rights to such funds held by Noteholder under this
Subparagraph but subject to the rights of Noteholder hereunder.
(o) Further Assurances. Grantor will, on request of Noteholder, promptly
(i) correct any defect, error or omission which may be discovered in the
contents of this Mortgage or in any other instrument now or hereafter executed
in connection herewith or in the execution or acknowledgment thereof; (ii)
execute, acknowledge, deliver and record or file such further instruments
(including, without limitation, further deeds of trust, security agreements,
financing statements, continuation statements and assignments of rents and
leases) and do such further acts as may be necessary, desirable or proper to
carry out more effectively the purposes of this Mortgage and such other
instruments and to subject to the liens and security interests hereof and
thereof any property intended by the terms hereof and thereof to be covered
hereby and thereby including, without limitation, any renewals, additions,
substitutions, replacements or appurtenances to the Mortgaged Property; (iii)
execute, acknowledge, deliver, procure and record or file any document or
instrument (including, without limitation, any financing statement) deemed
advisable by Noteholder to protect the lien or security interest hereunder
against the rights or interests of third persons; and (iv) provide such
certificates, documents, reports, information, affidavits and other instruments
and do such further acts as may be necessary, desirable or proper in the
reasonable determination of Noteholder to enable Noteholder to comply with the
requirements or requests of any agency having jurisdiction over Noteholder or
any examiners of such agencies with respect to the Indebtedness, Grantor or the
Mortgaged Property and Grantor will pay all costs connected with any of the
foregoing.
(p) Title Insurance. Grantor shall, at its sole cost and expense obtain
and maintain title insurance in the form of a commitment, binder or policy
(collectively, "Policy") as Noteholder may require, issued by a title company
acceptable to Noteholder. If for any reason during the period the Indebtedness
is outstanding such title insurance is no longer valid or the issuing title
company is insolvent or unable to adequately insure the validity and priority of
the lien evidenced by this Mortgage (as determined by Noteholder in its
reasonable discretion), Grantor agrees to obtain, at its sole cost and expense,
a replacement Policy issued by a title company acceptable to Noteholder in favor
of Noteholder as mortgagee, in an amount equal to the outstanding Indebtedness,
and in form reasonably required by Noteholder, insuring the validity and
priority of the lien evidenced by this Mortgage.
(q) Fees and Expenses; Indemnification. Grantor will pay all appraisal
fees, filing and recording fees, inspection fees, survey fees, taxes, brokerage
fees and commissions, abstract fees, title policy fees, uniform commercial code
search fees, escrow
4
fees, attorneys' fees, and all other costs and expenses of every character
incurred by Grantor or Noteholder in connection with the Indebtedness, either at
the closing thereof or at any time during the term thereof, or otherwise
attributable or chargeable to Grantor as owner of the Mortgaged Property, and
will reimburse Noteholder for all such reasonable costs and expenses incurred by
Noteholder. Grantor shall pay all expenses and reimburse Noteholder for any
expenditures, including, without limitation, reasonable attorneys' fees and
legal expenses, incurred or expended in connection with (i) Default by Grantor
hereunder; (ii) Noteholder's exercise of any of its rights and remedies
hereunder or under the Note or any other Loan Document or Noteholder's
protection of the Mortgaged Property and its lien and security interest therein
as provided herein; or (iii) any amendments to this Mortgage, the Note or any
other Loan Document or any matter requested by Grantor or any approval required
hereunder. Grantor will indemnify and hold harmless Trustee and Noteholder (for
purposes of this Subparagraph, the terms "Trustee" and "Noteholder" shall
include the directors, officers, partners, employees, representatives and agents
of Trustee and Noteholder, respectively, and any persons or entities owned or
controlled by, owning or controlling, or under common control or affiliated with
Trustee and Noteholder, respectively) from and against, and reimburse them for,
all claims, demands, liabilities, losses, damages, causes of action, judgments,
penalties, costs and expenses (collectively, the "Claims") (including, without
limitation, reasonable attorneys' fees) which may be imposed upon, asserted
against or incurred or paid by them by reason of, on account of or in connection
with any bodily injury or death or property damage occurring in or upon or in
the vicinity of the Mortgaged Property through any cause whatsoever or asserted
against them on account of any act performed or omitted to be performed
hereunder or on account of any transaction arising out of or in any way
connected with the Mortgaged Property or with this Mortgage, the Note or any
other Loan Documents; provided, however, such indemnification shall only apply
to Claims which accrue prior to release, foreclosure or such other termination
of this Mortgage. The foregoing indemnities shall not terminate upon release,
foreclosure or other termination of this Mortgage but will survive foreclosure
of this Mortgage or conveyance in lieu of foreclosure and the repayment of the
Indebtedness and the discharge and release of this Mortgage and the other Loan
Documents. Any amount to be paid hereunder by Grantor to Noteholder and/or
Trustee shall be subject to and governed by the provisions of Paragraph 2.3
hereof.
(r) Liability Insurance. Grantor shall maintain Commercial General
Liability insurance against claims for bodily injury or death and property
damage occurring in or upon or resulting from the Mortgaged Property, in
standard form and with such insurance company or companies as may be acceptable
to Noteholder, such insurance to afford immediate protection, to the limit of
not less than $5,000,000 in respect of any one accident or occurrence, and to
the limit of not less than $100,000 for property damage, with not more than
$5,000 deductible. Such Commercial General Liability insurance shall include
Blanket Contractual Liability coverage which insures contractual liability under
the indemnification of Noteholder and the Trustee by Grantor set forth in this
Mortgage (but such coverage or the amount thereof shall in no way limit such
indemnification). Grantor shall maintain with respect to each policy or
agreement evidencing such Commercial General Liability insurance such
endorsements as may be required by Noteholder and shall at all times deliver and
maintain with Noteholder a certificate with respect to such insurance in form
satisfactory to Noteholder. Not less than fifteen (15) days prior to the
expiration date of each policy of insurance required of Grantor pursuant to this
Subparagraph, Grantor shall deliver to Noteholder a renewal policy or policies
marked "premium paid" or accompanied by other evidence of payment satisfactory
to Noteholder. In the event of a foreclosure of this Mortgage, the purchaser of
the Mortgaged Property shall succeed to all the rights of Grantor, including,
without limitation, any right to unearned premiums, in and to all policies of
insurance assigned pursuant to the provisions of this Subparagraph, and Grantor
hereby authorizes Noteholder to notify any or all insurance carriers of this
assignment.
(s) Warranty. Grantor will warrant and forever defend the title to the
Mortgaged Property against the claims of all persons making any claim to the
same or any part thereof, subject to the Permitted Encumbrances.
(t) Intentionally Omitted.
(u) Change of Name, Identity or Structure. Grantor will not change
Grantor's name, identity (including its trade name or names) or, if not an
individual, Grantor's corporate, partnership or other structure without
notifying Noteholder of such change in writing at least thirty (30) days prior
to the effective date of such change. Grantor will execute and deliver to
Noteholder, prior to or contemporaneously with the effective date of any such
change, any financing statement or financing statement change or other document
required by Noteholder to establish or maintain the validity, perfection and
priority of the lien and security interest granted herein. At the request of
Noteholder, Grantor shall execute a certificate in form satisfactory to
Noteholder listing the trade names under which Grantor intends to operate the
Mortgaged Property, and representing and warranting that Grantor does business
under no other trade name with respect to the Mortgaged Property.
(v) Intentionally Omitted.
(w) Intentionally Omitted.
(x) Intentionally Omitted.
(y) Loan Agreement. Grantor will punctually perform and discharge each and
every obligation and undertaking of Grantor under the loan agreement, if any, of
even date herewith, as from time to time amended or restated (the "Loan
Agreement"), between Grantor and Noteholder and will not permit a default to
occur thereunder.
(z) Permitted Encumbrances. Grantor will comply with and will perform all
of the covenants, agreements and obligations imposed upon it or the Mortgaged
Property in the Permitted Encumbrances in accordance with their respective terms
and provisions. Grantor will not modify or permit any modification of any
Permitted Encumbrance without the prior written consent of Noteholder, such
consent not to be unreasonably delayed, withheld or conditioned.
(aa) Environmental. Grantor will not cause or permit the Mortgaged
Property or Grantor to be in violation of, or do anything or permit anything to
be done which will subject the Mortgaged Property to any remedial obligations
under, any Applicable Environmental Laws, including, without limitation, CERCLA,
RCRA, the Texas Water Code and the Texas Solid Waste Disposal Act, assuming
disclosure to the applicable governmental authorities of all relevant facts,
conditions and circumstances, if any, pertaining to Grantor and/or the Mortgaged
Property, and Grantor will promptly notify Noteholder in writing of any
existing, pending or, to the best knowledge of Grantor, threatened investigation
or inquiry by any governmental authority in connection with any Applicable
Environmental Laws. Grantor shall obtain any permits, licenses or similar
authorizations to construct, occupy, operate or use any buildings, improvements,
fixtures and equipment forming a part of the Mortgaged Property by reason of any
Applicable Environmental Laws. Grantor shall take all steps reasonably necessary
to determine that no hazardous substances or solid waste are being disposed of
or otherwise released on or to the Mortgaged Property. Grantor will not cause or
knowingly permit the disposal or other release of any hazardous substance or
solid waste on or to the Mortgaged Property and covenants and agrees to keep or
cause the Mortgaged Property to be kept free of any hazardous substance or solid
waste and to remove the same (or if removal is prohibited by law, to take
whatever action is required by law) promptly upon discovery at its sole expense.
Upon Noteholder's reasonable request, at any time and from time to time during
the existence of this Mortgage, Grantor will provide at Grantor's sole expense
an inspection or audit of the Mortgaged Property from an engineering or
consulting firm approved by Noteholder, indicating the presence or absence of
hazardous substances and solid wastes on the Mortgaged Property. If Grantor
fails to provide same after forty-five (45) days' notice, Noteholder may order
same, and Grantor grants to Noteholder and its agents, employees, contractors
and consultants access to the Mortgaged Property and a license (which is coupled
with an interest and irrevocable while this Mortgage is in effect) to perform
inspections and tests. The cost of such inspections and tests shall be a demand
obligation owing by Grantor to Noteholder pursuant to this Mortgage and shall be
subject to and covered by the provisions of Paragraph 2.3 hereof.
(bb) Asbestos. Grantor covenants and agrees that it will not install in
the Mortgaged Property, nor permit to be installed in the Mortgaged Property,
asbestos, material containing asbestos which is or may become friable or
material containing asbestos deemed hazardous by any Applicable Environmental
Law, and that if any such asbestos or material containing asbestos exists in or
on the Mortgaged Property, whether installed by Grantor or others, Grantor will
remove the same (or if removal is prohibited by law, will take whatever action
is required by law, including, without limitation, implementing any required
operation and maintenance
6
program) promptly upon discovery at its sole expense. Upon Noteholder's
reasonable request, but not more frequently than once per calendar year, Grantor
shall provide at Grantor's sole expense an inspection or audit of the Mortgaged
Property from an engineering or consulting firm approved by Noteholder,
indicating the presence or absence of asbestos or material containing asbestos
on the Mortgaged Property. If Grantor fails to provide same after thirty (30)
days' notice, Noteholder may order same, and Grantor grants to Noteholder and
its agents, employees, contractors and consultants access to the Mortgaged
Property and a license (which is coupled with an interest and irrevocable while
this Mortgage is in effect) to perform inspections and tests. The cost of such
inspections and tests shall be subject to and covered by the provisions of
Paragraph 2.3 hereof.
2.3 Right of Noteholder to Perform. Grantor agrees that if Grantor fails to
perform any act or to take any action which Grantor is required to perform or
take hereunder or under any of the other Loan Documents, or to pay any money
which Grantor is required to pay hereunder or under any of the other Loan
Documents, or takes any action prohibited hereby or thereby, Noteholder, in
Grantor's name or in its own name, may but shall not be obligated to perform or
cause to be performed such act or take such action, including, without
limitation, entering the Mortgaged Property for such purpose and to take all
such action thereon as it may deem necessary or appropriate, or pay such money
or remedy any action so taken, and any reasonable expenses so incurred by
Noteholder, and any money paid by Noteholder in connection therewith, shall be a
demand obligation owing by Grantor to Noteholder and Noteholder, upon making
such payment, shall be subrogated to all of the rights of the party receiving
such payment. Any amounts due and owing by Grantor to Noteholder pursuant to
this Mortgage shall bear interest from the date such amount becomes due until
paid at the rate of interest payable on matured but unpaid principal of or
interest on the Note and shall be a part of the Indebtedness and shall be
secured by this Mortgage and by all of the other Loan Documents.
2.4 Indemnification Regarding Environmental Matters. Grantor agrees to
indemnify and hold Noteholder and Trustee (for purposes of this Paragraph, the
terms "Noteholder" and "Trustee" shall include the directors, officers,
partners, employees, representatives and agents of Noteholder and Trustee,
respectively, and any persons or entities owned or controlled by, owning or
controlling, or under common control or otherwise affiliated with Noteholder and
Trustee, respectively) harmless from and against, and to reimburse Noteholder
and Trustee with respect to, any and all claims, demands, losses, damages
(including consequential damages), liabilities, causes of action, judgments,
penalties, costs and expenses (including attorneys' fees and court costs) of any
and every kind or character, known or unknown, fixed or contingent, imposed on,
asserted against or incurred by Noteholder and/or the Trustee at any time and
from time to time by reason of, in connection with or arising out of (a) the
breach of any representation or warranty of Grantor as set forth herein
regarding asbestos, material containing asbestos or Applicable Environmental
Laws, (b) the failure of Grantor to perform any obligation herein required to be
performed by Grantor regarding asbestos, material containing asbestos or
Applicable Environmental Laws, (c) any violation on or before the Release Date
(as hereinafter defined) of any Applicable Environmental Law in effect on or
before the Release Date, (d) the removal of hazardous substances or solid wastes
from the Mortgaged Property (or if removal is prohibited by law, the taking of
whatever action is required by law), (e) the removal of asbestos or material
containing asbestos from the Mortgaged Property (or if removal is prohibited by
Applicable Environmental Laws, the taking of whatever action is required by
Applicable Environmental Laws, including, without limitation, the implementation
of any required operation and maintenance program), (f) any act, omission, event
or circumstance existing or occurring on or prior to the Release Date
(including, without limitation, the presence on the Mortgaged Property or
release from the Mortgaged Property of any hazardous substance or solid waste
disposed of or otherwise released on or prior to the Release Date), resulting
from or in connection with the ownership, construction, occupancy, operation,
use and/or maintenance of the Mortgaged Property, regardless of whether the act,
omission, event or circumstance constituted a violation of any Applicable
Environmental Law at the time of its existence or occurrence, and (g) any and
all claims or proceedings accruing, in whole or in part, before the Release Date
(whether brought by private party or governmental agency) for bodily injury,
property damage, abatement or remediation, environmental damage or impairment or
any other injury or damage resulting from or relating to any hazardous substance
or solid waste located upon or migrating into, from or through the Mortgaged
Property (whether or not any or all of the foregoing was caused by Grantor or
its tenant or subtenant, or a prior owner of the Mortgaged Property or its
tenant or subtenant, or any third party and whether or not the alleged liability
is attributable to the handling, storage, generation, transportation or disposal
of such substance or waste or the mere presence of such substance or waste on
the Mortgaged Property). The term "Release Date" as used herein shall mean the
earlier of the following two dates: (i) the date on which the Indebtedness has
been paid and performed in full and this Mortgage has been released, or (ii) the
date on which the lien of this Mortgage is foreclosed or a conveyance by deed in
lieu of such foreclosure is fully effective; provided, if such payment,
performance, release, foreclosure or conveyance is challenged, in bankruptcy
proceedings or otherwise, the Release Date shall be deemed not to have occurred
until such challenge is rejected, dismissed or withdrawn with prejudice. The
foregoing indemnities shall not terminate upon the Release Date or upon the
release, foreclosure or other termination of this Mortgage but will survive the
Release Date, foreclosure of this Mortgage or conveyance in lieu of foreclosure,
and the repayment of the Indebtedness and the discharge and release of this
Mortgage and the other Loan Documents. Any amount to be paid hereunder by
Grantor to Noteholder and/or Trustee shall be a demand obligation owing by
Grantor to Noteholder and/or Trustee and shall be subject to and covered by the
provisions of Paragraph 2.3 hereof. Nothing in this Paragraph, elsewhere in this
Mortgage or in any other Loan Document shall limit or impair any rights or
remedies of Noteholder and/or Trustee against Grantor or any third party under
Applicable Environmental Laws, including without limitation, any rights of
contribution or indemnification available hereunder or thereunder.
ARTICLE III
ASSIGNMENT OF RENTS, LEASES, PROFITS, INCOME,
CONTRACTS AND BONDS
3.1 Assignment of Rents. Grantor does hereby absolutely and unconditionally
assign, transfer and set over to Noteholder all rents, income, receipts,
revenues, issues and proceeds to be derived from the Mortgaged Property,
including, without limitation, the immediate and continuing right to collect and
receive all of the rents, income, receipts, revenues, issues, profits and other
sums of money that may now or at any time hereafter become due and payable to
Grantor under the terms of any leases now or hereafter covering the Mortgaged
Property, or any part thereof, including, but not limited to, minimum rents,
additional rents, percentage rents, deficiency rents and liquidated damages
following default, all proceeds payable under any policy of insurance covering
the loss of rents resulting from untenantability caused by destruction or damage
to the Mortgaged Property, and all of Grantor's rights to recover monetary
amounts from any tenant in bankruptcy, including, without limitation, rights of
recovery for use and occupancy and damage claims arising out of lease defaults,
including rejections, under any Applicable Bankruptcy Law (as hereinafter
defined), together with any sums of money that may now or at any time hereafter
become due and payable to Grantor by virtue of any and all royalties, overriding
royalties, bonuses, delay rentals and any other amount of any kind or character
arising under any and all present and future oil, gas and mining leases covering
the Mortgaged Property or any part thereof (collectively, the "Rents"); and all
proceeds and other amounts paid or owing to Grantor under or pursuant to any and
all contracts and bonds relating to the construction, erection or renovation of
the Mortgaged Property; subject however to a license hereby granted by
Noteholder to Grantor to collect and receive all of the foregoing (such license
evidenced by Noteholder's acceptance of the Mortgage), subject to the terms and
conditions hereof. Notwithstanding anything contained herein or in any of the
other Loan Documents to the contrary, the assignment in this Paragraph is an
absolute, unconditional and presently effective assignment and not merely a
security interest; provided, however, upon the occurrence of a Default (as
hereinafter defined) hereunder, such license shall automatically and immediately
terminate and Grantor shall hold all Rents paid to Grantor thereafter in trust
for the use and benefit of Noteholder and Noteholder shall have the right, power
and authority, whether or not it takes possession of the Mortgaged Property, to
seek enforcement of any such lease, contract or bond and to demand, collect,
receive, xxx for and recover in its own name any and all of the above described
amounts assigned hereby and to apply the sum(s) collected, first to the payment
of expenses incident to the collection of the same, and the balance to the
payment of the Indebtedness; provided further, however, that Noteholder shall
not be deemed to have taken possession of the Mortgaged Property except on the
exercise of its option to do so, evidenced by its demand and overt act for such
purpose. It shall not be necessary for Noteholder to institute any type of legal
proceedings or take any other action whatsoever to enforce the assignment
provisions in this Paragraph 3.1.
3.2 Assignment of Leases. Grantor hereby assigns to Noteholder all existing
and future leases, including, without limitation, all subleases thereof, and any
and all extensions, renewals, modifications and replacements thereof, upon any
part of the Mortgaged
6
Property (collectively, the "Leases"). Grantor hereby further assigns to
Noteholder all guaranties of tenants' performance under the Leases. Prior to a
Default, Grantor shall have the right, without joinder of Noteholder, to enforce
the Leases, unless Noteholder directs otherwise.
3.3 Warranties Concerning Leases and Rents. Grantor represents and
warrants that:
(a) Grantor has good title to the Leases and Rents and authority to assign
them, and no other person or entity has any right, title or interest
therein;
(b) all existing Leases are valid, unmodified and in full force and
effect, except as indicated herein, and no default exists thereunder;
(c) unless otherwise provided herein, no Rents have been or will be
assigned, mortgaged or pledged;
(d) no Rents have been or will be anticipated, waived, released,
discounted, set off or compromised; and
(e) except as indicated in the Leases, Grantor has not received any funds
or deposits from any tenant for which credit has not already been made
on account of accrued Rents.
3.4 Grantor's Covenants of Performance. Grantor covenants to:
(a) perform all of its obligations under the Leases and give prompt notice
to Noteholder of any failure to do so;
(b) give immediate notice to Noteholder of any notice Grantor receives
from any tenant or subtenant under any Leases, specifying any claimed
default by any party under such Leases, excluding, however, notices of
default under residential leases;
(c) enforce the tenant's obligations under the Leases;
(d) defend, at Grantor's expense, any proceeding pertaining to the Leases,
including, if Noteholder so requests, any such proceeding to which
Noteholder is a party; and
(e) neither create nor permit any encumbrance upon its interest as lessor
of the Leases, except this Mortgage and any other encumbrances
permitted by this Mortgage.
3.5 Prior Approval for Actions Affecting Leases. Grantor shall not, without
the prior written consent of Noteholder:
(a) receive or collect Rents more than one month in advance;
(b) encumber or assign future Rents;
(c) waive or release any obligation of any tenant under the Leases except
for prudent business reasons;
(d) cancel, terminate or modify any of the Leases; cause or permit any
cancellation, termination or surrender of any of the Leases; or
commence any proceedings for dispossession of any tenant under any of
the Leases, except upon default by the tenant thereunder;
(e) renew or extend any of the Leases, except pursuant to terms in
existing Leases; or
(f) permit any assignment of the Leases except for prudent business
reasons.
3.6 Settlement for Termination. Grantor agrees that no settlement for damages
for termination of any of the Leases under the United States Bankruptcy Code, or
under any other federal, state or local statute, shall be made without the prior
written consent of Noteholder, and any check in payment of such damages will be
made payable to both Grantor and Noteholder. Grantor hereby assigns any such
payment to Noteholder to be applied to the Indebtedness as Noteholder may elect
and agrees to endorse any check for such payment to the order of Noteholder.
3.7 Noteholder in Possession. Noteholder's acceptance of this assignment shall
not, prior to entry upon and taking possession of the Mortgaged Property by
Noteholder, be deemed to constitute Noteholder a "mortgagee in possession," nor
obligate Noteholder to appear in or defend any proceedings relating to any of
the Leases or to the Mortgaged Property, take any action hereunder, expend any
money, incur any expenses, or perform any obligation or liability under the
Leases, or assume any obligation for any deposits delivered to Grantor by any
tenant and not delivered to Noteholder. Noteholder shall not be liable for any
injury or damage to any person or property in or about the Mortgaged Property
which occurred or accrued prior to the date Noteholder takes possession of the
Mortgaged Property.
3.8 Appointment of Attorney. Grantor hereby irrevocably appoints Noteholder
its attorney-in-fact, coupled with an interest, empowering Noteholder to
subordinate any Leases to this Mortgage.
3.9 Indemnification. Grantor hereby indemnifies and holds Noteholder (which
shall include the directors, officers, partners, employees, representatives and
agents of Noteholder and any persons or entities owned or controlled by, owning
or controlling, or under common control or affiliated with Noteholder) harmless
from all liability, damage or expense imposed on or incurred by Noteholder from
any claims under the Leases, including, without limitation, any claims by
Grantor with respect to payments of Rents made directly to Noteholder after
Default and claims by any tenant for security deposits or for rental payments
more than one (1) month in advance and not delivered to Noteholder. All amounts
indemnified against hereunder, including, without limitation, attorneys' fees,
if paid by Noteholder shall bear interest at the maximum lawful rate and shall
be payable by Grantor in accordance with Paragraph 2.3 hereof. The foregoing
indemnities shall not terminate upon the foreclosure, release or other
termination of this Mortgage but will survive foreclosure of this Mortgage or
conveyance in lieu of foreclosure and the repayment of the Indebtedness and the
discharge and release of this Mortgage and the other Loan Documents, to the
extent the claim accrued prior to such foreclosure.
3.10 Records. Upon request by Noteholder, Grantor shall deliver to Noteholder
executed originals of all Leases and copies of all records relating thereto.
3.11 Merger. There shall be no merger of the leasehold estates, created by the
Leases, with the fee estate of the Land without the prior written consent of
Noteholder.
3.12 Right to Rely. Grantor hereby irrevocably authorizes and directs the
tenants under the Leases to pay Rents to Noteholder upon written demand by
Noteholder without further consent of Grantor, and the tenants may rely upon any
written statement delivered by Noteholder to the tenants. Any such payment to
Noteholder shall constitute payment to Grantor under the Leases. The provisions
of this Paragraph are intended solely for the benefit of the tenants and shall
never inure to the benefit of Grantor or any person claiming through or under
Grantor, other than a tenant who has not received such notice. The assignment of
Rents set forth in Paragraph 3.1 is not contingent upon any notice or demand by
Noteholder to the tenants.
7
ARTICLE IV
EVENTS OF DEFAULT
Defaults. The term "Default" as used in this Mortgage shall mean the
occurrence of any of the following events:
4.1 Intentionally Omitted.
4.2 Non-Performance of Covenants. The failure of Grantor to timely and
properly observe, keep or perform any covenant, agreement, warranty or condition
required herein or in any other Loan Document to be observed, kept or performed
subject to the applicable cure period set forth in Section 9.03 of the Loan
Agreement; or
4.3 False Representation. Any representation contained herein or in any other
Loan Document or otherwise made by Grantor or any other person or entity to
Noteholder in connection with the Indebtedness is false or misleading in any
material respect; or
4.4 Bankruptcy or Insolvency. If the owner of the Mortgaged Property or any
person obligated to pay the Indebtedness: (a) becomes insolvent, or makes a
transfer in fraud of creditors, or makes an assignment for the benefit of
creditors, or admits in writing its inability to pay its debts as they become
due; (b) generally is not paying its debts as such debts become due; (c) has a
receiver, trustee or custodian appointed for, or take possession of, all or
substantially all of the assets of such party or any of the Mortgaged Property,
either in a proceeding brought by such party or in a proceeding brought against
such party and such appointment is not discharged or such possession is not
terminated within sixty (60) days after the effective date thereof or such party
consents to or acquiesces in such appointment or possession; (d) files a
petition for relief under the United States Bankruptcy Code or any other present
or future federal or state insolvency, bankruptcy or similar law (all of the
foregoing hereinafter collectively referred to as "Applicable Bankruptcy Law")
or an involuntary petition for relief is filed against such party under any
Applicable Bankruptcy Law and such involuntary petition is not dismissed within
sixty (60) days after the filing thereof, or an order for relief naming such
party is entered under any Applicable Bankruptcy Law, or any composition,
rearrangement, extension, reorganization or other relief of debtors now or
hereafter existing is requested or consented to by such party; (e) fails to have
discharged within a period of sixty (60) days any attachment, sequestration or
similar writ levied upon any property of such party; or (f) fails to pay within
thirty (30) days any final money judgment against such party; or
4.5 Execution on Mortgaged Property. The Mortgaged Property or any part
thereof is taken on execution or other process of law in any action against
Grantor; or
4.6 Loan Agreement. A Default occurs under the Loan Agreement; or
4.7 Action by Other Lienholder. The holder of any lien or security interest on
the Mortgaged Property (without hereby implying the consent of Noteholder to the
existence or creation of any such lien or security interest) declares a default
thereunder or institutes foreclosure or other proceedings for the enforcement of
its remedies thereunder; or
4.8 Transfer of Mortgaged Property. Without the prior written consent of
Noteholder, Grantor sells, leases, exchanges, assigns, transfers, conveys or
otherwise disposes of all or any part of the Mortgaged Property or any interest
therein (except for the disposition of worn-out or obsolete personal property or
fixtures under the circumstances described in Subparagraph 2.2(g) hereof), or
legal or equitable title to the Mortgaged Property, or any interest therein, is
vested in any other party, in any manner whatsoever, by operation of law or
otherwise, it being understood that the consent of Noteholder required hereunder
may be refused by Noteholder in its sole discretion or may be predicated upon
any terms, conditions and covenants deemed advisable or necessary in the sole
discretion of Noteholder, including, without limitation, the right to change the
interest rate, date of maturity or payments of principal and/or interest on the
Note, to require payment of any amount as additional consideration as a transfer
fee or otherwise and to require assumption of the Note and this Mortgage; or
4.9 Other Liens. Without the prior written consent of Noteholder, Grantor
creates, places or permits to be created or placed, or through any act or
failure to act, acquiesces in the placing of, or allows to remain, any deed of
trust, mortgage, voluntary or involuntary lien, whether statutory,
constitutional or contractual (except for the lien for ad valorem taxes on the
Mortgaged Property which are not delinquent), security interest, encumbrance or
charge, or conditional sale or other title retention document, against or
covering the Mortgaged Property, or any part thereof, other than the Permitted
Encumbrances, regardless of whether the same are expressly or otherwise
subordinate to the lien or security interest created in this Mortgage, or
acquires any fixtures, equipment or other property forming a part of the
Mortgaged Property pursuant to a lease, license or similar agreement; or
4.10 Destruction of Mortgaged Property. The Mortgaged Property is so
demolished, destroyed or damaged that, in the judgment of Noteholder, it cannot
be restored or rebuilt with available funds to a profitable condition within a
reasonable period of time; or
4.11 Condemnation. So much of the Mortgaged Property is taken in condemnation,
or sold in lieu of condemnation, or the Mortgaged Property is so diminished in
value due to any injury or damage to the Mortgaged Property, that the remainder
thereof cannot, in the judgment of Noteholder, continue to be operated
profitably for the purpose for which it was being used immediately prior to such
taking, sale or diminution; or
4.12 Intentionally Omitted.
4.13 Intentionally Omitted.
4.14 Intentionally Omitted.
ARTICLE V
REMEDIES AND RELATED RIGHTS
If a Default shall occur, Noteholder may exercise any one or more of the
following remedies and shall, in addition to any other rights, have the
following related rights, without notice (unless notice is required by
Applicable Laws):
5.1 Acceleration. Upon the occurrence of a Default, Noteholder shall have the
option of declaring all Indebtedness in its entirety to be immediately due and
payable, and the liens and security interests evidenced hereby shall be subject
to foreclosure in any manner provided for herein or provided for by applicable
law as Noteholder may elect.
5.2 Possession. Upon the occurrence of a Default, or any event or circumstance
which, with the lapse of time or the giving of notice, or both, would constitute
a Default hereunder, Noteholder is authorized prior or subsequent to the
institution of any foreclosure proceedings to enter upon the Mortgaged Property,
or any part thereof, and to take possession of the Mortgaged Property and of all
books, records and accounts relating thereto and to exercise without
interference from Grantor any and all rights which Grantor has with respect to
the management, possession, operation, protection or preservation of the
Mortgaged Property, including the right to rent the same for the account of
Grantor and to deduct from such rents all reasonable costs, expenses and
liabilities of every character incurred by Noteholder in collecting such rents
and in managing, operating, maintaining, protecting or preserving the Mortgaged
Property and to apply the remainder of such rents to the Indebtedness in such
manner as Noteholder may elect in its sole discretion. All such reasonable
costs, expenses and liabilities incurred by Noteholder in collecting such rents
and in managing, operating, maintaining or preserving the Mortgaged Property, if
not paid out of rents as hereinabove provided, shall constitute a demand
obligation owing by Grantor and shall be subject to and covered by Paragraph 2.3
hereof. If necessary to obtain the possession provided for above, Noteholder may
invoke any and all legal remedies to dispossess Grantor, including, without
limitation, one or more actions for forcible entry and detainer, trespass to try
title and restitution. In connection with any action taken by Noteholder
pursuant to this Paragraph,
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Noteholder shall not be liable for any loss sustained by Grantor resulting from
any failure to rent the Mortgaged Property, or any part thereof, or from any
other act or omission of Noteholder in managing the Mortgaged Property unless
such loss is caused by the gross negligence or willful misconduct and bad faith
of Noteholder, nor shall Noteholder be obligated to perform or discharge any
obligation, duty or liability under any Lease covering the Mortgaged Property or
any part thereof or under or by reason of this instrument or the exercise of
rights or remedies hereunder. Grantor shall and does hereby agree to indemnify
Noteholder for, and to hold Noteholder (which shall include the directors,
officers, partners, employees, representatives and agents of Noteholder and any
persons or entities owned or controlled by, owning or controlling or under
common control or affiliated with Noteholder) harmless from, any and all
liability, loss or damage which may or might be incurred by Noteholder under any
Lease or under or by reason of this Mortgage or the exercise of rights or
remedies hereunder and from any and all claims and demands whatsoever which may
be asserted against Noteholder by reason of any alleged obligations or
undertakings on its part to perform or discharge any of the terms, covenants or
agreements contained in any Lease. Should Noteholder incur any such liability,
the amount thereof, including costs, expenses and reasonable attorneys' fees,
shall be subject to and covered by Paragraph 2.3 hereof. Nothing in this
Paragraph shall impose any duty, obligation or responsibility upon Noteholder
for the control, care, management or repair of the Mortgaged Property, nor for
the carrying out of any of the terms and conditions of any such Lease; nor shall
it operate to make Noteholder responsible or liable for any waste committed on
the Mortgaged Property by the tenants or by any other parties or for any
dangerous or defective condition of the Mortgaged Property, or for any
negligence in the management, upkeep, repair or control of the Mortgaged
Property resulting in loss or injury or death to any tenant, licensee, employee
or stranger. Grantor hereby assents to, ratifies and confirms any and all
actions of Noteholder with respect to the Mortgaged Property taken under this
Paragraph and agrees that the foregoing indemnity shall not terminate upon
release, foreclosure or other termination of this Mortgage.
5.3 Foreclosure. Upon the occurrence of a Default, Trustee, his successor or
substitute, is authorized and empowered and it shall be his special duty at the
request of Noteholder to sell the Mortgaged Property or any part thereof
situated in the State of Texas at the courthouse of any county in the State of
Texas in which any part of the Mortgaged Property is situated, at public vendue
to the highest bidder for cash. The sale shall take place at such area of the
courthouse as shall be properly designated from time to time by the
commissioners court (or, if not so designated by the commissioners court, at the
courthouse door) of the specified county, between the hours of 10 o'clock a.m.
and 4 o'clock p.m. (the commencement of such sale to occur within three hours
following the time designated in the hereinafter described notice of sale as the
earliest time at which such sale shall occur, if required by Applicable Laws) on
the first Tuesday in any month after having given notice of such sale at least
twenty-one (21) days before the day of sale of the time, place and terms of said
sale (including the earliest time at which such sale shall occur) in accordance
with the statutes of the State of Texas then in force governing sales of real
estate under powers conferred by deeds of trust. Notice of a sale of all or part
of the Mortgaged Property by Trustee shall be given by posting written notice
thereof at the courthouse door (or other area in the courthouse as may be
designated for such public notices) of the county in which the sale is to be
made, and by filing a copy of the notice in the office of the county clerk of
the county in which the sale is to be made at least twenty-one (21) days
preceding the date of the sale, and if the Mortgaged Property to be sold is in
more than one county, a notice shall be posted at the courthouse door and filed
with the county clerk of each county in which the Mortgaged Property is
situated. In addition, Noteholder shall, at least twenty-one (21) days preceding
the date of sale, serve written notice of the proposed sale by certified mail on
Grantor and each debtor obligated to pay the Indebtedness or any portion thereof
according to the records of Noteholder. Service of such notice shall be
completed upon deposit of the notice, enclosed in a postpaid certified mail
wrapper, properly addressed to Grantor and each such debtor at the most recent
address as shown by the records of Noteholder, in a post office or official
depository under the care and custody of the United States Postal Service. The
affidavit of any person having knowledge of the facts to the effect that such
service was completed shall be prima facie evidence of the fact of service. Any
sale made by Trustee hereunder may be as an entirety or in such parcels as
Noteholder may request, and any sale may be adjourned by announcement at the
time and place appointed for such sale without further notice except as may be
required by law. The sale by Trustee of less than the whole of the Mortgaged
Property shall not exhaust the power of sale herein granted, and Trustee is
specifically empowered to make successive sale or sales under such power until
the whole of the Mortgaged Property shall be sold; and, if the proceeds of such
sale of less than the whole of the Mortgaged Property shall be less than the
aggregate of the Indebtedness and the expense of executing this trust as
provided herein, this Mortgage and the lien hereof shall remain in full force
and effect as to the unsold portion of the Mortgaged Property just as though no
sale had been made; provided, however, that Grantor shall never have any right
to require the sale of less than the whole of the Mortgaged Property but
Noteholder shall have the right, at its sole election, to request Trustee to
sell less than the whole of the Mortgaged Property. After each sale, Trustee
shall make to the purchaser or purchasers at such sale good and sufficient
conveyances in the name of Grantor, conveying the property so sold to the
purchaser or purchasers in fee simple with general warranty of title, and shall
receive the proceeds of said sale or sales and apply the same as herein
provided. Payment of the purchase price to Trustee shall satisfy the obligation
of purchaser at such sale therefor, and such purchaser shall not be responsible
for the application thereof. The power of sale granted herein shall not be
exhausted by any sale held hereunder by Trustee or his substitute or successor,
and such power of sale may be exercised from time to time and as many times as
Noteholder may deem necessary until all of the Mortgaged Property has been duly
sold and all Indebtedness has been fully paid. In the event any sale hereunder
is not completed or is defective in the opinion of Noteholder, such sale shall
not exhaust the power of sale hereunder and Noteholder shall have the right to
cause a subsequent sale or sales to be made hereunder. Any and all statements of
fact or other recitals made in any deed or deeds given by Trustee or any
successor or substitute appointed hereunder as to nonpayment of the
Indebtedness, or as to the occurrence of any Default, or as to Noteholder having
declared all of such Indebtedness to be due and payable, or as to the request to
sell, or as to notice of time, place and terms of sale and of the properties to
be sold having been duly given, or as to the refusal, failure or inability to
act of Trustee or any substitute or successor, or as to the appointment of any
substitute or successor Trustee, or as to any other act or thing having been
duly done by Noteholder or by Trustee or any substitute or successor, shall be
taken as prima facie evidence of the truth of the facts so stated and recited.
Trustee, his successor or substitute, may appoint or delegate any one or more
persons as agent to perform any act or acts necessary or incident to any sale
held by Trustee, including, without limitation, the posting of notices and the
conducting of sales, but in the name and on behalf of Trustee, his successor or
substitute.
5.4 Judicial Foreclosure. This Mortgage shall be effective as a mortgage as
well as a deed of trust and upon the occurrence of a Default may be foreclosed
as to any of the Mortgaged Property in any manner permitted by the laws of the
State of Texas or of any other state in which any part of the Mortgaged Property
is situated, and any foreclosure suit may be brought by Trustee or by
Noteholder. In the event a foreclosure hereunder shall be commenced by Trustee,
or his substitute or successor, Noteholder may at any time before the sale of
the Mortgaged Property direct Trustee to abandon the sale, and may then
institute suit for the collection of the Indebtedness, and/or for the
foreclosure of this Mortgage. It is agreed that if Noteholder should institute a
suit for the collection of the Indebtedness and/or for the foreclosure of this
Mortgage, Noteholder may at any time before the entry of a final judgment in
said suit dismiss the same, and require Trustee, his substitute or successor to
sell the Mortgaged Property in accordance with the provisions of this Mortgage.
5.5 Intentionally Omitted.
5.6 Proceeds of Sale. The proceeds of any sale held by Trustee or any receiver
or public officer in foreclosure of the liens evidenced hereby shall be applied:
FIRST, to the payment of all necessary costs and expenses incident to such
foreclosure sale, including but not limited to, all court costs and charges of
every character in the event foreclosed by suit, attorneys' fees and a
reasonable fee to Trustee acting under the provisions of Paragraph 5.3 if
foreclosed by power of sale as provided in said paragraph, not exceeding five
percent (5%) of the proceeds of such sale;
SECOND, to the payment in full of the Indebtedness (including, without
limitation, the principal and interest due and unpaid on the Note, attorneys'
fees and any other amounts due and unpaid and owed to Noteholder under this
Mortgage) in such order as Noteholder may elect in its sole direction; and
THIRD, the remainder, if any there shall be paid to Grantor or to such
other party or parties as may be entitled thereto by applicable law.
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5.7 Noteholder as Purchaser. Noteholder shall have the right to become the
purchaser at any sale held by any Trustee or substitute or successor or by any
receiver or public officer, and any Noteholder purchasing at any such sale shall
have the right to credit upon the amount of the bid made therefor, to the extent
necessary to satisfy such bid, the Indebtedness owing to such Noteholder.
5.8 Intentionally Omitted.
5.9 Partial Foreclosure. In the event of a Default in the payment of any part
of the Indebtedness, Noteholder shall have the right to proceed with foreclosure
of the liens and security interests evidenced hereby without declaring the
entire Indebtedness due, and in such event any such foreclosure sale may be made
subject to the unmatured part of the Indebtedness; and any such sale shall not
in any manner affect the unmatured part of the Indebtedness, but as to such
unmatured part this Mortgage shall remain in full force and effect just as
though no sale had been made. The proceeds of any such sale shall be applied as
provided in Paragraph 5.6 except that the amount paid under subparagraph SECOND
thereof shall be only the matured portion of the Indebtedness and any proceeds
of such sale in excess of those provided for in subparagraphs FIRST and SECOND
(modified as provided above) shall be applied to installments of principal of
and interest on the Note in the inverse order of maturity. Several sales may be
made hereunder without exhausting the right of sale for any unmatured part of
the Indebtedness.
5.10 Remedies Cumulative. All remedies herein expressly provided for are
cumulative of any and all other remedies existing at law or in equity and are
cumulative of any and all other remedies provided for in any of the other Loan
Documents, or any part thereof, or otherwise benefiting Noteholder, and Trustee
and Noteholder shall, in addition to the remedies herein provided, be entitled
to avail themselves of all such other remedies as may now or hereafter exist at
law or in equity for the collection of the Indebtedness and the enforcement of
the covenants herein and the foreclosure of the liens and security interests
evidenced hereby, and resort to any remedy provided for hereunder or under any
such Loan Documents or provided for by law shall not prevent the concurrent or
subsequent employment of any other appropriate remedy or remedies.
5.11 Resort to Any Security. Noteholder may resort to any security given by
this Mortgage or to any other security now existing or hereafter given to secure
the payment of the Indebtedness, in whole or in part, and in such portions and
in such order as may seem best to Noteholder in its sole and absolute
discretion, and any such action shall not in any way be considered as a waiver
of any of the rights, benefits, liens or security interests evidenced by this
Mortgage.
5.12 Waiver. To the full extent Grantor may do so, Grantor agrees that Grantor
will not at any time insist upon, plead, claim or take the benefit or advantage
of any law now or hereafter in force pertaining to the rights and remedies of
sureties or providing for any appraisement, valuation, stay, extension or
redemption, and Grantor, for Grantor and Grantor's heirs, devisees,
representatives, successors and assigns, and for any and all persons ever
claiming any interest in the Mortgaged Property, to the extent permitted by law,
hereby waives and releases all rights of redemption, valuation, appraisement,
stay of execution, notice of intention to mature or declare due the whole of the
Indebtedness, notice of election to mature or declare due the whole of the
Indebtedness and all rights to a marshaling of the assets of Grantor, including,
without limitation, the Mortgaged Property, or to a sale in inverse order of
alienation in the event of foreclosure of the liens and security interests
hereby created. Grantor shall not have or assert any right under any statute or
rule of law pertaining to the marshaling of assets, sale in inverse order of
alienation, the exemption of homestead, the administration of estates of
decedents or other matters whatever to defeat, reduce or affect the right of
Noteholder under the terms of this Mortgage to a sale of the Mortgaged Property
for the collection of the Indebtedness without any prior or different resort of
collection, or the right of Noteholder under the terms of this Mortgage to the
payment of such Indebtedness out of the proceeds of sale of the Mortgaged
Property in preference to every other claimant whatever. If any law referred to
in this Paragraph and now in force, of which Grantor or Grantor's heirs,
devisees, representatives, successors and assigns and such other persons
claiming any interest in the Mortgaged Property might take advantage despite
this Paragraph, shall hereafter be repealed or cease to be enforced, such law
shall not thereafter be deemed to preclude the application of this Paragraph.
5.13 Delivery of Possession After Foreclosure. In the event there is a
foreclosure sale hereunder and at the time of such sale Grantor or Grantor's
heirs, devisees, representatives, successors or assigns or any other persons
claiming any interest in the Mortgaged Property by, through or under Grantor are
occupying or using the Mortgaged Property, or any part thereof, each and all
shall immediately become the tenant of the purchaser at such sale, which tenancy
shall be a tenancy from day-to-day, terminable at the will of either landlord or
tenant, at a reasonable rental per day based upon the value of the property
occupied, such rental to be due daily to the purchaser. In the event the tenant
fails to surrender possession of said property upon demand, the purchaser shall
be entitled to institute and maintain an action for forcible entry and detainer
of said property in the appropriate court having jurisdiction.
5.14 Intentionally Omitted.
ARTICLE VI
MISCELLANEOUS
6.1 Defeasance. If all of the Indebtedness and all other amounts due
Noteholder hereunder are paid as the same become due and payable and if this
Mortgage is kept and performed, then and in that event only, all rights under
this Mortgage shall terminate and the Mortgaged Property shall become wholly
clear of the liens, security interests, conveyances and assignments evidenced
hereby, which shall be released by Noteholder in due form at Grantor's cost.
6.2 Successor Trustee. Trustee may resign by an instrument in writing
addressed to Noteholder, or Trustee may be removed at any time with or without
cause by an instrument in writing executed by Noteholder. In case of the death,
resignation, removal or disqualification of Trustee or if for any reason
Noteholder shall deem it desirable to appoint a substitute or successor Trustee
to act instead of the herein named Trustee or any substitute or successor
Trustee, then Noteholder shall have the right and is hereby authorized and
empowered to appoint a successor Trustee, or a substitute Trustee, without
formality other than appointment and designation in writing executed by
Noteholder and the authority hereby conferred shall extend to the appointment of
other successor and substitute Trustees successively until the Indebtedness has
been paid in full or until the Mortgaged Property is sold hereunder. In the
event the Indebtedness is owned by more than one person or entity, the holders
of not less than a majority in the amount of such Indebtedness shall have the
right and authority to make the appointment of a successor or substitute Trustee
provided for in the preceding sentence. Such appointment and designation by
Noteholder or by the holder or holders of not less than a majority of the
Indebtedness shall be full evidence of the right and authority to make the same
and of all facts therein recited. If Noteholder is a national banking
association or corporation and such appointment is executed in its behalf by an
officer of such national banking association or corporation, such appointment
shall be conclusively presumed to be executed with authority and shall be valid
and sufficient without proof of any action by the board of directors or any
superior officer of the association or corporation. Upon the making of any such
appointment and designation, all of the estate and title of Trustee in the
Mortgaged Property shall vest in the named successor or substitute Trustee and
he shall thereupon succeed to and shall hold, possess and execute all the
rights, powers, privileges, immunities and duties herein conferred upon Trustee;
but nevertheless, upon the written request of Noteholder or of the successor or
substitute Trustee, Trustee ceasing to act shall execute and deliver an
instrument transferring to such successor or substitute Trustee all of the
estate and title in the Mortgaged Property of Trustee so ceasing to act,
together with all the rights, powers, privileges, immunities and duties herein
conferred upon Trustee, and shall duly assign, transfer and deliver any of the
properties and moneys held by said Trustee hereunder to said successor or
substitute Trustee. All references herein to Trustee shall be deemed to refer to
Trustee (including any successor or substitute appointed and designated as
herein provided) from time to time acting hereunder. Grantor hereby ratifies and
confirms any and all acts which the herein named Trustee or his successor or
successors, substitute or substitutes, in this trust, shall do lawfully by
virtue hereof.
6.3 Liability and Indemnification of Trustee. Trustee shall not be liable for
any error of judgment or act done by Trustee in good faith, or be otherwise
responsible or accountable under any circumstances whatsoever (including,
without limitation, Trustee's negligence), except for Trustee's gross negligence
or willful misconduct. Trustee shall have the right to rely on any instrument,
10
document or signature authorizing or supporting any action taken or proposed to
be taken by him hereunder, believed by him in good faith to be genuine. All
moneys received by Trustee shall, until used or applied as herein provided, be
held in trust for the purposes for which they were received, but need not be
segregated in any manner from any other moneys (except to the extent required by
law), and Trustee shall be under no liability for interest on any moneys
received by him hereunder. Grantor will reimburse Trustee for, and indemnify and
save him harmless against, any and all liability and expenses (including,
without limitation, reasonable attorneys' fees) which may be incurred by him in
the performance of his duties hereunder (Trustee shall include the directors,
officers, partners, employees, representatives and agents of Trustee and any
persons or entities owned or controlled by, owning or controlling or under
common control or affiliated with Trustee). The foregoing indemnity shall not
terminate upon release, foreclosure or other termination of this Mortgage;
provided, however, such indemnity shall only apply to claims which accrue prior
to or in connection with such foreclosure sale or other termination of this
Mortgage.
6.4 Waiver by Noteholder. Noteholder may at any time and from time to time in
writing (a) waive compliance by Grantor with any covenant herein made by Grantor
to the extent and in the manner specified in such writing; (b) consent to
Grantor doing any act which hereunder Grantor is prohibited from doing, or
consent to Grantor failing to do any act which hereunder Grantor is required to
do, to the extent and in the manner specified in such writing; (c) release any
part of the Mortgaged Property, or any interest therein, from the lien and
security interest of this Mortgage without the joinder of Trustee; or (d)
release any party liable, either directly or indirectly, for the Indebtedness or
for any covenant herein or in any of the other Loan Documents now or hereafter
securing the payment of the Indebtedness, without impairing or releasing the
liability of any other party. No such act shall in any way impair the rights of
Noteholder hereunder except to the extent specifically agreed to by Noteholder
in such writing.
6.5 Actions by Noteholder. The lien, security interest and other security
rights of Noteholder hereunder shall not be impaired by any indulgence,
moratorium or release granted by Noteholder, including but not limited to (a)
any renewal, extension, increase or modification which Noteholder may grant with
respect to any of the Indebtedness; (b) any surrender, compromise, release,
renewal, extension, exchange or substitution which Noteholder may grant in
respect of the Mortgaged Property, or any part thereof or any interest therein;
or (c) any release or indulgence granted to any endorser, guarantor or surety of
any of the Indebtedness. The taking of additional security by Noteholder shall
not release or impair the lien, security interest or other security rights of
Noteholder hereunder or affect the liability of Grantor or of any endorser or
guarantor or other surety or improve the rights of any permitted junior
lienholder in the Mortgaged Property.
6.6 Rights of Noteholder. Noteholder may waive any Default without waiving any
other prior or subsequent Default. Noteholder may remedy any Default without
waiving the Default remedied. Neither the failure by Noteholder to exercise, nor
the delay by Noteholder in exercising, any right, power or remedy upon any
Default shall be construed as a waiver of such Default or as a waiver of the
right to exercise any such right, power or remedy at a later date. No single or
partial exercise by Noteholder of any right, power or remedy hereunder shall
exhaust the same or shall preclude any other or further exercise thereof, and
every such right, power or remedy hereunder may be exercised at any time and
from time to time. No modification or waiver of any provision hereof nor consent
to any departure by Grantor therefrom shall in any event be effective unless the
same shall be in writing and signed by Noteholder and then such waiver or
consent shall be effective only in the specific instances, for the purpose for
which given and to the extent therein specified. No notice to nor demand on
Grantor in any case shall of itself entitle Grantor to any other or further
notice or demand in similar or other circumstances. Acceptance by Noteholder of
any payment in an amount less than the amount then due on any of the
Indebtedness shall be deemed an acceptance on account only and shall not in any
way affect the existence of a Default hereunder.
6.7 Notification of Account Debtors. Noteholder may at any time after Default
by Grantor notify the account debtors or obligors of any accounts, chattel
paper, negotiable instruments or other evidences of indebtedness included in the
Personal Property to pay Noteholder directly.
6.8 Reproduction as Financing Statement. A carbon, photographic or other
reproduction of this Mortgage or of any financing statement relating to this
Mortgage shall be sufficient as a financing statement.
6.9 Fixture Filing. This Mortgage shall be effective as a financing statement
filed as a fixture filing with respect to all fixtures included within the
Mortgaged Property and is to be filed for record in the real property records in
the Office of the County Clerk for the county or counties where the Mortgaged
Property (including said fixtures) is situated. This Mortgage shall also be
effective as a financing statement covering minerals or the like (including oil
and gas) and accounts subject to Subsection 9.103(e) of the Business Code and is
to be filed for record in the real property records of the county where the
Mortgaged Property is situated. The mailing address of Grantor is set forth on
the first page of this Mortgage and the address of Noteholder from which
information concerning the security interest may be obtained is the address of
Noteholder set forth in Paragraph 1.1 of this Mortgage.
6.10 Filing and Recordation. Grantor will cause this Mortgage and all
amendments and supplements thereto and substitutions therefor and all financing
statements and continuation statements relating hereto to be recorded, filed,
re-recorded and refiled in such manner and in such places as Trustee or
Noteholder shall reasonably request, and will pay all such recording, filing,
re-recording and refiling taxes, fees and other charges.
6.11 Dealing with Successor. In the event the ownership of the Mortgaged
Property or any part thereof becomes vested in a person other than Grantor,
Noteholder may, without notice to Grantor, deal with such successor or
successors in interest with reference to this Mortgage and to the Indebtedness
in the same manner as with Grantor, without in any way vitiating or discharging
Grantor's liability hereunder or for the payment of the Indebtedness; provided,
however, nothing in this Paragraph shall be construed as permitting any transfer
of the Mortgaged Property which would constitute a Default under this Mortgage.
No sale of the Mortgaged Property, no forbearance on the part of Noteholder and
no extension of the time for the payment of the Indebtedness given by Noteholder
shall operate to release, discharge, modify, change or affect, in whole or in
part, the liability of Grantor hereunder or for the payment of the Indebtedness
or the liability of any other person hereunder or for the payment of the
Indebtedness, except as agreed to in writing by Noteholder.
6.12 Place of Payment. The Indebtedness shall be payable at the place
designated in the Note, or if no such designation is made, at the office of
Noteholder at the address indicated in this Mortgage, or at such other place as
Noteholder may designate in writing.
6.13 Subrogation. To the extent that proceeds of the Note are used to pay
indebtedness secured by any outstanding lien, security interest, charge or prior
encumbrance against the Mortgaged Property, such proceeds have been advanced by
Noteholder at Grantor's request and Noteholder shall be subrogated to any and
all rights, security interests and liens owned or held by any owner or holder of
such outstanding liens, security interests, charges or encumbrances,
irrespective of whether said liens, security interests, charges or encumbrances
are released; provided, however, that the terms and provisions of this Mortgage
shall govern the rights and remedies of Noteholder and shall supersede the
terms, provisions, rights and remedies under and pursuant to the instruments
creating the liens, security interests, charges or encumbrances to which
Noteholder is subrogated hereunder.
6.14 Application of Indebtedness. If any part of the Indebtedness cannot be
lawfully secured by this Mortgage or if any part of the Mortgaged Property
cannot be lawfully subject to the lien and security interest hereof to the full
extent of the Indebtedness, then all payments made shall be applied on said
Indebtedness first in discharge of that portion thereof which is unsecured by
this Mortgage.
6.15 Usury. This Mortgage has been executed under, and shall be construed and
enforced in accordance with, the laws of the State of Texas, except as such laws
are preempted by federal law. This Mortgage and all of the other Loan Documents
are intended to be performed in accordance with, and only to the extent
permitted by, all applicable usury laws. If any provision hereof or of any of
the other Loan Documents or the application thereof to any person or
circumstance shall, for any reason and to any extent, be invalid or
unenforceable, neither the application of such provision to any other person or
circumstance nor the remainder of the instrument in which such provision is
contained shall be affected thereby and shall be enforced to the greatest extent
permitted by Applicable Laws. It is expressly stipulated and agreed to be the
intent of Grantor and Noteholder to at all times comply with the usury and other
applicable laws now or hereafter governing the interest payable on the
Indebtedness. If the applicable law is ever revised, repealed or judicially
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interpreted so as to render usurious any amount called for under the Note or
under any of the other Loan Documents, or contracted for, charged, taken,
reserved or received with respect to the Indebtedness, or if Noteholder's
exercise of the option to accelerate the maturity of the Indebtedness, or if any
prepayment of the Indebtedness results in the payment of any interest in excess
of that permitted by law, then it is the express intent of Grantor and
Noteholder that all excess amounts theretofore collected by Noteholder be
credited on the principal balance of the Note (or, if the Note and all of such
other Indebtedness have been paid in full, refunded), and the provisions of the
Note and the other Loan Documents immediately be deemed reformed and the amounts
thereafter collectable hereunder and thereunder reduced, without the necessity
of the execution of any new document, so as to comply with the then Applicable
Laws, but so as to permit the recovery of the fullest amount otherwise called
for hereunder or thereunder. All sums paid, or agreed to be paid, for the use,
forbearance , detention, taking, charging, receiving or reserving on the
Indebtedness shall, to the extent permitted by Applicable Laws, be amortized,
prorated, allocated and spread throughout the full term of such Indebtedness
until payment in full so that the rate or amount of interest on account of such
Indebtedness does not exceed the usury ceiling from time to time in effect and
applicable thereto for so long as debt is outstanding under the Indebtedness. To
the extent that Noteholder is relying on Chapter 303 of the Texas Finance Code
to determine the maximum rate ("Maximum Rate") payable on the Indebtedness,
Noteholder will utilize the weekly ceiling from time to time in effect as
provided in such Chapter 303. To the extent federal law permits Noteholder to
contract for, charge or receive a greater amount of interest, Noteholder will
rely on federal law instead of such article, as amended, for the purpose of
determining the Maximum Rate. Additionally, to the extent permitted by
applicable law now in effect, Noteholder may, at its option and from time to
time, implement any other method of computing the Maximum Rate under such
article, as amended, or under other applicable law by giving notice, if
required, to Grantor as provided by applicable law now or hereafter in effect.
In no event shall the provisions of Chapter 346 of the Texas Finance Code (which
regulates certain revolving credit loan accounts and revolving triparty
accounts) apply to the Indebtedness. Notwithstanding anything to the contrary
contained herein or in any of the other Loan Documents, it is not the intention
of Noteholder to accelerate the maturity of any interest that has not accrued at
the time of such acceleration or to collect unearned interest at the time of
such acceleration.
6.16 Notice. Any notice, request, demand or other communication required or
permitted hereunder, or under the Note, or under any of the other Loan Documents
(unless otherwise expressly provided therein) shall be given in writing as set
forth in the Loan Agreement. Service of a notice required by Texas Property Code
ss.51.002 shall be considered complete when the requirements of that statute are
met.
6.17 Heirs, Successors and Assigns. The terms, provisions, covenants and
conditions hereof shall be binding upon Grantor, and the heirs, devisees,
representatives, successors and assigns of Grantor including all successors in
interest of Grantor in and to all or any part of the Mortgaged Property, and
shall inure to the benefit of Trustee and Noteholder and their respective heirs,
successors, substitutes and assigns and shall constitute covenants running with
the Land. All references in this Mortgage to Grantor, Trustee or Noteholder
shall be deemed to include all such heirs, devisees, representatives,
successors, substitutes and assigns.
6.18 Severability. A determination that any provision of this Mortgage is
unenforceable or invalid shall not affect the enforceability or validity of any
other provision and any determination that the application of any provision of
this Mortgage to any person or circumstance is illegal or unenforceable shall
not affect the enforceability or validity of such provision as it may apply to
any other persons or circumstances.
6.19 Gender and Number. Within this Mortgage, words of any gender shall be
held and construed to include any other gender, and words in the singular number
shall be held and construed to include the plural and words in the plural number
shall be held and construed to include the singular, unless in each instance the
context otherwise requires.
6.20 Counterparts. This Mortgage may be executed in any number of counterparts
with the same effect as if all parties hereto had signed the same document. All
such counterparts shall be construed together and shall constitute one
instrument, but in making proof hereof it shall only be necessary to produce one
such counterpart.
6.21 Joint and Several. Where two or more persons or entities have executed
this Mortgage, unless the context clearly indicates otherwise, the term
"Grantor" as used in this Mortgage means the grantors hereunder or either or any
of them and the obligations of Grantor hereunder shall be joint and several.
6.22 Reporting Requirements. Grantor agrees to comply with any and all
reporting requirements applicable to the transaction evidenced by the Note and
secured by this Mortgage which are set forth in any law, statute, ordinance,
rule, regulation, order or determination of any governmental authority
(including, but not limited to, The International Investment Survey Act of 1976,
The Agricultural Foreign Investment Disclosure Act of 1978, The Foreign
Investment in Real Property Tax Act of 1980 and the Tax Reform Act of 1984) and
further agrees upon request of Noteholder to furnish Noteholder with evidence of
such compliance.
6.23 Headings. The Paragraph headings contained in this Mortgage are for
convenience only and shall in no way enlarge or limit the scope or meaning of
the various and several Paragraphs hereof.
6.24 Consent of Noteholder. Except where otherwise provided herein, in any
instance hereunder where the approval, consent or the exercise of judgment of
Noteholder is required, the granting or denial of such approval or consent and
the exercise of such judgment shall be within the reasonable discretion of
Noteholder.
6.25 Modification or Termination. The Loan Documents may only be modified or
terminated by a written instrument or instruments executed by the party against
which enforcement of the modification or termination is asserted. Any alleged
modification or termination which is not so documented shall not be effective as
to any party. Grantor agrees that it shall be bound by any modification of this
Mortgage or any of the other Loan Documents made by Noteholder and any
subsequent owner of the Mortgaged Property, with or without notice to or consent
of Grantor, and no such modification shall impair the obligations of Grantor
under this Mortgage or under any other Loan Document.
6.26 Negation of Partnership. Nothing contained in the Loan Documents is
intended to create any partnership, joint venture or association between Grantor
and Noteholder, or in any way make Noteholder a co-principal with Grantor with
reference to the Mortgaged Property, and any inferences to the contrary are
hereby expressly negated.
6.27 Entire Agreement. The Loan Documents constitute the entire understanding
and agreement between Grantor and Noteholder with respect to the transactions
arising in connection with the Indebtedness and supersede all prior written or
oral understandings and agreements between Grantor and Noteholder with respect
thereto. Grantor hereby acknowledges that, except as incorporated in writing in
the Loan Documents, there are not, and were not, and no persons are or were
authorized by Noteholder to make, any representations, understandings,
stipulations, agreements or promises, oral or written, with respect to the
transaction which is the subject of the Loan Documents.
6.28 Construction Mortgage. If this Mortgage is a construction mortgage (as
that term is defined in Subsection 9.313(a)(3) of the Business Code) it secures
an obligation incurred for the construction of improvements on the Land
including the acquisition cost of the Land. In such event it is understood and
agreed that funds to be advanced upon the Note are to be used in the
construction of certain improvements on the Land in accordance with the Loan
Documents.
6.29 Renewal and Extension.
(a) The Note hereby secured is given in modification, renewal and
extension (but not in novation) of the amount left owing and unpaid by Grantor
upon that promissory note in the original principal sum of $500,000.00 dated
October 15, 1997, executed by Grantor and payable to the order of Texas Bank
more fully described and secured by a Deed of Trust dated October 15, 1997,
entered into by Grantor in favor of Texas Bank and recorded under Xxxxxx County
Clerk's File No. 97-R0073136, in the Real property Records of Xxxxxx County,
Texas, said Promissory Note being secured by the lien therein and thereby
created upon and against the
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Mortgaged Property which lien (along with any vendor's lien held by Bank to
secure, in whole, or in part, repayment fo the Note) are hereby renewed,
extended and carried forward in fully force and effect to secure payment of the
Indebtedness.
(b) The Note hereby secured is also given in modification, renewal and
extension (but not in novation) of the amount left owing and unpaid by Grantor
upon that promissory note in the original principal sum of $250,000.00 dated
October 15, 1997, executed by Grantor and payable to the order of Texas Bank
more fully described and secured by a Deed of Trust dated October 15, 1997,
entered into by Grantor in favor of Texas Bank and recorded under Xxxxxx County
Clerk's File No. 97-R0073137, in the Real property Records of Xxxxxx County,
Texas, said Promissory Note being secured by the lien therein and thereby
created upon and against the Mortgaged Property which lien (along with any
vendor's lien held by Bank to secure, in whole, or in part, repayment fo the
Note) are hereby renewed, extended and carried forward in fully force and effect
to secure payment of the Indebtedness.
EXECUTED as of June 26, 1998.
INTERNATIONAL ISOTOPES, INC.
By:_____________________________________
Name:___________________________________
Title:__________________________________
By:_____________________________________
Name:___________________________________
Title:__________________________________
STATE OF TEXAS ss.
ss.
COUNTY OF ____ ss.
This instrument was acknowledged before me on ___ day of ________, 19__,
by _________, as ___________________ of International Isotopes, Inc., a Texas
corporation, on behalf of said corporation.
[S E A L]
__________________________________
Notary Public, State of Texas
My Commission Expires: __________________________________
___________________ Printed Name of Notary Public
STATE OF TEXAS ss.
ss.
COUNTY OF ____ ss.
This instrument was acknowledged before me on ___ day of _______, 19__, by
________, as ______________________ of International Isotopes, Inc., a Texas
corporation, on behalf of said corporation.
[S E A L]
__________________________________
Notary Public, State of Texas
My Commission Expires: __________________________________
___________________ Printed Name of Notary Public
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EXHIBIT "A"
TO
DEED OF TRUST, SECURITY AGREEMENT AND
ASSIGNMENT OF RENTS AND LEASES
EXECUTED BY INTERNATIONAL ISOTOPES, INC.
AS GRANTOR
14
