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HomeMy WebLinkAboutSubordinated Mortgage SUBORDINATED MORTGAGE "This SU~.oR~IN~TED MORT,G,AGE, dated as of the ic>1-kday of ;Nvcl.., 1995, (the Mortgage), IS gIven by MobIlia, Ltd., a Delaware corporation, (hereinafter referred to as the "Mortgagor"), to the Housing and Redevelopment Authority in and for the City of Columbia Heights, Minnesota, a public body corporate and politic under the laws of Minnesota, and its successors or assigns (the "Mortgagee"). WITNESSETH: WHEREAS, Zaidan Holdings, Inc. (" Zaidan") and Mortgagee have entered that certain Purchase and Property Tax Agreement dated as of November 23, 1994 (the "Agreement") , pursuant to which the Mortgagee agreed to convey to Zaidan property described in attached Exhibit A hereto (the "Property") in consideration, in part, of delivery by Zaidan of a promissory note of even date herewith in the amount of $1,015,099 (the "Note") and certain other obligations set forth in the Agreement; and WHEREAS, in accordance with the Agreement, Zaidan has assigned its rights and obligations under the Agreement, in part, to Mortgagor, pursuant to that certain Purchase Agreement between Mortgagor and Zaidan of even date herewith (the "Purchase Agreement"); and WHEREAS, under the Purchase Agreement Zaidan has assigned to Mortgagor the right to receive the deed for the Property and the corresponding obligation to execute the Mortgage, provided that Zaidan has executed the Note and remains the obligor thereunder; and WHEREAS, the Agreement requires that this Mortgage be given by the Mortgagor as assignee of Zaidan and fee owner of the Mortgaged Property to secure the Note and obligations of the Mortgagor, as assignee of Zaidan, under the Agreement; Therefore, in consideration of the conveyance of the Property by Mortgagee to Mortgagor and for the purpose of securing (a) the Note and of all sums payable in accordance with the Note and the Agreement; (b) the payment of all other sums with interest thereon as may be advanced by the Mortgagee in accordance with this Mortgage (the sums payable in accordance with the Note and the Agreement and all such other sums are hereinafter collectively referred to as the "Indebtedness") ; and (c) the performance of all the covenants and agreements of Mortgagor herein contained and contained in the Agreement and in all other documents securing or executed in connection with the Note; the Mortgagor, hereby mortgages, grants, bargains, sells, assigns, transfers, and conveys unto the Mortgagee forever the Property, together with (i) all of the buildings, structures, and other improvements now standing or at any time hereafter constructed or placed upon the Property; (ll) all hereditaments, easements, appurtenances, riparian rights, rents, issues, profits, condemnation awards, mineral rights, water rights, and contract rights (including contract rights pertaining to performance bonds, fidelity bonds, or insurance contracts) now or hereafter belonging or in any way pertaining to the Property or to any building now or hereafter located thereon and all the estate, right and interest of the Mortgagor in the Property; and (iii) all proceeds and products of the foregoing (all of the foregoing, together with the Property, are hereinafter referred to as the "Mortgaged Property") . BJB85055 CL160-70 1 . To Have and To Hold the Mortgaged Property unto the Mortgagee forever; provIded, nevertheless, that this Mortgage is upon the express condition that if the Mortgagor shall, pursuant to the Agreement, pay to the Mortgagee as and when due and payable the principal of and interest on the Note, and all other Indebtedness, and the Mortgagor shall also keep and perform each and every covenant and agreement of Mortgagor herein contained, or contained in the Agreement, then this Mortgage and the estate hereby granted shall cease and be and become void and shall be released of record at the expense of the Mortgagor, otherwise this Mortgage shall be and remain in full force and effect. . The Mortgagor represents, warrants, and covenants to and with the Mortgagee, that it is lawfully seized of the Property in fee simple and that it has good right and full power and authority under all applicable provisions of law to execute this Mortgage and to mortgage the Mortgaged Property; that the Mortgaged Property is free from all liens, security interests, and encumbrances except as listed in Exhibit B attached hereto; that the Mortgagor will warrant and defend the title to the Mortgaged Property and the lien and priority of this Mortgage to the extent of its interest against all claims and demands of all persons whomsoever, whether now existing or hereafter arising, not listed in Exhibit B; and that all buildings and Improvements now or hereafter located on the Property are or will be located entirely within the boundaries of the Property. The covenants and warranties of this paragraph shall survive foreclosure of this Mortgage and shall run with the Property. Mortgagee's interest in the Property and buildings is subordinate only to the interest of the First Mortgage and Second Mortgage, as defined in the Agreement. The Mortgagor further covenants and agrees as follows: ARTICLE ONE Mortgage Covenants Section 1.01. Payment of Indebtedness. The Mortgagor will duly and punctually pay in installments as provided in the Note the principal of, premium, if any, and interest on the Note pursuant to the terms of the Agreement and the Note, and all other Indebtedness, when and as due and payable, including without limitation any liquidated damages payable under the Agreement. The terms of repayment shall be in accordance with the terms of the Note and the Agreement. Section 1.02. Application of Payments. All payments received by Mortgagee from Mortgagor under the Agreement, the Note, or this Mortgage shall, until foreclosure of this Mortgage, be applied by Mortgagee in the following order or priority: (a) interest payable on advances made pursuant to Section 3.03 hereof; (b) principal of advances made pursuant to Section 3.03 hereof; (c) any other sums secured by this Mortgage not listed in this section, in such order of application as Mortgagee may determine; (d) interest payable on the obligations of the Mortgagor pursuant to the Note which will be applied to interest due on the Note; (e) principal due on the obligations of the Mortgagor pursuant to the Note which will be applied to principal due on the Note. SJB65055 CL160-70 2 ~ection 1.03. Payment of Ta~es. Assessments and Other Charges. Subject to Section 6 of the Agreement relatmg to tax escrow requirements and subject to Section 1.07 hereof relating to contests, the Mortgagor shall payor cause to be paid before penalty might attach for nonpayment thereof, all taxes and assessments and all other charges whatsoever levied upon or assessed or placed against the Mortgaged Property, except that assessments may be paid in installments so long as no fine or penalty is added to any installment for the nonpayment thereof. Mortgagor shall likewise payor cause to be paid any and all governmental levies or assessments such as maintenance charges, owner association dues, charges, or fees, levies or charges resulting from covenants, conditions, and restrictions affecting the Mortgaged Property, which are assessed or imposed upon the Mortgaged Property or any part thereof or become due and payable, and which create, may create, or appear to create a lien upon the Mortgaged Property, or any part thereof. Mortgagor shall likewise payor cause to be paid all taxes, assessments, and other charges, levied upon or assessed, placed, or made against, or measured by, this Mortgage, or the recordation hereof, or the Indebtedness secured hereby, provided that the Mortgagor shall not be obliged to payor cause to be paid such tax, assessment, or charge if such payment would be contrary to law or would result in the payment of an unlawful rate of interest on the Indebtedness secured hereby; and provided further that nothing herein contained shall be construed as requiring Mortgagor to pay any net income, profits, or revenue taxes of Mortgagee. Upon request of Mortgagee, Mortgagor shall promptly furnish to the Mortgagee all notices received by the Mortgagor of amounts due under this paragraph and in the event Mortgagor shall make payment directly, Mortgagor shall promptly furnish to Mortgagee receipts evidencing such payments. Section 1. 04. Payment of Utility Charges. Subject to Section 1. 07 relating to contests, the Mortgagor shall payor cause to be paid all charges made by utility companies, whether public or private, for electricity, gas, heat, water, sewer, or other utilities furnished or used in connection with the Mortgaged Property or any part thereof, and will, upon written request of Mortgagee, furnish proper receipts evidencing such payment. Section 1.05. ~. Subject to Section 1.07 hereof relating to contests and Section 3.06 hereof relating to additional financing, the Mortgagor shall not create, incur, or suffer to exist any lien, encumbrance, or charge on the Mortgaged Property or any part thereof, whether junior or prior to the lien of this Mortgage, other than (i) the lien of the First Mortgage and the Second Mortgage as defined in the Agreement and (il) the lien of current real estate taxes and installments of special assessments with respect to which no penalty is yet payable. Section 1.06. Compliance with Laws. Subject to Section 1.07 relating to contests, Mortgagor shall comply with all present and future statutes, laws, rules, orders, regulations, ordinances, and agreements affecting the Mortgaged Property, any part thereof or the use thereof. Section 1.07. Permitted Contests. Except for any monthly escrows of real estate taxes and special assessments required in Section 1.03, and subject to the terms of the Amended and Restated Assessment Agreement (Columbia Heights Office Center) between Zaidan and Mortgagee dated November 23, 1994, the Mortgagor shall not be required to pay any tax, assessment, or other charge referred to in Section 1.03 hereof, pay any charge referred to in Section 1.04 hereof, discharge or remove any lien, encumbrance or charge referred to in Section 1.05 hereof, or comply with any statute, law, rule, regulation or ordinance referred to in Section 1. 06 hereof, SJB65055 CL160-70 3 so long as Mortgagor shall contest, in good faith, the existence, amount, or validity thereof, the amount of damages caused thereby, or the extent of its liability therefor, by appropriate proceedings which shall operate during the pendency thereof to prevent the collection of, or other realization upon, the tax, assessment, charge or lien, encumbrance or charge so contested, the sale, forfeiture or loss of the Mortgaged Property or any part thereof, and any interference with the use or occupancy of the Mortgaged Property or any part thereof. Mortgagor shall give prompt written notice to Mortgagee of the commencement of any contest referred to in this Section 1.07. Prior to such contest, the Mortgagor shall provide to the Mortgagee a bond or other security reasonably satisfactory to the Mortgagee securing the payment of any such contested amount. ARTICLE TWO Insurance Section 2.01. Insurance. The Mortgagor, at its sole cost and expense, will maintain or cause to be maintained continuously in effect with respect to the Mortgaged Property policies of insurance against such risks and in such amounts as are customary for a prudent owner of property comparable to those comprising the Mortgaged Property. Section 2.02. Policy Provisions. All insurance policies and renewals thereof maintained by Mortgagor pursuant to Section 2.01 above shall be written by a company or companies that are financially sound and licensed to transact business in the State of Minnesota, and shall contain a standard mortgage clause in favor of Mortgagee, reciting Mortgagee's interest as that of a subordinate mortgagee, contain an agreement of the insurer that it will not cancel the policy or modify it materially and adversely to the interest of the Mortgagee except after at least thirty (30) days prior written notice to Mortgagee. Mortgagor shall provide Mortgagee with a certificate of Mortgagor stating that the Mortgagor has obtained insurance policies which meet all of the requirements set forth in this Mortgage. Section 2.03. Delivery of Policy. Mortgagor will deliver to Mortgagee copies of all insurance policies required under Section 2.01. At least seven (7) days prior to the expiration date of a required policy, Mortgagor shall deliver to Mortgagee a renewal certificate. Section 2.04. Assignment of Policy. If the Mortgaged Property is sold at a foreclosure sale or if Mortgagee shall acquire title to the Mortgaged Property, ; he Mortgagee shall have all of the right, title, and interest of Mortgagor in and to any insurance policies required under Section 2.01 hereof and in and to the proceeds resulting from any damage to the Mortgaged Property prior to such sale or acquisition. Section 2.05. Notice of Damae;e or Destruction; Adiustine; Loss. If the Mortgaged Property or any part thereof shall be damaged or destroyed by fire or other casualty, Mortgagor will promptly give written notice thereof to the insurance carrier and Mortgagee. SJB85055 CL160-70 4 ARTICLE THREE Mortgaged Property Section 3.01. Preservation and Maintenance of Mortgaged Property. Mortgagor (a) shall keep the buildings and other improvements now or hereafter erected on the Property in safe and good repair and condition, ordinary depreciation excepted; (b) shall, upon damage to or destruction of the Mortgaged Property or any part thereof by fire or other casualty, restore, repair, replace, or rebuild the Mortgaged Property that is damaged or destroyed to the condition it was in immediately prior to such damage or destruction, whether or not any insurance proceeds are available or sufficient for such purpose; (c) shall constantly maintain the parking and landscaped areas of the Mortgaged Property; (d) shall not commit waste or permit impairment or deterioration of the Mortgaged Property; (e) shall generally operate and maintain the Mortgaged Property in a manner to insure maximum revenues; and (f) shall not alter the design or structural character of any building now or hereafter erected on the Property or hereafter construct, or permit any tenant to construct, additions to existing buildings or additional buildings on the Property without the prior written consent of the Mortgagee, which consent shall not be unreasonably withheld; provided that consent of Mortgagee is deemed given for improvements to the Mortgaged Property that Mortgagor has disclosed to Mortgagee as of the date hereof and are reasonably required for a tenant or tenants therein. Section 3.02. Inspection. The Mortgagee, or its agents, shall have the right, at all reasonable times and upon prior notice, to enter upon the Mortgaged Property for the purposes of inspecting the Mortgaged Property or any part thereof. The Mortgagee shall, however, have no duty to make such Inspection. Section 3.03. Protection of Mortgagee's Security. If the Mortgagor fails to perform any of the covenants and agreements contained in this Mortgage after receipt of notice thereof from the Mortgagee and failure to cure within thirty (30) business days, or if any action or proceeding is commenced which affects the Mortgaged Property or the interest of the Mortgagee therein, or the title thereto, then the Mortgagee, at Mortgagee's option, may perform such covenants and agreements, defend against and/or investigate such action or proceeding, and take such other action as the Mortgagee deems necessary to protect the Mortgagee's interest. Subject to Mortgagor's rights under Section 1.07, Mortgagee shall be the sole judge of the legality, validity, and priority of any claim, lien, encumbrance, tax, assessment, charge, and premium paid by it and of the amount necessary to be paid in satisfaction thereof. Mortgagee shall, at its option, be subrogated to the lien of any mortgage or other lien discharged in whole or in part by the Indebtedness or by the Mortgagee under the provisions hereof, and any such subrogation rights shall be additional and cumulative security for this Mortgage. Nothing contained in this Section 3.03 shall require the Mortgagee to incur any expense or do any act hereunder, and the Mortgagee shall not be liable to the Mortgagor for any damages or claims arising out of action taken by the Mortgagee pursuant to this Section 3.03. Section 3.04. Condemnation. Mortgagor hereby irrevocably assigns to the Mortgagee any award or payment (but not in excess of the Indebtedness) which becomes payable by reason of any taking of the Mortgaged Property, or any part thereof, whether directly or indirectly or temporarily or permanently, in or by condemnation or other eminent domain proceedings or by reason of sale under threat SJB85055 CL160-70 5 thereof, or in anticipation of the exercise of the right of condemnation or other eminent domain proceedings or by reason of sale under threat thereof (hereinafter called "Taking"). Forthwith upon receipt by Mortgagor of notice of the institution of any proceeding or negotiations for a Taking, Mortgagor shall give notice thereof to Mortgagee. Mortgagee may appear in any such proceedings and participate in any such negotiations and may be represented by counsel. Mortgagor, notwithstanding that Mortgagee may not be a party to any such proceeding, will promptly give to Mortgagee copies of all notices, pleadings, judgments, determinations, and other papers received by Mortgagor therein. Mortgagor will not enter into any agreement permitting or consenting to the taking of the Mortgaged Property, or any part thereof, or providing for the conveyance thereof in lieu of condemnation, with anyone authorized to acquire the same in condemnation or by eminent domain unless Mortgagee shall first have consented thereto in writing, which consent will not be unreasonably withheld. All Taking awards shall be adjusted jointly by Mortgagor and Mortgagee except that at any time while an Event of Default exists hereunder, Mortgagee may alone adjust any taking and the Taking Authority may conclusively rely upon Mortgagee's statement that It Is entitled to do so. Section 3.05. Financial Statements and Other Information; Books and Records. Mortgagor shall prepare annual financial statements with respect to the Mortgagor's general operations. Mortgagor agrees that upon Mortgagee's request Mortgagor shall deliver to Mortgagee copies of all such financial statements on or before ninety (90) days after the end of Mortgagor's fiscal year. Immediately upon becoming aware of the existence of any condition or event which constitutes, or which after notice or lapse of time or both would constitute an Event of Default, Mortgagor shall provide to Mortgagee written notice specifying the nature and period of existence thereof and what action Mortgagor has taken, is taking, or proposes to take with respect thereto. Mortgagor shall keep and maintain at all times at Mortgagor's address stated below or at such other place as Mortgagee may approve in writing, complete and accurate books of accounts and records in sufficient detail to reflect correctly the results of the operation of the Mortgaged Property and copies of all written contracts, leases, and other instruments which affect the Mortgaged Property. Such books, records, contracts, leases, and other instruments shall be subject to examination and inspection by the Mortgagee or its representative during ordinary business hours. If the Mortgagor fails to provide the operating statements specified in subparagraph (a) above, the Mortgagee shall have the right to audit the Mortgagor's books and records at the Mortgagor's expense. Section 3.06. Sale of Mortgaged Property, Parity Financing, Secondary Financing. (a) The Mortgaged Property may not be assigned, leased, sold or encumbered except in accordance with the provisions of the Agreement and the Note. (b) The Mortgaged Property shall be subject to release from the lien of this Mortgage only upon meeting the conditions set forth in the Agreement and the Note. BJB85055 CL160-70 6 Section 3.07. Hazardous Waste. (a) Mortgagor covenants, represents and warrants to Mortgagee, its successors and assigns, that it is not aware of, nor has discovered on the Mortgaged Property any hazardous substances, hazardous wastes, pollutants, or contaminants as those terms are defined under any Federal, State of Minnesota, or local statute, ordinance, code, or regulation, and further warrants that it will not, nor cause to be, nor will allow any other person to deposit, store, dispose of, place, or otherwise locate or allow to be located on or within the Mortgaged Property, any of the above referenced hazardous substances. (b) These covenants, representations, warranties and indemnities shall be deemed continuing covenants, representations, warranties and indemnities running with the Property for the benefit of the Mortgagee, and any successors and assigns of the Mortgagee, including any purchaser at a mortgage foreclosure sale, any transferee of the title of the Mortgagee or any subsequent purchaser at a foreclosure sale, and any subsequent owner of the Mortgaged Property claiming through or under the title of Mortgagee and shall survive any foreclosure of this Mortgage and any acquisition of title of Mortgagee. The amount of all such indemnified loss, damage, expense or cost, shall bear interest thereon at the rate of interest in effect on the Bonds and shall become so much additional Indebtedness secured hereby and shall become immediately due and payable in full on demand of the Mortgagee, its successors and assigns. ARTICLE FOUR Events of Default and Remedies Section 4.01. Events of Default. Each of the following occurrences shall constitute an event of default hereunder (herein called an "Event of Default"): (a) Mortgagor shall fail to duly and punctually payor cause to be paid any installment of the principal, premium, or interest payable under the Note. (b) Mortgagor shall default in the performance of or breach its agreements contained in Section 3.06 hereof. (c) Mortgagor shall fail to duly perform or observe any of the covenants or agreements contained in this Mortgage (other than a default specified in paragraphs (a) and (b) of this Section 4.01) and such failure shall continue for thirty days after the Mortgagee has given written notice to the Mortgagor specifying such default or breach unless Mortgagee shall agree in writing to an extension of such time prior to its expiration; provided, however, if the failure stated in the notice cannot be corrected within the applicable period, Mortgagee will not unreasonably withhold their consent to an extension of such time if corrective action is instituted by Mortgagor within the applicable period and is being diligently pursued until the Default is corrected, but no such extension shall be given for a Default that can be cured by the payment of money (i.e., payment of taxes, insurance premiums or other amounts required to be paid hereunder). SJBB5055 CL160-70 7 (d) An Event of Default under the Agreement shall occur. Section 4.02. Acceleration: Foreclosure. Upon the occurrence of any Event of Default, the Mortgagee may, at its option, and subject to the interest of the First Mortgage and Second Mortgage as defined in the Agreement, exercise one or more of the following rights and remedies (and any other rights and remedies available to it) : (a) Mortgagee may, by written notice to the Mortgagor, declare immediately due and payable all Indebtedness secured by this Mortgage, and the same shall thereupon be immediately due and payable, without further notice or demand; and . (b) Mortgagee may (and is hereby authorized and empowered to) foreclose this Mortgage by action or advertisement, pursuant to the statutes of the State in such case made and provided, power being expressly granted to sell the Mortgaged Property at public auction and convey the same to the purchaser in fee simple and, out of the proceeds arising from such sale, to pay all Indebtedness secured hereby with interest, and all legal costs and charges of such foreclosure and the maximum attorneys' fees permitted by law, which costs, charges, and fees the Mortgagor agrees to pay. Section 4.03. Disposition of Funds. Any amounts collected pursuant to action taken under Section 4.02 shall be applied in such order as the Mortgagee may determine; provided that in the event that the Mortgagee advances sums in protecting the lien of this Mortgage, in payment of taxes on the Mortgaged Property, in payment of principal and interest on prior liens against the Mortgaged Property, and in payment of expenses and attorneys' fees herein provided for, the Mortgagor on demand shall pay all such costs and expenses so incurred and advances so made to the Mortgagee together with interest at the rate of one percent (1.00%) per annum in excess of the "prime rate" publicly announced from time to time by First Bank National Association, Minneapolis, Minnesota (unless payment of such rate would be contrary to applicable law, in which event such sums shall bear interest at the highest rate permitted by applicable law). Such sum shall become additional Indebtedness of the Mortgagor secured by this Mortgage. Section 4.04 . Attorneys' Fees and Expenses. In the event the Mortgagor should default under any of the provisions of this Mortgage and the Mortgagee should employ attorneys or incur other expenses for the collection of amounts due hereunder or the enforcement of performance of any obligation or agreement on the part of the Mortgagor contained in this Mortgage, or any other instrument securing the Bonds the Mortgagor will pay to the Mortgagee on demand the reasonable fee of such attorneys and such other expenses so incurred. Section 4.05. Estoppel Certificate. Mortgagor agrees at any time and from time to time, upon not less than fifteen days prior notice by Mortgagee, to execute, acknowledge, and deliver, without charge, to Mortgagee or to any person designated by Mortgagee, a statement in writing certifying that this Mortgage is unmodified (or if there have been modifications, identifying the same by the date thereof and specifying the nature thereof), the principal amount then secured hereby and the unpaid balance of the Note and any other Indebtedness hereunder, that Mortgagor has not received any notice of default or notice of acceleration or foreclosure of this Mortgage (or if Mortgagor has received such a notice, that it has been revoked, if such be the case), that no Event of Default or state of facts, which with the giving 8JB85055 CL160-70 8 of notice or passage of time, or both, will constitute an Event of Default exists hereunder (or if any such Event of Default does exist, specifying the s~me and stating that the same has been cured, if such be the case), that Mortgagor to its knowledge has no claims or offsets against Mortgagee (or if Mortgagor has any such claims, specifying the same) , and the dates to which the interest and the other sums and charges payable by Mortgagor pursuant to the Note have been paid. Section 4.06. Forbearance Not a Waiver j Rights and Remedies Cumulative. No delay by the Mortgagee in exercising any right or remedy provided herein or otherwise afforded by law or equity shall be deemed a waiver of or preclude the exercise of such right or remedy, and no waiver by the Mortgagee of any particular provision of this Mortgage shall be deemed effective unless in writing signed by the Mortgagee. Any failure by Mortgagee to insist, or any election by the Mortgagee not to insist, upon the Mortgagor's strict performance of any of the terms, provisions, or conditions of this Mortgage shall not be deemed to be a waiver of same or of any other term, provision, or condition hereof and Mortgagee shall have the right at any time thereafter to insist upon strict performance by the Mortgagor of any and all of same. All such rights and remedies provided for herein or which the Mortgagee or the holder of the Bonds may have otherwise, at law or in equity, shall be distinct, separate, and cumulative and may be exercised concurrently, independently, or successively in any order whatsoever, and as often as the occasion therefor arises. The Mortgagee's taking action pursuant to Section 3.03 or receiving proceeds, awards, or damages pursuant to Article Two or Section 3.04 shall not impair any right or remedy available to the Mortgagee under Section 4.02 hereof. Acceleration of maturity of the Note, once claimed hereunder by the Mortgagee, may, at the option of Mortgagee, be rescinded by written acknowledgment to that effect by Mortgagee, but the tender and acceptance of partial payments alone shall not in any way affect or rescind such acceleration of maturity of the Note, provided that any such acceleration shall be subject to Mortgagor's right of reinstatement as provided in Minnesota Statutes, Section 580.30. Section 4.07. Marshalling of Assets. Mortgagor, on its own behalf and on behalf of its successors and assigns, hereby expressly waives all rights to require a marshalling of assets by Mortgagee or to require Mortgagee, upon a foreclosure, to first resort to the sale of any portion of the Mortgaged Property which might have been retained by Mortgagor before foreclosing upon and selling any other portion as may be conveyed by Mortgagor, subject to this Mortgage. Section 4.08. Mortgagee's Right to Cure. If a default shall occur in the payment or performance of the document listed in Section 4. Ol( d) hereof, Mortgagee, in addition to any other rights and remedies it may have hereunder, shall have the right, at its option, upon ten (10) days written notice, to cure such default, and any sums expended by Mortgagee in doing so, together with interest thereon at the rate of one percent (1.00%) per annum in excess of the "prime rate" publicly announced from time to time by First Bank National Association, Minneapolis, Minnesota from the date expended until paid, shall be immediately due and payable from Mortgagor to Mortgagee, and shall be added to the Indebtedness secured hereby. BJB85055 CL160-70 9 ARTICLE FIVE Miscellaneous . Section 5.01. Successors and Assill:Ils Bound; Number; Gender; Agents; Captions. The covenants and agreements herein contained shall bind, and the rights hereunder shall inure to, the respective successors and assigns of the Mortgagee and the Mortgagor subject to Section 3.06. The term "Mortgagee" shall include any successors or any assigns of the Mortgagee. Wherever used, the singular number shall include the plural, and the plural the singular, and the use of any gender shall apply to all genders. In exercising any rights hereunder or taking any actions provided for herein, Mortgagee may act through its employees, agents, or Independent contractors as authorized by Mortgagee. The captions and headings of the paragraphs of this Mortgage are for convenience only and are not to be used to interpret or define the provisions hereof. Section 5.02. Notice. Any notice from the Mortgagee to the Mortgagor under this Mortgage shall be deemed to have been given by the Mortgagee and received by the Mortgagor when mailed by registered or certified mail by the Mortgagee to the Mortgagor at the following address: Mobilia, Ltd. Box 77 Suite 315 175 East 5th Street St. Paul, MN 55101 Attn: Gordon Awsumb or at such other address as the Mortgagor may designate in writing to the Mortgagee. Any notice from the Mortgagor to the Mortgagee under this Mortgage shall be deemed to have been given by the Mortgagor when delivered to the Mortgagee as follows: Columbia Heights Housing and Redevelopment Authority 590 NE 40th Avenue Columbia Heights, MN 55421 Section 5.03. Governing Law; Severability. This Mortgage shall be governed by the substantive laws of the State of Minnesota. In the event that any provision or clause of this Mortgage conflicts with applicable law, such conflict shall not affect other provisions of this Mortgage which can be given effect without the conflicting provisions and to this end the provisions of the Mortgage are declared to be severable. Section 5.04. Counterparts. This Mortgage may be executed in any number of counterparts, each of which shall be an original, but all of which together shall constitute one instrument. Section 5.05. Production of Documents. Mortgagor shall, while this Mortgage is in full force and effect, furnish the Mortgagee with such documents, instruments, and papers as the Mortgagee may request from time to time in order for the 8JB8S055 CL160~70 10 Mortgagee to effectuate a sale or a participation in the loan evidenced by the Note and this Mortgage. . Section 5.06. Indemnification by Mortgagor. Mortgagor will protect, mdemnify, and save harmless Mortgagee from and against all liabilities , obligations, claims, damages, penalties, causes of action, costs and expenses (including, without limitation, attorneys' fees and expenses) imposed upon or issued by or asserted against Mortgagee by reason of (a) ownership of the Mortgaged Property, or any interest therein, or receipt of any rent or other sum therefrom, (b) any accident, injury to, or death of persons or loss of or damage to property occurring on or about the Mortgaged Property or any part thereof or the adjoining sidewalks, curbs, vaults, and vault space, if any, (c) any use, non-use, or condition of the Mortgaged Property or any part thereof or the adjoining sidewalks, curbs, vaults, and vault space, if any, (d) any failure on the part of Mortgagor to perform or comply with any of the terms of this Mortgage, (e) performance of any labor or services or the furnishing of any materials or other property in respect of the Mortgaged Property or any part thereof, (f) any negligence or tortious act on the part of Mortgagor or any of its agents, contractors, sublessees, licensees, or invitees, or (g) exercise by Mortgagee of any remedy provided hereunder or at law or equity. Any amounts payable to Mortgagee under this section which are not paid within ten (10) days after written demand therefor by Mortgagee shall bear interest at the rate of one percent (1.00%) per annum in excess of the "prime rate" publicly announced from time to time by First Bank National Association, Minneapolis, Minnesota (unless collection from Mortgagor of interest at such rate would be contrary to applicable law, in which event such amounts shall bear interest at the highest rate which may be collected from Mortgagor under applicable law) from the date of such demand, and shall be secured by this Mortgage. If any action, suit, or proceeding is brought against Mortgagee by reason of any such occurrence, Mortgagor upon Mortgagee's request will at Mortgagor's expense resist and defend such action, suit, or proceeding, or will cause the same to be resisted and defended by counsel for the insurer of the liability or by counsel designated by Mortgagor approved by Mortgagee. Section 5.07. Validity Notwithstanding Invalidity of Note. This Mortgage shall be in all respects valid and enforceable, securing payments due under the Note and the Agreement and all other indebtedness secured hereby, regardless of whether or not the Note and Agreement have been validly authorized, executed and delivered or are legal, valid or enforceable. Section 5.08. Exhibit. The Exhibits to this Mortgage is as follows: Exhibit A Description of Property Exhibit B Permitted Encumbrances SJB85055 CL160-70 11 IN WITNESS WHEREOF, the Mortgagor has duly executed this Mortgage as of the date first written above. MOBILIA, LTD. .~ By: I~' (J.t.a:' L." L I Av~'/ G STATE OF MIil:TA ) c_ J )SS COUNTY OF .e.. J ) 71 Th~ foregoing ~str~nt was a?knowledged befor~ me thisJ /u-i/dayof !--'('\cA- , 1994.by' ~Ln) t4u~<,.~.() ,the U-~ .x:k-r / of Mobilia, Ltd., a Dela~are corporation, on behalf of said corporation. J 171 12~~ , THIS INSTRUMENT DRAFTED BY: Holmes & Graven, Chartered (SJB) 470 Pillsbury Center Minneapolis, Minnesota 55402 SJB85055 CL160-70 12 EXHIBIT A TO SUBORDINATED MORTGAGE PROPERTY Real property located in Anoka County, Minnesota, legally described as follows:' Lot 32, Block 6, Reservoir Hills. Lots 25 through 28, Block 1, Walton's R,earrangement of Lots 33 and 34, ,Block 6, Reservoir Hills. The vacated -alley adjacent to Walton's Rearrangement of Lots Hills. Those parts of tots 28 through 31, Block'~, Reservoir Hills, Lots 23 and 24, Block 1, Walton's Rl=arrangement of Lots 33 and 34, Block 6, Reservoir Hills, and of the vacp.ted'alley adjacent'to Lot 24, Block 1, Walton's Rearrangement of Lot 33 and 34, Block 6, Reservoir Hills, lying Southwesterly and Westerly of the fol- lowing described line: Beginning at a point on the South line of said Block 1, Walton's Rearrangement, said point being 18.00 feet West of the Southeast corner of Lot' 23, of said Block l, Walton I s Rearrangement; thence Northerly on a line 18.00' feet West of and parallel w'ith said East line of Lot 23, a distance of 87.00 feet; thence on a straight line to a point on the North line of Lot 30 of said Block 6, Re~ervoir Hills, said point being 47.23 feet: Easterly of the Northwest corner of said Lot 30 and there terminating, all in Anoka County. Reserving and subject to easements to 'the City of Columbia Heights for roadway purposes over the North 4.00 feet of the West 232.00 feet of said Block 6, Reservoir Hills, and.over the area described as follows: Beginning at the Northwest.comer'of Lot 30, Block 6, Reservoir Hills; thence East along the North lot line of said Lot ,30 a distance of 12.0 feet; thence Southerly and parallel to the West line of said Block 6 a dist:ance of 130.00 feet; thence Southwest:erly in a straight line to a point 225.0 feet from said Northwest corner of Lot 30 along the West line of Blo~k 6, Reservoir Hills and Block 1, Walton I s Rearrangement of Lots 33 and 34, Block 6, Reservoir Hills; thence North 225.0 feet to the point of beginnlng. Reserving to the City of Columbia Heights' a utility easement over, under and across the East 15.00 feet of the West 27.00 feet: of the above described parcel. Lots 25 through 33 and 34, Block 28, 6, Block 1, Reservoir BJB85055 CL160-70 13 EXIllBIT B PERMfITED ENCUMBRANCES 1. Mineral and mineral rights reserved by the State of Minnesota as is shown in the recital to the Certificate of Title. 2. Mineral and mineral rights reserved by the State of Minnesota as evidenced by a Conveyance of Forfeited Lands dated February 25, 1946 and filed of record on March 7, 1946 as Document No. 115817. 3. Management Agreement dated July 20, 1982, and filed of record on February 9, 1983, as Document No. 607127 and 124953. 4. Roadway and utility easement shown in Quit Claim Deeds dated October 15, 1981, and October 23, 1981, and filed of record on October 20, 1981, as Document No. 580233 and 118551 and November 6, 1981 as Document No. 581375 and 118855. 5. Taxes not yet due and payable. 6. Amended and Restated Assessment Agreement dated November 23, 1994 executed by Housing and Redevelopment Authority in and for the City of Columbia Heights, Minnesota and Zaidan Holdings, Inc. and filed of record on as Document No. and 7. Combination Mortgage, Security Agreement and Fixture Financing Statement dated March 10, 1995 by Mobilia, Ltd. in favor of Northeast State Bank securing an original principal balance of $700,000 and filed of record on as Document No. and 8. Subordinated Mortgage dated March 10, 1995 by Mobilia, Ltd. in favor of the Housing and Redevelopment Authority in and for the City of Columbia Heights securing an original principal amount of $1,015,099 and filed of record on as Document No. and