MORTGAGE, SECURITY AGREEMENT, ASSIGNMENT OF LEASES AND RENTS AND FIXTURE FINANCING STATEMENT
Lease Assignment Agreement
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MORTGAGE, SECURITY AGREEMENT, ASSIGNMENT OF LEASES AND RENTS AND FIXTURE FINANCING STATEMENT
Lease Assignment Agreement
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Prepared by and Return to: Cristina Kuhn, Dorsey & Whitney LLP, 801 Grand, Suite 3900, Des Moines, Iowa 50309, (515) 283-1000
Grantor/Mortgagor/Taxpayer: Art’s-Way Manufacturing Co., Inc., 5556 Hwy 9, Armstrong, IA 50514
Grantee/Mortgagee: The First National Bank of West Union, 115 North Vine, P.O. Box 233, West Union, Iowa 52175
Legal Description: See Exhibit A (Page A-1)
MORTGAGE, SECURITY AGREEMENT,
ASSIGNMENT OF LEASES AND RENTS
AND FIXTURE FINANCING STATEMENT
ART’S-WAY MANUFACTURING CO., INC.
THE FIRST NATIONAL BANK OF WEST UNION
Dated as of May 1, 2010
Notice: This Mortgage secures credit in the amount of $1,300,000. Loans and advances up to this amount, together with interest, are senior to indebtedness to other creditors under subsequently recorded or filed mortgages and liens.
This Mortgage contains an after acquired property clause. This Mortgage constitutes a construction mortgage within the meaning of Iowa Uniform Commercial Code and Section 572.18 of the Code of Iowa.
TABLE OF CONTENTS
This Table of Contents is not a part of this Mortgage and is provided only for convenience of reference.
THIS MORTGAGE, SECURITY AGREEMENT, ASSIGNMENT OF LEASES AND RENTS AND FIXTURE FINANCING STATEMENT (the “Mortgage”), made as of the 1st day of May, 2010, by and between Art’s-Way Manufacturing Co., Inc. (the “Mortgagor”), as Mortgagor, and The First National Bank of West Union (the “Mortgagee”), as Mortgagee.
WHEREAS, pursuant to the provisions of Chapter 16 of the Code of Iowa, 2009, as amended (the “Act”), Iowa Finance Authority (the “Issuer”) has entered into a Loan Agreement, dated as of even date herewith (as amended from time to time, the “Agreement”) with the Mortgagor pursuant to which the Issuer has agreed to issue its $1,300,000 Manufacturing Facility Revenue Note (Art’s-Way Manufacturing Co., Inc. Project), Series 2010 (the “Series 2010 Note”) to (1) finance a Project (as defined in the Loan Agreement) and (2) pay costs of issuance associated with the Series 2010 Note; and
WHEREAS, the Agreement provides that the Issuer will lend the proceeds from the sale of the Series 2010 Note to the Mortgagor and the Mortgagor will pay the Issuer sums sufficient to pay the principal of, interest, and premium, if any, on the Series 2010 Note as and when the same become due; and
WHEREAS, the Agreement further provides that as a condition to the issuance of the Note, to secure performance by the Mortgagor of its obligations under the Agreement, including the payment of sums sufficient to pay the Series 2010 Note and any Additional Notes, as hereinafter defined (together, the “Notes”), and as an inducement to the purchase of the Notes by all who shall at any time become holders thereof, the Mortgagor will execute and deliver this Mortgage to the Mortgagee; and
WHEREAS, the Agreement further provides for the issuance and sale from time to time by the Issuer of bonds, notes or other obligations (the “Additional Notes”) and the issuance or incurrence from time to time by the Mortgagor of Parity Obligations (the “Parity Obligations”) to be of equal standing with the Notes and the Mortgagor’s obligations under the Agreement and secured as a payment and performance by a lien equal to and on a parity with the lien of this Mortgage; and
WHEREAS, the last stated maturity of the Series 2010 Note and the maturity date of this Mortgage, is June 1, 2020.
NOW, THEREFORE, for the purposes of securing the payment of all amounts now or hereafter advanced under the Agreement, owing under the Notes, the Agreement, any Parity Obligations or this Mortgage and the faithful performance of all covenants, conditions, stipulations and agreements of the Notes, any Parity Obligations, the Agreement and this Mortgage contained, and in consideration of the premises, and as an inducement to the purchase of the Notes by all who shall at any time become holders thereof, and other good and valuable consideration the receipt whereof is hereby acknowledged, the Mortgagor has executed and delivered this Mortgage to the Mortgagee and the Mortgagor does hereby grant, bargain, sell, convey, transfer, assign, set over, mortgage, grant a security interest in, and warrant to the Mortgagee, its successors and assigns forever, all and singular the following described properties, whether now owned or hereafter acquired (herein collectively called the “Mortgaged Property”):
A. All of the Mortgagor’s interest in the tract or parcel of land (the “Land”) located in Fayette County, Iowa, that is described in Exhibit A attached hereto;
B. All buildings, structures, additions, improvements and appurtenances now standing or at any time hereafter constructed on or made an integral part of the Land;
C. All building materials, building equipment and fixtures of every kind and nature now or hereafter located on the Land and suitable or intended to be incorporated in any building or structure now or hereafter standing on the Land;
D. All fixtures and articles of personal property that constitute fixtures that will integrally belong to, be or hereafter become an integral part of the Land, and whether attached or detached, and whether now owned or hereafter acquired by Mortgagor, including, but without limiting the generality of the foregoing, any and all carpeting, drapes, screens, awnings, storm windows, floor coverings, call and sprinkler systems, and all attached heating, lighting, ventilating, incinerating, air-conditioning and air-cooling equipment, attached gas and electric machinery, and all of the right, title and interest of the Mortgagor in and to any fixtures which may be subject to any title retention or security agreement superior in lien to the lien of this Mortgage, and all additions, accessions, increases, parts, fittings, accessories, replacements, substitutions, betterments, repairs and proceeds of all of the foregoing, all of which shall be construed as fixtures;
E. Any and all leases, subleases, licenses, concessions or grants of other possessory interests now or hereafter in force, oral or written, covering or affecting the building and improvements to be constructed on the Land;
F. All the rents, issues, uses, profits, condemnation awards, insurance proceeds and other rights and interests now or hereafter belonging or in any way pertaining to the Mortgagor’s interest in the Land and each and every lease, sublease and agreement described in the foregoing paragraph E and every right, title and interest thereunder, from the date of this Mortgage until the terms hereof are complied with and fulfilled; and
G. All machinery, apparatus, equipment, furnishings and personal property wherever located which may or might now or hereafter be or be deemed to be personal property and not an integral part of the Land now owned or hereinafter acquired by the Mortgagor (hereinafter called the “Equipment”) and all accessions, parts, fittings, accessories, replacements, substitutions, betterments, repairs and proceeds of all of the foregoing, and a security interest is hereby granted by the Mortgagor and hereby attaches thereto, all as provided by the Iowa Uniform Commercial Code;
TOGETHER with the reversions, remainders and benefits and all other revenues, rents, earnings, issues and income and profits arising or to arise out of or to be received or had of and from the properties hereby mortgaged or intended so to be or any part thereof and all the estate, right, title, interest and claims, at law or in equity which the Mortgagor now or may hereafter acquire or be or become entitled to in and to the aforesaid properties and any and every part thereof. The above described Mortgaged Property is hereby declared to be subject to the lien of this Mortgage as security for the payment of the aforementioned indebtedness.
TO HAVE AND TO HOLD all and singular, the Mortgaged Property, whether now owned or hereafter acquired, unto the Mortgagee, its successors and assigns forever; provided, however, that this Mortgage is upon the express condition that if the Mortgagor shall pay or cause to be paid all indebtedness secured hereby and shall keep, perform and observe all and singular the covenants and promises in the Notes and in this Mortgage expressed to be kept, performed and observed by the Mortgagor, then this Mortgage and the rights hereby granted shall cease, determine and be void, otherwise to remain in full force and effect.
As additional security for the payment of the Notes and the amounts due under the Agreement and the payment of any Parity Obligations, the Mortgagor hereby further covenants, warrants and agrees with the Mortgagee as follows:
SECTION 1. Terms Defined .
All words and phrases defined in Article I of the Agreement shall have the same meaning in this Mortgage, unless the context clearly otherwise requires. In addition, the following words and phrases shall have the following meanings:
“Net Proceeds”, when used with respect to any insurance or condemnation award, means the gross proceeds from the insurance or condemnation award remaining after payment of all expenses (including attorneys fees and any extraordinary expenses of the Mortgagee) incurred in the collection of such gross proceeds.
“Permitted Encumbrances” means, as of any particular time:
(i) liens for real estate taxes, ad valorem taxes and special assessments or installments thereof not then delinquent;
(ii) presently recorded utility, access and other easements and rights of way which do not underlie any existing or contemplated improvements, restrictions and exceptions that will not materially interfere with or impair any activities permitted under applicable zoning ordinances or the operations currently being conducted on the Mortgaged Property or elsewhere on the Land;
(iii) such minor defects, irregularities, encumbrances (exclusive of liens and judgments) and clouds on title as normally exist with respect to properties similar in character to the Mortgaged Property and as do not in the aggregate render title unmarketable or materially impair (a) the property affected thereby for the purpose for which it was acquired or is held by the Mortgagor or (b) the value of the Mortgaged Property as security for any other obligations secured hereby;
(iv) zoning and building laws, ordinances or regulations and similar restrictions which are not violated by the Mortgaged Property or its current or contemplated uses;
(v) liens arising in connection with taxes, assessments, or statutory obligations or liens which are not delinquent;
(vi) undetermined or inchoate liens and charges incidental to construction, which have not at the time been filed pursuant to law, including those of contractors, subcontractors, materialmen and suppliers with respect to the Project, expressly excluding any such liens or charges as and when same are filed, become determined or a choate lien or encumbrance upon the Mortgaged Property unless such liens are being contested in good faith by appropriate negotiations or proceedings and in a manner not to jeopardize any of the Mortgaged Property or subject the Mortgagee to any liability and adequate reserves as agreed upon by the Mortgagor and the Mortgagee are maintained by the Mortgagor with the Mortgagee in escrow to assure full payment thereof;
(vii) such other liens and charges at the time required by law as a condition precedent to the exercise of any privileges or licenses necessary to the normal operations of the Mortgagor which are not delinquent;
(viii) this Mortgage and any financing statements showing the Mortgagor as the debtor and the Mortgagee as the secured party;
(ix) liens on property received by the Mortgagor through gifts, grants or bequests, such liens being due to restrictions on such gifts, grants or bequests of property or income thereon;
(x) any lien or security interest created in connection with the issuance of Additional Notes or Parity Obligations;
(xi) any subordinate mortgage, security interest or lien;
(xii) any purchase money security interest in personal property acquired by the Mortgagor and any financing statement showing (i) the Mortgagor as debtor and (ii) the holder of such purchase money security interest as the secured party; and
(xiii) any capital lease for personal property being acquired by the Mortgagor and any financing statement showing (i) the Mortgagor as debtor and (ii) the lessor of such personal property as the secured party.
“Repayment Rate” means the rate of 10% per annum.
SECTION 2. Title to the Mortgaged Property and the Status of the Lien of this Mortgage; Maintenance of Lien; Recording; Further Assurance; After-Acquired Property.
(a) The Mortgagor is lawfully seized of the Land and the lien created by this Mortgage is a first, prior and paramount lien on the Mortgagor’s interest in and to the Land and the remainder of the above described Mortgaged Property, except for Permitted Encumbrances, and Mortgagor will keep said premises and the rights, privileges and appurtenances thereto free from all lien claims of every kind on a parity with or superior to the lien of this Mortgage, except Permitted Encumbrances and as otherwise provided in this Mortgage, and if any such lien be filed, Mortgagor, within thirty (30) days after such filing shall cause same to be discharged by payment or protected against by bonding or adequate reserves as agreed upon by the Mortgagor and the Mortgagee being maintained with the Mortgagee in escrow. The Mortgagor further agrees to protect and defend the title and possession of the Mortgaged Property so that this Mortgage shall be and remain a lien thereon prior to all liens other than Permitted Encumbrances until the Notes, any Parity Obligations and the indebtedness secured hereby have been fully paid, or if foreclosure sale be had hereunder so that the purchaser at said sale shall acquire good title in and to said premises free and clear of all liens and encumbrances, except Permitted Encumbrances;
(b) The Mortgagor will, at its expense, take all necessary action to maintain and preserve the lien and security interest of this Mortgage so long as any of the Notes, any Parity Obligations and any of the indebtedness secured hereby remain outstanding;
(c) The Mortgagor will, forthwith after the execution and delivery of this Mortgage and thereafter from time to time, cause this Mortgage and any financing statements in respect thereof to be filed, registered and recorded in such manner and in such places as may be required by law in order to publish notice of and fully to protect the lien hereof upon, and the title of the Mortgagor to, the Mortgaged Property; and from time to time will perform or cause to be performed any other act as provided by law and will execute or cause to be executed any and all continuation statements and further instruments for such publication and protection. Except to the extent that it is exempt therefrom, the Mortgagor will pay or cause to be paid all filing, registration and recording fees incident to such filing, registration and recording, and all expenses incident to the preparation, execution and acknowledgment of this assurance, and all federal or state fees and other similar fees, duties, imposts, assessments and charges arising out of or in connection with the execution and delivery of this Mortgage and such instruments of further assurance;
(d) The Mortgagor will do, execute, acknowledge and deliver, or cause to be done, executed, acknowledged and delivered, all such further acts, deeds, conveyances, mortgages, assignments, transfers, financing statements, continuation statements and assurances as the Mortgagee reasonably may require for the better assuring, conveying, mortgaging, assigning and confirming unto the Mortgagee all and singular the Mortgaged Property as now or hereafter constituted; and
(e) All right, title and interest of the Mortgagor in and to all improvements, betterments, renewals, substitutions, replacements and proceeds of the Mortgaged Property or any part thereof, hereafter constructed or acquired by the Mortgagor, which shall become a part of the Mortgaged Property, immediately upon such construction or acquisition, and without any further mortgaging, conveyance or assignment, shall become and be part of the Mortgaged Property and shall be subject to the lien of this Mortgage as fully and completely and with the same effect as though now owned by the Mortgagor, but at any and all times the Mortgagor will execute and deliver to the Mortgagee any and all such further assurances, mortgages, conveyances or assignments therefor and other instruments with respect thereto as the Mortgagee may reasonably require for the purpose of expressly and specifically subjecting the same to the lien of this Mortgage.
SECTION 3. Payments Under the Agreement.
The Mortgagor agrees to pay the repayment installment and other amounts required by the Agreement and all amounts due under the Notes and any Parity Obligations in accordance with their terms.
SECTION 4. Taxes and Assessments.
The Mortgagor agrees to promptly pay before the same become delinquent:
(a) All taxes, liabilities, charges, impositions and assessments of every type or nature at any time levied and assessed upon or against the Mortgaged Property;
(b) All other claims which might or could become a lien on the Mortgaged Property or any part thereof equal to or prior to the lien of this Mortgage except for Permitted Encumbrances unless approved in writing by the Mortgagee;
(c) All taxes, assessments or impositions upon this Mortgage or on the interest of the Mortgagee herein, or upon the Agreement, the Notes, any Parity Obligations or indebtedness secured hereby.
Provided, however, that no such tax, liability, charge, imposition, assessment or claim need be paid so long as the validity thereof is being contested in good faith by appropriate proceedings and in a manner not to jeopardize any of the Mortgaged Property or to subject the Mortgagee to any liability, and adequate reserves as agreed upon by the Mortgagor and the Mortgagee are maintained by the Mortgagor with the Mortgagee in escrow to assure full payment thereof.
Except as otherwise provided in this Mortgage and the Loan Agreement, the Mortgagor will not allow to arise or exist any lien of whatsoever kind or nature equal to or prior to the lien of this Mortgage, or create, allow to arise or exist any lien thereof upon the Mortgaged Property, or any part thereof, save and except for Permitted Encumbrances which, as herein provided, are permitted to remain unpaid.
The Mortgagor agrees to exhibit to the Mortgagee, at least annually and at any time upon request, official receipts showing payment of all taxes, assessments and charges which the Mortgagor is required or elects to pay hereunder ten days prior to the respective delinquency dates.
SECTION 5. Maintenance and Repair ; Insurance Required to be Carried .
The Mortgagor shall at all times maintain, preserve and keep, or shall cause to be maintained, the Mortgaged Property and every part thereof in good condition, repair and working order (ordinary wear and tear accepted) and will from time to time make, or shall cause to be made, all needful and proper repairs thereto and renewals, replacements, additions, betterments and improvements thereto so that the value and the operating efficiency thereof shall at all times be maintained and preserved. Except for the Project and all improvements related thereto, the Mortgagor will not commit or permit waste of the Mortgaged Property or any part thereof, and shall not remove or demolish nor alter or impair the structural character of any building, structure, or other improvements now or hereafter situated upon the Land without the prior written consent of the Mortgagee. The Mortgagor shall not do or permit any other act or thing that will damage the Mortgaged Property or cause the same or any part thereof to depreciate in value, reasonable and ordinary wear and tear excepted. Notwithstanding the foregoing or the requirements of Section 9 hereof, the Mortgagor may remove and dispose of obsolete, worn out or surplus items of Equipment or replace any item of Equipment with Equipment of equivalent function or utility without consent of the Mortgagee.
The Mortgagor shall maintain insurance on the insurable portions of the Mortgaged Property of a kind and in an amount which normally would be carried by private companies engaged in a similar kind of business, including, but not limited to, comprehensive general public liability insurance, workers’ compensation insurance, use and occupancy insurance, professional liability insurance, business interruption and boiler insurance.
SECTION 6. Inspection of the Mortgaged Property.
The Mortgagee may (but has no duty to) by itself, its agents or workmen enter and inspect during normal business hours and upon providing reasonable notice to Mortgagor, unless an Event of Default has occurred, any part of the Mortgaged Property for the purpose of inspecting the same and for the purpose of performing any of the acts it is authorized to perform under the terms of this Mortgage.
SECTION 7. Compliance with Laws.
The Mortgagor shall furnish and keep in force a certificate of occupancy, or its equivalent, and shall comply with all laws, ordinances, regulations, covenants, conditions and restrictions from time to time affecting the Mortgaged Property and shall not suffer or permit any act to be done in or upon the Mortgaged Property in violation thereof, unless and to the extent the same are being contested in good faith by appropriate proceedings and in a manner not to jeopardize the Mortgaged Property or the lien or priority of this Mortgage or the Notes or subject the Mortgagee to any liability.
Except as heretofore disclosed by the Mortgagor to Mortgagee in writing, the Mortgagor has no knowledge of any public health, environmental or other land-use action or proceeding, either instituted or threatened, which would or might materially and detrimentally affect the use or operation of the Mortgaged Property or materially and adversely affect the value thereof. Promptly upon learning of any such action or proceeding, whether threatened or initiated, the Mortgagor will notify the Mortgagee thereof in writing.