SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities and Exchange Act of 1934
Date of Report (Date of earliest event reported): December 30, 1997
Microware Systems Corporation
(Exact name of registrant as specified in its charter)
Iowa 0-27988 42-1073916
(State or other jurisdiction (Commission (I.R.S. Employer
of incorporation) File number) Identification No.)
1500 Northwest 118th Street, Des Moines, IA 50325
(Address of principal executive offices) (Zip Code)
<PAGE>
Item 2. Acquisition or Disposition of Assets
On December 30, 1997, the Company, through a newly organized wholly-owned
subsidiary, Microware Systems Corporate Park, Inc., executed a promissory note
with GMAC Commercial Mortgage Corporation in the amount of $7,000,000.00
secured by the Company's corporate headquarters facility and associated real
estate at 1500 N.W. 118th Street, Des Moines, Iowa 50325. The Company
established Microware Systems Corporate Park, Inc. in connection with this
financing transaction for the sole purpose, as provided in the subsidiary's
articles of incorporation, of holding the property subject to the mortgage.
Item 7. Financial Statements and Exhibits.
(c) Exhibits.
10.1 Promissory Note of Microware Systems Corporate Park,
Inc. dated December 30, 1997
10.2 Mortgage, Assignment of Rents and Security Agreement
between Microware Systems Corporate Park, Inc. and GMAC
Commercial Mortgage Corporation dated December 30, 1997
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this Report to be signed on its behalf by the
undersigned thereunto duly authorized.
Dated: January 14, 1998 MICROWARE SYSTEMS CORPORATION
By: /s/Kent R. Kelderman
Name: Kent R. Kelderman
Title: Executive Vice President and
Chief Financial Officer
<PAGE>
EXHIBIT INDEX
Exhibit
Number Description of Document Page
10.1 Promissory Note between the Company and GMAC Commercial
Mortgage Corporation dated December 30, 1997
10.2 Mortgage, Assignment of Rents and Security Agreement
between the Company and GMAC Commercial Mortgage
Corporation dated December 30, 1997
Exhibit 10.1
PROMISSORY NOTE
US $7,000,000.00 Clive, Iowa
December 30, 1997
FOR VALUE RECEIVED, the undersigned promise to pay GMAC Commercial
Mortgage Corporation, a California corporation, or order, the principal sum of
Seven Million Dollars ($7,000,000.00), with interest on the unpaid principal
balance from the date of this Note, until paid, at the rate of Seven and
Forty-Six Hundredths Percent (7.46%)per annum. The principal and interest
shall be payable at 650 Dresher Road, Horsham, Pennsylvania 19044-8015, or
such other place as the holder hereof may designate in writing, in consecutive
monthly installments of Forty-Eight Thousand Seven Hundred Fifty-Three and
43/100 Dollars ($48,753.43) on the First day of each month beginning February
1, 1998 , (herein "amortization commencement date"), until the entire
indebtedness evidenced hereby is fully paid, except that any remaining
indebtedness, if not sooner paid, shall be due and payable on January 1, 2008
(the "Maturity Date").
If any installment under this Note is not paid when due, the entire
principal amount outstanding hereunder and accrued interest thereon shall at
once become due and payable, at the option of the holder hereof. The holder
hereof may exercise this option to accelerate during any default by the
undersigned regardless of any prior forbearance. In the event of any default
in the payment of this Note or any other payment due under the Instrument or
any other Loan Document (as such terms are hereinafter defined) and if the
same is referred to an attorney at law for collection or any action at law or
in equity is brought with respect hereto, the undersigned shall pay the holder
hereof all expenses and costs, including, but not limited to, attorneys' fees.
If any installment under this Note is not received by the holder hereof
within ten (10) calendar days after the installment is due, the undersigned
shall pay to the holder hereof a late charge of the greater of (a) US$250.00
or (b) five percent (5%) of such installment, such late charge to be
immediately due and payable without demand by the holder hereof. If any
installment under this Note or any other monetary payment due under this Note,
the Instrument or any other Loan Document remains past due for ten (10)
calendar days or more, the outstanding principal balance of this Note shall
bear interest during the period in which the undersigned is in default at a
rate of Twelve and Forty-Six Hundredths Percent (12.46%) per annum, or if
there shall exist any non-monetary default under this Note, the Instrument or
any other Loan Document which remains uncured for the later of (i) ten (10)
calendar days or (ii) the expiration of any applicable grace or cure period
specifically provided in the Instrument, the outstanding principal balance of
this Note shall bear interest during the period the undersigned is in default
at the rate of Nine and Forty-Six Hundredths Percent (9.46%) per annum, or, if
such increased rate of interest may not be collected from the undersigned
under applicable law, then at the maximum increased rate of interest, if any,
which may be collected from the undersigned under applicable law.
From time to time, without affecting the obligation of the undersigned or
the successors or assigns of the undersigned to pay the outstanding principal
balance of this Note and observe the covenants of the undersigned contained
herein, in the Instrument or in any other Loan Document without affecting the
guaranty of any person, corporation, partnership or other entity for payment
of the outstanding principal balance of this Note, without giving notice to or
obtaining the consent of the undersigned, the successors or assigns of the
undersigned or guarantors, and without liability on the part of the holder
hereof, the holder hereof may, at the option of the holder hereof, extend the
time for payment of said outstanding principal balance or any part thereof,
reduce the payments thereon, release anyone liable on any of said outstanding
principal balance, accept a renewal of this Note, modify the terms and time of
payment of said outstanding principal balance, join in any extension or
subordination agreement, release any security given herefor, take or release
other or additional security, and agree in writing with the undersigned to
modify the rate of interest or period of amortization of this Note or change
the amount of the monthly installments payable hereunder.
Presentment, notice of dishonor, and protest are hereby waived by all
makers, sureties, guarantors and endorsers hereof. This Note shall be the
joint and several obligation of all makers, sureties, guarantors, and
endorsers, and shall be binding upon them and their successors and assigns.
The indebtedness evidenced by this Note is secured by, among other
things, that certain Mortgage, Assignment of Rents and Security Agreement (the
"Instrument"), executed by the undersigned, encumbering real property more
particularly described therein (the "Property"), dated of even date herewith,
and reference is made thereto for rights as to acceleration of the
indebtedness evidenced by this Note.
Prior to and through December 31, 2001, this Note may not be prepaid in
whole or (except as hereinafter provided) in part. Commencing January 1, 2002
and continuing through and including June 30, 2007, this Note may only be
prepaid (whether voluntarily or involuntarily, except as hereinafter provided,
and including any acceleration by the holder hereof) in whole (but not in
part) upon not less than forty five (45) days and not more than ninety (90)
days prior written notice by the undersigned to the holder hereof and the
simultaneous payment by the undersigned to the holder hereof of an amount (the
"Yield Maintenance Premium") equal to the aggregate (without duplication) of:
(a) the product obtained by multiplying (1) the entire unpaid
principal balance of this Note at the time of prepayment, times (2)
the difference obtained by subtracting from the interest rate on
this Note the yield rate (the "Yield Rate") on the 6.125% U.S.
Treasury Security due August 15, 2007 (the "Specified U.S. Treasury
Security"), as the Yield Rate is reported in the Wall Street Journal
on the fifth Business Day (as hereinafter defined) preceding (x) the
date notice of prepayment is given to holder hereof where prepayment
is voluntary, or (y) the date holder hereof accelerates the Loan (as
hereinafter defined), times (3) the present value factor calculated
using the following formula:
1-(1 + r)-n
r
r = Yield Rate
n = the number of years, and any fraction thereof,
remaining between the prepayment date and the
Maturity Date.
In the event that no Yield Rate is published for the Specified
U.S. Treasury Security, then the nearest equivalent U.S. Treasury
Security shall be selected at the holder hereof's sole discretion.
If the publication of such Yield Rates in the Wall Street Journal is
discontinued, the holder hereof shall determine such Yield Rates
from another source selected by the holder hereof. As used herein,
the term "Business Day" means any day other than a Saturday, a
Sunday, or any other day on which the holder hereof is not open for
business; and
(b) an amount equal to the interest which would have accrued
on the amount of such prepayment during the remaining days of the
full calendar month within which such prepayment is made.
In the event of a prepayment of this Note after June 30, 2007 Borrower
shall pay, together with the amount of such prepayment, an amount equal to the
interest which would have been accrued on the amount of such prepayment during
the remaining days of the full calendar month within which such prepayment is
made.
The undersigned shall pay the Yield Maintenance Premium whether the
prepayment is voluntary or involuntary (in connection with holder hereof's
acceleration of the unpaid principal balance of this Note) or the Instrument
is satisfied or released by foreclosure (whether by power of sale or judicial
proceeding), deed in lieu of foreclosure or by any other means.
Notwithstanding any other provision herein to the contrary, the undersigned
shall not be required to pay any Yield Maintenance Premium in connection with
any prepayment occurring as a result of the application of insurance proceeds
or condemnation awards under the Instrument.
The Yield Maintenance Premium is not a penalty or additional interest,
but is holder hereof's cost of liquidating its investments in the event of any
prepayment of this Note. The undersigned hereby covenants and agrees to
indemnify holder hereof and hold it harmless from any costs, fees, expenses
(including attorney's fees) resulting from any action, litigation or judicial
decision alleging, claiming or holding that the Yield Maintenance Premium is a
penalty or additional interest, and from any damages (whether compensatory or
punitive) ordered by a court, judge or administrative law judge which may
determine that the Yield Maintenance Premium is a penalty or additional
interest.
Notwithstanding anything herein contained to the contrary, any permitted
prepayment of this Note may only be made by payment of the principal amount to
be prepaid together with (i) the applicable Yield Maintenance Premium, (ii)
all accrued and unpaid interest and (iii) any other sums due under this Note,
the Instrument or any other Loan Document.
Subject to the qualifications below in this paragraph, the undersigned
shall be liable for payment and performance of all of the obligations,
covenants and agreements of the undersigned under this Note, the Instrument,
the Assignment of Leases and Rents (herein so called), dated of even date
herewith, and executed by the undersigned to the holder hereof, the
Environmental Indemnity Agreement (herein so called), dated of even date
herewith, and executed by the undersigned and the holder hereof, and all other
instruments and documents evidencing, securing or governing the terms of the
loan (the "Loan") evidenced by this Note (collectively, the "Loan Documents"),
to the full extent (but only to the extent) of all of the Property and any
other items, property or amounts which are collateral or security for the
Loan. If a default occurs in the timely and proper payment of any portion of
such indebtedness or in the timely performance of any obligations, agreements
or covenants under any of the Loan Documents, except as set forth below in
this paragraph, neither the undersigned, nor any partner of the undersigned,
nor any partner, stockholder, director or officer of any partner of the
undersigned, shall be personally liable for the repayment of any of the
principal of, interest on, or prepayment fees or late charges, or other
charges or fees, due in connection with, the Loan, the performance of any
covenants of the undersigned under this Note, the Instrument or any of the
other Loan Documents or for any deficiency judgment which the holder hereof
may obtain after default by the undersigned. Notwithstanding the foregoing
provisions of this paragraph or any other agreement, the undersigned shall be
fully and personally liable for any and all: (1) liabilities, costs, losses,
damages, expenses or claims (including, without limitation, any reduction in
the value of the Property or any other items, property or amounts which are
collateral or security for the Loan) suffered or incurred by the holder hereof
by reason of or in connection with (a) any fraud or misrepresentation by the
undersigned in connection with the Loan, including but not limited to any
misrepresentation of the undersigned contained in any Loan Document, (b) any
failure to pay taxes, insurance premiums (except to the extent that such taxes
and insurance premiums are then held by the holder hereof), assessments,
charges for labor or materials or other charges that can create liens on any
portion of the Property, (c) any misapplication of (i) proceeds of insurance
covering any portion of the Property, or (ii) proceeds of the sale or
condemnation of any portion of the Property, (d) any rentals, income, profits,
issues and products received by or on behalf of the undersigned subsequent to
the date on which the holder hereof gives written notice that a default has
occurred under the Loan and not applied to the payment of principal or
interest due under this Note or the payment of operating expenses (excluding
any operator's, manager's, or developer's fee payable to the undersigned or
any affiliate of the undersigned) of the Property, (e) any failure to
maintain, repair or restore the Property in accordance with any Loan Document,
to the extent not covered by insurance proceeds made available to the holder
hereof, (f) any failure by the undersigned to deliver to the holder hereof all
unearned advance rentals and security deposits paid by tenants of the Property
received by or on behalf of the undersigned, and not refunded to or forfeited
by such tenants, (g) any failure by the undersigned to return to, or reimburse
the holder hereof for, all personalty taken from the Property by or on behalf
of the undersigned, except in accordance with the provisions of the
Instrument, and (h) any and all indemnities given by the undersigned to the
holder hereof set forth in the Environmental Indemnity Agreement or any other
Loan Document in connection with any environmental matter relating to the
Property; and (2) court costs and all attorneys' fees provided for in any Loan
Document. Furthermore, no limitation of liability or recourse provided above
in this paragraph shall (x) apply to the extent that the holder hereof's
rights of recourse to the Property are suspended, reduced or impaired by or as
a result of any act, omission or misrepresentation of the undersigned or any
other party now or hereafter liable for any part of the Loan and accrued
interest thereon, or by or as a result of any case, action, suit or proceeding
to which the undersigned or any such other party, voluntarily becomes a party;
or (y) constitute a waiver, forfeiture, abrogation or limitation of or on any
right accorded by any law establishing a debtor relief proceeding, including,
but not limited to, Title 11, U.S. Code, which right provides for the
assertion in such debtor relief proceeding of a deficiency arising by reason
of the insufficiency of collateral notwithstanding an agreement of the holder
hereof not to assert such deficiency.
This Note shall be governed by and construed in accordance with the law
of the state in which the Property is located, and applicable federal law.
The parties hereto intend to conform strictly to the applicable usury laws.
In no event, whether by reason of demand for payment, prepayment, acceleration
of the maturity hereof or otherwise, shall the interest contracted for,
charged or received by the holder hereof hereunder or otherwise exceed the
maximum amount permissible under applicable law. If from any circumstance
whatsoever interest would otherwise be payable to the holder hereof in excess
of the maximum lawful amount, the interest payable to the holder hereof shall
be reduced automatically to the maximum amount permitted by applicable law.
If the holder hereof shall ever receive anything of value deemed interest
under applicable law which would apart from this provision be in excess of the
maximum lawful amount, an amount equal to any amount which would have been
excessive interest shall be applied to the reduction of the principal amount
owing hereunder in the inverse order of its maturity and not to the payment of
interest, or if such amount which would have been excessive interest exceeds
the unpaid balance of principal hereof, such excess shall be refunded to the
undersigned. All interest paid or agreed to be paid to the holder hereof
shall, to the extent permitted by applicable law, be amortized, prorated,
allocated, and spread throughout the full stated term (including any renewal
or extension) of such indebtedness so that the amount of interest on account
of such indebtedness does not exceed the maximum permitted by applicable law.
The provisions of this paragraph shall control all existing and future
agreements between the undersigned and the holder hereof.
THE UNDERSIGNED HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES
ANY RIGHT THE UNDERSIGNED MAY HAVE TO A TRIAL BY JURY IN RESPECT TO ANY
LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER OR IN CONJUNCTION WITH THIS
NOTE, THE INSTRUMENT, ANY OTHER LOAN DOCUMENT, ANY OTHER AGREEMENT
CONTEMPLATED TO BE EXECUTED IN CONNECTION HEREWITH, OR ANY COURSE OF CONDUCT,
COURSE OF DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTIONS OF EITHER
PARTY.
The holder hereof shall have the right to assign, in whole or in part,
this Note, the Instrument and any other Loan Document and all of its rights
hereunder and thereunder, and all of the provisions herein and therein shall
continue to apply to the Loan. The holder hereof shall have the right to
participate the Loan with other parties.
Interest on the principal sum of this Note shall be calculated on the
basis of the actual number of days elapsed over a year consisting of 360 days.
Interest on this Note shall be paid in arrears.
The undersigned shall pay the holder hereof, in advance, on the date
hereof, interest only on the outstanding principal balance of this Note, at
the interest rate first mentioned above, from the date hereof through and
including the last day of the calendar month in which this Note is executed.
<PAGE>
Executed as of the date set forth above.
Microware Systems Corporate Park, Inc.,
an Iowa Corporation
By: /s/ Kenneth B. Kaplan
Kenneth B. Kaplan, President
Exhibit 10.2
MORTGAGE,
ASSIGNMENT OF RENTS AND SECURITY AGREEMENT
THIS MORTGAGE (herein "Instrument") is made this 30th day of December,
1997, between the Mortgagor/Grantor, Microware Systems Corporate Park, Inc.,
an Iowa corporation, whose address is 1500 N.W. 118th Street, Clive, Iowa
50325 (herein "Borrower"), and the Mortgagee, GMAC Commercial Mortgage
Corporation, a California corporation, a corporation organized and existing
under the laws of Iowa, whose address is 650 Dresher Road, Horsham,
Pennsylvania 19044-8015, together with its successors, assigns and
transferees, (herein "Lender").
WHEREAS, Borrower is indebted to Lender in the principal sum of Seven
Million Dollars ($7,000,000.00), which indebtedness is evidenced by Borrower's
note dated of even date herewith (herein "Note"), providing for monthly
installments of principal and interest, with the balance of the indebtedness,
if not sooner paid, due and payable on January 1, 2008 (the "Maturity Date");
TO SECURE TO LENDER (a) the repayment of the indebtedness evidenced by
the Note with interest thereon, and all renewals, extensions and modifications
thereof; (b) the repayment of any future advances with interest thereon, made
by Lender to Borrower pursuant to paragraph 40 hereof (herein "Future
Advances"); (c) the performance of the covenants and agreements of Borrower
contained in an Environmental Indemnity Agreement (herein so-called) between
Lender, Borrower and Principal (as defined in the Environmental Indemnity
Agreement) dated of even date herewith; (d) the payment of all other sums,
with interest thereon, advanced in accordance herewith to protect the security
of this Instrument; and (e) the performance of the covenants and agreements of
Borrower herein contained, or contained in any other Loan Document (as
hereinafter defined), Borrower does hereby mortgage, grant, convey and assign
to Lender, its successors, assigns and transferees,0 the following described
property located in Polk County, State of Iowa, and more particularly
described on Exhibit "A" attached hereto and incorporated herein by reference
for all purposes,
TOGETHER with all buildings, improvements, and tenements now or hereafter
erected on the property, and all heretofore or hereafter vacated alleys and
streets abutting the property, and all easements, rights, appurtenances, rents
(subject however to the assignment of rents to Lender herein), royalties,
mineral, oil and gas rights and profits, water, water rights, and water stock
appurtenant to the property, and all fixtures, machinery, equipment, engines,
boilers, incinerators, building materials, appliances and goods of every
nature whatsoever now or hereafter located in, or on, or used, or intended to
be used in connection with the property, including, but not limited to, those
for the purposes of supplying or distributing heating, cooling, electricity,
gas, water, air and light; and all elevators, and related machinery and
equipment, fire prevention and extinguishing apparatus, security and access
control apparatus, plumbing, bath tubs, water heaters, water closets, sinks,
ranges, stoves, refrigerators, dishwashers, disposals, washers, dryers,
awnings, storm windows, storm doors, screens, blinds, shades, curtains and
curtain rods, mirrors, cabinets, panelling, rugs, attached floor coverings,
furniture, pictures, antennas, trees and plants, tax refunds, trade names,
licenses, permits, Borrower's rights to insurance proceeds, unearned insurance
premiums and choses in action; all of which, including replacements and
additions thereto, shall be deemed to be and remain a part of the real
property covered by this Instrument; and all of the foregoing, together with
said property (or the leasehold estate in the event this Instrument is on a
leasehold ) are herein referred to as the "Property";
TOGETHER with all right, title and interest in, to and under any and all
leases now or hereinafter in existence (as amended or supplemented from time
to time) and covering space in or applicable to the Property (hereinafter
referred to collectively as the "Leases" and singularly as a "Lease"),
together with all rents, earnings, income, profits, benefits and advantages
arising from the Property and from said Leases and all other sums due or to
become due under and pursuant thereto, and together with any and all
guarantees of or under any of said Leases, and together with all rights,
powers, privileges, options and other benefits of Borrower as lessor under the
Leases, including, without limitation, the immediate and continuing right to
receive and collect all rents, income, revenues, issues, profits, condemnation
awards, insurance proceeds, moneys and security payable or receivable under
the Leases or pursuant to any of the provisions thereof, whether as rent or
otherwise, the right to accept or reject any offer made by any tenant pursuant
to its Lease to purchase the Property and any other property subject to the
Lease as therein provided and to perform all other necessary or appropriate
acts with respect to such Leases as agent and attorney-in-fact for Borrower,
and the right to make all waivers and agreements, to give and receive all
notices, consents and releases, to take such action upon the happening of a
default under any Lease, including the commencement, conduct and consummation
of proceedings at law or in equity as shall be permitted under any provision
of any Lease or by any law, and to do any and all other things whatsoever
which the Borrower is or may become entitled to do under any such Lease
together with all accounts receivable, contract rights, franchises, interests,
estates or other claims, both at law and in equity, relating to the Property,
to the extent not included in rent earnings and income under any of the
Leases;
TOGETHER with all right, title and interest in, to and under any and all
reserve, deposit or escrow accounts (the "Accounts") made pursuant to any loan
document made between Borrower and Lender with respect to the Property,
together with all income, profits, benefits and advantages arising therefrom,
and together with all rights, powers, privileges, options and other benefits
of Borrower under the Accounts, and together with the right to do any and all
other things whatsoever which the Borrower is or may become entitled to do
under the Accounts;
TOGETHER with all agreements, contracts, certificates, guaranties,
warranties, instruments, franchises, permits, licenses, plans, specifications
and other documents, now or hereafter entered into, and all rights therein and
thereto, pertaining to the use, occupancy, construction, management or
operation of the Property and any part thereof and any improvements or
respecting any business or activity conducted on the Property and any part
thereof and all right, title and interest of Borrower therein, including the
right to receive and collect any sums payable to Borrower thereunder and all
deposits or other security or advance payments made by Borrower with respect
to any of the services related to the Property or the operation thereof;
TOGETHER with all tradenames, trademarks, servicemarks, logos,
copyrights, goodwill, books and records and all other general intangibles
relating to or used in connection with the operation of the Property; and
TOGETHER with any and all proceeds resulting or arising from the
foregoing (collectively, the "Collateral").
Borrower covenants that Borrower is lawfully seised of the estate hereby
conveyed and has the right to mortgage, grant, convey and assign the Property
(and, if this Instrument is on a leasehold, that the ground lease is in full
force and effect without modification except as noted above and without
default on the part of either lessor or lessee thereunder), that the Property
is unencumbered, and that Borrower will warrant and defend generally the title
to the Property against all claims and demands, subject to any easements and
restrictions listed in a schedule of exceptions to coverage in any title
insurance policy insuring Lender's interest in the Property.
UNIFORM COVENANTS. Borrower and Lender covenant and agree as follows:
1. PAYMENT OF PRINCIPAL AND INTEREST. Borrower shall promptly pay when due
the principal of and interest on the indebtedness evidenced by the Note, any
prepayment and late charges provided in the Note and all other sums secured by
this Instrument.
2. FUNDS FOR TAXES, INSURANCE AND OTHER CHARGES. Subject to applicable law
or to a written waiver by Lender, Borrower shall pay to Lender on the day
monthly installments of principal or interest are payable under the Note (or
on another day designated in writing by Lender), until the Note is paid in
full, a sum (herein "Funds") equal to one-twelfth of (a) the yearly taxes and
assessments which may be levied on the Property, (b) the yearly ground rents,
if any, ( c) the yearly premium installments for fire and other hazard
insurance, rent loss insurance and such other insurance covering the Property
as Lender may require pursuant to paragraph 5 hereof, (d) the yearly premium
installments for mortgage insurance, if any, and (e) if this Instrument is on
a leasehold, the yearly fixed rents, if any, under the ground lease, all as
reasonably estimated initially and from time to time by Lender on the basis of
assessments and bills and reasonable estimates thereof. Any waiver by Lender
of a requirement that Borrower pay such Funds may be revoked by Lender, in
Lender's sole discretion, at any time upon notice in writing to Borrower.
Lender may require Borrower to pay to Lender, in advance, such other Funds for
other taxes, charges, premiums, assessments and impositions in connection with
Borrower or the Property which Lender shall reasonably deem necessary to
protect Lender's interests (herein "Other Impositions"). Unless otherwise
provided by applicable law, Lender may require Funds for Other Impositions to
be paid by Borrower in a lump sum or in periodic installments, at Lender's
option.
The Funds shall be held in an institution(s) the deposits or accounts of
which are insured or guaranteed by a Federal or state agency (including Lender
if Lender is such an institution). Lender shall apply the Funds to pay said
rents, taxes, assessments, insurance premiums and Other Impositions so long as
Borrower is not in breach of any covenant or agreement of Borrower in this
Instrument. Lender shall make no charge for so holding and applying the
Funds, analyzing said account or for verifying and compiling said assessments
and bills, unless Lender pays Borrower interest, earnings or profits on the
Funds and applicable law permits Lender to make such a charge. Borrower and
Lender may agree in writing at the time of execution of this Instrument that
interest on the Funds shall be paid to Borrower, and unless such agreement is
made or applicable law requires interest, earnings or profits to be paid,
Lender shall not be required to pay Borrower any interest, earnings or profits
on the Funds. Lender shall give to Borrower, without charge, an annual
accounting of the Funds in Lender's normal format showing credits and debits
to the Funds and the purpose for which each debit to the Funds was made. The
Funds are pledged as additional security for the sums secured by this
Instrument.
If the amount of the Funds held by Lender at the time of the annual
accounting thereof shall exceed the amount deemed necessary by Lender to
provide for the payment of taxes, assessments, insurance premiums, rents and
Other Impositions, as they fall due, such excess shall be credited to Borrower
on the next monthly installment or installments of Funds due. If at any time
the amount of the Funds held by Lender shall be less than the amount deemed
necessary by Lender to pay taxes, assessments, insurance premiums, rents and
Other Impositions, as they fall due, Borrower shall pay to Lender any amount
necessary to make up the deficiency within thirty days after notice from
Lender to Borrower requesting payment thereof.
Upon Borrower's breach of any covenant or agreement of Borrower in this
Instrument, Lender may apply, in any amount and in any order as Lender shall
determine in Lender's sole discretion, any Funds held by Lender at the time of
application (i) to pay rents, taxes, assessments, insurance premiums and Other
Impositions which are now or will hereafter become due, or (ii) as a credit
against sums secured by this Instrument. Upon payment in full of all sums
secured by this Instrument, Lender shall promptly refund to Borrower any Funds
held by Lender.
3. APPLICATION OF PAYMENTS. Unless applicable law provides otherwise, all
payments received by Lender from Borrower under the Note or this Instrument
shall be applied by Lender in the following order of priority: (i) amounts
payable to Lender by Borrower under paragraph 2 hereof; (ii) interest payable
on the Note; (iii) principal of the Note; (iv) interest payable on advances
made pursuant to paragraph 8 hereof; (v) principal of advances made pursuant
to paragraph 8 hereof; (vi) interest payable on any Future Advance, provided
that if more than one Future Advance is outstanding, Lender may apply payments
received among the amounts of interest payable on the Future Advances in such
order as Lender, in Lender's sole discretion, may determine; (vii) principal
of any Future Advance, provided that if more than one Future Advance is
outstanding, Lender may apply payments received among the principal balances
of the Future Advances in such order as Lender, in Lender's sole discretion,
may determine; and (viii) any other sums secured by this Instrument in such
order as Lender, at Lender's option, may determine: provided, however, that
Lender may, at Lender's option, apply any sums payable pursuant to paragraph 8
hereof prior to interest on and principal of the Note, but such application
shall not otherwise affect the order of priority of application specified in
this paragraph 3.
4. CHARGES; LIENS. Borrower shall pay all rents, taxes, assessments,
premiums, and Other Impositions attributable to the Property at Lender's
option in the manner provided under paragraph 2 hereof or, if not paid in such
manner, by Borrower making payment, when due, directly to the payee thereof,
or in such other manner as Lender may designate in writing. Borrower shall
promptly furnish to Lender all notices of amounts due under this paragraph 4,
and in the event Borrower shall make payment directly, Borrower shall promptly
furnish to Lender receipts evidencing such payments. Borrower shall promptly
discharge any lien, which has, or may have, priority over or equality with,
the lien of this Instrument, and Borrower shall pay, when due, the claims of
all persons supplying labor or materials to or in connection with the
Property. Without Lender's prior written permission, Borrower shall not allow
any lien inferior to this Instrument to be perfected against the Property.
5. HAZARD INSURANCE. Borrower shall keep the improvements now existing or
hereafter erected on the Property insured by carriers at all times
satisfactory to Lender against loss by fire, hazards included within the term
"extended coverage", rent loss and such other hazards, casualties, liabilities
and contingencies as Lender (and, if this Instrument is on a leasehold, the
ground lease) shall require and in such amounts and for such periods as Lender
shall require. Borrower shall purchase policies of insurance with respect to
the Property with such insurers, in such amounts and covering such risks as
shall be satisfactory to Lender, including, but not limited to, (i) personal
injury and death; (ii) loss or damage by fire, lightning, hail, windstorm,
explosion, hurricane (to the extent available), and such other hazards,
casualties and contingencies (including at least twelve (12) months rental
insurance in an amount equal to the gross rentals for such period and broad
form boiler and machinery insurance) as are normally and usually covered by
extended coverage policies in effect where the Property is located and
comprehensive general public liability insurance in an amount not less than
$1,000,000.00 and containing an "Ordinance or Law Coverage" or "Enforcement"
endorsement if any of the improvements or the use of the Property shall at any
time constitute legal nonconforming structures or uses; provided, that each
policy shall provide by way of endorsement, rider or otherwise that no such
insurance policy shall be cancelled, endorsed, altered, or reissued to effect
a change in coverage unless such insurer shall have first given Lender thirty
(30) days prior written notice thereof, such policy shall be on a replacement
cost basis, with a waiver of depreciation, in an amount not less than that
necessary to comply with any coinsurance percentage stipulated in the policy,
but not less than one hundred percent (100%) of the insurable value (based
upon replacement cost) of the Property and the deductible clause, if any, of
the fire and extended coverage policy may not exceed one percent (1%) of the
face amount of the policy ; (iii) loss or damage by flood, if the Property is
in an area designated by the Secretary of Housing and Urban Development as an
area having special flood hazards, in an amount equal to the principal amount
of the Note or the maximum amount available under the Flood Disaster
Protection Act of 1973, and regulations issued pursuant thereto, as amended
from time to time, whichever is less, in form complying with the "insurance
purchase requirement" of that Act; and (iv) such other insurance and
endorsements, if any, as Lender may require from time to time, or which is
required by the Loan Documents. Borrower shall cause all insurance (except
general public liability insurance) carried in accordance with this paragraph
5 to be payable to Lender as a mortgagee and not as a coinsured, and, in the
case of all policies of insurance carried by each lessee for the benefit of
Borrower, if any, to cause all such policies to be payable to Lender as
Lender's interest may appear. All premiums on insurance policies shall be
paid, in the manner provided under paragraph 2 hereof, or in such other manner
as Lender may designate in writing.
All insurance policies and renewals thereof shall be in a form acceptable
to Lender and shall include a standard mortgagee clause in favor of and in
form acceptable to Lender. Lender shall have the right to hold the policies,
and Borrower shall promptly furnish to Lender all renewal notices and all
receipts of paid premiums. At least thirty (30) days prior to the expiration
date of a policy, Borrower shall deliver to Lender a renewal policy in form
satisfactory to Lender. If this Instrument is on a leasehold, Borrower shall
furnish Lender a duplicate of all policies, renewal notices, renewal policies
and receipts of paid premiums if, by virtue of the ground lease, the originals
thereof may not be supplied by Borrower to Lender.
In the event of loss, Borrower shall give immediate written notice to the
insurance carrier and to Lender. Borrower hereby authorizes and empowers
Lender as attorney-in-fact for Borrower to make proof of loss, to adjust and
compromise any claim under insurance policies, to appear in and prosecute any
action arising from such insurance policies, to collect and receive insurance
proceeds, and to deduct therefrom Lender's expenses incurred in the collection
of such proceeds; provided however, that nothing contained in this paragraph 5
shall require Lender to incur any expense or take any action hereunder.
Borrower further authorizes Lender, at Lender's option, (a) to hold the
balance of such proceeds to be used to reimburse Borrower for the cost of
reconstruction or repair of the Property or (b) subject to the immediately
following paragraph, to apply such proceeds to the payment of the sums secured
by this Instrument whether or not then due, in the order of application set
forth in paragraph 3 hereof (subject, however, to the rights of the lessor
under the ground lease if this Instrument is on a leasehold).
Lender shall not exercise Lender's option to apply insurance proceeds to
the payment of the sums secured by this Instrument if all of the following
conditions are met: (i) Borrower is not in breach or default of any covenant
or agreement of this Instrument, the Note or any other Loan Document; (ii)
Lender determines that there will be sufficient funds to restore and repair
the Property to the Pre-existing Condition (as hereinafter defined); (iii)
Lender agrees in writing that the rental income of the Property, after
restoration and repair of the Property to the Pre-existing Condition, will be
sufficient to meet all operating costs and other expenses, payments for
reserves and loan repayment obligations (including any obligations under any
permitted subordinate financing) relating to the Property and maintain a debt
service coverage ratio of at least 1.3 to 1.0; (iv) Lender determines that
restoration and repair of the Property to the Pre-existing Condition will be
completed within one year of the date of the loss or casualty to the Property,
but in no event later than six months prior to the Maturity Date; (v) less
than fifty percent (50%) of the total floor area of the improvements has been
damaged, destroyed or rendered unusable as a result of such fire or other
casualty; (vi) tenant leases demising in the aggregate at least fifty percent
(50%) of the total rentable space in the Property and in effect as of the date
of the occurrence of such fire or other casualty remain in full force and
effect during and after the completion of the restoration and repair of the
Property and Borrower furnishes to Lender evidence satisfactory to Lender that
the existing tenant(s) at the time of the casualty loss shall continue to
operate its business at the Property notwithstanding the occurrence of any
such fire or other casualty; and (vii) Lender is reasonably satisfied that the
Property can be restored and repaired as nearly as possible to the condition
it was in immediately prior to such casualty and in compliance with all
applicable zoning, building and other laws and codes (the "Pre-existing
Condition"). If Lender elects to make the insurance proceeds available for
the restoration and repair of the Property, Borrower agrees that, if at any
time during the restoration and repair, the cost of completing such
restoration and repair, as determined by Lender, exceeds the undisbursed
insurance proceeds, Borrower shall, immediately upon demand by Lender, deposit
the amount of such excess with Lender, and Lender shall first disburse such
deposit to pay for the costs of such restoration and repair on the same terms
and conditions as the insurance proceeds are disbursed.
If the insurance proceeds are held by Lender to reimburse Borrower for
the cost of restoration and repair of the Property, the Property shall be
restored to the equivalent of its original condition or such other condition
as Lender may approve in writing. Lender may, at Lender's option, condition
disbursement of said proceeds on Lender's approval of such plans and
specifications of an architect satisfactory to Lender, contractor's cost
estimates, architect's certificates, waivers of liens, sworn statements of
mechanics and materialmen and such other evidence of costs, percentage
completion of construction, application of payments; and satisfaction of liens
as Lender may reasonably require. If the insurance proceeds are applied to
the payment of the sums secured by this Instrument, any such application of
proceeds to principal shall not extend or postpone the due dates of the
monthly installments referred to in paragraphs 1 and 2 hereof or change the
amounts of such installments. If the Property is sold pursuant to paragraph
27 hereof or if Lender acquires title to the Property, Lender shall have all
of the right, title and interest of Borrower in and to any insurance policies
and unearned premiums thereon and in and to the proceeds resulting from any
damage to the Property prior to such sale or acquisition.
6. PRESERVATION AND MAINTENANCE OF PROPERTY; LEASEHOLDS. Borrower (a) shall
not commit waste or permit impairment or deterioration of the Property, (b)
shall not abandon the Property, (c) shall restore or repair promptly and in a
good and workmanlike manner all or any part of the Property to the equivalent
of its original condition, or such other condition as Lender may approve in
writing, in the event of any damage, injury or loss thereto, whether or not
insurance proceeds are available to cover in whole or in part the costs of
such restoration or repair, (d) shall keep the Property, including
improvements, fixtures, equipment, machinery and appliances thereon in good
repair and shall replace fixtures, equipment, machinery and appliances on the
Property when necessary to keep such items in good repair, (e) shall comply
with all laws, ordinances, regulations and requirements of any governmental
body applicable to the Property, (f) shall generally operate and maintain the
Property in a manner to ensure maximum rentals, and (g) shall give notice in
writing to Lender of and, unless otherwise directed in writing by Lender,
appear in and defend any action or proceeding purporting to affect the
Property, the security of this Instrument or the rights or powers of Lender.
Neither Borrower nor any tenant or other person shall remove, demolish or
alter any improvement now existing or hereafter erected on the Property or any
fixture, equipment, machinery or appliance in or on the Property except when
incident to the replacement of fixtures, equipment, machinery and appliances
with items of like kind.
If this Instrument is on a leasehold, Borrower (i) shall comply with the
provisions of the ground lease, (ii) shall give immediate written notice to
Lender of any default by lessor under the ground lease or of any notice
received by Borrower from such lessor of any default under the ground lease by
Borrower, (iii) shall exercise any option to renew or extend the ground lease
and give written confirmation thereof to Lender within thirty days after such
option becomes exercisable, (iv) shall give immediate written notice to Lender
of the commencement of any remedial proceedings under the ground lease by any
party thereto and, if required by Lender, shall permit Lender as Borrower's
attorney-in-fact to control and act for Borrower in any such remedial
proceedings and (v) shall within thirty days after request by Lender obtain
from the lessor under the ground lease and deliver to Lender the lessor's
estoppel certificate required thereunder, if any. Borrower hereby expressly
transfers and assigns to Lender the benefit of all covenants contained in the
ground lease, whether or not such covenants run with the land, but Lender
shall have no liability with respect to such covenants nor any other covenants
contained in the ground lease.
Borrower shall not surrender the leasehold estate and interests herein
conveyed nor terminate or cancel the ground lease creating said estate and
interests, and Borrower shall not, without the express written consent of
Lender, alter or amend said ground lease. Borrower covenants and agrees that
there shall not be a merger of the ground lease, or of the leasehold estate
created thereby, with the fee estate covered by the ground lease by reason of
said leasehold estate or said fee estate, or any part of either, coming into
common ownership, unless Lender shall consent in writing to such merger, if
Borrower shall acquire such fee estate, then this Instrument shall
simultaneously and without further action be spread so as to become a lien on
such fee estate.
7. USE OF PROPERTY. Unless required by applicable law or unless Lender has
otherwise agreed in writing, Borrower shall not allow changes in the use for
which all or any part of the Property was intended at the time this Instrument
was executed. Except as contemplated by written agreement between the parties
dated December 30, 1997 and recorded in the Polk County, Iowa, Recorder's
Office, Borrower shall not subdivide the Property or initiate or acquiesce in
a change in the zoning classification of the Property without Lender's prior
written consent.
8. PROTECTION OF LENDER'S SECURITY. If Borrower fails to perform the
covenants and agreements contained in this Instrument, or if any action or
proceeding is commenced which affects the Property or title thereto or the
interest of Lender therein, including, but not limited to, eminent domain,
insolvency, code enforcement, or arrangements or proceedings involving a
bankrupt or decedent, then Lender at Lender's option may make such
appearances, disburse such sums and take such action as Lender deems
necessary, in its sole discretion, to protect Lender's interest, including,
but not limited to, (i) disbursement of attorney's fees, (ii) entry upon the
Property to make repairs, (iii) procurement of satisfactory insurance as
provided in paragraph 5 hereof, (iv) if this Instrument is on a leasehold,
exercise of any option to renew or extend the ground lease on behalf of
Borrower and the curing of any default of Borrower in the terms and conditions
of the ground lease, and (v) the payment of any taxes and/or assessments
levied against the Property and then due and payable.
Any amounts disbursed by Lender pursuant to this paragraph 8, with
interest thereon, shall become additional indebtedness of Borrower secured by
this Instrument. Unless Borrower and Lender agree to other terms of payment,
such amounts shall be immediately due and payable and shall bear interest from
the date of disbursement at the rate stated in the Note unless collection from
Borrower 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 Borrower under applicable law. Borrower hereby covenants and
agrees that Lender shall be subrogated to the lien of any mortgage or other
lien discharged, in whole or in part, by the indebtedness secured hereby.
Nothing contained in this paragraph 8 shall require Lender to incur any
expense or take any action hereunder.
9. INSPECTION. Lender may make or cause to be made reasonable entries upon
and inspections of the Property including, but not limited to, phase I and/or
phase II environmental audits and inspections which phase II inspections will
not unreasonably disturb Borrower's use of the Property.
10. BOOKS AND RECORDS. Borrower shall keep and maintain at all times at
Borrower's address stated below, or such other place as Lender may approve in
writing, complete and accurate books of accounts and records adequate to
reflect correctly the results of the operation of the Property and copies of
all written contracts, leases and other instruments which affect the Property.
Such books, records, contracts, leases and other instruments shall be subject
to examination and inspection at any reasonable time by Lender. Upon Lender's
request, Borrower shall furnish to Lender, within thirty (30) days after the
end of each three month quarter of each fiscal year of Borrower, a balance
sheet, a statement of income and expenses of the Property and a statement of
changes in financial position, each in reasonable detail and certified by
Borrower and, if Lender shall require after a default hereunder or under the
Note or the Loan Documents, by an independent certified public accountant.
Borrower shall furnish, together with the foregoing financial statements and
at any other time upon Lender's request, a rent schedule for the Property,
certified by Borrower, showing the name of each tenant, and for each tenant,
the space occupied, the lease expiration date, the rent payable and the rent
paid. In addition to the above delivery of financial statements and rent
schedule, Borrower shall deliver to Lender updated versions of such financial
statements at any other time upon Lender's request, including monthly balance
sheets and monthly statements of income and expenses of the Property.
11. CONDEMNATION. Borrower shall promptly notify Lender of any action or
proceeding relating to any condemnation or other taking, whether direct or
indirect, of the Property, or part thereof, and Borrower shall appear in and
prosecute any such action or proceeding unless otherwise directed by Lender in
writing. Borrower authorizes Lender, at Lender's option, as attorney-in-fact
for Borrower, to commence, appear in and prosecute, in Lender's or Borrower's
name, any action or proceeding relating to any condemnation or other taking of
the Property, whether direct or indirect, and to settle or compromise any
claim in connection with such condemnation or other taking. The proceeds of
any award, payment or claim for damages, direct or consequential, in
connection with any condemnation or other taking, whether direct or indirect,
of the Property, or part thereof, or for conveyances in lieu of condemnation,
are hereby assigned to and shall be paid to Lender subject, if this Instrument
is on a leasehold, to the rights of lessor under the ground lease.
Borrower authorizes Lender to apply such awards, payments, proceeds or
damages, after the deduction of Lender's expenses incurred in the collection
of such amounts, at Lender's option, to restoration or repair of the Property
or to payment of the sums secured by this Instrument, whether or not then due,
in the order of application set forth in paragraph 3 hereof, with the balance,
if any, to Borrower. Unless Borrower and Lender otherwise agree in writing,
any application of proceeds to principal shall not extend or postpone the due
date of the monthly installments referred to in paragraphs 1 and 2 hereof or
change the amount of such installments. Borrower agrees to execute such
further evidence of assignment of any awards, proceeds, damages or claims
arising in connection with such condemnation or taking as Lender may require.
Notwithstanding the foregoing, if borrower meets the criterion set forth in
the fourth paragraph, section 5 hereof, Borrower shall be entitled to use
condemnation awards, payments, proceeds or damages to reasonably restore or
repair the Property.
12. BORROWER AND LIEN NOT RELEASED. From time to time, Lender may, at
Lender's option, without giving notice to or obtaining the consent of
Borrower, Borrower's successors or assigns or of any junior lienholder or
guarantors, without liability on Lender's part and notwithstanding Borrower's
breach of any covenant or agreement of Borrower in this Instrument, extend the
time for payment of said indebtedness or any part thereof, reduce the payments
thereon, release anyone liable on any of said indebtedness, accept a renewal
note or notes therefor, modify the terms and time of payment of said
indebtedness, release from the lien of this Instrument any part of the
Property, take or release other or additional security, reconvey any part of
the Property, consent to any map or plan of the Property, consent to the
granting of any easement, join in any extension or subordination agreement,
and agree in writing with Borrower to modify the rate of interest or period of
amortization of the Note or change the amount of the monthly installments
payable thereunder. Any actions taken by Lender pursuant to the terms of this
paragraph 12 shall not affect the obligation of Borrower or Borrower's
successors or assigns to pay the sums secured by this Instrument and to
observe the covenants of Borrower contained herein, shall not affect the
guaranty of any person, corporation, partnership or other entity for payment
of the indebtedness secured hereby, and shall not affect the lien or priority
of lien hereof on the Property. Borrower shall pay Lender a reasonable
service charge, together with such title insurance premiums and attorney's
fees as may be incurred at Lender's option, for any such action if taken at
Borrower's request.
13. FORBEARANCE BY LENDER NOT A WAIVER. Any forbearance by Lender in
exercising any right or remedy hereunder, or otherwise afforded by applicable
law, shall not be a waiver of or preclude the exercise of any right or remedy.
The acceptance by Lender of payment of any sum secured by this Instrument
after the due date of such payment shall not be a waiver of Lender's right to
either require prompt payment when due of all other sums so secured or to
declare a default for failure to make prompt payment. The procurement of
insurance or the payment of taxes or other liens or charges by Lender shall
not be a waiver of Lender's right to accelerate the maturity of the
indebtedness secured by this Instrument, nor shall Lender's receipt of any
awards, proceeds or damages under paragraphs 5 and 11 hereof operate to cure
or waive Borrower's default in payment of sums secured by this Instrument.
14. ESTOPPEL CERTIFICATE. Borrower shall within ten (10) days of a written
request from Lender furnish Lender with a written statement, duly
acknowledged, setting forth the sums secured by this Instrument and any right
of set-off, counterclaim or other defense which exists against such sums and
the obligations of this Instrument and attaching true, correct and complete
copies of the Note, this Instrument and any other Loan Documents and any and
all modifications, amendments and substitutions thereof.
15. UNIFORM COMMERCIAL CODE SECURITY AGREEMENT. This Instrument is intended
to be a security agreement pursuant to the Uniform Commercial Code for any of
the items specified above as part of the Property which, under applicable law,
may be subject to a security interest pursuant to the Uniform Commercial Code,
and Borrower hereby grants Lender a security interest in said items. Borrower
agrees that Lender may file this Instrument, or a reproduction thereof, in the
real estate records or other appropriate index, as a financing statement for
any of the items specified above as part of the Property. Any reproduction of
this Instrument or of any other security agreement or financing statement
shall be sufficient as a financing statement. In addition, Borrower agrees to
execute and deliver to Lender, upon Lender's request, any financing
statements, as well as extensions, renewals and amendments thereof, and
reproductions of this Instrument in such form as Lender may require to perfect
a security interest with respect to said items. Borrower shall pay all costs
of filing such financing statements and any extensions, renewals, amendments
and releases thereof, and shall pay all reasonable costs and expenses of any
record searches for financing statements Lender may reasonably require.
Without the prior written consent of Lender, Borrower shall not create or
suffer to be created pursuant to the Uniform Commercial Code any other
security interest in said items, including replacements and additions thereto.
Upon Borrower's breach of any covenant or agreement of Borrower contained in
this Instrument, including the covenants to pay when due all sums secured by
this Instrument, Lender shall have the remedies of a secured party under the
Uniform Commercial Code and, at Lender's option, may also invoke the remedies
provided in paragraph 27 of this Instrument as to such items. In exercising
any of said remedies, Lender may proceed against the items of real property
and any items of personal property specified above as part of the Property
separately or together and in any order whatsoever, without in any way
affecting the availability of Lender's remedies under the Uniform Commercial
Code or of the remedies provided in paragraph 27 of this Instrument.
16. LEASES OF THE PROPERTY. The property is occupied, as of the date of the
Instrument by Microware Systems Corporation, an Iowa corporation
("Microware") and the sole shareholder of the Borower. Borrower shall not
amend, modify, extend or otherwise alter its lease agreement with Microware,
nor shall Borrower forgive rent or forbear enforcement of any provision of the
lease without the express written consent of Lender which consent may not be
unreasonably withheld.
17. REMEDIES CUMULATIVE. Each remedy provided in this Instrument is distinct
and cumulative to all other rights or remedies under this Instrument or
afforded by law or equity, and may be exercised concurrently, independently,
or successively, in any order whatsoever.
18. ACCELERATION IN CASE OF BORROWER'S INSOLVENCY. If Borrower shall
voluntarily file a petition under Title 11 of the U.S. Code (the "Act"), as
such Act may from time to time be amended, or under any similar or successor
Federal statute relating to bankruptcy, insolvency, arrangements or
reorganizations, or under any state bankruptcy or insolvency act, or file an
answer in any involuntary proceeding admitting insolvency or inability to pay
debts, or if Borrower shall fail to obtain a vacation or stay of involuntary
proceedings brought for the reorganization, dissolution or liquidation of
Borrower, within one hundred and twenty (120) days of the filing of such
involuntary proceeding, or if Borrower shall be adjudged a bankrupt, or if a
trustee or receiver shall be appointed for Borrower or Borrower's property, or
if the Property shall become subject to the jurisdiction of a Federal
bankruptcy court or similar state court, or if Borrower shall make an
assignment for the benefit of Borrower's creditors, or if there is an
attachment, execution or other judicial seizure of any portion of Borrower's
assets and such seizure is not discharged within ten (10) days, then Lender
may, at Lender's option, declare all of the sums secured by this Instrument to
be immediately due and payable without prior notice to Borrower, and Lender
may invoke any remedies permitted by paragraph 27 of this Instrument. Any
attorney's fees and other expenses incurred by Lender in connection with
Borrower's bankruptcy or any of the other aforesaid events shall be additional
indebtedness of Borrower secured by this Instrument pursuant to paragraph 8
hereof
19. TRANSFERS OF THE PROPERTY OR BENEFICIAL INTERESTS IN BORROWER.
(a) Except as provided in subparagraph (c) of this paragraph 19, upon
the sale or transfer of (i) all or any part of the Property, or any interest
therein, or (ii) beneficial interests in Borrower (if Borrower is not a
natural person or persons but is a corporation, partnership, trust or other
legal entity), Lender may, at Lender's option, declare all of the sums secured
by this Instrument to be immediately due and payable, and Lender may invoke
any remedies permitted by paragraph 27 of this Instrument.
(b) For purposes of this paragraph 19, a sale or transfer of a
beneficial interest in Borrower shall be deemed to include, but is not limited
to:
(i) if Borrower or any general partner of Borrower is a
corporation or limited liability company, the voluntary
or involuntary sale, conveyance, transfer or pledge of a
majority of such corporation's or limited liability
company's stock (or the stock of any corporation directly
or indirectly controlling such corporation or limited
liability company by operation of law or otherwise) or
the creation or issuance of new stock by which an
aggregate of more than 49% of such corporation's or
limited liability company's stock shall be vested in a
party or parties who are not now stockholders
(ii) if Borrower is a limited liability company, the change,
removal or resignation of a managing member;
(iii) if Borrower, or any general partner of Borrower, is a
limited or general partnership, the change, removal or
resignation of a general partner or managing partner or
the transfer or pledge of the partnership interest of any
general partner or managing partner or any profits or
proceeds relating to such partnership interest;
(iv) if Borrower is a limited partnership, the transfer or
pledge of a majority of the limited partnership interests
which in the aggregate constitute more than a 49%
interest in Borrower, or any profits or proceeds relating
to such limited partnership interests.
In addition to clauses (i), (ii) and (iii) above, publicly-traded
security interests in Borrower or Microware Systems Corporation (the "Parent")
previously registered under federal securities law may be transferred without
Lender's consent if (i) the transfer is exempt from registration under federal
and state securities laws, and (ii) the transfer will not result in a transfer
of control (as reasonably determined by Lender) in the Borrower or the Parent.
Any transfer of security interests in Borrower or the Parent which will result
in a transfer of control requires Lender's prior written consent, which will
be conditioned upon the satisfaction of the requirements of Paragraph 35,
below if the transfer is not exempt under federal and state securities law.
(c) Notwithstanding the foregoing, the following shall not be deemed
a sale or transfer of a beneficial interest in Borrower for purposes of this
paragraph 19:
(i) a transfer of less than a 49% interest in Borrower, or
any partner, shareholder or member of Borrower, by
devise, descent or by operation of law upon the death of
a partner, member or stockholder of Borrower;
(ii) a transfer of a limited partner, shareholder or non-
managing member interest in Borrower for estate planning
purposes to an immediate family member of such limited
partner, shareholder or member, or a trust for the
benefit of an immediate family member; or
(iii) a transfer of a general partner or managing member
interest in Borrower for estate planning purposes to an
immediate family member of such partner or member, or a
trust for the benefit of an immediate family member,
subject to obtaining Lender's prior written consent,
which consent shall not be unreasonably withheld subject
to the criteria set forth in subparagraph (b) of
paragraph 35 of this Instrument.
(iv) a transfer of any interest whatsoever in the ownership of
Borrower or in the ownership of Microware Systems
Corporation or any merger or corporate reorganization of
either such entity.
See paragraph 35 of this Instrument.
20. NOTICE. Except for any notice required under applicable law to be given
in another manner, (a) any notice to Borrower provided for in this Instrument
or in the Note shall be given by mailing such notice by certified mail
addressed to Borrower at Borrower's address stated below or at such other
address as Borrower may designate by notice to Lender as provided herein, and
(b) any notice to Lender shall be given by certified mail, return receipt
requested, to Lender's address stated herein or to such other address as
Lender may designate by notice to Borrower as provided herein. Any notice
provided for in this Instrument or in the Note shall be deemed to have been
given to Borrower or Lender when given in the manner designated herein.
Borrower's address: 1500 N.W. 118th Street, Clive, Iowa 50325
Lender's address: 650 Dresher Road, Horsham, Pennsylvania 19044-8015
21. SUCCESSORS AND ASSIGNS BOUND; JOINT AND SEVERAL LIABILITY; AGENTS;
CAPTIONS. The covenants and agreements herein contained shall bind, and the
rights hereunder shall inure to, the respective successors and assigns of
Lender and Borrower, subject to the provisions of paragraph 19 hereof. All
covenants and agreements of Borrower shall be joint and several. In
exercising any rights hereunder or taking any actions provided for herein,
Lender may act through its employees, agents or independent contractors as
authorized by Lender. The captions and headings of the paragraphs of this
Instrument are for convenience only and are not to be used to interpret or
define the provisions hereof.
22. UNIFORM INSTRUMENT; GOVERNING LAW; SEVERABILITY. This form of instrument
combines uniform covenants for national use and non-uniform covenants with
limited variations by jurisdiction to constitute a uniform security instrument
covering real property and related fixtures and personal property. This
Instrument shall be governed by the law of the jurisdiction in which the
Property is located. In the event that any provision of this Instrument or
the Note conflicts with applicable law, such conflict shall not affect other
provisions of this Instrument or the Note which can be given effect without
the conflicting provisions, and to this end the provisions of this Instrument
and the Note are declared to be severable. In the event that any applicable
law limiting the amount of interest or other charges permitted to be collected
from Borrower is interpreted so that any charge provided for in this
Instrument or in the Note, whether considered separately or together with
other charges levied in connection with this Instrument and the Note, violates
such law, and Borrower is entitled to the benefit of such law, such charge is
hereby reduced to the extent necessary to eliminate such violation. The
amounts, if any, previously paid to Lender in excess of the amounts payable to
Lender pursuant to such charges as reduced shall be applied by Lender to
reduce the principal of the indebtedness evidenced by the Note. For the
purposes of determining whether any applicable law limiting the amount of
interest or other charges permitted to be collected from Borrower has been
violated, all indebtedness which is secured by this Instrument or evidenced by
the Note and which constitutes interest, as well as all other charges levied
in connection with such indebtedness which constitute interest, shall be
deemed to be allocated and spread over the stated term of the Note. Unless
otherwise required by applicable law, such allocation and spreading shall be
effected in such a manner that the rate of interest computed thereby is
uniform throughout the stated term of the Note.
23. WAIVER OF STATUTE OF LIMITATIONS. Borrower hereby waives the right to
assert any statute of limitations as a bar to the enforcement of the lien of
this Instrument or to any action brought to enforce the Note or any other
obligation secured by this Instrument.
24. WAIVER OF MARSHALLING. Notwithstanding the existence of any other
security interest in the Property held by Lender or by any other party, Lender
shall have the right to determine the order in which any or all of the
Property shall be subjected to the remedies provided herein. Lender shall
have the right to determine the order in which any or all portions of the
indebtedness secured hereby are satisfied from the proceeds realized upon the
exercise of the remedies provided herein. Borrower, any party who consents to
this Instrument and any party who now or hereafter acquires a security
interest in the Property and who has actual or constructive notice hereof
hereby waives any and all right to require the marshalling of assets in
connection with the exercise of any of the remedies permitted by applicable
law or provided herein.
25. INTENTIONALLY OMITTED.
26. ASSIGNMENT OF RENTS; APPOINTMENT OF RECEIVER; LENDER IN POSSESSION. As
part of the consideration for the indebtedness evidenced by the Note, Borrower
hereby absolutely and unconditionally assigns and transfers to Lender all the
rents and revenues of the Property, including those now due, past due, or to
become due by virtue of any lease or other agreement for the occupancy or use
of all or any part of the Property, regardless of to whom the rents and
revenues of the Property are payable. Borrower hereby authorizes Lender or
Lender's agents to collect the aforesaid rents and revenues and hereby directs
each tenant of the Property to pay such rents to Lender or Lender's agents;
provided, however, that prior to written notice given by Lender to Borrower of
the breach by Borrower of any covenant or agreement of Borrower in this
Instrument or any other Loan Document, Borrower shall collect and receive all
rents and revenues of the Property as trustee for the benefit of Lender and
Borrower, to apply the rents and revenues so collected to the sums secured by
this Instrument in the order provided in paragraph 3 hereof with the balance,
so long as no such breach has occurred, to the account of Borrower, it being
intended by Borrower and Lender that this assignment of rents constitutes an
absolute assignment and not an assignment for additional security only. Upon
delivery of written notice by Lender to Borrower of the breach by Borrower of
any covenant or agreement of Borrower in this Instrument, and without the
necessity of Lender entering upon and taking and maintaining full control of
the Property in person, by agent or by a court-appointed receiver, Lender
shall immediately be entitled to possession of all rents and revenues of the
Property as specified in this paragraph 26 as the same become due and payable,
including, but not limited to, rents then due and unpaid, and all such rents
shall immediately upon delivery of such notice be held by Borrower as trustee
for the benefit of Lender only; provided, however, that the written notice by
Lender to Borrower of the breach by Borrower shall contain a statement that
Lender exercises its rights to such rents. Borrower agrees that commencing
upon delivery of such written notice of Borrower's breach by Lender to
Borrower, each tenant of the Property shall make such rents payable to and pay
such rents to Lender or Lender's agents on Lender's written demand to each
tenant therefor, delivered to each tenant personally, by mail or by delivering
such demand to each retail store, without any liability on the part of said
tenant to inquire further as to the existence of a default by Borrower.
Borrower hereby covenants that Borrower has not executed any prior
assignment of said rents, that Borrower has not performed, and will not
perform, any acts or has not executed, and will not execute, any instrument
which would prevent Lender from exercising its rights under this paragraph 26,
and that at the time of execution of this Instrument there has been no
anticipation or prepayment of any of the rents of the Property for more than
one month prior to the due dates of such rents. Borrower covenants that
Borrower will not hereafter collect or accept payment of any rents of the
Property more than one month prior to the due dates of such rents. Borrower
further covenants that Borrower will execute and deliver to Lender such
further assignments of rents and revenues of the Property as Lender may from
time to time request.
Upon Borrower's breach of any covenant or agreement of Borrower in this
Instrument, or upon Borrower's breach of any material covenant of Borrower as
landlord or lessor under any lease, Lender shall be entitled to the
appointment of a receiver for the Property, without notice to Borrower or any
other person or entity and Lender may in person, by agent or by a court
appointed receiver, regardless of the adequacy of Lender's security, enter
upon and take and maintain full control of the Property in order to perform
all acts necessary and appropriate for the operation and maintenance thereof
including, but not limited to, the execution, cancellation or modification of
leases, the collection of all rents and revenues of the Property, the
enforcement or fulfillment of any terms, condition or provision of any lease,
the making of repairs to the Property and the execution or termination of
contracts providing for the management or maintenance of the Property, all on
such terms as are deemed best to protect the security of this Instrument. In
the event Lender elects to seek the appointment of a receiver for the Property
upon Borrower's breach of any covenant or agreement of Borrower in this
Instrument, Borrower hereby expressly consents to the appointment of such
receiver. Lender or the receiver shall be entitled to receive a reasonable
fee for so managing the Property.
All rents and revenues collected subsequent to delivery of written notice
by Lender to Borrower of the breach by Borrower of any covenant or agreement
of Borrower in this Instrument shall be applied first to the costs, if any, of
taking control of and managing the Property and collecting the rents,
including, but not limited to, attorney's fees, receiver's fees, premiums on
receiver's bonds, costs of repairs to the Property, premiums on insurance
policies, taxes, assessments and other charges on the Property, and the costs
of discharging any obligation or liability of Borrower as lessor or landlord
of the Property and then to the sums secured by this Instrument. Lender or
the receiver shall have access to the books and records used in the operation
and maintenance of the Property and shall be liable to account only for those
rents actually received. Lender shall not be liable to Borrower, anyone
claiming under or through Borrower or anyone having an interest in the
Property by reason of anything done or left undone by Lender under this
paragraph 26.
If the rents of the Property are not sufficient to meet the costs, if
any, of taking control of and managing the Property and collecting the rents,
any funds expended by Lender for such purposes shall become indebtedness of
Borrower to Lender secured by this Instrument pursuant to paragraph 8 hereof.
Unless Lender and Borrower agree in writing to other terms of payment, such
amounts shall be payable upon notice from Lender to Borrower requesting
payment thereof and shall bear interest from the date of disbursement at the
rate stated in the Note unless payment 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 Borrower under applicable law.
Any entering upon and taking and maintaining of control of the Property
by Lender or the receiver and any application of rents as provided herein
shall not cure or waive any default hereunder or invalidate any other right or
remedy of Lender under applicable law or provided herein. This assignment of
rents of the Property shall terminate at such time as this Instrument ceases
to secure indebtedness held by Lender.
NON-UNIFORM COVENANTS. Borrower and Lender further covenant and agree as
follows:
27. ACCELERATION; REMEDIES. Upon Borrower's breach of any representation,
covenant or agreement of Borrower in this Instrument, the Note, the
Environmental Indemnity Agreement or any other Loan Document, including, but
not limited to, the covenants to pay when due any sums secured by this
Instrument, Lender, at Lender's option, may declare all of the sums secured by
this Instrument to be immediately due and payable without further demand, and
may invoke any remedies permitted by applicable law or provided herein.
Borrower has the right to bring an action to assert the non-existence of a
breach or any other defense of Borrower to acceleration and sale. Lender
shall be entitled to collect all costs and expenses incurred in pursuing such
remedies, including, but not limited to, attorney's fees and costs of
documentary evidence, abstracts and title reports.
Notwithstanding the foregoing, Lender shall not invoke any remedy
provided hereunder, under the Loan Documents, at law or in equity upon
Borrower's breach of a non-monetary representation, covenant, or agreement of
Borrower in this Instrument, the Note, the Environmental Indemnity Agreement
or any other Loan Document, other than a breach of paragraphs 5, 19, 32(k),
32(l) or 32(n) of this Instrument, or paragraph 2 of the Environmental
Indemnity Agreement, provided Borrower shall have, on or before the date that
is ten (10) days after Borrower's receipt of notice thereof, cured such
default or, if such default cannot be cured within such ten (10) day period,
Borrower shall have commenced to cure within such ten (10) day period and is
taking all actions required to diligently cure such default and such default
is cured on or before the date that is thirty (30) days after Borrower's
receipt of a notice to cure such default.
See paragraph 34 of this Instrument.
28. RELEASE. Upon payment of all sums secured by this Instrument, Lender
shall release this Instrument.
29. ATTORNEY'S FEES. As used in this Instrument and in the Note, "attorney's
fees" shall include attorney's fees, if any, which may be awarded by an
appellate court.
30. NONRECOURSE LOAN. Subject to the qualifications below in this paragraph,
the Borrower shall be liable for payment and performance of all of the
obligations, covenants and agreements of the Borrower under the Note, this
Instrument, the Assignment of Leases and Rents (herein so-called), dated of
even date herewith, executed by Borrower to Lender, the Environmental
Indemnity Agreement dated of even date herewith, executed by Borrower and
Lender, and all other instruments and documents evidencing, securing or
governing the terms of the loan (the "Loan") evidenced by the Note
(collectively, the "Loan Documents"), to the full extent (but only to the
extent) of all of the Property and any other items, property or amounts which
are collateral or security for the Loan. If a default occurs in the timely
and proper payment of any portion of such indebtedness or in the timely
performance of any obligations, agreements or covenants, except as set forth
below in this paragraph, neither Borrower, nor any partner of Borrower, nor
any partner, stockholder, director or officer of any partner of Borrower,
shall be personally liable for the repayment of any of the principal of,
interest on, or prepayment fees or late charges, or other charges or fees due
in connection with the Loan, the performance of any covenants of Borrower
under the Note, this Instrument or any of the other Loan Documents or for any
deficiency judgment which Lender may obtain after default by Borrower.
Notwithstanding the foregoing provisions of this paragraph or any other
agreement, the Borrower shall be fully and personally liable for any and all:
(1) liabilities, costs, losses, damages, expenses or claims (including,
without limitation, any reduction in the value of the Property or any other
items, property or amounts which are collateral or security for the Loan)
suffered or incurred by Lender by reason of or in connection with (a) any
fraud or misrepresentation by the Borrower in connection with the Loan,
including but not limited to any misrepresentation of the Borrower contained
in any Loan Document, (b) any failure to pay taxes, insurance premiums (except
to the extent that such taxes and insurance premiums are then held by the
Lender), assessments, charges for labor or materials or other charges that can
create liens on any portion of the Property, (c) any misapplication of (i)
proceeds of insurance covering any portion of the Property, or (ii) proceeds
of the sale or condemnation of any portion of the Property, (d) any rentals,
income, profits, issues and products received by or on behalf of the Borrower
subsequent to the date on which the Lender gives written notice that a default
has occurred under the Loan and not applied to the payment of principal or
interest due under the Note or the payment of operating expenses (excluding
any operator's, manager's or developer's fee paid to the Borrower or any
affiliate of the Borrower) of the Property, (e) any failure to maintain,
repair or restore the Property in accordance with any Loan Document to the
extent not covered by insurance proceeds made available to the Lender, (f) any
failure by the Borrower to deliver to the Lender all unearned advance rentals
and security deposits paid by tenants of the Property received by or on behalf
of the Borrower, and not refunded to or forfeited by such tenants, (g) any
failure by the Borrower to return to, or reimburse the Lender for, all
personalty taken from the Property by or on behalf of the Borrower, except in
accordance with the provisions of this Instrument, and (h) any and all
indemnities given by the Borrower to the Lender set forth in the Environmental
Indemnity Agreement or any other Loan Document in connection with any
environmental matter relating to the Property; and (2) court costs and all
attorneys' fees provided for in any Loan Document. Furthermore, no limitation
of liability or recourse provided above in this paragraph shall (x) apply to
the extent that the Lender's rights of recourse to the Property are suspended,
reduced or impaired by or as a result of any act, omission or
misrepresentation of the Borrower or any other party now or hereafter liable
for any part of the Loan and accrued interest thereon, or by or as a result of
any case, action, suit or proceeding to which the Borrower or any such other
party, voluntarily becomes a party; or (y) constitute a waiver, forfeiture,
abrogation or limitation of or on any right accorded by any law establishing a
debtor relief proceeding, including, but not limited to, Title 11, U.S. Code,
which right provides for the assertion in such debtor relief proceeding of a
deficiency arising by reason of the insufficiency of collateral
notwithstanding an agreement of the Lender not to assert such deficiency.
31. REPRESENTATIONS OF BORROWER. The Borrower hereby represents and warrants
to Lender the following:
(a) Borrower is a corporation duly organized, validly existing and in
good standing under the laws of the State of Iowa. There are no proceedings
or actions pending, threatened or contemplated for the liquidation,
termination or dissolution of Borrower.
(b) Borrower has delivered to Lender a true, correct, and complete
copy of the lease agreement with Microware Systems Corporation (the "Existing
Lease"); and there are no other leases, assignments, modifications,
extensions, renewals, or other agreements of any kind whatsoever (written or
oral) outstanding with respect to the leases or the Property.
(c) Unless otherwise specified in writing by Borrower:
(i) the Existing Lease is in full force and effect;
(ii) Borrower has not given any notice of default to the
tenant under the Existing Lease which remains uninsured;
(iii) the tenant does not have any set off, claim or defense to
the enforcement of the Existing Lease;
(iv) the tenant is not in arrears in the payment of rent,
additional rent or any other charges whatsoever due under
the Existing Lease; or, to the knowledge of Borrower, is
it materially in default in the performance of any other
obligations the Existing Lease; and
(v) Borrower has completed all work or alterations required
of the landlord or lessor under the Existing Lease; and
all of the other obligations of landlord or lessor under
the Existing Lease has been performed.
(d) Borrower has delivered to Lender a true, correct, and complete
rent roll (the "Rent Roll") of annual and monthly rents payable by all
Existing Tenants, including all percentage rents, if any, expiration dates of
the Existing Leases, and the amount of security deposit being held by Borrower
under each Existing Lease, if any; and Borrower has not granted any Existing
Tenant any rent concessions (whether in form of cash contributions, work
agreements, assumption of an Existing Tenant's other obligations, or
otherwise) or extensions of time whatsoever not reflected in such Rent Roll.
(e) There are no legal proceedings commenced (or, to the best of the
knowledge of the Borrower, threatened) against Borrower by any Existing
Tenant; no rental in excess of one month's rent has been prepaid under any of
the Existing Leases; each of the Leases is valid and binding on the parties
thereto in accordance with its terms; and the execution of this Instrument and
the other Loan Documents will not constitute an event of default under any of
the Existing Leases.
(f) Borrower currently holds the security deposits (if any) specified
in the Existing Leases and has not given any credit, refund, or set off
against such security deposits to any person.
(g) There are no residential units in the Property, and no portion of
the Property is an apartment or other unit subject to any form or rent
control, stabilization or regulation; and no person presently occupies any
part of the Property for dwelling purposes.
(h) Except for Borrower, there are no persons or entities occupying
space in the Property as tenants other than the persons or entities
specifically named in the Existing Leases.
(i) Except as specifically listed in the schedule of exceptions to
coverage in the title policy insuring Lender's interest in the Property,
Borrower is now in possession of the Property; Borrower's possession of the
Property is peaceable and undisturbed; Borrower does not know any facts by
reason of which any claim to the Property, or any part thereof, might arise or
be set up adverse to Borrower; and the Property is free and clear of (i) any
lien for taxes (except real property taxes not yet due and payable for the
calendar year in which this Instrument is being executed), and (ii) any
easements, rights-of-way, restrictions, encumbrances, liens or other
exceptions to title by mortgage, decree, judgment, agreement, instrument, or,
to the knowledge of Borrower, proceeding in any court.
(j) All charges for labor, materials or other work of any kind
furnished in connection with the construction, improvement, renovation or
rehabilitation of the Property or any portion thereof have been paid in full,
and no unreleased affidavit claiming a lien against the Property, or any
portion thereof, for the supplying of labor, materials or services for the
construction of improvements on the Property has been executed or recorded in
the mechanic's lien or other appropriate records in the county in which the
Property is located.
(k) The Property and the current and contemplated uses of the
Property are in compliance with all applicable federal, state and municipal
laws, rules, regulations and ordinances, applicable restrictions, zoning
ordinances, building codes and regulations, building lines and easements,
including, without limitation, federal and state environmental protection law
and the Americans with Disabilities Act of 1990, the Fair Housing Amendments
Act of 1988, all state and local laws or ordinances related to handicapped
access, and any statute, rule, regulation, ordinance, or order of governmental
bodies or regulatory agencies, or any order or decree of any court adopted or
enacted with respect thereto (collectively, "Applicable Laws"); no
governmental authority having jurisdiction over any aspect of the Property has
made a claim or determination that there is any such violation; the Property
is not included in any area identified by the Secretary of Housing and Urban
Development pursuant to the Flood Disaster Protection Act of 1973, as amended,
as an area having special flood hazards; and all permits, licenses and the
like which are necessary for the operation of the Property have been issued
and are in full force and effect.
(l) There have been no material adverse changes, financial or
otherwise, in the condition of Borrower from that disclosed to Lender in the
loan application submitted to Lender by Borrower, or in any supporting data
submitted in connection with the Loan, and all of the information contained
therein was true and correct when submitted and is now substantially and
materially true and correct on the date hereof.
(m) There is no claim, litigation or condemnation proceeding pending,
or, to the knowledge of the Borrower, threatened, against the Property or
Borrower, which would affect the Property or Borrower's ability to perform its
obligations in the connection with the Loan.
(n) Borrower does not own any real property or assets other than the
Property and does not operate any business other than the management and
operation of the Property.
(o) No proceedings in bankruptcy or insolvency has ever been
instituted by or against Borrower or any affiliate thereof, and no such
proceeding is now pending or contemplated.
(p) Borrower is, and if there are any general partners or members of
Borrower, such partners or members are, solvent pursuant to the laws of the
United States, as reflected by the entries in Borrower's books and records and
as reflected by the actual facts.
(q) The Loan Documents have been duly authorized, executed and
delivered by Borrower and constitute valid and binding obligations of
Borrower, enforceable against Borrower in accordance with their respective
terms. No approval, consent, order or authorization of any governmental
authority and no designation, registration, declaration or filing with any
governmental authority is required in connection with the execution and
delivery of the Note, this Instrument or any other Loan Document.
(r) The execution and delivery of the Loan Documents will not violate
or contravene in any way the articles of incorporation or bylaws or
partnership agreement, articles of organization or operating agreement as the
case may be, of Borrower or any indenture, agreement or instrument to which
Borrower is a party or by which it or its property may be bound, or be in
conflict with, result in a breach of or constitute a default under any such
indenture, agreement or other instrument, result in the creation or imposition
of any lien, charge or encumbrance of any nature whatsoever upon any of the
property or assets of Borrower, except as contemplated by the provisions of
such Loan Documents, and no action or approval with respect thereto by any
third person is required.
(s) No part of the Property is all or a part of Borrower's homestead.
(t) The Property is served by all utilities required for the current
or contemplated use thereof. All utility service is provided by public
utilities and the Property has accepted or is equipped to accept such utility
service.
(u) All public roads and streets necessary for service of and access
to the Property for the current or contemplated use thereof have been
completed, are serviceable and all-weather and are physically and legally open
for use by the public.
(v) The Property is serviced by public water and sewer systems.
(w) The Property is free from damage caused by fire or other
casualty.
(x) All liquid and solid waste disposal, septic and sewer systems
located on the Property are in a good and safe condition and repair and in
compliance with all Applicable Laws.
32. BORROWER'S ADDITIONAL COVENANTS. Borrower hereby covenants, agrees and
undertakes to:
(a) fulfill and perform all of Borrower's obligations as landlord or
lessor under any lease; will promptly send Lender copies of any notices of
default received from the tenant under any lease; and will enforce (short of
terminating such lease) the performance by the tenant of the tenant's
obligations under any lease;
(b) not make, enter into, execute, cancel, amend or modify any lease
without the prior written consent of Lender (other than an Exempt Lease);
(c) not approve any assignment of a lease, of any sublease or
underlease, without the prior written consent of Lender (other than an Exempt
Lease);
(d) not cancel or modify any guaranty of a lease, or release any
security deposit or letter of credit constituting security under a lease,
without the prior written consent of Lender;
(e) not accept prepayment of any installment of rent from any tenants
of the Property for a period of more than one (1) month in advance;
(f) not further assign the whole (or any part of) the leases or the
rents;
(g) not undertake or commence any alterations of any improvements on
the Property the cost of which is in excess of five percent (5%) of the then
original principal amount of the Note, without the prior written consent of
Lender;
(h) from time to time, at the request of Lender, (i) promptly correct
any defect, error or omission which may be discovered in the contents of this
Instrument or in any other Loan Document or in the execution or
acknowledgement thereof; (ii) execute, acknowledge, deliver and record and/or
file such further documents or instruments (including, without limitation,
further mortgages, security agreements, financing statements, continuation
statements, assignments of rents or leases and environmental indemnity
agreements) and perform such further acts and provide such further assurances
as may be necessary, desirable or proper, in Lender's opinion, to carry out
more effectively the purposes of this Instrument and such other instruments
and to subject to the liens and security interests hereof and thereof any
property intended by the terms hereof or thereof to be covered hereby or
thereby, including specifically, but without limitation, any renewals,
additions, substitutions, replacements, or appurtenances to the Property;
provided that such documents or instruments do not materially increase
Borrower's liability under the Loan Documents; and (iii) execute, acknowledge,
deliver, procure, and file and/or record any document or instrument (including
specifically, but without limitation, any financing statement) deemed
advisable by Lender to protect the liens and the security interests herein
granted against the rights or interests of third persons; provided that such
documents or instruments do not materially increase Borrower's liability under
the Loan Documents. Borrower will pay all reasonable costs connected with any
of the foregoing in this subparagraph (h);
(i) continuously maintain Borrower's existence and right to do
business in the State of Iowa;
(j) at any time any law shall be enacted imposing or authorizing the
imposition of any tax upon this Instrument, or upon any rights, titles, liens
or security interests created hereby, or upon the obligations secured hereby
or any part thereof, immediately pay all such taxes; provided that, if such
law as enacted makes it unlawful for Borrower to pay such tax, Borrower shall
not pay nor be obligated to pay such tax, and in the alternative, Borrower
may, in the event of the enactment of such a law, and must, if it is unlawful
for Borrower to pay such taxes, prepay the obligations secured hereby in full
within sixty (60) days after demand therefor by Lender;
(k) not execute or deliver any deed of trust, mortgage or pledge of
any type covering all or any portion of the Property;
(l) not acquire any real property or assets (other than the Property)
or operate any business other than the management and operation of the
Property during the term of the Loan;
(m) not permit any drilling or exploration for or extraction, removal
or production of any mineral, natural element, compound or substance from the
surface or subsurface of the Property regardless of the depth thereof or the
method of mining or extraction thereof;
(n) not change its name, identity, structure or employer
identification number during the term of the Loan;
(o) pay on demand all reasonable and bona fide out-of-pocket costs,
fees and expenses and other expenditures, including, but not limited to,
reasonable attorneys' fees and expenses, paid or incurred by Lender to third
parties incident to this Instrument or any other Loan Document (including, but
not limited to, reasonable attorneys' fees and expenses in connection with the
negotiation, preparation and execution hereof and of any other Loan Document
and any amendment hereto or thereto, any release hereof, any consent, approval
or waiver hereunder or under any other Loan Document, the making of any
advance under the Note, and any suit to which Lender is a party involving this
Instrument or the Property) or incident to the enforcement of the obligations
secured hereby or the exercise of any right or remedy of Lender under any Loan
Document; and
(p) maintain and keep the Property in compliance with all Applicable
Laws.
33. RESERVES.
(a) CAPITAL IMPROVEMENTS RESERVE.
(i) Commencing on the first day a monthly installment of
principal and interest is due and payable under the Note and continuing on the
first calendar day of each calendar month thereafter, Borrower shall deliver
to Lender, together with the regular installments of principal and interest an
amount (a "CIR Payment") equal to Six Hundred Ninety and 67/100 Dollars
($690.67) this Instrument. The CIR Payments will be placed in interest
bearing deposits or accounts in the name of Lender or Lender's loan servicer
at the same financial institution(s) as the other Funds (the "Other
Impositions Account"), shall be held in accordance with the terms of paragraph
2 of this Instrument, and may be drawn on by Borrower for deferred maintenance
and/or ongoing capital improvement expenditures in connection with the
Property, pursuant to the terms set forth below in subparagraph 33(a)(ii). At
Lender's discretion, the CIR Payments may be increased to reflect any increase
in the "Consumer Price Index" published by the Bureau of Labor Statistics of
the U.S. Department of Labor, All Items, U.S. city average, all urban
consumers (presently denominated "CPI-U"), or a successor or substitute index
appropriately adjusted (the "CPI"). In the event Lender shall elect not to
increase the CIR Payment for any given year by the CPI, Lender, at its sole
discretion, may during any subsequent year elect to increase the CIR Payment
by the aggregate amount of CPI increases which Lender otherwise was entitled
to make during the previous years in which it did not elect to make such
increases.
(ii) So long as Borrower (x) is not in default under any of
the terms of the Note, this Instrument or any of the other Loan Documents, and
(y) no situation exists which with the passage of time or the giving of notice
or both would constitute a default under the Note, this Instrument or any of
the other Loan Documents, Borrower, subject to the following provisions of
this subparagraph (ii) and upon ten (10) days' prior written notice to Lender
and Lender's loan servicer (which notice shall include a brief statement of
the purpose for which the advance is to be used), shall be entitled to draw on
the CIR Payments on deposit in the Other Impositions Account solely for the
payment of deferred maintenance and/or ongoing capital improvement
expenditures for the Property. Borrower may not make any drawing on the Other
Impositions Account (1) for less than $500 and (2) without the prior consent
of Lender. Lender reserves the right to require such information as Lender
may reasonably require, and to withhold consent in the event that Lender deems
it necessary to do so. Without limiting the foregoing, Lender may request, in
connection with a request by Borrower for a drawing on the Other Impositions
Account, that Borrower furnish written evidence reasonably satisfactory to
Lender that the amount requested by Borrower is for work performed, services
or materials furnished, and bills paid or payable with respect to the deferred
maintenance and/or ongoing capital improvement expenditures (including, but
not limited to, contracts and invoices for work performed or materials
supplied and mechanics' and materialmen' lien releases and waivers from such
parties performing such work or supplying such materials). Lender also
reserves the right to make any disbursement or portion thereof from the Other
Impositions Account directly to the party performing such work or supplying
such materials. Lender or Lender's servicing agent, as the case may be, shall
be entitled to charge Borrower a reasonable processing fee for administering
and reviewing Borrower's draw requests. In addition, Lender shall be
reimbursed by Borrower for any costs incurred by Lender or Lender's servicing
agent in inspecting the Property in connection with Borrower's draw requests.
Any such processing fees and inspection costs shall be deducted by Lender
from the Funds on deposit or account or, at Lender's option, shall be paid to
Lender by Borrower within ten (10) days of Lender's written demand.
(iii) Each CIR Payment is pledged as additional security for
the sums secured by this Instrument and any of the other Loan Documents.
Borrower hereby grants to Lender a lien and security interest in each CIR
Payment and the deposit or other accounts in which such payments are placed.
(b) TENANT IMPROVEMENTS/LEASING COMMISSION RESERVE. Intentionally
Omitted.
(c) LETTER OF CREDIT SECURITY.
On or before the execution of this Instrument, Borrower shall provide
Lender with a letter of credit in a form and substance and from a commercial
bank acceptable to Lender, in its sole discretion, in the principal amount of
Six Hundred Sixty Two Thousand Five Hundred Dollars ($662,500.00). The letter
of credit shall be irrevocable by Borrower and shall provide that it may be
drawn upon by Lender without notice to Borrower in the event there is an event
of default under this Instrument or any of the Loan Documents and an
acceleration of the amounts due hereunder. The letter of credit shall be for a
term of not less than twelve (12) months, and shall be extended or replaced by
Borrower with a second letter of credit acceptable to Lender prior to its
expiration. The second letter of credit shall have a principal amount equal to
the principal amount of the first letter of credit, plus Sixty Two Thousand
Dollars ($62,000.00) or a total of Seven Hundred Twenty Four Thousand Dollars
($724,000.00). At the beginning of each twelve (12) month period thereafter,
Borrower shall similarly extend or replace the letter of credit with a letter
of credit acceptable to Lender, but in a amount equal to the then existing
letter of credit, plus Sixty Two Thousand Dollars ($62,000.00), until the
amount of the letter of credit equals Eight Hundred and Fifty Thousand Dollars
($850,000.00). Thereafter until the Loan is repaid in full, Borrower shall
maintain a letter of credit payable to Lender in the amount of Eight Hundred
Fifty Thousand Dollars. Any failure of the Borrower to maintain such letter of
credit, or to timely extend or replace any letter of credit as provide herein
shall be a default hereunder and under the Note, and shall entitle Lender to
all the remedies available to it hereunder and under the Loan Documents.
34. ACCELERATION; FORECLOSURE. Upon the occurrence of any Event of Default
and at any time thereafter while such Event of Default exists, Lender may, at
its option, exercise one or more of the following rights and remedies (and any
other rights and remedies available to it):
(a) Lender may declare immediately due and payable all indebtedness
secured by this Instrument, and the same shall thereupon be immediately due
and payable, without further notice or demand.
(b) Lender shall have and may exercise with respect to all fixtures
which are part of the Property, all the rights and remedies accorded upon
default to a secured party under the Uniform Commercial Code, as in effect in
the State of Iowa. If notice to Borrower of intended disposition of such
property is required by law in a particular instance, such notice shall be
deemed commercially reasonable if given to Borrower at least ten (10) days
prior to the date of intended disposition. Borrower shall pay on demand all
costs and expenses incurred by Lender in exercising such rights and remedies,
including without limitation, reasonable attorney's fees and legal expenses.
(c) Lender may (and is hereby authorized and empowered to) foreclose
this Instrument in accordance with the law of the State of Iowa, and in
connection therewith:
(i) At any time after the commencement of an action in
foreclosure, or during the period of redemption, the
court having jurisdiction of the case shall at the
request of Lender appoint a receiver to take immediate
possession of the Property and of the rents and profits
accruing therefrom, and to rent or cultivate the same as
he may deem best for the interest of all parties
concerned, and such receiver shall be liable to account
to Borrower only for the net profits, after application
of rents, issues and profits upon the costs and expenses
of the receivership and foreclosure and upon the
indebtedness.
(ii) In the event of foreclosure of this Instrument and sale
of the property by Sheriff's sale in said foreclosure
proceeding, the period of redemption after such sale
shall be reduced to six (6) months provided the Land
comprises less than ten (10) acres and Lender waives in
the foreclosure action any rights to a deficiency
judgment against Borrower which might arise out of the
foreclosure proceedings.
(iii) The court in a decree of foreclosure may find
affirmatively that Property has been abandoned by the
owners and those persons personally liable under this
Instrument at the time of such foreclosure. Should the
court so find and if Lender shall waive any rights to a
deficiency judgment against Borrower or its successors in
interest in the foreclosure action, then the period of
redemption after foreclosure shall be reduced to sixty
(60) days.
(iv) If any indebtedness or evidence thereof or this
Instrument shall be placed in the hands of an attorney
for collection, foreclosure, or other legal proceedings,
Borrower will pay a reasonable attorney's fee for any
service rendered by such attorney in connection
therewith, and will also pay all expenses incurred by
such attorney in procuring abstracts of title for
purposes of any foreclosure proceeding and all other
expenses reasonably incurred by such attorney in
connection with such foreclosure proceeding; and such
attorney's fees and expenses shall be considered part of
the indebtedness secured hereby and collectible
accordingly.
35. ASSUMABILITY.
(a) So long as (i) Borrower is not in default under any of the terms
of the Note, this Instrument or any other Loan Document, and (ii) no situation
exists which with the passage of time or the giving of notice or both would
constitute a default under the Note, this Instrument or any other Loan
Document, in the event Borrower desires to transfer all of the Property to
another party (the "Transferee") and have the Transferee assume all of
Borrower's obligations under the Note, this Instrument and all of the other
Loan Documents (collectively, the "Transfer and Assumption"), Borrower,
subject to the terms of this paragraph, may make a written application to
Lender for Lender's consent to the Transfer and Assumption, subject to the
conditions set forth in subparagraph (b) of this paragraph 35. Together with
such written application (and afterwards if requested by Lender), Borrower
will submit to Lender true, correct and complete copies of any and all
information and documents of any kind requested by Lender concerning the
Property, Transferee and/or Borrower, together with any review fee required by
Lender, in Lender's sole discretion.
(b) Lender shall not unreasonably withhold its consent to a Transfer
and Assumption provided and upon the condition that:
(i) Lender receives an opinion from counsel acceptable to
Lender that (x) such Transfer and Assumption shall not
affect, in any way, the enforceability of the Loan
Documents or the lien status, and (y) that the Transferee
complies in all respects with the provisions of
paragraph 31(n) and paragraph 32(l) of this Instrument
and such other conditions concerning the organizational
structure of the Transferee as were required by Lender at
the time of the making of the Loan;
(ii) Borrower has submitted to Lender true, correct and
complete copies of any and all information and documents
of any kind requested by Lender concerning the Property,
Transferee and/or Borrower;
(iii) the Transferee, in Lender's sole judgment, has sufficient
experience in managing assets similar in size and type to
the Property;
(iv) in Lender's sole judgment, the Transferee and the
partners, members or shareholders of the Transferee are
financially sound or have sufficient financial resources
to manage the Property for the term of the Loan;
(v) the Loan has been placed, or Lender plans to place the
Loan, in an offering of Securities (as defined in
paragraph 37) and Lender receives written confirmation
from the rating agencies that the Transfer and Assumption
will not result in any downgrade, qualification or
withdrawal of the ratings assigned to the pool and assets
in which the Loan has been placed; and
(vi) Borrower has paid any review fee required by Lender.
(c) If Lender consents to the Transfer and Assumption, the Transferee
and/or Borrower as the case may be, shall deliver the following to Lender:
(i) Borrower shall deliver to Lender an assumption fee in the
amount of one percent (1%) of the then unpaid principal
balance of the Loan;
(ii) Borrower and Transferee shall execute and deliver to
Lender any and all documents required by Lender, in form
and substance required by Lender, in Lender's sole
discretion (the "Assumption Documents");
(iii) Borrower shall cause to be delivered to Lender, an
endorsement to the mortgagee policy of title insurance
then insuring the lien created by this Instrument in form
and substance acceptable to Lender, in Lender's sole
discretion (the "Endorsement"); and
(iv) Borrower shall deliver to Lender a payment in the amount
of all costs incurred by Lender in connection with the
Transfer and Assumption, including but not limited to,
Lender's attorneys fees and expenses, all recording fees
for the Assumption Documents, and all fees payable to the
title company for the delivery to Lender of the
Endorsement.
(d) Notwithstanding anything contained in this paragraph to the
contrary, (x) under no circumstances may the Property and Loan be transferred
and assumed by any party under the terms of this paragraph more than once
during the entire term of the Loan and (y) except based on Lender's written
agreement to the Transfer and Assumption and Borrower's and Transferee's
compliance with all of the terms and provisions of this paragraph, the terms
and provisions of this paragraph shall in no way amend or modify the terms and
provisions contained in paragraph 19 of this Instrument.
36. WAIVER OF JURY TRIAL. BORROWER HEREBY KNOWINGLY, VOLUNTARILY AND
INTENTIONALLY WAIVES ANY RIGHT THE BORROWER MAY HAVE TO A TRIAL BY JURY IN
RESPECT TO ANY LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER OR IN
CONJUNCTION WITH THE NOTE, THIS INSTRUMENT, ANY OTHER LOAN DOCUMENT, ANY OTHER
AGREEMENT CONTEMPLATED TO BE EXECUTED IN CONNECTION HEREWITH, OR ANY COURSE OF
CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTIONS
OF EITHER PARTY.
37. TRANSFER OF LOAN. Lender may, at any time, sell, transfer or assign the
Note, this Instrument and the Loan Documents, or any part thereof, and any or
all servicing rights with respect thereto, or grant participations therein or
issue mortgage pass-through certificates or other securities evidencing a
beneficial interest in a rated or unrated public offering or private placement
(the "Securities"). Lender may forward to each purchaser, transferee,
assignee, servicer, participant, investor in such Securities or any rating
agency rating such Securities (singularly, an "Investor," and collectively,
the "Investors") and each prospective Investor, all documents and information
which Lender now has or may hereafter acquire relating to the Loan and to
Borrower, any guarantor, any indemnitors and/or the Property, whether
furnished by Borrower, any guarantor, any indemnitors or otherwise, as Lender
determines necessary or desirable. Borrower shall furnish and Borrower
consents to Lender furnishing to such Investors or such prospective Investors
or rating agency any and all information concerning the Property, the leases,
the financial condition of Borrower, any guarantor and any indemnitor as may
be requested by Lender, any Investor or any prospective Investor or rating
agency in connection with any sale, transfer or participation interest.
38. WAIVER OF DOWER, HOMESTEAD AND DISTRIBUTIVE SHARE. Borrower hereby
relinquishes all right of dower and hereby waives all right of homestead and
distributive share in and to the Property. Borrower hereby waives any right
of exemption as to the Property.
39. REDEMPTION PERIOD. If the Property is less than ten (10) acres in size
and if Lender waives in any foreclosure proceeding any right to a deficiency
judgment against Borrower, then the period of redemption from judicial sale
shall be reduced to six (6) months. If the court finds that the Property has
been abandoned by Borrower and if Lender waives any right to a deficiency
judgment against Borrower, then the period of redemption from judicial sale
shall be reduced to sixty (60) days. The provisions of this paragraph 39
shall be construed to conform to the provisions of Sections 628.26 and 628.27
of the 1975 Code of Iowa.
40. FUTURE ADVANCES. Upon request of Borrower, Lender, at Lender's option so
long as this Instrument secures indebtedness held by Lender, may make Future
Advances to Borrower. Such Future Advances, with interest thereon, shall be
secured by this Instrument when evidenced by promissory notes stating that
said notes are secured hereby. At no time shall the principal amount of the
indebtedness secured by this Instrument exceed the original amount of the Note
(US $7,000,000.00) nor shall the maturity of Future Advances secured hereby
extend beyond the time of repayment of the Note.
41. AGREEMENT CONCERNING PARTIAL RELEASES. This Mortgage shall be subject to
all of the terms and conditions of an Agreement between Mortgagor and
Mortgagee, dated of even date herewith and recording in the Polk County, Iowa,
Recorder's Office, providing for the partial release of the lien of this
Mortgage upon partition of the Property regardless of whether such Agreement
is recorded prior to or subsequent to this Mortgage and regardless of whether
or not the Mortgage interest herein is assigned prior to or subsequent to that
recordation of such Agreement.
This Instrument may be executed in any number of duplicate originals and
each duplicate original shall be deemed to be an original.
IN WITNESS WHEREOF, Borrower has executed this Instrument or has caused
the same to be executed by its representatives thereunto duly authorized.
Attest: Borrower:
____________________________________ Microware Systems Corporate Park, Inc.
an Iowa Corporation
____________________________________
By:/s/Kenneth B. Kaplan
Kenneth B. Kaplan, President
Borrower's address:
1500 N.W. 118th Street
Clive, Iowa 50325
<PAGE>
ACKNOWLEDGMENT
STATE OF IOWA)
) ss.
COUNTY OF POLK)
I certify that I know or have satisfactory evidence that Kenneth B.
Kaplan is the person who appeared before me, and said person acknowledged that
he signed the foregoing instrument, on oath stated that he was authorized to
execute the instrument and acknowledged it as the President of Microware
Systems Corporate Park, Inc., an Iowa Corporation to be the free and voluntary
act of said corporation for the uses and purposes mentioned in the instrument.
Dated this 30th day of December, 1997.
/s/ Paul R. Tyler
Paul R. Tyler
Notary Public for the State of Iowa
Residing at Des Moines, Iowa
My appointment expires 10-1-99
<PAGE>
EXHIBIT A
Legal Description:
Lot 1, Micro Systems Corporate Park, an Official Plat now included in and
forming a part of the City of Clive, Polk County, Nebraska
Situate in Polk County, Iowa
For Informational Purposes Only:
Tax Parcel Numbers: 445 - 501
Street Address: 1500 N.W. 118th Street, Clive, Iowa 50325
