FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended: July 2, 1995
Commission file number: 1-7807
Champion Parts, Inc.
(Exact name of registrant as specified in its charter)
Illinois 36-2088911
(State or other jurisdiction of (I.R.S. Employer Identifi-
incorporation or organization) cation No.)
2525 22nd Street, Oak Brook, Illinois
(Address of principal executive offices)
60521
(Zip Code)
708-573-6600
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to
file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
Indicate the number of shares outstanding of each of the
issuer's classes of common stock, as of the latest practicable
date.
Class Outstanding at August 23, 1995
Common Shares - $.10 par value 3,655,266
<PAGE>
<TABLE>
PART I
CHAMPION PARTS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (CONDENSED)
<CAPTION>
July 2, January 1,
1995 1995
---------- ----------
(Unaudited)
<S> <C> <C>
ASSETS
Current Assets
Cash and cash equivalents 495,000 346,000
Accounts Receivable,
less allowance for uncollectible
accounts 8,549,000 12,857,000
Inventories 16,969,000 26,866,000
Prepaid expenses and other 2,691,000 2,647,000
---------- ----------
Total current assets 28,704,000 42,716,000
Property, plant, and equipment (net) 10,554,000 11,494,000
Other assets 1,020,000 1,095,000
---------- ----------
TOTAL ASSETS 40,278,000 55,305,000
========== ==========
LIABILITIES AND STOCKHOLDERS EQUITY:
Current Liabilities
Accounts Payable 5,657,000 6,167,000
Accrued expenses and other payables 12,571,000 10,904,000
Current maturities on long-term debt 14,510,000 20,026,000
---------- ----------
Total current liabilities 32,738,000 37,097,000
Deferred income taxes 1,391,000 1,393,000
Long-term debt, less current maturities
ESOP loan agreement 0 514,000
Notes payable to banks and other 819,000 937,000
---------- ----------
Total liabilities 34,948,000 39,941,000
Stockholders Equity
Preferred stock - no par value
authorized 10,000,000 shares:
issued and outstanding, none 0 0
Common shares - $.10 par value
authorized 50,000,000 shares
issued and outstanding
3,655,266 shares 366,000 366,000
Additional paid-in capital 15,578,000 15,578,000
Cumulative translation adjustment (580,000) (645,000)
Debt guarantee for ESOP 0 (514,000)
Retained earnings (10,034,000) 579,000
---------- ----------
Total Stockholders equity 5,330,000 15,364,000
---------- ----------
TOTAL LIABILITIES AND STOCKHOLDERS EQUITY 40,278,000 55,305,000
========== ==========
<FN>
<F1> See notes to condensed consolidated financial statements
</FN>
</TABLE>
<PAGE>
<TABLE>
CHAMPION PARTS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS (CONDENSED)
<CAPTION>
Six Months Ended Three Months Ended
July 2, July 3, July 2, July 3,
1995 1994 1995 1995
----------- ----------- ----------- -----------
(Unaudited) (Unaudited)
<S> <C> <C> <C> <C>
NET SALES $37,612,000 $48,255,000 $16,308,000 $24,131,000
----------- ----------- ----------- -----------
Cost and expenses:
Cost of products sold 37,047,000 38,543,000 18,647,000 18,857,000
Selling, distribution and administration 8,792,000 8,224,000 4,368,000 4,184,000
Special charge 1,133,000 3,400,000 1,133,000 0
----------- ----------- ----------- -----------
46,972,000 50,167,000 24,148,000 23,041,000
----------- ----------- ----------- -----------
EARNINGS (LOSS) BEFORE INTEREST AND INCOME TAXES (9,360,000) (1,912,000) (7,840,000) 1,090,000
INTEREST 1,252,000 1,189,000 654,000 629,000
----------- ----------- ----------- -----------
EARNINGS (LOSS) BEFORE INCOME TAXES (10,612,000) (3,101,000) (8,494,000) 461,000
INCOME TAXES (BENEFIT) 1,000 (634,000) 0 84,000
----------- ----------- ----------- -----------
NET EARNINGS (LOSS) ($10,613,000) ($2,467,000) ($8,494,000) 377,000
=========== =========== =========== ===========
AVERAGE COMMON SHARES OUTSTANDING 3,655,266 3,655,266 3,655,266 3,655,266
=========== =========== =========== ===========
NET EARNINGS PER COMMON SHARE ($2.90) ($0.67) ($2.32) $0.10
=========== =========== =========== ===========
<FN>
<FN1> See notes to condensed consolidated financial statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
CHAMPION PARTS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (CONDENSED)
<CAPTION>
Six Months Ended
July 2, July 3,
1995 1994
----------- -----------
UNAUDITED
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings (loss) ($10,613,000) ($2,467,000)
Adjustments to reconcile net earnings (loss) to net
cash provided by operating activities:
Depreciation and amortization 754,000 892,000
Provision for losses on accounts receivable 646,000 192,000
Special charge 1,133,000 3,400,000
Change in assets and liabilities:
Accounts receivable 3,668,000 (3,366,000)
Inventories 9,929,000 (3,557,000)
Accounts payable (509,000) 3,901,000
Accrued expenses and other 1,429,000 (966,000)
----------- -----------
NET CASH PROVIDED BY (USED IN)
OPERATING ACTIVITIES 6,437,000 (1,971,000)
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (net) (140,000) (357,000)
------------ -----------
NET CASH USED IN INVESTING ACTIVITIES (140,000) (357,000)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net borrowings (payments) under line of credit
agreement (5,200,000) 3,000,000
Principal payments on long-term debt (948,000) (624,000)
------------ -----------
NET CASH PROVIDED BY (USED IN)
FINANCING ACTIVITIES (6,148,000) 2,376,000
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 149,000 48,000
CASH AND CASH EQUIVALENTS, beginning of period 346,000 78,000
----------- -----------
CASH AND CASH EQUIVALENTS, end of period $495,000 $126,000
=========== ===========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW
INFORMATION:
Cash paid during the period for:
Interest $1,104,000 $1,224,000
Income Taxes 0 324,000
<FN>
<FN1> See notes to condensed consolidated financial statements.
</FN>
</TABLE>
<PAGE>
CHAMPION PARTS, INC. AND SUBSIDIARIES
_____________________________________
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
_______________________________________________________________________________
1. The accompanying condensed financial statements have been
prepared in accordance with the accounting policies described
and set forth in the Company's annual report to the Securities
and Exchange Commission on Form 10-K for the twelve
months ended January 1, 1995.
The consolidated balance sheet at January 1, 1995 has been
derived from the audited financial statements at that date and
condensed. Certain reclassifications have been made to the
January 1, 1995 financial statements for consistency of
presentation.
2. The information furnished herein reflects all adjustments
(consisting of normal recurring accruals and certain other operating
and special charges as more fully described in Note 5) which are,
in the opinion of management, necessary for a fair presentation of
the results of operations for the interim period. Results of
operations for the six months ended July 2, 1995 are not
necessarily indicative of results to be expected for the entire
year.
3. Inventories are valued at the lower of cost (first in, first
out method) or market. A summary of the inventories follows:
July 2, 1995 January 1, 1995
------------ ---------------
Raw Materials $ 7,418,000 $ 10,870,000
Work in Process 3,602,000 5,028,000
Finished Goods 5,949,000 10,968,000
------------ ---------------
$ 16,969,000 $ 26,866,000
============ ===============
Included in inventory above were cores of $8,989,000 (July 2,
1995) and $14,139,000 (January 1, 1995).
4. For reporting purposes, product and core returns are offset
against gross sales in arriving at net sales. For the six
months ended July 2, 1995 and July 3, 1994 returns were
$31,088,000 and $31,458,000 respectively.
5. In June 1995, the company recorded a pre-tax special charge of $1.1
million to reflect the decision to exit the manufacture and sale
of automotive electrical (alternators and starters) and
mechanical (clutches and water pumps) products to traditional
market customers in the eastern United States. The charge
consists of $0.7 million for fixed asset write-downs to estimated
net realizable values and other facility wind-down costs related to
downsizing the Company's Hope, Arkansas production facility,
$0.2 million in termination benefits, and $0.2 million in
estimated costs to exit contractual liabilities. The downsizing
is expected to be substantially completed by the end of the
fourth quarter of 1995. Charges against the reserve have not
been significant to date.
Associated with the decision to exit the manufacture and sale
of automotive electrical and mechanical products to traditional
market customers in the eastern United States and the loss of certain
business in the western United States, the Company recorded a $3 million
write-down of inventory to estimated net realizable values. These
provisions are estimates based on the Company's judgment at this time.
Adjustments to the provisions may be necessary in future quarters
based on further development of restructuring related costs. Also,
additional adjustments may be necessary with respect to the Company's
Fresno, California operation. The Company is currently assessing its
options with respect to its Fresno, California facility which include
remaining in operation, selling it to or a combination with another
entity or closing the operation.
6. At the end of the second quarter, the Company continued to be
in default of its bank credit facility. The banks permitted the Company
to borrow under provisions of the credit facility. On July 2, 1995, the
Company had $15.0 million available under those provisions in the credit
agreement of which $12.7 million was borrowed.
In August 1995, the Company announced that it had reached an
agreement with its banks to amend and extend the credit facility to
January 8, 1996. The banks conditionally waived the defaults which
existed under the previous credit agreement. The amendment
reduced the commitment level to $16.0 million until September
14, 1995, to $14.8 million from September 15 to December 30 and
to $9.5 million until the expiration date. This declining
commitment level is commensurate with the company's planned
downsizing and reduction in operating assets. The amendment
provides the Company with $2 million of additional borrowing
availability within the commitment levels. In exchange for the
additional availability, the Company granted the banks a collateral
interest in its Beech Creek, Pennsylvania and Fresno, California plants
limited to $2.5 million plus accrued interest and certain other costs
related to the pledged real estate.
The Company agreed to pay interest at 3-1/2% above prime for
the duration of the extension. The commitment fee remains at 1/2%
of the facility. Certain financial covenants were conditionally
eliminated under the extension.
As a result of the default under the credit agreement, the Company
was in default of a $1.1 million standby letter of credit and a
$1.5 million capitalized lease obligation under a cross default
provision under a letter of credit which services the obligation.
The Company has reflected outstanding amounts under the credit
agreement and the $1.5 million capitalized lease obligation as
current liabilities in its financial statements.
The Company's ability to remain a going concern is dependent
upon it being able to restore operations to profitability and
sell assets from the discontinued product lines with sufficient
proceeds to remain within the credit agreement structure, reduce
outstanding trade debt and fund wind-down costs. There is no assurance
that the Company can achieve these results. If the Company cannot
extend or replace the current credit facility when it matures, the
Company would not have sufficient funds to pay outstanding amounts under
the facility. Additional equity or debt financing, would be necessary
for the Company to remain a going concern. There is no assurance that
the Company will be able to obtain additional equity or debt financing.
The Company's financial statements are prepared on a going concern basis
and do not contain adjustments which may be necessary if Company were
not to remain as a going concern.
In April, 1995 the Company deferred the final $200,000
principal payment on a promissory note to Echlin Inc. In May,
1995 the Company paid $100,000 of the outstanding remaining
principal.
<PAGE>
Management's Discussion and Analysis of Financial Condition and
Results of Operations
Significant Developments
In June 1995 the Company announced that it had adopted a plan
to refocus its business and exit the manufacture and sale of
automotive electrical (alternators and starters) and mechanical
(clutches and water pumps) products to the traditional wholesale
distributor and retail markets in the eastern United States. The
Company also manufactures and sells these products to
traditional wholesale distributor and retail customers in the
western United States. Subsequent to the announcement, the
Company's three largest customers, which did business with the
Company across the United States, informed the Company that they
would be changing to other suppliers in the third quarter. Sales
to the Company's three largest customers and those customers
affected by the Company's announcement accounted for
approximately 65% of sales in the first six months of 1995.
The Company retains its carburetor and constant velocity joint
product lines and continues to supply its original equipment
manufacturer aftermarket customers and west coast electrical and
mechanical products.
In response to these developments, the Company has taken
action to significantly downsize its operations. It is
currently assessing its options with respect to its operation in
Fresno, California which includes remaining in operation,
selling it to or a combination with another entity and/or
closing it. In addition, it is actively seeking customers for
its lost volume in carburetor and constant velocity joint
products lines.
In August the Company announced that it had come to terms with
its lending banks on an extension to its credit facility through
January 8, 1996. The extension, which supports the Company's
restructuring plan, initially provides for additional financing
for working capital and general business needs followed by a
declining facility commensurate with the Company's plan to
downsize its operations. For the additional financing, the
Company granted the banks a partial collateral interest in its
Beech Creek, Pennsylvania and Fresno, California plants limited
to $2.5 million plus accrued interest and certain other costs
related to the pledged real estate. See the Liquidity and
Capital Resources section for additional discussion on the
credit extension.
The restructuring plan will have a pervasive impact on the
Company's future operations and financial position. The Company
recorded a $1.1 million pretax restructuring charge in the
second quarter of 1995 to reflect the exit from the traditional
markets in the eastern United States. This charge included $0.7
million in estimated write downs of equipment and wind-down
costs, $0.2 million in termination benefits and $0.2 million in
estimated costs to exit contractual liabilities. It also wrote
down inventory approximately $3 million to estimated net
realizable value. These provisions are necessarily estimates
based on the Company's judgment at this time. Adjustments to
these provisions may be necessary in future quarters based on
further development of restructuring related costs. Also,
additional adjustments may be necessary with respect to the
Company's Fresno, California operation .
Beginning in the third quarter, sales will significantly
decline from previous levels. Carburetor sales and sales to
original equipment manufacturer aftermarket customers are
anticipated to comprise most of the Company's sales volume.
There can be no assurance that the Company will be able to
generate sufficient funds from operating profits, asset sales
and collections to cover continuing operations and wind-down
costs and satisfy debt obligations.
Results of Operations
Three Months Ended July 2, 1995 Compared to Three Months Ended July 3, 1994
Net sales for the quarter ended July 2, 1995 were $16.3
million, 32.4% less than net sales of $24.1 million for the same
period in 1994. The Company experienced lower sales in all of
its major product lines. This decrease reflected a continued
softness in the automotive aftermarket during the first half of
1995. Also, the Company began to lose customers in the
automotive aftermarket in the eastern United States after it
announced its intention to exit that market in June. The
Company began to experience higher product and core returns as a
proportion of sales, which are reflected as deductions to net
sales, as lost customers made final returns in a period of
declining sales. Second quarter 1995 returns were $1 million
higher than in 1994 . Total product and core returns, reflected
as reductions in net sales, were 44% in 1995 compared to 37% in
1994.
Carburetor sales were 33% of net sales in the second quarter of
1995 compared to 27% in 1994. In the second and third quarters
of 1995, the Company was informed by two major carburetor
customers that they were changing to other carburetor suppliers.
These customers accounted for 33% of second quarter 1995 net
carburetor sales. However, in the third quarter another major
carburetor customer informed the Company that it was increasing
its annual purchases by approximately $1 million. The Company
believes it continues to be a significant supplier of
carburetors to the aftermarket. Since the mid-1980's,
carburetors have been installed in fewer new vehicles sold in
the United States and Canada due to the increased use of fuel
injection systems. However, the Company continues to sell
replacement units for older vehicles, many of which use
carburetors. The Company expects that carburetor sales will
decline in future years. In addition, carburetor margins may be
negatively impacted in the future as customers seek to return
product during periods of declining demand. The Company has a
customer product return policy and has established reserves to
mitigate this effect.
At the end of the first quarter of 1995, one of the Company's
primary constant velocity joint customers changed to a
competitor. The other primary constant velocity joint customer,
which was the Company's largest customer, changed to a
competitor in the third quarter of 1995 as disclosed above.
These customers accounted for approximately 80% of 1995 year to
date constant velocity joint net sales and 5% of total 1995 year
to date net sales. The Company is making efforts to replace
this business with new customers. The Company anticipates
continued overall market volume growth in the constant velocity
joint product line as the number of front wheel drive vehicles
entering the prime repair age increases. However, there can be
no assurances the Company will be able to replace the lost
constant velocity joint business.
Cost of products sold was 114% of net sales in the second
quarter of 1995 compared to 78% in the second quarter of 1994.
The Company's cost per unit sold was 18% higher in 1995 than in
the second quarter 1994. Decreases in labor and overhead costs
resulting from the Company's 1994 plant consolidation were
offset by the labor inefficiencies and underabsorbed plant
overhead costs resulting from the 25% decrease in 1995 second
quarter unit volume as compared to 1994 second quarter. The 1995
costs were also negatively impacted during the quarter by
inefficiencies caused by material shortages which resulted from
the Company's tight cash position. 1995 costs of products sold
were also impacted by the $3 million write down of inventories
described above.
Selling, distribution and administrative expenses were
$4.4 million in the second quarter of 1995 compared to $4.2
million in the second quarter of 1994. The Company recorded $0.2
million in legal and professional fees related to its
restructuring plan and bank credit agreement in the second
quarter of 1995. These expenses offset decreases in selling and
administrative costs resulting from 1994 and 1995 headcount
reductions.
1995 second quarter results reflected a $1.1 million pretax
special charge to earnings reflecting the Company's decision to
exit the manufacture and sale of automotive electrical and
mechanical products to wholesale distributors and retailers in
the eastern United States.
Interest expense was $654,000 in the quarter compared to
$629,000 in the prior year. Lower average outstanding borrowings
were offset by a 2% increase in the spread between the prime
rate and the rate the Company's banks charge the Company and an
increase in the prime rate. The Company did not record any tax
benefit on 1995 losses due to limited carryback availability.
The net loss for the 1995 second quarter was $8.5 million
versus $0.4 million income in 1994.
Six Months Ended July 2, 1995 Compared to Six Months Ended July 3, 1994
Net sales for the first half of 1995 were $37.6 million, 22.2%
less than net sales of $48.3 million for the first half of 1994.
The Company experienced lower sales in all of its major product
lines with the exception of heavy duty alternator and starter
sales to original equipment manufacturers. This overall
decrease reflected a continued softness in the automotive
aftermarket during the first half of 1995 brought on by a mild
winter in the first quarter which depressed automotive
electrical sales. Also, the Company began to lose customers in
the automotive aftermarket in the eastern United States after it
announced its intention to exit that market in June. The
Company began to experience higher product and core returns at
the end of the second quarter, which are reflected as deductions
to net sales, as lost customers made final returns in a period
of declining sales. Returns in the first six months of 1995 were
$1.4 million higher than in 1994 . Total product and core
returns, reflected as reductions in net sales, were 44% in 1995
compared to 39% in 1994.
Carburetor sales were 28% of net sales in the first half of
1995 compared to 26% in 1994. In the second and third quarters
of 1995, the Company was informed by two major carburetor
customers that they were changing to other carburetor suppliers.
These customers accounted for 36% of 1995 net sales. However,
in the third quarter another major carburetor customer informed
the Company that it was increasing its annual carburetor
purchases by approximately $1 million in . The Company believes
it continues to be a significant supplier of carburetors to the
aftermarket. Since the mid-1980's, carburetors have been
installed in fewer new vehicles sold in the United States and
Canada due to the increased use of fuel injection systems.
However, the Company continues to sell replacement units for
older vehicles, many of which use carburetors. The Company
expects that carburetor sales will decline in future years. In
addition, carburetor margins may be negatively impacted in the
future as customers seek to return product during periods of
declining demand. The Company has a customer product return
policy and has established reserves to mitigate this effect.
At the end of the first quarter of 1995, one of the Company's
primary constant velocity joint customers changed to a
competitor. The other primary constant velocity joint customer,
which was the Company's largest customer, changed to a
competitor in the third quarter of 1995 as disclosed above.
These customers accounted for approximately 80% of 1995 year to
date constant velocity joint net sales and 5% of total 1995 year
to date net sales. The Company is making efforts to replace
this business with new customers. The Company anticipates
continued overall market volume growth in the constant velocity
joint product line as the number of front wheel drive vehicles
entering the prime repair age increases. However, there can be
no assurances the Company will be able to replace the lost
constant velocity joint business.
Cost of products sold was 98.5% of net sales in 1995 compared
to 80% in 1994. The Company's cost per unit sold was 11%
higher in the first six months of 1995 than in the first six
months of 1994. Decreases in labor and overhead costs resulting
from the Company's 1994 plant consolidation were offset by the
labor inefficiencies and underabsorbed plant overhead costs
resulting from the 17% decrease in 1995 unit volume as compared
to 1994 . The 1995 costs were also negatively impacted during
the quarter by inefficiencies caused by material shortages which
resulted from the Company's tight cash position. 1995 costs of
products sold were also impacted by the $3 million second
quarter write down of inventories described above.
Selling, distribution and administrative expenses were $8.8
million in the first half of 1995 compared to $8.2 million in
the first half of 1994. The Company recorded $0.7 million in
legal and professional fees related to the proposed equity
infusion in the first quarter and the restructuring plan and
bank credit agreement in the second quarter of 1995. These
expenses offset decreases in selling and administrative costs
resulting from 1994 and 1995 headcount reductions.
1995 results reflected a $1.1 million pretax special charge to
earnings reflecting the Company's decision to exit the
manufacture and sale of automotive electrical and mechanical
products to wholesale distributors and retailers in the eastern
United States. In 1994 the Company reported a $3.4 million
charge reflecting a plan to consolidate plant capacity which was
substantially completed by year end.
Interest expense was $1.3 million in 1995 compared to $1.2
million in the prior year. Lower average outstanding borrowings
were offset by a 2% increase in the spread between the prime
rate and the rate the Company's banks charge the Company. The
Company did not record any tax benefit on 1995 losses due to
limited carryback availability.
The net loss for 1995 was $10.6 million versus $2.5 million
loss in 1994.
Liquidity and Capital Resources
Working Capital
Net working capital at July 2, 1995 was $(4.0) million compared
to $5.6 million at January 1, 1995. The decrease was primarily
attributable to its $10.6 million year-to-date loss of which $3
million was due to the second quarter write down of inventory
and $1.1 million pretax special charge described above. Accounts
payable decreased $0.5 million due primarily to lower purchases.
The Company has reflected outstanding loans under its bank
credit agreement as short-term obligations at the end of the
second quarter. The Company entered into an amendment to its
bank credit agreement in the third quarter which conditionally
waived the defaults and extended the credit facility to January
1996. The amount of outstanding loans under the bank lines were
$12.7 million at July 2, 1995 and $17.9 million at January 1,
1995. The Company has also classified as short-term obligations
the outstanding principal on a $1.5 million capitalized lease
obligation .
The Company has a net deferred tax asset of $0.5 million as of
July 2, 1995. The Company believes this asset is realizable due
to its ability to obtain tax refunds on future tax losses.
Debt
The Company amended its bank credit agreement on April 1,
1995. This amendment waived the Company's noncompliance with
certain financial covenants in the first quarter of 1995 and
extended the credit agreement to July 1, 1995, provided the
Company consummated a proposed $5 million sale of Preferred
Stock. The Company did not complete the sale and was notified
by the banks that it was in default of the agreement. The
Company continued to borrow against eligible collateral based on
the terms of the agreement.
As a result of the default, the Company was in default of a
$1.1 million standby letter of credit and a $1.5 million
capitalized lease obligation under a cross default provision
under a letter of credit which services the obligation. The
Company has reflected outstanding amounts under the credit
agreement and the $1.5 million capitalized lease obligation as
current liabilities in its financial statements.
In August 1995 the Company reached an agreement with its banks
to amend and extend the credit facility to January 8, 1996. The
banks conditionally waived the defaults which existed under the
previous credit agreement. The amendment reduced the commitment
level to $16 million until September 14, 1995; $14.8 million
from September 15 to December 30 and $9.5 million after December
30. This declining commitment is commensurate with the Company's
planned downsizing and reduction in operating assets. The
amendment provides the Company with $2 million of additional
borrowing availability within the commitment levels. In
exchange for the additional availability, the Company granted
the banks a collateral interest in its Beech Creek,
Pennsylvania. and Fresno, California plants limited to $2.5
million plus accrued interest and certain other costs related to
the pledged real estate.
The Company agreed to pay interest at 3-1/2% above prime for
the duration of the extension. The commitment fee remains at
1/2% of the facility. Certain financial covenants were
conditionally eliminated under the extension.
The Company's ability to remain a going concern is dependent
upon it being able to restore operations to profitability and
sell assets from the discontinued product lines with sufficient
proceeds to remain within the credit agreement structure, pay
down outstanding trade debt to current terms and fund wind-down
costs. There is no assurance that the Company can achieve these
results. If the Company cannot extend or replace the current
credit facility when it matures, the Company would not have
sufficient funds to pay outstanding amounts under the facility.
Additional equity or debt financing would be necessary for the
Company to remain a going concern. There is no assurance that
the Company will be able to obtain additional equity or debt
financing. The Company's financial statements are prepared on a
going concern basis and do not contain adjustments which may be
necessary if Company were not to remain as a going concern.
In April, 1995 the Company deferred the final $200,000
principal payment on a promissory note to Echlin Inc. In May,
1995 the Company paid $100,000 of the outstanding remaining
principal.
Cash Flow
The Company decreased its debt, net of cash, by $6.3 million
in the six months ended July 2, 1995. This decrease was
primarily the result of reductions of borrowings under the
Company's bank credit facility and scheduled principal payments
on long-term debt. Funds generated by reducing Company
inventories funded the debt payments. The following summarizes
significant items affecting the change in total debt (amounts in
thousands).
July 2, July 3,
1995 1994
---------- ----------
Net income (loss), changes in
working capital, other $ 5,683 $ (2,863)
Depreciation and Amortization 754 892
Capital Expenditures (140) (357)
---------- ----------
(Increase) Decrease in total
debt, net of cash $ 6,297 $ (2,328)
========== ==========
The Company has generally funded major capital additions
through medium and long-term borrowing, including the use of
industrial revenue bond financing. However, such funding sources
are not readily available to the Company given its present
financial condition. Working capital requirements have
generally been financed by internally generated funds and bank
borrowings.
<PAGE>
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
In June 1995 the potentially responsible parties with
respect to the 825 Lawson Street property in the City of
Industry, California ("825 Lawson") received a request from the
California Regional Water Quality Control Board ("Water Board")
to prepare a plan to remediate soil at the site. The Water Board
also requested the responsible parties to continue testing
groundwater at the site in conjunction with the testing being
conducted by the Puenta Valley Steering Committee, a group of
which the Company is a member responding to a USEPA action. The
Company and other 825 Lawson responsible parties are in the
process of selecting a consultant to prepare the requested
remediation plan. As previously disclosed, it is too early to
predict the methods and cost of the cleanup. Prior proposed
estimates would cost in the range of $500,000 to $700,000.
The potentially responsible parties with respect to 825 Lawson
are the Company, the current property owner, another prior
property owner and a former operator. A Cost Sharing Agreement
between the Company, the prior property owner and former
operator called for the Company to share in one-third of the
costs of the cleanup at the property. This group and the current
property owner have entered into discussions regarding cost
sharing arrangements for future costs. The current property
owner indicated that it would not participate in a cost sharing
agreement. The Company cannot predict the outcome of these
discussions and the impact it would have on the Company's share,
if any, of the remediation costs. The Company has been partially
reimbursed for past costs under an agreement with its insurance
carriers. It intends to approach the carriers with respect to future
costs; however, it cannot predict the amount of insurance coverage it
would receive, if any, that would reduce the Company's ultimate
exposure.
Item 5. Other Information
The Company entered into a Third Amendment to Amended and Restated
Credit Agreement ("Credit Agreement"), and a Mortgage and Security
Agreement covering its principal Beech Creek, Pennsylvania plant (the
"Beech Creek Mortgage"), and a subsidiary of the Company entered into
a Deed of Trust, Assignment of Rents and Security Agreement --
California (the "Fresno Deed of Trust") and an Environmental
Indemnification Agreement, with the members of its bank group, dated
as of August 4, 1995 ("Third Amendment"). The Third Amendment extends
the Termination Date of the Credit Agreement to and including January
8, 1996 and, among other things, increases the borrowing base under
the Credit Agreement by $2,000,000 and, as indicated below,
conditionally waives existing defaults. Refer to Management's Discussion
and Analysis of Financial Condition and Results of Operations for
additional information regarding this amendment and limits on the
collateral interest granted.
The above summary of the Third Amendment is necessarily incomplete. For
a complete statement of the terms of the Third Amendment, the Beech
Creek Mortgage, the Fresno Deed of Trust and the Environmental
Indemnification Agreement, reference is hereby made to copies thereof
which are filed herewith as Exhibits 1, 2, 3 and 4, respectively, and
which are hereby incorporated by this reference.
On August 7, 1995 the Company announced that Donald G. Santucci
had resigned as president and director of the Company. It also
announced that Calvin A. Campbell had resigned as a director.
On August 10, the Company announced that Thomas W. Blashill,
36, was elected as the Company's president. He had held the
positions of executive vice president, secretary, chief
financial officer and treasurer. The Company also announced that
Mark Smetana, 35, was elected as vice president finance and
secretary and Richard Hebert, 55, as treasurer.
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits
(1) Third Amendment to Amended and Restated Credit Agreement
between Champion Parts, Inc. and LaSalle National Bank
Harris Trust and Savings Bank and NBD Bank
(2) Beech Creek Mortgage and Security Agreement
(3) Deed of Trust, Assignment of Rents and Security
Agreement -- California
(4) Environmental Indemnity Agreement
(27) Financial Data Schedules
(b) Reports on Form 8-K
The Company filed a Current Report on Form 8-K on June 9, 1995.
The Form 8-K reported the Company's announcement on its decision
to refocus the business and the Forbearance Agreement between
the Company and LaSalle National Bank, Harris Trust & Savings
Bank and NBD Bank.
<PAGE>
SIGNATURES
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.
CHAMPION PARTS, INC.
(Registrant)
DATE: August 22, 1995 By: /s/ Mark Smetana
Mark Smetana
Vice President Finance &
Secretary
<PAGE>
THIRD AMENDMENT TO AMENDED AND RESTATED CREDIT AGREEMENT
This Third Amendment to Amended and Restated Credit Agreement
(this "Third Amendment") is made and entered into as of
______________, 1995, by and among Champion Parts, Inc., an
Illinois corporation (the "Company"), LaSalle National Bank, a
national banking association ("LaSalle"), as successor to both
Exchange National Bank of Chicago and American National Bank and
Trust Company of Chicago, NBD Bank ("NBD"), and Harris Trust and
Savings Bank, an Illinois banking corporation ("Harris")
[LaSalle, NBD and Harris are each a "Bank" and collectively,
together with their respective successors and permitted assigns,
the "Banks"], and LaSalle in its capacity as both Agent and
Collateral Agent for the Banks.
W I T N E S S E T H:
WHEREAS, the Banks have provided certain extensions of credit,
loans and other financial accommodations to the Company pursuant
to (a) that certain Amended and Restated Credit Agreement dated
as of March 31, 1993, by and among the Company, the Banks, the
Agent and the Collateral Agent, as amended from time to time
(collectively the "Credit Agreement"), (b) (i) that certain
Reimbursement Agreement dated as of December 1, 1991, by and
between the Company and NBD (the "IRB Agreement"), and (ii) that
certain Standby Letter of Credit Application and Reimbursement
and Security Agreement dated December 30, 1991, by and between
the Company and NBD (the "Workmen's Compensation Agreement"),
and (c) any and all other agreements, documents and instruments
executed and delivered by the Company to any or all of the
Banks, the Agent or the Collateral Agent (collectively the
"Other Agreements"), including, but not limited to, that certain
Forbearance Agreement dated May 19, 1995, as extended from time
to time, and the other agreements, documents and instruments
executed and delivered in connection therewith (collectively the
"Forbearance Documents") [the Other Agreements, together with
the Credit Agreement, the IRB Agreement and the Workmen's
Compensation Agreement are collectively the "Champion Loan
Documents");
WHEREAS, the Company has requested, among other things, that
the Banks provide additional Advances in the aggregate amount of
Two Million and no/100 Dollars ($2,000,000.00) by increasing
availability under the borrowing base, extend the Termination
Date through January 8, 1996, and amend certain other provisions
contained in the Credit Agreement; and
WHEREAS, the Banks are willing to provide additional Advances
in the aggregate amount of Two Million and no/100 Dollars
($2,000,000.00) by increasing availability under the borrowing
base, extend the Termination Date through January 8, 1996, and
amend certain other provisions contained in the Credit
Agreement, but solely on the terms and subject to the conditions
set forth in this Third Amendment.
NOW, THEREFORE, in consideration of the foregoing, the mutual
promises and understandings of the parties hereto set forth
herein, and other good and valuable consideration, the receipt
and sufficiency of which consideration is hereby acknowledged,
the parties hereto hereby agree as set forth in this Third
Amendment.
1. Terms. All terms which have an initial capital letter in
this Third Amendment where not required by the rules of grammar,
and are not defined herein, are defined in the Credit Agreement.
2. Extension of Term of Credit Agreement. The Termination Date
of the Credit Agreement is hereby extended to and including
January 8, 1996.
3. Conditions Precedent.
A. The Banks shall be obligated to provide additional Advances
to the Company, subject to and solely in accordance with Section
6.27 of the Credit Agreement, in the aggregate amount of Two
Million and no/100 Dollars ($2,000,000.00) by increasing
availability under the borrowing base, to extend the Termination
Date through January 8, 1996, and to enter into this Third
Amendment, subject to the full and timely performance of any
conditions precedent contained in the Champion Loan Documents,
this Third Amendment and the "Initial Collateral Documents"
(hereinafter defined) and the full and timely performance of the
following covenants either prior to or contemporaneously with
the execution and delivery of this Third Amendment.
1. The Company will execute and deliver or cause to be
executed and delivered the following documents, all in form and
substance acceptable to the Banks, the Agent and the Collateral
Agent (collectively the "Initial Collateral Documents"):
(a) that certain Deed of Trust, Assignment of Rents and
Security Agreement - California executed and delivered by CPR
Properties, Inc. ("CPR") to Chicago Title Insurance Company, as
Trustee, granting a mortgage and lien in and to the real
property commonly known as 2696 South Maple Street, Fresno,
California ("Fresno Property"), subject only to a prior mortgage
and lien in favor of Gulf Life Corporation (the "Fresno Deed of
Trust");
(b) that certain Beech Creek Mortgage and Security Agreement
executed and delivered by the Company to the Banks, the Agent
and the Collateral Agent granting a first position priority
mortgage and lien in and to the real property commonly known as
Route 150 Beech Creek Industrial Park, Beech Creek, Pennsylvania
(the "Beech Creek Property") [the "Beech Creek Mortgage"];
(c) that certain Secretary's Certificate as to Officers and
Directors and Directors' Resolutions for the Company;
(d) that certain Secretary's Certificate as to Officers and
Directors and Directors' Resolutions for CPR;
(e) that certain Environmental Indemnification Agreement
executed and delivered by CPR to the Banks, the Agent and the
Collateral Agent;
(f) that certain Promissory Note executed and delivered by the
Company to LaSalle in the principal amount of Eight Million Two
Hundred Fifty-Eight Thousand Sixty-Four and 48/100 Dollars
($8,258,064.48) [the "LaSalle Revolving Note"];
(g) that certain Promissory Note executed and delivered by the
Company to Harris in the principal amount of Three Million
Ninety-Six Thousand Seven Hundred Seventy-Four and 24/100
Dollars ($3,096,774.24) [the "Harris Revolving Note"];
(h) that certain Promissory Note executed and delivered by the
Company to NBD in the principal amount of Four Million Six
Hundred Forty-Five Thousand One Hundred Sixty-One and 28/100
Dollars ($4,645,161.28) [the "NBD Revolving Note"]; and
(i) such other agreements, documents and instruments necessary
to effectuate the transactions described herein as the Banks,
the Agent and the Collateral Agent may reasonably request.
2. The Company will pay to LaSalle, in addition to any other
costs, fees and expenses which may be due and owing to the
Banks, an extension fee in the amount of Fifty Thousand and
no/100 Dollars ($50,000.00)[the "Extension Fee"]. LaSalle shall
remit the Extension Fee to each Bank in accordance with each
Bank's Percentage Share.
3. The Company acknowledges and agrees that the Agent will
debit the Company's accounts on the last business day of each
and every month, and the Company agrees to pay each of and all
of the Banks, the Agent and the Collateral Agent, for all
accrued interest, reasonable attorneys' fees, other professional
fees, and other fees, costs, charges, obligations and expenses
which the Banks, the Agent and/or the Collateral Agent have
incurred and will continue to incur in connection with the
Champion Loan Documents, this Third Amendment, the "Additional
Collateral Documents" (hereinafter defined), the default by the
Company under the Champion Loan Documents, and the indebtedness
evidenced by the Champion Loan Documents, this Third Amendment
and/or the Additional Collateral Documents (collectively the
"Champion Indebtedness"). The Agent acknowledges that it will
use its best efforts to provide copies of any bills and
statements relating thereto at least five (5) business days
prior to the last business day of each month, but the failure to
deliver copies thereof will not affect the Company's obligation
to pay such fees, costs, charges, obligations and expenses.
4. Other than those defaults described in Section 9.A. of this
Third Amendment or referred to in the waiver letter of even date
herewith from the Banks to the Company, no breach, default or
event of default has occurred pursuant to the Champion Loan
Documents, this Third Amendment or the Initial Collateral
Documents.
5. The representations and warranties contained in the
Champion Loan Documents, this Third Amendment and the Initial
Collateral Documents shall be true and correct.
B. The Banks', the Agent's and the Collateral Agent's
obligation to make any subsequent Advances pursuant to the
Champion Loan Documents, as amended by this Third Amendment, is
subject to the full and timely performance of each of the
following covenants and the full and timely performance of any
conditions precedent contained in the Champion Loan Documents,
either prior to or contemporaneously with, as the case may be,
the making of each subsequent Advance.
1. Within seven (7) days after presentment, the Company has
paid or reimbursed each and all of the Banks, the Agent and the
Collateral Agent for all reasonable attorneys' fees, costs and
expenses prior to and for the period ending July 31, 1995.
2. The Company will execute and deliver or cause to be
executed and delivered the following documents, all in form and
substance acceptable to the Banks, the Agent and the Collateral
Agent (the "Subsequent Documents") [the Initial Collateral
Documents, together with the Subsequent Documents are
collectively the "Additional Collateral Documents"]:
(a) on or before August 15, 1995, provide the Banks, the Agent
and the Collateral Agent with a complete schedule of all of the
Company's Patent and Trademarks and copies of all patent and
trademark searches in connection therewith;
(b) on or before August 31, 1995, a Collateral Assignment of
Patents and Trademarks for the Company, in form and substance
acceptable to the Banks, the Agent and the Collateral Agent;
(c) on or before September 15, 1995, that certain Promissory
Note executed and delivered by the Company to LaSalle in the
principal amount of Seven Million Six Hundred Thirty-Eight
Thousand Seven Hundred Nine and 65/100 Dollars ($7,638,709.65),
in substitution of the LaSalle Revolving Note and otherwise in
substantially the form of the LaSalle Revolving Note;
(d) on or before September 15, 1995, that certain Promissory
Note executed and delivered by the Company to Harris in the
principal amount of Two Million Eight Hundred Sixty-Four
Thousand Five Hundred Sixteen and 17/100 Dollars
($2,864,516.17), in substitution of the Harris Revolving Note
and otherwise in substantially the form of the Harris Revolving
Note;
(e) on or before September 15, 1995, that certain Promissory
Note executed and delivered by the Company to NBD in the
principal amount of Four Million Two Hundred Ninety-Six Thousand
Seven Hundred Seventy-Four and 18/100 Dollars ($4,296,774.18),
in substitution of the NBD Revolving Note and otherwise in
substantially the form of the NBD Revolving Note;
(f) on or before December 31, 1995, that certain Promissory
Note executed and delivered by the Company to LaSalle in the
principal amount of Four Million Nine Hundred Three Thousand Two
Hundred Twenty-Five and 78/100 Dollars ($4,903,225.78), in
substitution of the LaSalle Revolving Note and otherwise in
substantially the form of the LaSalle Revolving Note;
(g) on or before December 31, 1995, that certain Promissory
Note executed and delivered by the Company to Harris in the
principal amount of One Million Eight Hundred Thirty-Eight
Thousand Seven Hundred Nine and 71/100 Dollars ($1,838,709.71),
in substitution of the Harris Revolving Note and otherwise in
substantially the form of the Harris Revolving Note;
(h) on or before December 31, 1995, that certain Promissory
Note executed and delivered by the Company to NBD in the
principal amount of Two Million Seven Hundred Fifty-Eight
Thousand Sixty-Four and 51/100 Dollars ($2,758,064.51), in
substitution of the NBD Revolving Note and otherwise in
substantially the form of the NBD Revolving Note; and
(i) such other agreements, documents and instruments necessary
to effectuate the transactions described herein as the Banks,
the Agent and the Collateral Agent may reasonably request.
3. On or before August 31, 1995, the Company will provide the
Agent with a schedule of any specific licenses, contracts,
leases or other agreements which the Company believes in good
faith are excluded from the Banks', the Agent's or the
Collateral Agent's collateral as the granting of a security
interest and lien therein would result in a breach or default
under any such license, contract, lease or other agreement or
violate applicable law.
4. The Company acknowledges and agrees that the Agent will
debit the Company's accounts on the last business day of each
and every month, and the Company agrees to pay each of and all
of the Banks, the Agent and the Collateral Agent, for all
accrued interest, reasonable attorneys' fees, other professional
fees, and other fees, costs, charges, obligations and expenses
which the Banks, the Agent and/or the Collateral Agent have
incurred and will continue to incur in connection with the
Champion Loan Documents, this Third Amendment, the Additional
Collateral Documents, the default by the Company under the
Champion Loan Documents and the Champion Indebtedness. The
Agent acknowledges that it will use its best efforts to provide
copies of any bills and statements relating thereto at least
five (5) business days prior to the last business day of each
month, but the failure to deliver copies thereof will not affect
the Company's obligation to pay such fees, costs, charges,
obligations and expenses.
5. Other than those defaults described in Section 9.A. of this
Third Amendment or referred to in the waiver letter of even date
herewith from the Banks to the Company, no breach, default or
event of default has occurred pursuant to the Champion Loan
Documents, this Third Amendment or the Additional Collateral
Documents.
6. The representations and warranties contained in the
Champion Loan Documents, this Third Amendment and the Additional
Collateral Documents shall be true and correct.
4. Borrowing Base Provision. The Credit Agreement is hereby
amended by deleting Section 6.27(a) of the Credit Agreement in
its entirety and substituting therefor the following:
"(a) Not request, incur or permit to exist any Borrowing
hereunder which would violate any of the restrictions or
limitations set forth in Section 2.1 hereof or would result in,
cause or permit to exist the aggregate principal amount of all
Advances of any Bank outstanding at any one time, when added to
such Bank's Percentage Share of the aggregate remaining face
amount of all outstanding Letters of Credit and any unpaid draws
or disbursements thereunder, to exceed the lesser of (said
lesser amount being herein referred to as the "Section 6.27
Amount" or the "Borrowing Base") (x) such Bank's Percentage
Share of the sum of (A) the net book value of the Company's then
"Eligible Inventory" (as hereinafter defined) multiplied by the
then "Applicable Eligible Inventory Percentage" (as hereinafter
defined) [provided, however, that the amount determined pursuant
to this Section 6.27 (a)(x)(A) shall in no event exceed Nine
Million and no/100 Dollars ($9,000,000.00)], plus (B) the net
book value of the Company's then "Eligible Accounts" (as
hereinafter defined), multiplied by the then "Applicable
Eligible Accounts Percentage" (as hereinafter defined), plus (C)
the aggregate amount of the "Fresno and Beech Creek Real Estate
Advance" (hereinafter defined) outstanding from time to time, or
(y) such Bank's Commitment. As used in this Section 6.27(a),
the term "Fresno and Beech Creek Real Estate Advance" shall mean
the aggregate amount of Two Million and no/100 Dollars
($2,000,000.00), less monthly installments of Thirty-Three
Thousand Three Hundred Thirty-Three and 33/100 Dollars
($33,333.33) each, commencing August 31, 1995, and continuing on
the last day of each and every month thereafter through and
including December 31, 1995, with a final payment of the
outstanding balance on January 8, 1996."
5. Revolving Commitment. The amount of each Bank's Commitment
and Percentage Share appearing next to each Bank's respective
signature line in the Credit Agreement are hereby amended by
deleting such amounts and percentages in their entirety and
substituting therefor the amounts and percentages set forth next
to the signature lines appearing on this Third Amendment. In
connection with the reduction in each Bank's Commitment as of
______________, the Company will execute and deliver the LaSalle
Revolving Note, the Harris Revolving Note and the NBD Revolving
Note. Such Revolving Notes are in substitution, and not a
discharge of, that certain Promissory Note dated as of May 19,
1995, executed and delivered by the Company to LaSalle in the
amount of Nine Million Two Hundred Ninety Thousand Three Hundred
Twenty-Two and 54/100 Dollars ($9,290,322.54), that certain
Promissory Note dated as of May 19, 1995, executed and delivered
by the Company to Harris in the principal amount of Three
Million Four Hundred Eighty-Three Thousand Eight Hundred
Seventy-One and 02/100 Dollars ($3,483,871.02), and that certain
Promissory Note dated as of May 19, 1995, executed and delivered
by the Company to NBD in the principal amount of Five Million
Two Hundred Twenty-Five Thousand Eight Hundred Six and 44/100
Dollars ($5,225,806.44). In addition, the Company covenants and
agrees that, with the further reductions in each Bank's
Commitment on September 15, 1995, and December 31, 1995, it will
timely execute the additional Promissory Notes described in
Sections 3.B.1.c through and including 3.B.1.h of this Third
Amendment.
6. Additional Covenants. The Company covenants unto the Banks,
the Agent and the Collateral Agent as follows:
A. The Company shall fully and timely pay the Champion
Indebtedness as evidenced by the Champion Loan Documents, this
Third Amendment and the Additional Collateral Documents, and
fully and timely perform, subject to the applicable cure period,
if any, all of the covenants, duties, obligations and agreements
contained in the Champion Loan Documents, this Third Amendment
and the Additional Collateral Documents.
B. The Company will prepare and deliver each and every
business day to the Banks, the Agent and the Collateral Agent a
borrowing base certificate, in form and substance acceptable to
the Banks, the Agent and the Collateral Agent; provided,
however, if the Company fails to deliver a borrowing base
certificate on a business day when it has not requested nor
received an Advance, such failure shall constitute an Event of
Default if such borrowing base certificate has not been
delivered within two (2) days after notice from the Agent.
C. The Company covenants that a petition under the United
States Bankruptcy Code or any similar federal, state or local
law, statute or regulation has not been filed by or against the
Company.
D. The Company will execute and deliver any agreements,
documents and instruments necessary to perfect the Banks', the
Agent's and the Collateral Agent's security interest and lien in
and to all general intangibles of the Company, including, but
not limited to, the execution and delivery of the Collateral
Assignment of Patents and Trademarks referenced above.
E. The Company acknowledges and agrees that a written summary
will be prepared by Silverman, Korenthal & Company and delivered
to the Banks, the Agent and the Collateral Agent not later than
August 31, 1995, describing management's specific plans and
strategies, including repayment of the Champion Indebtedness.
F. The Company acknowledges and agrees that the Banks are
providing additional Advances, subject to and solely in
accordance with Section 6.27 of the Credit Agreement, in the
aggregate amount of Two Million and no/100 Dollars
($2,000,000.00) by creating additional availability under the
borrowing base as evidenced by the Fresno and Beech Creek Real
Estate Advance.
7. Default. The Company shall be in default under the terms
and provisions of this Third Amendment upon the occurrence of
any of the following events (an "Event of Default"):
A. The Company fails to fully and timely pay all sums due
pursuant to the Champion Loan Documents, this Third Amendment or
the Additional Collateral Documents;
B. Other than those defaults described in Section 9.A. of this
Third Amendment or referred to in the waiver letter of even date
herewith from the Banks to the Company, the Company breaches any
covenant, agreement or obligation set forth in the Champion Loan
Documents, this Third Amendment or the Additional Collateral
Documents, which remains uncured after the expiration of the
applicable cure period, if any; or
C. Other than those defaults described in Section 9.A. of this
Third Amendment or referred to in the waiver letter of even date
herewith from the Banks to the Company, any other or further
breach, default or event of default occurs under the Champion
Loan Documents, which remains uncured after the expiration of
the applicable cure period, if any.
In addition, the Company covenants and agrees that an Event of
Default under this Third Amendment is and shall constitute an
Event of Default under the Champion Loan Documents. Upon an
Event of Default, all of the Champion Indebtedness shall be
immediately due and payable, and shall be paid by the Company to
the Banks, the Agent and the Collateral Agent, as the case may
be, without any further notice or demand whatsoever, and the
Banks, the Agent and the Collateral Agent, as the case may be,
may, without notice, immediately (i) exercise all of their
rights and remedies under the Champion Loan Documents,
including, but not limited to, the Forbearance Documents, this
Third Amendment and the Additional Collateral Documents, as well
as any and all other rights and remedies available at law, in
equity or otherwise, and (ii) take any action, legal or
equitable, to collect the Champion Indebtedness and any and all
other sums now or hereafter due and owing from the Company to
the Banks, the Agent and the Collateral Agent. The Company
acknowledges and agrees that the Banks, the Agent and the
Collateral Agent have made no assurances, have not committed and
are under no obligation to extend the Termination Date.
8. Reaffirmation. The Company hereby reaffirms to the Banks,
the Agent and the Collateral Agent its pledge and grant of the
liens and security interests described in the Champion Loan
Documents, including, but not limited to, the Forbearance
Documents, this Third Amendment and the Additional Collateral
Documents. The Company and the Banks hereby affirm the
continued validity of the Champion Loan Documents, including,
but not limited to, the Forbearance Documents, and acknowledge
that all of the terms and provisions of the Champion Loan
Documents, including, but not limited to, the Forbearance
Documents, are and remain in full force and effect, are
enforceable in accordance with their terms and the Banks, the
Agent and the Collateral Agent are not in breach or default of
any of the terms, conditions and provisions of the Champion Loan
Documents, including, but not limited to, the Forbearance
Documents.
9. Reservation of Rights.
A. The Company acknowledges and agrees that it is and will
continue from time to time to be in default under the terms and
provisions of the Champion Loan Documents pursuant to Sections
6.1(a), 6.1(b), 6.2 (b), 6.2(f), 6.13, 6.14, 6.15, 6.29, 9.1(a)
and 9.1 (n) of the Credit Agreement, Article V of the IRB
Agreement and Section 5(h) of the Workmen's Compensation
Agreement (collectively the "Continuing Covenant Defaults"). To
the best of the Company's knowledge after due and diligent
inquiry, the Company represents and warrants unto the Banks, the
Agent and the Collateral Agent that no other breach, default or
event of default exists under the terms and provisions of the
Champion Loan Documents. To the Banks', the Agent's and the
Collateral Agent's knowledge without any inquiry or
investigation of any kind whatsoever, the Banks, the Agent and
the Collateral Agent are not aware of any other breach, default
or event of default under the terms and provisions of the
Champion Loan Documents.
B. The Banks, the Agent and the Collateral Agent hereby
continue to reserve all of their rights and remedies in
connection with the Continuing Covenant Defaults, whether such
rights and remedies are pursuant to the Champion Loan Documents,
including, but not limited to, the Forbearance Documents, this
Third Amendment, the Additional Collateral Documents, at law, in
equity or otherwise; provided, however, the Continuing Covenant
Defaults shall be deemed conditionally waived, subject to
reinstatement and enforcement upon the occurrence of an Event of
Default under this Third Amendment or the Additional Collateral
Documents or upon an additional or other default or event of
default under the Champion Loan Documents. Upon the occurrence
of an Event of Default under this Third Amendment or the
Additional Collateral Documents or upon an additional or other
default or event of default under the Champion Loan Documents,
then the Continuing Covenant Defaults shall be deemed reinstated
and existing, without further act or deed, as if no conditional
waiver were granted and any and all rights of the Banks, the
Agent or the Collateral Agent with respect thereto shall remain
reserved, unimpaired and fully enforceable.
C. Nothing contained in this Third Amendment or the Additional
Collateral Documents shall be or be deemed to be an
unconditional waiver by the Banks, the Agent and the Collateral
Agent of any default, breach or event of default, whether now
existing or hereafter arising or occurring. The Company
expressly acknowledges and agrees that, upon an Event of
Default, the Banks, the Agent and the Collateral Agent may
exercise any of their rights and remedies pursuant to the
Champion Loan Documents, including, but not limited to, the
Forbearance Documents, this Third Amendment or the Additional
Collateral Documents, at law, in equity or otherwise. Nothing
contained in this Third Amendment or the Additional Collateral
Documents shall affect the Company's obligation to fully and
timely pay the Champion Indebtedness.
10. Waiver and Release. In consideration of the Banks', the
Agent's and the Collateral Agent's execution and delivery of
this Third Amendment, the Company hereby waives, releases and
forever discharges the Banks, the Agent and the Collateral
Agent, their predecessors, parents, subsidiaries, affiliates,
agents, employees, officers, directors, shareholders, attorneys,
legal representatives, successors and assigns, and each of them,
of and from any and all claims, demands, counterclaims,
set-offs, defenses, debts, liabilities, obligations, costs,
expenses, actions, causes of action and damages of every kind,
nature and description whatsoever, known or unknown, foreseeable
and unforeseeable, liquidated and unliquidated, insured and
uninsured, which the Company heretofore and/or presently owns,
holds or has by reason of any matter, cause or thing whatsoever,
arising from, relating to or in connection with the Champion
Loan Documents, this Third Amendment, the Additional Collateral
Documents, the Champion Indebtedness or the default by the
Company. The Company hereby acknowledges and agrees that the
foregoing release shall not be or be deemed to create, construe
or admit any liability on behalf of the Banks, the Agent and the
Collateral Agent.
11. Authority To Execute This Third Amendment. The Company
represents and warrants to the Banks, the Agent and the
Collateral Agent that (a) it has obtained all necessary consents
to enter into, execute, deliver and perform this Third
Amendment, including, but not limited to, resolutions of the
Board of Directors of the Company, (b) CPR has obtained all
necessary consents to enter into, execute, deliver and perform
the Fresno Deed of Trust, including, but not limited to,
resolutions of the Board of Directors of CPR, (c) the Company
has the right, power and capacity and is duly authorized and
empowered to enter into, execute, deliver and perform this Third
Amendment, (d) CPR has the right, power and capacity and is duly
authorized and empowered to enter into, execute, deliver and
perform the Fresno Deed of Trust, (e) the execution and delivery
of this Third Amendment shall not breach any agreement,
instrument or document to which the Company is a party or by
which it is bound, and (f) the execution and delivery of the
Fresno Deed of Trust shall not breach any agreement, instrument
or document to which CPR is a party or by which it is bound.
12. Mortgage Proceeds. The Banks shall not receive or recover
proceeds in connection with the Beech Creek Mortgage and the
Fresno Deed of Trust in excess of the principal amount of Two
Million Five Hundred Thousand and no/100 Dollars
($2,500,000.00), plus (A) accrued interest on the outstanding
amount of the Fresno and Beech Creek Real Estate Advance, (B)
any disbursements made for payment of taxes, special assessments
or insurance on the Beech Creek Property and the Fresno
Property, and (C) any other costs, fees or expenses owed by the
Company or CPR to the Bank relating to the Beech Creek Property
or the Fresno Property. The Banks agree that, at any
foreclosure sale of the Beech Creek Property or the Fresno
Property, the amount of the Champion Indebtedness which the
Collateral Agent (at the direction of the Majority Banks) may
bid, as the equivalent of cash, shall not exceed the amount
described in this Section 12.
13. Release of Mortgages. The Company shall have the right to
cause the release of the Beech Creek Mortgage and the Fresno
Deed of Trust and the Banks shall release the Beech Creek
Mortgage and the Fresno Deed of Trust upon receipt by the Banks
of an amount (the "Release Amount") equal to the lesser of (i)
the total sum of all unpaid Champion Indebtedness; or (ii) the
amount described in Section 12 above. The Banks acknowledge and
agree that if the proceeds thereof, whether as a result of a
foreclosure sale or any other sale, disposition or refinancing
of either or both of the Beech Creek Property or the Fresno
Property, exceed the Release Amount and provided the Release
Amount is received by the Banks, all excess proceeds shall
belong to the Company free and clear of any lien or security
interest under the Champion Loan Documents.
14. Construction. This Third Amendment shall be interpreted,
construed and governed by and under the laws of the State of
Illinois.
A. The Schedules attached to and forming a part of the Credit
Agreement are hereby updated and restated in their entirety as
set forth on group Exhibit "A" to this Third Amendment,
excepting only Schedule 2.3 to the Credit Agreement.
B. Wherever possible, each provision of this Third Amendment
shall be interpreted in such manner as to be valid and
enforceable under applicable law, but if any provision of this
Third Amendment is held to be invalid or unenforceable by a
court of competent jurisdiction, such provision shall be severed
herefrom and such invalidity or unenforceability shall not
affect any other provision of this Third Amendment, the balance
of which shall remain in and have its intended full force and
effect; provided, however, if such provision may be modified so
as to be valid and enforceable as a matter of law, such
provision shall be deemed to be modified so as to be valid and
enforceable to the maximum extent permitted by law.
C. The Paragraph headings contained in this Third Amendment
are solely for the purpose of reference, are not part of the
agreement among the Company, the Banks, the Agent and the
Collateral Agent and shall not in any way affect the meaning or
interpretation of this Third Amendment, any Paragraph or
provision thereof. The Exhibits referred to herein are attached
hereto, made a part hereof and incorporated herein by this
reference thereto.
D. This Third Amendment shall be binding on the Company and
its successors, and shall inure to the benefit of the Banks, the
Agent and the Collateral Agent, their respective successors,
assigns, affiliates, divisions and parent.
E. This Third Amendment cannot be assigned by the Company
without the Banks', the Agent's and the Collateral Agent's,
prior written consent; provided, however, the Banks, the Agent
and the Collateral Agent may assign this Third Amendment and the
Additional Collateral Documents without notice to or the consent
of the Company.
F. No failure to exercise, and no delay in exercising, any of
the Banks', the Agent's and the Collateral Agent's rights,
powers or privileges shall operate as a waiver thereof.
1. No waiver of any breach of any provision shall be deemed
to be a waiver of any preceding or succeeding breach of the same
or any other provision.
2. No extension of time for the payment of any of the
Champion Indebtedness or any other sum to be paid pursuant to
the Champion Loan Documents, this Third Amendment or the
Additional Collateral Documents, or the performance of any other
obligation or act, shall be deemed to be an extension of the
time for payment or performance of any other obligation or act.
3. This Third Amendment may not be altered, changed, amended
or modified, except in accordance with Section 11.1 of the
Credit Agreement.
G. This Third Amendment, together with the Additional
Collateral Documents, constitutes the entire agreement among the
Company, the Banks, the Agent and the Collateral Agent with
regard to the subject matter hereof.
H. If, and to the extent the terms and provisions of this
Third Amendment contradict, modify, supersede or conflict with
the terms and provisions of the Champion Loan Documents,
including, but not limited to, the Forbearance Documents, then
the terms and provisions of this Third Amendment shall govern
and control; provided, however, to the extent the terms and
provisions of this Third Amendment does not contradict, modify,
supersede or conflict with the terms and provisions of the
Champion Loan Documents, including, but not limited to, the
Forbearance Documents, then the Champion Loan Documents,
including, but not limited to, the Forbearance Documents, shall
remain in and have their intended full force and effect, and the
Company hereby affirms, confirms and ratifies the same.
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Third
Amendment to be executed and delivered by their duly authorized
officers as of the date first set forth above.
CHAMPION PARTS, INC., an
Illinois corporation
By:
Title:
Amount of LaSalle's Percentage LA SALLE NATIONAL BANK,
Revolving Commitment Share individually, as Agent
and as Collateral Agent
(i) from the date of this 51.612903%
Third Amendment through
and including September 14, By:
1995, $8,258,064.48, (ii) Title
on September 15, 1995,
LaSalle's Commitment shall
automatically reduce to
$7,638,709.65, and (iii) on
December 31, 1995, LaSalle's
commitment shall automatically
reduce to $4,903,225.78
Amount of NBD's Percentage NBD BANK
Revolving Commitment Share
(i) from the date of this
Third Amendment through By:_____________
and including September 14, 29.032258% Title: ________
1995, $4,645,161.28, (ii) on
September 15, 1995, NBD's
commitment shall automatically
reduce to $4,296,774.18, and
(iii) on December 31, 1995,
NBD's commitment shall automatically
reduce to $2,758,064.51
Amount of Harris' Percentage HARRIS TRUST AND
Revolving Commitment Share SAVINGS BANK, an
Illinois corporation
(i) from the date of this 19.354839%
Third Amendment through
and including September 14, By: _________
1995, $3,096,774.24, (ii) Title: ____________
on September 15, 1995, Harris'
commitment shall automatically
reduce to $2,864,516.17, and (iii)
on December 31, 1995, Harris'
commitment shall automatically reduce
to $1,838,709.71
TOTAL REVOLVING
COMMITMENT
(i) from the date of this
Third Amendment through
and including September 14, 1995,
$16,000,000.00, (ii) on
September 15, 1995, the total
commitment shall automatically
reduce to $14,800,000.00, and (iii)
on December 31, 1995, the total
commitment shall automatically
reduce to $9,500,000.00
BEECH CREEK MORTGAGE AND SECURITY AGREEMENT
This Beech Creek Mortgage and Security Agreement (this
"Mortgage") is executed and delivered this 4th day of August,
1995, by Champion Parts, Inc., an Illinois corporation (the
"Company"), to LaSalle National Bank, a national banking
association ("LaSalle"), as successor to both Exchange National
Bank of Chicago and American National Bank and Trust Company of
Chicago, NBD Bank ("NBD"), and Harris Trust and Savings Bank, an
Illinois banking corporation ("Harris") [LaSalle, NBD and Harris
are collectively, together with their respective successors and
permitted assigns, the "Banks"], and LaSalle in its capacity as
both Agent and Collateral Agent for the Banks (the Banks and
LaSalle, in its capacity as both Agent and Collateral Agent for
the Banks are each a "Mortgagee" and collectively the
"Mortgagees").
W I T N E S S E T H:
WHEREAS, the Banks have provided certain extensions of credit,
loans and other financial accommodations to the Company pursuant
to (a) that certain Amended and Restated Credit Agreement dated
as of March 31, 1993, by and between the Company and the
Mortgagees, as amended from time to time (collectively the
"Credit Agreement"), (b) (i) that certain Reimbursement
Agreement dated as of December 1, 1991, by and between the
Company and NBD (the "IRB Agreement"), and (ii) that certain
Standby Letter of Credit Application and Reimbursement and
Security Agreement dated December 30, 1991, by and between the
Company and NBD (the "Workmen's Compensation Agreement"), and
(c) any and all other agreements, documents and instruments
executed and delivered by the Company to any or all of the
Banks, the Agent or the Collateral Agent (collectively the
"Champion Other Agreements") [the Champion Other Agreements,
together with the Credit Agreement, the IRB Agreement and the
Workmen's Compensation Agreement are collectively the "Champion
Loan Documents");
WHEREAS, the Company has requested, among other things, that
the Banks provide an additional extension of credit in the
amount of Two Million and no/100 Dollars ($2,000,000.00) by
increasing availability under the borrowing base, extend the
"Termination Date" (as defined in the Credit Agreement) through
January 8, 1996, and amend certain other provisions contained in
the Credit Agreement; and
WHEREAS, the Banks are willing to provide an additional
extension of credit in the amount of Two Million and no/100
Dollars ($2,000,000.00) by increasing availability under the
borrowing base, extend the Termination Date through January 8,
1996, and amend certain other provisions contained in the Credit
Agreement, but solely on the terms and subject to the conditions
set forth in that certain Third Amendment to the Amended and
Restated Credit Agreement of even date herewith by and between
the Company and the Mortgagees (the "Third Amendment to the
Amended and Restated Credit Agreement") and this Mortgage.
_______________________________
THIS INSTRUMENT PREPARED BY AND AFTER RECORDING SHOULD BE
RETURNED TO:
PIN: 12-01-072A Fagel & Haber
Common Addresses: Route 150 Beech South Dearborn
Creek Industrial Park Street
Park Suite 1400
Beech Creek, Pennsylvania Chicago, Illinois
60603
Attn.: Victor A.
Des Laurier, Esq.
NOW, THEREFORE, in consideration of the foregoing, the mutual
promises and understandings of the parties hereto set forth
herein, and other good and valuable consideration, the receipt
and sufficiency of such consideration is hereby acknowledged,
the Company hereby covenants unto and agrees with the Mortgagees
as set forth in this Mortgage.
1. DEFINITIONS AND TERMS
1.1 The following words, terms or phrases shall have the
meanings set forth below:
(A) "Charges": shall mean all national, federal, state,
county, city, municipal or other governmental (including,
without limitation, any instrumentality, division, agency, body
or department thereof) taxes, levies, assessments, charges,
water charges, sewer service charges, liens,
claims or encumbrances upon or relating to the "Mortgaged
Property" (hereinafter defined), the "Liabilities" (hereinafter
defined) or the "Obligations" (hereinafter defined).
(B) "Documents": shall mean any mortgage, deed of trust or
similar instrument, assignment of leases, assignment of rents,
promissory note, security agreement, guaranty, financing
statement, assignment of insurance, loss payable clause,
mortgage title insurance policy, letter of opinion, waiver
letter, estoppel letter, consent letter, non-offset letter,
insurance certificate, appraisal, survey and any other similar
such agreements, instruments or documents.
(C) "Encumbrances": shall mean all liens, security interests,
liabilities, claims, debts, exceptions, easements, restrictions,
Charges and any other types of encumbrances.
(D) "Environmental Laws": shall mean all federal, state and
local environmental, health or safety statutes, laws or
regulations now or hereafter enacted.
(E) "Equipment": shall mean all now existing or owned and
hereafter arising or acquired apparatus, machinery, equipment,
furniture, fixtures and other articles of personal property of
any and every kind and nature whatsoever, required for use in,
on, or in connection with the "Premises" (hereinafter defined)
or the management, maintenance, operation or business thereof
and all replacements thereof, substitutions therefor and
accessions thereto, including, without limitation, any such item
now or at any time or times hereafter situated on the Premises
and used to supply or otherwise deliver heat, gas, air
conditioning, water, light, electricity, power, plumbing,
refrigeration, sprinkling, ventilation, mobility, communication,
incineration, and all other related or other such services;
provided, however, the definition of Equipment shall not include
those items of equipment listed in paragraph 2 on Schedule 9.3
of the Credit Agreement.
(F) "Event of Default": shall mean the definition ascribed
to this term in Paragraph 6.1 below.
(G) "Hazardous Substance" means any (i) toxic or hazardous
waste, (ii) pollutants or substances, including, without
limitation, asbestos, Leerier, petroleum products and
by-products, substances defined or listed as "hazardous
substances" or "toxic substances" in the Comprehensive
Environmental Response, Compensation and Liability Act of 1980
("CERCLA") as amended, 42 U.S.C. 9601, et seq., "hazardous
materials" in the Hazardous Materials Transportation Act, as
amended, 49 U.S.C. e1802, et seq., "hazardous waste" in The
Resource Conservation and Recovery Act, as amended, 49 U.S.C.
6901, et seq., (iii) any chemical substance or mixture regulated
under the Toxic Substance Control Act of 1976, as amended, 15
U.S.C. e 2601, et seq., (iv) any "toxic pollutant" under the
Clean Water Act, as amended, 33 U.S.C. e 1251, et seq., (v) any
"hazardous air pollutant" under the Clean Air Act, as amended,
42 U.S.C. e 7401, et seq., and (vi) any hazardous, toxic
substance or pollutant regulated under any other applicable
federal, state or local Environmental Laws.
(H) "Leases": shall mean all present and future leases,
agreements, tenancies, licenses and franchises of or relating to
the Mortgaged Property, or in any way, manner or respect
required, existing, used or useable in connection with the
Mortgaged Property, or the management, maintenance, operation or
business thereof, and all deposits of money as advance rent or
for security under any or all of the Leases and all guaranties
of any lessee's performances thereunder.
(I) "Liabilities": shall mean any and all debts, claims,
obligations, demands, monies, liabilities or indebtedness of any
and every kind or nature heretofore, now or hereafter owing,
arising, due or payable from the Company and/or CPR Properties,
Inc., a California corporation ("CPR"), to any or all of the
Mortgagees, however evidenced, created, incurred, acquired or
owing, whether primary, secondary, direct, indirect, absolute,
contingent, fixed, determinable, undeterminable, insured and
uninsured, whether pursuant to the terms and provisions of this
Mortgage, the Other Agreements or otherwise, including, without
limitation, all advances made to protect and preserve the value
of the Mortgaged Property and the priority of the Mortgagees'
lien thereon.
(J) "Mortgaged Property": shall mean (1) the Premises; (2)
the "Rents" (hereinafter defined); (3) the Leases; (4) the
Equipment; (5) all present and future judgments, awards of
damages and settlements made as a result or in lieu of any
taking of the Premises, the Equipment or the Leases, or any part
thereof, whether under the power of eminent domain or otherwise,
or for any damage, whether caused by such taking or otherwise
thereto; (6) all present and future insurance policies in force
or effect insuring the Premises, the Rents, the Leases or the
Equipment; and (7) all proceeds of each and every of the
foregoing.
(K) "Obligations": shall mean all covenants, duties,
obligations and agreements of the Company and/or CPR to and with
any or all of the Mortgagees, whether pursuant to this Mortgage,
the Other Agreements or otherwise.
(L) "Other Agreements": shall mean all agreements,
instruments and documents heretofore, now or from time to time
hereafter executed by, or on behalf of, the Company or CPR, and
delivered to any or all of the Mortgagees, including, without
limitation, (1) that certain Promissory Note of even date
herewith executed and delivered by the Company to LaSalle in the
principal amount of Eight Million Two Hundred Fifty-Eight
Thousand Sixty-Four and 48/100 Dollars ($8,258,064.48); (2) that
certain Promissory Note of even date herewith executed and
delivered by the Company to NBD in the principal amount of Four
Million Six Hundred Forty-Five Thousand One Hundred Sixty-One
and 28/100 Dollars ($4,645,161.28); (3) that certain Promissory
Note of even date herewith executed and delivered by the Company
to Harris in the principal amount of Three Million Ninety-Six
Thousand Seven Hundred Seventy-Four and 24/100 Dollars
($3,096,774.24); (4) the Champion Loan Documents; (5) that
certain Deed of Trust, Assignment of Rents, and Security
Agreement - California of even date herewith by and among CPR,
Chicago Title Insurance Company and the Mortgagees (the
"California Deed of Trust"); (6) the Third Amendment to Amended
and Restated Credit Agreement, and (7) renewals, modifications,
amendments or substitutions to any of the foregoing.
(M) "Person": shall mean any individual, sole proprietorship,
partnership, joint venture, trust, unincorporated organization,
association, corporation, institution, entity, party or
government, whether national, federal, state, county, city,
municipal or otherwise, including, without limitation, any
instrumentality, division, agency, body or department thereof.
(N) "Premises": shall mean all of the real property, and all
of the Company's estate, right, title and interest therein,
situated, lying and being in the City of Beech Creek, County of
Clinton, State of Pennsylvania, and commonly known as Route 150
Beech Creek Industrial Park, Beech Creek, Pennsylvania, as
legally described on Exhibit "A", together with all buildings,
improvements, tenements, easements, hereditaments and
appurtenances now or at any time or times hereafter upon,
belonging or otherwise appertaining to or situated on said real
estate and all heretofore or hereafter acquired roads, alleys,
streets and other public ways abutting said real estate.
(O) "Rents": shall mean all present and future rents, issues,
deposits, income, profits and proceeds of, from or relating to
the Premises, the Leases or the Equipment.
2. CONVEYANCE
2.1 To secure the full and timely payment of the Liabilities,
and the full and timely performance of the Obligations, the
Company hereby warrants, grants, gives, bargains, confirms,
assigns, pledges, sets over, transfers, sells, conveys, remises,
releases and otherwise mortgages to the Banks and the Collateral
Agent for the ratable benefit of the Banks, their respective
successors and assigns, the Mortgaged Property, whether real,
personal or mixed.
2.2 This Mortgage shall operate as and constitute a Security
Agreement with respect to that portion of the Mortgaged Property
constituting property or interests in property, whether real or
personal, tangible or intangible, which are subject to the
Uniform Commercial Code with respect to the priority and
perfection of security interests or any similar law, statute,
code or other governing body of law. Therefore, to secure the
full and timely payment of the Liabilities and the full and
timely performance of the Obligations, the Company hereby grants
to the Banks and the Collateral Agent for the ratable benefit of
the Banks, their respective successors and assigns, a security
interest and lien in and to the Mortgaged Property.
2.3 Upon the request of the Collateral Agent (at the direction
of the "Majority Banks", as defined in the Credit Agreement), at
the Company's sole cost and expense, the Company will promptly
make, execute and deliver or will cause to be made, executed and
delivered to or for the benefit of the Mortgagees, in form and
substance acceptable to the Mortgagees, all Documents necessary
or appropriate to evidence, document or conclude the
transactions described in or contemplated by this Mortgage and
the Other Agreements, or required to perfect or continue
perfected the first position priority mortgage lien and security
interest granted herein by the Company to the Banks and the
Collateral Agent for the ratable benefit of the Banks upon the
Mortgaged Property (collectively the "Mortgagee's Lien").
3. REPRESENTATIONS, WARRANTIES AND COVENANTS
3.1 The Company represents, warrants and covenants unto the
Mortgagees as follows:
(A) The Company will fully and timely pay, or cause to be
paid, when due or declared due, the Liabilities and will fully
and timely perform, discharge, observe and comply with each and
every of the Obligations.
(B) The Company now has and hereafter shall maintain the
standing, right, power and lawful authority to own the Mortgaged
Property, to carry on the business of and operate the Mortgaged
Property, to enter into, execute and deliver this Mortgage and
the Other Agreements, and to pledge, mortgage and encumber the
Mortgaged Property to the Banks and the Collateral Agent for the
ratable benefit of the Banks.
(C) The Company now and at all times hereafter shall
perform all of the transactions described in or contemplated by
this Mortgage and the Other Agreements.
(D) To the best of the Company's knowledge after due and
diligent inquiry, the execution, delivery and performance by the
Company of and under this Mortgage and the Other Agreements (i)
does not and will not constitute a violation of any applicable
law, and (ii) does not and will not conflict with or result in a
default or breach of or under any obligation arising, existing
or created by or under any agreement, instrument, document,
mortgage, deed, trust deed, note, judgment, order, award, decree
or other restriction to which the Company now is or hereafter
shall become a party or by which the Company or any of the
Mortgaged Property is or hereafter shall become bound.
(E) The Company has duly filed and shall continue to timely
file all federal and state tax returns which the Company is
required by law to file with respect to the Mortgaged Property
and the operation and business thereof. All taxes and other
sums which are shown to be payable under such returns have been
and shall be fully and timely paid and the Company has and shall
continue to maintain adequate reserves in an amount to fully pay
all such liabilities as hereafter may accrue.
(F) All of the Leases, if any, are and shall remain (i)
genuine, (ii) in all respects what they purport to be, (iii)
free of set-offs, counterclaims or disputes, and (iv) valid and
enforceable in accordance with their terms. There are currently
no breaches, defaults or events of default under the Leases.
All parties to the Leases have and shall have the capacity to
contract thereunder. Except for security deposits provided for
under the Leases as indicated by the Company to the Collateral
Agent in writing, no advance payments have been or shall be made
thereunder.
(G) There is no litigation, action, claim or proceeding
pending or, to the best of the Company's knowledge, threatened
which might, in any way, manner or respect, affect the Mortgaged
Property, the operation or the business thereof or the
Mortgagees' Lien.
(H) To the best of Company's knowledge after due and diligent
inquiry, the Company possesses and holds and shall maintain
adequate properties, interests in properties, leases, licenses,
franchises, rights and other permits, certificates, consents and
approvals to conduct and operate the business of the Mortgaged
Property. None of the foregoing contain or shall contain any
term or condition that is burdensome to said business and
different than those customarily possessed or held by other
Persons conducting or operating a similar business.
(I) To the best of Company's knowledge after due and diligent
inquiry, the location, existence and use of the Premises and the
Equipment are and shall remain in compliance with all applicable
laws, rules, ordinances and regulations, including, without
limitation, building and zoning laws, and all covenants and
restrictions of record.
(J) The Company or the tenants under the Leases, as the case
may be, are and shall remain in peaceful possession of the
Premises and the Equipment, and the Company will forever warrant
and defend title to the Mortgaged Property from and against any
and all claims and Encumbrances thereon or thereto, except as
otherwise allowed herein.
(K) To the best of the Company's knowledge after due and
diligent inquiry: (i) the Company is not and shall not be using
the Mortgaged Property for any purpose in violation of any
applicable Environmental Laws, health or safety laws, rules or
regulations, including, but not limited to, the Resource
Conservation and Recovery Act, as amended ("RCRA"), the Toxic
Substances Control Act, as amended ("TSCA"), the Comprehensive
Environmental Response, Compensation and Liability Act, as
amended ("CERCLA"), the Clean Air Act, as amended ("CAA"), and
the Clean Water Act, as amended ("CWA"), regulations thereunder
and corresponding state statutes and regulations, except as set
forth on Exhibit "B"; (ii) the Company has all required permits,
certificates, consents and approvals required under any
applicable Environmental Laws, health or safety laws, rules or
regulations; and (iii) the Company is in compliance with all
applicable Environmental Laws, health and safety laws, rules or
regulations in connection with the use of the Mortgaged
Property, except as set forth on Exhibit "B".
(L) All hazardous waste accumulations at the Mortgaged
Property shall be in tanks or containers, as defined in 46.10
C.F.R. 260.10, and shall be in compliance with applicable United
States Environmental Protection Agency and State of Pennsylvania
small quantity generator limitations under RCRA, regulations
thereunder and corresponding Pennsylvania statutes and
regulations.
(M) As of the date hereof and at all times hereafter, there
are no underground storage tanks on the Premises and not more
than one (1) above ground storage tank on the Premises, as
described on Exhibit "B".
(N) Except as set forth on Exhibit "B", no burial, disposal
or landfilling of hazardous waste or hazardous substances,
regulated substances or other pollutants (as such are defined in
RCRA, TSCA, CERCLA, CAA or CWA) will be carried on at the
Mortgaged Property. Further, the Company shall operate no
surface impoundment, lagoon, or other earthen device for the
purposes of treatment, storage or disposal of hazardous wastes
and hazardous substances.
(O) Except as set forth on Exhibit "B", the Company shall
not use, release or cause to be used or released asbestos as
defined by 29 C.F.R. 1910.1001(a). Any repairs, maintenance or
modifications to the Mortgaged Property which may result in
release of asbestos shall be performed by or under the
supervision of personnel appropriately accredited by the State
of Pennsylvania or the United States Environmental Protection
Agency.
(P) The Company will, within fifteen (15) days of receipt
thereof, provide the Collateral Agent with a copy of any
administrative, civil or criminal complaint received by the
Company alleging (i) violations of environmental, health and
safety statutes, ordinances or regulations, (ii) bodily injury
in an amount in excess of Twenty-Five Thousand and no/100
Dollars ($25,000.00) for any single claim, or Fifty Thousand and
no/100 Dollars ($50,000.00) in the aggregate, in connection with
the Mortgaged Property; or (iii) property damage in connection
with the Mortgaged Property.
(Q) The Company hereby agrees to defend, indemnify and hold
the Mortgagees harmless from and against, and shall reimburse
the Mortgagees for, any and all losses, claims, liabilities,
damages, injunctive relief, injuries to person, property or
natural resources, costs and expenses or actions or causes of
action arising or in connection with the release or presence of
any Hazardous Substance or the violation or breach of any
Environmental Laws in connection with the Company's ownership of
the Premises, whether foreseeable or unforeseeable, irrespective
of the source of such release or when such release occurred or
is discovered (the "Environmental Indemnity"). The
Environmental Indemnity includes, without limitation, all costs
(i) of removal, remediation of any kind and disposal of such
Hazardous Substances; (ii) of determining whether the Premises
are in compliance, and all costs associated with causing the
Premises to be in compliance, with all applicable Environmental
Laws; (iii) associated with any violation or compliance with any
Environmental Laws; (iv) associated with claims for damages to
persons, property or natural resources; and (v) which the
Mortgagees have incurred, including, but not limited to,
attorneys' and consultants' fees and court costs. The
Environmental Indemnity shall not include any losses, claims,
liabilities, damages, costs or expenses caused as a result of
the wilful conduct or gross negligence of the Mortgagees.
(R) If the Collateral Agent (at the direction of the Majority
Banks) takes legal title to or becomes the beneficial owner of
all or any portion of the Premises, whether through any judicial
sale, non-judicial sale, deed in lieu of foreclosure or
otherwise, this Environmental Indemnity shall remain in full
force and effect, including, without limitation, with respect to
Hazardous Substances which were initially introduced or released
at the Premises prior to the Collateral Agent acquiring title to
or becoming the beneficial owner of the Premises and the
continuing migration or release of a Hazardous Substance
previously introduced at or near the Premises or Hazardous
Substances which are situated at the Premises prior to the
Collateral Agent taking title to or becoming the beneficial
owner of the Premises, but are removed by the Collateral Agent
subsequently thereto.
(S) The Environmental Indemnity shall survive repayment of the
Liabilities, any voluntary or involuntary transfer of title to
the Premises, any transfer by foreclosure or by a deed in lieu
of foreclosure or any bankruptcy or other insolvency proceeding.
(T) The Company, its successors and permitted assigns, hereby
waives, releases and agrees not to make any claim or bring any
action against any Mortgagee under any of the Environmental
Laws. The Company covenants unto and agrees with the Mortgagees
that any violation or breach of any of the Environmental Laws
shall be fully remediated and corrected prior to the Collateral
Agent obtaining title to or exclusive possession of the Premises
as evidenced by current clean Phase I and Phase II environmental
reports. It is expressly understood and agreed that to the
extent that any Mortgagee is strictly liable under any
Environmental Laws, the Company's obligations to the Mortgagees
under this Environmental Indemnity shall likewise be without
regard to fault on the part of the Company with respect to the
violation or condition which results in liability to any
Mortgagee.
(U) To the best of the Company's knowledge after due and
diligent inquiry, there are no unpaid assessments in connection
with the Mortgaged Property nor any assessment liens arising
from the non-payment of any such assessments.
3.2 The Company further represents, warrants and covenants unto
the Mortgagees as follows:
(A) The Company is and shall be lawfully seized, possessed and
the owner of and has good and indefeasible, marketable
fee-simple title to the Mortgaged Property, free and clear of
all Encumbrances, except for the Mortgagees' Lien, any liens
hereafter granted to the Banks and the Collateral Agent for the
ratable benefit of the Banks, and those Encumbrances described
on Exhibit "C" to this Mortgage (the "Permitted Encumbrances").
(B) The Company will (i) not materially change the use or
character of or abandon the Premises, (ii) keep the Premises and
Equipment in good condition and repair, and (iii) not commit or
suffer waste and will make all necessary repairs, replacements
and renewals, including, but not limited to, the replacement of
any items of the Equipment so that the value and operating
efficiency thereof shall at all times hereafter be maintained
and preserved. The Company shall not remove any trade fixture
or demolish any building or improvement located in or on the
Premises without the prior written consent of the Collateral
Agent (at the direction of the Majority Banks). The Company
shall (iv) pay for and promptly complete any building or
improvement at any time in the process of erection upon the
Premises, (v) refrain from impairing or diminishing the value of
the Premises or the Equipment, and (vi) make no material
alterations to the Premises or the Equipment which in the
opinion of the Collateral Agent (at the direction of the
Majority Banks) diminishes its value. Subject to the provisions
of subparagraphs 4.3 and 4.5(B) of this Mortgage, if the
Collateral Agent (at the direction of the Majority Banks) elects
to make all or a portion of any insurance, eminent domain or
condemnation proceeds available to the Company, the Company
shall promptly repair, restore or rebuild any building or
improvement now or hereafter on the Premises which may become
damaged or destroyed. The Company shall comply with all laws
and municipal ordinances governing the Mortgaged Property and
the use thereof. At all times during the term of this Mortgage
and the Other Agreements, the Company shall permit any or all of
the Mortgagees, and their agents, access to inspect the Premises.
(C) The Company shall fully and timely pay and discharge, as
and when due and payable, all Charges that may be at any time
levied, assessed or imposed upon or against the Mortgaged
Property, or any part thereof. The Company shall, immediately
upon the Collateral Agent's request (at the direction of the
Majority Banks), deliver to the Collateral Agent receipts
evidencing payment thereof or partial payment thereof if payable
in installments, at least thirty (30) days before delinquency;
provided, however, that the Company shall have the right to
contest in good faith, by an appropriate proceeding properly
initiated and diligently conducted, the validity, amount or
imposition of any Charges. and upon such good faith contest, to
delay or refuse payment thereof, if (i) the Company establishes
with the Collateral Agent (at the direction of the Majority
Banks) adequate reserves to satisfy in full such contested
Charges, and (ii) either such contest will not affect the
priority or value of the Mortgagees' Lien or the Company
otherwise insures the priority and value of the Mortgagees'
Lien. If at any time the United States of America shall require
internal revenue stamps to be affixed to this Mortgage, the
Company will pay for the same, together with any interest or
penalties imposed in connection therewith.
(D) Except for the Mortgagees' Lien, any liens hereafter
granted to the Banks and the Collateral Agent for the ratable
benefit of the Banks, and the Permitted Encumbrances, the
Company shall keep the Mortgaged Property free and clear of all
Encumbrances of any and every kind and nature including, without
limitation, mechanics' liens and other similar liens or claims
for liens. The Company shall promptly pay or cause to be paid,
as and when due and payable or when declared due and payable,
any indebtedness which may become, or be secured by, an
Encumbrance and, immediately upon request by the Collateral
Agent (at the direction of the Majority Banks) shall deliver to
the Collateral Agent evidence satisfactory to the Collateral
Agent (at the direction of the Majority Banks) of the payment
and discharge thereof; provided, however, that the Company shall
have the right to contest in good faith, by an appropriate
proceeding properly initiated and diligently conducted, the
validity, amount or imposition of any Encumbrances, and upon
such good faith contest, to delay or refuse payment thereof, if
(i) the Company establishes with the Collateral Agent (at the
direction of the Majority Banks) adequate reserves to satisfy in
full such contested Encumbrances, and (ii) either such contest
will not affect the priority or value of the Mortgagees' Lien or
the Company otherwise insures the priority and value of the
Mortgagees' Lien. If, in accordance with the terms of this
Mortgage, the Collateral Agent (at the direction of the Majority
Banks) makes payment of any such Encumbrance to a claimant, the
Collateral Agent shall be subrogated to the rights of such
claimant, notwithstanding that the Encumbrance may be released
of record.
(E) The Company shall not, at any time or times hereafter,
pledge, hypothecate, encumber, sell, permit or otherwise
transfer all or any portion of the Mortgaged Property or the
Company's interest therein, unless the Mortgagees receive the
"Release Amount" described in Section 7.9.
(F) All present and future items of fixtures, Equipment,
furnishings or other tangible personal property, whether or not
constituting a part of the Mortgaged Property, related,
necessary to or used or useable in connection with any present
or future building or improvement on the Premises, or the
operation or business thereof, are and will be owned free and
clear of all Encumbrances, except for the Mortgagees' Lien, any
liens hereafter granted to the Banks and the Collateral Agent
for the ratable benefit of the Banks and the Permitted
Encumbrances, and the Company will not acquire any such property
subject to any Encumbrance, except for the Mortgagees' Lien, any
lien hereafter granted to the Banks and the Collateral Agent for
the ratable benefit of the Banks and the Permitted Encumbrances.
3.3 Upon an Event of Default or if the Company fails to (A)
keep the Premises and Equipment in good operating condition and
repair or to replace or maintain the same as herein agreed, (B)
pay the premiums for the insurance coverage which is required to
be maintained hereunder, or (C) pay and discharge all
Encumbrances as herein agreed, the Collateral Agent (at the
direction of the Majority Banks) may, but shall not be obligated
to, cause such repairs or replacements to be made, obtain such
insurance or pay and discharge such Encumbrances. Any amounts
paid by the Collateral Agent (at the direction of the Majority
Banks) in taking such action together with interest thereon at
the "Default Rate" (as defined in the Credit Agreement) shall be
due and payable by the Company to the Collateral Agent upon
demand, and shall constitute a part of the Liabilities secured
by this Mortgage and the Other Agreements. Notwithstanding the
foregoing, such advances by the Collateral Agent shall not cure,
or be deemed to cure any Event of Default hereunder or under the
Other Agreements, or impair any of the Mortgagees' rights or
remedies hereunder, under the Other Agreements, at law, in
equity or otherwise. In making any such payments, the
Collateral Agent (at the direction of the Majority Banks) may
rely upon any bills, invoices, instruments or documents
delivered to it by the Company, an issuer or any such payee and
shall not be liable for any failure to make payments in any
amounts other than as set forth in any such bills, invoices,
instruments or documents.
4. TAXES, INSURANCE AND CONDEMNATION
4.1 The Company represents, warrants and covenants unto the
Mortgagees that the Company, at all times, shall keep and
maintain the Premises and the Equipment fully insured, without
co-insurance, against loss or damage by, or abatement of rental
income resulting from, fire and such other hazards, casualties
and contingencies as the Collateral Agent (at the direction of
the Majority Banks) may, from time to time, require with
insurance companies, and in form, amounts and for such periods
as are satisfactory to the Collateral Agent (at the direction of
the Majority Banks) but, in any event, for not less than the
full replacement cost of the Premises and the Equipment. All
such policies and renewals thereof shall contain, in form and
substance acceptable to the Collateral Agent (at the direction
of the Majority Banks) standard Lenders' Loss Payable clauses
naming the Collateral Agent as loss payee and the Banks as
additional insured as their interest may appear, together with a
standard waiver of subrogation endorsement and shall be
delivered to the Collateral Agent, with premiums therefor paid
in full by the Company. All policies shall contain an
endorsement that the insurer may not change, cancel or modify
the same without thirty (30) days prior written notice to the
Mortgagees. The Company will provide, within three (3) days of
such loss or damage, written notice to Mortgagees of any loss or
damage in excess of Twenty-Five Thousand and no/100 Dollars
($25,000.00) to the Premises or the Equipment caused by any
casualty. In the event of a deed in lieu of foreclosure or
other foreclosure of title to the Mortgaged Property, all right,
title and interest of the Company in and to any policies then in
force shall pass to the purchaser, grantee or assignee.
4.2 The Company hereby authorizes the Collateral Agent (at the
direction of the Majority Banks):
(A) to settle and compromise all claims under all insurance
policies;
(B) to demand and receive all proceeds payable under all
insurance policies;
(C) to execute, in the name of the Company or the name of the
Mortgagees, any proofs of loss, notices or other instruments in
connection with all claims under all policies; and
(D) to assign all policies to any holder of the Liabilities or
to the grantee of the Mortgaged Property in the event of the
foreclosure or other transfer of title to the Mortgaged
Property.
4.3 In the event of payment of proceeds under any of the
insurance policies, the Company acknowledges and agrees that the
proceeds of any of the insurance policies shall be paid by the
insurer to the Collateral Agent and the Collateral Agent (at the
direction of the Majority Banks) may, in whole or in part after
deducting all costs and expenses incurred by the Mortgagees in
connection with the collection of such proceeds, including the
Mortgagees' attorneys' fees, either:
(A) make available to the Company all or a portion of such
proceeds necessary to replace, reconstruct, repair or restore
the Premises and the Equipment or any portion thereof;
(B) apply all or a portion of such proceeds as payment on
account of the Liabilities pursuant to the terms and provisions
of this Mortgage, including, but not limited to, the payment of
any costs, fees and expenses due and owing by the Company to the
Mortgagees;
(C) apply such proceeds, in whole or in part, to satisfy,
perform or discharge any of the Obligations;
(D) require that the Company continue paying the Liabilities
as and when due and payable notwithstanding any loss of use of
all or any part of the Mortgaged Property; or
(E) if, prior to the receipt by the Collateral Agent of
proceeds of such policies, the Mortgaged Property shall have
been transferred pursuant to a deed in lieu of foreclosure or
otherwise sold or transferred by foreclosure of this Mortgage,
the Collateral Agent (at the direction of the Majority Banks)
shall receive proceeds of such policies to the extent of any
deficiency with interest thereon at the Default Rate, and the
attorneys' fees, costs, expenses and disbursements incurred by
the Mortgagees in connection with the collection of the proceeds
of such policies, whether or not a deficiency judgment on this
Mortgage shall have been sought or recovered or denied.
4.4 The Company further represents, warrants and covenants unto
the Mortgagees that it shall fully and timely pay all insurance
premiums and all real estate and other taxes in connection with
the Mortgaged Property and shall deliver to the Collateral Agent
evidence satisfactory to the Collateral Agent (at the direction
of the Majority Banks) of the payment of all insurance premiums
and all real estate and other taxes.
4.5 The Company further represents, warrants and covenants unto
the Mortgagees as follows:
(A) All awards now or hereafter made by any public or
quasi-public authority to or for the benefit of the Company in
any way, manner or respect affecting, arising from or relating
to the Mortgaged Property, or any portion thereof, by virtue of
an exercise of the right of eminent domain by such authority,
including, without limitation, any award for taking of title,
possession, right of access to a public way or for any change of
grade of streets affecting the Mortgaged Property, hereby are
assigned to the Banks and the Collateral Agent for the ratable
benefit of the Banks as additional security for the full and
timely payment of the Liabilities and the full and timely
performance of the Obligations, and for such purpose, the
Company hereby grants to the Banks and the Collateral Agent for
the ratable benefit of the Banks a security interest therein.
(B) The Collateral Agent (at the direction of the Majority
Banks) is hereby authorized, directed and empowered to collect
and receive all such awards and to give proper receipts therefor
whether in the Company's name, in the Mortgagees' name or in
both names, and may after deducting all costs and expenses of
collecting such awards, including, but not limited to, the
Mortgagees' attorneys' fees:
(1) make available to the Company all or a portion of such
awards necessary to replace, reconstruct, repair or restore the
Premises and the Equipment or any portion thereof;
(2) apply all or a portion of such awards as payment on
account of the Liabilities pursuant to the terms and provisions
of this Mortgage, including, but not limited to, the payment of
any costs, fees and expenses due and owing by the Company to the
Mortgagees;
(3) apply such awards, in whole or in part, to satisfy,
perform or discharge any of the Obligations;
(4) require that the Company continue paying the Liabilities
as and when due and payable notwithstanding any loss of use of
all or any part of the Mortgaged Property; or
(5) if, prior to the receipt by the Collateral Agent of such
proceeds, the Mortgaged Property shall have been transferred
pursuant to a deed in lieu of foreclosure or otherwise sold or
transferred by foreclosure of this Mortgage, the Collateral
Agent shall receive such proceeds to the extent of any
deficiency with interest thereon at the Default Rate, and the
attorneys' fees, costs, expenses and disbursements incurred by
the Mortgagees in connection with the collection of such
proceeds, whether or not a deficiency judgment on this Mortgage
shall have been sought or recovered or denied.
(C) The Company, promptly after request by the Collateral
Agent (at the direction of the Majority Banks), shall make,
execute and deliver or cause to be made, executed and delivered
to or for the benefit of the Mortgagees any and all assignments
and other instruments sufficient to assign, and cause the
payment directly to the Collateral Agent of, all such awards,
free and clear of all Encumbrances, except for the Mortgagees'
Lien, any Liens hereafter granted to the Banks and the
Collateral Agent for the ratable benefit of the Banks and the
Permitted Encumbrances. Notwithstanding any taking by eminent
domain, alteration of the grade of any street or other injury to
or decrease in value of the Mortgaged Property by any public or
quasi-public authority or corporation, the Company shall
continue to pay all of the Liabilities as and when due and
payable.
5. LEASES AND RENTS
5.1 Provided an Event of Default does not exist under this
Mortgage or the Other Agreements, the Company shall have the
right to collect all of the Rents and shall hold the same, in
trust, to be applied, except as otherwise provided by applicable
law, first to the payment of all Charges upon the Mortgaged
Property, second to the cost of the maintenance of insurance
policies upon the Mortgaged Property required hereby, and third
to the maintenance and repairs to the Premises and Equipment
required hereby, before using any part of the Rents for any
other purposes.
5.2 At all times, the Collateral Agent (at the direction of the
Majority Banks) shall have the right to verify the validity,
status of performance, amount of rentals and other sums due
under the Leases, or any other matter relating to any or all of
the Leases or a Person's use, occupancy or possession of the
Premises, by mail, telephone, telegraph or otherwise, in the
name of the Company, the Mortgagees, a nominee of the Mortgagees
or in any or all of said names.
5.3 The Company shall: (A) promptly upon the Company's receipt
or learning thereof, inform the Mortgagees, in writing, of any
assertion of any claims, offsets or counterclaims by any of the
obligors of the Leases; (B) not permit or agree to any
extension, compromise or settlement or make any change or
modification of any kind or nature of or with respect to the
Leases or the terms thereof except in the ordinary course of
business of the Company; and (C) promptly upon the Company's
receipt or learning thereof, furnish to and inform the
Mortgagees of all adverse information relating to or affecting
the financial condition of any lessee, tenant, guarantor or
obligor under any of the Leases.
5.4 The Company acknowledges and agrees that:
(A) As of the date hereof, there are no Leases in connection
with any or all of the Premises. The Company, not less than
seven (7) days prior to execution thereof, shall provide the
Mortgagees with copies of all Leases, amendments or renewals
which the Company desires to enter into, which shall be
reasonably acceptable to the Collateral Agent (at the direction
of the Majority Banks).
(B) Upon an Event of Default, the Collateral Agent (at the
direction of the Majority Banks) may without notice thereof to
the Company, notify any or all of the tenants, lessees,
guarantors or obligors under any of the Leases that the Leases
have been assigned to the Banks and the Collateral Agent for the
ratable benefit of the Banks, and the Collateral Agent (at the
direction of the Majority Banks) may direct said obligors
thereafter to make all payments of rents and other sums due from
them under the Leases directly to the Collateral Agent.
(C) Upon an Event of Default and notice from the Collateral
Agent, the Company shall irrevocably direct all obligors of the
Leases to make all payments under the Leases directly to the
Collateral Agent.
(D) Upon an Event of Default and notice from the Collateral
Agent, the Collateral Agent (at the direction of the Majority
Banks) may, without notice to the Company, (i) demand payment of
the Rents and performance of the Leases; (ii) enforce payment of
the Rents and performance of the Leases, by legal proceedings or
otherwise, in the name of the Company, the Mortgagees or in both
names; (iii) exercise any or all of the Company's rights,
interests and remedies in and under the Leases; (iv) settle,
adjust or compromise the Rents, or extend or renew the Leases;
(v) settle, adjust or compromise any legal proceeding brought to
collect the Rents or obtain performance of the Leases; (vi) take
possession, in any manner, of the Rents; (vii) prepare, file and
sign the Company's name on any Proof of Claim in bankruptcy, or
similar document in a similar proceeding, of any tenant, lessee,
guarantor or obligor under any of the Leases; (viii) endorse the
name of the Company upon any payments or proceeds of the Rents
and apply the same to the Liabilities; and (ix) do all acts and
things necessary to carry out any or all of the foregoing.
(E) All of the foregoing payments and proceeds received by the
Collateral Agent shall be utilized by the Collateral Agent (at
the direction of the Majority Banks) for any one or more of the
following purposes: (i) to be held by the Collateral Agent as
additional collateral for the payment of the Liabilities; (ii)
to be applied against the Liabilities pursuant to the terms and
provisions of the Credit Agreement; (iii) to be applied against
the Obligations, or the operation or business of the Mortgaged
Property as the Collateral Agent (at the direction of the
Majority Banks) shall determine; or (iv) to be remitted to the
Company.
6. DEFAULT
6.1 The occurrence of any one or more of the following shall
constitute an "Event of Default" under this Mortgage:
(A) The occurrence of a breach, default or event of default
under this Mortgage or the Other Agreements;
(B) The Company fails to fully and timely pay any of the
Liabilities, when due and payable or declared due and payable;
(C) The Company fails or neglects to timely perform, keep or
observe any of the Obligations and such default is not cured
within five (5) days after notice to the Company;
(D) Any statement, report or certificate made or delivered to
a Mortgagee by the Company, or any of such Mortgagee's partners,
officers, employees or agents, is materially untrue, incorrect
or incomplete;
(E) Any of the Company's assets are seized, attached,
subjected to a writ or distress warrant, or are levied upon, or
come within the possession of any receiver, trustee, custodian
or assignee for the benefit of creditors;
(F) The Company makes an assignment for the benefit of
creditors, or an application is made by or against the Company
for the appointment of a receiver, trustee, custodian or
conservator for the Company or any of the Company's assets;
(G) A petition under the United States Bankruptcy Code or
any similar federal, state or local law, statute or regulation
shall be filed by or against the Company;
(H) The Company is enjoined, restrained or in any way
prevented by court order from conducting any part of its
business;
(I) A lawsuit or other proceeding is filed by or against the
Company to liquidate any of the Company's assets; or
(J) A notice of a lien, levy or assessment is filed of
record with respect to the Company or any of the Company's
assets by the United States of America, any department, agency,
or instrumentality thereof, or by any state, county, municipal
or other governmental department, agency or instrumentality.
6.2 Upon the occurrence of an Event of Default, without
notice to or demand upon the Company, all of the Liabilities
shall become immediately due and payable, and the Collateral
Agent (at the direction of the Majority Banks) may do any one or
more of the following:
(A) Without notice to the Company, foreclose upon the
Mortgagees' Lien and exercise any rights or remedies granted to
the Mortgagees under this Mortgage, the Other Agreements, or
provided by law, in equity or otherwise. Upon an Event of
Default, the Liabilities shall bear interest at the Default Rate.
(B) Subject to applicable law, forcibly or otherwise, enter
upon and take immediate possession of the Premises, expel and
remove any Persons, goods or chattels occupying or upon the
Mortgaged Property, receive all Rents, and issue receipts
therefor, manage, control and operate the Mortgaged Property as
fully as the Company might do if in possession thereof,
including, but not limited to, the leasing of the Mortgaged
Property, or any part thereof, from time to time, and after
deducting all attorneys' fees, costs, fees and expenses incurred
in the protection, care, maintenance, management and operation
of the Premises and the Equipment, apply the remaining net
income, if any, to the Liabilities pursuant to the terms and
provisions of the Credit Agreement. Such entry and taking of
possession shall be accomplished either by actual entry and
possession or by written notice in accordance with Paragraph 7.1
of this Mortgage. The Company agrees to surrender possession of
the Premises and the Equipment to the Collateral Agent
immediately upon the occurrence of an Event of Default. If,
after an Event of Default, the Company shall remain in physical
possession of the Premises or any part thereof, such possession
shall be as a tenant at sufferance of the Collateral Agent, and
the Company agrees to pay to the Collateral Agent, or to any
receiver appointed as provided below, after an Event of Default,
a monthly rental for the Premises and the Equipment, or the part
thereof so occupied by the Company to be applied as provided
above in the first sentence of this Subparagraph, and to be paid
in advance on the first day of each calendar month, and, upon
failure to do so, the Company may be dispossessed by the usual
summary proceedings. In the event the Company shall so remain
in possession of all, or any part of, the Premises and the
Equipment, said monthly rental shall be in amounts established
by the Collateral Agent (at the direction of the Majority
Banks). This covenant shall be effective irrespective of (i)
whether any foreclosure proceeding shall have been instituted,
and (ii) any application for, or appointment of, a receiver.
(C) File one or more suits at law or in equity for the
foreclosure of all or any portion of this Mortgage or to collect
the Liabilities. In the event of the commencement of any such
suit by the Collateral Agent (at the direction of the Majority
Banks), the Collateral Agent (at the direction of the Majority
Banks) shall have the right, either before or after sale,
without notice and without bond which are hereby expressly
waived by the Company, and without regard to the solvency or
insolvency of the Company at the time of application and without
regard to the then value of the Mortgaged Property or whether
the same is then occupied, to make application for and obtain
the appointment of a receiver for the Mortgaged Property. Such
receiver shall have the power to collect the Rents during the
pendency of such suit and, in case of a sale and a deficiency,
during the full statutory period of redemption as well as during
any further times when the Company, except for the appointment
of such receiver, would be entitled to collect the Rents, and
shall have all other powers which may be necessary or usual in
such cases for the protection, possession, control, management
and operation of the Mortgaged Property. The court before which
such suit is pending may from time to time authorize the
receiver to apply the net income in his hands in payment, in
whole or in part, of the Liabilities pursuant to the terms and
provisions of the Credit Agreement. In case of a sale pursuant
to foreclosure, the Premises may, but need not, be sold as one
parcel.
(D) If the Collateral Agent (at the direction of the Majority
Banks) commences any suit to foreclose this Mortgage, the
Collateral Agent (at the direction of the Majority Banks) shall
have the right to apply to the court in which such proceedings
are pending for entry of an order placing the Collateral Agent
in possession of the Premises. If an order is entered placing
the Collateral Agent in possession of the Mortgaged Property,
the Collateral Agent (at the direction of the Majority Banks)
may thereupon enter upon and take immediate possession of the
premises, expel and remove any Persons, goods or chattels
occupying or upon the Premises, receive all Rents and issue
receipts therefor, manage, control and operate the Premises,
including, but not limited to, the making of all repairs and
replacements deemed necessary by the Collateral Agent (at the
direction of the Majority Banks) and the leasing of the Premises
or any part thereof, from time to time, and after deducting all
attorneys' fees, costs, fees and expenses incurred in the
protection, care, maintenance, management and operation of the
Premises, apply the remaining net income, if any, to the
Liabilities pursuant to the terms and provisions of the Credit
Agreement. Such entry and taking of possession shall be
accomplished either by actual entry and possession or by written
notice of entry of the order placing the Collateral Agent in
possession in accordance with Paragraph 7.1 of this Mortgage.
If the Company shall remain in physical possession of the
Premises after entry of an order placing the Collateral Agent in
possession, the Company's possession shall be as a tenant at
sufferance of the Collateral Agent, and the Company agrees to
pay to the Mortgagees, or to any other Person authorized by the
Mortgagees, after entry of such order, a monthly rental for the
Premises, or the part thereof so occupied by the Company to be
applied as provided above in the first sentence of Paragraph
6.2(B) and to be paid in advance on the first day of each
calendar month, and, upon failure to do so, the Company may be
dispossessed by the usual summary proceedings. If the Company
shall so remain in possession of all or of any part of the
Premises, said monthly rental shall be in amounts established by
the Collateral Agent (at the direction of the Majority Banks).
6.3 Upon the occurrence of an Event of Default under this
Mortgage, there will be added to and included as part of the
Liabilities, and allowed in any decree for sale of the Mortgaged
Property or in any judgment rendered in connection with this
Mortgage or the Other Agreements the following: (A) all of the
costs, fees and the expenses of taking possession of the
Mortgaged Property and of the holding, using, leasing,
maintaining, insuring, repairing and selling of the Mortgaged
Property, including, but not limited to, the costs, fees,
charges, expenses and attorneys' fees specified in Paragraph 6.4
below; (B) receivers' fees; (C) any and all expenditures which
may be paid or incurred by or on behalf of the Mortgagees for
appraisers' fees, documentary and expert evidence,
stenographers' charges, publication costs, fees and expenses for
examination of title, title searches, guaranty policies, Torrens
certificates and other similar data and assurances with respect
to the title to the Mortgaged Property; (D) all prepayment or
similar premiums, if any; and (E) all other costs, fees and
expenses which the Mortgagees deem necessary to prosecute or
enforce any right or remedy they have under this Mortgage, the
Other Agreements, at law, in equity or otherwise, or to inform
bidders at any sale which may be had pursuant to their rights
hereunder, of the true condition of title or of the value of the
Mortgaged Property. All such costs, charges, expenses,
prepayment or like premiums, fees and other expenditures shall
be a part of the Liabilities, secured by this Mortgage and the
Other Agreements, payable on demand and shall bear interest at
the Default Rate from the date of the Mortgagees' payment
thereof until repaid to the Mortgagees.
6.4 If foreclosure proceedings are instituted upon this
Mortgage, or if the Collateral Agent (at the direction of the
Majority Banks) shall be a party to, shall intervene, or file
any petition, answer, motion or other pleading in any suit or
proceeding relating to or in connection with the Mortgaged
Property, the Liabilities or the Obligations, or if any or all
of the Mortgagees shall incur or pay any expenses, costs,
charges, fees or attorneys' fees by reason of the employment of
counsel for advice with respect to the Mortgaged Property, the
Liabilities or the Obligations, and whether in court proceedings
or otherwise, such expenses, costs, charges and all of the
Mortgagees' attorneys' fees shall be part of the Liabilities,
secured by this Mortgage and the Other Agreements, payable on
demand and shall bear interest at the Default Rate from the date
of the Mortgagees' payment thereof until paid.
6.5 Subject to Paragraph 7.8 below, the Company waives the
right to direct the application of all proceeds of any
foreclosure sale of the Mortgaged Property at any time or times
hereafter received by the Collateral Agent, and the Company
agrees that the Collateral Agent shall have the continuing
exclusive right to apply and reapply any and all payments in
such manner and in such order as the Collateral Agent (at the
direction of the Majority Banks) may deem advisable, including,
but not limited to, the payment of any costs, fees and expenses
due and owing by the Company to the Mortgagees in connection
with the Liabilities, the Obligations, this Mortgage or the
Other Agreements.
6.6 If the Collateral Agent (at the direction of the Majority
Banks) commences judicial proceedings to foreclose this
Mortgage, the Company, on behalf of itself, its successors,
heirs and permitted assigns, and each and every Person which the
Company may legally bind which acquires any interest in or title
to the Mortgaged Property subsequent to the date of this
Mortgage: (a) does hereby expressly waive any and all rights of
appraisement, valuation, stay, extension and, to the extent
permitted by law, redemption from sale under any order or decree
of foreclosure of this Mortgage; and (b) does hereby agree that
when sale is had under any decree of foreclosure of this
Mortgage, upon confirmation of such sale, the master in chancery
or other officer making such sale, or his successor in office,
shall be and is hereby authorized immediately to execute and
deliver to any purchaser at any sale a deed conveying the
Mortgaged Property, showing the amount paid therefor, or if
purchased by the Person in whose favor the order or decree is
entered, the amount of his bid therefor.
6.7 The Collateral Agent (at the direction of the Majority
Banks) shall have the right to sue for any sums, whether
interest, principal or other sums required to be paid by or for
the account of the Company under the terms of this Mortgage or
the Other Agreements as the same become due, or for any other of
the Liabilities which shall become due, and without prejudice to
the right of the Collateral Agent (at the direction of the
Majority Banks) thereafter to bring an action of foreclosure, or
any other action, for a default or defaults by the Company
existing at the time such earlier action was commenced.
6.8 No right or remedy of the Mortgagees enforceable hereunder
by the Collateral Agent is exclusive of any other right or
remedy hereunder or now or hereafter existing at law, in equity
or otherwise, but is cumulative and in addition thereto and the
Collateral Agent (at the direction of the Majority Banks) may
recover judgment thereon, issue execution therefor, and resort
to every other right or remedy available at law, in equity or
otherwise, without first exhausting or affecting or impairing
the security or any right or remedy afforded by this Mortgage.
No delay in exercising, or omission to exercise, any right or
remedy will impair any such right or remedy or will be construed
to be a waiver of any default by the Company hereunder, or
acquiescence therein, nor will it affect any subsequent default
hereunder by the Company of the same or different nature. Every
such right or remedy may be exercised independently or
concurrently, and when and so often as may be deemed expedient
by the Collateral Agent (at the direction of the Majority
Banks). No terms or conditions contained in this Mortgage may
be waived, altered or changed except as evidenced in writing
signed by the Company and the Mortgagees.
6.9 If any rate of interest described in this Mortgage or the
Other Agreements is greater than the rate of interest permitted
to be charged or collected by applicable law, as the case may
be, such rate of interest shall automatically be reduced to the
maximum rate of interest permitted to be charged or collected by
applicable law.
6.10 Any failure of the Mortgagees to insist upon the strict
performance by the Company of any of the terms and provisions of
this Mortgage or the Other Agreements, shall not be or be deemed
to be a waiver of any of the terms and provisions thereof, and
the Mortgagees, notwithstanding any such failure, shall have the
right at any time or times thereafter to insist upon the strict
performance by the Company of any and all of the terms and
provisions thereof to be performed by such party. Neither the
Company nor any other Person now or hereafter obligated for the
payment of the whole or any part of the Liabilities shall be
relieved of such obligation by reason of (A) the sale,
conveyance or other transfer of the Mortgaged Property, (B) the
failure of any Mortgagee to comply with any request of the
Company or of any other Person to take action to foreclose this
Mortgage or otherwise enforce any of the provisions of this
Mortgage or the Other Agreements, (C) the release, regardless of
consideration, of the whole or any part of the collateral or
security held for the Liabilities or the Obligations, or (D) any
agreement or stipulation between any subsequent owner or owners
of the Mortgaged Property and the Mortgagees extending or
modifying the time for payment of the Liabilities or performance
of the Obligations, without first having obtained the consent of
the Company or such other Person and, in such case, the Company
and all such other Persons shall continue to be liable on
account of the Liabilities and the Obligations and to make such
payments according to the terms of any such agreement, extension
or modification unless expressly released and discharged in
writing by the Mortgagees. The Collateral Agent (at the
direction of the Majority Banks), without notice, may release,
regardless of consideration, any part of the security held for
the Liabilities or the Obligations without, as to the remainder
of the security therefor, in any way impairing or affecting the
Mortgagees' Lien or the priority of the Mortgagees' Lien over
any subordinate lien. The Collateral Agent (at the direction of
the Majority Banks) may resort for the payment of the
Liabilities to any other security therefor held by the
Mortgagees in such order and manner as the Collateral Agent (at
the direction of the Majority Banks) may elect.
7. MISCELLANEOUS
7.1 Any and all notices, demands, requests, consents,
designations, waivers and other communications required or
desired hereunder shall be in writing and shall be deemed
effective upon personal delivery, upon receipted delivery by
overnight carrier, or three (3) days after mailing if mailed by
registered or certified mail, return receipt requested, postage
prepaid, to the Company or the Mortgagees at the following
addresses or such other addresses as the Company or the
Mortgagees specify in like manner; provided, however, that
notices of a change of address shall be effective only upon
receipt thereof.
If to LaSalle, With a copy to:
then to:
LaSalle National Bank Fagel & Haber
120 South LaSalle Street 140 South Dearborn, Suite 1400
Chicago, Illinois 60603 Chicago, Illinois 60603
Attention: Mr. Thomas J. Bieke Attention: Gina M. Gentili, Esq.
If to the With a copy to:
Collateral Agent
or the Agent, LaSalle National Bank Fagel & Haber
then to: 120 South LaSalle Street 140 South Dearborn, Suite 1400
Chicago, Illinois 60603 Chicago, Illinois 60603
Attention: Mr. Thomas J. Bieke Attention: Gina M. Gentili, Esq.
If to Harris, With a copy to:
then to:
Harris Trust and Savings Bank Chapman & Cutler
111 West Monroe Street 111 West Monroe Street
Chicago, Illinois 60603 Chicago, Illinois 60603
Attention: Mr. John Smart Attn: Edward L. Lembitz, Esq.
If to NBD, With a copy to:
then to:
NBD Bank Honigman, Miller,
611 Woodward Avenue Schwartz & Cohn
Detroit, Michigan 48226 2290 First National Building
Attention: Mr. Andrew Arton Detroit, Michigan 48226
Attn.: Theodore Sylwestrazak, Esq.
If to the Company, With a copy to:
then to:
Champion Parts, Inc. Lord,Bissell & Brook
2525 22nd Street 115 S. LaSalle St., Ste. 2500
Oak Brook, Illinois 60521 Chicago, Illinois 60603
Attention: Executive Vice President Attention: Louis E. Rosen, Esq.
7.2 All the covenants contained in this Mortgage will run with
the land. Time is of the essence of this Mortgage and all
provisions herein relating thereto shall be strictly construed.
7.3 This Mortgage, and all the provisions hereof, will be
binding upon and inure to the benefit of the successors,
parents, subsidiaries, divisions and affiliates of the Company,
and the successors, parents, subsidiaries, divisions, affiliates
and assigns of the Mortgagees. This Mortgage may not be
assigned by the Company, but may be assigned by any Mortgagee
without notice to the Company.
7.4 Wherever possible, each provision of this Mortgage shall
be interpreted in such a manner as to be valid and enforceable
under applicable law, but if any provision of this Mortgage is
held to be invalid or unenforceable by a court of competent
jurisdiction, such provision shall be severed herefrom and such
invalidity or unenforceability shall not affect any other
provision of this Mortgage, the balance of which shall remain in
and have its intended full force and effect. Provided, however,
if such provision may be modified so as to be valid and
enforceable as a matter of law, such provision shall be deemed
to be modified so as to be valid and enforceable to the maximum
extent permitted by law.
7.5 The terms and provisions of the Other Agreements are
incorporated herein by this reference thereto.
7.6 In acting under or by virtue of this Mortgage, the
Collateral Agent shall be entitled to all the rights, authority,
privileges and immunities provided to the Agent or the
collateral Agent in Article 10 of the Credit Agreement, all of
which provisions of Article 10 are incorporated by reference
herein with the same force and effect as if set forth herein.
Without limiting the foregoing, the Collateral Agent hereby
disclaims any representation or warranty to the Banks or the
Agent concerning the creation, validity, enforceability,
perfection or priority of the security interest granted
hereunder or under any of the Other Agreements or the value of
the Mortgaged Property hereunder or under any of the Other
Agreements and the Collateral Agent shall not be required to
take any action with respect to any Event of Default except for
those expressly directed by the Majority Banks. The Company
acknowledges and agrees that it is not a beneficiary of the
rights, powers, duties and obligations provided for between the
Collateral Agent and the Banks and that the Company shall not be
entitled to any rights or claims or any immunities or defenses
as a result of (i) the Collateral Agent's actions or inactions
without the consent of the Majority Banks, or (ii) any breach of
the Collateral Agent's representations, warranties, covenants or
obligations, if any, to the Banks.
7.7 This Mortgage is given to secure, among other things, the
Liabilities. This Mortgage shall secure not only presently
existing indebtedness under the Other Agreements, but also
future advances, whether such advances are obligatory, to be
made at the option of the Bank or otherwise, to the same extent
as if such future advances were made on the date of the
execution of this Mortgage. The lien of this Mortgage shall be
valid as to all indebtedness secured hereby, including future
advances, from the time of its filing for record in the Clinton
County, Pennsylvania Recorder's Office. The total principal
amount of the Liabilities secured hereby shall not exceed the
principal amount of Eighteen Million Six Hundred Forty-Two
Thousand Nine Hundred Forty-Six and no/100 Dollars
($18,642,946.00), plus interest thereon, any disbursements made
for payment of taxes, special assessments or insurance on the
Mortgaged Property and
any other costs, fees, expenses or other indebtedness owed by
the Company to the Bank pursuant to this Mortgage or the Other
Agreements. This Mortgage shall be valid and have priority to
the extent of the maximum amount secured hereby over all
subsequent liens and encumbrances, including statutory liens,
excepting solely taxes and assessments levied on the Mortgaged
Property given priority by law.
7.8 Notwithstanding Paragraph 7.7 above or any other provisions
in this Mortgage or in any of the Other Agreements to the
contrary, (A) the Mortgagees shall not receive or recover
proceeds in connection with this Mortgage and the California
Deed of Trust in excess of the principal amount of Two Million
Five Hundred Thousand and no/100 Dollars ($2,500,000.00), plus
(i) accrued interest on the outstanding amount of the "Fresno
and Beech Creek Real Estate Advance" (as defined in the Credit
Agreement), (ii) any disbursements made for payment of taxes,
special assessments or insurance on the Mortgaged Property or
the real property commonly known as 2696 South Maple Street,
Fresno, California (the "Fresno Property"), and (iii) any other
costs, fees, or expenses owed by Mortgagor or CPR to the
Mortgagees relating to the Mortgaged Property and/or the Fresno
Property, and (B) at any foreclosure sale of the Mortgaged
Property, the amount of the Liabilities which the Collateral
Agent (at the direction of the Majority Banks) may bid, as the
equivalent of cash, shall not exceed the amount determined
pursuant to this Paragraph 7.8.
7.9 Notwithstanding any other provisions in this Mortgage or in
any of the Other Agreements to the contrary: (A) the Company
shall have the right to cause the release of this Mortgage and
the California Deed of Trust, and Mortgagees shall release this
Mortgage and such Deed of Trust, upon receipt by Mortgagees of
an amount (the "Release Amount") equal to the lesser of (i) the
total sum of all unpaid Liabilities; or (ii) the amount
determined in accordance with Paragraph 7.8 above; and (B)
whether as a result of a foreclosure sale or any other sale,
disposition or refinancing of either or both of the Mortgaged
Property and the real estate secured by the California Deed of
Trust, if the proceeds thereof exceed the Release Amount, and
provided the Release Amount is received by Mortgagees, all
excess proceeds shall belong to the Company free and clear of
any lien or security interest under the Other Agreements.
7.10 The Exhibits referred to herein are attached hereto, made
a part hereof and incorporated herein by this reference thereto.
7.11 Except as otherwise expressly required by Pennsylvania
law, the parties agree and intend that this Mortgage, and the
respective rights and obligations of the parties hereto, shall
be governed by and construed according to the internal laws of
the State of Illinois (without regard to its conflict of laws
principles). The parties agree and stipulate that this Mortgage
was negotiated in Illinois, that this Mortgage was executed,
delivered and accepted in Illinois, all payments shall be made
to the Mortgagees in Illinois, and that Illinois has a
substantial relationship to the parties and to the underlying
transaction contemplated by this Mortgage. Notwithstanding the
foregoing, the parties agreed that:
(A) The procedures governing the enforcement by the Mortgagees
or provisional remedies against the Company, including by way of
illustration, but not limited to, actions for claim and delivery
of property, for injunctive relief or for the appointment of a
receiver, shall be governed by the laws of the state in which
such provisional remedies or relief are sought.
(B) With respect to any collateral given by the Company to the
Mortgagees, the procedures for foreclosing on the liens of the
Company shall be governed by the laws of the state in which the
collateral is located in which the foreclosure is carried out;
provided, however, that this subparagraph shall in no event be
construed to provide that the substantive law of such state
shall apply to this Mortgage, the parties intending that the
substantive law of the State of Illinois shall govern this
Mortgage and all non-procedural incidents of foreclosure,
including, but not limited to, the right of the Mortgagees to
obtain a judgment for any deficiency following foreclosure.
(C) In the event of any foreclosure by the Mortgagees on any
collateral, regardless of where the collateral is located, the
parties agree and intend that the laws of the State of Illinois
shall govern the right of the Mortgagees to collect or obtain a
judgment for any deficiency following foreclosure, and the
parties specifically intend that the laws of other states shall
not be applicable.
7.12 The Company hereby irrevocably appoints and designates
Louis E. Rosen, Esq., located at Lord, Bissell & Brook, 115
South LaSalle Street, Suite 3500, Chicago, Illinois 60603, as
the Company's true and lawful attorney-in-fact and duly
authorized agent to accept any service of legal process or any
notice which, notwithstanding the Company's waiver of notice
contained in this Mortgage, the Mortgagees desire or elect to
provide to the Company, and agrees that service of process upon
such attorney-in-fact shall constitute personal service of
process upon the Company. The Company shall direct such
attorney-in-fact to forward any such notice or service of
process to the Company at an address designated by the Company.
The Company and the Mortgagees irrevocably agree, and hereby
consent and submit to the jurisdiction of the Court of Common
Pleas of Clinton County, Pennsylvania and the United States
District Court for the Middle District of Pennsylvania, with
regard to any litigation, actions or proceedings arising from,
relating to or in connection with this Mortgage. The Company
hereby waives any right it may have to transfer or change the
venue of any litigation, actions or proceedings filed in the
Court of Common Pleas of Clinton County, Pennsylvania, or the
United States District Court for the Middle District of
Pennsylvania, and further waives any objection to service of
process upon such attorney-in-fact.
7.13 THE COMPANY AND THE MORTGAGEES EACH HEREBY ABSOLUTELY
AND UNCONDITIONALLY WAIVE THEIR RESPECTIVE RIGHT TO A TRIAL BY
JURY IN CONNECTION WITH ANY CLAIM, DEMAND, ACTION OR CAUSE OF
ACTION ARISING UNDER OR RELATED TO THIS MORTGAGE, THE
LIABILITIES, THE OBLIGATIONS OR THE OTHER AGREEMENTS, OR ANY
OTHER INSTRUMENT, DOCUMENT OR AGREEMENT EXECUTED AND DELIVERED
IN CONNECTION THEREWITH OR RELATED THERETO.
IN WITNESS WHEREOF, this Mortgage has been duly executed and
delivered as of the day and year first above written.
CHAMPION PARTS, INC.,
an Illinois corporation
By:
Its:
ATTEST:
By:
Its:
STATE OF ILLINOIS )
) S.S.
COUNTY OF DU PAGE )
I, Carolyn A. Yost, a Notary Public in and for the County and
State aforesaid, do hereby certify that Thomas W. Blashill and
Thomas W. Blashill, personally known to me to be the Executive
Vice President and Secretary of Champion Parts, Inc. (the
"Company"), whose names are subscribed to the foregoing
Pennsylvania Mortgage and Security Agreement, appeared before me
this day in person, and acknowledged that they signed and
delivered the said instrument as their free and voluntary act,
and as the free and voluntary act of the Company, for the uses
and purposes therein set forth.
GIVEN under my hand and notarial seal this 4th day of August,
1995.
_________________
Notary Public
ADDRESS CERTIFICATION
1. On behalf of the Company, I hereby certify that the
Company's address is:
2525 22nd Street
Oak Brook, Illinois 60521
By:________________________________
Its:________________________________
2. On behalf of LaSalle, individually and as Agent and
Collateral Agent, I hereby certify that LaSalle's address is:
120 South LaSalle Street
Chicago, Illinois 60603
By:________________________________
Its:________________________________
3. On behalf of NBD, I hereby certify that NBD's address is:
611 Woodward Avenue
Detroit, Michigan 48226
By:________________________________
Its:________________________________
4. On behalf of Harris, I hereby certify that Harris' address
is:
111 West Monroe Street
Chicago, Illinois 60603
By:________________________________
Its:_______________________________
EXHIBIT "A" TO MORTGAGE
MORTGAGED PROPERTY LEGAL DESCRIPTION
ALL that certain piece or parcel of land situate in Beech Creek
Township, Clinton County, Pennsylvania, bounded and described in
accordance with a survey of Callum Murray, Registered Engineer,
dated October 1, 1978, as follows:
BEGINNING at an iron pin on the Eastern line of land of Harold
L. Hurwitz, on the Southern line of a fifty (50) foot
right-of-way leading to Township Route #327, and being the
Northwest corner of the land herein conveyed; thence along the
said fifty (50) foot right-of-way, the following six (6) courses
and distances: (1) North 55 degrees 32 minutes 00 seconds East,
a distance of fifty (50) feet to an iron pin; (2) On an arc
North 35 degrees 12 minutes 21 seconds East, a distance of
thirty-five (35) and 45/100 (35.45) feet, with a chord distance
of thirty-four and 71/100 (34.71) feet, and a radius of fifty
(50) feet to an iron pin; (3) North 74 degrees 54 minutes 47
seconds East, a distance of three hundred eighty-nine and 86/100
(389.86) feet to an iron pin; (4) South 73 degrees 57 minutes 53
seconds East, on a chord distance of one hundred eighty-five and
69/100 (185.69) feet, which has an arc of one hundred
ninety-five and 15/100 (195.15) feet and a radius of one hundred
seventy-nine and 63/100 (179.63) feet to an iron pin; (5) South
42 degrees 50 minutes 33 seconds East, a distance of eight
hundred sixty and 80/100 (860.80) feet to an iron pin; (6) South
16 degrees 01 minute 33 seconds East, on a chord which has a
distance of one hundred sixty-two and 27/100 (162.27) feet and
an arc with a distance of one hundred sixty-eight and 35/100
(168.35) feet and having a radius of one hundred seventy-nine
and 86/100 (179.86) feet to an iron pin on the line of land of
Edward Scantlin; thence along the Northern line of land of
Edward Scantlin, South 72 degrees 59 minutes 28 seconds West, a
distance of six hundred seventy-three and 94/100 (673.94) feet
to an iron pin on the line of land of Harold L. Hurwitz; thence
along the Eastern line of land of Harold L. Hurwitz, North 34
degrees 28 minutes 00 seconds West, a distance of one thousand
sixty-three and 62/100 (1,063.62) feet to an iron pin, the place
of beginning. Containing 15.7815 acres.
ALSO the right of ingress, egress and regress across the
following described fifty (50) foot wide tract of land:
BEGINNING at an iron pin situate on the North side of
Pennsylvania Route No. 150, being a distance of thirty (30) feet
from the center line of said Route No. 150 and being the
Southeast corner of land of the said Edward Scantlin; thence
along land of Edward Scantlin North 10 degrees 44 minutes East,
a distance of four hundred fifty-nine and 2/10 (459.2) feet to
an iron pin on land of Industrial Development Fund of Clinton
County, Inc.; thence along land of Industrial Development Fund
of Clinton County, Inc., North 73 degrees 07 minutes East, a
distance of fifty-six and 4/10 (56.4) feet to an iron pin;
thence along land of Fred Sherman South 10 degrees 44 minutes
West, a distance of four hundred eighty-four and 7/10 (484.7)
feet to an iron pin situate on the North side of Pennsylvania
Route No. 150; thence along Route No. 150 North 80 degrees 00
minutes West, a distance of fifty (50) feet to the place of
beginning.
AND FURTHER, the right of ingress, egress and regress across
the right-of-way to the North of the above right-of-way, being
fifty (50) feet in width and extending around the perimeter of
the land above described to land of Harold L. Hurwitz, and
thence in a Northerly direction to Township Route #327, giving
access from Pennsylvania Route 150 to Township Route #327.
EXHIBIT "B" TO MORTGAGE
SUMMARY OF ENVIRONMENTAL ISSUESEXHIBIT "C" TO MORTGAGE
PERMITTED ENCUMBRANCES
The following encumbrances listed on Schedule B of Chicago Title
Insurance Company commitment for ALTA form B policy (commitment
number 958100132):
Numbers: 2(2), 2(3), 3, 4, 5, 7, 8, 9, 14.
DEED OF TRUST, ASSIGNMENT OF RENTS,
AND SECURITY AGREEMENT - CALIFORNIA
THIS DEED OF TRUST, ASSIGNMENT OF RENTS AND SECURITY AGREEMENT
- CALIFORNIA (this "Deed of Trust") is entered into as of August
4, 1995, by and among CPR Properties, Inc., a California
corporation, with its principal place of business at 2696 South
Maple Street, Fresno, California 93725 (the "Trustor"), Chicago
Title Insurance Company, a _____________ corporation, with an
office at 2425 West Shaw, Fresno, California 93711 (the
"Trustee"), LaSalle National Bank, a national banking
association ("LaSalle"), NBD Bank, ("NBD"), Harris Trust and
Savings Bank, an Illinois banking corporation ("Harris")
[LaSalle, NBD and Harris together with their respective
successors and permitted assigns, are collectively the "Banks"],
and LaSalle in its capacity as both Agent and Collateral Agent
for the Banks (the Banks and LaSalle, in its capacity as both
Agent and Collateral Agent for the Banks are each a
"Beneficiary" and collectively the "Beneficiaries").
R E C I T A L S:
WHEREAS, the Banks have provided certain extensions of credit,
loans and other financial accommodations to Champion Parts, Inc.
("Champion"), pursuant to (a) that certain Amended and Restated
Credit Agreement dated as of March 31, 1993, by and between
Champion and the Beneficiaries, as amended from time to time
(collectively the "Credit Agreement"), (b) (i) that certain
Reimbursement Agreement dated as of December 1, 1991, by and
between Champion and NBD (the "IRB Agreement"), and (ii) that
certain Standby Letter of Credit Application and Reimbursement
and Security Agreement dated December 30, 1991, by and between
Champion and NBD (the "Workmen's Compensation Agreement"), and
(c) any and all other agreements, documents and instruments
executed and delivered by Champion to any or all of the Banks,
the Agent or the Collateral Agent (collectively the "Champion
Other Agreements") [the Champion Other Agreements, together with
the Credit Agreement, the IRB Agreement and the Workmen's
Compensation Agreement are collectively the "Champion Loan
Documents");
WHEREAS, Champion has requested, among other things, that the
Banks provide an additional extension of credit in the amount of
Two Million and no/100 Dollars ($2,000,000.00) by increasing
availability under the borrowing base, extend the "Termination
Date" (as defined in the Credit Agreement) through January 8,
1996, and amend certain other provisions contained in the Credit
Agreement;
_________________________________________________________________
_____________THIS INSTRUMENT PREPARED BY AND AFTER RECORDING
SHOULD BE RETURNED TO:
Fagel & Haber
140 South Dearborn Street
Suite 1400
Chicago, Illinois 60603
Attn.: Victor A. Des Laurier, Esq.
Common Address: 2696 South Maple Street
Fresno, California 93725
WHEREAS, the Banks are willing to provide an additional
extension of credit in the amount of Two Million and no/100
Dollars ($2,000,000.00) by increasing availability under the
borrowing base, extend the Termination Date through January 8,
1996, and amend certain other provisions contained in the Credit
Agreement, but solely on the terms and subject to the conditions
set forth in that certain Third Amendment to Amended and
Restated Credit Agreement of even date herewith by and between
Champion and the Beneficiaries (the "Third Amendment to Amended
and Restated Credit Agreement") and this Deed of Trust; and
WHEREAS, the Trustor acknowledges and agrees that (i) Champion
owns all of the issued and outstanding shares of stock of the
Trustor, (ii) the "Mortgaged Property" (hereinafter defined) is
the sole asset of the Trustor and the continued viability of
Champion financially benefits the Trustor and results in the
continued viability of the Trustor, (iii) the Trustor is, thus,
benefitted by the Banks providing an additional extension of
credit in the amount of Two Million and no/100 Dollars
($2,000,000.00) by increasing availability under the borrowing
base, extending the Termination Date through January 8, 1996,
and amending certain other provisions contained in the Credit
Agreement; (iv) the Trustor's execution and delivery of this
Deed of Trust is a material inducement to the Banks providing an
additional extension of credit in the amount of Two Million and
no/100 Dollars ($2,000,000.00) by increasing availability under
the borrowing base, extending the Termination Date through
January 8, 1996, and amending certain other provisions contained
in the Credit Agreement, and (v) without this Deed of Trust, the
Beneficiaries would not provide an additional extension of
credit in the amount of Two Million and no/100 Dollars
($2,000,000.00) by increasing availability under the borrowing
base, extend the Termination Date through January 8, 1996, and
amend certain other provisions contained in the Credit Agreement.
NOW, THEREFORE, in consideration of the foregoing, the mutual
promises and understandings of the parties hereto set forth
herein, and other good and valuable consideration, the receipt
and sufficiency of such consideration is hereby acknowledged,
the Trustor hereby covenants unto and agrees with the Trustee
and the Beneficiaries as set forth in this Deed of Trust.
1. DEFINITIONS AND TERMS
1.1 The following words, terms or phrases shall have the
meanings set forth below:
(A) "Charges": shall mean all national, federal, state,
county, city, municipal or other governmental (including,
without limitation, any instrumentality, division, agency, body
or department thereof) taxes, levies, assessments, charges,
water charges, sewer service charges, liens, claims or
encumbrances upon or relating to the Mortgaged Property, the
"Liabilities" (hereinafter defined) or the "Obligations"
(hereinafter defined).
(B) "Documents": shall mean any mortgage, deed of trust or
similar instrument, assignment of leases, assignment of rents,
promissory note, security agreement, guaranty, financing
statement, assignment of insurance, loss payable clause,
mortgage title insurance policy, letter of opinion, waiver
letter, estoppel letter, consent letter, non-offset letter,
insurance certificate, appraisal, survey and any other similar
such agreements, instruments or documents.
(C) "Encumbrances": shall mean all liens, security interests,
liabilities, claims, debts, exceptions, easements, restrictions,
Charges and any other types of encumbrances.
(D) "Environmental Laws": shall mean all federal, state and
local environmental, health or safety statutes, laws or
regulations now or hereafter enacted, including, but not limited
to, (i) the California Environmental Quality Act, California
Public Resources Code e 21000 et seq., (ii) the California Safe
Drinking Water and Toxic Enforcement Act, (Proposition 65)
California Health and Safety Code e 25249.5-25249.12, (iii) the
California Clean Air Act, California Health and Safety Code e
39000 et seq., (iv) the Porter-Cologne Water Quality Control
Act, California Water Code e 13000 et seq., (v) the California
Endangered Species Act, California Fish and Game Code e 2050 et
seq., (vi) the California Hazardous Waste Control Laws,
California Health and Safety Code e 25100 et seq., (vii) the
California Hazardous Substance Act, California Health and Safety
Code e 28740 et seq., (viii) the Resource Conservation and
Recovery Act, as amended ("RCRA"), (ix) the Toxic Substances
Control Act, as amended ("TSCA"), (x) the Comprehensive
Environmental Response, Compensation and Liability Act, as
amended ("CERCLA"), (xi) the Clean Air Act, as amended ("CAA"),
(xii) the Clean Water Act, as amended ("CWA"), and (xiii) all
amendments rules, regulations and guidance documents promulgated
by or published pursuant to any of the foregoing.
(E) "Equipment": shall mean all now existing or owned and
hereafter arising or acquired apparatus, machinery, equipment,
furniture, fixtures and other articles of personal property of
any and every kind and nature whatsoever, required for use in,
on, or in connection with the "Premises" (hereinafter defined)
or the management, maintenance, operation or business thereof
and all replacements thereof, substitutions therefor and
accessions thereto, including, without limitation, any such item
now or at any time or times hereafter situated on the Premises
and used to supply or otherwise deliver heat, gas, air
conditioning, water, light, electricity, power, plumbing,
refrigeration, sprinkling, ventilation, mobility, communication,
incineration, and all other related or other such services.
(F) "Event of Default": shall mean the definition ascribed
to this term in Paragraph 6.1 below.
(G) "Hazardous Substance" means any (i) toxic or hazardous
waste, (ii) pollutants or substances, including, without
limitation, asbestos, PCBs, petroleum products and by-products,
substances defined or listed as "hazardous substances" or "toxic
substances" in CERCLA, "hazardous materials" in the Hazardous
Materials Transportation Act, as amended, 49 U.S.C. e1802, et
seq., "hazardous waste" in The Resource Conservation and
Recovery Act, as amended, 49 U.S.C. 6901, et seq., (iii) any
chemical substance or mixture regulated under the Toxic
Substance Control Act of 1976, as amended, 15 U.S.C. e 2601, et
seq., (iv) any "toxic pollutant" under the Clean Water Act, as
amended, 33 U.S.C. e 1251, et seq., (v) any "hazardous air
pollutant" under the Clean Air Act, as amended, 42 U.S.C. e
7401, et seq., and (vi) any hazardous, toxic substance or
pollutant regulated under any other applicable federal, state or
local Environmental Laws.
(H) "Leases": shall mean all present and future leases,
agreements, tenancies, licenses and franchises of or relating to
the Mortgaged Property, or in any way, manner or respect
required, existing, used or useable in connection with the
Mortgaged Property, or the management, maintenance, operation or
business thereof, and all deposits of money as advance rent or
for security under any or all of the Leases and all guaranties
of any lessee's performances thereunder.
(I) "Liabilities": shall mean any and all debts, claims,
obligations, demands, monies, liabilities or indebtedness of any
and every kind or nature heretofore, now or hereafter owing,
arising, due or payable from the Trustor and/or Champion to the
Beneficiaries, however evidenced, created, incurred, acquired or
owing, whether primary, secondary, direct, indirect, absolute,
contingent, fixed, determinable, undeterminable, insured and
uninsured, whether pursuant to the terms and provisions of this
Mortgage, the "Other Agreements" (hereinafter defined) or
otherwise, including, without limitation, all advances made to
protect and preserve the value of the Mortgaged Property and the
priority of the Bank's lien thereon.
(J) "Mortgaged Property": shall mean (1) the Premises; (2)
the "Rents" (hereinafter defined); (3) the Leases; (4) the
Equipment; (5) all present and future judgments, awards of
damages and settlements made as a result or in lieu of any
taking of the Premises, the Equipment or the Leases, or any part
thereof, whether under the power of eminent domain or otherwise,
or for any damage, whether caused by such taking or otherwise
thereto; (6) all present and future insurance policies in force
or effect insuring the Premises, the Rents, the Leases or the
Equipment; and (7) all proceeds of each and every of the
foregoing.
(K) "Obligations": shall mean all covenants, duties,
obligations and agreements of the Trustor and/or Champion to and
with any or all of the Beneficiaries and/or the Trustee, whether
pursuant to this Deed of Trust, the Other Agreements or
otherwise.
(L) "Other Agreements": shall mean all agreements,
instruments and documents heretofore, now or from time to time
hereafter executed by, or on behalf of, the Trustor and/or
Champion and delivered to the Beneficiaries and/or the Trustee,
including, without limitation, (1) that certain Revolving Note
of even date herewith executed and delivered by Champion to
LaSalle in the principal amount of Eight Million Two Hundred
Fifty-Eight Thousand Sixty-Four and 48/100 Dollars
($8,258,064.48); (2) that certain Revolving Note of even date
herewith executed and delivered by Champion to NBD in the
principal amount of Four Million Six Hundred Forty-Five Thousand
One Hundred Sixty-One and 28/100 Dollars ($4,645,161.28); (3)
that certain Revolving Note of even date herewith executed and
delivered by Champion to Harris in the principal amount of Three
Million Ninety-Six Thousand Seven Hundred Seventy-Four and
24/100 Dollars ($3,096,774.24); (4) the Champion Loan Documents;
(5) that certain Beech Creek Mortgage and Security Agreement of
even date herewith executed and delivered by Champion to the
Beneficiaries (the "Beech Creek Mortgage"); (6) the Third
Amendment to Amended and Restated Credit Agreement; and (7)
renewals, modifications, amendments or substitutions to any of
the foregoing.
(M) "Person": shall mean any individual, sole proprietorship,
partnership, joint venture, trust, unincorporated organization,
association, corporation, institution, entity, party or
government, whether national, federal, state, county, city,
municipal or otherwise, including, without limitation, any
instrumentality, division, agency, body or department thereof.
(N) "Premises": shall mean all of the real property, and all
of the Trustor's estate, right, title and interest therein,
situated, lying and being in the City of Fresno, County of
Fresno, State of California, legally described on Exhibit "A"
and commonly known as 2696 South Maple Street, Fresno,
California 93725, together with all buildings, improvements,
tenements, easements, hereditaments and appurtenances now or at
any time or times hereafter upon, belonging or otherwise
appertaining to or situated on said real estate and all
heretofore or hereafter acquired roads, alleys, streets and
other public ways abutting said real estate.
(O) "Rents": shall mean all present and future rents, issues,
deposits, income, profits and proceeds of, from or relating to
the Premises, the Leases or the Equipment.
2. CONVEYANCE
2.1 To secure the full and timely payment of the Liabilities,
and the full and timely performance of the Obligations, THE
TRUSTOR HEREBY WARRANTS, GRANTS, GIVES, BARGAINS, CONFIRMS,
ASSIGNS, PLEDGES, SETS OVER, TRANSFERS, SELLS, CONVEYS, REMISES,
RELEASES AND OTHERWISE ASSIGNS, TO THE TRUSTEE, ITS SUCCESSORS
AND ASSIGNS, IN TRUST, WITH POWER OF SALE, FOREVER, the
Mortgaged Property, whether real, personal or mixed.
2.2 This Deed of Trust shall operate as and constitute a
Security Agreement with respect to that portion of the Mortgaged
Property constituting property or interests in property, whether
real or personal, tangible or intangible, which are subject to
the Uniform Commercial Code with respect to the priority and
perfection of security interests or any similar law, statute,
code or other governing body of law. Therefore, to secure the
full and timely payment of the Liabilities and the full and
timely performance of the Obligations, the Trustor hereby grants
to the Banks and the Collateral Agent for the ratable benefit of
the Banks, their respective successors and assigns, a security
interest and lien in and to the Mortgaged Property.
2.3 Upon the request of the Collateral Agent (at the direction
of the "Majority Banks", as defined in the Credit Agreement), at
the Trustor's sole cost and expense, the Trustor will promptly
make, execute and deliver or will cause to be made, executed and
delivered to or for the benefit of the Beneficiaries or the
Trustee, in form and substance acceptable to the Beneficiaries,
all Documents necessary or appropriate to evidence, document or
conclude the transactions described in or contemplated by this
Deed of Trust and the Other Agreements, or required to perfect
or continue perfected the priority lien and security interest
granted herein by the Trustor to the Trustee, the Banks and the
Collateral Agent for the ratable benefit of the Banks upon the
Mortgaged Property (collectively the "Mortgagees' Lien"),
subject only to the "Permitted Encumbrances" (hereinafter
defined).
3. REPRESENTATIONS, WARRANTIES AND COVENANTS
3.1 The Trustor represents, warrants and covenants unto the
Beneficiaries and the Trustee as follows:
(A) The Trustor will cause Champion to fully and timely pay,
or cause to be paid, when due or declared due, the Liabilities
and to fully and timely perform, discharge, observe and comply
with each and every of the Obligations.
(B) The Trustor now has and hereafter shall maintain the
standing, right, power and lawful authority to own the Mortgaged
Property, to carry on the business of and operate the Mortgaged
Property, to enter into, execute and deliver this Deed of Trust
and to pledge, and encumber the Mortgaged Property to the
Beneficiaries as provided herein.
(C) The Trustor now and at all times hereafter shall
perform or cause to be performed all of the transactions
described in or contemplated by this Deed of Trust.
(D) To the best of the Trustor's knowledge after due and
diligent inquiry, the execution, delivery and performance by the
Trustor of and under this Deed of Trust (i) does not and will
not constitute a violation of any applicable law, and (ii) does
not and will not conflict with or result in a default or breach
of or under any obligation arising, existing or created by or
under any agreement, instrument, document, mortgage, deed, trust
deed, note, judgment, order, award, decree or other restriction
to which the Trustor now is or hereafter shall become a party or
by which the Trustor or any of the Mortgaged Property is or
hereafter shall become bound.
(E) The Trustor has duly filed and shall continue to timely
file all federal and state tax returns which the Trustor is
required by law to file with respect to the Mortgaged Property
and the operation and business thereof. All taxes and other
sums which are shown to be payable under such returns have been
and shall be fully and timely paid and the Trustor has and shall
continue to maintain adequate reserves in an amount to fully pay
all such liabilities as hereafter may accrue.
(F) All of the Leases are and shall remain (i) genuine, (ii)
in all respects what they purport to be, (iii) free of set-offs,
counterclaims or disputes, and (iv) valid and enforceable in
accordance with their terms. There are currently no breaches,
defaults or events of default under the Leases. All parties to
the Leases have and shall have the capacity to contract
thereunder. Except for security deposits provided for under the
Leases as indicated by the Trustor to the Collateral Agent in
writing, no advance payments have been or shall be made
thereunder.
(G) There is no litigation, action, claim or proceeding
pending or, to the best of the Trustor's knowledge, threatened
which might, in any way, manner or respect, affect the Mortgaged
Property, the operation or the business thereof, the Mortgagees'
Lien, the collectibility or the ability of Champion to timely
repay the Liabilities or perform the Obligations, the financial
condition of the Trustor or the operation or business thereof.
(H) To the best of the Trustor's knowledge after due and
diligent inquiry, the Trustor possesses and holds and shall
maintain adequate properties, interests in properties, leases,
licenses, franchises, rights and other permits, certificates,
consents and approvals to conduct and operate the business of
the Mortgaged Property. None of the foregoing contain or shall
contain any term or condition that is burdensome to said
business and different than those customarily possessed or held
by other Persons conducting or operating a similar business.
(I) To the best of Trustor's knowledge after due and diligent
inquiry, the location, existence and use of the Premises and the
Equipment are and shall remain in compliance with all applicable
laws, rules, ordinances and regulations, including, without
limitation, building and zoning laws, and all covenants and
restrictions of record.
(J) The Trustor or the tenants under the Leases, as the case
may be, are and shall remain in peaceful possession of the
Premises and the Equipment, and the Trustor will forever warrant
and defend title to the Mortgaged Property from and against any
and all claims and Encumbrances thereon or thereto, except as
otherwise allowed herein.
(K) To the best of the Trustor's knowledge after due and
diligent inquiry, the Trustor is not, and shall not be using the
Mortgaged Property for any purpose in violation of any
applicable Environmental Laws, health or safety laws, rules or
regulations, except as set forth on Exhibit "B". The Trustor
has all required permits, certificates, consents and approvals
required under any applicable Environmental Laws, health or
safety laws, rules or regulations. Except as otherwise set
forth on Exhibit "B", neither the Trustor nor any of the
Mortgaged Property is in violation of any Environmental Laws or
subject to any existing, pending, or to the Trustor's knowledge,
threatened investigation by any governmental agency under any
Environmental Laws. The Trustor hereby acknowledges and agrees
that the Collateral Agent (at the direction of the Majority
Banks) has made a written request to the Trustor for information
concerning the environmental condition of the Mortgaged
Property, including, without limitation, the presence, alleged
presence or threatened presence, and the release, alleged
release or threatened release, of Hazardous Substances on,
under, in, from or about the Mortgaged Property. Except as
otherwise set forth on Exhibit "B", the Trustor hereby
represents, warrants and covenants to the Beneficiaries that
neither the Trustor nor any agent, affiliate, tenant, co-tenant,
partner or joint venturer of the Trustor has actual knowledge or
notice of the presence, alleged presence, threatened presence,
release, alleged release or threatened release of Hazardous
Substances on, under, in, from or about the Mortgaged Property.
As used herein, the term "release" has the meaning assigned to
such term in California Code of Civil Procedure Sections 726.5
and 736, as such Sections may be amended from time to time.
(L) To the best of the Trustor's knowledge after due and
diligent inquiry, in accordance with California Code of Civil
Procedure Section 736, as such Section may be amended from time
to time, the Collateral Agent (at the direction of the Majority
Banks) may bring an action for breach of contract against the
Trustor for breach of any "environmental provision" (as such
term is defined in such Section) made by the Trustor herein or
in the Other Agreements, for the recovery of damages (including
attorneys' fees and costs) and/or for the enforcement of the
environmental provisions [including, without limitation, to
recover all costs and expenses incurred by the Beneficiaries in
connection with any "Remedial Work" (as such term is defined in
that certain Environmental Indemnity Agreement of even date
herewith executed and delivered by CPR to the Beneficiaries)]
without foreclosing the Deed of Trust judicially or
non-judicially or accepting a deed or assignment in lieu of
foreclosure. All expenses, costs and other amounts incurred by
Beneficiaries in connection with any such action under
California Code of Civil Procedure Section 736 shall be part of
the Liabilities, secured by this Deed of Trust and payable on
demand.
(M) To the best of Trustor's knowledge after due and diligent
inquiry, the Collateral Agent (at the direction of the Majority
Banks) shall have all rights of a bank under Section 2929.5 of
the California Civil Code, as such Section may be amended from
time to time. All expenses, costs or other amounts incurred by
the Collateral Agent (at the direction of the Majority Banks) in
performing any inspection and/or testing for the purposes set
forth in such Section 2929.5 shall be part of the Liabilities,
secured by this Deed of Trust and payable on demand.
(N) To the best of Trustor's knowledge after due and diligent
inquiry, the Beneficiaries shall have all rights of a bank under
California Code of Procedure Section 564, as such Section may be
amended from time to time. All expenses, costs and other
amounts incurred by the Collateral Agent (at the direction of
the Majority Banks) in connection with any appointment of a
receiver under California Code of Civil Procedure Section 564
shall be a part of the Liabilities, secured by this Deed of
Trust and payable on demand.
(O) All Hazardous Substances at the Mortgaged Property shall
be in tanks or containers, as defined in 40 C.F.R. 260.10, and
shall be in compliance with applicable United States
Environmental Protection Agency and State of California small
quantity generator limitations under RCRA, regulations
thereunder and corresponding California statutes and regulations.
(P) There are no underground storage tanks on the Premises.
(Q) Except as set forth in Exhibit "B", no burial, disposal
or landfilling of hazardous waste or hazardous substances,
regulated substances or other pollutants (as such are defined in
RCRA, TSCA, CERCLA, CAA or CWA) will be carried on at the
Mortgaged Property. Further, the Trustor nor any lessor under
the Leases shall operate no surface impoundment, lagoon, or
other earthen device for the purposes of treatment, storage or
disposal of hazardous wastes and hazardous substances.
(R) The Trustor shall not use, release or cause to be used
or released asbestos as defined by 29 C.F.R. 1910.1001(a). Any
repairs, maintenance or modifications to the Mortgaged Property
which may result in release of asbestos shall be performed by or
under the supervision of personnel appropriately accredited by
the State of California or the United States Environmental
Protection Agency.
(S) The Trustor will, within fifteen (15) days of receipt
thereof, provide the Collateral Agent with a copy of any
administrative, civil or criminal complaint received by the
Trustor alleging (i) violations of environmental, health and
safety statutes, ordinances or regulations, (ii) bodily injury
in an amount in excess of Twenty-Five Thousand and no/100
Dollars ($25,000.00) for any single claim, or Fifty Thousand and
no/100 Dollars ($50,000.00) in the aggregate, in connection with
the Mortgaged Property; (iii) property damage in connection with
the Mortgaged Property.
(T) The Trustor hereby agrees to defend, indemnify and hold
the Beneficiaries and the Trustee harmless from and against, and
shall reimburse the Beneficiaries and the Trustee for, any and
all losses, claims, liabilities, damages, injunctive relief,
injuries to person, property or natural resources, costs and
expenses or actions or causes of action arising or in connection
with the release or presence of any Hazardous Substance or the
violation or breach of any Environmental Laws in connection with
the Trustor's ownership of the Premises, whether foreseeable or
unforeseeable, irrespective of the source of such release or
when such release occurred or is discovered (the "Environmental
Indemnity"). The Environmental Indemnity includes, without
limitation, all costs (i) of removal, remediation of any kind
and disposal of such Hazardous Substances; (ii) of determining
whether the Premises are in compliance, and all costs associated
with causing the Premises to be in compliance with all
applicable Environmental Laws; (iii) associated with any
violation or compliance with any Environmental Laws; (iv)
associated with claims for damages to persons, property or
natural resources; and (v) which the Beneficiaries or the
Trustee have incurred, including, but not limited to, attorneys'
and consultants' fees and court costs. The Environmental
Indemnity shall not include any losses, claims, liabilities,
damages, costs or expenses caused as a result of the wilful
misconduct or gross negligence of the Mortgagees.
(U) If the Collateral Agent (at the direction of the Majority
Banks) takes legal title to or becomes the beneficial owner of
all or any portion of the Premises, whether through any judicial
sale, non-judicial sale, deed in lieu of foreclosure or
otherwise, this Environmental Indemnity shall remain in full
force and effect, including, without limitation, with respect to
Hazardous Substances which were initially introduced or released
at the Premises prior to the Collateral Agent acquiring title to
or becoming the beneficial owner of the Premises, the continuing
migration or release of a Hazardous Substance previously
introduced at or near the Premises or Hazardous Substances which
are situated at the Premises prior to the Collateral Agent
taking title to or becoming the beneficial owner of the
Premises, but are removed by the Collateral Agent (at the
direction of the Majority Banks) subsequently thereto.
(V) The Environmental Indemnity shall survive repayment of the
Liabilities, any voluntary or involuntary transfer of title to
the Premises, any transfer by foreclosure or by a deed in lieu
of foreclosure or any bankruptcy or other insolvency proceeding.
(W) The Trustor, its successors and permitted assigns, hereby
waives, releases and agrees not to make any claim or bring any
action against any Beneficiary or the Trustee under any of the
Environmental Laws. The Trustor covenants unto and agrees with
the Beneficiaries and the Trustee that any violation or breach
of any of the Environmental Laws shall be fully remediated and
corrected prior to the Collateral Agent obtaining title to or
exclusive possession of the Premises as evidenced by current
clean Phase I and Phase II environmental reports. It is
expressly understood and agreed that to the extent that any
Beneficiary or the Trustee is strictly liable under any
Environmental Laws, the Trustor's obligations to the
Beneficiaries and the Trustee under this Environmental Indemnity
shall likewise be without regard to fault on the part of the
Trustor with respect to the violation or condition which results
in liability to any Beneficiary or the Trustee.
(X) To the best of the Trustor's knowledge after due and
diligent inquiry, there are no unpaid assessments in connection
with the Mortgaged Property nor any assessment liens arising
from the non-payment of any such assessments.
(Y) (i) Champion owns all of the issued and outstanding shares
of stock of the Trustor; (ii) the Trustor's only asset is the
Mortgaged Property; and (iii) except for (a) the indebtedness
owing to Gulf Life Insurance Co. ("Gulf Life") in a maximum
aggregate amount not to exceed Seven Hundred Eighty-Three
Thousand Two Hundred Six and no/100 Dollars ($783,206.00), (b)
indebtedness owing to the electric and gas utility companies in
the ordinary course of the Trustor's business which is not past
due and owing, and (c) indebtedness owing in connection with
real estate taxes which are not yet due and payable, all in
connection with owning the Mortgaged Property, there are no
other secured or unsecured creditors of the Trustor.
(Z) The indebtedness secured by that certain Deed of Trust
dated April 2, 1981, by and among the Trustor, Gulf Life and
Safeco Title Insurance Company does not now and will not
hereafter exceed Seven Hundred Eighty-Three Thousand Two Hundred
Six and no/100 Dollars ($783,206.00).
3.2 The Trustor further represents, warrants and covenants unto
the Beneficiaries and the Trustee as follows:
(A) The Trustor is and shall be lawfully seized, possessed and
the owner of and has good and indefeasible, marketable
fee-simple title to the Mortgaged Property, free and clear of
all Encumbrances, except for the Mortgagees' Lien, any liens
hereafter granted to or for the benefit of the Beneficiaries and
those Encumbrances described on Exhibit "C" to this Deed of
Trust (the "Permitted Encumbrances").
(B) The Trustor will (i) not materially change the use or
character of or abandon the Premises, (ii) keep the Premises and
Equipment in good condition and repair, and (iii) not commit or
suffer waste and will make all necessary repairs, replacements
and renewals, including, but not limited to, the replacement of
any items of the Equipment so that the value and operating
efficiency thereof shall at all times hereafter be maintained
and preserved; provided, however, if Champion substantially
ceases its operations on the Mortgaged Property, it will not
result in an Event of Default under this Deed of Trust. The
Trustor shall not remove any trade fixture or demolish any
building or improvement located in or on the Premises without
the prior written consent of the Collateral Agent (at the
direction of the Majority Banks). The Trustor shall (iv) pay
for and promptly complete any building or improvement at any
time in the process of erection upon the Premises, (v) refrain
from impairing or diminishing the value of the Premises or the
Equipment, and (vi) make no material alterations to the Premises
or the Equipment which in the opinion of the Collateral Agent
(at the direction of the Majority Banks) diminishes its value.
Subject to the provisions of subparagraphs 4.3 and 4.5(B) of
this Deed of Trust, if the Collateral Agent (at the direction of
the Majority Banks) elects to make all or a portion of any
insurance, eminent domain or condemnation proceeds available to
the Trustor, the Trustor shall promptly repair, restore or
rebuild any building or improvement now or hereafter on the
Premises which may become damaged or destroyed. The Trustor
shall comply with all laws and municipal ordinances governing
the Mortgaged Property and the use thereof. At all times during
the term of this Deed of Trust and the Other Agreements, the
Trustor shall permit any or all of the Beneficiaries, and their
agents, access to inspect the Premises.
(C) The Trustor shall fully and timely pay and discharge, as
and when due and payable, all Charges that may be at any time
levied, assessed or imposed upon or against the Mortgaged
Property, or any part thereof. The Trustor shall, immediately
upon the Collateral Agent's request (at the direction of the
Majority Banks), deliver to the Collateral Agent receipts
evidencing payment thereof or partial payment thereof if payable
in installments, at least thirty (30) days before delinquency;
provided, however, that the Trustor shall have the right to
contest in good faith, by an appropriate proceeding properly
initiated and diligently conducted, the validity, amount or
imposition of any Charges, and upon such good faith contest, to
delay or refuse payment thereof, if (i) the Trustor establishes
with the Collateral Agent (at the direction of the Majority
Banks) adequate reserves to satisfy in full such contested
Charges, and (ii) either such contest will not affect the
priority or value of the Mortgagees' Lien or the Trustor
otherwise insures the priority and value of the Mortgagees'
Lien. If at any time the United States of America shall require
internal revenue stamps to be affixed to this Deed of Trust, the
Trustor will pay for the same, together with any interest or
penalties imposed in connection therewith.
(D) Except for the Mortgagees' Lien, any liens hereafter
granted to or for the benefit of the Beneficiaries and the
Permitted Encumbrances, the Trustor shall keep the Mortgaged
Property free and clear of all Encumbrances of any and every
kind and nature including, without limitation, mechanics' liens
and other similar liens or claims for liens. The Trustor shall
promptly pay or cause to be paid, as and when due and payable or
when declared due and payable, any indebtedness which may
become, or be secured by, a Encumbrance and, immediately upon
request by the Collateral Agent (at the direction of the
Majority Banks) shall deliver to the Collateral Agent evidence
satisfactory to the Collateral Agent (at the direction of the
Majority Banks) of the payment and discharge thereof; provided,
however, that the Trustor shall have the right to contest in
good faith, by an appropriate proceeding properly initiated and
diligently conducted, the validity, amount or imposition of any
Encumbrances, and upon such good faith contest, to delay or
refuse payment thereof, if (i) the Trustor establishes with the
Collateral Agent (at the direction of the Majority Banks)
adequate reserves to satisfy in full such contested
Encumbrances, and (ii) either such contest will not affect the
priority or value of the Mortgagees' Lien or the Trustor
otherwise insures the priority and value of the Mortgagees'
Lien. If, in accordance with the terms of this Deed of Trust,
the Collateral Agent (at the direction of the Majority Banks)
makes payment of any such Encumbrance to a claimant, the
Collateral Agent shall be subrogated to the rights of such
claimant, notwithstanding that the Encumbrance may be released
of record.
(E) The Trustor shall not, at any time or times hereafter,
pledge, hypothecate, encumber, sell, permit or otherwise
transfer all or any portion of the Mortgaged Property or the
Trustor's interest therein, unless the Beneficiaries receive the
"Release Amount" described in Section 7.14.
(F) All present and future items of fixtures, Equipment,
furnishings or other tangible personal property, whether or not
constituting a part of the Mortgaged Property, related,
necessary to or used or useable in connection with any present
or future building or improvement on the Premises, or the
operation or business thereof, are and will be owned free and
clear of all Encumbrances, except for the Mortgagees' Lien, any
liens hereafter granted to or for the benefit of the
Beneficiaries and the Permitted Encumbrances, and the Trustor
will not acquire any such property subject to any Encumbrance,
except for the Mortgagees' Lien, any lien hereafter granted to
or for the benefit of the Beneficiaries and the Permitted
Encumbrances.
3.3 Upon an Event of Default or if the Trustor fails to (A)
keep the Premises and Equipment in good operating condition and
repair or to replace or maintain the same as herein agreed, (B)
pay the premiums for the insurance coverage which is required to
be maintained hereunder, or (C) pay and discharge all
Encumbrances as herein agreed, the Collateral Agent (at the
direction of the Majority Banks) may, but shall not be obligated
to, cause such repairs or replacements to be made, obtain such
insurance or pay and discharge such Encumbrances. Any amounts
paid by the Collateral Agent (at the direction of the Majority
Banks) in taking such action together with interest thereon at
the "Default Rate" (as defined in the Credit Agreement) shall be
due and payable by the Trustor to the Collateral Agent upon
demand, and shall constitute a part of the Liabilities secured
by this Deed of Trust and the Other Agreements. Notwithstanding
the foregoing, such advances by the Collateral Agent shall not
cure, or be deemed to cure any Event of Default hereunder or
under the Other Agreements, or impair any of the Beneficiaries'
rights or remedies hereunder, under the Other Agreements, at
law, in equity or otherwise. In making any such payments, the
Collateral Agent (at the direction of the Majority Banks) may
rely upon any bills, invoices, instruments or documents
delivered to it by the Trustor, an issuer or any such payee and
shall not be liable for any failure to make payments in any
amounts other than as set forth in any such bills, invoices,
instruments or documents.
4. TAXES, INSURANCE AND CONDEMNATION
4.1 The Trustor represents, warrants and covenants unto the
Beneficiaries and the Trustee that the Trustor, at all times,
shall keep and maintain the Premises and the Equipment fully
insured, without co-insurance, against loss or damage by, or
abatement of rental income resulting from, fire and such other
hazards, casualties and contingencies as the Collateral Agent
(at the direction of the Majority Banks) may, from time to time,
require with insurance companies, and in form, amounts and for
such periods as are satisfactory to the Collateral Agent (at the
direction of the Majority Banks) but, in any event, for not less
than the full replacement cost of the Premises and the
Equipment. All such policies and renewals thereof shall
contain, in form and substance acceptable to the Collateral
Agent (at the direction of the Majority Banks) standard Lenders'
Loss Payable clauses naming the Collateral Agent as loss payee
and the Banks as additional insured as their interest may
appear, together with a standard waiver of subrogation
endorsement and shall be delivered to the Collateral Agent, with
premiums therefor paid in full by the Trustor. All policies
shall contain an endorsement that the insurer may not change,
cancel or modify the same without thirty (30) days prior written
notice to the Beneficiaries. The Trustor will provide, within
three (3) days of such loss or damage, written notice to the
Beneficiaries of any loss or damage in excess of Twenty-Five
Thousand and no/100 Dollars ($25,000.00) to the Premises or the
Equipment caused by any casualty. In the event of a deed in
lieu of foreclosure or other foreclosure of title to the
Mortgaged Property, all right, title and interest of the Trustor
in and to any policies then in force shall pass to the
purchaser, grantee or assignee.
4.2 The Trustor hereby authorizes the Collateral Agent (at the
direction of the Majority Banks):
(A) to settle and compromise all claims under all insurance
policies;
(B) to demand and receive all proceeds payable under all
insurance policies;
(C) to execute, in the name of the Trustor or the name of the
Beneficiaries, any proofs of loss, notices or other instruments
in connection with all claims under all policies; and
(D) to assign all policies to any holder of the Liabilities or
to the grantee of the Mortgaged Property in the event of the
foreclosure or other transfer of title to the Mortgaged
Property.
4.3 In the event of payment of proceeds under any of the
insurance policies, the Trustor acknowledges and agrees that the
proceeds of any of the insurance policies shall be paid by the
insurer to the Collateral Agent and the Collateral Agent (at the
direction of the Majority Banks) may, in whole or in part after
deducting all costs and expenses incurred by the Beneficiaries
in connection with the collection of such proceeds, including
the Beneficiaries' attorneys' fees, either:
(A) make available to the Trustor all or a portion of such
proceeds necessary to replace, reconstruct, repair or restore
the Premises and the Equipment or any portion thereof;
(B) apply all or a portion of such proceeds as payment on
account of the Liabilities pursuant to the terms and provisions
of this Deed of Trust, including, but not limited to, the
payment of any costs, fees and expenses due and owing by the
Trustor to the Beneficiaries;
(C) apply such proceeds, in whole or in part, to satisfy,
perform or discharge any of the Obligations;
(D) require that Champion continue paying the Liabilities as
and when due and payable notwithstanding any loss of use of all
or any part of the Mortgaged Property; or
(E) if, prior to the receipt by the Collateral Agent of
proceeds of such policies, the Mortgaged Property shall have
been transferred pursuant to a deed in lieu of foreclosure or
otherwise sold or transferred by foreclosure of this Deed of
Trust, the Collateral Agent (at the direction of the Majority
Banks) shall receive proceeds of such policies to the extent of
any deficiency, together with interest thereon at the Default
Rate and the attorneys' fees, costs, expenses and disbursements
incurred by the Beneficiaries in connection with the collection
of the proceeds of such policies, whether or not a deficiency
judgment on this Deed of Trust shall have been sought or
recovered or denied.
4.4 The Trustor further represents, warrants and covenants unto
the Beneficiaries and the Trustee that it shall fully and timely
pay all insurance premiums and all real estate and other taxes
in connection with the Mortgaged Property and shall deliver to
the Collateral Agent evidence satisfactory to the Collateral
Agent (at the direction of the Majority Banks) of the payment of
all insurance premiums and all real estate and other taxes.
4.5 The Trustor further represents, warrants and covenants unto
the Beneficiaries and the Trustee as follows:
(A) All awards now or hereafter made by any public or
quasi-public authority to or for the benefit of the Trustor in
any way, manner or respect affecting, arising from or relating
to the Mortgaged Property, or any portion thereof, by virtue of
an exercise of the right of eminent domain by such authority,
including, without limitation, any award for taking of title,
possession, right of access to a public way or for any change of
grade of streets affecting the Mortgaged Property, hereby are
assigned to the Beneficiaries and the Trustee as additional
security for the full and timely payment of the Liabilities and
the full and timely performance of the Obligations, and for such
purpose, the Trustor hereby grants to the Beneficiaries and the
Trustee a security interest therein.
(B) The Collateral Agent (at the direction of the Majority
Banks) is hereby authorized, directed and empowered to collect
and receive all such awards and to give proper receipts therefor
whether in the Trustor's name, in the Beneficiaries' name or in
both names, and may after deducting all costs and expenses of
collecting such awards, including, but not limited to, the
Beneficiaries' attorneys' fees:
(1) make available to the Trustor all or a portion of such
awards necessary to replace, reconstruct, repair or restore the
Premises and the Equipment or any portion thereof;
(2) apply all or a portion of such awards as payment on
account of the Liabilities pursuant to the terms and provisions
of this Deed of Trust, including, but not limited to, the
payment of any costs, fees and expenses due and owing by the
Trustor to the Beneficiaries;
(3) apply such awards, in whole or in part, to satisfy,
perform or discharge any of the Obligations;
(4) require that Champion continue paying the Liabilities as
and when due and payable notwithstanding any loss of use of all
or any part of the Mortgaged Property; or
(5) if, prior to the receipt by the Collateral Agent of such
proceeds, the Mortgaged Property shall have been transferred
pursuant to a deed in lieu of foreclosure or otherwise sold or
transferred by foreclosure of this Deed of Trust, the Collateral
Agent shall receive such proceeds to the extent of any
deficiency, together with interest thereon at the Default Rate
and the attorneys' fees, costs, expenses and disbursements
incurred by the Beneficiaries in connection with the collection
of such proceeds, whether or not a deficiency judgment on this
Deed of Trust shall have been sought or recovered or denied.
(C) The Trustor, promptly after request by the Collateral
Agent (at the direction of the Majority Banks), shall make,
execute and deliver or cause to be made, executed and delivered
to or for the benefit of the Beneficiaries any and all
assignments and other instruments sufficient to assign, and
cause the payment directly to the Collateral Agent of, all such
awards, free and clear of all Encumbrances, except for the
Mortgagees' Lien, any liens hereafter granted to or for the
benefit of the Beneficiaries and the Permitted Encumbrances.
Notwithstanding any taking by eminent domain, alteration of the
grade of any street or other injury to or decrease in value of
the Mortgaged Property by any public or quasi-public authority
or corporation, Champion shall continue to pay all of the
Liabilities as and when due and payable.
5. LEASES AND RENTS
5.1 The Trustor hereby absolutely, irrevocably and
unconditionally grants, transfers and assigns to the Banks and
the Collateral Agent for the ratable benefit of the Banks, all
of the right, title and interest of the Trustor in and to the
Leases together with any and all extensions and renewals
thereof, security and guaranties therefor and deposits held in
connection therewith, and hereby grants to and confers upon the
Banks and the Collateral Agent for the ratable benefit of the
Banks, the right to collect all Rents from the Leases. The
Trustor irrevocably appoints the Collateral Agent as its true
and lawful attorney, with the power to, at the option of
Collateral Agent (at the direction of the Majority Banks) at any
time to demand, receive and enforce payment, to give receipts,
releases and satisfactions, and to sue, either in the name of
the Trustor or in the name of the Collateral Agent, for the
ratable benefit of the Banks, for all such Rents, and to apply
the same to the Liabilities in such order and manner as the
Collateral Agent (at the direction of the Majority Banks) shall
determine. Notwithstanding the foregoing assignment of Leases,
the Collateral Agent shall not be obligated to perform or
discharge, nor does it hereby undertake to perform or discharge,
any obligation, duty or liability under the Leases, or any of
them, or under or by reason of such assignment.
5.2 Provided an Event of Default does not exist under this Deed
of Trust or the Other Agreements, the Trustor shall have the
right to collect all of the Rents and shall hold the same, in
trust, to be applied, except as otherwise provided by applicable
law, first to the payment of all Charges upon the Mortgaged
Property, second to the cost of the maintenance of insurance
policies upon the Mortgaged Property required hereby, and third
to the maintenance and repairs to the Premises and Equipment
required hereby, before using any part of the Rents for any
other purposes.
5.3 At all times, the Collateral Agent (at the direction of the
Majority Banks) shall have the right to verify the validity,
status of performance, amount of rentals and other sums due
under the Leases, or any other matter relating to any or all of
the Leases or a Person's use, occupancy or possession of the
Premises, by mail, telephone, telegraph or otherwise, in the
name of the Trustor, the Beneficiaries, a nominee of the
Beneficiaries or in any or all of said names.
5.4 The Trustor shall: (A) promptly upon the Trustor's receipt
or learning thereof, inform the Beneficiaries, in writing, of
any assertion of any claims, offsets or counterclaims by any of
the obligors of the Leases; (B) not permit or agree to any
extension, compromise or settlement or make any change or
modification of any kind or nature of or with respect to the
Leases or the terms thereof except in the ordinary course of
business of the Trustor; and (C) promptly upon the Trustor's
receipt or learning thereof, furnish to and inform the
Beneficiaries of all adverse information relating to or
affecting the financial condition of any lessee, tenant,
guarantor or obligor under any of the Leases.
5.5 The Trustor acknowledges and agrees that:
(A) The Trustor shall, contemporaneously herewith, deliver to
the Collateral Agent the originals of all now existing Leases,
with appropriate endorsement or other specific evidence of
assignment thereto to the Collateral Agent, which endorsement or
assignment shall be in form and substance acceptable to the
Collateral Agent (at the direction of the Majority Banks). The
Trustor, not less than seven (7) days prior to execution
thereof, shall provide the Beneficiaries with copies of all
Leases, amendments or renewals which the Trustor desires to
enter into, which shall be reasonably acceptable to the
Collateral Agent (at the direction of the Majority Banks).
(B) Upon an Event of Default, the Collateral Agent (at the
direction of the Majority Banks) may without notice thereof to
the Trustor, notify any or all of the tenants, lessees,
guarantors or obligors under any of the Leases that the Leases
have been assigned to the Beneficiaries, and the Collateral
Agent (at the direction of the Majority Banks) may direct said
obligors thereafter to make all payments of rents and other sums
due from them under the Leases directly to the Collateral Agent.
(C) Upon an Event of Default and notice from the Collateral
Agent, the Trustor shall irrevocably direct all obligors of the
Leases to make all payments under the Leases directly to the
Collateral Agent.
6. DEFAULT
6.1 The occurrence of any one or more of the following shall
constitute an "Event of Default" under this Deed of Trust:
(A) The occurrence of a breach, default or event of default
under this Deed of Trust or the Other Agreements.
(B) Any of the Liabilities are not fully and timely paid
when due and payable or declared due and payable;
(C) The Trustor or Champion fails or neglects to timely
perform, keep or observe any of the Obligations and such default
is not cured within five (5) days after notice to Champion;
(D) Any statement, report or certificate made or delivered to
a Beneficiary by the Trustor, or any of such Beneficiary's
partners, officers, employees or agents, is not materially true,
correct and complete;
(E) Any of the Trustor's assets are seized, attached,
subjected to a writ or distress warrant, or are levied upon, or
come within the possession of any receiver, trustee, custodian
or assignee for the benefit of creditors;
(F) The Trustor makes a general assignment for the benefit
of creditors, or an application is made by or against the
Trustor for the appointment of a receiver, trustee, custodian or
conservator for the Trustor or any of the Trustor's assets;
(G) A petition under the United States Bankruptcy Code or
any similar federal, state or local law, statute or regulation
shall be filed by or against the Trustor;
(H) The Trustor is enjoined, restrained or in any way
prevented by court order from conducting any part of its
business;
(I) A lawsuit or other proceeding is filed by or against the
Trustor to liquidate any of the Trustor's assets; or
(J) A notice of a lien, levy or assessment is filed of
record with respect to the Trustor or any of the Trustor's
assets by the United States of America, any department, agency,
or instrumentality thereof, or by any state, county, municipal
or other governmental department, agency or instrumentality.
6.2 Upon the occurrence of an Event of Default, without
notice to or demand upon the Trustor or Champion, all of the
Liabilities shall become immediately due and payable, and the
Collateral Agent (at the direction of the Majority Banks) and/or
the Trustee may do any one or more of the following:
(A) With or without notice, but without releasing Trustor or
Champion from any of the Liabilities, and without becoming a
mortgagee in possession, cure any breach or default of Trustor
and, in connection therewith, enter upon the Property and do
such acts and things as Beneficiaries or the Trustee deem
necessary or desirable to protect the security hereof including,
without limitation, appear in and defend any action or
proceeding purporting to affect the security hereof or the
rights or powers of the Beneficiaries or the Trustee, pay,
purchase, contest or compromise any encumbrance, charge, lien or
claim of lien which, in the reasonable judgment of either the
Beneficiaries or the Trustee, is or may be senior to the lien of
this Deed of Trust in priority, the judgment of the
Beneficiaries or Trustee being conclusive as between the parties
hereto; obtain insurance; pay any premiums or charges with
respect to insurance required to be carried; and employ counsel,
accountants, contractors and other appropriate persons to assist
them.
(B) Commence and maintain an action or actions in any court of
competent jurisdiction, to foreclose this instrument as a
mortgage or to obtain specific enforcement of the covenants of
the Trustor. The Trustor agrees that such covenants shall be
specifically enforceable by injunction or any other appropriate
equitable remedy and that for the purposes of any suit brought
under this subparagraph, the Trustor waives the defense of
laches and any applicable statutes of limitations.
(C) Apply to a court of competent jurisdiction for and obtain
appointment of a receiver of the Mortgaged Property as matter of
strict right and without regard to (i) the adequacy of the
security of the repayment of the Liabilities, (ii) the existence
of a declaration that the Liabilities are immediately due and
payable, or (iii) the filing of a notice of default; and the
Trustor consents to such appointment to the extent permitted
hereunder and under law.
(D) Enter upon, possess, manage and operate the Mortgaged
Property or any part thereof, take and possess all documents,
books, records, papers and accounts of the Trustor or the then
owner of the Mortgaged Property; make, terminate, enforce or
modify leases of the Property upon such terms and conditions as
the Collateral Agent (at the direction of the Majority Banks)
deems proper, make repairs, alterations and improvements to the
Mortgaged Property necessary, in the Trustee's or the
Beneficiaries' judgment, to protect or enhance the security
hereof.
(E) Make, enforce, modify and accept the surrender of the
Leases, or any of them, obtain or evict lessees, fix or modify
rents, and do any act that the Collateral Agent (at the
direction of the Majority Banks) deems proper, and in its own
name sue for or otherwise collect such rents, issues and
profits, including, without limitation, those past due and
unpaid, and apply the same, less costs and expenses of operation
and collection, including, without limitation, attorneys' fees
and expenses, to the Liabilities, and in such order as the
Beneficiaries may determine. Except in the event of a full
reinstatement of any the Liabilities, the collection of such
rents, issues and profits and the application thereof as
aforesaid shall not cure or waive any Event of Default hereunder
or under the Other Agreements, or invalidate any act done
pursuant to any such notice. In collecting and receiving the
rents, issues and profits of the Mortgaged Property, and/or in
taking possession thereof, the Collateral Agent (at the
direction of the Majority Banks) shall be entitled to exercise
all of the rights, remedies and powers of an owner thereof (but
in so doing shall not be deemed to be an owner), may conduct the
business of the Trustor in its own name, may use any and all of
the Trustor's properties and facilities, and may deal with the
Trustor's creditors, debtors, tenants, lessees, agents,
employees and other persons and/or companies having any
relationship whatsoever with the Mortgaged Property, and alter
or amend any contracts between them, in any manner the
Collateral Agent (at the direction of the Majority Banks) may
determine. All rights, remedies and powers given to Collateral
Agent (at the direction of the Majority Banks) herein may be
exercised by the Collateral Agent (at the direction of the
Majority Banks) either in person, by agent or by a receiver to
be appointed by a court.
(F) The Trustor irrevocably authorizes and directs the lessees
and any successors to the respective interests of the lessees,
upon receipt of any written request of the Collateral Agent (at
the direction of the Majority Banks) stating that an Event of
Default exists in the payment or performance of the Liabilities,
to pay to the Collateral Agent the rents due and to become due
under the Leases. The Trustor agrees that the lessees shall
have the right to rely upon any such statement and request by
the Collateral Agent, that the lessees shall pay such rents to
the Collateral Agent without any obligation or right to inquire
as to whether such Event of Default actually exists and
notwithstanding any notice from or claim of the Trustor to the
contrary, and that the Trustor shall have no rights or claim
against the lessee for any such rents so paid by the lessees to
the Collateral Agent. Upon the curing of all Events of Default
(if permitted hereunder or under applicable law), the Collateral
Agent shall give written notice thereof to the lessees at the
Trustor's sole cost and thereafter, until the receipt of any
further similar written requests of the Collateral Agent (at the
direction of the Majority Banks), if any, the lessees shall pay
the rents to the Trustor. It is understood and agreed that
neither the assignment of income, rents, issues, profits and
proceeds to the Banks and the Collateral Agent for the ratable
benefit of the Banks, nor the exercise by the Collateral Agent
(at the direction of the Majority Banks), of any of its rights
or remedies hereunder shall be deemed to make the Collateral
Agent a "mortgagee-in-possession" or otherwise responsible or
liable in any manner with respect to the Mortgaged Property or
the use, occupancy, enjoyment or operation of all of all or any
portion thereof, unless and until the Collateral Agent (at the
direction of the Majority Banks), in person or by agent, assumes
actual possession thereof, nor shall appointment of a receiver
for the Mortgaged Property by any court at the request of the
Collateral Agent (at the direction of the Majority Banks) or by
agreement with the Trustor or the entering into possession of
the Mortgaged Property or any part thereof by such receiver be
deemed to make any Beneficiary a "mortgagee-in-possession" or
otherwise responsible or liable in any manner with respect to
the Mortgaged Property or the use, occupancy, enjoyment or
operation of all or any portion thereof.
(G) Execute a written notice of such Event of Default and of
its election to cause the Mortgaged Property to be sold to
satisfy the Liabilities. The Trustee shall cause the Mortgaged
Property to be sold to satisfy the Liabilities. Trustee shall
give and record such notice as the law then requires as a
condition precedent to a trustee's sale. When the minimum
period of time required by law after such notice has elapsed,
the Trustee, without notice or demand upon the Trustor except as
required by law, shall sell the Mortgaged Property at the time
and place of sale fixed by it in the notice of sale, at one or
several sales, either as a whole or in separate parcels and in
such manner and order, all as the Collateral Agent (at the
direction of the Majority Banks) may determine, at public
auction to the highest bidder for cash, in lawful money of the
United States, payable at time of sale. Neither the Trustee nor
another person or entity other than the Collateral Agent (at the
direction of the Majority Banks) shall have the right to direct
the order in which the Mortgaged Property is sold. Subject to
requirements and limits imposed by law, the Trustee may postpone
the sale of all or any portion of the Mortgaged Property by
public announcement at such time and place of sale, and from
time to time may postpone the sale by public announcement at
the time and place fixed by the preceding postponement. The
Trustee shall deliver to the purchaser at such sale a deed
conveying the Mortgaged Property or portion thereof so sold, but
without any covenant or warranty, express or implied. The
recitals in the deed of any matters or fact shall be conclusive
proof of the truthfulness thereof. Any person, including the
Trustee, the Trustor and the Beneficiaries may purchase at the
sale.
(H) Resort to and realize upon the security hereunder and any
other security now or hereafter held by any Beneficiary
concurrently or successively and in one or several consolidated
or independent judicial actions or lawfully taken non-judicial
proceedings, or both, and to apply the proceeds received upon
the Liabilities all in such order and manner as the Trustee and
the Collateral Agent (at the direction of the Majority Banks) or
either of them determine in their sole discretion.
(I) At any sale of the Mortgaged Property held pursuant to
this Section 6.2, the Collateral Agent (at the direction of the
Majority Banks) may bid, as the equivalent of cash, the amount
of all or any of the Liabilities, including, without limitation,
attorneys' fees, costs, fees and expenses; provided, however,
that the amount of such bid by the Collateral Agent shall not
exceed the amount determined pursuant to Paragraph 7.13 below.
6.3 Upon the occurrence of an Event of Default under this Deed
of Trust, there will be added to and included as part of the
Liabilities, and allowed in any decree for sale of the Mortgaged
Property or in any judgment rendered in connection with this
Deed of Trust or the Other Agreements the following: (A) all of
the costs, fees and the expenses of taking possession of the
Mortgaged Property and of the holding, using, leasing,
maintaining, insuring, repairing and selling of the Mortgaged
Property, including, but not limited to, the costs, fees,
charges, expenses and attorneys' fees specified in Paragraph 6.4
below; (B) receivers' fees; (C) any and all expenditures which
may be paid or incurred by or on behalf of the Beneficiaries or
the Trustee for appraisers' fees, documentary and expert
evidence, stenographers' charges, publication costs, fees and
expenses for examination of title, title searches, guaranty
policies, Torrens certificates and other similar data and
assurances with respect to the title to the Mortgaged Property;
(D) all prepayment or similar premiums, if any; and (E) all
other costs, fees and expenses which the Beneficiaries or the
Trustee deem necessary to prosecute or enforce any right or
remedy they have under this Deed of Trust, the Other Agreements,
at law, in equity or otherwise, or to inform bidders at any sale
which may be had pursuant to their rights hereunder, of the true
condition of title or of the value of the Mortgaged Property.
All such costs, charges, expenses, prepayment or like premiums,
fees and other expenditures shall be a part of the Liabilities,
secured by this Deed of Trust and the Other Agreements, payable
on demand and shall bear interest at the Default Rate from the
date of the Beneficiaries' or the Trustee's payment thereof
until repaid to the Beneficiaries.
6.4 If foreclosure proceedings are instituted upon this Deed of
Trust, or if the Collateral Agent (at the direction of the
Majority Banks) or the Trustee shall be a party to, shall
intervene, or file any petition, answer, motion or other
pleading in any suit or proceeding relating to or in connection
with the Mortgaged Property, the Liabilities or the Obligations,
or if any or all of the Beneficiaries or the Trustee shall incur
or pay any expenses, costs, charges, fees or attorneys' fees by
reason of the employment of counsel for advice with respect to
the Mortgaged Property, the Liabilities or the Obligations, and
whether in court proceedings or otherwise, such expenses, costs,
charges and all of the Beneficiaries' and the Trustee's
attorneys' fees shall be part of the Liabilities, secured by
this Deed of Trust and the Other Agreements, payable on demand
and shall bear interest at the Default Rate from the date of the
Beneficiaries' or the Trustee's payment thereof until paid.
6.5 Subject to Paragraph 7.13 below, the Trustor waives the
right to direct the application of all proceeds of any
foreclosure sale of the Mortgaged Property at any time or times
hereafter received by the Collateral Agent, and the Trustor
agrees that the Collateral Agent shall have the continuing
exclusive right to apply and reapply any and all payments in
such manner and in such order as the Collateral Agent (at the
direction of the Majority Banks) may deem advisable, including,
but not limited to, the payment of any costs, fees and expenses
due and owing by the Trustor and/or Champion to the Mortgagees
in connection with the Liabilities, the Obligations, this
Mortgage or the Other Agreements.
6.6 If the Collateral Agent (at the direction of the Majority
Banks) commences judicial proceedings to foreclose this Deed of
Trust, the Trustor, on behalf of itself, its successors, heirs
and permitted assigns, and each and every Person which the
Trustor may legally bind which acquires any interest in or title
to the Mortgaged Property subsequent to the date of this Deed of
Trust: (a) does hereby expressly waive any and all rights of
appraisement, valuation, stay, extension and, to the extent
permitted by law, redemption from sale under any order or decree
of foreclosure of this Deed of Trust; and (b) does hereby agree
that when sale is had under any decree of foreclosure of this
Deed of Trust, upon confirmation of such sale, the master in
chancery or other officer making such sale, or his successor in
office, shall be and is hereby authorized immediately to execute
and deliver to any purchaser at any sale a deed conveying the
Mortgaged Property, showing the amount paid therefor, or if
purchased by the Person in whose favor the order or decree is
entered, the amount of his bid therefor.
6.7 The Collateral Agent (at the direction of the Majority
Banks) or the Trustee shall have the right to sue for any sums,
whether interest, principal or other sums required to be paid by
or for the account of the Trustor under the terms of this Deed
of Trust or the Other Agreements as the same become due, or for
any other of the Liabilities which shall become due, and without
prejudice to the right of the Collateral Agent (at the direction
of the Majority Banks) thereafter to bring an action of
foreclosure, or any other action, for a default or defaults by
the Trustor existing at the time such earlier action was
commenced.
6.8 No right or remedy of the Beneficiaries or the Trustee
enforceable hereunder by the Collateral Agent or the Trustee is
exclusive of any other right or remedy hereunder or now or
hereafter existing at law, in equity or otherwise, but is
cumulative and in addition thereto and the Collateral Agent (at
the direction of the Majority Banks) or the Trustee may recover
judgment thereon, issue execution therefor, and resort to every
other right or remedy available at law, in equity or otherwise,
without first exhausting or affecting or impairing the security
or any right or remedy afforded by this Deed of Trust. No delay
in exercising, or omission to exercise, any right or remedy will
impair any such right or remedy or will be construed to be a
waiver of any default by the Trustor hereunder, or acquiescence
therein, nor will it affect any subsequent default hereunder by
the Trustor of the same or different nature. Every such right
or remedy may be exercised independently or concurrently, and
when and so often as may be deemed expedient by the Collateral
Agent (at the direction of the Majority Banks). No terms or
conditions contained in this Deed of Trust may be waived,
altered or changed except as provided in the Credit Agreement.
6.9 If any rate of interest described in this Deed of Trust or
the Other Agreements is greater than the rate of interest
permitted to be charged or collected by applicable law, as the
case may be, such rate of interest shall automatically be
reduced to the maximum rate of interest permitted to be charged
or collected by applicable law.
6.10 Any failure of the Beneficiaries or the Trustee to insist
upon the strict performance by the Trustor of any of the terms
and provisions of this Deed of Trust or the Other Agreements
shall not be or be deemed to be a waiver of any of the terms and
provisions thereof, and the Beneficiaries, notwithstanding any
such failure, shall have the right at any time or times
thereafter to insist upon the strict performance by the Trustor
of any and all of the terms and provisions thereof to be
performed by such party. Neither the Trustor nor any other
Person, including, but not limited to, Champion, now or
hereafter obligated for the payment of the whole or any part of
the Liabilities shall be relieved of such obligation by reason
of (A) the sale, conveyance or other transfer of the Mortgaged
Property, (B) the failure of any of the Beneficiaries or the
Trustee to comply with any request of the Trustor or of any
other Person to take action to foreclose this Deed of Trust or
otherwise enforce any of the provisions of this Deed of Trust or
the Other Agreements, (C) the release, regardless of
consideration, of the whole or any part of the collateral or
security held for the Liabilities or the Obligations, or (D) any
agreement or stipulation between Champion and the Beneficiaries
extending or modifying the time for payment of the Liabilities
or performance of the Obligations, without first having obtained
the consent of the Trustor. The Collateral Agent (at the
direction of the Majority Banks), without notice, may release,
regardless of consideration, any part of the security held for
the Liabilities or the Obligations without, as to the remainder
of the security therefor, in any way impairing or affecting the
Mortgagees' Lien or the priority of the Mortgagees' Lien over
any subordinate lien. The Collateral Agent (at the direction of
the Majority Banks) may resort for the payment of the
Liabilities to any other security therefor held by the
Beneficiaries in such order and manner as the Collateral Agent
(at the direction of the Majority Banks) may elect.
6.11 The Trustee and the Beneficiaries shall release this Deed
of Trust by proper instrument upon the full and timely
performance of all of the Obligations and the full and timely
payment and discharge of all of the Liabilities, including
reasonable attorneys' fees incurred by the Beneficiaries or the
Trustee for the preparation, execution and/or recording of such
release.
6.12 Neither the Beneficiaries', the Trustee's nor any
receiver's entry upon and taking possession of all or any part
of the Mortgaged Property, nor any collection of rents, issues,
profits, insurance proceeds, condemnation proceeds or damages,
other security or proceeds of other security, or other sums, nor
the application of any collected sum to any Liabilities, nor the
exercise of any other right or remedy by the Collateral Agent
(at the direction of the Majority Banks) or the Trustee or any
receiver shall cure or waive any Event of Default or notice of
Default under this Deed of Trust, or nullify the effect of any
notice of Event of Default or sale (unless all Liabilities have
been paid and performed and the Trustor has cured all other
Events of Default), or impair the status of the security, or
prejudice the Beneficiaries or the Trustee in the exercise of
any right or remedy, or be construed as an affirmation by the
Beneficiaries of any tenancy, lease or option or a subordination
of the lien of this Deed of Trust.
6.13 The Trustor hereby irrevocably appoints the Collateral
Agent (at the direction of the Majority Banks) and its
successors and assigns as its attorney-in-fact, which agency is
coupled with an interest, (a) to execute and record any notices
of completion, cessation of labor, any other notices that the
Collateral Agent (at the direction of the Majority Banks) deems
appropriate to protect the Beneficiaries' interest, and (b) upon
the occurrence of an Event of Default, the Collateral Agent (at
the direction of the Majority Banks) may perform any obligation
of the Trustor hereunder, provided, that (i) the Collateral
Agent, as such attorney-in-fact, shall only be accountable for
such funds as are actually received by the Collateral Agent, and
(ii) the Beneficiaries shall not be liable to the Trustor nor
any other person or entity for any failure to act under this
Section 6.13.
7. MISCELLANEOUS
7.1 Any and all notices, demands, requests, consents,
designations, waivers and other communications required or
desired hereunder shall be in writing and shall be deemed
effective upon personal delivery, upon receipted delivery by
overnight carrier, or three (3) days after mailing if mailed by
registered or certified mail, return receipt requested, postage
prepaid, to the Trustor or the Beneficiaries at the following
addresses or such other addresses as the Trustor, the
Beneficiaries or the Trustee specify in like manner; provided,
however, that notices of a change of address shall be effective
only upon receipt thereof.
If to LaSalle, With a copy to:
then to:
LaSalle National Bank Fagel & Haber
120 South LaSalle Street 140 South Dearborn, Suite 1400
Chicago, Illinois 60603 Chicago, Illinois 60603
Attention: Mr. Thomas J. Bieke Attention: Gina M. Gentili, Esq.
If to the With a copy to:
Collateral Agent
or the Agent, LaSalle National Bank Fagel & Haber
then to: 120 South LaSalle Street 140 South Dearborn, Suite 1400
Chicago, Illinois 60603 Chicago, Illinois 60603
Attention: Mr. Thomas J. Bieke Attention: Gina M. Gentili, Esq.
If to Harris, With a copy to:
then to:
Harris Trust and Savings Bank Chapman & Cutler
111 West Monroe Street 111 West Monroe Street
Chicago, Illinois 60603 Chicago, Illinois 60603
Attention: Mr. Michael Wood Attn.: Edward L. Lembitz,Esq.
If to NBD, With a copy to:
then to:
NBD Bank Honigman, Miller,
611 Woodward Avenue Schwartz & Cohn
Detroit, Michigan 48226 2290 First National Building
Attention: Mr. Andrew Arton Detroit, Michigan 48226
Attn.: Theodore Sylwestrazak, Esq.
If to the Trustor, With a copy to:
then to:
CPR Properties, Inc. Lord, Bissell & Brook
2525 22nd Street 115 South LaSalle Street
Oak Brook, Illinois 60521 Suite 3500
Attention: President Chicago, Illinois 60603
Attention: Louis E. Rosen, Esq.
If to the Trustee,
then to: Chicago Title Insurance Company
2425 West Shaw
Fresno, California 93711
7.2 All the covenants contained in this Deed of Trust will run
with the land. Time is of the essence of this Deed of Trust and
all provisions herein relating thereto shall be strictly
construed.
7.3 This Deed of Trust, and all the provisions hereof, will be
binding upon and inure to the benefit of the successors,
parents, subsidiaries, divisions and affiliates of the Trustor,
and the successors, parents, subsidiaries, divisions, affiliates
and assigns of the Beneficiaries and the Trustee. This Deed of
Trust may not be assigned by the Trustor, but may be assigned by
any Beneficiary or the Trustee without notice to the Trustor.
7.4 This Deed of Trust is given as security for the Liabilities
and the Obligations. The Trustor authorizes any or all of the
Beneficiaries, without notice or demand and without affecting
its liability hereunder, from time to time to: (A) amend,
alter, modify, renew, extend, accelerate or otherwise change the
time for payment of, or otherwise change the terms of the
Liabilities or Obligations or any part thereof, including
increase or decrease the rate of interest thereon; (B) accept
partial payments on the Liabilities; (C) accept new or
additional documents, instruments or agreements related to the
Liabilities or the Obligations; (D) take and hold additional
collateral security or guaranties for the payment of the
Liabilities or the Obligations, and amend, alter, exchange,
substitute, transfer, enforce, waive subordinate, terminate,
modify and release in any manner any such security or
guaranties; (E) apply such security and direct the order or
manner of sale thereof as the Collateral Agent (at the direction
of the Majority Banks) may determine; (F) release or substitute
any borrower or guarantor; and (G) settle, release on terms
satisfactory to the Collateral Agent (at the direction of the
Majority Banks) or by operation of law or otherwise, compound,
compromise, collect or otherwise liquidate any indebtedness or
security in any manner, consent to the transfer of security and
bid and purchase at any sale, without affecting or impairing the
obligations of the Trustor hereunder.
7.5 The Trustor waives any right to require the Collateral
Agent (at the direction of the Majority Banks) to (A) proceed
against Champion under the Other Agreements or anyone else; (B)
proceed against or exhaust any security for the Liabilities or
the Obligations; (C) give notice of the terms, time and place of
any public or private sale of any real or personal property
securing the Liabilities or the Obligations; or (D) pursue any
other remedy in the Collateral Agent's power whatsoever. The
Trustor waives all suretyship defenses under Illinois or
California law and any defense arising by reason of any other
defense of the Trustor, or by reason of the cessation from any
cause whatsoever of the liability of Champion, or by reason of
any act or omission of the Beneficiaries or others which
directly or indirectly results in or aids the discharge or
release of Champion or any of the Liabilities or the Obligations
or any security therefor by operation of law of otherwise, or by
reason of the amendment, modification, renewal, extension or
other change in any of the Liabilities or Obligations. The
Trustor agrees that its obligation hereunder is not limited nor
otherwise affected by any additional collateral given by
Champion or any other person or entity to Beneficiaries. The
Trustor waives all setoffs and counterclaims and all
presentments, demands for performance, notices of
non-performance, protests, notices of protest, notices of
dishonor, and notices of acceptance of this Deed of Trust and of
the existence, reaction, or incurring of new or additional
obligations, and all other notices and demands of any kind and
description now or hereafter provided for by any statute or rule
of law. The Trustor represents and warrants to Beneficiaries
that (A) the Trustor has established adequate means of obtaining
from Champion on a continuing basis financial and other
information pertaining to Champion's business and financial
condition; and (B) the Trustor is now and will be completely
familiar with the business, operation and financial condition of
Champion and its assets. The Trustor hereby waives and
relinquishes any duty on the part of the Beneficiaries to
disclose to the Trustor any matter, fact or thing relating to
the business, operation or financial condition of Champion and
its assets now known or hereafter known by the Beneficiaries
during the term of this Deed of Trust. With respect to any
indebtedness of the Trustor to the Beneficiaries, the
Beneficiaries need not inquire into the powers of the Trustor or
the officers, directors or agents acting or purporting to act on
its behalf, and any indebtedness made or created in reliance
upon the professed exercise of such powers shall be secured
hereunder.
7.6 In addition to any other waivers contained herein, to the
extent a court of competent jurisdiction deems California law to
be applicable hereto, pursuant to Section 2856 of the California
civil Code, the Trustor waives all rights and defenses arising
out of an election of remedies by the Beneficiaries, even
though that election of remedies, such as a non-judicial
foreclosure with respect to security for the Liabilities has
destroyed the Trustor's rights of subrogation and reimbursement
against Champion by the operation of Section 580d of the Code of
Civil Procedure or otherwise.
7.7 The terms and provisions of the Other Agreements are
incorporated herein by this reference thereto.
7.8 In acting under or by virtue of this Deed of Trust, the
Collateral Agent shall be entitled to all the rights, authority,
privileges and immunities provided to the Agent or the
Collateral Agent in Article 10 of the Credit Agreement, all of
which provisions of Article 10 are incorporated by reference
herein with the same force and effect as if set forth herein.
Without limiting the foregoing, the Collateral Agent hereby
disclaims any representation or warranty to the Banks or the
Agent concerning the creation, validity, enforceability,
perfection or priority of the mortgage lien granted hereunder or
under any of the Other Agreements or the value of the Mortgaged
Property hereunder or under any of the Other Agreements and the
Collateral Agent shall not be required to take any action with
respect to any Event of Default except for those expressly
directed by the Majority Banks. The Trustor acknowledges and
agrees that it is not a beneficiary of the rights, powers,
duties and obligations provided for between the Collateral Agent
and the Banks and that the Trustor shall not be entitled to any
rights or claims or any immunities or defenses as a result of
(i) the Collateral Agent's actions or inactions without the
consent of the Majority Banks, or (ii) any breach of the
Collateral Agent's representations, warranties, covenants or
obligations, if any, to the Banks.
7.9 The Exhibits referred to herein are attached hereto, made a
part hereof and incorporated herein by this reference thereto.
7.10 The Trustee shall be entitled to compensation in
accordance with Section 2924 of the California Civil Code and
the Trustor hereby agrees to pay the same.
7.11 The Collateral Agent (at the direction of the Majority
Banks) may from time to time, without notice to the Trustor or
to the Trustee, and with or without cause and with or without
the resignation of the Trustee substitute a successor or
successors to the Trustee named herein or acting hereunder to
execute this trust. Upon such appointment and without
conveyance to the successor Trustee, the latter shall be vested
with all title, powers and duties conferred upon the Trustee
herein named or acting hereunder. Each such appointment and
substitution shall be made by written document executed by the
Beneficiaries (at the direction of the Majority Banks)
containing reference to this Deed of Trust and its place of
record, which when duly filed for record in the proper office,
shall be conclusive proof of proper appointment of the successor
Trustee. The procedure herein provided for substitution of the
Trustee shall be conclusive of all other provisions for
substitution, statutory or otherwise.
7.12 This Deed of Trust is given to secure, among other things,
the Liabilities. This Deed of Trust shall secure not only
presently existing indebtedness under the Other Agreements, but
also future advances, whether such advances are obligatory, to
be made at the option of the Bank or otherwise, to the same
extent as if such future advances were made on the date of the
execution of this Deed of Trust. The lien of this Deed of Trust
shall be valid as to all indebtedness secured hereby, including
future advances, from the time of its filing for record in the
Fresno County, California Recorder's Office. The total principal
amount of the Liabilities secured hereby shall not exceed the
principal amount of Eighteen Million Six Hundred Forty-Two
Thousand Nine Hundred Forty-Six and no/100 Dollars
($18,642,946.00), plus interest thereon, any disbursements made
for payment of taxes, special assessments or insurance on the
Mortgaged Property and any other costs, fees, expenses or other
indebtedness owed by the Trustor or Champion to the Bank
pursuant to this Deed of Trust or the Other Agreements. This
Deed of Trust shall be valid and have priority to the extent of
the maximum amount secured hereby over all subsequent liens and
encumbrances, including statutory liens, excepting solely taxes
and assessments levied on the Mortgaged Property given priority
by law.
7.13 Notwithstanding Paragraph 7.12 above or any other
provisions in this Deed of Trust or in any of the Other
Agreements to the contrary, (A) the Beneficiaries shall not
receive or recover proceeds in connection with this Deed of
Trust and the Beech Creek Mortgage in excess of Two Million Five
Hundred Thousand and no/100 Dollars ($2,500,000.00), plus (i)
accrued interest on the outstanding amount of the "Fresno and
Beech Creek Real Estate Advance" (as defined in the Credit
Agreement), (ii) any disbursements made for payment of taxes,
special assessments or insurance on the Mortgaged Property or
the real property commonly known as Route 150, Beech Creek
Industrial Park, Beech Creek, Pennsylvania (the "Beech Creek
Property"), and (iii) any other costs, fees or expenses owed by
the Trustor or Champion to the Bank relating to the Mortgage
Property and/or the Beech Creek Property.
7.14 Notwithstanding any other provisions in this Deed of Trust
or in the Other Agreements to the contrary: (A) Trustor shall
have the right to cause the release of this Deed of Trust and
the Beech Creek Mortgage, and the Beneficiaries shall release
this Deed of Trust and the Beech Creek Mortgage, upon receipt by
the Beneficiaries of an amount (the "Release Amount") equal to
the lesser of (i) the total sum of all unpaid Liabilities; or
(ii) the amount determined in accordance with Paragraph 7.13
above; and (B) whether as a result of a foreclosure sale or any
other sale, disposition or refinancing of either or both of the
Mortgaged Property and the real estate secured by the Beech
Creek Mortgage, if the proceeds thereof exceed the Release
Amount, and provided the Release Amount is received by the
Beneficiaries, all excess proceeds shall belong to the Trustor
free and clear of any lien or security interest under the Other
Agreements.
7.15 Except as otherwise expressly provided in this Deed of
Trust, the parties agree and intend that this Deed of Trust, and
the respective rights and obligations of the parties hereto,
shall be governed by and construed according to the internal
laws of the State of Illinois (without regard to its conflict of
laws principles). The parties agree and stipulate that this
Deed of Trust was negotiated in Illinois, that this Deed of
Trust was executed, delivered and accepted in Illinois, all
payments shall be made to the Beneficiaries in Illinois, and
that Illinois has a substantial relationship to the parties and
to the underlying transaction contemplated by this Deed of
Trust. Notwithstanding the foregoing, the parties agreed that:
(A) The procedures governing the enforcement by the
Beneficiaries or provisional remedies against the Trustor,
including by way of illustration, but not limited to, actions
for claim and delivery of property, for injunctive relief or for
the appointment of a receiver, shall be governed by the laws of
the state in which such provisional remedies or relief are
sought.
(B)With respect to any collateral given by the Trustor to the
Beneficiaries, the procedures for foreclosing on the liens of
the Trustor shall be governed by the laws of the state in which
the collateral is located in which the foreclosure is carried
out; provided, however, that this subparagraph shall in no event
be construed to provide that the substantive law of such state
shall apply to this Deed of Trust, the parties intending that
the substantive law of the State of Illinois shall govern this
Deed of Trust and all non-procedural incidents of foreclosure,
including, but not limited to, the right of the Beneficiaries to
obtain a judgment for any deficiency following foreclosure.
(C) In the event of any foreclosure by the Beneficiaries on
any collateral, regardless of where the collateral is located,
the parties agree and intend that the laws of the State of
Illinois shall govern the right of the Beneficiaries to collect
or obtain a judgment for any deficiency following foreclosure,
and the parties specifically intend that the laws of other
states, including, but not limited to, Sections 580a, 580d and
726 of the California Code of Civil Procedure, shall not be
applicable.
(D) Upon the occurrence or in connection with a non-judicial
sale, the Trustor and the Beneficiaries hereby instruct the
Trustee that it shall not cancel nor return the Other Agreements
to Champion unless and until all obligations and indebtedness
secured hereby have been paid in full, and the Trustee receives
written confirmation of such fact from the Collateral Agent (at
the direction of the Beneficiaries).
7.16 The Trustor hereby irrevocably appoints and designates
Louis E. Rosen, Esq., located at Lord, Bissell & Brook, 115
South LaSalle Street, Suite 3500, Chicago, Illinois 60603, as
the Trustor's true and lawful attorney-in-fact and duly
authorized agent to accept any service of legal process or any
notice which, notwithstanding the Trustor's waiver of notice
contained in this Deed of Trust, the Beneficiaries or the
Trustee desire or elect to provide to the Trustor, and agrees
that service of process upon such attorney-in-fact shall
constitute personal service of process upon the Trustor. The
Trustor shall direct such attorney-in-fact to forward any such
notice or service of process to the Trustor at an address
designated by the Trustor. The Trustor and the Beneficiaries
irrevocably agree, and hereby consent and submit to the
exclusive jurisdiction of the Superior Court of Fresno County,
California, and the United States District Court for the Eastern
District of California, with regard to any litigation, actions
or proceedings arising from, relating to or in connection with
this Deed of Trust. The Trustor hereby waives any right it may
have to transfer or change the venue of any litigation, actions
or proceedings filed in the Superior Court of Fresno County,
California, or the United States District Court for the Eastern
District of California, and further waives any objection to
service of process upon such attorney-in-fact.
7.17 THE TRUSTOR, THE BENEFICIARIES AND THE TRUSTEE EACH
HEREBY ABSOLUTELY AND UNCONDITIONALLY WAIVE THEIR RESPECTIVE
RIGHT TO A TRIAL BY JURY IN CONNECTION WITH ANY CLAIM, DEMAND,
ACTION OR CAUSE OF ACTION ARISING UNDER OR RELATED TO THIS DEED
OF TRUST, THE LIABILITIES, THE OBLIGATIONS OR THE OTHER
AGREEMENTS, OR ANY OTHER INSTRUMENT, DOCUMENT OR AGREEMENT
EXECUTED AND DELIVERED IN CONNECTION THEREWITH OR RELATED
THERETO.
<PAGE>
IN WITNESS WHEREOF, this Deed of Trust has been duly executed
and delivered as of the day and year first above written.
CPR PROPERTIES, INC.,
a California corporation
By: _______________________
Its: _______________________
ATTEST:
By: _______________________
Its: _______________________
LA SALLE NATIONAL BANK, a national banking
association, individually, as Agent
and as Collateral Agent
By: _______________________
Its: _______________________
NBD BANK
By: _______________________
Its: _______________________
HARRIS TRUST AND SAVINGS
BANK, an Illinois banking
corporation
By: _______________________
Its: _______________________
CHICAGO TITLE INSURANCE
COMPANY
By: _______________________
Its: _______________________
STATE OF ____________ )
) S.S.
COUNTY OF ___________ )
I, ___________________________, a Notary Public in and for the
County and State aforesaid, do hereby certify that
_____________________ and _____________________, personally
known to me to be the _____________ and _____________ of CPR
Properties, Inc. (the "Trustor"), whose names are subscribed to
the foregoing Deed of Trust, Assignment of Rents and Security
Agreement - California, appeared before me this day in person,
and acknowledged that they signed and delivered the said
instrument as their free and voluntary act, and as the free and
voluntary act of the Trustor, for the uses and purposes therein
set forth.
GIVEN under my hand and notarial seal this _____ day of July,
1995.
______________________________
Notary Public
STATE OF _____________ )
) S.S.
COUNTY OF ___________ )
I, ___________________________, a Notary Public in and for the
County and State aforesaid, do hereby certify that
_____________________, personally known to me to be the
_____________ of LaSalle National Bank (the "Bank"), whose name
is subscribed to the foregoing Deed of Trust, Assignment of
Rents and Security Agreement - California, appeared before me
this day in person, and acknowledged that he signed and
delivered the said instrument as his free and voluntary act, and
as the free and voluntary act of the Bank, the Agent and the
Collateral Agent for the uses and purposes therein set forth.
GIVEN under my hand and notarial seal this _____ day of July,
1995.
Notary Public
STATE OF _____________ )
) S.S.
COUNTY OF ___________ )
I, ___________________________, a Notary Public in and for the
County and State aforesaid, do hereby certify that
_____________________, personally known to me to be the
_____________ of Harris Trust and Savings Bank (the "Bank"),
whose name is subscribed to the foregoing Deed of Trust,
Assignment of Rents and Security Agreement - California,
appeared before me this day in person, and acknowledged that he
signed and delivered the said instrument as his free and
voluntary act, and as the free and voluntary act of the Bank,
for the uses and purposes therein set forth.
GIVEN under my hand and notarial seal this _____ day of July,
1995.
________________________
Notary Public
STATE OF _____________ )
) S.S.
COUNTY OF ___________ )
I, ___________________________, a Notary Public in and for the
County and State aforesaid, do hereby certify that
_____________________, personally known to me to be the
_____________ of NBD Bank (the "Bank"), whose name is subscribed
to the foregoing Deed of Trust, Assignment of Rents and Security
Agreement - California, appeared before me this day in person,
and acknowledged that he signed and delivered the said
instrument as his free and voluntary act, and as the free and
voluntary act of the Bank, for the uses and purposes therein set
forth.
GIVEN under my hand and notarial seal this _____ day of July,
1995.
________________________
Notary Public
STATE OF _____________ )
) S.S.
COUNTY OF ___________ )
I, ___________________________, a Notary Public in and for the
County and State aforesaid, do hereby certify that
_____________________, personally known to me to be the
_____________ of Chicago Title Insurance Company (the
"Company"), whose name is subscribed to the foregoing Deed of
Trust, Assignment of Rents and Security Agreement - California,
appeared before me this day in person, and acknowledged that he
signed and delivered the said instrument as his free and
voluntary act, and as the free and voluntary act of the Company
for the uses and purposes therein set forth.
GIVEN under my hand and notarial seal this _____ day of July,
1995.
________________________
Notary Public
EXHIBIT "A" TO DEED OF TRUST
MORTGAGED PROPERTY LEGAL DESCRIPTION
That portion of the Northwest quarter of Section 24, Township 14
South, Range 20 East, Mount Diablo Base and Meridian, according
to the Official Plat thereof, more particularly described as
follows:
Beginning at a point 1348.80 feet South and 40.00 feet West of
the North quarter corner of said Section 24; thence along the
Northerly line of that certain 8.60 acre parcel of land
described in the deed to Diversified Transportation Systems,
Inc., recorded November 15, 1968, in Book 5636, Page 198 of
Official Records, as Document No. 81522, South 8946'00" West a
distance of 83.89 feet to an angle point therein; thence South
7806'46' West thereon a distance of 100.00 feet to an angle
point therein; thence South 8946'00" West thereon a distance of
1116.49 feet to an Easterly line of that certain parcel of land
described as Parcel 2 in the Deed to the Atchison, Topeka and
Santa Fe Railway Company recorded August 11, 1971, in Book 5924,
Page 993 of Official Records, as Document No. 64248; thence
along last said Easterly line, North 0010'00" West a distance of
205.96 feet to the beginning of a tangent curve therein concave
Southeasterly having a radius of 388.02 feet and an interior
angle of 6457'00"; thence Northeasterly along said curve an arc
distance of 439.86 feet to tangency with a Southeasterly line of
said Santa Fe Parcel; thence North 6447'00" East thereon a
distance of 79.52 feet to the beginning of a tangent curve
therein concave Southerly having a radius of 388.02 feet and an
interior angle of 2459'00"; thence Easterly, along said curve,
an arc distance of 169.19 feet to a tangency with a Southerly
line of said parcel; thence North 8946'00" East, along a line
that is parallel with and distant Southerly 741.90 feet measured
at right angles from the Northerly line of said Northwest
quarter of Section 24, a distance of 262.69 feet; thence South
0010'00" East, parallel with and 616.00 feet West of the East
line of said Northwest quarter of Section 24, a distance of
552.11 feet; thence North 8946'00" East a distance of 386.45
feet; thence North 7806'46" East a distance of 100.00 feet;
thence North 8946'00" East a distance of 91.63 feet to a point
40.00 feet West of the East line of said Northwest quarter of
Section 24; thence South 0010'00" East, parallel with and 40.00
feet West of said East line of the Northwest quarter of Section
24, a distance of 75.00 feet to the point of beginning.
EXCEPTING therefrom all oil, gas and other hydrocarbon
substances, as well as metallic or other solid materials, within
and under said land as excepted and reserved in the deeds
recorded in Book 2200 Page 433, Book 5235, Page 549 and in Book
5964, Page 932, all of Official Records.
Common Address: 2696 South Maple Street
Fresno, California 93725
EXHIBIT "B" TO MORTGAGE
SUMMARY OF ENVIRONMENTAL ISSUES
EXHIBIT "C" TO MORTGAGE
PERMITTED ENCUMBRANCES
The following encumbrances listed on Schedule B of Chicago Title
Company commitment for ALTA form B policy (commitment number
456399):
Numbers: 1 - 18 and encumbrances due to unrecorded easements.
ENVIRONMENTAL INDEMNIFICATION AGREEMENT
THIS ENVIRONMENTAL INDEMNIFICATION AGREEMENT (this "Agreement")
is executed and delivered as of August 4, 1995, by CPR
Properties, Inc., a California corporation ("Indemnitor"), to
LaSalle National Bank, a national banking association
("LaSalle"), NBD Bank, ("NBD"), Harris Trust and Savings Bank,
an Illinois banking corporation ("Harris") [LaSalle, NBD and
Harris, together with their respective successors and permitted
assigns, are collectively the "Banks"], and LaSalle in its
capacity as both Agent and Collateral Agent for the Banks (the
Banks and LaSalle, in its capacity as both Agent and Collateral
Agent for the Banks are each an "Beneficiary" and collectively
the "Beneficiaries").
R E C I T A L S:
WHEREAS, the Banks have provided certain extensions of credit,
loans and other financial accommodations to Champion Parts, Inc.
("Champion"), pursuant to (a) that certain Amended and Restated
Credit Agreement dated as of March 31, 1993, by and between
Champion and the Beneficiaries, as amended from time to time
(collectively the "Credit Agreement"), (b) (i) that certain
Reimbursement Agreement dated as of December 1, 1991, by and
between Champion and NBD (the "IRB Agreement"), and (ii) that
certain Standby Letter of Credit Application and Reimbursement
and Security Agreement dated December 30, 1991, by and between
Champion and NBD (the "Workmen's Compensation Agreement"), and
(c) any and all other agreements, documents and instruments
executed and delivered by Champion to any or all of the Banks,
the Agent or the Collateral Agent (collectively the "Champion
Other Agreements") [the Champion Other Agreements, together with
the Credit Agreement, the IRB Agreement and the Workmen's
Compensation Agreement are collectively the "Champion Loan
Documents");
WHEREAS, Champion has requested, among other things, that the
Banks provide an additional extension of credit in the amount of
Two Million and no/100 Dollars ($2,000,000.00) by increasing
availability under the borrowing base, extend the "Termination
Date" (as defined in the Credit Agreement) through January 8,
1996, and amend certain other provisions contained in the Credit
Agreement;
WHEREAS, the Banks are willing to provide an additional
extension of credit in the amount of Two Million and no/100
Dollars ($2,000,000.00) by increasing availability under the
borrowing base, extend the Termination Date through January 8,
1996, and amend certain other provisions contained in the Credit
Agreement, but solely on the terms and subject to the conditions
set forth in (a) that certain Third Amendment to Amended and
Restated Credit Agreement of even date herewith by and between
Champion and the Beneficiaries (the "Third Amendment to Amended
and Restated Credit Agreement"), (b) that certain Deed of Trust,
Assignment of Rents, and Security Agreement - California of even
date herewith executed and delivered by CPR to the Beneficiaries
(the "Deed of Trust"), and (c) this Agreement; and
WHEREAS, the Indemnitor acknowledges and agrees that (a)
Champion owns all of the issued and outstanding shares of stock
of the Indemnitor, (b) the "Property" (hereinafter defined) is
the sole asset of the Indemnitor and the continued viability of
Champion financially benefits the Indemnitor and results in the
continued viability of the Indemnitor, (c) the Indemnitor is,
thus, benefitted by the Beneficiaries increasing availability
under the borrowing base, extending the Termination Date through
January 8, 1996 and amending certain other provisions contained
in the Credit Agreement, (d) the Indemnitor's execution and
delivery of this Agreement is a material inducement to the
Beneficiaries increasing availability under the borrowing base,
extending the Termination Date through January 8, 1996 and
amending certain other provisions contained in the Credit
Agreement, and (e) without this Agreement, the Beneficiaries
would not increase availability under the borrowing base, extend
the Termination Date through January 8, 1996 and amend certain
other provisions contained in the Credit Agreement.
NOW, THEREFORE, in consideration of the foregoing, the
mutual promises and understandings of the parties hereto set
forth herein, and other good and valuable consideration, the
receipt and sufficiency of such consideration is hereby
acknowledged, the Indemnitor hereby covenants unto and agrees
with the Beneficiaries as set forth in this Agreement.
1. Definitions. As used herein, the following terms shall have
the following meanings:
(A) "Environmental Laws" means all federal, state and local
environmental, health or safety statutes, laws or regulations
now or hereafter enacted, including, but not limited to:
(i) the Comprehensive Environmental Response, Compensation,
and Liability Act of 1980, as amended by the Superfund
Amendments and Reauthorization Act of 1986, 42 USC e 9601 et
seq., the Solid Waste Disposal Act, as amended by the Resource
Conservation and Recovery Act of 1976, as amended by the
Hazardous and Solid Waste Amendments of 1984, 42 USC e 6901 et
seq., The Federal Water Pollution Control Act, as amended by the
Federal Clean Water Act of 1977, 33 USC e 1251 et seq., the
Toxic Substance Control Act of 1976, 15 USC e 2601 et seq., the
Emergency Planning and Community Right to Know Act of 1986, 42
USC e 11001 et seq., the Clean Air Act as amended, 42 USC e 7401
et seq., the National Environmental Policy Act of 1969, 42 USC e
4321, the Rivers and Harbors Act of 1899, 33 USC e 401 et seq.,
the Endangered Species Act of 1973, as amended, 29 USC e 1531 et
seq., the Occupational Health and Safety Act of 1970, as
amended, 29 USC e 651 et seq., the Safe Drinking Water Act of
1974, as amended, 42 USC e 300(f) et seq., the California
Environmental Quality Act, California Public Resources Code e
21000 et seq., California Safe Drinking Water and Toxic
Enforcement Act, (Proposition 65) California Health and Safety
Code e 25249.5-25249.12, California Clean Air Act, California
Health and Safety Code e 39000 et seq., PorterCologne Water
Quality Control Act, California Water Code e 13000 et seq.,
California Endangered Species Act, California Fish and Game Code
e 2050 et seq., California Hazardous Waste Control Laws,
California Health and Safety Code e 25100 et seq., California
Hazardous Substance Act, California Health and Safety Code e
28740 et seq., and all amendments, rules, regulations and
guidance documents promulgated or published thereunder.
(ii) all future laws, rules, regulations, and guidance
documents relating to public health, safety or the environment,
including, without limitation, (a) "Releases" (hereinafter
defined) to air, water, groundwater, or land; (b) withdrawal or
use of groundwater; (c) the use, handling, or disposal of
polychlorinated biphenyls (PCB's), asbestos or urea
formaldehyde; (d) the treatment, storage, disposal, or
management of Hazardous Substances (including without
limitation, petroleum, its derivatives, by-products or other
hydrocarbons), and any other solid, liquid, or gaseous
substance, exposure to which is prohibited, limited or
regulated, or may or could pose a hazard to the health and
safety of the occupants of the Property or the property adjacent
to or surrounding the Property; and (e) the exposure of persons
to toxic, hazardous, or other controlled, prohibited or
regulated substances, and any regulation, order, injunction,
judgment, declaration, notice or demand issued thereunder.
(B) "Hazardous Material" means any material which is listed in
the Department of Transportation Hazardous Materials Table, 49
CFR e 172.101, or which is toxic, explosive, corrosive,
flammable, infectious, radioactive, carcinogenic, mutagenic,
teratogenic or otherwise hazardous and is or becomes regulated
by any governmental authority, agency, department, commission,
board, agency or instrumentality of the United States, the State
of California or any political subdivision thereof.
(C) "Hazardous Substance" shall have the meaning given to it
under Section 101(14) of the Comprehensive Environmental
Recovery Compensation & Liability Act, as amended, 42 U.S.C. e
9601(14). It shall also include, but not be limited to, any
substance:
(i) the presence of which requires investigation or
remediation under any federal, state, or local statute,
regulation, ordinance, order, action, policy or common law;
(ii) which is or becomes defined 'Hazardous Waste,'
'Hazardous Substance,' pollutant or contaminate under any
federal, state or local statute, regulation, rule or ordinance
or amendment thereto including without limitation the Resource
Conservation & Recovery Act (42 U.S.C. e 6901 et seq.);
(iii) which is toxic, explosive, corrosive, flammable,
infectious, radioactive, carcinogenic, mutagenic, teratogenic or
otherwise hazardous and is or becomes regulated by any
governmental authority, agency, department, commission, board,
agency or instrumentality of the United States, the State of
California or any political subdivision thereof; or
(iv) which contains, without limitation, gasoline, diesel
fuel, petroleum hydrocarbons, polychlorinated biphenyls (PCBs),
asbestos, formaldehyde, foam insulation, or radon gas.
(D) "Property" means the real property legally described on
Exhibit "A" attached hereto, commonly known as 2696 South Maple
Street, Fresno, California 93725, and the improvements
constructed thereon.
(E) "Release" means any spilling, leaking, pumping, pouring,
emitting, emptying, discharging, injecting, escaping, leaching,
dumping or disposing into the environment, unless permitted or
authorized by a regulatory agency.
2. Representations, Warranties and Covenants. Indemnitor hereby
represents, warrants and covenants unto the Beneficiaries as
follows:
(A) The Property is not subject to any liens, actions or
proceedings relating to Hazardous Materials or Hazardous
Substances or to any Environmental Laws (as hereinafter
defined), and Indemnitor is not a party to any such action or
proceeding relating to the Property and Indemnitor has received
no notice of any such lien, action or proceeding pending or
threatened.
(B) To the best of Indemnitor's knowledge after due and
diligent inquiry, and except as otherwise set forth on Exhibit
"B", (i) there are no Hazardous Materials or Hazardous
Substances presently located on the surface or in the subsurface
of the Property or any surface waters or ground waters on or
under the Property, where the presence of such Hazardous
Materials or Hazardous Substances are in such quantities which
result in the violation of any Environmental Laws, and (ii)
there have been no Releases from any storage tanks (underground
or above the ground) or from operations.
(C) To the best of Indemnitor's knowledge after due and
diligent inquiry, no Hazardous Materials and no Hazardous
Substances have been located, stored or processed on the
Property, and no Hazardous Materials and no Hazardous Substances
have been disposed on or released or discharged on or from the
Property, including Releases or discharges to ground water or
surface water on or adjacent to the Property, except as set
forth on Exhibit "B".
(D) Except as set forth on Exhibit "B", the Property and its
use and operation is currently in compliance with all
Environmental Laws.
(E) Except as set forth on Exhibit "B", there are present on
the Property (i) no Hazardous Materials and no Hazardous
Substances which would subject the Property to any liens,
actions or proceedings, (ii) no storage tanks, and (iii) no
polychlorinated biphenyls or asbestos.
(F) To the best of Indemnitor's knowledge after due and
diligent inquiry, the real estate adjacent to the Property is
not currently and has not in the past been used for the on-site
storage, treatment or disposal of Hazardous Materials or
Hazardous Substances or been in violation of any Environmental
Laws.
(G) The Property has not been used as a sanitary landfill,
dump, industrial waste disposal area staging, or for storage or
treatment or for any other similar uses.
(H) Indemnitor and/or its tenant has obtained all permits and
licenses required by all governmental agencies having
jurisdiction over Indemnitor, its tenant and the Property and
under all Environmental Laws.
(I) Indemnitor's representations and warranties set forth in
subparagraphs (A) through (H) above shall be continuing and
shall remain true, correct, complete and accurate in all
material respects until all applicable statutes of limitation
shall have expired and have not been affected by any
investigation by or on behalf of the Beneficiaries or by any
information the Beneficiaries may have or obtain with respect to
the Property.
3. Covenant. Indemnitor covenants and agrees: (A) not to permit
any Hazardous Materials and Hazardous Substances on, under, in
or about the Property or (B) not to cause or permit the Property
to be in violation of any Environmental Laws on, under, in,
about, to or from the Property. Notwithstanding the foregoing,
Indemnitor hereby covenants and agrees to notify the
Beneficiaries within fifteen (15) days of Indemnitor's actual
discovery of, and to remove, if and as provided for in Paragraph
5 hereof from the Property, (and if such removal is permitted by
applicable governmental agencies), any Hazardous Materials or
Hazardous Substances discovered thereon. Indemnitor further
covenants and agrees to notify the Beneficiaries within five (5)
days of Indemnitor becoming aware of any new or modified
legislation which would result in Indemnitor or the Property
being in non-compliance with any Environmental Laws.
4. Indemnification. Indemnitor agrees to indemnify, defend and
hold the Beneficiaries, and the directors, officers,
shareholders, employees and agents of the Beneficiaries,
harmless from and against any claims (including, without
limitation, third party claims for personal injury or real or
personal property damage), actions, administrative proceedings
(including, without limitation, informal proceedings),
judgments, damages, penalties, costs, expenses, liabilities of
any kind or nature (including, without limitation, sums paid in
settlements of claims), or losses, including without limitation
attorneys' fees, paralegals' fees and expenses, court costs
(including without limiting any such fees and expenses incurred
in enforcing this Agreement or collecting any sums due
hereunder), and fees of consultants and experts (collectively
the "Costs") that arise directly or indirectly from or in
connection with the presence, suspected presence, release or
suspected release of any Hazardous Material or Hazardous
Substance in or into the air, soil, groundwater or surface water
at, on, under or within the Property or any portion thereof, or
elsewhere in connection with the transportation of Hazardous
Materials or Hazardous Substances to or from the Property in
connection with the Company's ownership of the Premises. The
indemnification provided in this Paragraph 4 shall specifically
apply to and include claims or actions brought by or on behalf
of employees of Indemnitor, and Indemnitor hereby expressly
waives, solely for the benefit of the Beneficiaries, any defense
to the Beneficiaries' rights hereunder based on any immunity to
which Indemnitor may otherwise be entitled under any applicable
industrial or worker's compensation laws. In the event the
Beneficiaries shall suffer or incur any such Costs, Indemnitor
shall pay to the Beneficiaries the total of all such Costs
suffered or incurred by the Beneficiaries within fifteen (15)
days of the Beneficiaries's written demand therefor. Without
limiting the generality of the foregoing, the indemnification
provided by this Paragraph 4 shall specifically cover Costs,
including capital, operating and maintenance costs, incurred in
connection with any investigation or monitoring of site
conditions, any clean-up, containment, remedial, removal or
restoration work required or performed by any federal, state or
local governmental agency or political subdivision or performed
by any nongovernmental entity or person because of the presence,
suspected presence, release or suspected release of any
Hazardous Material or Hazardous Substance in or into the air,
soil, groundwater or surface water at, on, under or within the
Property (or any portion thereof), or elsewhere in connection
with the transportation of Hazardous Materials or Hazardous
Substances to or from the Property. The indemnification
provided in this Paragraph 4 shall not include any losses,
claims, liabilities, damages, costs or expenses caused as a
result of the wilful conduct or gross negligence of the
Beneficiaries.
5. Remedial Work.
(A) In the event any investigation or monitoring of site
conditions or any clean-up, containment, restoration, removal or
other remedial work (collectively the "Remedial Work") is
required (i) under any Environmental Law, (ii) by any judicial
order, (iii) by any governmental entity, (iv) in order to assure
that the condition of the Property is at all times as
represented and warranted in Paragraph 2 hereof, or (v) in order
to comply with any agreements affecting any of the Property
because of, or in connection with, any occurrence or event
described in Paragraph 4 above, Indemnitor shall perform or
cause to be performed the Remedial Work in compliance with such
law, regulation, order, representation, warranty or agreement;
provided, that Indemnitor may withhold such compliance pursuant
to a good faith dispute regarding the application,
interpretation or validity of the law, regulation, order, or
agreement, subject to the requirements of Paragraph 6 below.
(B) All Remedial Work shall be performed by one or more
contractors, selected by Indemnitor and approved in advance in
writing by the Beneficiaries (which approval will not
unreasonably be withheld), and under the supervision of a
consulting engineer, selected by Indemnitor and approved in
advance in writing by the Beneficiaries (which approval will not
unreasonably be withheld). All costs and expenses of such
Remedial Work shall be paid by Indemnitor, including, without
limitation, the charges of such contractors and/or the
consulting engineer, and the Beneficiaries' reasonable attorneys
and paralegals' fees and costs incurred in connection with
monitoring or review of such Remedial Work. Subject to the
provisions of Paragraph 6 hereof, in the event Indemnitor shall
fail to commence timely, or cause to be commenced, or fail to
pursue diligently to completion, such Remedial Work, the
Beneficiaries may, but shall not be required to, cause such
Remedial Work to be performed, and all costs and expenses
thereof, or incurred in connection therewith shall be Costs
within the meaning of Paragraph 4 above. The Beneficiaries
shall give Indemnitor at least fifteen (15) days written notice
prior to undertaking any Remedial Work unless the circumstances
require the Beneficiaries to commence such Remedial Work sooner
or unless the Beneficiaries are ordered to do so by a
governmental entity or by court order. All such Costs shall be
due and payable within fifteen (15) days following written
demand therefor by the Beneficiaries. Nothing contained herein,
including any right to approve the consulting engineer, shall
make the Beneficiaries in any way responsible for the Remedial
Work nor for the payment of the cost thereof. This Agreement is
for the benefit of the Beneficiaries (and its participants) only
and its successors and assigns and it is expressly intended that
there shall be no third party beneficiaries of the agreements
and indemnifications of Indemnitor hereunder, including any
trustee or debtor in possession in bankruptcy.
6. Permitted Contests. Notwithstanding any provision of this
Agreement to the contrary, Indemnitor will be permitted to
contest or cause to be contested, subject to compliance with the
requirements of this Paragraph, by appropriate action any
Remedial Work requirement, and the Beneficiaries shall not
perform such requirement on its behalf, so long as no breach,
default nor event of default has occurred and is continuing
under any of the Champion Loan Documents, the Deed of Trust, the
"Additional Collateral Documents" (as defined in the Credit
Agreement), the Third Amendment to Amended and Restated Credit
Agreement or this Agreement, and Indemnitor has given the
Beneficiaries written notice that Indemnitor is contesting or
shall contest or cause to be contested the same and Indemnitor
actually contests or causes to be contested the application,
interpretation or validity of the governmental law, regulation,
order or agreement pertaining to the Remedial Work by
appropriate proceedings conducted in good faith with due
diligence; provided, such contest shall not subject the
Beneficiaries or any assignee of its interest in the Champion
Loan Documents, the Additional Collateral Documents, the Third
Amendment to Amended and Restated Credit Agreement or the Deed
of Trust to civil liability and does not jeopardize any such
party's lien upon or interest in any of the Property or affect
in any way the payment of any sums to be paid under the Champion
Loan Documents, the Additional Collateral Documents, the Third
Amendment to Amended and Restated Credit Agreement or the Deed
of Trust. Indemnitor shall give such security or assurances as
may be reasonably required by the Beneficiaries to insure
compliance with the legal requirements pertaining to the
Remedial Work (and payment of all costs, expenses, interest and
penalties in connection therewith) and to prevent any sale,
forfeiture or loss by reason of such nonpayment or noncompliance.
7. Notice of Claims. Indemnitor shall give written notice to
the Beneficiaries of any claim, action, administrative
proceeding (including without limitation informal proceedings)
or other demand by any governmental agency or other third party
involving Costs within fifteen (15) days after the time such
claim or other demand first becomes known to Indemnitor.
Receipt of any such notice shall not be deemed to create any
obligation on the Beneficiaries to defend or otherwise respond
to any claim or demand. All notices, approvals, consents,
requests, and demands upon the respective parties hereto shall
be in writing and shall be deemed to have been given or made in
accordance the notice provisions in the Deed of Trust.
8. Participation in Defense of Claims; Duty to Cooperate; Notice
of Indemnitor. If for any reason, including, without
limitation, foreclosure by the Beneficiaries, any Beneficiary
becomes the owner of the Property and any claim, action,
administrative proceeding (including, without limitation,
informal proceedings) or other demand is made by any
governmental agency or other third party against such
Beneficiary involving Costs with respect to the Property,
Indemnitor shall cooperate with the Beneficiaries in any defense
or other response to any such claim or other demand. Indemnitor
shall have the right to participate in the defense or other
response to any such claim or demand provided that the
Beneficiaries shall have the right, but not the obligation, to
direct and control the defense or response to any such claim or
demand, or in lieu thereof, may exercise its rights under
Paragraph 4 above. Indemnitor's right to participate in the
defense or response to any such claim or demand shall not be
deemed to limit or otherwise modify Indemnitor's obligations
under this Agreement nor create liability on the part of the
Beneficiaries to any third party or to Indemnitor. The
Beneficiaries shall give written notice to Indemnitor of any
claim or demand governed by this Paragraph 8 within fifteen (15)
days of the date such claim or other demand first becomes known
to the Beneficiaries.
9. Subrogation of Indemnity Rights. If the Beneficiaries pay or
incur any loss or unreimbursed Costs, fees or expenses
hereunder, the Beneficiaries shall be subrogated to any rights
Indemnitor may have under any indemnifications from any present,
future or former owner's tenants or other occupants or users of
the Property (or any portion thereof), relating to the matters
covered by this Agreement.
10. Assignment by the Beneficiaries. No consent by Indemnitor
shall be required for any assignment or reassignment of the
rights of the Beneficiaries hereunder to one or more purchasers
of the Champion Loan Documents, the Additional Collateral
Documents, the Third Amendment to Amended and Restated Credit
Agreement or the Deed of Trust, or any portion thereof.
11. Merger, Consolidation or Sale of Assets. Until the Champion
Indebtedness has been paid in full, in the event of a
dissolution of Indemnitor or other disposition involving
Indemnitor or all or substantially all the assets of Indemnitor
to one or more persons or other entities, the surviving entity
or transferee of assets, as the case may be, shall (A) be an
individual residing in the United States of America or an entity
formed and existing under the laws of a state, district or
commonwealth of the United States of America, and (B) deliver to
the Beneficiaries an acknowledged instrument in recordable form
assuming all obligations, covenants and responsibilities of
Indemnitor under this Agreement. Nothing in this Paragraph
shall be construed to authorize or permit any merger,
consolidation or sale of assets by Indemnitor without the prior
written consent of the Beneficiaries.
12. Independent Obligations; Survival. The obligations of
Indemnitor under this Agreement shall survive the repayment of
the Champion Indebtedness and reconveyance or foreclosure of any
security for the Champion
Indebtedness. The obligations of Indemnitor under this
Agreement are separate and distinct from the obligations of
Indemnitor under the Deed of Trust, and are not secured by the
Deed of Trust, the Champion Loan Documents, the Additional
Collateral Documents or the Third Amendment to the Amended and
Restated Credit Agreement. This Agreement may be enforced by
the Beneficiaries without regard to any other rights and
remedies the Beneficiaries may have against Indemnitor under the
Champion Loan Documents, the Deed of Trust, the Additional
Collateral Documents or the Third Amendment to Amended and
Restated Credit Agreement, and without regard to any limitations
on the Beneficiaries' recourse as may be provided in the
Champion Loan Documents, the Deed of Trust, the Additional
Collateral Documents or the Third Amendment to Amended and
Restated Credit Agreement. Enforcement of this Agreement shall
not be deemed to constitute an action for recovery of the
Champion Indebtedness nor for recovery of a deficiency judgment
against Indemnitor or Champion following foreclosure of the Deed
of Trust. Indemnitor acknowledges that the Beneficiaries'
appraisal of the Property is such that the Beneficiaries are not
willing to accept the consequences, under California's "one form
of action" rule, of inclusion of the obligations of Indemnitor
under this Agreement among the obligations secured by the
Champion Loan Documents, the Deed of Trust, the Additional
Collateral Documents and the Third Amendment to Amended and
Restated Credit Agreement, and that the Beneficiaries would not
make the Loan to Indemnitor but for the liability undertaken by
Indemnitor for such obligations.
13. Default Interest. Any Costs and other payments required to
be paid by Indemnitor to the Beneficiaries under this Agreement
which are not paid within ten (10) days of written demand
therefor shall thereupon be considered "Delinquent." In
addition to all other rights and remedies of the Beneficiaries
against Indemnitor as provided herein, or under applicable law,
interest shall accrue at the "Default Rate" (as defined in the
Credit Agreement) and be due and payable on all Delinquent
payments from and after such ten (10) day period until paid in
full. Interest at the Default Rate shall be paid by Indemnitor
from the date such payment becomes Delinquent through and
including the date of payment of such Delinquent sums.
14. Cross Default. For so long as the Champion Loan Documents,
the Additional Collateral Documents, the Third Amendment to
Amended and Restated Credit Agreement or the Deed of Trust shall
be in effect, any breach, default or event of default hereunder
shall, for the limited purpose set forth herein, be deemed a
default under each of the Champion Loan Documents, the
Additional Collateral Documents, the Third Amendment to Amended
and Restated Credit Agreement and the Deed of Trust, and,
although the obligations of Indemnitor under this Agreement are
unsecured by the Loan Documents, shall give the Beneficiaries
the right to declare the indebtedness evidenced by the Champion
Loan Documents, the Additional Collateral Documents and the
Third Amendment to Amended and Restated Credit Agreement
immediately due and payable.
15. Miscellaneous. If any term of this Agreement or any
application thereof shall be invalid, illegal or unenforceable,
the remainder of this Agreement and any other application of
such term shall not be affected thereby. Subject to applicable
statutes of limitations or equitable principles, no delay or
omission in exercising any right hereunder shall operate as a
waiver of such right or any other right. This Agreement shall
be binding upon Indemnitor and inure to the benefit of and be
enforceable by the Beneficiaries, and the directors, officers,
shareholders, employees and agents of the Beneficiaries, and
their respective successors and permitted assigns, including,
without limitation, any assignee or purchaser of all or any
portion of the Beneficiaries' interest in the Loan, the
documents evidencing or securing the Loan or the Property.
16. Survival of Indemnification. The provisions of and
undertakings and indemnification set out in this Agreement shall
survive the satisfaction and release of the Deed of Trust and
shall continue to be the liability, obligation and
indemnification of Indemnitor, binding upon Indemnitor and its
respective successors and assigns, for a period equal to the
statute of limitations for written contractual obligations in
effect in the State of California commencing on the date the
Obligations have been paid in full.
17. Governing Law. Except as otherwise expressly provided in
this Agreement, the parties agree and intend that this Agreement
and the respective rights and obligations of the parties hereto,
shall be governed by and construed according to the internal
laws of the State of Illinois (without regard to its conflict of
laws principles). The parties agree and stipulate that this
Agreement was negotiated in Illinois, that this Deed of Trust
was executed, delivered and accepted in Illinois, all payments
shall be made to the Beneficiaries in Illinois, and that
Illinois has a substantial relationship to the parties and to
the underlying transaction contemplated by this Agreement.
18. Jury Trial Waiver. INDEMNITOR AND THE BENEFICIARIES WAIVE
ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION TO ENFORCE OR DEFEND
ANY MATTER ARISING FROM, RELATED OR IN CONNECTION WITH THIS
AGREEMENT OR ANY DOCUMENTS OR AGREEMENTS EVIDENCING OR RELATING
TO THIS AGREEMENT. THIS PARAGRAPH 18 CONSTITUTES A WRITTEN
CONSENT BY INDEMNITOR AND THE BENEFICIARIES TO THE WAIVER OF A
TRIAL BY JURY IN ANY SUCH ACTION, AND INDEMNITOR AND THE
BENEFICIARIES EACH AUTHORIZE THE OTHER TO FILE THIS AGREEMENT
WITH THE CLERK OR A JUDGE OF ANY COURT IN WHICH ANY SUCH ACTION
IS PENDING FOR PURPOSES OF ENFORCING THE PROVISIONS OF THIS
PARAGRAPH 18.
IN WITNESS WHEREOF, Indemnitor has caused this Agreement to
be executed as of the day and year first above written.
CPR PROPERTIES, INC., a California corporation
By: _______________________
Its: _______________________
ATTEST:
By: _______________________
Its: _______________________
EXHIBIT "A"
LEGAL DESCRIPTION
That portion of the Northwest quarter of Section 24, Township 14
South, Range 20 East, Mount Diablo Base and Meridian, according
to the Official Plat thereof, more particularly described as
follows:
Beginning at a point 1348.80 feet South and 40.00 feet West of
the North quarter corner of said Section 24; thence along the
Northerly line of that certain 8.60 acre parcel of land
described in the deed to Diversified Transportation Systems,
Inc., recorded November 15, 1968, in Book 5636, Page 198 of
Official Records, as Document No. 81522, South 8946'00" West a
distance of 83.89 feet to an angle point therein; thence South
7806'46' West thereon a distance of 100.00 feet to an angle
point therein; thence South 8946'00" West thereon a distance of
1116.49 feet to an Easterly line of that certain parcel of land
described as Parcel 2 in the Deed to the Atchison, Topeka and
Santa Fe Railway Company recorded August 11, 1971, in Book 5924,
Page 993 of Official Records, as Document No. 64248; thence
along last said Easterly line, North 0010'00" West a distance of
205.96 feet to the beginning of a tangent curve therein concave
Southeasterly having a radius of 388.02 feet and an interior
angle of 6457'00"; thence Northeasterly along said curve an arc
distance of 439.86 feet to tangency with a Southeasterly line of
said Santa Fe Parcel; thence North 6447'00" East thereon a
distance of 79.52 feet to the beginning of a tangent curve
therein concave Southerly having a radius of 388.02 feet and an
interior angle of 2459'00"; thence Easterly, along said curve,
an arc distance of 169.19 feet to a tangency with a Southerly
line of said parcel; thence North 8946'00" East, along a line
that is parallel with and distant Southerly 741.90 feet measured
at right angles from the Northerly line of said Northwest
quarter of Section 24, a distance of 262.69 feet; thence South
0010'00" East, parallel with and 616.00 feet West of the East
line of said Northwest quarter of Section 24, a distance of
552.11 feet; thence North 8946'00" East a distance of 386.45
feet; thence North 7806'46" East a distance of 100.00 feet;
thence North 8946'00" East a distance of 91.63 feet to a point
40.00 feet West of the East line of said Northwest quarter of
Section 24; thence South 0010'00" East, parallel with and 40.00
feet West of said East line of the Northwest quarter of Section
24, a distance of 75.00 feet to the point of beginning.
EXCEPTING therefrom all oil, gas and other hydrocarbon
substances, as well as metallic or other solid materials, within
and under said land as excepted and reserved in the deeds
recorded in Book 2200 Page 433, Book 5235, Page 549 and in Book
5964, Page 932, all of Official Records.
Common Address: 2696 South Maple Street
Fresno, California 93725
EXHIBIT "B"
SUMMARY OF ENVIRONMENTAL ISSUES
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<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED BALANCE SHEETS AND THE CONSOLIDATED STATEMENTS OF OPERATIONS FOR
THE SIX MONTHS ENDED JULY 2, 1995 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE
TO SUCH FINANCIAL STATEMENTS
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<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> JUL-02-1995
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0
0
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