Document:

Exhibit 10.4

 

CONTINUING GUARANTY

 

JANUARY 15, 2009

 

FOR VALUE RECEIVED, the sufficiency of which is hereby acknowledged,
and in consideration of credit and/or financial accommodation heretofore or
hereafter from time to time made or granted to Brad Foote Gear Works, Inc.
(the “Borrower”) by BANK OF AMERICA, N.A. and any other subsidiaries or
affiliates of Bank of America Corporation and its successors and assigns
(collectively the “Lender”), the undersigned Guarantor (collectively,
the “Guarantor”, jointly and severally) hereby furnishes its guaranty of
the Guaranteed Obligations (as hereinafter defined) as follows:

 

1.                                      Guaranty.  The Guarantor hereby absolutely and
unconditionally guarantees, as a guaranty of payment and performance and not
merely as a guaranty of collection, prompt payment when due, whether at stated
maturity, by required prepayment, upon acceleration, demand or otherwise, and
at all times thereafter, of any and all existing and future indebtedness and
liabilities of every kind, nature and character, direct or indirect, absolute
or contingent, liquidated or unliquidated, voluntary or involuntary and whether
for principal, interest, premiums, fees, indemnities, damages, costs, expenses
or otherwise, of the Borrower to the Lender, whether associated with any credit or other financial accommodation
made to or for the benefit of the Borrower by the Lender or otherwise and
whenever created, arising, evidenced or acquired, including, without
limitation, all Indebtedness arising under that certain Loan and Security
Agreement dated as of January 17, 1997 between the Borrower and the Lender
(as amended from time to time, the “Loan Agreement”; capitalized terms
used herein, but not otherwise defined herein, shall have the meanings given
such terms in (or by reference in) the Loan Agreement) and all indebtedness and
liabilities arising under the Subsidiary Loan Documents and the other Loan
Documents (including all renewals, extensions, amendments, refinancings
and other modifications thereof and all costs, attorneys’ fees and expenses
incurred by the Lender in connection with the collection or enforcement
thereof), and whether recovery upon such indebtedness and liabilities may be or
hereafter become unenforceable or shall be an allowed or disallowed claim under
any proceeding or case commenced by or against
the Guarantor or the Borrower under the Bankruptcy Code (Title 11, United
States Code), any successor statute or any other liquidation, conservatorship,
bankruptcy, assignment for the benefit of creditors, moratorium, rearrangement,
receivership, insolvency, reorganization, or similar debtor relief laws of the
United States or other applicable jurisdictions from time to time in effect and
affecting the rights of creditors generally (collectively, “Debtor Relief
Laws”), and including interest that accrues after the commencement
by or against the Borrower of any proceeding under any Debtor Relief Laws
(collectively, the “Guaranteed Obligations”).  The Lender’s books and records showing the
amount of the Guaranteed Obligations shall be admissible in evidence in any
action or proceeding, and shall be binding upon the Guarantor and conclusive
for the purpose of establishing the amount of the Guaranteed Obligations.  This Guaranty shall not be affected by the genuineness,
validity, regularity or enforceability of the Guaranteed Obligations or any
instrument or agreement evidencing any Guaranteed Obligations, or by the
existence, validity, enforceability, perfection, non-perfection or extent of
any collateral therefor, or by any fact or circumstance relating to the
Guaranteed Obligations which might otherwise constitute a defense to the
obligations of the Guarantor under this Guaranty, and the

 

 

Guarantor hereby irrevocably waives any defenses it may now have or
hereafter acquire in any way relating to any or all of the foregoing.

 

2.                                      No Setoff or Deductions; Taxes; Payments.  The Guarantor represents and warrants that it
is organized and resident in the United States of America.  The Guarantor shall make all payments
hereunder without setoff or counterclaim and free and clear of and without
deduction for any taxes, levies, imposts, duties, charges, fees, deductions,
withholdings, compulsory loans, restrictions or conditions of any nature now or
hereafter imposed or levied by any jurisdiction or any political subdivision
thereof or taxing or other authority therein unless the Guarantor is compelled
by law to make such deduction or withholding. 
If any such obligation (other than one arising with respect to taxes based
on or measured by the income or profits of the Lender) is imposed upon the
Guarantor with respect to any amount payable by it hereunder, the Guarantor
will pay to the Lender, on the date on which such amount is due and payable
hereunder, such additional amount in U.S. dollars as shall be necessary to
enable the Lender to receive the same net amount which the Lender would have
received on such due date had no such obligation been imposed upon the
Guarantor.  The Guarantor will deliver
promptly to the Lender certificates or other valid vouchers for all taxes or
other charges deducted from or paid with respect to payments made by the
Guarantor hereunder.  The obligations of the Guarantor under this paragraph
shall survive the payment in full of the Guaranteed Obligations and termination of this Guaranty.

 

3.                                      Rights of Lender.  The Guarantor consents and agrees that the
Lender may, at any time and from time to time, without notice or demand, and
without affecting the enforceability or continuing effectiveness hereof:  (a) amend, extend, renew, compromise,
discharge, accelerate or otherwise change the time for payment or the terms of
the Guaranteed Obligations or any part thereof; (b) take, hold, exchange,
enforce, waive, release, fail to perfect, sell, or otherwise dispose of any
security for the payment of this Guaranty or any Guaranteed Obligations; (c) apply
such security and direct the order or manner of sale thereof as the Lender in
its sole discretion may determine; and (d) release or substitute one or more
of any endorsers or other guarantors of any of the Guaranteed Obligations.  Without limiting the generality of the
foregoing, the Guarantor consents to the taking of, or failure to take, any
action which might in any manner or to any extent vary the risks of the
Guarantor under this Guaranty or which, but for this provision, might operate
as a discharge of the Guarantor.

 

4.                                      Certain Waivers.  The Guarantor waives (a) any defense
arising by reason of any disability or other defense of the Borrower or any other
guarantor, or the cessation from any cause whatsoever (including any act or
omission of the Lender) of the liability of the Borrower; (b) any defense
based on any claim that the Guarantor’s obligations exceed or are more
burdensome than those of the Borrower; (c) the benefit of any statute of
limitations affecting the Guarantor’s liability hereunder; (d) any right
to require the Lender to proceed against the Borrower, proceed against or
exhaust any security for the Indebtedness, or pursue any other remedy in the
Lender ‘s power whatsoever; (e) any benefit of and any right to
participate in any security now or hereafter held by the Lender; and (f) to
the fullest extent permitted by law, any and all other defenses or benefits
that may be derived from or afforded by applicable law limiting the liability
of or exonerating guarantors or sureties. 
The Guarantor expressly waives all setoffs and counterclaims and all
presentments, demands for payment or performance, notices of nonpayment or
nonperformance, protests, notices of protest, notices of dishonor and all other

 

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notices or demands of any kind or nature whatsoever with respect to the
Guaranteed Obligations, and all notices of acceptance of this Guaranty or of
the existence, creation or incurrence of new or additional Guaranteed
Obligations.

 

5.                                      Obligations Independent.  The obligations of the Guarantor hereunder
are those of primary obligor, and not merely as surety, and are independent of
the Guaranteed Obligations and the obligations of any other guarantor, and a
separate action may be brought against the Guarantor to enforce this Guaranty
whether or not the Borrower or any other person or entity is joined as a party.

 

6.                                      Subrogation.  The Guarantor shall not exercise any right of
subrogation, contribution, indemnity, reimbursement or similar rights with
respect to any payments it makes under this Guaranty until all of the
Guaranteed Obligations and any amounts payable under this Guaranty have been indefeasibly
paid and performed in full and any commitments of the Lender or facilities
provided by the Lender with respect to the Guaranteed Obligations are
terminated.  If any amounts are paid to
the Guarantor in violation of the foregoing limitation, then such amounts shall
be held in trust for the benefit of the Lender and shall forthwith be paid to
the Lender to reduce the amount of the Guaranteed Obligations, whether matured
or unmatured.

 

7.                                      Termination; Reinstatement.  This Guaranty is a continuing and irrevocable
guaranty of all Guaranteed Obligations now or hereafter existing and shall
remain in full force and effect until all Guaranteed Obligations and any other
amounts payable under this Guaranty are indefeasibly paid in full in cash and
any commitments of the Lender or facilities provided by the Lender with respect
to the Guaranteed Obligations are terminated. 
Notwithstanding the foregoing, this Guaranty shall continue in full force and effect or be revived, as the case may be, if any payment by or on behalf of the Borrower or the
Guarantor is made, or the Lender exercises its right of setoff, in respect of
the Guaranteed Obligations and such payment or the proceeds of such setoff or
any part thereof is subsequently invalidated, declared to be fraudulent or
preferential, set aside or required (including pursuant to any settlement
entered into by the Lender in its discretion) to be repaid to a trustee,
receiver or any other party, in connection with any proceeding under any Debtor
Relief Laws or otherwise, all as if such payment had not been made or such setoff had not occurred and whether or
not the Lender is in possession of or has released this Guaranty and regardless
of any prior revocation, rescission, termination or reduction.  The
obligations of the Guarantor under this paragraph shall survive termination of
this Guaranty.

 

8.                                      Fraudulent
Conveyance.  Notwithstanding any
other provision of this Guaranty or any other Loan Document to the contrary, in
the event that any action or proceeding is brought in whatever form and in
whatever forum seeking to invalidate the Guarantor’s obligations under this
Guaranty or any other Loan Document under any fraudulent conveyance, fraudulent
transfer theory, or similar avoidance theory, whether under state or federal
law, the Guarantor, automatically and without any further action being required
of the Guarantor, the Lender or any other Person, shall be liable under this
Guaranty only for an amount equal to the maximum amount of liability that could
have been incurred under applicable law by the Guarantor with respect to the
Guaranteed Obligations (or any portion thereof) at the time of the execution
and delivery of this Guaranty (or, if such date is determined not to be the
appropriate date for determining the enforceability of the Guarantor’s
obligations hereunder for fraudulent

 

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conveyance or transfer (or similar avoidance) purposes, on the date
determined to be so appropriate) without rendering any such hypothetical
obligation voidable under applicable law relating to fraudulent conveyance,
fraudulent transfer, or any other grounds for avoidance (such highest amount
determined hereunder being the “Maximum Obligation Amount”), and not for
any greater amount, as if the Guaranteed Obligations had instead been the
Maximum Obligation Amount.  This Section is
intended solely to preserve the rights of Lender under this Guaranty and the
other Loan Documents to the maximum extent not subject to avoidance under
applicable law, and neither the Guarantor nor any other Person shall have any
right or claim under this Section with respect to the limitation
described in this Guaranty, except to the extent necessary so that the
obligations of the Guarantor under this Guaranty shall not be rendered voidable
under applicable law.  Without limiting
the generality of the foregoing, the determination of the Maximum Obligations
Amount pursuant to the provisions of the second preceding sentence of this Section shall
not in any manner reduce or otherwise affect any of the obligations of the
Guarantor under the provisions of this Guaranty.

 

9.                                      Subordination.  The Guarantor hereby subordinates the payment
of all obligations and indebtedness of the Borrower owing to the Guarantor,
whether now existing or hereafter arising, including but not limited to any
obligation of the Borrower to the Guarantor as subrogee of the Lender or
resulting from the Guarantor’s performance under this Guaranty, to the
indefeasible payment in full in cash of all Guaranteed Obligations.  If the Lender so requests, any such obligation or indebtedness of the Borrower to the
Guarantor shall be enforced and performance received by the Guarantor as
trustee for the Lender and the proceeds thereof shall be paid over to the Lender
on account of the Guaranteed Obligations, but without reducing or affecting in
any manner the liability of the Guarantor under this Guaranty.

 

10.                               Stay of Acceleration.  In the event
that acceleration of the time for payment of any of the Guaranteed Obligations
is stayed, in connection with any case commenced by or against the Guarantor or
the Borrower under any Debtor Relief Laws, or otherwise, all such amounts shall
nonetheless be payable by the Guarantor immediately upon demand by the Lender.

 

11.                               Expenses.  The
Guarantor shall pay on demand all out-of-pocket expenses (including reasonable
attorneys’ fees and expenses and the allocated cost and disbursements of
internal legal counsel) in any way relating to the enforcement or protection of
the Lender’s rights under this Guaranty or in respect of the Guaranteed
Obligations, including any incurred during any “workout” or restructuring in
respect of the Guaranteed Obligations and any incurred in the preservation,
protection or enforcement of any rights of the Lender in any proceeding any
Debtor Relief Laws.  The obligations of
the Guarantor under this paragraph shall survive the payment in full of
the Guaranteed Obligations and termination of
this Guaranty.

 

12.                               Miscellaneous.  No provision of this Guaranty may be waived,
amended, supplemented or modified, except by a written instrument executed by
the Lender and the Guarantor.  No failure
by the Lender to exercise, and no delay in exercising, any right, remedy or
power hereunder shall operate as a waiver thereof; nor shall any single or
partial exercise of any right, remedy or power hereunder preclude any other or
further exercise thereof or the exercise of any other right, power or
remedy.  The remedies herein provided are
cumulative and not exclusive of any remedies provided by law or in equity.  The unenforceability or invalidity of any
provision of this Guaranty shall not affect the enforceability or validity of
any other

 

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provision herein.  Unless otherwise
agreed by the Lender and the Guarantor in writing, this Guaranty is not
intended to supersede or otherwise affect any other guaranty now or hereafter
given by the Guarantor for the benefit of the Lender or any term or provision
thereof.

 

13.                               Condition of Borrower.  The Guarantor acknowledges and agrees that it
has the sole responsibility for, and has adequate means of, obtaining from the
Borrower and any other guarantor such information concerning the financial
condition, business and operations of the Borrower and any such other guarantor
as the Guarantor requires, and that the Lender has no duty, and the Guarantor
is not relying on the Lender at any time, to disclose to the Guarantor any
information relating to the business, operations or financial condition of the
Borrower or any other guarantor (the guarantor waiving any duty on the part of
the Lender to disclose such information and any defense relating to the failure
to provide the same).

 

14.                               Setoff.  If and to the extent any payment is not made
when due hereunder, the Lender may setoff and charge from time to time any
amount so due against any or all of the Guarantor’s accounts or deposits with
the Lender.

 

15.                               Representations and Warranties.  The Guarantor represents and warrants that (a) it
is duly organized and in good standing under the laws of the jurisdiction of
its organization and has full capacity and right to make and perform this
Guaranty, and all necessary authority has been obtained; (b) this Guaranty
constitutes its legal, valid and binding obligation enforceable in accordance
with its terms; (c) the making and performance of this Guaranty does not
and will not violate the provisions of any applicable law, regulation or order,
and does not and will not result in the breach of, or constitute a default or
require any consent under, any material agreement, instrument, or document to
which it is a party or by which it or any of its property may be bound or
affected; and (d) all consents, approvals, licenses and authorizations of,
and filings and registrations with, any governmental authority required under
applicable law and regulations for the making and performance of this Guaranty
have been obtained or made and are in full force and effect.

 

16.                               Indemnification and Survival.  Without limitation on any other
obligations of the Guarantor or remedies of the Lender under this Guaranty, the
Guarantor shall, to the fullest extent permitted by law, indemnify, defend and
save and hold harmless the Lender from and against, and shall pay on demand, any
and all damages, losses, liabilities and expenses (including reasonable
attorneys’ fees and expenses and the allocated cost and disbursements of
internal legal counsel) that may be suffered or incurred by the Lender in
connection with or as a result of any failure of any Guaranteed Obligations to
be the legal, valid and binding obligations of the Borrower enforceable against
the Borrower in accordance with their terms. 
The obligations of the Guarantor under
this paragraph shall survive the payment in full of the Guaranteed
Obligations and termination of this Guaranty.

 

17.                               GOVERNING LAW; Assignment; Jurisdiction;
Notices.  THIS GUARANTY SHALL BE GOVERNED
BY, AND CONSTRUED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF
ILLINOIS (INCLUDING 735 ILCS SECTION 105/5-5) BUT OTHERWISE WITHOUT
GIVING EFFECT TO ANY OF SUCH STATE’S CONFLICTS-OF-LAW PROVISIONS. 
This Guaranty shall (a) bind the Guarantor and its successors and
assigns, provided that the Guarantor may not assign its rights or

 

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obligations under this Guaranty without the prior written consent of
the Lender (and any attempted assignment without such consent shall be void),
and (b) inure to the benefit of the Lender and its successors and assigns
and the Lender may, without notice to the Guarantor and without affecting the
Guarantor’s obligations hereunder, assign, sell or grant participations in the
Guaranteed Obligations and this Guaranty, in whole or in part.  The Guarantor hereby irrevocably (i) submits
to the non-exclusive jurisdiction of any United States Federal or State court
sitting in Cook County, Illinois in any action or proceeding arising out of or
relating to this Guaranty, and (ii) waives to the fullest extent permitted
by law any defense asserting an inconvenient forum in connection
therewith.  Service of process by the
Lender in connection with such action or proceeding shall be binding on the
Guarantor if sent to the Guarantor by registered or certified mail at its
address specified below or such other address as from time to time notified by
the Guarantor.  The Guarantor agrees that
the Lender may disclose to any assignee of or participant in, or any
prospective assignee of or participant in, any of its rights or obligations of
all or part of the Guaranteed Obligations any and all information in the Lender’s
possession concerning the Guarantor, this Guaranty and any security for this
Guaranty.  All notices and other
communications to the Guarantor under this Guaranty shall be in writing and
shall be delivered by hand or overnight courier service, mailed by certified or
registered mail or sent by telecopier to the Guarantor at its address set forth
below or at such other address in the United States as may be specified by the
Guarantor in a written notice delivered to the Lender at such office as the
Lender may designate for such purpose from time to time in a written notice to
the Guarantor.

 

18.                               WAIVER OF JURY TRIAL; FINAL AGREEMENT.  TO THE EXTENT ALLOWED BY APPLICABLE LAW, THE
GUARANTOR AND THE LENDER EACH IRREVOCABLY WAIVES TRIAL BY JURY WITH RESPECT TO
ANY ACTION, CLAIM, SUIT OR PROCEEDING ON, ARISING OUT OF OR RELATING TO THIS
GUARANTY OR THE GUARANTEED OBLIGATIONS. 
THIS GUARANTY REPRESENTS THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT
BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL
AGREEMENTS BETWEEN THE PARTIES.  THERE
ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.

 

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This
Unconditional Guaranty is duly executed as of the date first above written.

 

 

	
   

  	
  1309 SOUTH CICERO AVENUE, LLC

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Ralph
  Placzek

  
	
   

  	
   

  	
   

  
	
   

  	
  Name:

  	
  Ralph
  Placzek

  
	
   

  	
   

  	
   

  
	
   

  	
  Title:

  	
  Authorized
  Signatory

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Address:

  	
  47 E.
  Chicago Avenue, Suite 332,

  Naperville, IL 60540

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  5100 NEVILLE ROAD, LLC

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Ralph
  Placzek

  
	
   

  	
   

  	
   

  
	
   

  	
  Name:

  	
  Ralph
  Placzek

  
	
   

  	
   

  	
   

  
	
   

  	
  Title:

  	
  Authorized
  Signatory

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Address:

  	
  47 E.
  Chicago Avenue, Suite 332,

  Naperville, IL 60540

  
								

 

1309/5100 Guaranty Signature Page

 

S-1Exhibit 10.5

 

Document prepared by and

upon recordation to be

returned to:

 

Rex A. Palmer, Esq.

Mayer Brown LLP

71 South Wacker Drive

Chicago, Illinois 60606

 

 

	
   

  
	
   

  
	
  FEE AND LEASEHOLD

  MORTGAGE, SECURITY AGREEMENT, ASSIGNMENT

  OF LEASES AND RENTS AND

  
	
  FIXTURE FILING

  
	
   

  
	
   

  
	
  dated as of January 15, 2009

  
	
   

  
	
   

  
	
  From

  
	
   

  
	
  1309 SOUTH CICERO AVENUE, LLC, 

  a Delaware limited liability company, as Mortgagor

  
	
   

  
	
  and

  
	
   

  
	
  BRAD FOOTE GEAR WORKS, INC., an Illinois
  corporation

  formerly known as BFG Acquisition Corp., as Additional Mortgagor

  
	
   

  
	
   

  
	
  To

  
	
   

  
	
   

  
	
  BANK OF AMERICA, N.A., as Mortgagee

  
	
   

  
	
   

  

 

 

FEE AND LEASEHOLD

MORTGAGE, SECURITY AGREEMENT

AND FIXTURE FILING

 

FEE AND LEASEHOLD MORTGAGE, SECURITY AGREEMENT AND
FIXTURE FILING, dated as of January 15, 2009 (this “Mortgage”), made by 1309 SOUTH CICERO AVENUE,
LLC, a Delaware limited liability company (the “Mortgagor”) with an
address at 1309 South Cicero Avenue, Cicero, Illinois, 60650 and BRAD FOOTE
GEAR WORKS, INC, an Illinois corporation formerly known as BFG Acquisition
Corp. (the “Additional Mortgagor”),
with an address at 1309 South Cicero Avenue, Cicero, Illinois, 60650 to BANK OF
AMERICA, N.A., a national banking association with an address at One Federal
Street, Boston, Massachusetts 02110 (the “Mortgagee”).

 

Preliminary
Statement

 

BFG
Acquisition Corp. (now known as Brad Foote Gear works, Inc.) and LaSalle
Bank NI (now known as Bank of America, N.A.) entered into a Loan and Security
Agreement dated as of January 17, 1997 (as heretofor amended, as amended
by an Omnibus Amendment Agreement of even date herewith and as hereafter
amended, modified and restated from time to time, the “Loan Agreement”).  Pursuant to the Loan Agreement the Mortgagee
has agreed to loan the Additional Mortgagor and its affiliates (including the
Mortgagor) up to the aggregate amount of $36,974,322.98 pursuant to and subject
to the terms of the following promissory notes ( as amended by an Omnibus
Amendment Agreement of even date herewith and as hereafter amended, modified
and restated from time to time collectively, the “Notes”):

 

1.             $7,000,000
Revolving Line of Credit Note dated December 8, 2008 from the Additional
Mortgagor to the order of Mortgagee (the “Revolving Line of Credit Note”)
due March 15, 2009.

 

2.             $11,000,000
Amended and Restated Equipment Line Note (Non-Revolving Line With Conversion)
dated November 10, 2006, from the Additional Mortgagor to the order of
Mortgagee (as modified by Note Modification Agreement dated as of December 8,
2008,  the “Equipment Loan A Note”)
which is payable in monthly principal payments of $183,333.33 plus interest
commencing May 31, 2007 with a final payment due April 30, 2012.

 

3.             $9,000,000
Equipment Line Note (Non-Revolving Line With Conversion) dated June 30,
2007, from the Additional Mortgagor to the order of Mortgagee (as modified by
Note Modification Agreement dated as of December 8, 2008, the “Equipment
Loan B Note”) with monthly principal payments of $147,958.13 plus interest
commencing July 31, 2008 with a final payment due June 30, 2013.

 

4.             $7,899,332.98
Consolidated Term Note dated February 1, 2006, from the Additional
Mortgagor to the order of Mortgagee (as modified by Note Modification Agreement
dated as of December 8, 2008, the “Term Loan Note”) with monthly
principal payments of $131,655.55 plus interest commencing February 28,
2006 with a final payment due January 31, 2011.

 

 

5.             $2,075,000
Term Note dated January 31, 2008 from the Mortgagor and 5100 Neville Road,
LLC (collectively, the “Subsidiaries”) to the order of Mortgagee (as
modified by Note Modification Agreement dated as of December 8, 2008, the “Subsidiary
Note”) payable in monthly principal payments of $34,583.33 plus interest
with a final payment due January 31, 2013.

 

The Subsidiaries and the Additional Mortgagor heretofore or hereafter may
enter into interest rate, currency or commodity swap agreements, cap agreements
or collar agreements or other agreements or arrangements designed to protect
such Person against fluctuations in interest rates, currency exchange rates or
commodity prices with the Mortgagee or its affiliates (as hereafter amended,
modified and restated from time to time collectively, the “Hedging
Agreements”) or receive treasury or cash management services from the
Mortgagee (the “Bank Services”).

 

Pursuant to the Loan Agreement the Mortgagor has executed and delivered
to the Mortgagee a Continuing Guaranty dated as of the date hereof (the “Guaranty”)
whereby the Mortgagor guaranteed the obligations of the Additional Mortgagor
under the Loan Agreement, the Subsidiary Note, any Hedging Agreement and the
other Loan Documents or any Bank Services.

 

The Mortgagor is the record owner of the Land.

 

It is a condition, among others, to the extension by the Mortgagee of
the term of the Revolving Line of Credit Note that the Mortgagor shall have
executed and delivered this Mortgage to the Mortgagee.

 

NOW, THEREFORE, in consideration of the premises and to induce the
Mortgagee to amend the Loan Agreement and extend the term of the loan evidenced
by the Revolving Line of Credit Note, the Mortgagor hereby agrees with the
Mortgagee, as follows:

 

TO SECURE PAYMENT OF THE INDEBTEDNESS (DEFINED BELOW) INCLUDING ALL THE
AMOUNTS ADVANCED TO OR FOR THE BENEFIT OF THE MORTGAGOR UNDER THE LOAN
AGREEMENT AND THE SUBSIDIARY NOTE AND THE OBLIGATIONS OF THE MORTGAGOR UNDER
THE LOAN AGREEMENT AND THE OTHER LOAN DOCUMENTS, THE GUARANTY, THE SUBSIDIARY
NOTE AND THE OTHER SUBSIDIARY LOAN DOCUMENTS, ALL HEDGING AGREEMENTS AND IN
CONNECTION WITH ANY BANK SERVICES THE MORTGAGOR HEREBY MORTGAGES, GRANTS, ASSIGNS,
TRANSFERS, WARRANTS AND SETS OVER TO THE MORTGAGEE, AND GRANTS THE MORTGAGEE A
SECURITY INTEREST IN:

 

(A) the parcel(s) of real property described
on Exhibit A (the “Land”); all buildings, structures, Fixtures,
Equipment, and other improvements of every kind existing at any time and from
time to time on or under the Land, together with any and all appurtenances to
such buildings, structures or improvements, including sidewalks, utility pipes,
conduits and lines, parking areas and roadways, and including all
modifications, alterations, renovations, improvements and other additions to or
changes in the Improvements at any time (“Improvements”);
all agreements, easements, rights of way or use, rights of ingress or egress, 

 

2

 

privileges,
appurtenances, tenements, hereditaments and other rights and benefits at any
time belonging or pertaining to the Land or the Improvements, including,
without limitation, the use of any streets, ways, alleys, vaults or strips of
land adjoining, abutting, adjacent or contiguous to the Land and all permits,
licenses and rights, whether or not of record, appurtenant to the Land (“Appurtenant Rights”; the Land, Improvements,
Appurtenant Rights, Fixtures and Equipment being collectively referred to as
the “Property”);

 

(B) all the estate, right, title, claim or demand
whatsoever of the Mortgagor, in possession or expectancy, in and to the
Property or any part thereof;

 

(C) all right, title and interest of the
Mortgagor in and to all of the fixtures, furnishings and fittings of every kind
and nature whatsoever, and all appurtenances and additions thereto and
substitutions or replacements thereof (together with, in each case,
attachments, components, parts and accessories) currently owned or subsequently
acquired by the Mortgagor and now or subsequently attached to, or contained in
or used or usable in any way in connection with any operation or letting of the
Property, (all of the foregoing in this paragraph being referred to as the “Fixtures”);

 

(D) all right, title and interest of the
Mortgagor in and to all of the fixtures, chattels, business machines,
machinery, apparatus, equipment, furnishings, fittings and all appurtenances
and additions thereto and substitutions or replacements thereof (together with,
in each case, attachments, components, parts and accessories) currently owned
or subsequently acquired by the Mortgagor and now or subsequently attached to,
or contained in the Property, including but without limiting the generality of
the foregoing, all screens, awnings, shades, blinds, curtains, draperies,
artwork, carpets, rugs, storm doors and windows, furniture and furnishings,
heating, electrical, and mechanical equipment, lighting, switchboards,
plumbing, ventilating, air conditioning and air-cooling apparatus,
refrigerating, and incinerating equipment, escalators, refrigerators, display
cases, elevators, loading and unloading equipment and systems, stoves, ranges,
laundry equipment, cleaning systems (including window cleaning apparatus),
telephones, communication systems (including satellite dishes and antennae),
televisions, computers, sprinkler systems and other fire prevention and
extinguishing apparatus and materials, security systems, motors, engines,
machinery, pipes, pumps, tanks, conduits, appliances, fittings and fixtures of
every kind and description (all of the foregoing in this paragraph being referred to as the “Equipment”);

 

(E) all right, title and interest of the
Mortgagor in and to all substitutes and replacements of, and all additions and
improvements to, the Improvements and the Fixtures and Equipment, subsequently
acquired by the Mortgagor or constructed, assembled or placed by the Mortgagor
on the Land, immediately upon such acquisition, release, construction,
assembling or placement, including, without limitation, any and all building
materials whether stored at the Property or offsite, and, in each such case,
without any further conveyance, mortgage, assignment or other act by the
Mortgagor;

 

(F) all right, title and interest of the
Mortgagor in and to all unearned premiums under insurance policies now or
subsequently obtained by the Mortgagee relating to the Property or the Fixtures
and the Mortgagor’s interest in and to all proceeds of any such insurance policies
(including title insurance policies) including the right to collect and receive
such proceeds: and 

 

3

 

all
awards and other compensation (“Condemnation Awards”), including the
interest payable thereon and the right to collect and receive the same, made to
the present or any subsequent owner of the Property for the taking by eminent
domain, condemnation or otherwise, of all or any part of the Property or any
easement or other right therein;

 

(G) all right, title and interest of the
Mortgagor in and to all consents, licenses, building permits, certificates of
occupancy and other governmental approvals relating to construction,
completion, occupancy, use or operation of the Property or any part thereof;

 

(H) all rights of the Mortgagor under all leases,
licenses, occupancy agreements, concessions or other arrangements, whether
written or oral, whether now existing or entered into at any time hereafter,
whereby any Person agrees to pay money to the Mortgagor or any consideration
for the use, possession or occupancy of, or any estate in, the Land or any part
thereof, and all rents, income, profits, benefits, avails, advantages and
claims against guarantors under any thereof (all of the foregoing is herein referred
to collectively as the “Leases”);;

 

(I)  all rents, issues, profits, royalties,
avails, income and other benefits derived by the Mortgagor from the Land (all
of the foregoing is herein collectively called the “Rents”);

 

(J) all Accounts, Chattel Paper, Deposit
Accounts, Documents, General Intangibles, Goods, Instruments, Inventory,
Investment Property and Securities Accounts (as each such term is defined in
the Uniform Commercial Code as in effect in the State of Illinois);

 

(K) all proceeds, both cash and noncash, of the
foregoing; and

 

(All of the foregoing property and rights and interests now owned or
held or subsequently acquired by the Mortgagor and described in the foregoing
clauses (A) through (I) are collectively referred to as the “Mortgaged Property”); provided, however,
that notwithstanding anything hereinabove to the contrary the maximum principal
amount of the Indebtedness secured hereby at any one time shall not exceed
$72,000,000, plus all costs of enforcement and collection of this Mortgage, the
Guaranty, the Subsidiary Note, the Loan Agreement and the other Loan Documents,
plus the total amount of any advances made pursuant to the Loan Documents to
protect the collateral and the security interest and lien created hereby;
together with interest on all of the foregoing as provided in the Loan
Documents.

 

TO HAVE AND TO HOLD the Mortgaged Property and the rights and
privileges hereby granted unto the Mortgagee, its successors and assigns for
the uses and purposes set forth, until all amounts owed by and obligations of
the Mortgagor to the Mortgagee under the Loan Agreement, the Subsidiary Note,
the Guaranty, the other Loan Documents, the other Subsidiary Loan Documents and
any Hedging Agreements or in connection with any Bank Services (collectively,
the “Indebtedness”) are paid.

 

1. Definitions.  Capitalized terms used but not otherwise
defined in this Mortgage shall have the respective meanings specified in the
Loan Agreement .

 

2. Payment of
Indebtedness.  The Mortgagor
shall pay the Indebtedness in accordance with the terms of the Loan Agreement,
the Guaranty, the Subsidiary Note and each Hedging Agreement and perform each
term to be performed by it under the Loan Agreement, the 

 

4

 

Guaranty,
the Subsidiary Note, each Hedging Agreement and the other Loan Documents and
Subsidiary Loan Documents.

 

3. Insurance.  The Mortgagor will at all times maintain or
cause to be maintained on the Improvements and on all other Mortgaged Property,
all casualty insurance required at any time or from time to time by the Loan
Agreement.  At the request of the
Mortgagee, Mortgagor shall deliver to and keep deposited with the Mortgagee
original certificates and copies of all such policies of casualty insurance
maintained on the Mortgaged Property and renewals thereof, with premiums
prepaid, and with standard non-contributory mortgagee and loss payable clauses
satisfactory to the Mortgagee, and clauses providing for not less than 10 days’
prior written notice to the Mortgagee of cancellation of such policies attached
thereto in favor of the Mortgagee, its successors and assigns.  While no Event of Default has occurred and is
continuing any loss paid to the Mortgagee or Mortgagor under any such policies
may be applied by the Mortgagor to rebuild or repair the damaged or destroyed
Improvements or other Mortgaged Property. 
The Mortgagor further agrees that, upon the occurrence and during the
continuance of an Event of Default, any loss paid to the Mortgagee or Mortgagor
under any of such policies shall be applied, at the option of the Mortgagee,
toward pre-payment of the Indebtedness as provided in the Loan Agreement, or to
the rebuilding or repairing of the damaged or destroyed Improvements or other
Mortgaged Property, as the Mortgagee in its sole and unreviewable discretion
may elect. The Mortgagor hereby empowers the Mortgagee, in its reasonably
exercised discretion, upon the occurrence and during the continuance of an
Event of Default, to settle, compromise and adjust any and all claims or rights
under any insurance policy maintained by the Mortgagor relating to the
Mortgaged Property.  At all times other
than during the continuance of an Event of Default, the Mortgagor shall have the
exclusive right to settle, compromise, and adjust any and all claims, rights,
or proceeds under any insurance policy maintained by the Mortgagor relating to
the Mortgaged Property.  In the event of
foreclosure of this Mortgage or other transfer of title to the Land in
extinguishment of the indebtedness secured hereby, all right, title and
interest of the Mortgagor in and to any insurance policies then in force shall
pass to the purchaser or grantee. 
Nothing contained in this Mortgage shall create any responsibility or
obligation on the Mortgagee to collect any amounts owing on any insurance
policy or resulting from any condemnation, to rebuild or replace any damaged or
destroyed Improvements or other Mortgaged Property or to perform any other act
hereunder.  The Mortgagee shall not by
the fact of approving, disapproving, accepting, preventing, obtaining or
failing to obtain any insurance, incur any liability for or with respect to the
amount of insurance carried, the form or legal sufficiency of insurance
contracts, solvency of insurance companies, or payment or defense of lawsuits,
and the Mortgagor hereby expressly assumes full responsibility therefor and all
liability, if any, with respect thereto.

 

4. Eminent Domain.  In case the Mortgaged Property, or any part
or interest in any thereof, is taken by condemnation, then upon the occurrence
and during the continuance of an Event of Default, the Mortgagee is empowered
to collect and receive all Condemnation Awards which may be paid for any
property taken or for damages to any property not taken (all of which the
Mortgagor hereby assigns to the Mortgagee), and all Condemnation Awards so
received shall be forthwith applied by the Mortgagee, as it may elect in its
sole and unreviewable discretion, to the prepayment of the Indebtedness, or to
the repair and restoration of any property not so taken or damaged; provided, however,
as long as no Event of Default has occurred and is continuing that any
Condemnation Awards payable by reason of the taking of less than all of the
Mortgaged 

 

5

 

Property
shall be made available to the extent required, as determined by the Mortgagee
in its reasonable discretion, for the repair or restoration of any Mortgaged
Property not so taken.  The Mortgagor
hereby empowers the Mortgagee, in the Mortgagee’s reasonably exercised
discretion, upon the occurrence and during the continuance of an Event of
Default to settle, compromise and adjust any and all claims or rights arising
under any condemnation or eminent domain proceeding relating to the Mortgaged
Property or any portion thereof.  At all
times other than during the continuance of an Event of Default, the Mortgagor
shall have the exclusive right to settle, compromise, and adjust any and all
claims, rights, or proceeds under any insurance policy maintained by the
Mortgagor relating to the Mortgaged Property.

 

5. Assignment of Leases and Rent. All of the
Mortgagor’s interest in and rights under the Leases now existing or hereafter
entered into, and all of the Rents, whether now due, past due, or to become
due, and including all prepaid rents and security deposits, and all other
amounts due with respect to any of the other Mortgaged Property, are hereby
absolutely, presently and unconditionally assigned and conveyed to the Mortgagee
to be applied by the Mortgagee in payment of all sums due with respect to, the
Indebtedness and all other sums payable under this Mortgage.  At all times other than during the
continuance of any Event of Default, the Mortgagor shall have a license to collect
and receive all Rents and other amounts, which license shall be terminated at
the sole option of the Mortgagee, without regard to the adequacy of its
security hereunder and without notice to or demand upon the Mortgagor, upon the
occurrence and during the continuance of any Default.  It is understood and agreed that neither the
foregoing assignment to the Mortgagee nor the exercise by the Mortgagee of any
of its rights or remedies under Section 7
hereof shall be deemed to make the Mortgagee a “mortgagee-in-possession” or
otherwise responsible or liable in any manner with respect to the Mortgaged
Property or the use, occupancy, enjoyment or any portion thereof, unless and
until the Mortgagee, 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 Mortgagee or by agreement
with the Mortgagor, or the entering into possession of any part of the
Mortgaged Property by such receiver, be deemed to make the Mortgagee 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.  Upon the
occurrence and during the continuance of any Event of Default, this shall
constitute a direction to and full authority to each lessee under any Leases,
each guarantor of any of the Leases and any other Person obligated under any of
the Mortgaged Property to pay all Rents and other amounts owing to the Mortgagor
with respect to the Mortgaged Property to the Mortgagee without proof of the
Event of Default relied upon.  The
Mortgagor hereby irrevocably authorizes each such Person to rely upon and
comply with any notice or demand by the Mortgagee for the payment to the
Mortgagee of any Rents and other amounts due or to become due to the Mortgagor
with respect to the Mortgaged Property.

 

6. Other Covenants.  At any time and from time to time, upon the
written request of the Mortgagee, and at the sole expense of the Mortgagor, the
Mortgagor will promptly and duly execute and deliver such further instruments
and documents (which instruments and documents shall be in form and substance
reasonably acceptable to Mortgagor) and take such further actions as the Mortgagee
reasonably may request for the purposes of obtaining or preserving the full
benefits of this Mortgage and of the rights and powers granted by this
Mortgage.

 

7. Default: Remedies.
(a) If an Event of Default has occurred and is continuing:

 

6

 

(i)            In addition to all other remedies
available to the Mortgagee at law or equity, the Mortgagee may proceed by suit
to foreclose this Mortgage, to sue the Mortgagor for damages on account of or
arising out of said continuing Event of Default or for specific performance of
any provision contained herein, or to enforce any other appropriate legal or
equitable right or remedy.  The Mortgagee
shall be entitled, as a matter of right, upon bill filed or other proper legal
proceedings being commenced for the foreclosure of this Mortgage, to the
appointment by any competent court or tribunal, without notice to the Mortgagor
or any other party, of a receiver of the rents, issues and profits of the
Mortgaged Property, with power to lease and control the Mortgaged Property and
with such other powers as may be deemed necessary.  The Mortgagor hereby authorizes and empowers
the Mortgagee or the auctioneer at any foreclosure sale had hereunder, for and
in the name of the Mortgagor, to execute and deliver to the purchaser or
purchasers of any of the Mortgaged Property sold at foreclosure good and
sufficient deeds of conveyance or bills of sale thereto.  All payments received by the Mortgagee as proceeds
of the Mortgaged Property, or any part thereof, as well as any and all amounts
realized by the Mortgagee in connection with the enforcement of any right or
remedy under or with respect to this Mortgage, shall be applied by the
Mortgagee as set forth in Section 16 of the Loan Agreement.  Several sales may be made under the
provisions hereof without exhausting the right of sale for any remaining part
of the Indebtedness whether then matured or unmatured, the purpose hereof being
to provide for a foreclosure and sale of the Mortgaged Property for any matured
part of the Indebtedness without exhausting any power of foreclosure and the
power to sell the Mortgaged Property for any other part of the Indebtedness,
whether matured at the time or subsequently maturing.  In the event any excess sales proceeds remain
after payment of costs of enforcement and the matured Indebtedness such excess
shall be applied as provided in the Loan Agreement.

 

(ii)           whether before or after institution
of proceedings to foreclose the lien of this Mortgage or before or after the
sale thereunder, the Mortgagee shall be entitled, in its discretion, to do all
or any of the following: (a) enter and take actual possession of the
rents, the leases and other Mortgaged Property relating thereto or any part
thereof personally, or by its agents or attorneys, and exclude the Mortgagor
therefrom; (b) with or without process of law, enter upon and take and
maintain possession of copies of all of the documents, books, records, papers
and accounts of the Mortgagor relating thereto, (provided Mortgagor will be
supplied with copies of such documents, books and records if Mortgagor so
requests); (c) as attorney-in-fact or agent of the Mortgagor, or in its
own name as mortgagee and under the powers herein granted, hold, operate,
manage and control the rents, the leases and other Mortgaged Property relating
thereto and conduct the business, if any, thereof either personally or by its
agents, contractors or nominees, with full power to use such measures, legal or
equitable, as in its discretion or in the discretion of its successors or
assigns may be deemed proper or necessary to enforce the payment of the rents,
the leases and other Mortgaged Property relating thereto (including actions for
the recovery of rent, actions in forcible detainer and actions in distress of
rent); (d) during the continuance of an Event of Default cancel or
terminate any lease or sublease for any cause or on any ground which would
entitle the Mortgagor to cancel the same; (e) elect to disaffirm any lease
or sublease made subsequent hereto or subordinated to the lien hereof; (f) make
all necessary or proper repairs, decorations, renewals,

 

7

 

replacements,
alterations, additions, betterments and improvements to the Mortgaged Property
that, in its discretion, may seem appropriate; (g) insure and reinsure the
Mortgaged Property for all risks incidental to the Mortgagee’s possession,
operation and management thereof; and (h) receive all such rents and
proceeds, and perform such other acts in connection with the management and
operation of the Mortgaged Property, as the Mortgagee in its discretion may
deem proper, the Mortgagor hereby granting the Mortgagee full power and
authority to exercise each and every one of the rights, privileges and powers
contained herein at any and all times after any Event of Default which is
continuing without notice to the Mortgagor or any other Person.  The Mortgagee, in the exercise of the rights
and powers conferred upon it hereby, shall have full power to use and apply the
rents to the payment of or on account of the following, in such order as it may
determine: (xx) to the payment of the operating expenses of the Mortgaged
Property, including the reasonable cost of management and leasing thereof
(which shall include reasonable compensation to the Mortgagee and its agents or
contractors, if management be delegated to agents or contractors, and it shall
also include reasonable lease commissions and other reasonable compensation and
expenses of seeking and procuring tenants and entering into leases),
established claims for damages, if any, and premiums on insurance hereinabove
authorized; (yy) to the payment of taxes, charges and special assessments, the
costs of all repairs, decorating, renewals, replacements, alterations,
additions, betterments and improvements of the Mortgaged Property, including
the cost from time to time of installing, replacing or repairing the Mortgaged
Property as reasonably necessary for its use or sale, and of placing the
Mortgaged Property in such condition as will, in the judgment of the Mortgagee,
make it readily rentable; and (zz) to the payment of any Indebtedness.  The entering upon and taking possession of
the Mortgaged Property, or any part thereof, and the collection of any rents
and the application thereof as aforesaid shall not cure or waive any default
theretofore or thereafter occurring or affect any notice or default hereunder
or invalidate any act done pursuant to any such default or notice, and,
notwithstanding continuance in possession of the Mortgaged Property or any part
thereof by the Mortgagee or a receiver and the collection, receipt and
application of the rents, the Mortgagee shall be entitled to exercise every
right provided for in this Mortgage or by law or in equity upon or after the
occurrence of an Event of Default which is continuing.  Any of the actions referred to in this Section may
be taken by the Mortgagee without regard to the adequacy of the security for
the Indebtedness.

 

8. Remedies Not Exclusive.  The Mortgagee shall be entitled to enforce
payment of the indebtedness and performance of the Indebtedness and to exercise
all rights and powers under this Mortgage or under any of the other Loan
Documents or other agreement or any laws now or hereafter in force,
notwithstanding some or all of the Indebtedness may now or hereafter be
otherwise secured, whether by deed of trust, deed to secure debt, mortgage,
security agreement, pledge, lien, assignment or otherwise.  Neither the acceptance of this Mortgage nor
its enforcement, shall prejudice or in any manner affect the Mortgagee’s right
to realize upon or enforce any other security now or hereafter held by the
Mortgagee, it being agreed that the Mortgagee shall be entitled to enforce this
Mortgage and any other security now or hereafter held by the Mortgagee in such
order and manner as the Mortgagee may determine in its absolute discretion.  No remedy herein conferred upon or reserved
to the Mortgagee is intended to be exclusive of any other remedy herein or by
law provided or permitted, but each shall be 

 

8

 

cumulative and shall be in addition to every other
remedy given hereunder or now or hereafter existing at law or in equity or by
statute.  Every power or remedy given by
any of the Loan Documents to the Mortgagee or to which they may otherwise be
entitled, may be exercised, concurrently or independently, from time to time
and as often as may be deemed expedient by the Mortgagee.  In no event shall the Mortgagee, in the
exercise of the remedies provided in this Mortgage (including, without
limitation, in connection with the assignment of Rents to the Mortgagee, or the
appointment of a receiver and the entry of such receiver on to all or any part
of the Mortgaged Property), be deemed a “mortgagee in possession,” and the
Mortgagee shall not in any way be made liable for any act, either of commission
or omission, in connection with the exercise of such remedies.

 

9. Performance by the
Mortgagee of the Mortgagor’s Indebtedness.  If the Mortgagor fails to perform or comply
with any of its agreements contained herein the Mortgagee, at its option, but
without any obligation so to do, during the continuance of an Event of Default
may perform or comply, or otherwise cause performance or compliance, with such
agreement.  The reasonable expenses of
the Mortgagee incurred in connection with actions undertaken as provided in
this Section, together with interest thereon at a rate per annum equal to the
rate payable under the Subsidiary Note after the occurrence of an Event of
Default (the “Default Rate”), from the date of payment by the Mortgagee,
as applicable, to the date reimbursed by the Mortgagor, shall be payable by the
Mortgagor to the Mortgagee on demand.

 

10. Duty of the Mortgagee.  The Mortgagee’s sole duty with respect to the
custody, safekeeping and physical preservation of any Mortgaged Property in its
possession, under the Uniform Commercial Code or otherwise, shall be to deal
with it in the same manner as the Mortgagee deals with similar property for its
own account.  Neither the Mortgagee nor
any of their respective directors, officers, employees or agents shall be
liable for failure to demand, collect or realize upon any of the Mortgaged
Property or for any delay in doing so or shall be under any obligation to sell
or otherwise dispose of any Mortgaged Property upon the request of the
Mortgagor or any other Person or to take any other action whatsoever with
regard to the Mortgaged Property or any part thereof.

 

11. Powers Coupled with
an Interest.  All powers,
authorizations and agencies contained in this Mortgage are coupled with an
interest and are irrevocable until the earlier of the date (a) this
Mortgage is terminated and the lien created hereby is released and (b) the
Indebtedness has been repaid in full and the Mortgagee has no further
obligation to make any advances , or extend any credit hereunder or under any
Loan Documents.

 

12. Filing of Financing
Statements.  The Mortgagor
authorizes the Mortgagee to file financing statements with respect to the
Mortgaged Property without the signature of the Mortgagor in such form and in
such filing offices as the Mortgagee reasonably determines appropriate to
perfect the security interests of the Mortgagee under this Mortgage.  A carbon, photographic or other reproduction
of this Mortgage shall be sufficient as a financing statement for filing in any
jurisdiction.

 

13. Security Agreement
under Uniform Commercial Code.  (a) It is the
intention of the parties hereto that this Mortgage shall constitute a Security
Agreement within the meaning of the Uniform Commercial Code of the State in
which the Mortgaged Property is located (the 

 

9

 

“Uniform Commercial Code”).  If an Event of Default shall occur, then in
addition to having any other right or remedy available at law or in equity, the
Mortgagee shall have the option of either (i) proceeding under the Uniform
Commercial Code and exercising such rights and remedies as may be provided to a
secured party by the Uniform Commercial Code with respect to all or any portion
of the Mortgaged Property which is personal property (including, without
limitation, taking possession of and selling such property) or (ii) treating
such property as real property and proceeding with respect to both the real and
personal property constituting the Mortgaged Property in accordance with the
Mortgagee’s rights, powers and remedies with respect to the real property (in
which event the default provisions of the Uniform Commercial Code shall not
apply).  If the Mortgagee, shall elect to
proceed under the Uniform Commercial Code, then fifteen days’ notice of sale of
the personal property shall be deemed reasonable notice and the reasonable
expenses of retaking, holding, preparing for sale, selling and the like
incurred by the Mortgagee shall include, but not be limited to, attorneys’ fees
and legal expenses.  At the Mortgagee’s
request, the Mortgagor shall assemble the personal property and make it
available to the Mortgagee at a place designated by the Mortgagee which is
reasonably convenient to both parties.

 

(b) The
Mortgagor, the Additional Mortgagor and the Mortgagee agree, to the extent
permitted by law, that this Mortgage upon recording or registration in the real
estate records of the proper office shall constitute a financing statement
filed as a “fixture filing” within the meaning of the Uniform Commercial Code.

 

14. Amendments in
Writing; No Waiver; Cumulative Remedies.  (a) None of
the terms or provisions of this Mortgage may be waived, amended, supplemented
or otherwise modified except by a written instrument executed by the Mortgagor
and the Mortgagee in accordance with the terms of the Loan Agreement.

 

(b) No
failure to exercise, nor any delay in exercising, on the part of the Mortgagee,
any right, power or privilege hereunder shall operate as a waiver thereof.  No single or partial exercise of any right, power
or privilege hereunder shall preclude any other or further exercise thereof or
the exercise of any other right, power or privilege.  A waiver by the Mortgagee of any right or
remedy hereunder on any one occasion shall not be construed as a bar to any
right or remedy which the Mortgagee would otherwise have on any future
occasion.

 

(c) The
rights and remedies herein provided are cumulative, may be exercised singly or
concurrently and are not exclusive of any other rights or remedies provided by
law.

 

15. Successors and
Assigns.  This Mortgage shall
run with the land and be binding upon the successors and assigns of the
Mortgagor and shall inure to the benefit of the Mortgagee, the Lenders and
their respective successors and assigns.

 

16. Mortgagor’s Waiver of
Rights. THE MORTGAGOR ACKNOWLEDGES THAT THE TRANSACTION OF WHICH
THIS MORTGAGE IS A PART IS A TRANSACTION WHICH DOES NOT INCLUDE EITHER
AGRICULTURAL REAL ESTATE (AS DEFINED IN THE ILLINOIS MORTGAGE FORECLOSURE LAW,
735 ILCS 5/15-1101 ET  SEQ., HEREIN THE “ACT”), OR RESIDENTIAL REAL
ESTATE (AS DEFINED IN THE ACT) EXCEPT AS OTHERWISE SET FORTH HEREIN, TO THE
FULLEST EXTENT 

 

10

 

PERMITTED BY LAW, THE MORTGAGOR WAIVES THE BENEFIT OF
ALL LAWS NOW EXISTING OR THAT MAY SUBSEQUENTLY BE ENACTED PROVIDING FOR (I) ANY
APPRAISEMENT BEFORE SALE OF ANY PORTION OF THE MORTGAGED PROPERTY, (II) ANY
EXTENSION OF THE TIME FOR THE ENFORCEMENT OF THE COLLECTION OF THE INDEBTEDNESS
OR THE CREATION OR EXTENSION OF A PERIOD OF REDEMPTION FROM ANY SALE MADE IN
COLLECTING SUCH DEBT AND (III) EXEMPTION OF THE MORTGAGED PROPERTY FROM
ATTACHMENT, LEVY OR SALE UNDER EXECUTION OR EXEMPTION FROM CIVIL PROCESS.  EXCEPT AS OTHERWISE SET FORTH HEREIN, TO THE
FULL EXTENT THE MORTGAGOR MAY DO SO, THE MORTGAGOR AGREES THAT THE
MORTGAGOR WILL NOT AT ANY TIME INSIST UPON, PLEAD, CLAIM OR TAKE THE BENEFIT OR
ADVANTAGE OF ANY LAW NOW OR HEREAFTER IN FORCE PROVIDING FOR ANY APPRAISEMENT,
VALUATION, STAY, EXEMPTION, EXTENSION, REINSTATEMENT OR REDEMPTION, OR
REQUIRING FORECLOSURE OF THIS MORTGAGE BEFORE EXERCISING ANY OTHER REMEDY
GRANTED HEREUNDER AND THE MORTGAGOR, FOR THE MORTGAGOR AND ITS SUCCESSORS AND
ASSIGNS, AND FOR ANY AND ALL PERSONS EVER CLAIMING ANY INTEREST IN THE
MORTGAGED PROPERTY, TO THE EXTENT PERMITTED BY LAW, HEREBY WAIVES AND RELEASES
ALL RIGHTS OF REINSTATEMENT, REDEMPTION, VALUATION, APPRAISEMENT STAY OF
EXECUTION, NOTICE OF ELECTION TO MATURE OR DECLARE DUE THE WHOLE OF THE SECURED
INDEBTEDNESS AND MARSHALLING IN THE EVENT OF FORECLOSURE OF THE LIENS HEREBY
CREATED.

 

17. Partial Release; Full
Release.  The Mortgagee may
release, for such consideration or none, as it may require, any portion of the
Mortgaged Property without, as to the remainder of the Mortgaged Property, in
any way impairing or affecting the lien, security interest and priority herein
provided for the Mortgagee compared to any other lien holder or secured party.
Upon full payment of all the Indebtedness and of all amounts owed by the
Additional Mortgagor under the Loan Documents all in accordance with their
respective terms and at the time and in the manner provided, and when the
Mortgagee has no further obligation to make any advance, or extend any credit
hereunder or under any Loan Documents, this conveyance shall be null and void,
and thereafter, upon demand therefor, an appropriate instrument of reconveyance
or release shall promptly be made by the Mortgagee to the Mortgagor, at the
expense of the Mortgagor.

 

18. Notices.  Each notice, demand or other communication in
connection with this Mortgage shall be in writing and shall be given as
provided in the Loan Agreement for notices required by the Loan Agreement
except that notices to the Mortgagor shall be addressed to 1309 South Cicero
Avenue, LLC, c/o Brad Foote Gear Works, Inc. at the address for notices to
the Additional Mortgagor in the Loan Agreement.

 

19. Successors; The
Mortgagor; Gender.  All
provisions hereof shall bind the Mortgagor and the Mortgagee and their
respective permitted successors, vendees and assigns and shall inure to the
benefit of the Mortgagee, its permitted successors and assigns, and the
Mortgagor and its permitted successors and assigns.  The Mortgagor shall not have any right to
assign any of its rights hereunder. 
Except as limited by the preceding sentence, the word “Mortgagor” shall
include all Persons claiming under or through the Mortgagor and all Persons
liable for the 

 

11

 

payment or performance by the Mortgagor of any of the
Indebtedness whether or not such Persons shall have executed the Loan Agreement
or this Mortgage.  Wherever used, the
singular number shall include the plural, the plural the singular, and the use
of any gender shall be applicable to all genders.

 

20. Care by the Mortgagee.  The Mortgagee shall be deemed to have
exercised reasonable care in the custody and preservation of any of the
Mortgaged Property assigned by the Mortgagor to the Mortgagee or in the
Mortgagee’s possession if it takes such action for that purpose as the
Mortgagor requests in writing, but failure of the Mortgagee to comply with any
such request shall not be deemed to be (or to be evidence of) a failure to
exercise reasonable care, and no failure of the Mortgagee to preserve or
protect any rights with respect to such Mortgaged Property against prior
parties, or to do any act with respect to the preservation of such Mortgaged
Property not so requested by the Mortgagor, shall be deemed a failure to
exercise reasonable care in the custody or preservation of such Mortgaged
Property.

 

21. No Obligation on Mortgagee.  This Mortgage is intended only as security
for the Indebtedness.  Anything herein to
the contrary notwithstanding (i) the Mortgagor shall be and remain liable
under and with respect to the Mortgaged Property to perform all of the
obligations assumed by it under or with respect to each thereof, (ii) the
Mortgagee shall have no obligation or liability under or with respect to the
Mortgaged Property by reason or arising out of this Mortgage prior to a
foreclosure or other sale of the Mortgaged Property pursuant to the terms
hereof and (iii) the Mortgagee shall not be required or obligated in any
manner to perform or fulfill any of the obligations of the Mortgagor under,
pursuant to or with respect to any of the Mortgaged Property prior to a
foreclosure or other sale of the Mortgaged Property pursuant to the terms
hereof.

 

22. Governing Law, Submission to Jurisdiction.  This Mortgage shall be governed by the laws
of the state where the Land are located. 
Whenever possible, each provision of this Mortgage shall be interpreted
in such manner as to be effective and valid under applicable law, but if any
provision of this Mortgage shall be prohibited by or invalid under applicable
law, such provision shall be ineffective to the extent of such prohibition or
invalidity, without invalidating the remainder of such provision or the
remaining provisions of this Mortgage.

 

23. JURY TRIAL.  THE MORTGAGOR AND MORTGAGEE HEREBY
IRREVOCABLY WAIVE, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY AND ALL RIGHT TO
TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS
MORTGAGE, THE LOAN AGREEMENT, THE NOTES OR THE TRANSACTIONS CONTEMPLATED HEREBY
OR THEREBY

 

24. No Merger.  It being the desire and intention of the
parties hereto that this Mortgage and the lien hereof do not merge in fee
simple title to the Land, it is hereby understood and agreed that should the
Mortgagee acquire an additional or other interests in or to the Land or the
ownership thereof, then, unless a contrary intent is manifested by the
Mortgagee as evidenced by an express statement to that effect in an appropriate
document duly recorded, this Mortgage and the lien hereof shall not merge in
the fee simple title, toward the end that this Mortgage may be foreclosed as if
owned by a stranger to the fee simple title.

 

12

 

25. Future Advances;
Revolving Credit.  This
Mortgage is given to secure not only existing indebtedness, but also future advances
made pursuant to or as provided in the Loan Agreement and the other Loan
Documents, whether such advances are obligatory or to be made at the option of
the Mortgagee, or otherwise, to the same extent as if such future advances were
made on the date of execution of this Mortgage, although there may be no
advance made at the time of execution hereof, and although there may be no
indebtedness outstanding at the time any advance is made.  To the fullest extent permitted by law, the
lien of this Mortgage shall be valid as to all such indebtedness, including all
revolving credit and future advances, from the time this Mortgage is recorded.

 

26. Joinder and Subordination by Additional
Mortgagor. The Additional Mortgagor leases the Land and
Improvements from the Mortgagor (as successor to BFG Cicero LLC which was the
original landlord ) pursuant to a Lease Agreement (the “Facility Lease”),
dated as of August 22, 2007. The Additional Mortgagor hereby joins in the
execution and delivery of this Mortgage and hereby grants, bargains, sells,
mortgages, pledges and assigns unto Mortgagee and grants a security interest in
all of Additional Mortgagor’s right, title and interest in and to the Facility
Lease and the Land, the Improvements and the rest of the Mortgaged Property as
security for the obligations of the Additional Mortgagor to the Mortgagee under
the Loan Agreement and the Notes.  The
Additional Mortgagor joins in and makes on its own behalf for the benefit of
the Mortgagee each of the agreements of the Mortgagor set forth herein with
respect to the Mortgaged Property.  The
Additional Mortgagor hereby subordinates the Facility Lease and the leasehold
estate created by the Facility Lease in the Mortgaged Property to the lien of
this Mortgage.

 

27. Compliance with
Illinois Mortgage Foreclosure Law.  (a) If any
provision of this Mortgage is inconsistent with any applicable provision of the
Act, the provisions of the Act shall take precedence over the provisions of
this Mortgage, but shall not invalidate or render unenforceable any other
provision of this Mortgage that can fairly be construed in a manner consistent
with the Act.

 

(b) Without
in any way limiting or restricting any of Mortgagee’s rights, remedies, powers
and authorities under this Mortgage, and in addition to all of such rights,
remedies, powers, and authorities, Mortgagee shall also have and may exercise
any and all rights, remedies, powers and authorities which the holder of a
mortgage is permitted to have or exercise under the provisions of the Act, as
the same may be amended from time to time. 
If any provision of this Mortgage grants to Mortgagee any rights,
remedies, powers or authorities upon default of Mortgagor which are more
limited than the rights that would otherwise be vested in Mortgagee under the
Act in the absence of said provision, Mortgagee shall be vested with all of the
rights, remedies, powers and authorities granted in the Act to the fullest
extent permitted by law.

 

(c) Without
limiting the generality of the foregoing, all expenses incurred by Mortgagee,
to the extent reimbursable under 735 ILCS 5/15-1510, 735 ILCS 5/15-1512, or any
other provisions of the Act, whether incurred before or after any decree or
judgment of foreclosure, and whether or not enumerated in any other provision
of this Mortgage, shall be added to the indebtedness secured by this Mortgage
and by the judgment of foreclosure.

 

13

 

IN WITNESS WHEREOF, the undersigned have caused this
Mortgage to be duly executed and delivered as of the date first above written.

 

	
   

  	
  1309 SOUTH CICERO AVENUE, LLC, a

  
	
   

  	
  Delaware limited liability company

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Ralph Placzek

  
	
   

  	
  Name: Ralph Placzek

  
	
   

  	
  Title: Authorized Signatory

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  BRAD FOOTE GEAR WORKS, INC.,

  
	
   

  	
  an Illinois corporation

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Ralph Placzek

  
	
   

  	
  Name: Ralph Placzek

  
	
   

  	
  Title: Vice President – Finance and Treasurer

  

 

S-1

 

Exhibit A

 

Legal
Description of the Land

 

PARCEL 1:

 

THE EAST 400 FEET OF THE WEST 440 FEET OF THE
SOUTH 100 FEET OF THE NORTH 233 FEET OF THE SOUTHWEST 1/4 OF THE NORTHWEST 1/4
OF THE NORTHWEST 1/4 OF SECTION 22, TOWNSHIP 39 NORTH, RANGE 13 EAST OF
THE THIRD PRINCIPAL MERIDIAN;.

 

PARCEL 2:

 

THE SOUTH 100 FEET OF THE NORTH 133 FEET
(EXCEPT THE EAST 33 FEET AND EXCEPT THE WEST 40 FEET) IN THE SOUTHWEST 1/4 OF
THE NORTHWEST 1/4 OF THE NORTHWEST 1/4 OF SECTION 22, TOWNSHIP 39 NORTH,
RANGE 13 EAST OF THE THIRD PRINCIPAL MERIDIAN;

 

PARCEL 3:

 

THE SOUTH 15 FEET OF THE NORTH 148 FEET
(EXCEPT THE WEST 440 FEET) OF THE SOUTHWEST 1/4 OF THE NORTHWEST 1/4 OF THE
NORTHWEST 1/4 OF SECTION 22, TOWNSHIP 39 NORTH, RANGE 13 EAST OF THE THIRD
PRINCIPAL MERIDIAN;

 

PARCEL 4:

 

EASEMENT FOR THE BENEFIT OF PARCELS 1, 2 AND
3 AS CREATED BY GRANT OF EASEMENT FROM AMERICAN NATIONAL BANK AND TRUST COMPANY
OF CHICAGO, AS TRUSTEE UNDER TRUST AGREEMENT NO. 8331 TO THE LEMONT REALTY
COMPANY, AN ILLINOIS CORPORATION, DATED SEPTEMBER 20, 1958 AND RECORDED
NOVEMBER 28, 1958 AS DOCUMENT 17389244 FOR INGRESS AND EGRESS;

 

(A)      THE WEST 30.50 FEET OF THE
FOLLOWING DESCRIBED PROPERTY TAKEN AS A TRACT; SOUTH 185 FEET OF THE NORTH 333
FEET (EXCEPT THE EAST 33 FEET AND EXCEPT THE WEST 440 FEET) OF THE SOUTHWEST
1/4 OF THE NORTHWEST 1/4 OF THE NORTHWEST 1/4 OF SECTION 22, TOWNSHIP 39
NORTH, RANGE 13, EAST OF THE THIRD PRINCIPAL MERIDIAN;

 

ALSO OVER

 

(B)        THE EAST 33 FEET OF THE
SOUTH 100 FEET OF THE NORTH 133 FEET OF THE SOUTHWEST 1/4 OF THE NORTHWEST 1/4
OF THE NORTHWEST 1/4 OF SECTION 22, TOWNSHIP 39 NORTH, RANGE 13, EAST OF
THE THIRD PRINCIPAL MERIDIAN, ALL IN COOK COUNTY, ILLINOIS

 

P.I.N. 16-22-104-002-0000 and
16-22-104-010-0000

 

ADDRESS:                    1309 S. Cicero
Avenue, Cicero, Illinois

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