Document:

Prepared by MERRILL CORPORATION

EXHIBIT

10.50

 

SECOND

AMENDED AND RESTATED AGREEMENT

THIS SECOND AMENDED AND

RESTATED PLEDGE AGREEMENT (as amended, restated, supplemented or otherwise

modified from time to time, this “Agreement”), dated as of

October 12, 2001, is made by BMC INDUSTRIES, INC., a Minnesota corporation

(the “Pledgor”), to BANKERS TRUST COMPANY, as Collateral Agent (the “Pledgee”)

for the benefit of (i) the Lenders and the Agent under the Credit Agreement

hereinafter referred to (such Lenders and the Agent are hereinafter called the

“Bank Creditors”), (ii) if one or more Lenders or any Affiliate of a

Lender enters into one or more (A) interest rate protection agreements

(including, without limitation, interest rate swaps, caps, floors, collars and

similar agreements), (B) foreign exchange contracts, currency swap agreements

or other similar agreements or arrangements designed to protect against the

fluctuations in currency values and/or (C) other types of hedging agreements

from time to time (collectively, the “Interest Rate Protection or Other

Hedging Agreements”), with, or guaranteed by, the Pledgor, any such Lender

or Lenders or Affiliate or Affiliates (even if the respective Lender

subsequently ceases to be a Lender under the Credit Agreement for any reason)

so long as any such Lender or Affiliate participates in the extension of such

Interest Rate Protection or Other Hedging Agreements and their subsequent

assigns, if any (collectively, the “Other Creditors”) and (iii) U.S.

Bank National Association ("US Bank") as lender under that

certain Continuing Reimbursement Agreement for Commercial Letters of Credit,

dated as of July 14, 2000 the "US Bank Letter of Credit Facility")

among the Borrower and US Bank (the "LC Creditor" and,

together with the Bank Creditors and the Other Creditors, are hereinafter

called the “Secured Creditors”). 

Except as otherwise defined herein, terms used herein and defined in the

Credit Agreement shall be used herein as so defined.

 

 

W I T N E S S E T H:

WHEREAS, the Pledgor, the

financial institutions from time to time party thereto, and Bankers Trust

Company, as Agent (together with any successor agent, the “Agent”), have

entered into an Amended and Restated Credit Agreement, dated as of June 25,

1998, providing for the making of Loans and the issuance of, and participation

in, Letters of Credit as contemplated therein (as used herein, the term “Credit

Agreement” means the Credit Agreement described above in this paragraph, as

in effect on the date hereof and as amended by that certain Second Amendment

and Restatement Agreement dated as of the date hereof, as the same may be

amended, modified, extended, renewed, replaced, restated or supplemented from

time to time, and including any agreement extending the maturity of or

restructuring of all or any portion of the Indebtedness under such agreement or

any successor agreements);

WHEREAS, the Pledgor may

at any time and from time to time enter into, or guarantee obligations of its

Subsidiaries under, one or more Interest Rate Protection or Other Hedging Agreements

with one or more Other Creditors;

WHEREAS, it is a

condition to each of the above–described extensions of credit that the

Pledgor shall have executed and delivered this Agreement;

WHEREAS, the Pledgor

desires to enter into this Agreement in order to satisfy the condition

described in the preceding paragraph;

NOW, THEREFORE, in

consideration of the benefits accruing to the Pledgor, the receipt and

sufficiency of which are hereby acknowledged, the Pledgor hereby makes the

following representations and warranties to the Pledgee for the benefit of the

Secured Creditors and hereby covenants and agrees with the Pledgee for the

benefit of the Secured Creditors as follows:

1.             SECURITY FOR OBLIGATIONS.  This Agreement is made by the Pledgor for the benefit of the

Secured Creditors to secure:

(i)            the

full and prompt payment when due (whether at the stated maturity, by

acceleration or otherwise) of all obligations and indebtedness (including,

without limitation, indemnities, Fees and interest thereon) of the Pledgor to

the Bank Creditors, whether now existing or hereafter incurred under, arising

out of, or in connection with the Credit Agreement and the other Loan Documents

and the due performance and compliance by the Pledgor with all of the terms,

conditions and agreements contained in the Credit Agreement and the other Loan

Documents (all such principal, interest, obligations and liabilities described

in this clause (i) being herein collectively called the “Credit Agreement

Obligations”);

(ii)           the

full and prompt payment when due (whether at the stated maturity, by

acceleration or otherwise) of all obligations and liabilities owing by the

Pledgor to the Other Creditors under, or with respect to, (x) any Interest Rate

Protection or Other Hedging Agreement, including all obligations of the Pledgor

in respect of Interest Rate Protection or Other Hedging Agreement, whether such

Interest Rate Protections or Other Hedging Agreements are now in existence or

hereafter arising, and the due performance and compliance by the Pledgor with

all of the terms, conditions and agreements contained therein and (y) the US

Bank Letter of Credit Facility up to a maximum amount of $2,000,000 (provided

that at no time shall there be more than $2,000,000 under the US Bank Letter of

Credit Facility secured by the Security Documents) (all such obligations and

liabilities described in this clause (ii) being herein collectively called the

“Other Obligations”);

(iii)          any

and all sums advanced by the Pledgee in accordance with the Loan Documents in

order to preserve the Collateral (as hereinafter defined) or preserve its

security interest in the Collateral;

(iv)          in

the event of any proceeding for the collection or enforcement of any

indebtedness, obligations, or liabilities referred to in clauses (i) , (ii) and

(iii) above, after an Event of Default (as such term is defined in the Credit

Agreement) shall have occurred and be continuing, the reasonable expenses of

retaking, holding, preparing for sale or lease, selling or otherwise disposing

of or realizing on the Collateral, or of any exercise by the Pledgee of its

rights hereunder, together with reasonable attorneys’ fees and court costs; and

(v)           all

amounts paid by any Secured Creditor as to which such Secured Creditor has the

right to reimbursement under Section 11 of this Agreement;

all such obligations,

liabilities, sums and expenses set forth in clauses (i) through (v) of this Section

1 being herein collectively called the “Obligations,” it being

acknowledged and agreed that the “Obligations” shall include extensions of

credit of the types described above, whether outstanding on the date of this

Agreement or extended from time to time after the date of this Agreement.

2.             DEFINITION OF STOCK, NOTES, SECURITIES, ETC.  As used herein, the term “Stock”

shall mean (x) all of the issued and outstanding shares of capital stock at any

time owned by the Pledgor of any Material Subsidiary which is a Domestic

Subsidiary and (y) 65% of the issued and outstanding shares of capital stock at

any time owned by the Pledgor of any first tier Foreign Subsidiary which is a

Material Subsidiary, (ii) the term “Notes” shall mean Note B and all

promissory notes issued in lieu thereof, and (iii) the term “Securities”

shall mean all of the Stock and the Notes. 

The Pledgor represents and warrants, as to the stock of Material

Subsidiaries owned by the Pledgor and the Notes, that on the date hereof (a)

the Stock consists of the number and type of shares of the stock of the

corporations as described in Part I of Annex A hereto; (b) such Stock

constitutes that percentage of the issued and outstanding capital stock of the

issuing corporation as is set forth in Part I of Annex A hereto; (c) the

Notes consist of the promissory notes described in Part II of Annex A

hereto; and (d) the Pledgor is the holder of record and sole beneficial owner

of the Stock, and there exist no options or preemptive rights in respect of any

of such Stock.  If and to the extent

that the Pledgee receives or holds stock certificates representing more than

65% of the total combined voting power of all classes of capital stock of any

first tier Foreign Subsidiary that is a Material Subsidiary entitled to vote,

the Pledgee agrees to act as bailee (and not as a pledgee, the Pledgee hereby

disclaiming any security interest in such portion except as otherwise provided

in the last sentence of this Section 2) and custodian for the benefit of

the Pledgor with respect to any portion of such capital stock representing more

than 65% of the total combined voting power of all classes of capital stock of

any such Foreign Subsidiary entitled to vote except as otherwise provided in

the last sentence of this Section 2. 

If following a change in the relevant sections of the Code or the

regulations, rules, rulings, notices or other official pronouncements issued or

promulgated thereunder which would permit a pledge of 66% or more (or would be

adjusted to permit a pledge of less than 66%) of the total combined voting

power of all classes of capital stock of such Foreign Subsidiary entitled to

vote without causing the undistributed earnings of such Foreign Subsidiary as

determined for Federal income taxes to be treated as a deemed dividend to the

Pledgor for Federal income tax purposes, then the 65% limitation set forth in

clause (y) of the first sentence of this Section 2 shall no longer be

applicable (or shall be adjusted as appropriate) and the Pledgor shall duly

pledge and deliver to the Pledgee such of the Stock not theretofore required to

be pledged hereunder or the Pledgee shall return such Stock as applicable.

3.             PLEDGE OF SECURITIES, STOCK, ETC.

3.1           Pledge.  To secure the Obligations, and for the

purposes set forth in Section 1 hereof, the Pledgor hereby (i) grants to

the Pledgee a security interest in all of the Collateral (as hereinafter

defined), (ii) pledges and deposits with the Pledgee the Securities owned by

the Pledgor on the date hereof, and acknowledging that it previously delivered

to the Pledgee certificates or instruments therefor, duly endorsed in blank in

the case of Notes, and accompanied by undated stock powers duly executed in

blank by the Pledgor (and accompanied by any transfer tax stamps required in

connection with the pledge of such Securities), or such other instruments of

transfer as are acceptable to the Pledgee and (iii) assigns, transfers,

hypothecates, mortgages, charges and sets over to the Pledgee all of the

Pledgor’s right, title and interest in and to such Securities (and in and to

all certificates or instruments evidencing such Securities), to be held by the

Pledgee as collateral security for the Obligations, upon the terms and

conditions set forth in this Agreement.

3.2           Subsequently Acquired Securities.  If the Pledgor shall acquire (by purchase,

stock dividend or otherwise) any additional Securities at any time or from time

to time after the date hereof, the Pledgor will immediately pledge and deposit

such Securities (or certificates or instruments representing such Securities)

as security with the Pledgee and deliver to the Pledgee certificates or

instruments therefor, duly endorsed in blank in the case of Notes, and

accompanied by undated stock powers duly executed in blank by the Pledgor (and

accompanied by any transfer tax stamps required in connection with the pledge

of such Securities) in the case of Stock, or such other instruments of transfer

as are reasonably acceptable to the Pledgee, and any other foreign security

documentation reasonably requested by Pledgee, and will promptly thereafter

deliver to the Pledgee a certificate executed by a Responsible Officer of the

Pledgor describing such Securities and certifying that the same have been duly

pledged with the Pledgee hereunder.  If

any Domestic Subsidiary of Pledgor shall hereafter own capital stock of any

Material Subsidiary, then Pledgor shall cause such Domestic Subsidiary to enter

into a pledge agreement in substantially the form hereof, and shall deliver any

other security documentation reasonably requested by Pledgee, in order to cause

the stock of such Material Subsidiary to be pledged to the Pledgee for the

benefit of the Lenders.  Subject to the

last sentence of Section 2, the Pledgor shall not be required at any time to

pledge hereunder more than 65% of the total combined voting power of all

classes of capital stock of any Foreign Subsidiary entitled to vote.

3.3           Uncertificated Securities.  Notwithstanding anything to the contrary

contained in Sections 3.1 and 3.2 hereof, if any Securities (whether now

owned or hereafter acquired) are uncertificated securities, the Pledgor shall promptly

notify the Pledgee thereof, and shall promptly take all actions required to

perfect the security interest of the Pledgee under applicable law (including,

in any event, under Sections 8-313 and 8-321 of the New York Uniform Commercial

Code if applicable).  The Pledgor

further agrees to take such actions as the Pledgee deems necessary or desirable

to effect the foregoing and to permit the Pledgee to exercise any of its rights

and remedies hereunder, and agrees to provide an opinion of counsel reasonably

satisfactory to the Pledgee with respect to any such pledge of uncertificated

Stock promptly upon the reasonable request of the Pledgee.  Subject to the last sentence of Section 2,

the Pledgor shall not be required, at any time, to pledge hereunder more than

65% of the total combined voting power of all classes of capital stock of any

Foreign Subsidiary entitled to vote.

3.4           Definitions of Pledged Stock;

Pledged Notes; Pledged Securities and Collateral.  All Stock at any time pledged or required to be pledged hereunder

is hereinafter called the “Pledged Stock;” and all Notes at any time

pledged or required to be pledged hereunder are hereinafter called the “Pledged

Notes;” all Pledged Stock and Pledged Notes together are called the “Pledged

Securities;” and the Pledged Securities, together with all proceeds

thereof, including any securities and moneys received and at the time held by

the Pledgee hereunder, are hereinafter called the “Collateral.”

4.             APPOINTMENT OF SUB–AGENTS; ENDORSEMENTS, ETC.  The Pledgee shall have the right to appoint

one or more sub–agents for the purpose of retaining physical possession

of the Pledged Securities, which may be held (in the discretion of the Pledgee)

in the name of the Pledgor, endorsed or assigned in blank or in favor of the

Pledgee or any nominee or nominees of the Pledgee or a sub–agent

appointed by the Pledgee.

5.             VOTING, ETC., WHILE NO EVENT OF DEFAULT.  Unless and until an Event of Default shall

have occurred and be continuing, the Pledgor shall be entitled to exercise any

and all voting and other consensual rights pertaining to the Pledged Securities

owned by it, and to give consents, waivers or ratifications in respect thereof,

provided that no vote shall be cast or any consent, waiver or

ratification given or any action taken which would violate or result in breach

of any covenant contained in this Agreement, the Credit Agreement, any other

Loan Document or any Interest Rate Protection or Other Hedging Agreement

(collectively, the “Secured Debt Agreements”), or which could reasonably

be expected to have the effect of impairing the value of the Collateral or any

part thereof or the position or interests of the Pledgee or any Secured

Creditor.  All such rights of the

Pledgor to vote and to give consents, waivers and ratifications shall cease in

case an Event of Default shall occur and be continuing, and Section 7

hereof shall become applicable.

6.             DIVIDENDS AND OTHER DISTRIBUTIONS.  Unless an Event of Default shall have

occurred and be continuing, all cash dividends and distributions payable in

respect of the Pledged Stock and all payments in respect of the Pledged Notes

shall be paid to the Pledgor which owns such Pledged Stock or Pledged Notes; provided,

that all cash dividends payable in respect of the Pledged Stock which are

reasonably determined by the Pledgee to represent in whole or in part an

extraordinary, liquidating or other distribution in return of capital shall be

paid, to the extent so determined to represent an extraordinary, liquidating or

other distribution in return of capital, to the Pledgee and retained by it as

part of the Collateral.  The Pledgee

also shall be entitled to receive directly, and to retain as part of the

Collateral:

(a)           all other or additional stock or

other securities or property (other than cash) paid or distributed by way of

dividend or otherwise in respect of the Pledged Stock;

(b)           all other or additional stock or

other securities or property (including cash) paid or distributed in respect of

the Pledged Stock by way of stock–split, spin-off, split-up,

reclassification, combination of shares or similar rearrangement; and

(c)           all other or additional stock or

other securities or property (including cash) which may be paid in respect of

the Collateral by reason of any consolidation, merger, exchange of stock,

conveyance of assets, liquidation or similar corporate reorganization.

Subject to the last sentence of Section 2, the Pledgor shall not

be required at any time to pledge hereunder more than 65% of the total combined

voting power of all classes of capital stock of any Foreign Subsidiary entitled

to vote.  Nothing contained in this Section

6 shall limit or restrict in any way the Pledgee’s right to receive

proceeds of the Collateral in any form in accordance with Section 3 of

this Agreement.  All dividends,

distributions or other payments which are received by the Pledgor contrary to

the provisions of this Section 6 and Section 7 shall be received

in trust for the benefit of the Pledgee, shall be segregated from other

property or funds of the Pledgor and shall be forthwith paid over to the

Pledgee as Collateral in the same form as so received (with any necessary

endorsement).

7.             REMEDIES IN CASE OF EVENTS OF DEFAULT.  In case an Event of Default shall have

occurred and be continuing, then and in every such case, the Pledgee shall be

entitled to exercise all of the rights, powers and remedies (whether vested in

it by this Agreement, any other Secured Debt Agreement or by law) for the

protection and enforcement of its rights in respect of the Collateral, and the

Pledgee shall be entitled to exercise all the rights and remedies of a secured

party under the Uniform Commercial Code and also shall be entitled, without

limitation, to exercise the following rights, which the Pledgor hereby agrees

to be commercially reasonable:

(a)           to receive all amounts payable in

respect of the Collateral otherwise payable to the Pledgor under Section 6

hereof;

(b)           to transfer all or any part of the

Collateral into the Pledgee’s name or the name of its nominee or nominees;

(c)           to accelerate any

Pledged Note which may be accelerated in accordance with its terms, and take

any other lawful action to collect upon any Pledged Note (including, without

limitation, to make any demand for payment thereon);

(d)           to vote all or any

part of the Pledged Stock (whether or not transferred into the name of the

Pledgee) and give all consents, waivers and ratifications in respect of the

Collateral and otherwise act with respect thereto as though it were the

outright owner thereof (the Pledgor hereby irrevocably constituting and

appointing the Pledgee the proxy and attorney–in–fact of the

Pledgor, with full power of substitution to do so); and

(e)           to sell, assign and

deliver, or grant options to purchase, all or any part of the Collateral, or

any interest therein, at any public or private sale, without demand of

performance, advertisement or notice of intention to sell or of the time or

place of sale or adjournment thereof or to redeem or otherwise (all of which

are hereby waived by the Pledgor), for cash, on credit or for other property,

for immediate or future delivery without any assumption of credit risk, and for

such price or prices and on such terms as the Pledgee in its absolute

discretion may determine, provided that at least 15 business days’

written notice of the time and place of any such sale shall be given to the

Pledgor.  Pledgee shall not be obligated

to make any such sale of Collateral regardless of whether any such notice of

sale has theretofore been given.  The

Pledgor hereby waives and releases to the fullest extent permitted by law any

right or equity of redemption with respect to the Collateral, whether before or

after sale hereunder, and all rights, if any, of marshalling the Collateral and

any other security for the Obligations or otherwise.  At any such sale, unless prohibited by applicable law, the

Pledgee on behalf of the Secured Creditors may bid for and purchase all or any

part of the Collateral so sold free from any such right or equity of

redemption.  Neither the Pledgee nor any

Secured Creditor shall be liable for failure to collect or realize upon any or

all of the Collateral or for any delay in so doing nor shall any of them be

under any obligation to take any action whatsoever with regard thereto.

8.             REMEDIES, ETC., CUMULATIVE.  Each and every right, power and remedy of the Pledgee provided

for in this Agreement or any Secured Debt Agreement, or now or hereafter

existing at law or in equity or by statute shall be cumulative and concurrent

and shall be in addition to every other such right, power or remedy.  The exercise or beginning of the exercise by

the Pledgee or any other Secured Creditor of any one or more of the rights,

powers or remedies provided for in this Agreement, or any other Secured Debt

Agreement or now or hereafter existing at law or in equity or by statute or

otherwise shall not preclude the simultaneous or later exercise by the Pledgee

or any Secured Creditor of all such other rights, powers or remedies, and no

failure or delay on the part of the Pledgee or any Secured Creditor to exercise

any such right, power or remedy shall operate as a waiver thereof.  Unless otherwise required by the Loan

Documents, no notice to or demand on the Pledgor in any case shall entitle it

to any other or further notice or demand in similar or other circumstances or

constitute a waiver of any of the rights of the Pledgee or any Secured Creditor

to any other or further action in any circumstances without notice or demand.

9.             APPLICATION OF PROCEEDS.

(a)           The cash proceeds

actually received from the sale or other disposition or collection of

Collateral, and any other amounts received in respect of the Collateral, the

application of which is not otherwise provided for herein, shall be applied

(after payment of any amounts payable to the Pledgee or the Agent pursuant to

this Agreement or the Credit Agreement) in whole or in part by the

Pledgee against all or any part of the Obligations in the following

order:  (i) first, to any fees, costs or

other expenses due under the Loan Documents; (ii) next, to any interest due

under the Loan Documents; (iii) next, to any principal due under the Loan

Documents and amount due under Interest Rate Protection and Other Hedging

Agreements; and (iv) last, to any other Obligations.  Any surplus thereof which exists after payment and performance in

full of the Obligations shall be promptly paid over to the Pledgor or otherwise

disposed of in accordance with the UCC or other applicable law.

(b)           It is understood and

agreed that the Pledgor shall remain liable to the extent of any deficiency

between the amount of the proceeds of the Collateral hereunder and the

aggregate amount of the Obligations.

10.           PURCHASERS OF COLLATERAL.  Upon any sale of the Collateral by the

Pledgee hereunder (whether by virtue of the power of sale herein granted,

pursuant to judicial process or otherwise), the receipt of the Pledgee or the

officer making the sale shall be a sufficient discharge to the purchaser or

purchasers of the Collateral so sold, and such purchaser or purchasers shall

not be obligated to see to the application of any part of the purchase money

paid over to the Pledgee or such officer or be answerable in any way for the

misapplication or nonapplication thereof.

11.           INDEMNITY.  The Pledgor agrees to indemnify and hold harmless the Pledgee and

each Secured Creditor and their respective successors, assigns, employees,

agents and servants (individually an “Indemnitee,” and collectively the

“Indemnitees”) from and against any and all claims, demands, losses,

judgments and liabilities (including liabilities for penalties) of whatsoever

kind or nature, and to reimburse each Indemnitee for all costs and expenses,

including reasonable attorneys’ fees, growing out of or resulting from this

Agreement or the exercise by any Indemnitee of any right or remedy granted to

it hereunder or under any other Secured Debt Agreement (but excluding any

claims, demands, losses, judgments and liabilities or expenses to the extent

incurred by reason of gross negligence or willful misconduct of such

Indemnitee).  If and to the extent that

the obligations of the Pledgor under this Section 11 are unenforceable

for any reason, the Pledgor hereby agrees to make the maximum contribution to

the payment and satisfaction of such obligations which is permissible under

applicable law.

12.           FURTHER ASSURANCES; POWER–OF–ATTORNEY.

(a)           The Pledgor agrees

that it will join with the Pledgee in executing and, at the Pledgor’s own

expense, file and refile under the Uniform Commercial Code or other applicable

law such financing statements, continuation statements and other documents in

such offices as the Pledgee may reasonably deem necessary and wherever required

by law in order to perfect and preserve the Pledgee’s security interest in the

Collateral and hereby authorizes the Pledgee to file financing statements and

amendments thereto relative to all or any part of the Collateral without the

signature of the Pledgor where permitted by law, and agrees to do such further

acts and things and to execute and deliver to the Pledgee such additional

conveyances, assignments, agreements and instruments as the Pledgee may

reasonably require or deem necessary to carry into effect the purposes of this

Agreement or to further assure and confirm unto the Pledgee its rights, powers

and remedies hereunder.

(b)           The Pledgor hereby

appoints the Pledgee as the Pledgor’s attorney-in-fact, with full authority in

the place and stead of the Pledgor and in the name of the Pledgor or otherwise,

from time to time after the occurrence and during the continuance of an Event

of Default, in the Pledgee’s reasonable discretion to take any action and to

execute any instrument required by paragraph (a) if Pledgor has failed to do so

after demand by Pledgee.

13.           THE PLEDGEE AS AGENT.  The Pledgee will hold in accordance with

this Agreement all items of the Collateral at any time received under this

Agreement.  It is expressly understood

and agreed by the parties hereto and each Secured Creditor, by accepting the

benefits of this Agreement that each acknowledges and agrees that the

obligations of the Pledgee as holder of the Collateral and interests therein

and with respect to the disposition thereof, and otherwise under this

Agreement, are only those expressly set forth in this Agreement.  The Pledgee shall act hereunder on the terms

and conditions set forth herein and in Article X of the Credit

Agreement.

14.           TRANSFER BY PLEDGOR.  The Pledgor will not sell or otherwise

dispose of, grant any option with respect to, or mortgage, pledge or otherwise

encumber any of the Collateral or any interest therein (except as may be

permitted in accordance with the terms of the Credit Agreement).

15.           REPRESENTATIONS, WARRANTIES AND

COVENANTS OF THE PLEDGOR.  The Pledgor

represents and warrants and covenants that (a) it is, or at the time when

pledged hereunder will be, the legal, record and beneficial owner of, and has

(or will have) good title to, all Securities pledged by it hereunder, subject

to no Lien (except the Lien created by this Agreement); (b) it has full

corporate power, authority and legal right to pledge all the Securities pledged

by it pursuant to this Agreement; (c) this Agreement has been duly authorized,

executed and delivered by the Pledgor and constitutes a legal, valid and

binding obligation of the Pledgor enforceable in accordance with its terms,

except to the extent that the enforceability hereof may be limited by

applicable bankruptcy, insolvency, reorganization, moratorium or other similar

laws generally affecting creditors’ rights and by equitable principles

(regardless of whether enforcement is sought in equity or at law); (d) except

to the extent already obtained or made, no consent of any other party

(including, without limitation, any stockholder or creditor of the Pledgor or any

of its Subsidiaries) and no consent, license, permit, approval or authorization

of, exemption by, notice or report to, or registration, filing or declaration

with, any governmental authority is required to be obtained by the Pledgor in

connection with (i) the execution, delivery or performance of this Agreement,

(ii) the validity or enforceability of this Agreement, (iii) the perfection or

enforceability of the Pledgee’s security interest in the Collateral or (iv)

except for compliance with or as may be required by applicable securities laws

and the Hart-Scott-Rodino Antitrust Improvements Act of 1976, the exercise by

the Pledgee of any of its rights or remedies provided herein; (e) the

execution, delivery and performance of this Agreement by the Pledgor does not

violate any provision of any applicable law or regulation or of any order,

judgment, writ, award or decree of any court, arbitrator or governmental

authority, domestic or foreign or of the certificate of incorporation or by–laws

of the Pledgor, or of any securities issued by the Pledgor or any of its

Subsidiaries, or of any material mortgage, indenture, lease, deed of trust,

loan agreement, credit agreement or other contract, agreement or instrument or

undertaking to which the Pledgor or any of its Subsidiaries is a party or which

purports to be binding upon the Pledgor or any of its Subsidiaries or upon any

of their respective assets and will not result in the creation or imposition of

(or the obligation to create or impose) any lien or encumbrance on any of the

assets of the Pledgor or any of its Subsidiaries except as contemplated by this

Agreement; (f) all the shares of the Stock have been duly and validly issued,

are fully paid and nonassessable and are subject to no options to purchase or

similar rights; (g) each of the Pledged Notes to the extent issued by the

Pledgor or any of its Subsidiaries constitutes, or when executed by the obligor

thereof will constitute, the legal, valid and binding obligation of such

obligor, enforceable in accordance with its terms, except to the extent that

the enforceability thereof may be limited by applicable bankruptcy, insolvency,

reorganization, moratorium or other similar laws generally affecting creditors’

rights and by equitable principles (regardless of whether enforcement is sought

in equity or at law); and (h) the pledge, collateral assignment and delivery to

the Pledgee of the Securities (other than uncertificated securities) pursuant

to this Agreement creates a valid and perfected first priority Lien in the

Securities, and the proceeds thereof, subject to no other Lien or to any

agreement purporting to grant to any third party a Lien on the property or

assets of the Pledgor which would include the Stock.  The Pledgor covenants and agrees that it will defend the

Pledgee’s right, title and security interest in and to the Securities and the

proceeds thereof against the claims and demands of all persons whomsoever; and

the Pledgor covenants and agrees that it will have like title to and right to

pledge any other property at any time hereafter pledged to the Pledgee as

Collateral hereunder and will likewise defend the right thereto and security

interest therein of the Pledgee and the Secured Creditors.

16.           PLEDGOR’S OBLIGATIONS ABSOLUTE,

ETC.  The obligations of the Pledgor

under this Agreement shall be absolute and unconditional and (except as

provided in Section 18 hereof) shall remain in full force and effect

without regard to, and shall not be released, suspended, discharged, terminated

or otherwise affected by, any circumstance or occurrence whatsoever, including,

without limitation: (a) any renewal, extension, amendment or modification of or

addition or supplement to or deletion from any Secured Debt Agreement or any

other instrument or agreement referred to therein, or any assignment or

transfer of any thereof; (b) any waiver, consent, extension, indulgence or

other action or inaction under or in respect of any such agreement or

instrument including, without limitation, this Agreement; (c) any furnishing of

any additional security to the Pledgee or its assignee or any acceptance

thereof or any release of any security by the Pledgee or its assignee; (d) any

limitation on any party’s liability or obligations under any such instrument or

agreement or any invalidity or unenforceability, in whole or in part, of any

such instrument or agreement or any term thereof; or (e) any bankruptcy,

insolvency, reorganization, composition, adjustment, dissolution, liquidation

or other like proceeding relating to the Pledgor or any Subsidiary of the

Pledgor, or any action taken with respect to this Agreement by any trustee or

receiver, or by any court, in any such proceeding, whether or not the Pledgor

shall have notice or knowledge of any of the foregoing.

17.           REGISTRATION, ETC.

(a)           If there shall have occurred and be

continuing an Event of Default and acceleration of the Notes then, and in every

such case, upon receipt by the Pledgor from the Pledgee of a written request or

requests that the Pledgor cause any registration, qualification or compliance

under any Federal or state securities law or laws to be effected with respect

to all or any part of the Pledged Stock, the Pledgor as soon as practicable and

at its expense will use its commercially reasonable efforts to cause such registration

to be effected (and be kept effective) and will use its commercially reasonable

efforts to cause such qualification and compliance to be declared effected (and

be kept effective) as may be so requested and as would permit or facilitate the

sale and distribution of such Pledged Stock, including, without limitation,

registration under the Securities Act of 1933, as then in effect (or any

similar statute then in effect), appropriate qualifications under applicable

blue sky or other state securities laws and appropriate compliance with any

other government requirements, provided that the Pledgee shall furnish

to the Pledgor such information regarding the Pledgee as the Pledgor may

request in writing and as shall be required in connection with any such

registration, qualification or compliance. 

The Pledgor will cause the Pledgee to be kept advised in writing as to

the progress of each such registration, qualification or compliance and as to

the completion thereof, will furnish to the Pledgee such number of

prospectuses, offering circulars or other documents incident thereto as the

Pledgee from time to time may reasonably request, and will indemnify the

Pledgee, each Secured Creditor and all others participating in the distribution

of such Pledged Stock against all claims, losses, damages and liabilities

caused by any untrue statement (or alleged untrue statement) of a material fact

contained therein (or in any related registration statement, notification or

the like) or by any omission (or alleged omission) to state therein (or in any

related registration statement, notification or the like) a material fact

required to be stated therein or necessary to make the statements therein not

misleading, except insofar as the same may have been caused by an untrue

statement or omission based upon information furnished in writing to the

Pledgor by the Pledgee or such other Secured Creditor expressly for use

therein.

(b)           If at any time when the Pledgee shall

determine to exercise its right to sell all or any part of the Pledged

Securities pursuant to Section 7 hereof, and such Pledged Securities or

the part thereof to be sold shall not, for any reason whatsoever, be

effectively registered under the Securities Act of 1933, as then in effect, the

Pledgee may, in its sole and absolute discretion, sell such Pledged Securities

or part thereof by private sale in such manner and under such circumstances as

the Pledgee may deem reasonably necessary or advisable in order that such sale

may legally be effected without such registration.  Without limiting the generality of the foregoing, in any such

event the Pledgee, in its sole and absolute discretion (i) may proceed to make

such private sale notwithstanding that a registration statement for the purpose

of registering such Pledged Securities or part thereof shall have been filed

under such Securities Act, (ii) may approach and negotiate with a single

possible purchaser to effect such sale, and (iii) may restrict such sale to a

purchaser who will represent and agree that such purchaser is purchasing for

its own account, for investment, and not with a view to the distribution or

sale of such Pledged Securities or part thereof.  In the event of any such sale, the Pledgee shall incur no responsibility

or liability for selling all or any part of the Pledged Securities at a price

which the Pledgee, in its sole and absolute discretion, in good faith deems

reasonable under the circumstances, notwithstanding the possibility that a

substantially higher price might be realized if the sale were deferred until

after registration as aforesaid.

18.           TERMINATION; RELEASE.

(a)           After the

Termination Date (as defined below), this Agreement and the security interest

created hereby shall terminate (provided that all indemnities set forth in Section

11 hereof shall survive any such termination), and the Pledgee, at the

request and expense of the Pledgor, will execute and deliver to the Pledgor all

such proper instruments as Pledgor may reasonably request acknowledging the

satisfaction and termination of this Agreement, and will duly assign, transfer

and deliver to the Pledgor (without recourse and without any representation or

warranty) such of the Collateral as has not theretofore been sold or otherwise

applied or released pursuant to this Agreement, together with any monies at the

time held by the Pledgee or any of its sub-agents hereunder.  As used in this Agreement, “Termination

Date” shall mean the date upon which the Total Revolving Loan Commitment

and all Interest Rate Agreement or Other Hedging Agreements have been

terminated, no Note under the Credit Agreement is outstanding (and all Loans

have been repaid in full), all Letters of Credit have been terminated and all

Obligations (as defined in the Credit Agreement) then owing have been paid in

full.

(b)           Notwithstanding

anything to the contrary contained above, upon the presentment of satisfactory

evidence to the Pledgee in its sole discretion that all obligations evidenced

by any Pledged Note have been repaid in full, and that any payments received by

the Pledgor were permitted to be received by the Pledgor pursuant to Section

6 hereof, the Pledgee shall, upon the request and at the expense of the

Pledgor, duly assign, transfer and deliver to the Pledgor (without recourse and

without any representation or warranty) such Pledged Note if same has not

theretofore been sold or otherwise applied or released pursuant to this

Agreement.

(c)           In the event that

any part of the Collateral is sold in connection with a sale permitted by Section

8.4 of the Credit Agreement or otherwise released at the direction of the

Majority Lenders (or all Lenders if required by Section 11.1 of the

Credit Agreement) and the proceeds of such sale or sales or from such release

are applied in accordance with the provisions of Section 4.4 of the

Credit Agreement, to the extent required to be so applied, the Pledgee, at the

request and expense of the Pledgor, will duly assign, transfer and deliver to

the Pledgor (without recourse and without any representation or warranty) such

of the Collateral as is then being (or has been) so sold or released and has

not theretofore been released pursuant to this Agreement.

(d)           At any time that the

Pledgor desires that Collateral be released as provided in the foregoing

sub-section (a), (b) or (c), as the case may be, it shall deliver to the

Pledgee a certificate signed by a Responsible Officer stating that the release

of the respective Collateral is permitted pursuant to such subsection (a), (b)

or (c), as the case may be.

(e)           The Pledgee shall

have no liability whatsoever to any Secured Creditor as the result of any

release of Collateral by it in accordance with this Section 18.

19.           NOTICES ETC.  All such notices and communications

hereunder shall be personally delivered, sent by registered or certified mail,

postage prepaid, return receipt requested, or by a reputable courier delivery

service, or by prepaid telex, TWX or telegram (with messenger delivery

specified in the case of a telegram), or by telecopier, and shall be deemed to

be given for purposes of this Agreement on the date received if deposited in

registered or certified mail, postage prepaid, and otherwise on the day that

such writing is delivered or sent to the intended recipient thereof, or in the

case of notice delivered by telecopy, upon completion of transmission with a

copy of such notice also being delivered under any of the methods provided

above.  All notices and other

communications shall be in writing and addressed as follows:

(a)           if to the Pledgor:

BMC Industries, Inc.

One Meridian Crossings

Suite 850

Minneapolis, Minnesota

55423

Attn:  Kathleen Pepski, Chief Financial Officer

Telephone: (952) 851-6030

Telecopy:   (952) 851-6050

(b)           if to the Pledgee, at:

Bankers Trust Company

One Bankers Trust Plaza

130 Liberty Street

14th Floor

New York, New York 10006

Attn:  Douglas Dibella

Telephone: (212) 250-3301

Telecopy:  

(212) 250-7351

with copies to:

Bankers

Trust Company

233

South Wacker Drive

Suite

8400

Chicago,

Illinois 60606

Attn:  John Anos

Telephone:  (312) 993-8141

Telecopy:    (312) 993-8162

Winston & Strawn

35 West Wacker Drive

Chicago, Illinois 60601

Attn:  Charles B. Boehrer, Esq.

Telephone:  (312) 558-5600

Telecopy:    (312) 558-5700

(c)           if  to any Bank Creditor, either (x) to the

Agent, at the address of the Agent specified in the Credit Agreement or (y) at

such address as such Bank Creditor shall have specified in the Credit

Agreement;

(d)           if to any Other

Creditor at such address as such Other Creditor shall have specified in writing

to the Pledgor and the Pledgee;

or at such other address as shall have been furnished in writing by any

Person described above to the party required to give notice hereunder.

20.           WAIVER; AMENDMENT.  None of the terms and conditions of this

Agreement may be changed, waived, modified or varied in any manner whatsoever

unless in writing duly signed by the Pledgor and the Pledgee (with the written

consent of the Majority Lenders or, to the extent required by Section 11.1

of the Credit Agreement with the consent of each of the Lenders); provided,

however, that any change, waiver, modification or variance affecting the

rights and benefits of a single Class (as defined below) of Secured Creditors

(and not all Secured Creditors in a like or similar manner) shall require the

written consent of the Requisite Creditors (as defined below) of such affected

Class (or in the case of the LC Creditor, the LC Creditor).  For the purpose of this Agreement, the term

“Class” shall mean each class of Secured Creditors, i.e., whether

(i) the Bank Creditors as holders of the Credit Agreement Obligations, (ii) the

Other Creditors as the holders of the Other Obligations; or (iii) the LC

Creditor.  For the purpose of this

Agreement, the term “Requisite Creditors” of any Class shall mean each

of (A) with respect to the Credit Agreement Obligations, the Majority Lenders

and (B) with respect to the Other Obligations, the holders of 51% of all

obligations outstanding from time to time under the Interest Rate Protection

Agreements or Other Hedging Agreements.

21.           MISCELLANEOUS.  This Agreement shall be binding upon the

parties hereto and their respective successors and assigns and shall inure to

the benefit of and be enforceable by each of the parties hereto and its

successors and assigns.  THIS AGREEMENT

SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH AND GOVERNED BY THE LAW OF

THE STATE OF NEW YORK.  The headings in

this Agreement are for purposes of reference only and shall not limit or define

the meaning hereof.  This Agreement may

be executed in any number of counterparts, each of which shall be an original,

but all of which shall constitute one instrument.  In the event that any provision of this Agreement shall prove to

be invalid or unenforceable, such provision shall be deemed to be severable

from the other provisions of this Agreement which shall remain binding on all

parties hereto.

22.           RECOURSE.  This Agreement is made with full recourse to the Pledgor and

pursuant to and upon all the representations, warranties, covenants and

agreements on the part of the Pledgor contained herein, in the other Loan

Documents, in the Interest Rate Protection or Other Hedging Agreements and

otherwise in writing in connection herewith or therewith.

[signature page follows]

IN WITNESS WHEREOF, the

Pledgor and the Pledgee have caused this Agreement to be executed by their duly

elected officers duly authorized as of the date first above written.

 

	

   

  	

  BMC INDUSTRIES, INC.,

  as Pledgor

  
	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  
	

   

  	

  By:   

  	

  /s/ Kathleen P. Pepski

  
	

   

  	

  Name: 

  	

  Kathleen P. Pepski

  
	

   

  	

  Title:    

  	

  Senior Vice President

  and Chief

  
	

   

  	

   

  	

  Financial Officer

  
	

   

  	

   

  	

   

  
	

   

  	

  BANKERS TRUST COMPANY,

  as Pledgee

  
	

   

  	

   

  	

   

  
	

   

  	

  By:  

  	

  /s/ Robert Telesca

  
	

   

  	

  Name: 

  	

  Robert Telesca

  
	

   

  	

  Title:    

  	

  Vice President

  
	

   

  	

   

  	

   

  
	

   

  	

  ACKNOWLEDGED AND

  ACCEPTED IN ITS

  
	

   

  	

  CAPACITY AS A SECURED

  CREDITOR:

  
	

   

  	

   

  	

   

  
	

   

  	

  U.S. BANK NATIONAL

  ASSOCIATION

  
	

   

  	

   

  	

   

  
	

   

  	

  By:   

  	

  /s/ William J. Umscheid

  
	

   

  	

  Name: 

  	

  William J. Umscheid

  
	

   

  	

  Title:    

  	

  Vice President

  

Annex A

to

Pledge Agreement

 

Part I.      Pledged Stock

 

	

  Name of Pledgor

  	

   

  	

  Name of Issuing Corporation

  	

   

  	

  Type of Shares

  	

   

  	

  Number  of Shares Authorized

  	

   

  	

  Number of Shares Outstanding

  	

   

  	

  Share Certificate Number

  	

   

  	

  Percentage of Outstanding Shares of

  Capital Stock

  
	

  BMC Industries, Inc.

  	

   

  	

  Vision-Ease Lens, Inc.

  (US)

  	

   

  	

  common

  	

   

  	

  1,000

  	

   

  	

  100

  	

   

  	

  1

  	

   

  	

  100%

  
	

  BMC Industries, Inc.

  	

   

  	

  Buckbee-Mears Holding

  Company B.V.

  	

   

  	

  common

  	

   

  	

  100,000

  	

   

  	

  20,000

  	

   

  	

  1

  	

   

  	

  65%

  

 

Part II.    Pledged Note

 

1.             Note in a stated face amount of EURO 77,000,000 made by

Buckbee-Mears Holding Company B.V. in favor of BMC Industries, Inc.Prepared by MERRILL CORPORATION

EXHIBIT

10.51

 

MORTGAGE, ASSIGNMENT OF LEASES AND

RENTS AND FIXTURE FILING

NOTWITHSTANDING ANYTHING TO THE CONTRARY HEREIN,

ENFORCEMENT OF THIS MORTGAGE IS LIMITED TO A DEBT AMOUNT OF $6,325,000.00 UNDER

CHAPTER 287 OF MINNESOTA STATUTES.

THIS MORTGAGE, ASSIGNMENT OF

LEASES AND RENTS AND FIXTURE FILING (this “Mortgage”) is dated as of the

12th day of October, 2001, and is made by VISION-EASE LENS, INC., a

Minnesota corporation (“Mortgagor”), in consideration of the premises

and covenants hereinafter set forth to BANKERS TRUST COMPANY, a New York

banking corporation (“Mortgagee”), not individually, but solely in its

capacity as Administrative Agent pursuant to the Credit Agreement (defined

below).

W I T N E S S E T

H:

WHEREAS, BMC Industries, Inc. (the “Borrower”), Mortgagee, NBD

Bank, as documentation agent, and certain Lenders have entered into that

certain Credit Agreement dated as of May 15, 1998 (the “Original Credit

Agreement”), as the same was amended and restated as of June 25, 1998, and

as was amended from time to time thereafter prior to the date hereof (as so

amended, the “First Amended and Restated Credit Agreement”);

WHEREAS, pursuant to that certain Second Amendment and Restatement

Agreement, dated as of the date hereof, the First Amended and Restated Credit

Agreement was further amended (as used herein, the term “Credit Agreement”

means the First Amended and Restated Credit Agreement, as in effect on the date hereof

and as amended by that certain Second Amendment and Restatement Agreement described

above, as the same may be amended, modified, extended, renewed,

replaced, restated or supplemented from time to time, and including any

agreement extending the maturity of or restructuring of all or any portion of

the Indebtedness under such agreement or any successor agreements),

and the financial institutions party thereto have severally agreed to make

certain extensions of credit to or for the benefit of Borrower upon the terms

and conditions set forth therein;

WHEREAS, the Mortgagor is a Domestic Subsidiary of the Borrower;

WHEREAS, in connection with the extensions of credit contemplated by

the Original Credit Agreement, Mortgagor executed and delivered to Mortgagee

that certain Subsidiary Guarantee Agreement dated as of May 15, 1998 (as

amended, modified, supplemented, extended or renewed from time to time, the “Subsidiary

Guarantee Agreement”);

WHEREAS, the proceeds of the extensions of credit to be made under the

Credit Agreement have been or will be used in part to enable the Borrower to

make valuable transfers to Mortgagor in connection with the operation of its

business;

WHEREAS, the Borrower and the Mortgagor are engaged in related

businesses, and Mortgagor will derive substantial direct and indirect benefit

from the transactions contemplated by the Credit Agreement;

WHEREAS, pursuant to the terms of the Credit Agreement, the obligations

of Mortgagor under the Subsidiary Guarantee Agreement shall be secured by,

among other things, a lien upon and perfected security interest in all estate,

right, title and interest of the Mortgagor in and to the Mortgaged Property (as

hereinafter defined) pursuant to the terms hereof;

WHEREAS, it is a condition precedent to the making of the loans under

the Credit Agreement that Mortgagor execute and deliver to Mortgagee this

Mortgage;

WHEREAS, Mortgagor is, or in the case of Mortgaged Property hereafter

acquired will be, the owner of the Mortgaged Property;

WHEREAS, capitalized terms used but not defined in this Mortgage have

the meanings given them in the Subsidiary Guarantee Agreement;

NOW, THEREFORE, for good and valuable consideration, the receipt and

sufficiency of which are hereby acknowledged, Mortgagor agrees that to secure

the prompt and complete payment and performance when due of all obligations and

liabilities of Mortgagor which may arise under the Subsidiary Guarantee

Agreement (the “Guaranteed Obligations”), the Mortgagor does hereby

MORTGAGE, GRANT, BARGAIN, SELL, ASSIGN, WARRANT, TRANSFER and CONVEY unto the

Mortgagee, its successors and assigns, forever, its fee simple interest in all

the tracts or parcels of land (hereinafter called the “Land”), located

in Anoka County, Minnesota, and described in Exhibit A attached hereto and

made a part hereof, together with all right, title and interest of Mortgagor

(including, but not limited to, after acquired title or reversion) in and to

the following property:  (i) all of the

buildings, structures and other improvements now standing or at any time

hereafter constructed or placed upon the Land and all materials intended for

construction, reconstruction, alteration and repair of all such buildings and

improvements; and (ii) all lighting, heating, ventilating, air–conditioning,

sprinkling and plumbing fixtures, water and power systems, engines and

machinery, boilers, furnaces, oil burners, elevators and motors, communication

systems, dynamos, transformers, electrical equipment and all other fixtures,

equipment, goods, inventory, systems and articles of every description located

in or on, or used, or intended to be used in connection with the Land or any

building now or hereafter located thereon and any replacements thereof,

accessions thereto and all proceeds thereof (excluding, however, fixtures owned

by tenants occupying space in any building now or hereafter located on the

Land); and (iii) all tenements, hereditaments, easements, appurtenances,

riparian rights, rents, issues, profits, condemnation awards, mineral rights

and water rights now or hereafter belonging or in any way pertaining to the

Land or to any building now or hereafter located thereon, together with all

estates, interests, rights, titles, claims or demands which Mortgagor now has

or may hereinafter acquire in the Land, including, but not limited to, any and

all claims, awards, proceeds or payments, including interest thereon, and the

right to receive the same, which may be made to or for the account of Mortgagor

with respect to the Land as a result of (A) the exercise of the right of

eminent domain, (B) the alteration of the grade of any street, (C) any

casualty or loss of or damage to any building or other improvement included in

or on the Land, (D) any other injury to or decrease in the value of the

Land, or (E) any refund due on account of the payment of real estate

taxes, assessments or other charges levied against or imposed upon the Land;

and (iv) all furniture, furnishings, maintenance equipment and all other

personal property now or hereafter located in, or on, or used, or intended to

be used in connection with the Land or any building now or hereafter located

thereon and all replacements and additions thereto (excluding personal property

owned by tenants occupying space in any building now or hereafter located on

the Land); and (v) all leases,

lettings, subleases, agreements for use and occupancy, concessions, licenses

and contracts of or with respect to any or all of the Land, whether written or

oral (collectively, “Leases”), and (A) all rents, issues

and profits thereof accruing and to accrue from the Land and the avails thereof

(which are pledged primarily and on a parity with said Land and not

secondarily), (B) any and all guarantees of any and all covenants,

agreements and obligations of tenants under each Lease, (C) all sums which

may be due and payable under any guaranty of any Lease, including, but not

limited to, all such rents, issues, profits which are or may become due and

payable (including those which are or may accrue or be paid during or after the

pendency of any bankruptcy, insolvency, receivership or other similar

proceeding, regardless of whether allowed or allowable in such proceeding) and

(D) any and all security and other deposits made pursuant to or

contemplated by the terms and provisions of each Lease (the matters referred to

in clauses (A), (B), (C) and (D) above being collectively, “Rents”);

it being the intention hereby to establish an absolute, unconditional and

presently effective transfer and assignment of all Leases and all Rents

thereunder (and not merely a security interest) and it shall not be necessary

for Mortgagee to institute any type of legal proceedings or take any other

legal action whatsoever to enforce the assignment provisions of this paragraph;

and (vi) all after-acquired interests in and all additions,

accessions, increases, parts, fittings, accessories, replacements,

substitutions, betterments, repairs and proceeds to any and all of the

foregoing together with all books and records (including computer records)

relating to or employed in any business now or hereafter operated on the Land

(all of the foregoing, together with the Land, are hereinafter referred to as

the “Mortgaged Property”).

To have and to hold the

Mortgaged Property together with Mortgagor’s rents, issues and profits, unto

the Mortgagee, its successors and assigns, forever, upon the terms and

conditions set forth herein.

The Mortgagor represents,

warrants and covenants to and with the Mortgagee that it is lawfully seized of

the Mortgaged Property in fee simple and has good right and full power and

authority under all applicable provisions of law and under its governing

documents to execute this Mortgage and to mortgage the Mortgaged Property; that

the Mortgaged Property is free from all liens, security interests and

encumbrances except as listed in Schedule B of the Mortgage Policy (as defined

in the Credit Agreement); that the Mortgagor will warrant and defend the title

to the Mortgaged Property and the lien and priority of this Mortgage against

all claims and demands of all persons whomsoever, whether now existing or

hereafter arising, not listed in the Mortgage Policy.  The covenants and warranties of this paragraph shall survive

foreclosure of this Mortgage and shall run with the Land.

The Mortgagor

further covenants and agrees as follows:

1.             Payment of the Guaranteed

Obligations.  The Mortgagor will

duly and punctually satisfy the Guaranteed Obligations, when and as due and

payable per the Subsidiary Guarantee Agreement.

2.             Payment of Taxes, Assessments

and Other Charges.  Subject to

paragraph 7 relating to contests, the Mortgagor shall pay when due all taxes

and assessments and all other charges whatsoever levied upon or assessed or

placed against the Mortgaged Property, except that assessments may be paid in

installments so long as no fine or penalty is added to any installment for the nonpayment

thereof, and will upon demand furnish to Mortgagee proof of such payment.  The Mortgagor shall likewise pay any and all

governmental levies or assessments such as maintenance charges, owner

association dues or charges or fees, levies or charges resulting from

covenants, conditions and restrictions affecting the Mortgaged Property, which

are assessed or imposed upon the Mortgaged Property or any part thereof or

become due and payable, and which create, may create or appear to create a lien

upon the Mortgaged Property, or any part thereof.  The Mortgagor shall likewise pay all taxes, assessments and other

charges, levied upon or assessed, placed or made against, or measured by, this

Mortgage, or the recordation hereof, or the Guaranteed Obligations.  In the event of any legislative action or

judicial decision after the date of this Mortgage, imposing upon the Mortgagee

the obligation to pay any such taxes, assessments or other charges, or

deducting the amount secured by this Mortgage from the value of the Mortgaged

Property for the purpose of taxation, or changing in any way the laws now in

force for the taxation of mortgages, deeds of trust or debts secured thereby,

or the manner of the operation of any such taxes so as to affect the interests

of the Mortgagee, then, and in such event, the Mortgagor shall bear and pay the

full amount of such taxes, assessments or other charges.  Mortgagor will, upon written request of the

Mortgagee, furnish proper receipts evidencing payments made pursuant to this

paragraph 2.  Upon Mortgagor’s failure to pay the taxes and assessments

as provided above, Mortgagee is hereby authorized to make or advance, in the

place and stead of Mortgagor, any payment relating to such taxes and

assessments, unless such taxes and assessments are then being contested by

Mortgagor pursuant to paragraph 7 hereof. 

Mortgagor further covenants to hold harmless and agrees to indemnify

Mortgagee, its successors or assigns, against any liability incurred by reason

of the imposition of any mortgage registration tax or similar tax on the

issuance of the Subsidiary Guaranty Agreement or the recording of this

Mortgage.

3.             Payment of Utility Charges.  Subject to paragraph 7 relating to

contests, the Mortgagor shall pay all charges (exclusive of charges which are

the obligations of tenants, if any, to pay) made by utility companies, whether

public or private, for electricity, gas, heat, water, or sewer, furnished or

used in connection with the Mortgaged Property or any part thereof, and will,

upon written request of the Mortgagee, furnish proper receipts evidencing such

payment.

4.             Liens.  Subject to paragraph 7 relating to

contests, the Mortgagor shall not create, incur or suffer to exist any lien,

encumbrance or charge on the Mortgaged Property or any part thereof other than

Permitted Liens and Permitted Real Property Encumbrances.  The Mortgagor shall pay, when first due, the

claims of all persons supplying labor or materials to or in connection with the

Mortgaged Property.

5.             Compliance with Laws.  Subject to paragraph 7 relating to contests,

the Mortgagor shall comply with all present and future statutes, laws, rules,

orders, regulations and ordinances affecting the Mortgaged Property, any part

thereof or the use thereof.

6.             Hazardous Substances.  The Mortgagor shall not use, or permit the

use of, the Mortgaged Property for the handling, storage, transportation,

manufacture, release or disposal of any Hazardous Substances.  In addition, the Mortgagor shall not install

or maintain, or permit the installation or maintenance of, any above-ground or

underground storage tanks for the storage of petroleum, petroleum by–products

or other Hazardous Substances in, about or under the Mortgaged Property unless

(a) the Mortgagor has obtained the prior written consent of the Mortgagee

for such installation and maintenance and (b) the Mortgagor installs and

maintains such above–ground or underground storage tanks in compliance

with all applicable Environmental Laws. 

Notwithstanding the foregoing, the Mortgagor or any tenant of the

Mortgagor may use or store immaterial amounts of commonly known and used

materials which may be deemed Hazardous Substances hereunder, provided that any

such use or storage (i) does not constitute a remunerative activity of the

Mortgagor or any tenant, (ii) is incidental to the Mortgagor’s or such

tenant’s primary use of the Mortgaged Property and does not constitute a

primary use thereof, and (iii) complies at all times with all applicable

Environmental Laws.  “Hazardous

Substances” means any Contaminant (as defined in the Credit Agreement),

asbestos, ureaformaldehyde, polychlorinated biphenyls, nuclear fuel or

material, chemical waste, radioactive material, explosives, known carcinogens,

petroleum products and by–products and other dangerous, toxic or

hazardous pollutants, contaminants, chemicals, materials or substances listed

or identified in, or regulated by, any Environmental Laws.  Each of the agreements set forth in

Section 7.9 of the Credit Agreement are hereby incorporated by reference

herein with the same effect as if such agreements had been set forth herein.

7.             Permitted Contests.  The Mortgagor shall not be required to

(a) pay any tax, assessment or other charge referred to in paragraph 2

hereof, (b) pay any charge referred to in paragraph 3 hereof,

(c) discharge or remove any lien, encumbrance or charge referred to in

paragraph 4 hereof, or (d) comply with any statute, law, rule, regulation

or ordinance referred to in paragraph 5 hereof, so long as the Mortgagor shall (i) contest,

in good faith and with reasonable diligence, the existence, amount or the

validity thereof, the amount of damages caused thereby or the extent of its

liability therefor, by appropriate proceedings which shall operate during the

pendency thereof to prevent (A) the collection of, or other realization upon

the tax, assessment, charge or lien, encumbrance or charge so contested and

(B) any interference with the use or occupancy of the Mortgaged Property

or any part thereof, and (ii) shall give such security to the Mortgagee as

may be demanded by the Mortgagee to ensure compliance with the foregoing

provisions of this paragraph 7. 

Mortgagor shall pay any such contested amount if such payment is

required to prevent such contest from having the effect of preventing the sale

or forfeiture of the Mortgaged Property or any part thereof.  The Mortgagor shall give written notice to

the Mortgagee prior to the commencement of any contest referred to in this

paragraph 7.

8.             Insurance; Casualty.  The Mortgagor, at its sole cost and expense,

will maintain insurance coverage with respect to the Mortgaged Property of the

types and in the amounts required by the Credit Agreement.  If the Mortgaged Property shall be damaged

or destroyed in whole or in part by casualty, Mortgagor shall give prompt

written notice to Mortgagee generally describing the nature and extent of such

casualty, and all insurance proceeds to which Mortgagor may be entitled as a

result of such casualty shall be distributed and applied in accordance with the

Credit Agreement.

9.             Condemnation.  If any proceeding in eminent domain is

commenced with respect to the Mortgaged Property, or any portion thereof,

Mortgagor shall give prompt written notice thereof to Mortgagee, and all

condemnation awards to which Mortgagor may be entitled as a result of such

casualty shall be distributed and applied in accordance with the Credit

Agreement.

10.           Preservation and Maintenance of

the Mortgaged Property.  The

Mortgagor (a) shall keep the buildings and other improvements now or

hereafter erected on the Land in safe and good repair and condition, ordinary

wear and tear excepted; (b) shall, upon damage to or destruction of the

Mortgaged Property or any part thereof by fire or other casualty, restore,

repair, replace or rebuild the Mortgaged Property that is damaged or destroyed

to the condition it was in immediately prior to such damage or destruction, to

the extent insurance proceeds are available or sufficient for such purpose;

(c) shall constantly maintain the parking and landscaped areas of the

Mortgaged Property; (d) shall not commit waste or permit impairment or

deterioration of the Mortgaged Property; (e) shall not alter or permit the

alteration by any tenant of the design or structural character of any building now

or hereafter erected on the Land or hereafter construct, or permit any tenant

to construct, additions to existing buildings or additional buildings on the

Land without the prior written consent of the Mortgagee; and (f) shall not

remove from the Land any of the fixtures and personal property included in the

Mortgaged Property unless the same is immediately replaced with property of at

least equal value and utility, and this Mortgage becomes a valid first lien on

such property.

11.           Inspection.  The Mortgagee and its agent shall have the

right at all reasonable times to enter upon the Mortgaged Property for the

purposes of inspecting the Mortgaged Property or any part thereof, including,

without limitation, the right to go upon the Mortgaged Property to conduct hazardous

substance and other inspections, and may make such examinations and

penetrations of the Mortgaged Property as the Mortgagee or its agents may

consider necessary or appropriate for that purpose.  The Mortgagee shall, however, have no duty to make such inspection.

12.           Protection of the Mortgagee’s

Security.  Subject to the rights of

the Mortgagor under paragraph 7 hereof, if the Mortgagor fails to perform

any of the covenants and agreements contained in this Mortgage or if any action

or proceeding is commenced which affects the Mortgaged Property or the interest

of the Mortgagee therein, or the title thereto, then the Mortgagee, at

Mortgagee’s option, may perform such covenants and agreements, defend against

and/or investigate such action or proceeding, and take such other action as the

Mortgagee deems necessary to protect the Mortgagee’s interest.  The Mortgagee shall be the sole judge of the

legality, validity and priority of any claim, lien, encumbrance, tax, assessment,

charge and premium paid by it and of the amount necessary to be paid in

satisfaction thereof.  The Mortgagee is

hereby given the irrevocable power of attorney (which power is coupled with an

interest and is irrevocable) to enter upon the Mortgaged Property as the

Mortgagor’s agent in the Mortgagor’s name to perform any and all covenants and

agreements to be performed by the Mortgagor as herein provided.  Any amounts or expenses disbursed or

incurred by the Mortgagee pursuant to this paragraph 12, with interest thereon,

shall become additional indebtedness of the Mortgagor secured by this

Mortgage.  Unless the Mortgagor and the

Mortgagee agree in writing to other terms of repayment, such amounts shall be

immediately due and payable, and shall bear interest from the date of

disbursement at the rate stated in the Term Note, unless collection from the

Mortgagor of interest at such rate would be contrary to applicable law, in

which event such amounts shall bear interest at the highest rate which may be

collected from the Mortgagor under applicable law.  The Mortgagee shall, at its option, be subrogated to the lien of

any mortgage or other lien discharged in whole or in part by the Guaranteed

Obligations or by the Mortgagee under the provisions hereof, and any such

subrogation rights shall be additional and cumulative security for this

Mortgage.  Nothing contained in this

paragraph 12 shall require the Mortgagee to incur any expense or do any act

hereunder, and the Mortgagee shall not be liable to the Mortgagor for any

damages or claims arising out of action taken by the Mortgagee pursuant to this

paragraph 12.

13.           No Secondary Financing or Superior

Liens.  The Mortgagor shall not

create or permit to be created or to remain any subordinate lien on the

Mortgaged Property or any part thereof to secure any indebtedness for borrowed

money, without obtaining the prior written consent of the Mortgagee.  Except

Permitted Liens and any Lien referred to in the Mortgage Policy (as such terms

are defined in the Credit Agreement) and except as otherwise provided in the

Credit Agreement or as provided by operation of the laws of the State of

Minnesota, Mortgagor shall not create, suffer, or permit to be created or filed

against the Mortgaged Property any mortgage lien or other lien superior to the

lien created by this Mortgage.

14.           Security Interest.  This Mortgage shall constitute a security

agreement with respect to (and the Mortgagor hereby grants the Mortgagee a

security interest in) all personal property and fixtures included in the

Mortgaged Property as more specifically described in paragraphs (ii), (iv) and

(vi) of the granting clause above.  The

Mortgagor will from time to time, at the request of the Mortgagee, execute any

and all financing statements covering such personal property and fixtures (in a

form satisfactory to the Mortgagee) which the Mortgagee may reasonably consider

necessary or appropriate to perfect its security interest.

15.           Events of Default.  Each of the following occurrences shall

constitute an event of default hereunder (herein called an “Event of Default”):

(a)           The Mortgagor shall fail to duly and

punctually pay any of the Guaranteed Obligations.

(b)           The occurrence of an “Event of

Default” under the Credit Agreement, including, if applicable, the expiration

of any grace period provided therein.

(c)           Failure of Mortgagor to perform or

observe any other covenant, agreement, representation, warranty or other

provision contained in this Mortgage.

(d)           The Mortgagor shall default in the

performance of or breach its agreement contained in paragraph 13 hereof.

(e)           The Mortgagor shall fail to duly and

punctually pay when and as due any payment for taxes and assessments required

by paragraph 2 to be paid or shall fail to provide the insurance coverage

required by paragraph 8 or to pay any utility required under paragraph 3.

(f)            The Mortgagor shall fail duly to

perform or observe any of the covenants or agreements contained in this

Mortgage (other than a covenant or agreement or default in which is elsewhere

in this paragraph 15 specifically dealt with) or any other instrument which

secures payment of the Guaranteed Obligations and such failure shall continue

unremedied for 30 calendar days.

(g)           Any representation or warranty made

by the Mortgagor herein shall prove to have been untrue in any material respect

or materially misleading as of the time such representation or warranty was

made.

(h)           The Mortgagor shall make an

assignment for the benefit of its creditors, or the Mortgagor shall generally

not be paying its debts as they become due, or a petition shall be filed by or

against the Mortgagor under the United States Bankruptcy Code, or the Mortgagor

shall seek or consent to or acquiesce in the appointment of any trustee,

receiver or liquidator of a material part of its properties or of the Mortgaged

Property or shall not, within 30 days after the appointment (without its

consent or acquiescence) of a trustee, receiver or liquidator of any material

part of its properties or of the Mortgaged Property, have such appointment

vacated.

(i)            A judgment, writ or warrant of

attachment or execution, or similar process shall be entered and become a lien

on, issued or levied against, the Mortgaged Property or any part thereof and

shall not be released, vacated or fully bonded within 30 days after its entry,

issue or levy.

(j)            The Mortgaged Property, or any part

thereof, shall be sold, conveyed, transferred, encumbered or full possessory

rights therein transferred, whether voluntarily, involuntarily or by operation

of law; this provision shall apply to each and every sale, transfer, conveyance

or encumbrance regardless of whether or not the Mortgagee has consented or

waived its rights, whether by action or omission, in connection with any

previous sale, transfer, conveyance or encumbrance.

16.           Remedies.  Upon the occurrence of any Event of Default,

the Mortgagee may, at its option, exercise one or more of the following rights

and remedies (and any other rights and remedies available to it):

(a)           The Mortgagee shall have and may

exercise with respect to all personal property and fixtures which are part of

the Mortgaged Property, all the rights and remedies accorded upon default to a

secured party under the Uniform Commercial Code, as in effect in the State of

Minnesota, including, without

limitation, the right to proceed under the Uniform Commercial Code provisions

governing default as to any personal property separately from the real estate

included within the Land, or to proceed as to all of the Land in accordance

with its rights and remedies in respect of said real estate.  If Mortgagee should elect to proceed

separately as to such personal property, Mortgagor agrees to make such personal

property available to Mortgagee at a place or places reasonably acceptable to

Mortgagee.  If notice to

the Mortgagor of intended disposition of such property is required by law in a

particular instance, such notice shall be deemed commercially reasonable if

given to the Mortgagor (in the manner specified in paragraph 20) at least 10

calendar days prior to the date of intended disposition.  The Mortgagor shall pay on demand all costs

and expenses incurred by the Mortgagee in exercising such rights and remedies,

including without limitation, reasonable attorneys’ fees and legal expenses.

(b)           The Mortgagee may accelerate the

maturity of all of the Guaranteed Obligations (or take any other action

provided in the Credit Agreement or at law or equity) and then may (and is

hereby authorized and empowered to) foreclose this Mortgage by judicial

proceeding or by advertisement with power of sale being hereby granted to the

Mortgagee to sell the Mortgaged Property at public auction and convey the same

to the purchaser in fee simple, pursuant to the statutes of the State of

Minnesota, and, out of the proceeds arising from such sale and foreclosure, to

satisfy all Guaranteed Obligations together

with all such sums of money as the Mortgagee shall have expended or advanced

pursuant to this Mortgage or pursuant to statute together with interest thereon

as herein provided and all costs and expenses of such foreclosure, including

the maximum lawful attorneys’ fees, with the balance, which costs, charges and

fees the Mortgagor agrees to pay.  All

expenditures and expenses of the nature in this Section mentioned and such

expenses and fees as may be incurred in the protection of the Land and the

maintenance of the lien of this Mortgage, including, but not limited to, the

fees and expenses of any attorneys employed by Mortgagee in any litigation or

proceeding affecting this Mortgage, the Guaranteed Obligations or the Land,

including bankruptcy or probate proceedings, or in the preparation for the

commencement or defense of any proceeding or threatened suit or proceeding,

shall be immediately due and payable by Mortgagor, with interest thereon at the

Default Rate (as defined in the Credit Agreement), and shall be secured by this

Mortgage.

(c)           Mortgagee shall have the right to

obtain the appointment of a receiver and may apply for the appointment of a

receiver to the district court for the county where the Land or any part

thereof is located, by an action separate from any foreclosure of this Mortgage

pursuant to Minnesota Statutes Chapter 580 or pursuant to Minnesota Statutes

Chapter 581, or as a part of the foreclosure action under said Chapter 581 (it

being agreed that the existence of a foreclosure pursuant to said Chapter 580

or a foreclosure action pursuant to said Chapter 581 is not a prerequisite to

any action for a receiver hereunder). 

Mortgagee shall be entitled to the appointment of a receiver without

regard to waste, adequacy of the security or solvency of Mortgagor.  Until the Guaranteed Obligations are fully

paid and satisfied and, in the case of a foreclosure sale, during the entire

redemption period, the receiver, who shall be an experienced property manager,

shall have power: (i) to collect the Rents during the pendency of such

foreclosure suit and, in case of a sale and a deficiency, during the full

statutory period of redemption, if any, whether there be redemption or not, as

well as during any further times when Mortgagor, except for the intervention of

such receiver, would be entitled to collect such Rents; (ii) to extend or

modify any leases and to make new leases, which extensions, modifications and

new leases may provide for terms to expire, or for options to lessees to extend

or renewal terms to expire, beyond the maturity date of the indebtedness

hereunder and beyond the date of the issuance of a deed or deeds to a purchaser

or purchasers at a foreclosure sale, it being understood and agreed that any

such leases, and the options or other such provisions to be contained therein,

shall be binding upon Mortgagor and all persons whose interests in the Land are

subject to the lien hereof and upon the purchaser or purchasers at any

foreclosure sale, notwithstanding any redemption from any judgment or decree of

foreclosure, discharge of the mortgage indebtedness, satisfaction of any

foreclosure decree, or issuance of any certificate of sale or deed to any

purchaser; and (iii) all other powers which may be necessary or are usual in

such cases for the protection, possession, control, management and operation of

the Land during the whole of said period, including without limitation the

rights of receiver pursuant to Minn. Stat. § 576.01, as amended.  All Rents collected by the Mortgagee or the

receiver each month shall be applied as follows:

(i)            to

payment of all reasonable fees of the receiver approved by the court;

(ii)           to

repayment of all tenant security deposits then owing to tenants under any of

the leases pursuant to the provisions of Minn. Stat. § 504B.178;

(iii)          to

payment of all prior or current real estate taxes and special assessments with

respect to the Mortgaged Property, or if this Mortgage or any other instrument

relating to the Guaranteed Obligations requires periodic escrow payments for

such taxes and assessments, to the escrow payments then due;

(iv)          to

payment of all premiums then due for the insurance required with respect to the

Mortgaged Property, or if this Mortgage or any other instrument relating to the

Guaranteed Obligations requires periodic escrow payments for such premiums, to

the escrow payments then due;

(v)           to

payment of expenses incurred for normal maintenance of the Mortgaged Property;

(vi)          the

balance to Mortgagee (A) if received prior to the commencement of a

foreclosure, to be applied to the Guaranteed Obligations, in such order as

Mortgagee may elect and (B) if received after the commencement of a

foreclosure, to be applied to the amount required to be paid to effect a reinstatement

prior to foreclosure sale, or, after a foreclosure sale to any deficiency and

thereafter to the amount required to be paid to effect a redemption, all

pursuant to Minn. Stat. §§ 580.30, 580.23 and 581.10, with any excess to

be paid to Mortgagor.  Provided, that if

this Mortgage is not reinstated nor the Land redeemed as provided by said

sections 580.30, 580.23 or 581.10, the entire amount paid to Mortgagee pursuant

thereto shall be the property of Mortgagee together with all or any part of the

Land acquired through foreclosure

(d)           Mortgagee

shall have the right, at any time and without limitation, as provided in Minn.

Stat. § 582.03, to advance money to the receiver to pay any part or all of

the items which the receiver should otherwise pay if cash were available from

the Land and sums so advanced, with interest at the Default Rate set forth in

the Credit Agreement, shall be secured hereby, or if advanced during the period

of redemption shall be part of the sum required to be paid to redeem from the sale.

(e)           Mortgagee

shall have the right to collect the rents from the Land and apply the same in

the manner hereinbefore provided with respect to a receiver.  For that purpose, Mortgagee may enter and

take possession of the Land and manage and operate the same and take any action

which, in Mortgagee’s judgment, is necessary or proper to collect the Rents and

to conserve the value of the Land. 

Mortgagee may also take possession of, and for these purposes use, any

and all of the personal property.  The

expense (including any receiver’s fees, attorneys’ fees and costs) incurred

pursuant to the powers herein contained shall be secured by this Mortgage.  Mortgagee shall not be liable to account to

Mortgagor for any action taken pursuant hereto other than to account for any

Rents actually received by Mortgagee. 

Enforcement hereof shall not cause Mortgagee to be deemed a mortgagee in

possession unless Mortgagee elects in writing to be a mortgagee in possession.

(f)            Mortgagee

shall have the right to enter and take possession of the Land and manage and

operate the same in conformity with all applicable laws and take any action

which, in Mortgagee’s judgment, is necessary or proper to conserve the value of

the Land.

(g)           Mortgagee

shall have the right to file proof of claim and  other documents as may be necessary or advisable in order to have

its claims allowed in any receivership, insolvency, bankruptcy, reorganization,

arrangement, adjustment, composition or other judicial proceedings affecting

Mortgagor, its creditors or its property, for the entire amount due and payable

by Mortgagor in respect of the Obligations at the date of the institution of

such proceedings, and for any additional amounts which may become due and

payable by Mortgagor after such date.

Each remedy herein specifically given

shall be in addition to every other right now or hereafter given or existing at

law or in equity, and each and every right may be exercised from time to time

and as often and in such order as may be deemed expedient by Mortgagee and the

exercise or the beginning of the exercise of one right shall not be deemed a

waiver of the right to exercise at the same time or thereafter any other

right.  Mortgagee shall have all rights

and remedies available under the law in effect now and/or at the time such

rights and remedies are sought to be enforced, whether or not they are

available under the law in effect on the date hereof.  The exercise of any of the foregoing rights or remedies and the

application of the revenues pursuant to this paragraph 16, shall not cure or

waive any Event of Default (or notice of default) or invalidate any act done

pursuant to such notice.  The rights and

powers of the Mortgagee and receivers under this Mortgage and the application

of rents under this paragraph 16 shall continue until expiration of the

redemption period from any foreclosure sale, whether or not any deficiency

remains after a foreclosure sale.

17.           Forbearance Not a Waiver; Rights

and Remedies Cumulative.  No delay

by the Mortgagee in exercising any right or remedy provided herein or otherwise

afforded by law or equity shall be deemed a waiver of or preclude the exercise

of such right or remedy, and no waiver by the Mortgagee of any particular

provision of this Mortgage shall be deemed effective unless in writing signed

by the Mortgagee.  All such rights and

remedies provided for herein or which the Mortgagee may have otherwise, at law

or in equity, shall be distinct, separate and cumulative and may be exercised

concurrently, independently or successively in any order whatsoever, and as

often as the occasion therefor arises. 

The Mortgagee’s taking action pursuant to paragraph 11 shall not impair

any right or remedy available to the Mortgagee under paragraph 16 hereof.

18.           Expense of Exercising Rights,

Powers and Remedies.  The reasonable expenses (including any

receiver’s fees, attorneys’ fees, appraisers’ fees, environmental engineers’

and/or consultants’ fees, costs incurred for documentary and expert evidence,

stenographers’ charges, publication costs, costs (which may be estimated as to

items to be expended after entry of the decree of foreclosure) of procuring all

abstracts of title, continuations of abstracts of title, title searches and

examinations, title insurance policies and commitments and extensions therefor,

UCC and chattel lien searches, and similar data and assurances with respect to

title as Mortgagee may deem reasonably necessary either to prosecute any

foreclosure action or to evidence to bidders at any sale which may be had

pursuant to any foreclosure decree the true condition of the title to or the

value of the Land, and agent’s compensation) incurred by Mortgagee after the

occurrence of any Event of Default and/or in pursuing the rights, powers and

remedies contained in this Mortgage shall be immediately due and payable by

Mortgagor, with interest thereon from the date incurred at the Default Rate (as

defined in the Credit Agreement), and shall be added to the indebtedness

secured by this Mortgage.

19.           Notice.  Any notice from the Mortgagee to the

Mortgagor under this Mortgage shall be in writing and shall be mailed or

delivered in the manner set forth in the Subsidiary Guarantee.

20.           Governing Law; Severability.  THIS

MORTGAGE SHALL BE CONSTRUED, GOVERNED AND ENFORCED ACCORDING TO THE LAWS OF THE

STATE OF NEW YORK, PROVIDED, HOWEVER, THAT MATTERS OF CREATION, PERFECTION,

PRIORITY OR ENFORCEABILITY OF ANY AND ALL RIGHTS AND REMEDIES PROVIDED FOR

HEREIN SHALL BE GOVERNED BY THE LAWS OF THE STATE OF MINNESOTA.  TO THE EXTENT THAT THIS MORTGAGE MAY OPERATE

AS A SECURITY AGREEMENT UNDER THE CODE, MORTGAGEE SHALL HAVE ALL RIGHTS AND

REMEDIES CONFERRED THEREIN FOR THE BENEFIT OF A SECURED PARTY AS SUCH TERM IS

DEFINED IN THE CODE.  In the event that any provision or clause of this Mortgage conflicts

with applicable law, such conflict shall not affect other provisions of this

Mortgage which can be given effect without the conflicting provisions and to

this end the provisions of this Mortgage are declared to be severable.

21.           Counterparts.  This Mortgage may be executed in any number

of counterparts, each of which shall be an original, but all of which together

shall constitute one instrument.

22.           Production of Documents.  The Mortgagor shall, while this Mortgage is

in full force and effect, furnish the Mortgagee with such documents,

instruments and papers as the Mortgagee may request from time to time in order

for the Mortgagee to effectuate a sale or a participation in the loan evidenced

by the Credit Agreement and this Mortgage.

23.           Waiver of Statutory Rights.  Mortgagor

shall not apply for or avail itself of any appraisement, valuation, redemption,

stay, extension, or exemption laws, or any so-called “moratorium laws”, now

existing or hereafter enacted, in order to prevent or hinder the enforcement or

foreclosure of this Mortgage, and Mortgagor hereby waives the benefit of such

laws (to the extent permitted by applicable law).  Mortgagor, for itself and all who may claim

through or under it, waives any and all rights to have

the Mortgaged Property and estates comprising the Mortgaged Property marshaled

upon any foreclosure of the lien of this Mortgage, and agrees that any court

having jurisdiction to foreclose such lien may order the Mortgaged Property

sold in its entirety.  Mortgagor further

waives any and all rights of redemption from foreclosure and from sale under

any order or decree of foreclosure of the lien created by this Mortgage, for

itself and on behalf of: (a) any trust estate of which the Land are a part, all

beneficially interested persons; (b) each and every person acquiring any

interest in the Mortgaged Property or title to the Land subsequent to the date

of this Mortgage; and (c) all other persons to the extent permitted by the

provisions of laws of the State of Minnesota.

24.           Fixture Filing.  From the date of its recording, this

Mortgage shall be effective as a financing statement filed as a fixture filing

with respect to all goods constituting part of the Mortgaged Property (as more

particularly described in item (ii) of the granting clause of this Mortgage)

which are or are to become fixtures related to the real estate described

herein.  For this purpose, the following

information is set forth:

(a)           Name

and Address of Debtor:

Vision-Ease Lens, Inc.

One Meridian Crossing, Suite 850

Minneapolis,

Minnesota 55423

(b)           Name

and Address of Secured Party:

Bankers Trust Company

130 Liberty Street

New York, New York

10006

(c)           This document covers goods which are

or are to become fixtures.

(d)           The name of the record owner of the

Land is the Debtor described above.

(e)           The Mortgagor’s tax identification

number is:  41–1837709.

(f)            The Mortgagor is a corporation

organized under the laws of the State of Minnesota.

(g)           The Mortgagor’s organizational

identification number is:  9D–872.

25.           Fees and Expenses.  Each of the agreements set forth in Section

22 of the Subsidiary Guaranty Agreement regarding payment of the Beneficiaries’

fees and expenses is hereby incorporated by reference with the same effect as

if such agreements had been set forth herein. 

The amounts payable by the Mortgagor pursuant to this paragraph 25,

together with interest thereon from the date of demand by the Mortgagee at the

rate stated in the Term Note, shall be Guaranteed Obligations.

26.           Usury Law.  Notwithstanding anything to the contrary

contained in the Subsidiary Guarantee Agreement or in this Mortgage, all

agreements which either now are or which shall become agreements between

Mortgagor and Mortgagee are hereby limited so that in no contingency or event

whatsoever shall the total liability for payments in the nature of interest,

additional interest and other charges exceed the applicable limits imposed by

the usury laws of the State of Minnesota. 

If any payments in the nature of interest, additional interest and other

charges made under the Note or under this Mortgage are held to be in excess of

the applicable limits imposed by the usury laws of the State of Minnesota, it

is agreed that any such amount held to be in excess shall be considered payment

of principal hereunder, and the indebtedness evidenced hereby shall be reduced

by such amount so that the total liability for payments in the nature of

interest, additional interest and other charges shall not exceed the applicable

limits imposed by the usury laws of the State of Minnesota, in compliance with

the desires of Mortgagor and Mortgagee. 

This provision shall never be superseded or waived and shall control

every other provision of the Note and this Mortgage and all agreements between

Mortgagor and Mortgagee, or their successors and assigns.

27.           Jury Trial Waiver.  Each of the agreements set forth in Section

21 of the Subsidiary Guarantee Agreement is hereby incorporated by reference

with the same effect as if such agreements had been set forth herein.

28.           Further Assurances.  At any time and from time to time until

satisfaction of this Mortgage, the Mortgagor will, at the request of the

Mortgagee, promptly execute and deliver to the Mortgagee such additional

instruments as may be reasonably required further to evidence the lien of this

Mortgage and further to protect the security interest of the Mortgagee with

respect to the Mortgaged Property, including, without limitation, additional

security agreements, financing statements and continuation statements.  Any expenses incurred by the Mortgagee in

connection with the preparation and recordation of any such instruments,

including, but not limited to reasonable attorneys’ fees, shall become

additional Guaranteed Obligations of the Mortgagor secured by this Mortgage.  Unless the Mortgagor and the Mortgagee agree

in writing to other terms of repayment, such amounts shall be immediately due

and payable, and shall bear interest from the date of disbursement at the

annual rate stated in the Term Note, unless collecting from the Mortgagor of

interest at such rate would be contrary to applicable law, in which event such

amounts shall bear interest at the highest rate which may be collected from the

Mortgagor under applicable law.

29.           Future

Advances.

(a)           To the extent that this Mortgage

secures future advances, the amount of such advances is not currently

known.  The acceptance of this Mortgage

by the Mortgagee, however, constitutes an acknowledgment that the Mortgagee is

aware of the provisions of Minn. Stat. § 287.05, Subd. 5, and intends

to comply with the requirements contained therein.

(b)           The maximum principal amount of

indebtedness secured by this Mortgage at any one time, excluding advances made

by the Mortgagee in protection of the Mortgaged Property or the lien of this Mortgage,

shall be $6,325,000.00.

(c)           The representations contained in this

paragraph 29 are made solely for the benefit of county recording authorities in

determining the mortgage registry tax payable as a prerequisite to the

recording of this Mortgage.  The

Mortgagor acknowledges that such representations do not constitute or imply an

agreement by the Mortgagee to make any future advances to the Mortgagor.

(d)           Notwithstanding any other provision

of this Mortgage to the contrary, any Guaranteed Obligations as to which

mortgage registry tax is payable shall not be secured by this Mortgage unless

and until the tax is paid.

30.           Limitation on Liability.  The obligations of the Mortgagor hereunder

are subject to the limitations on liability in the Subsidiary Guarantee

Agreement.

31.           Revolving Line of Credit.  This Mortgage secures a revolving line of

credit under which advances, payments or readvances may be made from time to time in accordance with the Credit

Agreement.  Mortgagor hereby agrees

that, if the outstanding, unpaid balance of the revolving line of credit under

the Credit Agreement is ever reduced to zero, the lien and security interest

hereof shall be deemed to remain in full force and effect to secure any future

advances made under said revolving line of credit, subject to the provisions

hereof limiting enforcement of this Mortgage to a debt amount of $6,325,000

under Chapter 287 of Minnesota Statutes.

32.           Assignment of Leases and Rents.  All

right, title, and interest of Mortgagor in and to all present Leases affecting

the Mortgaged Property and including and together with any and all future

Leases, written or oral, upon all or any part of the Mortgaged Property and

together with all of the rents, income, receipts, revenues, issues, avails and

profits from or due or arising out of the Mortgaged Property are hereby

transferred and assigned simultaneously herewith to Mortgagee as further

security for the payment of the Guaranteed Obligations.  All future Leases affecting the Mortgaged

Property shall be submitted by Mortgagor to Mortgagee for its approval prior to

execution, which approval shall not be unreasonably withheld or delayed.  Each Lease, including all future Leases

shall be subordinate to this Mortgage, provided that, upon the request of the

Mortgagor and the lessee under any such Lease, Mortgagee shall enter into a

Subordination, Nondisturbance and Attornment Agreement (or similar agreement)

with such lessee in form and substance reasonably satisfactory to Mortgagee,

pursuant to which (i) Mortgagee will agree that so long as such Lease shall be

in full force and effect and such lessee is not in default thereunder,

Mortgagee will not disturb, pursuant to a foreclosure action or otherwise, such

lessee’s possession under such Lease, and (ii) such lessee shall agree that if

Mortgagee or any future holder of this Mortgage shall become the owner of the

Mortgaged Property by reason of foreclosure of the Mortgage or otherwise, or if

the Mortgaged Property shall be sold as a result of any foreclosure action or

deed in lieu thereof, then such lease shall continue in full force and effect

as a direct lease between such lessee and the then owner of the Mortgaged

Property.  Although it is the intention

of the parties that the assignment contained in this Section shall be a present

and absolute assignment, it is expressly understood and agreed, anything to the

contrary notwithstanding, that Mortgagee shall not exercise any of the rights

or powers conferred upon it by this paragraph 32 until an Event of Default shall

occur under this Mortgage.  From time to

time, Mortgagor shall furnish Mortgagee with executed copies of each of the

Leases and shall use commercially reasonable efforts to furnish Mortgagee with

estoppel letters from each tenant under each of the Leases in a form

satisfactory to Mortgagee within 30 days after Mortgagee’s written demand.

(a)           Following

the occurrence of an Event of Default, (i) Mortgagee shall have the rights and

powers as are provided herein, (ii) this Mortgage shall constitute a direction

to each lessee under the Leases and each guarantor thereof to pay all Rents

directly to Mortgagee without proof of the Event of Default, and (iii)

Mortgagee shall have the authority, as Mortgagor’s attorney-in-fact (such

authority being coupled with an interest and irrevocable), to sign the name of

Mortgagor and to bind Mortgagor on all papers and documents relating to the

operation, leasing and maintenance of the Mortgaged Property.

(b)           If

Mortgagor, as lessor under any Lease, shall neglect or refuse to perform,

observe and keep all of the covenants, provisions and agreements contained in

such Lease, then Mortgagee may perform and comply with any such Lease

covenants, agreements and provisions. 

All costs and expenses incurred by Mortgagee in complying with such

covenants, agreements, and provisions shall constitute Guaranteed Obligations

and shall be payable upon demand with interest at the Default Rate (as defined

in the Credit Agreement).

(c)           Mortgagee

shall not be obligated to perform or discharge any obligation, duty or

liability under any Lease, and Mortgagor shall and does hereby agree, except to

the extent of Mortgagee’s gross negligence or willful misconduct, to indemnify

and hold Mortgagee harmless of and from any and all liability, loss or damage

which it may or might incur under any Lease or under or by reason of their

assignments and of and from any and all claims and demands whatsoever which may

be asserted against it by reason of all alleged obligations or undertakings on

its part to perform or discharge any of the terms, covenants or agreements

contained in such Lease.  Should

Mortgagee incur any such liability, loss or damage under any Lease or under or

by reason of its assignment, or in the defense of any claims or demands, the

amount thereof, including costs, expenses and reasonable attorneys’ fees, shall

be secured hereby.  Mortgagor shall

reimburse Mortgagee therefor immediately upon demand with interest payable at

the Default Rate (as defined in the Credit Agreement).

33.           Successors and Assigns Bound; Number; Gender; Agents;

Captions; Amendments.  The covenants and agreements

herein contained shall bind, and the rights hereunder shall inure to, the

respective heirs, legal representatives, successors and assigns of the

Mortgagee and the Mortgagor; provided, however, that this paragraph 33 shall

not limit the effect of paragraph 15(j).  

Wherever used, the singular number shall include the plural, and the

plural the singular, and the use of any gender shall apply to all genders.  The captions and headings of the paragraphs

of this Mortgage are for convenience only and are not to be used to interpret

or define the provisions hereof.  No

amendment of this Mortgage shall be effective unless in a writing executed by

the Mortgagor and the Mortgagee.

34.           Non-Agricultural Use.  Mortgagor represents and warrants that as of

the date of this Mortgage, the Mortgaged Property is not in agricultural use as

defined in Minn. Stat. § 40A.02, Subd. 3 and is not used for

agricultural purposes.

35.           Maturity Date.  The latest obligation secured by this

Mortgage matures on May 15, 2003.

36.           Last Dollars

Secured. This Mortgage secures only a portion of the Guaranteed Obligations

owing or which may become owing by Mortgagor. The parties agree that any

payments or repayments of such Guaranteed Obligations by Mortgagor shall be and

be deemed to be applied first to the portion of the Guaranteed Obligations that

is not secured hereby, it being the parties’ intent that the portion of the

Guaranteed Obligations last remaining unpaid shall be secured hereby.

37.           Conflicts with

Credit Agreement. Notwithstanding anything in this Mortgage to the

contrary, in the event of a conflict or patent inconsistency between the terms

of this Mortgage and the Credit Agreement, the terms of the Credit Agreement

shall govern and apply.

38.           Protective Advances.

(a)           Without

limiting Mortgagee’s foreclosure rights, all advances, disbursements and

expenditures made by Mortgagee before and during a foreclosure, and before and

after judgment of foreclosure, and at any time prior to sale, and, where

applicable, after sale, and during the pendency of any related proceedings, may

be used for the following purposes, in addition to those otherwise authorized

by this Mortgage (all such advances, disbursements and expenditures heretofore

and hereafter referred to in this paragraph 38 and elsewhere in this

Mortgage, collectively, “Protective Advances”):

(i)            all advances by Mortgagee in

accordance with the terms of this Mortgage to: (A) preserve or maintain,

repair, restore or rebuild the Land or other improvements upon the Land; (B)

preserve the lien of this Mortgage or the priority thereof; or (C) enforce this

Mortgage;

(ii)           payments by Mortgagee of: (A) when due installments of

principal, interest or other obligations in accordance with the terms of any

senior mortgage or other prior lien or encumbrance; (B) when due installments

of real estate taxes and assessments, general and special and all other taxes

and assessments of any kind or nature whatsoever which are assessed or imposed

upon the Land or any part thereof; (C) other obligations authorized by this

Mortgage; or (D) with court approval, any other amounts in connection with

other liens, encumbrances or interests reasonably necessary to preserve the status

of title;

(iii)          advances by Mortgagee in settlement or compromise of

any claims asserted by claimants under senior mortgages or any other prior

liens;

(iv)          reasonable attorneys’ fees and other

expenses incurred: (A) in connection with the foreclosure of this Mortgage; (B)

in connection with any action, suit or proceeding brought by or against the

Mortgagee for the enforcement of this Mortgage or arising from the interest of

the Mortgagee hereunder; or (C) in the preparation for the commencement or defense

of any such foreclosure or other action;

(v)           reasonable

Mortgagee’s fees and costs, including attorneys’ fees, arising between the

entry of judgment of foreclosure and confirmation hearing;

(vi)          reasonable

expenses deductible from proceeds of sale;

(vii)         reasonable

expenses incurred and expenditures made by Mortgagee for any one or more of the

following (if applicable): (A) if any interest in the Land is a leasehold

estate under a lease or sublease, rentals or other payments required to be made

by the lessee under the terms of the lease or sublease; (B) premiums for

casualty and liability insurance paid by Mortgagee whether or not Mortgagee or

a receiver is in possession, if reasonably required, in reasonable amounts, and

all renewals thereof, without regard to the limitation to maintaining of

existing insurance in effect at the time any receiver or mortgagee takes

possession of the Land; (C) repair or restoration of damage or destruction in

excess of available insurance proceeds or condemnation awards; (D) payments

required or deemed by Mortgagee to be for the benefit of the Land or required

to be made by the owner of the Land under any grant or declaration of easement,

easement agreement, agreement with any adjoining land owners or instruments

creating covenants or restrictions for the benefit of or affecting the Land;

(E) shared or common expense assessments payable to any association or

corporation in which the owner of the Land is a member in any way affecting the

Land; and (F) pursuant to any lease or other agreement for occupancy of the

Land.

(b)           All

Protective Advances shall be so much additional indebtedness secured by this

Mortgage, and shall become immediately due and payable without notice and with

interest thereon from the date of the advance until paid at the Default Rate

(as defined in the Credit Agreement). 

This Mortgage shall be a lien for all Protective Advances as to

subsequent purchasers and judgment creditors from the time this Mortgage is

recorded.  All Protective Advances

shall, except to the extent, if any, that any of the same is clearly contrary

to or inconsistent with the provisions of any Minnesota

Statute, apply to and be included in:  (i) determination of the amount of

Guaranteed Obligations secured by this Mortgage at any time; (ii) the

indebtedness found due and owing to the Mortgagee in the judgment of

foreclosure and any subsequent supplemental judgments, orders, adjudications or

findings by the court of any additional indebtedness becoming due after such

entry of judgment, it being agreed that in any foreclosure judgment, the court

may reserve jurisdiction for such purpose; (iii) determination of amounts

deductible from sale; (iv) application of income in the hands of any

receiver or mortgagee in possession; and (v) computation of any deficiency

judgment.

[Signature Page Follows]

IN WITNESS WHEREOF, the

Mortgagor has caused this Mortgage to be duly executed as of the day and year

first–above written.

 

	

   

  	

  VISION-EASE LENS, INC.

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

  By

  	

   

  	

  /s/ Bradley D. Carlson

  
	

   

  	

   

  	

  Its

  	

  Treasurer

  

 

 

	

  STATE OF MINNESOTA

  	

  )

  
	

   

  	

  ) ss.

  
	

  COUNTY OF HENNEPIN

  	

  )

  

 

 

The foregoing instrument

was acknowledged before me this 10th day of October, 2001, by Bradley D.

Carlson, the Treasurer of Vision-Ease Lens, Inc., a Minnesota corporation, on

behalf of said corporation.

 

	

   

  	

  /s/ La Wayne Reuter

  Yaeger

  
	

   

  	

  Notary Public

  

 

 

This instrument was drafted by, and after recording,

please return to:

 

Stephen N. Sher, Esq.

Winston & Strawn

35 West Wacker Drive

Chicago, Illinois 60601

 

 

EXHIBIT A

TO

MORTGAGE, ASSIGNMENT OF LEASES AND RENTS

AND FIXTURE FILING

 

Mortgagor:            VISION-EASE

LENS, INC.

 

Mortgagee:           BANKERS

TRUST COMPANY, not individually, but solely in its capacity as Collateral Agent

pursuant to the Credit Agreement

 

                                The Land described in the referenced

instrument is located in Anoka County, Minnesota, and is described as follows:

 

Lot 1, Block 1, A.E.C. Energy Park Second Addition,

according to the recorded plat thereof, in the County of Anoka, State of

Minnesota.

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