Document:

Exhibit
10.31

 

OLD MILL CORPORATE CENTER

SECOND AMENDMENT TO THE LEASE AGREEMENT

 

THIS AGREEMENT MADE and
entered into this 31st day of March 2003, by and between Holladay
Building, East L.L.C. (“Lessor”) and Overstock.com DE
(“Lessee”).

 

RECITALS:

 

A.                Lessor
and Lessee previously entered into a Lease Agreement dated January 23, 2002,
for the premises located at 6322 South 3000 East, Salt Lake City, Utah,
Suite 100, consisting of approximately 19,444 rentable square
feet (“the Lease”).

 

B.                  Subsequently,
Lessor and Lessee entered into a First Amendment to the Lease Agreement dated
September 1, 2002 pursuant to which Lessee expanded the Premises to include
Suite 110, consisting of approximately 1,919 rentable square
feet.

 

C.                  Lessee
desires to expand the Premises to include Suite 300, which consists of
approximately 8,832 rentable square feet (including 251 rsf of the
building kitchen/dining area) and 7,272 useable square feet (the “New
Space”).

 

D.                 Document
Control System, Inc. (“DCS”) currently occupies the New Space.

 

NOW,
THEREFORE, the parties agree as follows:

 

1.                    Expansion.  Commencing on (a) July 1, 2003
or (b) the relocation of DCS into Old Mill Corporate Center II (the
“Commencement Date”), Lessee shall expand its Premises to include the
New Space.

 

2.                    Term.  The term for the New Space shall commence on
the Commencement Date and shall terminate with the Lease on the 31st
day of January, 2007

 

3                       Base
Rent.  Beginning with the Commencement
Date, Lessee shall pay Lessor $12,880.00 per month for the New Space.  Should the Commencement Date occur on any
date other than the first day of the month, rent for such partial month shall
be prorated.

 

4.                    Annual
Base Rent Escalation.  Base rent shall
escalate by three percent (3%) annually.

 

5.                    Operating
Expenses.  Lessee shall pay as
additional rent its proportionate share of Building operating expenses on a
monthly basis, which Lessor estimates to be $5.75 per rentable square foot
($4,232.00 per month), and reconciled annually.

 

6.                    Tenant
Improvements.  Lessor will deliver the
New Space to Lessee “as-is” without tenant improvements.  Lessee shall be responsible for re-keying
the New Space (which shall be re-keyed to the building master system), and all
other costs associated with the New Space. 
Lessee shall obtain Lessor’s written consent prior to the commencement
of any work within the New Space.

 

7.                    Future
Expansion Space.  Lessor hereby grants
to Lessee an option to expand into the patio space on the third floor
consisting of approximately 977 rsf. 
Should Lessee desire to expand into the patio space, Lessee shall notify
Lessor in writing.  If Lessee exercises
its option to expand into the patio space, the Base Rent for the patio space
will be the same as the Base Rent for Suite 300 calculated on the basis of
rentable square feet at the time Lessee exercises its option, subject to
escalations as provided above.  Within
ten (10) days after receiving the notice form Lessee, Lessor shall confirm to
Lessee in writing of the Base Rent for the patio space and when Lessee will be
able to occupy the patio space.  If the
terms are acceptable to Lessee, Lessee shall notify Lessor in writing within
ten (10) days after receiving Lessor’s written notice.  Lessor shall then commence build-out of the
patio space.  Lessor’s build-out will
include finished acoustical drop ceilings, adequate light fixtures, HVAC,
carpet (not to exceed $19.00 per yard installed), and finished and painted
walls around the interior perimeter of the space.  Lessor shall contract with and be responsible for the cost of
architectural, engineering and other fees necessary to build-out the patio
space.  If Lessee desires partitions or
other improvements within the patio space, Lessee shall bear the cost thereof.  Lessee shall not construct any improvements
in the patio space without first obtaining Lessor’s written consent prior to
the commencement of any construction work.

 

 

8.                    Relocation
of DCS.  DCS will relocate its premises
into Old Mill Corporate Center II to facilitate Lessee’s expansion.  Lessee will pay Lessor $122,996.00
towards DCS’s relocation expenses (“relocation fees”).  Lessee will have the option to pay Lessor
said relocation fees on a monthly basis over the term of the lease at zero
percent (0%) interest.  Notwithstanding
the foregoing, in the event the Lease is terminated early for any reason, the
unpaid balance of the relocation fees shall become and payable immediately.

 

9.                    Contingency.  This Second Amendment shall be subject to
the acceptance and signature of a new Lease with DCS.  If Old Mill Corporate Center Il, LLC and DCS fail to enter into a
new lease within 14 days after the date hereof, this Second Amendment shall
become null and void.

 

10.              Real
Estate Commission.  Lessor and Lessee
warrant and represent that they have had no dealings with any outside real
estate broker or agent, and know of no one who is entitled to a commission with
respect to this Second Amendment.

 

11.              Provisions
of Lease.  During the term of the Lease,
all term and conditions of the Lease shall apply except as modified by this
Second Amendment to Lease.

 

IN WITNESS WHEREOF, the parties
have executed this Second Amendment to Lease Agreement as of the day and year
first above written.

 

	
   

  	
  LESSOR:

  	
  LESSEE:

  
	
   

  	
   

  	
   

  
	
   

  	
  HOLLADAY
  BUILDING EAST L.L.C.

  	
  OVERSTOCK.COM
  DE

  
	
   

  	
   

  	
   

  
	
   

  	
  By and
  through its Manager Holladay Building 

  East Management Corporation

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   /s/
  Jeff Peck

  	
   

  	
  By:

  	
   /s/
  James M. Hyde

  	
   

  
	
   

  	
   

  	
    Jeff
  Peck

  	
   

  	
   

  	
    James
  M. Hyde

  
	
   

  	
   

  	
  Its:

  	
  Vice President

  	
   

  	
   

  	
  Its: 

  	
  Chief Operating OfficerExhibit 10.91

 

Vari-LiteChtMtg2003

 

 

MORTGAGE

(Fixed)

 

	
  Parties

  	
   

  	
  This
  mortgage is made between the Borrower named below and Barclays Bank PLC (Company
  Number 1026167) (“the Lender” which expression shall include the Lender’s
  successors and assigns) of 54 Lombard Street, London EC3P 3AH and whose
  address for all correspondence in connection with this mortgage is Barclays
  Mercantile Business Finance Limited of Churchill Plaza, Churchill
  Way, Basingstoke, Hampshire RG21 7GP.

  
	
   

  	
   

  	
   

  
	
  Date and Definitions

  	
   

  	
  1.1     The
  date of this mortgage is 25 June 2003

  In this mortgage the following expressions have the meanings respectively set
  out against them:-

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  “Borrower”:

  	
  VLPS Lighting Services  Limited of 20-22 Fairway Drive, Greenford, Middlesex UB6 8PW
  (registered England No. 2876045);

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  “Goods”:

  	
  the goods,
  particulars of which are set out in the Schedule to this mortgage together
  with all component parts, accessories, improvements and renewals and all
  books, manuals, handbooks, technical data, drawings, schedules and other
  documentation and any amendments to them belonging to the Goods;

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  “Loan”:

  	
  £3,304,059.89
  or the balance for the time being outstanding;

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  “Instalment
  Dates”:

  	
  the 24th day
  of each month in each year in which the Loan is outstanding the first
  Instalment Date being July 2003;

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  “Instalments”:

  	
  48 monthly
  payments of £78,065.33 payable on the Instalment Dates;

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  “Base Rate”:

  	
  Finance
  House Base Rate as from time to time published in the Financial Times or
  other newspaper or, in default of such publication whilst any sum is
  outstanding under this mortgage, such alternative

  

 

 

	
   

  	
   

  	
   

  	
  equivalent
  base rate as shall be agreed between the parties or, in default of agreement,
  settled by the President for the time being of the Institute of Chartered
  Accountants in England and Wales or his nominee acting as an expert;

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  “Termination
  Sum”:

  	
  the balance
  of unpaid Instalments less a rebate of interest calculated by the Lender for
  early repayment;

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  “Insurances”:

  	
  all policies
  and contracts of insurance taken out or to be taken out in respect of the
  Goods, including all claims and benefits arising under them and returns of
  premium;

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  “Security
  Interest”:

  	
  any
  mortgage, charge, pledge, lien or other encumbrance;

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  “Total Loss”:

  	
  actual or
  constructive total loss or as compromised or agreed or arranged with the
  insurers of the Goods;

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  “Default
  Events”:

  	
  any of the
  events stated in clause 9 below;

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  “Working
  Day”:

  	
  any day,
  except Saturdays, on which the clearing Lenders in the City of London are (or
  would be but for strike, lockout or other stoppage, affecting particular
  Lenders or Lenders generally) open during banking hours.

  
	
   

  	
   

  	
   

  	
   

  
	
  Interpretation

  	
   

  	
  1.2     In
  this mortgage the masculine includes the feminine and the neuter, and the
  singular includes the plural.  If the
  Borrower is two or more persons, that expression includes all such persons
  (and each of them) and their liability under this mortgage is joint and
  several. The rights and obligations of the Borrower hereunder are personal to
  the Borrower and shall not be capable of being assigned or transferred

  
	
   

  	
   

  	
   

  
	
  Construction

  	
   

  	
  1.3     The
  marginal notes are for ease of reference only and do not affect the
  construction of this mortgage. Any reference in this deed to a statutory
  provision shall be construed as a reference to that provision as from time to
  time amended or re-enacted.  The
  benefit of this deed and the security created hereby shall enure for the
  benefit of the Lender’s successors and assigns and any company for which the
  Lender may be acting as agent.

  
	
   

  	
   

  	
   

  
	
  Instalments

  	
   

  	
  2.1     The
  Borrower shall pay to the Lender on the Instalment Dates the Instalments
  which comprise repayments of principal 

  
					

 

2

 

	
   

  	
   

  	
  and payments
  of interest.

  
	
   

  	
   

  	
   

  
	
  Interest

  	
   

  	
  2.2.     If
  the Borrower does not make payment of any Instalment on the relevant
  Instalment Date or any other sum payable under this mortgage within 10 days
  of the Lender’s demand, the Borrower shall pay interest to the Lender if
  demanded by the Lender at the rate of Finance House Base Rate plus 5% per
  annum calculated on a day to day basis from the due date to the date of
  receipt by the Lender both before and after judgement.

  
	
   

  	
   

  	
   

  
	
  Early Settlement

  	
   

  	
  2.3.     As
  an alternative to payment of Instalments the Lender will accept the
  Termination Sum in full settlement of the Loan with interest.

  
	
   

  	
   

  	
   

  
	
  Non-Working Day

  	
   

  	
  2.4     Any
  amount payable to the Lender on a day which is not a Working Day will be
  payable on the preceding Working Day.

  
	
   

  	
   

  	
   

  
	
  Sums Secured

  	
   

  	
  3.     This
  mortgage secures to the Lender repayment of the Loan, the payment of interest
  on the Loan and the payment from time to time of all other sums due from the
  Borrower to the Lender on any account whatsoever.  If a Default Event occurs all amounts secured by this mortgage
  shall become immediately due and payable. 
  The Borrower covenants to pay all such monies to the Lender.

  
	
   

  	
   

  	
   

  
	
  Costs

  	
   

  	
  4.     Any
  legal or other costs, charges or expenses payable by the Borrower to the
  Lender under the provisions of this mortgage are payable by the Borrower to
  the Lender with value added tax thereon (if any).  Legal Costs are payable on a full indemnity basis as between
  solicitor and own client.

  
	
   

  	
   

  	
   

  
	
  Warranties by Borrower

  	
   

  	
  5.     The
  Borrower warrants to the Lender that the Borrower:-

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (i)

  	
  lawfully
  owns and is in possession of the Goods and that it and the Insurances are
  free of any Security Interest (other than any Security Interest created or
  subsisting with the written consent of the Lender);

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (ii)

  	
  is not
  subject to any prohibition or restriction of its right or ability to enter
  into this mortgage;

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (iii)

  	
  has power by
  its memorandum of association and has taken all corporate action necessary to
  enter into this mortgage;

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (iv)

  	
  has not
  suffered or there have not occurred any Default Events which are unremedied.

  
	
   

  	
   

  	
   

  	
   

  
	
  Mortgage

  	
   

  	
  6.     The
  Borrower hereby mortgages and charges with full title guarantee to the Lender
  all its right, title and interest in the Goods as security for all sums
  payable by the Borrower to the Lender, as referred to in clause 3 above.

  

 

3

 

	
  Undertakings by Borrower

  	
   

  	
  7.     The
  Borrower:-

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (i)

  	
  shall at its
  own expense keep the Goods in good working order and condition;

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (ii)

  	
  shall not
  use or permit the Goods to be used in contravention of any statute or
  regulation or for any purpose for which they are not designed or reasonably
  suitable and shall take all reasonable steps to ensure that the use and
  operation of the Goods is by skilled personnel and is without risks to health
  and safety;

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (iii)

  	
  shall not
  (except with the consent of the Lender) sell, transfer, demise, let on hire
  or otherwise part with possession of the Goods or create or allow to arise
  any Security Interest in the Goods;

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (iv)

  	
  shall
  maintain all records, logs and other records required by the manufacturers of
  the Goods;

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (v)

  	
  shall
  replace any component, part or item of the Goods where necessary provided
  that such replacement is of at least equivalent value and condition when
  compared to the original;

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (vi)

  	
  shall cause
  any alterations to the Goods that are from time to time required by law to be
  made at the Borrower’s expense, but shall not otherwise alter the Goods
  otherwise than by way of improvement;

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (vii)

  	
  shall notify
  the Lender within 24 hours following:-

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  (a)

  	
  demand of
  the whereabouts of the Goods;

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  (b)

  	
  any
  occurrence as a result of which the Goods are or are likely to become a Total
  Loss;

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  (c)

  	
  the
  occurrence of any of the Default Events referred to in clause 9(ii) to (viii)
  below inclusive;

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (viii)

  	
  shall permit
  any person authorised by the Lender at all reasonable times upon at least 24
  hours notice (unless a Default Event is continuing unremedied or unwaived in
  which case no notice will be required) to inspect the Goods and permit or
  procure the granting of permission for such person to enter any land or
  premises where the Goods may be situated;

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (ix)

  	
  shall pay on
  demand to the Lender with interest all its 

  

 

4

 

	
   

  	
   

  	
   

  	
  costs and
  expenses incurred in:-

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  (a)

  	
  the advance
  of the Loan and the acceptance and registration of this mortgage;

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  (b)

  	
  the
  preservation of the Lender’s security in the Goods;

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  (c)

  	
  the exercise
  by the Lender of any of its powers under this mortgage and in ascertaining
  the whereabouts and/or safekeeping of the Goods;

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  (d)

  	
  any legal
  proceedings instituted by the Lender under this mortgage;

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (x)

  	
  undertakes
  that, for so long as any liability remains outstanding under this deed, and
  except with the prior written consent of the Lender:

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  (a)

  	
  Operational
  Cash Flow for each Relevant Period shall be at least equal to Gross Total
  Financing Costs for such Relevant Period;

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  (b)

  	
  Operational
  Cash Flow for each Relevant Period shall exceed 1.5 times Gross Senior
  Financing Costs for such Relevant Period;

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  (c)

  	
  Consolidated
  Net Tangible Assets shall at all times exceed £1,450,000;

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  For the
  purposes of this clause

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  “Gross
  Senior Financing Costs” means, in respect of any Relevant Period, all
  interest, acceptance  commission, payments under interest rate
  management arrangements (whether by way of swap, cap, collar, floor, option,
  forward rate agreement or otherwise) and other continuing, regular or
  periodic costs, charges and expenses in the nature of interest (whether paid,
  payable or capitalised and including the interest element in hire purchase
  and finance leasing charges) incurred by the Borrower during such Relevant
  Period in effecting, servicing or maintaining un-subordinated or un-postponed
  borrowings or borrowing facilities;

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  “Gross Total
  Financing Costs” means, in respect of any Relevant Period, all interest,
  acceptance  commission, payments under interest rate management
  arrangements (whether by way of swap, cap, collar, floor, option, forward
  rate agreement or otherwise) and other continuing, regular or periodic costs,
  charges and 

  

 

5

 

	
   

  	
   

  	
   

  	
  expenses in
  the nature of interest (whether paid, payable or capitalised and including
  the interest element in hire purchase and finance leasing charges) incurred
  by the Borrower during such Relevant Period in effecting, servicing or
  maintaining borrowings or borrowing facilities;

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  “Net
  Tangible Assets” means the aggregate of the amount paid up or credited as
  paid up on the issued share capital of the Borrower and the amount standing
  to the credit of the consolidated capital and revenue reserves (including
  share premium account, capital redemption reserve and profit and loss
  account) of the Borrower, but after deducting:

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  (i)            (to the extent included) goodwill (including
  goodwill arising on consolidation) or other intangible assets of the
  Borrower;

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  (ii)           (to the extent included) any
  reserve created by any upward revaluations of fixed assets made after the
  date of the most recent audited accounts of the Borrower as at the date of
  this deed and a copy of which accounts has been delivered to the Lender;

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  (iii)          (to the extent included) amounts
  attributable to minority interests and deferred taxation;

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  (iv)          any debit balance on the profit and
  loss account of the Borrower (but so that no amount shall be included or
  excluded more than once);

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  “Operational
  Cash Flow” means Total Operating Profit plus amounts charged to depreciation
  by the Borrower in the Relevant Period, capital receipts from the disposals
  of assets and funds received from equity subscription and capital issues
  minus corporation tax paid, dividends paid and un-funded capital expenditure
  of the Borrower during such Relevant Period;

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  “Total
  Operating Profit” means, in respect of any Relevant Period, the total
  operating profit for continuing operations, acquisitions (as a component of
  continuing operations) and discontinued operations (as set out in Financial
  Reporting Standard No. 3) of the Borrower but ignoring any exceptional items;

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  “Relevant
  Periods” means each period of twelve months ending on the last day of a
  financial year of the Borrower and each period of six months ending on the
  last day of the first half of a financial year of the Borrower (each a
  “Relevant Period”);

  

 

6

 

	
   

  	
   

  	
  (xi)

  	
  shall (so
  long as any liability remains outstanding under this deed) ensure that cash
  balances of no less than £300,000 are retained at all times in the balance
  sheet of the Borrower;

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (xii)

  	
  agrees that
  the balance outstanding in respect of the Loan shall at no time exceed 85% of
  the value of the Goods; such value to be determined from time to time by the
  Lender in its opinion, or by professional valuers acceptable to the Lender,
  at the expense of the Borrower;

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (xiii)

  	
  (a)  undertakes not (unless it has the prior
  written consent of the Lender) to exceed the annual capital expenditure
  levels determined by the Lender for each financial year of the Borrower;

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  (b)  Acknowledges that the capital expenditure
  level determined by the Lender for the period from 1st October
  2002 to 30th September 2003 is the net figure of £1,200,000 (after
  deduction of cash proceeds of any fixed asset disposals during that period).

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (xiv)

  	
  shall
  provide to the Lender once in each period of three months during each
  financial year of the Borrower such financial information as the Lender may
  require including (but not limited to) (a) profit and loss account in respect
  of the current quarter and the year to date, (b) comparisons to budgets, (c)
  balance sheets and (d) capital expenditure details.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Insurances

  	
   

  	
  8.1     The
  Insurances shall be effected and maintained by the Borrower at all times
  while any amount is secured by this mortgage and shall be endorsed with a
  note of the Lender’s interest.

  
	
   

  	
   

  	
   

  
	
  Risks Insured

  	
   

  	
  8.2     The
  Insurances shall be all insurable risks cover under policies, on terms,
  subject only to exclusions and/or an excess approved by the Lender and with insurers
  acceptable to the Lender.

  
	
   

  	
   

  	
   

  
	
  Sum Insured

  	
   

  	
  8.3     The
  Goods shall be insured for their market value as agreed by the parties or,
  failing agreement, as determined, at the expense of the Borrower, by a valuer
  acceptable to the parties.

  
	
   

  	
   

  	
   

  
	
  Premiums

  	
   

  	
  8.4     The
  Borrower shall pay punctually all premiums payable by the Borrower in respect
  of the Insurances and, on request, produce receipts or other proof of payment
  to the Lender.

  

 

7

 

	
  Application of Insurance Proceeds

  	
   

  	
  8.5        The
  Lender may elect to require the Borrower to apply any proceeds of the
  Insurances received by it in making good the loss, repairing the damage, or
  satisfying the liability in respect of which the claim was made or in satisfaction
  of any amount secured by this mortgage and pending such election such
  proceeds shall be held in trust for the Lender.

  
	
   

  	
   

  	
   

  
	
  Insurance Warranties

  	
   

  	
  8.6        The
  Borrower shall not use and shall not allow the Goods to be used other than in
  conformity with the terms of the Insurances, including any express or implied
  warranties, without the prior written consent of the insurers and without
  paying any extra premium required.

  
	
   

  	
   

  	
   

  
	
  Lender may Insure

  	
   

  	
  8.7        If
  the Borrower fails to effect or maintain the Insurances, the Lender may
  effect such Insurances at the Borrower’s expense to be reimbursed to the
  Lender on demand with interest.

  
	
   

  	
   

  	
   

  
	
  Default Events

  	
   

  	
  9.         The
  following are the Default Events:-

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (i)

  	
  the Borrower
  does not pay any sum of money secured by this mortgage within 10 days of the
  due date for payment (unless the Lender elects in its absolute discretion to
  accept late payment);

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (ii)

  	
  the Borrower
  enters into or attempts to enter into a composition or arrangement with its
  creditors or any of them;

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (iii)

  	
  a receiver
  or administrative receiver is appointed of the Borrower’s assets or any of
  them or a meeting, whether formal or informal, is called of the Borrower’s
  creditors or any of them;

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (iv)

  	
  the petition
  for the appointment to the Borrower of an administrator is presented or the
  Borrower goes into liquidation, except for a voluntary liquidation for the
  purpose of amalgamation or reconstruction on terms previously approved by the
  Lender in writing;

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (v)

  	
  the levy
  against the Goods of any distress or execution which is not paid out within
  10 Working Days of written request so requiring from the Lender to the
  Borrower;

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (vi)

  	
  any of the
  warranties in clause 5 above proves to be incorrect, inaccurate or misleading
  in any material respect;

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (vii)

  	
  the Goods
  are a Total Loss;

  

 

8

 

	
   

  	
   

  	
  (viii)

  	
  the Borrower
  is unable to pay its debts within the meaning of Section 123 of the
  Insolvency Act 1986;

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (ix)

  	
  the Lender’s
  Security is in the Lender’s reasonable opinion in jeopardy in any material
  respect;

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (x)

  	
  any company
  in the Barclays PLC group withdraws any facility or demands payment as a
  result of a default by the Borrower;

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (xi)

  	
  the Borrower
  fails to comply with any of its obligations, covenants or undertakings
  contained in this deed (other than those relating to the payment of money)
  and such default (if in the opinion of the Lender it is capable of remedy) is
  not remedied to the Lender’s satisfaction within 10 days after the occurrence
  of such failure.

  
	
   

  	
   

  	
   

  	
   

  
	
  Lender’s Powers

  	
   

  	
  10.1    On
  the occurrence of a Default Event the Lender may, at any time on the date of
  the occurrence or any subsequent date, without prejudice to any powers
  available to a Mortgagee by law, do any of the following by itself or by such
  agents as it thinks fit and without prior notice to the Borrower:-

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (i)

  	
  take
  possession of the Goods severing them from any land or other goods (but
  subject to the rights of the hirer under any hire agreement), if necessary,
  the Borrower reimbursing the Lender any expense incurred or damage suffered
  on demand with interest;

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (ii)

  	
  move the
  Goods to a safe place;

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (iii)

  	
  discharge,
  settle or take or defend any proceedings in respect of any claims incurred in
  connection with the Goods or the Insurances and collect on the Insurances and
  give any good receipts required;

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (iv)

  	
  pending
  sale, insure, maintain, repair, operate, hire out or otherwise use the Goods
  (but subject to the rights of the hirer under any hire agreement);

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (v)

  	
  sell the
  Goods by public auction or private sale, without advertisement and at such
  place, at such time and on such terms as the Lender may determine;

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (vi)

  	
  do all such
  other acts and things as may be considered to be necessary for any of the
  matters or powers aforesaid.

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Section 103
  of the Law of Property Act 1925 shall not apply to this security or any sale
  made by virtue hereof.

  

 

9

 

	
  Lender not Liable

  	
   

  	
  10.2    The
  Lender shall not be answerable for any loss occasioned by sale by it of the
  Goods under this mortgage or any postponement of sale.

  
	
   

  	
   

  	
   

  	
   

  
	
  Lender’s Receipt

  	
   

  	
  10.3    On
  any sale of the Goods the Lender’s receipt for the purchase money shall
  effectively discharge the purchaser. 
  The purchaser shall not be bound to enquire whether the Lender’s power
  of sale has arisen or is exercisable and shall not be concerned as to how the
  proceeds of sale are applied.

  
	
   

  	
   

  	
   

  	
   

  
	
  Application

  	
   

  	
  10.4    All
  monies received by the Lender in respect of:-

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (i)

  	
  sale of the
  Goods and/or

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (ii)

  	
  proceeds of
  the Insurances which the Lender, in its sole discretion, elects not to
  release to the Borrower for application by it in accordance with clause 8.5
  above;

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  shall be
  applied as follows:-

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  FIRST

  	
  in payment
  or reimbursement to the Lender of all costs and expenses incurred by it in
  connection with this mortgage and the exercise of its powers hereunder; 

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  SECONDLY

  	
  in payment
  of any accrued but unpaid interest in connection with this mortgage;

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  THIRDLY

  	
  in repayment
  or reduction of the Loan;

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  FOURTHLY

  	
  in payment
  of any surplus to the Borrower.

  
	
   

  	
   

  	
   

  	
   

  
	
  Attorney

  	
   

  	
  11.    The
  Borrower hereby irrevocably appoints the Lender as its attorney with full
  power to substitute any other person, for the Borrower and in the Borrower’s
  name to sign, seal, deliver and otherwise perfect any deed, assurance or
  agreement and do anything which may be required for any purpose under or in
  connection with this mortgage.

  
	
   

  	
   

  	
   

  	
   

  
	
  Waiver

  	
   

  	
  12.    The
  Lender’s rights and powers under this mortgage shall not be prejudiced or
  affected by delay or omission on the Lender’s part.  If the Lender, on occasion expressly or impliedly waives any of
  its rights or powers, such waiver shall not prevent the Lender from
  subsequently acting strictly in accordance with such rights and powers.

  
	
   

  	
   

  	
   

  	
   

  
	
  Further Assurances

  	
   

  	
  13.    The
  Borrower shall at its own expense sign, seal, deliver and otherwise perfect
  any deed, assurance or agreement and do anything the Lender may require to
  perfect or protect the security constituted by this mortgage.

  
						

 

10

 

	
  Notices

  	
   

  	
  14.    Any
  notice served under this mortgage shall be sufficiently served if sent by
  pre-paid letter post to the respective addresses above (or such changed
  address as one party may notify to the other) and proof of dispatch shall be
  conclusive evidence of receipt by the addressee in due course of
  transmission.

  
	
   

  	
   

  	
   

  
	
  Consolidation

  	
   

  	
  15.    If
  the Lender has from the Borrower security over any other property of the
  Borrower, the Borrower may not redeem such security or the security
  constituted by this mortgage alone without the prior written consent of the
  Lender.  Section 93 of the Law of
  Property Act 1925 (which restricts the consolidation of mortgages) shall not
  apply to the security constituted by this mortgage.

  
	
   

  	
   

  	
   

  
	
  Law

  	
   

  	
  16.    This
  mortgage shall be governed by the laws of England.

  
	
   

  	
   

  	
   

  
	
  Severance

  	
   

  	
  17.    Each
  of the provisions of this deed is severable and distinct from the others and
  if at any time one or more of such provisions is or becomes invalid illegal
  or unenforceable, the validity legality and enforceability of the remaining
  provisions hereof shall not in any way be affected or impaired thereby.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  IN WITNESS
  of which this deed was executed and is delivered on and takes effect from the
  day and year first before written.

  

 

 

	
  THE COMMON
  SEAL OF the

  	
  )

  	
   

  
	
  Company was
  affixed to  this

  	
  )

  	
   

  
	
  deed in the
  presence of:-

  	
  )

  	
   

  
	
  (or
  where no seal is to be affixed)

  	
  )

  	
   

  
	
  EXECUTED as
  a Deed by the

  	
  )

  	
   

  
	
  Company
  acting by:-

  	
  )

  	
   

  

 

 

	
   

  	
  Director

  	
  /s/ H.R. Brutsché III

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Director/Secretary

  	
  /s/ James H. Clark, Jr. 

  	
   

  
					

 

11

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