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possession of the collateral and receive the “rents, incomes,
issues, and profits of the Collateral”, to be applied to the
amount of the “secured indebtedness”, defined in the agreement by
reference to the “indebtedness evidenced by the [real estate]
Note in accordance with the terms thereof”.
On May 31, 1985, Briggs and Daniell executed a personal
guaranty with respect to the line of credit, agreeing that “if
the Debt is not paid by * * * [Towers Development] when due,
* * * [Briggs and Daniell] will immediately do so.” AMI also
intended to require Mr. Morris’ personal guaranty, but because of
his past credit problems, his name was struck from all documents.
Also on May 31, 1985, Briggs and Daniell executed a mortgage
and security agreement in favor of AMI, evidencing the $1.5
million acquisition and development loan for the 40 acres. The
loans from AMI to Towers Development and to Briggs and Daniell
were cross-collateralized. That is, default under either
mortgage would be deemed to constitute a default under the other
mortgage, so that AMI could exercise its security interest with
respect to the property collateralizing either mortgage. In the
event of default on the Towers Development loan, however, AMI was
subordinated to Mariners Cove’s security interest in the 40
acres.
To secure its mortgage interest with respect to its loans to
Towers Development and to Briggs and Daniell, AMI filed two
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