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mortgagee, acting in a fiduciary capacity for the benefit of the
United States and FFB. Property subject to the mortgage included
real estate owned by the partnership; plants, facilities, and
buildings owned by the partnership or leased by the partnership;
the partnership’s rights to and under certain contracts
(including gas purchase agreements, the project administration
agreement, and the coal purchase agreement, all of which are
discussed infra); and all other real or personal property “now
owned or hereafter acquired by Borrower”.
Pursuant to the mortgage, an “event of default” would
include termination in the project by any two or more partners
and the partnership’s failure to make timely principal or
interest payments. In the event of a default, the trustee was
entitled to take possession of the mortgaged property without
legal process, operate the mortgaged property, receive all income
from the operation, pay all expenses, and proceed to sell the
mortgaged property in foreclosure proceedings. The United States
was authorized to bid on and purchase the mortgaged property.
Sale proceeds were to be applied first to paying any interest and
principal then due on the note and then to repaying all amounts
paid by the United States pursuant to the guarantee. The
mortgage provided that the partnership agreed, “To the full
extent it may legally do so”, to waive “any and all rights of
redemption from sale under order or decree of foreclosure of this
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