MORTGAGE AND SECURITY AGREEMENT
QUARTERDECK APARTMENTS LLC,
MORTGAGOR
AND
FIRST UNION NATIONAL BANK,
MORTGAGEE
DATED: AS OF JUNE 24, 1999
THIS INSTRUMENT AFFECTS REAL AND PERSONAL PROPERTY SITUATED IN THE STATE OF
SOUTH CAROLINA, COUNTY OF CHARLESTON, KNOWN BY THE STREET ADDRESS OF 000
XXXXXX XXXX XXXX.
THIS INSTRUMENT IS TO BE FILED AND INDEXED IN THE REAL ESTATE RECORDS AND
IS ALSO TO BE INDEXED IN THE INDEX OF FINANCING STATEMENTS UNDER THE NAMES
OF MORTGAGOR, AS "DEBTOR", AND MORTGAGEE, AS "SECURED PARTY".
RECORD AND RETURN TO:
Xxxxxx, Xxxxxxxxxx & Xxxxxxxxx LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxx X'Xxxxx
FUNB Loan No. _______
THIS MORTGAGE AND SECURITY AGREEMENT (this "Mortgage") is made as
of the 24th day of June, 1999, by QUARTERDECK APARTMENTS LLC, a Georgia
limited liability company ("Mortgagor"), whose address is c/o Xxxxxx X.
Xxxxx, CFO, 000 Xxxxx Xxxxxx, Xxxxxx Xxxxx, Xxxxxxx, Xxxxxxx 00000 in favor
of FIRST UNION NATIONAL BANK, a national banking association ("Mortgagee"),
whose address is Xxx Xxxxx Xxxxx Xxxxxx, XX0, 000 Xxxxx Xxxxxxx Xxxxxx,
Xxxxxxxxx, Xxxxx Xxxxxxxx 00000-0000.
W I T N E S S E T H:
THAT FOR AND IN CONSIDERATION OF THE SUM OF TEN AND NO/100
DOLLARS ($10.00), AND OTHER VALUABLE CONSIDERATION, THE RECEIPT AND
SUFFICIENCY OF WHICH IS HEREBY ACKNOWLEDGED, MORTGAGOR HEREBY IRREVOCABLY
MORTGAGES, GRANTS, BARGAINS, SELLS, CONVEYS, TRANSFERS, PLEDGES, SETS OVER
AND ASSIGNS, AND GRANTS A SECURITY INTEREST, TO MORTGAGEE, ITS SUCCESSORS
AND ASSIGNS, with power of sale, in all of Mortgagor's estate, right, title
and interest in, to and under any and all of the following described
property, whether now owned or hereafter acquired (collectively, the
"Property"):
A. All that certain real property situated at 000 Xxxxxx Xxxx
Xxxx, Xxxxxx xx Xxxxxxxxxx, Xxxxx of South Carolina, more particularly
described on EXHIBIT A attached hereto and incorporated herein by this
reference (the "Real Estate"), together with all of the easements, rights,
privileges, franchises, tenements, hereditaments and appurtenances now or
hereafter thereunto belonging or in any way appertaining and all of the
estate, right, title, interest, claim and demand whatsoever of Mortgagor
therein or thereto, either at law or in equity, in possession or in
expectancy, now or hereafter acquired;
B. All structures, buildings and improvements of every kind and
description now or at any time hereafter located or placed on the Real
Estate (the "Improvements");
C. All furniture, furnishings, fixtures, goods, equipment,
inventory or personal property owned by Mortgagor and now or hereafter
located on, attached to or used in and about the Improvements, including,
but not limited to, all machines, engines, boilers, dynamos, elevators,
stokers, tanks, cabinets, awnings, screens, shades, blinds, carpets,
draperies, lawn mowers, and all appliances, plumbing, heating, air
conditioning, lighting, ventilating, refrigerating, disposal and
incinerating equipment, and all fixtures and appurtenances thereto, and
such other goods and chattels and personal property owned by Mortgagor as
are now or hereafter used or furnished in operating the Improvements, or
the activities conducted therein, and all building materials and equipment
hereafter situated on or about the Real Estate or Improvements, and all
warranties and guaranties relating thereto, and all additions thereto and
substitutions and replacements therefor (exclusive of any of the foregoing
owned or leased by tenants of space in the Improvements);
D. All easements, rights-of-way, strips and gores of land,
vaults, streets, ways, alleys, passages, sewer rights, air rights and other
development rights now or hereafter located on the Real Estate or under or
above the same or any part or parcel thereof, and all estates, rights,
titles, interests, tenements, hereditaments and appurtenances, reversions
and remainders whatsoever, in any way belonging, relating or appertaining
to the Real Estate and/or Improvements or any part thereof, or which
hereafter shall in any way belong, relate or be appurtenant thereto,
whether now owned or hereafter acquired by Mortgagor;
E. All water, ditches, xxxxx, reservoirs and drains and all
water, ditch, well, reservoir and drainage rights which are appurtenant to,
located on, under or above or used in connection with the Real Estate or
the Improvements, or any part thereof, whether now existing or hereafter
created or acquired;
F. All minerals, crops, timber, trees, shrubs, flowers and
landscaping features now or hereafter located on, under or above the Real
Estate;
G. All cash funds, deposit accounts and other rights and
evidence of rights to cash, now or hereafter created or held by Mortgagee
pursuant to this Mortgage or any other of the Loan Documents (as
hereinafter defined), including, without limitation, all funds now or
hereafter on deposit in the Impound Account, the Repair and Remediation
Reserve, the Replacement Reserve and the Payment Reserve (each as hereafter
defined);
H. All leases (including, without limitation, oil, gas and
mineral leases), licenses, concessions and occupancy agreements of all or
any part the Real Estate or the Improvements (each, a "Lease" and
collectively, "Leases"), whether written or oral, now or hereafter entered
into and all rents, royalties, issues, profits, revenue, income and other
benefits (collectively, the "Rents and Profits") of the Real Estate or the
Improvements, now or hereafter arising from the use or enjoyment of all or
any portion thereof or from any present or future Lease or other agreement
pertaining thereto or arising from any of the Contracts (as hereinafter
defined) or any of the General Intangibles (as hereinafter defined) and all
cash or, to the extent permitted by law, securities deposited to secure
performance by the tenants, lessees or licensees (each, a "Tenant" and
collectively, "Tenants"), as applicable, of their obligations under any
such Leases, whether said cash or securities are to be held until the
expiration of the terms of said Leases or applied to one or more of the
installments of rent coming due prior to the expiration of said terms,
subject to, however, the provisions contained in Section 1.11 hereinbelow;
I. All contracts and agreements now or hereafter entered into
covering any part of the Real Estate or the Improvements (collectively, the
"Contracts") and all revenue, income and other benefits thereof, including,
without limitation, management agreements, service contracts, maintenance
contracts, equipment leases, personal property leases and any contracts or
documents relating to construction on any part of the Real Estate or the
Improvements (including plans, drawings, surveys, tests, reports, bonds and
governmental approvals) or to the management or operation of any part of
the Real Estate or the Improvements;
J. All present and future monetary deposits given to any public
or private utility with respect to utility services furnished to any part
of the Real Estate or the Improvements;
K. All present and future funds, accounts, instruments, accounts
receivable, documents, causes of action, claims, general intangibles
(including without limitation, trademarks, trade names, servicemarks and
symbols now or hereafter used in connection with any part of the Real
Estate or the Improvements, all names by which the Real Estate or the
Improvements may be operated or known, all rights to carry on business
under such names, and all rights, interest and privileges which Mortgagor
has or may have as developer or declarant under any covenants, restrictions
or declarations now or hereafter relating to the Real Estate or the
Improvements) and all notes or chattel paper now or hereafter arising from
or by virtue of any transactions related to the Real Estate or the
Improvements (collectively, the "General Intangibles");
L. All water taps, sewer taps, certificates of occupancy,
permits, licenses, franchises, certificates, consents, approvals and other
rights and privileges now or hereafter obtained in connection with the Real
Estate or the Improvements and all present and future warranties and
guaranties relating to the Improvements or to any equipment, fixtures,
furniture, furnishings, personal property or components of any of the
foregoing now or hereafter located or installed on the Real Estate or the
Improvements;
M. All building materials, supplies and equipment now or
hereafter placed on the Real Estate or in the Improvements and all
architectural renderings, models, drawings, plans, specifications, studies
and data now or hereafter relating to the Real Estate or the Improvements;
N. All right, title and interest of Mortgagor in any insurance
policies or binders now or hereafter relating to the Property including any
unearned premiums thereon;
O. All proceeds, products, substitutions and accessions
(including claims and demands therefor) of the conversion, voluntary or
involuntary, of any of the foregoing into cash or liquidated claims,
including, without limitation, proceeds of insurance and condemnation
awards; and
P. All other or greater rights and interests of every nature in
the Real Estate or the Improvements and in the possession or use thereof
and income therefrom, whether now owned or hereafter acquired by Mortgagor.
FOR THE PURPOSES OF SECURING:
(1) The debt evidenced by that certain promissory note (such
promissory note, together with any and all renewals, modifications,
consolidations and extensions thereof, is hereinafter referred to as the
"Note") of even date with this Mortgage, made by Mortgagor to the order of
Mortgagee in the original principal amount of Nine Million Nine Hundred
Sixty-Four Thousand and 00/100 Dollars ($9,964,000.00), together with
interest as therein provided;
(2) The full and prompt payment and performance of all of the
provisions, agreements, covenants and obligations herein contained and
contained in any other agreements, documents or instruments now or
hereafter evidencing, securing, guarantying or otherwise relating to the
indebtedness evidenced by the Note, including, but not limited to, the
Hazardous Indemnity Agreement (as hereinafter defined) (the Note, this
Mortgage, and such other agreements, documents and instruments, together
with any and all renewals, amendments, extensions and modifications
thereof, are hereinafter collectively referred to as the "Loan Documents")
and the payment of all other sums therein covenanted to be paid;
(3) Any and all additional advances made in accordance with
section 29-3-50, Code of Laws of South Carolina (1976), as amended, by
Mortgagee to protect or preserve the Property or the lien or security
interest created hereby on the Property, or for taxes, assessments or
insurance premiums as hereinafter provided or for performance of any of
Mortgagor's obligations hereunder or under the other Loan Documents or for
any other purpose provided herein or in the other Loan Documents (whether
or not the original Mortgagor remains the owner of the Property at the time
of such advances); and
(4) Any and all other indebtedness now owing or which may
hereafter be owing by Mortgagor to Mortgagee, including, without
limitation, all prepayment fees, however and whenever incurred or
evidenced, whether express or implied, direct or indirect, absolute or
contingent, or due or to become due, and all renewals, modifications,
consolidations, replacements and extensions thereof.
(All of the sums referred to in Paragraphs (1) through (4) above
are herein sometimes referred to as the "secured indebtedness" or the
"indebtedness secured hereby").
TO HAVE AND TO HOLD the Property unto Mortgagee, its successors
and assigns forever, for the purposes and uses herein set forth.
PROVIDED, HOWEVER, that if the principal and interest and all
other sums due or to become due under the Note or under the other Loan
Documents, including, without limitation, any prepayment fees required
pursuant to the terms of the Note, shall have been paid at the time and in
the manner stipulated therein and all other sums payable hereunder and all
other indebtedness secured hereby shall have been paid and all other
covenants contained in the Loan Documents shall have been performed, then,
in such case, this Mortgage shall be satisfied and the estate, right, title
and interest of Mortgagee in the Property shall cease, and upon payment to
Mortgagee of all costs and expenses incurred for the preparation of the
release hereinafter referenced and all recording costs if allowed by law,
Mortgagee shall release this Mortgage and the lien and security interest
hereof by proper instrument.
ARTICLE 1
COVENANTS OF MORTGAGOR
For the purpose of further securing the indebtedness secured
hereby and for the protection of the security of this Mortgage, for so long
as the indebtedness secured hereby or any part thereof remains unpaid,
Mortgagor covenants and agrees as follows:
1.1 WARRANTIES OF MORTGAGOR. Mortgagor, for itself and its
successors and assigns, does hereby represent, warrant and covenant to and
with Mortgagee, its successors and assigns, that:
(a) Mortgagor has good and marketable fee simple title to the
Property, subject only to those matters expressly set forth as exceptions
to or subordinate matters in the title insurance policy insuring the lien
of this Mortgage which Mortgagee has agreed to accept, excepting therefrom
all preprinted and/or standard exceptions (the "Permitted Exceptions"), and
has full power and lawful authority to grant, bargain, sell, convey,
assign, transfer and mortgage its interest in the Property in the manner
and form hereby done or intended. Mortgagor will preserve its interest in
and title to the Property and will forever warrant and defend the same to
Mortgagee against any and all claims whatsoever and will forever warrant
and defend the validity and priority of the lien and security interest
created herein against the claims of all persons and parties whomsoever,
subject to the Permitted Exceptions. The foregoing warranty of title shall
survive the foreclosure of this Mortgage and shall inure to the benefit of
and be enforceable by Mortgagee in the event Mortgagee acquires title to
the Property pursuant to any foreclosure;
(b) No bankruptcy or insolvency proceedings are pending or
contemplated by Mortgagor or, to the best knowledge of Mortgagor, against
Mortgagor or by or against any endorser or cosigner of the Note, or any
guarantor or indemnitor under any guaranty or indemnity agreement executed
in connection with the Note of the loan evidenced thereby and secured
hereby;
(c) To the best of Mortgagor's knowledge, all reports,
certificates, affidavits, statements and other data furnished by or on
behalf of Mortgagor to Mortgagee in connection with the loan evidenced by
the Note are true and correct in all material respects and do not omit to
state any fact or circumstance necessary to make the statements contained
therein not misleading;
(d) The execution, delivery and performance of this Mortgage, the
Note and all of the other Loan Documents have been duly authorized by all
necessary action to be, and are, binding and enforceable against Mortgagor
in accordance with the respective terms thereof and do not contravene,
result in a breach of or constitute (upon the giving of notice or the
passage of time or both) a default under the partnership agreement,
articles of incorporation or other organizational documents of Mortgagor or
any contract or agreement of any nature to which Mortgagor is a party or by
which Mortgagor or any of its property may be bound and do not violate or
contravene any law, order, decree, rule or regulation to which Mortgagor is
subject;
(e) The Real Estate and the Improvements, and the intended use
thereof by Mortgagor comply in all material respects with all applicable
restrictive covenants, zoning ordinances, subdivision and building codes,
flood disaster laws, applicable health and environmental laws and
regulations and all other ordinances, orders or requirements issued by any
state, federal or municipal authorities having or claiming jurisdiction
over the Property. The Real Estate and Improvements constitute one or more
separate tax parcels for purposes of ad valorem taxation. The Real Estate
and Improvements do not require any rights over, or restrictions against,
other property in order to comply with any of the aforesaid governmental
ordinances, orders or requirements other than Permitted Exceptions.
(f) All utility services necessary and sufficient for the full
use, occupancy, operation and disposition of the Real Estate and the
Improvements for their intended purposes are available to the Property,
including water, storm sewer, sanitary sewer, gas, electric, cable and
telephone facilities, through public rights-of-way or perpetual private
easements;
(g) All streets, roads, highways, bridges and waterways necessary
for access to and full use, occupancy, operation and disposition of the
Real Estate and the Improvements have been completed, have been dedicated
to and accepted by the appropriate municipal authority and are open and
available to the Real Estate and the Improvements without further condition
or cost to Mortgagor or served by a perpetual private easement reflected in
the Permitted Exceptions;
(h) All curb cuts, driveways and traffic signals shown on the
survey delivered to Mortgagee prior to the execution and delivery of this
Mortgage are existing and have been fully approved by the appropriate
governmental authority;
(i) To the best of Mortgagor's knowledge, there are no judicial,
administrative, mediation or arbitration actions, suits or proceedings
pending or threatened against or affecting Mortgagor, (and, if Mortgagor is
a partnership, any of its general partners) or the Property which, if
adversely determined, would materially impair either the Property or
Mortgagor's ability to perform the covenants or obligations required to be
performed under the Loan Documents;
(j) The Property is free from delinquent water charges, sewer
rents, taxes and assessments;
(k) As of the date of this Mortgage, the Property is free from
unrepaired damage caused by fire, flood, accident or other casualty;
(l) As of the date of this Mortgage, no part of the Real Estate
or the Improvements has been taken in condemnation, eminent domain or like
proceeding nor is any such proceeding pending or to Mortgagor's knowledge
and belief, threatened or contemplated;
(m) Mortgagor possesses all franchises, patents, copyrights,
trademarks, trade names, licenses and permits adequate for the conduct of
its business substantially as now conducted;
(n) To the best of Mortgagor's knowledge, the Improvements are
structurally sound, in good repair and free of defects in materials and
workmanship and have been constructed and installed in substantial
compliance with the plans and specifications relating thereto, ordinary
wear and tear excepted. All major building systems located within the
Improvements, including, without limitation, the heating and air
conditioning systems and the electrical and plumbing systems, are in good
working order and condition, ordinary wear and tear excepted;
(o) Mortgagor has delivered to Mortgagee true, correct and
complete copies of all Contracts and all amendments thereto or
modifications thereof;
(p) Each Contract constitutes the legal, valid and binding
obligation of Mortgagor and, to the best of Mortgagor's knowledge and
belief, is enforceable against any other party thereto. To the best of
Mortgagor's knowledge, no default exists, or with the passing of time or
the giving of notice or both would exist, under any Contract which would,
in the aggregate, have a material adverse effect on Mortgagor or the
Property;
(q) No Contract provides any party with the right to obtain a
lien or encumbrance upon the Property superior to the lien of this Mortgage
other than Permitted Exceptions;
(r) Mortgagor and the Property are free from any delinquent
obligations for sales and payroll taxes;
(s) There are no security agreements or financing
statements affecting any of the Property other than (i) as disclosed in
writing by Mortgagor to Mortgagee prior to the date hereof and (ii) the
security agreements and financing statements created in favor of Mortgagee;
and
(t) The Property forms no part of any property owned, used or
claimed by Mortgagor as a residence or business homestead and is not exempt
from forced sale under the laws of the State of South Carolina. Mortgagor
hereby disclaims and renounces each and every claim to all or any portion
of the Property as a homestead.
(u) The Permitted Exceptions do not and will not materially and
adversely affect (1) the ability of Mortgagor to pay in full the principal
and interest on the Note in a timely manner or (2) the use of the Property
for the use currently being made thereof, the operation of the Property as
currently being operated or the value of the Property.
(v) Mortgagor shall take all action necessary to assure that
Mortgagor's computer based systems are able to operate and effectively
process data, including dates on and after January 1, 2000 and at the
request of Mortgagee, Mortgagor shall provide Mortgagee with assurance
acceptable to Mortgagee of Mortgagor's Year 2000 compatibility.
1.2 DEFENSE OF TITLE. If, while this Mortgage is in force, the
title to the Property or the interest of Mortgagee therein shall be the
subject, directly or indirectly, of any action at law or in equity, or be
attached directly or indirectly, or endangered, clouded or adversely
affected in any manner, Mortgagor, at Mortgagor's expense, shall take all
necessary and proper steps for the defense of said title or interest,
including the employment of counsel approved by Mortgagee, the prosecution
or defense of litigation, and the compromise or discharge of claims made
against said title or interest. Notwithstanding the foregoing, in the
event that Mortgagee determines that Mortgagor is not adequately performing
its obligations under this Section, Mortgagee may, without limiting or
waiving any other rights or remedies of Mortgagee hereunder, take such
steps, with respect thereto as Mortgagee shall deem necessary or proper and
any and all costs and expenses incurred by Mortgagee in connection
therewith, together with interest thereon at the Default Interest Rate (as
defined in the Note) from the date incurred by Mortgagee until actually
paid by Mortgagor, shall be immediately paid by Mortgagor on demand and
shall be secured by this Mortgage and by all of the other Loan Documents
securing all or any part of the indebtedness evidenced by the Note.
1.3 PERFORMANCE OF OBLIGATIONS. Mortgagor shall pay when due the
principal of and the interest on the indebtedness evidenced by the Note.
Mortgagor shall also pay all charges, fees and other sums required to be
paid by Mortgagor as provided in the Loan Documents, and shall observe,
perform and discharge all obligations, covenants and agreements to be
observed, performed or discharged by Mortgagor set forth in the Loan
Documents in accordance with their terms. Further, Mortgagor shall
promptly and strictly perform and comply with all covenants, conditions,
obligations and prohibitions required of Mortgagor in connection with any
other document or instrument affecting title to the Property, or any part
thereof, regardless of whether such document or instrument is superior or
subordinate to this Mortgage.
1.4 INSURANCE. Mortgagor shall, at Mortgagor's expense, maintain
in force and effect on the Property at all times while this Mortgage
continues in effect the following insurance:
(a) Insurance against loss or damage to the Property by fire,
windstorm, tornado and hail and against loss and damage by such other,
further and additional risks as may be now or hereafter embraced by an
"all-risk" or "special form" type of insurance policy. The amount of such
insurance shall be not less than one hundred percent (100%) of the full
replacement cost (insurable value) of the Improvements (as established by
an MAI appraisal), without reduction for depreciation. The determination
of the replacement cost amount shall be adjusted annually to comply with
the requirements of the insurer issuing such coverage or, at Mortgagee's
election, by reference to such indices, appraisals or information as
Mortgagee determines in its reasonable discretion in order to reflect
increased value due to inflation. Absent such annual adjustment, each
policy shall contain inflation guard coverage insuring that the policy
limit will be increased over time to reflect the effect of inflation. Full
replacement cost, as used herein, means, with respect to the Improvements,
the cost of replacing the Improvements without regard to deduction for
depreciation, exclusive of the cost of excavations, foundations and
footings below the lowest basement floor. Mortgagor shall also maintain
insurance against loss or damage to furniture, furnishing, fixtures,
equipment and other items (whether personalty or fixtures) included in the
Property and owned by Mortgagor from time to time to the extent applicable.
Each policy shall contain a replacement cost endorsement and either an
agreed amount endorsement (to avoid the operation of any co-insurance
provisions) or a waiver of any co-insurance provisions, all subject to
Mortgagee's approval. The maximum deductible shall be $10,000.00.
(b) Commercial General Liability Insurance against claims for
personal injury, bodily injury, death and property damage occurring on, in
or about the Real Estate or the Improvements in amounts not less than
$1,000,000.00 per occurrence and $2,000,000.00 in the aggregate plus
umbrella coverage in an amount not less than $2,000,000. Mortgagee hereby
retains the right to periodically review the amount of said liability
insurance being maintained by Mortgagor and to require an increase in the
amount of said liability insurance should Mortgagee deem an increase to be
reasonably prudent under then existing circumstances.
(c) Boiler and machinery insurance is required if steam boilers
or other pressure-fired vessels are in operation at the Property. Minimum
liability coverage per accident must equal the greater of the replacement
cost (insurable value) of the Improvements housing such boiler or pressure-
fired machinery or $2,000,000.00. If one or more large HVAC units is in
operation at the Property, "Systems Breakdowns" coverage shall be required,
as determined by Mortgagee. Minimum liability coverage per accident must
equal the value of such unit(s).
(d) If the Improvements or any part thereof is situated in an
area designated by the Federal Emergency Management Agency ("FEMA") as a
special flood hazard area (Zone A or Zone V), flood insurance in an amount
equal to the lesser of: (a) the minimum amount required, under the terms of
coverage, to compensate for any damage or loss on a replacement basis (or
the unpaid balance of the indebtedness secured hereby if replacement cost
coverage is not available for the type of building insured); or (b) the
maximum insurance available under the appropriate National Flood Insurance
Administration program. The maximum deductible shall be $3,000.00 per
building or a higher minimum amount as required by FEMA or other applicable
law.
(e) During the period of any construction, renovation or
alteration of the existing Improvements which exceeds the lesser of 10% of
the principal amount of the Note or $500,000, at Mortgagee's request, a
completed value, "All Risk" Builder's Risk form or "Course of Construction"
insurance policy in nonreporting form, in an amount approved by Mortgagee,
may be required. During the period of any construction of any addition to
the existing Improvements, a completed value, "All Risk" Builder's Risk
form or "Course of Construction" insurance policy in non-reporting form, in
an amount approved by Mortgagee, shall be required.
(f) When required by applicable law, ordinance or other
regulation, Worker's Compensation and Employer's Liability Insurance
covering all persons subject to the worker's compensation laws of the state
in which the Property is located.
(g) Business income (loss of rents) insurance in amounts
sufficient to compensate Mortgagor for all Rents and Profits or income
during a period of not less than twelve (12) months. The amount of
coverage shall be adjusted annually to reflect the Rents and Profits or
income payable during the succeeding twelve (12) month period.
(h) Such other insurance on the Property or on any replacements
or substitutions thereof or additions thereto as may from time to time be
required by Mortgagee against other insurable hazards or casualties which
at the time are commonly insured against in the case of property similarly
situated including, without limitation, Sinkhole, Mine Subsidence,
Earthquake and Environmental insurance, due regard being given to the
height and type of buildings, their construction, location, use and
occupancy.
All such insurance shall (i) be with insurers fully licensed and
authorized to do business in the state within which the Premises is located
and who have and maintain a rating of at least A from Standard & Poor's, or
equivalent, (ii) contain the complete address of the Premises (or a
complete legal description), (iii) be for terms of at least one year, with
premium prepaid, and (vi) be subject to the approval of Mortgagee as to
insurance companies, amounts, content, forms of policies, method by which
premiums are paid and expiration dates, and (v) include a standard, non-
contributory, mortgagee clause naming EXACTLY:
First Union National Bank
its Successors and Assigns ATIMA
Attn. Commercial Mortgage Servicing
X.X. Xxx 00000
Xxxxxxxxx, XX 00000
(a) as an additional insured under all liability insurance
policies, (b) as the first mortgagee on all property insurance policies and
(c) as the loss payee on all loss of rents or loss of business income
insurance policies.
Mortgagor shall, as of the date hereof, deliver to Mortgagee
evidence that said insurance policies have been prepaid as required above
and certified copies of such insurance policies and original certificates
of insurance signed by an authorized agent of the applicable insurance
companies evidencing such insurance satisfactory to Mortgagee. Mortgagor
shall renew all such insurance and deliver to Mortgagee certificates and
policies evidencing such renewals at least thirty (30) days before any such
insurance shall expire. Mortgagor further agrees that each such insurance
policy: (i) shall provide for at least thirty (30) days' prior written
notice to Mortgagee prior to any policy reduction or cancellation for any
reason other than non-payment of premium and at least ten (10) days' prior
written notice to Mortgagee prior to any cancellation due to non-payment of
premium; (ii) shall contain an endorsement or agreement by the insurer that
any loss shall be payable to Mortgagee in accordance with the terms of such
policy notwithstanding any act or negligence of Mortgagor which might
otherwise result in forfeiture of such insurance; (iii) shall waive all
rights of subrogation against Mortgagee; (iv) in the event that the Real
Estate or the Improvements constitutes a legal non-conforming use under
applicable building, zoning or land use laws or ordinances, shall include
an ordinance or law coverage endorsement which will contain Coverage A:
"Loss Due to Operation of Law" (with a minimum liability limit equal to
Replacement Cost With Agreed Value Endorsement), Coverage B: "Demolition
Cost" and Coverage C: "Increased Cost of Construction" coverages; and (v)
may be in the form of a blanket policy provided that, in the event that any
such coverage is provided in the form of a blanket policy, Mortgagor hereby
acknowledges and agrees that failure to pay any portion of the premium
therefor which is not allocable to the Property or by any other action not
relating to the Property which would otherwise permit the issuer thereof to
cancel the coverage thereof, would require the Property to be insured by a
separate, single-property policy. The blanket policy must properly
identify and fully protect the Property as if a separate policy were issued
for 100% of Replacement Cost at the time of loss and otherwise meet all of
Mortgagee's applicable insurance requirements set forth in this Section
1.4. The delivery to Mortgagee of the insurance policies or the
certificates of insurance as provided above shall constitute an assignment
of all proceeds payable under such insurance policies relating to the
Property by Mortgagor to Mortgagee as further security for the indebtedness
secured hereby. In the event of foreclosure of this Mortgage, or other
transfer of title to the Property in extinguishment in whole or in part of
the indebtedness secured hereby, all right, title and interest of Mortgagor
in and to all proceeds payable under such policies then in force concerning
the Property shall thereupon vest in the purchaser at such foreclosure, or
in Mortgagee or other transferee in the event of such other transfer of
title. Approval of any insurance by Mortgagee shall not be a
representation of the solvency of any insurer or the sufficiency of any
amount of insurance. In the event Mortgagor fails to provide, after five
(5) days notice, maintain, keep in force or deliver and furnish to
Mortgagee the policies of insurance required by this Mortgage or evidence
of their renewal as required herein, Mortgagee may, but shall not be
obligated to, procure such insurance and Mortgagor shall pay all amounts
advanced by Mortgagee therefor, together with interest thereon at the
Default Interest Rate from and after the date advanced by Mortgagee until
actually repaid by Mortgagor, promptly upon demand by Mortgagee. Any
amounts so advanced by Mortgagee, together with interest thereon, shall be
secured by this Mortgage and by all of the other Loan Documents securing
all or any part of the indebtedness secured hereby. Mortgagee shall not be
responsible for nor incur any liability for the insolvency of the insurer
or other failure of the insurer to perfrm, even though Mortgagee has caused
the insurance to be placed with the insurer after failure of Mortgagor to
furnish such insurance. Mortgagor shall not obtain insurance for the
Property in addition to that required by Mortgagee without the prior
written consent of Mortgagee, which consent will not be unreasonably
withheld provided that (i) Mortgagee is a named insured on such insurance,
(ii) Mortgagee receives complete copies of all policies evidencing such
insurance, and (iii) such insurance complies with all of the applicable
requirements set forth herein.
1.5 PAYMENT OF TAXES. Mortgagor shall pay or cause to be paid,
except to the extent provision is actually made therefor pursuant to
Section 1.6 of this Mortgage, all taxes and assessments which are or may
become a lien on the Property or which are assessed against or imposed upon
the Property. Mortgagor shall furnish Mortgagee with receipts (or if
receipts are not immediately available, with copies of canceled checks
evidencing payment with receipts to follow promptly after they become
available) showing payment of such taxes and assessments at least fifteen
(15) days prior to the applicable delinquency date therefor.
Notwithstanding the foregoing, Mortgagor may in good faith, by appropriate
proceedings and upon notice to Mortgagee, contest the validity,
applicability or amount of any asserted tax or assessment so long as (a)
such contest is diligently pursued, (b) Mortgagee determines, in its
subjective opinion, that such contest suspends the obligation to pay the
tax and that nonpayment of such tax or assessment will not result in the
sale, loss, forfeiture or diminution of the Property or any part thereof or
any interest of Mortgagee therein, and (c) prior to the earlier of the
commencement of such contest or the delinquency date of the asserted tax or
assessment, Mortgagor deposits in the Impound Account (as hereinafter
defined) an amount determined by Mortgagee to be adequate to cover the
payment of such tax or assessment and a reasonable additional sum to cover
possible interest, costs and penalties; provided, however, that Mortgagor
shall promptly cause to be paid any amount adjudged by a court of competent
jurisdiction to be due, with all interest, costs and penalties thereon,
promptly after such judgment becomes final; and provided, further, that in
any event each such contest shall be concluded, the taxes, assessments,
interest, costs and penalties shall be paid prior to the date any writ or
order is issued under which the Property may be sold, lost or forfeited.
1.6 TAX AND INSURANCE IMPOUND ACCOUNT. Mortgagor shall establish
and maintain at all times while this Mortgage continues in effect an
impound account (the "Impound Account") with Mortgagee for payment of real
estate taxes and assessments and insurance on the Property and as
additional security for the indebtedness secured hereby. Simultaneously
with the execution hereof, Mortgagor shall deposit in the Impound Account
an amount determined by Mortgagee to be necessary to ensure that there will
be on deposit with Mortgagee an amount which, when added to the monthly
payments subsequently required to be deposited with Mortgagee hereunder on
account of real estate taxes, assessments and insurance premiums, will
result in there being on deposit with Mortgagee in the Impound Account an
amount sufficient to pay the next due installment of real estate taxes and
assessment on the Property at least one (1) month prior to the due date
thereof and the next due annual insurance premiums with respect to the
Property at least one (1) month prior to the due date thereof. Commencing
on the first monthly payment date under the Note and continuing thereafter
on each monthly payment date under the Note, Mortgagor shall pay to
Mortgagee, concurrently with and in addition to the monthly payment due
under the Note and until the Note and all other indebtedness secured hereby
is fully paid and performed, deposits in an amount equal to one-twelfth
(1/12) of the amount of the annual real estate taxes and assessments that
will next become due and payable on the Property, plus one-twelfth (1/12)
of the amount of the annual premiums that will next become due and payable
on insurance policies which Mortgagor is required to maintain hereunder,
each as estimated and determined by Mortgagee. So long as no Event of
Default (as hereinafter defined), or event which with the passage of time,
the giving of notice, or both, would constitute an Event of Default (a
"Default") hereunder or under the other Loan Documents has occurred and is
continuing, all sums in the Impound Account shall e held by Mortgagee in
the Impound Account to pay said taxes, assessments and insurance premiums
before the same become delinquent. Mortgagor shall be responsible for
ensuring the receipt by Mortgagee, at least thirty (30) days prior to the
respective due date for payment thereof, of all bills, invoices and
statements for all taxes, assessments and insurance premiums to be paid
from the Impound Account, and so long as no Default or Event of Default
hereunder or under the other Loan Documents has occurred and is continuing,
Mortgagee shall pay the governmental authority or other party entitled
thereto directly to the extent funds are available for such purpose in the
Impound Account. In making any payment from the Impound Account, Mortgagee
shall be entitled to rely on any xxxx, statement or estimate procured from
the appropriate public office or insurance company or agent without any
inquiry into the accuracy of such xxxx, statement or estimate and without
any inquiry into the accuracy, validity, enforceability or contestability
of any tax, assessment, valuation, sale, forfeiture, tax lien or title or
claim thereof. The Impound Account shall not, unless otherwise explicitly
required by applicable law, be or be deemed to be escrow or trust funds,
but, at Mortgagee's option and in Mortgagee's discretion, may either be
held in a separate account or be commingled by Mortgagee with the general
funds of Mortgagee. No interest on the funds contained in the Impound
Account shall be paid by Mortgagee to Mortgagor. The Impound Account is
solely for the protection of Mortgagee and entails no responsibility on
Mortgagee's part beyond the payment of taxes, assessments and insurance
premiums following receipt of bills, invoices or statements therefor in
accordance with the terms hereof and beyond the allowing of due credit for
the sums actually received. Upon assignment of this Mortgage by Mortgagee,
any funds in the Impound Account shall be turned over to the assignee and
any responsibility of Mortgagee, as assignor, wih respect thereto shall
terminate. If the total funds in the Impound Account shall exceed the
amount of payments actually applied by Mortgagee for the purposes of the
Impound Account, such excess may be credited by Mortgagee on subsequent
payments to be made hereunder or, at the option of Mortgagee, refunded to
Mortgagor. If, however, the Impound Account shall not contain sufficient
funds to pay the sums required when the same shall become due and payable,
Mortgagor shall, within ten (10) days after receipt of written notice
thereof, deposit with Mortgagee the full amount of any such deficiency. If
the Mortgagor shall fail to deposit with Mortgagee the full amount of such
deficiency as provided above, Mortgagee shall have the option, but not the
obligation, to make such deposit and all amounts so deposited by Mortgagee,
together with interest thereon at the Default Interest Rate from the date
incurred by Mortgagee until actually paid by Mortgagor, shall be
immediately paid by Mortgagor on demand and shall be secured by this
Mortgage and by all of the other Loan Documents securing all or any part of
the indebtedness evidenced by the Note. If there is an Event of Default
under this Mortgage, Mortgagee may, but shall not be obligated to, apply at
any time the balance then remaining in the Impound Account against the
indebtedness secured hereby in whatever order Mortgagee shall subjectively
determine. No such application of the Impound Account shall be deemed to
cure any Default or Event of Default hereunder. Upon full payment of the
indebtedness secured hereby in accordance with its terms or at such
earlier time as Mortgagee may elect, the balance of the Impound Account
then in Mortgagee's possession shall be paid over to Mortgagor and no other
party shall have any right or claim thereto.
1.7 PAYMENT RESERVE.
(a) Contemporaneously with the execution hereof, Mortgagor has
established with Mortgagee a reserve in the amount equal to [two (2)
regular monthly installments of principal, interest and all required
deposits or impounds] as calculated by Mortgagee (the "Payment Reserve").
Mortgagor understands and agrees that, notwithstanding the establishment of
the Payment Reserve as herein required, all of the proceeds of the Note
have been, and shall be considered, fully disbursed and shall bear interest
and be payable on the terms provided therein. No interest on funds
contained in the Payment Reserve shall be paid by Mortgagee to Mortgagor.
(b) For so long as no Event of Default has occurred hereunder or
under any of the other Loan Documents, Mortgagee shall on the first two (2)
monthly Payment Dates (as defined in the Note) under the Note, advance from
the Payment Reserve to itself the amount of the monthly installment due and
payable by Mortgagor under the Note on such monthly Payment Date and shall
also advance from the Payment Reserve into the Impound Account the amount
of any deposit for taxes and insurance premiums and into the Replacement
Reserve (as hereinafter defined) the amount of any deposit for Repairs (as
hereinafter defined) and into any other reserve account the amount of any
deposit in accordance with the terms of any other Loan Document required to
be paid by Mortgagor concurrently with each such monthly installment
pursuant to the terms hereof. Provided no Default or Event of Default has
occurred after the final disbursement from the Payment Reserve, any amounts
then remaining in the Payment Reserve shall be paid to Mortgagor. Nothing
contained herein, including, without limitation, the existence of the
Payment Reserve, shall release Mortgagor of any obligation to make payments
under the Note, this Mortgage or the other Loan Documents strictly in
accordance with the terms hereof or thereof and, in this regard, without
limiting the generality of the foregoing, should the amounts contained in
the Payment Reserve not be sufficient to pay in full the monthly
installments and the Impound Account, Replacement Reserve and any other
applicable reserve account deposits referenced above in this subparagraph,
Mortgagor shall be responsible for paying such deficiency on the Payment
Date of any such monthly installment.
1.8 REPLACEMENT RESERVE; SECURITY INTEREST RESERVES.
(a) As additional security for the indebtedness secured hereby,
Mortgagor shall establish and maintain at all times while this Mortgage
continues in effect a repair reserve (the "Replacement Reserve") with
Mortgagee for payment of certain non-recurring types of costs and expenses
incurred by Mortgagor for interior and exterior work to the Property,
including without limitation, performance of work to the roofs, chimneys,
gutters, downspouts, paving, curbs, driveways, ramps, balconies, porches,
patios, exterior walls, carpets, exterior doors and doorways, windows,
elevators and mechanical and HVAC equipment (collectively, the "Repairs")
provided such costs and expenses are incurred for repairs (i) not incurred
for ordinary wear and tear at the Property and (ii) categorized under
generally accepted accounting principles as a capital expense and not as an
operating expense. Commencing on the first Payment Date under the Note and
continuing thereafter on each monthly Payment Date under the Note, the
Mortgagor shall pay to Mortgagee, concurrently with and in addition to the
monthly payment due under the Note and until the Note and all other
indebtedness secured hereby is fully paid and performed, a deposit to the
Replacement Reserve in an amount equal to $4,791.67 per month. So long as
no Default or Event of Default hereunder or under the other Loan Documents
has occurred and is continuing, all sums in the Replacement Reserve shall
be held by Mortgagee in the Replacement Reserve to pay the costs and
expenses of Repairs. So long as no Default or Event of Default hereunder
or under the other Loan Documents has occurred and is continuing, Mortgagee
shall, to the extent funds are available for such purpose in the
Replacement Reserve, disburse to Mortgagor the amount incurred and paid by
Mortgagor in performing such Repairs within ten (10) days following: (a)
the receipt by Mortgagee of a written request from Mortgagor for
disbursement from the Replacement Reserve and a certification by Mortgagor
in the form attached hereto as Exhibit B that the applicable item of Repair
has been completed, (b) the delivery to Mortgagee of paid invoices,
receipts or other evidence satisfactory to Mortgagee verifying the cost and
payment of performing the Repairs; (c) for dibursement requests in excess
of $10,000.00, the delivery to Mortgagee of affidavits, lien waivers or
other evidence reasonably satisfactory to Mortgagee showing that all
materialmen, laborers, subcontractors and any other parties who might or
could claim statutory or common law liens and are furnishing or have
furnished material or labor to the Property have been paid all amounts due
for labor and materials furnished to the Property; (d) for disbursement
requests in excess of $10,000.00, delivery to Mortgagee of a certification
from an inspecting architect or other third party acceptable to Mortgagee
describing the completed Repairs and verifying the completion of the
Repairs and the value of the completion of the Repairs and the value of the
completed Repairs; (e) for disbursement requests in excess of $10,000,00,
delivery to Mortgagee of a new certificate of occupancy for the portion of
the Improvements covered by such Repairs, if said new certificate of
occupancy is required by law, or a certification by Mortgagor that no new
certificate of occupancy is required; and (f) the receipt by Mortgagee of
an administrative fee in the amount of $150.00. Mortgagee shall not be
required to make advances from the Replacement Reserve more frequently than
once in any ninety (90) day period. In making any payment from the
Replacement Reserve, Mortgagee shall be entitled to rely on such request
from Mortgagor without any inquiry into the accuracy, validity or
contestability of any such amount. Mortgagee may, at Mortgagor's expense,
make or cause to be made during the term of this Mortgage an annual
inspection at the Property to determine the need, as determined by
Mortgagee in its reasonable judgment, for further Repairs of the Property
in order to maintain the Property in good condition and repair in
accordance with the second sentence of Section 1.16 hereof. In the event
that such inspection reveals that further Repairs of the Property are so
required, Mortgagee shall provide Mortgagor with a written description of
therequired Repairs and Mortgagor shall complete such Repairs to the
reasonable satisfaction of Mortgagee within ninety (90) days after the
receipt of such description from Mortgagee, or such later date as may be
approved by Mortgagee in its sole discretion. The Replacement Reserve
shall not, unless otherwise explicitly required by applicable law, be or
be deemed to be escrow or trust funds, but, at Mortgagee's option and in
Mortgagee's discretion, may either be held in a separate account or be
commingled by Mortgagee with the general funds of Mortgagee. Interest on
the funds contained in the Replacement Reserve shall be credited to
Mortgagor as provided in Section 4.31 hereof. The Replacement Reserve is
solely for the protection of Mortgagee and entails no responsibility on
Mortgagee's part beyond the payment of the costs and expenses described in
this Section in accordance with the terms hereof and beyond the allowing of
due credit for the sums actually received. In the event that the amounts
on deposit or available in the Replacement Reserve are inadequate to pay
the cost of the Repairs, Mortgagor shall pay the amount of such deficiency.
Upon assignment of this Mortgage by Mortgagee, any funds in the Replacement
Reserve shall be turned over to the assignee and any responsibility of
Mortgagee, as assignor, with respect thereto shall terminate. If there is
an Event of Default under this Mortgage, Mortgagee may, but shall not be
obligated to, apply at any time the balance then remaining in the
Replacement Reserve against the indebtedness secured hereby in whatever
order Mortgagee shall subjectively determine. No such application of the
Replacement Reserve shall be deemed to cure any Default or Event of Default
hereunder. Upon full payment of the indebtedness secured hereby in
accordance with its terms or at such earlier time as Mortgagee may elect,
the balance of the Replacement Reserve then in Mortgagee's possession shall
be paid over to Mortgagor and no other party shall have any right or claim
thereto.
(b) As additional security for the payment and performance by
Mortgagor of all duties, responsibilities and obligations under the Note
and the other Loan Documents, Mortgagor hereby unconditionally and
irrevocably assigns, conveys, pledges, mortgages, transfers, delivers,
deposits, sets over and confirms unto Mortgagee, and hereby grants to
Mortgagee a security interest in, (i) the Impound Account, the Payment
Reserve, the Repair and Remediation Reserve, the Replacement Reserve and
any other reserve or escrow account established pursuant to the terms
hereof or of any other Loan Document (collectively, the "Reserves"), (ii)
the accounts into which the Reserves have been deposited, (iii) all
insurance on said accounts, (iv) all accounts, contract rights and general
intangibles or other rights and interests pertaining thereto, (v) all sums
now or hereafter therein or represented thereby, (vi) all replacements,
substitutions or proceeds thereof, (vii) all instruments and documents now
or hereafter evidencing the Reserves or such accounts, (viii) all powers,
options, rights, privileges and immunities pertaining to the Reserves
(including the right to make withdrawals therefrom), and (ix) all proceeds
of the foregoing. Mortgagor hereby authorizes and consents to the account
into which the Reserves have been deposited being held in Mortgagee's name
or the name of any entity servicing the Note for Mortgagee and hereby
acknowledges and agrees, that Mortgagee, or at Mortgagee's election, such
servicing agent, shall have exclusive control over said account. Notice of
the assignment and security interest granted to Mortgagee herein may be
delivered by Mortgagee at any time to the financial institution wherein the
Reserves have been established, and Mortgagee, or such servicing entity,
shall have possession of all passbooks or other evidences of such accounts.
Mortgagor hereby assumes all risk of loss with respect to amounts on
deposit in the Reserves as long such Reserves are deposited into "Permitted
Investments" as described in Exhibit C annexed hereto. Mortgagor hereby
knowingly, voluntarily and intentionally stipulates, acknowledges and
agrees that the advancement of the funds from the Reserves as set forth
herein is at Mortgagor's direction and is not the exercise by Mortgagee of
any right of set-off or other remedy upon a Default or an Event of Default.
Mortgagor hereby waives all right to withdraw funds from the Reserves. If
an Event of Default shall occur hereunder or under any other of the Loan
Documents, then Mortgagee may, without notice or demand on Mortgagor, at
its option: (A) withdraw any or all of the funds (including, without
limitation, interest) then remaining in the Reserves and apply the same,
after deducting all costs and expenses of safekeeping, collection and
delivery (including, but not limited to, attorneys' fees, costs and
expenses) to the indebtedness evidenced by the Note or any other
obligations of Mortgagor under the other Loan Documents in such manner or
as Mortgagee shall deem appropriate in its sole discretion, and the excess,
if any, shall be paid to Mortgagor, (B) exercise any and all rights and
remedies of a secured party under any applicable Uniform Commercial Code,
and/or (C) exercise any other remedies available at law or in equity. No
such use or application of the funds contained in the Reserves shall be
deemed to cure any Default or Event of Default hereunder or under the other
Loan Documents.
1.9 CASUALTY AND CONDEMNATION. Mortgagor shall give Mortgagee
prompt written notice of the occurrence of any casualty affecting, or the
institution of any proceedings for eminent domain or for the condemnation
of, the Property or any portion thereof. All insurance proceeds on the
Property, and all causes of action, claims, compensation, awards and
recoveries for any damage, condemnation or taking of all or any part of the
Property or for any damage or injury to it for any loss or diminution in
value of the Property, are hereby assigned to and shall be paid to
Mortgagee. Mortgagee may participate in any suits or proceedings relating
to any such proceeds, causes of action, claims, compensation, awards or
recoveries and Mortgagee is hereby authorized, in its own name or in
Mortgagor's name, to adjust any loss covered by insurance or any
condemnation claim or cause of action, and to settle or compromise any
claim or cause of action in connection therewith, and Mortgagor shall from
time to time deliver to Mortgagee any instruments required to permit such
participation; provided, however, that so long as no Default or Event of
Default shall have occurred and be continuing. Mortgagee shall not have
the right to participate in the adjustment of any loss which is not in
excess of the lesser of (i) ten percent (10%) of the then outstanding
principal balance of the Note and (ii) $500,000.00. Mortgagee shall apply
any sums received by it under this Section first to the payment of all of
its costs and expenses (including, but not limited to, legal fees and
disbursements) incurred in obtaining those sums, and then, as follows:
(a) In the event that less than sixty percent (60%) of the
Improvements located on the Real Estate have been taken or destroyed, then
if:
(1) no Default or Event of Default is then continuing hereunder
or under any of the other Loan Documents, and
(2) the Property can, in Mortgagee's reasonable judgment, with
diligent restoration or repair, be returned to a condition at least equal
to the condition thereof that existed prior to the casualty or partial
taking causing the loss or damage within the earlier to occur of (i) six
(6) months after the receipt of insurance proceeds or condemnation awards
by either Mortgagor of Mortgagee and (ii) sixty (60) days prior to the
stated maturity date of the Note, and
(3) all necessary governmental approvals can be obtained to allow
the rebuilding and reoccupancy of the Property as described in Section
1.9(a)(2) above, and
(4) there are sufficient sums available (through insurance
proceeds or condemnation awards and contributions by Mortgagor, the full
amount of which shall at Mortgagee's option have been deposited with
Mortgagee) for such restoration or repair (including, without limitation,
for any costs and expenses of Mortgagee to be incurred in administering
said restoration or repair) and for payment of principal and interest to
become due and payable under the Note during such restoration or repair,
and
(5) the economic feasibility of the Improvements after such
restoration or repair will be such that income from their operation is
reasonably anticipated to be sufficient to pay operating expenses of the
Property and debt service on the indebtedness secured hereby in full with
the same coverage ratio considered by Mortgagee in its determination to
make the loan secured hereby including an assessment of the impact of the
termination of any Leases due to such casualty or condemnation, and
(6) in the event that the insurance proceeds or condemnation
awards received as a result of such casualty or partial taking exceed the
lesser of (i) five percent (5%) of the then outstanding principal balance
of the Note and (ii) $150,000, Mortgagor shall have delivered to Mortgagee,
at Mortgagor's sole cost and expense, an appraisal report in form and
substance satisfactory to Mortgagee appraising the value of the Property as
proposed to be restored or repaired to be not less than the appraised value
of the Property considered by Mortgagee in its determination to make the
loan secured hereby, and
(7) Mortgagor so elects by written notice delivered to Mortgagee
within five (5) days after settlement of the aforesaid insurance or
condemnation claim, then, Mortgagee shall, solely for the purposes of such
restoration or repair, advance so much of the remainder of such sums as may
be required for such restoration or repair, and any funds deposited by
Mortgagor therefor, to Mortgagor in the manner and upon such terms and
conditions as would be required by a prudent interim construction lender,
including, but not limited to, the prior approval by Mortgagee of plans and
specifications, contractors and form of construction contracts and the
furnishing to Mortgagee of permits, bonds, lien waivers, invoices, receipts
and affidavits from contractors and subcontractors in form and substance
satisfactory to Mortgagee in its discretion, with any remainder being
applied by Mortgagee for payment of the indebtedness secured hereby in
whatever order Mortgagee directs in its absolute discretion.
(8) In all other cases, namely, in the event that sixty percent
(60%) or more of the Improvements located on the Real Estate have been
taken or destroyed or Mortgagor does not elect to restore or repair the
Property pursuant to clause (a) above, or otherwise fails to meet the
requirements of clause (a) above, then in any of such events, Mortgagee
shall elect, in Mortgagee's absolute discretion and without regard to the
adequacy of Mortgagee's security, to do either of the following: (1)
accelerate the maturity date of the Note and declare any and all
indebtedness secured hereby to be immediately due and payable and apply the
remainder of such sums received pursuant to this Section to the payment of
the indebtedness secured hereby in whatever order Mortgagee directs in its
absolute discretion, with any remainder being paid to Mortgagor, or (2)
notwithstanding that Mortgagor may have elected not to restore or repair
the Property pursuant to the provisions of Section 1.9(a)(7) above, require
Mortgagor to restore or repair the Property, to the extent that proceeds
are received by Mortgagor, in the manner and upon such terms and conditions
as would be required by a prudent interim construction lender, including,
but not limited to the deposit by Mortgagor with Mortgagee, within thirty
(30) days after demand therefor, of any deficiency necessary in order to
assure the availability of sufficient funds to pay for such restoration or
repair, including Mortgagee's costs and expenses to be incurred in
connection therewith, the prior approval by Mortgagee of plans and
specifications, contractors and form of construction contracts and the
furnishing to Mortgagee of permits, bonds, lien waivers, invoices, receipts
and affidavits from contractors and subcontractors in form and substance
satisfactory to Mortgagee in its discretion, and apply the remainder of
such sums toward such restoration and repair, with any balance thereafter
remaining being applied by Mortgagee for payment of the indebtedness
secured hereby in whatever order Mrtgagee directs in its absolute
discretion.
Any reduction in the indebtedness secured hereby resulting from Mortgagee's
application of any sums received by it hereunder shall take effect only
when Mortgagee actually receives such sums and elects to apply such sums to
the indebtedness secured hereby and, in any event, the unpaid portion of
the indebtedness secured hereby shall remain in full force and effect and
Mortgagor shall not be excused in the payment thereof. Partial payments
received by Mortgagee, as described in the preceding sentence, shall be
applied to the unpaid principal balance evidenced hereby and the remaining
principal balance will be recast to adjust the fixed monthly installments
required to be paid pursuant to Section 1.02 of the Note over the remaining
amortization period. If Mortgagor elects or Mortgagee directs Mortgagor to
restore or repair the Property after the occurrence of a casualty or
partial taking of the Property as provided above, Mortgagor shall promptly
and diligently, at Mortgagor's sole cost and expense and regardless of
whether the insurance proceeds or condemnation award, as appropriate, shall
be sufficient for the purpose, restore, repair, replace and rebuild the
Property as nearly as possible to its value, condition and character
immediately prior to such casualty or partial taking in accordance with the
foregoing provisions and Mortgagor shall pay to Mortgagee all costs and
expenses of Mortgagee incurred in administering said rebuilding,
restoration or repair, provided the Mortgagee makes such proceeds or award
available for such purpose. Mortgagor agrees to execute and deliver from
time to time such further instruments as may be requested by Mortgagee to
confirm the foregoing assignment to Mortgagee of any award, damage,
insurance proceeds, payment or other compensation. Mortgagee is hereby
irrevocably constituted and appointed the attorney-in-fact of Mortgagor
(which power of attorney shall be irrevocable so long as any indebtedness
secured hereby is outstanding, shall be deemed coupled with an interest,
shal survive the voluntary or involuntary dissolution of Mortgagor and
shall not be affected by any disability or incapacity suffered by Mortgagor
subsequent to the date hereof), with full power of substitution, subject to
the terms of this section, to settle for, collect and receive any such
awards, damages, insurance proceeds, payments or other compensation from
the parties or authorities making the same, to appear in and prosecute any
proceedings therefor and to give receipts and acquittances therefor.
1.10 MECHANICS' LIENS. Mortgagor shall pay when due all claims
and demands of mechanics, materialmen, laborers and others for any work
performed or materials delivered for the Real Estate or Improvements;
provided, however, that, Mortgagor shall have the right to contest in good
faith any such claim or demand, so long as it does so diligently, by
appropriate proceedings and without prejudice to Mortgagee and provided
that neither the Property nor any interest therein would be in any danger
of sale, loss or forfeiture as a result of such proceeding or contest. In
the event Mortgagor shall contest any such claim or demand, Mortgagor shall
promptly notify Mortgagee of such contest and thereafter shall, upon
Mortgagee's request, promptly provide a bond, cash deposit or other
security satisfactory to Mortgagee to protect Mortgagee's interest and
security should the contest be unsuccessful. If Mortgagor shall fail to
immediately discharge or provide security against any such claim or demand
as aforesaid, Mortgagee may do so and any and all expenses incurred by
Mortgagee, together with interest thereon at the Default Interest Rate from
the date incurred by Mortgagee until actually paid by Mortgagor, shall be
immediately paid by Mortgagor on demand and shall be secured by this
Mortgage and by all of the other Loan Documents securing all or any part of
the indebtedness evidenced by the Note.
1.11 RENTS AND PROFITS. As additional and collateral security
for the payment of the indebtedness secured hereby and cumulative of any
and all rights and remedies herein provided for, Mortgagor hereby
absolutely and presently assigns to Mortgagee all existing and future Rents
and Profits. Mortgagor hereby grants to Mortgagee the sole, exclusive and
immediate right, without taking possession of the Property, to demand,
collect (by suit or otherwise), receive and give valid and sufficient
receipts for any and all of said Rents and Profits, for which purpose
Mortgagor does hereby irrevocably make, constitute and appoint Mortgagee
its attorney-in-fact with full power to appoint substitutes or a trustee to
accomplish such purpose (which power of attorney shall be irrevocable so
long as any indebtedness secured hereby is outstanding, shall be deemed to
be coupled with an interest, shall survive the voluntary or involuntary
dissolution of Mortgagor and shall not be affected by any disability or
incapacity suffered by Mortgagor subsequent to the date hereof). Mortgagee
shall be without liability for any loss which may arise from a failure or
inability to collect Rents and Profits, proceeds or other payments.
However, until the occurrence of an Event of Default under this Mortgage,
Mortgagor shall have a license to collect and receive the Rents and Profits
when due and prepayments thereof for not more than one month prior to due
date thereof. Upon the occurrence of an Event of Default hereunder,
Mortgagor's license shall automatically terminate without notice to
Mortgagor and Mortgagee may thereafter, without taking possession of the
Property, collect the Rents and Profits itself or by an agent or receiver.
From and after the termination of such license, Mortgagor shall be the
agent of Mortgagee in collection of the Rents and Profits and all of the
Rents and Profits so collected by Mortgagor shall be held in trust by
Mortgagor for the sole and exclusive benefit of Mortgagee and Mortgagor
shall, within one (1) business day after receipt o any Rents and Profits,
pay the same to Mortgagee to be applied by Mortgagee as hereinafter set
forth. Neither the demand for or collection of Rents and Profits by
Mortgagee shall constitute any assumption by Mortgagee of any obligations
under any agreement relating thereto. Mortgagee is obligated to account
only for such Rents and Profits as are actually collected or received by
Mortgagee. Mortgagor irrevocably agrees and consents that the respective
payors of the Rents and Profits shall, upon demand and notice from
Mortgagee of an Event of Default hereunder, pay said Rents and Profits to
Mortgagee without liability to determine the actual existence of any Event
of Default claimed by Mortgagee. Mortgagor hereby waives any right, claim
or demand which Mortgagor may now or hereafter have against any such payor
by reason of such payment of Rents and Profits to Mortgagee, and any such
payment shall discharge such payor's obligation to make such payment to
Mortgagor. All Rents and Profits collected or received by Mortgagee shall
be applied against all expenses of collection, including, without
limitation, attorneys' fees, against costs of operation and management of
the Property and against the indebtedness secured hereby, in whatever order
or priority as to any of the items so mentioned as Mortgagee directs in its
sole subjective discretion and without regard to the adequacy of its
security. Neither the exercise by Mortgagee of any rights under this
Section nor the application of any Rents and Profits to the secured
indebtedness shall cure or be deemed a waiver of any Event of Default
hereunder. The assignment of Rents and Profits hereinabove granted shall
continue in full force and effect during any period of foreclosure or
redemption with respect to the Property. Mortgagor has executed an
Assignment of Leases and Rents dated of even date herewith (the
"Assignment") in favor of Mortgagee covering all of the right, title and
interest of Mortgagor, as landlord, lessor or licensor, in and to any
Leases. All rghts and remedies granted to Mortgagee under the Assignment
shall be in addition to and cumulative of all rights and remedies granted
to Mortgagee hereunder.
1.12 LEASES AND LICENSES.
(a) Prior to execution of any Leases of space in the Improvements
after the date hereof, Mortgagor shall submit to Mortgagee, for Mortgagee's
prior approval, which approval shall not be unreasonably withheld, a copy
of the form Lease Mortgagor plans to use in leasing space in the
Improvements. All Leases of space in the Improvements shall be on terms
consistent with the terms for similar leases in the market area of the Real
Estate, shall provide for free rent only if the same is consistent with
prevailing market conditions and shall provide for market rents then
prevailing in the market area of the Real Estate. Mortgagor shall also
submit to Mortgagee for Mortgagee's approval, which approval shall not be
unreasonably withheld, prior to the execution thereof, any proposed Lease
of the Improvements or any portion thereof that differs materially and
adversely from the aforementioned form Lease. Mortgagor shall not execute
any Lease for all or a substantial portion of the Property, except for an
actual occupancy by the Tenant thereunder, and shall at all times promptly
and faithfully perform, or cause to be performed, all of the covenants,
conditions and agreements contained in all Leases with respect to the
Property, now or hereafter existing, on the part of the landlord, lessor or
licensor thereunder to be kept and performed. Mortgagor shall furnish to
Mortgagee, within ten (10) days after a request by Mortgagee to do so, but
in any event by January 1 of each year, a current Rent Roll certified by
Mortgagor as being true and correct containing the names of all Tenants
with respect to the Property, the terms of their respective Leases, the
spaces occupied and the rentals or fees payable thereunder and the amount
of each tenant's security deposit. Upon the request of Mortgagee,
Mortgagor shall deliver to Mortgagee a copy of each such Lease. Mortgagor
shall not do or suffer to be done any act that might result in a default by
the landlord, lessor or licensor under any such Lease or allow the Tenant
thereunder to wihhold payment or rent and, except as otherwise expressly
permitted by the terms of Section 1.12 hereof, shall not further assign any
such Lease or any such rents. Mortgagor, at no cost or expense to
Mortgagee, shall enforce, short of termination, the performance and
observance of each and every condition and covenant of each of the parties
under such Leases. Mortgagor shall not, without the prior written consent
of Mortgagee, modify any of the Leases, terminate or accept the surrender
of any Leases, waive or release any other party from the performance or
observance of any obligation or condition under such Leases except in the
normal course of business in a manner which is consistent with sound and
customary leasing and management practices for similar properties in the
community in which the Property is located. Mortgagor shall not permit the
prepayment of any rents under any of the Leases for more than one (1) month
prior to the due date thereof.
(b) Each commercial Lease executed after the date hereof
affecting any of the Real Estate or the Improvements must provide, in a
manner approved by Mortgagee, that the Tenant will recognize as its
landlord, lessor or licensor, as applicable, and attorn to any person
succeeding to the interest of Mortgagor upon any foreclosure of this
Mortgage or deed in lieu of foreclosure. Each such commercial Lease shall
also provide that, upon request of said successor-in-interest, the Tenant
shall execute and deliver an instrument or instruments confirming its
attornment as provided for in this Section; provided, however, that neither
Mortgagee nor any successor-in-interest shall be bound by any payment of
rental for more than one (1) month in advance, or any amendment or
modification of said commercial Lease made without the express written
consent of Mortgagee or said successor-in-interest.
(c) Upon the occurrence of an Event of Default under this
Mortgage, whether before or after the whole principal sum secured hereby is
declared to be immediately due or whether before or after the institution
of legal proceedings to foreclose this Mortgage, forthwith, upon demand of
Mortgagee, Mortgagor shall surrender to Mortgagee and Mortgagee shall be
entitled to take actual possession of the Property or any part thereof
personally, or by its agent or attorneys. In such event, Mortgagee shall
have, and Mortgagor hereby gives and grants to Mortgagee, the right, power
and authority to make and enter into Leases with respect to the Property or
portions thereof for such rents and for such periods of occupancy and upon
conditions and provisions as Mortgagee may deem desirable in its sole
discretion, and Mortgagor expressly acknowledges and agrees that the term
of any such Lease may extend beyond the date of any foreclosure sale at the
Property; it being the intention of Mortgagor that in such event Mortgagee
shall be deemed to be and shall be the attorney-in-fact of Mortgagor for
the purpose of making and entering into Leases of parts or portions of the
Property for the rents and upon the terms, conditions and provisions deemed
desirable to Mortgagee in its sole discretion and with like effect as if
such Leases had been made by Mortgagor as the owner in fee simple of the
Property free and clear of any conditions or limitations established by
this Mortgage. The power and authority hereby given and granted by
Mortgagor to Mortgagee shall be deemed to be coupled with an interest,
shall not be revocable by Mortgagor so long as any indebtedness secured
hereby is outstanding, shall survive the voluntary or involuntary
dissolution of Mortgagor and shall not be affected by any disability or
incapacity suffered by Mortgagor subsequent to the date hereof. In
connection with any action taken by Mortgagee pursuant to this Section,
Mortgagee shall not be liable for any loss sustained by Mortgagor resulting
from any failure to letthe Property, or any part thereof, or from any other
act or omission of Mortgagee in managing the Property, nor shall Mortgagee
be obligated to perform or discharge any obligation, duty or liability
under any Lease covering the Property or any part thereof or under or by
reason of this instrument or the exercise of rights or remedies hereunder.
Mortgagor shall, and does hereby, indemnify Mortgagee for, and hold
Mortgagee harmless from, any and all claims, actions, demands, liabilities,
loss or damage which may or might be incurred by Mortgagee under any such
Lease or under this Mortgage or by the exercise of rights or remedies
hereunder and from any and all claims and demands whatsoever which may be
asserted against Mortgagee by reason of any alleged obligations or
undertakings on its part to perform or discharge any of the terms,
covenants or agreements contained in any such Lease other than those
finally determined by a court of competent jurisdiction to have resulted
solely from the gross negligence or willful misconduct of Mortgagee.
Should Mortgagee incur any such liability, the amount thereof, including,
without limitation, costs, expenses and attorneys' fees, together with
interest thereon at the Default Interest Rate from the date incurred by
Mortgagee until actually paid by Mortgagor, shall be immediately due and
payable to Mortgagee by Mortgagor on demand and shall be secured hereby and
by all of the other Loan Documents securing all or any part of the
indebtedness evidenced by the Note. Nothing in this Section shall impose
on Mortgagee any duty, obligation or responsibility for the control, care,
management or repair of the Property, or for the carrying out of any of the
terms and conditions of any such Lease nor shall it operate to make
Mortgagee responsible or liable for any waste committed on the Property by
the Tenants or by any other parties or for any dangerous or defective
condition of the Property, or for any negligence in the management, upkeep,
repair or control of the Property. Mortgago hereby assents to, ratifies
and confirms any and all actions of Mortgagee with respect to the Property
taken under this Section.
1.13 Alienation and Further Encumbrances.
(a) Mortgagor acknowledges that Mortgagee has relied upon the
principals of Mortgagor and their experience in owning and operating the
Property through a management contract with Merry Land Property Management,
Inc. and properties similar to the Property in connection with the closing
of the loan evidenced by the Note. Accordingly, except as specifically
allowed hereinbelow in this Section and notwithstanding anything to the
contrary contained in SECTION 4.6 hereof, in the event that the Property or
any part thereof or interest therein shall be sold, conveyed, disposed of,
alienated, hypothecated, leased (except to Tenants of space in the
Improvements in accordance with the provisions of SECTION 1.12 hereof),
assigned, pledged, mortgaged, further encumbered or otherwise transferred
or Mortgagor shall be divested of its title to the Property or any interest
therein, in any manner or way, whether voluntarily or involuntarily,
without the prior written consent of Mortgagee being first obtained, which
consent may be withheld in Mortgagee's sole discretion, then the same shall
constitute an Event of Default hereunder and Mortgagee shall have the
right, at its option, to declare any or all of the indebtedness secured
hereby, irrespective of the maturity date specified in the Note,
immediately due and payable and to otherwise exercise any of its other
rights and remedies contained in ARTICLE III hereof. If such acceleration
is during any period when a prepayment fee is payable pursuant to the
provisions set forth in the Note, then, in addition to all of the
foregoing, such prepayment fee shall also then be immediately due and
payable to the same end as though Mortgagor were prepaying the entire
indebtedness secured hereby on the date of such acceleration. For the
purposes of this Section: (i) in the event either Mortgagor or any of its
general partners or managing members is a corporation or trust, the sale,
conveyance, transfer or disposition of more than 10% of the issued and
outstanding capital stock of Mortgagor or any of its general partners or of
the beneficial interest of such trust (or the issuance of new shares of
capital stock in Mortgagor or any of its general partners or managing
members so that immediately after such issuance the total capital stock
then issued and outstanding is more than 110% of the total immediately
prior to such issuance) shall be deemed to be a transfer of an interest in
the Property; and (ii) in the event Mortgagor or any general partner or
managing member of Mortgagor is a limited or general partnership, a joint
venture or a limited liability company, a change in the ownership interests
in any general partner, any joint venturer or any managing member, either
voluntarily, involuntarily or otherwise, or the sale, conveyance, transfer,
disposition, alienation, hypothecation or encumbering of all or any portion
of the interest of any such general partner, joint venturer or managing
member in Mortgagor or such general partner (whether in the form of a
beneficial or partnership interest or in the form of a power of direction,
control or management, or otherwise), shall be deemed to be a transfer of
an interest in the Property. Notwithstanding the foregoing, however, (i)
limited partnership or non-managing member interests in Mortgagor or in any
general partner or managing member of Mortgagor shall be freely
transferable without the consent of Mortgagee, (ii) any involuntary
transfer caused by the death of Mortgagor or any general partner,
shareholder, joint venturer, or beneficial owner of a trust shall not be an
Event of Default under this Mortgage so long as Mortgagor is reconstituted,
if required, following such death and so long as those persons responsible
for the management of the Property remain unchanged as a result of such
death or any replacement management is approved by Mortgagee and (iii)
gifts for estate planning purposes of any individual's interests in
Mortgagor or in any of Mortgagor's general partners, managing members or
joint venturers to the spouse or any lineal descendant of such individual,
or to a trust for the benefit of any one or more of such individual, spouse
or lineal descendant, shall not be an Event of Default under this Mortgage
so long as Mortgagor is reconstituted, if required, following such gift and
so long as those persons responsible for the management of the Property and
Mortgagor remain unchanged following such gift or any replacement
management is approved by Mortgagee.
(b) Notwithstanding the foregoing provisions of this Section,
Mortgagee shall consent to one or more sales, conveyances or transfers of
the Property in its entirety (hereinafter, "SALE") to any person or entity
provided that each of the following terms and conditions are satisfied for
each such Sale:
(1) No Default or Event of Default is then continuing
hereunder or under any of the other Loan Documents;
(2) Mortgagor gives Mortgagee written notice of the terms of
such prospective Sale not less than sixty (60) days before the date on
which such Sale is scheduled to close and, concurrently therewith, gives
Mortgagee all such information concerning the proposed transferee of the
Property (hereinafter, "BUYER") as Mortgagee would require in evaluating an
initial extension of credit to a borrower and pays to Mortgagee a non-
refundable application fee in the amount of $5,000.00. Mortgagee shall have
the right to approve or disapprove the proposed Buyer. In determining
whether to give or withhold its approval of the proposed Buyer, Mortgagee
shall consider the Buyer's experience and track record in owning and
operating facilities similar to the Property, the Buyer's financial
strength, the Buyer's general business standing and the Buyer's
relationships and experience with contractors, vendors, tenants, lenders
and other business entities; PROVIDED, HOWEVER, that, notwithstanding
Mortgagee's agreement to consider the foregoing factors in determining
whether to give or withhold such approval, such approval shall be given or
withheld based on what Mortgagee determines to be commercially reasonable
in Mortgagee's commercially reasonable discretion and, if given, may be
given subject to such conditions as Mortgagee may deem appropriate;
(3) Mortgagor pays Mortgagee, concurrently with the closing
of such Sale, a non-refundable assumption fee in an amount equal to all
out-of-pocket costs and expenses, including, without limitation, attorneys'
fees, incurred by Mortgagee in connection with the Sale, plus an amount
equal to one percent (1.0%) of the then outstanding principal balance of
the Note;
(4) The Buyer assumes and agrees to pay the indebtedness
secured hereby subject to the provisions of SECTION 4.27 hereof and, prior
to or concurrently with the closing of such Sale, the Buyer executes,
without any cost or expense to Mortgagee, such documents and agreements as
Mortgagee shall reasonably require to evidence and effectuate said
assumption and delivers such legal opinions as Mortgagee may require;
(5) A party associated with the Buyer approved by Mortgagee
in its sole discretion assumes the obligations of the current indemnitor
under its guaranty or indemnity agreement and such party associated with
the Buyer executes, without any cost or expense to Mortgagee, a new
guaranty or indemnity agreement in form and substance satisfactory to
Mortgagee and delivers such legal opinions as Mortgagee may require;
(6) Mortgagor and the Buyer execute, without any cost or
expense to Mortgagee, new financing statements or financing statement
amendments and any additional documents reasonably requested by Mortgagee;
(7) Mortgagor delivers to Mortgagee, without any cost or
expense to Mortgagee, such endorsements to Mortgagee's title insurance
policy, hazard insurance endorsements or certificates and other similar
materials as Mortgagee may deem necessary at the time of the Sale, all in
form and substance satisfactory to Mortgagee, including, without
limitation, an endorsement or endorsements to Mortgagee's title insurance
policy insuring the lien of this Mortgage, extending the effective date of
such policy to the date of execution and delivery (or, if later, of
recording) of the assumption agreement referenced above in SUBPARAGRAPH (4)
of this Section, with no additional exceptions added to such policy, and
insuring that fee simple title to the Property is vested in the Buyer;
(8) Mortgagor executes and delivers to Mortgagee, without any
cost or expense to Mortgagee, a release of Mortgagee, its officers,
directors, employees and agents, from all claims and liability relating to
the transactions evidenced by the Loan Documents, through and including the
date of the closing of the Sale, which agreement shall be in form and
substance satisfactory to Mortgagee and shall be binding upon the Buyer;
(9) Subject to the provisions of SECTION 4.27 hereof, such
Sale is not construed so as to relieve Mortgagor of any personal liability
under the Note or any of the other Loan Documents for any acts or events
occurring or obligations arising prior to or simultaneously with the
closing of such Sale, and Mortgagor executes, without any cost or expense
to Mortgagee, such documents and agreements as Mortgagee shall reasonably
require to evidence and effectuate the ratification of said personal
liability. Mortgagor shall be released from and relieved of any personal
liability under the Note or any of the other Loan Documents for any acts or
events occurring or obligations arising after the closing of such Sale
which are not caused by or arising out of any acts or events occurring or
obligations arising prior to or simultaneously with the closing of such
Sale;
(10) Such Sale is not construed so as to relieve any current
indemnitor of its obligations under any guaranty or indemnity agreement for
any acts or events occurring or obligations arising prior to or
simultaneously with the closing of such Sale, and each such current
indemnitor executes, without any cost or expense to Mortgagee, such
documents and agreements as Mortgagee shall reasonably require to evidence
and effectuate the ratification of each such guaranty and indemnity
agreement. Each such current indemnitor shall be released from and
relieved of any of its obligations under any guaranty or indemnity
agreement executed in connection with the loan secured hereby for any acts
or events occurring or obligations arising after the closing of such Sale
which are not caused by or arising out of any acts or events occurring or
obligations arising prior to or simultaneously with the closing of such
Sale;
(11) The Buyer shall furnish, if the Buyer is a corporation,
partnership or other entity, all appropriate papers evidencing the Buyer's
capacity and good standing, and the qualification of the signers to execute
the assumption of the indebtedness secured hereby, which papers shall
include certified copies of all documents relating to the organization and
formation of the Buyer and of the entities, if any, which are partners of
the Buyer. The Buyer and such constituent partners, members or
shareholders of Buyer (as the case may be), as Mortgagee shall require,
shall be single purpose, "bankruptcy remote" entities, whose formation
documents shall be approved by counsel to Mortgagee. The one (1)
individual recommended by the Mortgagor shall serve as independent director
of the Buyer (if the Buyer is a corporation) or the Buyer's corporate
general partner or as independent member or as manager of Buyer if the
Buyer is a limited liability company. The consent of such independent
party shall be required for, among other things, any merger, consolidation,
dissolution, bankruptcy or insolvency of such independent party or of the
Buyer; and
(12) Mortgagor delivers to Mortgagee a written statement from
the applicable rating agency to the effect that the Sale will not result in
a downgrading, withdrawal or qualification of the respective ratings in
effect immediately prior to such Sale for any securities issues in
connection with a Secondary Market Transaction (as hereinafter defined).
1.14 PAYMENT OF UTILITIES, ASSESSMENTS, CHARGES, ETC. Mortgagor
shall pay when due all utility charges which are incurred by Mortgagor or
which may become a charge or lien against any portion of the Property for
gas, electricity, water and sewer services furnished to the Real Estate
and/or the Improvements and all other assessments or charges of a similar
nature, or assessments payable pursuant to any restrictive covenants,
whether public or private, affecting the Real Estate and/or the
Improvements or any portion thereof, whether or not such assessments or
charges are or may become liens thereon.
1.15 ACCESS PRIVILEGES AND INSPECTIONS. Mortgagee and the
agents, representatives and employees of Mortgagee shall, subject to the
rights of tenants, have full and free access to the Real Estate and the
Improvements and any other location where books and records concerning the
Property are kept at all reasonable times for the purposes of inspecting
the Property and of examining, copying and making extracts from the books
and records of Mortgagor relating to the Property. Mortgagor shall lend
assistance to all such agents, representatives and employees of Mortgagee.
1.16 WASTE; ALTERATION OF IMPROVEMENTS. Mortgagor shall not
commit, suffer or permit any waste on the Property nor take any actions
that might invalidate any insurance carried on the Property. Mortgagor
shall maintain the Property in good condition and repair. No part of the
Improvements may be removed, demolished or materially altered, without the
prior written consent of Mortgagee. Without the prior written consent of
Mortgagee, Mortgagor shall not commence construction of any improvements on
the Real Estate other than improvements required for the maintenance or
repair of the Property.
1.17 ZONING. Without the prior written consent of Mortgagee,
Mortgagor shall not seek, make, suffer, consent to or acquiesce in any
change in the zoning or conditions of use of the Real Estate or the
Improvements. Mortgagor shall comply with and make all payments required
under the provisions of any covenants, conditions or restrictions affecting
the Real Estate or the Improvements. Mortgagor shall comply with all
existing and future requirements of all governmental authorities having
jurisdiction over the Property. Mortgagor shall keep all licenses,
permits, franchises and other approvals necessary for the operation of the
Property in full force and effect. Mortgagor shall operate the Property as
an apartment development for so long as the indebtedness secured hereby is
outstanding. If, under applicable zoning provisions, the use of all or any
part of the Real Estate or the Improvements is or becomes a nonconforming
use, Mortgagor shall not cause or permit such use to be discontinued or
abandoned without the prior written consent of Mortgagee. Further, without
Mortgagee's prior written consent, Mortgagor shall not file or subject any
part of the Real Estate or the Improvements to any declaration of
condominium or co-operative or convert any part of the Real Estate or the
Improvements to a condominium, co-operative or other form of multiple
ownership and governance.
1.18 FINANCIAL STATEMENTS AND BOOKS AND RECORDS. Mortgagor shall
keep accurate books and records of account of the Property and its own
financial affairs sufficient to permit the preparation of financial
statements therefrom in accordance with generally accepted accounting
principles. Mortgagee and its duly authorized representatives shall have
the right to examine, copy and audit Mortgagor's records and books of
account at all reasonable times. So long as this Mortgage continues in
effect, Mortgagor shall provide to Mortgagee, in addition to any other
financial statements required hereunder or under any of the other Loan
Documents, the following financial statements and information, all of which
must be certified to Mortgagee as being true and correct by Mortgagor or
the person or entity to which they pertain, as applicable, be prepared in
accordance with generally accepted accounting principles consistently
applied and be in form and substance acceptable to Mortgagee:
(a) copies of all tax returns filed by Mortgagor, within thirty
(30) days after the date of filing;
(b) monthly operating statements for the Property within ten (10)
days after the end of each month during the first twelve months of the term
of the loan secured hereby;
(c) quarterly operating statements for the Property, within
thirty (30) days after the end of each calendar quarter;
(d) annual balance sheets for the Property and annual financial
statements for Mortgagor, each principal or general partner in Mortgagor,
and each indemnitor and guarantor under any indemnity or guaranty executed
in connection with the loan secured hereby, within ninety (90) days after
the end of each calendar year; and
(e) such other information with respect to the Property,
Mortgagor, the principals or general partners in Mortgagor, and each
indemnitor and guarantor under any indemnity or guaranty executed in
connection with the loan secured hereby, which may be requested from time
to time by Mortgagee, within a reasonable time after the applicable
request.
If any of the aforementioned materials are not furnished to Mortgagee
within the applicable time periods or Mortgagee is dissatisfied with the
contents of any of the foregoing, in addition to any other rights and
remedies of Mortgagee contained herein, Mortgagee shall have the right, but
not the obligation after notice and a 30 day right to cure, to obtain the
same by means of an audit by an independent certified public accountant
selected by Mortgagee, in which event Mortgagor agrees to pay, or to
reimburse Mortgagee for, any expense of such audit and further agrees to
provide all necessary information to said accountant and to otherwise
cooperate in the making of such audit.
1.19 FURTHER DOCUMENTATION.(a) Mortgagor shall, on the request of
Mortgagee and at the expense of Mortgagor: (a) promptly correct any
defect, error or omission which may be discovered in the contents of this
Mortgage or in the contents of any of the other Loan Documents; (b)
promptly execute, acknowledge, deliver and record or file such further
instruments (including, without limitation, further mortgages, deeds of
trust, security deeds, security agreements, financing statements,
continuation statements and assignments of rents or leases) and promptly do
such further acts as may be necessary, desirable or proper to carry out
more effectively the purposes of this Mortgage and the other Loan Documents
and to subject to the liens and security interests hereof and thereof any
property intended by the terms hereof and thereof to be covered hereby and
thereby, including specifically, but without limitation, any renewals,
additions, substitutions, replacements or appurtenances to the Property;
(c) promptly execute, acknowledge, deliver, procure and record or file any
document or instrument (including specifically any financing statement)
deemed advisable by Mortgagee to protect, continue or perfect the liens or
the security interests hereunder against the rights or interests of third
persons; and (d) promptly furnish to Mortgagee, upon Mortgagee's request, a
duly acknowledged written statement and estoppel certificate addressed to
such party or parties as directed by Mortgagee and in form and substance
supplied by Mortgagee, setting forth all amounts due under the Note,
stating whether any Default or Event of Default has occurred hereunder,
stating whether any offsets or defenses exist against the indebtedness
secured hereby and containing such other matters as Mortgagee may
reasonably require.
(b) Mortgagor acknowledges that Mortgagee and its successors and
assigns may effectuate a Secondary Market Transaction. Mortgagor shall
cooperate in good faith with Mortgagee in effecting any such Secondary
Market Transaction and shall cooperate in good faith to implement all
requirements imposed by any rating agency involved in any Secondary Market
Transaction including, without limitation, all structural or other changes
to the indebtedness secured hereby, modifications to any documents
evidencing or securing the loan; provided, however, that the Mortgagor
shall not be required to modify any documents evidencing or securing the
indebtedness secured hereby which would modify (A) the interest rate
payable under the Note, (B) the stated maturity of the Note, (C) the
amortization of principal of the Note, or (D) any other material economic
term of the indebtedness secured hereby. Mortgagor shall provide such
information, and documents relating to Mortgagor, any guarantor or
indemnitor, the Property and any tenants of the Improvements as Mortgagee
may reasonably request in connection with such Secondary Market
Transaction. Mortgagor shall make available to Mortgagee all information
concerning its business and operations that Mortgagee may reasonably
request. Mortgagee shall be permitted to share all such information with
the investment banking firms, rating agencies, accounting firms, law firms
and other third-party advisory firms involved with the Loan Documents or
the applicable Secondary Market Transaction. It is understood that the
information provided by Mortgagor to Mortgagee may ultimately be
incorporated into the offering documents for the Secondary Market
Transaction and thus various investors may also see some or all of the
information. Mortgagee and all of the aforesaid third-party advisors and
professional firms shall be entitled to rely on the information supplied
by, or on behalf of, Mortgagor and Mortgagor indemnifies Mortgagee as to
any losses, claims, damages or liabilities that arise out of or are based
upon any untrue statement or alleged untrue statement of any material fact
contained in such information or arise out of or are based upon the
omission or alleged omission to state therein a material fact required to
be stated in such information or necessary in order to make the statements
in such information, or in light of the circumstances under which they were
made, not misleading. Mortgagee may publicize the existence of the
indebtedness secured hereby in connection with its marketing for a
Secondary Market Transaction or otherwise as part of its business
development. For purposes hereof, a "Secondary Market Transaction" shall
be (a) any sale of the Mortgage, Note and other Loan Documents to one or
more investors as a whole loan; (b) a participation of the indebtedness
secured hereby to one or more investors, (c) any deposit of the Mortgage,
Note and other Loan Documents with a trust or other entity which may sell
certificates or other instruments to investors evidencing an ownership
interest in the assets of such trust or other entity, or (d) any other sale
or transfer of the indebtedness secured hereby or any interest therein to
one or more investors.
1.20 PAYMENT OF COSTS; REIMBURSEMENT TO MORTGAGEE. Mortgagor
shall pay all costs and expenses of every character incurred in connection
with the closing of the loan evidenced by the Note and secured hereby or
otherwise attributable or chargeable to Mortgagor as the owner of the
Property, including, without limitation, appraisal fees, recording fees,
documentary, stamp, mortgage or intangible taxes, brokerage fees and
commissions, title policy premiums and title search fees, uniform
commercial code/tax lien/litigation search fees, escrow fees and reasonable
attorneys' fees. If Mortgagor defaults in any such payment, which default
is not cured within any applicable grace or cure period, Mortgagee may pay
the same and Mortgagor shall reimburse Mortgagee on demand for all such
costs and expenses incurred or paid by Mortgagee, together with such
interest thereon at the Default Interest Rate from and after the date of
Mortgagee's making such payment until reimbursement thereof by Mortgagor.
Any such sums disbursed by Mortgagee, together with such interest thereon,
shall be additional indebtedness of Mortgagor secured by this Mortgage and
by all of the other Loan Documents securing all or any part of the
indebtedness evidenced by the Note. Further, Mortgagor shall promptly
notify Mortgagee in writing of any litigation or threatened litigation
affecting the Property, or any other demand or claim which, if enforced,
could impair or threaten to impair Mortgagee's security hereunder. Without
limiting or waiving any other rights and remedies of Mortgagee hereunder,
if Mortgagor fails to perform any of its covenants or agreements contained
in this Mortgage or in any of the other Loan Documents and such failure is
not cured within any applicable grace or cure period, or if any action or
proceeding of any kind (including, but not limited to, any bankruptcy,
insolvency, arrangement, reorganization or other debtor relief proceeding)
is commenced which might affect Mortgagee's interest in the Property or
Mortgagee's right to enforce its security, then Mortgagee may, at its
ption, with or without notice to Mortgagor, make any appearances, disburse
any sums and take any actions as may be necessary or desirable to protect
or enforce the security of this Mortgage or to remedy the failure of
Mortgagor to perform its covenants and agreements (without, however,
waiving any default of Mortgagor). Mortgagor agrees to pay on demand all
expenses of Mortgagee incurred with respect to the foregoing (including,
but not limited to, reasonable fees and disbursements of counsel), together
with interest thereon at the Default Interest Rate from and after the date
on which Mortgagee incurs such expenses until reimbursement thereof by
Mortgagor. Any such expenses so incurred by Mortgagee, together with
interest thereon as provided above, shall be additional indebtedness of
Mortgagor secured by this Mortgage and by all of the other Loan Documents
securing all or any part of the indebtedness evidenced by the Note. The
necessity for any such actions and of the amounts to be paid shall be
determined by Mortgagee in its discretion. Mortgagee is hereby empowered
to enter and to authorize others to enter upon the Property or any part
thereof for the purpose of performing or observing any such defaulted term,
covenant or condition without thereby becoming liable to Mortgagor or any
person in possession holding under Mortgagor. Mortgagor hereby
acknowledges and agrees that the remedies set forth in this Section 1.20
shall be exercisable by Mortgagee, and any and all payments made or costs
or expenses incurred by Mortgagee in connection therewith shall be secured
hereby and shall be, without demand, immediately repaid by Mortgagor with
interest thereon at the Default Interest Rate, notwithstanding the fact
that such remedies were exercised and such payments made and costs incurred
by Mortgagee after the filing by Mortgagor of a voluntary case or the
filing against Mortgagor of an involuntary case pursuant to or within the
meaning of the Bankruptcy Reform Act of 1978, as amended, Title 11 U.S.C.,
or after ay similar action pursuant to any other debtor relief law (whether
statutory, common law, case law or otherwise) of any jurisdiction
whatsoever, now or hereafter, in effect, which may be or become applicable
to Mortgagor, Mortgagee, any guarantor or indemnitor, the secured
indebtedness or any of the Loan Documents. Mortgagor hereby indemnifies
and holds Mortgagee harmless from and against all loss, cost and expenses
with respect to any Event of Default hereof, any liens (i.e., judgments,
mechanics' and materialmen's liens, or otherwise), charges and encumbrances
filed against the Property, and from any claims and demands for damages or
injury, including claims for property damage, personal injury or wrongful
death, arising out of or in connection with any accident or fire or other
casualty on the Real Estate or the Improvements or any nuisance made or
suffered thereon, including, in any case, attorneys' fees, costs and
expenses as aforesaid, whether at pretrial, trial or appellate level, and
such indemnity shall survive payment in full of the indebtedness secured
hereby. This Section shall not be construed to require Mortgagee to incur
any expenses, make any appearances or take any actions.
1.21 SECURITY INTEREST. This Mortgage is also intended to
encumber and create a security interest in, and Mortgagor hereby grants to
Mortgagee a security interest in all sums on deposit with Mortgagee
pursuant to the provisions of Sections 1.6, 1.7, 1.8 and 1.35 hereof or any
other Section hereof and all fixtures, chattels, accounts, equipment,
inventory, contract rights, general intangibles and other personal property
included within the Property, all renewals, replacements of any of the
aforementioned items, or articles in substitution therefor or in addition
thereto or the proceeds thereof (said property is hereinafter referred to
collectively as the "Collateral"), whether or not the same shall be
attached to the Real Estate or the Improvements in any manner. It is
hereby agreed that to the extent permitted by law, all of the foregoing
property is to be deemed and held to be a part of and affixed to the Real
Estate and the Improvements. The foregoing security interest shall also
cover Mortgagor's leasehold interest in any of the foregoing property which
is leased by Mortgagor. Notwithstanding the foregoing, all of the
foregoing property shall be owned by Mortgagor and no material leasing or
installment sales or other financing or title retention agreement in
connection therewith shall be permitted without the prior written approval
of Mortgagee. Mortgagor shall, from time to time upon the request of
Mortgagee, supply Mortgagee with a current inventory of all of the property
in which Mortgagee is granted a security interest hereunder, in such detail
as Mortgagee may require. Mortgagor shall promptly replace all of the
Collateral subject to the lien or security interest of this Mortgage when
worn or obsolete with Collateral comparable to the worn out or obsolete
Collateral when new and will not, without the prior written consent of
Mortgagee, remove from the Real Estate or the Improvements any of the
Collateral subject to the lien or security interest of this Mortgage except
such as is replaced by an article of equal suitabilit and value as above
provided, owned by Mortgagor free and clear of any lien or security
interest except that created by this Mortgage and the other Loan Documents
and except as otherwise expressly permitted by the terms of Section 1.13 of
this Mortgage. All of the Collateral shall be kept at the location of the
Real Estate except as otherwise required by the terms of the Loan
Documents. Mortgagor shall not use any of the Collateral in violation of
any applicable statute, ordinance or insurance policy.
1.22 SECURITY AGREEMENT. This Mortgage constitutes a security
agreement between Mortgagor and Mortgagee with respect to the Collateral in
which Mortgagee is granted a security interest hereunder, and, cumulative
of all other rights and remedies of Mortgagee hereunder, Mortgagee shall
have all of the rights and remedies of a secured party under any applicable
Uniform Commercial Code. Mortgagor hereby agrees to execute and deliver on
demand and hereby irrevocably constitutes and appoints Mortgagee the
attorney-in-fact of Mortgagor to execute and deliver and, if appropriate,
to file with the appropriate filing officer or office such security
agreements, financing statements, continuation statements or other
instruments as Mortgagee may request or require in order to impose, perfect
or continue the perfection of the lien or security interest created hereby.
Except with respect to Rents and Profits to the extent specifically
provided herein to the contrary, Mortgagee shall have the right of
possession of all cash, securities, instruments, negotiable instruments,
documents, certificates and any other evidences of cash or other property
or evidences of rights to cash rather than property, which are now or
hereafter a part of the Property and Mortgagor shall promptly deliver the
same to Mortgagee, endorsed to Mortgagee, without further notice from
Mortgagee. Mortgagor agrees to furnish Mortgagee with notice of any change
in the name, identity, organizational structure, residence, or principal
place of business or mailing address of Mortgagor within ten (10) days of
the effective date of any such change. Upon the occurrence of any Event of
Default, Mortgagee shall have the rights and remedies as prescribed in this
Mortgage, or as prescribed by general law, or as prescribed by any
applicable Uniform Commercial Code, all at Mortgagee's election. Any
disposition of the Collateral may be conducted by an employee or agent of
Mortgagee. Any person, including both Mortgagor and Mortgagee, shall be
eligible to purchase any part or all of the Colateral at any such
disposition. Expenses of retaking, holding, preparing for sale, selling or
the like (including, without limitation, Mortgagee's attorneys' fees and
legal expenses), together with interest thereon at the Default Interest
Rate from the date incurred by Mortgagee until actually paid by Mortgagor,
shall be paid by Mortgagor on demand and shall be secured by this Mortgage
and by all of the other Loan Documents securing all or any part of the
indebtedness evidenced by the Note. Mortgagee shall have the right to
enter upon the Real Estate and the Improvements or any real property where
any of the property which is the subject of the security interest granted
herein is located to take possession of, assemble and collect the same or
to render it unusable, or Mortgagor, upon demand of Mortgagee, shall
assemble such property and make it available to Mortgagee at the Real
Estate, a place which is hereby deemed to be reasonably convenient to
Mortgagee and Mortgagor. Mortgagee shall give Mortgagor at least ten (10)
days' prior written notice of the time and place of any public sale of such
property or of the time of or after which any private sale or any other
intended disposition thereof is to be made, and if such notice is sent to
Mortgagor, as the same is provided for the mailing of notices herein, it is
hereby deemed that such notice shall be and is reasonable notice to
Mortgagor. No such notice is necessary for any such property which is
perishable, threatens to decline speedily in value or is of a type
customarily sold on a recognized market. Any sale made pursuant to the
provisions of this Section shall be deemed to have been a public sale
conducted in a commercially reasonable manner if held contemporaneously
with the foreclosure sale as provided in Section 3.1(e) hereof upon giving
the same notice with respect to the sale of the Property hereunder as is
required under said Section 3.1(e). Furthermore, to the extent permitted
by law, in conjunction with, in addition to or in substitution for th
rights and remedies available to Mortgagee pursuant to any applicable
Uniform Commercial Code:
(a) In the event of a foreclosure sale, the Property may, at the
option of Mortgagee, be sold as a whole; and
(b) It shall not be necessary that Mortgagee take possession of
the aforementioned Collateral, or any part thereof, prior to the time that
any sale pursuant to the provisions of this Section is conducted and it
shall not be necessary that said Collateral, or any part thereof, be
present at the location of such sale; and
(c) Mortgagee may appoint or delegate any one or more persons as
agent to perform any act or acts necessary or incident to any sale held by
Mortgagee, including the sending of notices and the conduct of the sale,
but in the name and on behalf of Mortgagee.
The name and address of Mortgagor (as Debtor under any applicable
Uniform Commercial Code) are:
Quarterdeck Apartments LLC
c/o Xxxxxx X. Xxxxx, CFO
000 Xxxxx Xxxxxx, 0{xx} Xxxxx
Xxxxxxx, Xxxxxxx 00000
The name and address of Mortgagee (as Secured Party under any
applicable Uniform Commercial Code) are:
First Union National Bank
One First Union Center, DC6
Xxxxxxxxx, Xxxxx Xxxxxxxx 00000-0000
1.23 EASEMENTS AND RIGHTS OF WAY. Mortgagor shall not grant any
easement or right-of-way with respect to all or any portion of the Real
Estate or the Improvements without the prior written consent of Mortgagee.
The purchaser at any foreclosure sale hereunder may, at its discretion,
disaffirm any easement or right-of-way granted in violation of any of the
provisions of this Mortgage and may take immediate possession of the
Property free from, and despite the terms of, such grant of easement or
right-of-way. If Mortgagee consents to the grant of an easement or
right-of-way, Mortgagee agrees to grant such consent provided that
Mortgagee is paid a standard review fee together with all other expenses,
including, without limitation, attorneys' fees, incurred by Mortgagee in
the review of Mortgagor's request and in the preparation of documents
effecting the subordination.
1.24 COMPLIANCE WITH LAWS. Mortgagor shall at all times comply
with all statutes, ordinances, orders, regulations and other governmental
or quasi-governmental requirements and private covenants now or hereafter
relating to the ownership, construction, use or operation of the Property,
including, but not limited to, those concerning employment and compensation
of persons engaged in operation and maintenance of the Property and any
environmental or ecological requirements, even if such compliance shall
require structural changes to the Property; provided, however, that,
Mortgagor may, upon providing Mortgagee with security satisfactory to
Mortgagee, proceed diligently and in good faith to contest the validity or
applicability of any such statute, ordinance, regulation or requirement so
long as during such contest the Property shall not be subject to any lien,
charge, fine or other liability and shall not be in danger of being
forfeited, lost or closed. Mortgagor shall not use or occupy, or allow the
use or occupancy of, the Property in any manner which violates any Lease of
or any other agreement applicable to the Property or any applicable law,
rule, regulation or order or which constitutes a public or private nuisance
or which makes void, voidable or cancelable, or increases the premium of,
any insurance then in force with respect thereto.
1.25 ADDITIONAL TAXES. In the event of the enactment after this
date of any law of the state where the Property is located or of any other
governmental entity deducting from the value of the Property for the
purpose of taxing any lien or security interest thereon, or imposing upon
Mortgagee the payment of the whole or any part of the taxes or assessments
or charges of liens herein required to be paid by Mortgagor, or changing in
any way the laws relating to the taxation of deeds of trust, mortgages or
security agreements or debts secured by mortgages or security agreements or
the interest of the Mortgagee or secured party in the property covered
thereby, or the manner of collection of such taxes, so as to adversely
affect this Mortgage or the indebtedness secured hereby or Mortgagee, then,
and in any such event, Mortgagor, upon demand by Mortgagee, shall pay such
taxes, assessments, charges or liens, or reimburse Mortgagee therefor;
provided, however, that if in the opinion of counsel for Mortgagee (a) it
might be unlawful to require Mortgagor to make such payment, or (b) the
making of such payment might result in the imposition of interest beyond
the maximum amount permitted by law, then and in either such event,
Mortgagee may elect, by notice in writing given to Mortgagor, to declare
all of the indebtedness secured hereby to be and become due and payable in
full thirty (30) days from the giving of such notice.
1.26 SECURED INDEBTEDNESS. It is understood and agreed that this
Mortgage shall secure payment of not only the indebtedness evidenced by the
Note but also any and all substitutions, replacements, renewals and
extensions of the Note, any and all indebtedness and obligations arising
pursuant to the terms hereof and any and all indebtedness and obligations
arising pursuant to the terms of any of the other Loan Documents, all of
which indebtedness is equally secured with and has the same priority as any
amounts advanced as of the date hereof. It is agreed that any future
advances made by Mortgagee to or for the benefit of Mortgagor from time to
time under this Mortgage or the other Loan Documents and whether or not
such advances are obligatory or are made at the option of Mortgagee, or
otherwise, made for any purpose, within twenty (20) years from the date
hereof, and all interest accruing thereon, attorneys' fees and court costs,
shall be equally secured by this Mortgage and shall have the same priority
as all amounts, if any, advanced as of the date hereof and shall be subject
to all of the terms and provisions of this Mortgage. The total amount of
the indebtedness including future advances, secured hereby may increase or
decrease from time to time, but shall not exceed the sum $20,000,000.00 at
any one time, plus accrued interest thereon and any disbursements made by
Mortgagee in accordance with the Loan Documents.
1.27 MORTGAGOR'S WAIVERS. To the full extent permitted by law,
Mortgagor agrees that Mortgagor shall not at any time insist upon, plead,
claim or take the benefit or advantage of any law now or hereafter in force
providing for any appraisement, valuation, stay, moratorium or extension,
or any law now or hereafter in force providing for the reinstatement of the
indebtedness secured hereby prior to any sale of the Property to be made
pursuant to any provisions contained herein or prior to the entering of any
decree, judgment or order of any court of competent jurisdiction, or any
right under any statute to redeem all or any part of the Property so sold.
Mortgagor, for Mortgagor and Mortgagor's successors and assigns, and for
any and all persons ever claiming any interest in the Property, to the full
extent permitted by law, hereby knowingly, intentionally and voluntarily
with and upon the advice of competent counsel: (a) waives, releases,
relinquishes and forever forgoes all rights of valuation, appraisement,
stay of execution, reinstatement and notice of election or intention to
mature or declare due the secured indebtedness (except such notices as are
specifically provided for herein); (b) waives, releases, relinquishes and
forever forgoes all right to a marshalling of the assets of Mortgagor,
including the Property, to a sale in the inverse order of alienation, or to
direct the order in which any of the Property shall be sold in the event of
foreclosure of the liens and security interests hereby created and agrees
that any court having jurisdiction to foreclose such liens and security
interests may order the Property sold as an entirety; and (c) waives,
releases, relinquishes and forever forgoes all rights and periods of
redemption provided under applicable law. To the full extent permitted by
law, Mortgagor shall not have or assert any right under any statute or rule
of law pertaining to the exemption of homestead or other exemption under
any federal, state or local law now or hereafter in effect, the
administration of estates of ecedents or other matters whatever to defeat,
reduce or affect the right of Mortgagee under the terms of this Mortgage to
a sale of the Property, for the collection of the secured indebtedness
without any prior or different resort for collection, or the right of
Mortgagee under the terms of this Mortgage to the payment of the
indebtedness secured hereby out of the proceeds of sale of the Property in
preference to every other claimant whatever. Further, Mortgagor hereby
knowingly, intentionally and voluntarily, with and upon the advice of
competent counsel, waives, releases, relinquishes and forever forgoes all
present and future statutes of limitations as a defense to any action to
enforce the provisions of this Mortgage or to collect any of the
indebtedness secured hereby the fullest extent permitted by law. Mortgagor
covenants and agrees that upon the commencement of a voluntary or
involuntary bankruptcy proceeding by or against Mortgagor, Mortgagor shall
not seek a supplemental stay or otherwise shall not seek pursuant to 11
U.S.C. section 105 or any other provision of the Bankruptcy Reform Act of
1978, as amended, or any other debtor relief law (whether statutory, common
law, case law, or otherwise) of any jurisdiction whatsoever, now or
hereafter in effect, which may be or become applicable, to stay, interdict,
condition, reduce or inhibit the ability of Mortgagee to enforce any rights
of Mortgagee against any guarantor or indemnitor of the secured obligations
or any other party liable with respect thereto by virtue of any indemnity,
guaranty or otherwise.
1.28 SUBMISSION TO JURISDICTION; WAIVER OF JURY TRIAL.
(a) MORTGAGOR, TO THE FULL EXTENT PERMITTED BY LAW, HEREBY
KNOWINGLY, INTENTIONALLY AND VOLUNTARILY, WITH AND UPON THE ADVICE OF
COMPETENT COUNSEL, (i) SUBMITS TO PERSONAL JURISDICTION IN THE STATE IN
WHICH THE PROPERTY IS LOCATED OVER ANY SUIT, ACTION OR PROCEEDING BY ANY
PERSON ARISING FROM OR RELATING TO THE NOTE, THIS MORTGAGE OR ANY OTHER OF
THE LOAN DOCUMENTS, (ii) AGREES THAT ANY SUCH ACTION, SUIT OR PROCEEDING
MAY BE BROUGHT IN ANY STATE OR FEDERAL COURT OF COMPETENT JURISDICTION OVER
THE COUNTY IN WHICH THE PROPERTY IS LOCATED, (iii) SUBMITS TO THE
JURISDICTION OF SUCH COURTS, AND, (iv) TO THE FULLEST EXTENT PERMITTED BY
LAW, AGREES THAT IT WILL NOT BRING ANY ACTION, SUIT OR PROCEEDING IN ANY
OTHER FORUM (BUT NOTHING HEREIN SHALL AFFECT THE RIGHT OF MORTGAGEE TO
BRING ANY ACTION, SUIT OR PROCEEDING IN ANY OTHER FORUM). MORTGAGOR
FURTHER CONSENTS AND AGREES TO SERVICE OF ANY SUMMONS, COMPLAINT OR OTHER
LEGAL PROCESS IN ANY SUCH SUIT, ACTION OR PROCEEDING BY REGISTERED OR
CERTIFIED U.S. MAIL, POSTAGE PREPAID, TO MORTGAGOR AT THE ADDRESS FOR
NOTICES DESCRIBED IN SECTION 4.5 HEREOF, AND CONSENTS AND AGREES THAT SUCH
SERVICE SHALL CONSTITUTE IN EVERY RESPECT VALID AND EFFECTIVE SERVICE (BUT
NOTHING HEREIN SHALL AFFECT THE VALIDITY OR EFFECTIVENESS OF PROCESS SERVED
IN ANY OTHER MANNER PERMITTED BY LAW).
(b) MORTGAGEE AND MORTGAGOR, TO THE FULL EXTENT PERMITTED BY LAW,
HEREBY KNOWINGLY, INTENTIONALLY AND VOLUNTARILY, WITH AND UPON THE ADVICE
OF COMPETENT COUNSEL, WAIVE, RELINQUISH AND FOREVER FORGO THE RIGHT TO A
TRIAL BY JURY IN ANY ACTION OR PROCEEDING BASED UPON, ARISING OUT OF, OR IN
ANY WAY RELATING TO THE INDEBTEDNESS SECURED HEREBY OR ANY CONDUCT, ACT OR
OMISSION OF MORTGAGEE OR MORTGAGOR, OR ANY OF THEIR DIRECTORS, OFFICERS,
PARTNERS, MEMBERS, EMPLOYEES, AGENTS OR ATTORNEYS, OR ANY OTHER PERSONS
AFFILIATED WITH MORTGAGEE OR MORTGAGOR, IN EACH OF THE FOREGOING CASES,
WHETHER SOUNDING IN CONTRACT, TORT OR OTHERWISE.
1.29 CONTRACTUAL STATUTE OF LIMITATIONS. Mortgagor hereby agrees
that any claim or cause of action by Mortgagor against Mortgagee, or any of
Mortgagee's directors, officers, employees, agents, accountants or
attorneys, based upon, arising from or relating to the indebtedness secured
hereby, or any other matter, cause or thing whatsoever, whether or not
relating thereto, occurred, done, omitted or suffered to be done by
Mortgagee or by Mortgagee's directors, officers, employees, agents,
accountants or attorneys, whether sounding in contract or in tort or
otherwise, shall be barred unless asserted by Mortgagor by the commencement
of an action or proceeding in a court of competent jurisdiction by the
filing of a complaint within one (1) year after Mortgagor first acquires or
reasonably should have acquired knowledge of the first act, occurrence or
omission upon which such claim or cause of action, or any part thereof, is
based and service of a summons and complaint on an officer of Mortgagee or
any other person authorized to accept service of process on behalf of
Mortgagee, within thirty (30) days thereafter. Mortgagor agrees that such
one (1) year period of time is reasonable and sufficient time for a
borrower to investigate and act upon any such claim or cause of action.
The one (1) year period provided herein shall not be waived, tolled or
extended except by the specific written agreement of Mortgagee. This
provision shall survive any termination of this Mortgage or any of the
other Loan Documents.
1.30 MANAGEMENT. The management of the Property shall be by
either: (a) Mortgagor or an entity affiliated with Mortgagor approved by
Mortgagee for so long as Mortgagor or said affiliated entity is managing
the Property in a first class manner; or (b) a professional property
management company approved by Mortgagee. Such management by an affiliated
entity or a professional property management company shall be pursuant to a
written agreement approved by Mortgagee. In no event shall any manager be
removed or replaced or the terms of any management agreement modified or
amended without the prior written consent of Mortgagee. After an Event of
Default or a default under any management contract then in effect, which
default is not cured within any applicable grace or cure period, Mortgagee
shall have the right to terminate, or to direct Mortgagor to terminate,
such management contract upon thirty (30) days' notice and to retain, or to
direct Mortgagor to retain, a new management agent approved by Mortgagee.
All Rents and Profits generated by or derived from the Property shall first
be utilized solely for current expenses directly attributable to the
ownership and operation of the Property, including, without limitation,
current expenses relating to Mortgagor's liabilities and obligations with
respect to this Mortgage and the other Loan Documents, and none of the
Rents and Profits generated by or derived from the Property shall be
diverted by Mortgagor and utilized for any other purposes unless all such
current expenses attributable to the ownership and operation of the
Property have been fully paid and satisfied.
1.31 HAZARDOUS WASTE AND OTHER SUBSTANCES.
(a) Except for those matters disclosed in the environmental
reports furnished by Mortgagor to Mortgagee, Mortgagor hereby represents
and warrants to Mortgagee that, as of the date hereof: (i) to the best of
Mortgagor's knowledge, information and belief, the Property is not in
direct or indirect violation of any local, state or federal law, rule or
regulation pertaining to environmental regulation, contamination or
clean-up (collectively, "Environmental Laws"), including, without
limitation, the Comprehensive Environmental Response, Compensation and
Liability Act of 1980 (42 U.S.C. section 9601 et seq. and 40 CFR
section 302.1 et seq.), the Resource Conservation and Recovery Act of 1976
(42 U.S.C. section 6901 et seq.), the Federal Water Pollution Control Act
(33 U.S.C. section 1251 et seq. and 40 CFR section 116.1 et seq.), those
relating to lead based paint, and the Hazardous Materials Transportation
Act (49 U.S.C. section 1801 et seq.), and the regulations promulgated
pursuant to said laws, all as amended; (ii) no hazardous, toxic or harmful
substances, wastes, materials, pollutants or contaminants (including,
without limitation, asbestos, lead based paint, polychlorinated biphenyls,
petroleum products, flammable explosives, radioactive materials, infectious
substances or raw materials which include hazardous constituents) or any
other substances or materials which are included under or regulated by
Environmental Laws (collectively, "Hazardous Substances") are located on or
have been handled, generated, stored, processed or disposed of on or
released or discharged from the Property (including underground
contamination) except for those substances used by Mortgagor in the
ordinary course of its business and in compliance with all Environmental
Laws; (iii) the Property is not subject to any private or governmental lien
or judicial or administrative notice or action relating to Hazardous
Substances; (iv) there are no existing or closed underground storage tanks
or other underground storage receptacles for Hazardous Substances on the
Property; (v) Mortgagor has received no notice of, and to the best of
Mortgagor's knowledge and belief, there exists no investigation, action,
proceeding or claim by any agency, authority or unit of government or by
any third party which could result in any liability, penalty, sanction or
judgment under any Environmental Laws with respect to any condition, use or
operation of the Property nor does Mortgagor know of any basis for such a
claim; and (vi) Mortgagor has received no notice of and, to the best of
Mortgagor's knowledge and belief, there has been no claim by any party that
any use, operation or condition of the Property has caused any nuisance or
any other liability or adverse condition on any other property nor does
Mortgagor know of any basis for such a claim.
(b) Mortgagor shall keep or cause the Property to be kept free
from Hazardous Substances (except those substances used by Mortgagor in the
ordinary course of its business and in compliance with all Environmental
Laws) and in compliance with all Environmental Laws, shall not install or
use any underground storage tanks, shall expressly prohibit the use,
generation, handling, storage, production, processing and disposal of
Hazardous Substances by all tenants of space in the Improvements, and,
without limiting the generality of the foregoing, during the term of this
Mortgage, shall not install in the Improvements or permit to be installed
in the Improvements asbestos or any substance containing asbestos.
(c) Mortgagor shall promptly notify Mortgagee if Mortgagor shall
become aware of the possible existence of any Hazardous Substances on the
Property or if Mortgagor shall become aware that the Property is or may be
in direct or indirect violation of any Environmental Laws. Further,
immediately upon receipt of the same, Mortgagor shall deliver to Mortgagee
copies of any and all orders, notices, permits, applications, reports, and
other communications, documents and instruments pertaining to the actual,
alleged or potential presence or existence of any Hazardous Substances at,
on, about, under, within, near or in connection with the Property.
Mortgagor shall, promptly and when and as required by applicable
Environmental Laws, at Mortgagor's sole cost and expense, take all actions
as shall be necessary or advisable for the clean-up of any and all portions
of the Property or other affected property, including, without limitation,
all investigative, monitoring, removal, containment and remedial actions in
accordance with all applicable Environmental Laws (and in all events in a
manner satisfactory to Mortgagee), and shall further pay or cause to be
paid, at no expense to Mortgagee, all clean-up, administrative and
enforcement costs of applicable governmental agencies which may be asserted
against the Property. In the event Mortgagor fails to do so, Mortgagee
may, but shall not be obligated to, cause the Property or other affected
property to be freed from any Hazardous Substances or otherwise brought
into conformance with Environmental Laws and any and all costs and expenses
incurred by Mortgagee in connection therewith, together with interest
thereon at the Default Interest Rate from the date incurred by Mortgagee
until actually paid by Mortgagor, shall be immediately paid by Mortgagor on
demand and shall be secured by this Mortgage and by all of the other Loan
Documents securing all or any part of the indebtedness evidenced by the
Note. Mortgagor hereby grants to Mortgagee and its agents and employees
access to the Poperty and a license to remove any items deemed by Mortgagee
to be Hazardous Substances and to do all things Mortgagee shall deem
necessary to bring the Property in conformance with Environmental Laws.
Mortgagor covenants and agrees, at Mortgagor's sole cost and expense, to
indemnify, defend (at trial and appellate levels, and with attorneys,
consultants and experts acceptable to Mortgagee), and hold Mortgagee
harmless from and against any and all liens, damages, losses, liabilities,
obligations, settlement payments, penalties, assessments, citations,
directives, claims, litigation, demands, defenses, judgments, suits,
proceedings, costs, disbursements or expenses of any kind or of any nature
whatsoever (including, without limitation, reasonable attorneys',
consultants' and experts' fees and disbursements actually incurred in
investigating, defending, settling or prosecuting any claim, litigation or
proceeding) which may at any time be imposed upon, incurred by or asserted
or awarded against Mortgagee or the Property, and arising directly or
indirectly from or out of: (i) the presence, release or threat of release
of any Hazardous Substances on, in, under or affecting all or any portion
of the Property or any surrounding areas, regardless of whether or not
caused by or within the control of Mortgagor; (ii) the violation of any
Environmental Laws relating to or affecting the Property, whether or not
caused by or within the control of Mortgagor; (iii) the failure by
Mortgagor to comply fully with the terms and conditions of this Section
1.31; (iv) the breach of any representation or warranty contained in this
Section 1.31; or (v) the enforcement of this Section 1.31, including,
without limitation, the cost of assessment, containment and/or removal of
any and all Hazardous Substances from all or any portion of the Property or
any surrounding areas, the cost of any actions taken in response to the
presence, release or threat of release of any Hazardous Substances on, in,
under or affecting any portion of the Propery or any surrounding areas to
prevent or minimize such release or threat of release so that it does not
migrate or otherwise cause or threaten danger to present or future public
health, safety, welfare or the environment, and costs incurred to comply
with the Environmental Laws in connection with all or any portion of the
Property or any surrounding areas. The indemnity set forth in this Section
1.31(c) shall also include any diminution in the value of the security
afforded by the Property or any future reduction in the sales price of the
Property by reason of any matter set forth in this Section 1.31(c).
Mortgagee's rights under this Section shall survive payment in full of the
indebtedness secured hereby and shall be in addition to all other rights of
Mortgagee under this Mortgage, the Note and the other Loan Documents.
(d) Upon Mortgagee's request, at any time after the occurrence of
an Event of Default hereunder or at such other time as Mortgagee has
reasonable grounds to believe that Hazardous Substances are or have been
released, stored or disposed of on or around the Property or that the
Property may be in violation of the Environmental Laws, Mortgagor shall
provide, at Mortgagor's sole cost and expense, an inspection or audit of
the Property prepared by a hydrogeologist or environmental engineer or
other appropriate consultant approved by Mortgagee indicating the presence
or absence of Hazardous Substances on the Property or an inspection or
audit of the Improvements prepared by an engineering or consulting firm
approved by Mortgagee indicating the presence or absence of friable
asbestos or substances containing asbestos on the Property. If Mortgagor
fails to provide such inspection or audit within thirty (30) days after
such request, Mortgagee may order the same, and Mortgagor hereby grants to
Mortgagee and its employees and agents access to the Property and a license
to undertake such inspection or audit. The cost of such inspection or
audit, together with interest thereon at the Default Interest Rate from the
date incurred by Mortgagee until actually paid by Mortgagor, shall be
immediately due and payable to Mortgagee by Mortgagor on demand and shall
be secured hereby and by all of the other Loan Documents securing all or
any part of the indebtedness evidenced by the Note.
(e) Reference is made to that certain Hazardous Substances
Indemnity Agreement of even date herewith by and among Mortgagor, Merry
Land Properties, Inc. and Mortgagee (the "Hazardous Indemnity Agreement").
The provisions of this Mortgage and the Hazardous Indemnity Agreement shall
be read together to maximize the coverage with respect to the subject
matter thereof, as determined by Mortgagee.
(f) If, prior to the date hereof, it was determined that the
Property contains Lead Based Paint, Mortgagor had prepared an assessment
report describing the location and condition of the Lead Based Paint (a
"Lead Based Paint Report"). If, at any time hereafter, Lead Based Paint is
suspected of being present on the Property, Mortgagor agrees, at its sole
cost and expense and within twenty (20) days thereafter, to cause to be
prepared a Lead Based Paint Report prepared by an expert, and in form,
scope and substance, acceptable to Mortgagee.
(g) Mortgagor agrees that if it has been, or if at any time
hereafter it is, determined that the Property contains Lead Based Paint, on
or before thirty (30) days following (i) the date hereof, if such
determination was made prior to the date hereof or (ii) such determination,
if such determination is hereafter made, as applicable, Mortgagor shall, at
its sole cost and expenses, develop and implement, and thereafter
diligently and continuously carry out (or cause to be developed and
implemented and thereafter diligently and continually to be carried out),
an operations, abatement and maintenance plan for the Lead Based Paint on
the Property, which plan shall be prepared by an expert, and be in form,
scope and substance, acceptable to Mortgagee (together with any Lead Based
Paint Report, the "O&M Plan"). (If an O&M Plan has been prepared prior to
the date hereof, Mortgagor agrees to diligently and continually carry out
(or cause to be carried out) the provisions thereof). Compliance with the
O&M Plan shall require or be deemed to require, without limitation, the
proper preparation and maintenance of all records, papers and forms
required under the Environmental Laws.
1.32 INDEMNIFICATION; SUBROGATION.
(a) Mortgagor shall indemnify, defend and hold Mortgagee harmless
against: (i) any and all claims for brokerage, leasing, finders or similar
fees which may be made relating to the Property or the secured
indebtedness, and (ii) any and all liability, obligations, losses, damages,
penalties, claims, actions, suits, costs and expenses (including
Mortgagee's reasonable attorneys' fees, together with reasonable appellate
counsel fees, if any) of whatever kind or nature which may be asserted
against, imposed on or incurred by Mortgagee in connection with the secured
indebtedness, this Mortgage, the Property, or any part thereof, or the
exercise by Mortgagee of any rights or remedies granted to it under this
Mortgage; provided, however, that nothing herein shall be construed to
obligate Mortgagor to indemnify, defend and hold harmless Mortgagee from
and against any and all liabilities, obligations, losses, damages,
penalties, claims, actions, suits, costs and expenses enacted against,
imposed on or incurred by Mortgagee by reason of Mortgagee's willful
misconduct or gross negligence.
(b) If Mortgagee is made a party defendant to any litigation or
any claim is threatened or brought against Mortgagee concerning the secured
indebtedness, this Mortgage, the Property, or any part thereof, or any
interest therein, or the construction, maintenance, operation or occupancy
or use thereof, then Mortgagor shall indemnify, defend and hold Mortgagee
harmless from and against all liability by reason of said litigation or
claims, including reasonable attorneys' fees (together with reasonable
appellate counsel fees, if any) and expenses incurred by Mortgagee in any
such litigation or claim, whether or not any such litigation or claim is
prosecuted to judgment. If Mortgagee commences an action against Mortgagor
to enforce any of the terms hereof or to prosecute any breach by Mortgagor
of any of the terms hereof or to recover any sum secured hereby, Mortgagor
shall pay to Mortgagee its reasonable attorneys' fees (together with
reasonable appellate counsel fees, if any) and expenses. The right to such
attorneys' fees (together with reasonable appellate counsel fees, if any)
and expenses shall be deemed to have accrued on the commencement of such
action, and shall be enforceable whether or not such action is prosecuted
to judgment. If Mortgagor breaches any term of this Mortgage, Mortgagee
may engage the services of an attorney or attorneys to protect its rights
hereunder, and in the event of such engagement following any breach by
Mortgagor, Mortgagor shall pay Mortgagee reasonable attorneys' fees
(together with reasonable appellate counsel fees, if any) and expenses
incurred by Mortgagee, whether or not an action is actually commenced
against Mortgagor by reason of such breach. All references to "attorneys"
in this Subsection and elsewhere in this Mortgage shall include without
limitation any attorney or law firm engaged by Mortgagee and Mortgagee's
in-house counsel, and all references to "fees and expenses" in this
Subsection and elsewhere in this Mortgage shall include without limitation
any reasonable fees f such attorney or law firm and any allocation charges
and allocation costs of Mortgagee's in-house counsel.
(c) A waiver of subrogation shall be obtained by Mortgagor from
its insurance carrier and, consequently, Mortgagor waives any and all right
to claim or recover against Mortgagee, its officers, employees, agents and
representatives, for loss of or damage to Mortgagor, the Property,
Mortgagor's property or the property of others under Mortgagor's control
from any cause insured against or required to be insured against by the
provisions of this Mortgage.
1.33 NEGATIVE COVENANTS WITH RESPECT TO INDEBTEDNESS, OPERATIONS
AND FUNDAMENTAL CHANGES OF MORTGAGOR. Mortgagor hereby represents,
warrants and covenants, as of the date hereof and until such time as the
indebtedness secured hereby is paid in full, that Mortgagor:
(a) will not, nor will any partner, limited or general, member or
shareholder thereof, as applicable, amend, modify or otherwise change its
partnership certificate, partnership agreement, articles of incorporation,
by-laws, operating agreement, articles of organization, or other formation
agreement or document, as applicable, in any manner which adversely affects
Mortgagor's existence as a single purpose entity;
(b) will not enter into any transaction of merger or
consolidation, or liquidate or dissolve itself (or suffer any liquidation
or dissolution), or acquire by purchase or otherwise all or substantially
all the business or assets of, or any stock or other evidence of beneficial
ownership of, any entity;
(c) has not and will not guarantee, pledge its assets for the
benefit of, or otherwise become liable on or in connection with any
obligation of any other person or entity;
(d) does not own and will not own any asset other than (i) the
Property, and (ii) incidental personal property necessary for the operation
of the Property;
(e) is not engaged and will not engage, directly or indirectly,
in any business other than the ownership, management and operation of the
Property;
(f) will not enter into any contract or agreement with any
general partner, member, principal or Affiliate (as hereinafter defined) of
the Mortgagor or any Affiliate of the general partner, principal or member
of the Mortgagor except upon terms and conditions that are intrinsically
fair and substantially similar to those that would be available on an
arms-length basis with third parties other than an Affiliate;
(g) has not incurred and will not incur any debt, secured or
unsecured, direct or contingent (including guaranteeing any obligation),
other than (i) the indebtedness secured hereby, and (ii) Affiliate advances
or trade payables or accrued expenses incurred in the ordinary course of
business of operating the Property not outstanding for more than sixty (60)
days with trade creditors and in amounts as are normal and reasonable under
the circumstances, but in no event to exceed five percent of the original
principal balance of the Note in the aggregate; no other debt may be
secured (senior, subordinate or pari passu) by the Property;
(h) has not made and will not make any loans or advances to any third
party (including any Affiliate);
(i) is and will be solvent and pay its debt from its assets as the
same shall become due;
(j) has done or caused to be done and will do all things necessary to
preserve its existence, and will not, nor will any member, partner, limited or
general, or shareholder thereof, amend, modify or otherwise change its
operating agreement, articles of organization, partnership certificate,
partnership agreement, articles of incorporation or bylaws in a manner which
adversely affects the Mortgagor's existence as a single purpose entity;
(k) will conduct and operate its business as presently conducted
and operated;
(l) will maintain financial statements, books and records and
bank accounts separate from those of its Affiliates, including its general
partners and members, (except that Mortgagor may be included in
consolidated financial statements of another person where required by
generally accepted accounting principals (GAAP)), provided that such
consolidated financial statements contained a note indicating that the
Mortgagor is a separate legal entity and the Mortgagor's assets and
liabilities are neither available to pay the debt of the consolidated
entity is not liable for any of the liabilities of the Mortgagor except as
otherwise provided in the Loan Documents;
(m) will be, and at all times will hold itself out to the public
as, a legal entity separate and distinct from any other entity (including
any Affiliate thereof, including any general partner or member, Affiliate
of the general partner or member of the Mortgagor);
(n) will file its own tax returns;
(o) will maintain adequate capital for the normal obligations
reasonably foreseeable in a business of its size and character and in light
of its contemplated business operations;
(p) will not seek the dissolution or winding up, in whole or in
part, of the Mortgagor;
(q) will not commingle the funds and other assets of Mortgagor
with those of any general partner, member, any Affiliate or any other
person;
(r) has and will maintain its assets in such a manner that it is
not costly or difficult to segregate, ascertain or identify its individual
assets from those of any Affiliate or any other person;
(s) does not and will not hold itself out to be responsible for
the debts or obligations of any other person;
(t) will not do any act which would make it impossible to carry
on the ordinary business of Mortgagor;
(u) will not possess or assign the Property or incidental
personal property necessary for the operation of the Property for other
than a business or company purpose;
(v) will not sell, encumber or otherwise dispose of all or
substantially all of the Property or incidental personal property necessary
for the operation of the Property;
(w) will not hold title to Mortgagor's assets other than in
Mortgagor's name; and
(x) will not institute proceedings to be adjudicated bankrupt or
insolvent; or consent to the institution of bankruptcy or insolvency
proceedings against it; or file a petition seeking, or consent to,
reorganization or relief under any applicable federal or state law relating
to bankruptcy; or consent to the appointment of a receiver, liquidator,
assignee, trustee, sequestrator (or other similar official) of the
Mortgagor or a substantial part of Mortgagor's property; or make any
assignment for the benefit of creditors; or admit in writing its inability
to pay its debts generally as they become due; or take any action in
furtherance of any such action.
1.34 COVENANTS REGARDING INDEPENDENT MANAGER. By execution
hereof, ML Apartments I, Inc., a Georgia corporation agrees that it:
(a) shall at all times act as the managing member (such entity
together with its successor or assignee is hereinafter the "Manager") of
Mortgagor with all of the rights, powers, obligations and liabilities of
the managing member under the operating agreement of Mortgagor and shall
take any and all actions and do any and all things necessary or appropriate
to the accomplishment of same and will engage in no other business.
(b) shall not institute proceedings to be adjudicated bankrupt or
insolvent; or consent to the institution of bankruptcy or insolvency
proceedings against it; or file a petition seeking, or consent to,
reorganization or relief under any applicable federal or state law relating
to bankruptcy; or consent to the appointment of a receiver, liquidator,
assignee, trustee, sequestrator (or other similar official) of the Manager
or a substantial part of its property; or make any assignment for the
benefit of creditors; or admit in writing its inability to pay its debts
generally as they become due; or take any corporate action in furtherance
of any such action.
(c) shall not (a) liquidate or dissolve the Manager in whole or
in part and (b) consolidate, merge or enter into any form of consolidation
with or into any other entity, nor convey, transfer or lease its assets
substantially as an entirety to any person or entity nor permit any entity
to consolidate, merge or enter into any form of consolidation with or into
the Manager, nor convey, transfer or lease its assets substantially as an
entirety to any person or entity.
(d) shall either (i) maintain its principal executive office
separate from that of any Affiliate, or (ii) if sharing office space,
allocate fairly and reasonably any rent, overhead and other lease charges
for shared office space, and shall use telephone and facsimile numbers
separate from that of any Affiliate, and shall conspicuously identify such
office and numbers as its own and shall use its own stationary, invoices
and checks which reflect its address, telephone number and facsimile
number, as appropriate;
(e) shall maintain its corporate records and books and accounts
separate from those of any Affiliate or any other entity and shall prepare
unaudited quarterly and annual financial statements, and said financial
statements shall be in compliance with generally accepted accounting
principles and shall be in form reasonably acceptable to Mortgagee and its
successors and/or assigns;
(f) shall maintain its own separate bank accounts and correct,
complete and separate books of account;
(g) shall hold itself out to the public (including any
Affiliate's creditors) under the Manager's own name and as a separate and
distinct corporate entity and not as a department, division or otherwise of
any Affiliate;
(h) shall observe all customary formalities regarding the
corporate existence of the Manager, including holding meetings of or
obtaining the consent of its board of directors, as appropriate, and its
stockholders and maintaining current accurate minute books separate from
those of any Affiliate;
(i) shall act solely in its own corporate name and through its
own duly authorized officers and agents and no Affiliate shall be appointed
or act as agent of the Manager in its capacity as Manager of Mortgagor;
(j) shall make investments in the name of the Manager directly by
the Manager or on its behalf by brokers engaged and paid by the Manager or
its agents;
(k) except as required by Mortgagee or any successor to Mortgagee
in connection with any extension of credit by Mortgagee or any successor to
Mortgagee to Mortgagor (or any refinancing, increase, modification,
consolidation or extension of any such extension of credit), shall not
guaranty or assume or hold itself out or permit itself to be held out as
having guaranteed or assumed any liabilities of any partner of Mortgagor or
any Affiliate other than Mortgagor, nor shall the Manager make any loan,
except as permitted in the applicable Operating Agreement of Mortgagor;
(l) represents and warrants that the Manager is and expects to
remain solvent and shall pay its own liabilities, indebtedness and
obligations of any kind, including all administrative expenses, from its
own separate assets;
(m) represents and warrants that assets of the Manager shall be
separately identified, maintained and segregated and the Manager's assets
shall at all times be held by or on behalf of the Manager and if held on
behalf of the Manager by another entity, shall at all times be kept
identifiable (in accordance with customary usages) as assets owned by the
Manager (this restriction requires, among other things, that corporate
funds shall not be commingled with those of any Affiliate and it shall
maintain all accounts in its own name and with its own tax identification
number, separate from those of any Affiliates);
(n) shall not intentionally take any action if, as a result of
such action, the Manager would be required to register as an investment
company under the Investment Company Act of 1940, as amended;
(o) shall at all times be adequately capitalized to engage in the
transactions contemplated at its formation;
(p) represents and warrants that all data and records (including
computer records) used by the Manager or any Affiliate in the collection
and administration of any loan shall reflect the Manager's ownership
interest therein; and
(q) represents and warrants that none of the Manager's funds
shall be invested in securities issued by any Affiliate.
(r) shall maintain at all times one (1) Independent Manager.
"Independent Manager" shall mean a person who is not, and has not
at any time during the preceding five years been (i) a member, shareholder
of, or an officer, director, attorney, counsel, partner or employee of,
Mortgagor or any of its shareholders, subsidiaries or affiliates, (ii) a
customer of, or supplier to, Mortgagor or any of its shareholders,
subsidiaries or affiliates, (iii) a person or other entity controlling or
under common control with any such shareholder, partner, supplier or
customer, or (iv) a member of the immediate family of any such shareholder,
officer, director, partner, employee, supplier or customer of any other
director of Mortgagor. As used herein, the term "control" means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of a person or entity, whether
through ownership of voting securities, by contract or otherwise.
"Affiliate" means any person or entity other than the Manager (i)
which owns beneficially, directly or indirectly, more than 50 percent of
the outstanding shares of Common Stock or which is otherwise in control of
the Manager, (ii) of which more than 50 percent of the outstanding voting
securities are owned beneficially, directly or indirectly, by any entity
described in clause (i) above, or (iii) which is controlled by an entity
described in clause (i) above; provided that for the purposes of this
definition the term "control" and "controlled by" shall have the meanings
assigned to them in Rule 405 under the Securities Act of 1933, as amended.
ARTICLE II
EVENTS OF DEFAULT
2.1 EVENTS OF DEFAULT. The occurrence of any of the following
events (each, an "Event of Default") shall be an Event of Default
hereunder:
(a) Mortgagor fails to punctually perform any covenant,
agreement, obligation, term or condition under the Note, this Mortgage or
any other Loan Document which requires payment of any money to Mortgagee at
the time or within any applicable grace period set forth therein or herein,
or if no time or grace period is set forth, then within seven (7) days of
the date such payment is due or following demand if there is no due date.
(b) Mortgagor fails to provide insurance as required by SECTION
1.4 hereof or fails to perform any covenant, agreement, obligation, term or
condition set forth in SECTIONS 1.5, 1.15, 1.31 OR 1.33 hereof.
(c) Mortgagor fails to perform any other covenant, agreement,
obligation, term or condition set forth herein other than those otherwise
described in this Section 2.1 and, to the extent such failure or default is
susceptible of being cured, the continuance of such failure or default for
thirty (30) days after written notice thereof from Mortgagee to Mortgagor;
provided, however, that if such default is susceptible of cure but such
cure cannot be accomplished with reasonable diligence within said period of
time, and if Mortgagor commences to cure such default promptly after
receipt of notice thereof from Mortgagee, and thereafter prosecutes the
curing of such default with reasonable diligence, such period of time shall
be extended for such period of time as may be necessary to cure such
default with reasonable diligence, but not to exceed an additional sixty
(60) days.
(d) Any representation or warranty made herein, in or in
connection with any application or commitment relating to the loan
evidenced by the Note, or in any of the other Loan Documents to Mortgagee
by Mortgagor, by any principal or general partner, manager or member in
Mortgagor or by any indemnitor or guarantor under any indemnity or guaranty
executed in connection with the loan secured hereby shall in its reasonable
discretion have been materially false or misleading in any material respect
at the time made.
(e) There shall be a sale, conveyance, disposition, alienation,
hypothecation, leasing, assignment, pledge, mortgage, granting of a
security interest in or other transfer or further encumbrancing of the
Property, Mortgagor or its general partners or members, or any portion
thereof or any interest therein, in violation of Section 1.13 hereof.
(f) An Event of Default or default occurs under any of the other
Loan Documents which has not been cured within any applicable grace or cure
period therein provided.
(g) Mortgagor, any, managing member or general partner in
Mortgagor or any indemnitor or guarantor under any indemnity or guaranty
executed in connection with the loan secured hereby becomes insolvent, or
shall make a transfer in fraud of creditors, or shall make an assignment
for the benefit of creditors, shall file a petition in bankruptcy, shall
voluntarily be adjudicated insolvent or bankrupt or shall admit in writing
the inability to pay debts as they mature, shall petition or apply to any
tribunal for or shall consent to or shall not contest the appointment of a
receiver, trustee, custodian or similar officer for Mortgagor, for any
such, managing member or general partner of Mortgagor or for any such
indemnitor or guarantor or for a substantial part of the assets of
Mortgagor, of any such, managing member or general partner of Mortgagor or
of any such indemnitor or guarantor, or shall commence any case, proceeding
or other action under any bankruptcy, reorganization, arrangement,
readjustment or debt, dissolution or liquidation law or statute of any
jurisdiction, whether now or hereafter in effect.
(h) A petition is filed or any case, proceeding or other action
is commenced against Mortgagor, against any, managing member or general
partner of Mortgagor or against any indemnitor or guarantor under any
indemnity or guaranty executed in connection with the loan secured hereby
seeking to have an order for relief entered against it as debtor or seeking
reorganization, arrangement, adjustment, liquidation, dissolution or
composition of it or its debts or other relief under any law relating to
bankruptcy, insolvency, arrangement, reorganization, receivership or other
debtor relief under any law or statute of any jurisdiction whether now or
hereafter in effect or a court of competent jurisdiction enters an order
for relief against Mortgagor, against any, managing member or general
partner of Mortgagor or against any indemnitor or guarantor under any
indemnity or guaranty executed in connection with the loan secured hereby,
as debtor, or an order, judgment or decree is entered appointing, with or
without the consent of Mortgagor, of any such, managing member or general
partner of Mortgagor or of any such indemnitor or guarantor, a receiver,
trustee, custodian or similar officer for Mortgagor, for any such, managing
member or general partner of Mortgagor or for any such indemnitor or
guarantor, or for any substantial part of any of the properties of
Mortgagor, of any such, managing member or general partner of Mortgagor or
of any such indemnitor or guarantor, and if any such event shall occur,
such petition, case, proceeding, action, order, judgment or decree shall
not be dismissed within sixty (60) days after being commenced.
(i) The Property or any part thereof shall be taken on execution
or other process of law in any action against Mortgagor.
(j) Mortgagor abandons all or a portion of the Property.
(k) The holder of any lien or security interest on the Property
(without implying the consent of Mortgagee to the existence or creation of
any such lien or security interest), whether superior or subordinate to
this Mortgage or any of the other Loan Documents, declares a default and
such default is not cured within any applicable grace or cure period set
forth in the applicable document or such holder institutes foreclosure or
other proceedings for the enforcement of its remedies thereunder.
(l) The Property, or any part thereof, is subjected to actual or
threatened waste or to removal, demolition or material alteration so that
the value of the Property is materially diminished thereby and Mortgagee
determines (in its subjective determination) that it is not adequately
protected from any loss, damage or risk associated therewith.
(m) Any dissolution, termination, partial or complete
liquidation, merger or consolidation of Mortgagor, any of its principals or
any general partner or any managing member.
(n) Manager fails to perform any covenant, agreement, obligation,
terms or condition of Section 1.34 hereof.
ARTICLE III
REMEDIES
3.1 REMEDIES AVAILABLE. If there shall occur an Event of Default
under this Mortgage, then this Mortgage is subject to foreclosure as
provided by law and Mortgagee may, at its option and by or through a
trustee, nominee, assignee or otherwise, to the fullest extent permitted by
law, exercise any or all of the following rights, remedies and recourses,
either successively or concurrently:
(a) ACCELERATION. Accelerate the maturity date of the Note and
declare any or all of the indebtedness secured hereby to be immediately due
and payable without any presentment, demand, protest, notice, or action of
any kind whatever (each of which is hereby expressly waived by Mortgagor),
whereupon the same shall become immediately due and payable. Upon any such
acceleration, payment of such accelerated amount shall constitute a
prepayment of the principal balance of the Note and any applicable
prepayment fee provided for in the Note shall then be immediately due and
payable.
(b) ENTRY ON THE PROPERTY. Either in person or by agent, with or
without bringing any action or proceeding, or by a receiver appointed by a
court and without regard to the adequacy of its security, enter upon and
take possession of the Property, or any part thereof, without force or with
such force as is permitted by law and without notice or process or with
such notice or process as is required by law unless such notice and process
is waivable, in which case Mortgagor hereby waives such notice and process,
and do any and all acts and perform any and all work which may be desirable
or necessary in Mortgagee's judgment to complete any unfinished
construction on the Real Estate, to preserve the value, marketability or
rentability of the Property, to increase the income therefrom, to manage
and operate the Property or to protect the security hereof and all sums
expended by Mortgagee therefor, together with interest thereon at the
Default Interest Rate, shall be immediately due and payable to Mortgagee by
Mortgagor on demand and shall be secured hereby and by all of the other
Loan Documents securing all or any part of the indebtedness evidenced by
the Note.
(c) COLLECT RENTS AND PROFITS. With or without taking possession
of the Property, xxx or otherwise collect the Rents and Profits, including
those past due and unpaid.
(d) APPOINTMENT OF RECEIVER. Upon, or at any time prior or
after, initiating the exercise of any power of sale, instituting any
judicial foreclosure or instituting any other foreclosure of the liens and
security interests provided for herein or any other legal proceedings
hereunder, make application to a court of competent jurisdiction for
appointment of a receiver for all or any part of the Property, as a matter
of strict right and without notice to Mortgagor and without regard to the
adequacy of the Property for the repayment of the indebtedness secured
hereby or the solvency of Mortgagor or any person or persons liable for the
payment of the indebtedness secured hereby, and Mortgagor does hereby
irrevocably consent to such appointment, waives any and all notices of and
defenses to such appointment and agrees not to oppose any application
therefor by Mortgagee, but nothing herein is to be construed to deprive
Mortgagee of any other right, remedy or privilege Mortgagee may now have
under the law to have a receiver appointed, provided, however, that, the
appointment of such receiver, trustee or other appointee by virtue of any
court order, statute or regulation shall not impair or in any manner
prejudice the rights of Mortgagee to receive payment of the Rents and
Profits pursuant to other terms and provisions hereof. Any such receiver
shall have all of the usual powers and duties of receivers in similar
cases, including, without limitation, the full power to hold, develop,
rent, lease, manage, maintain, operate and otherwise use or permit the use
of the Property upon such terms and conditions as said receiver may deem to
be prudent and reasonable under the circumstances as more fully set forth
in Section 3.3 below. Such receivership shall, at the option of Mortgagee,
continue until full payment of all of the indebtedness secured hereby or
until title to the Property shall have passed by foreclosure sale under
this Mortgage or deed in lieu of foreclosure.
(e) FORECLOSURE. Immediately commence an action to foreclose
this Mortgage or to specifically enforce its provisions or any of the
indebtedness secured hereby pursuant to the statutes in such case made and
provided and sell the Property or cause the Property to be sold in
accordance with the requirements and procedures provided by said statutes
in a single parcel or in several parcels at the option of Mortgagee.
(1) In the event foreclosure proceedings are filed by
Mortgagee, all expenses incident to such proceeding,
including, but not limited to, attorneys' fees and costs,
shall be paid by Mortgagor and secured by this Mortgage and
by all of the other Loan Documents securing all or any part
of the indebtedness evidenced by the Note. The secured
indebtedness and all other obligations secured by this
Mortgage, including, without limitation, interest at the
Default Interest Rate (as defined in the Note), any
prepayment charge, fee or premium required to be paid under
the Note in order to prepay principal (to the extent
permitted by applicable law), attorneys' fees and any other
amounts due and unpaid to Mortgagee under the Loan
Documents, may be bid by Mortgagee in the event of a
foreclosure sale hereunder. In the event of a judicial sale
pursuant to a foreclosure decree, it is understood and
agreed that Mortgagee or its assigns may become the
purchaser of the Property or any part thereof.
(2) Mortgagee may, by following the procedures and
satisfying the requirements prescribed by applicable law,
foreclose on only a portion of the Property and, in such
event, said foreclosure shall not affect the lien of this
Mortgage on the remaining portion of the Property
foreclosed.
(f) OTHER. Exercise any other right or remedy available
hereunder, under any of the other Loan Documents or at law or in equity.
3.2 APPLICATION OF PROCEEDS. To the fullest extent permitted by
law, the proceeds of any sale under this Mortgage shall be applied to the
extent funds are so available to the following items in such order as
Mortgagee in its discretion may determine:
(a) To payment of the costs, expenses and fees of taking
possession of the Property, and of holding, operating, maintaining, using,
leasing, repairing, improving, marketing and selling the same and of
otherwise enforcing Mortgagee's right and remedies hereunder and under the
other Loan Documents, including, but not limited to, receivers' fees, court
costs, attorneys', accountants', appraisers', managers' and other
professional fees, title charges and transfer taxes.
(b) To payment of all sums expended by Mortgagee under the terms
of any of the Loan Documents and not yet repaid, together with interest on
such sums at the Default Interest Rate.
(c) To payment of the secured indebtedness and all other
obligations secured by this Mortgage, including, without limitation,
interest at the Default Interest Rate and, to the extent permitted by
applicable law, any prepayment fee, charge or premium required to be paid
under the Note in order to prepay principal, in any order that Mortgagee
chooses in its sole discretion.
The remainder, if any, of such funds shall be disbursed to
Mortgagor or to the person or persons legally entitled thereto.
3.3 RIGHT AND AUTHORITY OF RECEIVER OR MORTGAGEE IN THE EVENT OF
DEFAULT; POWER OF ATTORNEY. Upon the occurrence of an Event of Default
hereunder, which default is not cured within any applicable grace or cure
period, and entry upon the Property pursuant to Section 3.1(b) hereof or
appointment of a receiver pursuant to Section 3.1(d) hereof, and under such
terms and conditions as may be prudent and reasonable under the
circumstances in Mortgagee's or the receiver's sole discretion, all at
Mortgagor's expense, Mortgagee or said receiver, or such other persons or
entities as they shall hire, direct or engage, as the case may be, may do
or permit one or more of the following, successively or concurrently: (a)
enter upon and take possession and control of any and all of the Property;
(b) take and maintain possession of all documents, books, records, papers
and accounts relating to the Property; (c) exclude Mortgagor and its
agents, servants and employees wholly from the Property; (d) manage and
operate the Property; (e) preserve and maintain the Property; (f) make
repairs and alterations to the Property; (g) complete any construction or
repair of the Improvements, with such changes, additions or modifications
of the plans and specifications or intended disposition and use of the
Improvements as Mortgagee may in its sole discretion deem appropriate or
desirable to place the Property in such condition as will, in Mortgagee's
sole discretion, make it or any part thereof readily marketable or
rentable; (h) conduct a marketing or leasing program with respect to the
Property, or employ a marketing or leasing agent or agents to do so,
directed to the leasing or sale of the Property under such terms and
conditions as Mortgagee may in its sole discretion deem appropriate or
desirable; (i) employ such contractors, subcontractors, materialmen,
architects, engineers, consultants, managers, brokers, marketing agents, or
other employees, agents, independent contractors or professionals, as
Mortgagee may in its sole discretion deem appropriate or desirable to
implement and effectuate the rights and powers herein granted (j) execute
and deliver, in the name of Mortgagee as attorney-in-fact and agent of
Mortgagor or in its own name as Mortgagee, such documents and instruments
as are necessary or appropriate to consummate authorized transactions; (k)
enter into such leases, whether of real or personal property, or tenancy
agreements, under such terms and conditions as Mortgagee may in its sole
discretion deem appropriate or desirable; (l) collect and receive the Rents
and Profits from the Property; (m) eject Tenants or repossess personal
property, as provided by law, for breaches of the conditions of their
Leases; (n) xxx for unpaid Rents and Profits, payments, income or proceeds
in the name of Mortgagor or Mortgagee; (o) maintain actions in forcible
entry and detainer, ejectment for possession and actions in distress for
rent; (p) compromise or give acquittance for Rents and Profits, payments,
income or proceeds that may become due; (q) delegate or assign any and all
rights and powers given to Mortgagee by this Mortgage; and (r) do any acts
which Mortgagee in its sole discretion deems appropriate or desirable to
protect the security hereof and use such measures, legal or equitable, as
Mortgagee may in its sole discretion deem appropriate or desirable to
implement and effectuate the provisions of this Mortgage. This Mortgage
shall constitute a direction to and full authority to any lessee, or other
third party who has heretofore dealt or contracted or may hereafter deal or
contract with Mortgagor or Mortgagee, at the request of Mortgagee, to pay
all amounts owing under any Lease, contract, concession, license or other
agreement to Mortgagee without proof of the Event of Default relied upon.
Any such lessee or third party is hereby irrevocably authorized to rely
upon and comply with (and shall be fully protected by Mortgagor in so
doing) any request, notice or demand by Mortgagee for the payment to
Mortgagee of any Rents and Profits or other sums which may be or thereafter
become due under its Lease, contract, concession, license or other
agreement, or for the performance of any undertakings uner any such Lease,
contract, concession, license or other agreement, and shall have no right
or duty to inquire whether any Event of Default under this Mortgage or
under any of the other Loan Documents has actually occurred or is then
existing. Mortgagor hereby constitutes and appoints Mortgagee, its
assignees, successors, transferees and nominees, as Mortgagor's true and
lawful attorney-in-fact and agent, with full power of substitution in the
Property, in Mortgagor's name, place and stead, to do or permit any one or
more of the foregoing described rights, remedies, powers and authorities,
successively or concurrently, and said power of attorney shall be deemed a
power coupled with an interest and irrevocable so long as any indebtedness
secured hereby is outstanding. Any money advanced by Mortgagee in
connection with any action taken under this Section 3.3, together with
interest thereon at the Default Interest Rate from the date of making such
advancement by Mortgagee until actually paid by Mortgagor, shall be a
demand obligation owing by Mortgagor to Mortgagee and shall be secured by
this Mortgage and by every other instrument securing the secured
indebtedness.
3.4 OCCUPANCY AFTER FORECLOSURE. In the event there is a
foreclosure sale hereunder and at the time of such sale, Mortgagor or
Mortgagor's representatives, successors or assigns, or any other persons
claiming any interest in the Property by, through or under Mortgagor
(except tenants of space in the Improvements subject to Leases entered into
prior to the date hereof), are occupying or using the Property, or any part
thereof, then, to the extent not prohibited by applicable law, each and all
shall, at the option of Mortgagee or the purchaser at such sale, as the
case may be, immediately become the tenant of the purchaser at such sale,
which tenancy shall be a tenancy from day-to-day, terminable at the will of
either landlord or tenant, at a reasonable rental per day based upon the
value of the Property occupied or used, such rental to be due daily to the
purchaser. Further, to the extent permitted by applicable law, in the
event the tenant fails to surrender possession of the Property upon the
termination of such tenancy, the purchaser shall be entitled to institute
and maintain an action for unlawful detainer of the Property in the
appropriate court of the county in which the Real Estate is located.
3.5 NOTICE TO ACCOUNT DEBTORS. Mortgagee may, at any time after
an Event of Default notify the account debtors and obligors of any
accounts, chattel paper, negotiable instruments or other evidences of
indebtedness, to Mortgagor included in the Property to pay Mortgagee
directly. Mortgagor shall at any time or from time to time upon the
request of Mortgagee provide to Mortgagee a current list of all such
account debtors and obligors and their addresses.
3.6 CUMULATIVE REMEDIES. All remedies contained in this Mortgage
are cumulative and Mortgagee shall also have all other remedies provided at
law and in equity or in any other Loan Documents. Such remedies may be
pursued separately, successively or concurrently at the sole subjective
direction of Mortgagee and may be exercised in any order and as often as
occasion therefor shall arise. No act of Mortgagee shall be construed as
an election to proceed under any particular provisions of this Mortgage to
the exclusion of any other provision of this Mortgage or as an election of
remedies to the exclusion of any other remedy which may then or thereafter
be available to Mortgagee. No delay or failure by Mortgagee to exercise
any right or remedy under this Mortgage shall be construed to be a waiver
of that right or remedy or of any Event of Default hereunder. Mortgagee
may exercise any one or more of its rights and remedies at its option
without regard to the adequacy of its security.
3.7 PAYMENT OF EXPENSES. Mortgagor shall pay on demand all of
Mortgagee's expenses incurred in any efforts to enforce any terms of this
Mortgage, whether or not any lawsuit is filed and whether or not
foreclosure is commenced but not completed, including, but not limited to,
legal fees and disbursements, foreclosure costs and title charges, together
with interest thereon from and after the date incurred by Mortgagee until
actually paid by Mortgagor at the Default Interest Rate, and the same shall
be secured by this Mortgage and by all of the other Loan Documents securing
all or any part of the indebtedness evidenced by the Note.
ARTICLE IV
MISCELLANEOUS TERMS AND CONDITIONS
4.1 TIME OF ESSENCE. Time is of the essence with respect to all
provisions of this Mortgage.
4.2 RELEASE OF MORTGAGE. If all of the secured indebtedness be
paid, then and in that event only, all rights under this Mortgage shall
terminate except for those provisions hereof which by their terms survive,
and the Property shall become wholly clear of the liens, security
interests, conveyances and assignments evidenced hereby, which shall be
released by Mortgagee in due form at Mortgagor's cost. No release of this
Mortgage or the lien hereof shall be valid unless executed by Mortgagee.
4.3 CERTAIN RIGHTS OF MORTGAGEE. Without affecting Mortgagor's
liability for the payment of any of the indebtedness secured hereby,
Mortgagee may from time to time and without notice to Mortgagor: (a)
release any person liable for the payment of the indebtedness secured
hereby; (b) extend or modify the terms of payment of the indebtedness
secured hereby; (c) accept additional real or personal property of any kind
as security or alter, substitute or release any property securing the
indebtedness secured hereby; (d) recover any part of the Property; (e)
consent in writing to the making of any subdivision map or plat thereof;
(f) join in granting any easement therein; or (g) join in any extension
agreement of the Mortgage or any agreement subordinating the lien hereof.
4.4 WAIVER OF CERTAIN DEFENSES. No action for the enforcement of
the lien hereof or of any provision hereof shall be subject to any defense
which would not be good and available to the party interposing the same in
an action at law upon the Note or any of the other Loan Documents.
4.5 NOTICES. All notices, demands, requests or other
communications to be sent by one party to the other hereunder or required
by law shall be in writing and shall be deemed to have been validly given
or served by delivery of the same in person to the intended addressee, or
by depositing the same with Federal Express or another reputable private
courier service for next business day delivery, or by depositing the same
in the United States mail, postage prepaid, registered or certified mail,
return receipt requested, in any event addressed to the intended addressee
at its address set forth on the first page of this Mortgage or at such
other address as may be designated by such party as herein provided. All
notices, demands and requests to be sent to Mortgagee shall be addressed to
the attention of the Capital Markets Group. All notices, demands and
requests shall be effective upon such personal delivery, or one (1)
business day after being deposited with the private courier service, or two
(2) business days after being deposited in the United States mail as
required above. Rejection or other refusal to accept or the inability to
deliver because of changed address of which no notice was given as herein
required shall be deemed to be receipt of the notice, demand or request
sent. By giving to the other party hereto at least fifteen (15) days'
prior written notice thereof in accordance with the provisions hereof, the
parties hereto shall have the right from time to time to change their
respective addresses and each shall have the right to specify as its
address any other address within the United States of America.
4.6 SUCCESSORS AND ASSIGNS. The terms, provisions, indemnities,
covenants and conditions hereof shall be binding upon Mortgagor and the
successors and assigns of Mortgagor, including all successors in interest
of Mortgagor in and to all or any part of the Property, and shall inure to
the benefit of Mortgagee, its directors, officers, shareholders, employees
and agents and their respective successors and assigns and shall constitute
covenants running with the land. All references in this Mortgage to
Mortgagor or Mortgagee shall be deemed to include all such parties'
successors and assigns, and the term "Mortgagee" as used herein shall also
mean and refer to any lawful holder or owner, including pledgees and
participants, of any of the indebtedness secured hereby. If Mortgagor
consists of more than one person or entity, each will be jointly and
severally liable to perform the obligations of Mortgagor.
4.7 SEVERABILITY. A determination that any provision of this
Mortgage is unenforceable or invalid shall not affect the enforceability or
validity of any other provision, and any determination that the application
of any provision of this Mortgage to any person or circumstance is illegal
or unenforceable shall not affect the enforceability or validity of such
provision as it may apply to any other persons or circumstances.
4.8 GENDER. Within this Mortgage, words of any gender shall be
held and construed to include any other gender, and words in the singular
shall be held and construed to include the plural, and vice versa, unless
the context otherwise requires.
4.9 WAIVER: DISCONTINUANCE OF PROCEEDINGS. Mortgagee may waive
any single Event of Default by Mortgagor hereunder without waiving any
other prior or subsequent Event of Default. Mortgagee may remedy any Event
of Default by Mortgagor hereunder without waiving the Event of Default
remedied. Neither the failure by Mortgagee to exercise, nor the delay by
Mortgagee in exercising, any right, power or remedy upon any Event of
Default by Mortgagor hereunder shall be construed as a waiver of such Event
of Default or as a waiver of the right to exercise any such right, power or
remedy at a later date. No single or partial exercise by Mortgagee of any
right, power or remedy hereunder shall exhaust the same or shall preclude
any other or further exercise thereof, and every such right, power or
remedy hereunder may be exercised at any time and from time to time. No
modification or waiver of any provision hereof nor consent to any departure
by Mortgagor therefrom shall in any event be effective unless the same
shall be in writing and signed by Mortgagee, and then such waiver or
consent shall be effective only in the specific instance and for the
specific purpose given. No notice to nor demand on Mortgagor in any case
shall of itself entitle Mortgagor to any other or further notice or demand
in similar or other circumstances. Acceptance by Mortgagee of any payment
in an amount less than the amount then due on any of the secured
indebtedness shall be deemed an acceptance on account only and shall not in
any way affect the existence of an Event of Default hereunder. In case
Mortgagee shall have proceeded to invoke any right, remedy or recourse
permitted hereunder or under the other Loan Documents and shall thereafter
elect to discontinue or abandon the same for any reason, Mortgagee shall
have the unqualified right to do so and, in such an event, Mortgagor and
Mortgagee shall be restored to their former positions with respect to the
indebtedness secured hereby, the Loan Documents, the Property and
otherwise, and the rights, remedies, recourses and powers of Mortagee shall
continue as if the same had never been invoked.
4.10 SECTION HEADINGS. The headings of the sections and
paragraphs of this Mortgage are for convenience of reference only, are not
to be considered a part hereof and shall not limit or otherwise affect any
of the terms hereof.
4.11 GOVERNING LAW. This Mortgage will be governed by and
construed in accordance with the laws of the State in which the Real Estate
is located provided that to the extent any of such laws may now or
hereafter be preempted by Federal law, in which case such Federal law shall
so govern and be controlling; and provided further that the laws of the
state in which the Real Estate is located shall govern as to the creation,
priority and enforcement of liens and security interests in property
located in such state.
4.12 COUNTING OF DAYS. The term "days" when used herein shall
mean calendar days. If any time period ends on a Saturday, Sunday or
holiday officially recognized by the state within which the Real Estate is
located, the period shall be deemed to end on the next succeeding business
day. The term "business day" when used herein shall mean a weekday, Monday
through Friday, except a legal holiday or a day on which banking
institutions in South Carolina are authorized by law to be closed.
4.13 RELATIONSHIP OF THE PARTIES. The relationship between
Mortgagor and Mortgagee is that of a borrower and a lender only and neither
of those parties is, nor shall it hold itself out to be, the agent,
employee, joint venturer or partner of the other party.
4.14 APPLICATION OF THE PROCEEDS OF THE NOTE. To the extent that
proceeds of the Note are used to pay indebtedness secured by any
outstanding lien, security interest, charge or prior encumbrance against
the Property, such proceeds have been advanced by Mortgagee at Mortgagor's
request and Mortgagee shall be subrogated to any and all rights, security
interests and liens owned by any owner or holder of such outstanding liens,
security interests, charges or encumbrances, irrespective of whether said
liens, security interests, charges or encumbrances are released.
4.15 UNSECURED PORTION OF INDEBTEDNESS. If any part of the
secured indebtedness cannot be lawfully secured by this Mortgage or if any
part of the Property cannot be lawfully subject to the lien and security
interest hereof to the full extent of such indebtedness, then all payments
made shall be applied on said indebtedness first in discharge of that
portion thereof which is unsecured by this Mortgage.
4.16 CROSS DEFAULT. An Event of Default hereunder shall be a
default under each of the other Loan Documents.
4.17 INTEREST AFTER SALE. In the event the Property or any part
thereof shall be sold upon foreclosure as provided hereunder, to the extent
permitted by law, the sum for which the same shall have been sold shall,
for purposes of redemption (pursuant to the laws of the state in which the
Property is located), bear interest at the Default Interest Rate.
4.18 INCONSISTENCY WITH OTHER LOAN DOCUMENTS. In the event of
any inconsistency between the provisions hereof and the provisions in any
of the other Loan Documents, it is intended that the provisions selected by
Mortgagee in its sole subjective discretion shall be controlling.
4.19 CONSTRUCTION OF THIS DOCUMENT. This document may be
construed as a mortgage, security deed, deed of trust, chattel mortgage,
conveyance, assignment, security agreement, pledge, financing statement,
hypothecation or contract, or any one or more of the foregoing, in order to
fully effectuate the liens and security interests created hereby and the
purposes and agreements herein set forth.
4.20 NO MERGER. It is the desire and intention of the parties
hereto that this Mortgage and the lien hereof do not merge in fee simple
title to the Property. It is hereby understood and agreed that should
Mortgagee acquire any additional or other interests in or to the Property
or the ownership thereof, then, unless a contrary intent is manifested by
Mortgagee as evidenced by an appropriate document duly recorded, this
Mortgage and the lien hereof shall not merge in such other or additional
interests in or to the Property, toward the end that this Mortgage may be
foreclosed as if owned by a stranger to said other or additional interests.
4.21 RIGHTS WITH RESPECT TO JUNIOR ENCUMBRANCES. Any person or
entity purporting to have or to take a junior mortgage or other lien or
security interest upon the Property or any interest therein shall be
subject to the rights of Mortgagee to amend, modify, increase, vary, alter
or supplement this Mortgage, the Note or any of the other Loan Documents
and to extend the maturity date of the indebtedness secured hereby and to
increase the amount of the indebtedness secured hereby and to waive or
forebear the exercise of any of its rights and remedies hereunder or under
any of the other Loan Documents and to release any collateral or security
for the indebtedness secured hereby, in each and every case without
obtaining the consent of the holder of such junior lien and without the
lien or security interest of this Mortgage losing its priority over the
rights of any such junior lien.
4.22 MORTGAGEE MAY FILE PROOFS OF CLAIM. In the case of any
receivership, insolvency, bankruptcy, reorganization, arrangement,
adjustment, composition or other proceedings affecting Mortgagor or the
principals or general partners in Mortgagor, or their respective creditors
or property, Mortgagee, to the extent permitted by law, shall be entitled
to file such proofs of claim and other documents as may be necessary or
advisable in order to have the claims of Mortgagee allowed in such
proceedings for the entire secured indebtedness at the date of the
institution of such proceedings and for any additional amount which may
become due and payable by Mortgagor hereunder after such date.
4.23 FIXTURE FILING. This Mortgage shall be effective from the
date of its recording as a financing statement filed as a fixture filing
with respect to all goods constituting part of the Property which are or
are to become fixtures.
4.24 AFTER-ACQUIRED PROPERTY. All property acquired by Mortgagor
after the date of this Mortgage which by the terms of this Mortgage shall
be subject to the lien and the security interest created hereby, shall
immediately upon the acquisition thereof by Mortgagor and without further
mortgage, conveyance or assignment become subject to the lien and security
interest created by this Mortgage. Nevertheless, Mortgagor shall execute,
acknowledge, deliver and record or file, as appropriate, all and every such
further mortgages, security agreements, financing statements, assignments
and assurances, as Mortgagee shall require for accomplishing the purposes
of this Mortgage.
4.25 NO REPRESENTATION. By accepting delivery of any item
required to be observed, performed or fulfilled or to be given to Mortgagee
pursuant to the Loan Documents, including, but not limited to, any
officer's certificates balance sheet, statement of profit and loss or other
financial statement, survey, appraisal or insurance policy, Mortgagee shall
not be deemed to have warranted, consented to, or affirmed the sufficiency,
legality, effectiveness or legal effect of the same, or of any term,
provision or condition thereof, and such acceptance of delivery thereof
shall not be or constitute any warranty, consent or affirmation with
respect thereto by Mortgagee.
4.26 COUNTERPARTS. This Mortgage may be executed in any number
of counterparts, each of which shall be effective only upon delivery and
thereafter shall be deemed an original, and all of which shall be taken to
be one and the same instrument, for the same effect as if all parties
hereto had signed the same signature page. Any signature page of this
Mortgage may be detached from any counterpart of this Mortgage without
impairing the legal effect of any signatures thereon and may be attached to
another counterpart of this Mortgage identical in form hereto but having
attached to it one or more additional signature pages.
4.27 PERSONAL LIABILITY. Notwithstanding anything to the
contrary contained in this Mortgage, the liability of Mortgagor and its
officer, directors, general partners, managers, members and principals for
the indebtedness secured hereby and for the performance of the other
agreements, covenants and obligations contained herein and in the other
Loan Documents shall be limited as set forth in Section 2.04 of the Note.
4.28 RECORDING AND FILING. Mortgagor will cause the Loan
Documents and all amendments and supplements thereto and substitutions
therefor to be recorded, filed, re-recorded and re-filed in such manner and
in such places as Mortgagee shall reasonably request, and will pay on
demand all such recording, filing, re-recording and re-filing taxes, fees
and other charges. Mortgagor shall reimburse Mortgagee, or its servicing
agent, for the costs incurred in obtaining a tax service company to verify
the status of payment of taxes and assessments on the Property.
4.29 ENTIRE AGREEMENT AND MODIFICATION. This Mortgage and the
other Loan Documents contain the entire agreements between the parties
relating to the subject matter hereof and thereof and all prior agreements
relative hereto and thereto which are not contained herein or therein are
terminated. This Mortgage and the other Loan Documents may not be amended,
revised, waived, discharged, released or terminated orally but only by a
written instrument or instruments executed by the party against which
enforcement of the amendment, revision, waiver, discharge, release or
termination is asserted. Any alleged amendment, revision, waiver,
discharge, release or termination which is not so documented shall not be
effective as to any party.
4.30 MAXIMUM INTEREST. The provisions of this Mortgage and of
all agreements between Mortgagor and Mortgagee, whether now existing or
hereafter arising and whether written or oral, are hereby expressly limited
so that in no contingency or event whatsoever, whether by reason of demand
or acceleration of the maturity of the Note or otherwise, shall the amount
paid, or agreed to be paid ("Interest"), to Mortgagee for the use,
forbearance or retention of the money loaned under the Note exceed the
maximum amount permissible under applicable law. If, from any circumstance
whatsoever, performance or fulfillment of any provision hereof or of any
agreement between Mortgagor and Mortgagee shall, at the time performance or
fulfillment of such provision shall be due, exceed the limit for Interest
prescribed by law or otherwise transcend the limit of validity prescribed
by applicable law, then ipso facto the obligation to be performed or
fulfilled shall be reduced to such limit and if, from any circumstance
whatsoever, Mortgagee shall ever receive anything of value deemed Interest
by applicable law in excess of the maximum lawful amount, an amount equal
to any excessive Interest shall be applied to the reduction of the
principal balance owing under the Note in the inverse order of
its maturity (whether or not then due) or at the option of Mortgagee be
paid over to Mortgagor, and not to the payment of Interest. All Interest
(including any amounts or payments deemed to be Interest) paid or agreed to
be paid to Mortgagee shall, to the extent permitted by applicable law, be
amortized, prorated, allocated and spread throughout the full period until
payment in full of the principal balance of the Note so that the Interest
thereon for such full period will not exceed the maximum amount permitted
by applicable law. This paragraph will control all agreements between
Mortgagor and Mortgagee.
4.31 INTEREST PAYABLE BY MORTGAGEE. Mortgagee shall cause funds
in the Replacement Reserve to be deposited into an interest bearing account
of the type customarily maintained by Mortgagee or its servicing agent for
the investment of similar reserves, which account may not yield the highest
interest rate then available. Interest payable on such amounts shall be
computed based on the daily outstanding balance in the Replacement Reserve.
Such interest shall be calculated on a simple, non-compounded interest
basis based solely on contributions made to the Replacement Reserve by
Mortgagor. All interest earned on amounts contributed to the Replacement
Reserve shall be retained by Mortgagee and added to the balance in the
Replacement Reserve and shall be disbursed for payment of the items for
which other funds in the Replacement Reserve are to be disbursed.
4.32 SECONDARY MARKET. Mortgagee may sell, transfer and deliver
the Loan Documents to one or more investors in the secondary mortgage
market. In connection with such sale, may retain or assign responsibility
for servicing the loan or may delegate some or all of such responsibility
and/or obligations to a servicer, including, but not limited to, any
subservicer or master servicer, on behalf of the investors. All references
to Mortgagee herein shall refer to and include, without limitation, any
such servicer, to the extent applicable.
4.33 FURTHER STIPULATIONS. The additional covenants, agreements
and provisions set forth in EXHIBITS B AND C attached hereto and made a
part hereof, if any, shall be a part of this Mortgage and shall, in the
event of any conflict between such further stipulations and any of the
other provisions of this Mortgage, be deemed to control.
IN WITNESS WHEREOF, Mortgagor has executed this Mortgage as of
the day and year first above written.
MORTGAGOR:
QUARTERDECK APARTMENTS LLC
____________________________ By: ML Apartments I, Inc.,
WITNESS its managing member
/s/
By: _______________________
____________________________ Name:
WITNESS Title:
Consented and Agreed to
as to the provisions of
Section 1.34
ML Apartments I, Inc., a Georgia corporation
By: ________________________
Name:
Title:
County of __________ )
) ss. PROBATE
State of ____________ )
Personally appeared before me ____________________ who being first
duly sworn, deposed and said that (s)he saw the within named
_________________________________________, by _____________, its _________,
sign and, as its act and deed, deliver the within Mortgage and Security
Agreement, and that (s)he with ___________________________ witnessed the
execution thereof.
______________________________
(First Witness)
Sworn to before me this _____ day of June, 1999.
__________________ (L.S.)
Notary Public for __________
My commission expires: _________________
EXHIBIT A
PROPERTY DESCRIPTION
EXHIBIT B
MORTGAGOR'S CERTIFICATE
The undersigned is the _____________ of ________, the general
partner of _________________ (the "Mortgagor") and has made due
investigation as to the matters hereinafter set forth and does hereby
certify the following to induce FIRST UNION NATIONAL BANK, (the
"Mortgagee") to advance the aggregate sum of $__________________ (the
"Disbursement") [from the Replacement Reserve or Repair and Remediation
Reserve or Environmental Reserve] to the Mortgagor pursuant to the terms of
that certain Mortgage and Security Agreement, dated as of _____ __, 199_,
between the Mortgagee and the Mortgagor (together with any amendments,
modifications, supplements and replacements thereof or therefor, the
"Mortgage"), dated ____________, pursuant to that certain Disbursement
request which is being submitted to the Mortgagee. (Capitalized terms used
and not otherwise define shall have the respective meanings given to them
in the Mortgage.)
1. No default beyond any applicable notice and/or grace period
exists under the Mortgage or under any of the other Loan Documents.
2. The [Repairs, Deferred Maintenance or Environmental Work]
relative to the Disbursement have been delivered or provided to Mortgagor
and are properly, completely and permanently installed on or about the
Property or otherwise properly completed, as applicable.
3. All of the statements, invoices, receipts and information
delivered in connection with the Disbursement request being submitted to
the Mortgagee in connection herewith are true and correct as of the date
hereof, and the amount requested in said Disbursement request accurately
reflects the precise amounts due and payable during the period covered by
such Disbursement request. All of the funds to be received pursuant to
such Disbursement request shall be used solely for the purpose of
reimbursing the Mortgagor for items previously paid.
4. Nothing has occurred subsequent to the date of the Mortgage
which has or may result in the creation of any lien, charge or encumbrance
upon the Real Estate or the Improvements or any part thereof, or anything
affixed thereto or used in connection therewith, or which has or may
substantially and adversely impair the ability of the Mortgagor to make any
payments of principal and interest on the Note or the ability of the
Mortgagor to meet its obligations under the Mortgage.
5. None of the labor, materials, overhead or other items of
expense specified in the Disbursement request submitted herewith has
previously been the basis of any Disbursement request by the Mortgagor or
any payment by the Mortgagee and, when added to all sums previously
disbursed by Mortgagee on account of the [Deferred Maintenance, Repairs or
Environmental Work], do not exceed the costs of all [Deferred Maintenance,
Repairs or Environmental Work] services completed, installed and/or
delivered, as applicable, to the date of that certificate.
6. The amount remaining in the [Account] allocated to the payment
of items on the [Deferred Maintenance, Repairs or Environmental Work] will
be sufficient to pay in full the entire remaining cost of [Deferred
Maintenance, Repairs or Environmental Work] required to be completed in
accordance with the Mortgage.
7. All work required permits and approvals required to complete
the work which work is now in process or was previously completed have been
obtained.
8. All conditions to the Disbursement to be made in accordance
with the Disbursement request submitted herewith have been met in
accordance with the terms of the Mortgage.
By:__________________________
EXHIBIT C
"PERMITTED INVESTMENTS" shall mean any one or more of the following
obligations or securities acquired at a purchase price of not greater than
par, including those issued by Beneficiary, Servicer, REMIC Trustee or any
of their respective affiliates:
(i) direct obligations of, or obligations fully guaranteed
as to payment of principal and interest by, (a) the United States or
any agency or instrumentality thereof provided such obligations are
backed by the full faith and credit of the United States of America,
or (b) FHLMC, FNMA, the Federal Farm Credit System or the Federal Home
Loan Banks provided such obligations at the time of purchase or
contractual commitment for purchase are qualified by the Rating
Agencies as a Permitted Investment hereunder as evidenced in writing;
(ii) fully FDIC-insured demand and time deposits in or
certificates of deposit of, or bankers' acceptances issued by, any
bank or trust company, savings and loan association or savings bank,
provided that the commercial paper and long-term unsecured debt
obligations of such depository institution or trust company have the
highest rating available for such securities by the Rating Agencies,
or such lower rating as will not result in the downgrading or
withdrawal of the rating then assigned to the Certificates by any
Rating Agency as evidenced in writing;
(iii) repurchase obligations with respect to any security
described in clause (i) above entered into with a depository
institution or trust company (acting as principal) described in clause
(ii) above;
(iv) general obligations of or obligations guaranteed by any
State of the United States or the District of Columbia receiving the
highest long-term unsecured debt rating available for such securities
by the Rating Agencies, or such lower rating as will not result in the
downgrading or withdrawal of the rating then assigned to the
Certificates by any Rating Agency as evidenced in writing;
(v) securities bearing interest or sold at a discount that
are issued by any corporation incorporated under the laws of the
United States of America or any State thereof or the District of
Columbia and is rated by the Rating Agencies in their highest long-
term unsecured rating categories at the time of such investment or
contractual commitment providing for such investment; PROVIDED,
HOWEVER, that securities issued by any such corporation will not be
Permitted Investments to the extent that investment therein will cause
the then outstanding principal amount of securities issued by such
corporation and held as part of the Central Account to exceed 20% of
the aggregate principal amount of all Permitted Investments held in
the Central Account;
(vi) commercial or finance company paper (including both
non-interest-bearing discount obligations and interest-bearing
obligations payable on demand or on a specified date not more than one
year after the date of issuance thereof) that is rated by the Rating
Agencies in their highest short-term unsecured debt rating available
at the time of such investment or contractual commitment providing for
such investment, and is issued by a corporation the outstanding senior
long-term debt obligations of which are then rated by the Rating
Agencies in their highest rating available in their short-term and
long-term unsecured debt ratings, or such lower rating as will not
result in the downgrading or withdrawal of the rating then assigned to
the Certificates by any Rating Agency as evidenced in writing;
(vii) guaranteed reinvestment agreements acceptable to the
Rating Agencies issued by any bank, insurance company or other
corporation rated in the highest long-term unsecured rating levels
available to such issuers by the Rating Agencies throughout the
duration of such agreements, or such lower rating as will not result
in the downgrading or withdrawal of the rating then assigned to the
Certificates by any Rating Agency as evidenced in writing;
(viii) units of taxable money market funds, which funds are
regulated investment companies, seek to maintain a constant net asset
value per share and invest solely in obligations backed by the full
faith and credit of the United States, which funds have been
designated in writing by the Rating Agencies as Permitted Investments
with respect to this definition; and
(ix) if previously confirmed in writing to the REMIC
Trustee, any other demand, money market or time deposit, or any other
obligation, security or investment, that may be acceptable to the
Rating Agencies as a permitted investment of funds backing securities
having ratings equivalent to their initial rating of the Certificates;
PROVIDED, HOWEVER, that no instrument or security shall be a Permitted
Investment if (y) such instrument or security evidences a right to receive
only interest payments or (z) the right to receive principal and interest
payments derived from the underlying investment provide a yield to maturity
in excess of 120% of the yield to maturity at par of such underlying
investment.
