Exhibit 10.4
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PR MARYLANDER LLC, as mortgagor
(Grantor)
to
XXXXXX X. XXXXXXXXX,
(Trustee)
for the benefit of
GMAC COMMERCIAL MORTGAGE CORPORATION, as mortgagee
(Beneficiary)
-----------------------------------
INDEMNITY DEED OF TRUST AND
SECURITY AGREEMENT
Principal Sum Secured: $12,300,000.00
-----------------------------------
Dated: April 13, 1999
Location: The Marylander Apartments
0000 Xx. Xxxx Xxxxxx
Xxxxxxxxx, XX 00000
PREPARED BY AND UPON
RECORDATION RETURN TO:
Xxxxx Xxxxxx Xxxxx Tischman Xxxxxxx & Xxxxx, P.A.
Xxx Xxxxxxxxxx Xxxxx
Xxxxxx, Xxx Xxxxxx 00000-0000
Attention: Xxxxxx Xxxxxxxxx, Esq.
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TABLE OF CONTENTS
Page
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Article 1 - GRANTS OF SECURITY 1
Section 1.1 Property Mortgaged 1
Section 1.2 Assignment of Leases and Rents. 4
Section 1.3 Security Agreement. 4
Section 1.4 Pledge of Monies Held. 4
Article 2 - DEBT AND OBLIGATIONS SECURED 5
Section 2.1 Debt. 5
Section 2.2 Other Obligations. 5
Section 2.3 Debt and Other Obligations. 5
Article 3 - GRANTOR COVENANTS 5
Section 3.1 Payment Under Guaranty. 5
Section 3.2 Incorporation by Reference. 5
Section 3.3 Insurance. 6
Section 3.4 Payment of Taxes, Etc. 9
Section 3.5 Escrow Fund. 10
Section 3.7 Leases and Rents. 11
Section 3.8 Maintenance of Property. 12
Section 3.9 Waste. 13
Section 3.10 Compliance With Laws. 13
Section 3.11 Books and Records. 14
Section 3.12 Payment For Labor and Materials. 15
Section 3.13 Performance of Other Agreements. 15
Section 3.14 Change of Name, Identity or Structure. 15
Section 3.15 Existence. 16
Article 4 - SPECIAL COVENANTS 16
Section 4.1 Property Use. 16
Section 4.2 ERISA. 16
Section 4.3 Single Purpose Entity. 16
Section 4.4 Restoration After Casualty/Condemnation. 19
Article 5 - REPRESENTATIONS AND WARRANTIES 24
Section 5.1 Warranty of Title. 24
Section 5.2 Authority. 24
Section 5.3 Legal Status and Authority. 24
Section 5.4 Validity of Documents. 24
Section 5.5 Litigation. 25
Section 5.6 Status of Property. 25
Section 5.7 No Foreign Person. 26
Section 5.8 Separate Tax Lot. 26
Section 5.9 ERISA Compliance. 26
Section 5.10 Leases. 27
Section 5.11 Financial Condition. 27
Section 5.12 Business Purposes. 28
Section 5.13 Taxes. 28
Section 5.14 Mailing Address. 28
Section 5.15 No Change in Facts or Circumstances. 28
Section 5.16 Disclosure. 28
Section 5.17 Third Party Representations. 28
Section 5.18 Illegal Activity. 28
Section 5.19 FUNB Line of Credit. 28
Article 6 - DEBTOR/CREDITOR RELATIONSHIP 29
Section 6.1 Relationship of Grantor and Beneficiary. 29
Section 6.2 Servicing of the Loan. 29
Article 7 - FURTHER ASSURANCES 29
Section 7.1 Recording of Security Instrument, Etc. 29
Section 7.2 Further Acts, Etc. 29
Section 7.3 Intentionally Deleted. 30
Section 7.4 Estoppel Certificates. 30
Section 7.5 Flood Insurance. 31
Section 7.6 Splitting of Security Instrument. 31
Section 7.7 Replacement Documents. 31
Section 7.8 Amended Financing Statements. 31
Article 8 - DUE ON SALE/ENCUMBRANCE 31
Section 8.1 Beneficiary Reliance 31
Section 8.2 No Sale/Encumbrance. 32
Section 8.3 Sale/Encumbrance Defined. 32
Section 8.4 Beneficiary's Rights. 33
Section 8.5 Right To Substitute Property. 34
Article 9 - INTENTIONALLY DELETED 34
Article 10 - DEFAULT 34
Section 10.1 Events of Default. 34
Article 11 - RIGHTS AND REMEDIES 35
Section 11.1 Remedies. 35
Section 11.2 Application of Proceeds. 39
Section 11.3 Right to Cure Defaults. 39
Section 11.4 Actions and Proceedings. 39
Section 11.5 Recovery of Sums Required To Be Paid. 40
Section 11.6 Examination of Books and Records. 40
Section 11.7 Other Rights, Etc. 40
Section 11.8 Right to Release Any Portion of the Property. 41
Section 11.9 Violation of Laws. 41
Section 11.10 Recourse and Choice of Remedies 41
Section 11.11 Right of Entry. 41
Article 12 - ENVIRONMENTAL HAZARDS 42
Section 12.1 Environmental Representations and Warranties. 42
Section 12.2 Environmental Covenants. 43
Section 12.3 Beneficiary's Rights. 44
Article 13 - INDEMNIFICATION 45
Section 13.1 General Indemnification. 45
Section 13.2 Mortgage and/or Intangible Tax. 46
Section 13.3 ERISA Indemnification. 46
Section 13.4 Environmental Indemnification. 46
Section 13.5 Duty to Defend; Attorneys' Fees and Other Fees
and Expenses. 47
Article 14 - WAIVERS 48
Section 14.1 Waiver of Counterclaim. 48
Section 14.2 Marshalling and Other Matters. 48
Section 14.3 Waiver of Notice. 48
Section 14.4 Waiver of Statute of Limitations. 48
Section 14.5 Sole Discretion of Beneficiary. 48
Section 14.6 Survival. 48
Section 14.7 Waiver of Trial By Jury. 49
Article 15 - EXCULPATION 49
Section 15.1 Exculpation. 49
Section 15.2 Reservation of Certain Rights. 50
Section 15.3 Exceptions to Exculpation. 50
Section 15.4 Recourse. 50
Section 15.5 Bankruptcy Claims. 51
Article 16 - NOTICES 51
Section 16.1 Notices. 51
Article 17 - APPLICABLE LAW 52
Section 17.1 Choice of Law. 52
Section 17.2 Usury Laws. 52
Section 17.3 Provisions Subject to Applicable Law. 53
Section 17.4 Inapplicable Provision. 53
Article 18 - SECONDARY MARKET 53
Section 18.1 Dissemination of Information. 53
Article 19 - COSTS 54
Section 19.1 Performance at Grantor's Expense. 54
Section 19.2 Attorney's Fees for Enforcement. 54
Article 20 - DEFINITIONS 55
Section 20.1 General Definitions. 55
Section 20.2 Headings, Etc. 55
Article 21 - MISCELLANEOUS PROVISIONS 55
Section 21.1 No Oral Change. 55
Section 21.2 Liability. 55
Section 21.3 Duplicate Originals; Counterparts. 55
Section 21.4 Number and Gender. 56
Section 21.5 Subrogation. 56
Section 21.6 Entire Agreement. 56
Article 22 - TRUSTEE PROVISIONS 56
Section 22.1 The Trustee. 56
Exhibits -
Exhibit A - Description of Land
Definitions
The terms set forth below are defined in the following Sections of this Security
Instrument:
a. ADA: Subsection 3.10(a);
b. Applicable Law: Subsection 3.10(a);
c. Attorneys' Fees/Counsel Fees: Section 20.1, 20.1;
d. Bankruptcy Code: Subsection 1.1(f);
e. Grantor: Preamble;
f. Business Day: Section 16.1;
g. Casualty Consultant: Subsection 4.4(b)(iii);
h. Casualty Retainage: Subsection 4.4(b)(iii);
i. Collateral: Section 1.3;
j. Debt: Section 2.1;
k. Default Rate: Section 10.3;
l. Environmental Indemnity: Subsection 10.1(c);
m. Environmental Law: Section 12.1;
n. Environmental Liens: Section 12.2;
o. Environmental Report: Section 12.1;
p. ERISA: Subsection 4.2(a);
q. Escrow Fund: Section 3.5;
r. Event: Section 19.1;
s. Event of Default: Section 10.1;
t. Exculpated Parties: Section 15.1;
u. Force Majeure: Subsection 4.4(b);
v. Guarantor: Section 5.5;
w. Hazardous Substances: Section 12.1;
x. Improvements: Subsection 1.1(c);
y. Indemnified Parties: Section 13.1;
z. Indemnitor: Subsection 10.1(c);
aa. Independent Director: Subsection 4.3(c);
ab. Insurance Premiums: Subsection 3.3(b);
ac. Investor: Section 18.1;
ad. Land: Subsection 1.1(a);
ae. Lease Guaranty: Subsection 3.7(a);
af. Leases: Subsection 1.1(f);
ag. Beneficiary: Preamble;
ah. Loan Application: Section 5.15;
ai. Losses: Section 13.1;
aj. Net Proceeds: Subsection 4.4(b);
ak. Net Proceeds Deficiency: Subsection 4.4(b)(v);
al. Note: Recitals;
am. Obligations: Section 2.3;
an. Other Charges: Subsection 3.4(a);
ao. Other Obligations: Section 2.2;
ap. Other Security Documents: Section 3.2;
aq. Participations: 18.1;
ar. Permitted Exceptions: Section 5.1;
as. Person: Section 20.1;
at. Personal Property: Subsection 1.1(e);
au. Policies/Policy: Subsection 3.3(b), 3.3(b);
av. Property: Section 1.1;
aw. Qualified Insurer: Subsection 3.3(b);
ax. Rating Agency: Subsection 3.3(b);
ay. Registrar: Section 18.2;
az. Release: Section 12.1;
ba. Remediation: Section 12.1;
bb. Rents: Subsection 1.1(f);
bc. Restoration: Subsection 3.3(d);
bd. Securities: Section 18.1;
be. Securitization: Section 18.1;
bf. Security Instrument: Preamble;
bg. Servicer: Section 6.2;
bh. SPE Member: Subsection 4.3(b);
bi. Taxes: Subsection 3.4(a); and
bj. Uniform Commercial Code: Subsection 1.1(e).
Principal Sum Secured: $12,300,000.00
THIS INDEMNITY DEED OF TRUST AND SECURITY AGREEMENT (the
"Security Instrument") is made as of the 13th day of April, 1999, by PR
MARYLANDER LLC, a Delaware limited liability company, having its principal place
of business at The Bellevue, Suite 300, 000 Xxxxx Xxxxx Xxxxxx, Xxxxxxxxxxxx,
Xxxxxxxxxxxx 00000, as mortgagor ("Grantor"), to XXXXXX X. XXXXXXXXX, a Maryland
resident, having an address c/o Commonwealth Land Title Insurance Company, 00
Xxxxx Xxxxxx, Xxxxx 000, Xxxxxxxxx, Xxxxxxxx 00000 ("Trustee"), for the benefit
of GMAC COMMERCIAL MORTGAGE CORPORATION, a California corporation, having an
address at 000 Xxxxxxx Xxxx, Xxxxxxx, Xxxxxxxxxxxx 00000-0000, as beneficiary
("Beneficiary").
RECITALS:
Simultaneously herewith, Beneficiary has made a $12,300,000
loan (the "Loan") to PR Marylander Note, LLC, a Delaware limited liability
company ("Borrower"). The Loan is evidenced by the Borrower's Promissory Note of
even date herewith payable to the order of Beneficiary in the principal amount
of the Loan (which Promissory Note, together with any replacements or
substitutions therefor, and as such Promissory Note or any replacement or
substitution therefor may from time to time be extended, renewed, amended,
restated, supplemented or otherwise modified, is herein called the "Note"). The
payment of the Loan and the Note with interest and the performance of the Other
Security Documents are guaranteed by Grantor pursuant to the provisions of a
Guaranty dated the date hereof from Grantor to Beneficiary (which Guaranty, as
the same may from time to time be amended, restated, supplemented or otherwise
modified, is herein called the "Guaranty").
The obligations of Grantor under the Guaranty are contingent
and arise only after a default or an event of default has occurred under the
Note and demand for payment has been made under the Guaranty.
As a condition precedent to the making of the Loan to the
Borrower, Beneficiary has required that Grantor, by the execution and delivery
of this Security Instrument, secure the full and punctual payment of the Debt
and the Obligations, and the performance of the Guaranty, this Security
Instrument and the Other Security Instruments.
GRANTOR IS NOT PRIMARILY LIABLE UNDER THE NOTE
Article - GRANTS OF SECURITY
Section . Property Mortgaged. Grantor does hereby irrevocably
(i) mortgage, grant, bargain, sell, pledge, assign, warrant, transfer and convey
to Beneficiary and to its successors and assigns with power of sale in
accordance with the terms and conditions hereof, for the use and benefit of
Beneficiary, and (ii) grant a security interest to Beneficiary and to its
successors and assigns with power of sale, in accordance with the terms and
conditions hereof, for the use and benefit of Beneficiary, in, the following
property, rights, interests and estates now owned, or hereafter acquired by
Grantor (collectively, the "Property"):
() Land. The real property described in Exhibit A attached hereto and
made a part hereof (the "Land");
() Additional Land. All xxxxxxxxxx xxxxx, xxxxxxx and development
rights hereafter acquired by Grantor for use in connection with the Land and the
development of the Land that may, from time to time, by supplemental mortgage or
otherwise be expressly made subject to the lien of this Security Instrument;
() Improvements. The buildings, structures, fixtures, additions,
enlargements, extensions, modifications, repairs, replacements and improvements
now or hereafter erected or located on the Land (the "Improvements");
() Easements. All easements, rights-of-way or use, rights, strips and
gores of land, streets, ways, alleys, passages, sewer rights, water, water
courses, water rights and powers, air rights and development rights, and all
estates, rights, titles, interests, privileges, liberties, servitudes,
tenements, hereditaments and appurtenances of any nature whatsoever, in any way
now or hereafter belonging, relating or pertaining to the Land and the
Improvements and the reversion and reversions, remainder and remainders, and all
land lying in the bed of any street, road or avenue, opened or proposed, in
front of or adjoining the Land, to the center line thereof and all the estates,
rights, titles, interests, dower and rights of dower, curtesy and rights of
curtesy, property, possession, claim and demand whatsoever, both at law and in
equity, of Grantor of, in and to the Land and the Improvements and every part
and parcel thereof, with the appurtenances thereto;
() Fixtures and Personal Property. All machinery, equipment, fixtures
(including, but not limited to all heating, air conditioning, plumbing,
lighting, communications and elevator fixtures) and other property of every kind
and nature whatsoever owned by Grantor, or in which Grantor has or shall have an
interest, now or hereafter located upon the Land or the Improvements, or
appurtenant thereto, and used in connection with the present or future operation
and occupancy of the Land and the Improvements and all building equipment,
materials and supplies of any nature whatsoever owned by Grantor, or in which
Grantor has or shall have an interest, now or hereafter located upon the Land
and the Improvements, or appurtenant thereto, or used in connection with the
present or future operation and occupancy of the Land and the Improvements
(collectively, the "Personal Property"), and the right, title and interest of
Grantor in and to any of the Personal Property which may be subject to any
security interests, as defined in the Uniform Commercial Code, as adopted and
enacted by the state or states where any of the Property is located (the
"Uniform Commercial Code"), superior in lien to the lien of this Security
Instrument and all proceeds and products of the above;
() Leases and Rents. All leases and other agreements affecting the use,
enjoyment or occupancy of all or any part of the Land or the Improvements
heretofore or hereafter entered into whether before or after the filing by or
against Grantor of any petition for relief under 11 U.S.C. ss. 101 et seq. (the
"Bankruptcy Code"), as the same may be amended from time to time (the "Leases")
and all right, title and interest of Grantor, its successors and assigns therein
and thereunder, including, without limitation, all guarantees, letters of credit
and any other credit support given by any guarantor in connection therewith,
cash or securities deposited under the Leases to secure the performance by the
lessees of their obligations thereunder and all rents, additional rents,
revenues, issues and profits (including all oil and gas or other mineral
royalties and bonuses) from the Land and the Improvements whether paid or
accruing before or after the filing by or against Grantor of any petition for
relief under the Bankruptcy Code (the "Rents") and all proceeds from the sale or
other disposition of the Leases and the right to receive and apply the Rents to
the payment of the Debt;
() Condemnation Awards. All awards or payments, including interest
thereon, which may heretofore and hereafter be made with respect to the
Property, whether from the exercise of the right of eminent domain (including,
but not limited to any transfer made in lieu of or in anticipation of the
exercise of the right), or for a change of grade, or for any other injury to or
decrease in the value of the Property;
() Insurance Proceeds. All proceeds of and any unearned premiums on
any insurance policies covering the Property, including, without limitation, the
right to receive and apply the proceeds of any insurance judgments, or
settlements made in lieu thereof, for damage to the Property;
() Tax Certiorari. All refunds, rebates or credits in connection with
a reduction in real estate taxes and assessments charged against the Property as
a result of Tax certiorari or any applications or proceedings for reduction;
() Rights. The right, in the name and on behalf of Grantor, to
commence any action or proceeding to protect the interest of Beneficiary in the
Property and while an Event of Default (defined in Section 10.1) remains
uncured, to appear in and defend any action or proceeding brought with respect
to the Property;
() Agreements. All agreements, contracts, certificates, instruments,
franchises, permits, licenses, plans, specifications and other documents, now or
hereafter entered into, and all rights therein and thereto, respecting or
pertaining to the use, occupation, construction, management or operation of the
Land and any part thereof and any Improvements or respecting any business or
activity conducted on the Land and any part thereof and all right, title and
interest of Grantor therein and thereunder, including, without limitation, the
right, while an Event of Default remains uncured, to receive and collect any
sums payable to Grantor thereunder;
() Intangibles. All accounts, escrows, chattel paper, claims,
deposits, trade names, trademarks, servicemarks, logos, copyrights, goodwill,
books and records and all other general intangibles specific to or used in
connection with the operation of the Property, if any; and
() Conversion. All proceeds of the conversion, voluntary or
involuntary, of any of the foregoing including, without limitation, proceeds of
insurance and condemnation awards, into cash or liquidation claims;
() Other Rights. Any and all other rights of Grantor in and to the
items set forth in Subsections (a) through (m) above.
Section . Assignment of Leases and Rents. Grantor hereby
absolutely and unconditionally assigns to Beneficiary Grantor's right, title and
interest in and to all current and future Leases and Rents; it being intended by
Grantor that this assignment constitutes a present, absolute assignment and not
an assignment for additional security only. Nevertheless, subject to the terms
of this Section 1.2 and Section 3.7, Beneficiary grants to Grantor a revocable
license to collect and receive the Rents. Grantor shall hold the Rents, or a
portion thereof, sufficient to discharge all current sums due on the Debt, for
use in the payment of such sums.
Section . Security Agreement. This Security Instrument is
both a real property mortgage and a "security agreement" within the meaning of
the Uniform Commercial Code. The Property includes both real and personal
property and all other rights and interests, whether tangible or intangible in
nature, of Grantor in the Property. By executing and delivering this Security
Instrument, Grantor hereby grants to Beneficiary, as security for the
Obligations (defined in Section 2.3), a security interest in the Property to the
full extent that the Property may be subject to the Uniform Commercial Code
(said portion of the Property so subject to the Uniform Commercial Code, the
"Collateral").
Section . Pledge of Monies Held. Grantor hereby pledges to
Beneficiary, and grants to Beneficiary a security interest in, any and all
monies now or hereafter held by Beneficiary, including, without limitation, any
sums deposited in the Escrow Fund (defined in Section 3.5) and the Net Proceeds
(defined in Section 4.4), as additional security for the Obligations until
expended or applied as provided in this Security Instrument.
CONDITIONS TO GRANT
TO HAVE AND TO HOLD the above granted and described Property
unto the Trustee and its successors and assigns, in trust with power of sale in
accordance with the terms and conditions hereof, for the use and benefit of
Beneficiary, and the successors and assigns of Beneficiary, forever;
PROVIDED, HOWEVER, these presents are upon the express
condition that, if Grantor shall perform its obligations under the Guaranty at
the time and in the manner provided in the Guaranty and this Security
Instrument, shall well and truly perform the Other Obligations as set forth in
this Security Instrument and shall well and truly abide by and comply with each
and every covenant and condition set forth herein and in the Guaranty, these
presents and the estate hereby granted shall cease, terminate and be void.
Article - DEBT AND OBLIGATIONS SECURED
Section . Debt. This Security Instrument and the grants,
assignments and transfers made in Article 1 are given for the purpose of
securing the payment of all amounts that become due under the Guaranty and the
performance of all covenants and obligations under the Guaranty (collectively,
the "Debt").
Section . Other Obligations. This Security Instrument and
the grants, assignments and transfers made in Article 1 are also given for the
purpose of securing the following (the "Other Obligations"):
() the performance of all Other Obligations of Grantor contained
herein;
() the performance of each obligation of Grantor contained in any
other agreement given by Grantor to Beneficiary which is for the purpose of
further securing the obligations secured hereby, and among amendments,
modifications and changes thereto; and
() the performance of each obligation of Grantor and any Guarantor
contained in any renewal, extension, modification, consolidation, change,
substitution, replacement for, restatement or increase of all or any part of the
Note, this Security Instrument or the Other Security Documents.
Section . Debt and Other Obligations. Grantor's obligations
for the Guaranty and the performance of the Other Obligations shall be referred
to collectively below as the "Obligations."
Article - GRANTOR COVENANTS
Grantor covenants and agrees with Trustee and Beneficiary
that:
Section . Payment Under Guaranty. Grantor will pay all
amounts due under the Guaranty at the time and in the manner provided in the
Guaranty and in this Security Instrument.
Section . Incorporation by Reference. All the covenants,
conditions and agreements contained in (a) the Guaranty and (b) all and any of
the documents other than the Guaranty or this Security Instrument now or
hereafter executed by Grantor and/or others and by or in favor of Beneficiary,
which wholly or partially secure or guaranty payment of the Guaranty or the
other Obligations (the "Other Security Documents"), are hereby made a part of
this Security Instrument to the same extent and with the same force as if fully
set forth herein.
Section . Insurance.
() Grantor shall obtain and maintain, or cause to be maintained,
insurance for Grantor and the Property providing at least the following
coverages:
() Property Insurance. Insurance with
respect to the Improvements and building equipment insuring against any peril
included within the classification "All Risks of Physical Loss" in amounts at
all times sufficient to prevent Beneficiary from becoming a co-insurer within
the terms of the applicable policies and under applicable law, but in any event
such insurance shall be maintained in an amount equal to the full insurable
value of the Improvements and building equipment, the term "full insurable
value" to mean the actual replacement cost of the Improvements and building
equipment (without taking into account any depreciation, and exclusive of
excavations, footings and foundations, landscaping and paving) determined
annually by an insurer, a recognized independent insurance broker or an
independent appraiser selected and paid by Grantor and in no event less than the
coverage required pursuant to the terms of any Lease. 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.
Grantor shall also maintain insurance against loss or damage to such furniture,
furnishings, fixtures, equipment and other items (whether personalty or
fixtures) included in the Property and owned by Grantor from time to time, to
the extent applicable, in the amount of the cost of replacing the same, in each
case, with inflation guard coverage to reflect the effect of inflation, or
annual valuation. Each policy or policies 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 Beneficiary's approval. The maximum deductible shall be $10,000.00;
() Liability Insurance. Comprehensive
general liability insurance, including personal injury, bodily injury, death and
property damage liability, insurance against any and all claims, including all
legal liability to the extent insurable and imposed upon Beneficiary and all
court costs and attorneys' fees and expenses, arising out of or connected with
the possession, use, leasing, operation, maintenance or condition of the
Property in such amounts as are generally available at commercially reasonable
premiums and are generally required by institutional beneficiaries for
properties comparable to the Property but in no event for a combined single
limit of less than $5,000,000. During any construction of the Property,
Grantor's general contractor for such construction shall also provide the
insurance required in this Subsection b. Beneficiary hereby retains the right to
periodically review the amount of said liability insurance being maintained by
Grantor and to require an increase in the amount of said liability insurance
should Beneficiary deem an increase to be reasonably prudent under then existing
circumstances;
() Workers' Compensation Insurance. Statutory
workers' compensation insurance with respect to any work on or about the
Property covering all persons subject to the workers' compensation laws of the
state in which the Property is located;
() Business Interruption. Business interruption
and/or loss of "rental income" insurance in an amount sufficient to avoid any
co-insurance penalty and to provide proceeds which will cover a period of not
less than one (1) year from the date of casualty or loss with a six month
extended period of indemnity, the term "rental income" to mean the sum of (A)
the total then ascertainable Rents payable under the Leases and (B) the total
ascertainable amount of all other amounts to be received by Grantor from third
parties which are the legal obligation of the tenants, reduced to the extent
such amounts would not be received because of operating expenses not incurred
during a period of non-occupancy of that portion of the Property then not being
occupied. The amount of coverage shall be adjusted annually to reflect the rents
payable during the succeeding twelve (12) month period.
() Boiler and Machinery Insurance. Broad form boiler
and machinery insurance (without exclusion for explosion) covering all boilers
or other pressure vessels, machinery, and equipment located in, on or about the
Property and insurance against loss of occupancy or use arising from any
breakdown in such amount per accident equal to the replacement value of the
improvements housing the machinery or $2,000,000 or such other amount reasonably
determined by Beneficiary. If one or more large HVAC units is in operation at
the Property, "System Breakdowns" coverage shall be required, as determined by
Beneficiary. Minimum liability coverage per accident must equal the value of
such unit(s);
() Flood Insurance. If required by
Subsection 5.6(a) hereof, flood insurance in an amount at least 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 deductible
may not exceed $25,000.
() During the period of any construction, renovation
or alteration of the Improvements, the cost of which exceeds the lesser of 10%
of the principal amount of the Guaranty or $500,000, at Beneficiary's request, a
completed value, "All Risk" Builder's Risk form, or "Course of Construction"
insurance policy in non-reporting form for any Improvements under construction,
renovation or alteration in an amount approved by Beneficiary 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
Beneficiary, shall be required.
() Other Insurance. Such other insurance with
respect to the Property or on any replacements or substitutions thereof or
additions thereto as may from time to time be required by Beneficiary 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 insurance provided for in Subsection 3.3(a) hereof
shall be obtained under valid and enforceable policies (the "Policies" or in the
singular, the "Policy"), and shall be issued by one or more domestic primary
insurer(s) having (i) an investment grade rating of "A" or better ("AA" or
better for Loans of $25 million or more), or a comparable claims paying ability
assigned by S & P of equivalent one or more credit rating agencies approved by
Beneficiary (a "Rating Agency"), (each such insurer shall be referred to below
as a "Qualified Insurer"). All insurers providing insurance required by this
Security Instrument shall be authorized to issue insurance in the state in which
the Property is located. The Policy referred to in Subsection 3.3(a)(ii) above
shall name Beneficiary as an additional named insured and the Policy referred to
in Subsection 3.3(a)(i), (iv), (v) and (vi) above shall provide that all
proceeds be payable to Beneficiary as set forth in Section 4.4 hereof. The
Policies referred to in Subsections 3.3(a)(i), (v) and (vi) shall also contain:
(i) a standard "non-contributory mortgagee" endorsement or its equivalent
relating, inter alia, to recovery by Beneficiary notwithstanding the negligent
or willful acts or omission of Beneficiary. All Policies described in Subsection
3.3(a) above shall contain (i) a provision that such Policies shall not be
canceled or terminated, nor shall they expire, without at least thirty (30)
days' prior written notice to Beneficiary in each instance; and (ii) include
effective waivers by the insurer of all claims for Insurance Premiums (defined
below) against any mortgage, loss payees, additional insureds and named insureds
(other than Grantor). In the event that the Property or the Improvements
constitutes a legal non-conforming use under applicable building, zoning or land
use laws or ordinances, the policy 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. Certificates of insurance with respect to all renewal
and replacement Policies shall be delivered to Beneficiary not less than thirty
(30) days prior to the expiration date of any of the Policies required to be
maintained hereunder which certificates shall bear notations evidencing payment
of applicable premiums (the "Insurance Premiums"). Originals or certificates of
such replacement Policies shall be delivered to Beneficiary promptly after
Grantor's receipt thereof but in any case within thirty (30) days after the
effective date thereof. If Grantor fails to maintain and deliver to Beneficiary
copies of the Policies or certificates of insurance required by this Security
Instrument, upon ten (10) days' prior notice to Grantor, Beneficiary may procure
such insurance at Grantor's sole cost and expense.
() Grantor shall comply with all insurance requirements and
shall not bring or keep or permit to be brought or kept any article upon any of
the Property or cause or permit any condition to exist thereon which would be
prohibited by an insurance requirement, or would invalidate the insurance
coverage required hereunder to be maintained by Grantor on or with respect to
any part of the Property pursuant to this Section 3.3.
() If the Property shall be damaged or destroyed, in whole or
in part, by fire or other casualty, Grantor shall give prompt notice of such
damage to Beneficiary and provided that Grantor shall have received the Net
Proceeds, Grantor shall promptly commence and diligently prosecute the
completion of the repair and restoration of the Property as nearly as possible
to the condition the Property was in immediately prior to such fire or other
casualty, with such alterations as may be approved by Beneficiary (the
"Restoration") and otherwise in accordance with Section 4.4 of this Security
Instrument.
() The insurance coverage required under Section 3.3(a) may
be effected under a blanket policy or policies covering the Property and other
properties and assets not constituting a part of the security hereunder;
provided that any such blanket policy shall specify, except in the case of
public liability insurance, the portion of the total coverage of such policy
that is allocated to the Property, and any sublimit in such blanket policy
applicable to the Property, and shall in any case comply in all other respects
with the requirements of this Section 3.3.
() The insurance coverage required under Subsection
3.3(a)(ii) may be satisfied by a layering of Commercial General Liability,
Umbrella and Excess Liability Policies, but in no event will the Commercial
General Liability policy be written for an amount less than $1,000,000 per
occurrences and $2,000,000 aggregate for bodily injury and property damage
liability.
() The delivery to Beneficiary of the insurance policies or
the certificates of insurance as provided above shall constitute an assignment
of all proceeds payable under such insurance as relating to the Property by
Grantor to Beneficiary as further security for the indebtedness secured hereby.
In the event of foreclosure of this Security Instrument, or other transfer of
title to the Property in extinguishment in whole or in part of the secured
indebtedness, all right, title and interest of Grantor 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 Beneficiary or other
transferee in the event of such other transfer of title. Approval of any
insurance by Beneficiary shall not be a representation of the solvency of any
insurer or the sufficiency of any amount of insurance.
() Beneficiary shall not be responsible for nor incur any
liability for the insolvency of the insurer or other failure of the insurer to
perform, even though Beneficiary has caused the insurance to be placed with the
insurer after failure of Grantor to furnish such insurance. Grantor shall not
obtain insurance for the Property in addition to that required by Beneficiary
without the prior written consent of Beneficiary, which consent will not be
unreasonably withheld provided that (i) Beneficiary is named insured on such
insurance, (ii) Beneficiary receives complete copies of all policies evidencing
such insurance, and (iii) such insurance complies with all of the applicable
requirements set forth herein.
Section . Payment of Taxes, Etc. () Subject to the terms and
conditions of Section 3.5 hereof, Grantor shall pay by their due date all taxes,
assessments, water rates, sewer rents, governmental impositions, and other
charges, including, without limitation, vault charges and license fees for the
use of vaults, chutes and similar areas adjoining the Land, now or hereafter
levied or assessed or imposed against the Property or any part thereof (the
"Taxes"), all ground rents, maintenance charges and similar charges, now or
hereafter levied or assessed or imposed against the Property or any part thereof
(the "Other Charges"), and all charges for utility services provided to the
Property as same become due and payable. Grantor will deliver to Beneficiary,
promptly upon Beneficiary's request, evidence satisfactory to Beneficiary that
the Taxes, Other Charges and utility service charges have been so paid or are
not then delinquent. Grantor shall not suffer and shall promptly cause to be
paid and discharged any lien or charge whatsoever which may be or become a lien
or charge against the Property. Except to the extent sums sufficient to pay all
Taxes and Other Charges have been deposited with Beneficiary in accordance with
the terms of this Security Instrument, Grantor shall furnish to Beneficiary paid
receipts for the payment of the Taxes and Other Charges prior to the date the
same shall become delinquent.
() After prior written notice to Beneficiary, Grantor, at its
own expense, may contest by appropriate legal proceeding, promptly initiated and
conducted in good faith and with due diligence, the amount or validity or
application in whole or in part of any of the Taxes, provided that (i) no Event
of Default has occurred and is continuing under the Guaranty, this Security
Instrument or any of the Other Security Documents, (ii) Grantor is permitted to
do so under the provisions of any other mortgage, deed of trust or deed to
secure debt affecting the Property, (iii) such proceeding shall suspend the
collection of the Taxes from Grantor and from the Property or Grantor shall have
paid all of the Taxes under protest, (iv) such proceeding shall be permitted
under and be conducted in accordance with the provisions of any other instrument
to which Grantor is subject and shall not constitute a default thereunder, (v)
neither the Property nor any part thereof or interest therein will be in danger
of being sold, forfeited, terminated, canceled or lost, (vi) Grantor shall have
set aside adequate reserves for the payment of the Taxes, together with all
interest and penalties thereon, unless Grantor has paid all of the Taxes under
protest, and (vii) Grantor shall have furnished the security as may be required
in the proceeding, or as may be reasonably requested by Beneficiary to insure
the payment of any contested Taxes, together with all interest and penalties
thereon, taking into consideration the amount in the Escrow Fund available for
payment of Taxes.
Section . Escrow Fund. At the option of Beneficiary,
Beneficiary may require Grantor to establish an Escrow Fund (defined below)
sufficient to discharge its obligations for the payment of Insurance Premiums
and Taxes pursuant to Sections 3.3 and 3.4 hereof. Initial deposits of Taxes and
Insurance Premiums shall be made by Grantor to Beneficiary in amounts determined
by Beneficiary in its discretion on the date hereof to be held by Beneficiary in
escrow. Additionally, Grantor shall pay to Beneficiary on the tenth (10th) day
of each calendar month (a) one-twelfth of an amount which would be sufficient to
pay the Taxes payable, or estimated by Beneficiary to be payable, upon the due
dates established by the appropriate taxing authority during the next ensuing
twelve (12) months and (b) one-twelfth of an amount which would be sufficient to
pay the Insurance Premiums due for the renewal of the coverage afforded by the
Policies upon the expiration thereof (the initial deposits together with the
amounts in (a) and (b) above shall be called the "Escrow Fund"). Grantor agrees
to notify Beneficiary immediately of any changes to the amounts, schedules and
instructions for payment of any Taxes and Insurance Premiums of which it has
obtained knowledge and authorizes Beneficiary or its agent to obtain the bills
for Taxes and Other Charges directly from the appropriate Tax authority. Monthly
payments to the Escrow Fund as required hereunder and the monthly payments of
interest or principal or both, payable pursuant to the Guaranty, shall be added
together and shall be paid as an aggregate sum by Grantor to Beneficiary.
Provided there are sufficient amounts in the Escrow Fund and no Event of Default
exists, Beneficiary shall be obligated to pay the Taxes and Insurance Premiums
as they become due on their respective due dates on behalf of Grantor by
applying the Escrow Fund to the payments of such Taxes and Insurance Premiums
required to be made by Grantor pursuant to Sections 3.3 and 3.4 hereof. If the
amount of the Escrow Fund shall exceed the amounts due for Taxes and Insurance
Premiums pursuant to Sections 3.3 and 3.4 hereof, Beneficiary shall, in its
discretion, return any excess to Grantor or credit such excess against future
payments to be made to the Escrow Fund. In allocating such excess, Beneficiary
may deal with the person shown on the records of Beneficiary to be the owner of
the Property. If the Escrow Fund is not sufficient to pay the items set forth in
(a) and (b) above, Grantor shall promptly pay to Beneficiary, upon demand, an
amount which Beneficiary shall reasonably estimate as sufficient to make up the
deficiency. The Escrow Fund shall not constitute a trust fund and may be
commingled with other monies held by Beneficiary.
Section . Condemnation. Grantor shall promptly give
Beneficiary notice of the actual or threatened commencement of any condemnation
or eminent domain proceeding and shall deliver to Beneficiary copies of any and
all papers served in connection with such proceedings. Beneficiary may
participate in any such proceedings to the extent permitted by law. Upon an
Event of Default, Grantor shall deliver to Beneficiary all instruments requested
by it to permit such participation. Grantor shall, at its expense, diligently
prosecute any such proceedings, and shall consult with Beneficiary, its
attorneys and experts, and cooperate with them in the carrying on or defense of
any such proceedings. Grantor shall not make any agreement in lieu of
condemnation of the Property or any portion thereof without the prior written
consent of Beneficiary in each instance, which consent shall not be unreasonably
withheld or delayed in the case of a taking of an insubstantial portion of the
Property. Notwithstanding any taking by any public or quasi-public authority
through eminent domain or otherwise (including, but not limited to any transfer
made in lieu of or in anticipation of the exercise of such taking), Grantor
shall continue to pay the Debt at the time and in the manner provided for its
payment in the Guaranty and in this Security Instrument and the Debt shall not
be reduced until any award or payment therefor shall have been actually received
and applied by Beneficiary, after the deduction of expenses of collection, to
the reduction or discharge of the Debt. Beneficiary shall not be limited to the
interest paid on the award by the condemning authority but shall be entitled to
receive out of the award interest at the rate or rates provided herein or in the
Guaranty. If the Property or any portion thereof is taken by the power of
eminent domain, Grantor shall promptly commence and diligently prosecute the
Restoration of the Property and otherwise comply with the provisions of in
accordance with Section 4.4 of this Security Instrument. If the Property is
sold, through foreclosure or otherwise, prior to the receipt by Beneficiary of
the award or payment, Beneficiary shall have the right, whether or not a
deficiency judgment on the Guaranty shall have been sought, recovered or denied,
to receive the award or payment, or a portion thereof sufficient to pay the
Debt.
Section . Leases and Rents. () Except as otherwise consented
to by Beneficiary, all Leases shall be written on a standard form of lease which
shall have been approved by Beneficiary. Upon request, Grantor shall furnish
Beneficiary with executed copies of all Leases. No material changes may be made
to the Beneficiary-approved standard lease without the prior written consent of
Beneficiary, which consent shall not be unreasonably withheld or delayed. All
proposed leases shall be subject to the prior approval of Beneficiary except
that all proposed leases which (i) are on the same form of lease which has been
approved by Beneficiary, (ii) are the result of an arms-length transaction,
(iii) which provide for rental rates comparable to existing market rates, (iv)
where space to be leased does not exceed more than ten percent (10%) of total
rentable space of the Property, (v) where the proposed tenant is an independent
third party not affiliated with the Grantor, and (vi) do not contain any terms
which would materially affect Beneficiary's rights under this Security
Instrument, the Guaranty or the Other Security Documents, shall not be subject
to the prior approval of Beneficiary. Notwithstanding subsections (ii), (iii)
and (v) above, Grantor may lease units to employees of Grantor, but the
aggregate number of units leased to such employees shall not exceed 1.5% of the
total number of units at the Property. Grantor (i) shall observe and perform all
the obligations imposed upon the lessor under the Leases if the failure to
perform or observe the same would materially and adversely affect the value of
the Property taken as a whole and shall not do or permit to be done anything to
impair the value of the Leases as security for the Debt; (ii) shall promptly
send copies to Beneficiary of all notices of default which Grantor shall send or
receive thereunder; (iii) shall enforce in a commercially reasonable manner all
of the terms, covenants and conditions contained in the Leases upon the part of
the lessee thereunder to be observed or performed; provided, however, with
respect to multifamily residential property, a residential Lease may be
terminated in the event of a default by the tenant thereunder; (iv) shall not
collect any of the Rents more than one (1) month in advance (provided that a
security deposit shall not be deemed rent collected in advance); (v) shall not
execute any other assignment of the lessor's interest in the Leases or the
Rents; (vi) shall not (A) materially alter, modify or change the terms of the
Leases without the prior written consent of Beneficiary, which consent shall not
be unreasonably withheld or delayed if the alteration, modification or change
does not materially and adversely affect the value of the Property taken as a
whole and provided further that such Lease, as altered, modified or changed, is
otherwise in compliance with the requirements of this Security Instrument, or
(B) cancel or terminate any Lease (except for defaults thereunder) of more than
ten (10%) percent of the rentable space of the Property or accept a surrender
thereof or convey or transfer or suffer or permit a conveyance or transfer of
the Land or of any interest therein so as to effect a merger of the estates and
rights of, or a termination or diminution of the obligations of, lessees
thereunder; (vii) shall not alter, modify or change the terms of any guaranty,
letter of credit or other credit support with respect to the Leases (the "Lease
Guaranty") or cancel or terminate such Lease Guaranty without the prior written
consent of Beneficiary; and (viii) shall not consent to any assignment of or
subletting under the Leases not in accordance with their terms, without the
prior written consent of Beneficiary. Notwithstanding the foregoing,
subdivisions (ii), (vi), (vii) and (viii) shall not apply to residential Leases
for space in a multifamily residential property.
Section . Maintenance of Property. Grantor shall cause the
Property to be maintained in a good and safe condition and repair. The
Improvements and the Personal Property shall not be removed, demolished or
altered if the costs of same would exceed $500,000 (except for normal
replacement of the Personal Property) without the consent of Beneficiary.
Subject to Section 4.4(c) hereof, Grantor shall promptly repair, replace or
rebuild any part of the Property which may be destroyed by any casualty, or
become damaged, worn or dilapidated or which may be affected by any proceeding
of the character referred to in Section 3.6 hereof and shall complete and pay
for any structure at any time in the process of construction or repair on the
Land. Grantor shall not initiate, join in, acquiesce in, or consent to any
change in any private restrictive covenant, zoning law or other public or
private restriction, limiting or defining the uses which may be made of the
Property or any part thereof. If under applicable zoning provisions the use of
all or any portion of the Property is or shall become a nonconforming use,
Grantor will not cause or permit the nonconforming use or Improvement to be
discontinued or abandoned without the express written consent of Beneficiary.
Section . Waste. Grantor shall not commit or suffer any
waste of the Property or make any change in the use of the Property which will
in any way materially increase the risk of fire or other hazard arising out of
the operation of the Property, or take any action that might invalidate or give
cause for cancellation of any Policy, or do or permit to be done thereon
anything that may in any way materially impair the value of the Property or the
security of this Security Instrument. Grantor will not, without the prior
written consent of Beneficiary, permit any drilling or exploration for or
extraction, removal, or production of any minerals from the surface or the
subsurface of the Land, regardless of the depth thereof or the method of mining
or extraction thereof.
Section . Compliance With Laws. () Grantor shall promptly
comply with all existing and future federal, state and local laws, orders,
ordinances, governmental rules and regulations or court orders affecting the
Property, or the use thereof including, but not limited to, the Americans with
Disabilities Act ("ADA") (collectively, "Applicable Law").
() Grantor shall from time to time, upon Beneficiary's
request, provide Beneficiary with evidence reasonably satisfactory to
Beneficiary that the Property complies with all Applicable Laws or is exempt
from compliance with Applicable Laws.
() Notwithstanding any provisions set forth herein or in any
document regarding Beneficiary's approval of alterations of the Property,
Grantor shall not alter the Property in any manner which would materially
increase Grantor's responsibilities for compliance with Applicable Laws without
the prior written approval of Beneficiary. Beneficiary's approval of the plans,
specifications, or working drawings for alterations of the Property shall create
no responsibility or liability on behalf of Beneficiary for their completeness,
design, sufficiency or their compliance with Applicable Laws. The foregoing
shall apply to tenant improvements constructed by Grantor or by any of its
tenants. Beneficiary may condition any such approval upon receipt of a
certificate of compliance with Applicable Laws from an independent architect,
engineer, or other person acceptable to Beneficiary.
() Grantor shall give prompt notice to Beneficiary of the
receipt by Grantor of any notice related to a violation of any Applicable Laws
and of the commencement of any proceedings or investigations which relate to
compliance with Applicable Laws.
() After prior written notice to Beneficiary, Grantor, at
its own expense, may contest by appropriate legal proceeding, promptly initiated
and conducted in good faith and with due diligence, the Applicable Laws
affecting the Property, provided that (i) no Event of Default has occurred and
is continuing under the Guaranty, this Security Instrument or any of the Other
Security Documents; (ii) Grantor is permitted to do so under the provisions of
any other mortgage, deed of trust or deed to secure debt affecting the Property;
(iii) such proceeding shall be permitted under and be conducted in accordance
with the provisions of any other instrument to which Grantor is subject and
shall not constitute a default thereunder; (iv) neither the Property nor any
part thereof or interest therein nor any of the tenants or occupants thereof
shall be affected in any material adverse way as a result of such proceeding;
and (v) Grantor shall have furnished to Beneficiary all other items reasonably
requested by Beneficiary.
Section . Books and Records. () Grantor and any Guarantors
and Indemnitors shall keep adequate books and records of account in accordance
with the methods utilized by them as of the date hereof, consistently applied
and furnish to Beneficiary:
() quarterly certified rent rolls signed and dated by
Grantor, detailing the names of all tenants of the Improvements, the portion of
Improvements occupied by each tenant, the base rent and any other charges
payable under each Lease and the term of each Lease, including the expiration
date, and any other information as is reasonably required by Beneficiary, within
forty-five (45) days after the end of each fiscal quarter;
() a quarterly operating statement of the Property detailing
the total revenues received, total expenses incurred, total cost of all capital
improvements, total debt service and total cash flow, together with a balance
sheet for such quarter, to be prepared and certified by Grantor in the form
required by Beneficiary, and if available (i.e., Grantor shall have no
obligation to deliver unless same is available to Grantor), any quarterly
operating statement and/or balance sheet prepared by an independent certified
public accountant within thirty (30) days after the close of each fiscal
quarter.
() an annual balance sheet and profit and loss statement of
Grantor, any Guarantors and any Indemnitors, in the form required by
Beneficiary, prepared and certified by the respective Grantor, Guarantor and/or
Indemnitor, as applicable, within ninety (90) days after the close of each
fiscal year;
() an annual certified rent roll presented on a quarterly
basis consistent with the quarterly certified rent rolls described above within
ninety (90) days after the close of each fiscal year;
() an annual operating budget presented on a monthly basis
consistent with the annual operating statement described above for the Property
and all proposed capital replacements and improvements at least thirty (30) days
prior to the start of each calendar year; and
() such other financial statements, including monthly
operating statements and rent rolls, as Beneficiary may reasonably request.
() Upon reasonable request from Beneficiary, Grantor and its
affiliates shall furnish to Beneficiary:
() a property management report for the Property, showing
the number of inquiries made and/or rental applications received from tenants or
prospective tenants and deposits received from tenants and any other information
requested by Beneficiary, in reasonable detail and certified by Grantor under
penalty of perjury to be true and complete, but no more frequently than
quarterly; and
() an accounting of all security deposits held in connection
with any Lease of any part of the Property, including the name and
identification number of the accounts in which such security deposits are held,
the name and address of the financial institutions in which such security
deposits are held and the name of the person to contact at such financial
institution, along with any authority or release necessary for Beneficiary to
obtain information regarding such accounts directly from such financial
institutions.
() Grantor and its affiliates and any Guarantor and
Indemnitor shall furnish Beneficiary with such other additional financial or
management information as may, from time to time, be reasonably required by
Beneficiary in form and substance satisfactory to Beneficiary.
Section . Payment For Labor and Materials. Grantor will
promptly pay when due all bills and costs for labor, materials, and specifically
fabricated materials incurred in connection with the Property and never permit
to exist beyond the due date thereof in respect of the Property or any part
thereof any lien or security interest, even though inferior to the liens and the
security interests hereof, and in any event never permit to be created or exist
in respect of the Property or any part thereof any other or additional lien or
security interest other than the liens or security interests hereof, except for
the Permitted Exceptions (defined in Section 5.1).
Section . Performance of Other Agreements. Grantor shall
observe and perform each and every term to be observed or performed by Grantor
pursuant to the terms of any agreement or recorded instrument affecting or
pertaining to the Property.
Section . Change of Name, Identity or Structure. Grantor
will not change Grantor's name, identity (including its trade name or names) or,
if not an individual, Grantor's corporate, partnership or other structure
without notifying the Beneficiary of such change in writing at least thirty (30)
days prior to the effective date of such change and, in the case of a change in
Grantor's structure, without first obtaining the prior written consent of the
Beneficiary.
Section . Existence. Grantor will continuously maintain (a)
its existence and shall not dissolve or permit its dissolution, (b) its rights
to do business in the state where the Property is located and (c) its franchises
and trade names.
Article - SPECIAL COVENANTS
Grantor covenants and agrees with Beneficiary that:
Section . Property Use. The Property shall be used only for
multifamily apartments, except for limited retail and other commercial use,
provided same does not exceed, in the aggregate, more than six percent (6%) of
the gross leaseable area of the Property, and for no other use without the prior
written consent of Beneficiary, which consent may be withheld in Beneficiary's
discretion.
Section . ERISA. () It shall not engage in any transaction
which would cause any obligation, or action taken or to be taken, hereunder (or
the exercise by Beneficiary of any of its rights under the Guaranty, this
Security Instrument and the Other Security Documents) to be a non-exempt (under
a statutory or administrative class exemption) prohibited transaction under the
Employee Retirement Income Security Act of 1974, as amended ("ERISA").
() Grantor further covenants and agrees to deliver to
Beneficiary such certifications or other evidence from time to time throughout
the term of this Security Instrument, as requested by Beneficiary in its sole
discretion, that (i) Grantor is not an "employee benefit plan" as defined in
Section 3(32) of ERISA, which is subject to Title I of ERISA, or a "governmental
plan" within the meaning of Section 3(32) of ERISA; (ii) Grantor is not subject
to state statutes regulating investments and fiduciary obligations with respect
to governmental plans; and (iii) one or more of the following circumstances is
true:
(A) Equity interests in Grantor are publicly offered securities,
within the meaning of 29 C.F.R. ss. 2510.3-101(b)(2);
(B) Less than 25 percent of each outstanding class of equity interests
in Grantor are held by "benefit plan investors" within the meaning
of 29 C.F.R. ss. 2510.3-101(f)(2); or
(C) Grantor qualifies as an "operating company" or a "real estate
operating company" within the meaning of 29 C.F.R. ss.
2510.3-101(c) or (e) or an investment company registered under The
Investment Company Act of 1940.
Section . Single Purpose Entity. () It has not and shall
not:
() engage in any business or activity other than the
ownership, operation and maintenance of the Property, and activities incidental
thereto;
() acquire or own any material assets other than (A)
the Property, and (B) such incidental Personal Property as may be necessary for
the operation of the Property;
() merge into or consolidate with any person or
entity or dissolve, terminate or liquidate in whole or in part, transfer or
otherwise dispose of all or substantially all of its assets or change its legal
structure, without in each case Beneficiary's consent;
() fail to preserve its existence as an entity duly
organized, validly existing and in good standing (if applicable) under the laws
of the jurisdiction of its organization or formation, or without the prior
written consent of Beneficiary, amend, modify, terminate or fail to comply with
the provisions of Grantor's Partnership Agreement, Articles or Certificate of
Incorporation, Operating Agreement or similar organizational documents, as the
case may be, as same may be further amended or supplemented, if such amendment,
modification, termination or failure to comply would adversely affect the
ability of Grantor to perform its obligations hereunder, under the Guaranty or
under the Other Security Documents;
() own any subsidiary or make any investment in, any
person or entity without the consent of Beneficiary;
() commingle its assets with the assets of any of
its general partners, members, shareholders, affiliates, principals or of any
other person or entity;
() incur any debt, secured or unsecured, direct or
contingent (including guaranteeing any obligation), other than the Debt and
trade payables incurred in the ordinary course of business, provided same are
paid when due, and that certain Promissory Note made by Grantor in favor of
Borrower, dated as of the date of hereof, in the original principal amount of
$12,300,000;
() fail to maintain its records, books of account
and bank accounts separate and apart from those of the general partners,
members, shareholders, principals and affiliates of Grantor, the affiliates of a
general partner or member, or shareholder of Grantor, and any other person or
entity;
() enter into any contract or agreement with any
general partner, member, shareholder, principal or affiliate of Grantor,
Guarantor or Indemnitor, or any general partner, member, principal or affiliate
thereof, 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 any general partner, member, shareholder,
principal or affiliate of Grantor, Guarantor or Indemnitor, or any general
partner, member, principal or affiliate thereof;
() seek the dissolution or winding up in whole, or
in part, of Grantor;
() maintain its assets in such a manner that it will
be costly or difficult to segregate, ascertain or identify its individual assets
from those of any general partner, member, shareholder, principal or affiliate
of Grantor, or any general partner, member, shareholder, principal or affiliate
thereof or any other person;
() hold itself out to be responsible for the debts
of another person;
() make any loans or advances to any third party,
including any general partner, member, shareholder, principal or affiliate of
Grantor, or any general partner, principal or affiliate thereof;
() fail to file its own tax returns;
() agree to, enter into or consummate any
transaction which would render Grantor unable to furnish the certification or
other evidence referred to in Section 4.2(b) hereof;
() fail either to hold itself out to the public as a
legal entity separate and distinct from any other entity or person or to conduct
its business solely in its own name in order not (A) to mislead others as to the
identity with which such other party is transacting business, or (B) to suggest
that Grantor is responsible for the debts of any third party (including any
general partner, principal or affiliate of Grantor, or any general partner,
principal or affiliate thereof);
() fail to 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; or
() file or consent to the filing of any petition,
either voluntary or involuntary, to take advantage of any applicable insolvency,
bankruptcy, liquidation or reorganization statute, or make an assignment for the
benefit of creditors.
() If Grantor is a limited liability company or a limited
liability company, each general partner or at least one member (the "SPE
Member") of Grantor, as applicable, is a corporation or limited liability
company whose sole asset is its interest in Grantor and each general partner or
the SPE Member of Grantor, as applicable, will at all times comply, and will
cause Grantor to comply, with each of the covenants, terms and provisions
contained in Section 4.3(a) as if such representation, warranty or covenant was
made directly by such general partner or SPE Member. Only the SPE Member may be
designated as a manager under the law where the Grantor is organized.
() Grantor shall at all times cause there to be at least one
duly appointed member of the board of directors (an "Independent Director") of
each general partner of Grantor (or of the SPE Member of Grantor) reasonably
satisfactory to Beneficiary who shall not have been at the time of such
individual's initial appointment, and may not have been at any time during the
preceding five years, and shall not be at any time while serving as a director
of the general partner (or SPE Member) either (i) a shareholder of, or an
officer, director (other than an Independent Director), partner or employee of,
Grantor or any of its shareholders, partners, members, subsidiaries or
affiliates, (ii) a customer of, or supplier to, Grantor or any of its
shareholders, partners, members, subsidiaries or affiliates, (iii) a person or
other entity controlling or under common control with any such shareholder,
officer, director, partner, member, employee, supplier or customer, or (iv) a
member of the immediate family of any such shareholder, officer, director,
partner, member, employee, supplier or customer. 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 policy of a person or entity,
whether through ownership of voting securities, by contract or otherwise.
() Grantor shall not cause or permit the board of directors
of the general partner of Grantor (or of the SPE Member of Grantor) to take any
action which, under the terms of any certificate of incorporation, bylaws or any
voting trust agreement with respect to any common stock, requires a vote of the
board of directors of the general partner of Grantor (or the SPE Member of
Grantor) unless at the time of such action there shall be at least one member of
the board of directors who is an Independent Director.
Section . Restoration After Casualty/Condemnation. In the
event of a casualty or a taking by eminent domain, the following provisions
shall apply in connection with the Restoration of the Property:
() If (i) the Net Proceeds (defined below) do not exceed
$500,000 ("Casualty Amount"); (ii) the costs of completing the Restoration as
reasonably estimated by Grantor shall be less than or equal to the Casualty
Amount; (iii) no Event of Default shall have occurred and be continuing under
the Guaranty, this Security Instrument or any of the Other Security Documents;
(iv) the Property and the use thereof after the Restoration will be in
compliance with, and permitted under, all applicable zoning laws, ordinances,
rules and regulations (including, without limitation, all applicable
Environmental Laws (defined in Section 12.1); and (v) such fire or other
casualty or taking, as applicable, does not materially impair access to the
Property or the Improvements, then the Net Proceeds will be disbursed directly
to Grantor and Grantor shall commence and diligently prosecute to completion,
subject to Force Majeure (defined herein), the Restoration of the Property to as
nearly as possible the condition it was in immediately prior to such fire or
other casualty or to such taking. Except upon the occurrence and continuance of
an Event of Default, Grantor shall settle any insurance claims with respect to
the Net Proceeds which in the aggregate are less than or equal to the Casualty
Amount. Beneficiary shall have the right to participate in and reasonably
approve any settlement for insurance claims with respect to the Net Proceeds
which in the aggregate are equal to or greater than the Casualty Amount. If an
Event of Default shall have occurred and be continuing, Grantor hereby
irrevocably empowers Beneficiary, in the name of Grantor as its true and lawful
attorney-in-fact, to file and prosecute such claim and to collect and to make
receipt for any such payment. If the Net Proceeds are received by Grantor, such
Net Proceeds shall, until the completion of the related work, be held in trust
for Beneficiary and shall be segregated from other funds of Grantor to be used
to pay for the cost of the Restoration in accordance with the terms hereof.
() If the Net Proceeds are greater than the Casualty Amount,
such Net Proceeds shall, subject to the provisions of the Leases that are
superior to the lien of this Security Instrument or with respect to which
subordination, non-disturbance agreements binding upon Beneficiary have entered
into concerning the deposits of Net Proceeds, be forthwith paid to Beneficiary
to be held by Beneficiary in a segregated account to be made available to
Grantor for the Restoration in accordance with the provisions of this Subsection
4.4(b). Subject to Section 4.4(c) hereof, Grantor shall commence and diligently
prosecute to completion, subject to Force Majeure (defined below), the
Restoration (in the case of a taking, to the extent the Property is capable of
being restored). The term "Net Proceeds" for purposes of this Section 4.4 shall
mean: (i) the net amount of all insurance proceeds received by Beneficiary under
the Policies carried pursuant to Subsections 3.3(a)(i), (iv), (v), (vi) and
(vii) of this Security Instrument as a result of such damage or destruction,
after deduction of its reasonable costs and expenses (including, but not limited
to reasonable counsel fees), if any, in collecting the same, or (ii) the net
amount of all awards and payments received by Beneficiary with respect to a
taking referenced in Section 3.6 of this Security Instrument, after deduction of
its reasonable costs and expenses (including, but not limited to reasonable
counsel fees), if any, in collecting the same, whichever the case may be. The
term "Force Majeure" for the purpose of this Section 4.4 shall have the
following meaning: Grantor shall be excused for the period of any delay in the
performance of any obligations hereunder when prevented from so doing by cause
or causes beyond Grantor's control such as, without limitation, all labor
disputes, civil commotion, war, war-like operations, invasion, rebellion,
hostilities, military or usurped power, sabotage, governmental regulations or
controls, fire or other casualty, inability to obtain any materials or services,
and acts of God.
() If the Net Proceeds are greater than the Casualty Amount,
the Net Proceeds shall be made available to Grantor for payment of, or
reimbursement of Grantor's expenses in connection with, the Restoration, subject
to the following conditions:
(A) no Event of Default shall have occurred
and be continuing under the Guaranty, this Security Instrument
or any of the Other Security Documents;
(B) Beneficiary shall, within a reasonable
period of time prior to request for initial disbursement, be
furnished with an estimate of the cost of the Restoration
accompanied by an independent architect's certification as to
such costs and appropriate plans and specifications for the
Restoration;
(C) the Net Proceeds, together with any cash
or cash equivalent deposited by Grantor with Beneficiary, are
sufficient to cover the cost of the Restoration as such costs
are certified by the independent architect;
(D) (1) in the event that the Net Proceeds
are insurance proceeds, less than fifty percent (50%) of the
total floor area of the Improvements has been damaged or
destroyed, or rendered unusable as a result of such fire or
other casualty; or (2) in the event that the Net Proceeds are
condemnation awards, less than fifty percent (50%) of the Land
constituting the Property is taken, such Land that is taken is
located along the perimeter or periphery of the Property and
no portion of the Improvements is located in such Lands;
(E) Beneficiary shall be satisfied that any
operating deficits, including all scheduled payments of
principal and interest under the Guaranty which will be
incurred with respect to the Property as a result of the
occurrence of any such fire or other casualty or taking,
whichever the case may be, will be covered out of (1) the Net
Proceeds, or (2) other funds of Grantor;
(F) Beneficiary shall be satisfied that, upon
the completion of the Restoration and related lease-up, if
applicable, the net cash flow of the Property will be restored
to a level sufficient to cover all carrying costs and
operating expenses of the Property, including, without
limitation, debt service on the Guaranty at a coverage ratio
(on a "normalized" basis, i.e., after deducting replacement
reserve requirements and reserves for tenant improvements and
leasing commissions from net operating income, whether or not
such sums are escrowed with Beneficiary) of at least 1.30 :
1.0 (assuming an interest rate equal to 9.0% per annum), or,
if lower, the coverage ratio which existed as of the date
immediately preceding such casualty or taking as the case may
be;
(G) the Restoration can reasonably be
completed on or before the earliest to occur of (1) six (6)
months prior to the Maturity Date (as defined in the
Guaranty), (2) the earliest date required for such completion
under the terms of any Lease and (3) such time as may be
required under applicable zoning law, ordinance, rule or
regulation in order to repair and restore the Property to as
nearly as possible the condition it was in immediately prior
to such fire or other casualty or to such taking, as
applicable;
(H) the Property and the use thereof after
the Restoration will be in compliance with, and permitted
under, all applicable zoning laws, ordinances, rules and
regulations (including, without limitation, all applicable
Environmental Laws (defined in Section 12.1)); and
(I) such fire or other casualty or taking, as
applicable, does not materially impair access to the Property
or the Improvements.
() If the Net Proceeds exceed the Casualty Amount, the Net
Proceeds shall be held by Beneficiary and, until disbursed in accordance with
the provisions of this Subsection 4.4(b), shall constitute additional security
for the Obligations. The Net Proceeds other than the Net Proceeds paid under the
Policy described in Subsection 3.3(a)(iv) shall be disbursed by Beneficiary to,
or as directed by, Grantor from time to time during the course of the
Restoration, upon receipt of evidence satisfactory to Beneficiary that (A) all
materials installed and work and labor performed (except to the extent that they
are to be paid for out of the requested disbursement) in connection with the
Restoration have been paid for in full, and (B) there exist no notices of
pendency, stop orders, mechanic's or materialman's liens or notices of intention
to file same, or any other liens or encumbrances of any nature whatsoever on the
Property arising out of the Restoration which have not either been fully bonded
and discharged of record or in the alternative fully insured to the satisfaction
of Beneficiary by the title company insuring the lien of this Security
Instrument.
() If the Net Proceeds exceed the Casualty Amount,
Beneficiary shall have the use of the plans and specifications and all permits,
licenses and approvals required or obtained in connection with the Restoration.
If the Net Proceeds exceed the Casualty Amount, the identity of the contractors,
subcontractors and materialmen engaged in the Restoration, as well as the
contracts under which they have been engaged, shall be subject to prior review
and acceptance by Beneficiary and an independent consulting engineer selected by
Beneficiary (the "Casualty Consultant"), such acceptance not to be unreasonably
withheld or delayed. All costs and expenses incurred by Beneficiary in
connection with making the Net Proceeds available for the Restoration including,
without limitation, reasonable counsel fees and disbursements and the Casualty
Consultant's fees, shall be paid by Grantor.
In no event shall Beneficiary be obligated to make disbursements of the
Net Proceeds in excess of an amount equal to the costs actually incurred from
time to time for work in place as part of the Restoration, as certified by the
Casualty Consultant, minus the Casualty Retainage. The term "Casualty Retainage"
as used in this Subsection 4.4(b) shall mean an amount equal to 10% of the costs
actually incurred for work in place as part of the Restoration, as certified by
the Casualty Consultant, until such time as the Casualty Consultant certifies to
Beneficiary that 50% of the required Restoration has been completed. There shall
be no Casualty Retainage with respect to costs actually incurred by Grantor for
work in place in completing the last 50% of the required Restoration. The
Casualty Retainage shall in no event, and notwithstanding anything to the
contrary set forth above in this Subsection 4.4(b), be less than the amount
actually held back by Grantor from contractors, subcontractors and materialmen
engaged in the Restoration. The Casualty Retainage shall not be released until
the Casualty Consultant certifies to Beneficiary that the Restoration has been
completed in accordance with the provisions of this Subsection 4.4(b) and that
all approvals necessary for the re-occupancy and use of the Property have been
obtained from all appropriate governmental and quasi-governmental authorities,
and Beneficiary receives evidence satisfactory to Beneficiary that the costs of
the Restoration have been paid in full or will be paid in full out of the
Casualty Retainage, provided, however, that Beneficiary will release the portion
of the Casualty Retainage being held with respect to any contractor,
subcontractor or materialman engaged in the Restoration as of the date upon
which the Casualty Consultant certifies to Beneficiary that the contractor,
subcontractor or materialman has satisfactorily completed all work and has
supplied all materials in accordance with the provisions of the contractor's,
subcontractor's or materialman's contract, and the contractor, subcontractor or
materialman delivers the lien waivers and evidence of payment in full of all
sums due to the contractor, subcontractor or materialman as may be reasonably
requested by Beneficiary or by the title company insuring the lien of this
Security Instrument. If required by Beneficiary, the release of any such portion
of the Casualty Retainage shall be approved by the surety company, if any, which
has issued a payment or performance bond with respect to the contractor,
subcontractor or materialman.
() Beneficiary shall not be obligated to make
disbursements of the Net Proceeds more frequently than once every calendar
month.
() If at any time the Net Proceeds or the
undisbursed balance thereof shall not, in the opinion of Beneficiary, be
sufficient to pay in full the balance of the costs which are estimated by the
Casualty Consultant to be incurred in connection with the completion of the
Restoration, Grantor shall deposit the deficiency (the "Net Proceeds
Deficiency") with Beneficiary before any further disbursement of the Net
Proceeds shall be made. The Net Proceeds Deficiency deposited with Beneficiary
shall be held by Beneficiary and shall be disbursed for costs actually incurred
in connection with the Restoration on the same conditions applicable to the
disbursement of the Net Proceeds, and until so disbursed pursuant to this
Subsection 4.4(b) shall constitute additional security for the Obligations.
() The excess, if any, of the Net Proceeds and the
remaining balance, if any, of the Net Proceeds Deficiency deposited with
Beneficiary after the Casualty Consultant certifies to Beneficiary that the
Restoration has been completed in accordance with the provisions of this
Subsection 4.4(b), and the receipt by Beneficiary of evidence satisfactory to
Beneficiary that all costs incurred in connection with the Restoration have been
paid in full, shall be remitted by Beneficiary to Grantor, provided no Event of
Default shall have occurred and shall be continuing under the Guaranty, this
Security Instrument or any of the Other Security Documents.
() All Net Proceeds not required (i) to be made available
for the Restoration or (ii) to be returned to Grantor as excess Net Proceeds
pursuant to Subsection 4.4(b)(vi) shall be retained and applied by Beneficiary
toward the payment of the Debt whether or not then due and payable in such
order, priority and proportions as Beneficiary in its discretion shall deem
proper or, at the discretion of Beneficiary, the same shall be paid, either in
whole or in part, to Grantor. If Beneficiary shall receive and retain Net
Proceeds, the lien of this Security Instrument shall be reduced only by the
amount received and retained by Beneficiary, and notwithstanding anything to the
contrary contained herein, Grantor shall have no further obligation thereafter
to commence or complete the Restoration.
Article - REPRESENTATIONS AND WARRANTIES
Grantor represents and warrants to Beneficiary that:
Section . Warranty of Title. Grantor has good and marketable
title to the Property and has the right to mortgage, grant, bargain, sell,
pledge, assign, warrant, transfer and convey the same and Grantor possesses an
unencumbered fee simple absolute estate in the Land and the Improvements and
owns the Property free and clear of all liens, encumbrances and charges
whatsoever except for those exceptions shown in the title insurance policy
insuring the lien of this Security Instrument (the "Permitted Exceptions"). The
Permitted Exceptions do not materially interfere with the use and operations of
the Property. Grantor shall forever warrant, defend and preserve the title and
the validity and priority of the lien of this Security Instrument and shall
forever warrant and defend the same to Beneficiary against the claims of all
persons whomsoever.
Section . Authority. Grantor (and the undersigned
representative of Grantor, if any) has full power, authority and legal right to
execute this Security Instrument, and to mortgage, grant, bargain, sell, pledge,
assign, warrant, transfer and convey the Property pursuant to the terms hereof
and to keep and observe all of the terms of this Security Instrument on
Grantor's part to be performed.
Section . Legal Status and Authority. Grantor (a) is duly
organized, validly existing and in good standing under the laws of its state of
organization; (b) is duly qualified to transact business and is in good standing
in the State where the Property is located; and (c) has all necessary approvals,
governmental and otherwise, and full power and authority to own the Property and
carry on its business as now conducted and proposed to be conducted. Grantor now
has and shall continue to have the full right, power and authority to operate
and lease the Property, to encumber the Property as provided herein and to
perform all of the other obligations to be performed by Grantor under the
Guaranty, this Security Instrument and the Other Security Documents.
Section . Validity of Documents. (a) The execution, delivery
and performance of the Guaranty, this Security Instrument and the Other Security
Documents and the borrowing evidenced by the Guaranty (i) are within the power
and authority of Grantor; (ii) have been authorized by all requisite
organizational action; (iii) have received all necessary approvals and consents,
corporate, governmental or otherwise; (iv) to the best of Grantor's knowledge,
will not violate, conflict with, result in a breach of or constitute (with
notice or lapse of time, or both) a default under any provision of law
(including, without limitation, any usury laws), any order or judgment of any
court or governmental authority, the articles of incorporation, by-laws,
partnership or operating agreement, or other governing instrument of Grantor, or
any indenture, agreement or other instrument to which Grantor is a party or by
which it or any of its assets or the Property is or may be bound or affected;
(v) will not result in the creation or imposition of any lien, charge or
encumbrance whatsoever upon any of its assets, except the lien and security
interest created hereby; and (vi) to the best of Grantor's knowledge, will not
require any authorization or license from, or any filing with, any governmental
or other body (except for the recordation of this instrument in appropriate land
records in the State where the Property is located and except for Uniform
Commercial Code filings relating to the security interest created hereby), and
(b) the Guaranty, this Security Instrument and the Other Security Documents
constitute the legal, valid and binding obligations of Grantor.
Section . Litigation. There is no action, suit or proceeding,
judicial, administrative or otherwise (including any condemnation or similar
proceeding), pending or, to the best of Grantor's knowledge, threatened or
contemplated against Grantor, any person guaranteeing the payment of the Debt or
any portion thereof or performance by Grantor of any terms of this Security
Instrument (a "Guarantor"), if any, an Indemnitor (defined in Subsection
10.1(c)), if any, or against or affecting the Property that (a) has not been
disclosed to Beneficiary, and has a material, adverse effect on the Property or
Grantor's, any Guarantor's or any Indemnitor's ability to perform its
obligations under the Guaranty, this Security Instrument or the Other Security
Documents, or (b) is not adequately covered by insurance, each as determined by
Beneficiary in its sole and absolute discretion.
Section . Status of Property. () No portion of the
Improvements is located in an area identified by the Secretary of Housing and
Urban Development or any successor thereto as an area having special flood
hazards pursuant to the National Flood Insurance Act of 1968 or the Flood
Disaster Protection Act of 1973, or the National Flood Insurance Reform Act of
1994, as each may be amended, or any successor law, or, if any portion of the
Improvements is now or at any time in the future located within any such area,
Grantor has obtained and will maintain the insurance prescribed in Section 3.3
hereof.
() Grantor has obtained all necessary certificates, licenses
and other approvals, governmental and otherwise, necessary for the operation of
the Property and the conduct of its business and all required zoning, building
code, land use, environmental and other similar permits or approvals, all of
which are in full force and effect as of the date hereof and, to the best of
Grantor's knowledge, not subject to revocation, suspension, forfeiture or
modification.
() To the best of Grantor's knowledge, and except as
expressly set forth in that certain Property Condition Survey of the Property,
dated April 1, 1999, prepared by Environmental Management Group, and that
certain Phase I Environmental Site Assessment of the Property, dated March 31,
1999, prepared by Environmental Management Group, the Property and the present
and contemplated use and occupancy thereof are in full compliance with all
Applicable Laws, including, without limitation, zoning ordinances, building
codes, land use and Environmental Laws, laws relating to the disabled (including
but not limited to, the ADA) and other similar laws.
() The Property is served by all utilities required for the
current or contemplated use thereof. All utility service is provided by public
utilities and the Property has accepted or is equipped to accept such utility
service.
() To the best of Grantor's knowledge, all public roads and
streets necessary for service of and access to the Property for the current or
contemplated use thereof have been completed, are serviceable and all-weather
and are physically and legally open for use by the public.
() The Property is served by public water and sewer systems.
() The Property is free from damage caused by fire or other
casualty.
() All costs and expenses of any and all labor, materials,
supplies and equipment used in the construction of the Improvements have been
paid in full.
() Grantor has paid in full for, and is the owner of, all
furnishings, fixtures and equipment (other than tenants' property) used in
connection with the operation of the Property, free and clear of any and all
security interests, liens or encumbrances, except the lien and security interest
created hereby.
() To the best of Grantor's knowledge, all liquid and solid
waste disposal, septic and sewer systems located on the Property are in a good
and safe condition and repair and in compliance with all Applicable Laws.
() All security deposits relating to the Leases reflected on
the certified rent roll delivered to Beneficiary have been collected by Grantor
except as Guarantyd on the certified rent roll.
() Grantor has received no notice of an actual or threatened
condemnation or eminent domain proceeding by any public or quasi-public
authority.
() All the Improvements lie within the boundaries of the
Property.
Section . No Foreign Person. Grantor is not a "foreign
person" within the meaning of Section 1445(f)(3) of the Internal Revenue Code of
1986, as amended and the related Treasury Department regulations, including
temporary regulations.
Section . Separate Tax Lot. The Property is assessed for
real estate tax purposes as one or more wholly independent tax lot or lots,
separate from any adjoining land or improvements not constituting a part of such
lot or lots, and no other land or improvements is assessed and taxed together
with the Property or any portion thereof.
Section . ERISA Compliance. () As of the date hereof and
throughout the term of this Security Instrument, (i) Grantor is not and will not
be an "employee benefit plan" as defined in Section 3(32) of ERISA, which is
subject to Title I of ERISA, and (ii) the assets of Grantor do not and will not
constitute "plan assets" of one or more such plans for purposes of Title I of
ERISA; and
() As of the date hereof and throughout the term of this
Security Instrument, (i) Grantor is not and will not be a "governmental plan"
within the meaning of Section 3(32) of ERISA, and (ii) transactions by or with
Grantor are not and will not be subject to state statutes applicable to Grantor
regulating investments of and fiduciary obligations with respect to governmental
plans.
Section . Leases. Except as disclosed in the certified rent
roll for the Property delivered to and approved by Beneficiary, or as otherwise
set forth on Exhibit B hereof, (a) Grantor is the sole owner of the entire
lessor's interest in the Leases; (b) the Leases are valid and enforceable; (c)
the terms of all alterations, modifications and amendments to the Leases are
reflected in the certified rent roll delivered to and approved by Beneficiary;
(d) none of the Rents reserved in the Leases have been assigned or otherwise
pledged or hypothecated (except to Beneficiary); (e) none of the Rents have been
collected for more than one (1) month in advance (provided that a security
deposit shall not be deemed rent collected in advance); (f) the premises demised
under the Leases have been completed and the tenants under the Leases have
accepted the same and have taken possession of the same on a rent-paying basis;
(g) to the best of Grantor's knowledge, there exist no offsets or defenses to
the payment of any portion of the Rents; (h) Grantor has received no notice from
any tenant challenging the validity or enforceability of any Lease; (i) all
payments due under the Leases are current and are consistent with the certified
rent roll for the Property delivered to and approved by Beneficiary; (j) to the
best of Grantor's knowledge, no tenant under any Lease is in default thereunder,
or is a debtor in any bankruptcy, reorganization, insolvency or similar
proceeding, or has demonstrated a history of payment problems which suggest
financial difficulty; (k) there are no agreements with the tenants under the
Leases other than expressly set forth in each Lease; (l) the Leases are valid
and enforceable against Grantor and, to the best of Grantor's knowledge, the
tenants set forth therein; (m) no Lease contains an option to purchase, right of
first refusal to purchase, or any other similar provision; (n) to the best of
Grantor's knowledge, no person or entity has any possessory interest in, or
right to occupy, the Property except under and pursuant to a Lease; (o) each
Lease (other than a residential Lease) is subordinate to this Security
Instrument, either pursuant to its terms or a recorded subordination agreement;
and (p) to the best of Grantor's knowledge, no brokerage commissions or finders
fees are due and payable regarding any Lease.
Section . Financial Condition. () Grantor is solvent, and no
bankruptcy, reorganization, insolvency or similar proceeding under any state or
federal law with respect to Grantor has been initiated, (b) it has received
reasonably equivalent value for the granting of this Security Instrument, and
(c) the granting of this Security Instrument does not constitute a fraudulent
conveyance.
Section . Business Purposes. The Guaranty is delivered
solely for the business purpose of Grantor, and is not for personal, family,
household, or agricultural purposes, and the proceeds of the Loan guaranteed by
the Guaranty will be used for commercial purposes pursuant to Section 12-103 of
the Commercial Law Article of the Annotated Code of Maryland.
Section . Taxes. Grantor, any Guarantor and any Indemnitor
have filed all federal, state, county, municipal, and city income and other tax
returns required to have been filed by them and have paid all taxes and related
liabilities which have become due pursuant to such returns or pursuant to any
assessments received by them. Neither Grantor, any Guarantor nor any Indemnitor
knows of any basis for any additional assessment in respect of any such taxes
and related liabilities for prior years.
Section . Mailing Address. Grantor's mailing address, as set
forth in the opening paragraph hereof or as changed in accordance with Article
16, is true and correct.
Section . No Change in Facts or Circumstances. All
information in the application for the loan submitted to Beneficiary (the "Loan
Application") and in all financing statements, rent rolls, reports, certificates
and other documents submitted in connection with the Loan Application or in
satisfaction of the terms thereof, are accurate, complete and correct in all
material respects. There has been no adverse change in any condition, fact,
circumstance or event that would make any such information materially
inaccurate, incomplete or otherwise misleading.
Section . Disclosure. To the best of Grantor's knowledge,
Grantor has disclosed to Beneficiary all material facts and has not failed to
disclose any material fact that could cause any representation or warranty made
herein to be materially misleading.
Section . Third Party Representations. To the best of
Grantor's knowledge, each of the representations and the warranties made by each
Guarantor and Indemnitor herein or in any Other Security Document(s) is true and
correct in all material respects.
Section . Illegal Activity. To the best of Grantor's
knowledge, no portion of the Property has been or will be purchased, improved,
fixtured, equipped or furnished with proceeds of any criminal or other illegal
activity and to the best of Grantor's knowledge, there are no illegal activities
or activities relating to controlled substance at the Property.
Section . FUNB Line of Credit. No more than five (5)
Business Days after the expiration or earlier termination of, or concurrently
with the giving of notice by PREIT Associates, L.P. to the public that an event
of default has occurred under, that certain Revolving Credit Loan Agreement
between PREIT Associates, L.P. and Corestates Bank, N.A., as agent
(predecessor-in-interest to First Union National Bank, as agent), and First
Trust Savings Bank, Fleet Bank, N.A. and PNC Bank, as lenders, dated September
30, 1997, Grantor shall notify Beneficiary in writing of same.
Article - DEBTOR/CREDITOR RELATIONSHIP
Section . Relationship of Grantor and Beneficiary. The
relationship between Grantor and Beneficiary is solely that of guarantor and
creditor, and Beneficiary has no fiduciary or other special relationship with
Grantor, and no term or condition of any of the Guaranty, this Security
Instrument and the Other Security Documents shall be construed so as to deem the
relationship between Grantor and Beneficiary to be other than that of guarantor
and creditor.
Section . Servicing of the Loan. At the option of
Beneficiary, the loan secured hereby may be serviced by a servicer/trustee (the
"Servicer") selected by Beneficiary and Beneficiary may delegate all or any
portion of its responsibilities under the Guaranty, this Security Instrument,
and the Other Security Documents to the Servicer.
Article - FURTHER ASSURANCES
Section . Recording of Security Instrument, Etc. Grantor
forthwith upon the execution and delivery of this Security Instrument and
thereafter, from time to time, will cause this Security Instrument and any of
the Other Security Documents creating a lien or security interest or evidencing
the lien hereof upon the Property and each instrument of further assurance to be
filed, registered or recorded in such manner and in such places as may be
required by any present or future law in order to publish notice of and fully to
protect and perfect the lien or security interest hereof upon, and the interest
of Trustee and of Beneficiary in, the Property. Grantor will pay all taxes,
filing, registration or recording fees, and all expenses incident to the
preparation, execution, acknowledgment and/or recording of the Guaranty, this
Security Instrument, the Other Security Documents, any Guaranty or mortgage
supplemental hereto, any security instrument with respect to the Property and
any instrument of further assurance, and any modification or amendment of the
foregoing documents, and all federal, state, county and municipal taxes, duties,
imposts, assessments and charges arising out of or in connection with the
execution and delivery of this Security Instrument, any mortgage supplemental
hereto, any security instrument with respect to the Property or any instrument
of further assurance, and any modification or amendment of the foregoing
documents, except where prohibited by law so to do.
Section . Further Acts, Etc. Grantor will, at the cost of
Grantor, and without expense to Beneficiary, do, execute, acknowledge and
deliver all and every such further acts, deeds, conveyances, mortgages,
assignments, notices of assignments, transfers and assurances as Beneficiary
shall, from time to time, reasonably require, for the better assuring,
conveying, assigning, transferring, and confirming unto Trustee (where
appropriate) and to Beneficiary, the property and rights hereby mortgaged,
granted, bargained, sold, conveyed, confirmed, pledged, assigned, warranted and
transferred or intended now or hereafter so to be, or which Grantor may be or
may hereafter become bound to convey or assign to Trustee or to Beneficiary, or
for carrying out the intention or facilitating the performance of the terms of
this Security Instrument or for filing, registering or recording this Security
Instrument, or for complying with all Applicable Laws. Grantor, on demand, will
execute and deliver and hereby authorizes Beneficiary or Trustee to execute in
the name of Grantor or without the signature of Grantor to the extent
Beneficiary and Trustee may lawfully do so, one or more financing statements,
chattel mortgages or other instruments, to evidence or perfect more effectively
the security interest of Trustee or Beneficiary in the Property. Grantor grants
to Beneficiary an irrevocable power of attorney coupled with an interest for the
purpose of exercising and perfecting any and all rights and remedies available
to Trustee or Beneficiary pursuant to this Section 7.2.
Section . Intentionally Deleted.
Section . Estoppel Certificates. () After request by
Beneficiary, Grantor, within twenty (20) days, shall furnish Beneficiary or any
proposed assignee with a statement, duly acknowledged and certified, setting
forth (i) the amount of the original principal amount of the Guaranty, (ii) the
unpaid principal amount of the Guaranty, (iii) the rate of interest of the
Guaranty, (iv) the terms of payment and maturity date of the Guaranty, (v) the
date installments of interest and/or principal were last paid, (vi) that, except
as provided in such statement, there are no defaults or events which with the
passage of time or the giving of notice or both, would constitute an event of
default under the Guaranty or the Security Instrument, (vii) that the Guaranty
and this Security Instrument are valid, legal and binding obligations and have
not been modified or if modified, giving particulars of such modification,
(viii) whether any offsets or defenses exist against the obligations secured
hereby and, if any are alleged to exist, a detailed description thereof, (ix)
that all Leases are in full force and effect and (provided the Property is not a
residential multifamily property) have not been modified (or if modified,
setting forth all modifications), (x) the date to which the Rents thereunder
have been paid pursuant to the Leases, (xi) whether or not, to the best
knowledge of Grantor, any of the lessees under the Leases are in default under
the Leases, and, if any of the lessees are in default, setting forth the
specific nature of all such defaults, (xii) the amount of security deposits held
by Grantor under each Lease and that such amounts are consistent with the
amounts required under each Lease, and (xiii) as to any other matters reasonably
requested by Beneficiary and reasonably related to the Leases, the obligations
secured hereby, the Property or this Security Instrument.
() Upon any transfer or proposed transfer contemplated by
Section 18.1 hereof, at Beneficiary's request, Grantor, any Guarantors and any
Indemnitors shall provide an estoppel certificate to the Investor (defined in
Section 18.1) or any prospective Investor confirming the accuracy of information
provided by such person to Beneficiary under or in respect of this Security
Instrument.
() After written request by Grantor not more than twice
annually, Beneficiary shall furnish Grantor a statement setting forth (i) the
amount of the original principal amount of the Guaranty, (ii) the unpaid
principal amount of the Guaranty, (iii) the rate of interest of the Guaranty,
(iv) the balance of the sums in the Escrow Fund, if any, and (v) to the best of
Beneficiary's knowledge, whether Grantor is currently in default.
Section . Flood Insurance. After Beneficiary's request,
Grantor shall deliver evidence satisfactory to Beneficiary that no portion of
the Improvements is situated in a federally designated "special flood hazard
area" or, if it is, that Grantor has obtained insurance meeting the requirements
of Section 3.3(a)(vi).
Section . Splitting of Security Instrument. This Security
Instrument and the Guaranty shall, at any time until the same shall be fully
paid and satisfied, at the sole election of Beneficiary, be split or divided
into two or more guarantees and two or more security instruments, each of which
shall cover all or a portion of the Property to be more particularly described
therein. To that end, Grantor, upon written request of Beneficiary, shall
execute, acknowledge and deliver to Beneficiary and/or its designee or designees
substitute guarantees and security instruments in such principal amounts,
aggregating not more than the then unpaid principal amount secured by this
Security Instrument, and containing terms, provisions and clauses no less
favorable to Grantor than those contained herein and in the Guaranty, and such
other documents and instruments as may be required by Beneficiary to effect the
splitting of the Guaranty and this Security Instrument.
Section . Replacement Documents. Upon receipt of an affidavit
of an officer of Beneficiary as to the loss, theft, destruction or mutilation of
the Guaranty or any Other Security Document which is not of public record, and,
in the case of any such mutilation, upon surrender and cancellation of such
Guaranty or Other Security Document, Grantor will issue, in lieu thereof, a
replacement Guaranty or Other Security Document, dated the date of such lost,
stolen, destroyed or mutilated Guaranty or Other Security Document in the same
principal amount thereof and otherwise of like tenor. Grantor shall not be
responsible to Beneficiary for Beneficiary's fees and expenses incurred in
connection with the transactions contemplated in this Section 7.7.
Section . Amended Financing Statements. Grantor will execute
and deliver to the Beneficiary, prior to or contemporaneously with the effective
date of any such change, any financing statement or financing statement change
required by the Beneficiary to establish or maintain the validity, perfection
and priority of the security interest granted herein. At the request of the
Beneficiary, Grantor shall execute a certificate in form satisfactory to the
Beneficiary listing the trade names under which Grantor intends to operate the
Property, and representing and warranting that Grantor does business under no
other trade name with respect to the Property.
Article - DUE ON SALE/ENCUMBRANCE
Section . Beneficiary Reliance. Grantor acknowledges that
Beneficiary has examined and relied on the experience of Grantor and its general
partners, principals and (if Grantor is a trust) beneficial owners in owning and
operating properties such as the Property in agreeing to make the loan secured
hereby, and will continue to rely on Grantor's ownership of the Property as a
means of maintaining the value of the Property as security for Grantor's
performance under the Guaranty and the performance of the Other Obligations.
Grantor acknowledges that Beneficiary has a valid interest in maintaining the
value of the Property so as to ensure that, should Grantor default under the
Guaranty or the performance of the Other Obligations, Beneficiary can enforce
the Guaranty by a sale of the Property.
Section . No Sale/Encumbrance. Grantor agrees that Grantor
shall not, without the prior written consent of Beneficiary, sell, convey,
mortgage, grant, bargain, encumber, pledge, assign, or otherwise transfer the
Property or any part thereof or permit the Property or any part thereof to be
sold, conveyed, mortgaged, granted, bargained, encumbered, pledged, assigned, or
otherwise transferred. Notwithstanding the foregoing, the Property may be
transferred with the prior written consent of Beneficiary which consent shall
not be unreasonably withheld in the case of a proposed transferee whose entity
status, creditworthiness and management ability meet standards consistently
applied by Beneficiary for approval of Grantors for similar properties under
mortgage loans secured by similar properties, provided that (i) only one such
transfer shall be permitted during the term of the Guaranty, (ii) prior to the
effective date of the transfer, the transferee shall execute and deliver to
Beneficiary a written assumption agreement in form and substance acceptable to
Beneficiary in its sole discretion, (iii) a transfer fee equal to one quarter of
one percent (.25%) of the outstanding principal balance of the Debt shall be
paid by Grantor to Beneficiary upon notice being given to Grantor of approval of
the proposed transfer (unless the proposed transferee is an affiliate of
Grantor, in which event no transfer fee shall be due and payable), (iv) no
transfer shall be permitted hereunder if an Event of Default, or an event which
with the giving of notice or lapse of time or both could become an Event of
Default, has occurred and is continuing, and (v) such transferee shall be a
single purpose bankruptcy remote entity and Grantor shall cause to be delivered
to Beneficiary a non-consolidation opinion or an update of the same, in form and
substance reasonably acceptable to Beneficiary, upon Beneficiary's request to do
so. Grantor agrees that Grantor shall not incur any debt, secured or unsecured,
direct or contingent (including guaranteeing any obligation), other than the
Debt and trade payables incurred in the ordinary course of business in
connection with the operation of the Property, provided same are paid when due.
Section . Sale/Encumbrance Defined. A sale, conveyance,
mortgage, grant, bargain, encumbrance, pledge, assignment, or transfer within
the meaning of this Article 8 shall be deemed to include, but not be limited to
(a) an installment sales agreement wherein Grantor agrees to sell the Property
or any part thereof for a price to be paid in installments; (b) an agreement by
Grantor leasing all or a substantial part of the Property for other than actual
occupancy by a space tenant thereunder or a sale, assignment or other transfer
of, or the grant of a security interest in, Grantor's right, title and interest
in and to any Leases or any Rents; (c) if Grantor or any general partner or
managing member (or if no managing member, any member) of Grantor is a
corporation, the voluntary or involuntary sale, conveyance, transfer or pledge
of such corporation's stock (or the stock of any corporation directly or
indirectly controlling such corporation by operation of law or otherwise) or the
creation or issuance of new stock by which an aggregate of more than 49% of such
corporation's stock shall be vested in a party or parties who are not now owners
of more than 49% of such corporation's stock; (d) if Grantor or any general
partner or managing member (or if no managing member, any member) of Grantor is
a limited or general partnership or joint venture, the change, removal or
resignation of a general partner or the transfer or pledge of the partnership
interest of any general partner or any profits or proceeds relating to such
partnership interest or the transfer or pledge of any partnership interest of
any limited partner or any profits or proceeds relating to any such partnership
interest, which, whether singly or in the aggregate, result in more than 49% of
the beneficial interests in Grantor, or the profits or proceeds relating
thereto, having been transferred or pledged; and (e) if Grantor or any general
partner or member of Grantor is a limited liability company, the change, removal
or resignation of a managing member or the transfer of the membership interest
of a managing member or any profits or proceeds relating to such membership
interest or the transfer or pledge of any membership interest of any other
member or any profits or proceeds relating to any such membership interest,
which, whether singly or in the aggregate, result in more than 49% of the
beneficial interests in Grantor, or the profits or proceeds relating thereto,
having been transferred or pledged. Notwithstanding the foregoing, the following
transfers shall not be deemed to be a sale, conveyance, mortgage, grant,
bargain, encumbrance, pledge, assignment or transfer within the meaning of this
Article 8: (a) transfer by devise or descent or by operation of law upon the
death of a member, general partner or stockholder of Grantor, any Guarantor or
Indemnitor or any member or general partner thereof, (b) a sale, transfer or
hypothecation of a membership, partnership or shareholder interest in Grantor,
whichever the case may be, by a current member, general partner or shareholder,
as applicable, to an immediate family member (i.e., parents, spouses, siblings,
children or grandchildren) of such member, general partner or shareholder, or to
a trust for the benefit of an immediate family member of such member, general
partner or shareholder, and (c) a change in the form of organizational structure
or name of Grantor, provided that there is no transfer or change in the
ownership interests in Grantor, and provided further that Grantor shall remain
in full compliance with Section 4.3 of this Security Instrument, provided that,
as to each of clauses (a), (b) and (c) of this sentence, with respect to any
such sale, transfer or hypothecation, Grantor shall deliver a non-consolidation
opinion or an update of the same, in form and substance reasonably satisfactory
to Beneficiary, upon Beneficiary's request to do so.
Section . Beneficiary's Rights. Beneficiary reserves the
right to condition the consent required hereunder upon a modification of the
terms hereof and on assumption of the Guaranty, this Security Instrument and the
Other Security Documents as so modified by the proposed transferee, payment of a
transfer fee and all of Beneficiary's expenses incurred in connection with such
transfer, or such other conditions as Beneficiary shall determine in its sole
discretion to be in the interest of Beneficiary. Beneficiary shall not be
required to demonstrate any actual impairment of its security or any increased
risk of default hereunder in order to declare the Debt immediately due and
payable upon Grantor's sale, conveyance, mortgage, grant, bargain, encumbrance,
pledge, assignment, or transfer of the Property without Beneficiary's consent.
This provision shall apply to every sale, conveyance, mortgage, grant, bargain,
encumbrance, pledge, assignment, or transfer of the Property regardless of
whether voluntary or not, or whether or not Beneficiary has consented to any
previous sale, conveyance, mortgage, grant, bargain, encumbrance, pledge,
assignment, or transfer of the Property.
Section . Right To Substitute Property. The terms and
conditions of this Article 8 shall be subject to Grantor's rights pursuant to
that certain letter dated the date hereof from Beneficiary to Grantor regarding
Grantor's rights to substitute security for the Debt. Inquiries regarding the
aforementioned letter shall be made to Grantor at the address set forth in
Article 16 below.
Article - INTENTIONALLY DELETED
Article - DEFAULT
Section . Events of Default. The occurrence of any one or
more of the following events shall constitute an "Event of Default":
() if any amount due under the Guaranty is not paid on the
date same is due and/or if the Grantor fails to perform, observe or comply with
any of the provisions of the Guaranty to be performed, observed or complied
with;
() if Grantor violates or does not comply with any of the
provisions of Sections 3.7, 4.3 or 8.1 or if any general partner or the SPE
Member of Grantor violates or does not comply with any of the provisions of
Section 4.3;
() if any representation or warranty of Grantor, Indemnitor
(as defined in that certain Environmental Indemnity Agreement dated as of the
date hereof (the "Environmental Indemnity") or any Guarantor, or any member,
general partner, principal or beneficial owner of any of the foregoing, made
herein or in the Environmental Indemnity or in any guaranty, or in any
certificate, report, financial statement or other instrument or document
furnished to Beneficiary shall have been false or misleading in any material
respect when made;
() if any default occurs under any guaranty or indemnity
executed in connection herewith and such default continues after the expiration
of applicable grace periods, if any;
() except for the specific defaults set forth in this Section
10.1, any other default hereunder or any of the Other Security Documents by
Grantor, which default is not cured (i) in the case of any default which can be
cured by the payment of a sum of money, within five (5) days after written
notice from Beneficiary to Grantor, or (ii) in the case of any other default,
within thirty (30) days after written notice from Beneficiary to Grantor;
provided that if such default cannot reasonably be cured within such thirty (30)
day period and Grantor shall have commenced to cure such default within such
thirty (30) day period and thereafter diligently and expeditiously proceeds to
cure the same, such thirty (30) day period shall be extended for so long as it
shall require Grantor in the exercise of due diligence to cure such default, it
being agreed that no such extension shall be for a period in excess of one
hundred twenty (120) days, unless, only in the case of cures that require
construction or remedial work, such cure cannot with diligence be completed
within such one hundred twenty (120) day period, in which case such period shall
be extended for an additional one hundred twenty (120) days;
() if Grantor or any Guarantor or Indemnitor shall make an
assignment for the benefit of creditors or if Grantor shall generally not be
paying its debts as they become due; or
() if the Policies are not kept in full force and effect, or
Grantor has not delivered evidence of the renewal of the Policies ten (10) days
prior to their expiration as provided in Section 3.3(b); or
() if (i) Grantor or any Guarantor or Indemnitor shall
commence any case, proceeding or other action (A) under any existing or future
law of any jurisdiction, domestic or foreign, relating to bankruptcy,
insolvency, reorganization, conservatorship or relief of debtors, seeking to
have an order for relief entered with respect to it, or seeking to adjudicate it
a bankrupt or insolvent, or seeking reorganization, arrangement, adjustment,
winding-up, liquidation, dissolution, composition or other relief with respect
to it or its debts, or (B) seeking appointment of a receiver, trustee,
custodian, conservator or other similar official for it or for all or any
substantial part of its assets, or the Grantor or any Guarantor or Indemnitor
shall make a general assignment for the benefit of its creditors'; or (ii) there
shall be commenced against Grantor or any Guarantor or Indemnitor any case,
proceeding or other action of a nature referred to in clause (i) above which (A)
results in the entry of an order for relief or any such adjudication or
appointment or (B) remains undismissed, undischarged or unbonded for a period of
ninety (90) days; or (iii) there shall be commenced against the Grantor or any
Guarantor or Indemnitor any case, proceeding or other action seeking issuance of
a warrant of attachment, execution, distraint or similar process against all or
any substantial part of its assets which results in the entry of any order for
any such relief which shall not have been vacated, discharged, or stayed or
bonded pending appeal within ninety (90) days from the entry thereof; or (iv)
the Grantor or any Guarantor or Indemnitor shall take any action in furtherance
of, or indicating its consent to, approval of, or acquiescence in, any of the
acts set forth in clause (i), (ii), or (iii) above; or (v) the Grantor or any
Guarantor or Indemnitor shall generally not, or shall be unable to, or shall
admit in writing its inability to, pay its debts as they become due.
Article - RIGHTS AND REMEDIES
Section . Remedies. () Upon the occurrence of any Event of
Default, Grantor agrees that Beneficiary, and when requested to do so by
Beneficiary, Trustee, may take such action, without notice or demand, as it
deems advisable to protect and enforce the rights of Beneficiary and Trustee
against Grantor and in and to the Property, including, but not limited to the
following actions, each of which may be pursued concurrently or otherwise, at
such time and in such order as Beneficiary may determine, in its sole
discretion, without impairing or otherwise affecting the other rights and
remedies of Beneficiary:
() declare all amounts due under the Guaranty to be
immediately due and payable;
() institute proceedings, judicial or otherwise, for
the complete foreclosure of this Security Instrument under any applicable
provision of law in which case the Property or any interest therein may be sold
for cash or upon credit in one or more parcels or in several interests or
portions and in any order or manner;
() in connection with any such sale or sales of all
or any part of the Property as mentioned in subpart (ii) above, Grantor hereby
(A) assents to the passage of a decree or decrees for the sale or sales of all
or any part of the Property, and/or (B) authorizes and empowers the Trustee to
sell all or any part of the Property. Any sale of all or any part of the
Property, whether by way of assent to decree or power of sale, shall be carried
out in accordance with the applicable laws of the State of Maryland and rules of
court relating to foreclosures of deeds of trust which do not materially change
or impair the remedy. The assent to decree and power of sale herein granted
shall not be deemed to be exhausted in the event that a foreclosure proceeding
is dismissed, canceled or delayed before the Debt is paid in full. In the event
of default by any purchaser at any such sale, the Trustee shall have the power
to resell all or any part of the Property. In connection with any such sale, the
Trustee may procure such title and other reports, surveys, audits, inspections,
environmental studies, Tax histories and appraisals as necessary or desirable,
and may make such repairs and improvements to the Property as the Trustee deems
advisable, the cost of all of which shall constitute and be a part of the Debt.
In case of any such sale under this Security Instrument, the Property may be
sold as an entirety or in parcels, by one sale or by several sales, as may be
deemed by the Trustee to be appropriate and without regard to any right of
Grantor or any other person to the marshalling of assets. Immediately upon the
first insertion of the advertisement of the sale of all or any part of the
Property, there shall become due and owing by Grantor all costs and expenses
incident to such sale and a commission on the total amount of the Debt then due
equal to one-half of the percentage allowed as commission to trustees making
sales under orders or decrees of the equity court having jurisdiction, and no
person shall be required to receive only the aggregate amount of the Debt to the
date of payment unless the same is accompanied by a tender of such Debt and
commission. Any sale hereunder may be made at public auction, at such time or
times, at such place or places, and upon such terms and conditions and after
such previous public notice as the Trustee shall deem appropriate and
advantageous and as required by applicable laws. Upon the terms of such sale
being complied with, the Trustee shall convey to, and at the cost of, the
purchaser or purchasers the interest of Grantor in the Property so sold, free
and discharged of and from all estate, title or interest of Grantor, at law or
in equity, such purchaser or purchasers being hereby discharged from all
liability to see to the application of the purchase money;
() sell for cash or upon credit the Property or any
part thereof and all estate, claim, demand, right, title and interest of Grantor
therein and rights of redemption thereof, pursuant to power of sale or
otherwise, at one or more sales, as an entity or in parcels, at such time and
place, upon such terms and after such notice thereof as may be required or
permitted by law;
() subject to the provisions of Article 15,
institute an action, suit or proceeding in equity for the specific performance
of any covenant, condition or agreement contained herein, in the Guaranty or in
the Other Security Documents;
() subject to the provisions of Article 15, recover
judgment on the Guaranty either before, during or after any proceedings for the
enforcement of this Security Instrument or the Other Security Documents;
() apply for the appointment of a receiver, trustee,
liquidator or conservator of the Property, without notice and without regard for
the adequacy of the security for the Debt and without regard for the solvency of
Grantor, any Guarantor, Indemnitor or of any person, firm or other entity liable
for the payment of the Debt;
() subject to any applicable law, the license
granted to Grantor under Section 1.2 shall automatically be revoked and
Beneficiary may enter into or upon the Property, either personally or by its
agents, nominees or attorneys and dispossess Grantor and its agents and servants
therefrom, without liability for trespass, damages or otherwise and exclude
Grantor and its agents or servants wholly therefrom, and take possession of all
books, records and accounts relating thereto and Grantor agrees to surrender
possession of the Property and of such books, records and accounts to
Beneficiary upon demand, and thereupon Beneficiary may (A) use, operate, manage,
control, insure, maintain, repair, restore and otherwise deal with all and every
part of the Property and conduct the business thereat; (B) complete any
construction on the Property in such manner and form as Beneficiary deems
advisable; (C) make alterations, additions, renewals, replacements and
improvements to or on the Property; (D) exercise all rights and powers of
Grantor with respect to the Property, whether in the name of Grantor or
otherwise, including, without limitation, the right to make, cancel, enforce or
modify Leases, obtain and evict tenants, and demand, xxx for, collect and
receive all Rents of the Property and every part thereof; (E) require Grantor to
pay monthly in advance to Beneficiary, or any receiver appointed to collect the
Rents, the fair and reasonable rental value for the use and occupation of such
part of the Property as may be occupied by Grantor; (F) require Grantor to
vacate and surrender possession of the Property to Beneficiary or to such
receiver and, in default thereof, Grantor may be evicted by summary proceedings
or otherwise; and (G) apply the receipts from the Property to the payment of the
Debt, in such order, priority and proportions as Beneficiary shall deem
appropriate in its sole discretion after deducting therefrom all expenses
(including reasonable attorneys' fees) incurred in connection with the aforesaid
operations and all amounts necessary to pay the Taxes, Other Charges, insurance
and other expenses in connection with the Property, as well as just and
reasonable compensation for the services of Beneficiary, its counsel, agents and
employees;
() exercise any and all rights and remedies granted
to a secured party upon default under the Uniform Commercial Code, including,
without limiting the generality of the foregoing: (A) the right to take
possession of the Collateral or any part thereof, and to take such other
measures as Trustee or Beneficiary may deem necessary for the care, protection
and preservation of the Collateral, and (B) request Grantor at its expense to
assemble the Collateral and make it available to Trustee or Beneficiary at a
convenient place acceptable to Beneficiary. Any notice of sale, disposition or
other intended action by Beneficiary with respect to the Collateral sent to
Grantor in accordance with the provisions hereof at least five (5) days prior to
such action, shall constitute commercially reasonable notice to Grantor;
() apply any sums then deposited in the Escrow Fund
and any other sums held in escrow or otherwise by Beneficiary in accordance with
the terms of this Security Instrument or any Other Security Document to the
payment of the following items in any order in its sole and absolute discretion:
(A) Taxes and Other Charges;
(B) Insurance Premiums;
(C) Interest on the Debt;
(D) amortization of the unpaid balance of the Debt;
and all other sums payable pursuant to the Guaranty, this Security Instrument
and the Other Security Documents, including, without limitation, advances made
by Beneficiary pursuant to the terms of this Security Instrument;
() surrender the Policies maintained pursuant to
Article 3 hereof, collect the unearned Insurance Premiums and apply such sums as
a credit on the Debt in such priority and proportion as Beneficiary in its
discretion shall deem proper, and in connection therewith, Grantor hereby
appoints Beneficiary as agent and attorney-in-fact (which is coupled with an
interest and is therefore irrevocable) for Grantor to collect such Insurance
Premiums;
() apply the undisbursed balance of any Net Proceeds
or any Net Proceeds Deficiency deposit, together with interest thereon, to the
payment of the Debt in such order, priority and proportions as Beneficiary shall
deem to be appropriate in its discretion;
() prohibit Grantor and anyone claiming on behalf of
or through Grantor from making use of or withdrawing any sums from any lockbox
or similar account, if any;
() pursue such other remedies as Beneficiary may
have under applicable law.
() In the event of a sale, by foreclosure, power of sale, or
otherwise, of less than all of the Property, this Security Instrument shall
continue as a lien and security interest on the remaining portion of the
Property unimpaired and without loss of priority. Notwithstanding the provisions
of this Section 11.1 to the contrary, if any Event of Default as described in
Subsection 10.1 (h)(i) or (ii) shall occur, the entire unpaid Debt shall be
automatically due and payable, without any further notice, demand or other
action by Beneficiary.
() Beneficiary may adjourn from time to time any
sale by it to be made under or by virtue of this Security Instrument by
announcement at the time and place appointed for such sale or for such adjourned
sale or sales; and, except as otherwise provided by any applicable provision of
law, Beneficiary, without further notice or publication, may make such sale at
the time and place to which the same shall be so adjourned.
() Upon any sale made under or by virtue of this Section
11.1, whether made under a power of sale or under or by virtue of judicial
proceedings or of a judgment or decree of foreclosure and sale, Beneficiary may
bid for and acquire the Property or any part thereof and in lieu of paying cash
therefor may make settlement for the purchase price by crediting upon the Debt
the net sales price after deducting therefrom the expenses of the sale and costs
of the action and any other sums which Beneficiary is authorized to deduct under
this Security Instrument.
Section . Application of Proceeds. The purchase
money, proceeds and avails of any disposition of the Property, or any part
thereof, or any other sums collected by Beneficiary pursuant to the Guaranty,
this Security Instrument or the Other Security Documents, may be applied by
Beneficiary to the payment of the Debt in such priority and proportions as
Beneficiary in its discretion shall deem proper.
Section . Right to Cure Defaults. Upon the occurrence of any
Event of Default, Beneficiary may, but without any obligation to do so and
without notice to or demand on Grantor and without releasing Grantor from any
obligation hereunder, cure the same in such manner and to such extent as
Beneficiary may deem necessary to protect the security hereof. Beneficiary is
authorized to enter upon the Property for such purposes, or appear in, defend,
or bring any action or proceeding to protect its interest in the Property or to
foreclose this Security Instrument or collect the Debt, and the cost and expense
thereof (including reasonable attorneys' fees to the extent permitted by law),
with interest as provided in this Section 11.3, shall constitute a portion of
the Debt and shall be due and payable to Beneficiary upon demand. All such costs
and expenses incurred by Beneficiary in remedying such Event of Default or in
appearing in, defending, or bringing any such action or proceeding shall bear
interest at the Default Rate (as defined in the Guaranty), for the period after
notice from Beneficiary that such cost or expense was incurred to the date of
payment to Beneficiary. All such costs and expenses incurred by Beneficiary
together with interest thereon calculated at the Default Rate shall be deemed to
constitute a portion of the Debt and be secured by this Security Instrument and
the Other Security Documents and shall be immediately due and payable upon
demand by Beneficiary therefor.
Section . Actions and Proceedings. After the
occurrence and during the continuance of an Event of Default, Beneficiary has
the right to appear in and defend any action or proceeding brought with respect
to the Property and to bring any action or proceeding, in the name and on behalf
of Grantor, which Beneficiary, in its discretion, decides should be brought to
protect its interest in the Property.
Section . Recovery of Sums Required To Be Paid.
Beneficiary shall have the right from time to time to take action to recover any
sum or sums which constitute a part of the Debt as the same become due, without
regard to whether or not the balance of the Debt shall be due, and without
prejudice to the right of Beneficiary thereafter to bring an action of
foreclosure, or any other action, for a default or defaults by Grantor existing
at the time such earlier action was commenced.
Section . Examination of Books and Records. Beneficiary, its
agents, accountants and attorneys shall have the right upon prior written notice
to examine the records, books, management and other papers of Grantor and its
affiliates or of any Guarantor or Indemnitor which reflect upon their financial
condition, at the Property or at any office regularly maintained by Grantor, its
affiliates or any Guarantor or Indemnitor where the books and records are
located. Beneficiary and its agents shall have the right upon notice to make
copies and extracts from the foregoing records and other papers. In addition,
Beneficiary, its agents, accountants and attorneys shall have the right to
examine and audit the books and records of Grantor and its affiliates or of any
Guarantor or Indemnitor pertaining to the income, expenses and operation of the
Property during reasonable business hours at any office of Grantor, its
affiliates or any Guarantor or Indemnitor where the books and records are
located.
Section . Other Rights, Etc. () The failure of Beneficiary to
insist upon strict performance of any term hereof shall not be deemed to be a
waiver of any term of this Security Instrument. Grantor shall not be relieved of
Grantor's obligations hereunder by reason of (i) the failure of Beneficiary to
comply with any request of Grantor, any Guarantor or any Indemnitor to take any
action to foreclose this Security Instrument or otherwise enforce any of the
provisions hereof or of the Guaranty or the Other Security Documents, (ii) the
release, regardless of consideration, of the whole or any part of the Property,
or of any person liable for the Debt or any portion thereof, or (iii) any
agreement or stipulation by Beneficiary extending the time of payment or
otherwise modifying or supplementing the terms of the Guaranty, this Security
Instrument or the Other Security Documents.
() It is agreed that the risk of loss or damage to
the Property is on Grantor, and Beneficiary shall have no liability whatsoever
for decline in value of the Property, for failure to maintain the Policies, or
for failure to determine whether insurance in force is adequate as to the amount
of risks insured. Possession by Beneficiary shall not be deemed an election of
judicial relief, if any such possession is requested or obtained, with respect
to any Property or collateral not in Beneficiary's possession.
() Beneficiary may resort for the payment of the
Debt to any other security held by Beneficiary in such order and manner as
Beneficiary, in its discretion, may elect. Beneficiary may take action to
recover the Debt, or any portion thereof, or to enforce any covenant hereof
without prejudice to the right of Beneficiary thereafter to foreclose this
Security Instrument. The rights of Beneficiary under this Security Instrument
shall be separate, distinct and cumulative and none shall be given effect to the
exclusion of the others. No act of Beneficiary shall be construed as an election
to proceed under any one provision herein to the exclusion of any other
provision. Beneficiary shall not be limited exclusively to the rights and
remedies herein stated but shall be entitled to every right and remedy now or
hereafter afforded at law or in equity.
Section . Right to Release Any Portion of the Property.
Beneficiary, may release any portion of the Property for such consideration as
Beneficiary may require without, as to the remainder of the Property, in any way
impairing or affecting the lien or priority of this Security Instrument, or
improving the position of any subordinate lienholder with respect thereto,
except to the extent that the obligations hereunder shall have been reduced by
the actual monetary consideration, if any, received by Beneficiary for such
release, and may accept by assignment, pledge or otherwise any other property in
place thereof as Beneficiary may require without being accountable for so doing
to any other lienholder. This Security Instrument shall continue as a lien and
security interest in the remaining portion of the Property.
Section . Violation of Laws. If the Property is not
in compliance with Applicable Laws, Beneficiary may impose additional
requirements upon Grantor in connection herewith including, without limitation,
monetary reserves or financial equivalents.
Section . Recourse and Choice of Remedies. Notwithstanding
any other provision of this Security Instrument, including but not limited to
Article 15 hereof, Beneficiary and other Indemnified Parties (defined in Section
13.1 below) are entitled to enforce the obligations of Grantor, Guarantor and
Indemnitor contained in Sections 13.2, 13.3 and 13.4 without first resorting to
or exhausting any security or collateral and without first having recourse to
the Guaranty or any of the Property, through foreclosure or acceptance of a deed
in lieu of foreclosure or otherwise, and in the event Trustee or Beneficiary
commences a foreclosure action against the Property, Beneficiary is entitled to
pursue a deficiency judgment with respect to such obligations against Grantor,
Guarantor and Indemnitor. The provisions of Sections 13.2, 13.3 and 13.4 are
exceptions to any non-recourse or exculpation provisions in the Guaranty, this
Security Instrument or the Other Security Documents, and Grantor, Guarantor and
Indemnitor are fully and personally liable for the obligations pursuant to
Sections 13.2, 13.3 and 13.4. The liability of Grantor, Guarantor and Indemnitor
are not limited to the amounts due under the Guaranty. Notwithstanding the
foregoing, nothing herein shall inhibit or prevent Trustee or Beneficiary from
foreclosing pursuant to this Security Instrument or exercising any other rights
and remedies pursuant to the Guaranty, this Security Instrument and the Other
Security Documents, whether simultaneously with foreclosure proceedings or in
any other sequence. A separate action or actions may be brought and prosecuted
against Grantor, whether or not action is brought against any other person or
entity or whether or not any other person or entity is joined in the action or
actions. In addition, Beneficiary shall have the right but not the obligation to
join and participate in, as a party if it so elects, any administrative or
judicial proceedings or actions initiated in connection with any matter
addressed in Article 12 or Section 13.4.
Section . Right of Entry. Beneficiary and its agents
shall have the right upon prior written notice to enter and inspect the Property
at all reasonable times upon not less than five (5) Business Days' notice
(except in the case of emergencies when no notice shall be required) to Grantor.
Article - ENVIRONMENTAL HAZARDS
Section . Environmental Representations and Warranties.
Grantor represents and warrants, based upon that certain Phase I Environmental
Site Assessment of the Property dated March 31, 1999, prepared by Environmental
Management Group, and information that Grantor knows, that: (a) there are no
Hazardous Substances (defined below) or underground storage tanks in, on, or
under the Property, except those that are both (i) in compliance with
Environmental Laws (defined below) and with permits issued pursuant thereto, if
any, and (ii) fully disclosed to Beneficiary in writing pursuant to the written
reports resulting from the environmental assessments of the Property delivered
to Beneficiary (the "Environmental Report"); (b) there are no past or present
Releases (defined below) of Hazardous Substances in violation of any
Environmental Law or which would require Remediation (defined below) by a
Governmental Authority in, on, under or from the Property except as described in
the Environmental Report; (c) there is no past or present non-compliance with
Environmental Laws, or with permits issued pursuant thereto, in connection with
the Property except as described in the Environmental Report; (d) Grantor does
not know of, and has not received, any written or oral notice or other
communication from any person or entity (including, but not limited to a
governmental entity) relating to Hazardous Substances or Remediation thereof, of
possible liability of any person or entity pursuant to any Environmental Law,
other environmental conditions in connection with the Property, or any actual
administrative or judicial proceedings in connection with any of the foregoing;
and (e) Grantor has truthfully and fully provided to Beneficiary, in writing,
any and all information relating to environmental conditions in, on, under or
from the Property that is known to Grantor and that is contained in Grantor's
files and records, including, but not limited to any reports relating to
Hazardous Substances in, on, under or from the Property and/or to the
environmental condition of the Property. "Environmental Law" means any present,
and for the purposes of Sections 12.2. 12.3 and 13.4 only, future, federal,
state and local laws, statutes, ordinances, rules, regulations and the like, as
well as common law, relating to protection of human health or the environment,
relating to Hazardous Substances, relating to liability for or costs of
Remediation or prevention of Releases of Hazardous Substances or relating to
liability for or costs of other actual or threatened danger to human health or
the environment. "Environmental Law" includes, but is not limited to, the
following statutes, as amended, any successor thereto, and any regulations
promulgated pursuant thereto, and any state or local statutes, ordinances,
rules, regulations and the like addressing similar issues: the Comprehensive
Environmental Response, Compensation and Liability Act; the Emergency Planning
and Community Right-to-Know Act; the Hazardous Substances Transportation Act;
the Resource Conservation and Recovery Act (including, but not limited to
Subtitle I relating to underground storage tanks); the Solid Waste Disposal Act;
the Clean Water Act; the Clean Air Act; the Toxic Substances Control Act; the
Safe Drinking Water Act; the Occupational Safety and Health Act; the Federal
Water Pollution Control Act; the Federal Insecticide, Fungicide and Rodenticide
Act; the Endangered Species Act; the National Environmental Policy Act; and the
River and Harbors Appropriation Act. "Environmental Law" also includes, but is
not limited to, any present, and for the purposes of Sections 12.2, 12.3 and
13.4 only, future, federal, state and local laws, statutes, ordinances, rules,
regulations and the like, as well as common law: conditioning transfer of
property upon a negative declaration or other approval of a governmental
authority of the environmental condition of the property; requiring notification
or disclosure of Releases of Hazardous Substances or other environmental
condition of the Property to any governmental authority or other person or
entity, whether or not in connection with transfer of title to or interest in
property. "Hazardous Substances" include but are not limited to any and all
substances (whether solid, liquid or gas) (i) defined, listed, or otherwise
classified as pollutants, hazardous wastes, hazardous substances, hazardous
materials, extremely hazardous wastes, or words of similar meaning or regulatory
effect under any present, or for the purposes of Sections 12.2. 12.3 and 13.4
only, future, Environmental Laws or (ii) that may have a negative impact on
human health or the environment, including, but not limited to petroleum and
petroleum products, asbestos and asbestos-containing materials, polychlorinated
biphenyls, lead, radon, radioactive materials, flammables and explosives.
"Release" of any Hazardous Substance includes, but is not limited to any
release, deposit, discharge, emission, leaking, spilling, seeping, migrating,
injecting, pumping, pouring, emptying, escaping, dumping or disposing of
Hazardous Substances. "Remediation" includes, but is not limited to any
response, remedial removal, or corrective action, any activity to cleanup,
detoxify, decontaminate, contain or otherwise remediate any Hazardous Substance,
any actions to prevent, cure or mitigate any Release of any Hazardous Substance,
any action to comply with any Environmental Laws or with any permits issued
pursuant thereto, any inspection, investigation, study, monitoring, assessment,
audit, sampling and testing, laboratory or other analysis, or evaluation
relating to any Hazardous Substances.
Section . Environmental Covenants. Grantor covenants and
agrees that so long as the Grantor owns, manages, is in possession of, or
otherwise controls the operation of the Property: (a) all uses and operations on
or of the Property, whether by Grantor or any other person or entity, shall be
in compliance with all Environmental Laws and permits issued pursuant thereto;
(b) there shall be no Releases of Hazardous Substances in, on, under or from the
Property; (c) there shall be no Hazardous Substances in, on, or under the
Property, except those that are in compliance with all Environmental Laws and
with permits issued pursuant thereto, if and to the extent required; (d) Grantor
shall keep the Property free and clear of all liens and other encumbrances
imposed pursuant to any Environmental Law, whether due to any act or omission of
Grantor or any other person or entity (the "Environmental Liens"); (e) Grantor
shall, at its sole cost and expense, fully and expeditiously cooperate in all
activities pursuant to Section 12.3 below, including, but not limited to
providing all relevant information and making knowledgeable persons available
for interviews; (f) Grantor shall, at its sole cost and expense, perform any
environmental site assessment or other investigation of environmental conditions
in connection with the Property, pursuant to any reasonable written request of
Beneficiary after Beneficiary has reason to believe this Section 12.2 has been
violated (including, but not limited to sampling, testing and analysis of soil,
water, air, building materials and other materials and substances whether solid,
liquid or gas), and share with Beneficiary the reports and other results
thereof, and Beneficiary and other Indemnified Parties (defined in Section 13.1)
shall be entitled to rely on such reports and other results thereof; (g) Grantor
shall, at its sole cost and expense, comply with all reasonable written requests
of Beneficiary to (i) reasonably effectuate Remediation of any condition
(including, but not limited to a Release of a Hazardous Substance) in, on, under
or from the Property, (ii) comply with any Environmental Law, (iii) comply with
any directive from any governmental authority, and (iv) take any other
reasonable action necessary or appropriate for protection of human health or the
environment; (h) Grantor shall not do or allow any tenant or other user of the
Property to do any act that materially increases the dangers to human health or
the environment, poses an unreasonable risk of harm to any person or entity
(whether on or off the Property), impairs or may impair the value of the
Property, is contrary to any requirement of any insurer, constitutes a public or
private nuisance, constitutes waste, or violates any covenant, condition,
agreement or easement applicable to the Property; and (i) Grantor shall
immediately notify Beneficiary in writing promptly after it has become aware of
(A) any presence or Releases or threatened Releases of Hazardous Substances in,
on, under, from or migrating towards the Property which is required to be
reported to a governmental authority under any Environmental Law, (B) any actual
Environmental Lien affecting the Property, (C) any required Remediation of
environmental conditions relating to the Property, and (D) any written or oral
notice or other communication of which Grantor becomes aware from any source
whatsoever (including, but not limited to a governmental entity) relating in any
way to Hazardous Substances or Remediation thereof, possible liability of any
person or entity pursuant to any Environmental Law, other environmental
conditions in connection with the Property, or any actual or threatened
administrative or judicial proceedings in connection with anything referred to
in this Article 12.
Section . Beneficiary's Rights. Beneficiary, its
environmental consultant, and any other person or entity designated by
Beneficiary, including, but not limited to any receiver and any representative
of a governmental entity, shall have the right, but not the obligation, at
intervals of not less than one year, or more frequently if the Beneficiary
reasonably believes that a Hazardous Substance or other environmental condition
violates or threatens to violate any Environmental Law, after notice to Grantor,
to enter upon the Property at all reasonable times to assess any and all aspects
of the environmental condition of the Property and its use, including, but not
limited to conducting any environmental assessment or audit of the Property or
portions thereof to confirm Grantor's compliance with the provisions of this
Article 12, and Grantor shall cooperate in all reasonable ways with Beneficiary
in connection with any such audit. Such audit shall be performed in a manner so
as to minimize interference with the conduct of business at the Property. If
such audit discloses that a violation of or a liability under any Environmental
Law exists or if such audit was required or prescribed by law, regulation or
governmental or quasi-governmental authority, Grantor shall pay all costs and
expenses incurred in connection with such audit; otherwise, the costs and
expenses of such audit shall, notwithstanding anything to the contrary set forth
in this Section, be paid by Beneficiary.
Article - INDEMNIFICATION
Section . General Indemnification. Grantor shall, at its sole
cost and expense, protect, defend, indemnify, release and hold harmless the
Indemnified Parties from and against any and all claims, suits, liabilities
(including, without limitation, strict liabilities), actions, proceedings,
obligations, debts, damages, losses, costs, expenses, diminutions in value,
fines, penalties, charges, fees, expenses, judgments, awards, amounts paid in
settlement, or punitive damages, of whatever kind or nature (including, but not
limited to attorneys' fees and other costs of defense) (the "Losses") imposed
upon or incurred by or asserted against any Indemnified Parties and directly or
indirectly arising out of or in any way relating to any one or more of the
following (but excluding Losses arising out of Beneficiary's gross negligence or
willful misconduct): (a) ownership of this Security Instrument, the Property or
any interest therein or receipt of any Rents; (b) any amendment to, or
restructuring of, the Debt, and the Guaranty, this Security Instrument, or any
Other Security Documents; (c) any and all lawful action that may be taken by
Beneficiary or Trustee in connection with the enforcement of the provisions of
this Security Instrument or the Guaranty or any of the Other Security Documents,
whether or not suit is filed in connection with same, or in connection with
Grantor, any Guarantor or Indemnitor and/or any member, partner, joint venturer
or shareholder thereof becoming a party to a voluntary or involuntary federal or
state bankruptcy, insolvency or similar proceeding; (d) any accident, injury to
or death of persons or loss of or damage to property occurring in, on or about
the Property or any part thereof or on the adjoining sidewalks, curbs, adjacent
property or adjacent parking areas, streets or ways; (e) any use, nonuse or
condition in, on or about the Property or any part thereof or on the adjoining
sidewalks, curbs, adjacent property or adjacent parking areas, streets or ways;
(f) any failure on the part of Grantor to perform or be in compliance with any
of the terms of this Security Instrument or the Other Security Documents; (g)
performance of any labor or services or the furnishing of any materials or other
property in respect of the Property or any part thereof; (h) the failure of any
person to file timely with the Internal Revenue Service an accurate Form 0000-X,
Xxxxxxxxx for Recipients of Proceeds from Real Estate, Broker and Barter
Exchange Transactions, which may be required in connection with the Security
Instrument, or to supply a copy thereof in a timely fashion to the recipient of
the proceeds of the transaction in connection with which this Security
Instrument is made; (i) any failure of the Property to be in compliance with any
Applicable Laws; (j) the enforcement by any Indemnified Party of the provisions
of this Article 13; (k) any and all claims and demands whatsoever which may be
asserted against Beneficiary 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 Lease; (l) the payment of any commission, charge or
brokerage fee to anyone which may be payable in connection with the funding of
the loan evidenced by the Guaranty and secured by this Security Instrument; or
(m) any misrepresentation made by Grantor in this Security Instrument, the Other
Security Documents, or any documents or information provided pursuant to Section
18.1 hereof. Any amounts payable to Beneficiary by reason of the application of
this Section 13.1 shall become immediately due and payable and shall bear
interest at the Default Rate from the date loss or damage is sustained by
Beneficiary until paid. For purposes of this Article 13, the term "Indemnified
Parties" means Beneficiary and any person or entity who is or will have been
involved in the origination of this loan, any person or entity who is or will
have been involved in the servicing of this loan, any person or entity in whose
name the encumbrance created by this Security Instrument is or will have been
recorded, persons and entities who may hold or acquire or will have held a full
or partial interest in this loan (including, but not limited to Investors or
prospective Investors in the Securities, as well as custodians, trustees and
other fiduciaries who hold or have held a full or partial interest in this loan
for the benefit of third parties) as well as the respective directors, officers,
shareholders, members, partners, employees, agents, servants, representatives,
affiliates, subsidiaries, participants, successors and assigns of any and all of
the foregoing (including, but not limited to any other person or entity who
holds or acquires or will have held a participation or other full or partial
interest in this loan or the Property, whether during the term of this loan or
as a part of or following a foreclosure of this loan and including, but not
limited to any successors by merger, consolidation or acquisition of all or a
substantial portion of Beneficiary's assets and business).
Section . Mortgage and/or Intangible Tax. Grantor shall, at
its sole cost and expense, protect, defend, indemnify, release and hold harmless
the Indemnified Parties from and against any and all Losses imposed upon or
incurred by or asserted against any Indemnified Parties and directly or
indirectly arising out of or in any way relating to any tax on the making and/or
recording of this Security Instrument, the Guaranty or any of the Other Security
Documents or in connection with a transfer of all or a portion of the Property
pursuant to a foreclosure, deed in lieu of foreclosure or otherwise.
Section . ERISA Indemnification. Grantor shall, at its sole
cost and expense, protect, defend, indemnify, release and hold harmless the
Indemnified Parties from and against any and all Losses (including, without
limitation, attorneys' fees and costs incurred in the investigation, defense,
and settlement of Losses incurred in correcting any prohibited transaction or in
the sale of a prohibited loan, and in obtaining any individual prohibited
transaction exemption under ERISA that may be required, in Beneficiary's sole
discretion) that Beneficiary may incur, directly or indirectly, as a result of a
default under Sections 4.2 or 5.9.
Section . Environmental Indemnification. Grantor shall, at
its sole cost and expense, protect, defend, indemnify, release and hold harmless
the Indemnified Parties from and against any and all Losses and costs of
Remediation (whether or not performed voluntarily), engineers' fees,
environmental consultants' fees, and costs of investigation (including, but not
limited to sampling, testing and analysis of soil, water, air, building
materials and other materials and substances whether solid, liquid or gas)
imposed upon or incurred by or asserted against any Indemnified Parties, and
arising out of or in any way relating to any one or more of the following,
unless caused by the gross negligence or willful misconduct of any Indemnified
Party: (a) any presence of any Hazardous Substances in, on, above or under the
Property; (b) any past, present or threatened Release of Hazardous Substances
in, on, above, under or from the Property; (c) any activity by Grantor, any
person or entity affiliated with Grantor or tenant or other users of the
Property in connection with any actual, proposed or threatened use, treatment,
storage, holding, existence, disposition or other Release, generation,
production, manufacturing, processing, refining, control, management, abatement,
removal, handling, transfer or transportation to or from the Property of any
Hazardous Substances at any time located in, under, on or above the Property;
(d) any activity by Grantor, any person or entity affiliated with Grantor or
tenant or other users of the Property in connection with any actual or proposed
Remediation of any Hazardous Substances at any time located in, under, on or
above the Property, whether or not such Remediation is voluntary or pursuant to
court or administrative order, including, but not limited to any removal,
remedial or corrective action; (e) any past, present or threatened violations of
any Environmental Laws (or permits issued pursuant to any Environmental Law) in
connection with the Property or operations thereon, including, but not limited
to any failure by Grantor, any person or entity affiliated with Grantor or
tenant or other users of the Property to comply with any order of any
governmental authority in connection with Environmental Laws; (f) the
imposition, recording or filing of any Environmental Lien encumbering the
Property; (g) any administrative processes or proceedings or judicial
proceedings in any way connected with any matter addressed in Article 12 and
this Section 13.4; (h) any past, present or threatened injury to, destruction of
or loss of natural resources in any way connected with the Property, including,
but not limited to costs to investigate and assess such injury, destruction or
loss; (i) any acts of Grantor or other users of the Property in arranging for
disposal or treatment, or arranging with a transporter for transport for
disposal or treatment, of Hazardous Substances owned or possessed by such
Grantor or other users, at any facility or incineration vessel owned or operated
by another person or entity and containing such or similar Hazardous Substance;
(j) any acts of Grantor or other users of the Property, in accepting any
Hazardous Substances for transport to disposal or treatment facilities,
incineration vessels or sites selected by Grantor or such other users, from
which there is a Release, or a threatened Release of any Hazardous Substance
which causes the incurrence of costs for Remediation; (k) any personal injury,
wrongful death, or property damage caused by Hazardous Substances arising under
any statutory or common law or tort law theory, including, but not limited to
damages assessed for the maintenance of a private or public nuisance or for the
conducting of an abnormally dangerous activity on or near the Property; and (l)
any intentional misrepresentation in any representation or warranty or material
breach or failure to perform any covenants or other obligations pursuant to
Article 12.
Section . Duty to Defend; Attorneys' Fees and Other Fees and
Expenses. Upon written request by any Indemnified Party, Grantor shall defend
such Indemnified Party (if requested by any Indemnified Party, in the name of
the Indemnified Party) by attorneys and other professionals approved by the
Indemnified Parties. Notwithstanding the foregoing, any Indemnified Parties may,
in their sole and absolute discretion, engage their own attorneys and other
professionals to defend or assist them, and, at the option of Indemnified
Parties, their attorneys shall control the resolution of claim or proceeding.
Upon demand, Grantor shall pay or, in the sole and absolute discretion of the
Indemnified Parties, reimburse, the Indemnified Parties for the payment of
reasonable fees and disbursements of attorneys, engineers, environmental
consultants, laboratories and other professionals in connection therewith.
Article - WAIVERS
Section . Waiver of Counterclaim. Grantor hereby waives the
right to assert a counterclaim, other than a mandatory or compulsory
counterclaim, in any action or proceeding brought against it by Beneficiary
arising out of or in any way connected with this Security Instrument, the
Guaranty, any of the Other Security Documents, or the Obligations.
Section . Marshalling and Other Matters. Grantor hereby
waives, to the extent permitted by law, the benefit of all appraisement,
valuation, stay, extension, reinstatement and redemption laws now or hereafter
in force and all rights of marshalling in the event of any sale hereunder of the
Property or any part thereof or any interest therein. Further, Grantor hereby
expressly waives any and all rights of redemption from sale under any order or
decree of foreclosure of this Security Instrument on behalf of Grantor, and on
behalf of each and every person acquiring any interest in or title to the
Property subsequent to the date of this Security Instrument and on behalf of all
persons to the extent permitted by Applicable Law.
Section . Waiver of Notice. To the extent permitted by
Applicable Law, Grantor shall not be entitled to any notices of any nature
whatsoever from Beneficiary except with respect to matters for which this
Security Instrument specifically and expressly provides for the giving of notice
by Trustee or Beneficiary to Grantor and except with respect to matters for
which Trustee or Beneficiary is required by Applicable Law to give notice, and
Grantor hereby expressly waives the right to receive any notice from Trustee or
Beneficiary with respect to any matter for which this Security Instrument does
not specifically and expressly provide for the giving of notice by Trustee or
Beneficiary to Grantor.
Section . Waiver of Statute of Limitations. Grantor hereby
expressly waives and releases to the fullest extent permitted by law, the
pleading of any statute of limitations as a defense to payment of the Debt or
performance of its Other Obligations.
Section . Sole Discretion of Beneficiary. Wherever pursuant
to this Security Instrument (a) Beneficiary exercises any right given to it to
approve or disapprove, (b) any arrangement or term is to be satisfactory to
Beneficiary, or (c) any other decision or determination is to be made by
Beneficiary, the decision of Beneficiary to approve or disapprove all decisions
that arrangements or terms are satisfactory or not satisfactory, and all other
decisions and determinations made by Beneficiary, shall be in the sole and
absolute discretion of Beneficiary and shall be final and conclusive, except as
may be otherwise expressly and specifically provided herein.
Section . Survival. Except as hereinafter specifically set
forth below, the representations and warranties, covenants, and other
obligations arising under Article 12 shall in no way be impaired by: any
satisfaction or other termination of this Security Instrument, any assignment or
other transfer of all or any portion of this Security Instrument or
Beneficiary's interest in the Property (but, in such case, shall benefit both
Indemnified Parties and any assignee or transferee), any exercise of
Beneficiary's rights and remedies pursuant hereto including, but not limited to
foreclosure or acceptance of a deed in lieu of foreclosure, any exercise of any
rights and remedies pursuant to the Guaranty or any of the Other Security
Documents, any transfer of all or any portion of the Property (whether by
Grantor or by Beneficiary, following foreclosure or acceptance of a deed in lieu
of foreclosure or at any other time), any amendment to this Security Instrument,
the Guaranty or the Other Security Documents, and any act or omission that might
otherwise be construed as a release or discharge of Grantor from the obligations
pursuant hereto. All obligations and liabilities of Grantor under Article 12
shall cease and terminate on the first (1st) anniversary of the date of payment
to Beneficiary in cash of the entire Debt, provided that contemporaneously with
or subsequent to such payment, Grantor, at its sole cost and expense, delivers
to Beneficiary an environmental audit of the Property in form and substance, and
prepared by a qualified environmental consultant, reasonably satisfactory in all
respects to Beneficiary and indicating the Property is in full compliance with
all applicable Environmental Laws.
Section . Waiver of Trial By Jury. Grantor HEREBY WAIVES, TO THE
FULLEST EXTENT PERMITTED BY LAW, THE RIGHT TO TRIAL BY JURY IN ANY ACTION,
PROCEEDING OR COUNTERCLAIM, WHETHER IN CONTRACT, TORT OR OTHERWISE, RELATING
DIRECTLY OR INDIRECTLY TO THE LOAN EVIDENCED BY THE Guaranty, THE APPLICATION
FOR THE LOAN EVIDENCED BY THE Guaranty, THE Guaranty, THIS SECURITY INSTRUMENT
OR THE OTHER SECURITY DOCUMENTS OR ANY ACTS OR OMISSIONS OF Beneficiary, ITS
OFFICERS, EMPLOYEES, DIRECTORS OR AGENTS IN CONNECTION THEREWITH.
Article - EXCULPATION
Section . Exculpation. Notwithstanding anything to the
contrary contained in this Security Instrument or in any Other Security Document
(but subject to the provisions of Sections 15.2, 15.3, 15.4 and 15.5),
Beneficiary shall not enforce the liability and obligation of Grantor to perform
and observe the obligations contained in the Guaranty or this Security
Instrument by any action or proceeding to collect damages or wherein a money
judgment or any deficiency judgment or order or any judgment establishing any
personal obligation or liability shall be sought against Grantor or any
principal director, officer, employee, beneficiary, shareholder, partner,
member, trustee, agent or affiliate of Grantor or any person owning, directly or
indirectly, any legal or beneficial interest in Grantor, or any successors or
assigns of any of the foregoing (collectively, the "Exculpated Parties").
Beneficiary or Trustee may bring a foreclosure action, action for specific
performance or other appropriate action or proceeding to enable Beneficiary to
enforce and realize upon this Security Instrument, the Other Security Documents,
and the interest in the Property, the Rents and any other collateral given to
Beneficiary created by this Security Instrument and the Other Security
Documents; provided, however, subject to the provisions of Sections 15.2, 15.3,
15.4 and 15.5, that any judgment in any action or proceeding shall be
enforceable against Grantor only to the extent of Grantor's interest in the
Property, in the Rents and in any other collateral given to Beneficiary in
connection with the Guaranty. Beneficiary, by accepting the Guaranty and this
Security Instrument, agrees that it shall not, except as otherwise provided
below, xxx for or demand any deficiency judgment against Grantor or any of the
Exculpated Parties in any action or proceeding, under or by reason of or under
or in connection with the Guaranty, the Other Security Documents or this
Security Instrument.
Section . Reservation of Certain Rights. The provisions of
Section 15.1 shall not (a) constitute a waiver, release or impairment of the
Obligations; (b) impair the right of Beneficiary to name Grantor as a party
defendant in any action or suit for judicial foreclosure and sale under this
Security Instrument; (c) affect the validity or enforceability of any indemnity,
guaranty, master lease or similar instrument made in connection with the
Guaranty, this Security Instrument, or the Other Security Documents; (d) impair
the ability of Beneficiary or Trustee to obtain the appointment of a receiver;
or (e) impair the enforcement of the Assignment of Leases and Rents executed in
connection herewith.
Section . Exceptions to Exculpation. Notwithstanding the
provisions of Article 15.1 to the contrary, Grantor and Indemnitor shall be
personally liable to Beneficiary on a joint and several basis for the Losses
Beneficiary incurs due to: (a) fraud or intentional misrepresentation by Grantor
or any other person or entity in connection with the execution and the delivery
of the Guaranty, this Security Instrument or the Other Security Documents; (b)
Grantor's misapplication or misappropriation of Rents received by Grantor after
the occurrence and during the continuance of an Event of Default; (c) Grantor's
misapplication or misappropriation of tenant security deposits or Rents
collected in advance; (d) the misapplication or misappropriation of insurance
proceeds or condemnation awards after the occurrence and during the continuance
of an Event of Default; (e) any fees or commissions paid by Grantor after the
occurrence and during the continuance of an Event of Default to any principal,
affiliate or general partner of Grantor, Indemnitor or Guarantor in violation of
the terms of the Guaranty, this Security Instrument or the Other Security
Documents; (f) gross negligence or criminal acts perpetrated by it resulting in
forfeiture, seizure or loss of any portion of the security; (g) any failure by
Grantor or Indemnitor to comply with the terms and provisions of Section 13.4
hereof or of the Environmental Indemnity; (h) any failure by Grantor or any
general partner or the SPE Member of Grantor to comply with the terms and
provisions of Section 4.3 hereof; or (i) any sale, conveyance, mortgage, grant,
bargain, encumbrance, pledge, assignment or transfer of the Property or any part
thereof, within the meaning of Article 8 hereof, without the prior written
consent of Beneficiary.
Section . Recourse. Notwithstanding the foregoing, the
agreement of Beneficiary not to pursue recourse liability as set forth in
Section 15.1 above SHALL BECOME NULL AND VOID and shall be of no further force
and effect in the event (i) Grantor fails to comply with the terms and
conditions of Section 4.3, 8.1, 8.2 or 8.3, (ii) the Property or any part
thereof shall become an asset in (A) a voluntary bankruptcy or insolvency
proceeding, or (B) an involuntary bankruptcy or insolvency proceeding commenced
by any Person (other than Beneficiary) and Grantor fails to use its best efforts
to obtain a dismissal of such proceedings, or (iii) Grantor or any Guarantor or
Indemnitor fails to comply with the terms and provisions of Section 3.11 hereof
within thirty (30) days after written notice from Beneficiary to Grantor (which
notice shall be a second notice given after the expiration of any notice given
pursuant to Section 10.1(e)); provided, however, so long as PREIT Associates,
L.P., a Delaware limited partnership, maintains that certain line of credit with
First Union National Bank, as agent, pursuant to that certain Revolving Credit
Loan Agreement with Corestates Bank, N.A.(predecessor-in-interest to First Union
National Bank), as agent, and First Trust Savings Bank, Fleet Bank, N.A. and PNC
Bank, as lenders, dated September 30, 1997 (or another credit arrangement
containing market standard financial covenants for net worth, leverage and
liquidity), the occurrence of any of the events referred to in subsections
(i)-(iii) above shall not create recourse liability against Grantor or any
Guarantor or Indemnitor.
Section . Bankruptcy Claims. Nothing herein shall be deemed
to be a waiver of any right which Beneficiary may have under Sections 506(a),
506(b), 1111(b) or any other provisions of the U.S. Bankruptcy Code to file a
claim for the full amount of the Debt secured by this Security Instrument or to
require that all collateral shall continue to secure all of the Debt owing to
Beneficiary in accordance with the Guaranty, this Security Instrument and the
Other Security Documents.
Article - NOTICES
Section . Notices. All notices or other written
communications hereunder shall be deemed to have been properly given (a) upon
delivery, if delivered in person or by facsimile transmission with receipt
acknowledged by the recipient thereof, (b) one (1) Business Day (defined below)
after having been deposited for overnight delivery with any reputable overnight
courier service, or (c) three (3) Business Days after having been deposited in
any post office or mail depository regularly maintained by the U.S. Postal
Service and sent by registered or certified mail, postage prepaid, return
receipt requested, addressed as follows:
If to Grantor: PR MARYLANDER LLC
c/o PREIT-XXXXX
Attn: Xxxxxxx X. Xxxx
The Bellevue, Suite 300
000 Xxxxx Xxxxx Xxxxxx
Xxxxxxxxxxxx, XX 00000
Fax: (000) 000-0000
If to Beneficiary: GMAC Commercial Mortgage Corporation
000 Xxxxxxx Xxxx
Xxxxxxx, Xxxxxxxxxxxx 00000-0000
Attention: Executive Vice President,
Commercial Loan Servicing
Facsimile No. (000) 000-0000
With a copy to: Commercial Capital Initiatives, Inc.
Wall Street Plaza
00 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Manager - Loan Administration
Facsimile No. (000) 000-0000
and
Xxxxx Cummis Radin Tischman Xxxxxxx & Xxxxx, P.A.
Xxx Xxxxxxxxxx Xxxxx
Xxxxxx, Xxx Xxxxxx 00000-0000
Attention: Xxxxxx Xxxxxxxxx, Esq.
Facsimile No. (000) 000-0000
If to Trustee: Xxxxxx X. Xxxxxxxxx
Commonwealth Land Title Insurance Company
00 Xxxxx Xxxxxx, Xxxxx 000
Xxxxxxxxx, Xxxxxxxx 00000
Facsimile No. (410)
or addressed as such party may from time to time designate by written notice to
the other parties.
Either party by notice to the other may designate additional
or different addresses for subsequent notices or communications.
For purposes of this Subsection, "Business Day" shall mean a
day on which commercial banks are not authorized or required by law to close in
the State of New York.
Article - APPLICABLE LAW
Section . Choice of Law. THIS SECURITY INSTRUMENT SHALL BE
GOVERNED, CONSTRUED, APPLIED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE
STATE WHERE THE LAND IS LOCATED AND THE APPLICABLE LAWS OF THE UNITED STATES OF
AMERICA.
Section . Usury Laws. This Security Instrument and the
Guaranty are subject to the express condition that at no time shall Grantor be
obligated or required to pay interest on the Debt at a rate which could subject
the holder of the Guaranty to either civil or criminal liability as a result of
being in excess of the maximum interest rate which Grantor is permitted by
applicable law to contract or agree to pay. If by the terms of this Security
Instrument or the Guaranty, Grantor is at any time required or obligated to pay
interest on the Debt at a rate in excess of such maximum rate, the rate of
interest under the Security Instrument and the Guaranty shall be deemed to be
immediately reduced to such maximum rate and the interest payable shall be
computed at such maximum rate and all prior interest payments in excess of such
maximum rate shall be applied and shall be deemed to have been payments in
reduction of the principal balance of the Guaranty. All sums paid or agreed to
be paid to Beneficiary for the use, forbearance, or detention of the Debt shall,
to the extent permitted by applicable law, be amortized, prorated, allocated,
and spread throughout the full stated term of the Guaranty until payment in full
so that the rate or amount of interest on account of the Debt does not exceed
the maximum lawful rate of interest from time to time in effect and applicable
to the Debt for so long as the Debt is outstanding.
Section . Provisions Subject to Applicable Law. All rights,
powers and remedies provided in this Security Instrument may be exercised only
to the extent that the exercise thereof does not violate any applicable
provisions of law and are intended to be limited to the extent necessary so that
they will not render this Security Instrument invalid, unenforceable or not
entitled to be recorded, registered or filed under the provisions of any
Applicable Law.
Section . Inapplicable Provision. If any term of this
Security Instrument or any application thereof shall be invalid or
unenforceable, the remainder of this Security Instrument and any other
application of the term shall not be affected thereby.
Article - SECONDARY MARKET
Section . Dissemination of Information. If Beneficiary
determines at any time to sell, transfer or assign the Guaranty, this Security
Instrument and the Other Security Documents, and any or all servicing rights
with respect thereto, or to grant participations therein (the "Participations")
or issue mortgage pass-through certificates or other securities (such sale
and/or issuance, the "Securitization") evidencing a beneficial interest in a
rated or unrated public offering or private placement (the "Securities"),
Beneficiary may forward to each purchaser, transferee, assignee, servicer,
participant, investor, or their respective successors in such Participations
and/or Securities (collectively, the "Investor") or any Rating Agency rating
such Securities and each prospective Investor, all documents and information
which Beneficiary now has or may hereafter acquire relating to the Debt and to
Grantor, any Guarantor, any Indemnitors and the Property (including, without
limitation, all financial statements), which shall have been furnished by
Grantor, any Guarantor or any Indemnitors, as Beneficiary determines necessary
or desirable. Grantor, any Guarantor and any Indemnitor agree to cooperate with
Beneficiary in connection with any transfer made or any Securities created
pursuant to this Section, including, without limitation, the delivery of an
estoppel certificate required in accordance with Subsection 7.4(c) hereof and
such other documents as may be reasonably requested by Beneficiary and, upon
Beneficiary's reasonable request, meeting with any Rating Agency for due
diligence purposes. Grantor shall also furnish and Grantor, any Guarantor and
any Indemnitor consent to Beneficiary furnishing to such Investors or such
prospective Investors or any Rating Agency any and all information concerning
the Property, the Leases, the financial condition of Grantor, any Guarantor and
any Indemnitor as may be requested by Beneficiary, any Investor or any
prospective Investor or Rating Agency in connection with any sale, transfer or
Participation, provided, however, PREIT Associates, L.P. and Pennsylvania Real
Estate Investment Trust shall only be required under this Section 18.1 to
disclose information that is deemed to be "public" information. Grantor shall
not be responsible for Beneficiary's fees and expenses incurred in connection
with the transactions contemplated by this Section 18.1. Beneficiary shall
reimburse Grantor for the reasonable actual out-of-pocket third party costs
incurred by Grantor in excess of $1,500.00 in connection with the transactions
contemplated by this Section 18.1. Grantor shall deliver on the date hereof, at
Grantor's sole cost and expense, a nonconsolidation opinion, and within ten (10)
Business Days after demand of Beneficiary, an update of same (which update
Grantor will not be required to provide more than once), each in form and
substance and delivered by counsel acceptable to Beneficiary and the Rating
Agency rating or proposed to rate the Securities, as may be required by
Beneficiary and/or such Rating Agency. Grantor's failure to deliver the opinions
required hereby shall constitute an Event of Default hereunder.
Article - COSTS
Section . Performance at Grantor's Expense. Grantor
acknowledges and confirms that Beneficiary shall impose certain administrative
processing and/or commitment fees in connection with (a) the extension, renewal,
modification, amendment and termination of its loans, (b) the release or
substitution of collateral therefor (provided, however, no commitment fee shall
be imposed in connection with the substitution of collateral), (c) obtaining
certain consents, waivers and approvals with respect to the Property, or (d) the
review of any Lease or proposed Lease or the preparation or review of any
subordination, non-disturbance agreement (the occurrence of any of the above
shall be called an "Event"). Grantor further acknowledges and confirms that it
shall be responsible for the payment of all costs of reappraisal of the Property
or any part thereof, whether required by law, regulation, Beneficiary or any
governmental or quasi-governmental authority. Grantor hereby acknowledges and
agrees to pay, immediately, with or without demand, all such fees (as the same
may be increased or decreased from time to time), and any additional fees of a
similar type or nature which may be imposed by Beneficiary from time to time,
upon the occurrence of any Event or otherwise. Wherever it is provided for
herein that Grantor pay any costs and expenses, such costs and expenses shall
include, but not be limited to, all legal fees and disbursements of Beneficiary
(whether of retained firms, the reimbursement for the expenses of in-house staff
or otherwise) and all costs and expenses of Beneficiary, if any.
Section . Attorney's Fees for Enforcement. (a) Grantor shall
pay all legal fees incurred by Beneficiary in connection with (i) the
preparation of the Guaranty, this Security Instrument and the Other Security
Documents; and (ii) the items set forth in Section 19.1 above, and (b) Grantor
shall pay to Beneficiary on demand any and all expenses, including legal
expenses and attorneys' fees, incurred or paid by Beneficiary in protecting its
interest in the Property or the Collateral or in collecting any amount payable
hereunder or in enforcing its rights hereunder with respect to the Property or
the Collateral, whether or not any legal proceeding is commenced hereunder or
thereunder and whether or not any default or Event of Default shall have
occurred and is continuing, together with interest thereon at the Default Rate
from the date paid or incurred by Beneficiary until such expenses are paid by
Grantor.
Article - DEFINITIONS
Section . General Definitions. Unless the context clearly
indicates a contrary intent or unless otherwise specifically provided herein,
words used in this Security Instrument may be used interchangeably in singular
or plural form and the word "Grantor" shall mean "each Grantor and any
subsequent owner or owners of the Property or any part thereof or any interest
therein," the word "Beneficiary" shall mean "Beneficiary and any subsequent
holder of the Guaranty," the word "Guaranty" shall mean "the Guaranty and any
other evidence of indebtedness secured by this Security Instrument," the word
"person" shall include an individual, corporation, limited liability company,
partnership, trust, unincorporated association, government, governmental
authority, and any other entity, the word "Property" shall include any portion
of the Property and any interest therein, the word "Trustee" shall mean "Trustee
and its successors and assigns", and the phrases "attorneys' fees" and "counsel
fees" shall include any and all attorneys', paralegal and law clerk fees and
disbursements, including, but not limited to fees and disbursements at the
pre-trial, trial and appellate levels incurred or paid by Beneficiary in
protecting its interest in the Property, the Leases and the Rents and enforcing
its rights under this Security Instrument.
Section . Headings, Etc. The headings and captions of
various Sections of this Security Instrument are for convenience of reference
only and are not to be construed as defining or limiting, in any way, the scope
or intent of the provisions hereof.
Article - MISCELLANEOUS PROVISIONS
Section . No Oral Change. This Security Instrument, and any
provisions hereof, may not be modified, amended, waived, extended, changed,
discharged or terminated orally or by any act or failure to act on the part of
Grantor, or Beneficiary, but only by an agreement in writing signed by the party
against whom enforcement of any modification, amendment, waiver, extension,
change, discharge or termination is sought.
Section . Liability. If Grantor consists of more than one
person, the obligations and liabilities of each such person hereunder shall be
joint and several. This Security Instrument shall be binding upon and inure to
the benefit of Grantor and Beneficiary and their respective successors and
assigns forever.
Section . Duplicate Originals; Counterparts. This Security
Instrument may be executed in any number of duplicate originals and each
duplicate original shall be deemed to be an original. This Security Instrument
may be executed in several counterparts, each of which counterparts shall be
deemed an original instrument and all of which together shall constitute a
single Security Instrument.
Section . Number and Gender. Whenever the context may
require, any pronouns used herein shall include the corresponding masculine,
feminine or neuter forms, and the singular form of nouns and pronouns shall
include the plural and vice versa.
Section . Subrogation. If any or all of the proceeds of the
Guaranty have been used to extinguish, extend or renew any indebtedness
heretofore existing against the Property, then, to the extent of the funds so
used, Beneficiary shall be subrogated to all of the rights, claims, liens,
titles, and interests existing against the Property heretofore held by, or in
favor of, the holder of such indebtedness and such former rights, claims, liens,
titles, and interests, if any, are not waived but rather are continued in full
force and effect in favor of Beneficiary and are merged with the lien and
security interest created herein as cumulative security for the repayment of the
Debt, the performance and discharge of Grantor's obligations hereunder, under
the Guaranty and the Other Security Documents and the performance and discharge
of the Other Obligations.
Section . Entire Agreement. The Guaranty, this Security
Instrument and the Other Security Documents constitute the entire understanding
and agreement between Grantor and Beneficiary with respect to the transactions
arising in connection with the Debt and supersede all prior written or oral
understandings and agreements between Grantor and Beneficiary with respect
thereto. Grantor hereby acknowledges that, except as incorporated in writing in
the Guaranty, this Security Instrument and the Other Security Documents, there
are not, and were not, and no persons are or were authorized by Beneficiary to
make, any representations, understandings, stipulations, agreements or promises,
oral or written, with respect to the transaction which is the subject of the
Guaranty, this Security Instrument and the Other Security Documents.
Article - TRUSTEE PROVISIONS
Section . The Trustee. () It shall be no part of the duty of
Trustee to see to any recording, filing or registration of this Security
Instrument or any other instrument in addition or supplemental hereto, or to
give any notice thereof, or to see to the payment of or be under any duty in
respect of any Tax or assessment or other governmental charge which may be
levied or assessed on the Property, or any part thereof, or against Grantor, or
to see to the performance or observance by Grantor of any of the covenants and
agreements contained herein. Trustee shall not be responsible for the execution,
acknowledgment or validity of this Security Instrument or of any instrument in
addition or supplemental hereto or for the sufficiency of the security purported
to be created hereby, and makes no representation in respect thereof or in
respect of the rights of Beneficiary. Trustee shall have the right to advice of
counsel upon any matters arising hereunder and shall be fully protected in
relying as to legal matters on the advice of counsel. Trustee shall not incur
any personal liability hereunder except for his own gross negligence or willful
misconduct and Trustee shall have the right to rely on any instrument, document
or signature authorizing or supporting any action taken or proposed to be taken
by Trustee hereunder and believed by Trustee in good faith to be genuine.
() Trustee may resign by an instrument in writing addressed
to Beneficiary, or Trustee may be removed at any time with or without cause by
an instrument in writing executed by Beneficiary. In case of the death,
resignation, removal or disqualification of Trustee, or if for any reason
Beneficiary shall deem it desirable to appoint a substitute or successor trustee
to act instead of the herein named trustee or any substitute or successor
trustee, then Beneficiary shall have the right and is hereby authorized and
empowered to appoint a successor trustee, or a substitute trustee, without other
formality than appointment and designation in writing executed by Beneficiary,
which substituted trustee may be Beneficiary or an affiliate of Beneficiary, and
the authority hereby conferred shall extend to the appointment of other
successor and substitute trustees successively until the Obligations secured
hereby have been performed and paid in full, or until the Property is fully and
finally sold hereunder. Such appointment and designation by Beneficiary shall be
full evidence of the right and authority to make the same and of all facts
therein recited. If Beneficiary is a corporation or association and such
appointment is executed in its behalf by an officer of such corporation or
association, such appointment shall be conclusively presumed to be executed with
authority and shall be valid and sufficient without proof of any action by the
board of directors or any superior officer of the corporation or association.
Upon the making of any such appointment and designation, all of the estate and
title of Trustee in the Property shall vest in the named successor or substitute
Trustee, and he shall thereupon succeed to and shall hold, possess and execute
all of the rights, powers, privileges, immunities and duties herein conferred
upon Trustee; but, nevertheless, upon the written request of Beneficiary or of
the successor or substitute Trustee, the trustee ceasing to act shall execute
and deliver an instrument transferring to such successor or substitute Trustee
all of the estate and title in the Property of the trustee so ceasing to act,
together with all the rights, powers, privileges, immunities and duties herein
conferred upon the Trustee, and shall duly assign, transfer and deliver any of
the properties and moneys held by said trustee hereunder to said successor or
substitute Trustee. All references herein to "Trustee" shall be deemed to refer
to Trustee (including any successor or substitute appointed and designated as
herein provided) from time to time acting hereunder.
() Trustee shall not be liable for any error of judgement or
act done by Trustee in good faith, or be otherwise responsible or accountable
under any circumstances whatsoever (including Trustee's negligence), except for
Trustee's gross negligence or willful misconduct. Trustee shall have the right
to rely on any instrument, document or signature authorizing or supporting any
action taken or proposed to be taken by him hereunder, believed by him in good
faith to be genuine. All moneys received by Trustee shall, until used or applied
as herein provided, be held in trust for the purposes for which they were
received, but need not be segregated in any manner from any other moneys (except
to the extent required by law), and Trustee shall be under no liability for
interest on any moneys received by him hereunder. Grantor hereby ratifies and
confirms any and all acts which the herein-named Trustee or his successor or
successors, substitute or substitutes, in this trust, shall do lawfully by
virtue hereof. Grantor will reimburse Trustee for, and save him harmless
against, any and all liability and expenses which may be incurred by him in the
performance of his duties. The foregoing indemnity shall not terminate upon
discharge of the obligations secured hereby or foreclosure, or release or other
termination, of this Security Instrument.
() Except as otherwise provided in the Loan Documents,
Grantor shall indemnify, defend and hold Trustee and Beneficiary, individually
and collectively, harmless against any and all losses, claims, demands,
liabilities, costs and/or expenses (including reasonable attorneys' fees) which
either may incur, in the execution of the trusts created hereunder, or in the
performance of any act or obligation required or permitted hereunder or by law
or otherwise arising out of or in connection with the Loan Documents, except to
the extent any of the foregoing results solely from the active gross negligence
or willful misconduct of such indemnified party. All of Trustee's expenses,
including reasonable attorneys' fees, shall be borne by Grantor.
[The remainder of this page intentionally left blank]
IN WITNESS WHEREOF, THIS SECURITY INSTRUMENT has been
executed by Grantor as of the date first above written.
Grantor:
PR MARYLANDER LLC,
a Delaware limited liability company
By: PR Marylander Manager LLC
By: /s/ Xxxxxxx X. Xxxx
----------------------------
Name: Xxxxxxx X. Xxxx
----------------------------
Title: Authorized Signatory
EXHIBIT A
(Description of Land)
ALL of that certain lot, piece or parcel of land, with the
buildings and improvements thereon, situate, lying and being
EXHIBIT B
(Local Law Provisions)
