THIS MORTGAGE AND SECURITY AGREEMENT (the "Security Instrument") is
made as of June 1, 2002, by Polymer Research Corporation of America, a New York
corporation, whose address is 0000 Xxxx Xxxxxx, Xxxxxxxx, Xxx Xxxx 00000, as
mortgagor ("Borrower") to Bayview Financial Trading Group, L.P., a Delaware
limited partnership, whose address is 0000 Xxxxx Xxxxxxxx Xxxxx, Xxx. 000,
Xxxxx, Xxxxxxx 00000, as mortgagee ("Lender").
RECITALS:
Borrower, by its Promissory Note of even date herewith given to Lender, is
indebted to Lender in the principal sum of One Million Four Hundred Thousand and
No/100 Dollars ($1,400,000.00) in lawful money of the United States of America
(the Note together with all extensions, renewals, modifications, substitutions
and amendments thereof shall collectively be referred to as the "Note"), with
interest from the date thereof at the rates set forth in the Note, principal and
interest to be payable in accordance with the terms and conditions provided in
the Note and with a maturity date of June 1, 2017.
By its execution hereof, Borrower desires to secure the payment of the Debt
(hereinafter defined) and the performance of all of its obligations under the
Note and the Other Obligations (hereinafter defined) and any and all other
indebtedness now or hereafter owing by Borrower to Lender.
ARTICLE 1. - GRANTS OF SECURITY
Section 1.1. PROPERTY MORTGAGED. Borrower does hereby irrevocably mortgage,
grant, bargain, sell, pledge, assign, warrant, transfer and convey to Lender
with mortgage covenants upon the Statutory Condition and, as provided and/or
authorized by applicable law, with the STATUTORY POWER OF SALE, and grant a
security interest to Lender in, the following property, rights, interests and
estates now owned, or hereafter acquired by Borrower to the fullest extent
permitted by applicable law (collectively, the "Property"):
(a) LAND. The real property described in EXHIBIT "A" attached hereto
and made a part hereof (the "Land");
(b) ADDITIONAL LAND. All xxxxxxxxxx xxxxx, xxxxxxx and development
rights hereafter acquired by Borrower for use in connection with the Land and
the development of the Land and all additional lands and estates therein which
may, from time to time, by supplemental mortgage or otherwise be expressly made
subject to the lien of this Security Instrument;
(c) IMPROVEMENTS. The buildings, structures, fixtures, additions,
enlargements, extensions, modifications, repairs, replacements and improvements
now or hereafter erected or located on the Land (the "Improvements");
(d) EASEMENTS. All easements, servitudes, 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, courtesy and rights of
courtesy, property, possession, claim and demand whatsoever, both at law and in
equity, of Borrower of, in and to the Land and the Improvements and every part
and parcel thereof, with the appurtenances thereto;
(e) FIXTURES AND PERSONAL PROPERTY. All machinery, equipment, fixtures
(including, but not limited to, all heating, air conditioning, plumbing,
lighting, communications and elevator fixtures) trade fixtures and other
property of every kind and nature whatsoever owned by Borrower, or in which
Borrower has or shall have an interest, including without limitation, letter of
credit rights, deposit accounts, payment intangibles, investment property,
electronic chattel paper, timber to be cut and farm animals and, now or
hereafter located upon the Land and the Improvements, or appurtenant thereto,
and usable 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 Borrower, or in which Borrower has or shall
have an interest, now or hereafter located upon the Land and the Improvements,
or appurtenant thereto, or usable 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 Borrower 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 all of the above;
(f) LEASES AND RENTS. All leases, subleases and other agreements
affecting the use, enjoyment or occupancy of the Land and/or the Improvements
heretofore or hereafter entered into and all extensions, amendments and
modifications thereto, whether before or after the filing by or against Borrower
of any petition for relief under Creditors Rights Laws (hereinafter defined)
(the "Leases") and all right, title and interest of Borrower, its successors and
assigns therein and thereunder, including, without limitation, any guaranties of
the lessees' obligations thereunder, cash or securities deposited thereunder to
secure the performance by the lessees of their obligations thereunder and all
rents, additional rents, revenues, room revenues, accounts, accounts receivable,
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 Borrower of any petition for relief under the
Creditors Rights Laws (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;
(g) 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;
(h) 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;
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(i) 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;
(j) 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;
(k) RIGHTS. The right, in the name and on behalf of Borrower, to appear
in and defend any action or proceeding brought with respect to the Property and
to commence any action or proceeding to protect the interest of Lender in the
Property;
(l) 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 Borrower therein and thereunder, including, without
limitation, the right, upon the occurrence and during the continuance of an
Event of Default (hereinafter defined), to receive and collect any sums payable
to Borrower thereunder;
(m) INTANGIBLES. All trade names, trademarks, servicemarks, logos,
copyrights, goodwill, books and records and all other intellectual property
rights and general intangibles relating to or used in connection with the
operation of the Property; and
(n) OTHER RIGHTS. Any and all other rights of Borrower in and to the
items set forth in Subsections (a) through (m) above.
Section 1.2. ASSIGNMENT OF LEASES AND RENTS. Borrower hereby absolutely and
unconditionally assigns to Lender Borrower's right, title and interest in and to
all current and future Leases and Rents; it being intended by Borrower that this
assignment constitutes a present, absolute assignment and not an assignment for
additional security only. Notwithstanding the foregoing, Lender grants to
Borrower a revocable license to collect and receive the Rents. Borrower shall
hold a portion of the Rents sufficient to discharge all current sums due on the
Debt, for use in the payment of such sums.
Section 1.3. 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
Borrower in the Property. By executing and delivering this Security Instrument,
Borrower hereby grants to Lender, as security for the Obligations (hereinafter
defined), a security interest in the Personal Property as well as all other
property and interests set forth in Section 1.1 herein to the full extent that
the same may be subject to the Uniform Commercial Code. If required by Lender,
Borrower shall execute UCC-1 Financing Statements covering said property for
filing with the appropriate county and/or state filing offices. In any event,
Lender is permitted to unilaterally file a UCC-1 Financing Statement covering
all of the Property.
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Section 1.4. PLEDGE OF MONIES HELD. Borrower hereby pledges to and grants a
continuing security interest in favor of Lender any and all monies now or
hereafter held by Lender, including, without limitation, any sums deposited in
the Escrow Fund (hereinafter defined), Net Proceeds (hereinafter defined) and
condemnation awards or payments (hereinafter described) 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 to the use and
benefit of Lender, and the successors and assigns of Lender, forever;
PROVIDED, HOWEVER, these presents are upon the express condition that, if
Borrower shall well and truly pay to Lender the Debt at the time and in the
manner provided in the Note and this Security Instrument, shall perform the
Other Obligations as set forth in this Security Instrument and shall abide by
and comply with each and every covenant and condition set forth herein and in
the Note, these presents and the estate hereby granted shall cease, terminate
and be void, except to the extent any provision herein provides that it shall
survive the repayment of the obligations.
ARTICLE 2. - DEBT AND OBLIGATIONS SECURED
Section 2.1. DEBT. This Security Instrument and the grants, assignments and
transfers made pursuant to the terms hereafter are given for the purpose of
securing the payment of the following, in such order of priority as Lender may
determine in its sole discretion (the "Debt"):
(a) the indebtedness evidenced by the Note in lawful money of the
United States of America;
(b) interest, default interest, late charges and other sums, as
provided in the Note, this Security Instrument or the Other Security Documents
(hereinafter defined);
(c) the Prepayment Consideration (defined in the Note), if any;
(d) all other monies agreed or provided to be paid by Borrower in the
Note, this Security Instrument or the Other Security Documents (hereinafter
defined);
(e) all sums advanced pursuant to this Security Instrument to protect
and preserve the Property and the lien and the security interest created hereby;
and
(f) all sums advanced and costs and expenses incurred by Lender in
connection with the Debt or any part thereof, any renewal, extension, or change
of or substitution for the Debt or any part thereof, or the acquisition or
perfection of the security therefor, whether made or incurred at the request of
Borrower or Lender; and
(g) any and all additional advances made by Lender to complete
Improvements or to preserve or protect the Property, or for taxes, assessments
or insurance premiums, or for the performance of any of Borrower's obligations
hereunder or under the Other Security Documents (hereinafter defined).
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Section 2.2. OTHER OBLIGATIONS. This Security Instrument and the grants,
assignments and transfers made pursuant to the terms hereof are also given for
the purpose of securing the performance of the following (the "Other
Obligations"):
(a) all other obligations of Borrower contained herein;
(b) each obligation of Borrower contained in the Note and in the Other
Security Documents; and
(c) each obligation of Borrower contained in any renewal, extension,
amendment, modification, consolidation, change of, or substitution or
replacement for, all or any part of the Note, this Security Instrument or the
Other Security Documents.
(d) any and all other indebtedness now or hereafter owing by Borrower
to Lender.
Section 2.3. DEBT AND OTHER OBLIGATIONS. Borrower's obligations for the payment
of the Debt and the performance of the Other Obligations shall be referred to
collectively as the "Obligations."
Section 2.4. PAYMENTS. Unless payments are made in the required amount in
immediately available funds at the place where the Note is payable, remittances
in payment of all or any part of the Debt shall not, regardless of any receipt
or credit issued therefor, constitute payment until the required amount is
actually received by Lender in funds immediately available at the place where
the Note is payable (or any other place as Lender, in Lender's sole discretion,
may have established by delivery of written notice thereof to Borrower) and
shall be made and accepted subject to the condition that any check or draft may
be handled for collection in accordance with the practice of the collecting bank
or banks; provided, however, Lender shall not be required to accept payment for
any Obligation in cash. Acceptance by Lender of any payment in an amount less
than the amount then due shall be deemed an acceptance on account only, and the
failure to pay the entire amount then due shall be and continue to be an Event
of Default.
ARTICLE 3. - BORROWER COVENANTS
Borrower covenants and agrees that:
Section 3.1. PAYMENT OF DEBT AND PERFORMANCE OF OBLIGATIONS. Borrower will pay
the Debt at the time and in the manner provided in the Note and in this Security
Instrument without relief from valuation or appraisement laws, and shall
promptly and fully perform all of the Obligations in this Security Agreement and
the Other Security Documents (hereinafter defined).
Section 3.2. INCORPORATION BY REFERENCE. All the covenants, conditions and
agreements contained in (a) the Note and (b) all and any of the documents other
than the Note or this Security Instrument now or hereafter executed by Borrower
and/or others and by or in favor of Lender, which wholly or partially secure or
guaranty payment of the Note or are otherwise executed and delivered in
connection with the Loan (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.
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Section 3.3. INSURANCE.
(a) Borrower shall obtain and maintain, or cause to be maintained,
insurance for Borrower and the Property providing at least the following
coverages:
(i) PROPERTY INSURANCE. Insurance with respect to the
Improvements and Personal Property insuring against any peril now or
hereafter included within the classification "Special Perils" or "All
Risk" in amounts at all times sufficient to prevent Borrower from
becoming a co-insurer within the terms of the applicable policies on
an agreed amount basis and under applicable insurance law, but in any
event such insurance shall be maintained in an amount which, after
application of deductible, shall be equal to the full insurable value
of the Improvements and Personal Property, the term "full insurable
value" to mean the actual replacement cost of the Improvements and
Personal Property (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
Borrower and in no event less than the coverage required pursuant to
the terms of any Lease;
(ii) LIABILITY INSURANCE. Commercial general liability insurance
on the so-called "occurrence" form, including bodily injury, death and
property damage liability, insurance against any and all claims,
including all legal liability to the extent insurable and imposed upon
Lender 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 lenders for properties comparable
to the Property but in any event for a limit per occurrence of at
least $1,000,000 and an annual aggregate of at least $3,000,000;
(iii) WORKERS' COMPENSATION INSURANCE. Statutory workers'
compensation insurance with respect to any work on or about the
Property;
(iv) 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 twelve (12) months from the date of casualty or loss,
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 Borrower
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;
(v) 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 amounts as are generally
required by institutional lenders for properties comparable to the
Property;
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(vi) FLOOD INSURANCE. If required pursuant to the terms hereof,
flood insurance in an amount at least equal to the lesser of (a) the
principal balance of the Note, or (b) the maximum limit of coverage
available for the Property under the National Flood Insurance Act of
1968, The Flood Disaster Protection Act of 1973 and the National Flood
Insurance Reform Act of 1994, as each may be amended (the "Flood
Insurance Acts");
(vii) BUILDER'S RISK INSURANCE. At all times during which
structural construction, repairs or alterations are being made with
respect to the Improvements (A) owner's contingent or protective
liability insurance covering claims not covered by or under the terms
or provisions of the above mentioned commercial general liability
insurance policy; and (B) the insurance provided for in Subsection
3.3(a)(i) written in a so-called builder's risk completed value form
(1) on a non-reporting basis, (2) against all risks insured against
pursuant to Subsection 3.3(a)(i), (3) including permission to occupy
the Property, and (4) with an agreed amount endorsement waiving
co-insurance provisions; and
(viii) OTHER INSURANCE. Such other insurance with respect to the
Property against loss or damage of the kinds from time to time
customarily insured against and in such amounts as required by
institutional lenders for properties comparable to the Property.
(b) All insurance provided for herein shall be obtained under valid and
enforceable policies (the "Policies" or in the singular, the "Policy"), and
shall be issued by either the insurers who insure the Improvements on the date
of this Security Instrument or one or more other domestic primary insurer(s)
having a general policy rating of A or better and a financial class of VIII or
better by A.M. Best Company, Inc. (or if a rating of A.M. Best Company Inc. is
no longer available, a similar rating from a similar or successor service) (each
such insurer shall be referred to below as a "Qualified Insurer"). All insurers
providing insurance required by this Security Instrument shall be authorized and
admitted 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 Lender as an
additional insured and the Policies referred to in Subsection 3.3(a)(i), (iv),
(v), (vi) and (vii), and as applicable (viii), above shall provide that all
proceeds be payable to Lender. The Policies referred to in Subsections
3.3(a)(i), (v), (vi) and (vii) shall also contain: (i) a standard
"noncontributory mortgagee" endorsement or its equivalent relating, INTER ALIA.
to recovery by Lender notwithstanding the negligent or willful acts or omissions
of Borrower; (ii) a waiver of subrogation endorsement as to Lender; and (iii) an
endorsement providing for a deductible per loss of an amount not more than that
which is customarily maintained by prudent owners of similar properties in the
general vicinity of the Property, but in no event in excess OF $5,000. The
Policy referred to in Subsection 3.3(a)(i) above shall provide coverage for
contingent liability from Operation of Building Laws, Demolition Costs and
Increased Cost of Construction Endorsements, together with an "Ordinance or Law
Coverage" or "Enforcement" endorsement to the extent available in the
jurisdiction in which the Property is located. All Policies shall contain (i) a
provision that such Policies shall not be denied renewal, materially changed
(other than to increase the coverage provided), canceled or terminated, nor
shall they expire, without at least thirty (30) days' prior written notice to
Lender in each instance; and (ii) include effective waivers by the insurer of
all claims for applicable premiums ("Insurance Premiums") against any mortgagee,
loss payees, additional insureds and named insureds (other than Borrower).
Certificates of insurance with respect to all renewal and replacement Policies
shall be delivered to Lender not less than twenty (20) days prior to the
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expiration date of any of the Policies required to be maintained hereunder which
certificates shall bear notations evidencing payment of Insurance Premiums.
Originals or certificates of such replacement Policies shall be delivered to
Lender promptly after Borrower's receipt thereof but in any case within thirty
(30) days after the effective date thereof. If Borrower fails to maintain and
deliver to Lender the original Policies or certificates of insurance required by
this Security Instrument, upon ten (10) days' prior notice to Borrower, Lender
may procure such insurance at Borrower's sole cost and expense.
(c) Borrower 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 Borrower on or with respect to
any part of the Property.
(d) In the event of a foreclosure of the Security Instrument or other
transfer of title to the Property in extinguishment in whole or in part of the
Debt, all right, title and interest of Borrower in and to the Policies then in
force concerning the Property and all proceeds payable thereunder shall
thereupon vest in Lender or the purchaser at such foreclosure or other
transferee in the event of such other transfer of title.
Section 3.4. PAYMENT OF TAXES, ETC.
(a) Borrower shall promptly pay by the date same are initially payable
all taxes, assessments, impact fees, levies, inspection and license fees, water
rates, sewer rents and other governmental impositions, including, without
limitation, vault and meter 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") not paid from
the Escrow Fund (hereinafter defined), 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. Borrower will
deliver to Lender, receipts or other, evidence satisfactory to Lender that the
Taxes, Other Charges and utility service charges have been so paid or are not
then delinquent. Borrower 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 Lender in accordance with the
terms of this Security Instrument.
(b) After prior written notice to Lender, Borrower, 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 Note, this Security Instrument or any of
the Other Security Documents, (ii) Borrower 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 Borrower and from the Property or Borrower 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 Borrower is
subject and shall not constitute a default thereunder, (v) neither the Property
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nor any part thereof or interest therein will be in danger of being sold,
forfeited, terminated, canceled or lost and (vi) Borrower shall have deposited
with Lender adequate reserves (determined by Lender in its sole discretion) for
the payment of the Taxes, together with all interest and penalties thereon,
unless Borrower has paid all of the Taxes under protest, and Borrower shall have
furnished such other security as may be required in the proceeding, or as may be
reasonably requested by Lender 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 3.5. ESCROW FUND. In addition to the initial deposits with respect to
Taxes and Insurance Premiums made by Borrower to Lender on the date hereof to be
held by Lender in escrow, Borrower shall pay to Lender on the first day of each
calendar month (a) one-twelfth of an amount which would be sufficient to cover
the payment of the Taxes payable, or estimated by Lender to be payable, 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 amounts in (a) and (b)
above shall be called the "Escrow Fund"). Borrower agrees to notify Lender
immediately of any changes to the amounts, schedules and instructions for
payment of any Taxes and Insurance Premiums of which it has or obtains knowledge
and authorizes Lender or its agent to obtain the bills for Taxes directly from
the appropriate taxing authority. The Escrow Fund and the payments of interest
or principal or both, payable pursuant to the Note shall be added together and
shall be paid as an aggregate sum by Borrower to Lender. Provided there are
sufficient amounts in the Escrow Fund and no Event of Default exists, Lender
shall be obligated to pay the Taxes and Insurance Premiums as they become due on
their respective due dates on behalf of Borrower by applying the Escrow Fund to
the payments of such Taxes and Insurance Premiums required to be made by
Borrower. If the amount of the Escrow Fund shall exceed the amounts reasonably
necessary for the payment of Taxes and Insurance Premiums, Lender shall, in its
discretion, return any excess to Borrower or credit such excess against future
payments to be made to the Escrow Fund. In allocating such excess, Lender may
deal with the person shown on the records of Lender 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 as and when they are due, Borrower shall promptly pay to Lender,
upon demand, an amount which Lender shall reasonably estimate as sufficient to
make up the deficiency. Unless otherwise required by applicable state or federal
law, the Escrow Fund shall not constitute a trust fund and may be commingled
with other monies held by Lender. Unless otherwise required by applicable state
or federal law, no earnings or interest on the Escrow Fund shall be payable to
Borrower. Upon payment in full of the Debt, and full performance of the
Obligations, the funds remaining in the Escrow Fund, if any, shall be paid to
the record owner of the Land encumbered by the lien of this Security Instrument
within a reasonable time following the date of such full payment and
performance.
Section 3.6. CONDEMNATION. Borrower shall promptly give Lender notice of the
actual or threatened commencement of any condemnation or eminent domain
proceeding and shall deliver to Lender copies of any and all papers, documents,
surveys and correspondence served or received in connection with such
proceedings. 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), Borrower
shall continue to pay the Debt at the time and in the manner provided for its
payment in the Note and in this Security Instrument and the Debt shall not be
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reduced until any award or payment therefor shall have been actually received
and applied by Lender, after the deduction of expenses of collection, to the
reduction or discharge of the Debt. Lender 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 in the Note. Borrower
hereby assigns and shall cause all awards and payments made in any condemnation
or eminent domain proceeding, to be paid directly to Lender. Lender may apply
any award or payment to the reduction or discharge of the Debt whether or not
then due and payable. If the Property is sold, through foreclosure or otherwise,
prior to the receipt by Lender of the award or payment, Lender shall have the
right, whether or not a deficiency judgment on the Note shall have been sought,
recovered or denied, to receive the award or payment, or a portion thereof
sufficient to pay the Debt. In addition, Borrower authorizes Lender, at Lender's
option but without any obligation, as attorney-in-fact for Borrower to commence,
appear in and prosecute, in Borrower's or Lender's name, any action or
proceeding relating to any condemnation (which term for purposes hereunder shall
mean any action regarding damage or taking by any governmental authority,
quasi-governmental authority, any party having power of condemnation, or any
transfer by private sale in lieu thereof) or other taking of the Property and to
settle or compromise any claim in connection with such condemnation or other
taking. Notwithstanding any application of condemnation proceeds by Lender to
the Debt, Borrower shall repair, restore and rebuild the Property affected by
the condemnation to a condition as close to that existing prior to such
condemnation as is reasonable practicable, and otherwise sufficient for the use
and enjoyment thereof as determined by Lender.
Section 3.7 CASUALTY.
(a) If all or any part of the Property shall be damaged or destroyed by
a casualty covered by insurance, Lender is authorized and empowered (but not
obligated or required) to make proof of loss, damage or destruction under any
policies of insurance required under this Mortgage. All proceeds of insurance
shall be paid to Lender and shall be applied first to the payment of all costs
and expenses (including without limitation reasonable attorneys' fees and
expenses) incurred by Lender in obtaining such proceeds, and second, at the
option of Lender, either to the payment of the Debt, whether or not due, in such
order as Lender may elect, or to the restoration, repair or replacement of the
Property. If Lender elects, in its sole discretion, to apply the insurance
proceeds to the restoration, repair or replacement of the Property, such
proceeds shall be disbursed to or for Borrower's account as work progresses
pursuant to a construction and disbursing agreement in form and content
satisfactory to Lender in its sole discretion. The election by Lender to apply
the insurance proceeds to the restoration, repair or replacement of the Property
shall not affect the lien of this Security Instrument or affect or reduce the
sums secured hereby (including but not limited to the continuing accrual of
interest under the Note); and this Security Instrument shall remain in full
force and effect, and Borrower shall not be excused in the payment or
performance thereof.
(b) If all or any part of the Property shall be damaged or destroyed by
a casualty (whether or not covered by insurance), Borrower shall immediately
give written notice thereof to Lender and the appropriate insurer, if any, and
Borrower shall promptly and diligently, at Borrower's sole cost and expense and
regardless of whether the insurance proceeds, if any, shall be sufficient or
available for the purpose, restore, repair and rebuild the Property to the
equivalent of its condition immediately prior to the casualty.
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(c) If any work required to be performed under this Section shall
involve an estimated expenditure of more than Ten Thousand and No/100 Dollars
($10,000.00), no such work shall be undertaken until plans and specifications
thereof, prepared by an architect satisfactory to Lender, have been submitted to
and approved in writing by Lender.
Section 3.8. LEASES AND RENTS.
(a) Borrower may from time to time enter into proposed Leases
(including the renewals or extensions of existing Leases ("a Renewal Lease")
without the prior written consent of Lender, so long as (A) there is no Event of
Default (or other default, but for the passing of any applicable grace period or
cure period would be an Event of Default) and (B) such proposed Lease or Renewal
Lease (i) provides for rental rates and terms comparable to existing local
market rates and terms (taking into account the type and quality of the tenant)
as of the date such Lease is executed by Borrower (unless, in the case of a
Renewal Lease, the rent payable during such renewal, or a formula or other
method to compute such rent, is provided for in the original Lease), (ii) is an
arms-length transaction with a bona fide, independent third party tenant, (iii)
does not have a materially adverse effect on the value of the Property taken as
a whole, (iv) is subject and subordinate to the Security Instrument and the
lessee thereunder agrees to subordinate the Lease or Renewal Lease to the lien
of this Security Instrument, and (v) if required by Lender, is written on the
standard form of lease approved by Lender. All proposed Leases which do not
satisfy the requirements set forth in this paragraph shall be subject to the
prior approval of Lender and its counsel, at Borrower's expense. Borrower shall
promptly deliver to Lender copies of all Leases which are entered into pursuant
to this Subsection together with Borrower's certification that it has satisfied
all of the conditions of this Subsection.
(b) Borrower (i) shall observe and perform all the obligations imposed
upon the lessor under the Leases and shall not do or permit to be done anything
to impair the value of any of the Leases as security for the Debt; (ii) upon
request, shall promptly send copies to Lender of all notices of default which
Borrower shall send or receive thereunder; (iii) shall enforce all of the
material terms, covenants and conditions contained in the Leases upon the part
of the tenant thereunder to be observed or performed; (iv) shall not collect any
of the Rents more than one (1) month in advance (security deposits shall not be
deemed Rents collected in advance); (v) shall not execute any other assignment
of the lessor's interest in any of the Leases or the Rents; and (vi) shall not
consent to any assignment of or subletting under any Leases not in accordance
with their terms, without the prior written consent of Lender.
(c) Borrower may, without the consent of Lender, amend, modify or waive
any provisions of any Lease or terminate, reduce rents under, accept a surrender
of space under, or shorten the term of, any Lease (including any guaranty,
letter of credit or other credit support with respect thereto) provided that
such action (taking into account, in the case of a termination, reduction in
rent, surrender of space or shortening of term, the planned alternative use of
the affected space) does not have a materially adverse effect on the value of
the Property taken as a whole and provided that such Lease, as amended, modified
or waived, is otherwise in compliance with the requirements of this Security
Instrument and any subordination agreement binding upon Lender with respect to
such Lease. A termination of a Lease with a tenant who is in default beyond
applicable notice and grace periods shall not be considered an action which has
11
a materially adverse effect on the value of the Property taken as a whole. Any
amendment, modification, waiver, termination, rent reduction, space surrender or
term shortening which does not satisfy the requirements set forth in this
Subsection shall be subject to the prior approval of Lender and its counsel, at
Borrower's expense. Borrower shall promptly deliver to Lender copies of
amendments, modifications and waivers which are entered into pursuant to this
Subsection together with Borrower's certification that it has satisfied all of
the conditions of this Subsection.
(d) Notwithstanding anything contained herein to the contrary, Borrower
shall not, without the prior written consent of Lender, enter into, renew,
extend, amend, modify, waive any provisions of, terminate, reduce rents under,
accept a surrender of space under, or shorten the term of, any Major Lease. The
term "Major Lease" shall mean any Lease under which the base rents will
contribute in excess of twenty percent (20%) of the gross cash flow of the
Property, together with any instrument guaranteeing or providing credit support
therefor.
Section 3.9. MAINTENANCE AND USE OF PROPERTY. Borrower 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 materially altered
(except for normal replacement of the Personal Property with replacement
property of equal or greater value) without the consent of Lender. Borrower
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 condemnation or taking proceeding and shall complete and pay
for any structure at any time in the process of construction or repair on the
Land. Borrower 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, defining or changing 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, Borrower will not cause or permit the nonconforming use to be discontinued
or the nonconforming Improvement to be abandoned without the express written
consent of Lender, and Borrower shall take such other steps as Lender may
require to establish the legality of such non-conforming use.
Section 3.10. WASTE. Borrower 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 substantially increase the rates
thereunder, or do or permit to be done thereon anything that may in any way
impair the value of the Property or the security of this Security Instrument.
Borrower will not, without the prior written consent of Lender, 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 3.11. COMPLIANCE WITH LAWS.
(a) Borrower 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, and the use thereof,
including any Environmental Law (hereinafter defined) ("Applicable Laws").
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(b) Borrower shall from time to time, upon Lender's request, provide
Lender with evidence reasonably satisfactory to Lender that the Property
complies with all Applicable Laws or is exempt from compliance with Applicable
Laws.
(c) Notwithstanding any provisions set forth herein or in any document
regarding Lender's approval of alterations of the Property, Borrower shall not
alter the Property in any manner which would materially increase Borrower's
responsibilities for compliance with Applicable Laws without the prior written
approval of Lender. Lender's approval of the plans, specifications, or working
drawings for alterations of the Property shall create no responsibility or
liability on behalf of Lender for their completeness, design, sufficiency or
their compliance with Applicable Laws. The foregoing shall apply to tenant
improvements constructed by Borrower or by any of its tenants. Lender 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 Lender.
(d) Borrower shall give prompt notice to Lender of the receipt by
Borrower of any notice related to a violation or threatened violation of any
Applicable Laws and of the commencement or threatened commencement of any
proceedings or investigations which relate to compliance with Applicable Laws.
(e) After prior written notice to Lender, Borrower, at its own expense,
may contest by appropriate legal proceedings, 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 Note, this Security Instrument or any of the Other Security Documents;
(ii) Borrower 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 Borrower or the Property is subject
and shall not constitute a default thereunder; (iv) neither the Property, any
part thereof or interest therein, any of the tenants or occupants thereof,
Borrower, nor Lender shall be affected in any material adverse way as a result
of such proceeding; (v) non-compliance with the Applicable Laws shall not impose
civil or criminal liability on Borrower or Lender; and (vi) Borrower shall have
furnished to Lender all other items reasonably requested by Lender.
Section 3.12. BOOKS AND RECORDS
(a) Borrower and any Guarantors (hereinafter defined) and Indemnitor(s)
(hereinafter defined), if any, shall keep adequate books and records of account
in accordance with generally accepted accounting principles ("GAAP"), or in
accordance with other methods acceptable to Lender in its sole discretion,
consistently applied and furnish to Lender:
(i) monthly (or if the Loan (defined below) has been securitized
or sold as a whole loan by Lender, quarterly) and annual certified
rent rolls signed and dated by Borrower, 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, the
extent to which any tenant is in default under any Lease, and any
other information as is reasonably required by Lender, within twenty
(20) days after the end of each calendar month, thirty (30) days after
the end of each fiscal quarter or sixty (60) days after the close of
each fiscal year of Borrower, as applicable;
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(ii) quarterly and annual operating statements of the Property,
prepared and certified by Borrower in the form required by Lender,
detailing the revenues received, the expenses incurred and the net
operating income before and after debt service (principal and
interest) and major capital improvements for each month and containing
appropriate year to date information, within twenty (20) days after
the end of each calendar month, thirty (30) days after the end of each
fiscal quarter or sixty (60) days after the close of each fiscal year
of Borrower, as applicable;
(iii) an annual 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, to be
prepared and certified by Borrower in the form required by Lender, or
if required by Lender, an audited annual operating statement prepared
and certified by an independent certified public accountant acceptable
to Lender, within sixty (60) days after the close of each fiscal year
of Borrower; and
(iv) quarterly and annual balance sheet and profit and loss
statements of Borrower, any Guarantors and any Indemnitor(s) in the
form required by Lender, prepared and certified by the respective
Borrower, Guarantors and/or Indemnitor(s), or if required by Lender,
audited financial statements prepared by an independent certified
public accountant acceptable to Lender, within thirty (30) days after
the end of each fiscal quarter or sixty (60) days after the close of
each fiscal year of Borrower, Guarantors and Indemnitor(s), as the
case may be; and
(v) within sixty (60) days after the close of each fiscal year,
copies of each Borrower's, Guarantor's and Indemnitor's state and
federal income tax returns, as same had been filed, and certified by
such party as true and complete.
(b) Upon request from Lender, Borrower, any Guarantor and any
Indemnitor shall furnish in a timely manner to Lender:
(i) a property management report for the Property, any
information reasonably requested by Lender, in reasonable detail and
certified by Borrower (or an officer, general partner, member or
principal of Borrower if Borrower is not an individual) to be true and
complete, but no more frequently than quarterly; and
(ii) 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 Lender to obtain information regarding such accounts
directly from such financial institutions.
(c) Borrower, any Guarantor and any Indemnitor shall furnish Lender
with such other additional financial or management information (including State
and Federal tax returns) as may, from time to time, be reasonably required by
Lender in form and substance satisfactory to Lender.
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(d) Borrower, any Guarantor and any Indemnitor shall furnish to Lender
and its agents convenient facilities for the examination, copying and audit of
any such books and records.
Section 3.13. PAYMENT FOR LABOR AND MATERIALS. Borrower 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 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
below).
Section 3.14. PERFORMANCE OF OTHER AGREEMENTS. Borrower shall observe and
perform each and every term to be observed or performed by Borrower pursuant to
the terms of any agreement or recorded instrument affecting or pertaining to the
Property, or given by Borrower to Lender for the purpose of further securing an
Obligation and any amendments, modifications or changes thereto.
Section 3.15. CHANGE OF NAME, IDENTITY OR STRUCTURE. Borrower shall not change
Borrower's name identity (including its trade name or names) or, if not an
individual, Borrower's corporate, partnership or other structure without
notifying the Lender 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 Borrower's
structure, without first obtaining the prior written consent of the Lender.
Section 3.16. EXISTENCE. Borrower 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.
Section 3.17. MANAGEMENT. The Property shall be managed by either: (a) Borrower
or an entity affiliated with Borrower and approved by Lender for so long as
Borrower or said affiliated entity is managing the Property in a first class
manner; or (b) a professional property management company approved by Lender.
Management by an affiliated entity or a professional property management company
shall be pursuant to a written agreement approved by Lender which shall be in
all respects subordinate to this Security Instrument. In no event shall any
manager be removed or replaced or the terms of any management agreement modified
or amended without the prior written consent of Lender. In the event (x) of
default hereunder or under any management contract then in effect, which default
is not cured within any applicable grace or cure period or (y) of the bankruptcy
or insolvency of the manager, Lender shall have the right to immediately
terminate, or to direct Borrower to immediately terminate, such management
contract and to retain, or to direct Borrower to retain, a new management agent
approved by Lender. All Rents generated by or derived from the Property shall
first be utilized solely for current expenses directly attributable to the
ownership and operation of the Property, including, without limitation, current
expenses relating to Borrower's liabilities and obligations with respect to the
Note, this Security Instrument and the Other Security Documents, and none of the
Rents generated by or derived from the Property shall be diverted by Borrower
and utilized for any other purpose unless all such current expenses attributable
to the ownership and operation of the Property have been fully paid and
satisfied.
15
Section 3.18. PRINCIPAL PLACE OF BUSINESS. Borrower shall not change the
principal place of business or chief executive office, or, in the event Borrower
is one or more natural persons, the location of its permanent residence, all as
set forth herein without the consent of Lender, which consent shall not be
unreasonably withheld. Lender's consent shall be conditioned upon, among other
things, the execution and delivery of additional financing statements, security
agreements and other instruments which may be necessary to effectively evidence
or perfect Lender's security interest in the Property as a result of such change
of principal place of business.
ARTICLE 4. - REPRESENTATIONS AND WARRANTIES
Borrower represents and warrants to Lender that:
Section 4.1. WARRANTY OF TITLE. Borrower 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 that Borrower possesses an
unencumbered fee simple absolute estate in the Land and the Improvements and
that it 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").
Borrower 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 Lender against the claims of all persons whomsoever, and
shall make such further assurances to perfect fee simple title to the Property
as Lender may reasonably require.
Section 4.2. LEGAL STATUS AND AUTHORITY. Borrower (a) is duly organized, validly
existing and in good standing under the laws of its state of organization or
incorporation; (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,
operate and lease the Property. Borrower (and the undersigned representative of
Borrower, 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 Borrower's part
to be performed.
Section 4.3. VALIDITY OF DOCUMENTS. (a) The execution, delivery and performance
of the Note, this Security Instrument and the Other Security Documents and the
borrowing evidenced by the Note (i) are within the power and authority of
Borrower; (ii) have been authorized by all requisite organizational action;
(iii) have received all necessary approvals and consents, corporate,
governmental or otherwise; (iv) 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, any order or judgment of any court or governmental
authority, the articles of incorporation, by-laws, partnership or trust
agreement, articles of organization, operating agreement, or other governing
instrument of Borrower, or any indenture, agreement or other instrument to which
Borrower 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) will not require any
authorization or license from, or any filing with, any governmental or other
body (except for the recordation of this
16
Security 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 Note, this Security Instrument
and the Other Security Documents constitute the legal, valid and binding
obligations of Borrower, enforceable in accordance with their terms.
Section 4.4. LITIGATION. There is no action, suit or proceeding, judicial,
administrative or otherwise (including any condemnation or similar proceeding),
pending or, to the best of Borrower's knowledge, threatened or contemplated
against Borrower, a Guarantor, if any, an Indemnitor, if any, or against or
affecting the Property that has not been disclosed to Lender by Borrower in
writing.
Section 4.5. STATUS OF PROPERTY.
(a) Borrower 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 not subject to revocation,
suspension, forfeiture or modification.
(b) The Property and the present and contemplated use and occupancy
thereof are in full compliance with all applicable zoning ordinances, building
codes, land use laws, Environmental Laws and other similar laws.
(c) 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.
(d) 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, and have been dedicated to and accepted for public maintenance by
the applicable municipal or county authorities.
(e) The Property is served by public water and sewer systems.
(f) The Property is free from damage caused by fire or other casualty.
(g) 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.
(h) Borrower 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.
(i) 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.
17
(j) No portion of the Improvements is located in an area identified by
the Emergency Management Agency or any successor thereto as an area having
special Federal flood hazards pursuant to the Flood Insurance Acts or, if any
portion of the Improvements is located within such area, Borrower has obtained
and will maintain the insurance required pursuant to the terms hereof.
(k) All the Improvements lie within the boundaries of the Land.
Section 4.6. NO FOREIGN PERSON. Borrower 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.
Section 4.7. 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 4.8. LEASES. Except as disclosed in the rent roll for the Property
delivered to and approved by Lender, (a) Borrower is the sole owner of the
entire lessor's interest in the Leases; (b) the Leases are valid and enforceable
and in full force and effect; (c) all of the Leases are arms-length agreements
with bona fide, independent third parties; (d) no party under any Lease is in
default; (e) all Rents due have been paid in full; (f) the terms of all
alterations, modifications and amendments to the Leases are reflected in the
certified occupancy statement delivered to and approved by Lender; (g) none of
the Rents reserved in the Leases have been assigned or otherwise pledged or
hypothecated; (h) none of the Rents have been collected for more than one (1)
month in advance (except a security deposit shall not be deemed rent collected
in advance); (i) the premises demised under the Leases have been completed in
accordance with the Leases, and the tenants under the Leases have accepted the
same and have taken possession of the same on a rent-paying basis; (j) there
exist no offsets or defenses to the payment of any portion of the Rents and
Borrower has no monetary obligation to any tenant under any Lease; (k) Borrower
has received no notice from any tenant challenging the validity or
enforceability of any Lease; (l) there are no agreements with the tenants under
the Leases other than expressly set forth in each Lease; (m) the Leases are
valid and enforceable against Borrower and the tenants set forth therein; (n) no
Lease contains an option to purchase, right of first refusal to purchase, right
of first refusal to relet, or any other similar provision; (o) no person or
entity has any possessory interest in, or right to occupy, the Property except
under and pursuant to a Lease; (p) each Lease is subordinate to this Security
Instrument, either pursuant to its terms or a recordable subordination
agreement; (q) no Lease has the benefit of a non-disturbance agreement that
would be considered unacceptable to prudent institutional lenders; (r) all
security deposits relating to the Leases reflected on the certified rent roll
delivered to Lender have been collected by Borrower; and (s) no brokerage
commissions or finders fees are due and payable regarding any Lease.
Section 4.9. FINANCIAL CONDITION.
(a) (i) Borrower is solvent and no proceeding under Creditors Rights
Laws (hereinafter defined) with respect to Borrower has been initiated, and (ii)
Borrower has received reasonably equivalent value for the granting of this
Security Instrument.
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(b) No petition in bankruptcy has been filed by or against Borrower,
any Guarantor, any Indemnitor or any related entity, or any principal, general
partner or member thereof, in the last seven (7) years, and neither Borrower,
any Guarantor, any Indemnitor nor any related entity, or any principal, general
partner or member thereof, in the last seven (7) years has ever made any
assignment for the benefit of creditors or taken advantage of any Creditors
Rights Laws.
Section 4.10. BUSINESS PURPOSES. The loan evidenced by the Note secured by the
Security Instrument and the Other Security Documents (the "Loan") is solely for
the business purpose of Borrower, and is not for personal, family, household, or
agricultural purposes.
Section 4.11. TAXES. Borrower, any Guarantor and any Indemnitor have filed all
federal, state county, municipal, and city income, personal property 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 Borrower, 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 4.12. MAILING ADDRESS. Borrower's mailing address, as set forth in the
opening paragraph hereof or as changed in accordance with the provisions hereof,
is true and correct.
Section 4.13. NO CHANGE IN FACTS OR CIRCUMSTANCES. All information in the
application for the Loan submitted to Lender and in all financial statements,
rent rolls, reports, certificates and other documents submitted in connection
with the application or in satisfaction of the terms thereof, are accurate,
complete and correct in all respects. There has been no adverse change in any
condition, fact, circumstance or event that would make any such information
inaccurate, incomplete or otherwise misleading.
Section 4.14. DISCLOSURE. Borrower has disclosed to Lender 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 4.15. THIRD PARTY REPRESENTATIONS. Each of the representations and the
warranties made by each Guarantor and Indemnitor in any Other Security
Document(s) is true and correct in all material respects.
Section 4.16. ILLEGAL ACTIVITY. No portion of the Property has been or will be
purchased, improved equipped or furnished with proceeds of any illegal activity
and to the best of Borrower's knowledge, there are no illegal activities or
activities relating to controlled substances at the Property.
Section 4.17. PERMITTED EXCEPTIONS. None of the Permitted Exceptions,
individually or in the aggregate, materially interfere with the benefits of the
security intended to be provided by the Security Instrument, the Note, and the
Other Security Documents, materially and adversely affect the value of the
Property, impair the use or the operation of the Property or impair Borrower's
ability to pay its obligations in a timely manner.
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Section 4.18. PRINCIPAL PLACE OF BUSINESS. Borrower's principal place of
business is as set forth in the opening paragraph to this Security Instrument.
Section 4.19. ERISA.
(a) As of the date hereof and throughout the term of this Security
Instrument, (i) Borrower is not and will not be an "employee benefit plan" as
defined in Section 3(3) of ERISA, which is subject to Title I of ERISA, and (ii)
the assets of Borrower do not and will not constitute "plan assets" of one or
more such plans for purposes of Title I of ERISA; and
(b) As of the date hereof and throughout the term of this Security
Instrument (i) Borrower is not and will not be a "governmental plan" within the
meaning of Section 3(32) of ERISA and (ii) transactions by or with Borrower are
not and will not be subject to state statutes applicable to Borrower regulating
investments of and fiduciary obligations with respect to governmental plans.
Section 4.20. PROPERTY USE. The Property shall continue to be used in accordance
with its present use, and for no other use without the prior written consent of
Lender.
ARTICLE 5 - OBLIGATIONS AND RELIANCE
Section 5.1. RELATIONSHIP OF BORROWER AND LENDER. The relationship between
Borrower and Lender is solely that of debtor and creditor, and Lender has no
fiduciary or other special relationship with Borrower, and no term or condition
of any of the Note, this Security Instrument and the Other Security Documents
shall be construed so as to deem the relationship between Borrower and Lender to
be other than that of debtor and creditor.
Section 5.2. NO RELIANCE. The members, general partners, principals and (if
Borrower is a trust) beneficial owners of Borrower are experienced in the
ownership and operation of properties similar to the Property, and Borrower and
Lender are relying solely upon such expertise in connection with the ownership
and operation of the Property. Borrower is not relying on Lender's expertise,
business acumen or advice in connection with the Property.
Section 5.3. NO LENDER OBLIGATIONS. Notwithstanding anything to the contrary
contained herein, Lender is not undertaking the performance of (a) any
obligations under the Leases; or (b) any obligations with respect to such
agreements, contracts, certificates, instruments, franchises, permits,
trademarks, licenses and other documents. By accepting or approving anything
required to be observed, performed or fulfilled or to be given to Lender
pursuant to this Security Instrument, the Note or the Other Security Documents,
including without limitation, any officer's certificate, balance sheet,
statement of profit and loss or other financial statement, survey, appraisal, or
insurance policy, Lender shall not be deemed to have warranted, consented to, or
affirmed the sufficiency, the legality or effectiveness of same, and such
acceptance or approval thereof shall not constitute any warranty or affirmation
with respect thereto by Lender.
Section 5.4. RELIANCE. Borrower recognizes and acknowledges that in accepting
the Note, this Security Instrument and the Other Security Documents, Lender is
expressly and primarily relying on the truth and accuracy of the warranties and
representations set forth herein without any obligation to investigate the
Property and notwithstanding any investigation of the Property by Lender; that
such reliance existed on the part of Lender prior to the date hereof; that the
warranties and representations are a material inducement to Lender in accepting
the Note, this Security Instrument and the Other Security Documents; and that
Lender would not be willing to make the Loan and accept this Security Instrument
in the absence of the warranties and representations as set forth herein.
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ARTICLE 6. - FURTHER ASSURANCES
Section 6.1. RECORDING OF SECURITY INSTRUMENT, ETC. Borrower 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 Lender
in, the Property. Borrower will pay all taxes, filing, registration or recording
fees, and all expenses incident to the preparation, execution, acknowledgment
and/or recording of the Note, this Security Instrument, the Other Security
Documents, any note 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 6.2. FURTHER ACTS, ETC. Borrower will, at the cost of Borrower, and
without expense to Lender, do, execute, acknowledge and deliver all and every
such further acts, deeds, conveyances, mortgages, assignments, notices of
assignments, transfers and assurances as Lender shall, from time to time,
reasonably require, for the better assuring, conveying, assigning, transferring,
and confirming unto Lender 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 Borrower may be or
may hereafter become bound to convey or assign to Lender, 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 state or federal law. Borrower, on demand,
will execute and deliver and hereby authorizes Lender, following 10 days' notice
to Borrower, to execute in the name of Borrower or without the signature of
Borrower to the extent Lender may lawfully do so, one or more financing
statements, chattel mortgages or other instruments, to evidence or perfect more
effectively the security interest of Lender in the Property. Borrower grants to
Lender an irrevocable power of attorney coupled with an interest for the purpose
of exercising and perfecting any and all rights and remedies available to Lender
hereunder.
Section 6.3. CHANGES IN TAX DEBT CREDIT AND DOCUMENTARY STAMP LAWS.
(a) If any law is enacted or adopted or amended after the date of this
Security Instrument which deducts the Debt from the value of the Property for
the purpose of taxation or which imposes a tax, either directly or indirectly,
on the Debt or Lender's interest in the Property, Borrower will pay the tax,
with interest and penalties thereon, if any. If Lender is advised by counsel
chosen by it that the payment of tax by Borrower would be unlawful or taxable to
Lender or unenforceable or provide the basis for a defense of usury, then Lender
shall have the option, exercisable by written notice of not less than ninety
(90) days, to declare the Debt immediately due and payable.
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(b) Borrower will not claim or demand or be entitled to any credit or
credits on account of the Debt for any part of the Taxes or Other Charges
assessed against the Property, or any part thereof.
(c) If at any time the United States of America, any State thereof or
any subdivision of any such State shall require revenue or other stamps to be
affixed to the Note, this Security Instrument, or any of the Other Security
Documents or impose any other tax or charge on the same, Borrower will pay for
the same, with interest and penalties thereon, if any.
Section 6.4. ESTOPPEL CERTIFICATES.
(a) After request by Lender, Borrower, within ten (10) days, shall
furnish Lender or any proposed assignee with a statement, duly acknowledged and
certified, setting forth (i) the original principal amount of the Note, (ii) the
unpaid principal amount of the Note, (iii) the rate of interest of the Note,
(iv) the terms of payment and maturity date of the Note, (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 Note or the Security Instrument, (vii) that the Note 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 Borrower,
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 Borrower 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 Lender and
reasonably related to the Leases, the obligations secured hereby, the Property
or this Security Instrument.
(b) Borrower shall use its best efforts to deliver to Lender, promptly
upon request, duly executed estoppel certificates from any one or more lessees
as required by Lender attesting to such facts regarding the Lease as Lender may
require, including, but not limited to attestations that each Lease covered
thereby is in full force and effect with no defaults thereunder on the part of
any party, that none of the Rents have been paid more than one month in advance,
except as security, and that the lessee claims no defense or offset against the
full and timely performance of its obligations under the Lease.
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(c) Upon any transfer or proposed transfer of the Property at Lender's
request, Borrower, any Guarantors and any Indemnitor(s) shall provide an
estoppel certificate in such form, substance and detail as Lender may require.
Section 6.5. FLOOD INSURANCE. After Lender's request, Borrower shall deliver
evidence satisfactory to Lender that no portion of the Improvements is situated
in a federally designated "special flood hazard area" or, if it is, that
Borrower has obtained insurance meeting the requirements hereof.
Section 6.6. REPLACEMENT DOCUMENTS. Upon receipt of an affidavit of an officer
of Lender as to the loss, theft, destruction or mutilation of the Note 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 Note or Other Security
Document, Borrower will issue, in lieu thereof, a replacement Note or Other
Security Document, dated the date of such lost, stolen, destroyed or mutilated
Note or Other Security Document in the same principal amount thereof and
otherwise of like tenor.
ARTICLE 7. - DUE ON SALE/ENCUMBRANCE
Section 7.1. TRANSFER DEFINITIONS. For purposes of this Article, an "Affiliated
Manager" shall mean any managing agent in which Borrower, any Guarantor or
Indemnitor has, directly or indirectly, any legal, beneficial or economic
interest; a "Restricted Party" shall mean Borrower, any Guarantor, any
Indemnitor, or any Affiliated Manager or any shareholder, partner, member or
non-member manager, or any direct or indirect legal or beneficial owner of
Borrower, any Guarantor, any Indemnitor, any Affiliated Manager or any
non-member manager; and a "Sale" shall mean a voluntary or involuntary sale,
conveyance, transfer or pledge of a legal or beneficial interest.
Section 7.2. NO SALE/ENCUMBRANCE
(a) Borrower shall not sell, convey, mortgage, grant, bargain,
encumber, pledge, assign, grant options with respect to, or otherwise transfer
or dispose of (directly or indirectly, voluntarily or involuntarily, by
operation of law or otherwise, and whether or not for consideration or of
record) the Property or any part thereof or any legal or beneficial interest
therein (collectively a "Transfer"), other than pursuant to Leases of space in
the Improvements to tenants in accordance with the provisions hereof without the
prior written consent of Lender.
(b) A Transfer shall include, but not be limited to, (i) an installment
sales agreement wherein Borrower agrees to sell the Property or any part thereof
for a price to be paid in installments; (ii) an agreement by Borrower 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, Borrower's right, title and interest in and to any
Leases or any Rents; (iii) if a Restricted Party is a corporation, any merger,
consolidation or Sale or Pledge of such corporation's stock or the creation or
issuance of new stock in one or a series of transactions, by which such
corporation's stock shall be vested in a party or parties who are not now
shareholders; (iv) if a Restricted Party is a limited or general partnership or
joint venture, any merger or consolidation or the change, removal, resignation
or addition of a general partner or the Sale or Pledge of the partnership
interest of any general partner or any profits or proceeds relating to such
partnership interest, or the Sale or Pledge of limited partnership interests or
the creation or issuance of new limited partnership interests in one or a series
of transactions, by which such limited partnership interests shall be vested in
23
a party or parties who are not now limited partners; (v) if a Restricted Party
is a limited liability company, any merger or consolidation or the change,
removal, resignation or addition of a managing member or nonmember manager (or
if no managing member, any member) or the Sale or Pledge of the membership
interest of a managing member (or if no managing member, any member) or any
profits or proceeds relating to such membership interest, or the Sale or Pledge
of non-managing membership interests or the creation or issuance of new
non-managing membership interests in one or a series of transactions, by which
such non-managing membership interests shall be vested in a party or parties who
are not now non-managing members; (vi) if a Restricted Party is a trust or
nominee trust, any merger, consolidation or the Sale or Pledge of the legal or
beneficial interest in a Restricted Party or the creation or issuance of new
legal or beneficial interests in one or a series of transactions, by which such
beneficial or legal interests shall be vested in a party or parties who are not
now legal or beneficial owners; or (vii) the removal or the resignation of the
managing agent (including, without limitation, an Affiliated Manager) other than
in accordance herewith.
Section 7.3. PERMITTED TRANSFERS. Notwithstanding anything to the contrary
contained herein, the following transfers shall not be deemed to be a Transfer:
(a) a transfer by devise or descent or by operation of law upon the death of a
member, partner or shareholder of a Restricted Party; and (b) the Sale or Pledge
of stock or limited partnership or non-managing membership interests in a
Restricted Party by which, in one or a series of transactions, in the aggregate,
not more than forty-nine percent (49%) of the stock, limited partnership
interests or non-managing membership interests (as the case may be) in a
Restricted Party, shall be vested in parties not now having an ownership
interest; provided, however, no such transfer shall result in the change of
voting control in the Restricted Party, and as a condition to each such
transfer, Lender shall receive not less than ten (10) days prior written notice
of such proposed transfer.
ARTICLE 8. - DEFAULT
Section 8.1. EVENTS OF DEFAULT. The occurrence of any one or more of the
following events shall constitute an "Event of Default":
(a) if any portion of the Debt is not paid on or prior to the date the
same is due or if the entire Debt is not paid on or before the Maturity Date;
(b) if Borrower fails to repay any sum paid or advanced by Lender under
the terms of this Security Instrument or any Other Loan Document;
(c) if Borrower fails to repay any sum paid, advanced or loaned by
Lender to Borrower under the terms of any other Security Instrument, promissory
note or other loan document in connection with any other loan;
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(d) if any of the Taxes or Other Charges is not paid when the same is
due and payable except to the extent sums sufficient to pay such Taxes and Other
Charges have been deposited with Lender in accordance with the terms of this
Security Instrument;
(e) if the Policies are not kept in full force and effect, or if the
Policies are not delivered to Lender as provided herein;
(f) if Borrower violates or does not comply with any of the provisions
of this Security Instrument or any Other Loan Document;
(g) if any representation or warranty of Borrower, any Indemnitor or
any person guaranteeing payment of the Debt or any portion thereof or
performance by Borrower of any of the terms of this Security Instrument (a
"Guarantor"), or any member, general partner, principal or beneficial owner of
any of the foregoing, made herein or in any guaranty, or in any certificate,
report, financial statement or other instrument or document furnished to Lender
shall have been false or misleading in any material respect when made;
(h) if (i) Borrower or any managing member or general partner of
Borrower, or an 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,
arrangement, adjustment, winding-up, liquidation, dissolution, composition or
other relief with respect to its debts or debtors ("Creditors Rights Laws"),
seeking to have an order for relief entered with respect to it, or seeking to
adjudicate it a bankrupt or insolvent, or seeking reorganization, 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
Borrower or any managing member or general partner of Borrower, or any Guarantor
or Indemnitor shall make a general assignment for the benefit of its creditors;
or (ii) there shall be commenced against Borrower or any managing member or
general partner of Borrower 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 sixty (60) days;
or (iii) there shall be commenced against the Borrower or any managing member or
general partner of Borrower, 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 sixty (60)
days from the entry thereof; or (iv) the Borrower or any managing member or
general partner of Borrower 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
Borrower or any managing member or general partner of Borrower, 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;
(i) if Borrower shall be in default beyond applicable notice and grace
periods under any other mortgage, deed of trust, deed to secure debt or other
security agreement covering any part of the Property whether it be superior or
junior in lien to this Security Instrument;
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(j) if the Property becomes subject to any mechanic's, materialman's or
other lien other than a lien for any Taxes not then due and payable and the lien
shall remain undischarged of record (by payment, bonding or otherwise) for a
period of thirty (30) days;
(k) if any federal tax lien is filed against Borrower, any member or
general partner of Borrower, any Guarantor, any Indemnitor or the Property and
same is not discharged of record within thirty (30) days after same is filed;
(l) 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; or
(m) if Borrower files of record, without the prior written consent of
Lender which Lender may grant or withhold for any reason in its sole and
absolute discretion, any notice limiting the maximum principal amount that may
be secured hereunder; or
(n) if Borrower sells, transfers (whether voluntary or by operation of
law), pledges, hypothecates or further encumbers all or any part of the Property
or any interest therein or any interest in the Borrower (except as otherwise
expressly provided herein), or additionally assigns all or any part of the
rents, income or profits arising therefrom, in either case without the prior
written consent of Lender, which may be withheld for any reason in Lender's sole
and absolute discretion; or
(o) if Borrower or any Guarantor or Indemnitor is dissolved, merges
into another entity, or otherwise terminates its existence (other than as
specifically allowed pursuant to the terms hereof) or if the person(s)
controlling such entity shall take any action authorizing or leading to the
same; or
(p) if for more than ten (10) days after notice from Lender, Borrower
shall continue to be in default under any other term, covenant or condition of
the Note, this Security Instrument or the Other Security Documents in the case
of any default which can be cured by the payment of a sum of money or for thirty
(30) days after notice from Lender in the case of any other default, provided
that if such default cannot reasonably be cured within such thirty (30) day
period and Borrower 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 Borrower 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 sixty (60)
days.
ARTICLE 9. - RIGHTS AND REMEDIES
Section 9.1 REMEDIES. Upon the occurrence of any Event of Default, to the extent
permitted by applicable law, Borrower agrees that Lender may take any action
available at law, in equity, and as otherwise provided in this Security
Instrument, without notice or demand, as it deems advisable to protect and
enforce its rights against Borrower 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 Lender may determine, in its sole
discretion, without impairing or otherwise affecting the other rights and
remedies of Lender:
26
(a) declare the entire unpaid Debt to be immediately due and payable;
(b) institute proceedings, judicial or otherwise, for the complete
foreclosure of this Security Instrument under any applicable state or federal
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;
(c) with or without entry, to the extent permitted and pursuant to the
procedures provided by applicable state or federal law, institute proceedings
for the partial foreclosure of this Security Instrument for the portion of the
Debt then due and payable, subject to the continuing lien and security interest
of this Security Instrument for the balance of the Debt not then due, unimpaired
and without loss of priority;
(d) sell for cash or upon credit the Property or any part thereof and
all estate, claim, demand, right, title and interest of Borrower therein and
rights of redemption thereof, pursuant to power of sale or otherwise, at one or
more sales, in one or more parcels, at such time and place, upon such terms and
after such notice thereof as may be required or permitted by law;
(e) institute an action, suit or proceeding in equity for the specific
performance of any covenant, condition or agreement contained herein, in the
Note or in the Other Security Documents;
(f) recover judgment on the Note either before, during or after any
proceedings for the enforcement of this Security Instrument or the Other
Security Documents;
(g) 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 Borrower,
any Guarantor, Indemnitor or of any person, firm or other entity liable for the
payment of the Debt;
(h) subject to any applicable state or federal law, the license granted
to Borrower to collect and receive rents hereunder shall automatically be
revoked and Lender may enter into or upon the Property, either personally or by
its agents, nominees or attorneys and dispossess Borrower and its agents and
servants therefrom, without liability for trespass, damages or otherwise and
exclude Borrower and its agents or servants wholly therefrom, and take
possession of all rent rolls, leases (including the form lease) and amendments
and exhibits, subleases (including the form sublease) and amendments and
exhibits and rental and license agreements with the tenants, subtenants and
licensees in possession of the Property or any part or parts thereof; tenants',
subtenants' and licensees' money deposits or other property (including, without
limitation, any letter of credit) given to secure tenants', subtenants' and
licensees' obligations under leases, subleases or licenses, together with a list
of the foregoing; all lists pertaining to current rent and license fee arrears;
any and all architects' plans and specifications, licenses and permits,
documents, books, records, accounts, surveys and property which relate to the
management, leasing, operation, occupancy, ownership, insurance, maintenance, or
service of or construction upon the Property and Borrower agrees to surrender
possession thereof and of the Property to Lender upon demand, and thereupon
Lender may (i) use, operate, manage, control, insure, maintain, repair, restore
27
and otherwise deal with all and every part of the Property and conduct
the business thereat; (ii) complete any construction on the Property in such
manner and form as Lender deems advisable; (iii) make alterations, additions,
renewals, replacements and improvements to or on the Property; (iv) exercise all
rights and powers of Borrower with respect to the Property, whether in the name
of Borrower 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; (v) either
require Borrower (A) to pay monthly in advance to Lender, 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 Borrower, or
(B) to vacate and surrender possession of the Property to Lender or to such
receiver and, in default thereof, Borrower may be evicted by summary proceedings
or otherwise; and (vi) apply the receipts from the Property to the payment of
the Debt, in such order, priority and proportions as Lender 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
Premiums and other expenses in connection with the Property, as well as just and
reasonable compensation for the services of Lender, its counsel, agents and
employees;
(i) 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: (i) the right to take possession of the Personal
Property or any part thereof, and to take such other measures as Lender may deem
necessary for the care, protection and preservation of the Personal Property,
and (ii) request Borrower at its expense to assemble the Personal Property and
make it available to Lender at a convenient place acceptable to Lender. Any
notice of sale, disposition or other intended action by Lender with respect to
the Personal Property sent to Borrower in accordance with the provisions hereof
at least five (5) days prior to such action, shall constitute commercially
reasonable notice to Borrower;
(j) apply any sums then deposited in the Escrow Fund and any other sums
held in escrow or otherwise by Lender 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 discretion: (i) Taxes and Other
Charges; (ii) Insurance Premiums; (iii) interest on the unpaid principal balance
of the Note; (iv) amortization of the unpaid principal balance of the Note; and
(v) all other sums payable pursuant to the Note, this Security Instrument and
the Other Security Documents including, without limitation, advances made by
Lender pursuant to the terms of this Security Instrument;
(k) surrender the Policies maintained pursuant hereto, collect the
unearned Insurance Premiums and apply such sums as a credit on the Debt in such
priority and proportion as Lender in its discretion shall deem proper, and in
connection therewith, Borrower hereby appoints Lender as agent and
attorney-in-fact (which is coupled with an interest and is therefore
irrevocable) for Borrower to collect such unearned Insurance Premiums;
(l) apply the undisbursed balance of any net proceeds deficiency
deposit, together with interest thereon, to the payment of the Debt in such
order, priority and proportions as Lender shall deem to be appropriate in its
discretion; or
28
(m) pursue such other remedies as Lender may have under applicable
state or federal law.
In the event of a sale, by foreclosure, to the extent permitted by applicable
law, 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 to the contrary, if any Event of
Default shall occur, and the Lender elects to declare the entire unpaid Debt to
be automatically due and payable, such remedy may be pursued without any further
notice, demand or other action by Lender.
Section 9.2. 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 Lender pursuant to the Note, this Security Instrument or the Other
Security Documents, may be applied by Lender to the payment of the Debt in such
priority and proportions as Lender in its discretion shall deem proper and which
are in accordance with applicable law or as shall be required by a court of
competent jurisdiction.
Section 9.3. RIGHT TO CURE DEFAULTS. Upon the occurrence of any Event of Default
or if Borrower fails to make any payment or to do any act as herein provided,
Lender may, but without any obligation to do so and without notice to or demand
on Borrower and without releasing Borrower from any obligation hereunder, make
or do the same in such manner and to such extent as Lender may deem necessary to
protect the security hereof. Lender 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. The cost and expense of any cure hereunder (including
reasonable attorneys' fees to the extent permitted by law), with interest at the
Default Rate (defined in the Note), shall constitute a portion of the Debt and
shall be due and payable to Lender upon demand. All costs and expenses incurred
by Lender in remedying any Event of Default or failed payment or act or in
appearing in, defending, or bringing any such action or proceeding shall bear
interest at the Default Rate defined in the Note, for the period after notice
from Lender that such cost or expense was incurred to the date of payment to
Lender. All such costs and expenses incurred by Lender 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 Lender
therefor.
Section 9.4. ACTIONS AND PROCEEDINGS. At any time, Lender has the right to
appear in and defend, compromise or settle any action or proceeding brought with
respect to the Property, and after the occurrence and during the continuance of
an Event of Default, to bring any action or proceeding, in the name and on
behalf of Borrower, which Lender, in its discretion, decides should be brought
to protect its interest in the Property.
Section 9.5. RECOVERY OF SUMS REQUIRED TO BE PAID. Lender 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 Lender
thereafter to bring an action of foreclosure, or any other action, for a default
or defaults by Borrower existing at the time such earlier action was commenced.
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Section 9.6. EXAMINATION OF BOOKS AND RECORDS. Lender, its agents, accountants
and attorneys shall have the right upon prior written notice to Borrower (unless
an Event of Default exists, in which case no notice shall be required), to
examine and audit, during reasonable business hours, the records, books,
management and other papers of Borrower and its affiliates or of any Guarantor
or Indemnitor which pertain to their financial condition or the income, expenses
and operation of the Property, at the Property or at any office regularly
maintained by Borrower, its affiliates or any Guarantor or Indemnitor where the
books and records are located. Lender and its agents shall have the right upon
notice to make copies and extracts from the foregoing records and other papers
at no cost to Lender.
Section 9.7. OTHER RIGHTS. ETC.
(a) The failure of Lender to insist upon strict performance of any term
hereof shall not be deemed to be a waiver of any term of this Security
Instrument. Borrower shall not be relieved of Borrower's obligations hereunder
by reason of (i) the failure of Lender to comply with any request of Borrower,
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 Note 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 Lender extending
the time of payment, changing the rate of interest, or otherwise modifying or
supplementing the terms of the Note, this Security Instrument or the Other
Security Documents.
(b) It is agreed that the risk of loss or damage to the Property, is on
Borrower, and Lender 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 Lender 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 Lender's possession.
(c) Lender may resort for the payment of the Debt to any other security
held by or guaranties given to Lender in such order and manner as Lender, in its
discretion, may elect. Lender may take action to recover the Debt, or any
portion thereof, or to enforce any covenant hereof without prejudice to the
right of Lender thereafter to foreclose this Security Instrument. The rights of
Lender 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 Lender
shall be construed as an election to proceed under any one provision herein to
the exclusion of any other provision. Lender 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 9.8. RIGHT TO RELEASE ANY PORTION OF THE PROPERTY. Lender may release
any portion of the Property for such consideration as Lender 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
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obligations hereunder shall have been reduced by the actual monetary
consideration, if any, received by Lender for such release, and may accept by
assignment, pledge or otherwise any other property in place thereof as Lender
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 9.9. VIOLATION OF LAWS. If the Property is not in compliance with
Applicable Laws, Lender may impose additional requirements upon Borrower in
connection herewith including, without limitation, monetary reserves or
financial equivalents.
Section 9.10. RIGHT OF ENTRY. Lender and its agents shall have the right to
enter and inspect the Property at all reasonable times.
Section 9.11. SUBROGATION. If any or all of the proceeds of the Note have been
used to extinguish, extend or renew any indebtedness heretofore existing against
the Property, then, to the extent of the funds so used, Lender 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 Lender 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 Borrower's obligations hereunder, under the Note and the Other Security
Documents and the performance and discharge of the Other Obligations.
ARTICLE 10. - ENVIRONMENTAL HAZARDS
Section 10.1. ENVIRONMENTAL DEFINITIONS. For the purpose of this Section,
"Environmental Law" means any present and future federal, state and local laws,
statutes, ordinances, rules, regulations, standards, policies and other
government directives or requirements, as well as common law, including but not
limited to the Comprehensive Environmental Response, Compensation and Liability
Act and the Resource Conservation and Recovery Act, that apply to Borrower or
the Property and relate to Hazardous Materials. "Environmental Liens" means all
Liens and other encumbrances imposed pursuant to any Environmental Law, whether
due to any act or omission of Borrower or any other person or entity.
"Environmental Report" means the written reports resulting from the
environmental site assessments of the Property delivered to Lender. "Hazardous
Materials" shall mean petroleum and petroleum products and compounds containing
them, including gasoline, diesel fuel and oil; explosives, flammable materials;
radioactive materials; polychlorinated biphenyls ("PCBs") and compounds
containing them; lead and lead-based paint; asbestos or asbestos-containing
materials in any form that is or could become friable; underground or
above-ground storage tanks, whether empty or containing any substance; any
substance the presence of which on the Property is prohibited by any federal,
state or local authority; any substance that requires special handling; and any
other material or substance now or in the future defined as a "hazardous
substance," "hazardous material," "hazardous waste," "toxic substance," "toxic
pollutant," "contaminant," or "pollutant" within the meaning of any
Environmental Law. "Release" of any Hazardous Materials includes but is not
limited to any release, deposit, discharge, emission, leaking, spilling,
seeping, migrating, injecting, pumping, pouring, emptying, escaping, dumping,
disposing or other movement of Hazardous Materials.
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Section 10.2. ENVIRONMENTAL REPRESENTATIONS AND WARRANTIES. Borrower represents
and warrants that: (a) there are no Hazardous Materials or underground storage
tanks in on or under the Property, except those that are both (i) in compliance
with Environmental Laws and with permits issued pursuant thereto (if such
permits are required), if any, and (ii) either (A) in amounts not in excess of
that necessary to operate the Property or (B) fully disclosed to and approved by
Lender in writing pursuant to an Environmental Report; (b) there are no past,
present or threatened (defined below) Release of Hazardous Materials in
violation of any Environmental Law and which would require remediation by a
governmental authority in, on, under or from the Property except as described in
the Environmental Report; (c) there is no threat of any Release of Hazardous
Materials migrating to the Property except as described in the Environmental
Report; (d) 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; (e) Borrower 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 Materials in, on, under or from the Property; and (f) Borrower has
truthfully and fully provided to Lender, in writing, any and all information
relating to environmental conditions in, on, under or from the Property known to
Borrower or contained in Borrower's files and records, including but not limited
to any reports relating to Hazardous Materials in, on, under or migrating to or
from the Property and/or to the environmental condition of the Property.
Section 10.3. ENVIRONMENTAL COVENANTS. Borrower covenants and agrees that so
long as Borrower 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 Borrower 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 Materials in, on, under or from the Property; (c) there
shall be no Hazardous Materials in, on, or under the Property, except those that
are both (i) in compliance with all Environmental Laws and with permits issued
pursuant thereto, if and to the extent required, and (ii) (A) in amounts not in
excess of that necessary to operate the Property or (B) fully disclosed to and
approved by Lender in writing; (d) Borrower shall keep the Property free and
clear of all Environmental Liens; (e) Borrower shall, at its sole cost and
expense, fully and expeditiously cooperate in all activities pursuant to this
Section, including but not limited to providing all relevant information and
making knowledgeable persons available for interviews; (f) Borrower 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 Lender, upon Lender's reasonable
belief that the Property is not in full compliance with all Environmental Laws,
and share with Lender the reports and other results thereof, and Lender and
other Indemnified Parties (hereinafter defined) shall be entitled to rely on
such reports and other results thereof; (g) Borrower shall, at its sole cost and
expense, comply with all reasonable written requests of Lender to (i) reasonably
effectuate remediation of any Hazardous Materials in, on, under or from the
Property; and (ii) comply with any Environmental Law; (h) Borrower shall not
allow any tenant or other user of the Property to violate any Environmental Law;
and (i) Borrower shall immediately notify Lender in writing after it has become
aware of (A) any presence or Release or threatened Releases of Hazardous
Materials in, on, under, from or migrating towards the Property; (B) any
non-compliance with any Environmental Laws related in any way to the Property;
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(C) any actual or potential Environmental Lien; (D) any required or proposed
remediation of environmental conditions relating to the Property; or (E) any
written or oral notice or other communication of which Borrower becomes aware
from any source whatsoever (including but not limited to a governmental entity)
relating in any way to Hazardous Materials. Any failure of Borrower to perform
its obligations pursuant to this Section 10.3 shall constitute bad faith waste
with respect to the Property.
Section 10.4. LENDER'S RIGHTS. Lender and any other person or entity designated
by Lender, including but not limited to any representative of a governmental
entity, and any environmental consultant, and any receiver appointed by any
court of competent jurisdiction, shall have the right, but not the obligation,
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 at Borrower's
expense (the scope of which shall be determined in Lender's sole discretion) and
taking samples of soil, groundwater or other water, air, or building materials,
and conducting other invasive testing. Borrower shall cooperate with and provide
access to Lender and any such person or entity designated by Lender.
Section 10.5. OPERATIONS AND MAINTENANCE PROGRAMS. If recommended by the
Environmental Report or any other environmental assessment or audit of the
Property, Borrower shall establish and comply with an operations and maintenance
program with respect to the Property, in form and substance reasonably
acceptable to Lender, prepared by an environmental consultant reasonably
acceptable to Lender, which program shall address any asbestos containing
material or lead based paint that may now or in the future be detected at or on
the Property. Without limiting the generality of the preceding sentence, Lender
may require (a) periodic notices or reports to Lender in form, substance and at
such intervals as Lender may specify, (b) an amendment to such operations and
maintenance program to address changing circumstances, laws or other matters,
(c) at Borrower's sole expense, supplemental examination of the Property by
consultants specified by Lender, (d) access to the Property by Lender, its
agents or servicer, to review and assess the environmental condition of the
Property and Borrower's compliance with any operations and maintenance program,
and (e) variation of the operations and maintenance program in response to the
reports provided by any such consultants.
ARTICLE 11. - INDEMNIFICATION
Section 11.1. GENERAL INDEMNIFICATION. Borrower shall, at its sole cost and
expense, protect, defend, indemnify, release and hold harmless the Indemnified
Parties (defined below) from and against any and all Losses (defined below)
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 (a) 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; (b)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; (c) performance of any labor or
services or the furnishing of any materials or other property in respect of the
Property or any part thereof; (d) any failure of the Property to be in
compliance with any Applicable Laws; (e) any and all claims and demands
whatsoever which may be asserted against Lender 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; (f) Borrower's breach of
any term, covenant, condition, representation or warranty contained herein; or
(g) 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 Note and
secured by this Security Instrument. Any amounts payable to Lender by reason of
the application of this Section shall become immediately due and payable and
shall bear interest at the Default Rate from the date loss or damage is
sustained by Lender until paid. The term "Losses" shall mean any and all claims,
suits, liabilities (including, without limitation, strict liabilities), actions,
proceedings, obligations, debts, damages, losses, costs, expenses, fines,
penalties, charges, fees, judgments, awards, amounts paid in settlement of
whatever kind or nature (including but not limited to attorneys' fees and other
costs of defense). The term "Indemnified Parties" shall mean (a) Lender, (b) any
prior owner or holder of the Note, (c) any servicer or prior servicer of the
Loan, (d) any Investor (defined below) or any prior Investor in any
Participations (defined below), (e) any trustees, custodians or other
fiduciaries who hold or who have held a full or partial interest in the Loan for
33
the benefit of any Investor or other third party, (f) any receiver or other
fiduciary appointed in a foreclosure or other Creditors Rights Laws proceeding,
(g) any officers, directors, shareholders, partners, members, employees, agents,
servants, representatives, contractors, subcontractors, affiliates or
subsidiaries of any and all of the foregoing, and (h) the heirs, legal
representatives, successors and assigns of any and all of the foregoing
(including, without limitation, any successors by merger, consolidation or
acquisition of all or a substantial portion of the Indemnified Parties' assets
and business), in all cases whether during the term of the Loan or as part of or
following a foreclosure of the Loan.
Section 11.2. MORTGAGE, DOCUMENTARY STAMPS AND/OR INTANGIBLE TAX. Borrower
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 or fee
on the making and/or recording of this Security Instrument, the Note or any of
the Other Security Documents.
Section 11.3. DUTY TO DEFEND: ATTORNEYS' FEES AND OTHER FEES AND EXPENSES. Upon
written request by any Indemnified Party, Borrower 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
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 any claim or proceeding. Upon demand, Borrower shall
pay or, in the sole discretion of the Indemnified Parties, reimburse, the
Indemnified Parties for the payment of reasonable fees and disbursements of
attorneys, engineers, environmental consultants, laboratories, surveyors, title
searches and other professionals in connection therewith, which any Indemnified
Parties may engage as a result of any Losses.
Section 11.4. ENVIRONMENTAL INDEMNITY. As between Borrower and Lender, all risk
of loss associated with non-compliance with Environmental Laws, or with the
presence of any Hazardous Material at, upon, within, contiguous to or otherwise
affecting the Property, shall lie solely with Borrower. Accordingly, Borrower
shall bear all risks and costs associated with any loss (including any loss in
value attributable to Hazardous Materials), damage or liability therefrom,
including all costs of removal of Hazardous Materials or other remediation
required by Lender or by law. Borrower shall indemnify, defend and hold Lender
harmless from and against all loss, liabilities, damages, claims, costs and
expenses (including reasonable costs of defense) arising out of or associated,
in any way, with the non-compliance with Environmental Laws, or the existence of
Hazardous Materials in, on, or about the Property, or a breach of any
34
representation, warranty or covenant contained in Article 10 hereof, whether
based in contract, tort, implied or express warranty, strict liability, criminal
or civil statute or common law, including those arising from the joint,
concurrent, or comparative negligence of Lender; however, Borrower shall not be
liable under such indemnification to the extent such loss, liability, damage,
claim, cost or expense results solely from Lender's gross negligence or willful
misconduct. Borrower's obligations hereunder shall arise upon the discovery of
the presence of any Hazardous Material, whether or not any governmental
authority has taken or threatened any action in connection with the presence of
any Hazardous Material, and whether or not the existence of any such Hazardous
Material or potential liability on account thereof is disclosed in any site
assessment and shall continue notwithstanding the repayment of the Note or any
transfer or sale of any right, title and interest in the Property (by
foreclosure, deed in lieu of foreclosure or otherwise). Of even date herewith,
Borrower and other persons or entities (collectively, Borrower and such other
parties, the "Indemnitors") may as circumstances require execute and deliver a
certain environmental indemnity agreement in favor of the Lender incorporating
the environmental indemnities set forth herein as well as additional provisions
and requirements with respect to environmental matters (the "Environmental
Indemnity"). In the event an Environmental Indemnity is executed, it shall be
included in the definition of "Other Security Documents".
ARTICLE 12. - WAIVERS
Section 12.1. WAIVER OF COUNTERCLAIM. Borrower hereby waives the right to assert
a counterclaim, other than a mandatory or compulsory counterclaim, in any action
or proceeding brought against it by Lender arising out of or in any way
connected with this Security Instrument, the Note, any of the Other Security
Documents, or the Obligations.
Section 12.2. MARSHALLING AND OTHER MATTERS. Borrower 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, Borrower 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 Borrower, 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 state or federal law.
Section 12.3. WAIVER OF NOTICE. Borrower shall not be entitled to any notices of
any nature whatsoever from Lender except (a) with respect to matters for which
this Security Instrument specifically and expressly provides for the giving of
notice by Lender to Borrower and (b) with respect to matters for which Lender is
required by applicable state or federal law to give notice, and Borrower hereby
expressly waives the right to receive any notice from Lender with respect to any
matter for which this Security Instrument does not specifically and expressly
provide for the giving of notice by Lender to Borrower.
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Section 12.4. WAIVER OF STATUTE OF LIMITATIONS. Borrower 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 12.5. SOLE DISCRETION OF LENDER. Wherever pursuant to this Security
Instrument (a) Lender exercises any right given to it to approve or disapprove,
(b) any arrangement or term is to be satisfactory to Lender, or (c) any other
decision or determination is to be made by Lender, the decision to approve or
disapprove all decisions that arrangements or terms are satisfactory or not
satisfactory, and all other decisions and determinations made by Lender, shall
be in the sole discretion of Lender, except as may be otherwise expressly and
specifically provided herein.
Section 12.6. WAIVER OF FORECLOSURE DEFENSE. Borrower hereby waives any defense
Borrower might assert or have by reason of Lender's failure to make any tenant
or lessee of the Property a party defendant in any foreclosure proceeding or
action instituted by Lender.
ARTICLE 13. - NOTICES
Section 13.1. NOTICES. All notices or other written communications hereunder
shall be deemed to have been properly given (a) upon delivery, if delivered in
person 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 to Borrower or Lender, as the case may be,
at the addresses set forth on the first page of this Security Instrument 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 New York, New York.
ARTICLE 14. - CHOICE OF LAW
Section 14.1. CHOICE OF LAW. This Security Instrument and any determination of
deficiency judgments shall be governed, construed, applied and enforced in
accordance with the laws of the state in which the Property is located and
applicable federal law.
Section 14.2. PROVISIONS SUBJECT TO 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 state or federal 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 any applicable state or federal law.
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ARTICLE 15. - SECONDARY MARKET
Section 15.1. TRANSFER OF LOAN. Lender may, at any time, sell, transfer or
assign the Note, this Security Instrument and the Other Security Documents, and
any or all servicing rights with respect thereto, or grant participations
therein (the "Participations") or issue mortgage passthrough certificates or
other securities evidencing a beneficial interest in a rated or unrated public
offering or private placement (the "Securities"). Lender may forward to each
purchaser, transferee, assignee, servicer, participant, or investor in such
Participations or Securities (collectively, the "Investor") or any Rating Agency
rating such Securities, each prospective Investor, and any organization
maintaining databases on the underwriting and performance of commercial mortgage
loans, all documents and information which Lender now has or may hereafter
acquire relating to the Debt and to Borrower, any Guarantor, any Indemnitor(s)
and the Property, whether furnished by Borrower, any Guarantor, any
Indemnitor(s) or otherwise, as Lender determines necessary or desirable.
Borrower irrevocably waives any and all rights it may have under applicable
state or federal law to prohibit such disclosure, including but not limited to
any right of privacy.
Section 15.2. COOPERATION. Borrower, any Guarantor and any Indemnitor agree to
cooperate with Lender in connection with any transfer made pursuant to this
Section, including, without limitation, the delivery of an estoppel certificate
required pursuant to the terms hereof and such other documents as may be
reasonably requested by Lender. Borrower shall also furnish and Borrower, any
Guarantor and any Indemnitor consent to Lender furnishing to such Investors or
such prospective Investors or such Rating Agency any and all information
concerning the Property, the Leases, the financial condition of Borrower, any
Guarantor and any Indemnitor as may be requested by Lender, any Investor or any
prospective Investor or any Rating Agency in connection with any sale, transfer
or Participations or Securities.
ARTICLE 16. - COSTS
Section 16.1. PERFORMANCE AT BORROWER'S EXPENSE. Borrower acknowledges and
confirms that Lender shall impose certain administrative processing and/or
commitment fees in connection with (a) the extension, renewal, modification,
amendment and termination of the Loan, (b) the release or substitution of
collateral therefor, (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"). Borrower 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, Lender or any governmental or quasi-governmental authority.
Borrower 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 Lender from time to time, upon the occurrence of any Event or otherwise.
Wherever it is provided for herein that Borrower pay any costs and expenses,
such costs and expenses shall include, but not be limited to, all reasonable
counsel fees of Lender.
Section 16.2. COUNSEL FEES FOR ENFORCEMENT. (a) Borrower shall pay all
reasonable counsel fees incurred by Lender in connection with (i) the
preparation of the Note, this Security Instrument and the Other Security
Documents; and (ii) the items set forth in this Article, and (b) Borrower shall
pay to Lender on demand any and all expenses, including legal fees incurred or
paid by Lender in protecting its interest in the Property or in collecting any
amount payable under the Note, this Security Instrument or the Other Security
Documents, or in enforcing its rights hereunder with respect to the Property,
whether or not any legal proceeding is commenced hereunder or thereunder,
together with interest thereon at the Default Rate from the date paid or
incurred by Lender until such expenses are paid by Borrower.
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ARTICLE 17. - DEFINITIONS
Section 17.1. 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 "Borrower" shall mean "each Borrower and any subsequent owner or
owners of the Property or any part thereof or any interest therein," the word
"Lender" shall mean "Lender and any subsequent holder of the Note," the word
"Note" shall mean "the Note 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,
and the phrases "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 pretrial, trial and appellate levels incurred or paid by
Lender in protecting its interest in the Property, the Leases and the Rents and
enforcing its rights hereunder, whether with respect to retained firms, the
reimbursement for the expenses of in-house staff or otherwise.
Section 17.2. HEADINGS ETC. The headings and captions of various Articles and
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 18. - MISCELLANEOUS PROVISIONS
Section 18.1. 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 Borrower or
Lender, 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 18.2. LIABILITY. If Borrower 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 Borrower and Lender and their respective successors and assigns forever.
Section 18.3. INAPPLICABLE PROVISIONS. If any term, covenant or condition of the
Note or this Security Instrument is held to be invalid, illegal or unenforceable
in any respect, the Note and this Security Instrument shall be construed without
such provision.
Section 18.4. 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. The
failure of any party hereto to execute this Security Instrument, or any
counterpart hereof, shall not relieve the other signatories from their
obligations hereunder.
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Section 18.5. 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 18.6. LEGAL DESCRIPTION. Borrower represents to lender that it has
reviewed and delivered to Lender a copy of the legal description set forth in
Exhibit "A"; that such legal description is the accurate and proper legal
description of the Land; and Borrower further acknowledges that neither Lender
nor Lender's counsel prepared or reviewed such legal description. Borrower shall
indemnify, defend and hold Lender harmless from and against any and all losses,
liabilities, claims, damages, expenses, obligations, penalties, actions,
judgments, suits, costs or disbursements of any kind or nature whatsoever,
including the reasonable fees and actual expenses of Lender's counsel, in
connection with any claim that title to the Property is impaired due to or based
upon an inaccurate or improper legal description set forth herein.
Section 18.7. INCONSISTENCIES. In the event of any inconsistencies between the
terms and conditions of this Article and the other provisions of this Security
Instrument, the terms and conditions of this Article shall control and be
binding.
Section 18.8. WAIVER OF TRIAL BY JURY. BORROWER BY ACCEPTANCE OF THIS SECURITY
INSTRUMENT, 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, THE APPLICATION
FOR THE LOAN, THE NOTE, THIS SECURITY INSTRUMENT OR THE OTHER SECURITY DOCUMENTS
OR ANY ACTS OR OMISSIONS OF LENDER OR BORROWER.
[NO FURTHER TEXT - SIGNATURES APPEAR ON NEXT PAGE]
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IN WITNESS WHEREOF, this Security Instrument has been executed by
borrower the day and year first above written.
Signed, sealed and delivered in the presence of:
BORROWER:
Polymer Research Corporation of America,
a New York corporation
______________________________
Print Name: __________________ By: __________________________________
Name: ____________________________
Title: ___________________________
______________________________
Print Name: __________________
[CORPORATE SEAL]
This Instrument Prepared by and Xxxxx X. Xxxxxxxx, Esq.
Upon Recording Return to: Bayview Financial Trading Group, L.P.
0000 Xxxxx Xxxxxxxx Xxxxx, Xxxxx 000
Xxxxx, Xxxxxxx 00000
Attention: Legal Department
40
