Loan No. 400030964
MORTGAGE AND SECURITY AGREEMENT
THIS MORTGAGE AND SECURITY AGREEMENT, (as the same may from time to time be
extended, renewed or modified, the "Mortgage"), is granted as of the 14 day of
August 1998, by JAGI XXXXXXXXX - XXXXXX, LLC, a Delaware limited liability
company ("Mortgagor"), having its principal place of business at 0000 Xxxx
Xxxxxx Xxxx, Xxxxxxxxxx, Xxxx 00000, to AMRESCO CAPITAL, L.P., a Delaware
limited partnership ("Mortgagee"), having its principal place of business at 000
Xxxxx Xxxxx Xxxxxx, Xxxxx 0000, XX 000, Xxxxxx, Xxxxx 00000-0000, Attention:
Loan Servicing, the mortgagee hereunder.
To secure (i) the payment of an indebtedness (the "Loan") in the original
principal sum of Thirteen Million Three Hundred Thousand and No/100 Dollars
($13,300,000), lawful money of the United States of America, to be paid with
interest according to a certain note dated the date hereof made by Mortgagor to
Mortgagee (the note together with all extensions, renewals or modifications
thereof being hereinafter collectively called the "Note"), and all other sums,
liabilities and obligations constituting the Debt (as defined in the Note), (ii)
the payment of all sums advanced or incurred by Mortgagee contemplated hereby,
and (iii) the performance of the obligations and covenants herein contained,
Mortgagor has mortgaged, given, granted, bargained, sold, alienated, enfeoffed,
conveyed, confirmed, warranted, pledged, assigned, and hypothecated and by these
presents does hereby mortgage, give, grant, bargain, sell, alien, enfeoff,
convey, confirm, warrant, pledge, assign and hypothecate unto Mortgagee the real
property described in Exhibit A attached hereto (the "Premises") and the
buildings, structures, fixtures, additions, enlargements, extensions,
modifications, repairs, replacements and improvements now or hereafter located
thereon (the "Improvements");
TOGETHER WITH: all right, title, interest and estate of Mortgagor now
owned, or hereafter acquired, in and to the following property, rights,
interests and estates (the Premises, the Improvements together with the
following property, rights, interests and estates being hereinafter described
are collectively referred to herein as the "Mortgaged Property"):
(a) all easements, rights-of-way, 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, tenements, hereditaments and
appurtenances of any nature whatsoever, in any way belonging, relating or
pertaining to the Premises 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
Premises, to the center line thereof and all the estates, rights, titles,
interests, dower and rights of dower, curtesy and rights of curtesy,
property, possession, claim and demand whatsoever, both at law and in
equity, of Mortgagor of, in and to the Premises and the Improvements and
every part and parcel thereof, with the appurtenances thereto;
(b) all machinery, furnishings, equipment, fixtures (including but not
limited to all heating, air conditioning, plumbing, lighting,
communications and elevator fixtures) and other personal property of every
kind and nature (hereinafter collectively called the "Equipment"), whether
tangible or intangible, whatsoever owned by Mortgagor, or in which
Mortgagor has or shall have an interest, now or hereafter located upon the
Premises and the Improvements, or appurtenant thereto, and usable in
connection with the present or future operation and occupancy of the
Premises and the Improvements, including without limitation, beds, bureaus,
chiffonniers, chests, chairs, desks, lamps, mirrors, bookcases, tables,
rugs, carpeting, drapes, draperies, curtains, shades, venetian blinds,
screens, paintings, hangings, pictures, divans, couches, luggage carts,
luggage racks, stools, sofas, chinaware, linens, pillows, blankets,
glassware, foodcarts, cookware, dry cleaning facilities, dining room
wagons, keys or other entry systems, bars, bar fixtures, liquor and other
drink dispensers, icemakers, radios, television sets, cable t.v. equipment,
intercom and paging equipment, electric and electronic equipment, dictating
equipment, private telephone systems, medical equipment, potted plants,
heating, lighting and plumbing fixtures, fire prevention and extinguishing
apparatus, fittings, plants, apparatus, stoves, ranges, refrigerators,
cutlery and dishes, laundry machines, tools, machinery, engineers, dynamos,
motors, boilers, incinerators, washers and dryers, other customary
hotel equipment, and all building equipment, materials and supplies of any
nature whatsoever owned by Mortgagor, or in which Mortgagor has or shall
have an interest, now or hereafter located upon the Premises and the
Improvements, or appurtenant thereto, or usable in connection with the
present or future operation, enjoyment and occupancy of the Premises and
the Improvements, including the proceeds of any sale or transfer of the
foregoing, and the right, title and interest of Mortgagor in and to any of
the Equipment 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 Mortgaged Property is located (the "Uniform Commercial
Code") superior in lien to the lien of this Mortgage;
(c) all awards or payments, including interest thereon, which may
heretofore and hereafter be made with respect to the Premises and the
Improvements, whether from the exercise of the right of eminent domain or
condemnation (including but not limited to any transfer made in lieu of or
in anticipation of the exercise of said rights), or for a change of grade,
or for any other injury to or decrease in the value of the Premises and
Improvements;
(d) all leases, subleases and other agreements affecting the use,
enjoyment or occupancy of the Premises and the Improvements heretofore or
hereafter entered into (including, without limitation, any and all security
interests, contractual liens and security deposits) (the "Leases") and all
income, rents, issues, profits and revenues (including all oil and gas or
other mineral royalties and bonuses) from the Premises and the
Improvements, including, without limitation, all revenues and credit card
receipts collected from guest rooms, restaurants, bars, meeting rooms,
banquet rooms and recreational facilities, all receivables, customer
obligations, installment payment obligations and other obligations now
existing or hereafter arising or created out of the sale, lease, sublease,
license, concession or other grant of the right of the use and occupancy of
property or rendering of services by Mortgagor or any operator or manager
of the hotel or the commercial space located in the Improvements or
acquired from others (including, without limitation, from the rental of any
office space, retail space, guest rooms or other space, halls, stores, and
offices, and deposits securing reservations of such space), license, lease,
sublease and concession fees and rentals, health club membership fees, food
and beverage wholesale and retail sales, service charges, vending machine
sales and proceeds, if any, from business interruption or other loss of
income insurance (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;
(e) all proceeds of and any unearned premiums on any insurance
policies covering the Mortgaged 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 Mortgaged Property;
(f) the right, in the name and on behalf of Mortgagor, to appear in
and defend any action or proceeding brought with respect to the Mortgaged
Property and to commence any action or proceeding to protect the interest
of Mortgagee in the Mortgaged Property;
(g) all accounts, escrows, documents, instruments, chattel paper,
claims, deposits and general intangibles, as the foregoing terms are
defined in the Uniform Commercial Code, and all contract rights,
franchises, books, contracts, certificates, records, plans, specifications,
permits, licenses (to the extent assignable), approvals, actions, and
causes of action which now or hereafter relate to, are derived from or are
used in connection with the Premises, or the use, operation, construction,
management, maintenance, occupancy or enjoyment thereof or the conduct of
any business or activities thereon (hereinafter collectively called the
"Intangibles"); and
(h) all refunds, rebates or credits in connection with a reduction in
real estate taxes and assessments charged against the Mortgaged Property as
a result of tax certiorari or any application or proceedings for reduction;
(i) 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; and
(j) any and all proceeds and products of any of the foregoing and any
and all other security and collateral of any nature whatsoever, now or
hereafter given for the repayment of the Debt and the performance of
Mortgagor's obligations under the Loan Documents (as defined in the Note),
including (without limitation) the Tax and Insurance Escrow Fund (hereafter
defined) and the Replacement Escrow Fund (hereafter defined), and all other
escrows established with Mortgagee by Mortgagor.
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TO HAVE AND TO HOLD the above granted and described Mortgaged Property unto
and to the use and benefit of Mortgagee and its successors and assigns, forever;
PROVIDED, HOWEVER, these presents are upon the express condition that, if
Mortgagor shall well and truly pay to Mortgagee the Debt at the time and in the
manner provided in the Note and this Mortgage and shall well and truly abide by
and comply with each and every covenant and condition set forth herein, in the
Note and in the other Loan Documents in a timely manner, these presents and the
estate hereby granted shall cease, terminate and be void;
AND Mortgagor represents and warrants to and covenants and agrees with
Mortgagee as follows:
1. Payment of Debt and Incorporation of Covenants, Conditions and
Agreements. Mortgagor will pay the Debt at the time and in the manner provided
in the Note and in this Mortgage. Mortgagor will duly and punctually perform all
of the covenants, conditions and agreements contained in the Note, this Mortgage
and the other Loan Documents all of which covenants, conditions and agreements
are hereby made a part of this Mortgage to the same extent and with the same
force as if fully set forth herein.
2. Warranty of Title. Mortgagor warrants that Mortgagor is the sole owner
of and has good, legal, marketable and insurable fee simple title to the
Mortgaged Property and has the full power, authority and right to execute,
deliver and perform its obligations under this Mortgage and to encumber,
mortgage, give, grant, bargain, sell, alienate, enfeoff, convey, confirm,
pledge, assign and hypothecate the same and that Mortgagor possesses an
unencumbered fee estate in the Premises and the Improvements and that it owns
the Mortgaged 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 Mortgage. This Mortgage is and will remain a valid and
enforceable first lien on and security interest in the Mortgaged Property,
subject only to said exceptions. Mortgagor shall forever warrant, defend and
preserve such title and the validity and priority of the lien of this Mortgage
and shall forever warrant and defend the same to Mortgagee against the claims of
all persons whomsoever. Notwithstanding the foregoing, Mortgagor may grant a
Second Mortgage and Security Agreement, subject and subordinate to the lien of
this Mortgage, as security for repayment of the Related Debt (hereinafter
defined).
3. Insurance. Mortgagor, at its sole cost and expense, will keep the
Mortgaged Property insured during the entire term of this Mortgage for the
mutual benefit of Mortgagor and Mortgagee against loss or damage by fire and
against loss or damage by other risks and hazards covered by a standard extended
coverage insurance policy and included within the classification "All Risks of
Physical Loss" including, but not limited to, riot and civil commotion,
vandalism, malicious mischief, burglary and theft. Such insurance shall be in an
amount (i) equal to the greater of (a) or (b), as follows: (a) the lesser of the
then full replacement cost of the Improvements and Equipment, without deduction
for physical depreciation, or the outstanding amount of the Debt, or (b) the
amount specified in the agreed value clause of the policy, which must be in an
amount required by the insurer to suspend any co-insurance clause, and (ii) with
extended coverage in amounts sufficient such that the insurer would not deem
Mortgagor a co-insurer under said policies. The policies of insurance carried in
accordance with this paragraph shall be paid annually in advance and shall
contain the "Replacement Cost Endorsement" with a waiver of depreciation.
(a) Mortgagor, at its sole cost and expense, for the mutual benefit of
Mortgagor and Mortgagee, shall also obtain and maintain during the entire
term of this Mortgage the following policies of insurance:
i) Flood insurance if any part of the Mortgaged Property now (or
subsequently determined to be) is located in an area identified by the
Federal Emergency Management Agency as an area having special flood hazards
and in which flood insurance has been made available under the National
Flood Insurance Act of 1968, the Flood Disaster Protection Act of 1973, or
the National Flood Insurance Reform Act of 1994 (and any amendment or
successor act thereto) in an amount at least equal to the lesser of the
full replacement cost of the Improvements and the Equipment, the
outstanding principal amount of the Note or the maximum limit of coverage
available with respect to the Improvements and Equipment under said Act.
Mortgagor hereby agrees to pay Mortgagee such fees as may be permitted
under applicable law
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for the costs incurred by Mortgagee in determining, from time to time,
whether the Mortgaged Property is then located within such area.
ii) Comprehensive General Liability insurance, including broad form
property damage, blanket contractual and personal injuries (including death
resulting therefrom) coverages and containing minimum limits per occurrence
of $1,000,000 for the Improvements and the Premises with excess umbrella
coverage in an amount of at least $1 million arising out of any one
occurrence ,except that if any buildings contain elevators, the minimum
limits per occurrence shall be $2,500,000.
iii) Business interruption insurance in an amount equal to (a) the
aggregate annual amount of projected gross income from the Mortgaged
Property from all sources (such income to cover gross income anticipated to
be lost for a period of at least one year after the date of the fire or
casualty in question) less (b) non-continuing expenses (which for purposes
hereof shall mean such operating expenses as are reasonably determined by
Mortgagor, subject to approval by Mortgagee, to be suspended after the
occurrence of a total casualty). The amount of such business interruption
insurance shall be reviewed annually and shall be adjusted from time to
time during the term of this Mortgage as warranted by Mortgagee as a result
of changes in gross income and/or operating expenses.
iv) Insurance against loss or damage from (1) leakage of sprinkler
systems, and (2) explosion of steam boilers, air conditioning equipment,
high pressure piping, machinery and equipment, pressure vessels or similar
apparatus now or hereafter installed in the Improvements and including
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 Premises and the Improvements. Coverage is
required in an amount at least equal to the full replacement cost of such
equipment and the building or buildings housing same. Coverage must extend
to electrical equipment, sprinkler systems, heating and air conditioning
equipment, refrigeration equipment and piping.
v) If the Mortgaged Property includes commercial property, worker's
compensation insurance with respect to any employees of Mortgagor, as
required by any governmental authority or legal requirement.
vi) If required by Mortgagee, Earthquake or sinkhole insurance if
available in the area where the Mortgaged Property is located in an amount
at least equal to the outstanding principal amount of the Note or the
maximum limit of coverage available, whichever is less.
vii) Such other insurance as may from time to time be reasonably
required by Mortgagee in order to protect its interests.
(b) All policies of insurance (the "Policies") required pursuant to Section
3: (i) shall contain a standard noncontributory mortgagee clause naming
Mortgagee as the person to which all payments made by such insurance company
shall be paid, (ii) shall be maintained throughout the term of this Mortgage
without cost to Mortgagee, (iii) shall be assigned and delivered to Mortgagee,
(iv) shall contain such provisions as Mortgagee deems reasonably necessary or
desirable to protect its interest including, without limitation, endorsements
providing that neither Mortgagor, Mortgagee nor any other party shall be a
co-insurer under said Policies and that Mortgagee shall receive at least thirty
(30) days prior written notice or, of any modification, reduction or
cancellation, (v) shall be for a term of not less than one year, (vi) shall be
issued by an insurer licensed in the state in which the Mortgaged Property is
located, (vii) shall provide that Mortgagee may, but shall not be obligated to,
make premium payments to prevent any cancellation, endorsement, alteration or
reissuance, and such payments shall be accepted by the insurer to prevent same,
(viii) shall be satisfactory in form and substance to Mortgagee and shall be
approved by Mortgagee as to amounts, form, risk coverage, deductibles, loss
payees and insureds, and (ix) shall provide that all claims shall be allowable
on events as they occur. Upon demand therefor, Mortgagor shall reimburse
Mortgagee for all of Mortgagee's (or its servicer's) reasonable costs and
expenses incurred in obtaining any or all of the Policies or otherwise causing
the compliance with the terms and provisions of this Section 3, including
(without limitation) obtaining updated flood hazard certificates and replacement
or any so-called "forced placed" insurance coverages. All Policies required
pursuant to subsections 3(a) and 3(b) shall be issued by an insurer with a
claims paying ability rating of "A-" or better by Standard & Poor's Corporation
or A:VIII or better by A.M. Best as published in Best's
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Key Rating Guide. Mortgagor shall pay the premiums for such Policies (the
"Insurance Premiums") as the same become due and payable (unless such Insurance
Premiums have been paid by Mortgagee pursuant to Section 5 hereof). Not later
than thirty (30) days prior to the expiration date of each of the Policies,
Mortgagor will deliver to Mortgagee satisfactory evidence of the renewal of each
Policy. If Mortgagor receives from any insurer any written notification or
threat of any actions or proceedings regarding the non-compliance or
non-conformity of the Mortgaged Property with any insurance requirements,
Mortgagor shall give prompt notice thereof to Mortgagee.
(c) In the event of the entry of a judgment of foreclosure, sale of the
Mortgaged Property by non-judicial foreclosure sale, or delivery of a deed in
lieu of foreclosure, Mortgagee hereby is authorized (without the consent of
Mortgagor) to assign any and all Policies to the purchaser or transferee
thereunder, or to take such other steps as Mortgagee may deem advisable to cause
the interest of such transferee or purchaser to be protected by any of the
Policies without credit or allowance to Mortgagor for prepaid premiums thereon.
(d) If the Mortgaged Property shall be damaged or destroyed, in whole or in
part, by fire or other casualty, Mortgagor shall give prompt notice thereof to
Mortgagee.
i) In case of loss covered by Policies, Mortgagee may either (1)
settle and adjust any claim without the consent of Mortgagor, or (2) allow
Mortgagor to agree with the insurance company or companies on the amount to
be paid upon the loss; provided, that Mortgagor may adjust losses
aggregating not in excess of $100,000.00 if such adjustment is carried out
in a competent and timely manner, and provided that in any case Mortgagee
shall and is hereby authorized to collect and receipt for any such
insurance proceeds; and the expenses incurred by Mortgagee in the
adjustment and collection of insurance proceeds shall become part of the
Debt and be secured hereby and shall be reimbursed by Mortgagor to
Mortgagee upon demand (unless deducted by and reimbursed to Mortgagee from
such proceeds).
ii) In the event of any insured damage to or destruction of the
Mortgaged Property or any part thereof (herein called an "Insured
Casualty"), if (A) the loss is in an aggregate amount less than twenty-five
percent (25%) of the original principal balance of the Note, and (B), in
the reasonable judgment of Mortgagee, the Mortgaged Property can be
restored within six (6) months after insurance proceeds are made available
to an economic unit not less valuable (including an assessment of the
impact of the termination of any Leases due to such Insured Casualty) and
not less useful than the same was prior to the Insured Casualty, and after
such restoration will adequately secure the outstanding balance of the
Debt, and (C) no Event of Default (hereinafter defined) shall have occurred
and be then continuing, then the proceeds of insurance shall be applied to
reimburse Mortgagor for the cost of restoring, repairing, replacing or
rebuilding the Mortgaged Property or part thereof subject to Insured
Casualty, as provided for below; and Mortgagor hereby covenants and agrees
forthwith to commence and diligently to prosecute such restoring,
repairing, replacing or rebuilding; provided, however, in any event
Mortgagor shall pay all costs (and if required by Mortgagee, Mortgagor
shall deposit the total thereof with Mortgagee in advance) of such
restoring, repairing, replacing or rebuilding in excess of the net proceeds
of insurance made available pursuant to the terms hereof.
iii) Except as provided above, the proceeds of insurance collected
upon any Insured Casualty shall, at the option of Mortgagee in its sole
discretion, be applied to the payment of the Debt or applied to reimburse
Mortgagor for the cost of restoring, repairing, replacing or rebuilding the
Mortgaged Property or part thereof subject to the Insured Casualty, in the
manner set forth below. Any such application to the Debt shall not be
considered a voluntary prepayment requiring payment of the prepayment
consideration provided in the Note, and shall not reduce or postpone any
payments otherwise required pursuant to the Note, other than the final
payment on the Note.
iv) In the event that proceeds of insurance, if any, shall be made
available to Mortgagor for the restoring, repairing, replacing or
rebuilding of the Mortgaged Property, Mortgagor hereby covenants to
restore, repair, replace or rebuild the same to be of at least equal value
and of substantially the same character as prior to such damage or
destruction, all to be effected in accordance with applicable law and plans
and specifications approved in advance by Mortgagee.
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v) In the event Mortgagor is entitled to reimbursement out of
insurance proceeds held by Mortgagee, such proceeds shall be disbursed from
time to time upon Mortgagee being furnished with (1) evidence satisfactory
to it (which evidence may include inspection[s] of the work performed) that
the restoration, repair, replacement and rebuilding covered by the
disbursement has been completed in accordance with plans and specifications
approved by Mortgagee, (2) evidence satisfactory to it of the estimated
cost of completion of the restoration, repair, replacement and rebuilding,
(3) funds, or, at Mortgagee's option, assurances satisfactory to Mortgagee
that such funds are available, sufficient in addition to the proceeds of
insurance to complete the proposed restoration, repair, replacement and
rebuilding, and (4) such architect's certificates, waivers of lien,
contractor's sworn statements, title insurance endorsements, bonds, plats
of survey and such other evidences of cost, payment and performance as
Mortgagee may reasonably require and approve; and Mortgagee may, in any
event, require that all plans and specifications for such restoration,
repair, replacement and rebuilding be submitted to and approved by
Mortgagee prior to commencement of work. With respect to disbursements to
be made by Mortgagee: (A) no payment made prior to the final completion of
the restoration, repair, replacement and rebuilding shall exceed ninety
percent (90%) of the value of the work performed from time to time; (B)
funds other than proceeds of insurance shall be disbursed prior to
disbursement of such proceeds; and (C) at all times, the undisbursed
balance of such proceeds remaining in the hands of Mortgagee, together with
funds deposited for that purpose or irrevocably committed to the
satisfaction of Mortgagee by or on behalf of Mortgagor for that purpose,
shall be at least sufficient in the reasonable judgment of Mortgagee to pay
for the cost of completion of the restoration, repair, replacement or
rebuilding, free and clear of all liens or claims for lien and the costs
described in subsection 3(e)(vi) below. Any surplus which may remain out of
insurance proceeds held by Mortgagee after payment of such costs of
restoration, repair, replacement or rebuilding shall be paid to any party
entitled thereto. In no event shall Mortgagee assume any duty or obligation
for the adequacy, form or content of any such plans and specifications, nor
for the performance, quality or workmanship of any restoration, repair,
replacement and rebuilding.
vi) Notwithstanding anything to the contrary contained herein, the
proceeds of insurance reimbursed to Mortgagor in accordance with the terms
and provisions of this Mortgage shall be reduced by the reasonable costs
(if any) incurred by Mortgagee in the adjustment and collection thereof and
in the reasonable costs incurred by Mortgagee of paying out such proceeds
(including, without limitation, reasonable attorneys' fees and costs paid
to third parties for inspecting the restoration, repair, replacement and
rebuilding and reviewing the plans and specifications therefor).
4. Payment of Other Charges. Mortgagor shall pay all assessments, water
rates and sewer rents, ground rents, maintenance charges, other governmental
impositions, and other charges, including without limitation vault charges and
license fees for the use of vaults, chutes and similar areas adjoining the
Premises, now or hereafter levied or assessed or imposed against the Mortgaged
Property or any part thereof (the "Other Charges") as the same become due and
payable. Mortgagor will deliver to Mortgagee evidence satisfactory to Mortgagee
that the Taxes and Other Charges have been so paid or are not then delinquent no
later than thirty (30) days following the date on which the Taxes and/or Other
Charges would otherwise be delinquent if not paid. Mortgagor 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 Mortgaged Property, and
shall promptly pay for all utility services provided to the Mortgaged Property.
5. Tax and Insurance Escrow Fund. On the date hereof, Mortgagor shall make
an initial deposit to the Tax and Insurance Escrow Fund, as hereinafter defined,
of an amount which, when added to the monthly amounts to be deposited as
specified below, will be sufficient in the estimation of Mortgagee to satisfy
the next due taxes, assessments, insurance premiums and other similar charges.
Mortgagor shall pay to Mortgagee on the first day of each calendar month (a)
one-twelfth of an amount which would be sufficient to pay all taxes, assessments
and other similar governmental impositions (the "Taxes") payable or estimated by
Mortgagee 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 (said amounts in [a] and [b] above hereinafter called the "Tax and
Insurance Escrow Fund"). Mortgagee may, in its sole discretion, retain a third
party tax consultant to obtain tax certificates or other evidence or estimates
of tax due or to become due or to verify the payment of taxes and Mortgagor will
promptly reimburse Mortgagee for the reasonable cost of retaining any such third
parties or obtaining such certificates. Any unpaid reimbursements for the costs
of
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such third parties shall be added to the Debt. The Tax and Insurance 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 Mortgagor to
Mortgagee. Mortgagor hereby pledges (and grants a lien and security interest) to
Mortgagee any and all monies now or hereafter deposited in the Tax and Insurance
Escrow Fund as additional security for the payment of the Debt. Mortgagee will
apply the Tax and Insurance Escrow Fund to payments of Taxes and Insurance
Premiums required to be made by Mortgagor pursuant to Sections 3 and 4 hereof.
If the amount of the Tax and Insurance Escrow Fund shall exceed the amounts due
for Taxes and Insurance Premiums pursuant to Sections 3 and 4 hereof, Mortgagee
shall, in its discretion, return any excess to Mortgagor or credit such excess
against future payments to be made to the Tax and Insurance Escrow Fund. In
allocating such excess, Mortgagee may deal with the person shown on the records
of Mortgagee to be the owner of the Mortgaged Property. If the Tax and Insurance
Escrow Fund is not sufficient to pay the items set forth in (a) and (b) above,
Mortgagor shall promptly pay to Mortgagee, upon demand, an amount which
Mortgagee shall estimate as sufficient to make up the deficiency. Upon the
occurrence of an Event of Default, Mortgagee shall be entitled to exercise both
the rights of setoff and banker's lien, if applicable, against the interest of
Mortgagor in the Tax and Insurance Escrow Fund to the full extent of the
outstanding balance of the Debt, application of any such sums to the Debt to be
in any order in its sole discretion. Until expended or applied as above
provided, any amounts in the Tax and Insurance Escrow Fund shall constitute
additional security for the Debt. The Tax and Insurance Escrow Fund shall not
constitute a trust fund and may be commingled with other monies held by
Mortgagee. Unless otherwise required by applicable law, no earnings or interest
on the Tax and Insurance Escrow Fund shall be payable to Mortgagor even if
Mortgagee or its servicer is paid a fee and/or receives interest or other income
in connection with the deposit or placement of such fund (in which event such
income shall be reported under Mortgagee's or its servicer's tax identification
number, as applicable). Upon payment of the Debt and performance by Mortgagor of
all its obligations under this Mortgage and the other Loan Documents, any
amounts remaining in the Tax and Insurance Escrow Fund shall be refunded to
Mortgagor.
Notwithstanding the foregoing, Mortgagee (by its acceptance of this
Mortgage) agrees to defer its right to require deposits into escrow for
Insurance Premiums as long as the following conditions are satisfied:
(1) JAGI XXXXXXXXX - XXXXXX, LLC, a Delaware limited liability
company, is the sole fee simple owner of the Mortgaged Property;
(2) Mortgagor has established a mechanism acceptable to Mortgagee for
insuring that all Insurance Premiums on the Mortgaged Property are paid at
a time and in a manner acceptable to Mortgagee;
(3) Mortgagee is satisfied in its discretion from written evidence
provided promptly and consistently to it by Mortgagor that all such
Insurance Premiums are actually being timely paid in full;
(4) No Event of Default exists hereunder or under any other Loan
Documents and no condition or event exists which with notice, the passage
of time, or both would constitute an Event of Default; and
(5) All insurance companies must have agreed that such insurance shall
not be subject to termination without 30 days prior written notice to
Mortgagee or its servicer.
In the event that any one or more of the foregoing conditions precedent shall be
(or become) unsatisfied, Mortgagee may require that such escrow be established
and fully funded as provided herein.
6. Replacement Escrow Fund. If initially or subsequently required by
Mortgagee, Mortgagor shall pay to Mortgagee on the first day of each calendar
month one-twelfth of the product of multiplying the annual gross revenues from
the Mortgaged Property (as reasonably estimated by Mortgagee from time to time)
by three percent (the amount reasonably estimated by Mortgagee to be due for
replacements and capital repairs required to be made to the Mortgaged Property
during each calendar year) (the "Replacement Escrow Fund"). Mortgagor hereby
pledges (and grants a lien and security interest) to Mortgagee any and all
monies now or hereafter deposited in the Replacement Escrow Fund as additional
security for the payment of the Debt. As required in Section 18 below, Mortgagor
shall deliver to Mortgagee for Mortgagee's review and approval, a capital
expenditure budget (the "Budget") itemizing the replacements and capital repairs
which are anticipated to be made to the Mortgaged Property during the next
immediately succeeding calendar year. Mortgagee may, upon notice to Mortgagor,
adjust
7
the monthly amounts required to be deposited into the Replacement Escrow Fund to
a monthly amount equal to one-twelfth of the total amount specified in each
approved Budget. So long as no Event of Default exists and is continuing,
Mortgagee shall make disbursements from the Replacement Escrow Fund for items
specified in each approved Budget on a quarterly basis in increments of no less
than $5,000.00 upon delivery by Mortgagor of Mortgagee's standard form of draw
request accompanied by copies of paid invoices (or unpaid invoices to be paid
from such requested disbursement; provided, however, that disbursements with
respect to unpaid invoices shall not exceed $20,000 during any calendar quarter)
for the amounts requested and, if required by Mortgagee, lien waivers and
releases from all parties furnishing materials and/or services in connection
with the requested payment, delivery of such certificates and certifications as
Mortgagee may require, including but not limited to a new certificate of
occupancy for the portion of the Improvements covered by such repairs, if a new
certificate of occupancy is required by applicable law, or a certification by
Mortgagor that no new certificate of occupancy is required and for disbursement
requests in excess of $20,000.00, if requested by Mortgagee a certification from
an inspecting architect or other third party acceptable to Mortgagee describing
the completed repairs or capital improvements, verifying the completion of the
completed work and the compliance with applicable law and reimbursement of all
out-of-pocket inspection fees incurred by Mortgagee. Mortgagee may require an
inspection of the Mortgaged Property prior to making a quarterly disbursement in
order to verify completion of replacements and repairs. Mortgagee reserves the
right to make any disbursement from the Replacement Escrow Fund directly to the
party furnishing materials and/or services. The Replacement Escrow Fund is
solely for the protection of Mortgagee and entails no responsibility or
obligation on Mortgagee's part beyond the payment of the costs and expenses
described in this section in accordance with the terms hereof and beyond the
allowing of due credit for the sums actually received. In the event that the
amounts on deposit or available in the Replacement Escrow Fund are inadequate to
pay the costs of such repairs or capital expenditure, Mortgagor shall pay the
amount of such deficiency. Until expended or applied as above provided, any
amounts in the Replacement Escrow Fund shall constitute additional security for
the Debt. Upon the occurrence of an Event of Default, Mortgagee may apply any
sums then present in the Replacement Escrow Fund to the payment of the Debt in
any order in its sole discretion. Upon payment of the Debt and performance by
Mortgagor of all its obligations under this Mortgage and the other Loan
Documents, any amounts remaining in the Replacement Escrow Fund shall be
refunded to Mortgagor. The Replacement Escrow Fund shall not constitute a trust
fund and may be commingled with other monies held by Mortgagee. The Replacement
Escrow Fund shall be held in an account in Mortgagee's name (or such other
account name style as Mortgagee may elect) at a financial institution selected
by Mortgagee in its sole discretion. Mortgagor shall be entitled to, and shall
report under its federal tax identification number, the amount earned, if any,
on the Replacement Escrow Fund at a yield equal to that which would accrue on
such funds by taking the average of the interest rate paid on each tier (if any)
of such institution's basic business checking with interest account and the
interest rates paid on each tier (if any) of such institution's business money
market savings account, as such rates change from time to time, as quoted by the
institution with which Mortgagee (or its servicer) deposits the Replacement
Escrow Fund ("Mortgagor's Interest"), or if such institution does not have
established basic business checking with interest and business money market
savings accounts (or if rates for such accounts cannot otherwise be determined
in connection with the deposit of such Replacement Escrow Fund), then at such
average of comparable rates as quoted by Bank One, Texas, N.A., Mortgagor's
Interest, less applicable administrative fees (if any), shall be and become part
of such Replacement Escrow Fund and shall be disbursed as provided in this
section. Mortgagee shall not be responsible for obtaining a specific return or
yield on such deposit and, unless otherwise prohibited by applicable law, shall
be entitled to retain any fees or other earnings in excess of Mortgagor's
Interest paid in connection with the deposit or placement of any Replacement
Escrow Fund. Mortgagee will cause to be furnished to Mortgagor on an annual
basis such income tax reporting forms as are required by applicable law.
7. Condemnation. Mortgagor shall promptly give Mortgagee written notice of
the actual or threatened commencement of any condemnation or eminent domain
proceeding and shall deliver to Mortgagee copies of any and all papers served in
connection with such proceedings. Mortgagee is hereby irrevocably appointed as
Mortgagor's attorney-in-fact, coupled with an interest, with exclusive power to
collect, receive and retain any award or payment for said condemnation or
eminent domain and to make any compromise or settlement in connection with such
proceeding, subject to the provisions of this Mortgage. 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), Mortgagor shall continue to pay
the Debt at the time and in the manner provided for its payment in the Note, in
this Mortgage and the other Loan Documents and the Debt shall not be reduced
until any award or payment therefor shall have been actually received after
expenses of collection and applied by Mortgagee to the discharge of the Debt.
Mortgagee shall not be limited to the interest
8
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. Mortgagor
shall cause the award or payment made in any condemnation or eminent domain
proceeding, which is payable to Mortgagor, to be paid directly to Mortgagee.
Mortgagee may apply any such award or payment to the reduction or discharge of
the Debt whether or not then due and payable (such application to be without the
prepayment consideration provided in the Note, except that if an Event of
Default, or an event which with notice and/or the passage of time, or both,
would constitute an Event of Default, has occurred, then such application shall
be subject to the full prepayment consideration computed in accordance with the
Note). If the Mortgaged Property is sold, through foreclosure or otherwise,
prior to the receipt by Mortgagee of such award or payment, Mortgagee shall have
the right, whether or not a deficiency judgment on the Note shall have been
sought, recovered or denied, to receive said award or payment, or a portion
thereof sufficient to pay the Debt.
8. Representations Concerning Loan. Mortgagor represents, warrants and
covenants as follows:
(a) Neither Mortgagor nor any guarantor of the Debt or any part
thereof (a "Guarantor") has any defense to the payment in full of the Debt
that arises from applicable local, state or federal laws, regulations or
other requirements. None of the Loan Documents are subject to any right of
rescission, set-off, abatement, diminution, counterclaim or defense,
including the defense of usury, nor will the operation of any of the terms
of any such Loan Documents, or the exercise of any right thereunder, render
any Loan Documents unenforceable, in whole or in part, or subject to any
right of rescission, set-off, abatement, diminution, counterclaim or
defense, including the defense of usury, and no such right of rescission,
set-off, abatement, diminution, counterclaim or defense has been, or will
be, asserted with respect thereto.
(b) There is no action, suit or proceeding, judicial administrative or
otherwise pending or, to the best of Mortgagor's knowledge threatened or
contemplated against Mortgagor, or Guarantor or against or affecting the
Mortgaged Property that (i) has not been disclosed to Mortgagee and has a
material, adverse effect on the Mortgaged Property or Mortgagor's and
Guarantor's ability to perform their obligations under any Loan Document or
(ii) is not adequately covered by insurance, each as determined by
Mortgagee in its sole and absolute discretion.
(c) All certifications, permits and approvals, including, without
limitation, certificates of completion and occupancy permits required for
the legal use and occupancy of the Mortgaged Property as a hotel,
including, without limitation, any applicable liquor license (collectively,
the "Licenses") have been obtained and are in full force and effect. The
Mortgaged Property is in good repair, good order and good condition and
free and clear of any damage that would affect materially and adversely the
value of the Mortgaged Property as security for the Debt and the Mortgaged
Property has not been materially damaged by fire, wind or other casualty or
physical condition (including, without limitation, any soil or geological
condition), which damage has not been fully repaired. There are no
proceedings pending or threatened for the partial or total condemnation of
the Mortgaged Property.
(d) All of the Improvements which were included in determining the
appraised value of the Mortgaged Property lie wholly within the boundaries
and building restriction lines of the Mortgaged Property, and no
improvements on adjoining properties encroach upon the Mortgaged Property,
and no easements or other encumbrances upon the Premises encroach upon any
of the Improvements, so as to affect the value or marketability of the
Mortgaged Property except for immaterial encroachments which do not
adversely affect the security intended to be provided by this Mortgage or
the use, enjoyment, value or marketability of the Mortgaged Property. All
of the Improvements comply with all material requirements of any applicable
zoning and subdivision laws and ordinances.
(e) The Mortgaged Property is not subject to any leases or operating
agreements other than the leases and the operating agreements, if any,
described in the rent roll delivered to Mortgagee in connection with this
Mortgage, and all such leases and agreements are in full force and effect.
No person has any possessory interest in the Mortgaged Property or right to
occupy the same except under and pursuant to the provisions of the leases
and any such operating agreements.
(f) All financial data, including, without limitation, statements of
cash flow and income and operating expenses, delivered to Mortgagee by, or
on behalf of Mortgagor are (i) true and correct in all material respects;
(ii) accurately represent the financial condition of Mortgagor or the
Mortgaged Property as of the date thereof in all material respects; and
(iii) to the extent reviewed by an independent certified public accounting
firm, have been
9
prepared in accordance with generally accepted accounting principles
consistently applied throughout the periods covered.
(g) The survey of the Mortgaged Property delivered to Mortgagee in
connection with this Mortgage, has been performed by a duly licensed
surveyor or registered professional engineer in the jurisdiction in which
the Mortgaged Property is situated and, to the best of Mortgagor=s
knowledge, does not fail to reflect any material matter affecting the
Mortgaged Property or the title thereto.
(h) The loan evidenced by the Loan Documents complies with, or is
exempt from, applicable state or federal laws, regulations and other
requirements pertaining to usury and any and all other requirements of any
federal, state or local law.
(i) The Mortgaged Property is located on a dedicated, all-weather
road, or has access to an irrevocable easement permitting ingress and
egress which are adequate in relation to the premises and location on which
the Mortgaged Property is located.
(j) The Mortgaged Property is served by public utilities and services
in the surrounding community, including police and fire protection, public
transportation, refuse removal, public education, and enforcement of safety
codes which are adequate in relation to the premises and location on which
the Mortgaged Property is located.
(k) The Mortgaged Property is serviced by public water and sewer
systems which are adequate in relation to the premises and location on
which the Mortgaged Property is located.
(l) The Mortgaged Property has parking and other amenities necessary
for the operation of the business currently conducted thereon which are
adequate in relation to the premises and location on which the Mortgaged
Property is located.
(m) The Mortgaged Property is a contiguous parcel and a separate tax
parcel, and there are no delinquent Taxes or other outstanding charges
adversely affecting the Mortgaged Property.
(n) The Mortgaged Property is not relied upon by, and does not rely
upon, any building or improvement not part of the Mortgaged Property to
fulfill any zoning, building code or other governmental or municipal
requirement for structural support or the furnishing of any essential
building systems or utilities, except to the extent of any valid and
existing reciprocal easement agreements shown in the title insurance policy
insuring the lien of this Mortgage.
(o) No action, omission, misrepresentation, negligence, fraud or
similar occurrence has taken place on the part of any person that would
reasonably be expected to result in the failure or impairment of full and
timely coverage under any insurance policies providing coverage for the
Mortgaged Property.
(p) There are no defaults by Mortgagor beyond any applicable grace
period under any contract or agreement (other than this Mortgage and the
other Loan Documents) that binds Mortgagor and/or the Mortgaged Property,
including any management, service, supply, security, maintenance or similar
contracts; and Mortgagor has no knowledge of any such default for which
notice has not yet been given; and no such agreement is in effect with
respect to the Mortgaged Property that is not capable of being terminated
by Mortgagor on less than thirty (30) days notice except as previously
disclosed to Mortgagee by a delivery of a copy of all such agreements.
(q) The representations and warranties contained in the Closing
Certificate executed by Mortgagor in connection with the Note (which
certificate constitutes one of the Loan Documents) are true and correct and
Mortgagor shall observe the covenants contained therein.
(r) The Holiday Inn Hotel Change of Ownership Agreement, dated as of
even date herewith (the "Franchise Agreement"), between Mortgagor and
Holiday Hospitality Franchising, Inc., pursuant to which Mortgagor has the
right to operate the hotel located on the Mortgaged Property under a name
and/or hotel system controlled by such franchisor, is in full force and
effect and there is no default, breach or violation existing
10
thereunder by any party thereto and no event has occurred (other than
payments due but not yet delinquent) that, with the passage of time or the
giving of notice, or both, would constitute a default, breach or violation
by any party thereunder.
(s) The Hotel Management Agreement dated as of July 20, 1998 (the
"Management Agreement"), between Mortgagor and Janus American Group, Inc.,
pursuant to which such hotel manager operates the Mortgaged Property as a
hotel, is in full force and effect and there is no default, breach or
violation existing thereunder by any party thereto and no event has
occurred (other than payments due but not yet delinquent) that, with the
passage of time or the giving of notice, or both, would constitute a
default, breach or violation by any party thereunder.
(t) Neither the execution and delivery of the Loan Documents, the
Mortgagor's performance thereunder, the recordation of this Mortgage, nor
the exercise of any remedies under this Mortgage, will adversely affect
Mortgagor's rights under the Franchise Agreement, the Management Agreement,
or any of the Licenses.
9. Single Purpose Entity/Separateness. Mortgagor represents, warrants and
covenants as follows:
(a) Mortgagor does not own and will not own any asset or property
other than (i) the Mortgaged Property, and (ii) incidental personal
property necessary for the ownership or operation of the Mortgaged
Property.
(b) Mortgagor will not engage in any business other than the
ownership, management and operation of the Mortgaged Property and Mortgagor
will conduct and operate its business as presently conducted and operated.
(c) Mortgagor will not enter into any contract or agreement with any
Guarantor or any party which is directly or indirectly controlling,
controlled by or under common control with Borrower, Mortgagor or Guarantor
(an "Affiliate"), except upon terms and conditions that are intrinsically
fair and substantially similar to those that would be available on an
arms-length basis with third parties other than any Guarantor or Affiliate.
(d) Mortgagor has not incurred and will not incur any indebtedness,
secured or unsecured, direct or indirect, absolute or contingent (including
guaranteeing any obligation), other than (i) the Debt, (ii) the Related
Debt (hereinafter defined) and (iii) trade and operational debt incurred in
the ordinary course of business with trade creditors and in amounts as are
normal and reasonable under the circumstances. No indebtedness other than
the Debt may be secured (subordinate or pari passu) by the Mortgaged
Property.
(e) Mortgagor has not made and will not make any loans or advances to
any third party, nor to Guarantor, any Affiliate or any constituent party
of Mortgagor.
(f) Mortgagor is and will remain solvent and Mortgagor will pay its
debts from its assets as the same shall become due.
(g) Mortgagor has done or caused to be done and will do all things
necessary, to preserve its existence, and Mortgagor will not, nor will
Mortgagor permit Guarantor to amend, modify or otherwise change the
partnership certificate, partnership agreement, articles of incorporation
and bylaws, trust, certificate of organization, operating agreement or
other organizational documents of Mortgagor or Guarantor in a manner which
would adversely affect the Mortgagor's existence as a single-purpose
entity.
(h) Mortgagor will maintain books and records and bank accounts
separate from those of its Affiliates and any constituent party of
Mortgagor, and Mortgagor will file its own tax returns.
(i) Mortgagor will be, and at all times will hold itself out to the
public as, a legal entity separate and distinct from any other entity
(including any Affiliate, any constituent party of Mortgagor or any
Guarantor).
(j) Mortgagor will preserve and keep in full force and effect its
existence, good standing and qualification to do business in the state in
which the Mortgaged Property is located.
11
(k) Mortgagor will maintain adequate capital for the normal
obligations reasonably foreseeable in a business of its size and character
and in light of its contemplated business operations.
(l) Neither Mortgagor nor any constituent party of Mortgagor will seek
the dissolution or winding up, in whole or in part, of Mortgagor, nor will
Mortgagor merge with or be consolidated into any other entity.
(m) Mortgagor will not commingle the funds and other assets of
Mortgagor with those of any Affiliate, any Guarantor, any constituent party
of Mortgagor or any other person.
(n) Mortgagor has and will maintain its assets in such a manner that
it will not be costly or difficult to segregate, ascertain or identify its
individual assets from those of any constituent party of Mortgagor,
Affiliate, Guarantor or any other person.
(o) Mortgagor does not and will not hold itself out to be responsible
for the debts or obligations of any other person other than the obligors
under the Related Debt (provided, that the foregoing shall not prevent
Mortgagor from being and holding itself responsible for expenses incurred
or obligations undertaken by the property manager of the Mortgaged Property
in respect of its duties regarding the Mortgaged Property).
(p) Mortgagor shall obtain and maintain in full force and effect, and
abide by and satisfy the material terms and conditions of, all material
permits, licenses, registrations and other authorizations with or granted
by any governmental authorities that may be required from time to time with
respect to the performance of its obligations under this Mortgage.
(q) Mortgagor will use separate checks, invoices and stationery.
10. Maintenance of Mortgaged Property. Mortgagor shall cause the Mortgaged
Property to be operated and maintained in a good and safe condition and repair
and in keeping with the condition and repair of properties of a similar use,
value, age, nature and construction. Mortgagor shall not use, maintain or
operate the Mortgaged Property in any manner which constitutes a public or
private nuisance or which makes void, voidable, or cancelable, or increases the
premium of, any insurance then in force with respect thereto. The Improvements
and the Equipment shall not be removed, demolished or materially altered (except
for normal replacement of the Equipment) without the consent of Mortgagee.
Mortgagor shall promptly comply with all laws, orders and ordinances affecting
the Mortgaged Property, or the use thereof. Mortgagor shall promptly repair,
replace or rebuild any part of the Mortgaged Property which may be destroyed by
any casualty, or become damaged, worn or dilapidated or which may be affected by
any proceeding of the character referred to in Section 7 hereof and shall
complete and pay for any structure at any time in the process of construction or
repair on the Premises.
11. Use of Mortgaged Property. Mortgagor shall not initiate, join in,
acquiesce in, or consent to any change in any private restrictive covenant,
zoning law or other public or private restriction, limiting or defining the uses
which may be made of the Mortgaged Property or any part thereof, nor shall
Mortgagor initiate, join in, acquiesce in, or consent to any zoning change or
zoning matter affecting the Mortgaged Property. If under applicable zoning
provisions the use of all or any portion of the Mortgaged Property is or shall
become a nonconforming use, Mortgagor will not cause or permit such
nonconforming use to be discontinued or abandoned without the express written
consent of Mortgagee. Mortgagor shall not permit or suffer to occur any waste on
or to the Mortgaged Property or to any portion thereof and shall not take any
steps whatsoever to convert the Mortgaged Property, or any portion thereof, to a
condominium or cooperative form of management. Mortgagor will not install or
permit to be installed on the Premises any underground storage tank or
above-ground storage tank without the written consent of Mortgagee.
12. Transfer or Encumbrance of the Mortgaged Property. (a) Mortgagor
acknowledges that Mortgagee has examined and relied on the creditworthiness and
experience of Mortgagor in owning and operating properties such as the Mortgaged
Property in agreeing to make the loan secured hereby, and that Mortgagee will
continue to rely on Mortgagor's ownership of the Mortgaged Property as a means
of maintaining the value of the Mortgaged Property as security for repayment of
the Debt. Mortgagor acknowledges that Mortgagee has a valid interest in
maintaining the value of the Mortgaged Property so as to ensure that, should
Mortgagor default in the repayment of the Debt, Mortgagee can recover the Debt
by a sale of the Mortgaged Property. Except for liens and
12
security interests granted by Mortgagor to Mortgagee in connection with the
Related Debt, Mortgagor shall not, without the prior written consent of
Mortgagee, sell, convey, alienate, mortgage, encumber, pledge or otherwise
transfer the Mortgaged Property or any part thereof, or permit the Mortgaged
Property or any part thereof to be sold, conveyed, alienated, mortgaged,
encumbered, pledged or otherwise transferred; provided, however, Mortgagee may,
in its sole discretion, give such written consent (but shall have no obligation
to do so) to any such sale, conveyance, alienation, mortgage, encumbrance,
pledge or other transfer, and any such consent may be conditioned upon the
satisfaction of such conditions precedent as Mortgagee may require (including,
without limitation, the conditions precedent set forth in subsection 12[c]
below). Notwithstanding any other provision of this Section 12, Mortgagee will
consent, subject to the conditions of subsection 12(c) and provided that no
Event of Default has occurred and is continuing, to one sale, conveyance,
alienation, mortgage, encumbrance, pledge or other transfer of the Mortgaged
Property by the original Mortgagor as set forth in this Mortgage.
(b) A sale, conveyance, alienation, mortgage, encumbrance, pledge or
transfer within the meaning of this Section 12 shall not include (x) transfers
made by devise or descent or by operation of law upon the death of a joint
tenant, partner or shareholder, subject, however, to all the following
requirements: (1) written notice of any transfer under this subsection 12(b)(x),
whether by will, trust or other written instrument, operation of law or
otherwise, is provided to Mortgagee or its servicer, together with copies of
such documents relating to the transfer as Mortgagee or its servicer may
reasonably request, (2) control over the management and operation of the
Mortgaged Property is retained by Janus American Group, Inc., a Delaware
corporation (the "Original Principals", whether one or more) at all times prior
to the death or legal incapacity of all the Original Principals and is
thereafter assumed by persons who are acceptable in all respects to Mortgagee in
its sole and absolute discretion, (3) no such transfer by any of the Original
Principals will release the respective estate from any liability as a Guarantor,
as more particularly provided in subsection 12(c) below, and (4) no such
transfer, death or other event has any adverse effect either on the
bankruptcy-remote status of Mortgagor under the requirements of any national
rating agency for the Certificates (hereinafter defined) or on the status of
Mortgagor as a continuing legal entity liable for the payment of the Debt and
the performance of all other obligations secured hereby, or (y) transfers
otherwise by operation of law in the event of a bankruptcy, nor shall the
meaning include a Lease, but shall be deemed to include (i) an installment sales
agreement wherein Mortgagor agrees to sell the Mortgaged Property or any part
thereof for a price to be paid in installments; (ii) an agreement by Mortgagor
leasing all or a substantial part of the Mortgaged 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, Mortgagor's right, title
and interest in and to any Leases or any Rents; (iii) if Mortgagor, Guarantor,
or any general partner of Mortgagor or Guarantor is a corporation, any merger,
consolidation or the voluntary or involuntary sale, conveyance or transfer of
such corporation's stock (or the stock of any corporation directly or indirectly
controlling such corporation by operation of law or otherwise) or the creation
or issuance of new stock in one or a series of transactions by which an
aggregate of more than 10% of such corporation's stock shall be vested in a
party or parties who are not now stockholders (provided, however, in no event
shall this subpart [iii] apply to any Guarantor whose stock, shares or
partnership interests are traded on a nationally recognized stock exchange);
(iv) if Mortgagor, Guarantor, or any general partner of Mortgagor or Guarantor
is a limited liability company or limited partnership, the voluntary or
involuntary sale, conveyance or transfer by which an aggregate of more than
fifty percent (50%) of the ownership interest in such limited liability company
or more than fifty percent (50%) of the limited partnership interests in such
limited partnership shall be vested in parties not having an ownership interest
as of the date of this Mortgage; and (v) if Mortgagor, any Guarantor or any
general partner of Mortgagor or any Guarantor is a limited or general
partnership or joint venture, the change, removal or resignation of a general
partner, managing partner or joint venturer or the transfer of all or any
portion of the partnership interest of any general partner, managing partner or
joint venturer.
(c) Notwithstanding the provisions of subsections 12(a) and (b) above,
Mortgagee will give its consent to a one time sale or transfer of Mortgaged
Property, provided that no Event of Default under the Loan Documents has
occurred and is continuing and (i) the grantee's or transferee's integrity,
reputation, character and management ability are satisfactory to Mortgagee in
its sole discretion, (ii) the grantee's or transferee's (and its sole general
partner's) single purpose and bankruptcy remote character are satisfactory to
Mortgagee in its sole discretion, (iii) and any conditions relating to the sale
or transfer imposed by any national rating agency for the Certificates (as
defined in Section 20) are satisfied, (iv) Mortgagee has obtained such estoppels
from any guarantors of the Note or replacement guarantors and such other legal
opinions, certificates and similar matters as Mortgagee may require, (v) all of
Mortgagee's costs and expenses associated with the sale or transfer (including
reasonable attorneys fees) are paid by Mortgagor or the grantee or transferee,
(vi) the payment of a transfer fee not to exceed
13
1% of the outstanding principal balance of the Loan evidenced by the Note and
secured hereby, (vii) the grantee's execution of a written assumption agreement
and such modification to the Loan Documents containing such terms as Mortgagee
may require and delivery of Fsuch agreement to Mortgagee prior to such sale or
transfer (provided that in the event the Loan is included in a REMIC and is a
performing loan, no modification to the terms and conditions shall be made or
permitted that would cause (A) any adverse tax consequences to the REMIC or any
holders of any Certificates, (B) the Mortgage to fail to be a Qualifying
Mortgage under applicable federal law relating to REMIC's, (C) result in a
taxation of the income from the Loan to the REMIC or cause a loss of REMIC
status), (viii) the delivery to Mortgagee of an endorsement (at Mortgagor's sole
cost and expense) to the mortgagee policy of title insurance then insuring the
lien created by this Mortgage in form and substance acceptable to Mortgagee in
its sole judgment, and (ix) all requirements set forth in the Loan Agreement
with respect to the loan to value ratio pertaining to the Related Debt are, or
will be at the time of the transfer and assumption, satisfied. Without limiting
the foregoing, if Mortgagee shall consent to any such transfer, the written
assumption agreement described in subsection 12(c)(vii) above shall provide for
the release of Mortgagor of personal liability under the Note and other Loan
Documents solely as to acts or events occurring, or obligations arising, after
the closing of such sale; provided, however, in no event shall such sale operate
to: (x) relieve Mortgagor of any personal liability under the Note or any of the
other Loan Documents for any acts or events occurring, or obligations arising,
prior to or simultaneously with the closing of such sale, and Mortgagor shall
execute, without any cost or expense to Mortgagee, such documents and agreements
as Mortgagee shall reasonably require to evidence and effectuate the
ratification of such personal liability; or (y) relieve any current guarantor or
indemnitor, including Mortgagor, of its obligations under any guaranty or
indemnity agreement executed in connection with the Loan secured hereby
(including, without limitation, the Environmental Liabilities Agreement of even
date herewith [the "Environmental Agreement"]), and each such current guarantor
and indemnitor shall execute, without any cost or expense to Mortgagee, such
documents and agreements as Mortgagee shall reasonably require to evidence and
effectuate the ratification of each such guaranty and indemnity agreement.
Notwithstanding (y) preceding, if the proposed transferee and a party associated
with the proposed transferee (the "Substitute Guarantor") (1) is approved by
Mortgagee in its sole discretion (including a determination that the proposed
transferee and Substitute Guarantor have adequate financial resources), (2)
assumes the obligations of the current guarantor or indemnitor under its
guaranty or indemnity agreement, and (3) executes, without any cost or expense
to Mortgagee, a new guaranty and/or indemnity agreement, as applicable, in form
and substance satisfactory to Mortgagee, then Mortgagee may release the current
guarantor or indemnitor from all obligations arising under its guaranty or
indemnity agreement after the closing of such sale.
(d) Mortgagee may predicate its decision to grant or withhold consent to
any subsequent sale, conveyance, alienation, mortgage, encumbrance, pledge or
other transfer upon the satisfaction (in the sole determination of Mortgagee)
with such conditions as may be imposed by Mortgagee, which may include, but
shall not be limited to, the following matters: (i) the delivery to Mortgagee of
an endorsement (at Mortgagor's sole cost and expense) to the mortgagee policy of
title insurance then insuring the lien created by this Mortgage in a form and
substance acceptable to Mortgagee, in its sole judgment; (ii) the grantee's
integrity, reputation, character, creditworthiness and management ability being
satisfactory to Mortgagee, in its sole judgment; (iii) the grantee's single
purpose and bankruptcy remote character being satisfactory to Mortgagee, in its
sole judgment; (iv) the grantee executing (prior to such sale or transfer) a
written assumption agreement containing such terms as Mortgagee may require; (v)
subject to any restrictions described in Section 12(c) above relating to the
Loan being included in a REMIC, an adjustment to the term of the Note, a
principal paydown on the Note or an increase in the rate of interest payable on
the Note; (vi) payment by Mortgagor of a transfer and assumption fee not to
exceed one percent (1%) of the then unpaid principal balance of the Note; (vii)
payment by Mortgagor of the expenses described in subsection 12(f) below; and
(viii) the satisfaction of any conditions imposed by any national rating agency
for Certificates (hereinafter defined), together with such modification(s) of
the Loan Documents and such legal opinions, certifications and similar matters
that Mortgagee may require. Mortgagee agrees not to unreasonably withhold its
consent to a sale or transfer of the Mortgaged Property upon the satisfaction
(in the sole determination of Mortgagee) of the conditions to its consent as set
forth herein; provided, however, in any event Mortgagee shall be deemed to be
reasonable in withholding its consent if a sale to the proposed transferee
receives unfavorable comment from a national rating agency for Certificates.
Mortgagee shall not be required to demonstrate any actual impairment of its
security or any increased risk of default hereunder in order to declare the Debt
immediately due and payable upon any sale, conveyance, alienation, mortgage,
encumbrance, pledge or transfer by Mortgagor of the Mortgaged Property without
Mortgagee's consent.
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(e) Mortgagee's consent to one sale, conveyance, alienation, mortgage,
encumbrance, pledge or transfer of the Mortgaged Property shall not be deemed to
be a waiver of Mortgagee's right to require such consent to any future
occurrence of same. Any sale, conveyance, alienation, mortgage, encumbrance,
pledge or transfer of the Mortgaged Property made in contravention of this
Section 12 shall be null and void and of no force and effect.
(f) Mortgagor agrees to bear and shall pay or reimburse Mortgagee on demand
for all reasonable expenses (including, without limitation, all recording costs,
taxes, reasonable attorney's fees and disbursements and title search costs)
incurred by Mortgagee in connection with the review, approval and documentation
of any such sale, conveyance, alienation, mortgage, encumbrance, pledge or
transfer.
(g) In no event shall any of the terms and provisions of this Section 12
amend or modify the terms and provisions contained in Section 9 herein.
13. Estoppel Certificates and No Default Affidavits.
(a) After request by Mortgagee, Mortgagor shall within ten (10) days
furnish Mortgagee with a statement, duly acknowledged and certified, setting
forth (i) the amount of 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 date installments of interest and/or principal were last paid, (v) any
offsets or defenses to the payment of the Debt, if any, and (vi) that the Note,
this Mortgage and the other Loan Documents are valid, legal and binding
obligations and have not been modified or if modified, giving particulars of
such modification.
(b) After request by Mortgagee, Mortgagor shall within ten (10) days
furnish Mortgagee with a certificate reaffirming all representations and
warranties of Mortgagor set forth herein and in the other Loan Documents as of
the date requested by Mortgagee or, to the extent of any changes to any such
representations and warranties, so stating such changes.
(c) If the Mortgaged Property includes commercial property, Mortgagor shall
deliver to Mortgagee upon request, tenant estoppel certificates from each
commercial tenant at the Mortgaged Property in form and substance reasonably
satisfactory to Mortgagee provided that Mortgagor shall not be required to
deliver such certificates more frequently than two (2) times in any calendar
year.
14. Changes in the Laws Regarding Taxation. If any law is amended, enacted
or adopted after the date of this Mortgage which deducts the Debt from the value
of the Mortgaged Property for the purpose of taxation or which imposes a tax,
either directly or indirectly, on the Debt or Mortgagee's interest in the
Mortgaged Property, Mortgagor will pay such tax, with interest and penalties
thereon, if any. In the event Mortgagee is advised by counsel chosen by it that
the payment of such tax or interest and penalties by Mortgagor would be unlawful
or taxable to Mortgagee or unenforceable or provide the basis for a defense of
usury, then in any such event, Mortgagee shall have the option, by written
notice of not less than forty-five (45) days, to declare the Debt immediately
due and payable.
15. No Credits on Account of the Debt. Mortgagor 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 Mortgaged Property, or any part
thereof, and no deduction shall otherwise be made or claimed from the assessed
value of the Mortgaged Property, or any part thereof, for real estate tax
purposes by reason of this Mortgage or the Debt. In the event such claim, credit
or deduction shall be required by law, Mortgagee shall have the option, by
written notice of not less than ninety (90) days, to declare the Debt
immediately due and payable.
16. Documentary Stamps. 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 or this Mortgage, or impose any other tax
or charge on the same, Mortgagor will pay for the same, with interest and
penalties thereon, if any.
17. Controlling Agreement. It is expressly stipulated and agreed to be the
intent of Mortgagor and Mortgagee at all times to comply with applicable state
law or applicable United States federal law (to the extent that it permits
Mortgagee to contract for, charge, take, reserve, or receive a greater amount of
interest than under state
15
law) and that this section shall control every other covenant and agreement in
this Mortgage and the other Loan Documents. If the applicable law (state or
federal) is ever judicially interpreted so as to render usurious any amount
called for under the Note or under any of the other Loan Documents, or
contracted for, charged, taken, reserved, or received with respect to the Debt,
or if Mortgagee's exercise of the option to accelerate the maturity of the Note,
or if any prepayment by Mortgagor results in Mortgagor having paid any interest
in excess of that permitted by applicable law, then it is Mortgagor's and
Mortgagee's express intent that all excess amounts theretofore collected by
Mortgagee shall be credited on the principal balance of the Note and all other
Debt (or, if the Note and all other Debt have been or would thereby be paid in
full, refunded to Mortgagor), and the provisions of the Note and the other Loan
Documents immediately be deemed reformed and the amounts thereafter collectible
hereunder and thereunder reduced, without the necessity of the execution of any
new documents, so as to comply with the applicable law, but so as to permit the
recovery of the fullest amount otherwise called for hereunder or thereunder. All
sums paid or agreed to be paid to Mortgagee for the use, forbearance, or
detention of the Debt shall, to the extent permitted by applicable law, be
amortized, prorated, allocated, and spread throughout the full stated term of
the Debt until payment in full so that the rate or amount of interest on account
of the Debt does not exceed the maximum rate permitted under applicable law from
time to time in effect and applicable to the Debt for so long as the Debt is
outstanding. Notwithstanding anything to the contrary contained herein or in any
of the other Loan Documents, it is not the intention of Mortgagee to accelerate
the maturity of any interest that has not accrued at the time of such
acceleration or to collect unearned interest at the time of such acceleration.
18. Books and Records. Mortgagor will keep accurate books and records in
accordance with sound accounting principles in which full, true and correct
entries shall be promptly made with respect to the Mortgaged Property and the
operation thereof, and will permit all such books and records (including without
limitation all contracts, statements, invoices, bills and claims for labor,
materials and services supplied for the construction, repair or operation of the
Improvements) to be inspected or audited and copies made by Mortgagee and its
representatives during normal business hours and at any other reasonable times.
Mortgagor represents that its chief executive office is as set forth in the
introductory paragraph of this Mortgage and that all books and records
pertaining to the Mortgaged Property are and will be maintained at such location
or at such other office maintained by Mortgagor or one of its affiliates as to
which Mortgagor has given Mortgagee written notice. Mortgagor will furnish, or
cause to be furnished, to Mortgagee on or before twenty (20) days after each
calendar month the following items, each certified by Mortgagor as being true
and correct, in such format and in such detail as Mortgagee or its servicer may
request: (a) a written statement (rent roll) dated as of the last day of such
month identifying each of the Leases by the term, space occupied, rental
required to be paid, security deposit paid, any rental concessions, and
identifying any defaults or payment delinquencies thereunder; (b) a report of
occupancy for such month, including an average daily rate, and any and all
franchise inspection reports received by Mortgagor during such month; (c)
operating statements prepared for such month and year to date, noting Net
Operating Income, Gross Income From Operations and Hotel Operating Expenses (all
as hereinafter defined); (d) a property balance sheet for such month; and (e) a
comparison of the budgeted income and expenses with the actual income and
expenses for such month and year to date, together with a detailed explanation
of any variances between budgeted and actual amounts that are greater than (i)
$1,000.00, or (ii) five percent (5%) or more for each line item therein. Such
monthly reporting obligation will continue through the end of the calendar month
which is not less than twelve (12) months after the date of this Mortgage and
until there is no Event of Default and no event with which notice or lapse of
time or both could constitute an Event of Default. Beginning upon the expiration
of such period, Mortgagor will furnish, or cause to be furnished, to Mortgagee
on or before forty-five (45) days after March 31, June 30, September 30 and
December 31 of each calendar year the following items, each certified by
Mortgagor as being true and correct, in such format and in such detail as
Mortgagee or its
16
servicer may request: (a) a written statement (rent roll) dated as of the last
day of each such calendar quarter identifying each of the Leases by the term,
space occupied, rental required to be paid, security deposit paid, any rental
concessions, and identifying any defaults or payment delinquencies thereunder;
(b) a report of occupancy for such quarter, including an average daily rate, and
any and all franchise inspection reports received by Mortgagor during such
quarter; (c) quarterly and year to date operating statements prepared for each
calendar quarter during each such reporting period; (d) a property balance sheet
for each calendar quarter during each such reporting period; and (e) a
comparison of the budgeted income and expenses and the actual income and
expenses for each calendar quarter during each such reporting period and year to
date, together with a detailed explanation of any variances between budgeted and
actual amounts that are greater than (i) $2,000.00, or (ii) five percent (5%) or
more for each line item therein. Within ninety (90) days following the end of
each calendar year, Mortgagor shall furnish a statement of the financial affairs
and condition of the Mortgaged Property including a statement of profit and loss
for the Mortgaged Property in such format and in such detail as Mortgagee or its
servicer may request, and setting forth the financial condition and the income
and expenses for the Mortgaged Property for the immediately preceding calendar
year certified by Mortgagor as being true and correct. Mortgagor shall deliver
to Mortgagee copies of all income tax returns, requests for extension and other
similar items contemporaneously with its delivery of same to the Internal
Revenue Service. On or before November 30 of each calendar year, Mortgagor shall
deliver to Mortgagee an itemized operating budget and capital expenditure budget
of the Mortgaged Property and a management plan for the Mortgaged Property for
the next succeeding calendar year on a month-by-month basis, in such format and
in such detail as Mortgagee may request. In the event Mortgagor fails to deliver
such reports within the time frames provided above, Mortgagor shall pay a late
charge equal to two percent (2%) of the monthly payment amount for each late
submission of financial reports to compensate Mortgagee or its servicer for the
additional administrative expense caused by such failure or delay whether or not
Mortgagor is entitled to any notice and opportunity to cure such failure prior
to the exercise of any of the remedies. Failure to provide monthly, quarterly or
annual reports shall constitute an Event of Default under Section 23 and entitle
Mortgagee to audit or cause to be audited Mortgagor's books and records. The
late charge and the cost of such audit shall be immediately payable from
Mortgagor upon demand by Mortgagee and, until paid, shall be added to and
constitute a part of the Debt. At any time and from time to time Mortgagor shall
deliver to Mortgagee or its agents such other financial data as Mortgagor
prepares for its own use and which Mortgagee or its agents shall request with
respect to the ownership, maintenance, use and operation of the Mortgaged
Property, including, but not limited to, schedules of gross sales for percentage
rents under Leases. Mortgagor will permit representatives appointed by
Mortgagee, including independent accountants, agents, attorneys, appraisers and
any other persons, to visit and inspect during its normal business hours and at
any other reasonable times any of the Mortgaged Property and to make photographs
thereof, and to write down and record any information such representatives
obtain, and shall permit Mortgagee or its representatives to investigate and
verify the accuracy of the information furnished to Mortgagee under or in
connection with this Mortgage or any of the other Loan Documents and to discuss
all such matters with its officers, employees and representatives. Mortgagor
will furnish to Mortgagee at Mortgagor's expense all evidence which Mortgagee
may from time to time reasonably request as to the accuracy and validity of or
compliance with all representations and warranties made by Mortgagor in the Loan
Documents and satisfaction of all conditions contained therein. Any inspection
or audit of the Mortgaged Property or the books and records of Mortgagor, or the
procuring of documents and financial and other information, by or on behalf of
Mortgagee, shall be for Mortgagee's protection only, and shall not constitute
any assumption of responsibility or liability by Mortgagee to Mortgagor or
anyone else with regard to the condition, construction, maintenance or operation
of the Mortgaged Property, nor Mortgagee's approval of any certification given
to Mortgagee nor relieve Mortgagor of any of Mortgagor's obligations.
19. Performance of Other Agreements. Mortgagor shall observe and perform
each and every term to be observed or performed by Mortgagor pursuant to the
terms of any agreement or recorded instrument affecting or pertaining to the
Mortgaged Property.
20. Further Acts, etc. Mortgagor will, at the cost of Mortgagor, and
without expense to Mortgagee, do, execute, acknowledge and deliver all and every
such further acts, deeds, conveyances, mortgages, assignments, notices of
assignment, Uniform Commercial Code financing statements or continuation
statements, transfers and assurances as Mortgagee shall, from time to time,
require, for the better assuring, conveying, assigning, transferring, and
confirming unto Mortgagee the property and rights hereby mortgaged, given,
granted, bargained, sold, alienated, enfeoffed, conveyed, confirmed, pledged,
assigned and hypothecated or intended now or hereafter so to be, or which
Mortgagor may be or may hereafter become bound to convey or assign to Mortgagee,
or for carrying out the intention or facilitating the performance of the terms
of this Mortgage or for filing, registering or recording this Mortgage.
Mortgagor, on demand, will execute and deliver and hereby authorizes Mortgagee
to execute in the name of Mortgagor or without the signature of Mortgagor to the
extent Mortgagee may lawfully do so, one or more financing statements, chattel
mortgages or other instruments, to evidence more effectively the security
interest of Mortgagee in the Mortgaged Property. Mortgagor grants to Mortgagee
an irrevocable power of attorney coupled with an interest for the purpose of
exercising and perfecting any and all rights and remedies available to Mortgagee
at law and in equity, including without limitation such rights and remedies
available to Mortgagee pursuant to this paragraph.
(a) Mortgagee (and its mortgage servicer and their respective assigns)
shall have the right to disclose in confidence such financial information
regarding Mortgagor, Guarantor or the Mortgaged Property as may be necessary (i)
to complete any sale or attempted sale of the Note or participations in the loan
(or any transfer of the
17
mortgage servicing thereof) evidenced by the Note and the Loan Documents, (ii)
to service the Note or (iii) to furnish information concerning the payment
status of the Note to the holder or beneficial owner thereof, including, without
limitation, all Loan Documents, financial statements, projections, internal
memoranda, audits, reports, payment history, appraisals and any and all other
information and documentation in the Mortgagee's files (and such servicer's
files) relating to the Mortgagor, any Guarantor and the Mortgaged Property. This
authorization shall be irrevocable in favor of the Mortgagee (and its mortgage
servicer and their respective assigns), and Mortgagor and Guarantor waive any
claims that they may have against the Mortgagee, its mortgage servicer and their
respective assigns or the party receiving information from the Mortgagee
pursuant hereto regarding disclosure of information in such files and further
waive any alleged damages which they may suffer as a result of such disclosure.
(b) The Mortgagor acknowledges that the Mortgagee intends to sell the Loan
evidenced by the Note and the Loan Documents or a participation interest therein
to a party who may pool the Loan with a number of other loans and to have the
holder of such loans (most likely a special purpose REMIC) issue one or more
classes of Mortgage Backed Pass-Through Certificates (the "Certificates"), which
may be rated by one or more national rating agencies. Mortgagee (and its
mortgage servicer and their respective assigns) shall be permitted to share any
of the information referred to in subsection (a) above, whether obtained before
or after the date of the Note, with the holders or potential holders of the
Certificates, investment banking firms, rating agencies, accounting firms,
custodians, successor mortgage servicers, law firms and other third-party
advisory firms involved with the Loan evidenced by the Note and the Loan
Documents or the Certificates. It is understood that the information provided by
the Mortgagor to the Mortgagee (or its mortgage servicer and their respective
assigns) or otherwise received by Mortgagee (or its mortgage servicer and their
respective assigns) in connection with the Loan evidenced by the Loan Documents
may ultimately be incorporated into the offering documents for the Certificates
and thus various prospective investors may also see some or all of the
information. The Mortgagee (and its mortgage servicer and their respective
assigns) and all of the aforesaid third-party advisors and professional firms
shall be entitled to rely on the information supplied by, or on behalf of, the
Mortgagor.
21. Recording of Mortgage, etc. Upon the execution and delivery of this
Mortgage and thereafter, from time to time, Mortgagor will cause this Mortgage,
and any security instrument creating a lien or security interest or evidencing
the lien hereof upon the Mortgaged 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 the lien or security interest hereof upon, and the interest
of Mortgagee in, the Mortgaged Property. Mortgagor will pay all filing,
registration or recording fees, and all expenses incident to the preparation,
execution and acknowledgment of this Mortgage, any mortgage supplemental hereto,
any security instrument with respect to the Mortgaged Property and any
instrument of further assurance, 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 Mortgage, any mortgage supplemental
hereto, any security instrument with respect to the Mortgaged Property or any
instrument of further assurance, except where prohibited by law so to do.
Mortgagor shall hold harmless and indemnify Mortgagee, its successors and
assigns, against any liability incurred by reason of the imposition of any tax
on the making and recording of this Mortgage.
22. Reporting Requirements. Mortgagor agrees to give prompt notice to
Mortgagee of the insolvency or bankruptcy filing of Mortgagor or the death,
insolvency or bankruptcy filing of any Guarantor.
23. Events of Default. The term "Event of Default" as used herein shall
mean the occurrence or happening, at any time and from time to time, of any one
or more of the following:
(a) if any portion of the Debt or the Related Debt is not paid within five
(5) days from the date when the same is due;
(b) if the Policies are not kept in full force and effect, or if the
Policies are not delivered to Mortgagee upon request;
(c) if Mortgagor fails to timely provide any monthly, quarterly or annual
financial or accounting report;
(d) if Mortgagor sells, conveys, alienates, mortgages, encumbers, pledges
or otherwise transfers any portion of the Mortgaged Property or permits the
Mortgaged Property or any part thereof to be sold, conveyed,
18
alienated, mortgaged, encumbered, levied, pledged or otherwise transferred
without Mortgagee's prior written consent, except to Mortgagee as security for
the Related Debt;
(e) if any representation or warranty of Mortgagor, or of any Guarantor,
made herein, in any Loan Document, any guaranty, or in any certificate, report,
financial statement or other instrument or document furnished to Mortgagee shall
have been false or misleading in any material respect when made;
(f) if Mortgagor or any Guarantor shall make an assignment for the benefit
of creditors or if Mortgagor or any Guarantor shall admit in writing its
inability to pay, or Mortgagor's or any Guarantor's failure to pay, debts
generally as the debts become due;
(g) if a receiver, liquidator or trustee of Mortgagor or of any Guarantor
shall be appointed or if Mortgagor or any Guarantor shall be adjudicated a
bankrupt or insolvent, or if any petition for bankruptcy, reorganization or
arrangement pursuant to federal bankruptcy law, or any similar federal or state
law, shall be filed by or against, consented to, or acquiesced in by, Mortgagor
or any Guarantor or if Mortgagor or any Guarantor shall admit in writing its
insolvency or bankruptcy or if any proceeding for the dissolution or liquidation
of Mortgagor or of any Guarantor shall be instituted; however, if such
appointment, adjudication, petition or proceeding was involuntary and not
consented to by Mortgagor or such Guarantor, upon the same not being discharged,
stayed or dismissed within sixty (60) days;
(h) subject to Mortgagor's right to contest as provided herein, if the
Mortgaged Property becomes subject to any mechanic's, materialman's, mortgage or
other lien except a lien for local real estate taxes and assessments not then
due and payable;
(i) if Mortgagor fails to cure properly any violations of laws or
ordinances affecting or which may be interpreted to affect the Mortgaged
Property;
(j) except as permitted in this Mortgage, the actual or threatened
alteration, improvement, demolition or removal of any of the Improvements
without the prior consent of Mortgagee;
(k) damage to the Mortgaged Property in any manner which is not covered by
insurance solely as a result of Mortgagor's failure to maintain insurance
required in accordance with this Mortgage;
(l) if Mortgagor shall default under any term, covenant, or condition of
this Mortgage or any of the other Loan Documents, including the Loan Agreement
(defined in the Note) and the Other Mortgages (hereinafter defined) other than
as specified in any of the above subparagraphs;
(m) if without Mortgagee's prior consent (i) the managing agent for the
Mortgaged Property resigns or is removed or (ii) the ownership, management or
control of such managing agent is transferred to a person or entity other than
the general partner or managing partner of the Mortgagor, or (iii) there is any
material change in the property management agreement of the Mortgaged Property;
(n) if all or a substantial part of Mortgagor's assets (other than the
Mortgaged Property) are attached, seized, subjected to a writ or distress
warrant or are levied upon (unless such attachment, seizure, writ, distress
warrant or levy is vacated within sixty [60] days following the date of the
same);
(o) entry of a judgment in excess of $100,000.00 and the expiration of any
appeal rights or the dismissal or final adjudication of appeals against
Mortgagor (unless such judgment is vacated within sixty [60] days following the
date of the same);
(p) the Mortgage shall cease to constitute a first-priority lien on the
Mortgaged Property (other than in accordance with its terms); and
(q) seizure or forfeiture of the Mortgaged Property, or any portion
thereof, or Mortgagor's interest therein, resulting from criminal wrongdoing or
other unlawful action of Mortgagor, its affiliates, or any tenant in the
Mortgaged Property under any federal, state or local law.
19
(r) if without Mortgagee's prior consent, the hotel manager for the
Mortgaged Property under the Management Agreement (or any successor management
agreement) resigns or is removed, or the ownership, management or control of
such hotel manager is transferred to a person or entity other than the general
partner or managing partner of the Mortgagor, or there is any material change in
the Management Agreement (or any successor management agreement);
(s) if a default has occurred and continues beyond any applicable cure
period under the Management Agreement (or any successor management agreement) if
such default permits the hotel manager to terminate or cancel the Management
Agreement (or any successor management agreements);
(t) if without Mortgagee's prior consent, there is any material change in
the Franchise Agreement (or any successor franchise agreement);
(u) if a default has occurred and continues beyond any applicable cure
period under the Franchise Agreement (or any successor franchise agreement) if
such default permits the franchisor to terminate or cancel the Franchise
Agreement (or any successor franchise agreement);
(v) if Mortgagor ceases to do business as a hotel or motel on the Mortgaged
Property or terminates such business for any reason whatsoever (other than
temporary cessation in connection with any renovations to the Mortgaged
Property); and
(w) if any Event of Default, as defined in the Other Mortgages (hereinafter
defined), occurs.
24. Notice and Cure. Notwithstanding the foregoing, Mortgagee agrees to
give to Mortgagor written notice as described below of (a) Mortgagor's failure
to pay any part of the Debt when due (a "Monetary Default"), (b) a default
referred to in subsection 23(p) above (a "First Lien Default") and (c) a default
referred to in subsections 23(c),(i) or (1) above (a "Nonmonetary Default").
Mortgagor shall have a period of five (5) days from its receipt of notice in
which to cure a Monetary Default (which written notice period may run
concurrently with the five [5] day period referred to in subsection 23[a]),
shall have a period of twenty (20) days from its receipt of notice to cure a
First Lien Default and shall have a period of twenty (20) days from its receipt
of notice in which to cure a Nonmonetary Default unless such Nonmonetary Default
is not susceptible to cure within such twenty (20) day period, in which case
Mortgagor shall commence to cure such Nonmonetary Default within twenty (20)
days following notice and diligently prosecute such cure to completion,
provided, however, that Mortgagor will provide Mortgagee with such information
as Mortgagee may reasonably request concerning the status of any attempted cure
of any such Nonmonetary Default and the cure of any such Nonmonetary Default
must be completed to the satisfaction of Mortgagee within sixty (60) days of
notice in any case. Notwithstanding the foregoing, Mortgagee may, but shall not
be required, to give notice of a Monetary Default or a recurrence of the same
Nonmonetary Default more frequently than two times in any calendar year. A
Monetary Default and/or First Lien Default and/or Nonmonetary Default shall
nevertheless be an Event of Default for all purposes under the Loan Documents
except that the acceleration of the Debt or other exercise of remedies shall not
be prior to the expiration of the applicable cure and/or grace periods provided
in Section 23 or in this section.
25. Remedies. Upon the occurrence of an Event of Default and subject to any
applicable cure period, Mortgagee may, at Mortgagee's option, do any one or more
of the following:
(a) Right to Perform Mortgagor's Covenants. If Mortgagor has failed to keep
or perform any covenant whatsoever contained in this Mortgage or the other Loan
Documents, Mortgagee may, but shall not be obligated to any person to do so,
perform or attempt to perform said covenant; and any payment made or expense
incurred in the performance or attempted performance of any such covenant,
together with any sum expended by Mortgagee that is chargeable to Mortgagor or
subject to reimbursement by Mortgagor under the Loan Documents, shall be and
become a part of the "Debt," and Mortgagor promises, upon demand, to pay to
Mortgagee, at the place where the Note is payable, all sums so incurred, paid or
expended by Mortgagee, with interest from the date when paid, incurred or
expended by Mortgagee at the Default Rate as specified in the Note.
20
(b) Right of Entry. Mortgagee may, prior or subsequent to the institution
of any foreclosure proceedings, enter upon the Mortgaged Property, or any part
thereof, and take exclusive possession of the Mortgaged Property and of all
books, records, and accounts relating thereto and to exercise without
interference from Mortgagor any and all rights which Mortgagor has with respect
to the management, possession, operation, protection, or preservation of the
Mortgaged Property, including without limitation the right to rent the same for
the account of Mortgagor and to deduct from such Rents all costs, expenses, and
liabilities of every character incurred by the Mortgagee in collecting such
Rents and in managing, operating, maintaining, protecting, or preserving the
Mortgaged Property and to apply the remainder of such Rents on the Debt in such
manner as Mortgagee may elect. All such costs, expenses, and liabilities
incurred by the Mortgagee in collecting such Rents and in managing, operating,
maintaining, protecting, or preserving the Mortgaged Property, if not paid out
of Rents as hereinabove provided, shall constitute a demand obligation owing by
Mortgagor and shall bear interest from the date of expenditure until paid at the
Default Rate as specified in the Note, all of which shall constitute a portion
of the Debt. If necessary to obtain the possession provided for above, the
Mortgagee may invoke any and all legal remedies to dispossess Mortgagor,
including specifically one or more actions for forcible entry and detainer,
trespass to try title, and restitution. In connection with any action taken by
the Mortgagee pursuant to this subparagraph, the Mortgagee shall not be liable
for any loss sustained by Mortgagor resulting from any failure to let the
Mortgaged Property, or any part thereof, or from any other act or omission of
the Mortgagee in managing the Mortgaged Property unless such loss is caused by
the willful misconduct of the Mortgagee, nor shall the Mortgagee be obligated to
perform or discharge any obligation, duty, or liability under any Lease or under
or by reason hereof or the exercise of rights or remedies hereunder. Mortgagor
shall and does hereby agree to indemnify the Mortgagee for, and to hold the
Mortgagee harmless from, any and all liability, loss, or damage, which may or
might be incurred by the Mortgagee under any such Lease or under or by reason
hereof or the exercise of rights or remedies hereunder, and from any and all
claims and demands whatsoever which may be asserted against the Mortgagee by
reason of any alleged obligations or undertakings on its part to perform or
discharge any of the terms, covenants, or agreements contained in any such
Lease. Should the Mortgagee incur any such liability, the amount thereof,
including without limitation costs, expenses, and reasonable attorneys' fees,
together with interest thereon from the date of expenditure until paid at the
Default Rate as specified in the Note, shall be secured hereby, and Mortgagor
shall reimburse the Mortgagee therefor immediately upon demand. Nothing in this
subsection shall impose any duty, obligation, or responsibility upon the
Mortgagee for the control, care, management, leasing, or repair of the Mortgaged
Property, nor for the carrying out of any of the terms and conditions of any
such Lease; nor shall it operate to make the Mortgagee responsible or liable for
any waste committed on the Mortgaged Property by the tenants or by any other
parties, or for any hazardous substances or environmental conditions on or under
the Mortgaged Property, or for any dangerous or defective condition of the
Mortgaged Property or for any negligence in the management, leasing, upkeep,
repair, or control of the Mortgaged Property resulting in loss or injury or
death to any tenant, licensee, employee, or stranger. Mortgagor hereby assents
to, ratifies, and confirms any and all actions of the Mortgagee with respect to
the Mortgaged Property taken under this subparagraph.
(c) Right to Accelerate. Mortgagee may, without notice except as
provided in Section 24 above, demand, presentment, notice of nonpayment or
nonperformance, protest, notice of protest, notice of intent to accelerate,
notice of acceleration, or any other notice or any other action, all of which
are hereby waived by Mortgagor and all other parties obligated in any manner
whatsoever on the Debt, declare the entire unpaid balance of the Debt
immediately due and payable, and upon such declaration, the entire unpaid
balance of the Debt shall be immediately due and payable.
(d) Foreclosure-Power of Sale. Mortgagee may institute a proceeding or
proceedings, judicial, or nonjudicial, by advertisement or otherwise, for the
complete or partial foreclosure of this Mortgage or the complete or partial sale
of the Mortgaged Property under the power of sale contained herein or under any
applicable provision of law. Mortgagee may sell the Mortgaged Property, and all
estate, right, title, interest, claim and demand of Mortgagor therein, and all
rights of redemption thereof, at one or more sales, as an entirety or in
parcels, with such elements of real and/or personal property, and at such time
and place and upon such terms as it may deem expedient, or as may be required by
applicable law, and in the event of a sale, by foreclosure or otherwise, of less
than all of the Mortgaged Property, this Mortgage shall continue as a lien and
security interest on the remaining portion of the Mortgaged Property.
(e) Rights Pertaining to Sales. Subject to the requirements of applicable
law and except as otherwise provided herein, the following provisions shall
apply to any sale or sales of all or any portion of the Mortgaged
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Property under or by virtue of subsection (d) above, whether made under the
power of sale herein granted or by virtue of judicial proceedings or of a
judgment or decree of foreclosure and sale:
i) Mortgagee may conduct any number of sales from time to time. The
power of sale set forth above shall not be exhausted by any one or more
such sales as to any part of the Mortgaged Property which shall not have
been sold, nor by any sale which is not completed or is defective in
Mortgagee's opinion, until the Debt shall have been paid in full.
ii) Any sale may be postponed or adjourned by public announcement at
the time and place appointed for such sale or for such postponed or
adjourned sale without further notice.
iii) After each sale, Mortgagee or an officer of any court empowered
to do so shall execute and deliver to the purchaser or purchasers at such
sale a good and sufficient instrument or instruments granting, conveying,
assigning and transferring all right, title and interest of Mortgagor in
and to the property and rights sold and shall receive the proceeds of said
sale or sales and apply the same as specified in the Note. Mortgagee is
hereby appointed the true and lawful attorney-in-fact of Mortgagor, which
appointment is irrevocable and shall be deemed to be coupled with an
interest, in Mortgagor's name and stead, to make all necessary conveyances,
assignments, transfers and deliveries of the property and rights so sold,
Mortgagor hereby ratifying and confirming all that said attorney or such
substitute or substitutes shall lawfully do by virtue thereof.
Nevertheless, Mortgagor, if requested by Mortgagee, shall ratify and
confirm any such sale or sales by executing and delivering to Mortgagee or
such purchaser or purchasers all such instruments as may be advisable, in
Mortgagee's judgment, for the purposes as may be designated in such
request.
iv) Any and all statements of fact or other recitals made in any of
the instruments referred to in subparagraph (iii) of this subsection (e)
given by Mortgagee shall be taken as conclusive and binding against all
persons as to evidence of the truth of the facts so stated and recited.
v) Any such sale or sales shall operate to divest all of the estate,
right, title, interest, claim and demand whatsoever, whether at law or in
equity, of Mortgagor in and to the properties and rights so sold, and shall
be a perpetual bar both at law and in equity against Mortgagor and any and
all persons claiming or who may claim the same, or any part thereof or any
interest therein, by, through or under Mortgagor to the fullest extent
permitted by applicable law.
vi) Upon any such sale or sales, Mortgagee may bid for and acquire the
Mortgaged Property and, in lieu of paying cash therefor, may make
settlement for the purchase price by crediting against the Debt the amount
of the bid made therefor, after deducting therefrom the expenses of the
sale, the cost of any enforcement proceeding hereunder, and any other sums
which Mortgagee is authorized to deduct under the terms hereof, to the
extent necessary to satisfy such bid.
vii) Upon any such sale, it shall not be necessary for Mortgagee or
any public officer acting under execution or order of court to have present
or constructively in its possession any of the Mortgaged Property.
(f) Mortgagee's Judicial Remedies. Mortgagee may proceed by suit or suits,
at law or in equity, to enforce the payment of the Debt to foreclose the liens
and security interests of this Mortgage as against all or any part of the
Mortgaged Property, and to have all or any part of the Mortgaged Property sold
under the judgment or decree of a court of competent jurisdiction. This remedy
shall be cumulative of any other nonjudicial remedies available to the Mortgagee
under this Mortgage or the other Loan Documents. Proceeding with a request or
receiving a judgment for legal relief shall not be or be deemed to be an
election of remedies or bar any available nonjudicial remedy of the Mortgagee.
(g) Mortgagee's Right to Appointment of Receiver . Mortgagee, as a matter
of right and (i) without regard to the sufficiency of the security for repayment
of the Debt, (ii) without notice to Mortgagor, (iii) without any showing of
insolvency, fraud, or mismanagement on the part of Mortgagor, (iv) without the
necessity of filing any judicial or other proceeding other than the proceeding
for appointment of a receiver, and (v) without regard to the
22
then value of the Mortgaged Property, shall be entitled to the appointment of a
receiver or receivers for the protection, possession, control, management and
operation of the Mortgaged Property, including (without limitation), the power
to collect the Rents, enforce this Mortgage and, in case of a sale and
deficiency, during the full statutory period of redemption (if any), whether
there be a redemption or not, as well as during any further times when
Mortgagor, except for the intervention of such receiver, would be entitled to
collection of such Rents. Mortgagor hereby irrevocably consents to the
appointment of a receiver or receivers. Any receiver appointed pursuant to the
provisions of this subsection shall have the usual powers and duties of
receivers in such matters.
(h) Mortgagee's Uniform Commercial Code Remedies. The Mortgagee may
exercise its rights of enforcement under the Uniform Commercial Code in effect
in the state in which the Mortgaged Property is located.
(i) Other Rights. Mortgagee (i) may surrender the Policies maintained
pursuant to this Mortgage or any part thereof, and upon receipt shall apply the
unearned premiums as a credit on the Debt, and, in connection therewith,
Mortgagor hereby appoints Mortgagee as agent and attorney-in-fact (which is
coupled with an interest and is therefore irrevocable) for Mortgagor to collect
such premiums; and (ii) may apply the Tax and Insurance Escrow Fund and/or the
Replacement Escrow Fund and any other funds held by Mortgagee toward payment of
the Debt; and (iii) shall have and may exercise any and all other rights and
remedies which Mortgagee may have at law or in equity, or by virtue of any of
the Loan Documents, or otherwise.
(j) Discontinuance of Remedies. In case Mortgagee shall have proceeded to
invoke any right, remedy, or recourse permitted under the Loan Documents and
shall thereafter elect to discontinue or abandon same for any reason, Mortgagee
shall have the unqualified right so to do and, in such event, Mortgagor and
Mortgagee shall be restored to their former positions with respect to the Debt,
the Loan Documents, the Mortgaged Property or otherwise, and the rights,
remedies, recourses and powers of Mortgagee shall continue as if same had never
been invoked.
(k) Remedies Cumulative. All rights, remedies, and recourses of Mortgagee
granted in the Note, this Mortgage and the other Loan Documents, any other
pledge of collateral, or otherwise available at law or equity: (i) shall be
cumulative and concurrent; (ii) may be pursued separately, successively, or
concurrently against Mortgagor, the Mortgaged Property, or any one or more of
them, at the sole discretion of Mortgagee; (iii) may be exercised as often as
occasion therefor shall arise, it being agreed by Mortgagor that the exercise or
failure to exercise any of same shall in no event be construed as a waiver or
release thereof or of any other right, remedy, or recourse; (iv) shall be
nonexclusive; (v) shall not be conditioned upon Mortgagee exercising or pursuing
any remedy in relation to the Mortgaged Property prior to Mortgagee bringing
suit to recover the Debt; and (vi) in the event Mortgagee elects to bring suit
on the Debt and obtains a judgment against Mortgagor prior to exercising any
remedies in relation to the Mortgaged Property, all liens and security
interests, including the lien of this Mortgage, shall remain in full force and
effect and may be exercised thereafter at Mortgagee's option.
(l) Election of Remedies. Mortgagee may release, regardless of
consideration, any part of the Mortgaged Property without, as to the remainder,
in any way impairing, affecting, subordinating, or releasing the lien or
security interests evidenced by this Mortgage or the other Loan Documents or
affecting the obligations of Mortgagor or any other party to pay the Debt. For
payment of the Debt, Mortgagee may resort to any collateral securing the payment
of the Debt in such order and manner as Mortgagee may elect. No collateral taken
by Mortgagee shall in any manner impair or affect the lien or security interests
given pursuant to the Loan Documents, and all collateral shall be taken,
considered, and held as cumulative.
(m) Waivers. Mortgagor hereby irrevocably and unconditionally waives and
releases: (i) all benefits that might accrue to Mortgagor by virtue of any
present or future law exempting the Mortgaged Property from attachment, levy or
sale on execution or providing for any appraisement, valuation, stay of
execution, exemption from civil process, redemption, or extension of time for
payment; (ii) all notices of any Event of Default except as expressly provided
herein; or of Mortgagee's exercise of any right, remedy, or recourse provided
for under the Loan Documents; and (iii) any right to a marshalling of assets, a
sale in inverse order of alienation or any other right to direct in any manner,
the order of sale of any of the Mortgaged Property.
(n) Statute of Limitations. To the extent permitted by applicable law,
Mortgagee's rights hereunder shall continue even to the extent that a suit for
collection of the Debt, or part thereof, is barred by a statute of
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limitations. Mortgagor 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.
(o) Waiver of Automatic or Supplemental Stay. In the event of the filing of
any voluntary or involuntary petition under the Bankruptcy Code by or against
Mortgagor (other than an involuntary petition filed by or joined in by
Mortgagee), the Mortgagor shall not assert, or request any other party to
assert, that the automatic stay under ss. 362 of the Bankruptcy Code shall
operate or be interpreted to stay, interdict, condition, reduce or inhibit the
ability of Mortgagee to enforce any rights it has by virtue of this Mortgage, or
any other rights that Mortgagee has, whether now or hereafter acquired, against
any guarantor of the Debt. Further, Mortgagor shall not seek a supplemental stay
or any other relief, whether injunctive or otherwise, pursuant to ss. 105 of the
Bankruptcy Code or any other provision therein to stay, interdict, condition,
reduce or inhibit the ability of Mortgagee to enforce any rights it has by
virtue of this Mortgage against any guarantor of the Debt. The waivers contained
in this paragraph are a material inducement to Mortgagee's willingness to enter
into this Mortgage and Mortgagor acknowledges and agrees that no grounds exist
for equitable relief which would bar, delay or impede the exercise by Mortgagee
of Mortgagee's rights and remedies against Mortgagor or any guarantor of the
Debt.
(p) Bankruptcy Acknowledgment. In the event the Mortgaged Property or any
portion thereof or any interest therein becomes property of any bankruptcy
estate or subject to any state or federal insolvency proceeding, then Mortgagee
shall immediately become entitled, in addition to all other relief to which
Mortgagee may be entitled under this Mortgage, to obtain (i) an order from the
Bankruptcy Court or other appropriate court granting immediate relief from the
automatic stay pursuant to ss. 362 of the Bankruptcy Code so to permit Mortgagee
to pursue its rights and remedies against Mortgagor as provided under this
Mortgage and all other rights and remedies of Mortgagee at law and in equity
under applicable state law, and (ii) an order from the Bankruptcy Court
prohibiting Mortgagor's use of all "cash collateral" as defined under ss. 363 of
the Bankruptcy Code. In connection with such Bankruptcy Court orders, Mortgagor
shall not contend or allege in any pleading or petition filed in any court
proceeding that Mortgagee does not have sufficient grounds for relief from the
automatic stay. Any bankruptcy petition or other action taken by the Mortgagor
to stay, condition, or inhibit Mortgagee from exercising its remedies are hereby
admitted by Mortgagor to be in bad faith and Mortgagor further admits that
Mortgagee would have just cause for relief from the automatic stay in order to
take such actions authorized under state law.
(q) Application of Proceeds. The proceeds from any sale, lease, or other
disposition made pursuant to this Mortgage, or the proceeds from the surrender
of any insurance policies pursuant hereto, or any Rents collected by Mortgagee
from the Mortgaged Property, or the Tax and Insurance Escrow Fund or the
Replacement Escrow Fund or sums received pursuant to Section 7 hereof, or
proceeds from insurance which Mortgagee elects to apply to the Debt pursuant to
Section 3 hereof, shall be applied by Mortgagee to the Debt in the following
order and priority: (1) to the payment of all expenses of advertising, selling,
and conveying the Mortgaged Property or part thereof, and/or prosecuting or
otherwise collecting Rents, proceeds, premiums or other sums including
reasonable attorneys' fees; (2) to that portion, if any, of the Debt with
respect to which no person or entity has personal or entity liability for
payment (the "Exculpated Portion"), and with respect to the Exculpated Portion
as follows: first, to accrued but unpaid interest, second, to matured principal,
and third, to unmatured principal in inverse order of maturity; (3) to the
remainder of the Debt as follows: first, to the remaining accrued but unpaid
interest, second, to the matured portion of principal of the Debt, and third, to
prepayment of the unmatured portion, if any, of principal of the Debt applied to
installments of principal in inverse order of maturity; (4) the balance, if any
or to the extent applicable, remaining after the full and final payment of the
Debt to the holder or beneficiary of any inferior liens covering the Mortgaged
Property, if any, in order of the priority of such inferior liens (Mortgagee
shall hereby be entitled to rely exclusively on a commitment for title insurance
issued to determine such priority); and (5) the cash balance, if any, to the
Mortgagor. The application of proceeds of sale or other proceeds as otherwise
provided herein shall be deemed to be a payment of the Debt like any other
payment. The balance of the Debt remaining unpaid, if any, shall remain fully
due and owing in accordance with the terms of the Note and the other Loan
Documents.
26. Right of Inspection. Mortgagee and its agents shall have the right to
enter and inspect the Mortgaged Property during normal business hours upon
reasonable notice.
27. Security Agreement. This Mortgage is both a real property mortgage or
deed of trust and a "security agreement" within the meaning of the Uniform
Commercial Code. The Mortgaged Property includes both real and personal property
and all other rights and interests, whether tangible or intangible in nature, of
Mortgagor
24
in the Mortgaged Property. Mortgagor by executing and delivering this Mortgage
has granted and hereby grants to Mortgagee, as security for the Debt, a security
interest in the Mortgaged Property to the full extent that the Mortgaged
Property may be subject to the Uniform Commercial Code (said portion of the
Mortgaged Property so subject to the Uniform Commercial Code being called in
this paragraph the "Collateral"). Mortgagor hereby agrees with Mortgagee to
execute and deliver to Mortgagee, in form and substance satisfactory to
Mortgagee, such financing statements and such further assurances as Mortgagee
may from time to time, reasonably consider necessary to create, perfect, and
preserve Mortgagee's security interest herein granted. This Mortgage shall also
constitute a "fixture filing" for the purposes of the Uniform Commercial Code.
All or part of the Mortgaged Property are or are to become fixtures. Information
concerning the security interest herein granted may be obtained from the parties
at the addresses of the parties set forth in the first paragraph of this
Mortgage. If an Event of Default shall occur, Mortgagee, in addition to any
other rights and remedies which they may have, shall have and may exercise
immediately and without demand, 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, the right to take possession of the
Collateral or any part thereof, and to take such other measures as Mortgagee may
deem necessary for the care, protection and preservation of the Collateral. Upon
request or demand of Mortgagee, Mortgagor shall at its expense assemble the
Collateral and make it available to Mortgagee at a convenient place acceptable
to Mortgagee. Mortgagor shall pay to Mortgagee on demand any and all expenses,
including legal expenses and attorneys' fees, incurred or paid by Mortgagee in
protecting the interest in the Collateral and in enforcing the rights hereunder
with respect to the Collateral. Any notice of sale, disposition or other
intended action by Mortgagee with respect to the Collateral sent to Mortgagor in
accordance with the provisions hereof at least five (5) days prior to such
action, shall constitute commercially reasonable notice to Mortgagor. The
proceeds of any disposition of the Collateral, or any part thereof, may be
applied by Mortgagee to the payment of the Debt in such priority and proportions
as Mortgagee in its discretion shall deem proper. In the event of any change in
name, identity or structure of any Mortgagor, such Mortgagor shall notify
Mortgagee thereof and promptly after request shall execute, file and record such
Uniform Commercial Code forms as are necessary to maintain the priority of
Mortgagee's lien upon and security interest in the Collateral, and shall pay all
expenses and fees in connection with the filing and recording thereof. If
Mortgagee shall require the filing or recording of additional Uniform Commercial
Code forms or continuation statements, Mortgagor shall, promptly after request,
execute, file and record such Uniform Commercial Code forms or continuation
statements as Mortgagee shall deem necessary, and shall pay all expenses and
fees in connection with the filing and recording thereof, it being understood
and agreed, however, that no such additional documents shall increase
Mortgagor's obligations under the Note, this Mortgage and the other Loan
Documents. Mortgagor hereby irrevocably appoints Mortgagee as its
attorney-in-fact, coupled with an interest, to file with the appropriate public
office on its behalf any financing or other statements signed only by Mortgagee,
as Mortgagor's attorney-in-fact, in connection with the Collateral covered by
this Mortgage. Notwithstanding the foregoing, Mortgagor shall appear and defend
in any action or proceeding which affects or purports to affect the Mortgaged
Property and any interest or right therein, whether such proceeding effects
title or any other rights in the Mortgaged Property (and in conjunction
therewith, Mortgagor shall fully cooperate with Mortgagee in the event Mortgagee
is a party to such action or proceeding).
28. Actions and Proceedings. Mortgagee has the right to appear in and
defend any action or proceeding brought with respect to the Mortgaged Property
and to bring any action or proceeding, in the name and on behalf of Mortgagor,
which Mortgagee, in its discretion, decides should be brought to protect their
interest in the Mortgaged Property. Mortgagee shall, at its option, be
subrogated to the lien of any mortgage or other security instrument discharged
in whole or in part by the Debt, and any such subrogation rights shall
constitute additional security for the payment of the Debt.
29 . Waiver of Setoff and Counterclaim. All amounts due under this
Mortgage, the Note and the other Loan Documents shall be payable without setoff,
counterclaim or any deduction whatsoever. Mortgagor hereby waives the right to
assert a setoff, counterclaim or deduction in any action or proceeding in which
Mortgagee is a participant, or arising out of or in any way connected with this
Mortgage, the Note, any of the other Loan Documents, or the Debt.
30 . Contest of Certain Claims. Notwithstanding the provisions of Sections
4 and 23(h) hereof, Mortgagor shall not be in default for failure to pay or
discharge Taxes, Other Charges or mechanic's or materialman's lien asserted
against the Mortgaged Property if, and so long as, (a) Mortgagor shall have
notified Mortgagee of same within five (5) days of obtaining knowledge thereof;
(b) Mortgagor shall diligently and in good
25
faith contest the same by appropriate legal proceedings which shall operate to
prevent the enforcement or collection of the same and the sale of the Mortgaged
Property or any part thereof, to satisfy the same; (c) Mortgagor shall have
furnished to Mortgagee a cash deposit, or an indemnity bond satisfactory to
Mortgagee with a surety satisfactory to Mortgagee, in the amount of the Taxes,
Other Charges or mechanic's or materialman's lien claim, plus a reasonable
additional sum to pay all costs, interest and penalties that may be imposed or
incurred in connection therewith, to assure payment of the matters under contest
and to prevent any sale or forfeiture of the Mortgaged Property or any part
thereof; (d) Mortgagor shall promptly upon final determination thereof pay the
amount of any such Taxes, Other Charges or claim so determined, together with
all costs, interest and penalties which may be payable in connection therewith;
(e) the failure to pay the Taxes, Other Charges or mechanic's or materialman's
lien claim does not constitute a default under any other deed of trust, mortgage
or security interest covering or affecting any part of the Mortgaged Property;
and (f) notwithstanding the foregoing, Mortgagor shall immediately upon request
of Mortgagee pay (and if Mortgagor shall fail so to do, Mortgagee may, but shall
not be required to, pay or cause to be discharged or bonded against) any such
Taxes, Other Charges or claim notwithstanding such contest, if in the opinion of
Mortgagee, the Mortgaged Property or any part thereof or interest therein may be
in danger of being sold, forfeited, foreclosed, terminated, canceled or lost.
Mortgagee may pay over any such cash deposit or part thereof to the claimant
entitled thereto at any time when, in the judgment of Mortgagee, the entitlement
of such claimant is established.
31. Recovery of Sums Required to Be Paid. Mortgagee 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
Mortgagee thereafter to bring an action of foreclosure, or any other action, for
a default or defaults by Mortgagor existing at the time such earlier action was
commenced.
32. Handicapped Access. Mortgagor agrees that the Mortgaged Property shall
at all times strictly comply to the extent applicable with the requirements of
the Americans with Disabilities Act of 1990, the Fair Housing Amendments Act of
1988, all state and local laws and ordinances related to handicapped access and
all rules, regulations, and orders issued pursuant thereto including, without
limitation, the Americans with Disabilities Act Accessibility Guidelines for
Buildings and Facilities (collectively "Access Laws").
(a) Notwithstanding any provisions set forth herein or in any other
document regarding Mortgagee's approval of alterations of the Mortgaged
Property, Mortgagor shall not alter the Mortgaged Property in any manner which
would increase Mortgagor's responsibilities for compliance with the applicable
Access Laws without the prior written approval of Mortgagee. The foregoing shall
apply to tenant improvements constructed by Mortgagor or by any of its tenants.
Mortgagee may condition any such approval upon receipt of a certificate from an
architect, engineer, or other person acceptable to Mortgagee of compliance with
Access Laws.
(b) Mortgagor agrees to give prompt notice to Mortgagee of the receipt by
Mortgagor of any complaints related to violation of any Access Laws and of the
commencement of any proceedings or investigations which relate to compliance
with applicable Access Laws.
33. ERISA. (a) Mortgagor shall not engage in any transaction which would
cause any obligation, or action taken or to be taken, hereunder (or the exercise
by Mortgagee of any of its rights under the Note, this Mortgage and the other
Loan Documents) to be a non-exempt (under a statutory or administrative class
exemption) prohibited transaction under the Employee Retirement Income Security
Act of 1974, as amended ("ERISA").
(b) As of the date hereof and throughout the term of this Mortgage, (i)
Mortgagor 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 Mortgagor do not and will not constitute "plan assets" of one or more such
plans for purposes of Title I of ERISA.
(c) As of the date hereof and throughout the term of this Mortgage, (i)
Mortgagor is not and will not be a "governmental plan" within the meaning of
Section 3(3) of ERISA, and (ii) transactions by or with Mortgagor are not and
will not be subject to state statutes applicable to Mortgagor regulating
investments of and fiduciary obligations with respect to governmental plans.
26
(d) Mortgagor further covenants and agrees to deliver to Mortgagee such
certifications or other evidence from time to time throughout the term of the
Mortgage, as requested by Mortgagee in its sole discretion, that (i) Mortgagor
is not an "employee benefit plan" as defined in Section 3(3) of ERISA, which is
subject to Title I of ERISA, or a "governmental plan" within the meaning of
Section 3(3) of ERISA; (ii) Mortgagor is not subject to state statutes
regulating investments and fiduciary obligations with respect to governmental
plans; and (iii) one or more of the following circumstances is true: (A) equity
interests in Mortgagor are publicly offered securities, within the meaning of 29
C.F.R. ss. 2510.3-101(b)(2); (B) less than 25 percent of each outstanding class
of equity interests in Mortgagor are held by "benefit plan investors" within the
meaning of 29 C.F.R. ss. 2510.3-101(f)(2); or (C) Mortgagor qualifies as an
"operating company" or a "real estate operating company" within the meaning of
29 C.F.R. ss. 2510.3-101(c) or (e) or an investment company registered under The
Investment Company Act of 1940.
34. Indemnification. In addition to any other indemnifications provided in
any of the Loan Documents, Mortgagor shall, at its sole cost and expense,
protect, defend, indemnify, release and save harmless Mortgagee or any person or
entity who is or will have been involved in the servicing of this Loan, any
person or entity whose name the encumbrance created by this Mortgage is or will
have been recorded, persons and entities who may hold or acquire or will have
held a full or partial interest in this Loan (including but not limited to
investors or prospective investors, as well as custodians, trustees and other
fiduciaries who hold or have held a full or partial interest in the Loan for the
benefit of third parties) as well as the respective affiliates, subsidiaries,
persons controlling or under common control, directors, officers, shareholders,
members, partners, employees, agents, servants, representatives, contractors,
subcontractors, participants, successors and assigns of any and all of the
foregoing (including but not limited to any other person or entity who holds or
acquires or will have held a participation or other full or partial interest in
this Loan or the Mortgaged Property, whether during the term of this Loan or as
a part of or following a foreclosure of this Loan and including, but not limited
to any successors by merger, consolidation or acquisition of all or a
substantial portion of Mortgagee's assets and business) (collectively, the
"Indemnified Parties"), from and against all liabilities, obligations, claims,
demands, damages, penalties, causes of action, losses, fines, costs and expenses
(including without limitation reasonable attorneys' fees and expenses), imposed
upon or incurred by or asserted against any of the Indemnified Parties and
directly or indirectly arising out of or in any way relating to any one or more
of the following: (a) ownership of this Mortgage, the Mortgaged Property or any
interest therein or receipt of any Rents; (b) any amendment to, or restructuring
of, the Debt, and the Note, this Mortgage or any other Loan Documents; (c) any
and all lawful action that may be taken by Mortgagee in connection with the
enforcement of the provisions of this Mortgage or the Note or any other Loan
Documents; (d) any and all lawful action that may be taken by Mortgagee in
connection with the enforcement of the provisions of this Mortgage or the Note
or any other Loan Documents, whether or not suit is filed in connection with
same, or in connection with Mortgagor, any Guarantor and/or any member, partner,
joint venturer or shareholder thereof becoming a party to a voluntary or
involuntary federal or state bankruptcy, insolvency or similar proceeding; (e)
any accident, injury to or death of persons or loss of or damage to property
occurring in, on or about the Mortgaged Property or any part thereof or on the
adjoining sidewalks, curbs, adjacent property or adjacent parking areas, streets
or ways; (f) any use, nonuse or condition in, on or about the Mortgaged Property
or any part thereof or on adjoining sidewalks, curbs, adjacent property or
adjacent parking areas, streets or ways; (g) any failure on the part of
Mortgagor to perform or comply with any of the terms of Sections 2 through 54 of
this Mortgage; (h) performance of any labor or services or the furnishing of any
materials or other property in respect of the Mortgaged Property or any part
thereof; (i) any failure of the Mortgaged Property to comply with any laws or
ordinances affecting or which may be interpreted to affect the Mortgaged
Property, including, without limitation, the Access Laws; (j) any representation
or warranty made in the Note, this Mortgage or the other Loan Documents being
false or misleading in any respect as of the date such representation or
warranty was made; (k) any claim by brokers, finders or similar persons claiming
to be entitled to a commission in connection with any Lease or other transaction
involving the Mortgaged Property or any part thereof under any legal requirement
or any liability asserted against Mortgagee with respect thereto; (l) the claims
of any lessee to any portion of the Mortgaged Property or any person acting
through or under any lessee or otherwise arising under or as a consequence of
any Lease; (m) performance of any labor or services or the furnishing of any
materials or other property in respect of the Mortgaged Property or any part
thereof; (n) the enforcement by any Indemnified Party of the provisions of this
Section 34; (o) any and all claims and demands whatsoever which may be asserted
against Mortgagee by reason of any alleged obligations or undertakings on its
part to perform or discharge any of the terms, covenants, or agreements
contained in any Lease; or (p) any investigation, defense, and settlement
incurred in correcting any prohibited transaction or in the sale of a prohibited
loan, and in obtaining any individual prohibited transaction exemption under
ERISA that may be required, in Mortgagee's sole discretion as a result of a
default under Section 33. The obligations and liabilities of
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Mortgagor under this Section 34 (A) shall survive for a period of one (1) year
following any release of this Mortgage executed by Mortgagee and satisfaction of
the Loan evidenced by the Loan Documents, and (B) shall survive the transfer or
assignment of this Mortgage, the entry of a judgment of foreclosure, sale of the
Mortgaged Property by nonjudicial foreclosure sale, or delivery of a deed in
lieu of foreclosure (including, without limitation, any transfer by Mortgagor of
any of its rights, title and interest in and to the Mortgaged Property to any
party, whether or not affiliated with Mortgagor).
35. Duty to Defend. Upon written request by an Indemnified Party, Mortgagor
shall defend such Indemnified Party (if requested by an Indemnified Party, in
the name of the Indemnified Party) by attorneys and other professionals approved
by the Indemnified Parties. Notwithstanding the foregoing, any Indemnified
Parties may, in their sole and absolute discretion, engage their own attorneys
and other professionals to defend or assist them, and, at the option of the
Indemnified Parties, their attorneys shall control the resolution of claim or
proceeding. Upon demand, Mortgagor shall pay or, in the sole and absolute
discretion of the Indemnified Parties, reimburse, the Indemnified Parties for
the payment of reasonable fees and disbursements of attorneys, engineers, and
other professionals in connection therewith. Any amounts payable to any of the
Indemnified Parties by reason of the application of Section 34 or this Section
shall be secured by this Mortgage and shall become immediately due and payable
and shall bear interest at the Default Rate specified in the Note from the date
loss or damage is sustained by any of the Indemnified Parties until paid.
36. Notices. Unless oral notice is expressly permitted hereunder any
notice, demand, statement, request or consent made hereunder shall be in writing
and shall be deemed to be received by the addressee on the first (1st) business
day after such notice is tendered to a nationally-recognized overnight delivery
service or on the third (3rd) day following the day such notice is deposited
with the United States postal service first class certified mail, return receipt
requested, in either instance, addressed to the address, as set forth above, of
the party to whom such notice is to be given, or to such other address as
Mortgagor or Mortgagee, as the case may be, shall in like manner designate in
writing.
37. Fee for Handling Interest-Bearing Escrows. Upon the request of
Mortgagee, Mortgagor agrees to pay to Mortgagee a fee of Fifty Dollars ($50.00)
per year (not to exceed Mortgagor's interest on the account) on each separate
escrow account maintained by Mortgagee on which Mortgagor is credited with
interest to compensate Mortgagee (or its servicer) for administrative costs
associated with Mortgagee's deposit into an interest-bearing account any funds
escrowed under this Mortgage or under any separate escrow agreement between
Mortgagee and Mortgagor. Mortgagor agrees that Mortgagee (or its servicer) shall
have the right to debit any interest earned for the benefit of Mortgagor on such
escrow account maintained by Mortgagee (or its servicer) for the account of
Mortgagor hereunder to pay such administrative fee.
38. Authority. (a) Mortgagor (and the undersigned representative of
Mortgagor, if any) has full power, authority and right to execute, deliver and
perform its obligations pursuant to this Mortgage, and to mortgage, give, grant,
bargain, sell, alien, enfeoff, convey, confirm, warrant, pledge, hypothecate and
assign the Mortgaged Property pursuant to the terms hereof and to keep and
observe all of the terms of this Mortgage on Mortgagor's part to be performed;
(b) Mortgagor is duly organized, validly existing and in good standing under the
laws of its state of organization or incorporation; (c) Mortgagor is duly
qualified to transact business and is in good standing in the state where the
Mortgaged Property is located and has all necessary approvals, governmental and
otherwise, and full power and authority to own the Mortgaged Property and carry
out its business as now conducted and proposed to be conducted; and (d)
Mortgagor represents and warrants that Mortgagor 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.
39. Waiver of Notice. Mortgagor shall not be entitled to any notices of any
nature whatsoever from Mortgagee except with respect to matters for which this
Mortgage specifically and expressly provides for the giving of notice by
Mortgagee to Mortgagor and except with respect to matters for which Mortgagee is
required by applicable law to give notice, and Mortgagor hereby expressly waives
the right to receive any notice from Mortgagee with respect to any matter for
which this Mortgage does not specifically and expressly provide for the giving
of notice by Mortgagee to Mortgagor.
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40. Remedies of Mortgagor. In the event that a claim or adjudication is
made that Mortgagee has acted unreasonably or unreasonably delayed acting in any
case where by law or under the Note, this Mortgage or the other Loan Documents,
it has an obligation to act reasonably or promptly, Mortgagee shall not be
liable for any monetary damages, and Mortgagor's remedies shall be limited to
injunctive relief or declaratory judgment.
41. Sole Discretion of Mortgagee. Wherever pursuant to this Mortgage,
Mortgagee exercises any right given to it to approve or disapprove, or any
arrangement or term is to be satisfactory to Mortgagee, the decision of
Mortgagee to approve or disapprove or to decide that arrangements or terms are
satisfactory or not satisfactory shall be in the sole discretion of Mortgagee
and shall be final and conclusive, except as may be otherwise expressly and
specifically provided herein.
42. Non-Waiver. The failure of Mortgagee to insist upon strict performance
of any term hereof shall not be deemed to be a waiver of any term of this
Mortgage. Mortgagor shall not be relieved of Mortgagor's obligations hereunder
by reason of (a) the failure of Mortgagee to comply with any request of
Mortgagor or Guarantor to take any action to foreclose this Mortgage or
otherwise enforce any of the provisions hereof or of the Note or other Loan
Documents, (b) the release, regardless of consideration, of the whole or any
part of the Mortgaged Property, or of any person liable for the Debt or any
portion thereof, or (c) any agreement or stipulation by Mortgagee extending the
time of payment or otherwise modifying or supplementing the terms of the Note,
this Mortgage, or the other Loan Documents. Mortgagee may resort for the payment
of the Debt to any other security held by Mortgagee in such order and manner as
Mortgagee, in its discretion, may elect. Mortgagee may take action to recover
the Debt, or any portion thereof, or to enforce any covenant hereof without
prejudice to the right of Mortgagee thereafter to foreclosure this Mortgage. The
rights and remedies of Mortgagee under this Mortgage shall be separate, distinct
and cumulative and none shall be given effect to the exclusion of the others. No
act of Mortgagee shall be construed as an election to proceed under any one
provision herein to the exclusion of any other provision. Mortgagee 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. It is agreed that the risk of loss or damage to the Mortgaged Property
is on the Mortgagor and Mortgagee shall have no liability whatsoever for decline
in the value of the Mortgaged 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.
43. No Oral Change. This Mortgage may not be modified, amended, waived,
extended, changed, discharged or terminated orally or by any act or failure to
act on the part of Mortgagor or Mortgagee, 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.
44. Liability. If Mortgagor consists of more than one person, the
obligations and liabilities of each such person hereunder shall be joint and
several. Subject to the provisions hereof requiring Mortgagee's consent to any
transfer of the Mortgaged Property, this Mortgage shall be binding upon and
inure to the benefit of Mortgagor and Mortgagee and their respective successors
and assigns forever.
45. Inapplicable Provisions. If any term, covenant or condition of this
Mortgage is held to be invalid, illegal or unenforceable in any respect, this
Mortgage shall be construed without such provision.
46. Headings, etc. The headings and captions of various paragraphs of this
Mortgage 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.
47. Counterparts. This Mortgage may be executed in any number of
counterparts each of which shall be deemed to be an original but all of which
when taken together shall constitute one agreement.
48. Definitions. Unless the context clearly indicates a contrary intent or
unless otherwise specifically provided herein, words used in this Mortgage may
be used interchangeably in singular or plural form and the word "Mortgagor"
shall mean "each Mortgagor and any subsequent owner or owners of the Mortgaged
Property or any part thereof or any interest therein," the word "Mortgagee"
shall mean "Mortgagee and any subsequent holder of the Note," the word "Debt"
shall mean "the Note and any other evidence of indebtedness secured by this
Mortgage," the word "person" shall include an individual, corporation,
partnership, trust, unincorporated association, government,
29
governmental authority, and any other entity, and the words "Mortgaged Property"
shall include any portion of the Mortgaged Property and any interest therein and
the words "attorneys' fees" shall include any and all attorneys' fees, paralegal
and law clerk fees, including, but not limited to, fees at the pre-trial, trial
and appellate levels incurred or paid by Mortgagee in protecting its interest in
the Mortgaged Property and Collateral and enforcing its rights hereunder.
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.
49. Homestead. Mortgagor hereby waives and renounces all homestead and
exemption rights provided by the constitution and the laws of the United States
and of any state, in and to the Premises as against the collection of the Debt,
or any part hereof.
50. Assignments. Mortgagee shall have the right to assign or transfer its
rights under this Mortgage and the other Loan Documents without limitation,
including, without limitation, the right to assign or transfer its rights to a
servicing agent. Any assignee or transferee shall be entitled to all the
benefits afforded Mortgagee under this Mortgage and the other Loan Documents.
51. Survival of Obligations; Survival of Warrants and Representations. Each
and all of the covenants and obligations of Mortgagor (other than warranties and
representations contained herein) shall survive the execution and delivery of
the Loan Documents and shall continue in full force and effect until the Debt
shall have been paid in full; provided, however, that nothing contained in this
paragraph shall limit the obligations of Mortgagor except as otherwise set forth
herein. In addition, any and all warranties and representations of Mortgagor
contained herein shall survive the execution and delivery of the Loan Documents
and (i) shall continue for a period of one (1) year following any release of
this Mortgage executed by Mortgagee and satisfaction of the loan evidenced by
the Loan Documents, and (ii) shall survive the transfer or assignment of this
Mortgage, the entry of a judgment of foreclosure, sale of the Mortgaged Property
by non-judicial foreclosure or deed in lieu of foreclosure (including, without
limitation, any transfer of the Mortgage by Mortgagee of any of its rights,
title and interest in and to the Mortgaged Property to any party, whether or not
affiliated with Mortgagee).
52. Mortgagor's Expense. Mortgagor acknowledges and confirms that Mortgagee
shall impose certain administrative processing and/or commitment fees in
connection with (a) the extension, renewal, modification, amendment and
termination of its loans, (b) the release or substitution of collateral
therefor, (c) obtaining certain consents, waivers and approvals with respect to
the Mortgaged Property, or (d) the review of any Lease or proposed Lease or the
preparation or review of any subordination, non-disturbance. Mortgagor further
acknowledges and confirms that it shall be responsible for the payment of all
costs of reappraisal of the Mortgaged Property or any part thereof, whether
required by law, regulation, Mortgagee or any governmental or quasi-governmental
authority. Mortgagor 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 Mortgagee from time to time, upon the occurrence of an event set
forth in this Section or otherwise. Wherever it is provided for herein that
Mortgagor pay any costs and expenses, such costs and expenses shall include, but
not be limited to, all legal fees and disbursements of Mortgagee, whether of
retained firms, the reimbursement for the expenses of in-house staff or
otherwise.
53. Attorneys' Fees. (a) Mortgagor shall pay all legal fees incurred by
Mortgagee in connection with (i) the preparation of the Note, this Mortgage and
the other Loan Documents; and (ii) the items set forth in Section 52 above, and
(b) Mortgagor shall pay to Mortgagee on demand any and all expenses, including
legal expenses and attorneys' fees, incurred or paid by Mortgagee in protecting
its interest in the Mortgaged Property or in collecting any amount payable under
the Note, Mortgage or other Loan Documents or enforcing its rights hereunder
with respect to the Mortgaged Property, whether or not any legal proceeding is
commenced hereunder or thereunder and whether or not any default or Event of
Default shall have occurred and is continuing, together with interest thereon at
the Default Rate from the date paid or incurred by Mortgagee until such expenses
are paid by Mortgagor.
54. Covenants Running with the Land. All covenants, conditions, warranties,
representations and other obligations contained in this Mortgage and the other
Loan Documents are intended by Mortgagor and Mortgagee to be, and shall be
construed as, covenants running with the Mortgaged Property until the lien of
this Mortgage has been fully released by Mortgagee.
30
55. Governing Law; Jurisdiction. THIS MORTGAGE AND THE OTHER LOAN DOCUMENTS
SHALL BE GOVERNED, CONSTRUED, APPLIED AND ENFORCED IN ACCORDANCE WITH THE LAWS
OF THE STATE IN WHICH THE MORTGAGED PROPERTY IS LOCATED (WITHOUT REGARD TO ANY
CONFLICT OF LAWS PRINCIPLES) AND THE APPLICABLE LAWS OF THE UNITED STATES OF
AMERICA. MORTGAGOR HEREBY IRREVOCABLY SUBMITS TO THE JURISDICTION OF ANY COURT
OF COMPETENT JURISDICTION LOCATED IN THE STATE IN WHICH THE MORTGAGED PROPERTY
IS LOCATED IN CONNECTION WITH ANY PROCEEDING OUT OF OR RELATING TO THIS
MORTGAGE.
56. Time. Time is of the essence in this Mortgage and the other Loan
Documents.
57. No Third Party Beneficiaries. The provisions of this Mortgage and the
other Loan Documents are for the benefit of Mortgagor and Mortgagee and shall
not inure to the benefit of any third party (other than any successor or
assignee of Mortgagee). This Mortgage and the other Loan Documents shall not be
construed as creating any rights, claims or causes of action against Mortgagee
or any of its officers, directors, agents or employees in favor of any party
other than Mortgagor including but not limited to any claims to any sums held in
the Tax and Insurance Escrow Fund or the Replacement Escrow Fund.
58. Relationship of Parties. The relationship of Mortgagee and Mortgagor is
solely that of debtor and creditor, and Mortgagee has no fiduciary or other
special relationship with the Mortgagor, and no term or condition of any of the
Loan Documents shall be construed to be other than that of debtor and creditor.
Mortgagor represents and acknowledges that the Loan Documents do not provide for
any shared appreciation rights or other equity participation interest.
59. Investigations. Any and all representations, warranties, covenants and
agreements made in this Mortgage (and/or in other Loan Documents) shall survive
any investigation or inspection made by or on behalf of Mortgagee.
60. Certain Hotel Covenants. Mortgagor further covenants and agrees with
Mortgagee as follows:
(a) Mortgagor shall cause the hotel located on the Mortgaged Property
to be operated pursuant to the Franchise Agreement and the Management
Agreement.
(b) Mortgagor shall:
(i) promptly perform and/or observe all of the covenants and
agreements required to be performed and observed by it under the
Franchise Agreement and the Management Agreement and do all things
necessary to preserve and to keep unimpaired its material rights
thereunder;
(ii) promptly notify Mortgagee of any default under the Franchise
Agreement or the Management Agreement of which it is aware;
(iii) promptly deliver to Mortgagee a copy of each financial
statement, business plan, capital expenditures plan, notice, report
and estimate received by it under the Franchise Agreement or the
Management Agreement; and
(iv) promptly enforce the performance and observance of all of
the covenants and agreements required to be performed and/or observed
by the franchisor under the Franchise Agreement and the manager under
the Management Agreement.
(c) Mortgagor shall not, without Mortgagee's prior consent:
(i) surrender, terminate or cancel the Franchise Agreement or the
Management Agreement;
31
(ii) reduce or consent to the reduction of the term of the
Franchise Agreement or the Management Agreement;
(iii) increase or consent to the increase of the amount of any
charges under the Franchise Agreement or the Management Agreement; or
(iv) otherwise modify, change, supplement, alter or amend, or
waive or release any of its rights and remedies under, the Franchise
Agreement or the Management Agreement in any material respect.
(d) Mortgagor shall not, without Mortgagee's prior consent, enter into
transactions with any affiliate, including without limitation, any arrangement
providing for the managing of the hotel on the Mortgaged Property, the rendering
or receipt of services or the purchase or sale of inventory, except any such
transaction in the ordinary course of business of Mortgagor if the monetary or
business consideration arising therefrom would be substantially as advantageous
to Mortgagor as the monetary or business consideration that would obtain in a
comparable transaction with a person not an affiliate of Mortgagor.
(e) Mortgagor shall maintain the Management Agreement for the operation of
the Mortgaged Property in full force and effect and timely perform all of
Mortgagor's obligations thereunder and enforce performance of all obligations of
the manager thereunder, and not permit the termination or amendment of such
Management Agreement unless the prior written consent of Mortgagee is first
obtained. Mortgagor will enter into and cause the manager to enter into an
assignment and subordination of such Management Agreement in form satisfactory
to Mortgagee, assigning and subordinating the manager's interest in the
Mortgaged Property and all fees and other rights of the manager pursuant to such
Management Agreement to the rights of Mortgagee. Upon an Event of Default,
Mortgagor at Mortgagee's request made at any time while such Event of Default
continues, shall terminate the Management Agreement and replace the manager with
a manager selected by Mortgagee.
61. Other Mortgages. Pursuant to the Loan Agreement, Mortgagee has advanced
an aggregate $30,700,000 (the "Related Debt") to JAGI Cleveland - Independence,
LLC, a Delaware limited liability company ("JAGI Independence"), JAGI Montrose
West, LLC, a Delaware limited liability company ("JAGI Montrose"), and JAGI
North Canton, LLC, a Delaware limited liability company ("JAGI Canton"). Each of
JAGI Independence, JAGI Montrose, and JAGI Canton has executed a promissory note
(the "Other Notes") to evidence the Related Debt and a Second Mortgage and
Security Agreement (the "Other Mortgages") as additional security for the Debt.
62. Mechanics' Lien Laws. Mortgagee shall be and hereby is authorized and
empowered to do, as mortgagee, all things provided to be done in the mechanic's
lien laws of the State of Ohio (including Section 1311.14 of the Ohio Revised
Code), and all acts amendatory or supplementary thereto.
63. Protective Advances. The Debt secured by this Mortgage shall include
unpaid balances of advances made by Mortgagee with respect to the Mortgaged
Property for the payment of taxes, assessments, and insurance premiums and for
costs incurred for the protection of the Mortgaged Property as provided for in
Section 5301.233 of the Ohio Revised Code, and all acts amendatory or
supplementary thereto.
32
Mortgagor has executed this instrument the day and year first above
written.
MORTGAGOR:
In the presence of: JAGI XXXXXXXXX-XXXXXX, LLC, a
Delaware limited liability company
By Janus American Group, Inc., a Delaware
corporation
/s/ XXXXXXX X. XXXXXXX By /s/ XXXXX X. XXXXXX
--------------------------------- --------------------------------------
Print Name: Xxxxxxx X. Xxxxxxx Name: Xxxxx X. Xxxxxx
Title: President
/s/ XXXXX XXXXXXXX
---------------------------------
Print Name: Xxxxx Xxxxxxxx
33
STATE OF TEXAS )
) SS.
COUNTY OF DALLAS )
Before me, a Notary Public in and for said county and state, personally
appeared the above-named JAGI XXXXXXXXX - XXXXXX, LLC, a Delaware limited
liability company, by Janus American Group, Inc., a Delaware corporation, its
Manager, by Xxxxx X. Xxxxxx, its President, who acknowledged that he did sign
the foregoing instrument on behalf of said corporation and said limited
liability company, that the same is the free act and deed of said limited
liability company, the free act and deed of said corporation individually and as
such manager, and his free act and deed individually and as such officer.
In testimony whereof, I have hereunto set my hand and official seal at
Dallas, Texas, this 12th day of August 1998.
/s/ XXXXXX XXXXXX
---------------------------------
Notary Public
This instrument prepared by:
Xxxxxxx X. Xxxxxxx, Esq.
Xxxxx, Day, Xxxxxx & Xxxxx
North Point
000 Xxxxxxxx Xxxxxx
Xxxxxxxxx, Xxxx 00000
34
EXHIBIT A
Legal Description
EXHIBIT A
PARCEL "A"
----------
Premises/situated in the VILLAGE of BOSTON HEIGHTS, County of Summit and State
of Ohio, and known as being a part of Lot No. 3 east of the Cuyahoga River,
formerly in Boston Township, and more fully described as follows:
Beginning at a stone at the northwest corner of said Lot No. 3, said stone
being at the intersection of the centerline tangents of Xxxxx Xxxx Road
(C. H. 115);
Thence S 68 deg. 51' 10" East, 140.02 feet along the centerline tangent of
Xxxxx Hill Road (C. H. 115) to a point and the true place of beginning;
Thence S 68 deg. 51' 10" East, 231.33 feet along the centerline tangent of
Xxxxx Xxxx Road (C. H. 115) to a point on the westerly line of a highway
easement conveyed to the State of Ohio for Relocated State Route 8 and
recorded in Volume 2990, Page 348 of the Summit County Record of Deeds;
Thence along the westerline of said highway following a circular curve to
the left, 33.46 feet to a point, said circular curve having a central angle
of 00 deg. 38' 52", a radius of 2,959.79 feet, a tangent of 16.73 feet, and
a chord of 33.46 feet;
Thence N 70 deg. 21' 01" West, 115.10 feet along the westerly line of said
highway;
Thence S 55 deg. 36' 00" East, 136.05 feet along the westerly line of said
highway;
Thence along the westerly line of said highway following a circular curve
to the left, 248.43 feet to a point, said circular curve having a central
angle of 04 deg. 48' 43", a radius of 2,959.79 feet, a tangent of 124.29
feet, and a chord of 248.36 feet:
Thence WEST, 146.07 feet to a point;
Thence NORTH, 35.00 feet to a point;
Thence WEST, 224.32 feet to a point;
Thence NORTH 210.26 feet to a point
Thence S 75 deg. 26' 37" East, 114.26 feet to a point;
Thence NORTH 183.95 feet to a point and the true place of beginning, and
containing 2.2659 acres of land as determined by Xxxxxxxx & Xxx, Registered
Surveyors in February, 1975, but subject to all legal roads, highways, and
easements of record.
PARCEL "B"
----------
Situated in the Village of Boston Heights, County of Summit and State of Ohio,
and known as being a part of Lot No. 3, east of the Cuyahoga River, formerly in
Boston Township, and more fully described as follows:
Beginning at a stone at the northwest corner of said Lot No. 3, said stone
being at the intersection of the centerline tangents of Xxxxx Xxxx Road
(C. H. 115);
Thence S 200.55 feet along the westerly line of said lot No. 3, to a point
and the true place of beginning;
Thence S 75 deg. 26' 37" East, 20.66 feet to a point;
Thence SOUTH 210.26 feet to a point;
Thence EAST 224.32 feet to a point;
Thence SOUTH 35.00 feet to a point;
Thence EAST 146.07 feet to a point on the westerly line of a highway
easement conveyed to the State of Ohio for relocated State Route 8 and
recorded in Volume 2990, Page 348 of the Summit County Record of Deeds;
Thence along the westerly line of said highway following a circular curve
to the left, 44.28 feet to a point, said circular curve having a central
angle of 00 deg. 51' 26", a radius of 2,959.79 feet, a tangent of 22.14
feet, and a chord of 44.28 feet;
Thence along the westerly line of said highway the following courses:
S 13 deg. 48' 20" East, 304.94 feet to a point.
S 14 deg. 49' 10" East, 116.68 feet to a point
S 12 deg. 55' 00" East, 473.76 feet to a point
N 89 deg. 14' 30" East, 15.70 feet to a point
S 14 deg. 49' 10" East, 116.89 feet to a point on the northerly
right-of-way line of the Ohio Turnpike Project No. 1, as recorded in
Plat Book 44, Page 154 of the Summit County Records of Plats;
Thence along the northerly line of said highway following a circular curve to
the left, 5251 feet to a point, said circular curve having a central angle of
00 deg. 15' 32", a radius of 11,619.16 feet, a tangent of 26.25 feet, and a
chord of 52.50 feet;
Thence N 03 deg. 36' 10" West, 50.00 feet to a point;
Thence N 77 deg. 05' 00" East, 4.50 feet to a point;
Thence N 12 deg. 55' 00" West, 381.49 feet to a point;
Thence West, 516.83 feet to a point on the westerly line of Lot No. 3;
Thence NORTH, 858.03 feet along the westerly line of Lot No. 3 to a point and
the true place of beginning, and containing 7.0156 acres of land as determined
by Xxxxxxxx & Xxx, Registered Surveyors in February, 1975, but subject to all
legal roads, highways and easements of record.
PARCEL "C"
----------
Situated in the Village of Boston Heights, the County of Summit and State of
Ohio, and known as being a part of Lot No. 3, east of the Cuyahoga River,
formerly in Boston Township, and more fully described as follows:
Beginning at a stone at the northwest corner of said Lot No. 3, said stone
being at the intersection of the centerline tangents of Xxxxx Xxxx Road
(C.H. 115),
Thence SOUTH 1,058.58 feet along the westerly line of said Lot No. 3 to a
point and the true place of beginning;
Thence EAST 516.83 feet to a point;
Thence S 12 deg. 55' 00" East, 256.49 feet to a point;
Thence WEST 574.16 feet to point on the westerly line of said Lot No. 3;
Thence NORTH along the westerly line of said Lot No. 3, 250.00 feet to a
point and the true place of beginning, and containing 3.1309 acres of land
as determined by Xxxxxxxx & Xxx, Registered Surveyors in February, 1975,
but subject to all legal roads, highways, and easements of record.
The above described Parcels "A", "B" and "C" also include the use of the
following described easement for ingress and egress from Xxxxx Hill Road;
Situated in the Village of Boston Heights, County of Summit, and State of Ohio,
and known as being a part of Lot No. 16, East of the Cuyahoga River, formerly in
Boston Township, and more fully described as follows:
Beginning at a stone at the northeast corner of Xxx Xx. 00 xx xxx
xxxxxxxxxx xx Xxxxx Xxxx Xxxx (X. H. 115);
Thence SOUTH, 1,110.00 feet along the easterly line of Xxx Xx. 00 to a
point;
Thence WEST, 40.00 feet to a point;
Thence NORTH, 1,110,00 feet to a point on the center line of Xxxxx Xxxx
Road;
Thence EAST, 40.00 feet along the center line of Xxxxx Hill Road to the
place of beginning.
Together with all rights, title and interest which the grantor now holds or
hereafter acquire in and to an easement for ingress and egress as more fully
set forth in a Right-of-Way Agreement from The Bostonian Country Club, Inc. to
The Bostonian Company and Galburton Inn, Inc. dated September 19, 1966 and filed
for record October 5, 1966 in Volume 4622, Page 637 of Summit County Records.
Together with all rights, title and interest in and to an EASEMENT for ingress
and egress to include parking privileges on PARCEL "B" described above.
SCHEDULE TO EXHIBIT 10.27
OTHER MORTGAGE AND SECURITY AGREEMENTS
I.
------------------------------------------------------------ ---------------------------------------------------------
Name of Mortgagor JAGI Cleveland - Independence, LLC, a Delaware limited
liability company
------------------------------------------------------------ ---------------------------------------------------------
Amount of Loan $21,800,000
----------------------------------------------------------- ---------------------------------------------------------
Definition of Franchise Agreement referenced in Section The Holiday Inn Hotel Change of Ownership Agreement
8(r) between Mortgagor and Holiday Hospitality
Franchising, Inc.
------------------------------------------------------------ ---------------------------------------------------------
Exhibit A Legal Description of Property
II.
------------------------------------------------------------ ---------------------------------------------------------
Name of Mortgagor JAGI Montrose West, LLC, a Delaware limited liability
company
------------------------------------------------------------ ---------------------------------------------------------
Amount of Loan $3,500,000
------------------------------------------------------------ ---------------------------------------------------------
Definition of Franchise Agreement referenced in Section Comfort Inn Change of Ownership Agreement between
8(r) Mortgagor and Choice Hotels International, Inc.
------------------------------------------------------------ ---------------------------------------------------------
Exhibit A Legal Description of Property
III.
------------------------------------------------------------ ---------------------------------------------------------
Name of Mortgagor JAGI North Canton, LLC, a Delaware limited liability
company
------------------------------------------------------------ ---------------------------------------------------------
Amount of Loan $5,400,000
------------------------------------------------------------ ---------------------------------------------------------
Definition of Franchise Agreement referenced in Section The Holiday Inn Hotel Change of Ownership Agreement
8(r) between Mortgagor and Holiday Hospitality
Franchising, Inc.
------------------------------------------------------------ ---------------------------------------------------------
Exhibit A Legal Description of Property
------------------------------------------------------------ ---------------------------------------------------------
