EXHIBIT 4.34
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DISCOVERY ZONE, INC.
(Mortgagor),
to
XxXXXXXX'x CORPORATION
(Mortgagee)
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AMENDED AND RESTATED MORTGAGE, ASSIGNMENT OF LEASES AND RENTS, SECURITY
AGREEMENT AND FIXTURE FILING
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Dated as of July 29, 1997
DOCUMENT PREPARED BY AND
AFTER RECORDING RETURN TO:
Cleary, Gottlieb, Xxxxx & Xxxxxxxx
Xxx Xxxxxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxxx X. Xxxxx, Esq.
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THIS MORTGAGE IS EXECUTED AND DELIVERED UNDER A PLAN CONFIRMED UNDER SECTION
1129 OF THE BANKRUPTCY CODE AND IS EXEMPT FROM MORTGAGE REGISTRATION TAX
PURSUANT TO SECTION 1146(C) OF THE BANKRUPTCY CODE
[BLAINE, MINNESOTA PROPERTY]
THIS AMENDED AND RESTATED MORTGAGE, ASSIGNMENT OF LEASES AND
RENTS, SECURITY AGREEMENT AND FIXTURE FILING (as the same may from time to time
be extended, renewed or modified, this "MORTGAGE"), made as of the 29th day of
July, 1997, by DISCOVERY ZONE, INC., a Delaware corporation ("MORTGAGOR"),
having its principal place of business at One Corporate Center, 000 Xxxx Xxxxxxx
Xxxxxxxxx, Xxxx Xxxxxxxxxx, Xxxxxxx 00000, as successor by merger to LEAPS &
BOUNDS, INC., to XxXXXXXX'X CORPORATION a Delaware corporation ("MORTGAGEE"),
having an address at Xxx XxXxxxxx'x Xxxxx, Xxx Xxxxx, Xxxxxxxx 00000.
W I T N E S S E T H:
A. WHEREAS, prior to Mortgagor's several predecessors in interest
filing their voluntary petitions for relief under chapter 11, title 11, United
States Code (the "BANKRUPTCY CODE"), Mortgagor's predecessors in interest with
respect to the Mortgaged Property (as hereinafter defined), Leaps & Bounds, Inc.
("LBI") had provided Mortgagee with a First Mortgage on the Mortgaged Property,
dated as of August 30, 1994 (the "ORIGINAL MORTGAGE") and identified by the
recording information set forth on Schedule A hereto, to secure certain
obligations owed to Mortgagee under the Agreement and Plan of Merger among
Mortgagee, Mortgagor, Discovery Zone, Inc., a Delaware corporation ("OLD DZI")
and Discovery Zone International, Inc. ("DZII"), a Delaware corporation, dated
as of August 30, 1994 (the "MERGER AGREEMENT"); and
B. WHEREAS, pursuant to Section 11.2(a)(iii) of the Merger
Agreement, Old DZI agreed to defend, indemnify and hold Mortgagee and its
affiliates harmless in respect of all expenses, losses, costs, deficiencies,
liabilities and damages (including related and reasonable counsel fees and
expenses, and compensatory and demonstrable consequential damages) incurred or
suffered by Mortgagee as a direct result of, inter alia, any breach by Old DZI
or LBI of the leases or subleases relating to certain properties that result in
any payment by Mortgagee in connection with any guarantee by Mortgagee of such
leases and pursuant to Section 10.3(f) of the Merger Agreement it was agreed
that certain security would be provided to secure the obligations under Section
11.2(a)(iii) of the Merger Agreement, including without limitation, a first
priority security interest in the Land and Improvements (the "AGREEMENT TO
INDEMNIFY"); and
C. WHEREAS, following the filing of their respective prayers for
relief under the Bankruptcy Code, Mortgagor's predecessors in interest, Old DZI,
their affiliated debtors, including DZII and LBI (the "DEBTORS"), and Mortgagee
entered into the Stipulation and Order Between Debtors and XxXxxxxx'x
Corporation Providing For The Resolution, Settlement And Compromise of Disputes
And For Rent Deferrals And Allowance of Certain Claims (the "STIPULATION AND
ORDER") that was entered by the United States Bankruptcy Court for the District
of Delaware (the "BANKRUPTCY COURT") on November 18, 1996, which was not
appealed or otherwise challenged, became a final order, remains in full force
and effect and to which Mortgagor is bound, Section 7 of which is captioned
"CONTINUING SECURITY" and provides, in pertinent part, that the valid and
enforceable first priority security interest on the
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Land and Improvements and certain other collateral shall secure the performance
and payment of all of the obligations of Mortgagor to Mortgagee under the Notes
(as hereinafter defined), any obligations of Mortgagee that may arise in
connection with the Assumption Locations whether pursuant to any guaranty,
lease, sublease or otherwise, any obligations of Mortgagor that may arise in the
event of a Liquidation, and any continuing obligations of Mortgagor relating to
the Rejection Location(s) and the Prior Rejection Locations (as such terms are
defined therein); and
D. WHEREAS, pursuant to the Stipulation and Order and 11 U.S.C.
ss.365, the Debtors, as predecessors in interest to Mortgagor, assumed the
subleases relating to certain properties (the "ASSUMED PROPERTIES") which
subleases (the "ASSUMED PROPERTY SUBLEASES") expressly incorporate the Agreement
to Indemnify as it relates to any current or future obligations of Mortgagee
relating to the Assumed Properties; and
E. WHEREAS, pursuant to the Stipulation and Order and the Plan
(as hereinafter defined), this Mortgage hereby amends and restates the Original
Mortgage in its entirety in accordance with the terms and provisions set forth
herein; and
F. WHEREAS, this Mortgage, together with certain other Deeds of
Trust, Mortgages or similar encumbrances, are intended to and do secure the
obligations of Mortgagor and its predecessors in interest and the other Debtors,
to Mortgagee under all of the Stipulation and Order, the Agreement to Indemnify,
the Secured Rent Deferral Notes (as hereinafter defined) and the Secured
Rejection Note (as hereinafter defined); and
G. WHEREAS, pursuant to the plan of reorganization for Old DZI
and its affiliated debtors confirmed by the Bankruptcy Court by order entered
July 18, 1997 (the "PLAN"), and as required by the terms of the Stipulation and
Order, Mortgagor, as the reorganized successor of the Debtors, is obligated to
issue to Mortgagee Secured Rent Deferral Notes in the aggregate original
principal amount of $266,466.24, which amount is subject to increase each month
in accordance with the terms thereof (the "SECURED RENT DEFERRAL NOTES") and
Secured Rejection Note in the aggregate original principal amount of
$4,416,237.90 (the "SECURED REJECTION NOTE", and, together with the Secured Rent
Deferral Notes, the "NOTES"); and
H. WHEREAS, pursuant to the Plan, all of the Debtors and their
reorganized successors have merged into Mortgagor, and simultaneously with such
merger, all property of LBI and the other Debtors, including the Mortgaged
Property (as hereinafter defined) has been revested in Mortgagor, as the
successor entity of the Debtors; and
I. WHEREAS, in accordance with the foregoing, Mortgagor is the
fee simple owner of the real estate described in Exhibit A attached hereto (the
"LAND"); and
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J. WHEREAS, mortgage registration tax in the amount of $4625.50
has been paid on the obligations secured hereby as evidenced by receipt Xx.
00000000, Xxxxx Xxxxxx Recorder;
NOW THEREFORE, with reference to the foregoing recitals and for
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, Mortgagor and Mortgagee hereby agree that the Original Mortgage is
hereby amended and restated in its entirety as follows:
For the purpose of securing the payment and performance of all of
the obligations (the "OBLIGATIONS") of Mortgagor to Mortgagee, including without
limitation, any and all obligations of Mortgagor, as successor in interest to
Old DZI, DZII, LBI and their affiliated debtors, under this Mortgage, the
Agreement to Indemnify (including, without limitation, any contingent
obligations thereunder), the Stipulation and Order (including, without
limitation, the obligations described in Section 7 thereof which is described in
paragraph C of the recitals above), the Plan and the Notes (including any and
all subsequent advances made pursuant to the terms of the Notes), and all other
documents evidencing or securing any such obligations (collectively, the
"RELEVANT DOCUMENTS"), Mortgagor by these presents does hereby mortgage, give,
grant, bargain, sell, alienate, enfeoff, convey, confirm, warrant, pledge,
assign and hypothecate unto Mortgagee, the Land and the buildings, structures
and improvements of every nature whatsoever now or hereafter located thereon to
the extent owned by Mortgagor (including, but not limited to, all gas and
electric fixtures, radiators, heaters, docks and docking facilities, engines and
machinery, boilers, elevators and motors, plumbing, heating and air conditioning
fixtures, carpeting and other floor coverings, water heaters, awnings and storm
sashes which are or shall be attached to the Land or said buildings, structures
or improvements) (the "IMPROVEMENTS");
TOGETHER WITH: all right, title, interest and estate of Mortgagor
now owned, or hereafter acquired, in and to the following property, rights,
interest and estates relating to the Land and the Improvements, together with
Mortgagor's interest in the following property, rights, interests and estates
hereinafter described (the Land, Improvements, and the following property,
rights, interests and estates being hereinafter collectively referred to 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, construction and equipment
warranties, and all estates, rights, titles, interests, privileges, liberties,
tenements, hereditaments and appurtenances of any nature whatsoever, in any way
belonging, relating to or pertaining to the Land and the Improvements and the
reversion and reversions, remainder and remainders, and all land lying in the
bed of any street, road or avenue, opened or proposed, in front of or adjoining
the Land, to the center line thereof and all the estates, rights, titles,
interests, dower and rights of dower, curtesy and rights of curtesy, property,
possession, claim and demand whatsoever, both at law and in equity, of Mortgagor
of, in and to the Land and the Improvements and every part and
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parcel thereof, with the appurtenances thereto, and in and to any streets, ways,
alleys, passages, strips or gores of land adjoining the Land or any part
thereof;
(b) all fixtures, attachments and other articles attached to the
Land or the Improvements constituting realty or real property now or hereafter
owned by Mortgagor or in which Mortgagor has or shall acquire an interest, now
or hereafter located on, attached to or contained in or used or usable in
connection with the Mortgaged Property, and including, without limitation, all
building or construction materials intended for construction, reconstruction,
alteration or repair of or installation on or in the Mortgaged Property, of
every kind and nature whatsoever now owned or hereafter acquired by Mortgagor,
and all proceeds thereof, as well as all additions to, appurtenances,
substitutions for, replacements of or accessions to any of the items recited as
aforesaid and all attachments, components, parts (including spare parts) and
accessories, whether installed thereon or affixed thereto, now or hereafter
owned by Mortgagor and used or intended to be used in connection with, or with
the operation of, the Mortgaged Property, to the extent constituting real
property, but not including play equipment or other similar-type entertainment
equipment relating to the operation of the "Discovery Zone" facility on the
Mortgaged Property unless removal of such equipment would cause structural
damage to the Land or the Improvements (collectively, the "FIXTURES");
(c) all awards or payments, including interest thereon, which may
heretofore and hereafter be made with respect to the Mortgaged Property, whether
from the exercise of the right of eminent domain (including, but not limited to,
any transfer made in lieu of or in anticipation of the exercise of said rights),
or for a change of grade, or for any other injury to or decrease in the value of
the Mortgaged Property;
(d) to the extent assignable (and to the extent relating to the
general occupancy and use of the Mortgaged Property as opposed to the operation
of the "Discovery Zone" entertainment facility on the Mortgaged Property),
leases, subleases (including sub-subleases), lettings, licenses, concessions,
occupancy agreements and other agreements which grant a possessory interest in,
or the right to use or occupy, all or any part of the Mortgaged Property now or
hereafter entered into, and all amendments, extensions, renewals and guarantees
thereof, and all security therefor (collectively, the "LEASES") and all rents,
issues, profits, revenues (including all oil and gas or other mineral royalties
and bonuses) and deposits (including, without limitation, security deposits)
under the Leases (including, without limitation, from the rental of any office
space, retail space or other space, halls, stores, and offices, and security
deposits therefor, exhibit or sales space of every kind, license, lease,
sublease, fees and rentals, letters of credit or cash instruments securing or
evidencing obligations under Leases, service charges, vending machine sales and
proceeds, if any, from business interruption or other loss of income insurance))
(collectively, 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
Obligations;
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(e) subject to the rights of Mortgagor hereunder, all proceeds of
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) all refundable, returnable or reimbursable fees deposits or
other funds or evidences of credit or indebtedness deposited by or on behalf of
Mortgagor with any governmental authorities, boards, corporations, providers of
utility services, public or private, including specifically, but without
limitation, all refundable, returnable or reimbursable tap fees, utility
deposits and development costs in connection with the Mortgaged Property, and
all of the records and books of account now or hereafter maintained by or on
behalf of Mortgagor in connection with the operation of the Mortgaged Property
(collectively, "SECURITY ACCOUNTS");
(g) all proceeds (as defined in the Uniform Commercial Code) of
the Mortgaged Property which, in any event, shall include, without limitation,
(i) cash, instruments and other property received, receivable or otherwise
distributed in exchange for any or all of the Mortgaged Property, (ii) the
collection or other disposition of, or realization upon, any item or portion of
the Mortgaged Property (including, without limitation, all claims of Mortgagor
against third parties for loss of, damage to, destruction of, or for proceeds
payable under policies of insurance in respect of, the Mortgaged Property now
existing or hereafter arising), (iii) any and all proceeds of any insurance,
indemnity, warranty or guaranty payable to Mortgagor from time to time with
respect to damage or loss of or to any of the Mortgaged Property, (iv) any and
all payments (in any form whatsoever) made or due and payable to Mortgagor from
time to time in connection with the requisition, confiscation, condemnation,
seizure or forfeiture of all or any part of the Mortgaged Property by any
Governmental Authority (or any person acting under color of Governmental
Authority), and (v) any and all real estate tax refunds payable to Mortgagor
with respect to the Mortgaged Property, and refunds or reimbursements payable
with respect to bonds, escrow accounts, or other sums payable in connection with
the use, development or ownership of the Mortgaged Property, but excluding any
proceeds obtained, earned or arising directly from the operation of the
"Discovery Zone" entertainment facility operated by Mortgagor on the Mortgaged
Property as opposed to the general occupancy and use of the Mortgaged Property
(collectively, the "PROCEEDS");
(h) to the extent permitted under applicable law, all licenses,
permits (other than proprietary permits of Mortgagor relating to the ordinary
operation of a "Discovery Zone" entertainment facility as opposed to the general
use and occupancy of the Mortgaged Property), variances and certificates used in
connection with the ownership, operation, use or occupancy of the Mortgaged
Property (including, without limitation, business licenses, state health
department licenses, food service licenses, liquor licenses, licenses to conduct
business and all such other permits, licenses and rights, obtained from any
Governmental Authority or private Person concerning ownership, operation, use or
occupancy of the Mortgaged Property) (collectively, "PERMITS");
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(i) all plans, specifications, shop drawings and other technical
descriptions prepared for construction, repair or alteration of the Improvements
(including diskettes containing any such data), and all amendments and
modifications thereof; and
(j) any escrows or escrow accounts established hereunder to
secure the Obligations of Mortgagor, including, without limitation, the Proceeds
Escrow Account described in Section 6(b) hereof; and
(k) any and all replacements and renewals of or additions and
substitutions to any of the foregoing and all proceeds of any of the foregoing.
TO HAVE AND TO HOLD the above granted and described Mortgaged
Property unto and to the use and benefit of Mortgagee, and its successor and
assigns, forever, and Mortgagor does hereby bind itself, its successors and
assigns to WARRANT AND FOREVER DEFEND the title to the Mortgaged Property unto
Mortgagee and its successors and assigns;
AND, TO PROTECT THE SECURITY OF THIS MORTGAGE, Mortgagor
represents and warrants to and covenants and agrees with Mortgagee as follows:
1. DEFINED TERMS. The following terms, when used herein, shall
have the meanings set forth below:
"ENVIRONMENTAL LAWS" means any and all present and future
federal, state or local laws, statutes, ordinances or regulations, any judicial
or administrative orders, decrees or judgments thereunder, and any permits,
approvals, licenses, registrations, filings and authorizations, in each case as
now or hereafter in effect, relating to the protection of the environment, the
impact of Hazardous Substances or the generation, disposal or remediation
thereof on human health or safety, or the Release or threatened Release of
Hazardous Substances or otherwise relating to the Use of Hazardous Substances.
For purposes of this definition, (A) "HAZARDOUS SUBSTANCES" means collectively,
(i) any petroleum or petroleum products or waste oils, explosives, radioactive
materials, asbestos, urea formaldehyde foam insulation, polychlorinated
biphenyls ("PCBs"), and lead-based paint, (ii) any chemicals or other materials
or substances which are now or hereafter become defined as or included in the
definitions of "hazardous substances", "hazardous wastes", "hazardous
materials", "extremely hazardous wastes", "restricted hazardous wastes", "toxic
substances", "toxic pollutants", "contaminants", "pollutants" or words of
similar import under any Environmental Law and (iii) any other chemical or any
other material or substance, exposure to which is now or hereafter prohibited,
limited or regulated under any Environmental Law; (B) "USE" means, with respect
to any Hazardous Substance, the generation, manufacture, processing,
distribution, handling, use, treatment, recycling or storage of such Hazardous
Substance or transportation of such Hazardous Substance; and (C) "RELEASE" means
any release, spill, emission, leaking, pumping, injection, deposit, disposal,
discharge, dispersal, leaching or migration into the indoor or outdoor
environment (including, without limitation, the movement
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of Hazardous Substances through ambient air, soil, surface water, ground water,
wetlands, land or subsurface strata).
"GOVERNMENTAL AUTHORITY" means any national or federal
government, any state, regional, local or other political subdivision thereof
with jurisdiction and any Person with jurisdiction exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining
to government (including without limitation any court).
"IMPOSITIONS" means all taxes (including, without limitation, all
real estate, ad valorem, sales (including those imposed on lease rentals), use,
single business, gross receipts, value added, intangible transaction privilege,
privilege or license or similar taxes), assessments (including, without
limitation, all assessments for public improvements or benefits, whether or not
commenced or completed within the term of this Mortgage), ground rents, water,
sewer or other rents and charges, excises, levies, fees (including, without
limitation, license, permit, inspection, authorization and similar fees), and
all 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 Mortgaged Property), in each case whether general or
special, ordinary or extraordinary, foreseen or unforeseen, of every character
in respect of the Mortgaged Property, which at any time prior to, during or in
respect of the term hereof may be assessed or imposed on or in respect of or be
a lien upon (i) Mortgagor (including, without limitation, all income, franchise,
single business or other taxes imposed on Mortgagor for the privilege of doing
business in the jurisdiction in which the Mortgaged Property is located), (ii)
the Mortgaged Property, or any part thereof or any revenues therefrom or any
estate, right, title or interest therein, or (iii) any occupancy, operation, use
or possession of, or sales from, or activity conducted on, or in connection with
the Mortgaged Property by Mortgagor or the leasing or use of the Mortgaged
Property or any part thereof by Mortgagor.
"LEGAL REQUIREMENTS" means (i) all governmental statutes, laws,
rules, orders, regulations, ordinances, judgments, decrees and injunctions of
Governmental Authorities (including, without limitation, Environmental Laws)
affecting either the Borrower or any Property or any part thereof or the
construction, ownership, use, alteration or operation thereof, or any part
thereof (whether now or hereafter enacted and in force), (ii) all permits,
licenses and authorizations and regulations relating thereto, and (iii) all
covenants, conditions and restrictions contained in any instruments at any time
in force (whether or not involving Governmental Authorities) affecting the
Mortgaged Property or any part thereof which, in the case of this clause (iii),
require repairs, modifications or alterations in or to the Mortgaged Property or
any part thereof, or in any material way limit or restrict the existing use and
enjoyment thereof.
"PERSON" means any individual, corporation, limited liability
company, partnership, joint venture, estate, trust, unincorporated association,
any federal, state, county or municipal government or any bureau, department or
agency thereof and any fiduciary acting in such capacity on behalf of any of the
foregoing.
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"UNIFORM COMMERCIAL CODE" means the Uniform Commercial Code, as
adopted, enacted and amended from time to time by the state or states where any
of the Mortgaged Property is located.
2. PAYMENT OF OBLIGATIONS AND INCORPORATION OF COVENANTS,
CONDITIONS AND AGREEMENTS. Mortgagor will pay the Obligations at the time and
in the manner provided in the Relevant Documents and in this Mortgage. All
the representations, warranties, covenants, conditions and agreements of
Mortgagor contained in the Relevant Documents are hereby made a part of this
Mortgage to the same extent and with the same force as if fully set forth
herein. If there shall be any inconsistencies between the terms, covenants,
conditions and provisions set forth in this Mortgage and the terms,
covenants, conditions and provisions set forth in the Relevant Documents,
then the terms, covenants, conditions and provisions of the Relevant
Documents shall prevail.
3. WARRANTY OF TITLE/ORGANIZATION. Mortgagor warrants that
Mortgagor has good, marketable and insurable fee simple title to Land and the
Improvements and has good title to the remainder of 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, warrant, pledge, assign and
hypothecate the Mortgaged Property and that Mortgagor possesses an unencumbered
fee estate in the Land and the Improvements and that it owns the Mortgaged
Property free and clear of all liens, encumbrances and charges whatsoever except
for (x) those exceptions to title which are existing on the date hereof and
approved by Mortgagee and (y) those exceptions of title that are permitted under
the other terms and conditions of this Mortgage (collectively, the "PERMITTED
ENCUMBRANCES") and that this Mortgage is and will remain a valid and enforceable
first lien on and security interest in the Mortgaged Property, subject only to
the Permitted Encumbrances. 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. Mortgagor is duly organized, validly existing and in good
standing under the laws of its jurisdiction of organization. Mortgagor is
qualified to do business and in good standing in the State in which the
Mortgaged Property is located, and to the extent that Mortgagor is not so
qualified or in good standing in such State, Mortgagor shall promptly qualify to
do business and become in good standing in such State and shall promptly present
evidence of such qualification to do business and good standing to Mortgagee,
and shall in any event take such steps as are necessary to insure the
enforceability of the Notes and this Mortgage.
4. TAXES. Mortgagor hereby warrants, covenants and agrees to pay
before any penalty attaches all real property taxes, general and special, and
all other taxes and assessments of any kind or nature whatsoever, against the
Mortgaged Property when due and shall, upon written request, furnish to
Mortgagee duplicate receipts therefor, Mortgagor may, in good faith and with
reasonable diligence, contest the validity or amount of any such taxes or
assessments provided that such contest shall have the effect of preventing the
collection of the
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tax or assessment so contested and the sale or forfeiture of said Mortgaged
Property or any part thereof, or any interest therein, to satisfy the same.
5. INDEMNIFICATION. Mortgagor shall indemnify, defend and hold
harmless Mortgagee from and against all of the following (collectively, and
individually referred to as a "LOSS"): claims, demands, causes of action,
judgments, costs, expenses, liabilities, losses and damages (including
consequential and punitive damages), reasonable attorneys' fees and expenses and
court costs, disbursements and court costs, and all risk of damage to property
and injury to persons in or upon the Mortgaged Property, arising from: (i)
Mortgagor's use of the Property or from the conduct of its business in or about
the Mortgaged Property; (ii) Mortgagor's default or breach of any term under
this Mortgage; and (iii) Mortgagor's violation or failure to comply with any
Legal Requirements, including Environmental Laws; provided that Mortgagor shall
not be liable for Loss arising from Mortgagee's negligence or willful misconduct
or from Mortgagee's breach of any of its obligations hereunder.
6. TRANSFER OR ENCUMBRANCE OF THE MORTGAGED PROPERTY. (a)
Except as may otherwise be permitted hereunder or pursuant to the Relevant
Documents, Mortgagor shall not sell, convey, alienate, mortgage, encumber,
pledge or otherwise transfer the Mortgaged Property or any part thereof or any
of its interest therein. 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 Obligations immediately due and payable upon Mortgagor's
conveyance, alienation, mortgage, encumbrance, pledge or transfer of the
Mortgaged Property in violation of this Mortgage or any other Relevant Document.
This provision shall apply to every sale, conveyance, alienation, mortgage,
encumbrance, pledge or transfer of the Mortgaged Property that is not permitted
pursuant to the Relevant Documents, regardless of whether voluntary or not, or
whether or not Mortgagee has consented to any previous sale, conveyance,
alienation, mortgage, encumbrance, pledge or transfer of the Mortgaged Property.
(b) Notwithstanding Section 6(a), Mortgagor shall have the right
to sell the Mortgaged Property at any time to a third party bona fide purchaser
after consultation with Mortgagee and upon the prior written consent of
Mortgagee to such sale and the sales price (such consent not to be unreasonably
withheld), provided that the net proceeds of such sale of the Mortgaged Property
(after payment of transfer taxes and reasonable brokerage commissions, if any,
and other reasonable closing costs) shall be applied towards repayment of the
Obligations, including, without limitation, repayment of the Secured Rejection
Note (including prepayment of any amounts not yet due and payable) and payment
of the Principal Amounts (as defined in the Rent Deferral Notes) then
outstanding under the Rent Deferral Notes, in the order and manner set forth in
the Notes. After the Secured Rejection Note and all Principal Amounts
outstanding under the Notes have been repaid in full, any remaining net proceeds
(including proceeds from any sale or other disposition of the Mortgaged Property
pursuant to Section 24 hereof) not applied towards repayment of the Obligations
shall be deposited into an escrow account designated by Mortgagee for
Mortgagor's account and as security for the performance by Mortgagor of its
Obligations to Mortgagee under the Relevant Documents (the "PROCEEDS ESCROW
ACCOUNT") which escrow account shall be administered by Mortgagee, or, at
Mortgagee's discretion and in accordance with Mortgagee's instructions, may be
administered
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by an escrow agent (an "ESCROW AGENT") selected by Mortgagee (whose reasonable
fees shall be paid by Mortgagor). Mortgagor may also from time to time deposit
additional funds into the Proceeds Escrow Account as further security for the
Obligations. At Mortgagee's request, Mortgagor agrees to enter into a separate
escrow agreement to further evidence the provisions of this Section 6(b), and in
the event that Mortgagee chooses an Escrow Agent to administer the Proceeds
Escrow Account, Mortgagor agrees to execute an escrow agreement in form and
substance reasonably satisfactory to Mortgagee (including provisions consistent
with the provisions of this Section 6(b)) to evidence the duties and
responsibilities of such Escrow Agent. Mortgagee or, if applicable, the Escrow
Agent at the direction of Mortgagee, shall invest the funds in the Proceeds
Escrow Account in obligations of the U.S. Government or its agencies, interest
in time accounts or certificates of deposits, or other interest bearing account
of any bank or bank and trust company or in money market funds available to
Mortgagee. Mortgagor agrees, and shall agree under any escrow agreement entered
into pursuant to this Section 6(b), that the funds on deposit under the escrow
arrangement described herein shall not constitute property of the estate (within
the meaning of Xxxxxxx 000 xx xxx Xxxxxx Xxxxxx Bankruptcy Code) and that
Mortgagor shall only have such rights to such funds as are provided herein and
in any escrow agreement entered into pursuant to this Section. Funds in the
Proceeds Escrow Account shall be disbursed (together with accrued interest) from
time to time to Mortgagee, at Mortgagee's direction (upon seven (7) days prior
notice to Mortgagor), to pay any Obligations that may arise from time to time
under the Agreement to Indemnify, the Notes, the Stipulation and Order or the
other Relevant Documents. Notwithstanding the foregoing, after December 31,
2005, Mortgagor shall be entitled to retain any net proceeds in excess of the
Minimum Amount set forth below from the sale of the Mortgaged Property,
including amounts previously deposited and remaining in the Proceeds Escrow
Account (including accrued interest thereon) which have not been applied towards
payment of the Obligations, provided that (i) no Obligations are then due and
owing by Mortgagor pursuant to the Agreement to Indemnify, the Stipulation and
Order, the Notes or otherwise, (ii) no default or Event of Default has occurred
and is continuing under any of the Relevant Documents; and (iii) the amount
remaining in the Proceeds Escrow Account is no less than the Minimum Amount (as
hereinafter defined). Except as otherwise set forth in the following sentence,
the "Minimum Amount" shall mean the product of (A) 1.5 times (B) the sum of the
gross rent (including additional rent and percentage rent charges, if any),
common area maintenance charges, taxes, insurance and other charges computed on
a gross basis (collectively, the "BASE CHARGES") which are due or shall become
due under any Assumed Property Subleases still in existence as of December 31,
2005 (the "SURVIVING ASSUMED PROPERTY SUBLEASES") from December 31, 2005 until
the expiration of the terms of such Assumed Property Subleases. Upon the
expiration after December 31, 2005 of any Surviving Assumed Property Sublease,
Mortgagee shall re-calculate the Minimum Amount based upon the product of 1.5
times the Base Charges of the remaining Surviving Assumed Property Subleases as
of the end of the term of such Surviving Assumed Property Sublease (such Base
Charges to be calculated as the sum of the Base Charges from such date through
the end of the expiration dates of the remaining Surviving Assumed Property
Subleases), and provided that (i) no Obligations are then due and owing by
Mortgagor pursuant to the Agreement to Indemnify, the Notes, the Stipulation and
Order or otherwise and that (ii) no default or Event of Default has occurred
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and is continuing under any of the Relevant Documents, Mortgagee shall, on the
first anniversary of the expiration of such expired Surviving Assumed Property
Sublease, release to Mortgagor, or cause the Escrow Agent to release to
Mortgagor, the excess of all funds in the Proceeds Escrow Account over the
re-calculated Minimum Amount. Any calculation of Base Charges under this Section
6(b) shall be made by Mortgagee and, absent manifest error, shall be conclusive
and binding upon Mortgagor. Provided that (i) an amount equal to at least the
Minimum Amount is deposited or on deposit in the Proceeds Escrow Account to
secure the payment of the Obligations, (ii) no default or Event of Default has
occurred and is continuing under any of the Relevant Documents, (iii) the Notes
have been repaid in full and (iv) no Obligations are then due and owing by
Mortgagor pursuant to the Agreement to Indemnify, the Stipulation and Order or
otherwise, Mortgagor shall be entitled to receive a release of this Mortgage
from Mortgagee at any time after December 31, 2005. Provided that no default or
Event of Default has occurred or is continuing under any of the Relevant
Documents and that no amounts are then owing by Mortgagor or outstanding
pursuant to or under any of the Relevant Documents (and that an amount equal to
the Minimum Amount is at all times on deposit in the Proceeds Escrow Account),
interest earned on the amounts deposited in the Proceeds Escrow Account after
December 31, 2005 shall be distributed to Mortgagor on a quarterly basis. All
remaining amounts in the Proceeds Escrow Account which have not been applied
towards payment of the Obligations shall be released to Mortgagor on the later
of (A) December 31, 2014 provided, however, that no Obligations are then due and
owing by Mortgagor pursuant to the Agreement to Indemnify, the Stipulation and
Order or otherwise, and (B) the end of the term of this Mortgage as set forth in
Section 13(c) hereof. Mortgagor shall pay any income taxes attributable to the
interest or other income earned on the Proceeds Escrow Account. Notwithstanding
any release of this Mortgage pursuant to this Section 6(b) or otherwise, the
terms and provisions of this Section 6(b) shall survive the release of this
Mortgage.
7. AMENDMENT TO LEGAL DESCRIPTION. If it becomes evident that the
legal description attached to any Relevant Document is inaccurate or does not
fully describe all of the real property which is reasonably connected to the
Land, Mortgagor hereby agrees to an amendment of such legal description and the
legal description contained on the corresponding title policy so that such error
is corrected and to execute and cause to be recorded, if applicable, such
document as may be appropriate for such purpose.
8. ASSIGNMENT OF LEASES AND RENTS. Mortgagor does hereby
absolutely and unconditionally assign to Mortgagee, Mortgagor's right, title and
interest in all current and future Leases and Rents, it being intended by
Mortgagor that this assignment constitutes a present, absolute assignment and
not an assignment for additional security only. Such assignment to Mortgagee
shall not be construed to bind Mortgagee to the performance of any of the
covenants, conditions or provisions contained in any such Lease or otherwise
impose any obligation upon Mortgagee. Mortgagee shall have no responsibility on
account of this assignment for the control, care, maintenance, management or
repair of the Mortgaged Property, for any dangerous or defective condition of
the Mortgaged Property, or for any negligence in the management, upkeep, repair
or control of the Mortgaged Property.
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Mortgagor agrees to execute and deliver to Mortgagee such additional
instruments, in form and substance satisfactory to Mortgagee, as may hereafter
be requested by Mortgagee to further evidence and confirm such assignment.
Nevertheless, subject to the terms of this paragraph, Mortgagee grants to
Mortgagor a revocable license to collect all of the Rents and retain, use and
enjoy the same and otherwise exercise all rights of Mortgagor under any Lease,
in each case, subject to the terms hereof and of the Relevant Documents. Upon an
Event of Default, the license granted to Mortgagor herein shall immediately and
automatically be revoked, and Mortgagee shall immediately be entitled to
possession of all Rents, whether or not Mortgagee enters upon or takes control
of the Mortgaged Property, provided that if such Event of Default ceases to
exist, the license shall automatically be reinstated. In addition, during the
continuation of an Event of Default, Mortgagee may, either in person or by
agent, without bringing any action or proceeding, or by a receiver appointed by
a court, without the necessity of taking possession of the Mortgaged Property in
its own name, and in addition to and without limiting any of Mortgagee's rights
and remedies hereunder, under the Notes and any other Relevant Documents and as
otherwise available at law or in equity, (a) notify any lessee or other person
that the Leases have been assigned to Mortgagee and that all Rents are to be
paid directly to Mortgagee, whether or not Mortgagee has commenced or completed
foreclosure or taken possession of the Mortgaged Property; (b) settle,
compromise, release, extend the time of payment of, and make allowances,
adjustments and discounts of any Rents or other obligations in, to and under the
Leases; (c) demand, xxx for or otherwise collect, receive, and enforce payment
of Rents, including those past-due and unpaid and other rights under the Leases,
prosecute any action or proceeding, and defend against any claim with respect to
the Rents and Leases; (d) enter upon, take possession of and operate the
Mortgaged Property; (e) lease all or any part of the Mortgaged Property; and/or
(f) perform any and all obligations of Mortgagor under the Leases and exercise
any and all rights of Mortgagor therein contained to the full extent of
Mortgagor's rights and obligations thereunder, with or without the bringing of
any action or the appointment of a receiver and without need for any other
authorization or other action by Mortgagee or Mortgagor. At Mortgagee's request,
Mortgagor shall deliver a copy of this assignment to each tenant under a Lease
and to each manager and managing agent or operator of the Mortgaged Property.
Mortgagor irrevocably directs any tenant, manager, managing agent, or operator
of the Property, without any requirement for notice to or consent by Mortgagor,
to comply with all demands of Mortgagee under this Section 8 and to turn over to
Mortgagee on demand all Rents which it receives. Mortgagor hereby acknowledges
and agrees that payment of any Rents by a person to Mortgagee as hereinabove
provided shall constitute payment by such person, as fully and with the same
effect as if such Rents had been paid to Mortgagor. Mortgagee is hereby granted
and assigned by Mortgagor the right, at its option, upon revocation of the
license granted herein, to enter upon the Mortgaged Property in person or by
agent, without bringing any action or proceeding, or by court-appointed receiver
to collect the Rents. Any Rents collected after the revocation of the license
shall be applied towards the payment of the Obligations. Neither the enforcement
of any of the remedies under this Section 8 nor any other remedies or security
interests afforded to Mortgagee under the Relevant Documents, at law or in
equity shall cause Mortgagee to be deemed or construed to be a Mortgagee in
possession of the Mortgaged Property, to obligate Mortgagee to lease the
Mortgaged Property or attempt to do so, or to
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take any action, incur any expense, or perform or discharge any obligation, duty
or liability whatsoever under any of the Leases or otherwise. Mortgagor shall,
and hereby agrees to indemnify Mortgagee for, and to hold Mortgagee harmless
from and against, any and all claims, liability, expenses, losses or damages
which may or might be asserted against or incurred by Mortgagee solely by reason
of Mortgagee's status as an assignee pursuant to the assignment of Rents and
Leases contained herein, but excluding any claim (a) to the extent caused by
Mortgagee's gross negligence or willful misconduct, or (b) to the extent arising
solely from Mortgagee's actions after Mortgagee has taken possession of the
Mortgaged Property. Should Mortgagee incur any such claim, liability, expense,
loss or damage, the amount thereof, including all actual expenses and reasonable
fees of attorneys, shall constitute Obligations secured hereby, and Mortgagor
shall reimburse Mortgagee therefor immediately upon demand. Mortgagor agrees
that all Leases shall be subject to the prior written approval of Mortgagee,
such approval not to be unreasonably withheld.
9. MAINTENANCE OF MORTGAGED PROPERTY. Mortgagor shall cause the
Mortgaged Property to be maintained in a good and safe condition and repair
(subject to ordinary wear and tear), and shall otherwise operate and maintain
the Mortgaged Property in a manner consistent with the manner in which it
operates and maintains the other properties on which it operates similar
businesses ("SIMILAR PROPERTIES"). Except as otherwise permitted by the Relevant
Documents, the Improvements, the Fixtures and the equipment located on the Land
or the Improvements shall not be removed, demolished or materially altered
(except for normal replacement of equipment) without the consent of Mortgagee
which shall not unreasonably be withheld or delayed. Mortgagor shall comply with
all laws, orders and ordinances affecting the Mortgaged Property, or the use
thereof. Except to the extent that Mortgagee fails to turn over insurance
proceeds, if any, received by Mortgagee pursuant to SECTIONS 10 and 11 with
respect to the Mortgaged Property to Mortgagor, Mortgagor shall promptly repair,
replace or rebuild any part of the Mortgaged Property that, following the date
hereof, becomes damaged, worn or dilapidated and Mortgagor shall complete and
pay for any structure at any time in the process of construction or repair on
the Land. Notwithstanding anything to the contrary contained herein, Mortgagor
hereby confirms its obligation to comply with all relevant Legal Requirements,
including Environmental Laws, with respect to the 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, unless Mortgagor shall have received Mortgagee's prior written
consent, such consent not to be unreasonably withheld or delayed. 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 such
nonconforming use to be discontinued or abandoned without the express written
consent of Mortgagee, such consent not to be unreasonably withheld or delayed.
Mortgagor shall not (i) change the use of the Land in any material respect or
(ii) permit or suffer to occur any waste on or to the Mortgaged Property or to
any portion thereof.
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10. INSURANCE.
(a) Mortgagor shall maintain casualty, liability and other
policies of insurance relating to the Mortgaged Property in form and substance,
and with insurers and coverages, reasonably satisfactory to Mortgagee and
consistent with insurance that it maintains on Similar Properties. Mortgagor
shall keep the Mortgaged Property insured against loss by flood if the Mortgaged
Property is located in an area identified by the Secretary of Housing and Urban
Development as an area having a special flood hazards and in which flood
insurance has been made available under the National Flood Insurance Act of 1968
(or any successor act thereto). All policies of insurance to be furnished
hereunder (i) shall have standard non-contributory Mortgagee clauses attached to
all policies in favor of Mortgagee, without contribution, under a standard New
York (or local equivalent) Mortgagee clause naming Mortgagee as the party to
which all payments made under such insurance policies in excess of $150,000
should be paid, (ii) shall contain an endorsement providing that neither
Mortgagor nor Mortgagee nor any other party shall be a co-insurer under said
policies and shall contain a provision requiring that the coverage evidenced
thereby shall not be terminated or materially modified without ten (10) days
prior written notice to Mortgagee, (iii) shall provide that no act or thing done
by Mortgagor shall invalidate the policy as against Mortgagee, and (iv) with
respect to property insurance policies, shall contain a waiver of subrogation
against Mortgagee. Mortgagor shall deliver certificates evidencing additional
and renewal policies, together with evidence of payment of premiums thereon, to
Mortgagee, and in the case of all insurance about to expire, shall deliver
renewal policies or certificates evidencing such policies not less than ten (10)
days prior to their respective dates of expiration.
(b) Mortgagor shall not take out separate insurance concurrent in
form or contributing in the event of loss with that required to be maintained
hereunder unless Mortgagee is included thereon under a standard,
non-contributory Mortgagee clause acceptable to Mortgagee. Mortgagor shall
promptly notify Mortgagee whenever any such separate insurance is taken out and
shall promptly deliver to Mortgagee the certificates evidencing the policy or
policies of such insurance.
(c) The insurance required by this Mortgage, at the option of
Mortgagor, may be effected by blanket and/or umbrella policies covering the
Mortgaged Property and other properties, provided, however, that in each case,
such insurance policies otherwise comply with the provisions of this Mortgage
and allocate to the Mortgaged Property, from time to time, the coverage
specified in this Mortgage without possibility of reduction or co-insurance by
reason of, or damage to, any other property named therein. If the insurance
required by this Mortgage shall be effected by any such blanket or umbrella
policies, Mortgagor shall furnish to Mortgagee certificates with respect to,
with schedules attached thereto showing the amount of the insurance provided
under such policies which is applicable to the Mortgaged Property.
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(d) If Mortgagor fails to maintain insurance in compliance with
this Section, Mortgagee may obtain such insurance and pay the premium therefor
and Mortgagor shall, on demand, reimburse Mortgagee for all expenses incurred in
connection therewith. Mortgagor shall deliver original certificates to Mortgagee
of all insurance policies maintained pursuant to this Section 10. Each property
insurance policy shall name Mortgagee as Mortgagee, and loss payee with respect
to all casualty coverage and each liability policy shall name Mortgagee as an
additional insured thereunder.
11. CASUALTY. (a) Mortgagor shall give Mortgagee prompt notice of
any loss or damage to the Mortgaged Property.
(b) In case of loss or damage to the Mortgaged Property covered
by any of the insurance policies described in Section 10 above, Mortgagee (or,
after entry of decree of foreclosure, the purchaser at the foreclosure sale or
decree creditor, as the case may be) is hereby authorized at its option either
(i) to settle and adjust any claim under such insurance policies without the
consent of Mortgagor or (ii) to allow Mortgagor to settle and adjust such claim
(either jointly with Mortgagee or by Mortgagor alone, at Mortgagee's
discretion); provided that in either case Mortgagee shall, and is hereby
authorized to, collect and receipt for any such insurance proceeds.
Notwithstanding anything in the preceding sentence to the contrary, Mortgagee
agrees that it will allow Mortgagor to settle and adjust any claims under the
insurance policies which are in an amount less than $150,000, per incident of
loss, up to an aggregate amount of no greater than $300,000. The expenses
incurred by Mortgagee in the adjustment and collection of insurance proceeds
shall be included in the Obligations, and shall be reimbursed to Mortgagee upon
demand or may be deducted by Mortgagee from said insurance proceeds prior to
another application thereof. Interest on such amount shall accrue at the Default
Rate, beginning ten (10) days after Mortgagor receives notice of a request for
payment of such amount from Mortgagee, until such amount, plus interest, is paid
in full.
(c) Mortgagee shall permit Mortgagor to apply the proceeds of
insurance policies received in connection with any casualty to pay for the cost
of restoring, repairing, replacing or rebuilding the loss or damage to the
Mortgaged Property resulting from the casualty ("RESTORATION") if: (i) there is
no Event of Default hereunder at the time of such application; (ii) restoration
can, in the reasonable judgment of Mortgagee, be completed prior to the maturity
of the Obligations; and (iii) restoration can, in the reasonable judgment of
Mortgagee, be effected within two (2) years after the date of such casualty and
in such a manner so that the Mortgaged Property will be of at least equal or
greater value to the value than the Mortgaged Property prior to such casualty.
Otherwise, Mortgagee may elect in its sole discretion to apply such proceeds
either (x) towards payment of the Obligations, notwithstanding the fact that the
Obligations, or a portion thereof, may not then be due and payable, or (y) to
pay for the cost of Restoration. In all events, disbursement of insurance
proceeds by Mortgagee (or at Mortgagee's election by a disbursing or escrow
agent who shall be selected by Mortgagee and whose fees shall be paid by
Mortgagor), to pay the cost of restoration shall require (i) evidence reasonably
satisfactory to Mortgagee of the estimated costs of Restoration, (ii) funds (or
assurances reasonably satisfactory to Mortgagee that such
16
funds are available) sufficient in addition to the proceeds of insurance to
complete and fully pay for Restoration; and (iii) such architect's certificates,
waivers of lien, contractor's sworn statements, title insurance endorsements,
plats of surveys and such other evidences of cost, payment and performance as
Mortgagee may reasonably require and approve. Except to the extent Mortgagee
fails to turn over insurance proceeds, if any, received by Mortgagee hereunder
with respect to such casualty to Mortgagor, Mortgagor hereby covenants to
restore, repair, replace or rebuild the Improvements, to be of at least equal
value, and of substantially the same character as prior to such loss or damage,
all to be effected in accordance with plans, specifications and procedures to be
first submitted to and reasonably approved by Mortgagee, and Mortgagor shall pay
all costs of such restoring, repairing, replacing or rebuilding.
12. EMINENT DOMAIN. Mortgagor warrants, covenants and agrees that
should the Mortgaged Property, or any part thereof or interest therein, be taken
or damaged by reason of any public improvement or condemnation proceeding, or in
any other manner, or should Mortgagor receive any notice of other information
regarding such proceeding, Mortgagor shall give written notice thereof within
five (5) business days to Mortgagee. Without Mortgagee's prior consent,
Mortgagor (1) shall not agree to any compensation or award, and (2) shall not
take any action or fail to take any action which would cause the compensation to
be determined. Mortgagee shall be entitled to: (1) all compensation, awards and
other payments or relief therefor, (2) to commence, appear in and prosecute in
its own name any action or proceedings, and (3) to make any compromise or
settlement in connection with such taking or damage. Mortgagor authorizes
Mortgagee to collect and receive such awards and compensation, to give proper
receipts and acquittances therefor and in Mortgagee's discretion to apply the
same toward the payment of the Obligations, notwithstanding the fact that the
Obligations, or a portion thereof, may not then be due and payable, or to the
restoration of the Mortgaged Property in accordance with the provisions set
forth in the second-to-last sentence of Section 11(c) above. Mortgagor further
agrees to make, execute, and deliver to Mortgagee, at any time upon request,
free and clear of any encumbrance of any kind whatsoever, any and all further
assignments and other instruments deemed necessary by Mortgagee for the purpose
of validly and sufficiently assigning all compensations and awards made to
Mortgagor for any taking, either permanent or temporary, under any such
proceeding.
13. RELEASE OF MORTGAGE. Mortgagee agrees to promptly and
unconditionally release this Mortgage (subject to the provisions set forth in
Section 6(b)) as follows:
(a) in the event of a bona fide sale (other than a "sale
leaseback" or other similar financing transaction) of the Mortgaged Property to
a third party that is not affiliated with Mortgagor, provided that each of the
following conditions is satisfied: (i) neither Mortgagor nor any of its
respective affiliates continue to use or occupy the Mortgaged Property or any
part thereof; (ii) Mortgagor shall consult with Mortgagee prior to such sale and
shall obtain Mortgagee's prior written consent with respect to such sale and the
sales price (such consent not to be unreasonably withheld); and (iii) all of the
proceeds of such sale are
17
applied towards repayment of the Obligations or otherwise applied in compliance
with the provisions of Section 6(b) hereof.
(b) in the event that Mortgagee is paid in full for all amounts
owing (or what shall or may become owing under the Relevant Documents) to
Mortgagee by Mortgagor and any of its former affiliated debtors, including the
indefeasible payment and satisfaction in full of the Obligations.
(c) on December 31, 2014 (or on such earlier date as permitted
under and pursuant to the provisions of Section 6(b) hereof); provided, however,
that if on such date, any amount secured by this Mortgage has not been
indefeasibly paid in full, then this Mortgage shall be deemed amended to extend
the term hereof until such obligations are so paid.
14. CHANGES IN THE LAWS REGARDING TAXATION. If any law is enacted
or adopted or amended after the date of this Mortgage which imposes a tax,
either directly or indirectly, on the Obligations or Mortgagee's interest in the
Mortgaged Property, Mortgagor will pay such tax, with interest and penalties
thereon, if any, PROVIDED, HOWEVER, that Mortgagor shall not be obligated to pay
any tax which is imposed on the net income of Mortgagee or franchise taxes or
doing business taxes imposed on Mortgagee. In the event 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 ninety (90) days, to declare the Obligations immediately due and payable.
15. NO CREDITS ON ACCOUNT OF THE OBLIGATIONS. (i) Mortgagor will
not claim or demand or be entitled to any credit or credits on account of the
Obligations for any part of the Impositions assessed against the Mortgaged
Property, or any part thereof, and (ii) no deduction shall otherwise be made or
claimed from the assessed value of the Mortgaged Property, or any part hereof,
for real estate tax purposes by reason of this Mortgage or the Obligations if
the effect of such deduction would impose on Mortgagee a tax, either directly or
indirectly, for which it otherwise would not have been liable.
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 Notes 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 law) and that this Section shall
control every other covenant and agreement in this Mortgage and the other
Relevant Documents. If the applicable law (state or federal) is ever judicially
interpreted so as to render usurious any amount called for under the Notes or
under any of the other Relevant
18
Documents, or contracted for, charged, taken, reserved, or received with respect
to the Obligations, or if Mortgagee's exercise of the option to accelerate the
maturity of the Notes, 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 Notes and all other Obligations (or, if the Notes and all other Obligations
have been or would thereby be paid in full, refunded to Mortgagor), and the
provisions of the Notes and the other Relevant 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 Obligations
shall, to the extent permitted by applicable law, be amortized, prorated,
allocated, and spread throughout the full stated term of the Obligations until
payment in full so that the rate or amount of interest on account of the
Obligations does not exceed the maximum rate of interest permitted by law from
time to time in effect and applicable to the Obligations for so long as the
Obligations are outstanding.
18. PERFORMANCE OF OTHER AGREEMENTS. Mortgagor shall observe and
perform in all respects the terms to be observed or performed by Mortgagor under
any agreement or recorded instrument affecting or pertaining to the Mortgaged
Property.
19. RIGHT TO PERFORM THE OBLIGATIONS. Subject to the terms of the
Relevant Documents, if any default exists, Mortgagee shall have the right, but
not the obligation, to cure such default in the name and on behalf of Mortgagor.
All sums advanced and expenses incurred at any time by Mortgagee under this
Section 19, or otherwise under this Mortgage or any of the other Relevant
Documents or applicable law (including, without limitation, the costs and
expenses of Mortgagee and its agents incurred in connection with the
preservation, collection and enforcement of this Mortgage or of the liens
created hereby), shall bear interest from the date that such sum is advanced or
expense incurred, to and including the date of reimbursement, computed at the
Default Rate (as defined in the Notes), and all such sums, together with
interest thereon, shall constitute additions to the Obligations and shall be
secured by this Mortgage and Mortgagor covenants and agrees to pay them to the
order of the Mortgagee promptly upon demand.
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,
reasonably 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, warranted,
pledged, assigned and hypothecated (including, without limitation, the
assignment of leases and rents contained in Section 8 hereof) or intended now or
hereafter so to be, or
19
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, Mortgagor 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.
Notwithstanding anything to the contrary contained herein, Mortgagor shall not
be obligated to execute, deliver, file or record any additional documents which
increase Mortgagor's obligations under this Mortgage or the Relevant Documents.
Mortgagor grants to Mortgagee an irrevocable power of attorney coupled with an
interest for the purpose of exercising the rights provided for in Section 19 and
this Section 20.
21. RECORDING OF MORTGAGE, ETC. Mortgagor forthwith upon the
execution and delivery of this Mortgage and thereafter, from time to time, 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, the costs and fees of local
counsel for Mortgagee, including, without limitation, costs and fees for local
counsel review of the Mortgage and Subordination Agreement and the preparation
of opinion letters in connection therewith, and all expenses incident to the
execution and acknowledgment of this Mortgage (but not including fees of
Mortgagee's New York counsel in connection with the preparation of this
Mortgage), any deed of trust or 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 deed of trust or mortgage supplemental hereto,
any security instrument with respect to the Mortgaged Property or any instrument
of further assurance (other than income or franchise taxes imposed on
Mortgagee), 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. Mortgagor shall pay all title costs and premiums in
connection with the ALTA lender's title insurance policy issued by Chicago Title
Insurance Company for the benefit of Mortgagee in connection with this Mortgage
(including payment for the cost of any property surveys ("Surveys") prepared in
connection therewith), which title insurance policy shall be in form and
substance satisfactory to Mortgagee containing such endorsements as Mortgagee
may reasonably request, including, without limitation, the deletion of any
creditor's rights exception and (to the extent available) a variable rate
endorsement; survey endorsement; comprehensive endorsement; first loss
endorsement; last dollar endorsement; tie-in endorsement; future advances
endorsement; access coverage; tax parcel coverage; contiguity (if applicable)
coverage; and such other endorsements as Mortgagee shall reasonably require. In
the event that any Survey with respect to the Mortgaged Property
20
reveals any encumbrances, restrictions, building code or zoning violations or
other matters which in Mortgagee's reasonable judgment, materially impair
Mortgagee's first priority lien in the Mortgaged Property, Mortgagor agrees to
cooperate with Mortgagee in performing any acts reasonably requested by
Mortgagee to cause such encumbrances, restrictions, violations or other matters
to be removed or remedied as appropriate.
22. REPORTING REQUIREMENTS. Mortgagor agrees to give prompt
notice to Mortgagee of the insolvency or bankruptcy filing of Mortgagor. In
addition, Mortgagor will give notice to Mortgagee in writing not later than ten
(10) days after: (i) the occurrence of any Event of Default with respect to
Mortgagor hereunder, or (ii) notice to Mortgagor of any action, litigation or
proceeding instituted to recover possession of the Mortgaged Property from
Mortgagor or for any other purpose affecting this Mortgage or of any other
action, litigation or proceeding instituted against Mortgagor or judgment
rendered against Mortgagor; and such notice to Mortgagee shall include a true
copy of any notice of default, or if any action is then proceeding, copies of
any pleadings and papers received by Mortgagor.
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
one or more of the following events:
(a) a default or event of default under any of the Notes
(including, without limitation, any event of default described in Section 3 of
any of the Notes), which remains uncured following the expiration of any
applicable cure periods;
(b) Mortgagor (i) shall fail to perform when due any payment
obligation under the terms of this Mortgage or the other Relevant Documents
within ten days after such amount becomes due, or (ii) shall be in violation of
any of the obligations or covenants contained herein or therein and such default
shall continued unremedied for a period of thirty (30) days, provided that if
such default is not readily susceptible of cure in such thirty (30) day period,
and provided that Mortgagor proceeds in a diligent manner to cure such default,
Mortgagor shall have such additional time to effect such cure as shall be
reasonably necessary to effect such cure;
(c) Failure by Mortgagor to maintain insurance and deliver
evidence thereof pursuant to Section 10; or
(d) a default under any other mortgage, deed of trust or other
security instrument covering the Mortgaged Property or a portion thereof which
remains uncured following the expiration of any applicable cure periods.
24. REMEDIES. (a) Upon the occurrence of any Event of Default,
Mortgagee may take such action permitted in law or at equity, without notice or
demand, as it deems advisable to protect and enforce its rights against
Mortgagor and in and to the Mortgaged
21
Property, by Mortgagee itself or otherwise, including, but not limited to, the
following actions, each of which may be pursued concurrently or otherwise, at
such time and in such order as Mortgagee may determine, in its sole discretion,
without impairing or otherwise affecting the other rights and remedies of
Mortgagee:
(i) declare the entire principal amount of the indebtedness and
Obligations secured hereby with interest accrued thereon to be
immediately due and payable;
(ii) institute a proceeding or proceedings, judicial or
nonjudicial, by advertisement or otherwise, for the complete
foreclosure of this Mortgage in which case the Mortgaged Property
or any interest therein may be sold for cash or upon credit in
one or more parcels or in several interests or portions and in
any order or manner in accordance with the laws of the
jurisdiction in which such Mortgaged Property is located;
(iii) with or without entry, to the extent permitted, and
pursuant to the procedures provided by, applicable law, institute
proceedings for the foreclosure of this Mortgage for the
Obligations then due and payable subject to the continuing lien
of this Mortgage, in accordance with the laws of the jurisdiction
in which such Mortgaged Property is located, for the balance of
the Obligations not then due;
(iv) sell for cash or upon credit the Mortgaged Property or any
part thereof and all estate, claim, demand, right, title and
interest of Mortgagor therein and rights of redemption thereof,
pursuant to power of sale or otherwise, at one or more sales, as
an entirety or in parcels, at such time and place, upon such
terms and after such notice thereof as may be required or
permitted by the laws of the jurisdiction in which such Mortgaged
Property is located;
(v) institute an action, suit or proceeding in equity for the
specific performance of any covenant, condition or agreement
contained herein or in the other Relevant Documents;
(vi) recover judgment on the Notes either before, during or after
any proceedings for the enforcement of this Mortgage;
(vii) prior to, concurrently with, or subsequent to the
institution of foreclosure proceedings, apply for the appointment
of a trustee, receiver, liquidator or conservator of the
Mortgaged Property, as a matter of strict right, without notice
and without regard for the adequacy of the security for the
Obligations or the interest of the Mortgagor therein and without
regard for the solvency of the Mortgagor or of any person, firm
or other entity liable for the payment of the Obligations, and
Mortgagor hereby consents to such appointment;
22
(viii) prior to, concurrently with or subsequent to the
institution of foreclosure proceedings, enforce Mortgagee's
interest in the Leases and Rents and enter into or upon the
Mortgaged Property and take exclusive possession thereof, either
personally or by its agents, nominees or attorneys and dispossess
Mortgagor and its agents and servants therefrom, and thereupon
Mortgagee may (whether or not a receiver has been appointed) as
attorney-in-fact or agent of Mortgagor, or in its own name and
under the powers herein granted,(A) use, operate, manage,
control, insure, maintain, repair, restore and otherwise deal
with all and every part of the Mortgaged Property and conduct the
business thereat; (B) complete any construction on the Mortgaged
Property in such manner and form as Mortgagee deems advisable;
(C) make alterations, additions, renewals, replacements and
improvements to or on the Mortgaged Property; (D) exercise all
rights and powers of Mortgagor with respect to the Mortgaged
Property, whether in the name of Mortgagor or otherwise
(including, without limitation, the right to make, cancel,
enforce or modify Leases, obtain and evict tenants, and demand,
xxx for, collect and receive all earnings, revenues, rents,
issues, profits and other income of the Mortgaged Property and
every part thereof); and (E) apply the receipts from the
Mortgaged Property to the payment of the Obligations, after
deducting therefrom all reasonable expenses (including, without
limitation, reasonable attorneys' fees) incurred in connection
with the aforesaid operations and all amounts necessary to pay
the taxes, assessments, insurance and other charges in connection
with the Mortgaged Property, it being agreed that should
Mortgagee incur any liability, loss or damage in the defense of
any claims or demands, the amount thereof, including costs,
expenses and reasonable attorneys' fees shall be secured hereby,
and Mortgagor shall reimburse Mortgagee therefor immediately upon
demand;
(ix) require Mortgagor to pay monthly in advance to Mortgagee, or
any receiver appointed to collect the Rents, the fair and
reasonable rental value for the use and occupation of any portion
of the Mortgaged Property occupied by Mortgagor and require
Mortgagor to vacate and surrender possession to Mortgagee of the
Mortgaged Property or to such receiver and, in default thereof,
evict Mortgagor by summary proceedings or otherwise; and
(x) pursue such other rights and remedies as may be available
under the Relevant Documents or otherwise at law or in equity or
under the Uniform Commercial Code including the right to
establish a lock box for all Rents and other receivables of
Mortgagor relating to the Mortgaged Property.
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 on the remaining
portions of the Mortgaged Property.
23
The proceeds of any sale made under or by virtue of this Section
24, together with any other sums which then may be held by Mortgagee under this
Mortgage, whether under the provisions of this Section or otherwise, shall be
applied by Mortgagee in the following order of priority: first, on account of
all reasonable costs and expenses incident to the foreclosure proceedings,
including all such items as are mentioned in this Section 24; second, all other
items which under the terms hereof constitute secured indebtedness, which are
any amounts due under this Mortgage, or under the other Relevant Documents
(including any amounts required to be escrowed pursuant to Section 6(b)); third,
any surplus to Mortgagor, its successors or assigns, as their rights may appear.
(b) Upon any sale made under or by virtue of this Section 24,
whether made under the power of sale herein granted or under or by virtue of
judicial proceedings or of a judgment or decree of foreclosure and sale,
Mortgagee may bid for and acquire the Mortgaged Property or any part thereof and
in lieu of paying cash therefor may make settlement for the purchase price by
crediting upon the Obligations the net sales price after deducting therefrom the
expenses of the sale and costs of the action and any other sums which Mortgagee
is authorized to deduct under this Mortgage.
(c) No recovery of any judgment by Mortgagee and no levy of an
execution under any judgment upon the Mortgaged Property or upon any other
property of Mortgagor shall affect in any manner or to any extent the lien of
this Mortgage upon the Mortgaged Property or any part thereof, or any liens,
rights, powers or remedies of Mortgagee hereunder, but such liens, rights,
powers and remedies of Mortgagee shall continue unimpaired as before.
(d) Mortgagee may adjourn, terminate or rescind any proceeding or
other action brought in connection with its exercise of the remedies provided in
this Section 24 at any time before the conclusion thereof, as determined in
Mortgagee's sole discretion and without prejudice to Mortgagee.
(e) Mortgagee may resort to any remedies and the security given
by this Mortgage or the other Relevant Documents in whole or in part, and in
such portions and in such order as determined by Mortgagee's sole discretion. No
such action shall in any way be considered a waiver of any rights, benefits or
remedies evidenced or provided by this Mortgage or the other Relevant Documents.
The failure of Mortgagee to exercise any right, remedy or option provided in
this Mortgage or the other Relevant Documents shall not be deemed a waiver of
such right, remedy or option or of any covenant or obligation secured by this
Mortgage or the other Relevant Documents. Subject to the provisions of the
Relevant Documents, no acceptance by Mortgagee of any payment after the
occurrence of any Event of Default and no payment by Mortgagee of any obligation
for which Mortgagor is liable hereunder shall be deemed to waive or cure any
Event of Default with respect to Mortgagor, or Mortgagor's liability to pay such
obligation. No sale of all or any portion of the Mortgaged Property, no
forbearance on the part of Mortgagee and no extension of time for the payment of
the whole or any portion of the Obligations or any other indulgence given by
Mortgagee to
24
Mortgagor, shall operate to release or in any manner affect the interest of
Mortgagee in the remaining Mortgaged Property or the liability of Mortgagor to
pay the Obligations. No waiver by Mortgagee shall be effective, unless it is in
writing and then only to the extent specifically stated.
(f) The interests and rights of Mortgagee under this Mortgage and
the other Relevant Documents, and the liens and security interests created and
evidenced by this Mortgage and the other Relevant Documents, shall not be
impaired by any indulgence, including (i) any renewal, extension or modification
which Mortgagee may grant with respect to any of the Obligations, (ii) any
surrender, compromise, release, renewal, extension, exchange or substitution
which Mortgagee may grant with respect to the Mortgaged Property or any portion
thereof; or (iii) any release or indulgence granted to any maker, endorser,
guarantor or surety of any of the Obligations.
(g) Upon the occurrence of any Event of Default under Section 23,
in any suit to foreclose the lien hereof or enforce any other remedy of
Mortgagee under this Mortgage, there shall be allowed and included as additional
indebtedness in the decree for sale or other judgment or decree all reasonable
expenditures and expenses which may be paid or incurred by or on behalf of
Mortgagee for attorneys' fees, appraiser's fees, outlays for documentary and
expert evidence, stenographers' charges, publication costs, and costs (which may
be estimated as to items to be expended after entry of the decree) of procuring
all such abstracts of title, title searches and examinations, title insurance
policies, Torrens certificates, and similar data and assurances with respect to
title as Mortgagee may deem reasonably necessary either to prosecute such suit
or to evidence to bidders at any sale which may be had pursuant to such decree
the true condition of the title to or the value of the Mortgaged Property. All
such reasonable expenditures and expenses which Mortgagee may incur as permitted
by this Section for the protection of the Mortgaged Property and the maintenance
of the lien of this Mortgage, including, but not limited to, the fees and
out-of-pocket disbursements of any attorney employed by Mortgagee in any
litigation or proceeding affecting this Mortgage, including, but not limited to,
bankruptcy proceedings or preparations for the commencement or defense of any
proceeding or threatened suit or proceeding, shall be immediately due and
payable by Mortgagor and shall be secured by this Mortgage.
25. RIGHT OF ACCESS. Mortgagor shall permit agents,
representatives and employees of Mortgagee to (i) inspect the Mortgaged Property
or any part thereof, PROVIDED that such inspection does not materially interfere
with the tenants of the Mortgaged Property or violate the terms of any Lease,
(ii) to examine and make abstracts from any of Mortgagor's books and records and
(iii) to discuss the business, operations, properties and financial and other
condition of Mortgagor with officers of Mortgagor and with its independent
certified public accountants, at such reasonable times as may be requested by
Mortgagee upon reasonable advance notice.
26. SECURITY AGREEMENT. This Mortgage is both a real property
mortgage and a "security agreement" within the meaning of the Uniform
Commercial Code. The
25
Mortgaged Property includes both real and personal property and all other rights
and interests, whether tangible or intangible in nature, of Mortgagor in the
Mortgaged Property. Mortgagor by executing and delivering this Mortgage has
granted and hereby grants to Mortgagee, as security for the Obligations, 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. All or part of the
Mortgaged Property is or is to become "fixtures" as defined in the Uniform
Commercial Code, and this Mortgage, upon being filed for record in the real
estate records of the city or county wherein such fixtures are situated, shall
also constitute a "fixture filing" for the purposes of the Uniform Commercial
Code upon such of the Mortgaged Property that is or may 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. Mortgagor's chief executive office and principal place of
business is the Mortgagor's address set forth in the first paragraph of this
Mortgage, and the place where Mortgagor's books and records in respect of where
the Mortgaged Property is located are kept is the address of Mortgagor set forth
in the first paragraph of this Mortgage. If an Event of Default shall occur
which shall remain uncured, Mortgagee, in addition to any other rights and
remedies which it 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 limitation, to the extent
permitted by law, 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 therefor any and all reasonable expenses
(including, without limitation, reasonable 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 at least ten (10) business days prior to such
action or such notice as is otherwise required by law or the Relevant Documents,
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 Obligations in such priority and proportions as
Mortgagee shall determine in its sole discretion. In the event of any change in
name, identity or structure of Mortgagor, 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
26
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
materially increase Mortgagor's obligations under this Mortgage or the other
Relevant 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 UCC financing statements (or related documents) signed
only by Mortgagee, as secured party, in connection with the Collateral covered
by this Mortgage, such appointment to terminate upon the release of this
Mortgage.
27. 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 reasonable discretion, decides should be
brought to protect its interest under this Mortgage or in the Mortgaged
Property. Subject to the foregoing, Mortgagor shall appear in and contest any
action or proceeding purporting to affect the security hereof and shall pay all
reasonable costs and expenses including cost of evidence of title and attorney's
fees, in any such action or proceeding in which Mortgagee may appear. 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 Obligations, and any
such subrogation rights shall constitute additional security for the payment of
the Obligations.
28. WAIVER OF SETOFF AND COUNTERCLAIM. Except as may be permitted
under the Relevant Documents, all amounts due under this Mortgage, the Notes and
the other Relevant Documents shall be payable without setoff or counterclaim
whatsoever.
29. LIENS. Mortgagor warrants, covenants and agrees to pay and
promptly discharge, at Mortgagor's cost and expense, all taxes, assessments and
governmental charges levied upon it, its income and assets as and when such
taxes, assessments and charges are due and payable (including, without
limitation, all Impositions), as well as all lawful claims for labor materials
and supplies or otherwise which could become a lien, and all liens, encumbrances
and charges upon the Mortgaged Property, or any part thereof or interest
therein; provided that the existence of any mechanic's, laborer's,
materialman's, supplier's or vendor's lien or right thereto shall not constitute
a violation of this Section if payment is not yet due under the contract which
is the foundation thereof. Notwithstanding the foregoing, Mortgagor shall not be
in default for failure to pay or discharge Impositions or mechanic's or
materialman's or similar lien asserted against the Mortgaged Property if, and so
long as, (a) Mortgagor shall have notified Mortgagee of same within seven (7)
days of obtaining knowledge thereof; (b) Mortgagor shall diligently and in good
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) unless funds are
otherwise reserved, Mortgagor shall furnish to Mortgagee such security as
Mortgagee may reasonably request to insure payment of such Impositions and to
secure and indemnify Mortgagee against any cost, expense, loss or damage in
connection with such contest or postponement of payment,; (d) Mortgagor shall
timely upon final determination
27
thereof pay the amount of any such Impositions, claim, fine or penalty so
determined, together with all costs, interest and penalties which may be payable
in connection therewith; (e) the failure to pay the Impositions, or mechanic's
or materialman's or similar 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 Impositions, or claim notwithstanding
such contest, if in the reasonable opinion of Mortgagee, the Mortgaged Property
or any part thereof or interest therein may be in imminent danger of being sold,
forfeited, foreclosed, terminated, canceled or lost.
30. 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 Obligations as the same become due and owing, without
regard to whether or not the balance of the Obligations 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.
31. MARSHALING, WAIVER OF REDEMPTION AND OTHER MATTERS. Mortgagor
hereby waives, to the extent permitted by law, the benefit of all appraisement,
valuation, stay, extension, reinstatement, moratorium and redemption laws now or
hereafter in force and all rights of marshaling in the event of any sale
hereunder of the Mortgaged Property or any part thereof or any interest therein.
Further, Mortgagor hereby expressly waives any and all rights of redemption from
sale under any order or decree of foreclosure of this Mortgage on behalf of
Mortgagor, and on behalf of each and every person acquiring any interest in or
title to the Mortgaged Property subsequent to the date of this Mortgage and on
behalf of all persons to the extent permitted by applicable law.
32. NOTICE. Any notice which either party hereto may desire or be
required to give to the other party shall be in writing and delivered by: (x) a
commercial courier or messenger service or (y) by U.S. registered or certified
mail with return receipt requested. Notice by commercial messenger or courier
service will be deemed to have been given on the day when delivered before 4:00
p.m. on a business day in the city in which notice is delivered, provided that
payment for the cost of delivery is not requested of the recipient. Notice by
mail shall be given by registered or certified U.S. Mail, return receipt
requested. Delivery of notice by commercial messenger or courier service or mail
shall be assumed if acceptance of delivery is refused. Notice may be given by
fax but will only be treated as delivered hereunder if: (x) sent between the
hours of 9:00 a.m. and 5:00 p.m. (based on local time at
28
the destination); and (y) receipt is acknowledged by fax and delivery will be
deemed to have been given on the date the fax acknowledgment is sent. Notices
shall be delivered as follows or at such other place as either party hereto may
by notice in writing (given in accordance with this Section 32) designate:
To Mortgagor: Discovery Zone, Inc.
One Corporate Center
000 Xxxx Xxxxxxx Xxxxxxxxx
Xxxx Xxxxxxxxxx, Xxxxxxx 00000
Attn: President
Telecopy Number: (000) 000-0000
To Mortgagee: XxXxxxxx'x Corporation
Xxx XxXxxxxx'x Xxxxx
Xxx Xxxxx, XX 00000
Attn: General Counsel
Telecopy Number: (000) 000-0000
33. 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.
34. 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 to take any action to foreclose this Mortgage or otherwise enforce
any of the provisions hereof or of the other Relevant Documents, (b) the
release, regardless of consideration, of the whole or any part of the Mortgaged
Property, or of any person liable for the Obligations 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 this Mortgage or the other
Relevant Documents. Mortgagee may resort for the payment of the Obligations 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 Obligations,
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
29
herein stated but shall be entitled to every right and remedy now or hereafter
afforded at law or in equity.
35. NO ORAL CHANGE. This Mortgage and the other Relevant
Documents constitute the final expression of the entire agreement among the
parties pertaining to the subject matter hereof and thereof and supersede all
prior and contemporaneous agreements, understanding, representations or other
arrangements, whether express or implied, written or oral, of the parties in
connection herewith or therewith except to the extent expressly incorporated or
specifically referred to herein or therein. This Mortgage, and any provisions
hereof, may not be modified, amended, waived, extended, changed, discharged or
terminated orally or by any act or failure to act on the part of 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.
36. SUCCESSORS AND ASSIGNS. 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 permitted successors and assigns forever.
37. SEVERABILITY. If any term, covenant or condition of this
Mortgage or the Relevant Documents is held to be invalid, illegal or
unenforceable in any respect, this Mortgage and any such other Relevant Document
shall be construed without such provision.
38. 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.
39. DUPLICATE ORIGINALS. This Mortgage may be executed in any
number of duplicate originals and each such duplicate original shall be deemed
to be an original.
40. 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(s) of the Notes,"
the word "person" shall include an individual, corporation, partnership, trust,
unincorporated association, government, 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, without limitation, 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 and all such fees
incurred in connection with any bankruptcy or insolvency proceedings). Whenever
the context may require, any pronouns used herein shall include the
corresponding masculine, feminine or
30
neuter forms, and the singular form of nouns and pronouns shall include the
plural and vice versa.
41. 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 Land as against the collection of
the Obligations, or any part hereof.
42. ASSIGNMENTS. Consistent with and subject to the applicable
provisions of the Relevant Documents, Mortgagee shall have the right to assign
or transfer its rights under this Mortgage without limitation. Any Mortgagee or
transferee shall be entitled to all the benefits afforded Mortgagee under this
Mortgage.
43. WAIVER OF JURY TRIAL. TO THE MAXIMUM EXTENT PERMITTED BY
APPLICABLE LAW, EACH PARTY HERETO HEREBY AGREES NOT TO ELECT A TRIAL BY JURY OF
ANY ISSUE TRIABLE OF RIGHT BY JURY, AND WAIVES ANY RIGHT TO TRIAL BY JURY FULLY
TO THE EXTENT THAT ANY SUCH RIGHT SHALL NOW OR HEREAFTER EXIST WITH REGARD TO
THE NOTES, THIS MORTGAGE, OR THE OTHER RELEVANT DOCUMENTS, OR ANY CLAIM,
COUNTERCLAIM OR OTHER ACTION ARISING IN CONNECTION THEREWITH. THIS WAIVER OF
RIGHT TO TRIAL BY JURY IS GIVEN KNOWINGLY AND VOLUNTARILY BY SUCH PARTY, AND IS
INTENDED TO ENCOMPASS INDIVIDUALLY EACH INSTANCE AND EACH ISSUE AS TO WHICH THE
RIGHT TO A TRIAL BY JURY WOULD OTHERWISE ACCRUE. MORTGAGEE IS HEREBY AUTHORIZED
TO FILE A COPY OF THIS PARAGRAPH IN ANY PROCEEDING AS CONCLUSIVE EVIDENCE OF
THIS WAIVER BY MORTGAGOR.
44. CONSENT TO JURISDICTION. MORTGAGOR AND MORTGAGEE HERETO
CONSENT FOR THEMSELVES AND IN RESPECT OF THEIR PROPERTIES, GENERALLY,
UNCONDITIONALLY AND IRREVOCABLY, TO THE NONEXCLUSIVE JURISDICTION OF THE FEDERAL
AND STATE COURTS IN THE STATE OF NEW YORK WITH RESPECT TO ANY PROCEEDING
RELATING TO ANY MATTER, CLAIM OR DISPUTE ARISING UNDER THE RELEVANT DOCUMENTS OR
THE TRANSACTIONS CONTEMPLATED THEREBY. MORTGAGOR FURTHER CONSENTS, GENERALLY,
UNCONDITIONALLY AND IRREVOCABLY, TO THE NONEXCLUSIVE JURISDICTION OF THE STATE
AND FEDERAL COURTS OF THE STATE IN WHICH ANY OF THE COLLATERAL IS LOCATED IN
RESPECT OF ANY PROCEEDING RELATING TO ANY MATTER, CLAIM OR DISPUTE ARISING WITH
RESPECT TO SUCH COLLATERAL. MORTGAGOR FURTHER IRREVOCABLY CONSENTS TO THE
SERVICE OF PROCESS, GENERALLY, UNCONDITIONALLY AND IRREVOCABLY, AT THE ADDRESSES
SET FORTH IN THE FIRST PARAGRAPH HEREOF IN CONNECTION WITH ANY OF THE AFORESAID
PROCEEDINGS IN ACCORDANCE WITH THE RULES APPLICABLE TO SUCH PROCEEDINGS. TO THE
EXTENT PERMITTED BY APPLICABLE LAW, MORTGAGOR HEREBY IRREVOCABLY WAIVES ANY
OBJECTION WHICH IT MAY NOW HAVE OR HAVE
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IN THE FUTURE TO THE LAYING OF VENUE IN RESPECT OF ANY OF THE AFORESAID
PROCEEDINGS BROUGHT IN THE COURTS REFERRED TO ABOVE AND AGREES NOT TO PLEAD OR
CLAIM IN ANY SUCH COURT THAT ANY SUCH ACTION OR PROCEEDING BROUGHT IN ANY SUCH
COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM. NOTHING HEREIN SHALL AFFECT THE
RIGHT OF MORTGAGEE TO SERVE PROCESS IN ANY MANNER PERMITTED BY LAW OR TO
COMMENCE PROCEEDINGS OR OTHERWISE PROCEED AGAINST MORTGAGOR IN ANY JURISDICTION.
45. GOVERNING LAW. This Mortgage shall be governed by and
construed in accordance with the laws of the State of New York including,
without limitation, Section 5-1401 of the General Obligations Law, but otherwise
without regard to conflict of law principles; PROVIDED, HOWEVER, that with
respect to the creation, attachment, perfection, priority and procedures
relating to the enforcement of the liens and security interests created by or
pursuant to this Mortgage and relating to real property, this Mortgage shall be
governed by and construed in accordance with the laws of the state in which the
Land is located.
46. LIEN ABSOLUTE, MULTI-SITE REAL ESTATE AND MULTIPLE COLLATERAL
TRANSACTION. Mortgagor acknowledges that this Mortgage and a number of other
Relevant Documents and those documents required by the Relevant Documents
together secure the Obligations. Mortgagor agrees that the lien of this Mortgage
and all obligations of the Mortgagor hereunder shall be absolute and
unconditional and shall not in any manner be affected or impaired by:
(a) any lack of validity or enforceability of the Notes or any
other Relevant Document, any agreement with respect to any of the Obligations or
any other agreement or instrument relating to any of the foregoing;
(b) any acceptance by Mortgagee of any security for or guarantees
of any of the indebtedness hereby secured;
(c) any failure, neglect or omission on the part of Mortgagee to
realize upon or protect any of the indebtedness hereby secured or any of the
collateral security therefor, including the Relevant Documents;
(d) any change in the time, manner or place of payment of, or in
any other term of, all or any of the Obligations;
(e) any release (except as to the property or obligation
released), sale, pledge, surrender, compromise, settlement, nonperfection,
renewal extension, indulgence, alteration, exchange, modification or disposition
of any of the Obligations hereby secured or of any of the collateral security
therefor;
32
(f) any amendment or waiver of or any consent to any departure
from the Notes or any other Relevant Documents or of any guaranty thereof
(except to the extent of such amendment, waiver or consent in writing by
Mortgagee), if any, and Mortgagee may in its discretion foreclose, exercise any
power of sale, or exercise any other remedy available to it under any or all of
the Relevant Documents without first exercising or enforcing any of its rights
and remedies hereunder; and
(g) any exercise of the rights or remedies of Mortgagee hereunder
or under any or all of the Relevant Documents.
Mortgagor specifically consents and agrees that Mortgagee may exercise its
rights and remedies hereunder and under the other Relevant Documents separately
or concurrently and in any order that Mortgagee may deem appropriate.
47. FUTURE ADVANCES. This Mortgage shall secure not only existing
indebtedness, but also such future advances, whether such advances are
obligatory or are to be made at the option of Mortgagee, or otherwise, as are
made by Mortgagee to Mortgagor after the date hereof, to the same extent as if
such future advances were made on the date of the execution of this Mortgage.
Nothing in this Mortgage shall be deemed an obligation on the part of the
Mortgagee to make any future advances.
48. STATE SPECIFIC PROVISIONS. The provisions of Exhibit B are
hereby incorporated by reference as though set forth in full herein.
49. NO MERGER OF ESTATES. It is the intention and agreement of
Mortgagor and Mortgagee that there shall be no merger of any leasehold estate in
the Mortgaged Property with the fee interest in the Mortgaged Property or any
other estate or interest in the Mortgaged Property, and there shall be no merger
of this Mortgage and any estate in the Mortgaged Property, by reason of the fact
that the same person may own or hold (a) any leasehold interest in the Mortgaged
Property, and/or (b) this Mortgage, and/or (c) the fee interest in the Mortgaged
Property or any other estate or interest in the Mortgaged Property.
50. SUBORDINATE LIEN. Notwithstanding anything to the contrary
contained herein, Mortgagor shall be permitted to grant a subordinate lien on
the Mortgaged Property in favor of State Street Bank and Trust Company, solely
in its capacity as trustee and collateral agent under and pursuant to the
Indenture (as hereinafter defined) (the "SUBORDINATED CREDITOR") as security for
the obligations of Mortgagor under that certain Indenture between Mortgagor and
the Subordinated Creditor dated as of July 22, 1997 (the "INDENTURE"), provided
that such lien in favor of the Subordinated Creditor is junior, subject and
subordinate to the lien of this Mortgage in accordance with and pursuant to the
terms and conditions set forth in that certain Subordination Agreement dated as
of the date hereof between Mortgagee and the Subordinated Creditor with respect
to the Mortgaged Property (the "SUBORDINATION AGREEMENT"), and provided,
further, that any event which gives the Subordinated Creditor the
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right to accelerate the obligations secured by such subordinate lien shall
automatically constitute an Event of Default hereunder.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK; SIGNATURE AND NOTARY PAGES FOLLOW.]
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IN WITNESS WHEREOF, this Mortgage has been duly executed under
seal by the Mortgagor as of the day and year first written above.
MORTGAGOR:
DISCOVERY ZONE, INC., a
Delaware corporation, as
successor in interest to
LEAPS & BOUNDS, INC.
By: /s/ Xxxxxx Xxxxxx
--------------------
Name: Xxxxxx Xxxxxx
Title: Sr. V.P.
STATE OF NEW YORK )
COUNTY OF WESTCHESTER)
The foregoing was acknowledged before me this 28 day of July,
1997, by Xxxxxx Xxxxxx, Sr. V.P. of DISCOVERY ZONE, INC., a
corporation under the laws of Delaware on behalf of the corporation.
NOTARIAL STAMP OR SEAL (OR OTHER TITLE OR RANK)
/s/ Xxxx X. Xxxxxxxx
[NOTARIAL SEAL] ----------------------
Signature of Person Taking
Acknowledgment
THIS INSTRUMENT WAS DRAFTED BY (NAME AND ADDRESS)
Xxxxxxxx Xxxxx, Esq.
Cleary, Gottlieb, Xxxxx & Xxxxxxxx
0 Xxxxxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Blaine
Anoka County, Minnesota
EXHIBIT A
Xxx 0. Xxxxx 0. Xxxxxxxxxxx Xxxx Second Addition, according to the plat thereof
on file or of record in the office of the County Recorder, Anoka County,
Minnesota, together with the appurtenant easement(s) contained in Document No.
952364.
EXHIBIT B
STATE SPECIFIC PROVISIONS (Minnesota)
The following provisions are incorporated by reference into Section 48
of the attached Mortgage. If any conflict or inconsistency exists between this
Exhibit B and the remainder of the attached Mortgage, this Exhibit B shall
govern. Notwithstanding anything in this Mortgage to the contrary, the following
provisions shall apply:
A. all Rents and revenues collected by Mortgagee or any receiver
following an Event of Default shall be applied as follows:
1. to the payment of all reasonable fees of any receiver approved
by court;
2. to the payment of all tenant security deposits then owing to
any lessee under any Lease pursuant to the provisions of Minn. Stat. ss. 504.20;
3. to the payment of all prior real estate taxes and special
assessments with respect to the Mortgaged Property, or if this Mortgage requires
periodic escrow payments for such taxes and assessments, to the escrow payments
then due;
4. to the payment of all premiums then due for the insurance
required by the provisions of this Mortgage, or if this Mortgage requires
periodic escrow payments for such premiums, to the escrow payments then due;
5. to the payment of costs incurred in normal maintenance and
operation of the Mortgaged Property;
6. if received prior to any foreclosure sale of the Mortgaged
Property, to the Mortgagee for the payment of indebtedness secured by this
Mortgage, but no such payment made after the acceleration of the indebtedness
shall affect such acceleration;
7. if received during or with respect to the period of redemption
after a foreclosure sale of the Mortgaged Property:
(a) if the purchaser at the foreclosure sale is not the
Mortgagee, first to the Mortgagee to the extent of any deficiency of the sale
proceeds to repay the indebtedness secured by this Mortgage, second to the
purchaser as a credit to the redemption price, but if the Mortgaged Property is
not redeemed, then to the purchaser of the Mortgaged Property; and
(b) if the purchaser at the foreclosure sale is the Mortgagee, to
the Mortgagee to the extent of any deficiency of the sale proceeds to repay the
indebtedness secured by this
Mortgage and the balance to be retained by the Mortgagee as a credit to the
redemption price, but if the Mortgaged Property is not redeemed, then to the
Mortgagee, whether or not such deficiency exists.
The rights and power of the Mortgagee under this Mortgage and the application of
Rents and revenue under this Subsection (A) shall continue until the expiration
of the redemption period from any foreclosure sale, whether or not any
deficiency remains after a foreclosure.
B. The Mortgagor represents and warrants that as of the date of
this Mortgage the Mortgaged Property is not in agricultural use as defined in
Minn. Stat. ss. 40A.02, Subd. 3 and is not used for agricultural purposes.
C. From the date of its recording in the State of Minnesota, this
Mortgage shall be effective as a financing statement filed as a financing
statement with respect to all goods constituting part of the Mortgaged Property
which are or are to become fixtures related to the real estate covered by this
Section. For this purpose the following information is included: (i) The
Mortgagor shall be deemed the "Debtor" with the address set forth in Section 32;
(ii) the Mortgagee shall be deemed the "Secured Party" with the address set
forth in Section 32; (iii) this document covers goods which are or are to become
fixtures; (iv) the name of the record owner of the real estate included in the
Mortgaged Property is the Mortgagor; and (v) the Mortgagor's Internal Revenue
Service Taxpayer I.D. number is 00-0000000.
D. This Mortgage is granted pursuant to a plan of reorganization
duly confirmed under Section 1129 of the Bankruptcy Code and is therefore exempt
from mortgage registration tax.
E. The Mortgagor hereby grants to Mortgagee the power of sale.
SCHEDULE A
DESCRIPTION OF ORIGINAL MORTGAGE
PROPERTY RECORDING OFFICE DOCUMENT NO. RECORDING DATE
------------------ --------------------------------- ----------------- -------------------------
Blaine, MN Office of the County Recorder, 1135049 9/12/94
Anoka County, MN
