EXHIBIT 10.24
This instrument was prepared by and
after recording return to:
XXXXXX XXXXXX XXXXXXXX LLP
000 Xxxxx Xxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxxx, Xxxxx Xxxxxxxx 00000
Attention: Xxxxxx X. Xxxxxxxx, Esq.
SUBORDINATE MORTGAGE, SECURITY AGREEMENT AND FIXTURE FILING
NNN CRAWFORDSVILLE, LLC,
A DELAWARE LIMITED LIABILITY COMPANY,
BORROWER,
to
LASALLE BANK NATIONAL ASSOCIATION,
A NATIONAL BANKING ASSOCIATION
LENDER
SUBORDINATE MORTGAGE, SECURITY AGREEMENT AND FIXTURE FILING
TABLE OF CONTENTS
PARAGRAPH PAGE
--------- ----
1. PAYMENT OF INDEBTEDNESS; PERFORMANCE OF OBLIGATIONS.................. 4
2. TAXES AND OTHER OBLIGATIONS.......................................... 4
3. RESERVES FOR TAXES/GROUND RENTS/INSURANCE/REPLACEMENT RESERVE/TENANT
IMPROVEMENTS AND LEASING RESERVE..................................... 4
4. USE OF PROPERTY...................................................... 7
5. INSURANCE AND CONDEMNATION........................................... 7
6. PRESERVATION AND MAINTENANCE OF PROPERTY............................. 12
7. PROTECTION OF LENDER'S SECURITY; LEASES.............................. 12
8. INSPECTION........................................................... 14
9. BOOKS AND RECORDS.................................................... 14
10. FINANCIAL STATEMENTS................................................. 14
11. HAZARDOUS SUBSTANCES................................................. 16
12. REPRESENTATIONS AND COVENANTS........................................ 17
13. LEASE ASSIGNMENT..................................................... 21
14. SUBORDINATION, NON-DISTURBANCE AND ATTORNMENT AGREEMENTS/ESTOPPEL
CERTIFICATES......................................................... 21
15. TRANSFERS OF THE PROPERTY OR OWNERSHIP INTERESTS IN BORROWER;
ASSUMPTION; DUE ON SALE/ENCUMBRANCE.................................. 22
16. NO ADDITIONAL LIENS.................................................. 22
17. SINGLE ASSET ENTITY.................................................. 22
18. BORROWER AND LIEN NOT RELEASED....................................... 27
19. UNIFORM COMMERCIAL CODE SECURITY AGREEMENT AND FIXTURE FILING........ 27
20. EVENTS OF DEFAULT; ACCELERATION OF INDEBTEDNESS; REMEDIES............ 29
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21. ENTRY; FORECLOSURE; REMEDIES......................................... 31
22. EXPENDITURES AND EXPENSES............................................ 32
23. APPLICATION OF PROCEEDS OF FORECLOSURE SALE.......................... 33
24. APPOINTMENT OF RECEIVER OR MORTGAGEE IN POSSESSION................... 33
25. FORBEARANCE BY LENDER NOT A WAIVER................................... 33
26. WAIVER OF STATUTE OF LIMITATIONS..................................... 33
27. WAIVER OF HOMESTEAD AND REDEMPTION................................... 33
28. JURY TRIAL WAIVER.................................................... 33
29. INDEMNIFICATION...................................................... 34
30. DUTY TO DEFEND....................................................... 35
31. ERISA................................................................ 35
32. NO ORAL CHANGE....................................................... 35
33. NOTICE............................................................... 35
34. SUCCESSORS AND ASSIGNS BOUND; JOINT AND SEVERAL LIABILITY; AGENTS;
CAPTIONS............................................................. 36
35. GOVERNING LAW; JURISDICTION; SEVERABILITY............................ 36
36. RELEASE.............................................................. 36
37. COVENANTS RUNNING WITH THE LAND...................................... 36
38. TERMS................................................................ 37
39. LOSS OF NOTE......................................................... 37
40. CHANGES IN THE LAWS REGARDING TAXATION............................... 37
41. INTENTIONALLY OMITTED................................................ 37
42. DISCLOSURE OF INFORMATION............................................ 37
43. SALE OF LOAN; SECURITIZATION......................................... 37
44. ACTIONS AND PROCEEDINGS.............................................. 38
45. NO THIRD PARTY BENEFICIARIES......................................... 38
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46. EXHIBITS AND RIDERS.................................................. 38
47. CUSTOMER IDENTIFICATION - USA PATRIOT ACT NOTICE; OFAC............... 38
48. COUNTERPARTS......................................................... 39
49. DISCLAIMERS.......................................................... 39
50. INTENTIONALLY DELETED................................................ 40
51. INTENTIONALLY DELETED................................................ 40
52. SUBORDINATION TO SENIOR MORTGAGE..................................... 40
53. INCONSISTENCIES...................................................... 40
EXHIBIT A - Legal Description
EXHIBIT B - Personal Property Description
EXHIBIT C - Pending and Threatened Litigation
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DEFINED TERMS
As used in this Mortgage, the following terms shall have the following
meanings assigned to them:
BORROWER NNN CRAWFORDSVILLE, LLC, ("BORROWER") having its principal
places of business at 0000 X. Xxxxxx Xxxxxx, Xxxxx 0000,
Xxxxx Xxx, Xxxxxxxxxx 00000.
BORROWER'S ADDRESS 0000 X. Xxxxxx Xxxxxx, Xxxxx 000
Xxxxx Xxx, Xxxxxxxxxx 00000
PROPERTY ADDRESS Crawfordsville Medical Office
1630 (f/k/a 1608) and 0000 Xxxxxxxxx Xxxx
Xxxxxxxxxxxxxx, Xxxxxxx
LENDER LaSalle Bank National Association, a national banking
association, and its successors and assigns as holders of
the Note
LENDER'S ADDRESS 000 X. XxXxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Attention: Real Estate Capital Markets
Re: Crawfordsville Medical Office
NOTE That Mezzanine Promissory Note dated August 18, 2006 made
by Borrower to the order of Lender in the amount of
$6,706,000.00, together with all notes issued in
substitution or exchange therefor, as any of the foregoing
may be amended, consolidated, modified or supplemented from
time to time
PRINCIPAL AMOUNT $2,132,000.00
MATURITY DATE February 14, 2007
LAND The property described on EXHIBIT A to this Mortgage
PERSONAL PROPERTY The property described on EXHIBIT B to this Mortgage
PERMITTED USE Office
GUARANTOR Triple Net Properties, LLC, a Virginia limited liability
company
THIS SUBORDINATE MORTGAGE, SECURITY AGREEMENT AND FIXTURE FILING
("MORTGAGE") is made as of the 12th day of September, 2006, by Borrower to and
for the benefit of Lender.
RECITALS:
A. Borrower has executed and delivered to Lender the Note (which is
hereinafter referred to as the "NOTE"), providing for monthly installments of
interest, with the balance thereof, if not sooner due or paid as set forth in
the Note, due and payable on the Maturity Date;
B. Lender wishes to secure (i) the prompt payment of the Note, together
with all interest thereon in accordance with the terms of the Note, as well as
the prompt payment of any additional indebtedness accruing to Lender on account
of any future payments, advances or expenditures made by Lender pursuant to the
Note or this Mortgage or any other agreement, document, or instrument securing
the payment of the indebtedness evidenced by the Note (the Note, this Mortgage,
the Pledge Agreement dated the date hereof made by NNN South Xxxxxxxx Member,
LLC in favor of Lender, and any other documents evidencing or securing the
indebtedness evidenced by the Note or executed in connection therewith, and any
modification, renewal, and/or extension thereof, are hereinafter collectively
referred to as the "LOAN DOCUMENTS"), and (ii) the prompt performance of each
and every covenant, condition, and agreement now or hereafter arising contained
in the Loan Documents of Borrower. All payment obligations of Borrower are
hereinafter sometimes collectively referred to as the "INDEBTEDNESS" and all
other obligations of Borrower are hereinafter sometimes collectively referred to
as the "OBLIGATIONS"; and
C. The schedule of Defined Terms appearing immediately before this page is
incorporated into this Mortgage by reference with the same force and effect as
if contained in the body hereof.
D. The Note and this Mortgage are intended to be subject and subordinate to
that certain $4,264,000 Promissory Note made by Borrower to Lender and that
certain Mortgage, Security Agreement and Fixture Filing given by Borrower to
Lender and encumbering the Property (the "SENIOR MORTGAGE").
NOW, THEREFORE, TO SECURE TO LENDER the repayment of the Indebtedness and
the performance of the Obligations, Borrower has mortgaged, given, granted,
bargained, sold, alienated, enfeoffed, transferred, conveyed, confirmed,
warranted, pledged, assigned, hypothecated and granted and by these presents
does hereby irrevocably mortgage, give, grant, bargain, sell, alien, enfeoff,
transfer, convey, confirm, warrant, pledge, assign, hypothecate and grant a
security interest in and to Lender the following described property and all
proceeds thereof (which property is hereinafter sometimes collectively referred
to as the "PROPERTY"):
A. The Land;
B. All improvements of every nature whatsoever now or hereafter situated on
the Land and owned by Borrower (the "IMPROVEMENTS"), and all machinery,
furnishings,
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equipment, fixtures (the "FIXTURES"), mechanical systems and other personal
property now or hereafter owned by Borrower and used in connection with the
operation of the Improvements;
C. All easements, rights-of-way, strips and gores of land, streets, ways,
alleys, passages, sewer rights, water, water courses, water rights and powers,
air rights and development rights, and all estates, rights, titles, interests,
privileges, liberties, tenements, hereditaments and appurtenances of any nature
whatsoever, in any way belonging, relating or pertaining to the 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 Borrower of, in and to the Land and the Improvements and every part
and parcel thereof, with the appurtenances thereto;
D. All agreements affecting the use, enjoyment or occupancy of the Land
and/or Improvements now or hereafter entered into (the "LEASES), and including
any and all guaranties of such Leases, and the immediate and continuing right to
collect all rents, income, receipts, royalties, profits, issues, service
reimbursements, fees, accounts receivables, revenues and prepayments of any of
the same from or related to the Land and/or Improvements from time to time
accruing under the Leases and/or the operation of the Land and/or Improvements
(the "RENTS"), reserving to Borrower, however, so long as no "EVENT OF DEFAULT"
(hereinafter defined) has occurred hereunder, a revocable license to receive and
apply the Rents in accordance with the terms and conditions of PARAGRAPH 13 of
this Mortgage;
E. The Personal Property;
F. All awards or payments, including interest thereon, which may heretofore
and hereafter be made with respect to the Land and the Improvements, whether
from the exercise of the right of eminent domain or condemnation (including but
not limited to any transfer made in lieu of or in anticipation of the exercise
of said rights), or for a change of grade, or for any other injury to or
decrease in the value of the Land and Improvements;
G. All proceeds of and any unearned premiums on any insurance policies
covering the Property, including, without limitation, the right to receive and
apply the proceeds of any insurance, judgments, or settlements made in lieu
thereof, for damage to the Property;
H. All proceeds of the conversion, voluntary or involuntary, of any of the
foregoing including, without limitation, proceeds of insurance and condemnation
awards, into cash or liquidation claims;
I. Any and all proceeds and products of any of the foregoing and any and
all other security and collateral of any nature whatsoever, now or hereafter
given for the repayment of the Indebtedness and the performance of Borrower's
obligations under the Loan Documents, including (without limitation) the
Replacement Reserve, the TI and Leasing Reserve, and all other escrows
established with Lender by Borrower; and
J. All property management agreements and tenants in common agreements
relating to the Property.
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AND without limiting any of the other provisions of this Mortgage, to the
extent permitted by applicable law, Borrower expressly grants to Lender, as a
secured party, a security interest in the portion of the Property that is or may
be subject to the provisions of the Uniform Commercial Code that are applicable
to secured transactions; it being understood and agreed that the Improvements
and Fixtures are part and parcel of the Land (the Land, the Improvements and the
Fixtures are collectively referred to as the "REAL PROPERTY") appropriated to
the use thereof and, whether affixed or annexed to the Real Property or not,
shall for the purposes of this Mortgage be deemed conclusively to be real estate
and mortgaged hereby.
TO HAVE AND TO HOLD the Property and all parts thereof, together with the
rents, issues, profits and proceeds thereof, unto Lender to its own proper use,
benefit, and advantage forever, subject, however, to the terms, covenants, and
conditions herein.
At no time shall the principal amount of the Indebtedness, not including
sums advanced in accordance herewith to protect the security of this Mortgage,
exceed TWO HUNDRED PERCENT (200%) of the original amount of the Note.
Borrower covenants and agrees with Lender as follows:
1. PAYMENT OF INDEBTEDNESS; PERFORMANCE OF OBLIGATIONS. Borrower shall
promptly pay when due the Indebtedness and shall promptly perform all
Obligations.
2. TAXES AND OTHER OBLIGATIONS. Borrower shall pay, when due, and before
any interest, collection fees or penalties shall accrue, all taxes, assessments,
fines, impositions and other charges and obligations, including charges and
obligations for any present or future repairs or improvements made on the
Property, or for any other goods or services or utilities furnished to the
Property, which may become a lien on or charge against the Property prior to
this Mortgage, subject, however, to Borrower's right to contest such lien or
charge upon the posting of security reasonably satisfactory to Lender so long as
such contest stays the enforcement or collection of such lien or charge. Should
Borrower fail to make such payments, Lender may, at its option and at the
expense of Borrower, pay the amounts due for the account of Borrower. Upon the
request of Lender, Borrower shall immediately furnish to Lender all notices of
amounts due and receipts evidencing payment. Borrower shall promptly notify
Lender of any lien on all or any part of the Property and shall promptly
discharge any unpermitted lien or encumbrance.
3. RESERVES FOR TAXES/GROUND RENTS/INSURANCE/REPLACEMENT RESERVE/TENANT
IMPROVEMENTS AND LEASING RESERVE.
(a) Borrower shall pay to Lender, at the time of and in addition to
the monthly installments of interest due under the Note, a sum equal to
1/12 of the amount estimated by Lender from time to time to be sufficient
to enable Lender to pay at least 30 days before they become due and
payable, all taxes, assessments and other similar charges levied against
the Property (collectively, the "TAXES"), and all ground rents, if
applicable. So long as no Event of Default exists hereunder, Lender shall
apply the sums so paid by Borrower to pay such tax items and ground rents,
if applicable. In making any such payments, Lender may do so according to
any xxxx, statement or estimate obtained by Lender in good faith, without
inquiry into the accuracy of such xxxx, statement or estimate
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or into the validity thereof. These sums may be commingled with the general
funds of Lender, and no interest shall be payable thereon nor shall these
sums constitute trust funds. If such amount on deposit with Lender is
insufficient to fully pay such tax items and ground rents, if applicable,
Borrower shall, within 10 days following notice at any time from Lender,
deposit such additional sum as may be required for the full payment of such
tax items and ground rents, if applicable. Borrower hereby represents and
warrants that Lender has a security interest in such funds and Borrower
shall execute any other documents and take any other actions necessary to
provide Lender with a perfected security interest. Upon the Maturity Date,
the moneys then remaining on deposit with Lender or its agent shall, at
Lender's option, be applied against the Indebtedness. The obligation of
Borrower to pay such tax items and ground rents is not affected or modified
by the provisions of this paragraph.
Notwithstanding anything contained herein or in the other Loan
Documents to the contrary, Borrower shall not be required to pay the
monthly installments set forth above, provided that Borrower complies with
PARAGRAPH 3(A) of the Senior Mortgage.
(b) Borrower shall pay to Lender, at the time of and in addition to
the monthly installments of interest due under the Note, a sum equal to
1/12 of the amount estimated by Lender from time to time to be sufficient
to enable Lender to pay at least 30 days before they become due and
payable, all insurance premiums due for the renewal, on an annual basis, of
the coverage afforded by the insurance policies required hereunder upon the
expiration thereof. So long as no Event of Default exists hereunder, Lender
shall apply the sums so paid by Borrower to pay such insurance premiums. In
making any such payment, Lender may do so according to any xxxx, statement
or estimate obtained by Lender in good faith, without inquiry into the
accuracy of such xxxx, statement or estimate or into the validity thereof.
These sums may be commingled with the general funds of Lender, and no
interest shall be payable thereon nor shall these sums constitute trust
funds. If such amount on deposit with Lender is insufficient to fully pay
such insurance premiums, Borrower shall, within 10 days following notice at
any time from Lender, deposit such additional sum as may be required for
the full payment of such insurance premiums. Borrower hereby represents and
warrants that Lender has a security interest in such funds and Borrower
shall execute any other documents and take any other actions necessary to
provide Lender with a perfected security interest. Upon the Maturity Date,
the moneys then remaining on deposit with Lender or its agent shall, at
Lender's option, be applied against the Indebtedness. The obligation of
Borrower to pay such insurance premiums is not affected or modified by the
provisions of this paragraph.
Notwithstanding anything contained herein or in the other Loan
Documents to the contrary, Borrower shall not be required to pay the
monthly installments set forth above, provided that Borrower complies with
Paragraph 3(b) of the Senior Mortgage.
(c) At the time of and in addition to the monthly installments
interest due under the Note, Borrower shall pay to Lender the Replacement
Reserve Monthly Payment (such payments shall be referred to as the
"REPLACEMENT RESERVE"). The Replacement Reserve may be commingled with the
general funds of Lender and such Replacement Reserve shall not constitute
trust funds. The funds contained in the Replacement Reserve
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shall bear interest for the benefit of Borrower at the rate of interest
which is the lower of (i) the amount paid from time to time by Lender on
commercial money market accounts; or (ii) the return on permitted
investments to be made with the funds by any third party servicer, rating
agency or loan purchaser ("RESERVE INTEREST RATE"), and all such interest
shall be added to and become part of the Replacement Reserve, provided
Lender shall make no representation or warranty as to the actual rate of
interest. The funds contained in the Replacement Reserve shall be utilized
by Borrower solely for exterior, structural, HVAC and mechanical
improvements that are customarily accounted for as capital expenses, and
other capital improvements approved in advance by Lender. Lender shall make
disbursements from the Replacement Reserve for the actual cost of such
items and approved capital improvements upon Borrower's providing Lender
with receipts, invoices, lien waivers, photographs and other documentation
deemed necessary by Lender to insure that the work and/or materials related
to the requested disbursement have been completed and/or provided, with
minimum draws of $10,000.00, which shall occur no more frequently than once
per month. Upon the Maturity Date, the moneys then remaining on deposit
with Lender or its agent shall, at Lender's option, be applied against the
Indebtedness. Borrower hereby represents and warrants that Lender has a
security interest in the Replacement Reserve and Borrower shall execute any
other documents and take any other actions necessary to provide Lender with
a perfected security interest in the Replacement Reserve.
Notwithstanding anything contained herein or in the other Loan
Documents to the contrary, Borrower shall not be required to pay the
monthly installments set forth above, provided that Borrower complies with
Paragraph 3(c) of the Senior Mortgage.
(d) At the time of and in addition to the monthly installments
interest due under the Note, Borrower shall pay to Lender monthly deposits
in the amount of the TI and Leasing Reserve Monthly Payment for approved
tenant improvements and leasing commissions (such payments shall be
referred to as the "TI AND LEASING RESERVE"). The TI and Leasing Reserve
may be commingled with the general funds of Lender and such TI and Leasing
Reserve shall not constitute trust funds. The funds contained in the TI and
Leasing Reserve shall bear interest for the benefit of Borrower at the
Reserve Interest Rate and all such interest shall be added to and become a
part of the TI and Leasing Reserve, provided Lender shall make no
representation or warranty as to the actual rate of interest. The funds
contained in the TI and Leasing Reserve shall be disbursed to Borrower
solely to pay for tenant improvements and leasing commissions due pursuant
to leases entered into in accordance with the requirements of PARAGRAPH 7
hereof or otherwise approved by Lender, but only when the tenants under
such leases are in occupancy, open for business, and paying full
contractual rent without any right of offset or rent abatement. Lender
shall make disbursements from the TI and Leasing Reserve for the actual
cost of such approved tenant improvements and leasing commissions upon
Borrower's providing Lender with receipts, invoices, lien waivers,
photographs and other documentation deemed necessary by Lender to insure
that the work and/or materials related to the requested disbursement have
been completed and/or provided, with minimum draws of $10,000.00, which
shall occur no more frequently than once per month. Upon the Maturity Date,
the moneys then remaining on deposit with Lender or its agent shall, at
Lender's option, be applied against the Indebtedness.
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Borrower hereby represents and warrants that Lender has a security interest
in the TI and Leasing Reserve and shall execute any other documents and
take any other actions necessary to provide Lender with a perfected
security interest in the TI and Leasing Reserve.
Notwithstanding anything contained herein or in the other Loan
Documents to the contrary, Borrower shall not be required to pay the
monthly installments set forth above, provided that Borrower complies with
Paragraph 3(d) of the Senior Mortgage.
(e) Upon the occurrence of an Event of Default, Lender may apply any
amounts then held in any of the Reserves described above to the payment of
the Indebtedness in such order as Lender may elect, in its sole and
absolute discretion.
4. USE OF PROPERTY. Unless required by applicable law, Borrower shall not
permit changes in the use of any part of the Property from the use existing at
the time this Mortgage was executed, which use Borrower represents and warrants
is limited to the Permitted Use and related uses. Borrower shall not initiate or
acquiesce in a change in the zoning classification of the Property without
Lender's prior written consent.
5. INSURANCE AND CONDEMNATION. Borrower shall obtain and maintain, or cause
to be maintained, insurance for Borrower and the Property providing at least the
following coverages:
(a) comprehensive all risk insurance ("SPECIAL FORM") including, but
not limited to, loss caused by any type of windstorm or hail on the
Improvements and the Personal Property, (i) in an amount equal to one
hundred percent (100%) of the "FULL REPLACEMENT COST," which for purposes
of this Mortgage shall mean actual replacement value (exclusive of costs of
excavations, foundations, underground utilities and footings) with a waiver
of depreciation, but the amount shall in no event be less than the
outstanding principal balance of the Loan; (ii) containing an agreed amount
endorsement with respect to the Improvements and Personal Property waiving
all co-insurance provisions or to be written on a no co-insurance form;
(iii) providing for no deductible in excess of Ten Thousand and 00/100
Dollars ($10,000.00) for all such insurance coverage excluding windstorm
and earthquake, and (iv) if any of the Improvements or the use of the
Property shall at any time constitute legal non-conforming structures or
uses, coverage for loss due to operation of law in an amount equal to the
Full Replacement Cost, coverage for demolition costs and coverage for
increased costs of construction. In addition, Borrower shall obtain: (A) if
any portion of the Improvements is currently or at any time in the future
located in a federally designated "special flood hazard area", flood hazard
insurance in an amount equal to the lesser of (1) the outstanding principal
balance of the Note or (2) the maximum amount of such insurance available
under the National Flood Insurance Act of 1968, the Flood Disaster
Protection Act of 1973 or the National Flood Insurance Reform Act of 1994,
as each may be amended or such greater amount as Lender shall require and
(B) earthquake insurance in amounts and in form and substance satisfactory
to Lender in the event the Property is located in an area with a high
degree of seismic activity;
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(b) business income insurance (i) with loss payable to Lender; (ii)
covering all risks required to be covered by the insurance provided for in
subparagraph (a) above; (iii) in an amount equal to one hundred percent
(100%) of the projected gross revenues from the operation of the Property
(as reduced to reflect expenses not incurred during a period of restoration
or repair) for a period of at least twelve (12) months after the date of
the loss or damage by fire or other casualty; and (iv) containing an
extended period of indemnity endorsement which provides that after the
physical loss to the Improvements and Personal Property has been repaired,
the continued loss of income will be insured until such income either
returns to the same level it was at prior to the loss, or the expiration of
six (6) months from the date that the Property is repaired or replaced and
operations are resumed, whichever first occurs, and notwithstanding that
the policy may expire prior to the end of such period. The amount of such
business income insurance shall be determined prior to the date hereof and
at least once each year thereafter based on Borrower's reasonable estimate
of the gross revenues from the Property for the succeeding twelve (12)
month period. All proceeds payable to Lender pursuant to this subsection
shall be held by Lender and shall be applied to the obligations secured by
the Loan Documents from time to time due and payable hereunder and under
the Note; provided, however, that nothing herein contained shall be deemed
to relieve Borrower of its obligations to pay the obligations secured by
the Loan Documents on the respective dates of payment provided for in this
Mortgage and the other Loan Documents except to the extent such amounts are
actually paid out of the proceeds of such business income insurance;
(c) at all times during which structural construction, repairs or
alterations are being made with respect to the Improvements, and only if
the Property coverage form does not otherwise apply, (i) owner's contingent
or protective liability insurance, otherwise known as Owner Contractor's
Protective Liability, covering claims not covered by or under the terms or
provisions of the above mentioned commercial general liability insurance
policy and (ii) the insurance provided for in subparagraph (a) above
written in a so-called builder's risk completed value form (A) on a
non-reporting basis, (B) against all risks insured against pursuant to
subparagraph (a) above, (C) including permission to occupy the Property and
(D) with an agreed amount endorsement waiving co-insurance provisions;
(d) comprehensive boiler and machinery insurance, if steam boilers or
other pressure-fixed vessels are in operation, in amounts as shall be
reasonably required by Lender on terms consistent with the commercial
property insurance policy required under subparagraph (a) above;
(e) commercial general liability insurance against claims for personal
injury, bodily injury, death or property damage occurring upon, in or about
the Property, such insurance (i) to be on the so-called "occurrence" form
with a combined limit of not less than Two Million and 00/100 Dollars
($2,000,000.00) in the aggregate and One Million and 00/100 Dollars
($1,000,000.00) per occurrence; (ii) to continue at not less than the
aforesaid limit until required to be changed by Lender in writing by reason
of changed economic conditions making such protection inadequate and (iii)
to cover at least the following hazards: (A) premises and operations; (B)
products and completed operations
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on an "if any" basis; (C) independent contractors; (D) blanket contractual
liability for all written contracts and (E) contractual liability covering
the indemnities contained in PARAGRAPH 29 of this Mortgage to the extent
the same is available;
(f) automobile liability coverage for all owned and non-owned
vehicles, including rented and leased vehicles containing minimum limits
per occurrence of One Million Dollars and 00/100 Dollars ($1,000,000.00);
(g) worker's compensation and employee's liability subject to the
worker's compensation laws of the applicable state;
(h) umbrella and excess liability insurance in an amount not less than
Three Million and 00/100 Dollars ($3,000,000.00) per occurrence on terms
consistent with the commercial general liability insurance policy required
under subparagraph (e) above, including, but not limited to, supplemental
coverage for employer liability and automobile liability, which umbrella
liability coverage shall apply in excess of the automobile liability
coverage in subparagraph (f) above;
(i) the insurance required under this PARAGRAPH 5 above shall cover
perils of terrorism and acts of terrorism and Borrower shall maintain
insurance for loss resulting from perils and acts of terrorism on terms
(including amounts) consistent with those required under PARAGRAPH 5 above
at all times during the term of the Loan; and
(j) upon sixty (60) days written notice, such other reasonable
insurance, including, but not limited to, sinkhole or land subsidence
insurance, if available at commercially reasonable costs, and in such
reasonable amounts as Lender from time to time may reasonably request
against such other insurable hazards which at the time are commonly insured
against for property similar to the Property located in or around the
region in which the Property is located.
All insurance provided for in this PARAGRAPH 5, shall be obtained under
valid and enforceable policies (collectively, the "POLICIES" or in the singular,
the "POLICY"), and shall be subject to the approval of Lender as to insurance
companies, amounts, deductibles, loss payees and insureds. The Policies shall be
issued by financially sound and responsible insurance companies authorized to do
business in the State and having a claims paying ability rating of "AA" or
better (and the equivalent thereof) by at least two (2) of the rating agencies
rating the Securities (one (1) of which shall be S&P if they are rating the
Securities and one (1) of which will be Moody's if they are rating the
Securities), or if only one (1) rating agency is rating the Securities, then
only by such rating agency. The Policies described in this PARAGRAPH 5 (other
than those strictly limited to liability protection) shall designate Lender as
loss payee. Not less than ten (10) days prior to the expiration dates of the
Policies theretofore furnished to Lender, certificates of insurance evidencing
the Policies accompanied by evidence satisfactory to Lender of payment of the
premiums due thereunder (the "INSURANCE PREMIUMS"), shall be delivered by
Borrower to Lender. Any blanket insurance Policy shall specifically allocate to
the Property the amount of coverage from time to time required hereunder and
shall otherwise provide the same protection as would a separate Policy insuring
only the Property in compliance with the provisions of this PARAGRAPH 5. All
Policies provided for or contemplated by this PARAGRAPH 5,
9
except for the Policy referenced in PARAGRAPH 5(G) of this Mortgage, shall name
Borrower as the insured and Lender as the additional insured, as its interests
may appear, and in the case of property damage, boiler and machinery, flood and
earthquake insurance, shall contain a so-called New York standard
non-contributing mortgagee clause in favor of Lender providing that the loss
thereunder shall be payable to Lender. All Policies shall contain clauses or
endorsements to the effect that: (1) no act or negligence of Borrower, or anyone
acting for Borrower, or of any tenant or other occupant, or failure to comply
with the provisions of any Policy, which might otherwise result in a forfeiture
of the insurance or any part thereof, shall in any way affect the validity or
enforceability of the insurance insofar as Lender is concerned; (2) the Policy
shall not be materially changed (other than to increase the coverage provided
thereby) or canceled without at least ten (10) days written notice to Lender and
any other party named therein as an additional insured; (3) the issuers thereof
shall give written notice to Lender if the Policy has not been renewed thirty
(30) days prior to its expiration; and (4) Lender shall not be liable for any
Insurance Premiums thereon or subject to any assessments thereunder.
Borrower shall keep the Improvements insured, and shall maintain during the
entire term of this Mortgage, comprehensive general liability coverage and such
other coverages requested by Lender, by carrier(s), in amounts and in form at
all times satisfactory to Lender, which carrier(s), amounts and form shall not
be changed without the prior written consent of Lender. All such policies of
insurance shall be issued by insurers qualified under the laws of the state in
which the Land is located, duly authorized and licensed to transact business in
such state and reflecting the Required Rating. Borrower shall maintain all
coverages on the Property as are required by Lender at the closing of the Loan,
and all other coverages as may be deemed necessary by Lender from time to time
during the term of the Loan. Any failure by Lender to insist on full compliance
with all of the above insurance requirements at closing does not constitute a
waiver of Lender's right to subsequently require full compliance with these
requirements. All policies required hereunder shall be indicated by evidence of
insurance on the Accord 28 form of certificate (as such form may be updated and
renamed from time to time), naming Lender as loss payee and as additional
insured. Unless Borrower provides Lender with evidence of the insurance coverage
required by this Mortgage, Lender may purchase insurance at Borrower's expense
to protect Lender's interests in the Property and to maintain the insurance
required by this Mortgage. This insurance may, but need not, protect Borrower's
interests. The coverage purchased by Lender may not pay any claim made by
Borrower or any claim that is made against Borrower in connection with the
Property or any required insurance policy. Borrower may later cancel any
insurance purchased by Lender, but only after providing Lender with evidence
that Borrower has obtained insurance as required by this Mortgage. If Lender
purchases insurance for the Property or insurance otherwise required by this
Mortgage, Borrower will be responsible for the costs of that insurance,
including interest and other charges imposed by Lender in connection with the
placement of the insurance, until the effective date of the cancellation or
expiration of the insurance. The costs of the insurance may be added to the
Indebtedness. The costs of the insurance may be more than the cost of insurance
Borrower is able to obtain on its own.
In case of loss or damage by fire or other casualty, Borrower shall give
immediate written notice thereof to the insurance carrier(s) and to Lender.
Lender is authorized and empowered to make or file proofs of loss or damage (in
each case only so long as such loss or damage is equal to or greater than
$500,000.00 and to settle and adjust any claim under insurance policies which
10
insure against such risks, or to direct Borrower, in writing, to agree with the
insurance carrier(s) on the amount to be paid in regard to such loss. The
proceeds of any insurance claim are hereby assigned to and shall be paid to
Lender as further security for the payment of the Indebtedness and performance
of the Obligations and applied as set forth herein.
Borrower shall immediately notify Lender of any action or proceeding
relating to any condemnation or other taking, whether direct or indirect, of the
Property, or part thereof, and Borrower shall appear in and prosecute any such
action or proceeding unless otherwise directed by Lender in writing. Borrower
authorizes Lender, at Lender's option, as attorney-in-fact for Borrower, to
commence, appear in and prosecute, in Lender's or Borrower's name, any action or
proceeding relating to any condemnation or other taking of the Property, whether
direct or indirect, and to settle or compromise any claim in connection with
such condemnation or other taking, provided such claim is for an amount equal to
or greater than $500,000.00. The proceeds of any award, payment or claim for
damages, direct or consequential, in connection with any condemnation or other
taking, whether direct or indirect, of the Property, or part thereof, or for
conveyances in lieu of condemnation, are hereby assigned to and shall be paid to
Lender as further security for the payment of the Indebtedness and performance
of the Obligations and applied as set forth herein.
Provided no Event of Default then exists hereunder, the net insurance
proceeds and net proceeds of any condemnation award (in each case after
deducting only Lender's reasonable costs and expenses, if any, in collecting the
same) shall be made available for the restoration or repair of the Property if,
in Lender's sole judgment (a) restoration or repair and the continued operation
of the Property is economically feasible, as determined by Lender, (b) the value
of Lender's security is not reduced, (c) the loss or condemnation, as
applicable, does not occur in the 6-month period preceding the stated Maturity
Date and Lender's independent consultant certifies that the restoration of the
Property can be completed at least 90 days prior to the Maturity Date, and (d)
Borrower deposits with Lender an amount, in cash, which Lender, in its sole
discretion, determines is necessary, in addition to the net insurance proceeds
or net proceeds of any condemnation award, as applicable, to pay in full the
cost of the restoration or repair, including the cost to carry the Property and
make all required payments due under the Loan during the period of restoration
or repair. Notwithstanding the foregoing, it shall be a condition precedent to
any disbursement of insurance proceeds held by Lender hereunder that Lender
shall have approved (x) all plans and specifications for any proposed repair or
restoration, (y) the construction schedule and (z) the architect's and general
contractor's contract for all restoration that exceeds $25,000.00 in the
aggregate. Lender may establish other conditions it deems reasonably necessary
to assure the work is fully completed in a good and workmanlike manner free of
all liens or claims by reason thereof. Borrower's deposits made pursuant to this
paragraph shall be used before the net insurance proceeds or net proceeds of any
condemnation award, as applicable, for such restoration or repair. If the net
insurance proceeds or net proceeds of any condemnation award, as applicable, are
made available for restoration or repair, such work shall be completed by
Borrower in an expeditious and diligent fashion, and in compliance with all
applicable laws, rules and regulations. At Lender's option, the net insurance
proceeds or net proceeds of any condemnation award, as applicable, shall be
disbursed pursuant to a construction escrow acceptable to Lender. If following
the final payments for the completion of such restoration or repair there are
any net insurance proceeds or net proceeds of any condemnation award, as
applicable, remaining, such proceeds shall be paid (i) to Borrower to the
11
extent Borrower was required to make a deposit pursuant to this paragraph, (ii)
then to fund any shortfall in the Replacement Reserve, (iii) then to Lender to
be applied to the Indebtedness, whether or not due and payable until paid in
full, and (iv) then to Borrower. If an Event of Default then exists, or any of
the conditions set forth in subparagraphs (a) through (d) of this PARAGRAPH 5
have not been met or satisfied, the net insurance proceeds or net proceeds of
any condemnation award, as applicable, shall be applied to the Indebtedness,
whether or not due and payable, with any excess paid to Borrower.
Notwithstanding anything contained herein or in the other Loan Documents to
the contrary, Borrower's compliance with PARAGRAPH 5 of the Senior Mortgage
shall be deemed to satisfy the requirements of this PARAGRAPH 5.
6. PRESERVATION AND MAINTENANCE OF PROPERTY. Borrower (a) shall not commit
waste or permit impairment or deterioration of the Property; (b) shall not
abandon the Property; (c) shall keep the Property in good repair and restore or
repair promptly, in a good and workmanlike manner, all or any part of the
Property to the equivalent of its original condition, ordinary wear and tear
excepted, or such other condition as Lender may approve in writing, upon any
damage or loss thereto, if net insurance proceeds are made available to cover in
whole or in part the costs of such restoration or repair; (d) shall comply with
all laws, ordinances, regulations and requirements of any governmental body, and
all requirements of any documents applicable to the Property; (e) shall provide
for management of the Property by Borrower or by a property manager satisfactory
to Lender pursuant to a contract in form and substance satisfactory to Lender;
(f) shall not take any steps whatsoever to convert the Property, or any portion
thereof, to a condominium or cooperative form of management; (g) shall not
install or permit to be installed on the Property any underground storage tank
or above-ground storage tank without the written consent of Lender; and (h)
shall give notice in writing to Lender of and, unless otherwise directed in
writing by Lender, appear in and defend any action or proceeding purporting to
affect the Property, the security granted by the Loan Documents or the rights or
powers of Lender. Neither Borrower nor any tenant or other person shall remove,
demolish or alter any Improvement or any Fixture, equipment, machinery or
appliance in or on the Land and owned or leased by Borrower except when incident
to the replacement of Fixtures, equipment, machinery and appliances with items
of like kind.
7. PROTECTION OF LENDER'S SECURITY; LEASES. If Borrower fails to pay the
Indebtedness or perform the Obligations, or if any action or proceeding is
commenced which affects the Property or Lender, at Lender's option, Lender may
make such appearances, disburse such sums and take such action as Lender deems
necessary, in its sole discretion, to protect the Property or Lender's interest
herein, including entry upon the Property to make repairs and perform
environmental tests and studies. Any amounts disbursed by Lender pursuant to
this PARAGRAPH 7 (including attorneys' costs and expenses), with interest
thereon at the "DEFAULT RATE" (defined in the Note) from the date of
disbursement, shall become additional Indebtedness of Borrower secured by the
Loan Documents and shall be due and payable on demand. Nothing contained in this
PARAGRAPH 7 shall require Lender to incur any expense or take any action
hereunder.
Borrower shall not be authorized to enter into any ground lease of the
Property, without Lender's prior written approval. Borrower shall not, without
Lender's prior written consent, modify, amend, surrender or terminate any Lease,
which approval shall not be unreasonably
12
withheld or delayed. All Leases of space in the Property shall be on the form of
lease previously approved by Lender with tenants and for a use acceptable to
Lender. All Leases of space in the Property executed or renewed after the date
hereof must be approved by Lender prior to the execution thereof by Borrower.
Notwithstanding anything contained herein to the contrary, Borrower may
enter into a proposed Lease (including the amendment, renewal or extension of an
existing Lease (a "RENEWAL LEASE") without the prior written consent of Lender,
provided such proposed Lease or Renewal Lease (i) provides for rental rates and
terms comparable to existing local market rates and terms (taking into account
the type and quality of the tenant) as of the date such Lease or Renewal Lease
is executed by Borrower (unless, in the case of a Renewal Lease, the rent
payable during such renewal, or a formula or other method to compute such rent,
is provided for in the original Lease), (ii) is an arms-length transaction with
a bona fide, independent third party tenant, (iii) is written on the standard
form of lease previously approved by Lender, (iv) is not for premises greater
than or equal to seven percent (7.0%) of the gross leaseable area of the
Property, (v) is not for a rental greater than or equal to seven percent (7.0%)
of the total gross rental revenues of the Property; (vi) shall have an initial
term of not less than three (3) years or greater than ten (10) years, (vii) is
for the same use as the current use of the Property, (viii) shall not contain
any options for renewal or expansion by the tenant thereunder at rental rates
which are either below comparable market levels or less than the rental rates
paid by the tenant during initial lease term; and (ix) shall be to a tenant
which is experienced, creditworthy and reputable. If Lender consents to any new
Lease of space in the Property or the renewal of any existing Lease of space in
the Property, at Lender's request, Borrower shall cause the tenant thereunder to
execute a subordination and attornment agreement in form and substance
satisfactory to Lender contemporaneously with the execution of such Lease.
Borrower expressly understands that any and all new or proposed leases or
Renewal Leases are included in the definition of "LEASE" or "LEASES" as such
terms may be used throughout this Mortgage or any of the other Loan Documents.
Notwithstanding anything contained herein to the contrary, Borrower may
terminate a Lease without Lender's request in the ordinary course of business if
(a) the related tenant is in default and (b) either (x) such Lease is for less
than seven percent (7.0%) of the then currently occupied and rentable square
feet of space at the Property, or (y) Borrower has executed a lease with a
replacement tenant for the premises in question. To the extent Lender's consent
is required under this PARAGRAPH 7, and the lease in question is for less than
25% of both the gross leaseable area of the Property and the total gross rental
revenues of the Property, Borrower shall submit a request to Lender with the
following language prominently displayed at the top and on the cover of any such
request in allcaps, boldface, 14 point type or larger: "IMMEDIATE RESPONSE
REQUIRED, CONSENT DEEMED GIVEN IF NO RESPONSE WITHIN 10 BUSINESS DAYS." If no
response has been received within 10 Business Days of Lender's receipt of such
request, Borrower shall submit a second request to Lender with the following
language prominently displayed at the top and on the cover of any such request
in allcaps, boldface, 14 point type or larger: "IMMEDIATE RESPONSE REQUIRED,
CONSENT DEEMED GIVEN IF NO RESPONSE WITHIN 5 BUSINESS DAYS." If no response has
been received within 5 Business Days of Lender's receipt of such second request,
Lender's consent shall be deemed to be given.
If at the time one or more Disclosure Documents (as hereinafter defined)
are being prepared for a securitization and if requested by Lender, Borrower
shall furnish, or shall cause
13
the applicable tenant to furnish, to Lender financial data and/or financial
statements in accordance with Regulation AB (as defined in Item 1101(k) of
Regulation AB) for any tenant of any Property if, in connection with a
securitization, Lender reasonably expects there to be, with respect to such
tenant or group of affiliated tenants, a concentration within all of the
mortgage loans included or reasonably expected to be included, as applicable, in
such securitization such that such tenant or group of affiliated tenants would
constitute a Significant Obligor (as defined in Item 1101(k)); provided,
however, that in the event the related lease does not require the related tenant
to provide the foregoing information, Borrower shall use commercially reasonable
efforts to cause the applicable tenant to furnish such information, provided
however, that Borrower shall be in default hereunder only for failure to use
commercially reasonable efforts to cause such tenant to furnish such
information.
Notwithstanding anything contained herein or in the other Loan Documents to
the contrary, Borrower's compliance with PARAGRAPH 7 of the Senior Mortgage
shall be deemed to satisfy the requirements of this PARAGRAPH 7.
8. INSPECTION. Lender and its agents and designees may make or cause to be
made reasonable entries upon and inspections of the Property, including for
performing any environmental inspections and testing of the Property, and
inspections of Borrower's books, records, and contracts at all reasonable times
upon reasonable advance notice, which notice may be given in writing or orally.
Borrower shall cooperate with Lender and its agents and designees with respect
to all such inspections, including any related to the sale or potential sale of
all or any portion of the Loan by Lender and any securitization or potential
securitization involving the Loan.
9. BOOKS AND RECORDS. Borrower shall keep and maintain at all times at
Borrower's address stated above, or such other place as Lender may approve in
writing, complete and accurate books of accounts and records adequate to reflect
correctly the results of the operation of the Property and copies of all written
contracts, Leases and other instruments affecting the Property.
10. FINANCIAL STATEMENTS. If required by Lender, Borrower shall furnish to
Lender, within 60 days after the end of each calendar month, until the later to
occur of either (i) the first 12 calendar months following the closing of the
loan (the "LOAN") evidenced by the Note, or (ii) the Loan is securitized as
described in Paragraph 43 below, a monthly unaudited (a) statement of income and
expenses, each in reasonable detail, prepared on a consistent, cash/tax basis in
accordance with sound accounting practices (relating to the real estate
industry) or in accordance with generally accepted accounting principles and
certified as true and complete by Borrower or its general partner,
manager/managing member or chief financial officer, and (b) a rent roll showing
the name of each tenant, and for each tenant, (i) the space occupied, (ii) the
lease expiration date, (iii) the rent payable, and (iv) the security deposit
being held for such tenant, each in reasonable detail and dated and certified as
true and complete by Borrower or its general partner or chief financial officer.
If required by Lender, Borrower shall furnish to Lender, within 60 days after
the end of each fiscal quarter of the operation of the business of Borrower and
at any other time upon Lender's request, an unaudited (a) balance sheet, (b) a
statement of income and expenses of the Property, and (c) a list of aged
accounts receivables, each in reasonable detail, prepared on a consistent,
cash/tax basis in accordance with sound accounting practices (relating to the
real estate industry) or in accordance with generally accepted accounting
principles prepared
14
on a consistent basis and certified as true and complete by Borrower or its
general partner, manager/managing member or chief financial officer. If required
by Lender, Borrower shall also furnish to Lender, and shall cause each Guarantor
(as defined in the Note) to furnish to Lender, within 60 days after the end of
each fiscal year of Borrower, an unaudited (a) balance sheet, (b) a statement of
income and expenses and (c) a statement of cash flows, each in reasonable
detail, prepared on a consistent, cash/tax basis in accordance with sound
accounting practices (relating to the real estate industry) or in accordance
with generally accepted accounting principles prepared on a consistent basis and
certified as true and complete by Borrower or its general partner,
manager/managing member or chief financial officer and each Guarantor, as the
case may be. In the event that the Loan has an original principal balance equal
to or greater than $20,000,000.00 such annual financial statements shall be
audited by an independent certified public accountant. If Lender requires
audited GAAP-compliant financial statements of Guarantor, Guarantor will provide
such financial statements to Lender within 120 days of Guarantor's fiscal
year-end or within 20 days of the filing of its returns with the Internal
Revenue Service. All of the information required by Lender in this paragraph
must be in a form acceptable to Lender in its absolute and sole discretion. If
Borrower fails to timely furnish Lender with any of the financial information
and reports set forth in this paragraph within the required time periods, Lender
shall have the right, acting in its sole discretion, to hire a certified public
accounting firm acceptable to Lender, to prepare such financial information and
reports, on an audited basis. The costs and expenses of such accounting firm
shall be paid by Borrower on demand and, to the extent advanced by Lender
become, with interest thereon from the date advanced by Lender at the Default
Rate, additional Indebtedness of Borrower secured by the Loan Documents.
Additionally, if Borrower fails to timely furnish Lender with any of the
financial information and reports set forth in this paragraph within the
required time periods, Lender shall be entitled to receive a late charge equal
to $500.00 for each financial information and/or report not so furnished to
Lender (the "FINANCIAL LATE CHARGE"). The Financial Late Charge shall be due and
payable by Borrower immediately upon receipt by Borrower of an invoice for same
from Lender. Until paid, the Financial Late Charge shall bear interest at the
Default Rate, and shall be deemed additional Indebtedness of Borrower secured by
the Loan Documents.
If, at the time one or more Disclosure Documents are being prepared for a
securitization, Lender reasonably expects that Borrower alone or Borrower and
one or more affiliates of Borrower collectively, or the Property alone or the
Property and any other parcel(s) of real property, together with improvements
thereon and personal property related thereto, that is "related", within the
meaning of the definition of Significant Obligor of Regulation AB), to the
Property (a "RELATED PROPERTY") collectively, will be a Significant Obligor,
Borrower shall furnish to Lender upon request (i) the selected financial data as
required under Item 1112(b)(1) of Regulation AB, if Lender reasonably expects
that the principal amount of the Loan, together with any loans made to an
affiliate of Borrower or secured by a Related Property that is included in a
securitization with the Loan (a "RELATED LOAN"), as of the cut-off date for such
securitization may, or if the principal amount of the Loan together with any
Related Loans as of the cut-off date for such securitization and at any time
during which the Loan and any Related Loans are included in a securitization
does, equal or exceed ten percent (10%) of the aggregate principal amount of all
mortgage loans included or reasonably expected to be included, as applicable, in
the securitization or (ii) the financial statements as required under Item
1112(b)(2) of Regulation AB, if Lender reasonably expects that the principal
amount of the Loan together with any Related Loans as of the cut-off date for
such securitization may, or if the principal
15
amount of the Loan together with any Related Loans as of the cut-off date for
such securitization and at any time during which the Loan and any Related Loans
are included in a securitization does, equal or exceed twenty percent (20%) of
the aggregate principal amount of all mortgage loans included or reasonably
expected to be included, as applicable, in the securitization. Such financial
data or financial statements shall be furnished to Lender (A) within ten (10)
Business Days after notice from Lender in connection with the preparation of
Disclosure Documents for the securitization, (B) not later than thirty (30) days
after the end of each fiscal quarter of Borrower and (C) not later than
seventy-five (75) days after the end of each fiscal year of Borrower for any
period for which a filing pursuant to the Securities Exchange Act of 1934 in
connection with or relating to the securitization (an "EXCHANGE ACT FILING") is
not required. As used herein, "REGULATION AB" shall mean Regulation AB under the
Securities Act of 1933 and the Securities Exchange Act of 1934 (as amended). As
used herein, "DISCLOSURE DOCUMENT" shall mean a prospectus, prospectus
supplement, private placement memorandum, or similar offering memorandum or
offering circular, in each case in preliminary or final form, used to offer
securities in connection with a securitization.
Notwithstanding anything contained herein or in the other Loan Documents to
the contrary, Borrower's compliance with PARAGRAPH 10 of the Senior Mortgage
shall be deemed to satisfy the requirements of this PARAGRAPH 10.
11. HAZARDOUS SUBSTANCES. Borrower covenants and agrees that it (a) shall
not use, generate, store, or allow to be generated, stored or used, any
"HAZARDOUS SUBSTANCES" (hereinafter defined) on the Property, except in the
ordinary course of Borrower's business and in accordance with all "ENVIRONMENTAL
LAWS" (hereinafter defined), (b) shall at all times maintain the Property in
full compliance with all applicable Environmental Laws, including timely
remediating the Property if and when required, and (c) shall cause compliance by
all tenants and sub-tenants on the Property with Borrower's covenants and
agreements contained in this PARAGRAPH 11. Borrower shall promptly notify Lender
in writing of (i) any investigation, claim or other proceeding by any party
caused or threatened in connection with any Hazardous Substances on the
Property, or the failure or alleged failure of the Property to comply with any
applicable Environmental Laws, or (ii) Borrower's discovery of any condition on
or in the vicinity of the Property to fail to comply with applicable
Environmental Laws.
The term "ENVIRONMENTAL LAWS" shall include any present and future federal,
state and/or local law, statute, ordinance, code, rule, regulation, license,
authorization, decision, order, injunction or decree and/or other governmental
directive or requirement, as well as common law, which pertains or relates to
health, safety or the environment (including but not limited to, ground or air
or water or noise pollution or contamination, and underground or above ground
tanks) and shall include, without limitation, the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, as amended ("CERCLA"), the
Resource Conservation and Recovery Act of 1976, as amended ("RCRA"), and any
state or federal lien or superlien or environmental clean-up statutes, and
regulations, rules, guidelines, or standards promulgated pursuant thereto all as
amended from time to time. The term "HAZARDOUS SUBSTANCES" shall include any
substance, whether solid, liquid or gaseous: (i) which is listed, defined or
regulated as a "hazardous substance," "hazardous waste" or "solid waste," or
otherwise classified as hazardous or toxic, in or pursuant to any Environmental
Laws; or (ii) which is or contains asbestos, radon, any polychlorinated
biphenyl, urea formaldehyde foam insulation, explosive or
16
radioactive material, lead paint, or motor fuel or other petroleum hydrocarbons;
or (iii) which causes or poses a threat to cause a contamination or nuisance on
the Property or any adjacent property or a hazard to the environment or to the
health or safety of persons on or about the Property.
Notwithstanding anything contained herein or in the other Loan Documents to
the contrary, Borrower's compliance with PARAGRAPH 11 of the Senior Mortgage
shall be deemed to satisfy the requirements of this PARAGRAPH 11.
12. REPRESENTATIONS AND COVENANTS.
(a) If Borrower is a corporation, it represents that it is a
corporation duly organized, existing and in good standing under the laws of
its state of incorporation, that it is duly qualified and in good standing
under the laws of the state where the Land is located, and that the
execution and delivery of the Loan Documents and the performance of the
obligations thereunder are within Borrower's corporate powers, have been
duly authorized by all necessary action of its board of directors, and do
not contravene the terms of its articles of incorporation or by-laws.
(b) If Borrower is a general or limited partnership or a limited
liability company, it represents that it is duly formed, organized and
existing in the state of its formation, that it is qualified to do business
under the laws of the state where the Land is located, and that the
execution and delivery of the Loan Documents and the performance of the
obligations thereunder do not conflict with any provision of Borrower's
partnership agreement or operating agreement, as applicable, and all other
certificates and agreements governing Borrower, and have been duly
authorized by all necessary action of its partners or members.
(c) Borrower represents that (i) the execution and delivery of the
Loan Documents, the payment of the Indebtedness, and the performance of the
Obligations do not violate any law or conflict with any agreement by which
Borrower is bound, or any court order by which Borrower is bound, (ii) no
consent or approval of any governmental authority or any third party is
required for the execution or delivery of the Loan Documents, the payment
of Indebtedness, and the performance of the Obligations, and (iii) the Loan
Documents are valid and binding agreements, enforceable in accordance with
their terms.
(d) Borrower represents that (i) it is lawfully seized with fee simple
title in the estate hereby conveyed; (ii) it has the right to mortgage,
convey, assign and grant a first security interest in the Property; (iii)
the Property is unencumbered, and Borrower will warrant and defend title to
the Property against all claims and demands, subject to easements and
restrictions listed in a schedule of exceptions to coverage in the title
insurance policy accepted by Lender insuring Lender's interest in the
Property; and (iv) it has no operations, assets or activities other than
the Property.
(e) Borrower represents and covenants that, to the best of Borrower's
knowledge, (i) all material permits, licenses, authorizations, approvals,
and certificates, including
17
certificates of completion and occupancy permits, required by law,
ordinance or regulation have been obtained and are and shall remain in full
force and effect; and (ii) Borrower and the use and occupancy of the Land
and all improvements thereon are and shall remain in compliance with all
laws, regulations and ordinances, including without limitation, all
restrictive covenants of record and zoning and building laws.
(f) Borrower represents that, to the best of its knowledge after
inquiry, except as disclosed on the survey furnished by Borrower to Lender
in connection with the Loan, all of the improvements on the Land lie wholly
within the boundaries of and building line restrictions relating to the
Land and no improvements located on adjoining lands encroach upon the Land
so as to affect the value or marketability of the Property, except those
which are insured against by the title insurance policy accepted by Lender
insuring Lender's interest in the Property.
(g) Borrower represents that, to the best of Borrower's knowledge, the
Property is served by public utilities, water and sewer (or septic
facilities) and services in the surrounding community, including police and
fire protection, public transportation, refuse removal, public education,
and enforcement of safety codes which are adequate in relation to the
premises and location on which the Property is located (taking into account
the Permitted Use of the Property).
(h) Borrower represents that, to the best of Borrower's knowledge, the
Property is serviced by public water and sewer systems which are adequate
in relation of the improvements and location on which the Property is
located. All liquid and solid waste disposal, septic and sewer systems
located on the Property are in good and safe condition and repair and in
compliance with all applicable laws.
(i) Borrower represents that the Property has parking and other
amenities necessary for the operation of the business currently conducted
thereon which are adequate in relation to the premises and location on
which the Property is located.
(j) Borrower represents that the Property is a contiguous parcel and a
separate tax parcel, and there are no delinquent taxes or other outstanding
charges adversely affecting the Property.
(k) Borrower represents that no action, omission, misrepresentation,
negligence, fraud or similar occurrence has taken place on the part of any
person that would reasonably be expected to result in the failure or
impairment of full and timely coverage under any insurance policies
providing coverage for the Property.
(l) None of Borrower, any Guarantor, or any other holder of a direct
or indirect legal or beneficial interest in Borrower is or will be, held,
directly or indirectly, by a "foreign corporation," "foreign partnership,"
"foreign trust," "foreign estate," "foreign person," "affiliate" of a
"foreign person" or a "United States intermediary" of a "foreign person"
within the meaning of IRC Sections 897 and 1445, the Foreign Investments in
Real Property Tax Act of 1980, the International Investment and Trade in
Services
18
Survey Act, the Agricultural Foreign Investment Disclosure Act of 1978, the
regulations promulgated pursuant to such acts or any amendments to such
acts.
(m) None of Borrower or any Guarantor is insolvent, and there has been
no (i) assignment made for the benefit of the creditors of any of them,
(ii) appointment of a receiver for any of them or for the properties of any
of them, or (iii) bankruptcy, reorganization, or liquidation proceeding
instituted by or against any of them.
(n) All information in the application for the Loan submitted by
Borrower to Lender (the "LOAN APPLICATION") and in all financial
statements, rent rolls, reports, certificates and other documents submitted
in connection with the Loan Application or in satisfaction of the terms
thereof, are accurate, complete and correct in all material respects,
provided, however, to the extent that such information was prepared by
someone other than Borrower or an affiliate of Borrower, the foregoing
representation is made to the best of Borrower's knowledge after inquiry.
There has been no material adverse change in the representations made or
information heretofore supplied by or on behalf of Borrower or any
Guarantor in connection with the Loan or the Loan Application as to
Borrower, any Guarantor, or the Property. There has been no adverse change
in any condition, fact, circumstance or event that would make any such
representations or information inaccurate, incomplete or otherwise
misleading.
(o) Except as listed on EXHIBIT C hereto, (i) there is no litigation,
arbitration, condemnation proceeding or other proceeding or governmental
investigation pending or, to Borrower's knowledge, threatened against or
relating to Borrower, any Guarantor, or the Property and there are no
outstanding judgment(s) against or relating to Borrower or any Guarantor,
in each case that may have a material adverse effect on Borrower's
financial condition, the value of the Property or the net operating income
therefrom, (ii) Borrower and Guarantor, each has not (A) had any property
foreclosed upon, (B) given a deed in lieu of foreclosure, or (C) been
involved in any criminal proceedings where Borrower or Guarantor was the
defendant and (iii) Borrower and Guarantor have not defaulted on any loan
or other indebtedness.
(p) The proceeds evidenced by the Note will be used by Borrower solely
and exclusively for proper business purposes and will not be used for the
purchase or carrying of registered equity securities within the purview and
operation of any regulation issued by the Board of Governors of the Federal
Reserve System or for the purpose of releasing or retiring any indebtedness
which was originally incurred for any such purpose.
(q) Borrower represents and covenants that all Leases of space in the
Property existing as of the date hereof are in writing.
(r) Borrower covenants that Lender shall be allowed to advertise in
the various news or financial media that Lender has provided the Loan to
Borrower, but Borrower shall not do so without Lender's prior written
permission.
(s) Borrower represents that Borrower and all Guarantors have filed
all federal, state, county, municipal, and city income and other tax
returns required to have been filed
19
by them and have paid all taxes and related liabilities which have become
due pursuant to such returns or pursuant to any assessments received by
them. Neither Borrower nor any Guarantor knows of any basis for any
additional assessment in respect to any such taxes and related liabilities
for prior years.
(t) Borrower covenants that if at any time the United States of
America, any State thereof or any subdivision of any such State shall
require revenue or other stamps to be affixed to the Note or this Mortgage,
or impose any other tax or charge on the same, Borrower will pay for the
same, with interest and penalties thereon, if any.
(u) As of the date hereof, Borrower represents that Borrower and
Guarantors have no valid offset, defense, counterclaim, abatement or right
to rescission with respect to any of the Loan Documents.
(v) Borrower has dealt with no broker other than X.X. Xxxxxx
("BROKER") and Borrower shall pay all fees and expenses owing to any
mortgage broker and will indemnify, defend and hold Lender harmless from
any and all other brokerage claims related to the Loan. Notwithstanding the
foregoing, Lender may, at its sole election, pay incentive fees or other
compensation (collectively, "INCENTIVES") to Broker. Those Incentives are
intended to encourage Broker to bring loans to Lender, and may be based on
a variety of different factors, including the amount of the Loan, the
Contract Rate (as defined in the Note) the spread, the number of loan
applications or loans referred to Lender, the amount of investigative, due
diligence or other assistance provided by Broker, or other factors. Any
cash payments to Broker are not referenced in the Loan Documents.
(w) Notwithstanding anything to the contrary contained herein, so long
as this Mortgage remains in effect, Borrower shall not bring an action for
partition with respect to such Borrower's ownership interest in the
Property or to compel any sale thereof, and each entity comprising Borrower
hereby expressly waives any and all rights to partition the Property.
(x) Borrower shall give prompt notice to Lender of any default under
any Tenant in Common Agreement ("TIC AGREEMENT").
(y) Borrower shall not modify, amend or terminate the TIC Agreement
without the prior written consent of Lender, which consent may be withheld
in Lender's sole and absolute discretion.
(z) Without limiting the generality of PARAGRAPH 15, there shall never
be more than thirty-five (35) tenants in common (including Borrower) owning
the Property.
(aa) Borrower covenants that it shall not terminate the property
manager under that certain Management Agreement executed by and between
Borrower and Triple Net Properties Realty, Inc. (the "PROPERTY MANAGER") or
modify and/or terminate the Management Agreement or enter into a new
management agreement, without the prior written consent of Lender. In the
event Borrower does terminate the Property Manager with the written consent
of Lender, Lender shall have the right to approve the new
20
management agreement and approve any new property manager named by Borrower
which new property manager must be acceptable to Lender in its sole
discretion. The Management Agreement or any subsequently approved
management agreement shall provide that such property manager may not be
terminated without Lender's prior written consent, and which such new
property management agreement may not be terminated or amended without
Lender's prior written consent. In addition, the Management Agreement shall
provide that all notice from Lender to the Tenants in Common may go to the
Property Manager on behalf of all Tenants in Common.
(bb) At all times during the term of the Loan, Property Manager shall
have all operating authority for the Property.
(cc) Borrower represents and warrants that it has not granted a
security interest in the Replacement Reserve or TI and Leasing Reserve to
any other person or entity.
(dd) With respect to the Borrower hereunder, NNN South Xxxxxxxx
Member, LLC, a Delaware limited liability company, shall at all times prior
to the repayment in full of the Concurrent Subordinate Indebtedness, be the
sole member of such entity.
(ee) With respect to the Borrower hereunder, Triple Net Properties,
LLC, a Virginia limited liability company, shall at all times prior to the
repayment in full of the Concurrent Subordinate Indebtedness, be the
"manager" of such entity.
Except as otherwise provided herein, each and all of the representations,
covenants and obligations of Borrower shall survive the execution and delivery
of the Loan Documents and shall continue in full force and effect until the
Indebtedness is paid in full.
13. LEASE ASSIGNMENT. Borrower acknowledges that, concurrently herewith
Borrower is delivering to Lender, as additional security for the repayment of
the Loan, an Assignment of Leases and Rents (the "ASSIGNMENT") pursuant to which
Borrower has assigned to Lender all of Borrower's right, title and interest in
the Leases and the Rents and income from the Property. All of the provisions of
the Assignment are hereby incorporated herein as if fully set forth at length in
the text of this Mortgage. Borrower agrees to abide by all of the provisions of
the Assignment.
14. SUBORDINATION, NON-DISTURBANCE AND ATTORNMENT AGREEMENTS/ESTOPPEL
CERTIFICATES.
(a) Borrower shall, within 15 days after Lender's request, furnish
Lender with a written statement, duly acknowledged, setting forth the sums
secured by the Loan Documents and any right of set-off, counterclaim or
other defense which exists against such sums and the Obligations.
(b) If the Property includes commercial property, Borrower shall use
best efforts (including institution of litigation) to deliver to Lender
upon request, tenant subordination, non-disturbance and attornment
agreements/estoppel certificates from each commercial tenant at the
Property in form and substance reasonably satisfactory to
21
Lender provided that Borrower shall not be required to deliver such
certificates more frequently than two (2) times in any calendar year.
15. TRANSFERS OF THE PROPERTY OR OWNERSHIP INTERESTS IN BORROWER;
ASSUMPTION; DUE ON SALE/ENCUMBRANCE.
(a) NO SALE/ENCUMBRANCE. Borrower agrees that Borrower shall not,
without the prior written consent of Lender, sell, convey, mortgage, grant,
bargain, encumber, pledge, assign, or otherwise transfer the Property or
any interest therein or any part thereof or permit the Property or any part
thereof to be sold, conveyed, mortgaged, granted, bargained, encumbered,
pledged, assigned, or otherwise transferred except for: (i) pursuant to
Leases of space in the Property to tenants in accordance with the
provisions of PARAGRAPH 7; (ii) in connection with a condemnation action or
other taking; or (iii) the disposal of personalty that is obsolete or no
longer used or useful, so long as such personalty is replaced with similar
items of comparable value and utility and in which Lender has a first lien
and mortgage. In addition, Borrower shall not allow, without the prior
written consent of Lender, any pledge of any ownership interests in
Borrower.
(b) TRANSFERS UNDER SENIOR MORTGAGE. Notwithstanding anything
contained herein or in the other Loan Documents to the contrary, Borrower's
compliance with PARAGRAPH 15 of the Senior Mortgage shall be deemed to
satisfy the requirements of this PARAGRAPH 15, and any Transfers permitted
under PARAGRAPH 15 of the Senior Mortgage shall be deemed to be permitted
hereunder.
16. NO ADDITIONAL LIENS. Borrower covenants not to execute any mortgage,
security agreement, assignment of leases and rents or other agreement granting a
lien (except the liens granted to Lender by the Loan Documents) or, except as
set forth in PARAGRAPH 2 above, take or fail to take any other action which
would result in a lien against the interest of Borrower in the Property without
the prior written consent of Lender.
17. SINGLE ASSET ENTITY. Borrower and any other entity required by Lender
to be a Special Purpose Entity pursuant to the provisions of this PARAGRAPH 17
or otherwise (a "REQUIRED SPE") shall not hold or acquire, directly or
indirectly, any ownership interest (legal or equitable) in any real or personal
property other than the Property, or become a shareholder of or a member or
partner in any entity which acquires any property other than the Property, until
such time as the Indebtedness has been fully repaid and all Obligations are
satisfied. Borrower's and any Required SPE's articles of incorporation,
partnership agreement or operating agreement, as applicable, (w) as to Borrower,
limit its purpose to the acquisition, ownership, operation and disposition of
the Property, and as to any Required SPE, limit its purpose to acting as the
general partner of the limited partnership that owns the Property, or a member
of the limited liability company that owns the Property, or the general partner
of any Required SPE which is a limited partnership, or a member of any Required
SPE which is a limited liability company, (x) prohibit other activities,
mergers, consolidations and asset sales while the Loan is outstanding until such
time as the Indebtedness has been fully repaid, (y) contain separateness
covenants satisfactory to Lender, and (z) provide that such provisions shall not
be amended without the prior written consent of Lender. Borrower covenants that:
22
(a) Borrower is organized solely for the purpose of acquiring,
developing, owning, holding, selling, leasing, transferring, exchanging,
managing and operating the Property, entering into the Loan Documents with
the Lender, refinancing the Property in connection with a permitted
repayment of the Loan, and transacting lawful business that is incident,
necessary and appropriate to accomplish the foregoing; and any Required SPE
is organized solely for the purpose of acting as a general partner of the
limited partnership that owns the Property, or a member of the limited
liability company that owns the Property, or the general partner of any
Required SPE which is a limited partnership, or a member of any Required
SPE which is a limited liability company;
(b) Borrower is not engaged and will not engage in any business
unrelated to the acquisition, development, ownership, management or
operation of the Property, and any Required SPE is not engaged and will not
engage in any business unrelated to (1) acting as general partner of the
limited partnership that owns the Property, (2) acting as a member of the
limited liability company that owns the Property, (3) acting as general
partner of any Required SPE which is a limited partnership, or (4) acting
as a member of any Required SPE which is a limited liability company;
(c) Borrower does not have and will not have any assets other than
those related to the Property and any Required SPE does not have and will
not have any assets other than its partnership interest in the limited
partnership that owns the Property, or its membership interest in the
limited liability company that owns the Property or acts as the general
partner of such limited partnership or managing member of such limited
liability company, as applicable;
(d) neither Borrower nor any Required SPE have engaged, sought or
consented to and will not, without the affirmative vote of all of its
members, managers, directors or general partners, as applicable, engage in,
seek or consent to any dissolution, winding up, liquidation, consolidation,
merger, sale of all or substantially all of its assets, transfer of
partnership or membership interests, or amendment of its limited
partnership agreement, articles of incorporation, bylaws, articles of
organization, certificate of formation, limited liability company agreement
and/or operating agreement (as applicable) with respect to the matters set
forth in this definition (in each case, except as permitted hereunder or
otherwise with Lender's prior written consent);
(e) Any Borrower or Required SPE that is a limited partnership has as
its only general partners, Special Purpose Entities that are corporations,
limited partnerships or limited liability companies;
(f) Any Borrower or Required SPE that is a limited liability company,
if such limited liability company has more than one member, has at least
one manager that is a Special Purpose Entity;
(g) Any Borrower or Required SPE that is a limited liability company,
if such limited liability company has only one member, (1) has been formed
under Delaware law and (2) has either a corporation or other person or
entity that shall become a member of the limited liability company upon the
dissolution or disassociation of the member, and
23
(3) will not cause or allow such entity to take any action related to a
bankruptcy or insolvency proceeding or a voluntary dissolution without the
unanimous affirmative vote of 100% of the managers;
(h) Borrower and any Required SPE (1) have articles of organization, a
certificate of formation, limited liability company agreement and/or an
operating agreement, as applicable (if such entity is a limited liability
company), (2) have a limited partnership agreement (if such entity is a
limited partnership), or (3) have a certificate of incorporation, articles
or bylaws (if such entity is a corporation) that, in each case, provide
that such entity will not, without the affirmative vote of all of its
members, managers, directors, or general partners, as applicable: (i)
dissolve, merge, liquidate or consolidate and, as to any Required SPE,
permit Borrower (as applicable) to dissolve, merge, liquidate, or
consolidate; (ii) except as permitted herein, sell all or substantially all
of its assets or, as to any Required SPE, the assets of the Borrower (as
applicable), (iii) engage in any other business activity, or amend its
organizational documents with respect to the matters set forth in this
definition without the consent of the Lender; or (iv) file a bankruptcy or
insolvency petition or otherwise institute insolvency proceedings with
respect to itself or, as to any Required SPE, with respect to Borrower (as
applicable);
(i) Borrower and any Required SPE have not and shall not, without the
affirmative vote of all of its member, managers, directors or general
partners, as applicable: (i) dissolve, merge, liquidate, or consolidate,
or, as to any Required SPE, permit Borrower (as applicable) to dissolve,
merge, liquidate, or consolidate; (ii) except as permitted herein, sell all
or substantially all of its assets or, as to any Required SPE, the assets
of the Borrower (as applicable), (iii) engage in any other business
activity, or amend its organizational documents, or, with respect to any
Required SPE, amend the organizational documents of Borrower, with respect
to the matters set forth in this definition without the consent of the
Lender; or (iv) file a bankruptcy or insolvency petition or otherwise
institute insolvency proceedings with respect to itself or, as to any
Required SPE, with respect to Borrower;
(j) each of Borrower and any Required SPE is solvent and pays its
debts and liabilities (including, as applicable, shared personnel and
overhead expenses) from its assets as the same become due, and endeavors to
maintain adequate capital for the normal obligations reasonably foreseeable
in a business of its size and character and in light of its contemplated
business operations;
(k) each of Borrower and any Required SPE has not failed and will not
fail to correct any known misunderstanding regarding the separate identity
of such entity;
(l) each of Borrower and any Required SPE will file its own tax
returns; provided, however, that its assets and income may be included in a
consolidated tax return of its parent companies if inclusion on such
consolidated tax return is in compliance with applicable law or, in the
event that such Borrower or Required SPE is a disregarded entity for
federal tax purposes, then its assets and income may be included on the tax
returns filed by its owner;
24
(m) each of Borrower and any Required SPE has maintained and will
maintain its own resolutions and agreements;
(n) each of Borrower and any Required SPE (1) has not commingled and
will not commingle its funds or assets with those of any other person, (2)
will pay its obligations solely with its own assets, and (3) has not
participated and will not participate in any cash management system with
any other person other than Lender;
(o) each of Borrower and any Required SPE has held and will hold its
assets in its own name;
(p) each of Borrower and any Required SPE has conducted and will
conduct its business in its name or in a name franchised or licensed to it
by an entity other than an Affiliate of Borrower;
(q) each of Borrower and any Required SPE has maintained and will
maintain its balance sheets, operating statements and other entity
documents separate from any other Person and has not permitted and will not
permit its assets to be listed as assets on the financial statement of any
other entity except as required or permitted by generally accepted
accounting principles; provided, however, that any such consolidated
financial statement shall contain a note indicating that it maintains
separate balance sheets and operating statements for such Borrower or
Required SPE, respectively, and, if it is the Borrower, for the Property.
(r) each of Borrower and any Required SPE has a sufficient number of
employees in light of its contemplated business operations, which may be
none;
(s) each of Borrower and any Required SPE has observed and will
observe all partnership, corporate or limited liability company
formalities, as applicable;
(t) each of Borrower and any Required SPE has no, and will have no,
Indebtedness (including loans (whether or not such loans are evidenced by a
written agreement) between such Borrower or Required SPE, respectively, and
any Affiliates of Borrower) other than (i) with respect to Borrower, the
Loan and the loan secured by the Senior Mortgage, (ii) with respect to
Borrower or any Required SPE, unsecured liabilities incurred in the
ordinary course of business relating to the routine administration of
Borrower or such Required SPE, respectively, and, with respect to Borrower
only, unsecured liabilities incurred in the ordinary course of business
relating to the ownership and operation of the Property, which liabilities
are owed to unrelated third parties, are not more than sixty (60) days past
the date incurred (unless disputed in accordance with applicable law), are
not evidenced by a note and are paid when due, and which amounts are normal
and reasonable under the circumstances, and shall not exceed two percent
(2%) of the outstanding principal balance of the Loan, and (iii) with
respect to Borrower or any Required SPE, any indebtedness or liabilities
owed to the co-maker of the $6,706,000 note made in connection with the
repayment of the Concurrent Subordinate Indebtedness;
25
(u) each of Borrower and any Required SPE will not guarantee or become
obligated for the debts of any other entity or person or hold out its
credits as being available to satisfy the obligations of others, including
not acquiring obligations or securities of its partners, members or
shareholders (except to the extent that any Required SPE acting as the
general partner of Borrower may become liable for the debts of Borrower,
where Borrower is a limited partnership);
(v) each of Borrower and any Required SPE has not and will not acquire
obligations of its partners, members or shareholders or any other
Affiliate;
(w) each of Borrower and any Required SPE has allocated and will
allocate fairly and reasonably any overhead expenses that are shared with
any Affiliate, including, but not limited to, paying for shared office
space and services performed by any employee of an Affiliate;
(x) each of Borrower and any Required SPE has not maintained or used,
and will not maintain or use, invoices and checks bearing the name of any
other Person, and will use its own stationery for written communications
with all other Persons;
(y) each of Borrower and any Required SPE has not pledged and will not
pledge its assets for the benefit of any other Person except as permitted
or required pursuant to this Mortgage;
(z) each of Borrower and any Required SPE has held itself out and
identified itself and will hold itself out and identify itself as a
separate and distinct entity under its own name or in a name franchised or
licensed to it by an entity other than an Affiliate of Borrower;
(aa) each of Borrower and any Required SPE has maintained and will
maintain its assets in such a manner that it will not be costly or
difficult to segregate, ascertain or identify its individual assets from
those of any other Person;
(bb) each of Borrower and any Required SPE has not made and will not
make loans to any Person or hold evidence of indebtedness issued by any
other person or entity (other than cash and investment-grade securities
issued by an entity that is not an Affiliate of or subject to common
ownership with such entity);
(cc) each of Borrower and any Required SPE has not identified and will
not identify its partners, members or shareholders, or any Affiliate of any
of them, as a division or part of it, and has not identified itself and
shall not identify itself as a division of any other Person (except to the
extent such treatment may be required under the federal income tax law and
similar state law for disregarded entities);
(dd) each of Borrower and any Required SPE has not entered into or
been a party to, and will not enter into or be a party to, any transaction
with its partners, members, shareholders or Affiliates except in the
ordinary course of its business and on terms which are intrinsically fair,
commercially reasonable and are no less favorable to it
26
than would be obtained in a comparable arm's-length transaction with an
unrelated third party;
(ee) each of Borrower and any Required SPE does not and will not have
any of its obligations guaranteed by any Affiliate except as otherwise
required in the Loan Documents; and
(ff) each of Borrower and any Required SPE has complied and will
comply with all of the terms and provisions contained in its organizational
documents. The statement of facts contained in its organizational documents
are true and correct and will remain true and correct.
For purposes of the foregoing:
"AFFILIATE" means any Person controlling, under common control with, or
controlled by the Person in question.
"CONTROL" means the possession, directly or indirectly, of the power to
direct or cause the direction of management, policies or activities of a person
or entity, whether through ownership of voting securities, by contract or
otherwise
"PERSON" shall mean any individual, corporation, partnership, joint
venture, limited liability company, 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.
"SPECIAL PURPOSE ENTITY" shall mean a limited partnership, limited
liability company or corporation which, at all times until the Indebtedness is
paid and all Obligations are satisfied, meets all of the requirements of this
PARAGRAPH 17.
18. BORROWER AND LIEN NOT RELEASED. Without affecting the liability of
Borrower or any other person liable for the payment of the Indebtedness, and
without affecting the lien or charge of this Mortgage as security for the
payment of the Indebtedness, Lender may, from time to time and without notice to
any junior lien holder or holder of any right or other interest in and to the
Property: (a) release any person so liable, (b) waive or modify any provision of
this Mortgage or the other Loan Documents or grant other indulgences, (c)
release all or any part of the Property, (d) take additional security for any
obligation herein mentioned, (e) subordinate the lien or charge of this
Mortgage, (f) consent to the granting of any easement, or (g) consent to any map
or plan of the Property.
19. UNIFORM COMMERCIAL CODE SECURITY AGREEMENT AND FIXTURE FILING. This
Mortgage shall constitute a security agreement and fixture filing pursuant to
the Uniform Commercial Code in effect from time to time for any of the items
specified herein as part of the Property which, under applicable law, may be
subject to a security interest pursuant to the Uniform Commercial Code
(collectively, the "COLLATERAL"), and Borrower hereby, pursuant to the terms of
this Mortgage, grants Lender a security interest in the Collateral. Any
reproduction of this Mortgage or of any other security agreement or financing
statement shall be sufficient as a financing statement. In addition, Borrower
authorizes Lender to file on its behalf any financing
27
statements, as well as extensions, renewals and amendments thereof, and
reproductions of this Mortgage in such form as Lender may require to perfect the
security interest in respect to said items. In addition, Borrower agrees to
execute and deliver to Lender any financing statements, as well as extensions,
renewals and amendments thereof, and reproductions of this Mortgage in such form
as Lender may require to perfect a security interest with respect to said items.
Borrower shall pay all costs of filing such financing statements and any
extensions, renewals, amendments and releases thereof, and shall pay all
reasonable costs and expenses of any record searches for financing statements
Lender may reasonably require. Borrower shall, at Lender's request, at any time
and from time to time, execute and deliver to Lender such financing statements,
amendments and other documents and do such acts as Lender deems necessary in
order to establish and maintain valid, attached and perfected first security
interests in the Collateral in favor of Lender, free and clear of all liens,
claims and rights of third parties whatsoever. Borrower hereby irrevocably
authorizes Lender at any time, and from time to time, to execute and file in any
jurisdiction any initial financing statements and amendments thereto that (a)
indicate the Collateral (i) as all assets of the Borrower or words of similar
effect, regardless of whether any particular asset comprised in the Collateral
falls within the scope of Article 9 of the Uniform Commercial Code of the
jurisdiction wherein such financing statement or amendment is filed, or (ii) as
being of an equal or lesser scope or within greater detail, and (b) contain any
other information required by Section 5 of Article 9 of the Uniform Commercial
Code of the jurisdiction wherein such financing statement or amendment is filed
regarding the sufficiency or filing office acceptance of any financing statement
or amendment, including (i) whether the Borrower is an organization, the type of
organization and any organization identification number issued to the Borrower,
and (ii) in the case of a financing statement filed as a fixture filing or
indicating Collateral as as-extracted collateral or timber to be cut, a
sufficient description of real property to which the Collateral relates.
Borrower agrees to furnish any such information to Lender promptly upon request.
Borrower further ratifies and affirms its authorization for any financing
statements and/or amendments thereto, executed and filed by Lender in any
jurisdiction prior to the date of this Mortgage. In addition, Borrower covenants
to: (w) obtain acknowledgments from any bailee holding Collateral; (x) obtain
consents from any letter of credit issuers; (y) notify and take steps to perfect
Lender's security interest in any Commercial Tort Claims; and (z) take any
action necessary to vest control in Lender of any of Borrower's Electronic
Chattel Paper. If an Event of Default shall occur, Lender, 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, the right to take possession of the Collateral or any part thereof,
and to take such other measures as Lender may deem necessary for the care,
protection and preservation of the Collateral. Upon request or demand of Lender,
Borrower shall, at its expense, assemble the Collateral and make it available to
Lender at a convenient place acceptable to Lender and Borrower. Borrower shall
pay to Lender on demand any and all expenses, including legal expenses and
attorneys' fees, incurred or paid by Lender 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 Lender, with respect
to the Collateral, sent to Borrower in accordance with the provisions hereof at
least ten (10) days prior to such action, shall constitute commercially
reasonable notice to Borrower. Capitalized words and phrases used herein in this
Paragraph 19 and not otherwise defined herein shall have the respective meanings
assigned to such terms in either: (i) Article 9 of the Uniform Commercial Code
as in force in Illinois at the time the financing statement was filed by Lender,
or
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(ii) Article 9 as in force at any relevant time in Illinois, the meaning to
be ascribed thereto with respect to any particular item of property shall be
that under the more encompassing of the two definitions.
THIS MORTGAGE SHALL BE EFFECTIVE AS A FINANCING STATEMENT FILED AS A
FIXTURE FILING IN THE REAL ESTATE RECORDS OF THE COUNTY WHERE THE PROPERTY IS
LOCATED WITH RESPECT TO ALL GOODS CONSTITUTING A PART OF THE PROPERTY WHICH ARE
OR ARE TO BECOME FIXTURES RELATED TO THE PROPERTY. FOR PURPOSES OF THE UNIFORM
COMMERCIAL CODE THE FOLLOWING INFORMATION IS FURNISHED:
a. Name and address of the record owner of the real estate described
in this instrument:
NNN CRAWFORDSVILLE, LLC
0000 X. Xxxxxx Xxxxxx, Xxxxx 000
Xxxxx Xxx, Xxxxxxxxxx 00000
b. Name and address of the debtor (Borrower):
NNN CRAWFORDSVILLE, LLC
0000 X. Xxxxxx Xxxxxx, Xxxxx 000
Xxxxx Xxx, Xxxxxxxxxx 00000
c. Name and address of the secured party (Lender):
LaSalle Bank National Association
000 Xxxxx XxXxxxx Xxxxxx
Xxxxx 0000
Xxxxxxx, Xxxx Xxxxxx, Xxxxxxxx 00000
d. Information concerning the security interest evidenced by this
Mortgage may be obtained from the secured party.
e. This Mortgage covers goods which are or are to become fixtures.
20. EVENTS OF DEFAULT; ACCELERATION OF INDEBTEDNESS; REMEDIES. The
occurrence of any one or more of the following events shall constitute an "EVENT
OF DEFAULT" under this Mortgage:
(a) failure of Borrower to pay (i) within 5 days of the due date, any
of the Indebtedness, including any payment due under the Note or (ii) the
outstanding Indebtedness, including all accrued and unpaid interest, in
full on the Maturity Date; or
(b) failure of Borrower to provide Lender with evidence of renewal of
any insurance required hereunder within 10 days of Lender's request
therefore, or
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(c) failure of Borrower to pay when due any taxes, assessments and
other similar charges levied against the Property, or ground rents, if
applicable, except to the extent sums sufficient to pay such amounts have
been escrowed with Lender as required under PARAGRAPH 3 and Borrower has
given notice of such amounts due to Lender; or
(d) failure of Borrower to strictly comply with PARAGRAPHS 15, 16 AND
17 of this Mortgage; or
(e) failure of Borrower to comply with the financial reporting
requirements of PARAGRAPH 10 within 10 days after notice from Lender; or
(f) a petition under any Chapter of Title 11 of the United States Code
or any similar law or regulation is filed by or against Borrower or any
Guarantor (and in the case of an involuntary petition in bankruptcy, which
petition is not discharged within sixty (60) days of its filing), or a
custodian, receiver or trustee for any of the Property is appointed, or
Borrower or any Guarantor makes an assignment for the benefit of creditors,
or any of them are adjudged insolvent by any state or federal court of
competent jurisdiction, or an attachment or execution is levied against any
of the Property (individually or collectively, a "BANKRUPTCY DEFAULT"),
provided, however, in the event that Borrower is comprised of more than one
Tenants in Common and pursuant to a buy/sell provision in the applicable
TIC Agreement, the defaulting Tenant in Common transfers its interest in
the Property to a non-defaulting Tenant in Common within sixty (60) days,
no Bankruptcy Default shall be deemed to have occurred; or
(g) the occurrence of an "EVENT OF DEFAULT" under and as defined in
any other Loan Document; or
(h) Borrower is in default in the payment of any indebtedness (other
than the Indebtedness) and such default is declared and is not cured within
the time, if any, specified therefor in any agreement governing the same;
or
(i) any statement, report or certificate made or delivered to Lender
by Borrower or any Guarantor is not materially true and complete, or any
representation or warranty made or delivered to Lender by Borrower or any
Guarantor is not materially true and correct; or
(j) seizure or forfeiture of the Property, or any portion thereof, or
Borrower's interest therein, resulting from criminal wrongdoing or other
unlawful action of Borrower, its affiliates, or any tenant in the Property
under any federal, state or local law; or
(k) failure of Borrower, within 30 days after notice and demand, to
satisfy each and every Obligation, other than those set forth in the
subparagraphs above; provided, however, if such failure to satisfy such
Obligation cannot by its nature be cured within 30 days, and if Borrower
commences to cure such failure promptly after written notice thereof and
thereafter diligently pursues the curing thereof (and then in all events
cures such failure within 60 days after the original notice thereof),
Borrower shall not be in default hereunder during such period of diligent
curing;
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(l) the termination of the Property Manager or modification or
termination of the Management Agreement or TIC Agreement without the prior
written consent of the Lender; or
(m) in the event that Borrower is comprised of more than one Tenants
in Common, the filing by a Tenant in Common of an action to partition all
or any portion of the Property or any action to compel any sale thereof
(individually or collectively, a "PARTITION DEFAULT"), provided, however,
if pursuant to a buy/sell provision in the applicable TIC Agreement, the
defaulting Tenant in Common transfers its interest in the Property to a
non-defaulting Tenant in Common within sixty (60) days, no Partition
Default shall be deemed to have occurred.
Upon the occurrence of an Event of Default, the Indebtedness, at the option
of the Lender, shall become immediately due and payable without notice to
Borrower; and Lender shall be entitled to immediately exercise and pursue any or
all of the rights and remedies contained in this Mortgage and any other Loan
Document or otherwise available at law or in equity. Each remedy provided in the
Loan Documents is distinct and cumulative to all other rights or remedies under
the Loan Documents or afforded by law or equity, and may be exercised
concurrently, independently, or successively, in any order whatsoever.
21. ENTRY; FORECLOSURE; REMEDIES. Upon the occurrence of an Event of
Default, (a) Borrower, upon demand of Lender, shall forthwith surrender to
Lender the actual possession, or to the extent permitted by law, Lender itself,
or by such officers or agents as it may appoint, may enter and take possession
of all or any part of the Property, and may exclude Borrower and its agents and
employees wholly therefrom, and may have joint access with Borrower to the
books, papers and accounts of Borrower; and (b) if Borrower shall for any reason
fail to surrender or deliver the Property or any part thereof after such demand
by Lender, Lender may obtain a judgment or decree conferring on Lender the right
to immediate possession or requiring the delivery to Lender of the Property, and
Borrower specifically consents to the entry of such judgment or decree. Upon
every such entering upon or taking of possession, Lender may hold, store, use,
operate, manage and control the Property and conduct the business thereof.
Lender shall have no liability for any loss, damage, injury, cost or expense
resulting from any action or omission by it or its representatives which was
taken or omitted in good faith.
Upon any foreclosure sale, Lender may bid for and purchase the Property and
shall be entitled to apply all or part of the Indebtedness as a credit to the
purchase price.
Upon the occurrence of an Event of Default, then, without notice to or the
consent of Borrower, Lender shall be entitled to immediately exercise or pursue
or cause to be exercised or pursued any or all of the rights and remedies
contained in this Mortgage or in any other Loan Document or otherwise available
at law or in equity including the right to do any one or more of the following:
(a) To enter upon, take possession of and manage the Property for the
purpose of collecting the Rents;
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(b) To require Borrower to hold all Rents collected in trust for the
benefit of Lender;
(c) Dispossess by the usual summary proceedings any Tenant defaulting
in the payment of Rent to Borrower;
(d) Lease the Property or any part thereof;
(e) Repair, restore, and improve the Property;
(f) Apply the Rent after payment of Property expenses as determined by
Lender to Borrower's indebtedness under the Loan Documents;
(g) Apply to any court of competent jurisdiction for specific
performance of this Mortgage, an injunction against the violation hereof
and/or the appointment of a receiver; and
(h) To foreclose this Mortgage by judicial or non-judicial process.
The foregoing remedies shall be cumulative of any other nonjudicial
remedies available to Lender under this Mortgage or the other Loan Documents, at
law or in equity. Proceeding with a request or receiving a judgment for legal
relief shall not be or be deemed to be an election of remedies or bar any
available nonjudicial remedy of Lender.
22. EXPENDITURES AND EXPENSES. Borrower acknowledges and confirms that
Lender shall impose certain administrative processing and/or commitment fees in
connection with (a) the extension, renewal, modification, amendment and
termination of its loans, (b) the release or substitution of collateral
therefor, (c) obtaining certain consents, waivers and approvals with respect to
the Property, or (d) the review of any Lease or proposed Lease or the
preparation or review of any subordination, non-disturbance and attornment
agreement. In addition, in any civil action to foreclose the lien hereof or
otherwise enforce Lender's rights, there shall be allowed and included as
additional Indebtedness in the order or judgment for foreclosure and sale or
other order all expenditures and expenses which may be paid or incurred by or on
behalf of Lender including attorneys' fees, costs and expenses, receiver's fees,
costs and expenses, appraiser's fees, engineers' fees, outlays for documentary
and expert evidence, stenographers' charges, publication costs, and costs (which
may be estimates as to items to be expended after entry of said order or
judgment) of procuring all such abstracts of title, title searches and
examination, title insurance policies, Torrens' Certificates and similar data
and assurances with respect to the title as Lender may deem reasonably necessary
either to prosecute such civil action or to evidence to bidders at any sale
which may be had pursuant to such order or judgment the true condition of the
title to, or the value of, the Property (all said expenditures and expenses are
hereinafter collectively referred to as the "REIMBURSABLE EXPENSES"). All
Reimbursable Expenses, and such costs, expenses and fees as may be incurred by
Lender at any time or times hereafter in the protection of the Property, in
enforcing the Obligations, and/or the maintenance of the lien established by any
of the Loan Documents, including accountants' and attorneys' fees, costs and
expenses in any advice, litigation, or proceeding affecting the Loan Documents
or the Property, whether instituted by Lender, Borrower or any other party, or
in preparation for the commencement or defense of any action or proceeding or
threatened action or proceeding, shall be immediately due and payable to
32
Lender by Borrower, and, to the extent such services relate to the Hazardous
Substances Indemnification Agreement of even date herewith from Borrower and
Guarantors in favor of Lender, by Borrower and Guarantors, with interest thereon
at the Default Rate set forth in the Note, and shall be secured by the Loan
Documents. In addition, Borrower shall be liable for the payment of all
commissions and brokerage fees relating to the Loan.
23. APPLICATION OF PROCEEDS OF FORECLOSURE SALE. The proceeds of any
foreclosure sale of the Property shall be distributed and applied in the order
of priority set forth in the Note with the excess, if any, being applied to any
parties entitled thereto as their rights may appear.
24. APPOINTMENT OF RECEIVER OR MORTGAGEE IN POSSESSION. If an Event of
Default is continuing or if Lender shall have accelerated the Indebtedness,
Lender, upon application to a court of competent jurisdiction, shall be entitled
as a matter of strict right, without notice, and without regard to the occupancy
or value of any security for the Indebtedness, without any showing of fraud or
mismanagement on the part of Borrower or the insolvency of any party bound for
its payment, without regard to the existence of a declaration that the
Indebtedness, or any portion thereof, is immediately due and payable, and
without regard to the filing of a notice of default, to the appointment of a
receiver or the immediate appointment of Lender to take possession of and to
operate the Property, and to collect and apply the rents, issues, profits and
revenues thereof, and Borrower consents to such appointment.
25. FORBEARANCE BY LENDER NOT A WAIVER. Any forbearance by Lender in
exercising any right or remedy under any of the Loan Documents, or otherwise
afforded by applicable law, shall not be a waiver of or preclude the exercise of
any right or remedy. Lender's acceptance of payment of any sum secured by any of
the Loan Documents after the due date of such payment shall not be a waiver of
Lender's right to either require prompt payment when due of all other sums so
secured or to declare a default for failure to make prompt payment. The
procurement of insurance or the payment of taxes or other liens or charges by
Lender shall not be a waiver of Lender's right to accelerate the maturity of the
Indebtedness, nor shall Lender's receipt of any awards, proceeds or damages
under PARAGRAPH 5 hereof operate to cure or waive Borrower's default in payment
or sums secured by any of the Loan Documents. With respect to all Loan
Documents, only waivers made in writing by Lender shall be effective against
Lender.
26. WAIVER OF STATUTE OF LIMITATIONS. Borrower hereby waives the right to
assert any statute of limitations as a bar to the enforcement of the lien
created by any of the Loan Documents or to any action brought to enforce the
Note or any other obligation secured by any of the Loan Documents.
27. WAIVER OF HOMESTEAD AND REDEMPTION. Borrower hereby waives all rights
of homestead exemption in the Property. Borrower hereby waives all right of
redemption on behalf of Borrower and on behalf of all other persons acquiring
any interest or title in the Property subsequent to the date of this Mortgage,
except decree or judgment creditors of Borrower.
28. JURY TRIAL WAIVER. BORROWER AND LENDER BY ITS ACCEPTANCE OF THIS
MORTGAGE, EACH HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ITS
RESPECTIVE RIGHT TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING BASED UPON, OR
RELATED TO, THE SUBJECT MATTER OF THE LOAN
33
DOCUMENTS AND THE BUSINESS RELATIONSHIP THAT IS BEING ESTABLISHED. THIS WAIVER
IS KNOWINGLY, INTENTIONALLY AND VOLUNTARILY MADE BY BORROWER AND BY LENDER, AND
BORROWER ACKNOWLEDGES ON BEHALF OF ITSELF AND ITS PARTNERS, MEMBERS,
SHAREHOLDERS, AS THE CASE MAY BE, THAT NEITHER LENDER NOR ANY PERSON ACTING ON
BEHALF OF LENDER HAS MADE ANY REPRESENTATIONS OF FACT TO INDUCE THIS WAIVER OF
TRIAL BY JURY OR HAS TAKEN ANY ACTIONS WHICH IN ANY WAY MODIFY OR NULLIFY ITS
EFFECT. BORROWER AND LENDER ACKNOWLEDGE THAT THIS WAIVER IS A MATERIAL
INDUCEMENT TO ENTER INTO A BUSINESS RELATIONSHIP, THAT BORROWER AND LENDER HAVE
ALREADY RELIED ON THIS WAIVER IN ENTERING INTO THE LOAN DOCUMENTS AND THAT EACH
OF THEM WILL CONTINUE TO RELY ON THIS WAIVER IN THEIR RELATED FUTURE DEALINGS.
BORROWER AND LENDER FURTHER ACKNOWLEDGE THAT THEY HAVE BEEN REPRESENTED (OR HAVE
HAD THE OPPORTUNITY TO BE REPRESENTED) IN THE SIGNING OF THE LOAN DOCUMENTS AND
IN THE MAKING OF THIS WAIVER BY INDEPENDENT LEGAL COUNSEL, SELECTED OF THEIR OWN
FREE WILL AND THAT THEY HAVE HAD THE OPPORTUNITY TO DISCUSS THIS WAIVER WITH
COUNSEL.
29. INDEMNIFICATION. In addition to any other indemnifications provided in
any of the other Loan Documents, Borrower shall, at its sole cost and expense,
protect, defend, indemnify, release and save harmless Lender or any person or
entity who is or will have been involved in the servicing of this Loan, as well
as the respective affiliates, subsidiaries, persons controlling or under common
control, directors, officers, shareholders, members, partners, employees,
agents, servants, representatives, contractors, subcontractors, participants,
successors and assigns of any and all of the foregoing (collectively, the
"INDEMNIFIED PARTIES"), from and against all liabilities, obligations, claims,
demands, damages, penalties, causes of action, losses, fines, costs and expenses
(including without limitation reasonable attorneys' fees and expenses), imposed
upon or incurred by or asserted against any of the Indemnified Parties and
directly or indirectly arising out of or in any way relating to any one or more
of the following: (a) ownership of this Mortgage, the Property or any interest
therein or receipt of any Rents; (b) any amendment to, or restructuring of, the
Indebtedness, the Note, this Mortgage or any other Loan Documents; (c) any and
all lawful action that may be taken by Lender in connection with the enforcement
of the provisions of this Mortgage or the Note or any other Loan Documents,
whether or not suit is filed in connection with same, or in connection with
Borrower or any Guarantor becoming a party to a voluntary or involuntary federal
or state bankruptcy, insolvency or similar proceeding; (d) any accident, injury
to or death of persons or loss of or damage to property occurring in, on or
about the Property or any part thereof or on the adjoining sidewalks, curbs,
adjacent property or adjacent parking areas, streets or ways; (e) any failure on
the part of Borrower to perform or comply with any of the terms of this
Mortgage; (f) performance of any labor or services or the furnishing of any
materials or other property in respect of the Property or any part thereof; (g)
any failure of the Property to comply with any laws or ordinances affecting or
which may be interpreted to affect the Property; or (h) any representation or
warranty made in the Note, this Mortgage or the other Loan Documents being false
or misleading in any respect as of the date such representation or warranty was
made. The obligations and liabilities of Borrower under this PARAGRAPH 29 (A)
shall survive for a period of two (2) years following any release of this
Mortgage executed by Lender and satisfaction of the Loan evidenced by the Loan
Documents, and (B) shall survive the transfer or assignment of this Mortgage,
the entry of a judgment of foreclosure, sale of the Property by
34
nonjudicial foreclosure sale, or delivery of a deed in lieu of foreclosure
(including, without limitation, any transfer by Borrower of any of its rights,
title and interest in and to the Property to any party, whether or not
affiliated with Borrower); provided, however, that any act or omission pursuant
to subparagraphs (a) through (h) above was taken or occurred prior to the
payment in full of the Indebtedness.
30. DUTY TO DEFEND. Upon written request by an Indemnified Party, Borrower
shall defend such Indemnified Party (if requested by an Indemnified Party, in
the name of the Indemnified Party) by attorneys and other professionals approved
by the Indemnified Parties. Notwithstanding the foregoing, any Indemnified
Parties may, in their sole and absolute discretion, engage their own attorneys
and other professionals to defend or assist them, and, at the option of the
Indemnified Parties, their attorneys shall control the resolution of the claim
or proceeding. Upon demand, Borrower shall pay or, in the sole and absolute
discretion of the Indemnified Parties, reimburse, the Indemnified Parties for
the payment of reasonable fees and disbursements of attorneys, engineers, and
other professionals in connection therewith. Any amounts payable to any of the
Indemnified Parties by reason of the application of PARAGRAPH 29 or this
paragraph shall be secured by this Mortgage and shall become immediately due and
payable and shall bear interest at the Default Rate specified in the Note from
the date loss or damage is sustained by any of the Indemnified Parties until
paid.
31. ERISA. Borrower covenants and agrees that during the term of the Loan,
(a) Borrower is not a and will not become a "party in interest" as defined in
Section 3(14) of the Employee Retirement Income Security Act of 1974, as
amended, with respect to any employee benefit plan, (b) Borrower will take no
action that would cause it to (i) become an "employee benefit plan" or (ii)
otherwise be considered "plan assets" as defined in 29 C.F.R. Section
2510.3-101, or "assets of a governmental plan" subject to regulation under the
state statutes, and (c) Borrower will not sell, assign or transfer the Property,
or any portion thereof or interest therein, to any transferee that does not
execute and deliver to Lender its written assumption of the obligations of this
covenant. Borrower further covenants and agrees to protect, defend, indemnify
and hold Lender harmless from and against all loss, cost, damage and expense
(including without limitation, all attorneys' fees and excise taxes, costs of
correcting any prohibited transaction or obtaining an appropriate exemption)
that Lender may incur as a result of Borrower's breach of this covenant. This
covenant and indemnity shall survive the extinguishment of the lien of this
Mortgage by foreclosure or action in lieu thereof; furthermore, the foregoing
indemnity shall supersede any limitations on Borrower's liability under any of
the Loan Documents.
32. NO ORAL CHANGE. This Mortgage may not be modified, amended, waived,
extended, changed, discharged or terminated orally or by any act or failure to
act on the part of Borrower or Lender, but only by an agreement in writing
signed by the party against whom enforcement of any modification, amendment,
waiver, extension, change, discharge or termination is sought.
33. NOTICE. Except for any notice required under applicable law to be given
in another manner, (a) any notice to Borrower provided for in the Loan Documents
shall be given by mailing such notice by Federal Express or any other nationally
recognized overnight carrier addressed to Borrower at Borrower's address stated
above or at such other address as Borrower may designate by notice to Lender as
provided herein, and (b) any notice to Lender shall be given by Federal Express
or any other nationally recognized overnight carrier to Lender's address stated
above or to
35
such other address as Lender may designate by notice to Borrower as
provided herein. Any notice provided for in the Loan Documents shall be deemed
to have been given to Borrower or Lender on the first BUSINESS DAY following
such mailing in the manner designated herein. In addition, notice may also be
given by first class certified mail, return receipt requested, postage prepaid,
addressed to the address set forth above for the party to whom such notice is to
be given and such notice given in this manner shall be deemed received the third
day after such notice was deposited with the United States Postal Service.
34. SUCCESSORS AND ASSIGNS BOUND; JOINT AND SEVERAL LIABILITY; AGENTS;
CAPTIONS. The covenants and agreements contained in the Loan Documents shall
bind, and the rights thereunder shall inure to, the respective successors and
assigns of Lender and Borrower, subject to the provisions of PARAGRAPH 15
hereof. All representations, warranties, covenants and agreements of Borrower
contained in the Loan Documents shall be joint and several. In exercising any
rights under the Loan Documents or taking any actions provided for therein,
Lender may act through its employees, agents, or independent contractors as
authorized by Lender. The captions and headings of the paragraphs of this
Mortgage are for convenience only and are not to be used to interpret or define
the provisions hereof.
35. GOVERNING LAW; JURISDICTION; SEVERABILITY. THIS MORTGAGE SHALL BE
GOVERNED BY, CONSTRUED, APPLIED AND ENFORCED IN ACCORDANCE WITH THE INTERNAL
LAWS OF THE STATE OF ILLINOIS, WITHOUT REGARD TO CONFLICTS OF LAW PRINCIPLES,
AND BORROWER AGREES THAT THE PROPER VENUE FOR ANY MATTERS IN CONNECTION HEREWITH
SHALL BE IN THE STATE OR FEDERAL COURTS LOCATED IN CHICAGO, ILLINOIS, AS LENDER
MAY ELECT AND BORROWER HEREBY SUBMITS ITSELF TO THE JURISDICTION OF SUCH COURTS
FOR THE PURPOSE OF ADJUDICATING ANY MATTERS RELATED TO THE LOAN, PROVIDED,
HOWEVER, THAT TO THE EXTENT THE MANDATORY PROVISIONS OF THE LAWS OF ANOTHER
JURISDICTION RELATING TO (i) THE PERFECTION OR THE EFFECT OF PERFECTION OR
NON-PERFECTION OF THE SECURITY INTERESTS IN ANY OF THE PROPERTY, (ii) THE LIEN,
ENCUMBRANCE OR OTHER INTEREST IN THE PROPERTY GRANTED OR CONVEYED BY THIS
MORTGAGE, OR (iii) THE AVAILABILITY OF AND PROCEDURES RELATING TO ANY REMEDY
HEREUNDER OR RELATED TO THIS MORTGAGE ARE REQUIRED TO BE GOVERNED BY SUCH OTHER
JURISDICTION'S LAWS, SUCH OTHER LAWS SHALL BE DEEMED TO GOVERN AND CONTROL. THE
INVALIDITY, ILLEGALITY OR UNENFORCEABILITY OF ANY PROVISION OF THIS MORTGAGE OR
THE LOAN DOCUMENTS SHALL NOT AFFECT OR IMPAIR THE VALIDITY, LEGALITY OR
ENFORCEABILITY OF THE REMAINDER OF THIS MORTGAGE AND THE OTHER LOAN DOCUMENTS,
AND TO THIS END, THE PROVISIONS OF THIS MORTGAGE AND THE OTHER LOAN DOCUMENTS
ARE DECLARED TO BE SEVERABLE.
36. RELEASE. Upon payment of all sums secured by this Mortgage, Lender
shall release this Mortgage. Borrower shall pay Lender's reasonable costs
incurred in releasing this Mortgage and any financing statements related hereto.
37. COVENANTS RUNNING WITH THE LAND. All covenants, conditions, warranties,
representations and other obligations contained in this Mortgage and the other
Loan Documents
36
are intended by Borrower and Lender to be, and shall be construed as, covenants
running with the Property until the lien of this Mortgage has been fully
released by Lender.
38. TERMS. As used in the Loan Documents, (i) "BUSINESS DAY" means a day
when banks are not required or authorized to be closed in Chicago, Illinois or
New York, New York; and (ii) the words "include" and "including" shall mean
"including but not limited to" unless specifically set forth to the contrary.
39. LOSS OF NOTE. Upon notice from Lender of the loss, theft, or
destruction of the Note and upon receipt of indemnity reasonably satisfactory to
Borrower from Lender, or in the case of mutilation of the Note, upon surrender
of the mutilated Note, Borrower shall make and deliver a new note of like tenor
in lieu of the then to be superseded Note.
40. CHANGES IN THE LAWS REGARDING TAXATION. If any law is amended, enacted
or adopted after the date of this Mortgage which deducts the Indebtedness from
the value of the Property for the purpose of taxation or which imposes a tax,
either directly or indirectly, on the Indebtedness of Lender's interest in the
Property, Borrower will pay such tax, with interest and penalties thereon, if
any. In the event Lender is advised by counsel chosen by it that the payment of
such tax or interest and penalties by Borrower would be unlawful or taxable to
Lender or unenforceable or provide the basis for a defense of usury, then in any
such event, Lender shall have the option, by written notice of not less than
forty-five (45) days, to declare the Indebtedness immediately due and payable.
41. INTENTIONALLY OMITTED
42. DISCLOSURE OF INFORMATION. Lender shall have the right (but shall be
under no obligation) to make available to any party for the purpose of granting
participation in or selling, transferring, assigning or conveying all or any
part of the Loan (including any governmental agency or authority and any
prospective bidder at any foreclosure sale of the Property) any and all
information which Lender may have with respect to the Property, Lease(s),
Borrower and any Guarantor, whether provided by Borrower, any Guarantor or any
third party or obtained as a result of any environmental assessments. Borrower
and each Guarantor agree that Lender shall have no liability whatsoever as a
result of delivering any such information to any third party, and Borrower and
each Guarantor, on behalf of themselves and their successors and assigns, hereby
release and discharge Lender from any and all liability, claims, damages, or
causes of action, arising out of, connected with or incidental to the delivery
of any such information to any third party.
43. SALE OF LOAN; SECURITIZATION. Lender may, at any time and without the
consent of Borrower or any Guarantor, grant participation in or sell, transfer,
securitize, assign and convey all or any portion of its right, title and
interest in and to the Loan, the servicing of the Loan, this Mortgage, the Note
and the other Loan Documents, any guaranties given in connection with the Loan
and any collateral given to secure the Loan. Borrower covenants to cooperate
with Lender's efforts in the sale, transfer or securitization of the Loan; such
cooperation includes Borrower's obligations to (a) make non-material
modifications of the Loan Documents (such modifications shall not have a
material adverse impact on Borrower and accordingly such modifications shall not
(i) increase the amount of the Indebtedness or (ii) change the Contract Rate [as
defined in the Note]), (b) provide additional information regarding Borrower's
financial statements, (c) deliver updated information regarding Borrower and the
Property, (d) cooperate with all third parties,
37
including, but not limited to, rating agencies and potential investors to
facilitate the rating and securitization of the Loan, (e) review Lender's
securitization offering materials to the extent such materials relate to
Borrower, the Property or the Loan, (f) respond to any inquiries of Lender or
other party relating thereto and (g) deliver an estoppel certificate. Borrower
agrees to represent and warrant the absence of misstatements and/or omissions in
the information relating to Borrower, the Property and the Loan that is
contained in the offering materials and which has been furnished to or approved
by Borrower. Borrower shall not be liable for Lender's post-closing costs
incurred pursuant to any securitization of the Loan by Lender.
Any such sale, transfer, participation, securitization of all or any portion of
the Note, this Mortgage and/or other Loan Documentation including, without any
limitation, with respect to any whole loan sale or securitization of the Loan
shall be deemed a "SECONDARY MARKET TRANSACTION".
44. ACTIONS AND PROCEEDINGS. Lender has the right to appear in and defend
any action or proceeding brought with respect to the Property and to bring any
action or proceeding, in the name and on behalf of Borrower, which Lender, in
its discretion, decides should be brought to protect their respective interests
in the Property. Lender shall, at its option, be subrogated to the lien of any
mortgage or other security instrument discharged in whole or in part by the
Indebtedness, and any such subrogation rights shall constitute additional
security for the payment of the Indebtedness.
45. NO THIRD PARTY BENEFICIARIES. The provisions of this Mortgage and the
other Loan Documents are for the benefit of Borrower and Lender and shall not
inure to the benefit of any third party (other than any successor or assignee of
Lender). This Mortgage and the other Loan Documents shall not be construed as
creating any rights, claims or causes of action against Lender or any of its
officers, directors, agents or employees in favor of any party other than
Borrower including but not limited to any claims to any sums held in the
Replacement Reserve or the TI and Leasing Reserve.
46. EXHIBITS AND RIDERS. The following Exhibits and Riders (which may
contain additional representations, warranties, and covenants) are attached to
this Mortgage and hereby made a part of this Mortgage: EXHIBIT A (legal
description for Land) EXHIBIT B (definition of Personal Property), and EXHIBIT C
(pending and threatened litigation).
47. CUSTOMER IDENTIFICATION - USA PATRIOT ACT NOTICE; OFAC. Lender hereby
notifies Borrower that pursuant to the requirements of the USA Patriot Act
(Title III of Pub. L. 107-56, signed into law October 26, 2001), as amended (the
"ACT"), and Lender's policies and practices, Lender is required to obtain,
verify and record certain information and documentation that identifies
Borrower, which information includes the name and address of Borrower and such
other information that will allow Lender to identify Borrower in accordance with
the Act. Borrower represents and covenants that it is not and will not become a
person (individually, a "PROHIBITED PERSON" and collectively "PROHIBITED
PERSONS") listed on the Specially Designated Nationals and Blocked Persons List
maintained by the Office of Foreign Asset Control, U.S. Department of the
Treasury (the "OFAC LIST") or otherwise subject to any other prohibitions or
restriction imposed by laws, rules, regulations or executive orders, including
Executive Order No. 13224, administered by OFAC (collectively the "OFAC RULES").
Borrower represents and covenants
38
that it also (a) is not and will not become owned or controlled by a Prohibited
Person, (b) is not acting and will not act for or on behalf of a Prohibited
Person, (c) is not otherwise associated with and will not become associated with
a Prohibited Person, (d) is not providing and will not provide any material,
financial or technological support for or financial or other service to or in
support of acts of terrorism or a Prohibited Person. Borrower will not transfer
any interest in Borrower to or enter into a Lease with a Prohibited Person.
Borrower shall immediately notify Lender if Borrower has knowledge that any
Guarantor or any member or beneficial owner of Borrower or any Guarantor is or
becomes a Prohibited Person or (i) is indicted on or (ii) arraigned and held
over on charges involving money laundering or predicate crimes to money
laundering. Borrower will not enter into any Lease or any other transaction or
undertake any activities related to the Loan in violation of the federal Bank
Secrecy Act, as amended ("BSA"), 31 U.S.C. Section 5311, et seq. or any federal
or state laws, rules, regulations or executive orders, including, but not
limited to, 18 U.S.C. Sections 1956, 1957 and 1960, prohibiting money laundering
and terrorist financing (collectively "ANTI-MONEY LAUNDERING LAWS"). Borrower
shall (A) not use or permit the use of any proceeds of the Loan in any way that
will violate either the OFAC Rules or Anti-Money Laundering Laws, (B) comply and
cause all of its subsidiaries to comply with applicable OFAC Rules and
Anti-Money Laundering Laws, (C) provide information as Lender may require from
time to time to permit Lender to satisfy its obligations under the OFAC Rules
and/or the Anti-Money Laundering Laws and (D) not engage in or conspire to
engage in any transaction that evades or avoids, or has the purpose of evading
or avoiding, or attempts to violate, any of the foregoing. Borrower shall
immediately notify Lender if any Tenant becomes a Prohibited Person or (1) is
convicted of, (2) pleads nolo contendere to, (3) is indicted on, or (4) is
arraigned and held over on charges involving money laundering or predicate
crimes to money laundering.
48. COUNTERPARTS. This Mortgage may be executed in any number of
counterparts each of which shall be deemed to be an original but all of which
when taken together shall constitute one agreement.
49. DISCLAIMERS. The relationship of Borrower and Lender under this
Mortgage and the other Loan Documents is, and shall at all times remain, solely
that of borrower and lender; and Lender neither undertakes nor assumes any
responsibility or duty to Borrower or to any third party with respect to the
Property. Notwithstanding any other provisions of this Mortgage and the other
Loan Documents: (i) Lender is not, and shall not be construed to be, a partner,
joint venturer, member, alter ego, manager, controlling person or other business
associate or participant of any kind of Borrower and Lender, and Lender does not
intend to ever assume such status; (ii) Lender does not intend to ever assume
any responsibility to any person for the quality, suitability, safety or
condition of the Property; and (iii) Lender shall not be deemed responsible for
or a participant in any acts, omissions or decisions of Borrower.
Lender shall not be directly or indirectly liable or responsible for any
loss, claim, cause of action, liability, indebtedness, damage or injury of any
kind or character to any person or property arising from any construction on, or
occupancy or use of, the Property, whether caused by or arising from: (i) any
defect in any building, structure, grading, fill, landscaping, or other
improvements thereon or in any on-site or off-site improvement or other facility
therein or thereon; (ii) any act or omission of Borrower or any of Borrower's
agents, employees, independent contractors, licensees or invitees; (iii) any
accident in or on the Property or any fire, flood, or other casualty or hazard
thereon; (iv) the failure of Borrower or any of Borrower's
39
licensees, employees, invitees, agents, independent contractors, or other
representatives to maintain the Property in a safe condition; or (v) any
nuisance made or suffered on any part of the Property.
50. INTENTIONALLY DELETED.
51. INTENTIONALLY DELETED.
52. SUBORDINATION TO SENIOR MORTGAGE. The Note evidences the "CONCURRENT
SUBORDINATE INDEBTEDNESS" as that term is defined in the Senior Mortgage.
Notwithstanding anything to the contrary herein or in the Note, in the event of
a conflict between the terms hereof and the terms of the Senior Mortgage, the
terms of the Senior Mortgage shall govern and control, and compliance with the
terms of the Senior Mortgage (other than payment of the applicable debt) shall
be deemed to constitute compliance with the corresponding terms hereof. The
Mortgage shall be subject and subordinate, in all respects, to the Senior
Mortgage.
STATE SPECIFIC PROVISIONS
53. INCONSISTENCIES. In the event of any conflicts between the terms and
conditions of Paragraph 52 and the remainder of this Mortgage, the terms and
conditions of Paragraph 52 shall govern, but only to the extent of any such
conflicts.
[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK;
SIGNATURE PAGES FOLLOW]
40
IN WITNESS WHEREOF, Borrower has executed this Mortgage or has caused the
same to be executed by its representatives thereunto duly authorized.
BORROWER:
NNN Crawfordsville, LLC, a Delaware
limited liability company
By: Triple Net Properties, LLC, a
Virginia limited liability company,
its manager
By: /s/ Xxxxxxx Xxxxxx
------------------------------------
Name: Xxxxxxx Xxxxxx
Its: Executive Vice President
STATE OF CALIFORNIA )
)SS.
COUNTY OF ORANGE )
On September 7, 2006, before me, X. Xx, Notary Public
(Name, Title of Officer, e.g., "Xxxx Xxx,
Notary Public")
personally appeared Xxxxxxx Xxxxxx
(Name(s) of Signer(s))
[X] personally known to me - OR -
[ ] proved to me on the basis of satisfactory evidence
to be the person(s) whose name(s) is/are subscribed to the within instrument and
acknowledged to me that he/she/they executed the same in his/her/their
authorized capacity/ies, and that by his/her/their signature(s) on the
instrument the person(s), or the entity upon behalf of which person(s) acted,
executed the instrument.
Witness my hand and official seal.
/s/ X. Xx
----------------------------------------
(Signature of Notary)
(SEAL)
My Commission expires:
September 30, 2009
C-1
