EXHIBIT 10.23
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.
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
MORTGAGE, SECURITY AGREEMENT AND FIXTURE FILING
TABLE OF CONTENTS
PARAGRAPH PAGE
--------- ----
1. PAYMENT OF INDEBTEDNESS; PERFORMANCE OF OBLIGATIONS.................. 3
2. TAXES AND OTHER OBLIGATIONS.......................................... 3
3. RESERVES FOR TAXES/GROUND RENTS/INSURANCE/REPLACEMENT RESERVE/TENANT
IMPROVEMENTS AND LEASING RESERVE..................................... 3
4. USE OF PROPERTY...................................................... 9
5. INSURANCE AND CONDEMNATION........................................... 9
6. PRESERVATION AND MAINTENANCE OF PROPERTY............................. 13
7. PROTECTION OF LENDER'S SECURITY; LEASES.............................. 14
8. INSPECTION........................................................... 15
9. BOOKS AND RECORDS.................................................... 16
10. FINANCIAL STATEMENTS................................................. 16
11. HAZARDOUS SUBSTANCES................................................. 17
12. REPRESENTATIONS AND COVENANTS........................................ 18
13. LEASE ASSIGNMENT..................................................... 22
14. SUBORDINATION, NON-DISTURBANCE AND ATTORNMENT AGREEMENTS/ESTOPPEL
CERTIFICATES......................................................... 23
15. TRANSFERS OF THE PROPERTY OR OWNERSHIP INTERESTS IN BORROWER;
ASSUMPTION; DUE ON SALE/ENCUMBRANCE.................................. 23
16. NO ADDITIONAL LIENS.................................................. 31
17. SINGLE ASSET ENTITY.................................................. 31
18. BORROWER AND LIEN NOT RELEASED....................................... 36
19. UNIFORM COMMERCIAL CODE SECURITY AGREEMENT AND FIXTURE FILING........ 37
20. EVENTS OF DEFAULT; ACCELERATION OF INDEBTEDNESS; REMEDIES............ 39
i
21. ENTRY; FORECLOSURE; REMEDIES......................................... 40
22. EXPENDITURES AND EXPENSES............................................ 41
23. APPLICATION OF PROCEEDS OF FORECLOSURE SALE.......................... 42
24. APPOINTMENT OF RECEIVER OR MORTGAGEE IN POSSESSION................... 42
25. FORBEARANCE BY LENDER NOT A WAIVER................................... 42
26. WAIVER OF STATUTE OF LIMITATIONS..................................... 43
27. WAIVER OF HOMESTEAD AND REDEMPTION................................... 43
28. JURY TRIAL WAIVER.................................................... 43
29. INDEMNIFICATION...................................................... 43
30. DUTY TO DEFEND....................................................... 44
31. ERISA................................................................ 44
32. NO ORAL CHANGE....................................................... 45
33. NOTICE............................................................... 45
34. SUCCESSORS AND ASSIGNS BOUND; JOINT AND SEVERAL LIABILITY; AGENTS;
CAPTIONS............................................................. 45
35. GOVERNING LAW; JURISDICTION; SEVERABILITY............................ 45
36. RELEASE.............................................................. 46
37. COVENANTS RUNNING WITH THE LAND...................................... 46
38. TERMS................................................................ 46
39. LOSS OF NOTE......................................................... 46
40. CHANGES IN THE LAWS REGARDING TAXATION............................... 46
41. EXCULPATION.......................................................... 46
42. DISCLOSURE OF INFORMATION............................................ 46
43. SALE OF LOAN; SECURITIZATION......................................... 47
44. ACTIONS AND PROCEEDINGS.............................................. 47
45. NO THIRD PARTY BENEFICIARIES......................................... 47
ii
46. EXHIBITS AND RIDERS.................................................. 48
47. CUSTOMER IDENTIFICATION - USA PATRIOT ACT NOTICE; OFAC............... 48
48. COUNTERPARTS......................................................... 48
49. DISCLAIMERS.......................................................... 48
50. INTENTIONALLY DELETED................................................ 49
51. INTENTIONALLY DELETED................................................ 49
52. CONCURRENT SUBORDINATE INDEBTEDNESS.................................. 49
53. INCONSISTENCIES...................................................... 49
EXHIBIT A - Legal Description
EXHIBIT B - Personal Property Description
EXHIBIT C - Pending and Threatened Litigation
iii
DEFINED TERMS
As used in this Mortgage, the following terms shall have the following
meanings assigned to them:
ATHEN'S SURGERY AND IMAGING That certain lease between Sisters of St.
CENTER LEASE Xxxxxxx Health Services, Inc. (successor in
interest to St. Xxxxxxx Hospital and Health
Care Center, Inc.) ("St. Xxxxxxx"), as tenant
and Borrower (or its predecessor in interest),
as landlord dated July 7, 2000 (as amended
through the date hereof) for premises located
at 0000 Xxxxxxxxx Xxxx, Xxxxxxxxxxxxxx, Xxxxxxx
consisting of approximately 15,000 gross square
feet (the "Athen's Surgery and Imaging Center
Space") which office building is commonly
called The Medical Pavilion.
ATHEN'S SURGERY AND IMAGING $18,333.34, subject to the provisions of
CENTER RESERVE MONTHLY PAYMENT subparagraph 3(f) of this Mortgage.
ATHEN'S SURGERY AND IMAGING St. Xxxxxxx either terminates or fails to renew
CENTER TRIGGER EVENT the Athen's Surgery and Imaging Center Lease on
or before August 31, 2015
ATHEN'S SURGERY AND IMAGING A lease executed by a replacement tenant or
CENTER REPLACEMENT LEASE tenants acceptable to Lender covering all of
the Athen's Surgery and Imaging Center Space
(i) at a net annual rent which equals or
exceeds $367,000 and (ii) for a term of not
less than five (5) years.
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
iv
LENDER'S ADDRESS 000 X. XxXxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Attention: Real Estate Capital Markets
Re: Crawfordsville Medical Office
NOTE That Promissory Note of even date herewith made
by Borrower to the order of Lender in the
Principal Amount, 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 $4,264,000.00
MATURITY DATE October 1, 2016
LAND The property described on EXHIBIT A to this
Mortgage
PERSONAL PROPERTY The property described on EXHIBIT B to this
Mortgage
REPLACEMENT RESERVE $490.83, subject to the provisions of
MONTHLY PAYMENT subparagraph 3(c) of this Mortgage
TI AND LEASING RESERVE $2,707.67, subject to the provisions of
MONTHLY PAYMENT subparagraph 3(d) of this Mortgage
PERMITTED USE Office
GUARANTOR Triple Net Properties, LLC, a Virginia limited
liability company
REQUIRED RATING A General Policy Rating of A: VIII or better in
A.M. Best's Key Rating Guide
ST. XXXXXXX LEASE That certain lease between St. Xxxxxxx, as
tenant and Borrower (or its predecessor in
interest), as landlord dated February 25, 1997
(as amended through the date hereof) for
premises located at 1630 (f/k/a 1608) Lafayette
Road, Crawfordsville, Indiana consisting of
approximately 14,450 rentable square feet (the
"St. Xxxxxxx Space") which office building is
commonly called St. Xxxxxxx Crawfordsville
Medical Pavilion.
ST. XXXXXXX RESERVE MONTHLY $18,333.34, subject to the provisions of
PAYMENT subparagraph 3(e) of this Mortgage.
v
ST. XXXXXXX TRIGGER EVENT St. Xxxxxxx either terminates or fails to renew
the St. Xxxxxxx Lease on or before July 31,
2012.
ST. XXXXXXX REPLACEMENT LEASE A lease executed by a replacement tenant or
tenants acceptable to Lender covering all of
the St. Xxxxxxx Space (i) at a net annual rent
which equals or exceeds $210,970 and (ii) for a
term of not less than five (5) years.
vi
THIS 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
principal and/or 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,
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. Subsequent to the closing of the "Loan" (as defined in the Note),
subject to the terms of PARAGRAPH 15 of this Mortgage, Borrower may transfer
undivided tenant in common interests in the Property (provided, however, there
may be no more than thirty-five (35) tenants in common ("TENANTS IN COMMON") in
the aggregate including Borrower (collectively "PERMITTED TICS") with the
consent of Lender, as more specifically set forth in one or more Loan
Assumption, Ratification and Consent Agreements(s) by and between Borrower,
Guarantor, the Tenants in Common and Lender (individually and collectively, the
"ASSUMPTION AGREEMENT"), and upon the execution of such Assumption Agreement,
"Grantor" shall thereafter be deemed to collectively include Borrower under this
Mortgage and all then existing Tenants in Common.
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, 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"), 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,
2
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.
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 principal and/or 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
3
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 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.
(b) Borrower shall pay to Lender, at the time of and in addition to
the monthly installments of principal and/or 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.
(c) At the time of and in addition to the monthly installments of
principal and/or 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
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
4
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.
(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. 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 herein to the
contrary, Lender agrees to defer collection of the TI and Leasing Reserve
Monthly Payments until November 1, 2009 provided the following conditions
are satisfied: (i) no Event of Default has occurred; (ii) the sole fee
simple owner of the Property is the Borrower or an entity which Lender has
5
approved in writing and for which Lender has approved in writing that this
waiver shall apply; and (iii) the Debt Service Coverage Ratio is not below
1.15:1.0. At any time the foregoing conditions are not satisfied, Lender
may require that Borrower immediately commence making the TI and Leasing
Reserve Monthly Payment. Notwithstanding anything herein to the contrary,
in the event that (i) St. Xxxxxxx renews its Lease for the St. Xxxxxxx
Space and (ii) St. Xxxxxxx renews its Lease for the Athen's Surgery and
Imaging Center Space both for a minimum term of five (5) years and on the
same terms as their current Leases, Lender shall disburse the full amount
of the TI and Leasing Reserve and no further TI and Leasing Reserve Monthly
Payments shall be required.
For purposes of this Section only, Debt Service Coverage Ratio shall mean
the ratio of Net Cash Flow derived from the Property for the preceding
twelve (12) calendar months (unless Borrower does not have a twelve
(12)-month history, in which event it shall be calculated on an annualized
basis after Borrower has at least a three (3)-month operating history to be
annualized) to required annual debt service under the (i) Loan and (ii)
Concurrent Subordinate Indebtedness, as determined by Lender each quarter.
For purposes of this Section only, Net Cash Flow shall mean sustainable
underwritable rent and other collections based upon the preceding twelve
(12) calendar month period (unless Borrower does not have a twelve
(12)-month history, in which event it shall be calculated on an annualized
basis after Borrower has at least a three (3)-month operating history to be
annualized) ("Gross Income") adjusted for a minimum vacancy factor equal to
the greater of (a) market vacancy as determined by Lender, (b) current
vacancy at the Property, or (c) 3%, less (i) Operating Expenses and (ii) an
annual adjustment for a structural reserve of not less than $0.20 per
square foot and normalized leasing commissions and tenant improvements of
not less than $1.10 per square foot. For purposes of this Section only,
Operating Expenses shall mean the aggregate of the following items: (a)
real estate taxes, general and special assessments or similar charges,
other than Taxes; (b) sales, use and personal property taxes; (c)
management fees of not more than five percent (5%) of the gross income
derived from the operation of the Property and disbursements for management
services whether such services are performed at the Property or off-site;
(d) wages, salaries, pension costs and all fringe and other
employee-related benefits and expenses, of all employees up to and
including (but not above) the level of the on-site manager, engaged in the
repair, operation and maintenance of the Property and service to tenants
and on-site personnel engaged in audit and accounting functions performed
by Borrower; (e) insurance premiums including, but not limited to,
casualty, liability, rent and fidelity insurance premiums, other than
Insurance Premiums, if such insurance is purchased on a "blanket" policy
basis, it may be based on a pro rata allocation for the Property; (f) cost
of all electricity, oil, gas, water, steam, HVAC and any other energy,
utility or similar item and overtime services, the cost of building and
cleaning supplies, and all other administrative, management, ownership,
operating, advertising, marketing and maintenance expenses incurred by
Borrower (and not paid directly by any tenant) in connection with the
operation of the Property; (g) costs of necessary cleaning, repair,
replacement, maintenance, decoration or painting of existing improvements
on the Property (including, without limitation, parking lots and roadways),
of like kind or quality or such kind or quality which is necessary to
maintain the Property to the same standards as competitive properties of
similar size and location of the Property; (h) the cost of such other
maintenance materials, HVAC repairs, parts
6
and supplies, and all equipment to be used in the ordinary course of
business, which is not capitalized in accordance with Borrower's approved
accounting method for the Property; (i) legal, accounting and other
professional expenses incurred in connection with the Property; and (j)
casualty losses to the extent not reimbursed by a third party. The
Operating Expenses shall be based on the above-described items actually
incurred or payable on an accrual basis in accordance with Borrower's
approved accounting method during the twelve (12) calendar month period
ending at the end of the immediately preceding calendar month prior to the
date on which the Operating Expenses are to be calculated (unless Borrower
does not have a twelve (12)-month history, in which event it shall be
calculated on an annualized basis after Borrower has at least a three
(3)-month operating history to be annualized), with customary adjustments
for items such as taxes and insurance which accrue but are paid
periodically, as adjusted by Lender to reflect projected adjustments for
only those items which are definitively ascertainable and of a fixed amount
(for example, real estate taxes) for the subsequent twelve (12) month
period beginning with the calendar month that the Operating Expenses are to
be calculated. Notwithstanding the foregoing, the term "Operating Expenses"
shall not include (i) depreciation or amortization or any other non-cash
item of expense unless approved by Lender, (ii) interest, principal, fees,
costs and expense reimbursements of Lender in administering the Loan or
exercising remedies under this Agreement, the Mortgage or the other Loan
Documents; or (iii) any expenditure properly treated as a capital item
under Borrower's approved accounting method for the Property.
(e) Upon the occurrence of a St. Xxxxxxx Trigger Event, Borrower shall
pay to Lender monthly deposits, at the time of and in addition to the
monthly installments of principal and/or interest due under the Note, the
St. Xxxxxxx Reserve Monthly Payment (such payments shall be refered to as
the "St. Xxxxxxx Reserve") until the earlier of (i) January 31, 2013 or
(ii) the balance in the St. Xxxxxxx Reserve equals or exceeds $110,000.00
(the "St. Xxxxxxx Required Balance"). Provided no Event of Default has
occurred, the funds contained in the St. Xxxxxxx Reserve shall be disbursed
to Borrower solely to pay for tenant improvements and leasing commissions
for the St. Xxxxxxx Space (i) if the St. Xxxxxxx Lease is renewed or (ii)
following vacation of the St. Xxxxxxx Space by St. Xxxxxxx, but only after:
(A) Lender shall have approved a St. Xxxxxxx Replacement Lease and shall
have received a fully-executed copy of such St. Xxxxxxx Replacement Lease;
(B) Borrower has provided an executed estoppel certificate satisfactory to
Lender from such replacement tenant or tenants stating that such
replacement tenant or tenants are in occupancy, open for business, and
paying full contractual rent without any right of offset or rent abatement
and that all related tenant improvement and leasing commission obligations
of Borrower, as landlord, under the St. Xxxxxxx Replacement Lease have been
satisfied; (C) Borrower provides Lender with receipts, invoices, lien
waivers, photographs and other documentation deemed necessary by Lender to
insure that the work and/or materials requested have been completed and/or
provided; (D) Borrower has provided evidence that the work is fully
completed in a good and workmanlike manner free of all liens or claims by
reason thereof; and (E) satisfaction of any other terms and conditions that
Lender may require in its reasonable discretion. Lender shall make
disbursements from the St. Xxxxxxx Reserve for the actual cost of such
approved tenant improvements and leasing commissions with minimum draws of
$10,000.00, which shall occur no more frequently than once per month. The
St. Xxxxxxx Reserve may be
7
commingled with the general funds of Lender and no interest shall be
payable thereon nor shall such St. Xxxxxxx Reserve constitute trust funds.
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 grants Lender a first priority security interest in the St.
Xxxxxxx Reserve and shall execute any other documents and take any other
actions necessary to provide Lender with such a perfected security interest
in the St. Xxxxxxx Reserve.
(f) Upon the occurrence of an Athen's Surgery and Imaging Center
Trigger Event, Borrower shall pay to Lender monthly deposits, at the time
of and in addition to the monthly installments of principal and/or interest
due under the Note, the Athen's Surgery and Imaging Center Reserve Monthly
Payment (such payments shall be refered to as the "Athen's Surgery and
Imaging Center Reserve") until the earlier of (i) February 28, 2016 or (ii)
the balance in the Athen's Surgery and Imaging Center Reserve equals or
exceeds $110,000.00 (the "Athen's Surgery and Imaging Center Required
Balance"). Provided no Event of Default has occurred, the funds contained
in the Athen's Surgery and Imaging Center Reserve shall be disbursed to
Borrower solely to pay for tenant improvements and leasing commissions for
the Athen's Surgery and Imaging Center Space (i) if the Athen's Surgery and
Imaging Center Lease is renewed or (ii) following vacation of the Athen's
Surgery and Imaging Center Space by St. Xxxxxxx, but only after: (A) Lender
shall have approved an Athen's Surgery and Imaging Center Replacement Lease
and shall have received a fully-executed copy of such Athen's Surgery and
Imaging Center Replacement Lease; (B) Borrower has provided an executed
estoppel certificate satisfactory to Lender from such replacement tenant or
tenants stating that such replacement tenant or tenants are in occupancy,
open for business, and paying full contractual rent without any right of
offset or rent abatement and that all related tenant improvement and
leasing commission obligations of Borrower, as landlord, under the Athen's
Surgery and Imaging Center Replacement Lease have been satisfied; (C)
Borrower provides Lender with receipts, invoices, lien waivers, photographs
and other documentation deemed necessary by Lender to insure that the work
and/or materials requested have been completed and/or provided; (D)
Borrower has provided evidence that the work is fully completed in a good
and workmanlike manner free of all liens or claims by reason thereof; and
(E) satisfaction of any other terms and conditions that Lender may require
in its reasonable discretion. Lender shall make disbursements from the
Athen's Surgery and Imaging Center Reserve for the actual cost of such
approved tenant improvements and leasing commissions with minimum draws of
$10,000.00, which shall occur no more frequently than once per month. The
Athen's Surgery and Imaging Center Reserve may be commingled with the
general funds of Lender and no interest shall be payable thereon nor shall
such Athen's Surgery and Imaging Center Reserve constitute trust funds.
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 grants Lender a first priority security interest in the
Athen's Surgery and Imaging Center Reserve and shall execute any other
documents and take any other actions necessary to provide Lender with such
a perfected security interest in the Athen's Surgery and Imaging Center
Reserve.
8
(g) 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 CONDEMNATIONBorrower 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;
(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
9
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 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;
10
(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, 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
11
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
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
12
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 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.
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
13
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 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 twenty percent (20.0%) of the gross leaseable area of the
14
Property, (v) is not for a rental greater than or equal to twenty percent
(20.0%) 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 twenty percent (20.0%) 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 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.
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,
15
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 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
16
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 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.
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
17
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 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.
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.
18
(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 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.
19
(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 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
20
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 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
21
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 (the "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 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 pursuant to the terms of the
Management Agreement.
(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
22
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 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) SALE/ENCUMBRANCE DEFINED. A sale, conveyance, mortgage, grant,
bargain, encumbrance, pledge, assignment, or transfer of the Property
within the meaning of this PARAGRAPH 15 shall be deemed to include, but not
limited to the following: (i) an installment sales agreement wherein
Borrower agrees to sell the Property or any part thereof for a price to be
paid in installments; (ii) an agreement by Borrower leasing all or a
substantial part of the Property for other than actual occupancy by a space
tenant thereunder or a sale, assignment or other transfer of, or the grant
of a mortgage in, Borrower's right, title and interest in and to any Leases
or any Rents; or (iii) a sale, encumbrance, pledge, hypothecation, or
transfer of any direct and/or indirect ownership interests (including
beneficial interests) in Borrower. Notwithstanding the foregoing, provided
that no Event of Default has occurred, the following transfers shall not be
23
deemed to be a sale or encumbrance for the purpose of this PARAGRAPH 15:
(A) transfers of interests in Borrower for estate planning purposes to
immediate family members (which shall be limited to a spouse, parent, child
and grandchild (each an "IMMEDIATE FAMILY MEMBER")) of such party or to
trusts or entities created for the benefit of Immediate Family Members
provided that (1) Borrower shall provide Lender with 30 days' prior written
notice of any such permitted transfer, and (2) Borrower shall furnish
Lender with copies of any documentation executed in connection with such
permitted transfer promptly after execution thereof, (B) transfers of
direct and/or indirect interests in Borrower by operation of law or upon
death by devise or descent, provided that Borrower shall furnish Lender
with copies of any documentation executed in connection with such permitted
transfer promptly after execution thereof, (C) transfers of direct and/or
indirect interests in Borrower to Guarantor(s), (D) a sale, encumbrance,
pledge, hypothecation, or transfer of less than forty-nine percent (49%) in
the aggregate (which may be pursuant to one or more transactions during the
term of the Loan) of the direct and/or indirect ownership interests
(including beneficial interests) in Borrower provided that (1) Borrower
shall furnish Lender with copies of any documentation executed in
connection with such permitted transfer promptly after execution thereof,
(2) such transfer does not result in change in the control or management of
Borrower, and (3) if the transferor is Guarantor or an entity owned and
controlled by Guarantor, such transferor shall deliver to Lender within one
(1) Business Day after the closing of any such transfer the net proceeds
for application to the outstanding balance of the Concurrent Subordinate
Indebtednessor, and (E) the issuance of new membership interests in
Borrower by which an aggregate of less than forty-nine percent (49%) of the
ownership of Borrower's membership interests shall be vested in or pledged
to a party or parties other than Guarantor, provided that (1) Borrower
shall furnish Lender with copies of any documentation executed in
connection with such permitted transfer promptly after execution thereof,
and (2) such transfer does not result in change in the control or
management of Borrower, and (3) Borrower shall deliver to Lender within one
(1) Business Day after the closing of any such issuance the net proceeds
for application to the outstanding balance of the Concurrent Subordinate
Indebtedness. To the extent that the forgoing are not deemed to be a sale
or encumbrance for purposes of this PARAGRAPH 15, no administrative fee
shall be required in connection therewith.
(c) TIC ASSUMPTION. Notwithstanding the foregoing provisions of this
PARAGRAPH 15, Lender shall not withhold its consent to a transfer of an
undivided tenant-in-common interest in the Property and partial assumption
of this Loan (hereinafter, a "TIC ASSUMPTION"), provided that each of the
following terms and conditions are satisfied:
(i) Borrower is in compliance with all terms and conditions of
the Loan Documents and no Event of Default has occurred and is then
continuing hereunder or under any of the other Loan Documents and the
proposed transferee ("TRANSFEREE") agrees to continue to comply with
and be bound by all provisions of the Loan Documents;
(ii) Borrower gives Lender written notice of the terms of such
prospective TIC Assumption not less than thirty (30) days before the
date on
24
which such TIC Assumption is scheduled to take place and, concurrently
therewith, gives Lender all such information concerning Transferee as
Lender reasonably requests;
(iii) Borrower shall pay Lender (A) in connection with such
proposed TIC Assumption, all reasonable out-of-pocket costs and
expenses, including, without limitation, reasonable attorneys' fees
incurred by Lender and any rating agency approval fees (whether such
transfer is approved or rejected) plus (B) concurrently with the
closing of such TIC Assumption, a nonrefundable assumption fee in an
amount equal to the greater of (A) $5,000.00, or (B) 1% of such
Transferee's proportionate share of the Principal Amount (based on
such Transferee's tenancy in common interest in the Property),
provided, however, with respect to TIC Assumptions closed on or before
the earlier of the date that is one hundred eighty (180) days of the
date hereof and the maturity date of the Concurrent Subordinate
Indebtedness, such nonrefundable assumption fee shall equal the lesser
of (A) $1,000.00 per Transferee, or (B) $7,000;
(iv) Transferee executes and delivers such documents and
agreements as Lender shall reasonably require to evidence and
effectuate said assumption and delivers such legal opinions as Lender
may reasonably require, including, without limitation, hazard
insurance endorsements or certificates and other similar materials as
Lender may deem necessary at the time of the TIC Assumption, all in
form and substance satisfactory to Lender, including, without
limitation, an endorsement or endorsements to Lender's loan title
insurance policy insuring the lien of this Mortgage, extending the
effective date of such policy to the date of execution and delivery of
the assumption agreement referenced in this SUBPARAGRAPH 15(C)(IV),
with no additional exceptions added to such policy, except for items
consented to by Lender or permitted under this Mortgage, and insuring
that Transferee's proportionate interest in the fee simple title to
the Property is vested in the Transferee;
(v) the transferring Borrower executes and delivers to Lender,
without any cost or expense to Lender, a release of Lender, its
officers, directors, employees and agents, from all claims and
liability relating to the transactions evidenced by the other security
documents through and including the date of the closing of the TIC
Assumption, which agreement shall be in form and substance
satisfactory to Lender and shall be binding upon the Transferee;
(vi) subject to the provisions of PARAGRAPH 11 of the Note, such
TIC Assumption is not construed so as to relieve the transferring
Borrower of any personal liability under the Note or any of the Loan
Documents for any act or events occurring or obligations arising prior
to or simultaneously with the closing of such TIC Assumption
(excluding payment of the principal amount of the Note and interest
accrued thereon) and the transferring Borrower executes, without any
cost or expense to Lender, such documents and agreements as Lender
shall reasonably require to evidence and effectuate the ratification
of such personal liability;
25
(vii) Transferee shall furnish, if Transferee is a corporation,
partnership or other entity, all appropriate papers evidencing
Transferee's capacity in good standing and the qualification of the
signers to execute the assumption of the Obligations, which paper
shall include certified copies of all documents relating to the
organization and formation of Transferee and of the entities, if any,
which are partners, members or shareholders of Transferee. Transferee
and such constituent partners, members or shareholders of Transferee
(as the case may be) as Lender shall require, shall be single purpose
entities, whose formation documents shall be approved by counsel to
Lender. Transferee must comply with the provisions of PARAGRAPH 17
hereof;
(viii) Transferee shall furnish an opinion of counsel
satisfactory to Lender and its counsel stating that (A) Transferee's
formation documents provide proof for the matters described in
SUBPARAGRAPH (VII) above, (B) the assets of Transferee will not be
consolidated with the assets of any other entity having an interest
in, or affiliation with, the Transferee, in the event of a bankruptcy
or insolvency of any such entity if required by any rating agency
after the securitization of the Loan, (C) the assumption of the
Obligations has been duly authorized, executed and delivered and the
Loan Documents are valid, binding and enforceable against the
Transferee in accordance with their terms, (D) Transferee and any
entity which is a controlling stockholder, general partner or managing
member of Transferee have been duly organized and are in good standing
and in existence, (E) the waiver of the right to partition the
Property is enforceable against Transferee, and (F) with respect to
such other matters as Lender or any applicable rating agency may
request;
(ix) if the Loan has previously been securitized pursuant to
PARAGRAPH 43, Lender shall have received evidence in writing from the
rating agencies to the effect the proposed transfer will not result in
a downgrade, qualification, reduction or withdrawal of any rating
initially assigned or to be assigned to any securities issued in
connection with the Loan; and
(x) Notwithstanding the foregoing or any of the provisions of the
Loan Documents to the contrary, a Transferee must meet all of the
following conditions:
(A) the owner(s) of all of the ownership interests in a
Transferee must be an " Accredited Investor" as defined in Rule
501 of Regulation D of the Securities Act of 1933, and Transferee
and/or its principals must have a Beacon/FICO score of not less
than 650;
(B) neither a Transferee nor the owner(s) of any of the ownership
interests in a Transferee shall have (1) been a party to any
bankruptcy proceedings, voluntary or involuntary, (2) made an
assignment for the benefit of creditors or taken advantage of any
insolvency act, or any act for the benefit of debtors, (3)
defaulted on any indebtedness, (4) owned any property which was
subject to foreclosure or attachment proceedings,
26
(5) been a target of, or party to, any criminal investigation or
proceeding, (6) been a party to any threatened or pending
litigation or (7) any outstanding judgments;
(C) intentionally deleted;
(D) there shall be no material convictions, judgments, litigation
or regulatory action pending or threatened against Transferee,
Transferee's principals or related entities which is not
reasonably acceptable to Lender, and none of Transferee,
Transferee's principals or such related entities shall be on any
so-called prohibited persons lists;
(E) other than with respect to transfers by the initial Borrower
hereunder, the transfer (1) must be for the entire interest of a
Tenant in Common in the Property (or 100% of the ownership
interests in a Tenant in Common), and (2) can only be made to a
single new Tenant in Common. In no event may any such transfer
result in "Borrower" being comprised of more than the number of
co-owners set forth in Revenue Procedure 2002-22, I.R.B. 2002-14,
as such pronouncement may be modified from time to time (which
number is thirty five [35] as of the date hereof);
(F) Transferee, Transferee's principals and the related entities
shall not have defaulted under its or their obligations with
respect to any other indebtedness in a manner which is not
acceptable to Lender; and
(G) Transferee, Transferee's principals and the related entities
must have demonstrated expertise in owning and operating real
estate investment property, which expertise shall be reasonably
determined by Lender.
Any such TIC Assumption shall not be construed as to relieve any current
Guarantors of their obligations under any guarantees or indemnity agreements
executed in connection with the Note, provided that if Transferee or a party
associated with Transferee approved by Lender in its sole discretion assumes the
obligations of the current Guarantors under their guarantees or indemnity
agreements and Transferee or such party associated with Transferee if
applicable, executes, without any cost or expense to Lender, a new guarantee
and/or indemnity agreement in form and substance satisfactory to Lender, then
Lender shall release the current Guarantors from all obligations first arising
under their guarantees or indemnity agreements after the closing of such TIC
Assumption;
(d) ONE-TIME ASSUMPTION. Notwithstanding the foregoing provisions of this
PARAGRAPH 15, Lender shall not withhold its consent to a sale of the entire
Property and assumption of this Loan (hereinafter, an "Assumption"), provided
that each of the following terms and conditions are satisfied:
27
(i) Borrower is in compliance with all terms and conditions of the
Loan Documents and no default has occurred and is then continuing hereunder
or under any of the other Loan Documents and the proposed Transferee agrees
to continue to comply with and be bound by all provisions of the Loan
Documents;
(ii) Borrower gives Lender written notice of the terms of such
prospective Assumption not less than forty-five (45) days before the date
on which such Assumption is scheduled to take place and, concurrently
therewith, gives Lender all such information concerning Transferee as
Lender reasonably requests. Lender shall have the right to approve or
disapprove the proposed Transferee. In determining whether to give or
withhold its approval of the proposed Transferee, Lender shall consider
Transferee's experience in owning and operating a facility similar to the
Property, Transferee's entity structure, Transferee's financial strength,
the Transferee's general business standing and Transferee's relationship
and experience with contractors, vendors, tenants, lenders and other
business entities;
(iii) Borrower shall pay Lender (A) in connection with such proposed
Assumption, all reasonable out-of-pocket costs and expenses, including,
without limitation, reasonable attorneys' fees incurred by Lender and any
rating agency approval fees (whether such transfer is approved or
rejected), plus (B) concurrently with the closing of such Assumption, a
nonrefundable assumption fee in an amount equal to 1% of the then
outstanding principal balance of the Note;
(iv) Transferee executes and delivers such documents and agreements as
Lender shall reasonably require to evidence and effectuate said assumption
and delivers such legal opinions as Lender may reasonably require,
including, without limitation, hazard insurance endorsements or
certificates and other similar materials as Lender may deem necessary at
the time of the Assumption, all in form and substance satisfactory to
Lender, including, without limitation, an endorsement or endorsements to
Lender's loan title insurance policy insuring the lien of this Mortgage,
extending the effective date of such policy to the date of execution and
delivery of the assumption agreement referenced in this subparagraph
15(c)(iv), with no additional exceptions added to such policy, except for
items consented to by Lender or permitted under this Mortgage, and insuring
that fee simple title to the Property is vested in the Transferee;
(v) Borrower executes and delivers to Lender, without any cost or
expense to Lender, a release of Lender, its officers, directors, employees
and agents, from all claims and liability relating to the transactions
evidenced by the other security documents through and including the date of
the closing of the Assumption, which agreement shall be in form and
substance satisfactory to Lender and shall be binding upon the Transferee;
(vi) subject to the provisions of PARAGRAPH 11 of the Note, such
Assumption is not construed so as to relieve Borrower of any personal
liability
28
under the Note or any of the Loan Documents for any act or events occurring
or obligations arising prior to or simultaneously with the closing of such
Assumption (excluding payment of the principal amount of the Note and
interest accrued thereon) and Borrower executes, without any cost or
expense to Lender, such documents and agreements as Lender shall reasonably
require to evidence and effectuate the ratification of such personal
liability;
(vii) Transferee shall furnish, if Transferee is a corporation,
partnership or other entity, all appropriate papers evidencing Transferee's
capacity in good standing and the qualification of the signers to execute
the assumption of the Obligations, which paper shall include certified
copies of all documents relating to the organization and formation of
Transferee and of the entities, if any, which are partners, members or
shareholders of Transferee. Transferee and such constituent partners,
members or shareholders of Transferee (as the case may be) as Lender shall
require, shall be single purpose entities, whose formation documents shall
be approved by counsel to Lender. Transferee must comply with the
provisions of PARAGRAPH 17 hereof;
(viii) Transferee shall furnish an opinion of counsel satisfactory to
Lender and its counsel stating that (A) Transferee's formation documents
provide proof for the matters described in subparagraph (vi) above, (B) the
assets of Transferee will not be consolidated with the assets of any other
entity having an interest in, or affiliation with, the Transferee, in the
event of a bankruptcy or insolvency of any such entity if required by any
rating agency after the securitization of the Loan, (C) the assumption of
the Obligations has been duly authorized, executed and delivered and the
Loan Documents are valid, binding and enforceable against the Transferee in
accordance with their terms, (D) Transferee and any entity which is a
controlling stockholder, general partner or managing member of Transferee
have been duly organized and are in good standing and in existence, and (E)
with respect to such other matters as Lender or any applicable rating
agency may request; and
(ix) if the Loan has previously been securitized pursuant to PARAGRAPH
44, Lender shall have received evidence in writing from the rating agencies
to the effect the proposed transfer will not result in a downgrade,
qualification, reduction or withdrawal of any rating initially assigned or
to be assigned to any securities issued in connection with the Loan.
Any such Assumption shall not be construed as to relieve any current Guarantors
of their obligations under any guarantees or indemnity agreements executed in
connection with the Note, provided that if Transferee or a party associated with
Transferee approved by Lender in its sole discretion assumes the obligations of
the current Guarantors under their guarantees or indemnity agreements and
Transferee or such party associated with Transferee if applicable, executes,
without any cost or expense to Lender, a new guarantee and/or indemnity
agreement in form and substance satisfactory to Lender, then Lender shall
release the current Guarantors from all obligations first arising under their
guarantees or indemnity agreements after the closing of such Assumption. If the
Transferee under this
29
Section 15(d) is a real estate investment trust affiliated with Guarantor (the
"REIT"), at such time as the REIT achieves a minimum net worth not less than
$10,000,000 as determined by Lender in its sole discretion, then the REIT shall
be deemed an acceptable substitute guarantor for purposes of this section;
(e) TRANSFER OF MEMBERSHIP INTERESTS.
Notwithstanding anything herein to the contrary, the sole member of the
initial Borrower hereunder shall have the right, without Lender's consent, to
transfer non-managing limited liability company interests in such initial
Borrower to one or more Persons (each, a "Member Transferee"), provided, the
following criteria are satisfied:
1) Each Member Transferee and/or its principals must be an "Accredited
Investor" as defined in Rule 501 of Regulation D of the Securities Act of 1933;
2) Each Member Transferee and/or its principals must not be listed on
any so-called prohibited persons lists, including, but not limited to any list
published by the Office of Foreign Assets Control or any successor agency;
3) No Member Transferee and/or its principals may, in the previous ten
(10) years, have been party to any bankruptcy proceedings, voluntary or
involuntary, made an assignment for the benefit of creditors or taken advantage
of any insolvency act, or any act for the benefit of debtors;
4) No Member Transferee may hold more than 7.5% of the interest in the
Property (determined by multiplying the initial Borrower's interest in the
Property by the Member Transferee's interest in such initial Borrower);
5) Triple Net Properties, LLC shall remain the sole manager of initial
Borrower; and
6) Not less than 10 days prior to such transfer, Borrower shall
provide notice of the pending transfer to Lender, together with a certificate
certifying compliance with the foregoing.
(f) LENDER'S RIGHTS. Except as provided in SUBPARAGRAPH 15(C), (D) AND (E)
above, Lender reserves the right to condition the consent required hereunder
upon a modification of the terms hereof and on assumption of the Note, this
Mortgage and the Loan Documents as so modified by the proposed Transferee,
payment of an assumption fee of one percent (1%) of the Principal Amount, and
all of Lender's out of pocket expenses incurred in connection with such
transfer, the approval by a rating agency of the proposed transferee, the
proposed transferee's continued compliance with the covenants set forth in this
Mortgage, including, without limitation, the covenants contained in PARAGRAPH
17, or such other conditions as Lender shall determine in its sole discretion to
be in the interest of Lender. All of Lender's out-of-pocket expenses incurred
shall be payable by Borrower whether or not Lender consents to such assumption.
Lender shall not be required to demonstrate any actual impairment of its
security or any increased risk
30
of default hereunder in order to declare the Note immediately due and payable
upon Borrower's prohibited sale, conveyance, mortgage, grant, bargain,
encumbrance, pledge, assignment, or transfer of the Property without Lender's
consent. This provision shall apply to every sale, conveyance, mortgage, grant,
bargain, encumbrance, pledge, assignment, or transfer of the Property regardless
of whether voluntary or not, or whether or not Lender has consented to any
previous sale, conveyance, mortgage, grant, bargain, encumbrance, pledge,
assignment, or transfer of the Property.
(g) LOCKOUT PERIODS.
(i) Lender may send written notice (the "SECURITIZATION NOTICE") to
Borrower notifying Borrower that Lender has initiated contact with (A) any
rating agency concerning the securitization of the Loan or (B) any
purchaser or investor regarding the sale of the Loan. Once a Securitization
Note has been given, Borrower can no longer transfer any interest in the
Property; provided, however, that notwithstanding the foregoing, in the
event that Borrower has been provided with all the information concerning
any proposed Tenant in Common as a Transferee as described above in
SUBPARAGRAPH 15(C)(II) prior to the receipt of the Securitization Notice,
Borrower shall have thirty (30) days from the date of the receipt of the
Securitization Notice to complete all the requirements set forth in this
PARAGRAPH 15 necessary to transfer a Tenant in Common interest hereunder.
In the event such transfer is not completed within said thirty (30) day
period, Borrower shall be prohibited from trying to add the proposed Tenant
in Common or transferring any interest to any other Tenant in Common for
six (6) months from the date of the Securitization Notice. If the Loan is
not securitized or sold within six (6) months from the date of the
Securitization Notice, then Borrower may again try to admit a new Tenant in
Common subject to Lender providing a subsequent Securitization Notice in
the event Lender later initiates contact with any rating agency concerning
the securitization of the Loan or initializes contact with a potential
whole loan purchaser or investor and the thirty (30) day period and six (6)
month period described above shall commence again. Any subsequent approval
and admittance of a new Tenant in Common shall comply with the terms and
conditions of this PARAGRAPH 15.
(ii) Lender shall have no obligation to provide a Securitization
Notice if an Event of Default has occurred and is then continuing hereunder
or under any of the other Loan Documents and in such event Borrower shall
have no right to add an additional Tenant in Common or transfer any
interest in the Property.
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")
31
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:
(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
32
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 (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;
33
(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;
(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
34
agreement) between such Borrower or Required SPE, respectively, and any
Affiliates of Borrower) other than (i) with respect to Borrower, the Loan
and the Concurrent Subordinate Indebtedness (hereinafter defined), (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;
(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;
35
(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 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" or "PERSONS" 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
36
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 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
37
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 (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
38
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
(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
39
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;
(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
40
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;
(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
41
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 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.
42
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 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
43
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 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
44
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 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
45
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 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. EXCULPATION. This Mortgage and other Loan Documents and all of
Borrower's obligations hereunder and thereunder are subject to the provisions of
PARAGRAPH 11 of the Note entitled Exculpation. All of the provisions of the
Note, including PARAGRAPH 11, are incorporated herein by this reference.
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
46
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, 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.
47
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 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
48
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 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. CONCURRENT SUBORDINATE INDEBTEDNESS. Notwithstanding anything in this
Mortgage or the other Loan Documents to the contrary, by its acceptance hereof
Lender acknowledges and agrees that Borrower, simultaneously herewith, is
borrowing an additional Six Million Seven Hundred and Six Thousand and No/100ths
Dollars ($6,706,000) from Lender (the "CONCURRENT SUBORDINATE INDEBTEDNESS").
Such Concurrent Subordinate Indebtedness is evidenced by that certain Promissory
Note in such original principal amount of even date herewith, and is secured by
that certain Subordinate Mortgage, Security Agreement and Fixture Filing of even
date herewith encumbering the Property, that certain Pledge Agreement of even
date herewith made by NNN South Xxxxxxxx Member, LLC in favor of Lender, and
that certain Guaranty of Payment of even date herewith made by Guarantor in
favor of Lender (collectively, the "SUBORDINATE LOAN Documents"). Neither the
existence of the Concurrent Subordinate Indebtedness or the execution and
delivery by Borrower and Guarantor of the Subordinate Loan Documents shall
constitute an Event of Default hereunder, provided however, that an Event of
Default under the Subordinate Loan Documents shall constitute an Event of
Default hereunder.
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.
49
[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK;
SIGNATURE PAGES FOLLOW]
50
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
