EXHIBIT 10.2
------------
LHO FINANCING PARTNERSHIP I, L.P.
(Borrower)
to
GENERAL ELECTRIC CAPITAL CORPORATION
(Lender)
______________________________________________________________
FEE AND LEASEHOLD MORTGAGE, ASSIGNMENT OF LEASES AND RENTS,
SECURITY AGREEMENT AND FIXTURE FILING
______________________________________________________________
Dated: As of July 29, 1999
Property Location: 0000 Xxxxxxxxxx Xxxxxxxxx
Xxxxxxxxxxx
Xxxxxxxx Xxxxxx, Xxxxxxxxx
DOCUMENT PREPARED BY AND WHEN RECORDED, RETURN TO:
Cadwalader, Xxxxxxxxxx & Xxxx
000 Xxxxxx Xxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx Xxxxx, Esq.
FEE AND LEASEHOLD MORTGAGE, ASSIGNMENT OF LEASES
AND RENTS, SECURITY AGREEMENT AND FIXTURE FILING
-------------------------------------------------
This Fee and Leasehold Mortgage, Assignment of Leases and
Rents, Security Agreement and Fixture Filing (this "Mortgage") is executed
as of July 29, 1999, by LHO FINANCING PARTNERSHIP I, L.P., a Delaware
limited partnership ("Borrower"), whose address for notice hereunder is
0000 Xxx Xxxxxx, X.X., Xxxxx 000, Xxxxxxxxxx, X.X. 00000 for the benefit of
GENERAL ELECTRIC CAPITAL CORPORATION, a New York corporation ("Lender"),
whose address for notice is 000 Xxxx Xxxxx Xxxx, Xxxxxxxx, Xxxxxxxxxxx
00000.
ARTICLE I
DEFINITIONS
Section 1.1 Definitions. As used herein, the following terms
shall have the following meanings:
"Debt": The sum of all (a) principal, interest and all other
amounts due under or secured by the Loan Documents (b) any and all advances
or disbursements made by Lender of funds other than funds deposited with
Lender by Borrower to protect and preserve the Property, or the lien hereof
on the Property, including without limitation, advances or disbursements
made for the payment of taxes, levies or insurance on the Property,
advances or disbursements made under the Loan Agreement to enable
completion of improvements on or to the Property and advances or
disbursements made to repair or maintain the Property, with interest on all
such advances or disbursements, and (c) all other indebtedness, obligations
and liabilities now or hereafter existing of any kind of Borrower to Lender
under documents which recite that they are intended to be secured by this
Mortgage.
"Ground Lease": The Ground Lease dated March 14, 1980, between
Xxxxxx X. Xxxxxxx, Xxxxxx X. Xxxxxxxxxxx and Xxxxxxx X. Xxxxxx, as trustees
of the Xxxxxx X. Xxxxxxx Hennepin Trust, as lessor (such lessor and its
respective successors and assigns are hereinafter collectively referred to
as the "Ground Lessor"), and Radisson South Company, as lessee, a
memorandum of which was recorded on December 31, 1989 as Document No.
4954763 of the records of Hennepin County, Minnesota, as subsequently
assigned to Borrower by Assignment of Lease dated April 29, 1998.
"Loan": The Loan made to the Borrower by the Lender as
evidenced and secured by the Loan Documents.
"Loan Documents": The (a) Loan Agreement of even date
herewith, between Borrower and Lender (the "Loan Agreement"),
(b) Promissory Note of even date, executed by Borrower, payable to the
order of Lender, in the stated principal amount of $30,300,000.00, (the
"Note") (c) this Mortgage, (d) Second Fee and Leasehold Mortgage,
Assignment of Leases and Rents, Security Agreement and Fixture Filing of
even date herewith, executed by Borrower in favor of Lender (the "Second
Mortgage"), (e) all other documents now or hereafter executed by Borrower,
or any other person or entity, to evidence, secure or guaranty the payment
of all or any portion of the Debt or the performance of all or any portion
of the Obligations or otherwise executed in connection with the Note or
this Mortgage, and (f) all amendments, modifications, restatements,
extensions, renewals or replacements of the foregoing.
"Obligations": All of the agreements, covenants, conditions,
warranties, representations and other obligations (other than to repay the
Debt) made or undertaken by Borrower or any other person or entity to
Lender or others as set forth in the Loan Documents.
"Permitted Encumbrances": The outstanding liens, easements,
restrictions, security interests and other exceptions to title set forth in
the policy of title insurance insuring the lien of this Mortgage, together
with (i) the liens and security interests in favor of Lender created by the
Loan Documents, (ii) the liens for taxes, not yet delinquent, which are
being contested in accordance with Loan Agreement and (iii) any rights
under Leases entered into in accordance with the Loan Agreement.
"Property": (a) the real property described in Exhibits X-0,
X-0 xxx X-0, together with any greater estate therein as hereafter may be
acquired by Borrower (the "Land"), (b) all buildings, structures and other
improvements, now or at any time situated, placed or constructed upon the
Land (the "Improvements"), (c) the Ground Lease and the leasehold estate
created thereby, (d) all modifications, extensions and renewals of the
Ground Lease and all credits, deposits (including, without limitation, any
deposit of cash or securities or any other property which may be held to
secure Borrower's performance of its obligations under the Ground Lease),
options, privileges and rights of Borrower as lessee under the Ground
Lease, including, but not limited to, the right, if any, to renew or extend
the Ground Lease for a succeeding term or terms, (e) all the estate, right,
title, claim or demand whatsoever of Borrower either in law or in equity,
in possession or expectancy, of, in and to the Property or any part
thereof, (f) the Parking Agreements and all modifications, extensions and
renewals thereof, (g) all materials, supplies, equipment, apparatus and
other items of personal property now owned or hereafter acquired by
Borrower and now or hereafter attached to, installed in or used in
connection with any of the Improvements or the Land, and all the right,
title and interest of Borrower in and to water, gas, electrical, storm and
sanitary sewer facilities and all other utilities whether or not situated
in easements (the "Fixtures"), including, without limitation, Borrower's
reversionary interest in Fixtures pursuant to the Operating Lease, if any,
(h) all right, title and interest of Borrower in and to all goods,
accounts, general intangibles, instruments, documents, chattel paper and
all other personal property of any kind or character, including such items
of personal property as defined in the UCC, now owned or hereafter acquired
by Borrower and now or hereafter affixed to, placed upon, used in
connection with, arising from or otherwise related to the Land and
Improvements or which may be used in or relating to the planning,
development, financing or operation of the Property, including, without
limitation, furniture, furnishings, equipment, machinery, money, insurance
proceeds, accounts, contract rights, trademarks, goodwill, chattel paper,
documents, trade names, licenses and/or franchise agreements, rights of
Borrower under leases of Fixtures or other personal property or equipment,
inventory, all refundable, returnable or reimbursable fees, deposits or
other funds or evidences of credit or indebtedness deposited by or on
behalf of Borrower with any governmental authorities, boards, corporations,
providers of utility services, public or private, including specifically,
but without limitation, all refundable, returnable or reimbursable tap
fees, utility deposits, commitment fees and development costs (the
"Personalty"), (i) all right, title and interest of Borrower in and to
that certain Promissory Note dated as of April 29, 1998 by Operating Lessee
(as defined in the Loan Agreement) in favor of Operating Partnership (as
defined in the Loan Agreement), predecessor-in-interest to Borrower,
(j) all reserves, escrows or impounds required under the Loan Agreement and
all deposit accounts maintained by Borrower with respect to the Property
including without limitation any lockbox account and cash management
account and all securities, investments, property and financial assets held
from time to time, all accounts and monies held by Operating Lessee and/or
Manager which Borrower has an interest in and is entitled to receive and
all proceeds, products, distributions or dividends or substitutions thereon
and thereof (the "Accounts"), (k) all the right, title and interest of
Borrower in and to all plans, specifications, shop drawings and other
technical descriptions prepared for construction, repair or alteration of
the Improvements, and all amendments and modifications thereof (the
"Plans"), (l) all the right, title and interest of Borrower in and to all
leases, subleases, operating leases, licenses, concessions, occupancy
agreements, rental contracts, or other agreements (written or oral) now or
hereafter existing relating to the use or occupancy of all or any part of
the Property, together with all guarantees, letters of credit and other
credit support, modifications, extensions and renewals thereof, whether
before or after the filing by or against Borrower of any petition of relief
under 11 U.S.C. Section 101 et. seq. (as same may be amended from time to
time, the "Bankruptcy Code") and all related security and other deposits
(the "Leases") and all of Borrower's claims and rights (the "Bankruptcy
Claims") to the payment of damages arising from any rejection by a lessee
of any Lease under the Bankruptcy Code, (m) all of the Operating Lease Rent
(as defined in the Loan Agreement) and, if any, all of the rents, revenues,
issues, income, proceeds, profits, and all other payments of any kind under
the Leases actually received by Borrower for using, leasing, licensing,
possessing, operating from, residing in, selling or otherwise enjoying the
Property whether paid or accruing before or after the filing by or against
Borrower of any petition for relief under the Bankruptcy Code including,
without limitation, all hotel receipts, revenues and credit card receipts
collected from guest rooms, restaurants, bars, meeting rooms, banquet rooms
and recreational facilities, all receivables, customer obligations,
installment payment obligations and other obligations now existing or
hereafter arising or created out of the sale, lease, sublease, license,
concession or other grant of the right of the use and occupancy of property
or rendering of services by Borrower or any operator or manager of the
hotel or the commercial space located in the Improvements or acquired from
others (including, without limitation, from the rental of any office space,
retail space, guest rooms or other space, halls, stores, and offices, and
deposits securing reservations of such space), license, lease, sublease and
concession fees and rentals, health club membership fees, food and beverage
wholesale and retail sales, service charges, vending machine sales and
security deposits under Leases (collectively, the "Rents"), (n) all other
agreements, such as construction contracts, architects' agreements,
operating agreements, engineers' contracts, utility contracts, maintenance
agreements, franchise agreements, service contracts, permits, licenses,
certificates and entitlements in any way relating to the development,
construction, use, occupancy, operation, maintenance, enjoyment,
acquisition or ownership of the Property (the "Property Agreements"),
(o) all rights, privileges, tenements, hereditaments, rights-of-way,
easements, reciprocal easement agreements, appendages and appurtenances
appertaining to the foregoing, and all right, title and interest, if any,
of Borrower in and to any streets, ways, alleys, strips or gores of land
adjoining the Land or any part thereof, including, but not limited to, any
right, title and interest created by virtue of the Ground Lease, (p) all
accessions, replacements and substitutions for any of the foregoing and all
proceeds thereof, (q) all insurance policies, unearned premiums therefor
and proceeds from such policies covering any of the above property now or
hereafter acquired by Borrower, (r) all mineral, water, oil and gas rights
now or hereafter acquired and relating to all or any part of the Property,
(s) all tradenames, trademarks, service marks, logos, copyrights, goodwill,
books and records and all other general intangibles relating to or used in
connection with the operation of the Property, (t) all of Borrower's right,
title and interest in and to all inventory and articles of personal
property and accessions thereof and renewals and replacements thereof and
substitutions therefor, if any (including, but not limited to, beds,
bureaus, chiffoniers, chests, chairs, desks, lamps, mirrors, bookcases,
tables, rugs, carpeting, drapes, draperies, curtains, shades, venetian
blinds, screens, paintings, hangings, pictures, divans, couches, luggage
carts, luggage racks, stools, sofas, chinaware, linens, pillows, blankets,
glassware, foodcarts, cookware, dry cleaning facilities, dining room
wagons, keys or other entry systems, bars, bar fixtures, liquor and other
drink dispensers, icemakers, radios, television sets, intercom and paging
equipment, electric and electronic equipment, dictating equipment, private
telephone systems, medical equipment, potted plants, heating, lighting and
plumbing fixtures, fire prevention and extinguishing apparatus, cooling and
air-conditioning systems, elevators, escalators, fittings, plants,
apparatus, stoves, ranges, refrigerators, laundry machines, tools,
machinery, engines, dynamos, motors, boilers, incinerators, switchboards,
conduits, compressors, vacuum cleaning systems, floor cleaning, waxing and
polishing equipment, call systems, brackets, electrical signs, bulbs,
bells, ash and fuel, conveyors, cabinets, lockers, shelving, spotlighting
equipment, dishwashers, garbage disposals, washers and dryers), other
customary hotel equipment, and (u) all of Borrower's right, title and
interest in and to any awards, remunerations, reimbursements, settlements
or compensation heretofore made or hereafter to be made by any governmental
authority pertaining to the Land, Improvements, Fixtures or Personalty. As
used in this Mortgage, the term "Property" shall mean all or, where the
context permits or requires, any portion of the above or any interest
therein.
"UCC": The Uniform Commercial Code of Minnesota or, if the
creation, perfection and enforcement of any security interest herein
granted is governed by the laws of a state other than Minnesota then, as to
the matter in question, the Uniform Commercial Code in effect in that
state.
Section 1.2Other Terms. Capitalized terms not otherwise
defined herein shall have the respective meanings set forth in the Loan
Agreement.
ARTICLE II
GRANT
Section 2.1Grant. To secure the full and timely payment of
the Debt and the full and timely performance of the Obligations, Borrower
hereby MORTGAGES, GRANTS, BARGAINS, SELLS and CONVEYS to Lender all of
Borrower's right, title and interest in and to the Property, subject,
however, to the Permitted Encumbrances; TO HAVE AND TO HOLD the Property to
Lender, its successors and assigns, and Borrower does hereby bind itself,
its successors and assigns to WARRANT AND FOREVER DEFEND the title to the
Property unto Lender.
ARTICLE III
WARRANTIES, REPRESENTATIONS AND COVENANTS
Borrower warrants, represents and covenants to Lender as
follows:
Section 3.1Title to Property and Lien of this Instrument.
Borrower owns the Property free and clear of any liens, claims or
interests, except the Permitted Encumbrances. This Mortgage creates valid,
enforceable first priority liens and security interests against the
Property. Borrower warrants that Borrower has good, marketable and
insurable title to the Property and has the full power, authority and right
to execute, deliver and perform its obligations under this Mortgage. None
of the Permitted Encumbrances, individually or in the aggregate, materially
interfere with the benefits of the security intended to be provided by this
Mortgage, materially and adversely affect the value of the Property,
materially impair the use or operations of the Property or impair
Borrower's ability to pay its obligations in a timely manner.
Notwithstanding anything to the contrary contained in this Section 3.1,
Borrower and Lender hereby acknowledge and agree that Borrower owns
leasehold title to a portion of the Land more particularly described on
Exhibit A-2 (the "Lease Property") as created by virtue of the Ground Lease
and does not own fee title to such portion of the Land.
Section 3.2First Lien Status. Borrower shall preserve and
protect the first lien and security interest status of this Mortgage, the
Second Mortgage and the other Loan Documents. If any lien or security
interest other than the Permitted Encumbrances is asserted against the
Property, Borrower shall promptly, and at its expense, (a) give Lender a
detailed written notice of such lien or security interest (including
origin, amount and other terms), and (b) pay the underlying claim in full
or take such other action so as to cause it to be released or, in Lender's
discretion, provide a bond or other security satisfactory to Lender for the
payment of such claim or contest such claim in accordance with the Loan
Agreement.
Section 3.3Payment and Performance. Borrower shall pay the
Debt when due under the Loan Documents and shall perform the Obligations in
full when they are required to be performed.
Section 3.4Replacement of Fixtures and Personalty. Borrower
shall not, without the prior written consent of Lender, permit any of the
Fixtures or Personalty to be removed at any time from the Land or
Improvements unless the removed item is removed temporarily for maintenance
and repair or, if removed permanently, is obsolete and is replaced by an
article of equal or better suitability and value, owned by Borrower subject
to the liens and security interests of this Mortgage and the other Loan
Documents, and free and clear of any other lien or security interest except
such as may be first approved in writing by Lender.
Section 3.5Maintenance of Rights of Way, Easements and
Licenses. Borrower shall maintain all rights of way, easements, grants,
privileges, licenses, certificates, permits, entitlements and franchises
necessary for the use of the Property and will not, without the prior
consent of Lender, consent to any public restriction (including any zoning
ordinance) or private restriction as to the use of the Property. Borrower
shall comply in all material respects with all restrictive covenants
affecting the Property, and all zoning ordinances and other public or
private restrictions as to the use of the Property.
Section 3.6Inspection. Borrower shall permit Lender, and
Lender's agents, representatives and employees, upon reasonable prior
notice to Borrower and during normal business hours, to inspect the
Property and conduct such environmental and engineering studies as Lender
may require, provided that such inspections and studies shall not
materially interfere with the use and operation of the Property.
Section 3.7Other Covenants. All of the covenants in the Loan
Agreement are incorporated herein by reference and, together with covenants
in this Article 3, shall be covenants running with the land. The covenants
set forth in the Loan Agreement include, among other provisions: (a) the
obligation to pay (subject to Borrower's right to contest pursuant to the
terms of the Loan Agreement) when due all taxes on the Property or assessed
against Lender with respect to the Loan, (b) the right of Lender to inspect
the Property, (c) the obligation to keep the Property insured as set forth
therein, (d) the obligation to comply with all legal requirements
(including environmental laws), maintain the Property in good condition,
and promptly repair any damage or casualty, and (e) except as otherwise
permitted under the Loan Agreement, the obligation of Borrower to obtain
Lender's consent prior to entering into, modifying or taking other actions
with respect to Leases.
Section 3.8Condemnation Awards and Insurance Proceeds.
(a) Condemnation Awards. Borrower assigns all awards and
compensation for any condemnation or other taking, or any purchase in lieu
thereof, to Lender and authorizes Lender to collect and receive such awards
and compensation and to give proper receipts and acquittances therefor,
subject to the terms of the Loan Agreement.
(b) Insurance Proceeds. Borrower assigns to Lender all
proceeds of any insurance policies insuring against loss or damage to the
Property. Borrower authorizes Lender to collect and receive such proceeds
and authorizes and directs the issuer of each of such insurance policies to
make payment for all such losses directly to Lender, instead of to Borrower
and Lender jointly in accordance with Section 5.1 of the Loan Agreement.
Section 3.9Transfer or Encumbrance of Property.
(a) Without the prior written consent of Lender, neither
Borrower nor any other Person having a direct or indirect ownership or
beneficial interest in Borrower shall (i) directly or indirectly sell,
transfer, convey, mortgage, pledge, or assign the Property, any part
thereof or any interest therein (including any partnership or any other
ownership interest in Borrower); (ii) further encumber, alienate, xxxxx x
Xxxx or xxxxx any other interest in the Property or any part thereof
(including any partnership or other ownership interest in Borrower),
whether voluntarily or involuntarily; or (iii) enter into any easement or
other agreement granting rights in or restricting the use or development of
the Property.
(b) As used in this Section 3.9, "transfer" shall include,
without limitation, (i) an installment sales agreement wherein Borrower
agrees to sell the Property or any part thereof for a price to be paid in
installments; (ii) an agreement by Borrower leasing all or a substantial
part of the Property for other than actual occupancy by a space tenant
thereunder or a sale, assignment or other transfer of, or the grant of a
security interest in, Borrower's right, title and interest in and to any
Leases or any Rents, (iii) if Borrower or any general partner or managing
member of Borrower is a corporation, the voluntary or involuntary sale,
conveyance or transfer of such corporation's stock (or the stock of any
corporation directly or indirectly controlling such corporation by
operation of law or otherwise) or the creation or issuance of new stock
such that such corporation's stock shall be vested in a party or parties
who are not now stockholders or any change in the control of such
corporation; and (iv) if Borrower or any general partner or managing member
of Borrower is a limited or general partnership, joint venture or limited
liability company, the change, removal, resignation or addition of a
general partner, managing partner, limited partner, joint venturer or
member or the transfer of the partnership interest of any general partner,
managing partner or limited partner or the transfer of the interest of any
joint venture or member.
(c) Lender shall not be required to demonstrate any actual
impairment of its security or any increased risk of default hereunder in
order to declare the Debt immediately due and payable upon Borrower's sale,
conveyance, alienation, mortgage, encumbrance, pledge or transfer of the
Property without Lender's consent. This provision shall apply to every
sale, conveyance, alienation, mortgage, encumbrance, pledge or transfer of
the Property regardless of whether voluntary or not, or whether or not
Lender has consented to any previous sale, conveyance, alienation,
mortgage, encumbrance, pledge or transfer of the Property.
(d) Lender's consent to one sale, conveyance, alienation,
mortgage, encumbrance, pledge or transfer of the Property shall not be
deemed to be a waiver of Lender's right to require such consent to any
future occurrence of same. Any sale, conveyance, alienation, mortgage,
encumbrance, pledge or transfer of the Property made in contravention of
this paragraph shall be null and void and of no force and effect.
(e) Borrower agrees to bear and shall pay or reimburse Lender
on demand for all reasonable expenses (including, without limitation,
reasonable attorneys' fees and disbursements, title search costs and title
insurance endorsement premiums) incurred by Lender in connection with the
review, approval and documentation of any such sale, conveyance,
alienation, mortgage, encumbrance, pledge or transfer.
(f) Lender's consent to a one-time sale or transfer of the
Property will not be unreasonably withheld if such sale occurs in
connection with the sale of the Additional Property (as defined in the Loan
Agreement) together with the Property to one purchaser and after
consideration of all relevant factors, provided that:
(i) no Event of Default or event which with the giving
of notice or the passage of time would constitute an Event of Default shall
have occurred and remain uncured;
(ii) the proposed transferee ("Transferee") and any
indemnitor for non-recourse carveouts shall each be a reputable entity or
person of good character, creditworthy, with sufficient financial worth as
determined by Lender in its reasonable discretion considering the
obligations assumed and undertaken, as evidenced by financial statements
and other information reasonably requested by Lender;
(iii)the Transferee and its property manager shall have
sufficient experience in the ownership and management of properties similar
to the Property and the Additional Property, and Lender shall be provided
with reasonable evidence thereof (and Lender reserves the right to approve
the Transferee without approving the substitution of the property manager);
(iv) (a) the Manager (as defined in the Loan Agreement)
for the Property shall be either (1) the manager immediately prior to such
transfer, (2) a professional management company, which at the time of its
engagement as manager shall be the property manager for at least ten (10)
hotel properties containing at least two thousand (2000) rooms, exclusive
of the Property and Additional Property or (3) such other manager
reasonably satisfactory to Lender and (b) any new Management Agreement (as
defined in the Loan Agreement) shall be satisfactory to Lender in its
reasonable discretion;
(v) (a) the Operating Lessee shall be either (1) the
operating lessee immediately prior to such transfer, (2) an affiliate of
hotel operating company, which such operating company at the time of
engagement shall be operating and controlling, as owner, manager or
operating lessee, at least ten (10) hotel properties consisting of at least
two thousand (2000) rooms, exclusive of the Property and Additional
Property, and a single purpose bankruptcy-remote entity in accordance with
the then-current standards of the Rating Agencies or (3) such other
operating lessee reasonably satisfactory to Lender and (b) any new
Operating Lease (as defined in the Loan Agreement) shall be satisfactory to
Lender in its reasonable discretion;
(vi) Lender shall have confirmation in writing from the
Rating Agencies (as hereinafter defined) to the effect that such transfer
will not result in a re-qualification, reduction or withdrawal of the then
current rating assigned in a Securitization (as defined in the Loan
Agreement). The term "Rating Agencies" as used herein shall mean each of
Standard & Poor's Ratings Group, a division of XxXxxx-Xxxx, Inc., Xxxxx'x
Investors Service, Inc., Duff & Xxxxxx Credit Rating Co. and Fitch IBCA,
Inc., or any other nationally-recognized statistical rating agency which
has been selected by Lender;
(vii)Lender shall have received evidence satisfactory to
it (which shall include a legal non-consolidation opinion reasonably
acceptable to Lender) that the single purpose nature and bankruptcy
remoteness of Transferee, its shareholders, partners, or members, as the
case may be, following such transfers are in accordance with the standards
of the Rating Agencies;
(viii) the Transferee shall have executed and
delivered to Lender an assumption agreement in form and substance
reasonably acceptable to Lender, evidencing such Transferee's agreement to
abide and be bound by the terms of the Note, this Mortgage and the other
Loan Documents, together with such legal opinions and title insurance
endorsements as may be reasonably requested by Lender;
(ix) the franchise or franchise system for the Property
shall be either the franchise or franchise system in place immediately
prior to such transfer or a franchise or franchise system reasonably
satisfactory to Lender; and
(x) Lender shall have received the payment of all out
of pocket costs and expenses incurred by Lender in connection with such
assumption (including reasonable attorney's fees and costs).
(g) Notwithstanding anything to the contrary contained herein
or any other Loan Documents, Lender's consent shall not be required for any
of the following sales, transfers, assignments, pledges, conveyances or
encumbrances, provided that Lender has received payment in full of all its
costs and expenses incurred in connection therewith:
(i) with respect to the REIT, (A) any transfer of all
or any portion of any shares of beneficial interests of the REIT for so
long as the shares of the REIT continues to be publicly traded on a
national stock exchange and (B) the issuance of additional shares of the
REIT;
(ii) with respect to the Operating Partnership, (A) any
transfer of limited partnership interests in the Operating Partnership and
(B) the issuance of additional limited partnership units or other
securities, even if such issuance results in a reduction of the partnership
interest of the REIT in the Operating Partnership, provided that, after
giving effect to such transfer or series of transfers described in (A) or
(B), the REIT owns more than fifty-one percent (51%) of the partnership
interests of the Operating Partnership.
Section 3.10 Ground Lease. Borrower shall (a) pay all
rents, additional rents and other sums required to be paid by Borrower, as
tenant under and pursuant to the provisions of the Ground Lease as and when
such rent or other charge is payable, (b) diligently perform and observe
all of the terms, covenants and conditions of the Ground Lease on the part
of Borrower, as tenant thereunder, to be performed and observed at least
thirty (30) days prior to the expiration of any applicable grace period
therein provided, and (c) promptly notify Lender of the giving of any
notice by the Ground Lessor to Borrower of any default by Borrower in the
performance or observance of any of the terms, covenants or conditions of
the Ground Lease on the part of Borrower, as tenant thereunder, to be
performed or observed and deliver to Lender a true copy of each such
notice. Borrower shall not, without the prior consent of Lender, surrender
the leasehold estate created by the Ground Lease or terminate or cancel the
Ground Lease or modify, change, supplement, alter or amend the Ground
Lease, in any material respect, either orally or in writing, and Borrower
hereby assigns to Lender, as further security for the payment of the Debt
and for the performance and observance of the terms, covenants and
conditions of this Mortgage, the Second Mortgage and the Loan Agreement,
all of the rights, privileges and prerogatives of Borrower, as tenant under
the Ground Lease, to surrender the leasehold estate created by the Ground
Lease or to terminate, cancel, modify in any material respect, change in
any material respect, supplement in any material respect, alter or amend in
any material respect the Ground Lease, and any such surrender of the
leasehold estate created by the Ground Lease or termination, cancellation,
modification, change, supplement, alteration or amendment of the Ground
Lease without the prior consent of Lender shall be void and of no force and
effect. Borrower shall not exercise any option to purchase the Lease
Property granted to Borrower pursuant to the Ground Lease, without the
prior written consent of Lender, which consent shall not be unreasonably
withheld, conditioned or delayed. If Borrower shall default in the
performance or observance of any term, covenant or condition of the Ground
Lease on the part of Borrower, as tenant thereunder, to be performed or
observed, then, without limiting the generality of the other provisions of
this Mortgage, the Second Mortgage and the Loan Agreement, and without
waiving or releasing Borrower from any of its obligations hereunder or
thereunder, Lender shall have the right, but shall be under no obligation,
to pay any sums and to perform any act or take any action as may be
appropriate to cause all of the terms, covenants and conditions of the
Ground Lease on the part of Borrower, as tenant thereunder, to be performed
or observed or to be promptly performed or observed on behalf of Borrower,
to the end that the rights of Borrower in, to and under the Ground Lease
shall be kept unimpaired and free from default (subject to Borrower's right
to contest in accordance with the Loan Agreement). If Lender shall make
any payment or perform any act or take action in accordance with the
preceding sentence, Lender will notify Borrower of the making of any such
payment, the performance of any such act, or the taking of any such action.
In any such event, subject to the rights of tenants, subtenants and other
occupants under the Leases, Lender and any person designated by Lender
shall have, and are hereby granted, the right to enter upon the Property at
any time and from time to time for the purpose of taking any such action.
Lender may pay and expend such sums of money as Lender deems reasonably
necessary for any such purpose and upon so doing shall be subrogated to any
and all rights of the Ground Lessor. Borrower hereby agrees to pay to
Lender immediately upon demand therefor, all such sums so paid and expended
by Lender, together with interest thereon from the day of such payment at
the Default Rate. All sums so paid and expended by Lender and the interest
thereon shall be secured by the legal operation and effect of the Mortgage
and Second Mortgage. If the Ground Lessor shall deliver to Lender a copy
of any notice of default sent by said Ground Lessor to Borrower, as tenant
under the Ground Lease, such notice shall constitute full protection to
Lender for any action taken or omitted to be taken by Lender, in good
faith, in reliance thereon. Borrower shall exercise each individual
option, if any, to extend or renew the term of the Ground Lease upon demand
by Lender made at any time within one (1) year of the last day upon which
any such option may be exercised, and, if Borrower fails to exercise such
option, Borrower hereby expressly authorizes and appoints Lender its
attorney-in-fact to exercise any such option in the name of and upon behalf
of Borrower, which power of attorney shall be irrevocable and shall be
deemed to be coupled with an interest. Borrower will not subordinate or
consent to the subordination of the Ground Lease to any mortgage, security
deed, lease or other interest on or in the Ground Lessor's interest in all
or any part of the Property, unless, in each such case, the written consent
of Lender shall have been first had and obtained, which consent shall be in
Lender's sole and absolute discretion. Each Lease hereafter made and each
renewal of any existing Lease shall provide that, (i) in the event of the
termination of the Ground Lease, the Lease shall not terminate or be
terminated by the tenant; (ii) in the event of any action for the
foreclosure of the Mortgage or Second Mortgage, the Lease shall not
terminate or be terminable by the tenant by reason of the foreclosure of
the Ground Lease unless the tenant is specifically named and joined in any
such action and unless a judgment is obtained therein against the tenant;
and (iii) in the event that the Ground Lease is terminated as aforesaid,
the tenant shall attorn to the Ground Lessor or to the purchaser at the
sale of the Property on such foreclosure, as the case may be.
Section 3.11 No Merger of Fee and Leasehold Estates;
Releases. So long as any portion of the Debt shall remain unpaid, unless
Lender shall otherwise consent, the fee title to the Lease Property and the
leasehold estate therein created pursuant to the provisions of the Ground
Lease shall not merge but shall always be kept separate and distinct,
notwithstanding the union of such estates in Borrower, Lender, or in any
other person by purchase, operation of law or otherwise. Lender reserves
the right, at any time, to release portions of the Lease Property,
including, but not limited to, the leasehold estate created by the Ground
Lease, with or without consideration, at Lender's election, without waiving
or affecting any of its rights hereunder or under the Note or the other
Loan Documents and any such release shall not affect Lender's rights in
connection with the portion of the Lease Property not so released.
Section 3.12 Borrower's Acquisition of Fee Estate. In the
event that Borrower, so long as any portion of the Debt remains unpaid,
shall be the owner and holder of the fee title to the Lease Property, the
liens of the Mortgage and Second Mortgage shall be spread to cover
Borrower's fee title to the Lease Property and said fee title shall be
deemed to be included in the Property. Borrower agrees, at its sole cost
and expense, including without limitation Lender's reasonable attorneys'
fees, to (a) execute any and all documents or instruments reasonably
necessary to subject its fee title to the Lease Property to the liens of
the Mortgage and Second Mortgage; and (b) provide a title insurance policy,
or endorsement thereto, which shall insure that the lien of the Mortgage is
a first lien on Borrower's fee title to the Lease Property and the lien of
the Second Mortgage is a second lien on Borrower's fee title to the Lease
Property. Notwithstanding the foregoing, if the Ground Lease is for any
reason whatsoever terminated prior to the natural expiration of its term,
and if, pursuant to any provisions of the Ground Lease or otherwise, Lender
or its designee shall acquire from the Ground Lessor thereunder another
lease of the Lease Property, Borrower shall have no right, title or
interest in or to such other lease or the leasehold estate created thereby.
Section 3.13 Rejection of the Ground Lease.
(a) If the Ground Lease is terminated for any reason in the
event of the rejection or disaffirmance of the Ground Lease pursuant to the
Bankruptcy Code, or any other law affecting creditor's rights, (i) the
Borrower, immediately after obtaining notice thereof, shall give notice
thereto to Lender, (ii) Borrower, without the prior written consent of
Lender, shall not elect to treat the Ground Lease as terminated pursuant to
Section 365(h) of the Bankruptcy Code or any comparable federal or state
statute or law, and any election by Borrower made without such consent
shall be void and (iii) this Mortgage, the Second Mortgage and the Loan
Agreement and all the liens, terms, covenants and conditions of this
Mortgage, the Second Mortgage and the Loan Agreement hereby extends to and
covers Borrower's possessory rights under Section 365(h) of the Bankruptcy
Code and to any claim for damages due to the rejection of the Ground Lease
or other termination of the Ground Lease. In addition, Borrower hereby
assigns irrevocably to Lender, Borrower's rights to treat the Ground Lease
as terminated pursuant to Section 365(h) of the Bankruptcy Code and to
offset rents under such Ground Lease in the event any case, proceeding or
other action is commenced by or against the Ground Lessor under the
Bankruptcy Code or any comparable federal or state statute or law.
(b) Borrower hereby assigns to Lender, (i) Borrower's right
to reject the Ground Lease under Section 365 of the Bankruptcy Code or any
comparable federal or state statute or law with respect to any case,
proceeding or other action commenced by or against Borrower under the
Bankruptcy Code or comparable federal or state statute or law and (ii)
Borrower's right to seek an extension of the 60-day period within which
Borrower must accept or reject the Ground Lease under Section 365 of the
Code or any comparable federal or state statute or law with respect to any
case, proceeding or other action commenced by or against Borrower under the
Bankruptcy Code or comparable federal or state statute or law. Further, if
the foregoing assignment is not effective under applicable law and Borrower
shall desire to so reject the Ground Lease, at Lender's request, Borrower
shall assign its interest in the Ground Lease to Lender in lieu of
rejecting such Ground Lease as described above, upon receipt by Borrower of
written notice from Lender of such request together with Lender's agreement
to cure any existing defaults of Borrower under such Ground Lease.
(c) Borrower hereby agrees that if the Ground Lease is
terminated for any reason in the event of the rejection or disaffirmance of
the Ground Lease pursuant to the Bankruptcy Code or any other law affecting
creditor's rights, any property not removed by the Borrower as permitted or
required by the Ground Lease, shall at the option of Lender be deemed
abandoned by Borrower, provided that Lender may remove any such property
required to be removed by Borrower pursuant to the Ground Lease and all
reasonable costs and expenses associated with such removal shall be paid by
Borrower within five (5) days of receipt by Borrower of an invoice for such
removal costs and expenses.
ARTICLE IV
DEFAULT AND FORECLOSURE
Section 4.1Remedies. If an Event of Default (as defined in
the Loan Agreement) exists, Lender may, at Lender's election, exercise any
or all of the following rights, remedies and recourses:
(a) Acceleration. Declare the Debt to be immediately due and
payable, without further notice, presentment, protest, notice of intent to
accelerate, notice of acceleration, demand or action of any nature
whatsoever (each of which hereby is expressly waived by Borrower),
whereupon the same shall become immediately due and payable.
(b) Entry on Property. Enter the Property and take exclusive
possession thereof and of all books, records and accounts relating thereto.
If Borrower remains in possession of the Property after an Event of Default
and without Lender's prior written consent, Lender may invoke any legal
remedies to dispossess Borrower.
(c) Operation of Property. Hold, lease, develop, manage,
operate or otherwise use the Property upon such terms and conditions as
Lender may deem reasonable under the circumstances (making such repairs,
alterations, additions and improvements and taking other actions, from time
to time, as Lender deems necessary or desirable), and apply all Rents and
other amounts collected by Lender in connection therewith in accordance
with the provisions of Section 4.6.
(d) Foreclosure and Sale. Institute proceedings for the
complete foreclosure of this Mortgage, in which case the Property may be
sold for cash or credit in one or more parcels. At any such sale by virtue
of any judicial proceedings or any other legal right, remedy or recourse,
the title to and right of possession of any such property shall pass to the
purchaser thereof, and to the fullest extent permitted by law, Borrower
shall be completely and irrevocably divested of all of its right, title,
interest, claim and demand whatsoever, either at law or in equity, in and
to the property sold and such sale shall be a perpetual bar both at law and
in equity against Borrower, and against all other persons claiming the
property sold or any part thereof, by, through or under Borrower. Lender
may be a purchaser at such sale and if Lender is the highest bidder, may
credit the portion of the purchase price that would be distributed to
Lender against the Debt in lieu of paying cash.
(e) Receiver. Make application to a court of competent
jurisdiction for, and obtain from such court as a matter of strict right
and without notice to Borrower or regard to the adequacy of the Property
for the repayment of the Debt, the appointment of a receiver of the
Property, and Borrower irrevocably consents to such appointment. Any such
receiver shall have all the usual powers and duties of receivers in similar
cases, including the full power to rent, maintain and otherwise operate the
Property upon such terms as may be approved by the court, and shall apply
such Rents in accordance with the provisions of Section 4.6.
(f) UCC. Exercise any and all rights and remedies granted to
a secured party upon default under the Uniform Commercial Code, including,
without limiting the generality of the foregoing: (i) the right to take
possession of the Personalty or any part thereof, and to take such other
measures as Lender may deem necessary for the care, protection and
preservation of the Personalty, and (ii) request Borrower at its expense to
assemble the Personalty and make it available to Lender at a convenient
place acceptable to Lender. Any notice of sale, disposition or other
intended action by Lender with respect to the Personalty 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;
(g) Other. Exercise all other rights, remedies and recourses
granted under the Loan Documents or otherwise available at law or in equity
(including an action for specific performance of any covenant contained in
the Loan Documents, or a judgment on the Note either before, during or
after any proceeding to enforce this Mortgage).
Section 4.2Separate Sales. The Property may be sold in one or
more parcels and in such manner and order as Lender in its sole discretion,
may elect; the right of sale arising out of any Event of Default shall not
be exhausted by any one or more sales.
Section 4.3Remedies Cumulative, Concurrent and Nonexclusive.
Lender shall have all rights, remedies and recourses granted in the Loan
Documents and available at law or equity (including the UCC), which rights
(a) shall be cumulative and concurrent, (b) may be pursued separately,
successively or concurrently against Borrower or others obligated under the
Note and the other Loan Documents, or against the Property, or against any
one or more of them, at the sole discretion of Lender, (c) may be exercised
as often as occasion therefor shall arise, and the exercise or failure to
exercise any of them shall not be construed as a waiver or release thereof
or of any other right, remedy or recourse, and (d) are intended to be, and
shall be, nonexclusive. No action by Lender in the enforcement of any
rights, remedies or recourses under the Loan Documents or otherwise at law
or equity shall be deemed to cure any Event of Default.
Section 4.4Release of and Resort to Collateral. Lender may
release, regardless of consideration and without the necessity for any
notice to or consent by the holder of any subordinate lien on the Property,
any part of the Property without, as to the remainder, in any way
impairing, affecting, subordinating or releasing the lien or security
interests created in or evidenced by the Loan Documents or their status as
a first and prior lien and security interest in and to the Property. For
payment of the Debt, Lender may resort to any other security in such order
and manner as Lender may elect.
Section 4.5Discontinuance of Proceedings. If Lender shall
have proceeded to invoke any right, remedy or recourse permitted under the
Loan Documents and shall thereafter elect to discontinue or abandon it for
any reason, Lender shall have the unqualified right to do so and, in such
an event, Borrower and Lender shall be restored to their former positions
with respect to the Debt, the Obligations, the Loan Documents, the Property
and otherwise, and the rights, remedies, recourses and powers of Lender
shall continue as if the right, remedy or recourse had never been invoked,
but no such discontinuance or abandonment shall waive any Event of Default
which may then exist or the right of Lender thereafter to exercise any
right, remedy or recourse under the Loan Documents for such Event of
Default.
Section 4.6Application of Proceeds. The proceeds of any sale
of, and the Rents and other amounts generated by the holding, leasing,
management, operation or other use of the Property, shall be applied by
Lender (or the receiver, if one is appointed) in the following order unless
otherwise required by applicable law:
(a) to the payment of the reasonable costs and expenses of
taking possession of the Property and of holding, using, leasing,
repairing, and selling the same, including, without limitation (i)
receiver's fees and expenses, (ii) court costs, (iii) attorneys' and
accountants' fees and expenses, (iv) costs of advertisement, (v) insurance
premiums and (vi) the payment of all ground rent, real estate taxes and
assessments, except any taxes, assessments or other charges subject to
which the Property shall have been sold;
(b) to the payment of all amounts (including interest), other
than the unpaid principal balance of the Note and accrued but unpaid
interest, which may be due to Lender under the Loan Documents;
(c) to the payment of the Debt in such manner and order of
preference as Lender in its sole discretion may determine; and
(d) the balance, if any, to the payment of the persons
legally entitled thereto.
Section 4.7Occupancy After Foreclosure. The purchaser at any
foreclosure sale pursuant to Section 4.1(d) shall become the legal owner of
the Property. All occupants of the Property shall, at the option of such
purchaser and subject to the rights of tenants to remain in possession,
become tenants of the purchaser at the foreclosure sale and shall deliver
possession thereof immediately to the purchaser upon demand. It shall not
be necessary for the purchaser at said sale to bring any action for
possession of the Property other than the statutory action of forcible
detainer in any justice court having jurisdiction over the Property.
Section 4.8 Additional Advances and Disbursements, Costs of
Enforcement.
(a) If any Event of Default exists, Lender shall have the
right, but not the obligation, to cure such Event of Default in the name
and on behalf of Borrower. All sums advanced and expenses incurred at any
time by Lender under this Section 4.8, or otherwise under this Mortgage or
any of the other Loan Documents or applicable law, shall bear interest from
the date that such sum is advanced or expense incurred, to and including
the date of reimbursement, computed at the Default Rate (as defined in the
Loan Agreement), and all such sums, together with interest thereon, shall
be secured by this Mortgage.
(b) Borrower shall pay all reasonable expenses (including
reasonable attorneys' fees and expenses) of or incidental to the perfection
and enforcement of this Mortgage and the other Loan Documents, or the
enforcement, compromise or settlement of the Debt or any claim under this
Mortgage and the other Loan Documents, and for the curing thereof, or for
defending or asserting the rights and claims of Lender in respect thereof,
by litigation or otherwise.
Section 4.9No Lender in Possession. Neither the enforcement
of any of the remedies under this Article 4, the assignment of the Rents
and Leases under Article 5, the security interests under Article 6, nor any
other remedies afforded to Lender under the Loan Documents, at law or in
equity shall cause Lender to be deemed or construed to be a mortgagee in
possession of the Property, to obligate Lender to lease the Property or
attempt to do so, or to take any action, incur any expense, or perform or
discharge any obligation, duty or liability whatsoever under any of the
Leases or otherwise.
Section 4.10 Actions and Proceedings. Lender has the
right to appear in and defend any action or proceeding brought with respect
to the Property, if reasonably necessary to protect Lender's interest in
the Property, and to bring any action or proceeding, in the name and on
behalf of Borrower, which Lender, in its reasonable discretion, decides
should be brought to protect its interest in the Property.
Section 4.11 Waiver of Redemption, Notice and Marshalling
of Assets. To the fullest extent permitted by law, Borrower hereby
irrevocably and unconditionally waives and releases (a) all benefit that
might accrue to Borrower by virtue of any present or future statute of
limitations or law or judicial decision exempting the Property from
attachment, levy or sale on execution or providing for any appraisement,
valuation, stay of execution, exemption from civil process, redemption or
extension of time for payment, (b) all notices of any Event of Default or
of Lender's election to exercise or its actual exercise of any right,
remedy or recourse provided for under the Loan Documents, and (c) any right
to a marshalling of assets or a sale in inverse order of alienation.
ARTICLE V
ASSIGNMENT OF RENTS AND LEASES
Section 5.1Assignment. Borrower acknowledges and confirms
that it has executed and delivered to Lender an Assignment of Leases and
Rents of even date herewith (the "Assignment of Leases and Rents"),
intending that such instrument create a present, absolute assignment to
Lender of the Leases and Rents. Without limiting the intended benefits or
the remedies provided under the Assignment of Leases and Rents, Borrower
hereby assigns to Lender, as further security for the Debt and the
Obligations, the Leases and Rents. While any Event of Default exists,
Lender shall be entitled to exercise any or all of the remedies provided in
the Assignment of Leases and Rents and in Article 4 hereof including,
without limitation, the right to have a receiver appointed. If any
conflict or inconsistency exists between the assignment of the Rents and
the Leases in this Mortgage and the absolute assignment of the Leases and
Rents in the Assignment of Leases and Rents, the terms of the Assignment of
Leases and Rents shall control.
Section 5.2No Merger of Estates. So long as any part of the
Debt and the Obligations secured hereby remain unpaid and undischarged, the
fee and leasehold estates to the Property shall not merge, but shall remain
separate and distinct, notwithstanding the union of such estates either in
Borrower, Lender, any lessee or any third party by purchase or otherwise.
ARTICLE VI
SECURITY AGREEMENT
Section 6.1Security Interest. This Mortgage constitutes a
"Security Agreement" on personal property within the meaning of the UCC and
other applicable law and with respect to the Personalty, Fixtures, Plans,
Leases, Rents, Accounts and Property Agreements. To this end, Borrower
grants to Lender, a first and prior security interest in the Personalty,
Fixtures, Plans, Leases, Rents, Accounts and Property Agreements and all
other Property which is personal property to secure the payment of the Debt
and performance of the Obligations, and agrees that Lender shall have all
the rights and remedies of a secured party under the UCC with respect to
such property. Any notice of sale, disposition or other intended action by
Lender with respect to the Personality, Fixtures, Plans, Leases, Rents,
Accounts and Property Agreements sent to Borrower at least ten (10) days
prior to any action under the UCC shall constitute reasonable notice to
Borrower.
Section 6.2Financing Statements. Borrower shall execute and
deliver to Lender, in form and substance reasonably satisfactory to Lender,
such financing statements and such further assurances as Lender may, from
time to time, reasonably consider necessary to perfect and preserve
Lender's security interest hereunder and Lender may cause such statements
and assurances to be recorded and filed, at such times and places as may be
required or permitted by law to so create, perfect and preserve such
security interest. Borrower's chief executive office is in the District of
Columbia at the address set forth in the first paragraph of this Mortgage.
Section 6.3Fixture Filing. This Mortgage shall also
constitute a "fixture filing" for the purposes of the UCC against all of
the Property which is or is to become fixtures. Information concerning the
security interest herein granted may be obtained at the addresses of Debtor
(Borrower) and Secured Party (Lender) as set forth in the first paragraph
of this Mortgage.
ARTICLE VII
MISCELLANEOUS
Section 7.1Limitation on Interest. It is the intention of the
parties hereto to conform strictly to applicable usury laws. Accordingly,
all agreements between Borrower and Lender with respect to the Loan are
hereby expressly limited so that in no event, whether by reason of
acceleration of maturity or otherwise, shall the amount paid or agreed to
be paid to Lender or charged by Lender for the use, forbearance or
detention of the money to be lent hereunder or otherwise, exceed the
maximum amount allowed by law. If the Loan would be usurious under
applicable law (including the laws of the state where the Property is
located and the laws of the United States of America), then,
notwithstanding anything to the contrary in the Loan Documents: (a) the
aggregate of all consideration which constitutes interest under applicable
law that is contracted for, taken, reserved, charged or received under the
Loan Documents shall under no circumstances exceed the maximum amount of
interest allowed by applicable law, and any excess shall be credited on the
Debt; and (b) if maturity is accelerated by reason of an election by
Lender, or in the event of any prepayment, then any consideration which
constitutes interest may never include more than the maximum amount allowed
by applicable law. In such case, excess interest, if any, provided for in
the Loan Documents or otherwise, to the extent permitted by applicable law,
shall be amortized, prorated, allocated and spread from the date of advance
until payment in full so that the actual rate of interest is uniform
through the term hereof. If such amortization, proration, allocation and
spreading is not permitted under applicable law, then such excess interest
shall be canceled automatically as of the date of such acceleration or
prepayment and, if theretofore paid, shall be credited on the Debt. The
Loan Documents are contracts made under and shall be construed in
accordance with and governed by the laws of the State of New York, except
that if at any time the laws of the United States of America permit Lender
to contract for, take, reserve, charge or receive a higher rate of interest
than is allowed by the laws of the State of New York (whether such federal
laws directly so provide or refer to the law of any state), then such
federal laws shall to such extent govern as to the rate of interest which
Lender may contract for, take, reserve, charge or receive under the Loan
Documents.
Section 7.2Notices. Any notice required or permitted to be
given under this Mortgage shall be (a) in writing, (b) sent in the manner
set forth in the Loan Agreement, and (c) effective in accordance with the
terms of the Loan Agreement.
Section 7.3Covenants Running with the Land. All Obligations
contained in this Mortgage are intended by Borrower and Lender to be, and
shall be construed as, covenants running with the Property. As used
herein, "Borrower" shall refer to the party named in the first paragraph of
this Mortgage and to any subsequent owner of all or any portion of the
Property (without in any way implying that Lender has or will consent to
any such conveyance or transfer of the Property). All persons or entities
who may have or acquire an interest in the Property shall be deemed to have
notice of, and be bound by, the terms of the Loan Agreement and the other
Loan Documents; however, no such party shall be entitled to any rights
thereunder without the prior written consent of Lender.
Section 7.4Attorney-in-Fact. Borrower hereby irrevocably
appoints Lender and its successors and assigns, as its attorney-in-fact,
which agency is coupled with an interest, (a) to execute and/or record any
notices of completion, cessation of labor or any other notices that Lender
deems reasonably necessary to protect Lender's interest, if Borrower shall
fail to do so within ten (10) days after written request by Lender, (b)
upon the issuance of a deed pursuant to the foreclosure of this Mortgage or
the delivery of a deed in lieu of foreclosure, to execute all instruments
of assignment, conveyance or further assurance with respect to the Leases,
Rents, Personalty, Fixtures, Plans and Property Agreements in favor of the
grantee of any such deed and as may be reasonably necessary for such
purpose, (c) to prepare, execute and file or record financing statements,
continuation statements, applications for registration and like papers
necessary to create, perfect or preserve Lender's security interests and
rights in or to any of the collateral and (d) while any Event of Default
exists, to perform any obligation of Borrower hereunder; however: (i)
Lender shall not under any circumstances be obligated to perform any
obligation of Borrower; (ii) any sums advanced by Lender in such
performance shall be added to and included in the Debt and shall bear
interest at the Default Rate; (iii) Lender as such attorney-in-fact shall
only be accountable for such funds as are actually received by Lender; and
(iv) Lender shall not be liable to Borrower or any other person or entity
for any failure to take any action which it is empowered to take under this
Section.
Section 7.5Successors and Assigns. This Mortgage shall be
binding upon and inure to the benefit of Lender and Borrower and their
respective successors and assigns. Borrower shall not, without the prior
written consent of Lender, except as expressly permitted pursuant to
Section 3.9 hereof, assign any rights, duties or obligations hereunder.
Section 7.6No Waiver. Any failure by Lender to insist upon
strict performance of any of the terms, provisions or conditions of the
Loan Documents shall not be deemed to be a waiver of same, and Lender shall
have the right at any time to insist upon strict performance of all of such
terms, provisions and conditions.
Section 7.7Subrogation. To the extent proceeds of the Note
have been used to extinguish, extend or renew any indebtedness against the
Property, then Lender shall be subrogated to all of the rights, liens and
interests existing against the Property and held by the holder of such
indebtedness and such former rights, liens and interests, if any, are not
waived, but are continued in full force and effect in favor of Lender.
Section 7.8Loan Agreement. If any conflict or inconsistency
exists between this Mortgage and the Loan Agreement, the Loan Agreement
shall govern.
Section 7.9Release. Upon payment in full of the Debt and
performance in full of the Obligations, Lender, at Borrower's expense,
shall release the liens and security interests created by this Mortgage.
Section 7.10 Waiver of Stay, Moratorium and Similar
Rights. Borrower agrees, to the full extent that it may lawfully do so,
that it will not at any time insist upon or plead or in any way take
advantage of any appraisement, valuation, stay, marshaling of assets,
extension, redemption or moratorium law now or hereafter in force and
effect so as to prevent or hinder the enforcement of the provisions of this
Mortgage or the Debt secured hereby, or any agreement between Borrower and
Lender or any rights or remedies of Lender.
Section 7.11 Limitation on Liability. Borrower's
liability hereunder is subject to the limitation on liability provisions of
Article 13 of the Loan Agreement.
Section 7.12 Obligations of Borrower, Joint and Several.
If more than one person or entity has executed this Mortgage as "Borrower,"
the obligations of all such persons or entities hereunder shall be joint
and several.
Section 7.13 Governing Law. THIS MORTGAGE WAS NEGOTIATED
IN THE STATE OF NEW YORK, AND MADE BY LENDER AND ACCEPTED BY BORROWER IN
THE STATE OF NEW YORK, AND THE PROCEEDS OF THE NOTE SECURED HEREBY WERE
DISBURSED FROM THE STATE OF NEW YORK, WHICH STATE THE PARTIES AGREE HAS A
SUBSTANTIAL RELATIONSHIP TO THE PARTIES AND TO THE UNDERLYING TRANSACTION
EMBODIED HEREBY, AND IN ALL RESPECTS, INCLUDING, WITHOUT LIMITING THE
GENERALITY OF THE FOREGOING, MATTERS OF CONSTRUCTION, VALIDITY AND
PERFORMANCE, THIS MORTGAGE AND THE OBLIGATIONS ARISING HEREUNDER SHALL BE
GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW
YORK APPLICABLE TO CONTRACTS MADE AND PERFORMED IN SUCH STATE (WITHOUT
REGARD TO PRINCIPLES OF CONFLICT LAWS) AND ANY APPLICABLE LAW OF THE UNITED
STATES OF AMERICA, EXCEPT THAT AT ALL TIMES THE PROVISIONS FOR THE
CREATION, PERFECTION, AND ENFORCEMENT OF THE LIENS AND SECURITY INTERESTS
CREATED ON REAL PROPERTY (INCLUDING FIXTURES) PURSUANT HERETO AND PURSUANT
TO THE OTHER LOAN DOCUMENTS SHALL BE GOVERNED BY AND CONSTRUED ACCORDING TO
THE LAW OF THE STATE IN WHICH THE PROPERTY IS LOCATED, IT BEING UNDERSTOOD
THAT, TO THE FULLEST EXTENT PERMITTED BY THE LAW OF SUCH STATE, THE LAW OF
THE STATE OF NEW YORK SHALL GOVERN THE CONSTRUCTION, VALIDITY AND
ENFORCEABILITY OF ALL LOAN DOCUMENTS AND ALL OF THE OBLIGATIONS ARISING
HEREUNDER OR THEREUNDER. TO THE FULLEST EXTENT PERMITTED BY LAW, BORROWER
HEREBY UNCONDITIONALLY AND IRREVOCABLY WAIVES ANY CLAIM TO ASSERT THAT THE
LAW OF ANY OTHER JURISDICTION GOVERNS THIS MORTGAGE, AND THIS MORTGAGE
SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE
OF NEW YORK PURSUANT TO SECTION 5-1401 OF THE NEW YORK GENERAL OBLIGATIONS
LAW.
Section 7.14 Headings. The Article, Section and
Subsection titles hereof are inserted for convenience of reference only and
shall in no way alter, modify or define, or be used in construing, the text
of such Articles, Section or Subsections.
Section 7.15 Entire Agreement. This Mortgage and the
other Loan Documents embody the entire agreement and understanding between
Lender and Borrower and supersede all prior agreements and understandings
between such parties relating to the subject matter hereof and thereof.
Accordingly, the Loan Documents may not be contradicted by evidence of
prior, contemporaneous or subsequent oral agreements of the parties. There
are no unwritten oral agreements between the parties.
ARTICLE VIII
INTENTIONALLY DELETED
ARTICLE IX
SPECIAL STATE PROVISIONS
Section 9.1 Principles of Construction. In the event of any
inconsistencies between the terms and conditions of this Article IX and the
terms and conditions of this Mortgage, the terms and conditions of this
Article IX shall control and be binding.
Section 9.2 Application to Minnesota Property. Notwithstanding
anything in this Mortgage to the contrary, to the extent the applicable
portion of the Property is situated in the State of Minnesota or to the
extent the application, interpretation or treatment of this Mortgage is
subject to Minnesota laws, the following shall apply:
(a) Definitions.
(i) "Collateral": The Personalty, Plans, Leases, Rents, Property
Agreements and any other Property which may not be deemed real property or
may not constitute a "fixture" (within the meaning of Minn. Stat. Section
336.9-313 of the UCC) and all replacements, substitutions, and additions
of, for and to the same, and the proceeds thereof.
(ii) "Property": The definition of Property shall be as set forth
in this Mortgage, except that for purposes of Lender exercising its
remedies hereunder in Minnesota, all references herein to the Property or
any component of the Property shall refer to the Property or component
thereof in Minnesota.
(b) Drafting Information. This instrument was drafted by:
Xxxxx Xxxxx, Esq.
Cadwalader, Xxxxxxxxxx & Xxxx
000 Xxxxxx Xxxx
Xxx Xxxx, XX 00000
(c) Multistate Affidavit Allocation. Attached hereto as
Exhibit B is an Affidavit for purposes of determining mortgage registration
tax pursuant to Minn. Stat. Section 287.05, Subd. 1.
(d) Exhibit A. All references to Exhibit A shall include
reference to Exhibits X-0, X-0 and A-3 attached hereto, with Exhibits A-1
and A-2 to be the "Minnesota Property" and Exhibit A-3 to be the "Non-
Minnesota Property."
(e) Secured Obligations. Notwithstanding anything in this
Mortgage to the contrary, this Mortgage shall secure the following
Obligations:
(i) The debt evidenced by the Note in the principal face amount of
THIRTY MILLION THREE HUNDRED THOUSAND AND NO/100 DOLLARS ($30,300,000.00);
(ii) any and all other charges and amounts payable under the Note,
this Mortgage or the Loan Documents, as are exempt from Minnesota mortgage
registry tax (the "Registry Tax") under Minn. Stat. Section 287.05, Subd.
4;
(iii) any and all charges, amounts and non-monetary obligations under
the Note, this Mortgage or the Loan Documents, which are not otherwise
subject to Registry Tax;
(iv) any and all charges and amounts payable under the Note, this
Mortgage or the Loan Documents, not referred to in clauses (i), (ii) or
(iii) on which the Registry Tax has been paid; and
(v) interest from time to time payable on any or all of the
foregoing.
(f) Minnesota Remedies. If an Event of Default exists,
Lender may, at Lender's election, exercise any of the following rights,
remedies and recourses:
(i) Foreclosure and Sale. Foreclose this Mortgage by judicial
proceedings or by advertisement with full authority to sell the Property at
public auction and convey the same to the purchaser in fee simple, either
in one parcel or separate lots and parcels, all in accordance with and in
the manner prescribed by law, and out of the proceeds arising from sale and
foreclosure to retain the principal, prepayment fees, and interest due on
the Note, the Debt and the Obligations, together with all sums of money as
Lender shall have expended or advanced pursuant to this Mortgage or
pursuant to statute, together with interest thereon as herein provided, and
all costs and expenses of such foreclosure, including lawful attorneys'
fees with the balance, if any, due to paid to the person entitled thereto
by law.
(ii) Receiver. As a matter of right, without notice and without
regard to the solvency or insolvency of Borrower, or the existence of waste
of the Property or adequacy of the security of the Property, and without
giving bond, apply for the appointment of a receiver in accordance with the
statutes and law made and provided for who shall have all the rights,
powers and remedies as provided by such statute or law, including without
limitation the rights of receiver pursuant to Minn. Stat. Section 576.01,
as amended, and who shall from the date of its appointment through any
period of redemption existing at law collect the Rents, manage the Property
so as to prevent waste, execute leases within or beyond the period of
receivership, pay all expenses for normal maintenance of the Property, and
perform the terms of this Mortgage and apply the Rents to the payment of
the expenses enumerated in Minn. Stat. Section 576.01, Subd. 2 in the
priority mentioned therein and to all expenses for maintenance of the
Property and to the costs and expenses of the receivership, including
attorneys' fees, to the repayment of the Debt and Obligations and as
further provided in the Assignment of Leases and Rents executed by Borrower
to Lender whether contained in this Mortgage or in a separate instrument.
Borrower does hereby irrevocably consent to such appointment.
(iii) UCC. Exercise all rights, remedies and recourse available to a
secured party under the UCC (in addition to the rights available to a
Lender of real property), including the right to proceed under the
provisions of the UCC governing default as to any Collateral as defined in
this Mortgage which may be included on the Property or which may be deemed
non-realty in a foreclosure of this Mortgage or to proceed as to such
Collateral in accordance with the procedures and remedies available
pursuant to a foreclosure of real estate.
(g) Acknowledgment of Waiver of Hearing Before Sale.
Borrower understands and agrees that if an Event of Default shall occur,
Lender has the right, inter alia, to foreclose this Mortgage by
advertisement pursuant to Minn. Stat. Chapter 580, as hereafter amended, or
pursuant to any similar or replacement statute hereafter enacted; that if
Lender elects to foreclose by advertisement, it may cause the Property or
any part thereof to be sold at public action; that notice of such sale must
be published for six (6) successive weeks at least once a week in a
newspaper of general circulation, and that no personal notice is required
to be served upon Borrower. Borrower further understands that upon the
occurrence of an Event of Default, Lender may also elect its rights under
the UCC and take possession of the non-real estate items of the Property
and dispose of the same by sale or otherwise in one or more parcels,
provided that at least ten (10) days' prior notice of such disposition must
be given, all as provided for by the UCC, as hereinafter amended or by any
similar or replacement statute hereafter enacted. Borrower further
understands that under the Constitution of the United States and the
Constitution of the State of Minnesota it may have the right to notice and
hearing before the Property may be sold and that the procedure for
foreclosure by advertisement described above does not insure that notice
will be given to Borrower and neither said procedure for foreclosure by
advertisement nor the UCC requires any hearing or other judicial
proceeding. BORROWER HEREBY EXPRESSLY CONSENTS AND AGREES THAT THE
PROPERTY MAY BE FORECLOSED BY ADVERTISEMENT AND THAT THE PERSONAL PROPERTY
MAY BE DISPOSED OF PURSUANT TO THE CODE, ALL AS DESCRIBED ABOVE. BORROWER
ACKNOWLEDGES THAT IT IS REPRESENTED BY LEGAL COUNSEL; THAT BEFORE SIGNING
THIS DOCUMENT THIS SECTION AND BORROWER'S CONSTITUTIONAL RIGHTS WERE FULLY
EXPLAINED BY SUCH COUNSEL AND THAT BORROWER UNDERSTANDS THE NATURE AND
EXTENT OF THE RIGHTS WAIVED HEREBY AND THE EFFECT OF SUCH WAIVER.
(h) Additional Minnesota Waiver of Redemption, Notice and
Marshaling of Assets Provision. The following shall be added to the last
sentence of Section 4.11 hereof:
", (d) any appraisal before a sale of any portion of the
Property, and (e) any extension of time for the enforcement and collection
of the Note, the Loan or the Obligations, or creating or extending a period
of redemption from any sale made in collecting said debt. To the full
extent Borrower may do so, Borrower agrees that the Borrower will not at
any time insist upon, plead, claim or take the benefit or advantage of any
law now or hereafter enforced providing for any appraisal, evaluation,
stay, extension or redemption, and Borrower, to the extent permitted by
law, waives and releases all rights of redemption, valuation, appraisal,
stay of execution or notice of election to mature or declare due the whole
of this Mortgage."
(i) Leases and Rents. (i) Upon the occurrence of any Event
of Default, Borrower's revocable license to collect the Rents set forth in
Section 5 shall immediately cease and terminate. Upon or at any time
during the continuance of an Event of Default, including but not limited to
failure of the Borrower to pay any of the items set forth in subparagraphs
9.2(i)(iii)(A)-(E) below, or if any material representation or warranty
herein proves to be untrue, then the Lender, without regard to waste,
adequacy of the security or solvency of the Borrower, may declare all
Obligations (as defined in the Loan Agreement) immediately due and payable
and may, at its option, without notice:
(A) In person or by agent, with or without taking
possession of or entering the Property, with or without bringing any action
or proceeding, give, or require the Borrower to give, notice to the tenants
under the Leases authorizing and directing the tenants to pay all Rents
directly to the Lender; collect all of the Rents; enforce the payment
thereof and exercise all of the rights of the Borrower under the Leases and
all of the rights of the Lender hereunder; and may enter upon, take
possession of, manage and operate the Property, or any part thereof; may
cancel, enforce or modify the Leases, and fix or modify Rents, and do any
acts which the Lender deems proper to protect the security hereof; and/or
(B) Apply for appointment of a receiver in accordance
with the statutes and law made and provided for, which Receivership hereby
consents to, who shall collect the Rents; manage the Property so to prevent
waste; execute Leases within or beyond the period of receivership; perform
the terms of this Mortgage and apply the Rents as hereinafter provided.
(ii) The exercise of any of the foregoing rights or
remedies and the application of the Rents pursuant to this Section, shall
not cure or waive any Event of Default (or notice of default) or invalidate
any act done pursuant to such notice nor in any way operate to prevent the
Lender from pursuing any remedy which now or hereafter it may have under
the terms and conditions of the Loan Agreement, Mortgage, or the Note
secured thereby or any other instruments securing the same. The rights and
powers of the Lender hereunder shall remain in full force and effect both
prior to and after any foreclosure of the Mortgage and any sale pursuant
thereto and until expiration of the period of redemption from said sale,
regardless of whether a deficiency remains from said sale. The purchaser
at any foreclosure sale, including the Lender, shall have the right, at any
time and without limitation as provided in Minn. Stat. Section 582.03, to
advance money to any receiver appointed hereunder to pay any part or all of
the items which the receiver would otherwise be authorized to pay if cash
were available from the Property and the sum so advanced, with interest at
the rate then in effect under the terms of the Note, shall be a part of the
sum required to be paid to redeem from any foreclosure sale. The rights
under this Section 9.2(i)(ii) shall in no way be dependent upon and shall
apply without regard to whether the Property is in danger of being lost,
materially injured or damaged or whether the Property is adequate to
discharge the Debt and the Obligations. To the extent inconsistent with
the terms of this section 9.2(i)(ii), the terms of the Assignment of Rents
and Leases shall control.
(iii)Notwithstanding anything in this Mortgage or the
other Loan Documents to the contrary, and specifically replacing contrary
provisions in this Mortgage, all Rents collected by Lender or the receiver
each month following the occurrence and continuance of an Event of Default
shall be applied as follows:
(A) to payment of all reasonable fees of the
receiver approved by the court;
(B) to payment of all tenant security deposits
then owing to tenants under any of the Leases pursuant to the provisions of
Minn. Stat. Section 504.20;
(C) to payment of all prior or current real
estate taxes and special assessments with respect to the Property, or if
this Mortgage or any other instrument relating to the Obligations requires
periodic escrow payments for such taxes and assessments, to the escrow
payments then due;
(D) to payment of all premiums then due for the
insurance required with respect to the Property, or if this Mortgage or any
other instrument relating to the Obligations requires periodic escrow
payments for such premiums, to the escrow payments then due;
(E) to payment of expenses incurred for normal
maintenance of the Property;
(F) if received prior to any foreclosure sale of
the Property pursuant to this Mortgage, to Lender for payment of the
indebtedness secured hereby, but no such payment made after acceleration of
the indebtedness secured hereby shall affect such acceleration; and
(G) If the Property shall be foreclosed and sold
pursuant to a foreclosure sale, then:
(1) If the Lender is the purchaser at the foreclosure sale, the
Rents shall be paid to the Lender to be applied to the extent of any
deficiency remaining after the sale, the balance to be retained by the
Lender, and if the Property be redeemed by the Borrower or any other party
entitled to redeem, to be applied as a credit against the redemption price
with any remaining excess Rents to be paid to the Borrower, provided, if
the Property not be redeemed, any remaining excess Rents to belong to the
Lender, whether or not a deficiency exists; and
(2) If the Lender is not the purchaser at the foreclosure sale, the
Rents shall be paid to the Lender to be applied first, to the extent of any
deficiency remaining after the sale, the balance to be retained by the
purchaser, and if the Property be redeemed by the Borrower or any other
party entitled to redeem, to be applied as a credit against the redemption
price with any remaining excess Rents to be paid to the Borrower, provided,
if the Property not be redeemed any remaining excess Rents shall be paid
first, to the purchaser at the foreclosure sale in an amount equal to the
interest accrued upon the sale price pursuant to Minn. Stat. Section 580.23
or Section 581.10, then to the Lender to the extent of any deficiency
remaining unpaid and the remainder to the purchaser.
The rights and powers of Lender and receivers under this Mortgage and the
application of Rents under this Section shall continue until expiration of
the redemption period from any foreclosure sale, whether or not any
deficiency remains after a foreclosure sale.
(j) Borrower's Federal Taxpayer Identification Number. The
following information supplements that given in Sections 6.1 and 6.3 of
this Mortgage:
The Federal taxpayer identification number of
Borrower (Debtor) is 00-0000000.
(k) Non-Agricultural Use. Borrower represents and warrants
that as of the date of this Mortgage the Property is not in agricultural
use as defined in Minn. Stat. Section 40A.02, Subd. 3 and is not used for
agricultural purposes.
(l) Maturity Date. The latest obligation secured by this
Mortgage matures on August 1, 2024 (the "Maturity Date").
(m) Future Advances. To the extent that this Mortgage is
deemed to secure future advances including, but not limited to, Accrued
Interest (as defined in the Loan Agreement), the amount of such advances is
not currently known. The delivery and acceptance of this Mortgage by
Borrower and Lender, however, constitutes an acknowledgment that Borrower
and Lender are aware of the provisions of Minn. Stat. Section 287.05,
Subd. 5, and intend to comply with the requirements contained therein. The
maximum principal amount of indebtedness secured by this Mortgage at any
one time, excluding any amounts constituting an "indeterminate amount"
under Minn. Stat. Section 287.05, Subd. 5, and excluding advances made by
the Lender in protection of the Property or the lien of this Mortgage,
shall be $30,300,000. The representations contained in this Section are
made solely for the benefit of county recording authorities in determining
the mortgage registry tax payable as a prerequisite to the recording of
this Mortgage. Borrower acknowledges that such representations do not
constitute or imply an agreement by Lender to make any future advances to
Borrower.
(n) Waiver of Jury Trial. BORROWER HEREBY WAIVES, TO THE
FULLEST EXTENT PERMITTED BY LAW, THE RIGHT TO TRIAL, BY JURY IN ANY ACTION,
PROCEEDING OR COUNTER-CLAIM FILED BY EITHER PARTY, WHETHER IN CONTRACT,
TORT OR OTHERWISE, RELATING DIRECTLY OR INDIRECTLY TO THE APPLICATION, THE
LOAN, THE LOAN DOCUMENTS, THE HAZARDOUS MATERIALS INDEMNITY AGREEMENT, OR
ANY ACTS OR OMISSIONS OF LENDER IN CONNECTION THEREWITH.
(o) Note Rate. The rate of interest accruing on the unpaid
principal balance of the Note is eight and ten one hundredths percent
(8.10%) per annum.
(p) No Affect on Other Instruments. Nothing in this Mortgage
and no foreclosure or enforcement of this Mortgage in any state shall limit
or impair any other mortgages, deeds of trusts or other instruments
(collectively, the "Other Mortgages"), or any liens, rights or remedies
under or the provisions of any of the Other Mortgages, notwithstanding that
this Mortgage and the Other Mortgages may encumber the same property, and
this Mortgage and the Other Mortgages may be separately foreclosed or
otherwise enforced concurrently or in any order of priority. For purposes
of exercising rights and remedies, including but not limited to foreclosure
in a state, all references herein to Property or any component thereof
shall be to the Property or component thereof in that state.
[NO FURTHER TEXT ON THIS PAGE]
IN WITNESS WHEREOF, THIS MORTGAGE has been executed by Borrower
as of the day and year first above written.
LHO FINANCING PARTNERSHIP I, L.P.,
a Delaware limited partnership
By: LHO Financing, Inc.,
a Delaware corporation
By: /s/ Xxxx Xxxxx
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Name: Xxxx Xxxxx
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Title: Chief Financial Officer
------------------------------
