Exhibit 4.2
HOPKINS TECH CENTER, LLC, as mortgagor
(Borrower)
to
NORTHLAND FINANCIAL CORPORATION, as mortgagee
(Lender)
------------------------------------------
MORTGAGE AND
SECURITY AGREEMENT AND
FIXTURE FINANCING STATEMENT
--------------------------------------------
Dated: September 11, 1997
Location: Hopkins Technical Center
00000 Xxxxxxxxx Xxxxxxxxx
Xxxxxxx, Xxxxxxxxx 00000
County: Hennepin
DRAFTED BY AND UPON
RECORDATION RETURN TO:
Xxxxxxxxxxx Xxxxx & Xxxxxxxx
3400 Plaza VII
00 Xxxxx Xxxxxxx Xxxxxx
Xxxxxxxxxxx, Xxxxxxxxx 00000
Attention: Xxxx X. Xxxxxx
Telephone No. (000) 000-0000
TABLE OF CONTENTS
-----------------
1 - GRANTS OF SECURITY........................................................1
1.1 PROPERTY MORTGAGED................................................1
1.2 ASSIGNMENT OF RENTS...............................................3
1.3 SECURITY AGREEMENT................................................3
1.4 PLEDGE OF MONIES HELD.............................................3
2 - DEBT AND OBLIGATIONS SECURED..............................................3
2.1 DEBT AND OBLIGATIONS SECURED.......................................
3 - BORROWER COVENANTS........................................................4
3.1 PAYMENT OF DEBT...................................................4
3.2 INSURANCE.........................................................4
3.3 PAYMENT OF TAXES. ETC.............................................7
3.4 RESERVES..........................................................8
3.5 CONDEMNATION.......................................................
3.6 LEASES AND RENTS..................................................9
3.7 MAINTENANCE OF: PROPERTY.........................................10
3.8 WASTE............................................................11
3.9 COMPLIANCE WITH LAWS.............................................11
3.10 BOOKS AND RECORDS................................................11
3.11 PAYMENT FOR LABOR AND MATERIALS..................................12
3.12 INTENTIONALLY DELETED............................................12
3.13 PERFORMANCE OF OTHER AGREEMENTS..................................12
3.15 CHANGE OF NAME. IDENTITY OR STRUCTURE............................12
3.16 EXISTENCE........................................................13
4 - SPECIAL COVENANTS........................................................13
4.1 PROPERTY USE.....................................................13
4.2 SINGLE PURPOSE ENTITY............................................13
4.3 RESTORATION......................................................14
5- REPRESENTATIONS AND WARRANTIES............................................17
5.1 WARRANTY OF TITLE................................................17
5.2 AUTHORITY........................................................18
5.3 LEGAL STATUS AND AUTHORITY.......................................18
5.4 VALIDITY OF DOCUMENTS............................................18
5.5 LITIGATION.......................................................18
5.6 STATUS OF PROPERTY...............................................18
5.7 NO FOREIGN PERSON................................................19
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5.9 ERISA COMPLIANCE.................................................19
5.10 LEASES...........................................................19
5.11 FINANCIAL CONDITION..............................................20
5.12 BUSINESS PURPOSES................................................20
5.13 TAXES............................................................20
5.14 MAILING ADDRESS..................................................20
5.15 NO CHANGE IN FACTS OR CIRCUMSTANCES..............................20
5.16 DISCLOSURE.......................................................20
5.17 THIRD PARTY REPRESENTATIONS......................................20
5.18 ILLEGAL ACTIVITY.................................................20
6 - OBLIGATIONS AND RELIANCES................................................21
6.1 RELATIONSHIP OF BORROWER AND LENDER..............................21
6.2 NO LENDER OBLIGATIONS............................................21
7 - FURTHER ASSURANCES.......................................................21
7.1 RECORDING OF SECURITY INSTRUMENT. ETC............................21
7.2 FURTHER ACTS. ETC..................................................
7.3 CHANGES IN TAX, DEBT, CREDIT AND DOCUMENTARY STAMP LAWS..........22
7.4 ESTOPPEL CERTIFICATES............................................22
7.5 REPLACEMENT DOCUMENTS............................................23
8 - DUE ON SALE/ENCUMBRANCE..................................................23
8.1 LENDER RELIANCE..................................................23
8.2 NO SALE/ENCUMBRANCE..............................................23
8.3 SALE/ENCUMBRANCE DEFINED.........................................23
8.4 LENDER'S RIGHTS..................................................24
9 - DEFAULT..................................................................24
9.1 EVENTS OF DEFAULT................................................25
10 - RIGHTS AND REMEDIES.....................................................26
10.1 REMEDIES.........................................................26
10.2 APPLICATION OF PROCEEDS..........................................27
10.3 RIGHT TO CURE DEFAULTS...........................................27
10.4 ACTIONS AND PROCEEDINGS..........................................28
10.5 RECOVERY OF SUMS REQUIRED TO BE PAID.............................28
10.6 EXAMINATION OF BOOKS AND RECORDS.................................28
10.7 OTHER RIGHTS, ETC................................................28
10.8 RIGHT TO RELEASE ANY PORTION OF THE PROPERTY.....................29
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10.9 VIOLATION OF LAWS................................................29
10.10 RECOURSE AND CHOICE OF REMEDIES..................................29
10.11 RIGHT OF ENTRY...................................................30
10.12 DEFAULT INTEREST AND LATE CHARGES................................30
11 - INDEMNIFICATION.........................................................30
11.1 GENERAL INDEMNIFICATION..........................................30
11.2 MORTGAGE AND/OR INTANGIBLE TAX...................................31
11.3 ERISA INDEMNIFICATION............................................31
11.4 DUTY TO DEFEND: ATTORNEYS' FEES AND OTHER FEES AND EXPENSES......31
12 - WAIVERS.................................................................31
12.1 WAIVER OF COUNTERCLAIM...........................................31
12.2 MARSHALLING AND OTHER MATTERS....................................31
12.3 WAIVER OF NOTICE.................................................32
12.4 SOLE DISCRETION OF LENDER........................................32
12.5 SURVIVAL.........................................................32
12.6 WAIVER OF TRIAL BY JURY..........................................32
13 - EXCULPATION.............................................................32
13.1 EXCULPATION......................................................32
13.2 RESERVATION OF CERTAIN RIGHTS....................................33
13.3 EXCEPTIONS TO EXCULPATION........................................33
13.4 RECOURSE.........................................................33
13.5 BANKRUPTCY CLAIMS................................................34
14 - NOTICES.................................................................34
14.1 NOTICES..........................................................34
15 - APPLICABLE LAW..........................................................35
15.1 CHOICE OF LAW....................................................35
15.2 USURY LAWS.......................................................35
15.3 PROVISIONS SUBJECT TO APPLICABLE LAW.............................35
16 - SECONDARY MARKET........................................................36
16.1 TRANSFER OF LOAN.................................................36
17 - COSTS...................................................................36
17.1 PERFORMANCE AT BORROWER'S EXPENSE................................36
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17.2 ATTORNEY'S FEES FOR ENFORCEMENT..................................36
18 - DEFINITIONS.............................................................36
18.1 GENERAL DEFINITIONS..............................................37
19 - MISCELLANEOUS PROVISIONS................................................37
19.1 NO ORAL CHANGE...................................................37
19.2 LIABILITY........................................................37
19.3 INAPPLICABLE PROVISIONS..........................................37
19.4 HEADINGS. ETC....................................................37
19.5 DUPLICATE ORIGINALS: COUNTERPARTS................................37
19.6 NUMBER AND GENDER................................................37
19.7 SUBROGATION......................................................38
19.8 ENTIRE AGREEMENT.................................................38
20- STATE SPECIFIC PROVISIONS................................................38
20.1 REMEDIES.........................................................38
20.2 APPLICATION OF RENTS.............................................39
20.3 BUSINESS LOAN REPRESENTATION.....................................39
20.4 REMEDIES OF LENDER AND RIGHT TO FORECLOSE..........................
20.5 RECEIVER.........................................................40
20.6. ACKNOWLEDGMENT OF WAIVER OF HEARING BEFORE SALE..................40
20.7 FIXTURE FILING...................................................41
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THIS MORTGAGE AND SECURITY AGREEMENT AND FIXTURE FINANCING
STATEMENT (the "Security Instrument") is made as of the day of September, 1997,
by HOPKINS TECH CENTER, LLC, a Minnesota limited liability company, having its
principal place of business at c/o Venturian Corp., 0000 Xxxxxx Xxxxxx Xxxxx,
Xxxxxxx, Xxxxxxxxx 00000, Attention: Xxxx Xxxxxxxxx, as mortgagor ("Borrower")
to NORTHLAND FINANCIAL COMPANY, a Minnesota corporation, having an address at
0000 Xxxx 00xx Xxxxxx, Xxxxx 000, Xxxxxxxxxxx, Xxxxxxxxx 00000, as mortgagee
("Lender").
RECITALS:
Borrower by its promissory note of even date herewith given to
Lender is indebted to Lender in the principal sum of Three Million Three Hundred
Seventy-Five Thousand and No/100 Dollars ($3,375,000.00) in lawful money of the
United States of America (the note together with all extensions, renewals,
modifications, substitutions and amendments thereof shall collectively be
referred to as the "Note"), with interest from the date thereof at the rates set
forth in the Note, principal and interest to be payable in accordance with the
terms and conditions provided in the Note.
Borrower desires to secure the payment and performance of the
Obligations (as defined in Article 2).
1 - GRANTS OF SECURITY
1.1 PROPERTY MORTGAGED. Borrower does hereby irrevocably
mortgage, grant, bargain, sell, pledge, assign, warrant, transfer and convey to
Lender, and grant a security interest to lender in, the following Property,
rights, interests and estates now owned, or hereafter acquired by Borrower
(collectively, the "Property'): (a) the real property described in Exhibit A
attached hereto and made a part hereof (the "Land"); (b) all xxxxxxxxxx xxxxx,
xxxxxxx and development rights hereafter acquired by Borrower for use in
connection with the Land and the development of the Land and all additional
lands and estates therein which may, from time to time, by supplemental mortgage
or otherwise be expressly made subject to the lien of this Security Instrument;
(c) the buildings, structures, fixtures, additions, enlargements, extensions,
modifications, repairs, replacements and improvements now or hereafter erected
or located on the Land (the "Improvements"); (d) all easements, rights-of-way or
use, rights, 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, servitudes, tenements, hereditaments and appurtenances of any nature
whatsoever, in any way now or hereafter 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, courtesy
and rights of courtesy, 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; (e) all
furnishings, machinery, equipment, fixtures (including, but not limited to, all
heating, air conditioning, plumbing, lighting, communications and elevator
fixtures) and other property of
every kind and nature whatsoever owned by Borrower, or in which Borrower has or
shall have an interest, now or hereafter located upon the Land and the
Improvements, or appurtenant thereto, and usable in connection with the present
or future operation and occupancy of the Land and the Improvements and all
building equipment, materials and supplies of any nature whatsoever owned by
Borrower, or in which Borrower has or shall have an interest, now or hereafter
located upon the Land and the Improvements, or appurtenant thereto, or usable in
connection with the present or future operation and occupancy of the Land and
the Improvements (collectively, the "Personal Property"), and the right, title
and interest of Borrower in and to any of the Personal Property which may be
subject to any security interests, as defined in the Uniform Commercial Code, as
adopted and enacted by the state or states where any of the Property is located
(the "Uniform Commercial Code"), superior in lien to the lien of this Security
Instrument and all proceeds and products of the above; (f) all leases and other
agreements affecting the use, enjoyment or occupancy of the Land and the
Improvements heretofore or hereafter entered into, whether before or after the
filing by or against Borrower of any petition for relief under 11 U.S.C. ss. 101
et seq., as the same may be amended from time to time (the "Bankruptcy Code")
(the "Leases") and all right, title and interest of Borrower, its successors and
assigns therein and thereunder, including, without limitation, cash or
securities deposited thereunder to secure the performance by the lessees of
their obligations thereunder and all rents, additional rents, revenues, issues
and profits (including all oil and gas or other mineral royalties and bonuses)
from the Land and the Improvements whether paid or accruing before or after the
filing by or against Borrower of any petition for relief under the Bankruptcy
Code (the "Rents") and all proceeds from the sale or other disposition of the
Leases and the right to receive and apply the Rents to the payment of the Debt;
(g) all awards or payments, including interest thereon, which may heretofore and
hereafter be made with respect to the Property, whether from the exercise of the
right of eminent domain (including but not limited to any transfer made in lieu
of or in anticipation of the exercise of the right), or for a change of grade,
or for any other injury to or decrease in the value of the Property; (h) all
proceeds of and any unearned premiums on any insurance policies covering the
Property, including, without imitation, the right to receive and apply the
proceeds of any insurance, judgments, or settlements made in lieu thereof, for
damage to the Property; (i) all refunds, rebates or credits in connection with a
reduction in real estate taxes and assessments charged against the Property as a
result of tax certiorari or any applications or proceedings for reduction; (j)
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; () the right, in the name and on behalf
of Borrower, to appear in and defend any action or proceeding brought with
respect to the Property and to commence any action or proceeding to protect the
interest of Lender in the Property; (l) all agreements, contracts, certificates,
instruments, franchises, permits, licenses, plans, specifications and other
documents, now or hereafter entered into, and all rights therein and thereto,
respecting or pertaining to the use, occupation, construction, management or
operation of the Land and any part thereof and any Improvements or respecting
any business or activity conducted on the Land and any part thereof and all
right, title and interest of Borrower therein and thereunder, including, without
limitation, the right, upon the happening of any default hereunder, to receive
and collect any sums payable to Borrower thereunder; (m) 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; and (n) any and all other rights of Borrower in and
to the items set forth in Subsections (a) through (m) above.
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1.2 ASSIGNMENT OF RENTS. Borrower hereby absolutely and
unconditionally assigns to Lender Borrower's right, title and interest in and to
all current and future Leases and Rents; it being intended by Borrower that this
assignment constitutes a present, absolute assignment and not an assignment for
additional security only. Nevertheless, subject to the terms of this Section 1.2
and Section 3.6, Lender grants to Borrower a revocable license to collect and
receive the Rents, which license shall be automatically revoked upon the
occurrence of an Event of Default (as. hereinafter defined). Borrower shall hold
the Rents, or a portion thereof sufficient to discharge all current sums due on
the Debt, for use in the payment of such sums.
1.3 SECURITY AGREEMENT. This Security Instrument is both a
real property mortgage and a "security agreement" within the meaning of the
Uniform Commercial Code. The Property includes both real and personal property
and all other rights and interests, whether tangible or intangible in nature, of
Borrower in the Property. By executing and delivering this Security Instrument,
Borrower hereby grants to Lender, as security for the Obligations (defined in
Section 2.1), a security interest in the Property to the full extent that the
Property may be subject to the Uniform Commercial Code.
1.4 PLEDGE OF MONIES HELD. Borrower hereby pledges to Lender
any and all monies now or hereafter held by Lender, including, without
limitation, any sums deposited in the Escrow Fund (as defined in Section 3.4),
the Deferred Maintenance Deposit (as defined on Exhibit B attached hereto and
made a part hereof), the Reserve (as defined on Exhibit B), Net Proceeds (as
defined in Section 4.3), and condemnation awards or payments described in
Section 3.5 (collectively, "Deposits"), as additional security for the
Obligations (as hereinafter defined) until expended or applied as provided in
this Security Instrument.
CONDITIONS TO GRANT
TO HAVE AND TO HOLD the above granted and described Property
unto and to the use and benefit of Lender, and the successors and assigns of
Lender, forever;
PROVIDED, HOWEVER, these presents are upon the express
condition that, if Borrower shall well and truly pay to Lender the Debt as
defined below at the time and in the manner provided in the Note and this
Security Instrument, shall well and truly perform the Other Obligations (as
defined in Article 2) as set forth in this Security Instrument but in any event
on or before October 1, 2007 and shall well and truly abide by and comply with
each and every covenant and condition set forth herein and in the Note, these
presents and the estate hereby granted shall cease, terminate and be void.
2 - DEBT AND OBLIGATIONS SECURED
2.1 DEBT AND OBLIGATIONS SECURED. This Security Instrument and
the grants, assignments and transfers made in Article 1 are given for the
purpose of securing the following, in such order of priority as Lender may.
determine in its sole discretion (the `Debt"): (a) the payment of the
indebtedness evidenced by the Note in lawful money of the United States of
America; (b) the payment of interest, default interest, late charges, prepayment
premiums and other sums, as provided in the Note, this Security Instrument or
the other Loan Documents (defined
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below); (c) the payment of all other moneys agreed or provided to be Paid by
Borrower in the Note, this Security Instrument or the other Loan Documents; (d)
the payment of all sums advanced pursuant to this Security Instrument to protect
and preserve the Property and the lien and the security interest created hereby;
-and (e) the performance of each obligation of Borrower contained this Security
Instrument, the Note-and any other documents or instruments which now or shall
hereafter wholly or partially secure or guarantee payment of the Note or which
have otherwise been executed or are hereafter executed by Borrower and/or any
other person or entity in connection with the loan (the "Loan") evidenced by the
Note (the Note, this Security Instrument and such other documents and
instruments being hereinafter referred to collectively as the `Loan Documents")
and in any renewal, extension, amendment, modification, consolidation, change
of, or substitution or replacement for, all or any part thereof (collectively,
the "Other Obligations"). Borrower's obligations for the payment of the Debt and
the performance of the Other Obligations shall be referred to collectively below
as the "Obligations." All the covenants, conditions and agreements contained in
the Note and the other Loan Documents are hereby made a part of this Security
Instrument to the same extent and with the same force as if fully set forth
herein.
3 - BORROWER COVENANTS
Borrower covenants and agrees that:
3.1 PAYMENT OF DEBT. Borrower will pay the Debt at the time
and in the manner provided in the Note, this Security Instrument and the other
Loan Documents.
3.2 INSURANCE.
(a) Borrower shall obtain and maintain, or cause to be
maintained, insurance for Borrower and the Property providing at least the.
following coverages:
(i) comprehensive all risk insurance on the Improvements and
the Personal Property, including contingent liability from Operation of
Building Laws, Demolition Costs and Increased Cost of Construction
Endorsements, in each case (A) in an amount equal to 100% of the "Full
Replacement Cost," which for purposes of this Security Instrument shall
mean actual replacement value (exclusive of costs of excavations,
foundations, underground utilities and footings) with a waiver of
depreciation; (B) containing an agreed amount endorsement with respect
to the Improvements and Personal Property waiving all co-insurance
provisions; (C) providing for a deductible of not greater than $10,000;
and (D) containing an "Ordinance or Law Coverage" or "Enforcement"
endorsement if any of the Improvements or the use of the Property shall
at any time constitute legal non-conforming structures or uses. If any
portion of the Improvements is currently or at any time in the future
located in a federally designated `special flood hazard area", Borrower
shall obtain flood hazard insurance in an amount equal to the lesser of
(a) the outstanding principal balance of the Note or (b) 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. In addition, in the event the
Property is located in an area
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with a high degree of seismic activity, Borrower shall obtain
earthquake insurance in amounts and in form and substance satisfactory
to Lender;
(ii) commercial general liability insurance against claims for
personal injury, bodily injury, death or property damage occurring
upon, to or about the Property, such insurance (A) to be on the
so-called "occurrence" form with a combined single limit (including
"umbrella" coverage in place) of not less than $3,000,000 or, if any of
the Improvements contain elevators, $5,000,000; (B) 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 (C) to cover at least the following hazards: (1)
premises and operations; (2) products and competed operations on an "if
any" basis; (3) independent contractors; and (4) blanket contractual
liability for all written and oral contracts, to the extent the same is
available;
(iii) business income insurance (A) with loss payable to
Lender; (B) covering all risks required to be covered by the insurance
provided for in Subsection 3.2(a)(i); and (C) in an amount equal to
100% of the projected gross income from the Property for a period of
twelve (12) months. 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 income
from the Property for the succeeding twelve (12) month period. All
insurance proceeds payable to Lender pursuant to this Subsection shall
be held by Lender and shall be applied to the obligations secured
hereunder 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
hereunder on the respective dates of payment provided for in the Note
except to the extent such amounts are actually paid out of the proceeds
of such business income insurance;
(iv) at all times during which structural construction,
repairs or alterations are being made with respect to the Improvements
(A) owner's contingent or protective liability insurance covering
claims not covered by or under the terms or provisions of the above
mentioned commercial general liability insurance policy; and (B) the
insurance provided for in Subsection 3.2(a)(i) written in a so-called
builder's risk completed value form on a non-reporting basis;
(v) if applicable, workers' compensation, subject to the
statutory limits of the state in which the Property is located, and
employer's liability insurance with a limit of at least $1,000,000 per
accident and per disease per employee, and $1,000,000 aggregate
coverage for disease in respect of any work or operations on or about
the Property, or in connection with the Property or its operation;
(vi) if applicable, comprehensive boiler and machinery
insurance, if applicable, in amounts as shall be reasonably required by
Lender;
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(vii) if applicable, motor vehicle liability coverage for all
owned and non-owned vehicles, including rented and leased vehicles
containing minimum limits reasonably acceptable to Lender; and
(viii) for Public Warehousing Properties Only: environmental
insurance in amounts as shall be reasonably required by Lender;
(ix) such other insurance and in such 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.
(b) All insurance provided for in Subsection 3.2(a) hereof
shall be obtained under valid and enforceable policies (the "Policies" or in the
singular, the "Policy"), and shall be subject to the approval of Lender as to
insurance companies, amounts, forms, deductibles, loss payees and insureds. The
insurance companies must have a rating of "A" or better for claims paying
ability assigned by Xxxxx'x Investors Service, Inc. and Standard & Poor's Rating
Group or a general policy rating of A or better and a financial class of VIII or
better assigned by A.M. Best Company, Inc. Each such insurer shall be referred
to herein as a "Qualified Insurer". Not less than thirty (30) days prior to the
expiration dates of the Policies theretofore furnished to Lender pursuant to
Subsection 3.2(a), certified copies of the Policies marked "premium paid" or
accompanied by evidence satisfactory to Lender of payment of the premiums due
thereunder (the "Insurance Premiums"), shall be delivered by Borrower to Lender;
provided, however, that in the case of renewal Policies, Borrower may furnish
Lender with binders therefor to be followed by the original Policies when
issued.
(c) Borrower shall not obtain (i) any umbrella or blanket
liability or casualty Policy unless, in each case, such Policy is approved in
advance in writing by Lender and Lender's interest is included therein as
provided in this Security Instrument and such Policy is issued by a Qualified
Insurer, or (ii) separate insurance concurrent in form or contributing in the
event of loss with that required in Subsection 3.2(a) to ~ furnished by, or
which may be reasonably required to be furnished by, Borrower. In the event
Borrower obtains separate insurance or an umbrella or a blanket Policy, Borrower
shall notify Lender of the same and shall cause certified copies of each Policy
to be delivered as required in Subsection 3.2(b). 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 Subsection 3.2(a).
(d) All Policies of insurance provided for or contemplated by
Subsection 3.2(a), except for the Policy referenced in Subsection 3.2(a)(v),
shall name Lender and Borrower as the insured or additional insured, as their
respective 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.
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(e) Borrower shall furnish to Lender, on or before thirty (30)
days after the close of each of Borrower's fiscal years, a statement certified
by Borrower or a duly authorized officer of Borrower of the amounts of insurance
maintained in compliance herewith, of the risks covered by such insurance and of
the insurance company or companies which carry such insurance and, if requested
by Lender, verification of the adequacy of such insurance by an independent
insurance broker or appraiser acceptable to Lender.
(f) If at any time Lender is not in receipt of written
evidence that all insurance required hereunder is in full force. and effect,
Lender shall have the right, without notice to Borrower to take such action as
Lender deems necessary to protect its interest in the Property, including,
without limitation, the obtaining of such insurance coverage as Lender in its
sole discretion deems appropriate, and all expenses incurred by Lender in
connection with such action or in obtaining such insurance and keeping it in
effect shall be paid by Borrower to Lender upon demand and until paid shall be
secured by this Security Instrument and shall bear interest in accordance with
Section 10.3 hereof.
(g) If the Property shall be damaged or destroyed, in whole or
in part, by fire or other casualty, Borrower shall give prompt notice of such
damage to Lender and shall promptly commence and diligently prosecute the
completion of the repair and restoration of the Property as nearly as possible
to the condition the Property was in immediately prior to such fire or other
casualty, with such alterations as may be approved by Lender (the "Restoration")
and otherwise in accordance with Section 4.3 of this Security Instrument, except
in instances where Lender has failed or elected not to disburse Net Proceeds to
Borrower under such Section 4.3 (provided that such exception shall not apply if
the failure to disburse is attributable to Borrower's failure to comply with the
conditions set forth in Clauses (A), (D) or (1) of Subsection 43(b)(i) or in
Subsection 4.3(b)(ii) or any other conditions set forth in Section 4.3 which
Borrower has the practical ability to satisfy). Lender may, but shall not be
obligated to make proof of loss if not made promptly by Borrower.
(h) In the event of foreclosure of this Security Instrument,
or other transfer of title to the Property in extinguishment in whole or in part
of the Debt all right, title and interest of Borrower in and to such policies
then in force concerning the Property and all proceeds payable thereunder shall
thereupon vest in the purchaser at such foreclosure or Lender or other
transferee in the event of such other transfer of title.
3.3 PAYMENT OF TAXES. ETC. Borrower shall promptly pay all
taxes, assessments, water rates, sewer rents, governmental impositions, and
other charges, including without limitation vault charges and license fees for
the use of vaults, chutes and similar areas adjoining the Land, now or hereafter
levied or assessed or imposed against the Property or any part thereof (the
"Taxes"), all ground rents, maintenance charges and similar charges, now or
hereafter levied or assessed or imposed against the Property or any part thereof
(the "Other Charges'), and all charges for utility services provided to the
Property prior to the time same become delinquent. Borrower will deliver to
Lender, promptly upon Lender's request, evidence satisfactory to Lender that the
Taxes, Other Charges and utility service charges have been so paid or are not
then delinquent. Borrower shall not suffer and shall promptly cause to be paid
and discharged any lien or charge whatsoever which may be or become a lien or
charge against the Property. Except to the
7
extent sums sufficient to pay all Taxes and Other Charges have been deposited
with Lender in accordance with the terms of this Security Instrument, Borrower
shall furnish to Lender paid receipts for the payment of the Taxes and Other
Charges prior to the date the same shall become delinquent. Borrower shall not
be required to pay any Taxes or Other Charges so long as Borrower shall in good
faith contest the same or the validity thereof by appropriate legal proceedings
which shall operate to prevent the collection of the Liens or Impositions so
contested and the sale of the Property, or any part thereof to satisfy the same,
provided that Borrower shall, prior to any such contest, have given such
security as may be reasonably required by Lender to ensure such payments and
prevent any sale or forfeiture of the Property by reason or such nonpayment. Any
such contest shall be prosecuted in accordance with the laws and rules
pertaining to such contests and to all events with due diligence and Borrower
shall promptly after final determination thereof pay the amount of any such Tax
or Other Charge so determined, together with all interest and penalties, which
may be payable in connection therewith. Notwithstanding the provisions of this
Section, Borrower shall (and if Borrower shall fail so to do, Lender, may but
shall not be required to) ay any such Taxes or Other Charges notwithstanding
such contest if in the reasonable opinion of Lender, the Property shall be in
jeopardy or in danger of being forfeited or foreclosed.
3.4 RESERVES.
(a) Borrower shall pay to Lender on the first day of each
calendar month (a) one-twelfth of an amount which would be sufficient to pay the
Taxes payable, or estimated by Lender to be payable, during the next ensuing
twelve (12) months and (b) one-twelfth of an amount which would be sufficient to
pay the Insurance Premiums due for the renewal of the coverage afforded by the
Policies upon the expiration thereof (the amounts in (a) and (b) above shall be
called the "Escrow Fund"). Borrower agrees to notify Lender immediately of any
changes to the amounts, schedules and instructions for payment of any Taxes and
Insurance Premiums of which it has obtained knowledge and authorizes Lender or
its agent to obtain the bills for Taxes and Other Charges directly from the
appropriate taxing authority. The Escrow Fund and the payments of interest or
principal or both, payable pursuant to the Note shall be added together and
shall be paid as an aggregate sum by Borrower to Lender. Lender will apply the
Escrow Fund to payments of Taxes and Insurance Premiums required to be made by
Borrower pursuant to Sections 3.2 and 3.3 hereof. If the amount of the Escrow
Fund shall exceed the amounts due for Taxes and Insurance Premiums pursuant to
Sections 3.2 and 3.3 hereof, Lender shall, in its discretion, return any excess
to Borrower or credit such excess against future payments to be made to the
Escrow Fund. In allocating such excess, Lender may deal with the person shown on
the records of Lender to be the owner of the Property. If the Escrow Fund is not
sufficient to pay the items set forth in (a) and (b) above, Borrower shall
promptly pay to Lender, upon demand, an amount which Lender shall estimate as
sufficient to make up the deficiency. The Escrow Fund shall not constitute a
trust fund and may be commingled with other monies held by Lender. No earnings
or interest on the Escrow Fund shall be payable to Borrower.
(b) Borrower shall comply with the Replacement and Leasing
Reserve Requirements set forth on Exhibit "B" attached hereto and made a part
hereof.
3.5 CONDEMNATION. Borrower shall promptly give Lender notice
of the actual or threatened commencement of any condemnation or eminent domain
proceeding and shall
8
deliver to Lender copies of any and all papers served in connection with such
proceedings. Lender may participate in any such proceedings, and Borrower shall
from time to time deliver to Lender all instruments requested by it to permit
such participation. Borrower shall, at its expense, diligently prosecute any
such proceedings, and shall consult with Lender, its attorneys and experts, and
cooperate with them in the carrying on or defense of any such proceedings.
Notwithstanding any taking by any public or quasi-public authority through
eminent domain or otherwise (including but not limited to any transfer made in
lieu of or in anticipation of the exercise of such taking), Borrower shall
continue to pay the Debt at the time and in the manner provided for its payment
in the Note and in this Security Instrument and the Debt shall not be reduced
until any award or payment therefor shall have been actually received and
applied by Lender, after the deduction of expenses of collection, to the
reduction or discharge of the Debt. Lender shall not be limited to the interest
paid on the award by the condemning authority but shall be entitled to receive
out of the award interest at the rate or rates provided herein or in the Note.
If the Property or any portion-. thereof is taken by a condemning authority,
Borrower shall promptly commence and diligently prosecute the Restoration of the
Property and otherwise comply with the provisions of Section 4.3 of this
Security Instrument, except in instances where Lender has failed or elected not
to disburse Net Proceeds to Borrower under such Section 4.3 (provided that such
exception shall not apply if the failure to disburse is attributable to
Borrower's failure to comply with the conditions set forth in Clauses (A), (D)
or (1) of Subsection 4.3(b)(i) or in Subsection 4.3(b)(ii) or any other
conditions set forth in Section 4.3 which Borrower has the practical ability to
satisfy). If the Property is sold, through foreclosure or otherwise, prior to
the receipt by Lender of the award or payment, Lender shall have the right,
whether or not a deficiency judgment on the Note shall have been sought,
recovered or denied, to receive the award or payment, or a portion thereof
sufficient to pay the Debt.
3.6 LEASES AND RENTS.
(a) Except as otherwise consented to by Lender, all Leases
shall be written on the standard form of lease which shall have been approved by
Lender. Upon request, Borrower shall furnish Lender with executed copies of all
Leases. No material changes may be made to the Lender-approved standard lease
without the prior written consent of Lender, which approval shall not be
unreasonably withheld or delayed. In addition, all renewals of Leases and all
proposed leases shall provide for rental rates and terms comparable to existing
local market rates and terms and shall be arms-length transactions with bona
fide, independent third party tenants. All proposed leases and renewals of
existing Leases, other than Minor Leases (hereinafter defined), shall be subject
to the prior approval of Lender and its counsel, at Borrower's expense, which
approval shall not be unreasonably withheld or delayed if the proposed Lease or
renewal Lease (i) is on the Lender-approved form, subject only to commercially
reasonable variations therefrom, (ii) is negotiated in an arms-length
transaction with an independent third party tenant and (iii) provides for rental
rates and terms comparable to existing local market terms. All Leases entered
into after the date hereof shall provide that they are subordinate to this
Security Instrument and that the lessee agrees to attorn to Lender. Borrower (i)
shall observe and perform all the obligations imposed upon the lessor under the
Leases and shall not do or permit to be done anything to impair the value of the
Leases as security for the Debt; (ii) shall promptly send xxxxx to Lender of all
notices of default which Borrower shall send or receive thereunder; (iii) shall
enforce all of the terms, covenants and conditions contained in the Leases upon
the part of the lessee thereunder to be observed or
9
performed, short of termination thereof; Borrower may terminate, however, Minor
Leases as the result of a default by lessee thereunder; (iv) shall not collect
any of the Rents more than one (1) month in advance; (v) shall not execute any
other assignment of the lessor's interest in the Leases or the Rents; (vi) shall
not alter, modify or change the terms of the Leases without the prior written
consent of Lender, or cancel or terminate the Leases or accept a surrender
thereof or convey or transfer or suffer or permit a conveyance or transfer of
the Land or of any interest therein so as to effect a merger of the estates and
rights of, or a termination or diminution of the obligations of, lessees
thereunder; (vii) shall not alter, modify or change the terms of any guaranty,
letter of credit or other credit support with respect to the Leases (the "Lease
Guaranty") or cancel or terminate such Lease Guaranty without the prior written
consent of Lender; and (viii) shall not consent to any assignment of or
subletting under the Leases not in accordance-with their terms, without the
prior written consent of Lender.
(b) Notwithstanding the provisions of Subsection 3.6(a) above,
renewals of existing commercial Leases and proposed leases for commercial space
covering less than ten percent (10%) of the total rentable space for the
Property and accounting for rental income which in the aggregate is less than
ten percent (10%) of the total rental income for the Property ("Minor Leases")
shall not be subject to the prior approval of Lender provided that (i) the
renewal Lease or proposed lease shall have a lease term not to exceed ten (10)
years including options to renew, (ii) the renewal Lease or proposed lease shall
provide for rental rates and terms comparable to existing local market rates and
terms, and (iii) the renewal Lease or proposed lease shall be an arms-length
transaction with a bona fide, independent third party tenant. Borrower shall
deliver to Lender copies of all Leases which are entered into pursuant to the
preceding sentence together with Borrower's certification that it has satisfied
all of the conditions of the preceding sentence within thirty (30) days after
the execution of the Lease.
(c) All security deposits of tenants, whether held in cash or
any other form, shall not be commingled with any other funds of Borrower and, if
cash, shall be deposited by Borrower at such commercial or savings bank or banks
as may be reasonably satisfactory to Lender. Borrower shall, upon request,
provide Lender with evidence reasonably satisfactory to Lender of Borrower's
compliance with the foregoing. Following the occurrence and during the
continuance of any Event of Default, Borrower shall, upon Lender s request, if
permitted by any applicable legal requirements, turn over to Lender the security
de sits (and any interest theretofore earned thereon) with respect to all or any
portion of the Property, to beheld ~ Lender subject to the terms of the Leases.
3.7 MAINTENANCE OF: PROPERTY. Borrower shall cause the
Property to be maintained in a good and safe condition and repair. The
Improvements and the Personal Property shall not be removed, demolished or
materially altered (except for normal replacement of the Personal Property and
tenant improvements made in connection with a Lease which has been entered into
by Borrower in accordance with the terms hereof) without the consent of Lender.
Subject to the provisions of Subsection 3.2(g) and Section 3.5, Borrower shall
promptly repair, replace or rebuild any part of the Property which may be
destroyed by any casualty, or become damaged, worn or dilapidated or which may
be affected by any proceeding of the character referred to in Section 3.5 hereof
and shall complete and pay for any structure at any time in the process of
construction or repair on the Land. Borrower shall not initiate, join in,
acquiesce in, or consent to
10
any change in any private restrictive covenant, zoning law or other public or
private restriction, limiting or defining the uses which may be made of the
Property or any part thereof. If under applicable zoning provisions the use of
all or any portion of the Property is or shall become a nonconforming use,
Borrower will not cause or permit the nonconforming use to be discontinued or
abandoned without the express written consent of Lender
3.8 WASTE. Borrower shall not commit or suffer any waste of
the Property or make any change in the use of the Property which will in any way
materially increase the risk of fire or other hazard arising out of the
operation of the Property, or take any action that might invalidate or give
cause for cancellation of any Policy, or do or permit to be done thereon
anything that may in any way materially impair the value of the Property or the
security of this Security Instrument.
3.9 COMPLIANCE WITH LAWS. Borrower shall (i) promptly comply
with all existing and future federal, state and local laws, orders, ordinances,
governmental rues and regulations or court orders affecting the Property, or the
use thereof including, but not limited to, the Americans with Disabilities Act
("ADA') (collectively, the "Applicable Laws"), (ii) from time to time, upon
Lender's request, provide Lender with evidence satisfactory to Lender that the
Property complies with all Applicable Laws or is exempt from compliance with
Applicable Laws, (iii) give prompt notice to Lender of the receipt by Borrower
of any notice related to a violation of any Applicable Laws and of the
commencement of any proceedings or investigations which relate to compliance
with Applicable Laws, and (iv) take appropriate measures to prevent and will not
engage in or knowingly permit any illegal activities at the Property.
3.10 BOOKS AND RECORDS.
(a) Borrower shall keep adequate books and records of account
in accordance with methods of accounting reasonably acceptable to Lender and
furnish to Lender:
(i) quarterly operating statements of the Property, prepared
and certified by Borrower in the form required by Lender, detailing the
revenues received, the expenses incurred and the net operating income
before and after debt service (principal and interest) and major
capital improvements for that quarter and containing appropriate year
to date information within thirty (30) days after the end of each
fiscal quarter;
(ii) certified rent rolls for the last month of each fiscal
quarter signed and dated by Borrower, detailing the names of all
tenants of the Improvements, the portion of Improvements occupied by
each tenant, the base rent and any other charges payable under each
Lease and the term of each Lease, including the expiration date, and
any other information as is reasonably required by Lender, within
thirty (30) days after the end of each fiscal quarter;
(iii) an annual operating statement of the Property detailing
the total revenues received, total expenses incurred, total cost of al(
capital improvements, total debt service and total cash flow, to be
prepared and certified by Borrower in the form required by Lender,
within ninety (90) days after the close of each fiscal year of Borrower
and if
11
available, any operating statements prepared by an independent
certified public accountant within thirty (30) days of the date the
same are made available to Borrower;
(iv) an annual balance sheet and profit and loss statement of
Borrower in the form required by Lender, prepared and certified by the
Borrower within ninety (90) days after the close of each fiscal year of
Borrower, and, as the case may be and, if available, any financial
statement prepared by an independent certified public accountant with
respect to Borrower within thirty (30) days of the date the same are
made available to any such persons; and
(v) copies of Borrower's federal income tax returns within
fifteen (15) days of the date such returns are filed.
(b) Upon Lender's request, Borrower shall cause each Guarantor
(as hereinafter defined) and each Indemnitor other than Borrower (an
"Indemnitor") under the Environmental Indemnity (as hereinafter defined) to
furnish to Lender no later than ninety (90) days after the end of the fiscal
year for the applicable Guarantor or Indemnitor a financial statement for said
fiscal year certified to Lender and prepared on a form reasonably acceptable to
Lender.
(c) Borrower, its affiliates, any Guarantor and any Indemnitor
shall furnish Lender with such other additional financial or management
information certified to by such respective parties but not audited as may, from
time to time, be reasonably required by Lender in form and substance reasonably
satisfactory to Lender.
3.11 PAYMENT FOR LABOR AND MATERIALS. Borrower will promptly
pay when due all bills and costs for labor, materials, and specifically
fabricated materials incurred m connection with the Property and never permit to
be created or exist in respect of the Property or any part thereof any other or
additional lien or security interest other than the liens or security interests
hereof, except for the Permitted Exceptions (defined below).
3.12 INTENTIONALLY DELETED.
3.13 PERFORMANCE OF OTHER AGREEMENTS. Borrower shall observe
and perform each and every term to be observed or performed by Borrower pursuant
to the terms of any agreement or recorded instrument affecting or pertaining to
the Property, or given
3.14 by Borrower to Lender for the purpose of further securing
an obligation secured hereby and any amendments, modifications or changes
thereto.
3.15 CHANGE OF NAME. IDENTITY OR STRUCTURE. Borrower will not
change Borrower's name, identity (including its trade name or names) or, if not
an individual, Borrower's corporate, limited liability company, partnership or
other structure without notifying Lender of such change in writing at least
thirty (30) days prior to the effective date of such change and, in the case of
a change to Borrower's structure, without first obtaining the prior written
consent of Lender. Borrower will execute and deliver to Lender, prior to or
contemporaneously with the effective date of any such change, any financing
statement or financing statement change
12
required by Lender to establish or maintain the validity, perfection and
priority of the security interest granted herein. At the request of Lender,
Borrower shall execute a certificate in form satisfactory to Lender listing the
trade names under which Borrower intends to operate the Property, and
representing and warranting that Borrower does business under no other trade
name with respect to the Property.
3.16 EXISTENCE. Borrower will continuously maintain its
existence and its rights to do business in the state where the Property is
located together with its franchises and trade names.
4 - SPECIAL COVENANTS
Borrower covenants and agrees that:
4.1 PROPERTY USE. The Property shall be used only for
industrial office building, and for no other use without the prior written
consent of Lender, which consent may be withheld in Lender's sole and absolute
discretion.
4.2 SINGLE PURPOSE ENTITY. It has not and shall not: (a)
engage in any business or activity other than the ownership, operation and
maintenance of the Property, and activities incidental thereto; (b) acquire or
own any material assets other than (i) the Property, and (ii) such incidental
Personal Property as may be necessary for the oration of the Property; (c) merge
into or consolidate with any person or entity or dissolve, terminate or
liquidate in whole or in part, transfer or otherwise dispose se of all or
substantially all of its assets or change its legal structure, without in each
case Lender's consent; (fail to preserve its existence as an entity duly
organized, validly existing and in good standing (if applicable) under the laws
of the jurisdiction of its organization or formation, or without the prior
written consent of Lender, amend, modify, terminate or fail to comply with the
provisions of Borrower's partnership agreement, articles or certificate of
incorporation , articles of organization, operating agreement, or similar
organizational documents, as the case may be, as same may be further amended or
supplemented, if such amendment, modification, termination or failure to comply
would adversely affect the ability of Borrower to perform its obligations
hereunder, under the Note or under the other Loan Documents; (e) own any
subsidiary or make any investment in, any person or entity without the consent
of Lender; (f) commingle its assets with the assets of any of its general
partners, managing members, shareholders, affiliates, principals or of any other
person or entity; (g) incur any debt, secured or unsecured, direct or continent
(including guaranteeing any obligation), other than the Debt, except with
respect to trade payables in the or wary course of its business of owning and
operating the Property, provided that such debt is paid when due; (h) fail to
maintain its records, books of account and bank accounts separate and apart from
those of the general partners, managing members, shareholders, principals and
affiliates of Borrower, the affiliates of a general partner or managing member
of Borrower, and any other person or entity; (i) enter into any contract or
agreement with any general partner, managing member, shareholder, principal or
affiliate of Borrower, Guarantor or Indemnitor, or any general partner, managing
member, shareholder, principal or affiliate thereof, except upon terms and
conditions that are intrinsically fair and substantially similar to those that
would be available on an arms-length basis with third parties other than any
general partner, managing member, shareholder, principal or affiliate of
Borrower,
13
Guarantor or Indemnitor, or any general partner, managing member, shareholder,
principal or affiliate thereof; (j) seek the dissolution or winding up in whole,
or in part, of Borrower; (k) maintain its assets in such a manner that it will
be costly or difficult to segregate, ascertain or identify its individual assets
from those of any general partner, managing member, shareholder, principal or
affiliate of Borrower, or any general partner, managing member, shareholder,
principal or affiliate thereof or any other person; (1) hold itself out to be
responsible for the debts of another person; (m) make any loans to any third
party; (n) fail either to hold itself out to the public as a legal entity
separate and distinct from any other entity or person or to conduct its business
solely in its own name in order not (i) to mislead others as to the identity
with which such other party is transacting business, or (ii) to suggest that
Borrower is responsible for the debts of any third party (including any general
partner, managing member, shareholder, principal or affiliate of Borrower, or
any general partner, managing member, shareholder, principal or affiliate
thereof); (o) fail 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; or (p) file or consent to the filing of
any petition, either voluntary or involuntary, to take advantage of any
applicable insolvency, bankruptcy, liquidation or reorganization statute, or
make an assignment for the benefit of creditors.
4.3 RESTORATION. The following provisions shall apply in
connection with the Restoration of the Property.
(a) If the Net Proceeds shall be less than $100,000 and the
costs of completing the Restoration shall be less than $100,000, the Net
Proceeds will be disbursed by Lender to Borrower upon receipt, provided that all
of the conditions set forth in Subsection 4.3(b)(i) are met and Borrower
delivers to Lender a written undertaking to expeditiously commence and to
satisfactorily complete with due diligence the Restoration in accordance with
the terms of this Security Instrument.
(b) If the Net Proceeds are equal to or greater than $100,000
or the costs of completing the Restoration is equal to or greater than $100,000
Lender shall make the Net Proceeds available for the Restoration in accordance
with the provisions of this Subsection 4.3(b). The term "Net Proceeds" for
purposes of this Section 4.3 shall mean: (i) the net amount of all insurance
proceeds received by Lender pursuant to Subsections 3.2(a)(i), (iv), (vi) and
(ix) of this Security Instrument as a result of such damage or destruction,
after deduction of its reasonable costs and expenses (including, but not limited
to, reasonable counsel fees), if any, in collecting same ("Insurance Proceeds"),
or (ii) the net amount of all awards and payments received by Lender with
respect to a taking referenced in Section 3.5 of this Security Instrument, after
deduction of its reasonable costs and expenses (including, but not limited to,
reasonable counsel fees), if any, in collecting same ("Condemnation Proceeds"),
whichever the case may be.
(i) The Net Proceeds shall be made available to Borrower for
the Restoration provided that each of the following conditions are met:
(A) no Event of Default shall have occurred and be continuing under the
Note, this Security Instrument or any of the other Loan Documents; (B)
(1) in the event of the Net Proceeds are Insurance Proceeds, less than
fifty percent (50%) of the total floor area of the Improvements has
been damaged, destroyed, or rendered unusable as a result of such fire
or other casualty or (2) in the event
14
the Net Proceeds are Condemnation Proceeds, less than ten (10%) of the
land constituting the Property is taken, and such land is located along
the perimeter or periphery of the Property, and some portion of the
Improvements is located in such land; (C) Leases demising in the
aggregate a percentage amount equal to or greater than fifty percent
(50%) (with respect to casualties) or ten percent (10%) (with respect
to condemnation) of the total net rentable space in the Property which
has been demised under executed and delivered Leases in effect as of
the date of the occurrence of such fire or other casualty, as the case
may be, shall remain in full force and effect during and after the
completion of the Restoration; (D) Borrower shall have commenced the
Restoration as-soon as reasonably practicable (but in no event later
than ninety (90) days after such damage or destruction or taking,
whichever the case may be, occurs) and shall diligently pursue the same
to satisfactory completion; (E) Lender shall be satisfied that any
operating d21cits, including all scheduled payments of principal and
interest under the Note at the Applicable Interest Rate (as defined in
the Note), which will be incurred with respect to the Property as a
result of the occurrence of any such fire or other casualty or taking,
whichever the case maybe, will be covered out of (1) the Net Proceeds,
(2) the insurance coverage referred to in Subsection 3.2(a)(iii), if
applicable, or (3) by other funds of Borrower; (F) Lender shall be
satisfied that for the twelve (12) month period succeeding the
completion of the Restoration, the ratio of sustainable net operating
income as calculated in accordance with Exhibit C attached hereto for
the Property (after deduction for applicable reserves) to debt service
payable under the Note shall be at least 1.30 to 1.0 (G) Lender shall
be reasonably satisfied that the Restoration will be completed on or
before the earliest to occur of (1) twelve (12) months prior to the
Maturity Date (as defined m the Note), (2) twelve (12) months after the
occurrence of such fire or other casualty or taking, whichever the case
may be, (3) the earliest date required for such completion under the
terms of any Leases which are required in accordance with the
provisions of this Subsection 4.3(b) to remain in effect subsequent to
the occurrence of such fire or other casualty or taking, whichever the
case may be, and the completion of the Restoration or (4) such time as
may be required under any applicable zoning laws, ordinances, rules or
regulations in order to repair and restore the Property to the
condition it was in immediately prior to such fire or other casualty or
to as nearly as possible the condition it was in immediately prior to
such taking, as applicable; (H) the Property and the use thereof after
the Restoration will be in compliance with and permitted under all
applicable zoning laws, ordinances, rules and regulations; (I) the
Restoration shall be done and completed by Borrower m an expeditious
and diligent fashion and in compliance with all applicable laws, rules
and regulations; and (J) such fire or other casualty or taking, as
applicable, does not result in the loss of access to the Property or
the Improvements.
(ii) The Net Proceeds shall be held by Lender and, until
disbursed in accordance with the provisions of this Subsection 43(b),
shall constitute additional security for the Obligations. The Net
Proceeds shall be disbursed by Lender to, or as directed by, Borrower
from time to time during the course of the Restoration, upon receipt of
evidence satisfactory to Lender that (A) all materials installed and
work and labor performed (except to the extent that they are to be paid
for out of the requested disbursement) in connection with the
Restoration have been paid for in full, and (B) there exist no notices
of pendency, stop orders, mechanic's or materialman's liens or notices
of intention to file same, or any other
15
liens or encumbrances of any nature whatsoever on the Property arising
out of the Restoration which have not either been fully bonded to the
satisfaction of Lender and discharged of record or in the alternative
fully insured to the satisfaction of Lender by the title company
insuring the lien of this Security Instrument.
(iii) All plans and specifications required in connection with
the Restoration shall be subject to prior review and approval to all
respects by Lender and by an independent consulting engineer selected
by Lender (the "Casualty Consultant"), which approval shall not be
unreasonably withheld or delayed. Lender shall have the use of the
plans and specifications and all permits, licenses and approvals
required or obtained in connection with the Restoration. The identity
of the contractors, subcontractors and materialman engaged in the
Restoration, as well as the contracts under which they have been
engaged, shall be subject to prior review and acceptance by Lender and
the Casualty Consultant, which approval shall not be unreasonably
withheld or delayed. All costs and expenses incurred by Lender in
connection with making the Net Proceeds available for the Restoration
including, without limitation, reasonable counsel fees and
disbursements and the reasonable Casualty Consultant's fees, shall be
paid by Borrower.
(iv) In no event shall Lender be obligated to make
disbursements of the Net Proceeds in excess of an amount equal to the
costs actually incurred from time to time for work in place as part of
the Restoration, as certified by the Casualty Consultant, minus the
Casualty Retainage. The term "Casualty Retainage" as used in this
Subsection 43(b) shall mean an amount equal to 10% of the costs
actually incurred for work in place as part of the Restoration, as
certified by, the Casualty Consultant, until the Restoration has been
completed. The Casualty Retainage shall to no event, and
notwithstanding anything to the contrary set forth above in this
Subsection 43(b), be less than the amount actually held back by
Borrower from contractors, subcontractors and materialman engaged in
the Restoration. The Casualty Retainage shall not: be released until
the Casualty Consultant certifies to Lender that the Restoration has
been completed in accordance with the provisions of this Subsection
43(b) and that all approvals necessary for the re-occupancy and use of
the Property have been obtained from all appropriate governmental and
quasi-governmental authorities, and Lender receives evidence reasonably
satisfactory to Lender that the costs of the Restoration have been paid
in full or will be paid in full out of the Casualty Retainage,
provided, however, that Lender will release the portion of the Casualty
Retainage being held with respect to any contractor, subcontractor or
materialman engaged in the Restoration as of the date upon which the
Casualty Consultant certifies to Lender that the contractor,
subcontractor or materialman has satisfactorily completed all work and
has supplied all materials in accordance with the provisions of the
contractor's, subcontractor's or materialman's contract, and the
contractor, subcontractor or materialman delivers the lien waivers and
evidence of payment in full of all sums due to the contractor,
subcontractor or materialman as may be reasonably requested by Lender
or by the title company insuring the lien of this Security Instrument.
If required by Lender, the release of any such portion of the Casualty
Retainage shall be approved by the surety company, if any, which has
issued a payment or performance bond with respect to the contractor,
subcontractor or materialman.
16
(v) Lender shall not be obligated to make disbursements of the
Net Proceeds more frequently than once every calendar month.
(vi) If at any time the Net Proceeds or the undisbursed
balance thereof shall not, in the reasonable opinion of Lender, be
sufficient to pay in full the balance of the costs which are estimated
by the Casualty Consultant to be incurred in connection with the
completion of the Restoration, Borrower shall deposit the deficiency
(the "Net Proceeds Deficiency") with Lender before any further
disbursement of the Net Proceeds shall be made. The Net Proceeds
Deficiency deposited with Lender shall be held by Lender and shall be
disbursed for costs actually incurred in connection with the
Restoration on the same conditions applicable to the disbursement of
the Net Proceeds, and until so disbursed pursuant to this Subsection
43(b) shall constitute additional security for the Obligations. With
respect to Restorations following a casualty in which the Improvements
are restored to substantially the same condition as they existed prior
to the casualty, the excess, if any, of the Net Proceeds and the
remaining balance, if any, of the Net Proceeds Deficiency deposited
with Lender after the Casualty Consultant certifies to Lender that the
Restoration has been completed in accordance with the provisions of
this Subsection 4.3(b), and the receipt by Lender of evidence
reasonably satisfactory to Lender that all costs incurred in connection
with the Restoration have been paid in full, shall be remitted by
Lender to Borrower, provided no Event of Default shall have occurred
and shall be continuing under the Note, this Security Instrument or any
of the other Loan Documents.
(c) All Net Proceeds not required (i) to be made available for
the Restoration or (ii) to be returned to Borrower as excess Net Proceeds
pursuant to Subsection 4.3(b)(vi) may. be retained and applied by Lender toward
the payment of the Debt whether or not then due and payable to such order,
priority and proportions as Lender in its discretion shall deem proper or, at
the discretion of Lender, the same may be paid, either in whole or in part; to
Borrower for such purposes as Lender shall designate, in its discretion.
Provided no Event of Default exists under the Note, this Security Instrument or
the other Loan Documents, in the event of any prepayment of the Debt pursuant to
the terms of Sections 3.2 or 3.5 hereof, no Prepayment Consideration (as defined
in the Note) shall be due in connection therewith, but Borrower shall be
responsible for all other amounts due under the Note, this Security Instrument
and the other Loan Documents. If Lender shall receive and retain Net Proceeds,
the lien of this Security Instrument shall be reduced only by the amount thereof
received and retained by Lender and actually applied by Lender in reduction of
the Debt.
5- REPRESENTATIONS AND WARRANTIES
Borrower represents and warrants to Lender that:
5.1 WARRANTY OF TITLE. Borrower has paid for and has good
title to the Property and has the right to mortgage, grant, bargain, sell,
pledge, assign, warrant, transfer and convey the same and that Borrower
possesses an unencumbered fee simple absolute estate in the Land and the
Improvements and that it owns the Property free and clear of all liens,
encumbrances and charges whatsoever except for those exceptions shown in the
title insurance policy insuring the lien of this Security Instrument (the
"Permitted Exceptions"). Borrower shall forever warrant, fend
17
and preserve the title and the validity and priority of the lien of this
Security Instrument and shall forever warrant and defend the same to Lender
against the claims of all persons whomsoever.
5.2 AUTHORITY. Borrower (and the undersigned representative of
Borrower, if any) has full power, authority and legal right to execute this
Security Instrument, and to mortgage, grant, bar sell, pledge, assign, warrant,
transfer and convey the. Property pursuant to the terms hereof and to keep and
observe all of the terms of this Security Instrument on Borrower's part to be
performed.
5.3 LEGAL STATUS AND AUTHORITY. Borrower (a) is duly
organized, validly existing and in good standing under the laws of its state of
organization or incorporation; (b) is duly qualified to transact business and is
in good standing in the State where the Property is located; and (c) has all
necessary approvals, governmental and otherwise, and full power and authority to
own the Property and carry on its business as now conducted and proposed to be
conducted. Borrower now has and shall continue to have the full right, power and
authority to operate and lease the Property, to encumber the Property as
provided herein and to perform all of the other obligations to be performed by
Borrower under the Note, this Security Instrument and the other Loan Documents
5.4 VALIDITY OF DOCUMENTS. (a) The execution, delivery and
performance of the Note, this Security Instrument and the other Loan Documents
and the borrowing evidenced by the Note (i) are within the corporate,
partnership, trust or limited liability company (as the case may be) power of
Borrower; (ii) have been authorized by all requisite corporate, partnership,
trust or limited liability company (as the case may be) action; (iii) have
received all necessary approvals and consents, corporate, governmental or
otherwise; (iv) will not violate, conflict with, result in a breach of or
constitute (with notice or apse of time, or both) a default under any provision
of law, any order or judgment of any court or governmental authority, the
articles of incorporation, by-laws, partnership, trust, operating agreement or
other governing instrument of Borrower, or any indenture, agreement or other
instrument to which Borrower is a party or by which it or any of its assets or
the Property is or may be bound or affected; (v) will not result in the creation
or imposition of any lien, charge or encumbrance whatsoever upon any of its
assets, except the lien and security interest created hereby; and (vi) will not
require any authorization or license from, or any filing with, any governmental
or other body (except for the recordation of this instrument in appropriate land
records in the State where the Property is located and except for Uniform
Commercial Code filings relating to the security interest created hereby); and
(b) the Note, this Security Instrument and the other Loan Documents constitute
the legal, valid and binding obligations of Borrower.
5.5 LITIGATION. There is no action, suit or proceeding,
judicial, administrative or otherwise (including any condemnation or similar
proceeding), pending or, to the best of Borrower's knowledge, threatened or
contemplated against, or affecting, Borrower, a Guarantor, if any, an
Indemnitor, if any, or the Property that has not been disclosed to Lender or is
not adequately covered by insurance, as determined by Lender in its sole and
absolute discretion.
5.6 STATUS OF PROPERTY. (a) No portion of the Improvements is
located in an area identified by the Secretary of Housing and Urban Development
or any successor thereto as
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an area having special flood hazards pursuant to the National Flood Insurance
Act of 1968 or the Flood Disaster Protection Act of 1973, as amended, or any
successor law, or, if located within any such area, Borrower has obtained and
will maintain the insurance prescribed in Section 3.2 hereof; (b) Borrower has
obtained all necessary certificates, licenses and other approvals, governmental
and otherwise, necessary for the operation of the Property and the conduct of
its business and all required zoning, building code, land use, environmental and
other similar permits or approvals, all of which are in full force and effect as
of the date hereof and not subject to revocation, suspension, forfeiture or
modification; (c) except as set forth in that certain Phase I, lI, and III
Environmental Site Assessment ("ESA") Report prepared by Conestoga-Rovers &
Associates (Reference No. 9759), the Property and the present and contemplated
use and occupancy thereof are in full compliance with all Applicable Laws,
including, without limitation, zoning ordinances, building codes, land use and
environmental laws, laws relating to the disabled (including, but not limited
to, the ADA) and other similar laws; (d) the Property is served by all utilities
(including, but not limited to, public water and sewer systems) required for the
current or contemplated use thereof; (e) all utility service is provided by
public utilities and the Property has accepted or is equipped to accept such
utility service; (f) all pubic roads and streets necessary for service of and
access to the Property for the current or contemplated use thereof have been
completed, are serviceable and all-weather and are physically and legally open
for use by the public, (g) the Property is, to the best of Borrower's knowledge,
free from damage caused by fire or other casualty; (h) all costs and expenses of
any and all labor, materials, supplies and equipment used in the construction of
the Improvements have been paid in full; (i) all liquid and solid waste
disposal, septic and sewer systems located on the Property are in a good and
safe condition and repair and in compliance with all Applicable Laws; and (j)
all Improvements lie within the boundary of the Land.
5.7 NO FOREIGN PERSON. Borrower is not a "foreign person"
within the meaning of Section 1445(f)(3) of the Internal Revenue Code of 1986,
as amended and the related Treasury Department regulations, including temporary
regulations.
5.8 SEPARATE TAX LOT. The Property is assessed for real estate
tax purposes as one or more wholly independent tax lot or lots, separate from
any adjoining land or improvements not constituting a part of such lot or lots,
and no other land or improvements are assessed and taxed together with the
Property or any portion thereof.
5.9 ERISA COMPLIANCE. As of the date hereof and throughout the
term of this Security Instrument, (i) Borrower is not and will not be an
"employee benefit plan" as deed in Section 3(3) of ERISA, which is subject to
Title I of ERISA; (ii) the assets of Borrower do not and will not constitute
"plan assets" of one or more such plans for purposes of Title I of ERISA; (iii)
Borrower is not and will not be a `governmental plan" within the meaning of
Section 3(32) of ERISA; and (iv) transactions by or with Borrower are not and
will not be subject to state statutes applicable to Borrower regulating
investments of and fiduciary obligations with respect to governmental plans.
Borrower shall deliver to Lender such certifications or other evidence as
requested by Lender from time to time of Borrower's compliance with the
foregoing representations and covenants.
5.10 LEASES. (a) Borrower is the sole owner of the entire
lessor's interest in the Leases; (b) the Leases are valid and enforceable; (c)
the terms-of all alterations, modifications and
19
amendments to the Leases are reflected in the certified occupancy statement
delivered to and approved by Lender, (d) none of the Rents reserved in the
Leases have been assigned or otherwise pledged or hypothecated; (e) none of the
Rents have been collected for more than one (1) month in advance; (f) the
premises demised under the Leases have been completed and the tenants under the
Leases have accepted the same and have taken possession of the same on a
rent-paying basis; (g) there exist no offsets or defenses to the payment of any
portion of the Rents; (h) no Lease contains an option to purchase, right of
first refusal to purchase, or any other similar provision; and (i) no person or
entity has any possessory interest in, or right to occupy, the Property except
under and pursuant to a Lease.
5.11 FINANCIAL CONDITION. (a) Borrower is solvent, and no
bankruptcy, reorganization, insolvency or similar proceeding under any state or
federal law with respect to Borrower has been initiated, and (b) it has received
reasonably equivalent value for the granting of this Security Instrument.
5.12 BUSINESS PURPOSES. The Loan is solely for the business
purpose of Borrower, and is not for personal, family, household, or agricultural
purposes.
5.13 TAXES. Borrower has 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.
Borrower knows of no basis for any additional assessment in respect of any such
taxes and related liabilities for prior years.
5.14 MAILING ADDRESS. Borrower's mailing address, as set forth
in the opening paragraph hereof or as changed in accordance with the provisions
hereof, is true and correct.
5.15 NO CHANGE IN FACTS OR CIRCUMSTANCES. All information
submitted in connection with Borrowers application for the loan and Lender's
issuance of a commitment for the Loan (collectively, the "Loan Application") and
the satisfaction of the conditions thereof, including, but not limited to, all
financial statements, rent rolls, reports, certificates and other documents, are
accurate, complete and correct in all respects. There has been no adverse change
in any condition, fact, circumstance or event that would make any such
information inaccurate, incomplete or otherwise misleading.
5.16 DISCLOSURE. To Borrower's best knowledge, Borrower has
disclosed to Lender all material facts and has not failed to disclose any
material fact that could cause any representation or warranty made herein to be
materially misleading.
5.17 THIRD PARTY REPRESENTATIONS. Each of the representations
and the warranties made by each Guarantor and Indemnitor herein or in any Other
Loan Document(s) is true and correct in all material respects.
5.18 ILLEGAL ACTIVITY. No portion of the Property has been or
will be purchased with proceeds of any illegal activity.
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Borrower acknowledges that in accepting the Note, this Security Instrument and
the other Loan Documents, Lender is expressly and primarily relying on the truth
and accuracy of the warranties and representations set forth above
notwithstanding any investigation of the Property by Lender; that such reliance
existed on the part of Lender prior to the date hereof; that the warranties and
representations are a material inducement to Lender in making the Loan and that
Lender would not make the Loan in the absence of such warranties.
6 - OBLIGATIONS AND RELIANCES
6.1 RELATIONSHIP OF BORROWER AND LENDER. The relationship
between Borrower and Lender is solely that of debtor and creditor, and Lender
has no fiduciary or other special relationship with Borrower and no term or
condition of any of the Note, this Security Instrument and the other Loan
Documents shall be construed so as to deem the relationship between Borrower and
Lender to be other than that of debtor and creditor. Borrower is not relying on
Lender's expertise business acumen or advice in connection with the Property.
6.2 NO LENDER OBLIGATIONS.
(a) Notwithstanding the provisions of Subsections 1.1(f) and
(l) or Section 1.2, Lender is not undertaking the performance of (i) any
obligations under the Leases; or (ii) any obligations with respect to such
agreements, contracts, certificates, instruments, franchises, permits,
trademarks, licenses and other documents.
(b) By accepting or approving anything required to be
observed, performed or fulfilled or to be given to Lender pursuant to this
Security Instrument, the Note or the other Loan Documents, Lender shall not be
deemed to have warranted, consented to, or affirmed the sufficiency, the
legality or effectiveness of same, and such acceptance or approval thereof shall
not constitute any warranty or affirmation with respect thereto by Lender.
7 - FURTHER ASSURANCES
7.1 RECORDING OF SECURITY INSTRUMENT. ETC. Borrower forthwith
upon the execution and delivery of this Security Instrument and thereafter, from
time to time, will cause this Security Instrument and any of the other Loan
Documents creating a lien or security interest or evidencing the lien hereof
upon the Property to be filed, registered or recorded in such manner and in such
places as may be required by any present or future law in order to publish
notice of and fully to protect and perfect the lien or security interest hereof
upon, and the interest of Lender in, the Property. Except where prohibited by
law, Borrower will pay all taxes, duties, imposts, assessments, filing,
registration and recording fees, and any and all expenses incident to the
preparation, execution, acknowledgment and/or recording of the Loan Documents
and any amendment or supplement thereto.
7.2 FURTHER ACTS. ETC. Borrower will, at the cost of Borrower,
and without expense to Lender, do, execute, acknowledge and deliver all and
every such further acts, deeds, conveyances, mortgages, assignments, notices of
assignments, transfers and assurances as Lender
21
shall, from time to time, reasonably require, for the better assuring,
conveying, assigning, transferring, and confirming unto Lender the property and
rights hereby mortgaged, granted, bargained, sold, conveyed, confirmed, pledged,
assigned, warranted and transferred or intended now or hereafter so to be, or
which Borrower may be or may hereafter become bound to convey or assign to
Lender, or for carrying out the intention or facilitating the performance of the
terms of this Security Instrument or for filing, registering or recording this
Security Instrument, or for complying with all Applicable Laws. Borrower, on
demand, will execute and deliver and hereby authorizes Lender to execute in the
name of Borrower or without the signature of Borrower to the extent Lender may
lawfully do so, one or more financing statements, chattel mortgages or other
instruments, to evidence more effectively the security interest of Lender in the
Property. Borrower grants to Lender an irrevocable power of attorney coupled
with an interest for the purpose of exercising and perfecting any and all rights
and remedies available to Lender at law and in equity, including without
limitation such rights and remedies available to Lender pursuant to this Section
7.2.
7.3 CHANGES IN TAX, DEBT, CREDIT AND DOCUMENTARY STAMP LAWS.
(a) If any law is enacted or adopted or amended after the date
of this Security Instrument which deducts the Debt from the value of the
Property for the purpose of taxation or which imposes a tax, either directly or
indirectly, on the Debt or Lender's interest in the Property, Borrower will pay
the tax, with interest and penalties thereon, if any. If Lender is advised by
counsel chosen by it that the payment of tax by Borrower would be unlawful or
taxable to Lender or unenforceable or provide the basis for a defense of usury,
then Lender shall have the option by written notice of not less than ninety (90)
days to declare the Debt immediately due and payable.
(b) Borrower will not claim or demand or be entitled to any
credit or credits on account of the Debt for any part of the Taxes or Other
Charges assessed against the Property, or any part thereof, and no deduction
shall otherwise be made or claimed from the assessed value of the Property, or
any part thereof, for real estate tax purposes by reason of this Security
Instrument or the Debt. If such claim, credit or deduction shall be required by
law, Lender shall have the option, by written notice of not less than ninety
(90) days, to declare the Debt immediately due and payable.
(c) 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, this Security Instrument, or any of the other
Loan Documents or impose any other tax or charge on the same, Borrower will pay
for the same, with interest and penalties thereon, if any.
7.4 ESTOPPEL CERTIFICATES.
(a) After request by Lender, Borrower, within ten (10) days,
shall furnish Lender or any proposed assignee an estoppel certificate in form
and content as may be requested by Lender with respect to the status of the Loan
and/or the Loan Documents.
22
(b) Borrower shall use its best efforts to deliver to Lender,
promptly upon request, duly executed estoppel certificates from any one or more
lessees as required by Lender attesting to such facts regarding the Lease as
Lender may reasonably require, provided that (i) Borrower shall not be required
to honor more than two requests made by Lender in any twelve month period and
(ii) in no event shall Borrower be required to obtain estoppel certificates from
lessees containing more information than that required to be certified pursuant
to the terms of the related Lease.
7.5 REPLACEMENT DOCUMENTS. Upon receipt of an affidavit of an
officer of Lender as to the loss, theft, destruction or mutilation of the Note
or any other Loan Document which is not of public record, and, in the case of
any such mutilation, upon surrender and cancellation of such Note or other Loan
Document, Borrower will issue, in lieu thereof, a replacement Note or other Loan
Document, dated the date of such lost, stolen, destroyed or mutilated Note or
other Loan Document in the same principal amount thereof and otherwise of like
tenor.
8 - DUE ON SALE/ENCUMBRANCE
8.1 LENDER RELIANCE. Borrower acknowledges that Lender has
examined and relied on the experience of Borrower and its general partners,
managing members, principals and (if Borrower is a trust) beneficial owners in
owning and operating properties such as the Property in agreeing to make the
Loan, and will continue to rely on Borrower's ownership of the Property as a
means of maintaining the value of the Property as security for payment and
performance of the Obligations. Borrower acknowledges that Lender has a valid
interest in maintaining the value of the Property so as to ensure that, should
Borrower default in the payment or the performance of the Obligations, Lender
can recover the Debt by a sale of the Property.
8.2 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
part thereof or permit the Property or any part thereof to be sold, conveyed,
mortgaged, granted, bargained, encumbered, pledged, assigned, or otherwise
transferred.
8.3 SALE/ENCUMBRANCE DEFINED. A sale, conveyance, mortgage,
grant, bargain, encumbrance, pledge, assignment, or transfer within the meaning
of this Article 8 shall be deemed to include, but not be limited to, (a) an
installment sales agreement wherein Borrower agrees to sell the Property or any
part thereof for a price to be paid in installments; (b) 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; (c) if Borrower, any Guarantor, any
Indemnitor, or any general partner or managing member of Borrower, Guarantor or
Indemnitor is a corporation, the voluntary or involuntary sale, conveyance,
transfer or pledge 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 by which an aggregate of
more than 10% of such corporation's stock shall be vested in a party or parties
who are not now stockholders provided however that this subpart (c) shall not
apply
23
to any Guarantor whose stock or shares are publicly trade (d) if Borrower, any
Guarantor or Indemnitor or any general partner or managing member of Borrower,
any Guarantor or Indemnitor is a limited or general partnership or joint
venture, the change, removal or resignation of a general partner or managing
partner, or the transfer, or pledge of the partnership interest of any general
partner or managing partner of such partnership or any profits or proceeds
relating to such partnership interest or the transfer or pledge of more than 49%
to the aggregate of any limited partnership interests in such partnership or any
profits or proceeds related to such interests whether to one transfer or pledge
or a series of transfers or pledges; (e) if Borrower, any Guarantor or
Indemnitor or any general partner or managing member of Borrower, any Guarantor
or Indemnitor is a limited liability company, the change, removal or resignation
of the managing member of such company, or the transfer or pledge of the
membership interest of the managing member of such company or any profits or
proceeds relating to such membership interest or the transfer or pledge of more
than 49% in the aggregate of any membership interests in such company or any
profits or proceeds related to such interests whether to one transfer or pledge
or a series of transfers or pledges; and (f) without limitation to the
foregoing, any voluntary or involuntary sale, transfer, conveyance or pledge by
any person or entity which directly or indirectly controls Borrower (by
operation of law or otherwise) (a "Principal") of its direct or indirect
controlling interest to Borrower. Notwithstanding the foregoing, the following
transfers shall not be deemed to be a sale, conveyance, mortgage, ant, bargain,
encumbrance, pledge, assignment or transfer within the meaning of this Article
8: (A) transfer by vise or descent or by operation of law upon the death of a
partner, member or stockholder of Borrower or any general partner thereof, and
(B) a sale, transfer or hypothecation of a partnership, shareholder or
membership interest in Borrower, whichever the case may be, by the current
partner(s), shareholder(s) or member(s), as applicable, to an immediate family
member (i.e., parents, spouses, siblings, children or grandchildren) of such
partner, shareholder or member to a Principal (or a trust for the benefit of any
such persons).
8.4 LENDER'S RIGHTS. Lender reserves the right to condition
the consent required hereunder upon a modification of the terms hereof and on
assumption of the Note, this Security Instrument and the other Loan Documents as
so modified by the proposed transferee, payment of a processing fee of $2,000
upon any request for transfer, payment of a transfer fee of not less than one
percent (1%) of the principal balance of the Note upon the occurrence of the
transfer and payment of all of Lender's expenses incurred in connection with
such transfer, the approval by Lender of the proposed transferee, the proposed
transferee's continued compliance with the representations, warranties and
covenants set forth in Sections 4.2 and 5.9 hereof, or such other conditions as
Lender shall determine in its sole discretion to be in the interest of Lender.
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, 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.
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9 - DEFAULT
9.1 EVENTS OF DEFAULT. The occurrence of any one or more of
the following events shall constitute an "Event of Default": (a) if any portion
of the Debt is not paid prior to the fifth (5th) day after the same is due or if
the entire Debt is not paid on or before the Maturity Date; (b) if any of the
Taxes or Other Charges is not paid prior to the date the same becomes delinquent
except to the extent sums sufficient to pay such Taxes and Other Charges have
been deposited with Lender in accordance with the terms of this Security
Instrument; (c) if the Policies ate not kept in full force and effect, or if the
Policies are not delivered to Lender upon request or Borrower has not delivered
evidence of the renewal of the Policies thirty (30) days prior to their
expiration as provided in Section 3.2(b); (d) if Borrower violates or does not
comply with any of the provisions of Sections 3.6 or 4.2 or Articles 8 or 11;
(e) if any representation or warranty of Borrower, Indemnitor or any person
guaranteeing payment of the Debt or any portion thereof or performance by
Borrower of any of the terms of this Security Instrument (a "Guarantor"), or any
general partner, principal or beneficial owner of any of the foregoing, made
herein or in the Environmental Indemnity (defined below) or any guaranty, or in
any certificate, report, financial statement or other instrument or document
furnished to Lender shall have been false or misleading in any material respect
when made; (f) if (i) Borrower or any general partner or managing member of
Borrower shall commence any case, proceeding or other action (A) under any
existing or future law of any jurisdiction, domestic or foreign, relating to
bankruptcy, insolvency or relief of debtors, seeking to have an order for relief
entered with respect to it, or seeking to adjudicate it a bankrupt or insolvent,
or seeking reorganization, adjustment, liquidation, dissolution or other relief
with respect to it or its debts, or (B) seeking appointment of a receiver,
trustee, custodian or other similar official for it or for all or any
substantial part of its assets, or Borrower or any general partner or managing
member of Borrower shall make a general assignment for the benefit of its
creditors; or (ii) there shall be commenced against Borrower or any general
partner or managing member of Borrower any case, proceeding or. other action of
a nature referred to in clause (i) above which (A) results in the entry of an
order for relief or any such adjudication or appointment or (B) remains
undismissed or undischarged for a period of sixty (60) days; & (iii) there shall
be commenced against Borrower or any general partner or managing member of
Borrower any case, proceeding or other action seeking issuance of a Warrant of
attachment, execution, distraint or similar process against all or any
substantial part of its assets which results in the entry of any order for any
such relief which shall not have been vacated, discharged, or stayed or bonded
pending appeal within sixty (60) days from the entry thereof; or (iv) Borrower
or any general partner or managing member of Borrower shall take any action in
furtherance of, or indicating its consent to, approval of, or acquiescence in,
any of the acts set forth in clause (i), (ii), or (iii) above; or (v) Borrower
or any general partner or managing member of Borrower shall generally not, or
shall be unable to, or shall admit in writing its inability to, pay its debts as
they become due; (g) if Borrower shall be in default beyond any applicable
notice or cure period under any other mortgage, deed of trust, deed to secure
debt or other security agreement covering any part of the Property whether it be
superior or junior in lien to this Security Instrument; (h) if the Property
becomes subject to any mechanic's, materialman's or other lien other than a lien
for local real estate taxes and assessments not then delinquent and the lien
shall remain undischarged of record (by payment, bonding or otherwise) for a
period of thirty (30) days after Borrower has first received notice thereof; (i)
if any federal tax lien is filed against the Property and same is not discharged
of record within thirty (30) days after Borrower has first received notice
thereof; (j) if within ten (10) days of Lender's demand therefor Borrower fails
to provide Lender with the written certification and evidence referred to in
Section
25
5.9 hereof; (k) if Borrower or any other Indemnitor shall fail to perform any of
its obligations under that certain environmental indemnity agreement of even
date herewith (the "Environmental Indemnity") after the expiration of applicable
notice and grace periods, if any; (1) if any default beyond any applicable
notice or cure period occurs under any guaranty or indemnity executed in
connection herewith and such default continues after the expiration of
applicable grace periods, if any; or (m) if for more than ten (10) days after
notice from Lender, Borrower shall continue to be in default under any other
term, covenant or condition of the Note, this Security Instrument or the other
Loan Documents in the case of any default which can be cured by the payment of a
sum of money or for thirty (30) days after notice from Lender in the case of any
other default, provided that if such default cannot reasonably be cured within
such thirty (30) day period and Borrower shall have commenced to cure such
default within such thirty (30) day period and thereafter diligently and
expeditiously proceeds to cure the same, such thirty (30) day period shall be
extended for so long as it shall require Borrower in the exercise of due
diligence to cure such default, it being agreed that no such extension shall for
a period in excess of sixty (60) days.
10 - RIGHTS AND REMEDIES
10.1 REMEDIES. Upon the occurrence of any Event of Default,
Borrower agrees that Lender may take such action, without notice or demand, as
it deems advisable to protect and enforce its rights against Borrower and in and
to the Property, including, but not limited to, the following actions, each of
which may be pursued concurrently or otherwise, at such time and in such order
as Lender may determine, in its sole discretion, without impairing or otherwise
affecting the other rights and remedies of Lender: (a) declare the entire unpaid
Debt to be immediately due and payable; (b) with or without entry, institute
proceedings, judicial or otherwise, for the complete or partial foreclosure of
this Security Instrument under any applicable provision of law in which case the
Property or any interest therein may be sold for cash or upon credit in one or
more parcels or in several interests or portions and to any order or manner, any
partial foreclosure to be subject to the continuing lien and security interest
of this Security Instrument for the balance of the Debt not then due, unimpaired
and without loss of priority; (c) sell for cash or upon credit the Property or
any part thereof and all estate, claim, demand, right, title and interest of
Borrower therein and rights of redemption thereof, pursuant to power of sale or
otherwise, at one or more sales, as an entirety or in one or more parcels; (d)
institute an action, suit or proceeding in equity for the specific performance
of any covenant, condition or agreement contained herein, in the Note or in the
other Loan Documents; (e) recover judgment on the Note either before, during or
after any proceedings for the enforcement of this Security Instrument or the
other Loan Documents; (f) apply for the appointment of a receiver, trustee,
liquidator or conservator of the Property, without notice and without regard for
the adequacy of the security for the Debt and without regard for the solvency of
Borrower, any Guarantor, Indemnitor or of any person, firm or other entity
liable for the payment of the Debt; (g) enter into or upon the Property, either
personally or by its agents, nominees or attorneys and dispossess Borrower and
its agents and servants therefrom, without liability for trespass, damages or
otherwise and exclude Borrower and its agents or servants wholly therefrom, and
take possession of all books, records and accounts relating thereto and Borrower
agrees to surrender possession of the Property and of such books, records and
accounts to Lender upon demand, and thereupon Lender may exercise all rights and
powers of Borrower with respect to the Property including, without limitation,
(1) the right to use, operate, manage, control, insure, maintain, repair,
restore and otherwise deal with all and every part of the Property and conduct
the
26
business thereat; (2) the right to make or complete any construction,
alterations, additions, renewals, replacements and improvements to or on the
Property as Lender deems advisable; (3) the right to make, cancel, enforce or
modify Leases, obtain and evict tenants, and demand, xxx for, collect and
receive all Rents of the Property and every part thereof; (h) require Borrower
to pay monthly in advance to Gender, or any receiver appointed to collect the
Rents, the fair and reasonable rental value for the use and occupation of such
art of the Property. as may be occupied by Borrower; (i) require Borrower to
vacate and surrender possession of the Property to Lender or to such receiver
and, in default thereof, Borrower may be evicted by summary proceedings or
otherwise; (j) apply the receipts from the Property, any Deposits and interest
thereon and/or any unearned Insurance Premiums paid to Lender upon the surrender
of any Policies maintained pursuant to Article 3 hereof (it being agreed that
Lender shall have the right to surrender such Policies upon the occurrence of an
Event of Default), to the payment of the Obligations, in such order, priority
and proportions as Lender shall deem appropriate in its sole discretion; (k)
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: (1) the right to take possession of the Personal Property or any
part thereof, and to take such other measures as Lender may deem necessary for
the care, protection and preservation of the Personal Property, and (2) request
Borrower at its expense to assemble the Personal Property 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 Personal
Property sent to Borrower in accordance with the provisions hereof at least five
(5) days prior to such action, shall constitute commercially reasonable notice
to Borrower.
In the event of a sale, by foreclosure, power of sale, or
otherwise, of less than all of the Property, this Security Instrument shall
continue as a lien and security interest on the remaining portion of the
Property unimpaired and without loss of priority. Notwithstanding the provisions
of this Section 10.1 to the contrary, if any Event of Default as described in
clause (i) or (ii) of Subsection 9.1 (f) shall occur, the entire unpaid Debt
shall be automatically due and payable, without any further notice, demand or
other action by Lender.
10.2 APPLICATION OF PROCEEDS. The purchase money, proceeds and
avails of any disposition of the Property, or any part thereof, or any other
sums collected by Lender pursuant to the Note, this Security Instrument or the
other Loan Documents, may be applied by Lender to the payment of the Debt in
such priority and proportions as Lender in its discretion shall deem proper.
10.3 RIGHT TO CURE DEFAULTS. Upon the occurrence of any Event
of Default, Lender may, but without any obligation to do so and without notice
to or demand on Borrower and without releasing Borrower from any obligation
hereunder, make or do the same in such manner and to such extent as Lender may
deem necessary to protect the security hereof. Lender is authorized to enter
upon the Property for such purposes, or appear in, defend, or bring any action
or proceeding to protect its interest in the Property or to foreclose this
Security Instrument or collect the Debt, and the cost and expense thereof
(including reasonable attorneys' fees to the extent permitted by law), with
interest as provided in this Section 10.3, shall constitute a portion of the
Debt and shall be due and payable to Lender upon demand. All such costs and
expenses incurred by Lender in remedying such Event of Default or such failed
payment or act or
27
in appearing in, defending, or brining any such action or proceeding shall bear
interest at the Default Rate (as defined in the Note), for the period after
notice from Lender that such cost or expense was incurred to the date of payment
to Lender. All such costs and expenses incurred by Lender together with interest
thereon calculated at the Default Rate shall be deemed to constitute a portion
of the Debt and be secured by this Security Instrument and the other Loan
Documents and shall be immediately due and payable upon demand by Lender
therefor.
10.4 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 its interest in
the Property.
10.5 RECOVERY OF SUMS REQUIRED TO BE PAID. Lender shall have
the right from time to time to take action to recover any sum or sums which
constitute a part of the Debt as the same become due, without regard to whether
or not the balance of the Debt shall be due, and without prejudice to the right
of Lender thereafter to bring an action of foreclosure, or any other action, for
a default or defaults by Borrower existing at the time such earlier action was
commenced.
10.6 EXAMINATION OF BOOKS AND RECORDS. Lender, its agents,
accountants and attorneys shall have the right to examine the records, books,
management and other papers of Borrower and its affiliates or of any Guarantor
or Indemnitor which reflect upon their financial condition, at the Property or
at any office regularly maintained by Borrower, its affiliates or any Guarantor
or Indemnitor where the books and records are located. Lender and its agents
shall have the right to make copies and extracts from the foregoing records and
other papers. In addition, Lender, its agents, accountants and attorneys shall
have the right to examine and audit the books and records of Borrower and its
affiliates or of any Guarantor or Indemnitor pertaining to the income, expenses
and operation of the Property during reasonable business hours at any office of
Borrower, its affiliates or any Guarantor or Indemnitor where the books and
records are located. This Section 10.6 shall apply throughout the term of the
Note and without regard to whether an Event of Default has occurred or is
continuing.
10.7 OTHER RIGHTS, ETC.
(a) The failure of Lender to insist upon strict performance of
any term hereof shall not be deemed to be a waiver of any term of this Security
Instrument. Borrower shall not be relieved of Borrower's obligations hereunder
by reason of (i) the failure of Lender to comply with any request of Borrower,
any Guarantor or any Indemnitor to take any action to foreclose this Security
Instrument or otherwise enforce any of the provisions hereof or of the Note or
the other Loan Documents, (ii) the release, regardless of consideration, of the
whole or any part of the Property, or of any person liable for the Debt or any
portion thereof, or (iii) any agreement or stipulation by Lender extending the
time of payment or otherwise modifying or supplementing the terms of the Note,
this Security Instrument or the other Loan Documents.
(b) It is agreed that the risk of loss or damage to the
Property is on Borrower, and Lender shall have no liability whatsoever for
decline in value of the Property, for failure to
28
maintain the Policies, or for failure to determine whether insurance in force is
adequate as to the amount of risks insured. Possession by Lender shall not be
deemed an election of judicial relief, if any such possession is requested or
obtained, with respect to any Property or collateral not in Lender's possession.
(c) The Lender shall also have the rights and remedies set
forth in Section 20 hereof. Lender may resort for the payment of the Debt to any
other security held by Lender in such order and manner as Lender, in its
discretion, may elect. Lender may take action to recover the Debt, or any
portion thereof, or to enforce any covenant hereof without prejudice to the
right of Lender thereafter to foreclose this Security Instrument. The rights of
Lender under this Security Instrument shall be separate, distinct and cumulative
and none shall be given effect to the exclusion of the others. No act of Lender
shall be construed as an election to proceed under any one provision herein to
the exclusion of any other provision. Lender shall not be limited exclusively to
the rights and remedies herein stated but shall be entitled to every right and
remedy now or hereafter afforded at law or in equity.
10.8 RIGHT TO RELEASE ANY PORTION OF THE PROPERTY. Lender may
release any portion of the Property for such consideration as Lender may require
without, as to the remainder of the Property, in any way impairing or affecting
the lien or priority of this Security Instrument, or improving the position of
any subordinate lienholder with respect thereto, except to the extent that the
obligations hereunder shall have been reduced by the actual monetary
consideration, if any, received by Lender for such release, and may accept by
assignment, pledge or otherwise any other property in place thereof as Lender
may require without being accountable for so doing to any other lienholder. This
Security Instrument shall continue as a lien and security interest in the
remaining portion of the Property.
10.9 VIOLATION OF LAWS. If the Property is not in compliance
with Applicable Laws, Lender may impose additional requirements upon Borrower in
connection herewith including, without limitation, monetary reserves or
financial equivalents.
10.10 RECOURSE AND CHOICE OF REMEDIES. Notwithstanding any
other provision of this Security Instrument, including but not limited to
Article 13 hereof, Lender and other Indemnified Parties (defined in Section 11.1
below) are entitled to enforce the obligations of Borrower, Guarantor and
Indemnitor contained in Sections 11.2 and 11.3 without first resorting to or
exhausting any security or collateral and without first having recourse to the
Note or any of the Property, through foreclosure or acceptance of a deed in lieu
of foreclosure or otherwise, and in the event Lender commences a foreclosure
action against the Property, Lender is entitled to pursue a deficiency judgment
with respect to such obligations against Borrower, Guarantor and Indemnitor. The
provisions of Sections 11.2 and 11.3 are exceptions to any non-recourse or
exculpation provisions in the Note, this Security Instrument or the other Loan
Documents, and Borrower, Guarantor and Indemnitor are fully and personally
liable for the obligations pursuant to Sections 11.2 and 11.3. The liability of
Borrower, Guarantor and Indemnitor are not limited to the original principal
amount of the Note. Notwithstanding the foregoing, nothing herein shall inhibit
or prevent Lender from foreclosing pursuant to this Security Instrument or
exercising any other rights and remedies pursuant to the Note, this Security
Instrument and the other Loan Documents, whether simultaneously with foreclosure
proceedings or in any other sequence. A separate action or
29
actions may be brought and prosecuted against Borrower, whether or not action is
brought against any other person or entity or whether or not any other person or
entity is joined in the action or actions.
10.11 RIGHT OF ENTRY. Lender and its agents shall have the
right to enter and inspect the Property at all reasonable times.
10.12 DEFAULT INTEREST AND LATE CHARGES. Borrower acknowledges
that, without limitation to any of Lender's rights or remedies set forth in this
Security Instrument, Lender has the right following an Event of Default to
demand interest on the principal amount of the Note at the Default Rate and late
payment charges in accordance with the terms of the Note.
11 - INDEMNIFICATION
11.1 GENERAL INDEMNIFICATION. Borrower shall, at its sole cost
and expense, protect, defend, indemnify, release and hold harmless the
Indemnified Parties from and against any and all claims, suits, liabilities
(including, without limitation, strict liabilities), actions, proceedings,
obligations, debts, damages, losses, costs, expenses, diminutions in value,
fines, penalties, charges, fees, expenses, judgments, awards, amounts paid in
settlement, punitive damages, foreseeable and unforeseeable consequential
damages, of whatever kind or nature (including but not limited to attorneys'
fees and other costs of defense) (the "Losses") imposed upon or incurred by or
asserted against any Indemnified Parties and directly or indirectly arising out
of or to any way relating to any one or more of the following, except to the
extent the following relate solely to an Indemnified Party's gross negligence or
willful misconduct: (a) any and all lawful action that may be taken by Lender in
connection with the enforcement of the provisions of this Security Instrument or
the Note or any of the other Loan Documents, whether or not suit is filed in
connection with same, or in connection with Borrower, any Guarantor or
Indemnitor and/or any partner, joint venturer or shareholder thereof becoming a
party to a voluntary or involuntary federal or state bankruptcy, insolvency or
similar proceeding; (b) 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; (c) any use, nonuse or condition in, on or about the
Property or any part thereof; (d) any failure on the part of Borrower to perform
or be in compliance with any of the terms of this Security Instrument; (e) the
failure of any person to file timely with the Internal Revenue Service an
accurate Form 0000-X, Xxxxxxxxx for Recipients of Proceeds from Real Estate,
Broker and Barter Exchange Transactions, which may be required in connection
with the Security Instrument, or to supply a copy thereof in a timely fashion to
the recipient of the proceeds of the transaction in connection with which this
Security Instrument is made; (f) any, failure of the Property to be in
compliance with any Applicable Laws; (g) the enforcement by any Indemnified
Party of the provisions of this Article 11; (h) the payment of any commission,
charge or brokerage fee to anyone which may be payable in connection with the
funding of the Loan; or (i) any misrepresentation made by Borrower in this
Security Instrument or any other Loan Document. Any amounts payable to Lender by
reason of the application of this Section 11.1 shall become immediately due and
payable and shall bear interest at the Default Rate from the date loss or damage
is sustained by Lender until paid. For purposes of this Article 11, the term
"Indemnified Parties" means Lender and any person or entity who is or will have
been involved in the origination
30
of the Loan, any person or entity who is or will have been involved in the
servicing of the Loan, any person or entity in whose name the encumbrance
created by this Security Instrument is or will have been recorded and persons
and entities who may hold or acquire or will have held a full or partial
interest in the Loan, including, but not limited to, custodians, trustees and
other fiduciaries who hold or have held a full or partial interest in the Loan.
11.2 MORTGAGE AND/OR INTANGIBLE TAX. Borrower shall, at its
sole cost and expense, protect, defend, indemnify, release and hold harmless the
Indemnified Parties from and against any and all Losses imposed upon or incurred
by or asserted against any Indemnified Parties and directly or indirectly
arising out of or in any way relating to any tax on the making and/or recording
of this Security Instrument, the Note or any of the other Loan Documents.
11.3 ERISA INDEMNIFICATION. Borrower shall, at its sole cost
and expense, protect, defend, indemnify, release and hold harmless the
Indemnified Parties from and against any and all Losses (including, without
limitation, attorneys' fees and costs incurred in the investigation, defense,
and settlement of Losses incurred in correcting any prohibited transaction or in
the sale of a prohibited loan, and in obtaining any individual prohibited
transaction exemption under ERISA that may be required, in Lender's sole
discretion) that Lender may incur, directly or indirectly, as a result of a
default under Section 5.9.
11.4 DUTY TO DEFEND: ATTORNEYS' FEES AND OTHER FEES AND
EXPENSES. Upon written request by any Indemnified Party, Borrower shall defend
such Indemnified Party (if requested by any 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 Indemnified
Parties, their attorneys shall control the resolution of 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, environmental
consultants, laboratories and other professionals in connection therewith.
12 - WAIVERS
12.1 WAIVER OF COUNTERCLAIM. Borrower hereby waives the right
to assert a counterclaim, other than a mandatory or compulsory counterclaim, in
any action or proceeding brought against it by Lender arising out of or in any
way connected with this Security Instrument, the Note, any of the other Loan
Documents, or the Obligations.
12.2 MARSHALLING AND OTHER MATTERS. Borrower hereby waives, to
the extent permitted by law, the benefit of all appraisement, valuation, stay,
extension, reinstatement and redemption laws now or hereafter in force and all
rights of marshalling in the event of any sale hereunder of the Property or any
part thereof or any interest therein. Further, Borrower hereby expressly waives
any and all rights of redemption from sale under any order or decree of
foreclosure of this Security Instrument on behalf of Borrower, and on behalf of
each and every person acquiring any interest in or title to the Property
subsequent to the date of this Security Instrument and on behalf of all persons
to the extent permitted by applicable law.
31
12.3 WAIVER OF NOTICE. Borrower shall not be entitled to any
notices of any nature whatsoever from Lender except with respect to matters for
which this Security Instrument specifically and expressly provides for the
giving of notice by Lender to Borrower and except with respect to matters for
which Lender is required by applicable law to give notice, and Borrower hereby
expressly waives the right to receive any notice from Lender with respect to any
matter for which this Security Instrument does not specifically and expressly
provide for the giving of notice by Lender to Borrower.
12.4 SOLE DISCRETION OF LENDER. Wherever pursuant to this
Security Instrument (a) Lender exercises any right given to it to approve or
disapprove, (b) any arrangement or term is to be satisfactory to Lender, or (c)
any other decision or determination is to be made by Lender, the decision of
Lender to approve or disapprove, all decisions that arrangements or terms are
satisfactory or not satisfactory and all other decisions and determinations made
by Lender, shall be in the sole and absolute discretion of Lender and shall be
final and conclusive, except as may be otherwise expressly and specifically
provided herein.
12.5 SURVIVAL. The indemnifications made pursuant to Section
11.3 shall continue indefinitely in full force and effect and shall survive and
shall in no way be impaired by: any satisfaction or other termination of this
Security Instrument, any assignment or other transfer of all or any portion of
this Security Instrument or Lender's interest in the Property (but, in such
case, shall benefit both Indemnified Parties and any assignee or transferee),
any exercise of Lender's rights and remedies pursuant hereto including but not
limited to foreclosure or acceptance of a deed in lieu of foreclosure, any
exercise of any rights and remedies pursuant to the Note or any of the other
Loan Documents, any transfer of all or any portion of the Property (whether by
Borrower or by Lender following foreclosure or acceptance of a deed in lieu of
foreclosure or at any other time), any amendment to this Security Instrument,
the Note or the other Loan Documents, and any act or omission that might
otherwise be construed as a release or discharge of Borrower from the
obligations pursuant hereto.
12.6 WAIVER OF TRIAL BY JURY. BORROWER HEREBY WAIVES, TO THE
FULLEST EXTENT PERMITTED BY LAW, THE RIGHT TO TRIAL BY JURY IN ANY ACTION,
PROCEEDING OR COUNTERCLAIM, WHETHER IN CONTRACT, TORT OR OTHERWISE, RELATING
DIRECTLY OR INDIRECTLY TO THE LOAN, THE APPLICATION FOR THE LOAN, THE NOTE, THIS
SECURITY INSTRUMENT OR THE OTHER LOAN DOCUMENTS OR ANY ACTS OR OMISSIONS OF
LENDER, ITS OFFICERS, EMPLOYEES, DIRECTORS OR AGENTS IN CONNECTION THEREWITH.
13 - EXCULPATION
13.1 EXCULPATION. Except as otherwise provided herein, in the
Note or in the other Loan Documents, Lender shall not enforce the liability and
obligation of Borrower to perform and observe the obligations contained in the
Note or this Security Instrument by any action or proceeding wherein a money
judgment shall be sought against Borrower, except that Lender may bring a
foreclosure action, action for specific performance or other appropriate action
or proceeding
32
to enable Lender to enforce and realize upon the Note, this Security Instrument,
the other Loan Documents, and the interest in the Property, the Rents and any
other collateral given to Lender created by the Note; this Security Instrument
and the other Loan Documents; provided, however, that any judgment in any such
action or proceeding shall be enforceable against Borrower only to the extent of
Borrower's interest in the Property, in the Rents and in any other collateral
given to Lender. Lender, by accepting the Note and this Security Instrument,
agrees that it shall not, except as otherwise provided in Section 10.10, xxx
for, seek or demand any deficiency judgment against Borrower in any such action
or proceeding, under or by reason of or under or in connection with the Note,
the other Loan Documents or this Security Instrument.
13.2 RESERVATION OF CERTAIN RIGHTS. The provisions of Section
13.1 shall not, however, (a) constitute a waiver, release or impairment of any
obligation evidenced or secured by the Note, the other Loan Documents or this
Security Instrument; Intentionally Deleted; (c) impair the right of Lender to
name Borrower as a party defendant in any action or suit for judicial
foreclosure and sale under this Security Instrument; (d) affect the validity or
enforceability of any separate indemnity, guaranty, master lease or similar
instrument made in connection with the Note, this Security Instrument, or the
other Loan Documents; (e) impair the right of Lender to obtain the appointment
of a receiver; (f) impair the enforcement of the Assignment of Leases and Rents
executed in connection herewith; (g) impair the right of Lender to obtain a
deficiency judgment or judgment on the Note against Borrower if necessary to
obtain any insurance proceeds or condemnation awards to which Lender would
otherwise be entitled under this Security Instrument, provided, however, Lender
shall only enforce such judgment against the insurance proceeds and/or
condemnation awards; or (h) impair the right of Lender to enforce the provisions
of Sections 10.10, 11.2 and 11.3 of this Security Instrument.
13.3 EXCEPTIONS TO EXCULPATION. Notwithstanding the provisions
of this Article to the contrary, Borrower shall be personally liable to Lender
for the Losses it incurs due to: (i) fraud or intentional misrepresentation by
Borrower, its agents or principals in connection with the execution and the
delivery of the Note, this Security Instrument or the other Loan Documents; (ii)
Borrower's misapplication or misappropriation of (A) Rents received by Borrower
after the occurrence of an Event of Default, (B) tenant security deposits or
Rents collected in advance, or (C) insurance proceeds or condemnation awards;
(iii) Borrower's failure to pay Taxes, Insurance Premiums, Other Charges (except
to the extent that sums sufficient to pay such amounts have been deposited in
escrow with Lender pursuant to the terms of this Security Instrument), charges
for labor or materials or other charges that can create liens on the Property,
provided that Borrower's liability under this clause (iii) shall not exceed an
amount equal to the net operating income of the Property for the twelve (12)
month period preceding the related failure to pay, less the amount of all
Constant Monthly Payments (as defined in the Note) and required reserve payments
made by Borrower in accordance with this Note, the Security Instrument and the
other Loan Documents during such twelve (12) month period; (iv) Borrower's
failure to comply with the provisions of Section 3.10 or Section 5.9 of this
Security Instrument; or (v) Borrower's or any other Indemnitor's failure to
comply with the provisions of the Environmental Indemnity.
13.4 RECOURSE. Notwithstanding the foregoing, the agreement of
Lender not to pursue recourse liability as set forth in Section 13.1 above SHALL
BECOME NULL AND VOID and shall be of no further force and effect in the event of
Borrower's default under Sections 4.2 or
33
8.2 of this Security Instrument or if the Property or any part thereof shall
become an asset in (i) a voluntary bankruptcy or insolvency proceeding, or (ii)
an involuntary bankruptcy or insolvency proceeding (A) which is commenced by any
party controlling, controlled by or under common control with Borrower (the
"Borrowing Group") or (B) in which any member of the Borrowing Group objects to
a motion by Lender for relief from any stay or injunction from the foreclosure
of this Security Instrument or any other remedial action permitted hereunder or
under the Note or the other Loan Documents.
13.5 BANKRUPTCY CLAIMS. Nothing herein shall be deemed to be a
waiver of any right which Lender may have under Sections 506(a), 506(b), 1111(b)
or any other provisions of the Bankruptcy Code to file a claim for the full
amount of the Debt or to require that all collateral shall continue to secure
all of the Debt owing to Lender in accordance with the Note, this Security
Instrument and the other Loan Documents.
14 - NOTICES
14.1 NOTICES. All notices or other written communications
hereunder shall be deemed to have been properly given (i) upon delivery, if
delivered in person or by facsimile transmission with receipt acknowledged by
the recipient thereof, (ii) one (1) Business Day (defined below) after having
been deposited for overnight delivery with any reputable overnight courier
service, or (iii) three (3) Business Days after having been deposited in any
post office or mail depository regularly maintained by the U.S. Postal Service
and sent by registered or certified mail, postage prepaid, return receipt
requested, addressed as follows:
If to Borrower: Hopkins Tech Center, LLC
c/o Venturian Corp.
0000 Xxxxxx Xxxxxx Xxxxx
Xxxxxxx, Xxxxxxxxx 00000
Attention: Xxxx Xxxxxxxxx
Facsimile No. (000) 000-0000
With a copy to: Xxxxxxx, Street and Deinard
000 Xxxxx Xxxxx Xxxxxx
Xxxxxxxxxxx, Xxxxxxxxx 00000
Attention: Xxxxxx Xxx
Facsimile No. (000) 000-0000
If to Lender: Northland Financial Company
0000 Xxxx 00xx Xxxxxx, Xxxxx 000
Xxxxxxxxxxx, Xxxxxxxxx 00000
Attention: Xxxxxxxx Xxxxxxxxxx
Facsimile No. (000) 000-0000
With a copy to: Xxxxxxxxxxx Xxxxx & Xxxxxxxx
3400 Plaza VII
00 Xxxxx Xxxxxxx Xxxxxx
Xxxxxxxxxxx, XX 00000
Attention: Xxxx X. Xxxxxx
Facsimile No. (000) 000-0000
34
or addressed as such party may from time to time designate by written notice to
the other parties.
Either party by notice to the other may designate additional
or different addresses for subsequent notices or communications.
For purposes of this Subsection, "Business Day" shall mean a
day on which commercial banks are not authorized or required by law to close in
New York, New York.
15 - APPLICABLE LAW
15.1 CHOICE OF LAW. This Security Instrument shall be
governed, construed, applied and enforced in accordance with the laws of the
state in which the Property is located and the applicable laws of the United
States of America.
15.2 USURY LAWS. This Security Instrument and the Note are
subject to the express condition that at no time shall Borrower be obligated or
required to pay interest on the Debt at a rate which could subject the holder of
the Note to either civil or criminal liability as a result of being in excess of
the maximum interest rate which Borrower is permitted by applicable law to
contract or agree to pay. If by the terms of this Security Instrument or the
Note, Borrower is at any time required or obligated to pay interest on the Debt
at a rate in excess of such maximum rate, the rate of interest under the
Security Instrument and the Note shall be deemed to be immediately reduced to
such maximum rate and the interest payable shall be computed at such maximum
rate and all prior interest payments in excess of such maximum rate shall be
applied and shall be deemed to have been payments in reduction of the principal
balance of the Note. All sums paid or agreed to be Paid to Lender for the use,
forbearance, or detention of the Debt shall, to the extent permitted by
applicable law, be amortized, prorated, allocated, and spread throughout the
full stated term of the Note until payment in full so that the rate or amount of
interest on account of the Debt does not exceed the maximum lawful rate of
interest from time to time in effect and applicable to the Debt for so long as
the Debt is outstanding.
15.3 PROVISIONS SUBJECT TO APPLICABLE LAW. All rights, powers
and remedies provided in this Security Instrument may be exercised only to the
extent that the exercise thereof does not violate any applicable provisions of
law and are intended to be limited to the extent necessary so that they will not
render this Security Instrument invalid, unenforceable or not entitled to be
recorded, registered or filed under the provisions of any applicable law. If any
term of this Security Instrument or any application thereof shall be invalid or
unenforceable, the remainder of this Security Instrument and any other
application of the term shall not be affected thereby.
35
16 - SECONDARY MARKET
16.1 TRANSFER OF LOAN. Lender may, at any time, sell, transfer
or assign the Note, this Security Instrument and the other Loan Documents, and
any or all servicing rights with respect thereto, or grant participations
therein or issue mortgage pass-through certificates or other securities
evidencing a beneficial interest to a rated or unrated public offering or
private placement (the "Securities"). Lender may forward to each purchaser,
transferee, assignee, servicer, participant, investor in such Securities or any
rating agency (a "Rating Agency") rating such Securities (all of the foregoing
entities collectively referred to as the "Investor") and each prospective
Investor, all documents and information which Lender now has or may hereafter
acquire relating to the Debt and to Borrower, any Guarantor, any Indemnitor and
the Property, whether furnished by Borrower, any Guarantor, any Indemnitor or
otherwise, as Lender determines necessary or desirable. Borrower, any Guarantor
and any Indemnitor agree to cooperate with Lender in connection with any
transfer made or any Securities created pursuant to this Section, provided such
cooperation does not require Borrower to incur any material cost or expense.
Borrower shall also furnish and Borrower, any Guarantor and any Indemnitor
consent to Lender furnishing to such Investors or such prospective Investors or
Rating Agency any and all available information concerning the Property, the
Leases, the financial condition of Borrower, any Guarantor and any Indemnitor as
may be requested by Lender, any Investor or any prospective Investor or Rating
Agency in connection with any sale, transfer or participation interest.
17 - COSTS
17.1 PERFORMANCE AT BORROWER'S EXPENSE. Borrower acknowledges
and confirms that Lender shall be entitled to impose certain administrative
processing and/or commitment fees in connection with: (a) extensions, renewals,
modifications, amendments and terminations of the Loan Documents requested by
Borrower, (b) the release or substitution of collateral for the Loan requested
by Borrower, and that Lender shall be entitled to reimbursement for its
reasonable out-of-pocket costs and expenses associated with its provision of
consents, waivers and approvals under the Loan Documents (the occurrence of any
of the above shall be called an "Event"). Borrower further acknowledges and
confirms that it shall be responsible for the payment of all costs of
reappraisal of the Property or any part thereof, which are required by law,
regulation or any governmental or quasi-governmental authority. Borrower hereby
acknowledges and agrees to pay, immediately, upon demand, all such fees, costs
and expenses.
17.2 ATTORNEY'S FEES FOR ENFORCEMENT. (a) Borrower shall pay
all reasonable legal fees incurred by Lender in connection with the preparation
of the Note, this Security Instrument and the other Loan Documents, and (b)
Borrower shall pay to Lender on demand any and all expenses, including
reasonable legal expenses and attorneys' fees, incurred or paid by Lender in
protecting its interest in the Property or in collecting any amount payable
hereunder or in enforcing its rights hereunder with respect to the Property,
whether or not any legal proceeding is commenced hereunder or thereunder and
whether or not any default or Event of Default shall have occurred and is
continuing, together with interest thereon at the Default Rate from the date
paid or incurred by Lender until such expenses are paid by Borrower.
18 - DEFINITIONS
36
18.1 GENERAL DEFINITIONS. Unless the context clearly indicates
a contrary intent or unless otherwise specifically provided herein, words used
in this Security instrument may be used interchangeably in singular or plural
form and the word "Borrower" shall mean "each Borrower and any subsequent owner
or owners of the Property or any part thereof or any interest therein," the word
"Lender" shall mean `Lender and any subsequent holder of the Note," the word
"Note" shall mean "the Note and any other evidence of indebtedness secured by
this Security Instrument," the word "person" shall include an individual,
corporation, partnership, limited liability company, trust, unincorporated
association, government, governmental authority, and any other entity, the word
"Proper" shall include any portion of the Property and any interest therein, and
the phrases "attorneys' fees", "legal fees" and "counsel fees" shall include any
and all reasonable attorneys', paralegal and law clerk fees and disbursements,
including, but not limited to, fees and disbursements at the pre-trial, trial
and appellate levels incurred or paid by Lender in protecting its interest in
the Property, the Leases and the Rents and enforcing its rights hereunder.
19 - MISCELLANEOUS PROVISIONS
19.1 NO ORAL CHANGE. This Security Instrument, and any
provisions hereof, may not be modified, amended, waived, extended, changed,
discharged or terminated orally or by any act or failure to act on the part of
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.
19.2 LIABILITY. If Borrower consists of more than one person,
the obligations and liabilities of each such person hereunder shall be joint and
several. This Security Instrument shall be binding upon and inure to the benefit
of Borrower and tender and their respective successors and assigns forever.
19.3 INAPPLICABLE PROVISIONS. If any term, covenant or
condition of the Note or this Security Instrument is held to be invalid, illegal
or unenforceable in any respect, the Note and this Security Instrument shall be
construed without such provision.
19.4 HEADINGS. ETC. The headings and captions of various
Sections of this Security Instrument are for convenience of reference only and
are not to be construed as defining or limiting, in any way, the scope or intent
of the provisions hereof.
19.5 DUPLICATE ORIGINALS: COUNTERPARTS. This Security
Instrument may be executed in any number of duplicate originals and each
duplicate original shall be deemed to be an original. This Security Instrument
may be executed m several counterparts, each of which counterparts shall be
deemed an original instrument and all of which together shall constitute a
single Security Instrument. The failure of any party hereto to execute this
Security Instrument, or any counterpart hereof, shall not relieve the other
signatories from their obligations hereunder.
19.6 NUMBER AND GENDER. Whenever the context may require, any
pronouns used herein shall include the corresponding masculine, feminine or
neuter forms, and the singular form of nouns and pronouns shall include the
plural and vice versa.
37
19.7 SUBROGATION. If any or all of the proceeds of the Note
have been used to extinguish, extend or renew any indebtedness heretofore
existing against the Property, then, to the extent of the funds so used, Lender
shall be subrogated to all of the rights, claims, liens, titles, and interests
existing against the Property heretofore held by, or in favor of, the holder of
such indebtedness and such former rights, claims, liens, titles, and interests,
if any, are not waived but rather are continued in full force and effect in
favor of Lender and are merged with the lien and security interest created
herein as cumulative security for the payment and performance of the
Obligations.
19.8 ENTIRE AGREEMENT. The Note, this Security Instrument and
the other Loan Documents constitute the entire understanding and agreement
between Borrower and Lender with respect to the transactions arising in
connection with the Debt and supersede all prior written or oral understandings
and agreements between Borrower and Lender with respect thereto. Borrower hereby
acknowledges that, except as incorporated in writing in the Note, this Security
Instrument and the other Loan Documents, there are not, and were not, and no
persons are or were authorized by Lender to make, any representations,
understandings, stipulations, agreements or promises, oral or written, with
respect to the transaction which is the subject of the Note, this Security
Instrument and the other Loan Documents.
20- STATE SPECIFIC PROVISIONS
20.1 REMEDIES. Upon an Event of Default and whether before or
after the institution of legal proceedings to foreclose the lien hereof or
before or after sale thereunder or during any period of redemption, Lender,
without regard to waste, adequacy of the security or solvency of Borrower may
revoke the privilege granted Borrower hereunder to collect the Rents and
profits, and may, at its option, without notice, either: (a) in person or by
agent, with or without taking possession of or entering the Property, with or
without any action or proceeding, give, or require Borrower to give, notice to
any or all tenants under any lease authorizing and directing the tenant to pay
such Rents and profits to Lender; collect all of the Rents and profits; enforce
the payment thereof and exercise all of the rights of the landlord under the
leases and all of the rights of Lender hereunder, may enter upon, take
possession of, manage and operate said Property, or any part thereof; may
cancel, enforce or modify the leases, and fix or modify rents, and do any acts
which Lender deems proper to protect the security hereof with or without taking
possession of the Property; or (b) apply for the appointment of a receiver in
accordance with the statutes and law made and provided for, which receivership
Borrower hereby consents to, who shall collect the Rents and profits, and all
other income of any kind; manage the Property so to prevent waste; execute
leases within or beyond the period of receivership, and perform the terms of
this Security Instrument and apply the Rents and profits as hereinafter
provided.
The entering upon and taking possession of the Property, the
appointment of a receiver, the collection of such Rents and profits and the
application thereof as aforesaid shall not cure or waive any Event of Default
under this Security Instrument nor in any way operate to prevent Lender from
pursuing any other remedy which it may now or hereafter have under the terms of
this Security Instrument nor shall it in any way be deemed to constitute Lender
a mortgagee-in-possession. The rights and powers of Lender hereunder shall
remain in full force and
38
effect both prior to and after any foreclosure of the Security Instrument 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 Lender, shall have the right, at
any time and without limitation as provided in Minn. Stat. ss. 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 as 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 hereunder 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. The rights contained herein are in addition
to and shall be cumulative with the rights given in that certain Assignment of
Leases and Rents dated of even date herewith and executed in connection
herewith, assigning any leases, rents and profits of the Property. To the extent
inconsistent with the terms of this Section 20.1, the terms of the Assignment of
Leases and Rents shall control.
20.2 APPLICATION OF RENTS. Any Rents collected pursuant to the
terms of Section 21.1 above shall be applied in the following order: (a) to
payment of all fees of any receiver appointed hereunder; (b) to application of
tenant's security deposits as required by Minn. Stat. ss. 504.20; (c) to payment
when due of prior or current real estate taxes or special assessments with
respect to the Property or, if this Security Instrument so requires, to the
periodic escrow for payment of Taxes or special assessments then due; (d) to
payment when due of Insurance Premiums of the type required by this Security
Instrument or, if this Security Instruments so required, to the periodic escrow
for the payment of Insurance Premiums then due; and (e) to payment of all
expenses for normal maintenance of the Property. Any Rents remaining after
application of the above item shall be applied to the Debt on a monthly basis.
If the Property shall be foreclosed and sold pursuant to a foreclosure sale,
then:
(i) if Lender is the purchaser at the foreclosure sale, the
Rents shall be paid to Lender to be applied to the extent of any
deficiency remaining after the sale, the balance to b retained by
Lender, and if the Property be redeemed by 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 Borrower, provided,
if the Property not be redeemed, any remaining excess rents to belong
to Lender, whether or not a deficiency exists.
(ii) if Lender is not the purchaser at the foreclosure sale,
the Rents shall be paid to 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 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
Borrower, provided, if the Property not be redeemed any remaining
excess rents shall be paid first, to the purchaser at the foreclosure
sale to an amount equal to the interest accrued upon the sale price
pursuant to Minn. Stat. ss. ss. 580.23 or 581.10, then to Lender to the
extent of any deficiency remaining unpaid and the remainder to the
purchaser.
20.3 BUSINESS LOAN REPRESENTATION. Borrower represents and
warrants to Lender that the loan evidenced by the Note is a business loan
transacted solely for the purpose of
39
carrying on the business of Borrower and the Property does not constitute the
homestead of Borrower.
20.4 REMEDIES OF LENDER AND RIGHT TO FORECLOSE. If an Event of
Default shall occur Lender shall have the right to enforce the provisions of
this Security Instrument and may, either with or without entry or taking
possession, proceed by suit or suits at law or in equity or by any other
appropriate proceedings or remedy to enforce payment of the Debt or the
performance of any other term hereof or any other right and Borrower hereby
authorized and fully empowers Lender to foreclose this Security Instrument by
judicial proceedings or by advertisement with full authority and power 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 and interest due on the Note and
the Debt together with all such sums of money as Lender shall have expended or
advanced pursuant to this Security Instrument or pursuant to statute together
with interest thereon as herein provided an all costs and expenses of such
foreclosure, including lawful attorney's fees, with the balance, if any, to be
paid to the persons entitled thereto by law.
20.5 RECEIVER. Upon the occurrence of an Event of Default,
Lender shall be entitled as a matter of right without notice and without giving
bond and without regard to the solvency or insolvency of Borrower, or waste of
the premises or adequacy of the security of the Property, to apply for the
appointment of a receiver under any statute or law who shall have all the right,
powers and remedies as provided by such statute or law, including without
limitation the rights or-.receiver pursuant to Minn. Stat. ss. 5701, as amended,
and who shall from the date of his appointment through any period of redemption
existing at law collect the rents, and all other income of any kind; manage the
Property so as to prevent waste; executed leases within or beyond the use of
receivership; and perform the terms of this Security Instrument and apply the
rents, issues and profits to the payment of the expenses enumerated in Minn.
Stat. ss. 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 reasonable attorney's fees, to the repayment of the Debt
and as further provided in the Assignment of Leases and Rents. .Borrower does
hereby irrevocably consent to such appointment.
20.6. 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 Security Instrument 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 auction; 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 Uniform Commercial Code and
take possession of the collateral 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 Uniform Commercial
Code, as hereafter amended or by any similar or replacement statute hereafter
enacted. Borrower further understands that under the Constitution of the United
States and the
40
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
Uniform Commercial Code 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 UNIFORM COMMERCIAL CODE, ALL AS DESCRIBED ABOVE. BORROWER
ACKNOWLEDGES THAT IT IS REPRESENTED BY LEGAL COUNSEL; THAT BEFORE SIGNING THIS
DOCUMENT THIS SECTION AND THE 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.
20.7 FIXTURE FILING. As to those items of Property described
in this Security Instrument that are, or are to become fixtures related to the
land mortgaged herein, it is intended as to those items that THIS SECURITY
INSTRUMENT BE EFFECTIVE AS A FINANCING STATEMENT FILED AS A FIXTURE FILING from
the date of its filing in the real estate records of the County where the
Property is situate. The name of the record owner of said real estate is the
Borrower set forth in page one to this Security Instrument. Information
concerning the security interest created by this instrument may be obtained from
the Lender, as secured party, at its address as set forth in page one of this
Security Instrument. The address of the Borrower, as debtor, is as set forth in
page one to this Security Instrument. This document covers goods which are or
are to become fixtures. The Borrower's Federal Tax Identification Number is
00-0000000.
IN WITNESS WHEREOF, THIS SECURITY INSTRUMENT has been executed
by Borrower as of the day and year first above written.
BORROWER:
HOPKIN TECH CENTER, LLC,
a Minnesota limited liability company
By: /s/ Xxxx Xxxxxxxxx
--------------------------------
Xxxx Xxxxxxxxx
Its: Chief Manager and President
41
STATE OF MINNESOTA )
) ss.
COUNTY OF HENNEPIN )
The foregoing instrument was acknowledged before me this 11th, day of
September, 1997, by Xxxx Xxxxxxxxx, the Chief Manager and President of Hopkins
Tech Center, LLC, a Minnesota limited liability company, on behalf of the
limited liability company.
/s/ Xxxxxxx X. Xxxxx
---------------------------
Notary Public
42
EXHIBIT A
(Description of Land)
ALL of that certain lot, piece or parcel of land, with the buildings and
improvements thereon, situate, lying and being in Hennepin County, Minnesota,
and being more particularly described as follows:
PARCEL 1:
Tract A:
All that part of the Northwest Quarter of the Northwest Quarter of Section 25
and all that part of the Northeast Quarter of the Northeast Quarter of Section
26, Township 117, Range 22 West, as follows: Beginning at the Northwest corner
of the Northeast Quarter of the Northeast Quarter of said Section 26; thence
South along the West boundary line of said Northeast Quarter of the Northeast
Quarter of said Section 26 a distance of 96 feet; thence East on a line parallel
with the North line of said Section 26 a distance of 1087.4 feet to the point of
beginning of the property to be described; thence South along a line parallel
with the Section line between said Sections 25 and 26 to the Northerly boundary
line of the right of way of the Minneapolis & St. Louis Railway Company; thence
Northeasterly along said Northerly boundary line of said right of way to the
Section line between said Sections 25 and 26; thence North along said Section
line to the North line of said Section 26; thence West along said north line of
Section 26 to a point 112.65 feet East of the Northwest corner of said Northeast
Quarter of the Northeast Quarter of Section 26; thence South parallel with the
West line of said Northeast Quarter of the Northeast Quarter of Section 26 a
distance of 96 feet; thence West to the point of beginning, according to the
recorded plat thereof,-and situate in Hennepin County, Minnesota.
Tract B:
A parcel of land described as follows: Beginning at the intersection of the
Section line between said Section 25 and 26 with the Northerly boundary line of
the right of way of The Minneapolis & St. Louis Railway Company; thence
Northeasterly along said Northerly boundary line of said right of way to a point
356 feet East of and at right angles to said section line between Sections 25
and 26; thence North parallel with said Section line to the North line of said
Section 25; thence West along the North line of said Section 25 to the Northwest
corner of said Section 25; thence South along the section line between said
Sections 25 and 26 to the point of beginning, according to the recorded plat
thereof, and situate in Hennepin County, Minnesota.
Torrens Certificate Number: 812752
Includes additional land.
PARCEL 2:
That part of the following described property:
The East 660 feet of the following described tract:
The South 75 feet of the North 696 feet of the West 1,087.4 feet of Northeast
Quarter of the Northeast Quarter and South 75 feet of North 621 feet of East
854.4 feet of West 1,087.4 feet of Northeast Quarter of Northeast Quarter, all
in Xxxxxxx 00, Xxxxxxxx 000, Xxxxx 22.
Which lies easterly of the west 319.00 feet thereof.
Abstract
2
EXHIBIT B
REPLACEMENT RESERVE AND LEASING RESERVE REQUIREMENTS
1. Defined Terms.
All capitalized terms used herein and not defined in the
Security Instrument shall have the meanings set forth m Section 7 hereof. To the
extent any Reserve Deposit is assigned the meaning "none" in the Reserve Letter,
the provisions set forth in this Exhibit B specifically relating to the making
or application of such Reserve Deposits shall be disregarded.
2. Reserve Deposits.
(a) Concurrently with the execution of this Security
Instrument, Borrower shall deposit with Lender the Deferred Maintenance Deposit.
The Deferred Maintenance Deposit shall be applied as provided in Section 4.1
hereof.
(b) Commencing on the first date that a regularly scheduled
payment of principal or interest is due under the Note, and continuing on the
first day of each consecutive month thereafter, Borrower shall be required to
make a Monthly posit.
(c) Lender shall deposit each Monthly Deposit, as received, in
an escrow account (the "Reserve"). Out of each Monthly Deposit, the Monthly
Replacement Account Deposit shall be allocated to an account (the "Replacement
Account") for the payment of Replacements and the Monthly Leasing Account
Deposit shall be allocated to an account (the "Leasing Account") for the payment
of Tenant Improvements and Leasing Commissions (as defined below) m conjunction
with Leases (as hereinafter defined). Notwithstanding anything to the contrary
contained herein, Borrower shall not be required to make the portion of the
Monthly Deposit to be allocated to the Leasing Account at any time when the
balance in the Leasing Account is equal to or greater than $123,322.00. Such
limitation on the balance in the Leasing Account shall be subject to adjustment
by Lender in the event that Lender reasonably determines that such balance is
not sufficient to pay the amounts needed for Tenant Improvements and Leasing
Commissions as set forth in Section 6 hereof.
(d) Concurrently with the execution of this Security
Instrument, Borrower shall deposit with Lender the Remediation Account Deposit
which shall be deposited in the Reserve.
(e) Lender shall maintain a record of all deposits into and
withdrawals from the Reserve and their allocation to the Replacement Account,
the Leasing Account and the Remediation Account. Lender or a designated
representative of Lender shall have the sole right to make withdrawals from such
account.
(f) No interest shall be paid on the Deferred Maintenance
Deposit. Provided Borrower pays the account fees set forth below, the Reserve
shall be held in an interest bearing account. Lender shall have no
responsibility or liability for the amount of interest earned on the Reserve.
All interest earned on funds m the Reserve shall be .added to and become part of
the
Reserve, shall be allocated pro rata to the Replacement Account, the Leasing
Account and the Remediation Account, and shall be for the benefit of Borrower,
subject to Lender's rights pursuant to the terms of this Security Instrument.
Borrower shall be required to pay a one-time set-up fee on the date hereof of
$250 and an additional fee of $800 on January 2 of each calendar year after the
date hereof.
3. Disbursements.
(a) Provided no Event of Default exists, Lender shall make
disbursements of funds available in the Replacement Account to reimburse
Borrower for Replacements.
(b) Provided no Event of Default exists, Lender shall make
disbursements of funds available in the Remediation Account to reimburse
Borrower for Required Remediation.
(c) Provided no Event of Default exists, Lender shall make
disbursements of funds in the Leasing Account to reimburse Borrower for Tenant
Improvement Expenses (as hereinafter defined) and Leasing Commission Expenses
(as hereinafter defined). For purposes hereof, Tenant Improvement Expenses shall
mean the cost of tenant improvements required under any Lease (collectively, the
"Tenant Improvements"). For purposes hereof, Leasing Commission Expenses shall
mean the cost of leasing commissions incurred by Borrower in connection with any
Lease, provided that (i) such leasing commissions are reasonable and customary
for properties similar to the Property and the portion of the Property for
-which such leasing commission is due and (ii) the amount of such leasing
commissions are determined pursuant to arms length transactions between Borrower
and any leasing agent to which a leasing commission is due, and excluding any
leasing commissions which shall be due any general partner, or shareholder of
Borrower or any affiliate of Borrower (collectively, "Leasing Commissions"). In
no event shall Lender be obligated to make disbursements from the Leasing
Account with respect to any Lease which would cause the total amount disbursed
with respect to such lease to exceed the Maximum Leasing Account Disbursement
Amount.
(d) Lender shall, upon written request from Borrower and
satisfaction of the requirements set forth in this Section 3, disburse to
Borrower amounts from the Reserve necessary to reimburse Borrower for the actual
costs of (i) any Leasing Commissions, (ii) any work relating to Replacements or
Tenant Improvements, and (iii) any work relating to Required Remediation
(collectively, "Work").
(e) Lender shall, upon receipt from the State of Minnesota
Pollution Control Agency (MPCA) of a "No Action Letter", a "No Further Action
Letter", a "Closure Letter" or another finding of the MPCA that can be relied
upon.-by Lender, and is satisfactory to Lender in its reasonable discretion, to
assure Lender that the Property will. not be-.subject to further remedial
requirements in order to render the Property marketable, disburse to borrower
any amounts remaining in the Remediation Account.
(f) Each request for disbursement from the Reserve shall be in
a form specified or approved by Lender, and shall be accompanied by evidence of
the full performance of the obligations of the leasing agent or satisfactory
completion of the Work, as the case may be, and
2
such bills, invoices and other evidence of the incurrence of the related costs
and expenses as Lender may reasonably request.
(g) Borrower shall not make a request for disbursement from
the Reserve more frequently than once in any calendar quarter.
(h) Borrower shall not make a request for disbursement from
the Reserve in an amount less than the lesser of (i) $5,000, and (ii) the total
cost of the Replacement, Tenant Improvement or Leasing Commission for which the
disbursement is requested.
(i) Notwithstanding anything to the contrary contained herein,
if Borrower shall hereafter enter into an Eligible Lease Agreement, Lender shall
disburse to Borrower an amount equal to the lesser of (i) the Maximum Leasing
Account Disbursement Amount and (ii) the aggregate sum of all Lease Commission
Expenses and Tenant Improvement Expenses associated with said Eligible Lease;
said amount to be disbursed upon and only upon satisfaction of all of the
following conditions:
(1) The tenant under the Eligible Lease Agreement shall
have taken possession of the premises leased to it
and paid the first monthly installment of rent
payable under the Eligible Lease Agreement.
(2) Borrower shall have delivered to Lender a certificate
from the tenant certifying that all the conditions to
the effectiveness of the Eligible Lease Agreement
have been satisfied and that all Tenant Improvements
have been completed in a manner satisfactory and
acceptable to such tenant, and that all Leasing
Commissions due m connection with the Eligible Lease
have been paid, that the Tenant has paid its first
monthly rent, that the Eligible Lease Agreement is in
full force and effect and there is no default by any
party thereunder.
4. Performance of Replacements.
(a) Deferred Maintenance. Notwithstanding anything contained
herein to the contrary, Borrower agrees to perform all of the Scheduled Repairs
within sixty (60) days after the date hereof or such other period of time, if
any, set forth in the Reserve Letter. The Deferred Maintenance Deposit shall be
used solely for the payment of the actual costs of the Scheduled Repairs. Upon
completion of the Scheduled Repairs m accordance with the requirements hereof
and receipt of confirmation from the office of the City of Xxxxxxx Fire Xxxxxxxx
that the Scheduled Repairs have been completed in accordance with its
requirements, the portion of the Deferred Maintenance Deposit remaining
undisbursed, if any, shall be disbursed to Borrower. All conditions, covenants
and agreements set forth herein with respect to a disbursement from the
Replacement Account shall apply to the disbursements from the Deferred
Maintenance Deposit.
(b) Entry Onto Property: Inspections. Lender may inspect the
Property in connection with any Work prior to disbursing funds from the Reserve
with respect thereto. In connection with any Work that is (i) a structural
repair or improvement, (ii) a replacement or repair
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of a major component or element of any part of the Property or (iii) Scheduled
Repairs, Lender may require, at Borrower's expense, one or more inspections
and/or certificates of completion by an appropriate independent, qualified
professional (e.g., architect, engineer, consultant) approved by Lender. In
addition to Lender's costs and expenses, Borrower shall pay Lender a reasonable
inspection fee, provided, however, such fees shall not exceed $500, in the
aggregate, in any calendar year.
5. Borrower's Records.
Borrower shall furnish ` such financial statements, invoices,
records, papers and documents relating to the Property as Lender may reasonably
require from time to time to make the determinations permitted or required to be
made by Lender with respect to disbursements of the Deferred Maintenance Deposit
and/or the Reserve.
6. Insufficiency of Reserve Balances, Temporary Deferral of Monthly
Deposits.
The insufficiency of any balance in the Reserve or the
Deferred Maintenance Deposit shall not abrogate Borrower's agreement to fulfill
its obligations contained in this Security Instrument. In the event Lender
reasonably determines that (i) the balance in the Reserve (not including the
Remediation Account) is less than the current estimated cost to complete the
Work and pay the Leasing Commissions which Borrower, in the prudent operation of
the Property can reasonably be anticipated to incur during the succeeding twenty
four (24) months, (ii) the balance in the Remediation Account is less than the
amount necessary to complete the Required Remediation, or (iii) the balance of
the Deferred Maintenance Deposit is less than the amount necessary to complete
the Scheduled Repairs, Borrower shall deposit the shortage within ten (10) days
of request by Lender. In the event Lender reasonably determines from time to
time based on Lender's inspections that the amount of the Monthly Deposit is
insufficient to fund the cost of likely Work and Leasing Commissions and related
contingencies that may arise during the remaining term of the Loan, Lender may
require an increase in the amount of the Monthly Deposits upon thirty (30) days
prior written notice to Borrower. Lender may approve a temporary deferral or a
reduction in the amount of the Monthly Deposit; provided, however, that if
Lender approves either a temporary deferral or reduction in the amount of the
Monthly Deposit, such action by Lender shall not prevent Lender from requiring
Borrower to resume payment of the Monthly Deposits on any date that Lender may
deem appropriate.
7. Certain Defined Terms.
The following terms shall have the meanings assigned to them
below:
(a) "Deferred Maintenance Deposit" means the Deferred
Maintenance Deposit set forth in the Reserve letter, if any.
(b) Eligible Lease Agreement means a Lease which is entered
after the date hereof and is entered into in accordance with the terms and
provisions of this Security Instrument and the other Loan Documents, it being
agreed that the reference to "rental rates comparable to existing local market
terms" in this Security Instrument shall mean the rental rate that a tenant
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would be obligated to pay a landlord in the local market where the Property is
located assuming that the landlord is obligated for the payment of all normal
and customary landlord work, leasing commissions and all other landlord expenses
associated with the leasing of space.
(c) "Maximum Leasing Account Disbursement Amount" means the
Maximum Leasing Account Disbursement Amount set forth in the Reserve Letter, if
any.
(d) "Monthly Deposit" means the sum of the Monthly Leasing
Account Deposit and the Monthly Replacement Account Deposit.
(e) "Monthly Leasing Account Deposit" means the Monthly
Leasing Account Deposit set forth in the Reserve Letter, if any.
(f) "Monthly Replacement Account Deposit" means the Monthly
Replacement Account Deposit set forth in the Reserve Letter. If there is no
Monthly Leasing Account Deposit, the Monthly Replacement Account Deposit shall
have the same meaning as the Monthly Deposit.
(g) "Remediation Account Deposit" means the Remediation
Account Deposit set forth in the Reserve Letter.
(h) "Replacements" means the costs of any repairs,
improvements, equipment, alterations, additions, changes, replacements, and
other items which, under generally accepted accounting principles, consistently
applied, are properly classified as capital expenditures or capital improvements
(and, in the case of multifamily projects only shall include the costs of window
treatments and carpeting, blinds, equipment and appliances, and painting of the
exterior of the Property), but excluding (i) costs of routine maintenance to the
Property; (ii) the costs of salaries, benefits and administrative expenses
related to the employment of (A) officers and executives of Borrower, and of
employees of Borrower above the level of building manager, and (B) employees of
Borrower at or below the level of building manager, except in the case of those
costs which Borrower can demonstrate to Lender's satisfaction to be properly
allocable to the work performed by such employees in connection with
Replacements; (iii) the cost of any items for which Borrower is reimbursed by
insurance or otherwise; (iv) the cost of any landscaping work to the Property;
(v) the cost of any material additions or material alterations to the Property
after the date hereof; and (vi) (except in the case of multifamily projects) the
cost of any alterations, additions, changes, replacements and improvements that
are made primarily in order to prepare space for occupancy by a tenant.
(i) "Required Remediation" means the Required Remediation
described in the Reserve Letter.
(j) "Reserve Deposits" shall mean the Deferred Maintenance
Deposit, the Remediation Account Deposit and the Monthly Deposit.
(k) "Reserve Letter" means a letter from Borrower to Lender of
even date herewith confirming the amount of the Monthly Replacement Account
Deposit, the Monthly
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Leasing Deposit Account Deposit (if any) and the Deferred Maintenance Deposit,
if any, and the Scheduled Repairs, if any.
(l) "Scheduled Repairs" means the Scheduled Repairs described
in the Reserve letter, if any.
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EXHIBIT C
The term "Debt Service Coverage Ratio" shall mean the ratio of
(a) the NOI (hereinafter defined) produced by the operation of the Property
during the twelve (12) calendar month period immediately preceding the
calculation to (b) the Annual Debt Service.
The Term "NOI" shall mean the Gross Income (as hereinafter
defined) derived from the operation of the Property, less Expenses (hereinafter
defined).
The term "Annual Debt Service" shall mean an amount equal to
twelve (12) times the Constant Monthly Payment payable under the Note.
The term "Gross Income" means (and includes only) Rents (as
defined in the Security Instruments) and such other income, including any rent
loss or business interruption insurance proceeds, laundry, parking, vending or
concession income, which are actually received by the Borrower or its agents or
representatives. Notwithstanding the foregoing, Gross Income shall not include
(a) condemnation or insurance proceeds (excluding rent or business interruption
insurance proceeds); (b) any proceeds from the sale, exchange, transfer,
financing or refinancing of all or any portion of the Property; (c) amounts
received from tenants as a security deposit; (d) any other type of income
otherwise includable m NOI but paid directly by any tenant to a person or entity
other than Borrower or its agents ore representatives; or (e) interest income.
The term "Expenses" shall mean the aggregate of the following
items: (a) real estate taxes, general and special assessments or similar
charges; (b) sales, use and person property taxes; (c) management fees of not
less 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, 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 m audit and accounting functions performed by Borrower; (e)
insurance premiums including, but not limited to, casualty, liability, rent and
fidelity insurance premiums; (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 in connection with the operation of Property; (g) cost 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 and 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, together with adequate
reserves for the repair and replacement of capital improvements on the Property
acceptable to Lender; (h) the cost of such other maintenance materials, HVAC
repairs, parts and supplies, and all equipment to be used in the ordinary course
of business, which is not capitalized in accordance with generally accepted
accounting principles ("GAAP"); (i) cost of leasing commissions and tenants
concessions payable by Borrower pursuant to Leases in effect for the Property;
(j) legal, accounting and other professional expenses incurred in connection
with the Property; (k) casualty losses to the extent not reimbursed by a third
party; and (1) all amounts that should be reserved, as reasonably determined
by the Borrower with approval by the Lender in its reasonable discretion, for
repair or maintenance of the Property and to maintain the value of the Property
including replacement reserves in amounts not less than those required in
Exhibit B of this Security Instrument. The Expenses shall be based on the above
described items actually incurred or payable on an accrual basis in accordance
with GAAP by Borrower during the twelve (12) month period ending one month prior
to the date on which the NOI is to be calculated (except the capital expenses
and reserves set forth in subsection (g) above), 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 the subsequent twelve
(12) month period beginning on the date on which the NOI is to be calculated.
Notwithstanding the foregoing, the term "Expenses" shall not
include (i) depreciation or amortization any other non-cash of expense unless
approved by Lender; (ii) interest, principal, fees, costs and expense
reimbursements of Lender to administrating the Loan or exercising remedies under
the Loan Documents; or (iii) any expenditure (other than leasing commissions and
tenant concessions) properly treated as a capital item under GAAP and such
expenditure is treated by Borrower as a capital item in Borrower's financial
statements.
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