NUMBER TWO
LEASEHELD MORTGAGE
In the City of San Juan, Commonwealth of Puerto Rico, this seventh (7th)
day of February, nineteen hundred ninety-one (1991).
BEFORE ME, LEONOR M. AGUILAR-GUERRERO, Notary Public in and for the
Commonwealth of Puerto Rico, with residence in Guaynabo, Puerto Rico, and office
on the Tenth Floor, Royal Bank Center, Two Hundred Fifty-Five (255) Ponce de
Leon Avenue, Hato Rey, San Juan, Puerto Rico.
APPEARS AS PARTY OF THE FIRST PART: EL CONQUISTADOR PARTNERSHIP L.P., a
partnership organized and existing under the laws of Delaware, with a place of
business at one hundred eighty-seven (187) East Isla Verde Road in the
Municipality of Carolina, Puerto Rico, zero zero nine one three (00913),
Taxpayer Identification Number 06-1288145 (hereinafter referred to as the
"Mortgagor"), represented herein by its General Partners WKA EL CON ASSOCIATES,
Taxpayer Identification Number 06-1288143, a partnership organized and existing
under the laws of the state of New York, herein represent by its Authorized
Signatory, HUGH ALANSON ANDREWS, Social Security Number ###-##-####, of legal
age, married,
business executive and resident of San Juan, Puerto Rico; and KUMAGAI CARIBBEAN,
INC., Taxpayer Identification Number 75-2303665, a corporation organized and
existing under the laws of the state of Texas, represented by its Vice
President, TORU FUJITA UEDA; Social Security Number, of legal age, married, and
resident of San Juan, Puerto Rico.
AS PARTY OF THE SECOND PART: PUERTO RICO INDUSTRIAL, MEDICAL, EDUCATIONAL
AND ENVIRONMENTAL POLLUTION CONTROL FACILITIES FINANCING AUTHORITY, Taxpayer
Identification Number 66-04-26994, with a place of business at Minillas
Government Center, Avenida De Diego, Stop Twenty-Second (22), San Juan, Puerto
Rico zero zero nine four zero (00940), (hereinafter referred to either as the
"Mortgagee" or as the "Authority") a public corporation and a governmental
instrumentality of the Commonwealth of Puerto Rico, represented by its Assistant
Executive Director, Francisco Sierra Mendez, Social Security Number ###-##-####,
of legal age, married, attorney-at-law and resident of Juncos, Puerto Rico.
The above parties have agreed and bind themselves to show their
authorities for this act whenever and wherever properly required.
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I, the Notary do hereby certify that I personally know Mister Francisco
Sierra Mendez and I have identified the other appearing parties by the means
provided in Article Seventeen (c) of the Notarial Law of Puerto Rico,
specifically by means of the following documents of identity which contain the
signature and photograph of each of the appearing parties:
To: Mister Hugh Alanson Andrews, United States of America Passport Number
zero four one eight seven five five eight six (041875586).
To: Mister Toru Fujita Ueda, Commonwealth of Puerto Rico Driver's License
Number two one seven seven seven nine eight (2177798).
STATE FIRST: The Mortgaged Property. The Mortgagor represents and warrants
that:
(A) It is the sole and valid tenant with a valid, good, insurable
leasehold interest (the "Leasehold") in the real property (the "Leasehold
Estate") and all presently existing buildings, structures and improvements
thereon, which Leasehold Estate is described in the Spanish language as follows:
"RUSTICA: Predio compuesto de 100 cuerdas, equivalentes a 39 hectareas, 30
areas y 4 centiareas, terreno quebrado y llano, destinado a pastos, situado en
el islote denominado Palomino, en el Mar Caribe y frente al Puerto de Fajardo,
al Este del mismo; colinda por sus cuatro puntos
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cardinales con el mencionado Mar Caribe. Enclave una casa y un ranchon para
peones y distintas cercas."
(B) The Leasehold Estate is recorded at page thirty-five overleaf (35
vto.) of volume three hundred twenty-six (326) of Fajardo, Registry of Property
of Puerto Rico Number Five Hundred Fifty (550).
The Leasehold of the Mortgagor was constituted by Alberto Bachman Umpierre
and Lillian Bachman Umpierre, as lessor, in favor of the Mortgagor, as lessee,
for a term of thirty-two (32) years commencing on the first (1st) day of
November, nineteen hundred and ninety (1990), subject to an option to renew on
the same terms and conditions, for two additional consecutive five (5) year
periods, as per Deed Number Twelve (12) of December fifteen (15), nineteen
hundred and ninety (1990) before Notary Public Silvestre M. Miranda (the "Ground
Lease"), which is pending recording at the Registry of Property, Fajardo
Section.
(C) Its leasehold interest in the Ground Lease is good and insurable, and
is subject to no liens, charges, encumbrances, encroachments, reservations,
restrictions, defects or claims of any kind, including taxes and assessments,
easements or encumbrances, other than the Permitted Encumbrances.
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The Leasehold and the Improvements (as hereinafter defined) and the Lease
Rights (as hereinafter defined) are referred to herein collectively as the
"Mortgaged Property".
(a) The Improvements will consist of all buildings, structures and
improvements on the Leasehold Estate that are constructed by or on behalf of or
at the direction of Mortgagor after the date of the Ground Lease, and any
appurtenances or additions thereto, as well as any accessions thereto in the
future, including but not limited to the following:
(i) all buildings or structures constructed thereon and all other
buildings and improvements of every kind and description erected or placed on
the Leasehold Estate and all materials intended for construction,
reconstruction, alteration and repairs of such buildings, title to which
materials reside in the Mortgagor, all of which materials shall be deemed to be
included within the Mortgaged Property immediately upon the delivery thereof to
the Mortgagor at the Leasehold Estate, and all other property immovable either
by nature or destination now owned or hereafter acquired by the Mortgagor and
now or hereafter located on said Leasehold Estate or in said buildings or any
such other buildings or improvements used either for its adornment or for the
purpose of comfort, or for the service of some industry operated on such
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building or structure, even though the aforesaid shall have been attached to the
same after the constitution of this Mortgage; and
(ii) all fixtures and articles of movable property now or hereafter owned
by the Mortgagor and attached to, contained in, located on or used in connection
with the Leasehold Estate or in connection with any improvements thereto,
including, but not limited to all of the Mortgagor's rights, title and interest
in and to all furniture, furnishings, motors, transformers, fittings, radiators,
gas ranges, ice boxes, mechanical refrigerators, awnings, shades, screens,
blinds, drapes, office equipment, word processors, computers, typewriters,
telephone and communications equipment and installations, elevators, conveyors,
kitchen, bar-room and restaurant equipment, plates, forks, knives, spoons,
silverware, napkins, tablecloths, tables, glasses, chinaware, cups, cooking
equipment and installations, electrical appliances, television sets, radios,
beds, vanities, chairs, mirrors, pillows, curtains, blankets, sheets, towels,
bathroom equipment, mattresses, box springs, sprinkler equipment, carpeting, and
other furnishings and all plumbing, heating, laundry, ventilating,
refrigerating, incinerating, lighting, air conditioning and electrical
equipment, compressors and related machinery, equipment and apparatus, and all
fixtures and appurtenances thereto; and all renewals or replacements
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thereof or articles in substitution therefor, whether or not the same are or
shall be attached to said buildings or structures in any manner, it being
understood and agreed that all the aforesaid property and any replacement or
addition thereto owned by the Mortgagor and placed by it on the Leasehold Estate
or on or in the improvements to be located thereon have been specially
designated for use in connection with the operation of a destination resort
hotel and casino and that the Mortgagor operates or will operate a destination
resort hotel and casino doing business as El Conquistador Resort and Country
Club in connection with which the same will be used, and, that for such purpose,
the aforesaid property and any replacement or addition thereto shall be deemed
to be immovable property, by nature or destination, affixation, incorporation,
or appropriation to use, and shall be deemed necessary for and integral to the
operation of the Mortgaged Property as a first-class destination resort hotel
and casino.
(b) In addition to the Leasehold and the Improvements, the Mortgaged
Property shall also consist of all rights of the Mortgagor (the "Lease Rights")
to receive payments of money under all concessions or leases of space existing
or at any time hereafter made and any and all amendments, modifications,
supplements, renewals and extensions thereof (all of such
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concessions and leases being referred to individually as an "Occupancy Lease"
and collectively as the "Occupancy Leases"), including, without limitation, all
rents, additional rents, revenues, earnings, profits and income, payments
incident to any assignment, sublease or surrender of any Occupancy Lease, claims
for forfeited deposits and claims for damages which are due and unpaid with
respect to any Occupancy Lease at the time payment of the secured loan is
required.
SECOND: The Mortgaged Note. Simultaneously herewith Mortgagor has
subscribed before me a mortgage note (hereinafter the "Mortgage Note"), which is
copied literally in paragraph FIFTEENTH hereof. The Mortgagor will pay, on
demand, the principal of and interest on the Mortgage Note and all other sums
due or to become due pursuant to the Mortgage Note, this Mortgage, or any pledge
agreement pursuant to which the Mortgage Note is pledged or assigned.
THIRD: Creation of Mortgage. In order to guarantee and secure:
(i) the full and complete payment of the principal of and the interest on
the Mortgage Note;
(ii) the performance and observance of the terms therein and herein
contained;
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(iii) an additional credit in an amount equal to five (5) years of
interest as provided in the Mortgage Note to cover accrued and unpaid interest
on the Mortgage Note pursuant to the provisions of Article One Hundred Sixty-Six
(166) of the Mortgage and Registry of Property Law of Puerto Rico (30 L.P.R.A.
2562) (hereinafter called the "interest credit");
(iv) an additional credit in an amount equal to fifteen percent (15%) of
the principal amount of the Mortgage Note A to cover any amounts that may be
paid by or advanced by the Mortgagee pursuant to Article Ninth (9th) hereof,
together with interest thereon at the highest legal rate then prevailing
(hereinafter called the "credit for additional advances");
(v) an additional credit in an amount up to but no greater than five
percent (5%) of the principal amount of the Mortgage Note, to cover the actual
costs and actual expenses (including attorneys' fees and disbursements), of the
holder of the Mortgage Note, payable without necessity for approval by any
court, in the even that such holder shall have recourse to the courts or to any
other governmental agency in order to collect all or any part of the principal
thereof or any interest thereon (by foreclosure or other proceedings or action)
(hereinafter called the "credit for liquidated damages");
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(vi) an additional credit in an amount equal to fifteen percent (15%) of
the principal amount of the Mortgage Note to cover any additional amounts that
may be paid or advanced by the Mortgagee in connection with the condition of the
improvements presently contemplated to be constructed on the Mortgaged Property,
which improvements shall consist of approximately seven hundred fifty (75) guest
rooms, approximately fifty thousand (50,000) square fee of meeting space
(including prefunctionary space), six (6) restaurants, approximately thirteen
thousand (13,000) square feet of retail space, an approximately ten thousand
(10,000) square feet casino, a marina, approximately one hundred thousand
(100,000) square feet of swimming pools and water features, an 18-hole golf
course, an approximately forty thousand (40,000) square foot clubhouse and spa
facility, eight (8) tennis courts, related amenities and facilities, and all
related furniture, fixtures and equipment (hereinafter called the "credit for
additional amounts").
Mortgagor hereby constitutes and creates a voluntary first mortgage in
favor of the Mortgagee on the Mortgaged Property (references herein to Mortgagee
shall be deemed to include the Authority and any future holder of the Mortgage
Note either by endorsement or assignment and in the event the Mortgaged Note
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is delivered in pledge to secure Mortgagor's obligations under a pledge
agreement, the term Mortgagee shall also refer to the Pledgee(s) of the Mortgage
Note under such pledge agreement).
FOURTH: Additional Representation and Warranties. The Mortgagor
represents, warrants and covenants to the Mortgagee as follows:
(a) The Mortgagor, by its execution and delivery hereof, is mortgaging to
the Mortgagee all of its right, title and interest in and to the Mortgaged
Property.
(b) The Mortgagor has full right, power and authority to mortgage the
Mortgaged Property to the Mortgagee pursuant hereto; the Mortgagor knows of no
adverse claim to the interest of the Mortgagor in or to the Mortgaged Property;
no fire or casualty has affected the improvements on the Leasehold Estate within
sixty (60) days prior to the date hereof; and the Mortgagor knows of no actual
or proposed condemnation or eminent domain proceeding or settlement in lieu
thereof that would affect any of its rights, title or interest in or to the
Mortgaged Property.
(c) The Mortgagor, at its sole cost and expense, will warrant and defend
to the Mortgagee such title to the Mortgaged Property and the lien of the
Mortgagee thereon and therein against all claims and demands and will maintain
and preserve such lien
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and will keep this Mortgage a valid and direct mortgage lien upon the Mortgaged
Property, subject only to the Permitted Encumbrances and prior, at all times, to
all Occupancy Leases.
(d) The Mortgagor will pay, or cause to be paid, all charges for all
public and private utility services at any time rendered to, or the payment of
which is the obligation of, the Mortgagor in connection with the Mortgaged
Property, or any part thereof, and will do all other things required for the
maintenance and continuance of all such services.
(e) It has taken all necessary and proper action, which has not been
modified or revoked, to enter into this Mortgage and the execution and delivery
of this Mortgage by the Persons who have signed this Mortgage on behalf of the
Mortgagor have been duly qualified and are sufficient action to constitute this
Mortgage as a valid, binding and enforceable obligation of the Mortgagor.
FIFTH: The Ground Lease.
(a) The Mortgagor represents, warrants and covenants to the Mortgagee as
follows:
(i) The Mortgagor will promptly pay when due and payable the
rentals, additional rentals and other charges mentioned in and payable under the
Ground Lease.
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(ii) The Mortgagor will promptly perform and observe all of the
terms, covenants and conditions required to be performed and observed by the
Mortgagor under the Ground Lease, within the grace periods provided in the
Ground Lease or such lesser grace periods as are provided in this Mortgage, and
will do all things necessary to preserve and to keep unimpaired its rights under
the Ground Lease. The Mortgagor will use its best efforts to obtain performance
by the lessor of its obligations under the Ground Lease, to the end that the
Mortgagor may enjoy all of the rights granted to it under the Ground Lease.
(iii) The Mortgagor will promptly notify the Mortgagee of any
default by the Mortgagor in the performance or observance of any of the terms,
covenants or conditions on the part of the Mortgagor to be performed or observed
under the Ground Lease.
(iv) The Mortgagor will: (i) promptly notify the Mortgagee of the
receipt by the Mortgagor of any notice from the lessor under the Ground Lease of
default by the Mortgagor in the performance or observance of any of the terms,
covenants or conditions on the part of the Mortgagor to be performed or observed
under the Ground Lease; (ii) promptly notify the Mortgagee of the receipt by the
Mortgagor of any notice from the
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lessor under the Ground Lease to the Mortgagor of termination of the Ground
Lease pursuant to the provision thereof; and (iii) promptly cause a copy of each
such notice received by the Mortgagor from the lessor under the Ground Lease to
be delivered to the Mortgagee.
(v) The Mortgagor will promptly notify the Mortgagee of any request
made by either party to the Ground Lease for arbitration proceedings pursuant to
the Ground Lease and of the institution of any arbitration proceedings, and will
promptly deliver to the Mortgagee a copy of the determination of the arbitrators
in each such arbitration proceeding.
(vi) The Mortgagor will not subordinate or consent to the
subordination of the Ground Lease to any mortgage on the lessor's interest in
the property demised by the Ground Lease.
(vii) The Mortgagor will use best efforts within fifteen (15) days
after demand from the Mortgagee, to obtain from the lessor under the Ground
Lease and deliver to the Mortgagee a certificate that the Ground Lease is
unmodified and in full force and effect and the date to which the rentals,
additional rentals and other charges payable thereunder have been paid and
stating whether to the lessor's knowledge the Mortgagor is in default in
14
the performance of any covenants, agreements or conditions contained in the
Ground Lease and if so, specifying each such default.
(viii) The Ground Lease is valid and in full force and effect in
accordance with its terms and without modification and no default under the
Ground Lease has occurred and is continuing.
(ix) The execution and delivery of this Mortgage is permitted under
the Ground Lease.
(x) If the term of the Ground Lease is scheduled to expire prior to
the payment in full of the indebtedness secured hereby and by any pledge
agreement pursuant to which the Mortgage Note has been pledged or assigned and
the Mortgagor has the option to renew such term, the Mortgagor shall effectively
exercise such option and deliver to the Mortgagee proof of such exercise, at
least thirty (30) days before the expiration of the period during which such
option may be exercised. The Mortgagor hereby irrevocably appoints the Mortgagee
its attorney-in-fact, to exercise any such options within such thirty (30) day
period if the Mortgagor has not theretofore exercised the same.
(b) Spreader of Mortgage to Fee. So long as any of the indebtedness
secured hereby or by any pledge agreement pursuant
15
to which the Mortgage Note has been pledged or assigned shall remain unpaid,
(unless the Mortgagee shall otherwise consent), the Mortgagor covenants and
agrees that, in case it shall become the owner in fee simple ("pleno dominio")
of the Leasehold Estate, by purchase or otherwise, this Mortgage shall attach to
and cover and be a lien upon the Estate so acquired. Mortgagor further agrees
and consents to execute, acknowledge, deliver and record, at its sole cost and
expense, all such instruments necessary to attach to this Mortgage the Estate so
acquired.
SIXTH: Maintenance of the Mortgaged Property. The Mortgagor will at all
times maintain, preserve and keep, or cause to be maintained, preserved or kept,
all and each part of the Leasehold Estate and the Improvements in good repair,
working order and condition, such that the Mortgaged Property will be maintained
and operated as part of a first-class destination resort. The Mortgagor will
supply the Mortgaged Property, and keep the same or cause the same to be kept
and supplied, with all necessary supplies and equipment and make all needful and
proper repairs, renewals and replacements thereto, whether interior or exterior,
structural or non-structural, ordinary or extraordinary, foreseen or unforeseen.
All such repairs, renewals and replacements shall be at least equal in quality,
value and class to the original
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Improvements. Without limiting the generality of the foregoing, the Mortgagor
covenants that it will not cause or permit to suffer damage, deterioration, loss
or waste to the Mortgaged Property, other than that resulting from normal wear
and tear. The Mortgagor will not alter, add to, remove or demolish any building,
structure or property forming part of the Mortgaged Property without the prior
written consent of the Mortgagee, except to the extent permitted in any pledge
agreement pursuant to which the Mortgage Note is pledged or assigned.
SEVENTH: Assignment of Leases and Rents. The Mortgagor hereby absolutely
and irrevocably mortgages and assigns to the Mortgagee all rents, income and
other sums due to the Mortgagor under each Occupancy Lease now existing or
hereafter entered into, together with the right to collect and receive the same
provided if and so long as no Event of Default (as hereinafter defined) shall
have occurred and be continuing, the Mortgagor shall have the right to collect
and receive such rents and other sums for its own uses and purposes. Upon the
occurrence of an Event of Default, all such rents and other sums shall be
collected and held by the Mortgagee to be applied as deed appropriate in the
sole discretion of the Mortgagee to the obligations secured hereunder and in
such other manner as is
17
permitted pursuant to the terms hereof and of any pledge agreement pursuant to
which the Mortgage Note may be pledged or assigned. The Mortgagee shall notify
the Mortgagor of its exercise of its right to collect rent and other sums at the
same time that it notifies any tenants thereof; provided, however, that failure
on the part of the Mortgagee to give such notice to the Mortgagor shall not
operate as a waiver of the right of the Mortgagee to collect and receive all
rents, income and other sums due to the Mortgagor under each Occupancy Lease.
The assignment of rents, income and other benefits contained herein shall
constitute an absolute assignment, subject, however, to the conditional
permission given herein to the Mortgagor to collect and use such rents, income
and other benefits. The foregoing assignment shall be fully operative without
any further action on the part of either party and the Mortgagee shall be
entitled, at its option, upon the occurrence of an Event of Default hereunder,
to all rents, income and other benefits from the Mortgaged Property, whether or
not the Mortgagee takes possession of the Mortgaged Property. The Mortgagor
hereby further grants to the Mortgagee and its agent the right, at the
Mortgagee's option, upon the occurrence of an Event of Default, to (i) enter
upon and take possession of the Mortgaged Property for the purpose of collecting
said rents, income and other
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benefits, (ii) dispossess by the usual summary proceedings any lessee defaulting
in its obligations pursuant to its Occupancy Lease beyond any applicable grace
and/or notice period, (iii) let the Mortgaged Property, or any part thereof, to
the extent permitted by law, and (iv) apply such rents, income and other
benefits, after payment of all necessary charges and expenses, on account of the
indebtedness and other sums secured hereby or by any pledge agreement pursuant
to which the Mortgage Note may be pledged or assigned. Such assignment and grant
shall continue in effect until the indebtedness and other sums secured by this
Mortgage, and by any pledge agreement pursuant to which the Mortgage Note may be
pledged or assigned, are paid in full, the execution of this Mortgage
constituting and evidencing the irrevocable consent of the Mortgagor to the
entry upon and taking possession of the Mortgaged Property by the Mortgagee
pursuant to such grant. Neither the exercise of any rights under this paragraph
SEVENTH by the Mortgagee nor the application of any such rents, income or other
benefits to the indebtedness and other sums secured hereby shall cure or waive
any Default, Event of Default or notice of Default hereunder or invalidate any
act done pursuant hereto or to any such notice, but shall be cumulative of all
other rights and remedies.
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EIGHTH: Insurance. As is provided in Article One Hundred Sixty (160) of
the Mortgage and property Registry Act of Puerto Rico Act Number One Hundred
Ninety-Eight (198) of August ten (10), nineteen hundred seventy-nine (1979),
Thirty Laws of Puerto Rico Annotated Two Thousand Five Hundred Fifty-Six (30
L.P.R.A. 2556), this Mortgage shall be extensive to, and shall cover, all
indemnities to which the Mortgagor may be entitled under any policy of insurance
covering the Mortgaged Property or any part thereof, and the Mortgagee shall be
entitled to receive directly from the insurance underwriter(s) all payments
which become due under any such policy(ies) of insurance, unless otherwise
provided in any pledge agreement under which the Mortgage Note is pledged or
assigned. Such payments shall be applied in the manner provided in any pledge
agreement or other instrument under which the Mortgage Note is pledged or
assigned.
NINTH: Additional Advances. The Mortgagee, without consent of or demand
upon the Mortgagor and without waiving or releasing any obligation or Default or
Event of Default, may (but shall be under no obligation to) at any time advance
such funds as may in the Mortgagee's judgment be needed for the purpose of (i)
paying real estate taxes assessed against the Mortgaged Property which the
Mortgagor has failed to pay, (ii) maintaining insurance
20
coverage on the Mortgaged Property as required hereunder or otherwise as set
forth in any pledge agreements pursuant to which any of the Mortgage Notes have
been pledged or assigned, (iii) complying with any Legal Requirements relating
to environmental matters with which the Mortgagor has failed to comply or (iv)
paying any other expenses which the Mortgagee reasonably determines to be
necessary to preserve the value of the Mortgaged Property, and the Mortgagor
may, in such event, enter upon the Mortgaged Property for such purpose and take
all action thereon that it considers necessary or appropriate, and may take such
other and further action as it may consider necessary or appropriate for such
purposes. All sums so advanced or paid by the Mortgagee and all costs and
expenses (including, without limitation, attorneys' fees and expenses) so
incurred, together with interest thereon at the rate provided for in the
Mortgage Note from the date of payment or incurring, shall constitute additional
indebtedness secured by this Mortgage and shall be paid by the Mortgagor to the
Mortgagee on demand, regardless of the due date of the remainder of the
indebtedness secured by this Mortgage.
TENTH: Further Assurances; Additional Security. The Mortgagor, at its
expense, will execute, acknowledge, deliver and record all such instruments and
take all such action as the
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Mortgagee from time to time may request better to assure the Mortgagee that the
properties and rights hereby mortgaged and assigned or intended to have been
mortgaged and assigned have so been. Without notice to or consent of the
Mortgagor, and without impairment of the lien of and rights under this Mortgage,
the Mortgagee may take from (but the Mortgagor shall not be obligated to furnish
to) the Mortgagor or from any other Person or Persons (as hereinafter defined)
additional security for the Mortgage Note or for the obligations of the
Mortgagor secured by the assignment or pledge of the Mortgage Note; and neither
the giving of this Mortgage nor the acceptance of any such additional security
shall prevent the Mortgagee from resorting first to such additional security, or
to the security created by this Mortgage, in either case without affecting the
Mortgagee's lien and rights under this Mortgage.
ELEVENTH: Foreclosure Valuation. In compliance with Article One Hundred
Seventy-Nine (179) of the Mortgage and Property Registry Act of Puerto Rico [Act
Number One Hundred Ninety-Eight (198) of August ten (10), nineteen hundred
seventy-nine (1979) Thirty Laws of Puerto Rico Annotated Two Thousand Five
Hundred Seventy-Five (30 L.P.R.A. 2575)], the Mortgagor hereby declares and
agrees for the purpose of foreclosure that the
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value of the Mortgaged Property is the amount of TWO MILLION THREE HUNDRED
THOUSAND DOLLARS ($2,300,000).
TWELFTH: Foreclosure. In the event that the Mortgage Note is assigned or
pledged or otherwise encumbered by the Mortgagor as collateral security for the
payment of any other note or debt of the Mortgagor or of any other Person, the
Mortgagor agrees that:
(a) The Mortgagee may foreclose this Mortgage and may exercise all other
rights, remedies, powers and privileges provided herein or now or hereafter
existing at law, in equity, by statute, or otherwise, without first foreclosing
the pledge or other lien so constituted upon the Mortgage Note, to the same
extent and with the same force and effect as if the Mortgage Note had been
assigned or transferred directly to the Mortgagee rather than assigned or
pledged as collateral security, provided that nothing contained in this
paragraph TWELFTH shall relief the Mortgagee from the obligation to comply with
the terms of any pledge agreement or other instrument under which the Mortgage
Note is assigned or pledged.
(b) The Mortgagor will not exercise any right which it might have to
cancel the record of the Mortgage by reason of lapse of time counted from the
date of the constitution of the Mortgage
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either under the provisions of Article One Hundred Forty-Five (145) of the
Mortgage and Property Registry Act of Puerto Rico [Act Number One Hundred
Ninety-Eight (198) of August ten (10), nineteen hundred seventy-nine (1979),
Thirty Laws of Puerto Rico Annotated Two Thousand Four Hundred Sixty-Nine (30
L.P.R.A. 2469) or otherwise and further agrees, whenever required by the
Mortgagee, to execute and file in the appropriate Registry, at the Mortgagor's
sole cost and expense, any and all supplemental instruments which may be
necessary or convenient in the judgment of the Mortgagee for the preservation of
the lien of this Mortgage until full payment of the note or debt so secured by
the lien of the Mortgage Note and full payment of any obligations secured by any
pledge of the Mortgage Note. Without limiting the generality of the foregoing,
the Mortgagor agrees that, unless the Mortgagee shall consent in writing to the
cancellation of the Mortgage at an earlier date, the Mortgage shall be
conclusively presumed to subsist for a period of twenty-five (25) years from the
date of its constitution or such lesser date as the Leasehold is terminated in
accordance with the terms of the Ground Lease; and the Mortgagor does hereby
waive any right which he might otherwise have under said Article One Hundred
Forty-Five (145) of the Mortgage and
24
Property Registry Act to apply for an earlier cancellation of the record of the
Mortgage.
(c) The Mortgagee may, upon the occurrence of any Event of Default
hereunder or under any pledge agreement pursuant to which the Mortgage Note has
been pledged or assigned, petition the court having jurisdiction over the
Mortgaged Property to appoint a receiver for the Mortgaged Property, including
all rents, issues and profits therefrom, and said receiver shall have the
broadest powers and faculties permitted to be granted to a receiver by the court
and his appointment shall be made by the court as a matter of absolute right
granted to the Mortgagee without taking into consideration the value of the
Mortgaged Property or the solvency of the Mortgagor or of any other party to the
action, and the Mortgagor hereby consents to the appointment of such a receiver
and agrees not to oppose the same, and waives any requirement for such a
receiver to post a bond of any kind.
THIRTEENTH: Definitions. As used in this Mortgage, the following terms
shall have the following respective meanings:
"Default" shall mean any event which, with the giving of notice or the
lapse of time, or both, would constitute an Event of Default.
25
"Event of Default" shall have the meaning ascribed thereto in paragraph
EIGHTEENTH hereof.
"Governmental Authority" shall mean any court, agency, authority, board
(including, without limitation, any environmental protection, planning or zoning
board), bureau, commission, department, office or instrumentality of any nature
whatsoever of any governmental or quasi-governmental unit of the United States,
the Commonwealth of Puerto Rico, or the Municipality of Fajardo, whether now or
hereafter in existence, having jurisdiction over the Mortgagor or the Mortgaged
Property.
"Impositions" shall mean all real estate and other taxes, all assessments
(including, without limitation, all assessments for public improvements or
benefits, whether or not commenced or completed prior to the date hereof or
while this Mortgage is in force), water, sewer, electricity, utility and other
rents, rates and charges, excises, levies, license fees, permit fees, inspection
fees and other authorization fees and other charges, in each case whether
general or special, ordinary or extraordinary, or foreseen or unforeseen, of
every character (including all penalties or interest thereon), which at any time
may be assessed, levied, confirmed or imposed on or in respect of or be a lien
upon (a) the Mortgaged
26
Property or any part thereof or any rents, issues, income, profits or earnings
therefrom or any estate, right or interest therein, or (b) any occupancy, use or
possession of or sales from the Mortgaged Property or any part thereof, or (c)
the Mortgage Note, this Mortgage, any interest herein or any other payments due
from the Mortgagor under the terms of this Mortgage; excepting, however, the
income taxes now or hereafter imposed by the United States under the Internal
Revenue Code of nineteen hundred eighty-six (1986), as amended from time to
time, and by the Commonwealth of Puerto Rico under the Income Tax Act of
nineteen hundred fifty-four (1954) [Act Number Ninety-One (91), approved on June
twenty-nine (29), nineteen hundred fifty-four (29), nineteen hundred fifty-four
(1954)], as amended, or under any other Act of Congress or Act of the
Legislature of Puerto Rico of the same nature, modifying, amending, or
substituting the statutes above mentioned.
"Legal Requirements" shall mean collectively (i) all laws, statutes,
codes, acts, ordinances, orders, judgments, decrees, injunctions, rules,
regulations, permits, licenses, authorizations, directions and requirements of
any Governmental Authority having jurisdiction over the Mortgaged Property, the
Mortgagor or any tenant of all or any of its commercial spaces, foreseen or
27
unforeseen, ordinary or extraordinary (including, without limitation, fire,
health, handicapped access, sanitation, ecological, historic, zoning,
environmental protection, wetlands, and building laws or regulations), which now
or at any time hereafter may be applicable to the Mortgaged Property or any part
thereof, or any of the streets, alleys, passageways, sidewalks, curbs, gutters,
vaults or vault spaces adjoining the Mortgaged Property or any part thereof, or
any use or condition of the Mortgaged Property or any part thereof, (ii) all
material requirements of each permit, license, authorization and regulation
relating to the Mortgaged Property, or any portion thereof, or to the ownership,
leasing, use, occupancy, possession, operation or maintenance thereof and (iii)
all requirements of the Puerto Rico Fire Department, the Factual Mutual System
or the Industrial Risk Insurers or other similar body acting in and for the
Commonwealth of Puerto Rico and all requirements of each insurance policy
covering or applicable to all or any portion of the Leasehold Estate, or the use
thereof, which are maintained or required to be maintained by the Mortgagor or
of which the Mortgagor has notice, and all requirements of the issuer of each
such policy, including any which may require repairs, modifications or
alterations (structural or otherwise) in or to the Mortgaged Property, or any
portion thereof.
28
"Lien" shall mean any mortgage, pledge, security interest, encumbrance,
lien or charge of any kind, including, without limitation, any conditional sale
or other title retention agreement, any lease in the nature thereof, or the
filing of, or any agreement to give, any financing statement under the Uniform
Commercial Code of any jurisdiction (other than informational filings in respect
of equipment leased under any lease not intended as security, within the meaning
of the Uniform Commercial Code) and any comparable financing statement under the
laws of the Commonwealth of Puerto Rico.
"Permitted Encumbrances" shall have the meaning ascribed hereto in
paragraph NINETEENTH hereof.
"Person" shall mean an individual, corporation, partnership, joint
venture, trust, association or any other entity or organization, including a
government or political subdivision, agency or instrumentality thereof.
FOURTEENTH: Miscellaneous. (a) Successors; No Oral Modification; Headings.
All of the terms of this Mortgage shall apply to and be binding upon the
successors and assigns of the Mortgagor and all Persons claiming under or
through the Mortgagor or any such successor or assign, and shall inure to the
benefit of the Mortgagee and its successors and assigns. Neither
29
this Mortgage nor any term hereof may be changed, waived, discharged or
terminated orally, but only by an instrument in writing signed by the Mortgagee,
notice of which is endorsed on the Mortgage Note. No notice to or demand on the
Mortgagor in any case shall entitle the Mortgagor to any other or further notice
or demand in similar or other circumstances. The headings of the clauses of this
Mortgage have been inserted for convenience of reference only and shall in no
way define, modify or restrict any of the provisions hereof.
FIFTEENTH: The Mortgage Note. The Mortgage Note referred to in paragraph
SECOND of this Deed is literally transcribed herein as follows:
"MORTGAGE NOTE
"VALUE: $2,000,000
"DUE DATE: ON DEMAND
"FOR VALUE RECEIVED, on demand the undersigned promises to pay to PUERTO
RICO INDUSTRIAL, MEDICAL, EDUCATIONAL AND ENVIRONMENTAL POLLUTION CONTROL
FACILITIES FINANCING AUTHORITY (hereinafter the "Authority") or its order, the
principal sum of TWO MILLION DOLLARS ($2,000,000) with interest on the unpaid
balance at a fluctuating annual rate (computed on the basis of a 360-day year
and the actual number of days elapsed) equal to two percent (2%) over and above
the "reference rate," as defined below, such fluctuating rate to change
simultaneously with the changes in the reference rate, from the date of this
Mortgage Note until full payment hereof. As used herein, the term "reference
rate" shall mean at any time the lower of (i) the fluctuating rate of interest
announced publicly from time to time by The Chase Manhattan Bank, N.A. in New
York, New York as its "prime," "base," or
30
"reference" rate and (ii) the fluctuating rate of interest announced publicly
from time to time by Citibank, N.A. in New York, New York as its "prime," "base"
or "reference" rate, it being understood that such rates of not necessarily be
the best or lowest rates of interest available to such bank's best or more
preferred large commercial customers. Anything herein to the contrary
notwithstanding, if the rate of interest required to be paid hereunder exceeds
the rate lawfully chargeable, the rate of interest to be paid shall be
automatically reduced to the maximum rate lawfully chargeable so that no amounts
shall be charged which are in excess thereof, and, in the event it should be
determined that any excess over such highest lawful rate has been charged or
received, the holder hereof shall promptly refund such excess to the
undersigned; provided, however, that, if lawful, any such excess shall be paid
by the undersigned to the holder hereof as additional interest (accruing at a
rate equal to the maximum legal rate minus the rate provided for hereunder)
during any subsequent period when regular interest is accruing hereunder at less
than the maximum legal rate. The Mortgagee shall be entitled to charge the
maximum late charge permitted by law on any overdue principal under this
Mortgage Note. Interest hereunder shall be payable on demand, and payments of
interest and principal shall be made at the office or domicile of the Authority
within the Commonwealth of Puerto Rico, or at such other place as may be
designed in writing by said Authority or any holder hereof.
"The undersigned, and all others who may become liable for all or any part
of this obligation whether as maker, principal, surety, guarantor or endorser,
agree hereby to be jointly and severally liable and jointly and severally waive
demand, presentment, protest, notice of dishonor and nonpayment and any and all
lack of diligence or delays in collection or enforcement hereof, and expressly
agree to extend to the Authority or any holder hereof the right of set-off or
compensation prior to, on or after maturity or default, and consent to any
application of payment of any monies in possession of the Authority or any
holder hereof belonging to the undersigned or any obligor hereunder related to
this Mortgage Note and to any extension of time, modification of the terms of
payment, releases of any party liable for this obligation, release, substitution
or exchange of any property, real or personal, tangible or intangible,
guaranteeing payment of the Mortgage securing this Mortgage Note, and agree also
to any other indulgence or forbearance whatsoever. Any such extension, release,
modification, substitution, exchange, indulgence
31
or forbearance may be made without notice to said party, and without in any way
affecting the personal liability of any party obliged hereunder.
"The holder of this Mortgage Note shall be entitled to the benefits and
security afforded by Deed Number Two which was executed on the date hereof,
before the undersigned Notary as security for this Mortgage Note and by any
agreement executed by the undersigned assigning, pledging, or encumbering this
Mortgage Note as security therefor, and may enforce the agreements of the
undersigned contained in each of said instruments, and may exercise the remedies
provided thereby or otherwise in respect thereof without being required first to
foreclose the pledge or other lien or encumbrance so constituted upon this
Mortgage Note, all in accordance with the terms of said instruments. No
reference herein to said instruments, and no provision of this Mortgage Note or
of said instruments, shall alter or impair the obligation of the undersigned
hereon, which is joint and several, continuing, absolute and unconditional, nor
shall such reference affect the negotiability hereof under the Negotiable
Instruments Law of Puerto Rico. Recourse on this Mortgage Note is limited as
provided in Deed Number Two.
The undersigned hereby submits to the venue of the courts in the
Commonwealth of Puerto Rico selected by the holder in case of legal action
brought against the undersigned for the collection of this Mortgage Note.
"In San Juan, Puerto Rico, this 7th day of February, 1991.
"EL CONQUISTADOR PARTNERSHIP L.P.
"By: Kumagai Caribbean, Inc.
"(Signed) By: /s/ Toru Fujita Ueda
---------------------------
Toru Fujita Ueda,
"Vice President
"WKA El Con Associates
"(Signed) By: /s/ Hugh Alanson Andrew
---------------------------
Hugh Alanson Andrew
"Authorized Signatory
32
"Affidavit No. 101
"Acknowledged and subscribed before me in San Juan, Puerto Rico, this 7th
day of February, 1991, by Hugh Alanson Andrew, of legal age, married, business
executive and resident of San Juan, Puerto Rico in his capacity as Authorized
Signatory of WKA EL CON ASSOCIATES, General Partner of EL CONQUISTADOR
PARTNERSHIP L.P. and by Toru Fujita Ueda, of legal age, married, business
executive and resident of San Juan, Puerto Rico, in his capacity as Vice
President of KUMAGAI CARIBBEAN, INC., General Partner of EL CONQUISTADOR
PARTNERSHIP L.P., identified by the means set forth in Article Seventeen "c"
(17(c)) of the Notarial Law of Puerto Rico.
(Signed) Leonor M. Aguilar-Guerrero
--------------------------
"Notary Public"
(Notarial Seal)
SIXTEENTH: Deed in the Public Interest: (a) The Authority hereby states
that its appearance in this Deed, made for its benefits, is in furtherance of
the purpose for which the Authority was created and is a legitimate exercise of
its powers. In approving the financing being provided to the Mortgagor and
secured hereby, the Authority has determined that the Mortgage constituted by
this Deed is in the public interest and serves the public interest and serves
the public purpose of promoting the economic development, health, welfare and
safety of the people of the Commonwealth of Puerto Rico, and that, therefore,
under the provisions of Sections One Thousand Two Hundred Fifty-One (1251) to
One Thousand Two Hundred Sixty-Nine (1269) of Tile
33
Twelve (12) of the Laws of Puerto Rico Annotated (L.P.R.A.) and Section One
Thousand Seven Hundred Seventy Subsection (c)] (1770[c]) of Title Thirty (30) of
the Laws of Puerto Rico Annotated, the constitution and recording of this
Mortgage is exempt from the payment and/or cancellation of all internal revenue
stamps and recording fees.
(b) If such exemption is held to be invalid, or if additional costs and
expenses are otherwise incurred, then all costs and expenses of this Deed, of
obtaining a certified copy or copies hereof, and of the registration of this
instrument in the proper public registry (including, without limitation, the
cost of all recording fees payable in connection with the initial recordation or
subsequent cancellation of this Mortgage or fees for the cancellation of any
revenue stamps affixed hereto); all expenses of such additional documentation as
may hereafter be required, including the registration thereof in the appropriate
sections of the Registry of Property, if such be required; and all expenses of
all documents of cancellation, including the cost of registration thereof, and
all other recording, filing, notarial or other fees, taxes and charges, shall be
for the account of Mortgagor.
SEVENTEENTH: Disposition of Mortgaged Property. The Mortgagor covenants
that it shall not sell, convey, mortgage,
34
or otherwise dispose of or encumber the Mortgaged Property, any portion thereof,
or any of the Mortgagor's right, title or interest therein without first
securing the written consent of the Mortgagee, except to the extent otherwise
permitted under any pledge agreement pursuant to which the Mortgage Note has
been pledged or assigned.
EIGHTEENTH: (a) Events of Default. The following shall constitute "Events
of Default" under this Mortgage, and the term "Event of Default" shall mean,
wherever used with reference to this Mortgage, any one or more of the following
occurrences:
(i) any principal, interest or any other sums payable pursuant to the
Mortgage Note shall not be paid when due;
(ii) any sums (other than those set forth in (i) above) payable pursuant
to this Mortgage or any pledge agreement pursuant to which the Mortgage Note has
been pledged or assigned shall not be paid when due, and such failure shall
continue for a period of thirty (30) days after notice is given to the Mortgagor
by the Mortgagee, unless the Mortgagee shall agree to an extension of such time
prior to its expiration;
(iii) the Mortgagor shall fail in the due performance or observance of any
covenant, agreement or term binding upon the Mortgagor contained in this
Mortgage, the Mortgage Note or any
35
pledge agreement pursuant to which the Mortgage Note was pledged or assigned,
other than those covenants, agreements or terms of which the Mortgagor's failure
to perform would constitute another Event of Default referred to in this
paragraph EIGHTEENTH, and such failure shall continue unremedied for more than
ninety (90) days after notice thereof shall have been given to the Mortgagor by
the Mortgagee or such shorter grace period provided for in any such documents;
provided, however, that if such failure cannot be corrected within such ninety
(90) day period, it shall not constitute an Event of Default hereunder if
corrective action is instituted by the Mortgagor within such period and
diligently pursued until such failure is corrected;
(iv) any warranty, representation or other statement made by or on behalf
of the Mortgagor in or pursuant to this Mortgage, any pledge agreement pursuant
to which the Mortgage Note was pledged or assigned, or any document, instrument
or certificate delivered in connection herewith or therewith shall prove to have
been materially incorrect or misleading when made; provided, however, that if
the incorrect or misleading nature of such warranty, representation or other
statement is curable, such incorrect or misleading nature shall not be an Event
of Default hereunder so long as the Mortgagor diligently proceeds to cure and
36
cures such incorrect or misleading nature within ten (10) days after notice from
the Mortgagee of such incorrect or misleading nature such that the original
warranty, representation or other statement made shall then not be materially
incorrect or misleading;
(v) the occurrence of an Event of Default under and pursuant to the terms
of any pledge agreement pursuant to which the Mortgage Note has been pledged or
otherwise encumbered;
(vi) the occurrence of an Event of Default under and pursuant to the terms
of the Ground Lease; or
(vii) the Mortgagor shall breach its covenant contained in paragraph
NINETEENTH hereof.
To the extent that any circumstances constitute an Event of Default under
any pledge agreement pursuant to which the Mortgage Note may be pledged or
assigned but would not otherwise constitute an Event of Default hereunder, then,
notwithstanding the foregoing, such circumstances shall constitute an Event of
Default hereunder.
(b) Remedies. Upon the occurrence and continuance of an Event of Default
hereunder or under any pledge agreement or other document pursuant to which the
Mortgage Note may be assigned, pledged, or otherwise encumbered as collateral
security,
37
the Mortgagee, its successors and assigns, may, at its or their election:
(i) declare all or any portion of the principal sum of and interest
on the Mortgage Note, along with all or any other sums payable under the
Mortgage Note, this Mortgage or any pledge agreement pursuant to which the
Mortgage Note has been pledged or assigned immediately due and payable;
(ii) proceed to enforce the payment of the Mortgage Note and/or to
foreclose the lien of the Mortgage as against all or any part of the Mortgaged
Property (by summary proceedings or otherwise) and to have the same sold under
the judgment or decree of a court of competent jurisdiction; and/or
(iii) enter upon and take possession of the Mortgaged Property or
any part thereof by summary proceedings, ejectment or other legal proceedings
and remove the Mortgagor and all other persons and any and all properties
therefrom (to the extent permitted by law, other than pursuant to a foreclosure
proceeding), and hold, operate and manage the same and receive all earnings,
income, rents, issues and proceeds accruing with respect thereto or any part
thereof. The Mortgagee shall be under no liability for or by reason of any such
taking of possession, entry, removal or holding, operation or management, except
that
38
any amounts so received by the Mortgagee shall be applied to pay all costs and
expenses of so entering upon, taking possession of, holding, operating,
maintaining, repairing, preserving and managing the Mortgaged Property or any
part thereof, and any taxes, assessments or other charges prior to the Lien of
this Mortgage which the Mortgagee may consider it necessary or desirable to pay,
and any balance of such amounts shall be applied as determined by the Mortgagee
in its sole and absolute discretion; and/or
(iv) exercise any other remedy available at law or inequity.
NINETEENTH: No Other Liens. (a) Subject to paragraph TWENTIETH below,
relating to contests, the Mortgagor will not create or permit to be created or
to remain, and will discharge, any Lien upon the Mortgaged Property or any part
thereof other than the following (collectively, the "Permitted Encumbrances"):
(a) the herein constituted Mortgage, (b) leases of commercial space at the
Mortgaged Property, provided such leases are subordinate to the lien of this
Mortgage, (c) a second mortgage in favor of Government Development Bank for
Puerto Rico, as per Deed Number Three (3) of Leasehold Mortgage, dated February
seven (7), nineteen hundred ninety-one (1991) before Notary Ramon
39
Moran Lubriel, which will be filed for registration contemporaneously with this
Mortgage in the Fajardo Section, Registry of Property of Puerto Rico, (d)
easements or reservations with respect to the servicing of the Mortgaged
Property for rights of way for electric transmission and distribution lines,
telephone and telegraph lines, fuel, water, sewage and drainage pipelines and
channels and all other similar purposes, provided that such easements and
reservations are approved by the Mortgagee and do not, in any single case or in
the aggregate, materially interfere with the occupancy or use of the Mortgaged
Property, and (i) any other liens or encumbrances specifically permitted by the
terms of any pledge agreement pursuant to which the Mortgage Note has been
pledged, assigned or otherwise encumbered.
TWENTIETH: Payment of Impositions; Compliance with Legal Requirements and
Contests.
(a) Subject to subparagraph (c) below, the Mortgagor will pay or cause to
be paid all Impositions before the same would become delinquent and before any
fine, penalty, interest or cost may be added for non-payment of same. The
Mortgagor promptly will deliver to the Mortgagee after payment of such
Impositions copies of official receipts or other evidence satisfactory to the
40
Mortgagee evidencing the payment of any Imposition as required pursuant to this
subparagraph (a).
(b) The Mortgagor will comply promptly with any Legal Requirement and will
furnish the Mortgagee, on demand, with the results of any requested official
search made by a Governmental Authority regarding such compliance.
(c) The Mortgagor, at its expense, and after prior written notice to
Mortgagee and provided no Event of Default shall then have occurred and be
continuing may contest in good faith by appropriate proceedings promptly
initiated and conducted with due diligence, the amount or validity or
application, in whole or in part, of any Imposition or any Legal Requirement or
any Lien upon the Mortgaged Property or the application of any instrument of
record referred to in paragraph NINETEENTH hereof and may defer payment thereof;
provided that (i) in the case of any such unpaid Imposition or Lien, such
proceedings shall suspend the collection thereof from the Mortgagor, the
Mortgagee and the Mortgaged Property, (ii) in any case, the Mortgaged Property,
any rent or other income therefrom or any part thereof or interest therein would
not be in danger of being sold, forfeited, terminated, cancelled or lost, (iii)
in the case of a Legal Requirement, neither the Mortgagor nor the Mortgagee
would be subject to civil or
41
criminal liability as a result of such deferral of compliance therewith, (iv) in
any case, the Mortgagor shall have furnished such security if any, as may be
required in the proceedings or as may be requested by the Mortgagee, (v) in any
case, the payment of any sums required to be paid under the Mortgage Note, this
Mortgage, or any pledge agreement pursuant to which the Mortgage Note may be
pledged or assigned (other than any unpaid Imposition at the time being
contested in accordance with this paragraph TWENTIETH shall not be interfered
with or otherwise affected, and (vi) in any case, the Mortgagor shall hold the
Mortgagee harmless of and from and indemnify the Mortgagee against any loss by
reason of any such deferment.
TWENTY-FIRST: Additional Payments. If any action or proceeding shall be
commenced or taken (including, without limitation, an action to foreclose this
Mortgage, collect the indebtedness secured hereby or enforce the Mortgagee's
rights under the Mortgage Note) by the Mortgagee, or any other Person, in which
action or proceeding the Mortgagee is involved or is made a party by reason of
the execution and/or delivery of the Mortgage Note, this Mortgage, any pledge
agreement pursuant to which the Mortgage Note has been pledged or assigned or
any other documents or in which it becomes necessary to enforce,
42
defend or uphold the lien on the Mortgaged Property pursuant to this Mortgage or
any other documents (including, without limitation, any pledge agreement) or the
Mortgagee's rights under the Mortgage Note or any other documents (including,
without limitation, any pledge agreement), all sums paid by the Mortgagee for
the expense of any such action or litigation shall be paid by the Mortgagor to
the Mortgagee promptly after demand. The Mortgagor will hold the Mortgagee
harmless against any and all liability with respect to any mortgage recording or
intangible personal property tax or fees or similar imposition now or hereafter
in effect, to the extent that the same may be payable by the Mortgagee with
respect to this Mortgage, the Mortgage Note, any pledge agreement, or any other
related document. Any amounts due and payable to the Mortgagee under this
paragraph that are not paid within fifteen (15) days after written demand
therefor by the Mortgagee shall bear interest at the rate then applicable under
the terms of the Mortgage Note, from the date of such demand, and such amounts,
together with such interest, shall be deemed to be indebtedness secured by this
Mortgage. In the event of any action, suit or proceeding is brought against the
Mortgagee by reason of any such occurrence, the Mortgagor upon request by the
Mortgagee will, at the Mortgagor's expense, resist
43
and defend such action, suit or proceeding or cause the same to be resisted or
defended, either by counsel designated by the Mortgagor and approved by the
Mortgagee, or where such occurrence is covered by liability insurance, by
counsel designated by the insurer. The obligations of the Mortgagor under this
paragraph TWENTY-FIRST shall survive the termination or satisfaction of this
Mortgage.
TWENTY-SECOND: Application of Foreclosure Proceeds. The proceeds of any
foreclosure sale of the Mortgaged Property or any part thereof shall be applied
in accordance with the provisions of any pledge agreement pursuant to which the
Mortgage Note may be pledged or assigned or, if no such agreement exists, as
follows:
First: All taxes, assessments or liens prior to the lien of this Mortgage
that the Mortgagee may consider necessary or desirable to pay, the costs and
expenses (including without limitation, attorney's fees and expenses) of
collection, including the costs and expenses of any foreclosure or sale of the
Mortgaged Property, the cost and expenses of entering upon, taking possession of
or holding, operating and managing the Mortgaged Property, as the case may be,
and of the enforcement of any remedies hereunder, including court costs and
expenses, and
44
reasonable compensation to the Mortgagee's agents, attorneys and counsel, and
all expenses, liabilities and advances incurred or made by the Mortgagee with
respect to such foreclosure;
Second: All amounts disbursed for costs incurred by the Mortgagee, other
than on account of principal and interest thereon due on all indebtedness of the
Mortgagor secured by the Mortgage Note, under this Mortgage, any pledge
agreement pursuant to which this Mortgage Note may be pledged or assigned or any
documents secured thereby, plus accrued interest thereon;
Third: All amounts of interest and principal due and unpaid on all
indebtedness of the Mortgagor secured by the Mortgage Note, any pledge agreement
pursuant to which this Mortgage Note may be pledged or assigned or any documents
secured thereby; and
Fourth: The balance, if any, to the Mortgagor, or to any other person or
legal entity who may be legally entitled thereto, or as a court of competent
jurisdiction may otherwise direct.
TWENTY-THIRD: Remedies Cumulative. Each right, power and remedy of the
Mortgagee provided for in this Deed shall be cumulative and concurrent and shall
be in addition to every other right, power or remedy provided for in this Deed
or in any agreement between the Mortgagor and the Mortgagee
45
secured by the Mortgage Note, or in any pledge agreement pursuant to which the
Mortgage Note has been pledged or assigned, or now or hereafter existing at law
or in equity or by statute or otherwise, and the exercise or beginning of the
exercise by the Mortgagee of any one or more of the rights, powers or remedies
provided for in this Deed or in any agreement between the Mortgagor and the
Mortgagee secured by the Mortgage Note, or in any pledge agreement pursuant to
which the Mortgage Note has been pledged or assigned, or now or hereafter
existing at law or in equity or by statute or otherwise shall not preclude the
simultaneous or later exercise by the Mortgagee of any or all such other rights,
powers or remedies. All rights, remedies and powers provided herein may be
exercised only to the extent that the exercise thereof does not violate any
applicable provision of law, and are intended to be limited to the extent
necessary so that they will not render this Mortgage invalid, unenforceable or
not entitled to be recorded, registered or filed under the provision of any
applicable law. If any provision of this Deed shall be held to be invalid,
illegal or unenforceable, the validity of other provisions of this Deed shall in
no way be affected thereby.
TWENTY-FOURTH: No Waiver of Remedies. No failure by the Mortgagee to
insist upon the strict performance of any term
46
hereof or to exercise any right, power or remedy consequent upon a breach
thereof, shall constitute a waiver of any such term or of any such breach. No
waiver of any breach shall affect or alter this Deed or the Mortgage constituted
herein, which shall continue in full force and effect with respect to any other
than existing or subsequent breach. Any action, suit or proceeding brought by
the Mortgagee against the Mortgagor pursuant to any of the terms of this
Mortgage or otherwise, and any claim made by the Mortgagee hereunder may be
compromised, withdrawn or otherwise dealt with by the Mortgagee without any
notice to or approval of the Mortgagor. Nothing contained in this Deed shall
constitute any consent or request by Mortgagee, express or implied, for the
performance of any labor or services or the furnishing of any materials or other
property in respect of the Mortgaged Property or any part thereof, nor as giving
Mortgagor any right, power or authority to contract for or permit the
performance of any labor or services or the furnishing of any materials or other
property in such fashion as would permit the making of any claim against
Mortgagee in respect thereof or any claim that any lien based on the performance
of such labor or services or the furnishings of any such materials or other
property is prior to the lien of this Mortgage.
47
TWENTY-FIFTH: Notices. All notices to and demands and requests upon or
from the Mortgagor under this Deed shall be made in the manner called for in any
pledge agreement pursuant to which the Mortgage Note has been pledged or
assigned; otherwise, such notices shall be in writing and shall be deemed to
have been properly given or made if sent by United States registered or
certified mail, postage prepaid, return receipt requested, addressed to the
Mortgagor or the Mortgagee, as the case may be, at such place as the Mortgagor
or the Mortgagee may have furnished to each other in writing. All such notices,
demands and requests shall be effective when received at the address specified
as aforesaid.
TWENTY-SIXTH: Interim Sums. The Mortgagee will have the right from time to
time to sue for any sums whether for interest, damages for failure to pay
principal or any installment thereof, taxes, or any other sums required to be
paid under the terms of this Mortgage, any pledge agreement pursuant to which
the Mortgage Note has been pledged or assigned or any other related document as
the same become due, without regard to whether or not the principal sum or any
other sum evidenced by the Mortgage Note and secured by this Mortgage becomes
due and without prejudice to the right of the Mortgagee thereafter to bring
48
an action of foreclosure, or any other action, as a consequence of a Default or
Event of Default existing at the time such earlier action was commenced.
TWENTY-SEVENTH: No Credits on Account of the Debt. The Mortgagor will not
claim or demand or be entitled to any credit or credits on account of the
indebtedness secured by this Mortgage for any part of the Impositions assessed
against the Mortgaged Property or any part thereof and no deduction shall
otherwise be made or claimed from the taxable value of the Mortgaged Property,
or any part thereof, by reason of this Mortgage or the indebtedness secured by
this Mortgage.
TWENTY-EIGHTH: Inspection. The Mortgagor will permit the Mortgagee and any
representatives designated by the Mortgagee to visit and inspect the Mortgaged
Property, or any part thereof, (i) in an Emergency, at any time and (ii) at all
other times, during normal business hours and upon reasonable notice, or as
otherwise permitted pursuant to the terms of any pledge agreement pursuant to
which the Mortgage Note may have been pledged or assigned. The Mortgagee shall
not have any duty to make any such inspection and shall not incur any liability
or obligation for not making any such inspection or, once having undertaken any
such inspection, for making the inspection, not
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making the same carefully or properly, or for not completing the same; nor shall
the fact that such inspection may not have been made by the Mortgagee relieve
the Mortgagor of any obligations that it may otherwise have under this Mortgage.
TWENTY-NINTH: Actions and Proceedings. Except as otherwise provided in any
pledge agreement pursuant to which the Mortgage Note may have been pledged or
assigned, the Mortgagee shall have the right to appear in and defend any action
or proceeding brought with respect to the Mortgaged Property, and to bring any
action or proceeding, in the name and on behalf of the Mortgagor, which the
Mortgagee, in its discretion, feels should be brought to protect its interest in
the Mortgaged Property, provided that unless an Event of Default shall have
occurred and be continuing at the time the Mortgagee first appears in or brings
any such action or proceeding, prior to the Mortgagee's appearance in or
bringing of any such action or proceeding, the Mortgagee shall give the
Mortgagor notice of the Mortgagee's intention with respect thereto.
THIRTY: Officers of Mortgagee Not Liable. All covenants, stipulations,
promises, agreements and obligations of the Mortgagee contained herein shall be
deemed to be covenants, stipulations, promises, agreements and obligations of
the
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Mortgagee and not of any member of the governing body of the Mortgagee or any
officer, agent, servant or employee of the Mortgagee in his individual capacity,
and no recourse shall be had for any claim based thereon or hereunder against
any member of the governing body of the Mortgagee or any officer, agent, servant
or employee of the Mortgagee.
THIRTY-FIRST: No Charge Against Mortgagee Credit. No provision hereof
shall be construed to impose a charge against the general credit of the
Mortgagee or shall impose any personal or pecuniary liability upon any director,
official or employee of the Mortgagee.
THIRTY-SECOND: Mortgagee Not Liable. Notwithstanding any other provision
of this Deed, (a) the Mortgagee shall not be liable to the Mortgagor or any
other person for any failure of the Mortgagee to take action under this Deed
unless the Mortgagee (i) is requested in writing by an appropriate Person to
take such action and (ii) is assured of payment of or reimbursement for any
expenses in such action, and (b) except with respect to any action for specific
performance or any action in the nature of a prohibitory or mandatory
injunction, neither the Mortgagee nor any director of the Mortgagee or any other
official or employee of the Mortgagee shall be liable to the Mortgagor or
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any other person for any action taken by it or by its officers, servants, agents
or employees, or for any failure to take action under this Deed. In acting under
this Deed, or in refraining from acting under this Deed, the Mortgagee may
conclusively rely on the advice of its legal counsel.
THIRTY-THIRD: Waivers. In view of the assignment of the Mortgagee's rights
under and interest in this Deed to the Trustee by the provisions of the Trust
Agreement and in view of any pledge agreement pursuant to which the Mortgage
Note may be pledged or assigned, the Mortgagee shall have no power to waive the
performance by the Mortgagor of any provision hereunder or extend the time for
the correction of any default of the Mortgagor without the consent of the
Trustee to such waiver by the Trustee and by any such pledge agreement.
THIRTY-FOURTH: Waiver of Moratorium and Redemption. The Mortgagor, to the
full extent that it may lawfully do so, agrees that it will not at any time
insist upon, plead or in any way take advantage of and hereby waives any
redemption or moratorium law now or hereafter in force and effect which would
prevent or hinder the enforcement of the provisions of this Deed or any rights
or remedies the Mortgagee may have hereunder or by law.
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THIRTY-FIFTH: Limitation of Liability. Notwithstanding anything to the
contrary contained in this Mortgage, no recourse shall be had, whether by levy
or execution or otherwise, for the payment of the principal of or interest on,
or other amounts owed hereunder or under the Mortgage Note, or for any claim
based on this Mortgage or in respect thereof, against any partner of the
Mortgagor or any predecessor, successor or affiliate of any such partner or any
of their assets (other than from the interest of such partner in the Mortgagor),
or against any principal, partner, shareholder, officer, director, agent or
employee of any such partner (other than from the interest of any such person in
such partner), nor shall any such persons be personally liable for any such
amount or claims, or liable for any deficiency judgment based thereon or with
respect thereto, it being expressly understood that the sole remedies of the
Mortgagee with respect to such amounts and claims shall be against the assets of
the Mortgagor, including the Mortgaged Property, and that all such liability of
the aforesaid persons, except as otherwise expressly provided herein, is
expressly waived and released as a condition of and as consideration for the
execution of the Mortgage; provided, however, that (A) nothing contained in this
Mortgage (including, without limitation, the provisions of this paragraph
THIRTY-
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FIFTH) shall constitute a waiver of any indebtedness of Mortgagor evidenced
hereby or of any of the Mortgagor's other obligations under such other
instruments executed in connection herewith or shall be taken to prevent
recourse to and the enforcement against the Mortgagor, of all the liabilities,
obligations and undertakings contained in this Mortgage; (B) this paragraph
THIRTY-FIFTH shall not be applicable to a breach by any person of any
independent obligation to the Mortgagee, including, but not limited to any other
obligations of any Person under any other guarantee or indemnity agreement
executed or delivered in connection herewith or with any pledge agreement
pursuant to which the Mortgage Note is pledged or assigned and (C) this
paragraph THIRTY-FIFTH shall not be applicable to the active party in the event
of (1) fraud by such party, (2) misappropriation of funds or other property by
such party, or (3) damage to the Mortgaged Property or any part thereof
intentionally inflicted in bad faith by such party. For the purposes of the
foregoing, the term "shareholder" shall be deemed to include the shareholders of
any corporation which is shareholder of a corporation and the term "partner"
shall be deemed to include the partners of any partnership which is a partner of
a partnership.
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THIRTY-SIXTH: Satisfaction of Debt. Should the Mortgagor satisfy the
Mortgage Note or the obligations hereunder, under the Mortgage Note and under
any pledge agreement pursuant to which the Mortgage Note is pledged or assigned,
in the time and manner heretofore set forth, and comply with, and execute all
agreements and stipulations required herein, then the Mortgagee shall execute in
its favor the corresponding release and shall endorse to Mortgagor or its
nominee the Mortgage Note without recourse, representations and warranties, or
at Mortgagor's election shall endorse the same for cancellation purposes only,
delivering said Mortgage note so endorsed to the Mortgagor, except to the extent
otherwise provided in any pledge agreement pursuant to which it may have been
assigned.
ACCEPTANCE, WARNINGS AND EXECUTION.
The appearing parties accept this Deed as drafted and fully ratify and
confirm the statements contained herein as the true and exact embodiment of
their stipulations, terms and conditions. I, the Notary, made to the appearing
parties the necessary legal reserves and warnings concerning the execution of
this Deed and they were fully advised by me thereon. Specifically, I advised the
appearing parties with respect to:
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(a) The meaning and legal effects of the acts consummated pursuant to this
Deed, having asked each of the persons appearing herein whether they had any
further questions and allowing each of them ample time and opportunity to ask
questions and to understand and comprehend the meaning, legal nature and effects
of their acts;
(b) That in the execution hereof they are relying in a title report
prepared by an independent third party and not by the undersigned Notary;
(c) That any liens or encumbrances or any other matter affecting the title
to the Leasehold Estate that may be filed for recordation with the Registry of
Property prior to the filing of this Deed may be legally binding and could take
precedence over this Deed;
(d) The advisability for the Mortgagee to obtain an insurance policy
insuring its Leasehold interest;
(e) The advisability of the parties to have someone with the appropriate
expertise conduct an investigation to determine the environmental conditions of
the Leasehold Estate;
(f) That recordation at the Registry of Property of the Mortgage
constituted by this Deed is conditioned upon the recordation of the documents
described in Paragraph FIRST;
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(g) That the full effectiveness of this Deed is subordinated to the
presentation of documentary evidence confirming the authority of the persons
appearing herein.
I, the Notary, certify that this Deed was read by the persons appearing
herein; that I advised them of their right to have witnesses present at the
execution hereof, which right they waived; that I advised them of the legal
effect of this Deed; that they acknowledged that they understood the contents of
this Deed and such legal effect; and that thereupon they signed this Deed before
me and affixed their initials to each and every page hereof.
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