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Exhibit 4.04(b)
CERTIFIED TO BE A
TRUE COPY
BY MAXINE J. LIEVOIS
FRANK'S NURSERY & CRAFTS, INC.
(Borrower)
in favor of
MIDLAND LOAN SERVICES, L.P.
(Lender)
MORTGAGE, SECURITY AGREEMENT
AND ASSIGNMENT OF LEASES AND RENTS
Dated: March 14, 1996
Locations: 2450 28th Street SE
Grand Rapids, Michigan 49508
RECORD AND RETURN TO:
MIDLAND LOAN SERVICES, L.P.
210 West 10th Street, 6th Floor
Kansas City, MO 64105
Attention: MCF Closing Department
Loan No.: 94-0903604
Store No. 25
THIS INSTRUMENT WAS DRAFTED BY:
Michael B. Hickman
Morrison & Hecker
2600 Grand Avenue
Kansas City, Missouri 64108-4606
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TABLE OF CONTENTS
Page
----
1. Payment of Debt and Incorporation of Covenants, Conditions and Agreements...... 2
2. Warranty of Title.............................................................. 3
3. Insurance Requirements......................................................... 3
4. Casualty Loss.................................................................. 4
5. Payment of Taxes and Other Charges............................................. 6
6. Escrowed Funds................................................................. 6
7. Condemnation................................................................... 7
8. Leases and Rents............................................................... 8
9. Maintenance, Use and Management of Mortgaged Property.......................... 10
10. Sale of Mortgaged Property or Change in Borrower............................... 11
11. No Other Encumbrances Permitted................................................ 12
12. Estoppel Certificates and No Default Affidavits................................ 12
13. Cooperation.................................................................... 13
14. Books and Records; Reporting Requirements...................................... 13
15. Performance of Other Agreements................................................ 14
16. Further Acts, etc.............................................................. 14
17. Recording of Mortgage, etc..................................................... 14
18. Prepayment..................................................................... 15
19. Events of Default.............................................................. 15
20. Default Interest............................................................... 16
21. Right to Cure Defaults......................................................... 16
22. Prepayment After Event of Default.............................................. 16
23. Lender's Remedies.............................................................. 17
24. Additional Lender's Remedies................................................... 18
25. Late Charges................................................................... 20
26. Changes in the Laws Regarding Taxation......................................... 20
27. No Credits on Account of the Debt.............................................. 21
28. Documentary Stamps............................................................. 21
29. Usury Laws..................................................................... 21
30. Right of Entry................................................................. 21
31. Reasonable Use and Occupancy................................................... 21
32. Security Agreement............................................................. 21
33. Actions and Proceedings........................................................ 22
34. Waiver of Counterclaim......................................................... 22
35. Recovery of Sums Required to Be Paid........................................... 22
36. Marshalling and Other Matters.................................................. 22
37. Hazardous Waste................................................................ 22
38. Access Laws.................................................................... 23
39. Indemnification................................................................ 24
40. Notices........................................................................ 25
41. Authority...................................................................... 25
42. Waiver of Notice............................................................... 25
43. Remedies of Borrower........................................................... 25
44. Sole Discretion of Lender...................................................... 25
45. Nonwaiver...................................................................... 26
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46. No Oral Change................................................................. 26
47. Liability...................................................................... 26
48. Inapplicable Provisions........................................................ 26
49. Headings, etc.................................................................. 26
50. Duplicate Originals............................................................ 26
51. Definitions.................................................................... 26
52. Homestead...................................................................... 27
53. Assignments.................................................................... 27
54. Exculpation.................................................................... 27
55. Integration.................................................................... 27
56. Applicable Law; Jurisdiction................................................... 27
57. Additional Terms and Provisions................................................ 27
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THIS MORTGAGE, SECURITY AGREEMENT AND ASSIGNMENT OF LEASES AND RENTS (the
"Mortgage") is made as of the 14th day of March, 1996, by Frank's Nursery &
Crafts, Inc., a Michigan corporation ("Borrower"), having its principal place
of business (or residing) at 6501 East Nevada, Detroit, Michigan 48234 in favor
of Midland Loan Services, L.P., a Missouri limited partnership ("Lender"),
having its principal place of business at 210 West 10th Street, 6th Floor,
Kansas City, Missouri 64105.
WITNESSETH:
To secure the payment of an indebtedness in the principal sum of Six
Hundred Eighty-two Thousand Eight Hundred Seventy-eight and No/100 Dollars
($682,878.00), lawful money of the United States of America, to be paid with
interest according to a certain contemporaneously executed Promissory Note made
by Borrower to the order of Lender in substantially the form of Exhibit B
attached hereto, and future advances, if any (said Promissory Note, together
with all extensions, renewals or modifications thereof, is referred to as the
"Note", and said indebtedness, interest, future advances, if any, and all other
sums due hereunder, and under the Note and the Other Security Documents
(hereinafter defined), including applicable attorney fees and costs, is
collectively referred to as the "Debt"), Borrower hereby irrevocably deeds,
mortgages and warrants, gives, grants, bargains, sells, aliens, enfeoffs,
conveys, confirms, pledges, assigns, grants a security interest in, and
hypothecates to Lender, its successors and assigns, with the right to entry and
possession, all of its estate, right, title and interest in, to, and under any
and all of the following described property (collectively the "Mortgaged
Property"), whether now owned or held or hereafter acquired:
(a) The real property described in Exhibit A attached hereto (the
"Premises") and the buildings, structures, additions, enlargements, extensions,
modifications, repairs, replacements and improvements now or hereafter located
thereon (the "Improvements");
(b) all easements, rights-of-way, strips and gores of land, streets,
ways, alleys, passages, sewer rights, water, water courses, water rights and
powers, air rights and development rights, and all estates, rights, titles,
interests, privileges, liberties, tenements, hereditaments and appurtenances of
any nature whatsoever, in any way belonging, relating or pertaining to the
Premises 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 Premises, to the center line thereof
and all the estates, rights, titles, interests, dower and rights of dower,
curtesy and rights of curtesy, property, possession, claim and demand
whatsoever, both at law and in equity, of Borrower of, in and to the Premises
and the Improvements and every part and parcel thereof, with the appurtenances
thereto;
(c) all machinery, equipment, fixtures (including but not limited to
all heating, air conditioning, plumbing, lighting, communications and elevator
fixtures), building equipment, materials and supplies, and other property of
every kind and nature, whether tangible or intangible, owned by Borrower, or in
which Borrower has or shall have an interest, now or hereafter located upon the
Premises and the Improvements, or appurtenant thereto, and usable in connection
with the present or future operation and occupancy of the Premises and the
Improvements (hereinafter collectively called the "Equipment"), including the
proceeds of any sale or transfer of the foregoing, and, without limiting the
generality of the foregoing, if any such Equipment is subject to any prior
security interest or prior security agreement (as such terms are defined in the
Uniform Commercial Code, as adopted and enacted in the State or States in which
any of the Mortgaged Property is located), then the Mortgaged Property shall
include all of the right, title and interest of Borrower in and to any such
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Equipment, together with all deposits and payments now or hereafter made by
Borrower with respect to such Equipment;
(d) all awards, payments or compensation, including interest thereon,
heretofore or hereafter made with respect to the Mortgaged Property for any
injury or decrease in the value of the Mortgaged Property related to any
exercise of the right of eminent domain or condemnation (including without
limitation, any transfer made in lieu of or in anticipation of the exercise of
said rights or for a change of grade);
(e) all leases, reciprocal easement agreements, and other agreements
and arrangements affecting the use, enjoyment or occupancy of, or the conduct of
any activity upon or at the Premises and the Improvements heretofore or
hereafter entered into (the "Leases"), all income, rents (including, without
limitation, all percentage rents), issues, profits and revenues (including all
oil and gas or other mineral royalties and bonuses) from the Mortgaged Property
(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;
(f) all proceeds of, and any unearned premiums on, any insurance
policies covering the Mortgaged Property, including, without limitation, the
right to receive and apply the proceeds of any insurance, judgments, or
settlements made in lieu thereof, for damage to the Mortgaged Property; and
(g) the right, in the name and on behalf of Borrower, to appear in and
defend any action or proceeding brought with respect to the Mortgaged Property
and to commence any action or proceeding to protect the interest of Lender in
the Mortgaged Property;
TO HAVE AND TO HOLD the Mortgaged Property unto and to the use and benefit
of Lender, and the successors and assigns of Lender, forever to secure the
payment to Lender of the Debt at the time and in the manner provided for its
payment in the Note, in this Mortgage or in the Other Security Documents;
PROVIDED, HOWEVER, these presents are upon the express condition that, if
Borrower shall pay to Lender the Debt at the time and in the manner provided in
the Note, in this Mortgage or in the Other Security Documents, and shall abide
by and comply with each and every covenant and condition set forth herein and
in the Note in a timely manner, these presents and the estate hereby granted
shall cease, terminate and be void, and Lender shall execute and deliver to
Borrower a satisfaction or discharge of this Mortgage, in recordable form.
Borrower hereby represents and warrants to and covenants and agrees with
Lender as follows:
1. Payment of Debt and Incorporation of Covenants, Conditions and Agreements.
Borrower will pay the Debt at the time and in the manner provided in the Note,
this Mortgage and the Other Security Documents. All the covenants, conditions
and agreements contained in: (a) the Note; and (b) all and any documents (other
than the Note, this Mortgage, the Other Loan Documents or the Additional Loan
Documents) (collectively the "Other Security Documents") now or hereafter
executed by Borrower and/or others in favor of Lender, which wholly or
partially secure or guaranty payment of the Note, provide for any indemnity in
favor of or payment to Lender related to the Debt, the Note or the Mortgaged
Property, provide for any escrow/holdback arrangements or for any actions to be
completed by Borrower subsequent to the date hereof, or are otherwise related
to the loan secured by this Mortgage (the "Loan"); are hereby made a part of
this Mortgage to the same
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extent and with the same force as if fully set forth herein. Notwithstanding
anything herein to the contrary, neither this Mortgage nor any of the Other
Security Documents shall secure the payment of any Post-Foreclosure Transfer
Environmental Losses (as defined in that certain Environmental Indemnity
Agreement executed by Borrower in favor of Lender contemporaneously herewith).
2. Warranty of Title. Borrower warrants that Borrower has good title to the
Mortgaged Property and has the right to deed, mortgage, give, grant a security
interest in, bargain, sell, alien, enfeoff, convey, confirm, pledge, assign and
hypothecate the same and that Borrower possesses an unencumbered fee estate in
the Premises and the Improvements and that it owns the Mortgaged Property free
and clear of all liens, encumbrances and charges whatsoever except for those
exceptions shown in the title insurance policy in favor of the Lender insuring
the lien of this Mortgage. Borrower shall forever warrant, defend and preserve
such title and the validity and priority of the lien of this Mortgage to Lender
against the claims of all persons whomsoever.
3. Insurance Requirements.
(a) Borrower, at its sole cost and expense, will keep the Mortgaged
Property insured during the entire term of this Mortgage for the mutual
benefit of Borrower and Lender against loss or damage by fire and against
loss or damage by other risks and hazards covered by a standard extended
coverage insurance policy including, but not limited to, fire, lightning,
windstorm, hail, explosion, riot attending a strike, riot, civil
commotion, aircraft, vehicles, smoke, vandalism, malicious mischief,
burglary and theft, and to the extent required by Lender, earthquake or
any other risks insured against by persons operating like properties in
the locality of the Mortgaged Property. Such insurance shall be in an
amount not less than the lesser of (i) the then full replacement cost of
the Mortgaged Property, without deduction for physical depreciation, or
(ii) the outstanding principal balance of the Debt; but in any event an
amount sufficient to ensure that the insurer issuing said policies would
not deem Borrower a co-insurer under said policies. The policies of
insurance carried in accordance with this paragraph shall be paid annually
in advance and shall contain the "Replacement Cost Endorsement" with a
waiver of depreciation.
(b) Borrower, at its sole cost and expense, for the mutual benefit of
Borrower and Lender, shall also obtain and maintain during the entire term
of this Mortgage the following policies of insurance:
(i) Flood insurance (meeting the current requirement of the
Federal Insurance Administration) if any part of the Mortgaged
Property is located in an area identified by the Federal Emergency
Management Agency as an area having special flood hazards and in
which flood insurance has been made available under the National
Flood Insurance Act of 1968 (and any successor act thereto) in an
amount at least equal to the lesser of (A) the stated principal
amount of the Note; or (B) the maximum amount of coverage
available to the Borrower under the Flood Disaster Protection Act
of 1973 (and any successor act thereto).
(ii) Comprehensive public liability insurance on an "occurrence
basis", in the amount of at least $3,000,000.00 per occurrence,
including broad form property damage, blanket contractual and
personal injuries (including death resulting therefrom) coverages.
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(iii) Business interruption and/or rental loss insurance (for
all losses regardless of cause, and with no exclusions) in an
amount equal to the aggregate annual amount of all rents,
additional rents (including, without limitation, percentage rents)
payable by all of the tenants under the Leases (whether or not
such Leases are terminable in the event of a fire or casualty) and
profits or other income from the Mortgaged Property, which
business interruption insurance and/or rental loss insurance shall
cover such losses for a period of at least twelve (12) months
after the date of the fire or other casualty in question. The
amount of such insurance shall be increased from time to time
during the term of this Mortgage as and when Lender requires, to
reflect all rent, additional rent, increased rent and increased
additional rent payable by all new or renewal tenants, and all
increased profits or other income from the Mortgaged Property.
(iv) Insurance against loss or damage from explosion of steam
boilers, air conditioning equipment, high pressure piping,
machinery and equipment, pressure vessels or similar apparatus now
or hereafter installed in the Improvements (excepting any such
apparatus located within and serving individual residential units
of the Improvements, if any).
(v) Such other insurance as may from time to time be reasonably
required by Lender in order to protect its interests.
(c) All policies of insurance (individually, a "Policy", and
collectively the "Policies") required pursuant to this Mortgage: (i) shall
be issued by an insurer satisfactory to Lender, in its sole discretion;
(ii) shall contain a mortgagee non-contribution clause satisfactory to
Lender, in its sole discretion, naming Lender as the person to which all
payments made by such insurance company shall be paid; (iii) shall be
maintained throughout the term of this Mortgage without cost to Lender;
(iv) shall be assigned and delivered to Lender; (v) shall contain such
provisions as Lender deems necessary or desirable to protect its interest
including, without limitation, endorsements providing that neither
Borrower, Lender nor any other party shall be a co-insurer under said
Policies and that Lender shall receive at least thirty (30) days prior
written notice of any modification, termination or cancellation of the
applicable Policy; and (vi) shall be satisfactory in form and substance to
Lender and shall be approved by Lender as to amounts, form, risk coverage,
deductibles, loss payees and insureds. Borrower shall pay the premiums
for such Policies (the "Insurance Premiums") as the same become due and
payable. Not later than thirty (30) days prior to the expiration date of
each of the Policies, Borrower will deliver to Lender satisfactory
evidence of the renewal of each expiring Policy.
4. Casualty Loss.
(a) If the Mortgaged Property is damaged or destroyed, in whole or in
part, by fire or other casualty (a "Casualty"), Borrower shall give prompt
notice thereof to Lender. Borrower hereby authorizes and empowers Lender
to settle, adjust or compromise any claims for any insurance proceeds
arising from any Casualty (the "Insurance Proceeds"), to receive such
Insurance Proceeds and to retain and apply such Insurance Proceeds as set
forth herein. If no Event of Default (hereinafter defined), or event
which with the giving of notice or passage of time, or both, would give
rise to an Event of Default, has occurred as of the date of the Casualty,
then:
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(i) If the aggregate amount of any Insurance Proceeds resulting
from a Casualty is equal to $15,000.00 or less, such Insurance
Proceeds shall be paid directly to Borrower and shall be applied
by Borrower to the prompt repair and replacement of the Mortgaged
Property;
(ii) If the aggregate amount of any Insurance Proceeds resulting
from a Casualty (or series of related Casualties) exceeds
$15,000.00 and the value of the Mortgaged Property immediately
following such Casualty remains greater than fifty percent (50%)
of its value immediately prior to such Casualty, then all
Insurance Proceeds from such Casualty shall be paid to Lender;
provided, however, that so long as no Event of Default exists and
subject to the requirements set forth herein, Lender shall
disburse such amounts of the Insurance Proceeds (after deduction
for Lender's costs and expenses of collection) as Lender
reasonably deems necessary for the repair or replacement of the
Mortgaged Property, with any balance remaining after such
disbursement being applied by Lender to the Debt in such priority
and proportions as Lender deems proper;
(iii) If the value of the Mortgaged Property immediately
following any Casualty (or series of related Casualties) does not
exceed fifty percent (50%) of its value immediately prior to such
Casualties, then all Insurance Proceeds from such Casualties shall
be paid directly to Lender and Lender, at its discretion: (A) may
declare the entire Debt to be immediately due and payable and
apply all such Insurance Proceeds, after deduction for Lender's
costs and expenses of collection, to the Debt in such priority and
proportions as Lender deems proper; or (B) subject to the
requirements set forth herein, may disburse such amounts of the
Insurance Proceeds as Lender reasonably deems necessary for the
repair or replacement of the Mortgaged Property, with any balance
remaining after such disbursement being applied by Lender to the
Debt in such priority and proportions as Lender deems proper; and
(iv) If no Event of Default (as hereinafter defined) has
occurred, and no event has occurred that with notice and/or the
passage of time, or both, would constitute an Event of default,
then no Prepayment Consideration (as defined in the Note) will be
due with respect to any Insurance Proceeds paid to Lender pursuant
to subclauses (ii) or (iii) above. If an Event of Default has
occurred, or an event has occurred that with notice and/or the
passage of time, or both, would constitute an Event of Default,
then Prepayment Consideration will be due with respect to any
Insurance Proceeds paid to Lender pursuant to Subclauses (ii) and
(iii) above. An Event of Default which existed but which was
completely cured prior to the date of Casualty shall not in itself
give rise to any Prepayment Consideration under this subsection.
(b) All disbursements of any portion of any Insurance Proceeds held by
Lender shall be subject to all terms and conditions deemed necessary by
Lender, including: (i) Lender's receipt of satisfactory requests for
disbursements, paid bills and lien waivers, architect certificates or
other certificates, and certificates or endorsements from title insurance
companies; (ii) Borrower's deposit with Lender of any additional funds
necessary to supplement the Insurance Proceeds, so as to cover, in
advance, the entire cost of the necessary repairs or replacements to the
Mortgaged Property as established by the certificate of an architect or
engineer (employed by Lender at Borrower's expense); (iii) such
architect's or engineer's determination that such repairs or replacements
may be effected within a period
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of six (6) months or less; and (iv) Borrower's prompt and diligent
completion of such repairs or replacements in accordance with plans and
specifications submitted to and approved by Lender. Lender, whether in
possession of the Premises or not, shall not have any obligation to
advance or make funds other than the Insurance Proceeds available for the
repair or replacement of the Mortgaged Property.
5. Payment of Taxes and Other Charges.
(a) Borrower shall pay or cause to be paid and discharged all taxes,
assessments, water rates and sewer rents now or hereafter levied or
assessed or imposed against the Mortgaged Property or any part thereof
(collectively the "Taxes"), and all ground rents, utility charges,
maintenance charges, other governmental impositions, and all other liens
or charges whatsoever which may be or become a lien or charge against the
Mortgaged Property (including without limitation, mechanics and
materialmen's liens, vault charges and license fees for the use of vaults,
chutes and similar areas adjoining the Premises), now or hereafter related
to, or levied, assessed or imposed against, the Mortgaged Property or any
part thereof (collectively the "Other Charges") as the same become due and
payable. Borrower will deliver to Lender, promptly upon Lender's request,
evidence satisfactory to Lender that the Taxes and Other Charges have been
paid prior to the same becoming delinquent.
(b) After prior written notice to Lender, Borrower, at its own expense,
may contest by appropriate legal proceeding, promptly initiated and
conducted in good faith and with due diligence, the amount or validity or
application in whole or in part of any of the Taxes or Other Charges,
provided that: (i) no Event of Default has occurred and shall be
continuing; (ii) Borrower is permitted to do so under the provisions of
any mortgage, deed of trust, ground lease, or other instrument which
creates a superior or junior lien to this Mortgage (it being understood
that no such superior or junior liens will be permitted unless
specifically allowed, in writing, by Lender); (iii) such proceeding shall
be permitted under and be conducted in accordance with the provisions of
any other instrument to which Borrower is subject and shall not
constitute a default thereunder; (iv) neither the Mortgaged Property nor
any part thereof or interest therein will be in danger of being sold,
forfeited, terminated, cancelled or lost; (v) Borrower shall have set
aside adequate reserves (which Lender may at its option require to be
placed in escrow with Lender) for the payment of the Taxes or Other
Charges, together with all interest and penalties; and (vi) Borrower
shall have furnished such security as may be required in the proceeding,
or as may be requested by Lender to insure the payment of any such Taxes
or Other Charges, together with all interest and penalties thereon.
(c) The failure of the Borrower to pay any taxes or assessments assessed
against the Mortgaged Property, or any installment thereof, or any
premiums payable with respect to any insurance policy covering the
Mortgaged Property, shall constitute waste, as provided by Act No. 236 of
the Michigan Public Acts of 1961 as amended (MCL Section 600.2927). The
Borrower further hereby consents to the appointment of a receiver under
said statute, should the Lender elect to seek such relief thereunder.
6. Escrowed Funds. Borrower shall, at the option of Lender or its designee,
pay to Lender or its designee on the first day of each calendar month
one-twelfth of an amount which would be sufficient to pay all Insurance
Premiums, Taxes and Other Charges payable, or estimated by Lender to be
payable, during the next ensuing twelve (12) months. (The aggregate of said
amounts so held
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by Lender is hereinafter called the "Escrowed Funds"). Borrower hereby pledges
to Lender any and all Escrowed Funds now or hereafter held by Lender as
additional security for the payment of the Debt. Lender will apply the Escrowed
Funds to payments of Taxes, Other Charges and Insurance Premiums required to be
made by Borrower pursuant hereto. If the amount of the Escrowed Funds held by
Lender shall exceed the amounts required for the payment of the Taxes, Other
Charges and Insurance Premiums described above, Lender shall, in its discretion,
return any excess to Borrower or credit such excess against future payments to
be made to the Escrowed Funds. In allocating such excess, Lender may deal with
the person shown on the records of Lender to be the owner of the Mortgaged
Property. If, at any time, the Escrowed Funds are not sufficient to pay the
Taxes, Other Charges and Insurance Premiums described above, Borrower shall
promptly pay to Lender, upon demand, an amount which Lender shall estimate as
sufficient to make up the deficiency. Upon the occurrence of an Event of
Default, Lender may apply any Escrowed Funds held by it to the payment of the
following items in any order in its sole discretion:
(i) Taxes and Other Charges;
(ii) Insurance Premiums;
(iii) Interest on the unpaid principal balance of the Note;
(iv) Amortization of the unpaid principal balance of the Note; and
(v) All other sums payable pursuant to the Note, this Mortgage and
the Other Security Documents, including without limitation
advances made by Lender pursuant to the terms of this
Mortgage and any applicable Prepayment Consideration.
Until expended or applied as above provided, the Escrowed Funds shall constitute
additional security for the Debt. The Escrowed Funds shall not constitute a
trust fund and may be commingled with other monies held by Lender. No earnings
or interest on the Escrowed Funds shall be payable to Borrower.
To the extent Borrower timely deposits all required Escrowed Funds with
Lender, Borrower shall be relieved of any further obligation to directly pay, or
to deliver to Lender any evidence of the payment of (prior to their expiration
or delinquency), any Insurance Premiums, Taxes or Other Charges.
7. Condemnation. Borrower shall promptly give Lender written notice of the
actual or threatened commencement of any exercise of a right of condemnation or
eminent domain affecting all or any part of the Mortgaged Property (each such
event being hereinafter referred to as a "Condemnation"), and shall deliver to
Lender copies of any and all papers served in connection with any such
Condemnation. Notwithstanding any taking (including but not limited to any
transfer made in lieu of or in anticipation of the exercise of such taking) of
all or any part of the Mortgaged Property through a Condemnation, Borrower
shall continue to pay the Debt at the time and in the manner provided for its
payment in the Note, this Mortgage and the Other Security Documents, and the
Debt shall not be reduced until any award or payment therefor shall have been
actually received and applied by Lender (after deducting any expenses of
collection) to the Debt. Lender shall not be limited to the rate of interest
paid on any such award or payment from a Condemnation but shall be entitled to
receive out of such award or payment interest at the rate then applicable under
the Note. Borrower shall cause any award or payment payable to Borrower in any
Condemnation to be paid directly to Lender. Lender shall apply any such award
or payment (after deducting any expenses of collection) to the reduction or
discharge of the Debt (whether or not then due and payable). No Prepayment
Consideration shall be payable solely in connection with such application;
provided, however, that notwithstanding the foregoing, if an Event of Default
is existing as of the date of the
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Condemnation, or an event has occurred as of the date of the Condemnation that
with notice and/or the passage of time, or both, would constitute an Event of
Default hereunder, then any Condemnation awards or proceeds applied to the Debt
pursuant to this section shall be subject to the Prepayment Consideration
computed in accordance with the terms of the Note. If the Mortgaged Property is
sold, through foreclosure or otherwise, prior to the receipt by Lender of any
such 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
said award or payment in an amount sufficient to fully satisfy the Debt.
8. Leases and Rents.
(a) Borrower does hereby assign to Lender all current and future Leases
and Rents. Notwithstanding any provision in this Mortgage providing that
an absolute assignment of rents is created, the assignment of rents in
this Mortgage assigns the rents only as security for the indebtedness
evidenced by the Note and the covenants and agreements contained in this
Mortgage, and shall be so construed whenever the contrary intent shall
appear, and whenever possible to carry out the intent of this assignment
of rents. Lender shall be entitled to all of the rights and benefits
conferred, and this assignment of rents shall be governed, by Act 210 of
Michigan Public Acts of 1953 as amended (MCL 554.231 et seq.).
(b) Borrower warrants that: (i) Borrower is the sole owner of the entire
lessor's interest in the Leases; (ii) the Leases are in all material
respects valid and enforceable and have not been altered, modified or
amended in any manner since copies of same were last delivered to Lender;
(iii) none of the Rents reserved in the Leases have been assigned or
otherwise pledged or hypothecated; (iv) none of the Rents have been
collected for more than one (1) month in advance; (v) Borrower has full
power and authority to execute and deliver the Assignment of Rents and
Leases dated of even date herewith from Borrower in favor of Lender (the
"Lease Assignment") and the execution and delivery of the Lease
Assignment has been duly authorized and does not conflict with or
constitute a default under any law, judicial order or other agreement
affecting Borrower or the Mortgaged Property; (vi) 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; (vii) to the best of Borrower's knowledge, there exist
no offsets or defenses to the payment of any portion of the Rents; and
(viii) other than Leases for all or any part of the Mortgaged Property
for residential purposes, for congregate care services or for
mini-warehouse storage rentals (except for storage rentals of ten percent
(10%) or more of the rentable square footage of such storage facility)
(collectively "Residential Leases"), true and correct copies of all
Leases in existence as of the date hereof have been delivered to Lender.
(c) Nothing herein shall be construed to bind Lender to the performance
of any of the covenants, conditions, or provisions contained in any of
the Leases or otherwise to impose any obligation upon Lender. Borrower
agrees to execute and deliver to Lender such additional instruments, in
form and substance satisfactory to Lender, as Borrower may hereinafter
require to further evidence and confirm the Lease Assignment.
(d) With respect to all Leases, Borrower shall: (i) observe and perform
all the obligations imposed upon Borrower as landlord; (ii) not do or
permit to be done anything to impair the value of any of the Leases as
security for the Debt; (iii) other than Residential Leases, promptly send
to Lender copies of all notices of default which Borrower shall send or
receive
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thereunder; (iv) enforce all of the material terms, covenants and
conditions which are to be performed by any tenant, short of termination
thereof; (v) not collect any of the Rents more than one (1) month in
advance; (vi) not execute any other assignment of Borrower's interest in
any of the Leases or the Rents; (vii) execute and deliver at the request
of Lender all such further assurances, confirmations and assignments in
connection with the Mortgaged Property as Lender shall from time to time
require; and (xi) not extend any Lease or enter into any new or renewal
Lease affecting the Mortgaged Property except as allowed pursuant to this
Mortgage and the Lease Assignment.
(e) Without obtaining Lender's prior written approval (which shall not
be unreasonably withheld), Borrower shall not:
(i) extend any Lease or enter into any new or renewal Lease
affecting the Mortgaged Property; provided, however, that no such
approval is required if: (A) such Lease is written on a standard
form of lease approved in writing by Lender with no material
changes to such standard form; (B) all of the terms of such Lease
equal or exceed the requirements set forth in the then applicable
Leasing Report (as defined below); (C) such Lease is an
arm's-length transaction with an unrelated third party tenant; (D)
an executed copy of such Lease (other than Residential Leases,
unless requested by Lender) shall be furnished to Lender within ten
(10) days after its execution; (E) such Lease provides that upon
Borrower's request the tenant thereunder shall subordinate such
Lease to the Mortgage and shall agree to attorn to Lender and such
subordination and attornment shall be evidenced by a written
agreement executed by such tenant in form and substance
satisfactory to Lender;
(ii) other than Residential Leases, consent to any assignment
of or subletting by any tenant under any of the Leases (except in
accordance with the terms of such tenant's Lease);
(iii) alter, modify, change, cancel or terminate any guaranty
of any of the Leases;
(iv) other than Residential Leases, materially alter, modify,
change the terms of, cancel, terminate or accept a surrender of any
of the Leases; or
(v) transfer or permit a transfer of the Mortgaged Property
or of any interest therein, even if such a transfer is permitted
under the Mortgage, if such transfer would effect a merger of the
estates and rights of, or a termination or diminution of the
obligations of, tenants under any of the Leases.
(f) Notwithstanding anything to the contrary contained in Paragraph
8(e), Borrower agrees that: (i) Borrower shall not modify, amend,
supplement or replace the approved standard form of lease referred to in
Paragraph 8(e)(i) without Lender's prior written approval, which approval
shall not be unreasonably withheld; and (ii) Borrower shall not enter
into, materially modify, extend, renew or terminate any Lease in respect
of forty (40%) percent or more of the rentable space at the Mortgaged
Property without Lender's prior written approval, which approval may be
withheld or granted in Lender's sole discretion. Any request for approval
under this Paragraph 8(f) shall be made in accordance with Paragraph 40
hereof.
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(g) Lender shall not be liable for any loss sustained by Borrower
resulting from Lender's failure to let the Mortgaged Property after an
Event of Default or from any other act or omission of Lender in managing
the Mortgaged Property after an Event of Default unless such loss is
caused by the willful misconduct and bad faith of Lender. Lender shall
not be obligated to perform or discharge any obligation, duty or liability
under the Leases or under or by reason of this Mortgage or the Lease
Assignment. Borrower hereby agrees to hold Lender harmless from any and
all liability, loss or damage (including attorney fees and the costs of
defense) from any and all claims and demands whatsoever asserted against
Lender pursuant to the Leases, this Mortgage or the Lease Assignment,
including, without limitation, any claims or demands related to any
alleged obligations or alleged undertakings on Lender's part to perform or
discharge any of the terms, covenants or agreements contained in the
Leases. Borrower shall reimburse Lender immediately upon demand for the
amount of any such liability, loss or damage, the payment of which shall
be secured by this Mortgage, the Lease Assignment and by the Other
Security Documents. Upon the failure of Borrower to reimburse Lender,
Lender may, at its option, declare the entire Debt immediately due and
payable. Nothing contained herein or in the Lease Assignment shall
obligate or make Lender liable for (i) the control, care, management or
repair of the Mortgaged Property, (ii) the carrying out of any of the
terms and conditions of the Leases, (iii) any waste committed on the
Mortgaged Property by the tenants or any other parties, (iv) any dangerous
or defective condition of the Mortgaged Property, including without
limitation the presence of any Hazardous Substances (as defined in the
Mortgage), or (v) any negligence in the management, upkeep, repair or
control of the Mortgaged Property resulting in loss or injury or death to
any tenant, licensee, employee or stranger.
9. Maintenance, Use and Management of Mortgaged Property.
(a) Borrower shall cause the Mortgaged Property to be maintained in a
good and safe condition and repair. The Improvements and the Equipment
shall not be removed, demolished or materially altered (except for normal
replacement of the Equipment) without the consent of Lender, not to be
unreasonably withheld. Borrower shall promptly comply with all laws,
orders and ordinances affecting the Mortgaged Property, or the use
thereof, except that Borrower shall be permitted to contest any change or
proposed change thereto under the same terms and conditions as permitted
in paragraph 5(b), above. Borrower shall promptly repair, replace or
rebuild any part of the Mortgaged Property which may be destroyed by any
Casualty, become damaged, worn or dilapidated or which may be affected by
any Condemnation, and shall also complete and pay for any structure at any
time in the process of construction or repair on the Premises. Unless
Lender otherwise consents in writing, Borrower shall not initiate, join
in, acquiesce in or consent to any change in any private restrictive
covenant, replat, easement, zoning law or other public or private
restriction, limiting or defining the uses which may be made of the
Mortgaged Property or any part thereof. If under applicable zoning
provisions the use of all or any portion of the Mortgaged Property is or
shall become a nonconforming use, Borrower will not cause or permit such
nonconforming use to be discontinued or abandoned without the express
written consent of Lender.
(b) Borrower shall use and continuously operate and permit the use and
continuous operation of the Premises and the Improvements as provided for
in Borrower's original loan application to Lender.
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(c) Unless Lender otherwise consents in writing, Borrower shall not
initiate, join in, acquiesce in or consent to the removal or resignation
of the managing agent for the Mortgaged Property or the transfer of
ownership, management or control of such managing agent to a person or
entity other than Borrower or the general partner or managing partner of
Borrower.
10. Sale of Mortgaged Property or Change in Borrower.
(a) Borrower acknowledges that Lender has examined and relied on the
creditworthiness and experience of Borrower in agreeing to make the loan
secured hereby, and that Lender has a valid interest in maintaining the
value of the Mortgaged Property so as to ensure that should Borrower
default in the repayment of the Debt, Lender can recover the Debt by a
sale of the Mortgaged Property.
(b) Borrower may not Transfer (hereinafter defined) the Mortgaged
Property, nor allow any Change in Ownership (hereinafter defined), unless
all of the following conditions shall have been satisfied: (i) Lender has
received Borrower's written request for a Transfer, or for a Change in
Ownership (or any other request resulting in a new obligor under the
Loan) and Lender shall have expressly approved such request in writing,
subject to the satisfaction of all requirements hereunder; (ii) no Event
of Default has occurred and is continuing; (iii) the proposed new
owner/assignee of the Mortgaged Property (the "New Borrower") meets all
of the Lender's Underwriting Standards (hereinafter defined); (iv) the
Mortgaged Property meets all of the Lender's Underwriting Standards
related to its financial condition, cash flow, operating income, physical
condition, management and operation; (v) Borrower reimburses Lender for
all underwriting costs incurred by Lender in connection with such
Transfer or Change in Ownership (including without limitation,
engineering and/or architect's fees, environmental studies, title
searches, credit checks, attorney fees), whether or not any requested
Transfer or Change in Ownership is approved or consummated; (vi) Borrower
remits to Lender an assumption fee in the amount of one percent (1%) of
the outstanding balance of the Debt as of the date of such Transfer or
Change in Ownership, not as a penalty, but as compensation to Lender for
administrative costs and loss of Prepayment Consideration. A failure to
comply with any of the terms of this paragraph 10 shall constitute an
Event of Default, and Lender may then declare the entire Debt immediately
due and payable upon any such Transfer or Change in Ownership.
(c) "Lender's Underwriting Standards" shall mean the actual commercial
loan underwriting standards of Midland Loan Services, L.P. (or any
successor entity that is then servicing the Loan) in effect at the time
of the proposed Transfer or Change in Ownership, or, if no such standards
exist, such standards which are then customary for a commercial lender in
connection with a mortgage loan of the size and type of the Borrower's
loan from Lender secured hereby.
(d) A "Transfer" is defined as any sale, conveyance, alienation,
mortgage, encumbrance, pledge or other transfer of the Mortgaged Property
or any part thereof or interest therein, whether voluntary or involuntary
or otherwise. Without limiting the generality of the foregoing, a
Transfer is deemed to include: (i) an installment sales agreement wherein
Borrower agrees to sell the Mortgaged Property or any part thereof for a
price to be paid in installments; (ii) an agreement by Borrower leasing
all or a substantial part of the Mortgaged Property for other than actual
occupancy by a space tenant thereunder; or (iii)
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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.
(e) A "Change in Ownership" is defined as follows: (i) if Borrower, any
Guarantor (hereinafter defined), or any general partner in Borrower or any
Guarantor is a corporation, the voluntary or involuntary sale, conveyance
or transfer of any of such corporation's stock (or any of the stock of any
corporation directly or indirectly controlling such corporation by
operation of law or otherwise), or the creation or issuance of any new
stock in one or a series of transactions, by which an aggregate of more
than forty percent (40%) any of such corporation's stock shall be vested
in a party or parties who are not now stockholders (where appropriate, a
corporation shall be deemed to include a limited liability company, co-op,
business trust, joint venture or other entity, and the rules applicable to
shares of stock will apply with equal force to membership shares or
similar indicia of ownership, or actual ownership interest in these other
entities); and (ii) if Borrower, any Guarantor or any general partner of
Borrower or any Guarantor is a limited or general partnership or joint
venture, the change, removal or resignation of a general partner or
managing partner. Except as set forth above, involuntary changes in
ownership resulting from a death or physical or mental disability shall
not be considered a Change in Ownership.
(f) Borrower shall be released from liability for the Debt only after:
(i) all conditions for a Transfer or Change in Ownership have been
satisfied; (ii) all security documents deemed necessary by Lender have
been executed, delivered, recorded and perfected; (iii) Lender has
received a policy of title insurance (or similar assurance) reflecting the
new ownership and the priority and perfection of Lender's security; (iv)
the New Borrower has assumed all required personal liability; and (v) all
other reasonable requirements of Lender are satisfied.
11. No Other Encumbrances Permitted. Except for financing liens placed
against the Borrower's inventory in the normal course of business, Borrower
shall not, directly or indirectly, mortgage, pledge, hypothecate, encumber,
assign or otherwise place a lien or security interest against the Mortgaged
Property without in each instance obtaining the prior written consent of Lender,
which consent may be given or withheld by Lender in each instance in its sole
discretion. If Lender does consent to any additional mortgages or liens, it may
require the modification of this Mortgage, payment of an administrative fee in
an amount determined by Lender and such other conditions as Lender shall
determine in its sole discretion. 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 such encumbrance.
This provision shall apply to every sale, conveyance, alienation, mortgage,
encumbrance, pledge or transfer of the Mortgaged Property regardless of whether
voluntary or not, or whether or not Lender has consented to any previous sale,
conveyance, alienation, mortgage, encumbrance, pledge or transfer of the
Mortgaged Property.
12. Estoppel Certificates and No Default Affidavits.
(a) After request by Lender, Borrower shall within ten (10) business
days furnish Lender with a statement, duly acknowledged and certified by
Borrower, setting forth: (i) the amount of the original principal amount
of the Note; (ii) the unpaid principal amount of the Note; (iii) the rate
of interest of the Note; (iv) the date installments of interest and/or
principal were last paid; (v) any offsets or defenses to the payment of
the Debt, if any; and (vi) that the Note, this Mortgage and the Other
Security Documents are valid, legal and binding obligations and have not
been modified, or if modified, giving particulars of such modification.
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(b) Within ten (10) business days after request by Lender, Borrower will
furnish Lender with estoppel certificates, in form and content
satisfactory to Lender, from all tenants specified by Lender (other than
tenants under Leases for residential purposes, congregate care services or
mini-warehouse storage rentals (unless such storage rental exceeds ten
percent (10%) of the rentable square footage of such storage facility)
(collectively "Residential Leases")), or, if any tenant fails to provide
such estoppel certificate, Borrower shall provide a certificate with
respect to the tenancy of such tenant, in form and substance satisfactory
to Lender.
13. Cooperation. Borrower acknowledges that Lender and its successors and
assigns may: (a) sell or assign this Mortgage, the Note and any of the Other
Security Documents to one or more investors as a whole loan; (b) sell or assign
a participation interest in the Debt to one or more investors; (c) deposit this
Mortgage, the Note and any of the Other Security Documents with a trust, which
trust may sell certificates to investors evidencing an ownership interest in
the trust assets; or (d) otherwise sell or assign the Debt, the Note, this
Mortgage and any of the Other Security Documents, or any interest therein to
investors (the transactions referred to in subparagraphs (a) through (d) above
are hereinafter referred to as "Secondary Market Transactions"). Borrower
shall cooperate in good faith with Lender in effecting any such Secondary
Market Transaction and in addressing such matters as any party involved in a
Secondary Market Transaction may require, including the provision of such
information and documents relating to Borrower, any Guarantors, the Mortgaged
Property and any tenants of the Improvements as Lender may reasonably request
in connection with a Secondary Market Transaction. Lender shall have the right
to provide to prospective investors any information in its possession,
including, without limitation, financial statements relating to Borrower, any
Guarantors, the Mortgaged Property and any tenant of the Improvements.
Borrower acknowledges that certain information regarding the Loan and the
parties thereto and the Mortgaged Property may be included in a private
placement memorandum, prospectus or other disclosure documents.
14. Books and Records; Reporting Requirements.
(a) Borrower and Guarantor(s), if any, shall keep complete and accurate
books and records of account in accordance with generally accepted
accounting principles consistently applied. Borrower shall deliver, or
cause to be delivered, the reports and financial statements described
below, all in form acceptable to Lender (collectively the "Reports"),
within the time period required.
(i) Within ninety (90) days after the close of each fiscal year of
Borrower, Borrower shall deliver, or cause to be delivered to
Lender: (A) an annual rent roll, certified by the Borrower's chief
financial officer (or other person acceptable to Lender); (B) an
annual operating statement of the Mortgaged Property, certified by
the Borrower's chief financial officer (or other person acceptable
to Lender); and (C) an annual balance sheet and profit and loss
statement of Borrower certified by the Borrower's chief financial
officer (or other person acceptable to Lender).
(ii) Within ninety (90) days after the close of the separate
individual fiscal years of any Guarantor, Borrower shall deliver,
or cause to be delivered to Lender, an annual balance sheet and
profit and loss statement of each Guarantor, if any, certified by
such Guarantor's chief financial officer (or other person
acceptable to Lender).
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(iii) Within thirty (30) days after the close of each calendar
quarter, Borrower shall deliver, or cause to be delivered the
following, all to be certified by the Borrower's chief financial
officer (or other person acceptable to Lender): (A) a quarterly rent
roll; (B) a quarterly operating statement of the Mortgaged Property;
(C) a quarterly balance sheet and profit and loss statement of
Borrower.
(b) Annually, no later than each February 1 during the term of the Note,
Borrower shall deliver to Lender, for Lender's approval in its sole
discretion, a report (the "Leasing Report") setting forth the minimum
economic terms which Borrower proposes for use in connection with the
standard lease form for Leases of portions of the Mortgaged Property
during the twelve month period beginning upon such anniversary date. The
terms set forth in the Leasing Report shall reflect the prevailing market
conditions for like properties in the locality of the Mortgaged Property.
(c) Borrower shall supplement the required Reports and Leasing Reports
and provide such other financial information in respect of Borrower, any
Guarantor and the Mortgaged Property as Lender, from time to time, may
request. Borrower acknowledges that, without timely delivery of complete
and accurate Reports and Leasing Reports, Lender may not be able to
execute a Secondary Market Transaction. Borrower agrees that failure to
timely deliver any of the Reports or the Leasing Reports shall be an
Event of Default hereunder.
15. 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 Mortgaged
Property.
16. 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
assignment, transfers and assurances as Lender shall, from time to time,
require for the better assuring, conveying, assigning, transferring and
confirming unto Lender the property and rights hereby mortgaged, warranted,
given, granted, bargained, sold, alienated, enfeoffed, conveyed, confirmed,
pledged, assigned and hypothecated 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 intent of or facilitating the performance of
the terms of this Mortgage or for filing, registering or recording this
Mortgage. 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 or perfect more effectively
the security interest of Lender in the Mortgaged 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 under the Note, this Mortgage, the Other Security Documents, at law
or in equity, including without limitation the rights and remedies described in
this paragraph.
17. Recording of Mortgage, etc. Upon the execution and delivery of this
Mortgage and thereafter, from time to time, Borrower shall cause this Mortgage,
the Lease Assignment and any other instrument creating or evidencing a lien or
security interest in Lender's favor upon the Mortgaged Property, and each
instrument of further assurance 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 protect Lender's interest in and lien or
security interest upon the Mortgaged Property. Except where otherwise
prohibited by law, Borrower will pay all filing, registration or recording
fees,
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`
and all expenses incident to the preparation, execution, acknowledgment,
and subsequent release or reconveyance of this Mortgage and the Note, any deed
of trust or mortgage supplemental hereto, any security instrument with respect
to the Mortgaged Property, any instrument of further assurance and all federal,
state, county and municipal, taxes, duties, imposts, assessments and charges
arising out of or in connection with the same. Borrower shall hold harmless
and indemnify Lender, its successors and assigns, against any liability
incurred by reason of the imposition of any tax on the making and recording of
this Mortgage.
18. Prepayment. The Debt may only be prepaid in accordance with the terms of
the Note.
19. Events of Default. The Debt shall become immediately due and payable at
the option of Lender, without notice or demand, upon the occurrence of any one
or more of the followings events ("Events of Default"):
(a) if Borrower fails to make the full and punctual payment of any
amount payable pursuant to the Note or hereunder on a monthly basis, which
failure is not cured on or before the fifth (5th) day after written notice
from Lender to Borrower of such failure;
(b) if Borrower fails to pay the entire outstanding principal balance of
the Note, together with all accrued and unpaid interest, on the date when
due, whether on the Maturity Date (as defined in the Note), or upon
acceleration, or on the Prepayment Date (as defined in the Note);
(c) if Borrower fails to make the full and punctual payment of any
portion of the Debt (other than payments described in subparagraphs (a)
and (b) immediately above) which failure is not cured on or before the
twentieth (20th) day after written notice from Lender to Borrower of such
failure;
(d) if Borrower fails to make the full and punctual payment of Taxes or
Other Charges as required hereby;
(e) if Borrower fails to keep the Policies of insurance required hereby
in full force and effect, or fails to promptly deliver copies thereof to
Lender upon request;
(f) if a Transfer or a Change in Ownership occurs in violation of the
provisions of this Mortgage, or if Borrower violates or does not comply
with the provisions of the Lease Assignment, or paragraphs 37 or 39 of
this Mortgage;
(g) if any representation or warranty of Borrower, or of any person
guaranteeing payment of the Debt or any portion thereof or performance by
Borrower of any of the terms of this Mortgage, the Note or the Other
Security Documents (a "Guarantor"), made herein, in 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;
(h) if Borrower shall make an assignment for the benefit of creditors or
if Borrower is not paying debts as and when the same become due;
(i) if a receiver, liquidator or trustee of Borrower shall be appointed
or if Borrower is adjudicated bankrupt or insolvent, or if any petition
for bankruptcy, reorganization or
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arrangement pursuant to federal bankruptcy law, or any similar federal or
state law, shall be filed by or against, consented to, or acquiesced in
by, Borrower or if any proceeding for the dissolution or liquidation of
Borrower shall be instituted; however, if such appointment, adjudication,
petition or proceeding was involuntary and not consented to by Borrower,
then upon the same not being discharged, stayed or dismissed within sixty
(60) days;
(j) if Borrower shall be in default under any other deed of trust,
mortgage or security agreement covering any part of the Mortgaged
Property whether it be superior or junior in priority to this Mortgage
(it not being implied by this clause that any such encumbrance will be
permitted);
(k) if the Mortgaged 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 due and payable, or any lien being
contested by Borrower pursuant to its rights hereunder) and such lien
shall remain undischarged of record (by payment, bonding or otherwise)
for a period of thirty (30) calendar days;
(l) if Borrower fails to promptly and diligently cure any material
violations of laws or ordinances affecting the Mortgaged Property; or
(m) if for more than thirty (30) days after written notice from Lender,
Borrower shall fail to perform any other term, covenant or condition of
the Note, this Mortgage or any of the Other Security Documents; provided,
however, that if such failure to perform is of a type which cannot be
cured within such thirty (30) day period and Borrower diligently
commences and prosecutes such cure, Lender shall allow a reasonable
additional time period (not to exceed sixty (60) additional days) to
complete such cure.
20. Default Interest. Upon the occurrence of any Event of Default (including,
without limitation, the failure of Borrower to pay the Debt in full on the
Maturity Date), Borrower shall pay interest on the unpaid principal balance of
the Note at the Default Rate (as defined in the Note).
21. Right to Cure Defaults. Upon the occurrence of any Event of Default, or
if Borrower fails to make any payment or to do any act as herein required,
Lender may do such acts or make such payments in Borrower's stead, in such
manner and to the extent that Lender may deem necessary to protect the security
hereof. Any such acts or payments by Lender shall be at Lender's sole
discretion, may be taken without notice to or demand on Borrower, and will not
release Borrower from any obligation hereunder. Lender is authorized to enter
upon the Mortgaged Property for such purposes, or appear in, defend or bring any
action or proceeding to protect its interest in the Mortgaged Property, to cause
this Mortgage to be foreclosed or to collect the Debt. All such costs and
expenses (including attorney fees) incurred by Lender in remedying any such
Event of Default, in acting or making payments in Borrower's stead, or in
appearing in, defending or bringing any of the foregoing actions or proceedings,
shall bear interest at the Default Rate from the date incurred by Lender until
the date of payment to Lender. All such costs and expenses incurred by Lender
together with interest thereon calculated at the above rate shall be deemed to
constitute a portion of the Debt and be secured by this Mortgage and the Other
Security Documents and shall be immediately due and payable upon demand by
Lender therefor.
22. Prepayment After Event of Default. If following the occurrence of any
Event of Default, Borrower shall tender payment of an amount sufficient to
satisfy the Debt at any time prior to a sale
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of the Mortgaged Property, either through foreclosure or the exercise of other
remedies available to Lender under this Mortgage or the Other Security
Documents, such tender by Borrower shall be deemed to be a voluntary prepayment
under the Note and all applicable Prepayment Consideration shall be immediately
due and payable.
23. Lender's Remedies.
(a) Upon the occurrence of any Event of Default, 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 Mortgaged Property,
including, without limitation, the following actions:
(i) declare the entire Debt to be immediately due and payable;
(ii) institute proceedings to foreclose this Mortgage, in which
case the Mortgaged 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 in any order or manner;
(iii) with or without entry, to the extent permitted and pursuant
to the procedures provided by applicable law, institute proceedings
for the partial foreclosure of this Mortgage for the portion of the
Debt then due and payable, subject to the continuing lien of this
Mortgage for the balance of the Debt not then due;
(iv) institute an action, suit or proceeding in equity for the
specific performance of any covenant, condition or agreement
contained herein, in the Note or the Other Security Documents;
(v) recover judgment on the Note either before, during or after
any proceedings for the enforcement of this Mortgage;
(vi) apply for the appointment of a trustee, receiver, liquidator
or conservator of the Mortgaged Property, without notice and without
regard for the adequacy of the security for the Debt or the solvency
of the Borrower, any Guarantor or of any person, firm or other
entity liable for the payment of the Debt;
(vii) enforce Lender's interest in the Leases and Rents and enter
into or upon the Mortgaged Property, either personally or by its
agents, nominees or attorneys and dispossess Borrower and its
agents and servants therefrom, and thereupon Lender may: (A) use,
operate, manage, control, insure, maintain, repair, restore and
otherwise deal with all and every part of the Mortgaged Property
and conduct the business thereat; (B) complete any construction on
the Mortgaged Property in such manner and form as Lender deems
advisable; (C) make alterations, additions, renewals, replacements
and improvements to or on the Mortgaged Property; (D) exercise all
rights and powers of Borrower with respect to the Mortgaged
Property, whether in the name of Borrower or otherwise, including,
without limitation, the right to make, cancel, enforce or modify
Leases, obtain and evict tenants, and demand, sue for, collect and
receive all earnings, revenues, rents, issues, profits and other
income of the Mortgaged Property and every part thereof; and (E)
apply the receipts from the Mortgaged Property to the payment of
the Debt, after deducting therefrom all expenses (including
reasonable attorney fees) incurred in connection with the
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aforesaid operations and all amounts necessary to pay the Taxes,
assessments, Insurance Premiums and Other Charges in connection with
the Mortgaged Property, as well as just and reasonable compensation
for the services of Lender, its counsel, agents and employees; or
(viii) pursue such other rights and remedies as may be available
at law and in equity.
In the event of a sale, by foreclosure or otherwise, of less than all of
the Mortgaged Property, this Mortgage shall continue as a lien on the
remaining portion of the Mortgaged Property.
(b) Upon the completion of any sale or sales made under or by virtue of
this Mortgage, an officer of any court empowered to do so shall execute
and deliver to the purchaser or purchasers a good and sufficient
instrument, or good and sufficient instruments, conveying, assigning and
transferring all estate, right, title and interest in and to the property
and rights sold. Lender is hereby irrevocably appointed the true and
lawful attorney of Borrower, in its name and stead, to make all necessary
conveyances, assignments, transfers and deliveries of the Mortgaged
Property and rights so sold, and for that purpose Lender may execute all
necessary instruments of conveyance, assignment and transfer, and may
substitute one or more persons with like power, Borrower hereby ratifying
and confirming all that Lender shall lawfully do by virtue hereof. Any
such sale or sales made under or by virtue of this Mortgage pursuant to
any proceedings to foreclose this Mortgage or any judgment or decree of
foreclosure and sale, shall operate to divest all the estate, right,
title, interest, claim and demand whatsoever, whether at law or in
equity, of Borrower in and to the properties and rights so sold, and
shall be a perpetual bar both at law and in equity against Borrower and
against any all persons claiming or who may claim the same, or any part
thereof from, through or under Borrower.
(c) Upon any sale made under or by virtue of this Mortgage pursuant to
any proceedings to foreclose this Mortgage or any judgment or decree of
foreclosure and sale, Lender may bid for and acquire the Mortgaged
Property or any part thereof and in lieu of paying cash therefor may make
settlement for the purchase price by crediting upon the Debt the net
sales price after deducting therefrom (to the extent allowed by
applicable law) the expenses of the sale and costs of the action and any
other sums which Lender is authorized to deduct under this Mortgage.
(d) No recovery of any judgment by Lender and no levy of an execution
under any judgment upon the Mortgaged Property or upon any other property
of Borrower shall affect in any manner or to any extent the lien of this
Mortgage upon the Mortgaged Property or any part thereof, or any liens,
rights, powers or remedies of Lender hereunder, but such liens, rights,
powers and remedies of Lender shall continue unimpaired as before.
24. Additional Lender's Remedies. If an Event of Default shall have occurred,
Lender shall have the following rights and remedies, which shall be in addition
to and not in limitation of any other rights and remedies set forth in this
Mortgage:
(a) Lender may commence foreclosure proceedings against the
Mortgaged Property, as an entirety (including personal property) or
otherwise as the Lender may determine, through judicial proceedings
or by advertisement, at the option of the
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Lender, pursuant to the statutes in such case made and provided, and sell
the Mortgaged Property or cause the same to be sold at public sale and
convey the same to the purchaser, in accordance with said statutes, in a
single parcel or in several parcels at the option of the Lender. By
execution of this Mortgage, Borrower has granted to Lender the power to
sell and convey any or all of the Mortgaged Property at public sale in
accordance with the statutes providing therefor, or as otherwise provided
herein. Borrower agrees that no notice of any sale other than as
specifically required by applicable law need be given by Lender or any
other person. Lender shall have the privilege of selling the Mortgaged
Property together or in lots or parcels, as to it shall seem expedient,
and shall receive the proceeds of such sale;
(b) Lender may collect and receive all earnings, revenues, rents,
issues, profits and income of the Mortgaged Property and every part
thereof, all of which shall for all purposes constitute property of the
Lender; and after deducting the expenses of conducting the business
thereof and of all maintenance, repairs, renewals, replacements,
alterations, additions, betterments and improvements and amounts necessary
to pay for taxes, assessments, insurance and prior or other proper charges
upon the Mortgaged Property or any part thereof, as well as just and
reasonable compensation for the services of the Lender and for all
attorneys, counsel, agents, clerks, servants and other employees properly
engaged and employed by Lender, the Lender shall apply the monies arising
as aforesaid to the Debt in such manner and order as Lender shall
determine in its sole and absolute discretion. In connection with the
Lender's right to possession of the Mortgaged Property the Borrower
acknowledges that it has been advised that there is a significant body of
law in Michigan which purportedly provides that in the absence of a
showing of waste of a character sufficient to endanger the value of the
Mortgaged Property (or of other special factors) a person in the role of
the Borrower is entitled to remain in possession of the Mortgaged Property
and to enjoy the earnings, revenues, rents, issues, profits and income of
the Mortgaged Property during the pendency of foreclosure proceedings and
until the expiration of the redemption period, notwithstanding that the
mortgage expressly provides to the contrary. The Borrower further
acknowledges that it has been advised that the Lender considers that the
value of the security granted hereby is inextricably intertwined with the
effectiveness of the management, maintenance and general operation of the
Mortgaged Property and that the Lender would not make the loan secured
hereby unless it could be assured that it would have the right to take
possession of the Mortgaged Property and manage or control management
thereof and enjoy the earnings, revenues, rents, issues, profits and
income of the Mortgaged Property therefrom immediately upon an Event of
Default notwithstanding that foreclosure proceedings may not have been
instituted or are pending or that the redemption period, if any, may not
have expired. The Borrower hereby knowingly, intelligently and
voluntarily waives all rights to possession of the Mortgaged Property from
and after the occurrence of an Event of Default and upon demand for
possession by the Lender the Borrower agrees not to assert any objection
or defense to the Lender's request or to petition to a court for
possession, and hereby consents to the appointment of a receiver for the
Mortgaged Property. The rights hereby conferred upon the Lender have been
agreed upon prior to the occurrence of an Event of Default and the
exercise by the Lender of these rights shall not be deemed to put the
Lender in the status of a "mortgagee in possession". The
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Borrower acknowledges that this provision is material to this
transaction and that the Lender would not make the loan secured hereby
but for this Paragraph 24(b);
(c) To the extent permitted by applicable law, the Lender shall have all
of the remedies of a secured party under the Uniform Commercial Code (as
defined herein), including, without limitation, the right and power to
sell, or otherwise dispose of, the Collateral (as defined herein), or any
part thereof, and for that purpose may take immediate and exclusive
possession of the Collateral, or any part thereof, and with or without
judicial process, enter upon any premises on which the Collateral, or any
part thereof, may be situated and remove the same therefrom without being
deemed guilty of trespass and without liability for damages thereby
occasioned, or at the Lender's option, the Borrower shall assemble the
Collateral and make it available to the lender at the place and at the
time designated in the demand. The Lender shall be entitled to hold,
maintain, preserve and prepare the Collateral for sale. To the extent
permitted by law, the Borrower expressly waives any right or remedy of the
Lender existing after default hereunder, other than notice of sale or
other disposition of the Collateral required by law, and the Borrower
agrees that as it relates to this Paragraph 24(c) only, if such notice is
mailed, postage prepaid, to the Borrower at the above address at least
five (5) days before the time of the sale or disposition, such notice
shall be deemed reasonable and shall fully satisfy any requirement for
giving of said notice; or
(d) Lender may receive and collect the rents, issues, profits and
revenues of the Mortgaged Property personally or through a receiver so
long as such Event of Default shall exist and during the pendency of any
foreclosure proceedings and during any redemption period, and the Borrower
agrees to consent to a receiver if this is believed necessary or desirable
by the Lender to enforce its rights hereunder. The Lender shall be
entitled to all of the rights and benefits conferred by Act No. 210 of the
Michigan Public Acts of 1953 as amended by Act No. 151 of the Michigan
Public Acts of 1966 (MCL Section E554.231 et seq.). The collection of
rents, issues, profits or revenues of the Mortgaged Property by the Lender
shall in no way waive the right of the Lender to foreclose this Mortgage
in the event of any said Event of Default.
25. Late Charges. If any portion of the Debt is not actually received by
Lender by close of business on the tenth (10th) day after the date on which it
was due, Borrower shall pay to Lender an amount (the "Late Charge") equal to
the lesser of five percent (5%) of such unpaid portion of the Debt or the
maximum amount permitted by applicable law, to defray the expenses incurred by
Lender in handling and processing such delinquent payment and to compensate
Lender for the loss of the use of such delinquent payment. All such Late
Charges shall be automatically due and payable without any notice or demand and
shall be secured by this Mortgage and the Other Security Documents.
26. Changes in the Laws Regarding Taxation. If any law is enacted or adopted
or amended after the date of this Mortgage which deducts the Debt from the
value of the Mortgaged Property for the purpose of taxation or which imposes a
tax, either directly or indirectly, on the Debt or Lender's interest in the
Mortgaged Property, Borrower will pay such tax, with interest and penalties
thereon, if any. In the event Lender is advised by counsel chosen by it that
the payment of such tax or interest and penalties by Borrower would be unlawful
or taxable to Lender or unenforceable or provide the basis for a defense of
usury, then in any such event, Lender shall have the option, by
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written notice of not less than ninety (90) days, to declare the entire Debt
immediately due and payable; provided, however, that no Prepayment Consideration
shall be required solely as a result of a prepayment required by any such
declaration.
27. No Credits on Account of the Debt. 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 Mortgaged Property, or any part
thereof, and no deduction shall otherwise be made or claimed from the assessed
value of the Mortgaged Property, or any part thereof, for real estate tax
purposes by reason of this Mortgage or the Debt. In the event 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 entire Debt
immediately due and payable; provided, however, that no Prepayment Consideration
shall be required solely as a result of a prepayment required by any such
declaration.
28. Documentary Stamps. If at any time the United States of America, any
State thereof or any subdivision of any such State shall require revenue or
other stamps to be affixed to the Note or this Mortgage, or impose any other tax
or charge on the same, Borrower will pay for the same, with interest and
penalties thereon, if any.
29. Usury Laws. This Mortgage, the Other Security Documents 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 or any other charges at a rate which could
subject Lender to either civil or criminal liability as a result of being in
excess of the maximum interest rate which Borrower is permitted by law to
contract or agree to pay. If by the terms of this Mortgage, the Other Security
Documents or the Note, Borrower is at any time required or obligated to pay any
such amounts at a rate in excess of such maximum rate, the rate of interest
under 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
previous payments in excess of such maximum rate shall be deemed to have been
payments in reduction of the principal and not on account of the interest due
hereunder.
30. Right of Entry. Lender and its agents shall have the right to enter and
inspect the Mortgaged Property at all reasonable times.
31. Reasonable Use and Occupancy. In addition to the rights which Lender may
have herein, upon the occurrence of any Event of Default, Lender, at its
option, may require Borrower to pay monthly in advance to Lender, or any
receiver appointed to collect the Rents, the fair and reasonable rental value
for the use and occupation of such part of the Mortgaged Property as may be
occupied by Borrower, or may require Borrower to vacate and surrender
possession of the Mortgaged Property to Lender or to such receiver and, in
default thereof, Borrower may be evicted by summary proceedings or otherwise.
32. Security Agreement. This Mortgage is both a real property mortgage and a
"security agreement" within the meaning of the Uniform Commercial Code adopted
and enacted by the State or States where any of the Mortgaged Property is
located (the "Uniform Commercial Code"), made by and between Borrower, as
debtor, and Lender, as secured party. Borrower by executing and delivering
this Mortgage has granted and hereby grants to Lender, as security for the
Debt, a security interest in the Mortgaged Property to the full extent that the
Mortgaged Property may be subject to the Uniform Commercial Code (said portion
of the Mortgaged Property so subject to the Uniform Commercial Code being
herein referred to as the "Collateral"). If an Event of Default shall occur,
Lender, in addition to any other rights and remedies which it may have, shall
have and may exercise
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immediately and without demand 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, the right to take possession of the
Collateral or any part thereof, and to take such other measures as Lender may
deem necessary for the care, protection and preservation of the Collateral.
Upon request or demand of Lender, Borrower shall at its expense assemble the
Collateral and make it available to Lender at a convenient place acceptable to
Lender. Borrower shall pay to Lender on demand any and all expenses, including
legal expenses and attorney fees, incurred or paid by Lender in protecting the
interest in the Collateral and in enforcing Lender's rights hereunder with
respect to the Collateral. Any notice of sale, disposition or other intended
action by Lender with respect to the Collateral sent to Borrower in accordance
with the provisions hereof at least five (5) days prior to such action, shall
constitute commercially reasonable notice to Borrower. The proceeds of any
disposition of the Collateral, or any part thereof, may be applied by Lender to
the payment of the Debt in such priority and proportions as Lender in its
discretion shall deem proper.
33. Actions and Proceedings. Lender has 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 Borrower, which
Lender, in its discretion, decides should be brought to protect its interest in
the Mortgaged Property. Lender shall, at its option, be subrogated to the lien
of any deed of trust, mortgage or other security instrument discharged in whole
or in part by the Debt, and any such subrogation rights shall constitute
additional security for the payment of the Debt.
34. 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, and, to the extent permitted by
law, waives trial by jury in any action or proceeding brought by either party
hereto against the other or in any counterclaim asserted by Lender against
Borrower, or in any matters whatsoever arising out of or in any way connected
with this Mortgage, the Note, any of the Other Security Documents or the Debt.
35. 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.
36. Marshalling and Other Matters. Borrower hereby waives, to the extent
permitted by law, the benefit of all appraisement, valuation, stay, extension,
reinstatement, redemption and similar laws now or hereafter in force and all
rights of marshalling in the event of any sale hereunder of the Mortgaged
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 Mortgage on behalf of Borrower, and on behalf of
each and every person acquiring any interest in or title to the Mortgaged
Property subsequent to the date of this Mortgage and on behalf of all persons
to the extent permitted by applicable law.
37. Hazardous Waste. Borrower hereby represents and warrants to Lender that,
to the best of Borrower's knowledge, after due inquiry and investigation: (a)
except as disclosed to Lender in the environmental report specifically referred
to in an addendum (if any) attached hereto, the Mortgaged Property is not in
violation of any local, state, federal or other governmental authority,
statute, ordinance, code, order, decree, law, rule or regulation pertaining to
or imposing liability or standards of conduct concerning environmental
regulation, contamination or cleanup including, without
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limitation, the Comprehensive Environmental Response, Compensation and Liability
Act, as amended ("CERCLA"), the Resource Conservation and Recovery Act, as
amended ("RCRA"), and any state superlien and environmental cleanup statutes
(collectively, "Environmental Laws"); (b) the Mortgaged Property is not subject
to any private or governmental lien or judicial or administrative notice or
action relating to hazardous and/or toxic, dangerous and/or regulated,
substances, wastes, materials, pollutants or contaminants, petroleum, petroleum
by-products, friable asbestos, tremolite, anthlophylie or actinolite or
polychlorinated biphenyls (including, without limitation, any raw materials
which include hazardous constituents) and any other substances or materials
which are included under or regulated by Environmental Laws (collectively,
"Hazardous Substances"); (c) except as disclosed to Lender in the environmental
report specifically referred to in an addendum (if any) attached hereto, no
Hazardous Substances are or have been discharged, generated, treated, disposed
of or stored on, incorporated in, or removed or transported from the Mortgaged
Property otherwise than in compliance with all Environmental Laws; and (d)
except as disclosed to Lender in the environmental report specifically referred
to in an addendum (if any) attached hereto, no underground storage tanks exist
on any of the Mortgaged Property.
Notwithstanding anything previously disclosed to Lender, so long as
Borrower owns or is in possession of the Mortgaged Property, Borrower shall keep
or cause the Mortgaged Property to be kept free from Hazardous Substances and in
compliance with all Environmental Laws and shall notify Lender within five (5)
business days after Borrower becomes aware of the existence of any Hazardous
Substances on, or any alleged or actual violation of any Environmental Laws with
respect to, the Mortgaged Property. Borrower shall remove any such Hazardous
Substances and/or cure any such violations, as applicable, as required by law,
promptly after Borrower becomes aware of same, at Borrower's sole expense.
Additionally, Borrower shall obtain and implement an asbestos-containing
material operations and maintenance program for all identified and presumed
asbestos-containing materials on or in the Mortgaged Property. Nothing herein
shall prevent Borrower from recovering such expenses from any other party
(excluding Lender) that may be liable for such removal or cure. If, at any time
and from time to time while this Mortgage is in effect, Lender has reasonable
cause to believe that Borrower has violated, or permitted any violations, under
this paragraph 37, then Borrower shall provide, at Borrower's sole expense, an
inspection or audit of the Mortgaged Property prepared by a licensed
hydrogeologist or licensed environmental engineer approved by Lender indicating
the presence or absence of Hazardous Substances on, or violation of
Environmental Laws at the Mortgaged Property. If Borrower fails to provide such
inspection or audit within thirty (30) days after such request, Lender may order
same, and Borrower hereby grants to Lender and its employees and agents access
to the Mortgaged Property to undertake such inspection or audit. The cost of
such inspection or audit shall be immediately due and payable, shall be added to
the Debt and shall bear interest at the Default Rate from the date expended by
Lender until paid by Borrower. The obligations and liabilities of Borrower
under this paragraph 37 shall survive any termination, satisfaction, or
assignment of this Mortgage and the exercise by Lender of any of its rights or
remedies hereunder, including but not limited to, the acquisition of the
Mortgaged Property by foreclosure or a conveyance in lieu of foreclosure.
38. Access Laws.
(a) Borrower agrees that the Mortgaged Property shall at all times
comply with the requirements of the Americans with Disabilities Act of
1990, the Fair Housing Amendments Act of 1988, all similar state and local
laws and ordinances related to access and all rules, regulations, and
orders issued pursuant thereto including, without limitation, the
Americans
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with Disabilities Act Accessibility Guidelines for Buildings and
Facilities (collectively the "Access Laws").
(b) Notwithstanding any provisions set forth herein or in any other
document regarding Lender's approval of alterations of the Mortgaged
Property, Borrower shall not alter the Mortgaged Property in any manner
which would increase Borrower's responsibilities for compliance with the
applicable Access Laws without the prior written approval of Lender. The
foregoing shall apply to tenant improvements constructed by Borrower or by
any of its tenants. Lender may condition any such approval upon receipt
of a certificate of an architect, engineer or other person acceptable to
Lender regarding compliance with applicable Access Laws.
(c) Borrower agrees to give prompt notice to Lender of the receipt by
Borrower of any complaints related to any violations of any Access Laws
and of the commencement of any proceedings or investigations which relate
to compliance with applicable Access Laws.
39. Indemnification. In addition to any other indemnifications provided herein
or in the Other Security Documents, Borrower shall protect, defend, indemnify
and save harmless Lender from and against all liabilities, obligations, claims,
demands, damages, penalties, causes of action, losses, fines, costs and
expenses (including without limitation reasonable attorney fees and expenses),
imposed upon, incurred by or asserted against Lender by reason of: (a)
ownership of this Mortgage, the Mortgaged Property or any interest therein or
receipt of any Rents; (b) any accident, injury to or death of persons or loss
of or damage to property occurring in, on or about the Mortgaged 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 Mortgaged Property or any part thereof or on adjoining
sidewalks, curbs, adjacent property or adjacent parking areas, streets or ways;
(d) any failure on the part of Borrower to perform or comply with any of the
terms of this Mortgage; (e) 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; (f) the presence, disposal, escape, seepage,
leakage, spillage, discharge, emission, release or threatened release of any
Hazardous Substance on, from or affecting: (I) the Mortgaged Property; or (II)
any other property by reason of any use or ownership of the Mortgaged Property
or any action or inaction by Borrower; (g) any personal injury (including
wrongful death) or property damage (real or personal) arising out of or related
to any Hazardous Substance; (h) any lawsuit brought or threatened, settlement
reached, or government order relating to any Hazardous Substance on, from or
affecting: (I) the Mortgaged Property; or (II) any other property by reason of
any use or ownership of the Mortgaged Property or any action or inaction by
Borrower; (i) any violation of the Environmental Laws, which are based upon or
in any way related to any Hazardous Substance including, without limitation,
the costs and expenses of any remedial action, attorney and consultant fees,
investigation and laboratory fees, court costs, and litigation expenses; and
(j) any failure of the Mortgaged Property to comply with any Access Laws. Any
amounts payable to Lender by reason of the application of this indemnification
shall be secured by this Mortgage and the Other Security Documents, 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. The
obligations and liabilities of Borrower under this paragraph 39 shall survive
any termination, satisfaction or assignment of this Mortgage and the exercise
by Lender of any of its rights or remedies hereunder, including, but not
limited to, the acquisition of the Mortgaged Property by foreclosure or a
conveyance in lieu of foreclosure.
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40. Notices. Except as otherwise specified herein, any notice, consent,
request or other communication required or permitted to be given hereunder
shall be in writing, addressed to the other party as set forth below (or to
such other address or person as either party or person entitled to notice may
by notice to the other party specify), and shall be: (a) personally delivered;
(b) delivered by Federal Express or some comparable overnight delivery service;
or (c) transmitted by United States certified mail, return receipt requested
with postage prepaid; to:
Lender: Midland Loan Services, L.P.
210 West 10th Street, 6th Floor
Kansas City, MO 64105
Borrower: Frank's Nursery & Crafts, Inc.
6501 East Nevada
Detroit, MI 48234
Attention: Robert M. Lovejoy, Jr.
Unless otherwise specified, all notices and other communications shall be
deemed to have been duly given on the first to occur of actual receipt of the
same or: (i) the date of delivery if personally delivered; (ii) one (1)
business day after depositing the same with the delivery service if by
overnight delivery service; and (iii) three (3) business days following posting
if transmitted by mail.
41. Authority.
(a) Borrower (and the undersigned representative of Borrower, if any)
has full power, authority and right to execute, deliver and perform its
obligations pursuant to this Mortgage, and to mortgage, give, grant,
bargain, sell, alien, enfeoff, convey, confirm, pledge, hypothecate and
assign the Mortgaged Property pursuant to the terms hereof and to keep
and observe all of the terms of this Mortgage on Borrower's part to be
performed.
(b) Borrower represents and warrants that 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.
42. 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
Mortgage 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 other notice.
43. Remedies of Borrower. In the event that a claim or adjudication is made
that Lender has acted unreasonably or unreasonably delayed acting in any case
where by law or under the Note, this Mortgage or the Other Security Documents,
it has an obligation to act reasonably or promptly, Lender shall not be liable
for any monetary damages, and Borrower's remedies shall be limited to
injunctive relief or declaratory judgment.
44. Sole Discretion of Lender. Wherever pursuant to this Mortgage, Lender
exercises any right given to it to approve or disapprove, or any arrangement or
term is to be satisfactory to Lender, the decision of Lender to approve or
disapprove or to decide that arrangements or terms are satisfactory
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or not satisfactory 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.
45. Nonwaiver. 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 Mortgage.
Borrower shall not be relieved of Borrower's obligations hereunder by reason
of: (a) the failure of Lender to comply with any request of Borrower or any
Guarantor to take any action to foreclose this Mortgage or otherwise enforce
any of the provisions hereof, of the Note or the Other Security Documents; (b)
the release, regardless of consideration, of the whole or any part of the
Mortgaged Property, or of any person liable for the Debt or any portion
thereof; or (c) any agreement or stipulation by Lender extending the time of
payment or otherwise modifying or supplementing the terms of the Note, this
Mortgage or the Other Security Documents. 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 Mortgage. The
rights and remedies of Lender under this Mortgage and the Other Security
Documents 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.
46. No Oral Change. This Mortgage, 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.
47. Liability. If Borrower consists of more than one person, the obligations
and liabilities of each such person hereunder shall be joint and several. This
Mortgage shall be binding upon and inure to the benefit of Borrower and Lender
and their respective successors and assigns forever.
48. Inapplicable Provisions. If any term, covenant or condition of the Note
or this Mortgage is held to be invalid, illegal or unenforceable in any respect,
the Note and this Mortgage shall be construed without such provision.
49. Headings, etc. The headings and captions of various paragraphs of this
Mortgage 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.
50. Duplicate Originals. This Mortgage may be executed in any number of
duplicate originals and each such duplicate original shall be deemed to be an
original.
51. Definitions. Unless the context clearly indicates a contrary intent or
unless otherwise specifically provided herein, words used in this Mortgage
(including pronouns) shall include the corresponding masculine, feminine or
neuter forms, and the singular form such words shall include the plural and
vice versa. The word "Borrower" shall mean "each Borrower and any subsequent
owner or owners of the Mortgaged 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 Mortgage"; the word "person" shall
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include an individual, corporation, partnership, trust, unincorporated
association, government, governmental authority and any other entity; and the
words "Mortgaged Property" shall include any portion of the Mortgaged Property
and any interest therein.
52. Homestead. Borrower hereby waives and renounces all homestead and
exemption rights provided by the constitution and the laws of the United States
and of any state, in and to the Mortgaged Property as against the collection of
the Debt, or any part hereof.
53. Assignments. Lender shall have the right to assign or transfer its rights
under this Mortgage without limitation. Any assignee or transferee shall be
entitled to all the benefits afforded Lender under this Mortgage.
54. Exculpation. Notwithstanding anything to the contrary contained in this
Mortgage, the liability of Borrower and its general partners (if any) for the
payment of the Debt and for the performance of the other agreements, covenants
and obligations contained herein, in the Note or in any of the Other Security
Documents shall be limited as set forth in Paragraph 12 of the Note.
55. Integration. This Mortgage, the Note and the Other Security Documents
embody the entire agreement by and between Borrower and Lender with respect to
the Loan, and any and all prior correspondence, discussions or negotiations are
deemed merged therein; provided, however, that except to the extent
inconsistent with the specific terms and provisions of this Mortgage, the Note
and the Other Security Documents, all representations, warranties, statements,
covenants and agreements of Borrower contained in any loan commitment and/or
loan application executed in connection with the Loan shall survive the funding
of the Loan, any termination, satisfaction, or assignment of this Mortgage and
the exercise by Lender of any of its rights or remedies hereunder, including
but not limited to, the acquisition of the Mortgaged Property by foreclosure or
a conveyance in lieu of foreclosure.
56. Applicable Law; Jurisdiction. This Mortgage shall be governed and
construed in accordance with the laws of the state in which the Premises and
Improvements encumbered by this Mortgage is located, without regard to conflict
of law provisions thereof. Borrower hereby submits to personal jurisdiction in
the state courts located in said state and the federal courts of the United
States of America (and any appellate courts taking appeals thereof) located in
said state for the enforcement of Borrower's obligations hereunder and waives
any and all personal rights under the law of any other state to object to
jurisdiction within such state for the purposes of any action, suit, proceeding
or litigation to enforce such obligations of Borrower. Borrower hereby waives
and agrees not to assert, as a defense in any action, suit, proceeding or
litigation arising out of or relating to this Mortgage, the Note and/or any of
the Other Security Documents: (a) that it is not subject to such jurisdiction
or that such action, suit, proceeding or litigation may not be brought or is
not maintainable in those courts or that this Mortgage, the Note and/or any of
the Other Security Documents may not be enforced in or by those courts or that
it is exempt or immune from execution; (b) that the action, suit, proceeding or
litigation is brought in an inconvenient forum; or (c) that the venue of the
action, suit, proceeding or litigation is improper.
57. Additional Terms and Provisions. Certain additional and supplemental
terms and provisions of this Mortgage are set forth in the Addendum to Mortgage,
Security Agreement and Assignment of Leases and Rents attached hereto and
incorporated herein by this reference.
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IN WITNESS WHEREOF, Borrower has executed this Mortgage, Security
Agreement and Assignment of Leases and Rents to be effective as of the day and
year first above written.
In the presence of: "Borrower"
Lauren J. Cato FRANK'S NURSERY & CRAFTS, INC.,
- -------------------------------- a Michigan corporation
Print Name: Lauren J. Cato
--------------------
Maxine J. Lievois By: Robert M. Lovejoy, Jr.
- -------------------------------- ---------------------------
Print Name: Maxine J. Lievois Robert M. Lovejoy, Jr.
-------------------- Vice President and Treasurer
ACKNOWLEDGEMENT
STATE OF MICHIGAN )
) ss.
COUNTY OF Wayne )
---------
The foregoing instrument was acknowledged before me this 14th day of
March, 1996, by Robert M. Lovejoy, Jr., the Vice President and Treasurer of
Frank's Nursery & Crafts, Inc. , a Michigan corporation, on behalf of the
corporation.
SHERRY L. RYGWELSKI
-------------------------------------------
Notary Public, Wayne County, Michigan
-----------
My Commission Expires: 12-27-98
---------------------
[Notary Seal]
Mortgage - Michigan
Last Revised May 18, 1995
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EXHIBIT A
LEGAL DESCRIPTION
The real property situated in the County of Kent, State of Michigan,
described as follows:
Parcel 1:
Part of the West 1/2 of the Northwest 1/4, Section 15, T6N, R11W, City of Grand
Rapids, Kent County, Michigan, commencing at the Northeast corner thereof;
thence North 89 degrees 36 minutes 30 seconds West 480.0 feet along the North
section line; thence South 02 degrees 52 minutes East 54.6 feet parallel with
the West 1/8 line to the South line of 28th Street (100 feet wide) and
beginning of this description; thence South 02 degrees 52 minutes East to a
line 450 feet South from and parallel with the South line of 28th Street;
thence 90 degrees 00 minutes West along said line to the East line of the West
348 feet of the Northwest 1/4; thence North 02 degrees 57 minutes 30 seconds
West along said East line to a point 192.25 feet South from the South line of
28th Street; thence North 90 degrees 00 minutes East 93.11 feet; thence North
00 degrees 00 minutes 159.00 feet; thence North 90 degrees 00 minutes East 36.0
feet; thence North perpendicular to the South line of 28th Street to the South
line of the North 15 feet of that part of the Northwest 1/4 lying South of the
South line of 28th Street; thence East along said South line to the East line
of the West 548 feet of the Northwest 1/4; thence North along said East line to
the South line of 28th Street; thence East along the South line of 28th Street
to beginning; except commencing 494.46 feet North 89 degrees 36 minutes 30
seconds West along the North section line and 54.68 feet South 0 degrees 05
minutes East from the Northeast corner of the West 1/2 of the Northwest 1/4;
thence South 00 degrees 05 minutes East 410.90 feet; thence South 89 degrees 55
minutes West 100.0 feet; thence North 00 degrees 05 minutes West 376.04 feet;
thence 90 degrees 00 minutes East 10.0 feet; thence North 0 degrees 05 minutes
West 35.0 feet; thence North 90 degrees 00 minutes East 90.0 feet along the
South line of 28th Street to beginning.
Parcel 2:
Easement for pedestrian and vehicular passage and vehicular parking on, over
and across that certain property described in Exhibit D to that certain
Reciprocal Easement Grant dated September 6, 1984, and filed for record in
Liber 2440 at Page 569, appurtenant to and for the benefit of the property
described above as Parcel 1.
Parcel 3:
Easement for pedestrian and vehicular passage and vehicular parking on, over
and across that certain property described in Exhibit D to that certain
Reciprocal Easement Grant dated July 18, 1983, and filed for record in Liber
2406 at Page 915, appurtenant to and for the benefit of the property described
above as Parcel 1.
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EXHIBIT B
PROMISSORY NOTE
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Loan No.: 94-0903604
PROMISSORY NOTE Store 25
$682,878.00 Michigan
March 14, 1996
FOR VALUE RECEIVED Frank's Nursery & Crafts, Inc., a Michigan corporation
("Borrower"), having its principal place of business at 6501 East Nevada,
Detroit, Michigan 48234, promises to pay to the order of Midland Loan Services,
L.P., a Missouri limited partnership ("Lender"), at the following address:
210 West 10th Street, 6th Floor, Kansas City, Missouri 64105; or such other
place as the holder hereof may from time to time designate in writing, the
principal sum of Six Hundred Eighty-two Thousand Eight Hundred Seventy-eight
and No/100 Dollars ($682,878.00) in lawful money of the United States of
America, with interest thereon to be computed from the date of disbursement
under this Promissory Note (the "Note") at the Applicable Interest Rate
(hereinafter defined), and to be paid in installments as follows:
A. A payment, on the date hereof, in the amount of $3,168.54
representing interest from the date of disbursement through the
last day of the calendar month in which such disbursement is made;
B. A constant payment of $6,267.54 on the first day of May, 1996 and
on the first day of each calendar month thereafter up to and
including the first day of March, 2006, each of such payments to be
applied: (a) to the payment of interest computed at the Applicable
Interest Rate; and (b) the balance applied toward the reduction of
the principal sum; and
C. The balance of said principal sum, all unpaid interest thereon and
all other amounts owed pursuant to this Note, the Mortgage
(hereinafter defined), the Other Security Documents (hereinafter
defined), or otherwise in connection with the loan evidenced by
this Note shall be due and payable on the first day of April, 2006
(the "Maturity Date").
All payments to be made by Borrower to Lender shall be deemed received by
Lender only upon Lender's actual receipt of same.
1. Applicable Interest Rate. Interest on the principal sum of this
Note shall be calculated on the basis of a three hundred sixty (360) day year
composed of twelve (12) months of thirty (30) days each except that interest
due and payable for a period less than a full month shall be calculated by
multiplying the actual number of days elapsed in such period by a daily rate
based on said 360 day year. The term "Applicable Interest Rate" as used in
this Note shall mean, from the date of this Note through and including the
Maturity Date, a rate of Nine and 28/100 percent (9.28%) per annum.
2. Late Charge. If any sum payable under this Note is not received
by Lender by close of business on the tenth (10th) day after the date on which
it was due, Borrower shall pay to Lender an amount (the "Late Charge") equal to
the lesser of five percent (5%) of the full amount of such
35
sum, or the maximum amount permitted by applicable law, to defray the expenses
incurred by Lender in handling and processing such delinquent payment and to
compensate Lender for the loss of the use of such delinquent payment and any
such Late Charges shall be secured by the Mortgage and Other Security
Documents.
3. Security; Defined Terms; Incorporation by Reference. This Note is
secured by the Mortgage and the Other Security Documents. The term "Mortgage"
as used in this Note shall mean either the Mortgage, Security Agreement and
Assignment of Leases and Rents, or the Deed of Trust, Security Agreement and
Assignment of Leases and Rents, executed and delivered by Borrower
contemporaneously with this Note, which encumbers certain property located in
Kent County, Michigan, and which secures the Debt (hereinafter defined). The
term "Other Security Documents" means all documents other than this Note or the
Mortgage now or hereafter executed and/or delivered by Borrower and/or others
and to or in favor of Lender, which wholly or partially secure, evidence or
guarantee payment of the Debt, provide for any indemnity in favor of or payment
to Lender related to the Debt, the Note or the Mortgaged Property, provide for
any escrow/holdback arrangements or for any actions to be completed by Borrower
subsequent to the date hereof, or are otherwise related to the loan evidenced
by this Note. All amounts due and payable under the Note, together with all
sums due under the Mortgage and the Other Security Documents, including any
applicable Prepayment Consideration (hereinafter defined) and all applicable
attorney fees and costs, are collectively referred to herein as the "Debt."
Where appropriate, the singular number shall include the plural, the plural
shall include the singular, and the words "Lender" and "Borrower" shall include
their respective successors, assigns, heirs, personal representatives,
executors and administrators. The terms, covenants, and conditions of the
Mortgage and Other Security Documents are hereby incorporated herein by
reference and are made a part of this Note to the same extent as if they were
fully set forth herein.
4. Prepayment.
(a) When Permitted. Except as set forth in this Section, Borrower shall
not have the right to prepay all or any portion of the Debt at any time during
the term of this Note. Borrower may prepay the Debt in whole, but not in part
(except for any prepayment permitted under the Mortgage in the event of a
casualty or condemnation) if: (i) no Event of Default (hereinafter
defined) then exists; (ii) any applicable Prepayment Consideration (hereinafter
defined) is tendered with such prepayment; and (iii) the required notice of
prepayment required hereby is timely received by Lender. Notwithstanding
anything to the contrary contained herein, no prepayments will be allowed
during the period from the sixteenth (16th) day through and including the last
day of any calendar month.
(b) Notice. Borrower shall give written notice to Lender specifying the
date on which prepayment is to be made (the "Prepayment Date"). The
designated Prepayment Date must fall within the first fifteen (15) calendar
days of a month during the term of this Note. Lender shall receive this notice
not more than sixty (60) days and not less than (30) days prior to the
Prepayment Date. If any such notice of prepayment is given, the entire Debt,
including any applicable Prepayment Consideration, shall be due and payable on
the Prepayment Date.
(c) Prepayment Consideration. Lender shall not be obligated to
accept any prepayment of the principal balance of this Note unless it is
accompanied by all Prepayment Consideration due in connection therewith.
Except as otherwise set forth in the Mortgage, no Prepayment Consideration will
be due for involuntary prepayments resulting from any Casualty (as defined in
the Mortgage) or Condemnation (as defined in the Mortgage). The "Prepayment
Consideration" shall be computed as follows:
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Month 1 through 114: The greater of: (i) one percent (1%) of the
outstanding principal balance of the Note
at the time of prepayment; or (ii) the
Yield Maintenance Amount (hereinafter
defined).
Months 115 through
maturity: No Prepayment Consideration.
Borrower acknowledges that the Prepayment Consideration is a bargained for
consideration and not a penalty, and Borrower recognizes that Lender would
incur substantial additional costs and expenses in the event of a prepayment of
the Debt and that the Prepayment Consideration compensates Lender for such
costs and expenses (including without limitation, the loss of Lender's
investment opportunity during the period from the Prepayment Date until the
Maturity Date). Borrower agrees that Lender shall not, as a condition to
receiving the Prepayment Consideration, be obligated to actually reinvest the
amount prepaid in any treasury obligation or in any other manner whatsoever.
(d) Yield Maintenance Amount. The "Yield Maintenance Amount" shall mean the
present value, as of the Prepayment Date, of the remaining scheduled payments
(including any balloon payment) of principal amount being prepaid and interest
on such amount from the Prepayment Date through the Maturity Date (assuming no
prepayment were made), determined by discounting such payments at the Discount
Rate (hereinafter defined), and subtracting therefrom the amount of principal
being prepaid. The term "Discount Rate" shall mean the rate which, when
compounded monthly, is equivalent to the Treasury Rate (hereinafter defined)
when compounded semi-annually. The term "Treasury Rate" shall mean the yield
calculated by the linear interpolation of the yields, as reported in Federal
Reserve Statistical Release H.15-Selected Interest Rates under the heading U.S.
Government Securities/Treasury Constant Maturities for the week ending prior to
the Prepayment Date, of U.S. Treasury constant maturities with maturity dates
(one longer and one shorter) most nearly approximating the Maturity Date. (In
the event Release H.15 is no longer published, Lender shall select a comparable
publication to determine the Treasury Rate.) Lender shall notify Borrower of
the amount and the basis of determination of the required Prepayment
Consideration.
(e) Prepayment After Event of Default. If following the occurrence of any
Event of Default, Borrower shall tender payment of an amount sufficient to
satisfy the Debt at any time prior to a sale of the "Mortgaged Property" (as
defined in the Mortgage), either through foreclosure or the exercise of the
other remedies available to Lender under the Mortgage or the Other Security
Documents, such tender by Borrower shall be deemed to be a voluntary prepayment
under this Note in the amount tendered and in such case Borrower shall also pay
to Lender, with respect to the amount tendered, the applicable Prepayment
Consideration set forth in this Note, if any, which Prepayment Consideration
shall be immediately due and payable.
5. Default. An "Event of Default" shall occur if:
(a) the Borrower fails to make the full and punctual payment of any amount
payable hereunder or under the Mortgage on a monthly basis, which failure is
not cured on or before the fifth (5th) day after the date of written notice
from Lender to Borrower of such failure;
(b) the Borrower fails to pay the entire outstanding principal balance
hereunder, together with all accrued and unpaid interest, on the date when due,
whether on the Maturity Date, upon acceleration or prepayment or otherwise;
3
37
(c) the Borrower fails to make the full and punctual payment of any Late
Charges, costs and expenses due hereunder or any other sum of money required to
be paid hereunder (other than any payment described in subclauses (a) and (b)
immediately above) or under the Mortgage or Other Security Documents which
failure is not cured on or before the twentieth (20th) day after Lender's
written notice to Borrower that such payment is required; or
(d) an Event of Default (as defined in the Mortgage or any of the Other
Security Documents) shall have occurred under the Mortgage and/or Other
Security Documents.
6. Acceleration. The whole of the Debt, including without limitation, the
principal sum of this Note, all accrued interest and all other sums due under
this Note, the Mortgage and the Other Security Documents, together with any
applicable Prepayment Consideration, shall become immediately due and payable
at the option of Lender, without notice, at any time following the occurrence
of an Event of Default.
7. Default Interest. Upon the occurrence of an Event of Default (including
without limitation, the failure of Borrower to pay the Debt in full on the
Maturity Date), Lender shall be entitled to receive and Borrower shall pay
interest on the entire unpaid principal balance at the rate (the "Default
Rate") equal to the greater of: (a) four (4)% above the Applicable Interest
Rate; or (b) four (4)% above the Prime Rate (hereinafter defined) in effect at
the time of the occurrence of the Event of Default; provided, however, that
notwithstanding the foregoing, in no event shall the Default Rate exceed the
Maximum Rate (hereinafter defined). The term "Prime Rate" shall mean the prime
rate reported in the Money Rates section of The Wall Street Journal for the
date (the "Default Rate Calculation Date") upon which the Event of Default
occurred, or if no publication occurs upon such date, then the date of
publication immediately preceding the date of the Event of Default. In the
event that The Wall Street Journal should cease or temporarily interrupt
publication, the term "Prime Rate" shall mean the daily average prime rate
published upon the Default Rate Calculation Date in another business newspaper,
or business section of a newspaper, of national standing chosen by Lender. In
the event that a prime rate is no longer generally published or is limited,
regulated or administered by a governmental or quasi-governmental body, then
Lender shall select a comparable interest rate index which is readily available
and verifiable to Borrower but is beyond Lender's control. The Default Rate
shall be computed from the occurrence of the Event of Default until the actual
payment in full of the Debt. This charge shall be added to the Debt, and shall
be deemed secured by the Mortgage. This clause, however, shall not be
construed as an agreement or privilege to extend the Maturity Date, nor as a
waiver of any other right or remedy accruing to Lender by reason of the
occurrence of any Event of Default.
8. Attorney Fees. In the event that Lender employs attorney(s) to collect
the Debt, to enforce the provisions of this Note or to protect or foreclose the
security herefor, Borrower agrees to pay Lender's attorney fees and
disbursements, whether or not suit be brought. Such fees shall be immediately
due and payable.
9. Limit of Validity. This Note is subject to the express condition that at
no time shall Borrower be obligated or required to pay interest or other
charges on the Debt at a rate which may subject Lender to civil or criminal
liability as a result of such rate exceeding the maximum interest
rate which Borrower is permitted to pay by applicable law (the "Maximum Rate").
If by the terms of this Note, Borrower is at any time required or obligated to
pay interest or other charges on the Debt at a rate in excess of the Maximum
Rate, the rate of interest due under this Note shall be deemed to be
immediately reduced to the Maximum Rate and any previous payments in excess of
the
4
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Maximum Rate shall be deemed to have been payments in reduction of
principal and not on account of the interest due hereunder.
10. No Oral Amendments. This Note 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.
11. Assignment. This Note may be freely transferred and assigned by Lender.
Borrower's right to transfer its rights and obligations with respect to the
Debt, and to be released from liability under this Note, shall be governed by
the Mortgage.
12. Applicable Law; Jurisdiction. This Note shall be governed and construed
in accordance with the laws of the state in which the real property encumbered
by the Mortgage is located, without regard to conflict of law provisions
thereof. Borrower hereby submits to personal jurisdiction in the state courts
located in said state and the federal courts of the United States of America
(and any appellate courts taking appeals thereof) located in said state for the
enforcement of Borrower's obligations hereunder and waives any and all personal
rights under the law of any other state to object to jurisdiction within such
state for the purposes of any action, suit, proceeding or litigation to enforce
such obligations of Borrower. Borrower hereby waives and agrees not to assert,
as a defense in any action, suit, proceeding or litigation arising out of or
relating to this Note, the Mortgage and/or any of the Other Security Documents:
(a) that it is not subject to such jurisdiction or that such action, suit,
proceeding or litigation may not be brought or is not maintainable in those
courts or that this Note, the Mortgage and/or any of the Other Security
Documents may not be enforced in or by those courts or that it is exempt or
immune from execution; (b) that the action, suit, proceeding or litigation is
brought in an inconvenient forum; or (c) that the venue of the action, suit,
proceeding or litigation is improper.
13. Joint and Several Liability. If Borrower consists of more than one person
or entity, the obligations and liabilities of each such person or entity shall
be joint and several.
14. Waiver of Presentment, Etc. Borrower and all others who may become
liable for the payment of all or any part of the Debt do hereby severally waive
presentment and demand for payment, notice of dishonor, protest, notice of
protest, and notice of intent to accelerate the maturity hereof (and of such
acceleration), except to the extent that specific notices are required by this
Note, the Mortgage or the Other Security Documents.
15. Full Authority. Borrower (and the undersigned representative of
Borrower, if any) represents that Borrower has full power, authority and legal
right to execute, deliver and perform its obligations pursuant to this Note,
the Mortgage and the Other Security Documents and that this Note, the Mortgage
and the Other Security Documents constitute valid and binding obligations of
Borrower.
16. No Waiver. Any failure by Lender to insist upon strict performance by
Borrower or any of the provisions of this Note, the Mortgage or the Other
Security Documents shall not be deemed to be a waiver of any of the terms or
provisions of this Note, the Mortgage or the Other Security Documents, and
Lender shall have the right thereafter to insist upon strict performance by
Borrower of any and all of the terms and provisions of this Note, the Mortgage
or the Other Security Documents.
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17. Notices. Except as otherwise specified herein, any notice, consent,
request or other communication required or permitted to be given hereunder
shall be in writing, addressed to the other party as set forth below (or to
such other address or person as either party or person entitled to notice may
by notice to the other party specify), and shall be: (a) personally delivered;
(b) delivered by Federal Express or other comparable overnight delivery
service; or (c) transmitted by United States certified mail, return receipt
requested with postage prepaid; to:
Lender: Midland Loan Services, L.P.
210 West 10th Street, 6th Floor
Kansas City, MO 64105
Borrower: Frank's Nursery & Crafts, Inc.
6501 East Nevada
Detroit, MI 48234
Attention: Robert M. Lovejoy, Jr.
Unless otherwise specified, all notices and other communications shall be
deemed to have been duly given on the first to occur of actual receipt of the
same or: (i) the date of delivery if personally delivered; (ii) one (1)
business day after depositing the same with the delivery service if by
overnight delivery service; and (iii) three (3) days following posting if
transmitted by mail.
BORROWER AND LENDER HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE ANY
RIGHT THEY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED ON
THE LOAN EVIDENCED BY THIS NOTE OR ARISING OUT OF, UNDER OR IN CONNECTION WITH
THIS NOTE, THE MORTGAGE OR ANY OF THE OTHER SECURITY DOCUMENTS, OR ANY COURSE
OF CONDUCT, COURSE OF DEALING, STATEMENT (WHETHER VERBAL OR WRITTEN) OR ACTION
OF BORROWER OR LENDER. THIS PROVISION IS A MATERIAL INDUCEMENT FOR LENDER'S
MAKING OF THE LOAN SECURED BY THE MORTGAGE AND THE OTHER SECURITY DOCUMENTS.
IN WITNESS WHEREOF, Borrower has duly executed this Promissory Note to be
effective the day and year first above written.
"Borrower"
FRANK'S NURSERY & CRAFTS, INC.,
a Michigan corporation
By:
------------------------------
Robert M. Lovejoy, Jr.,
Vice President and Treasurer
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Pay to the order of Midland Commercial Financing Corp., without recourse.
Midland Loan Services, L.P.,
a Missouri limited partnership
By: Midland Data Systems, Inc.
a Missouri corporation,
its sole General Partner
By: ________________________
Print Name: ________________
Title: _____________________
Pay to the order of _________________________________________, without recourse.
Midland Commercial Financing Corp.,
a Missouri corporation
By: _______________________________
Print Name: _______________________
Title: ____________________________
7
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ADDENDUM TO MORTGAGE,
SECURITY AGREEMENT AND ASSIGNMENT OF LEASES AND RENTS
This Addendum to Mortgage, Security Agreement and Assignment of Leases and
Rents contains certain additional and supplemental terms and provisions of the
Mortgage, Security Agreement and Assignment of Leases and Rents (the
"Mortgage") dated as of March 14, 1996, executed by Frank's Nursery & Crafts,
Inc., as Borrower, in favor of Midland Loan Services, L.P., as Lender. The
terms and provisions of this Addendum control and supersede any conflicting
terms and provisions contained in the body of such Mortgage.
1. Environmental Report. The environmental report referred to in the Mortgage
is the Phase I Environmental Site Assessment of the Mortgaged Property dated
October 24, 1995 prepared by ATEC Associates, Inc. in favor of Lender.
2. The following phrase is hereby inserted at the end of paragraph (c) on page
2: "provided, however, that the aforesaid Mortgaged Property shall not
include: (i) trade fixtures or trade equipment, including but not limited to
shelving, computers, cash registers, communications equipment, signage, facing
and furniture, or (ii) inventory;".
3. The phrase "Lender's interest in" is hereby inserted after the term
"defend" in paragraph (g) on page 2.
4. The term "reasonably" is hereby inserted after the term "risks" in the
seventh line of paragraph 3(a).
5. The phrase "with a waiver of depreciation" contained in the last line of
paragraph 3(a) is hereby deleted.
6. Paragraph 3(b)(ii) is hereby deleted and inserted in lieu thereof is the
following:
(ii) Comprehensive public or commercial general liability insurance on an
"occurrence basis", in the amount of at least $2,000,000.00 per occurrence,
including broad form property damage, blanket contractual and personal
injuries (including death resulting therefrom) coverages, and an additional
umbrella liability insurance policy in the amount of at least
$1,000,000.00.
7. The phrase "and/or rental loss" contained in the first and sixth lines of
paragraph 3(b)(iii) is hereby deleted in each instance. Paragraph 3(b)(iii) is
hereby further amended by inserting the following phrase at the end of said
paragraph: "such increases shall be effective on the next anniversary date of
the Policy immediately following Lender's imposition of such increases."
8. The following phrase is hereby inserted after the term "Lender" in
paragraph 3(b)(v): "under the then applicable Lender's Underwriting Standards
(as defined in paragraph 10(c) hereof)."
9. The term "thirty (30)" contained in the last sentence of paragraph 3(c) is
hereby deleted and inserted in lieu thereof is the term "twenty (20)". The
phrase "in its sole discretion" contained in paragraph 3(c)(i) is hereby
deleted and inserted in lieu thereof is the phrase "with Borrower's current
insurers or with insurers having a rating of A- or better by A.M. Best Company.
Paragraph 3(c)(iv)
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is hereby amended by inserting the following phrase before the term "delivered":
"a copy thereof certified by an officer of the Borrower".
10. The references to the amount "$15,000.00" contained in paragraphs 4(a)(i)
and (ii) are hereby deleted and inserted in lieu thereof in each instance is
the amount "$50,000.00".
11. The term "reasonable" is hereby inserted after the term "Lender's" in the
seventh line of paragraph 4(a)(ii).
12. Notwithstanding anything contained in this Mortgage, the Note or the Other
Security Documents to the contrary, any application of Insurance Proceeds to
the Debt under paragraph 4(a)(iii)(A) or (B), or payment of the Debt by
Borrower after an acceleration by Lender under paragraph 4(a)(iii)(A), shall be
without Prepayment Consideration.
13. Notwithstanding anything contained in paragraph 6 to the contrary,
Borrower shall not be required to escrow for Insurance Premiums so long as no
Event of Default has occurred and is continuing. The tenth and eleventh
sentences of paragraph 6 are hereby deleted and inserted in lieu thereof is the
following:
The Escrowed Funds shall be kept by Lender in one (1) or more segregated
accounts and shall bear interest for the account of Borrower; provided,
however, that escrowed funds held by Lender in connection with other
loans to Borrower may be kept by Lender in the same account or accounts
in which Lender is keeping the Escrowed Funds.
14. Notwithstanding anything contained in paragraph 7, upon any Condemnation
and Lender's application of any Condemnation award or payment to the reduction
or discharge of the Debt (whether or not then due and payable), such
application shall be without Prepayment Consideration so long as no Event of
Default has occurred and is continuing. Upon such application, and so long as
no Event of Default has occurred and is continuing, Borrower shall be entitled
to prepay the Debt without Prepayment Consideration.
15. Clause (i)(B) of paragraph 8(e) is hereby deleted and inserted in lieu
thereof is the following clause: (B) such Lease covers not more than
twenty-five percent (25%) of the Mortgaged Property and rent for the leased
portion of Mortgaged Property is no less than the pro rata market rent for such
portion as specified in the Appraisal.
16. The following phrase is hereby inserted after the term "Premises" in the
eleventh line of paragraph 9(a): "to the extent Borrower receives any payment
as a result of any Casualty or Condemnation, but only if Borrower does not make
a payment of the Debt allowed under Paragraphs 12 or 14 of the Addendum to this
Mortgage".
17. The parenthetical phrase "(if any)" is hereby inserted after the term
"agent" in the second line of paragraph 9(c).
18. Paragraph 10(e) shall not apply to any Guarantor.
19. The term "ten (10)" contained in paragraph 12(b) is hereby deleted and
inserted in lieu thereof is the term "twenty (20)".
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20. The term "thirty (30)" contained in paragraph 14(a)(iii) is hereby deleted
and inserted in lieu thereof is the term "forty-five (45)".
21. Paragraph 14(b) only shall apply if more than twenty-five percent (25%) of
the Premises is leased to a person or entity unrelated to Borrower.
22. The last sentence of paragraph 14(c) is hereby deleted.
23. The phrase "after notice to Borrower" is hereby inserted at the end of
paragraph 19(k).
24. The phrase "or protest" is hereby inserted after the term "cure" in
paragraph 19(l).
25. The phrase "after providing Borrower with reasonable prior notice of such
entry" is hereby inserted after the term "times" in paragraph 30.
26. Paragraph 38(a) is hereby deleted and inserted in lieu thereof is the
following:
(a) Borrower agrees that with respect to the Mortgaged Property, it
shall cure any violation of the Americans with Disabilities Act of 1990,
the Fair Housing Amendments Act of 1988, all similar state and local laws
and ordinances related to access and all rules, regulations, and orders
issued pursuant thereto including, without limitation, the Americans with
Disabilities Act Accessibility Guidelines for Buildings and Facilities
(collectively the "Access Laws").
27. Notwithstanding anything contained in paragraph 37 to the contrary, the
Borrower and all tenants of the Mortgaged Property shall be permitted to sell,
store and use those certain Hazardous Substances on the Mortgaged Property which
they sell, store or use in the ordinary course of their business so long as such
storage and use comply with all Environmental Laws.
28. The phrase "or about" in the seventh line of paragraph 39 is hereby
deleted. The terms "adjoining" and "adjacent" are hereby deleted in each
instance from the eighth and ninth lines of paragraph 39. The following phrases
are hereby inserted after the term "foreclosure" at the end of paragraph 39: ";
provided, however, that Borrower's obligations and liabilities hereunder only
shall extend to events occurring during Borrower's possession of the Mortgaged
Property".
29. Paragraph 54 is hereby deleted.
30. If any non-monetary Event of Default occurs hereunder, and thereafter on
the fifteenth (15th) day through the last day of any calendar month Borrower
receives notice from Lender that Lender has elected to accelerate the full
outstanding balance of the Debt as a result of such Event of Default, the full
accelerated Debt shall not be due and payable until the first business day of
the month next following the date on which such notice is received, if and only
if Borrower provides to Lender United States treasury securities acceptable to
Lender in its reasonable discretion with a combined face amount of at least the
full accelerated Debt determined as of the first business day of the month next
following the date on which such notice is received, maturing on said business
day. Nothing contained in this Addendum Paragraph shall constitute or effect a
release of the lien of this Mortgage.
31. Lender has made the following loans to Borrower:
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Loan No. Store Location of Property Loan Amount
---------- -------- ----------------------------------- ------------------
94-0903449 277 Bloomfield, Michigan 1,330,423.00
94-0903450 168 Battle Creek, Michigan 726,793.00
94-0903447 163 Crystal Lake, Illinois 857,318.00
94-0903445 106 Libertyville, Illinois 867,548.00
94-0903446 140 Lake Zurich, Illinois 862,893.00
94-0903448 167 Schaumburg, Illinois 883,802.00
94-0903354 99 Brookhaven, Pennsylvania 892,829.00
94-0903355 65 Roseville, Minnesota 956,708.00
94-0903356 244 Eden Prairie, Minnesota 909,974.00
94-0903357 245 Eagan, Minnesota 849,344.00
94-0903358 623 Staten Island, New York 1,373,432.00
94-0903359 628 Bridgewater, New Jersey 1,379,474.00
94-0903360 101 Deptford, New Jersey 1,280,990.00
94-0903340 626 Bricktown, New Jersey 1,316,019.00
94-0903361 139 St. Charles, Missouri 734,319.00
94-0903442 265 St. Charles, Missouri 753,432.00
94-0903441 135 Bridgeton, Missouri 730,026.00
94-0901885 34 & 100 Okemos, Michigan & Joliet, Illinois 2,583,273.69
The foregoing loans shall be referred to herein collectively as the "Other
Loans". Each of the Other Loans is evidenced by a Promissory Note
(collectively the "Other Notes") executed and delivered by Borrower to the
order of Lender in the Loan Amount referenced above. Each of the Other Notes
is secured by certain liens and security interests in favor of Lender
encumbering certain real estate and other property of Borrower, which liens and
security interests are evidenced by: (a) a Mortgage, Security Agreement and
Assignment of Leases and Rents or a Deed of Trust, Security Agreement and
Assignment of Leases and Rents (collectively the "Other Mortgages"); and (b)
certain Other Security Documents (as such term is defined in each of the Other
Mortgages). The Other Notes, Other Mortgages and Other Security Documents
related thereto are referred to herein collectively as the "Other Loan
Documents". Each of the Other Loan Documents secures a certain "Debt" as such
term is defined in the related Other Mortgage, which respective "Debts" are
referred to herein collectively as the "Other Debt". Borrower and Lender
intend that the Loan and all of the Other Loans be cross-collateralized and
cross-defaulted as hereinafter described:
(a) In addition to securing the payment of the Debt, this Mortgage and
the Other Security Documents specifically related to the Loan also
secure the payment of the Other Debt and the performance of the
Other Loan Documents; provided, however, that no owner and holder of
all or any part of the Other Debt may enforce such
cross-collateralization unless such owner and holder is also the
same person or entity which is the owner and holder of the Note,
this Mortgage and the Other Security Documents related to the Loan.
(b) Any Event of Default under any of the Other Loan Documents (an
"Other Event of Default") shall also constitute an Event of Default
under this Mortgage and the Note; provided, however, that no Event
of Default under this Mortgage or the Note may be declared based
solely upon the occurrence of any Other Event of Default unless
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the owner and holder of this Mortgage and the Note is also the owner
and holder of the Other Loan Document(s) under which the Other Event
of Default has occurred.
The limits upon the enforceability of the cross-collateralization and
cross-default provisions contained in the foregoing paragraphs (a) and (b)
shall not be deemed to terminate such cross-collateralization and
cross-default, which shall continue until the Lender has executed and delivered
a specific written release or waiver of the same.
32. Lender may make certain additional loans to Borrower to be secured by real
property owned by Borrower that Borrower and Lender may agree to
cross-collateralize and cross-default with this Mortgage (the "Additional
Loans"). The loan and security documents, instruments and agreements related
to or evidencing the Additional Loans shall be referred to herein collectively
as the "Additional Loan Documents". The debt and obligations of Borrower under
the Additional Loan Documents shall be referred to herein collectively as the
"Additional Debt". Borrower and Lender intend that the Loan and all Additional
Loans be cross-collateralized and cross-defaulted as hereinafter described,
and, notwithstanding any limits upon the enforceability of such
cross-collateralization and cross-default set forth herein, that such
cross-collateralization and cross-default shall not be terminated and shall
continue until Lender has executed and delivered a specific written release or
waiver of the same.
(a) In addition to securing the payment of the Debt, this Mortgage and
the Other Security Documents specifically related to the Loan also
secure the payment of the Additional Debt and the performance of the
Additional Loan Documents; provided, however, that no owner and
holder of all or any part of the Additional Debt may enforce such
cross-collateralization unless such owner and holder is also the
same person or entity which is the owner and holder of the Note,
this Mortgage and the Other Security Documents related to the Loan.
(b) Any breach, default or failure to perform, and the expiration of any
applicable cure period, under any of the Additional Loan Documents
(an "Additional Event of Default") shall also constitute an Event of
Default under this Mortgage and the Note; provided, however, that no
Event of Default under this Mortgage or the Note may be declared
based solely upon the occurrence of any Additional Event of Default
unless the owner and holder of this Mortgage and the Note is also
the owner and holder of the Additional Loan Document(s) under which
the Additional Event of Default has occurred.
33. Lender shall not be obligated to record a release or satisfaction of this
Mortgage until the earlier of the following occurs:
(a) Payment in full of the Debt, the Other Debt and the Additional Debt;
or
(b) Payment in full of the Debt, so long as immediately prior to or at
the time of such payment, none of the following exist and are
continuing (collectively "Defaults"): (i) an Event of Default, (ii)
an Other Event of Default, (iii) an Additional Event of Default, or
(iv) an event that with notice, the passage time or both, would
constitute an Event of Default, Other Event of Default or Additional
Event of Default.
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Notwithstanding foregoing subparagraph (b), if there is a Default at or
immediately prior to the time when Borrower makes payment in the full of the
Debt, Lender may, in its sole and absolute discretion, elect to record a
release or satisfaction of this Mortgage.
34. Lender's approval required under Paragraph 10(b)(i), subject to Borrower's
satisfaction of all other requirements under Paragraph 10(b), shall not be
unreasonably withheld.
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