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EXHIBIT 4.05(b)
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FRANK'S NURSERY AND CRAFTS, INC.,
as Mortgagor
to
FIRST UNION NATIONAL BANK OF NORTH CAROLINA,
as Mortgagee
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MORTGAGE AND SECURITY AGREEMENT
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Date: April 22, 1996
PREPARED BY AND UPON RECORDATION RETURN TO:
Mitchell Fenton, Esq.
Graham & James LLP
885 Third Avenue
New York, New York 10022
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MORTGAGE AND SECURITY AGREEMENT
THIS MORTGAGE AND SECURITY AGREEMENT (this "Mortgage") is made as of
April 22, 1996 by FRANK'S NURSERY AND CRAFTS, INC., a Michigan corporation, as
Mortgagor ("Mortgagor"), whose address is 6501 East Nevada, Detroit, MI
48234-2864, to FIRST UNION NATIONAL BANK OF NORTH CAROLINA, a national banking
association, as Mortgagee ("Mortgagee"), whose address is One First Union
Center TW-8, Charlotte, North Carolina 28288.
W I T N E S S E T H:
THAT FOR AND IN CONSIDERATION OF THE SUM OF TEN AND NO/100 DOLLARS
($10.00), AND OTHER VALUABLE CONSIDERATION, THE RECEIPT AND SUFFICIENCY OF
WHICH ARE HEREBY ACKNOWLEDGED, MORTGAGOR HEREBY IRREVOCABLY MORTGAGES, GRANTS,
BARGAINS, SELLS, CONVEYS, TRANSFERS, PLEDGES, SETS OVER AND ASSIGNS, with power
of sale, all of Mortgagor's estate, right, title and interest in, to and under
any and all of the following described property, whether now owned or hereafter
acquired (collectively, the "Mortgaged Property"):
(A) All that certain real property situated in the County of
Franklin, State of Ohio, more particularly described on Exhibit A attached
hereto and incorporated herein by this reference (the "Premises"), together
with all of the easements, rights, privileges, franchises, tenements,
hereditaments and appurtenances now or hereafter thereunto belonging or in any
way appertaining thereto, and all of the estate, right, title, interest, claim
and demand whatsoever of Mortgagor therein or thereto, either at law or in
equity, in possession or in expectancy, now or hereafter acquired;
(B) All structures, buildings and improvements of every kind and
description now or at any time hereafter located or placed on the Premises (the
"Improvements");
(C) All furniture, furnishings, fixtures, goods, equipment or
personal property owned by Mortgagor and now or hereafter located on, attached
to or used in and about the Improvements, including, but not limited to, all
machines, engines, boilers, dynamos, elevators, stokers, tanks, cabinets,
awnings, screens, shades, blinds, carpets, draperies, lawn mowers, and all
appliances, plumbing, heating, air conditioning, lighting, ventilating,
refrigerating, disposal and incinerating equipment, and all fixtures and
appurtenances thereto, and such other goods and chattels and personal property
owned by Mortgagor as are now or hereafter used or furnished in operating the
Improvements or the activities conducted therein (the "Personal Property"),
excluding, however, any inventory, fork lifts, computers, pallet jacks, skids,
push carts, display carts, registers or such other Personal
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Property used in the operation of Mortgagor's retail business and all building
materials and equipment now or hereafter situated on or about the Premises or
Improvements, and all warranties and guaranties relating thereto, and all
additions thereto and substitutions and replacements therefor (exclusive of any
of the foregoing owned or leased by tenants of space in the Improvements);
(D) All easements, rights-of-way, strips and gores of land,
vaults, streets, ways, alleys, passages, sewer rights, and other emblements now
or hereafter located on the Premises or under or above the same or any part or
parcel thereof, and all estates, rights, titles, interests, tenements,
hereditaments and appurtenances, reversions and remainders whatsoever, in any
way belonging, relating or appertaining to the Mortgaged Property or any part
thereof, or that hereafter shall in any way belong, relate or be appurtenant
thereto, whether now owned or hereafter acquired by Mortgagor;
(E) All water, ditches, wells, reservoirs and drains and all
water, ditch, well, reservoir and drainage rights that are appurtenant to,
located on, under or above or used in connection with the Premises or the
Improvements, or any part thereof, whether now existing or hereafter created or
acquired;
(F) All minerals, crops, timber, trees, shrubs, flowers and
landscaping features now or hereafter located on, under or above the Premises;
(G) All cash funds, deposit accounts and other rights and evidence
of rights to cash, now or hereafter created or held by Mortgagee pursuant to
this Mortgage or any other of the Loan Documents (as hereinafter defined),
including, without limitation, all funds now or hereafter on deposit in the
Impound Account, the Payment Reserve, the Replacement Reserve and the Repair
and Remediation Reserve (each as hereinafter defined);
(H) All leases, licenses, concessions and occupancy agreements of
the Premises or the Improvements (collectively, "Leases"), whether written or
oral, now or hereafter entered into and all rents, royalties, issues, profits,
bonus money, revenue, income, rights and other benefits (collectively, the
"Rents") of the Premises or the Improvements, now or hereafter arising from the
use or enjoyment of all or any portion thereof or from any present or future
lease (including, without limitation, oil, gas and mineral leases), license,
concession, occupancy agreement or other agreement pertaining thereto or
arising from any of the Leases or any of the General Intangibles (as
hereinafter defined) and all cash or securities deposited to secure performance
by the tenants, lessees or licensees, as applicable, of their obligations under
any such Leases, whether said cash or securities are to be held until the
expiration of the terms of said Leases or applied to one or more of the
installments of rent coming due prior to the expiration of said terms, subject,
however, to the provisions contained in Section 1.11 hereinbelow;
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(I) All contracts and agreements now or hereafter entered into
covering any part of the Premises or the Improvements (including, without
limitation, all Leases) and all revenue, income and other benefits thereof,
including, without limitation, management agreements, service contracts,
maintenance contracts, equipment leases, personal property leases and any
contracts or documents relating to construction on any part of the Premises or
the Improvements (including plans, drawings, surveys, tests, reports, bonds and
governmental approvals) or to the management or operation of any part of the
Premises or the Improvements;
(J) All present and future monetary deposits given to any public
or private utility with respect to utility services furnished to any part of
the Premises or the Improvements;
(K) All present and future funds, accounts, instruments, accounts
receivable, documents, causes of action, claims, general intangibles
(excluding, however, trademarks, trade names, service marks and symbols now or
hereafter used in connection with the operation of Mortgagor's retail business
on the Premises or the Improvements), including all rights, interest and
privileges that Mortgagor has or may have as developer or declarant under any
covenants, restrictions or declarations now or hereafter relating to the
Premises or the Improvements and all notes or chattel paper now or hereafter
arising from or by virtue of any transactions related to the Premises or the
Improvements (collectively, the "General Intangibles");
(L) All water taps, sewer taps, certificates of occupancy,
permits, licenses, franchises, certificates, consents, approvals and other
rights and privileges now or hereafter obtained in connection with the Premises
or the Improvements and all present and future warranties and guaranties
relating to the Improvements or to any equipment, fixtures, furniture,
furnishings, personal property or components of any of the foregoing now or
hereafter located or installed on the Premises or the Improvements;
(M) All building materials, supplies and equipment now or
hereafter placed on the Premises or in the Improvements and all architectural
renderings, models, drawings, plans, specifications, studies and data now or
hereafter relating to the Premises or the Improvements;
(N) All right, title and interest of Mortgagor in any insurance
policies or binders now or hereafter relating to the Mortgaged Property (but
only that portion of such interest that relates to the Mortgaged Property),
including any unearned premiums thereon;
(O) With respect to the Mortgaged Property, all proceeds,
products, substitutions and accessions (including claims and demands therefor)
of the conversion, voluntary or involuntary, of any of the foregoing into cash
or liquidated claims, including,
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without limitation, proceeds of insurance and condemnation awards; and
(P) All other or greater rights and interests of every nature in
the Premises or the Improvements and in the possession or use thereof and
income therefrom, whether now owned or hereafter acquired by Mortgagor.
FOR THE PURPOSE OF SECURING:
(1) The debt evidenced by that certain Promissory Note (such
Promissory Note, together with any and all renewals, modifications,
consolidations and extensions thereof, is hereinafter referred to as the
"Note") of even date with this Mortgage, made by Mortgagor payable to the order
of Mortgagee in the principal face amount of SEVEN HUNDRED FORTY-ONE THOUSAND
AND NO/100 DOLLARS ($741,000.00), together with interest as therein provided;
(2) The full and prompt payment and performance of all of the
provisions, agreements, covenants and obligations herein contained and
contained in any other agreements, documents or instruments now or hereafter
evidencing, securing, guarantying, indemnifying or otherwise relating to the
Debt (the Note, this Mortgage, and such other agreements, documents and
instruments, together with any and all renewals, amendments, extensions and
modifications thereof, are hereinafter collectively referred to as the "Loan
Documents") and the payment of all other sums therein covenanted to be paid;
(3) Any and all additional advances made by Mortgagee to protect
or preserve the Mortgaged Property or the lien or security interest created
hereby on the Mortgaged Property, or for taxes, assessments or insurance
premiums as hereinafter provided or for performance of any of Mortgagor's
obligations hereunder or under the other Loan Documents or for any other
purpose provided herein or in the other Loan Documents (whether or not the
original Mortgagor remains the owner of the Mortgaged Property at the time of
such advances); and
(4) Any and all other indebtedness now owing or that may hereafter
be owing by Mortgagor to Mortgagee in connection with the Mortgaged Property,
however and whenever incurred or evidenced, whether express or implied, direct
or indirect, absolute or contingent, or due or to become due, and all renewals,
modifications, consolidations, replacements and extensions thereof, it being
contemplated by Mortgagor and Mortgagee that Mortgagor may hereafter become so
indebted to Mortgagee.
(All of the sums referred to in Paragraphs (1) through (4) above are herein
referred to as the "Debt").
TO HAVE AND TO HOLD the Mortgaged Property unto Mortgagee, its
successors and assigns forever, and Mortgagor does hereby bind itself, its
successors and assigns, to WARRANT AND FOREVER DEFEND the title to the
Mortgaged Property, subject to the Permitted
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Encumbrances (as hereinafter defined), to Mortgagee against every person
whomsoever lawfully claiming or to claim the same or any part thereof;
PROVIDED, HOWEVER, that if the principal and interest and all other
sums due or to become due under the Note, including, without limitation, any
prepayment fees required pursuant to the terms of the Note, shall have been
paid at the time and in the manner stipulated therein and the Debt shall have
been paid and all other covenants contained in the Loan Documents shall have
been performed, then, in such case, the liens, security interests, estates and
rights granted by this Mortgage shall be satisfied and the estate, right, title
and interest of Mortgagee in the Mortgaged Property shall cease, and upon
payment to Mortgagee of all costs and expenses incurred for the preparation of
the release hereinafter referenced and all recording costs if allowed by law,
Mortgagee shall promptly satisfy and release this Mortgage of record and the
lien hereof by proper instrument.
ARTICLE I
COVENANTS OF MORTGAGOR
For the purpose of further securing the Debt and for the protection of
the security of this Mortgage, for so long as the Debt or any part thereof
remains unpaid, Mortgagor covenants and agrees as follows:
1.1 Warranties of Mortgagor. Mortgagor, for itself and its
successors and assigns, does hereby represent, warrant and covenant to and with
Mortgagee, its successors and assigns, that:
(a) Mortgagor has good, marketable and indefeasible fee
simple title to the Mortgaged Property, subject only to those matters expressly
set forth as exceptions to or subordinate matters in the title insurance policy
insuring the lien of this Mortgage (such items being the "Permitted
Encumbrances"), and has full power and lawful authority to grant, bargain,
sell, convey, assign, transfer, encumber and mortgage its interest in the
Mortgaged Property in the manner and form hereby done or intended. Mortgagor
will preserve its interest in and title to the Mortgaged Property and will
forever warrant and defend the same to Mortgagee against any and all claims
whatsoever and will forever warrant and defend the validity and priority of the
lien and security interest created herein against the claims of all persons and
parties whomsoever, subject to the Permitted Encumbrances. The foregoing
warranty of title shall survive the foreclosure of this Mortgage and shall
inure to the benefit of and be enforceable by Mortgagee in the event Mortgagee
acquires title to the Mortgaged Property pursuant to any foreclosure;
(b) No bankruptcy or insolvency proceedings are pending
or contemplated by Mortgagor or, to the best knowledge of
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Mortgagor, against Mortgagor or by or against any endorser, cosigner or
guarantor of the Note;
(c) All reports, certificates, affidavits, statements and
other data furnished by Mortgagor to Mortgagee in connection with the loan
evidenced by the Note are true and correct in all material respects and do not
omit to state any fact or circumstance necessary to make the statements
contained therein not misleading;
(d) The execution, delivery and performance of this
Mortgage, the Note and all of the other Loan Documents have been duly
authorized by all necessary action to be, and are binding and enforceable
against Mortgagor in accordance with the respective terms thereof and do not
contravene, result in a breach of or constitute a default (nor upon the giving
of notice or the passage of time or both will same constitute a default) under
the partnership agreement, articles of incorporation or other organizational
documents of Mortgagor or, to the best knowledge of Mortgagor, any contract or
agreement of any nature to which Mortgagor is a party or by which Mortgagor or
any of its property may be bound and do not violate or contravene any law,
order, decree, rule or regulation to which Mortgagor is subject;
(e) To the best knowledge of Mortgagor, the Premises and
the Improvements and the intended use thereof by Mortgagor comply with all
applicable restrictive covenants, zoning ordinances, subdivision and building
codes, flood disaster laws, applicable health and environmental laws and
regulations and all other ordinances, orders or requirements issued by any
state, federal or municipal authorities having or claiming jurisdiction over
the Mortgaged Property. To the best knowledge of Mortgagor, the Premises and
Improvements constitute a separate tax parcel for purposes of ad valorem
taxation. The Premises and Improvements do not require any rights over, or
restrictions against, other property in order to comply with any of the
aforesaid governmental ordinances, orders or requirements;
(f) All utility services necessary and sufficient for the
full use, occupancy, operation and disposition of the Premises and the
Improvements for their current purposes are available to the Mortgaged
Property, including water, storm sewer, sanitary sewer, gas, electric, cable
and telephone facilities, through public rights-of-way or perpetual private
easements approved by Mortgagee;
(g) All streets, roads, highways, bridges and waterways
necessary for access to and full use, occupancy, operation and disposition of
the Premises and the Improvements have been completed, to the best knowledge of
Mortgagor have been dedicated to and accepted by the appropriate municipal
authority, and are open and available to the Premises and the Improvements
without further condition or cost to Mortgagor;
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(h) All curb cuts, driveways and traffic signals shown on
the survey delivered to Mortgagee prior to the execution and delivery of this
Mortgage are existing and to the best knowledge of Mortgagor, have been fully
approved by the appropriate governmental authority;
(i) There are no judicial, administrative, mediation or
arbitration actions, suits or proceedings pending or to the best knowledge of
Mortgagor, threatened against or affecting Mortgagor (or, if Mortgagor is a
partnership, any of its general partners) or the Mortgaged Property which, if
adversely determined, would materially impair either the Mortgaged Property or
Mortgagor's ability to perform the covenants or obligations required to be
performed under the Loan Documents;
(j) To the best knowledge of Mortgagor, the Mortgaged
Property is free from delinquent water charges, sewer rents, taxes and
assessments;
(k) As of the date of this Mortgage, the Mortgaged
Property is free from unrepaired damage caused by fire, flood, accident or
other casualty;
(l) As of the date of this Mortgage, no part of the
Premises or the Improvements has been taken in condemnation, eminent domain or
like proceeding nor is any such proceeding pending or, to the best knowledge of
Mortgagor, threatened or contemplated;
(m) Mortgagor possesses all franchises, patents,
copyrights, trademarks, trade names, licenses and permits necessary for the
conduct of its business substantially as now conducted;
(n) The Improvements are structurally sound, in good
repair and, to the best knowledge of Mortgagor, are free of defects in
materials and workmanship and have been constructed and installed in
substantial compliance with the plans and specifications relating thereto. All
major building systems located within the Improvements, including, without
limitation, the heating and air conditioning systems and the electrical and
plumbing systems, are in good working order and condition;
(o) Mortgagor has delivered to Mortgagee true, correct
and complete copies of all Leases and all amendments thereto or modifications
thereof;
(p) Mortgagor and the Mortgaged Property are free from
any past due obligations for sales and payroll taxes;
(q) There are no security agreements or financing
statements affecting any of the Mortgaged Property other than (i) as disclosed
in writing by Mortgagor to Mortgagee prior to the date hereof and (ii) the
security agreements and financing statements created in favor of Mortgagee; and
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(r) There are no Leases affecting the Mortgaged Property
as of the date hereof.
1.2 Defense of Title. If, while this Mortgage is in force, the
title to the Mortgaged Property or the interest of Mortgagee therein shall be
the subject, directly or indirectly, of any action at law or in equity, or be
attached directly or indirectly, or endangered, clouded or adversely affected
in any manner, Mortgagor, at Mortgagor's expense, shall take all necessary and
proper steps for the defense of said title or interest, including the
employment of counsel (which counsel shall be approved by Mortgagee at anytime
during an Event of Default hereunder), the prosecution or defense of
litigation, and the compromise or discharge of claims made against said title
or interest. Notwithstanding the foregoing, in the event that Mortgagee
determines that Mortgagor is not adequately performing its obligations under
this Section, Mortgagee may, without limiting or waiving any other rights or
remedies of Mortgagee hereunder, take such steps with respect thereto as
Mortgagee shall deem necessary or proper and any and all costs and expenses
incurred by Mortgagee in connection therewith, together with interest thereon
at the Default Interest Rate (as defined in the Note) from the date incurred by
Mortgagee until actually paid by Mortgagor, shall be immediately paid by
Mortgagor on demand and shall be secured by this Mortgage and by all of the
other Loan Documents securing all or any part of the indebtedness evidenced by
the Note.
1.3 Performance of Obligations. Mortgagor shall pay when due the
principal of and the interest on the Debt in accordance with the terms of the
Note. Mortgagor shall also pay all charges, fees and other sums required to be
paid by Mortgagor as provided in the Loan Documents, in accordance with the
terms of the Loan Documents, and shall observe, perform and discharge all
obligations, covenants and agreements to be observed, performed or discharged
by Mortgagor set forth in the Loan Documents in accordance with their terms.
Further, Mortgagor shall promptly and strictly perform and comply with all
covenants, conditions, obligations and prohibitions required of Mortgagor in
connection with any other document or instrument affecting title to the
Mortgaged Property, or any part thereof, regardless of whether such document or
instrument is superior or subordinate to this Mortgage.
1.4 Insurance. Mortgagor shall, at Mortgagor's expense, maintain
in force and effect on the Mortgaged Property at all times while this Mortgage
continues in effect the following insurance:
(a) Insurance against loss or damage to the Mortgaged
Property by fire, windstorm, tornado and hail and against loss and damage by
such other, further and additional risks as may be now or hereafter embraced by
an "all-risk" form of insurance policy. The amount of such insurance shall be
not less than one hundred percent (100%) of the full replacement cost of the
Improvements, furniture, furnishings, fixtures, equipment and other items
(whether personalty or fixtures) included in the Mortgaged Property and
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owned by Mortgagor from time to time, without reduction for depreciation. The
determination of the replacement cost amount shall be adjusted annually to
comply with the requirements of the insurer issuing such coverage or, at
Mortgagee's election, by reference to such indices, appraisals or information
as Mortgagee determines in its reasonable discretion. Full replacement cost,
as used herein, means, with respect to the Improvements, the cost of replacing
the Improvements without regard to deduction for depreciation, exclusive of the
cost of excavations, foundations and footings below the lowest basement floor,
and means, with respect to such furniture, furnishings, fixtures, equipment and
other items, the cost of replacing the same, in each cases, with inflation
guard coverage to reflect the effect of inflation. Each policy or policies
shall contain a replacement cost endorsement and either an agreed amount
endorsement (to avoid the operation of any co-insurance provisions) or a waiver
of any co-insurance provisions, all subject to Mortgagee's approval.
(b) Commercial comprehensive general liability insurance
for personal injury, bodily injury, death and property damage liability in
amounts not less than $3,000,000.00, (inclusive of umbrella coverage) combined
single limit "per occurrence" for bodily injury, personal injury and property
damage. This policy must contain, but not be limited to, coverage for premises
and operations liability, products and completed operations liability,
contractual liability, hired and non-owned automobile liability, personal
injury liability and property damage liability. During any construction on the
Premises, Mortgagor's general contractor for such construction shall also
provide the insurance required in this Subsection (b). Mortgagee hereby
retains the right to periodically review the amount of said liability insurance
being maintained by Mortgagor and to require an increase in the amount of said
liability insurance should Mortgagee deem an increase to be reasonably prudent
under then existing circumstances.
(c) Insurance covering the major components of the
central heating, air conditioning and ventilating systems, boilers, other
pressure vessels, high pressure piping and machinery, elevators and escalators,
if any, and other similar equipment installed in the Improvements, in an amount
equal to one hundred percent (100%) of the full replacement cost of the
Improvements, which policies shall insure against physical damage to and loss
of occupancy and use of the Improvements arising out of an accident or
breakdown covered thereunder.
(d) If the Premises or any part thereof is identified by
the Secretary of Housing and Urban Development as being situated in an area now
or subsequently designated as having special flood hazards (including, without
limitation, those areas designated as Zone A or Zone V), flood insurance in an
amount equal to the lesser of: (a) the minimum amount required, under the terms
of coverage, to compensate for any damage or loss on a replacement basis (or
the unpaid balance of the mortgage if replacement cost coverage is not
available for the type of building insured); or (b) the maximum
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insurance available under the appropriate National Flood Insurance
Administration program.
(e) During the period of any construction on the Premises
or renovation or alteration of the Improvements, a so-called "Builder's
All-Risk Completed Value" or "Course of Construction" insurance policy in
non-reporting form for any Improvements under construction, renovation or
alteration in an amount approved by Mortgagee and Worker's Compensation
Insurance covering all persons engaged in such construction, renovation or
alteration.
(f) Loss of rents or loss of business income insurance in
amounts sufficient to compensate Mortgagor for all Rents during a period of not
less than one year in which the Mortgaged Property may be damaged or destroyed.
(g) Such other insurance on the Mortgaged Property or on
any replacements or substitutions thereof or additions thereto as may from time
to time be required by Mortgagee against other insurable hazards or casualties
that at the time are commonly insured against in the case of property similarly
situated, due regard being given to the height and type of buildings, their
construction, location, use and occupancy.
All such insurance shall (i) be with insurers authorized to do
business in the state within which the Premises is located and who have and
maintain a rating of at least (A) A from Standard & Poors or (B) A: VIII from
A.M. Best, (ii) contain the complete address of the Premises (or a complete
legal description), (iii) be for terms of at least one year, (iv) contain
deductibles that do not exceed $50,000.00 or, with respect to the policy
described in clause (d) above, $3,000, and (v) be subject to the approval of
Mortgagee as to insurance companies, amounts, content, forms of policies,
method by which premiums are paid and expiration dates.
Mortgagor shall as of the date hereof deliver to Mortgagee evidence
that said insurance policies have been paid current as of the date hereof and
certified copies of such insurance policies and original certificates of
insurance signed by an authorized agent evidencing such insurance satisfactory
to Mortgagee. Mortgagor shall renew all such insurance and deliver to
Mortgagee certificates evidencing such renewals at least thirty (30) days
before any such insurance shall expire. Without limiting the required
endorsements to insurance policies, Mortgagor further agrees that all such
policies include a standard, non-contributory, mortgagee clause naming:
First Union National Bank of North Carolina, its Successors
and Assigns ATIMA
c/o First Union Mortgage Corporation
P.O. Box 20068
Charlotte, NC 28202.
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Mortgagee, its successors and assigns, (a) as an additional insured
under all liability insurance policies, (b) as the first mortgagee on all
property insurance policies and (c) as the lender's loss payee on all loss of
rents or loss of business income insurance policies. Mortgagor further agrees
that all such insurance policies: (i) shall provide for at least thirty (30)
days' prior written notice to Mortgagee prior to any cancellation or
termination thereof and prior to any modification thereof that affects the
interest of Mortgagee; (ii) shall contain an endorsement or agreement by the
insurer that any loss shall be payable to Mortgagee in accordance with the
terms of such policy notwithstanding any act or negligence of Mortgagor that
might otherwise result in forfeiture of such insurance; (iii) shall either name
Mortgagee as an additional insured or waive all rights of subrogation against
Mortgagee; (iv) in the event that the Mortgaged Property constitutes a legal
non-conforming use, shall include an ordinance or law coverage endorsement that
will contain "Demolition Cost", "Loss to the Undamaged Portion of the Building"
and "Increased Cost of Construction" coverages; (v) in the event that any Lease
requires that any insurance policies affecting the Mortgaged Property contain a
waiver of subrogation provision, shall, either by their terms or by
endorsement, provide such a waiver; and (vi) may be in the form of blanket
policies provided that such policies contain an endorsement to the effect that
the coverage provided thereby will not be affected by the failure to pay any
portion of the premium therefor that is not allocable to the Mortgaged Property
or by any other action not relating to the Mortgaged Property that would
otherwise permit the issuer thereof to cancel the coverage thereof. The
delivery to Mortgagee of the insurance policies or the certificates of
insurance as provided above shall constitute an assignment of all proceeds
payable under such insurance policies relating to the Mortgaged Property by
Mortgagor to Mortgagee as further security for the Debt. In the event of
foreclosure of this Mortgage, or other transfer of title to the Mortgaged
Property in extinguishment in whole or in part of the Debt, all right, title
and interest of Mortgagor in and to all proceeds payable under such policies
then in force concerning the Mortgaged Property shall thereupon vest in the
purchaser at such foreclosure, or in Mortgagee or other transferee in the event
of such other transfer of title. Approval of any insurance by Mortgagee shall
not be a representation of the solvency of any insurer or the sufficiency of
any amount of insurance. In the event Mortgagor fails to provide, maintain,
keep in force or deliver and furnish to Mortgagee the policies of insurance
required by this Mortgage or evidence of their renewal as required herein,
Mortgagee may, but shall not be obligated to, procure such insurance and
Mortgagor shall pay all amounts advanced by Mortgagee therefor, together with
interest thereon at the Default Interest Rate from and after the date advanced
by Mortgagee until actually repaid by Mortgagor, promptly upon demand by
Mortgagee. Any amounts so advanced by Mortgagee, together with interest
thereon, shall be secured by this Mortgage and by all of the other Loan
Documents securing all or any part of the Debt evidenced by the Note.
Mortgagee shall not be responsible for nor incur any
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liability for the insolvency of the insurer or other failure of the insurer to
perform, even though Mortgagee has caused the insurance to be placed with the
insurer after failure of Mortgagor to furnish such insurance.
1.5 Payment of Taxes. Mortgagor shall pay or cause to be paid,
except to the extent provision is actually made therefor pursuant to Section
1.6 of this Mortgage, all taxes and assessments that are or may become a lien
on the Mortgaged Property or that are assessed against or imposed upon the
Mortgaged Property. Mortgagor shall furnish Mortgagee with receipts (or if
receipts are not immediately available, with copies of canceled checks
evidencing payment with receipts to follow promptly after they become
available) showing payment of such taxes and assessments at least fifteen (15)
days prior to the applicable delinquency date therefor. Notwithstanding the
foregoing, Mortgagor may in good faith, by appropriate proceedings and upon
notice to Mortgagee, contest the validity, applicability or amount of any
asserted tax or assessment so long as (a) such contest is diligently pursued,
(b) Mortgagee determines, in its subjective opinion, that such contest suspends
the obligation to pay the tax and that nonpayment of such tax or assessment
will not result in the sale, loss, forfeiture or diminution of the Mortgaged
Property or any part thereof or any interest of Mortgagee therein, and (c)
prior to the earlier of the commencement of such contest or the delinquency
date of the asserted tax or assessment, Mortgagor deposits in the Impound
Account (as hereinafter defined) an amount determined by Mortgagee to be
adequate to cover the payment of such tax or assessment and a reasonable
additional sum to cover possible interest, costs and penalties; provided,
however, that, unless Mortgagor duly pays the contested tax or assessment prior
to the commencement of such contest, Mortgagor shall promptly cause to be paid
any amount adjudged by a court of competent jurisdiction to be due, with all
interest, costs and penalties thereon, promptly after such judgment becomes
final; and provided further that in any event each such contest shall be
concluded and the taxes, assessments, interest, costs and penalties shall be
paid prior to the date any writ or order is issued under which the Mortgaged
Property may be sold, lost or forfeited.
1.6 Tax and Insurance Impound Account. Mortgagor shall establish
and maintain at all times while this Mortgage continues in effect an impound
account (the "Impound Account") with Mortgagee for payment of real estate taxes
and assessments and insurance on the Mortgaged Property and as additional
security for the Debt. Simultaneously with the execution hereof, Mortgagor
shall deposit in the Impound Account an amount determined by Mortgagee to be
necessary to ensure that there will be on deposit with Mortgagee an amount
which, when added to the monthly payments subsequently required to be deposited
with Mortgagee hereunder on account of real estate taxes, assessments and
insurance premiums, will result in there being on deposit with Mortgagee in the
Impound Account an amount sufficient to pay the next due annual installment of
real estate taxes and assessments on the Mortgaged Property at least one
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(1) month prior to the delinquency date thereof (if paid in one installment)
and the next due annual insurance premiums with respect to the Mortgaged
Property at least one (1) month prior to the due date thereof (if paid in one
installment). Commencing on the first monthly payment date under the Note and
continuing thereafter on each monthly payment date under the Note, Mortgagor
shall pay to Mortgagee, concurrently with and in addition to the monthly
payment due under the Note and until the Debt is fully paid and performed,
deposits in an amount equal to one-twelfth (1/12) of the amount of the annual
real estate taxes and assessments that will next become due and payable on the
Mortgaged Property, plus one-twelfth (1/12) of the amount of the annual
premiums that will next become due and payable on insurance policies that
Mortgagor is required to maintain hereunder, each as estimated and determined
by Mortgagee. So long as no default hereunder or under the other Loan
Documents has occurred and is continuing, all sums in the Impound Account shall
be held by Mortgagee in the Impound Account to pay said taxes, assessments and
insurance premiums in one installment before the same become delinquent.
Mortgagor shall be responsible for ensuring the receipt by Mortgagee, at least
thirty (30) days prior to the respective due date for payment thereof, of all
bills, invoices and statements for all taxes, assessments and insurance
premiums to be paid from the Impound Account (unless Mortgagor has not received
any such bill, invoice or statement, in which case Mortgagor shall so advise
Mortgagee in writing at least thirty (30) days prior to the respective due date
and shall deliver a copy of such bill, invoice or statement to Mortgagee upon
receipt thereof), and so long as no default hereunder or under the other Loan
Documents has occurred and is continuing, Mortgagee shall pay the governmental
authority or other party entitled thereto directly to the extent funds are
available for such purpose in the Impound Account. In making any payment from
the Impound Account, Mortgagee shall be entitled to rely on any bill, statement
or estimate procured from the appropriate public office or insurance company or
agent without any inquiry into the accuracy of such bill, statement or estimate
and without any inquiry into the accuracy, validity, enforceability or
contestability of any tax, assessment, valuation, sale, forfeiture, tax lien or
title or claim thereof. The Impound Account shall not, unless otherwise
explicitly required by applicable law, be or be deemed to be escrow or trust
funds, but, at Mortgagee's option and in Mortgagee's discretion, may either be
held in a separate account or be commingled by Mortgagee with the general funds
of Mortgagee. No interest on funds contained in the Impound Account, if any,
shall be paid by Mortgagee to Mortgagor. The Impound Account is solely for the
protection of Mortgagee and entails no responsibility on Mortgagee's part
beyond the payment of taxes, assessments and insurance premiums following
receipt of bills, invoices or statements therefor in accordance with the terms
hereof and beyond the allowing of due credit for the sums actually received;
provided, however, that so long as there is no default under this Mortgage that
is not cured within any applicable grace or cure period, and provided that the
Impound Account shall contain sufficient funds to pay the sums required
hereunder at least fifteen (15) days prior to their respective due date for
payment
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therefor, Mortgagee shall be responsible for any late charges, interests and
penalties that become payable as a result of Mortgagee's failure to timely pay
such sums. Upon assignment of this Mortgage by Mortgagee, any funds in the
Impound Account shall be turned over to the assignee and any responsibility of
Mortgagee, as assignor, with respect thereto shall terminate. If the total
funds in the Impound Account shall exceed the amount of payments actually
applied by Mortgagee for the purposes of the Impound Account, such excess may
be credited by Mortgagee on subsequent payments to be made hereunder or, at the
option of Mortgagee, refunded to Mortgagor. If, however, the Impound Account
shall not contain sufficient funds to pay the sums required when the same shall
become due and payable, Mortgagor shall, within ten (10) days after receipt of
written notice thereof, deposit with Mortgagee the full amount of any such
deficiency. If Mortgagor shall fail to deposit with Mortgagee the full amount
of such deficiency as provided above, Mortgagee shall have the option, but not
the obligation, to make such deposit, and all amounts so deposited by
Mortgagee, together with interest thereon at the Default Interest Rate from the
date so deposited by Mortgagee until actually paid by Mortgagor, shall be
immediately paid by Mortgagor on demand and shall be secured by this Mortgage
and by all of the other Loan Documents securing all or any part of the Debt.
If there is a default under this Mortgage that is not cured within any
applicable grace or cure period, Mortgagee may, but shall not be obligated to,
apply at any time the balance then remaining in the Impound Account against the
Debt in whatever order Mortgagee shall subjectively determine. No such
application of the Impound Account shall be deemed to cure any default
hereunder. Upon full payment of the Debt in accordance with its terms or at
such earlier time as Mortgagee may elect, the balance of the Impound Account
then in Mortgagee's possession shall be paid over to Mortgagor and no other
party shall have any right or claim thereto.
1.7 Payment Reserve.
(a) Contemporaneously with the execution hereof,
Mortgagor has established with Mortgagee a reserve in the amount of $18,579.51
(the "Payment Reserve"). Mortgagor understands and agrees that,
notwithstanding the establishment of the Payment Reserve as herein required,
all of the proceeds of the Note have been, and shall be considered, fully
disbursed and shall bear interest and be payable on the terms provided therein.
No interest on funds contained in the Payment Reserve shall be paid by
Mortgagee to Mortgagor.
(b) For so long as no default has occurred hereunder or
under any of the other Loan Documents beyond any applicable grace or cure
period, Mortgagee shall on each monthly payment due date under the Note to and
including May 1, 2006, advance from the Payment Reserve to itself the amount of
the monthly installment due and payable by Mortgagor under the Note on such
monthly payment due date and shall also advance from the Payment Reserve into
the Impound Account the amount of any deposit for taxes and insurance
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premiums and into the Replacement Reserve (as hereinafter defined) the amount
of any deposit for Repairs (as hereinafter defined) required to be paid by
Mortgagor concurrently with each such monthly installment pursuant to the terms
hereof. Provided no default, or event that with the passage of time or the
giving of notice, or both, which would constitute a default, has occurred after
the final disbursement from the Payment Reserve on May 1, 2006 any amounts then
remaining in the Payment Reserve shall be paid to Mortgagor. Nothing contained
herein, including, without limitation, the existence of the Payment Reserve,
shall release Mortgagor of any obligation to make payments under the Note, this
Mortgage or the other Loan Documents strictly in accordance with the terms
hereof or thereof and, in this regard, without limiting the generality of the
foregoing, should the amounts contained in the Payment Reserve not be
sufficient to pay in full the monthly installments and the Impound Account and
Replacement Reserve deposits referenced above in this subparagraph, Mortgagor
shall be responsible for paying such deficiency on the due date of any such
monthly installment.
1.8 Replacement Reserve.
(a) As additional security for the Debt, Mortgagor shall
establish and maintain at all times while this Mortgage continues in effect a
repair reserve (the "Replacement Reserve") with Mortgagee for payment of costs
and expenses incurred by Mortgagor in connection with the performance of work
to the roofs, chimneys, gutters, downspouts, paving, curbs, ramps, driveways,
balconies, porches, patios, exterior walls, exterior doors and doorways,
windows, elevators, lighting, ballasts, lamps and mechanical and HVAC equipment
(collectively, the "Repairs"). Commencing on the first monthly payment date
under the Note and continuing thereafter on each monthly payment date under the
Note, Mortgagor shall pay to Mortgagee, concurrently with and in addition to
the monthly payment due under the Note and until the Debt is fully paid and
performed, a deposit to the Replacement Reserve in an amount equal to $1,044.51
per month. So long as no default hereunder or under the other Loan Documents
has occurred and is continuing, all sums in the Replacement Reserve shall be
held by Mortgagee in the Replacement Reserve to pay the costs and expenses of
Repairs. So long as no default hereunder or under the other Loan Documents has
occurred and is continuing, Mortgagee shall, to the extent funds are available
for such purpose in the Replacement Reserve, disburse to Mortgagor the amount
paid or incurred by Mortgagor in performing such Repairs within ten (10) days
following: (a) the receipt by Mortgagee of a written request from Mortgagor for
disbursement from the Replacement Reserve and a certification by Mortgagor in a
form approved in writing by Mortgagee that the applicable item of Repair has
been completed; (b) the delivery to Mortgagee of invoices, receipts or other
evidence satisfactory to Mortgagee, verifying the cost of performing the
Repairs; (c) for disbursement requests in excess of $20,000.00, the delivery to
Mortgagee of affidavits, lien waivers or other evidence reasonably satisfactory
to Mortgagee showing that all materialmen, laborers, subcontractors and any
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other parties who might or could claim statutory or common law liens and are
furnishing or have furnished material or labor to the Mortgaged Property have
been paid all amounts due for labor and materials furnished to the Mortgaged
Property; (d) for disbursement requests in excess of $20,000.00 (other than
such disbursement requests for routine, nonstructural repairs to the Premises),
delivery to Mortgagee of a certification from an inspecting architect or other
third party acceptable to Mortgagee describing the completed Repairs and
verifying the completion of the Repairs and the value of the completed Repairs;
and (e) for disbursement requests in excess of $20,000.00, delivery to
Mortgagee of a new certificate of occupancy for the portion of the Improvements
covered by such Repairs, if said new certificate of occupancy is required by
law, or a certification by Mortgagor that no new certificate of occupancy is
required. Mortgagee shall not be required to make advances from the
Replacement Reserve more frequently than once in any sixty (60) day period. In
making any payment from the Replacement Reserve, Mortgagee shall be entitled to
rely on such request from Mortgagor without any inquiry into the accuracy,
validity or contestability of any such amount. Mortgagee may, at Mortgagor's
expense, make or cause to be made during the term of this Mortgage an annual
inspection of the Mortgaged Property to determine the need, as determined by
Mortgagee in its reasonable judgment, for further Repairs of the Mortgaged
Property. In the event that such inspection reveals that further Repairs of
the Mortgaged Property are required, Mortgagee shall provide Mortgagor with a
written description of the required Repairs and Mortgagor shall complete such
Repairs to the reasonable satisfaction of Mortgagee within ninety (90) days
after the receipt of such description from Mortgagee, or such later date as may
be approved by Mortgagee in its sole discretion. The Replacement Reserve shall
not, unless otherwise explicitly required by applicable law, be or be deemed to
be escrow or trust funds, but, at Mortgagee's option and in Mortgagee's
discretion, may either be held in a separate account or be commingled by
Mortgagee with the general funds of Mortgagee. Interest on the funds contained
in the Replacement Reserve shall be credited to Mortgagor as provided in
Section 4.31 hereof. The Replacement Reserve is solely for the protection of
Mortgagee and entails no responsibility on Mortgagee's part beyond the
reimbursement of Mortgagor for the payment of the costs and expenses described
in this Section in accordance with the terms hereof and the allowing of due
credit for the sums actually received. In the event that the amounts on
deposit or available in the Replacement Reserve are inadequate to pay the cost
of the Repairs, Mortgagor shall pay the amount of such deficiency. Upon
assignment of this Mortgage by Mortgagee, any funds in the Replacement Reserve
shall be turned over to the assignee and any responsibility of Mortgagee, as
assignor, with respect thereto shall terminate. If there is a default under
this Mortgage that is not cured within any applicable grace or cure period,
Mortgagee may, but shall not be obligated to, apply at any time the balance
then remaining in the Replacement Reserve against the Debt in whatever order
Mortgagee shall subjectively determine. No such application of the Replacement
Reserve shall be deemed to
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cure any default hereunder. Upon full payment of the Debt in accordance with
its terms or at such earlier time as Mortgagee may elect, the balance of the
Replacement Reserve then in Mortgagee's possession shall be paid over to
Mortgagor and no other party shall have any right or claim thereto.
(b) As additional security for the payment and
performance by Mortgagor of all duties, responsibilities and obligations under
the Note and the other Loan Documents, Mortgagor hereby unconditionally and
irrevocably assigns, conveys, pledges, mortgages, transfers, delivers,
deposits, sets over and confirms unto Mortgagee, and hereby grants to Mortgagee
a security interest in, (i) the Impound Account, the Payment Reserve, the
Replacement Reserve and the Repair and Remediation Reserve (as hereinafter
defined) (collectively, the "Reserves"), (ii) the accounts into which the
Reserves have been deposited, (iii) all insurance on said accounts, (iv) all
accounts, contract rights and General Intangibles or other rights and interests
pertaining thereto, (v) all sums now or hereafter therein or represented
thereby, (vi) all replacements, substitutions or proceeds thereof, (vii) all
instruments and documents now or hereafter evidencing the Reserves or such
accounts, (viii) all powers, options, rights, privileges and immunities
pertaining to the Reserves (including the right to make withdrawals therefrom),
and (ix) all proceeds of the foregoing. Mortgagor hereby authorizes and
consents to the account into which the Reserves have been deposited being held
in Mortgagee's name or the name of any entity servicing the Note for Mortgagee
and hereby acknowledges and agrees that Mortgagee, or at Mortgagee's election,
such servicing agent, shall have exclusive control over said account. Notice
of the assignment and security interest granted to Mortgagee herein may be
delivered by Mortgagee at any time to the financial institution wherein the
Reserves have been established, and Mortgagee, or such servicing entity, shall
have possession of all passbooks or other evidences of such accounts.
Mortgagee agrees to provide Mortgagor with monthly statements setting forth the
then current principal balance in each of the Reserve and the interest accrued
on such balance in the Replacement Reserve. Mortgagor hereby assumes all risk
of loss with respect to amounts on deposit in the Reserves, except to the
extent such loss is caused by the gross negligence or willful misconduct of
Mortgagor. Mortgagor hereby knowingly, voluntarily and intentionally
stipulates, acknowledges and agrees that the advancement of the funds from the
Reserves as set forth herein is at Mortgagor's direction and is not the
exercise by Mortgagee of any right of set-off or other remedy upon a default.
Mortgagor hereby waives all right to withdraw funds from the Reserves except as
provided for in this Mortgage. If a default shall occur hereunder or under any
other of the Loan Documents that is not cured within any applicable grace or
cure period, then Mortgagee may, without notice or demand on Mortgagor, at its
option: (A) withdraw any or all of the funds (including, without limitation,
interest) then remaining in the Reserves and apply the same, after deducting
all costs and expenses of safekeeping, collection and delivery (including, but
not limited to, reasonable attorneys'
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fees, costs and expenses) to the Debt or any other obligations of Mortgagor
under the other Loan Documents in such manner or as Mortgagee shall deem
appropriate in its sole discretion, and the excess, if any, shall be paid to
Mortgagor, (B) exercise any and all rights and remedies of a secured party
under any applicable Uniform Commercial Code, or (C) exercise any other
remedies available at law or in equity. No such use or application of the
funds contained in the Reserves shall be deemed to cure any default hereunder
or under the other Loan Documents.
1.9 Casualty and Condemnation. Mortgagor shall give Mortgagee
prompt written notice of the occurrence of any casualty affecting the Mortgaged
Property or any portion thereof, the estimated cost of which is, in Mortgagor's
reasonable opinion, in excess of $5,000.00. Mortgagor shall give Mortgagee
prompt written notice of the institution of any proceedings for eminent domain
or for the condemnation of the Mortgaged Property or any portion thereof. All
insurance proceeds on the Mortgaged Property, and all causes of action, claims,
compensation, awards and recoveries for any damage, condemnation or taking of
all or any part of the Mortgaged Property or for any damage or injury to it for
any loss or diminution in value of the Mortgaged Property, are hereby assigned
to and shall be paid to Mortgagee. Mortgagee may participate in any suits or
proceedings relating to any such proceeds, causes of action, claims,
compensation, awards or recoveries. Mortgagee shall apply any sums received by
it under this Section first to the payment of all of its costs and expenses
(including, but not limited to, legal fees and disbursements) incurred in
obtaining those sums, and then, as follows:
(a) In the event that amount of the insurance proceeds or
condemnation award is equal to or less than twenty percent (20%) of the
appraised value of the Premises, as determined pursuant to that certain
Appraisal by Aaron & Wright dated August 7, 1995 (the "Appraisal"), then if:
(1) no default is then continuing hereunder or
under any of the other Loan Documents and no event has occurred which,
with the giving of notice or the passage of time or both, would
constitute a default hereunder or under any of the other Loan
Documents, and
(2) the Mortgaged Property can, in Mortgagee's
judgment, with diligent restoration or repair, be returned to a
condition at least equal to the condition thereof that existed prior
to the casualty or partial taking causing the loss or damage within
the earlier to occur of (i) six (6) months after the receipt of
insurance proceeds or condemnation awards by either Mortgagor or
Mortgagee, and (ii) the stated maturity date of the Note, and
(3) all necessary governmental approvals can be
obtained to allow the rebuilding and reoccupancy of the Mortgaged
Property as described in Section (a)(2) above, and
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(4) there are sufficient sums available (through
insurance proceeds or condemnation awards and contributions by
Mortgagor, the full amount of which shall at Mortgagee's option have
been deposited with Mortgagee) for such restoration or repair
(including, without limitation, for any costs and expenses of
Mortgagee to be incurred in administering said restoration or repair)
and for payment of principal and interest to become due and payable
under the Note during such restoration or repair, and
(5) the economic feasibility of the Improvements
after such restoration or repair will be such that income from their
operation is reasonably anticipated to be sufficient to pay operating
expenses of the Mortgaged Property and debt service on the Debt in
full with the same coverage ratio considered by Mortgagee in its
determination to make the loan secured hereby, and
(6) Mortgagor shall have delivered to Mortgagee,
at Mortgagor's sole cost and expense, an appraisal report in form and
substance satisfactory to Mortgagee appraising the value of the
Mortgaged Property as so restored or repaired to be not less than the
appraised value of the Mortgaged Property considered by Mortgagee in
its determination to make the loan secured hereby, and
(7) Mortgagor so elects by written notice
delivered to Mortgagee within five (5) days after settlement of the
aforesaid insurance or condemnation claim,
then, Mortgagee shall, solely for the purposes of such restoration or repair,
advance so much of the remainder of such sums as may be required for such
restoration or repair, and any funds deposited by Mortgagor therefor, to
Mortgagor in the manner and upon such terms and conditions as would be required
by a prudent interim construction lender, including, but not limited to, the
prior approval by Mortgagee of plans and specifications, contractors and form
of construction contracts and the furnishing to Mortgagee of permits, bonds,
lien waivers, invoices, receipts and affidavits from contractors and
subcontractors, in form and substance satisfactory to Mortgagee in its
discretion, with any remainder being applied by Mortgagee for payment of the
Debt in whatever order Mortgagee directs in its absolute discretion.
(b) In all other cases, namely, in the event that the
amount of the insurance proceeds or condemnation award is greater than twenty
percent (20%) of the appraised value of the Premises determined pursuant to the
Appraisal or Mortgagor does not elect to restore or repair the Mortgaged
Property pursuant to clause (a) above, or otherwise fails to meet the
requirements of clause (a) above, then, in any of such events, Mortgagee may
elect to accelerate the maturity date of the Note and declare any and all Debt
to be immediately due and payable and apply the remainder of such sums received
pursuant to this Section to the payment of the
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Debt in whatever order Mortgagee directs in its absolute discretion, with any
remainder being paid to Mortgagor.
Any reduction in the Debt resulting from Mortgagee's application of any sums
received by it hereunder shall take effect only when Mortgagee actually
receives such sums and elects to apply such sums to the Debt and, in any event,
the unpaid portion of the Debt shall remain in full force and effect and
Mortgagor shall not be excused in the payment thereof. Partial payments
received by Mortgagee, as described in the preceding sentence, shall be applied
first to the final payment due under the Note and thereafter to installments
due under the Note in the inverse order of their due date. If Mortgagor elects
to restore or repair the Mortgaged Property after the occurrence of a casualty
or partial taking of the Mortgaged Property as provided above, Mortgagor shall
promptly and diligently, at Mortgagor's sole cost and expense and regardless of
whether the insurance proceeds or condemnation award, as appropriate, shall be
sufficient for the purpose, restore, repair, replace and rebuild the Mortgaged
Property as nearly as possible to its value, condition and character
immediately prior to such casualty or partial taking in accordance with the
foregoing provisions and Mortgagor shall pay to Mortgagee all costs and
expenses of Mortgagee incurred in administering said rebuilding, restoration or
repair, provided that Mortgagee makes such proceeds or award available for such
purpose. Mortgagor agrees to execute and deliver from time to time such
further instruments as may be requested by Mortgagee to confirm the foregoing
assignment to Mortgagee of any award, damage, insurance proceeds, payment or
other compensation. Upon and during the continuance of an Event of Default
hereunder, Mortgagee is hereby irrevocably constituted and appointed the
attorney-in-fact of Mortgagor with respect to the Mortgaged Property (which
power of attorney shall be irrevocable so long as any portion of the Debt is
outstanding, shall be deemed coupled with an interest, shall survive the
voluntary or involuntary dissolution of Mortgagor and shall not be affected by
any disability or incapacity suffered by Mortgagor subsequent to the date
hereof), with full power of substitution, subject to the terms of this Section,
to adjust, settle or compromise for, collect and receive any such awards,
damages, insurance proceeds, payments or other compensation from the parties or
authorities making the same, to appear in and prosecute any proceedings
therefor and to give receipts and acquittances therefor; provided, however,
that Mortgagee shall only exercise such power-of-attorney during the
continuance of an Event of Default.
(c) If the amount of the insurance proceeds or
condemnation award is greater than twenty percent (20%) of the appraised value
of the Premises determined pursuant to the Appraisal, Mortgagor may elect to
prepay the Debt in its entirety, subject to any prepayment penalties or fees
under the Note, and Mortgagor may apply the insurance proceeds or condemnation
award toward such prepayment.
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1.10 Construction Liens. Mortgagor shall pay when due all claims
and demands of mechanics, materialmen, laborers and others for any work
performed or materials delivered for the Premises or the Improvements;
provided, however, that, Mortgagor shall have the right to contest in good
faith any such claim or demand, so long as it does so diligently, by
appropriate proceedings and without prejudice to Mortgagee and provided that
neither the Mortgaged Property nor any interest therein would be in any danger
of sale, loss or forfeiture as a result of such proceeding or contest. In the
event Mortgagor shall contest any such claim or demand, Mortgagor shall
promptly notify Mortgagee of such contest and thereafter shall, upon
Mortgagee's request, promptly provide a bond, cash deposit or other security
satisfactory to Mortgagee to protect Mortgagee's interest and security should
the contest be unsuccessful. If Mortgagor shall fail to immediately discharge
or provide security against any such claim or demand as aforesaid, Mortgagee
may do so and any and all expenses incurred by Mortgagee, together with
interest thereon at the Default Interest Rate from the date incurred by
Mortgagee until actually paid by Mortgagor, shall be immediately paid by
Mortgagor on demand and shall be secured by this Mortgage and by all of the
other Loan Documents securing all or any part of the Debt.
1.11 Rents. As additional and collateral security for the payment
of the Debt and cumulative of any and all rights and remedies herein provided
for, Mortgagor hereby absolutely and presently assigns to Mortgagee all
existing and future Rents, if any, with respect to the Mortgaged Property.
Mortgagor hereby grants to Mortgagee the sole, exclusive and immediate right,
without taking possession of the Mortgaged Property, to demand, collect (by
suit or otherwise), receive and give valid and sufficient receipts for any and
all of said Rents, for which purpose Mortgagor does hereby irrevocably make,
constitute and appoint Mortgagee its attorney-in-fact with full power to
appoint substitutes or a trustee to accomplish such purpose (which power of
attorney shall be irrevocable so long as any portion of the Debt is
outstanding, shall be deemed to be coupled with an interest, shall survive the
voluntary or involuntary dissolution of Mortgagor and shall not be affected by
any disability or incapacity suffered by Mortgagor subsequent to the date
hereof); provided, however, that Mortgagee shall only exercise such
power-of-attorney during the continuance of an Event of Default. Mortgagee
shall be without liability for any loss that may arise from a failure or
inability to collect Rents, proceeds or other payments. However, until the
occurrence of a default under this Mortgage that has not been cured within any
applicable grace or cure period, Mortgagor shall have a license to collect,
receive, use and enjoy the Rents when due and prepayments thereof for not more
than one (1) month prior to due date thereof. Upon the occurrence of a default
hereunder that has not been cured within any applicable grace or cure period,
Mortgagor's license shall automatically terminate without notice to Mortgagor
and Mortgagee may thereafter, without taking possession of the Mortgaged
Property, collect the Rents itself or by an agent or receiver. From and after
the termination of such license,
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Mortgagor shall be the agent of Mortgagee in collection of the Rents, and all
of the Rents so collected by Mortgagor shall be held in trust by Mortgagor for
the sole and exclusive benefit of Mortgagee, and Mortgagor shall, within one
(1) business day after receipt of any Rents, pay the same to Mortgagee to be
applied by Mortgagee as hereinafter set forth. Neither the demand for or
collection of Rents by Mortgagee shall constitute any assumption by Mortgagee
of any obligations under any agreement relating thereto. Mortgagee is
obligated to account only for such Rents as are actually collected or received
by Mortgagee. Mortgagor irrevocably agrees and consents that the respective
payors of the Rents shall, upon demand and notice from Mortgagee of a default
hereunder, pay said Rents to Mortgagee without liability to determine the
actual existence of any default claimed by Mortgagee. Mortgagor hereby waives
any right, claim or demand that Mortgagor may now or hereafter have against any
such payor by reason of such payment of Rents to Mortgagee, and any such
payment shall discharge such payor's obligation to make such payment to
Mortgagor. All Rents collected or received by Mortgagee may be applied against
all expenses of collection, including, without limitation, reasonable
attorneys' fees, against costs of operation and management of the Mortgaged
Property and against the Debt, in whatever order or priority as to any of the
items so mentioned as Mortgagee directs in its sole subjective discretion and
without regard to the adequacy of its security. Neither the exercise by
Mortgagee of any rights under this Section nor the application of any Rents to
the Debt shall cure or be deemed a waiver of any default hereunder. The
assignment of Rents hereinabove granted shall continue in full force and effect
during any period of foreclosure or redemption with respect to the Mortgaged
Property. Mortgagor agrees to execute and deliver, within ten (10) days after
written request of Mortgagee, an Assignment of Leases and Rents (the
"Assignment") in favor of Mortgagee covering all of the right, title and
interest of Mortgagor, as landlord, lessor or licensor, in and to any Leases
relating to all or portions of the Mortgaged Property. All rights and remedies
granted to Mortgagee under such Assignment shall be in addition to and
cumulative of all rights and remedies granted to Mortgagee hereunder.
1.12 Leases.
(a) Mortgagor covenants and agrees that it shall not
enter into any Lease affecting 5,000 square feet or more of the Mortgaged
Property or having a term of more than five (5) years without the prior written
approval of Mortgagee, which approval shall not be unreasonably withheld. The
request for approval of each such proposed new Lease shall be made to Mortgagee
in writing and shall state that, pursuant to the terms of this Mortgage,
failure to approve or disapprove such proposed Lease within fifteen (15)
business days is deemed approval and Mortgagor shall furnish to Mortgagee (and
any loan servicer specified from time to time by Mortgagee): (i) such
biographical and financial information about the proposed tenant as Mortgagee
may require in conjunction with its review, (ii) a copy of the proposed form of
Lease, and (iii) a
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summary of the material terms of such proposed Lease (including, without
limitation, rental terms and the term of the proposed Lease and any options).
It is acknowledged that Mortgagee intends to include among its criteria for
approval of any such proposed Lease the following: (i) such Lease shall be with
a bona-fide arm's-length tenant; (ii) such Lease shall not contain any rental
or other concessions that are not then customary and reasonable for similar
properties and leases in the market area of the Premises; (iii) such Lease
shall provide that the tenant pays for its expenses; (iv) the rental shall be
at least at the market rate then prevailing for similar properties and leases
in the market areas of the Premises; and (v) such Lease shall contain
subordination and attornment provisions in form and content acceptable to
Mortgagee. Failure of Mortgagee to approve or disapprove any such proposed
Lease within fifteen (15) business days after receipt of such written request
and all the documents and information required to be furnished to Mortgagor
with such request shall be deemed approval, provided that the written request
for approval specifically mentioned the same.
(b) Prior to execution of any Leases of space in the
Improvements after the date hereof, Mortgagor shall submit to Mortgagee, for
Mortgagee's prior approval, which approval shall not be unreasonably withheld,
a copy of the form lease Mortgagor plans to use in leasing space in the
Improvements or at the Mortgaged Property. All such Leases of space in the
Improvements or at the property shall be on terms consistent with the terms for
similar leases in the market area of the Premises, shall provide for free rent
only if the same is consistent with prevailing market conditions and shall
provide for market rents then prevailing in the market area of the Premises.
Such Leases shall also provide for security deposits in reasonable amounts.
Mortgagor shall also submit to Mortgagee for Mortgagee's approval, which
approval shall not be unreasonably withheld, prior to the execution thereof,
any proposed Lease of the Improvements or any portion thereof that differs
materially and adversely from the aforementioned form Lease. Mortgagor shall
not execute any Lease for all or a substantial portion of the Mortgaged
Property, except for an actual occupancy by the tenant, lessee or licensee
thereunder, and shall at all times promptly and faithfully perform, or cause to
be performed, all of the covenants, conditions and agreements contained in all
Leases with respect to the Mortgaged Property, now or hereafter existing, on
the part of the landlord, lessor or licensor thereunder to be kept and
performed. Mortgagor shall furnish to Mortgagee, within ten (10) days after a
request by Mortgagee to do so, a current rent roll, certified by Mortgagor as
being true and correct, containing the names of all tenants, lessees and
licensees with respect to the Mortgaged Property, if any, the terms of their
respective Leases, the spaces occupied and the rentals or fees payable
thereunder and the amount of each tenant's security deposit. Upon the request
of Mortgagee, Mortgagor shall deliver to Mortgagee a copy of each such Lease.
Mortgagor shall not do or suffer to be done any act that might result in a
default by the landlord, lessor or licensor under any
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such Lease or allow the tenant, lessee or licensee thereunder to withhold
payment or rent and shall not further assign any such Lease or any such rents.
Mortgagor, at no cost or expense to Mortgagee, shall enforce, short of
termination, the performance and observance of each and every condition and
covenant of each of the parties under such Leases. Mortgagor shall not,
without the prior written consent of Mortgagee, modify any of the Leases,
terminate or accept the surrender of any Leases, waive or release any other
party from the performance or observance of any obligation or condition under
such Leases except, with respect only to Leases affecting less than 5,000
square feet and having a term of five (5) years or less, in the normal of
course of business in a manner that is consistent with sound and customary
leasing and management practices for similar properties in the community in
which the Mortgaged Property is located. Mortgagor shall not permit the
prepayment of any rents under any of the Leases for more than one (1) month
prior to the due date thereof.
(c) Each Lease executed after the date hereof affecting
any of the Premises or the Improvements must provide, in a manner approved by
Mortgagee, that the tenant, lessee or licensee, as appropriate, will recognize
as its landlord, lessor or licensor and attorn to any person succeeding to the
interest of Mortgagor upon any foreclosure of this Mortgage or deed in lieu of
foreclosure. Each such Lease shall also provide that, upon request of said
successor in interest, the tenant, lessee or licensee shall execute and deliver
an instrument or instruments confirming its attornment as provided for in this
Section; provided, however, that neither Mortgagee nor any
successor-in-interest shall be bound by any payment of rental for more than one
(1) month in advance, or any amendment or modification of said Lease or rental
agreement made without the express written consent of Mortgagee or said
successor-in-interest.
(d) Upon the occurrence of a default under this Mortgage
that is not cured within any applicable grace period, whether before or after
the whole principal sum secured hereby is declared to be immediately due or
whether before or after the institution of legal proceedings to foreclose this
Mortgage, forthwith, upon demand of Mortgagee, Mortgagor shall surrender to
Mortgagee, and Mortgagee shall be entitled to take actual possession of, the
Mortgaged Property or any part thereof personally, or by its agent or
attorneys. In such event, Mortgagee shall have, and Mortgagor hereby gives and
grants to Mortgagee, the right, power and authority to make and enter into
Leases with respect to the Mortgaged Property or portions thereof for such
rents and for such periods of occupancy and upon conditions and provisions as
Mortgagee may deem desirable in its sole discretion, and Mortgagor expressly
acknowledges and agrees that the term of such Lease may extend beyond the date
of any foreclosure sale of the Mortgaged Property; it being the intention of
Mortgagor that in such event Mortgagee shall be deemed to be and shall be the
attorney-in-fact of Mortgagor for the purpose of making and entering into
Leases of parts or portions of the Mortgaged Property for the rents and upon
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the terms, conditions and provisions deemed desirable to Mortgagee in its sole
discretion and with like effect as if such Leases had been made by Mortgagor as
the owner in fee simple of the Mortgaged Property free and clear of any
conditions or limitations established by this Mortgage. The power and
authority hereby given and granted by Mortgagor to Mortgagee shall be deemed to
be coupled with an interest, shall not be revocable by Mortgagor so long as any
portion of the Debt is outstanding, shall survive the voluntary or involuntary
dissolution of Mortgagor and shall not be affected by any disability or
incapacity suffered by Mortgagor subsequent to the date hereof. In connection
with any action taken by Mortgagee pursuant to this Section, Mortgagee shall
not be liable for any loss sustained by Mortgagor resulting from any failure to
let the Mortgaged Property, or any part thereof, or from any other act or
omission of Mortgagee in managing the Mortgaged Property, nor shall Mortgagee
be obligated to perform or discharge any obligation, duty or liability under
any Lease covering the Mortgaged Property or any part thereof or under or by
reason of this instrument or the exercise of rights or remedies hereunder.
Mortgagor shall, and does hereby, indemnify Mortgagee for, and hold Mortgagee
harmless from, any and all claims, actions, demands, liabilities, loss or
damage that may or might be incurred by Mortgagee under any such Lease or under
this Mortgage or by the exercise of rights or remedies hereunder and from any
and all claims and demands whatsoever that may be asserted against Mortgagee by
reason of any alleged obligations or undertakings on its part to perform or
discharge any of the terms, covenants or agreements contained in any such Lease
other than those finally determined to have resulted solely from the gross
negligence or willful misconduct of Mortgagee. Should Mortgagee incur any such
liability, the amount thereof, including, without limitation, costs, expenses
and reasonable attorneys' fees, together with interest thereon at the Default
Interest Rate from the date incurred by Mortgagee until actually paid by
Mortgagor, shall be immediately due and payable to Mortgagee by Mortgagor on
demand and shall be secured hereby and by all of the other Loan Documents
securing all or any part of the Debt. Nothing in this Section shall impose on
Mortgagee any duty, obligation or responsibility for the control, care,
management or repair of the Mortgaged Property, or for the carrying out of any
of the terms and conditions of any such Lease, nor shall it operate to make
Mortgagee responsible or liable for any waste committed on the Mortgaged
Property by the tenants or by any other parties or for any dangerous or
defective condition of the Mortgaged Property, or for any negligence in the
management, upkeep, repair or control of the Mortgaged Property. Mortgagor
hereby assents to, ratifies and confirms any and all actions of Mortgagee with
respect to the Mortgaged Property taken under this Section.
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1.13 Alienation and Further Encumbrances.
(a) Mortgagor acknowledges that Mortgagee has relied upon
the principals of Mortgagor and their experience in owning and operating
properties similar to the Mortgaged Property in connection with the closing of
the loan evidenced by the Note. Accordingly, except as specifically allowed
hereinbelow in this Section and notwithstanding anything to the contrary
contained in Section 4.6 hereof, in the event that the Mortgaged Property or
any part thereof or interest therein shall be sold, conveyed, disposed of,
alienated, hypothecated, leased (except to tenants of space in the Improvements
in accordance with the provisions of Section 1.12 hereof), assigned, pledged,
mortgaged, further encumbered or otherwise transferred or Mortgagor shall be
divested of its title to the Mortgaged Property or any interest therein, in any
manner or way, whether voluntarily or involuntarily, without the prior written
consent of Mortgagee being first obtained, which consent may be withheld in
Mortgagee's sole discretion, then the same shall constitute a default hereunder
and Mortgagee shall have the right, at its option, to declare any or all of the
Debt, irrespective of the maturity date specified in the Note, immediately due
and payable and to otherwise exercise any of its other rights and remedies
contained in Article III hereof. If such acceleration is during any period
when a prepayment fee is payable pursuant to the provisions set forth in the
Note, then, in addition to all of the foregoing, such prepayment fee shall also
then be immediately due and payable to the same end as though Mortgagor were
prepaying the entire Debt on the date of such acceleration. For the purposes
of this Section, the following events shall be deemed to be a transfer of
interest in the Mortgaged Property: (i) the transfer of greater than
twenty-five percent (25%) of the outstanding common stock Mortgagor or (ii) a
"change of control" of General Host Corporation, the guarantor of the Loan
("Guarantor"). A "change of control" with respect to Guarantor shall be deemed
to have occurred if: (A) any person or group within the meaning of Section
13(d) (3) of the Securities Exchange Act of 1934 (the "Exchange Act"), together
with any affiliates of any such person or group, shall beneficially own,
directly or indirectly (within the meaning of Rule 13d-3 under the Exchange
Act), at least twenty-five percent (25%) of the total voting power of all
classes of capital stock of the Guarantor entitled to vote generally in the
election of directors of the Guarantor, (B) the Guarantor consolidates with,
merges into or sells, leases or conveys all or substantially all of its assets
to, any other Person, or (C) the Guarantor is liquidated or dissolved or the
stockholders of the Guarantor adopt a plan for the liquidation or dissolution
of the Guarantor. Notwithstanding the foregoing, however, (x) limited
partnership interests in Mortgagor or in any general partner of Mortgagor shall
be freely transferable without the consent of Mortgagee, and (y) any
involuntary transfer caused by the death of Mortgagor or any general partner,
shareholder, joint venturer, or beneficial owner of a trust shall not be a
default under this Mortgage so long as Mortgagor is reconstituted, if required,
following such death and so long as those persons responsible for the
management of the
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Mortgaged Property remain unchanged as a result of such death or any
replacement management is approved by Lender.
(b) Intentionally Deleted.
(c) Notwithstanding the foregoing provisions of this
Section, Mortgagee shall consent to a one time sale, conveyance or transfer of
the Mortgaged Property in its entirety (hereinafter, "Sale") to any person or
entity provided that each of the following terms and conditions are satisfied:
(1) No default is then continuing hereunder or
under any of the other Loan Documents;
(2) Mortgagor gives Mortgagee written notice of
the terms of such prospective Sale not less than sixty (60) days
before the date on which such Sale is scheduled to close and,
concurrently therewith, gives Mortgagee all such information
concerning the proposed transferee of the Mortgaged Property
(hereinafter, "Buyer") as Mortgagee would require in evaluating an
initial extension of credit to a borrower and pays to Mortgagee a
non-refundable application fee in the amount of $5,000. Mortgagee
shall have the right to approve or disapprove the proposed Buyer. In
determining whether to give or withhold its approval of the proposed
Buyer, Mortgagee shall consider the Buyer's experience and track
record in owning and operating facilities similar to the Mortgaged
Property, the Buyer's financial strength, the Buyer's general business
standing and the Buyer's relationships and experience with
contractors, vendors, tenants, lenders and other business entities;
provided, however, that, notwithstanding Mortgagee's agreement to
consider the foregoing factors in determining whether to give or
withhold such approval, such approval shall be given or withheld based
on what Mortgagee determines to be commercially reasonable in
Mortgagee's sole discretion and, if given, may be given subject to
such conditions as Mortgagee may deem appropriate;
(3) Mortgagor pays Mortgagee, concurrently with
the closing of such Sale, a non-refundable assumption fee in an amount
equal to all out-of-pocket costs and expenses, including, without
limitation, reasonable attorneys' fees, incurred by Mortgagee in
connection with the Sale, plus an amount equal to one percent (1.0%)
of the then outstanding principal balance of the Note.
(4) The Buyer assumes and agrees to pay the Debt
subject to the provisions of Section 4.27 hereof and, prior to or
concurrently with the closing of such Sale, the Buyer executes,
without any cost or expense to Mortgagee, such documents and
agreements as Mortgagee shall reasonably require to evidence and
effectuate said assumption and delivers such legal opinions as
Mortgagee may require;
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(5) Mortgagor and the Buyer execute, without any
cost or expense to Mortgagee, new financing statements or financing
statement amendments and any additional documents reasonably requested
by Mortgagee;
(6) Mortgagor delivers to Mortgagee, without any
cost or expense to Mortgagee, such endorsements to Mortgagee's title
insurance policy, hazard insurance endorsements or certificates and
other similar materials as Mortgagee may deem necessary at the time of
the Sale, all in form and substance satisfactory to Mortgagee,
including, without limitation, an endorsement or endorsements to
Mortgagee's title insurance policy insuring the lien of this Mortgage,
extending the effective date of such policy to the date of execution
and delivery (or, if later, of recording) of the assumption agreement
referenced above in subparagraph (4) of this Section, with no
additional exceptions added to such policy, and insuring that fee
simple title to the Mortgaged Property is vested in the Buyer;
(7) Mortgagor executes and delivers to Mortgagee,
without any cost or expense to Mortgagee, a release of Mortgagee, its
officers, directors, employees and agents, from all claims and
liability relating to the transactions evidenced by the Loan
Documents, through and including the date of the closing of the Sale,
which agreement shall be in form and substance satisfactory to
Mortgagee and shall be binding upon the Buyer;
(8) Subject to the provisions of Section 4.27
hereof, such Sale is not construed so as to relieve Mortgagor of any
personal liability under the Note or any of the other Loan Documents
for any acts or events occurring or obligations arising prior to or
simultaneously with the closing of such Sale, and Mortgagor executes,
without any cost or expense to Mortgagee, such documents and
agreements as Mortgagee shall reasonably require to evidence and
effectuate the ratification of said personal liability; and
(9) Such Sale is not construed so as to relieve
any current guarantor or indemnitor of its obligations under any
guaranty or indemnity agreement executed in connection with the loan
secured hereby and each such current guarantor and indemnitor
executes, without any cost or expense to Mortgagee, such documents and
agreements as Mortgagee shall reasonably require to evidence and
effectuate the ratification of each such guaranty and indemnity
agreement, provided that if the Buyer or a party associated with the
Buyer approved by Mortgagee in its sole discretion assumes the
obligations of the current guarantor or indemnitor under its guaranty
or indemnity agreement and the Buyer or such party associated with the
Buyer, as applicable, executes, without any cost or expense to
Mortgagee, a new guaranty or indemnity agreement in form and substance
satisfactory to Mortgagee, then Mortgagee
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shall release the current guarantor or indemnitor from all obligations
arising under its guaranty or indemnity agreement after the closing of
such Sale.
1.14 Payment of Utilities, Assessments, Charges, Etc. Mortgagor
shall pay when due all utility charges that are incurred by Mortgagor or that
may become a charge or lien against any portion of the Mortgaged Property for
gas, electricity, water and sewer services furnished to the Premises and/or the
Improvements and all other assessments or charges of a similar nature, or
assessments payable pursuant to any restrictive covenants, whether public or
private, affecting the Premises and/or the Improvements or any portion thereof,
whether or not such assessments or charges are or may become liens thereon.
1.15 Access Privileges and Inspections. Mortgagee and the agents,
representatives and employees of Mortgagee shall, subject to the rights of
tenants, have full and free access to the Premises and the Improvements and
books and records concerning the Mortgaged Property at all reasonable times for
the purposes of inspecting the Mortgaged Property and of examining, copying and
making extracts from the books and records of Mortgagor relating to the
Mortgaged Property. Mortgagor shall lend assistance to all such agents,
representatives and employees of Mortgagee.
1.16 Waste; Alteration of Improvements. Mortgagor shall not
commit, suffer or permit any waste on the Mortgaged Property nor take any
actions that might invalidate any insurance carried on the Mortgaged Property.
Mortgagor shall maintain the Mortgaged Property in good condition and repair.
No part of the Improvements may be removed, demolished or materially altered,
without the prior written consent of Mortgagee. Without the prior written
consent of Mortgagee, which consent shall not be unreasonably withheld,
Mortgagor shall not commence construction of any improvements on the Premises
other than improvements required for the maintenance or repair of the Mortgaged
Property.
1.17 Zoning. Without the prior written consent of Mortgagee,
Mortgagor shall not seek, make, suffer, consent to or acquiesce in any change
in the zoning or conditions of use of the Premises or the Improvements.
Mortgagor shall comply with and make all payments required under the provisions
of any covenants, conditions or restrictions affecting the Premises or the
Improvements. Mortgagor shall comply with all existing and future requirements
of all governmental authorities having jurisdiction over the Mortgaged
Property. Mortgagor shall keep all licenses, permits, franchises and other
approvals necessary for the operation of the Mortgaged Property in full force
and effect. Mortgagor shall operate the Mortgaged Property as a retail
operation for so long as the Debt is outstanding. If, under applicable zoning
provisions, the use of all or any part of the Premises or the Improvements is
or becomes a nonconforming use, Mortgagor shall not cause or permit such use to
be discontinued or abandoned without the prior written consent of Mortgagee.
Further, without Mortgagee's prior written consent,
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Mortgagor shall not file or subject any part of the Premises or the
Improvements to any declaration of condominium or co-operative or convert any
part of the Premises or the Improvements to a condominium, co-operative or
other form of multiple ownership and governance.
1.18 Financial Statements and Books and Records. Mortgagor shall
cause to be kept accurate books and records of account of the Mortgaged
Property and its own and Guarantor's financial affairs sufficient to permit the
preparation of the financial information required by this Mortgage and the
other Loan Documents in accordance with generally accepted accounting
principles. So long as this Mortgage continues in effect, Mortgagor shall
provide to Mortgagee, in addition to any other financial statements required
hereunder or under any of the other Loan Documents, the following financial
information:
(a) monthly operating statements for the Mortgaged
Property, within fifteen (15) days after the end of each of the first (1st)
twelve (12) calendar months following the date hereof;
(b) within forty-five (45) days following the end of each
fiscal quarter of Guarantor, Guarantor's 10-Q report;
(c) within ninety (90) days following the end of each fiscal
year of Guarantor, Guarantor's 10-K report; and
(d) such other information with respect to the Mortgaged
Property and Guarantor that may be reasonably requested from time to time by
Mortgagee, within a reasonable time after the applicable request.
Notwithstanding anything to the contrary in clause (b), (c) or (d) above, if
Guarantor shall obtain an extension for the filing of its 10-Q or 10-K reports,
Mortgagor shall provide or cause to be provided to Mortgagee preliminary
quarterly or annual, as applicable, reports within forty-five (45) or ninety
(90) days, as applicable, following the end of the quarter or fiscal year in
question, and the 10-Q or 10-K report in question shall be provided to
Mortgagee when filed with the Securities Exchange Commission. All financial
information shall be in form reasonably satisfactory to Mortgagee.
If any of the aforementioned materials are not furnished to Mortgagee within
the applicable time periods or Mortgagee is dissatisfied with the contents of
any of the foregoing, in addition to any other rights and remedies of Mortgagee
contained herein, Mortgagee shall have the right, but not the obligation, to
obtain the same by means of an audit by an independent certified public
accountant selected by Mortgagee, in which event Mortgagor agrees to pay, or to
reimburse Mortgagee for, any expense of such audit and further agrees to
provide all necessary information to said accountant and to otherwise cooperate
in the making of such audit.
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1.19 Further Documentation. Mortgagor shall, on the request of
Mortgagee and at the expense of Mortgagor: (a) promptly correct any defect,
error or omission that may be discovered in the contents of this Mortgage or in
the contents of any of the other Loan Documents; (b) promptly execute,
acknowledge, deliver and record or file such further instruments (including,
without limitation, further mortgages, deeds of trust, security deeds, security
agreements, financing statements, continuation statements and assignments of
rents or leases) and promptly do such further acts as may be necessary,
desirable or proper to carry out more effectively the purposes of this Mortgage
and the other Loan Documents and to subject to the liens and security interests
hereof and thereof any property intended by the terms hereof and thereof to be
covered hereby and thereby, including specifically, but without limitation, any
renewals, additions, substitutions, replacements or appurtenances to the
Mortgaged Property; (c) promptly execute, acknowledge, deliver, procure and
record or file any document or instrument (including specifically any financing
statement) deemed advisable by Mortgagee to protect, continue or perfect the
liens or the security interests hereunder against the rights or interests of
third persons; and (d) promptly furnish to Mortgagee, upon Mortgagee's request,
a duly acknowledged written statement and estoppel certificate addressed to
such party or parties as directed by Mortgagee and in form and substance
supplied by Mortgagee, setting forth all amounts due under the Note, stating
whether any event has occurred which, with the passage of time or the giving of
notice or both, would constitute an event of default hereunder, stating whether
any offsets or defenses exist against the Debt and containing such other
matters as Mortgagee may reasonably require.
1.20 Payment of Costs; Reimbursement to Mortgagee. Mortgagor shall
pay all costs and expenses of every character reasonably incurred in connection
with the closing of the loan evidenced by the Note and secured hereby or
otherwise attributable or chargeable to Mortgagor as the owner of the Mortgaged
Property, including, without limitation, appraisal fees, recording fees,
documentary, stamp, mortgage or intangible taxes, brokerage fees and
commissions, title policy premiums and title search fees, uniform commercial
code/tax lien/litigation search fees, escrow fees and reasonable attorneys'
fees. If Mortgagor defaults in any such payment, which default is not cured
within any applicable grace or cure period, Mortgagee may pay the same and
Mortgagor shall reimburse Mortgagee on demand for all such costs and expenses
incurred or paid by Mortgagee, together with such interest thereon at the
Default Interest Rate from and after the date of Mortgagee's making such
payment until reimbursement thereof by Mortgagor. Any such sums disbursed by
Mortgagee, together with such interest thereon, shall be additional
indebtedness of Mortgagor secured by this Mortgage and by all of the other Loan
Documents securing all or any part of the Debt. Further, Mortgagor shall
promptly notify Mortgagee in writing of any litigation or threatened litigation
affecting the Mortgaged Property, or any other demand or claim which, if
enforced, could impair or threaten to impair Mortgagee's
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security hereunder. Without limiting or waiving any other rights and remedies
of Mortgagee hereunder, if (i) Mortgagor fails to perform any of its covenants
or agreements contained in this Mortgage or in any of the other Loan Documents
and such failure is not cured within any applicable grace or cure period, or
(ii) (a) any action or proceeding of any kind (including, but not limited to,
any bankruptcy, insolvency, arrangement, reorganization or other debtor relief
proceeding) is commenced that might affect Mortgagee's interest in the
Mortgaged Property or Mortgagee's right to enforce its security and (b)
Mortgagor fails to diligently and continuously defend such action or proceeding
(provided, however, that clause (b) shall not apply if Mortgagee is a named
party in any such action), then Mortgagee may, at its option, with or without
notice to Mortgagor, make any appearances, disburse any sums and take any
actions as may be necessary or desirable to protect or enforce the security of
this Mortgage or to remedy the failure of Mortgagor to perform its covenants
and agreements (without, however, waiving any default of Mortgagor). Mortgagor
agrees to pay on demand all expenses of Mortgagee incurred with respect to the
foregoing (including, but not limited to, fees and disbursements of counsel),
together with interest thereon at the Default Interest Rate from and after the
date on which Mortgagee incurs such expenses until reimbursement thereof by
Mortgagor. Any such expenses so incurred by Mortgagee, together with interest
thereon as provided above, shall be additional indebtedness of Mortgagor
secured by this Mortgage and by all of the other Loan Documents securing all or
any part of the Debt. The necessity for any such actions and of the amounts to
be paid shall be determined by Mortgagee in its discretion. Mortgagee is
hereby empowered to enter and to authorize others to enter upon the Mortgaged
Property or any part thereof for the purpose of performing or observing any
such defaulted term, covenant or condition without thereby becoming liable to
Mortgagor or any person in possession holding under Mortgagor. Mortgagor
hereby acknowledges and agrees that the remedies set forth in this Section 1.20
shall be exercisable by Mortgagee, and any and all payments made or costs or
expenses incurred by Mortgagee in connection therewith shall be secured hereby
and shall be, without demand, immediately repaid by Mortgagor with interest
thereon at the Default Interest Rate, notwithstanding the fact that such
remedies were exercised and such payments made and costs incurred by Mortgagee
after the filing by Mortgagor of a voluntary case or the filing against
Mortgagor of an involuntary case pursuant to or within the meaning of the
Bankruptcy Reform Act of 1978, as amended, Title 11 U.S.C., or after any
similar action pursuant to any other debtor relief law (whether statutory,
common law, case law or otherwise) of any jurisdiction whatsoever, now or
hereafter in effect, which may be or become applicable to Mortgagor, Mortgagee,
any guarantor or indemnitor, the Debt or any of the Loan Documents. Mortgagor
hereby indemnifies and holds Mortgagee harmless from and against all loss, cost
and expenses with respect to any default hereof, any liens (i.e., judgments,
mechanics' and materialmen's liens, or otherwise), charges and encumbrances
filed against the Mortgaged Property, and from any claims and demands for
damages or injury,
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including claims for property damage, personal injury or wrongful death,
arising out of or in connection with any accident or fire or other casualty on
the Premises or the Improvements or any nuisance made or suffered thereon,
except those that are due to Mortgagee's gross negligence or willful
misconduct, including, in any case, reasonable attorneys' fees, costs and
expenses as aforesaid, whether at pretrial, trial or appellate level, and such
indemnity shall survive payment in full of the Debt. This Section shall not be
construed to require Mortgagee to incur any expenses, make any appearances or
take any actions.
1.21 Security Interest. This Mortgage is also intended to encumber
and create a security interest in, and Mortgagor hereby grants to Mortgagee a
security interest in all sums on deposit with Mortgagee pursuant to the
provisions of Section 1.6, and Section 1.8 hereof or any other Section hereof
and all fixtures, chattels, accounts, equipment, contract rights, General
Intangibles and other personal property included within the Mortgaged Property,
all renewals, replacements of any of the aforementioned items, or articles in
substitution therefor or in addition thereto or the proceeds thereof (said
property is hereinafter referred to collectively as the "Collateral"), whether
or not the same shall be attached to the Premises or the Improvements in any
manner. It is hereby agreed that to the extent permitted by law, all of the
foregoing property is to be deemed and held to be a part of and affixed to the
Premises and the Improvements. The foregoing security interest shall also
cover Mortgagor's leasehold interest in any of the foregoing property that is
leased by Mortgagor. Notwithstanding the foregoing, all of the foregoing
property shall be owned by Mortgagor and no leasing or installment sales or
other financing or title retention agreement in connection therewith shall be
permitted without the prior written approval of Mortgagee. Mortgagor shall,
from time to time upon the request of Mortgagee, supply Mortgagee with a
current inventory of all of the property in which Mortgagee is granted a
security interest hereunder, in such detail as Mortgagee may require.
Mortgagor shall promptly replace all of the Collateral subject to the lien or
security interest of this Mortgage when worn or obsolete with Collateral
comparable to the worn out or obsolete Collateral when new and will not,
without the prior written consent of Mortgagee, remove from the Premises or the
Improvements any of the Collateral subject to the lien or security interest of
this Mortgage except such as is replaced by an article of equal suitability and
value as above provided, owned by Mortgagor free and clear of any lien or
security interest except that created by this Mortgage and the other Loan
Documents. All of the Collateral shall be kept at the location of the Premises
except as otherwise required by the terms of the Loan Documents. Mortgagor
shall not use any of the Collateral in violation of any applicable statute,
ordinance or insurance policy.
1.22 Security Agreement. This Mortgage constitutes a security
agreement between Mortgagor and Mortgagee with respect to the Collateral in
which Mortgagee is granted a security interest hereunder, and, cumulative of
all other rights and remedies of
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Mortgagee hereunder, Mortgagee shall have all of the rights and remedies of a
secured party under any applicable Uniform Commercial Code. Mortgagor hereby
agrees to execute and deliver on demand and hereby irrevocably constitutes and
appoints Mortgagee the attorney-in-fact of Mortgagor to execute and deliver
and, if appropriate, to file with the appropriate filing officer or office such
security agreements, financing statements, continuation statements or other
instruments as Mortgagee may request or require in order to impose, perfect or
continue the perfection of the lien or security interest created hereby.
Except with respect to Rents to the extent specifically provided herein to the
contrary, Mortgagee shall have the right of possession of all cash, securities,
instruments, negotiable instruments, documents, certificates and any other
evidences of cash or other property or evidences of rights to cash rather than
property, which are now or hereafter a part of the Mortgaged Property, and
Mortgagor shall promptly deliver the same to Mortgagee, endorsed to Mortgagee,
without further notice from Mortgagee. Mortgagor agrees to furnish Mortgagee
with notice of any change in the name, identity, corporate structure,
residence, or principal place of business or mailing address of Mortgagor
within ten (10) days of the effective date of any such change. Upon the
occurrence of any default hereunder not cured within any applicable grace or
cure period, Mortgagee shall have the rights and remedies as prescribed in this
Mortgage, or as prescribed by general law, or as prescribed by any applicable
Uniform Commercial Code, all at Mortgagee's election. Any disposition of the
Collateral may be conducted by an employee or agent of Mortgagee. Any person,
including both Mortgagor and Mortgagee, shall be eligible to purchase any part
or all of the Collateral at any such disposition. Expenses of retaking,
holding, preparing for sale, selling or the like (including, without
limitation, Mortgagee's reasonable attorneys' fees and legal expenses),
together with interest thereon at the Default Interest Rate from the date
incurred by Mortgagee until actually paid by Mortgagor, shall be paid by
Mortgagor on demand and shall be secured by this Mortgage and by all of the
other Loan Documents securing all or any part of the Debt. Mortgagee shall
have the right to enter upon the Premises and the Improvements or any real
property where any of the property which is the subject of the security
interest granted herein is located to take possession of, assemble and collect
the same or to render it unusable, or Mortgagor, upon demand of Mortgagee,
shall assemble such property and make it available to Mortgagee at the
Premises, or at a place that is hereby deemed to be reasonably convenient to
Mortgagee and Mortgagor. If notice is required by law, Mortgagee shall give
Mortgagor at least ten (10) days' prior written notice of the time and place of
any public sale of such property, or adjournments thereof, or of the time of or
after which any private sale or any other intended disposition thereof is to be
made, and if such notice is sent to Mortgagor, as the same is provided for the
mailing of notices herein, it is hereby deemed that such notice shall be and is
reasonable notice to Mortgagor. No such notice is necessary for any such
property that is perishable, threatens to decline speedily in value or is of a
type customarily sold on a
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recognized market. Any sale made pursuant to the provisions of this Section
shall be deemed to have been a public sale conducted in a commercially
reasonable manner if held contemporaneously with the foreclosure sale as
provided in Section 3.1(e) hereof upon giving the same notice with respect to
the sale of the Mortgaged Property hereunder as is required under said Section
3.1(e). Furthermore, to the extent permitted by law, in conjunction with, in
addition to or in substitution for the rights and remedies available to
Mortgagee pursuant to any applicable Uniform Commercial Code:
(a) In the event of a foreclosure sale, the Mortgaged
Property may, at the option of Mortgagee, be sold as a whole; and
(b) It shall not be necessary that Mortgagee take
possession of the aforementioned Collateral, or any part thereof, prior to the
time that any sale pursuant to the provisions of this Section is conducted and
it shall not be necessary that said Collateral, or any part thereof, be present
at the location of such sale; and
(c) Mortgagee may appoint or delegate any one or more
persons as agent to perform any act or acts necessary or incident to any sale
held by Mortgagee, including the sending of notices and the conduct of the
sale, but in the name and on behalf of Mortgagee.
The name and address of Mortgagor (as Debtor under any applicable Uniform
Commercial Code) are:
FRANK'S NURSERY AND CRAFTS, INC.
6501 East Nevada
Detroit, MI 48231
The name and address of Mortgagee (as Secured Party under any applicable
Uniform Commercial Code) are:
FIRST UNION NATIONAL BANK OF NORTH CAROLINA
One First Union Center TW-8
Charlotte, North Carolina 28288
1.23 Easements and Rights-of-Way. Mortgagor shall not grant any
easement or right-of-way with respect to all or any portion of the Premises or
the Improvements without the prior written consent of Mortgagee. The purchaser
at any foreclosure sale hereunder may, at its discretion, disaffirm any
easement or right-of-way granted in violation of any of the provisions of this
Mortgage and may take immediate possession of the Mortgaged Property free from,
and despite the terms of, such grant of easement or right-of-way. If Mortgagee
consents to the grant of an easement or right-of-way, Mortgagee agrees to grant
such consent without charge to Mortgagor other than expenses, including,
without limitation, reasonable attorneys' fees, incurred by Mortgagee in the
review of Mortgagor's
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request and in the preparation of documents effecting the subordination.
1.24 Compliance with Laws. Mortgagor shall at all times comply
with all applicable statutes, ordinances, regulations and other governmental or
quasi-governmental requirements and private covenants now or hereafter relating
to the ownership, construction, use or operation of the Mortgaged Property,
including, but not limited to, those concerning employment and compensation of
persons engaged in operation and maintenance of the Mortgaged Property and any
environmental or ecological requirements, even if such compliance shall require
structural changes to the Mortgaged Property; provided, however, that,
Mortgagor may, upon providing Mortgagee with security satisfactory to
Mortgagee, proceed diligently and in good faith to contest the validity or
applicability of any such statute, ordinance, regulation or requirement so long
as such contest does not subject the Mortgaged Property to any lien, charge,
fine or other liability and shall not be in danger of being forfeited, lost or
closed. Mortgagor shall not use or occupy, or allow the use or occupancy of,
the Mortgaged Property in any manner that materially violates any lease of or
any other agreement applicable to the Mortgaged Property or that violates any
applicable law, rule, regulation or order or that constitutes a public or
private nuisance or that makes void, voidable or cancelable, or increases the
premium of, any insurance then in force with respect thereto.
1.25 Additional Taxes. In the event of the enactment after this
date of any law of the state in which the Mortgaged Property is located or of
any other governmental entity deducting from the value of the Mortgaged
Property for the purpose of taxation any lien or security interest thereon, or
imposing upon Mortgagee the payment of the whole or any part of the taxes or
assessments or charges or liens herein required to be paid by Mortgagor, or
changing in any way the laws relating to the taxation of deeds of trust,
mortgages or security agreements or debts secured by deeds of trust, mortgages
or security agreements or the interest of the beneficiary, mortgagee or secured
party in the property covered thereby, or the manner of collection of such
taxes, so as to adversely affect this Mortgage or the Debt or Mortgagee, then,
and in any such event, Mortgagor, upon demand by Mortgagee, shall pay such
taxes, assessments, charges or liens, or reimburse Mortgagee therefor;
provided, however, that if in the opinion of counsel for Mortgagee (a) it might
be unlawful to require Mortgagor to make such payment, or (b) the making of
such payment might result in the imposition of interest beyond the maximum
amount permitted by law, then and in either such event, Mortgagee may elect, by
notice in writing given to Mortgagor, to declare all of the Debt to be and
become due and payable in full thirty (30) days from the giving of such notice.
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1.26 Secured Indebtedness. It is understood and agreed that this
Mortgage shall secure payment of not only the indebtedness evidenced by the
Note but also any and all substitutions, replacements, renewals and extensions
of the Note, any and all indebtedness and obligations arising pursuant to the
terms hereof and any and all indebtedness and obligations arising pursuant to
the terms of any of the other Loan Documents, all of which indebtedness is
equally secured with and has the same priority as any amounts advanced as of
the date hereof. It is agreed that any future advances made by Mortgagee to or
for the benefit of Mortgagor from time to time under this Mortgage or the other
Loan Documents and whether or not such advances are obligatory or are made at
the option of Mortgagee, or otherwise, made for any purpose under this Mortgage
or any of the other Loan Documents, within twenty (20) years from the date
hereof, and all interest accruing thereon, shall be equally secured by this
Mortgage and shall have the same priority as all amounts, if any, advanced as
of the date hereof and shall be subject to all of the terms and provisions of
this Mortgage.
1.27 Mortgagor's Waivers. To the full extent permitted by law,
Mortgagor agrees that Mortgagor shall not at any time insist upon, plead, claim
or take the benefit or advantage of any law now or hereafter in force providing
for any appraisement, valuation, stay, moratorium or extension, or any law now
or hereafter in force providing for the reinstatement of the Debt prior to any
sale of the Mortgaged Property to be made pursuant to any provisions contained
herein or prior to the entering of any decree, judgment or order of any court
of competent jurisdiction, or any right under any statute to redeem all or any
part of the Mortgaged Property so sold. Mortgagor, for Mortgagor and
Mortgagor's successors and assigns, and for any and all persons ever claiming
any interest in the Mortgaged Property, to the full extent permitted by law,
hereby knowingly, intentionally and voluntarily with and upon the advice of
competent counsel: (a) waives, releases, relinquishes and forever forgoes all
rights of valuation, appraisement, stay of execution, reinstatement and notice
of election or intention to mature or declare due the Debt (except such notices
as are specifically provided for herein); (b) waives, releases, relinquishes
and forever forgoes all right to a marshalling of the assets of Mortgagor,
including the Mortgaged Property, to a sale in the inverse order of alienation,
or to direct the order in which any of the Mortgaged Property shall be sold in
the event of foreclosure of the liens and security interests hereby created and
agrees that any court having jurisdiction to foreclose such liens and security
interests may order the Mortgaged Property sold as an entirety; and (c) waives,
releases, relinquishes and forever forgoes all rights and periods of redemption
provided under applicable law. To the full extent permitted by law, Mortgagor
shall not have or assert any right under any statute or rule of law pertaining
to the exemption of homestead or other exemption under any federal, state or
local law now or hereafter in effect, the administration of estates of
decedents or other matters whatever to defeat, reduce or affect the right of
Mortgagee under the terms of
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this Mortgage to a sale of the Mortgaged Property, for the collection of the
Debt without any prior or different resort for collection, or the right of
Mortgagee under the terms of this Mortgage to the payment of the Debt out of
the proceeds of sale of the Mortgaged Property in preference to every other
claimant whatever. Mortgagor covenants and agrees that upon the commencement
of a voluntary or involuntary bankruptcy proceeding by or against Mortgagor,
Mortgagor shall not seek a supplemental stay or otherwise shall not seek
pursuant to 11 U.S.C. Section 105 or any other provision of the Bankruptcy
Reform Act of 1978, as amended, or any other debtor relief law (whether
statutory, common law, case law, or otherwise) of any jurisdiction whatsoever,
now or hereafter in effect, which may be or become applicable, to stay,
interdict, condition, reduce or inhibit the ability of Mortgagee to enforce any
rights of Mortgagee against any guarantor or indemnitor of the secured
obligations or any other party liable with respect thereto by virtue of any
indemnity, guaranty or otherwise.
1.28 SUBMISSION TO JURISDICTION; WAIVER OF JURY TRIAL.
(a) MORTGAGOR, TO THE FULL EXTENT PERMITTED BY LAW,
HEREBY KNOWINGLY, INTENTIONALLY AND VOLUNTARILY, WITH AND UPON THE ADVICE OF
COMPETENT COUNSEL, (i) SUBMITS TO PERSONAL JURISDICTION IN THE STATE IN WHICH
THE PREMISES IS LOCATED OVER ANY SUIT, ACTION OR PROCEEDING BY ANY PERSON
ARISING FROM OR RELATING TO THE NOTE, THIS MORTGAGE OR ANY OTHER OF THE LOAN
DOCUMENTS, (ii) AGREES THAT ANY SUCH ACTION, SUIT OR PROCEEDING MAY BE BROUGHT
IN ANY STATE OR FEDERAL COURT OF COMPETENT JURISDICTION SITTING IN THE COUNTY
IN WHICH THE PREMISES IS LOCATED, (iii) SUBMITS TO THE JURISDICTION OF SUCH
COURTS, AND (iv) TO THE FULLEST EXTENT PERMITTED BY LAW, AGREES THAT IT WILL
NOT BRING ANY ACTION, SUIT OR PROCEEDING IN ANY OTHER FORUM (BUT NOTHING HEREIN
SHALL AFFECT THE RIGHT OF MORTGAGEE TO BRING ANY ACTION, SUIT OR PROCEEDING IN
ANY OTHER FORUM). MORTGAGOR FURTHER CONSENTS AND AGREES TO SERVICE OF ANY
SUMMONS, COMPLAINT OR OTHER LEGAL PROCESS IN ANY SUCH SUIT, ACTION OR
PROCEEDING BY REGISTERED OR CERTIFIED U.S. MAIL, POSTAGE PREPAID, TO THE
MORTGAGOR AT THE ADDRESS FOR NOTICES DESCRIBED IN SECTION 4.5 HEREOF, AND
CONSENTS AND AGREES THAT SUCH SERVICE SHALL CONSTITUTE IN EVERY RESPECT VALID
AND EFFECTIVE SERVICE (BUT NOTHING HEREIN SHALL AFFECT THE VALIDITY OR
EFFECTIVENESS OF PROCESS SERVED IN ANY OTHER MANNER PERMITTED BY LAW).
(b) MORTGAGOR, TO THE FULL EXTENT PERMITTED BY LAW,
HEREBY KNOWINGLY, INTENTIONALLY AND VOLUNTARILY, WITH AND UPON THE ADVICE OF
COMPETENT COUNSEL, WAIVES, RELINQUISHES AND FOREVER FORGOES THE RIGHT TO A
TRIAL BY JURY IN ANY ACTION OR PROCEEDING BASED UPON, ARISING OUT OF, OR IN ANY
WAY RELATING TO THE DEBT OR ANY CONDUCT, ACT OR OMISSION OF MORTGAGEE OR
MORTGAGOR, OR ANY OF THEIR DIRECTORS, OFFICERS, PARTNERS, MEMBERS, EMPLOYEES,
AGENTS OR ATTORNEYS, OR ANY OTHER PERSONS AFFILIATED WITH MORTGAGEE OR
MORTGAGOR, IN EACH OR THE FOREGOING CASES, WHETHER SOUNDING IN CONTRACT, TORT
OR OTHERWISE.
1.29 Intentionally Omitted.
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1.30 Management. The management of the Mortgaged Property shall be
by either: (a) Mortgagor or an entity affiliated with Mortgagor approved by
Mortgagee for so long as Mortgagor or said affiliated entity is managing the
Mortgaged Property in a first class manner; or (b) a professional property
management company approved by Mortgagee. Such management by an affiliated
entity or a professional property management company shall be pursuant to a
written agreement approved by Mortgagee. In no event shall any manager be
removed or replaced or the terms of any management agreement modified or
amended without the prior written consent of Mortgagee. In the event of
default hereunder or under any management contract then in effect, which
default is not cured within any applicable grace or cure period, Mortgagee
shall have the right to terminate, or to direct Mortgagor to terminate, such
management contract upon thirty (30) days' notice and to retain, or to direct
Mortgagor to retain, a new management agent approved by Mortgagee. All Rents
generated by or derived from the Mortgaged Property shall first be utilized
solely for current expenses directly attributable to the ownership and
operation of the Mortgaged Property, including, without limitation, current
expenses relating to Mortgagor's liabilities and obligations with respect to
this Mortgage and the other Loan Documents, and none of the Rents generated by
or derived from the Mortgaged Property shall be diverted by Mortgagor and
utilized for any other purposes unless all such current expenses attributable
to the ownership and operation of the Mortgaged Property have been fully paid
and satisfied.
1.31 Hazardous Waste and Other Substances.
(a) Mortgagor hereby represents and warrants to Mortgagee
that, as of the date hereof: (i) to the best of Mortgagor's knowledge,
information and belief, the Mortgaged Property is not in direct or indirect
violation of any local, state or federal law, rule or regulation pertaining to
environmental regulation, contamination or clean-up (collectively,
"Environmental Statutes"), including, without limitation, the Comprehensive
Environmental Response, Compensation and Liability Act of 1980 (42 U.S.C.
Section 9601 et seq. and 40 CFR Section 302.1 et seq.), the Resource
Conservation and Recovery Act of 1976 (42 U.S.C. Section 6901 et seq.), The
Federal Water Pollution Control Act (33 U.S.C. Section 1251 et seq. and 40 CFR
Section 116.1 et seq.), and the Hazardous Materials Transportation Act (49
U.S.C. Section 1801 et seq.), and the regulations promulgated pursuant to said
laws, all as amended; (ii) to the best of Mortgagor's knowledge, information
and belief, no hazardous, toxic or harmful substances, wastes, materials,
pollutants or contaminants (including, without limitation, asbestos,
polychlorinated biphenyls, petroleum products, flammable explosives,
radioactive materials, infectious substances or raw materials that include
hazardous constituents) or any other substances or materials that are included
under or regulated by Environmental Statutes (collectively, "Hazardous
Materials") are located on or have been handled, generated, stored, processed
or disposed of on or released or discharged from the Mortgaged
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Property (including underground contamination), except for those substances
used by Mortgagor in the ordinary course of its business and in compliance with
all Environmental Statutes; (iii) to the best of Mortgagor's knowledge,
information and belief, the Mortgaged Property is not subject to any private or
governmental lien or judicial or administrative notice or action relating to
Hazardous Materials; (iv) to the best of Mortgagor's knowledge, information and
belief, there are no existing or closed underground storage tanks or other
underground storage receptacles for Hazardous Materials on the Mortgaged
Property; (v) Mortgagor has received no notice of, and to the best of
Mortgagor's knowledge, information and belief, there exists no investigation,
action, proceeding or claim by any agency, authority or unit of government or
by any third party that could result in any liability, penalty, sanction or
judgment under any Environmental Statutes with respect to any condition, use or
operation of the Mortgaged Property, nor does Mortgagor know of any basis for
such a claim; and (vi) Mortgagor has received no notice of and, to the best of
Mortgagor's knowledge, information and belief, there has been no claim by any
party that any use, operation or condition of the Mortgaged Property has caused
any nuisance or any other liability or adverse condition on any other property,
nor does Mortgagor know of any basis for such a claim.
(b) Mortgagor shall keep or cause the Mortgaged Property
to be kept free from Hazardous Materials (except those substances used by
Mortgagor in the ordinary course of its business and in compliance with all
Environmental Statutes) and in compliance with all Environmental Statutes,
shall not install or use any underground storage tanks, shall expressly
prohibit the use, generation, handling, storage, production, processing and
disposal of Hazardous Materials by all tenants of space in the Improvements,
and, without limiting the generality of the foregoing, during the term of this
Mortgage, shall not install in the Improvements or permit to be installed in
the Improvements asbestos or any substance containing asbestos.
(c) Mortgagor shall promptly notify Mortgagee if
Mortgagor shall become aware of the possible existence of any Hazardous
Materials on the Mortgaged Property or if Mortgagor shall become aware that the
Mortgaged Property is or may be in direct or indirect violation of any
Environmental Statutes. Further, immediately upon receipt of the same,
Mortgagor shall deliver to Mortgagee copies of any and all orders, notices,
permits, applications, reports, and other communications, documents and
instruments pertaining to the actual, alleged or potential presence or
existence of any Hazardous Materials at, on, about, under, within, near or in
connection with the Mortgaged Property. Mortgagor shall, promptly and when and
as required by any Environmental Statute, at Mortgagor's sole cost and expense,
take all actions as shall be necessary for the clean-up of any and all portions
of the Mortgaged Property or other affected property, including, without
limitation, all investigative, monitoring, removal, containment and remedial
actions in accordance with all
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applicable Environmental Statutes and shall further pay or cause to be paid, at
no expense to Mortgagee, all clean-up, administrative and enforcement costs of
applicable governmental agencies that may be asserted against the Mortgaged
Property. In the event Mortgagor fails to do so, Mortgagee may, but shall not
be obligated to, after thirty (30) days' notice to Mortgagor, cause the
Mortgaged Property or other affected property to be freed from any Hazardous
Materials or otherwise brought into conformance with Environmental Statutes and
any and all costs and expenses incurred by Mortgagee in connection therewith,
together with interest thereon at the Default Interest Rate from the date
incurred by Mortgagee until actually paid by Mortgagor, shall be immediately
paid by Mortgagor on demand and shall be secured by this Mortgage and by all of
the other Loan Documents securing all or any part of the Debt. In connection
with such self-help rights, Mortgagor hereby grants to Mortgagee and its agents
and employees access to the Mortgaged Property and a license to remove any
Hazardous Materials and to do all things necessary to bring the Mortgaged
Property in conformance with Environmental Statutes. Mortgagor covenants and
agrees, at Mortgagor's sole cost and expense, to indemnify, defend (at trial
and appellate levels, and with attorneys, consultants and experts acceptable to
Mortgagee), and hold Mortgagee harmless from and against any and all liens,
damages, losses, liabilities, obligations, settlement payments, penalties,
assessments, citations, directives, claims, litigation, demands, defenses,
judgments, suits, proceedings, costs, disbursements or expenses of any kind or
of any nature whatsoever (including, without limitation, reasonable attorneys',
consultants' and experts' fees and disbursements actually incurred in
investigating, defending, settling or prosecuting any claim, litigation or
proceeding) which may at any time be imposed upon, incurred by or asserted or
awarded against Mortgagee or the Mortgaged Property (except those that result
solely from the gross negligence or willful misconduct of Mortgagee), and
arising directly or indirectly from or out of: (i) the presence, release or
threat of release of any Hazardous Materials on, in, under or affecting all or
any portion of the Mortgaged Property or any surrounding areas, regardless of
whether or not caused by or within the control of Mortgagor; (ii) the violation
of any Environmental Statutes relating to or affecting the Mortgaged Property,
whether or not caused by or within the control of Mortgagor; (iii) the failure
by Mortgagor to comply fully with the terms and conditions of this Section
1.31; (iv) the breach of any representation or warranty contained in this
Section 1.31; or (v) the enforcement of this Section 1.31, including, without
limitation, the cost of assessment, containment and/or removal of any and all
Hazardous Materials from all or any portion of the Mortgaged Property or any
surrounding areas, the cost of any actions taken in response to the presence,
release or threat of release of any Hazardous Materials on, in, under or
affecting any portion of the Mortgaged Property or any surrounding areas to
prevent or minimize such release or threat of release so that it does not
migrate or otherwise cause or threaten danger to present or future public
health, safety, welfare or the environment, and costs incurred to comply with
the Environmental Statutes in connection with all or any portion of the
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Mortgaged Property or any surrounding areas. The indemnity set forth in this
Section 1.31(c) shall also include any diminution in the value of the security
afforded by the Mortgaged Property or any future reduction in the sales price
of the Mortgaged Property by reason of any matter set forth in this Section
1.31(c). Mortgagee's rights under this Section shall survive payment in full
of the Debt and shall be in addition to all other rights of Mortgagee under
this Mortgage, the Note and the other Loan Documents.
(d) Upon Mortgagee's request, at any time after the
occurrence of a default hereunder or at such other time as Mortgagee has
reasonable grounds to believe that Hazardous Materials are or have been
released, stored or disposed of in violation of this Section 1.31 or any
Environmental Statute on the Mortgaged Property, or on property contiguous with
the Mortgaged Property, or that the Mortgaged Property may be in violation of
the Environmental Statutes, Mortgagor shall provide, at Mortgagor's sole cost
and expense, an inspection or audit of the Mortgaged Property prepared by a
hydrogeologist or environmental engineer or other appropriate consultant
approved by Mortgagee indicating the presence or absence of Hazardous Materials
on the Mortgaged Property or an inspection or audit of the Improvements
prepared by an engineering or consulting firm approved by Mortgagee indicating
the presence or absence of friable asbestos or substances containing asbestos
on the Mortgaged Property. If Mortgagor fails to provide such inspection or
audit within thirty (30) days after such request, Mortgagee may order the same,
and Mortgagor hereby grants to Mortgagee and its employees and agents access to
the Mortgaged Property and a license to undertake such inspection or audit.
The cost of such inspection or audit, together with interest thereon at the
Default Interest Rate from the date incurred by Mortgagee until actually paid
by Mortgagor, shall be immediately paid by Mortgagor on demand and shall be
secured by this Mortgage and by all of the other Loan Documents securing all or
any part of the Debt.
(e) Without limiting the foregoing, Mortgagor shall
establish and comply with an operations and maintenance program, in form and
substance acceptable to Mortgagee, for the Mortgaged Property prepared by an
environmental consultant acceptable to Mortgagee, which program shall address
any Hazardous Materials that may now or in the future be detected on the
Mortgaged Property. Without limiting the generality of the preceding sentence,
Mortgagee may require (i) periodic notices or reports to Mortgagee in form,
substance and at such intervals as Mortgagee may specify, (ii) an amendment to
such operations and maintenance program to address changing circumstances, laws
or other matters, (iii) at Mortgagee's sole expense, supplemental examination
of the Mortgaged Property by consultants specified by Mortgagee, and (iv)
variation of the operations and maintenance program in response to the reports
provided by any such consultants.
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1.32 Indemnification; Subrogation.
(a) Mortgagor shall indemnify, defend and hold Mortgagee
harmless against: (i) any and all claims for brokerage, leasing, finders or
similar fees that may be made relating to the Mortgaged Property or the Debt,
and (ii) any and all liability, obligations, losses, damages, penalties,
claims, actions, suits, costs and expenses (including Mortgagee's reasonable
attorneys' fees, together with reasonable appellate counsel fees, if any) of
whatever kind or nature that may be asserted against, imposed on or incurred by
Mortgagee in connection with the Debt, this Mortgage, the Mortgaged Property,
or any part thereof, or the exercise by Mortgagee of any rights or remedies
granted to it under this Mortgage; provided, however, that nothing herein shall
be construed to obligate Mortgagor to indemnify, defend and hold harmless
Mortgagee from and against any and all liabilities, obligations, losses,
damages, penalties, claims, actions, suits, costs and expenses enacted against,
imposed on or incurred by Mortgagee by reason of Mortgagee's willful misconduct
or gross negligence.
(b) If Mortgagee is made a party defendant to any
litigation or any claim is threatened or brought against Mortgagee concerning
the Debt, this Mortgage, the Mortgaged Property, or any part thereof, or any
interest therein, or the construction, maintenance, operation or occupancy or
use thereof, then Mortgagor shall indemnify, defend and hold Mortgagee harmless
from and against all liability by reason of said litigation or claims,
including reasonable attorneys' fees (together with reasonable appellate
counsel fees, if any) and expenses incurred by Mortgagee in any such litigation
or claim, whether or not any such litigation or claim is prosecuted to
judgment; provided, however, that Mortgagor shall have the right, at its sole
cost and expense, to participate in any such litigation. If Mortgagee
commences an action against Mortgagor to enforce any of the terms hereof or to
prosecute any breach by Mortgagor of any of the terms hereof or to recover any
sum secured hereby, Mortgagor shall pay to Mortgagee its reasonable attorneys'
fees (together with reasonable appellate counsel, fees, if any) and expenses.
The right to such attorneys' fees (together with reasonable appellate counsel
fees, if any) and expenses shall be deemed to have accrued on the commencement
of such action, and shall be enforceable whether or not such action is
prosecuted to judgment. If Mortgagor breaches any term of this Mortgage,
Mortgagee may engage the services of an attorney or attorneys to protect its
rights hereunder, and in the event of such engagement following any breach by
Mortgagor, Mortgagor shall pay the reasonable attorneys' fees (together with
reasonable appellate counsel fees, if any) and expenses incurred by Mortgagee,
whether or not an action is actually commenced against Mortgagor by reason of
such breach. All references to "attorneys" in this Subsection and elsewhere in
this Mortgage shall include, without limitation, any attorney or law firm
engaged by Mortgagee and Mortgagee's in-house counsel, and all references to
"fees and expenses" in this Subsection and elsewhere in this Mortgage shall
include, without limitation, any fees of such attorney or law firm and any
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allocation charges and allocation costs of Mortgagee's in-house counsel, but
shall exclude any (i) out-of-pocket costs that do not result directly from the
subject litigation and (ii) general corporate overhead charges.
(c) A waiver of subrogation shall be obtained by
Mortgagor from its insurance carrier and, consequently, Mortgagor waives any
and all right to claim or recover against Mortgagee, its officers, employees,
agents and representatives, for loss of or damage to Mortgagor, the Mortgaged
Property, Mortgagor's property or the property of others under Mortgagor's
control from any cause insured against or required to be insured against by the
provisions of this Mortgage.
1.33 Covenants with Respect to Indebtedness, Operations,
Fundamental Changes of Mortgagor. Mortgagor hereby represents, warrants and
covenants as of the date hereof and until such time as the Debt is paid in
full, that Mortgagor:
(a) will not dissolve or terminate or materially amend
the terms of its certificate of incorporation, partnership agreement or
operating agreement;
(b) will not enter into any transaction of merger or
consolidation, or liquidate or dissolve (or suffer any liquidation or
dissolution), or acquire by purchase or otherwise all or substantially all the
business or assets of unless Mortgagor is the surviving entity;
(c) [intentionally omitted];
(d) [intentionally omitted];
(e) [intentionally omitted];
(f) [intentionally omitted];
(g) no other debt may be secured (senior, subordinate or
pari passu) by the Mortgaged Property;
(h) [intentionally omitted];
(i) is and will be solvent and pay its debts from its
assets as the same shall become due;
(j) has done or caused to be done and will do all things
necessary to preserve its existence;
(k) will conduct and operate its business substantially
as presently conducted and operated;
(l) will maintain books and records and bank accounts
separate from those of its affiliates, including its general partners or
members, as applicable;
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(m) [intentionally omitted];
(n) will file tax returns;
(o) will maintain adequate capital for the normal
obligations reasonably foreseeable in a business of its size and character and
in light of its contemplated business operations in a manner consistent with
its current practice of maintaining capital;
(p) will not seek the dissolution or winding up, in whole
or in part, of Mortgagor;
(q) [intentionally omitted];
(r) has and will maintain its assets in such a manner
that it is not costly or difficult to segregate, ascertain or identify its
individual assets from those of any affiliate or any other person; and
(s) [intentionally omitted].
1.34 Repair and Remediation Reserve. Prior to the execution of
this Mortgage, Mortgagee has caused the Mortgaged Property to be inspected and
such inspection has revealed that the Mortgaged Property is in need of certain
maintenance, repairs and/or remedial or corrective work. Contemporaneously
with the execution hereof, Mortgagor has established with the Mortgagee a
reserve in the amount of $34,990.00 (the "Repair and Remediation Reserve") by
depositing such amount with Mortgagee. Mortgagor shall cause each of the items
described in that certain Engineering Report dated September 11, 1995 and
prepared by Albert A. Roupp Associates (the "Deferred Maintenance") to be
completed, performed, remediated and corrected to the reasonable satisfaction
of Mortgagee and as necessary to bring the Mortgaged Property into compliance
with all applicable laws, ordinances, rules and regulations on or before the
expiration of six (6) months after the effective date hereof, as such time
period may be extended by Mortgagee in its sole discretion. So long as no
default hereunder or under the other Loan Documents has occurred and is
continuing, all sums in the Repair and Remediation Reserve shall be held by
Mortgagee in the Repair and Remediation Reserve to pay the costs and expenses
of completing the Deferred Maintenance. So long as no default hereunder or
under the other Loan Documents has occurred and is continuing, Mortgagee shall,
to the extent funds are available for such purpose in the Repair and
Remediation Reserve, disburse to Mortgagor the amount paid or incurred by
Mortgagor in completing, performing, remediating or correcting the Deferred
Maintenance upon (a) the receipt by Mortgagee of a written request from
Mortgagor for disbursement from the Repair and Remediation Reserve and a
certification by Mortgagor in a form as may be required by Mortgagee that the
applicable item of Deferred Maintenance has been completed in accordance with
the terms of this Mortgage, (b) delivery to Mortgagee of invoices, receipts or
other evidence
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satisfactory to Mortgagee verifying the costs of the Deferred Maintenance to be
reimbursed, (c) delivery to Mortgagee of a certification from an inspecting
architect, engineer or other consultant reasonably acceptable to Mortgagee
describing the completed work, verifying the completion of the work and the
value of the completed work and, if applicable, certifying that the Mortgaged
Property is, as a result of such work, in compliance with all applicable laws,
ordinances, rules and regulations relating to the Deferred Maintenance so
performed, and (d) delivery to Mortgagee of affidavits, lien waivers or other
evidence reasonably satisfactory to Mortgagee showing that all materialmen,
laborers, subcontractors and any other parties who might or could claim
statutory or common law liens and are furnishing or have furnished materials or
labor to the Mortgaged Property have been paid all amounts due for such labor
and materials furnished to the Mortgaged Property. Mortgagee shall not be
required to make advances from the Repair and Remediation Reserve more
frequently than once in any sixty (60) day period. In making any payment from
the Repair and Remediation Reserve, Mortgagee shall be entitled to rely on such
request from Mortgagor without any inquiry into the accuracy, validity or
contestability of any such amount. Mortgagor hereby grants to Mortgagee, as
additional security for payment of the Debt, a security interest in the Repair
and Remediation Reserve. The Repair and Remediation Reserve shall not, unless
otherwise explicitly required by applicable law, be or be deemed to be escrow
or trust funds, but at Mortgagee's option and in Mortgagee's discretion, may
either be held in a separate account or be commingled by Mortgagee with the
general funds of Mortgagee. No interest on the funds contained in the Repair
and Remediation Reserve shall be paid by Mortgagee to Mortgagor. The Repair
and Remediation Reserve is solely for the protection of Mortgagee and entails
no responsibility on Mortgagee's part beyond the payment of the costs and
expenses described in this paragraph in accordance with the terms hereof and
beyond the allowing of due credit for the sums actually received. In the event
that the amounts on deposit or available in the Repair and Remediation Reserve
are inadequate to pay the costs of the Deferred Maintenance, Mortgagor shall
pay the amount of such deficiency. Upon assignment of this Mortgage by
Mortgagee, any funds in the Repair and Remediation Reserve shall be turned over
to the assignee and any responsibility of Mortgagee, as assignor, with respect
thereto shall terminate. If there is a default under this Mortgage that is not
cured within any applicable grace or cure period, Mortgagee may, but shall not
be obligated to, apply at any time the balance then remaining in the Repair and
Remediation Reserve against the Debt in whatever order Mortgagee shall
subjectively determine. No such application of the Repair and Remediation
Reserve shall be deemed to cure any default hereunder. Mortgagor hereby grants
to Mortgagee a power-of-attorney, coupled with an interest, to cause the
Deferred Maintenance to be completed, performed, remediated and corrected to
the satisfaction of Mortgagee upon Mortgagor's failure to do so in accordance
with the terms and conditions of this Section 1.34, and to apply the amounts on
deposit in the Repair and Remediation Reserve to the costs associated
therewith, all as Mortgagee may
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determine in its sole and absolute discretion but without obligation to do so.
Upon the earlier to occur of full payment of the Debt in accordance with its
terms, the completion of the Deferred Maintenance to the satisfaction of the
Mortgagee or at such earlier time as Mortgagee may elect, the balance of the
Repair and Remediation Reserve then in Mortgagee's possession shall be paid
over to Mortgagor and no other party shall have any right or claim thereto.
ARTICLE II
EVENTS OF DEFAULT
2.1 Events of Default. The occurrence of any of the following
events shall be a default hereunder:
(a) Mortgagor fails to punctually perform any covenant,
agreement, obligation, term or condition hereof that requires payment of any
money to Mortgagee (except those regarding payments to be made under the Note,
which failure is subject to any grace periods set forth in the Note).
(b) Mortgagor fails to provide insurance as required by
Section 1.4 hereof or fails to perform any covenant, agreement, obligation,
term or condition set forth in Section 1.15 or Section 1.31 hereof.
(c) Mortgagor fails to perform any other covenant,
agreement, obligation, term or condition set forth herein, other than those
otherwise described in this Section 2.1, and, to the extent such failure or
default is susceptible of being cured, the continuance of such failure or
default for thirty (30) days after written notice thereof from Mortgagee to
Mortgagor; provided, however, that if such default is susceptible of cure but
such cure cannot be accomplished with reasonable diligence within said period
of time, and if Mortgagor commences to cure such default promptly after receipt
of notice thereof from Mortgagee, and thereafter prosecutes the curing of such
default with reasonable diligence, such period of time shall be extended for
such period of time as may be necessary to cure such default with reasonable
diligence, but not to exceed an additional sixty (60) days.
(d) Any representation or warranty made herein, in or in
connection with any application or commitment relating to the loan evidenced by
the Note, or in any of the other Loan Documents to Mortgagee by Mortgagor, by
any principal, general partner or member in Mortgagor or by any indemnitor or
guarantor (including, without limitation, Guarantor) under any indemnity or
guaranty executed in connection with the loan secured hereby is determined by
Mortgagee to have been false or misleading in any material respect at the time
made.
(e) There shall be a sale, conveyance, disposition,
alienation, hypothecation, leasing, assignment, pledge, mortgage,
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granting of a security interest in or other transfer or further encumbrancing
of the Mortgaged Property, Mortgagor or its general partners or members, or any
portion thereof or any interest therein, in violation of Section 1.13 hereof.
(f) A default occurs under any of the other Loan
Documents that has not been cured within any applicable grace or cure period
therein provided.
(g) In connection with any other loan from Mortgagee to
Mortgagor that is secured by property or properties located at (1) 4810 Outer
Loop, Louisville, Kentucky, (2) 5354 Dixie Highway, Louisville, Kentucky, (3)
4180 Plainfield, N.E., Grand Rapids, Michigan, (4) 5504 Miller Road, Flint,
Michigan, or (5) 801 Eastgate Drive, Cincinnati, Ohio (each, an "Additional
Loan"), a default occurs under any note, mortgage, indemnity or guaranty, or
any other agreement, document or instrument now or hereafter evidencing,
securing, guarantying, indemnifying or otherwise relating to an Additional Loan
(together with any and all renewals, amendments, extensions and modifications
thereof), which default has not been cured within any applicable grace or cure
period therein provided.
(h) Mortgagor, any principal, general partner or member
in Mortgagor or any indemnitor or guarantor (including, without limitation,
Guarantor) under any indemnity or guaranty executed in connection with the loan
secured hereby becomes insolvent, or shall make a transfer in fraud of
creditors, or shall make an assignment for the benefit of creditors, shall file
a petition in bankruptcy, shall voluntarily be adjudicated insolvent or
bankrupt or shall admit in writing the inability to pay debts as they mature,
shall petition or apply to any tribunal for or shall consent to or shall not
contest the appointment of a receiver, trustee, custodian or similar officer
for Mortgagor, for any such principal, general partner or member of Mortgagor
or for any such indemnitor or guarantor (including, without limitation,
Guarantor) or for a substantial part of the assets of Mortgagor, of any such
principal, general partner or member of Mortgagor or of any such indemnitor or
guarantor, or shall commence any case, proceeding or other action under any
bankruptcy, reorganization, arrangement, readjustment or debt, dissolution or
liquidation law or statute of any jurisdiction, whether now or hereafter in
effect.
(i) A petition is filed or any case, proceeding or other
action is commenced against Mortgagor, against any principal, general partner
or member of Mortgagor or against any indemnitor or guarantor (including,
without limitation, Guarantor) under any indemnity or guaranty executed in
connection with the loan secured hereby seeking to have an order for relief
entered against it as debtor or seeking reorganization, arrangement,
adjustment, liquidation, dissolution or composition of it or its debts or other
relief under any law relating to bankruptcy, insolvency, arrangement,
reorganization, receivership or other debtor relief under any law or statute of
any jurisdiction, whether now or
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hereafter in effect, or a court of competent jurisdiction enters an order for
relief against Mortgagor, against any principal, general partner or member of
Mortgagor or against any indemnitor or guarantor (including, without
limitation, Guarantor) under any indemnity or guaranty executed in connection
with the loan secured hereby, as debtor, or an order, judgment or decree is
entered appointing, with or without the consent of Mortgagor, of any such
principal, general partner or member of Mortgagor or of any such indemnitor or
guarantor, a receiver, trustee, custodian or similar officer for Mortgagor, for
any such principal, general partner or member of Mortgagor or for any such
indemnitor or guarantor, or for any substantial part of any of the properties
of Mortgagor, of any such principal, general partner or member of Mortgagor or
of any such indemnitor or guarantor, and if any such event shall occur, such
petition, case, proceeding, action, order, judgment or decree shall not be
dismissed within sixty (60) days after being commenced.
(j) The Mortgaged Property or any part thereof shall be
taken on execution or other process of law in any action against Mortgagor.
(k) Mortgagor abandons all or a portion of the Mortgaged
Property.
(l) The holder of any lien or security interest on the
Mortgaged Property (without implying the consent of Mortgagee to the existence
or creation of any such lien or security interest), whether superior or
subordinate to this Mortgage or any of the other Loan Documents, declares a
default and such default is not cured within any applicable grace or cure
period set forth in the applicable document or such holder institutes
foreclosure or other proceedings for the enforcement of its remedies
thereunder.
(m) Subject to Section 1.9 hereof, the Mortgaged
Property, or any part thereof, is subjected to actual or threatened (in
writing) waste or to removal, demolition or material alteration so that the
value of the Mortgaged Property is materially diminished thereby and Mortgagee
determines (in its subjective determination) that it is not adequately
protected from any loss, damage or risk associated therewith.
(n) Any dissolution, termination, partial or complete
liquidation, merger or consolidation of Mortgagor, any of its principals, any
general partner or any member, unless Mortgagor is the surviving entity and no
material adverse change in the financial condition of Mortgagor results
therefrom.
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ARTICLE III
REMEDIES
3.1 Remedies Available. If there shall occur a default under this
Mortgage, and such default has not been cured within any applicable grace or
cure period, then this Mortgage is subject to foreclosure as provided by law
and Mortgagee may, at its option and by or through a trustee, nominee, assignee
or otherwise, to the fullest extent permitted by law, exercise any or all of
the following rights, remedies and recourses, either successively or
concurrently:
(a) Acceleration. Accelerate the maturity date of the
Note and declare any or all of the Debt to be immediately due and payable
without any presentment, demand, protest, notice or action of any kind whatever
(each of which is hereby expressly waived by Mortgagor), whereupon the same
shall become immediately due and payable. Upon any such acceleration, payment
of such accelerated amount shall constitute a prepayment of the principal
balance of the Note and any applicable prepayment fee provided for in the Note
shall then be immediately due and payable.
(b) Entry on the Mortgaged Property. Either in person or
by agent, with or without bringing any action or proceeding, or by a receiver
appointed by a court and without regard to the adequacy of its security, enter
upon and take possession of the Mortgaged Property, or any part thereof,
without force or with such force as is permitted by law and without notice or
process or with such notice or process as is required by law, unless such
notice and process is waivable, in which case Mortgagor hereby waives such
notice and process, and do any and all acts and perform any and all work that
may be desirable or necessary in Mortgagee's judgment to complete any
unfinished construction on the Premises, to preserve the value, marketability
or rentability of the Mortgaged Property, to increase the income therefrom, to
manage and operate the Mortgaged Property or to protect the security hereof,
and all sums expended by Mortgagee therefor, together with interest thereon at
the Default Interest Rate, shall be immediately due and payable to Mortgagee by
Mortgagor on demand and shall be secured hereby and by all of the other Loan
Documents securing all or any part of the Debt.
(c) Collect Rents. With or without taking possession of
the Mortgaged Property, sue or otherwise collect the Rents, including those
past due and unpaid.
(d) Appointment of Receiver. Upon, or at any time prior
or after, initiating the exercise of any power of sale, instituting any
judicial foreclosure or instituting any other foreclosure of the liens and
security interests provided for herein or any other legal proceedings
hereunder, make application to a court of competent jurisdiction for
appointment of a receiver for all or any part of the Mortgaged Property, as a
matter of strict right and without notice to Mortgagor and without regard to
the adequacy of
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the Mortgaged Property for the repayment of the Debt or the solvency of
Mortgagor or any person or persons liable for the payment of the Debt, and
Mortgagor does hereby irrevocably consent to such appointment, waive any and
all notices of and defenses to such appointment and agree not to oppose any
application therefor by Mortgagee, but nothing herein is to be construed to
deprive Mortgagee of any other right, remedy or privilege Mortgagee may now
have under the law to have a receiver appointed, provided, however, that the
appointment of such receiver, trustee or other appointee by virtue of any court
order, statute or regulation shall not impair or in any manner prejudice the
rights of Mortgagee to receive payment of the Rents pursuant to other terms and
provisions hereof. Any such receiver shall have all of the usual powers and
duties of receivers in similar cases, including, without limitation, the full
power to hold, develop, rent, lease, manage, maintain, operate and otherwise
use or permit the use of the Mortgaged Property upon such terms and conditions
as said receiver may deem to be prudent and reasonable under the circumstances
as more fully set forth in Section 3.3 below. Such receivership shall, at the
option of Mortgagee, continue until full payment of all of the Debt or until
title to the Mortgaged Property shall have passed by foreclosure sale under
this Mortgage or deed in lieu of foreclosure.
(e) Foreclosure. Immediately commence an action to
foreclose this Mortgage or to specifically enforce its provisions with respect
to any of the Debt, pursuant to the statutes in such case made and provided,
and sell the Mortgaged Property or cause the Mortgaged Property to be sold in
accordance with the requirements and procedures provided by said statutes in a
single parcel or in several parcels at the option of Mortgagee.
(1) In the event foreclosure proceedings are
instituted by Mortgagee, all expenses incident to such proceedings,
including, but not limited to, attorneys' fees and costs, shall be
paid by Mortgagor and secured by this Mortgage and by all of the other
Loan Documents securing all or any part of the Debt. The Debt and all
other obligations secured by this Mortgage, including, without
limitation, interest at the Default Interest Rate (as defined in the
Note), any prepayment charge, fee or premium required to be paid under
the Note in order to prepay principal (to the extent permitted by
applicable law), reasonable attorneys' fees and any other amounts due
and unpaid to Mortgagee under the Loan Documents, may be bid by
Mortgagee in the event of a foreclosure sale hereunder. In the event
of a judicial sale pursuant to a foreclosure decree, it is understood
and agreed that Mortgagee or its assigns may become the purchaser of
the Mortgaged Property or any part thereof.
(f) Judicial Remedies. Proceed by suit or suits, at law
or in equity, instituted by Mortgagee, upon written request of Mortgagee, to
enforce the payment of the Debt or the other obligations of Mortgagor hereunder
or pursuant to the Loan
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Documents, to foreclose the liens and security interests of this Mortgage as
against all or any part of the Mortgaged Property, and to have all or any part
of the Mortgaged Property sold under the judgment or decree of a court of
competent jurisdiction. This remedy shall be cumulative of any other
non-judicial remedies available to the Mortgagee with respect to the Loan
Documents. Proceeding with the request or receiving a judgment for legal
relief shall not be or be deemed to be an election of remedies or bar any
available non-judicial remedy of the Mortgagee.
(g) Other. Exercise any other right or remedy available
hereunder, under any of the other Loan Documents or at law or in equity.
3.2 Application of Proceeds. To the fullest extent permitted by
law, the proceeds of any sale under this Mortgage shall be applied, to the
extent funds are so available, to the following items in such order as
Mortgagee in its discretion may determine:
(a) To payment of the reasonable costs, expenses and fees
of taking possession of the Mortgaged Property, and of holding, operating,
maintaining, using, leasing, repairing, improving, marketing and selling the
same and of otherwise enforcing Mortgagee's right and remedies hereunder and
under the other Loan Documents, including, but not limited to, receivers' fees,
court costs, attorneys', accountants', appraisers', managers' and other
professional fees, title charges and transfer taxes.
(b) To payment of all sums expended by Mortgagee under
the terms of any of the Loan Documents and not yet repaid, together with
interest on such sums at the Default Interest Rate.
(c) To payment of the Debt and all other obligations
secured by this Mortgage, including, without limitation, interest at the
Default Interest Rate and, to the extent permitted by applicable law, any
prepayment fee, charge or premium required to be paid under the Note in order
to prepay principal, in any order that Mortgagee chooses in its sole
discretion.
(d) The remainder, if any, of such funds shall be
disbursed to Mortgagor or to the person or persons legally entitled thereto.
3.3 Right and Authority of Receiver or Mortgagee in the Event of
Default; Power of Attorney. Upon the occurrence of a default hereunder, which
default is not cured within any applicable grace or cure period, and entry upon
the Mortgaged Property pursuant to Section 3.1(b) hereof or appointment of a
receiver pursuant to Section 3.1(d) hereof, and under such terms and conditions
as may be prudent and reasonable under the circumstances in Mortgagee's or the
receiver's sole discretion, all at Mortgagor's expense, Mortgagee or said
receiver, or such other persons or entities as they shall hire, direct or
engage, as the case may be, may do or permit one or more of the following,
successively or concurrently:
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(a) enter upon and take possession and control of any and all of the Mortgaged
Property; (b) take and maintain possession of all documents, books, records,
papers and accounts relating to the Mortgaged Property; (c) exclude Mortgagor
and its agents, servants and employees wholly from the Mortgaged Property; (d)
manage and operate the Mortgaged Property; (e) preserve and maintain the
Mortgaged Property; (f) make repairs and alterations to the Mortgaged Property;
(g) complete any construction or repair of the Improvements, with such changes,
additions or modifications of the plans and specifications or intended
disposition and use of the Improvements as Mortgagee may in its sole discretion
deem appropriate or desirable to place the Mortgaged Property in such condition
as will, in Mortgagee's sole discretion, make it or any part thereof readily
marketable or rentable; (h) conduct a marketing or leasing program with respect
to the Mortgaged Property, or employ a marketing or leasing agent or agents to
do so, directed to the leasing or sale of the Mortgaged Property under such
terms and conditions as Mortgagee may in its sole discretion deem appropriate
or desirable; (i) employ such contractors, subcontractors, materialmen,
architects, engineers, consultants, managers, brokers, marketing agents, or
other employees, agents, independent contractors or professionals, as Mortgagee
may in its sole discretion deem appropriate or desirable to implement and
effectuate the rights and powers herein granted; (j) execute and deliver, in
the name of Mortgagee as attorney-in-fact and agent of Mortgagor or in its own
name as Mortgagee, such documents and instruments as are necessary or
appropriate to consummate authorized transactions; (k) enter such leases,
whether of real or personal property, or tenancy agreements, under such terms
and conditions as Mortgagee may in its sole discretion deem appropriate or
desirable; (1) collect and receive the Rents from the Mortgaged Property; (m)
eject tenants or repossess personal property, as provided by law, for breaches
of the conditions of their leases or other agreements; (n) sue for unpaid
Rents, payments, income or proceeds in the name of Mortgagor or Mortgagee; (o)
maintain actions in forcible entry and detainer, ejectment for possession and
actions in distress for rent; (p) compromise or give acquittance for Rents,
payments, income or proceeds that may become due; (q) delegate or assign any
and all rights and powers given to Mortgagee by this Mortgage; and (r) do any
acts that Mortgagee in its sole discretion deems appropriate or desirable to
protect the security hereof and use such measures, legal or equitable, as
Mortgagee may in its sole discretion deem appropriate or desirable to implement
and effectuate the provisions of this Mortgage. This Mortgage shall constitute
a direction to and full authority to any lessee, or other third party who has
heretofore dealt or contracted or may hereafter deal or contract with Mortgagor
or Mortgagee, at the request of Mortgagee, to pay all amounts owing under any
lease, contract, concession, license or other agreement to Mortgagee without
proof of the default relied upon. Any such lessee or third party is hereby
irrevocably authorized to rely upon and comply with (and shall be fully
protected by Mortgagor in so doing) any request, notice or demand by Mortgagee
for the payment to Mortgagee of any Rents or other sums that may be or
thereafter become due
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under its lease, contract, concession, license or other agreement, or for the
performance of any undertakings under any such lease, contract, concession,
license or other agreement, and shall have no right or duty to inquire whether
any default under this Mortgage or under any of the other Loan Documents has
actually occurred or is then existing. Mortgagor hereby constitutes and
appoints Mortgagee, its assignees, successors, transferees and nominees, as
Mortgagor's true and lawful attorney-in-fact and agent, with full power of
substitution in the Mortgaged Property, in Mortgagor's name, place and stead,
to do or permit any one or more of the foregoing described rights, remedies,
powers and authorities, successively or concurrently, and said power of
attorney shall be deemed a power coupled with an interest and irrevocable so
long as any portion of the Debt is outstanding. Any money advanced by
Mortgagee in connection with any action taken under this Section 3.3, together
with interest thereon at the Default Interest Rate from the date of making such
advancement by Mortgagee until actually paid by Mortgagor, shall be a demand
obligation owing by Mortgagor to Mortgagee and shall be secured by this
Mortgage and by every other instrument securing the Debt.
3.4 Occupancy After Foreclosure. In the event there is a
foreclosure sale hereunder and at the time of such sale, Mortgagor or
Mortgagor's representatives, successors or assigns, or any other persons
claiming any interest in the Mortgaged Property by, through or under Mortgagor
(except tenants of space in the Improvements subject to leases entered into
prior to the date hereof), are occupying or using the Mortgaged Property, or
any part thereof, then, to the extent not prohibited by applicable law, each
and all shall, at the option of Mortgagee or the purchaser at such sale, as the
case may be, immediately become the tenant of the purchaser at such sale, which
tenancy shall be a tenancy from day-to-day, terminable at the will of either
landlord or tenant, at a reasonable rental per day based upon the value of the
Mortgaged Property occupied or used, such rental to be due daily to the
purchaser. Further, to the extent permitted by applicable law, in the event
the tenant fails to surrender possession of the Mortgaged Property upon the
termination of such tenancy, the purchaser shall be entitled to institute and
maintain an action for unlawful detainer of the Mortgaged Property in the
appropriate court of the county in which the Premises is located.
3.5 Notice to Account Debtors. Mortgagee may, at any time after a
default hereunder, which default is not cured within any applicable grace or
cure period, notify the account debtors and obligors of any accounts, chattel
paper, negotiable instruments or other evidences of indebtedness to Mortgagor
included in the Mortgaged Property to pay Mortgagee directly. Mortgagor shall
at any time or from time to time upon the request of Mortgagee provide to
Mortgagee a current list of all such account debtors and obligors and their
addresses.
3.6 Cumulative Remedies. All remedies contained in this Mortgage
are cumulative and Mortgagee shall also have all other
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remedies provided at law and in equity or in any other Loan Documents. Such
remedies may be pursued separately, successively or concurrently at the sole
subjective direction of Mortgagee and may be exercised in any order and as
often as occasion therefor shall arise. No act of Mortgagee shall be construed
as an election to proceed under any particular provisions of this Mortgage to
the exclusion of any other provision of this Mortgage or as an election of
remedies to the exclusion of any other remedy that may then or thereafter be
available to Mortgagee. No delay or failure by Mortgagee to exercise any right
or remedy under this Mortgage shall be construed to be a waiver of that right
or remedy or of any default hereunder. Mortgagee may exercise any one or more
of its rights and remedies at its option without regard to the adequacy of its
security.
3.7 Payment of Expenses. Mortgagor shall pay on demand all of
Mortgagee's expenses incurred in any efforts to enforce any terms of this
Mortgage, whether or not any lawsuit is filed and whether or not foreclosure is
commenced but not completed, including, but not limited to, legal fees and
disbursements, foreclosure costs and title charges, together with interest
thereon from and after the date incurred by Mortgagee until actually paid by
Mortgagor at the Default Interest Rate, and the same shall be secured by this
Mortgage and by all of the other Loan Documents securing all or any part of the
indebtedness evidenced by the Note.
ARTICLE IV
MISCELLANEOUS TERMS AND CONDITIONS
4.1 Time of Essence. Time is of the essence with respect to all
provisions of this Mortgage.
4.2 Release of Mortgage. If all of the Debt be paid, then and in
that event only, all rights under this Mortgage, except for those provisions
hereof that by their terms survive, shall terminate and the Mortgaged Property
shall become wholly clear of the liens, security interests, conveyances and
assignments evidenced hereby, which shall be promptly released of record by
Mortgagee in due form at Mortgagor's cost. No release of this Mortgage or the
lien hereof shall be valid unless executed by Mortgagee.
4.3 Certain Rights of Mortgagee. Without affecting Mortgagor's
liability for the payment of any of the Debt, Mortgagee may from time to time
and without notice to Mortgagor: (a) release any person liable for the payment
of the Debt; (b) extend or materially modify the terms of payment of the Debt;
(c) accept additional real or personal property of any kind as security or
alter, substitute or release any property securing the Debt; (d) recover any
part of the Mortgaged Property; (e) consent in writing to the making of any
subdivision map or plat thereof; (f) join in granting any easement therein; or
(g) join in any extension
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agreement of this Mortgage or any agreement subordinating the lien hereof.
4.4 Waiver of Certain Defenses. No action for the enforcement of
the lien hereof or of any provision hereof shall be subject to any defense that
would not be good and available to the party interposing the same in an action
at law upon the Note or any of the other Loan Documents.
4.5 Notices. All notices, demands, requests or other
communications to be sent by one party to the other hereunder or required by
law shall be in writing and shall be deemed to have been validly given or
served by delivery of the same in person to the intended addressee, or by
depositing the same with Federal Express or another reputable private courier
service for next business day delivery, or by depositing the same in the United
States mail, postage prepaid, registered or certified mail, return receipt
requested, in any event addressed to the intended addressee at its address set
forth on the first page of this Mortgage or at such other address as may be
designated by such party as herein provided. All notices, demands and requests
shall be effective upon such personal delivery, or one (1) business day after
being deposited with the private courier service, or three (3) business days
after being deposited in the United States mail as required above. Rejection
or other refusal to accept or the inability to deliver because of changed
address of which no notice was given as herein required shall be deemed to be
receipt of the notice, demand or request sent. By giving to the other party
hereto at least fifteen (15) days' prior written notice thereof in accordance
with the provisions hereof, the parties hereto shall have the right from time
to time to change their respective addresses and each shall have the right to
specify as its address any other address within the United States of America.
4.6 Successors and Assigns. The terms, provisions, indemnities,
covenants and conditions hereof shall be binding upon Mortgagor and the
successors and assigns of Mortgagor, including all successors in interest of
Mortgagor in and to all or any part of the Mortgaged Property, and shall inure
to the benefit of Mortgagee, its directors, officers, shareholders, employees
and agents and their respective successors and assigns and shall constitute
covenants running with the land. All references in this Mortgage to Mortgagor
or Mortgagee shall be deemed to include all such parties' successors and
assigns, and the term "Mortgagee" as used herein shall also mean and refer to
any lawful holder or owner, including pledgees and participants, of any of the
Debt. If Mortgagor consists of more than one person or entity, each will be
jointly and severally liable to perform the obligations of Mortgagor.
4.7 Severability. A determination that any provision of this
Mortgage is unenforceable or invalid shall not affect the enforceability or
validity of any other provision, and any determination that the application of
any provision of this
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Mortgage to any person or circumstance is illegal or unenforceable shall not
affect the enforceability or validity of such provision as it may apply to any
other persons or circumstances.
4.8 Gender. Within this Mortgage, words of any gender shall be
held and construed to include any other gender, and words in the singular shall
be held and construed to include the plural, and vice versa, unless the context
otherwise requires.
4.9 Waiver; Discontinuance of Proceedings. Mortgagee may waive
any single default by Mortgagor hereunder without waiving any other prior or
subsequent default. Mortgagee may remedy any default by Mortgagor hereunder
without waiving the default remedied. Neither the failure by Mortgagee to
exercise, nor the delay by Mortgagee in exercising, any right, power or remedy
upon any default by Mortgagor hereunder shall be construed as a waiver of such
default or as a waiver of the right to exercise any such right, power or remedy
at a later date. No single or partial exercise by Mortgagee of any right,
power or remedy hereunder shall exhaust the same or shall preclude any other or
further exercise thereof, and every such right, power or remedy hereunder may
be exercised at any time and from time to time. No modification or waiver of
any provision hereof nor consent to any departure by Mortgagor therefrom shall
in any event be effective unless the same shall be in writing and signed by
Mortgagee, and then such waiver or consent shall be effective only in the
specific instance and for the specific purpose given. No notice to nor demand
on Mortgagor in any case shall of itself entitle Mortgagor to any other or
further notice or demand in similar or other circumstances. Acceptance by
Mortgagee of any payment in an amount less than the amount then due on any of
the Debt shall be deemed an acceptance on account only and shall not in any way
affect the existence of a default hereunder. In case Mortgagee shall have
proceeded to invoke any right, remedy or recourse permitted hereunder or under
the other Loan Documents and shall thereafter elect to discontinue or abandon
the same for any reason, Mortgagee shall have the unqualified right to do so
and, in such an event, Mortgagor and Mortgagee shall be restored to their
former positions with respect to the Debt, the Loan Documents, the Mortgaged
Property and otherwise, and the rights, remedies, recourses and powers of
Mortgagee shall continue as if the same had never been invoked.
4.10 Section Headings. The headings of the sections and paragraphs
of this Mortgage are for convenience of reference only, are not to be
considered a part hereof and shall not limit or otherwise affect any of the
terms hereof.
4.11 GOVERNING LAW. THIS MORTGAGE WILL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE IN WHICH THE PREMISES IS
LOCATED, PROVIDED THAT TO THE EXTENT THAT ANY OF SUCH LAWS MAY NOW OR HEREAFTER
BE PREEMPTED BY FEDERAL LAW, SUCH FEDERAL LAW SHALL SO GOVERN AND BE
CONTROLLING.
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4.12 Counting of Days. The term "days" when used herein shall mean
calendar days. If any time period ends on a Saturday, Sunday or holiday
officially recognized by the state within which the Premises is located, the
period shall be deemed to end on the next succeeding business day. The term
"business day" when used herein shall mean a weekday, Monday through Friday,
except a legal holiday or a day on which banking institutions in New York, New
York are authorized by law to be closed.
4.13 Relationship of the Parties. The relationship between
Mortgagor and Mortgagee is that of a borrower and a lender only and neither of
those parties is, nor shall it hold itself out to be, the agent, employee,
joint venturer or partner of the other party.
4.14 Application of the Proceeds of the Note. To the extent that
proceeds of the Note are used to pay indebtedness secured by any outstanding
lien, security interest, charge or prior encumbrance against the Mortgaged
Property, such proceeds have been advanced by Mortgagee at Mortgagor's request
and Mortgagee shall be subrogated to any and all rights, security interests and
liens owned by any owner or holder of such outstanding liens, security
interests, charges or encumbrances, irrespective of whether said liens,
security interests, charges or encumbrances are released.
4.15 Unsecured Portion of Indebtedness. If any part of the Debt
cannot be lawfully secured by this Mortgage or if any part of the Mortgaged
Property cannot be lawfully subject to the lien and security interest hereof to
the full extent of such indebtedness, then all payments made shall be applied
on said indebtedness first in discharge of that portion thereof that is
unsecured by this Mortgage.
4.16 Cross Default. A default hereunder that has not been cured
within any applicable grace or cure period shall be a default under each of the
other Loan Documents.
4.17 Interest After Sale. In the event the Mortgaged Property or
any part thereof shall be sold upon foreclosure as provided hereunder, to the
extent permitted by law, the sum for which the same shall have been sold shall,
for purposes of redemption (pursuant to the laws of the State of in which the
Premises is located), bear interest at the Default Interest Rate.
4.18 Inconsistency with Other Loan Documents. In the event of any
inconsistency between the provisions hereof and the provisions in any of the
other Loan Documents, it is intended that the provisions selected to control by
Mortgagee in its sole subjective discretion shall be controlling.
4.19 Construction of this Document. This document may be construed
as a mortgage, security deed, deed of trust, chattel mortgage, conveyance,
assignment, security agreement, pledge, financing statement, hypothecation or
contract, or any one or more of the foregoing, in order to fully effectuate the
liens and
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security interests created hereby and the purposes and agreements herein set
forth.
4.20 No Merger. It is the desire and intention of the parties
hereto that this Mortgage and the lien hereof do not merge in fee simple title
to the Mortgaged Property. It is hereby understood and agreed that should
Mortgagee acquire any additional or other interests in or to the Mortgaged
Property or the ownership thereof, then, unless a contrary intent is manifested
by Mortgagee as evidenced by an appropriate document duly recorded, this
Mortgage and the lien hereof shall not merge in such other or additional
interests in or to the Mortgaged Property, toward the end that this Mortgage
may be foreclosed as if owned by a stranger to said other or additional
interests.
4.21 Rights With Respect to Junior Encumbrances. Any person or
entity purporting to have or to take a junior mortgage or other lien upon the
Mortgaged Property or any interest therein shall be subject to the rights of
Mortgagee to amend, modify, increase, vary, alter or supplement this Mortgage,
the Note or any of the other Loan Documents, and to extend the maturity date of
the Debt, and to increase the amount of the Debt, and to waive or forebear the
exercise of any of its rights and remedies hereunder or under any of the other
Loan Documents and to release any collateral or security for the Debt, in each
and every case without obtaining the consent of the holder of such junior lien
and without the lien or security interest of this Mortgage losing its priority
over the rights of any such junior lien.
4.22 Mortgagee May File Proofs of Claim. In the case of any
receivership, insolvency, bankruptcy, reorganization, arrangement, adjustment,
composition or other proceedings affecting Mortgagor or the principals or
general partners in Mortgagor, or their respective creditors or property,
Mortgagee, to the extent permitted by law, shall be entitled to file such
proofs of claim and other documents as may be necessary or advisable in order
to have the claims of Mortgagee allowed in such proceedings for the entire Debt
at the date of the institution of such proceedings and for any additional
amount that may become due and payable by Mortgagor hereunder after such date.
4.23 Fixture Filing. This Mortgage shall be effective from the
date of its recording as a financing statement filed as a fixture filing with
respect to all goods constituting part of the Mortgaged Property that are or
are to become fixtures. This Mortgage shall also be effective as a financing
statement covering minerals or the like (including oil and gas) and is to be
filed for record in the Real Estate Records of the county where the Mortgaged
Property is situated. The mailing address of Mortgagor and the address of
Mortgagee from which information concerning the security interests may be
obtained are set forth in Section 1.22 above.
4.24 After-Acquired Mortgaged Property. All property acquired by
Mortgagor after the date of this Mortgage that by the terms of
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this Mortgage shall be subject to the lien and the security interest created
hereby, shall immediately upon the acquisition thereof by Mortgagor and without
further mortgage, conveyance or assignment become subject to the lien and
security interest created by this Mortgage. Nevertheless, Mortgagor shall
execute, acknowledge, deliver and record or file, as appropriate, all and every
such further mortgages, security agreements, financing statements, assignments
and assurances as Mortgagee shall require for accomplishing the purposes of
this Mortgage.
4.25 No Representation. By accepting delivery of any item required
to be observed, performed or fulfilled or to be given to Mortgagee pursuant to
the Loan Documents, including, but not limited to, any officer's certificate,
balance sheet, statement of profit and loss or other financial statement,
survey, appraisal or insurance policy, Mortgagee shall not be deemed to have
warranted, consented to, or affirmed the sufficiency, legality, effectiveness
or legal effect of the same, or of any term, provision or condition thereof,
and such acceptance of delivery thereof shall not be or constitute any
warranty, consent or affirmation with respect thereto by Mortgagee.
4.26 Counterparts. This Mortgage may be executed in any number of
counterparts, each of which shall be effective only upon delivery and
thereafter shall be deemed an original, and all of which shall be taken to be
one and the same instrument, for the same effect as if all parties hereto had
signed the same signature page. Any signature page of this Mortgage may be
detached from any counterpart of this Mortgage without impairing the legal
effect of any signatures thereon and may be attached to another counterpart of
this Mortgage identical in form hereto but having attached to it one or more
additional signature pages.
4.27 Intentionally Omitted.
4.28 Recording and Filing. Mortgagor will cause the Loan Documents
and all amendments and supplements thereto and substitutions therefor to be
recorded, filed, re-recorded and re-filed in such manner and in such places as
Mortgagee shall reasonably request, and will pay on demand all such recording,
filing, re-recording and re-filing taxes, fees and other charges. Mortgagor
shall reimburse Mortgagee, or its servicing agent, for the costs incurred in
obtaining a tax service company to verify the status of payment of taxes and
assessments on the Mortgaged Property.
4.29 Entire Agreement and Modifications. This Mortgage and the
other Loan Documents contain the entire agreements between the parties relating
to the subject matter hereof and thereof and all prior agreements relative
hereto and thereto that are not contained herein or therein are terminated.
This Mortgage and the other Loan Documents may not be amended, revised, waived,
discharged, released or terminated orally but only by a written instrument or
instruments executed by the party against which enforcement of the
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amendment, revision, waiver, discharge, release or termination is asserted.
Any alleged amendment, revision, waiver, discharge, release or termination that
is not so documented shall not be effective as to any party.
4.30 Maximum Interest. The provisions of this Mortgage and of all
agreements between Mortgagor and Mortgagee, whether now existing or hereafter
arising and whether written or oral, are hereby expressly limited so that in no
contingency or event whatsoever, whether by reason of demand or acceleration of
the maturity of the Note or otherwise, shall the amount paid, or agreed to be
paid ("Interest"), to Mortgagee for the use, forbearance or retention of the
money loaned under the Note exceed the maximum amount permissible under
applicable law. If, from any circumstance whatsoever, performance or
fulfillment of any provision hereof or of any agreement between Mortgagor and
Mortgagee shall, at the time performance or fulfillment of such provision shall
be due, exceed the limit for Interest prescribed by law or otherwise transcend
the limit of validity prescribed by applicable law, then ipso facto the
obligation to be performed or fulfilled shall be reduced to such limit, and if,
from any circumstance whatsoever, Mortgagee shall ever receive anything of
value deemed Interest by applicable law in excess of the maximum lawful amount,
an amount equal to any excessive Interest shall be applied to the reduction of
the principal balance owing under the Note in the inverse order of its maturity
(whether or not then due) or at the option of Mortgagee be paid over to
Mortgagor, and not to the payment of Interest. All Interest (including any
amounts or payments deemed to be Interest) paid or agreed to be paid to
Mortgagee shall, to the extent permitted by applicable law, be amortized,
prorated, allocated and spread throughout the full period until payment in full
of the principal balance of the Note so that the Interest thereon for such full
period will not exceed the maximum amount permitted by applicable law. This
paragraph will control all agreements between Mortgagor and Mortgagee.
4.31 Interest Payable by Mortgagor. Mortgagee shall cause funds in
the Replacement Reserve to be deposited into interest bearing accounts of the
type customarily maintained by Mortgagee or its servicing agent for the
investment of similar reserves, which accounts may not yield the highest
interest rate then available. Interest payable on such amounts shall be
computed based on the daily outstanding balance in the Replacement Reserve.
Such interest shall be calculated on a simple, non-compounded interest basis
based solely on contributions made to the Replacement Reserve by Mortgagor.
All interest earned on amounts contributed to the Replacement Reserve shall be
retained by Mortgagee and accumulated for the benefit of Mortgagor and added to
the balance in the Replacement Reserve and shall be disbursed for payment of
the items for which other funds in the Replacement Reserve are to be disbursed.
4.32 Consents and Approvals. Wherever in this Mortgage Mortgagee's
consent or approval is required, if Mortgagee shall
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delay or refuse such consent or approval, Mortgagor in no event shall be
entitled to make, nor shall Mortgagor make, any claim, and Mortgagor hereby
waives any claim, for money damages (nor shall Mortgagor claim any money
damages by way of set-off, counterclaims or defense) based upon any claim or
assertion by Mortgagor that Mortgagee unreasonably withheld or unreasonably
delayed its consent or approval. Mortgagor's sole remedy shall be an action or
proceeding to enforce any such provision, for specific performance, injunction
or declaratory judgment, and such remedy shall be available only in those cases
in which Mortgagee has expressly agreed in writing not to unreasonably withhold
its consent or where as a matter of law Mortgagee may not unreasonably withhold
its consent. Unless this Mortgage expressly provides that Mortgagee's consent
or approval may not be unreasonably withheld or delayed, Mortgagee may withhold
or deny such consent or approval in Mortgagee's sole discretion.
4.33 Power of Attorney. Mortgagor expressly agrees that if
it disputes Mortgagee's right to exercise a power-of-attorney granted under
this Mortgage, Mortgagor shall in no event be entitled to make, nor shall
Mortgagor make, any claim, and Mortgagor hereby waives any claim, for money
damages (nor shall Mortgagor claim any money damages by way of set-off,
counterclaims or defense) based upon any claim or assertion by Mortgagor that
Mortgagee did not have the right to exercise such power-of attorney pursuant to
this Mortgage. Mortgagor's sole remedy shall be an action or proceeding for
injunction or declaratory judgment.
4.34 [Intentionally omitted.]
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IN WITNESS WHEREOF, Mortgagor has executed this Mortgage on the day
and year first written above.
MORTGAGOR:
FRANK'S NURSERY AND CRAFTS, INC.
a Michigan corporation
By: Robert M. Lovejoy, Jr.
-----------------------------------
Name: Robert M. Lovejoy, Jr.
Title: Vice President
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STATE OF MICHIGAN )
) SS.:
COUNTY OF WAYNE )
The foregoing instrument was acknowledged before me this 18th day of
April, 1996, by ROBERT M. LOVEJOY, JR. the Vice President and Treasurer, of
Frank's Nursery & Crafts, Inc., a Michigan corporation, on behalf of the said
corporation.
[AFFIX SEAL] Sherry L. Rygwelski
-------------------------------
Notary Public
Wayne County, Michigan
My commission expires: 12-27-98 [NOTARY SEAL]
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EXHIBIT A
(LEGAL DESCRIPTION)
STORE #32
Situate in the State of Ohio, County of Franklin, City of Columbus,
being a part of Quarter Township 4, Township 2, Range 18, United States
Military Lands, and being all of the 2.610 acre tract as conveyed to Frank's
Nursery Sales, Inc. by deed of record in Deed book 3198, page 327, Recorder's
Office, Franklin County, Ohio and being more particularly bounded and described
as follows:
Beginning at an iron pin (found) at the northeasterly corner of the
said 2.610 acre tract, said pin being the northwesterly corner of a 1.068 acre
tract as conveyed to Samuel K. Freshman by deed of record in Official Record
5417J06, said pin being in the southerly line of Reserve "B" of SHARON WOODS
SECTION NO. 1 of record in Plat Book 40, pages 14 and 15 all of the
aforementioned references being to the Recorder's Office, Franklin county,
Ohio, and said pin being also North 87 degrees 35 minutes 30 seconds West, a
distance of 105.00 feet from an iron pin (found) at the northeasterly corner of
the said 1.068 acre tract;
Thence South 2 degrees 23 minutes 06 seconds West, a distance of 437.55
feet, along the easterly line of the said 2.610 acre tract and also along the
westerly line of the said 1.068 acre tract to a point (an existing iron pin
bears 0.22 feet North of said point) at the southeasterly corner of the 2.610
acre tract, said point being the southwesterly corner of the said 1.068 acre
tract, said point being in the northerly right-of-way line of Dublin-Granville
Road (S.R. 161) and said point being also in the northerly line of a 1.300 acre
tract (Parcel 29-WD) as conveyed to the State of Ohio by deed of record in Deed
Book 3167, page 391, Recorder's Office, Franklin County, Ohio;
Thence along the southerly line of the said 2.610 acre tract, along the
northerly right-of-way line of said Dublin-Granville Road and also along the
northerly line of the said 1.300 acre tract by the following described four (4)
courses:
(1) South 89 degrees 32 minutes 45 seconds West, a distance of 45.16
feet to a spike (set);
(2) North 87 degrees 35 minutes 30 seconds West, a distance of 100.00
feet to an iron pin (set);
(3) North 81 degrees 52 minutes 52 seconds West, a distance of 100.50
feet to a spike (set);
(4) North 87 degrees 35 minutes 30 seconds West, a distance of 14.90
feet to a spike (set) at the southwesterly corner of the said 2.610
acre tract and said spike being also the southeasterly corner of a
7.042 acre tract as conveyed to Samuel K. Freshman by deed of record
in Official Record 5417J06, Recorder's Office, Franklin county,
Ohio;
Thence North 2 degrees 23 minutes 06 seconds East, a distance of 429.80
feet, along the westerly line of the said 2.610 acre tract and also along the
easterly line of the said 7.042 acre tract to a point (an existing iron pin
bears 0.53 feet East of said point) at the northwesterly corner of the said
2.610 acre tract, said point being the northeasterly corner of the said 7.042
acre tract and said point being also in the southerly line of Lot No. 3 of said
SHARON WOODS SECTION NO. 1;
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EXHIBIT A
(LEGAL DESCRIPTION)
STORE #32
Thence South 87 degrees 35 minutes 30 seconds East, a distance of
260.00 feet, along the northerly line of the said 2.610 acre tract and also
along the southerly of Lot No. 3, 2, 1 and Reserve "B" of the said SHARON WOODS
SECTION NO. 1 to the point of beginning, containing 2.609 acres, more or less.