Exhibit 10.17
MSDWMC Loan No. 02-11615
GROCERY (OK) QRS 15-5, INC., as mortgagor
(Borrower)
to
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ MORTGAGE CAPITAL INC., as mortgagee
(Lender)
MORTGAGE AND SECURITY AGREEMENT
A POWER OF SALE HAS BEEN GRANTED IN THIS MORTGAGE. A POWER OF
SALE MAY ALLOW THE MORTGAGEE TO TAKE THE MORTGAGED PROPERTY AND
SELL IT WITHOUT GOING TO COURT IN A FORECLOSURE ACTION UPON
DEFAULT BY THE MORTGAGOR UNDER THIS MORTGAGE.
Dated: June 28, 2002
Location: ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ &
▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇: Tulsa
PREPARED BY AND UPON
RECORDATION RETURN TO:
Paul, Hastings, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇-▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
TABLE OF CONTENTS
Page
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ARTICLE I Grants Of Security................................ 1
Section 1.1 Property Mortgaged........................... 1
Section 1.2 Assignment of Leases and Rents............... 4
Section 1.3 Security Agreement........................... 4
Section 1.4 Pledge of Monies Held........................ 4
Section 1.5 Conditions to Grant.......................... 4
ARTICLE II Debt and Obligations Secured...................... 4
Section 2.1 Debt......................................... 4
Section 2.2 Other Obligations............................ 5
Section 2.3 Debt and Other Obligations................... 5
Section 2.4 Payments..................................... 5
ARTICLE III Borrower Covenants................................ 5
Section 3.1 Payment of Debt.............................. 6
Section 3.2 Incorporation by Reference................... 6
Section 3.3 Insurance.................................... 6
Section 3.4 Payment of Taxes, etc. ...................... 9
Section 3.5 Escrow Fund.................................. 10
Section 3.6 Condemnation................................. 10
Section 3.7 Restoration After Casualty/Condemnation...... 11
Section 3.8 Leases and Rents............................. 15
Section 3.9 Maintenance and Use of Property.............. 17
Section 3.10 Waste........................................ 17
Section 3.11 Compliance With Laws......................... 17
Section 3.12 Books and Records............................ 18
Section 3.13 Payment For Labor and Materials.............. 20
Section 3.14 Performance of Other Agreements.............. 21
Section 3.15 Change of Name, Identity or Structure........ 21
Section 3.16 Existence.................................... 21
Section 3.17 Management................................... 21
ARTICLE IV Special Covenants................................. 22
Section 4.1 Property Use................................. 22
Section 4.2 Single Purpose Entity........................ 22
ARTICLE V Representations and Warranties.................... 25
Section 5.1 Warranty of Title............................ 25
Section 5.2 Legal Status and Authority................... 25
Section 5.3 Validity of Documents........................ 26
Section 5.4 Litigation................................... 26
Section 5.5 Status of Property........................... 26
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Section 5.6 No Foreign Person............................ 27
Section 5.7 Separate Tax Lot............................. 27
Section 5.8 Leases....................................... 27
Section 5.9 Financial Condition.......................... 28
Section 5.10 Business Purposes............................ 28
Section 5.11 Taxes........................................ 28
Section 5.12 Mailing Address.............................. 29
Section 5.13 No Change in Facts or Circumstances.......... 29
Section 5.14 Disclosure................................... 29
Section 5.15 Third Party Representations.................. 29
Section 5.16 Illegal Activity............................. 29
Section 5.17 Regulations T, U and X....................... 29
Section 5.18 Non-Consolidation............................ 29
ARTICLE VI Obligations and Reliance.............................. 30
Section 6.1 Relationship of Borrower and Lender.......... 30
Section 6.2 No Reliance on Lender........................ 30
Section 6.3 No Lender Obligations........................ 30
Section 6.4 Reliance..................................... 30
ARTICLE VII Further Assurances.................................... 30
Section 7.1 Recording of Security Instruments, etc....... 30
Section 7.2 Further Acts, etc............................ 31
Section 7.3 Changes in Tax, Debt Credit and Documentary
Stamp Laws.......................... 31
Section 7.4 Estoppel Certificates........................ 32
Section 7.5 Flood Insurance.............................. 33
Section 7.6 Replacement Documents........................ 33
ARTICLE VIII Due On Sale/Encumbrance............................... 33
Section 8.1 No Sale/Encumbrance.......................... 33
Section 8.2 Sale/Encumbrance Defined..................... 33
Section 8.3 Lender's Rights.............................. 34
Section 8.4 Permitted One Time Transfer.................. 34
ARTICLE IX Prepayment............................................ 37
Section 9.1 Prepayment................................... 37
ARTICLE X Default............................................... 38
Section 10.1 Events of Default............................ 38
ARTICLE XI Rights and Remedies................................... 40
Section 11.1 Remedies..................................... 40
Section 11.2 Application of Proceeds...................... 42
Section 11.3 Right to Cure Defaults....................... 42
Section 11.4 Actions and Proceedings...................... 42
Section 11.5 Recovery of Sums Required To Be Paid......... 42
Section 11.6 Examination of Books and Records............. 43
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Section 11.7 Other Rights, etc. ................................... 43
Section 11.8 Right to Release Any Portion of the Property. ........ 43
Section 11.9 Violation of Laws. ................................... 44
Section 11.10 Right of Entry. ...................................... 44
Section 11.11 Subrogation. ......................................... 44
ARTICLE XII Environmental Matters....................................... 44
Section 12.1 Environmental Representations and Warranties. ........ 44
Section 12.2 Environmental Covenants. ............................. 45
Section 12.3 Lender's Rights. ..................................... 46
Section 12.4 Operations and Maintenance Programs. ................. 46
ARTICLE XIII Indemnifications........................................... 46
Section 13.1 General Indemnification. ............................. 46
Section 13.2 Mortgage and/or Intangible Tax. ...................... 47
Section 13.3 Duty to Defend; Attorney's Fees and Other Fees and
Expenses. .......................................... 47
Section 13.4 Environmental Indemnity. ............................. 47
ARTICLE XIV Waivers..................................................... 47
Section 14.1 Waiver of Counterclaim. .............................. 47
Section 14.2 Marshalling and Other Matters. ....................... 48
Section 14.3 Waiver of Notice. .................................... 48
Section 14.4 Waiver of Statute of Limitations. .................... 48
Section 14.5 Sole Discretion of Lender. ........................... 48
Section 14.6 WAIVER OF TRIAL BY JURY. ............................. 48
ARTICLE XV Exculpation.................................................. 49
Section 15.1 Exculpation. ......................................... 49
ARTICLE XVI Notices..................................................... 49
Section 16.1 Notices. ............................................. 49
ARTICLE XVII Applicable Law............................................. 49
Section 17.1 Choice of Law. ....................................... 49
ARTICLE XVIII Secondary Market........................................... 51
Section 18.1 Transfer of Loan. .................................... 51
Section 18.2 Cooperation. ......................................... 51
ARTICLE XIX Costs....................................................... 52
Section 19.1 Performance at Borrower's Expense. ................... 52
Section 19.2 Legal Fees for Enforcement. .......................... 52
ARTICLE XX Definitions.................................................. 53
Section 20.1 General Definitions. ................................. 53
Section 20.2 Headings, etc. ....................................... 53
ARTICLE XXI Miscellaneous Provisions.................................... 53
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Section 21.1 No Oral Change. ...................................... 53
Section 21.2 Liability. ........................................... 53
Section 21.3 Inapplicable Provisions. ............................. 53
Section 21.4 Duplicate Originals; Counterparts. ................... 53
Section 21.5 Number and Gender. ................................... 54
Section 21.6 Cross Default. ....................................... 54
ARTICLE XXII Special Oklahoma Provisions.................................54
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A POWER OF SALE HAS BEEN GRANTED IN THIS SECURITY INSTRUMENT. A POWER OF SALE
MAY ALLOW THE MORTGAGEE TO TAKE THE MORTGAGED PROPERTY AND SELL IT WITHOUT GOING
TO COURT IN A FORECLOSURE ACTION UPON DEFAULT BY THE MORTGAGOR UNDER THIS
SECURITY INSTRUMENT.
THIS
MORTGAGE AND SECURITY AGREEMENT (this "Security Instrument") is
made as of the 28th day of June, 2002, by GROCERY (OK) QRS 15-5, INC., a
Delaware corporation, having its principal place of business at c/o W.P. ▇▇▇▇▇ &
Co. LLC, ▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, as
mortgagor ("Borrower") to ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ MORTGAGE CAPITAL INC., a
New York corporation, having an address at c/o Wells Fargo Bank, N.A.,
Commercial Mortgage Servicing, ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, as mortgagee ("Lender").
RECITALS:
Borrower by its promissory note of even date herewith given to Lender
is indebted to Lender in the principal sum of THIRTY MILLION AND 00/100 DOLLARS
($30,000,000.00) (the "Loan Amount") in lawful money of the United States of
America due July 1, 2012, if not sooner paid in accordance with the terms of
the Note (the note together with all extensions, renewals, modifications,
substitutions and amendments thereof shall collectively be referred to as the
"Note"), with interest from the date thereof at the rates set forth in the
Note, principal and interest to be payable in accordance with the terms and
conditions provided in the Note.
Borrower desires to secure the payment of the Debt (as defined in
Article 2) and the performance of all of its obligations under the Note and the
Other Obligations (as defined in Article 2).
ARTICLE I
GRANTS OF SECURITY
Section 1.1 Property Mortgaged. Borrower does hereby irrevocably
mortgage, grant, bargain, sell, pledge, assign, warrant, transfer and convey to
Lender, its successors and assigns, and grant a security interest to Lender,
its successors and assigns, in, the following property, rights, interests and
estates now owned, or hereafter acquired by Borrower (collectively, the
"Property"):
(a) Land. The real property described in Exhibit A attached
hereto and made a part hereof, LESS AND EXCEPT all oil, gas, and other minerals
previously reserved or conveyed of record (the "Land");
(b) Additional Land. All ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇ and
development rights hereafter acquired by Borrower for use in connection with the
Land and the development of the
Land and all additional lands and estates therein which may, from time to time,
by supplemental mortgage or otherwise be expressly made subject to the lien of
this Security Instrument;
(c) Improvements. The buildings, structures, fixtures,
additions, enlargements, extensions, modifications, repairs, replacements and
improvements now or hereafter erected or located on the Land (the
"Improvements");
(d) Easements. All easements, rights-of-way or use, rights,
strips and gores of land, streets, ways, alleys, passages, sewer rights, water,
water courses, water rights and powers, air rights and development rights, and
all estates, rights, titles, interests, privileges, liberties, servitudes,
tenements, hereditaments and appurtenances of any nature whatsoever, in any way
now or hereafter belonging, relating or pertaining to the Land and the
Improvements and the reversion and reversions, remainder and remainders, and all
land lying in the bed of any street, road or avenue, opened or proposed, in
front of or adjoining the Land, to the center line thereof and all the estates,
rights, titles, interests, dower and rights of dower, curtesy and rights of
curtesy, property, possession, claim and demand whatsoever, both at law and in
equity, of Borrower of, in and to the Land and the Improvements and every part
and parcel thereof, with the appurtenances thereto;
(e) Fixtures and Personal Property. All machinery, equipment,
fixtures (including, but not limited to, all heating, air conditioning,
plumbing, lighting, communications and elevator fixtures) and other property of
every kind and nature whatsoever owned by Borrower, or in which Borrower has or
shall have an interest, now or hereafter located upon the Land and the
Improvements, or appurtenant thereto, and usable in connection with the present
or future operation and occupancy of the Land and the Improvements and all
building equipment, materials and supplies of any nature whatsoever owned by
Borrower, or in which Borrower has or shall have an interest, now or hereafter
located upon the Land and the Improvements, or appurtenant thereto, or usable in
connection with the present or future operation and occupancy of the Land and
the Improvements (collectively, the "Personal Property"), and the right, title
and interest of Borrower in and to any of the Personal Property which may be
subject to any security interests, as defined in the Uniform Commercial Code, as
adopted and enacted by the state or states where any of the Property is located
(the "Uniform Commercial Code"), and all proceeds and products of the above;
(f) Leases and Rents. All leases, subleases and other
agreements affecting the use, enjoyment or occupancy of the Land and/or the
Improvements heretofore or hereafter entered into and all extensions, amendments
and modifications thereto, whether before or after the filing by or against
Borrower of any petition for relief under 11 U.S.C. Section 101 et seq., as the
same may be amended from time to time (the "Bankruptcy Code") (the "Leases") and
all right, title and interest of Borrower, its successors and assigns therein
and thereunder, including, without limitation, any guaranties of the lessees'
obligations thereunder, cash or securities deposited thereunder to secure the
performance by the lessees of their obligations thereunder and all rents,
additional rents, revenues, issues and profits (including all oil and gas or
other mineral royalties and bonuses) from the Land and the Improvements, whether
paid or accruing before or after the filing by or against Borrower of any
petition for relief under the Bankruptcy Code (the "Rents") and all proceeds
from the sale or other disposition of the Leases and the right to receive and
apply the Rents to the payment of the Debt;
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(g) Insurance Proceeds. All proceeds of and any unearned
premiums on any insurance policies covering the Property, including, without
limitation, the right to receive and apply the proceeds of any insurance,
judgments, or settlements made in lieu thereof, for damage to the Property;
(h) Condemnation Awards. All awards or payments, including
interest thereon, which may heretofore and hereafter be made with respect to the
Property, whether from the exercise of the right of eminent domain (including
but not limited to any transfer made in lieu of or in anticipation of the
exercise of the right), or for a change of grade, or for any other injury to or
decrease in the value of the Property;
(i) Tax Certiorari. All refunds, rebates or credits in
connection with a reduction in real estate taxes and assessments charged against
the Property as a result of tax certiorari or any applications or proceedings
for reduction;
(j) Conversion. All proceeds of the conversion, voluntary or
involuntary, of any of the foregoing including, without limitation, proceeds of
insurance and condemnation awards, into cash or liquidation claims;
(k) Rights. The right, in the name and on behalf of Borrower,
to appear in and defend any action or proceeding brought with respect to the
Property and to commence any action or proceeding to protect the interest of
Lender in the Property;
(1) Agreements. All agreements, contracts, certificates,
instruments, franchises, permits, licenses, plans, specifications and other
documents, now or hereafter entered into, and all rights therein and thereto,
respecting or pertaining to the use, occupation, construction, management or
operation of the Land and any part thereof and any Improvements or respecting
any business or activity conducted on the Land and any part thereof and all
right, title and interest of Borrower therein and thereunder, including, without
limitation, the right, upon the occurrence and during the continuance of an
Event of Default (defined below), to receive and collect any sums payable to
Borrower thereunder;
(m) Intangibles. All trade names, trademarks, servicemarks,
logos, copyrights, goodwill, books and records and all other general intangibles
relating to or used in connection with the operation of the Property; and
(n) Other Rights. Any and all other rights of Borrower in and
to the items set forth in Subsections (a) through (m) above.
Section 1.2 Assignment of Leases and Rents. Borrower hereby
absolutely and unconditionally assigns to Lender Borrower's right, title and
interest in and to all current and future Leases and Rents; it being intended by
Borrower that this assignment constitutes a present, absolute assignment and not
an assignment for additional security only. Nevertheless, subject to the terms
of this Section 1.2 and Section 3.8, Lender grants to Borrower a revocable
license to collect and receive the Rents. Borrower shall hold a portion of the
Rents sufficient to discharge all current sums due on the Debt for use in the
payment of such sums.
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Section 1.3 Security Agreement. This Security Instrument is
both a real property mortgage and a "security agreement" within the meaning of
the Uniform Commercial Code. The Property includes both real and personal
property and all other rights and interests, whether tangible or intangible in
nature, of Borrower in the Property. By executing and delivering this Security
Instrument, Borrower hereby grants to Lender, as security for the Obligations
(defined in Section 2.3), a security interest in the Personal Property to the
full extent that the Personal Property may be subject to the Uniform Commercial
Code.
Section 1.4 Pledge of Monies Held. Borrower hereby pledges to
Lender any and all monies now or hereafter held by Lender, including, without
limitation, any sums deposited in the Escrow Fund (as defined in Section 3.5),
Net Proceeds (as defined in Section 3.7) and condemnation awards or payments
described in Section 3.6, as additional security for the Obligations until
expended or applied as provided in this Security Instrument.
Section 1.5 Conditions to Grant. TO HAVE AND TO HOLD the above
granted and described Property unto and to the use and benefit of Lender, and
the successors and assigns of Lender, forever; PROVIDED, HOWEVER, these presents
are upon the express condition that, if Borrower shall well and truly pay to
Lender the Debt at the time and in the manner provided in the Note and this
Security Instrument, shall well and truly perform the Other Obligations as set
forth in this Security Instrument and shall well and truly abide by and comply
with each and every covenant and condition set forth herein and in the Note,
these presents and the estate hereby granted shall cease, terminate and be void.
ARTICLE II
DEBT AND OBLIGATIONS SECURED
Section 2.1 Debt. This Security Instrument and the grants,
assignments and transfers made in Article 1 are given for the purpose of
securing the payment of the following, in such order of priority as Lender may
determine in its sole discretion (the "Debt"):
(a) the indebtedness evidenced by the Note in lawful money of
the United States of America;
(b) interest, default interest, late charges and other sums,
as provided in the Note, this Security Instrument or the Other Security
Documents (defined below);
(c) the Default Consideration (as defined in the Note), if
any;
(d) all other moneys agreed or provided to be paid by Borrower
in the Note, this Security Instrument or the Other Security Documents;
(e) all sums advanced pursuant to this Security Instrument to
protect and preserve the Property and the lien and the security interest created
hereby; and
(f) all sums advanced and costs and expenses incurred by
Lender in connection with the Debt or any part thereof, any renewal, extension,
or change of or substitution for the
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Debt or any part thereof, or the acquisition or perfection of the security
therefor, whether made or incurred at the request of Borrower or Lender.
Section 2.2 Other Obligations. This Security Instrument and
the grants, assignments and transfers made in Article I are also given for the
purpose of securing the performance of the following (the "Other Obligations"):
(a) all other obligations of Borrower contained herein;
(b) each obligation of Borrower contained in the Note and in
the Other Security Documents; and
(c) each obligation of Borrower contained in any renewal,
extension, amendment, modification, consolidation, change of, or substitution or
replacement for, all or any part of the Note, this Security Instrument or the
Other Security Documents.
Section 2.3 Debt and Other Obligations. Borrower's obligations
for the payment of the Debt and the performance of the Other Obligations shall
be referred to collectively below as the "Obligations."
Section 2.4 Payments. Unless payments are made in the required
amount in immediately available funds at the place where the Note is payable,
remittances in payment of all or any part of the Debt shall not, regardless of
any receipt or credit issued therefor, constitute payment until the required
amount is actually received by Lender in funds immediately available at the
place where the Note is payable (or any other place as Lender, in Lender's sole
discretion, may have established by delivery of written notice thereof to
Borrower) and shall be made and accepted subject to the condition that any check
or draft may be handled for collection in accordance with the practice of the
collecting bank or banks. Acceptance by Lender of any payment in an amount less
than the amount then due shall be deemed an acceptance on account only, and the
failure to pay the entire amount then due shall be and continue to be an Event
of Default.
ARTICLE III
BORROWER COVENANTS
Borrower covenants and agrees that:
Section 3.1 Payment of Debt. Borrower will pay the Debt at the
time and in the manner provided in the Note and in this Security Instrument.
Section 3.2 Incorporation by Reference. All the covenants,
conditions and agreements contained in (a) the Note and (b) all and any of the
documents other than the Note or this Security Instrument now or hereafter
executed by Borrower and/or others and by or in favor of Lender, which wholly or
partially secure or guaranty payment of the Note (the "Other Security
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Documents"), are hereby made a part of this Security Instrument to the same
extent and with the same force as if fully set forth herein.
Section 3.3 Insurance.
(a) Borrower shall obtain and maintain, or cause to be
maintained, insurance for Borrower and the Property providing at least the
following coverages:
(i) Property Insurance. Insurance with respect to the
Improvements and building equipment insuring against any peril now or hereafter
included within the classification "All Risks of Physical Loss" in amounts at
all times sufficient to prevent Lender from becoming a co-insurer within the
terms of the applicable policies and under applicable law, but in any event such
insurance shall be maintained in an amount which, after application of
deductible, shall be equal to the full insurable value of the Improvements and
building equipment, the term "full insurable value" to mean the actual
replacement cost of the Improvements and building equipment (without taking into
account any depreciation, and exclusive of excavations, footings and
foundations, landscaping and paving) determined annually by an insurer, a
recognized independent insurance broker or an independent appraiser selected and
paid by Borrower and in no event less than the coverage required pursuant to the
terms of any Lease;
(ii) Liability Insurance. Comprehensive general liability
insurance, including bodily injury, death and property damage liability,
insurance against any and all claims, including all legal liability to the
extent insurable and imposed upon Lender and all court costs and attorneys' fees
and expenses, arising out of or connected with the possession, use, leasing,
operation, maintenance or condition of the Property in such amounts as are
generally available at commercially reasonable premiums and are generally
required by institutional lenders for properties comparable to the Property but
in any event for a combined single limit of at least $15,000,000;
(iii) Workers' Compensation Insurance. Statutory workers'
compensation insurance with respect to any work on or about the Property;
(iv) Business Interruption Insurance. Business interruption
and/or loss of "rental income" insurance in an amount sufficient to avoid any
co-insurance penalty and to provide proceeds which will cover a period of not
less than eighteen (18) months, from the date of casualty or loss, the term
"rental income" to mean the sum of (A) the total then ascertainable Rents
payable under the Leases and (B) the total ascertainable amount of all other
amounts to be received by Borrower from third parties which are the legal
obligation of the tenants, reduced to the extent such amounts would not be
received because of operating expenses not incurred during a period of
non-occupancy of that portion of the Property then not being occupied;
(v) Boiler and Machinery Insurance. Broad form boiler and
machinery insurance (without exclusion for explosion) covering all boilers or
other pressure vessels, machinery, and equipment located in, on or about the
Property and insurance against loss of occupancy or use arising from any
breakdown in such amounts as are generally required by institutional lenders for
properties comparable to the Property;
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(vi) Flood Insurance. If required by Subsection 5.5(j) hereof,
flood insurance in an amount at least equal to the lesser of (A) the principal
balance of the Note, or (B) the maximum limit of coverage available for the
Property under the National Flood Insurance Act of 1968, The Flood Disaster
Protection Act of 1973 or the National Flood Insurance Reform Act of 1994, as
each may be amended;
(vii) Builder's Risk Insurance. At all times during which
structural construction, repairs or alterations are being made with respect to
the Improvements (A) owner's contingent or protective liability insurance
covering claims not covered by or under the terms or provisions of the above
mentioned commercial general liability insurance policy; and (B) the insurance
provided for in Subsection 3.3(a)(i) written in a so-called builder's risk
completed value form (1) on a non-reporting basis, (2) against all risks insured
against pursuant to Subsection 3.3(a)(i), (3) including permission to occupy the
Property, and (4) with an agreed amount endorsement waiving co-insurance
provisions;
(viii) Terrorism Insurance. The comprehensive all risk
insurance and business income insurance policies required under subsections (i)
and (iv) above shall be required to cover perils of terrorism and acts of
terrorism in an amount equal to Fifty Million Dollars ($50,000,000) and with a
deductible no greater than two percent (2%) of the "full insurable value" of the
Property (as more specifically defined in subsection (i) above) so long as such
insurance coverage is available at commercially reasonable rates (as determined
by Lender in its sole discretion); provided however, if a Rating Agency in
connection with a Securitization of the Loan or in connection with its rating
surveillance of the certificates issued pursuant to a Securitization of the Loan
would not provide or maintain a rating for any portion of the Loan or such
certificates which would otherwise be available but for the failure to maintain
such terrorism insurance, Borrower will so maintain such insurance if obtainable
from any insurer or any Governmental Authority (for the maximum amount
obtainable up to the amounts set forth in subsections (i) and (iii) above and
with deductibles no greater than those provided in subsections (i) and (iii)
above); and
(ix) Other Insurance. Such other insurance with respect to the
Property against loss or damage of the kinds from time to time customarily
insured against and in such amounts as are required by institutional lenders for
properties comparable to the Property.
(b) All insurance provided for in Subsection 3.3(a) hereof
shall be obtained under valid and enforceable policies (the "Policies" or in the
singular, the "Policy"), and shall be issued by one or more domestic primary
insurer(s) having (i) a general policy rating of A or better and a financial
class of A:VII or better by A.M. Best Company, Inc. (or if a rating of A.M. Best
Company, Inc. is no longer available, a similar rating from a similar or
successor service) and (ii) a claims paying ability rating by a credit rating
agency approved by Lender or which actually rates this Loan (a "Rating Agency")
of not less than A by Standard & Poor's Corp. or such comparable rating by such
other Rating Agency. All insurers providing insurance required by this Security
Instrument shall be authorized to issue insurance in the state in which the
Property is located. The Policy referred to in Subsection 3.3(a)(ii) above shall
name Lender as an additional named insured and the Policies referred to in
Subsection 3.3(a)(i), (iv), (v), (vi) and (vii), and as applicable (viii), above
shall provide that all proceeds be payable to Lender as set forth in Section 3.7
hereof. The Policies referred to in Subsections 3.3(a)(i), (v), (vi) and
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(vii) shall also contain: (i) a standard "non-contributory mortgagee"
endorsement or its equivalent relating, inter alia, to recovery by Lender
notwithstanding the negligent or willful acts or omission of Lender; (ii) to the
extent available at commercially reasonable rates, a waiver of subrogation
endorsement as to Lender; and (iii) an endorsement providing for a deductible
per loss of an amount not more than that which is customarily maintained by
prudent owners of similar properties in the general vicinity of the Property,
but in no event in excess of $25,000 (except for Policies referred to in
Subsection 3.3(a)(i) and (v), for which the deductible per loss shall not exceed
$50,000), if such coverage availability in the commercial insurance marketplace
for properties that are of similar size, scope, and usage of those detailed in
the ▇▇▇▇▇▇▇ Lease (defined below) shall change, Lender, in its sole and absolute
discretion, shall review such coverages available at the time. The Policy
referred to in Subsection 3.3 (a)(i) above shall provide coverage for contingent
liability from Operation of Building Laws, Demolition Costs and Increased Cost
of Construction Endorsements together with an "Ordinance or Law Coverage" or
"Enforcement" endorsement if any of the Improvements or the use of the Property
shall at any time constitute legal non-conforming structures or uses. All
Policies shall contain (i) a provision that such Policies shall not be cancelled
or terminated, nor shall they expire, without at least thirty (30) days' prior
written notice to Lender in each instance; and ( ii) include effective waivers
by the insurer of all claims for Insurance Premiums (defined below) against any,
loss payees, additional insureds and named insureds (other than Borrower).
Certificates of insurance with respect to all renewal and replacement Policies
shall be delivered to Lender not less than twenty (20) days prior to the
expiration date of any of the Policies required to be maintained hereunder,
which certificates shall bear notations evidencing payment of applicable
premiums (the "Insurance Premiums"). Originals or certificates of such
replacement Policies shall be delivered to Lender promptly after Borrower's
receipt thereof but in any case within thirty (30) days after the effective date
thereof. If Borrower fails to maintain and deliver to Lender the original
Policies or certificates of insurance required by this Security Instrument, upon
ten (10) days' prior notice to Borrower, Lender may procure such insurance at
Borrower's sole cost and expense. Notwithstanding the foregoing, so long as (i)
the lease between Borrower, as landlord, and ▇▇▇▇▇▇▇ Companies, Inc., an
Oklahoma corporation ("Fleeting"), dated June 28, 2002, as may be amended with
Lender's consent except as otherwise specifically permitted pursuant to Section
3.8 hereof, (the "Fleeting Lease") or a replacement "triple net" lease for the
entire Property acceptable to Lender in its sole discretion (an "Acceptable
Replacement Lease") with another single-user tenant acceptable to Lender in its
sole discretion (an "Acceptable Replacement Tenant") remains in full force and
effect with ▇▇▇▇▇▇▇ or its assignee as the tenant thereunder or an Acceptable
Replacement Tenant, (ii) ▇▇▇▇▇▇▇ or an Acceptable Replacement Tenant is not in
default under the Fleeting Lease or an Acceptable Replacement Lease, as
applicable, beyond any applicable notice and cure periods set forth in the
▇▇▇▇▇▇▇ Lease, and (iii) Borrower provides Lender with original Policies or
certificates of insurance evidencing that ▇▇▇▇▇▇▇ or an Acceptable Replacement
Tenant is carrying all insurance required under the ▇▇▇▇▇▇▇ Lease or an
Acceptable Replacement Lease, as applicable, then the requirements of Section
3.3(a) and (b) shall be deemed satisfied.
(c) Borrower shall comply with all insurance requirements and
shall not bring or keep or permit to be brought or kept any article upon any of
the Property or cause or permit any condition to exist thereon which would be
prohibited by an insurance requirement, or would invalidate the insurance
coverage required hereunder to be maintained by Borrower on or with respect to
any part of the Property pursuant to this Section 3.3.
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Section 3.4 Payment of Taxes, etc.
(a) Borrower shall promptly pay or cause to be paid all taxes,
assessments, water rates, sewer rents, governmental impositions, and other
charges, including without limitation vault charges and license fees for the use
of vaults, chutes and similar areas adjoining the Land, now or hereafter levied
or assessed or imposed against the Property or any part thereof (the "Taxes"),
all ground rents, maintenance charges and similar charges, now or hereafter
levied or assessed or imposed against the Property or any part thereof (the
"Other Charges"), and all charges for utility services provided to the Property
prior to the date on which interest or delinquency charges begin to accrue
thereon or any non-payment thereof would result in the application of any
penalties, provided however that taxes may be paid in installments to the extent
permitted by the taxing authority. Borrower will deliver to Lender, promptly
upon Lender's request, evidence satisfactory to Lender that the Taxes, Other
Charges and utility service charges have been so paid or are not then
delinquent. Borrower shall not suffer and shall promptly cause to be paid and
discharged any lien or charge whatsoever which may be or become a lien or charge
against the Property. Except to the extent sums sufficient to pay all Taxes and
Other Charges have been deposited with Lender in accordance with the terms of
this Security Instrument, Borrower shall furnish to Lender paid receipts for the
payment of the Taxes and Other Charges prior to the date the same shall become
delinquent.
(b) After prior written notice to Lender, Borrower or, if the
▇▇▇▇▇▇▇ Lease or an Acceptable Replacement Lease is in full force and effect,
▇▇▇▇▇▇▇ or an Acceptable Replacement Tenant, as applicable, at its own expense,
may contest by appropriate legal proceeding, promptly initiated and conducted in
good faith and with due diligence, the amount or validity or application in
whole or in part of any of the Taxes, provided that (i) no Event of Default has
occurred and is continuing under the Note, this Security Instrument or any of
the Other Security Documents, (ii) Borrower is permitted to do so under the
provisions of any other mortgage, deed of trust or deed to secure debt affecting
the Property, (iii) such proceeding shall suspend the collection of the Taxes
from Borrower and from the Property or Borrower shall have paid all of the Taxes
under protest, (iv) such proceeding shall be permitted under and be conducted in
accordance with the provisions of any other instrument to which Borrower is
subject and shall not constitute a default thereunder, (v) neither the Property
nor any part thereof or interest therein will be in danger of being sold,
forfeited, terminated, cancelled or lost, and (vi) Borrower shall have deposited
with Lender adequate reserves, a bond, or other reasonable security for the
payment of the Taxes, together with all interest and penalties thereon, unless
Borrower has paid all of the Taxes under protest, or Borrower or ▇▇▇▇▇▇▇ or an
Acceptable Replacement Tenant shall have furnished the security as may be
required in the proceeding, or as may be reasonably requested by Lender to
insure the payment of any contested Taxes, together with all interest and
penalties thereon, taking into consideration the amount in the Escrow Fund
available for payment of Taxes.
Section 3.5 Escrow Fund. In addition to the initial deposits with
respect to Taxes and Insurance Premiums made by Borrower to Lender on the date
hereof to be held by Lender in escrow, Borrower shall pay to Lender on the first
day of each calendar month (a) one-twelfth of an amount which would be
sufficient to pay the Taxes payable, or estimated by Lender to be payable,
during the next ensuing twelve (12) months and (b) one-twelfth of an amount
which would be sufficient to pay the Insurance Premiums due for the renewal of
the coverage afforded
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by the Policies upon the expiration thereof (the amounts in (a) and (b) above
shall be called the "Escrow Fund"). Borrower agrees to notify Lender immediately
of any changes to the amounts, schedules and instructions for payment of any
Taxes and Insurance Premiums of which it has or obtains knowledge and authorizes
Lender or its agent to obtain the bills for Taxes directly from the appropriate
taxing authority. The Escrow Fund and the payments of interest or principal or
both, payable pursuant to the Note shall be added together and shall be paid as
an aggregate sum by Borrower to Lender. Provided there are sufficient amounts in
the Escrow Fund and no Event of Default exists, Lender shall be obligated to pay
the Taxes and Insurance Premiums as they become due on their respective due
dates on behalf of Borrower by applying the Escrow Fund to the payments of such
Taxes and Insurance Premiums required to be made by Borrower pursuant to
Sections 3.3 and 3.4 hereof. If the amount of the Escrow Fund shall exceed the
amounts due for Taxes and Insurance Premiums pursuant to Sections 3.3 and 3.4
hereof, Lender shall, in its discretion, return any excess to Borrower or credit
such excess against future payments to be made to the Escrow Fund. In allocating
such excess, Lender may deal with the person shown on the records of Lender to
be the owner of the Property. If the Escrow Fund is not sufficient to pay the
items set forth in (a) and (b) above, Borrower shall promptly pay to Lender,
upon demand, an amount which Lender shall reasonably estimate as sufficient to
make up the deficiency. The Escrow Fund shall not constitute a trust fund and
may be commingled with other monies held by Lender. Unless otherwise. required
by Applicable Laws (defined in Section 3.11), no earnings or interest on the
Escrow Fund shall be payable to Borrower. Notwithstanding the foregoing, so long
as (i) no Event of Default has occurred and is continuing, (ii) ▇▇▇▇▇▇▇ or an
Acceptable Replacement Tenant is not in default under the terms of the ▇▇▇▇▇▇▇
Lease or an Acceptable Replacement Lease, as applicable, beyond any applicable
notice and cure periods set forth therein, and (iii) ▇▇▇▇▇▇▇ or an Acceptable
Replacement Tenant is paying the Taxes pursuant to the terms of Section 3.4
hereof and Insurance Premiums in accordance with the terms of the last sentence
of Section 3.3(b) hereof, directly pursuant to the terms hereof, and such Taxes
are current, then Borrower shall not be required to make monthly payments into
the Escrow Fund.
Section 3.6 Condemnation. Borrower shall promptly give Lender
notice of the actual or threatened commencement of any condemnation or eminent
domain proceeding and shall deliver to Lender copies of any and all papers
served in connection with such proceedings. Notwithstanding any taking by any
public or quasi-public authority through eminent domain or otherwise (including
but not limited to any transfer made in lieu of or in anticipation of the
exercise of such taking), Borrower shall continue to pay the Debt at the time
and in the manner provided for its payment in the Note and in this Security
Instrument and the Debt shall not be reduced until any award or payment therefor
shall have been actually received and applied by Lender, after the deduction of
expenses of collection, to the reduction or discharge of the Debt. Subject to
Section 3.7 herein, Borrower shall cause the award or payment made in any
condemnation or eminent domain proceeding, which is payable to Borrower, to be
paid directly to Lender. Subject to Section 3.7 herein, Lender shall not be
limited to the interest paid on the award by the condemning authority but shall
be entitled to receive out of the award interest at the rate or rates provided
herein or in the Note. Lender may apply any award or payment to the reduction or
discharge of the Debt whether or not then due and payable. If the Property is
sold, through foreclosure or otherwise, prior to the receipt by Lender of the
award or payment, Lender shall have the right, whether or not a deficiency
judgment on the Note (to the extent permitted in the Note or herein) shall have
been sought, recovered or denied, to receive the award or payment allocated to
Borrower under the ▇▇▇▇▇▇▇ Lease, or a portion thereof sufficient to pay the
Debt.
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Section 3.7 Restoration After Casualty/Condemnation. In the event of a
casualty or a taking by eminent domain, the following provisions shall apply in
connection with the Restoration (defined below) of the Property:
(a) If the Property shall be damaged or destroyed, in whole or in
part, by fire or other casualty, where such damage or destruction is equal to or
greater than $50,000, or if the Property or any portion thereof is taken by the
power of eminent domain Borrower shall give prompt notice of such damage or
taking to Lender and, subject to the terms of Sections 17 and 18 of the ▇▇▇▇▇▇▇
Lease or comparable provisions of a Major Lease (as hereinafter defined), shall
promptly commence or cause to be commenced and diligently prosecute or cause to
be prosecuted the completion of the repair and restoration of the Property as
nearly as possible to the condition the Property was in immediately prior to
such fire or other casualty or taking, with such alterations as may be approved
by Lender (the "Restoration"). Use of the Net Proceeds to pay down the Debt as
may be required by Lender herein will not cause Borrower to incur either a
premium or a penalty.
(b) The term "Net Proceeds" for purposes of this Section 3.7 shall
mean: (i) the net amount of all insurance proceeds under the Policies carried
pursuant to Subsections 3.3(a)(i), (iv), (v), (vi), (vii) and (viii) of this
Security Instrument as a result of such damage or destruction, after deduction
of Lender's reasonable costs and expenses (including, but not limited to
reasonable counsel fees), if any, in collecting the same, or (ii) the net amount
of all awards and payments received by Lender with respect to a taking
referenced in Section 3.6 of this Security Instrument, after deduction of
Lender's reasonable costs and expenses (including, but not limited to reasonable
counsel fees), if any, in collecting the same, whichever the case may be. If (i)
the Net Proceeds do not exceed $500,000 (the "Net Proceeds Availability
Threshold"); (ii) the costs of completing the Restoration as reasonably
estimated by Borrower shall be less than or equal to the Net Proceeds; (iii) no
Event of Default shall have occurred and be continuing under the Note, this
Security Instrument or any of the Other Security Documents; (iv) the Property
and the use thereof after the Restoration will be in compliance with, and
permitted under, all applicable zoning laws, ordinances, rules and regulations
(including, without limitation, all applicable Environmental Laws (defined in
Section 12.1)); (v) (A) in the event that the Net Proceeds are insurance
proceeds, less than twenty-five percent (25%) of the total floor area of the
Improvements has been damaged or destroyed, or rendered unusable as a result of
such fire or other casualty; or (B) in the event that the Net Proceeds are
condemnation awards, less than 25% of the Land constituting the Property is
taken, such Land that is taken is located along the perimeter or periphery of
the Property, no portion of the Improvements is located in such Lands, and such
taking does not materially impair access to the Property; and (vi) Lender shall
be satisfied that any operating deficits, including all scheduled payments of
principal and interest under the Note which will be incurred with respect to the
Property as a result of the occurrence of any such fire or other casualty or
taking, whichever the case may be, will be covered out of (1) the Net Proceeds,
or (2) other funds of Borrower, then the Net Proceeds will be disbursed directly
to Borrower. Notwithstanding anything to the contrary contained in this Section
3.7(b), so long as (i) the ▇▇▇▇▇▇▇ Lease remains in full force and effect and
(ii) ▇▇▇▇▇▇▇ is not in default under the ▇▇▇▇▇▇▇ Lease beyond any applicable
notice and cure periods set forth in the ▇▇▇▇▇▇▇ Lease, then subsections (iv)
and (v) of Section 3.7(b) shall be deemed not applicable.
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(c) If the Net Proceeds are greater than the Net Proceeds
Availability Threshold or Borrower is not otherwise entitled to have the Net
Proceeds disbursed directly to Borrower pursuant to Subsection 3.7(b), such Net
Proceeds shall be forthwith paid to Lender to be held by Lender in a segregated
account to be made available to Borrower for the Restoration in accordance with
the provisions of this Subsection 3.7(c).
The Net Proceeds held by Lender pursuant to this Subsection 3.7(c) shall
be made available to Borrower for payment or reimbursement of Borrower's
expenses in connection with the Restoration, subject to the following
conditions:
(i) no Event of Default shall have occurred and be continuing
under the Note, this Security Instrument or any of the Other Security Documents;
(ii) Lender shall, within a reasonable period of time prior to
request for initial disbursement, be furnished with an estimate of the cost of
the Restoration accompanied by an independent architect's certification as to
such costs and appropriate plans and specifications for the Restoration, such
plans and specifications and cost estimates to be subject to Lender's approval,
not to be unreasonably withheld or delayed;
(iii) the Net Proceeds, together with any cash or cash
equivalent deposited by Borrower with Lender, are sufficient to cover the cost
of the Restoration as such costs are certified by the independent architect;
(iv) Net Proceeds are less than the then outstanding principal
balance of the Note;
(v) (A) in the event that the Net Proceeds are insurance
proceeds, less than twenty-five percent (25%) of the total floor area of the
Improvements has been damaged or destroyed, or rendered unusable as a result of
such fire or other casualty; or (B) in the event that the Net Proceeds are
condemnation awards, less than 25% of the Land constituting the Property is
taken, such Land that is taken is located along the perimeter or periphery of
the Property, no portion of the Improvements is located in such Lands and such
taking does not materially impair access to the Property, provided, however,
that the terms of this Section 3.7(c)(v) shall not apply so long as ▇▇▇▇▇▇▇ is
obligated to perform the Restoration pursuant to the terms of the ▇▇▇▇▇▇▇ Lease;
(vi) Lender shall be satisfied that any operating deficits,
including all scheduled payments of principal and interest under the Note which
will be incurred with respect to the Property as a result of the occurrence of
any such fire or other casualty or taking, whichever the case may be, will be
covered out of (1) the Net Proceeds, or (2) other funds of Borrower;
(vii) Lender shall be satisfied that, upon the completion of
the Restoration, the net cash flow of the Property will be restored to a level
sufficient to cover all carrying costs and operating expenses of the Property,
including, without limitation, debt service on the Note and all required
replacement reserves, reserves for tenant improvements and leasing commissions;
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(viii) the Restoration can reasonably be completed on or
before the earliest to occur of (A) six (6) months prior to the Maturity Date
(as defined in the Note), (B) the earliest date required for such completion
under the terms of any Major Leases (defined below) and (C) such time as may be
required under applicable zoning law, ordinance, rule or regulation in order to
repair and restore the Property to as nearly as possible the condition it was in
immediately prior to such fire or other casualty or to such taking, as
applicable;
(ix) the Property and the use thereof after the Restoration
will be in compliance with, and permitted under, all applicable zoning laws,
ordinances, rules and regulations (including, without limitation, all applicable
Environmental Laws (defined in Section 12.1); and
(x) each Major Lease (defined in Section 3.8) in effect as of
the date of the occurrence of such fire or other casualty shall remain in full
force and effect during and after the completion of the Restoration without
abatement of rent beyond the time required for Restoration.
(d) The Net Proceeds held by Lender until disbursed in accordance
with the provisions of this Section 3.7 shall constitute additional security for
the Obligations. The Net Proceeds other than the Net Proceeds paid under the
Policy described in Subsection 3.3(a)(iv) shall be disbursed by Lender to, or as
directed by, Borrower, in an amount equal to the costs actually incurred from
time to time for work in place as part of the Restoration less customary
retainage from time to time during the course of the Restoration, not more
frequently than once per month, upon receipt of evidence satisfactory to Lender
that (A) all materials installed and work and labor performed (except to the
extent that they are to be paid for out of the requested disbursement) in
connection with the Restoration have been paid for in full, and (B) there exist
no notices of pendency, stop orders, mechanic's or materialman's liens or
notices of intention to file same, or any other liens or encumbrances of any
nature whatsoever on the Property arising out of the Restoration which have not
either been fully bonded and discharged of record or in the alternative fully
insured to the satisfaction of Lender by the title company insuring the lien of
this Security Instrument. The Net Proceeds paid under the Policy described in
Subsection 3.3(a)(iv) shall be disbursed by Lender to pay for debt service under
the loan evidenced by the Note, to pay other expenses incurred by Borrower in
connection with the ownership and operation of the Property, and the remainder
thereof, to, or as directed by, Borrower to pay for the cost of the Restoration
in accordance with this Section 3.7(d). Final payment shall be made after
submission to Lender of all licenses, permits, certificates of occupancy and
other required approvals of governmental authorization having jurisdiction and
Casualty Consultant's (as defined below) certification that the Restoration has
been fully completed.
(e) Subject to the rights of Fleeting under the ▇▇▇▇▇▇▇ Lease so
long as the ▇▇▇▇▇▇▇ Lease remains in full force and effect, Lender shall have
the use of the plans and specifications and all permits, licenses and approvals
required or obtained in connection with the Restoration. The identity of the
contractors, subcontractors and materialmen engaged in the Restoration, as well
as the contracts under which they have been engaged, shall be subject to prior
review and acceptance by Lender and an independent consulting engineer selected
by Lender (the "Casualty Consultant"), such acceptance not to be unreasonably
withheld or delayed. All costs and expenses incurred by Lender in connection
with making the Net Proceeds available
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for the Restoration including, without limitation, reasonable counsel fees and
disbursements and the Casualty Consultant's fees, shall be paid by Borrower.
(f) If at any time the Net Proceeds or the undisbursed balance
thereof shall not, in the reasonable opinion of Lender, be sufficient to pay in
full the balance of the costs which are reasonably estimated by the Casualty
Consultant to be incurred in connection with the completion of the Restoration,
Borrower shall deposit or cause to be deposited the deficiency (the "Net
Proceeds Deficiency") with Lender before any further disbursement of the Net
Proceeds shall be made. The Net Proceeds Deficiency deposited with Lender shall
be held by Lender and shall be disbursed for costs actually incurred in
connection with the Restoration on the same conditions applicable to the
disbursement of the Net Proceeds, and until so disbursed pursuant to this
Section 3.7 shall constitute additional security for the Obligations.
(g) Except upon the occurrence and continuance of an Event of
Default, Borrower shall settle any insurance claims with respect to the Net
Proceeds which in the aggregate are less than the Net Proceeds Availability
Threshold. Lender shall have the right to participate in and reasonably approve
any settlement for insurance claims with respect to the Net Proceeds which in
the aggregate are greater than the Net Proceeds Availability Threshold. If an
Event of Default shall have occurred and be continuing, Borrower hereby
irrevocably empowers Lender, in the name of Borrower as its true and lawful
attorney-in-fact, to file and prosecute such claim and to collect and to make
receipt for any such payment. If the Net Proceeds are received by Borrower, such
Net Proceeds shall, until the completion of the related work, be held in trust
for Lender and shall be segregated from other funds of Borrower to be used to
pay for the cost of the Restoration in accordance with the terms hereof.
(h) The excess, if any, of the Net Proceeds and the remaining
balance, if any, of the Net Proceeds Deficiency deposited with Lender after (i)
the Casualty Consultant certifies to Lender that the Restoration has been
completed in accordance with the provisions of this Section 3.7, and (ii) the
receipt by Lender of evidence satisfactory to Lender that all costs incurred in
connection with the Restoration have been paid in full and all required permits,
licenses, certificates of occupancy and other required approvals of governmental
authorities having jurisdiction have been issued, shall be remitted by Lender to
Borrower, provided no Event of Default shall have occurred and shall be
continuing under the Note, this Security Instrument or any of the Other Security
Documents.
(i) All Net Proceeds not required (i) to be made available for the
Restoration or (ii) to be returned to Borrower as excess Net Proceeds pursuant
to Subsection 3.7(h) shall be retained and applied by Lender toward the payment
of the Debt without penalty or prepayment premium whether or not then due and
payable in such order, priority and proportions as Lender in its discretion
shall deem proper or, at the discretion of Lender, the same shall be paid,
either in whole or in part, to Borrower. If Lender shall receive and retain Net
Proceeds, the lien of this Security Instrument shall be reduced only by the
amount received and retained by Lender and actually applied by Lender in
reduction of the Debt.
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Section 3.8 Leases and Rents.
(a) Borrower may enter into a proposed Lease (including the renewal
or extension of an existing Lease ("a Renewal Lease")) without the prior written
consent of Lender, provided such proposed Lease or Renewal Lease (i) provides
for rental rates and terms comparable to existing local market rates and terms
(taking into account the type and quality of the tenant) as of the date such
Lease is executed by Borrower (unless, in the case of a Renewal Lease, the rent
payable during such renewal, or a formula or other method to compute such rent,
is provided for in the original Lease), (ii) is an arms-length transaction with
a bona fide, independent third party tenant, (iii) does not have a materially
adverse effect on the value of the Property taken as a whole, (iv) is subject
and subordinate to the Security Instrument and the lessee thereunder agrees to
attorn to Lender, and (v) is written on the standard form of lease approved by
Lender. All proposed Leases which do not satisfy the requirements set forth in
this Subsection 3.8(a) shall be subject to the prior approval of Lender and its
counsel, at Borrower's expense. Borrower shall promptly deliver to Lender copies
of all Leases which are entered into pursuant to this Subsection together with
Borrower's certification that it has satisfied all of the conditions of this
Subsection.
(b) Borrower (i) shall observe and perform all the obligations
imposed upon the lessor under the Leases and shall not do or permit to be done
anything to impair the value of any of the Leases as security for the Debt; (ii)
upon request, shall promptly send copies to Lender of all notices of default
which Borrower shall send or receive thereunder; (iii) shall enforce all of the
material terms, covenants and conditions contained in the Leases upon the part
of the tenant thereunder to be observed or performed, (iv) shall not collect any
of the Rents more than one (1) calendar quarter in advance (except security
deposits shall not be deemed Rents collected in advance); (v) shall not execute
any other assignment of the lessor's interest in any of the Leases or the Rents;
and (vi) shall not consent to any assignment of or subletting otherwise not
permitted under any Leases, without the prior written consent of Lender.
Provided no Event of Default has occurred and is continuing, Borrower may waive,
amend and/or supplement any financial covenants of ▇▇▇▇▇▇▇ contained in the
▇▇▇▇▇▇▇ Lease without the prior written consent of Lender.
(c) Borrower may, without the consent of Lender, amend, modify or
waive the provisions of any Lease or terminate, reduce rents under, accept a
surrender of space under, or shorten the term of, any Lease (including any
guaranty, letter of credit or other credit support with respect thereto)
provided that such action (taking into account, in the case of a termination,
reduction in rent, surrender of space or shortening of term, the planned
alternative use of the affected space) does not have a materially adverse effect
on the value of the Property taken as a whole, and provided that such Lease, as
amended, modified or waived, is otherwise in compliance with the requirements of
this Security Instrument and any subordinate agreement binding upon Lender with
respect to such Lease. A termination of a Lease with a tenant who is in default
beyond applicable notice and grace periods shall not be considered an action
which has a materially adverse effect on the value of the Property taken as a
whole. Any amendment, modification, waiver, termination, rent reduction, space
surrender or term shortening which does not satisfy the requirements set forth
in this Subsection shall be subject to the prior approval of Lender and its
counsel, which approval shall not be unreasonably withheld or delayed, at
Borrower's expense. Borrower shall promptly deliver to Lender copies of
amendments,
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modifications and waivers which are entered into pursuant to this Subsection
together with Borrower's certification that it has satisfied all of the
conditions of this Subsection.
(d) Notwithstanding anything contained herein to the contrary,
Borrower shall not, without the prior written consent of Lender, enter into,
renew, extend, amend, modify, waive any provisions of, terminate, reduce rents
under, accept a surrender of space under, or shorten the term of, any Major
Lease. The term "Major Lease" shall mean any Lease between Borrower as landlord
and a tenant which lease is (i) approved by Lender, in form and substance, in
its sole discretion using prudent business judgment, (ii) at comparable terms
with the ▇▇▇▇▇▇▇ Lease and (iii) which demises in the aggregate more than the
lesser of (a) 15,000 rentable square feet or (b) fifteen percent (15%) of the
total rentable square feet at the Property.
(e) Provided no Event of Default has occurred and is continuing,
Borrower shall have the right, upon notice to, but without the consent of
Lender, to accept or reject any offer by ▇▇▇▇▇▇▇ or such tenant under a Major
Lease to terminate the ▇▇▇▇▇▇▇ Lease or Major Lease with respect to the Property
in connection with a casualty or condemnation to the Property pursuant to and in
accordance with the terms and provisions of Section 17 of the ▇▇▇▇▇▇▇ Lease or
similar provision of a Major Lease so long as the amount payable by ▇▇▇▇▇▇▇ or
such tenant under a Major Lease to Borrower pursuant to the ▇▇▇▇▇▇▇ Lease or
Major Lease in connection with such termination and/or the amount of insurance
proceeds or condemnation award, as applicable, which Borrower is entitled to
retain pursuant to the ▇▇▇▇▇▇▇ Lease or Major Lease in connection therewith is
not less than the Defeasance Collateral (as defined in the Note) for the
Property, in the event Borrower is defeasing a portion of the Debt in connection
with such casualty or condemnation pursuant to Article VI of the Note, and
provided, further, that such prepayment or defeasance is made in accordance with
the terms of the Note, this Security Instrument and Other Security Documents.
(f) Intentionally Deleted.
Section 3.9 Maintenance and Use of Property. Borrower shall cause the
Property to be maintained in a good and safe condition and repair. The
Improvements and the Personal Property shall not be removed, demolished or
materially altered (except for normal replacement of the Personal Property or as
permitted in the ▇▇▇▇▇▇▇ Lease) without the consent of Lender. Except as may be
provided in Section 3.7(a), Borrower shall promptly repair, replace or rebuild
or cause to be repaired, replaced or rebuilt, any part of the Property which may
be destroyed by any casualty, or become damaged, worn or dilapidated or which
may be affected by any proceeding of the character referred to in Section 3.6
hereof and shall complete and pay for any structure at any time in the process
of construction or repair on the Land: Borrower shall not initiate, join in,
acquiesce in, or consent to any change in any private restrictive covenant,
zoning law or other public or private restriction, limiting or defining the uses
which may be made of the Property or any part thereof, provided that Borrower
shall be permitted to enter into easement agreements or grant rights of way so
long as such agreements or grants do not reduce the value of the Property or
impair its use, and so long as Borrower has delivered to Lender a title
endorsement satisfactory to Lender with respect to such agreements and/or rights
of way. If under applicable zoning provisions the use of all or any portion of
the Property is or shall become a nonconforming use, Borrower will not cause or
permit the nonconforming use to be
-16-
discontinued or the nonconforming Improvement to be abandoned without the
express written consent of Lender.
Section 3.10 Waste. Borrower shall not commit or suffer any waste of the
Property or make any change in the use of the Property which will in any way
materially increase the risk of fire or other hazard arising out of the
operation of the Property, or take any action that might invalidate or give
cause for cancellation of any Policy, or do or permit to be done thereon
anything that may in any way impair the value of the Property or the security of
this Security Instrument. Borrower will not, without the prior written consent
of Lender, execute any oil and gas lease or any other instrument allowing any
drilling or exploration for or extraction, removal, or production of any
minerals from the surface or the subsurface of the Land, regardless of the depth
thereof or the method of mining or extraction thereof.
Section 3.11 Compliance With Laws.
(a) Borrower shall promptly comply or cause compliance with all
existing and future federal, state and local laws, orders, ordinances,
governmental rules and regulations or court orders affecting the Property, or
the use thereof ("Applicable Laws"); provided, however, Borrower's obligations
with respect to Environmental Laws are exclusively addressed herein in Article
XII.
(b) Borrower shall from time to time, upon Lender's request, provide
Lender with evidence reasonably satisfactory to Lender that the Property
complies with all Applicable Laws or is exempt from compliance with Applicable
Laws.
(c) Notwithstanding any provisions set forth herein or in any
document regarding Lender's approval of alterations of the Property, but subject
to any rights of ▇▇▇▇▇▇▇ to perform alterations at the Property pursuant to and
in accordance with the terms and provisions of the Fleeting Lease, Borrower
shall not alter the Property in any manner which would materially increase
Borrower's responsibilities for compliance with Applicable Laws without the
PRIOR WRITTEN approval of Lender. Lender's approval of the plans,
specifications, or working drawings for alterations of the Property shall create
no responsibility or liability on behalf of Lender for their completeness,
design, sufficiency or their compliance with Applicable Laws. The foregoing
shall apply to tenant improvements constructed by Borrower or by any of its
tenants. Lender may condition any such approval upon receipt of a certificate of
compliance with Applicable Laws from an independent architect, engineer, or
other person acceptable to Lender.
(d) Borrower shall give prompt notice to Lender of the receipt by
Borrower of any notice related to a violation of any Applicable Laws and of the
commencement of any proceedings or investigations which relate to compliance
with Applicable Laws.
(e) After prior written notice to Lender, Borrower, at its own
expense, may contest by appropriate legal proceeding, promptly initiated and
conducted in good faith and with due diligence, the Applicable Laws affecting
the Property, provided that (i) no Event of Default has occurred and is
continuing under the Note, this Security Instrument or any of the Other Security
Documents; (ii) Borrower is permitted to do so under the provisions of any other
mortgage, deed of trust or deed to secure debt affecting the Property; (iii)
such proceeding shall
-17-
be permitted under and be conducted in accordance with the provisions of any
other instrument to which Borrower or the Property is subject and shall not
constitute a default thereunder; (iv) neither the Property, any part thereof or
interest therein, any of the tenants or occupants thereof, nor Borrower shall be
affected in any material adverse way as a result of such proceeding; (v)
non-compliance with the Applicable Laws shall not impose civil or criminal
liability on Borrower or Lender; and (vi) Borrower shall have furnished to
Lender all other items reasonably requested by Lender.
Section 3.12 Books and Records.
(a) Borrower and any Guarantors (defined in Subsection 10.1(e)) and
Indemnitor(s) (defined in Section 13.4), if any, shall keep adequate books and
records of account in accordance with generally accepted accounting principles
("GAAP"), or in accordance with other methods acceptable to Lender in its sole
discretion, consistently applied and furnish to Lender:
(i) monthly, or if the Loan (defined below) has been
securitized or sold as a whole loan by Lender, quarterly and annual certified
rent rolls in the form attached hereto as Exhibit B signed and dated by
Borrower, detailing the names of all tenants of the Improvements, the portion of
Improvements occupied by each tenant, the base rent and any other charges
payable under each Lease and the term of each Lease, including the expiration
date, the extent to which any tenant is in default under any Lease, and any
other information as is reasonably required by Lender, within twenty (20) days
after the end of each calendar month, thirty (30) days after the end of each
fiscal quarter or sixty (60) days after the close of each fiscal year of
Borrower, as applicable;
(ii) on a monthly basis, operating statements of the Property
in the form attached as Exhibit C for the immediately preceding month (and for
previous periods if required by Lender), or if the Loan has been securitized or
sold as a whole loan by Lender, quarterly and annual operating statements of the
Property in the form attached hereto as Exhibit D and Exhibit E, all of which
shall be prepared and certified by Borrower in the form required by Lender,
detailing the revenues received, the expenses incurred and the net operating
income before and after debt service (principal and interest) and major capital
improvements completed by Borrower for each month and containing appropriate
year to date information, within twenty (20) days after the end of each calendar
month, thirty (30) days after the end of each fiscal quarter or sixty (60) days
after the close of each fiscal year of Borrower, as applicable;
(iii) an annual operating statement of the Property in the
form attached hereto as Exhibit E detailing the total revenues received, total
expenses incurred, total cost of all capital improvements, total debt service
and total cash flow, to be prepared and certified by Borrower in the form
required by Lender within sixty (60) days after the close of each fiscal year of
Borrower;
(iv) quarterly and annual balance sheet in the form attached
hereto as Exhibit F and profit and loss statements of Borrower, any Guarantors
and any Indemnitor(s) in the form required by Lender, prepared and certified by
the respective Borrower, Guarantors and/or Indemnitor(s), within thirty (30)
days after the end of each fiscal quarter and within
-18-
sixty (60) days after the end of each fiscal year, with respect to Borrower, and
within sixty (60) days (or, at any titter after the Loan is securitized, ninety
(90) days) after the end of each fiscal quarter with respo a: to any Guarantors
and Indemnitor(s); and audited financial statements prepared by an indierrndent
certified public accountant acceptable to Lender, within one hundred twenty
(120) days after the close of each fiscal year with respect to any Guarantor and
Indemnitor; and
z) an annual operating budget in the form attached hereto as
Exhibit G presented on a mo baly basis consistent with the annual operating
statement described above for the Property, inch caig cash flow projections for
the upcoming year, and all proposed capital replacements and ivetrovements at
least fifteen (15) days prior to the start of each fiscal year.
(b) r reon request from Lender, Borrower, any Guarantor and any
Indemnitor shall furnish in a timely ierLnner to Lender:
If at any time the ▇▇▇▇▇▇▇ Lease is no longer in effect or if
▇▇▇▇▇▇▇ has otherwise vac,,he 1 the Property, a property management report for
the Property, showing the number of inquiriede ,lade and/or rental applications
received from tenants or prospective tenants and deposits receivom from tenants
and any other information requested by Lender, in reasonable detail and
certifiedtorr Borrower (or an officer, general partner, member or principal of
Borrower if Borrower is not idii individual) under penalty of perjury to be true
and complete, but no more frequently than ▇▇▇; zrly; and
an accounting of all security deposits held in connection with
any Lease of any part a Prhe Property, including the name and identification
number of the accounts in which such sec dety deposits are held, the name and
address of the financial institutions in which such securiposieposits are held
and the name of the person to contact at such financial institution, along ▇▇▇
any authority or release necessary for Lender to obtain information regarding
such acc, diets directly from such financial institutions.
(c) )warower, any Guarantor and any Indemnitor shall furnish Lender
with such other additional ftal ccial or management information (including State
and Federal tax returns, if any) as may, frone :ime to time, be reasonably
required by Lender in form and substance satisfactory to Len,
(d) 3wErrower acknowledges the importance to Lender of the timely
delivery of each of the item;uirequired by this Section 3.12 (each, a "Required
Financial Item" and collectively, the "Irequired Financial Items"). In the event
Borrower fails to deliver to Lender any of the Requireancinancial Items within
the time frame specified herein and such failure is not cured within ten (usi)
business days after notice from Lender (each such event, a "Reporting Failure"),
without ingtiting Lender's other rights and remedies with respect to the
occurrence of such an Event of Dt, ▇▇▇▇, Borrower shall pay to Lender the sum of
$1,000.00 per occurrence for each Reporting Ft. re. It shall constitute a
further Event of Default hereunder if any such payment is not recl b3ed by
Lender within thirty (30) days of the date on which such payment is due, and
Lender : be 11 be entitled to the exercise of all of its rights and remedies
provided he reunder.
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(e) In the event that two (2) Reporting Failures occur during any
twelve (12) month period during the term of the Loan, Borrower agrees to
establish a lockbox and lockbox account pursuant to Lender's requirements, each
in the name of Lender, and to execute Lender's standard form Cash Management
Agreement, together with any documentation ancillary thereto as required by
Lender, including, without limitation, a lockbox agreement with a bank
acceptable to Lender, signature cards and letters to tenants, credit card
companies and other account receivable counterparties directing them to pay all
rents, receivables and other sums directly to the lockbox account.
Section 3.13 Payment For Labor and Materials. Borrower will promptly pay
or cause to be paid when due all bills and costs for labor, materials, and
specifically fabricated materials incurred in connection with the Property and
never permit to exist in respect of the Property or any part thereof any lien or
security interest, even though inferior to the liens and the security interests
hereof, and in any event never permit to be created or exist in respect of the
Property or any part thereof any other or additional lien or security interest
other than the liens or security interests hereof, except for the Permitted
Exceptions (defined below). After prior written notice to Lender, Borrower or,
if the ▇▇▇▇▇▇▇ Lease or an Acceptable Replacement Lease is in full force and
effect, ▇▇▇▇▇▇▇ or an Acceptable Replacement Tenant, as applicable, at its own
expense, may contest by appropriate legal proceeding, promptly initiated and
conducted in good faith and with due diligence, the amount or validity or
application in whole or in part of any of such lien, provided that (i) no Event
of Default has occurred and is continuing under the Note, this Security
Instrument or any of the Other Security Documents, (ii) such proceeding shall
suspend the collection of such lien from Borrower and from the Property or
Borrower shall have paid such lien under protest, (iii) neither the Property nor
any part thereof or interest therein will be in danger of being sold, forfeited,
terminated, cancelled or lost, and (iv) Borrower, ▇▇▇▇▇▇▇ or an Acceptable
Replacement Tenant shall have deposited with Lender adequate reserves, a bond,
or other reasonable security for the payment of the lien, together with all
interest and penalties thereon, unless Borrower has paid all of the lien under
protest, or Borrower or ▇▇▇▇▇▇▇ or an Acceptable Replacement Tenant shall have
furnished the security as may be required in the proceeding, or as may be
reasonably requested by Lender to insure the payment of any contested lien
together with all interest and penalties thereon.
Section 3.14 Performance of Other Agreements. Borrower shall observe and
perform or cause to be observed and performed each and every term to be observed
or performed by Borrower pursuant to the terms of any agreement or recorded
instrument affecting or pertaining to the Property, or given by Borrower to
Lender for the purpose of further securing an Obligation secured hereby and any
amendments, modifications or changes thereto.
Section 3.15 Change of Name, Identity or Structure. Except as may be
permitted under Article 8 hereof, Borrower will not change Borrower's name,
identity (including its trade name or names) or, if not an individual,
Borrower's corporate, partnership or other structure without notifying the
Lender of such change in writing at least thirty (30) days prior to the
effective date of such change and, in the case of a change in Borrower's
structure, without first obtaining the prior written consent of the Lender.
-20-
Section 3.16 Existence. Borrower will continuously maintain (a) its
existence and shall not dissolve or permit its dissolution, (b) its rights to do
business in the state where the Property is located and (c) its franchises and
trade names, if any
Section 3.17 Management. The management of the Property shall be by
either: (a) Borrower or an entity affiliated with Borrower approved by Lender
for so long as Borrower or said affiliated entity is managing the Property in a
first class manner; or (b) a professional property management company approved
by Lender; or (c) by ▇▇▇▇▇▇▇ or an Acceptable Replacement Tenant, so long as the
▇▇▇▇▇▇▇ Lease or an Acceptable Replacement Lease, as applicable, is in full
force and effect and provided there is no uncured default under the ▇▇▇▇▇▇▇
Lease or Acceptable Replacement Lease, as applicable. Such management by an
affiliated entity or a professional property management company shall be
pursuant to a written agreement approved by Lender. 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 Lender. 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, Lender shall have the right to
immediately terminate, or to direct Borrower to immediately terminate, such
management contract and to retain, or to direct Borrower to retain, a new
management agent approved by Lender. All Rents generated by or derived from the
Property shall first be utilized solely for current expenses directly
attributable to the ownership and operation of the Property, including, without
limitation, current expenses relating to Borrower's liabilities and obligations
with respect to the Note, this Security Instrument and the Other Security
Documents, and none of the Rents generated by or derived from the Property shall
be diverted by Borrower and utilized for any other purpose unless all such
current expenses attributable to the ownership and operation of the Property
have been fully paid and satisfied.
ARTICLE IV
SPECIAL COVENANTS
Borrower covenants and agrees that:
Section 4.1 Property Use. The Property shall be used only for any lawful
purpose reasonably comparable to or relating to packaging, light assembly,
warehousing, storage and/or distribution facilities and uses ancillary thereto,
and except for any permitted use by Fleeting or an Acceptable Replacement Tenant
as set forth in the Fleeting Lease or an Acceptable Replacement Lease, as
applicable, for no other use, without the prior written consent of Lender.
Section 4.2 Single Purpose Entity. It has not and shall not and agrees
that its general partner(s), if Borrower is a partnership, or its managing
member(s), if Borrower is a limited liability company (in each case,
"Principal"), has not and shall not:
(a) with respect to any Principal, fail to be organized as a
corporation;
(b) with respect to Borrower, fail to be organized solely for the
purpose of (i) acquiring, developing, owning, managing or operating the
Property, (ii) entering into this Security Instrument and the documents related
hereto, and (iii) engaging in any activity that is
-21-
incidental, necessary or appropriate to accomplish the foregoing and, with
respect to a Principal, be organized for any purpose other than (I) owning at
least a 0.5% interest in Borrower, (II) serving as a manager of Borrower and
(III) engaging in any activity that is incidental, necessary or appropriate to
owning an interest in Borrower and serving as a manager of Borrower;
(c) with respect to Borrower, engage in any business or activity
other than the ownership, operation and maintenance of the Property, and
activities incidental thereto and with respect to Principal, engage in any
business or activity other than the ownership of its interest in Borrower, and
activities incidental thereto including the management of the Property;
(d) with respect to Borrower, acquire or own any material assets
other than (i) the Property, and (ii) such incidental Personal Property as may
be necessary for the operation of the Property and with respect to Principal,
acquire or own any material asset other than (i) its interest in Borrower, and
(ii) such incidental Personal Property as may be necessary to effectuate its
purpose;
(e) merge into or consolidate with any person or entity or dissolve,
terminate or liquidate in whole or in part, transfer or otherwise dispose of all
or substantially all of its assets or change its legal structure;
(f) fail to preserve its existence as an entity duly organized,
validly existing and in good standing (if applicable) under the laws of the
jurisdiction of its organization or formation, and qualification to do business
in the state where the Property is located, if applicable, or without the prior
written consent of Lender, amend, modify, terminate or fail to comply with the
provisions of Borrower's Partnership Agreement, Articles or Certificate of
Incorporation, Articles of Organization, Certificate of Formation, Operating
Agreement or similar organizational documents, as the case may be, or of
Principal's Articles or Certificate of Incorporation or similar organizational
documents, as the case may be;
(g) own, form or acquire any subsidiary or make any investment in,
any person or entity, other than Principal's investment in Borrower;
(h) commingle its assets with the assets of any of its members,
general partners, affiliates, principals or of any other person or entity nor
fail to hold all of its assets in its own name;
(i) with respect to Borrower, incur any debt, secured or unsecured,
direct or contingent (including guaranteeing any obligation), other than the
Debt, except for trade payables in the ordinary course of its business of owning
and operating the Property, provided that such debt is not evidenced by a note
and is paid when due and, with respect to Principal, incur any debt secured or
unsecured, direct or contingent (including guaranteeing any obligations), except
for trade payables in the ordinary course of its business of owning an interest
in Borrower and serving as a manager of Borrower, provided that such debt is not
evidenced by a note and is paid when due;
(j) become insolvent or fail to pay its debts and liabilities from
its assets as the same shall become due;
-22-
(k) fail to maintain its records and books of account separate and
apart from those of the members, general partners, principals and affiliates of
Borrower or of Principal, as the case may be, the affiliates of a member,
general partner or principal of Borrower or Principal, as the case may be, and
any other person or entity or fail to maintain such books and records in the
ordinary course of its business;
(1) enter into any contract or agreement with any member, general
partner, principal or affiliate of Borrower or of Principal, as the case may be,
Guarantor or Indemnitor, or any member, general partner, principal or affiliate
thereof, except upon terms and conditions that are intrinsically fair,
commercially reasonable and substantially similar to those that would be
available on an arms-length basis with third parties other than any member,
general partner, principal or affiliate of Borrower or of Principal, as the case
may be, Guarantor or Indemnitor, or any member, general partner, principal or
affiliate thereof;
(m) seek the dissolution or winding up in whole, or in part, of
Borrower or of Principal, as the case may be;
(n) fail to correct any known misunderstandings regarding the
separate identity of Borrower, or of Principal, as the case may be, from any
member, general partner, principal or affiliate thereof or any other person;
(o) guaranty or become obligated for the debts of any other person
or entity or hold out its credit as being able to satisfy the debts of another
person or entity, except if a Principal is a general partner of Borrower, such
an entity may be under state law liable for the debts of Borrower in its
capacity as a "general partner";
(p) make any loans or advances to any third party, including any
member, general partner, principal or affiliate of Borrower, or of Principal, as
the case may be, or any member, general partner, principal or affiliate thereof,
nor buy or hold evidence of indebtedness issued by any other person or entity
(other than cash or investment grade securities);
(q) fail to hold itself out to the public as a legal entity separate
and distinct from any other entity or person, fail to conduct its business
solely in its own name, mislead others as to the identity with which such other
party is transacting business, or suggest that Borrower or Principal, as the
case may be, is responsible for the debts of any third party (including any
member, general partner, principal or affiliate of Borrower, or of Principal, as
the case may be, or any member, general partner, principal or affiliate
thereof);
(r) fail to maintain adequate capital for the normal obligations
reasonably foreseeable in a business of its size and character and in light of
its contemplated business operations;
(s) share any common logo with or hold itself out as or be
considered as a department or division of (i) any general partner, principal,
member or affiliate of Borrower or of Principal, as the case may be, (ii) any
affiliate of a general partner, principal or member of Borrower or of Principal,
as the case may be, or (iii) any other person or entity;
-23-
(t) fail to maintain separate financial statements showing its
assets and liabilities separate and apart from those of any other person or
entity, provided that Lender acknowledges that Borrower may file consolidated
tax returns with
Corporate Property Associates 15 Incorporated, a Maryland
corporation;
(u) fail to observe all applicable organizational formalities;
(v) pledge its assets for the benefit of any person or entity, other
than in the case of Borrower, in connection with the loan secured hereby;
(w) Borrower shall at all times cause there to be at least one duly
appointed member of the board of directors ("Independent Director") of Borrower
reasonably satisfactory to Lender who shall not have been at the time of such
individual's appointment or at any time while serving as a director of Borrower,
and may not have been at any time during the preceding five years (i) a
stockholder, director (other than as an Independent Director), officer,
employee, partner, attorney or counsel of such corporation, Borrower or any
Affiliate of either of them, (ii) a customer, supplier or other Person who
derives any of its purchases or revenues from its activities with such
corporation, Borrower or any Affiliate of either of them, (iii) a Person or
other entity controlling or under common control with any such stockholder,
partner, customer, supplier or other Person, - or (iv) a member of the immediate
family of any such stockholder, director, officer, employee, partner, customer,
supplier or other Person. As used in this definition, the term "control" means
the possession, directly or indirectly, of the power to direct or cause the
direction of the management, policies or activities of a Person, whether through
ownership of voting securities, by contract or otherwise;
(x) Borrower shall not cause or permit the board of directors of
Borrower to take any action which, under the terms of any certificate of
incorporation, by-laws or any voting trust agreement with respect to any common
stock, requires a vote of the board of directors of Borrower unless at the time
of such action there shall be at least one member who is an Independent
Director;
(y) Borrower shall conduct its business so that the assumptions made
with respect to Borrower in the Insolvency Opinion shall be true and correct in
all respects. In connection with the foregoing, Borrower hereby covenants and
agrees that it will comply with or cause the compliance with, (i) all of the
facts and assumptions (whether regarding the Borrower or any other Person) set
forth in the Insolvency Opinion, (ii) all the representations, warranties and
covenants in this Section 4.2, and (iii) all the organizational documents of the
Borrower.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
Borrower represents and warrants to Lender that:
Section 5.1 Warranty of Title. Borrower has good title to the Property and
has the right to mortgage, grant, bargain, sell, pledge, assign, warrant,
transfer and convey the same and that Borrower possesses an unencumbered fee
simple absolute estate in the Land and the
-24-
Improvements and that it owns the Property free and clear of all liens,
encumbrances and charges whatsoever except for those exceptions shown in the
title insurance policy insuring the lien of this Security Instrument (the
"Permitted Exceptions"). Borrower shall forever warrant, defend and preserve the
title and the validity and priority of the lien of this Security Instrument and
shall forever warrant and defend the same to Lender against the claims of all
persons whomsoever.
Section 5.2 Legal Status and Authority. (a) Borrower is duly organized,
validly existing and in good standing under the laws of its state of
organization or incorporation; (ii) is duly qualified to transact business and
is in good standing in the state where the Property is located; and (iii) has
all necessary approvals, governmental and otherwise, and full power and
authority to own, operate and lease the Property. Borrower (and the undersigned
representative of Borrower, if any) has full power, authority and legal right to
execute this Security Instrument, and to mortgage, grant, bargain, sell, pledge,
assign, warrant, transfer and convey the Property pursuant to the terms hereof
and to keep and observe all of the terms of this Security Instrument on
Borrower's part to be performed.
Section 5.3 Validity of Documents. (a) The execution, delivery and
performance of the Note, this Security Instrument and the Other Security
Documents and the borrowing evidenced by the Note (i) are within the power and
authority of Borrower; (ii) have been authorized by all requisite organizational
action; (iii) have received all necessary approvals and consents, corporate,
governmental or otherwise; (iv) will not violate, conflict with, result in a
breach of or constitute (with notice or lapse of time, or both) a material
default under any provision of law, any order or judgment of any court or
governmental authority, the articles of incorporation, by-laws, partnership or
trust agreement, articles of organization, operating agreement, or other
governing instrument of Borrower, or any indenture, agreement or other
instrument to which Borrower is a party or by which it or any of its assets or
the Property is or may be bound or affected; (v) will not result in the creation
or imposition of any lien, charge or encumbrance whatsoever upon any of its
assets, except the lien and security interest created hereby; and (vi) will not
require any authorization or license from, or any filing with, any governmental
or other body (except for the recordation of this Security Instrument in
appropriate land records in the State where the Property is located and except
for Uniform Commercial Code filings relating to the security interest created
hereby); and (b) to the best knowledge of Borrower, the Note, this Security
Instrument and the Other Security Documents constitute the legal, valid and
binding obligations of Borrower.
Section 5.4 Litigation. There is no action, suit or proceeding, judicial,
administrative or otherwise (including any condemnation or similar proceeding),
pending or, to the best of Borrower's knowledge, threatened or contemplated
against Borrower, a Guarantor, if any, an Indemnitor, if any, or against or
affecting the Property that (a) has not been disclosed to Lender by Borrower in
writing, and has a material adverse affect on the Property or Borrower's, any
Guarantor's or any Indemnitor's ability to perform its obligations under the
Note, this Security Instrument or the Other Security Documents, or (b) is not
adequately covered by insurance, each as determined by Lender in its sole
discretion.
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Section 5.5 Status of Property.
(a) Borrower has obtained or caused to be obtained all necessary
certificates, licenses and other approvals, governmental and otherwise,
necessary for the operation of the Property and the conduct of its business and
all required zoning, building code, land use, environmental and other similar
permits or approvals, all of which are in full force and effect as of the date
hereof and not subject to revocation, suspension, forfeiture or modification.
(b) To the best of Borrower's knowledge, the Property and the
present and contemplated use and occupancy thereof are in full compliance with
all applicable zoning ordinances, building codes, land use laws, Environmental
Laws and other similar laws.
(c) To the best of Borrower's knowledge, the Property is served by
all utilities required for the current or contemplated use thereof. All utility
service is provided by public utilities and the Property has accepted or, to the
best of Borrower's knowledge, is equipped to accept such utility service.
(d) All public roads and streets necessary for service of and access
to the Property for the current or contemplated use thereof have been completed,
are serviceable and all-weather and are physically and legally open for use by
the public.
(e) The Property is served by public water and sewer systems.
(f) The Property is free from damage caused by fire or other
casualty.
(g) All costs and expenses of any and all labor, materials, supplies
and equipment used in the construction of the Improvements and for which
Borrower is or, to the best of Borrower's knowledge, may be responsible or which
may otherwise become a lien upon the Property have been paid in full.
(h) Borrower has paid in full for, and is the owner of, all
furnishings, fixtures and equipment (other than tenants' property) used in
connection with the operation of the Property, free and clear of any and all
security interests, liens or encumbrances, except the lien and security interest
created hereby.
(i) To the best of Borrower's knowledge, all liquid and solid waste
disposal, septic and sewer systems located on the Property are in a good and
safe condition and repair and in compliance with all Applicable Laws.
(j) No portion of the Improvements is located in an area identified
by the Secretary of Housing and Urban Development or any successor thereto as an
area having special flood hazards pursuant to the Flood Insurance Acts or, if
any portion of the Improvements is located within such area, Borrower has
obtained and will maintain the insurance prescribed in Section 3.3 hereof.
(k) All the Improvements lie within the boundaries of the Land.
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Section 5.6 No Foreign Person. Borrower is not a "foreign person" within
the meaning of Section 1445(f)(3) of the Internal Revenue Code of 1986, as
amended and the related Treasury Department regulations.
Section 5.7 Separate Tax Lot. The Property is assessed for real estate tax
purposes as one or more wholly independent tax lot or lots, separate from any
adjoining land or improvements not constituting a part of such lot or lots, and
no other land or improvements is assessed and taxed together with the Property
or any portion thereof.
Section 5.8 Leases. (a) Except as disclosed in the rent roll for the
Property delivered to and approved by Lender in writing prior to the date
hereof, (i) Borrower is the sole owner of the entire lessor's interest in the
Leases; (ii) the Leases are valid and enforceable and in full force and effect;
(iii) all of the Leases are arms-length agreements with bona fide, independent
third parties; (iv) no party under any Lease is in default; (v) all Rents due
have been paid in full; (vi) the terms of all alterations, modifications and
amendments to the Leases are reflected in the certified occupancy statement
delivered to and approved by Lender; (vii) none of the Rents reserved in the
Leases have been assigned or otherwise pledged or hypothecated; (viii) none of
the Rents have been collected for more than one (1) calendar quarter in advance
(except a security deposit shall not be deemed rent collected in advance); (ix)
the premises demised under the Leases have been completed and the tenants under
the Leases have accepted the same and have taken possession of the same on a
rent-paying basis; (x) there exist no offsets or defenses to the payment of any
portion of the Rents and Borrower has no monetary obligation to any tenant under
any Lease; (xi) Borrower has received no notice from any tenant challenging the
validity or enforceability of any Lease; (xii) there are no agreements with the
tenants under the Leases other than expressly set forth in each Lease; (xiii)
the Leases are valid and enforceable against Borrower and the tenants set forth
therein; (xiv) no Lease contains an option to purchase, right of first refusal
to purchase or any other similar provision; (xv) no person or entity has any
possessory interest in, or right to occupy, the Property except under and
pursuant to a Lease; (xvi) each Lease is subordinate to this Security
Instrument, either pursuant to its terms or a recordable subordination
agreement; (xvii) no Lease has the benefit of a nondisturbance agreement that
would be considered unacceptable to prudent institutional lenders, (xviii) all
security deposits relating to the Leases reflected on the certified rent roll
delivered to Lender have been collected by Borrower; and (xix) no brokerage
commissions or finders fees are due and payable regarding any Lease.
(b) Notwithstanding anything contained herein to the contrary,
Borrower shall not willfully withhold from Lender any information regarding
renewal, extension, amendment, modification, waiver of provisions of,
termination, rental reduction of, surrender of space of, or shortening of the
term of, any Lease during the term of the Loan. Borrower further covenants and
agrees that, to the best of Borrower's knowledge, one of the entities comprising
▇▇▇▇▇▇▇, as of the date hereof is in physical occupancy of each of the premises
demised under the ▇▇▇▇▇▇▇ Lease, and is paying full rent under the ▇▇▇▇▇▇▇
Lease.
Section 5.9 Financial Condition. (a) Borrower is solvent, and no
bankruptcy, reorganization, insolvency or similar proceeding under any state or
federal law with respect to Borrower has been initiated and Borrower has
received reasonably equivalent value for the granting of this Security
Instrument.
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(b) No petition in bankruptcy has ever been filed by or against
Borrower, any Guarantor, any Indemnitor or any related entity, or any principal,
general partner or member thereof, in the last seven (7) years, and neither
Borrower, any Guarantor, any Indemnitor nor any related entity, or any
principal, general partner or member thereof, in the last seven (7) years has
ever made any assignment for the benefit of creditors or taken advantage of any
insolvency act or any act for the benefit of debtors, provided, however, that
this representation specifically excludes any shareholder in Guarantor.
Section 5.10 Business Purposes. The loan evidenced by the Note secured by
the Security Instrument and the Other Security Documents (the "Loan") is solely
for the business purpose of Borrower, and is not for personal, family,
household, or agricultural purposes.
Section 5.11 Taxes. Borrower, any Guarantor and any Indemnitor have filed
all federal, state, county, municipal, and city income and other tax returns
required to have been filed by them and have paid all taxes and related
liabilities which have become due pursuant to such returns or pursuant to any
assessments received by them. Neither Borrower, any Guarantor nor any Indemnitor
knows of any basis for any additional assessment in respect of any such taxes
and related liabilities for prior years. Borrower confirms that its federal tax
identification number is: ▇▇-▇▇▇▇▇▇▇.
Section 5.12 Mailing Address. Borrower's mailing address, as set forth in
the opening paragraph hereof or as changed in accordance with the provisions
hereof, is true and correct.
Section 5.13 No Change in Facts or Circumstances. All information in the
application for the Loan submitted to Lender (the "Loan Application") and in all
financing statements, rent rolls, reports, certificates and other documents
submitted in connection with the Loan Application or in satisfaction of the
terms thereof, are accurate, complete and correct in all respects. There has
been no adverse change in any condition, fact, circumstance or event that would
make any such information inaccurate, incomplete or otherwise misleading.
Section 5.14 Disclosure. Borrower has disclosed to Lender all material
facts and has not failed to disclose any material fact that could cause any
representation or warranty made herein to be materially misleading.
Section 5.15 Third Party Representations. Each of the representations and
the warranties made by each Guarantor and Indemnitor herein or in any Other
Security Document(s) is true and correct in all material respects.
Section 5.16 Illegal Activity. No portion of the Property has been or will
be purchased, improved, equipped or furnished with proceeds of any illegal
activity and to the best of Borrower's knowledge, there are no illegal
activities or activities relating to controlled substance at the Property.
Section 5.17 Regulations T, U and X. Borrower does not own any "margin
stock" as such term is defined in Regulation U of the Board of Governors of the
Federal Reserve System (12 CFR Part 221), as amended. Borrower will not use any
part of the proceeds from the loan to be made under this Security Instrument (a)
directly or indirectly, to purchase or carry any such stock or to reduce or
retire any Obligations originally incurred to purchase any such stock within
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the meaning of such Regulation, (b) so as to involve Borrower in a violation of
Regulation T, U or X of such Board (12 CFR Parts 220, 221 and 224), as amended,
or (c) for any other purpose not permitted by Section 7 of the Securities
Exchange Act of 1934, as amended, or any of the rules and regulations respecting
the extension of credit promulgated thereunder.
Section 5.18 Non-Consolidation. All of the assumptions made in that
certain substantive non-consolidation opinion letter of even date herewith
delivered by Borrower's counsel in connection herewith and any subsequent
non-consolidation opinion delivered in accordance with the terms and conditions
of this Security Instrument and/or the Note, including, but not limited to, any
exhibits attached thereto (the "Non-Consolidation Opinion"), are true and
correct in all respects. Borrower has complied and will comply with all of the
assumptions made with respect to it in the Non-Consolidation Opinion. Each
entity other than Borrower with respect to which an assumption is made in the
Non-Consolidation Opinion has complied and will comply with all of the
assumptions made with respect to it in the Non-Consolidation Opinion.
ARTICLE VI
OBLIGATIONS AND RELIANCE
Section 6.1 Relationship of Borrower and Lender. The relationship between
Borrower and Lender is solely that of debtor and creditor, and Lender has no
fiduciary or other special relationship with Borrower, and no term or condition
of any of the Note, this Security Instrument and the Other Security Documents
shall be construed so as to deem the relationship between Borrower and Lender to
be other than that of debtor and creditor.
Section 6.2 No Reliance on Lender. The members, general partners,
principals and (if Borrower is a trust) beneficial owners of Borrower are
experienced in the ownership and operation of properties similar to the
Property, and Borrower and Lender are relying solely upon such expertise and
business plan in connection with the ownership and operation of the Property.
Borrower is not relying on Lender's expertise, business acumen or advice in
connection with the Property.
Section 6.3 No Lender Obligations. Notwithstanding the provisions of
Subsections 1.1 (f) and (1) or Section 1.2, Lender is not undertaking the
performance of (i) any obligations under the Leases; or (ii) any obligations
with respect to such agreements, contracts, certificates, instruments,
franchises, permits, trademarks, licenses and other documents. By accepting or
approving anything required to be observed, performed or fulfilled or to be
given to Lender pursuant to this Security Instrument, the Note or the Other
Security Documents, including without limitation, any officer's certificate,
balance sheet, statement of profit and loss or other financial statement,
survey, appraisal, or insurance policy, Lender shall not be deemed to have
warranted, consented to, or affirmed the sufficiency, the legality or
effectiveness of same, and such acceptance or approval thereof shall not
constitute any warranty or affirmation with respect thereto by Lender.
Section 6.4 Reliance. Borrower recognizes and acknowledges that in
accepting the Note, this Security Instrument and the Other Security Documents,
Lender is expressly and primarily relying on the truth and accuracy of the
warranties and representations set forth in
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Article 5 and Article 12 without any obligation to investigate the Property and
notwithstanding any investigation of the Property by Lender; that such reliance
existed on the part of Lender prior to the date hereof; that the warranties and
representations are a material inducement to Lender in accepting the Note, this
Security Instrument and the Other Security Documents; and that Lender would not
be willing to. make the Loan and accept this Security Instrument in the absence
of the warranties and representations as set forth in Article 5 and Article 12.
ARTICLE VII
FURTHER ASSURANCES
Section 7.1 Recording of Security Instrument, etc. Borrower forthwith upon
the execution and delivery of this Security Instrument and thereafter, from time
to time, will cause this Security Instrument and any of the Other Security
Documents creating a lien or security interest or evidencing the lien hereof
upon the Property and each instrument of further assurance to be filed,
registered or recorded in such manner and in such places as may be required by
any present or future law in order to publish notice of and fully to protect and
perfect the lien or security interest hereof upon, and the interest of Lender
in, the Property. Borrower will pay all taxes, filing, registration- or
recording fees, and all expenses incident to the preparation, execution,
acknowledgment and/or recording of the Note, this Security Instrument, the Other
Security Documents, any note, deed of trust or mortgage supplemental hereto, any
security instrument with respect to the Property and any instrument of further
assurance, and any modification or amendment of the foregoing documents, and all
federal, state, county and municipal taxes, duties, imposts, assessments and
charges arising out of or in connection with the execution and delivery of this
Security Instrument, any deed of trust or mortgage supplemental hereto, any
security instrument with respect to the Property or any instrument of further
assurance, and any modification or amendment of the foregoing documents, except
where prohibited by law so to do.
Section 7.2 Further Acts, etc. Borrower will, at the cost of Borrower, and
without expense to Lender, do, execute, acknowledge and deliver all and every
such further acts, deeds, conveyances, mortgages, assignments, notices of
assignments, transfers and assurances as Lender shall, from time to time,
require, for the better assuring, conveying, assigning, transferring, and
confirming unto Lender the Property and rights hereby mortgaged, granted,
bargained, sold, conveyed, confirmed, pledged, assigned, warranted and
transferred or intended now or hereafter so to be, or which Borrower may be or
may hereafter become bound to convey or assign to Lender, or for carrying out
the intention or facilitating the performance of the terms of this Security
Instrument or for filing, registering or recording this Security Instrument, or
for complying with all Applicable Laws. Borrower, on demand, will execute and
deliver and hereby authorizes Lender, following 10 days' notice to Borrower, to
execute in the name of Borrower or without the signature of Borrower to the
extent Lender may lawfully do so, (i) one or more financing statements, chattel
mortgages or other instruments, to evidence more effectively the security
interest of Lender in the Property and (ii) any amendments or modifications to
the Note, this Security Instrument and/or the Other Security Documents in order
to correct any scrivener's errors contained herein or therein, including,
without limitation, any errors with respect to the spelling of Borrower's name,
the address of the Property, the legal description of the Property
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and/or the date of execution of the Note, this Security Instrument and/or the
Other Security Documents. Borrower grants to Lender an irrevocable power of
attorney coupled with an interest for the purpose of exercising and perfecting
any and all rights and remedies available to Lender pursuant to this Section
7.2.
Section 7.3 Changes in Tax, Debt Credit and Documentary Stamp Laws.
(a) If any law is enacted or adopted or amended after the date of
this Security Instrument which deducts the Debt from the value of the Property
for the purpose of taxation or which imposes a tax (excluding business and
occupation or income taxes on Lender), either directly or indirectly, on the
Debt or Lender's interest in the Property, Borrower will pay the tax, with
interest and penalties thereon, if any. If Lender is advised by counsel chosen
by it that the payment of tax by Borrower would be unlawful or taxable to Lender
or unenforceable or provide the basis for a defense of usury, then Lender shall
have the option, exercisable by written notice of not less than one hundred
twenty (120) days, to declare the Debt immediately due and payable.
(b) Borrower will not claim or demand or be entitled to any credit
or credits on account of the Debt for any part of the Taxes or Other Charges
assessed against the Property, or any part thereof, and no deduction shall
otherwise be made or claimed from the assessed value of the Property, or any
part thereof, for real estate tax purposes by reason of this Security Instrument
or the Debt. If such claim, credit or deduction shall be required by law, Lender
shall have the option, exercisable by written notice of not less than one
hundred twenty (120) days, to declare the Debt immediately due and payable.
(c) If at any time the United States of America, any State thereof
or any subdivision of any such State shall require revenue or other stamps to be
affixed to the Note, this Security Instrument, or any of the Other Security
Documents or impose any other tax or charge on the same, Borrower will pay for
the same, with interest and penalties thereon, if any.
Section 7.4 Estoppel Certificates.
(a) After request by Lender, Borrower, within fifteen (15) days,
shall furnish Lender or any proposed assignee with a statement, duly
acknowledged and certified, setting forth (i) the original principal amount of
the Note, (ii) the unpaid principal amount of the Note, (iii) the rate of
interest of the Note, (iv) the terms of payment and maturity date of the Note,
(v) the date installments of interest and/or principal were last paid, (vi)
that, except as provided in such statement, there are no defaults or events
which with the passage of time or the giving of notice or both, would constitute
an event of default under the Note or the Security Instrument, (vii) that the
Note and this Security Instrument are valid, legal and binding obligations and
have not been modified or if modified, giving particulars of such modification,
(viii) whether any offsets or defenses exist against the obligations secured
hereby and, if any are alleged to exist, a detailed description thereof, (ix)
that all Leases are in full force and effect and (provided the Property is not a
residential multifamily property) have not been modified (or if modified,
setting forth all modifications), (x) the date to which the Rents thereunder
have been paid pursuant to the Leases, (xi) whether or not, to the best
knowledge of Borrower, any of the lessees under the Leases are in default under
the Leases, and, if any of the lessees are in default, setting forth the
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specific nature of all such defaults, (xii) the amount of security deposits held
by Borrower under each Lease and that such amounts are consistent with the
amounts required under each Lease, and (xiii) as to any other matters reasonably
requested by Lender and reasonably related to the Leases, the obligations
secured hereby, the Property or this Security Instrument.
(b) Borrower shall use its best efforts to deliver to Lender, within
a reasonable time following request, duly executed estoppel certificates from
any one or more lessees as required by Lender attesting to such facts regarding
the Lease as Lender reasonably may require, including but not limited to
attestations that each Lease covered thereby is in full force and effect with no
defaults thereunder on the part of any party, that none of the Rents have been
paid more than one quarter in advance, and that the lessee claims no defense or
offset against the full and timely performance of its obligations under the
Lease. Notwithstanding anything to the contrary contained in this Section
7.4(b), so long as (i) the ▇▇▇▇▇▇▇ Lease remains in full force and effect, and
(ii) ▇▇▇▇▇▇▇ is not in default under the ▇▇▇▇▇▇▇ Lease beyond any applicable
notice and cure periods set forth in the ▇▇▇▇▇▇▇ Lease, Lender shall not request
estoppel certificates from ▇▇▇▇▇▇▇ more than two (2) times per calendar year.
(c) Upon any transfer or proposed transfer contemplated by Section
18.1 hereof, at Lender's request, Borrower, any Guarantors and any Indemnitor(s)
shall provide an estoppel certificate to the Investor (defined in Section 18.1)
or any prospective Investor in such form, substance and detail as Lender, such
Investor or prospective Investor may require.
(d) After written request by Borrower not more than once annually,
and at Borrower's sole cost and expense, Lender shall furnish to Borrower a
statement setting forth (i) the unpaid principal amount of the Note, and (ii)
the balance of the sums held in escrow pursuant to the Reserve and Security
Agreement.
Section 7.5 Flood Insurance. After Lender's request, Borrower shall
deliver evidence satisfactory to Lender that no portion of the Improvements is
situated in a federally designated "special flood hazard area" or if it is, that
Borrower has obtained or caused to be obtained insurance meeting the
requirements of Section 3.3(a)(vi).
Section 7.6 Replacement Documents. Upon receipt of an affidavit of an
officer of Lender as to the loss, theft, destruction or mutilation of the Note
or any Other Security Document which is not of public record, and, in the case
of any such mutilation, upon surrender and cancellation of such Note or Other
Security Document, Borrower will issue, in lieu thereof, a replacement Note or
Other Security Document, dated the date of such lost, stolen, destroyed or
mutilated Note or Other Security Document in the same principal amount thereof
and substantially similar in form and substance to the replaced Note or Other
Security Document.
ARTICLE VIII
DUE ON SALE/ENCUMBRANCE
Section 8.1 No Sale/Encumbrance. Borrower agrees that Borrower shall not,
without the prior written consent of Lender, sell, convey, mortgage, grant,
bargain, encumber, pledge, assign, or otherwise transfer the Property or any
part thereof or any interest therein or any direct
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or indirect interest in Borrower or permit the Property or any part thereof or
any interest therein or any direct or indirect interest in Borrower to be sold,
conveyed, mortgaged, granted, bargained, encumbered, pledged, assigned, or
otherwise transferred, other than pursuant to Leases of space in the
Improvements to tenants in accordance with the provisions of Section 3.8.
Section 8.2 Sale/Encumbrance Defined. A sale, conveyance, mortgage, grant,
bargain, encumbrance, pledge, assignment, or transfer within the meaning of this
Article 8 shall be deemed to include, but not be limited to, (a) an installment
sales agreement wherein Borrower agrees to sell the Property or any part thereof
for a price to be paid in installments; (b) an agreement by Borrower leasing all
or a substantial part of the Property for other than actual occupancy by a space
tenant thereunder or a sale, assignment or other transfer of, or the grant of a
security interest in, Borrower's right, title and interest in and to any Leases
or any Rents; (c) if Borrower, any Guarantor, any Indemnitor, or any general or
limited partner or member of Borrower, any Guarantor or any Indemnitor is a
corporation, any merger, consolidation or voluntary or involuntary sale,
conveyance, transfer or pledge of such corporation's stock (or the stock of any
corporation directly or indirectly controlling such corporation by operation of
law or otherwise) or the creation or issuance of new stock in one or a series of
transactions by which an aggregate of more than 10% of such corporation's stock
shall be vested in a party or parties who are not now stockholders; (d) if
Borrower, any Guarantor or any Indemnitor or any general or limited partner or
member of Borrower, any Guarantor or any Indemnitor is a limited or general
partnership or joint venture, the change, removal or resignation of a general
partner or the transfer or pledge of the partnership interest of any general
partner or any profits or proceeds relating to such partnership interest or the
voluntary or involuntary sale, conveyance, transfer or pledge of limited
partnership interests (or the limited partnership interests of any limited
partnership directly or indirectly controlling such limited partnership by
operation of law or otherwise); and (e) if Borrower, any Guarantor, any
Indemnitor or any general or limited partner or member of Borrower, any
Guarantor or any Indemnitor is a limited liability company, the change, removal
or resignation of a managing member (or if no managing member, any member or
non-member manager) or the transfer of the membership interest of a managing
member (or if no managing member, any member) or any profits or proceeds
relating to such membership interest or the voluntary or involuntary sale,
conveyance, transfer or pledge of membership interests (or the membership
interests of any limited liability company directly or indirectly controlling
such limited liability company by operation of law or otherwise).
Notwithstanding the foregoing, so long as the Guarantor and/or Indemnitor is
Corporate Property Associates 15 Incorporated or an Affiliate (as defined in
Section 8.4(b) hereof) (the "Guarantor"), the provisions of clauses (c), (d) and
(e) above shall not apply to the Guarantor, any Indemnitor or any interest
holder therein.
Section 8.3 Lender's Rights. Lender reserves the right to condition the
consent required hereunder upon a modification of the terms hereof and on
assumption of the Note, this Security Instrument and the Other Security
Documents as so modified by the proposed transferee, payment of a transfer fee
equal to one percent (1%) of the then outstanding principal balance of the
Note, and all of Lender's expenses incurred in connection with such transfer,
the approval by a Rating Agency of the proposed transferee, the proposed
transferee's continued compliance with the covenants set forth in this Security
Instrument, including, without limitation, the covenants in Section 4.2 hereof,
or such other conditions as Lender shall determine in its sole discretion to be
in the interest of Lender. All of Lender's expenses incurred
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shall be payable by Borrower whether or not Lender consents to the transfer.
Lender shall not be required to demonstrate any actual impairment of its
security or any increased risk of default hereunder in order to declare the Debt
immediately due and payable upon Borrower's sale, conveyance, mortgage, grant,
bargain, encumbrance, pledge, assignment, or transfer of the Property without
Lender's consent. This provision shall apply to every sale, conveyance,
mortgage, grant, bargain, encumbrance, pledge, assignment, or transfer of the
Property regardless of whether voluntary or not, or whether or not Lender has
consented to any previous sale, conveyance, mortgage, grant, bargain,
encumbrance, pledge, assignment, or transfer of the Property.
Section 8.4 Permitted One Time Transfer. (a) Notwithstanding the foregoing
provisions of this Section, Lender shall not unreasonably withhold consent to
the simultaneous sale, conveyance or transfer of the Property on one occasion
(a, "Sale") after the first anniversary of the first day of the first calendar
month after the date hereof (or the date hereof if dated the first day of a
calendar month) and with respect to such Sale, Lender shall not require a
modification of the material economic terms hereof (other than a corresponding
increase in Borrower's deposits into the Escrow Fund with respect to Taxes in
the event such Sale results in an increase in the real property tax assessment
by the applicable taxing authority), to any person or entity provided that each
of the following terms and conditions are satisfied:
(i) no default after the expiration of notice or grace periods
is then continuing hereunder, under the Note or under any of the Other Security
Documents;
(ii) Borrower gives Lender written notice of the terms of such
prospective Sale not less than thirty (30) days before the date on which such
Sale is scheduled to close and, concurrently therewith, gives Lender all such
information concerning the proposed transferee of the Property (hereinafter,
"Buyer") as Lender would reasonably require in evaluating an initial extension
of credit to a borrower and pays to Lender a non-refundable application fee in
the amount of $2,500.00. Lender shall have the right to approve or disapprove
the proposed Buyer, such approval not to be unreasonably withheld or delayed. In
determining whether to give or withhold its approval of the proposed Buyer,
Lender shall consider the Buyer's experience and track record in owning and
operating facilities similar to the 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 Lender'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 Lender
determines to be commercially reasonable and, if given, may be given subject to
such conditions as Lender may deem reasonably appropriate;
(iii) Borrower pays Lender, 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 Lender in connection with the Sale plus an amount
equal to one percent (1.0%) of the then outstanding principal balance of the
Note. Borrower also pays, concurrently with the closing of such Sale, all costs
and expenses of all third parties and Rating Agencies in connection with the
Sale;
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(iv) Buyer assumes and agrees to pay the indebtedness secured
hereby as and when due subject to the provisions of Article I I of the Note and,
prior to or concurrently with the closing of such Sale, the Buyer executes,
without any cost or expense to Lender, such documents and agreements as Lender
shall reasonably require to evidence and effectuate said assumption;
(v) Borrower and the Buyer execute, without any cost or
expense to Lender, new financing statements or financing statement amendments
and any additional documents reasonably requested by Lender;
(vi) Borrower delivers to Lender, without any cost or expense
to Lender, such endorsements to Lender's title insurance policy, hazard
insurance endorsements or certificates and other similar materials as Lender may
deem necessary at the time of the Sale, all in form and substance satisfactory
to Lender, including, without limitation, an endorsement or endorsements to
Lender's title insurance policy insuring the lien of this Security Instrument
insuring that fee simple title to the Property is vested in the Buyer;
(vii) Buyer shall furnish, if the Buyer is a corporation,
partnership or other entity, all appropriate papers evidencing the Buyer's
capacity and good standing, and the qualification of the signers to execute the
assumption of the indebtedness secured hereby, which papers shall include
certified copies of all documents relating to the organization and formation of
the Buyer and of the entities, if any, which are partners or members of the
Buyer. The Buyer and such constituent partners, members or shareholders of Buyer
(as the case may be), as Lender shall require, shall be single purpose,
"bankruptcy remote" entities which satisfy the requirements of Article IV hereof
and the requirements of the Rating Agencies, and whose formation documents shall
be approved by counsel to Lender. An individual recommended by the Buyer and
approved by Lender shall serve as an independent director of the Buyer (if the
Buyer is a corporation) or the Buyer's corporate general partner or an
independent member of, in Lender's discretion, manager, of Buyer if the Buyer is
a limited liability company. The consent of such independent director shall be
required for, among other things, any merger, consolidation, dissolution,
bankruptcy or insolvency of the Buyer.
(viii) Buyer shall assume the obligations of Borrower under
any management agreements pertaining to the Property or assign to Lender as
additional security any new management agreement entered into in connection with
such Sale;
(ix) Buyer shall furnish an opinion of counsel satisfactory to
Lender and its counsel (A) that the Buyer's formation documents provide for the
matters described in subparagraph (vii) above, (B) that the assumption of the
indebtedness evidenced hereby has been duly authorized, executed and delivered,
and that the Note, this Security Instrument, the assumption agreement and the
Other Security Documents are valid, binding and enforceable against the Buyer in
accordance with their terms, (C) that the Buyer and any entity which is a
controlling stockholder, member or general partner of Buyer, have been duly
organized, and are in existence and good standing, (D) if required by Lender,
that the assets of the Buyer will not be consolidated with the assets of any
other entity having an interest in, or affiliation with, the Buyer, in the event
of bankruptcy or insolvency of any such entity, and (E) with respect to such
other matters as Lender may reasonably request;
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(x) Lender shall have received confirmation in writing from
the Rating Agencies that rate the Securities or Participations (as defined in
Section 18.1) to the effect that the Sale will not result in a qualification,
downgrade or withdrawal of any rating initially assigned or then currently
assigned or to be assigned to the Securities or Participations, as applicable;
(xi) An affiliate of Buyer with a net worth (as determined by
Lender) of not less than Twenty-Five Million Dollars ($25,000,000) shall have
assumed, from and after the date of such Sale, all of the obligations of
Guarantor under the Environmental Indemnity and the Guaranty of Recourse
Obligations of Borrower of even date herewith (the "Guaranty") pursuant to such
documents and agreements as Lender shall reasonably require to evidence and
effectuate such assumption and thereafter Guarantor shall be released from all
liabilities and obligations under the Environmental Indemnity and the Guaranty
arising from matters first occurring from and after the date of such Sale; and
(xii) Borrower's obligations under the contract of sale
pursuant to which the Sale is proposed to occur shall expressly be subject to
the satisfaction of the terms and conditions of this Section 8.4.
(b) Notwithstanding the foregoing provision of this Section,
Borrower shall be permitted, after the first anniversary of the first day of the
first calendar month after the date hereof (or the date hereof if dated the
first day of a calendar month), to transfer or convey on up to two (2) occasions
all or a part of its interests in the Property to any Affiliate (hereinafter
defined) whose key principal's (the "Key Principal") net worth as determined by
Lender shall be not less than Twenty-Five Million Dollars ($25,000,000) without
Lender's approval or consent and without payment of the one percent (1 %)
transfer fee (but with payment of all out-of pocket expenses, including without
limitation, reasonable attorney's fees, incurred by Lender in connection with
the transfer and all costs and expenses of all third parties and Rating Agencies
in connection with the Sale) so long as the terms and conditions set forth in
Sections 8.4(a)(i), (iv), (v), (vi), (vii), (viii), (ix) and (x) are satisfied.
Borrower shall, not less than thirty (30) days before any such transfer, deliver
to Lender written notice of such transfer which notice shall (i) describe the
proposed transfer in reasonable detail, (ii) include evidence reasonably
satisfactory to Lender that the proposed transferee is an Affiliate of Borrower
and that such Key Principal has a net worth of not less than Twenty-Five Million
Dollars ($25,000,000), and (iii) include evidence reasonably satisfactory to
Lender that the applicable provisions of Section 8.4 hereof have been satisfied.
In connection with any such transfer to an Affiliate, Key Principal shall
assume, from and after the date of such transfer, all of the obligations of
Guarantor under the Environmental Indemnity and the Guaranty pursuant to such
documents and agreements as Lender shall reasonably require to evidence and
effectuate such assumption and thereafter Guarantor shall be released from all
liabilities and obligations under the Environmental Indemnity and the Guaranty
arising from matters first occurring from and after the date of such transfer.
As used herein, the term "Affiliate" shall mean an entity which controls, is
controlled by or is under common control with Borrower, Corporate Property
Associates 10 Incorporated, Corporate Property Associates 12 Incorporated,
Corporate Property Associates 14 Incorporated,
Corporate Property Associates 15
Incorporated, ▇▇▇▇▇ Institutional Properties Incorporated or W.P. ▇▇▇▇▇ & Co.,
LLC.
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In the event of a transfer pursuant to this Article 8.4, any successor guarantor
whose ownership interests are publicly held and which is approved by Lender, or
deemed approved by Lender pursuant to Section 8.4(b), shall have the benefit of
the last sentence of section 8.2, as may be amended based on the affiliates of
said successor guarantor.
ARTICLE IX
PREPAYMENT
Section 9.1 Prepayment. The Debt may not be prepaid in whole or in part
except in strict accordance with the express terms and conditions of the Note.
ARTICLE X
DEFAULT
Section 10.1 Events of Default. The occurrence of any one or more of the
following events shall constitute an "Event of Default":
(a) if any portion of the Debt is not paid prior to the fifth (5th)
day after the same is due or if the entire Debt is not paid on or before the
Maturity Date (as defined in the Note);
(b) if any of the Taxes or Other Charges is not paid prior to
delinquency, penalty or default interest accrual except to the extent sums
sufficient to pay such Taxes and Other Charges have been deposited with Lender
in accordance with the terms of this Security Instrument or such items are being
contested in accordance with the terms of this Security Instrument;
(c) if the Policies are not kept in full force and effect, or if the
Policies are not delivered to Lender within ten (10) Business Days of Lender's
request;
(d) if Borrower violates or does not comply with any of the
provisions of Section 4.2 or Article 8;
(e) if any representation or warranty of Borrower, any Indemnitor or
any person guaranteeing payment of the Debt or any portion thereof or
performance by Borrower of any of the terms of this Security Instrument (a
"Guarantor"), or any member, general partner, principal or beneficial owner of
any of the foregoing, made herein or in the Environmental Indemnity (defined
below) or in any guaranty, or in any certificate, report, financial statement or
other instrument or document furnished to Lender shall have been false or
misleading in any material respect when made;
(f) if (i) Borrower or any managing member or general partner of
Borrower, or any Guarantor or Indemnitor shall commence any case, proceeding or
other action (A) under any existing or future law of any jurisdiction, domestic
or foreign, relating to bankruptcy, insolvency, reorganization, conservatorship
or relief of debtors, seeking to have an order for relief entered with respect
to it, or seeking to adjudicate it a bankrupt or insolvent, or seeking
reorganization,
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arrangement, adjustment, winding-up, liquidation, dissolution, composition or
other relief with respect to it or its debts, or (B) seeking appointment of a
receiver, trustee, custodian, conservator or other similar official for it or
for all or any substantial part of its assets, or the Borrower or any managing
member or general partner of Borrower, or any Guarantor or Indemnitor shall make
a general assignment for the benefit of its creditors; or (ii) there shall be
commenced against Borrower or any managing member or general partner of
Borrower, or any Guarantor or Indemnitor any case, proceeding or other action of
a nature referred to in clause (i) above which (A) results in the entry of an
order for relief or any such adjudication or appointment or (B) remains
undismissed, undischarged or unbonded for a period of sixty (60) days; or (iii)
there shall be commenced against the Borrower or any managing member or general
partner of Borrower, or any Guarantor or Indemnitor any case, proceeding or
other action seeking issuance of a warrant of attachment, execution, distraint
or similar process against all or any substantial part of its assets which
results in the entry of any order for any such relief which shall not have been
vacated, discharged, or stayed or bonded pending appeal within sixty (60) days
from the entry thereof; or (iv) the Borrower or any managing member or general
partner of Borrower, or any Guarantor or Indemnitor shall take any action in
furtherance of, or indicating its consent to, approval of, or acquiescence in,
any of the acts set forth in clause (i), (ii), or (iii) above; or (v) the
Borrower or any managing member or general partner of Borrower, or any Guarantor
or Indemnitor shall generally not, or shall be unable to, or shall admit in
writing its inability to, pay its debts as they become due;
(g) if Borrower shall be in default beyond applicable notice and
grace periods under any other mortgage, deed of trust, deed to secure debt or
other security agreement covering any part of the Property whether it be
superior or junior in lien to this Security Instrument;
(h) if the Property becomes subject to any mechanic's, materialman's
or other lien other than a lien for local real estate taxes and assessments not
then due and payable and the lien shall remain undischarged of record (by
payment, bonding or otherwise) for a period of thirty (30) days;
(i) if any federal tax lien is filed against Borrower, any member or
general partner of Borrower, any Guarantor, any Indemnitor or the interest of
Borrower in the Property and same is not discharged of record within thirty (30)
days after same is filed;
(j) if any default occurs under any guaranty or indemnity executed
in connection herewith (including the Environmental Indemnity, defined in
Section 13.4) and such default continues after the expiration of applicable
grace periods, if any;
(k) if Borrower shall fail to deliver to Lender, within fifteen (15)
days after receipt of written request from Lender, the estoppel certificates
required pursuant to Section 7.4(a);
(1) if for more than ten (10) days after notice from Lender,
Borrower shall continue to be in default under any other term, covenant or
condition of the Note, this Security Instrument or the Other Security Documents
in the case of any default which can be cured by the payment of a sum of money
or for thirty (30) days after notice from Lender in the case of any other
default, provided that if such default cannot reasonably be cured within such
thirty (30) day
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period and Borrower shall have commenced to cure such default within such thirty
(30) day period and thereafter diligently and expeditiously proceeds to cure the
same, such thirty (30) day period shall be extended for so long as it shall
require Borrower in the exercise of due diligence to cure such default, it being
agreed that no such extension shall be for a period in excess of one hundred and
twenty (120) days; or
(m) If any of the assumptions contained in the Non-Consolidation
Opinion were not true and correct as of the date of such opinion.
ARTICLE XI
RIGHTS AND REMEDIES
Section 11.1 Remedies. Upon the occurrence of any Event of Default,
Borrower agrees that Lender may take such action, without notice or demand, as
it deems advisable to protect and enforce its rights against Borrower and in and
to the Property, including, but not limited to, the following actions, each of
which may be pursued concurrently or otherwise, at such time and in such order
as Lender may determine, in its sole discretion, without impairing or otherwise
affecting the other rights and remedies of Lender:
(a) declare the entire unpaid Debt to be immediately due and
payable;
(b) institute proceedings, judicial or otherwise, for the complete
foreclosure of this Security Instrument under any applicable provision of law in
which case the Property or any interest therein may be sold for cash or upon
credit in one or more parcels or in several interests or portions and in any
order or manner;
(c) with or without entry, to the extent permitted and pursuant to
the procedures provided by applicable law, institute proceedings for the partial
foreclosure of this Security Instrument for the portion of the Debt then due and
payable, subject to the continuing lien and security interest of this Security
Instrument for the balance of the Debt not then due, unimpaired and without loss
of priority;
(d) sell for cash or upon credit the Property or any part thereof
and all estate, claim, demand, right, title and interest of Borrower therein and
rights of redemption thereof, pursuant to power of sale or otherwise, at one or
more sales, in one or more parcels, at such time and place, upon such terms and
after such notice thereof as may be required or permitted by law;
(e) subject to the provisions of Article 11 of the Note, institute
an action, suit or proceeding in equity for the specific performance of any
covenant, condition or agreement contained herein, in the Note or in the Other
Security Documents;
(f) subject to the provisions of Article 11 of the Note, recover
judgment on the Note either before, during or after any proceedings for the
enforcement of this Security Instrument or the Other Security Documents;
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(g) apply for the appointment of a receiver, trustee, liquidator or
conservator of the Property, without notice and without regard for the adequacy
of the security for the Debt and without regard for the solvency of Borrower,
any Guarantor, Indemnitor or of any person, firm or other entity liable for the
payment of the Debt;
(h) subject to any applicable law, the license granted to Borrower
under Section 1.2 shall automatically be revoked and Lender may enter into or
upon the Property, either personally or by its agents, nominees or attorneys and
dispossess Borrower and its agents and servants therefrom, without liability for
trespass, damages or otherwise and exclude Borrower and its agents or servants
wholly therefrom, and take possession of all books, records and accounts
relating thereto and Borrower agrees to surrender possession of the Property and
of such books, records and accounts to Lender upon demand, and thereupon Lender
may (i) use, operate, manage, control, insure, maintain, repair, restore and
otherwise deal with all and every part of the Property and conduct the business
thereat; (ii) complete any construction on the Property in such manner and form
as Lender deems advisable; (iii) make alterations, additions, renewals,
replacements and improvements to or on the Property; (iv) exercise all rights
and powers of Borrower with respect to the Property, whether in the name of
Borrower or otherwise, including, without limitation, the right to make, cancel,
enforce or modify Leases, obtain and evict tenants, and demand, ▇▇▇ for, collect
and receive all Rents of the Property and every part thereof; (v) require
Borrower to pay monthly in advance to Lender, or any receiver appointed to
collect the Rents, the fair and reasonable rental value for the use and
occupation of such part of the Property as may be occupied by Borrower; (vi)
require Borrower to vacate and surrender possession of the Property to Lender or
to such receiver and, in default thereof, Borrower may be evicted by summary
proceedings or otherwise; and (vii) apply the receipts from the Property to the
payment of the Debt, in such order, priority and proportions as Lender shall
deem appropriate in its sole discretion after deducting therefrom all expenses
(including reasonable attorneys' fees) incurred in connection with the aforesaid
operations and all amounts necessary to pay the Taxes, Other Charges, insurance
and other expenses in connection with the Property, as well as just and
reasonable compensation for the services of Lender, its counsel, agents and
employees;
(i) exercise any and all rights and remedies granted to a secured
party upon default under the Uniform Commercial Code, including, without
limiting the generality of the foregoing: (i) the right to take possession of
the Personal Property or any part thereof, and to take such other measures as
Lender may deem necessary for the care, protection and preservation of the
Personal Property, and (ii) request Borrower at its expense to assemble the
Personal Property and make it available to Lender at a convenient place
acceptable to Lender. Any notice of sale, disposition or other intended action
by Lender with respect to the Personal Property sent to Borrower in accordance
with the provisions hereof at least five (5) days prior to such action, shall
constitute commercially reasonable notice to Borrower;
(j) apply any sums then deposited in the Escrow Fund and any other
sums held in escrow or otherwise by Lender in accordance with the terms of this
Security Instrument or any Other Security Document to the payment of the
following items in any order in its sole discretion: (i) Taxes and Other
Charges; (ii) Insurance Premiums; (iii) interest on the unpaid principal balance
of the Note; (iv) amortization of the unpaid principal balance of the Note; (v)
all other sums payable pursuant to the Note, this Security Instrument and the
Other Security
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Documents, including, without limitation, advances made by Lender pursuant to
the terms of this Security Instrument;
(k) surrender the Policies maintained pursuant to Article 3 hereof,
collect the unearned Insurance Premiums and apply such sums as a credit on the
Debt in such priority and proportion as Lender in its discretion shall deem
proper, and in connection therewith, Borrower hereby appoints Lender as agent
and attorney-in-fact (which is coupled with an interest and is therefore
irrevocable) for Borrower to collect such Insurance Premiums;
(1) apply the undisbursed balance of any Net Proceeds Deficiency
deposit, together with interest thereon, to the payment of the Debt in such
order, priority and proportions as Lender shall deem to be appropriate in its
discretion; or
(m) pursue such other remedies as Lender may have under applicable
law.
In the event of a sale, by foreclosure, power of sale, or otherwise, of less
than all of the Property, this Security Instrument shall continue as a lien and
security interest on the remaining portion of the Property unimpaired and
without loss of priority. Notwithstanding the provisions of this Section 11.1 to
the contrary, if any Event of Default as described in clause (i) or (ii) of
Subsection 10.1 (f) shall occur; the entire unpaid Debt shall be automatically
due and payable, without any further notice, demand or other action by Lender.
Section 11.2 Application of Proceeds. The purchase money, proceeds and
avails of any disposition of the Property, or any part thereof, or any other
sums collected by Lender pursuant to the Note, this Security Instrument or the
Other Security Documents, may be applied by Lender to the payment of the Debt in
such priority and proportions as Lender in its discretion shall deem proper.
Section 11.3 Right to Cure Defaults. Upon the occurrence of any Event of
Default or if Borrower fails to make any payment or to do any act as herein
provided, Lender may, but without any obligation to do so and without notice to
or demand on Borrower and without releasing Borrower from any obligation
hereunder, make or do the same in such manner and to such extent as Lender may
deem necessary to protect the security hereof. Lender is authorized to enter
upon the Property for such purposes, or appear in, defend, or bring any action
or proceeding to protect its interest in the Property or to foreclose this
Security Instrument or collect the Debt. The cost and expense of any cure
hereunder (including reasonable attorneys' fees to the extent permitted by law),
with interest as provided in this Section 11.3, shall constitute a portion of
the Debt and shall be due and payable to Lender upon demand. All such costs and
expenses incurred by Lender in remedying such Event of Default or such failed
payment or act or in appearing in, defending, or bringing any such action or
proceeding shall bear interest at the Default Rate (as defined in the Note), for
the period after notice from Lender that such cost or expense was incurred to
the date of payment to Lender. All such costs and expenses incurred by Lender
together with interest thereon calculated at the Default Rate shall be deemed to
constitute a portion of the Debt and be secured by this Security Instrument and
the Other Security Documents and shall be immediately due and payable upon
demand by Lender therefor.
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Section 11.4 Actions and Proceedings. Lender has the right to appear in
and defend any action or proceeding brought with respect to the Property and,
after the occurrence and during the continuance of an Event of Default, to bring
any action or proceeding, in the name and on behalf of Borrower, which Lender,
in its discretion, decides should be brought to protect its interest in the
Property.
Section 11.5 Recovery of Sums Required To Be Paid. Lender shall have the
right from time to time to take action to recover any sum or sums which
constitute a part of the Debt as the same become due, without regard to whether
or not the balance of the Debt shall be due, and without prejudice to the right
of Lender thereafter to bring an action of foreclosure, or any other action, for
a default or defaults by Borrower existing at the time such earlier action was
commenced.
Section 11.6 Examination of Books and Records. Lender, its agents,
accountants and attorneys shall have the right, upon prior written notice to
Borrower if no Event of Default exists, to examine and audit, during reasonable
business hours, the records, books, management and other papers of Borrower and
its affiliates or of any Guarantor or Indemnitor which pertain to their
financial condition or the income, expenses and operation of the Property, at
the Property, if Borrower or Guarantor maintain such records at the Property, or
at any office regularly maintained by Borrower, its affiliates or any Guarantor
or Indemnitor where the books and records are located. Lender and its agents
shall have the right to make copies and extracts from the foregoing records and
other papers.
Section 11.7 Other Rights, etc. (a) The failure of Lender to insist upon
strict performance of any term hereof shall not be deemed to be a waiver of any
term of this Security Instrument. Borrower shall not be relieved of Borrower's
obligations hereunder by reason of (i) the failure of Lender to comply with any
request of Borrower, any Guarantor or any Indemnitor to take any action to
foreclose this Security Instrument or otherwise enforce any of the provisions
hereof or of the Note or the Other Security Documents, (ii) the release,
regardless of consideration, of the whole or any part of the Property, or of any
person liable for the Debt or any portion thereof, or (iii) any agreement or
stipulation by Lender extending the time of payment or otherwise modifying or
supplementing the terms of the Note, this Security Instrument or the Other
Security Documents.
(b) It is agreed that the risk of loss or damage to the Property is
on Borrower, and Lender shall have no liability whatsoever for decline in value
of the Property, for failure to maintain the Policies, or for failure to
determine whether insurance in force is adequate as to the amount of risks
insured. Possession by Lender shall not be deemed an election of judicial
relief, if any such possession is requested or obtained, with respect to any
Property or collateral not in Lender's possession.
(c) Lender may resort for the payment of the Debt to any other
security held by Lender in such order and manner as Lender, in its discretion,
may elect. Lender may take action to recover the Debt, or any portion thereof,
or to enforce any covenant hereof without prejudice to the right of Lender
thereafter to foreclose this Security Instrument. The rights of Lender under
this Security Instrument shall be separate, distinct and cumulative and none
shall be given effect to the exclusion of the others. No act of Lender shall be
construed as an election to proceed
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under any one provision herein to the exclusion of any other provision. Lender
shall not be limited exclusively to the rights and remedies herein stated but
shall be entitled to every right and remedy now or hereafter afforded at law or
in equity.
Section 11.8 Right to Release Any Portion of the Property. Lender may
release any portion of the Property for such consideration as Lender may require
without, as to the remainder of the Property, in any way impairing or affecting
the lien or priority of this Security Instrument, or improving the position of
any subordinate lienholder with respect thereto, except to the extent that the
obligations hereunder shall have been reduced by the actual monetary
consideration, if any, received by Lender for such release, and may accept by
assignment, pledge or otherwise any other property in place thereof as Lender
may require without being accountable for so doing to any other lienholder. This
Security Instrument shall continue as a lien and security interest in the
remaining portion of the Property.
Section 11.9 Violation of Laws. If the Property is not in compliance with
Applicable Laws, Lender may impose additional requirements upon Borrower in
connection herewith including, without limitation, monetary reserves or
financial equivalents; provided, however, Borrower's obligations with respect to
Environmental Laws are exclusively addressed herein in Article XII.
Section 11.10 Right of Entry. Lender and its agents shall have the right
to enter and inspect the Property at all reasonable times.
Section 11.11 Subrogation. If any or all of the proceeds of the Note have
been used to extinguish, extend or renew any indebtedness heretofore existing
against the Property, then, to the extent of the funds so used, Lender shall be
subrogated to all of the rights, claims, liens, titles, and interests existing
against the Property heretofore held by, or in favor of, the holder of such
indebtedness and such former rights, claims, liens, titles, and interests, if
any, are not waived but rather are continued in full force and effect in favor
of Lender and are merged with the lien and security interest created herein as
cumulative security for the repayment of the Debt, the performance and discharge
of Borrower's obligations hereunder, under the Note and the Other Security
Documents and the performance and discharge of the Other Obligations.
ARTICLE XII
ENVIRONMENTAL MATTERS
Section 12.1 Environmental Representations and Warranties. Borrower
represents and warrants, based upon an environmental site assessment of the
Property and information that Borrower knows or should reasonably have known,
that: (a) there are no Hazardous Materials (defined below) or underground
storage tanks in, on, or under the Property, except those that are both (i) in
compliance with Environmental Laws (defined below) and with permits issued
pursuant thereto (if such permits are required), if any, and (ii) either (A) in
amounts not in excess of that necessary to operate the Property or (B) fully
disclosed to and approved by Lender in writing pursuant to the documents
described in Exhibit H hereto and delivered to Lender or to Lender's
environmental consultant (such documents are collectively referred to herein as,
the "Environmental Report"); (b) there are no past, present or threatened
Releases (defined below) of
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Hazardous Materials in violation of any Environmental Law and which would
require remediation by a governmental authority in, on, under or from the
Property except as described in the Environmental Report; (c) there is no threat
of any Release of Hazardous Materials migrating to the Property except as
described in the Environmental Report; (d) there is no past or present
non-compliance with Environmental Laws, or with permits issued pursuant thereto,
in connection with the Property except as described in the Environmental Report;
(e) except as fully disclosed to and approved by Lender in writing pursuant to
the Environmental Report, Borrower does not know of, and has not received, any
written or oral notice or other communication from any person or entity
(including but not limited to a governmental entity) relating to Hazardous
Materials in, on, under or from the Property; and (f) Borrower has truthfully
and fully provided to Lender, in writing, any and all information relating to
environmental conditions in, on, under or from the Property known to Borrower or
contained in Borrower's files and records, including but not limited to any
reports relating to Hazardous Materials in, on, under or migrating to or from
the Property and/or to the environmental condition of the Property.
"Environmental Law" means any present and future federal, state and local laws,
statutes, ordinances, rules, regulations, standards, policies and other
government directives or requirements, as well as common law, including but not
limited to the Comprehensive Environmental Response, Compensation and Liability
Act and the Resource Conservation and Recovery Act, that apply to Borrower or
the Property and relate to Hazardous Materials. "Hazardous Materials" shall mean
petroleum and petroleum products and compounds containing them, including
gasoline, diesel fuel and oil; explosives, flammable materials; radioactive
materials; polychlorinated biphenyls ("PCBs") and compounds containing them;
lead and lead-based paint; asbestos or asbestos-containing materials in any form
that is or could become friable; underground or above-ground storage tanks,
whether empty or containing any substance; any substance the presence of which
on the Property is prohibited by any federal, state or local authority; any
substance that requires special handling; and any other material or substance
now or in the future defined as a "hazardous substance," "hazardous material,"
hazardous waste," toxic substance," "toxic pollutant," "contaminant," or
pollutant" within the meaning of any Environmental Law. "Release" of any
Hazardous Materials includes but is not limited to any release, deposit,
discharge, emission, leaking, spilling, seeping, migrating, injecting, pumping,
pouring, emptying, escaping, dumping, disposing or other movement of Hazardous
Materials.
Section 12.2 Environmental Covenants. Borrower covenants and agrees that
so long as Borrower owns, manages, is in possession of, or otherwise controls
the operation of the Property: (a) all uses and operations on or of the
Property, whether by Borrower or any other person or entity, shall be in
compliance with all Environmental Laws and permits issued pursuant thereto; (b)
there shall be no Releases of Hazardous Materials in, on, under or from the
Property; except in compliance with Environmental Laws or as disclosed in the
Environmental Report; (c) there shall be no Hazardous Materials in, on, or under
the Property, except those that are both (i) in compliance with all
Environmental Laws and with permits issued pursuant thereto, if and to the
extent required, and (ii) (A) in amounts not in excess of that necessary to
operate the Property or (B) disclosed in the Environmental Report; (d) Borrower
shall keep the Property free and clear of all liens and other encumbrances
imposed pursuant to any Environmental Law, whether due to any act or omission of
Borrower or any other person or entity (the "Environmental Liens"); (e) Borrower
shall, at its sole cost and expense, fully and expeditiously cooperate in all
activities pursuant to Section 12.3 below, including but not limited to
providing all relevant information and making knowledgeable persons available
for interviews; (f) Borrower shall, at its sole cost
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and expense, perform any environmental site assessment or other investigation of
environmental conditions in connection with the Property, pursuant to any
reasonable written request of Lender, upon Lender's reasonable belief that the
Property is not in full compliance with all Environmental Laws, and share with
Lender the reports and other results thereof, and Lender and other Indemnified
Parties shall be entitled to rely on such reports and other results thereof; (g)
Borrower shall, at its sole cost and expense, comply with all reasonable written
requests of Lender to (i) reasonably effectuate remediation of any Hazardous
Materials in, on, under or from the Property in violation of any Environmental
Law; and (ii) comply with any Environmental Law; (h) Borrower shall not allow
any tenant or other user of the Property to violate any Environmental Law; and
(i) Borrower shall immediately notify Lender in writing after it has become
aware of (A) any presence or Release or threatened Releases of Hazardous
Materials in, on, under, from or migrating towards the Property; (B) any
non-compliance with any Environmental Laws related in any way to the Property;
(C) any actual or potential Environmental Lien; (D) any required or proposed
remediation of environmental conditions relating to the Property; and (E) any
written or oral notice or other communication of which Borrower becomes aware
from any source whatsoever (including but not limited to a governmental entity)
relating in any way to Hazardous Materials. Any failure of Borrower to perform
its obligations pursuant to this Section 12.2 shall constitute bad faith waste
with respect to the Property.
Section 12.3 Lender's Rights. Lender and any other person or entity
designated by Lender, including but not limited to any representative of a
governmental entity, and any environmental consultant, and any receiver
appointed by any court of competent jurisdiction, shall have the right, but not
the obligation, to enter upon the Property at all reasonable times to assess any
and all aspects of the environmental condition of the Property and its use,
including but not limited to conducting any environmental assessment or audit
(the scope of which shall be determined in Lender's sole discretion) and taking
samples of soil, groundwater or other water, air, or building materials, and
conducting other invasive testing. Borrower shall cooperate with and provide
access to Lender and any such person or entity designated by Lender.
Section 12.4 Operations and Maintenance Programs. Where recommended by the
Environmental Report or as a result of any other environmental assessment or
audit of the Property, Borrower shall establish and comply with an operations
and maintenance program with respect to the Property, in form and substance
reasonably acceptable to Lender, prepared by an environmental consultant
reasonably acceptable to Lender, which program shall address any asbestos
containing material or lead based paint that may now or in the future be
detected at or on the Property. Without limiting the generality of the preceding
sentence, Lender may require (a) periodic notices or reports to Lender in form,
substance and at such intervals as Lender may specify, (b) an amendment to such
operations and maintenance program to address changing circumstances, laws or
other matters, (c) at Borrower's sole expense, supplemental examination of the
Property by consultants specified by Lender, (d) access to the Property by
Lender, its agents or servicer, to review and assess the environmental condition
of the Property and Borrower's compliance with any operations and maintenance
program, and (e) variation of the operations and maintenance program in response
to the reports provided by any such consultants.
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ARTICLE XIII
INDEMNIFICATIONS
Section 13.1 General Indemnification. Borrower shall, at its sole cost and
expense, protect, defend, indemnify, release and hold harmless the Indemnified
Parties (defined below) from and against any and all Losses (defined below)
imposed upon or incurred by or asserted against any Indemnified Parties and
directly or indirectly arising out of or in any way relating to any one or more
of the following: (a) any accident, injury to or death of persons or loss of or
damage to property occurring in, on or about the Property or any part thereof or
on the adjoining sidewalks, curbs, adjacent property or adjacent parking areas,
streets or ways; (b) any use, nonuse or condition in, on or about the Property
or any part thereof or on the adjoining sidewalks, curbs, adjacent property or
adjacent parking areas, streets or ways; (c) performance of any labor or
services or the furnishing of any materials or other property in respect of the
Property or any part thereof; (d) any failure of the Property to be in
compliance with any Applicable Laws; (e) any and all claims and demands
whatsoever which may be asserted against Lender 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 Lease; or (f) the payment of
any commission, charge or brokerage fee to anyone which may be payable in
connection with the funding of the Loan evidenced by the Note and secured by
this Security Instrument, except, in each of the above cases, to the extent
arising out of the gross negligence or willful misconduct of the Indemnified
Parties. Any amounts payable to Lender by reason of the application of this
Section 13.1 shall become immediately due and payable and shall bear interest at
the Default Rate from the date loss or damage is sustained by Lender until paid.
The term "Losses" shall mean any and all claims, suits, liabilities
(including, without limitation, strict liabilities), actions, proceedings,
obligations, debts, damages, losses, costs, expenses, fines, penalties, charges,
fees, expenses, judgments, awards, amounts paid in settlement of whatever kind
or nature (including but not limited to attorneys' fees and other costs of
defense). The term "Indemnified Parties" shall mean (a) Lender, (b) any prior
owner or holder of the Note, (c) any servicer or prior servicer of the Loan, (d)
the officers, directors, shareholders, partners, members, employees and trustees
of any of the foregoing, and (e) the heirs, legal representatives, successors
and assigns of each of the foregoing.
Section 13.2 Mortgage and/or Intangible Tax. Borrower shall, at its sole
cost and expense, protect, defend, indemnify, release and hold harmless the
Indemnified Parties from and against any and all Losses imposed upon or incurred
by or asserted against any Indemnified Parties and directly or indirectly
arising out of or in any way relating to any tax on the making and/or recording
of this Security Instrument, the Note or any of the Other Security Documents.
Section 13.3 Duty to Defend; Attorneys' Fees and Other Fees and Expenses.
Upon written request by any Indemnified Party, Borrower shall defend such
Indemnified Party (if requested by any Indemnified Party, in the name of the
Indemnified Party) by attorneys and other professionals approved by the
Indemnified Parties. Notwithstanding the foregoing, any Indemnified Parties may,
in their sole discretion, engage their own attorneys and other professionals to
defend or assist them, and, at the option of Indemnified Parties, their
attorneys shall control the resolution of any claim or proceeding. Upon demand,
Borrower shall pay or, in
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the sole discretion of the Indemnified Parties, reimburse, the Indemnified
Parties for the payment of reasonable fees and disbursements of attorneys,
engineers, environmental consultants, laboratories and other professionals in
connection therewith.
Section 13.4 Environmental Indemnity. Simultaneously with this Security
Instrument, Borrower and any other person(s) or entity(ies) identified therein
(collectively, the "Indemnitors") have executed and delivered that certain
environmental indemnity agreement dated the date hereof to Lender (the
"Environmental Indemnity").
ARTICLE XIV
WAIVERS
Section 14.1 Waiver of Counterclaim. Borrower hereby waives the right to
assert a counterclaim, other than a mandatory or compulsory counterclaim, in any
action or proceeding brought against it by Lender arising out of or in any way
connected with this Security Instrument, the Note, any of the Other Security
Documents, or the Obligations.
Section 14.2 Marshalling and Other Matters. Borrower hereby waives, to the
extent permitted by law, the benefit of all appraisement, valuation, stay,
extension, reinstatement and redemption laws now or hereafter in force and all
rights of marshalling in the event of any sale hereunder of the Property or any
part thereof or any interest therein. Further, Borrower hereby expressly waives
any and all rights of redemption from sale under any order or decree of
foreclosure of this Security Instrument on behalf of Borrower, and on behalf of
each and every person acquiring any interest in or title to the Property
subsequent to the date of this Security Instrument and on behalf of all persons
to the extent permitted by Applicable Laws.
Section 14.3 Waiver of Notice. Borrower shall not be entitled to any
notices of any nature whatsoever from Lender except (a) with respect to matters
for which this Security Instrument specifically and expressly provides for the
giving of notice by Lender to Borrower and (b) with respect to matters for which
Lender is required by Applicable Laws to give notice, and Borrower hereby
expressly waives the right to receive any notice from Lender with respect to any
matter for which this Security Instrument does not specifically and expressly
provide for the giving of notice by Lender to Borrower.
Section 14.4 Waiver of Statute of Limitations. Borrower hereby expressly
waives and releases to the fullest extent permitted by law, the pleading of any
statute of limitations as a defense to payment of the Debt or performance of its
Other Obligations.
Section 14.5 Sole Discretion of Lender. Wherever pursuant to this Security
Instrument (a) Lender exercises any right given to it to approve or disapprove,
(b) any arrangement or term is to be satisfactory to Lender, or (c) any other
decision or determination is to be made by Lender, the decision of Lender to
approve or disapprove, all decisions that arrangements or terms are satisfactory
or not satisfactory and all other decisions and determinations made by Lender,
shall be in the sole discretion of Lender, except as may be otherwise expressly
and specifically provided herein.
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Section 14.6 WAIVER OF TRIAL BY JURY. BORROWER HEREBY WAIVES, TO THE
FULLEST EXTENT PERMITTED BY LAW, THE RIGHT TO TRIAL BY JURY IN ANY ACTION,
PROCEEDING OR COUNTERCLAIM, WHETHER IN CONTRACT, TORT OR OTHERWISE, RELATING
DIRECTLY OR INDIRECTLY TO THE LOAN EVIDENCED BY THE NOTE, THE APPLICATION FOR
THE LOAN EVIDENCED BY THE NOTE, THE NOTE, THIS SECURITY INSTRUMENT OR THE OTHER
SECURITY DOCUMENTS OR ANY ACTS OR OMISSIONS OF LENDER, ITS OFFICERS, EMPLOYEES,
DIRECTORS OR AGENTS IN CONNECTION THEREWITH.
ARTICLE XV
EXCULPATION
Section 15.1 Exculpation. The provisions of Article XI of the Note are
hereby incorporated by reference to the fullest extent as if the text of such
Article were set forth in its entirety herein.
ARTICLE XVI
NOTICES
Section 16.1 Notices. All notices or other written communications
hereunder shall be deemed to have been properly given (i) upon delivery, if
delivered in person or by facsimile transmission with receipt acknowledged by
the recipient thereof and confirmed by telephone by sender, (ii) one (1)
Business Day (defined below) after having been deposited for overnight delivery
with any reputable overnight courier service, or (iii) three (3) Business Days
after having been deposited in any post office or mail depository regularly
maintained by the U.S. Postal Service and sent by registered or certified mail,
postage prepaid, return receipt requested, addressed to Borrower or Lender, as
the case may be, at the addresses set forth on the first page of this Security
Instrument or addressed as such party may from time to time designate by written
notice to the other parties.
Notices to Borrower shall be addressed to the attention of Director, Asset
Management, with a copy to ▇▇▇▇ ▇▇▇▇▇ LLP, 2500 One Liberty Place, ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇, Attention: Managing Partner, Real
Estate. Borrower's telephone number is ▇▇▇-▇▇▇-▇▇▇▇ and facsimile number is
▇▇▇-▇▇▇-▇▇▇▇.
Either party by notice to the other may designate additional or different
addresses for subsequent notices or communications.
For purposes of this Subsection, "Business Day" shall mean a day on which
commercial banks are not authorized or required by law to close in
New York,
New
York.
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ARTICLE XVII
APPLICABLE LAW
Section 17.1 Choice of Law. (A) THIS SECURITY INSTRUMENT WAS NEGOTIATED IN
THE STATE OF
NEW YORK, AND MADE BY BORROWER AND ACCEPTED BY LENDER IN THE STATE
OF
NEW YORK, AND THE PROCEEDS OF THE NOTE SECURED HEREBY WERE DISBURSED FROM THE
STATE OF
NEW YORK, WHICH STATE THE PARTIES AGREE HAS A SUBSTANTIAL RELATIONSHIP
TO THE PARTIES AND TO THE UNDERLYING TRANSACTION EMBODIED HEREBY, AND IN ALL
RESPECTS, INCLUDING, WITHOUT LIMITING THE GENERALITY OF THE FOREGOING, MATTERS
OF CONSTRUCTION, VALIDITY AND PERFORMANCE, THIS SECURITY INSTRUMENT AND THE
OBLIGATIONS ARISING HEREUNDER SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE
WITH, THE LAWS OF THE STATE OF
NEW YORK APPLICABLE TO CONTRACTS MADE AND
PERFORMED IN SUCH STATE (WITHOUT REGARD TO PRINCIPLES OF CONFLICT LAWS) AND ANY
APPLICABLE LAW OF THE UNITED STATES OF AMERICA, EXCEPT THAT AT ALL TIMES THE
PROVISIONS FOR THE CREATION, PERFECTION, AND ENFORCEMENT OF THE LIENS AND
SECURITY INTERESTS CREATED PURSUANT HERETO AND PURSUANT TO THE OTHER LOAN
DOCUMENTS WITH RESPECT TO THE PROPERTY SHALL BE GOVERNED BY AND CONSTRUED
ACCORDING TO THE LAW OF THE STATE IN WHICH THE PROPERTY IS LOCATED, IT BEING
UNDERSTOOD THAT, TO THE FULLEST EXTENT PERMITTED BY THE LAW OF SUCH STATE, THE
LAW OF THE STATE OF
NEW YORK SHALL GOVERN THE CONSTRUCTION, VALIDITY AND
ENFORCEABILITY OF ALL LOAN DOCUMENTS AND ALL OF THE OBLIGATIONS ARISING
HEREUNDER OR THEREUNDER. TO THE FULLEST EXTENT PERMITTED BY LAW, BORROWER HEREBY
UNCONDITIONALLY AND IRREVOCABLY WAIVES ANY CLAIM TO ASSERT THAT THE LAW OF ANY
OTHER JURISDICTION GOVERNS THIS SECURITY INSTRUMENT OR THE OTHER LOAN DOCUMENTS,
AND THIS SECURITY INSTRUMENT AND THE OTHER LOAN DOCUMENTS SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
NEW YORK PURSUANT TO
SECTION 5-1401 OF THE
NEW YORK GENERAL OBLIGATIONS LAW.
(B) ANY LEGAL SUIT, ACTION OR PROCEEDING AGAINST LENDER OR BORROWER
ARISING OUT OF OR RELATING TO THIS SECURITY INSTRUMENT MAY AT LENDER'S OPTION BE
INSTITUTED IN ANY FEDERAL OR STATE COURT IN ▇▇▇ ▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇ ▇▇ ▇▇▇
▇▇▇▇, PURSUANT TO SECTION 5-1402 OF THE NEW YORK GENERAL OBLIGATIONS LAW, AND
BORROWER WAIVES ANY OBJECTIONS WHICH IT MAY NOW OR HEREAFTER HAVE BASED ON VENUE
AND/OR FORUM NON CONVENIENS OF ANY SUCH SUIT, ACTION OR PROCEEDING, AND BORROWER
HEREBY IRREVOCABLY SUBMITS TO THE JURISDICTION OF ANY SUCH COURT IN ANY SUIT,
ACTION OR PROCEEDING. BORROWER DOES HEREBY DESIGNATE AND APPOINT
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GROCERY (OK) QRS 15-5, INC.
C/O W.P. ▇▇▇▇▇ & CO. LLC
▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
ATTENTION: DIRECTOR, ASSET MANAGEMENT
WITH A COPY TO:
▇▇▇▇ ▇▇▇▇▇ LLP
▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
ATTENTION: CHAIRMAN, REAL ESTATE DEPARTMENT
AS ITS AUTHORIZED AGENT TO ACCEPT AND ACKNOWLEDGE ON ITS BEHALF SERVICE OF ANY
AND ALL PROCESS WHICH MAY BE SERVED IN ANY SUCH SUIT, ACTION OR PROCEEDING IN
ANY FEDERAL OR STATE COURT IN NEW YORK, NEW YORK, AND AGREES THAT SERVICE OF
PROCESS UPON SUCH AGENT AT SUCH ADDRESS AND WRITTEN NOTICE OF SUCH SERVICE
MAILED OR -DELIVERED TO BORROWER IN THE MANNER PROVIDED HEREIN SHALL BE DEEMED
IN EVERY RESPECT EFFECTIVE SERVICE OF PROCESS UPON BORROWER IN ANY SUCH SUIT,
ACTION OR PROCEEDING IN THE STATE OF NEW YORK. BORROWER (I) SHALL GIVE PROMPT
NOTICE TO LENDER OF ANY CHANGED ADDRESS OF ITS AUTHORIZED AGENT HEREUNDER, (II)
MAY AT ANY TIME AND FROM TIME TO TIME DESIGNATE A SUBSTITUTE AUTHORIZED AGENT
WITH AN OFFICE IN NEW YORK, NEW YORK (WHICH SUBSTITUTE AGENT AND OFFICE SHALL BE
DESIGNATED AS THE PERSON AND ADDRESS FOR SERVICE OF PROCESS), AND (III) SHALL
PROMPTLY DESIGNATE SUCH A SUBSTITUTE IF ITS AUTHORIZED AGENT CEASES TO HAVE AN
OFFICE IN NEW YORK, NEW YORK OR IS DISSOLVED WITHOUT LEAVING A SUCCESSOR.
Section 17.2 Provisions Subject to Applicable Law. All rights, powers and
remedies provided in this Security Instrument may be exercised only to the
extent that the exercise thereof does not violate any applicable provisions of
law and are intended to be limited to the extent necessary so that they will not
render this Security Instrument invalid, unenforceable or not entitled to be
recorded, registered or filed under the provisions of any Applicable Laws.
ARTICLE XVIII
SECONDARY MARKET
Section 18.1 Transfer of Loan. Lender may, at any time, sell, transfer or
assign the Note, this Security Instrument and the Other Security Documents, and
any or all servicing rights with respect thereto, or grant participations
therein (the "Participations") or issue mortgage passthrough certificates or
other securities evidencing a beneficial interest in a rated or unrated public
offering or private placement (the "Securities"). Lender may forward to each
purchaser,
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transferee, assignee, servicer, participant, or investor in such Participations
or Securities (collectively, the "Investor") or any Rating Agency rating such
Securities, each prospective Investor, and any organization maintaining
databases on the underwriting and performance of commercial mortgage loans, all
documents and information which Lender now has or may hereafter acquire relating
to the Debt and to Borrower, any Guarantor, any Indemnitor(s) and the Property,
whether furnished by Borrower, any Guarantor, any Indemnitor(s) or otherwise, as
Lender determines necessary or desirable. Borrower irrevocably waives any and
all rights it may have under Applicable Laws to prohibit such disclosure,
including but not limited to any right of privacy.
Section 18.2 Cooperation. Borrower, any Guarantor and any Indemnitor agree
to cooperate with Lender in connection with any transfer made or any Securities
created pursuant to this Article XVIII, including, without limitation, the
taking, or refraining from taking, of such action as may be necessary to satisfy
all of the conditions of any Investor, the delivery of an estoppel certificate
required in accordance with Subsection 7.4(c) hereof and such other documents as
may be reasonably requested by Lender and the execution of amendments to the
Note, this Security Instrument and Other Security Documents and Borrower's
organizational documents as reasonably requested by Lender. Borrower shall also
furnish and Borrower, any Guarantor and any Indemnitor consent to Lender
furnishing to such Investors or such prospective investors or such Rating Agency
any and all information concerning the Property, the Leases, the financial
condition of Borrower, any Guarantor and any Indemnitor as may be requested by
Lender, any Investor, any prospective Investor or any Rating Agency in
connection with any sale, transfer or Participations or Securities.
ARTICLE XIX
COSTS
Section 19.1 Performance at Borrower's Expense. Borrower acknowledges and
confirms that Lender shall impose certain administrative processing and/or
commitment fees in connection with (a) the extension, renewal, modification,
amendment and termination of the Loan, (b) the release or substitution of
collateral therefor, (c) obtaining certain consents, waivers and approvals with
respect to the Property, or (d) the review of any Lease. or proposed Lease or
the preparation or review of any subordination, non-disturbance agreement (the
occurrence of any of the above shall be called an "Event"). Borrower further
acknowledges and confirms that it shall be responsible for the payment of all
costs of reappraisal of the Property or any part thereof, whether required by
law, regulation, Lender or any governmental or quasi-governmental authority.
Borrower hereby acknowledges and agrees to pay, immediately, with or without
demand, all such fees (as the same may be increased or decreased from time to
time), and any additional fees of a similar type or nature which may be imposed
by Lender from time to time, upon the occurrence of any Event or otherwise.
Wherever it is provided herein that Borrower pay any costs and expenses, such
costs and expenses shall include, but not be limited to, all reasonable legal
fees and disbursements of Lender, whether with respect to retained firms, the
reimbursement for the expenses of in-house staff or otherwise.
Section 19.2 Legal Fees for Enforcement. (a) Borrower shall pay all
reasonable legal fees incurred by Lender in connection with (i) the preparation
of the Note, this Security
-51-
Instrument and the Other Security Documents and (ii) the items set forth in
Section 19.1 above, and (b) Borrower shall pay to Lender on demand any and all
expenses, including reasonable legal expenses and attorneys' fees, incurred or
paid by Lender in protecting its interest in the Property or in collecting any
amount payable hereunder or in enforcing its rights hereunder with respect to
the Property, whether or not any legal proceeding is commenced hereunder or
thereunder, together with interest thereon at the Default Rate from the date
paid or incurred by Lender until such expenses are paid by Borrower.
ARTICLE XX
DEFINITIONS
Section 20.1 General Definitions. Unless the context clearly indicates a
contrary intent or unless otherwise specifically provided herein, words used in
this Security Instrument may be used interchangeably in singular or plural form
and the word "Borrower" shall mean "each Borrower and any subsequent owner or
owners of the Property or any part thereof or any interest therein," the word
"Lender" shall mean "Lender and any subsequent holder of the Note," the word
"Note" shall mean "the Note and any other evidence of indebtedness secured by
this Security Instrument,'-" the -word "person" shall include an individual,
corporation, partnership, limited liability company, trust, unincorporated
association, government, governmental authority, and any other entity, the word
"Property" shall include any portion of the Property and any interest therein,
and the phrases "attorneys' fees" and "counsel fees" shall include any and all
attorneys', paralegal and law clerk fees and disbursements, including, but not
limited to, fees and disbursements at the pre-trial, trial and appellate levels
incurred or paid by Lender in protecting its interest in the Property, the
Leases and the Rents and enforcing its rights hereunder.
Section 20.2 Headings, etc. The headings and captions of various Articles
and Sections of this Security Instrument are for convenience of reference only
and are not to be construed as defining or limiting, in any way, the scope or
intent of the provisions hereof.
ARTICLE XXI
MISCELLANEOUS PROVISIONS
Section 21.1 No Oral Change. This Security Instrument, and any provisions
hereof, may not be modified, amended, waived, extended, changed, discharged or
terminated orally or by any act or failure to act on the part of Borrower or
Lender, but only by an agreement in writing signed by the party against whom
enforcement of any modification, amendment, waiver, extension, change, discharge
or termination is sought.
Section 21.2 Liability. If Borrower consists of more than one person, the
obligations and liabilities of each such person hereunder shall be joint and
several. This Security Instrument shall be binding upon and inure to the benefit
of Borrower and Lender and their respective successors and assigns forever.
-52-
Section 21.3 Inapplicable Provisions. If any term, covenant or condition
of the Note or this Security Instrument is held to be invalid, illegal or
unenforceable in any respect, the Note and this Security Instrument shall be
construed without such provision.
Section 21.4 Duplicate Originals; Counterparts. This Security Instrument
may be executed in any number of duplicate originals and each duplicate original
shall be deemed to be an original. This Security Instrument may be executed in
several counterparts, each of which counterparts shall be deemed an original
instrument and all of which together shall constitute a single Security
Instrument. The failure of any party hereto to execute this Security Instrument,
or any counterpart hereof, shall not relieve the other signatories from their
obligations hereunder.
Section 21.5 Number and Gender. Whenever the context may require, any
pronouns used herein shall include the corresponding masculine, feminine or
neuter forms, and the singular form of nouns and pronouns shall include the
plural and vice versa.
Section 21.6 Cross Default. An Event of Default under this Security
Instrument shall constitute an Event of Default under the Note and each of the
Other Security Documents and an Event of Default under the Note and/or any of
the Other Security Documents shall constitute an Event of Default under this
Security Instrument.
ARTICLE XXII
SPECIAL OKLAHOMA PROVISIONS
Section 22.1 Principles of Construction. In the event of any
inconsistencies between the terms and provisions of this Section 22 and the
terms and provision of the other Sections of this Security Instrument, the terms
and provisions of this Section 22 shall govern and control.
Section 22.2 Oklahoma Provisions. Without in any way limiting the other
provisions of this Security Instrument, but in addition thereto and in
amplification thereof, Borrower hereby confers on Lender the power to sell the
Property, and the interests of persons therein, upon the occurrence and during
the continuation of any Event of Default hereunder, in the manner and pursuant
to the procedures set forth in the Oklahoma Power of Sale Mortgage Foreclosure
Act, 46 Okla. Stat. Section 40 et seq. (the "Act"), as said Act may be amended
from time to time, or pursuant to other applicable statutory or judicial
authority. If no cure of such default is effected within the time period set
forth in the Act, Lender may accelerate the indebtedness secured hereby without
further notice (the aforementioned statutory cure period to run concurrently
with any contractual provision for notice before acceleration of debt) and may
then proceed in the manner and subject to the conditions of the Act to send to
Borrower and other necessary parties a notice of sale and may sell and convey
the Property in accordance with the Act. Lender may enforce this Security
Instrument by exercising said power of sale or, at the option of Lender, by
judicial foreclosure proceedings as provided by law. No action of Lender based
upon the provisions contained in this Security Instrument or in the Act,
including, without limitation, the giving of the notice of intent to foreclose
by power of sale or the notice of sale, shall constitute an election of remedies
which would preclude Lender from accelerating the indebtedness secured hereby
and pursuing judicial foreclosure before or at any time after commencement of
the power of sale foreclosure procedure. If Lender institutes judicial
proceedings to enforce this Security
-53-
IN WITNESS WHEREOF, THIS SECURITY INSTRUMENT has been executed by Borrower
the day and year first above written.
BORROWER:
GROCERY (OK) QRS 15-5, INC.,
a Delaware corporation
By: /s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------------------
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Vice President
STATE OF New York )
)ss.
COUNTY OF New York )
The foregoing instrument was acknowledged before me this 26th day of [ILLEGIBLE]
2002 by ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Vice President of GROCERY (OK) QRS 15-5, INC., a
Delaware corporation, on behalf of the corporation.
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
------------------------------------------------
Notary Public
Commission No.
----------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Notary Public, State of New York
No. 02SH6003044
Qualified in Queens County
Commission Expires Feb. 23, 2006
-2-
EXHIBIT A
A-1
EXHIBIT B
FORM OF RENT ROLL
GROCERY (OK) QRS 15-5, INC.
MSDWMC LOAN NO. 02-11615
RENT ROLL CERTIFICATION
CURRENT
SQUARE LEASE MONTHLY RENT CURRENT CURRENT ANNUAL CURRENT ANNUAL
TENANT FEET EXPIRATION PSF MONTHLY RENT PSF RENT
------ ------ ---------- ------------ ------------ -------------- --------------
▇▇▇▇▇▇▇ $ $ $ $
TOTAL FOR PROPERTY $ $ $ $
B-1
EXHIBIT C
FORM OF MONTHLY OPERATING STATEMENT
GROCERY (OK) QRS 15-5, INC.
MSDWMC LOAN NO. 02-11615
------------------
------------------
MONTHLY OPERATING STATEMENT CERTIFICATION
INCOME
Current Base Rent for Period $
Reimbursements $
Other $
Total Income
OPERATING EXPENSES
(None-NNN bond-type lease. Tenant is responsible) $
Total Operating Expenses $
Net Operating Income $
====
C-1
EXHIBIT D
FORM OF QUARTERLY OPERATING STATEMENT
GROCERY (OK) QRS 15-5, INC.
MSDWMC LOAN NO. 02-11615
------------------
------------------
QUARTERLY OPERATING STATEMENT CERTIFICATION
INCOME
Current Base Rent for Period $
Reimbursements $
Other $
Total Income
OPERATING EXPENSES
(None-NNN bond-type lease. Tenant is responsible) $
Total Operating Expenses $
Net Operating Income $
====
D-1
EXHIBIT E
FORM OF ANNUAL OPERATING STATEMENT
GROCERY (OK) QRS 15-5, INC.
MSDWMC LOAN NO. 02-11615
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ANNUAL OPERATING STATEMENT CERTIFICATION
INCOME
Current Base Rent for Period $
Reimbursements $
Other $
Total Income
OPERATING EXPENSES
(None-NNN bond-type lease. Tenant is responsible) $
Total Operating Expenses $
Net Operating Income $
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E-1
EXHIBIT F
FORM OF PROFIT AND LOSS STATEMENT
GROCERY (OK) QRS 15-5, INC.
MSDWMC LOAN NO. 02-11615
BALANCE SHEET CERTIFICATION
ASSETS
CURRENT ASSETS:
Cash $
Restricted Deposits (TI/LC Reserve Account) $
Tenant Receivables $
Prepaid Expenses $
Other $
Total Current Assets $
FIXED ASSETS:
Building & Improvements (at total acquisition cost) $
Furniture & Equipment $
Other $
Total Fixed Assets $
TOTAL ASSETS $
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LIABILITIES
CURRENT LIABILITIES:
Restricted Deposits (TI/LC Reserve Account) $
Other Current Liabilities $
Total Current Liabilities $
LONG-TERM LIABILITIES:
Outstanding Loan Balance $
Other $
TOTAL LONG-TERM LIABILITIES $
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NET WORTH $
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A-1