EXHIBIT 10.03
PREPARED BY AND
---------------
AFTER RECORDING RETURN TO:
--------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, III
▇▇▇▇▇ & ▇▇▇▇▇ PC
▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
-------------------------
MORTGAGE, ASSIGNMENT OF LEASES AND RENTS, SECURITY AGREEMENT AND FIXTURE FILING
THIS MORTGAGE, ASSIGNMENT OF LEASES AND RENTS, SECURITY AGREEMENT AND FIXTURE
FILING (as the same may be amended, restated, extended, supplemented or
otherwise modified from time to time, the "Mortgage"), is made as of the
-------- -----
day of May, 2006, by Deer Valley Homebuilders, Inc., an Alabama corporation,
having its principal place of business at ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇, ▇▇▇▇▇▇▇
▇▇▇▇▇ referred to herein as "Borrower"; and Fifth Third Bank, an Ohio banking
--------
corporation, having a place of business at ▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, together with its successors, assigns and transferees
("Lender").
------
W I T N E S S E T H:
To secure the payment of an indebtedness in the principal sum of TWO
MILLION AND NO/100 DOLLARS ($2,000,000.00), lawful money of the United States of
America, to be paid with interest, with the balance of the indebtedness, if not
sooner paid, due and payable on May 22, 2011 (the "Maturity Date"), according to
-------------
that certain variable rate Note in the amount of $2,000,000.00 dated of even
date hereof made by Borrower to Lender, as lender, (together with all
extensions, renewals or modifications thereof, being hereinafter called the
"Note"), as also evidenced and secured by a Loan Agreement of even date hereof
-----
(the "Loan Agreement") and all other sums due hereunder, or otherwise due under
the Loan Documents (as defined in the Loan Agreement) (said indebtedness,
interest and all sums due hereunder and under the Note and any other Loan
Documents being collectively called the "Debt"), and of that certain Guaranty of
----
the Debt dated of even date hereof made by Cytation Corporation and by
DeerValley Acquisitions Corp., jointly and severally (collectively the
"Guarantors") to Lender, and all of the agreements, covenants, conditions,
warranties, representations and other obligations made or undertaken by Borrower
or any other person or entity to Lender or others as set forth in the Loan
Documents (collectively, including the Debt, the "Obligations"), Borrower has
-----------
irrevocably bargained, granted, sold, given and assigned, and does hereby
irrevocably bargain, sell, give, grant and assign unto Lender, the real property
described in Exhibit A attached hereto (the "Premises"), and the buildings,
---------- --------
structures, fixtures, additions, enlargements, extensions, modifications,
repairs, replacements and improvements now or hereafter located thereon (the
"Improvements"), including, without limitation, all right, title and interest of
------------
the Borrower, as owner or landlord and otherwise, in, to and under any lease
thereof;
The Premises consist of the real property located in ▇▇▇▇▇ County and
▇▇▇▇▇▇ County. The ▇▇▇▇▇ County real property has a value of $687,000.00 and the
▇▇▇▇▇▇ County real property has a value of $1,313,000.00.
TOGETHER WITH: all right, title, interest and estate of Borrower now owned,
or hereafter acquired, in and to the following property, rights, interests and
estates (the Premises and the Improvements together with the following property,
rights, interests and estates being hereinafter described are collectively
referred to herein as the "Property"):
--------
(a) all easements, rights-of-way, strips and gores of land, streets,
ways, alleys, passages, sewer rights, water, water courses, water rights and
powers, air rights and development rights, and all estates, rights, titles,
interests, privileges, liberties, tenements, hereditaments and appurtenances of
any nature whatsoever, in any way belonging, relating or pertaining to the
Premises and the Improvements and the reversion and reversions, remainder and
remainders, and all land lying in the bed of any street, road or avenue, opened
or proposed, in front of or adjoining the Premises, to the center line thereof
and all the estates, rights, titles, interests, dower and rights of dower,
courtesy and rights of courtesy, property, possession, claim and demand
whatsoever, both at law and in equity, of Borrower of, in and to the Premises
and the Improvements and every part and parcel thereof, with the appurtenances
thereto;
(b) all machinery, equipment, fixtures (including but not limited to
all heating, ventilation, air conditioning, plumbing, lighting, communications
and elevator fixtures) and other personal property of every kind and nature,
whether tangible or intangible, whatsoever owned by Borrower, or in which
Borrower has or shall have an interest, now or hereafter located upon the
Premises and the Improvements, or appurtenant thereto, and primarily for use in
connection with the present or future operation and occupancy of the Premises
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 Premises and the Improvements, or
appurtenant thereto, and primarily for use in connection with the present or
future operation, enjoyment and occupancy of the Premises and the Improvements
(hereinafter collectively called the "Equipment"), including the proceeds of any
---------
sale or transfer of the foregoing, and the right, title and interest of Borrower
in and to any of the Equipment which may be subject to any security interests,
as defined in the Uniform Commercial Code, as adopted and enacted by the state
or states where any of the Property is located (the "Uniform Commercial Code")
-----------------------
superior in lien to the lien of this Mortgage, provided, however, that nothing
in the foregoing of this subparagraph (b) shall be construed to grant any right,
title, interest and estate to Lender in and to any property, rights, interests
and estates, now owned or hereafter acquired by Borrower in any tangible or
intangible assets of the Borrower, including, without limitation, any contracts,
inventory, accounts, escrows, reserves, software, franchises, trade names,
trademarks, machinery, or equipment, used in the normal course of Borrower's
business and trade activities and not primarily related to the use and occupancy
of the Premises and the Improvements as set forth above;
(c) 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 or condemnation (including but not
limited to any transfer made in lieu of or in anticipation of the exercise of
2
said rights), or for a change of grade, or for any other injury to or decrease
in the value of the Property;
(d) all leases and subleases (including, without limitation, all
guarantees, letter of credit rights and other supporting obligations in respect
thereof) and other agreements or arrangements heretofore or hereafter entered
into affecting the use, enjoyment or occupancy of, or the conduct of any
activity upon or in, the Premises and the Improvements, including any
extensions, renewals, modifications or amendments thereof (the "Leases") and all
------
rents, rent equivalents (including room revenues, if applicable), moneys payable
as damages or in lieu of rent or rent equivalents, royalties (including, without
limitation, all oil and gas or other mineral royalties and bonuses), income,
receivables, receipts, revenues, deposits (including, without limitation,
security, utility and other deposits), accounts (including deposit accounts),
cash, issues, profits, charges for services rendered, and other consideration of
whatever form or nature received by or paid or paid or payable to or for the
account of or benefit of Borrower or its agents or employees from any and all
sources arising from or attributable to the Premises and the Improvements,
moneys payable as damages or in lieu of rent or rent equivalents, royalties
(including, without limitation, all oil and gas or other mineral royalties and
bonuses), income, receivables, receipts, revenues, deposits (including, without
limitation, security, utility and other deposits), accounts (including deposit
accounts), cash, issues, profits, charges for services rendered, and other
consideration of whatever form or nature received by or paid or paid or payable
to or for the account of or benefit of Borrower or its agents or employees from
any and all sources arising from or attributable to the Premises and the
Improvements thereunder (the "Rents"), together with 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;
(e) 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 or any part thereof;
(f) 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 or any part thereof;
(g) all books, records, plans, specifications, designs, drawings,
permits, consents, licenses, franchises, management agreements, contracts,
contract rights (including, without limitation, any contract with any architect
or engineer or with any other provider of goods or services for or in connection
with any construction, repair, or other work upon the Property), approvals,
actions, refunds or real estate taxes and assessments (and any other
governmental impositions related to the Property), and causes of action that now
or hereafter relate to, are derived from or are used in connection with the
Property, or the use, operation, management, improvement, alteration, repair,
maintenance, occupancy or enjoyment thereof or the conduct of any business or
activities thereon;
(h) any and all proceeds and products of any of the foregoing and any
and all other security and collateral of any nature whatsoever, now or hereafter
given for the repayment of the Debt and the performance of Borrower's
obligations under the Loan Documents, including (without limitation) any other
escrows set forth in the Loan Documents; and
3
(i) all rights which Borrower now has or may hereafter acquire, to be
indemnified and/or held harmless from any liability, loss, damage, cost or
expense (including, without limitation, attorneys' and paralegals' fees and
disbursements) relating to the Property or any part thereof.
TO HAVE AND TO HOLD such portion of the above granted and described
Property constituting real property unto and to the use and benefit of Lender
and the successors and assigns of Lender, forever and such portion of the above
granted and described Property constituting personal property unto and for 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 full amount of the Debt at the
time and in the manner provided in the Note and this Mortgage and shall well and
truly abide by and comply with each and every covenant and condition set forth
herein and in the Note in a timely manner, these presents and the estate hereby
granted shall cease, terminate and be null and void, and the Property shall be
revested in Borrower according to the provisions of law;
AND Borrower represents and warrants to and covenants and agrees with
Lender as follows:
1. Payment of Debt and Incorporation of Covenants, Conditions and
----------------------------------------------------------------------
Agreements. Borrower shall pay the Debt at the time and in the manner provided
----------
in the Note and in this Mortgage. Borrower will duly and punctually perform all
of the covenants, conditions and agreements contained in the Note, this Mortgage
and the other Loan Documents all of which covenants, conditions and agreements
are hereby made a part of this Mortgage to the same extent and with the same
force as if fully set forth herein.
2. Warranty of Title. The Borrower warrants that the Borrower has good,
-------------------
marketable and insurable title to the Property, subject to the Permitted
Encumbrances (defined below), and has the right to give, grant, bargain, sell,
alien, enfeoff, convey, confirm, pledge and assign the same. The Borrower
warrants that the Borrower possesses an unencumbered fee estate in the Premises
and the Improvements, subject to the Permitted Encumbrances. Borrower warrants
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 Mortgage ("Permitted Encumbrances"). Borrower
------------------------
represents and warrants that no tenant, subtenant or other person has any
outstanding exercisable rights with respect to the purchase or sale of any
portion of the Property, including, without limitation, any right of first offer
or refusal or purchase option. Borrower represents and warrants that none of the
Permitted Encumbrances will materially and adversely affect (i) Borrower's
ability to pay in full the Debt, (ii) the use of the Property for the use
currently being made thereof, (iii) the operation of the Property, or (iv) the
value of the Property. Borrower shall forever warrant, defend and preserve such
title and the validity and priority of the lien of this Mortgage and shall
forever warrant and defend the same to Lender against the claims of all persons
whomsoever.
4
3. Insurance. (a) Borrower, at its sole cost and expense, will keep the
---------
Property insured during the entire term of this Mortgage for the mutual benefit
of Borrower and Lender against loss or damage by fire, lightning, wind and such
other perils as are included in a standard "all-risk" or "special causes of
loss" form and against loss or damage by all other risks and hazards covered by
a standard extended coverage insurance policy including, without limitation,
riot and civil commotion, vandalism, malicious mischief, burglary and theft.
Such insurance shall be in an amount equal to the greatest of (i) the then full
replacement cost of the Improvements and Equipment, without deduction for
physical depreciation, (ii) the outstanding principal balance of the Loan (as
such term is defined in the Note), and (iii) such amount that the insurer would
not deem Borrower a co-insurer under said policies. The policies of insurance
carried in accordance with this section shall be paid annually in advance and
shall contain a "Replacement Cost Endorsement" with a waiver of depreciation and
an "Agreed Amount Endorsement". The policies shall have a deductible no greater
than $25,000.00 unless agreed to by Lender. The policies of insurance required
to be obtained and maintained pursuant to this Mortgage are collectively
referred to herein as the "Policies," and each individual insurance policy is
--------
referred to herein as a "Policy."
------
(b) Borrower, at its sole cost and expense, for the mutual benefit of
Borrower and Lender, shall also obtain and maintain during the entire term of
this Mortgage the following Policies:
(i) Flood insurance if any part of the Improvements (excluding any
portion of the parking lot) are located in an area identified by the
Federal Emergency Management Agency as an area having special flood hazards
and in which flood insurance has been made available under the National
Flood Insurance Act of 1968, the Flood Disaster Protection Act of 1973 or
the National Flood Insurance Reform Act of 1994 (and any amendment or
successor act thereto) in an amount at least equal to the amount of the
lesser of (A) the full replacement cost of the Improvements and the
Equipment within the parts of the Property so affected, (B) the outstanding
principal amount of the Note or (C) the maximum limit of coverage available
with respect to the Improvements and Equipment under said Act. Borrower
hereby agrees to pay Lender such fees as may be permitted under applicable
law for the costs incurred by Lender in determining, from time to time,
whether the Property is then located within such area.
(ii) Worker's Compensation Insurance with respect to any employees of
Borrower, as required by any governmental authority or legal requirement.
(iii) Such other insurance as may from time to time be reasonably
required by Lender in order to protect its interests.
(c) All Policies (i) shall be issued by companies approved by Lender
and licensed to do business in the state where the Property is located, with a
claims paying ability rating of "AA" or better by Standard & Poor's Ratings
Services and a rating of "A:IX" or better in the current Best's Insurance
Reports; (ii) shall be maintained throughout the term of this Mortgage without
cost to Lender; (iii) shall contain a Non-Contributory Standard Beneficiary
Clause and a Lender's Loss Payable Endorsement, or their equivalents, naming
Lender as the person to which all payments made by such insurance company shall
be paid; (iv) shall contain a waiver of subrogation against Lender; (v) shall be
5
assigned and the originals delivered to Lender (including certified copies of
the Policies in effect on the date hereof within thirty (30) days after the
closing of the Loan); (vi) shall contain such provisions as Lender reasonably
deems necessary or desirable to protect its interest including, without
limitation, endorsements providing that neither Borrower, Lender nor any other
party shall be a co-insurer under said Policies and that Lender shall receive at
least thirty (30) days prior written notice of any modification or cancellation;
(vii) shall be for a term of not less than one year, and (viii) shall be
satisfactory in form and substance to Lender and shall be approved by Lender as
to amounts, form, risk coverage, deductibles, loss payees and insureds. Upon
demand therefor, Borrower shall reimburse Lender for all of Lender's (or its
servicer's) reasonable costs and expenses incurred in obtaining any or all of
the Policies or otherwise causing the compliance with the terms and provisions
of this Section 3, including (without limitation) obtaining updated flood hazard
---------
certificates for any required flood hazard insurance and replacement of any
so-called "forced placed" insurance coverages. Borrower shall pay the premiums
for such Policies (the "Insurance Premiums") as the same become due and payable
------------------
and shall furnish to Lender evidence of the renewal of each of the Policies with
receipts for the payment of the Insurance Premiums or other evidence of such
payment reasonably satisfactory to Lender (provided, however, that Borrower is
not required to furnish such evidence of payment to Lender in the event that
such Insurance Premiums have been paid by Lender pursuant to Section 5 hereof).
---------
If Borrower does not furnish such evidence and receipts at least thirty (30)
days prior to the expiration of any expiring Policy, then Lender may procure,
but shall not be obligated to procure, such insurance and pay the Insurance
Premiums therefor, and Borrower agrees to reimburse Lender for the cost of such
Insurance Premiums promptly on demand. Within thirty (30) days after request by
Lender, Borrower shall obtain such increases in the amounts of coverage required
hereunder as may be reasonably requested by Lender, taking into consideration
changes in the value of money over time, changes in liability laws, changes in
prudent customs and practices, and the like. Borrower shall give Lender prompt
written notice if Borrower receives from any insurer any written notification or
threat of any actions or proceedings regarding the non-compliance or
non-conformity of the Property with any insurance requirements. For purposes
hereof, references to "Lender" shall also be deemed to include, without
limitation, Lender's successors, assigns or other designees.
(d) In the event of the entry of a judgment of foreclosure, sale of the
Property by non-judicial foreclosure sale, or delivery of a deed in lieu of
foreclosure, Lender hereby is authorized (without the consent of Borrower) to
assign any and all Policies to the purchaser or transferee thereunder, or to
take such other steps as Lender may deem advisable to cause the interest of such
transferee or purchaser to be protected by any of the Policies without credit or
allowance to Borrower for prepaid premiums thereon.
(e) If the Property shall be damaged or destroyed, in whole or in part,
by fire or other casualty (an "Insured Casualty"), Borrower shall give prompt
-----------------
notice thereof to Lender and, notwithstanding whether the insurance proceeds are
sufficient, Borrower shall promptly repair the Property with the insurance
proceeds made available to it by Lender or the insurer so that the restored
Property shall be at least of equal value to the outstanding Debt and of
substantially the same character as prior to such damage, all to be effected in
accordance with applicable law and plans and specifications approved in advance
by Lender. The expenses incurred by Lender in the adjustment and collection of
insurance proceeds shall become part of the Debt and be secured hereby and shall
be reimbursed by Borrower to Lender upon demand.
6
(f) In case of loss or damages covered by any of the Policies, the
following provisions shall apply:
(i) In the event of an Insured Casualty that does not exceed $100,000,
Borrower may settle and adjust any claim without the consent of Lender and
agree with the insurance company or companies on the amount to be paid upon
the loss; provided that such adjustment is carried out in a competent and
timely manner. In such case, Borrower is hereby authorized to collect and
receipt for any such insurance proceeds.
(ii) In the event an Insured Casualty shall exceed $100,000, then and
in that event, Lender may settle and adjust any claim without the consent
of Borrower and agree with the insurance company or companies on the amount
to be paid on the loss and the proceeds of any such policy shall be due and
payable solely to Lender and held in escrow by Lender in accordance with
the terms of this Mortgage.
(iii) In the event of any Insured Casualty, if (A) the loss is in an
aggregate amount less than twenty percent (20%) of the original principal
balance of the Note, and (B), in the reasonable judgment of Lender, the
Property can be restored, within twelve (12) months after insurance
proceeds are made available, to an economic unit not less valuable
(including an assessment of the impact of the termination of any Leases due
to such Insured Casualty) and not less useful than the same was prior to
the Insured Casualty, and after such restoration will adequately secure the
outstanding balance of the Debt, and such restoration can be completed on
or before six (6) months prior to the Maturity Date of the Loan, and (C) no
Event of Default (hereinafter defined) shall have occurred and be then
continuing, then the proceeds of insurance shall be applied to pay Borrower
for the cost of restoring, repairing, replacing or rebuilding the Property
or part thereof subject to Insured Casualty, as provided for below; and
Borrower hereby covenants and agrees forthwith to commence and diligently
to prosecute such restoring, repairing, replacing or rebuilding; provided,
however, in any event Borrower shall pay all costs (and if required by
Lender, Borrower shall deposit the total thereof with Lender in advance) of
such restoring, repairing, replacing or rebuilding in excess of the net
proceeds of insurance made available pursuant to the terms hereof.
(iv) Except as provided above, the proceeds of insurance collected
upon any Insured Casualty shall, at the option of Lender in its sole
discretion, be applied to the payment of the Debt or applied to reimburse
Borrower for the cost of restoring, repairing, replacing or rebuilding the
Property or part thereof subject to the Insured Casualty, in the manner set
forth below. Any such application to the Debt shall not be considered a
voluntary prepayment requiring payment of the prepayment consideration
provided in the Note, and shall not reduce or postpone any payments
otherwise required pursuant to the Note, other than the final payment on
the Note.
(v) In the event Borrower is entitled to reimbursement out of
insurance proceeds held by Lender, such proceeds shall be disbursed from
7
time to time upon Lender being furnished with (A) evidence reasonably
satisfactory to it (which evidence may include inspection[s] of the work
performed) that the restoration, repair, replacement and rebuilding covered
by the disbursement has been completed in accordance with plans and
specifications approved by Lender, (B) evidence reasonably satisfactory to
it of the estimated cost of completion of the restoration, repair,
replacement and rebuilding, (C) funds, or, at Lender's option, assurances
reasonably satisfactory to Lender that such funds are available, sufficient
in addition to the proceeds of insurance to complete the proposed
restoration, repair, replacement and rebuilding, and (D) such architect's
certificates, waivers of lien, contractor's sworn statements, title
insurance endorsements, bonds, plats of survey and such other evidences of
cost, payment and performance as Lender may reasonably require and approve;
and Lender may, in any event, require that all plans and specifications for
such restoration, repair, replacement and rebuilding be submitted to and
approved by Lender prior to commencement of work. With respect to
disbursements to be made by Lender: (A) no payment made prior to the final
completion of the restoration, repair, replacement and rebuilding shall
exceed ninety percent (90%) of the value of the work performed from time to
time; (B) funds other than proceeds of insurance shall be disbursed prior
to disbursement of such proceeds; and (C) at all times, the undisbursed
balance of such proceeds remaining in the hands of Lender, together with
funds deposited for that purpose or irrevocably committed to the
satisfaction of Lender by or on behalf of Borrower for that purpose, shall
be at least sufficient in the reasonable judgment of Lender to pay for the
cost of completion of the restoration, repair, replacement or rebuilding,
free and clear of all liens or claims for lien and the costs described in
subsection 3(vi) below. Any surplus which may remain out of insurance
proceeds held by Lender after payment of such costs of restoration, repair,
replacement or rebuilding may at Lender's discretion be applied to the
reduction or discharge of the Debt whether or not then due and payable
(such application to be without any prepayment consideration, except that
if an Event of Default, or an event with notice and/or the passage of time,
or both, would constitute an Event of Default, has occurred, then such
application shall be subject to the prepayment consideration computed in
accordance with the Note), with the balance, if any, to be disbursed to
Borrower. In no event shall Lender assume any duty or obligation for the
adequacy, form or content of any such plans and specifications, nor for the
performance, quality or workmanship of any restoration, repair, replacement
and rebuilding.
(vi) Notwithstanding anything to the contrary contained herein, the
proceeds of insurance reimbursed to Borrower in accordance with the terms
and provisions of this Mortgage shall be reduced by the reasonable costs
(if any) incurred by Lender in the adjustment and collection thereof and by
the reasonable costs incurred by Lender of paying out such proceeds
(including, without limitation, reasonable attorneys' fees and costs paid
to third parties for inspecting the restoration, repair, replacement and
rebuilding and reviewing the plans and specifications therefor).
4. Payment of Taxes and Other Charges. Subject to the provisions of
--------------------------------------
Section 5 below, Borrower shall pay all taxes, assessments, water rates and
----------
sewer rents, now or hereafter levied or assessed or imposed against the Property
or any part thereof (the "Taxes") and all ground rents, maintenance charges,
-----
other governmental impositions, and other charges, now or hereafter levied or
8
assessed or imposed against the Property or any part thereof (the "Other
-----
Charges") as the same become due and payable. Borrower will deliver to Lender,
promptly upon Lender's request, evidence satisfactory to Lender that the Taxes
and Other Charges have been 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, and
shall promptly pay for all utility services provided to the Property. Borrower
shall furnish to Lender or its designee receipts for the payment of the Taxes,
Other Charges and said utility services prior to the date the same shall become
delinquent (provided, however, that Borrower is not required to furnish such
receipts for payment of Taxes in the event that such Taxes have been paid by
Lender pursuant to Section 5 hereof).
----------
5. Tax and Insurance Escrow Fund. In the event Borrower fails to make timely
-----------------------------
payment of Taxes or Insurance Lender may require that Borrower make an initial
deposit to the Tax and Insurance Escrow Fund, as hereinafter defined, in an
amount which, when added to the monthly amounts to be deposited as specified
below, will be sufficient in the reasonable estimation of Lender to satisfy the
next due Taxes and Insurance Premiums, plus an additional amount equal to two
(2) monthly installments for each. Beginning on the date the first constant
monthly payment is due under the Note, and on the eleventh day of each calendar
month thereafter, Borrower shall, at the option of Lender or its designee, pay
to Lender (a) one-twelfth of an amount which would be sufficient to pay the
Taxes payable, or estimated by Lender to be payable, during the next ensuing
twelve (12) months, and (b) one-twelfth of an amount which would be sufficient
to pay the Insurance Premiums due for the renewal of the coverage afforded by
the Policies upon the expiration thereof (said amounts in (a) and (b) above
hereinafter called the "Tax and Insurance Escrow Fund"). Lender may, in its sole
-----------------------------
discretion, retain a third party tax consultant to obtain tax certificates or
other evidence or estimates of tax due or to become due or to verify the payment
of taxes and Borrower will promptly reimburse Lender for the reasonable cost of
retaining any such third parties or obtaining such certificates. Any unpaid
reimbursements for the aforesaid shall be added to the Debt. The Tax and
Insurance 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. Borrower hereby pledges to Lender any and all monies
now or hereafter deposited in the Tax and Insurance Escrow Fund as additional
security for the payment of the Debt. Lender will apply the Tax and Insurance
Escrow Fund to payments of Taxes and Insurance Premiums required to be made by
Borrower pursuant to Sections 3 and 4 hereof. In making any payment relating to
---------- -
the Tax and Insurance Escrow Fund, Lender may do so according to any ▇▇▇▇,
statement or estimate procured from the appropriate public office (with respect
to Taxes) or insurer or agent (with respect to Insurance Premiums), without
inquiry into the accuracy of such ▇▇▇▇, statement or estimate or into the
validity of any tax, assessment, sale, forfeiture, tax lien or title or claim
thereof. If the amount of the Tax and Insurance Escrow Fund shall exceed the
amounts due for Taxes and Insurance Premiums pursuant to Sections 3 and 4
---------- -
hereof, Lender shall credit such excess against future payments to be made to
the Tax and Insurance 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 at any time Lender determines that the Tax and Insurance Escrow Fund is not
or will not be sufficient to pay the items set forth in (a) and (b) above,
Lender shall notify Borrower of such determination and Borrower shall increase
its monthly payments to Lender by the amount that Lender estimates is sufficient
to make up the deficiency at least thirty (30) days prior to delinquency of the
Taxes and/or expiration of the Policies, as the case may be. Upon the occurrence
9
of an Event of Default, Lender may apply any sums then present in the Escrow
Fund to the payment of the Debt in any order in its sole discretion. Until
expended or applied as above provided, any amounts in the Tax and Insurance
Escrow Fund shall constitute additional security for the Debt. Unless otherwise
required by applicable law, the Tax and Insurance Escrow Fund shall not
constitute a trust fund and may be commingled with other monies held by Lender.
Unless otherwise required by applicable law, no earnings or interest on the Tax
and Insurance Escrow Fund shall be payable to Borrower even if Lender or its
servicer is paid a fee and/or receives interest or other income in connection
with the deposit or placement of such fund (in which event such income shall be
reported under Lender's or its servicer's tax identification number, as
applicable). Upon payment of the Debt and performance by Borrower of all its
obligations under this Mortgage and the other Loan Documents, any amounts
remaining in the Tax and Insurance Escrow Fund shall be refunded to Borrower.
6. Replacement Reserve Fund. [intentionally omitted]
--------------------------
7. Condemnation. (a) Borrower shall promptly give Lender written 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. Lender is hereby irrevocably appointed as
Borrower's attorney-in-fact, coupled with an interest, with exclusive power to
collect, receive and retain any award or payment for said condemnation or
eminent domain and while any Event of Default exists to make any compromise or
settlement in connection with such proceeding, subject to the provisions of this
Mortgage. Borrower shall make no compromise or settlement in connection with
such proceeding without Lender's prior written consent, not to be unreasonably
withheld. 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, in this Mortgage and the other Loan Documents and the Debt
shall not be reduced until any award or payment therefor shall have been
actually received after expenses of collection and applied by Lender to the
discharge of the Debt; provided, however, the occurrence of any taking by any
public or quasi-public authority through eminent domain or otherwise shall not
constitute an Event of Default. 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 and in the Note.
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.
Lender may apply any such award or payment to the reduction or discharge of the
Debt whether or not then due and payable (such application to be without any
prepayment consideration, except that if an Event of Default, or an event with
notice and/or the passage of time, or both, would constitute an Event of
Default, has occurred, then such application shall be subject to the prepayment
consideration computed in accordance with the Note). If the Property is sold,
through foreclosure or otherwise, prior to the receipt by Lender of such award
or payment, Lender shall have the right, whether or not a deficiency judgment on
the Note shall have been sought, recovered or denied, to receive said award or
payment, or a portion thereof sufficient to pay the Debt.
(b) Notwithstanding the provisions of subsection 7(a) above, in the
event of a condemnation of less than all of the Property where: (i) no Event of
Default shall have occurred and be continuing; (ii) the condemnation will not,
10
in Lender's sole discretion, result in a material adverse effect to the use or
operation of the Property, Borrower's ability to make payments hereunder, or the
operating income from the Property; and (iii) the amount of any award or payment
that is uncontested shall have been paid to Lender, then Lender and Borrower
shall jointly make any such compromise or settlement hereunder, or otherwise
adjudicate such claim, and such award or payment (less amounts payable to Lender
for its costs and expenses incurred in connection therewith) shall be paid by
Lender to Borrower in the same manner as provided by subsection 3(f)(v) above to
restore the Property to an architecturally and functionally compatible
condition, and the excess available upon completion of such restoration may at
Lender's discretion be applied to the reduction or discharge of the Debt whether
or not then due and payable (such application to be without any prepayment
consideration, except that if an Event of Default, or an event with notice
and/or the passage of time, or both, would constitute an Event of Default, has
occurred, then such application shall be subject to the prepayment consideration
computed in accordance with the Note), with the balance, if any, to be disbursed
to Borrower.
8. Representations and Covenants Concerning Loan. Borrower represents,
----------------------------------------------
warrants and covenants as follows:
(a) Borrower shall comply with all of the terms and conditions of the Loan
Documents and the Note.
(b) Borrower will timely comply with all Financial Reporting requirements
of the Loan Documents.
(c) Neither Borrower, nor any of the Guarantors has been a debtor, and no
property of any of them (including the Property) is property of the estate, in
any voluntary or involuntary case under the Bankruptcy Code or under any
applicable bankruptcy, insolvency or other similar law now or hereafter in
effect. No such party and no property of any of them is or has been under the
possession or control of a receiver, trustee or other custodian. Neither
Borrower or any of the Guarantors has made or will make any assignment for the
benefit of creditors. No such assignment or bankruptcy or similar case or
proceeding is now contemplated.
(f) The representations and warranties contained in the Closing Certificate
executed by Borrower in connection with the Note (which certificate constitutes
one of the Loan Documents) are true and correct and Borrower shall observe the
covenants contained therein.
9. General Covenants. Borrower represents, warrants and covenants as
-------------------
follows with respect to such Borrower:
(a) Borrower owns and uses the Property in its operations.
(b) Borrower has not engaged and shall not engage in any business or
activity, other than the current business of Borrower and such other businesses
and activities reasonably related thereto, without the written consent of
Lender, and Borrower has conducted and operated and will conduct and operate its
business as presently conducted and operated on the Property.
11
(c) Borrower has not made and shall not make any loans or advances to any
third party, nor to Guarantors, any Affiliate or any other person, except in the
ordinary course of business, without notice and prior written consent of Lender.
(d) Borrower is and will remain solvent and Borrower will pay its debts
from its assets as the same shall become due.
(e) Borrower has done or caused to be done and will do all things
necessary, to preserve its existence, and Borrower will not, nor will Borrower
permit any of the Guarantors to amend, modify or otherwise change the articles
of incorporation and bylaws or other organizational documents of Borrower or any
of the Guarantors in a manner which would adversely affect Borrower's existence
and operations, without the prior written consent of Lender.
(f) Borrower has maintained and shall maintain financial statements,
accounting records, books and records, bank accounts and other entity documents
separate from those of its Affiliates and any constituent party of Borrower or
any other person or entity, and Borrower shall maintain its books, records,
resolutions and agreements as official records.
(g) Borrower has been and will be, and at all times will hold itself out to
the public as, a legal entity separate and distinct from any other entity
(including any Affiliate, any constituent party of Borrower or any of the
Guarantors), shall correct any known misunderstanding regarding its identity or
status as a separate entity, has conducted and shall conduct business in its own
name, has held and shall hold its assets in its own name, has maintained and
shall maintain and utilize separate stationery, invoices and checks, has
allocated and shall allocate fairly and reasonably any overhead for shared
office space, and has not identified and shall not identify itself as a division
or part of any Affiliate or other person, or any Affiliate or other person as a
division or part of Borrower.
(h) Borrower has preserved and kept and shall preserve and keep in full
force and effect its existence, good standing and qualification to do business
in the state in which the Property is located and Borrower has observed and will
observe all corporate formalities, as applicable.
(i) Borrower has maintained and shall maintain adequate capital and a
sufficient number of employees for the normal obligations reasonably foreseeable
in a business of its size and character and in light of its contemplated
business operations. Borrower will pay the salaries of its own employees.
(j) Borrower nor any constituent party of Borrower has sought or shall seek
or consent to the dissolution or winding up, in whole or in part, of Borrower,
nor will Borrower merge with or be consolidated into any other entity or acquire
by purchase or otherwise all or substantially all of the business assets of, or
any stock of beneficial ownership of, any entity or participate in an UPREIT,
DOWNREIT or similar transaction with a real estate investment trust or other
entity.
(k) Borrower has not and shall not commingle the funds and other assets of
Borrower with those of any Affiliate, any of the Guarantors, any constituent
party of Borrower or any other person, and Borrower has paid and will pay its
own liabilities out of its own funds and assets, provided that nothing in the
foregoing shall be construed to preclude inter-entity transfers between Borrower
and the Guarantors, provide that such inter-entity transfers are properly
documented and ascertainable by Lender's auditors.
12
(l) Borrower has maintained and shall maintain its assets in such a manner
that it will not be costly or difficult to segregate, ascertain or identify its
individual assets from those of any constituent party of Borrower, Affiliate,
Guarantors or any other person.
(m) Borrower shall obtain and maintain in full force and effect, and abide
by and satisfy the material terms and conditions of, all material permits,
licenses, registrations and other authorizations with or granted by any
governmental authorities that may be required from time to time with respect to
the performance of its obligations under this Mortgage.
(o) Borrower does not own and shall not own any subsidiary, or make any
investment in any person or entity.
(p) Borrower has not and shall not without the unanimous consent of all its
directors file or consent to the filing of any petition, either voluntary or
involuntary, to take advantage of any applicable insolvency, bankruptcy,
liquidation or reorganization statute, or make an assignment for the benefit of
creditors.
10. Maintenance of the Property. Borrower shall cause the Property to
-----------------------------
be operated and maintained in a good and safe condition and repair and in
keeping with the condition and repair of properties of a similar use, value,
age, nature and construction. Borrower shall not use, maintain or operate the
Property in any manner which constitutes a public or private nuisance or which
makes void, voidable, or cancelable, or increases the premium of, any insurance
then in force with respect thereto. The Improvements and the Equipment shall not
be removed, demolished or materially altered (except for normal replacement of
the Equipment and tenant improvements performed in accordance with the terms of
the Loan Documents) without the consent of Lender. Borrower shall promptly
comply with all laws, orders and ordinances affecting the Property, or the use
thereof. Borrower shall promptly repair, replace or rebuild any part of the
Property which may be destroyed by any casualty, or become damaged, worn or
dilapidated or which may be affected by any proceeding of the character referred
to in Section 7 hereof and shall complete and pay for any structure at any time
---------
in the process of construction or repair on the Premises.
11. (a) Use of Property. 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, nor shall Borrower initiate, join in,
acquiesce in, or consent to any zoning change or zoning matter affecting the
Property. 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 such nonconforming use to be discontinued or abandoned without the
express written consent of Lender. Borrower shall not permit or suffer to occur
any waste on or to the Property or to any portion thereof and shall not take any
steps whatsoever to convert the Property, or any portion thereof, to a
condominium or cooperative form of management. Borrower will not install or
permit to be installed on the Premises any underground storage tank or
above-ground storage tank without the written consent of Lender.
13
(b) Environmental Hazards. Borrower hereby covenants and agrees that it
---------------------
shall not: (i) cause or permit the presence, use, generation, manufacture,
production, processing, installation, release, discharge, storage (including
above and underground storage tanks for petroleum or petroleum products, but
excluding small containers of gasoline used for maintenance equipment or similar
purposes), treatment, handling, or disposal of any Hazardous Substances (as
defined in this subsection 11(b), hereinbelow) on, under, in or about the
Property, or in any way affecting the Property or the value of the Property, or
which may form the basis for any present or future claim, demand or liability
relating to contamination, release, exposure, cleanup or other remediation of
the Property (excluding the safe and lawful use and storage of quantities of
Hazardous Substances customarily used in the operation and maintenance of
comparable properties); (ii) cause or permit the transportation to, from or
across the Property of any Hazardous Substances or (iii) cause or exacerbate any
occurrence or condition on the Property that is or may be in violation of any
Environmental Law (as defined in this subsection 11(b), hereinbelow). Borrower
shall take all appropriate steps to ensure compliance by all tenants and
subtenants on the Property with Borrower's covenants and agreements in this
subsection 11(b). The matters described in subsection 11(b), clauses (i), (ii)
and (iii) above, are referred to collectively below as "Prohibited Activities or
------------------------
Conditions."
----------
Except with respect to any matters which have been disclosed in writing by
Borrower to Lender prior to the date of this Mortgage, or matters which have
been disclosed in an environmental hazard assessment report of the Property
received by Lender prior to the date of this Mortgage, Borrower represents and
warrants that it has not at any time caused or permitted any Prohibited
Activities or Conditions and to the best of its knowledge after due inquiry, no
Prohibited Activities or Conditions exist or have existed on or under the
Property. Borrower shall take all appropriate steps (including but not limited
to appropriate lease provisions) to prevent its employees, agents, and
contractors, and all tenants and other occupants on the Property, from causing,
permitting or exacerbating any Prohibited Activities or Conditions. Borrower
shall not lease or allow the sublease of all or any portion of the Property for
use to any tenant or subtenant that, in the ordinary course of its business,
would cause, permit or exacerbate any Prohibited Activities or Conditions, and
all leases and subleases shall provide that tenants and subtenants shall not
cause, permit or exacerbate any Prohibited Activities or Conditions.
Borrower represents that it has not received and has no knowledge of the
issuance of, any claim, citation or notice of any pending or threatened suits,
proceeding, orders, notices of violation, or governmental inquiries, requests
for information, or opinions involving the Property that allege the violation of
any Environmental Law (collectively "Governmental Actions").
Borrower shall promptly notify Lender in writing of: (i) the occurrence of
any Prohibited Activity or Condition on the Premises or Improvements or both;
(ii) Borrower's actual knowledge of the presence on or under any adjoining
property of any Hazardous Substances which can reasonably be expected to have a
material adverse impact on the Property or the value of the Property, discovery
of any occurrence or condition on the Property or any adjoining real property
that could cause any restrictions on the ownership, occupancy, transferability
or use of the Real Property under any Environmental Law, and Borrower shall
cooperate with any governmental inquiry, and shall comply with any governmental
14
or judicial order which arises from any alleged Prohibited Activities or
Conditions; (iii) any Governmental Action; and (iv) any claim made or threatened
by any third party against Borrower, Lender, or the Property relating to loss or
injury resulting from any Hazardous Substances. Any such notice by Borrower
shall not relieve Borrower of, or result in a waiver of any obligation of
Borrower under this subsection 11(b).
Borrower shall promptly pay the costs of any environmental audits, studies
or investigations (including but not limited to advice of legal counsel) and the
removal of any Hazardous Substances from the Property required by Lender as a
condition of its consent to any sale or transfer under Section 12 hereof of all
----------
or any part of the Premises or Improvements or any transfer occurring upon a
foreclosure or a deed in lieu of foreclosure or any interest therein, or
required by Lender following a reasonable determination by Lender and its
employees, agents and contractors to enter onto the Property for the purpose of
conducting such environmental audits, studies and investigations. Any such costs
and expenses incurred by Lender (including but not limited to reasonable fees
and expenses of attorneys and consultants, whether incurred in connection with
any judicial or administrative process or otherwise) which Borrower fails to
promptly pay shall become immediately due and payable and shall become
additional indebtedness secured by this Mortgage.
Borrower shall hold harmless, defend and indemnify Lender and its officers,
directors, trustees, employees, and agents from and against all losses,
proceedings (including but not limited to Government Actions), claims, damages,
penalties, liabilities, fines, costs and expenses (including without limitation
fees and expenses of attorneys and expert witnesses, sums paid in settlement of
claims and any fees and expenses incurred in collecting any sums due hereunder,
investigatory fees, and cleanup and remediation expenses, whether or not
incurred within the context of the judicial process), arising directly or
indirectly from: (i) any breach of any representation, warranty, or obligation
of Borrower contained in this subsection 11(b); (ii) the presence or alleged
presence of Hazardous Substances on or under the Property; (iii) any lawsuit
brought or threatened, settlement reached, or Governmental Actions relating to
Hazardous Substances and (iv) any personal injury (including wrongful death) or
property damage (real or personal) arising out of or related to Hazardous
Substances. Borrower's liability to Lender under this subsection 11(b) shall
arise upon the earlier to occur of (i) the discovery of, or threat or suspected
presence of any Hazardous Substances on, under or about the Real Property or
(ii) upon the institution of any action for which Borrower has agreed to
indemnify Lender, and not upon the realization of loss or damage. Lender agrees
that Borrower's liability created under this paragraph shall be limited to the
assets of Borrower. Notwithstanding the foregoing or any provision to the
contrary contained herein or in any of the other Loan Documents, the foregoing
indemnity in favor of Lender shall not extend to any matters caused by Lender's
gross negligence or willful misconduct.
The term "Hazardous Substances," for purposes of this subsection 11(b),
---------------------
includes petroleum and petroleum products (excluding a small quantity of
gasoline used in maintenance equipment on the Property), flammable explosives,
radioactive materials (excluding radioactive materials in smoke detectors),
polychlorinated biphenyls, asbestos in any form that is or could become friable,
lead, radon, urea formaldehyde, hazardous waste, toxic or hazardous substances
or other related materials whether in the form of a chemical, element, compound
15
solution, mixture or otherwise including, but not limited to, those materials
defined as "hazardous substances," "extremely hazardous substances," "hazardous
chemicals, "hazardous materials, "toxic substances," "toxic chemicals," "air
pollutants," "toxic pollutants," "hazardous wastes," "extremely hazardous
waste," or "restricted hazardous waste" by any Environmental Law or regulated by
any Environmental Law in any manner whatsoever, or which may have a negative
impact on human health, the health of animals, or the environment.
Notwithstanding the foregoing or any provision to the contrary contained herein
or in any of the other Loan Documents, "Hazardous Substances" shall not include
ordinary cleaning solvents and common chemicals used by owners or tenants during
the ordinary cleaning and maintenance of such tenant's space in compliance with
all applicable Environmental Laws.
The term "Environmental Law," for the purposes of this subsection 11(b)
------------------
means any federal, state, or local law, ordinance or regulation or any court
judgment applicable to Borrower or to the Property relating to industrial
hygiene or to environmental or unsafe conditions including, but not limited to,
those relating to the generation, manufacture, storage, handling,
transportation, disposal, release, emission or discharge of Hazardous
Substances, those in connection with the construction, fuel supply, power
generation and transmission, waste disposal or any other operations or processes
relating to the Property, and those relating to the atmosphere, soil, surface
and ground water, wetlands, stream sediments and vegetation on, under, in or
about the Property. "Environmental Law" also shall include, but not be limited
-----------------
to: the Comprehensive Environmental Response, Compensation and Liability Act;
the Superfund Amendment and Reauthorization Act; the Emergency Planning and
Community Right-to-Know Act of 1986; the Hazardous Materials Transportation Act;
the Resource Conservation and Recovery Act; the Solid Waste Disposal Act; the
Clean Water Act; the Clean Air Act; the Toxic Substance Control Act; the Safe
Drinking Water Act, the Occupational Safety and Health Act, the Federal Water
Pollution Control Act; the Federal Insecticide, Fungicide and Rodenticide Act;
the Federal Food, Drug and Cosmetic Act; the Endangered Species Act; the
National Environmental Policy Act; the Rivers and Harbors Appropriation Act; the
Surface Mining Control and Reclamation Act of 1977; the Oil Pollution Act of
1990, and the rules, regulations and guidance adopted with respect to the
foregoing laws. The term "Environmental Law" also includes, but is not limited
-----------------
to, any present and future federal, state and local laws, including but not
limited to common law, statutes, ordinances, rules, or regulations which:
condition transfer of real property upon a negative declaration or other
approval of a governmental authority or other person or entity; impose
conditions or requirements in connection with permits or other authorization for
lawful activity; relating to nuisance or trespass or other causes of action
relating to the Property; and relating to wrongful death, personal injury, or
property or other damage in connection with any physical condition or use of the
Property.
The representations, warranties, covenants, agreements, indemnities and
undertakings of Borrower contained in this subsection 11(b) shall be in addition
to any and all other obligations and liabilities that Borrower may have to
Lender under applicable law. Lender may enforce the obligations of Borrower
contained in this subsection 11(b) without first resorting to or exhausting any
security or collateral or without first having recourse to the Note, this
Mortgage, or the other Loan Documents or security documents or any of the
Property, through foreclosure proceedings or otherwise.
16
Except as otherwise provided herein, the representations, warranties,
covenants, agreements, indemnities and undertakings of Borrower contained in
this subsection 11(b) shall continue and survive notwithstanding the
satisfaction, discharge, release, assignment, termination, subordination or
cancellation of this Mortgage or the payment in full of the principal of and
interest on the Note and all other sums payable under the other Loan Documents
or the foreclosure of this Mortgage or the tender or delivery of a deed in lieu
of foreclosure or the release of any portion of the Property from the lien of
this Mortgage, except with respect to any Prohibited Activities or Conditions or
violation of any of the Environmental Laws which first commences and occurs
after the satisfaction, discharge, release, assignment, termination or
cancellation of this Mortgage following the payment in full of the principal of
and interest on the Note and all other sums payable under this Mortgage and the
other Loan Documents or which first commences or occurs after the actual
dispossession from the entire Property of Borrower and all entities which
control, are controlled by, or are under common control with Borrower (each of
the foregoing persons or entities is hereinafter referred to as a "Responsible
-----------
Party") following foreclosure of this Mortgage or acquisition of the Property by
-----
a deed in lieu of foreclosure. Nothing in the foregoing sentence shall relieve
Borrower from any liability with respect to any Prohibited Activities or
Conditions or violation of Environmental Laws where such Prohibited Activities
or Conditions or violation of Environmental Laws commences or occurs, or is
present as a result of, any act or omission by any Responsible Party or by any
person or entity acting on behalf of a Responsible Party.
12. Transfer or Encumbrance of the Property. (a) Borrower acknowledges that
----------------------------------------
Lender has examined and relied on the creditworthiness, reputation and status of
Borrower in agreeing to make the loan secured hereby, and that Lender will
continue to rely on Borrower's ownership of the Property and as a means of
maintaining the value of the Property as security for repayment of the Debt.
Borrower acknowledges that Lender has a valid interest in maintaining the value
of the Property so as to ensure that, should Borrower default in the repayment
of the Debt, Lender can recover the Debt by a sale of the Property. Subject to
the provisions of subsection 12(b) through 12(d) below, inclusive, without the
prior written consent of Lender, except as otherwise provided herein or in any
of the Loan Documents, no Borrower, nor any other person, shall, directly or
indirectly, voluntarily or involuntarily, by operation of law or otherwise,
sell, transfer, convey, mortgage, pledge, or assign any interest in, or
encumber, alienate, ▇▇▇▇▇ ▇ ▇▇▇▇ in or against, or grant or enter into any
easement, covenant or other agreement granting rights in or restricting the use
or development of the Property or any part thereof.
As used in this Section 12, "transfer" shall include, without limitation,
---------- --------
(1) an installment sales agreement wherein Borrower agrees to sell the Property
or any part thereof for a price to be paid in installments; and (2) 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.
(b) The occurrence of any of the foregoing transfers or other occurrences
described in the foregoing subsection 12(a) shall, unless otherwise approved in
writing by Lender, constitute an Event of Default (as defined below) hereunder,
regardless of whether any such transfer or occurrence was caused instituted by
Borrower or any other person, whereupon Lender at its option, without being
required to demonstrate any actual impairment of its security or any increased
17
risk of default hereunder, declare the Debt immediately due and payable. This
provision shall apply to every sale, conveyance, alienation, mortgage,
encumbrance, pledge or transfer of the Property or other occurrence described in
subsection 12(a) above, regardless of whether voluntary or not, or whether or
not Lender has consented to any previous sale, conveyance, alienation, mortgage,
encumbrance, pledge or transfer of the Property or other occurrence described in
subsection 12(a) above.
(c) Borrower agrees to bear and shall pay or reimburse Lender on demand for
all reasonable expenses (including, without limitation, reasonable attorneys'
fees and disbursements, title search costs and title insurance endorsement
premiums) incurred by Lender in connection with the review, approval and
documentation of any sale, conveyance, alienation, mortgage, encumbrance,
pledge, transfer or other transaction or event described in subsection 12(a)
above related to such Borrower.
. (d) Lender's consent to one sale, conveyance, alienation, mortgage,
encumbrance, pledge or transfer of the Property or any part thereof or any other
transaction or event described in subsection 12(a) above shall not be deemed to
be a waiver of Lender's right to require such consent to any future occurrence
of same. Any attempted or purported sale, conveyance, alienation, mortgage,
encumbrance, pledge or transfer of the Property or of any direct or indirect
interest in Borrower, and any other transfer described in subsection 12(a)
above, if made in contravention of this Section 12, shall be null and void and
----------
of no force and effect.
13. Estoppel Certificates and No Default Affidavits. (a) Not more than
----------------------------------------------------
twice in any twelve (12) month period provided an Event of Default has not
occurred, after request by Lender, Borrower shall within ten (10) days furnish
Lender with a statement, duly acknowledged and certified, setting forth (i) the
amount of the original principal amount of the Note, (ii) the unpaid principal
amount of the Note, (iii) the rate of interest of the Note, (iv) the date
installments of interest and/or principal were last paid, (v) any known offsets
or defenses to the payment of the Debt, if any, and (vi) that the Note, this
Mortgage and the other Loan Documents are valid, legal and binding obligations
and have not been modified or if modified, giving particulars of such
modification.
(b) After request by Lender, Borrower shall within ten (10) days furnish
Lender with a certificate reaffirming all representations and warranties of
Borrower set forth herein and in the other Loan Documents as of the date
requested by Lender or, to the extent of any changes to any such representations
and warranties, so stating such changes.
(c) If the Property includes commercial property, Borrower shall deliver to
Lender upon request, tenant estoppel certificates from each commercial tenant at
the Property in form and substance reasonably satisfactory to Lender provided
that Borrower shall not be required to deliver such certificates more frequently
than one (1) time in any calendar year.
14. Taxes on Security; Documentary Stamps; Intangibles Tax. (a) Borrower
---------------------------------------------------------
shall pay all taxes, charges, filing, registration and recording fees, excises
and levies payable with respect to the Note or the liens created or secured by
the Loan Documents, other than income, franchise and doing business taxes
imposed on Lender. If there shall be enacted any law (a) deducting the Loan from
18
the value of the Property for the purpose of taxation, (b) affecting any lien on
the Property, or (c) changing existing laws of taxation of mortgages, deeds of
trust, security deeds, or debts secured by real property, or changing the manner
of collecting any such taxes, Borrower shall promptly pay to Lender, on demand,
all taxes, costs and charges for which Lender is or may be liable as a result
thereof; however, if such payment would be prohibited by law or would render the
Loan usurious, then instead of collecting such payment, Lender may declare all
amounts owing under the Loan Documents to be immediately due and payable. No
prepayment consideration shall be imposed on any such payment.
(b) If at any time the United States of America, any State thereof or any
subdivision of any such State shall require revenue or other stamps to be
affixed to the Note or this Mortgage, or impose any other tax or charge on the
same, Borrower will pay for the same, with interest and penalties thereon, if
any. Borrower hereby agrees that, in the event that it is determined that
additional documentary stamp tax or intangible tax is due hereon or any mortgage
or promissory note executed in connection herewith (including, without
limitation, the Note), Borrower shall indemnify and hold harmless Lender for all
such documentary stamp tax and/or intangible tax, including all penalties and
interest assessed or charged in connection therewith. Borrower shall pay same
within ten (10) days after demand of payment from Lender and the payment of such
sums shall be secured by this Mortgage and such sums shall bear interest at the
Default Interest Rate (as defined in the Note) until paid in full.
(c) Borrower shall hold harmless and indemnify Lender, its successors and
assigns, against any liability incurred by reason of the imposition of any tax
on the making and recording of this Mortgage.
15. No Credits on Account of the Debt. Borrower will not claim or demand
-------------------------------------
or be entitled to any credit or credits on account of the Debt for any part of
the Taxes or Other Charges assessed against the 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 Mortgage or the Debt. In the event such claim, credit or deduction shall be
required by law, Lender shall have the option, by written notice of not less
than ninety (90) days, to declare the Debt immediately due and payable.
16. Controlling Agreement. It is expressly stipulated and agreed to be the
----------------------
intent of Borrower and Lender at all times to comply with applicable state law
or applicable United States federal law (to the extent that it permits Lender to
contract for, charge, take, reserve, or receive a greater amount of interest
than under state law) and that this section shall control every other covenant
and agreement in this Mortgage and the other Loan Documents. If the applicable
law (state or federal) is ever judicially interpreted so as to render usurious
any amount called for under the Note or under any of the other Loan Documents,
or contracted for, charged, taken, reserved, or received with respect to the
Debt, or if Lender's exercise of the option to accelerate the maturity of the
Note, or if any prepayment by Borrower results in Borrower having paid any
interest in excess of that permitted by applicable law, then it is Borrower's
and Lender's express intent that all excess amounts theretofore collected by
Lender shall be credited on the principal balance of the Note and all other Debt
(or, if the Note and all other Debt have been or would thereby be paid in full,
refunded to Borrower), and the provisions of the Note and the other Loan
Documents immediately be deemed reformed and the amounts thereafter collectible
hereunder and thereunder reduced, without the necessity of the execution of any
19
new documents, so as to comply with the applicable law, but so as to permit the
recovery of the fullest amount otherwise called for hereunder or thereunder. All
sums paid or agreed to be paid to Lender for the use, forbearance, or detention
of the Debt shall, to the extent permitted by applicable law, be amortized,
prorated, allocated, and spread throughout the full stated term of the Debt
until payment in full so that the rate or amount of interest on account of the
Debt does not exceed the maximum rate permitted under applicable law from time
to time in effect and applicable to the Debt for so long as the Debt is
outstanding. Notwithstanding anything to the contrary contained herein or in any
of the other Loan Documents, it is not the intention of Lender to accelerate the
maturity of any interest that has not accrued at the time of such acceleration
or to collect unearned interest at the time of such acceleration.
17. Financial Statements. The financial statements heretofore furnished
---------------------
to Lender are, as of the dates specified therein, complete and correct and
fairly present the financial condition of Borrower and any other persons or
entities that are the subject of such financial statements, and are prepared in
accordance with generally accepted accounting principles in the United States of
America consistently applied (or such other accounting basis reasonably
acceptable to Lender). Borrower does not have any contingent liabilities,
liabilities for taxes, unusual forward or long-term commitments or unrealized or
anticipated losses from any unfavorable commitments that are known to Borrower
and reasonably likely to have a materially adverse effect on the Property or the
operation thereof for its current use, except as referred to or reflected in
said financial statements. Since the date of such financial statements, there
has been no materially adverse change in the financial condition, operation or
business of Borrower or any other persons or entities that are the subject of
such financial statements from that set forth in said financial statements.
18. Performance of Other Agreements. Borrower shall duly and punctually
----------------------------------
observe and perform each and every term, provision, condition, and covenant to
be observed or performed by Borrower pursuant to the terms of any agreement or
recorded instrument (including all instruments comprising the Permitted
Encumbrances) affecting or pertaining to the Property, and will not suffer or
permit any default or event of default (giving effect to any applicable notice
requirements and cure periods) to exist under any of the foregoing.
19. Further Acts, Etc. (a) Borrower will, at the cost of Borrower, and
--------------------
without expense to Lender, do, execute, acknowledge and deliver all and every
such further acts, deeds, conveyances, mortgages, assignments, notices of
assignment, Uniform Commercial Code financing statements or continuation
statements, transfers and assurances as Lender shall, from time to time,
reasonably require, for the better assuring, conveying, assigning, transferring,
and confirming unto Lender the property and rights hereby mortgaged, given,
granted, bargained, sold, alienated, conveyed, confirmed, pledged, assigned and
hypothecated or intended now or hereafter so to be, or which Borrower may be or
may hereafter become bound to convey or assign to Lender, or for carrying out
the intention or facilitating the performance of the terms of this Mortgage or
for filing, registering or recording this Mortgage. Borrower, on demand, will
execute and deliver and hereby authorizes Lender to execute in the name of
Borrower or without the signature of Borrower to the extent Lender may lawfully
do so, one or more financing statements, chattel mortgages or other instruments,
to evidence more effectively the security interest of Lender in the Property.
Upon foreclosure, the appointment of a receiver or any other relevant action,
20
Borrower will, at the cost of Borrower and without expense to Lender, cooperate
fully and completely to effect the assignment or transfer of any license,
permit, agreement or any other right necessary or useful to the operation of the
Property. Borrower grants to Lender an irrevocable power of attorney coupled
with an interest for the purpose of exercising and perfecting any and all rights
and remedies available to Lender at law and in equity, including, without
limitation, such rights and remedies available to Lender pursuant to this
section.
(b) Borrower acknowledges that Lender and its successors and assigns may
(i) sell this Mortgage, the Note and other Loan Documents to one or more
investors as a whole loan, (ii) participate the Loan secured by this Mortgage to
one or more investors, (iii) deposit this Mortgage, the Note and other Loan
Documents with a trust, which trust may sell certificates to investors
evidencing an ownership interest in the trust assets, or (iv) otherwise sell the
Loan or interest therein to investors (the transactions referred to in clauses
(i) through (iv) are hereinafter each referred to as a "Secondary Market
----------------
Transaction"). Borrower shall cooperate with Lender in effecting any such
-----------
Secondary Market Transaction.
20. Recording of Mortgage, Etc. Upon the execution and delivery of this
-----------------------------
Mortgage and thereafter, from time to time, Borrower will cause this Mortgage,
and any security instrument 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 the lien or security interest hereof upon, and the interest of Lender
in, the Property. Borrower will pay all filing, registration or recording fees,
and all expenses incident to the preparation, execution and acknowledgment of
this Mortgage, any mortgage supplemental hereto, any security instrument with
respect to the Property and any instrument of further assurance, and all
federal, state, county and municipal, taxes, duties, imposts, assessments and
charges arising out of or in connection with the execution and delivery of this
Mortgage, any mortgage supplemental hereto, any security instrument with respect
to the Property or any instrument of further assurance, except where prohibited
by law so to do.
21. Reporting Requirements. Borrower agrees to give prompt notice to Lender
-----------------------
of the insolvency or bankruptcy filing of Borrower or the insolvency or
bankruptcy filing of any of the Guarantors.
22. Events of Default. The term "Event of Default" as used herein shall mean
----------------- ----------------
the occurrence or happening, at any time and from time to time, of any one or
more of the following:
(a) if any portion of the Debt is not paid on the date when the same is
due;
(b) if the Policies are not kept in full force and effect, or if the
Policies (or the associated certificates) are not delivered to Lender upon
request;
(c) if Borrower fails to timely provide any financial or accounting report;
(d) if Borrower suffers or permits the transfer or encumbrance of any
portion of the Property in violation of Section 12 of this Mortgage, or any
----------
other violation of subsection 12(a), or any violation of Section 9 of this
---------
Mortgage;
21
(e) if any representation or warranty of Borrower, or of any of the
Guarantors, made herein or in any other Loan Document 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 Borrower or any of the Guarantors shall make an assignment for the
benefit of creditors or if Borrower shall generally not be paying its debts as
they become due;
(g) if a receiver, liquidator or trustee of Borrower or of any of the
Guarantors shall be appointed or if Borrower or any of the Guarantors shall be
adjudicated a bankrupt or insolvent, or if any petition for bankruptcy,
reorganization or arrangement pursuant to federal bankruptcy law, or any similar
federal or state law, shall be filed by or against, consented to, or acquiesced
in by, Borrower or any of the Guarantors or if any proceeding for the
dissolution or liquidation of Borrower or of any of the Guarantors shall be
instituted; however, if such appointment, adjudication, petition or proceeding
was involuntary and not consented to by Borrower or such Guarantors, upon the
same not being discharged, stayed or dismissed within sixty (60) days;
(h) if Borrower shall be in default under any other mortgage or security
agreement covering any part of the Property and otherwise permitted hereunder;
(i) subject to Borrower's right to contest as provided herein, if the
Property becomes subject to any mechanic's, materialman's, mortgage or other
lien except a lien for local real estate taxes and assessments not then due and
payable;
(j) if Borrower fails to properly cure within any applicable cure period
any violations of laws or ordinances which may be interpreted to materially and
adversely affect the Property;
(k) except as permitted in this Mortgage, the actual alteration,
improvement, demolition or removal of any of the Improvements without the prior
consent of Lender;
(l) damage to the Property in any manner which is not covered by insurance
solely as a result of Borrower's failure to maintain insurance required in
accordance with this Mortgage;
(m) if a default or breach of any covenant, term or provision of this
Mortgage, the Note or the other Loan Documents shall occur which is not
otherwise enumerated herein, in the Note or in the other Loan Documents as an
Event of Default;
(n) entry of a judgment in excess of $100,000 and the expiration of any
appeal rights or the dismissal or final adjudication of appeals against
Borrower, not satisfied by Borrower within ninety (90) days after such
expiration date;
(p) the Mortgage shall cease to constitute a first-priority lien on the
Property (other than in accordance with its terms);
22
(q) seizure or forfeiture of the Property, or any portion thereof, or
Borrower's interest therein, resulting from criminal wrongdoing or other
unlawful action of Borrower, its Affiliates, or any tenant in the Property under
any federal, state or local law; or
(r) if, without Lender's prior written consent, Borrower ceases to
continuously operate the Property or any material portion thereof as the same
use that is currently permitted under applicable zoning or other local laws for
any reason whatsoever (other than temporary cessation in connection with any
repair or renovation thereof undertaken with the consent of Lender).
23. Notice and Cure. Notwithstanding the foregoing, Lender agrees to
------------------
give to Borrower written notice as described below of (a) Borrower's failure to
pay any part of the Debt when due, other than a regularly scheduled monthly
payment of principal, interest revenues, escrows or other amounts, required
under the Note, this Mortgage, or any other Loan Document (a "Noticed Monetary
----------------
Default"), (b) a default referred to in subsection 22(p) above (a "First Lien
------- ----------
Default") and (c) a default referred to in subsections 22(c), (h), (j), (1),
-------
(m), (q) or (r) above (a "Noticed Nonmonetary Default"). Without limiting
----------------------------
Lender's rights to impose a late charge for Borrower's nonpayment as provided in
the Note, Borrower shall have a period of ten (10) days from its receipt of
notice in which to cure a Noticed Monetary Default, shall have a period of
twenty (20) days from its receipt of notice to cure a First Lien Default and
shall have a period of thirty (30) days from its receipt of notice in which to
cure a Noticed Nonmonetary Default, provided, however, that if such Noticed
Nonmonetary Default is reasonably susceptible of cure, but not within such
thirty (30) day period, then Borrower may be permitted up to an additional sixty
(60) days to cure such default provided that Borrower diligently and
continuously pursues such cure. Notwithstanding the foregoing, Lender may, but
shall not be required, to give notice of a Noticed Monetary Default or a
recurrence of the same Noticed Nonmonetary Default more frequently than two
times in any twelve-month period. A Noticed Monetary Default and/or First Lien
Default and/or Noticed Nonmonetary Default shall nevertheless be an Event of
Default for all purposes under the Loan Documents (including, without
limitation, Lender's right to collect Default Interest and any other
administrative charge set forth in the Note) except that the acceleration of the
Debt or other exercise of remedies shall not be prior to the expiration of the
applicable cure and/or grace periods provided in Section 22 or in this section.
----------
24. Remedies. Upon the occurrence of an Event of Default and subject to any
--------
applicable cure period, Lender may, at Lender's option, by Lender itself, or
otherwise, do any one or more of the following:
(a) Right to Perform Borrower's Covenants. If Borrower has failed to keep
or perform any covenant whatsoever contained in this Mortgage or the other Loan
Documents, Lender may, but shall not be obligated to any person to do so,
perform or attempt to perform said covenant; and any payment made or expense
incurred in the performance or attempted performance of any such covenant,
together with any sum expended by Lender that is chargeable to Borrower or
subject to reimbursement by Borrower under the Loan Documents, shall be and
become a part of the Debt, and Borrower promises, upon demand, to pay to Lender,
at the place where the Note is payable, all sums so incurred, paid or expended
by Lender, with interest from the date when paid, incurred or expended by Lender
at the Default Interest Rate.
23
(b) Right of Entry. Lender may, prior or subsequent to the institution of
any foreclosure proceedings, enter upon the Property, or any part thereof, and
take exclusive possession of the Property and of all books, records, and
accounts relating thereto and to exercise without interference from Borrower any
and all rights which Borrower has with respect to the management, possession,
operation, protection, or preservation of the Property, including without
limitation the right to rent the same for the account of Borrower and to deduct
from such Rents all costs, expenses, and liabilities of every character incurred
by Lender in collecting such Rents and in managing, operating, maintaining,
protecting, or preserving the Property and to apply the remainder of such Rents
on account of the Debt in such manner as Lender may elect. All such costs,
expenses, and liabilities incurred by Lender in collecting such Rents and in
managing, operating, maintaining, protecting, or preserving the Property, if not
paid out of Rents as hereinabove provided, shall constitute a demand obligation
owing by Borrower and shall bear interest from the date of expenditure until
paid at the Default Interest Rate, all of which shall constitute a portion of
the Debt. If necessary to obtain the possession provided for above, Lender may
invoke any and all legal remedies to dispossess Borrower, including specifically
one or more actions for forcible entry and detainer, trespass to try title and
restitution. In connection with any action taken by Lender pursuant to this
subsection, Lender shall not be liable for any loss sustained by Borrower
resulting from any failure to let the Property, or any part thereof, or from any
other act or omission of Lender in managing the Property unless such loss is
caused by the willful misconduct of Lender, nor shall Lender be obligated to
perform or discharge any obligation, duty, or liability under any Lease or under
or by reason hereof or the exercise of rights or remedies hereunder. Borrower
shall and does hereby agree to indemnify Lender and any affiliate, officer,
director, employee, attorney, or agent of Lender (the "Indemnified Parties")
for, and to hold the Indemnified Parties harmless from, any and all liability,
loss, or damage which may or might be incurred by any Indemnified Party under
any such Lease or under or by reason hereof or the exercise of rights or
remedies hereunder, and from any and all claims and demands whatsoever which may
be asserted against any Indemnified Party by reason of any alleged obligations
or undertakings on its part to perform or discharge any of the terms, covenants,
or agreements contained in any such Lease. Should any Indemnified Party incur
any such liability, the amount thereof, including without limitation costs,
expenses, and reasonable attorneys' fees, together with interest thereon from
the date of expenditure until paid at the Default Interest Rate, shall be
secured hereby, and Borrower shall reimburse such Indemnified Party therefor
immediately upon demand. Nothing in this subsection shall impose any duty,
obligation, or responsibility upon any Indemnified Party for the control, care,
management, leasing, or repair of the Property, nor for the carrying out of any
of the terms and conditions of any such Lease, nor shall it operate to make any
Indemnified Party responsible or liable for any waste committed on the Property
by the tenants or by any other parties, for any hazardous substances or
environmental conditions on or under the Property, for any dangerous or
defective condition of the Property or for any negligence in the management,
leasing, upkeep, repair, or control of the Property resulting in loss or injury
or death to any tenant, licensee, employee, or stranger. Borrower hereby assents
to, ratifies, and confirms any and all actions of Lender with respect to the
Property taken under this subsection.
(c) Right to Accelerate. Lender may, without notice, demand, presentment,
notice of nonpayment or nonperformance, protest, notice of protest, notice of
intent to accelerate, notice of acceleration, or any other notice or any other
action, all of which are hereby waived by Borrower and all other parties
obligated in any manner whatsoever on the Debt, declare the entire unpaid
24
balance of the Debt immediately due and payable, and upon such declaration, the
entire unpaid balance of the Debt shall be immediately due and payable.
(d) Foreclosure-Power of Sale. In the Event of a Default the Lender, its
agents or assigns, shall be authorized to take possession of the premises hereby
conveyed, and with or without first taking possession, after giving twenty-one
days' notice, by publishing once a week for three consecutive weeks, the time,
place and terms of sale, by publication in some newspaper published in the
County in which the Property is located in he State of Alabama, sell the same in
lots or parcels or en masse as the Lender, its agents or assigns deem best, in
front of the Court House door of said County, (or division thereof) where the
Property is located, at public outcry, to the highest bidder for cash, and apply
the proceeds of the sale: First, to the expense of advertising, selling and
conveying, including a reasonable attorney's fee; Second, to the payment of any
amounts that may have been expended, or that it may then be necessary to expend,
in paying insurance, taxes, or other encumbrances, with interest thereon; Third,
to the payment of said indebtedness in full, whether the same shall or shall not
have fully matured at the date of said sale, but no interest shall be collected
beyond the date of sale; and Fourth, the balance, if any, to be turned over to
the Borrower and the Borrower further agrees that the Lender, its agents or
assigns may bid at said sale and purchase the Property, if the highest bidder
therefor; and the Borrower further agree to pay a reasonable attorney's fee to
the Lender or its assigns, for the foreclosure of this mortgage in court, should
the same be so foreclosed, said fee to be a part of the debt hereby secured.
(e) Rights Pertaining to Sales. Subject to the requirements of applicable
law and except as otherwise provided herein, the following provisions shall
apply to any sale or sales of all or any portion of the Property under or by
virtue of subsection 23(d) above, whether made under the power of sale herein
granted or by virtue of judicial proceedings or of a judgment or decree of
foreclosure and sale:
(i) Lender may conduct any number of sales from time to time. The
power of sale set forth above shall not be exhausted by any one or more
such sales as to any part of the Property which shall not have been sold,
nor by any sale which is not completed or is defective in Lender's opinion,
until the Debt shall have been paid in full.
(ii) Any sale may be postponed or adjourned by public announcement at
the time and place appointed for such sale or for such postponed or
adjourned sale without further notice.
(iii) After each sale, Lender or an officer of any court empowered to
do so shall execute and deliver to the purchaser or purchasers at such sale
a good and sufficient instrument or instruments granting, conveying,
assigning and transferring all right, title and interest of Borrower in and
to the property and rights sold and shall receive the proceeds of said sale
or sales and apply the same as specified in the Note. Lender is hereby
appointed the true and lawful attorney-in-fact of Borrower, which
appointment is irrevocable and shall be deemed to be coupled with an
interest, in Borrower's name and stead, to make all necessary conveyances,
assignments, transfers and deliveries of the property and rights so sold,
Borrower hereby ratifying and confirming all that said attorney or such
substitute or substitutes shall lawfully do by virtue thereof.
25
Nevertheless, Borrower, if requested by Lender, shall ratify and confirm
any such sale or sales by executing and delivering to Lender or such
purchaser or purchasers all such instruments as may be advisable, in
Lender's judgment, for the purposes as may be designated in such request.
(iv) Any and all statements of fact or other recitals made in any of
the instruments referred to in subsection 23(e)(iii) above given by Lender
shall be taken as conclusive and binding against all persons as evidence of
the truth of the facts so stated and recited.
(v) Any such sale or sales shall operate to divest all of the estate,
right, title, interest, claim and demand whatsoever, whether at law or in
equity, of Borrower in and to the properties and rights so sold, and shall
be a perpetual bar both at law and in equity against Borrower and any and
all persons claiming or who may claim the same, or any part thereof or any
interest therein, by, through or under Borrower to the fullest extent
permitted by applicable law.
(vi) Upon any such sale or sales, Lender may bid for and acquire the
Property and, in lieu of paying cash therefor, may make settlement for the
purchase price by crediting against the Debt the amount of the bid made
therefor, after deducting therefrom the expenses of the sale, the cost of
any enforcement proceeding hereunder, and any other sums which Lender is
authorized to deduct under the terms hereof, to the extent necessary to
satisfy such bid.
(vii) Upon any such sale, it shall not be necessary for Lender or any
public officer acting under execution or order of court to have present or
constructively in its possession any of the Property.
(f) Lender's Judicial Remedies. Lender may proceed by suit or suits, at law
or in equity, to enforce the payment of the Debt to foreclose the liens and
security interests of this Mortgage as against all or any part of the Property,
and to have all or any part of the Property sold under the judgment or decree of
a court of competent jurisdiction. This remedy shall be cumulative of any other
non-judicial remedies available to Lender under this Mortgage or the other Loan
Documents. Proceeding with a request or receiving a judgment for legal relief
shall not be or be deemed to be an election of remedies and shall not bar any
available non-judicial remedy of Lender.
(g) Lender's Right to Appointment of Receiver. Lender, as a matter of right
and without (i) regard to the sufficiency of the security for repayment of the
Debt, (ii) notice to Borrower, (iii) any showing of insolvency, fraud, or
mismanagement on the part of Borrower, (iv) the necessity of filing any judicial
or other proceeding other than the proceeding for appointment of a receiver, and
(v) regard to the then value of the Property, shall be entitled to the
appointment of a receiver or receivers for the protection, possession, control,
management and operation of the Property, including, without limitation, the
power to collect the Rents and enforce this Mortgage. In the case of a sale and
deficiency, such right shall continue during the full statutory period of
redemption (if any), whether there be a redemption or not, as well as during any
further times when Borrower, except for the intervention of such receiver, would
be entitled to collection of such Rents. Borrower hereby irrevocably consents to
the appointment of a receiver or receivers. Any receiver appointed pursuant to
the provisions of this subsection shall have the usual powers and duties of
receivers in such matters.
26
(h) Lender's Uniform Commercial Code Remedies. Lender may exercise its
rights of enforcement under the Uniform Commercial Code in effect in the state
in which the Property is located.
(i) Other Rights. Lender (i) may surrender the Policies maintained pursuant
to this Mortgage or any part thereof, and upon receipt shall apply the unearned
premiums as a credit on the Debt, 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 premiums; and (ii)
may apply the Tax and Insurance Escrow Fund and/or the Replacement Reserve Fund
and any other funds held by Lender toward payment of the Debt; and (iii) shall
have and may exercise any and all other rights and remedies which Lender may
have at law or in equity, or by virtue of any of the Loan Documents, or
otherwise.
(j) Discontinuance of Remedies. In case Lender shall have proceeded to
invoke any right, remedy, or recourse permitted under the Loan Documents and
shall thereafter elect to discontinue or abandon same for any reason, Lender
shall have the unqualified right so to do and, in such event, Borrower and
Lender shall be restored to their former positions with respect to the Debt, the
Loan Documents, the Property or otherwise, and the rights, remedies, recourses
and powers of Lender shall continue as if same had never been invoked.
(k) Remedies Cumulative. All rights, remedies, and recourses of Lender
granted in the Note, this Mortgage and the other Loan Documents, any other
pledge of collateral, or otherwise available at law or equity: (i) shall be
cumulative and concurrent; (ii) may be pursued separately, successively, or
concurrently against Borrower, the Property, or any one or more of them, at the
sole discretion of Lender; (iii) may be exercised as often as occasion therefor
shall arise, it being agreed by Borrower that the exercise or failure to
exercise any of same shall in no event be construed as a waiver or release
thereof or of any other right, remedy, or recourse; (iv) shall be nonexclusive;
(v) shall not be conditioned upon Lender exercising or pursuing any remedy in
relation to the Property prior to Lender bringing suit to recover the Debt; and
(vi) in the event Lender elects to bring suit on the Debt and obtains a judgment
against Borrower prior to exercising any remedies in relation to the Property,
all liens and security interests, including the lien of this Mortgage, shall
remain in full force and effect and may be exercised thereafter at Lender's
option.
(l) Election of Remedies. Lender may release, regardless of consideration,
any part of the Property without, as to the remainder, in any way impairing,
affecting, subordinating, or releasing the lien or security interests evidenced
by this Mortgage or the other Loan Documents or affecting the obligations of
Borrower or any other party to pay the Debt. For payment of the Debt, Lender may
resort to any collateral securing the payment of the Debt in such order and
manner as Lender may elect. No collateral taken by Lender shall in any manner
impair or affect the lien or security interests given pursuant to the Loan
Documents, and all collateral shall be taken, considered, and held as
cumulative.
27
(m) Bankruptcy Acknowledgment. In the event the Property or any portion
thereof or any interest therein becomes property of any bankruptcy estate or
subject to any state or federal insolvency proceeding, then Lender shall
immediately become entitled, in addition to all other relief to which Lender may
be entitled under this Mortgage, to obtain (i) an order from the Bankruptcy
Court or other appropriate court granting immediate relief from the automatic
stay pursuant to Section 362 of the Bankruptcy Code so to permit Lender to
------------
pursue its rights and remedies against Borrower as provided under this Mortgage
and all other rights and remedies of Lender at law and in equity under
applicable state law, and (ii) an order from the Bankruptcy Court prohibiting
Borrower's use of all "cash collateral" as defined under Section 363 of the
-----------
Bankruptcy Code. In connection with such Bankruptcy Court orders, Borrower shall
not contend or allege in any pleading or petition filed in any court proceeding
that Lender does not have sufficient grounds for relief from the automatic stay.
Any bankruptcy petition or other action taken by Borrower to stay, condition, or
inhibit Lender from exercising its remedies are hereby admitted by Borrower to
be in bad faith and Borrower further admits that Lender would have just cause
for relief from the automatic stay in order to take such actions authorized
under state law.
(n) Application of Proceeds. The proceeds from any sale, lease, or other
disposition made pursuant to this Mortgage, or the proceeds from the surrender
of any insurance policies pursuant hereto, or any Rents collected by Lender from
the Property, or the Tax and Insurance Escrow Fund or the Replacement Reserve
Fund or sums received pursuant to Section 7 hereof, or proceeds from insurance
---------
which Lender elects to apply to the Debt pursuant to Section 3 hereof, shall be
---------
applied by Lender to the Debt in the following order and priority: (i) to the
payment of all expenses of advertising, selling, and conveying the Property or
part thereof, and/or prosecuting or otherwise collecting Rents, proceeds,
premiums or other sums including reasonable attorneys' fees and a reasonable fee
or commission to Lender, not to exceed five percent of the proceeds thereof or
sums so received and, in no event, in excess of any limitation imposed by
applicable law; (ii) to that portion, if any, of the Debt with respect to which
no person or entity has personal or entity liability for payment (the
"Exculpated Portion"), and with respect to the Exculpated Portion as follows:
---------------------
first, to accrued but unpaid interest, second, to matured principal, and third,
to unmatured principal in inverse order of maturity; (iii) to the remainder of
the Debt as follows: first, to the remaining accrued but unpaid interest,
second, to the matured portion of principal of the Debt, and third, to
prepayment of the unmatured portion, if any, of principal of the Debt applied to
installments of principal in inverse order of maturity; (iv) the balance, if any
or to the extent applicable, remaining after the full and final payment of the
Debt to the holder or beneficiary of any inferior liens covering the Property,
if any, in order of the priority of such inferior liens (Lender shall hereby be
entitled to rely exclusively on a commitment for title insurance issued to
determine such priority); and (v) the cash balance, if any, to the person or
persons entitled thereto. The application of proceeds of sale or other proceeds
as otherwise provided herein shall be deemed to be a payment of the Debt like
any other payment. The balance of the Debt remaining unpaid, if any, shall
remain fully due and owing in accordance with the terms of the Note and the
other Loan Documents.
25. Security Agreement. This Mortgage is both a real property mortgage
--------------------
or Mortgage and a "security agreement" within the meaning of the Uniform
Commercial Code. For the purposes of this Section 25, Borrower shall be referred
to as "Debtor" and Lender shall be referred to as "Secured Party." The Property
------ -------------
includes both real and personal property and all other rights and interests,
whether tangible or intangible in nature, of Debtor in the Property. Debtor by
28
executing and delivering this Mortgage has granted and hereby grants to Secured
Party, as security for the Debt, a security interest in the Property to the full
extent that the Property may be subject to the Uniform Commercial Code (said
portion of the Property so subject to the Uniform Commercial Code being called
in this section the "Collateral"). Debtor hereby agrees with Secured Party to
----------
execute and deliver to Secured Party, in form and substance satisfactory to
Secured Party, such financing statements and such further assurances as Secured
Party may from time to time, reasonably consider necessary to create, perfect,
and preserve Secured Party's security interest herein granted. This Mortgage
shall also constitute a "fixture filing" for the purposes of the Uniform
Commercial Code. All or part of the Property are or are to become fixtures.
Information concerning the security interest herein granted may be obtained from
the parties at the addresses of the parties set forth in the first paragraph of
this Mortgage. If an Event of Default shall occur, Secured Party, in addition to
any other rights and remedies which it may have, shall have and may exercise
immediately and without demand, any and all rights and remedies granted to a
secured party upon default under the Uniform Commercial Code, including, without
limiting the generality of the foregoing, the right to take possession of the
Collateral or any part thereof, and to take such other measures as Secured Party
may deem necessary for the care, protection and preservation of the Collateral.
Upon request or demand of Secured Party, Debtor shall at its expense assemble
the Collateral and make it available to Secured Party at a convenient place
acceptable to Secured Party. Debtor shall pay to Secured Party on demand any and
all expenses, including reasonable legal expenses and attorneys' fees, incurred
or paid by Secured Party in protecting the interest in the Collateral and in
enforcing the rights hereunder with respect to the Collateral. Any notice of
sale, disposition or other intended action by Secured Party with respect to the
Collateral sent to Debtor in accordance with the provisions hereof at least ten
(10) days prior to such action, shall constitute commercially reasonable notice
to Debtor. The proceeds of any disposition of the Collateral, or any part
thereof, may be applied by Secured Party to the payment of the Debt in such
priority and proportions as Secured Party in its discretion shall deem proper.
In the event of any change in name, identity or structure of any Debtor, such
Debtor shall notify Secured Party thereof and promptly after request shall
execute, file and record such Uniform Commercial Code forms as are necessary to
maintain the priority of Secured Party's lien upon and security interest in the
Collateral, and shall pay all expenses and fees in connection with the filing
and recording thereof. If Secured Party shall require the filing or recording of
additional Uniform Commercial Code forms or continuation statements, Debtor
shall, promptly after request, execute, file and record such Uniform Commercial
Code forms or continuation statements as Secured Party shall deem necessary, and
shall pay all expenses and fees in connection with the filing and recording
thereof, it being understood and agreed, however, that no such additional
documents shall increase Debtor's obligations under the Note, this Mortgage and
the other Loan Documents. Debtor hereby irrevocably appoints Secured Party as
its attorney-in-fact, coupled with an interest, to file with the appropriate
public office on its behalf any financing or other statements signed only by
Secured Party, as Debtor's attorney-in-fact, in connection with the Collateral
covered by this Mortgage. Notwithstanding the foregoing, Debtor shall appear and
defend in any action or proceeding which affects or purports to affect the
Property and any interest or right therein, whether such proceeding affects
title or any other rights in the Property (and in conjunction therewith, Debtor
shall fully cooperate with Secured Party in the event Secured Party is a party
to such action or proceeding).
29
26. Right of Entry. In addition to any other rights or remedies granted
--------------
under this Mortgage, Lender and its agents shall have the right to enter and
inspect the Property and Borrower's place of business, including its financial
and accounting records, and to make copies and take extracts therefrom, and to
discuss its affairs, finances and business with its officers and independent
public accountants (with such Borrower's representative(s) present) at any
reasonable time during the term of the Loan and as often as may be reasonably
requested upon prior notice and subject to the rights of the tenants at the
Property. The cost of such inspections or audits shall be borne by Borrower
should Lender determine that an Event of Default exists, including the cost of
all follow up or additional investigations or inquiries deemed reasonably
necessary by Lender. The cost of such inspections, if not paid for by Borrower
following demand, may be added to the principal balance of the sums due under
the Note and this Mortgage and shall bear interest thereafter until paid at the
Default Interest Rate.
27. Actions and Proceedings. Lender has the right to appear in and defend
-------------------------
any action or proceeding brought with respect to the Property and to bring any
action or proceeding, in the name and on behalf of Borrower, which Lender, in
its discretion, decides should be brought to protect its interest in the
Property. Lender shall, at its option, be subrogated to the lien of any mortgage
or other security instrument discharged in whole or in part by the Debt, and any
such subrogation rights shall constitute additional security for the payment of
the Debt.
28. Waiver of Setoff and Counterclaim, Marshalling, Statute of Limitations,
------------------------------------------------------------------------
Automatic or Supplemental Stay, Etc. (a) All amounts due under this Mortgage,
---------------------------------------
the Note and the other Loan Documents shall be payable without setoff,
--
counterclaim (other than compulsory counterclaims) or any deduction whatsoever.
Borrower hereby waives the right to assert a setoff, counterclaim or deduction
in any action or proceeding in which Lender is a participant, or arising out of
or in any way connected with this Mortgage, the Note, any of the other Loan
Documents, or the Debt.
(b) Borrower hereby expressly, irrevocably, and unconditionally waives and
releases, to the extent permitted by law (i) the benefit of all appraisement,
valuation, stay, extension, reinstatement and redemption laws now or hereafter
in force and all rights of marshalling, sale in the inverse order of alienation,
or any other right to direct in any manner the order or sale of any of the
Property in the event of any sale hereunder of the Property or any part thereof
or any interest therein; (ii) any and all rights of redemption from sale under
any order or decree of foreclosure of this Mortgage on behalf of Borrower, and
on behalf of each and every person acquiring any interest in or title to the
Property subsequent to the date of this Mortgage and on behalf of all persons to
the extent permitted by applicable law; (iii) all benefits that might accrue to
Borrower by virtue of any present or future law exempting the Property from
attachment, levy or sale on execution or providing for any appraisement,
valuation, stay of execution, exemption from civil process, redemption, or
extension of time for payment; and (iv) all notices of any Event of Default
except as expressly provided herein or of Lender's exercise of any right,
remedy, or recourse provided for under the Loan Documents.
(c) To the extent permitted by applicable law, Lender's rights hereunder
shall continue even to the extent that a suit for collection of the Debt, or
part thereof, is barred by a 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.
30
(d) In the event of the filing of any voluntary or involuntary petition
under the U.S. Bankruptcy Code (the "Bankruptcy Code") by or against Borrower
(other than an involuntary petition filed by or joined in by Lender), Borrower
shall not assert, or request any other party to assert, that the automatic stay
under Section 362 of the Bankruptcy Code shall operate or be interpreted to
------------
stay, interdict, condition, reduce or inhibit the ability of Lender to enforce
any rights it has by virtue of this Mortgage, or any other rights that Lender
has, whether now or hereafter acquired, against any of the Guarantors of the
Debt. Further, Borrower shall not seek a supplemental stay or any other relief,
whether injunctive or otherwise, pursuant to Section 105 of the Bankruptcy Code
-----------
or any other provision therein to stay, interdict, condition, reduce or inhibit
the ability of Lender to enforce any rights it has by virtue of this Mortgage
against any of the Guarantors of the Debt. The waivers contained in this section
are a material inducement to Lender's willingness to enter into this Mortgage
and Borrower acknowledges and agrees that no grounds exist for equitable relief
which would bar, delay or impede the exercise by Lender of Lender's rights and
remedies against Borrower or any of the Guarantors of the Debt.
29. Contest of Certain Claims. Notwithstanding the provisions of Section
---------------------------- -------
4 and subsection 22(i) hereof, Borrower shall not be in default for failure to
--
pay or discharge Taxes, Other Charges or mechanic's or materialman's lien
asserted against the Property if, and so long as, (a) Borrower shall have
notified Lender of same within five (5) days of obtaining knowledge thereof; (b)
Borrower shall diligently and in good faith contest the same by appropriate
legal proceedings which shall operate to prevent the enforcement or collection
of the same and the sale of the Property or any part thereof, to satisfy the
same; (c) Borrower shall have furnished to Lender a cash deposit, or an
indemnity bond satisfactory to Lender with a surety satisfactory to Lender, in
the amount of the Taxes, Other Charges or mechanic's or materialman's lien
claim, plus a reasonable additional sum to pay all costs, interest and penalties
that may be imposed or incurred in connection therewith, to assure payment of
the matters under contest and to prevent any sale or forfeiture of the Property
or any part thereof; (d) Borrower shall promptly upon final determination
thereof pay the amount of any such Taxes, Other Charges or claim so determined,
together with all costs, interest and penalties which may be payable in
connection therewith; (e) the failure to pay the Taxes, Other Charges or
mechanic's or materialman's lien claim does not constitute a default under any
other Mortgage, mortgage or security interest covering or affecting any part of
the Property; and (f) notwithstanding the foregoing, Borrower shall immediately
upon request of Lender pay (and if Borrower shall fail so to do, Lender may, but
shall not be required to, pay or cause to be discharged or bonded against) any
such Taxes, Other Charges or claim notwithstanding such contest, if in the
opinion of Lender, the Property or any part thereof or interest therein may be
in danger of being sold, forfeited, foreclosed, terminated, canceled or lost.
Lender may pay over any such cash deposit or part thereof to the claimant
entitled thereto at any time when, in the judgment of Lender, the entitlement of
such claimant is established.
30. 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.
31. Handicapped Access. (a) Borrower agrees that the Property shall at
-------------------
all times comply in all material respects with applicable requirements of the
Americans with Disabilities Act of 1990, the Fair Housing Amendments Act of
31
1988, all state and local laws and ordinances related to handicapped access and
all rules, regulations, and orders issued pursuant thereto including, without
limitation, the Americans with Disabilities Act Accessibility Guidelines for
Buildings and Facilities (collectively "Access Laws").
------------
(b) Notwithstanding any provisions set forth herein or in any other
document regarding Lender's approval of alterations of the Property, Borrower
shall not alter the Property in any manner which would increase Borrower's
responsibilities for compliance with the applicable Access Laws without the
prior written approval of Lender. Lender may condition any such approval upon
receipt of a certificate from an architect, engineer, or other person acceptable
to Lender of compliance with Access Laws.
(c) Borrower agrees to give prompt notice to Lender of the receipt by
Borrower of any complaints related to violation of any Access Laws and of the
commencement of any proceedings or investigations which relate to compliance
with applicable Access Laws.
32. Indemnification; Limitation of Liability. (a) Unless caused solely by an
----------------------------------------
Indemnified Party's gross negligence or willful misconduct, Borrower shall
protect, defend, indemnify and save harmless the Indemnified Parties from and
against all liabilities, obligations, claims, damages, penalties, causes of
action, costs and expenses (including without limitation reasonable attorneys'
fees and expenses), imposed upon or incurred by or asserted against any
Indemnified Party by reason of (i) ownership of the Mortgage, the Property or
any interest therein or receipt of any rents; (ii) 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; (iii) 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;
(iv) performance of any labor or services or the furnishing of any materials or
other property in respect of the Property or any part thereof; (v) any actions
taken by any Indemnified Party in the enforcement of this Mortgage and the other
Loan Documents; (vi) any failure to act on the part of any Indemnified Party
hereunder; (vii) the payment or nonpayment of any brokerage commissions to any
party in connection with the transaction contemplated hereby; and (viii) the
failure of Borrower to file timely with the Internal Revenue Service an accurate
Form ▇▇▇▇-▇, ▇▇▇▇▇▇▇▇▇ for Recipients of Proceeds from Real Estate, Broker and
Barter Exchange Transactions, which may be required in connection with this
Mortgage, or to supply a copy thereof in a timely fashion to the recipient of
the proceeds of the transaction in connection with which this Mortgage is made;
(ix) the presence, disposal, escape, seepage, leakage, spillage, discharge,
emission, release, or threatened release of any Hazardous Substances on, from,
or affecting the Property or any other property; (x) any personal injury
(including wrongful death) or property damage (real or personal) arising out of
or related to such Hazardous Substances; (xi) any lawsuit brought or threatened,
settlement reached, or Government Action relating to such Hazardous Substances;
or, (xii) any violation of laws, orders, regulations, requirements, or demands
of government authorities, which are based upon or in any way related to such
Hazardous Substances including, without limitation, the costs and expenses of
any remedial action, attorney and consultant fees, investigation and laboratory
fees, court costs, and litigation expenses; provided, however, that
notwithstanding the foregoing (ix) through (xii), in the event of a foreclosure
of the Property or deed-in-lieu of foreclosure, Borrower shall not be liable for
32
any claim arising thereunder to the extent the condition, event or circumstance
giving rise to such claim did not exist or take place on or prior to, and
instead first occurs and arises after the date that Lender takes title to the
Property by foreclosure or deed-in-lieu of foreclosure. Any amounts payable to
an Indemnified Party by reason of the application of this section shall become
immediately due and payable and shall bear interest at the Default Interest Rate
from the date loss or damage is sustained by such Indemnified Party until paid.
(b) Neither Lender, nor any affiliate, officer, director, employee,
attorney, or agent of Lender, shall have any liability with respect to, and
Borrower hereby waives, releases, and agrees not to ▇▇▇ any of them upon, any
claim for any special, indirect, incidental, or consequential damages suffered
or incurred by Borrower in connection with, arising out of, or in any way
related to, this Mortgage or any of the other Loan Documents, or any of the
transactions contemplated by this Mortgage or any of the other Loan Documents,
other than the gross negligence or willful misconduct of a Lender. Borrower
hereby waives, releases, and agrees not to ▇▇▇ Lender or any of Lender's
affiliates, officers, directors, employees, attorneys, or agents for punitive
damages in respect of any claim in connection with, arising out of, or in any
way related to, this Mortgage or any of the other Loan Documents, or any of the
transactions contemplated by this Mortgage or any of the transactions
contemplated hereby except to the extent same is caused by the gross negligence
or willful misconduct of a Lender.
33. Notices. Any notice, demand, statement, request or consent
-------
(collectively, "Notice") made hereunder shall be in writing, addressed to the
------
address, as set forth above, of the party to whom such notice is to be given, or
to such other address as Borrower or Lender, as the case may be, shall designate
in writing; provided, however, that, notwithstanding that Borrower may consist
of more than one person or entity with different addresses, Lender shall only be
required to send one Notice to a single address (the "Central Address") for all
---------------
entities and/or persons comprising Borrower, which address shall be designated
in written notice to Lender by Borrower from time to time, and is initially
designated as Deer Valley Homebuilders, Inc., ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇, ▇▇▇▇▇▇▇
▇▇▇▇▇, as the Central Address. Any Notice shall be deemed to be received by the
addressee on (i) the day such notice is personally delivered to such addressee,
(ii) the third (3rd) day following the day such notice is deposited with the
United States postal service first class certified mail, return receipt
requested, (iii) the day following the day on which such notice is delivered to
a nationally recognized overnight courier delivery service, or (iv) the day
facsimile transmission is confirmed after transmission of such notice by
telecopy to such telecopier number as Borrower or Lender, as the case may be,
shall have previously designated in writing.
34. Authority. (a) Borrower has full power, authority and right to execute,
---------
deliver and perform its obligations pursuant to this Mortgage, and to give,
grant, bargain, sell, alien, convey, confirm, warrant, pledge, and assign the
Property pursuant to the terms hereof and to keep and observe all of the terms
of this Mortgage on Borrower's part to be performed; and (b) Borrower represents
and warrants that Borrower is not a "foreign person" within the meaning of
Section 1445(f)(3) of the Internal Revenue Code of 1986, as amended and the
related Treasury Department regulations.
33
35. Waiver of Notice. Borrower shall not be entitled to any notices of
-----------------
any nature whatsoever from Lender except with respect to matters for which this
Mortgage specifically and expressly provides for the giving of notice by Lender
to Borrower and except with respect to matters for which Lender is required by
applicable law to give notice, and Borrower hereby expressly waives the right to
receive any notice from Lender with respect to any matter for which this
Mortgage does not specifically and expressly provide for the giving of notice by
Lender to Borrower. Specifically, but without limitation, Borrower hereby waives
to the maximum extent permitted by applicable law; (a) notice of acceptance
hereof and of any action taken or omitted in reliance hereon, and (b)
presentment for payment, demand of payment, protest or notice of nonpayment or
failure to perform or observe, or other proof or notice or demand.
36. Remedies of Borrower. In the event that a claim or adjudication is made
---------------------
that Lender has acted unreasonably or unreasonably delayed acting in any case
where by law or under the Note, this Mortgage or the other Loan Documents, it
has an obligation to act reasonably or promptly, Lender shall not be liable for
any monetary damages, and Borrower's remedies shall be limited to injunctive
relief or declaratory judgment. Notwithstanding the foregoing, in the event of
an overpayment by Borrower of amounts paid to Lender under the Loan Documents,
Borrower shall be entitled to reimbursement of such overpayments.
37. Sole Discretion of Lender. Whenever pursuant to this Mortgage or the
----------------------------
other Loan Documents, Lender exercises any right given to it to consent, approve
or disapprove, or any arrangement or term is to be satisfactory to Lender, the
decision of Lender to consent, approve or disapprove, or to decide that
arrangements or terms are satisfactory or not satisfactory shall be in the sole
discretion of Lender and shall be final and conclusive, except as may be
otherwise expressly and specifically provided herein. Notwithstanding anything
to the contrary contained herein, it shall be understood and agreed that any
such consent, approval, or disapproval may be conditioned, among other things,
upon Lender obtaining confirmation by the Rating Agencies that the action or
other matter subject to Lender's consent, approval, or disapproval shall not
adversely affect the rating of any securities issued or to be issued in
connection with any Secondary Market Transaction, notwithstanding that such
condition may not be expressly set forth in the provision or provisions of the
Loan Documents which require that Lender's consent be obtained.
38. Non-Waiver. The failure of Lender to insist upon strict performance of
-----------
any term hereof shall not be deemed to be a waiver of any term of this Mortgage.
Borrower shall not be relieved of Borrower's obligations hereunder by reason of
(a) the failure of Lender to comply with any request of Borrower or Guarantors
to take any action to foreclose this Mortgage or otherwise enforce any of the
provisions hereof or of the Note or other Loan Documents, (b) 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 (c) any agreement or
stipulation by Lender extending the time of payment or otherwise modifying or
supplementing the terms of the Note, this Mortgage, or the other Loan Documents.
Lender may resort for the payment of the Debt to any other security held by
Lender in such order and manner as Lender, in its discretion, may elect. Lender
may take action to recover the Debt, or any portion thereof, or to enforce any
covenant hereof without prejudice to the right of Lender thereafter to
foreclosure this Mortgage. The rights and remedies of Lender under this Mortgage
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
34
proceed under any one provision herein to the exclusion of any other provision.
Lender shall not be limited exclusively to the rights and remedies herein stated
but shall be entitled to every right and remedy now or hereafter afforded at law
or in equity.
39. Liability. All covenants, obligations and liabilities of Borrower
---------
hereunder shall be the joint and several covenants, obligations and liabilities
of each Borrower and each entity making up Borrower. Any default by any such
entity shall be deemed a default by all such entities and Borrower. The
obligations contained herein shall be read to apply to the individual entities
comprising Borrower when the context so requires but a breach of any obligation
hereunder shall be deemed a breach by all such entities and Borrower, entitling
Lender to exercise all of its rights and remedies hereunder and under the other
Loan Documents and under applicable law. Subject to the provisions hereof
requiring Lender's consent to any transfer of the Property, this Mortgage shall
be binding upon and inure to the benefit of Borrower and Lender and their
respective successors and assigns forever.
40. Inapplicable Provisions. If any term, covenant or condition of this
-----------------------
Mortgage is held to be invalid, illegal or unenforceable in any respect, this
Mortgage shall be construed without such provision.
41. Headings, Etc. The headings and captions of various sections of this
---------------
Mortgage are for convenience of reference only and are not to be construed as
defining or limiting, in any way, the scope or intent of the provisions hereof.
42. Counterparts. This Mortgage may be executed in any number of
------------
counterparts each of which shall be deemed to be an original but all of which
when taken together shall constitute one agreement.
43. Definitions. Unless the context clearly indicates a contrary intent or
-----------
unless otherwise specifically provided herein, words used in this Mortgage 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 "Debt" shall mean "the Note and any
----
other evidence of indebtedness secured by this Mortgage," the word "person"
------
shall include an individual, corporation, partnership, trust, unincorporated
association, government, governmental authority, and any other entity, and the
words "Property" shall include any portion of the Property and any interest
--------
therein and the words "attorneys' fees" shall include any and all attorneys'
---------------
fees, paralegal and law clerk fees, including, but not limited to, fees at the
pre-trial, trial and appellate levels incurred or paid by Lender in protecting
its interest in the Property and Collateral and enforcing its rights hereunder.
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.
44. Homestead. Borrower hereby waives and renounces all homestead and
---------
exemption rights provided by the constitution and the laws of the United States
and of any state, in and to the Premises as against the collection of the Debt,
or any part hereof.
35
45. Assignments. Lender shall have the right to assign or transfer its
-----------
rights under this Mortgage and the other Loan Documents without limitation,
including, without limitation, the right to assign or transfer its rights to a
servicing agent. Any assignee or transferee shall be entitled to all the
benefits afforded Lender under this Mortgage and the other Loan Documents.
46. Survival of Obligations; Survival of Warranties and Representations.
-----------------------------------------------------------------------
Each and all of the covenants, obligations, representations and warranties of
Borrower shall survive the execution and delivery of the Loan Documents and the
transfer or assignment of this Mortgage (including, without limitation, any
transfer of the Mortgage by Lender of any of its rights, title and interest in
and to the Property to any party, whether or not affiliated with Lender), and
shall also survive the entry of a judgment of foreclosure, sale of the Property
by non-judicial foreclosure or deed in lieu of foreclosure and satisfaction of
the Debt.
47. Covenants Running with the Land. All covenants, conditions, warranties,
--------------------------------
representations and other obligations contained in this Mortgage and the other
Loan Documents are intended by Borrower and Lender to be, and shall be construed
as, covenants running with the Property until the lien of this Mortgage has been
fully released by Lender.
48. Governing Law; Jurisdiction. THIS MORTGAGE AND THE OTHER LOAN DOCUMENTS
----------------------------
SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
ALABAMA (WITHOUT REGARD TO ANY CONFLICT OF LAWS PRINCIPLES) AND THE APPLICABLE
LAWS OF THE UNITED STATES OF AMERICA. BORROWER HEREBY IRREVOCABLY SUBMITS TO THE
JURISDICTION OF ANY COURT OF COMPETENT JURISDICTION LOCATED IN THE STATE IN
WHICH THE PROPERTY IS LOCATED IN CONNECTION WITH ANY PROCEEDING OUT OF OR
RELATING TO THIS MORTGAGE.
49. Time. Time is of the essence in this Mortgage and the other Loan
----
Documents.
50. No Third-Party Beneficiaries. The provisions of this Mortgage and the
------------------------------
other Loan Documents are for the benefit of Borrower and Lender and shall not
inure to the benefit of any third party (other than any successor or assignee of
Lender). This Mortgage and the other Loan Documents shall not be construed as
creating any rights, claims or causes of action against Lender or any of its
officers, directors, agents or employees in favor of any party other than
Borrower including but not limited to any claims to any sums held in the Tax and
Insurance Escrow Fund or the Replacement Reserve Fund.
51. Relationship of Parties. The relationship of Lender and Borrower is
-------------------------
solely that of creditor and debtor, and Lender has no fiduciary or other special
relationship with Borrower, and no term or condition of any of the Loan
Documents shall be construed to be other than that of debtor and creditor.
Borrower represents and acknowledges that the Loan Documents do not provide for
any shared appreciation rights or other equity participation interest.
52. Investigations. Any and all representations, warranties, covenants and
--------------
agreements made in this Mortgage (and/or in other Loan Documents) shall survive
any investigation or inspection made by or on behalf of Lender.
36
53. Waiver of Right to Trial by Jury. BORROWER AND LENDER AND EACH OF THEIR
---------------------------------
RESPECTIVE PARTNERS, MEMBERS, MANAGERS AND SHAREHOLDERS, IF ANY (EACH FOR
HIMSELF IF MORE THAN ONE): (A) COVENANT AND AGREE NOT TO ELECT A TRIAL BY JURY
WITH RESPECT TO ANY ISSUE ARISING UNDER THIS NOTE, THE MORTGAGE AND/OR ANY OTHER
LOAN DOCUMENTS TRIABLE BY A JURY, OR ANY CLAIM, COUNTERCLAIM OR OTHER ACTION
ARISING IN CONNECTION THEREWITH INCLUDING, BUT NOT LIMITED TO, THOSE RELATING
TO(i) ALLEGATIONS THAT A PARTNERSHIP EXISTS BETWEEN LENDER AND BORROWER;(ii)
USURYOR PENALTIES OR DAMAGES THEREFOR;(iii) ALLEGATIONS OF UNCONSCIONABLE ACTS,
DECEPTIVE TRADE PRACTICE, LACK OF GOOD FAITH OR FAIR DEALING, LACK OF COMMERCIAL
REASONABLENESS, OR SPECIAL RELATIONSHIPS (SUCH AS FIDUCIARY, TRUST OR
CONFIDENTIAL RELATIONSHIP);(iv) ALLEGATIONS OF DOMINION, CONTROL, ALTER EGO,
INSTRUMENTALITY, FRAUD, REAL ESTATE FRAUD, MISREPRESENTATION, DURESS, COERCION,
UNDUE INFLUENCE, INTERFERENCE OR NEGLIGENCE;(v) ALLEGATIONS OF TORTIOUS
INTERFERENCE WITH PRESENT OR PROSPECTIVE BUSINESS RELATIONSHIPS OR OF ANTITRUST;
OR(vi) SLANDER, LIBEL OR DAMAGE TO REPUTATION; AND (B) WAIVE ANY RIGHT TO TRIAL
BY JURY TO THE EXTENT THAT ANY SUCH RIGHT SHALL NOW OR HEREAFTER EXIST. THIS
WAIVER OF THE RIGHT TO TRIAL BY JURY IS SEPARATELY GIVEN, KNOWINGLY AND
VOLUNTARILY BY AND WITH THE OPPORTUNITY TO HAVE BENEFIT OF COMPETENT LEGAL
COUNSEL, BY BORROWER AND LENDER AND EACH RESPECTIVE PARTNER, MEMBER, MANAGER AND
SHAREHOLDER, IF ANY, AND THIS WAIVER IS INTENDED TO ENCOMPASS INDIVIDUALLY EACH
INSTANCE AND EACH ISSUE AS TO WHICH THE RIGHT TO A JURY TRIAL WOULD OTHERWISE
ACCRUE. BORROWER AND EACH PARTNER, MEMBER, MANAGER AND SHAREHOLDER OF BORROWER,
IF ANY, HEREBY CERTIFY THAT NO REPRESENTATIVE OR AGENT OF LENDER (INCLUDING, BUT
NOT LIMITED TO, LENDER'S COUNSEL) HAS REPRESENTED, EXPRESSLY OR OTHERWISE, TO
BORROWER OR ANY PARTNER, MEMBER, MANAGER OR SHAREHOLDER OF BORROWER, THAT LENDER
WILL NOT SEEK TO ENFORCE THE PROVISIONS OF THIS SECTION.
54. Expenses and Attorneys' Fees. Borrower agrees to promptly pay all
-------------------------------
reasonable fees, costs and expenses incurred by Lender in connection with any
matters contemplated by or arising out of this Mortgage and the Loan Documents,
including the following, and all such fees, costs and expenses shall be part of
the Debt, payable on demand: (i) reasonable fees, costs and expenses (including
reasonable attorneys' fees, and other professionals retained by Lender) incurred
in connection with the examination, review, due diligence investigation,
documentation and closing of the financing arrangements evidenced by the Loan
Documents; (ii) reasonable fees, costs and expenses (including reasonable
attorneys' fees and other professionals retained by Lender) incurred in
connection with the administration of the Loan Documents and the loan and any
amendments, modifications and waivers relating thereto; and (iii) reasonable
fees, costs and expenses (including attorneys' fees and fees of other
professionals retained by Lender) incurred in any action to enforce this
Mortgage or the other Loan Documents or to collect, upon Default hereunder or
under the other Loan Documents, any payments due from Borrower under this
Mortgage, the Note or any other Loan Document or incurred in connection with any
refinancing or restructuring of the credit arrangements provided under this
Mortgage, whether in the nature of a "workout" or in connection with any
insolvency or bankruptcy proceedings or otherwise.
37
55. Amendments and Waivers. Except as otherwise provided herein, no
------------------------
amendment, modification, termination or waiver of any provision of this
Mortgage, the Note or any other Loan Document, or consent to any departure
therefrom, shall in any event be effective unless the same shall be in writing
and signed by Lender and any other party to be charged. Each amendment,
modification, termination or waiver shall be effective only in the specific
instance and for the specific purpose for which it was given. No notice to or
demand on Borrower in any case shall entitle Borrower to any other or further
notice or demand in similar or other circumstances.
56. Sophisticated Parties; Reasonable Terms. Borrower represents, warrants
-----------------------------------------
and acknowledges that (i) Borrower is a sophisticated company familiar with
transactions of this kind, and (ii) Borrower has entered into this Mortgage and
the other Loan Documents after conducting its own assessment of the alternatives
available to them in the market, and after lengthy negotiations in which they
have been represented by legal counsel of their choice. Borrower also
acknowledges and agrees that the rights of Lender under this Mortgage and the
other Loan Documents are reasonable and appropriate, taking into consideration
all of the facts and circumstances including without limitation the quantity of
the loan secured by this Mortgage, the nature of the Deed of Property, and the
risks incurred by Lender in this transaction.
Borrower has executed this instrument as of the day and year first above
written.
BORROWER:
Deer Valley Homebuilders, Inc.,
An Alabama corporation
By: /s/ ▇▇▇▇ ▇▇▇▇▇
-------------------------------
▇▇▇▇ ▇▇▇▇▇, President
(CORPORATE SEAL)
38
ACKNOWLEDGMENTS
STATE OF ALABAMA )
)
COUNTY OF )
------------
BEFORE ME, a Notary Public, in and for said County and State, personally
appeared ▇▇▇▇ ▇▇▇▇▇, the President of Deer Valley Homebuilders, Inc., an Alabama
corporation, who acknowledged that he did sign the foregoing instrument on
behalf of said corporation and that the same is the voluntary act and deed of
said corporation.
IN TESTIMONY WHEREOF, I have hereunto set my hand and official seal at
, this day of , 2006.
------------ ------------ ----- ------------
--------------------------------------
Notary Public
(official seal)
My Commission expires:
--------------------
39
EXHIBIT A
LEGAL DESCRIPTION