EXHIBIT 10.23
RECORDING REQUESTED BY AND LOAN NO. 30381
WHEN RECORDED RETURN TO:
▇▇▇▇▇▇ & Bird LLP
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇.
________________________________________________________________________
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MORTGAGE AND SECURITY AGREEMENT
PAPER WAREHOUSE, INC., as Mortgagor,
in favor of
FORTIS INSURANCE COMPANY, as Mortgagee
Dated: As of April 8, 1999
Location: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇., ▇▇. ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇
THIS INSTRUMENT IS TO BE FILED AND INDEXED IN THE REAL ESTATE RECORDS AND
IS ALSO TO BE INDEXED IN THE INDEX OF FINANCING STATEMENTS. FROM THE DATE
OF ITS RECORDING, THIS INSTRUMENT SHALL BE EFFECTIVE AS A FINANCING
STATEMENT FILED AS A FIXTURE FILING WITH RESPECT TO ALL GOODS CONSTITUTING
PART OF THE PREMISES (AS MORE PARTICULARLY DESCRIBED IN THE GRANTING CLAUSE
OF THIS INSTRUMENT) WHICH ARE OR ARE TO BECOME FIXTURES RELATED TO THE REAL
ESTATE DESCRIBED HEREIN. THE NAMES OF THE DEBTOR AND THE SECURED PARTY,
THE MAILING ADDRESS OF THE SECURED PARTY FROM WHICH INFORMATION CONCERNING
THE SECURITY INTEREST MAY BE OBTAINED, THE MAILING ADDRESS OF THE DEBTOR
AND A STATEMENT INDICATING THE TYPES, OR DESCRIBING THE ITEMS, OF
COLLATERAL, ARE AS DESCRIBED IN PARAGRAPH 16 OF ARTICLE I HEREOF AND THE
GRANTING CLAUSES HEREOF, IN COMPLIANCE WITH THE REQUIREMENTS OF THE UNIFORM
COMMERCIAL CODE, AS ENACTED IN THE STATE OF MINNESOTA, AND A CARBON OR
PHOTOGRAPHIC REPRODUCTION OF THIS INSTRUMENT MAY BE FILED AS A FINANCING
STATEMENT TO PERFECT A SECURITY INTEREST IN THE PROPERTY DESCRIBED HEREIN
IN WHICH A SECURITY INTEREST MAY BE CREATED UNDER THE UCC.
________________________________________________________________________
________________________________________________________________________
MORTGAGE AND SECURITY AGREEMENT
THIS MORTGAGE AND SECURITY AGREEMENT (this "Instrument") is made as of
April ____, 1999, from PAPER WAREHOUSE, INC., a Minnesota corporation (the
"Borrower"), as Mortgagor, having an office and place of business located at
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇, to FORTIS
INSURANCE COMPANY, a Wisconsin corporation (the "Lender"), having a mailing
address of ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇, as Mortgagee.
W I T N E S S E T H:
WHEREAS, ▇▇▇▇▇▇▇▇ is the owner of a fee estate in the premises described in
EXHIBIT A attached hereto and made a part hereof (the "Premises");
NOW THEREFORE, to secure the payment in full of an indebtedness in the
principal sum of One Million One Hundred Thousand and No/100 Dollars
($1,100,000.00), lawful money of the United States of America, to be paid with
interest (said indebtedness, interest, late charges, prepayment premiums and all
other sums which may or shall become due hereunder being hereinafter
collectively referred to as the "Debt") according to a certain mortgage note
dated the date hereof given by Borrower to Lender (the "Note"), which Note is
due and payable on or before May 1, 2009, and any renewals, extensions,
modifications or replacements of the Note, Borrower has mortgaged, given,
granted, bargained, sold, aliened, enfeoffed, conveyed, set-over, transferred,
warranted, pledged, confirmed and assigned, and by these presents does mortgage,
give, grant, bargain, sell, alien, warrant, pledge, enfeoff, convey, set over,
transfer, confirm and assign unto Lender, WITH POWER OF SALE pursuant to this
Instrument and applicable law all right, title and interest of Borrower now
owned, or hereafter acquired, in and to the following property, rights and
interests (such property, rights and interests being hereinafter collectively
referred to as the "Mortgaged Property"):
(a) the Premises;
(b) all buildings and other structures and improvements now or
hereafter located on the Premises (the "Improvements");
(c) all of the estate, right, title, claim or demand of any
nature whatsoever of Borrower, either in law or in equity, in possession or
expectancy, in and to the Premises and Improvements or any part thereof;
(d) all easements, rights-of-way, strips and gores of land,
vaults, streets, ways, alleys, passages, sewer rights, waters, water courses,
water rights and powers, and all estates, rights, titles, interests, privileges,
liberties, tenements,
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hereditaments, and appurtenances, revision or revisions, remainder or
remainders of any nature whatsoever, in any way belonging, relating or
pertaining to the Premises (including, without limitation, any and all
development rights, air rights or similar or comparable rights of any nature
whatsoever now or hereafter appurtenant to the Premises or now or hereafter
transferred to the Premises) 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;
(e) all machinery, apparatus, equipment, fittings, fixtures and
other tangible property used in connection only with the ownership, maintenance
and operation of the physical plant of the Premises and Improvements (and not in
connection with the business operations of Borrower within the Improvements and
the Premises) and all additions thereto and renewals and replacements thereof,
and all substitutions therefor now owned or hereafter acquired by Borrower, or
in which Borrower has or shall have an interest, now or hereafter located upon
or in, or attached to, any portion of the Premises and Improvements, or
appurtenances thereto, and all building equipment, building materials and
supplies used in connection only with the ownership, maintenance and operation
of the physical plant of the Premises and Improvements (and not in connection
with the business operations of Borrower within the Improvements and the
Premises) owned by Borrower, or in which Borrower has or shall have an interest,
now or hereafter located upon the Premises and Improvements (collectively, the
"Building Equipment") (and, without limitation, Building Equipment excludes all
of Borrower's inventory, office furnishings, equipment, motor vehicles,
machinery, furniture, fittings, parts, supplies, tools, dies, tooling and other
items of personal property used in connection with the business operations of
Borrower within the Improvements and the Premises and not as part of the
ownership, maintenance and operation of the physical plant of the Premises and
Improvements, and Building Equipment excludes fixtures, equipment, machinery or
other property of tenants under any lease of or rental agreement for space in
the Premises and Improvements), including the interest of Borrower in all of the
aforesaid which are subject to lease agreements or other service contracts (but
excluding the interest of the lessor or owner of such items), and including all
extensions, additions, improvements, betterments, after-acquired property,
renewals, replacements and substitutions, or proceeds from a sale of any of the
foregoing, and the right, title and interest of Borrower in and to any of the
Building Equipment which may be subject to any security agreements (as defined
in the Uniform Commercial Code of the State in which the Premises and
Improvements are located; the "Uniform Commercial Code"), superior in lien to
the lien of this Instrument and all proceeds and products of any of the above,
and all accounts, chattel paper, documents, equipment, fixtures, farm products,
consumer goods and general intangibles but only to the extent constituting
proceeds acquired with cash proceeds of any of the property described
hereinabove, all of which are hereby declared and shall be deemed to be fixtures
and accessions to, and a part of, the Premises and Improvements as between the
parties hereto and all persons claiming by, through or under them, and which
shall be deemed to be a portion of the security for the indebtedness herein
described and to be secured by this Instrument;
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(f) all awards or payments, including interest thereon, and the
right to receive the same, which may be made with respect to the Premises,
Improvements and Building Equipment, whether from the exercise of the right of
eminent domain (including any transfer made in lieu of the exercise of said
right), for a change in grade or for any other injury to or decrease in the
value of the Premises and Improvements and the reasonable attorneys' fees, costs
and disbursements incurred by Lender in connection with the collection of such
award or payment;
(g) the interest of the owner of the Mortgaged Property in and
to all leases and other agreements affecting the use or occupancy of the
Premises and Improvements or any part thereof now or hereafter entered into
(including any such agreements entered into after filing by or against Borrower
of a petition for relief under 11 U.S.C Section 101 ET SEQ. (the "Bankruptcy
Code"), as the same may be amended from time to time) (the "Leases") and
absolutely and presently the right to receive and apply the income, rents,
issues, cash collateral, revenues, royalties, benefits and profits of the
Premises and Improvements from time to time accruing, including, without
limitation, all payments under Leases or tenancies, proceeds of insurance,
additional rents, lease termination fees, tenant security deposits and escrow
funds paid or accruing before or after the filing by or against Borrower of a
petition for relief under the Bankruptcy Code (the "Rents") to the payment of
the Debt; reserving only the right, power and authority given to Borrower as a
licensor to collect and apply the same prior to the occurrence of an Event of
Default hereunder and so long as the same are not subjected to garnishment,
levy, attachment or lien;
(h) all proceeds of any insurance policies covering the Premises
and Improvements (whether or not such policies are specifically required
hereunder and/or the requirement for such policies had been theretofore waived
or deferred by Lender), 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 Premises and Improvements, and any unearned premiums
on any insurance policies covering the Premises and Improvements to the extent
such policies are specifically required hereunder;
(i) the right, in the name and on behalf of ▇▇▇▇▇▇▇▇, to appear
in and defend any action or proceeding brought with respect to the Premises and
Improvements and to commence any action or proceeding to protect the interest of
▇▇▇▇▇▇ in the Premises and Improvements; and
(j) all refunds, rebates or credits in connection with the
reduction of Taxes (hereinafter defined) as a result of tax certiorari or any
applications or proceedings for deduction; and
(k) all and singular the rights, members and appurtenances
whatsoever, in any way belonging, relating or appertaining to any of the
Premises and Improvements
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hereinabove mentioned or which hereafter shall in any way belong, relate or
be appurtenant thereto, whether now owned or hereafter acquired by ▇▇▇▇▇▇▇▇.
TO HAVE AND TO HOLD the above granted and described Mortgaged Property unto
Lender, and the successors and assigns of Lender, forever IN FEE SIMPLE, and
Borrower covenants and warrants that Borrower is lawfully seized of the
Mortgaged Property and has good right to convey the same, and that the same are
unencumbered except for those matters set forth on EXHIBIT B attached hereto and
incorporated herein by this reference (the "Permitted Title Exceptions"), and
that Borrower will warrant and forever defend the title thereto against the
claims of all persons whomsoever, except as to the Permitted Title Exceptions.
PROVIDED, HOWEVER, these presents are upon the express condition that, if
Borrower shall well and truly pay to Lender the Debt at the time and in the
manner provided in the Note and this Instrument and shall well and truly perform
all other obligations as set forth herein and each carveout and condition hereof
and in the Note, these presents and the estate hereby granted shall cease,
terminate and be void.
AND Borrower covenants and agrees with and represents and warrants to
Lender as follows:
ARTICLE I - GENERAL PROVISIONS
1.1. PAYMENT OF DEBT. Borrower will pay the Debt at the time and in the
manner provided for its payment in the Note and in this Instrument.
1.2. WARRANTY OF TITLE; OTHER REPRESENTATIONS AND WARRANTIES. Borrower
represents and warrants to, and covenants with, Lender that:
(a) Borrower has good title to the Premises, the Improvements, the
Building Equipment and the balance of the Mortgaged Property, except for the
title exceptions shown in the title insurance policy insuring the lien of this
Instrument.
(b) (i) Borrower is now, and after giving effect to this Instrument,
will be in a solvent condition, (ii) there has been no material adverse change
in the financial condition of Borrower, any guarantor (if any) of the Debt or
the performance by Borrower of any of the terms of this Instrument (a
"Guarantor") or any Responsible Party (if any) (as defined in the Note) since
the date of Borrower's application for the loan secured hereby, (iii) Borrower
is not in default under any note, loan or security agreement to which it is a
party, (iv) the execution and delivery of this Instrument by Borrower does not
constitute a "fraudulent conveyance" within the meaning of the Bankruptcy Code
as now constituted or under any other applicable statute, (v) no bankruptcy or
insolvency proceedings are pending or contemplated by or against Borrower, and
(vi) there are no existing, threatened
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or pending actions or proceedings affecting any portion of the Mortgaged
Property except for possible negligence actions or proceedings which are
fully covered by insurance.
(c) Borrower (and the undersigned representative of Borrower, if any)
(i) has full power, authority and legal right to execute this Instrument, and to
mortgage, give, grant, bargain, sell, alien, enfeoff, convey, confirm and assign
the Mortgaged Property pursuant to the terms hereof and to keep and observe all
of the terms of this Instrument on Borrower's part to be performed, (ii) is duly
organized, validly existing and in good standing under the laws of its state of
organization, (iii) is duly qualified to transact business and in good standing
in the State where the Mortgaged Property is located, and (iv) has all necessary
approvals, government and otherwise, and full power and authority to own the
Mortgaged Property and carry on its business as now conducted or proposed to be
conducted.
1.3. INSURANCE.
(a) Borrower will keep the Improvements and the Building
Equipment insured with:
(i) "all risks" extended coverage against loss or damage by
fire, vandalism, malicious mischief and such other hazards as Lender shall
from time to time require, in amounts approved by Lender, which amounts
shall in no event be less than 100% of the full replacement cost of the
Improvements and the Building Equipment (without deduction for physical
depreciation and exclusive of excavations, footings and foundations,
landscaping and paving), with an agreed amount endorsement and replacement
cost endorsement and shall be sufficient to meet all applicable
co-insurance requirements;
(ii) boiler, machinery and sprinkler leakage insurance covering
physical damage to the Improvements and Building Equipment and any other
major components of any central HVAC system and such other equipment as
Lender may require (without exclusion for explosion);
(iii) annual business interruption in an amount not less than
$500,000.00;
(iv) comprehensive public liability insurance, including broad
form property damage, blanket contractual and personal injury coverage;
(v) ordinance or law coverage to compensate for the cost of
development and increased cost of construction if any portion of the
Improvements are non-conforming under applicable law, including broad form
property damage, blanket contractual and personal injury coverage; and
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(vi) such other forms of insurance coverage with respect to the
Premises and Improvements as Lender shall from time to time require in
amounts approved by Lender, which requirement shall not be made if such
requirement is not commercially reasonable to protect ▇▇▇▇▇▇'s interests in
the Premises and the Improvements.
During any period of construction, renovation or restoration of the
Improvements, Borrower shall maintain "all builder's risk" insurance, in a form
acceptable to Lender. If the Premises are improved, and any portion thereof is
located in the then applicable 100 year flood plain or in a Federally designated
"special flood hazard area", in addition to the other policies of insurance
required under this paragraph and/or any other policies of insurance obtained by
Borrower, whether or not required hereunder, including, without limitation, any
insurance Borrower elects to obtain notwithstanding a prior waiver or deferral
of such requirement by Lender (the "Policies"), a flood insurance policy
acceptable in all respects to Borrower shall be delivered by Borrower to Lender.
If no portion of the Premises is located in the then applicable 100 year flood
plain or in a Federally designated "special flood hazard area" such fact shall
be substantiated by a certificate in form satisfactory to Lender from a licensed
surveyor, appraiser or professional engineer or other qualified person
satisfactory to Lender in accordance with applicable regulations.
(b) Borrower shall at all times comply with and shall cause the
Improvements and Building Equipment and the use, occupancy, operation,
maintenance, alteration, repair and restoration thereof to comply with the
terms, conditions, stipulations and requirements of the Policies. All Policies
shall be issued by insurers having a minimum policy holders rating of "A" and a
financial class of VII or better per the latest rating publication of Property
and Casualty Insurers by A.M. Best Company, Inc. and who are lawfully doing
business in the State in which the Premises and Improvements are located and are
otherwise acceptable in all respects to Lender. All Policies shall, with
respect to the Premises and the Improvements, contain the standard Lender
non-contribution clause endorsement or its equivalent and, with respect to the
Building Equipment, contain a lender's loss payable clause endorsement or an
equivalent endorsement. All Policies shall name ▇▇▇▇▇▇ as the person to which
all payments made by the insurer thereunder shall be paid, naming Lender as an
additional insured on required liability policies and otherwise in form and
substance satisfactory in all respects to Lender. Borrower hereby assigns the
proceeds of the Policies to Lender and directs and hereby authorizes each
insurance company to make payment for loss directly to Lender, as its interest
may appear. All Policies shall provide that the coverages evidenced thereby
shall not be terminated or materially modified without thirty (30) days prior
written notice to Lender. Blanket insurance policies shall not be acceptable
for the purposes of this paragraph unless otherwise approved to the contrary by
Lender, and if approved, shall contain a statement of values. Borrower shall
pay the premiums for the Policies as the same become due and payable. At the
request of ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ will deliver the Policies to Lender, or copies
thereof certified by the insurer. Not later than ten (10) days prior to the
expiration date of each of the Policies, ▇▇▇▇▇▇▇▇ will deliver to
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Lender a renewal policy or certificates of renewal marked "premium paid" or
accompanied by other evidence of payment of premium satisfactory to Lender,
provided, however, that so long as there is then no Event of Default and no
written or oral notice from Borrower's insurance company that Borrower has
failed to pay such premiums in full, Borrower shall not be required to
evidence Borrower's monthly installments of insurance required in connection
with each annual policy of insurance. If at any time Lender is not in
receipt of written evidence that all insurance required hereunder is in full
force and effect, Lender shall have the right, without notice to Borrower, to
take such action as Lender deems necessary to protect its interest in the
Premises and Improvements, including, without limitation, the obtaining of
such insurance coverage as Lender in its sole discretion deems appropriate,
and all expenses incurred by Lender in connection with such action or in
obtaining such insurance and keeping it in effect shall be paid by Borrower
to Lender upon demand and until paid shall be secured by this Instrument in
accordance with Section 2.7 hereof.
(c) (i) If the Premises and Improvements shall be damaged or
destroyed, in whole or in part, by fire, or other casualty Borrower shall give
prompt notice thereof to Lender. Lender shall make the amount of all insurance
proceeds received by Lender (aa) of less than $25,000.00 received in any
consecutive six (6) month period immediately available to Borrower if no Event
of Default then exists under this Instrument or the other Loan Documents and
(bb) of any greater amount pursuant to the provisions of this Instrument as a
result of such damage or destruction after deduction of its reasonable costs and
expenses, if any, in collecting the same (the "Net Proceeds") available for the
repair and restoration of the Improvements, provided that:
(aa) no Event of Default shall exist under the Note or this
Instrument at the time of the casualty or any requested disbursement
hereunder;
(bb) Borrower shall proceed with the repair and restoration of
the Improvements as nearly as possible to the condition the Improvements
were in immediately prior to such fire or other casualty promptly after the
insurance claims are settled;
(cc) no lease demising more than twenty five percent (25%) of the
net rentable area of the Improvements (a "Key Lease") has been terminated
by reason of such casualty;
(dd) the loan to value ratio of the restored Improvements as
estimated in ▇▇▇▇▇▇'s sole discretion, or at ▇▇▇▇▇▇▇▇'s request, as
determined by a third party MAI appraiser acceptable to ▇▇▇▇▇▇, does not
exceed the loan to value ratio as of the date hereof;
(ee) the Net Proceeds, together with additional funds provided by
Borrower if necessary, are sufficient to reconstruct or restore the
Improvements according to plans and specifications approved by Lender or
its Inspecting
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Engineer (as hereinafter defined), which approval shall not be
unreasonably withheld or delayed if such plans and specifications
substantially conform to the plans for the existing Improvements and which
plans and specifications shall comply with local building codes and all
other applicable laws, ordinances, rules and regulations, and
(ff) Lender has determined that all approved restoration work can
be completed not later than one hundred eighty (180) days prior to the
maturity of the Note or by such earlier date as may be required under the
Leases or pursuant to applicable law.
(ii) Upon satisfaction of each of the provisions of
subsection 1.3(c), the Net Proceeds will be disbursed by Lender to Borrower to
pay for the costs of repair and restoration of the Improvements in the manner
hereinafter set forth. The Net Proceeds shall be held by ▇▇▇▇▇▇ in escrow until
expended in connection with the repair and restoration of the Improvements, it
being agreed that any Net Proceeds so held by Lender may be commingled with the
general funds of Lender, shall not bear interest, and shall constitute
additional security for the payment of the Debt. The Net Proceeds shall be paid
by ▇▇▇▇▇▇ to, or as directed by, Borrower from time to time during the course of
the repair and restoration, upon receipt of evidence satisfactory to Lender
that:
(aa) all materials installed and work and labor performed (except
to the extent that they are to be paid for out of the requested payment) in
connection with the repair and restoration have been paid for in full;
(bb) there exists no notice of intention, mechanics or other
liens and encumbrances on the Premises and Improvements arising out of the
repair and restoration (except routine filings by contractors which are
customarily required in the ordinary course of business in order to
protect, in advance, any rights of the contractor to payment, and which do
not relate to any failure to pay such contractor or dispute with such
contractor, and provided that such contractor is to be paid out of the
remaining budget for the completion of the repair and restoration and that
sufficient funds remain in the budget for such restoration), and
(cc) the balance of the Net Proceeds plus the balance of any
deficiency deposits made by Borrower pursuant to the provisions of this
paragraph hereinafter set forth shall be sufficient to pay in full the
balance of the cost of the repair and restoration.
The repair and restoration shall be done and completed by Borrower in an
expeditious and diligent fashion and in compliance with all applicable laws,
rules and regulations, and all plans and specifications required in connection
with the repair and restoration shall be subject to review and approval in all
respects by an independent inspecting engineer selected by ▇▇▇▇▇▇ (the
"Inspecting Engineer"). All costs and expenses incurred by ▇▇▇▇▇▇ in connection
with making the Net Proceeds available for the repair and
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restoration, including, without limitation, an administrative fee of $500 for
each advance, counsel fees, travel fees and the Inspecting Engineer's fees
incurred by ▇▇▇▇▇▇, shall be paid by ▇▇▇▇▇▇▇▇. In no event shall Lender be
obligated to make disbursements of the Net Proceeds in excess of an amount
equal to the costs actually incurred for work in place as part of the repair
and restoration, as certified by the Inspecting Engineer, MINUS 10% of such
costs (the "Retainage"). Lender shall not be obligated to make disbursements
of the Net Proceeds more than once every thirty (30) days. The Retainage
shall not be released until the Inspecting Engineer certifies that the repair
and restoration have been completed in accordance with the provisions of
Section 1.3, and ▇▇▇▇▇▇ receives evidence satisfactory to Lender that the
costs of the repair and restoration have been paid in full or will be paid in
full out of the Retainage, and thereafter the Retainage shall be released for
payment in full of such costs. If at any time the Net Proceeds, or the
undisbursed balance thereof, shall not, in the opinion of Lender, be
sufficient to pay in full the balance of the costs which will be incurred in
connection with the completion of the repair and restoration, Borrower shall
deposit the deficiency with Lender before any further disbursement of the Net
Proceeds shall be made, which deficiency deposit may be commingled with the
general funds of Lender, shall not bear interest and shall be disbursed for
costs actually incurred in connection with the repair and restoration on the
same conditions applicable to the Net Proceeds. Any such deficiency deposit
until disbursed pursuant to this paragraph shall constitute additional
security for the payment of the Debt.
(d) All insurance proceeds received by Lender and not required
to be disbursed for the repair and restoration pursuant to the provisions of
this Section 1.3 may be retained and applied by Lender toward the payment of the
Debt whether or not then due and payable in such priority and proportions as
Lender in its discretion shall deem proper (without payment of the Prepayment
Premium) or, at the discretion of Lender, the same may be paid, either in whole
or in part, to Borrower for such purposes as Lender shall designate. If Lender
shall receive and retain such insurance proceeds, the lien of this Instrument
shall be reduced only by the amount thereof received and retained by ▇▇▇▇▇▇ and
actually applied by Lender in reduction of the Debt.
1.4. PAYMENT OF TAXES, ETC.
(a) Borrower shall pay all real and personal property taxes,
assessments, water rates, sewer rents and other charges, including vault charges
and license fees for the use of vaults, chutes and similar areas adjoining the
Premises, now or hereafter levied, imposed or assessed against the Premises and
Improvements (collectively, the "Taxes") prior to the date upon which any fine,
penalty, interest or cost may be added thereto or imposed by law for the
nonpayment thereof, and, in the absence of such timely payment, Lender in its
sole discretion, may, but shall not be obligated to, pay same (all such payments
to be secured hereby in accordance with Section 2.7 hereof), and ▇▇▇▇▇▇▇▇ shall
reimburse Lender upon demand for such expenditures. Borrower shall deliver to
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▇▇▇▇▇▇, within thirty (30) days of payment, receipts bills, canceled checks and
other evidence satisfactory to Lender evidencing the payment of real property
taxes and assessments (excluding those paid by ▇▇▇▇▇▇), and upon written request
of Lender shall evidence payment of all other Taxes prior to the date upon which
any fine, penalty, interest or cost may be added thereto or imposed by law for
the nonpayment thereof.
(b) After prior notice to Lender, in the case of any material
item, Borrower, at its own expense, may contest by appropriate legal proceeding,
promptly initiated and conducted in good faith and with due diligence, the
amount or validity or application in whole or in part of any of the Taxes,
provided that (i) no Event of Default then exists under the Note or this
Instrument, (ii) Borrower is permitted to do so under the provisions of any
mortgage or deed of trust superior in lien to the Mortgage and under the
provisions of the any ground lease encumbered hereby, if any, (iii) such
proceeding shall suspend the collection of the Taxes from Borrower and from the
Mortgaged Property, (iv) such proceeding shall be permitted under and be
conducted in accordance with the provisions of any other instrument to which
Borrower or the Mortgaged Property is subject and shall not constitute a default
thereunder, (v) neither the Mortgaged Property nor any part thereof or interest
therein will in the opinion of Lender be in danger of being sold, forfeited,
terminated, canceled or lost, (vi) Borrower shall have set aside adequate
reserves for the payment of the Taxes, together with all interest and penalties
thereon, and (vii) Borrower shall have furnished such security as may be
required in the proceeding, or as may be requested by ▇▇▇▇▇▇ to insure the
timely payment of any such Taxes, together with all interest and penalties
thereon.
1.5 ESCROW FUND.
(a) Borrower will pay to Lender on the first day of each
calendar month one-twelfth of an amount (the "Escrow Fund") which would be
sufficient to pay, on the first day of the month preceding the month in which
they become due, the Taxes and the premiums on all Policies (the "Premiums")
payable, or estimated by Lender to be payable, during the ensuing twelve (12)
months. Lender will apply the Escrow Fund to the payment of Taxes and the
Premiums which are required to be paid by Borrower pursuant to the provisions
of this Instrument. If the amount of the Escrow Fund shall exceed the amount
of the Taxes and the Premiums payable by Borrower pursuant to the provisions
of this Instrument, Lender shall, in its discretion, (i) return any excess to
Borrower, or (ii) credit such excess against future payments to be made to
the Escrow Fund. In allocating such excess, ▇▇▇▇▇▇ may deal with the person
shown on the records of ▇▇▇▇▇▇ to be the owner of the Premises and
Improvements. If the Escrow Fund is not sufficient to pay the Taxes and/or
the Premiums, as the same become payable, Borrower shall pay to Lender, upon
request, an amount which Lender shall estimate as sufficient to make up the
deficiency. Until expended or applied as above provided, any amounts in the
Escrow Fund may be commingled with the general funds of Lender, shall
constitute additional security for the Debt and shall not bear interest. The
collection of such deposits by Lender shall not relieve Borrower of any of
the obligations of Borrower under any provision of this Instrument. Provided
(i) there are sufficient amounts in the Escrow
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not less than thirty (30) days in advance of the due date of such payment,
(ii) no Event of Default exists under this Instrument and (iii) Lender is not
otherwise constrained or prohibited from making such payment, Lender shall
pay the Taxes and Premiums as they become due by their respective due dates;
further, if such conditions apply and should Lender fail to make such payment
on or before the delinquency date of such payment, then Lender shall be
responsible for the payment of any interest and penalties arising on account
of such failure from and after such date, provided that in the event Borrower
receives written notice of such failure to pay, then the liability of Lender
for such interest and penalties shall terminate ten (10) days after ▇▇▇▇▇▇▇▇
receives such notice unless Borrower notifies Lender in writing within such
ten (10) day period of such failure to pay.
(b) To the extent permitted by applicable law, if a Default
occurs under any of the provisions of this Instrument, Lender shall have the
right to apply the balance of any funds deposited with it, or its designee,
accumulated to pay Taxes and Premiums, either as a credit against the Debt or to
the payment of any other charges payable hereunder.
1.6. CONDEMNATION. Borrower shall promptly provide notice to Lender of
the actual or threatened commencement of any condemnation or eminent domain
proceedings and shall deliver to Lender copies of any and all pleadings and
papers served in connection with such proceedings. Lender may at its option
participate in such proceedings. Notwithstanding any taking by any public or
quasi-public authority through eminent domain or otherwise, Borrower shall
continue to pay the Debt at the time and in the manner provided for its payment
in the Note and this Instrument and the Debt shall not be reduced until any
award or payment therefor shall have been actually received and applied by
Lender to the discharge of the Debt. Lender may apply the entire amount of any
such award or payment to the discharge of the Debt whether or not then due and
payable in such order, priority and proportions as Lender in its discretion
shall deem proper. If Lender receives and retains such award or payment and
applies it to the Debt, the lien of this Instrument shall be affected only by a
reduction of the amount of said lien by the amount of such award or payment so
received and retained by ▇▇▇▇▇▇. Borrower shall at its expense file and
prosecute its claim or claims for any such award or payment in good faith and
with due diligence and cause the same to be collected and paid over to Lender.
Borrower hereby irrevocably authorizes and empowers ▇▇▇▇▇▇, in the name of
Borrower or otherwise, to collect and receipt for any such award or payment and
to file and prosecute such claim or claims. Although it is hereby expressly
agreed that the same shall not be necessary in any event, Borrower shall, upon
demand of Lender, make, execute and deliver any and all assignments and other
instruments sufficient for the purpose of assigning any such award or payment to
Lender, free and clear of any encumbrances of any kind or nature whatsoever. If
the Mortgaged 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 such award or payment, or a portion thereof sufficient to pay
the Debt, whichever is less, and Borrower shall pay over to Lender said award or
payment as, if and when Borrower receives same, to the extent of
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any deficiency found to be due upon such sale, with interest thereon, whether
or not a deficiency judgment on this Instrument shall have been sought or
recovered or denied, and of the attorneys' fees, costs and disbursements
incurred by ▇▇▇▇▇▇ in connection with the collection of such award or
payment. Lender shall not be limited to the interest paid on the award by the
condemning authority and shall be entitled to reserve interest on the amount
at the Interest Rate (as defined in the Note).
1.7. LEASES AND RENTS.
(a) Borrower absolutely and irrevocably assigns to Lender the
Rents, and Borrower grants to Lender the right to enter upon and to take
possession of the Premises and Improvements for the purpose of collecting the
same and to let the Premises and Improvements, or any part thereof, and to apply
the Rents after payment of all necessary charges and expenses on account to the
Debt, reserving only to Borrower the conditional right, as a licensee, to
collect, use and enjoy the Rents until an Event of Default shall occur hereunder
and be continuing. In exercising such conditional right, Borrower shall be
entitled to collect and receive such Rent and agrees to use such Rents in
payment of principal and interest becoming due under the Note and in payment of
Taxes and Premiums becoming due hereunder, but such right of Borrower may be
revoked by Lender upon the occurrence and during the continuance of an Event of
Default under the terms of the Note or this Instrument and thereafter Lender may
let the Premises and Improvements or any part thereof and may retain and apply
the Rents toward payment of the Debt in such order, priority and proportions as
Lender, in its discretion, shall deem proper, or toward the operation,
maintenance and repair of the Premises and Improvements, and irrespective of
whether Lender shall have commenced a foreclosure of this Instrument or shall
have applied or arranged for the appointment of a receiver. Lender shall not be
obligated to give to Borrower prior notice of such revocation of the right to
let and collect the Rents.
(b) In addition to the rights which Lender may have herein,
if an Event of any Default occurs under this Instrument and is continuing,
Lender, at its option, may require Borrower to pay monthly in advance to
Lender, or any receiver appointed to collect the Rents for application to the
amounts outstanding under the Note, the fair and reasonable rental value for
the use and occupation of such part of the Premises and Improvements as may
be in actual possession of Borrower for application to the amounts
outstanding under the Note. Upon default in any such payment, ▇▇▇▇▇▇▇▇ will
vacate and surrender possession of the Premises and Improvements to Lender,
or to such receiver, and, in default thereof, Borrower may be evicted by
summary proceedings or otherwise. Nothing contained in this paragraph shall
be construed as imposing on Lender any of the obligations of the lessor under
the Leases, any duty to produce rents from the Premises and Improvements and
shall not cause Lender to be a "mortgage-in-possession" for any purpose.
▇▇▇▇▇▇ further agrees that it shall, upon request, execute, acknowledge and
deliver to Lender such further and additional assignments and other
instruments as shall be reasonably required for the purpose of assigning the
Rents.
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(c) Borrower shall not, without the prior written consent of Lender,
(i) accept prepayments or installments of the Rents for a period of more than 1
month in advance; (ii) further assign the whole or any part of the Rents; or
(iii) enter into new Leases, modify, cancel, terminate or accept any surrender
under any existing Leases. Borrower shall (aa) fulfill or perform each and
every provision of the Leases on the part of the Borrower to be observed or
performed, (bb) promptly send to Lender copies of all notices of default which
Borrower shall give or receive under the Leases and (cc) enforce the performance
or observance of the provisions thereof by the tenant thereunder.
Notwithstanding the foregoing, provided no Event of Default then exists under
this Instrument or any of the other Loan Documents, the prior written consent of
Lender shall not be required in connection with making of non-residential Leases
which (i) provide for a term of five (5) years or less (including options) at a
market rental rate for comparable properties in the Mortgaged Property area (as
determined by the Lender or the Lender's loan correspondent); (ii) have been
negotiated at arms length; (iii) demise not more than ten percent (10%) in the
aggregate of the Improvements; and (iv) do not contain material modifications
from a standard form of Lease previously approved by the Lender, if any. If the
Mortgaged Property includes residential apartments, the prior consent of the
Lender shall not be required in connection with the making, modification or
termination of Leases in the ordinary course of business and in the exercise of
the Borrower's prudent business judgment.
1.8. BOOKS AND RECORDS.
(a) Borrower will keep and maintain or will cause to be kept and
maintained in accordance with Generally Accepted Accounting Principles,
consistently applied, proper and accurate books, records and accounts reflecting
all of the financial affairs of Borrower and all items of income and expense in
connection with the operation of the Mortgaged Property. Lender shall have the
right from time to time at all times during normal business hours to examine
such books, records and accounts in connection with the operation of the
Mortgaged Property at the office of Borrower or such other person maintaining
such books, records and accounts and to make copies or extracts thereof as
Lender shall desire.
(b) Borrower will furnish Lender within ninety (90) days after
each fiscal year end of Borrower with:
(i) a complete executed copy of an annual financial statement
prepared in accordance with Generally Accepted Accounting Principles
certified by Borrower, containing a balance sheet, income statements, cash
flow statements, operating statements in the same form and scope as the
financial statements of the Borrower provided to Lender in connection with
the Loan and shall otherwise be in form and substance satisfactory to
Lender, which statement shall include the operation of the Mortgaged
Property;
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(ii) a complete and detailed leasing status and rent roll report
with respect to the Improvements, which leasing report shall also include,
by way of illustration only, a list of current tenants, space occupied,
base rent, additional rent, lease concessions, commencement and expiration
dates and leasing commission obligations and shall otherwise be in form and
substance satisfactory in all respects to Lender
(said items in clauses (i) and (ii) being referred to as the "Reports"). If
Borrower fails to provide any Report within thirty (30) days of a written
request by ▇▇▇▇▇▇, Borrower shall pay Lender $5,000 for such Report not timely
delivered.
(c) Borrower shall furnish to Lender, within ten (10) days after
request, such further detailed financial and other information (including, but
not limited to, financial statements) as may be reasonably requested by Lender
with respect to the Mortgaged Property and Borrower, any Guarantor (if any) or
Responsible Party (if any) or any affiliate of, or entity controlled by,
Borrower, any Guarantor (if any) or Responsible Party (if any) as of a date not
earlier than that specified by ▇▇▇▇▇▇ in such request.
1.9. TRANSFER OR ENCUMBRANCE OF THE MORTGAGED PROPERTY.
(a) No part of the Mortgaged Property nor any interest in
Borrower shall be further encumbered, sold, transferred, assigned or conveyed,
or permitted to be further encumbered, sold, transferred, assigned or conveyed
(a "Transfer") if such Transfer results in any person or group acting in concert
acquiring beneficial ownership of securities of the Borrower representing more
than 20% of the combined voting power of all securities of the Borrower entitled
to vote and such percentage is greater than the aggregate percentage of such
voting power then held by Yale ▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ and their immediate
families, designated beneficiaries and any trust established for the benefit
thereof by either of them, nor shall the Mortgaged Property or any portion
thereof be converted to or operated as a condominium or cooperative form of
ownership without the prior written consent of Lender in each instance, and
which consent in any and all circumstances may be withheld in the sole and
absolute discretion of Lender. The provisions of the foregoing sentence of this
paragraph shall apply to each and every such further encumbrance, sale,
transfer, assignment or conveyance, regardless of whether or not Lender has
consented to, or waived by its action or inaction its rights hereunder with
respect to, any such previous further encumbrance, sale, transfer, assignment or
conveyance, and irrespective of whether such further encumbrance, sale,
transfer, assignment or conveyance is voluntary, by reason of operation of law
or is otherwise made. For illustration purposes only, a Transfer shall be
deemed to include: an installment sales contract or agreement whereby Borrower
agrees to sell the Mortgaged Property or any part thereof in installments and/or
an agreement by Borrower for leasing of all or a substantial part of the
Mortgaged Property for other than actual occupancy by a space tenant.
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(b) Notwithstanding the foregoing provisions of Section 1.9(a),
and in addition to any Transfers not prohibited by this Section and except if
Borrower is comprised of any individual persons, beneficial interests in
Borrower can be transferred for estate planning purposes to family members of
the holder of such beneficial interests without the prior written consent of
Lender, provided (i) no Event of Default then exists under this Instrument or
the Loan Documents and (ii) Lender receives true, accurate and complete copies
of the documents accomplishing such transfer within seven (7) days of such
transfer. In no event shall any such Transfer affect in any respect whatsoever
the liability of any of the Responsible Parties (if any) with respect to the
Loan.
1.10. MAINTENANCE OF THE MORTGAGED PROPERTY; COMPLIANCE WITH LAWS,
REGULATIONS, COVENANTS AND EASEMENTS.
(a) Borrower shall cause the Mortgaged Property to be maintained
in good condition and repair and, to the extent of any renovations that are made
by Borrower, the same shall be made in compliance with the requirements of all
governmental authorities having jurisdiction over the Mortgaged Property.
Borrower will not commit or suffer to be committed any waste of the Mortgaged
Property. The Improvements and the Building Equipment shall not be removed,
demolished or materially altered (except for normal replacement of the Building
Equipment), without the prior written consent of Lender, including, but not
limited to, any alteration changing the configuration or number of parking
spaces comprising a part of the Mortgaged Property. Without limiting the rights
of Borrower to obtain insurance proceeds as and to the extent set forth in
Paragraph 1.3(c) of this Instrument and subject Lender's compliance therewith,
Borrower shall promptly repair, replace or rebuild any part of the Mortgaged
Property which may be damaged or destroyed by fire or other property hazard or
casualty (including any fire or other property hazard or casualty for which
insurance was not obtained or obtainable) or which may be affected by any taking
by any public or quasi-public authority through eminent domain or otherwise, and
shall complete and pay for, within a reasonable time, any structure at any time
in the process of construction or repair on the Premises.
(b) Borrower represents and warrants to Lender that the
Mortgaged Property is currently in compliance with, and Borrower shall in the
future promptly comply with, all existing and future governmental laws, orders,
ordinances, rules and regulations affecting the Mortgaged Property, or any
portion thereof or the use thereof, including specifically, but not limited to,
provisions of the Americans with Disabilities Act. Borrower shall comply with
the requirements of all, and shall not modify, amend or terminate any, easements
and restrictive covenants which from time to time affect the whole or any
portion of the Mortgaged Property or the use thereof. Borrower shall also
comply with the requirements of, and to the extent reasonably within Borrower's
control, maintain, preserve, enforce and renew, all rights of way, easements,
grants, privileges, licenses, franchises and restrictive covenants which from
time to time benefit or pertain to the whole or any portion of the Mortgaged
Property, and Borrower shall not modify, amend or terminate, or surrender any of
its rights under, any of such rights of way,
16
easements, grants, privileges, licenses, franchises or restrictive covenants.
Borrower will not, without obtaining the prior written consent of Lender,
initiate, join in or consent to any new private restrictive covenant, zoning
ordinance, or other public or private restrictions, limiting or affecting the
uses which may be made of the Mortgaged Property or any part thereof.
(c) In the event Borrower retains a professional manager for the
Mortgaged Property, the management agreement is hereby assigned to Lender and
the rights of the manager thereunder shall be subordinated to the lien of this
Instrument and such manager shall consent to such subordination and assignment
upon request from ▇▇▇▇▇▇. If any change of management or termination or
modification of any management contract occurs without ▇▇▇▇▇▇'s prior written
approval, it shall constitute a Default hereunder. So long as no Event of
Default exists under this Instrument, ▇▇▇▇▇▇ approves Borrower as manager of the
Mortgaged Property and no written management contract shall be required during
the term of such party's management.
1.11. ENVIRONMENTAL PROVISIONS.
(a) For the purposes of this paragraph the following terms shall
have the following meanings: (i) the term "Hazardous Material" shall mean any
material or substance that, whether by its nature or use, is now or hereafter
defined as a hazardous waste, hazardous substance, pollutant or contaminant
under any Environmental Requirement, or which is toxic, explosive, corrosive,
flammable, infectious, radioactive, carcinogenic, mutagenic or otherwise
hazardous and which is now or hereafter regulated under any Environmental
Requirement, or which is or contains petroleum, gasoline, diesel fuel or another
petroleum hydrocarbon product, (ii) the term "Environmental Requirements" shall
collectively mean all present and future laws, statutes, ordinances, rules,
regulations, orders, codes, licenses, permits, decrees, judgments, directives or
the equivalent of or by any Governmental Authority and relating to or addressing
the protection of the environment or human health, and (iii) the term
"Governmental Authority" shall mean the Federal government, or any state or
other political subdivision thereof, or any agency, court or body of the Federal
government, any state or other political subdivision thereof, exercising
executive, legislative, judicial, regulatory or administrative functions and
having appropriate jurisdiction over Hazardous Materials or Hazardous Materials
activities; and (iv) the term "Environmental Assessments" shall mean the PEER
Environmental, Inc. Phase I Environmental Assessment provided by Borrower to
Lender in connection with this Loan.
(b) Except as set forth in the Environmental Assessments,
Borrower hereby represents and warrants to Lender that to the best of Borrower's
knowledge after diligent inquiry (i) no Hazardous Material is currently located
at, on, in, under or about the Mortgaged Property in a manner which violates any
Environmental Requirement, or which requires cleanup or corrective action of any
kind under any Environmental Requirement, (ii) no releasing, emitting,
discharging, leaching, dumping or disposing of any Hazardous Material from the
Mortgaged Property onto or into any other property or
17
from any other property onto or into the Mortgaged Property has occurred or
is occurring in violation of any Environmental Requirement, (iii) no written
or oral notice of violation, lien, complaint, suit, order or other notice
with respect to the Mortgaged Property is presently outstanding under any
Environmental Requirement, and (iv) the Mortgaged Property and the operation
thereof are in material compliance with all Environmental Requirements.
(c) Borrower shall comply, and shall cause all tenants or other
occupants of the Mortgaged Property to comply, in all material respects with all
Environmental Requirements, and will not generate, store, handle, process,
dispose of or otherwise use, and will not permit any tenant or other occupant of
the Mortgaged Property to generate, store, handle, process, dispose of or
otherwise use, Hazardous Materials at, in, on, under or about the Mortgaged
Property in a manner that could lead or potentially lead to the imposition on
Borrower, Lender or the Mortgaged Property of any liability or lien of any
nature whatsoever under any Environmental Requirement. Borrower shall notify
Lender promptly in the event of any spill or other release of any Hazardous
Material at, in, on, under or about the Mortgaged Property which is required to
be reported to a Governmental Authority under any Environmental Requirement,
will promptly forward to Lender copies of any notices received by Borrower
relating to alleged violations of any Environmental Requirement and will
promptly pay when due any fine or assessment against Lender, Borrower or the
Mortgaged Property relating to any Environmental Requirement. If at any time it
is determined that the operation or use of the Mortgaged Property violates any
applicable Environmental Requirement or that there are Hazardous Materials
located at, in, on, under or about the Mortgaged Property which, under any
Environmental Requirement, require special handling in collection, storage,
treatment or disposal, or any other form of cleanup or corrective action,
Borrower shall, within thirty (30) days after receipt of notice thereof from any
Governmental Authority or from Lender, take, at Borrower's sole cost and
expense, such actions as may be necessary to fully comply in all respects with
all Environmental Requirements, provided, however, that if such compliance
cannot reasonably be completed within such thirty (30) day period, Borrower
shall commence such necessary action within such thirty (30) day perod and shall
thereafter diligently and expeditiously proceed to fully comply in all respects
and in a timely fashion with all Environmental Requirements.
(d) If Borrower fails to timely take, or to diligently and
expeditiously proceed to complete in a timely fashion, any such action described
in Section 1.11(c) above, Lender may, in its sole and absolute discretion, make
advances or payments toward the performance or satisfaction of the same, but
shall in no event be under any obligation to do so. All sums so advanced or
paid by ▇▇▇▇▇▇ (including, without limitation, counsel and consultant fees and
expenses, investigation and laboratory fees and expenses, and fines or other
penalty payments) and all sums advanced or paid in connection with any judicial
or administrative investigation or proceeding relating thereto, will within 30
days of the demand, become due and payable from Borrower and shall bear interest
at the Default Rate (as hereinafter defined) from the date any such sums are so
advanced or paid by Lender until the date any such sums are repaid by
Borrower to
18
Lender. Borrower will execute and deliver, promptly upon request, such
instruments as Lender may deem useful or necessary to permit Lender to take any
such action, and such additional notes and mortgages, as Lender may require to
secure all sums so advanced or paid by ▇▇▇▇▇▇. If a lien is filed against the
Mortgaged Property by any Governmental Authority resulting from the need to
expend or the actual expending of monies arising from an action or omission,
whether intentional or unintentional, of Borrower or for which Borrower is
responsible, resulting in the releasing, spilling, leaking, leaching, pumping,
emitting, pouring, emptying or dumping of any Hazardous Material into the waters
or onto land located within or without the State where the Mortgaged Property is
located, then Borrower will, within thirty (30) days from the date that Borrower
is first given notice that such lien has been placed against the Mortgaged
Property (or within such shorter period of time as may be specified by Lender if
such Governmental Authority has commenced steps to cause the Mortgaged Property
to be sold pursuant to such lien), either (a) pay the claim and remove the lien,
or (b) furnish a cash deposit, bond, or such other security with respect thereto
as is reasonably satisfactory in all respects to Lender and is sufficient to
effect a complete discharge of such lien on the Mortgaged Property.
(e) Lender may, at its option, at intervals of not less than one
year, or more frequently if Lender reasonably believes that a Hazardous Material
or other environmental condition violates or threatens to violate any
Environmental Requirement, cause an environmental audit of the Mortgaged
Property or portions thereof to be conducted to confirm Borrower's compliance
with the provisions of this paragraph, and Borrower shall cooperate in all
reasonable ways with Lender in connection with any such audit. If such audit
discloses that a violation of an Environmental Requirement exists, Borrower
shall pay all costs and expenses incurred in connection with such audit;
otherwise, the costs and expenses of such audit shall, notwithstanding anything
to the contrary set forth in this paragraph, be paid by ▇▇▇▇▇▇.
(f) If this Instrument is foreclosed, or if the Mortgaged
Property is sold pursuant to the provisions of this Instrument, or if Borrower
tenders a deed or assignment in lieu of foreclosure or sale, Borrower shall
deliver the Mortgaged Property to the purchaser at foreclosure or sale or to
Lender, its nominee, or wholly-owned subsidiary, as the case may be, in a
condition that complies in all respects with all Environmental Requirements.
Borrower will defend, indemnify, and hold harmless Lender, its employees,
agents, officers, and directors (collectively, "Indemnitee"), from and against
any and all claims, demands, penalties, causes of action, fines, liabilities,
settlements, damages, costs, or expenses of whatever kind or nature, known or
unknown, foreseen or unforeseen, contingent or otherwise (including, without
limitation, counsel and consultant fees and expenses, investigation and
laboratory fees and expenses, court costs, and litigation expenses) which we
asserted against or incurred by Indemnitee and which are arising out of, or in
any way related to, (i) any breach by Borrower of any of the provisions of this
Section 1.11, (ii) the presence, disposal, spillage, discharge, emission,
leakage, release, or threatened release of any Hazardous Material which is at,
in, on, under, about, from or affecting the Mortgaged Property, including,
without limitation, any
19
damage or injury resulting from any such Hazardous Material to or affecting
the Mortgaged Property or the soil, water, air, vegetation, buildings,
personal property, persons or animals located on the Mortgaged Property or on
any other property or otherwise, (iii) any personal injury (including
wrongful death) or property damage (real or personal) arising out of or
related to any such Hazardous Material which is at, in, on, under, about,
from or affecting the Mortgaged Property, (iv) any lawsuit brought or
threatened, settlement reached, or order or directive of or by any
Governmental Authority relating to such Hazardous Material which is at, in,
on, under, about, from or affecting the Mortgaged Property, or (v) any
violation of any Environmental Requirement or any policy or requirement of
Lender hereunder. The aforesaid indemnification shall, notwithstanding any
exculpatory or other provision of any nature whatsoever to the contrary set
forth in the Note, this Instrument or any other document or instrument now or
hereafter executed and delivered in connection with the loan evidenced by the
Note and secured by this Instrument, constitute the personal recourse
undertakings, obligations and liabilities of Borrower.
(g) The aforesaid indemnification shall not be applicable to any
claim, demand, penalty, cause of action, fine, liability, settlement, damage,
cost or other expense of any type whatsoever occasioned, arising and caused
solely and directly as the result of the gross negligence or willful misconduct
of Lender, its nominee or wholly-owned subsidiary or their respective employees
or agents.
(h) Provided no claims concerning the indemnification set forth
herein are then pending, all obligations and liabilities of Borrower under this
Section 1.11 shall cease and terminate on the fifth (5th) anniversary of the
date of payment to Lender in cash of the entire Debt, PROVIDED that
contemporaneously with or subsequent to the payment to Lender in cash of the
entire Debt Borrower, at its sole cost and expense, delivers to Lender an
environmental audit of the Mortgaged Property in form and substance, and
prepared by a qualified environmental consultant, satisfactory in all respects
to Lender and indicating that the Mortgaged Property is in material compliance
with all applicable Environmental Requirements, AND PROVIDED FURTHER, HOWEVER,
that Borrower shall continue to be obligated to indemnify Lender and to hold
Lender harmless from and against any penalty, fine, liability, damage, cost or
other expense incurred by Lender and to which the aforesaid indemnification
pertains to the extent the same arises out of any claim, penalty, fine liability
or damage which is asserted or cause of action suit which is commenced prior to,
or which otherwise relates back to the period before fifth (5th) anniversary of
the date of payment to Lender in cash of the entire Debt. Except as hereinabove
specifically provided to the contrary in this Section 1.11, the obligations and
liabilities of Borrower under this Section 1.11 shall survive and continue in
full force and effect and shall not be terminated, discharged or released, in
whole or in part, irrespective of whether the Debt has been paid in full and
irrespective of any foreclosure of this Instrument, sale of the Mortgaged
Property pursuant to the provisions of this Instrument or acceptance by Lender,
its nominee or wholly-owned subsidiary of a deed or assignment in lieu of
foreclosure or sale and irrespective of any other fact or circumstance of any
nature whatsoever.
20
1.12. PERFORMANCE OF OTHER AGREEMENTS. Borrower shall observe and
perform each and every term to be observed or performed by Borrower pursuant to
the terms of any agreement or recorded instrument affecting or pertaining to the
Mortgaged Property.
1.13. OTHER SECURITY FOR THE DEBT. Borrower shall observe and perform
all of the terms, covenants and provisions contained in the Note and in all
other mortgages and other instruments or documents evidencing, securing or
guaranteeing payment of the Debt, in whole or in part, or otherwise executed and
delivered in connection with the Note, this Instrument or the loan evidenced and
secured thereby or hereby, including, but not limited to, that certain
Assignment of Leases and Rents dated of even date herewith from Borrower to
Lender (the "Loan Documents").
1.14. RIGHT OF ENTRY. Lender and its agents shall have the right to
enter and inspect the Mortgaged Property at all reasonable times, subject to the
rights of tenants of the Mortgaged Property (all of which leases shall permit
inspection of the demised premises thereunder), provided, however, that if
Lender has not delivered written notice of such intent to inspect at least 24
hours in advance of such inspection, then Borrower may require that any such
inspection be limited to any areas of the Mortgaged Property which are open to
access to the public.
1.15. SECURITY AGREEMENT.
(a) This Instrument constitutes both a real property mortgage
and a "security agreement," within the meaning of the Uniform Commercial Code,
and the Mortgaged Property includes both real and personal property and all
other rights and interests, whether tangible or intangible in nature, of
Borrower in the Mortgaged Property. Borrower by executing and delivering this
Instrument has granted to Lender, as security for the Debt, a security interest
in the Building Equipment and hereby pledges to Lender any and all monies now or
hereafter held by ▇▇▇▇▇▇ as additional security for the Debt until expended or
applied as provided in this Instrument. If a Default occurs under the Note,
this Instrument or the Loan Documents, Lender, 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 Building
Equipment or any part thereof, and to take such other measures as Lender may
deem necessary for the care, protection and preservation of the Building
Equipment. Upon request or demand of Lender, Borrower shall at its expense
assemble the Building Equipment and make it available to Lender at a convenient
place acceptable to Lender. Borrower shall pay to Lender on demand any and all
expenses, including legal expenses and attorneys' fees, incurred or paid by
▇▇▇▇▇▇ in protecting its interest in the Building Equipment and in enforcing its
rights hereunder with respect to the Building Equipment. Any notice of sale,
disposition or other intended action by Lender with respect to the Building
Equipment sent to Borrower in accordance with the provisions of this Instrument
at least seven (7) days prior to the date of any such sale, disposition or other
action, shall constitute reasonable notice to Borrower, and the
21
method of sale or disposition or other intended action set forth or specified
in such notice shall conclusively be deemed to be commercially reasonable
within the meaning of the Uniform Commercial Code unless objected to in
writing by Borrower within five (5) days after receipt by Borrower of such
notice. The proceeds of any sale or disposition of the Building Equipment,
or any part thereof, may be applied by Lender to the payment of the Debt in
such order, priority and proportions as Lender in its discretion shall deem
proper.
(b) Borrower warrants that (i) Borrower's (that is, "Debtor's")
name, identity or corporate structure and residence or principal place of
business are as set forth in Section 1.15(c) hereof; (ii) Borrower (that is,
"Debtor") has been using or operating under said name, identity or corporate
structure without change for the time period set forth in Section 1.15(c)
hereof; and (iii) the location of the collateral is upon the Real Property.
Borrower covenants and agrees that ▇▇▇▇▇▇▇▇ will furnish Lender with notice of
any change in the matters addressed by clauses (i) or (iii) of this
Section 1.15(b) within thirty (30) days of the effective date of any such change
and Borrower will promptly execute any financing statements or other instruments
deemed necessary by ▇▇▇▇▇▇ to prevent any filed financing statement from
becoming misleading or losing its perfected status.
(c) The information contained in this Section 1.15(c) is
provided in order that this Instrument shall, to the extent permitted by
applicable law, comply with the requirements of the Uniform Commercial Code, as
enacted in the State of Minnesota, for instruments to be filed as financing
statements. The name of the "Debtor" and, as provided to Borrower by ▇▇▇▇▇▇,
the name of the "Secured Party," the identity or corporate structure and
residence or principal place of business of "Debtor," and the time period for
which "Debtor" has been using or operating under said name and identity or
corporate structure without change, are as set forth in Schedule 1 of EXHIBIT C
attached hereto and by this reference made a part hereof; as provided to
Borrower by ▇▇▇▇▇▇, the name of the mailing address of the "Secured Party" from
which information concerning the security interest may be obtained, and the
mailing address of "Debtor," are as set forth in Schedule 2 of said EXHIBIT C
attached hereto; and a statement indicating the types, or describing the items,
of collateral is set forth hereinabove.
22
ARTICLE II - DEFAULTS AND REMEDIES
2.1. DEFAULT. The term "Event of Default", wherever used in this
Instrument, shall mean any one or more of the following events, without regard
to any grace period or notice and cure period provided or referenced below with
respect to any such events, and the term "Default", wherever used in this
Instrument, shall mean any one or more of the following events, after expiration
of any applicable grace period or notice and cure period provided or referenced
below with respect to any such events. The Debt shall become immediately due
and payable at the option of Lender upon the occurrence of any one or more of
the following events, whether such occurrence shall be voluntary, involuntary,
by operation of law or pursuant to or in compliance with any judgment, decree or
order of any court or any rule or regulation of any administrative or
governmental body:
(a) if any portion of the Debt is not paid within ten (10) days
of the due date or if the Debt is not paid in full on maturity;
(b) if Borrower shall fail to pay when due any installment of
any assessment against the Premises and Improvements for local improvements
heretofore or hereafter laid, which assessment is or may become payable in
annual or periodic installments and is or may become a lien on the
Mortgaged Property, as such payment due date may be extended by Borrower's
contest thereof in accordance with Paragraph 1.4(b);
(c) if any Federal tax lien is filed against Borrower, any
Guarantor (if any) or Responsible Party (if any) or the Mortgaged Property
and the same is not discharged of record within thirty (30) days after the
same is filed;
(d) except as expressly permitted under the Loan Documents, if
without the consent of Lender (which consent in any and all circumstances
may be withheld in the sole and absolute discretion of Lender), any part of
the Mortgaged Property or any interest of any nature whatsoever therein or
any interest of any nature whatsoever in Borrower (whether partnership,
stock, equity, beneficial, profit, loss or otherwise) is in any manner, by
operation of law or otherwise, whether directly or indirectly, further
encumbered, sold, transferred, assigned or conveyed, and irrespective of
whether any such further encumbrance, sale, transfer, assignment or
conveyance is voluntary, by reason or operation of law or is otherwise
made, or if any portion of the Mortgaged Property is operated as or
converted to a condominium or cooperative ownership regime without the
prior written consent of Lender;
(e) if Borrower shall fail to comply with any requirement or
order or notice of violation of law or ordinance issued by any Governmental
Authority within three (3) months from the issuance thereof, or the time
period set forth therein, whichever is less;
(f) if the Policies are not assigned to Lender in the manner set
forth in Paragraph 1.3 or kept in full force and effect, or if the Policies
or certified copies thereof are not delivered to Lender upon request in
accordance with Paragraph 1.3;
23
(g) if any representation or warranty of Borrower, any Guarantor
(if any) or any Responsible Party (if any) made herein or in any such
guaranty executed and delivered by a Guarantor (if any) (a "Guaranty"), or
in any certificate, report, financial statement or other instrument
furnished in connection with the making of the Note, this Instrument, any
such Guaranty if Borrower or any Guarantor (if any) or Responsible Party
(if any), shall prove false or misleading in any material respect or shall
have omitted any substantial contingent or unliquidated liability or claim;
(h) if Borrower, any Guarantor (if any), any Responsible Party
(if any) or any general partner of Borrower (each of whom is hereinafter in
this subparagraph referred to as an "Obligor") shall commence any case,
proceeding or other action relating to it in bankruptcy or seeking
reorganization, liquidation, dissolution, winding-up, arrangement,
composition or readjustment of its debts, or for any other relief, under
bankruptcy, insolvency, reorganization, liquidation, dissolution,
winding-up, arrangement, composition, readjustment of debt or other similar
act or law of any jurisdiction, domestic or foreign, now or hereafter
existing; or if an Obligor shall apply for a receiver, custodian or trustee
of it or for all or a substantial part of its property; or if an Obligor
shall make an assignment for the benefit of creditors; or if an Obligor
shall be unable to, or shall admit in writing the inability to pay its
debts generally as they become due; or if an Obligor shall take any action
indicating its consent to, approval of, acquiescence in, or in furtherance
of, any of the foregoing; or if any case, proceeding or other action
against an Obligor shall be commenced in bankruptcy or seeking
reorganization, liquidation, dissolution, winding-up, arrangement,
composition or readjustment of its debts, or any other relief, under any
bankruptcy, insolvency, reorganization, liquidation, dissolution,
arrangement, composition, readjustment of debt or other similar act or law
of any jurisdiction, domestic or foreign, now or hereafter existing, and
such condition shall continue for a period of sixty (60) days undismissed,
undischarged or unbonded; or if a receiver, custodian or trustee of an
Obligor or for all or a substantial part of its property shall be appointed
and such condition shall continue for a period of sixty (60) days
undismissed, undischarged or unbonded; or if a warrant of attachment,
execution or distraint, or similar process, shall be issued against any
substantial part of the property of an Obligor and such condition shall
continue for a period of sixty (60) days undismissed, undischarged or
unbonded;
(i) if Borrower or any other person shall be in Default under
the Note, or under any other mortgage, instrument or document evidencing,
securing or guaranteeing payment of the Debt, in whole or in part, or
otherwise executed and delivered in connection with the Note, this
Instrument or the loan evidenced and secured thereby or hereby;
24
(j) if Borrower or any other person shall be in Default under
any mortgage or deed of trust covering any part of the Premises and
Improvements whether superior or inferior in lien to this Instrument, and
including, without limitation, any such mortgage or deed of trust now or
hereafter held by ▇▇▇▇▇▇;
(k) if the Mortgaged Property shall become subject (i) to any
tax lien, other than a lien for local real estate taxes and assessments not
due and payable, or (ii) to any lis pendens, notice of pendency, stop
order, notice of intention to file mechanic's or materialman's lien,
mechanic's or materialman's lien or other lien of any nature whatsoever and
the same shall not either be discharged of record or in the alternative
insured over to the satisfaction of Lender by the title company insuring
the lien of this Instrument within a period of thirty (30) days after the
same is filed or recorded, and irrespective of whether the same is superior
or subordinate in lien or other priority to the lien of this Instrument and
irrespective of whether the same constitutes a perfected or inchoate lien
or encumbrance on the Premises and Improvements or is only a matter of
record or notice, except only for those filings permitted in
Paragraph 1.3(c)(ii)(bb) in connection with the permitted repair and
renovation of the Mortgaged Property;
(l) if Borrower shall fail to maintain its business in the State
of Minnessota in good standing under the applicable regulations of the
agencies or governmental authorities having jurisdiction thereof, or its
failure to receive and maintain whatever licenses are required, or shall be
required, for the ownership, maintenance and operation of the Premises and
Improvements; or
(m) except for specific defaults set forth in this Section 2.1,
if Borrower shall continue to be in default under any of the other terms,
covenants or conditions of this Instrument for ten (10) days after notice
from Lender in the case of any default which can be cured by the payment of
a sum of money or for thirty (30) days after notice from Lender in the case
of any other default, provided that if such default cannot reasonably be
cured within such thirty (30) day period and Borrower shall have commenced
to cure such default within such thirty (30) day period and thereafter
diligently and expeditiously proceeds to cure the same, such thirty (30)
day period shall be extended for so long as it shall require Borrower in
the exercise of due diligence to cure such default, it being agreed that no
such extension shall be for a period in excess of ninety (90) days.
2.2. RIGHTS AND REMEDIES OF LENDER. At any time after the occurrence of
a Default hereunder, ▇▇▇▇▇▇ shall have all of the rights and remedies available
under applicable law, including, by way of illustration and not of limitation,
the right:
(i) to declare the Debt immediately due and payable;
25
(ii) to commence and maintain an action or actions in any court
of competent jurisdiction to foreclose this Instrument and the security
interest granted herein, or to obtain specific enforcement of the covenants
of Borrower hereunder, and ▇▇▇▇▇▇▇▇ agrees that such covenants shall be
specifically enforceable by injunction or any other appropriate equitable
remedy, and that for the purposes of any action brought hereunder, Borrower
waives the defenses of laches and any statute of limitations;
(iii) to enter upon, possess, manage and operate the Mortgaged
Property or any part thereof, to make, terminate, enforce or modify the
Leases upon such terms and conditions as Lender deems proper, and to make
repairs, alterations and improvements to the Mortgaged Property necessary
in ▇▇▇▇▇▇'s judgment to protect or enhance the security hereof;
(iv) to enforce and realize upon, or waive, the security
hereunder and any other security now or hereafter held by ▇▇▇▇▇▇ in such
order and manner as Lender may in its sole discretion determine, whether
concurrently or successively and in one or several consolidated independent
judicial actions or lawfully taken non-judicial proceedings, or both;
(v) foreclose this Instrument, and in any such action qualify
for the appointment of a receiver of the Mortgaged Property either before
or after a foreclosure sale, without notice and without regard to the
solvency or insolvency of Borrower at the time of the application for such
receiver, and without regard to the then value of the Mortgaged Property,
and Lender or any holder of the Note may be appointed as such receiver or
as Lender in possession. The receiver or Lender in possession shall have
the power to collect the Rents during the pendency of such foreclosure
action, and in case of a sale and a deficiency, during the full statutory
period of redemption, if any, whether there be a redemption or not, as well
as during all other times, when Borrower, except for the intervention of
the receiver or Lender in possession, would be entitled to collect such
Rents, together with all other powers which may be necessary or are usual
in such cases for the protection, possession, control, management and
operation of the Mortgaged Property during the whole of said period; and
(vi) to exercise all rights, powers and remedies, if any,
described under Article IV of this Instrument.
(vii) to enforce this Instrument in any other manner permitted
under applicable law or to exercise any other remedy now or hereafter
existing in equity, at law, by virtue of statute or otherwise, as provided
in Minnesota.
2.3. APPOINTMENT OF RECEIVER. The holder of this Instrument, in any
action to foreclose it, shall be entitled to the appointment of a receiver. In
addition, upon the actual or threatened waste to any part of the Mortgaged
Property or upon the occurrence of any
26
default hereunder, the holder of this Instrument shall be at liberty, without
notice, to apply for the appointment of a receiver of the Rents, and shall be
entitled to the appointment of such receiver as a matter of right, without
regard to the value of the Mortgaged Property as security for the Debt, or
the solvency or insolvency of any person then liable for the payment of the
Debt.
2.4. SALE OF MORTGAGED PROPERTY. In connection with any foreclosure,
the Mortgaged Property, or any interest therein, may, at the discretion of
Lender, at the direction of Lender, be sold in one or more parcels or in several
interests or portions and in any order or manner.
2.5. RECOVERY OF SUMS REQUIRED TO BE PAID. Lender shall have the right
from time to time to take action to recover any sum or sums which constitute a
part of the Debt as the same become due, without regard to whether or not the
balance of the Debt shall be due, and without prejudice to the right of Lender
thereafter to bring an action of foreclosure, or any other action, for a default
or defaults by Borrower existing at the time such earlier action was commenced.
2.6. ACTIONS AND PROCEEDINGS. Lender shall have the right to appear in
and defend any action or proceeding brought with respect to the Mortgaged
Property and to bring any action or proceeding, in the name and on behalf of
Borrower, which ▇▇▇▇▇▇, in its discretion, feels should be brought to protect
▇▇▇▇▇▇'s interest in the Mortgaged Property.
2.7. RIGHT TO CURE DEFAULTS. Upon the occurrence of any Default
hereunder, ▇▇▇▇▇▇ may, at its discretion, remedy the same and for such purpose
shall have the right to enter upon the Mortgaged Property or any portion thereof
without thereby becoming liable to Borrower or any person in possession thereof
holding under or claiming under or through Borrower, it being understood and
agreed that nothing contained in this Instrument shall in any manner obligate
Lender to remedy any default hereunder. If Lender shall remedy such Default or
appear in, defend, or bring any action or proceeding to protect ▇▇▇▇▇▇'s
interest in the Mortgaged Property or to foreclose this Instrument or collect
the Debt, the costs and expenses thereof (including reasonable attorneys' fees
to the extent permitted by law), with interest as provided in this paragraph,
shall be paid by Borrower to Lender upon demand. All such costs and expenses
incurred by Lender in remedying such default or in appearing in, defending, or
bringing any such action or proceeding shall be paid by Borrower to Lender upon
demand, with interest (calculated for the actual number of days elapsed on the
basis of a 360-day year consisting of twelve (12) thirty (30) day months) at a
rate per annum equal to 18% (the "Default Rate"), provided, however, that the
Default Rate shall in no event exceed the maximum interest rate which Borrower
may by law pay, for the period after notice from Lender that such costs or
expenses were incurred to the date of payment to Lender. To the extent any of
the aforementioned costs or expenses paid by Lender after default by Borrower
shall constitute payment of (i) Taxes, charges or assessments which may be
imposed by law upon the Mortgaged Property, (ii) Premiums on insurance policies
covering the
27
Mortgaged Property, (iii) expenses incurred in preserving and protecting the
lien of this Instrument, including, but not limited to, the costs and
expenses of any litigation to collect the indebtedness secured by this
Instrument or to prosecute, defend, protect or preserve the rights and the
lien created by this Instrument, or (iv) any amount, cost or charge to which
Lender becomes subrogated, upon payment, whether under recognized principles
of law or equity, or under express statutory authority; then, and in each
such event, such costs, expenses and amounts, together with interest thereon
at the Default Rate, shall be added to the indebtedness secured by this
Instrument and shall be secured by this Instrument.
2.8. LATE PAYMENT CHARGE. If any installment of principal, interest or
other sum payable under this Instrument is not paid within ten (10) days after
the date on which it is due, Borrower shall pay to Lender upon demand an amount
equal to four percent (4%) of such unpaid installment as a late payment charge
in order to defray part of the increased cost of collection occasioned by any
late payments, as liquidated damages and not as a penalty, since actual damages
are impossible to determine at this time. This charge shall be in addition to,
and not in lieu of, any other remedy Lender may have and is in addition to any
reasonable fees and charges of any agents or attorneys which ▇▇▇▇▇▇ is entitled
to employ on any defaults hereunder, whether authorized herein or by law.
2.9. NON-WAIVER. The failure of Lender to insist upon strict
performance of any term of this Instrument shall not be deemed to be a waiver of
any term of this Instrument. No delay or omission by Lender to exercise any
right, power or remedy accruing under this Instrument shall be construed to be a
waiver of any default or acquiescence therein. A waiver in one or more
instances to exercise any right, power or remedy accruing hereunder shall apply
only to the particular instance or instances, and at the particular time or
times only, and no such waiver shall be deemed a continuing waiver, but every
term, covenant, provision or condition establishing such right, power or remedy
shall survive and continue to remain in full force and effect. Borrower shall
not be relieved of Borrower's obligation to pay the Debt at the time and in the
manner provided for its payment in the Note and this Instrument by reason of:
(i) failure of Lender to comply with any request of Borrower to take any action
to foreclose this Instrument or otherwise enforce any of the provisions hereof
or of the Note or any other mortgage, instrument or document evidencing,
securing or guaranteeing payment of the Debt or any portion thereof, (ii) the
release, regardless of consideration, of the whole or any part of the Mortgaged
Property or any other security for the Debt, or (iii) any agreement or
stipulation between Lender and any subsequent owner or owners of the Mortgaged
Property or other person extending the time of payment or otherwise modifying or
supplementing the terms of the Note, this Instrument or any other mortgage,
instrument or document evidencing, securing or guaranteeing payment of the Debt
or any portion thereof, without first having obtained the consent of ▇▇▇▇▇▇▇▇,
and in the latter event, Borrower shall continue to be obligated to pay the Debt
at the time and in the manner provided in the Note and this Instrument, as so
extended, modified and supplemented, unless expressly released and discharged
from such obligation by ▇▇▇▇▇▇ in writing. Regardless of consideration, and
without the necessity for any notice to or
28
consent by the holder of any subordinate lien, encumbrance, right, title or
interest in or to the Mortgaged Property, Lender may release any person at
any time liable for the payment of the Debt or any portion thereof or any
part of the security held for the Debt and may extend the time of payment or
otherwise modify the terms of the Note or this Instrument, including, without
limitation, a modification of the interest rate payable on the principal
balance of the Note, without in any manner impairing or affecting this
Instrument or the lien hereof or the priority of this Instrument, as so
extended and modified, as security for the Debt over any such subordinate
lien, encumbrance, right, title or interest. Lender may resort for the
payment of the Debt to any other security held by ▇▇▇▇▇▇ in such order and
manner as Lender, in its discretion, may elect. Lender may take action to
recover the Debt, or any portion thereof, or to enforce any covenant hereof
without prejudice to the right of Lender thereafter to foreclose this
Instrument. Lender shall not be limited exclusively to the rights and
remedies herein stated but shall be entitled to every additional right and
remedy now or hereafter afforded by law or equity. The rights of Lender
under this Instrument shall be separate, distinct and cumulative and none
shall be given effect to the exclusion of the others. No act of Lender shall
be construed as an election to proceed under any one provision herein to the
exclusion of any other provision.
2.10. ABSOLUTE AND UNCONDITIONAL OBLIGATION. Borrower acknowledges that
▇▇▇▇▇▇▇▇'s obligation to pay the Debt in accordance with the provisions of the
Note and this Instrument is and shall at all times continue to be absolute and
unconditional in all respects, and shall at all times be valid and enforceable
irrespective of any other agreements or circumstances of any nature whatsoever
which might otherwise constitute a defense to the Note or this Instrument or the
obligation of Borrower thereunder to pay the Debt or the obligations of any
other person relating to the Note or this Instrument or the obligations of
Borrower under the Note or this Instrument or otherwise with respect to the loan
secured hereby. Except as set forth below, Borrower absolutely, unconditionally
and irrevocably waives any and all right to assert any setoff, counterclaim or
crossclaim (a "Borrower Claim") of any nature whatsoever with respect to the
obligation of Borrower to pay the Debt in accordance with the provisions of the
Note and this Instrument or the obligations of any other person relating to the
Note or this Instrument or obligations of Borrower under the Note or this
Instrument or otherwise with respect to the loan secured hereby in any action or
proceeding (a "Lender Proceeding") brought by ▇▇▇▇▇▇ to collect the Debt, or any
portion thereof, or to enforce, foreclose and realize upon the lien and security
interest created by this Instrument or any other document or instrument securing
repayment of the Debt. The forgoing sentence shall not alter or diminish the
right of Borrower (i) to raise in a Lender Proceeding any compulsory defenses
which, if not raised in the Lender Proceeding, would be forever barred, or
(ii) to bring any motion or file any suit against Lender with respect to a
Borrower Claim in an action separate from a Lender Proceeding.
2.11. WAIVER OF STATUTORY RIGHTS. Borrower shall not and will not apply
for or avail itself of any appraisement, valuation, stay, extension or exemption
laws, or any so-called "Moratorium Laws", now existing or hereafter enacted, in
order to prevent or
29
hinder the enforcement or foreclosure of this Instrument, but hereby waives
the benefit of such laws to the full extent that Borrower may do so under
applicable law. Borrower for itself and all who may claim through or under
it waives any and all right to have the property and estates comprising the
Mortgaged Property marshaled upon any foreclosure of the lien of this
Instrument and agrees that any court having jurisdiction to foreclose such
lien may order the Mortgaged Property sold as an entirety. Borrower hereby
waives for itself and all who may claim through or under it, and to the full
extent Borrower may do so under applicable law, any and all rights of
redemption from sale under any order or decree of foreclosure of this
Instrument or granted under any statute now existing or hereafter enacted.
2.12. TRIAL BY ▇▇▇▇ ▇▇▇▇▇▇. THE BORROWER HEREBY IRREVOCABLY AND
UNCONDITIONALLY WAIVES TO THE FULLEST EXTENT PERMITTED BY LAW, ANY AND ALL RIGHT
TO TRIAL BY JURY IN ANY ACTION, SUIT OR COUNTERCLAIM, WHETHER CONTRACT, TORT OR
OTHERWISE ARISING IN CONNECTION WITH, OUT OF OR OTHERWISE RELATING TO THE LOAN,
THE NOTE, THIS INSTRUMENT, THE LOAN DOCUMENTS OR ANY ACTS OR OMISSIONS OF
LENDER, ITS OFFICERS, EMPLOYEES, DIRECTORS OR AGENTS IN CONNECTION THEREWITH.
ARTICLE III - MISCELLANEOUS
3.1. NOTICE. Any notice, request, demand, statement, authorization,
approval or consent made hereunder shall be in writing and shall be sent by
Federal Express, UPS, Airborne or other reputable nationally recognized
overnight courier service, or by postage pre-paid registered or certified mail,
return receipt requested, and shall be deemed given when received or refused (as
indicated on the receipt) and addressed as follows:
If to Borrower:
Paper Warehouse, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attn: Chief Financial Officer
30
With a copy to:
▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, LLP
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-1609
Attention: ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
If to Lender:
Fortis Insurance Company
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-3050
Attn: General Counsel; Loan No. 30381
With a copy to:
Fortis Advisers, Inc.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attn: Senior Vice President - Mortgages;
Loan No. 30381
With a copy to:
▇▇▇▇▇▇ & Bird LLP
One Atlantic Center
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇.; Loan from
Fortis Insurance Company to Paper
Warehouse, Inc.
Each party may designate a change of address by notice given, as herein
provided, to the other party, at least fifteen (15) days prior to the date such
change of address is to become effective.
3.2. 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
Instrument specifically and expressly provides for the giving of notice by
▇▇▇▇▇▇ to Borrower, and Borrower hereby expressly waives the right to receive
any notice from Lender with respect to any matter for which this Instrument does
not specifically and expressly provide for the giving of notice by ▇▇▇▇▇▇ to
Borrower.
3.3. ESTOPPEL CERTIFICATES. Borrower shall within ten (10) days after
request by Lender furnish Lender or any proposed assignee 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 terms of payment and maturity
date of the Note, (v) the date installments of interest and/or principal were
last paid, (vi) that, except as provided in such statement, there are no
defaults or events which with the passage of time or the giving of notice or
both, would constitute an event of default under the Note or this Instrument,
(vii) that the Note
31
and this Instrument are valid, legal and binding obligations and have not
been modified or if modified, giving particulars of such modification, (viii)
whether any offsets or defenses exist against the obligations and have not
been modified or if modified, giving particulars of such modification, (viii)
whether any offsets or defenses exists against the obligations secured hereby
and, if any are alleged to exist, a detailed description thereof, (ix) that
all Leases are in full force and effect and (provided the Mortgaged Property
is not a residential multifamily property) have not been modified (or if
modified, setting forth all modifications), (x) the date to which the rents
thereunder have been paid pursuant to the Leases, (xi) whether or not, to the
best knowledge of Borrower, any of the lessees under the Leases are in
default under the Leases, and if any of the lessees are in default, setting
forth the specific nature of all such defaults, (xii) the amount of security
deposits held by Borrower under each Lease and that such amounts are
consistent with the amounts required under each Lease, and (xiii) as to any
other matters reasonably requested by ▇▇▇▇▇▇ and reasonably related to the
Leases, the obligations secured hereby, the Mortgaged Property or this
Instrument.
3.4. CHANGES IN LAWS REGARDING TAXATION. In the event of the passage
after the date of this Instrument of any law of the State in which the
Mortgaged Property is located deducting from the value of real property for
the purpose of taxation any lien or encumbrance thereon or changing in any
way the laws for the taxation of mortgages or debts secured by mortgages for
state or local purposes or the manner of the collection of any such taxes,
and imposing a tax, either directly or indirectly, on this Instrument, the
Note or the Debt, Borrower shall, if permitted by law, pay any tax imposed as
a result of any such law within the statutory period or within fifteen (15)
days after demand by ▇▇▇▇▇▇, whichever is less, provided, however, that if,
in the opinion of the attorneys for Lender, Borrower is not permitted by law
to pay such taxes, Lender shall have the right, at its option, to declare the
Debt due and payable on a date specified in a prior notice to Borrower of not
less than thirty (30) days.
3.5. 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 assessed against the Mortgaged Property or any part thereof
and no deduction shall otherwise be made or claimed from the taxable value of
the Mortgaged Property, or any part thereof, by reason of this Instrument or
the Debt.
3.6. DOCUMENTARY STAMPS. If at any time the United States of America,
any state thereof, or any governmental subdivision of any such state, shall
require revenue or other stamps to be affixed to the Note or this Instrument,
Borrower will, upon demand, pay for the same, with interest and penalties
thereon, if any.
3.7. FILING OF MORTGAGE, ETC. Borrower forthwith upon the execution
and delivery of this Instrument and thereafter, from time to time, will cause
this Instrument and any extension, modification, renewal or replacement
hereof, and any security instrument creating a lien or evidencing the lien
hereof upon the Mortgaged Property and each instrument of further assurance
to be filed, registered or recorded in such manner
33
and in such places as may be required by any present or future law in order
to publish notice of and fully to protect, preserve and perfect the lien
hereof upon, and the interest of Lender in, the Mortgaged Property. Borrower
will pay all title insurance fees and charges, all filing, registration and
recording fees, and all expenses incident to the preparation, execution and
acknowledgment of this Instrument, any mortgage supplemental hereto, any
security instrument with respect to the Mortgaged 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 Instrument, any mortgage
supplemental hereto, any security instrument with respect to the Mortgaged
Property or any instrument of further assurance. 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 Instrument.
3.8. FURTHER ACTS, ETC. Borrower will at its cost, and without
expense to Lender, do, execute, acknowledge and deliver all and every such
further acts, deeds, conveyances, mortgages, assignments, notices of
assignments, transfers and assurances as Lender shall, from time to time,
require for the better assuring, conveying, assigning, transferring and
confirming unto Lender the property and rights hereby conveyed or assigned
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 Instrument or for
filing, registering or recording this Instrument and, on demand, will execute
and deliver and hereby authorizes ▇▇▇▇▇▇ to execute in the name of Borrower
to the extent Lender may lawfully do so, one or more financing statements,
chattel mortgages or comparable security instruments, to evidence more
effectively the lien hereof upon the Mortgaged Property.
3.9. USURY LAWS. It is the express intent hereof that Borrower not
pay and Lender not receive, directly or indirectly in any manner whatsoever,
interest in excess of that which may be legally paid by Borrower under
applicable law, and the note is subject to the express condition that at no
time shall Borrower be obligated or required to pay, nor shall Lender be
permitted to collect, interest on the principal balance of the Note at a rate
which could subject Lender to either civil or criminal liability as a result
of being in excess of the maximum rate which Borrower is permitted by law to
agree to pay. If any such excess amount of interest is contracted for,
charged, paid, received or applied under the Loan Documents or the Note, or
in the event the maturity of the indebtedness secured hereby is accelerated
in whole or in part or all or part of the principal of or interest on the
Note shall be prepaid, so that under any of such circumstances the amount of
interest contracted for, charged, paid, received or applied under the Loan
Documents or the Note on the amount of principal actually outstanding from
time to time under the Note shall exceed the maximum amount of interest
permitted by applicable law, then in any such event (a) neither Borrower nor
any other person liable for payment of the indebtedness secured hereby shall
be obligated to pay the amount of such interest to the extent that it is in
excess of the maximum amount of interest permitted by applicable law, (b) any
such excess which may have been collected shall, at ▇▇▇▇▇▇'s option, either
be applied as a
34
credit against the then unpaid principal amount of the Note or refunded to
Borrower and (c) the effective rate of interest shall be automatically
reduced to the maximum lawful rate of interest allowed under applicable law,
as now or hereafter construed by the courts having jurisdiction thereof.
Without limiting the generality of the foregoing, all calculations of the
rate of interest contracted for, charged or received under the Loan Documents
or the Note which are made for the purposes of determining whether such rate
exceeds the maximum amount of interest permitted by applicable law shall be
made, to the extent permitted by applicable law, by amortizing, prorating,
allocating and spreading in equal parts during the period of the full stated
term of the Note, all interest at any time contracted for, charged or
received in connection with the indebtedness evidenced by the Note.
3.10. INDEMNITY. Anything in this Instrument or the other Loan
Documents to the contrary notwithstanding, Borrower shall indemnify and hold
Lender harmless and defend Lender at Borrower's sole cost and expense against
any loss or liability, cost or expense (including, without limitation,
reasonable attorneys' fees and disbursements of Lender's counsel, whether
in-house staff, retained firms or otherwise), and all claims, actions,
procedures and suits arising out of or in connection with (i) any ongoing
matters arising out of the transaction contemplated hereby, the Debt, this
Instrument, the Note or any Loan Documents, (ii) any amendment to, or
restructuring of, the Debt and this Instrument, the Note or any of the other
Loan Documents, and (iii) any and all lawful action that may be taken by
Lender in connection with the enforcement of the provisions of this
Instrument or the Note or any of the other Loan Documents, whether or not
suit is filed in connection with the same, or in connection with Borrower,
any Guarantor (if any), any Responsible Party (if any) and/or any partner,
joint venturer or shareholder thereof becoming a party to a voluntary or
involuntary federal or state bankruptcy, insolvency or similar proceeding.
All sums expended by ▇▇▇▇▇▇ shall be payable on demand and, until reimbursed
by Borrower pursuant hereto, shall be deemed additional principal of the Debt
and secured hereby and shall bear interest at the Default Rate.
3.11. NO ORAL CHANGE. This Instrument may only be modified, amended or
changed by an agreement in writing signed by ▇▇▇▇▇▇▇▇ and Lender, and may
only be released, discharged or satisfied of record by an agreement in
writing signed by ▇▇▇▇▇▇. No waiver of any term, covenant or provision of
this Instrument shall be effective unless given in writing by ▇▇▇▇▇▇ and if
so given by Lender shall only be effective in the specific instance in which
given. ▇▇▇▇▇▇▇▇ acknowledges that the Note, this Instrument and the other
documents and instruments executed and delivered in connection therewith or
otherwise in connection with the loan secured hereby set forth the entire
agreement and understanding of Borrower and Lender with respect to the loan
secured hereby and that no oral or other agreement, understanding,
representation or warranty exists with respect to the loan secured hereby
other than those set forth in the Note, this Instrument and the other Loan
Documents.
3.12. ENFORCEABILITY. This instrument and the obligations arising
hereunder shall be governed by, and construed in accordance with, the laws of
the state in which the
35
Mortgaged Property are located and any applicable laws of the United States
of America. Whenever possible, each provision of this Instrument shall be
interpreted in such manner as to be effective and valid under applicable law,
but if any provision of this Instrument shall be unenforceable or prohibited
by or invalid under applicable law, such provision shall be ineffective to
the extent of such unenforceability, prohibition or invalidity, without
invalidating the remaining provisions of this Instrument.
3.13. RELATIONSHIP. The relationship of Lender to Borrower hereunder
is strictly and solely that of lender and borrower and mortgagor and
mortgagee and nothing contained in the Note, this Instrument or any other
document or instrument now or hereafter executed and delivered in connection
therewith or otherwise in connection with the loan secured hereby is intended
to create, or shall in any event or under any circumstance be construed as
creating, a partnership, joint venture, tenancy-in-common, joint tenancy or
other relationship of any nature whatsoever between ▇▇▇▇▇▇ and ▇▇▇▇▇▇▇▇ other
than as lender and ▇▇▇▇▇▇▇▇ and mortgagee and mortgagor.
3.14. LIABILITY. If Borrower consists of more than one person, the
obligations and liabilities of each such person hereunder shall be joint and
several.
3.15. CERTAIN DEFINITIONS. Unless the context clearly indicates a
contrary intent or unless otherwise specifically provided herein, words used
in this Instrument shall be used interchangeably in singular or plural form
and the word "Mortgagor" shall mean each Borrower and any subsequent owner or
owners of the Mortgaged Property or any part thereof or interest therein; the
word "Lender" shall mean Lender or any subsequent holder of the Note; the
word "Note" shall mean the Note, any amendment, extension, modification,
restatement or replacement thereof or any other evidence of indebtedness
secured by this Instrument; the word "Guarantor" shall mean, if any exist,
each person guaranteeing payment of the Debt or any portion thereof or
performance by Borrower of any of the terms of this Instrument and their
respective heirs, executors, administrators, legal representatives,
successors and assigns; the word "person" shall include an individual,
corporation, partnership, trust, unincorporated association, government,
governmental authority, or other entity; the words "Mortgaged Property" shall
include any portion of the Mortgaged Property or interest therein; and the
word "Debt" shall mean all sums secured by this Instrument. 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.
3.16. HEADINGS, ETC. The headings and captions of various paragraphs
of this Instrument are for convenience of reference only and are not to be
construed as defining or limiting, in any way, the scope or intent of the
provisions hereof.
3.17. DUPLICATE ORIGINALS. This Instrument may be executed in any
number of duplicate originals, and each such duplicate original shall be
deemed to constitute but one and the same instrument.
36
3.18. SOLE DISCRETION OF LENDER. Except as may otherwise be expressly
provided herein the contrary or as required by applicable law, wherever
pursuant to the Note, this Instrument or any other document or instrument now
or hereafter executed and delivered in connection therewith or otherwise with
respect to the loan secured hereby, Lender exercises any right given to it to
consent or not consent, or to approve or disapprove, or any arrangement or
term is to be satisfactory to Lender, the decision of Lender to consent or
not consent, or to approve or disapprove, or to decide that arrangements or
terms are satisfactory or not satisfactory, shall be in the sole and absolute
discretion of Lender and shall be final and conclusive.
3.19. REASONABLENESS. If at any time ▇▇▇▇▇▇▇▇ believes that ▇▇▇▇▇▇ has
not acted reasonably in granting or withholding any approval or consent under
the Note, this Instrument or any other document or instrument now or
hereafter executed and delivered in connection therewith or otherwise with
respect to the loan secured hereby, as to which approval or consent either
▇▇▇▇▇▇ has expressly agreed to act reasonably, or absent such agreement, a
court of law having jurisdiction over the subject matter would require Lender
to act reasonably, then Borrower's sole remedy shall be to seek injunctive
relief or specific performance and no action for monetary damages or punitive
damages shall in any event or under any circumstance be maintained by
Borrower against Lender.
3.20 BROKERAGE. ▇▇▇▇▇▇▇▇ shall pay in full all brokerage commissions
due any party upon the execution and delivery hereof. Borrower covenants and
agrees that no brokerage commission or other fee, commission or compensation
is to be paid by ▇▇▇▇▇▇ and ▇▇▇▇▇▇▇▇ agrees to indemnify Lender against any
claims for any of the same.
3.21. SALE/ASSIGNMENT. Borrower acknowledges that Lender shall have
the right in its sole and absolute discretion during the term of the Loan (i)
to sell and assign the Loan or participation interests in the Loan and/or
(ii) to effect a so-called securitization of the Loan, in each instance in
such manner and on such terms and conditions as Lender shall deem to be
appropriate. Borrower shall cooperate, and shall cause each Responsible Party
(if any), indemnitor and other person or party associated or connected with
the Loan or the collateral therefor to cooperate, in all respects with Lender
in connection with such sale, assignment, participation and/or
securitization, and shall, in connection therewith, execute and deliver such
estoppels, certificates, instruments and documents as may be requested by
Lender. Borrower grants to Lender, and shall cause each Responsible Party
(if any), indemnitor and other person or party associated or connected with
the Loan or the collateral therefor to grant to Lender, the right to
distribute on a confidential basis financial and other information concerning
Borrower, each such Responsible Party (if any), indemnitor and other person
or party and the property encumbered by this Instrument and other pertinent
information with respect to the Loan to any party who has indicated to Lender
an interest in entering into such sale, assignment and/or securitization of
the Loan. If Borrower shall default in the performance of its obligations as
set forth in this paragraph, and if such default shall not be remedied by
Borrower within ten (10) days after notice by ▇▇▇▇▇▇, Lender shall have the
right in its discretion to declare the Debt immediately due and payable.
37
3.22. WAIVER OF AUTOMATIC STAY. BORROWER HEREBY AGREES THAT, IN
CONSIDERATION OF ▇▇▇▇▇▇'S AGREEMENT TO MAKE THE LOAN AND IN RECOGNITION THAT
THE FOLLOWING COVENANT IS A MATERIAL INDUCEMENT FOR LENDER TO MAKE THE LOAN,
IF BORROWER SHALL (i) FILE WITH ANY BANKRUPTCY COURT OF COMPETENT
JURISDICTION OR BE THE SUBJECT OF ANY PETITION UNDER ANY SECTION OR CHAPTER
OF THE BANKRUPTCY CODE, OR SIMILAR LAW OR STATUTE; (ii) BE THE SUBJECT OF ANY
ORDER FOR RELIEF ISSUED UNDER THE BANKRUPTCY CODE OR SIMILAR LAW OR STATUE;
(iii) FILE OR BE THE SUBJECT OF ANY PETITION SEEKING ANY REORGANIZATION,
ARRANGEMENT, COMPOSITION, READJUSTMENT, LIQUIDATION, DISSOLUTION, OR SIMILAR
RELIEF UNDER ANY PRESENT OR FUTURE FEDERAL OR STATE ACT OR LAW RELATING TO
BANKRUPTCY, INSOLVENCY, OR OTHER RELIEF FOR DEBTORS; (iv) HAVE SOUGHT OR
CONSENTED TO OR ACQUIESCED IN THE APPOINTMENT OF ANY TRUSTEE, RECEIVER,
CONSERVATOR, OR LIQUIDATOR; OR (v) BE THE SUBJECT OF AN ORDER, JUDGMENT OR
DECREE ENTERED BY ANY COURT OF COMPETENT JURISDICTION APPROVING A PETITION
FILED AGAINST ANY BORROWER FOR ANY REORGANIZATION, ARRANGEMENT, COMPOSITION,
READJUSTMENT, LIQUIDATION, DISSOLUTION, OR SIMILAR RELIEF UNDER ANY PRESENT
OR FUTURE FEDERAL OR STATE ACT OR LAW RELATING TO BANKRUPTCY, INSOLVENCY OR
RELIEF FOR DEBTORS, THEN, SUBJECT TO COURT APPROVAL, LENDER SHALL THEREUPON
BY ENTITLED AND BORROWER HEREBY IRREVOCABLY CONSENTS TO, AND WILL NOT
CONTEST, AND AGREES TO STIPULATE TO RELIEF FROM ANY AUTOMATIC STAY OR OTHER
INJUNCTION IMPOSED BY SECTION 362 OF THE BANKRUPTCY CODE, OR SIMILAR LAW OR
STATUTE (INCLUDING, WITHOUT LIMITATION, RELIEF FROM ANY EXCLUSIVE PERIOD SET
FORTH IN SECTION 1121 OF THE BANKRUPTCY CODE) OR OTHERWISE AVAILABLE TO
LENDER AS PROVIDED IN THIS NOTE AND THE LOAN DOCUMENTS, AND AS OTHERWISE
PROVIDED BY LAW, AND BORROWER HEREBY IRREVOCABLY WAIVES ITS RIGHT TO OBJET TO
SUCH RELIEF.
ARTICLE IV - LOCAL LAW PROVISIONS
4.1. INCONSISTENCIES. In the event of any inconsistencies between the
terms and conditions of this Article IV and any other terms of this
Instrument the terms and conditions of this Article IV shall control and be
binding.
4.2 POWER OF SALE. Without limiting any rights of Lender under
Section 2.2, upon any Default:
(a) Lender may cause any or all of the Property to be sold under the
power of sale granted in this Instrument in any manner permitted by
38
applicable law. Lender is hereby authorized and empowered to
expose to sale and to sell the Mortgaged Property at public auction
for cash, after having first complied with all applicable
requirements of the law of the State of Minnesota with respect to
the exercise of powers of sale contained in mortgages or such other
sales appropriate under the circumstances, and upon any such sale,
Lender shall convey title to the purchaser of the Mortgaged
Property.
(b) Lender may qualify for the appointment of a receiver of the
Mortgaged Property either before or after a foreclosure sale
pursuant to Minnesota Statutes Section 559.17 or otherwise, without
notice and without regard to the solvency or insolvency of Borrower
at the time of the application for such receiver, and without
regard to the then value of the Mortgaged Property, and Lender or
any holder of the Note may be appointed as such receiver or as
Lender in possession, and to file in the Office of the Hennepin
County Recorder, or in the case of a registered property, in the
Office of the Hennepin County Registrar of Titles, a notice of the
occurrence of a Default in the terms and conditions of this
Instrument and by serving the notice of the occurrence of a Default
upon the occupiers of the Mortgaged Property. The receiver or
Lender in possession shall have the power to collect the Rents
during the pendency of such foreclosure action, and in case of a
sale and a deficiency, during the full statutory period of
redemption, if any, whether there be a redemption or not, as well
as during all other times, when Borrower, except for the
intervention of the receiver or Lender in possession, would be
entitled to collect such Rents, together with all other powers
which may be necessary or are usual in such cases for the
protection, possession, control, management and operation of the
Mortgaged Property during the whole of said period; if application
of the Rents is made after the occurrence of a Sheriff's sale
foreclosing this Instrument and Lender is not entitled to obtain a
deficiency judgment under Minnesota Statutes, Section 582.30, such
Rents shall be applied to the holder of the Sheriff's Certification
of Sale as a credit against the amount required to be paid to
effect a redemption of the Mortgaged Property from foreclosure of
this Instrument, and if Lender is entitled to obtain a deficiency
judgment pursuant to Minnesota Statutes, Section 582.30, such Rents
shall be applied first, to Lender for the payment of any deficiency
for which ▇▇▇▇▇▇ is entitled to seek a judgment (whether or not
Lender has obtained a judgment) and second, to the holder of the
Sheriff's Certificate of Sale; as a credit to the amount required
to be paid to effect a redemption of the Mortgaged Property from
the foreclosure of this Instrument;
(c) If a Default shall have occurred, Lender may cause the Mortgaged
Property to be sold by advertisement for cash, after having first
complied with all applicable requirements of the law of the State
of Minnesota with
39
respect to the exercise of powers of sale or foreclosure by
advertisement (pursuant to Minn. Stat. chs. 580 and 582, or
otherwise) contained in mortgages or such other sales
appropriate under the circumstances. Lender or any person
conducting the sale for Lender is authorized to execute to the
purchaser at said sale a deed to the Mortgaged Property so
purchased. Lender may bid at said sale and purchase said
Mortgaged Property, or any part hereof, if the highest bidder
therefor. At the foreclosure sale the Mortgaged Property may be
offered for sale and sold as a whole without first offering it
in any other manner or may be offered for sale and sold in any
other manner Lender may elect. Any and all statements of fact
or other recitals made in any deed or deeds given by the Lender
as to nonpayment of the Debt, or as to the occurrence of any
Default, or as to Lender having declared all of such Debt to be
due and payable, or as to the request to sell, or as to notice
of time, place and terms of sale and of the properties to be
sold having been duly given, or as to any other act or thing
having been duly done by Lender, shall be taken as prima facie
evidence of the truth of the facts so stated and recited.
▇▇▇▇▇▇ may appoint or delegate any one or more persons as agent
(or as attorney-in-fact) to perform any act or acts necessary or
incident to any sale held by ▇▇▇▇▇▇, including the posting of
notices and the conduct of sale, but in the name and on behalf
of ▇▇▇▇▇▇.
(d) Any and all statements of fact or other recitals made in any deed
or deeds given by ▇▇▇▇▇▇ as to nonpayment of the Debt, or as to the
occurrence of any Default, or as to Lender having declared all of
such Debt to be due and payable, or as to the request to sell, or
as to notice of time, place and terms of sale and of the properties
to be sold having been duly given, or as to any other act or thing
having been duly done by ▇▇▇▇▇▇, shall be taken as prima facie
evidence of the truth of the facts so stated and recited.
IN WITNESS WHEREOF, ▇▇▇▇▇▇▇▇ has duly executed this Instrument under
seal the day and year first above written.
BORROWER:
PAPER WAREHOUSE, INC., a Minnesota
corporation
By: /s/ Yale ▇. ▇▇▇▇▇▇▇▇
----------------------------------
Name: Yale ▇. ▇▇▇▇▇▇▇▇
----------------------------
Title: Chief Executive Officer
---------------------------
ACKNOWLEDGMENT
40
STATE OF ____________
COUNTY OF __________
On this _____ day of _________________, 1999, before me,
_____________________________, a Notary Public of ____________ County,
________________, personally appeared ____________________, known or
identified to me to be the ___________________ of PAPER WAREHOUSE, INC., a
Minnesota corporation, and the officer who subscribed the corporate name to
the foregoing instrument, and acknowledged to me that he executed the same in
the name of such corporation.
IN WITNESS WHEREOF, I have set my hand and affixed my official notarial
stamp or seal, the day and year in this certificate first above written.
My Commission Expires:
_________________________________
_______________________________ Notary Public
[NOTARIAL SEAL]
41
EXHIBIT A
(Legal Description of Premises)
Tax Map Reference Number: ___________________
42
EXHIBIT B
(Permitted Title Exceptions)
Those items set forth in Schedule B, Section 2, of that certain Commitment
for Title Insurance issued by Lawyers Title Insurance Corporation, Commitment
No. 13659, as endorsed and marked in connection with the making of the Loan
evidenced by the Note and the recording of this Instrument.
43
EXHIBIT C
(UCC Financing Statement Information)
SCHEDULE 1
(DESCRIPTION OF "DEBTOR" AND "SECURED PARTY")
A. DEBTOR:
1. Name and Identity of Corporate Structure: Paper Warehouse, Inc.,
a Minnesota corporation.
2. The principal place of business and chief executive office of
Debtor is located in Hennepin County.
3. Debtor has been using or operating under said name and identity
without change for more than five (5) years or has not operated
under any other name or identity.
B. SECURED PARTY: Fortis Insurance Company
SCHEDULE 2
(NOTICE ▇▇▇▇▇▇▇ ADDRESSES OF "DEBTOR" AND "SECURED PARTY")
A. The mailing address of Debtor is:
Paper Warehouse, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attn: Chief Financial Officer
B. The mailing address of Secured Party is:
Fortis Insurance Company
c/o Fortis Advisers, Inc.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attn: Mortgage Servicing Department; Loan No.
30381
44