EXHIBIT 10.5
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This Document was Prepared by and
When Recorded Return to:
▇▇▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, Esq.
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BRC 37-281-4-2807-124-11;
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Parcel Identification Number
LAKE POINTE APARTMENT HOMES, INC.
(Mortgagor)
and
CREDIT SUISSE FIRST BOSTON MORTGAGE CAPITAL LLC
(Mortgagee)
MORTGAGE, ASSIGNMENT OF LEASES
AND RENTS AND SECURITY AGREEMENT
As of March 5, 1998
PROPERTY LOCATION:
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇
THIS MORTGAGE, ASSIGNMENT OF LEASES AND RENTS AND SECURITY AGREEMENT
(this "MORTGAGE"), made as of March 5, 1998, by LAKE POINTE APARTMENT HOMES,
INC., A WISCONSIN CORPORATION ("MORTGAGOR"), having its principal place of
business at ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇,
and CREDIT SUISSE FIRST BOSTON MORTGAGE CAPITAL LLC, a Delaware limited
liability company ("MORTGAGEE"), having its principal office at ▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇.
W I T N E S S E T H:
To secure the payment of an indebtedness in the original principal sum
of TWO MILLION SEVEN HUNDRED AND FIFTY THOUSAND and NO/100 DOLLARS
($2,750,000.00), lawful money of the United States of America, to be paid with
interest according to a certain mortgage note of even date herewith made by
Mortgagor to Mortgagee (the mortgage note together with all extensions, renewals
or modifications thereof being hereinafter collectively called the "NOTE", and
the loan evidence by the Note hereinafter being referred to as the "LOAN") and
all other sums due hereunder, under the other Loan Documents (hereinafter
defined) and under the Note (said indebtedness and interest due under the Note
and all other sums due hereunder under the Note and the other Loan Documents
being hereinafter collectively referred to as the "DEBT"), Mortgagor has
mortgaged, given, granted, bargained, sold, alienated, enfeoffed, conveyed,
confirmed, warranted, pledge, assigned, and hypothecated and by these presents
does hereby deed, mortgage, give, grant, bargain, sell, alien, enfeoff, convey,
confirm, warrant, pledge, assign and hypothecate unto Mortgagee, the real
property described in Exhibit A attached hereto (the "PREMISES") and the
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buildings, structures, fixtures, additions, enlargements, extensions,
modifications, repairs, replacements and improvements now or hereafter located
thereon (the "IMPROVEMENTS");
TOGETHER WITH: all right, title, interest and estate of Mortgagor now
owned, or hereafter acquired, in and to the following property, rights,
interests and estates (the Premises, the Improvements, and such property,
rights, interests and estates hereinafter described are collectively referred to
herein as the "MORTGAGED PROPERTY"):
GRANTING CLAUSE ONE
All easements, rights-of-way, strips and gores of land, streets, ways,
alleys, passages, sewer rights, water, water courses, water rights and powers,
air rights and development rights, all rights to oil, gas, minerals, coal and
other substances of any kind or character, and all estates, rights, titles,
interests, privileges, liberties, tenements, hereditaments and appurtenances of
any nature whatsoever, in any way belonging, relating or pertaining to the
Premises and the Improvements and the reversion and reversions, remainder and
remainders, and all land lying in the bed of any street, road, highway, alley or
avenue, opened, vacated or proposed, in front of or adjoining the Premises, to
the center line thereof and all the estates, rights, titles, interests, dower
and rights of dower, curtsey and rights of curtsey, property, possession, claim
and demand whatsoever, both at law and in equity, of Mortgagor of, in and to the
Premises and the Improvements and every part and parcel thereof, with the
appurtenances thereto;
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GRANTING CLAUSE TWO
All machinery, furniture, furnishings, equipment, computer software and
hardware, fixtures (including, without limitation, all heating, air
conditioning, plumbing, lighting, communications and elevator fixtures) and
other property of every kind and nature, whether tangible or intangible,
whatsoever owned by Mortgagor, or in which Mortgagor has or shall have an
interest, now or hereafter located upon the Premises and the Improvements, or
appurtenant thereto, and usable in connection with the present or future
operation and occupancy of the Premises and the Improvements and all building
equipment, materials and supplies of any nature whatsoever owned by Mortgagor,
or in which Mortgagor has or shall have an interest, now or hereafter located
upon the Premises and the Improvements, or appurtenant thereto, or usable in
connection with the present or future operation, enjoyment and occupancy of the
Premises and the Improvements (hereinafter collectively referred to as the
"EQUIPMENT"), including any leases of any of the foregoing, any deposits
existing at any time in connection with any of the foregoing, and the proceeds
of any sale or transfer of the foregoing, and the right, title and interest of
Mortgagor in and to any of the Equipment that may be subject to any "security
interests" as defined in the Uniform Commercial Code, as adopted and enacted by
the State or States where any of the Mortgaged Property is located (the "UNIFORM
COMMERCIAL CODE"), superior in lien to the lien of this Mortgage;
GRANTING CLAUSE THREE
Awards or payments, including interest thereon, that may heretofore and
hereafter be made with respect to the Premises and the Improvements, whether
from the exercise of the right of eminent domain or condemnation (including,
without limitation, any transfer made in lieu of or in anticipation of the
exercise of said rights), or for a change of grade, or for any other injury to
or decrease in the value of the Premises and Improvements;
GRANTING CLAUSE FOUR
All leases and other agreements or arrangements heretofore or hereafter
entered into affecting the use, enjoyment or occupancy of, or the conduct of any
activity upon or in, the Premises and the Improvements, including any
extensions, renewals, modifications or amendments thereof (the "LEASES") and all
rents, rent equivalents, moneys payable as damages or in lieu of rent or rent
equivalents, royalties (including, without limitation, all oil and gas or other
mineral royalties and bonuses), income, receivables, receipts, revenues,
deposits (including, without limitation, security, utility and other deposits),
accounts, cash, issues, profits, charges for services rendered, and other
consideration of whatever form or nature received by or paid to or for the
account of or benefit of Mortgagor or its agents or employees from any and all
sources arising from or attributable to the Premises and the Improvements (the
"RENTS"), together with all proceeds from the sale or other disposition of the
Leases and the right to receive and apply the Rents to the payment of the Debt;
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GRANTING CLAUSE FIVE
All proceeds of and any unearned premiums on any insurance policies
covering the Mortgaged Property, including, without limitation, the right to
receive and apply the proceeds of any insurance, judgments, or settlements made
in lieu thereof, for damage to the Mortgaged Property;
GRANTING CLAUSE SIX
The right, in the name and on behalf of Mortgagor, to appear in and
defend any action or proceeding brought with respect to the Mortgaged Property
and to commence any action or proceeding to protect the interest of Mortgagee in
the Mortgaged Property;
GRANTING CLAUSE SEVEN
All accounts, escrows, documents, instruments, chattel paper, claims,
deposits and general intangibles, as the foregoing terms are defined in the
Uniform Commercial Code, and all franchises, trade names, trademarks,
symbols, service marks, books, records, plans, specifications, designs,
drawings, permits, consents, licenses, management agreements, contract rights
(including, without limitation, any contract with any architect or engineer or
with any other provider of goods or services for or in connection with any
construction, repair, or other work upon the Mortgaged Property), approvals,
actions, refunds of real estate taxes and assessments (and any other
governmental impositions related to the Mortgaged Property), and causes of
action that now or hereafter relate to, are derived from or are used in
connection with the Mortgaged Property, or the use, operation, maintenance,
occupancy or enjoyment thereof or the conduct of any business or activities
thereon (hereinafter collectively referred to as the "INTANGIBLES"); and
GRANTING CLAUSE EIGHT
All proceeds, products, offspring, rents and profits from any of the
foregoing, including, without limitation, those from sale, exchange, transfer,
collection, loss, damage, disposition, substitution or replacement of any of the
foregoing.
TO HAVE AND TO HOLD the above granted and described Mortgaged Property
unto and to the use and benefit of Mortgagee, forever;
PROVIDED, HOWEVER, these presents are upon the express condition that,
if Mortgagor shall well and truly pay to Mortgagee the Debt at the time and in
the manner provided in the Note and this Mortgage and shall well and truly
abide by and comply with each and every covenant and condition set forth herein,
in the Note and in the other Loan Documents (hereinafter defined) in a timely
manner, these presents and the estate hereby granted shall cease, terminate and
be void;
AND Mortgagor represents and warrants to and covenants and agrees with
Mortgagee as follows:
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PART I
GENERAL PROVISIONS
1. PAYMENT OF DEBT AND INCORPORATION OF COVENANTS, CONDITIONS AND
AGREEMENTS. Mortgagor shall pay the Debt at the time and in the manner provided
in the Note and in this Mortgage. All the covenants, conditions and agreements
contained in (a) the Note and (b) all and any of the documents including the
Note and this Mortgage now or hereafter executed by Mortgagor and/or others and
by or in favor of Mortgagee, which evidences, secures or guarantees all or any
portion of the payments due under the Note or otherwise is executed and/or
delivered in connection with the Note and this Mortgage (the "LOAN DOCUMENTS")
are hereby made a part of this Mortgage to the same extent and with the same
force as if fully set forth herein.
2. WARRANTY OF TITLE. Mortgagor warrants that Mortgagor has good,
marketable and insurable title to the Mortgaged Property and has the full power,
authority and right to execute, deliver and perform its obligations under this
Mortgage and to deed, encumber, mortgage, give, grant, bargain, sell, alienate,
enfeoff, convey, confirm, pledge, assign and hypothecate the same and that
Mortgagor possess an unencumbered fee estate in the Premises and the
Improvements and that it owns the Mortgaged Property free and clear of all
liens, encumbrances and charges whatsoever except for those exceptions shown in
the title insurance policy insuring the lien of this Mortgage and that this
Mortgage is and will remain a valid and enforceable first lien on and security
interest in the Mortgaged Property, subject only to said exceptions. Mortgagor
shall forever warrant, defend and preserve such title and the validity and
priority of the lien of this Mortgage and shall forever warrant and defend the
same to Mortgagee against the claims of all persons whomsoever.
3. INSURANCE.
(a) Mortgagor, at its sole cost and expense, for the mutual benefit
of Mortgagor and Mortgagee, shall obtain and maintain during the entire term of
this Mortgage (the "TERM") policies of insurance against loss or damage by fire,
lightning and such other perils as are included in a standard "all-risk"
endorsement, and against loss or damage by all other risks and hazards covered
by a standard extended coverage insurance policy including, without limitation,
riot and civil commotion, vandalism, malicious mischief, burglary and theft.
Such insurance shall be in an amount equal to the greatest of (i) the then full
replacement cost of the Improvements and Equipment, without deduction for
physical depreciation, (ii) the outstanding principal balance of the Loan, and
(iii) such amount that the insurer would not deem Mortgagor a co-insurer under
said policies. The policies of insurance carried in accordance with this
paragraph shall be paid annually in advance and shall contain a "Replacement
Cost Endorsement" with a waiver of depreciation, and shall have a deductible no
greater than $25,000.00 unless so agreed by mortgagee.
(b) Mortgagor, at its sole cost and expense, for the mutual benefit
of Mortgagor and Mortgagee, shall also obtain and maintain during the Term the
following policies of insurance:
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(i) Flood insurance if any part of the Mortgaged Property
is located in an area identified by the Federal Emergency Management as an area
having special flood hazards and in which flood insurance has been made
available under the National Flood Insurance Program in an amount at least equal
to the outstanding principal amount of the Loan or the maximum limit of coverage
available with respect to the Improvements and Equipment under said Program,
whichever is less.
(ii) Comprehensive public liability insurance, including
broad form property damage, blanket contractual and personal injuries (including
death resulting therefrom) coverages and containing minimum limits per
occurrence of $1,000,000 and $2,000,000 in the aggregate for any policy year. In
addition, at least $5,000,000 excess and/or umbrella liability insurance shall
be obtained and maintained for any and all claims, including all legal liability
imposed upon Mortgagor and all court costs and attorneys' fee incurred in
connection with the ownership, operation and maintenance of the Mortgaged
Property.
(iii) Rental loss and/or business interruption insurance in
an amount equal to the greater of (A) estimated gross revenues for eighteen(18)
months from the operations of the Mortgaged Property or (B) the projected
operating expenses (including debt service) for eighteen (18) months for the
maintenance and operation of the Mortgaged Property. The amount of such
insurance shall be increased from time to time during the Term as and when new
Leases and renewal Leases are entered into and the Rents increase or the
estimate of (or the actual) gross revenue, as may be applicable, increases.
(iv) Insurance against loss or damage from (A) leakage of
sprinkler systems and (B) explosion of steam boilers, air conditioning
equipment, high pressure piping, machinery and equipment, pressure vessels or
similar apparatus now or hereafter installed in the Improvements (without
exclusion for explosions), to the extent that such items now or hereafter exist
upon the Mortgaged Property, in an amount at least equal to the outstanding
principal amount of the Note or $2,000,000, whichever is less.
(v) If the Mortgaged Property includes commercial
property, worker's compensation insurance with respect to any employees of
Mortgagor, as required by any governmental authority or legal requirement.
(vi) During any period of repair or restoration, builder's
"all risk" insurance in an amount equal to not less than the full insurable
value of the Mortgaged Property insuring against such risks (including, without
limitation, fire and extended coverage and collapse of the Improvements to
agreed limits) as Mortgagee may request, in form and substance acceptable to
Mortgagee.
(vii) Ordinance or law coverage to compensate for the cost
of demolition and the increased cost of construction.
(viii) Intentionally deleted prior to excution.
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(ix) Such other insurance as may from time to time be reasonably
required by Mortgagee in order to protect its interests.
(c) All policies of insurance (the "POLICIES") required pursuant to
this paragraph: (i) shall be issued by companies approved by Mortgagee and
licensed to do business in the state where the Mortgaged Property is located,
with a claims paying ability rating of "AA" or better by Standard & Poor's
Rating Services, a division of the McGraw Hill Companies, Inc. and/or a rating
of "A:X" or better in the current Best's Insurance Reports; (ii) shall name
Mortgagee and its successors and/or assigns as their interest may appear as the
beneficiary/mortgagee; (iii) shall contain a non-contributory standard mortgagee
clause and lender's loss payable endorsement or their equivalents, naming
Mortgagee as the person to which all payments made by such insurance company
shall be paid; (iv) shall contain a waiver of subrogation against Mortgagee; (v)
shall be maintained throughout the Term without cost to Mortgagee; (vi) shall be
assigned and the originals delivered to Mortgagee; (vii) shall contain such
provisions as Mortgagee deems reasonably necessary or desirable to protect its
interest including, without limitation, endorsements providing that neither
Mortgagor, Mortgagee nor any other party shall be a co-insurer under said
Policies and that Mortgagee shall receive at least thirty (30) days prior
written notice of any modification, reduction or cancellation; and (viii) shall
be satisfactory in form and substance to Mortgagee and shall be approved by
Mortgagee as to amounts, form, risk coverage, deductibles, loss payees and
insureds. Mortgagor shall pay the premiums for such Policies (the "INSURANCE
PREMIUMS") as the same become due and payable and shall furnish to Mortgagee
evidence of the renewal of each of the Policies with receipts for the payment of
the Insurance Premiums or other evidence of such payment reasonably satisfactory
to Mortgagee (provided, however, that Mortgagor is not required to furnish such
evidence of payment to Mortgagee in the event that such Insurance Premiums have
been paid by Mortgagee pursuant to Paragraph 5 hereof). If Mortgagor does not
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furnish such evidence and receipts at least thirty (30) days prior to the
expiration of any expiring Policy, then Mortgagee may procure, but shall not be
obligated to procure, such insurance and pay the Insurance Premiums therefor,
and Mortgagor agrees to reimburse Mortgagee for the cost of such Insurance
Premiums promptly on demand. Within thirty (30) days after request by Mortgagee,
Mortgagor shall obtain such increases in the amounts of coverage required
hereunder as may be reasonably requested by Mortgagee, taking into consideration
changes in the value of money over time, changes in liability laws, changes in
prudent customs and practices.
4. CASUALTY.
(a) If the Mortgaged Property shall be damaged or destroyed, in whole
or in part, by fire or other casualty (as "INSURED CASUALTY"), Mortgagor shall
give prompt notice thereof to Mortgagee. Following the occurrence of an Insured
Casualty, Mortgagor, regardless of whether insurance proceeds are available,
shall promptly proceed to restore, repair, replace or rebuild the same to be of
at least equal value and of substantially the same character as prior to such
damage or destruction, all to be effected in accordance with applicable law. The
expenses incurred by Mortgagee in the adjustment and collection of insurance
proceeds shall become part of the Debt and be secured hereby and shall be
reimbursed by Mortgagor to Mortgagee upon demand.
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(b) In case of loss or damages covered by any of the Policies, the
following provisions shall apply:
(i) In the event of an Insured Casualty that does not exceed the
lesser of (a) $250,000.00 or (b) ten percent (10%) of the then outstanding
principal balance of the Note, Mortgagor may settle and adjust any claim without
the consent of Mortgagee and agree with the insurance company or companies on
the amount to be paid upon the loss; provided that such adjustment is carried
out in a competent and timely manner. In such case, Mortgagor is hereby
authorized to collect and receipt for any such insurance proceeds.
(ii) In the event an Insured Casualty shall exceed the lesser of (a)
$250,000.00 or (b) ten percent (10%) of the then outstanding principal balance
of the Note, then and in that event, Mortgagee may settle and adjust any claim
without the consent of Mortgagor and agree with the insurance company or
companies on the amount to be paid on the loss and the proceeds of any policy
shall be due and payable solely to Mortgagee and held in escrow by Mortgagee in
accordance with the terms of this Mortgage.
(iii) In the event of an Insured Casualty where the loss is in an
aggregate amount less than fifth percent (50%) of the original principal balance
of the Note, and if, in the reasonable judgment of Mortgagee, the Mortgaged
Property can be restored within twelve (12) months and prior to the Anticipated
Repayment Date (as defined in the Note) of the Note to an economic unit not
materially less valuable (including an assessment of the impact of the
termination of any Leases due to such Insured Casualty) and not less useful than
the same was prior to the Insured Casualty, and after such restoration will
adequately secure the outstanding balance of the Debt, then, if no Event of
Default (as hereinafter defined) shall have occurred and be then continuing, the
proceeds of insurance (after reimbursement of any expenses incurred by
Mortgagee) shall be applied to reimburse Mortgagor for the cost of restoring,
repairing, replacing or rebuilding the Mortgaged Property or part thereof
subject to the Insured Casualty, in the manner set forth below. Mortgagor hereby
covenants and agrees to commence and diligently to prosecute such restoring,
repairing, replacing or rebuilding; provided always, that Mortgagor shall pay
all costs (and if required by Mortgagee, Mortgagor shall deposit the total
thereof with Mortgagee in advance) of such restoring, repairing, replacing or
rebuilding in excess of the net proceeds of insurance made available pursuant to
the terms hereof.
(iv) Except as provided above, the proceeds of insurance collected
upon any Insured Casualty shall, at the option of Mortgagee in its sole
discretion, be applied to the payment of the Debt or applied to reimburse
Mortgagor for the cost of restoring, repairing, replacing or rebuilding the
Mortgaged Property or part thereof subject to the Insured Casualty, in the
manner set forth below. Any such application to the Debt shall be without any
prepayment consideration except that if an Event of Default, or an event with
notice and/or the passage of time would constitute an Event of Default, has
occurred, then the Mortgagor shall pay to Mortgagee an additional amount equal
to the Yield Maintenance Premium (hereinafter defined), if any, that would be
required under Paragraph 55 hereof if Defeasance Collateral (hereinafter
defined) was to be purchased by Mortgagor. Any such application to the Debt
shall be applied to
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those payments of principal and interest last due under the Note but shall not
postpone or reduce any payments otherwise required pursuant to the Note other
than such last due payments.
(v) In the event Mortgagor is entitled to reimbursement out of
insurance proceeds held by Mortgagee, such proceeds shall be disbursed from time
to time upon Mortgagee being furnished with (1) evidence satisfactory to it of
the estimated cost of completion of the restoration, repair, replacement and
rebuilding, (2) funds or, at Mortgagee's option, assurances satisfactory to
Mortgagee that such funds are available, sufficient in addition to the proceeds
of insurance to complete the proposed restoration, repair, replacement and
rebuilding, and (3) such architect's certificates, waivers of lien, contractor's
sworn statements, title insurance endorsements, bonds, plats of survey and such
other reasonable evidences of cost, payment and performance as Mortgagee may
reasonably require and approve. Mortgagee may, in any event, require that all
plans and specifications for such restoration, repair, replacement and
rebuilding be submitted to and approved by Mortgagee prior to commencement of
work. No payment made prior to the final completion of the restoration, repair,
replacement and rebuilding shall exceed ninety percent (90%) of the value of the
work performed from time to time; funds other than proceeds of insurance shall
be disbursed prior to disbursement of such proceeds; and at all times, the
undisbursed balance of such proceeds remaining in the hands of Mortgagee,
together with funds deposited for that purpose or irrevocably committed to the
satisfaction of Mortgagee by or on behalf of Mortgagor for that purpose, shall
be at least sufficient in the reasonable judgment of Mortgagee to pay for the
cost of completion of the restoration, repair, replacement or rebuilding, free
and clear of all liens or claims for lien. Any surplus which may remain out of
insurance proceeds held by Mortgagee after payment of such costs of restoration,
repair, replacement or rebuilding shall be paid to any party entitled thereto.
5. PAYMENT OF TAXES, ETC. Mortgagor shall pay all taxes, assessments,
water rates and sewer rents, now or hereafter levied or assessed or imposed
against the Mortgaged Property or any part thereof (the "TAXES") and all ground
rents, maintenance charges, other impositions, and other charges, including,
without limitation, vault charges and license fees for the use of vaults, chutes
and similar areas adjoining the Premises, now or hereafter levied or assessed or
imposed against the Mortgaged Property or any part thereof (the "OTHER CHARGES")
as the same become due and payable. Mortgagor will deliver to Mortgagee receipts
for payment or other evidence satisfactory to Mortgagee that the Taxes and Other
Charges have been so paid or are not then delinquent no later than thirty (30)
days prior to the date on which the Taxes and/or Other Charges would otherwise
be delinquent if not paid. Mortgagor shall not suffer and shall promptly cause
to be paid and discharged any lien or charge whatsoever which may be or become a
lien or charge against the Mortgaged Property, and shall promptly pay for all
utility services provided to the Mortgaged Property. Mortgagor shall furnish to
Mortgagee receipts for the payment of the Taxes and the Other Charges prior to
the date the same shall become delinquent (provided, however, that Mortgagor is
not required to furnish such receipts for payment of Taxes in the event that
such Taxes have been paid for by Mortgagee pursuant to Paragraph 6 hereof).
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6. TAX AND INSURANCE IMPOUND FUND; REPLACEMENT ESCROW FUND.
(a) Mortgagor shall pay to Mortgagee on the eleventh day of each
calendar month (a) one-twelfth of the Taxes that Mortgagee estimates will be
payable during the next ensuing twelve (12) months in order to accumulate with
Mortgagee sufficient funds to pay all such Taxes at least thirty (30) days prior
to their respective due dates, and (b) one-twelfth of the Insurance Premiums
that Mortgagee estimates will be payable for the renewal of the coverage
afforded by the Policies upon the expiration thereof in order to accumulate with
Mortgagee sufficient funds to pay all such Insurance Premiums at least thirty
(30) days prior to the expiration of the Policies (said amounts in (a) and (b)
above hereinafter called the "TAX AND INSURANCE IMPOUND FUND"). The Tax and
Insurance Impound Fund and the payments of interest or principal or both,
payable pursuant to the Note, shall be added together and shall be paid as an
aggregate sum by Mortgagor to Mortgagee. Mortgagee will apply the Tax and
Insurance Impound Fund to payments of Taxes and Insurance Premiums required to
be made by Mortgagor pursuant to Paragraphs 3 and 5 hereof. In making any
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payment relating to the Tax and Insurance Impound Fund, Mortgagee may do so
according to any ▇▇▇▇, statement or estimate procured from the appropriate
public office (with respect to Taxes) or insurer or agent (with respect to
Insurance Premiums), without inquiry into the accuracy of such ▇▇▇▇, statement
or estimate or into the validity of any tax, assessment, sale, forfeiture, tax
lien or title or claim thereof. If the amount of the Tax and Insurance Impound
Fund shall exceed the amounts due for Taxes and Insurance Premiums pursuant to
Paragraphs 3 and 5 hereof, Mortgagee shall, in its sole discretion, return any
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excess to Mortgagor or credit such excess against future payments to be made to
the Tax and Insurance Impound Fund. In allocating such excess, Mortgagee may
deal with the person shown on the records of Mortgagee to be the owner of the
Mortgaged Property. If at any time Mortgagee determines that the Tax and
Insurance Impound Fund is not or will not be sufficient to pay the items set
forth in (a) or (b) above, Mortgagee shall notify Mortgagor of such
determination and Mortgagor shall increase its monthly payments to Mortgagee by
the amount that Mortgagee estimates is sufficient to make up the deficiency at
least thirty (30) days prior to the delinquency of the Taxes and/or expiration
of the Policies, as the case may be. Until expended or applied as above
provided, any amounts in the Tax and Insurance Impound Fund shall constitute
additional security for the Debt. The Tax and Insurance Impound Fund shall not
constitute a trust fund and may be commingled with other monies held by
Mortgagee. No earnings or interest on the Tax and Insurance Impound Fund shall
be payable to Mortgagor. If Mortgagee so elects at any time, Mortgagor shall
provide, at Mortgagor's expense, a tax service contract for the Term issued by a
tax reporting agency acceptable to Mortgagee. If Mortgagee does not so elect,
Mortgagor shall reimburse Mortgagee for the cost of making annual tax searches
throughout the Term.
(b) Mortgagor shall pay to Mortgagee on the eleventh day of each
calendar month the sum of one thousand four hundred thirty-four and 00/100
Dollars ($1,434.00) which shall be deposited with and held by Mortgagee for
replacement and repairs required to be made to the Mortgaged Property during the
calendar year and for any work approved by Mortgagee ("REPLACEMENT ESCROW
FUND"). Mortgagee may in its reasonable discretion reassess its estimate of the
amount necessary for the Replacement Escrow Fund from time to time and in its
discretion, and may adjust the monthly amounts required to be deposited into the
Replacement Escrow Fund by thirty (30) days notice to Mortgagor. Mortgagee shall
make disbursements from
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the Replacement Escrow Fund as requested by Mortgagor, and approved by Mortgagee
in its sole discretion, no more frequently than once in any thirty (30) day
period of no less than $5,000.00 upon delivery by Mortgagor of Mortgagee's
standard form of draw request accompanied by copies of paid invoices for the
amounts requested and, if required by Mortgagee for requests in excess of
$10,000.00, lien waivers and releases from all parties furnishing materials
and/or services in connection with the requested payment. Mortgagee may require
an inspection of the Mortgaged Property at Mortgagor's expense prior to making a
monthly disbursement in order to verify completion of replacements and repairs
of items in excess of $10,000.00 for which reimbursement is sought. The
Replacement Escrow Fund shall be held in an interest bearing account in
Mortgagee's name at a financial institution selected by Mortgagee in its sole
discretion. All earnings or interest on the Replacement Escrow Fund shall be and
become part of such Replacement Escrow Fund and shall be disbursed as provided
in this Paragraph 6(b). Until expended or applied as above provided, the
--------------
Replacement Escrow Fund shall constitute additional security for the Debt. The
Replacement Escrow Fund shall not constitute a trust fund and may be commingled
with other monies held by Mortgagee.
(c) Intentionally Omitted.
(d) Mortgagor hereby pledges to Mortgagee and grants to Mortgagee a
security interest in any and all monies now or hereafter deposited in the Tax
and Insurance Impound Fund and Replacement Escrow Fund as additional security
for the payment of the Debt. Upon the occurrence of an Event of Default,
Mortgagee may apply any sums then present in the Tax and Insurance Impound Fund
and the Replacement Escrow Fund to the payment of the Debt in any order in its
sole discretion.
7. CONDEMNATION. Mortgagor shall promptly give Mortgagee written
notice of the actual or threatened commencement of any condemnation or eminent
domain proceeding (a "CONDEMNATION") and shall deliver to Mortgagee copies of
any and all papers served in connection with such Condemnation. Following the
occurrence of a Condemnation, Mortgagor, regardless of whether an Award
(hereinafter defined) is available, shall promptly proceed to restore, repair,
replace or rebuild the same to the extent practicable to be of at least equal
value and of substantially the same character as prior to such Condemnation, all
to be effected in accordance with applicable law.
(a) Mortgagee is hereby irrevocably appointed as Mortgagor's
attorney-in-fact, coupled with an interest, with exclusive power to collect,
receive and retain any award or payment ("AWARD") for any taking accomplished
through a Condemnation (a "TAKING") and to make any compromise or settlement in
connection with such Condemnation, subject to the provisions of this Mortgage.
Notwithstanding any Taking by any public or quasi-public authority (including,
without limitation, any transfer made in lieu of or in anticipation of such a
Taking), Mortgagor shall continue to pay the Debt at the time and in the manner
provided for in the Note, in this Mortgage and the other Loan Documents and the
Debt shall not be reduced unless and until any Award shall have been actually
received and applied by Mortgagee to expenses of collecting the Award and to
discharge of the Debt. Mortgagee shall not be limited to the interest paid on
the Award by the condemning authority but shall be entitled to received out of
the Award interest at the
11
rate or rates provided in the Note. Mortgagor shall cause any Award that is
payable to Mortgagor to be paid directly to Mortgagee.
(b) In the event of any Condemnation where the Award is in an
aggregate amount less than the lesser of (i) $250,000.00 or (ii) ten percent
(10%) of the then outstanding original principal balance of the Note, and if, in
the reasonable judgment of Mortgagee, the Mortgaged Property can be restored
within twelve (12) months and prior to Anticipated Repayment Date to an economic
unit not less valuable (including an assessment of the impact of the termination
of any Leases due to such Condemnation) and not less useful than the same was
prior to the Condemnation, and after such restoration will adequately secure the
outstanding balance of the Debt, then, if no Event of Default shall have
occurred and be then continuing, the proceeds of the Award (after reimbursement
of any expenses incurred by Mortgagee) shall be applied to reimburse Mortgagor
for the cost of restoring, repairing, replacing or rebuilding the Mortgaged
Property or part thereof subject to Condemnation, in the manner set forth below.
Mortgagor hereby covenants and agrees to commence and diligently to prosecute
such restoring , repairing, replacing or rebuilding; provided always, that
Mortgagor shall pay all costs (and if required by Mortgagee, Mortgagor shall
deposit the total thereof with Mortgagee in advance) of such restoring,
repairing, replacing or rebuilding in excess of the Award made available
pursuant to the terms hereof.
(c) Except as provided above, the Award collected upon any
Condemnation shall, at the option of Mortgagee in its sole discretion, be
applied to the payment of the Debt or applied to reimburse Mortgagor for the
cost of restoring, repairing, replacing or rebuilding the Mortgaged Property or
part thereof subject to the Condemnation, in the manner set forth below. Any
such application to the Debt shall be without any prepayment consideration
except that if an Event of Default, or an event with notice and/or the passage
of time would constitute an Event of Default, has occurred then the Mortgagor
shall pay to Mortgagee an additional amount equal to the Yield Maintenance
Premium, if any, that would be required under Paragraph 55 hereof if Defeasance
------------
Collateral was to be purchased by Mortgagor. Any such application to the Debt
shall be applied to those payments of principal and interest last due under the
Note but shall not postpone or reduce any payments otherwise required pursuant
to the Note other than such last due payments. If the Mortgaged Property is
sold, through foreclosure or otherwise, prior to the receipt by Mortgagee of
such Award, Mortgagee shall have the right, whether or not a deficiency
judgment on the Note shall be recoverable or shall have been sought, recovered
or denied, to receive all or a portion of said Award sufficient to pay the Debt.
(d) In the event Mortgagor is entitled to reimbursement out of
the Award received by Mortgagee, such proceeds shall be disbursed from time to
time upon Mortgagee being furnished with (1) evidence satisfactory to it of the
estimated cost of completion of the restoration, repair, replacement and
rebuilding resulting from such condemnation, (2) funds or, at Mortgagee's
option, assurances satisfactory to Mortgagee that such funds are available,
sufficient in addition to the proceeds of the Award to complete the proposed
restoration, repair, replacement and rebuilding, and (3) such architect's
certificates, waivers of lien, contractor's sworn statements, title insurance
endorsements, bonds, plats of survey and such other evidences of costs, payment
and performance as Mortgagee may reasonably require and approve; and Mortgagee
may, in any event,
12
require that all plans and specifications for such restoration, repair,
replacement and rebuilding be submitted to and approved by Mortgagee prior to
commencement of work. No payment made prior to the final completion of the
restoration, repair, replacement and rebuilding shall exceed ninety percent
(90%) of the value of the work performed from time to time; funds other than
proceeds of the Award shall be disbursed prior to disbursement of such proceeds;
and at all times, the undisbursed balance of such proceeds remaining in hands of
Mortgagee, together with funds deposited for that purpose or irrevocably
committed to the satisfaction of Mortgagee by or on behalf of Mortgagor for that
purpose, shall be at least sufficient in the reasonable judgment of Mortgagee to
pay for the costs of completion of the restoration, repair, replacement or
rebuilding, free and clear of all liens or claims for lien. Any surplus which
may remain out of the Award received by Mortgagee after payment of such costs of
restoration, repair, replacement or rebuilding shall, in the sole and absolute
discretion of Mortgagee, be retained by Mortgagee and applied to payment of the
Debt.
8. LEASES AND RENTS
(a) Mortgagor does hereby absolutely and unconditionally assign
to Mortgagee, all Mortgagor's right, title and interest in all current and
future Leases and Rents, it being intended by Mortgagor that this assignment
constitutes a present, absolute assignment and not an assignment for additional
security only. Such assignment to Mortgagee shall not be construed to bind
Mortgagee to the performance of any of the covenants, conditions or provisions
contained in any such Lease or otherwise impose any obligation upon Mortgagee.
Mortgagor agrees to execute and deliver to Mortgagee such additional
instruments, in form and substance satisfactory to Mortgagee, as may hereafter
be requested by Mortgagee to further evidence and confirm such assignment.
Nevertheless, subject to the terms of this paragraph, Mortgagee grants to
Mortgagor a revocable license to operate and manage the Mortgaged Property and
to collect the Rents. Mortgagor shall hold the Rents, or a portion thereof,
sufficient to discharge all current sums due on the Debt, in trust for the
benefit of Mortgagee for use in the payment of such sums. Upon an Event of
Default, without the need for notice or demand, the license granted to Mortgagor
herein shall automatically be revoked, and Mortgagee shall immediately be
entitled to possession of all Rents, whether or not Mortgagee enters upon or
takes control of the Mortgaged Property. Mortgagee is hereby granted and
assigned by Mortgagor the right, at its option, upon revocation of the license
granted herein, to enter upon the Mortgaged Property in person, by agent or by
court-appointed receiver to collect the Rents. Any Rents collected after the
revocation of the license may be applied toward payment of the Debt in such
priority and proportions as Mortgagee in its sole discretion shall deem proper.
(b) All Leases shall provide that they are subordinate to this
Mortgage and that the tenant agrees to attorn to Mortgagee. None of the Leases
shall contain any option to purchase, any right of first refusal to lease or
purchase or any right to terminate the lease term (except in the event of the
destruction of all or substantially all of the Mortgaged Property). Leases
executed after the date hereof shall not contain any provisions which adversely
affect the Mortgaged Property or which might adversely affect the rights of any
holder of the Loan without the prior written consent of Mortgagee. Each tenant
shall conduct business only in that portion of
13
the Mortgaged Property covered by its lease. Upon request, Mortgagor shall
furnish Mortgagee with executed copies of all Leases.
(c) Mortgagor shall not, without the prior consent of Mortgagee
(i) enter into any Lease of all or any part of the Mortgaged Property in excess
of 25% of gross leasable area rentable square feet (a "Major Lease"), (ii)
-----------
cancel, terminate, abridge or otherwise modify the terms of any Major Lease, or
accept a surrender thereof, (iii) consent to any assignment of or subletting
under any Major Lease not in accordance with its terms, (iv) cancel, terminate,
abridge or otherwise modify any guaranty of any Major Lease or the terms
thereof, (v) accept prepayments of installments of Rents for a period of more
than one (1) month in advance or (vi) further assign the whole or any part of
the Leases or the Rents. In addition to, Mortgagor shall not (A) lease all or
any part of the Mortgaged Property, (B) cancel, terminate, abridge or otherwise
modify the terms of any Lease, or accept a surrender thereof, (C) consent to any
assignment of or subletting under any Lease not in accordance with its terms
or (D) cancel, terminate, abridge or otherwise modify any guaranty of any Lease
or the terms thereof unless such actions are exercised for a commercially
reasonable purpose in arms-length transactions for market rate terms.
(d) Mortgagor (i) shall observe and perform all the obligations
imposed upon the lessor under the Leases and shall not do or permit to be done
anything to impair the value of the Leases as security for the Debt; (ii) shall
promptly send copies to Mortgagee of all notices of default which Mortgagor
shall send or receive thereunder; (iii) shall enforce all the terms, covenants
and conditions contained in the Leases upon the part of the lessee thereunder to
be observed or performed, short of termination thereof; (iv) shall not collect
any of the Rents more than one (1) month in advance; (v) shall not execute any
other assignment of the lessor's interest in the Leases or the Rents; (vi) shall
deliver to Mortgagee, upon request, tenant estoppel certificates from each
commercial tenant at the Mortgagee Property in form and substance reasonably
satisfactory to Mortgagee, provided that Mortgagor shall not be required to
deliver such certificates more frequently than two (2) times in any calendar
year; and (vii) shall execute and deliver at the request of Mortgagee all such
further assurances, confirmations and assignments in connection with the
Mortgaged Property as Mortgagee shall form time to time require.
(e) All security deposits of tenants, if held in the form of
cash, shall be deposited by Mortgagor at such commercial or savings bank or
banks, and, whether held in cash or any other form, shall be held in compliance
with applicable law, as may be reasonably satisfactory to Mortgagee. Any bond or
other instrument which Mortgagor is permitted to hold in lieu of cash security
deposits under any applicable legal requirements shall be maintained in full
force and effect in the full amount of such deposits unless replaced by cash
deposits as hereinabove described, shall be issued by an institution reasonably
satisfactory to Mortgagee, shall, if permitted pursuant to any legal
requirements, name Mortgagee as payee or mortgagee thereunder (or at Mortgagee's
option, be fully assignable to Mortgagee) and shall, in all respects, comply
with any applicable legal requirements and otherwise be reasonably satisfactory
to Mortgagee. Mortgagor shall, upon request, provide Mortgagee with evidence
reasonably satisfactory to Mortgagee of Mortgagor's compliance with the
foregoing. Following the occurrence and during the continuance of any Event of
Default, Mortgagor shall, upon Mortgagee's request, if permitted by any
applicable legal requirements, turn over to Mortgagee the security deposits (and
any interest theretofore earned
14
thereon) with respect to all or any portion of the Mortgaged Property, to be
held by Mortgagee subject to the terms of the Leases.
9. MAINTENANCE AND USE OF MORTGAGED PROPERTY. Mortgagor shall cause
the Mortgaged Property to be maintained in a good and safe condition and repair.
The Improvements and the Equipment shall not be removed, demolished or
materially altered (except for normal replacement of the Equipment) without the
consent of Mortgagee. Mortgagor shall promptly comply with all laws, orders and
ordinances affecting the Mortgaged Property, or the use thereof. Mortgagor shall
promptly repair, replace or rebuild any part of the Mortgaged Property that is
destroyed by any casualty, or becomes damaged, worn or dilapidated or that is
affected by any proceeding of the character referred to in Paragraph 7 hereof
-----------
and shall complete and pay for any structure at any time in the process of
construction or repair on the Premises. Mortgagor shall not initiate join in,
acquiesce in, or consent to any change in any private restrictive covenant,
zoning law or other public or private restriction, limiting or defining the uses
which may be made of the Mortgaged Property or any part thereof. If under
applicable zoning provisions the use of all or any portion of the Mortgaged
Property is or shall become a nonconforming use, Mortgagor will not cause or
permit such nonconforming use to be discontinued or abandoned without the
express written consent of Mortgagee. Mortgagor shall not (i) change the use of
the Mortgaged Property, (ii) permit or suffer to occur any waste on or to the
Mortgaged Property or to any portion thereof or (iii) take any steps whatsoever
to convert the Mortgaged Property, or any portion thereof, to a condominium or
cooperative form of management. Mortgagor will not install or permit to be
installed on the Premises any underground storage tank.
10. TRANSFER OR ENCUMBRANCE OF THE MORTGAGED PROPERTY.
(a) Mortgagor acknowledges that Mortgagee has examined and
relied on the creditworthiness and experience of Mortgagor in owning and
operating properties such as the Mortgaged Property in agreeing to make the
Loan, and that Mortgagee will continue to rely on Mortgagor's ownership of the
Mortgaged Property as a means of maintaining the value of the Mortgaged Property
as security for repayment of the Debt. Mortgagor acknowledges that Mortgagee has
a valid interest in maintaining the value of the Mortgaged Property so as to
ensure that, should Mortgagor default in the repayment of the Debt, Mortgagee
can recover the Debt by a sale of the Mortgaged Property. Mortgagor shall not,
without the prior written consent of Mortgagee, sell, convey, alienate,
mortgage, encumber, pledge or otherwise transfer the Mortgaged Property or any
part thereof, or permit the Mortgaged Property or any party thereof to be sold,
conveyed, alienate mortgaged, encumbered, pledged or otherwise transferred.
(b) A sale, conveyance, alienation, mortgage, encumbrance,
pledge or transfer within the meaning of this Paragraph 10 shall be deemed to
------------
include (i) an installment sales agreement wherein Mortgagor agrees to sell the
Mortgaged Property or any part thereof for a price to be paid in installments;
(ii) an agreement by Mortgagor leasing all or a substantial part of the
Mortgaged Property for other than actual occupancy by a space tenant thereunder
or a sale, assignment or other transfer of, or the grant of a security interest
in, Mortgagor's right, title and interest in and to any Leases or any Rents;
(iii) if Mortgagor, Guarantor, or any general partner or managing member of
Mortgagor or Guarantor is a corporation, the voluntary or involuntary sale,
15
conveyance or transfer of such corporation's stock (or the stock of any
corporation directly or indirectly controlling such corporation by operation of
law or otherwise) or the creation or issuance of new stock in one or a series of
transactions by which an aggregate of more than 10% of such corporation's stock
shall be vested in a party or parties who are not now stockholders or any change
in the control of such corporation; (iv) if Mortgagor, any Guarantor or any
general partner of Mortgagor or any Guarantor is a limited or general
partnership, joint venture or limited liability company, the change, removal,
resignation or addition of a general partner, managing partner, joint venturer
or the transfer, of any ownership interest of any general partner, managing
partner or joint venturer or the transfer, assignment or pledge of any ownership
interest of any general partner, managing partner or joint venturer; (v) if
Mortgagor or any Guarantor is a limited partnership, the voluntary or
involuntary sale, conveyance, transfer or pledge of any limited partnership
interests or the creation or issuance of new limited partnership interests, by
which an aggregate of more than 49% of such limited partnership interests are
held by parties who are not currently limited partners; or (vi) if Mortgagor or
any Guarantor is a limited liability company, the voluntary or involuntary sale,
conveyance or transfer of a member's interest.
(c) Mortgagee shall not be required to demonstrate any actual
impairment of its security or any increased risk of default hereunder in order
to declare the Debt immediately due and payable upon Mortgagor's sale,
conveyance, alienation, mortgage, encumbrance, pledge or transfer of the
Mortgaged Property without Mortgagee's consent. This provision shall apply to
every sale, conveyance, alienation, mortgage, encumbrance, pledge or transfer of
the Mortgaged Property regardless of whether voluntary or not, or whether or not
Mortgagee has consented to any previous sale, conveyance, alienation, mortgage,
encumbrance, pledge or transfer of the Mortgaged Property.
(d) Mortgagee's consent to one sale, conveyance, alienation,
mortgage, encumbrance, pledge or transfer of the Mortgaged Property shall not be
deemed to be a waiver of Mortgagee's right to require such consent to any future
occurrence of same. Any sale, conveyance, alienation, mortgage, encumbrance,
pledge or transfer of the Mortgaged Property made in contravention of this
paragraph shall be null and void and of no force and effect.
(e) Mortgagor agrees to bear and shall pay or reimburse Mortgagee on
demand for all reasonable expenses (including, without limitation, reasonable
attorney's fees and disbursements, title search costs and title insurance
endorsement premiums) incurred by Mortgagee in connection with the review,
approval and documentation of any such sale, conveyance, alienation, mortgage,
encumbrance, pledge or transfer.
(f) Mortgagee's consent to the sale or transfer of the Mortgaged
Property will not be unreasonably withheld after consideration of all relevant
factors, provided that:
(i) no Event of Default or event which with the giving of
notice or the passage or time would constitute an Event of Default shall have
occurred and remain uncured;
(ii) the proposed transferee ("TRANSFEREE") shall be a reputable
entity or person of good character, creditworthy, with sufficient financial
worth considering the
16
obligations assumed and undertaken, as evidenced by financial statements and
other information reasonably requested by Mortgagee;
(iii) the Transferee and its property manager shall have
sufficient experience in the ownership and management of properties similar to
the Mortgaged Property, and Mortgagee shall be provided with reasonable evidence
thereof (and Mortgagee reserves the right to approve the Transferee without
approving the substitution of the property manager);
(iv) At Mortgagee's option, Mortgagee shall have received
recommendations in writing from the Rating Agencies to the effect that such
transfer will not result in a requalification, reduction or withdrawal of any
rating initially assigned or to be assigned in a Secondary Market Transaction.
The term "RATING AGENCIES" as used herein shall mean each of Standard & Poor's
Ratings Group, a division of the ▇▇▇▇▇▇-▇▇▇▇ Companies, Inc., ▇▇▇▇▇'▇ Investors
Service, Inc., Duff and ▇▇▇▇▇▇ Credit Rating Co. and Fitch Investors Service,
L.P., or any other nationally-recognized statistical rating agency which has
been approved by Mortgagee;
(v) the Transferee shall have executed and delivered to
Mortgagee an assumption agreement in form and substance acceptable to Mortgagee,
evidencing such Transferee's agreement to abide and be bound by the terms of the
Note, this Mortgage and the other Loan Documents, together with such legal
opinions and title insurance endorsements as may be reasonably requested by
Mortgagee; and
(vi) Mortgagee shall have received the payment of all costs
and expenses incurred by Mortgagee in connection with such assumption (including
reasonable attorneys' fees and costs).
11. REPRESENTATIONS AND COVENANTS OF MORTGAGOR. Mortgagor represents,
warrants and covenants as follows:
(a) Organization and Existence. Mortgagor is duly organized and
--------------------------
validly existing as a corporation in good standing under the laws
of Wisconsin and in all other jurisdictions in which Mortgagor is
transacting business. Mortgagor has the power and authority to
execute, deliver and perform the obligations imposed on it under
the Loan Documents and to consummate the transactions
contemplated by the Loan Documents.
(b) Authorization. Mortgagor has taken all necessary actions for the
-------------
authorization of the borrowing on account of the Loan and for the
execution and delivery of the Loan Documents, including, without
limitation, that those partners of Mortgagor whose approval is
required by the terms of Mortgagor's organizational documents
have duly approved the transactions contemplated by the Loan
Documents and have authorized execution and delivery thereof by
the respective signatories. To the best of Mortgagor's
knowledge, no other consent by any local, state or federal agency
is required in connection with the execution and delivery of the
Loan Documents.
17
(c) Valid Execution and Delivery. All of the Loan Documents requiring
----------------------------
execution by Mortgagor have been duly and validly executed and
delivered by Mortgagor.
(d) Enforceability. All of the Loan Documents constitute valid, legal
--------------
and binding obligations of Mortgagor and are fully enforceable
against Mortgagor in accordance with their terms by Mortgagee and
its successors, transferees and assigns, subject only to
bankruptcy laws and general principles of equity.
(e) No Defenses. The Note, this Mortgage and the other Loan Documents
-----------
are not subject to any right of rescission, set-off, counterclaim
or defense, including the defense of usury, nor would the
operation of any of the terms of the Note, this Mortgage or any
of the other Loan Documents, or the exercise of any right
thereunder, render this Mortgage unenforceable, in whole or in
part, or subject to any right of rescission, set-off,
counterclaim or defense, including the defense of usury.
(f) Defense of Usury. Mortgagor knows of no facts that would support
----------------
a claim of usury to defeat or avoid its obligation to repay the
principal of, interest on, and other sums or amounts due and
payable under, the Loan Documents.
(g) No Conflict/Violation of Law. The execution, delivery and
----------------------------
performance of the Loan Documents by the Mortgagor will not cause
or constitute a default under or conflict with the organizational
documents of Mortgagor, any Guarantor or any general partner or
managing member of Mortgagor or any Guarantor. The execution,
delivery and performance of the obligations imposed on Mortgagor
under the Loan Documents will not cause Mortgagor to be in
default, including after due notice or lapse of time or both,
under the provisions of any agreement, judgment or order to which
Mortgagor is a party or by which Mortgagor is bound.
(h) Compliance with Applicable Laws and Regulations. All of the
-----------------------------------------------
Improvements and the use of the Mortgaged Property comply with,
and shall remain in compliance with, all applicable statutes,
rules, regulations and private covenants now or hereafter
relating to the ownership, construction, use or operation of the
Mortgaged Property, including all applicable statutes, rules and
regulations pertaining to requirements for equal opportunity,
anti-discrimination, fair housing, environmental protection,
zoning and land use. The Improvements comply with, and shall
remain in compliance with, applicable health, fire and building
codes. There is no evidence of any illegal activities relating to
controlled substances on the Mortgaged Property. All
certifications, permits, licenses and approvals, including,
without limitation, certificates of completion and
18
occupancy permits required for the legal use, occupancy and
operation of the Mortgaged Property as a multifamily apartment
complex have been obtained and are in full force and effect. All
of the Improvements comply with all material requirements of any
applicable zoning and subdivision laws and ordinances.
(i) Consents Obtained. All consents, approvals, authorizations,
-----------------
orders or filings with any court or governmental agency or body,
if any, required for the execution, delivery and performance of
the Loan Documents by Mortgagor have been obtained or made.
(j) No Litigation. There are no pending actions, suits or
-------------
proceedings, arbitrations or governmental investigations against
the Mortgaged Property, an adverse outcome of which would
materially affect the Mortgagor's performance under the Note,
the Mortgage or the other Loan Documents.
(k) Title. The Mortgagor has good and marketable fee simple title to
-----
the Mortgaged Property, and good title to the Equipment, subject
to no liens, charges or encumbrances other than the Permitted
Exceptions. The possession of the Mortgaged Property has been
peaceful and undisturbed and title thereto has not been disputed
or questioned to the best of Mortgagor's knowledge.
(l) Permitted Exceptions. The Permitted Exceptions do not and will
--------------------
not materially and adversely affect (1) the ability of the
Mortgagor to pay in full the principal and interest on the Note
in a timely manner or (2) the use of the Mortgaged Property for
the use currently being made thereof, the operation of the
Mortgaged Property as currently being operated or the value of
the Mortgaged Property.
(m) First Lien. Upon the execution by the Mortgagor and the recording
----------
of this Mortgage, and upon the execution and filing of UCC-1
financing statements or amendments thereto, the Mortgagee will
have a valid first lien on the Mortgaged Property and a valid
security interest in the Equipment subject to no liens, charges
or encumbrances other than the Permitted Exceptions.
(n) ERISA. The Mortgagor has made and shall continue to make all
-----
required contributions to all employee benefit plans, if any, and
the Mortgagor has no knowledge of any material liability which
has been incurred by the Mortgagor which remains unsatisfied for
any taxes or penalties with respect to any employee benefit plan
or any multi-employer plan, and each such plan has been
administered in compliance with its terms and the applicable
provisions of the Employee Retirement Income Security Act of
1974, as amended ("ERISA") and any other federal or state law.
19
(o) Contingent Liabilities. The Mortgagor has no known material
----------------------
contingent liabilities.
(p) No Other Obligations. Mortgagor has no material financial
--------------------
obligation under any indenture, mortgage, deed of trust, loan
agreement or other agreement or instrument to which the Mortgagor
is a party or by which the Mortgagor or the Mortgaged Property is
otherwise bound, other than obligations incurred in the ordinary
course of the operation of the Mortgaged Property and other than
obligations under this mortgage and the other Loan Documents.
(q) No Other Debt. Mortgagor has not borrowed or received other debt
-------------
financing that has not been heretofore repaid in full.
(r) Fraudulent Conveyance. The Mortgagor (1) has not entered into the
---------------------
Loan or any Loan Document with the actual intent to hinder,
delay, or defraud any creditor and (2) received reasonably
equivalent value in exchange for its obligations under the Loan
Documents. Giving effect to the Loans contemplated by the Loan
Documents, the fair saleable value of the Mortgagor's assets
exceed and will, immediately following the execution and delivery
of the Loan Documents, exceed the Mortgagor's total liabilities,
including, without limitation, subordinated, unliquidated,
disputed or contingent liabilities. The fair saleable value of
the Mortgagor's assets is and will, immediately following the
execution and delivery of the Loan Documents, be greater than the
Mortgagor's probable liabilities, including the maximum amount of
its contingent liabilities or its debts as such debts become
absolute and matured. The Mortgagor's assets do not and,
immediately following the execution and delivery of the Loan
Documents will not, constitute unreasonably small capital to
carry out its business as conducted or as proposed to be
conducted. The Mortgagor does not intend to, and does not believe
that it will, incur debts and liabilities (including, without
limitation, contingent liabilities and other commitments) beyond
its ability to pay such debts as they mature (taking into account
the timing and amounts to be payable on or in respect of
obligations of the Mortgagor).
(s) Investment Company Act. The Mortgagor is not (1) an "investment
----------------------
company" or a company "controlled" by an "investment company,"
within the meaning of the Investment Company Act of 1940, as
amended; (2) a "holding company" or a "subsidiary company" of a
"holding company" or an "affiliate" of either a "holding company"
or a " subsidiary company" within the meaning of the Public
Utility Holding Company Act of 1935, as amended; or (3) subject
to any other federal or state law or regulation which purports to
restrict or regulate its ability to borrow money.
20
(t) Access/Utilities. The Mortgaged Property has adequate rights of
----------------
access to public ways and is served by adequate water, sewer,
sanitary sewer and storm drain facilities. All public utilities
necessary to the continued use and enjoyment of the mortgaged
property as presently used and enjoyed are located in the public
right-of-way abutting the mortgaged property, and all such
utilities are connected so as to serve the mortgaged property
without passing over other property. All roads necessary for the
full utilization of the mortgaged property for its current
purpose have been completed and dedicated to public use and
accepted by all governmental authorities or are the subject of
access easements for the benefit of the mortgaged property.
(u) Taxes Paid. Mortgagor has filed all federal, state, county and
----------
municipal tax returns required to have been filed by Mortgagor,
and has paid all taxes which have become due pursuant to such
returns or to any notice of assessment received by Mortgagor, and
Mortgagor has no knowledge of any basis for additional assessment
with respect to such taxes.
(v) Single Tax Lot. The Premises consists of a single lot or multiple
--------------
tax lots; no portion of said tax lot(s) covers property other
than the Premises or a portion of the Premises and no portion of
the Premises lies in any other tax lot.
(w) Special Assessments. Except as disclosed in the title insurance
-------------------
policy, there are no pending or, to the knowledge of the
Mortgagor, proposed special or other assessments for public
improvements or otherwise affecting the Mortgaged Property, nor,
to the knowledge of the Mortgagor, are there any contemplated
improvements to the Mortgaged that may result in such special or
other assessments.
(x) Flood Zone. The Mortgaged Property is located in a flood hazard
----------
area as defined by the Federal Insurance Administration.
(y) Seismic Exposure. The Premises are not located Zone 3 or Zone 4
----------------
of the "Seismic Zone Map of the U.S.".
(z) Misstatements of Fact. No statement of fact made in the Loan
---------------------
Documents contains any untrue statement of a material fact or
omits to state any material fact necessary to make statements
contained herein or therein not misleading. There is no fact
presently known to the Mortgagor which has not been disclosed
which adversely affects, nor as far as the Mortgagor can foresee,
might adversely affect the business, operations or condition
(financial or otherwise) of the representing party.
21
(aa) Condition of Improvements. The Mortgaged Property has not been damaged by
-------------------------
fire, water, wind or other cause of loss or any previous damage to the
Mortgaged Property has been fully restored.
(bb) No Insolvency or Judgment. Neither Mortgagor nor any guarantor of the loan
-------------------------
is currently (a) the subject of or a party to any completed or pending
bankruptcy, reorganization or insolvency proceeding; or (b) the subject of
any judgment unsatisfied of record or docketed in any court of the state in
which the Mortgaged Property is located or in any other court located in
the United States. The purposed Loan will not render the Mortgagor
insolvent. As used herein, the term "insolvent" means that the sum total of
all of an entity's liabilities (whether secured or unsecured, contingent or
fixed, or liquidated or unliquidated) is in excess of the value of all such
entity's non-exempt assets, i.e., all of the assets of the entity that are
available to satisfy claims of creditors.
(cc) No Condemnation. No part of any property subject to the Mortgage has been
---------------
taken in condemnation or other like proceeding to an extent which would
impair the value of the Mortgaged Property, the Mortgage or the Loan or the
usefulness of such property for the purposes contemplated by the loan
application relating to the Loan (the "LOAN APPLICATION"), nor is any
proceeding pending, threatened or known to be contemplated for the partial
or total condemnation or taking of the Mortgaged Property.
(dd) No Subordinate Financing. Except as otherwise expressly approved by
------------------------
Mortgagee in writing, no part of any property subject to the Mortgage is,
or will become, subject to a second mortgage, deed of trust or other type
of subordinate lien.
(ee) No Labour or Materialmen Claims. All parties furnishing labor and materials
-------------------------------
have been paid in full and, except for such liens or claims insured against
by the policy of title insurance to be issued in connection with the Loan,
there are no mechanics', laborers' or materialmens' liens or claims
outstanding for work, labor or materials affecting the Mortgaged Property,
whether prior to, equal with or subordinate to the lien of the Mortgage.
(ff) No Purchase Options. No tenant, person, party, firm, corporation or other
-------------------
entity has an option to purchase the Mortgaged Property, any portion
thereof or any interest therein.
(gg) Leases. The Mortgaged Property is not subject to any Leases other than the
------
Leases described in the rent roll delivered to Mortgagee in connection with
this Mortgage. No person has any possessory interest in the Mortgaged
Property or right to occupy the same except under and pursuant to the
provisions of the Leases. As of the date hereof, (i) the Mortgagor is
22
the owner and holder of the landlord's interest under each Lease;
(ii) there are no prior assignments of any Lease or any portion
of Rents which are presently outstanding and have priority over
the Assignment of Leases and Rents (the "ASSIGNMENTS OF LEASES
AND RENTS"), dated the date hereof, given by Mortgagor to
Mortgagee and intended to be duly recorded; (iii) the Leases are
on the standard form of lease approved by Mortgagee and have not
been modified or amended, except as disclosed to Mortgagee in
writing on the date hereof; (iv) each Lease is in full force and
effect; (v) neither Mortgagor nor any tenant under any Lease is
in default under any of the terms, covenants or provisions of the
Lease, and Mortgagor knows of no event which, but for the passage
of time or the giving of notice or both, would constitute an
event of default under any Lease; (vi) there are no offsets or
defenses to the payment of any portion of the Rents; and (vii)
all Rents due and payable under each Lease have been paid in full
and no said Rents have been paid more than one (1) month in
advance of the due dates thereof.
(hh) Appraisal. All requirements and conditions of the appraisal of
---------
the Property submitted to Mortgagee as part of the Loan
Application, upon which the value of the Mortgaged Property was
conditioned, have been fully satisfied.
(ii) Boundary Lines. All of the Improvements which were included in
--------------
determining the appraised value of the Mortgaged Property lie
wholly within the boundaries and building restriction lines of
the Mortgaged Property, and no improvements on adjoining
properties encroach upon the Mortgaged Property, and no easements
or other encumbrances upon the Premises encroach upon any of the
Improvements, so as to affect the value or marketability of the
Mortgaged Property except those which are insured against by
title insurance.
(jj) Survey. The survey of the Mortgaged Property delivered to
------
Mortgagee in connection with this Mortgage, has been performed by
a duly licensed surveyor or registered professional engineer in
the jurisdiction in which the Mortgaged Property is situated, is
certified to the Mortgagee, its successors and assigns, and the
title insurance company, and is in accordance with the most
current minimum standards for title surveys as determined by the
American Land Title Association, with the signature and seal of a
licensed engineer or surveyor affixed thereto, and does not fail
to reflect any material matter affecting the Mortgaged Property
or the title thereto.
(kk) Forfeiture. There has not been and shall never be committed by
----------
Mortgagor or any other person in occupancy of or involved with
the operation or use of the Mortgaged Property any act or
omission affording the federal government or any state or local
government the right of forfeiture as against
23
the Mortgaged Property or any part thereof or any monies paid in
performance of Mortgagor's obligations under any of the Loan
Documents.
(ll) Management Agreement. The Management Agreement dated February
--------------------
20, 1996 (the "MANAGEMENT AGREEMENT") between Mortgagor and WMC
Realty, Inc. ("MANAGER") pursuant to which Manager operates the
Mortgaged Property is in full force and effect and there is no
default or violation by any party thereunder. The fee due under
the Management Agreement, which shall in no event exceed five
percent (5.00%) of Gross Income from Operations (hereinafter
defined), and the terms and provisions of the Management
Agreement, are subordinate to this Mortgage and Manager shall
attorn to Mortgagee. Mortgagor shall not terminate, cancel,
modify, renew or extend the Management Agreement, or enter into
any agreement relating to the management or operation of the
Mortgaged Property with Manager or any other party without the
express written consent of Mortgagee, which consent shall not be
unreasonably withheld. If at any time Mortgagee consents to the
appointment of a new Manager, such new Manager and Mortgagor
shall, as a condition of Mortgagee's consent, execute a Consent
and Agreement of Manager in the form then used by Mortgagee.
(mm) No Broker. No Broker other than Sandcastle Investments, Ltd., no
---------
financial advisors, brokers, underwriters, placement agents,
agents or finders have been dealt with by the Mortgagor in
connection with the Loan.
12. SINGLE PURPOSE ENTITY/SEPARATENESS. Mortgagor represents,
warrants and covenants as follows:
(a) Mortgagor does not own and will not own any asset or
property other than (i) the Mortgaged Property, and (ii) incidental personal
property necessary for the ownership or operation of the Mortgaged Property.
(b) Mortgagor will not engage in any business other than the
ownership, management and operation of the Mortgaged Property and Mortgagor will
conduct and operate its business as presently conducted and operated.
(c) Mortgagor will not enter into any contract or agreement with
any affiliate of the Mortgagor, any constituent party of Mortgagor, any
guarantor (a "GUARANTOR") of the Debt or any part thereof or any affiliate of
any constituent party or Guarantor, except upon terms and conditions that are
intrinsically fair and substantially similar to those that would be available on
an arms-length basis with third parties other than any such party.
(d) Mortgagor has not incurred and will not incur any
indebtedness, secured or unsecured, direct or indirect, absolute or contingent
(including guaranteeing any obligation), other than (i) the Debt, (ii) trade and
operational debt incurred in the ordinary course of business with trade
creditors and in amounts as are normal and reasonable under the circumstances,
24
and (iii) debt incurred in the financing of equipment and other personal
property used on the Premises. No indebtedness other than the Debt may be
secured (subordinate or pari passu) by the Mortgaged Property.
---- -----
(e) Mortgagor has not made and will not make any loans or
advances to any third party (including any affiliate or constituent party, any
Guarantor or any affiliate of any constituent party or Guarantor), and shall not
acquire obligations or securities of its affiliates.
(f) Mortgagor is and will remain solvent and Mortgagor will pay
its debts and liabilities (including, as applicable, shared personnel and
overhead expenses) from its assets as the same shall beome due.
(g) Mortgagor has done or caused to be done and will do all
things necessary to observe organizational formalities and preserve its
existence, and Mortgagor will not, nor will Mortgagor permit any constituent
party or Guarantor to amend, modify or otherwise change the partnership
certificate, partnership agreement, articles of incorporation and bylaws, trust
or other organizational documents of Mortgagor or such constituent party or
Guarantor without the prior written consent of Mortgagee.
(h) Mortgagor will maintain all of its books, records, financial
statements and bank accounts separate from those of its affiliates and any
constituent party and Mortgagor will file its own tax returns unless required
otherwise by applicable law. Mortgagor shall maintain its books, records,
resolutions and agreements as official records.
(i) Mortgagor will be, and at all times will hold itself out to
the public as, a legal entity separate and distinct from any other entity
(including any affiliate of Mortgagor, any constituent party of Mortgagor, any
Guarantor or any affiliate of any constituent party or Guarantor), shall
correct any known misunderstanding regarding its status as a separate entity,
shall conduct business in its own name, shall not identify itself or any of its
affiliates as a division or part of the other and shall maintain and utilize a
separate telephone number and separate stationery, invoices and checks.
(j) Mortgagor is adequately capitalized and will maintain
adequate capital for the normal obligations reasonably foreseeable in a business
of its size and character and in light of its contemplated business operations.
(k) Neither Mortgagor nor any constituent party will seek the
dissolution, winding up, liquidation, consolidation or merger in whole or in
part, of the Mortgagor.
(l) Mortgagor will not commingle the funds and other assets of
Mortgagor with those of any affiliate or constituent party, any Guarantor, or
any affiliate of any constituent party of Guarantor, or any other person.
(m) Mortgagor has and will maintain its assets in such a manner
that it will not be costly or difficult to segregate, ascertain or identify its
individual assets from those of
25
any affiliate or constituent party, any Guarantor, or any affiliate of any
constituent party or Guarantor, or any other person.
(n) Mortgagor does not and will not guarantee, become obligated
for, or hold itself out to be responsible for the debts or obligations of any
person or entity or the decisions or actions respecting the daily business or
affairs of any other person or entity.
(o) If Mortgagor is a limited partnership or a limited liability
company, the general partner or managing member shall be a corporation whose
sole asset is its interest in Mortgagor and the general partner or managing
member will at all times comply, and will cause Mortgagor to comply, with each
of the representations, warranties, and covenants contained in this Paragraph 12
------------
as if such representation, warranty or covenant was made directly by such
general partner or managing member.
13. ESTOPPEL CERTIFICATES AND NO DEFAULT AFFIDAVITS.
(a) After request by Mortgagee, Mortgagor shall within ten (10)
days furnish Mortgagee with a statement, duly acknowledged and certified,
setting forth (i) the amount of the original principal amount of the Note, (ii)
the unpaid principal amount of the Note, (iii) the rate of interest of the Note,
(iv) the date installments of interest and/or principal were last paid, (v) any
offsets or defenses to the payment of the Debt, if any, (vi) that the Note, this
Mortgage and the other Loan Documents are valid, legal and binding obligations
and have not been modified or if modified, giving particulars of such
modification; and (vii) reaffirming all representations and warranties of
Mortgagor set forth herein and in the other Loan Documents as of the date
requested by Mortgagee or, to the extent of any changes to any such
representations and warranties, so stating such changes.
(b) Mortgagor shall deliver to Mortgagee upon request, tenant
estoppel certificates from each commercial tenant at the Mortgaged Property in
form and substance reasonably satisfactory to Mortgagee provided that Mortgagor
shall not be required to deliver such certificates more frequently than two (2)
times in any calendar year.
26
14. CONTROLLING AGREEMENT. It is expressly stipulated and agreed to
be the intent of Mortgagor, and Mortgagee at all times to comply with applicable
state law or applicable United States federal law (to the extent that it
permits Mortgagee to contract for, charge, take, reserve, or receive a greater
amount of interest than under state law) and that this Paragraph 14 (and the
------------
similar paragraph contained in the Note) shall control every other covenant and
agreement in this Mortgage and the other Loan Documents. If the applicable law
(state or federal) is ever judicially interpreted so as to render usurious any
amount called for under the Note or under any of the other Loan Documents, or
contracted for, charged, taken, reserved, or received with respect to the Debt,
or if Mortgagee's exercise of the option to accelerate the maturity of the Note,
or if any prepayment by Mortgagor results in Mortgagor having paid any interest
in excess of that permitted by applicable law, then it is Mortgagor's and
Mortgagee's express intent that all excess amounts theretofore collected by
Mortgagee shall be credited on the principal balance of the Note and all other
Debt (or, if the Note and all other Debt have been or would thereby be paid in
full, refunded to Mortgagor), and the provisions of the Note and the other Loan
Documents immediately be deemed reformed and the amounts thereafter collectible
hereunder and thereunder reduced, without the necessity of the execution of any
new documents, so as to comply with the applicable law, but so as to permit the
recovery of the fullest amount otherwise called for hereunder or thereunder. All
sums paid or agreed to be paid to Mortgagee for the use, forbearance, or
detention of the Debt shall, to the extent permitted by applicable law, be
amortized, prorated, allocated, and spread throughout the full stated term of
the Debt until payment in full so that the rate or amount of interest on account
of the Debt does not exceed the maximum lawful rate from time to time in effect
and applicable to the Debt for so long as the Debt is outstanding.
Notwithstanding anything to the contrary contained herein or in any of the other
Loan Documents, it is not the intention of Mortgagee to accelerate the maturity
of any interest that has not accrued at the time of such acceleration or to
collect unearned interest at the time of such acceleration.
15. CHANGES IN LAWS REGARDING TAXATION. If any law is enacted or
adopted or amended after the date of this Mortgage which deducts the Debt from
the value of the Mortgaged Property for the purpose of taxation or which imposes
a tax, either directly or indirectly, on the Debt or Mortgagee's interest in the
Mortgaged Property, Mortgagor will pay such tax, with interest and penalties
thereon, if any. In the event Mortgagee is advised by counsel chosen by it that
the payment of such tax or interest and penalties by Mortgagor would be unlawful
or taxable to Mortgagee or unenforceable or provide the basis for a defense of
usury, then in any such event, Mortgagee shall have the option, by written
notice of not less than ninety (90) days, to declare the Debt immediately due
and payable.
16. NO CREDITS ON ACCOUNT OF THE DEBT. Mortgagor will not claim or
demand or be entitled to any credit or credits on account of the Debt for any
part of the Taxes or Other Charges assessed against the Mortgaged Property, or
any part thereof, and no deduction shall otherwise be made or claimed from the
assessed value of the Mortgaged Property, or any part thereof, for real, estate
tax purposes by reason of this Mortgage or the Debt. In the event such claim,
credit or deduction shall be required by law, Mortgagee shall have the option,
by written notice of not less than ninety (90) days, to declare the Debt
immediately due and payable.
27
17. DOCUMENTARY STAMPS. If at any time the United States of America,
any State thereof or any subdivision of any such State shall require revenue or
other stamps to be affixed to the Note or this Mortgage, or impose any other tax
or charge on the same, Mortgagor will pay for the same, with interest and
penalties thereon, if any.
18. BOOKS AND RECORDS.
(a) The financial statements heretofore furnished to Mortgagee
are, as of the dates specified therein, complete and correct and fairly present
the financial condition of the Mortgagor and any other persons or entities that
are the subject of such financial statements, and are prepared in accordance
with generally accepted accounting principles. Mortgagor does not have any
contingent liabilities, liabilities for taxes, unusual forward or long-term
commitments or unrealized or anticipated losses from any unfavorable commitments
that are known to Mortgagor and reasonably likely to have a materially adverse
effect on the Mortgaged Property or the operation thereof as a multifamily
apartment complex, except as referred to or reflected in said financial
statements. Since the date of such financial statements, there has been no
materially adverse change in the financial condition, operation or business of
Mortgagor from that set forth in said financial statements.
(b) Mortgagor will maintain full and accurate books of accounts
and other records reflecting the results of the operations of the Mortgaged
Property and will furnish to Mortgagee on or before forty-five (45) days after
the end of each calendar quarter the following items, each certified by
Mortgagor as being true and correct: (i) a written statement (rent roll) dated
as of the last day of each such calendar quarter identifying each of the Leases
by the term, space occupied, rental required to be paid, security deposit paid,
any rental concessions, and identifying any defaults or payment delinquencies
thereunder; (ii) monthly and year to date operating statements prepared for each
calendar month during each such calendar quarter, noting Net Operating Income
(as hereinafter defined), Gross Income from Operations (as hereinafter defined),
and Operating Expenses (as hereinafter defined) and including an itemization of
actual (not pro forma) capital and other information necessary and sufficient
under generally accepted accounting practices to fairly represent the financial
position and results of operation of the Mortgaged Property during such calendar
month, all in form satisfactory to Mortgagee; (iii) a property balance sheet for
each such calendar quarter; (iv) a comparison of the budgeted income and
expenses and the actual income and expenses for each calender quarter and year
to date together with a detailed explanation of any variances of five percent
(5%) or more between budgeted and actual amounts for such quarterly period and
year to date; and (v) a calculation reflecting the Debt Service Coverage Ratio
(as hereinafter defined) as of the last day of each such calendar quarter. Until
a Secondary Market Transaction has occurred, the Mortgagor shall furnish monthly
each of the items listed in the immediately preceding sentence within twenty
(20) days after the end of such month. With 120 days following the end of each
calendar year, Mortgagor shall furnish statements of its financial affairs and
condition including a balance sheet and a statement of profit and loss for the
Mortgagor in such detail as Mortgage may reasonably request, and setting forth
the financial condition and the income and expenses for the Mortgaged Property
for the immediately preceding calendar year, which statements shall be prepared
by Mortgagor. Mortgagor's annual financial statements shall include (i) a list
of the tenants, if any, occupying more than twenty (20%) percent
28
of the total floor area of the Improvements, and (ii) a breakdown showing the
year in which each Lease then in effect expires and the percentage of total
floor area of the Improvements and the percentage of base rent with respect to
which Leases shall expire in each such year, each such percentage to be
expressed on both a per year and a cumulative basis. Mortgagor's annual
financial statements shall be accompanied by a certificate executed by the
chief financial officer of Mortgagor, stating that each such annual financial
statement presents fairly the financial condition of the Mortgaged Property
being reported upon. Each such annual financial statement shall be prepared in
accordance with generally accepted accounting principles consistently applied.
At any time and from time to time Mortgagor shall deliver to Mortgagee or its
agents such other financial data as Mortgagee or its agents shall reasonably
request with respect to the ownership, maintenance, use and operation of the
Mortgaged Property.
(c) For the purposes of this Mortgage, the following terms shall have
the following meanings:
(i) The term "NET OPERATING INCOME" shall mean the amount
obtained by subtracting Operating Expenses from Gross Income from Operations.
(ii) The term "OPERATING EXPENSES" shall mean the total of all
expenditures, computed in accordance with generally accepted accounting
principles, of whatever kind relating to the operation, maintenance and
management of the Mortgaged Property that are incurred on a regular monthly or
other periodic basis, including without limitation, utilities, ordinary repairs
and maintenance, insurance, license fees, property taxes and assessments,
advertising expenses, management fees, payroll and related taxes, computer
processing charges, operational equipment or other lease payments as approved by
Mortgagee, and other similar costs, but excluding depreciation, debt service,
capital expenditures, and contributions to the Replacement Escrow Fund, the Tax
and Insurance Impound Fund, and any other reserves required under the Loan
Documents.
(iii) The term "GROSS INCOME FROM OPERATIONS" shall mean all
income, computed in accordance with generally accepted accounting principles,
derived from the ownership and operation of the Mortgaged Property from whatever
source, including, but not limited to, Rents, utility charges, escalations,
forfeited security deposits, interest on credit accounts, service fees or
charges, license fees, parking fees, rent concessions or credits, and other
passthrough or reimbursements paid by tenants under the Leases of any nature but
excluding sales, use and occupancy or other taxes on receipts required to be
accounted for by Mortgagor to any government or governmental agency, refunds and
uncollectible accounts, sales of furniture, fixtures and equipment, proceeds of
casualty insurance and condemnation awards (other than business interruption or
other loss of income insurance), and any disbursements to the Mortgagor from the
Tax and Insurance Impound Fund, the Replacement Escrow Fund, the Rollover Escrow
Fund, or any other escrow fund established by the Loan Documents.
(iv) The term "DEBT SERVICE COVERAGE RATIO" shall mean a ratio
for the applicable period in which: (A) the numerator is the Net Operating
Income (excluding
29
interest on credit accounts) for such period as set forth in the statements
required hereunder; and (B) the denominator is the aggregate amount of principal
and interest due and payable on the Note.
19. PERFORMANCE OF OTHER AGREEMENTS. Mortgagor shall observe and
perform each and every term to be observed or performed by Mortgagor pursuant to
the terms of any agreement or recorded instrument affecting or pertaining to the
Mortgaged Property.
20. FURTHER ACTS, ETC.
(a) Mortgagor will, at the cost of Mortgagor, and without
expense to Mortgage, do, execute, acknowledge and deliver all and every such
further acts, deeds, conveyances, mortgages, assignments, notices of assignment,
Uniform Commercial Code financing statements or continuation statements,
transfers and assurances as Mortgagee shall, from time to time, reasonably
require, for the better assuring, conveying, assigning, transferring, and
confirming unto Mortgagee the property and rights hereby deeded, mortgaged,
given, granted, bargained, sold, alienated, enfeoffed, conveyed, confirmed,
pledged, assigned and hypothecated or intended now or hereafter so to be, or
which Mortgagor may be or may hereafter become bound to convey or assign to
Mortgagee, or for carrying out the intention or facilitating the performance of
the terms of this Mortgage or for filing, registering or recording this Mortgage
or for facilitating the sale of the Loan and the Loan Documents as described in
Paragraph 20(b) below. Mortgagor, on demand, will execute and deliver and hereby
---------------
authorizes Mortgagee to execute in the name of Mortgagor or without the
signature of Mortgagor to the extent Mortgagee may lawfully do so, one or more
financing statements, chattel mortgages or other instruments, to evidence more
effectively the security interest of Mortgagee in the Mortgaged Property. Upon
foreclosure, the appointment of a receiver or any other relevant action,
Mortgagor will, at the cost of Mortgagor and without expense to Mortgagee,
cooperate fully and completely to effect the assignment or transfer of any
license, permit, agreement or any other right necessary or useful to the
operation of or the Mortgaged Property. Mortgagor grants to Mortgagee an
irrevocable power of attorney coupled with an interest for the purpose of
exercising and perfecting any and all rights and remedies available to
Mortgagee at law and in equity, including without limitation, such rights and
remedies available to Mortgagee pursuant to this paragraph.
21. RECORDING OF MORTGAGE, ETC. Mortgagor forthwith upon the
execution and delivery of this Mortgage and thereafter, from time to time, will
cause this Mortgage, and any security instrument creating a lien or security
interest or evidencing the lien hereof upon the Mortgaged Property and each
instrument of further assurance to be filed, registered or recorded in such
manner and in such places as may be required by any present or future law in
order to publish notice of and fully to protect the lien or security interest
hereof upon, and the interest of Mortgagee in, the Mortgaged Property. Mortgagor
will pay all filing, registration or recording fees, and all expenses incident
to the preparation, execution and acknowledgement of this Mortgage, 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 Mortgage, any mortgage
supplemental hereto, any security instrument with respect to the Mortgaged
Property or any instrument of further assurance, except where prohibited by law
so to
30
do. Mortgagor shall hold harmless and indemnify Mortgagee, its successors and
assigns, against any liability incurred by reason of the imposition of any tax
on the making and recording of this Mortgage.
22. REPORTING REQUIREMENTS. Mortgagor agrees to give prompt notice
to Mortgagee of the insolvency or bankruptcy filing of Mortgagor or the death,
insolvency or bankruptcy filing of any Guarantor.
23. EVENTS OF DEFAULT. The Debt shall become immediately due and
payable at the option of Mortgagee upon the happening of any one or more of the
following events of default (each an "EVENT OF DEFAULT"):
(a) if any portion of the Debt is not paid on or before the date
on which such payment is due;
(b) subject to Mortgagor's right to contest as provided herein,
if any of the Taxes or Other Charges are not paid when the same are due and
payable (unless sums equaling the amount of Taxes and Other Charges then due and
payable have been delivered to Mortgagee in accordance with Paragraph 6 hereof);
(c) if the Policies are not kept in full force and effect, or if
the Policies are not delivered to Mortgagee upon request;
(d) if Mortgagor transfers or encumbers any portion of the
Mortgaged Property without Mortgagee's prior written consent;
(e) if any representation or warranty of Mortgagor, or of any
Guarantor, made herein or in any other Loan Document or in any certificate,
report, financial statement or other instrument or document furnished to
Mortgagee shall have been false or misleading in any material respect when made;
(f) if Mortgagor or any Guarantor shall make an assignment for
the benefit of creditors or if Mortgagor shall generally not be paying its debts
as they become due;
(g) if a receiver, liquidator or trustee of Mortgagor or of any
Guarantor shall be appointed or if Mortgagor or any Guarantor shall be
adjudicated a bankrupt or insolvent, or if any petition for bankruptcy,
reorganization or arrangement pursuant to federal bankruptcy law, or any similar
federal or state law, shall be filed by or against, consented to, or acquiesced
in by, Mortgagor or any Guarantor of if any proceeding for the dissolution or
liquidation of Mortgagor or of any Guarantor shall be instituted; however, if
such appointment, adjudication, petition or proceeding was involuntary and not
consented to by Mortgagor or such Guarantor, upon the same not being discharged,
stayed or dismissed within sixty (60) days;
(h) if Mortgagor shall be in default under any other mortgage or
security agreement covering any part of the Mortgaged Property whether it be
superior or junior in lien to this Mortgage;
31
(i) subject to Mortgagor's right to contest as provided herein,
if the Mortgaged Property becomes subject to any mechanic's, materialman's or
other lien and such lien is not removed or recorded within thirty (30) days of
the filing or recording of such lien (except a lien for local real estate taxes
and assessments not then due and payable);
(j) if Mortgagor fails to cure properly any violations of laws
or ordinances affecting or which may be interpreted to affect the Mortgaged
Property within thirty (30) days after Mortgagor first receives notice of any
such violations;
(k) except as permitted in this Mortgage, the alteration,
improvement, demolition or removal of any of the Improvements without the prior
consent of Mortgagee;
(l) if Mortgagor shall continue to be in default under any term,
covenant, or provision of the Note or any of the other Loan Documents, beyond
applicable cure periods contained in those documents;
(m) if Mortgagor fails to cure a default under any other term,
covenant or provision of this Mortgage within thirty (30) days after Mortgagor
first receives notice of any such default; provided, however, if such default is
reasonably susceptible of cure, but not within such thirty (30) day period, then
Mortgagor may be permitted up to an additional sixty (60) days to cure such
default provided that Mortgagor diligently and continuously pursues such cure;
(n) if without Mortgagee's prior written consent, (i) the
Management Agreement is terminated, (ii) the ownership, management or control of
Manager is transferred, (iii) there is a material change in the Management
Agreement, or (iv) if there shall be a material default by Mortgagor under the
Management Agreement; or
(o) if Mortgagor ceases to continuously operate the Mortgaged
Property or any material portion thereof as a multifamily apartment complex for
any reason whatsoever (other than temporary cessation in connection with any
repair or renovation thereof undertaken with the consent of Mortgagee).
24. LATE PAYMENT CHARGE. If any portion of the Debt is not paid on
or before the date on which such payment is due, Mortgagor shall pay to
Mortgagee upon demand an amount equal to the lesser of five percent (5.00%) of
such unpaid portion of the Debt or the maximum amount permitted by applicable
law in order to defray a portion of the expenses incurred by Mortgagee in
handling and processing such delinquent payment and to compensate Mortgagee for
the loss of the use of such delinquent payment, and such amount shall be secured
by this Mortgage.
25. RIGHT TO CURE DEFAULTS. Upon the occurrence of any Event of
Default or if Mortgagor fails to make any payment or to do any act as herein
provided, Mortgagee may, but without any obligation to do so and without notice
to or demand on Mortgagor and without releasing Mortgagor from any obligation
hereunder, make or do the same in such manner and to such extent as Mortgagee
may deem necessary to protect the security hereof. Mortgagee is authorized to
enter upon the Mortgaged Property for such purposes or appear in, defend, or
bring any action or proceeding to protect its interest in the Mortgaged Property
or to foreclose this
32
Mortgage or collect the Debt, and the cost and expense thereof (including
reasonable attorneys' fees and disbursements to the extent permitted by law),
with interest at the Default Rate (as defined in the Note) for the period after
notice from Mortgagee that such cost or expense was incurred to the date of
payment to Mortgagee, shall constitute a portion of the Debt, shall be secured
by this Mortgage and the other Loan Documents and shall be due and payable to
Mortgagee upon demand.
26. ADDITIONAL REMEDIES.
(a) Upon the occurrence of any Event of Default, Mortgagee may
take such action, without notice or demand, as it deems advisable to protect and
enforce its rights against Mortgagor and in and to the Mortgaged Property by
Mortgagee itself or otherwise, including, without limitation, the following
actions, each of which may be pursued concurrently or otherwise, at such time
and in such order as Mortgagee may determine, in its sole discretion, without
impairing or otherwise affecting the other rights and remedies of Mortgagee:
(i) declare the entire Debt to be immediately due and
payable;
(ii) institute a proceeding or proceedings, judicial or
nonjudicial, by advertisement or otherwise, for the complete foreclosure of this
Mortgage in which case the Mortgaged Property or any interest therein may be
sold for cash or upon credit in one or more parcels or in several interests or
portions and in any order or manner;
(iii) with or without entry, to the extent permitted and
pursuant to the procedures provided by applicable law, institute proceedings for
the partial foreclosure of this Mortgage for the portion of the Debt then due
and payable, subject to the continuing lien of this Mortgage for the balance of
the Debt not then due;
(iv) sell for cash or upon credit the Mortgaged Property or
any part thereof and all estate, claim, demand, right, title and interest of
Mortgagor therein and rights of redemption thereof, pursuant to the power of
sale contained herein or otherwise, at one or more sales, as an entirety or in
parcels, at such time and place, upon such terms and after such notice thereof
as may be required or permitted by law;
(v) institute an action, suit or proceeding in equity for
the specific performance of any covenant, condition or agreement contained
herein, or in any of the other Loan Documents;
(vi) recover judgment on the Note either before, during or
after any proceedings for the enforcement of this Mortgage;
(vii) apply for the appointment of a trustee, receiver,
liquidator or conservator of the Mortgaged Property, without notice and without
regard for the adequacy of the security for the Debt and without regard for the
solvency of the Mortgagor, any Guarantor or of any person, firm or other entity
liable for the payment of the Debt;
33
(viii) enforce Mortgagee's interest in the Leases and
Rents and enter into or upon the Mortgaged Property, either personally or by
its agents, nominees or attorneys and dispossess Mortgagor and its agents and
servants therefrom, and thereupon Mortgagee may (A) use, operate, manage,
control, insure, maintain, repair, restore and otherwise deal with all and every
part of the Mortgaged Property and conduct the business thereat; (B) complete
any construction on the Mortgaged Property in such manner and form as Mortgagee
deems advisable; (C) make alterations, additions, renewals, replacements and
improvements to or on the Mortgaged Property; (D) exercise all rights and powers
of Mortgagor with respect to the Mortgaged Property, whether in the name of
Mortgagor or otherwise, including, without limitation, the right to make,
cancel, enforce or modify Leases, obtain and evict tenants, and demand, ▇▇▇ for,
collect and receive all Rents; and (E) apply the receipts from the Mortgaged
Property to the payment of Debt, after deducting therefrom all expenses
(including reasonable attorney's fees and disbursements) incurred in connection
with the aforesaid operations and all amounts necessary to pay the taxes,
assessments insurance and other charges in connection with the Mortgaged
Property, as well as just and reasonable compensation for the services of
Mortgagee, its counsel, agents and employees;
(ix) require Mortgagor to pay monthly in advance to
Mortgagee, or any receiver appointed to collect the Rents, the fair and
reasonable rental value for the use and occupation of any portion of the
Mortgaged Property occupied by Mortgagor and require Mortgagor to vacate and
surrender possession to Mortgagee of the Mortgaged Property or to such receiver
and, in default thereof, evict Mortgagor by summary proceedings or otherwise; or
(x) pursue such other rights and remedies as may be
available at law or in equity or under the Uniform Commercial Code including
without limitation the right to receive and/or establish a lock box for all
Rents proceeds from the Intangibles and any other receivables or rights to
payments of Mortgagor relating to the Mortgaged Property; or
(xi) foreclose this Mortgage in accordance with the
provisions of Wis. Stats. (S) 846.101 or (S) 846.103, or any successor statutes
--- -----
thereto.
In the event of a sale, by foreclosure or otherwise, of less than all
of the Mortgaged Property, this Mortgage shall continue as a lien on the
remaining portion of the Mortgaged Property.
(b) The proceeds of any sale made under or by virtue of this
paragraph, together with any other sums which then may be held by Mortgagee,
under this Mortgage, whether under the provisions of this paragraph or
otherwise, shall be applied by Mortgagee to the payment of the Debt in such
priority and proportion as Mortgagee in its sole discretion shall deem proper.
(c) Mortgagee may adjourn from time to time any sale by it to be
made under or by virtue of this Mortgage by announcement at the time and place
appointed for such sale or for such adjourned sale or sales; and, except as
otherwise provided by any applicable provision of law, Mortgagee, without
further notice or publication, may make such sale at the time and place to which
the same shall be so adjourned.
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(d) Upon the completion of any sale or sales pursuant hereto,
Mortgagee, or an officer of any court empowered to do so, shall execute and
deliver to the accepted purchaser or purchasers a good and sufficient
instrument, or good and sufficient instruments, conveying, assigning and
transferring all estate, right, title and interest in and to the property and
rights sold. Mortgagee is hereby irrevocably appointed the true and lawful
attorney of Mortgagor, in its name and stead, to make all necessary conveyances,
assignments, transfers and deliveries of the Mortgaged Property and rights so
sold and for that purpose Mortgagee may execute all necessary instruments of
conveyance, assignment and transfer, and may substitute one or more persons with
like power, Mortgagor hereby ratifying and confirming all that its said attorney
or such substitute or substitutes shall lawfully do by virtue hereof. Any sale
or sales made under or by virtue of this paragraph, whether made under the power
of sale herein granted or under or by virtue of judicial proceedings or of a
judgement or decree of foreclosure and sale, shall operate to divest all the
estate, right, title, interest, claim and demand whatsoever, whether at law or
in equity, of Mortgagor in and to the properties and rights so sold, and shall
be a perpetual bar both at law and in equity against Mortgagor and against any
and all persons claiming or who may claim the same, or any part thereof from,
through or under Mortgagor.
(e) Upon any sale made under or by virtue of this paragraph,
whether made under the power of sale herein granted or under or by virtue of
judicial proceedings or of a judgement or decree of foreclosure and sale,
Mortgagee may bid for and acquire the Mortgaged Property or any part thereof and
in lien of paying cash therefor may make settlement for the purchase price by
crediting upon the Debt the net sales price after deducting therefrom the
expenses of the sale and costs of the action and any other sums which Mortgagee
is authorized to deduct under this Mortgage.
(f) No recovery of any judgement by Mortgagee and no levy of an
execution under any judgement upon the Mortgaged Property or upon any other
property of Mortgagor shall affect in any manner or to any extent the lien of
this Mortgage upon the Mortgaged Property or any part thereof, or any liens,
rights, powers or remedies of Mortgagee hereunder, but such liens, rights,
powers and remedies of Mortgagee shall continue unimpaired as before.
(g) Mortgagee may terminate or rescind any proceeding or other
action brought in connection with its exercise of the remedies provided in this
paragraph at any time before the conclusion thereof, as determined in
Mortgagee's sole discretion and without prejudice to Mortgagee.
(h) Mortgagee may resort to any remedies and the security given
by the Note, this Mortgage or the Loan Documents in whole or in part, and in
such portions and in such order as determined by Mortgagee's sole discretion. No
such action shall in any way be considered a waiver of any rights, benefits or
remedies evidenced or provided by the Note, this Mortgage or any of the other
Loan Documents. The failure of Mortgagee to exercise any right, remedy or option
provided in the Note, this Mortgage or any of the other Loan Documents shall not
be deemed a waiver of such right, remedy or option or of any covenant or
obligation secured by the Note, this Mortgage or the other Loan Documents. No
acceptance by Mortgagee of any payment after the occurrence of any Event of
Default and no payment by Mortgagee of any obligation for which
35
Mortgagor is liable hereunder shall be deemed to waive or cure any Event of
Default with respect to Mortgagor, or Mortgagor's liability to pay such
obligation. No sale of all or any portion of the Mortgaged Property, no
forbearance on the part of Mortgagee, and no extension of time for the payment
of the whole or any portion of the Debt or any other indulgence given by
Mortgagee to Mortgagor, shall operate to release or in any manner affect the
interest of Mortgagee in the remaining Mortgaged Property or the liability of
Mortgagor to pay the Debt. No waiver by Mortgagee shall be effective unless it
is in writing and then only to the extent specifically stated. All costs and
expenses of Mortgagee in exercising the rights and remedies under this Paragraph
---------
26 (including reasonable attorneys' fees and disbursements to the extent
--
permitted by law), shall be paid by Mortgagor immediately upon notice from
Mortgagee, with interest at the Default Rate for the period after notice from
Mortgagee and such costs and expenses shall constitute a portion of the Debt and
shall be secured by this Mortgage.
(i) The interests and rights of Mortgagee under the Note,
this Mortgage or in any of the other Loan Documents shall not be impaired by
any indulgence, including (i) any renewal, extension or modification which
Mortgagee may grant with respect to any of the Debt, (ii) any surrender,
compromise, release, renewal, extension, exchange or substitution which
Mortgagee may grant with respect to the Mortgaged Property or any portion
thereof; or (iii) any release or indulgence granted to any maker, endorser,
Guarantor or surety of any of the Debt.
27. RIGHT OF ENTRY. In addition to any other rights or remedies
granted under this Mortgage, Mortgagee, and its agents, during the Term, shall
have the right to enter and inspect the Mortgaged Property during normal
business hours. The cost of such inspections or audits shall be borne by
Mortgagor should Mortgagee determine that an Event of Default exists, including
the cost of all follow up or additional investigations or inquiries deemed
reasonably necessary by Mortgagee. The cost of such inspections, if not paid for
by Mortgagor following demand, may be added to the principal balance of the sums
due under the Note and this Mortgage and shall bear interest thereafter until
paid at the Default Rate.
28. SECURITY AGREEMENT.
(a) This Mortgage is both a real property mortgage and a
"security agreement" within the meaning of the Uniform Commercial Code. The
Mortgaged Property includes both real and personal property and all other rights
and interests, whether tangible or intangible in nature, of Mortgagor in the
Mortgaged Property. Mortgagor by executing and delivering this Mortgage has
granted and hereby grants to Mortgagee, as security for the Debt, a security
interest in the Mortgaged Property to the full extent that the Mortgaged
Property may be subject to the Uniform Commercial Code (said portion of the
Mortgaged Property so subject to the Uniform Commercial Code being called in
this paragraph the "COLLATERAL"). Mortgagor hereby agrees with Mortgagee to
execute and deliver to Mortgagee, in form and substance satisfactory to
Mortgagee, such financing statements and such further assurances as Mortgagee
may from time to time, reasonably consider necessary to create, perfect, and
preserve Mortgagee's security interest herein granted. This Mortgage shall also
constitute a "fixture filing" for the purposes of the Uniform Commercial Code.
As such, this Mortgage covers all items of the Collateral that are or
36
are to become fixtures. Information concerning the security interest herein
granted may be obtained from the parties at the addresses of the parties set
forth in the first paragraph of this Mortgage.
(b) If an Event of Default shall occur, Mortgagee, in addition
to any other rights and remedies which it may have, shall have and may exercise
immediately and without demand, any and all rights and remedies granted to a
secured party upon default under the Uniform Commercial Code, including, without
limiting the generality of the foregoing, the right to take possession of the
Collateral or any part thereof, and to take such other measures as Mortgagee may
deem necessary for the care, protection and preservation of the Collateral. Upon
request or demand of Mortgagee, Mortgagor shall at its expense assemble the
Collateral and make it available to Mortgagee at a convenient place acceptable
to Mortgagee. Mortgagor shall pay to Mortgagee on demand any and all expenses,
including attorneys' fees and disbursements, incurred or paid by Mortgagee in
protecting the interest in the Collateral and in enforcing the rights hereunder
with respect to the Collateral. Any notice of sale, disposition or other
intended action by Mortgagee with respect to the Collateral sent to Mortgagor in
accordance with the provisions hereof at least five (5) days prior to such
action, shall constitute commercially reasonable notice to Mortgagor. The
proceeds of any disposition of the Collateral, or any part thereof, may be
applied by Mortgagee to the payment of the Debt in such priority and proportions
as Mortgagee in its sole discretion shall deem proper. In the event of any
change in name, identity or structure of any Mortgagor, such Mortgagor shall
notify Mortgagee thereof and promptly after request shall execute, file and
record such Uniform Commercial Code forms as are necessary to maintain the
priority of Mortgagee's lien upon and security interest in the Collateral, and
shall pay all expenses and fees in connection with the filing and recording
thereof. If Mortgagee shall require the filing or recording of additional
Uniform Commercial Code forms or continuation statements, Mortgagor shall,
promptly after request, execute, file and record such Uniform Commercial Code
forms or continuation statements as Mortgagee shall deem necessary, and shall
pay all expenses and fees in connection with the filing and recording thereof,
it being understood and agreed, however, that no such additional documents
shall increase Mortgagor's obligations under the Note, this Mortgage and any of
the other Loan Documents. Mortgagor hereby irrevocably appoints Mortgagee as its
attorney-in-fact, coupled with an interest, to file with the appropriate public
office on its behalf any financing or other statements signed only by Mortgagee,
as secured party, in connection with the Collateral covered by this Mortgage.
29. ACTIONS AND PROCEEDINGS. Mortgagee has the right to appear in
and defend any action or proceeding brought with respect to the Mortgaged
Property and to bring any action or proceeding, in the name and on behalf of
Mortgagor, which Mortgagee, in its sole discretion, decides should be brought to
protect their interest in the Mortgaged Property. Mortgagee shall, at its
option, be subrogated to the lien of any mortgage or other security instrument
discharged in whole or in part by the Debt, and any such subrogation rights
shall constitute additional security for the payment of the Debt.
30. WAIVER OF SETOFF AND COUNTERCLAIM. All amounts due under this
Mortgage, the Note and the other Loan Documents shall be payable without setoff,
counterclaim or any deduction whatsoever. Mortgagor hereby waives the right to
assert a setoff, counterclaim (other than a mandatory or compulsory
counterclaim) or deduction in any action or proceeding in
37
which Mortgagee is a participant, or arising out of or in any way connected with
this Mortgage, the Note, any of the other Loan Documents, or the Debt.
31. CONTEST OF CERTAIN CLAIMS. Notwithstanding the provisions of
Paragraphs 5 and 23 hereof, Mortgagor shall not be in default for failure to pay
------------ --
or discharge Taxes, Other Charges or mechanic's or materialman's lien asserted
against the Mortgaged Property if, and so long as, (a) Mortgagor shall have
notified Mortgagee of same within five (5) days of obtaining knowledge thereof;
(b) Mortgagor shall diligently and in good faith contest the same by appropriate
legal proceedings which shall operate to prevent the enforcement or collection
of the same and the sale of the Mortgaged Property, or any part thereof, to
satisfy the same; (c) Mortgagor shall have furnished to Mortgagee a cash
deposit, or an indemnity bond satisfactory to Mortgagee with a surety reasonably
satisfactory to Mortgagee, in the amount of the Taxes, Other Charges or
mechanic's or materialman's lien claim, plus a reasonable additional sum to pay
all costs, interest and penalties that may be imposed or incurred in connection
therewith, to assure payment of the matters under contest and to prevent any
sale or forfeiture of the Mortgaged Property or any part thereof; (d) Mortgagor
shall promptly upon final determination thereof pay the amount of any such
Taxes, Other Charges or claim so determined, together with all costs, interest
and penalties which may be payable in connection therewith; (e) the failure to
pay the Taxes, Other Charges or mechanic's or materialman's lien claim does not
constitute a default under any other deed of trust, mortgage or security
interest covering or affecting any part of the Mortgaged Property; and (f)
notwithstanding the foregoing, Mortgagor shall immediately upon request of
Mortgagee pay (and if Mortgagor shall fail so to do, Mortgagee may, but shall
not be required to, pay or cause to be discharged or bonded against) any such
Taxes, Other Charges or claim notwithstanding such contest, if in the opinion
of Mortgagee, the Mortgaged Property or any part thereof of interest therein may
be in danger of being sold, forfeited, foreclosed, terminated, canceled or lost.
Mortgagee may pay over any such cash deposit or part thereof to the claimant
entitled thereto at any time when, in the judgment of Mortgagee, the entitlement
of such claimant is established.
32. RECOVERY OF SUMS REQUIRED TO BE PAID. Mortgagee 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
Mortgagee thereafter to bring an action of foreclosure, or any other action, for
a default or defaults by Mortgagor existing at the time such earlier action was
commenced.
33. MARSHALLING AND OTHER MATTERS. Mortgagor hereby waives, to the extent
permitted by law, the benefit of all appraisement, valuation, stay, extension,
reinstatement and redemption laws now or hereafter in force and all rights of
marshalling in the event of any sale hereunder of the Mortgaged Property or any
part thereof or any interest therein. Further, Mortgagor hereby expressly waives
any and all rights of redemption from sale under any order or decree of
foreclosure of this Mortgage on behalf of Mortgagor, and on behalf of each and
every person acquiring any interest in or title to the Mortgaged Property
subsequent to the date of this Mortgage and on behalf of all persons to the
extent permitted by applicable law.
38
34. HAZARDOUS SUBSTANCES. Mortgagor hereby represents and warrants to
Mortgagee that, to the best of Mortgagor's knowledge, after due inquiry and
investigation except as disclosed in the report dated November 25, 1997,
prepared by Certified Environmental Inc. (the "PHASE I REPORT") and delivered to
Mortgagee in connection with the Loan: (a) the Mortgaged Property is not in
direct or indirect violation of any local, state, federal or other governmental
authority, statute, ordinance, code, order, decree, law, rule or regulation
pertaining to or imposing liability or standards of conduct concerning
environmental regulation, contamination or clean-up including, without
limitation, the Comprehensive Environmental Response, Compensation and Liability
Act, as amended ("CERCLA"), the Resource Conservation and Recovery Act, as
amended ("RCRA"), the Emergency Planning and Community Right-to-Know Act of
1986, as amended, the Hazardous Substances Transportation Act, as amended, the
Solid Waste Disposal Act, as amended, the Clean Water Act, as amended, the Clean
Air Act, as amended, the Toxic Substance Control Act, as amended, the Safe
Drinking Water Act, as amended, the Occupational Safety and Health Act, as
amended, any state super-lien and environmental clean-up statutes and all rules
and regulations adopted in respect to the foregoing laws whether presently in
force or coming into being and/or effectiveness hereafter (collectively,
"ENVIRONMENTAL LAWS"); (b) the Mortgaged Property is not subject to any private
or governmental lien or judicial or administrative notice or action or inquiry,
investigation or claim relating to hazardous and/or toxic, dangerous and/or
regulated, substances, wastes, materials, raw materials which include hazardous
constituents, pollutants or contaminants including without limitation,
petroleum, tremolite, anthlophylie, actinolite or polychlorinated biphenyls and
any other substances or materials which are included under or regulated by
Environmental Laws or which are considered by scientific opinion to be otherwise
dangerous in terms of the health, safety and welfare of humans (collectively,
"HAZARDOUS SUBSTANCES"); (c) no Hazardous Substances are or have been
discharged, generated, treated, disposed of or stored on, incorporated in, or
removed or transported from the Mortgaged Property other than in compliance with
all Environmental Laws; and (d) no underground storage tanks exist on any of the
Mortgaged Property. So long as Mortgagor owns or is in possession of the
Mortgaged Property, Mortgagor (i) shall keep or cause the Mortgaged Property to
be kept free from Hazardous Substances and in compliance with all Environmental
Laws, (ii) shall promptly notify Mortgagee if Mortgagor shall become aware of
any Hazardous Substances on or near the Mortgaged Property and/or if Mortgagor
shall become aware that the Mortgaged Property is in direct or indirect
violation of any Environmental Laws and/or if Mortgagor shall become aware of
any condition on or near the Mortgaged Property which shall pose a threat to the
health, safety or welfare of humans, and (iii) Mortgagor shall remove such
Hazardous Substances and/or cure such violations and/or remove such threats, as
applicable, as required by law (or as shall be required by Mortgagee in the case
of removal which is not required by law, but in response to the opinion of a
licensed hydrogeologist, licensed environmental engineer or other qualified
consultant engaged by Mortgagee ("MORTGAGEE'S CONSULTANT")), promptly after
Mortgagor becomes aware of same, at Mortgagor's sole expense. Notwithstanding
anything to the contrary in this paragraph, the Mortgagor may use and store
immaterial amounts of Hazardous Substances at the Mortgaged Property if such use
or storage is in connection with the ordinary cleaning and maintenance of the
Mortgaged Property so long as such use and storage (A) does not violate any
applicable Environmental Laws and (B) is not the subject of any specific
recommendations in the Phase I Report. Nothing herein shall prevent Mortgagor
from recovering such expenses from any other party that may be liable for such
removal or cure. The obligations and liabilities of Mortgagor
39
under this Paragraph 34 shall survive any termination, satisfaction, or
------------
assignment of this Mortgage and the exercise by Mortgagee of any of its rights
or remedies hereunder, including, without limitation, the acquisition of the
Mortgaged Property by foreclosure or a conveyance in lieu of foreclosure.
35. ASBESTOS. Mortgagor represents and warrants that, to the best of
Mortgagor's knowledge, based upon the Phase I Report, no asbestos or any
substance or material containing asbestos ("ASBESTOS") is located on the
Mortgaged Property except as may have been disclosed in the Phase I Report
delivered to Mortgagee in connection with the Loan. Mortgagor shall not install
in the Mortgaged Property, nor permit to be installed in the Mortgaged Property,
Asbestos and shall remove any Asbestos promptly upon discovery to the
satisfaction of Mortgagee, at Mortgagor's sole expense. Mortgagor shall in all
instances comply with, and ensure compliance by all occupants of the Mortgaged
Property with, all applicable federal, state and local laws, ordinances, rules
and regulations with respect to Asbestos, and shall keep the Mortgaged Property
free and clear of any liens imposed pursuant to such laws, ordinances, rules or
regulations. In the event that Mortgagor receives any notice or advice from any
governmental agency or any source whatsoever with respect to Asbestos on,
affecting or installed on the Mortgaged Property, Mortgagor shall immediately
notify Mortgagee. The obligations and liabilities of Mortgagor under this
Paragraph 35 shall survive any termination, satisfaction, or assignment of this
------------
Mortgage and the exercise by Mortgagee of any of its rights or remedies
hereunder, including but not limited to, the acquisition of the Mortgaged
Property by foreclosure or a conveyance in lieu of foreclosure.
36. ENVIRONMENTAL MONITORING. Mortgagor shall give prompt written
notices to Mortgagee of: (a) any proceeding or inquiry by any party with respect
to the presence of any Hazardous Substance or Asbestos on, under, from or about
the Mortgaged Property, (b) all claims made or threatened by any third party
against Mortgagor or the Mortgaged Property relating to any loss or injury
resulting from any Hazardous Substance or Asbestos, and (c) Mortgagor's
discovery of any occurrence or condition on any real property adjoining or in
the vicinity of the Mortgaged Property that could cause the Mortgaged Property
to be subject to any investigation or cleanup pursuant to any Environmental Law.
Mortgagor shall permit Mortgagee to join and participate in, as a party if it so
elects, any legal proceedings or actions initiated with respect to the Mortgaged
Property in connection with any Environmental Law or Hazardous Substance, and
Mortgagor shall pay all attorneys' fees and disbursements incurred by Mortgagee
in connection therewith. Upon Mortgagee's request, at any time and from time to
time while this Mortgage is in effect but not more frequently than once per
calendar year, unless Mortgagee has determined (in the exercise of its good
faith judgment) that reasonable cause exists for the performance of an
environmental inspection or audit of the Mortgaged Property, Mortgagor shall
provide at Mortgagor's sole expense, (i) an inspection or audit of the Mortgaged
Property prepared by a licensed hydrogeologist or licensed environmental
engineer approved by Mortgagee indicating the presence or absence of Hazardous
Substances on, in or near the Mortgaged Property, and (ii) an inspection or
audit of the Mortgaged Property prepared by a duly qualified engineering or
consulting firm approved by Mortgagee, indicating the presence or absence of
Asbestos on the Mortgaged Property; provided, however, any such inspection or
audit requested by Mortgagee, during the Term, in excess of one (1) inspection
during each five (5) year period commencing upon the date hereof, shall be
performed at Mortgagee's expense unless an Event of Default exists or Mortgagee
has determined
40
(in the exercise of its good faith and judgment) that reasonable cause exists
for the performance of an environmental inspection or audit. If Mortgagor fails
to provide such inspection or audit within thirty (30) days after such request
Mortgagee may order same, and Mortgagor hereby grants to Mortgagee and its
employees and agents access to the Mortgaged Property and a license to undertake
such inspection or audit. The cost of such inspection or audit may be added to
the Debt and shall bear interest thereafter until paid at the Default Rate. In
the event that any environmental site assessment report prepared in connection
with such inspection or audit recommends that an operations and maintenance plan
be implemented for Asbestos or any Hazardous Substance, Mortgagor shall cause
such operations and maintenance plan to be prepared and implemented at
Mortgagor's expense upon request of Mortgagee. In the event that any
investigation, site monitoring, containment cleanup, removal restoration, or
other work of any kind is reasonably necessary or desirable under an applicable
Environmental Law (the "REMEDIAL WORK"), Mortgagor shall commence and thereafter
diligently prosecute to completion all such Remedial Work within thirty (30)
days after written demand by Mortgagee for performance thereof (or any such
shorter period of time as may be required under applicable law.) All Remedial
Work shall be performed by contractors approved in advance by Mortgagee, and
under the supervision of a consulting engineer approved by Mortgagee. All costs
and expenses of such Remedial Work shall be paid be Mortgagor including, without
limitation, Mortgagee's reasonable attorneys' fees and disbursements incurred in
connection with monitoring or review of such Remedial Work. In the event
Mortgagor shall fail to timely commence, or cause to be commenced, or fail to
diligently prosecute to completion, such Remedial Work, Mortgagee may, but shall
not be required to, cause such Remedial Work to be performed, and all costs and
expenses thereof, or incurred in connection therewith, may be added to the Debt
and shall bear interest hereafter until paid at the Default Rate.
37. HANDICAPPED ACCESS.
(a) Mortgagor agrees that the Mortgaged Property shall
at all times strictly comply to the extent applicable with the requirements of
the Americans with Disabilities Act of 1990, the Fair Housing Amendments Act of
1988 (if applicable), all state and local laws and ordinances related to
handicapped access and all rules, regulations, and orders issued pursuant
thereto including, without limitation, the Americans with Disabilities Act
Accessibility Guidelines for Buildings and Facilities (collectively "ACCESS
LAWS").
(b) Notwithstanding any provisions set forth herein or
in any other document regarding Mortgagee's approval of alterations of the
Mortgaged Property, Mortgagor shall not alter the Mortgaged Property in any
manner which would increase Mortgagor's responsibilities for compliance with the
applicable Access Laws without the prior written approval of Mortgagee. The
foregoing shall apply to tenant improvements constructed by Mortgagor or by any
of its tenants. Mortgagee may condition any such approval upon receipt of a
certificate of Access Law compliance from an architect, engineer, or other
person acceptable to Mortgagee.
(c) Mortgagor agrees to give prompt notice to
Mortgagee of the receipt by Mortgagor of any complaints related to violation of
any Access Laws and of the commencement of any proceedings or investigations
which relate to compliance with applicable Access Laws.
41
38. INDEMNIFICATION. In addition to any other indemnifications
provided herein or in the other Loan Documents, Mortgagor shall protect, defend,
indemnify and save harmless Mortgagee from and against all liabilities,
obligations, claims, demands, damages, penalties, causes of action, losses,
fines, costs and expenses (including, without limitation, reasonable attorney's
fees and disbursements), imposed upon or incurred by or asserted against
Mortgagee by reason of (a) ownership of this Mortgage, the Mortgaged Property or
any interest therein or receipt of any Rents; (b) any accident, injury to or
death or persons or loss of or damage to property occurring in, on or about the
Mortgaged Property or any part thereof or on the adjoining sidewalk, curbs,
adjacent property or adjacent parking areas, streets or ways; (c) any use,
nonuse or condition in, on or about the Mortgaged Property or any part thereof
or on adjoining sidewalks, curbs, adjacent property or adjacent parking areas,
streets or ways; (d) any failure on the part of Mortgagor to perform or comply
with any of the terms of this Mortgage; (e) performance of any labor or services
or the furnishing of any materials or other property in respect of the Mortgaged
Property or any part thereof; (f) the presence, disposal, escape, seepage,
leakage, spillage, discharge, emission, release, or threatened release of any
Hazardous Substance or Asbestos on, from, or affecting the Mortgaged Property;
(g) any personal injury (including wrongful death) or property damage (real or
personal) arising out of or related to such Hazardous Substance or Asbestos; (h)
any lawsuit brought or threatened, settlement reached, or government order
relating to such Hazardous Substance or Asbestos; (i) any violation of the
Environmental Laws, which are based upon or in any way related to such Hazardous
Substance or Asbestos including, without limitation, the costs and expenses of
any Remedial Work, attorney and consultant fees and disbursements, investigation
and laboratory fees, court costs, and litigation expenses; (j) and failure of
the Mortgaged Property to comply with any Access Laws; (k) any representation or
warranty made in the Note, this Mortgage or any of the other Loan Documents
being false or misleading in any material respect as of the date such
representation or warranty was made; (l) any claim by brokers, finders or
similar persons claiming to be entitled to a commission in connection with the
Loan, any Lease or other transaction involving the Mortgaged Property or any
part thereof under any legal requirement or any liability asserted against
Mortgagee with respect thereto; and (m) the claims of any lessee of any or any
portion of the Mortgaged Property or any person acting through or under any
lessee or otherwise arising under or as a consequence of any Lease. Any amounts
payable to Mortgagee by reason of the application of this paragraph shall be
secured by this Mortgage and shall become immediately due and payable and shall
bear interest at the Default Rate from the date loss or damage is sustained by
Mortgagee until paid. The obligations and liabilities of Mortgagor under this
Paragraph 38 shall survive any termination, satisfaction, or assignment of this
------------
Mortgage and the exercise by Mortgagee of any of its rights or remedies
hereunder, including, but not limited to, the acquisition of the Mortgaged
Property by foreclosure or a conveyance in lieu of foreclosure.
39. NOTICES. Any notice, report, demand or other instrument
authorized or required or be given or furnished ("Notices") shall be in writing
-------
and shall be given as follows: (a) by hand delivery; (b) by deposit in the
United States mail as first class certified mail, return receipt requested,
postage paid; (c) by overnight nationwide commercial courier service; or (d) by
telecopy transmission (other than for notices of default) with a confirmation
copy to be delivered by duplicate notice in accordance with any of clauses (a)-
------------
(c) above, in each case, to the party intended to receive the same at the
---
following address(es):
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Mortgagee: Credit Suisse First Boston Mortgage Capital LLC
Principal Transactions Group
▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇
Re: Wellington/Lake Pointe/▇▇▇▇▇▇▇ ▇▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
with copies to: Credit Suisse First Boston Mortgage Capital LLC
Legal & Compliance Department
▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, Esq.
Re: Wellington/Lake Pointe/▇▇▇▇▇▇▇ ▇▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
and: Banc One Mortgage Capital Market, LLC
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇ ▇▇▇▇▇, Account Representative
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
or any successor servicer of the Loan.
Mortgagor: Lake Pointe Apartment Homes, Inc.
▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to: Lake Pointe Apartment Homes, Inc.
▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
Any party may change the address to which any such Notice is to be
delivered, by furnishing ten (10) days written notice of such change to the
other parties in accordance with the provisions of this Paragraph 39. Notices
------------
shall be deemed to have been given on the date they are actually received;
provided, that the inability to deliver Notices because of a changed address of
--------
which no Notice was given, or rejection or refusal to accept any Notice offered
for delivery shall be deemed to be receipt of the Notice as of the date of such
inability to deliver or rejection or
43
refusal to accept delivery. Notice for either party may be given by its
respective counsel. Additionally, notice from Mortgagee may also be given by the
Servicer.
40. AUTHORITY.
(a) Mortgagor (and the undersigned representative of Mortgagor,
if any) represent and warrant that it (or they, as the case may be) has full
power, authority and right to execute, deliver and perform its obligations
pursuant to this Mortgage, and to deed, mortgage, give, grant, bargain, sell,
alien, enfeoff, convey, confirm, warrant, pledge, hypothecate and assign the
Mortgaged Property pursuant to the terms hereof and to keep and observe all of
the terms of this Mortgage on Mortgagor's part to be performed.
(b) Mortgagor represents and warrants that Mortgagor is not a
"foreign person" within the meaning of Section 1445(f)(3) of the Internal
Revenue Code of 1986, as amended and the related Treasury Department
regulations, including temporary regulations.
41. WAIVER OF NOTICE. Mortgagor shall not be entitled to any notices
of any nature whatsoever from Mortgagee except with respect to matters for which
this Mortgage specifically and expressly provides for the giving of notice by
Mortgagee to Mortgagor and except with respect to matters for which Mortgagee is
required by applicable law to give notice, and Mortgagor hereby expressly waives
the right to receive any notice from Mortgagee with respect to any matter for
which this Mortgage does not specifically and expressly provide for the giving
of notice by Mortgagee to Mortgagor.
42. REMEDIES OF MORTGAGOR. In the event that a claim or adjudication
is made that Mortgagee has acted unreasonably or unreasonably delayed acting in
any case where by law or under the Note, this Mortgage or any of the other Loan
Documents, it has an obligation to act reasonably or promptly, Mortgagee shall
not be liable for any monetary damages, and Mortgagor's remedies shall be
limited to injunctive relief or declaratory judgment.
43. SOLE DISCRETION OF MORTGAGEE. Wherever pursuant to this
Mortgage, Mortgagee exercises any right given to it to consent or not consent or
approve or disapprove, or any arrangement or term is to be satisfactory to
Mortgagee, the decision of Mortgagee to consent or not consent, to approve or
disapprove or to decide that arrangements or terms are satisfactory or not
satisfactory shall be in the sole discretion of Mortgagee and shall be final and
conclusive, except as may be otherwise expressly and specifically provided
herein.
44. NON-WAIVER. The failure of Mortgagee to insist upon strict
performance of any term hereof shall not be deemed to be a waiver of any term of
this Mortgage. Mortgagor shall not be relieved of Mortgagor's obligations
hereunder by reason of (a) the failure of Mortgagee to comply with any request
of Mortgagor or Guarantor to take any action to foreclose this Mortgage or
otherwise enforce any of the provisions hereof or of the Note, or the other Loan
Documents, (b) the release, regardless of consideration, of the whole or any
part of the Mortgaged Property, or of any person liable for the Debt or any
portion thereof, or (c) any agreement or stipulation by Mortgagee extending the
time of payment or otherwise modifying or supplementing the terms of the Note,
this Mortgage or any of the other Loan Documents. Mortgagee may resort for the
payment of the Debt
44
to any other security held by Mortgagee in such order and manner as Mortgagee,
in its sole discretion, may elect. Mortgagee may take action to recover the
Debt, or any portion thereof, or to enforce any covenant hereof without
prejudice to the right of Mortgagee thereafter to foreclosure this Mortgage. The
rights and remedies of Mortgagee under this Mortgage shall be separate, distinct
and cumulative and none shall be given effect to the exclusion of the others.
No act of Mortgagee shall be construed as an election to proceed under any one
provision herein to the exclusion of any other provision. Mortgagee shall not be
limited exclusively to the rights and remedies herein stated but shall be
entitled to every right and remedy now or hereafter afforded at law or in
equity.
45. NO ORAL CHANGE. This Mortgage, and any provisions hereof, may not
be modified, amended, waived, extended, changed, discharged or terminated orally
or by any act or failure to act on the part of Mortgagor or Mortgagee, but only
by an agreement in writing signed by the party against whom enforcement of any
modification, amendment, waiver, extension, change, discharge or termination is
sought.
46. LIABILITY. If Mortgagor consists of more than one person, the
obligations and liabilities of each such person hereunder shall be joint and
several. Subject to the provisions hereof requiring Mortgagee's consent to any
transfer of the Mortgaged Property, this Mortgage shall be binding upon and
inure to the benefit of Mortgagor and Mortgagee and their respective successors
and assigns forever.
47. INAPPLICABLE PROVISIONS. If any term, covenant or condition of
the Note or this Mortgage is held to be invalid, illegal or unenforceable in any
respect, the Note and this Mortgage shall be construed without such provision.
48. HEADINGS, ETC. The headings and captions of various paragraphs of
this Mortgage are for convenience or reference only and are not to be construed
as defining or limiting, in any way, the scope or intent of the provisions
hereof.
49. DUPLICATE ORIGINALS. This Mortgage may be executed in any number
of duplicate originals and each such duplicate original shall be deemed to be an
original.
50. DEFINITIONS. Unless the context clearly indicates a contrary
intent or unless otherwise specifically provided herein, words used in this
Mortgage may be used interchangeably in singular or plural form and the word
"MORTGAGOR" shall mean "each Mortgagor and any subsequent owner or owners of the
Mortgaged Property or any part thereof or any interest therein," the word
"MORTGAGEE" shall mean "Mortgagee and any subsequent holder of the Note," the
word "NOTE" shall mean "the Note and any other evidence of indebtedness secured
by this Mortgage," the word "PERSON" shall include an individual, corporation,
partnership, trust, unincorporated association, government, governmental
authority, an any other entity, the words "MORTGAGED PROPERTY" shall include any
portion of the Mortgaged Property and any interest therein and the words
"ATTORNEYS' FEES" shall include any and all attorneys' fees, paralegal and law
clerk fees, including, without limitation, fees at the pre-trial, trial and
appellate levels incurred or paid by Mortgagee in protecting its interest in the
Mortgaged Property and Collateral and enforcing its rights hereunder. Whenever
the context may require, any pronouns used herein shall include the
45
corresponding masculine, feminine or neuter forms, and the singular form of
nouns and pronouns shall include the plural and vice versa.
51. HOMESTEAD. Mortgagor hereby waives and renounces all homestead
and exemption rights provided by the Constitution and the laws of the United
States and of any state, in and to the Mortgaged Property as against the
collection of the Debt, or any part hereof.
52. ASSIGNMENTS. Mortgagee shall have the right to assign or
transfer its rights under this Mortgage without limitation. Any assignee or
transferee shall be entitled to all the benefits afforded Mortgagee under this
Mortgage.
53. WAIVER OF JURY TRIAL. MORTGAGOR HEREBY AGREES NOT TO ELECT A
TRIAL BY JURY OF ANY ISSUE TRIABLE OF RIGHT BY JURY, AND WAIVES ANY RIGHT TO
TRIAL BY JURY FULLY TO THE EXTENT THAT ANY SUCH RIGHT SHALL NOW OR HEREAFTER
EXIST WITH REGARD TO THE NOTE, THIS MORTGAGE, OR THE OTHER LOAN DOCUMENTS, OR
ANY CLAIM, COUNTERCLAIM OR OTHER ACTION ARISING IN CONNECTION THEREWITH. THIS
WAIVER OF RIGHT TO TRIAL BY JURY IS GIVEN KNOWINGLY AND VOLUNTARILY BY
MORTGAGOR, AND IS INTENDED TO ENCOMPASS INDIVIDUALLY EACH INSTANCE AND EACH
ISSUE AS TO WHICH THE RIGHT TO A TRIAL BY JURY WOULD OTHERWISE ACCRUE. MORTGAGEE
IS HEREBY AUTHORIZED TO FILE A COPY OF THIS PARAGRAPH IN ANY PROCEEDING AS
CONCLUSIVE EVIDENCE OF THIS WAIVER BY MORTGAGOR.
54. INTENTIONALLY OMITTED.
55. DEFEASANCE.
(a) Provided no Event of Default has occurred and is continuing,
at any time after the earlier to occur of (i) two years after the "startup day,"
within the meaning of Section 860G(a)(9) of the Internal Revenue Code of 1986,
as amended from time to time or any successor statute (the "CODE"), of a "real
estate mortgage investment conduit," within the meaning of Section 860D of the
Code, that holds the Note or (ii) four (4) years after the date hereof and
before the Anticipated Repayment Date, Mortgagor may cause the release of the
Mortgaged Property from the lien of this Mortgage and the other Loan Documents
upon the satisfaction of the following conditions:
(i) not less than thirty (30) days prior written notice
shall be given to Mortgagee specifying a date (the "RELEASE
DATE") on which the Defeasance Collateral (as hereinafter
defined) is to be delivered, such Release Date only to occur on a
Payment Date (as defined in the Note);
(ii) all accrued and unpaid interest and all other sums due
under the Note and under the other Loan Documents up to the
Release Date, including, without limitation, all costs and
expenses incurred by Mortgagee or its agents in connection with
such release (including, without limitation,
46
the review of the proposed Defeasance Collateral and the preparation of the
Defeasance Security Agreement (as hereinafter defined) and related
documentation), shall be paid in full on or prior to the Release Date; and
(iii) Mortgagor shall deliver to Mortgagee on or prior to the
Release Date:
(A) an amount equal to the remaining principal amount of the Note and the Yield
Maintenance Premium (hereinafter defined), if any, sufficient to purchase
direct, non-callable obligations of the United States of America that
provide for payments prior, but as close as possible, to all successive
monthly Payment Dates occurring after the Release Date and assuming the
Loan is paid in full on the Anticipated Repayment Date (as defined in the
Note), with each such payment being equal to or greater than the amount of
the corresponding installment of principal and interest required to be paid
under the Note (the "DEFEASANCE COLLATERAL"), each of which shall be duly
endorsed by the holder thereof as directed by Mortgagee or accompanied by a
written instrument of transfer in form and substance wholly satisfactory to
Mortgagee (including, without limitation, such instruments as may be
required by the depository institution holding such securities to
effectuate book-entry transfers and pledges through the book-entry
facilities of such institution) in order to create a first priority
security interest therein in favor of the Mortgagee in conformity with all
applicable state and federal laws governing granting of such security
interests;
(B) a pledge and security agreement, in form and substance satisfactory to
Mortgagee in its sole discretion, creating a first priority security
interest in favor of Mortgagee in the Defeasance Collateral (the
"DEFEASANCE SECURITY AGREEMENT"), which shall provide, among other things,
that any excess received by Mortgagee from the Defeasance Collateral over
the amounts payable by Mortgagor hereunder shall be refunded to Mortgagor
promptly after each Payment Date;
(C) a certificate of Mortgagor certifying that all of the requirements set
forth in this Paragraph 55 have been satisfied;
(D) an opinion of counsel for Mortgagor in form and substance and delivered by
counsel satisfactory to Mortgagee in its sole discretion stating, among
other things, that (1) Mortgagee has a perfected first priority security
interest in the Defeasance Collateral and that the Defeasance Security
Agreement is enforceable against Mortgagor in accordance with its terms;
and (2) that any REMIC Trust formed pursuant to a securitization will not
fail to maintain its status as a "real estate mortgage investment conduit"
within the meaning of Section 860D of the Code as a result of such
defeasance;
47
(E) Mortgagor shall deliver evidence in writing from the applicable
Rating Agencies to the effect that the collateral substitution
will not result in a downgrading, withdrawal or qualification of
the respective ratings in effect immediately prior to such
defeasance event for any securities issued in connection with the
securitization which are then outstanding; and
(F) such other certificates, documents or instruments as Mortgagee
may reasonably require.
(b) Upon compliance with the requirements of this paragraph, the
Mortgaged Property shall be released from the lien of the this Mortgage and the
other Loan Documents, and the Defeasance Collateral shall constitute the only
collateral which shall secure the Note and all other obligations under the Loan
Documents. Mortgagee will, at Mortgagor's expense, execute and deliver any
agreements reasonably requested by Mortgagor to release the lien of the Mortgage
from the Mortgaged Property. Mortgagor, pursuant to the Defeasance Security
Agreement, shall authorize and direct that the payments received from Defeasance
Collateral be made directly to Mortgagee and applied to satisfy the obligations
of the Mortgagor under the Note.
(c) Upon the release of the Mortgaged Property in accordance
with this paragraph, Mortgagor may, or at option of Mortgagee shall, assign all
its obligations under the Note, together with the pledged Defeasance Collateral,
to a successor entity designated by Mortgagor and approved by Mortgagee in its
sole discretion. Such successor entity shall execute an assumption agreement in
form and substance satisfactory to Mortgagee in its sole discretion pursuant to
which it shall assume Mortgagor's obligations under the Note and the Defeasance
Security Agreement. As conditions to such assignment and assumption, Mortgagor
shall (i) deliver to Mortgagee an opinion of counsel in form and substance and
delivered by counsel satisfactory to Mortgagee in its sole discretion stating,
among other things, that such assumption agreement is enforceable against
Mortgagor and such successor entity in accordance with its terms and that the
Note, the Defeasance Security Agreement and the other Loan Documents, as so
assumed, are enforceable against such successor entity in accordance with their
respective terms, and (ii) pay all costs and expenses incurred by Mortgagee or
its agents in connection with such assignment and assumption (including, without
limitation, the review of the proposed transferee and the preparation of the
assumption agreement and related documentation). Upon such assumption, Mortgagor
shall be relieved of its obligations hereunder, under the other Loan Documents
and under the Defeasance Security Agreement other than those obligations which
are specifically intended to survive the termination, satisfaction or assignment
of this Mortgage or the exercise of Mortgagee's rights and remedies hereunder.
(d) Upon the release of the Mortgaged Property in accordance
with this paragraph, Mortgagor shall have no further right to prepay the Note
pursuant to the other provisions of this paragraph or otherwise. In connection
with the conditions set forth in subparagraph (a)(iii)(A) above, Mortgagor
hereby appoints Mortgagee as its agent and attorney-in-fact for the purpose of
purchasing the Defeasance Collateral with funds provided by the Mortgagor.
Mortgagor shall pay any and all expenses incurred in the purchase of the
Defeasance Collateral and any
48
revenue, documentary stamp or intangible taxes or any other tax or charge due in
connection with the transfer of the Note or otherwise required to accomplish the
agreements of this paragraph.
(e) For purposes of this Mortgage the Note and the other Loan
Documents, the term "YIELD MAINTENANCE PREMIUM" shall mean the amount, if any,
which, when added to the remaining principal amount of the Note, will be
sufficient to purchase the Defeasance Collateral.
56. LOCK-BOX AGREEMENT. On or before the date hereof Mortgagor
covenants and agrees to enter into one or more servicing account agreements and
lockbox servicing agreements acceptable to Mortgagee between Mortgagor,
Mortgagee and one or more certain financial institutions (together with any
modification, amendment, substitution or replacement thereof, hereinafter
collectively referred to as the "CASH MANAGEMENT AGREEMENT") which shall
provide, among other things, that all Rents and other sums collected from, or
arising with respect to, the Mortgaged Property be deposited in the accounts
established in connection with such Cash Management Agreement and that such
amounts shall be disbursed in accordance with paragraphs 8 and 9 of the Note.
The Mortgagor shall pay all costs and expenses required under the Cash
Management Agreement. Upon the occurrence of an Event of Default, Mortgagee may
apply any sums then held pursuant to the Cash Management Agreement to the
payment of the Debt in any order in its sole discretion. Until expended or
applied, amounts held pursuant to the Cash Management Agreement shall constitute
additional security for the Debt.
57. MISCELLANEOUS.
(a) Any consent or approval by Mortgagee in any single instance
shall not be deemed or construed to be Mortgagee's consent or approval in any
like matter arising at a subsequent date, and the failure of Mortgagee to
promptly exercise any right, power, remedy, consent or approval provided herein
or at law or in equity shall not constitute or be construed as a waiver of the
same nor shall Mortgagee be estopped from exercising such right, power, remedy,
consent or approval at a later date. Any consent or approval requested of and
granted by Mortgagee pursuant hereto shall be narrowly construed to be
applicable only to Mortgagor and the matter identified in such consent or
approval and no third party shall claim any benefit by reason thereof, and any
such consent or approval shall not be deemed to constitute Mortgagee a venturer
or partner with Mortgagor nor shall privity of contract be presumed to have been
established with any such third party. If Mortgagee deems it to be in its best
interest to retain assistance of persons, firms or corporations (including,
without limitation, attorneys, title insurance companies, appraisers, engineers
and surveyors) with respect to a request for consent or approval, Mortgagor
shall reimburse Mortgagee for all costs reasonably incurred in connection with
the employment of such persons, firms or corporations.
(b) Mortgagor covenants and agrees that during the Term, unless
Mortgagee shall previously consented in writing, (a) Mortgagor will take no
action that would cause it to become an "EMPLOYEE BENEFIT PLAN" as defined in 29
C.F.R. Section 2510.3-101, or "ASSETS OF A GOVERNMENTAL PLAN" subject to
regulation under the state statutes, and (b) Mortgagor will not sell, assign or
transfer the Mortgaged Property, or any portion thereof or interest therein, to
49
any transferee that does not execute and deliver to Mortgagee its written
assumption of the obligations of this covenant. Mortgagor further covenants and
agrees to protect, defend, indemnify and hold Mortgagee harmless from and
against all loss, cost, damage and expense (including without limitation, all
attorneys' fees and excise taxes, costs of correcting any prohibited transaction
or obtaining an appropriate exemption) that Mortgage may incur as a result of
Mortgagor's breach of this covenant. This covenant and indemnity shall survive
the extinguishment of the lien of this Mortgage by foreclosure or action in lieu
thereof; furthermore, the foregoing indemnity shall supersede any limitations on
Mortgagor's liability under any of the Loan Documents.
(c) If there is more than one party comprising Mortgagor, then
the obligations and liabilities of each party under this Mortgage shall be joint
and several.
(d) The Loan Documents contain the entire agreement between
Mortgagor and Mortgagee relating to or connected with the Loan. Any other
agreements relating to or connected with the Loan not expressly set forth in the
Loan Documents are null and void and superseded in their entirety by the
provisions of the Loan Documents.
(e) Mortgagor hereby covenants and agrees not to commit, permit
or suffer to exist any act, omission or circumstance affording such right of
forfeiture. In furtherance thereof, Mortgagor hereby indemnifies Mortgagee and
agrees to defend and hold Mortgagee harmless from and against any loss, damage
or injury by reason of the breach of the covenants and agreements or the
representations and warranties set forth in this paragraph. Without limiting the
generality of the foregoing, the filing of formal charges or the commencement of
proceedings against Mortgagor or all or any part of the Mortgaged Property under
any federal or state law for which forfeiture of the Mortgaged Property or any
part thereof or of any monies paid in performance of Mortgagor's obligations
under the Loan Documents is a potential result, shall, at the election of
Mortgagee, constitute an Event of Default hereunder without notice or
opportunity to cure.
(f) Mortgagor acknowledges that, with respect to the Loan,
Mortgagor is relying solely on its own judgment and advisors in entering into
the Loan without relying in any manner on any statements, representations or
recommendations of Mortgagee or any parent, subsidiary or affiliate of
Mortgagee. Mortgagor acknowledges that Mortgagee engages in the business of
real estate financings and other real estate transactions and investments which
may be viewed as adverse to or competitive with the business of the Mortgagor or
its affiliates. Mortgagor acknowledges that it is represented by competent
counsel and has consulted counsel before executing the Loan Documents.
(g) Mortgagor covenants and agrees to pay Mortgagee upon receipt
of written notice from Mortgagee, all reasonable costs and expenses (including
reasonably attorneys' fees and disbursements) incurred by Mortgagee in
connection with (i) the preparation, negotiation, execution and delivery of this
Mortgage and the other Loan Documents; (ii) Mortgagor's performance of and
compliance with Mortgagor's respective agreements and covenants contained in
this Mortgage and the other Loan Documents on its part to be performed or
complied with after the date hereof; (iii) Mortgagee's performance and
compliance with all agreements and conditions
50
contained in this Mortgage and the other Loan Documents on its part to be
performed or complied with after the date hereof; (iv) the negotiation,
preparation, execution, delivery and administration of any consents,
amendments, waivers or other modifications to this Mortgage and the other Loan
Documents; and (v) the filing and recording fees and expenses, title insurance
fees and expenses, and other similar expenses incurred in creating and
perfecting the lien in favor of Mortgagee pursuant to this Mortgage and the
other Loan Documents.
(h) This Mortgage shall be governed by and construed in
accordance with the laws of the State in which the Premises are located and the
applicable laws of the United States of America.
58. MANAGEMENT OF THE MORTGAGED PROPERTY.
-------------------------------------
Mortgagor shall maintain the Management Agreement for the operation of
the Mortgaged Property in full force and effect and timely perform all of
Martgagor's obligations thereunder and enforce performance of all obligations of
the Manager thereunder, and not permit the termination or amendment of such
Management Agreement unless the prior written consent of Mortgagee is first
obtained. Mortgagor will enter into and cause the Manager to enter into an
assignment and subordination of such Management Agreement in form satisfactory
to Mortgagee, assigning and subordinating the Manager's interest in the
Mortgaged Property and all fees and other rights of the manager pursuant to such
Management Agreement to the rights of Mortgagee. Upon an Event of Default,
Mortgagor at Mortgagee's request made at any time while such Event of Default
continues, shall terminate the Management Agreement and replace the Manager with
a Manager approved by Mortgagee. In addition, if at the end of each calendar
quarter the Mortgagor does not provide evidence of the achievement of a Debt
Service Coverage Ratio of not less than 1.10:1.0 for the preceeding twelve (12)
month period (the "REQUIRED DSCR") Mortgagor, at Mortgagee's request made at any
time such Required DSCR is not maintained, shall terminate the Management
Agreement and replace the Manager with Manager approved by Mortgagee.
59. SALE OF NOTES AND SECURITIZATION.
--------------------------------
Mortgagor acknowledges that Mortgagee and its successors and assigns
may (i) sell this Mortgage, the Note and other Loan Documents to one or more
investors as a whole loan, (ii) participate the Loan secured by this Mortgage to
one or more investors, (iii) deposit this Mortgage, the Note and other Loan
Documents with a trust, which trust may sell certificates to investors
evidencing an ownership interest in the trust assets, or (iv) otherwise sell the
Loan or interest therein to investors (the transactions referred to in clauses
(i) through (iv) are hereinafter each referred to as "SECONDARY MARKET
TRANSACTION"). Mortgagor shall cooperate with Mortgage in effecting any such
Secondary Market Transaction and shall cooperate to implement all requirements
imposed by any Rating Agency involved in any Secondary Market Transaction.
Mortgagor, however, shall not be required to modify any documents evidencing or
securing the Loan which would modify (A) the interest rate payable under the
Note, (B) the stated maturity of the Note, (C) the amortization of principal of
the Note, (D) the non-recourse provisions of the loan or (E) any other material
economic term of the loan. Mortgagor shall provide such
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information, legal opinions and documents relating to Mortgagor, Guarantor, if
any, the Mortgaged Property and any tenants of the Improvements as Mortgagee may
reasonably request in connection with such Secondary Market Transaction. In
addition, Mortgagor shall make available to Mortgagee all information concerning
its business and operations that Mortgagee may reasonably request. Mortgagee
shall be permitted to share all such information with the investment banking
firms, Rating Agencies, accounting firms, law firms and other third-party
advisory firms involved with the Loan and the Loan Documents or the applicable
Secondary Market Transaction. It is understood that the information provided by
Mortgagor to Mortgagee may ultimately be incorporated into the offering
documents for the Secondary Market Transaction and thus various investors may
also see some or all of the information. Mortgagee and all of the aforesaid
third-party advisors and professional firms shall be entitled to rely on the
information supplied by, or on behalf of, Mortgagor and Mortgagor indemnifies
Mortgagee as to any losses, claims, damages or liabilities that arise out of or
are based upon any untrue statement or alleged untrue statement of any material
fact contained in such information or arise out of or are based upon the
omission or alleged omission to state therein a material fact required to be
stated in such information or necessary in order to make the statements in such
information, or in light of the circumstances under which they were made, not
misleading. Mortgagee may publicize the existence of the Loan in connection with
its marketing for a Secondary Market Transaction or otherwise as part of its
business development.
60. SERVICER. At the option of Mortgagee, the Loan may be serviced by
--------
a servicer/trustee (the "SERVICER") selected by Mortgagee and Mortgagee may
delegate all or any portion of its responsibilities under this Mortgage and the
other Loan Documents to the Servicer pursuant to a servicing agreement (the
"SERVICING AGREEMENT") between Mortgagee and Servicer. Mortgagor shall be
responsible for any reasonable set-up fees or any other initial costs relating
to or arising under the Servicing Agreement.
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IN WITNESS WHEREOF, Mortgagor has executed this instrument the day and
year first above written.
LAKE POINTE APARTMENT HOMES, INC.,
a Wisconsin corporation
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇
------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇
President
Attest: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇
------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇
Secretary
STATE OF WISCONSIN )
)ss.:
COUNTY OF WAUKESHA )
Personally came before me this 5th day of March, 1998, the above named
▇▇▇▇▇▇ ▇. ▇▇▇▇ and ▇▇▇▇▇▇ ▇. ▇▇▇▇, President and Secretary, respectively, of
LAKE POINTE APARTMENT HOMES, INC., to me known to be the persons who executed
the foregoing instrument and acknowledge the same.
/s/ ▇▇▇▇ ▇▇▇▇▇▇▇
------------------------------------------
Notary Public Waukesha County, Wisconsin
My Commission 1-9-2000
-------------------
[Seal]
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EXHIBIT A
LEGAL DESCRIPTION
-----------------
Parcel Identification Number:
Lot one (1) of Certified Survey Map No. 5756 recorded in the office of
the Register of Deeds for Marathon County, Wisconsin, in Volume 21 of Certified
Survey Maps on page 74; being the land described in Certified Survey Map
recorded in said Register's office in Volume 3 of Certified Survey Maps on page
202; being a part of Block seven (7) of ▇. ▇. ▇▇▇▇▇▇▇▇▇'▇ Addition to ▇▇▇▇▇▇▇▇▇,
in the Southeast quarter (SE 1/4) of the Southeast quarter (SE 1/4) of Section
twelve (12); and also being a part of the South one-half (S 1/2) of the
Southwest quarter (SW 1/4) of the Southeast quarter (SE 1/4) of Section twelve
(12), and of the North one-half (N 1/2) of the Northeast quarter (NE 1/4) of
Section thirteen (13), all in Township twenty-eight (28) North, Range seven (7)
East, in the City of ▇▇▇▇▇▇▇▇▇, Marathon County, Wisconsin; excepting land
described in instrument recorded in said Register's office in Micro-Record 781
on page 1181, used for highway purposes; subject to easements of record.