EXHIBIT 10.9
FB DISTRO DISTRIBUTION CENTER, LLC
(Mortgagor)
to
BANKATLANTIC COMMERCIAL MORTGAGE CAPITAL, LLC
(Mortgagee)
--------------------------------------------------------------------------------
MORTGAGE, ASSIGNMENT OF LEASES AND RENTS AND
SECURITY AGREEMENT
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Dated: As of October 6, 2004
Property Location: ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇
WHEN RECORDED, RETURN TO:
Kronish ▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ LLP
▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇'▇▇▇▇▇▇, Esq.
TABLE OF CONTENTS
Page
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1. Payment of Debt; Incorporation of Covenants, Conditions and Agreements...3
2. Insurance................................................................3
3. Casualty/Application of Insurance Proceeds...............................7
4. Payment of Taxes, Etc...................................................10
5. Tax and Insurance Escrow Fund...........................................10
6. Replacement Escrow Fund; Rollover Escrow Fund; Additional Escrow Fund;
the Debt Service Escrow Fund; Tax Lien Escrow Fund......................12
7. General Provisions Applicable to Escrow Funds...........................16
8. Condemnation............................................................16
9. Leases and Rents........................................................18
10. Representations, Warranties and Covenants Concerning Loan...............19
11. Single Purpose Entity/Separateness......................................27
12. Maintenance of Mortgaged Property.......................................29
13. Transfer or Encumbrance of the Mortgaged Property.......................29
14. Estoppel Certificates and No Default Affidavits.........................33
15. Changes in Laws Regarding Taxation......................................34
16. No Credits on Account of the Debt.......................................34
17. Financial Statements....................................................34
18. Further Acts, Etc.......................................................35
19. Recording of Mortgage, Etc..............................................36
20. Events of Default.......................................................36
21. Late Payment Charge.....................................................38
22. Right To Cure Defaults..................................................39
23. Remedies................................................................39
24. Right of Entry..........................................................42
25. Security Agreement......................................................43
26. Actions and Proceedings.................................................43
27. Contest of Certain Claims...............................................43
28. Marshalling and Other Matters...........................................44
29. Hazardous Substances....................................................44
30. Asbestos................................................................45
31. Environmental Monitoring................................................46
32. Handicapped Access......................................................47
33. Indemnification.........................................................47
34. Notices.................................................................48
35. Non-Waiver..............................................................49
36. No Oral Change..........................................................49
37. Liability...............................................................50
38. Inapplicable Provisions.................................................50
39. Headings, Etc...........................................................50
40. Duplicate Originals.....................................................50
41. Definitions.............................................................50
42. Homestead...............................................................50
43. Assignments.............................................................50
44. Waiver of Jury Trial....................................................50
45. Miscellaneous...........................................................51
46. Mortgagor's Liability...................................................53
47. Yield Maintenance Prepayment Option.....................................53
48. Yield Maintenance.......................................................54
49. Cash Management Agreement...............................................55
50. Annual Budgets..........................................................55
51. Sale of Notes and Securitization........................................56
52. Intentionally Omitted Prior to Execution................................57
53. Intentionally Omitted Prior to Execution................................57
54. Servicer................................................................57
55. Management of the Mortgaged Property....................................57
56. Principles of Construction..............................................57
57. Maturity Date...........................................................58
58. Disclosure Law..........................................................58
59. Environmental Liens.....................................................58
60. Applicable Law..........................................................58
61. Unenforceable Remedies..................................................59
62. No Waiver of Right to Seek Deficiency...................................59
63. Future Advances.........................................................59
64. Reimbursable Costs......................................................59
65. UCC Remedies............................................................60
66. Security Interest - Rents...............................................60
67. Consent to Receiver.....................................................60
68. Release of Mortgage.....................................................61
THIS MORTGAGE, ASSIGNMENT OF LEASES AND RENTS AND SECURITY AGREEMENT (the
"Mortgage"), made as of October 6, 2004, by FB DISTRO DISTRIBUTION CENTER, LLC,
a Delaware limited liability company, having its principal place of business at
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇, ("Mortgagor"), to
BANKATLANTIC COMMERCIAL MORTGAGE CAPITAL, LLC, a Florida limited liability
company, having its principal place of business at ▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇
▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇ ("Mortgagee").
W I T N E S S E T H:
To secure the payment of an indebtedness in the original principal sum of
Thirteen Million and no/100 Dollars ($13,000,000.00) (the "Loan"), lawful money
of the United States of America, to be paid with interest according to a certain
promissory note of even date herewith made by Mortgagor to Mortgagee (the
promissory note together with all consolidations, extensions, renewals or
modifications thereof being hereinafter collectively called the "Note") 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 under the other Loan Documents
being hereinafter collectively referred to as the "Debt"), Mortgagor has
mortgaged, given, granted, bargained, sold, alienated, enfeoffed, conveyed,
confirmed, warranted, pledged, assigned, and hypothecated and by these presents
does hereby 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
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 the property, rights, interests and
estates hereinafter described are collectively referred to herein as the
"Mortgaged Property"):
(a) all easements, rights-of-way, strips and gores of land, streets, ways,
alleys, passages, sewer rights, water, water courses, water rights and powers,
air rights and development rights, 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, courtesy and rights of courtesy, 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;
(b) 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/or the
Improvements, or appurtenant thereto, and usable in connection with the present
or future operation and occupancy of the Premises and/or 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;
(c) all awards or payments, including interest thereon, that may heretofore
and hereafter be made with respect to the Premises and/or 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/or Improvements;
(d) 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 (hereinafter
collectively referred to as 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, fees, receivables, receipts, revenues, deposits (including,
without limitation, security, utility and other deposits), accounts, cash,
issues, profits, charges for services rendered, and other payment and
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
(hereinafter collectively referred to as the "Rents"), together with all
proceeds from the sale or other disposition of the Leases and the right to
receive and apply the Rents to the payment of the Debt;
(e) all proceeds of and any unearned premiums on any insurance policies
covering the 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;
(f) 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;
(g) 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,
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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
(h) 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
Mortgagee and its successors and assigns, forever;
PROVIDED, HOWEVER, these presents are upon the express condition that, if
Mortgagor shall pay to Mortgagee the Debt at the time and in the manner provided
in the Note and this Mortgage and shall 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:
PART I.
GENERAL PROVISIONS
1. Payment of Debt; 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 and the other Loan Documents. All the covenants, conditions
and agreements contained in (a) the Note and (b) all and any of the documents
including, without limitation, the Note, that certain Cash Management Agreement
of even date herewith by and between Mortgagor and Mortgagee (the "Cash
Management Agreement") 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 Debt or otherwise is executed and/or
delivered in connection with the Note and this Mortgage (collectively, 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. Insurance.
(a) Mortgagor, at its sole cost and expense, shall obtain and maintain (or
cause to be obtained and maintained) during the entire term of this Mortgage
(the "Term") the following policies of insurance:
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(i) Casualty insurance against loss or damage by fire, lightning and
such other perils as are included in a standard "special form" policy
(formerly known as an "all-risk" endorsement policy), 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, terrorist actions, vandalism, malicious mischief, windstorm,
burglary and theft in an amount equal to the greatest of (A) the then full
replacement cost of the Improvements and Equipment, without deduction for
physical depreciation, (B) the outstanding principal balance of the Loan,
and (C) such amount that the insurer would not deem Mortgagor a co-insurer
under said policies. The policies of insurance required under this
Paragraph 2(a)(i) shall not provide for or permit co-insurance and shall
contain a "Replacement Cost" endorsement with a waiver of depreciation and
an "Agreed Amount" or "No Coinsurance" endorsement and shall have a
deductible no greater than $10,000.
(ii) Commercial General Liability insurance, including a broad form
comprehensive general liability endorsement and coverages for broad form
property damage, contractual damages and personal injuries (including death
resulting therefrom) and containing minimum limits per occurrence of
$1,000,000.00 and $2,000,000.00 in the aggregate for any policy year with
no deductible. All liability policies must provide for claims to be made on
an occurrence basis. 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' fees incurred in connection with the ownership,
operation and maintenance of the Mortgaged Property.
(iii) Rental loss and/or business income interruption insurance: (A)
with loss payable to Mortgagee; (B) covering all risks required to be
covered by the insurance provided for in Paragraph 2(a)(i) above and
covered by any other separate insurance required to be maintained hereunder
with respect to windstorm, earthquake, terrorist acts and any other risks
required to separately insured hereunder; (C) covering a period of
restoration of twelve (12) months in addition to containing an extended
period of indemnity endorsement which provides that after the physical loss
to the Improvements and personal property has been repaired and restored,
the continued loss of income will be insured until such income either
returns to the same level it was at prior to the loss, or the expiration of
three (3) months from the date that the Mortgaged Property is repaired or
replaced, whichever first occurs, and notwithstanding that the policy may
expire prior to the end of such period; and (D) the policy limits procured
shall be at least equal to one hundred percent (100%) of the projected
gross potential revenue for the Mortgaged Property for a period equal to at
least fifteen (15 ) months. The amount of such rental loss and/or business
income interruption insurance shall be determined prior to the date hereof
and at least once each year thereafter based on Mortgagor's reasonable
estimate of the gross potential revenue from the Mortgaged Property for the
succeeding fifteen (15) month period;
(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
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installed in the Improvements (without exclusion for explosions), in an
amount at least equal to the outstanding principal amount of the Note or
$2,000,000.00, whichever is less.
(v) If Mortgagor has employees, worker's compensation insurance with
respect to any employees of Mortgagor, as required by any governmental
authority or legal requirement.
(vi) Flood insurance if any part of the Mortgaged Property is located
in an area identified by the Federal Emergency Management Agency as an area
having special flood hazards in an amount at least equal to the outstanding
principal amount of the Loan or such lesser amount as agreed to by
Mortgagee in writing.
(vii) 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 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 reasonably
acceptable to Mortgagee.
(viii) If the Mortgaged Property is or ever becomes non-conforming
with respect to zoning, ordinance or law coverage to compensate for loss of
value or property resulting from operation of law and the cost of
demolition and the increased cost of construction in amounts as requested
by Mortgagee.
(ix) If the Mortgaged Property is located in a "seismic zone" of 3 or
4 and a seismic assessment acceptable to Mortgagee reveals a maximum
probable or bounded loss equal to or greater than 20% of the amount of the
estimated replacement cost of the Improvements, earthquake insurance in an
amount equal to the outstanding principal balance of the Loan or such
lesser amount as agreed to by Mortgagee in writing.
(x) Windstorm insurance in an amount equal to the outstanding
principal balance of the Loan or such lesser amount as agreed to by
Mortgagee in writing.
(b) All policies of insurance (the "Policies") required pursuant to this
Paragraph 2: (i) shall be issued by companies licensed to do business in the
state where the Mortgaged Property is located, with a financial strength and
claims paying ability rating of at least A:VIII from A.M. Best Company and "A"
or better by Standard & Poor's Ratings Services, a division of the ▇▇▇▇▇▇-▇▇▇▇
Companies, Inc.; (ii) shall, with respect to all property insurance policies,
name Mortgagee and its successors and/or assigns as their interest may appear as
the mortgagee; (iii) shall, with respect to all property insurance policies and
rental loss and/or business interruption insurance policies, contain a Standard
Mortgagee Clause and a 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, with respect to all liability policies, name
Mortgagee and its successors and/or assigns as an additional insured; (v) shall
contain a waiver of subrogation against Mortgagee; (vi) 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
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written notice of any modification, reduction or cancellation; and (vii) 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. Certified copies of the Policies shall be delivered to Mortgagee, c/o
Wachovia Bank, National Association, as Servicer, ▇▇ ▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇, within 30 days after the effective date thereof.
Mortgagor shall pay to Mortgagee the cost of Mortgagee's review of the Policies
and any certificates and renewals relating thereto. Mortgagor shall pay the
annual premiums for such Policies (the "Insurance Premiums") in full in advance
of each renewal date of the respective term of each Policy and shall furnish to
Mortgagee evidence of the renewal of each of the Policies with receipts for the
full payment of the entire annual Insurance Premiums or other evidence of such
payment reasonably satisfactory to Mortgagee which evidence may include, without
limitation, a letter certified by Mortgagor's insurance carrier indicating that
such Insurance Premiums have been paid (provided, however, that Mortgagor shall
not be 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). In addition to the insurance coverages described in Paragraph 2(a)
above, Mortgagor shall obtain such other insurance as may from time to time be
reasonably required by Mortgagee in order to protect its interests. 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,
and the like.
(c) It shall be an Event of Default if Mortgagor fails to maintain and keep
in full force and effect all Policies in accordance with the terms and
provisions of this Mortgage, and, in addition to any other remedies that
Mortgagee shall have under this Mortgage in connection with any such Event of
Default, Mortgagee shall also have the right (without any obligation), at the
sole cost and expense of Mortgagor, to obtain and put into effect any such
Policies not maintained by Mortgagor. Any amounts paid by Mortgagee (including
without limitation any Premiums and other costs incurred by Mortgagee with
respect to the exercise of Mortgagee's rights hereunder) shall be paid by
Mortgagor to Mortgagee within five (5) days after demand by Mortgagee together
with interest thereon accrued from the date any such amounts are paid by
Mortgagee until repaid to Mortgagee in full at the Default Rate (as defined in
the Note). The exercise by Mortgagee of any rights hereunder to obtain any
Policies shall not in any event cure or otherwise constitute any waiver with
respect to any Event of Default arising because of Mortgagor's failure to
maintain the Policies.
(d) Upon the occurrence of: (i) an Insured Casualty (as defined herein),
Mortgagor shall deposit with Mortgagee ( to be held and applied by Mortgagee in
the same manner in which Insurance Proceeds are to be held and applied by
Mortgagee under this Mortgage), an amount equal to the difference between the
deductible set forth in Paragraph 2(a)(i) above with respect to property
insurance and the then current deductible under such property insurance actually
maintained by FB Distro and/or Mortgagor (if such deductible is greater than the
deductible amount set forth in said Paragraph 2(a)(i) hereof); and (ii) any
other claim arising with respect to any matters required to be insured under the
Policies, Mortgagor shall deposit with Mortgagee (to be held as additional
collateral for the Loan in accordance with Paragraph 7 below), an amount equal
to the insurance deductible under the respective Policy that is maintained by FB
Distro and/or Mortgagor (if any).
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3. Casualty/Application of Insurance Proceeds.
(a) If the Mortgaged Property shall be damaged or destroyed, in whole or in
part, by fire or other casualty (an "Insured Casualty"), Mortgagor shall give
prompt notice thereof to Mortgagee. Following the occurrence of an Insured
Casualty, Mortgagor, regardless of whether Insurance Proceeds (hereinafter
defined) 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.
(b) Upon the occurrence of an Insured Casualty, Mortgagor shall (subject to
the right of Mortgagee to elect to do so as set forth below in this clause (b)),
promptly file a proof of loss with the respective insurance company or companies
insuring such Insured Casualty and provided no Event of Default has occurred,
Mortgagor shall have the right (subject to the right of Mortgagee to elect to do
so as set forth below in this clause (b)) to proceed to settle and adjust any
claims with respect to such Insured Casualty and agree with such company or
companies on the amount of the Insurance Proceeds to be paid upon the loss (any
amounts so received, including without limitation any proceeds received from
rental loss or business interruption coverages (the "Insurance Proceeds"),
provided that Mortgagor proceeds with such adjustment promptly and diligently
and in a competent and timely manner. In the event Mortgagor fails to promptly
file a proof of loss with respect to any Insured Casualty or fails to promptly
and diligently proceed to settle and adjust any claims with respect thereto as
required in this clause (b), then Mortgagee shall, at the sole cost and expense
of Mortgagor, have the right to file such proof of claim, settle and adjust such
claim and agree with such insurance company or companies on the amount of the
Insurance Proceeds, in the place and stead of Mortgagor without the consent of
Mortgagor, and Mortgagor hereby irrevocably appoints Mortgagee as its
attorney-in-fact, coupled with an interest, to do so. Notwithstanding the
foregoing, with respect to any Insured Casualty where the damage to the
Mortgaged Property is greater than $6,500,000.00: (x) if Mortgagor has not
concluded such settlement with the insurance company within nine (9) months of
the Insured Casualty, then Mortgagee shall have the right to elect to settle and
adjust such Insured Casualty and Mortgagor hereby irrevocably appoints Mortgagee
as it attorney-in fact, coupled with an interest to do; and (y) in the event
Mortgagee does so elect to adjust and settle the claim with respect to such
Insured Casualty, then Mortgagor shall have the right within ninety (90) days
after such election and upon not less than thirty (30) days notice to Mortgagee,
to prepay the entire amount of the Loan in full (but not in part) on any Payment
Date (as defined in the Note) without payment of any Proportionate Yield
Maintenance Premium with respect to any of the Debt. In the event of an Insured
Casualty where the damage to the Mortgaged Property does not exceed the lesser
of (x) $250,000 and (y) ten percent (10%) of the outstanding principal balance
of the Note (a "Significant Casualty") and provided no Event of Default shall
have occurred, so long as Mortgagor shall proceed to restore, repair, replace or
rebuild the Mortgaged Property as set forth in Paragraph 3(a) above, and that
the restoration or repair of the Mortgaged Property can be completed prior to
the earlier to occur of (i) the date which is six (6) months following such
Insured Casualty and (ii) the date which is twelve (12) months prior to the
Anticipated Repayment Date (as defined in the Note), Mortgagor is hereby
authorized to collect and receipt for any such Insurance Proceeds. All other
Insurance Proceeds (whether or
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not Mortgagee elects to settle and adjust the claim or Mortgagor settles such
claim) shall be due and payable solely to Mortgagee and held by Mortgagee in
accordance with the terms of this Mortgage. In the event Mortgagor or any party
other than Mortgagee is a payee on any check representing Insurance Proceeds
with respect to any Significant Casualty (or with respect to any Insured
Casualty, if an Event of Default has occurred), Mortgagor shall immediately
endorse, and cause all such third parties to endorse, such check payable to the
order of Mortgagee. Mortgagor hereby irrevocably appoints Mortgagee as its
attorney-in-fact, coupled with an interest, to endorse any such check payable to
the order of Mortgagee. 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. Mortgagor
hereby releases Mortgagee from any liability with respect to the settlement and
adjustment by Mortgagee of any Insured Casualty.
(c) In the event of loss or damages covered by any of the Policies, the
following provisions shall apply with respect to application of Insurance
Proceeds:
(i) In the event of an Insured Casualty where the loss is in an
aggregate amount less than twenty-five percent (25%) of the original
principal balance of the Note and if, in the reasonable judgment of
Mortgagee, the Mortgaged Property can be restored prior to the earlier to
occur of (A) the date which is six (6) months following such Insured
Casualty and (B) the date which is twelve (12) months prior to the
Anticipated Repayment Date, and after such restoration will adequately
secure the outstanding balance of the Debt and will have a value at least
equal to the value immediately prior to the date hereof, and if the FB
Distro Lease is in full force and effect, FB Distro does not have the right
to terminate the FB Distro Lease with respect to such Insured Casualty or
FB Distro affirms in writing that it has waived any right it has to
terminate the FB Distro Lease as a result of such Insured Casualty, then,
if no Event of Default (as hereinafter defined) shall have occurred, the
Insurance Proceeds (not including any Insurance Proceeds paid in respect of
the liability policies required under Paragraph 2(a)(ii) hereof, in respect
of any rental loss or business interruption coverage, or in respect of any
worker's compensation 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
Insurance Proceeds made available pursuant to the terms hereof.
(ii) Except as provided in Paragraph 3(c)(i) above, the Insurance
Proceeds 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. Additionally,
throughout the term of the Loan if an Event of Default, or an event which
with notice and/or the passage of time or both would constitute an Event of
Default, has occurred
8
then the Mortgagor shall pay to Mortgagee, with respect to any payment of
the Debt pursuant to this paragraph, an additional amount equal to the
Proportionate Yield Maintenance Premium (as defined in Paragraph 48 below);
provided, however, that if an Event of Default, or an event which with
notice and/or the passage of time or both would constitute an Event of
Default, has not occurred, then the Proportionate Yield Maintenance Premium
shall not be payable. Any such application to the Debt shall (A) be applied
to those payments of principal and interest last due under the Note but
shall not postpone any payments otherwise required pursuant to the Note
other than such last due payments and (B) not cause or result in the
Monthly Debt Service Payment Amount under the Note being re-cast. Mortgagor
acknowledges that in order for Mortgagee to fix the Initial Interest Rate
on the Loan, Mortgagee entered into hedging transactions by selling U.S.
Treasury securities, which hedging transactions would have to be "unwound"
if all or any portion of the Loan is paid down.
(iii) In the event Mortgagor is entitled to reimbursement out of
Insurance Proceeds held by Mortgagee, such Insurance Proceeds shall be
disbursed from time to time upon Mortgagee being furnished with (1)
evidence satisfactory to Mortgagee 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 Insurance Proceeds 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 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 Insurance
Proceeds shall be disbursed prior to disbursement of such Insurance
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 (including, but not limited to, all Insurance
Proceeds paid with respect to rental loss and/or business interruption
insurance) shall be deposited by Mortgagee into one or more of the Escrow
Funds, as determined by Mortgagee, and thereafter held and disbursed by
Mortgagee in accordance with the terms and provisions of this Mortgage
applicable to such Escrow Funds.
(iv) Notwithstanding anything contained in Paragraph 3 or Paragraph 47
to the contrary, in the event Mortgagee elects to apply the proceeds of
insurance to the payment of the Debt anytime during the term of the Loan in
accordance with this ▇▇▇▇▇▇▇▇▇ ▇, ▇▇▇▇▇▇▇▇▇ may, within ninety (90) days
after such election by Mortgagee, upon not less than thirty (30) days
notice to Mortgagee, prepay the entire amount of the
9
Loan in full (but not in part) on any Payment Date (as defined in the Note)
without payment of any Proportionate Yield Maintenance Premium with respect
to any of the Debt regardless of whether the source of repayment is the
Insurance Proceeds or Mortgagor's own funds.
4. 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 (collectively, the "Taxes") and all
water rates, sewer rents, ground rents, maintenance charges, and other
impositions and charges now or hereafter levied or assessed or imposed against
the Mortgaged Property or any part thereof (collectively, the "Other Charges")
as the same become due and payable. 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 shall not be required to furnish such receipts for payment of Taxes in
the event that such Taxes have been paid by Mortgagee pursuant to Paragraph 5
hereof).
5. Tax and Insurance Escrow Fund. (a) Simultaneously with the execution
hereof, Mortgagor shall deposit with Mortgagee the amount, as determined by
Mortgagee, which, when added to the monthly payments subsequently required to be
deposited with Mortgagee hereunder on account of Taxes and Insurance Premiums,
will result in there being on deposit with Mortgagee an amount sufficient to pay
the next due installment of Taxes on the Mortgaged Property at least thirty (30)
days prior to the due date thereof and, subject to the terms of Section 5(b)
below, the next due annual Insurance Premiums with respect to the Mortgaged
Property at least thirty (30) days prior to the due date thereof. In addition,
Mortgagor shall pay to Mortgagee on each Payment Date (as defined in the Note)
(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, subject to the terms of Section 5(b) below, (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 initial
deposit, together with the amounts in clauses (a) and (b) above, being
hereinafter called the "Tax and Insurance Escrow Fund"). Mortgagee will apply
the Tax and Insurance Escrow Fund to payments of Taxes and Insurance Premiums
required to be made by Mortgagor pursuant to Paragraphs 2 and 4 hereof. In
making any payment relating to the Tax and Insurance Escrow 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 at any time Mortgagee determines that the Tax
and Insurance Escrow Fund is not or will not be sufficient to pay the items set
forth in clauses (a) and (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 delinquency of the Taxes and/or expiration of
the Policies, as the case may be. If the amount of the Tax and Insurance Escrow
Fund shall exceed the amounts due
10
for Taxes and Insurance Premiums pursuant to Paragraphs 2 and 4 hereof,
Mortgagee shall credit such excess against future payments to be made to the Tax
and Insurance Escrow Fund, and all excess amounts remaining when the Debt has
been satisfied shall be returned to Mortgagor.
(b) Notwithstanding the provisions of Paragraph 5(a) to the contrary,
provided and on condition that each and all of the Insurance Conditions
Precedent (as defined herein) are satisfied and remain satisfied at all times,
Mortgagor shall not be required to fund the Tax and Insurance Escrow Fund with
respect to Insurance Premiums only as provided herein. If at any time any or all
of the Insurance Conditions Precedent are no longer met, Mortgagor shall
immediately begin and shall continue to fund the Tax and Insurance Escrow fund
as provided herein. The "Insurance Conditions Precedent" shall mean the
following conditions precedent: (i) no Event of Default exists, (ii) FB Distro,
Inc., an Indiana corporation ("FB Distro") shall be maintaining the insurance in
respect of the Mortgaged Property in accordance with that certain lease, dated
as of September 28, 2004, (the "FB Distro Lease") by and between FB Distro, as
tenant and Mortgagor, as landlord and paying Insurance Premiums directly to the
respective insurer or agent, (iii) the FB Distro Lease shall be in full force
and effect and neither landlord nor tenant thereunder shall be in default of any
of its obligations, (iv) FB Distro shall be and shall remain obligated under the
FB Distro Lease to pay Insurance Premiums and maintain insurance in respect of
the Mortgaged Property as currently set forth in the FB Distro Lease, and (v)
the senior unsecured debt rating of Charming Shoppes, Inc. ("Charming") shall be
and remain at least "B" by Standard & Poor's ratings Services, a division of the
▇▇▇▇▇▇-▇▇▇▇ Companies, Inc.
(c) In the event that, for any reason, Mortgagor shall be funding the Tax
and Insurance Escrow Fund, Mortgagor shall have a one time right to elect, in
lieu of funding the Tax and Insurance Escrow Fund as set forth in Paragraph 5(a)
above, to deliver to Mortgagee an irrevocable, automatically renewable,
transferable letter of credit (the "Letter of Credit") for 110% of the amount of
the then annual Taxes on the Mortgaged Property and the next due annual
Insurance Premiums with respect to the Mortgaged Property. The Letter of Credit
shall be in form and substance acceptable to Mortgagee in its sole discretion,
issued by a bank which has a rating by Standard & Poors of not less than "A",
name Mortgagee as beneficiary and shall be delivered, together with a letter of
credit agreement with respect to such Letter of Credit consistent with the terms
and provisions of this Paragraph 5(c) and otherwise in form and substance
acceptable to Mortgagee in its sole discretion. If Mortgagor delivers the Letter
of Credit to Mortgagee pursuant to this Paragraph 5(c), then Taxes and Insurance
Premiums shall cease to be paid from amounts on deposit in the Tax and Insurance
Escrow Fund, but Mortgagor shall thereafter directly pay all Taxes not less than
thirty (30) days prior to the due date and shall pay all Insurance Premiums not
less than two (2) business days prior to the expiration of the Policies and
shall deliver to Mortgagee paid invoices, if obtainable, or other evidence of
payment with respect to same on or prior to such dates. If Mortgagor fails to
pay the Taxes and Insurance Premiums as set forth above and fails to deliver
such invoices as forth above, then Mortgagee shall have the right to realize
upon the Letter of Credit and apply the proceeds thereof to the payment of due
and unpaid Taxes and Insurance Premiums. Failure to either deposit the Letter of
Credit (or the replacement letter of credit) as set forth in this Paragraph 5(c)
and to pay the Taxes and Insurance Premiums as set forth in this Paragraph 5(c),
or to make any payments as required pursuant to this Paragraph 5 shall
constitute an Event of Default. During the term of the Loan if after delivering
the Letter of Credit to Mortgagee, Mortgagor elects to commence or recommence
deposits into the Tax and Insurance Escrow Fund pursuant to Paragraph 5(a)
above,
11
then provided no Event of Default exists, the Letter of Credit (or such
replacement letter of credit), will be returned to Mortgagor at such time that
Mortgagor has deposited into the Tax and Insurance Escrow Fund the respective
amount required under Paragraph 5(a) above. At such time that there is an
increase in Taxes and/or the annual Insurance Premiums that causes the then
maximum amount available under the Letter of Credit to be less than 110% of the
then current annual Taxes and Insurance Premiums, Mortgagor shall, within
fifteen (15) days after receiving any invoice or ▇▇▇▇ evidencing such increase
(or after receiving any notice of such increase), deliver to Mortgagee a new
letter of credit to replace the Letter of Credit, which complies with the terms
and provisions of this Paragraph 5(c) and is in an amount equal to 110% of the
then current annual Taxes and Insurance Premiums. Upon receipt of such
replacement letter of credit, provided no Event of Default exists, Mortgagee
shall return the Letter of Credit to Mortgagor.
(d) Notwithstanding anything to the contrary contained in this Paragraph 5,
in lieu of Mortgagor's obligation to make payments of Taxes pursuant to
Paragraph 5(a) herein, on the date hereof, Mortgagor shall deposit with
Mortgagee the sum of $83,129.00, and thereafter Mortgagee shall at all times
maintain a sum equal to the then current amount of six month's payment of Taxes
payable with respect to the Mortgaged Property (such amount being referred to
herein as the "Tax Payment"), which shall be deposited with and held by
Mortgagee in the Tax and Insurance Escrow Fund. If Taxes are not paid prior to
delinquency ("Tax Trigger Event"), Mortgagee shall have the right to apply the
Tax Payment to the payment of such Taxes. Upon the occurrence of a Tax Trigger
Event, Mortgagor shall be required to deposit monthly payments with respect to
Taxes in accordance with Paragraph 5(a) herein.
6. Replacement Escrow Fund; Rollover Escrow Fund; Additional Escrow Fund;
the Debt Service Escrow Fund; Tax Lien Escrow Fund.
(a) Mortgagor shall pay to Mortgagee on each Payment Date an amount equal
to one-twelfth of the Annual Replacement Amount (as defined below) and such
payments shall be held in escrow (the "Replacement Escrow Fund") and disbursed
in accordance with the following provisions of this Paragraph 6. The "Annual
Replacement Amount", which is based on Mortgagee's initial estimate of the
annual amount for replacements and repairs of a capital nature required to be
made to the Mortgaged Property, shall initially be $194,400. Notwithstanding
anything contained herein to the contrary, the amount on deposit in the
Replacement Escrow Fund shall not be required to exceed $388,800.00 (the
"Replacement Escrow Fund Cap"). At such time that the amount in the Replacement
Escrow Fund equals or exceeds the Replacement Escrow Fund Cap, Mortgagor shall
not be required to continue to make deposits into the Replacement Escrow Fund as
required under this Mortgage unless and until the amount on deposit is less than
the Replacement Escrow Fund Cap, whereupon Mortgagor shall resume making such
deposits until the amount on deposit therein equals or exceeds the Replacement
Escrow Fund Cap (it being agreed and understand that Mortgagor shall be required
to resume deposits as required under this Paragraph 6(a) anytime the amount on
deposit in the Replacement Escrow Fund is less than the Replacement Escrow Fund
Cap). Provided that no Event of Default exists, Mortgagee shall make
disbursements from the Replacement Escrow Fund as requested by Mortgagor, and
approved by Mortgagee in its reasonable discretion, on a monthly basis in
increments of no less than $1,000.00 upon delivery by Mortgagor of a draw
request accompanied by (i) copies of paid invoices (or with respect to requests
in excess of $10,000.00, unpaid invoices) for the amounts requested, (ii) a
brief description of the repair or
12
replacement (including evidence that same is of a capital nature) and, if
required by Mortgagee, (iii) lien waivers and releases from all parties
furnishing materials and/or services in connection with the requested payment.
Any disbursement by Mortgagee hereunder for a capital item in excess of
$10,000.00 and not already paid for by Mortgagor, shall be made by joint check,
payable to Mortgagor and the applicable contractor, supplier, materialman,
mechanic, subcontractor or other party to whom payment is due in connection with
such capital item. Mortgagee may require an inspection of the Mortgaged Property
at Mortgagor's expense, or other evidence as Mortgagee may in its reasonable
discretion require, prior to making a monthly disbursement in order to verify
compliance with the requirements of this Paragraph 6(a).
(b) Intentionally Omitted Prior to Execution.
(c) Mortgagor shall pay to Mortgagee on each Payment Date one-twelfth of
$150,000.00, which shall be deposited with and held by Mortgagee for tenant
improvement and leasing commission obligations incurred following the date
hereof (the "Rollover Escrow Fund"). In addition, notwithstanding any
limitations on the amount to be deposited in the Rollover Escrow Fund, Mortgagor
shall pay to Mortgagee for deposit in the Rollover Escrow Fund all funds
received by Mortgagor from tenants in connection with the cancellation of any
Leases, including, but not limited to, any cancellation fees, penalties, and
payments relating to unamortized tenant improvements and leasing commissions.
Mortgagee may from time to time reassess its estimate of the monthly amount
necessary to be deposited into the Rollover Escrow Fund and, upon notice to
Mortgagor, Mortgagor shall be required to deposit into the Rollover Escrow Fund
each month such reassessed amount. Notwithstanding anything contained herein to
the contrary, the amount on deposit in the Rollover Escrow Fund shall not be
required to exceed $750,000.00 (the "Rollover Escrow Fund Cap"). At such time
that the amount in the Rollover Escrow Fund equals or exceeds the Rollover
Escrow Fund Cap, Mortgagor shall not be required to continue to make deposits
into the Rollover Escrow Fund as required under this Mortgage unless and until
the amount on deposit is less than the Rollover Escrow Fund Cap, whereupon
Mortgagor shall resume making such deposits until the amount on deposit therein
equals or exceeds the Rollover Escrow Fund Cap (it being agreed and understand
that Mortgagor shall be required to resume deposits as required under this
Paragraph 6(c) anytime the amount on deposit in the Rollover Escrow Fund is less
than the Rollover Escrow Fund Cap). To the extent the Leases were not previously
approved by Mortgagee, all such expenses shall be approved by Mortgagee in its
sole discretion. Provided that no Event of Default shall exist and remain
uncured, Mortgagee shall make disbursements as requested, in writing, by
Mortgagor on a monthly basis in increments of no less than $1,000.00 upon
delivery by Mortgagor of copies of paid invoices (or with respect to any request
in excess of $10,000, unpaid invoices) for the amounts requested for tenant
improvements and leasing commissions, the newly executed Lease, extension,
renewal, or modification, with terms commensurate with the expired Lease, a
certification for tenant improvement disbursements from the Mortgagor stating
(a) the nature and type of the related improvement, (b) that the related
improvement has been completed in a good and workmanlike manner and (c) that the
related improvement has been paid in full (or, with respect to any request in
excess of $10,000, will be paid for in full from the requested disbursement) or
a certification for leasing commission disbursements stating that such leasing
commission has been paid in full (or, with respect to requests in excess of
$10,000, will be paid for in full from the requested disbursement) and, if
required by Mortgagee, lien waivers and releases from all parties furnishing
materials and/or services in connection with the requested
13
payment. Any disbursement by Mortgagee hereunder in excess of $10,000 and not
already paid for by Mortgagor, shall be made by joint check, payable to
Mortgagor and the applicable contractor, supplier, materialman, mechanic,
subcontractor, broker or other party to whom payment is due in connection with
such disbursement. Mortgagee may require an inspection of the Mortgaged Property
at Mortgagor's expense prior to making a disbursement in order to verify
compliance with the requirements of this Paragraph 6 (c).
(d) If at anytime during the term of the Loan, the issuer credit rating of
Charming falls below "B" (but not below "B-") according to Standard & Poor's
Rating Services, a division of the ▇▇▇▇▇▇-▇▇▇▇ Companies, Inc. or the senior
implied credit rating of Charming falls below "B2" (but not below "B3")
according to ▇▇▇▇▇'▇ Investors Service, Inc. (individually and collectively, the
"Initial Charming Rating Drop"), Mortgagor shall be required to deposit into an
additional reserve (the "Additional Escrow Fund") on each Payment Date,
beginning with the next Payment Date then due, an amount equal to all Excess
Cash Flow (as defined herein) until the amount paid into the Additional Escrow
Fund is no less than $2,000,000.00 (the "Additional Escrow Fund Cap"), which
amounts shall be held by Mortgagee as additional security for the indebtedness
secured hereby. If after the occurrence of the Initial Charming Rating Drop, but
prior to the occurrence of the Second Charming Rating Drop (as defined herein)
or a Charming Rating Drop Termination, at any time during the term of the Loan
the amount on deposit in the Additional Escrow Fund shall fall below the
Additional Escrow Fund Cap, Mortgagor shall resume making deposits of Excess
Cash Flow into the Additional Escrow Fund as required under this Paragraph 6(d)
until the amount on deposit therein equals no less than the Additional Escrow
Fund Cap. If at anytime during the term of the Loan, whether prior to or after
the occurrence of the Initial Charming Rating Drop, the issuer credit rating of
Charming falls below "B-" according to Standard & Poor's Rating Services, a
division of the ▇▇▇▇▇▇-▇▇▇▇ Companies, Inc. or the senior implied credit rating
of Charming falls below "B3" according to ▇▇▇▇▇'▇ Investors Service, Inc.,
(individually and collectively, the "Second Charming Rating Drop") Mortgagor
shall be required to deposit into the Additional Escrow Fund on each Payment
Date, beginning with the next Payment Date then due, an amount equal to all
Excess Cash Flow until the amount paid into the Additional Escrow Fund is no
less than the outstanding principal balance of the Loan (the "Second Additional
Escrow Fund Cap"). If after the occurrence of the Second Charming Rating Drop,
but prior to the occurrence of a Charming Rating Drop Termination, at any time
during the term of the Loan the amount on deposit in the Additional Escrow Fund
shall fall below the Second Additional Escrow Fund Cap, Mortgagor shall resume
making deposits of Excess Cash Flow into the Additional Escrow Fund as required
under this Paragraph 6(d) until the amount on deposit therein equals no less
than the Second Additional Escrow Fund Cap. Notwithstanding anything contained
in this Paragraph 6(d) to the contrary, during the term of the loan if Charming
regains an issuer credit rating of "BB-" or greater by Standard & Poors and a
senior implied credit rating of "Ba3" by ▇▇▇▇▇'▇ Investors Service, Inc. (the
"Charming Rating Drop Termination"), and provided no Event of Default exists,
Mortgagor will no longer be required to make the aforesaid payments into the
Additional Escrow Fund. If after the occurrence of the Charming Rating Drop
Termination, Charming maintains an issuer credit rating of "BB-" or greater by
Standard & Poors and a senior implied credit rating of "Ba3" by ▇▇▇▇▇'▇
Investors Service, Inc. for the six (6) consecutive months immediately following
the Charming Rating Drop Termination (the "6 Month ▇▇▇▇"), and provided no Event
of Default exists, fifty percent (50%) of any amounts in the Additional Escrow
Fund deposited pursuant to this Paragraph 6(d) will be released to Mortgagor. If
after
14
the occurrence of the 6 Month ▇▇▇▇, Charming maintains the issuer credit rating
of "BB-" or greater by Standard & Poors and the senior implied credit rating of
"Ba3" by ▇▇▇▇▇'▇ Investors Service, Inc. for the six (6) consecutive months
immediately following the 6 Month ▇▇▇▇, and provided no Event of Default exists,
any remaining amounts in the Additional Escrow Fund deposited pursuant to this
Paragraph 6(d) will be released to Mortgagor. Notwithstanding the foregoing,
after the occurrence of a Charming Rating Drop Termination, in the event that
the Initial Charming Rating Drop or Second Charming Rating Drop again occurs,
then Mortgagor shall fund the Additional Escrow Fund as provided in this
Paragraph 6(d) which funds shall again be applied and released in accordance
with this Paragraph 6(d) (it being agreed and understood that the obligation to
fund the Additional Escrow Fund as set forth in this Paragraph 6(d) is an
ongoing obligation which arises every time an Initial Charming Rating Drop or
Second Charming Rating Drop occurs). For purposes of this Paragraph 6(d) the
term "Excess Cash Flow" shall mean all revenue generated from the Mortgaged
Property less Cash Expenses (as such term is defined in the Cash Management
Agreement) after deducting, for the respective period, Mortgagor's payment of
the Monthly Debt Service Payment and the deposits into the Tax and Insurance
Escrow Fund, Replacement Escrow Fund and Rollover Escrow Fund required to be
made by Mortgagor pursuant to the terms of this Mortgage.
(e) On the date hereof, Mortgagor shall deposit with Mortgagee the sum
equal to the Monthly Debt Service Payment Amount (as defined in the Note)
together with the sum of $28,700.00 to be held in escrow (the "Debt Service
Escrow Fund"), as additional collateral for the Loan. If on any Payment Date
during the term of the Loan Mortgagee does not receive the Monthly Debt Service
Payment Amount and/or an amount equal to the monthly amounts then being paid by
Mortgagor into the Escrow Funds (the "Monthly Escrow Payment Amount"), then,
provided no Event of Default exists, Mortgagee shall apply the funds in the Debt
Service Escrow Fund on the Payment Date to the payment of the Monthly Debt
Service Payment Amount and to the Monthly Escrow Payment Amount due on such
Payment Date. In the event Mortgagee applies the funds in the Debt Service
Escrow Fund as set forth herein (or at anytime that the Monthly Escrow Payment
Amount is not sufficient to pay the monthly amounts then being paid by Mortgagor
into the Escrow Funds), at Mortgagor's election, such election to be made in
Mortgagor's sole discretion, Mortgagor shall have the right at anytime during
the term of the Loan, but not the obligation, to deposit an amount equal to the
Monthly Debt Service Payment Amount plus an amount equal to the Monthly Escrow
Payment Amount in the Debt Service Escrow Fund and in the event Mortgagee does
not receive the Monthly Debt Service Amount or the Monthly Escrow Payment Amount
on a subsequent Payment Date, such amount previously deposited into the Debt
Service Escrow Fund shall thereafter be applied by Mortgagee to the payment of
the Monthly Debt Service Payment Amount and the Monthly Escrow Payment Amount on
such Payment Date provided no Event of Default then exists (it being agreed and
understood that anytime Mortgagee applies the funds in the Debt Service Escrow
Fund as set forth herein, Mortgagor shall have the right, but not the
obligation, to deposit such amounts in the Debt Service Escrow Fund to be
applied as set forth herein).
(f) On the date hereof, Mortgage shall deposit with Mortgagee the sum of
$350,000.00 to be held in escrow (the "Tax Lien Escrow Fund"), as additional
collateral for the Loan. Provided no Event of Default exists, all funds held in
the Tax Lien Escrow Fund shall be promptly disbursed to Mortgagor upon
Mortgagee's receipt of evidence satisfactory to Mortgagee in its sole discretion
which indicates that Tax Warrant No. 04366131, Tax Warrant
15
No. 04366132, Tax Warrant No. 04366133, Tax Warrant No. 04366134, Tax Warrant
No. 04366134, Tax Warrant No. 04366136, Tax Warranty No. 04366137, Tax Warrant
No. 04366138 Tax Warrant No. 04366139 and Tax Warrant No. 04366145 each as filed
in the ▇▇▇▇▇▇ County Clerk's Office, ▇▇▇▇▇▇ County, Indiana, have been fully
satisfied (including any interest and penalties thereon) and released of record
and the title policy insuring Mortgagee's interest under this Mortgage delivered
to Mortgagee in connection with this Loan is revised to remove such tax liens as
title exceptions to such title policy.
7. General Provisions Applicable to Escrow Funds. All monies on deposit in
the Replacement Escrow Fund, the Rollover Escrow Fund, the Additional Escrow
Fund, the Debt Service Escrow Fund, the Tax Lien Escrow Fund and the Tax and
Insurance Escrow Fund (collectively, the "Escrow Funds") shall earn interest at
a rate commensurate with the rate of interest paid from time to time on money
market accounts at Servicer, with interest credited monthly to such Escrow Funds
(with the exception of the Tax and Insurance Escrow Fund). All earnings or
interest on each of the Escrow Funds (with the exception of the Tax and
Insurance Escrow Fund) shall be and become part of the respective Escrow Fund
and shall be disbursed as provided in the paragraph(s) of this Mortgage
applicable to each such Escrow Fund. No earnings or interest on the Tax and
Insurance Escrow Fund shall be payable to Mortgagor. Mortgagor hereby pledges to
Mortgagee and grants to Mortgagee a first priority perfected security interest
in any and all monies now or hereafter deposited in the Escrow Funds 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 Escrow Funds to the
payment of the Debt in any order in its sole discretion. The Escrow Funds shall
not constitute a trust fund and may be commingled with other monies held by
Mortgagee. Notwithstanding anything contained herein to the contrary, any
amounts remaining in the Escrow Funds at the time the Loan is paid off in full
shall be credited to the outstanding obligations of Mortgagor with respect to
the Loan at the time of such payoff.
8. Condemnation.
(a) Mortgagor shall promptly give Mortgagee written notice of the actual or
threatened commencement of any condemnation or eminent domain proceeding with
respect to all or any portion of the Mortgaged Property (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.
(b) Any and all awards or payments ("Award") for any taking accomplished
through a Condemnation (a "Taking") are hereby assigned by Mortgagor to
Mortgagee and Mortgagee is hereby authorized to make any compromise or
settlement in connection with such Condemnation, subject to the provisions of
this Mortgage.
(c) In the event of any Condemnation where the Award is in an aggregate
amount less than five percent (5%) of the original principal balance of the
Note, and if, in the reasonable judgment of Mortgagee, the Mortgaged Property
can be restored prior to the earlier to
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occur of (i) the date which is six (6) months following such Taking and (ii) the
date which is twelve (12) months prior to the Anticipated Repayment Date (as
defined in the Note), and after such restoration will adequately secure the
outstanding balance of the Debt and will have a value at least equal to the
value immediately prior to such Taking and the FB Distro Lease is in full force
and effect, and FB Distro does not have the right to terminate the FB Distro
Lease due to such Taking, or FB Distro affirms in writing that it has waived any
right it has to terminate the FB Distro Lease as a result of such Taking, then,
if no Event of Default shall have occurred, the proceeds of the Award (after
reimbursement of any expenses incurred by Mortgagee) shall be applied to
reimburse Mortgagor for the cost of restoring and rebuilding the Mortgaged
Property, and such Award shall be disbursed in the same manner as provided in
Paragraph 3(c)(iii) for the application of Insurance Proceeds. 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.
Any surplus which may remain out of the Award received by Mortgagee after
payment of such costs of restoration, repair, replacement or rebuilding
(including, but not limited to, all Insurance Proceeds paid with respect to
rental loss and/or business interruption insurance) shall be deposited by
Mortgagee into one or more of the Escrow Funds, as determined by Mortgagee, and
thereafter held and disbursed by Mortgagee in accordance with the terms of
provisions of this Mortgage applicable to such Escrow Funds.
(d) Except as provided in Paragraph 8(c) 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 and rebuilding the Mortgaged Property in the same manner as
provided in Paragraph 3(c)(iii) for the application of Insurance Proceeds.
Additionally, throughout the term of the Loan if an Event of Default, or an
event which with notice and/or the passage of time or both would constitute an
Event of Default, has occurred then the Mortgagor shall pay to Mortgagee, with
respect to any payment of the Debt pursuant to this paragraph, an additional
amount equal to the Proportionate Yield Maintenance Premium in accordance with
Paragraph 48 below; provided, however, that if an Event of Default, or an event
which with notice and/or the passage of time or both would constitute an Event
of Default, has not occurred, then the Proportionate Yield Maintenance Premium
shall not be payable. Any such application to the Debt shall (i) 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 and (ii) not cause or result in the Monthly Debt
Service Payment Amount under the Note to be re-cast based upon the reduction in
the principal balance of the Loan and the number of months remaining until the
Maturity Date. 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.
(e) 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
17
until any Award shall have been actually received and applied by Mortgagee to
expenses of collecting the Award and to discharge of the Debt.
(f) Notwithstanding anything contained in Paragraph 8 or Paragraph 47 to
the contrary, in the event Mortgagee elects to apply the Award to the payment of
the Debt anytime during the term of the Loan in accordance with this ▇▇▇▇▇▇▇▇▇
▇, ▇▇▇▇▇▇▇▇▇ may, within ninety (90) days after such election by Mortgagee, upon
not less than thirty (30) days notice to Mortgagee, prepay the entire amount of
the Loan in full (but not in part) on any Payment Date (as defined in the Note)
without payment of any Proportionate Yield Maintenance Premium with respect to
any of the Debt, regardless of whether the source of repayment is the Award or
Mortgagor's own funds.
9. 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.
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. At anytime that an
Event of Default exists, 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) Mortgagor will not enter into, modify, amend, consent to the
cancellation of or terminate any Lease, whether now existing or hereafter
entered into, without the prior written consent of Mortgagee which consent may
be granted or withheld in Mortgagee's sole discretion.
(c) 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, (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; and (vi) shall deliver to Mortgagee, upon request,
tenant estoppel certificates from each commercial tenant at the Mortgaged
Property in form and substance reasonably satisfactory to
18
Mortgagee, provided that Mortgagor shall not be required to deliver such
certificates more frequently than once in any calendar year. Except to the
extent Mortgagor has received the prior written consent of Mortgagee, which
consent may be granted or withheld in Mortgagee's sole discretion, Mortgagor
shall not consent to any assignment of or subletting under any Lease not in
accordance with its terms. Notwithstanding anything contained herein to the
contrary, so long as no Event of Default exists, without the consent of
Mortgagee, FB Distro shall have the right to sublet up to twenty-five percent
(25%) of the premises leased to FB Distro pursuant to the FB Distro Lease so
long as such sublease shall not relieve FB Distro of any obligations under the
FB Distro Lease with respect to the subleased premises.
(d) All security deposits of tenants, whether held in cash or any other
form, shall: (x) not be commingled with any other funds of Mortgagor and, if
cash, shall be deposited by Mortgagor at such commercial or savings bank or
banks as may be reasonably satisfactory to Mortgagee; and (y) be applied by
Mortgagor as required under the terms and provisions of the respective Lease and
in accordance with applicable law . 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 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. Any security deposit of a tenant that is
in excess of $250,000 shall be deposited with Mortgagee, to be held by Mortgagee
subject to the terms of the Lease. 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 thereon) with respect to
all or any portion of the Mortgaged Property, to be held by Mortgagee subject to
the terms of the Leases.
10. Representations, Warranties and Covenants Concerning Loan. Mortgagor
represents, warrants and covenants as follows:
(a) Organization and Existence. Mortgagor is duly organized and validly
existing as a limited liability company in good standing under the laws of
Delaware 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
members 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. No other consent by any local, state or federal agency
is required in connection with the execution and delivery of the Loan Documents.
Mortgagor is not a "foreign person" within the meaning of Section 1445(f)(3) of
the Internal
19
Revenue Code of 1986, as amended and the related Treasury Department
regulations, including temporary regulations.
(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 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
of the Debt or any part thereof ("Guarantor") or any general partner, manager 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.
(f) Compliance with Applicable Laws and Regulations. All of the
Improvements and the use of the Mortgaged Property comply in all material
respects with, and shall remain in compliance in all material respects with, all
applicable laws, zoning and subdivision ordinances (including without
limitation, parking requirements), rules, regulations, covenants and
restrictions now or hereafter affecting or otherwise relating to the ownership,
construction, occupancy, use or operation of the Mortgaged Property, including
all applicable laws, rules and regulations pertaining to requirements for equal
opportunity, anti-discrimination, fair housing, environmental protection, zoning
and land use, and Mortgagor has not received any notice of any violation of any
of the foregoing. The Improvements comply with, and shall remain in compliance
in all material respects 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, authorizations
and approvals, including, without limitation, certificates of completion and
occupancy permits required for the legal use, occupancy and operation of the
Mortgaged Property as a warehouse and distribution center have been obtained and
are in full force and effect, and Mortgagor has not received any notice to the
contrary (including, without limitation, any such certifications, permits,
licenses, authorizations and approvals required with respect to the use of the
Mortgaged Property by any tenants, franchisors or operators) and Mortgagor shall
take all actions necessary to file, keep and maintain all such certification,
permits, licenses, authorizations and approvals current and in full force and
effect at all times and to obtain any other certifications, permits, licenses,
authorizations and approvals that may hereafter be required for the legal use,
occupancy and operation of the Mortgaged Property.
(g) 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.
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(h) No Litigation. There are no pending actions, suits or proceedings,
arbitrations or governmental investigations against the Mortgagor or the
Mortgaged Property: (i) except as previously fully disclosed in writing by
Mortgagor to Mortgagee on a certification delivered by Mortgagor to Mortgagee on
the date hereof; and (ii) an adverse outcome of which would affect in any
respect the value of the Mortgaged Property or the Mortgagor's performance under
the Note, this Mortgage or the other Loan Documents. There are no material legal
actions, suits, or proceedings, arbitrations or governmental investigations
pending against Guarantor that would adversely affect Guarantor's performance
under the Loan Documents to which Guarantor is a party.
(i) Title. Mortgagor has good, marketable, and insurable title to the
Mortgaged Property, possesses an unencumbered fee estate in the Premises and the
Improvements and owns the Mortgaged Property free and clear of all liens,
encumbrances and charges whatsoever except as disclosed in the title insurance
policy insuring the lien of this Mortgage (the "Permitted Exceptions") and 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
is not a party to any outstanding contract or agreement providing for or
requiring it to convey its interest in the Mortgaged Property to any person or
entity, and no person or entity other than Mortgagor has any beneficial or
equitable right, title or interest in the Mortgaged Property, or any part
thereof, other than FB Distro pursuant to the FB Distro Lease. The possession of
the Mortgaged Property by Borrower and FB Distro has been peaceful and
undisturbed and title thereto has not been disputed or questioned to the best of
Mortgagor's knowledge. Subject to the Permitted 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.
(j) 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, (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, or (3) the benefits of the security intended to be provided by this
Mortgage.
(k) 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.
(l) ERISA. To the extent applicable, 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.
21
(m) Contingent Liabilities. The Mortgagor has no known material contingent
liabilities other than those created by the Loan Documents.
(n) No Other Obligations. The 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
under the FB Distro Lease, 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.
(o) 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 Loan 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).
(p) 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.
(q) 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, in each case for its current use and operation. 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.
(r) 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
22
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 paid for any prior period.
(s) Single Tax Lot; Subdivision. The Premises consists of a single tax 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. The Premises consists of one or more legally subdivided lots.
(t) 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 Property that may result in such special or other
assessments.
(u) Flood Zone. The Mortgaged Property is not located in a flood hazard
area as defined by the Federal Insurance Administration.
(v) Seismic Exposure. The Premises are not located in Zone 3 or Zone 4 of
the "Seismic Zone Map of the U.S."
(w) 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 materially
misleading. There is no fact presently known to the Mortgagor which has not been
disclosed which materially and adversely affects, nor as far as the Mortgagor
can foresee, might materially and adversely affect the business, operations or
condition (financial or otherwise) of the representing party.
(x) 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.
(y) No Insolvency or Judgment. Neither Mortgagor, nor any member of
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; (b) with respect to Mortgagor or any member of Mortgagor, 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; or (c) with respect to any guarantor of the Loan, the
subject of any material, final and non-appealable 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 that would have a material,
adverse affect on Guarantor's ability to perform under the Loan Documents to
which such guarantor is a party. The Loan will not render the Mortgagor nor any
member of 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.
23
(z) No Condemnation. No part of any property subject to this Mortgage has
been taken in condemnation or other like proceeding nor is any proceeding
pending, threatened or known to be contemplated for the partial or total
condemnation or taking of the Mortgaged Property.
(aa) No Labor 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 this Mortgage.
(bb) 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.
(cc) 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 or any of the Permitted Exceptions. As of the date hereof, (i) the
Mortgagor is 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 "Assignment of Leases and Rents"), dated the date hereof, given by
Mortgagor to Mortgagee and intended to be duly recorded; (iii) no Lease has been
modified or amended and all Leases are in full force and effect, 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; (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;
(viii) Mortgagor has not received any notice that any tenant of the Mortgaged
Property intends to vacate their respective demised premises or otherwise cease
operating at the Mortgaged Property and Mortgagor has no knowledge that any of
the tenants of the Mortgaged Property intend to vacate their respective demised
premises or otherwise cease operating at the Mortgaged Property; and (viii) none
of the Leases at the Mortgaged Property are subject to any actions, whether
voluntary or otherwise, against the tenants thereunder under the bankruptcy or
insolvency laws of the United States or any state and to the best of Mortgagor's
knowledge, no such actions have been threatened.
(dd) Appraisal. All requirements and conditions of the appraisal of the
Property submitted to Mortgagee in connection with the Loan, upon which the
value of the Mortgaged Property was conditioned, have been fully satisfied.
(ee) Boundary Lines. Except as set forth on the survey delivered to
Mortgagee in connection with the Loan, all of the Improvements which were
included in determining the appraised value of the Mortgaged Property lie wholly
within the boundaries and building
24
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.
(ff) 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.
(gg) 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
the Mortgaged Property or any part thereof or any monies paid in performance of
Mortgagor's obligations under any of the Loan Documents.
(hh) Mortgagor shall personally manage the Mortgaged Property in its own
name and for its own account. Mortgagor hereby represents and warrants to
Mortgagee that Mortgagor has not engaged and has no present intention of
engaging any affiliate of Mortgagor or any third party to manage the Mortgaged
Property for or on behalf of Mortgagor. In no event shall any management fee for
the Mortgaged Property exceed four percent (4%) of effective gross rental
income. Any fee relating to the management or operation of the Mortgaged
Property is and shall at all times remain subordinate to this Mortgage.
Mortgagor shall not enter into any agreement relating to the management or
operation of the Mortgaged Property with any party without the express prior
written consent of Mortgagee, which consent shall not be unreasonably withheld
and shall be conditioned upon receipt by Mortgagee of a written confirmation
from the Rating Agencies to the effect that such appointment of a new manager
will not result in a requalification, reduction or withdrawal of any current
securities rating assigned in a Securitization (as hereinafter defined). 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 an
Assignment and Subordination of Management Agreement in the form then being used
by Mortgagee.
(ii) No Defense. The Note, this Mortgage and the other Loan Documents are
not subject to any right of rescission, offset, abatement, set-off, counterclaim
or defense, including the defense of usury, nor would the operation of any of
the terms of the Note, this Mortgage and 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, offset, abatement, set-off,
counterclaim or defense, including the defense of usury. The Loan complies with
or is exempt from all applicable usury laws. No default, breach, violation or
event of acceleration exists under this Mortgage or any other Loan Documents.
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(jj) Patriot Act Compliance. (i) Mortgagor will use its good faith and
commercially reasonable efforts to not cause any violation of the Patriot Act
(as defined below) and all applicable requirements of governmental authorities
having jurisdiction of the Mortgagor and the Mortgaged Property, including those
relating to money laundering and terrorism. The Mortgagee shall have the right
to audit the Mortgagor's compliance with the Patriot Act and all applicable
requirements of governmental authorities having jurisdiction of the Mortgagor
and the Mortgaged Property, including those relating to money laundering and
terrorism. In the event that the Mortgagor fails to comply with the Patriot Act
or any such requirements of governmental authorities, then the Mortgagee may, at
its option, cause the Mortgagor to comply therewith and any and all reasonable
costs and expenses incurred by the Mortgagee in connection therewith shall be
secured by this Mortgage and the other Loan Documents and shall be immediately
due and payable. For purposes hereof, the term "Patriot Act" means the Uniting
and Strengthening America by Providing Appropriate Tools Required to Intercept
and Obstruct Terrorism (USA PATRIOT ACT) Act of 2001, as the same may be amended
from time to time, and corresponding provisions of future laws.
(ii) Neither the Mortgagor nor any partner in the Mortgagor or member of
such partner nor any owner of a direct or indirect interest in the Mortgagor
(but excluding the holders of publicly traded securities of Charming traded on a
nationally recognized exchange) and Borrower has no knowledge that the holders
of any publicly traded securities of Charming (a) is listed on any Government
Lists (as defined below), (b) is a person who has been determined by competent
authority to be subject to the prohibitions contained in Presidential Executive
Order No. 13224 (Sept. 23, 2001) or any other similar prohibitions contained in
the rules and regulations of OFAC (as defined below) or in any enabling
legislation or other Presidential Executive Orders in respect thereof, (c) has
been previously indicted for or convicted of any felony involving a crime or
crimes of moral turpitude or for any Patriot Act Offense (as defined below), or
(d) is not currently under investigation by any governmental authority for
alleged criminal activity. For purposes hereof, the term "Patriot Act Offense"
means any violation of the criminal laws of the United States of America or of
any of the several states, or that would be a criminal violation if committed
within the jurisdiction of the United States of America or any of the several
states, relating to terrorism or the laundering of monetary instruments,
including any offense under (a) the criminal laws against terrorism; (b) the
criminal laws against money laundering, (c) the Bank Secrecy Act, as amended,
(d) the Money Laundering Control Act of 1986, as amended, or the (e) Patriot
Act. "Patriot Act Offense" also includes the crimes of conspiracy to commit, or
aiding and abetting another to commit, a Patriot Act Offense. For purposes
hereof, the term "Government Lists" means (i) the Specially Designated Nationals
and Blocked Persons Lists maintained by Office of Foreign Assets Control
("OFAC"), (ii) any other list of terrorists, terrorist organizations or
narcotics traffickers maintained pursuant to any of the Rules and Regulations of
OFAC that Mortgagee notified Mortgagor in writing is now included in
"Governmental Lists", or (iii) any similar lists maintained by the United States
Department of State, the United States Department of Commerce or any other
government authority or pursuant to any Executive Order of the President of the
United States of America that Mortgagee notified Mortgagor in writing is now
included in "Governmental Lists".
(kk) Plans. As of the date hereof: (i) Mortgagor is not and does not
maintain an "employee benefit plan" as defined in Section 3(3) of ERISA, which
is subject to Title I of
26
ERISA, or a "governmental plan" within the meaning of Section 3(32) of ERISA;
(ii) none of the assets of Mortgagor constitute "plan assets" of a governmental
plan for purposes of any state statutes regulating investments and fiduciary
obligations with respect to governmental plans; and (iii) one or more of the
following circumstances is true: A) equity interests in Mortgagor are publicly
offered securities, within the meaning of 29 C.F.R. Section 2510.3-101(b)(2);
(B) less than twenty-five percent (25%) of each outstanding class of equity
interests in Mortgagor are held by "benefit plan investors" within the meaning
of 29 C.F.R. Section 2510.3-101(f)(2); or (C) Mortgagor qualifies as an
"operating company", a "venture capital operating company" or a "real estate
operating company" within the meaning of 29 C.F.R. Section 2510.3-101(c), (d) or
(e).
11. Single Purpose Entity/Separateness. Mortgagor represents, warrants and
covenants as follows:
(a) Mortgagor has not owned, 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 has not engaged and 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 of Mortgagor or any 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 the Debt except for trade payables incurred in the
ordinary course of its business of owning and operating the Mortgaged Property,
provided that such debt (i) is not evidenced by a note, (ii) is not outstanding
for more than sixty (60) days from the date such trade payables were incurred,
(iii) is with trade creditors and in amounts as are normal and reasonable under
the circumstances, and (iv) does not exceed $260,000 in the aggregate. 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 of Mortgagor, any
Guarantor or any affiliate or constituent party of Guarantor), and shall not
acquire obligations or securities of its affiliates or any constituent party.
(f) Mortgagor: (i) is solvent and agrees to give prompt notice to Mortgagee
of the insolvency or bankruptcy filing of Mortgagor or any general partner,
managing member or controlling shareholder of Mortgagor, or the death,
insolvency or bankruptcy filing of any Guarantor; and (ii) will remain solvent.
(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 amend,
27
modify or otherwise change the partnership certificate, partnership agreement,
articles of incorporation and bylaws, articles of organization or operating
agreement, trust or other organizational documents of Mortgagor.
(h) Mortgagor will maintain all of its books, records, financial statements
and bank accounts separate from those of its affiliates and any constituent
party of Mortgagor. Mortgagor will file its own tax returns when required to do
so under applicable income tax law; to the extent that the Mortgagor is not
required to do so, the Mortgagor's income and expenses are included on the tax
return of one or more of its affiliates with notations on such tax return to
indicate the separateness of the Mortgagor from its affiliates as legal
entities, and to indicate that the Mortgagor's assets and credit are not
available to satisfy the debts and obligations of its affiliates or any other
entity; 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 such 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 separate
stationery and invoices.
(j) Mortgagor 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 of Mortgagor 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 of Mortgagor, any Guarantor, or
any affiliate of any constituent party or 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 any affiliate or constituent party of Mortgagor,
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 other person or
entity or the decisions or actions respecting the daily business or affairs of
any other person or entity.
(o) Mortgagor will not permit any affiliate or constituent party of
Mortgagor independent access to its bank accounts.
(p) Mortgagor shall pay the salaries of its own employees and maintain a
sufficient number of employees in light of its contemplated business operations.
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12. Maintenance 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, which consent shall not be unreasonably withheld if such proposed
removal, demolition or alteration is conducted in the ordinary course of
business and does not materially adversely affect the economic value of the
Mortgaged Property. Notwithstanding anything contained herein to the contrary,
Mortgagee's consent shall not be required with respect to non-structural
repairs, alterations, improvements, demolition or removal of any of the
Improvements so long as such repairs, alterations, improvements, demolition or
removal do not materially adversely affect the economic value of the Mortgaged
Property and the cost of same shall not exceed $5,000,000.00. Mortgagor shall
promptly comply with all laws, orders and ordinances affecting the Mortgaged
Property, or the use thereof, provided that Mortgagor shall have the right to
contest any such law, order or ordinance or the application thereof to the
Mortgaged Property by any lawful petition, appeal, action or proceeding, subject
to the terms and provisions of Section 27 herein. Mortgagor shall promptly
repair, replace or rebuild any part of the Mortgaged Property that becomes
damaged or unreasonably worn, ordinary wear and tear excepted. Mortgagor shall
comply with all of the recommendations concerning the maintenance and repair of
the Mortgaged Property which are contained in the inspection and engineering
report which was delivered to Mortgagee in connection with the origination of
the Loan.
13. Transfer or Encumbrance of the Mortgaged Property.
(a) (i) Mortgagor acknowledges that Mortgagee has examined and relied on
the creditworthiness and experience of Mortgagor (and the creditworthiness and
experience of the parties owning the direct and indirect interests in 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 (and on the ownership of the direct and indirect
interests in Mortgagor) 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
(collectively, "Transfer") the Mortgaged Property or any part thereof or any
direct or indirect interest therein or in Mortgagor or permit the Mortgaged
Property or any part thereof or any direct or indirect interest therein or in
Mortgagor to be transferred; provided, however, notwithstanding any other
provision of this Paragraph 13 or any other provision of this Mortgage or the
Loan Documents, so long as there remains outstanding any class of publicly
traded securities of Charming traded on a nationally recognized exchange, then
(A) no transaction of any kind involving shares, securities or other beneficial
interests of Charming shall constitute a Transfer or require any consent of
Mortgagee, and (B) no transaction of any kind involving the ownership of any
direct or indirect interest in Mortgagor shall constitute a Transfer or require
any consent of Mortgagee, so long as Mortgagor shall continue to be a direct or
indirect wholly owned subsidiary of Charming or a direct or indirect wholly
owned subsidiary of one or more wholly owned subsidiaries of Charming.
29
(ii) The death of any natural person which holds any direct or indirect
interests in Mortgagor and/or the Mortgaged Property shall not constitute a
"Transfer" so long as: (i) all of the direct and/or indirect interests of such
decedent in the Mortgagor and/or the Mortgaged Property are held and remain the
property of the legal representative (i.e., the administrator or the executor)
of such decedent's estate; (ii) no Event of Default has occurred; (iii) the
Mortgaged Property continues to be managed in a manner acceptable to Mortgagee;
and (iv) within thirty (30) days of such death, Mortgagor delivers notice
thereof to Mortgagee and thereafter provides Mortgagee with such information as
may be reasonably requested by Mortgagee as to the continued management of the
Mortgaged Property. Any distribution or transfer by such legal representative of
the decedent of any of the direct and/or indirect interests of the decedent in
the Mortgagor and/or the Mortgaged Property (whether by operation of law,
devise, bequest or otherwise) shall constitute a "Transfer" and shall be subject
to the terms and provisions of this Paragraph 13 and the other applicable terms
and provisions of the Loan Documents.
(b) A Transfer within the meaning of this Paragraph 13 shall be deemed to
mean any voluntary or involuntary sale, hypothecation, assignment, pledge,
transfer, grant of a security interest in or other encumbrance or conveyance of
any direct or indirect ownership interest in Mortgagor or the Mortgaged
Property, and shall include, without limitation, the following: (i) an
installment sales agreement wherein Mortgagor agrees to sell the Mortgaged
Property or any part thereof or any direct or indirect interest in Mortgagor 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 any voluntary or involuntary sale,
hypothecation, assignment, pledge, transfer, grant of a security interest in or
other encumbrance or conveyance of, Mortgagor's right, title and interest in and
to any Leases or any Rents; (iii) if Mortgagor, Guarantor, or any partner,
member or shareholder of Mortgagor or Guarantor is a corporation, any voluntary
or involuntary sale, hypothecation, assignment, pledge, transfer, grant of a
security interest in or other encumbrance or conveyance of any direct or
indirect interest in such corporation's stock or the creation or issuance of new
stock in any of such entities (or in any entities holding any direct or indirect
interests in such entities) in one or a series of transactions (including,
without limitation, the creation of any preferred stock); and (iv) if Mortgagor,
any Guarantor or any partner, member or shareholder of Mortgagor or any
Guarantor is a limited or general partnership, joint venture or limited
liability company, the voluntary or involuntary sale, hypothecation, assignment,
pledge, transfer, grant of a security interest in or other encumbrance or
conveyance of any direct or indirect interest in such partnership, joint venture
or membership interests or the creation or issuance of new partnership, joint
venture or membership interests in any of such entities (or in any entities
holding any direct or indirect interests in such entities) in one or a series of
transactions (including, without limitation, the creation of any preferred
interests or preferred equity).
(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 a Transfer without Mortgagee's consent.
This provision shall apply to every Transfer of the Mortgaged Property
regardless of whether voluntary or not, or whether or not Mortgagee has
consented to any previous Transfer of the Mortgaged Property.
30
(d) Mortgagee's consent to one Transfer of the Mortgaged Property shall not
be deemed to be a waiver of Mortgagee's right to require such consent to any
future Transfer. Any 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 costs and expenses (including, without limitation, the cost of any
required counsel opinions relating to any requests made under this Paragraph 13,
attorneys' fees and disbursements, title search costs and title insurance
endorsement premiums) incurred by Mortgagee and Mortgagee's Servicer
(hereinafter defined) in connection with the review, approval and documentation
of any matters under this Paragraph 13 (including without limitation, the review
of any matters which do not require approval of Mortgagor but which are required
to be submitted to Mortgagee under this Paragraph 13).
(f) Mortgagee's consent to a Transfer 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 of time or both 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 obligations assumed and undertaken, as evidenced by
financial statements and other information reasonably requested by
Mortgagee, and the Transferee shall satisfy the Single Purpose
Entity/Separateness requirements of Paragraph 11 above;
(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) Mortgagee shall have received a non-consolidation opinion and
confirmation in writing from the Rating Agencies (as hereinafter defined)
to the effect that such transfer will not result in a re-qualification,
reduction or withdrawal of any rating initially assigned or to be assigned
in a Secondary Market Transaction (as hereinafter defined). 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 & ▇▇▇▇▇▇ 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
31
(vi) Mortgagee shall have received an assumption fee equal to one
percent (1%) of the Debt on the date of such assumption and the payment of,
or reimbursement for, all costs and expenses incurred by Mortgagee in
connection with such assumption (including, without limitation, reasonable
attorney's fees and costs). Mortgagee may, as a condition to evaluating any
requested consent to a Transfer, require that Mortgagor post a cash deposit
with Mortgagee in an amount equal to Mortgagee's anticipated costs and
expenses in evaluating any such request for consent.
(g) Notwithstanding anything to the contrary contained in this Paragraph
13, holders of interests in Mortgagor (or holders of interests in any entity
directly or indirectly holding an interest in Mortgagor) as of the date of this
Mortgage (the "Interest Holders") shall have the right to transfer their
interest in Mortgagor (or any entity directly or indirectly holding an interest
in Mortgagor) to another person or entity who is not an Interest Holder,
including, without limitation, to immediate family members for estate planning
purposes, without Mortgagee's consent; provided, however, that:
(i) after taking into account any prior transfers pursuant to this
Paragraph 13, whether to the proposed transferee or otherwise, no such
transfer (or series of transfers) shall result in (x) the proposed
transferee, together with all members of his/her immediate family or any
affiliates thereof, owning in the aggregate (directly, indirectly or
beneficially) more than 20% of the interests in Mortgagor (or any entity
directly or indirectly holding an interest in Mortgagor), or (y) a transfer
in the aggregate of more than 20% of the interests in Mortgagor as of the
date hereof;
(ii) no such transfer of interest shall result in a change of control
of Mortgagor (or its managing member/general partner) or the day to day
operations of the Mortgaged Property;
(iii) Mortgagor shall give Mortgagee notice of such transfer together
with copies of all instruments effecting such transfer not less than ten
(10) days prior to the date of such transfer;
(iv) no Event of Default shall have occurred and remain uncured; and
(v) the legal and financial structure of Mortgagor and its
shareholders, partners or members, and the single purpose nature and
bankruptcy remoteness of Mortgagor and its shareholders, partners or
members after such transfer, shall satisfy Mortgagee's then current
applicable underwriting criteria and requirements, including, without
limitation, the requirement, at the request of Mortgagee, to deliver
written confirmations from the Rating Agencies that such transfer or series
of transfers will not result in a qualification, downgrade or withdrawal of
the then applicable ratings.
(h) In addition to the provisions of Paragraph 13(g) above, a transfer that
occurs by inheritance, devise or bequest or by operation of law upon the death
of a natural person who is an Interest Holder shall not require the consent of
Mortgagee, provided that such transfer is to a member of the immediate family of
such Interest Holder, or a trust established for the benefit of such immediate
family member, and provided further that each of the following transfer
conditions (the "49% Transfer Conditions") are satisfied:
32
(i) after taking into account any prior transfers pursuant to this
Paragraph 13, whether to the proposed transferee or otherwise, no such
transfer (or series of transfers) shall result in (x) the proposed
transferee, together with all members of his/her immediate family or any
affiliates thereof, owning in the aggregate (directly, indirectly or
beneficially) more than 49% of the interests in Mortgagor (or any entity
directly or indirectly holding an interest in Mortgagor), or (y) a transfer
in the aggregate of more than 49% of the interests in Mortgagor as of the
date hereof;
(ii) no such transfer of interest shall result in a change of control
of Mortgagor (or its managing member/general partner) or the day to day
operations of the Mortgaged Property;
(iii) Mortgagor shall give Mortgagee notice of such transfer together
with copies of all instruments effecting such transfer not less than ten
(10) days prior to the date of such transfer;
(iv) no Event of Default shall have occurred and remain uncured; and
(v) the legal and financial structure of Mortgagor and its
shareholders, partners or members, and the single purpose nature and
bankruptcy remoteness of Mortgagor and its shareholders, partners or
members after such transfer, shall satisfy Mortgagee's then current
applicable underwriting criteria and requirements, including without
limitation the requirement, at the request of Mortgagee, to deliver written
confirmations from the Rating Agencies that such transfer or series of
transfers will not result in a qualification, downgrade or withdrawal of
the then applicable ratings.
(i) For purposes of this Paragraph 13, (i) a change of control of Mortgagor
(or its managing member/general partner) shall be deemed to have occurred if
there is any change in the identity of the individual or entities or group of
individuals or entities who have the right, by virtue of any partnership
agreement, articles of incorporation, by-laws, articles of organization,
operating agreement or any other agreement, with or without taking any formative
action, to cause Mortgagor (or its managing member/general partner) to take some
action or to prevent, restrict or impede Mortgagor from taking some action
which, in either case, Mortgagor could take or could refrain from taking were it
not for the rights of such individuals; and (ii) an "immediate family member"
shall mean a spouse or a child of any Interest Holder.
14. Estoppel Certificates and No Default Affidavits. Mortgagor shall,
within fifteen (15) days after request by Mortgagee, furnish Mortgagee with a
statement, duly acknowledged and certified, setting forth (i) the original
principal amount of the Note, (ii) the unpaid principal amount of the Note,
(iii) the rate of interest of the Note, (iv) the date installments of interest
and/or principal were last paid, (v) any offsets or defenses to the payment of
the Debt, if any, and (vi) a statement 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. Mortgagor
shall, within fifteen (15) days after request by Mortgagee, furnish Mortgagee
with a certificate 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.
33
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, upon not less
than ninety (90) days written notice to Mortgagor, to declare the Debt
immediately due and payable without liability for any Proportionate Yield
Maintenance Premium or any other prepayment penalty, premium or charge so long
as no Event of Default exists.
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, upon not
less than ninety (90) days written notice to Mortgagor, to declare the Debt
immediately due and payable.
17. Financial Statements.
(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 warehouse project, 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 Charming Calendar Quarter (as hereinafter defined) 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; and (ii) monthly and year to date operating
statements prepared for each calendar month during each Charming Calendar
Quarter, noting Net Operating Income (as defined in the Cash Management
Agreement), Gross Income from Operations (as defined in the Cash Management
Agreement), and Operating Expenses (as defined in the Cash Management Agreement)
each of which shall include an itemization of actual (not pro forma) capital
expenditures and other information necessary and sufficient under generally
accepted accounting practices to fairly represent the
34
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 Charming Calendar Quarter; and (iv) a calculation
reflecting the Debt Service Coverage Ratio (as hereinafter defined) as of the
last day of each Charming Calendar Quarter. Notwithstanding the foregoing, until
the final sale of the Loan in a Secondary Market Transaction (hereinafter
defined) has occurred, the Mortgagor shall, upon request from Mortgagee, furnish
monthly each of the items listed in the immediately preceding sentence
(collectively, the "Pre-Securitization Financials") within twenty (20) days
after the end of such month. Within ninety (90) days following the end of each
Charming Fiscal Year (as hereinafter defined), 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 Mortgagee may
request, and setting forth the financial condition and the income and expenses
for the Mortgaged Property for the immediately preceding Charming Fiscal Year
prepared by Charming and certified by a responsible officer of Charming or an
independent accounting firm or independent certified public accountant approved
by Mortgagee (which approval shall not be unreasonably withheld). Mortgagor's
annual financial statements shall include (i) a list of the tenants, if any,
occupying more than twenty (20%) percent 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: (x) a certificate executed by the chief financial officer of Mortgagor or
the general partner of Mortgagor, as applicable, stating that each such annual
financial statement presents fairly the financial condition of the Mortgaged
Property being reported upon and has been prepared in accordance with generally
accepted accounting principles consistently applied; and (y) payment to
Mortgagee of an annual fee in the amount of $250.00 in respect of Mortgagee's
review of the financial statements delivered by Mortgagor pursuant to this
Paragraph 17(b). 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. For the purposes herein, "Charming Fiscal
Year" shall mean each twelve (12) month period ending on the Saturday closest to
January 31 of every year, and "Charming Calendar Quarter" shall mean, generally,
each consecutive thirteen (13) week period within each Charming Fiscal Year.
(c) In the event that Mortgagor fails to provide Mortgagee with
Pre-Securitization Financials on or before the date they are due, and if such
failure continues for two (2) business days following notice of same from
Mortgagee, then, in addition to all other rights and remedies of Mortgagee
hereunder, Mortgagor shall pay to Mortgagee, at Mortgagee's option and in its
sole discretion, an amount equal to $1,000 for each Pre-Securitization Financial
that is not delivered.
18. Further Acts, Etc.
Mortgagor will, without expense to Mortgagee, do, execute, acknowledge and
deliver all and every such further acts, deeds, conveyances, mortgages,
assignments, subordinations, notices of assignment, Uniform Commercial Code
financing statements or continuation statements, transfers and assurances as
Mortgagee shall, from time to time,
35
reasonably require, for the better assuring, conveying, assigning, transferring,
and confirming unto Mortgagee the property and rights hereby 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 51 below.
19. 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 acknowledgment 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 (including, without limitation, documentary stamp 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 do.
20. 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 when due;
(b) subject to Mortgagor's right to contest as provided herein, if any
Other Charges or any of the Taxes (except, the failure to pay such Taxes shall
not constitute an Event of Default, if such Taxes are not paid when due solely
because Mortgagee fails to make proceeds in the Tax and Insurance Escrow Fund
available in accordance with the terms of this Mortgage, to the extent proceeds
are available in the Tax and Insurance Escrow Fund and provided there exists no
Event of Default and Mortgagor has complied with all provisions set forth herein
with respect to any such Taxes) are not paid when the same are due and payable;
(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 effects a Transfer without Mortgagee's prior written
consent or otherwise violates Paragraph 13 hereof;
(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
36
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 or if any proceeding for the dissolution or liquidation of
Mortgagor or 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 ninety (90) 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;
(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, anytime after a Securitization, Mortgagor fails to obtain a release,
lift or stay of such lien within ten (10) business days after Mortgagor obtains
actual knowledge thereof (with respect to anytime prior to a Securitization, if
Mortgagor fails to obtain a release, lift or stay of such lien within five (5)
days of actual knowledge thereof) except a lien for local real estate taxes and
assessments not then due and payable;
(j) subject to Mortgagor's right to contest as provided herein, 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; provided,
however, if such violation of laws or ordinances is reasonably susceptible of
cure, but not within such thirty (30) day period, then Mortgagor may be
permitted up to an additional ninety (90) days (or such lesser period of time as
required by applicable law) to cure such default provided that Mortgagor
diligently and continuously pursues such cure and provided further that
Mortgagor promptly provides Mortgagee with a written report and evidence
reasonably satisfactory to Mortgagee of the progress of Mortgagor's cure efforts
from time to time as requested by Mortgagee;
(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) (i) if Mortgagor shall continue to be in default under any monetary
term, covenant, or provision of the Note or any of the other Loan Documents,
beyond applicable grace or cure periods, if any, contained in those documents;
or (ii) if Mortgagor shall continue to be in default under any non-monetary
term, covenant, or provision of the Note or any of the other Loan Documents,
beyond applicable grace or cure periods, if any, contained in those documents,
provided, however, if there is no stated notice and grace period in such other
documents then
37
Mortgagor shall have the right to cure such default within five (5) days after
notice thereof, provided, further, however, that in the event such continuing
default shall also constitute a default under this Mortgage, Mortgagor shall not
be entitled to any such notice or opportunity to cure with respect to such
default as set forth in this Section 20(l) except to the extent such right to
notice and the opportunity to cure is otherwise specifically set forth in this
Mortgage (it being specifically agreed and understood that the terms and
provisions of this Mortgage shall prevail with respect to any right of Mortgagor
to notice and opportunity to cure any such default);
(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 ninety (90) days (but in no event
beyond the Maturity Date (as defined in the Note) to cure such default provided
that Mortgagor diligently and continuously pursues such cure and provided
further that Mortgagor promptly provides Mortgagee with a written report and
evidence reasonably satisfactory to Mortgagee of the progress of Mortgagor's
cure efforts from time to time as requested by Mortgagee;
(n) if without Mortgagee's prior written consent, Mortgagor enters into an
agreement relating to the management or operation of the Mortgaged Property;
(o) if Mortgagor ceases to continuously operate the Mortgaged Property or
any material portion thereof as a warehouse for any reason whatsoever (other
than temporary cessation in connection with any repair or renovation thereof
undertaken with the consent of Mortgagee); provided, however, the foregoing
shall not constitute an Event of Default so long as the Mortgaged Property shall
be and continue to remain in the condition the Mortgaged Property was in
immediately prior to the date Mortgagor ceased to continuously operate the
Mortgaged Property or any material portion thereof as a warehouse for any reason
whatsoever;
(p) Intentionally Omitted.
(q) if Mortgagor fails to comply with the terms and provisions of Paragraph
11 hereof;
(r) if the FB Distro Lease shall be terminated, modified or amended by
Mortgagor without the prior written consent of Mortgagee.
21. Late Payment Charge. If any portion of the Debt is not paid on the date
on which it is due, Mortgagor shall pay to Mortgagee upon demand an amount equal
to the lesser of five percent (5%) 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 Mortgagor for the loss of the use of such delinquent
payment, and such amount shall be secured by this Mortgage (provided, however,
that with respect that the payment due on the Maturity Date (as defined in the
Note), the aforesaid 5% sum shall be paid if the payment due on the Maturity
Date is not paid within 20 days after the Maturity Date (provided further,
however, that the foregoing shall not in any way
38
constitute any type of extension of the Maturity Date, it being understood and
agreed that, failure to make all payments due on the Maturity Date shall
constitute an Event of Default).
22. Right To Cure Defaults. Upon the occurrence and during the continuation
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, cure such Event of Default 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 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.
23. 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 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;
39
(vi) recover judgment on the Note either before, during or after any
proceedings for the enforcement of this Mortgage;
(vii) 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 foreclose this Mortgage;
(viii) 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;
(ix) 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 attorneys'
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;
(x) 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 or any related and/or affiliated party and require
Mortgagor to vacate and surrender possession to Mortgagee of the Mortgaged
Property or to such receiver and, in default thereof, evict Mortgagor or
any related and/or affiliated party by summary proceedings or otherwise;
(xi) enforce Mortgagee's rights and remedies under the Cash Management
Agreement; or
(xii) pursue such other rights and remedies as may be available at law
or in equity or under the Uniform Commercial Code.
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.
40
(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.
(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. 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 judgment 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 a power of sale or under or by virtue of judicial proceedings or of a
judgment or decree of foreclosure and sale, Mortgagee may bid for and acquire
the Mortgaged Property or any part thereof and in lieu 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 judgment by Mortgagee and no levy of an execution
under any judgment 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) 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. Mortgagee may resort to any remedies and the security
given by the Note, this Mortgage or in any of the other Loan Documents in whole
or in part, and in such portions and in such order as
41
determined by Mortgagee in its sole discretion. No such action shall in any way
be considered a waiver or election of any rights, benefits or remedies evidenced
or provided by the Note, this Mortgage or in 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 any of 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 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 its rights and
remedies under this Paragraph 23 (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 and
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.
(j) In the event the Loan is repaid in whole or in part in connection with
the exercise by Mortgagee of any of its remedies hereunder upon the occurrence
of an Event of Default (including, without limitation, a foreclosure sale of the
Property) and such repayment occurs prior to the Anticipated Repayment Date,
then Mortgagor shall be required to pay Mortgagee, in addition to such
repayment, accrued interest and all other sums due under this Mortgage, the
Proportionate Yield Maintenance Premium.
24. Right of Entry. In addition to any other rights or remedies granted
under this Mortgage, Mortgagee and its agents shall have the right to enter and
inspect the Mortgaged Property at any reasonable time during the Term. Mortgagor
agrees to pay to Mortgagee within ten (10) days after demand, an annual
inspection fee in the amount of $250.00 in respect of annual inspections of the
Mortgaged Property to be made by or on behalf of Mortgagee. Additionally, the
cost of all 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 Debt and shall bear interest thereafter until paid
at the Default Rate.
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25. Security Agreement. 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"). 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 are to become fixtures.
Information concerning the security interest herein granted may be obtained from
the parties at the addresses of the parties set forth in the first paragraph of
this Mortgage. If an Event of Default exists, 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 its 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. 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.
26. 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
its 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.
27. Contest of Certain Claims. Notwithstanding the provisions of Paragraphs
4 and 20 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
provided Mortgagee with written notice thereof 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)
43
Mortgagor shall have furnished to Mortgagee a cash deposit, or an indemnity bond
satisfactory to Mortgagee with a surety 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 any such Taxes, Other Charges or claim
(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), if in the opinion of
Mortgagee, the Mortgaged Property or any part thereof or interest therein may be
in danger of being sold, forfeited, foreclosed, terminated, cancelled 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.
28. 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.
29. Hazardous Substances. Mortgagor hereby represents and warrants to
Mortgagee that, to the best of Mortgagor's knowledge and except as disclosed in
that certain Phase I Environmental Site Assessment dated April 12, 2004 prepared
by National Assessment Corporation and previously delivered to Mortgagee in
connection with the Loan (the "Environmental Report"): (a) the Mortgaged
Property is not in violation of any local, state, federal or other governmental
authority, statute, ordinance, code, order, decree, law, permits, 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
regulations adopted in respect to the foregoing laws (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, claim or threatened 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,
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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 (including the period
prior to Mortgagor's acquisition of the Mortgaged Property), 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; (d) no Hazardous Substances are present in, on or under any
nearby real property which could migrate to or otherwise affect the Mortgaged
Property; (e) no underground storage tanks exist on any of the Mortgaged
Property, and (f) no Mold is present in the indoor air of the Mortgaged Property
at concentrations exceeding ambient air levels and no visible Mold is present on
any building materials or surfaces at the Mortgaged Property for which the EPA
Mold Guidelines (as defined below) recommends or requires removal thereof by
remediation professionals, and Mortgagor is not aware of any conditions at the
Mortgaged Property that are likely to result in the presence of Mold in the
indoor air at concentrations that exceed ambient air levels or on building
materials or surfaces that would require such removal. As used herein the term
"Mold" shall mean fungi that reproduces through the release of spores or the
splitting of cells or other means, including but not limited to mold, mildew,
fungi, fungal spores, fragments and metabolites such as mycotoxins and microbial
volatile organic compounds. 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 including without limitation any and all environmental permits, (ii) shall
not install or permit to be installed on the Premises any underground storage
tank, (iii) 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), promptly after
Mortgagor becomes aware of same, at Mortgagor's sole expense and (iv) shall
comply with all of the recommendations contained in the Environmental 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 under this Paragraph 29 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.
30. Asbestos. Mortgagor represents and warrants that, to the best of
Mortgagor's knowledge and except as disclosed in the Environmental Report, no
asbestos or any substance or material containing asbestos ("Asbestos") is
located on the Mortgaged Property. Mortgagor (i) shall not install in the
Mortgaged Property, nor permit to be installed in the Mortgaged Property,
Asbestos, (ii) shall remove, encapsulate or otherwise control any friable
Asbestos promptly upon discovery to the satisfaction of Mortgagee, at
Mortgagor's sole expense, (iii) 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. The obligations
and liabilities of Mortgagor under this Paragraph 30 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
45
to, the acquisition of the Mortgaged Property by foreclosure or a conveyance in
lieu of foreclosure.
31. Environmental Monitoring. Mortgagor shall give prompt written notices
to Mortgagee: (a) 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,
except to the extent such Hazardous Substances, direct or indirect violation of
any Environmental Laws, or such condition are disclosed in the Environmental
Report, (b) of any proceeding or inquiry by any party with respect to the
presence of any Hazardous Substance, Asbestos or Mold on, under, from or about
the Mortgaged Property, except to the extent such proceeding or inquiry is
disclosed in the Environmental Report, (c) of 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, Asbestos or Mold, except to
the extent such claims are disclosed in the Environmental Report, and (d) of
Mortgagor's discovery from and after the date hereof 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
promptly provide to Mortgagee a copy of any written notice, order or other
communication received by Mortgagor concerning or in connection with any actual
or threatened claim, proceeding, investigation or inquiry involving Hazardous
Materials, Asbestos and/or Mold on, under, in or near the Mortgaged Property.
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 or
Mold, and Mortgagor shall pay all reasonable 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, Mortgagor shall
provide (i) an inspection or audit of the Mortgaged Property satisfactory in
scope to the Mortgagee 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 satisfactory in scope to the
Mortgagee and prepared by a duly qualified engineering or consulting firm
approved by Mortgagee, indicating the presence or absence of Asbestos,
Lead-Based Paint ("LBP") or Mold on the Mortgaged Property. The cost and expense
of such audit or inspection shall be paid by Mortgagor not more frequently than
once every five (5) calendar years after the final sale of the Loan in a
Secondary Market Transaction unless an Event of Default has occurred and is
continuing or Mortgagee, in its good faith judgment, determines that reasonable
cause exists for the performance of an environmental inspection or audit of the
Mortgaged Property, then such inspections or audits described in the preceding
sentence shall be at Mortgagor's sole expense. If Mortgagor fails to provide any
inspection or audit required pursuant to this Paragraph 31 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 assessment report prepared
in connection with such inspection or audit recommends that an operations and
maintenance plan be implemented for Asbestos, LBP or any Hazardous Substance,
Mortgagor
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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 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 by 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 that
any environmental assessment report, inspection or audit reveals the presence of
Mold at concentrations exceeding ambient air levels or the presence of Mold on
any building materials or surfaces at the Mortgaged Property for which the EPA
Mold Guidelines recommends or requires removal thereof by remediation
professionals, Mortgagor shall immediately remediate the Mold and perform
post-remedial clearance sampling in accordance with the EPA Mold Guidelines.
Following abatement of the Mold, Mortgagor shall prepare and implement an
Operations and Maintenance Plan for Mold and Moisture acceptable to the
Mortgagee and in accordance with the EPA Mold Guidelines. For purposes hereof,
"EPA Mold Guidelines" shall mean the guidelines set forth in "Mold Remediation
in Schools and Commercial Buildings" prepared by the U.S. Environmental
Protection Agency.
32. 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"). 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.
(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 (including without
limitation construction of tenant improvements by Mortgagor or any of its
tenants) in any manner which would increase Mortgagor's responsibilities for
compliance with the applicable Access Laws without the prior written approval of
Mortgagee. Mortgagee may condition any such approval upon receipt of a
certificate of compliance with Access Laws from an architect, engineer, or other
person acceptable to Mortgagee.
33. Indemnification. In addition to any other indemnifications provided
herein or in the other Loan Documents, subject to the terms and provisions of
Paragraph 18 of the Note, 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
47
and expenses (including, without limitation, reasonable attorneys' 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 of persons
or loss of or damage to property occurring in, on or about the Mortgaged
Property or any part thereof or on the adjoining sidewalks, 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) any 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 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 33 shall
survive the 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.
34. Notices. Any notice, report, demand or other instrument authorized or
required to 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,
addressed to the party intended to receive the same at the following
address(es):
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Mortgagee: BankAtlantic Commercial Mortgage Capital, LLC
▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
with copies to: Kronish ▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ LLP
▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇'▇▇▇▇▇▇, Esq.
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
and: Wachovia Bank, National Association
8739 Research Dr., URP4
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
or any successor servicer of the Loan
Mortgagor: FB Distro Distribution Center, LLC
c/o Charming Shoppes, Inc.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, Esq.
Vice President- Corporate
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 40. 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 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.
35. 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. 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.
36. 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.
49
37. 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, this Mortgage shall be binding upon and inure to the benefit of
Mortgagor and Mortgagee and their respective successors and assigns forever.
38. 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.
39. Headings, Etc. The headings and captions of various paragraphs of this
Mortgage are for convenience of reference only and are not to be construed as
defining or limiting, in any way, the scope or intent of the provisions hereof.
40. 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.
41. 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, limited
liability company, partnership, trust, unincorporated association, government,
governmental authority, and 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
corresponding masculine, feminine or neuter forms, and the singular form of
nouns and pronouns shall include the plural and vice versa.
42. 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.
43. 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.
44. Waiver of Jury Trial. MORTGAGOR HEREBY AGREES NOT TO ELECT A TRIAL BY
JURY OF ANY ISSUE TRIABLE OF RIGHT BY JURY, AND FOREVER 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,
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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. MORTGAGOR IS HEREBY AUTHORIZED
TO FILE A COPY OF THIS PARAGRAPH IN ANY PROCEEDING AS CONCLUSIVE EVIDENCE OF
THIS WAIVER.
45. Miscellaneous.
(a) (i) Mortgagor covenants and agrees that during the Term, unless
Mortgagee shall have 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
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 Mortgagee may incur as a result of
Mortgagor's breach of this covenant, subject to the provisions of Paragraph 18
of the Note. 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.
(ii) Mortgagor covenants and agrees to deliver to the Mortgagee, on the
date hereof and from time to time throughout the term of the Loan, such
certifications or other evidence as requested by the Mortgagee in its sole
discretion, that (x) Mortgagor is not and does not maintain an "employee benefit
plan" as defined in Section 3(3) of ERISA, which is subject to Title I of ERISA,
or a "governmental plan" within the meaning of Section 3(32) of ERISA; (y) none
of the assets of Mortgagor constitute "plan assets" of a governmental plan for
purposes of any state statutes regulating investments and fiduciary obligations
with respect to governmental plans; and (z) one or more of the following
circumstances is true: (A) equity interests in Mortgagor are publicly offered
securities, within the meaning of 29 C.F.R. Section 2510.3-101(b)(2); (B) less
than twenty-five percent (25%) of each outstanding class of equity interests in
Mortgagor are held by "benefit plan investors" within the meaning of 29 C.F.R.
Section 2510.3-101(f)(2); or (C) Mortgagor qualifies as an "operating company",
a "venture capital operating company" or a "real estate operating company"
within the meaning of 29 C.F.R. Section 2510.3-101(c), (d) or (e).
(iii) Mortgagor will not sell, assign or transfer the Mortgaged Property,
or any portion thereof or interest therein, to any transferee that does not
execute and deliver to Mortgagee its written assumption of the obligations of
this covenant.
(iv) 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
51
prohibited transaction or obtaining an appropriate exemption) that Mortgagee 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.
(b) 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.
(c) Mortgagor represents and warrants to Mortgagee that there has not been
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 the Mortgaged Property or any part thereof or any monies paid in
performance of Mortgagor's obligations under the Note or under any of the other
Loan Documents. 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, subject to the terms of Paragraph 18 of the
Note, 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.
(d) 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.
(e) Mortgagor covenants and agrees to pay Mortgagee upon receipt of written
notice from Mortgagee, subject to the terms of Paragraph 18 of the Note, all
reasonable costs and expenses (including, without limitation, reasonable
attorneys' fees and disbursements and the costs and expenses of any title
insurance company, appraisers, engineers or surveyors) 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 contained in this Mortgage and the
other Loan Documents on its part to be performed or complied with after the date
hereof; (iv)
52
the negotiation, preparation, execution, delivery and administration of any
consents, amendments, waivers or other modifications to this Mortgage and the
other Loan Documents; (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.; and (vi) the enforcement by Mortgagee of any right and/or
remedies of Mortgagee under this Mortgage or under any of the other Loan
Documents.
(f) 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. This Mortgage has been negotiated by parties
knowledgeable in the matters contained herein, with the advice of counsel, and
is to be construed and interpreted in absolute parity, and shall not be
construed or interpreted against any party by reason of such party's preparation
of the initial or any subsequent draft of the Loan Documents or this Mortgage.
(g) This Mortgage may be executed in two or more counterparts, each of
which shall constitute an original but all of which together shall constitute
but one and the same instrument.
46. Mortgagor's Liability. Anything contained in this Mortgage to the
contrary notwithstanding, the liability of Mortgagor for the Debt and for the
performance of all other agreements, covenants and obligations contained herein
and in the Loan Documents shall be as set forth in the Note.
47. Yield Maintenance Prepayment Option.
(a) Provided no Event of Default has occurred and is continuing, at any
time after the date that is two and one-half years after the date hereof and
before the Optional Prepayment Date (as defined in the Note), Mortgagor may
prepay the principal balance of the Note, in whole but not in part, upon the
satisfaction in full of all the following conditions:
(i) not less than sixty (60) days prior written notice shall be given
to Mortgagee specifying a Payment Date (as defined in the Note) on which
the prepayment is to be made (the "Tender Date");
(ii) the principal balance under the Note and all accrued and unpaid
interest and all other sums due under the Note and under the other Loan
Documents up to the Tender Date shall be paid in full;
(iii) all out-of-pocket third party costs and expenses incurred by
Mortgagee or its agents (not to exceed $40,000 in the aggregate provided no
Event of Default exists) in connection with such prepayment, shall be paid
in full; and
(iv) Mortgagor shall pay to Mortgagee on or prior to the Tender Date a
prepayment consideration (the "Prepayment Consideration") in an amount
equal to the greater of: (A) one percent (1%) of the principal amount of
the Note being prepaid; and (B) the present value of a series of payments
each equal to the Payment Differential (as hereinafter defined) and payable
on each Payment Date over the remaining original term of the Note until the
Anticipated Repayment Date Date on the Anticipated Repayment
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Date, discounted at the Reinvestment Yield (hereinafter defined) for the
number of months remaining from the Tender Date to each such Payment Date
until the Anticipated Repayment Date and to the Anticipated Repayment Date.
The term "Reinvestment Yield" as used herein shall be equal to the (i)
yield on the U.S. Treasury issue (primary issue) with the same maturity
date as the Anticipated Repayment Date; or (ii) if no such U.S. Treasury
issue is available, then the interpolated yield on the two U.S. Treasury
issues (primary issues) with maturity dates (one prior to and one
following) that are closest to the Anticipated Repayment Date, with each
such yield being based on the bid price for such issue as published in The
Wall Street Journal on the date that is fourteen (14) days prior to the
Tender Date set forth Mortgagor's notice of repayment (or, if such bid
price is not published on that date, the next preceding date on which such
bid price is so published) and converted to a monthly compounded nominal
yield. The term "Payment Differential" as used herein shall be equal to (x)
the Interest Rate minus the Reinvestment Yield, divided by (y) twelve (12)
and multiplied by (z) the principal sum outstanding and payable hereunder
on such Tender Date after application of the Monthly Debt Service Payment
Amount (if any) due and actually paid on such Tender Date, provided that
the Payment Differential shall in no event be less than zero. In no event,
however, shall Mortgagee be required to reinvest any prepayment proceeds in
U.S. Treasury obligations or otherwise. Mortgagee shall notify Mortgagor of
the amount, and the basis of determination, of the required Prepayment
Consideration, and, provided that Mortgagee shall have in good faith
applied the applicable formula described above, Mortgagor shall not have
the right to challenge the calculation or the method of calculation set
forth in the any such statement in the absence of manifest error.
Mortgagor acknowledges and agrees that such Prepayment Consideration
represents a reasonable and fair estimate of compensation for the loss that
Mortgagee may sustain from the prepayment of the Note. Mortgagor acknowledges
and agrees that it has no right to prepay the Note without paying the Prepayment
Consideration except as specifically provided herein. If any notice of
prepayment is given, the principal balance of the Note and the other sums
required under this paragraph shall be due and payable on the Tender Date. Payee
shall not be obligated to accept any prepayment of the principal balance of the
Note unless (a) the payment is accompanied by the required Prepayment
Consideration and all other sums required under this paragraph and (b) the
prepayment is made on the applicable Tender Date.
48. Yield Maintenance. In the event of an Unscheduled Loan Prepayment (as
defined below) where Mortgagor is required, pursuant to the provisions of
Paragraph 3(c)(ii), Paragraph 8(d) or Paragraph 23(j), to pay a Proportionate
Yield Maintenance Premium, the following terms shall have the following
meanings:
(a) "Proportionate Yield Maintenance Premium" shall mean the product of (a)
the Prepayment Consideration multiplied by (b) the Prepayment Percentage.
(b) "Prepayment Percentage" shall mean, with respect to any Unscheduled
Loan Prepayment, the percentage of the then current outstanding principal
balance of the Note that is being prepaid.
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(c) "Unscheduled Loan Prepayment" shall mean any principal prepayment of
the Note prior to the Anticipated Repayment Date other than the portion of each
Monthly Debt Service Payment Amount (as defined in the Note) which comprises a
principal payment. An Unscheduled Loan Prepayment shall include, without
limitation, (i) a paydown of the Loan (in whole or in part) prior to the
Anticipated Repayment Date as a result of an Insured Casualty pursuant to
Paragraph 3(c)(ii) of this Mortgage if an Event of Default, or an event which,
with notice and/or the passage of time or both, would constitute an Event of
Default, has occurred (but not otherwise), (ii) a paydown of the Loan (in whole
or in part) prior to the Anticipated Repayment Date as a result of a
Condemnation pursuant to Paragraph 8(d) of this Mortgage if an Event of Default,
or an event which, with notice and/or the passage of time or both, would
constitute an Event of Default, has occurred (but not otherwise) and (iii) a
paydown of the Loan (in whole or in part) in connection with the exercise by
Mortgagee of any of its remedies under this Mortgage upon the occurrence of an
Event of Default, including, without limitation, a foreclosure sale of the
Mortgaged Property.
49. Cash Management Agreement. On or before the date hereof, Mortgagor
covenants and agrees at Mortgagor's sole cost and expense to enter into one or
more servicing account agreements, lockbox servicing agreements and/or cash
management agreements acceptable to Mortgagee among Mortgagor, Manager, (as
defined below) Mortgagee and, as applicable, one or more financial institutions
(together with any modification, amendment, substitution or replacement thereof,
hereinafter collectively referred to as the "Cash Management Agreement"). The
Cash Management Agreement shall provide, among other things (i) when and in what
manner all Rents and other sums collected from, or arising with respect to, the
Mortgaged Property shall be deposited directly into a clearing account
established in connection with such Cash Management Agreement, and (ii) the
order and priority of the application of such funds.
50. Annual Budgets. For the Charming Fiscal Year commencing in the year
2014 and for each Charming Fiscal Year thereafter and anytime an Initial
Charming Rating Drop or Second Charming Rating Drop occurs until the occurrence
of a Charming Rating Drop Termination, Mortgagor shall submit to Mortgagee for
Mortgagee's written approval an annual budget (an "Annual Budget") not later
than sixty (60) days prior to the commencement of such Charming Fiscal Year, in
form satisfactory to Mortgagee setting forth in reasonable detail budgeted
monthly operating income and monthly operating capital and other expenses for
the Mortgaged Property. Each Annual Budget shall contain, among other things,
limitations on management fees, third party service fees, and other expenses as
Mortgagee may reasonably require. Mortgagee shall have the right to approve such
Annual Budget and in the event that Mortgagee objects to the proposed Annual
Budget submitted by Mortgagor, Mortgagee shall advise Mortgagor of such
objections within fifteen (15) days after receipt thereof (and deliver to
Mortgagor a reasonably detailed description of such objections) and Mortgagor
shall within ten (10) days after receipt of notice of any such objections revise
such Annual Budget and resubmit the same to Mortgagee. Mortgagee shall advise
Mortgagor of any objections to such revised Annual Budget within ten (10) days
after receipt thereof (and deliver to Mortgagor a reasonably detailed
description of such objections) and Mortgagor shall revise the same in
accordance with the process described in this Paragraph 50 until Mortgagee
approves an Annual Budget, provided, however, that if Mortgagee shall not advise
Mortgagor of its objections to any proposed Annual Budget within the applicable
time period set forth in this paragraph, then such
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proposed Annual Budget shall be deemed approved by Mortgagee. Each such Annual
Budget approved by Mortgagee in accordance with terms hereof shall hereinafter
be referred to as an "Approved Annual Budget". Until such time that Mortgagee
approves a proposed Annual Budget, the most recently Approved Annual Budget
shall apply; provided that, such Approved Annual Budget shall be adjusted to
reflect actual increases in real estate taxes, insurance premiums and utilities
expenses.
51. Sale of Notes and Securitization.
(a) 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" or "Securitization"). Mortgagor shall cooperate with Mortgagee 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, or (D) any other material economic term of the Loan.
Mortgagor shall provide such 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, subject to applicable securities and other laws and
regulations to which Mortgagor or any of its affiliates may be subject.
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, subject to the
terms of Paragraph 18 of the Note, 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.
(b) In the event that the provisions of this Mortgage or any Loan Documents
require the receipt of written confirmation from each Rating Agency with respect
to the ratings on the Securities, or, in accordance with the terms of the
transaction documents relating to a
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Secondary Market Transaction, such a rating confirmation is required in order
for the consent of the Mortgagee to be given, the Mortgagor shall pay all of the
costs and expenses of the Mortgagee, Servicer and each Rating Agency in
connection therewith, and, if applicable, shall pay any fees imposed by any
Rating Agency as a condition to the delivery of such confirmation.
52. Intentionally Omitted Prior to Execution.
53. Intentionally Omitted Prior to Execution.
54. 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.
55. Management of the Mortgaged Property. If Mortgagor enters into any
subsequent agreement relating to the operation and management of the Mortgaged
Property approved by Mortgagee, Mortgagor shall maintain such agreement in full
force and effect and timely perform all of Mortgagor's obligations thereunder
and enforce performance of all obligations of the Manager thereunder, and not
permit the termination or amendment of such subsequent agreement relating to the
operation and management of the Mortgaged Property approved by Mortgagee, unless
the prior written consent of Mortgagee is first obtained. Upon the occurrence of
an Event of Default, Mortgagor at Mortgagee's request made at any time while
such Event of Default continues, shall terminate any such subsequent agreement
relating to the operation and management of the Mortgaged Property approved by
Mortgagee and replace the manager thereunder with a manager approved by
Mortgagee. In addition, if within forty-five (45) days before the end of each
calendar quarter Mortgagor does not provide evidence of the achievement of a
Debt Service Coverage Ratio of not less than 1.10 (the "Required DSCR")
Mortgagor, at Mortgagee's request made at any time after such Required DSCR is
not maintained, shall terminate any such subsequent agreement relating to the
operation and management of the Mortgaged Property approved by Mortgagee, and
replace the manager thereunder with manager approved by Mortgagee or if no
management agreement is then in place enter into a management agreement
acceptable to Mortgagee with a manager approved by Mortgagee. All references in
this Mortgage and in the Loan Documents to "Debt Service Coverage Ratio" shall
mean the debt service coverage ratio of the Mortgaged Property calculated by
Mortgagee in its sole discretion by dividing the underwritten net cash flow of
the Mortgaged Property (as determined by Mortgagee in its sole discretion based
upon Mortgagee's then current underwriting standards and practices) by the
actual annual principal and interest payable under the Note.
PART II
SPECIAL STATE PROVISIONS
56. Principles of Construction. In the event of any inconsistencies between
the terms and conditions of this Part II and the terms and conditions of this
Mortgage, the terms and conditions of this Part II shall control and be binding.
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57. Maturity Date. The Debt shall mature on or before October 11, 2019, or
earlier subject to the terms and conditions of the Note and this Mortgage.
58. Disclosure Law. Mortgagor has complied, and will comply, with the
Indiana Responsible Property Transfer Law, Ind. Code 13-25-3-1 et seq. (the
"Disclosure Law"), by (A) the completion and delivery to Mortgagee of a
disclosure document in the form required by the Disclosure Law (the "Disclosure
Document"), (B) the timely recording of the Disclosure Documents in the Office
of the Recorder of the County in which the Mortgaged Property is located, and
(C) the timely filing of the Disclosure Document in the Office of the Indiana
Department of Environmental Management; or Mortgagor has determined after
diligent investigation, and Mortgagor hereby certifies to Mortgagee, that the
Mortgaged Property does not constitute "property" under the Disclosure Law, and
therefore, delivery, filing and recording of a Disclosure Document is not
required, because:
(a) the Mortgaged Property does not contain (1) or more facilities that are
subject to reporting under Section 312 of the Federal Emergency Planning and
Community Right-to-Know Act of 1986 (42 U.S.C. 11022);
(b) the Mortgaged Property is not the site of one (1) or more underground
storage tanks for which notification is required under: (A) 42 U.S.C. 6991(a)
and (B) Ind. Code 13-23-1-2(c)(8)(A); or
(c) the Mortgaged Property is not listed in the Comprehensive Environmental
Response, Compensation and Liability Information System (CERCLIS) in accordance
with Section 116 of CERCLA (42 U.S.C. 9616).
59. Environmental Liens. Neither Mortgagor nor, to the best of Mortgagor's
knowledge, after diligent inquiry and investigation, any tenant of the Mortgaged
Property has received a notice of intention to hold a lien as may be imposed
under Ind. Code 13-25-4-1 et seq..
60. Applicable Law. Notwithstanding anything in this Mortgage or the Loan
Documents to the contrary, Mortgagee shall be entitled to all rights and
remedies that a mortgagee would have under Indiana law or in equity including,
but not by way of limitation, Ind. Code 32-30-10, Mortgage Foreclosure Actions,
Ind. Code 32-30-5, Receiverships, and the Revised Uniform Commercial Code Ind.
Code 26-1-9.1 (the "UCC") (such laws, as amended, modified and/or recodified
from time to time are collectively referred to herein collectively as, the
"Applicable Law"). In the event of any inconsistency between the provisions of
this Mortgage and the provisions of Applicable Law, the provisions of Applicable
Law shall take precedence over the provisions of this Mortgage, but shall not
invalidate or render unenforceable any other provisions of this Mortgage that
can be construed in a manner consistent with Applicable Law. Conversely, if any
provision of this Mortgage shall grant to Mortgagee any rights or remedies upon
default of the Mortgagor which are more limited than the rights or remedies that
would otherwise be vested in the Mortgage under Applicable Law in the absence of
said provision, Mortgagee shall be vested with the rights and remedies granted
under Applicable Law. Notwithstanding any provision in this Mortgage relating to
a power of sale or other provision for sale of the Mortgaged Property upon
default other than under a judicial
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proceeding, any sale of the Mortgaged Property pursuant to this Mortgage will be
made through a judicial proceeding, except as otherwise may be permitted under
the UCC.
61. Unenforceable Remedies. To the extent Applicable Law limits: (i) the
availability of the exercise of any of the remedies set forth in the Mortgage,
including without limitation the remedies involving a power of sale on the part
of Mortgagee and the right of Mortgagee to exercise self-help in connection with
the enforcement of the terms of this Mortgage, or (ii) the enforcement of
waivers and indemnities made by Mortgagor, such remedies, waivers, or
indemnities shall be exercisable or enforceable, any provisions in this Mortgage
to the contrary notwithstanding, if, and to the extent, permitted by the laws in
force at the time of the exercise of such remedies or the enforcement of such
waivers or indemnities without regard to whether such remedies, waivers or
indemnities were enforceable at the time of the execution and delivery of this
Mortgage.
62. No Waiver of Right to Seek Deficiency. Anything contained in Ind. Code.
32-29-7-5 to the contrary notwithstanding, no waiver made by Mortgagor in this
Mortgage or in any of the other terms and provisions of the Loan Documents shall
constitute the consideration for or be deemed to be a waiver or release by
Mortgagee or any judgment holder of the Debt secured by the Mortgage of the
right to seek a deficiency judgment against the Mortgagor or any other person or
entity who may be personally liable for the Debt hereby secured, which right to
seek a deficiency judgment is hereby reserved, preserved and retained by
Mortgagee for its own behalf and its successors and assigns, subject to the
provisions of Paragraph 18 of the Note and Paragraph 46 of this Mortgage.
63. Future Advances. Notwithstanding anything contained in this Mortgage or
the Loan Documents to the contrary, this Mortgage shall secure: (i) a maximum
principal amount of $26,000,000.00, exclusive of any items described in (ii)
below, including any additional advances made from time to time after the date
hereof pursuant to the Loan Documents whether made as part of the Debt secured
hereby or made at the option of the Mortgagee, (ii) all other amounts payable by
Mortgagor, or advanced by Mortgagee for the account, or on behalf, of Mortgagor,
pursuant to the Loan Documents, including amounts advanced with respect to the
Mortgaged Property for the payment of taxes, assessments, insurance premiums and
other costs and impositions incurred for the protection of the Mortgaged
Property to the same extent as if the future Debt and advances were made on the
date of execution of the Mortgage; and (iii) future modifications, extensions,
and renewals of any Loan Documents or Debt secured by this Mortgage. Pursuant to
Ind. Code 32-29-1-10, the lien of this Mortgage with respect to any future
advances, modifications, extensions, and renewals referred to herein and made
from time to time shall have the same priority to which this Mortgage otherwise
would be entitled as of the date this Mortgage is executed and recorded without
regard to the fact that any such future advance, modification, extension, or
renewal may occur after the Mortgage is executed. Such maximum principal amount
is stated herein for the purpose of any applicable future advance laws and is
not deemed a commitment by Mortgagee to make any future advances.
64. Reimbursable Costs. Notwithstanding anything to the contrary contained
in this Mortgage, but subject to the provisions of Paragraph 18 of the Note and
Paragraph 46 of this Mortgage, all costs incurred by Mortgagee pursuant to this
Mortgage, to the extent reimbursable under Applicable Law, whether or not
enumerated in this Mortgage, shall be added to the Debt
59
secured by this Mortgage or by the judgment of foreclosure, which Reimbursable
Costs may include, without limitation, all costs and expenses which may be paid
or incurred by or on behalf of Mortgagee in any proceeding to enforce this
Mortgage or foreclose upon the Mortgaged Property, all expenses of any
environmental site assessments, environmental audits, environmental remediation
costs, appraisals, surveys, engineering studies, wetlands delineations, flood
plain studies, and any other similar testing or investigation deemed necessary
or advisable by Mortgagee incurred in preparation for, contemplation of or in
connection with the enforcement of this Mortgage and/or the collection of the
debt and for attorneys' fees, appraiser's fees, receiver's costs and expenses,
insurance, taxes, outlays for documentary and expert evidence, expenses and
costs for preservation of the Mortgages Property, stenographer's charges,
publication costs and costs of procuring all abstracts of title, title searches
and examination, guarantee policies, and similar data and assurances with
respect to title as may deem to be reasonably necessary either to prosecute such
suit or to evidence to bidders at any foreclosure sale which may be had pursuant
to such decree the true condition of the title to or value of the Mortgaged
Property or for any other reasonable purpose. The amount of any such
Reimbursable Costs which may be paid or incurred after the decree or judgment
for sale is entered may be estimated and the amount of such estimate may be
allowed and included as additional Debt secured hereby in the foreclosure
judgment or decree for or sale. The phrases "attorneys fees", "legal fees" and
counsel fees" when used herein or in the other Loan Documents shall include any
and all attorneys', paralegals' and law clerks' fees and disbursements,
including, but not limited to, fees and disbursements at the pre-trial, trial
and appellate levels incurred or paid by Mortgagee in protecting its interest in
the Mortgaged Property, or any part thereof and enforcing its rights hereunder.
65. UCC Remedies. It is the intention of the parties hereto that this
Mortgage shall constitute a security agreement within the meaning of Applicable
Law. If an Event of Default shall occur under this Mortgage, then in addition to
having any other right or remedy available at law or in equity, Mortgagee shall
have the option pursuant to Applicable Law of either (i) proceeding under
Applicable Law and exercising such rights and remedies as may be provided to a
secured party by Applicable Law with respect to all or any portion of the
Collateral that is not real property (including, without limitation, taking
possession of and selling such property) or (ii) treating such Collateral as
real property and proceeding with respect to both the real and personal property
constituting the Mortgaged Property in accordance with Mortgagee's rights,
powers and remedies with respect to the real property (in which event the
default provisions of the UCC shall not apply).
66. Security Interest - Rents. Without limiting the scope of the assignment
of Rents contained in this Mortgage, the assignment of Rents set forth herein
shall constitute an assignment of rents as set forth in Ind. Code 32-21-4-2 and
thereby creates, and Mortgagor hereby grants to Mortgagee, a security interest
in the Rents that will be perfected upon the recording of this Mortgage.
67. Consent to Receiver. Subject to the terms and provisions of this
Mortgage, Mortgagor hereby irrevocably consents to the appointment of a
receiver, which receiver, when duly appointed, shall have all of the powers and
duties of receivers pursuant to Applicable Law.
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68. Release of Mortgage. Upon payment and performance of the Debt secured
hereby, or otherwise in accordance with the provisions of the Note, Mortgagee,
upon written request, and at the expense, of Mortgagor, will execute and deliver
such proper instruments of release and satisfaction as may be reasonably be
requested to evidence such release, and any such instrument, when duly executed
by Mortgagee and duly recorded in the place where this Mortgage is recorded,
shall conclusively evidence the release of this Mortgage; provided, however, any
of the terms and provisions of the Mortgage that are intended to survive, shall
nevertheless survive the release or satisfaction of the Mortgage whether
voluntarily granted by Mortgagee, as a result of a judgment upon judicial
foreclosure of this Mortgage or in the event a deed in lieu of foreclosure is
granted by Mortgagor to Mortgagee.
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, Mortgagor has executed this Mortgage, Assignment of
Leases and Rents and Security Agreement the day and year first above written.
MORTGAGOR:
FB DISTRO DISTRIBUTION CENTER, LLC,
a Delaware limited liability company
By: FB Distro, Inc.,
an Indiana corporation,
its Sole Member
By:_________________________
Name:
Title:
ACKNOWLEDGMENT
COMMONWEALTH OF PENNSYLVANIA:
COUNTY OF ________________________:
The foregoing instrument was acknowledged before me this ___ day of
October, 2004, by _________________________, who acknowledged himself/herself to
be the _____________ of FB Distro, Inc., an Indiana corporation, the sole member
of FB Distro Distribution Center, LLC, a Delaware limited liability company, and
that he/she as such officer, being authorized to do so, executed the foregoing
instrument, and acknowledged that he/she executed the same for the purposes
therein contained.
In witness whereof, I hereunto set my hand and official seal.
___________________________
Notary Public
My Commission Expires:
THIS INSTRUMENT WAS PREPARED BY:
▇▇▇▇▇▇ ▇. ▇'▇▇▇▇▇▇, Esq.
Kronish ▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ LLP
▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
EXHIBIT A
LEGAL DESCRIPTION