EXHIBIT 10.2
OPEN-END MORTGAGE,
ASSIGNMENT OF LEASES AND PROFITS, SECURITY AGREEMENT
AND FIXTURE FILING
from
SOLON HOTEL LLC
as Mortgagor
to
GMAC COMMERCIAL MORTGAGE CORPORATION
as Mortgagee
Dated: July 7, 1997
PREPARED BY AND AFTER RECORDATION RETURN TO:
▇▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇.▇.
Suite 700, East Tower
Washington, D.C. 20007
Attn: ▇▇▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇, Esq.
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THE MAXIMUM AMOUNT OF PRINCIPAL TO BE SECURED
AT ANY ONE TIME UNDER THIS MORTGAGE
IS $4,500,000.00
TABLE OF CONTENTS
Section Page
1. DEFINED TERMS........................................................ 5
2. THE LOAN..............................................................14
3. WARRANTY OF TITLE.................................................... 14
4. INSURANCE............................................................ 14
5. PAYMENT OF TAXES..................................................... 20
6. ESCROW FUND.......................................................... 20
7. COMPLIANCE WITH LAWS................................................. 21
8. CONDEMNATION......................................................... 22
9. LEASES AND PROFITS................................................... 25
10. REPRESENTATIONS CONCERNING LOAN..................................... 26
11. SINGLE PURPOSE ENTITY; AUTHORIZATION................................ 31
12. MAINTENANCE OF PROPERTY............................................. 33
13. TRANSFER OR ENCUMBRANCE OF THE PROPERTY............................. 34
14. ESTOPPEL CERTIFICATES: AFFIDAVITS................................... 35
15. CHANGES IN THE LAWS REGARDING TAXATION.............................. 36
16. NO CREDITS ON ACCOUNT OF THE DEBT................................... 36
17. DOCUMENTARY STAMPS.................................................. 37
18. CONTROLLING AGREEMENT............................................... 37
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19. BOOKS AND RECORDS................................................... 37
20. PERFORMANCE OF OTHER AGREEMENTS..................................... 38
21. FURTHER ASSURANCES.................................................. 39
22. RECORDING OF MORTGAGE............................................... 40
23. REPORTING REQUIREMENTS.............................................. 41
24. EVENTS OF DEFAULT................................................... 41
25. LATE PAYMENT CHARGE: SERVICING FEES................................ 43
26. RIGHT TO CURE DEFAULTS.............................................. 44
27. REMEDIES............................................................ 44
28. RIGHT OF ENTRY...................................................... 48
29. SECURITY AGREEMENT.................................................. 48
30. ACTIONS AND PROCEEDINGS............................................. 49
31. WAIVER OF SETOFF AND COUNTERCLAIM................................... 49
32. CONTEST OF CERTAIN CLAIMS........................................... 49
33. RECOVERY OF SUMS REQUIRED TO BE PAID................................ 50
34. MARSHALING AND OTHER MATTERS........................................ 50
35. HAZARDOUS SUBSTANCES................................................ 50
36. ASBESTOS............................................................ 51
37. ENVIRONMENTAL MONITORING............................................ 52
38. MANAGEMENT OF THE PROPERTY.......................................... 53
39. HANDICAPPED ACCESS.................................................. 55
40. ERISA............................................................... 55
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41. INDEMNIFICATION..................................................... 55
42. LIMITATIONS ON RECOURSE............................................. 57
43. NOTICE.............................................................. 60
44. AUTHORITY........................................................... 60
45. WAIVER OF NOTICE.................................................... 60
46. REMEDIES OF MORTGAGOR............................................... 61
47. SOLE DISCRETION OF MORTGAGEE........................................ 61
48. NON-WAIVER.......................................................... 61
49. NO ORAL CHANGE...................................................... 62
50. LIABILITY........................................................... 62
51. INAPPLICABLE PROVISIONS............................................. 62
52. SECTION HEADINGS.................................................... 62
53. COUNTERPARTS........................................................ 62
54. HOMESTEAD........................................................... 62
55. ASSIGNMENTS......................................................... 63
56. SUBMISSION TO JURISDICTION.......................................... 63
57. SERVICE OF PROCESS.................................................. 63
58. WAIVER OF JURY TRIAL................................................ 63
59. CHOICE OF LAW....................................................... 64
60. TIME OF ESSENCE..................................................... 64
61. SURVIVAL............................................................ 64
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62. NO THIRD-PARTY BENEFICIARY RIGHTS CREATED........................... 65
63. DISCHARGE........................................................... 65
64. MAINTAINING PRIORITY OF MORTGAGE.................................... 65
65. USURY SAVINGS....................................................... 65
66. COSTS............................................................... 66
67. LOCAL LAW PROVISIONS.................................................. 66
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OPEN-END MORTGAGE,
ASSIGNMENT OF LEASES AND PROFITS, SECURITY AGREEMENT
AND FIXTURE FILING
This OPEN-END MORTGAGE, ASSIGNMENT OF LEASES AND PROFITS, SECURITY
AGREEMENT AND FIXTURE FILING (this "MORTGAGE") is dated as of the 7th day of
July, 1997 from SOLON HOTEL LLC, a New York limited liability company, having an
address at c/o Essex Partners Inc., ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇
▇▇▇▇▇ ("MORTGAGOR") to GMAC COMMERCIAL MORTGAGE CORPORATION, a California
corporation, having an address at ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇ ("MORTGAGEE").
MORTGAGOR, in consideration of the indebtedness herein recited, and in
consideration of the sum of Ten and No/100 Dollars ($10.00) in hand paid by
Mortgagee, the receipt of which is hereby acknowledged, does hereby irrevocably
mortgage, grant, bargain, sell, pledge, assign, warrant, transfer and convey to
Mortgagee, its successors and assigns forever, all of Mortgagor's right, title
and interest in and to certain lands in Cuyahoga County, Ohio, more particularly
described in EXHIBIT A attached hereto and made a part hereof (collectively, the
"LAND"; together with all of the following described property, collectively, the
"PROPERTY");
TOGETHER WITH all machinery, furnishings and equipment including,
without limitation, all furnaces, boilers, oil burners, radiators and piping,
coal stokers, refrigeration and sprinkler systems, wash-tubs, sinks, gas and
electric fixtures, awnings, window shades, kitchen cabinets, plants and
shrubbery and all other equipment and machinery, appliances, fittings and
fixtures of every kind in or used in the operation of the Land and the
Improvements, together with any and all replacements thereof and additions
thereto, fixtures (including, without limitation, all heating, air conditioning,
plumbing and bathroom, lighting, communications and elevator fixtures),
inventory and articles of personal property and accessions thereof and renewals,
replacements thereof and substitutions therefor (including, without limitation,
beds, bureaus, chiffonniers, chests, chairs, desks, lamps, mirrors, bookcases,
tables, rugs, carpeting, drapes, draperies, curtains, shades, venetian blinds,
screens, paintings, hangings, pictures, divans, couches, luggage carts, luggage
racks, stools, sofas, chinaware, linens, pillows, blankets, glassware,
foodcarts, cookware, dry cleaning facilities, dining room wagons, keys or other
entry systems, bars, bar fixtures, liquor and other drink dispensers, icemakers,
radios, clock radios, television sets, intercom and paging equipment, electric
and electronic equipment, dictating equipment, private telephone systems,
medical equipment, potted plants, heating, lighting and plumbing fixtures, fire
prevention and extinguishing apparatus, cooling and air conditioning systems,
elevators, escalators, fittings, plants, apparatus, stoves, ranges,
refrigerators, laundry machines, tools, machinery, engines, dynamos, motors,
boilers, incinerators, switchboards, conduits, compressors, vacuum cleaning
systems, floor cleaning, waxing and
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polishing equipment, call systems, brackets, electrical signs, bulbs, bells,
fuel, conveyors, cabinets, lockers, shelving, spotlighting equipment,
dishwashers, garbage disposals, washer and dryers), other customary equipment
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 Land and the buildings, structures
and improvements now or hereafter erected or located thereon or appurtenant
thereto, including without limitation that "Hampton Inn" hotel, the construction
of which is nearing completion, on the Land and all related amenities and
improvements (collectively, the "IMPROVEMENTS"), and usable in connection with
the present or future operation and occupancy of the Land and the Improvements
and all 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 Land and the Improvements, or appurtenant thereto, or usable in
connection with the present or future operation, enjoyment and occupancy of the
Land and the Improvements (collectively, the "PERSONAL PROPERTY"), and the
right, title and interest of Mortgagor in and to any of the Personal Property
which may be subject to any security interests, as defined in the Uniform
Commercial Code, as adopted and enacted by the state or states where any of the
Property is located (the "UNIFORM COMMERCIAL CODE"), superior in lien to the
lien of this Mortgage and all proceeds and products of the above; Mortgagor
acknowledges that, as of the date hereof, it has entered into a certain letter
agreement with Mortgagee (the "FF&E SIDE LETTER") confirming, among other
things, that after Mortgagor has acquired all Personal Property necessary to
operate the Property, it shall execute such additional security agreements,
UCC-1 financing statements and other instruments as may be reasonably requested
by Mortgagee to reflect that Mortgagee holds a valid, perfected first-lien
security interest in all such Personal Property;
TOGETHER WITH all accounts, escrows (including, without limitation, the
Replacement Reserve Account and the Escrow Fund), documents, instruments,
chattel paper, claims, deposits and general intangibles of Mortgagor, as such
terms are defined in the Uniform Commercial Code, and all agreements, contracts,
certificates, instruments, and other documents, now or hereafter entered into,
including, without limitation, the Management Agreement and the License
Agreement (to the extent permitted thereby), and all proceeds, substitutions and
replacements thereof, all of Mortgagor's interest in contract rights, insurance
proceeds, security deposits, franchises, books, records, appraisals,
architectural and engineering plans, specifications, environmental and other
reports relating to the Land, trademarks (to the extent assignable), trade names
(to the extent assignable), servicemarks, logos, copyrights, goodwill, symbols,
permits, licenses (to the extent assignable), approvals, actions, tenant or
guest lists, advertising materials and telephone exchange numbers as identified
in such materials, all refunds, rebates or credits in connection with a
reduction in real estate taxes and assessments charged against the Land as a
result of tax certiorari or any applications or proceedings for reduction, and
causes of action which now or hereafter relate to, are derived from or are used
in connection with the Land, or the use, operation, maintenance, occupancy or
enjoyment thereof or the conduct of any business or activities thereon
(collectively, "INTANGIBLES");
TOGETHER WITH all leases and other agreements affecting the use,
enjoyment or occupancy of the Land or the Improvements heretofore or hereafter
entered into (including,
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without limitation, subleases, licenses, concessions, tenancies and other
occupancy agreements covering or encumbering all or any portion of the Land),
together with any guarantees, supplements, amendments, modifications, extensions
and renewals of any thereof, and all additional remainders, reversions, and
other rights and estates appurtenant thereto, as the same may be amended from
time to time (collectively, "LEASES");
TOGETHER WITH all of Mortgagor's right, title and interest in
and to the Operating Agreements (defined herein), together with any amendments,
modifications, extensions and renewals of any thereof, and all subordinations,
estoppels and other rights in connection therewith;
TOGETHER WITH all agreements (including, without limitation, the
Management Agreement, the License Agreement and all agreements now or hereafter
entered into for the use and enjoyment of all food, liquor and other beverage
licenses), contracts, certificates, instruments, franchises, permits, licenses
(including, without limitation, food, liquor and other beverage licenses, to the
extent assignable), plans, specifications and other documents, now or hereafter
entered into, together with any amendments, modifications, extensions and
renewals of any thereof, and all subordinating estoppel rights therein and
thereto, respecting or pertaining to the use, occupation, construction,
management or operation of the Land and any part thereof and any Improvements or
respecting any business or activity conducted on the Land and any part thereof
and all right, title and interest of Mortgagor therein and thereunder,
including, without limitation, the right, while an Event of Default remains
uncured, to receive and collect any sums payable to Mortgagor thereunder;
TOGETHER WITH all of Mortgagor's right, title and interest in and to
any easements and appurtenances affecting the Property;
TOGETHER WITH the right, in the name and on behalf of Mortgagor, to
commence any action or proceeding to protect the interest of Mortgagee in the
Property and while an Event of Default remains uncured, to appear in and defend
any action or proceeding brought with respect to the Property;
TOGETHER WITH all (i) income, rents, room rates, receipts, issues,
profits, revenues (including all oil and gas or other mineral royalties and
bonuses), deposits and other benefits now due or which may become due or to
which Mortgagor is now or hereafter may become entitled or which Mortgagor may
demand or claim arising or issuing from or out of the operation of the business
at the Land or any part thereof and all amounts paid as rents for such Land or
the fees, charges, accounts or other payments for the use or occupancy of rooms
and other public facilities in hotels, motels or other lodging facilities,
including, without limitation, all revenues and credit card receipts collected
from guest rooms, restaurants, bars, mini-bars, meeting rooms, banquet rooms,
recreational facilities and otherwise; and (ii) receivables, customer
obligations, installment payment obligations and other payment obligations
whether already accrued, now accruing or to accrue in the future for the
occupancy or use of the Property or any part thereof, or arising or created out
of the sale, lease, sublease, license, concession or other grant of the right of
the possession, use or
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occupancy of all or any portion of the Land or personalty located thereon, or
the rendering of services by Mortgagor or any operator or manager of the hotel
or the commercial space located in the Improvements or acquired from others
including, without limitation, from the rental of any office space, retail
space, commercial space, parking space, guest rooms or other space, halls,
stores or offices, including any deposits securing reservations of such space,
exhibit or sales space of every kind, license, lease, sublease and concession
fees and rentals, health club membership fees, food and beverage wholesale and
retail sales, service charges, vending machine sales and proceeds, if any, from
business interruption or other loss of income insurance relating to the use,
enjoyment or occupancy of the Land, regardless of whether the revenues described
in the preceding clauses (i) and (ii) are paid or accrued before or after the
filing by or against Mortgagor of any petition for relief under any state or
federal bankruptcy or insolvency laws (collectively, "PROFITS");
TOGETHER WITH all additional lands, estates and development rights
hereafter acquired by Mortgagor for use in connection with the Land and the
development of the Land that may, from time to time, by supplemental mortgage or
otherwise be expressly made subject to the lien of this Mortgage;
TOGETHER WITH all awards heretofore and hereafter made to Mortgagor for
taking by eminent domain the whole or any part of the Land or any easement
therein, including any awards for changes of grade of streets; and
TOGETHER WITH any and all other rights of Mortgagor in and to the
foregoing.
TO HAVE AND TO HOLD the Property unto Mortgagee and unto its successors
and assigns in fee simple forever with all appurtenances hereunto belonging,
together with all Profits therefrom.
PROVIDED, HOWEVER, that upon full payment of all indebtedness hereby
secured, and upon performance of all covenants, obligations and indemnities
hereby secured, the Property shall be released to Mortgagor.
TO SECURE to Mortgagee:
(a) Payment of all indebtedness evidenced by an interest-bearing
loan and debt in the original principal sum of Four Million Five Hundred
Thousand and No/100 Dollars ($4,500,000.00) (the "LOAN") evidenced by that
certain Mortgage Note dated as of the date hereof from Mortgagor, as Maker, to
Mortgagee, as Payee (the "NOTE"), the terms of which are incorporated herein by
reference as well as all renewals, extensions, modifications and recastings of
the Note.
(b) The performance of all covenants, obligations, indemnities and
agreements required of Mortgagor under the Note, this Mortgage, any indemnity
executed in connection with the Loan, and all other agreements, documents and
instruments evidencing or securing the indebtedness hereby secured (the Note,
this Mortgage, the Assignment, the Document Assignment,
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the Financing Statements, Environmental Agreement, the Replacement Reserve
Agreement, the Guaranty Agreement, and all such other agreements, documents and
instruments are hereinafter referred to collectively as the "LOAN DOCUMENTS").
(c) The payment of (i) interest, default interest, late charges
and other sums as provided in the Loan Documents; (ii) any Extension Fee or
Deferred Financing Fee (as each such term is defined in the Note; and (iii) all
other monies agreed or provided to be paid by Mortgagor in the Loan Documents.
(d) The payment of any and all future advances made to Mortgagor
hereunder or under any Loan Document.
(e) The performance of all obligations of any surety, guarantor or
indemnitor of any of the obligations of Mortgagor under the Loan Documents.
(f) The payment of all costs and expenses, including court costs,
attorneys' fees, witness fees (including fees of expert witnesses), paid,
advanced or incurred by Mortgagee pursuant to the Loan Documents to protect or
preserve the Property or the validity or priority of this Mortgage or to enforce
the remedies of Mortgagee as provided for herein or in the other Loan Documents.
1. DEFINED TERMS
The following terms shall have the following meanings:
(a) "ACCESS LAWS" has the meaning set forth in Section 39(a)
hereof.
(b) "ACCOUNTS" has the meaning set forth in Section 6(b) hereof.
(c) "AFFILIATE" means, with respect to a specified person or
entity, another person or entity who: (i) directly or indirectly through one or
more intermediaries controls, is controlled by, or is under common control, with
the specified person or entity; (ii) is a partner, director, officer or trustee
of the specified person or entity or of any person or entity described in clause
(i) above; (iii) is a partner of a partnership or joint venture which owns, or
is a beneficiary or trustee of a trust which owns, or other owner of any stock
or other evidences of beneficial ownership in, the specified person or entity or
any person or entity as described in clause (i) above; or (iv) is related to the
specified person by blood (including grandparents of the specified person and of
his or her spouse and all lineal descendants of such grandparents) or marriage
to the specified person or to any person described in (i) above or of the spouse
of any of the foregoing persons. For purposes of this definition, the term
"control" with respect to a specified person or entity means the possession,
directly or indirectly, of the power to direct or cause the direction of the
management and policies of the specified person or entity, whether through the
ownership of voting stock, by contract or otherwise.
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(d) "APPLICABLE LAWS" has the meaning set forth in Section 7(a)
hereof.
(e) "ASBESTOS" has the meaning set forth in Section 36 hereof.
(f) "ASSIGNMENT" has the meaning set forth in Section 2(b) hereof.
(g) "BUDGET" means the budget for the use and application of the
Loan and Gross Revenues derived from the operation of the Property, including
all expenses to be satisfied from the Accounts, as set forth in the budget
delivered by Mortgagor to Mortgagee on the date hereof with respect to the
balance of the current calendar year, and the annual budget to be delivered in
accordance with the terms hereof for each subsequent calendar year for so long
as any portion of the Debt remains outstanding.
(h) "BUSINESS DAY" means a day on which commercial banks are not
authorized or required by law to close in the State of Ohio.
(i) "CAPITAL EXPENSES" means all payments for any fixed assets or
improvements, or for replacements, substitutions or additions thereto, that have
a useful life of more than one year and that are required to be capitalized
consistent with accounting methods employed by Mortgagor for the Property.
(j) "COLLATERAL" has the meaning set forth in Section 29 hereof.
(k) "CONDEMNATION" has the meaning set forth in Section 8(a)
hereof.
(l) "DEBT" means the outstanding principal balance of the Note
from time to time, with all accrued and unpaid interest thereon, and all other
sums now or hereafter due under the Loan Documents, as well as the last
paragraph of this Section.
(m) "DEBT SERVICE COVERAGE RATIO" shall mean the ratio of:
(i) the NOI produced by the operation of the Property during
the twelve (12) calendar month period immediately preceding the
calculation, to
(ii) the projected payments of principal and interest
due under the Note for the twelve (12) calendar month period
immediately following the calculation, as reasonably calculated by
Mortgagee.
(n) "DEFAULT RATE" has the meaning set forth in Section 25(b)
hereof.
(o) "DOCUMENT ASSIGNMENT" has the meaning set forth in Section
2(b) hereof.
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(p) "EHA IV" means Essex Hospitality Associates IV L.P., a New
York limited partnership and the ninety-nine percent (99%) member of Borrower.
(q) "ENVIRONMENTAL AGREEMENT" has the meaning set forth in Section
2(b) hereof.
(r) "ENVIRONMENTAL LAWS" has the meaning set forth in Section 35
hereof.
(s) "ERISA" has the meaning set forth in Section 40(a) hereof.
(t) "ESCROW AGREEMENT" means that Escrow Agreement between the
Title Company, Mortgagor and Mortgagee dated of even date herewith, which sets
forth the schedule of and conditions precedent to the disbursement of the Loan
proceeds.
(u) "ESCROW FUND" has the meaning set forth in Section 6(a)
hereof.
(v) "EVENT OF DEFAULT" has the meaning set forth in Section 24
hereof.
(w) "EXCULPATED PARTIES" has the meaning set forth in Section
42(b) hereof.
(x) "EXPENSES" means the aggregate of the following items actually
incurred by Mortgagor, whether or not paid, during the twelve (12) month period
ending one (1) month prior to the date on which the NOI is to be calculated:
(i) the cost of sales including, without limitation,
salaries, wages, employee benefits, payroll taxes and
other costs related to the Property's employees;
(ii) departmental expenses incurred at departments within the
Property, administrative and general expenses and the
cost of marketing incurred by the Property, advertising
and business promotion incurred by the Property, all
utility costs (including, without limitation, heat,
light, power, water, and telephone), computer line
charges, and routine repairs, maintenance and minor
alterations treated as Expenses under the License
Agreement or the Management Agreement;
(iii) the cost of inventories and fixed asset supplies
consumed in the operation of the Property;
(iv) a reasonable reserve for uncollectible accounts
receivable;
(v) all costs and fees of independent professionals or other
third parties who are retained by Licensor to perform
services required or permitted under the License
Agreement;
(vi) all costs and fees of technical consultants and
operational experts who are retained or employed by
Licensor for specialized services (including, without
limitation, quality
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assurance inspectors) and the cost of attendance by
employees of the Property at training and manpower
development programs sponsored by the Licensor;
(vii) the base management fee under the Management Agreement
and the base license fee under the License Agreement;
(viii) the Property's pro rata share of costs and expenses of
the national and regional reservations system service
under the License Agreement;
(ix) Insurance Premiums, as provided herein or in the License
Agreement;
(x) taxes (exclusive of the Manager's income taxes and any
license, corporate, estate, inheritance, succession,
capital levy or transfer tax imposed on the Manager) and
all impositions;
(xi) transfers to any reserve account required pursuant
hereto or to the License Agreement;
(x) lease payments and associated costs on any operating (as
opposed to capital) leases of FF&E;
(xi) common area maintenance fees and improvement district
assessments;
(xii) costs and expenses incurred by Licensor in terminating
its employees at the Property pursuant to the License
Agreement; and
(xiii) such other costs and expenses incurred by Licensor or
Manager as are otherwise reasonably necessary for the
proper and efficient operation of the Property.
The term "Expenses" shall not include (a) debt service payments
pursuant to any mortgage financing on the Property, (b) payments pursuant to
equipment leases or other forms of financing obtained for the initial FF&E
located in or connected with the Property or (c) rental payments pursuant to any
ground lease.
(y) "FF&E SIDE LETTER" has the meaning set forth in the recitals
of this Mortgage.
(z) "FINANCING STATEMENTS" means any and all UCC financing
statements filed by or on behalf of Mortgagee as additional security hereunder.
(aa) "GROSS REVENUES" shall mean all revenues and receipts of
every kind derived from operating the Property and all departments and parts
thereof, including, but not limited to: income (from both cash and credit
transactions) from rental of guest rooms, telephone charges, stores, offices,
exhibit or sales space of every kind; license, lease and concession fees and
rentals
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(not including gross receipts of licensees, lessees and concessionaires); income
from vending machines; health club membership fees; food and beverage sales;
wholesale and retail sales of merchandise; service charges; and proceeds, if
any, from business interruption or other loss of income insurance; PROVIDED,
HOWEVER, that Gross Revenues shall not include the following: gratuities to
employees of the Property; federal, state or municipal excise, sales or use
taxes or any other taxes collected directly from patrons or guests or included
as part of the sales price of any goods or services; proceeds from the sale of
FF&E; interest received or accrued with respect to the funds in any required
reserve accounts or the other operating accounts of the Property; any refunds,
rebates, discounts and credits of a similar nature, given, paid or returned in
the course of obtaining Gross Revenues or components thereof; insurance proceeds
(other than proceeds from business interruption or other loss of income
insurance); condemnation proceeds (other than for a temporary taking); or any
proceeds from any sale of the Property or from the refinancing of any debt
encumbering the Property.
(bb) "GUARANTOR" means Essex Partners Inc., a New York
corporation.
(cc) "GUARANTY AGREEMENT" has the meaning set forth in
Section 2(b) hereof.
(dd) "HAZARDOUS SUBSTANCES" has the meaning set forth in
Section 35 hereof.
(ee) "INDEMNIFIED PARTIES" has the meaning set forth in Section
41(b) hereof.
(ff) "IMPROVEMENTS" has the meaning set forth in the recitals of
this Mortgage.
(gg) "INSURANCE PREMIUMS" has the meaning set forth in
Section 4(d) hereof.
(hh) "INSURED CASUALTY" has the meaning set forth in Section
4(e)(ii) hereof.
(ii) "INTANGIBLES" has the meaning set forth in the recitals of
this Mortgage.
(jj) "INVESTOR" has the meaning set forth in Section 21(b) hereof.
(kk) "LAND" has the meaning set forth in the recitals of this
Mortgage.
(ll) "LEASES" has the meaning set forth in the recitals of this
Mortgage.
(mm) "LICENSE AGREEMENT" means the License Agreement to be issued
under that Commitment Agreement to issue a Hampton Inn License Agreement dated
as of November 6, 1995 ("LICENSE COMMITMENT"), by and between Licensor and EHA
IV, which, in accordance with that certain letter from Licensor to Lender dated
June 27, 1997, will be reissued in the name of Mortgagor, pursuant to which
Mortgagor has the right to operate the hotel located on the Property under a
name and/or hotel system controlled by Licensor, or any successor agreement
between Mortgagor and Licensor.
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(nn) "LICENSOR" means Promus Hotels, Inc., a Delaware corporation.
(oo) "LOAN" has the meaning set forth in the recitals of this
Mortgage, together with any renewals, extensions, amendments, modifications,
supplements or restatements thereof.
(pp) "LOAN DOCUMENTS" has the meaning set forth in the recitals of
this Mortgage, together with any renewals, extensions, amendments,
modifications, supplements or restatements of such instruments.
(qq) "LOAN-TO-VALUE RATIO" means the ratio of: (i) the Debt, plus
all other debt (or other liquidated economic obligations) which is then
outstanding and secured by the Property or any part thereof, to (ii) the
appraised value of the Property as estimated by an appraiser acceptable to
Mortgagee. Any appraisal for purposes of calculating the Loan-to-Value Ratio
shall be performed in accordance with the then-approved standards under the
Financial Institutions Reform, Recovery and Enforcement Act of 1989, as amended
("FIRREA").
(rr) "MANAGEMENT AGREEMENT" means the Management Agreement dated
as of June 25, 1997 between Mortgagor and Manager.
(ss) "MANAGER" means Essex Partners Inc., a New York corporation.
(tt) "MANAGING MEMBER" means Essex Hotels LLC, a New York limited
liability partnership.
(uu) "MATURITY DATE" means the Applicable Maturity Date (as such
term is defined in the Note) or any earlier acceleration of sums due under the
Note pursuant to Mortgagee's declaration of an Event of Default.
(vv) "MORTGAGE" has the meaning set forth in the recitals of this
Mortgage, together with any renewals, extensions, amendments, modifications,
supplements or restatements hereof.
(ww) "MORTGAGEE" has the meaning set forth in the preamble to this
Mortgage as well as the last paragraph of this Section.
(xx) "MORTGAGOR" has the meaning set forth in the preamble to this
Mortgage as well as the last paragraph of this Section.
(yy) "NOI" means for any period of time, the excess of Gross
Revenues for such period over Expenses for such period adjusted by the
Underwriting Standards. NOI shall include only Profits and such other income,
including any rent loss, business interruption insurance proceeds, vending or
concession income, late fees, forfeited security deposits and other
miscellaneous tenant charges, which are accrued and Expenses actually incurred
or payable during the period for which
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the NOI is being calculated, as set forth on operating statements satisfactory
to Mortgagee. NOI shall be calculated on an accrual basis in accordance with
generally accepted accounting principles consistently applied, based on the
Uniform System of Accounts; PROVIDED, HOWEVER, that notwithstanding the
foregoing, Mortgagee reserves the right as aforesaid and as specified in
subsection 1(v) above to adjust Gross Revenues and Expenses based on the
Underwriting Standards.
(zz) "NOTE" has the meaning set forth in the recitals of this
Mortgage, together with any renewals, extensions, amendments, modifications,
supplements or restatements of such instrument.
(aaa) "OPERATING AGREEMENTS" has the meaning set forth in Section
20 hereof.
(bbb) "OTHER CHARGES" has the meaning set forth in Section 5
hereof.
(ccc) "PERSONAL PROPERTY" has the meaning set forth in the
recitals of this Mortgage.
(ddd) "POLICIES" has the meaning set forth in Section 4(d) hereof.
(eee) "PROFITS" has the meaning set forth in the recitals of this
Mortgage.
(fff) "PROPERTY" has the meaning set forth in the recitals of
this Mortgage, as well as the last paragraph of this Section.
(ggg) "REMEDIAL WORK" has the meaning set forth in Section 37
hereof.
(hhh) "REPLACEMENT RESERVE AGREEMENT" has the meaning set forth in
Section 2(b) hereof.
(iii) "REPLACEMENT RESERVE ACCOUNT" has the meaning set forth in
Section 6(b) hereof.
(jjj) "SECURITIES" has the meaning set forth in Section 21(b)
hereof.
(kkk) "TAXES" has the meaning set forth in Section 5 hereof.
(lll) "UCC FINANCING STATEMENTS" has the meaning set forth in
Section 2(b) hereof.
(mmm) "UNDERWRITING STANDARDS" means shall mean the
underwriting standards utilized to adjust the actual net operating income of the
Property to comply with the Underwriting Standards of Mortgagee for the
Property, as follows:
(i) Gross Revenues shall not include any interest or
investment income. In addition, Gross Revenues shall be
adjusted as may be reasonably
F:\HOME\▇▇▇▇▇▇\WORDPFT\ESSXGMAC.DOC
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required to normalize Gross Revenues in a manner in
which a prudent "institutional hotel investor" would
reasonably expect, and the Gross Revenues shall be
further adjusted for underwriting purposes by
multiplying the Gross Revenues, as adjusted above, times
the ratio of (1) the Underwriting Occupancy Rate to (2)
the Property Occupancy Rate (although in no event shall
the ratio be greater than 1.00). Underwriting Occupancy
Rate shall mean an occupancy rate equal to the lesser of
the Property Occupancy Rate or 85% for the underwriting
period. Property Occupancy Rate shall mean the actual
occupancy rate for the Property for the underwriting
period and shall be calculated by the rooms occupied by
guests (including paid rooms occupied and complimentary
rooms occupied) divided by the rooms actually available
for rent during the underwriting period.
(ii) Expenses shall be adjusted as follows:
(1) Taxes shall be based on a fully completed,
occupied, functioning and assessed Property
(including, without limitation, all
build-out, personal property in place).
(2) if any ratio percentages used to calculate
fees or contributions (including, without
limitation, the base and incentive management
fees, base and incentive franchise fees, and
the replacement reserve contribution, if any)
under the Management Agreement, the License
Agreement or hereunder for the Property shall
be scheduled to increase during any portion
of the 24 month period following the
Underwriting Period (the increased amount
shall be the "INCREASED FEES AND
CONTRIBUTION"), then the higher Increased
Fees and Contribution on an annualized basis
shall be used to calculate the Expenses with
respect to the Property.
(iii) In addition to, but not in duplication of, the
adjustments set forth above, NOI for the Property
may be further adjusted to reflect (1) the growth
and/or decline in demand, (2) additions and/or
deletions to supply and (3) penetration of the
Property for the three year period commencing on
the date of determination of the trailing 12 month
period. The Property's stabilized NOI shall be
adjusted, on a constant dollar basis, for the
average daily rate and occupancy rate projected
over the three year period commencing on the date
of determination of the trailing 12 month period.
(iv) In the event that Mortgagor disputes Mortgagee's
calculation of
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adjustments set forth in subsection (iii) above,
it shall submit its calculation to Mortgagee with
supporting detail and Mortgagee shall have the
right to either accept Mortgagor's calculation or
to submit both Mortgagee's and Mortgagor's
adjustments as set forth in subsection (iii) above
to the arbitrator (as selected below) to resolve
the dispute. In the event Mortgagee shall elect to
submit a dispute to the arbitrator, Mortgagor and
Mortgagee shall have ten (10) days to designate
one and only one person to act as an arbitrator by
written notice given to the other within such ten
(10) day period. In the event that either side
shall fail to select an arbitrator within such ten
(10) day period, the arbitrator selected by the
other shall be deemed the arbitrator to resolve
the dispute. If both Mortgagor and Mortgagee
timely select an arbitrator as stated above, the
arbitrators so selected shall, within ten (10)
days of their appointment, select a third
arbitrator who shall resolve the dispute. Any
arbitrator selected above shall be an appraiser
with at least ten (10) years experience in
appraising hotel properties. The cost of the
arbitrator shall be shared equally between
Mortgagor and Mortgagee.
(nnn) "UNIFORM COMMERCIAL CODE" means the Uniform Commercial Code,
as adopted and enacted by the State or States where any of the Property is
located.
(ooo) "UNIFORM SYSTEM OF ACCOUNTS" has the meaning set forth in
Section 10(h) hereof.
Capitalized terms not otherwise defined herein shall have the
meanings ascribed to them in the Note. 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 or any part thereof or any interest
therein", the word "Mortgagee" shall mean "Mortgagee, its successors and
assigns, and any subsequent holder of the Note", the word "Debt" shall mean "the
Note and any other evidence of indebtedness secured by this Mortgage", the word
"person" shall include an individual, corporation, partnership, trust,
unincorporated association, government, governmental authority and any other
entity, and the words "Property" shall include any portion of the Property and
any interest therein and the words "attorneys' fees" shall include any and all
attorneys' fees, paralegal and law clerk fees including, without limitation,
fees at the pretrial, trial and appellate levels incurred or paid by Mortgagee
in protecting its interest in the Property and Collateral and enforcing its
rights hereunder. Whenever the context may require, any pronouns used herein
shall include the corresponding masculine, feminine or neuter forms, and the
singular form of nouns and pronouns shall include the plural and vice versa.
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2. THE LOAN
(a) Upon and subject to the terms and conditions herein set forth,
Mortgagee agrees to lend to Mortgagor and Mortgagor agrees to borrow from
Mortgagee, a sum not to exceed Four Million Five Hundred Thousand and No/100
Dollars ($4,500,000.00) Mortgagor will pay the Debt at the time and in the
manner provided in the Note, this Mortgage and the other Loan Documents. All
payments made to Mortgagee in respect of the Debt after payment of principal and
interest due and payable under the Note shall be applied by Mortgagee in such
order of priority as Mortgagee shall determine in its sole discretion.
(b) All the covenants, conditions and agreements contained in the
Note, the Assignment of Contracts, Licenses, Permits, Agreements, Warranties and
Approvals dated as of the date hereof from Mortgagor to Mortgagee (the
"ASSIGNMENT"), the Assignment of Construction Agreements, Plans and Property
Agreements dated as of the date hereof from Mortgagor to Mortgagee (the
"DOCUMENT ASSIGNMENT"), the Environmental Indemnity Agreement dated as of the
date hereof among Mortgagee, Mortgagor and Guarantor (the "ENVIRONMENTAL
AGREEMENT"), the Guaranty Agreement dated as of the date hereof from Guarantor
to Mortgagee (the "GUARANTY AGREEMENT"), the Replacement Reserve Agreement dated
as of the date hereof from Mortgagor to Mortgagee (the "REPLACEMENT RESERVE
AGREEMENT"), the Uniform Commercial Code Financing Statement(s) dated as of the
date hereof from Mortgagor for the benefit of Mortgagee (the "UCC FINANCING
STATEMENTS"), and the other Loan Documents are hereby made a part of this
Mortgage to the same extent and with the same force as if fully set forth
herein.
2. WARRANTY OF TITLE
Mortgagor represents and warrants generally that Mortgagor: (a) has
good indefeasible fee simple title to the Property as specified in the title
insurance policy insuring the lien of this Mortgage, (b) has the full power,
authority and right to execute, deliver and perform its obligations under this
Mortgage and to encumber, mortgage, give, grant, bargain, sell, alienate,
enfeoff, convey, confirm, pledge, assign, hypothecate and grant a security
interest in the Property, (c) possesses an unencumbered fee estate in the Land
and the Improvements, and (d) owns the Property free and clear of all liens,
encumbrances and charges whatsoever except for those exceptions approved by
Mortgagee and shown in the title insurance policy insuring the lien of this
Mortgage. Mortgagor further represents and warrants that this Mortgage is and
will remain a valid and enforceable first lien on and security interest in the
Property, subject only to such 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 such title, validity and priority
to Mortgagee against the claims of all persons whomsoever.
3. INSURANCE
(a) Mortgagor, at its sole cost and expense, will keep the Property
insured during the entire term of this Mortgage for the mutual benefit of
Mortgagor and Mortgagee in accordance
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with the terms and provisions of this Section against loss or damage by fire and
against loss or damage by other risks and hazards covered by a standard extended
coverage insurance policy including, without limitation, riot and civil
commotion, vandalism, malicious mischief, burglary and theft. The insurance
policy shall contain option perils and income loss endorsements and if any of
the Improvements or the use of the Property shall at any time constitute legal
nonconforming structures or uses, a law and ordinance endorsement. Such
insurance shall be in an amount equal to the greater of: (A) the original
principal amount of the Loan (in no event less than the minimum amount required
to compensate for damage or loss on a replacement cost basis), or (B) the then
full replacement cost of the Improvements and the Personal Property, without
deduction for physical depreciation; PROVIDED, HOWEVER, that such insurance
shall be in an amount such that the insurer would not deem Mortgagor a
co-insurer under such policies. The deductible in respect of such insurance
shall not exceed the lesser of: (1) Ten Thousand and No/100 Dollars
($10,000.00); or (2) one percent (1%) of the face value of such policy, unless a
higher deductible is required by law. Unless such premiums are deposited in the
Escrow Fund pursuant to Section 6 of this Mortgage, the premiums for the
insurance carried in accordance with this Section shall be paid annually in
advance and each policy shall contain the "Replacement Cost Endorsement" with a
waiver of depreciation.
(b) Mortgagor shall also obtain and maintain during the entire term of
this Mortgage, at its sole cost and expense, for the mutual benefit of Mortgagor
and Mortgagee, the following policies of insurance:
(i) If Mortgagee shall request at any time in writing, Flood
insurance if any part of the Property is currently or at any
time in the future located in an area identified by the
Federal Emergency Management Agency as an area having special
flood hazards and in which flood insurance has been made
available under the National Flood Insurance Act of 1968 (and
any amendment or successor act thereto) in an amount at least
equal to the lesser of: (A) the outstanding principal amount
of the Note; or (B) the maximum limit of coverage available
with respect to the Improvements and the Personal Property
under such act;
(ii) (A) Comprehensive public liability insurance, including broad
form property damage, blanket contractual and personal
injuries (including death resulting therefrom) coverages and
"Dram shop" or other liquor liability coverage if alcoholic
beverages are sold from or may be consumed at the Property,
and containing minimum limits per occurrence of One Million
and No/100 Dollars ($1,000,000.00) and Two Million and No/100
Dollars ($2,000,000.00) general aggregate for the Land and
the Improvements, or such greater amount as may be required
under the License Agreement; and (B) Umbrella liability
insurance containing minimum limits of Ten Million and No/100
Dollars ($10,000,000.00) for the Land and the Improvements,
or such greater amount as may be required under the License
Agreement;
(iii) Business interruption insurance: (A) with loss payable to
Mortgagee, its successors and/or assigns, as their respective
interests may appear; (B) covering all risks
- 15 -
required to be covered by the insurance provided for in
Section 4(a); (C) containing an extended period of indemnity
endorsement which provides that after the physical loss to
the Improvements and all personal property has been repaired,
the continued loss of income will be insured until the
Property is restored (or if such income is not as of the date
of restoration at the same level it was at prior to the loss,
then until two (2) months following the restoration date), or
the expiration of twelve (12) months from the date of the
loss, whichever first occurs, and notwithstanding that the
policy may expire prior to the end of such period; and (D) in
an amount equal to One Million and No/100 Dollars
($1,000,000.00) (based on Expenses and NOI for the Property).
The amount of such business interruption insurance shall be
determined prior to the date hereof and at least once each
year thereafter based on clause 4(b)(iii)(D). All insurance
proceeds payable to Mortgagee pursuant to this Section shall
be held by Mortgagee and shall be applied to the obligations
secured hereunder from time to time due and payable hereunder
and under the Note; PROVIDED, HOWEVER, that nothing herein
contained shall be deemed to relieve Mortgagor of its
obligations to pay the obligations secured hereunder on the
respective dates of payment provided for in the Note except
to the extent such amounts are actually and timely paid out
of the proceeds of such business interruption insurance;
(iv) Insurance, in an amount equal to the lesser of the original
principal amount of the Loan or the insurable value of the
Improvements and the Personal Property, against loss or
damage from: (A) leakage of sprinkler systems; and (B)
explosion of steam boilers, air conditioning equipment, high
pressure piping, machinery and equipment, pressure vessels or
similar apparatus now or hereafter installed in the
Improvements;
(v) Worker's compensation insurance with respect to any employees
of Mortgagor, as required by any governmental authority or
legal requirement;
(vi) Motor vehicle liability coverage for all owned and non-owned
vehicles, including rented and leased vehicles, containing
minimum limits per occurrence of One Million and No/100
Dollars ($1,000,000.00) with minimum limits of Four Million
and No/100 Dollars ($4,000,000.00) liability umbrella
coverage or such greater amount as may be required under the
License Agreement;
(vii) Blanket crime and fidelity insurance coverage insuring
against losses resulting from dishonest or fraudulent acts
committed by Mortgagor's or Manager's personnel;
(viii) Earthquake insurance (including subsidence), if the Property
is located in an earthquake prone region, insuring to
replacement cost with a maximum deductible of no greater than
five percent (5%) of the Property value; and
(ix) Such other insurance as may from time to time be reasonably
required by Mortgagee or as may be required by the License
Agreement, including, without
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limitation, during the course of any construction of, or
repairs to, any Improvements, builder's completed value risk
insurance against "all risks of physical loss" including (A)
collapse and transit coverage, in a nonreporting form,
covering the total value of work performed and equipment,
supplies and materials furnished, and (B) a full installation
floater to insure all materials stored on the Land but not
yet part of the permanent installation.
(c) Mortgagor shall increase the amount of insurance required to be
provided hereunder at the time that each such policy is renewed (but, in any
event not less frequently than once during each twelve (12) month period) by
using the ▇.▇. ▇▇▇▇▇ Building Index to determine whether there has been an
increase in the replacement cost of the improvement since the most recent
adjustment of any such policy and, if there has been any such increase, the
amount of insurance required to be provided hereunder shall be adjusted
accordingly.
(d) All policies of insurance required pursuant to this Section
(collectively, the "POLICIES") shall: (i) be issued by an insurer fully licensed
in the State of Ohio with an investment grade rating for claims paying ability
by ▇▇▇▇▇'▇ Investors Service, Inc. and Standard & Poor's Rating Group, if rated
(or, if not rated investment grade by any of the foregoing, a CUT THROUGH
ENDORSEMENT will be required); (ii) contain a standard noncontributory mortgagee
clause naming Mortgagee, its successors and/or assigns, as their respective
interests may appear, as the person to which all payments made by such insurance
company shall be paid; (iii) be maintained throughout the term of this Mortgage
without cost to Mortgagee; (iv) be assigned and delivered to Mortgagee; (v)
contain such provisions as Mortgagee deems reasonably necessary or appropriate
to protect its interest including, without limitation, endorsements providing
that neither Mortgagor, Mortgagee nor any other party shall be a co-insurer
thereunder, and that Mortgagee shall receive at least thirty (30) days prior
written notice of any modification, reduction or cancellation; (vi) be
satisfactory in form and substance to Mortgagee, and be approved by Mortgagee as
to amounts, form, risk coverage, deductible, loss payees and insureds; (vii)
name Mortgagee as an additional insured or as a Loss Payee, as applicable; and
(viii) waive Mortgagor's right of subrogation against Mortgagee with respect to
all property, casualty and hazard insurance, but not with respect to any
liability insurance. To the extent that the funds in the Escrow Fund are
insufficient to pay such amounts, Mortgagor shall pay or cause Manager to pay
the premiums for the Policies (the "INSURANCE PREMIUMS") as they become due and
payable. Not later than thirty (30) days prior to the expiration date of each of
the Policies, Mortgagor will deliver to Mortgagee satisfactory evidence of the
renewal of each Policy. Notwithstanding anything herein to the contrary, in the
event that the License Agreement requires (1) greater amounts of coverage for
any insurance required hereunder, or (2) additional types of insurance coverage,
then the License Agreement insurance requirements shall prevail. In the event
Mortgagor fails to provide, maintain, keep in force, or deliver and furnish to
Mortgagee the Policies, Mortgagee may procure such insurance or single-interest
insurance for such risks covering Mortgagee's interest, and Mortgagor will
reimburse Mortgagee for all premiums paid by Mortgagee, together with interest
thereon from the date paid at the Default Rate, promptly upon demand by
Mortgagee. Until such payment is made by Mortgagor, the amount of all such
premiums, together with interest thereon, shall be secured by this Mortgage.
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(e) If the Property shall be damaged or destroyed, in whole or in
part, by fire or other casualty, Mortgagor shall give prompt written notice
thereof to Mortgagee.
(i) In the case of a loss covered by Policies, Mortgagee may: (A)
settle and adjust any claim without the consent of Mortgagor,
or (B) allow Mortgagor to agree with the insurance company or
companies on the amount to be paid upon the loss; PROVIDED,
HOWEVER, that, if no Event of Default shall have occurred and
be continuing, Mortgagor may adjust losses aggregating not in
excess of Two Hundred Fifty Thousand and No/100 Dollars
($250,000.00) if such adjustment is carried out in a
competent and timely manner and provided in any case that
Mortgagee shall be, and is hereby, authorized to collect and
receipt for any such insurance proceeds. The expenses
incurred by Mortgagee in the adjustment and collection of
insurance proceeds shall become part of the Debt, shall be
secured by this Mortgage and shall be reimbursed by Mortgagor
to Mortgagee on demand.
(ii) In the event of any insured damage to or destruction of the
Property or any part thereof (an "INSURED CASUALTY") where:
(A) the proceeds of insurance are sufficient to enable
Mortgagor to fully restore the Property; (B) the term of, and
proceeds derived from, Mortgagor's business interruption
insurance (or other similar insurance) shall be sufficient to
fully cover the period that the Property is undergoing
restoration; (C) Mortgagee determines that the restoration is
reasonably capable of being completed, and is actually
completed, at least nine (9) months prior to the Maturity
Date; (D) the Loan-to-Value Ratio upon completion of
restoration is estimated, by an appraiser reasonably
acceptable to Mortgagee, to be no greater than 0.7:1.0; (E)
the License Agreement has not been terminated as a result of
the Insured Casualty; (F) the restoration can be completed
within nine (9) months from the date that the Insured
Casualty occurred, or within such shorter time period as may
be required by the License Agreement; (G) the restoration is
permitted or required under the License Agreement; and (H)
the Debt Service Coverage Ratio upon completion is reasonably
anticipated to be at least 1.25, then, if no Event of Default
shall have occurred and be continuing, the proceeds of
insurance shall be applied to the cost of restoring,
repairing, replacing or rebuilding the Property or the part
thereof subject to the Insured Casualty, as provided for
below; and Mortgagor hereby covenants and agrees forthwith to
commence and diligently to prosecute such restoring,
repairing, replacing or rebuilding. NOI for purposes of this
calculation shall be NOI for the twelve (12) calendar month
period immediately preceding the casualty, unless the
appraiser referenced in clause 4(e)(ii)(D) above estimates
that NOI after the restoration will be more than ten percent
(10%) less than NOI for such twelve (12) calendar month
period, in which case the Debt Service Coverage Ratio shall
be calculated using the appraiser's estimate of NOI.
(iii) Except as provided above, the proceeds of insurance collected
upon any Insured Casualty shall, at the option of Mortgagee
in its sole discretion, be applied to the payment of the Debt
or applied to reimburse Mortgagor for the cost of restoring,
repairing, replacing or rebuilding the Property or the part
thereof subject to the Insured Casualty, in the manner set
forth below. In no case shall any such application reduce or
postpone any
- 18 -
payments otherwise required pursuant to the Note.
(iv) In the event that proceeds of insurance, if any, shall be
made available to Mortgagor for the restoring, repairing,
replacing or rebuilding of the Property, Mortgagor hereby
covenants to restore, repair, replace or rebuild the Property
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 and plans and
specifications approved in advance by Mortgagee and otherwise
in accordance with the requirements of the License Agreement,
if any; PROVIDED, HOWEVER, that Mortgagor shall pay all costs
(and if required by Mortgagee, shall deposit the total
thereof with Mortgagee in advance) of such restoring,
repairing, replacing or rebuilding in excess of the net
proceeds of insurance required to be made available pursuant
to the terms hereof.
(v) In the event Mortgagor is entitled to reimbursement out of
insurance proceeds held by Mortgagee, such proceeds shall be
disbursed from time to time upon Mortgagee being furnished
with: (A) evidence reasonably satisfactory to it of the
estimated cost of completion of the restoration, repair,
replacement and rebuilding; (B) funds, or, at Mortgagee's
option, assurances reasonably satisfactory to Mortgagee that
such funds are available, sufficient in addition to the
proceeds of insurance to complete the proposed restoration,
repair, replacement and rebuilding; and (C) such architect's
certificates, waivers of lien for work previously performed
or contemporaneously funded, 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
(which approval shall not be unreasonably withheld). No
payment made prior to the final completion of the
restoration, repair, replacement and rebuilding shall exceed
ninety percent (90%) of the value of the work performed from
time to time. Funds other than proceeds of insurance shall be
disbursed prior to disbursement of such proceeds, and at all
times the undisbursed balance of such proceeds remaining in
Mortgagee's possession, together with funds deposited for
that purpose or irrevocably committed to the reasonable
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 and claims of lien. Any surplus which may
remain out of insurance proceeds held by Mortgagee after
payment of such costs of restoration, repair, replacement or
rebuilding shall be delivered to Mortgagor, provided such
restoration was performed in accordance with the provisions
of this Section and Mortgagor is not then in default of its
obligations under the Loan Documents.
(f) Mortgagor shall not carry separate insurance, concurrent in kind
or form or contributing in the event of loss, with any insurance required under
this Section. Notwithstanding the foregoing, Mortgagor may carry insurance not
required under this Mortgage, provided any such
- 19 -
insurance affecting the Property shall be for the mutual benefit of Mortgagor
and Mortgagee, as their respective interests may appear, and shall be subject to
all other provisions of this Section.
(g) In the event this Mortgage is foreclosed, or title to the Property
is transferred in extinguishment, in whole or in part, of the Debt secured
hereby, all right, title and interest of Mortgagor in and to all Policies shall
inure to the benefit of and pass to the successor in interest of Mortgagor or
the purchaser or grantee of the Property.
5. PAYMENT OF TAXES
To the extent that the funds in the Escrow Fund are insufficient to pay
such amounts, Mortgagor shall pay, within thirty (30) days of receipt of
notification by Mortgagee, all taxes, assessments (including, without
limitation, all assessments imposed under any declaration of covenants, owner's
associations or special improvement districts affecting the Property), water
rates and sewer rents, now or hereafter levied, assessed or imposed against the
Property or any part thereof (collectively, the "TAXES") and all ground rents,
maintenance charges, other governmental impositions, and other charges
including, without limitation, vault charges and license fees for the use of
vaults, chutes and similar areas adjoining the Land, now or hereafter levied,
assessed or imposed against the Property or any part thereof (collectively, the
"OTHER CHARGES") as they become due and payable. Mortgagor will deliver to
Mortgagee evidence satisfactory to Mortgagee that the Taxes and Other Charges
have been so paid, or are not then delinquent, no later than thirty (30) days
following the date on which the Taxes and/or Other Charges would otherwise be
delinquent if not paid. Mortgagor shall not suffer, and shall promptly cause to
be paid and discharged, any lien or charge whatsoever which may be or become a
lien or charge against the Property, and shall promptly pay for all utility
services provided to the Property. Upon request, Mortgagor shall furnish to
Mortgagee or its designee receipts for the payment of the Taxes, Other Charges
and charges for utility services prior to the date that such obligations shall
become delinquent. Mortgagor shall be entitled to contest by appropriate legal
proceeding, promptly initiated and conducted in good faith and with due
diligence, the amount of any Taxes or Other Charges. Notwithstanding the
preceding sentence, during the pendency of any such contest Mortgagor shall pay
or cause to be paid all Taxes and Other Charges as and when due and payable, or
otherwise in accordance with Section 32 hereof.
6. ESCROW FUND
(a) Mortgagor shall pay to Mortgagee on the closing date and
thereafter monthly on the first (1st) day of each calendar month: (a)
one-twelfth (1/12th) of an amount which would be sufficient to pay the Taxes and
Other Charges payable, or reasonably estimated by Mortgagee to be payable,
during the next ensuing twelve (12) months; and (b) one-twelfth (1/12th) of an
amount which would be sufficient to pay the Insurance Premiums due for the
renewal of the coverage afforded by the Policies upon the expiration thereof
(the amounts described in clauses (a) and (b) above, collectively, the "ESCROW
FUND"). The Escrow Fund and the monthly installments of principal and interest
payable under the Note shall be added together and shall be paid as an aggregate
sum by Mortgagor to Mortgagee. Mortgagee will apply the Escrow Fund to payments
of Taxes and
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Insurance Premiums required to be made by Mortgagor pursuant to Sections 4 and 5
hereof. If the amount of the Escrow Fund shall exceed the amounts due for Taxes
and Insurance Premiums pursuant to Sections 4 and 5 hereof, Mortgagee shall, in
its discretion, return any excess to Mortgagor or credit such excess against
future payments to be made to the Escrow Fund. If the Escrow Fund is not
sufficient to pay the items set forth in clauses (a) and (b) above, Mortgagor
shall promptly pay to Mortgagee, within thirty (30) days following demand, an
amount which Mortgagee shall reasonably estimate as sufficient to make up the
deficiency. Upon the occurrence of an Event of Default, Mortgagee may apply any
sums then comprising the Escrow Fund to the payment of the Debt in any order in
its sole discretion. To the extent permitted by applicable law, the Escrow Fund
shall not constitute a trust fund and may be commingled with other monies held
by Mortgagee. No earnings or interest on the Escrow Fund shall be payable to
Mortgagor, unless required by applicable law.
(b) Mortgagee shall this day, or as soon hereafter as is practicable,
establish and shall thereafter maintain the following interest-bearing escrow
accounts at one or more federally insured institutions selected by Mortgagee
(collectively, the "ACCOUNTS"), each of which shall be in Mortgagee's name and
shall constitute additional security for Loan:
(i) Replacement Reserve Account, into which shall be deposited
monthly on the first (1st) day of each calendar month: (A)
from the thirteenth (13th) month of the Loan through the
twenty-fourth (24th) month of the Loan, an amount equal to
one-twelfth (1/12th) of two percent (2%) of the Gross
Revenues derived from the operation of the Property and (B)
thereafter, for the balance of the Loan term, an amount equal
to one-twelfth (1/12th) of four percent (4%) of the Gross
Revenues derived from the operation of the Property, from
which Mortgagor may request withdrawal from time to time on a
semi-monthly basis to refurbish, repair or replace specified
Personal Property at the Property, all as more particularly
set forth in the Replacement Reserve Agreement (the
"REPLACEMENT RESERVE ACCOUNT"); and
(ii) Intentionally omitted.
7. COMPLIANCE WITH LAWS
(a) Mortgagor shall promptly comply with all existing and
future federal, state and local laws, orders, ordinances, governmental rules and
regulations or court orders affecting the Property or the use thereof
("APPLICABLE LAWS").
(b) Mortgagor shall from time to time, upon Mortgagee's
request, provide Mortgagee with evidence reasonably satisfactory to Mortgagee
that the Property complies with all Applicable Laws or is exempt from compliance
with Applicable Laws.
(c) Notwithstanding any provisions set forth herein or in any document
regarding Mortgagee's approval of alterations of the Property, Mortgagor shall
not alter the Property in any manner which would materially increase Mortgagor's
responsibilities for compliance with
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Applicable Laws without the prior written approval of Mortgagee. Mortgagee's
approval of the plans, specifications, or working drawings for alterations of
the Property as required herein shall create no responsibility or liability on
behalf of Mortgagee for their completeness, design, sufficiency or their
compliance with Applicable Laws. The foregoing shall apply to tenant
improvements constructed by Mortgagor or by any of its tenants. Mortgagee may
condition any such approval upon receipt of a certificate of compliance with
Applicable Laws from an independent architect, engineer, or other person
acceptable to Mortgagee.
(d) Mortgagor shall give prompt notice to Mortgagee of the
receipt by Mortgagor of any notice related to a violation of any Applicable Laws
and of the commencement of any proceedings or investigations which relate to
compliance with Applicable Laws.
(e) After prior written notice to Mortgagee, Mortgagor, at its own
expense, may contest by appropriate legal proceeding, promptly initiated and
conducted in good faith and with due diligence, the Applicable Laws affecting
the Property, provided that (i) no Event of Default has occurred and is
continuing under the Note, this Mortgage or any of the other Loan Documents;
(ii) such proceeding shall be permitted under and be conducted in accordance
with the provisions of any other instrument to which Mortgagor is subject and
shall not constitute a default thereunder; (iii) neither the Property nor any
part thereof or interest therein nor any of the tenants or occupants thereof
shall be affected in any material adverse way as a result of such proceeding;
and (iv) Mortgagor shall have furnished to Mortgagee all other items reasonably
requested by Mortgagee.
8. CONDEMNATION
(a) Mortgagor shall promptly give Mortgagee written notice of the
actual or threatened commencement of any condemnation, governmental taking or
eminent domain proceeding of which Mortgagor has knowledge or receives notice
with respect thereto (a "CONDEMNATION") and shall deliver to Mortgagee copies of
any and all papers served in connection with such proceedings. Mortgagee is
hereby irrevocably appointed as Mortgagor's attorney-in-fact, coupled with an
interest, with exclusive power to collect, receive and retain any award or
payment for such Condemnation and to make any compromise or settlement in
connection with such proceeding, subject to the provisions of this Mortgage;
PROVIDED, HOWEVER, that so long as Mortgagor is not in default hereunder or
under the other Loan Documents, Mortgagee shall not be entitled to exercise said
appointment. Notwithstanding any taking by any public or quasi-public authority
through eminent domain or otherwise (including, without limitation, any transfer
made in lieu of or in anticipation of the exercise of such taking), Mortgagor
shall continue to pay the Debt at the time and in the manner provided for in the
Note, this Mortgage, and the other Loan Documents, and the Debt shall not be
reduced until any award or payment therefor shall have been actually received
after expenses of collection and applied by Mortgagee to the discharge of the
Debt. Mortgagee shall not be limited to the interest paid on the award by the
condemning authority but shall be entitled to receive out of the award interest
at the rate or rates provided in the Note.
(b) If the Property shall be the subject of a Condemnation, in whole
or in part,
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Mortgagor shall give prompt written notice thereof to Mortgagee.
(i) In the case of a Condemnation, provided that no Event of
Default has occurred and is continuing, Mortgagee may: (A)
settle and adjust any claim with the prior written consent of
Mortgagor, or (B) allow Mortgagor to agree with the
condemning authority on the amount to be paid upon the
Condemnation; PROVIDED, HOWEVER, that, if no Event of Default
shall have occurred and be continuing, Mortgagor may adjust
losses aggregating not in excess of Two Hundred Fifty
Thousand and No/100 Dollars ($250,000.00) if such adjustment
is carried out in a competent and timely manner, and provided
in any case that Mortgagee shall be, and is hereby,
authorized to collect and receipt for any such Condemnation
award or proceeds. The reasonable expenses incurred by
Mortgagee in the adjustment and collection of a Condemnation
award or proceeds shall become part of the Debt, shall be
secured by this Mortgage and shall be reimbursed by Mortgagor
to Mortgagee on demand.
(ii) In the event of any Condemnation affecting all or any portion
of the Property where: (A) the Condemnation award or proceeds
are sufficient to enable Mortgagor to fully restore the
Property; (B) the term of, and proceeds derived from,
Mortgagor's business interruption insurance (or other similar
insurance) shall be sufficient to fully cover the period that
the Property is undergoing restoration; (C) Mortgagee
determines that the restoration is reasonably capable of
being completed, and is actually completed, at least nine (9)
months prior to the Maturity Date; (D) the Loan-to-Value
Ratio upon completion of restoration is estimated, by an
appraiser acceptable to Mortgagee, to be no greater than
0.7:1.0; (E) the License Agreement has not been terminated as
a result of the Condemnation; (F) the restoration can be
completed within nine (9) months from the date that the
Condemnation occurred, or within such shorter time period as
may be required by the License Agreement; (G) the restoration
is permitted or required under the License Agreement; and (H)
the Debt Service Coverage Ratio upon completion is reasonably
anticipated to be at least 1.25 to 1.0, then, if no Event of
Default shall have occurred and be continuing, the
Condemnation award or proceeds shall be applied to the cost
of restoring, repairing, replacing or rebuilding the Property
or the part thereof subject to the Condemnation, as provided
for below; and Mortgagor hereby covenants and agrees
forthwith to commence and diligently to prosecute such
restoring, repairing, replacing or rebuilding. NOI for
purposes of this calculation shall be NOI for the twelve (12)
calendar month period immediately preceding the Condemnation,
unless the appraiser referenced in clause (D) above estimates
that NOI after the restoration will be more than ten percent
(10%) less than NOI for such twelve (12) calendar month
period, in which case the Debt Service Coverage Ratio shall
be calculated using the appraiser's estimate of NOI.
(iii) Except as provided above, the award or proceeds 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 the cost of restoring, repairing, replacing or
rebuilding the Property or the part thereof subject to the
Condemnation in the manner set forth below. In
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no case shall any such application reduce or postpone any
payments otherwise required pursuant to the Note.
(iv) In the event that a Condemnation award or proceeds, if any,
shall be made available to Mortgagor for the restoring,
repairing, replacing or rebuilding of the Property, Mortgagor
hereby covenants to restore, repair, replace or rebuild the
Property 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 and plans and
specifications approved in advance by Mortgagee; PROVIDED,
HOWEVER, that Mortgagor shall pay all costs (and if required
by Mortgagee, shall deposit the total thereof with Mortgagee
in advance) of such restoring, repairing, replacing or
rebuilding in excess of the net award or proceeds made
available pursuant to the terms hereof.
(v) In the event Mortgagor is entitled to reimbursement out of
proceeds held by Mortgagee, such proceeds shall be disbursed
from time to time upon Mortgagee being furnished with: (A)
evidence reasonably satisfactory to it of the estimated cost
of completion of the restoration, repair, replacement and
rebuilding; (B) funds, or, at Mortgagee's option, assurances
reasonably satisfactory to Mortgagee that such funds are
available, sufficient in addition to the Condemnation award
or proceeds to complete the proposed restoration, repair,
replacement and rebuilding; and (C) such architect's
certificates, waivers of lien for work previously performed
or contemporaneously funded, 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
(which approval shall not be unreasonably withheld). 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 the Condemnation award or
proceeds shall be disbursed prior to disbursement of such
proceeds, and at all times the undisbursed balance of such
proceeds remaining in Mortgagee's possession, together with
funds deposited for that purpose or irrevocably committed to
the reasonable 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 and claims of lien.
Any surplus which may remain out of a Condemnation award or
proceeds held by Mortgagee after payment of such costs of
restoration, repair, replacement or rebuilding shall be
delivered to Mortgagor, provided such restoration was
performed in accordance with the provisions of this Section,
and Mortgagor is not then in default of its obligations under
the Loan Documents.
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9. LEASES AND PROFITS
(a) In connection with the Loan, Mortgagor hereby absolutely and
unconditionally assigns to Mortgagee all of Mortgagor's right, title and
interest in all current and future Leases and Profits, it being intended by
Mortgagor that such 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 to
impose any obligation upon Mortgagee. Mortgagor shall execute and deliver to
Mortgagee such additional instruments, in form and substance reasonably
satisfactory to Mortgagee, as may hereafter be requested by Mortgagee to further
evidence and confirm such assignment. Nevertheless, subject to the terms of this
Section, Mortgagee has granted to Mortgagor a revocable license to operate and
manage the Property and to collect the Profits. Mortgagor shall hold the
Profits, or a portion thereof sufficient to discharge all current sums due on
the Debt, in trust for the benefit of Mortgagee for use in the payment of such
sums. Upon the occurrence of an Event of Default, the license granted to
Mortgagor shall automatically be revoked, and Mortgagee shall immediately be
entitled to possession of all Profits, whether or not Mortgagee enters upon or
takes control of the 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 Property in person, by agent or by court-appointed
receiver to collect the Profits. Any Profits collected after revocation of the
license may be applied toward payment of the Debt in such priority and
proportions as Mortgagee in its discretion shall deem appropriate.
(b) Mortgagor shall furnish Mortgagee with executed copies of all
Leases and all amendments thereto. All renewals of Leases and all proposed
Leases shall provide for rental rates comparable to existing local market rates
and shall be arms-length transactions. All proposed Leases shall be subject to
the prior approval of Mortgagee except that proposed Leases which: (i) do not
individually or in the aggregate alter the ratio of office/retail space to hotel
space as presently utilized in the Property; (ii) are the result of an
arms-length transaction with a bona fide, independent third-party; (iii) provide
for rental rates comparable to existing market rates; (iv) do not contain any
terms which would affect Mortgagee's rights under the Note, this Mortgage or the
other Loan Documents; and (v) are for less than 500 square feet, shall not be
subject to the prior approval of Mortgagee (the "MAJOR LEASES"). All Leases
shall provide that they are subordinate to this Mortgage and that the lessee
agrees to attorn to Mortgagee. Mortgagor shall: (A) 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;
(B) promptly send to Mortgagee copies of all notices of default which Mortgagor
shall send or receive thereunder; (C) enforce all of the material terms,
covenants and conditions contained in the Leases on the part of the lessee
thereunder to be observed or performed, short of termination thereof; (D) not
collect any Profits more than one (1) month in advance; (E) not execute any
other assignment of the lessor's interest in the Leases or Profits; (F) other
than DE MINIMIS non-financial amendments, not alter, modify or change the terms
of the Major Leases without the prior written consent of Mortgagee (which
consent shall not be unreasonably withheld), or, except if a lessee is in
default, cancel or terminate a Major Lease or
- 25 -
accept a surrender thereof or convey or transfer or suffer or permit a
conveyance or transfer of the Property or of any interest therein so as to
effect a merger of the estates and rights of, or a termination or diminution of
the obligations of, lessees thereunder; PROVIDED, HOWEVER, that any Major Lease
may be canceled if at the time of the cancellation thereof a new Major Lease is
entered into with a bona fide, independent third-party on substantially the same
terms or more favorable terms as the canceled Major Lease; (G) not alter, modify
or change the terms of any guaranty of the Leases or cancel or terminate such
guaranty without the prior written consent of Mortgagee; (H) not consent to any
assignment of or subletting under a Major Lease not in accordance with their
terms, without the prior written consent of Mortgagee; and (I) execute and
deliver at the request of Mortgagee all such further assurances, confirmations
and assignments in connection with the Property as Mortgagee shall from time to
time request.
(c) All security deposits of lessees, whether held in cash or any
other form, shall not be commingled with any other funds of Mortgagor and, if
cash, shall be deposited by Mortgagor into a separate account. 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 unless replaced by cash deposits as hereinabove described,
shall be issued by an institution reasonably satisfactory to Mortgagee, shall,
if permitted pursuant to any legal requirements, name Mortgagee as payee or
mortgagee thereunder (or at Mortgagee's option, be fully assignable to
Mortgagee) and shall, in all respects, comply with any applicable legal
requirements and otherwise be reasonably satisfactory to Mortgagee. Mortgagor
shall, upon request, provide Mortgagee with evidence reasonably satisfactory to
Mortgagee of Mortgagor's compliance with the foregoing. Following the occurrence
and during the continuance of any Event of Default, Mortgagor shall, upon
Mortgagee's request, if permitted by any applicable legal requirements, turn
over to Mortgagee the security deposits (and any interest theretofore earned
thereon) with respect to all or any portion of the Property, to be held by
Mortgagee subject to the terms of the Leases.
10. REPRESENTATIONS CONCERNING LOAN
Mortgagor represents, warrants and covenants as follows:
(a) Mortgagor is duly organized and validly existing in good
standing under the applicable laws of the state of its creation as a limited
liability company and Mortgagor is qualified to do business in and is in good
standing in the state in which the Property is located, with full power, right,
authority and legal capacity to enter into this Mortgage, the Loan and the Loan
Documents and to operate the Property as contemplated hereunder.
(b) The execution, delivery and performance of the Loan Documents
executed or delivered by Mortgagor and the consummation of the transactions
contemplated thereby: (i) have been duly authorized by all requisite actions;
(ii) have been approved or consented to by all of their respective constituent
entities whose approval or consent is required to be obtained; (iii) do not
require the approval or consent of any governmental authority having
jurisdiction over any of Mortgagor or the Property; (iv) do not and will not
constitute a violation of,
- 26 -
or default under, the governing instruments of Mortgagor or any applicable
requirement of a governmental authority; and (v) will not be in contravention of
any court or administrative order or ruling applicable to Mortgagor or the
Property, or any mortgage, indenture, agreement, commitment or instrument to
which Mortgagor is a party or by which it or its assets are bound, nor create or
cause to be created any mortgage, lien, encumbrance, or charge against the
assets of Mortgagor other than those permitted by the Loan Documents.
(c) There are no actions, suits or proceedings pending, or, to the
knowledge of Mortgagor, threatened, nor any pending or, to the knowledge of
Mortgagor, threatened labor disputes, against or affecting Mortgagor or the
Property, or any other collateral covered by the Loan Documents, or involving
the validity or enforceability of the Loan Documents or the priority of the
liens created or to be created thereby, at law or in equity, or before or by any
governmental authority, which, if adversely determined, would, in the
determination of Mortgagee, either individually or in the aggregate, have a
material adverse affect on (i) the operation of the Property as contemplated
hereunder, (ii) the ability of Mortgagor to pay all of its liabilities or to
perform all of its obligations in the manner and within the time periods
required under the Loan Documents, (iii) the validity, enforceability or
consummation of the Loan Documents or the transactions contemplated thereby, or
(iv) the title to the Property, the permitted uses of the Property or the value
of the security provided by the Loan Documents.
(d) The Note, this Mortgage and the other Loan Documents are the
legal, valid and binding obligations of Mortgagor and are not subject to any
right of rescission, set-off, counterclaim or defense, including the defense of
usury, nor would the operation of any of the terms of the Note, this Mortgage,
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, set-off, counterclaim or defense, including the defense of usury.
(e) To Mortgagor's best knowledge, and except as disclosed on the
survey of the Property delivered to Mortgagee in connection with this Mortgage,
all of the Improvements which were considered in determining the appraised value
of the Property lie wholly within the boundaries and building restriction lines
of the Property, no improvements on adjoining properties encroach upon the
Property, and no easements or other encumbrances upon the Land encroach upon any
of the Improvements, so as to affect the value or marketability of the Property.
(f) The Property is not subject to any leases, licenses or other
use or occupancy agreements. No person has any possessory interest in the
Property or right to occupy any portion thereof except under and pursuant to the
provisions of any Leases or transient hotel guests in the ordinary course of
Mortgagor's business.
(g) The survey of the Property delivered to Mortgagee in
connection with this Mortgage has been performed by a duly licensed surveyor
or registered
- 27 -
professional engineer in the jurisdiction in which the Property is situated, and
to Mortgagor's best knowledge, does not fail to reflect any material matter
affecting the Property or the title thereto.
(h) The financial statements of Mortgagor heretofore furnished to
Mortgagee are, as of the date specified therein, complete and correct in all
material respects and fairly present the financial condition of Mortgagor and to
Mortgagor's best knowledge are prepared in accordance with the Uniform System of
Accounts for hotel and motel properties as approved by the American Hotel and
Motel Association (as in effect from time to time, the "UNIFORM SYSTEM OF
ACCOUNTS") applied on a consistent basis. Mortgagor does not on the date hereof
have any contingent liabilities, liabilities for taxes, unusual forward or
long-term commitments or unrealized or anticipated losses from any unfavorable
commitments which in each case are known to Mortgagor and which, in Mortgagor's
opinion, are reasonably likely to result in a material adverse effect on the
Property or the operation thereof as a hotel, except as referred to or reflected
or provided for in the financial statements heretofore furnished to Mortgagee or
as otherwise disclosed to Mortgagee herein. Since the last date of such
financial statements, there has been no material adverse change in the financial
condition, operations or business of Mortgagor from that set forth in such
financial statements as of the dates thereof.
(i) The License Commitment is in full force and effect and there
is no default, breach or violation existing thereunder by any party thereto and
no event (other than payments due but not yet delinquent) which, with the
passage of time or with notice and the expiration of any grace or cure period,
would constitute a default, breach or violation by any party thereunder.
(j) The Management Agreement is in full force and effect and there
is no default, breach or violation existing thereunder by any party thereto and
no event (other than payments due but not yet delinquent) which, with the
passage of time or with notice and the expiration of any grace or cure period,
would constitute a default, breach or violation by any party thereunder.
(k) Neither the execution and delivery of the Loan Documents,
Mortgagor's performance thereunder, nor the recordation of this Mortgage will
adversely affect (i) Mortgagor's rights under either the License Agreement or
the Management Agreement or (ii) the licenses, registrations, permits,
certificates, authorizations and approvals necessary for the operation of the
Property as a hotel.
(l) The Leases are in full force and effect and to Mortgagor's
best knowledge, there is no default, breach or violation existing thereunder by
any party thereto and no event (other than payments due but not yet delinquent)
which, with the passage of time or with notice and the expiration of any grace
or cure period, would constitute a default, breach or violation by any party
thereunder.
(m) Since the date of the last inspection of the Property by
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Mortgagee: (i) no portion of the Property has been damaged and not repaired to
Mortgagee's satisfaction or has been taken in condemnation or other similar
proceedings; and (ii) no change has occurred in the structure or physical
condition of the Property other than customary wear and tear.
(n) Since the date of the information and documentation relating
to the Property furnished to Mortgagee, no material change in the Property has
occurred.
(o) No default has occurred and is continuing in the performance
of any obligation of Mortgagor or any affiliate of Mortgagor which would be
deemed an Event of Default under the Loan Documents if they were in effect, or
any instruments evidencing, securing or guaranteeing any other loan.
(p) There exists no fact, event or disclosure in connection with
the Loan that reasonably could be expected to cause the Loan to become
delinquent or otherwise have a material adverse affect on the Loan or the
Property.
(q) Except as otherwise previously disclosed to Mortgagee in
writing, no notice of violation of any municipal ordinances have been filed
against the Property by any municipal department.
(r) Mortgagor has no knowledge of any latent or patent defects in
the roof, foundations, sprinkler mains, structural, mechanical and HVAC systems
and masonry wall in any of the Improvements.
(s) No portion of the Property or Improvements is located in an
area identified by the Secretary of Housing and Urban Development, the Federal
Emergency Management Act or any successor thereto as an area having special
flood hazards pursuant to the National Flood Insurance Act of 1968 or the Flood
Disaster Protection Act of 1973, or the National Flood Insurance Reform Act of
1994, as each may be amended, or any successor law, or, if any portion of the
Property or Improvements is now or at any time in the future located within any
such area, at the request of Mortgagee, Mortgagor will obtain and maintain the
insurance prescribed in Section 4 hereof. Mortgagor hereby acknowledges that
this provision is operative insofar as the triggering condition specified in the
first sentence hereof is satisfied.
(t) Mortgagor has obtained, or as promptly as reasonably possible
after completion of the construction of the Improvements will obtain and provide
to Mortgagee, true and correct copies of all necessary certificates, permits,
licenses and other approvals, governmental and otherwise, necessary for the
legal use, occupancy and operation of the Property as a hotel, including,
without limitation, any applicable food, beverage and liquor licenses,
certificate of completion and occupancy permit and the conduct of its business
and all required zoning, building code, land use, environmental and other
similar permits or approvals, all of which are either in full force and effect
as of the date hereof or will be promptly obtained when appropriate after the
date hereof and thereafter maintained in full force and effect, and are not or
will not be subject to
- 29 -
revocation, suspension, forfeiture or modification.
(u) The Property, the Improvements and the present and
contemplated use and occupancy thereof are in full compliance with all
applicable zoning ordinances, building codes, land use and Environmental Laws
and other similar laws.
(v) The Property is, or after completion of construction of the
Improvements will be, served by all utilities required for the current or
contemplated use thereof. All utility service is or will be provided by public
utilities and the Property has accepted such utility service or is or will be
equipped to accept such utility service.
(w) (i) The Property is contiguous to (or has access through a
perpetual easement which perpetual easement in each case is (or will be)
irrevocable, and is not (and will not be) subordinate to any mortgage other than
this Mortgage) and has access to a physically and legally open all-weather
public street; (ii) all public roads and streets necessary for service of and
access to the Property for the current or contemplated use thereof have been (or
will be) completed prior to the hotel on the Property opening for business, are
(or will be) serviceable and all-weather prior to the opening for business and
are (or will be) physically and legally open for use by the public prior to the
hotel on the Property opening for business; and (iii) Mortgagor has (or will
have) all necessary permits and approvals for ingress and egress prior to the
hotel on the property opening for business.
(x) The Property is free from damage caused by fire or other
casualty and is in good repair.
(y) All costs and expenses of any and all labor, materials,
supplies and equipment used in the construction of the Improvements have been
paid in full (or will be paid when due) and the title insurance company has
received such additional assurances, bond or other comfort it may require in
order to provide Mortgagee with an acceptable title insurance policy having no
title exception for mechanics' or materialmen's liens or potential liens.
(z) Mortgagor either has paid and is the owner of, or will have
paid and be the owner of, all furnishings, fixtures and equipment (other than
tenants' property) now or hereafter located on or used in connection with the
operation of the Property, free and clear of any and all security interests,
liens or encumbrances, except the lien and security interest created hereby and
any security interest expressly permitted by Mortgagee.
(aa) All liquid and solid waste disposal, septic and sewer systems
located on the Property are in a good and safe condition and repair and in
compliance with all Applicable Laws.
- 30 -
(bb) Mortgagor has received no notice of an actual or threatened
condemnation or eminent domain proceeding by any public or quasi-public
authority affecting the Property.
(cc) The Property is assessed for real estate tax purposes as one
or more wholly independent tax lot or lots, separate from any adjoining land or
improvements owned by Mortgagor or any other person not constituting a part of
such lot or lots, and no other land or improvements is assessed and taxed
together with the Property or any portion thereof.
(dd) Mortgagor has disclosed to Mortgagee all material facts and
has not failed to disclose any material fact that could cause any representation
or warranty made herein to be materially misleading. Each of the representations
and the warranties made by each Guarantor herein or in any other Loan
Document(s) is true and correct in all material respects.
(ee) No portion of the Property has been or will be purchased,
improved, fixtured, equipped or furnished with proceeds of any criminal or other
illegal activity and to the best of Mortgagor's knowledge, there are no illegal
activities or activities relating to controlled substances at the Property.
11. SINGLE PURPOSE ENTITY; AUTHORIZATION
Mortgagor represents and warrants, and covenants for so long as any
obligations secured by this Mortgage remain outstanding, as follows:
(a) Mortgagor does not and will not own any asset or property
other than: (i) the Property; and (ii) personal property necessary for the
ownership or operation of the Property.
(b) Mortgagor does not and will not engage in any business other
than the ownership, management and operation of the Property, and Mortgagor will
conduct and operate its business in all material respects as presently conducted
and operated and will not change the use of the Property.
(c) Mortgagor will not enter into any contract or agreement with
Guarantor or an Affiliate, except upon terms and conditions that are
substantially similar to those that would be available on an arms-length
third-party basis.
(d) Mortgagor has not incurred and will not incur any
indebtedness, secured or unsecured, direct or indirect, absolute or contingent
(including guaranteeing any obligation), other than: (i) the Debt, (ii) trade
and operational debt incurred in the ordinary course of business with trade
creditors and in amounts as are customary and reasonable under the circumstances
and (iii) interim advances to Mortgagor by Guarantor to fund construction and
property development expenses related to the Property in the amounts set forth
in the Guaranty Agreement, all of which
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shall be repaid with the proceeds of the Loan on or before August 15, 1997;
provided, however, that, after September 1, 1997, Mortgagor may incur Affiliate
indebtedness to Guarantor in an aggregate amount not to exceed Fifty Thousand
and No/100 Dollars ($50,000.00) in any calendar month and Two Hundred Fifty
Thousand and No/100 Dollars ($250,000.00) in the aggregate, and provided further
that such Affiliate indebtedness shall bear interest at a rate not in excess of
the Prime Rate plus one percent (1%). Except with Mortgagee's prior written
approval in each instance, no indebtedness other than the Debt is or shall be
secured by the Property. Mortgagee's approval shall be granted or withheld at
Mortgagee's sole discretion. In connection with any such financing approved by
Mortgagee, Mortgagor shall be required to obtain and deliver to Mortgagee a
subordination and standstill agreement from such Mortgagee which shall be in
form and substance satisfactory to Mortgagee in its sole discretion.
(e) Mortgagor has not made and will not make any loans or advances
to any third party (including any constituent party, Guarantor or any affiliate
of Mortgagor, of any constituent party or of Guarantor), where the principal,
interest and all other sums exceed, in the aggregate, Ten Thousand Dollars
($10,000.00) in the ordinary course of business and of the character of trade or
operational expenses.
(f) Mortgagor has done or caused to be done, and will do or cause
to be done, all things necessary to preserve its existence, and Mortgagor will
not, nor will Mortgagor permit any constituent party or Guarantor, to amend,
modify or otherwise change the partnership certificate, partnership agreement,
articles of incorporation and bylaws, trust or other organizational documents,
as the case may be, of Mortgagor or such constituent party or Guarantor in a
manner which would adversely affect the Mortgagor's existence as a single
purpose entity.
(g) Mortgagor will maintain books and records and bank accounts
separate from those of its Affiliates and any constituent party, and Mortgagor
and Guarantor each will file or cause to be filed separate tax returns.
Mortgagor shall provide Mortgagee with sixty (60) days prior written notice of
any change in the principal place of its business or the jurisdiction of
formation.
(h) Mortgagor is and will be, and at all times will hold itself
out to the public as, a legal entity separate and distinct from any other entity
(including any Affiliate or constituent party of Mortgagor or any Affiliate or
constituent party of Guarantor), and will use and conduct its business in its
own name.
(i) Neither Mortgagor nor any constituent party will cause or seek
the dissolution or winding up, in whole or in part, of Mortgagor.
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(j) Mortgagor will not commingle its funds and other assets with
those of, or pledge its assets for the benefit of, any Affiliate or constituent
party of Mortgagor, any Affiliate or constituent party of Guarantor, or any
other person.
(k) Mortgagor does not or will not hold itself out to be
responsible for the debts or obligations of any other person and does not or
will not pay another person's liabilities out of its own funds.
(l) Mortgagor will not consent to the filing of any petition to
take advantage of any applicable insolvency, bankruptcy, liquidation or
reorganization statute, and Mortgagor will not make an assignment for the
benefit of its creditors.
12. MAINTENANCE OF PROPERTY
(a) Mortgagor shall cause the Property to be maintained in a good
and safe condition and repair. The Improvements and the Personal Property shall
not be removed, demolished or materially altered (except for normal replacement
of the Personal Property) without the prior written consent of Mortgagee.
Mortgagor shall promptly comply with all laws, orders and ordinances affecting
the Property, or the use thereof, subject to Mortgagor's right to contest the
same as provided in this Mortgage. Mortgagor shall promptly repair, replace or
rebuild any part of the Property which may be destroyed by any casualty (subject
to Section 4 hereof), or become damaged, worn or dilapidated, or which may be
affected by any proceeding of the character referred to in Section 8 hereof, and
shall complete and pay for any structure at any time in the process of
construction or repair on the Land. Except as expressly permitted in writing by
Mortgagee, Mortgagor shall not initiate, join in, acquiesce in, or consent to
any change in any private restrictive covenant, zoning law or other public or
private restriction limiting or defining the uses which may be made of the
Property or any part thereof. If under applicable zoning provisions the use of
all or any portion of the Property is or shall become a nonconforming use,
Mortgagor will not cause or permit such nonconforming use to be discontinued or
abandoned without the prior written consent of Mortgagee. Mortgagor shall not:
(i) change the use of the Land as currently configured and utilized; (ii) permit
or suffer to occur any waste on or to the Property or to any portion thereof; or
(iii) take any steps whatsoever to convert the Property, or any portion thereof,
to a condominium or cooperative form of ownership. Mortgagor shall not enter
into any license, easement, covenant or other agreement affecting the Property
without the prior written consent of Mortgagee.
(b) Mortgagor shall not commit or suffer any waste on or to the
Property or to any portion thereof or make any change in the use of the Property
which will in any way materially increase the risk of fire or other hazard
arising out of the operation of the Property, or take any steps to convert the
Property or any portion thereof to a condominium or cooperative form of
ownership, or take any action that might invalidate or give cause for
cancellation of any Policy, or do or permit to be done thereon anything that may
in any way impair the value of the Property or the security of this Mortgage.
Mortgagor will not, without the prior written consent of Mortgagee, permit any
drilling or exploration for or extraction, removal, or production of any
minerals from the surface or
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the subsurface of the Land, regardless of the depth thereof or the method of
mining or extraction thereof.
(c) Mortgagor will promptly pay when due all bills and costs for
labor, materials, and specifically fabricated materials incurred in connection
with the Property and never permit to exist beyond the due date thereof in
respect of the Property or any part thereof any lien or security interest, even
though inferior to the liens and the security interests hereof, and in any event
never permit to be created or exist in respect of the Property or any part
thereof any other or additional lien or security interest other than the liens
or security interests hereof, except as otherwise expressly permitted by
Mortgagee.
13. TRANSFER OR ENCUMBRANCE OF THE PROPERTY
(a) Mortgagor acknowledges that Mortgagee has examined and relied
on the creditworthiness and experience of Mortgagor, EHA IV and Guarantor in
owning and operating properties such as the Property in agreeing to make the
loan secured by this Mortgage, and that Mortgagee will continue to rely on
Mortgagor's ownership of the Property as a means of maintaining the value of the
Property as security for repayment of the Debt. Mortgagor acknowledges that
Mortgagee has a valid interest in maintaining the value of the 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 Property. So long as any amounts remain
outstanding under the Note or Other Loan Documents, Mortgagor shall not, without
the prior written consent of Mortgagee, sell, convey, alienate, mortgage,
encumber, pledge or otherwise transfer the Property or any part thereof, or
permit the Property or any part thereof to be sold, conveyed, alienated,
mortgaged, encumbered, pledged or otherwise transferred.
(b) A sale, conveyance, alienation, mortgage, encumbrance, pledge
or transfer within the meaning of this Section shall be deemed to include: (i)
an installment sales agreement wherein Mortgagor agrees to sell the Property or
any part thereof for a price to be paid in installments; (ii) an agreement by
Mortgagor leasing all or a substantial part of the Property for other than
actual occupancy by a space tenant thereunder or a sale, assignment or other
transfer of, or the grant of a security interest in, Mortgagor's right, title
and interest in and to any Leases or any Profits; and (iii) the change, removal
or resignation of EHA IV or the transfer of the partnership interests of EHA IV;
PROVIDED, HOWEVER, that the foregoing provision shall not prohibit or restrict
the transfer of the lesser of: (A) up to forty-nine percent (49%) of the
ownership interests in EHA IV, or (B) such lesser amount of ownership interests
in EHA IV as shall be permitted by the License Agreement.
(c) No sale, conveyance, alienation, mortgage, encumbrance, pledge
or transfer of the Property, or of any interest therein, shall be permitted
during the term of the Loan without Mortgagee's prior written approval (except
for leases in the ordinary course of business entered into in accordance with
the terms of this Mortgage). Mortgagee shall not be required to demonstrate any
actual impairment of its security or any increased risk of default hereunder in
order to declare the Debt immediately due and payable upon Mortgagor's sale,
conveyance, alienation, mortgage,
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encumbrance, pledge or transfer of the Property without Mortgagee's consent.
This provision shall apply to every sale, conveyance, alienation, mortgage,
encumbrance, pledge or transfer of the Property regardless of whether voluntary
or not, or whether or not Mortgagee has consented to any previous sale,
conveyance, alienation, mortgage, encumbrance, pledge or transfer of the
Property.
(d) Mortgagee's consent to one sale, conveyance, alienation,
mortgage, encumbrance, pledge or transfer of the Property shall not be deemed to
be a waiver of Mortgagee's right to require such consent in the future. Any
sale, conveyance, alienation, mortgage, encumbrance, pledge or transfer of the
Property made in contravention of this Section shall be null and void and of no
force or effect.
(e) Mortgagor agrees to bear and shall pay or reimburse Mortgagee
on demand for all reasonable expenses (including, without limitation,
Mortgagee's out-of-pocket attorney's fees and disbursements, title search costs
and title insurance endorsement premiums) incurred by Mortgagee in connection
with the review, approval or disapproval, and documentation of any such sale,
conveyance, alienation, mortgage, encumbrance, pledge or transfer.
14. ESTOPPEL CERTIFICATES: AFFIDAVITS
(a) Within ten (10) days after request by Mortgagee, Mortgagor
shall furnish Mortgagee or any proposed assignee of the Loan with a statement,
duly acknowledged and certified, setting forth: (i) the amount of the original
principal amount of the Note; (ii) the then outstanding principal balance of the
Note; (iii) the most recent rate of interest of the Note of which Mortgagor has
received notice; (iv) the terms of payment and maturity date of the Note; (v)
the date on which installments of interest and/or principal were last paid; (vi)
except as provided in such statement, there are no defaults or events with which
the passage of time or the giving of notice or both would constitute an event of
default under any of the Loan Documents; (vii) any offsets or defenses to the
payment of the Debt to Mortgagor's best knowledge; (viii) that the Note, this
Mortgage and the other Loan Documents are valid, legal and binding obligations
of Mortgagor, which have not been modified or if modified, giving particulars of
such modification; (ix) that after completion of the construction of the
Improvements, all Leases and other agreements necessary for the use and
operation of the Property, including without limitation, all food, liquor and
other beverage licenses and all other necessary permits and governmental
approvals, are (or will be prior to the hotel on the Property opening for
business) in full force and effect, have not been modified (or if modified,
setting forth all modifications), and are not, to the best knowledge of
Mortgagor, in default or if any of such agreements are in default, setting forth
the specific nature of all such defaults; (x) that the Management Agreement is
in full force and effect, has not been modified and is not, to the best
knowledge of Mortgagor, in default, or if in default, setting forth the specific
nature of such default; (xi) that the License Agreement is in full force and
effect, has not been modified and is not, to the best knowledge of Mortgagor, in
default, or if in default, setting forth the specific nature of such default,
and (xii) as to any other matters reasonably requested by Mortgagee and
reasonably related to the Management Agreement, the License Agreement, the
Leases, the obligations secured hereby, the Property or this Mortgage.
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(b) Within thirty (30) days after request by Mortgagee, Mortgagor
shall furnish Mortgagee or any proposed assignee of the Loan 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.
(c) Mortgagor shall deliver to Mortgagee upon request, an estoppel
certificate from the Manager attesting to such facts regarding the Management
Agreement as Mortgagee may require, including, but not limited to, attestations
that such agreement is in full force and effect with no defaults thereunder on
the part of Manager or, to Manager's best knowledge, any other party, stating
the amount of management fees and all other fees and sums payable by Mortgagor
under the Management Agreement, and that the Manager claims no defense or offset
against the full and timely performance of its obligations under the Management
Agreement in form and substance reasonably satisfactory to Mortgagee; PROVIDED,
HOWEVER, that Mortgagor shall not be required to deliver such certificates more
frequently than once in any consecutive twelve (12) month period except upon any
sale or transfer (or proposed sale or transfer) of the Loan by Mortgagee.
(d) Mortgagor shall use its best efforts to deliver to Mortgagee
upon request, an estoppel certificate from the Licensor attesting to such facts
regarding the License Agreement as Mortgagee may require, including, but not
limited to, attestations that such agreement is in full force and effect with no
defaults thereunder on the part of Licensor or, to Licensor's best knowledge,
any other party, stating the amount of license fees, incentive fees and all
other fees and sums payable by Mortgagor under the License Agreement, and to
Licensor's best knowledge that Licensor claims no defense or offset against the
full and timely performance of its obligations under the License Agreement in
form and substance reasonably satisfactory to Mortgagee; provided; however, that
Mortgagor shall not be required to deliver such certificates more frequently
than once in any consecutive twelve (12) month period except upon any sale or
transfer (or proposed sale or transfer) of the Loan by Mortgagee or except as
set forth in the Escrow Agreement.
15. CHANGES IN THE LAWS REGARDING TAXATION
If any law is enacted, adopted or amended after the date of this
Mortgage which imposes a tax (other than income taxes), either directly or
indirectly, on the Debt or Mortgagee's interest in the Property, Mortgagor will
pay such tax, with interest and penalties thereon, if any. In the event
Mortgagee or its counsel determines that the payment of such tax or interest and
penalties by Mortgagor would be unlawful or taxable to Mortgagee or
unenforceable or provide the basis for a defense of usury, then in any such
event, Mortgagee shall have the option, by written notice of not less than
ninety (90) days, to declare the Debt immediately due and payable.
16. NO CREDITS ON ACCOUNT OF THE DEBT
Mortgagor will not claim, demand or be entitled to any credit or
credits on account of the Debt for any part of the Taxes or Other Charges
assessed against the Property, or any part
- 36 -
thereof, and no deduction shall otherwise be made or claimed from the assessed
value of the Property, or any part thereof, for real estate tax purposes by
reason of this Mortgage or the Debt. In the event such claim, credit or
deduction shall be required by law, Mortgagee shall have the option, by written
notice of not less than ninety (90) days, to declare the Debt immediately due
and payable.
17. DOCUMENTARY STAMPS
If at any time the United States of America, any State thereof or any
subdivision of any such State shall require revenue or other stamps to be
affixed to the Note, this Mortgage or any of the other Loan Documents, or shall
impose any other tax or charge on the same, Mortgagor will pay for the same,
with interest and penalties thereon, if any.
18. CONTROLLING AGREEMENT
It is expressly stipulated and agreed to be the intent of Mortgagor and
Mortgagee at all times to comply with applicable state law or applicable United
States federal law (to the extent that it permits Mortgagee to contract for,
charge, take, reserve, or receive a greater amount of interest than under state
law) and that this Section shall control every other covenant and agreement in
this Mortgage and the other Loan Documents. If the applicable law (state or
federal) is ever judicially interpreted so as to render usurious any amount
called for under the Note or under any of the other Loan Documents, or
contracted for, charged, taken, reserved, or received with respect to the Debt,
or if Mortgagee's exercise of the option to accelerate the maturity of the Note,
or if any prepayment by Mortgagor results in Mortgagor having paid any interest
in excess of that permitted by applicable law, then it is Mortgagor's and
Mortgagee's express intent that all excess amounts theretofore collected by
Mortgagee shall be credited on the principal balance of the Note and all other
Debt (or, if the Note and all other Debt have been or would thereby be paid in
full, refunded to Mortgagor), and the provisions of the Note and the other Loan
Documents immediately be deemed reformed and the amounts thereafter collectible
hereunder and thereunder reduced, without the necessity of the execution of any
new documents, so as to comply with the applicable law, but so as to permit the
recovery of the fullest amount otherwise called for hereunder or thereunder. All
sums paid or agreed to be paid to Mortgagee for the use, forbearance, or
detention of the Debt shall, to the extent permitted by applicable law, be
amortized, prorated, allocated, and spread throughout the full stated term of
the Debt until payment in full so that the rate or amount of interest on account
of the Debt does not exceed the maximum lawful rate from time to time in effect
and applicable to the Debt for so long as the Debt is outstanding.
Notwithstanding anything to the contrary contained herein or in any of the other
Loan Documents, it is not the intention of Mortgagee to accelerate the maturity
of any interest that has not accrued at the time of such acceleration or to
collect unearned interest at the time of such acceleration.
19. BOOKS AND RECORDS. Mortgagor shall keep and maintain full and
adequate books and records of account in accordance with methods acceptable to
Mortgagee in its sole discretion, consistently applied. Mortgagor will furnish,
or cause to be furnished to Mortgagee, within 30 days of the end of each
calendar quarter or indicated period, the following items, each
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certified by a senior financial officer of Mortgagor as true, correct and
complete as of the end of and for such period (subject to normal year-end
adjustments), and as having been prepared in accordance with the Uniform System
of Accounts, consistently applied: (a) a written occupancy statement dated as of
the last day of the most recently ended 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; (b) monthly and year to date operating statements
detailing the total revenues received and total expenses incurred in connection
with the ownership and operation of the Property, including a comparison of the
budgeted income and expenses and the actual income and expenses for such month
and the year to date (which operating information shall include the
Improvements); and (c) a written statement dated as of the last day of the most
recently ended month showing the percentage of hotel or motel rooms rented and
occupied during such month and the average daily room rate charged during such
month. Upon request by Mortgagee, Mortgagor will provide a detailed explanation
of any variances of ten (10%) percent or more between budgeted and actual
amounts for such periods. Mortgagor shall furnish or cause to be furnished,
within one hundred twenty (120) days following the end of each calendar year, a
statement of the financial affairs and condition of the Property, including a
statement of profit and loss and a balance sheet for the Property (and
Guarantor) for the immediately preceding fiscal year, prepared by an independent
certified public accountant acceptable to Mortgagee. Mortgagor shall deliver to
Mortgagee on or before January 31 of each calendar year an itemized operating
budget and capital expenditure budget for the Property and a management plan for
the Property for the current calendar year in such detail as Mortgagee may
reasonably request. Mortgagor shall promptly after receipt deliver to Mortgagee
copies of all quality inspection reports or similar reports or inspection
results that are delivered to it by the Franchisor. At any time and from time to
time Mortgagor and Guarantor shall deliver to Mortgagee or its agents such other
financial data as Mortgagee or its agents shall reasonably request with respect
to Mortgagor and/or Guarantor and the ownership, maintenance, use and operation
of the Property. All information required to be furnished to Mortgagee pursuant
to this Section shall be on the form provided by Mortgagee (which form shall
accompany Mortgagee's request). Mortgagee shall have the right to conduct an
independent audit of any of the above financial information at its own expense
at any time. In the event that an error in excess of three percent (3%) of
either total revenues or total expenses is discovered, the cost of the audit
shall be borne by Mortgagor.
20. PERFORMANCE OF OTHER AGREEMENTS
(a) Mortgagor shall observe and perform each and every term to be
observed or performed by Mortgagor pursuant to the terms of any agreement or
instrument affecting or pertaining to the Property (collectively, the "OPERATING
AGREEMENTS"). Upon reasonable request by Mortgagee, Mortgagor shall use best
efforts to deliver to Mortgagee estoppel certificates from each
- 38 -
party to the Operating Agreements in form and substance reasonably satisfactory
to Mortgagee; PROVIDED, HOWEVER, that Mortgagor shall not be required to deliver
such certificates more frequently than once in any consecutive twelve (12) month
period except upon any sale or transfer (or proposed sale or transfer) of the
Loan by Mortgagee.
(b) Mortgagor shall observe and perform each and every term to be
observed or performed by Mortgagor pursuant to the terms of the Operating
Agreements and shall:
(i) diligently proceed to cure any default and satisfy any
demand made upon it pursuant to the Operating
Agreements;
(ii) promptly notify Mortgagee in writing of any default
under the Operating Agreements and provide Mortgagee
with copies of any notices delivered in connection
therewith;
(iii) promptly enforce the performance and observance of all
of the covenants and agreements required to be
performed and/or observed by the other party under the
Operating Agreements; and
(iv) grant Mortgagee the right, but Mortgagee shall be under
no obligation, to pay any sums and to perform any act
or take any action as may be appropriate to cause all
the terms, covenants and conditions of the Operating
Agreements on the part of Mortgagor to be performed or
observed to be promptly performed or observed on behalf
of Mortgagor, to the end that the rights of Mortgagor
in, to and under said Operating Agreements shall be
kept unimpaired and free from default.
21. FURTHER ASSURANCES
(a) Mortgagor will, at the cost of Mortgagor, and without expense to
Mortgagee, do, execute, acknowledge and deliver all and every such further acts,
deeds, conveyances, mortgages, assignments, notices of assignment, Uniform
Commercial Code financing statements or continuation statements, transfers and
assurances as Mortgagee shall, from time to time, 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. Mortgagor, on demand, will execute and
deliver and hereby authorizes Mortgagee to execute in the name of Mortgagor or
without the signature of Mortgagor to the extent Mortgagee may lawfully do so,
one or more financing statements, chattel mortgages or other instruments, to
evidence more effectively the security interest of Mortgagee in the Property.
Mortgagor grants to Mortgagee an irrevocable power of attorney coupled with an
interest for the purpose of exercising and perfecting any and all rights and
remedies available to Mortgagee at law
- 39 -
and in equity, including, without limitation, such rights and remedies available
to Mortgagee pursuant to this Section; provided, however, that so long as no
Event of Default has occurred and continues beyond any applicable cure period,
Mortgagee shall not be entitled to exercise the foregoing power.
(b) Mortgagor acknowledges that Mortgagee may (i) sell or transfer
interests in the Loan and Loan Documents to one or more participants or special
purpose entities, (ii) pledge Mortgagee's interests in the Loan and the Loan
Documents as security for one or more loans obtained by Mortgagee, or (iii) sell
the Loan evidenced by the Note and the Loan Documents to a party who may pool
the Loan with a number of other loans and to have the holder of such loans grant
participations therein or issue one or more classes of Mortgage-Backed,
Pass-Through Certificates or other securities evidencing a beneficial interest
in a rated or unrated public offering or private placement (the "SECURITIES").
The Securities may be rated by one or more national rating agencies. Mortgagor
acknowledges and agrees that Mortgagee may, at any time, sell, transfer or
assign the Note, this Mortgage and the other Loan Documents, and any or all
servicing rights with respect thereto, or grant participations therein or issue
Securities evidencing a beneficial interest in a rated or unrated public
offering or private placement. In this regard, Mortgagor agrees to make
available to Mortgagee all information concerning its business and operations
which Mortgagee reasonably requests. Mortgagee may share such information with
the investment banking firms, rating agencies, accounting firms, law firms and
other third-party advisory firms involved with the Loan or the Securities.
Mortgagee may forward to each purchaser, transferee, assignee, servicer,
participant or investor in such securities or any credit rating agency rating
such Securities (collectively, the "INVESTOR") and each prospective Investor,
all documents and information which Mortgagee now has or may hereafter acquire
relating to Mortgagor and the Property, whether furnished by Mortgagor or
otherwise, as Mortgagee determines necessary or desirable consistent with full
disclosure for purposes of marketing and underwriting the Loan; PROVIDED,
HOWEVER, that Mortgagee shall obtain agreement from any such reviewing party to
keep such information strictly confidential to itself and its advisors.
Mortgagor shall furnish and hereby consents to Mortgagee furnishing to such
Investors or such prospective Investors any and all information concerning
Mortgagor and the Property as may be requested by Mortgagee, any Investor or any
prospective Investor in connection with any sale, transfer or participation
interest. It is understood that the information provided by Mortgagor to
Mortgagee may ultimately be incorporated into the offering documents for the
Securities and thus such information may be disclosed to Investors and
prospective Investors. 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. Upon any transfer or proposed transfer contemplated
above and by the Loan Documents, at Mortgagee's request, Mortgagor shall provide
an estoppel certificate to the Investor or any prospective Investor in such
form, substance and detail as Mortgagee may reasonably require.
22. RECORDING OF MORTGAGE
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
- 40 -
interest or evidencing the lien thereof upon the Property and each instrument of
further assurance to be filed, registered or recorded in such manner and in such
places as may be required by any present or future law in order to publish
notice of and fully to protect the lien or security interest thereof upon, and
the interest of Mortgagee in, the 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
thereto, any security instrument with respect to the Property and any instrument
of further assurance, and all federal, state, county and municipal taxes,
duties, imposts, assessments and charges arising out of or in connection with
the execution and delivery of this Mortgage, any mortgage supplemental thereto,
any security instrument with respect to the Property or any instrument of
further assurance, except where prohibited by law so to do. Mortgagor shall hold
harmless and indemnify Mortgagee, its successors and assigns, against any
liability incurred by reason of the imposition of any tax on the making and
recording of this Mortgage.
23. REPORTING REQUIREMENTS
Mortgagor agrees to give prompt written notice to Mortgagee of the
insolvency or bankruptcy filing of Mortgagor or any constituent thereof, or the
insolvency or bankruptcy filing of Guarantor.
24. EVENTS OF DEFAULT
The term "EVENT OF DEFAULT" as used herein shall mean the occurrence or
happening, at any time and from time to time, of any one or more of the
following:
(a) if any portion of the Debt is not paid on or before the fifth
(5th) day after the date such payment is due (including, without limitation, any
required deposit into any of the Accounts or the Escrow Fund) or if the entire
Debt is not paid on or before the Maturity Date;
(b) subject to Mortgagor's right to contest as provided herein, if
any of the Taxes or Other Charges are not paid when 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 transfers or encumbers any portion of the
Property in a manner inconsistent with the terms of this Mortgage;
(e) if any representation or warranty of Mortgagor, or of
Guarantor, made herein, in any Loan Document, any guaranty, or in any
certificate, report, financial statement or other instrument or document
furnished to Mortgagee shall have been false or misleading in any material
respect when made or shall become so at any time prior to repayment in full of
the debt;
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(f) if Mortgagor or Guarantor shall make an assignment for the
benefit of creditors, or if Mortgagor or Guarantor shall generally not be paying
its debts as they become due;
(g) if a receiver, liquidator or trustee of Mortgagor or of
Guarantor shall be appointed, or if Mortgagor or 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 Guarantor or if any proceeding for the dissolution or liquidation of
Mortgagor or of Guarantor shall be instituted; PROVIDED, HOWEVER, that such
appointment, adjudication, petition or proceeding, if involuntary and not
consented to by Mortgagor or Guarantor, shall constitute an Event of Default
only if 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 Property, whether it be superior or
junior in lien to this Mortgage and such default continues beyond thirty (30)
days after written notice thereof;
(i) subject to Mortgagor's right to contest as provided herein, if
the Property becomes subject to any mechanic's, materialman's or other lien or
encumbrance except a lien or encumbrance for local real estate taxes and
assessments not then due and payable that is not bonded over, discharged or
terminated within thirty (30) days of filing;
(j) if Mortgagor fails to cure promptly any violations of laws,
ordinances or regulations affecting the Property or pertaining to its use or
operation;
(k) except as permitted in this Mortgage, the actual or threatened
alteration, improvement, demolition or removal of any of the Improvements
without the prior written consent of Mortgagee;
(l) if there shall occur any damage to the Property in any manner
which is not covered by insurance solely as a result of Mortgagor's failure to
maintain insurance required in accordance with this Mortgage;
(m) if without Mortgagee's prior written consent: (i) the Manager
resigns or is removed; (ii) there is any material change in or amendment to the
Management Agreement; or (iii) there is a cancellation, expiration, surrender or
termination, for any reason, of the Management Agreement;
(n) if a default by Borrower has occurred and continues beyond any
applicable cure period under the Management Agreement;
(o) if Mortgagor ceases to operate a hotel on the Property or
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terminates such business for any reason whatsoever (other than temporary
cessation in connection with any renovations to the Property or restoration of
the Property after casualty or condemnation or similar force majeure event);
(p) if Mortgagor operates the Property under the name of any hotel
chain or system other than "Hampton Inn" without the prior written consent of
Mortgagee;
(q) if without Mortgagee's prior written consent, (i) the Licensor
resigns or is removed, (ii) there is any material change in or amendment to the
License Agreement; or (iii) there is a cancellation, expiration, surrender or
termination, for any reason, of the License Agreement;
(r if a default has occurred and continues beyond any applicable
cure period under the License Agreement;
(s) if Mortgagor or Guarantor shall be in default beyond any
applicable cure period under any term, covenant, or condition of this Mortgage,
or any of the other Loan Documents;
(t) if for more than thirty (30) days after receipt of written
notice from Mortgagee, Mortgagor shall continue to be in default under any term,
covenant, or condition of this Mortgage, or any of the other Loan Documents
other than as specified in any of the subsections of this Section; PROVIDED,
HOWEVER, that if the cure of any such default cannot reasonably be effected
within such thirty (30) day period and Mortgagor shall have promptly and
diligently commenced to cure such default within such thirty (30) day period,
then the period to cure shall be deemed extended for up to an additional sixty
(60) days (for a total of ninety (90) days from Mortgagee's default notice) so
long as Mortgagor diligently and continuously proceeds to cure such default to
Mortgagee's satisfaction;
(u) if by December 31, 1997, EHA IV shall have failed to have
conveyed and transferred, for cash, the real property located in Warwick, Rhode
Island, which it currently owns or shall have failed to transfer such property
to another entity; and
(v) if a default shall have occurred and continues beyond any
applicable cure period under any term, covenant or condition of any mortgage or
other loan documents now existing or executed in the future by Erie Hotel, LLC,
a New York limited liability company to Mortgagee.
25. LATE PAYMENT CHARGE: SERVICING FEES
(a) If any portion of the Debt is not paid on or before the fifth
(5th) day after the date such payment is due or if the entire Debt is not paid
on or before the Maturity Date, Mortgagor shall pay to Mortgagee upon demand an
amount equal to the lesser of: (i) the maximum amount
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permitted by applicable law, and (ii) five percent (5%) of such overdue portion
of the Debt, to defray the expense incurred by Mortgagee in handling and
processing such delinquent payment and to compensate Mortgagee for the loss of
the use of such delinquent payment, and such amount shall be secured by this
Mortgage, and the other Loan Documents.
(b) Mortgagor will pay, from and after the date of the occurrence of
an Event of Default through the earlier of the date upon which the Event of
Default is cured or the date upon which the Debt is paid in full, interest on
the unpaid principal balance of the Note at a per annum rate equal to the lesser
of (a) the variable Adjustable Rate, as defined in the Note, then in effect on
the Debt calculated monthly as set forth in the Note plus five percent (5%) per
annum, or (b) the maximum interest rate which by law Mortgagor may pay or
Mortgagee may charge and collect (the "DEFAULT RATE")
26. RIGHT TO CURE DEFAULTS
Upon the occurrence of any Event of Default and the lapse of
any applicable cure period 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, take such action as Mortgagee may deem necessary
to protect its security for the Loan. Upon the occurrence and continuation of an
Event of Default, Mortgagee is authorized to enter upon the Property for such
purposes or to appear in, defend, or bring any action or proceeding to protect
its interest in the Property or to foreclose this Mortgage or collect the Debt,
and the cost and expense thereof (including Mortgagee's attorneys' fees to the
extent permitted by law), with interest at the Default Rate 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 (following
Mortgagor's failure to cure), shall be secured by this Mortgage, and the other
Loan Documents and shall be due and payable to Mortgagee upon demand.
27. REMEDIES
(a) Upon the occurrence of any Event of Default or if Mortgagor fails
to make any payment or to do any action as herein provided, Mortgagee may take
such action, without any obligation to do so and notice or demand, except for
any notice which may not be waived pursuant to applicable law or which is
expressly provided for herein, and without releasing Mortgagor from any
obligation hereunder, as Mortgagee deems advisable to protect and enforce its
rights against Mortgagor and in and to the Property 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 judicial proceedings or nonjudicial proceedings,
by notice and
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advertisement to the extent required by law, for the
complete foreclosure of this Mortgage in which case the
Property or any interest therein may be sold for cash, upon
credit or otherwise in one or more parcels or in several
interests or portions and in any order or manner;
(iii) sell for cash, upon credit or otherwise the Property or any
part thereof and all estate, claim, demand, right, title and
interest of Mortgagor therein and rights of redemption
thereof, pursuant to the power of sale contained herein or
otherwise, at one or more sales, as an entity or in parcels,
at such time and place, upon such terms and after such
notice thereof as may be required or permitted by law;
(iv) institute an action, suit or proceeding in equity for the
specific performance of any covenant, condition or agreement
contained herein, in the Note or in the other Loan
Documents;
(v) recover judgment on the Note either before, during or after
any proceedings for the enforcement of this Mortgage or the
other Loan Documents;
(vi) apply for the appointment of a trustee, receiver, liquidator
or conservator of the Property, without notice and without
regard for the adequacy of the security for the Debt and
without regard for the solvency of Mortgagor, Guarantor or
of any person, firm or other entity liable for the payment
of the Debt;
(vii) revoke the license granted to Mortgagor to collect the
Profits and other sums due under the Leases and enforce
Mortgagee's interest in the Leases and Profits and enter
into or upon the Property, either personally or by its
agents, nominees or attorneys and dispossess Mortgagor and
its agents and servants therefrom, and thereupon Mortgagee
may to the maximum extent permitted, or not restricted,
under applicable law: (A) use, operate, manage, control,
insure, maintain, repair, restore and otherwise deal with
all and every part of the Property and conduct the business
thereat; (B) complete any construction on the Property in
such manner and form as Mortgagee deems advisable; (C) make
alterations, additions, renewals, replacements and
improvements to or on the Property; (D) exercise all rights
and powers of Mortgagor with respect to the 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 Profits, earnings, revenues,
and other income of the Property and every part thereof; and
(E) apply the receipts from the Property to the payment of
the Debt, after deducting therefrom all expenses (including
Mortgagee's attorneys' fees) incurred in connection with the
aforesaid operations and all amounts necessary to pay the
taxes, assessments insurance and other charges in connection
with the Property, as well as just and reasonable
compensation for the services of Mortgagee, its counsel,
agents and employees;
(viii) require Mortgagor to pay monthly in advance to Mortgagee, or
any
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receiver appointed to collect the Profits, the fair and
reasonable rental value for the use and occupancy of any
portion of the Property occupied by Mortgagor and require
Mortgagor to vacate and surrender possession of the Property
to Mortgagee or to such receiver and, in default thereof,
evict Mortgagor by summary proceedings or otherwise; and
(ix) pursue such other rights and remedies as may be available at
law or in equity or under the Uniform Commercial Code,
including the right to establish a lock box for all Profits
and other receivables of Mortgagor relating to the Property.
In the event of a sale, by foreclosure or otherwise, of less than all of the
Property, this Mortgage shall continue as a lien on the remaining portion of the
Property.
(b) The proceeds of any sale made under or by virtue of this Section,
together with any other sums which then may be held by Mortgagee under this
Mortgage or the other Loan Documents, whether under the provisions of this
Section 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
such sale 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. Mortgagee is hereby irrevocably appointed the true and lawful
attorney-in-fact of Mortgagor, to act in its name and stead (such power of
attorney being coupled with an interest, and irrevocable), to make all necessary
conveyances, assignments, transfers and deliveries of the Property and rights so
sold and for that purpose Mortgagee may execute all necessary instruments of
conveyance, assignment and transfer, and may substitute one or more persons with
like power, Mortgagor hereby ratifying and confirming all that its attorney or
such substitute or substitutes shall lawfully do by virtue hereof. Any sale or
sales made under or by virtue of this Section, 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 Section, whether
made under the power of sale herein granted or under or by virtue of judicial
proceedings or of a judgment or
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decree of foreclosure and sale, Mortgagee may bid for and acquire the 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 Property or upon any other property of
Mortgagor shall affect in any manner or to any extent the lien of this Mortgage
upon the 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 Section
at any time before the conclusion thereof, as determined in Mortgagee's sole
discretion and without prejudice to Mortgagee.
(h) Mortgagee may resort for the payment of the Debt to any remedies
and the security given by the Note, this Mortgage or the other Loan Documents in
whole or in part, and in such portions and in such order as determined by
Mortgagee's sole discretion. No such action shall in any way be considered a
waiver of any rights, benefits or remedies evidenced or provided by the Note,
this Mortgage or the other Loan Documents. The failure of Mortgagee to exercise
any right, remedy or option provided in the Note, this Mortgage or the other
Loan Documents shall not be deemed a waiver of such right, remedy or option or
of any covenant or obligation secured by the Note, this Mortgage or the other
Loan Documents. No acceptance by Mortgagee of any payment after the occurrence
of any Event of Default and no payment by Mortgagee of any obligation for which
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 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 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.
(i) The interests and rights of Mortgagee under the Note, this
Mortgage or 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 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) Mortgagor hereby expressly waives and releases to the fullest
extent permitted by law, the pleading of any statute of limitations as a defense
to payment of the Debt or performance of its obligations under any of the Loan
Documents.
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28. RIGHT OF ENTRY
Mortgagee and its agents shall have the right to enter and inspect the
Property during normal business hours upon reasonable notice.
29. SECURITY AGREEMENT
This Mortgage is a "security agreement" within the meaning of the
Uniform Commercial Code. The Property includes both real and personal property
and all other rights and interests, whether tangible or intangible in nature, of
Mortgagor in the Property. By executing and delivering this Mortgage, Mortgagor
has granted and thereby grants to Mortgagee, as security for the Debt, a
security interest in the Property to the full extent that the Property may be
subject to the Uniform Commercial Code (such portion of the Property so subject
to the Uniform Commercial Code being called in this Section the "COLLATERAL").
Mortgagor hereby agrees with Mortgagee to execute and deliver to Mortgagee, in
form and substance satisfactory to Mortgagee, such financing statements and such
further assurances as Mortgagee may from time to time reasonably consider
necessary to create, perfect or preserve Mortgagee's security interest therein
granted. This Mortgage shall also constitute a "fixture filing" for the purposes
of the Uniform Commercial Code. All or part of the Property are or are to become
fixtures. If an Event of Default shall occur, Mortgagee, in addition to any
other rights and remedies which it may have, shall have and may exercise
immediately and without demand, any and all rights and remedies granted to a
secured party upon default under the Uniform Commercial Code including, without
limitation, 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, following the occurrence and continuation beyond any applicable cure
period of an Event of Default, 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 Mortgagee's attorneys' fees, incurred or paid by Mortgagee in
protecting the interest in the Collateral and in enforcing the rights hereunder
with respect to the Collateral. Any notice of sale, disposition or other
intended action by Mortgagee with respect to the Collateral sent to Mortgagor in
accordance with the provisions hereof at least ten (10) 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 discretion shall deem proper. In the event of any change in
name, identity or structure of any Mortgagor, such Mortgagor shall notify
Mortgagee thereof and promptly after request shall execute, file and record such
Uniform Commercial Code forms as are necessary to maintain the priority of
Mortgagee's lien upon and security interest in the Collateral, and shall pay all
expenses and fees in connection with the filing and recording thereof. If
Mortgagee shall require the filing or recording of additional Uniform Commercial
Code forms or continuation statements, Mortgagor shall, promptly after request,
execute, file and record such Uniform Commercial Code forms or continuation
statements as Mortgagee shall deem necessary, and shall pay all expenses and
fees in connection with the filing and recording thereof, it being understood
and agreed, however, that no such additional documents
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shall increase Mortgagor's obligations under the Note, this Mortgage, the
Assignment, the Environmental Agreement, the Guaranty Agreement and the other
Loan Documents. Mortgagor hereby irrevocably appoints Mortgagee as its
attorney-in-fact, coupled with an interest, to file with the appropriate public
office on its behalf any financing or other statements signed only by Mortgagee,
as secured party, in connection with the Collateral covered by this Mortgage.
30. ACTIONS AND PROCEEDINGS
After the occurrence and during the continuance of an Event of Default,
Mortgagee has the right to appear in and defend any action or proceeding brought
with respect to the Property and to bring any action or proceeding, in the name
and on behalf of Mortgagor, which Mortgagee, in its discretion, decides should
be brought to protect its interest in the 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.
31. WAIVER OF SETOFF AND COUNTERCLAIM
All amounts due under this Mortgage, the Note and the other Loan
Documents shall be payable without setoff, counterclaim or any deduction
whatsoever. Mortgagor hereby waives the right to assert a counterclaim (other
than a mandatory or compulsory counterclaims) in any action or proceeding
brought against it by Mortgagee, or arising out of or in any way connected with
this Mortgage, the Note, any of the other Loan Documents, or the Debt.
32. CONTEST OF CERTAIN CLAIMS
Notwithstanding the provisions of Sections 5 and 24(i) hereof,
Mortgagor shall not be in default for failure to pay or discharge Taxes, Other
Charges or a mechanic's or materialman's lien asserted against the Property if,
and so long as: (a) Mortgagor shall have notified Mortgagee of such nonpayment
and the reasons therefor within ten (10) days of obtaining knowledge thereof;
(b) Mortgagor shall diligently and in good faith contest such Taxes, Other
Charges or lien by appropriate legal proceedings which shall operate to prevent
the enforcement or collection thereof and the sale of the Property or any part
thereof, in satisfaction thereof; (c) Mortgagor shall have furnished to
Mortgagee a cash deposit, or an indemnity bond satisfactory to Mortgagee with a
surety reasonably satisfactory to Mortgagee or such other entity as is required
by applicable law, in the amount of the Taxes, other Charges or mechanic's or
materialman's lien claim, plus a reasonable additional sum to pay all costs,
interest and penalties that may be imposed or incurred in connection therewith,
to assure payment of the matters under contest and to prevent any sale or
forfeiture of the Property or any part thereof; (d) 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; and (e) the failure to pay the Taxes,
Other Charges or mechanic's or materialman's lien claim does not constitute a
default under any other Mortgage, mortgage or security interest covering or
affecting any part of the Property. Notwithstanding the
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foregoing, Mortgagor shall immediately upon request of Mortgagee pay (and if
Mortgagor shall fail so to do, Mortgagee may, but shall not be required to, pay
or cause to be discharged or bonded against) any such Taxes, Other Charges or
claim notwithstanding such contest, if in the opinion of Mortgagee, the Property
or any part thereof or interest therein may be in danger of being sold,
forfeited, foreclosed, terminated, canceled or lost. Mortgagee may pay over any
such cash deposit or part thereof to the claimant entitled thereto at any time
when, in the judgment of Mortgagee, the entitlement of such claimant is
established.
33. RECOVERY OF SUMS REQUIRED TO BE PAID
Mortgagee shall have the right from time to time to take action to
recover any sum or sums which constitute a part of the Debt as they become due,
without regard to whether or not the balance of the Debt shall be due, and
without prejudice to the right of Mortgagee thereafter to bring an action of
foreclosure, or any other action, for a default or defaults by Mortgagor
existing at the time such earlier action was commenced.
34. MARSHALING 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 marshaling in the event of any sale
hereunder of the Property or any part thereof or any interest therein. Further,
Mortgagor hereby expressly waives and renounces 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 Property subsequent to the date of this Mortgage and on behalf of
all persons to the extent permitted by applicable law.
35. HAZARDOUS SUBSTANCES
Mortgagor hereby represents and warrants to Mortgagee that,
except as set forth in the Phase I Environmental I Site Assessment dated June
26, 1997, prepared by SCS Engineering, Inc.: (a) the Property is not in direct
or indirect violation of any local, state, federal or other applicable
governmental authority, statute, ordinance, code, order, decree, law, rule or
regulation or common law pertaining to or imposing liability or standards of
conduct concerning the protection of human health, environmental regulation,
contamination or clean-up including, without limitation, the Comprehensive
Environmental Response, Compensation and Liability Act, as amended, the Resource
Conservation and Recovery Act, as amended, and any state super-lien and
environmental clean-up statutes (collectively, "ENVIRONMENTAL LAWS"); (b) the
Property is not subject to any private or governmental lien or judicial or
administrative notice or action relating to hazardous and/or toxic, dangerous
and/or regulated substances, solvents, wastes, materials, pollutants or
contaminants, petroleum, tremolite, anthlophylie or actinolite or
polychlorinated biphenyls (including, without limitation, any raw materials
which include hazardous constituents) and any other substances, materials or
solvents which are included under or regulated by Environmental Laws, including,
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without limitation, Asbestos (collectively, "HAZARDOUS SUBSTANCES"); (c) no
Hazardous Substances are or have been, prior to Mortgagor's acquisition of the
Property, discharged, generated, treated, disposed of or stored on, incorporated
in or removed or transported from the Property other than in compliance with all
Environmental Laws; and (d) no underground storage tanks exist on any of the
Property. So long as Mortgagor owns or is in possession of the Property,
Mortgagor shall keep or cause the Property to be kept free from Hazardous
Substances (other than DE MINIMIS quantities of Hazardous Substances that are
necessary and lawfully used in the operation of the Property as a hotel or
motel, and which are stored and disposed of in compliance with all Environmental
Laws, including, without limitation, chlorinators, pesticides, fertilizers,
de-icers, cleaning supplies and other Hazardous Substances used by Mortgagor or
its agents in the operation of the Property) and in compliance with all
Environmental Laws, shall promptly notify Mortgagee if Mortgagor shall become
aware of any Hazardous Substances on the Property and/or if Mortgagor shall
become aware that the Property is in direct or indirect violation of any
Environmental Laws and Mortgagor shall remove such Hazardous Substances and/or
cure such violations, as applicable, as required by law, promptly after
Mortgagor becomes aware of such Hazardous Substances or such violations, at
Mortgagor's sole expense. Nothing herein shall prevent Mortgagor from recovering
such expenses from any other party that may be liable for such removal or cure.
Upon Mortgagee's request, at any time and from time to time while this Mortgage
is in effect (but in no event more frequently than once in any three-year period
or more frequently if specific facts and circumstances reasonably dictate, or
otherwise at Mortgagee's election but at Mortgagee's expense), Mortgagor shall
provide at Mortgagor's sole expense, an inspection or audit of the Property
prepared by a licensed hydrogeologist or licensed environmental engineer
approved by Mortgagee indicating the presence or absence of Hazardous Substances
on the Property. If Mortgagor fails to provide such inspection or audit within
thirty (30) days after such request, Mortgagee may order such inspection or
audit, and Mortgagor hereby grants to Mortgagee and its employees and agents
access to the Property and a license to undertake such inspection or audit. The
cost of such inspection or audit shall be paid by Mortgagor and added to the
principal balance of the sums due under the Note and this Mortgage and shall
bear interest thereafter until paid at the Default Rate. The obligations and
liabilities of Mortgagor under this Section shall survive any termination,
satisfaction, or assignment of this Mortgage and the exercise by Mortgagee of
any of its rights or remedies thereunder including, without limitation, the
acquisition of the Property by foreclosure or a conveyance in lieu of
foreclosure.
36. ASBESTOS
Mortgagor represents and warrants that no asbestos or any substance
containing asbestos (collectively, "ASBESTOS") is located on the Property.
Mortgagor shall not install in the Property, nor permit to be installed in the
Property, Asbestos and shall remove any Asbestos promptly upon discovery to the
satisfaction of Mortgagee, at Mortgagor's sole expense. Upon Mortgagee's
request, at any time and from time to time (but in no event more frequently than
once in any three-year period or more frequently if specific facts and
circumstances reasonably dictate, or otherwise at Mortgagee's election but at
Mortgagee's expense), Mortgagor shall provide, at Mortgagor's sole expense, an
inspection or audit of the Property prepared by an engineering or
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consulting firm approved by Mortgagee, indicating the presence or absence of
Asbestos on the Property. If Mortgagor fails to provide such inspection or audit
within thirty (30) days after such request, Mortgagee may order such inspection
or audit. The cost of such inspection or audit shall be paid by Mortgagor and
added to the principal balance of the sums due under the Note and this Mortgage,
and shall bear interest thereafter until paid at the Default Rate. The
obligations and liabilities of Mortgagor under this Section shall survive any
termination, satisfaction, or assignment of this Mortgage and the exercise by
Mortgagee of any of its rights or remedies thereunder, including, but not
limited to, the acquisition of the Property by foreclosure or a conveyance in
lieu of foreclosure.
37. ENVIRONMENTAL MONITORING
Mortgagor shall give prompt written notice to Mortgagee of: (a) any
proceeding or inquiry by any party with respect to the presence of any Hazardous
Substance on, under, from or about the Property; (b) all claims made or
threatened by any third party against Mortgagor or the Property relating to any
loss or injury resulting from any Hazardous Substance; and (c) Mortgagor's
discovery of any occurrence or condition on any real property adjoining or in
the vicinity of the Property that could cause the Property to be subject to any
investigation or cleanup pursuant to any Environmental Law. Mortgagor shall
permit Mortgagee to join and participate, as a party if it so elects, in any
legal proceedings or actions initiated with respect to the Property in
connection with any Environmental Law or Hazardous Substance, and Mortgagor
shall pay all reasonable attorneys' fees incurred by Mortgagee in connection
therewith. In the event that any environmental site assessment report prepared
for the Property recommends that an operations and maintenance plan be
implemented for Asbestos or any Hazardous Substance, Mortgagor shall cause such
operations and maintenance plan to be prepared and implemented at Mortgagor's
expense upon request of Mortgagee and in accordance with the recommendation. In
the event that any inspection, assessment, investigation, site monitoring,
containment, cleanup, removal, restoration, corrective action or other work of
any kind to prevent, cure or mitigate any release, spill, emission, leaking,
pumping, injection, deposit, disposal, discharge, dispersal, leaching or
migration into the indoor or outdoor environment, including, without limitation,
the movement of Hazardous Substances through ambient air, soil, surface water,
ground water, wetlands, land or subsurface strata, or which is reasonably
necessary or desirable under an applicable Environmental Law ("REMEDIAL WORK")
is recommended, Mortgagor shall, at its sole cost and expense, 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).
38. MANAGEMENT OF THE PROPERTY
Mortgagor further covenants and agrees with Mortgagee as follows:
(a) Mortgagor shall cause the hotel located on the Property to be
operated pursuant to the License Agreement and the Management Agreement.
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(b) Mortgagor shall:
(i) pay all sums required to be paid by Mortgagor under the
License Agreement and the Management Agreement and promptly
perform and/or observe all of the covenants and agreements
required to be performed and observed by it under the
License Agreement and the Management Agreement and do all
things necessary to preserve and to keep unimpaired its
material rights thereunder;
(ii) promptly notify Mortgagee in writing of any default under
the License Agreement or the Management Agreement of which
it is aware and provide Mortgagee with copies of any notices
delivered in connection therewith;
(iii) promptly deliver to Mortgagee a copy of each financial
statement, business plan, capital expenditures plan, notice,
report and estimate received by it under the License
Agreement or the Management Agreement other than day-to-day
general correspondence;
(iv) promptly enforce the performance and observance of all of
the covenants and agreements required to be performed and/or
observed by Licensor and Manager;
(v) assign, and does hereby assign and transfer, to Mortgagee
any right it may have to modify, amend or supplement the
License Agreement or the Management Agreement, such that any
attempted modification, amendment or supplement of the
License Agreement or the Management Agreement without the
prior written consent of Mortgagee shall be null and void
and have no legal force or effect;
(vi) grant Mortgagee the right, but Mortgagee shall be under no
obligation, to pay any sums and to perform any act or take
any action as may be appropriate to cause all the terms,
covenants and conditions of the License Agreement and the
Management Agreement on the part of Mortgagor to be
performed or observed to be promptly performed or observed
on behalf of Mortgagor, to the end that the rights of
Mortgagor in, to and under the License Agreement and the
Management Agreement shall be kept unimpaired and free from
default;
(vii) use its reasonable efforts to obtain, from time to time,
from Licensor and Manager such certificates of estoppel with
respect to compliance by Mortgagor with the terms of the
License Agreement and the Management Agreement,
respectively, as may be requested by Mortgagee;
(viii) exercise each individual option, if any, to extend or renew
the term of the License Agreement and the Management
Agreement upon demand by Mortgagee made at any time within
one year of the last day upon which any such option may be
exercised,
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and Mortgagor hereby expressly authorizes and appoints
Mortgagee its attorney-in-fact to exercise any such option
in the name of and upon behalf of Mortgagor, which power of
attorney shall be irrevocable and shall be deemed to be
coupled with an interest; PROVIDED, HOWEVER, that so long as
Mortgagor is not in default hereunder or under any of the
Loan Documents, Mortgagee shall not be entitled to exercise
the foregoing appointment; and
(ix) promptly notify Mortgagee in writing and provide Mortgagee
with copies of any notices delivered to Mortgagor,
including, without limitation, any notice of violation of
any laws, regulations, or ordinances or other notice from
any governmental or quasi-governmental authority, or any
notice of default under the Leases, the Management Agreement
or any other document or agreement relating to the Property,
which contain information that, if true, might materially
adversely affect the value, use or operation of the
Property.
(c) Mortgagor shall not, without Mortgagee's prior written consent:
(i) surrender, terminate or cancel the License Agreement or the Management
Agreement; (ii) reduce or consent to the reduction of the term of the License
Agreement or the Management Agreement; (iii) increase or consent to the increase
of the amount of any charges under the License Agreement (except as otherwise
expressly provided therein) or the Management Agreement; (iv) otherwise modify,
change, supplement, alter or amend, or waive or release any of its rights and
remedies under the License Agreement or the Management Agreement in any material
respect; or (v) operate the Property under the name of any hotel chain or system
other than Hampton Inn.
(d) Mortgagor shall not, without Mortgagee's prior written consent,
enter into transactions with any Affiliate including, without limitation, any
arrangement providing for the management of the hotel on the Property, the
rendering or receipt of services or the purchase or sale of inventory, except
any such transaction in the ordinary course of business of Mortgagor if the
monetary or business consideration arising therefrom would be substantially as
advantageous to Mortgagor as the monetary or business consideration which would
obtain in a comparable transaction with a person not an Affiliate of Mortgagor.
Notwithstanding the foregoing, Mortgagee acknowledges that Manager is an
Affiliate of Mortgagor, and hereby consents to the Management Agreement.
(e) Mortgagor irrevocably authorizes and directs Licensor and
Manager to deliver to Mortgagee: (i) all operating information concerning the
Property submitted by Mortgagor to Licensor or Manager; (ii) the written results
of all quality assurance inspections of the Property performed by Licensor or
Manager; and (iii) such other information that Mortgagee or Mortgagee's agents
may reasonably request, from time to time, including any information in the
possession of Licensor or Manager relating to Mortgagor not included in the
reports referred to above.
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39. HANDICAPPED ACCESS
(a) Mortgagor agrees that the Property shall at all times strictly
comply to the extent applicable with the requirements of the Americans with
Disabilities Act of 1990, all state and local laws and ordinances related to
handicapped access and all rules, regulations, and orders issued pursuant
thereto including, without limitation, the Americans with Disabilities Act
Accessibility Guidelines for Buildings and Facilities (collectively, "ACCESS
LAWS").
(b) Notwithstanding any provisions set forth herein or in any other
document regarding Mortgagee's approval of alterations of the Property,
Mortgagor shall not alter the Property in any manner which would increase
Mortgagor's responsibilities for compliance with the applicable Access Laws
without the prior written approval of Mortgagee. The foregoing shall apply to
tenant improvements constructed by Mortgagor or by any of its tenants. Mortgagee
may condition any such approval upon receipt of a certificate of Access Law
compliance from an architect, engineer or other person acceptable to Mortgagee.
(c) Mortgagor agrees to give prompt written 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.
40. ERISA
Mortgagor covenants and agrees that it shall not engage in any
transaction which would cause any obligation, or action taken or to be taken,
hereunder (or the exercise by Mortgagee of any of its rights under the Note,
this Mortgage and the other Loan Documents) to be a non-exempt (under a
statutory or administrative class exemption) prohibited transaction under the
Employee Retirement Income Security Act of 1974 (or any successor legislation
thereto), as amended ("ERISA").
41. INDEMNIFICATION
(a) In addition to any other indemnifications provided herein, in the
Environmental Agreement or in the other Loan Documents, Mortgagor shall protect,
defend, indemnify and save harmless the Indemnified Parties (defined herein)
from and against all liabilities, obligations, claims, demands, damages,
penalties, causes of action, losses, fines, costs and expenses (including,
without limitation, attorneys' fees and expenses), imposed upon or incurred by
or asserted against Mortgagee by reason of: (i) ownership of this Mortgage
(except income, franchise and similar taxes and costs related thereto), the
Property or any interest therein or receipt of any Profits; (ii) any accident,
injury to or death of persons or loss of or damage to property occurring in, on
or about the Property or any part thereof or on the adjoining sidewalks, curbs,
adjacent property or adjacent parking areas, streets or ways; (iii) any use,
nonuse or condition in, on or about the Property or any part thereof or on
adjoining sidewalks, curbs, adjacent property or adjacent parking areas, streets
or ways; (iv) any failure on the part of Mortgagor or Guarantor to perform or
comply with
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any of the terms of this Mortgage; (v) performance of any labor or services or
the furnishing of any materials or other property in respect of the Property or
any part thereof; (vi) the presence, disposal, escape, seepage, leakage,
spillage, discharge, emission, release, or threatened release of any Hazardous
Substance or Asbestos on, from, or affecting the Property or any other property;
(vii) any personal injury (including wrongful death) or property damage (real or
personal) arising out of or related to such Hazardous Substance or Asbestos;
(viii) any lawsuit brought or threatened, settlement reached, or government
order relating to such Hazardous Substance or Asbestos; (ix) 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 action, reasonable out-of-pocket attorney's and
consultant's fees, investigation and laboratory fees, court costs, and
litigation expenses; (x) any failure of the Property to comply with any Access
Laws; (xi) any representation or warranty made in the Note, this Mortgage or the
other Loan Documents being false or misleading in any material respect as of the
date such representation or warranty was made; (xii) 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 Property or any part thereof
under any legal requirement or any liability asserted against Mortgagee with
respect thereto; (xiii) the claims of any lessee of all or any portion of the
Property or any person acting through or under any lessee or otherwise arising
under or as a consequence of any Lease; and (xiv) claims of any persons arising
under or as a consequence of any of the Operating Agreements. Any amounts
payable to Mortgagee by reason of the application of this Section shall be
immediately due and payable, shall be secured by this Mortgage and shall bear
interest at the Default Rate from the date loss or damage is sustained by
Mortgagee until paid. Notwithstanding the foregoing, Mortgagor shall not be
liable for any losses incurred by Mortgagee arising solely as a direct result of
Mortgagee's gross negligence or willful misconduct. The obligations and
liabilities of Mortgagor under this Section shall survive any termination,
satisfaction or assignment of this Mortgage or the entry of a judgment of
foreclosure, sale of the Property by nonjudicial foreclosure sale, or delivery
of a conveyance in lieu of foreclosure (but shall be limited to liabilities
accruing or arising prior thereto), but shall continue to be subject to the
limitations on recourse set forth in Section 42 below, to the extent applicable,
which shall also survive.
(b) "INDEMNIFIED PARTIES" means Mortgagee and any person or entity who
is or will have been involved in the origination of this loan, any person or
entity who is or will have been involved in the servicing of this loan, any
person or entity in whose name the encumbrance created by this Mortgage is or
will have been recorded, persons and entities who may hold or acquire or will
have held a full or partial interest in this loan (including, but not limited to
Investors or prospective Investors in the Securities, as well as custodians,
trustees and other fiduciaries who hold or have held a full or partial interest
in this loan for the benefit of third parties) as well as the respective
directors, officers, shareholders, members, partners, employees, agents,
servants, representatives, contractors, subcontractors, affiliates,
subsidiaries, participants, successors and assigns of any and all of the
foregoing (including, but not limited to any other person or entity who holds or
acquires or will have held a participation or other full or partial interest in
this loan or the Property, whether during the term of this loan or as a part of
or following a foreclosure of this loan and including, but not limited to any
successors by merger, consolidation or acquisition of all or a substantial
portion of
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Mortgagee's assets and business).
42. LIMITATIONS ON RECOURSE
(a) Subject to the qualifications set forth in this Section,
neither Mortgagor nor Guarantor nor any partner, shareholder, officer, or
director, manager, member or Affiliate of either of them or any successors or
assigns of the foregoing (collectively, the "EXCULPATED PARTIES") shall be
personally liable either at law or in equity for the repayment of the Debt or
the failure of performance of any other obligation evidenced by the Note or
contained in the Mortgage or the other Loan Documents and Mortgagee will satisfy
any judgments, orders or decrees on account of the failure to repay such Debt
and/or the failure to perform any such obligation, from the Property and any
other real or personal property, tangible or intangible, as Mortgagor, Guarantor
or any other entity shall have pledged or assigned to secure the Note by any of
the Loan Documents, except that Mortgagee may bring a foreclosure action, an
action for specific performance or any other appropriate action or proceeding to
enable Mortgagee to enforce and realize upon the Note, the Mortgage, the other
Loan Documents, and the interests in the Property and any other collateral given
to Mortgagee pursuant to the Mortgage and the other Loan Documents; PROVIDED,
HOWEVER, that, except as specifically provided in this Section, any judgment in
any such action or proceeding shall be enforceable against Mortgagor only to the
extent of Mortgagor's interest in the Property and in any other collateral given
to Mortgagee. Mortgagee, by accepting the Note, the Mortgage and the other Loan
Documents, agrees that it shall not ▇▇▇ for, seek or demand any deficiency
judgment against Mortgagor in any such action or proceeding, under, by reason of
or in connection with the Mortgage, the Assignment, the other Loan Documents or
the Note. The provisions of this Section shall not, however: (i) constitute a
waiver, release or impairment of any obligation evidenced or secured by the Note
this Mortgage or the other Loan Documents; (ii) impair the right of Mortgagee to
name Mortgagor as a party defendant in any action or suit for foreclosure and
sale under this Mortgage; (iii) affect the validity or enforceability of the
Guaranty Agreement, the Environmental Agreement or any other guaranty or
indemnity made in connection with the Note, this Mortgage or the other Loan
Documents; (iv) impair the right of Mortgagee to obtain the appointment of a
receiver; (v) impair the right of Mortgagee to bring suit with respect to fraud
or misrepresentation by Mortgagor in connection with the Note, this Mortgage or
Loan Documents; (vi) affect the validity or impair the enforcement of the Loan
Documents.
(b) Nothing herein shall be deemed to be a waiver of any right which
Mortgagee may have under Sections 506(a), 506(b), 1111(b) or any other
provisions of the U.S. Bankruptcy Code to file a claim for the full amount of
the Debt secured by this Mortgage or to require that all collateral shall
continue to secure all of the debt owing to Mortgagee in accordance with the
Note, this Mortgage and the other Loan Documents.
(c) Notwithstanding the foregoing provisions of this Section or any
other provision in the Loan Documents, Mortgagor and Guarantor, jointly and
severally, shall be fully and personally liable to and shall indemnify Mortgagee
for any or all loss, cost, liability, judgment, claim, damage or expense
sustained, suffered or incurred by Mortgagee (including, without
- 57 -
limitation, Mortgagee's attorneys' fees and costs) arising out of or
attributable or relating to:
(i) fraud or misrepresentation by Mortgagor or Guarantor in
connection with the Loan;
(ii) the gross negligence or willful misconduct of Mortgagor or
Guarantor, their agents, managers, officers or employees
with respect to their obligations to Mortgagee or with
respect to the operation of the Property, or physical waste
of the Property;
(iii) the breach of provisions in this Mortgage concerning
Environmental Laws, Hazardous Substances and Asbestos, and
any indemnification of Mortgagee herein or in the
Environmental Agreement or any other Loan Document with
respect to such Environmental Laws, Hazardous Substances and
Asbestos;
(iv) other than in the ordinary course of business, the removal
or disposal of any portion of the Property after an Event of
Default under the Note, this Mortgage, or any other Loan
Document;
(v) the misapplication or conversion by Mortgagor of: (A) any
insurance proceeds paid by reason of any loss, damage or
destruction to the Property; (B) any awards or other amounts
received in connection with the condemnation of all or a
portion of the Property; or (C) rents, issues, profits,
proceeds, accounts, or other amounts received by Mortgagor
or Guarantor (in the case of clause (C) following an Event
of Default under the Note, this Mortgage or the other Loan
Documents);
(vi) Mortgagor's failure to pay Taxes, assessments, charges for
labor or materials or Other Charges that can result in liens
on any portion of the Property, provided, however, that
Mortgagor's and Guarantor's liability hereunder shall cease
with respect to such amounts incurred from and after such
time, if any, that Mortgagee obtains legal and beneficial
title to the Property;
(vii) the deductible amount in respect of any insurance maintained
in respect of the Property, provided, however, that
Mortgagor's and Guarantor's liability hereunder shall cease
with respect to such amounts incurred from and after such
time, if any, that Mortgagee obtains legal and beneficial
title to the Property;
(viii) the costs incurred by Mortgagee (including reasonable
attorneys' fees) in connection with the collection or
enforcement of the Debt;
(ix) any security deposits, advance deposits or retained rents
and profits collected with respect to the Property which are
not delivered to Mortgagee upon a foreclosure of the
Property or action in lieu thereof;
- 58 -
(x) the presence, disposal, escape, seepage, leakage, spillage,
discharge, emission, release, or threatened release of any
Hazardous Substance or Asbestos on, from, or affecting the
Property or any other property, regardless of when
discovered, which occurs prior to foreclosure, transfer by
deed in lieu of foreclosure or the appointment of a receiver
by Mortgagee;
(xi) any personal injury (including wrongful death) or property
damage (real or personal) arising out of or related to such
Hazardous Substance or Asbestos;
(xii) any lawsuit brought or threatened, settlement reached, or
government order relating to such Hazardous Substance or
Asbestos;
(xiii) any violation of the Environmental Laws, regardless of when
discovered, which occurs prior to foreclosure, transfer by
deed in lieu of foreclosure or the appointment of a receiver
by Mortgagee, and which is based upon or in any way related
to such Hazardous Substance or Asbestos including, without
limitation, the costs and expenses of any remedial action,
reasonable out-of-pocket attorney's and consultant's fees,
investigation and laboratory fees, court costs, and
litigation expenses; and
(xiv) Mortgagor fails to comply with the provisions of Sections 11
and/or 13 of this Mortgage.
(d) Notwithstanding the foregoing, the agreement of Mortgagee not to
pursue recourse liability as set forth in subsection (a) above SHALL BE AND
BECOME NULL AND VOID and shall be of no further force or effect if: (1)
Mortgagor fails to permit reasonable on-site inspections of the Property upon
reasonable advance oral notice or to provide financial reports and information
pertaining to the Property as required by any Loan Document, unless such failure
is the result of a good faith error and such failure is cured within ten (10)
days after notice; (2) any financial information concerning Mortgagor or
Guarantor provided by Mortgagor or Guarantor (or their respective agents,
employees, or authorized representatives) is fraudulent in any respect, contains
any fraudulent information or misrepresents in any material respect the
financial condition of Mortgagor or Guarantor; (3) Mortgagor fails to obtain
Payee's prior written consent, if consent is required under any Loan Document,
to any subordinate financing; (4) Mortgagor fails to obtain Payee's prior
written consent, if consent is required under any Loan Document, to any transfer
of the Property or of any ownership interest in Mortgagor; and (5) Mortgagor or
its Managing Member files for relief or protection under any federal, state or
other bankruptcy, insolvency, reorganization or other creditor-relief laws, or
an involuntary filing or petition is made under any of such laws, against
Mortgagor by any of its creditors (other than Payee) and such involuntary filing
is not unconditionally dismissed or vacated within ninety (90) days. Upon the
occurrence of any of the foregoing events, Mortgagor and Guarantor shall have
full joint and several recourse liability for all sums due under the Loan
Documents.
(e) Nothing in this Section shall be interpreted or construed to
impair, limit the
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liability of or otherwise affect the terms, conditions, requirements and
obligations of Guarantor under that certain Guaranty Agreement dated as of the
date hereof or the Mortgagor or Guarantor under the Environmental Agreement.
43. NOTICE
Any notice, demand, statement, request, consent or other
communication made hereunder shall be in writing and shall be deemed given (a)
on the next Business Day if sent by Federal Express or other reputable overnight
courier and designated for next Business Day delivery, (b) upon delivery, if
delivered in person or by facsimile transmission with receipt acknowledged by
the recipient thereof, or (c) on the third (3rd) Business Day following the day
such notice is deposited with the United States postal service first class
certified mail, return receipt requested, addressed to the address, as set forth
above, of the party to whom such notice is to be given, or to such other address
or additional party as Mortgagor, Guarantor or Mortgagee, as the case may be,
shall in like manner designate in writing. Any notice to Mortgagor or Guarantor
shall be likewise given to ▇▇▇▇▇▇ Beach & ▇▇▇▇▇▇, LLP, ▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇▇▇-▇▇▇▇, to the attention of ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq. Any
notice to Mortgagee shall be likewise given to ▇▇▇▇▇▇ ▇▇▇▇▇▇ & Zavis, 1025
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ Street, N.W., ▇▇▇▇▇ ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇.▇.
▇▇▇▇▇, to the attention of ▇▇▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇, Esq.
44. AUTHORITY
Mortgagor represents and warrants that: (a) it has full power,
authority and right to execute, deliver and perform its obligations pursuant to
this Mortgage, give, grant, bargain, sell, alien, enfeoff, convey, confirm,
warrant, pledge, hypothecate and assign the Property pursuant to the terms
hereof and to keep and observe all of the terms of this Mortgage on Mortgagor's
part to be performed; and (b) Mortgagor is not a "foreign person" within the
meaning of Section 1445(f)(3) of the Internal Revenue Code of 1986, as amended,
and the related Treasury Department regulations, including temporary
regulations. Mortgagee represents and warrants that it has full power, authority
and right to execute, deliver and perform its obligations pursuant to this
Mortgage.
45. WAIVER OF NOTICE
To the extent permitted by applicable law, neither Mortgagor nor
Guarantor shall be entitled to any notices of any nature whatsoever from
Mortgagee except with respect to matters for which this Mortgage specifically
and expressly provides for the giving of notice by Mortgagee to Mortgagor or
Guarantor and except with respect to matters for which Mortgagee is required by
applicable law to give notice, and Mortgagor and Guarantor each hereby expressly
waives the right to receive any notice from Mortgagee with respect to any matter
for which this Mortgage does not specifically and expressly provide for the
giving of notice by Mortgagee to Mortgagor or Guarantor, including, without
limitation, notice of default, notice of intention to accelerate sums under the
Loan Documents and notice of acceleration of sums under the Loan Documents. All
notices required hereunder must be in writing, delivered by certified mail
(return receipt requested), personal delivery
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or overnight delivery.
46. REMEDIES OF MORTGAGOR
In the event that a claim or adjudication is made that Mortgagee has
acted unreasonably or has unreasonably delayed acting in any case where by law
or under the Note, this Mortgage, the Assignment, the Environmental Agreement,
the Guaranty Agreement or the other Loan Documents, it has an obligation to act
reasonably or promptly, Mortgagee shall not be liable for any monetary damages,
and Mortgagor's and Guarantor's remedies shall be limited to injunctive relief
or declaratory judgment.
47. SOLE DISCRETION OF MORTGAGEE
Wherever pursuant to this Mortgage Mortgagee exercises any right given
to it to approve or disapprove, or any arrangement or term is to be satisfactory
to Mortgagee, the decision of Mortgagee to approve or disapprove or to decide
that arrangements or terms are satisfactory or not satisfactory shall be in the
sole discretion of Mortgagee and shall be final and conclusive, except as may be
otherwise expressly and specifically provided herein.
48. NON-WAIVER
The failure of Mortgagee to insist upon strict performance of any term
hereof shall not be deemed to be a waiver of any term of this Mortgage.
Mortgagor shall not be relieved of Mortgagor's obligations hereunder by reason
of: (a) the failure of Mortgagee to comply with any request of Mortgagor or
Guarantor to take any action to foreclose this Mortgage or otherwise to enforce
any of the provisions hereof or of the Note, the Assignment, the Environmental
Agreement, the Guaranty Agreement or the other Loan Documents; (b) the release,
regardless of consideration, of the whole or any part of the Property, or of any
person liable for the Debt or any portion thereof; or (c) any agreement or
stipulation by Mortgagee extending the time of payment or otherwise modifying or
supplementing the terms of the Note, this Mortgage, the Assignment, the
Environmental Agreement, the Guaranty Agreement or the other Loan Documents.
Mortgagee may resort for the payment of the Debt to any other security held by
Mortgagee in such order and manner as Mortgagee, in its discretion, may elect.
Mortgagee may take action to recover the Debt, or any portion thereof, or to
enforce any covenant hereof without prejudice to the right of Mortgagee
thereafter to foreclosure this Mortgage. The rights and remedies of Mortgagee
under this Mortgage shall be separate, distinct and cumulative and none shall be
given effect to the exclusion of the others. No act of Mortgagee shall be
construed as an election to proceed under any one provision herein to the
exclusion of any other provision. Mortgagee shall not be limited exclusively to
the rights and remedies herein stated but shall be entitled to every right and
remedy now or hereafter afforded at law or in equity.
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49. 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.
50. LIABILITY
If Mortgagor or Guarantor consists of more than one person,
the obligations and liabilities of each such person hereunder and of each of
Mortgagor and Guarantor shall be joint and several. Subject to the provisions
hereof requiring Mortgagee's consent to any transfer of the Property, this
Mortgage shall be binding upon and inure to the benefit of Mortgagor, Guarantor
and Mortgagee and their respective successors and assigns forever.
51. INAPPLICABLE PROVISIONS
If any term, covenant or condition of this Mortgage is held to be
invalid, illegal or unenforceable in any respect, this Mortgage shall be
construed without such provision.
52. SECTION HEADINGS
The headings and captions of the various Sections of this
Mortgage are for convenience of reference only and are not to be construed as
defining or limiting, in any way, the scope or intent of the provisions hereof.
53. COUNTERPARTS
This Mortgage may be executed in any number of duplicate originals and
each such duplicate original shall be deemed to be an original. This Mortgage
may be executed in several counterparts, each of which counterparts shall be
deemed an original instrument and all of which together shall constitute a
single Mortgage. The failure of any party hereto to execute this Mortgage, or
any counterpart hereof, shall not relieve the other signatories from their
obligations hereunder.
54. 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 Property as against the collection of the Debt, or any part
thereof.
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55. 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. Neither Mortgagor
nor Guarantor shall, without the prior written consent of Mortgagee, which
consent may be withheld in Mortgagee's sole discretion, assign or transfer its
rights under this Mortgage or any of the Loan Documents.
56. SUBMISSION TO JURISDICTION
MORTGAGOR, GUARANTOR AND MORTGAGEE EACH HEREBY IRREVOCABLY SUBMIT TO
THE JURISDICTION OF ANY OHIO STATE OR FEDERAL COURT SITTING IN CUYAHOGA COUNTY
OVER ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS MORTGAGE.
MORTGAGOR, GUARANTOR AND MORTGAGEE EACH MAY, AT ITS SOLE DISCRETION, ELECT THE
STATE OF OHIO, CUYAHOGA COUNTY, OR THE UNITED STATES OF AMERICA FEDERAL DISTRICT
COURT HAVING JURISDICTION OVER CUYAHOGA COUNTY AS THE VENUE OF ANY SUCH SUIT,
ACTION OR PROCEEDING. MORTGAGOR, GUARANTOR AND MORTGAGEE EACH HEREBY IRREVOCABLY
WAIVE, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION IT MAY NOW OR
HEREAFTER HAVE TO SUCH VENUE AS BEING AN INCONVENIENT FORUM.
57. SERVICE OF PROCESS
To the extent permitted by applicable law, process in any suit, action
or proceeding of the nature referred to in Section 56 hereof may be served by
registered or certified mail, postage prepaid, to Mortgagor or Guarantor, as
applicable, at the address set forth above or to such other address of which
Mortgagor or Guarantor, as applicable, shall have given Mortgagee written
notice. Nothing in this Section shall affect the Mortgagee's right to serve
process in any manner permitted by law, or limit Mortgagee's right to bring
proceedings against Mortgagor or Guarantor in the courts of any other
jurisdiction.
58. WAIVER OF JURY TRIAL
MORTGAGOR, HEREBY AGREES NOT TO ELECT A TRIAL BY JURY OF ANY ISSUE
TRIABLE OF RIGHT BY JURY, AND WAIVES ANY RIGHT TO TRIAL BY JURY FULLY TO THE
EXTENT THAT ANY SUCH RIGHT SHALL NOW OR HEREAFTER EXIST WITH REGARD TO THE NOTE,
THIS MORTGAGE OR THE OTHER LOAN DOCUMENTS, OR ANY CLAIM, COUNTERCLAIM OR OTHER
ACTION ARISING IN CONNECTION THEREWITH. THIS WAIVER OF RIGHT TO TRIAL BY JURY IS
GIVEN KNOWINGLY AND VOLUNTARILY BY MORTGAGOR, AND IS
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INTENDED TO ENCOMPASS INDIVIDUALLY EACH INSTANCE AND EACH ISSUE AS TO WHICH THE
RIGHT TO A TRIAL BY JURY WOULD OTHERWISE ACCRUE. MORTGAGEE IS HEREBY AUTHORIZED
TO FILE A COPY OF THIS SECTION IN ANY PROCEEDING AS CONCLUSIVE EVIDENCE OF THIS
WAIVER BY MORTGAGOR.
59. CHOICE OF LAW
THIS MORTGAGE SHALL BE DEEMED TO BE A CONTRACT ENTERED INTO PURSUANT TO
THE LAWS OF THE STATE IN WHICH THE PROPERTY IS LOCATED AND SHALL IN ALL RESPECTS
BE GOVERNED, CONSTRUED, APPLIED, AND ENFORCED IN ACCORDANCE WITH THE LAWS OF
SUCH JURISDICTION.
60. TIME OF ESSENCE
Time is of the essence of this Mortgage and of each and every term,
covenant and condition herein.
61. SURVIVAL
All covenants, representations and warranties made herein shall survive
the making of the Loan and the delivery of the Note and other Loan Documents.
Except as hereinafter specifically set forth below, the representations and
warranties, covenants, and other obligations arising under Sections 35, 36, 37
and 41 of this Mortgage shall in no way be impaired by: any satisfaction or
other termination of this Mortgage, any assignment or other transfer of all or
any portion of this Mortgage or Mortgagee's interest in the Property (but, in
such case, shall benefit both Mortgagee and any assignee or transferee), any
exercise of Mortgagee's rights and remedies pursuant hereto including, but not
limited to foreclosure or acceptance of a deed in lieu of foreclosure, any
exercise of any rights and remedies pursuant to the Note or any of the other
Loan Documents, any transfer of all or any portion of the Property (whether by
Mortgagor or by Mortgagee following foreclosure or acceptance of a deed in lieu
of foreclosure or at any other time), any amendment to this Mortgage, the Note
or the other Loan Documents, and any act or omission that might otherwise be
construed as a release or discharge of Mortgagor from the obligations pursuant
hereto. All obligations and liabilities of Mortgagor under Sections 35, 36, 37
and 41 of this Mortgage shall cease and terminate on the earlier to occur of (a)
the first (1st) anniversary of the date of payment to Mortgagee in cash of the
entire Debt, and (b) the first date, after payment to Mortgagee in cash of the
entire Debt, on which Mortgagor, at its sole cost and expense, delivers to
Mortgagee an environmental audit of the Property in form and substance, and
prepared by a qualified environmental consultant, reasonably satisfactory in all
respects to Mortgagee and indicating the Property is in full compliance with all
applicable Environmental Laws.
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62. NO THIRD-PARTY BENEFICIARY RIGHTS CREATED
The parties hereto expressly declare that it is their joint
and mutual intention that this Mortgage and the transactions contemplated hereby
shall not be construed as creating a third party beneficiary contract, and
neither this Mortgage nor any of the other Loan Documents shall be construed as
giving or conferring any rights or benefits whatsoever to or upon any other
persons or entities other than Mortgagor, Guarantor and Mortgagee.
63. DISCHARGE
If all indebtedness secured hereby is promptly paid when due and all
other provisions hereof are faithfully performed, the conveyance of the Property
shall be null and void, otherwise to remain in full force and effect.
64. MAINTAINING PRIORITY OF MORTGAGE
Mortgagor shall, at its expense, cause the recordation of this Mortgage
and of any other instrument evidencing or securing the Note wherever such
recording would or might be required in order to protect the first lien and
priority of this Mortgage or such instrument against the claims of third
parties. Mortgagor hereby covenants and agrees at all times, at its sole
expense, take such other action and execute and record such other instruments as
may be necessary or desirable to preserve and protect the first lien and
priority of this Mortgage and all other instruments evidencing or securing the
Note.
65. USURY SAVINGS
This Mortgage and the Note are subject to the express condition that at
no time shall Mortgagor be obligated or required to pay interest on the Debt or
loan charges at a rate which could subject the holder of the Note to either
civil or criminal liability as a result of being in excess of the maximum
interest rate which Mortgagor is permitted by applicable law to contract or
agree to pay. If by the terms of this Mortgage or the Note, Mortgagor is at any
time required or obligated to pay interest on the Debt or loan charges at a rate
in excess of such maximum rate, the rate of interest or loan charges under the
Mortgage and the Note shall be deemed to be immediately reduced to such maximum
rate and the interest payable shall be computed at such maximum rate and all
prior interest payments or loan charges in excess of such maximum rate shall be
applied and shall be deemed to have been payments in reduction of the principal
balance of the Note. All sums paid or agreed to be paid to Mortgagee for the
use, forbearance, or detention of the Debt or for loan charges shall, to the
extent permitted by applicable law, be amortized, prorated, allocated, and
spread throughout the full stated term of the Note until payment in full so that
the rate or amount of interest on account of the Debt does not exceed the
maximum lawful rate of interest from time to time in effect and applicable to
the Debt for so long as the Debt is outstanding.
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66. COSTS
(a) Mortgagor acknowledges and confirms that Mortgagee shall impose
certain administrative processing and/or commitment fees in connection with (a)
the extension, renewal, modification, amendment and termination of its loans,
(b) the release or substitution of collateral therefor, (c) obtaining certain
consents, waivers and approvals with respect to the Property, or (d) the review
of any Lease or proposed Lease or the preparation or review of any
subordination, non-disturbance agreement. Mortgagor further acknowledges and
confirms that it shall be responsible for the payment of all costs of
reappraisal of the Property or any part thereof, whether required by law,
regulation, Mortgagee or any governmental or quasi-governmental authority.
Mortgagor hereby acknowledges and agrees to pay, immediately, with or without
demand, all such fees (as the same may be increased or decreased from time to
time), and any additional fees of a similar type or nature which may be imposed
by Mortgagee from time to time, upon the occurrence of any such event or
otherwise. Wherever it is provided for herein that Mortgagor pay any costs and
expenses, such costs and expenses shall include, but not be limited to, all
legal fees and disbursements of Mortgagee, whether of retained firms, the
reimbursement for the expenses of in-house staff or otherwise.
(b) (i) Mortgagor shall pay all legal fees incurred by Mortgagee in
connection with (A) the preparation of the Note, this Mortgage and the other
Loan Documents; and (B) the items set forth in subsection (a) above, and (ii)
Mortgagor shall pay to Mortgagee on demand any and all expenses, including legal
expenses and attorneys' fees, incurred or paid by Mortgagee in protecting its
interest in the Property or Personal Property or in collecting any amount
payable hereunder or in enforcing its rights hereunder with respect to the
Property or Personal Property, whether or not any legal proceeding is commenced
hereunder or thereunder and whether or not any default or Event of Default shall
have occurred and is continuing, together with interest thereon at the Default
Rate from the date paid or incurred by Mortgagee until such expenses are paid by
Mortgagor.
67. LOCAL LAW PROVISIONS
(a) Notice is hereby given that no holder of any mortgage, deed of
trust, deed to secure debt, lien security interest or other encumbrance
affecting all or any portion of the Property, which is inferior to the lien,
security interest and security title of this Mortgage shall have the right or
privilege to require the Mortgagee to ▇▇▇▇▇▇▇▇ assets.
(b) The Mortgagee is hereby authorized to do all things provided to be
done by a mortgagee under Section 1311.14 of the Ohio Revised Code. The correct
name and address of the Mortgagor and the Mortgagee are as set forth in the
preamble to this Mortgage.
[SIGNATURE APPEARS ON FOLLOWING PAGE]
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IN WITNESS WHEREOF, Mortgagor has executed and delivered this
Open-End Mortgage, Assignment of Leases and Profits, Security Agreement and
Fixture Filing under seal as of the day and year first above written.
Witnesses: MORTGAGOR:
SOLON HOTEL LLC, a New York limited liability company
By: Essex Hotels LLC, a New York limited liability
company, its managing member
By: Essex Hospitality Associates IV L.P., a New York
limited partnership, its managing member
By: Essex Partners Inc., a New York corporation,
its general partner
By: /S/▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ (SEAL)
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Senior Vice President
_______________________
Witness
_______________________
Printed Name
_______________________
Witness
_______________________
Printed Name
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STATE OF NEW YORK )
)
COUNTY OF MONROE )
Before me, ________________________________, on this day personally
appeared ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, known to me to be the person whose name is
subscribed to the foregoing instrument, and known to me to be the Senior Vice
President of Essex Partners Inc., a New York corporation, general partner of
Essex Hospitality Associates IV L.P., a New York limited partnership, managing
member of Essex Hotels LLC, a New York limited liability company, managing
member of SOLON HOTEL LLC, a New York limited liability company, and
acknowledged to me that she executed said instrument for the purposes and
consideration therein expressed, and as the act of said corporation as general
partner of said limited partnership, as managing member of Essex Hotels LLC, as
managing member of SOLON HOTEL LLC, on behalf of said corporation, said limited
partnership and said limited liability companies. Given under my hand and seal
of office this 7TH day of July, 1997.
-----------------------------
Notary Public
[NOTARIAL SEAL]
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EXHIBIT A
LEGAL DESCRIPTION OF LAND
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