Exhibit 10.2
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PENNSYLVANIA REAL ESTATE INVESTMENT TRUST, as mortgagor
(Borrower)
to
GMAC COMMERCIAL MORTGAGE CORPORATION, as mortgagee
(Lender)
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MORTGAGE AND
SECURITY AGREEMENT
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Dated: April 13, 1999
Location: ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇
PREPARED BY AND UPON
RECORDATION RETURN TO:
▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ Tischman ▇▇▇▇▇▇▇ & ▇▇▇▇▇, P.A.
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, Esq.
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TABLE OF CONTENTS
Page
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Article 1 - GRANTS OF SECURITY 1
Section 1.1 Property Mortgaged 1
Section 1.2 Assignment of Leases and Rents. 3
Section 1.3 Security Agreement. 4
Section 1.4 Pledge of Monies Held. 4
Article 2 - DEBT AND OBLIGATIONS SECURED 4
Section 2.1 Debt. 4
Section 2.2 Other Obligations. 5
Section 2.3 Debt and Other Obligations. 5
Section 2.4 Payments. 5
Article 3 - BORROWER COVENANTS 6
Section 3.1 Payment of Debt. 6
Section 3.2 Incorporation by Reference. 6
Section 3.3 Insurance. 6
Section 3.4 Payment of Taxes, Etc. 10
Section 3.5 Escrow Fund. 11
Section 3.6 Condemnation. 11
Section 3.7 Leases and Rents. 12
Section 3.8 Maintenance of Property. 13
Section 3.9 Waste. 13
Section 3.10 Compliance With Laws. 13
Section 3.11 Books and Records. 14
Section 3.12 Payment For Labor and Materials. 15
Section 3.13 Performance of Other Agreements. 16
Section 3.14 Change of Name, Identity or Structure. 16
Section 3.15 Existence. 16
Article 4 - SPECIAL COVENANTS 16
Section 4.1 Property Use. 16
Section 4.2 ERISA. 16
Section 4.3 Intentionally Deleted. 17
Section 4.4 Restoration After Casualty/Condemnation. 17
Article 5 - REPRESENTATIONS AND WARRANTIES 21
Section 5.1 Warranty of Title. 21
Section 5.2 Authority. 21
Section 5.3 Legal Status and Authority. 21
Section 5.4 Validity of Documents. 22
Section 5.5 Litigation. 22
Section 5.6 Status of Property. 22
Section 5.7 No Foreign Person. 24
Section 5.8 Separate Tax Lot. 24
Section 5.9 ERISA Compliance. 24
Section 5.10 Leases. 24
Section 5.11 Financial Condition. 25
Section 5.12 Business Purposes. 25
Section 5.13 Taxes. 25
Section 5.14 Mailing Address. 25
Section 5.15 No Change in Facts or Circumstances. 25
Section 5.16 Disclosure. 25
Section 5.17 Third Party Representations. 26
Section 5.18 Illegal Activity. 26
Section 5.19 FUNB Line of Credit. 26
Article 6 - DEBTOR/CREDITOR RELATIONSHIP 26
Section 6.1 Relationship of Borrower and Lender. 26
Section 6.2 Servicing of the Loan. 26
Article 7 - FURTHER ASSURANCES 26
Section 7.1 Recording of Security Instrument, Etc. 26
Section 7.2 Further Acts, Etc. 27
Section 7.3 Changes in Tax, Debt Credit and Documentary Stamp Laws. 27
Section 7.4 Estoppel Certificates. 28
Section 7.5 Flood Insurance. 28
Section 7.6 Splitting of Security Instrument. 28
Section 7.7 Replacement Documents. 29
Section 7.8 Amended Financing Statements. 29
Article 8 - DUE ON SALE/ENCUMBRANCE 29
Section 8.1 No Sale/Encumbrance. 29
Section 8.2 Sale/Encumbrance Defined. 30
Section 8.3 Lender's Rights. 31
Section 8.4 Right To Substitute Property 31
Article 9 - PREPAYMENT 31
Section 9.1 Prepayment Only in Accordance with Note. 31
Article 10 - DEFAULT 31
Section 10.1 Events of Default. 31
Article 11 - RIGHTS AND REMEDIES 33
Section 11.1 Remedies. 33
Section 11.2 Application of Proceeds. 36
Section 11.3 Right to Cure Defaults. 36
Section 11.4 Actions and Proceedings. 36
Section 11.5 Recovery of Sums Required To Be Paid. 36
Section 11.6 Examination of Books and Records. 36
Section 11.7 Other Rights, Etc. 37
Section 11.8 Right to Release Any Portion of the Property. 37
Section 11.9 Violation of Laws. 38
Section 11.10 Right of Entry. 38
Article 12 - ENVIRONMENTAL HAZARDS 38
Section 12.1 Environmental Representations and Warranties. 38
Section 12.2 Environmental Covenants. 39
Section 12.3 Lender's Rights. 40
Article 13 - INDEMNIFICATION 41
Section 13.1 General Indemnification. 41
Section 13.2 Mortgage and/or Intangible TAX. 42
Section 13.3 ERISA Indemnification. 42
Section 13.4 Environmental Indemnification. 42
Section 13.5 Duty to Defend; Attorneys' Fees and Other Fees
and Expenses. 43
Article 14 - WAIVERS 44
Section 14.1 Waiver of Counterclaim. 44
Section 14.2 Marshalling and Other Matters. 44
Section 14.3 Waiver of Notice. 44
Section 14.4 Waiver of Statute of Limitations. 44
Section 14.5 Sole Discretion of Lender. 44
Section 14.6 Survival. 45
Section 14.7 Waiver of Trial By Jury. 45
Article 15 - EXCULPATION 45
Section 15.1 Exculpation. 45
Section 15.2 Reservation of Certain Rights. 46
Section 15.3 Exceptions to Exculpation. 46
Section 15.4 Recourse. 46
Section 15.5 Bankruptcy Claims. 47
Article 16 - NOTICES 47
Section 16.1 Notices. 47
Article 17 - APPLICABLE LAW 48
Section 17.1 Choice of Law. 48
Section 17.2 Usury Laws. 48
Section 17.3 Provisions Subject to Applicable Law. 49
Section 17.4 Inapplicable Provision. 49
Article 18 - SECONDARY MARKET 49
Section 18.1 Dissemination of Information. 49
Article 19 - COSTS 50
Section 19.1 Performance at Borrower's Expense. 50
Section 19.2 Attorney's Fees for Enforcement. 50
Article 20 - DEFINITIONS 51
Section 20.1 General Definitions. 51
Section 20.2 Headings, Etc. 51
Article 21 - MISCELLANEOUS PROVISIONS 51
Section 21.1 No Oral Change. 51
Section 21.2 Liability. 51
Section 21.3 Duplicate Originals; Counterparts. 51
Section 21.4 Number and Gender. 52
Section 21.5 Subrogation. 52
Section 21.6 Entire Agreement. 52
Exhibits -
Exhibit A - Description of Land
Definitions
The terms set forth below are defined in the following Sections of this Security
Instrument:
o ADA: Subsection 3.10(a);
o Applicable Law: Subsection 3.10(a);
o Attorneys' Fees/Counsel Fees: Section 20.1, 20.1;
o Bankruptcy Code: Subsection 1.1(f);
o Borrower: Preamble;
o Business Day: Section 16.1;
o Casualty Consultant: Subsection 4.4(b)(iii);
o Casualty Retainage: Subsection 4.4(b)(iii);
o Collateral: Section 1.3;
o Debt: Section 2.1;
o Default Rate: Section 10.3;
o Environmental Indemnity: Subsection 10.1(c);
o Environmental Law: Section 12.1;
o Environmental Liens: Section 12.2;
o Environmental Report: Section 12.1;
o ERISA: Subsection 4.2(a);
o Escrow Fund: Section 3.5;
o Event: Section 19.1;
o Event of Default: Section 10.1;
o Exculpated Parties: Section 15.1;
o Force Majeure: Subsection 4.4(b);
o Guarantor: Section 5.5;
o Hazardous Substances: Section 12.1;
o Improvements: Subsection 1.1(c);
o Indemnified Parties: Section 13.1;
o Indemnitor: Subsection 10.1(c);
o Independent Director: Subsection 4.3(c);
o Insurance Premiums: Subsection 3.3(b);
o Investor: Section 18.1;
o Land: Subsection 1.1(a);
o Lease Guaranty: Subsection 3.7(a);
o Leases: Subsection 1.1(f);
o Lender: Preamble;
o Loan Application: Section 5.15;
o Losses: Section 13.1;
o Net Proceeds: Subsection 4.4(b);
o Net Proceeds Deficiency: Subsection 4.4(b)(v);
o Note: Recitals;
o Obligations: Section 2.3;
o Other Charges: Subsection 3.4(a);
o Other Obligations: Section 2.2;
o Other Security Documents: Section 3.2;
o Participations: 18.1;
o Permitted Exceptions: Section 5.1;
o Person: Section 20.1;
o Personal Property: Subsection 1.1(e);
o Policies/Policy: Subsection 3.3(b), 3.3(b);
o Property: Section 1.1;
o Qualified Insurer: Subsection 3.3(b);
o Rating Agency: Subsection 3.3(b);
o Registrar: Section 18.2;
o Release: Section 12.1;
o Remediation: Section 12.1;
o Rents: Subsection 1.1(f);
o Restoration: Subsection 3.3(d);
o Securities: Section 18.1;
bd Securitization: Section 18.1;
o Security Instrument: Preamble;
o Servicer: Section 6.2;
o Taxes: Subsection 3.4(a); and
o Uniform Commercial Code: Subsection 1.1(e).
THIS MORTGAGE AND SECURITY AGREEMENT (the "Security
Instrument") is made as of the 13th day of April, 1999, by PENNSYLVANIA REAL
ESTATE INVESTMENT TRUST, a Pennsylvania business trust, having its principal
place of business at The Bellevue, Suite 300, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, as mortgagor ("Borrower"), to GMAC COMMERCIAL
MORTGAGE CORPORATION, a California corporation, having an address at ▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇, as mortgagee ("Lender").
RECITALS:
Borrower by its promissory note of even date herewith given
to Lender is indebted to Lender in the principal sum of $18,750,000 in lawful
money of the United States of America (the note together with all extensions,
renewals, modifications, consolidations, substitutions, replacements,
restatements and increases thereof shall collectively be referred to as the
"Note"), with interest from the date thereof at the rates set forth in the Note,
principal and interest to be payable in accordance with the terms and conditions
provided in the Note.
Borrower desires to secure the payment of the Debt (as
defined in Article 2) and the performance of all of its obligations under the
Note and the Other Obligations (as defined in Article 2).
Article - GRANTS OF SECURITY
Section . Property Mortgaged. Borrower does hereby
irrevocably (i) mortgage, grant, bargain, sell, pledge, assign, warrant,
transfer and convey to Lender and to its successors and assigns with power of
sale in accordance with the terms and conditions hereof, for the use and benefit
of Lender, and (ii) grant a security interest to Lender and to its successors
and assigns with power of sale, in accordance with the terms and conditions
hereof, for the use and benefit of Lender, in, the following property, rights,
interests and estates now owned, or hereafter acquired by Borrower
(collectively, the "Property"):
() Land. The real property described in Exhibit A attached
hereto and made a part hereof (the "Land");
() Additional Land. All ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇ and
development rights hereafter acquired by Borrower 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 Security Instrument;
() Improvements. The buildings, structures, fixtures,
additions, enlargements, extensions, modifications, repairs,
replacements and improvements now or hereafter erected or located on
the Land (the "Improvements");
() Easements. All easements, rights-of-way or use, rights,
strips and gores of land, streets, ways, alleys, passages, sewer
rights, water, water courses, water rights and powers, air rights and
development rights, and all estates, rights, titles, interests,
privileges, liberties, servitudes, tenements, hereditaments and
appurtenances of any nature whatsoever, in any way now or hereafter
belonging, relating or pertaining to the Land and the Improvements and
the reversion and reversions, remainder and remainders, and all land
lying in the bed of any street, road or avenue, opened or proposed, in
front of or adjoining the Land, to the center line thereof and all the
estates, rights, titles, interests, dower and rights of dower, curtesy
and rights of curtesy, property, possession, claim and demand
whatsoever, both at law and in equity, of Borrower of, in and to the
Land and the Improvements and every part and parcel thereof, with the
appurtenances thereto;
() Fixtures and Personal Property. All machinery, equipment,
fixtures (including, but not limited to all heating, air conditioning,
plumbing, lighting, communications and elevator fixtures) and other
property of every kind and nature whatsoever owned by Borrower, or in
which Borrower has or shall have an interest, now or hereafter located
upon the Land or the Improvements, or appurtenant thereto, and used in
connection with the present or future operation and occupancy of the
Land and the Improvements and all building equipment, materials and
supplies of any nature whatsoever owned by Borrower, or in which
Borrower has or shall have an interest, now or hereafter located upon
the Land and the Improvements, or appurtenant thereto, or used in
connection with the present or future operation and occupancy of the
Land and the Improvements (collectively, the "Personal Property"), and
the right, title and interest of Borrower 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 Security
Instrument and all proceeds and products of the above;
() Leases and Rents. All leases and other agreements
affecting the use, enjoyment or occupancy of all or any part of the
Land or the Improvements heretofore or hereafter entered into whether
before or after the filing by or against Borrower of any petition for
relief under 11 U.S.C. ss. 101 et seq. (the "Bankruptcy Code"), as the
same may be amended from time to time (the "Leases") and all right,
title and interest of Borrower, its successors and assigns therein and
thereunder, including, without limitation, all guarantees, letters of
credit and any other credit support given by any guarantor in
connection therewith, cash or securities deposited under the Leases to
secure the performance by the lessees of their obligations thereunder
and all rents, additional rents, revenues, issues and profits
(including all oil and gas or other mineral royalties and bonuses)
from the Land and the Improvements whether paid or accruing before or
after the filing by or against Borrower of any petition for relief
under the Bankruptcy Code (the "Rents") and all
proceeds from the sale or other disposition of the Leases and the
right to receive and apply the Rents to the payment of the Debt;
() Condemnation Awards. All awards or payments, including
interest thereon, which may heretofore and hereafter be made with
respect to the Property, whether from the exercise of the right of
eminent domain (including, but not limited to any transfer made in
lieu of or in anticipation of the exercise of the right), or for a
change of grade, or for any other injury to or decrease in the value
of the Property;
() Insurance Proceeds. All proceeds of and any unearned
premiums on any insurance policies covering the Property, including,
without limitation, the right to receive and apply the proceeds of any
insurance judgments, or settlements made in lieu thereof, for damage
to the Property;
() Tax Certiorari. All refunds, rebates or credits in
connection with a reduction in real estate taxes and assessments
charged against the Property as a result of tax certiorari or any
applications or proceedings for reduction;
() Rights. The right, in the name and on behalf of Borrower,
to commence any action or proceeding to protect the interest of Lender
in the Property and while an Event of Default (defined in Section
10.1) remains uncured, to appear in and defend any action or
proceeding brought with respect to the Property;
() Agreements. All agreements, contracts, certificates,
instruments, franchises, permits, licenses, plans, specifications and
other documents, now or hereafter entered into, and all 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
Borrower therein and thereunder, including, without limitation, the
right, while an Event of Default remains uncured, to receive and
collect any sums payable to Borrower thereunder;
() Intangibles. All accounts, escrows, chattel paper, claims,
deposits, trade names, trademarks, servicemarks, logos, copyrights,
goodwill, books and records and all other general intangibles specific
to or used in connection with the operation of the Property, if any;
and
() Conversion. All proceeds of the conversion, voluntary or
involuntary, of any of the foregoing including, without limitation,
proceeds of insurance and condemnation awards, into cash or
liquidation claims;
() Other Rights. Any and all other rights of Borrower in and
to the items set forth in Subsections (a) through (m) above.
Section . Assignment of Leases and Rents. Borrower hereby
absolutely and unconditionally assigns to Lender Borrower's right, title and
interest in and to all current and future Leases and Rents; it being intended by
Borrower that this assignment constitutes a present, absolute assignment and not
an assignment for additional security only. Nevertheless, subject to the terms
of this Section 1.2 and Section 3.7, Lender grants to Borrower a revocable
license to collect and receive the Rents. Borrower shall hold the Rents, or a
portion thereof, sufficient to discharge all current sums due on the Debt, for
use in the payment of such sums.
Section . Security Agreement. This Security Instrument is
both a real property mortgage and 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 Borrower in the Property. By executing and delivering this Security
Instrument, Borrower hereby grants to Lender, as security for the Obligations
(defined in Section 2.3), a security interest in the Property to the full extent
that the Property may be subject to the Uniform Commercial Code (said portion of
the Property so subject to the Uniform Commercial Code, the "Collateral").
Section . Pledge of Monies Held. Borrower hereby pledges to
Lender, and grants to Lender a security interest in, any and all monies now or
hereafter held by Lender, including, without limitation, any sums deposited in
the Escrow Fund (defined in Section 3.5) and the Net Proceeds (defined in
Section 4.4), as additional security for the Obligations until expended or
applied as provided in this Security Instrument.
CONDITIONS TO GRANT
TO HAVE AND TO HOLD the above granted and described Property
unto the Lender and its successors and assigns, with power of sale in accordance
with the terms and conditions hereof, for the use and benefit of Lender, and the
successors and assigns of Lender, forever;
PROVIDED, HOWEVER, these presents are upon the express
condition that, if Borrower shall well and truly pay to Lender the Debt at the
time and in the manner provided in the Note and this Security Instrument, shall
well and truly perform the Other Obligations as set forth in this Security
Instrument and shall well and truly abide by and comply with each and every
covenant and condition set forth herein and in the Note, these presents and the
estate hereby granted shall cease, terminate and be void.
Article - DEBT AND OBLIGATIONS SECURED
Section . Debt. This Security Instrument and the grants,
assignments and transfers made in Article 1 are given for the purpose of
securing the following, in such order
of priority as Lender may determine in its sole discretion (the "Debt"):
() the payment of the indebtedness evidenced by the Note in
lawful money of the United States of America;
() the payment of interest, default interest, late charges
and other sums, as provided in the Note, this Security Instrument or
the Other Security Documents (defined in Section 3.2);
() the payment of any prepayment consideration, defeasance
payment, exit fee or similar fees provided in the Note;
() the payment of all other monies agreed or provided to be
paid by Borrower in the Note, this Security Instrument or the Other
Security Documents;
() the payment of all sums advanced pursuant to this Security
Instrument to protect and preserve the Property and the lien and the
security interest created hereby; and
() the payment of all sums advanced and costs and expenses
incurred by Lender in connection with the Debt or any part thereof,
any renewal, extension, modification, consolidation, change,
substitution, replacement, restatement or increase of the Debt or any
part thereof, or the acquisition or perfection of the security
therefor, whether made or incurred at the request of Borrower or
Lender.
Section . Other Obligations. This Security Instrument and the
grants, assignments and transfers made in Article 1 are also given for the
purpose of securing the following (the "Other Obligations"):
() the performance of all other obligations of Borrower
contained herein;
() the performance of each obligation of Borrower contained
in the Note in addition to the payment of the Debt and of Borrower and
of any Guarantor (defined in Section 5.5) contained in the Other
Security Documents; and
() the performance of each obligation of Borrower and any
Guarantor contained in any renewal, extension, modification,
consolidation, change, substitution, replacement for, restatement or
increase of all or any part of the Note, this Security Instrument or
the Other Security Documents.
Section . Debt and Other Obligations. Borrower's obligations
for the payment of the Debt and the performance of the Other Obligations shall
be referred to collectively below as the "Obligations."
Section . Payments. Unless payments are made in the required
amount in immediately available funds at the place where the Note is payable,
remittances in payment of all or any part of the Debt shall not, regardless of
any receipt or credit issued therefor, constitute payment until the required
amount is actually received by Lender in funds immediately available at the
place where the Note is payable (or any other place as Lender, in Lender's sole
discretion, may have established by delivery of written notice thereof to
Borrower) and shall be made and accepted subject to the condition that any check
or draft may be handled for collection in accordance with the practice of the
collecting bank or banks. Acceptance by Lender of any payment in an amount less
than the amount then due shall be deemed an acceptance on account only, and the
failure to pay the entire amount then due shall be and continue to be an Event
of Default.
Article - BORROWER COVENANTS
Borrower covenants and agrees with Lender that:
Section . Payment of Debt. Borrower will pay the Debt at the
time and in the manner provided in the Note and in this Security Instrument.
Section . Incorporation by Reference. All the covenants,
conditions and agreements contained in (a) the Note and (b) all and any of the
documents other than the Note or this Security Instrument now or hereafter
executed by Borrower and/or others and by or in favor of Lender, which wholly or
partially secure or guaranty payment of the Note or the other Obligations (the
"Other Security Documents"), are hereby made a part of this Security Instrument
to the same extent and with the same force as if fully set forth herein.
Section . Insurance.
() Borrower shall obtain and maintain, or cause to be
maintained, insurance for Borrower and the Property providing at least the
following coverages:
() Property Insurance. Insurance with respect to the
Improvements and building equipment insuring against any peril included within
the classification "All Risks of Physical Loss" in amounts at all times
sufficient to prevent Lender from becoming a co-insurer within the terms of the
applicable policies and under applicable law, but in any event such insurance
shall be maintained in an amount equal to the full insurable value of the
Improvements and building equipment, the term "full insurable value" to mean the
actual replacement cost of the Improvements and building equipment (without
taking into account any depreciation, and exclusive of excavations, footings and
foundations, landscaping and paving) determined annually by an insurer, a
recognized independent insurance broker or an independent appraiser selected and
paid by Borrower and in no event less than the coverage required pursuant to the
terms of any Lease. Absent such
annual adjustment, each policy shall contain inflation guard coverage insuring
that the policy limit will be increased over time to reflect the effect of
inflation. Borrower shall also maintain insurance against loss or damage to such
furniture, furnishings, fixtures, equipment and other items (whether personalty
or fixtures) included in the Property and owned by Borrower from time to time,
to the extent applicable, in the amount of the cost of replacing the same, in
each case, with inflation guard coverage to reflect the effect of inflation, or
annual valuation. Each policy or policies shall contain a replacement cost
endorsement and either an agreed amount endorsement (to avoid the operation of
any co-insurance provisions) or a waiver of any co-insurance provisions, all
subject to Lender's approval. The maximum deductible shall be $10,000.00;
() Liability Insurance. Comprehensive general liability
insurance, including personal injury, bodily injury, death and property damage
liability, insurance against any and all claims, including all legal liability
to the extent insurable and imposed upon Lender and all court costs and
attorneys' fees and expenses, arising out of or connected with the possession,
use, leasing, operation, maintenance or condition of the Property in such
amounts as are generally available at commercially reasonable premiums and are
generally required by institutional lenders for properties comparable to the
Property but in no event for a combined single limit of less than $5,000,000.
During any construction of the Property, Borrower's general contractor for such
construction shall also provide the insurance required in this Subsection b.
Lender hereby retains the right to periodically review the amount of said
liability insurance being maintained by Borrower and to require an increase in
the amount of said liability insurance should Lender deem an increase to be
reasonably prudent under then existing circumstances;
() Workers' Compensation Insurance. Statutory workers'
compensation insurance with respect to any work on or about the Property
covering all persons subject to the workers' compensation laws of the state in
which the Property is located;
() Business Interruption. Business interruption and/or
loss of "rental income" insurance in an amount sufficient to avoid any
co-insurance penalty and to provide proceeds which will cover a period of not
less than one (1) year from the date of casualty or loss with a six month
extended period of indemnity, the term "rental income" to mean the sum of (A)
the total then ascertainable Rents payable under the Leases and (B) the total
ascertainable amount of all other amounts to be received by Borrower from third
parties which are the legal obligation of the tenants, reduced to the extent
such amounts would not be received because of operating expenses not incurred
during a period of non-occupancy of that portion of the Property then not being
occupied. The amount of coverage shall be adjusted annually to reflect the rents
payable during the succeeding twelve (12) month period.
() Boiler and Machinery Insurance. Broad form boiler
and machinery
insurance (without exclusion for explosion) covering all boilers or other
pressure vessels, machinery, and equipment located in, on or about the Property
and insurance against loss of occupancy or use arising from any breakdown in
such amount per accident equal to the replacement value of the improvements
housing the machinery or $2,000,000 or such other amount reasonably determined
by Lender. If one or more large HVAC units is in operation at the Property,
"System Breakdowns" coverage shall be required, as determined by Lender. Minimum
liability coverage per accident must equal the value of such unit(s);
() Flood Insurance. If required by Subsection 5.6(a)
hereof, flood insurance in an amount at least equal to the lesser of (A) the
minimum amount required, under the terms of coverage, to compensate for any
damage or loss on a replacement basis (or the unpaid balance of the indebtedness
secured hereby if replacement cost coverage is not available for the type of
building insured); or (B) the maximum insurance available under the appropriate
National Flood Insurance Administration program. The deductible may not exceed
$25,000.
() During the period of any construction, renovation or
alteration of the Improvements, the cost of which exceeds the lesser of 10% of
the principal amount of the Note or $500,000, at Lender's request, a completed
value, "All Risk" Builder's Risk form, or "Course of Construction" insurance
policy in non-reporting form for any Improvements under construction, renovation
or alteration in an amount approved by Lender may be required. During the period
of any construction of any addition to the existing Improvements, a completed
value, "All Risk" Builder's Risk form or "Course of Construction" insurance
policy in non-reporting form, in an amount approved by Lender, shall be
required.
() Other Insurance. Such other insurance with respect
to the Property or on any replacements or substitutions thereof or additions
thereto as may from time to time be required by Lender against other insurable
hazards or casualties which at the time are commonly insured against in the case
of property similarly situated, including, without limitation, sinkhole, mine
subsidence, earthquake and environmental insurance, due regard being given to
the height and type of buildings, their construction, location, use and
occupancy.
() All insurance provided for in Subsection 3.3(a)
hereof shall be obtained under valid and enforceable policies (the "Policies" or
in the singular, the "Policy"), and shall be issued by one or more domestic
primary insurer(s) having (i) an investment grade rating of "A" or better ("AA"
or better for Loans of $25 million or more), or a comparable claims paying
ability assigned by S & P of equivalent one or more credit rating agencies
approved by Lender (a "Rating Agency"), (each such insurer shall be referred to
below as a "Qualified Insurer"). All insurers providing insurance required by
this Security Instrument shall be authorized to issue insurance in the state in
which the Property is located. The Policy referred to in Subsection 3.3(a)(ii)
above shall name Lender as an additional named
insured and the Policy referred to in Subsection 3.3(a)(i), (iv), (v) and (vi)
above shall provide that all proceeds be payable to Lender as set forth in
Section 4.4 hereof. The Policies referred to in Subsections 3.3(a)(i), (v) and
(vi) shall also contain: (i) a standard "non-contributory mortgagee" endorsement
or its equivalent relating, inter alia, to recovery by Lender notwithstanding
the negligent or willful acts or omission of Lender. All Policies described in
Subsection 3.3(a) above shall contain (i) a provision that such Policies shall
not be canceled or terminated, nor shall they expire, without at least thirty
(30) days' prior written notice to Lender in each instance; and (ii) include
effective waivers by the insurer of all claims for Insurance Premiums (defined
below) against any mortgage, loss payees, additional insureds and named insureds
(other than Borrower). In the event that the Property or the Improvements
constitutes a legal non-conforming use under applicable building, zoning or land
use laws or ordinances, the policy shall include an ordinance or law coverage
endorsement which will contain Coverage A: "Loss Due to Operation of Law" (with
a minimum liability limit equal to Replacement Cost With Agreed Value
Endorsement), Coverage B: "Demolition Cost" and Coverage C: "Increased Cost of
Construction" coverages. Certificates of insurance with respect to all renewal
and replacement Policies shall be delivered to Lender not less than thirty (30)
days prior to the expiration date of any of the Policies required to be
maintained hereunder which certificates shall bear notations evidencing payment
of applicable premiums (the "Insurance Premiums"). Originals or certificates of
such replacement Policies shall be delivered to Lender promptly after Borrower's
receipt thereof but in any case within thirty (30) days after the effective date
thereof. If Borrower fails to maintain and deliver to Lender copies of the
Policies or certificates of insurance required by this Security Instrument, upon
ten (10) days' prior notice to Borrower, Lender may procure such insurance at
Borrower's sole cost and expense.
() Borrower shall comply with all insurance requirements and
shall not bring or keep or permit to be brought or kept any article upon any of
the Property or cause or permit any condition to exist thereon which would be
prohibited by an insurance requirement, or would invalidate the insurance
coverage required hereunder to be maintained by Borrower on or with respect to
any part of the Property pursuant to this Section 3.3.
() If the Property shall be damaged or destroyed, in whole or
in part, by fire or other casualty, Borrower shall give prompt notice of such
damage to Lender and provided that Borrower shall have received the Net
Proceeds, Borrower shall promptly commence and diligently prosecute the
completion of the repair and restoration of the Property as nearly as possible
to the condition the Property was in immediately prior to such fire or other
casualty, with such alterations as may be approved by Lender (the "Restoration")
and otherwise in accordance with Section 4.4 of this Security Instrument.
() The insurance coverage required under Section 3.3(a) may
be effected under a blanket policy or policies covering the Property and other
properties and assets not constituting a part of the security hereunder;
provided that any such blanket policy shall specify, except in the case of
public liability insurance, the portion of the total coverage of
such policy that is allocated to the Property, and any sublimit in such blanket
policy applicable to the Property, and shall in any case comply in all other
respects with the requirements of this Section 3.3.
() The insurance coverage required under Subsection
3.3(a)(ii) may be satisfied by a layering of Commercial General Liability,
Umbrella and Excess Liability Policies, but in no event will the Commercial
General Liability policy be written for an amount less than $1,000,000 per
occurrences and $2,000,000 aggregate for bodily injury and property damage
liability.
() The delivery to Lender of the insurance policies or the
certificates of insurance as provided above shall constitute an assignment of
all proceeds payable under such insurance as relating to the Property by
Borrower to Lender as further security for the indebtedness secured hereby. In
the event of foreclosure of this Security Instrument, or other transfer of title
to the Property in extinguishment in whole or in part of the secured
indebtedness, all right, title and interest of Borrower in and to all proceeds
payable under such policies then in force concerning the Property shall
thereupon vest in the purchaser at such foreclosure, or in Lender or other
transferee in the event of such other transfer of title. Approval of any
insurance by Lender shall not be a representation of the solvency of any insurer
or the sufficiency of any amount of insurance.
() Lender shall not be responsible for nor incur any
liability for the insolvency of the insurer or other failure of the insurer to
perform, even though Lender has caused the insurance to be placed with the
insurer after failure of Borrower to furnish such insurance. Borrower shall not
obtain insurance for the Property in addition to that required by Lender without
the prior written consent of Lender, which consent will not be unreasonably
withheld provided that (i) Lender is named insured on such insurance, (ii)
Lender receives complete copies of all policies evidencing such insurance, and
(iii) such insurance complies with all of the applicable requirements set forth
herein.
Section . Payment of Taxes, Etc. () Subject to the terms and
conditions of Section 3.5 hereof, Borrower shall pay by their due date all
taxes, assessments, water rates, sewer rents, 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 or assessed or imposed against the Property or any part thereof (the
"Taxes"), all ground rents, maintenance charges and similar charges, now or
hereafter levied or assessed or imposed against the Property or any part thereof
(the "Other Charges"), and all charges for utility services provided to the
Property as same become due and payable. Borrower will deliver to Lender,
promptly upon Lender's request, evidence satisfactory to Lender that the Taxes,
Other Charges and utility service charges have been so paid or are not then
delinquent. Borrower shall not suffer and shall promptly cause to be paid and
discharged any lien or charge whatsoever which may be or become a lien or charge
against the Property. Except to the extent sums sufficient to pay all Taxes and
Other Charges have
been deposited with Lender in accordance with the terms of this Security
Instrument, Borrower shall furnish to Lender paid receipts for the payment of
the Taxes and Other Charges prior to the date the same shall become delinquent.
() After prior written notice to Lender, Borrower, at its own
expense, may contest by appropriate legal proceeding, promptly initiated and
conducted in good faith and with due diligence, the amount or validity or
application in whole or in part of any of the Taxes, provided that (i) no Event
of Default has occurred and is continuing under the Note, this Security
Instrument or any of the Other Security Documents, (ii) Borrower is permitted to
do so under the provisions of any other mortgage, deed of trust or deed to
secure debt affecting the Property, (iii) such proceeding shall suspend the
collection of the Taxes from Borrower and from the Property or Borrower shall
have paid all of the Taxes under protest, (iv) such proceeding shall be
permitted under and be conducted in accordance with the provisions of any other
instrument to which Borrower is subject and shall not constitute a default
thereunder, (v) neither the Property nor any part thereof or interest therein
will be in danger of being sold, forfeited, terminated, canceled or lost, (vi)
Borrower shall have set aside adequate reserves for the payment of the Taxes,
together with all interest and penalties thereon, unless Borrower has paid all
of the Taxes under protest, and (vii) Borrower shall have furnished the security
as may be required in the proceeding, or as may be reasonably requested by
Lender to insure the payment of any contested Taxes, together with all interest
and penalties thereon, taking into consideration the amount in the Escrow Fund
available for payment of Taxes.
Section . Escrow Fund. At the option of Lender, Lender may
require Borrower to establish an Escrow Fund (defined below) sufficient to
discharge its obligations for the payment of Insurance Premiums and Taxes
pursuant to Sections 3.3 and 3.4 hereof. Initial deposits of Taxes and Insurance
Premiums shall be made by Borrower to Lender in amounts determined by Lender in
its discretion on the date hereof to be held by Lender in escrow. Additionally,
Borrower shall pay to Lender on the tenth (10th) day of each calendar month (a)
one-twelfth of an amount which would be sufficient to pay the Taxes payable, or
estimated by Lender to be payable, upon the due dates established by the
appropriate taxing authority during the next ensuing twelve (12) months and (b)
one-twelfth of an amount which would be sufficient to pay the Insurance Premiums
due for the renewal of the coverage afforded by the Policies upon the expiration
thereof (the initial deposits together with the amounts in (a) and (b) above
shall be called the "Escrow Fund"). Borrower agrees to notify Lender immediately
of any changes to the amounts, schedules and instructions for payment of any
Taxes and Insurance Premiums of which it has obtained knowledge and authorizes
Lender or its agent to obtain the bills for Taxes and Other Charges directly
from the appropriate tax authority. Monthly payments to the Escrow Fund as
required hereunder and the monthly payments of interest or principal or both,
payable pursuant to the Note, shall be added together and shall be paid as an
aggregate sum by Borrower to Lender. Provided there are sufficient amounts in
the Escrow Fund and no Event of Default exists, Lender shall be obligated to pay
the Taxes and Insurance Premiums as they become due on their
respective due dates on behalf of Borrower by applying the Escrow Fund to the
payments of such Taxes and Insurance Premiums required to be made by Borrower
pursuant to Sections 3.3 and 3.4 hereof. If the amount of the Escrow Fund shall
exceed the amounts due for Taxes and Insurance Premiums pursuant to Sections 3.3
and 3.4 hereof, Lender shall, in its discretion, return any excess to Borrower
or credit such excess against future payments to be made to the Escrow Fund. In
allocating such excess, Lender may deal with the person shown on the records of
Lender to be the owner of the Property. If the Escrow Fund is not sufficient to
pay the items set forth in (a) and (b) above, Borrower shall promptly pay to
Lender, upon demand, an amount which Lender shall reasonably estimate as
sufficient to make up the deficiency. The Escrow Fund shall not constitute a
trust fund and may be commingled with other monies held by Lender.
Section . Condemnation. Borrower shall promptly give Lender
notice of the actual or threatened commencement of any condemnation or eminent
domain proceeding and shall deliver to Lender copies of any and all papers
served in connection with such proceedings. Lender may participate in any such
proceedings to the extent permitted by law. Upon an Event of Default, Borrower
shall deliver to Lender all instruments requested by it to permit such
participation. Borrower shall, at its expense, diligently prosecute any such
proceedings, and shall consult with Lender, its attorneys and experts, and
cooperate with them in the carrying on or defense of any such proceedings.
Borrower shall not make any agreement in lieu of condemnation of the Property or
any portion thereof without the prior written consent of Lender in each
instance, which consent shall not be unreasonably withheld or delayed in the
case of a taking of an insubstantial portion of the Property. Notwithstanding
any taking by any public or quasi-public authority through eminent domain or
otherwise (including, but not limited to any transfer made in lieu of or in
anticipation of the exercise of such taking), Borrower shall continue to pay the
Debt at the time and in the manner provided for its payment in the Note and in
this Security Instrument and the Debt shall not be reduced until any award or
payment therefor shall have been actually received and applied by Lender, after
the deduction of expenses of collection, to the reduction or discharge of the
Debt. Lender shall not be limited to the interest paid on the award by the
condemning authority but shall be entitled to receive out of the award interest
at the rate or rates provided herein or in the Note. If the Property or any
portion thereof is taken by the power of eminent domain, Borrower shall promptly
commence and diligently prosecute the Restoration of the Property and otherwise
comply with the provisions of in accordance with Section 4.4 of this Security
Instrument. If the Property is sold, through foreclosure or otherwise, prior to
the receipt by Lender of the award or payment, Lender shall have the right,
whether or not a deficiency judgment on the Note shall have been sought,
recovered or denied, to receive the award or payment, or a portion thereof
sufficient to pay the Debt.
Section . Leases and Rents. () Except as otherwise consented
to by Lender, all Leases shall be written on a standard form of lease which
shall have been approved by Lender. Upon request, Borrower shall furnish Lender
with executed copies of all Leases. No material changes may be made to the
Lender-approved standard lease without the prior
written consent of Lender, which consent shall not be unreasonably withheld or
delayed. All proposed leases shall be subject to the prior approval of Lender
except that all proposed leases which (i) are on the same form of lease which
has been approved by Lender, (ii) are the result of an arms-length transaction,
(iii) which provide for rental rates comparable to existing market rates, (iv)
where space to be leased does not exceed more than ten percent (10%) of total
rentable space of the Property, (v) where the proposed tenant is an independent
third party not affiliated with the Borrower, and (vi) do not contain any terms
which would materially affect Lender's rights under this Security Instrument,
the Note or the Other Security Documents, shall not be subject to the prior
approval of Lender. Notwithstanding subsections (ii), (iii) and (v) above,
Borrower may lease units to employees of Borrower, but the aggregate number of
units leased to such employees shall not exceed 1.5% of the total number of
units at the Property. Borrower (i) shall observe and perform all the
obligations imposed upon the lessor under the Leases if the failure to perform
or observe the same would materially and adversely affect the value of the
Property taken as a whole and shall not do or permit to be done anything to
impair the value of the Leases as security for the Debt; (ii) shall promptly
send copies to Lender of all notices of default which Borrower shall send or
receive thereunder; (iii) shall enforce in a commercially reasonable manner all
of the terms, covenants and conditions contained in the Leases upon the part of
the lessee thereunder to be observed or performed; provided, however, with
respect to multifamily residential property, a residential Lease may be
terminated in the event of a default by the tenant thereunder; (iv) shall not
collect any of the Rents more than one (1) month in advance (provided that a
security deposit shall not be deemed rent collected in advance); (v) shall not
execute any other assignment of the lessor's interest in the Leases or the
Rents; (vi) shall not (A) materially alter, modify or change the terms of the
Leases without the prior written consent of Lender, which consent shall not be
unreasonably withheld or delayed if the alteration, modification or change does
not materially and adversely affect the value of the Property taken as a whole
and provided further that such Lease, as altered, modified or changed, is
otherwise in compliance with the requirements of this Security Instrument, or
(B) cancel or terminate any Lease (except for defaults thereunder) of more than
ten (10%) percent of the rentable space of the Property or accept a surrender
thereof or convey or transfer or suffer or permit a conveyance or transfer of
the Land 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; (vii) shall not alter, modify or change the terms of any guaranty,
letter of credit or other credit support with respect to the Leases (the "Lease
Guaranty") or cancel or terminate such Lease Guaranty without the prior written
consent of Lender; and (viii) shall not consent to any assignment of or
subletting under the Leases not in accordance with their terms, without the
prior written consent of Lender. Notwithstanding the foregoing, subdivisions
(ii), (vi), (vii) and (viii) shall not apply to residential Leases for space in
a multifamily residential property.
Section . Maintenance of Property. Borrower 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
altered if the costs of same would exceed
$500,000 (except for normal replacement of the Personal Property) without the
consent of Lender. Subject to Section 4.4(c) hereof, Borrower shall promptly
repair, replace or rebuild any part of the Property which may be destroyed by
any casualty, or become damaged, worn or dilapidated or which may be affected by
any proceeding of the character referred to in Section 3.6 hereof and shall
complete and pay for any structure at any time in the process of construction or
repair on the Land. Borrower shall not initiate, join in, acquiesce in, or
consent to any change in any private restrictive covenant, zoning law or other
public or private restriction, limiting or defining the uses which may be made
of the Property or any part thereof. If under applicable zoning provisions the
use of all or any portion of the Property is or shall become a nonconforming
use, Borrower will not cause or permit the nonconforming use or Improvement to
be discontinued or abandoned without the express written consent of Lender.
Section . Waste. Borrower shall not commit or suffer any
waste of the Property 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 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 materially impair the value of the Property or the
security of this Security Instrument. Borrower will not, without the prior
written consent of Lender, permit any drilling or exploration for or extraction,
removal, or production of any minerals from the surface or the subsurface of the
Land, regardless of the depth thereof or the method of mining or extraction
thereof.
Section . Compliance With Laws. () Borrower 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 including, but not limited to, the Americans with
Disabilities Act ("ADA") (collectively, "Applicable Law").
() Borrower shall from time to time, upon Lender's request,
provide Lender with evidence reasonably satisfactory to Lender that the Property
complies with all Applicable Laws or is exempt from compliance with Applicable
Laws.
() Notwithstanding any provisions set forth herein or in any
document regarding Lender's approval of alterations of the Property, Borrower
shall not alter the Property in any manner which would materially increase
Borrower's responsibilities for compliance with Applicable Laws without the
prior written approval of Lender. Lender's approval of the plans,
specifications, or working drawings for alterations of the Property shall create
no responsibility or liability on behalf of Lender for their completeness,
design, sufficiency or their compliance with Applicable Laws. The foregoing
shall apply to tenant improvements constructed by Borrower or by any of its
tenants. Lender 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 Lender.
() Borrower shall give prompt notice to Lender of the receipt
by
Borrower 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.
() After prior written notice to Lender, Borrower, 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 Security Instrument or any of the Other Security
Documents; (ii) Borrower is permitted to do so under the provisions of any other
mortgage, deed of trust or deed to secure debt affecting the Property; (iii)
such proceeding shall be permitted under and be conducted in accordance with the
provisions of any other instrument to which Borrower is subject and shall not
constitute a default thereunder; (iv) 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 (v)
Borrower shall have furnished to Lender all other items reasonably requested by
Lender.
Section . Books and Records. () Borrower and any Guarantors
and Indemnitors shall keep adequate books and records of account in accordance
with the methods utilized by them as of the date hereof, consistently applied
and furnish to Lender:
() quarterly certified rent rolls signed and dated by Borrower,
detailing the names of all tenants of the Improvements, the portion of
Improvements occupied by each tenant, the base rent and any other charges
payable under each Lease and the term of each Lease, including the expiration
date, and any other information as is reasonably required by Lender, within
forty-five (45) days after the end of each fiscal quarter;
() a quarterly operating statement of the Property detailing the total
revenues received, total expenses incurred, total cost of all capital
improvements, total debt service and total cash flow, together with a balance
sheet for such quarter, to be prepared and certified by Borrower in the form
required by Lender, and if available (i.e., Borrower shall have no obligation to
deliver unless same is available to Borrower), any quarterly operating statement
and/or balance sheet prepared by an independent certified public accountant
within sixty (60) days after the close of each fiscal quarter.
() an annual balance sheet and profit and loss statement of Borrower,
any Guarantors and any Indemnitors, in the form required by Lender, prepared and
certified by the respective Borrower, Guarantor and/or Indemnitor, as
applicable, within ninety (90) days after the close of each fiscal year;
() an annual certified rent roll presented on a quarterly basis
consistent with the quarterly certified rent rolls described above within ninety
(90) days after the close of each fiscal year;
() an annual operating budget presented on a monthly basis consistent
with the annual operating statement described above for the Property and all
proposed capital replacements and improvements at least thirty (30) days prior
to the start of each calendar year; and
() such other financial statements, including monthly operating
statements and rent rolls, as Lender may reasonably request.
() Upon reasonable request from Lender, Borrower and its
affiliates shall furnish to Lender:
() a property management report for the Property, showing the number of
inquiries made and/or rental applications received from tenants or prospective
tenants and deposits received from tenants and any other information requested
by Lender, in reasonable detail and certified by Borrower under penalty of
perjury to be true and complete, but no more frequently than quarterly; and
() an accounting of all security deposits held in connection with any
Lease of any part of the Property, including the name and identification number
of the accounts in which such security deposits are held, the name and address
of the financial institutions in which such security deposits are held and the
name of the person to contact at such financial institution, along with any
authority or release necessary for Lender to obtain information regarding such
accounts directly from such financial institutions.
() Borrower and its affiliates and any Guarantor and
Indemnitor shall furnish Lender with such other additional financial or
management information as may, from time to time, be reasonably required by
Lender in form and substance satisfactory to Lender.
Section . Payment For Labor and Materials. Borrower 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 for
the Permitted Exceptions (defined in Section 5.1).
Section . Performance of Other Agreements. Borrower shall
observe and perform each and every term to be observed or performed by Borrower
pursuant to the terms of any agreement or recorded instrument affecting or
pertaining to the Property.
Section . Change of Name, Identity or Structure. Borrower
will not change Borrower's name, identity (including its trade name or names)
or, if not an individual, Borrower's corporate, partnership or other structure
without notifying the Lender of such
change in writing at least thirty (30) days prior to the effective date of such
change and, in the case of a change in Borrower's structure, without first
obtaining the prior written consent of the Lender.
Section . Existence. Borrower will continuously maintain (a)
its existence and shall not dissolve or permit its dissolution, (b) its rights
to do business in the state where the Property is located and (c) its franchises
and trade names.
Article - SPECIAL COVENANTS
Borrower covenants and agrees with Lender that:
Section . Property Use. The Property shall be used only for
multifamily apartments, and for no other use without the prior written consent
of Lender, which consent may be withheld in Lender's discretion.
Section . ERISA. () It shall not engage in any transaction
which would cause any obligation, or action taken or to be taken, hereunder (or
the exercise by Lender of any of its rights under the Note, this Security
Instrument and the Other Security Documents) to be a non-exempt (under a
statutory or administrative class exemption) prohibited transaction under the
Employee Retirement Income Security Act of 1974, as amended ("ERISA").
() Borrower further covenants and agrees to deliver to Lender
such certifications or other evidence from time to time throughout the term of
this Security Instrument, as requested by Lender in its sole discretion, that
(i) Borrower is not an "employee benefit plan" as defined in Section 3(32) of
ERISA, which is subject to Title I of ERISA, or a "governmental plan" within the
meaning of Section 3(32) of ERISA; (ii) Borrower is not subject to state
statutes regulating investments and fiduciary obligations with respect to
governmental plans; and (iii) one or more of the following circumstances is
true:
(A) Equity interests in Borrower are publicly offered securities,
within the meaning of 29 C.F.R. ss. 2510.3-101(b)(2);
(B) Less than 25 percent of each outstanding class of equity
interests in Borrower are held by "benefit plan investors"
within the meaning of 29 C.F.R. ss. 2510.3-101(f)(2); or
(C) Borrower qualifies as an "operating company" or a "real estate
operating company" within the meaning of 29 C.F.R. ss.
2510.3-101(c) or (e) or an investment company registered under
The Investment Company Act of 1940.
Section . Intentionally Deleted.
Section . Restoration After Casualty/Condemnation. In the
event of a casualty or a taking by eminent domain, the following provisions
shall apply in connection with the Restoration of the Property:
() If (i) the Net Proceeds (defined below) do not exceed
$500,000 ("Casualty Amount"); (ii) the costs of completing the Restoration as
reasonably estimated by Borrower shall be less than or equal to the Casualty
Amount; (iii) no Event of Default shall have occurred and be continuing under
the Note, this Security Instrument or any of the Other Security Documents; (iv)
the Property and the use thereof after the Restoration will be in compliance
with, and permitted under, all applicable zoning laws, ordinances, rules and
regulations (including, without limitation, all applicable Environmental Laws
(defined in Section 12.1); and (v) such fire or other casualty or taking, as
applicable, does not materially impair access to the Property or the
Improvements, then the Net Proceeds will be disbursed directly to Borrower and
Borrower shall commence and diligently prosecute to completion, subject to Force
Majeure (defined herein), the Restoration of the Property to as nearly as
possible the condition it was in immediately prior to such fire or other
casualty or to such taking. Except upon the occurrence and continuance of an
Event of Default, Borrower shall settle any insurance claims with respect to the
Net Proceeds which in the aggregate are less than or equal to the Casualty
Amount. Lender shall have the right to participate in and reasonably approve any
settlement for insurance claims with respect to the Net Proceeds which in the
aggregate are equal to or greater than the Casualty Amount. If an Event of
Default shall have occurred and be continuing, Borrower hereby irrevocably
empowers Lender, in the name of Borrower as its true and lawful
attorney-in-fact, to file and prosecute such claim and to collect and to make
receipt for any such payment. If the Net Proceeds are received by Borrower, such
Net Proceeds shall, until the completion of the related work, be held in trust
for Lender and shall be segregated from other funds of Borrower to be used to
pay for the cost of the Restoration in accordance with the terms hereof.
() If the Net Proceeds are greater than the Casualty Amount,
such Net Proceeds shall, subject to the provisions of the Leases that are
superior to the lien of this Security Instrument or with respect to which
subordination, non-disturbance agreements binding upon Lender have entered into
concerning the deposits of Net Proceeds, be forthwith paid to Lender to be held
by Lender in a segregated account to be made available to Borrower for the
Restoration in accordance with the provisions of this Subsection 4.4(b). Subject
to Section 4.4(c) hereof, Borrower shall commence and diligently prosecute to
completion, subject to Force Majeure (defined below), the Restoration (in the
case of a taking, to the extent the Property is capable of being restored). The
term "Net Proceeds" for purposes of this Section 4.4 shall mean: (i) the net
amount of all insurance proceeds received by Lender under the Policies carried
pursuant to Subsections 3.3(a)(i), (iv), (v), (vi) and (vii) of this Security
Instrument as a result of such damage or destruction, after deduction of its
reasonable costs and expenses (including, but not limited to reasonable counsel
fees), if any,
in collecting the same, or (ii) the net amount of all awards and payments
received by Lender with respect to a taking referenced in Section 3.6 of this
Security Instrument, after deduction of its reasonable costs and expenses
(including, but not limited to reasonable counsel fees), if any, in collecting
the same, whichever the case may be. The term "Force Majeure" for the purpose of
this Section 4.4 shall have the following meaning: Borrower shall be excused for
the period of any delay in the performance of any obligations hereunder when
prevented from so doing by cause or causes beyond Borrower's control such as,
without limitation, all labor disputes, civil commotion, war, war-like
operations, invasion, rebellion, hostilities, military or usurped power,
sabotage, governmental regulations or controls, fire or other casualty,
inability to obtain any materials or services, and acts of God.
() If the Net Proceeds are greater than the Casualty Amount,
the Net Proceeds shall be made available to Borrower for payment of, or
reimbursement of Borrower's expenses in connection with, the Restoration,
subject to the following conditions:
(A) no Event of Default shall have occurred and be continuing under
the Note, this Security Instrument or any of the Other Security
Documents;
(B) Lender shall, within a reasonable period of time prior to
request for initial disbursement, be furnished with an estimate
of the cost of the Restoration accompanied by an independent
architect's certification as to such costs and appropriate plans
and specifications for the Restoration;
(C) the Net Proceeds, together with any cash or cash equivalent
deposited by Borrower with Lender, are sufficient to cover the
cost of the Restoration as such costs are certified by the
independent architect;
(D) (1) in the event that the Net Proceeds are insurance proceeds,
less than fifty percent (50%) of the total floor area of the
Improvements has been damaged or destroyed, or rendered unusable
as a result of such fire or other casualty; or (2) in the event
that the Net Proceeds are condemnation awards, less than fifty
percent (50%) of the Land constituting the Property is taken,
such Land that is taken is located along the perimeter or
periphery of the Property and no portion of the Improvements is
located in such Lands;
(E) Lender shall be satisfied that any operating deficits, including
all scheduled payments of principal and interest under the Note
which will be incurred with respect to the Property as a result
of the occurrence of any such fire or other casualty or taking,
whichever the case may be, will be covered out of (1) the Net
Proceeds, or (2) other funds of Borrower;
(F) Lender shall be satisfied that, upon the completion of the
Restoration and related lease-up, if applicable, the net cash
flow of the Property will be restored to a
level sufficient to cover all carrying costs and operating
expenses of the Property, including, without limitation, debt
service on the Note at a coverage ratio (on a "normalized"
basis, i.e., after deducting replacement reserve requirements
and reserves for tenant improvements and leasing commissions
from net operating income, whether or not such sums are escrowed
with Lender) of at least 1.30 : 1.0 (assuming an interest rate
equal to 9.0% per annum), or, if lower, the coverage ratio which
existed as of the date immediately preceding such casualty or
taking as the case may be;
(G) the Restoration can reasonably be completed on or before the
earliest to occur of (1) six (6) months prior to the Maturity
Date (as defined in the Note), (2) the earliest date required
for such completion under the terms of any Lease and (3) such
time as may be required under applicable zoning law, ordinance,
rule or regulation in order to repair and restore the Property
to as nearly as possible the condition it was in immediately
prior to such fire or other casualty or to such taking, as
applicable;
(H) the Property and the use thereof after the Restoration will be
in compliance with, and permitted under, all applicable zoning
laws, ordinances, rules and regulations (including, without
limitation, all applicable Environmental Laws (defined in
Section 12.1)); and
(I) such fire or other casualty or taking, as applicable, does not
materially impair access to the Property or the Improvements.
() If the Net Proceeds exceed the Casualty Amount, the Net Proceeds
shall be held by Lender and, until disbursed in accordance with the provisions
of this Subsection 4.4(b), shall constitute additional security for the
Obligations. The Net Proceeds other than the Net Proceeds paid under the Policy
described in Subsection 3.3(a)(iv) shall be disbursed by Lender to, or as
directed by, Borrower from time to time during the course of the Restoration,
upon receipt of evidence satisfactory to Lender that (A) all materials installed
and work and labor performed (except to the extent that they are to be paid for
out of the requested disbursement) in connection with the Restoration have been
paid for in full, and (B) there exist no notices of pendency, stop orders,
mechanic's or materialman's liens or notices of intention to file same, or any
other liens or encumbrances of any nature whatsoever on the Property arising out
of the Restoration which have not either been fully bonded and discharged of
record or in the alternative fully insured to the satisfaction of Lender by the
title company insuring the lien of this Security Instrument.
() If the Net Proceeds exceed the Casualty Amount, Lender shall have
the use of the plans and specifications and all permits, licenses and approvals
required or obtained in connection with the Restoration. If the Net Proceeds
exceed the Casualty Amount, the identity of the contractors, subcontractors and
materialmen engaged in the Restoration, as
well as the contracts under which they have been engaged, shall be subject to
prior review and acceptance by Lender and an independent consulting engineer
selected by Lender (the "Casualty Consultant"), such acceptance not to be
unreasonably withheld or delayed. All costs and expenses incurred by Lender in
connection with making the Net Proceeds available for the Restoration including,
without limitation, reasonable counsel fees and disbursements and the Casualty
Consultant's fees, shall be paid by Borrower.
In no event shall Lender be obligated to make disbursements of the Net
Proceeds in excess of an amount equal to the costs actually incurred from time
to time for work in place as part of the Restoration, as certified by the
Casualty Consultant, minus the Casualty Retainage. The term "Casualty Retainage"
as used in this Subsection 4.4(b) shall mean an amount equal to 10% of the costs
actually incurred for work in place as part of the Restoration, as certified by
the Casualty Consultant, until such time as the Casualty Consultant certifies to
Lender that 50% of the required Restoration has been completed. There shall be
no Casualty Retainage with respect to costs actually incurred by Borrower for
work in place in completing the last 50% of the required Restoration. The
Casualty Retainage shall in no event, and notwithstanding anything to the
contrary set forth above in this Subsection 4.4(b), be less than the amount
actually held back by Borrower from contractors, subcontractors and materialmen
engaged in the Restoration. The Casualty Retainage shall not be released until
the Casualty Consultant certifies to Lender that the Restoration has been
completed in accordance with the provisions of this Subsection 4.4(b) and that
all approvals necessary for the re-occupancy and use of the Property have been
obtained from all appropriate governmental and quasi-governmental authorities,
and Lender receives evidence satisfactory to Lender that the costs of the
Restoration have been paid in full or will be paid in full out of the Casualty
Retainage, provided, however, that Lender will release the portion of the
Casualty Retainage being held with respect to any contractor, subcontractor or
materialman engaged in the Restoration as of the date upon which the Casualty
Consultant certifies to Lender that the contractor, subcontractor or materialman
has satisfactorily completed all work and has supplied all materials in
accordance with the provisions of the contractor's, subcontractor's or
materialman's contract, and the contractor, subcontractor or materialman
delivers the lien waivers and evidence of payment in full of all sums due to the
contractor, subcontractor or materialman as may be reasonably requested by
Lender or by the title company insuring the lien of this Security Instrument. If
required by Lender, the release of any such portion of the Casualty Retainage
shall be approved by the surety company, if any, which has issued a payment or
performance bond with respect to the contractor, subcontractor or materialman.
() Lender shall not be obligated to make disbursements of the Net
Proceeds more frequently than once every calendar month.
() If at any time the Net Proceeds or the undisbursed balance thereof
shall not, in the opinion of Lender, be sufficient to pay in full the balance of
the costs which are estimated by the Casualty Consultant to be incurred in
connection with the completion of the
Restoration, Borrower shall deposit the deficiency (the "Net Proceeds
Deficiency") with Lender before any further disbursement of the Net Proceeds
shall be made. The Net Proceeds Deficiency deposited with Lender shall be held
by Lender and shall be disbursed for costs actually incurred in connection with
the Restoration on the same conditions applicable to the disbursement of the Net
Proceeds, and until so disbursed pursuant to this Subsection 4.4(b) shall
constitute additional security for the Obligations.
() The excess, if any, of the Net Proceeds and the remaining balance,
if any, of the Net Proceeds Deficiency deposited with Lender after the Casualty
Consultant certifies to Lender that the Restoration has been completed in
accordance with the provisions of this Subsection 4.4(b), and the receipt by
Lender of evidence satisfactory to Lender that all costs incurred in connection
with the Restoration have been paid in full, shall be remitted by Lender to
Borrower, provided no Event of Default shall have occurred and shall be
continuing under the Note, this Security Instrument or any of the Other Security
Documents.
() All Net Proceeds not required (i) to be made available for
the Restoration or (ii) to be returned to Borrower as excess Net Proceeds
pursuant to Subsection 4.4(b)(vi) shall be retained and applied by Lender toward
the payment of the Debt whether or not then due and payable in such order,
priority and proportions as Lender in its discretion shall deem proper or, at
the discretion of Lender, the same shall be paid, either in whole or in part, to
Borrower. If Lender shall receive and retain Net Proceeds, the lien of this
Security Instrument shall be reduced only by the amount received and retained by
Lender, and notwithstanding anything to the contrary contained herein, Borrower
shall have no further obligation thereafter to commence or complete the
Restoration.
Article - REPRESENTATIONS AND WARRANTIES
Borrower represents and warrants to Lender that:
Section . Warranty of Title. Borrower has good and marketable
title to the Property and has the right to mortgage, grant, bargain, sell,
pledge, assign, warrant, transfer and convey the same and Borrower possesses an
unencumbered fee simple absolute estate in the Land and the Improvements and
owns the Property free and clear of all liens, encumbrances and charges
whatsoever except for those exceptions shown in the title insurance policy
insuring the lien of this Security Instrument (the "Permitted Exceptions"). The
Permitted Exceptions do not materially interfere with the use and operations of
the Property. Borrower shall forever warrant, defend and preserve the title and
the validity and priority of the lien of this Security Instrument and shall
forever warrant and defend the same to Lender against the claims of all persons
whomsoever.
Section . Authority. Borrower (and the undersigned
representative of Borrower, if any) has full power, authority and legal right to
execute this Security
Instrument, and to mortgage, grant, bargain, sell, pledge, assign, warrant,
transfer and convey the Property pursuant to the terms hereof and to keep and
observe all of the terms of this Security Instrument on Borrower's part to be
performed.
Section . Legal Status and Authority. Borrower (a) is duly
organized, validly existing and in good standing under the laws of its state of
organization; (b) is duly qualified to transact business and is in good standing
in the State where the Property is located; and (c) has all necessary approvals,
governmental and otherwise, and full power and authority to own the Property and
carry on its business as now conducted and proposed to be conducted. Borrower
now has and shall continue to have the full right, power and authority to
operate and lease the Property, to encumber the Property as provided herein and
to perform all of the other obligations to be performed by Borrower under the
Note, this Security Instrument and the Other Security Documents.
Section . Validity of Documents. (a) The execution, delivery
and performance of the Note, this Security Instrument and the Other Security
Documents and the borrowing evidenced by the Note (i) are within the power and
authority of Borrower; (ii) have been authorized by all requisite organizational
action; (iii) have received all necessary approvals and consents, corporate,
governmental or otherwise; (iv) to the best of Borrower's knowledge, will not
violate, conflict with, result in a breach of or constitute (with notice or
lapse of time, or both) a default under any provision of law (including, without
limitation, any usury laws), any order or judgment of any court or governmental
authority, the articles of incorporation, by-laws, partnership or operating
agreement, or other governing instrument of Borrower, or any indenture,
agreement or other instrument to which Borrower is a party or by which it or any
of its assets or the Property is or may be bound or affected; (v) will not
result in the creation or imposition of any lien, charge or encumbrance
whatsoever upon any of its assets, except the lien and security interest created
hereby; and (vi) to the best of Borrower's knowledge, will not require any
authorization or license from, or any filing with, any governmental or other
body (except for the recordation of this instrument in appropriate land records
in the State where the Property is located and except for Uniform Commercial
Code filings relating to the security interest created hereby), and (b) the
Note, this Security Instrument and the Other Security Documents constitute the
legal, valid and binding obligations of Borrower.
Section . Litigation. There is no action, suit or proceeding,
judicial, administrative or otherwise (including any condemnation or similar
proceeding), pending or, to the best of Borrower's knowledge, threatened or
contemplated against Borrower, any person guaranteeing the payment of the Debt
or any portion thereof or performance by Borrower of any terms of this Security
Instrument (a "Guarantor"), if any, an Indemnitor (defined in Subsection
10.1(c)), if any, or against or affecting the Property that (a) has not been
disclosed to Lender, and has a material, adverse effect on the Property or
Borrower's, any Guarantor's or any Indemnitor's ability to perform its
obligations under the Note, this Security Instrument or the Other Security
Documents, or (b) is not adequately covered by
insurance, each as determined by Lender in its sole and absolute discretion.
Section . Status of Property. () No portion of the
Improvements is located in an area identified by the Secretary of Housing and
Urban Development 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
Improvements is now or at any time in the future located within any such area,
Borrower has obtained and will maintain the insurance prescribed in Section 3.3
hereof.
() Borrower has obtained all necessary certificates, licenses
and other approvals, governmental and otherwise, necessary for the operation of
the Property 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 in full force and effect as of the date hereof and, to the best of
Borrower's knowledge, not subject to revocation, suspension, forfeiture or
modification.
() To the best of Borrower's knowledge, and except as
expressly set forth in that certain Property Condition Survey of Cobblestone
Apartments, dated April 1, 1999, by Environmental Management Group, and that
certain Phase I Environmental Site Assessment of the Property dated April 1,
1999, prepared by Environmental Management Group, the Property and the present
and contemplated use and occupancy thereof are in full compliance with all
Applicable Laws, including, without limitation, zoning ordinances, building
codes, land use and Environmental Laws, laws relating to the disabled (including
but not limited to, the ADA) and other similar laws.
() The Property is served by all utilities required for the
current or contemplated use thereof. All utility service is provided by public
utilities and the Property has accepted or is equipped to accept such utility
service.
() To the best of Borrower's knowledge, all public roads and
streets necessary for service of and access to the Property for the current or
contemplated use thereof have been completed, are serviceable and all-weather
and are physically and legally open for use by the public.
() The Property is served by public water and sewer systems.
() The Property is free from damage caused by fire or other
casualty.
() 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.
() Borrower has paid in full for, and is the owner of, all
furnishings,
fixtures and equipment (other than tenants' property) 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.
() To the best of Borrower's knowledge, 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.
() All security deposits relating to the Leases reflected on
the certified rent roll delivered to Lender have been collected by Borrower
except as noted on the certified rent roll.
() Borrower has received no notice of an actual or threatened
condemnation or eminent domain proceeding by any public or quasi-public
authority.
() All the Improvements lie within the boundaries of the
Property.
Section . No Foreign Person. Borrower is not a "foreign
person" within the meaning of Section 1445(f)(3) of the Internal Revenue Code of
1986, as amended and the related Treasury Department regulations, including
temporary regulations.
Section . Separate Tax Lot. 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 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.
Section . ERISA Compliance. () As of the date hereof and
throughout the term of this Security Instrument, (i) Borrower is not and will
not be an "employee benefit plan" as defined in Section 3(32) of ERISA, which is
subject to Title I of ERISA, and (ii) the assets of Borrower do not and will not
constitute "plan assets" of one or more such plans for purposes of Title I of
ERISA; and
() As of the date hereof and throughout the term of this
Security Instrument, (i) Borrower is not and will not be a "governmental plan"
within the meaning of Section 3(32) of ERISA, and (ii) transactions by or with
Borrower are not and will not be subject to state statutes applicable to
Borrower regulating investments of and fiduciary obligations with respect to
governmental plans.
Section . Leases. Except as disclosed in the certified rent
roll for the Property delivered to and approved by Lender, or as otherwise set
forth on Exhibit B hereof, (a) Borrower is the sole owner of the entire lessor's
interest in the Leases; (b) the Leases are valid and enforceable; (c) the terms
of all alterations, modifications and amendments to the Leases are reflected in
the certified rent roll delivered to and approved by Lender; (d) none
of the Rents reserved in the Leases have been assigned or otherwise pledged or
hypothecated (except to Lender); (e) none of the Rents have been collected for
more than one (1) month in advance (provided that a security deposit shall not
be deemed rent collected in advance); (f) the premises demised under the Leases
have been completed and the tenants under the Leases have accepted the same and
have taken possession of the same on a rent-paying basis; (g) to the best of
Borrower's knowledge, there exist no offsets or defenses to the payment of any
portion of the Rents; (h) Borrower has received no notice from any tenant
challenging the validity or enforceability of any Lease; (i) all payments due
under the Leases are current and are consistent with the certified rent roll for
the Property delivered to and approved by Lender; (j) to the best of Borrower's
knowledge, no tenant under any Lease is in default thereunder, or is a debtor in
any bankruptcy, reorganization, insolvency or similar proceeding, or has
demonstrated a history of payment problems which suggest financial difficulty;
(k) there are no agreements with the tenants under the Leases other than
expressly set forth in each Lease; (l) the Leases are valid and enforceable
against Borrower and, to the best of Borrower's knowledge, the tenants set forth
therein; (m) no Lease contains an option to purchase, right of first refusal to
purchase, or any other similar provision; (n) to the best of Borrower's
knowledge, no person or entity has any possessory interest in, or right to
occupy, the Property except under and pursuant to a Lease; (o) each Lease (other
than a residential Lease) is subordinate to this Security Instrument, either
pursuant to its terms or a recorded subordination agreement; and (p) to the best
of Borrower's knowledge, no brokerage commissions or finders fees are due and
payable regarding any Lease.
Section . Financial Condition. () Borrower is solvent, and no
bankruptcy, reorganization, insolvency or similar proceeding under any state or
federal law with respect to Borrower has been initiated, (b) it has received
reasonably equivalent value for the granting of this Security Instrument, and
(c) the granting of this Security Instrument does not constitute a fraudulent
conveyance.
Section . Business Purposes. The loan evidenced by the Note
is solely for the business purpose of Borrower, and is not for personal, family,
household, or agricultural purposes.
Section . Taxes. Borrower, any Guarantor and any Indemnitor
have filed all federal, state, county, municipal, and city income and other tax
returns required to have been filed by them and have paid all taxes and related
liabilities which have become due pursuant to such returns or pursuant to any
assessments received by them. Neither Borrower, any Guarantor nor any Indemnitor
knows of any basis for any additional assessment in respect of any such taxes
and related liabilities for prior years.
Section . Mailing Address. Borrower's mailing address, as set
forth in the opening paragraph hereof or as changed in accordance with Article
16, is true and correct.
Section . No Change in Facts or Circumstances. All
information in the
application for the loan submitted to Lender (the "Loan Application") and in all
financing statements, rent rolls, reports, certificates and other documents
submitted in connection with the Loan Application or in satisfaction of the
terms thereof, are accurate, complete and correct in all material respects.
There has been no adverse change in any condition, fact, circumstance or event
that would make any such information materially inaccurate, incomplete or
otherwise misleading.
Section . Disclosure. To the best of Borrower's knowledge,
Borrower has disclosed to Lender 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.
Section . Third Party Representations. To the best of
Borrower's knowledge, each of the representations and the warranties made by
each Guarantor and Indemnitor herein or in any Other Security Document(s) is
true and correct in all material respects.
Section . Illegal Activity. To the best of Borrower's
knowledge, 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 Borrower's knowledge, there are no illegal
activities or activities relating to controlled substance at the Property.
Section . FUNB Line of Credit. No more than five (5) Business
Days after the expiration or earlier termination of, or concurrently with the
giving of notice by PREIT Associates, L.P. to the public that an event of
default has occurred under, that certain Revolving Credit Loan Agreement between
PREIT Associates, L.P. and Corestates Bank, N.A., as agent
(predecessor-in-interest to First Union National Bank, as agent), and First
Trust Savings Bank, Fleet Bank, N.A. and PNC Bank, as lenders, dated September
30, 1997, Borrower shall notify Lender in writing of same.
Article - DEBTOR/CREDITOR RELATIONSHIP
Section . Relationship of Borrower and Lender. The
relationship between Borrower and Lender is solely that of debtor and creditor,
and Lender has no fiduciary or other special relationship with Borrower, and no
term or condition of any of the Note, this Security Instrument and the Other
Security Documents shall be construed so as to deem the relationship between
Borrower and Lender to be other than that of debtor and creditor.
Section . Servicing of the Loan. At the option of Lender, the
loan secured hereby may be serviced by a servicer/trustee (the "Servicer")
selected by Lender and Lender may delegate all or any portion of its
responsibilities under the Note, this Security Instrument, and the Other
Security Documents to the Servicer.
Article - FURTHER ASSURANCES
Section . Recording of Security Instrument, Etc. Borrower
forthwith upon the execution and delivery of this Security Instrument and
thereafter, from time to time, will cause this Security Instrument and any of
the Other Security Documents creating a lien or security interest or evidencing
the lien hereof upon the Property and each instrument of further assurance to be
filed, registered or recorded in such manner and in such places as may be
required by any present or future law in order to publish notice of and fully to
protect and perfect the lien or security interest hereof upon, and the interest
of Lender in, the Property. Borrower will pay all taxes, filing, registration or
recording fees, and all expenses incident to the preparation, execution,
acknowledgment and/or recording of the Note, this Security Instrument, the Other
Security Documents, any note or mortgage supplemental hereto, any security
instrument with respect to the Property and any instrument of further assurance,
and any modification or amendment of the foregoing documents, 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 Security
Instrument, any mortgage supplemental hereto, any security instrument with
respect to the Property or any instrument of further assurance, and any
modification or amendment of the foregoing documents, except where prohibited by
law so to do.
Section . Further Acts, Etc. Borrower will, at the cost of
Borrower, and without expense to Lender, do, execute, acknowledge and deliver
all and every such further acts, deeds, conveyances, mortgages, assignments,
notices of assignments, transfers and assurances as Lender shall, from time to
time, reasonably require, for the better assuring, conveying, assigning,
transferring, and confirming unto Lender, the property and rights hereby
mortgaged, granted, bargained, sold, conveyed, confirmed, pledged, assigned,
warranted and transferred or intended now or hereafter so to be, or which
Borrower may be or may hereafter become bound to convey or assign to Lender, or
for carrying out the intention or facilitating the performance of the terms of
this Security Instrument or for filing, registering or recording this Security
Instrument, or for complying with all Applicable Laws. Borrower, on demand, will
execute and deliver and hereby authorizes Lender to execute in the name of
Borrower or without the signature of Borrower to the extent Lender may lawfully
do so, one or more financing statements, chattel mortgages or other instruments,
to evidence or perfect more effectively the security interest of Lender in the
Property. Borrower grants to Lender an irrevocable power of attorney coupled
with an interest for the purpose of exercising and perfecting any and all rights
and remedies available to Lender pursuant to this Section 7.2.
Section . Changes in Tax, Debt Credit and Documentary Stamp
Laws. () If any law is enacted or adopted or amended after the date of this
Security Instrument which deducts the Debt from the value of the Property for
the purpose of taxation or which imposes a tax, either directly or indirectly,
on the Debt or Lender's interest in the Property, Borrower will pay the tax,
with interest and penalties thereon, if any. If Lender is advised
by counsel chosen by it that the payment of tax by Borrower would be unlawful or
taxable to Lender or unenforceable or provide the basis for a defense of usury,
then Lender shall have the option by written notice of not less than ninety (90)
days to declare the Debt immediately due and payable.
() Borrower will not claim or demand or be entitled to any
credit or credits on account of the Debt for any part of the Taxes or Other
Charges assessed against the Property, or any part thereof, and no deduction
shall otherwise be made or claimed from the assessed value of the Property, or
any part thereof, for real estate tax purposes by reason of this Security
Instrument or the Debt. If such claim, credit or deduction shall be required by
law, Lender shall have the option, by written notice of not less than ninety
(90) days, to declare the Debt immediately due and payable.
() 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 Security Instrument, or any of the Other
Security Documents or impose any other tax or charge on the same, Borrower will
pay for the same, with interest and penalties thereon, if any.
Section . Estoppel Certificates. () After request by Lender,
Borrower, within twenty (20) days, shall furnish Lender or any proposed assignee
with a statement, duly acknowledged and certified, setting forth (i) the amount
of the original principal amount of the Note, (ii) the unpaid principal amount
of the Note, (iii) the rate of interest of the Note, (iv) the terms of payment
and maturity date of the Note, (v) the date installments of interest and/or
principal were last paid, (vi) that, except as provided in such statement, there
are no defaults or events which with the passage of time or the giving of notice
or both, would constitute an event of default under the Note or the Security
Instrument, (vii) that the Note and this Security Instrument are valid, legal
and binding obligations and have not been modified or if modified, giving
particulars of such modification, (viii) whether any offsets or defenses exist
against the obligations secured hereby and, if any are alleged to exist, a
detailed description thereof, (ix) that all Leases are in full force and effect
and (provided the Property is not a residential multifamily property) have not
been modified (or if modified, setting forth all modifications), (x) the date to
which the Rents thereunder have been paid pursuant to the Leases, (xi) whether
or not, to the best knowledge of Borrower, any of the lessees under the Leases
are in default under the Leases, and, if any of the lessees are in default,
setting forth the specific nature of all such defaults, (xii) the amount of
security deposits held by Borrower under each Lease and that such amounts are
consistent with the amounts required under each Lease, and (xiii) as to any
other matters reasonably requested by Lender and reasonably related to the
Leases, the obligations secured hereby, the Property or this Security
Instrument.
() Upon any transfer or proposed transfer contemplated by
Section 18.1 hereof, at Lender's request, Borrower, any Guarantors and any
Indemnitors shall provide an
estoppel certificate to the Investor (defined in Section 18.1) or any
prospective Investor confirming the accuracy of information provided by such
person to Lender under or in respect of this Security Instrument.
() After written request by Borrower not more than twice
annually, Lender shall furnish Borrower a statement setting forth (i) the amount
of the original principal amount of the Note, (ii) the unpaid principal amount
of the Note, (iii) the rate of interest of the Note, (iv) the balance of the
sums in the Escrow Fund, if any, and (v) to the best of Lender's knowledge,
whether Borrower is currently in default.
Section . Flood Insurance. After Lender's request, Borrower
shall deliver evidence satisfactory to Lender that no portion of the
Improvements is situated in a federally designated "special flood hazard area"
or, if it is, that Borrower has obtained insurance meeting the requirements of
Section 3.3(a)(vi).
Section . Splitting of Security Instrument. This Security
Instrument and the Note shall, at any time until the same shall be fully paid
and satisfied, at the sole election of Lender, be split or divided into two or
more notes and two or more security instruments, each of which shall cover all
or a portion of the Property to be more particularly described therein. To that
end, Borrower, upon written request of Lender, shall execute, acknowledge and
deliver to Lender and/or its designee or designees substitute notes and security
instruments in such principal amounts, aggregating not more than the then unpaid
principal amount secured by this Security Instrument, and containing terms,
provisions and clauses no less favorable to Borrower than those contained herein
and in the Note, and such other documents and instruments as may be required by
Lender to effect the splitting of the Note and this Security Instrument.
Section . Replacement Documents. Upon receipt of an affidavit
of an officer of Lender as to the loss, theft, destruction or mutilation of the
Note or any Other Security Document which is not of public record, and, in the
case of any such mutilation, upon surrender and cancellation of such Note or
Other Security Document, Borrower will issue, in lieu thereof, a replacement
Note or Other Security Document, dated the date of such lost, stolen, destroyed
or mutilated Note or Other Security Document in the same principal amount
thereof and otherwise of like tenor. Borrower shall not be responsible to Lender
for Lender's fees and expenses incurred in connection with the transactions
contemplated in this Section 7.7.
Section . Amended Financing Statements. Borrower will execute
and deliver to the Lender, prior to or contemporaneously with the effective date
of any such change, any financing statement or financing statement change
required by the Lender to establish or maintain the validity, perfection and
priority of the security interest granted herein. At the request of the Lender,
Borrower shall execute a certificate in form satisfactory to the Lender listing
the trade names under which Borrower intends to operate the Property, and
representing and warranting that Borrower does business under no other trade
name with respect to the Property.
Article - DUE ON SALE/ENCUMBRANCE
Section . No Sale/Encumbrance. Borrower agrees that Borrower
shall not, without the prior written consent of Lender, sell, convey, mortgage,
grant, bargain, encumber, pledge, assign, or otherwise transfer the Property or
any part thereof or permit the Property or any part thereof to be sold,
conveyed, mortgaged, granted, bargained, encumbered, pledged, assigned, or
otherwise transferred. Notwithstanding the foregoing, the Property may be
transferred with the prior written consent of Lender which consent shall not be
unreasonably withheld in the case of a proposed transferee whose entity status,
creditworthiness and management ability meet standards consistently applied by
Lender for approval of borrowers for similar properties under mortgage loans
secured by similar properties, provided that (i) only one such transfer shall be
permitted during the term of the Note, (ii) prior to the effective date of the
transfer, the transferee shall execute and deliver to Lender a written
assumption agreement in form and substance acceptable to Lender in its sole
discretion, (iii) a transfer fee equal to one quarter of one percent (.25%) of
the outstanding principal balance of the Note shall be paid by Borrower to
Lender upon notice being given to Borrower of approval of the proposed transfer
(unless the proposed transferee is an affiliate of Borrower, in which event no
transfer fee shall be due and payable), and (iv) no transfer shall be permitted
hereunder if an Event of Default, or an event which with the giving of notice or
lapse of time or both could become an Event of Default, has occurred and is
continuing. Borrower agrees that Borrower shall not incur any debt, secured or
unsecured, direct or contingent (including guaranteeing any obligation), other
than the Debt and trade payables incurred in the ordinary course of business in
connection with the operation of the Property, provided same are paid when due.
Section . Sale/Encumbrance Defined. A sale, conveyance,
mortgage, grant, bargain, encumbrance, pledge, assignment, or transfer within
the meaning of this Article 8 shall be deemed to include, but not be limited to
(a) an installment sales agreement wherein Borrower agrees to sell the Property
or any part thereof for a price to be paid in installments; (b) an agreement by
Borrower leasing all or a substantial part of the Property for other than actual
occupancy by a space tenant thereunder or a sale, assignment or other transfer
of, or the grant of a security interest in, Borrower's right, title and interest
in and to any Leases or any Rents; (c) if Borrower or any general partner or
managing member (or if no managing member, any member) of Borrower is a
corporation, the voluntary or involuntary sale, conveyance, transfer or pledge
of such corporation's stock (or the stock of any corporation directly or
indirectly controlling such corporation by operation of law or otherwise) or the
creation or issuance of new stock by which an aggregate of more than 49% of such
corporation's stock shall be vested in a party or parties who are not now owners
of more than 49% of such corporation's stock; (d) if Borrower or any general
partner or
managing member (or if no managing member, any member) of Borrower is a limited
or general partnership or joint venture, the change, removal or resignation of a
general partner or the transfer or pledge of the partnership interest of any
general partner or any profits or proceeds relating to such partnership interest
or the transfer or pledge of any partnership interest of any limited partner or
any profits or proceeds relating to any such partnership interest, which,
whether singly or in the aggregate, result in more than 49% of the beneficial
interests in Borrower, or the profits or proceeds relating thereto, having been
transferred or pledged; and (e) if Borrower or any general partner or member of
Borrower is a limited liability company, the change, removal or resignation of a
managing member or the transfer of the membership interest of a managing member
or any profits or proceeds relating to such membership interest or the transfer
or pledge of any membership interest of any other member or any profits or
proceeds relating to any such membership interest, which, whether singly or in
the aggregate, result in more than 49% of the beneficial interests in Borrower,
or the profits or proceeds relating thereto, having been transferred or pledged.
Notwithstanding the foregoing, the following transfers shall not be deemed to be
a sale, conveyance, mortgage, grant, bargain, encumbrance, pledge, assignment or
transfer within the meaning of this Article 8: (a) transfer by devise or descent
or by operation of law upon the death of a member, general partner or
stockholder of Borrower, any Guarantor or Indemnitor or any member or general
partner thereof, (b) a sale, transfer or hypothecation of a membership,
partnership or shareholder interest in Borrower, whichever the case may be, by a
current member, general partner or shareholder, as applicable, to an immediate
family member (i.e., parents, spouses, siblings, children or grandchildren) of
such member, general partner or shareholder, or to a trust for the benefit of an
immediate family member of such member, general partner or shareholder, and (c)
a change in the form of organizational structure or name of Borrower, provided
that there is no transfer or change in the ownership interests in Borrower.
Section . Lender's Rights. Lender reserves the right to
condition the consent required hereunder upon a modification of the terms hereof
and on assumption of the Note, this Security Instrument and the Other Security
Documents as so modified by the proposed transferee, payment of a transfer fee
and all of Lender's expenses incurred in connection with such transfer, or such
other conditions as Lender shall determine in its sole discretion to be in the
interest of Lender. Lender 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 Borrower's sale,
conveyance, mortgage, grant, bargain, encumbrance, pledge, assignment, or
transfer of the Property without Lender's consent. This provision shall apply to
every sale, conveyance, mortgage, grant, bargain, encumbrance, pledge,
assignment, or transfer of the Property regardless of whether voluntary or not,
or whether or not Lender has consented to any previous sale, conveyance,
mortgage, grant, bargain, encumbrance, pledge, assignment, or transfer of the
Property.
Section . Right To Substitute Property. The terms and
conditions of this Article 8 shall be subject to Borrower's rights pursuant to
that certain letter dated the date
hereof from Lender to Borrower regarding Borrower's rights to substitute
security for the Debt. Inquiries regarding the aforementioned letter shall be
made to Borrower at the address set forth in Article 16 below.
Article - PREPAYMENT
Section . Prepayment Only in Accordance with Note. The Debt
may be prepaid only in strict accordance with the express terms and conditions
of the Note including, without limitation, payment of the Prepayment
Consideration if applicable.
Article - DEFAULT
Section . Events of Default. The occurrence of any one or
more of the following events shall constitute an "Event of Default":
() if any Event of Default (as defined in the Note, for
purposes of this Section 10.1(a) only) occurs under Section 4.01(a) of the Note;
() if Borrower violates or does not comply with any of the
provisions of Sections 3.7 or 8.1;
() if any representation or warranty of Borrower, Indemnitor
(as defined in that certain Environmental Indemnity Agreement dated as of the
date hereof (the "Environmental Indemnity") or any Guarantor, or any member,
general partner, principal or beneficial owner of any of the foregoing, made
herein or in the Environmental Indemnity or in any guaranty, or in any
certificate, report, financial statement or other instrument or document
furnished to Lender shall have been false or misleading in any material respect
when made;
() if any default occurs under any guaranty or indemnity
executed in connection herewith and such default continues after the expiration
of applicable grace periods, if any;
() except for the specific defaults set forth in this Section
10.1, any other default hereunder or any of the Other Security Documents by
Borrower, which default is not cured (i) in the case of any default which can be
cured by the payment of a sum of money, within five (5) days after written
notice from Lender to Borrower, or (ii) in the case of any other default, within
thirty (30) days after written notice from Lender to Borrower; provided that if
such default cannot reasonably be cured within such thirty (30) day period and
Borrower shall have commenced to cure such default within such thirty (30) day
period and thereafter diligently and expeditiously proceeds to cure the same,
such thirty (30) day period
shall be extended for so long as it shall require Borrower in the exercise of
due diligence to cure such default, it being agreed that no such extension shall
be for a period in excess of one hundred twenty (120) days, unless, only in the
case of cures that require construction or remedial work, such cure cannot with
diligence be completed within such one hundred twenty (120) day period, in which
case such period shall be extended for an additional one hundred twenty (120)
days;
() if Borrower or any Guarantor or Indemnitor shall make an
assignment for the benefit of creditors or if Borrower shall generally not be
paying its debts as they become due; or
() if the Policies are not kept in full force and effect, or
Borrower has not delivered evidence of the renewal of the Policies ten (10) days
prior to their expiration as provided in Section 3.3(b); or
() if (i) Borrower or any Guarantor or Indemnitor shall
commence any case, proceeding or other action (A) under any existing or future
law of any jurisdiction, domestic or foreign, relating to bankruptcy,
insolvency, reorganization, conservatorship or relief of debtors, seeking to
have an order for relief entered with respect to it, or seeking to adjudicate it
a bankrupt or insolvent, or seeking reorganization, arrangement, adjustment,
winding-up, liquidation, dissolution, composition or other relief with respect
to it or its debts, or (B) seeking appointment of a receiver, trustee,
custodian, conservator or other similar official for it or for all or any
substantial part of its assets, or the Borrower or any Guarantor or Indemnitor
shall make a general assignment for the benefit of its creditors'; or (ii) there
shall be commenced against Borrower or any Guarantor or Indemnitor any case,
proceeding or other action of a nature referred to in clause (i) above which (A)
results in the entry of an order for relief or any such adjudication or
appointment or (B) remains undismissed, undischarged or unbonded for a period of
ninety (90) days; or (iii) there shall be commenced against the Borrower or any
Guarantor or Indemnitor any case, proceeding or other action seeking issuance of
a warrant of attachment, execution, distraint or similar process against all or
any substantial part of its assets which results in the entry of any order for
any such relief which shall not have been vacated, discharged, or stayed or
bonded pending appeal within ninety (90) days from the entry thereof; or (iv)
the Borrower or any Guarantor or Indemnitor shall take any action in furtherance
of, or indicating its consent to, approval of, or acquiescence in, any of the
acts set forth in clause (i), (ii), or (iii) above; or (v) the Borrower or any
Guarantor or Indemnitor shall generally not, or shall be unable to, or shall
admit in writing its inability to, pay its debts as they become due.
Article - RIGHTS AND REMEDIES
Section . Remedies. () Upon the occurrence of any Event of
Default, Borrower agrees that Lender, may take such action, without notice or
demand, as it deems advisable to protect and enforce the rights of Lender
against Borrower and in and to the
Property, including, but not limited to the following actions, each of which may
be pursued concurrently or otherwise, at such time and in such order as Lender
may determine, in its sole discretion, without impairing or otherwise affecting
the other rights and remedies of Lender:
() declare the entire unpaid Debt to be immediately due and
payable;
() institute proceedings, judicial or otherwise, for the
complete foreclosure of this Security Instrument under any applicable provision
of law in which case the Property or any interest therein may be sold for cash
or upon credit in one or more parcels or in several interests or portions and in
any order or manner;
() with or without entry, to the extent permitted and
pursuant to the procedures provided by applicable law, institute proceedings for
the partial foreclosure of this Security Instrument for the portion of the Debt
then due and payable, subject to the continuing lien and security interest of
this Security Instrument for the balance of the Debt not then due, unimpaired
and without loss of priority;
() sell for cash or upon credit the Property or any part
thereof and all estate, claim, demand, right, title and interest of Borrower
therein and rights of redemption thereof, pursuant to power of sale 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;
() subject to the provisions of Article 15, 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
Security Documents;
() subject to the provisions of Article 15, recover judgment
on the Note either before, during or after any proceedings for the enforcement
of this Security Instrument or the Other Security Documents;
() apply for the appointment of a receiver, trustee,
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
Borrower, any Guarantor, Indemnitor or of any person, firm or other entity
liable for the payment of the Debt;
() subject to any applicable law, the license granted to
Borrower under Section 1.2 shall automatically be revoked and Lender may enter
into or upon the Property, either personally or by its agents, nominees or
attorneys and dispossess Borrower and its agents and servants therefrom, without
liability for trespass, damages or otherwise and exclude Borrower and its agents
or servants wholly therefrom, and take possession of all books, records and
accounts relating thereto and Borrower agrees to surrender possession of
the Property and of such books, records and accounts to Lender upon demand, and
thereupon Lender may (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 Lender deems advisable; (C) make alterations, additions,
renewals, replacements and improvements to or on the Property; (D) exercise all
rights and powers of Borrower with respect to the Property, whether in the name
of Borrower or otherwise, including, without limitation, the right to make,
cancel, enforce or modify Leases, obtain and evict tenants, and demand, ▇▇▇ for,
collect and receive all Rents of the Property and every part thereof; (E)
require Borrower to pay monthly in advance to Lender, or any receiver appointed
to collect the Rents, the fair and reasonable rental value for the use and
occupation of such part of the Property as may be occupied by Borrower; (F)
require Borrower to vacate and surrender possession of the Property to Lender or
to such receiver and, in default thereof, Borrower may be evicted by summary
proceedings or otherwise; and (G) apply the receipts from the Property to the
payment of the Debt, in such order, priority and proportions as Lender shall
deem appropriate in its sole discretion after deducting therefrom all expenses
(including reasonable attorneys' fees) incurred in connection with the aforesaid
operations and all amounts necessary to pay the Taxes, Other Charges, insurance
and other expenses in connection with the Property, as well as just and
reasonable compensation for the services of Lender, its counsel, agents and
employees;
() exercise any and all rights and remedies granted to a
secured party upon default under the Uniform Commercial Code, including, without
limiting the generality of the foregoing: (A) the right to take possession of
the Collateral or any part thereof, and to take such other measures as Lender
may deem necessary for the care, protection and preservation of the Collateral,
and (B) request Borrower at its expense to assemble the Collateral and make it
available to Lender at a convenient place acceptable to Lender. Any notice of
sale, disposition or other intended action by Lender with respect to the
Collateral sent to Borrower in accordance with the provisions hereof at least
five (5) days prior to such action, shall constitute commercially reasonable
notice to Borrower;
() apply any sums then deposited in the Escrow Fund and any
other sums held in escrow or otherwise by Lender in accordance with the terms of
this Security Instrument or any Other Security Document to the payment of the
following items in any order in its sole and absolute discretion:
(A) Taxes and Other Charges;
(B) Insurance Premiums;
(C) Interest on the unpaid principal balance of the Note;
(D) amortization of the unpaid principal balance of the
Note; and all other sums payable pursuant to the Note,
this Security
Instrument and the Other Security Documents,
including, without limitation, advances made by
Lender pursuant to the terms of this Security
Instrument;
() surrender the Policies maintained pursuant to Article 3
hereof, collect the unearned Insurance Premiums and apply such sums as a credit
on the Debt in such priority and proportion as Lender in its discretion shall
deem proper, and in connection therewith, Borrower hereby appoints Lender as
agent and attorney-in-fact (which is coupled with an interest and is therefore
irrevocable) for Borrower to collect such Insurance Premiums;
() apply the undisbursed balance of any Net Proceeds or any
Net Proceeds Deficiency deposit, together with interest thereon, to the payment
of the Debt in such order, priority and proportions as Lender shall deem to be
appropriate in its discretion;
() prohibit Borrower and anyone claiming on behalf of or
through Borrower from making use of or withdrawing any sums from any lockbox or
similar account, if any;
() pursue such other remedies as Lender may have under
applicable law.
() In the event of a sale, by foreclosure, power of sale, or
otherwise, of less than all of the Property, this Security Instrument shall
continue as a lien and security interest on the remaining portion of the
Property unimpaired and without loss of priority. Notwithstanding the provisions
of this Section 11.1 to the contrary, if any Event of Default as described in
Subsection 10.1 (h)(i) or (ii) shall occur, the entire unpaid Debt shall be
automatically due and payable, without any further notice, demand or other
action by Lender.
() Lender may adjourn from time to time any sale by it to be
made under or by virtue of this Security Instrument 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, Lender, without
further notice or publication, may make such sale at the time and place to which
the same shall be so adjourned.
() Upon any sale made under or by virtue of this Section
11.1, whether made under a power of sale or under or by virtue of judicial
proceedings or of a judgment or decree of foreclosure and sale, Lender 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 Lender is authorized to deduct under this
Security Instrument.
Section . Application of Proceeds. The purchase money,
proceeds and avails of any disposition of the Property, or any part thereof, or
any other sums collected by Lender pursuant to the Note, this Security
Instrument or the Other Security Documents, may be applied by Lender to the
payment of the Debt in such priority and proportions as Lender in its discretion
shall deem proper.
Section . Right to Cure Defaults. Upon the occurrence of any
Event of Default, Lender may, but without any obligation to do so and without
notice to or demand on Borrower and without releasing Borrower from any
obligation hereunder, cure the same in such manner and to such extent as Lender
may deem necessary to protect the security hereof. Lender is authorized to enter
upon the Property for such purposes, or appear in, defend, or bring any action
or proceeding to protect its interest in the Property or to foreclose this
Security Instrument or collect the Debt, and the cost and expense thereof
(including reasonable attorneys' fees to the extent permitted by law), with
interest as provided in this Section 11.3, shall constitute a portion of the
Debt and shall be due and payable to Lender upon demand. All such costs and
expenses incurred by Lender in remedying such Event of Default or in appearing
in, defending, or bringing any such action or proceeding shall bear interest at
the Default Rate (as defined in the Note), for the period after notice from
Lender that such cost or expense was incurred to the date of payment to Lender.
All such costs and expenses incurred by Lender together with interest thereon
calculated at the Default Rate shall be deemed to constitute a portion of the
Debt and be secured by this Security Instrument and the Other Security Documents
and shall be immediately due and payable upon demand by Lender therefor.
Section . Actions and Proceedings. After the occurrence and
during the continuance of an Event of Default, Lender has the right to appear in
and defend any action or proceeding brought with respect to the Property and to
bring any action or proceeding, in the name and on behalf of Borrower, which
Lender, in its discretion, decides should be brought to protect its interest in
the Property.
Section . Recovery of Sums Required To Be Paid. Lender shall
have the right from time to time to take action to recover any sum or sums which
constitute a part of the Debt as the same become due, without regard to whether
or not the balance of the Debt shall be due, and without prejudice to the right
of Lender thereafter to bring an action of foreclosure, or any other action, for
a default or defaults by Borrower existing at the time such earlier action was
commenced.
Section . Examination of Books and Records. Lender, its
agents, accountants and attorneys shall have the right upon prior written notice
to examine the records, books, management and other papers of Borrower and its
affiliates or of any Guarantor or Indemnitor which reflect upon their financial
condition, at the Property or at any office regularly maintained by Borrower,
its affiliates or any Guarantor or Indemnitor where the books and records are
located. Lender and its agents shall have the right upon
notice to make copies and extracts from the foregoing records and other papers.
In addition, Lender, its agents, accountants and attorneys shall have the right
to examine and audit the books and records of Borrower and its affiliates or of
any Guarantor or Indemnitor pertaining to the income, expenses and operation of
the Property during reasonable business hours at any office of Borrower, its
affiliates or any Guarantor or Indemnitor where the books and records are
located.
Section . Other Rights, Etc. () The failure of Lender to
insist upon strict performance of any term hereof shall not be deemed to be a
waiver of any term of this Security Instrument. Borrower shall not be relieved
of Borrower's obligations hereunder by reason of (i) the failure of Lender to
comply with any request of Borrower, any Guarantor or any Indemnitor to take any
action to foreclose this Security Instrument or otherwise enforce any of the
provisions hereof or of the Note or the Other Security Documents, (ii) 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 (iii) any
agreement or stipulation by Lender extending the time of payment or otherwise
modifying or supplementing the terms of the Note, this Security Instrument or
the Other Security Documents.
() It is agreed that the risk of loss or damage to the
Property is on Borrower, and Lender shall have no liability whatsoever for
decline in value of the Property, for failure to maintain the Policies, or for
failure to determine whether insurance in force is adequate as to the amount of
risks insured. Possession by Lender shall not be deemed an election of judicial
relief, if any such possession is requested or obtained, with respect to any
Property or collateral not in Lender's possession.
() Lender may resort for the payment of the Debt to any other
security held by Lender in such order and manner as Lender, in its discretion,
may elect. Lender may take action to recover the Debt, or any portion thereof,
or to enforce any covenant hereof without prejudice to the right of Lender
thereafter to foreclose this Security Instrument. The rights of Lender under
this Security Instrument shall be separate, distinct and cumulative and none
shall be given effect to the exclusion of the others. No act of Lender shall be
construed as an election to proceed under any one provision herein to the
exclusion of any other provision. Lender shall not be limited exclusively to the
rights and remedies herein stated but shall be entitled to every right and
remedy now or hereafter afforded at law or in equity.
Section . Right to Release Any Portion of the Property.
Lender, may release any portion of the Property for such consideration as Lender
may require without, as to the remainder of the Property, in any way impairing
or affecting the lien or priority of this Security Instrument, or improving the
position of any subordinate lienholder with respect thereto, except to the
extent that the obligations hereunder shall have been reduced by the actual
monetary consideration, if any, received by Lender for such release, and may
accept by assignment, pledge or otherwise any other property in place thereof as
Lender may
require without being accountable for so doing to any other lienholder. This
Security Instrument shall continue as a lien and security interest in the
remaining portion of the Property.
Section . Violation of Laws. If the Property is not in
compliance with Applicable Laws, Lender may impose additional requirements upon
Borrower in connection herewith including, without limitation, monetary reserves
or financial equivalents.
Section . Right of Entry. Lender and its agents shall have
the right upon prior written notice to enter and inspect the Property at all
reasonable times upon not less than five (5) Business Days' notice (except in
the case of emergencies when no notice shall be required) to Borrower.
Article - ENVIRONMENTAL HAZARDS
Section . Environmental Representations and Warranties.
Borrower represents and warrants, except as set forth in that certain Phase I
Environmental Site Assessment of the Property dated March 31, 1999, prepared by
Environmental Management Group, and information that Borrower knows, that: (a)
there are no Hazardous Substances (defined below) or underground storage tanks
in, on, or under the Property, except those that are both (i) in compliance with
Environmental Laws (defined below) and with permits issued pursuant thereto, if
any, and (ii) fully disclosed to Lender in writing pursuant to the written
reports resulting from the environmental assessments of the Property delivered
to Lender (the "Environmental Report"); (b) there are no past or present
Releases (defined below) of Hazardous Substances in violation of any
Environmental Law or which would require Remediation (defined below) by a
Governmental Authority in, on, under or from the Property except as described in
the Environmental Report; (c) there is no past or present non-compliance with
Environmental Laws, or with permits issued pursuant thereto, in connection with
the Property except as described in the Environmental Report; (d) Borrower does
not know of, and has not received, any written or oral notice or other
communication from any person or entity (including, but not limited to a
governmental entity) relating to Hazardous Substances or Remediation thereof, of
possible liability of any person or entity pursuant to any Environmental Law,
other environmental conditions in connection with the Property, or any actual
administrative or judicial proceedings in connection with any of the foregoing;
and (e) Borrower has truthfully and fully provided to Lender, in writing, any
and all information relating to environmental conditions in, on, under or from
the Property that is known to Borrower and that is contained in Borrower's files
and records, including, but not limited to any reports relating to Hazardous
Substances in, on, under or from the Property and/or to the environmental
condition of the Property. "Environmental Law" means any present, and for the
purposes of Sections 12.2. 12.3 and 13.4 only, future, federal, state and local
laws, statutes, ordinances, rules, regulations and the like, as well as common
law, relating to protection of human health or the environment, relating to
Hazardous Substances,
relating to liability for or costs of Remediation or prevention of Releases of
Hazardous Substances or relating to liability for or costs of other actual or
threatened danger to human health or the environment. "Environmental Law"
includes, but is not limited to, the following statutes, as amended, any
successor thereto, and any regulations promulgated pursuant thereto, and any
state or local statutes, ordinances, rules, regulations and the like addressing
similar issues: the Comprehensive Environmental Response, Compensation and
Liability Act; the Emergency Planning and Community Right-to-Know Act; the
Hazardous Substances Transportation Act; the Resource Conservation and Recovery
Act (including, but not limited to Subtitle I relating to underground storage
tanks); the Solid Waste Disposal Act; the Clean Water Act; the Clean Air Act;
the Toxic Substances Control Act; the Safe Drinking Water Act; the Occupational
Safety and Health Act; the Federal Water Pollution Control Act; the Federal
Insecticide, Fungicide and Rodenticide Act; the Endangered Species Act; the
National Environmental Policy Act; and the River and Harbors Appropriation Act.
"Environmental Law" also includes, but is not limited to, any present, and for
the purposes of Sections 12.2, 12.3 and 13.4 only, future, federal, state and
local laws, statutes, ordinances, rules, regulations and the like, as well as
common law: conditioning transfer of property upon a negative declaration or
other approval of a governmental authority of the environmental condition of the
property; requiring notification or disclosure of Releases of Hazardous
Substances or other environmental condition of the Property to any governmental
authority or other person or entity, whether or not in connection with transfer
of title to or interest in property. "Hazardous Substances" include but are not
limited to any and all substances (whether solid, liquid or gas) (i) defined,
listed, or otherwise classified as pollutants, hazardous wastes, hazardous
substances, hazardous materials, extremely hazardous wastes, or words of similar
meaning or regulatory effect under any present, or for the purposes of Sections
12.2. 12.3 and 13.4 only, future, Environmental Laws or (ii) that may have a
negative impact on human health or the environment, including, but not limited
to petroleum and petroleum products, asbestos and asbestos-containing materials,
polychlorinated biphenyls, lead, radon, radioactive materials, flammables and
explosives. "Release" of any Hazardous Substance includes, but is not limited to
any release, deposit, discharge, emission, leaking, spilling, seeping,
migrating, injecting, pumping, pouring, emptying, escaping, dumping or disposing
of Hazardous Substances. "Remediation" includes, but is not limited to any
response, remedial removal, or corrective action, any activity to cleanup,
detoxify, decontaminate, contain or otherwise remediate any Hazardous Substance,
any actions to prevent, cure or mitigate any Release of any Hazardous Substance,
any action to comply with any Environmental Laws or with any permits issued
pursuant thereto, any inspection, investigation, study, monitoring, assessment,
audit, sampling and testing, laboratory or other analysis, or evaluation
relating to any Hazardous Substances.
Section . Environmental Covenants. Borrower covenants and
agrees that so long as the Borrower owns, manages, is in possession of, or
otherwise controls the operation of the Property: (a) all uses and operations on
or of the Property, whether by Borrower or any other person or entity, shall be
in compliance with all Environmental Laws and permits issued pursuant thereto;
(b) there shall be no Releases of Hazardous Substances in, on, under
or from the Property; (c) there shall be no Hazardous Substances in, on, or
under the Property, except those that are in compliance with all Environmental
Laws and with permits issued pursuant thereto, if and to the extent required;
(d) Borrower shall keep the Property free and clear of all liens and other
encumbrances imposed pursuant to any Environmental Law, whether due to any act
or omission of Borrower or any other person or entity (the "Environmental
Liens"); (e) Borrower shall, at its sole cost and expense, fully and
expeditiously cooperate in all activities pursuant to Section 12.3 below,
including, but not limited to providing all relevant information and making
knowledgeable persons available for interviews; (f) Borrower shall, at its sole
cost and expense, perform any environmental site assessment or other
investigation of environmental conditions in connection with the Property,
pursuant to any reasonable written request of Lender after Lender has reason to
believe this Section 12.2 has been violated (including, but not limited to
sampling, testing and analysis of soil, water, air, building materials and other
materials and substances whether solid, liquid or gas), and share with Lender
the reports and other results thereof, and Lender and other Indemnified Parties
(defined in Section 13.1) shall be entitled to rely on such reports and other
results thereof; (g) Borrower shall, at its sole cost and expense, comply with
all reasonable written requests of Lender to (i) reasonably effectuate
Remediation of any condition (including, but not limited to a Release of a
Hazardous Substance) in, on, under or from the Property, (ii) comply with any
Environmental Law, (iii) comply with any directive from any governmental
authority, and (iv) take any other reasonable action necessary or appropriate
for protection of human health or the environment; (h) Borrower shall not do or
allow any tenant or other user of the Property to do any act that materially
increases the dangers to human health or the environment, poses an unreasonable
risk of harm to any person or entity (whether on or off the Property), impairs
or may impair the value of the Property, is contrary to any requirement of any
insurer, constitutes a public or private nuisance, constitutes waste, or
violates any covenant, condition, agreement or easement applicable to the
Property; and (i) Borrower shall immediately notify Lender in writing promptly
after it has become aware of (A) any presence or Releases or threatened Releases
of Hazardous Substances in, on, under, from or migrating towards the Property
which is required to be reported to a governmental authority under any
Environmental Law, (B) any actual Environmental Lien affecting the Property, (C)
any required Remediation of environmental conditions relating to the Property,
and (D) any written or oral notice or other communication of which Borrower
becomes aware from any source whatsoever (including, but not limited to a
governmental entity) relating in any way to Hazardous Substances or Remediation
thereof, possible liability of any person or entity pursuant to any
Environmental Law, other environmental conditions in connection with the
Property, or any actual or threatened administrative or judicial proceedings in
connection with anything referred to in this Article 12.
Section . Lender's Rights. Lender, its environmental
consultant, and any other person or entity designated by Lender, including, but
not limited to any receiver and any representative of a governmental entity,
shall have the right, but not the obligation, at intervals of not less than one
year, or more frequently if the Lender reasonably believes that
a Hazardous Substance or other environmental condition violates or threatens to
violate any Environmental Law, after notice to Borrower, to enter upon the
Property at all reasonable times to assess any and all aspects of the
environmental condition of the Property and its use, including, but not limited
to conducting any environmental assessment or audit of the Property or portions
thereof to confirm Borrower's compliance with the provisions of this Article 12,
and Borrower shall cooperate in all reasonable ways with Lender in connection
with any such audit. Such audit shall be performed in a manner so as to minimize
interference with the conduct of business at the Property. If such audit
discloses that a violation of or a liability under any Environmental Law exists
or if such audit was required or prescribed by law, regulation or governmental
or quasi-governmental authority, Borrower shall pay all costs and expenses
incurred in connection with such audit; otherwise, the costs and expenses of
such audit shall, notwithstanding anything to the contrary set forth in this
Section, be paid by Lender.
Article - INDEMNIFICATION
Section . General Indemnification. Borrower shall, at its
sole cost and expense, protect, defend, indemnify, release and hold harmless the
Indemnified Parties from and against any and all claims, suits, liabilities
(including, without limitation, strict liabilities), actions, proceedings,
obligations, debts, damages, losses, costs, expenses, diminutions in value,
fines, penalties, charges, fees, expenses, judgments, awards, amounts paid in
settlement, or punitive damages, of whatever kind or nature (including, but not
limited to attorneys' fees and other costs of defense) (the "Losses") imposed
upon or incurred by or asserted against any Indemnified Parties and directly or
indirectly arising out of or in any way relating to any one or more of the
following (but excluding Losses arising out of Lender's gross negligence or
willful misconduct): (a) ownership of this Security Instrument, the Property or
any interest therein or receipt of any Rents; (b) any amendment to, or
restructuring of, the Debt, and the Note, this Security Instrument, or any Other
Security Documents; (c) any and all lawful action that may be taken by Lender in
connection with the enforcement of the provisions of this Security Instrument or
the Note or any of the Other Security Documents, whether or not suit is filed in
connection with same, or in connection with Borrower, any Guarantor or
Indemnitor and/or any member, partner, joint venturer or shareholder thereof
becoming a party to a voluntary or involuntary federal or state bankruptcy,
insolvency or similar proceeding; (d) 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; (e) any use, nonuse or condition in, on
or about the Property or any part thereof or on the adjoining sidewalks, curbs,
adjacent property or adjacent parking areas, streets or ways; (f) any failure on
the part of Borrower to perform or be in compliance with any of the terms of
this Security Instrument or the Other Security Documents; (g) performance of any
labor or services or the furnishing of any materials or other property in
respect of the Property or any part thereof; (h) the failure of any person to
file timely with the Internal Revenue Service an
accurate Form ▇▇▇▇-▇, ▇▇▇▇▇▇▇▇▇ for Recipients of Proceeds from Real Estate,
Broker and Barter Exchange Transactions, which may be required in connection
with the Security Instrument, or to supply a copy thereof in a timely fashion to
the recipient of the proceeds of the transaction in connection with which this
Security Instrument is made; (i) any failure of the Property to be in compliance
with any Applicable Laws; (j) the enforcement by any Indemnified Party of the
provisions of this Article 13; (k) any and all claims and demands whatsoever
which may be asserted against Lender by reason of any alleged obligations or
undertakings on its part to perform or discharge any of the terms, covenants, or
agreements contained in any Lease; (l) the payment of any commission, charge or
brokerage fee to anyone which may be payable in connection with the funding of
the loan evidenced by the Note and secured by this Security Instrument; or (m)
any misrepresentation made by Borrower in this Security Instrument, the Other
Security Documents, or any documents or information provided pursuant to Section
18.1 hereof. Any amounts payable to Lender by reason of the application of this
Section 13.1 shall become immediately due and payable and shall bear interest at
the Default Rate from the date loss or damage is sustained by Lender until paid.
For purposes of this Article 13, the term "Indemnified Parties" means Lender 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 Security Instrument 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, 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 Lender's assets and business).
Section . Mortgage and/or Intangible TAX. Borrower shall, at
its sole cost and expense, protect, defend, indemnify, release and hold harmless
the Indemnified Parties from and against any and all Losses imposed upon or
incurred by or asserted against any Indemnified Parties and directly or
indirectly arising out of or in any way relating to any TAX on the making and/or
recording of this Security Instrument, the Note or any of the Other Security
Documents or in connection with a transfer of all or a portion of the Property
pursuant to a foreclosure, deed in lieu of foreclosure or otherwise.
Section . ERISA Indemnification. Borrower shall, at its sole
cost and expense, protect, defend, indemnify, release and hold harmless the
Indemnified Parties from and against any and all Losses (including, without
limitation, attorneys' fees and costs incurred in the investigation, defense,
and settlement of Losses incurred in correcting any
prohibited transaction or in the sale of a prohibited loan, and in obtaining any
individual prohibited transaction exemption under ERISA that may be required, in
Lender's sole discretion) that Lender may incur, directly or indirectly, as a
result of a default under Sections 4.2 or 5.9.
Section . Environmental Indemnification. Borrower shall, at
its sole cost and expense, protect, defend, indemnify, release and hold harmless
the Indemnified Parties from and against any and all Losses and costs of
Remediation (whether or not performed voluntarily), reasonable engineers' fees,
reasonable environmental consultants' fees, and costs of investigation
(including, but not limited to sampling, testing and analysis of soil, water,
air, building materials and other materials and substances whether solid, liquid
or gas) imposed upon or incurred by or asserted against any Indemnified Parties,
and arising out of or in any way relating to any one or more of the following,
unless caused by the gross negligence or willful misconduct of any Indemnified
Party: (a) any presence of any Hazardous Substances in, on, above or under the
Property; (b) any past, present or threatened Release of Hazardous Substances
in, on, above, under or from the Property; (c) any activity by Borrower, any
person or entity affiliated with Borrower or tenant or other users of the
Property in connection with any actual, proposed or threatened use, treatment,
storage, holding, existence, disposition or other Release, generation,
production, manufacturing, processing, refining, control, management, abatement,
removal, handling, transfer or transportation to or from the Property of any
Hazardous Substances at any time located in, under, on or above the Property;
(d) any activity by Borrower, any person or entity affiliated with Borrower or
tenant or other users of the Property in connection with any actual or proposed
Remediation of any Hazardous Substances at any time located in, under, on or
above the Property, whether or not such Remediation is voluntary or pursuant to
court or administrative order, including, but not limited to any removal,
remedial or corrective action; (e) any past, present or threatened violations of
any Environmental Laws (or permits issued pursuant to any Environmental Law) in
connection with the Property or operations thereon, including, but not limited
to any failure by Borrower, any person or entity affiliated with Borrower or
tenant or other users of the Property to comply with any order of any
governmental authority in connection with Environmental Laws; (f) the
imposition, recording or filing of any Environmental Lien encumbering the
Property; (g) any administrative processes or proceedings or judicial
proceedings in any way connected with any matter addressed in Article 12 and
this Section 13.4; (h) any past, present or threatened injury to, destruction of
or loss of natural resources in any way connected with the Property, including,
but not limited to costs to investigate and assess such injury, destruction or
loss; (i) any acts of Borrower or other users of the Property in arranging for
disposal or treatment, or arranging with a transporter for transport for
disposal or treatment, of Hazardous Substances owned or possessed by such
Borrower or other users, at any facility or incineration vessel owned or
operated by another person or entity and containing such or similar Hazardous
Substance; (j) any acts of Borrower or other users of the Property, in accepting
any Hazardous Substances for transport to disposal or treatment facilities,
incineration vessels or sites selected by Borrower or such other users, from
which there is a Release, or a
threatened Release of any Hazardous Substance which causes the incurrence of
costs for Remediation; (k) any personal injury, wrongful death, or property
damage caused by Hazardous Substances arising under any statutory or common law
or tort law theory, including, but not limited to damages assessed for the
maintenance of a private or public nuisance or for the conducting of an
abnormally dangerous activity on or near the Property; and (l) any intentional
misrepresentation in any representation or warranty or material breach or
failure to perform any covenants or other obligations pursuant to Article 12.
Section . Duty to Defend; Attorneys' Fees and Other Fees and
Expenses. Upon written request by any Indemnified Party, Borrower shall defend
such Indemnified Party (if requested by any Indemnified Party, in the name of
the Indemnified Party) by attorneys and other professionals approved by the
Indemnified Parties. Notwithstanding the foregoing, any Indemnified Parties may,
in their sole and absolute discretion, engage their own attorneys and other
professionals to defend or assist them, and, at the option of Indemnified
Parties, their attorneys shall control the resolution of claim or proceeding.
Upon demand, Borrower shall pay or, in the sole and absolute discretion of the
Indemnified Parties, reimburse, the Indemnified Parties for the payment of
reasonable fees and disbursements of attorneys, engineers, environmental
consultants, laboratories and other professionals in connection therewith.
Article - WAIVERS
Section . Waiver of Counterclaim. Borrower hereby waives the
right to assert a counterclaim, other than a mandatory or compulsory
counterclaim, in any action or proceeding brought against it by Lender arising
out of or in any way connected with this Security Instrument, the Note, any of
the Other Security Documents, or the Obligations.
Section . Marshalling and Other Matters. Borrower hereby
waives, to the extent permitted by law, the benefit of all appraisement,
valuation, stay, extension, reinstatement and redemption laws now or hereafter
in force and all rights of marshalling in the event of any sale hereunder of the
Property or any part thereof or any interest therein. Further, Borrower hereby
expressly waives any and all rights of redemption from sale under any order or
decree of foreclosure of this Security Instrument on behalf of Borrower, and on
behalf of each and every person acquiring any interest in or title to the
Property subsequent to the date of this Security Instrument and on behalf of all
persons to the extent permitted by Applicable Law.
Section . Waiver of Notice. To the extent permitted by
Applicable Law, Borrower shall not be entitled to any notices of any nature
whatsoever from Lender except with respect to matters for which this Security
Instrument specifically and expressly provides for the giving of notice by
Lender to Borrower and except with respect to matters for which Lender is
required by Applicable Law to give notice, and Borrower hereby expressly waives
the right to receive any notice from Lender with respect to any matter for which
this Security Instrument does not specifically and expressly provide for the
giving of notice by Lender to Borrower.
Section . Waiver of Statute of Limitations. Borrower hereby
expressly waives and releases to the fullest extent permitted by law, the
pleading of any statute of limitations as a defense to payment of the Debt or
performance of its Other Obligations.
Section . Sole Discretion of Lender. Wherever pursuant to
this Security Instrument (a) Lender exercises any right given to it to approve
or disapprove, (b) any arrangement or term is to be satisfactory to Lender, or
(c) any other decision or determination is to be made by Lender, the decision of
Lender to approve or disapprove all decisions that arrangements or terms are
satisfactory or not satisfactory, and all other decisions and determinations
made by Lender, shall be in the sole and absolute discretion of Lender and shall
be final and conclusive, except as may be otherwise expressly and specifically
provided herein.
Section . Survival. Except as hereinafter specifically set
forth below, the representations and warranties, covenants, and other
obligations arising under Article 12 shall in no way be impaired by: any
satisfaction or other termination of this Security Instrument, any assignment or
other transfer of all or any portion of this Security Instrument or Lender's
interest in the Property (but, in such case, shall benefit both Indemnified
Parties and any assignee or transferee), any exercise of Lender'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 Security Documents, any transfer of all
or any portion of the Property (whether by Borrower or by Lender, following
foreclosure or acceptance of a deed in lieu of foreclosure or at any other
time), any amendment to this Security Instrument, the Note or the Other Security
Documents, and any act or omission that might otherwise be construed as a
release or discharge of Borrower from the obligations pursuant hereto. All
obligations and liabilities of Borrower under Article 12 shall cease and
terminate on the first (1st) anniversary of the date of payment to Lender in
cash of the entire Debt, provided that contemporaneously with or subsequent to
such payment, Borrower, at its sole cost and expense, delivers to Lender an
environmental audit of the Property in form and substance, and prepared by a
qualified environmental consultant, reasonably satisfactory in all respects to
Lender and indicating the Property is in full compliance with all applicable
Environmental Laws.
Section . Waiver of Trial By Jury. BORROWER HEREBY WAIVES, TO
THE FULLEST EXTENT PERMITTED BY LAW, THE RIGHT TO TRIAL BY JURY IN ANY ACTION,
PROCEEDING OR COUNTERCLAIM, WHETHER IN CONTRACT, TORT OR OTHERWISE, RELATING
DIRECTLY OR INDIRECTLY TO THE LOAN EVIDENCED BY THE NOTE, THE APPLICATION FOR
THE LOAN EVIDENCED BY THE NOTE, THE NOTE, THIS SECURITY INSTRUMENT OR THE OTHER
SECURITY
DOCUMENTS OR ANY ACTS OR OMISSIONS OF LENDER, ITS OFFICERS, EMPLOYEES, DIRECTORS
OR AGENTS IN CONNECTION THEREWITH.
Article - EXCULPATION
Section . Exculpation. Notwithstanding anything to the
contrary contained in this Security Instrument or in any Other Security Document
(but subject to the provisions of Sections 15.2, 15.3, 15.4 and 15.5), Lender
shall not enforce the liability and obligation of Borrower to perform and
observe the obligations contained in the Note or this Security Instrument by any
action or proceeding to collect damages or wherein a money judgment or any
deficiency judgment or order or any judgment establishing any personal
obligation or liability shall be sought against Borrower or any principal
director, officer, employee, beneficiary, shareholder, partner, member, trustee,
agent or affiliate of Borrower or any person owning, directly or indirectly, any
legal or beneficial interest in Borrower, or any successors or assigns of any of
the foregoing (collectively, the "Exculpated Parties"). Lender may bring a
foreclosure action, action for specific performance or other appropriate action
or proceeding to enable Lender to enforce and realize upon this Security
Instrument, the Other Security Documents, and the interest in the Property, the
Rents and any other collateral given to Lender created by this Security
Instrument and the Other Security Documents; provided, however, subject to the
provisions of Sections 15.2, 15.3, 15.4 and 15.5, that any judgment in any
action or proceeding shall be enforceable against Borrower only to the extent of
Borrower's interest in the Property, in the Rents and in any other collateral
given to Lender in connection with the Note. Lender, by accepting the Note and
this Security Instrument, agrees that it shall not, except as otherwise provided
below, ▇▇▇ for or demand any deficiency judgment against Borrower or any of the
Exculpated Parties in any action or proceeding, under or by reason of or under
or in connection with the Note, the Other Security Documents or this Security
Instrument.
Section . Reservation of Certain Rights. The provisions of
Section 15.1 shall not (a) constitute a waiver, release or impairment of the
Obligations; (b) impair the right of Lender to name Borrower as a party
defendant in any action or suit for judicial foreclosure and sale under this
Security Instrument; (c) affect the validity or enforceability of any indemnity,
guaranty, master lease or similar instrument made in connection with the Note,
this Security Instrument, or the Other Security Documents; (d) impair the
ability of Lender to obtain the appointment of a receiver; or (e) impair the
enforcement of the Assignment of Leases and Rents executed in connection
herewith.
Section . Exceptions to Exculpation. Notwithstanding the
provisions of Article 15.1 to the contrary, Borrower and Indemnitor shall be
personally liable to Lender on a joint and several basis for the Losses Lender
incurs due to: (a) fraud or intentional misrepresentation by Borrower or any
other person or entity in connection with the execution and the delivery of the
Note, this Security Instrument or the Other Security Documents; (b)
Borrower's misapplication or misappropriation of Rents received by Borrower
after the occurrence and during the continuance of an Event of Default; (c)
Borrower's misapplication or misappropriation of tenant security deposits or
Rents collected in advance; (d) the misapplication or misappropriation of
insurance proceeds or condemnation awards after the occurrence and during the
continuance of an Event of Default; (e) any fees or commissions paid by Borrower
after the occurrence and during the continuance of an Event of Default to any
principal, affiliate or general partner of Borrower, Indemnitor or Guarantor in
violation of the terms of the Note, this Security Instrument or the Other
Security Documents; (f) gross negligence or criminal acts perpetrated by it
resulting in forfeiture, seizure or loss of any portion of the security; (g) any
failure by Borrower or Indemnitor to comply with the terms and provisions of
Section 13.4 hereof or of the Environmental Indemnity; (h) any failure by
Borrower or any general partner or the SPE Member of Borrower to comply with the
terms and provisions of Section 4.3 hereof; or (i) any sale, conveyance,
mortgage, grant, bargain, encumbrance, pledge, assignment or transfer of the
Property or any part thereof, within the meaning of Article 8 hereof, without
the prior written consent of Lender.
Section . Recourse. Notwithstanding the foregoing, the
agreement of Lender not to pursue recourse liability as set forth in Section
15.1 above SHALL BECOME
NULL AND VOID and shall be of no further force and effect in the event (i)
Borrower fails to comply with the terms and conditions of Section 8.1, 8.2 or
8.3, (ii) the Property or any part thereof shall become an asset in (A) a
voluntary bankruptcy or insolvency proceeding, or (B) an involuntary bankruptcy
or insolvency proceeding commenced by any Person (other than Lender) and
Borrower fails to use its best efforts to obtain a dismissal of such
proceedings, or (iii) Borrower or any Guarantor or Indemnitor fails to comply
with the terms and provisions of Section 3.11 hereof within thirty (30) days
after written notice from Lender to Borrower (which notice shall be a second
notice given after the expiration of any notice given pursuant to Section
10.1(e)); provided, however, so long as PREIT Associates, L.P., a Delaware
limited partnership, maintains that certain line of credit with First Union
National Bank, as agent, pursuant to that certain Revolving Credit Loan
Agreement with Corestates Bank, N.A. (predecessor-in-interest to First Union
National Bank), as agent, and First Trust Savings Bank, Fleet Bank, N.A. and PNC
Bank, as lenders, dated September 30, 1997 (or another credit arrangement
containing market standard financial covenants for net worth, leverage and
liquidity), the occurrence of any of the events referred to in subsections
(i)-(iii) above shall not create recourse liability against Borrower or any
Guarantor or Indemnitor.
Section . Bankruptcy Claims. Nothing herein shall be deemed
to be a waiver of any right which Lender 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 Security Instrument or to require
that all collateral shall continue to secure all of the Debt owing to Lender in
accordance with the Note, this Security Instrument and the Other Security
Documents.
Article - NOTICES
Section . Notices. All notices or other written
communications hereunder shall be deemed to have been properly given (a) upon
delivery, if delivered in person or by facsimile transmission with receipt
acknowledged by the recipient thereof, (b) one (1) Business Day (defined below)
after having been deposited for overnight delivery with any reputable overnight
courier service, or (c) three (3) Business Days after having been deposited in
any post office or mail depository regularly maintained by the U.S. Postal
Service and sent by registered or certified mail, postage prepaid, return
receipt requested, addressed as follows:
If to Borrower: Pennsylvania Real Estate Investment Trust
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
The Bellevue, Suite 300
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to: Drinker ▇▇▇▇▇▇ & ▇▇▇▇▇ LLP
Philadelphia National Bank Building
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Esq.
Facsimile No. (▇▇▇) ▇▇▇-▇▇▇▇
If to Lender: GMAC Commercial Mortgage Corporation
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: Executive Vice President,
Commercial Loan Servicing
Facsimile No. (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to: Commercial Capital Initiatives, Inc.
Wall Street Plaza
▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: Manager - Loan Administration
Facsimile No. (▇▇▇) ▇▇▇-▇▇▇▇
and
▇▇▇▇▇ Cummis Radin Tischman ▇▇▇▇▇▇▇ & ▇▇▇▇▇, P.A.
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, Esq.
Facsimile No. (▇▇▇) ▇▇▇-▇▇▇▇
or addressed as such party may from time to time designate by written notice to
the other parties.
Either party by notice to the other may designate additional
or different addresses for subsequent notices or communications.
For purposes of this Subsection, "Business Day" shall mean a
day on which commercial banks are not authorized or required by law to close in
the State of New York.
Article - APPLICABLE LAW
Section . Choice of Law. THIS SECURITY INSTRUMENT SHALL BE
GOVERNED, CONSTRUED, APPLIED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE
STATE WHERE THE LAND IS LOCATED AND THE
APPLICABLE LAWS OF THE UNITED STATES OF AMERICA.
Section . Usury Laws. This Security Instrument and the Note
are subject to the express condition that at no time shall Borrower be obligated
or required to pay interest on the Debt 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
Borrower is permitted by applicable law to contract or agree to pay. If by the
terms of this Security Instrument or the Note, Borrower is at any time required
or obligated to pay interest on the Debt at a rate in excess of such maximum
rate, the rate of interest under the Security Instrument 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 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 Lender for the use, forbearance, or detention of the Debt shall, to the
extent permitted by applicable law, be amortized, prorated, allocated, and
spread throughout the full stated term of the 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.
Section . Provisions Subject to Applicable Law. All rights,
powers and remedies provided in this Security Instrument may be exercised only
to the extent that the exercise thereof does not violate any applicable
provisions of law and are intended to be limited to the extent necessary so that
they will not render this Security Instrument invalid, unenforceable or not
entitled to be recorded, registered or filed under the provisions of any
Applicable Law.
Section . Inapplicable Provision. If any term of this
Security Instrument or any application thereof shall be invalid or
unenforceable, the remainder of this Security Instrument and any other
application of the term shall not be affected thereby.
Article - SECONDARY MARKET
Section . Dissemination of Information. If Lender determines
at any time to sell, transfer or assign the Note, this Security Instrument and
the Other Security Documents, and any or all servicing rights with respect
thereto, or to grant participations therein (the "Participations") or issue
mortgage pass-through certificates or other securities (such sale and/or
issuance, the "Securitization") evidencing a beneficial interest in a rated or
unrated public offering or private placement (the "Securities"), Lender may
forward to each purchaser, transferee, assignee, servicer, participant,
investor, or their respective successors in such Participations and/or
Securities (collectively, the "Investor") or any Rating Agency rating such
Securities and each prospective Investor, all documents and information which
Lender now has or may hereafter acquire relating to the Debt and to Borrower,
any Guarantor, any Indemnitors and the Property (including, without limitation,
all financial statements), which shall have been furnished by Borrower, any
Guarantor or any Indemnitors, as Lender determines necessary or desirable.
Borrower, any Guarantor and any Indemnitor agree to cooperate with Lender in
connection with any transfer made or any Securities created pursuant to this
Section, including, without limitation, the delivery of an
estoppel certificate required in accordance with Subsection 7.4(c) hereof and
such other documents as may be reasonably requested by Lender and, upon Lender's
reasonable request, meeting with any Rating Agency for due diligence purposes.
Borrower shall also furnish and Borrower, any Guarantor and any Indemnitor
consent to Lender furnishing to such Investors or such prospective Investors or
any Rating Agency any and all information concerning the Property, the Leases,
the financial condition of Borrower, any Guarantor and any Indemnitor as may be
requested by Lender, any Investor or any prospective Investor or Rating Agency
in connection with any sale, transfer or Participation, provided, however, PREIT
Associates, L.P. and Pennsylvania Real Estate Investment Trust shall only be
required under this Section 18.1 to disclose information that is deemed to be
"public" information. Borrower shall not be responsible for Lender's fees and
expenses incurred in connection with the transactions contemplated by this
Section 18.1. Lender shall reimburse Borrower for the reasonable actual
out-of-pocket third party costs incurred by Borrower in excess of $1,500.00 in
connection with the transactions contemplated by this Section 18.1.
Article - COSTS
Section . Performance at Borrower's Expense. Borrower
acknowledges and confirms that Lender 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, provided, however, no commitment fee shall
be imposed in connection with the substitution of collateral, (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 (the occurrence of any of the above
shall be called an "Event"). Borrower 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, Lender or any
governmental or quasi-governmental authority. Borrower 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 Lender from time to time, upon
the occurrence of any Event or otherwise. Wherever it is provided for herein
that Borrower pay any costs and expenses, such costs and expenses shall include,
but not be limited to, all legal fees and disbursements of Lender (whether of
retained firms, the reimbursement for the expenses of in-house staff or
otherwise) and all costs and expenses of Lender, if any.
Section . Attorney's Fees for Enforcement. (a) Borrower shall
pay all legal fees incurred by Lender in connection with (i) the preparation of
the Note, this Security Instrument and the Other Security Documents; and (ii)
the items set forth in Section 19.1 above, and (b) Borrower shall pay to Lender
on demand any and all expenses, including legal expenses and attorneys' fees,
incurred or paid by Lender in protecting its interest in the Property or the
Collateral or in collecting any amount payable hereunder or in enforcing its
rights hereunder with respect to the Property or the Collateral, 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 Lender
until such expenses are paid by Borrower.
Article - DEFINITIONS
Section . General Definitions. Unless the context clearly
indicates a contrary intent or unless otherwise specifically provided herein,
words used in this Security Instrument may be used interchangeably in singular
or plural form and the word "Borrower" shall mean "each Borrower and any
subsequent owner or owners of the Property or any part thereof or any interest
therein," the word "Lender" shall mean "Lender and any subsequent holder of the
Note," the word "Note" shall mean "the Note and any other evidence of
indebtedness secured by this Security Instrument," the word "person" shall
include an individual, corporation, limited liability company, partnership,
trust, unincorporated association, government, governmental authority, and any
other entity, the word "Property" shall include any portion of the Property and
any interest therein, and the phrases "attorneys' fees" and "counsel fees" shall
include any and all attorneys', paralegal and law clerk fees and disbursements,
including, but not limited to fees and disbursements at the pre-trial, trial and
appellate levels incurred or paid by Lender in protecting its interest in the
Property, the Leases and the Rents and enforcing its rights under this Security
Instrument.
Section . Headings, Etc. The headings and captions of various
Sections of this Security Instrument are for convenience of reference only and
are not to be construed as defining or limiting, in any way, the scope or intent
of the provisions hereof.
Article - MISCELLANEOUS PROVISIONS
Section . No Oral Change. This Security Instrument, 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
Borrower, or Lender, 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.
Section . Liability. If Borrower consists of more than one
person, the obligations and liabilities of each such person hereunder shall be
joint and several. This Security Instrument shall be binding upon and inure to
the benefit of Borrower and Lender and their respective successors and assigns
forever.
Section . Duplicate Originals; Counterparts. This Security
Instrument may be executed in any number of duplicate originals and each
duplicate original shall be deemed to be an original. This Security Instrument
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 Security Instrument.
Section . Number and Gender. 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.
Section . Subrogation. If any or all of the proceeds of the
Note have been used to extinguish, extend or renew any indebtedness heretofore
existing against the Property, then, to the extent of the funds so used, Lender
shall be subrogated to all of the rights, claims, liens, titles, and interests
existing against the Property heretofore held by, or in favor of, the holder of
such indebtedness and such former rights, claims, liens, titles, and interests,
if any, are not waived but rather are continued in full force and effect in
favor of Lender and are merged with the lien and security interest created
herein as cumulative security for the repayment of the Debt, the performance and
discharge of Borrower's obligations hereunder, under the Note and the Other
Security Documents and the performance and discharge of the Other Obligations.
Section . Entire Agreement. The Note, this Security
Instrument and the Other Security Documents constitute the entire understanding
and agreement between Borrower and Lender with respect to the transactions
arising in connection with the Debt and supersede all prior written or oral
understandings and agreements between Borrower and Lender with respect thereto.
Borrower hereby acknowledges that, except as incorporated in writing in the
Note, this Security Instrument and the Other Security Documents, there are not,
and were not, and no persons are or were authorized by Lender to make, any
representations, understandings, stipulations, agreements or promises, oral or
written, with respect to the transaction which is the subject of the Note, this
Security Instrument and the Other Security Documents.
IN WITNESS WHEREOF, THIS SECURITY INSTRUMENT has been
executed by Borrower as of the date first above written.
BORROWER:
PENNSYLVANIA REAL ESTATE
INVESTMENT TRUST
a Pennsylvania business trust
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
-----------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
Title: Authorized Signatory
EXHIBIT A
(Description of Land)
ALL of that certain lot, piece or parcel of land, with the
buildings and improvements thereon, situate, lying and being