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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-K
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CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported):
August 14, 1998
JANUS AMERICAN GROUP, INC.
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(Exact name of Registrant as specified in Charter)
DELAWARE 0-22745 13-2572712
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(State or Other Jurisdiction (Commission (IRS Employer
of Incorporation) File Number) Identification No.)
2300 Corporate Blvd., N.W., Suite 232, Boca Raton, FL 33431-8596
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(Address of principal executive office) (Zip Code)
Registrant's telephone number including area code: (561) 994-4800
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(Former name or Former Address, if Changed Since Last Report)
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
On August 14, 1998, the Company, through four limited liability companies,
acquired four hotels located in Ohio (collectively, the "Acquired Business"), as
follows:
(i) Holiday Inn, Independence is a 364-room full-service hotel located
near downtown Cleveland and the Hopkins International Airport at the
intersection of Interstate Highway 77 and State Route 480. The purchase
price was $21,807,000.
(ii) Holiday Inn, Hudson is a 289-room full-service hotel located off
Exit 189 of the Ohio Turnpike between Cleveland and Akron and about 15
miles from Sea World, a visitor attraction. The purchase price was
$13,369,350.
(iii) Holiday Inn, North Canton is a 194-room full-service hotel
located three miles from downtown Canton off Interstate Highway 77. The
purchase price was $5,454,250.
(iv) Comfort Inn, West Montrose is a 132-room limited feature hotel
located north of Akron off Exit 137 of Interstate 77. The purchase price
was $3,479,900.
The selling entities were commonly controlled by Michael Gallucci, Jr.
("Gallucci") of Akron, Ohio. The total acquisition price was $44,110,500 in cash
and was financed by borrowings by four (4) wholly-owned limited liability
companies of the Company from Amresco Capital, L.P. in substantially the total
amount of the acquisition prices, secured by the acquired properties. The four
loans are cross-defaulted and cross-collateralized, but otherwise with only
limited recourse to the Company. The financing is for a term of ten years, based
upon a 25-year amortization schedule, at a fixed interest rate of 8.09% per
annum.
In connection with the transaction, the Company entered into a Consulting
Agreement with The Cornerstone Company (the "Consultant") a corporation
controlled by Gallucci. The Consulting Agreement has a term of four years and
provides for monthly payments by the Company of $20,833. The Consultant is
obligated to assist the Company with regard to employee, labor, community
relations and governmental affairs issues associated with the transition of the
ownership of the Acquired Business to the Company.
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ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS
(a) Financial Statements of Businesses Acquired
Audited financial statements of the Acquired Business for the year ending
December 31, 1997, unaudited financial statements of the Acquired Business for
the six months ending June 30, 1998 and additional financial information
required under Rule 3-14 of Regulation S-X are not included in this report and
will be filed by amendment within 60 days.
(b) Pro Forma Financial Information
Pro forma financial information for the Company after giving effect to the
acquisition of the Acquired Business is not included in this report and will be
filed by amendment within 60 days.
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(c) Exhibits
Exhibit No. Description
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10.20 Consulting Agreement by and between Janus American
Group, Inc. and The Cornerstone Company,
Developers and Operators of Inns, Hotels and
Resorts incorporated by reference to Exhibit 10.20
filed with the Registrant's Form 10-QSB for the
three months ended June 30, 1998.
10.21 Purchase and Sale Agreement between Galburton Inn,
Inc. and Janus American Group, Inc. incorporated
by reference to Exhibit 10.21 filed with the
Registrant's Form 10-QSB for the three months
ended June 30, 1998.
10.22 Purchase and Sale Agreement between West Montrose
Properties and Janus American Group, Inc.
incorporated by reference to Exhibit 10.22 filed
with the Registrant's Form 10-QSB for the three
months ended June 30, 1998.
10.23 Purchase and Sale Agreement between North Canton
Operating Corp., Canton North Properties and Janus
American Group, Inc. incorporated by reference to
Exhibit 10.23 filed with the Registrant's Form
10-QSB for the three months ended June 30, 1998.
10.24 Purchase and Sale Agreement between Rockside Road
Operating Corp., Rockside Road Properties and
Janus American Group, Inc. incorporated by
reference to Exhibit 10.24 filed with the
Registrant's Form 10-QSB for the three months
ended June 30, 1998.
10.25 Loan Agreement dated as of August 14, 1998 by and
among JAGI Cleveland - Hudson, LLC; JAGI Cleveland
- Independence, LLC; JAGI Montrose West, LLC, JAGI
North Canton, LLC; and Amresco Capital, L.P.
10.26 Note (Fixed Rate) of JAGI Cleveland - Hudson, LLC
dated August 14, 1998 in the principal sum of
$13,300,000 and Schedule of Other Notes (Fixed
Rate).
10.27 Mortgage and Security Agreement dated as of August
14, 1998 by and between JAGI Cleveland - Hudson,
LLC and Amresco Capital, L.P. and Schedule of
Other Mortgage and Security Agreements.
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10.28 Security Agreement dated as of August 14, 1998 by
JAGI Cleveland - Hudson, LLC and Amresco Capital
L.P. and Schedule of Other Security Agreements.
10.29 Second Mortgage and Security Agreement dated as of
August 14, 1998 by and between JAGI Cleveland -
Hudson, LLC and Amresco Capital, L.P. and Schedule
of Other Second Mortgage and Security Agreements.
10.30 Second Security Agreement dated as of August 14,
1998 by and between JAGI Cleveland - Hudson, LLC
and Amresco Capital, L.P. and Schedule of Other
Second Security Agreements.
10.31 Guaranty dated as of August 14, 1998 by and
between Janus American Group, Inc. and Amresco
Capital, L.P. and Schedule of Other Guaranties.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Janus American Group, Inc.
(Registrant)
Dated: August 28, 1998 By: /s/ James E. Bishop
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Name: James E. Bishop
Title: President
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LOAN NO. 400030964
LOAN AGREEMENT
THIS LOAN AGREEMENT (this "Loan Agreement") is made and entered into as of
the 14 day of August, 1998, by and among JAGI CLEVELAND - HUDSON, LLC, a
Delaware limited liability company ("JAGI Hudson"), JAGI CLEVELAND -
INDEPENDENCE, LLC, a Delaware limited liability company ("JAGI Independence"),
JAGI MONTROSE WEST, LLC, a Delaware limited liability company ("JAGI Montrose"),
JAGI NORTH CANTON, LLC, a Delaware limited liability company ("JAGI Canton")
("JAGI Hudson, JAGI Independence, JAGI Montrose, and JAGI Canton sometimes
collectively referred to as "Borrowers"), each having an address at 8534 East
Kemper Road, Cincinnati, Ohio 45249, and AMRESCO CAPITAL, L.P., a Delaware
limited partnership ("Lender"), whose address is 700 North Pearl Street, Suite
2400, LB#342, Dallas, Texas 75201.
R E C I T A L S
A. JAGI Hudson is the owner in fee simple of the land situated in the
Village of Boston Heights, County of Summit, State of Ohio, and more
particularly described on Exhibit A-1 attached hereto and made a part hereof,
together with the improvements thereon (the "Holiday Inn Hudson").
B. JAGI Independence is the owner in fee simple of the land situated in the
City of Independence, County of Cuyahoga, State of Ohio, and more particularly
described on Exhibit A-2 attached hereto and made a part hereof, together with
the improvements thereon (the "Holiday Inn Independence").
C. JAGI Montrose is the owner in fee simple of the land situated in the
Township of Copley, County of Summit, State of Ohio, and more particularly
described on Exhibit A-3 attached hereto and made a part hereof (the "Comfort
Inn").
D. JAGI Canton is the owner in fee simple of the land situated in the
Township of Jackson, County of Stark, State of Ohio, and more particularly
identified on Exhibit A-4 attached hereto and made a part hereof (the "Holiday
Inn Canton").
E. Borrowers have applied to Lender for a mortgage loan (the "Loan") to be
secured by the Holiday Inn Hudson, the Holiday Inn Independence, the Comfort
Inn, and the Holiday Inn Canton (individually, a "Real Property" and
collectively, the "Real Properties").
F. Lender has agreed to make the Loan, as evidenced by Lender's Commitment,
dated August 3, 1998 (the "Loan Commitment"), to Borrowers, on the terms and
conditions set forth in the Loan Commitment and as hereinafter set forth.
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NOW, THEREFORE, in consideration of the premises and the mutual covenants
and agreements of the parties hereinafter set forth, it is hereby mutually
agreed as follows:
1. The Loans and Allocation. (a) Lender and Borrowers agree that the amount
of the Loan shall be $44,000,000, which sum shall be evidenced by four separate
promissory notes (each, a "Note" and together, the "Notes") as follows:
(i) a $13,300,000 Note (the "Holiday Inn Hudson Note") made by JAGI
Hudson to the order of Lender;
(ii) a $21,800,000 Note (the "Holiday Inn Independence Note") made by
JAGI Independence to the order of Lender;
(iii) a $3,500,000 Note (the "Comfort Inn Note") made by JAGI Montrose
to the order of Lender;
(iv) a $5,400,000 Note (the "Holiday Inn Canton Note") made by JAGI
Canton to the order of Lender.
(b) Each Note shall be secured, in part, by a first priority mortgage and
security agreement upon the Real Property owned by its maker (each, a "Mortgage"
and collectively, the "Mortgages"), and secondarily by second mortgages and
security agreements (each a "Second Mortgage" and collectively, the "Second
Mortgages") encumbering the other Real Properties.
(c) The Loan shall be repayable together with interest thereon, during the
term specified in the Notes, all on the terms and conditions set forth in the
Loan Documents, as hereinafter defined.
2. Agreement to Borrow. Borrowers agree to borrow the proceeds of the Loan
in accordance with the terms of this Loan Agreement, the Loan Commitment and the
other Loan Documents.
3. Loan Documents. (a) For the purpose of evidencing the Loan and securing
unto Lender the repayment of the Loans, all interest thereon and all other
amounts at any time due from Borrowers to Lender, and for the purpose of
securing the performance by Borrowers of all of the covenants and undertakings
as set forth herein and as set forth in the below listed documents, each of the
Borrowers shall execute and deliver, or cause to be executed and delivered, as
the case may be, the following documents, all of which shall be satisfactory to
Lender in form and substance:
(i) a Note;
(ii) a Mortgage;
(iii) an Assignment of Leases and Rents;
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(iv) a Security Agreement;
(v) UCC Financing Statements;
(vi) Guaranty Agreement (executed by Janus American Group, Inc.) with
respect to certain obligations pertaining, in part, to each of the Real
Properties;
(vii) Environmental Liabilities Agreement;
(viii) Closing Certificate;
(ix) a tri-partite agreement by and among Borrower, Lender, and the
hotel franchisor;
(x) an Acknowledgment of Property Manager executed by the manager of
the Real Property owned by the Borrower;
(xi) an Assignment of Franchise Agreement assigning to Lender the
Franchise Agreement pertaining to the Borrower's Real Property;
(xii) Certification of Taxpayer Identification Number and Nonforeign
Status;
(xii) Disbursement and Receipt Certification;
(xiv) Loans to One Borrower Certificate;
(xv) Undelivered Items Letter;
(xvi) an Escrow for Products Improvement Plan;
(xvii) a Second Mortgage;
(xviii) a Second Security Agreement; and
(xix) such other documents as are provided for in the Commitment
(b) This Loan Agreement, the Loan Commitment, the documents identified in
Section 3(a), and any and all other instruments now or at any time hereafter
evidencing, governing, securing and/or related to the Loan, as now or hereafter
amended, restated, modified or substituted, herein are referred to collectively
as the "Loan Documents".
4. Permitted Transfers of Real Properties. (a) Provided there then exists
no Event of Default (defined in the Mortgages) under any of the Loan Documents,
commencing on October 1, 2001, Lender agrees to permit the transfer of the
entire fee simple interest in a Real Property to a person or entity not related
or affiliated to any Borrower or Janus American Group, Inc. (a "Fee Transfer")
on and subject to the terms and conditions set forth in Sections 12(c) of the
Mortgage pertaining to such Real Property upon satisfaction of the provisions
set forth in such Mortgage and provided that all other Real Properties
encumbered by Mortgages which
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remain cross-defaulted hereunder following the Fee Transfer (for purposes of
this Section 4, the "Remaining Real Properties") satisfy, in the aggregate, the
Minimum Debt Service Coverage Ratio (hereinafter defined).
(b) As used herein, the term "Minimum Debt Service Coverage Ratio" means a
ratio of 1.30 to 1.00 of (i) the annual sustainable net operating income of the
Real Properties in question, as determined by Lender at the time in question
based on certified, historical, trailing twelve (12) months operating
statements, after adjustment for reserves required by the terms of the
Mortgages, compared to (ii) the annual debt service on the Notes made by the
makers of the Real Properties in question.
(c) In the event a Borrower proposes a Fee Transfer of a Real Property and
the Remaining Real Properties do not, in the aggregate, satisfy the Minimum Debt
Service Coverage Ratio, the Borrowers owning the Remaining Real Properties shall
prepay such portion of the Loan allocable to the Remaining Real Properties as is
necessary for such Remaining Real Properties to satisfy, in the aggregate, the
Minimum Debt Service Coverage Ratio (each Note made by the owner of a Remaining
Real Property to be prepaid by an amount equal to the product of multiplying the
amount of the Loan required to be prepaid in order for the Remaining Real
Properties, in the aggregate, to satisfy the Minimum Debt Service Coverage Ratio
by a fraction, the numerator of which shall be the outstanding principal balance
of the Note made by the owner of a Remaining Real Property, and the denominator
of which shall be the outstanding principal balance of all Notes made by the
owners of all the Remaining Real Properties. The required prepayments shall be
accomplished by partially defeasing the Notes (a "Required Ancillary Partial
Defeasance") in accordance with the terms of the Notes pertaining to partial
defeasance thereof.
(d) Upon consummation of a Fee Transfer, the Note made by the Borrower
owning the transferred Real Property on the date hereof (for purposes of this
Section 4, the "Original Owner") and the other Loan Documents (exclusive of this
Loan Agreement) executed by the Original Owner in connection therewith shall no
longer be cross-defaulted with the remainder of the Loan Documents, and Lender
shall release the Second Mortgage and Second Security Agreement executed and
delivered by the Original Owner. All other Loan Documents, including any
Defeased Notes (defined in the Note) resulting from a Required Ancillary Partial
Defeasance and the Undefeased Notes (defined in the Notes) resulting from a
Required Ancillary Partial Defeasance, shall remain cross-defaulted with one
another.
(e) Upon consummation of a Fee Transfer, the Note made by the Original
Owner of the transferred Real Property shall no longer be secured by any lien or
security interest in the Remaining Real Properties, and the Notes pertaining to
the Remaining Real Properties shall no longer be secured by any lien or security
interest in the transferred Real Property. Except as aforesaid, the Notes
pertaining to the Remaining Real Properties shall remain cross-collateralized by
all Remaining Real Properties and, in addition, shall be cross-collateralized by
a security interest in any Defeasance Deposit (defined in the Note) and any
Defeasance Collateral (defined in the Note) established in connection with a
Required Ancillary Partial Defeasance, by each owner of a Remaining Real
Property or Successor Borrower (defined in the Notes) executing and delivering
to Lender a Subordinated Defeasance Security Agreement (defined in the Notes).
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5. Defeasance. (a) No Note may be prepaid or defeased in whole or in part
prior to October 1, 2001 except with respect to application of casualty or
condemnation proceeds as provided in the Notes and Mortgages. Provided there
then exists no Event of Default (defined in the Mortgages) under any of the Loan
Documents, commencing on October 1, 2001, a Note may be defeased in whole, but
not in part (except with respect to application of casualty or condemnation
proceeds as provided in the Notes and Mortgages and except in connection with a
Required Ancillary Partial Defeasance) provided that the conditions applicable
to defeasance set forth in the Note, and the conditions set forth herein, are
satisfied. A Note may be defeased in whole in accordance on and subject to the
terms and conditions set forth in the Note upon satisfaction of the provisions
set forth in such Note pertaining to defeasance and provided that all Real
Properties encumbered by Mortgages which remain cross-defaulted hereunder
following the complete defeasance of a Note (for purposes of this Section 5, the
"Remaining Real Properties") satisfy, in the aggregate, the Minimum Debt Service
Coverage Ratio.
(b) In the event a Borrower elects a voluntary defeasance of a Note in full
and the Remaining Real Properties do not, in the aggregate, satisfy the Minimum
Debt Service Coverage Ratio, the Borrowers owning the Remaining Real Properties
shall prepay such portion of the Loan allocable to the Remaining Real Properties
as is necessary for such Remaining Real Properties to satisfy, in the aggregate,
the Minimum Debt Service Coverage Ratio (each Note made by the owner of a
Remaining Real Property to be prepaid by an amount equal to the product of
multiplying the amount of the Loan required to be prepaid in order for the
Remaining Real Properties, in the aggregate, to satisfy the Minimum Debt Service
Coverage Ratio by a fraction, the numerator of which shall be the outstanding
principal balance of the Note made by the owner of a Remaining Real Property,
and the denominator of which shall be the outstanding principal balance of all
Notes made by the owners of all the Remaining Real Properties. The required
prepayments shall be accomplished by a Required Ancillary Partial Defeasance in
accordance with the terms of the Notes pertaining to partial defeasance thereof.
(c) Upon consummation of the defeasance of a Note in whole, the resulting
Defeased Note (defined in the Note) and the other Loan Documents (exclusive of
this Loan Agreement) executed by the maker of the Note which has been defeased
in full (for purposes of this Section 5, the "Original Owner") in connection
therewith shall remain cross-defaulted with the remainder of the Loan Documents,
and any Defeased Notes resulting from a Required Ancillary Partial Defeasance
shall remain cross-defaulted with the remainder of the Loan Documents, and
Lender shall release the Second Mortgage and Second Security Agreement executed
and delivered by the Original Owner. All other Loan Documents, including the
Undefeased Notes (defined in the Notes) resulting from a Required Ancillary
Partial Defeasance, shall remain cross-defaulted with one another.
(d) Upon consummation of the defeasance of a Note in whole, the resulting
Defeased Note shall no longer be secured by any lien or security interest in the
Remaining Real Properties, and the Notes pertaining to the Remaining Real
Properties shall no longer be secured by any lien or security interest in the
Real Property owned by the Original Owner on the date hereof. Except as
aforesaid, the Notes pertaining to the Remaining Real Properties shall remain
cross-collateralized by all Remaining Real Properties and, in addition, shall be
cross-collateralized by a security interest in any Defeasance Deposit (defined
in the Note) and any Defeasance Collateral (defined in the Note) established in
connection with the defeasance of a Note in full and in connection with any
Required Ancillary Partial Defeasance of other Notes in
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connection therewith, by the maker of the Defeased Note and each owner of a
Remaining Real Property (or Successor Borrower, as the case may be) executing
and delivering to Lender a Subordinated Defeasance Security Agreement (defined
in the Notes).
6. Default and Cross Default. (a) Except as set forth in Section 4, there
shall be a default ("Default") hereunder if there is an Event of Default under
any Note or Mortgage as defined therein, including Default arising thereunder by
reason of Borrowers' failing to comply with or perform or observe any agreement,
covenant, obligation or condition to be performed, observed, or complied with by
Borrowers under this Loan Agreement.
(b) Borrowers agree that (i) except as set forth in Section 4, an Event of
Default under any one or more of the Loan Documents shall be deemed to be an
Event of Default under each and every other Loan Document, and (ii) Lender
unilaterally may release or waive cross-default as it relates to any one or more
of the Loan Documents at any time, provided that such waiver or release shall be
in writing and shall only be effective as to the Loan Documents specifically so
designated.
7. Remedies. Upon the occurrence of a Default, Lender may exercise any or
all of the following remedies:
(a) Declare the entire indebtedness of Borrowers to Lender hereunder, under
the Notes and under the other Loan Documents, together with interest thereon,
and any prepayment premiums, and any other sum secured by any of the Loan
Documents to be immediately due and payable, without notice; and
(b) Exercise any and all rights and remedies provided herein, in any
Mortgage (or all of them, at Lender's option) or in any of the other Loan
Documents, or provided at law or in equity, including appointment of a receiver
for any one or more of the Real Properties.
8. Costs of Collection. Borrowers hereby agree that, in the event of
Default, Borrowers shall pay Lender's reasonable legal costs in connection with
the foreclosure and other litigation or enforcement or collection actions
(whether or not suit is instituted) resulting from such Default.
9. Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF OHIO AND THE APPLICABLE LAWS OF THE
UNITED STATES OF AMERICA.
10. Incorporation of Loan Commitment. In addition to, and not in limitation
of, the terms, conditions and provisions hereof, all of the terms, conditions
and provisions of the Loan Commitment are hereby incorporated in and made a part
hereof to the same extent as if herein set forth in full. To the greatest
possible extent, all of the terms, conditions and provisions of the Loan
Commitment and the Loan Documents shall be deemed to be complementary,
cumulative and in addition to each other; however, in the event of any
inconsistency, the provisions of the Loan Documents shall govern and prevail.
11. Notices. All notices hereunder shall be given in accordance with the
provisions of the Mortgages.
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12. Expenses. Borrowers hereby agree to pay, immediately upon demand, all
costs and expenses (including, 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) incurred in connection with any
permitted transfers of a Real Property or any defeasance of a Note.
13. Severability. In the event that any one or more of the provisions of
this Agreement shall for any reason be held to be invalid, illegal or
unenforceable, in whole or in part, or in any respect, or in the event that any
one or more of the provisions of this Agreement shall operate, or would
prospectively operate, to invalidate this Agreement, then, and in any such
event, such provision or provisions only shall be deemed to be null and void and
of no force or effect and shall not affect any other provision of this
Agreement, and the remaining provisions of this Agreement shall remain operative
and in full force and effect and shall in no way be affected, prejudiced or
disturbed thereby.
14. Variation in Pronouns. All the terms and words used in this Agreement,
regardless of the number and gender in which they are used, shall be deemed and
construed to include any other number, singular or plural, and any other gender,
masculine, feminine, or neuter, as the context or sense of this Agreement or any
paragraph or clause herein may require, the same as if such word had been fully
and properly written in the correct number and gender.
15. Captions. The section titles or captions contained in this Agreement
are for convenience only and shall not be deemed to define, limit or otherwise
modify the scope or intent of this Agreement.
16. Counterparts. This Agreement may be executed in multiple counterparts,
all of which taken together shall constitute one and the same Agreement and the
signature page of any counterpart may be removed therefrom and attached to any
other counterpart.
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IN WITNESS WHEREOF, Borrowers and Lender have caused this Loan Agreement to
be duly executed as of the day and year first above written.
JAGI CLEVELAND - HUDSON, LLC,
a Delaware limited liability company
By Janus American Group, Inc., a Delaware
corporation
By /s/ JAMES E. BISHOP
----------------------------------
Name: James E. Bishop
Title: President
JAGI CLEVELAND - INDEPENDENCE, LLC,
a Delaware limited liability company
By Janus American Group, Inc., a Delaware
corporation
By /s/ JAMES E. BISHOP
----------------------------------
Name: James E. Bishop
Title: President
JAGI MONTROSE WEST, LLC, a Delaware
limited liability company
By Janus American Group, Inc., a Delaware
corporation
By /s/ JAMES E. BISHOP
----------------------------------
Name: James E. Bishop
Title: President
JAGI NORTH CANTON, LLC, a Delaware
limited liability company
By Janus American Group, Inc., a Delaware
corporation
By /s/ JAMES E. BISHOP
-----------------------------------
Name: James E. Bishop
Title: President
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AMRESCO CAPITAL, L.P., a Delaware
limited partnership
By: AMRESCO Mortgage Capital, Inc.,
a Delaware corporation, its sole
general partner
By: /s/ FRED A. BROWN
---------------------------------
Name: Fred A. Brown
Title: Senior Investment Officer
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EXHIBIT A-1
HOLIDAY INN HUDSON
<PAGE>
EXHIBIT A
PARCEL "A"
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Premises/situated in the VILLAGE of BOSTON HEIGHTS, County of Summit and State
of Ohio, and known as being a part of Lot No. 3 east of the Cuyahoga River,
formerly in Boston Township, and more fully described as follows:
Beginning at a stone at the northwest corner of said Lot No. 3, said stone
being at the intersection of the centerline tangents of Hines Hill Road
(C. H. 115);
Thence S 68 deg. 51' 10" East, 140.02 feet along the centerline tangent of
Hines Hill Road (C. H. 115) to a point and the true place of beginning;
Thence S 68 deg. 51' 10" East, 231.33 feet along the centerline tangent of
Hines Hill Road (C. H. 115) to a point on the westerly line of a highway
easement conveyed to the State of Ohio for Relocated State Route 8 and
recorded in Volume 2990, Page 348 of the Summit County Record of Deeds;
Thence along the westerline of said highway following a circular curve to
the left, 33.46 feet to a point, said circular curve having a central angle
of 00 deg. 38' 52", a radius of 2,959.79 feet, a tangent of 16.73 feet, and
a chord of 33.46 feet;
Thence N 70 deg. 21' 01" West, 115.10 feet along the westerly line of said
highway;
Thence S 55 deg. 36' 00" East, 136.05 feet along the westerly line of said
highway;
Thence along the westerly line of said highway following a circular curve
to the left, 248.43 feet to a point, said circular curve having a central
angle of 04 deg. 48' 43", a radius of 2,959.79 feet, a tangent of 124.29
feet, and a chord of 248.36 feet:
Thence WEST, 146.07 feet to a point;
Thence NORTH, 35.00 feet to a point;
Thence WEST, 224.32 feet to a point;
Thence NORTH 210.26 feet to a point
Thence S 75 deg. 26' 37" East, 114.26 feet to a point;
Thence NORTH 183.95 feet to a point and the true place of beginning, and
containing 2.2659 acres of land as determined by Messmore & Fay, Registered
Surveyors in February, 1975, but subject to all legal roads, highways, and
easements of record.
PARCEL "B"
- ----------
Situated in the Village of Boston Heights, County of Summit and State of Ohio,
and known as being a part of Lot No. 3, east of the Cuyahoga River, formerly in
Boston Township, and more fully described as follows:
Beginning at a stone at the northwest corner of said Lot No. 3, said stone
being at the intersection of the centerline tangents of Hines Hill Road
(C. H. 115);
Thence S 200.55 feet along the westerly line of said lot No. 3, to a point
and the true place of beginning;
Thence S 75 deg. 26' 37" East, 20.66 feet to a point;
Thence SOUTH 210.26 feet to a point;
<PAGE>
Thence EAST 224.32 feet to a point;
Thence SOUTH 35.00 feet to a point;
Thence EAST 146.07 feet to a point on the westerly line of a highway
easement conveyed to the State of Ohio for relocated State Route 8 and
recorded in Volume 2990, Page 348 of the Summit County Record of Deeds;
Thence along the westerly line of said highway following a circular curve
to the left, 44.28 feet to a point, said circular curve having a central
angle of 00 deg. 51' 26", a radius of 2,959.79 feet, a tangent of 22.14
feet, and a chord of 44.28 feet;
Thence along the westerly line of said highway the following courses:
S 13 deg. 48' 20" East, 304.94 feet to a point.
S 14 deg. 49' 10" East, 116.68 feet to a point
S 12 deg. 55' 00" East, 473.76 feet to a point
N 89 deg. 14' 30" East, 15.70 feet to a point
S 14 deg. 49' 10" East, 116.89 feet to a point on the northerly
right-of-way line of the Ohio Turnpike Project No. 1, as recorded in
Plat Book 44, Page 154 of the Summit County Records of Plats;
Thence along the northerly line of said highway following a circular curve to
the left, 5251 feet to a point, said circular curve having a central angle of
00 deg. 15' 32", a radius of 11,619.16 feet, a tangent of 26.25 feet, and a
chord of 52.50 feet;
Thence N 03 deg. 36' 10" West, 50.00 feet to a point;
Thence N 77 deg. 05' 00" East, 4.50 feet to a point;
Thence N 12 deg. 55' 00" West, 381.49 feet to a point;
Thence West, 516.83 feet to a point on the westerly line of Lot No. 3;
Thence NORTH, 858.03 feet along the westerly line of Lot No. 3 to a point and
the true place of beginning, and containing 7.0156 acres of land as determined
by Messmore & Fay, Registered Surveyors in February, 1975, but subject to all
legal roads, highways and easements of record.
PARCEL "C"
- ----------
Situated in the Village of Boston Heights, the County of Summit and State of
Ohio, and known as being a part of Lot No. 3, east of the Cuyahoga River,
formerly in Boston Township, and more fully described as follows:
Beginning at a stone at the northwest corner of said Lot No. 3, said stone
being at the intersection of the centerline tangents of Hines Hill Road
(C.H. 115),
Thence SOUTH 1,058.58 feet along the westerly line of said Lot No. 3 to a
point and the true place of beginning;
Thence EAST 516.83 feet to a point;
Thence S 12 deg. 55' 00" East, 256.49 feet to a point;
Thence WEST 574.16 feet to point on the westerly line of said Lot No. 3;
Thence NORTH along the westerly line of said Lot No. 3, 250.00 feet to a
point and the true place of beginning, and containing 3.1309 acres of land
as determined by Messmore & Fay, Registered Surveyors in February, 1975,
but subject to all legal roads, highways, and easements of record.
<PAGE>
The above described Parcels "A", "B" and "C" also include the use of the
following described easement for ingress and egress from Hines Hill Road;
Situated in the Village of Boston Heights, County of Summit, and State of Ohio,
and known as being a part of Lot No. 16, East of the Cuyahoga River, formerly in
Boston Township, and more fully described as follows:
Beginning at a stone at the northeast corner of Lot No. 16 on the
centerline of Hines Hill Road (C. H. 115);
Thence SOUTH, 1,110.00 feet along the easterly line of Lot No. 16 to a
point;
Thence WEST, 40.00 feet to a point;
Thence NORTH, 1,110,00 feet to a point on the center line of Hines Hill
Road;
Thence EAST, 40.00 feet along the center line of Hines Hill Road to the
place of beginning.
Together with all rights, title and interest which the grantor now holds or
hereafter acquire in and to an easement for ingress and egress as more fully
set forth in a Right-of-Way Agreement from The Bostonian Country Club, Inc. to
The Bostonian Company and Galburton Inn, Inc. dated September 19, 1966 and filed
for record October 5, 1966 in Volume 4622, Page 637 of Summit County Records.
Together with all rights, title and interest in and to an EASEMENT for ingress
and egress to include parking privileges on PARCEL "B" described above.
<PAGE>
EXHIBIT A-2
HOLIDAY INN INDEPENDENCE
<PAGE>
EXHIBIT A
PARCEL NO. 1:
Situated in the City of Independence, County of Cuyahoga and State of Ohio and
known as being part of Original Independence Township Lot No. 21, Tract No. 2,
West of River and is bounded and described as follows:
Beginning at a 1" iron pin monument found in the centerline of Rockside Road, 80
feet in width, at its intersection with the Westerly line of said Lot No. 21;
Thence South 73 deg. 38' 43" East, 1074.21 feet along the centerline of Rockside
Road, passing through a 1" iron pin monument at 928.43 feet;
Thence North 06 deg. 00' 22" East 190.66 feet along the Easterly line of land
conveyed to William F. Bay by the deed recorded in Volume 9487, Page 564 of
Cuyahoga County Deed Records and the most Easterly line of land conveyed to
George Hajek and Stella Hajek by the deed recorded in Volume 4871, Page 402 of
Cuyahoga County Deed Records, to the principal place of beginning, of the
premises herein to be described;
Thence North 83 deg. 59' 38" West, 143.30 feet to a point;
Thence South 06 deg. 00' 22" West, 14.00 feet to a point of compound curvature
in the Northeasterly line of Frontage Road, 60 feet in width, also being on the
Northeasterly line of Parcel No. 410AWD as shown by the deed to the State of
Ohio recorded in Volume 12396, Page 621 of Cuyahoga County Deed Records;
Thence Northwesterly along the arc of a circle deflecting to the left 45.24
feet, said arc having a radius of 142.47 feet and a chord which bears North 64
deg. 33' 46" West, 45.05 feet along the Northeasterly line of Frontage Road to a
point of tangency therein,
Thence North 73 deg. 39' 37" West, 275.63 feet along said Northeasterly line to
a point of curvature in the Northeasterly line of Parcel No. 410WD as shown by
the deed to the State of Ohio recorded in Volume 12389, Page 491 of Cuyahoga
County Deed Records.
<PAGE>
Thence Northwesterly along the arc of a curve deflecting to the right, 45.85
feet, said arc having a radius of 32.00 feet and a chord which bears North 32
deg. 36' 32" West 42.03 feet to a point of tangency in the Easterly line of
Frontage Road;
Thence North 08 deg. 26' 33" East 548.15 feet along said Easterly line to the
Southerly line of land conveyed to Frank Trem and Ruth Trem by the deed recorded
in Volume 12379, Page 357 of Cuyahoga County Deed Records;
Thence South 81 deg. 34' 00" East 146.47 feet along said Southerly line to an
angle point therein;
Thence North 87 deg. 54' 35" East, 316.70 feet along said Southerly line and the
Northerly line of land so conveyed to George Hajek and Stella Hajek as
aforementioned;
Thence South 06 degrees 00' 22" West, 669.32 feet along the Easterly line of
land so conveyed to George Hajek and Stella Hajek to the principal place of
beginning, according to a survey by Dempsey & Neff Inc., dated October 18, 1994.
PARCEL NO. 2
Situated in the City of Independence, County of Cuyahoga and State of Ohio and
known as being part of original Independence Township Lot No. 21, Tract No. 2,
West of River and bounded and described as follows:
Beginning at a 1" iron pin monument found in the centerline of Rockside Road, 80
feet in width, at its intersection with the Westerly line of said Original Lot
No. 21;
Thence South 73 deg. 38' 43" East, 551.77 feet along the centerline of Rockside
Road to its intersection with the Easterly line of land conveyed to S-I-D
Management Co., by deed dated August 4, 1967 and is recorded in Volume 12149,
Page 333 of Cuyahoga County Deed Records;
Thence North 08 deg. 23' 17" East, 96.00 feet along the Easterly line of land so
conveyed to the most Southerly corner of Parcel No. 409WD conveyed to the State
of Ohio by the deed recorded in Volume 12357, Page 639 of Cuyahoga County Deed
Records;
Thence North 23 deg. 36' 20" West, 69.41 feet along the Southwesterly line of
said Parcel No. 409WD and a Southwesterly line of Frontage Road, 60 feet in
width, to an angle point therein,
<PAGE>
Thence North 08 deg. 26' 33" East, 413.00 feet along the Westerly line of said
Parcel No. 409WD and Frontage Road to its intersection with the Northerly line
of land conveyed to C-C Restaurant LTD-9 dated December 12, 1985 and recorded in
Volume 85-6917, Page 63 of Cuyahoga County Deed Records and the principal place
of beginning of the premises herein to be described;
Thence North 81 deg. 33' 27" West, 166.00 feet along the Northerly line of land
so conveyed to an angle point therein;
Thence South 77 deg. 59' 26" West, 162.50 feet along said Northerly line,
parallel to a line drawn between the center of the existing transmission towers,
to the Easterly line of Parcel No. 409WL as conveyed to the State of Ohio by the
deed recorded in Volume 12357, Page 639, said Easterly line also being the
Easterly line of Interstate Route 77,
Thence North 16 deg. 49' 33" East, 415.27 feet along said Easterly line to an
angle point therein;
Thence North 54 deg. 52' 41" East, 75.61 feet along said Easterly line to an
angle point therein;
Thence North 21 deg. 37' 43" East, 209.82 feet along said Easterly line to the
Northeasterly corner of Parcel No. 409WL as aforementioned and the Northerly
line of Original Lot No. 21;
Thence North 88 deg. 11' 40" East, 193.93 feet along said Northerly line of
Original Lot No. 21 to the Northeasterly corner of land so conveyed to S-I-D
Management Co., as aforesaid;
Thence South 08 deg. 23' 17" West, 217.39 feet along the Easterly line of land
so conveyed to the most Northerly corner of Parcel No. 409WD as aforementioned
and the Westerly line of Frontage Road;
Thence Southwesterly along the arc of a curve deflecting to the left, 233.15
feet, said arc having a radius of 749.38 feet and a chord which bears South 17
deg. 21' 20" West, 232.21 feet along said Westerly line to a point of tangency
therein;
Thence continuing South 08 deg. 26' 33" West, 198.16 feet along said Westerly
line to the principal place of beginning, according to a survey by Dempsey &
Neff, Inc., dated October, 18, 1994.
<PAGE>
EXHIBIT A-3
COMFORT INN
<PAGE>
EXHIBIT "A"
Situated in the Township of Copley, County of Summit, State of Ohio and known as
being part of original Copley Township Lot Number 2, also known as being the
south 122 feet of Lot Number 14, all of Lot Number 15 and the north 75 feet of
Lot Number 16 of the Montrose West Allotment Phase I-Part 2 and Rerecord of
Phase I as recorded in Plat Cabinet "B" Slides 747 to 753 of said County Records
and being further described as follows:
Parcel Number 1-South 122 feet of Lot Number 14.
- -----------------------------------------------
Beginning at the northwest corner of said Montrose West Allotment, said
northwest corner also being the northwest corner of Lot Number 1 of said
Montrose West Allotment, thence S 00 deg. 13' 30" W for a distance of 1298.76
feet to a point, said point being the northwest corner of said Lot Number 14,
thence continuing S 00 deg. 13' 30" W for a distance of 96.00 feet to the true
place of beginning of the parcel of land hereinafter described;
Thence clockwise along the following five (5) courses and distances;
1) Thence S 89 deg. 46' 30" E for a distance of 400.60 feet to a point, said
point being on the western right of way line of Montrose West Avenue (70
feet);
2) Thence S 02 deg. 47' 57" W along said western right of way line for a
distance of 19.29 feet to a point, said point being a point of curvature;
3) Thence continuing along said western right of way line along the arc of a
curve to the right having the following properties;
Delta = 01 deg. 33' 28"
Radius = 3784.72 feet
Tangent = 51.45 feet
Chord = 102.90 feet
Chord Bearing = S 03 deg. 34' 41" deg. W for a distance of 102.90
feet to a point, said point being the
southeast corner of said Lot Number 14;
4) Thence N 89 deg. 46' 30" W along the southern line of said Lot Number 14
for a distance of 393.72 feet to a point, said point being the southwest
corner of said Lot Number 14;
5) Thence N 00 deg. 13' 30" E along the western line of said Lot Number 14 and
western line of said Montrose West Allotment for a distance of 122.00 feet
to a point; said point being the true place of beginning, and containing
1.1132 acres of land, more or less, and subject to all easements,
restrictions, and convenants of record.
<PAGE>
Parcel Number 2--All of Lot Number 15
- -------------------------------------
Situated in the Township of Copley, County of Summit, State of Ohio and known as
being part of original Copley Township Lot Number 2, also known as being all of
Lot Number 15 of the Montrose West Allotment Phase I-Part 2 and Rerecord of
Phase I as recorded in Plat Cabinet "B" Slides 747 to 753 of said County Records
and being further described as follows:
Beginning at the northwest corner of said Montrose West Allotment, said
northwest corner also being the northwest corner of Lot Number 1 of said
Montrose West Allotment, thence S 00 deg. 13' 30" W along the western line of
said Montrose West Allotment for a distance of 1516.76 feet to a point, said
point being the northwest corner and true place of beginning of the parcel of
land hereinafter described;
Thence clockwise along the following four (4) courses and distances;
1) Thence S 89 deg. 46' 30" E along the north line of said Lot Number 15, said
north line also being the south line of Parcel Number 1 as above described,
for a distance of 393.72 feet to a point, said point being on the western
right of way line of Montrose West Avenue (70 feet);
2) Thence along the said western right of way line, along the arc of a curve
to the right having the following properties;
Delta = 04 deg. 52' 40"
Radius = 3784.72 feet
Tangent = 161.20 feet
Chord = 322.12 feet
Chord Bearing = S 06 deg. 47' 45" W for a distance of 322.21
feet to a point, said point being the
southeast corner of said Lot Number 15;
3) Thence N 89 deg. 46' 30" W along the south line of said Lot Number 15 for a
distance of 356.86 feet to a point; said point being the southwest corner
of said Lot Number 15;
4) Thence N 00 deg. 13' 30" E along the western line of said Lot Number 15 for
a distance of 320.00 feet to a point, said point being the true place of
beginning, and containing 2.7738 acres of land, more or less, and subject
to all easements, restrictions, and covenants of record.
Parcel Number 3--North 75 feet of Lot Number 16
- ----------------------------------------------
Situated in the Township of Copley, County of Summit, State of Ohio and known as
being part of original Copley Township Lot Number 2, also known as being the
north 75 feet of Lot Number 16 of the Montrose West Allotment Phase I-Part 2 and
Rerecord of Phase I as recorded in Plat Cabinet "B" Slides 747 to 753 of said
County Records and being further described as follows:
<PAGE>
Beginning at the northwest corner of said Montrose West Allotment, said
northwest corner also being the northwest corner of Lot Number 1 of said
Montrose West Allotment, thence S 00 deg. 13' 30" W along the western line of
said Montrose West Allotment for a distance of 1836.76 feet to a point, said
point being the northwest corner of said Lot Number 16 and true place of
beginning of the parcel of land hereinafter described;
Thence clockwise along the following four (4) courses and distances;
1) Thence S 89 deg. 46' 30" E along the north line of said Lot Number 16, said
north line also being the south line of Parcel Number 2 as above described,
for a distance of 356.86 feet to a point, said point being on the western
right of way line of Montrose West Avenue (70 feet);
2) Thence along the said western right of way line, long the arc of a curve to
the right having the following properties;
Delta = 01 deg. 09' 05"
Radius = 3784.72'
Tangent = 38.03'
Chord = 76.06'
Chord Bearing = S 09 deg. 48' 37.5" W for a distance of 76.06
feet to a point;
3) Thence N 89 deg. 46' 30" W for a distance of 344.19 feet to a point, said
point being on the western line of said Lot Number 16;
4) Thence W 00 deg. 13' 30" E along said western line for a distance of 75.00
feet to a point, said point being the true place of beginning, and
containing 0.6037 acres of land, more or less, and subject to all
easements, restrictions, and covenants of record.
The total acreage of all three parcels in 4.4907 acres.
Excepting therefrom the following described premises:
Situated in the Township of Copley, County of Summit, State of Ohio, and known
as being part of original Copley Township Lot Number 2, also known as being the
south 42.42 feet of Original Lot Number 15 and north 75.00 feet of Original Lot
Number 16 of the Montrose West Allotment Phase I-Part 2 and Re-record of Phase I
as recorded in Plat Cabinet "B" Slides 747 to 753 of said County Records and
being further described as follows:
Beginning at the northwest corner of said Montrose West Allotment, said
northwest corner also being the northwest corner of Lot Number 1 of said
Montrose West Allotment, thence S 00 deg. 13' 30" W. along the western line of
said Montrose West Allotment for a distance of 1836.76 feet to a point, said
point being the northwest corner of Lot Number 16 of said Montrose West
Allotment, said point also being the True Place of Beginning of the parcel of
land hereinafter described, thence clockwise along the following five (5)
courses and distances:
1. Thence N 00 deg. 13' 30" E. along the westerly line of said Lot Number 15
for a distance of 42.42 feet to a point;
2. Thence S 89 deg. 46' 30" E. for a distance of 363.33 feet to a point, said
point being on the westerly right of way line of Montross West Avenue (75
feet wide);
3. Thence along said westerly right of way line along the arc of a curve to
the right having the following properties:
Delta = 01 deg. 48' 04"
Radius = 3784.72
Tangent = 59.49
Chord = 118.97
Chord Bearing = S 09 deg. 29' 10" W. for a distance of 118.98
feet to a point;
4. Thence N 89 deg. 46' 30" W. for a distance of 344.18 feet to a point,
said point being on the westerly line of said Lot Number 16;
5. Thence N 00 deg. 13' 30" E. along the westerly line of said Lot Number 16
for a distance of 75.00 feet to the True Place of Beginning and containing
0.9544 of an acre of land of which 0.6037 of an acre is in Lot Number 16
and 0.3507 of an acre is in Lot Number 15, more or less, and subject to all
easements, restrictions and covenants of record as surveyed under the
supervision of L. Terry Frease, P.S., Number 5917, for GPD Associates, in
September of 1992.
<PAGE>
EXHIBIT A-4
HOLIDAY INN CANTON
<PAGE>
EXHIBIT A
PARCEL 1
Situated in the Township of Jackson, County of Stark and State of Ohio: and
known as being part of the Northwest Quarter of Section No. 24, Township 11,
Range 9, Jackson Township, and being further described as follows:
Beginning at an iron pin at the Southeasterly corner of said Northwest Quarter
of Section No. 24; thence from said place of beginning North 2 deg. 14' 12"
East, measured along the Easterly line of said Northwest Quarter of Section No.
24 and along the center line of Dressler Road, Proposed, 80 feet wide, 1065.06
feet to a point therein; Thence North 87 deg. 45' 48" West, 40.00 feet to a
point in the Westerly line of said Dressler Road, proposed, which is the
principal place of beginning for premises herein described; Thence from said
principal place of beginning North 56 deg. 05' 21" West, 83.99 feet to a point
in the Southeasterly curved line of Everhard Road, 80 feet wide; Thence
Northeasterly, along said Southeasterly curved line of Everhard Road, 25.00 feet
along the arc of a circle, deflecting to the right, said arc having a radius of
1870.73 feet and a chord which bears North 65 deg. 19' 32" East, 25.00 feet to a
point of compound curvature at the Southwesterly end of a curved turnout,
between said Southeasterly curved line of Everhard Road and said Westerly line
of Dressler Road, Proposed; Thence Northeasterly and Southeasterly along said
curved turnout, 69.16 feet along the arc of a circle, deflecting to the right,
said arc having a radius of 34.00 feet and a chord which bears South 56 deg. 01'
39" East, 57.83 feet to a point of tangency in said Westerly line of Dressler
Road Proposed; Thence South 2 deg. 14' 12" West, measured along said Westerly
line of Dressler Road, Proposed, 25.00 feet to the principal place of beginning.
PARCEL 2
Situated in the Township of Jackson, County of Stark and State of Ohio: and
known as being part of the Northwest Quarter of Section No. 24, Township 11,
Range 9, Jackson Township, and being further described as follows:
Beginning at an iron pin at the Southeasterly corner of said Northwest Quarter
of Section No. 24; Thence from said place of beginning North 2 deg. 14' 12"
East, measured along the Easterly line of said Northwest Quarter of Section No.
24 and along the center line of Dressler Road, Proposed, 80 feet wide, 588.34
feet to a point therein; Thence North 87 deg. 53' 14" West, 40.00 feet to a
point in the Westerly line of said Dressler Road, Proposed, which is the
principal place of beginning for premises
<PAGE>
herein described; Thence from said principal place of beginning, continuing
North 87 deg. 53' 14" West, 696.8 feet to a point in the Southeasterly curved
line of Everhard Road, 80 feet wide; Thence Northeasterly along said
Southeasterly curved line of Everhard Road, 696.47 along the arc of a circle,
deflecting to the right, said arc having a radius of 1870.73 feet and a chord
which bears North 50 deg. 26' 55" East, 692.45 feet to a point therein; Thence
South 56 deg. 51' 03" East, 210.46 feet to a point in said Westerly line of
Dressler Road, Proposed. Thence South 2 deg. 14' 12" West, measured along said
Westerly line of Dressler Road Proposed, 351.81 feet to the principal place of
beginning.
LOAN NO. 400030964
NOTE
(FIXED RATE)
$13,300,000 August 14, 1998
FOR VALUE RECEIVED JAGI CLEVELAND - HUDSON, LLC, a Delaware limited
liability company (hereinafter referred to as "Maker"), promises to pay to the
order of AMRESCO CAPITAL, L.P., a Delaware limited partnership, its successors
and assigns (hereinafter referred to as "Payee"), at the office of Payee or its
agent, designee, or assignee at 700 North Pearl Street, Suite 2400, LB#342,
Dallas, Texas 75201-7424, Attention: Loan Servicing, or at such place as Payee
or its agent, designee, or assignee may from time to time designate in writing,
the principal sum of Thirteen Million Three Hundred Thousand and No/100 Dollars
($13,300,000), in lawful money of the United States of America, with interest
thereon to be computed on the unpaid principal balance from time to time
outstanding at the Applicable Interest Rate (hereinafter defined) at all times
prior to the occurrence of an Event of Default (as defined in the Mortgage
[hereinafter defined]), and to be paid in installments as follows:
1. A payment of interest only on the date hereof for the period from
the date hereof through the last day of the current calendar month, both
inclusive;
2. A constant payment (the "Monthly Payment"), in arrears, of
$103,445.77, on the first day of October, 1998 and on the first day of each
calendar month thereafter up to and including the month immediately
preceding the Maturity Date stated below, which Monthly Payment is
calculated using an amortization period of twenty-five (25) years;
and the balance of said principal sum, together with accrued and unpaid interest
and any other amounts due under this Note shall be due and payable on the first
day of September, 2008 or upon earlier maturity hereof whether by acceleration
or otherwise (the "Maturity Date"). Interest on the principal sum of this Note
shall be calculated on the basis of the actual number of days elapsed in the
applicable calendar month multiplied by a daily rate based upon a 360 day year,
and in any event interest calculated with reference to the maximum rate
permitted by applicable law shall be calculated by multiplying the actual number
of days elapsed in such period by a daily rate based on a year of 365/366 days
(as applicable). Monthly Payments under this Note shall be applied first, to the
payment of interest and other costs and charges due in connection with this Note
or the Debt (as hereinafter defined), as Payee may determine in its sole
discretion, and the balance shall be applied toward the reduction of the
principal sum. All amounts due under this Note shall be payable without setoff,
counterclaim or any other deduction whatsoever.
The term "Applicable Interest Rate" means from the date of this Note
through and including the Maturity Date a rate of eight and 09/100ths percent
(8.09%) per annum.
<PAGE>
This Note is secured by, and Payee is entitled to the benefits of, the
Mortgage, the Assignment, the Security Agreement, the Environmental Agreement
and the other Loan Documents (hereinafter defined). The term "Mortgage" means
the Mortgage and Security Agreement dated the date hereof given by Maker for the
use and benefit of Payee covering the fee estate of Maker in certain premises as
more particularly described therein (the "Mortgaged Property"). The term "Other
Mortgages" means that certain Second Mortgage and Security Agreement of even
date herewith granted by JAGI Cleveland - Independence, LLC, a Delaware limited
partnership ("JAGI Independence"), to Payee and encumbering premises located in
the City of Independence, County of Cuyahoga, State of Ohio and other property
more particularly described therein (the "Independence Property"), that certain
Second Mortgage and Security Agreement of even date herewith granted by JAGI
Montrose West, LLC, a Delaware limited partnership ("JAGI Montrose), to Payee
and encumbering premises located in the Township of Copley, County of Summit,
State of Ohio and other property more particularly described therein (the
"Copley Property"), and that certain Second Mortgage and Security Agreement of
even date herewith granted by JAGI North Canton, LLC, a Delaware limited
partnership ("JAGI Canton"), to Payee and encumbering premises located in the
Township of Jackson, County of Stark, State of Ohio and other property more
particularly described therein (the "Jackson Property"). The Independence
Property, the Copley Property, and the Jackson Property sometimes collectively
are referred to as the "Other Properties"). The term "Assignment" means the
Assignment of Leases and Rents of even date herewith executed by Maker in favor
of Payee. The term "Security Agreement" means the Security Agreement of even
date herewith executed by Maker in favor of Payee covering a security interest
in all collateral as more particularly described therein. The term
"Environmental Agreement" means the Environmental Liabilities Agreement of even
date herewith executed by Maker in favor of Payee. The term "Loan Agreement"
means the Loan Agreement of even date herewith by and among Payee, Borrower,
JAGI Independence, JAGI Montrose, and JAGI Canton. The term "Loan Documents"
refers collectively to this Note, the Loan Agreement, the Mortgage, the Other
Mortgages, the Assignment, the Security Agreement, the Environmental Agreement
and any and all other documents executed in connection with this Note or now or
hereafter executed by Maker and/or others and by or in favor of Payee, which
wholly or partially secure or guarantee payment of this Note or pertain to
indebtedness evidenced by this Note.
If any installment payable under this Note (including the final installment
due on the Maturity Date) is not received by Payee within five (5) days after
the date on which it is due (without regard to any applicable cure and/or notice
period), Maker shall pay to Payee upon demand an amount equal to the lesser of
(a) five percent (5%) of such unpaid sum or (b) the maximum amount permitted by
applicable law to defray the expenses incurred by Payee in handling and
processing such delinquent payment and to compensate Payee for the loss of the
use of such delinquent payment, and such amount shall be secured by the Loan
Documents. The term "Debt" means, collectively, (i) the unpaid principal balance
of and the accrued but unpaid interest on this Note, (ii) all other sums due,
payable or reimbursable to Payee under the Loan Documents (including, without
limitation, sums due or payable by Maker for deposit into the Tax and Insurance
Escrow Fund [as defined in the Mortgage], the Replacement Escrow Fund [as
defined in the Mortgage], and any other escrows established or required under
the Loan Documents), and (iii) any and all other liabilities and obligations of
Maker under this Note or the other Loan Documents.
2
<PAGE>
So long as an Event of Default exists, Payee may, at its option, without
notice or demand to Maker, declare the Debt immediately due and payable. All
remedies hereunder, under the Loan Documents and at law or in equity shall be
cumulative. In the event that it should become necessary to employ counsel to
collect the Debt or to protect or foreclose the security for the Debt or to
defend against any claims asserted by Maker arising from or related to the Loan
Documents, Maker also agrees to pay to Payee on demand all costs of collection
or defense incurred by Payee, including reasonable attorneys' fees for the
services of counsel whether or not suit be brought.
Upon the occurrence of an Event of Default (remaining uncured after the
giving of any notice and the expiration of any cure period expressly provided
for in the Mortgage as a condition precedent to the exercise of remedies
thereunder) Maker shall pay interest on the entire unpaid principal sum and any
other amounts due under the Loan Documents at the rate equal to the lesser of
(a) the maximum rate permitted by applicable law, or (b) the greater of (i) five
percent (5%) above the Applicable Interest Rate or (ii) five percent (5%) above
the Prime Rate (hereinafter defined), in effect at the time of the occurrence of
the Event of Default (the "Default Rate"). The term "Prime Rate" means the prime
rate reported in the Money Rates section of The Wall Street Journal. In the
event that The Wall Street Journal should cease or temporarily interrupt
publication, the term "Prime Rate" shall mean the daily average prime rate
published in another business newspaper, or business section of a newspaper, of
national standing and general circulation chosen by Payee. In the event that a
prime rate is no longer generally published or is limited, regulated or
administered by a governmental or quasi-governmental body, then Payee shall
select a comparable interest rate index which is readily available and
verifiable to Maker but is beyond Payee's control. The Default Rate shall be
computed from the occurrence of the Event of Default until the actual receipt
and collection of a sum of money determined by Payee to be sufficient to cure
the Event of Default. Amounts of interest accrued at the Default Rate shall
constitute a portion of the Debt, and shall be deemed secured by the Loan
Documents. This clause, however, shall not be construed as an agreement or
privilege to extend the date of the payment of the Debt, nor as a waiver of any
other right or remedy accruing to Payee by reason of the occurrence of any Event
of Default.
The principal balance of this Note may not be prepaid in whole or in part
(except with respect to the application of casualty or condemnation proceeds)
until after the Permitted Prepayment Date (hereinafter defined). At any time
after the date occurring three years after the first scheduled payment date
under this Note (the "Permitted Prepayment Date") and provided no Event of
Default exists, (a) Maker may voluntarily defease all of the Debt provided that
the conditions set forth in the Loan Agreement with respect to full defeasance
are satisfied, and (b) Maker shall defease that portion of the Debt, if any,
required by the terms of the Loan Agreement to be defeased in connection with
(i) the voluntary defeasance of any one or more of the Other Notes (defined in
the Mortgage), and (ii) the transfer of the Mortgaged Property to a transferee
who assumes the obligations of Maker under the Loan Documents as permitted by
Section 12(c) of the Mortgage and by the terms of the Loan Agreement (each of
the partial defeasances referred to in this clause (b) being referred to as a
"Required Ancillary Partial Defeasance"). Any such defeasance (hereinafter, a
"Defeasance Event") may be accomplished only by providing Payee with Defeasance
Collateral (as defined below) that produce payments which replicate the
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Scheduled Defeasance Payments (as defined below). Each Defeasance Event by the
Maker shall be subject to the satisfaction of the following conditions
precedent:
(1) Maker shall provide not less than thirty (30) days prior written
notice to Payee specifying a regularly scheduled payment date (the
"Defeasance Date") on which the Defeasance Event is to occur. Such notice
shall indicate the principal amount of the Note to be defeased;
(2) Maker shall pay to Payee all accrued and unpaid interest on the
principal balance of the Note to but not including the Defeasance Date. If
for any reason the Defeasance Date is not a regularly scheduled payment
date, the Maker shall also pay interest that would have accrued on the Note
through the next regularly scheduled payment date;
(3) Maker shall pay to Payee all other sums, not including scheduled
interest or principal payments, due to Payee under the Note, the Mortgage,
and the other Loan Documents;
(4) Maker shall pay to Payee the principal amount of the Note to be
defeased together with an additional amount (the "Yield Maintenance
Premium") such that the aggregate amount (the "Defeasance Deposit") is
sufficient to purchase direct, non-callable obligations of the United
States of America (the "Defeasance Collateral") that provide payments on or
prior, but as close as possible, to all successive scheduled payment dates
after the Defeasance Date upon which interest and/or principal payments are
due under the Note (including the amounts due on the Maturity Date), in the
case of a Defeasance Event for the entire outstanding principal balance of
the Note, or the Defeased Note (as defined below), in the case of a
Defeasance Event for only a portion of the outstanding principal balance of
the Note, as applicable, and in amounts equal to the scheduled payments due
on such dates and on the Maturity Date under the Note or the Defeased Note,
as applicable (the "Scheduled Defeasance Payments"), for the Defeasance
Event;
(5) In the event only a portion of the principal balance of the Note
is the subject of the Defeasance Event, Maker shall prepare all necessary
documents to amend and restate the Note and issue two substitute notes, one
note having a principal balance equal to the defeased portion of the
original Note (the "Defeased Note") and the other note having a principal
balance equal to the undefeased portion of the Note (the "Undefeased
Note"). The Defeased Note and Undefeased Note shall have identical terms as
the Note except for the principal balance. A Defeased Note cannot be the
subject of any further Defeasance Event;
(6) Maker shall deliver to Payee on or prior to the Defeasance Date:
(A) an executed security agreement, in form and substance
satisfactory to Payee, creating a first priority lien on the
Defeasance Deposit and the Defeasance Collateral (the "Defeasance
Security Agreement");
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(B) an executed security agreement, in form and substance
satisfactory to the holders of the Other Notes, creating a lien on the
Defeasance Deposit and the Defeasance Collateral (the "Subordinate
Defeasance Security Agreement") in their favor and subordinate only to
the lien of the Defeasance Security Agreement, which Subordinate
Defeasance Security Agreement shall provide on a pro rata basis
security for repayment of the Other Notes.
(C) an opinion of counsel for Maker in form and substance
satisfactory to Payee and the holders of the Other Notes in their sole
discretion stating, among other things, that Maker has legally and
validly transferred and assigned the Defeasance Collateral and all
obligations, rights and duties under and to the Note or Defeased Note
(as applicable) to the Successor Borrower (as defined below), that
Payee has a perfected first priority security interest in the
Defeasance Deposit and the Defeasance Collateral delivered by Maker,
that the holders of the Other Notes have a perfected security interest
in the Defeasance Deposit and the Defeasance Collateral subject and
subordinate only to the first priority security interest of Payee
therein under the Defeasance Security Agreement, and that any REMIC
Trust or REMIC Trusts formed pursuant to Section 860D of the Internal
Revenue Code of 1986, as amended from time to time, or any successor
statute (the "Code") that holds the Note and the Other Notes will not
fail to maintain its status as a "real estate mortgage investment
conduit" (a "REMIC") within the meaning of Section 860D of the Code as
a result of such Defeasance Event;
(D) a certificate of Maker certifying that all requirements
relating to defeasance set forth in this Note, the Loan Agreement, and
any other Loan Documents have been satisfied;
(E) such other certificates, documents or instruments as Payee
may reasonably request; and
(7) Maker shall pay all costs and expenses of Payee and the holders of
the Other Notes incurred in connection with the Defeasance Event, including
any costs and expenses associated with a release of the lien of the
Mortgage as provided below as well as reasonable accountants' and
attorneys' fees and expenses.
In connection with each Defeasance Event, Maker hereby appoints Payee as
its agent and attorney-in-fact for the purpose of using the Defeasance Deposit
to purchase the Defeasance Collateral. Payee shall receive written confirmation
from independent accountants as to the sufficiency of such Defeasance Collateral
to provide the payments as described above. Maker, pursuant to the Defeasance
Security Agreement or other appropriate document, shall authorize and direct
that the payments received from the Defeasance Collateral may be made directly
to the account maintained by, or for the benefit of, Payee (unless otherwise
directed by Payee) and applied to satisfy the obligations of Maker or Successor
Borrower under the Note, the Defeased Note, or the Other Notes, as applicable.
Any portion of the Defeasance Deposit in excess of the amount necessary to
purchase the Defeasance Collateral and satisfy Maker's obligations shall be
remitted to Maker (or to the holders of the Other Notes if required by the terms
of the Subordinate Defeasance Security Agreement).
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Except as set forth in this Note, no repayment, prepayment or defeasance of
all or any portion of the Note shall cause, give rise to a right to require, or
otherwise result in, the release of the lien of the Mortgage on the Mortgaged
Property.
If the Maker has elected to defease the entire Note and the conditions
precedent listed above and all other terms and conditions set forth herein have
been satisfied, the Mortgaged Property shall be released from the lien of the
Mortgage and the Defeasance Collateral, pledged pursuant to the Defeasance
Security Agreement, shall be the sole source of collateral securing the Note.
In connection with the release of the lien, the Maker shall submit to
Payee, not less than thirty (30) days prior to the Defeasance Date, releases for
execution by Payee of the Mortgage and related Loan Documents constituting a
lien upon, or security interest in, the Mortgaged Property and releases of the
Second Mortgage and the Second Security Agreement (as both are defined in the
Loan Agreement) constituting a lien upon, or a security interest in, the
Mortgaged Property. Such releases shall be in form appropriate in the
jurisdiction in which the Mortgaged Property is located and satisfactory to
Payee and the holders of the Other Notes in their sole discretion. In addition,
Maker shall pay all recording costs, fees and expenses associated with recording
the release of lien. Maker shall provide all other documentation Payee and the
holders of the Other Notes reasonably requires to be delivered by Maker in
connection with such releases, together with a certificate certifying that such
documentation (i) is in compliance with all applicable laws, and (ii) will
effect such release in accordance with the terms of this Note.
Payee, at Maker's expense, may form or, at Payee's request, Maker shall
form a special -purpose bankruptcy remote entity (the "Successor Borrower") to
be the obligor under the Note or the Defeased Note, as applicable. Maker shall,
at Payee's request, assign all of its obligations and rights under the Note to
the Successor Borrower. In connection therewith, the Successor Borrower shall
execute an assumption agreement in form and substance satisfactory to Payee in
its sole discretion pursuant to which it shall assume Maker's obligations under
the Note or the Defeased Note, as applicable, the Defeasance Security Agreement,
and the Subordinate Defeasance Security Agreement, and Maker and any guarantors
shall be released from their obligations with respect to such assumed documents.
The sole assets of the Successor Borrower shall be Defeasance Collateral. In
connection with such assignment and assumption, Maker shall:
(1) deliver to Payee and the holders of the Other Notes an opinion of
counsel in form and substance and delivered by counsel satisfactory to
Payee in its sole discretion stating, among other things, that such
assumption agreement is enforceable against Maker and the Successor
Borrower in accordance with its terms, that the Note, the Defeasance
Security Agreement, the Subordinate Defeasance Security Agreement, and any
other documents executed in connection with such defeasance are enforceable
against the Successor Borrower in accordance with their respective terms
and that the delivery of the Defeasance Deposits and transfer of the
Defeasance Collateral to Successor Borrower does not constitute a
fraudulent conveyance or a preference payment under applicable bankruptcy
law;
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(2) pay all costs and expenses incurred by Payee, the holders of the
Other Notes, or their agents in connection with such assignment and
assumption (including, without limitation, any fees and disbursements of
legal counsel); and
(3) pay $1,000 to the Successor Borrower as consideration for assuming
the obligations under the Note, the Defeasance Security Agreement, and the
Subordinate Defeasance Security Agreement and a defeasance processing fee
in an amount equal to one-half of one percent (.5%) of the original
outstanding principal balance of the Note but in no event less than (a)
$10,000 or greater than (b) $20,000, to the servicer of the Note; provided,
notwithstanding anything to the contrary herein or in the Loan Documents,
no other assumption fee shall be payable by Maker in connection with such
assumption.
If, prior to the Maturity Date and following the occurrence of any Event of
Default, Maker shall tender payment of an amount sufficient to satisfy all or
any portion of the Debt, such tender by Maker shall be deemed to be a voluntary
prepayment under this Note in the amount tendered and Maker shall pay, in
addition to the Debt, an amount equal to the Yield Maintenance Premium that
would be required if a Defeasance Event had occurred, together with all other
amounts Maker is obligated to pay if a Defeasance Event had occurred. If a
complete or partial prepayment results from the application to the Debt of the
casualty or condemnation proceeds from the Mortgaged Property or as the result
of a Required Ancillary Partial Defeasance, no prepayment consideration will be
imposed. Partial prepayments of principal resulting from the application of
casualty or insurance proceeds to the Debt or as the result of a Required
Ancillary Partial Defeasance shall not change the amounts of subsequent monthly
installments nor change the dates on which such installments are due, unless
Payee shall otherwise require in writing. Notwithstanding any provision herein
to the contrary, Maker shall have the additional privilege to prepay the entire
principal balance of this Note (together with any other sums constituting the
Debt) on any scheduled payment date during the three (3) months preceding the
Maturity Date (the "Open Prepayment Period") without any fee or consideration
for such privilege. If any such notice of prepayment is given, the principal
balance of this Note and the other sums required under this paragraph shall be
due and payable on the selected prepayment date.
It is expressly stipulated and agreed to be the intent of Maker and
Payee at all times to comply with applicable state law or applicable United
States federal law (to the extent that it permits Payee to contract for, charge,
take, reserve or receive a greater amount of interest than under state law) and
that this section shall control every other covenant and agreement in this Note
and the other Loan Documents. If the applicable law (state or federal) is ever
judicially interpreted so as to render usurious any amount called for under this
Note or under any of the other Loan Documents, or contracted for, charged,
taken, reserved or received with respect to the indebtedness evidenced by this
Note and the other Loan Documents, or if Payee's exercise of the option to
accelerate the maturity of this Note, or if any prepayment by Maker results in
Maker having paid any interest in excess of that permitted by applicable law,
then it is Maker's and Payee's express intent that all excess amounts
theretofore collected by Payee be credited on the principal balance of this Note
(or, if this Note has been or would thereby be paid in full, refunded to Maker),
and the provisions of this Note and the other Loan Documents immediately be
deemed reformed and the amounts thereafter collectible hereunder and thereunder
reduced, without the necessity of the execution of any new document, so as to
comply with the applicable law, but so as to permit the recovery of the fullest
amount otherwise called for hereunder and
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thereunder. All sums paid or agreed to be paid to Payee for the use, forbearance
and detention of the indebtedness evidenced hereby and by the other Loan
Documents shall, to the extent permitted by applicable law, be amortized,
prorated, allocated and spread throughout the full term of such indebtedness
until payment in full so that the rate or amount of interest on account of such
indebtedness does not exceed the maximum rate permitted under applicable law
from time to time in effect and applicable to the indebtedness evidenced hereby
for so long as such indebtedness remains outstanding. Notwithstanding anything
to the contrary contained herein or in any of the other Loan Documents, it is
not the intention of Payee to accelerate the maturity of any interest that has
not accrued at the time of such acceleration or to collect unearned interest at
the time of such acceleration.
Except as specifically provided in the Loan Documents, Maker and any
endorsers, sureties or guarantors hereof jointly and severally waive presentment
and demand for payment, notice of intent to accelerate maturity, notice of
acceleration of maturity, protest and notice of protest and non-payment, all
applicable exemption rights, valuation and appraisement, notice of demand, and
all other notices in connection with the delivery, acceptance, performance,
default or enforcement of the payment of this Note and the bringing of suit and
diligence in taking any action to collect any sums owing hereunder or in
proceeding against any of the rights and collateral securing payment hereof.
Maker and any surety, endorser or guarantor hereof agree (i) that the time for
any payments hereunder may be extended from time to time without notice and
consent, (ii) to the acceptance of further collateral, (iii) the release of any
existing collateral for the payment of this Note, (iv) to any and all renewals,
waivers or modifications that may be granted by Payee with respect to the
payment or other provisions of this Note, and/or (v) that additional makers,
endorsers, guarantors or sureties may become parties hereto all without notice
to them and without in any manner affecting their liability under or with
respect to this Note. No extension of time for the payment of this Note or any
installment hereof shall affect the liability of Maker under this Note or any
endorser or guarantor hereof even though the Maker or such endorser or guarantor
is not a party to such agreement.
Failure of Payee to exercise any of the options granted herein to Payee
upon the happening of one or more of the events giving rise to such options
shall not constitute a waiver of the right to exercise the same or any other
option at any subsequent time in respect to the same or any other event. The
acceptance by Payee of any payment hereunder that is less than payment in full
of all amounts due and payable at the time of such payment shall not constitute
a waiver of the right to exercise any of the options granted herein to Payee at
that time or at any subsequent time or nullify any prior exercise of any such
option without the express written acknowledgment of the Payee.
Notwithstanding anything in the Loan Documents to the contrary, but subject
to the qualifications below, Payee and Maker agree that:
(A) Maker shall be liable upon the Debt and for the other obligations
arising under the Loan Documents to the full extent (but only to the extent) of
the security therefor, the same being all properties (whether real or personal),
rights, estates and interests now or at any time hereafter securing the payment
of the Debt and/or the other obligations of Maker under the Loan Documents
(collectively with the Mortgaged Property, the "Security Property"), provided,
however, in the event (i) of fraud or material misrepresentation by Maker or
guarantors in
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connection with the loan evidenced by this Note, or (ii) the first full monthly
payment on the Note is not paid when due, the limitation on recourse set forth
in this Section (A) will be null and void and completely inapplicable, and this
Note shall be with full recourse to Maker;
(B) if a default occurs in the timely and proper payment of all or any part
of the Debt, any judicial proceedings brought by Payee against Maker shall be
limited to the preservation, enforcement and foreclosure, or any thereof, of the
liens, security titles, estates, assignments, rights and security interests now
or at any time hereafter securing the payment of the Debt and/or the other
obligations of Maker under the Loan Documents, and no attachment, execution or
other writ of process shall be sought, issued or levied upon any assets,
properties or funds of Maker other than the Security Property, except with
respect to the liability described in Section (A) above and in Section (C)
below; and
(C) in the event of a foreclosure of such liens, security titles, estates,
assignments, rights or security interests securing the payment of the Debt, no
judgment for any deficiency upon the Debt shall be sought or obtained by Payee
against Maker, except with respect to the liability described in Section (A)
above and below in this Section (C); provided that, notwithstanding the
foregoing provisions of this section, nothing contained therein shall in any
manner or way release, affect or impair the right of Payee to recover, and Maker
shall be fully and personally liable and subject to legal action for any loss,
cost, expense, damage, claim or other obligation (including without limitation
reasonable attorneys' fees and court costs) incurred or suffered by Payee
arising out of or in connection with the following:
1. any breach of the Environmental Agreement, including the
indemnification provisions contained therein;
2. Maker's failure to obtain Payee's prior written consent to (a) any
subordinate financing or any other encumbrance on the Mortgaged Property,
or (b) any transfer of the Mortgaged Property or majority ownership in
Maker in violation of the Mortgage;
3. any litigation or other legal proceeding related to the Debt that
delays or impairs Payee's ability to preserve, enforce or foreclose its
lien on the Security Property, including, but not limited to, the filing of
a voluntary or involuntary petition concerning Maker under 11 U.S.C. ss.
101 et seq. (the "Bankruptcy Code"), in which action a claim, counterclaim,
or defense is asserted against Payee, other than any litigation or other
legal proceeding in which a final, non-appealable judgment for money
damages or injunctive relief is entered against Payee;
4. Maker's failure to pay required taxes, assessments, and insurance
premiums payable with respect to the Mortgaged Property or to maintain the
required escrows therefor, to the extent that monies are not paid by Maker
in escrow for the payment of such amounts, except for any amounts
applicable to the period after foreclosure of Payee's lien on the Mortgaged
Property, or the delivery by Maker of a deed to the Mortgaged Property in
lieu of foreclosure (which deed has been accepted by Payee in writing), or
the appointment of a receiver for the Mortgaged Property;
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<PAGE>
5. the gross negligence or willful misconduct of Maker, its agents,
affiliates, officers or employees which causes or results in a diminution,
or loss of value, of the Security Property that is not reimbursed by
insurance or which gross negligence or willful misconduct exposes Payee to
claims, liability or costs of defense in any litigation or other legal
proceeding;
6. the seizure or forfeiture of the Security Property, or any portion
thereof, or Payee's interest therein, resulting from criminal wrongdoing by
any person or entity other than Payee under any federal, state or local
law;
7. (a) any physical waste of the Mortgaged Property caused by the
intentional or grossly negligent act(s) or omission(s) of Maker, its
agents, affiliates, officers and employees, (b) the failure by Maker to
maintain, repair or restore any part of the Mortgaged Property as may be
required by the Mortgage or any of the other Loan Documents to the extent
of all gross revenues that have been generated by the Mortgaged Property
following the date which is eighteen (18) months prior to notice to Maker
from Payee of such failure to maintain, repair or restore any part of the
Mortgaged Property and that have not been applied to pay any portion of the
Debt, reasonable and customary operating expenses and capital expenditures
for the Mortgaged Property paid to third parties not affiliated (directly
or indirectly) with Maker, taxes and insurance premiums for the Mortgaged
Property and escrows deposited with Payee, or (c) the removal or disposal
of any portion of the Mortgaged Property after an Event of Default under
the Loan Documents to the extent such Mortgaged Property is not replaced by
Maker with like property of equivalent value, function and design;
8. Maker's misapplication or conversion of any insurance proceeds paid
by reason of any loss, damage or destruction to the Mortgaged Property and
any awards or amounts received in connection with the condemnation of all
or a portion of the Mortgaged Property and not used by Maker for
restoration or repair of the Mortgaged Property;
9. Maker's failure to pay in accordance with the terms of the Mortgage
any charges for labor or materials or other charges for work performed or
materials furnished prior to foreclosure that can create liens on any
portion of the Mortgaged Property, to the extent of the amount rightfully
claimed by the lien claimant, or found in any legal proceeding to be owed
to the lien claimant, and not so paid;
10. Maker's failure to deliver any security deposits collected with
respect to the Mortgaged Property to Payee or any other party entitled to
receive such security deposits under the Loan Documents, following an Event
of Default; and
11. any rents (including advanced or prepaid rents), issues, profits,
accounts or other amounts generated by or related to the Mortgaged Property
attributable to, or accruing after an Event of Default, which amounts were
collected by Maker or its property manager and not turned over to the Payee
or used to pay unaffiliated
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third parties for reasonable and customary operating expenses and capital
expenditures for the Mortgaged Property, taxes and insurance premiums with
respect to the Mortgaged Property and any other amounts required to be paid
under the Loan Documents with respect to the Mortgaged Property.
Nothing contained in the foregoing Sections (A), (B) or (C) shall (1) be
deemed to be a release or impairment of the Debt or the lien of the Loan
Documents upon the Security Property, or (2) preclude Payee from foreclosing
under the Loan Documents in case of any default or from enforcing any of the
other rights of Payee, including naming Maker as a party defendant in any action
or suit for foreclosure and sale under the Mortgage, or obtaining the
appointment of a receiver, except as stated in this section, or (3) limit or
impair in any way whatsoever the Guaranty (the "Guaranty") of even date executed
and delivered in connection with the indebtedness evidenced by this Note or
release, relieve, reduce, waive or impair in any way whatsoever, any obligation
of any party to the Guaranty.
Nothing herein shall be deemed to be a waiver of any right which Payee may
have under Sections 506(a), 506(b), 1111(b) or any other provisions of the
Bankruptcy Code to file a claim for the full amount of the Debt secured by the
Loan Documents or to require that all collateral shall continue to secure all of
the Debt owing to Payee in accordance with this Note and the other Loan
Documents.
Maker (and the undersigned representative of Maker, if any) represents that
Maker has full power, authority and legal right to execute, deliver and perform
its obligations pursuant to this Note and the other Loan Documents and that this
Note and the other Loan Documents constitute legal, valid and binding
obligations of Maker. Maker further represents that the loan evidenced by the
Loan Documents was made for business or commercial purposes and not for
personal, family or household use.
All notices or other communications required or permitted to be given
pursuant hereto shall be given in the manner and be effective as specified in
the Mortgage, directed to the parties at their respective addresses as provided
therein.
References to particular sections of the Loan Documents shall be deemed
references to such sections as affected by other provisions of the Loan
Documents relating thereto.
Payee shall have the unrestricted right at any time or from time to time to
sell this Note and the loan evidenced by this Note and the Loan Documents or
participation interests therein. Maker shall execute, acknowledge and deliver
any and all instruments requested by Payee to satisfy such purchasers or
participants that the unpaid indebtedness evidenced by this Note is outstanding
upon the terms and provisions set out in this Note and the other Loan Documents.
To the extent, if any specified in such assignment or participation, such
assignee(s) or participant(s) shall have the rights and benefits with respect to
this Note and the other Loan Documents as such assignee(s) or participant(s)
would have if they were the Payee hereunder.
MAKER HEREBY AGREES NOT TO ELECT A TRIAL BY JURY OF ANY ISSUE TRIABLE OF
RIGHT BY JURY, AND WAIVES ANY RIGHT TO TRIAL BY JURY FULLY TO THE EXTENT THAT
ANY SUCH RIGHT SHALL NOW OR
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HEREAFTER EXIST WITH REGARD TO THIS NOTE OR THE OTHER LOAN DOCUMENTS, OR ANY
CLAIM, COUNTERCLAIM OR OTHER ACTION ARISING IN CONNECTION THEREWITH INCLUDING,
BUT NOT LIMITED TO THOSE RELATING TO (A) ALLEGATIONS THAT A PARTNERSHIP EXISTS
BETWEEN PAYEE AND MAKER; (B) USURY OR PENALTIES OR DAMAGES THEREFOR; (C)
ALLEGATIONS OF UNCONSCIONABLE ACTS, DECEPTIVE TRADE PRACTICE, LACK OF GOOD FAITH
OR FAIR DEALING, LACK OF COMMERCIAL REASONABLENESS, OR SPECIAL RELATIONSHIPS
(SUCH AS FIDUCIARY, TRUST OR CONFIDENTIAL RELATIONSHIP); (D) ALLEGATIONS OF
DOMINION, CONTROL, ALTER EGO, INSTRUMENTALITY, FRAUD, REAL ESTATE FRAUD,
MISREPRESENTATION, DURESS, COERCION, UNDUE INFLUENCE, INTERFERENCE OR
NEGLIGENCE; (E) ALLEGATIONS OF TORTIOUS INTERFERENCE WITH PRESENT OR PROSPECTIVE
BUSINESS RELATIONSHIPS OR OF ANTITRUST; OR (F) SLANDER, LIBEL OR DAMAGE TO
REPUTATION. THIS WAIVER OF RIGHT TO TRIAL BY JURY IS GIVEN KNOWINGLY AND
VOLUNTARILY BY MAKER, AND IS INTENDED TO ENCOMPASS INDIVIDUALLY EACH INSTANCE
AND EACH ISSUE AS TO WHICH THE RIGHT TO A TRIAL BY JURY WOULD OTHERWISE ACCRUE.
PAYEE IS HEREBY AUTHORIZED TO FILE A COPY OF THIS PARAGRAPH IN ANY PROCEEDING AS
CONCLUSIVE EVIDENCE OF THIS WAIVER BY MAKER.
THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF
THE STATE IN WHICH THE REAL PROPERTY ENCUMBERED BY THE MORTGAGE IS LOCATED
(WITHOUT REGARD TO ANY CONFLICT OF LAWS PRINCIPLES) AND THE APPLICABLE LAWS OF
THE UNITED STATES OF AMERICA. MAKER HEREBY IRREVOCABLY SUBMITS TO THE
JURISDICTION OF ANY COURT OF COMPETENT JURISDICTION LOCATED IN THE STATE IN
WHICH THE MORTGAGED PROPERTY IS LOCATED IN CONNECTION WITH ANY PROCEEDING OUT OF
OR RELATING TO THIS NOTE.
THE PROVISIONS OF THIS NOTE AND THE LOAN DOCUMENTS MAY BE AMENDED OR
REVISED ONLY BY AN INSTRUMENT IN WRITING SIGNED BY THE MAKER AND PAYEE. THIS
NOTE AND ALL THE OTHER LOAN DOCUMENTS EMBODY THE FINAL, ENTIRE AGREEMENT OF
MAKER AND PAYEE AND SUPERSEDE ANY AND ALL PRIOR COMMITMENTS, AGREEMENTS,
REPRESENTATIONS AND UNDERSTANDINGS, WHETHER WRITTEN OR ORAL, RELATING TO THE
SUBJECT MATTER HEREOF AND THEREOF AND MAY NOT BE CONTRADICTED OR VARIED BY
EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OR DISCUSSIONS
OF MAKER AND PAYEE. THERE ARE NO ORAL AGREEMENTS BETWEEN MAKER AND PAYEE.
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Executed as of the day and year first above written.
MAKER:
JAGI CLEVELAND - HUDSON, LLC, a Delaware
limited liability company
By Janus American Group, Inc., a Delaware
corporation
By /s/ JAMES E. BISHOP
------------------------------------
Name: James E. Bishop
Title: President
13
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<TABLE>
<CAPTION>
SCHEDULE TO EXHIBIT 10.26
OTHER NOTES (FIXED RATE)
I.
<S> <C>
- ------------------------------------------------------------ ---------------------------------------------------------
Name of Maker JAGI Cleveland - Independence, LLC, a Delaware limited
liability company
- ------------------------------------------------------------ ---------------------------------------------------------
Amount of Note $21,800,000
- ------------------------------------------------------------ ---------------------------------------------------------
Monthly Payment $169,557.73
- ------------------------------------------------------------ ---------------------------------------------------------
II.
- ------------------------------------------------------------ ---------------------------------------------------------
Name of Maker JAGI Montrose West, LLC, a Delaware limited liability
company
- ------------------------------------------------------------ ---------------------------------------------------------
Amount of Note $3,500,000
- ------------------------------------------------------------ ---------------------------------------------------------
Monthly Payment $27,222.57
- ------------------------------------------------------------ ---------------------------------------------------------
III.
- ------------------------------------------------------------ ---------------------------------------------------------
Name of Maker JAGI North Canton, LLC, a Delaware limited liability
company
- ------------------------------------------------------------ ---------------------------------------------------------
Amount of Note $5,400,000
- ------------------------------------------------------------ ---------------------------------------------------------
Monthly Payment $42,000.54
- ------------------------------------------------------------ ---------------------------------------------------------
</TABLE>
Loan No. 400030964
MORTGAGE AND SECURITY AGREEMENT
THIS MORTGAGE AND SECURITY AGREEMENT, (as the same may from time to time be
extended, renewed or modified, the "Mortgage"), is granted as of the 14 day of
August 1998, by JAGI CLEVELAND - HUDSON, LLC, a Delaware limited liability
company ("Mortgagor"), having its principal place of business at 8534 East
Kemper Road, Cincinnati, Ohio 45249, to AMRESCO CAPITAL, L.P., a Delaware
limited partnership ("Mortgagee"), having its principal place of business at 700
North Pearl Street, Suite 2400, LB 342, Dallas, Texas 75201-7424, Attention:
Loan Servicing, the mortgagee hereunder.
To secure (i) the payment of an indebtedness (the "Loan") in the original
principal sum of Thirteen Million Three Hundred Thousand and No/100 Dollars
($13,300,000), lawful money of the United States of America, to be paid with
interest according to a certain note dated the date hereof made by Mortgagor to
Mortgagee (the note together with all extensions, renewals or modifications
thereof being hereinafter collectively called the "Note"), and all other sums,
liabilities and obligations constituting the Debt (as defined in the Note), (ii)
the payment of all sums advanced or incurred by Mortgagee contemplated hereby,
and (iii) the performance of the obligations and covenants herein contained,
Mortgagor has mortgaged, given, granted, bargained, sold, alienated, enfeoffed,
conveyed, confirmed, warranted, pledged, assigned, and hypothecated and by these
presents does hereby mortgage, give, grant, bargain, sell, alien, enfeoff,
convey, confirm, warrant, pledge, assign and hypothecate unto Mortgagee the real
property described in Exhibit A attached hereto (the "Premises") and the
buildings, structures, fixtures, additions, enlargements, extensions,
modifications, repairs, replacements and improvements now or hereafter located
thereon (the "Improvements");
TOGETHER WITH: all right, title, interest and estate of Mortgagor now
owned, or hereafter acquired, in and to the following property, rights,
interests and estates (the Premises, the Improvements together with the
following property, rights, interests and estates being hereinafter described
are collectively referred to herein as the "Mortgaged Property"):
(a) all easements, rights-of-way, strips and gores of land, streets,
ways, alleys, passages, sewer rights, water, water courses, water rights
and powers, air rights and development rights, and all estates, rights,
titles, interests, privileges, liberties, tenements, hereditaments and
appurtenances of any nature whatsoever, in any way belonging, relating or
pertaining to the Premises and the Improvements and the reversion and
reversions, remainder and remainders, and all land lying in the bed of any
street, road or avenue, opened or proposed, in front of or adjoining the
Premises, to the center line thereof and all the estates, rights, titles,
interests, dower and rights of dower, curtesy and rights of curtesy,
property, possession, claim and demand whatsoever, both at law and in
equity, of Mortgagor of, in and to the Premises and the Improvements and
every part and parcel thereof, with the appurtenances thereto;
(b) all machinery, furnishings, equipment, fixtures (including but not
limited to all heating, air conditioning, plumbing, lighting,
communications and elevator fixtures) and other personal property of every
kind and nature (hereinafter collectively called the "Equipment"), whether
tangible or intangible, whatsoever owned by Mortgagor, or in which
Mortgagor has or shall have an interest, now or hereafter located upon the
Premises and the Improvements, or appurtenant thereto, and usable in
connection with the present or future operation and occupancy of the
Premises and the Improvements, including without limitation, beds, bureaus,
chiffonniers, chests, chairs, desks, lamps, mirrors, bookcases, tables,
rugs, carpeting, drapes, draperies, curtains, shades, venetian blinds,
screens, paintings, hangings, pictures, divans, couches, luggage carts,
luggage racks, stools, sofas, chinaware, linens, pillows, blankets,
glassware, foodcarts, cookware, dry cleaning facilities, dining room
wagons, keys or other entry systems, bars, bar fixtures, liquor and other
drink dispensers, icemakers, radios, television sets, cable t.v. equipment,
intercom and paging equipment, electric and electronic equipment, dictating
equipment, private telephone systems, medical equipment, potted plants,
heating, lighting and plumbing fixtures, fire prevention and extinguishing
apparatus, fittings, plants, apparatus, stoves, ranges, refrigerators,
cutlery and dishes, laundry machines, tools, machinery, engineers, dynamos,
motors, boilers, incinerators, washers and dryers, other customary
<PAGE>
hotel equipment, and all building equipment, materials and supplies of any
nature whatsoever owned by Mortgagor, or in which Mortgagor has or shall
have an interest, now or hereafter located upon the Premises and the
Improvements, or appurtenant thereto, or usable in connection with the
present or future operation, enjoyment and occupancy of the Premises and
the Improvements, including the proceeds of any sale or transfer of the
foregoing, and the right, title and interest of Mortgagor in and to any of
the Equipment 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 Mortgaged Property is located (the "Uniform Commercial
Code") superior in lien to the lien of this Mortgage;
(c) all awards or payments, including interest thereon, which may
heretofore and hereafter be made with respect to the Premises and the
Improvements, whether from the exercise of the right of eminent domain or
condemnation (including but not limited to any transfer made in lieu of or
in anticipation of the exercise of said rights), or for a change of grade,
or for any other injury to or decrease in the value of the Premises and
Improvements;
(d) all leases, subleases and other agreements affecting the use,
enjoyment or occupancy of the Premises and the Improvements heretofore or
hereafter entered into (including, without limitation, any and all security
interests, contractual liens and security deposits) (the "Leases") and all
income, rents, issues, profits and revenues (including all oil and gas or
other mineral royalties and bonuses) from the Premises and the
Improvements, including, without limitation, all revenues and credit card
receipts collected from guest rooms, restaurants, bars, meeting rooms,
banquet rooms and recreational facilities, all receivables, customer
obligations, installment payment obligations and other obligations now
existing or hereafter arising or created out of the sale, lease, sublease,
license, concession or other grant of the right of the use and occupancy of
property or rendering of services by Mortgagor or any operator or manager
of the hotel or the commercial space located in the Improvements or
acquired from others (including, without limitation, from the rental of any
office space, retail space, guest rooms or other space, halls, stores, and
offices, and deposits securing reservations of such space), license, lease,
sublease and concession fees and rentals, health club membership fees, food
and beverage wholesale and retail sales, service charges, vending machine
sales and proceeds, if any, from business interruption or other loss of
income insurance (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;
(e) all proceeds of and any unearned premiums on any insurance
policies covering the Mortgaged Property, including, without limitation,
the right to receive and apply the proceeds of any insurance, judgments, or
settlements made in lieu thereof, for damage to the Mortgaged Property;
(f) the right, in the name and on behalf of Mortgagor, to appear in
and defend any action or proceeding brought with respect to the Mortgaged
Property and to commence any action or proceeding to protect the interest
of Mortgagee in the Mortgaged Property;
(g) all accounts, escrows, documents, instruments, chattel paper,
claims, deposits and general intangibles, as the foregoing terms are
defined in the Uniform Commercial Code, and all contract rights,
franchises, books, contracts, certificates, records, plans, specifications,
permits, licenses (to the extent assignable), approvals, actions, and
causes of action which now or hereafter relate to, are derived from or are
used in connection with the Premises, or the use, operation, construction,
management, maintenance, occupancy or enjoyment thereof or the conduct of
any business or activities thereon (hereinafter collectively called the
"Intangibles"); and
(h) all refunds, rebates or credits in connection with a reduction in
real estate taxes and assessments charged against the Mortgaged Property as
a result of tax certiorari or any application or proceedings for reduction;
(i) 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; and
(j) any and all proceeds and products of any of the foregoing and any
and all other security and collateral of any nature whatsoever, now or
hereafter given for the repayment of the Debt and the performance of
Mortgagor's obligations under the Loan Documents (as defined in the Note),
including (without limitation) the Tax and Insurance Escrow Fund (hereafter
defined) and the Replacement Escrow Fund (hereafter defined), and all other
escrows established with Mortgagee by Mortgagor.
2
<PAGE>
TO HAVE AND TO HOLD the above granted and described Mortgaged Property unto
and to the use and benefit of Mortgagee and its successors and assigns, forever;
PROVIDED, HOWEVER, these presents are upon the express condition that, if
Mortgagor shall well and truly pay to Mortgagee the Debt at the time and in the
manner provided in the Note and this Mortgage and shall well and truly abide by
and comply with each and every covenant and condition set forth herein, in the
Note and in the other Loan Documents in a timely manner, these presents and the
estate hereby granted shall cease, terminate and be void;
AND Mortgagor represents and warrants to and covenants and agrees with
Mortgagee as follows:
1. Payment of Debt and Incorporation of Covenants, Conditions and
Agreements. Mortgagor will pay the Debt at the time and in the manner provided
in the Note and in this Mortgage. Mortgagor will duly and punctually perform all
of the covenants, conditions and agreements contained in the Note, this Mortgage
and the other Loan Documents all of which covenants, conditions and agreements
are hereby made a part of this Mortgage to the same extent and with the same
force as if fully set forth herein.
2. Warranty of Title. Mortgagor warrants that Mortgagor is the sole owner
of and has good, legal, marketable and insurable fee simple title to the
Mortgaged Property and has the full power, authority and right to execute,
deliver and perform its obligations under this Mortgage and to encumber,
mortgage, give, grant, bargain, sell, alienate, enfeoff, convey, confirm,
pledge, assign and hypothecate the same and that Mortgagor possesses an
unencumbered fee estate in the Premises and the Improvements and that it owns
the Mortgaged Property free and clear of all liens, encumbrances and charges
whatsoever except for those exceptions shown in the title insurance policy
insuring the lien of this Mortgage. This Mortgage is and will remain a valid and
enforceable first lien on and security interest in the Mortgaged Property,
subject only to said exceptions. Mortgagor shall forever warrant, defend and
preserve such title and the validity and priority of the lien of this Mortgage
and shall forever warrant and defend the same to Mortgagee against the claims of
all persons whomsoever. Notwithstanding the foregoing, Mortgagor may grant a
Second Mortgage and Security Agreement, subject and subordinate to the lien of
this Mortgage, as security for repayment of the Related Debt (hereinafter
defined).
3. Insurance. Mortgagor, at its sole cost and expense, will keep the
Mortgaged Property insured during the entire term of this Mortgage for the
mutual benefit of Mortgagor and Mortgagee against loss or damage by fire and
against loss or damage by other risks and hazards covered by a standard extended
coverage insurance policy and included within the classification "All Risks of
Physical Loss" including, but not limited to, riot and civil commotion,
vandalism, malicious mischief, burglary and theft. Such insurance shall be in an
amount (i) equal to the greater of (a) or (b), as follows: (a) the lesser of the
then full replacement cost of the Improvements and Equipment, without deduction
for physical depreciation, or the outstanding amount of the Debt, or (b) the
amount specified in the agreed value clause of the policy, which must be in an
amount required by the insurer to suspend any co-insurance clause, and (ii) with
extended coverage in amounts sufficient such that the insurer would not deem
Mortgagor a co-insurer under said policies. The policies of insurance carried in
accordance with this paragraph shall be paid annually in advance and shall
contain the "Replacement Cost Endorsement" with a waiver of depreciation.
(a) Mortgagor, at its sole cost and expense, for the mutual benefit of
Mortgagor and Mortgagee, shall also obtain and maintain during the entire
term of this Mortgage the following policies of insurance:
i) Flood insurance if any part of the Mortgaged Property now (or
subsequently determined to be) is located in an area identified by the
Federal Emergency Management Agency as an area having special flood hazards
and in which flood insurance has been made available under the National
Flood Insurance Act of 1968, the Flood Disaster Protection Act of 1973, or
the National Flood Insurance Reform Act of 1994 (and any amendment or
successor act thereto) in an amount at least equal to the lesser of the
full replacement cost of the Improvements and the Equipment, the
outstanding principal amount of the Note or the maximum limit of coverage
available with respect to the Improvements and Equipment under said Act.
Mortgagor hereby agrees to pay Mortgagee such fees as may be permitted
under applicable law
3
<PAGE>
for the costs incurred by Mortgagee in determining, from time to time,
whether the Mortgaged Property is then located within such area.
ii) Comprehensive General Liability insurance, including broad form
property damage, blanket contractual and personal injuries (including death
resulting therefrom) coverages and containing minimum limits per occurrence
of $1,000,000 for the Improvements and the Premises with excess umbrella
coverage in an amount of at least $1 million arising out of any one
occurrence ,except that if any buildings contain elevators, the minimum
limits per occurrence shall be $2,500,000.
iii) Business interruption insurance in an amount equal to (a) the
aggregate annual amount of projected gross income from the Mortgaged
Property from all sources (such income to cover gross income anticipated to
be lost for a period of at least one year after the date of the fire or
casualty in question) less (b) non-continuing expenses (which for purposes
hereof shall mean such operating expenses as are reasonably determined by
Mortgagor, subject to approval by Mortgagee, to be suspended after the
occurrence of a total casualty). The amount of such business interruption
insurance shall be reviewed annually and shall be adjusted from time to
time during the term of this Mortgage as warranted by Mortgagee as a result
of changes in gross income and/or operating expenses.
iv) Insurance against loss or damage from (1) leakage of sprinkler
systems, and (2) explosion of steam boilers, air conditioning equipment,
high pressure piping, machinery and equipment, pressure vessels or similar
apparatus now or hereafter installed in the Improvements and including
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 Premises and the Improvements. Coverage is
required in an amount at least equal to the full replacement cost of such
equipment and the building or buildings housing same. Coverage must extend
to electrical equipment, sprinkler systems, heating and air conditioning
equipment, refrigeration equipment and piping.
v) If the Mortgaged Property includes commercial property, worker's
compensation insurance with respect to any employees of Mortgagor, as
required by any governmental authority or legal requirement.
vi) If required by Mortgagee, Earthquake or sinkhole insurance if
available in the area where the Mortgaged Property is located in an amount
at least equal to the outstanding principal amount of the Note or the
maximum limit of coverage available, whichever is less.
vii) Such other insurance as may from time to time be reasonably
required by Mortgagee in order to protect its interests.
(b) All policies of insurance (the "Policies") required pursuant to Section
3: (i) shall contain a standard noncontributory mortgagee clause naming
Mortgagee as the person to which all payments made by such insurance company
shall be paid, (ii) shall be maintained throughout the term of this Mortgage
without cost to Mortgagee, (iii) shall be assigned and delivered to Mortgagee,
(iv) shall contain such provisions as Mortgagee deems reasonably necessary or
desirable to protect its interest including, without limitation, endorsements
providing that neither Mortgagor, Mortgagee nor any other party shall be a
co-insurer under said Policies and that Mortgagee shall receive at least thirty
(30) days prior written notice or, of any modification, reduction or
cancellation, (v) shall be for a term of not less than one year, (vi) shall be
issued by an insurer licensed in the state in which the Mortgaged Property is
located, (vii) shall provide that Mortgagee may, but shall not be obligated to,
make premium payments to prevent any cancellation, endorsement, alteration or
reissuance, and such payments shall be accepted by the insurer to prevent same,
(viii) shall be satisfactory in form and substance to Mortgagee and shall be
approved by Mortgagee as to amounts, form, risk coverage, deductibles, loss
payees and insureds, and (ix) shall provide that all claims shall be allowable
on events as they occur. Upon demand therefor, Mortgagor shall reimburse
Mortgagee for all of Mortgagee's (or its servicer's) reasonable costs and
expenses incurred in obtaining any or all of the Policies or otherwise causing
the compliance with the terms and provisions of this Section 3, including
(without limitation) obtaining updated flood hazard certificates and replacement
or any so-called "forced placed" insurance coverages. All Policies required
pursuant to subsections 3(a) and 3(b) shall be issued by an insurer with a
claims paying ability rating of "A-" or better by Standard & Poor's Corporation
or A:VIII or better by A.M. Best as published in Best's
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Key Rating Guide. Mortgagor shall pay the premiums for such Policies (the
"Insurance Premiums") as the same become due and payable (unless such Insurance
Premiums have been paid by Mortgagee pursuant to Section 5 hereof). Not later
than thirty (30) days prior to the expiration date of each of the Policies,
Mortgagor will deliver to Mortgagee satisfactory evidence of the renewal of each
Policy. If Mortgagor receives from any insurer any written notification or
threat of any actions or proceedings regarding the non-compliance or
non-conformity of the Mortgaged Property with any insurance requirements,
Mortgagor shall give prompt notice thereof to Mortgagee.
(c) In the event of the entry of a judgment of foreclosure, sale of the
Mortgaged Property by non-judicial foreclosure sale, or delivery of a deed in
lieu of foreclosure, Mortgagee hereby is authorized (without the consent of
Mortgagor) to assign any and all Policies to the purchaser or transferee
thereunder, or to take such other steps as Mortgagee may deem advisable to cause
the interest of such transferee or purchaser to be protected by any of the
Policies without credit or allowance to Mortgagor for prepaid premiums thereon.
(d) If the Mortgaged Property shall be damaged or destroyed, in whole or in
part, by fire or other casualty, Mortgagor shall give prompt notice thereof to
Mortgagee.
i) In case of loss covered by Policies, Mortgagee may either (1)
settle and adjust any claim without the consent of Mortgagor, or (2) allow
Mortgagor to agree with the insurance company or companies on the amount to
be paid upon the loss; provided, that Mortgagor may adjust losses
aggregating not in excess of $100,000.00 if such adjustment is carried out
in a competent and timely manner, and provided that in any case Mortgagee
shall and is hereby authorized to collect and receipt for any such
insurance proceeds; and the expenses incurred by Mortgagee in the
adjustment and collection of insurance proceeds shall become part of the
Debt and be secured hereby and shall be reimbursed by Mortgagor to
Mortgagee upon demand (unless deducted by and reimbursed to Mortgagee from
such proceeds).
ii) In the event of any insured damage to or destruction of the
Mortgaged Property or any part thereof (herein called an "Insured
Casualty"), if (A) the loss is in an aggregate amount less than twenty-five
percent (25%) of the original principal balance of the Note, and (B), in
the reasonable judgment of Mortgagee, the Mortgaged Property can be
restored within six (6) months after insurance proceeds are made available
to an economic unit not less valuable (including an assessment of the
impact of the termination of any Leases due to such Insured Casualty) and
not less useful than the same was prior to the Insured Casualty, and after
such restoration will adequately secure the outstanding balance of the
Debt, and (C) no Event of Default (hereinafter defined) shall have occurred
and be then continuing, then the proceeds of insurance shall be applied to
reimburse Mortgagor for the cost of restoring, repairing, replacing or
rebuilding the Mortgaged Property or part thereof subject to Insured
Casualty, as provided for below; and Mortgagor hereby covenants and agrees
forthwith to commence and diligently to prosecute such restoring,
repairing, replacing or rebuilding; provided, however, in any event
Mortgagor shall pay all costs (and if required by Mortgagee, Mortgagor
shall deposit the total thereof with Mortgagee in advance) of such
restoring, repairing, replacing or rebuilding in excess of the net proceeds
of insurance made available pursuant to the terms hereof.
iii) Except as provided above, the proceeds of insurance collected
upon any Insured Casualty shall, at the option of Mortgagee in its sole
discretion, be applied to the payment of the Debt or applied to reimburse
Mortgagor for the cost of restoring, repairing, replacing or rebuilding the
Mortgaged Property or part thereof subject to the Insured Casualty, in the
manner set forth below. Any such application to the Debt shall not be
considered a voluntary prepayment requiring payment of the prepayment
consideration provided in the Note, and shall not reduce or postpone any
payments otherwise required pursuant to the Note, other than the final
payment on the Note.
iv) In the event that proceeds of insurance, if any, shall be made
available to Mortgagor for the restoring, repairing, replacing or
rebuilding of the Mortgaged Property, Mortgagor hereby covenants to
restore, repair, replace or rebuild the same to be of at least equal value
and of substantially the same character as prior to such damage or
destruction, all to be effected in accordance with applicable law and plans
and specifications approved in advance by Mortgagee.
5
<PAGE>
v) In the event Mortgagor is entitled to reimbursement out of
insurance proceeds held by Mortgagee, such proceeds shall be disbursed from
time to time upon Mortgagee being furnished with (1) evidence satisfactory
to it (which evidence may include inspection[s] of the work performed) that
the restoration, repair, replacement and rebuilding covered by the
disbursement has been completed in accordance with plans and specifications
approved by Mortgagee, (2) evidence satisfactory to it of the estimated
cost of completion of the restoration, repair, replacement and rebuilding,
(3) funds, or, at Mortgagee's option, assurances satisfactory to Mortgagee
that such funds are available, sufficient in addition to the proceeds of
insurance to complete the proposed restoration, repair, replacement and
rebuilding, and (4) such architect's certificates, waivers of lien,
contractor's sworn statements, title insurance endorsements, bonds, plats
of survey and such other evidences of cost, payment and performance as
Mortgagee may reasonably require and approve; and Mortgagee may, in any
event, require that all plans and specifications for such restoration,
repair, replacement and rebuilding be submitted to and approved by
Mortgagee prior to commencement of work. With respect to disbursements to
be made by Mortgagee: (A) no payment made prior to the final completion of
the restoration, repair, replacement and rebuilding shall exceed ninety
percent (90%) of the value of the work performed from time to time; (B)
funds other than proceeds of insurance shall be disbursed prior to
disbursement of such proceeds; and (C) at all times, the undisbursed
balance of such proceeds remaining in the hands of Mortgagee, together with
funds deposited for that purpose or irrevocably committed to the
satisfaction of Mortgagee by or on behalf of Mortgagor for that purpose,
shall be at least sufficient in the reasonable judgment of Mortgagee to pay
for the cost of completion of the restoration, repair, replacement or
rebuilding, free and clear of all liens or claims for lien and the costs
described in subsection 3(e)(vi) below. Any surplus which may remain out of
insurance proceeds held by Mortgagee after payment of such costs of
restoration, repair, replacement or rebuilding shall be paid to any party
entitled thereto. In no event shall Mortgagee assume any duty or obligation
for the adequacy, form or content of any such plans and specifications, nor
for the performance, quality or workmanship of any restoration, repair,
replacement and rebuilding.
vi) Notwithstanding anything to the contrary contained herein, the
proceeds of insurance reimbursed to Mortgagor in accordance with the terms
and provisions of this Mortgage shall be reduced by the reasonable costs
(if any) incurred by Mortgagee in the adjustment and collection thereof and
in the reasonable costs incurred by Mortgagee of paying out such proceeds
(including, without limitation, reasonable attorneys' fees and costs paid
to third parties for inspecting the restoration, repair, replacement and
rebuilding and reviewing the plans and specifications therefor).
4. Payment of Other Charges. Mortgagor shall pay all assessments, water
rates and sewer rents, ground rents, maintenance charges, other governmental
impositions, and other charges, including without limitation vault charges and
license fees for the use of vaults, chutes and similar areas adjoining the
Premises, now or hereafter levied or assessed or imposed against the Mortgaged
Property or any part thereof (the "Other Charges") as the same become due and
payable. Mortgagor will deliver to Mortgagee evidence satisfactory to Mortgagee
that the Taxes and Other Charges have been so paid or are not then delinquent no
later than thirty (30) days following the date on which the Taxes and/or Other
Charges would otherwise be delinquent if not paid. Mortgagor shall not suffer
and shall promptly cause to be paid and discharged any lien or charge whatsoever
which may be or become a lien or charge against the Mortgaged Property, and
shall promptly pay for all utility services provided to the Mortgaged Property.
5. Tax and Insurance Escrow Fund. On the date hereof, Mortgagor shall make
an initial deposit to the Tax and Insurance Escrow Fund, as hereinafter defined,
of an amount which, when added to the monthly amounts to be deposited as
specified below, will be sufficient in the estimation of Mortgagee to satisfy
the next due taxes, assessments, insurance premiums and other similar charges.
Mortgagor shall pay to Mortgagee on the first day of each calendar month (a)
one-twelfth of an amount which would be sufficient to pay all taxes, assessments
and other similar governmental impositions (the "Taxes") payable or estimated by
Mortgagee to be payable, 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 (said amounts in [a] and [b] above hereinafter called the "Tax and
Insurance Escrow Fund"). Mortgagee may, in its sole discretion, retain a third
party tax consultant to obtain tax certificates or other evidence or estimates
of tax due or to become due or to verify the payment of taxes and Mortgagor will
promptly reimburse Mortgagee for the reasonable cost of retaining any such third
parties or obtaining such certificates. Any unpaid reimbursements for the costs
of
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<PAGE>
such third parties shall be added to the Debt. The Tax and Insurance Escrow Fund
and the payments of interest or principal or both, payable pursuant to the Note,
shall be added together and shall be paid as an aggregate sum by Mortgagor to
Mortgagee. Mortgagor hereby pledges (and grants a lien and security interest) to
Mortgagee any and all monies now or hereafter deposited in the Tax and Insurance
Escrow Fund as additional security for the payment of the Debt. Mortgagee will
apply the Tax and Insurance Escrow Fund to payments of Taxes and Insurance
Premiums required to be made by Mortgagor pursuant to Sections 3 and 4 hereof.
If the amount of the Tax and Insurance Escrow Fund shall exceed the amounts due
for Taxes and Insurance Premiums pursuant to Sections 3 and 4 hereof, Mortgagee
shall, in its discretion, return any excess to Mortgagor or credit such excess
against future payments to be made to the Tax and Insurance Escrow Fund. In
allocating such excess, Mortgagee may deal with the person shown on the records
of Mortgagee to be the owner of the Mortgaged Property. If the Tax and Insurance
Escrow Fund is not sufficient to pay the items set forth in (a) and (b) above,
Mortgagor shall promptly pay to Mortgagee, upon demand, an amount which
Mortgagee shall estimate as sufficient to make up the deficiency. Upon the
occurrence of an Event of Default, Mortgagee shall be entitled to exercise both
the rights of setoff and banker's lien, if applicable, against the interest of
Mortgagor in the Tax and Insurance Escrow Fund to the full extent of the
outstanding balance of the Debt, application of any such sums to the Debt to be
in any order in its sole discretion. Until expended or applied as above
provided, any amounts in the Tax and Insurance Escrow Fund shall constitute
additional security for the Debt. The Tax and Insurance Escrow Fund shall not
constitute a trust fund and may be commingled with other monies held by
Mortgagee. Unless otherwise required by applicable law, no earnings or interest
on the Tax and Insurance Escrow Fund shall be payable to Mortgagor even if
Mortgagee or its servicer is paid a fee and/or receives interest or other income
in connection with the deposit or placement of such fund (in which event such
income shall be reported under Mortgagee's or its servicer's tax identification
number, as applicable). Upon payment of the Debt and performance by Mortgagor of
all its obligations under this Mortgage and the other Loan Documents, any
amounts remaining in the Tax and Insurance Escrow Fund shall be refunded to
Mortgagor.
Notwithstanding the foregoing, Mortgagee (by its acceptance of this
Mortgage) agrees to defer its right to require deposits into escrow for
Insurance Premiums as long as the following conditions are satisfied:
(1) JAGI CLEVELAND - HUDSON, LLC, a Delaware limited liability
company, is the sole fee simple owner of the Mortgaged Property;
(2) Mortgagor has established a mechanism acceptable to Mortgagee for
insuring that all Insurance Premiums on the Mortgaged Property are paid at
a time and in a manner acceptable to Mortgagee;
(3) Mortgagee is satisfied in its discretion from written evidence
provided promptly and consistently to it by Mortgagor that all such
Insurance Premiums are actually being timely paid in full;
(4) No Event of Default exists hereunder or under any other Loan
Documents and no condition or event exists which with notice, the passage
of time, or both would constitute an Event of Default; and
(5) All insurance companies must have agreed that such insurance shall
not be subject to termination without 30 days prior written notice to
Mortgagee or its servicer.
In the event that any one or more of the foregoing conditions precedent shall be
(or become) unsatisfied, Mortgagee may require that such escrow be established
and fully funded as provided herein.
6. Replacement Escrow Fund. If initially or subsequently required by
Mortgagee, Mortgagor shall pay to Mortgagee on the first day of each calendar
month one-twelfth of the product of multiplying the annual gross revenues from
the Mortgaged Property (as reasonably estimated by Mortgagee from time to time)
by three percent (the amount reasonably estimated by Mortgagee to be due for
replacements and capital repairs required to be made to the Mortgaged Property
during each calendar year) (the "Replacement Escrow Fund"). Mortgagor hereby
pledges (and grants a lien and security interest) to Mortgagee any and all
monies now or hereafter deposited in the Replacement Escrow Fund as additional
security for the payment of the Debt. As required in Section 18 below, Mortgagor
shall deliver to Mortgagee for Mortgagee's review and approval, a capital
expenditure budget (the "Budget") itemizing the replacements and capital repairs
which are anticipated to be made to the Mortgaged Property during the next
immediately succeeding calendar year. Mortgagee may, upon notice to Mortgagor,
adjust
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the monthly amounts required to be deposited into the Replacement Escrow Fund to
a monthly amount equal to one-twelfth of the total amount specified in each
approved Budget. So long as no Event of Default exists and is continuing,
Mortgagee shall make disbursements from the Replacement Escrow Fund for items
specified in each approved Budget on a quarterly basis in increments of no less
than $5,000.00 upon delivery by Mortgagor of Mortgagee's standard form of draw
request accompanied by copies of paid invoices (or unpaid invoices to be paid
from such requested disbursement; provided, however, that disbursements with
respect to unpaid invoices shall not exceed $20,000 during any calendar quarter)
for the amounts requested and, if required by Mortgagee, lien waivers and
releases from all parties furnishing materials and/or services in connection
with the requested payment, delivery of such certificates and certifications as
Mortgagee may require, including but not limited to a new certificate of
occupancy for the portion of the Improvements covered by such repairs, if a new
certificate of occupancy is required by applicable law, or a certification by
Mortgagor that no new certificate of occupancy is required and for disbursement
requests in excess of $20,000.00, if requested by Mortgagee a certification from
an inspecting architect or other third party acceptable to Mortgagee describing
the completed repairs or capital improvements, verifying the completion of the
completed work and the compliance with applicable law and reimbursement of all
out-of-pocket inspection fees incurred by Mortgagee. Mortgagee may require an
inspection of the Mortgaged Property prior to making a quarterly disbursement in
order to verify completion of replacements and repairs. Mortgagee reserves the
right to make any disbursement from the Replacement Escrow Fund directly to the
party furnishing materials and/or services. The Replacement Escrow Fund is
solely for the protection of Mortgagee and entails no responsibility or
obligation on Mortgagee's part beyond the payment of the costs and expenses
described in this section in accordance with the terms hereof and beyond the
allowing of due credit for the sums actually received. In the event that the
amounts on deposit or available in the Replacement Escrow Fund are inadequate to
pay the costs of such repairs or capital expenditure, Mortgagor shall pay the
amount of such deficiency. Until expended or applied as above provided, any
amounts in the Replacement Escrow Fund shall constitute additional security for
the Debt. Upon the occurrence of an Event of Default, Mortgagee may apply any
sums then present in the Replacement Escrow Fund to the payment of the Debt in
any order in its sole discretion. Upon payment of the Debt and performance by
Mortgagor of all its obligations under this Mortgage and the other Loan
Documents, any amounts remaining in the Replacement Escrow Fund shall be
refunded to Mortgagor. The Replacement Escrow Fund shall not constitute a trust
fund and may be commingled with other monies held by Mortgagee. The Replacement
Escrow Fund shall be held in an account in Mortgagee's name (or such other
account name style as Mortgagee may elect) at a financial institution selected
by Mortgagee in its sole discretion. Mortgagor shall be entitled to, and shall
report under its federal tax identification number, the amount earned, if any,
on the Replacement Escrow Fund at a yield equal to that which would accrue on
such funds by taking the average of the interest rate paid on each tier (if any)
of such institution's basic business checking with interest account and the
interest rates paid on each tier (if any) of such institution's business money
market savings account, as such rates change from time to time, as quoted by the
institution with which Mortgagee (or its servicer) deposits the Replacement
Escrow Fund ("Mortgagor's Interest"), or if such institution does not have
established basic business checking with interest and business money market
savings accounts (or if rates for such accounts cannot otherwise be determined
in connection with the deposit of such Replacement Escrow Fund), then at such
average of comparable rates as quoted by Bank One, Texas, N.A., Mortgagor's
Interest, less applicable administrative fees (if any), shall be and become part
of such Replacement Escrow Fund and shall be disbursed as provided in this
section. Mortgagee shall not be responsible for obtaining a specific return or
yield on such deposit and, unless otherwise prohibited by applicable law, shall
be entitled to retain any fees or other earnings in excess of Mortgagor's
Interest paid in connection with the deposit or placement of any Replacement
Escrow Fund. Mortgagee will cause to be furnished to Mortgagor on an annual
basis such income tax reporting forms as are required by applicable law.
7. Condemnation. Mortgagor shall promptly give Mortgagee written notice of
the actual or threatened commencement of any condemnation or eminent domain
proceeding and shall deliver to Mortgagee copies of any and all papers served in
connection with such proceedings. Mortgagee is hereby irrevocably appointed as
Mortgagor's attorney-in-fact, coupled with an interest, with exclusive power to
collect, receive and retain any award or payment for said condemnation or
eminent domain and to make any compromise or settlement in connection with such
proceeding, subject to the provisions of this Mortgage. 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), Mortgagor shall continue to pay
the Debt at the time and in the manner provided for its payment in the Note, in
this Mortgage and the other Loan Documents and the Debt shall not be reduced
until any award or payment therefor shall have been actually received after
expenses of collection and applied by Mortgagee to the discharge of the Debt.
Mortgagee shall not be limited to the interest
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paid on the award by the condemning authority but shall be entitled to receive
out of the award interest at the rate or rates provided in the Note. Mortgagor
shall cause the award or payment made in any condemnation or eminent domain
proceeding, which is payable to Mortgagor, to be paid directly to Mortgagee.
Mortgagee may apply any such award or payment to the reduction or discharge of
the Debt whether or not then due and payable (such application to be without the
prepayment consideration provided in the Note, except that if an Event of
Default, or an event which with notice and/or the passage of time, or both,
would constitute an Event of Default, has occurred, then such application shall
be subject to the full prepayment consideration computed in accordance with the
Note). If the Mortgaged Property is sold, through foreclosure or otherwise,
prior to the receipt by Mortgagee of such award or payment, Mortgagee shall have
the right, whether or not a deficiency judgment on the Note shall have been
sought, recovered or denied, to receive said award or payment, or a portion
thereof sufficient to pay the Debt.
8. Representations Concerning Loan. Mortgagor represents, warrants and
covenants as follows:
(a) Neither Mortgagor nor any guarantor of the Debt or any part
thereof (a "Guarantor") has any defense to the payment in full of the Debt
that arises from applicable local, state or federal laws, regulations or
other requirements. None of the Loan Documents are subject to any right of
rescission, set-off, abatement, diminution, counterclaim or defense,
including the defense of usury, nor will the operation of any of the terms
of any such Loan Documents, or the exercise of any right thereunder, render
any Loan Documents unenforceable, in whole or in part, or subject to any
right of rescission, set-off, abatement, diminution, counterclaim or
defense, including the defense of usury, and no such right of rescission,
set-off, abatement, diminution, counterclaim or defense has been, or will
be, asserted with respect thereto.
(b) There is no action, suit or proceeding, judicial administrative or
otherwise pending or, to the best of Mortgagor's knowledge threatened or
contemplated against Mortgagor, or Guarantor or against or affecting the
Mortgaged Property that (i) has not been disclosed to Mortgagee and has a
material, adverse effect on the Mortgaged Property or Mortgagor's and
Guarantor's ability to perform their obligations under any Loan Document or
(ii) is not adequately covered by insurance, each as determined by
Mortgagee in its sole and absolute discretion.
(c) All certifications, permits and approvals, including, without
limitation, certificates of completion and occupancy permits required for
the legal use and occupancy of the Mortgaged Property as a hotel,
including, without limitation, any applicable liquor license (collectively,
the "Licenses") have been obtained and are in full force and effect. The
Mortgaged Property is in good repair, good order and good condition and
free and clear of any damage that would affect materially and adversely the
value of the Mortgaged Property as security for the Debt and the Mortgaged
Property has not been materially damaged by fire, wind or other casualty or
physical condition (including, without limitation, any soil or geological
condition), which damage has not been fully repaired. There are no
proceedings pending or threatened for the partial or total condemnation of
the Mortgaged Property.
(d) All of the Improvements which were included in determining the
appraised value of the Mortgaged Property lie wholly within the boundaries
and building restriction lines of the Mortgaged Property, and no
improvements on adjoining properties encroach upon the Mortgaged Property,
and no easements or other encumbrances upon the Premises encroach upon any
of the Improvements, so as to affect the value or marketability of the
Mortgaged Property except for immaterial encroachments which do not
adversely affect the security intended to be provided by this Mortgage or
the use, enjoyment, value or marketability of the Mortgaged Property. All
of the Improvements comply with all material requirements of any applicable
zoning and subdivision laws and ordinances.
(e) The Mortgaged Property is not subject to any leases or operating
agreements other than the leases and the operating agreements, if any,
described in the rent roll delivered to Mortgagee in connection with this
Mortgage, and all such leases and agreements are in full force and effect.
No person has any possessory interest in the Mortgaged Property or right to
occupy the same except under and pursuant to the provisions of the leases
and any such operating agreements.
(f) All financial data, including, without limitation, statements of
cash flow and income and operating expenses, delivered to Mortgagee by, or
on behalf of Mortgagor are (i) true and correct in all material respects;
(ii) accurately represent the financial condition of Mortgagor or the
Mortgaged Property as of the date thereof in all material respects; and
(iii) to the extent reviewed by an independent certified public accounting
firm, have been
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prepared in accordance with generally accepted accounting principles
consistently applied throughout the periods covered.
(g) The survey of the Mortgaged Property delivered to Mortgagee in
connection with this Mortgage, has been performed by a duly licensed
surveyor or registered professional engineer in the jurisdiction in which
the Mortgaged Property is situated and, to the best of Mortgagor=s
knowledge, does not fail to reflect any material matter affecting the
Mortgaged Property or the title thereto.
(h) The loan evidenced by the Loan Documents complies with, or is
exempt from, applicable state or federal laws, regulations and other
requirements pertaining to usury and any and all other requirements of any
federal, state or local law.
(i) The Mortgaged Property is located on a dedicated, all-weather
road, or has access to an irrevocable easement permitting ingress and
egress which are adequate in relation to the premises and location on which
the Mortgaged Property is located.
(j) The Mortgaged Property is served by public utilities and services
in the surrounding community, including police and fire protection, public
transportation, refuse removal, public education, and enforcement of safety
codes which are adequate in relation to the premises and location on which
the Mortgaged Property is located.
(k) The Mortgaged Property is serviced by public water and sewer
systems which are adequate in relation to the premises and location on
which the Mortgaged Property is located.
(l) The Mortgaged Property has parking and other amenities necessary
for the operation of the business currently conducted thereon which are
adequate in relation to the premises and location on which the Mortgaged
Property is located.
(m) The Mortgaged Property is a contiguous parcel and a separate tax
parcel, and there are no delinquent Taxes or other outstanding charges
adversely affecting the Mortgaged Property.
(n) The Mortgaged Property is not relied upon by, and does not rely
upon, any building or improvement not part of the Mortgaged Property to
fulfill any zoning, building code or other governmental or municipal
requirement for structural support or the furnishing of any essential
building systems or utilities, except to the extent of any valid and
existing reciprocal easement agreements shown in the title insurance policy
insuring the lien of this Mortgage.
(o) No action, omission, misrepresentation, negligence, fraud or
similar occurrence has taken place on the part of any person that would
reasonably be expected to result in the failure or impairment of full and
timely coverage under any insurance policies providing coverage for the
Mortgaged Property.
(p) There are no defaults by Mortgagor beyond any applicable grace
period under any contract or agreement (other than this Mortgage and the
other Loan Documents) that binds Mortgagor and/or the Mortgaged Property,
including any management, service, supply, security, maintenance or similar
contracts; and Mortgagor has no knowledge of any such default for which
notice has not yet been given; and no such agreement is in effect with
respect to the Mortgaged Property that is not capable of being terminated
by Mortgagor on less than thirty (30) days notice except as previously
disclosed to Mortgagee by a delivery of a copy of all such agreements.
(q) The representations and warranties contained in the Closing
Certificate executed by Mortgagor in connection with the Note (which
certificate constitutes one of the Loan Documents) are true and correct and
Mortgagor shall observe the covenants contained therein.
(r) The Holiday Inn Hotel Change of Ownership Agreement, dated as of
even date herewith (the "Franchise Agreement"), between Mortgagor and
Holiday Hospitality Franchising, Inc., pursuant to which Mortgagor has the
right to operate the hotel located on the Mortgaged Property under a name
and/or hotel system controlled by such franchisor, is in full force and
effect and there is no default, breach or violation existing
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thereunder by any party thereto and no event has occurred (other than
payments due but not yet delinquent) that, with the passage of time or the
giving of notice, or both, would constitute a default, breach or violation
by any party thereunder.
(s) The Hotel Management Agreement dated as of July 20, 1998 (the
"Management Agreement"), between Mortgagor and Janus American Group, Inc.,
pursuant to which such hotel manager operates the Mortgaged Property as a
hotel, is in full force and effect and there is no default, breach or
violation existing thereunder by any party thereto and no event has
occurred (other than payments due but not yet delinquent) that, with the
passage of time or the giving of notice, or both, would constitute a
default, breach or violation by any party thereunder.
(t) Neither the execution and delivery of the Loan Documents, the
Mortgagor's performance thereunder, the recordation of this Mortgage, nor
the exercise of any remedies under this Mortgage, will adversely affect
Mortgagor's rights under the Franchise Agreement, the Management Agreement,
or any of the Licenses.
9. Single Purpose Entity/Separateness. Mortgagor represents, warrants and
covenants as follows:
(a) Mortgagor does not own and will not own any asset or property
other than (i) the Mortgaged Property, and (ii) incidental personal
property necessary for the ownership or operation of the Mortgaged
Property.
(b) Mortgagor will not engage in any business other than the
ownership, management and operation of the Mortgaged Property and Mortgagor
will conduct and operate its business as presently conducted and operated.
(c) Mortgagor will not enter into any contract or agreement with any
Guarantor or any party which is directly or indirectly controlling,
controlled by or under common control with Borrower, Mortgagor or Guarantor
(an "Affiliate"), except upon terms and conditions that are intrinsically
fair and substantially similar to those that would be available on an
arms-length basis with third parties other than any Guarantor or Affiliate.
(d) Mortgagor has not incurred and will not incur any indebtedness,
secured or unsecured, direct or indirect, absolute or contingent (including
guaranteeing any obligation), other than (i) the Debt, (ii) the Related
Debt (hereinafter defined) and (iii) trade and operational debt incurred in
the ordinary course of business with trade creditors and in amounts as are
normal and reasonable under the circumstances. No indebtedness other than
the Debt may be secured (subordinate or pari passu) by the Mortgaged
Property.
(e) Mortgagor has not made and will not make any loans or advances to
any third party, nor to Guarantor, any Affiliate or any constituent party
of Mortgagor.
(f) Mortgagor is and will remain solvent and Mortgagor will pay its
debts from its assets as the same shall become due.
(g) Mortgagor has done or caused to be done and will do all things
necessary, to preserve its existence, and Mortgagor will not, nor will
Mortgagor permit Guarantor to amend, modify or otherwise change the
partnership certificate, partnership agreement, articles of incorporation
and bylaws, trust, certificate of organization, operating agreement or
other organizational documents of Mortgagor or Guarantor in a manner which
would adversely affect the Mortgagor's existence as a single-purpose
entity.
(h) Mortgagor will maintain books and records and bank accounts
separate from those of its Affiliates and any constituent party of
Mortgagor, and Mortgagor will file its own tax returns.
(i) Mortgagor will be, and at all times will hold itself out to the
public as, a legal entity separate and distinct from any other entity
(including any Affiliate, any constituent party of Mortgagor or any
Guarantor).
(j) Mortgagor will preserve and keep in full force and effect its
existence, good standing and qualification to do business in the state in
which the Mortgaged Property is located.
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(k) Mortgagor will maintain adequate capital for the normal
obligations reasonably foreseeable in a business of its size and character
and in light of its contemplated business operations.
(l) Neither Mortgagor nor any constituent party of Mortgagor will seek
the dissolution or winding up, in whole or in part, of Mortgagor, nor will
Mortgagor merge with or be consolidated into any other entity.
(m) Mortgagor will not commingle the funds and other assets of
Mortgagor with those of any Affiliate, any Guarantor, any constituent party
of Mortgagor or any other person.
(n) Mortgagor has and will maintain its assets in such a manner that
it will not be costly or difficult to segregate, ascertain or identify its
individual assets from those of any constituent party of Mortgagor,
Affiliate, Guarantor or any other person.
(o) Mortgagor does not and will not hold itself out to be responsible
for the debts or obligations of any other person other than the obligors
under the Related Debt (provided, that the foregoing shall not prevent
Mortgagor from being and holding itself responsible for expenses incurred
or obligations undertaken by the property manager of the Mortgaged Property
in respect of its duties regarding the Mortgaged Property).
(p) Mortgagor shall obtain and maintain in full force and effect, and
abide by and satisfy the material terms and conditions of, all material
permits, licenses, registrations and other authorizations with or granted
by any governmental authorities that may be required from time to time with
respect to the performance of its obligations under this Mortgage.
(q) Mortgagor will use separate checks, invoices and stationery.
10. Maintenance of Mortgaged Property. Mortgagor shall cause the Mortgaged
Property to be operated and maintained in a good and safe condition and repair
and in keeping with the condition and repair of properties of a similar use,
value, age, nature and construction. Mortgagor shall not use, maintain or
operate the Mortgaged Property in any manner which constitutes a public or
private nuisance or which makes void, voidable, or cancelable, or increases the
premium of, any insurance then in force with respect thereto. The Improvements
and the Equipment shall not be removed, demolished or materially altered (except
for normal replacement of the Equipment) without the consent of Mortgagee.
Mortgagor shall promptly comply with all laws, orders and ordinances affecting
the Mortgaged Property, or the use thereof. Mortgagor shall promptly repair,
replace or rebuild any part of the Mortgaged Property 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 7 hereof and shall
complete and pay for any structure at any time in the process of construction or
repair on the Premises.
11. Use of Mortgaged Property. Mortgagor shall not initiate, join in,
acquiesce in, or consent to any change in any private restrictive covenant,
zoning law or other public or private restriction, limiting or defining the uses
which may be made of the Mortgaged Property or any part thereof, nor shall
Mortgagor initiate, join in, acquiesce in, or consent to any zoning change or
zoning matter affecting the Mortgaged Property. If under applicable zoning
provisions the use of all or any portion of the Mortgaged Property is or shall
become a nonconforming use, Mortgagor will not cause or permit such
nonconforming use to be discontinued or abandoned without the express written
consent of Mortgagee. Mortgagor shall not permit or suffer to occur any waste on
or to the Mortgaged Property or to any portion thereof and shall not take any
steps whatsoever to convert the Mortgaged Property, or any portion thereof, to a
condominium or cooperative form of management. Mortgagor will not install or
permit to be installed on the Premises any underground storage tank or
above-ground storage tank without the written consent of Mortgagee.
12. Transfer or Encumbrance of the Mortgaged Property. (a) Mortgagor
acknowledges that Mortgagee has examined and relied on the creditworthiness and
experience of Mortgagor in owning and operating properties such as the Mortgaged
Property in agreeing to make the loan secured hereby, and that Mortgagee will
continue to rely on Mortgagor's ownership of the Mortgaged Property as a means
of maintaining the value of the Mortgaged Property as security for repayment of
the Debt. Mortgagor acknowledges that Mortgagee has a valid interest in
maintaining the value of the Mortgaged Property so as to ensure that, should
Mortgagor default in the repayment of the Debt, Mortgagee can recover the Debt
by a sale of the Mortgaged Property. Except for liens and
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security interests granted by Mortgagor to Mortgagee in connection with the
Related Debt, Mortgagor shall not, without the prior written consent of
Mortgagee, sell, convey, alienate, mortgage, encumber, pledge or otherwise
transfer the Mortgaged Property or any part thereof, or permit the Mortgaged
Property or any part thereof to be sold, conveyed, alienated, mortgaged,
encumbered, pledged or otherwise transferred; provided, however, Mortgagee may,
in its sole discretion, give such written consent (but shall have no obligation
to do so) to any such sale, conveyance, alienation, mortgage, encumbrance,
pledge or other transfer, and any such consent may be conditioned upon the
satisfaction of such conditions precedent as Mortgagee may require (including,
without limitation, the conditions precedent set forth in subsection 12[c]
below). Notwithstanding any other provision of this Section 12, Mortgagee will
consent, subject to the conditions of subsection 12(c) and provided that no
Event of Default has occurred and is continuing, to one sale, conveyance,
alienation, mortgage, encumbrance, pledge or other transfer of the Mortgaged
Property by the original Mortgagor as set forth in this Mortgage.
(b) A sale, conveyance, alienation, mortgage, encumbrance, pledge or
transfer within the meaning of this Section 12 shall not include (x) transfers
made by devise or descent or by operation of law upon the death of a joint
tenant, partner or shareholder, subject, however, to all the following
requirements: (1) written notice of any transfer under this subsection 12(b)(x),
whether by will, trust or other written instrument, operation of law or
otherwise, is provided to Mortgagee or its servicer, together with copies of
such documents relating to the transfer as Mortgagee or its servicer may
reasonably request, (2) control over the management and operation of the
Mortgaged Property is retained by Janus American Group, Inc., a Delaware
corporation (the "Original Principals", whether one or more) at all times prior
to the death or legal incapacity of all the Original Principals and is
thereafter assumed by persons who are acceptable in all respects to Mortgagee in
its sole and absolute discretion, (3) no such transfer by any of the Original
Principals will release the respective estate from any liability as a Guarantor,
as more particularly provided in subsection 12(c) below, and (4) no such
transfer, death or other event has any adverse effect either on the
bankruptcy-remote status of Mortgagor under the requirements of any national
rating agency for the Certificates (hereinafter defined) or on the status of
Mortgagor as a continuing legal entity liable for the payment of the Debt and
the performance of all other obligations secured hereby, or (y) transfers
otherwise by operation of law in the event of a bankruptcy, nor shall the
meaning include a Lease, but shall be deemed to include (i) an installment sales
agreement wherein Mortgagor agrees to sell the Mortgaged Property or any part
thereof for a price to be paid in installments; (ii) an agreement by Mortgagor
leasing all or a substantial part of the Mortgaged Property for other than
actual occupancy by a space tenant thereunder or a sale, assignment or other
transfer of, or the grant of a security interest in, Mortgagor's right, title
and interest in and to any Leases or any Rents; (iii) if Mortgagor, Guarantor,
or any general partner of Mortgagor or Guarantor is a corporation, any merger,
consolidation or the voluntary or involuntary sale, conveyance or transfer of
such corporation's stock (or the stock of any corporation directly or indirectly
controlling such corporation by operation of law or otherwise) or the creation
or issuance of new stock in one or a series of transactions by which an
aggregate of more than 10% of such corporation's stock shall be vested in a
party or parties who are not now stockholders (provided, however, in no event
shall this subpart [iii] apply to any Guarantor whose stock, shares or
partnership interests are traded on a nationally recognized stock exchange);
(iv) if Mortgagor, Guarantor, or any general partner of Mortgagor or Guarantor
is a limited liability company or limited partnership, the voluntary or
involuntary sale, conveyance or transfer by which an aggregate of more than
fifty percent (50%) of the ownership interest in such limited liability company
or more than fifty percent (50%) of the limited partnership interests in such
limited partnership shall be vested in parties not having an ownership interest
as of the date of this Mortgage; and (v) if Mortgagor, any Guarantor or any
general partner of Mortgagor or any Guarantor is a limited or general
partnership or joint venture, the change, removal or resignation of a general
partner, managing partner or joint venturer or the transfer of all or any
portion of the partnership interest of any general partner, managing partner or
joint venturer.
(c) Notwithstanding the provisions of subsections 12(a) and (b) above,
Mortgagee will give its consent to a one time sale or transfer of Mortgaged
Property, provided that no Event of Default under the Loan Documents has
occurred and is continuing and (i) the grantee's or transferee's integrity,
reputation, character and management ability are satisfactory to Mortgagee in
its sole discretion, (ii) the grantee's or transferee's (and its sole general
partner's) single purpose and bankruptcy remote character are satisfactory to
Mortgagee in its sole discretion, (iii) and any conditions relating to the sale
or transfer imposed by any national rating agency for the Certificates (as
defined in Section 20) are satisfied, (iv) Mortgagee has obtained such estoppels
from any guarantors of the Note or replacement guarantors and such other legal
opinions, certificates and similar matters as Mortgagee may require, (v) all of
Mortgagee's costs and expenses associated with the sale or transfer (including
reasonable attorneys fees) are paid by Mortgagor or the grantee or transferee,
(vi) the payment of a transfer fee not to exceed
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1% of the outstanding principal balance of the Loan evidenced by the Note and
secured hereby, (vii) the grantee's execution of a written assumption agreement
and such modification to the Loan Documents containing such terms as Mortgagee
may require and delivery of Fsuch agreement to Mortgagee prior to such sale or
transfer (provided that in the event the Loan is included in a REMIC and is a
performing loan, no modification to the terms and conditions shall be made or
permitted that would cause (A) any adverse tax consequences to the REMIC or any
holders of any Certificates, (B) the Mortgage to fail to be a Qualifying
Mortgage under applicable federal law relating to REMIC's, (C) result in a
taxation of the income from the Loan to the REMIC or cause a loss of REMIC
status), (viii) the delivery to Mortgagee of an endorsement (at Mortgagor's sole
cost and expense) to the mortgagee policy of title insurance then insuring the
lien created by this Mortgage in form and substance acceptable to Mortgagee in
its sole judgment, and (ix) all requirements set forth in the Loan Agreement
with respect to the loan to value ratio pertaining to the Related Debt are, or
will be at the time of the transfer and assumption, satisfied. Without limiting
the foregoing, if Mortgagee shall consent to any such transfer, the written
assumption agreement described in subsection 12(c)(vii) above shall provide for
the release of Mortgagor of personal liability under the Note and other Loan
Documents solely as to acts or events occurring, or obligations arising, after
the closing of such sale; provided, however, in no event shall such sale operate
to: (x) relieve Mortgagor of any personal liability under the Note or any of the
other Loan Documents for any acts or events occurring, or obligations arising,
prior to or simultaneously with the closing of such sale, and Mortgagor shall
execute, without any cost or expense to Mortgagee, such documents and agreements
as Mortgagee shall reasonably require to evidence and effectuate the
ratification of such personal liability; or (y) relieve any current guarantor or
indemnitor, including Mortgagor, of its obligations under any guaranty or
indemnity agreement executed in connection with the Loan secured hereby
(including, without limitation, the Environmental Liabilities Agreement of even
date herewith [the "Environmental Agreement"]), and each such current guarantor
and indemnitor shall execute, without any cost or expense to Mortgagee, such
documents and agreements as Mortgagee shall reasonably require to evidence and
effectuate the ratification of each such guaranty and indemnity agreement.
Notwithstanding (y) preceding, if the proposed transferee and a party associated
with the proposed transferee (the "Substitute Guarantor") (1) is approved by
Mortgagee in its sole discretion (including a determination that the proposed
transferee and Substitute Guarantor have adequate financial resources), (2)
assumes the obligations of the current guarantor or indemnitor under its
guaranty or indemnity agreement, and (3) executes, without any cost or expense
to Mortgagee, a new guaranty and/or indemnity agreement, as applicable, in form
and substance satisfactory to Mortgagee, then Mortgagee may release the current
guarantor or indemnitor from all obligations arising under its guaranty or
indemnity agreement after the closing of such sale.
(d) Mortgagee may predicate its decision to grant or withhold consent to
any subsequent sale, conveyance, alienation, mortgage, encumbrance, pledge or
other transfer upon the satisfaction (in the sole determination of Mortgagee)
with such conditions as may be imposed by Mortgagee, which may include, but
shall not be limited to, the following matters: (i) the delivery to Mortgagee of
an endorsement (at Mortgagor's sole cost and expense) to the mortgagee policy of
title insurance then insuring the lien created by this Mortgage in a form and
substance acceptable to Mortgagee, in its sole judgment; (ii) the grantee's
integrity, reputation, character, creditworthiness and management ability being
satisfactory to Mortgagee, in its sole judgment; (iii) the grantee's single
purpose and bankruptcy remote character being satisfactory to Mortgagee, in its
sole judgment; (iv) the grantee executing (prior to such sale or transfer) a
written assumption agreement containing such terms as Mortgagee may require; (v)
subject to any restrictions described in Section 12(c) above relating to the
Loan being included in a REMIC, an adjustment to the term of the Note, a
principal paydown on the Note or an increase in the rate of interest payable on
the Note; (vi) payment by Mortgagor of a transfer and assumption fee not to
exceed one percent (1%) of the then unpaid principal balance of the Note; (vii)
payment by Mortgagor of the expenses described in subsection 12(f) below; and
(viii) the satisfaction of any conditions imposed by any national rating agency
for Certificates (hereinafter defined), together with such modification(s) of
the Loan Documents and such legal opinions, certifications and similar matters
that Mortgagee may require. Mortgagee agrees not to unreasonably withhold its
consent to a sale or transfer of the Mortgaged Property upon the satisfaction
(in the sole determination of Mortgagee) of the conditions to its consent as set
forth herein; provided, however, in any event Mortgagee shall be deemed to be
reasonable in withholding its consent if a sale to the proposed transferee
receives unfavorable comment from a national rating agency for Certificates.
Mortgagee shall not be required to demonstrate any actual impairment of its
security or any increased risk of default hereunder in order to declare the Debt
immediately due and payable upon any sale, conveyance, alienation, mortgage,
encumbrance, pledge or transfer by Mortgagor of the Mortgaged Property without
Mortgagee's consent.
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(e) Mortgagee's consent to one sale, conveyance, alienation, mortgage,
encumbrance, pledge or transfer of the Mortgaged Property shall not be deemed to
be a waiver of Mortgagee's right to require such consent to any future
occurrence of same. Any sale, conveyance, alienation, mortgage, encumbrance,
pledge or transfer of the Mortgaged Property made in contravention of this
Section 12 shall be null and void and of no force and effect.
(f) Mortgagor agrees to bear and shall pay or reimburse Mortgagee on demand
for all reasonable expenses (including, without limitation, all recording costs,
taxes, reasonable attorney's fees and disbursements and title search costs)
incurred by Mortgagee in connection with the review, approval and documentation
of any such sale, conveyance, alienation, mortgage, encumbrance, pledge or
transfer.
(g) In no event shall any of the terms and provisions of this Section 12
amend or modify the terms and provisions contained in Section 9 herein.
13. Estoppel Certificates and No Default Affidavits.
(a) After request by Mortgagee, Mortgagor shall within ten (10) days
furnish Mortgagee with a statement, duly acknowledged and certified, setting
forth (i) the amount of the original principal amount of the Note, (ii) the
unpaid principal amount of the Note, (iii) the rate of interest of the Note,
(iv) the date installments of interest and/or principal were last paid, (v) any
offsets or defenses to the payment of the Debt, if any, and (vi) that the Note,
this Mortgage and the other Loan Documents are valid, legal and binding
obligations and have not been modified or if modified, giving particulars of
such modification.
(b) After request by Mortgagee, Mortgagor shall within ten (10) days
furnish Mortgagee with a certificate reaffirming all representations and
warranties of Mortgagor set forth herein and in the other Loan Documents as of
the date requested by Mortgagee or, to the extent of any changes to any such
representations and warranties, so stating such changes.
(c) If the Mortgaged Property includes commercial property, Mortgagor shall
deliver to Mortgagee upon request, tenant estoppel certificates from each
commercial tenant at the Mortgaged Property in form and substance reasonably
satisfactory to Mortgagee provided that Mortgagor shall not be required to
deliver such certificates more frequently than two (2) times in any calendar
year.
14. Changes in the Laws Regarding Taxation. If any law is amended, enacted
or adopted after the date of this Mortgage which deducts the Debt from the value
of the Mortgaged Property for the purpose of taxation or which imposes a tax,
either directly or indirectly, on the Debt or Mortgagee's interest in the
Mortgaged Property, Mortgagor will pay such tax, with interest and penalties
thereon, if any. In the event Mortgagee is advised by counsel chosen by it that
the payment of such tax or interest and penalties by Mortgagor would be unlawful
or taxable to Mortgagee or unenforceable or provide the basis for a defense of
usury, then in any such event, Mortgagee shall have the option, by written
notice of not less than forty-five (45) days, to declare the Debt immediately
due and payable.
15. No Credits on Account of the Debt. Mortgagor will not claim or demand
or be entitled to any credit or credits on account of the Debt for any part of
the Taxes or Other Charges assessed against the Mortgaged Property, or any part
thereof, and no deduction shall otherwise be made or claimed from the assessed
value of the Mortgaged Property, or any part thereof, for real estate tax
purposes by reason of this Mortgage or the Debt. In the event such claim, credit
or deduction shall be required by law, Mortgagee shall have the option, by
written notice of not less than ninety (90) days, to declare the Debt
immediately due and payable.
16. Documentary Stamps. If at any time the United States of America, any
State thereof or any subdivision of any such State shall require revenue or
other stamps to be affixed to the Note or this Mortgage, or impose any other tax
or charge on the same, Mortgagor will pay for the same, with interest and
penalties thereon, if any.
17. Controlling Agreement. It is expressly stipulated and agreed to be the
intent of Mortgagor and Mortgagee at all times to comply with applicable state
law or applicable United States federal law (to the extent that it permits
Mortgagee to contract for, charge, take, reserve, or receive a greater amount of
interest than under state
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law) and that this section shall control every other covenant and agreement in
this Mortgage and the other Loan Documents. If the applicable law (state or
federal) is ever judicially interpreted so as to render usurious any amount
called for under the Note or under any of the other Loan Documents, or
contracted for, charged, taken, reserved, or received with respect to the Debt,
or if Mortgagee's exercise of the option to accelerate the maturity of the Note,
or if any prepayment by Mortgagor results in Mortgagor having paid any interest
in excess of that permitted by applicable law, then it is Mortgagor's and
Mortgagee's express intent that all excess amounts theretofore collected by
Mortgagee shall be credited on the principal balance of the Note and all other
Debt (or, if the Note and all other Debt have been or would thereby be paid in
full, refunded to Mortgagor), and the provisions of the Note and the other Loan
Documents immediately be deemed reformed and the amounts thereafter collectible
hereunder and thereunder reduced, without the necessity of the execution of any
new documents, so as to comply with the applicable law, but so as to permit the
recovery of the fullest amount otherwise called for hereunder or thereunder. All
sums paid or agreed to be paid to Mortgagee for the use, forbearance, or
detention of the Debt shall, to the extent permitted by applicable law, be
amortized, prorated, allocated, and spread throughout the full stated term of
the Debt until payment in full so that the rate or amount of interest on account
of the Debt does not exceed the maximum rate permitted under applicable law from
time to time in effect and applicable to the Debt for so long as the Debt is
outstanding. Notwithstanding anything to the contrary contained herein or in any
of the other Loan Documents, it is not the intention of Mortgagee to accelerate
the maturity of any interest that has not accrued at the time of such
acceleration or to collect unearned interest at the time of such acceleration.
18. Books and Records. Mortgagor will keep accurate books and records in
accordance with sound accounting principles in which full, true and correct
entries shall be promptly made with respect to the Mortgaged Property and the
operation thereof, and will permit all such books and records (including without
limitation all contracts, statements, invoices, bills and claims for labor,
materials and services supplied for the construction, repair or operation of the
Improvements) to be inspected or audited and copies made by Mortgagee and its
representatives during normal business hours and at any other reasonable times.
Mortgagor represents that its chief executive office is as set forth in the
introductory paragraph of this Mortgage and that all books and records
pertaining to the Mortgaged Property are and will be maintained at such location
or at such other office maintained by Mortgagor or one of its affiliates as to
which Mortgagor has given Mortgagee written notice. Mortgagor will furnish, or
cause to be furnished, to Mortgagee on or before twenty (20) days after each
calendar month the following items, each certified by Mortgagor as being true
and correct, in such format and in such detail as Mortgagee or its servicer may
request: (a) a written statement (rent roll) dated as of the last day of such
month identifying each of the Leases by the term, space occupied, rental
required to be paid, security deposit paid, any rental concessions, and
identifying any defaults or payment delinquencies thereunder; (b) a report of
occupancy for such month, including an average daily rate, and any and all
franchise inspection reports received by Mortgagor during such month; (c)
operating statements prepared for such month and year to date, noting Net
Operating Income, Gross Income From Operations and Hotel Operating Expenses (all
as hereinafter defined); (d) a property balance sheet for such month; and (e) a
comparison of the budgeted income and expenses with the actual income and
expenses for such month and year to date, together with a detailed explanation
of any variances between budgeted and actual amounts that are greater than (i)
$1,000.00, or (ii) five percent (5%) or more for each line item therein. Such
monthly reporting obligation will continue through the end of the calendar month
which is not less than twelve (12) months after the date of this Mortgage and
until there is no Event of Default and no event with which notice or lapse of
time or both could constitute an Event of Default. Beginning upon the expiration
of such period, Mortgagor will furnish, or cause to be furnished, to Mortgagee
on or before forty-five (45) days after March 31, June 30, September 30 and
December 31 of each calendar year the following items, each certified by
Mortgagor as being true and correct, in such format and in such detail as
Mortgagee or its
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servicer may request: (a) a written statement (rent roll) dated as of the last
day of each such calendar quarter identifying each of the Leases by the term,
space occupied, rental required to be paid, security deposit paid, any rental
concessions, and identifying any defaults or payment delinquencies thereunder;
(b) a report of occupancy for such quarter, including an average daily rate, and
any and all franchise inspection reports received by Mortgagor during such
quarter; (c) quarterly and year to date operating statements prepared for each
calendar quarter during each such reporting period; (d) a property balance sheet
for each calendar quarter during each such reporting period; and (e) a
comparison of the budgeted income and expenses and the actual income and
expenses for each calendar quarter during each such reporting period and year to
date, together with a detailed explanation of any variances between budgeted and
actual amounts that are greater than (i) $2,000.00, or (ii) five percent (5%) or
more for each line item therein. Within ninety (90) days following the end of
each calendar year, Mortgagor shall furnish a statement of the financial affairs
and condition of the Mortgaged Property including a statement of profit and loss
for the Mortgaged Property in such format and in such detail as Mortgagee or its
servicer may request, and setting forth the financial condition and the income
and expenses for the Mortgaged Property for the immediately preceding calendar
year certified by Mortgagor as being true and correct. Mortgagor shall deliver
to Mortgagee copies of all income tax returns, requests for extension and other
similar items contemporaneously with its delivery of same to the Internal
Revenue Service. On or before November 30 of each calendar year, Mortgagor shall
deliver to Mortgagee an itemized operating budget and capital expenditure budget
of the Mortgaged Property and a management plan for the Mortgaged Property for
the next succeeding calendar year on a month-by-month basis, in such format and
in such detail as Mortgagee may request. In the event Mortgagor fails to deliver
such reports within the time frames provided above, Mortgagor shall pay a late
charge equal to two percent (2%) of the monthly payment amount for each late
submission of financial reports to compensate Mortgagee or its servicer for the
additional administrative expense caused by such failure or delay whether or not
Mortgagor is entitled to any notice and opportunity to cure such failure prior
to the exercise of any of the remedies. Failure to provide monthly, quarterly or
annual reports shall constitute an Event of Default under Section 23 and entitle
Mortgagee to audit or cause to be audited Mortgagor's books and records. The
late charge and the cost of such audit shall be immediately payable from
Mortgagor upon demand by Mortgagee and, until paid, shall be added to and
constitute a part of the Debt. At any time and from time to time Mortgagor shall
deliver to Mortgagee or its agents such other financial data as Mortgagor
prepares for its own use and which Mortgagee or its agents shall request with
respect to the ownership, maintenance, use and operation of the Mortgaged
Property, including, but not limited to, schedules of gross sales for percentage
rents under Leases. Mortgagor will permit representatives appointed by
Mortgagee, including independent accountants, agents, attorneys, appraisers and
any other persons, to visit and inspect during its normal business hours and at
any other reasonable times any of the Mortgaged Property and to make photographs
thereof, and to write down and record any information such representatives
obtain, and shall permit Mortgagee or its representatives to investigate and
verify the accuracy of the information furnished to Mortgagee under or in
connection with this Mortgage or any of the other Loan Documents and to discuss
all such matters with its officers, employees and representatives. Mortgagor
will furnish to Mortgagee at Mortgagor's expense all evidence which Mortgagee
may from time to time reasonably request as to the accuracy and validity of or
compliance with all representations and warranties made by Mortgagor in the Loan
Documents and satisfaction of all conditions contained therein. Any inspection
or audit of the Mortgaged Property or the books and records of Mortgagor, or the
procuring of documents and financial and other information, by or on behalf of
Mortgagee, shall be for Mortgagee's protection only, and shall not constitute
any assumption of responsibility or liability by Mortgagee to Mortgagor or
anyone else with regard to the condition, construction, maintenance or operation
of the Mortgaged Property, nor Mortgagee's approval of any certification given
to Mortgagee nor relieve Mortgagor of any of Mortgagor's obligations.
19. Performance of Other Agreements. Mortgagor shall observe and perform
each and every term to be observed or performed by Mortgagor pursuant to the
terms of any agreement or recorded instrument affecting or pertaining to the
Mortgaged Property.
20. Further Acts, etc. Mortgagor will, at the cost of Mortgagor, and
without expense to Mortgagee, do, execute, acknowledge and deliver all and every
such further acts, deeds, conveyances, mortgages, assignments, notices of
assignment, Uniform Commercial Code financing statements or continuation
statements, transfers and assurances as Mortgagee shall, from time to time,
require, for the better assuring, conveying, assigning, transferring, and
confirming unto Mortgagee the property and rights hereby mortgaged, given,
granted, bargained, sold, alienated, enfeoffed, conveyed, confirmed, pledged,
assigned and hypothecated or intended now or hereafter so to be, or which
Mortgagor may be or may hereafter become bound to convey or assign to Mortgagee,
or for carrying out the intention or facilitating the performance of the terms
of this Mortgage or for filing, registering or recording this Mortgage.
Mortgagor, on demand, will execute and deliver and hereby authorizes Mortgagee
to execute in the name of Mortgagor or without the signature of Mortgagor to the
extent Mortgagee may lawfully do so, one or more financing statements, chattel
mortgages or other instruments, to evidence more effectively the security
interest of Mortgagee in the Mortgaged Property. Mortgagor grants to Mortgagee
an irrevocable power of attorney coupled with an interest for the purpose of
exercising and perfecting any and all rights and remedies available to Mortgagee
at law and in equity, including without limitation such rights and remedies
available to Mortgagee pursuant to this paragraph.
(a) Mortgagee (and its mortgage servicer and their respective assigns)
shall have the right to disclose in confidence such financial information
regarding Mortgagor, Guarantor or the Mortgaged Property as may be necessary (i)
to complete any sale or attempted sale of the Note or participations in the loan
(or any transfer of the
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mortgage servicing thereof) evidenced by the Note and the Loan Documents, (ii)
to service the Note or (iii) to furnish information concerning the payment
status of the Note to the holder or beneficial owner thereof, including, without
limitation, all Loan Documents, financial statements, projections, internal
memoranda, audits, reports, payment history, appraisals and any and all other
information and documentation in the Mortgagee's files (and such servicer's
files) relating to the Mortgagor, any Guarantor and the Mortgaged Property. This
authorization shall be irrevocable in favor of the Mortgagee (and its mortgage
servicer and their respective assigns), and Mortgagor and Guarantor waive any
claims that they may have against the Mortgagee, its mortgage servicer and their
respective assigns or the party receiving information from the Mortgagee
pursuant hereto regarding disclosure of information in such files and further
waive any alleged damages which they may suffer as a result of such disclosure.
(b) The Mortgagor acknowledges that the Mortgagee intends to sell the Loan
evidenced by the Note and the Loan Documents or a participation interest therein
to a party who may pool the Loan with a number of other loans and to have the
holder of such loans (most likely a special purpose REMIC) issue one or more
classes of Mortgage Backed Pass-Through Certificates (the "Certificates"), which
may be rated by one or more national rating agencies. Mortgagee (and its
mortgage servicer and their respective assigns) shall be permitted to share any
of the information referred to in subsection (a) above, whether obtained before
or after the date of the Note, with the holders or potential holders of the
Certificates, investment banking firms, rating agencies, accounting firms,
custodians, successor mortgage servicers, law firms and other third-party
advisory firms involved with the Loan evidenced by the Note and the Loan
Documents or the Certificates. It is understood that the information provided by
the Mortgagor to the Mortgagee (or its mortgage servicer and their respective
assigns) or otherwise received by Mortgagee (or its mortgage servicer and their
respective assigns) in connection with the Loan evidenced by the Loan Documents
may ultimately be incorporated into the offering documents for the Certificates
and thus various prospective investors may also see some or all of the
information. The Mortgagee (and its mortgage servicer and their respective
assigns) and all of the aforesaid third-party advisors and professional firms
shall be entitled to rely on the information supplied by, or on behalf of, the
Mortgagor.
21. Recording of Mortgage, etc. Upon the execution and delivery of this
Mortgage and thereafter, from time to time, Mortgagor will cause this Mortgage,
and any security instrument creating a lien or security interest or evidencing
the lien hereof upon the Mortgaged Property and each instrument of further
assurance to be filed, registered or recorded in such manner and in such places
as may be required by any present or future law in order to publish notice of
and fully to protect the lien or security interest hereof upon, and the interest
of Mortgagee in, the Mortgaged Property. Mortgagor will pay all filing,
registration or recording fees, and all expenses incident to the preparation,
execution and acknowledgment of this Mortgage, any mortgage supplemental hereto,
any security instrument with respect to the Mortgaged Property and any
instrument of further assurance, and all federal, state, county and municipal,
taxes, duties, imposts, assessments and charges arising out of or in connection
with the execution and delivery of this Mortgage, any mortgage supplemental
hereto, any security instrument with respect to the Mortgaged Property or any
instrument of further assurance, except where prohibited by law so to do.
Mortgagor shall hold harmless and indemnify Mortgagee, its successors and
assigns, against any liability incurred by reason of the imposition of any tax
on the making and recording of this Mortgage.
22. Reporting Requirements. Mortgagor agrees to give prompt notice to
Mortgagee of the insolvency or bankruptcy filing of Mortgagor or the death,
insolvency or bankruptcy filing of any Guarantor.
23. Events of Default. The term "Event of Default" as used herein shall
mean the occurrence or happening, at any time and from time to time, of any one
or more of the following:
(a) if any portion of the Debt or the Related Debt is not paid within five
(5) days from the date when the same is due;
(b) if the Policies are not kept in full force and effect, or if the
Policies are not delivered to Mortgagee upon request;
(c) if Mortgagor fails to timely provide any monthly, quarterly or annual
financial or accounting report;
(d) if Mortgagor sells, conveys, alienates, mortgages, encumbers, pledges
or otherwise transfers any portion of the Mortgaged Property or permits the
Mortgaged Property or any part thereof to be sold, conveyed,
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alienated, mortgaged, encumbered, levied, pledged or otherwise transferred
without Mortgagee's prior written consent, except to Mortgagee as security for
the Related Debt;
(e) if any representation or warranty of Mortgagor, or of any Guarantor,
made herein, in any Loan Document, any guaranty, or in any certificate, report,
financial statement or other instrument or document furnished to Mortgagee shall
have been false or misleading in any material respect when made;
(f) if Mortgagor or any Guarantor shall make an assignment for the benefit
of creditors or if Mortgagor or any Guarantor shall admit in writing its
inability to pay, or Mortgagor's or any Guarantor's failure to pay, debts
generally as the debts become due;
(g) if a receiver, liquidator or trustee of Mortgagor or of any Guarantor
shall be appointed or if Mortgagor or any Guarantor shall be adjudicated a
bankrupt or insolvent, or if any petition for bankruptcy, reorganization or
arrangement pursuant to federal bankruptcy law, or any similar federal or state
law, shall be filed by or against, consented to, or acquiesced in by, Mortgagor
or any Guarantor or if Mortgagor or any Guarantor shall admit in writing its
insolvency or bankruptcy or if any proceeding for the dissolution or liquidation
of Mortgagor or of any Guarantor shall be instituted; however, if such
appointment, adjudication, petition or proceeding was involuntary and not
consented to by Mortgagor or such Guarantor, upon the same not being discharged,
stayed or dismissed within sixty (60) days;
(h) subject to Mortgagor's right to contest as provided herein, if the
Mortgaged Property becomes subject to any mechanic's, materialman's, mortgage or
other lien except a lien for local real estate taxes and assessments not then
due and payable;
(i) if Mortgagor fails to cure properly any violations of laws or
ordinances affecting or which may be interpreted to affect the Mortgaged
Property;
(j) except as permitted in this Mortgage, the actual or threatened
alteration, improvement, demolition or removal of any of the Improvements
without the prior consent of Mortgagee;
(k) damage to the Mortgaged Property in any manner which is not covered by
insurance solely as a result of Mortgagor's failure to maintain insurance
required in accordance with this Mortgage;
(l) if Mortgagor shall default under any term, covenant, or condition of
this Mortgage or any of the other Loan Documents, including the Loan Agreement
(defined in the Note) and the Other Mortgages (hereinafter defined) other than
as specified in any of the above subparagraphs;
(m) if without Mortgagee's prior consent (i) the managing agent for the
Mortgaged Property resigns or is removed or (ii) the ownership, management or
control of such managing agent is transferred to a person or entity other than
the general partner or managing partner of the Mortgagor, or (iii) there is any
material change in the property management agreement of the Mortgaged Property;
(n) if all or a substantial part of Mortgagor's assets (other than the
Mortgaged Property) are attached, seized, subjected to a writ or distress
warrant or are levied upon (unless such attachment, seizure, writ, distress
warrant or levy is vacated within sixty [60] days following the date of the
same);
(o) entry of a judgment in excess of $100,000.00 and the expiration of any
appeal rights or the dismissal or final adjudication of appeals against
Mortgagor (unless such judgment is vacated within sixty [60] days following the
date of the same);
(p) the Mortgage shall cease to constitute a first-priority lien on the
Mortgaged Property (other than in accordance with its terms); and
(q) seizure or forfeiture of the Mortgaged Property, or any portion
thereof, or Mortgagor's interest therein, resulting from criminal wrongdoing or
other unlawful action of Mortgagor, its affiliates, or any tenant in the
Mortgaged Property under any federal, state or local law.
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(r) if without Mortgagee's prior consent, the hotel manager for the
Mortgaged Property under the Management Agreement (or any successor management
agreement) resigns or is removed, or the ownership, management or control of
such hotel manager is transferred to a person or entity other than the general
partner or managing partner of the Mortgagor, or there is any material change in
the Management Agreement (or any successor management agreement);
(s) if a default has occurred and continues beyond any applicable cure
period under the Management Agreement (or any successor management agreement) if
such default permits the hotel manager to terminate or cancel the Management
Agreement (or any successor management agreements);
(t) if without Mortgagee's prior consent, there is any material change in
the Franchise Agreement (or any successor franchise agreement);
(u) if a default has occurred and continues beyond any applicable cure
period under the Franchise Agreement (or any successor franchise agreement) if
such default permits the franchisor to terminate or cancel the Franchise
Agreement (or any successor franchise agreement);
(v) if Mortgagor ceases to do business as a hotel or motel on the Mortgaged
Property or terminates such business for any reason whatsoever (other than
temporary cessation in connection with any renovations to the Mortgaged
Property); and
(w) if any Event of Default, as defined in the Other Mortgages (hereinafter
defined), occurs.
24. Notice and Cure. Notwithstanding the foregoing, Mortgagee agrees to
give to Mortgagor written notice as described below of (a) Mortgagor's failure
to pay any part of the Debt when due (a "Monetary Default"), (b) a default
referred to in subsection 23(p) above (a "First Lien Default") and (c) a default
referred to in subsections 23(c),(i) or (1) above (a "Nonmonetary Default").
Mortgagor shall have a period of five (5) days from its receipt of notice in
which to cure a Monetary Default (which written notice period may run
concurrently with the five [5] day period referred to in subsection 23[a]),
shall have a period of twenty (20) days from its receipt of notice to cure a
First Lien Default and shall have a period of twenty (20) days from its receipt
of notice in which to cure a Nonmonetary Default unless such Nonmonetary Default
is not susceptible to cure within such twenty (20) day period, in which case
Mortgagor shall commence to cure such Nonmonetary Default within twenty (20)
days following notice and diligently prosecute such cure to completion,
provided, however, that Mortgagor will provide Mortgagee with such information
as Mortgagee may reasonably request concerning the status of any attempted cure
of any such Nonmonetary Default and the cure of any such Nonmonetary Default
must be completed to the satisfaction of Mortgagee within sixty (60) days of
notice in any case. Notwithstanding the foregoing, Mortgagee may, but shall not
be required, to give notice of a Monetary Default or a recurrence of the same
Nonmonetary Default more frequently than two times in any calendar year. A
Monetary Default and/or First Lien Default and/or Nonmonetary Default shall
nevertheless be an Event of Default for all purposes under the Loan Documents
except that the acceleration of the Debt or other exercise of remedies shall not
be prior to the expiration of the applicable cure and/or grace periods provided
in Section 23 or in this section.
25. Remedies. Upon the occurrence of an Event of Default and subject to any
applicable cure period, Mortgagee may, at Mortgagee's option, do any one or more
of the following:
(a) Right to Perform Mortgagor's Covenants. If Mortgagor has failed to keep
or perform any covenant whatsoever contained in this Mortgage or the other Loan
Documents, Mortgagee may, but shall not be obligated to any person to do so,
perform or attempt to perform said covenant; and any payment made or expense
incurred in the performance or attempted performance of any such covenant,
together with any sum expended by Mortgagee that is chargeable to Mortgagor or
subject to reimbursement by Mortgagor under the Loan Documents, shall be and
become a part of the "Debt," and Mortgagor promises, upon demand, to pay to
Mortgagee, at the place where the Note is payable, all sums so incurred, paid or
expended by Mortgagee, with interest from the date when paid, incurred or
expended by Mortgagee at the Default Rate as specified in the Note.
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(b) Right of Entry. Mortgagee may, prior or subsequent to the institution
of any foreclosure proceedings, enter upon the Mortgaged Property, or any part
thereof, and take exclusive possession of the Mortgaged Property and of all
books, records, and accounts relating thereto and to exercise without
interference from Mortgagor any and all rights which Mortgagor has with respect
to the management, possession, operation, protection, or preservation of the
Mortgaged Property, including without limitation the right to rent the same for
the account of Mortgagor and to deduct from such Rents all costs, expenses, and
liabilities of every character incurred by the Mortgagee in collecting such
Rents and in managing, operating, maintaining, protecting, or preserving the
Mortgaged Property and to apply the remainder of such Rents on the Debt in such
manner as Mortgagee may elect. All such costs, expenses, and liabilities
incurred by the Mortgagee in collecting such Rents and in managing, operating,
maintaining, protecting, or preserving the Mortgaged Property, if not paid out
of Rents as hereinabove provided, shall constitute a demand obligation owing by
Mortgagor and shall bear interest from the date of expenditure until paid at the
Default Rate as specified in the Note, all of which shall constitute a portion
of the Debt. If necessary to obtain the possession provided for above, the
Mortgagee may invoke any and all legal remedies to dispossess Mortgagor,
including specifically one or more actions for forcible entry and detainer,
trespass to try title, and restitution. In connection with any action taken by
the Mortgagee pursuant to this subparagraph, the Mortgagee shall not be liable
for any loss sustained by Mortgagor resulting from any failure to let the
Mortgaged Property, or any part thereof, or from any other act or omission of
the Mortgagee in managing the Mortgaged Property unless such loss is caused by
the willful misconduct of the Mortgagee, nor shall the Mortgagee be obligated to
perform or discharge any obligation, duty, or liability under any Lease or under
or by reason hereof or the exercise of rights or remedies hereunder. Mortgagor
shall and does hereby agree to indemnify the Mortgagee for, and to hold the
Mortgagee harmless from, any and all liability, loss, or damage, which may or
might be incurred by the Mortgagee under any such Lease or under or by reason
hereof or the exercise of rights or remedies hereunder, and from any and all
claims and demands whatsoever which may be asserted against the Mortgagee 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 such
Lease. Should the Mortgagee incur any such liability, the amount thereof,
including without limitation costs, expenses, and reasonable attorneys' fees,
together with interest thereon from the date of expenditure until paid at the
Default Rate as specified in the Note, shall be secured hereby, and Mortgagor
shall reimburse the Mortgagee therefor immediately upon demand. Nothing in this
subsection shall impose any duty, obligation, or responsibility upon the
Mortgagee for the control, care, management, leasing, or repair of the Mortgaged
Property, nor for the carrying out of any of the terms and conditions of any
such Lease; nor shall it operate to make the Mortgagee responsible or liable for
any waste committed on the Mortgaged Property by the tenants or by any other
parties, or for any hazardous substances or environmental conditions on or under
the Mortgaged Property, or for any dangerous or defective condition of the
Mortgaged Property or for any negligence in the management, leasing, upkeep,
repair, or control of the Mortgaged Property resulting in loss or injury or
death to any tenant, licensee, employee, or stranger. Mortgagor hereby assents
to, ratifies, and confirms any and all actions of the Mortgagee with respect to
the Mortgaged Property taken under this subparagraph.
(c) Right to Accelerate. Mortgagee may, without notice except as
provided in Section 24 above, demand, presentment, notice of nonpayment or
nonperformance, protest, notice of protest, notice of intent to accelerate,
notice of acceleration, or any other notice or any other action, all of which
are hereby waived by Mortgagor and all other parties obligated in any manner
whatsoever on the Debt, declare the entire unpaid balance of the Debt
immediately due and payable, and upon such declaration, the entire unpaid
balance of the Debt shall be immediately due and payable.
(d) Foreclosure-Power of Sale. Mortgagee may institute a proceeding or
proceedings, judicial, or nonjudicial, by advertisement or otherwise, for the
complete or partial foreclosure of this Mortgage or the complete or partial sale
of the Mortgaged Property under the power of sale contained herein or under any
applicable provision of law. Mortgagee may sell the Mortgaged Property, and all
estate, right, title, interest, claim and demand of Mortgagor therein, and all
rights of redemption thereof, at one or more sales, as an entirety or in
parcels, with such elements of real and/or personal property, and at such time
and place and upon such terms as it may deem expedient, or as may be required by
applicable law, and in the event of a sale, by foreclosure or otherwise, of less
than all of the Mortgaged Property, this Mortgage shall continue as a lien and
security interest on the remaining portion of the Mortgaged Property.
(e) Rights Pertaining to Sales. Subject to the requirements of applicable
law and except as otherwise provided herein, the following provisions shall
apply to any sale or sales of all or any portion of the Mortgaged
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Property under or by virtue of subsection (d) above, whether made under the
power of sale herein granted or by virtue of judicial proceedings or of a
judgment or decree of foreclosure and sale:
i) Mortgagee may conduct any number of sales from time to time. The
power of sale set forth above shall not be exhausted by any one or more
such sales as to any part of the Mortgaged Property which shall not have
been sold, nor by any sale which is not completed or is defective in
Mortgagee's opinion, until the Debt shall have been paid in full.
ii) Any sale may be postponed or adjourned by public announcement at
the time and place appointed for such sale or for such postponed or
adjourned sale without further notice.
iii) After each sale, Mortgagee or an officer of any court empowered
to do so shall execute and deliver to the purchaser or purchasers at such
sale a good and sufficient instrument or instruments granting, conveying,
assigning and transferring all right, title and interest of Mortgagor in
and to the property and rights sold and shall receive the proceeds of said
sale or sales and apply the same as specified in the Note. Mortgagee is
hereby appointed the true and lawful attorney-in-fact of Mortgagor, which
appointment is irrevocable and shall be deemed to be coupled with an
interest, in Mortgagor's name and stead, to make all necessary conveyances,
assignments, transfers and deliveries of the property and rights so sold,
Mortgagor hereby ratifying and confirming all that said attorney or such
substitute or substitutes shall lawfully do by virtue thereof.
Nevertheless, Mortgagor, if requested by Mortgagee, shall ratify and
confirm any such sale or sales by executing and delivering to Mortgagee or
such purchaser or purchasers all such instruments as may be advisable, in
Mortgagee's judgment, for the purposes as may be designated in such
request.
iv) Any and all statements of fact or other recitals made in any of
the instruments referred to in subparagraph (iii) of this subsection (e)
given by Mortgagee shall be taken as conclusive and binding against all
persons as to evidence of the truth of the facts so stated and recited.
v) Any such sale or sales shall operate to divest all of the estate,
right, title, interest, claim and demand whatsoever, whether at law or in
equity, of Mortgagor in and to the properties and rights so sold, and shall
be a perpetual bar both at law and in equity against Mortgagor and any and
all persons claiming or who may claim the same, or any part thereof or any
interest therein, by, through or under Mortgagor to the fullest extent
permitted by applicable law.
vi) Upon any such sale or sales, Mortgagee may bid for and acquire the
Mortgaged Property and, in lieu of paying cash therefor, may make
settlement for the purchase price by crediting against the Debt the amount
of the bid made therefor, after deducting therefrom the expenses of the
sale, the cost of any enforcement proceeding hereunder, and any other sums
which Mortgagee is authorized to deduct under the terms hereof, to the
extent necessary to satisfy such bid.
vii) Upon any such sale, it shall not be necessary for Mortgagee or
any public officer acting under execution or order of court to have present
or constructively in its possession any of the Mortgaged Property.
(f) Mortgagee's Judicial Remedies. Mortgagee may proceed by suit or suits,
at law or in equity, to enforce the payment of the Debt to foreclose the liens
and security interests of this Mortgage as against all or any part of the
Mortgaged Property, and to have all or any part of the Mortgaged Property sold
under the judgment or decree of a court of competent jurisdiction. This remedy
shall be cumulative of any other nonjudicial remedies available to the Mortgagee
under this Mortgage or the other Loan Documents. Proceeding with a request or
receiving a judgment for legal relief shall not be or be deemed to be an
election of remedies or bar any available nonjudicial remedy of the Mortgagee.
(g) Mortgagee's Right to Appointment of Receiver . Mortgagee, as a matter
of right and (i) without regard to the sufficiency of the security for repayment
of the Debt, (ii) without notice to Mortgagor, (iii) without any showing of
insolvency, fraud, or mismanagement on the part of Mortgagor, (iv) without the
necessity of filing any judicial or other proceeding other than the proceeding
for appointment of a receiver, and (v) without regard to the
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then value of the Mortgaged Property, shall be entitled to the appointment of a
receiver or receivers for the protection, possession, control, management and
operation of the Mortgaged Property, including (without limitation), the power
to collect the Rents, enforce this Mortgage and, in case of a sale and
deficiency, during the full statutory period of redemption (if any), whether
there be a redemption or not, as well as during any further times when
Mortgagor, except for the intervention of such receiver, would be entitled to
collection of such Rents. Mortgagor hereby irrevocably consents to the
appointment of a receiver or receivers. Any receiver appointed pursuant to the
provisions of this subsection shall have the usual powers and duties of
receivers in such matters.
(h) Mortgagee's Uniform Commercial Code Remedies. The Mortgagee may
exercise its rights of enforcement under the Uniform Commercial Code in effect
in the state in which the Mortgaged Property is located.
(i) Other Rights. Mortgagee (i) may surrender the Policies maintained
pursuant to this Mortgage or any part thereof, and upon receipt shall apply the
unearned premiums as a credit on the Debt, and, in connection therewith,
Mortgagor hereby appoints Mortgagee as agent and attorney-in-fact (which is
coupled with an interest and is therefore irrevocable) for Mortgagor to collect
such premiums; and (ii) may apply the Tax and Insurance Escrow Fund and/or the
Replacement Escrow Fund and any other funds held by Mortgagee toward payment of
the Debt; and (iii) shall have and may exercise any and all other rights and
remedies which Mortgagee may have at law or in equity, or by virtue of any of
the Loan Documents, or otherwise.
(j) Discontinuance of Remedies. In case Mortgagee shall have proceeded to
invoke any right, remedy, or recourse permitted under the Loan Documents and
shall thereafter elect to discontinue or abandon same for any reason, Mortgagee
shall have the unqualified right so to do and, in such event, Mortgagor and
Mortgagee shall be restored to their former positions with respect to the Debt,
the Loan Documents, the Mortgaged Property or otherwise, and the rights,
remedies, recourses and powers of Mortgagee shall continue as if same had never
been invoked.
(k) Remedies Cumulative. All rights, remedies, and recourses of Mortgagee
granted in the Note, this Mortgage and the other Loan Documents, any other
pledge of collateral, or otherwise available at law or equity: (i) shall be
cumulative and concurrent; (ii) may be pursued separately, successively, or
concurrently against Mortgagor, the Mortgaged Property, or any one or more of
them, at the sole discretion of Mortgagee; (iii) may be exercised as often as
occasion therefor shall arise, it being agreed by Mortgagor that the exercise or
failure to exercise any of same shall in no event be construed as a waiver or
release thereof or of any other right, remedy, or recourse; (iv) shall be
nonexclusive; (v) shall not be conditioned upon Mortgagee exercising or pursuing
any remedy in relation to the Mortgaged Property prior to Mortgagee bringing
suit to recover the Debt; and (vi) in the event Mortgagee elects to bring suit
on the Debt and obtains a judgment against Mortgagor prior to exercising any
remedies in relation to the Mortgaged Property, all liens and security
interests, including the lien of this Mortgage, shall remain in full force and
effect and may be exercised thereafter at Mortgagee's option.
(l) Election of Remedies. Mortgagee may release, regardless of
consideration, any part of the Mortgaged Property without, as to the remainder,
in any way impairing, affecting, subordinating, or releasing the lien or
security interests evidenced by this Mortgage or the other Loan Documents or
affecting the obligations of Mortgagor or any other party to pay the Debt. For
payment of the Debt, Mortgagee may resort to any collateral securing the payment
of the Debt in such order and manner as Mortgagee may elect. No collateral taken
by Mortgagee shall in any manner impair or affect the lien or security interests
given pursuant to the Loan Documents, and all collateral shall be taken,
considered, and held as cumulative.
(m) Waivers. Mortgagor hereby irrevocably and unconditionally waives and
releases: (i) all benefits that might accrue to Mortgagor by virtue of any
present or future law exempting the Mortgaged Property from attachment, levy or
sale on execution or providing for any appraisement, valuation, stay of
execution, exemption from civil process, redemption, or extension of time for
payment; (ii) all notices of any Event of Default except as expressly provided
herein; or of Mortgagee's exercise of any right, remedy, or recourse provided
for under the Loan Documents; and (iii) any right to a marshalling of assets, a
sale in inverse order of alienation or any other right to direct in any manner,
the order of sale of any of the Mortgaged Property.
(n) Statute of Limitations. To the extent permitted by applicable law,
Mortgagee's rights hereunder shall continue even to the extent that a suit for
collection of the Debt, or part thereof, is barred by a statute of
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limitations. Mortgagor hereby expressly waives and releases to the fullest
extent permitted by law, the pleading of any statute of limitations as a defense
to payment of the Debt.
(o) Waiver of Automatic or Supplemental Stay. In the event of the filing of
any voluntary or involuntary petition under the Bankruptcy Code by or against
Mortgagor (other than an involuntary petition filed by or joined in by
Mortgagee), the Mortgagor shall not assert, or request any other party to
assert, that the automatic stay under ss. 362 of the Bankruptcy Code shall
operate or be interpreted to stay, interdict, condition, reduce or inhibit the
ability of Mortgagee to enforce any rights it has by virtue of this Mortgage, or
any other rights that Mortgagee has, whether now or hereafter acquired, against
any guarantor of the Debt. Further, Mortgagor shall not seek a supplemental stay
or any other relief, whether injunctive or otherwise, pursuant to ss. 105 of the
Bankruptcy Code or any other provision therein to stay, interdict, condition,
reduce or inhibit the ability of Mortgagee to enforce any rights it has by
virtue of this Mortgage against any guarantor of the Debt. The waivers contained
in this paragraph are a material inducement to Mortgagee's willingness to enter
into this Mortgage and Mortgagor acknowledges and agrees that no grounds exist
for equitable relief which would bar, delay or impede the exercise by Mortgagee
of Mortgagee's rights and remedies against Mortgagor or any guarantor of the
Debt.
(p) Bankruptcy Acknowledgment. In the event the Mortgaged Property or any
portion thereof or any interest therein becomes property of any bankruptcy
estate or subject to any state or federal insolvency proceeding, then Mortgagee
shall immediately become entitled, in addition to all other relief to which
Mortgagee may be entitled under this Mortgage, to obtain (i) an order from the
Bankruptcy Court or other appropriate court granting immediate relief from the
automatic stay pursuant to ss. 362 of the Bankruptcy Code so to permit Mortgagee
to pursue its rights and remedies against Mortgagor as provided under this
Mortgage and all other rights and remedies of Mortgagee at law and in equity
under applicable state law, and (ii) an order from the Bankruptcy Court
prohibiting Mortgagor's use of all "cash collateral" as defined under ss. 363 of
the Bankruptcy Code. In connection with such Bankruptcy Court orders, Mortgagor
shall not contend or allege in any pleading or petition filed in any court
proceeding that Mortgagee does not have sufficient grounds for relief from the
automatic stay. Any bankruptcy petition or other action taken by the Mortgagor
to stay, condition, or inhibit Mortgagee from exercising its remedies are hereby
admitted by Mortgagor to be in bad faith and Mortgagor further admits that
Mortgagee would have just cause for relief from the automatic stay in order to
take such actions authorized under state law.
(q) Application of Proceeds. The proceeds from any sale, lease, or other
disposition made pursuant to this Mortgage, or the proceeds from the surrender
of any insurance policies pursuant hereto, or any Rents collected by Mortgagee
from the Mortgaged Property, or the Tax and Insurance Escrow Fund or the
Replacement Escrow Fund or sums received pursuant to Section 7 hereof, or
proceeds from insurance which Mortgagee elects to apply to the Debt pursuant to
Section 3 hereof, shall be applied by Mortgagee to the Debt in the following
order and priority: (1) to the payment of all expenses of advertising, selling,
and conveying the Mortgaged Property or part thereof, and/or prosecuting or
otherwise collecting Rents, proceeds, premiums or other sums including
reasonable attorneys' fees; (2) to that portion, if any, of the Debt with
respect to which no person or entity has personal or entity liability for
payment (the "Exculpated Portion"), and with respect to the Exculpated Portion
as follows: first, to accrued but unpaid interest, second, to matured principal,
and third, to unmatured principal in inverse order of maturity; (3) to the
remainder of the Debt as follows: first, to the remaining accrued but unpaid
interest, second, to the matured portion of principal of the Debt, and third, to
prepayment of the unmatured portion, if any, of principal of the Debt applied to
installments of principal in inverse order of maturity; (4) the balance, if any
or to the extent applicable, remaining after the full and final payment of the
Debt to the holder or beneficiary of any inferior liens covering the Mortgaged
Property, if any, in order of the priority of such inferior liens (Mortgagee
shall hereby be entitled to rely exclusively on a commitment for title insurance
issued to determine such priority); and (5) the cash balance, if any, to the
Mortgagor. The application of proceeds of sale or other proceeds as otherwise
provided herein shall be deemed to be a payment of the Debt like any other
payment. The balance of the Debt remaining unpaid, if any, shall remain fully
due and owing in accordance with the terms of the Note and the other Loan
Documents.
26. Right of Inspection. Mortgagee and its agents shall have the right to
enter and inspect the Mortgaged Property during normal business hours upon
reasonable notice.
27. Security Agreement. This Mortgage is both a real property mortgage or
deed of trust and a "security agreement" within the meaning of the Uniform
Commercial Code. The Mortgaged Property includes both real and personal property
and all other rights and interests, whether tangible or intangible in nature, of
Mortgagor
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in the Mortgaged Property. Mortgagor by executing and delivering this Mortgage
has granted and hereby grants to Mortgagee, as security for the Debt, a security
interest in the Mortgaged Property to the full extent that the Mortgaged
Property may be subject to the Uniform Commercial Code (said portion of the
Mortgaged Property so subject to the Uniform Commercial Code being called in
this paragraph the "Collateral"). Mortgagor hereby agrees with Mortgagee to
execute and deliver to Mortgagee, in form and substance satisfactory to
Mortgagee, such financing statements and such further assurances as Mortgagee
may from time to time, reasonably consider necessary to create, perfect, and
preserve Mortgagee's security interest herein granted. This Mortgage shall also
constitute a "fixture filing" for the purposes of the Uniform Commercial Code.
All or part of the Mortgaged Property are or are to become fixtures. Information
concerning the security interest herein granted may be obtained from the parties
at the addresses of the parties set forth in the first paragraph of this
Mortgage. If an Event of Default shall occur, Mortgagee, in addition to any
other rights and remedies which they may have, shall have and may exercise
immediately and without demand, any and all rights and remedies granted to a
secured party upon default under the Uniform Commercial Code, including, without
limiting the generality of the foregoing, the right to take possession of the
Collateral or any part thereof, and to take such other measures as Mortgagee may
deem necessary for the care, protection and preservation of the Collateral. Upon
request or demand of Mortgagee, Mortgagor shall at its expense assemble the
Collateral and make it available to Mortgagee at a convenient place acceptable
to Mortgagee. Mortgagor shall pay to Mortgagee on demand any and all expenses,
including legal expenses and attorneys' fees, incurred or paid by Mortgagee in
protecting the interest in the Collateral and in enforcing the rights hereunder
with respect to the Collateral. Any notice of sale, disposition or other
intended action by Mortgagee with respect to the Collateral sent to Mortgagor in
accordance with the provisions hereof at least five (5) days prior to such
action, shall constitute commercially reasonable notice to Mortgagor. The
proceeds of any disposition of the Collateral, or any part thereof, may be
applied by Mortgagee to the payment of the Debt in such priority and proportions
as Mortgagee in its discretion shall deem proper. In the event of any change in
name, identity or structure of any Mortgagor, such Mortgagor shall notify
Mortgagee thereof and promptly after request shall execute, file and record such
Uniform Commercial Code forms as are necessary to maintain the priority of
Mortgagee's lien upon and security interest in the Collateral, and shall pay all
expenses and fees in connection with the filing and recording thereof. If
Mortgagee shall require the filing or recording of additional Uniform Commercial
Code forms or continuation statements, Mortgagor shall, promptly after request,
execute, file and record such Uniform Commercial Code forms or continuation
statements as Mortgagee shall deem necessary, and shall pay all expenses and
fees in connection with the filing and recording thereof, it being understood
and agreed, however, that no such additional documents shall increase
Mortgagor's obligations under the Note, this Mortgage and the other Loan
Documents. Mortgagor hereby irrevocably appoints Mortgagee as its
attorney-in-fact, coupled with an interest, to file with the appropriate public
office on its behalf any financing or other statements signed only by Mortgagee,
as Mortgagor's attorney-in-fact, in connection with the Collateral covered by
this Mortgage. Notwithstanding the foregoing, Mortgagor shall appear and defend
in any action or proceeding which affects or purports to affect the Mortgaged
Property and any interest or right therein, whether such proceeding effects
title or any other rights in the Mortgaged Property (and in conjunction
therewith, Mortgagor shall fully cooperate with Mortgagee in the event Mortgagee
is a party to such action or proceeding).
28. Actions and Proceedings. Mortgagee has the right to appear in and
defend any action or proceeding brought with respect to the Mortgaged Property
and to bring any action or proceeding, in the name and on behalf of Mortgagor,
which Mortgagee, in its discretion, decides should be brought to protect their
interest in the Mortgaged Property. Mortgagee shall, at its option, be
subrogated to the lien of any mortgage or other security instrument discharged
in whole or in part by the Debt, and any such subrogation rights shall
constitute additional security for the payment of the Debt.
29 . Waiver of Setoff and Counterclaim. All amounts due under this
Mortgage, the Note and the other Loan Documents shall be payable without setoff,
counterclaim or any deduction whatsoever. Mortgagor hereby waives the right to
assert a setoff, counterclaim or deduction in any action or proceeding in which
Mortgagee is a participant, or arising out of or in any way connected with this
Mortgage, the Note, any of the other Loan Documents, or the Debt.
30 . Contest of Certain Claims. Notwithstanding the provisions of Sections
4 and 23(h) hereof, Mortgagor shall not be in default for failure to pay or
discharge Taxes, Other Charges or mechanic's or materialman's lien asserted
against the Mortgaged Property if, and so long as, (a) Mortgagor shall have
notified Mortgagee of same within five (5) days of obtaining knowledge thereof;
(b) Mortgagor shall diligently and in good
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faith contest the same by appropriate legal proceedings which shall operate to
prevent the enforcement or collection of the same and the sale of the Mortgaged
Property or any part thereof, to satisfy the same; (c) Mortgagor shall have
furnished to Mortgagee a cash deposit, or an indemnity bond satisfactory to
Mortgagee with a surety satisfactory to Mortgagee, in the amount of the Taxes,
Other Charges or mechanic's or materialman's lien claim, plus a reasonable
additional sum to pay all costs, interest and penalties that may be imposed or
incurred in connection therewith, to assure payment of the matters under contest
and to prevent any sale or forfeiture of the Mortgaged Property or any part
thereof; (d) Mortgagor shall promptly upon final determination thereof pay the
amount of any such Taxes, Other Charges or claim so determined, together with
all costs, interest and penalties which may be payable in connection therewith;
(e) the failure to pay the Taxes, Other Charges or mechanic's or materialman's
lien claim does not constitute a default under any other deed of trust, mortgage
or security interest covering or affecting any part of the Mortgaged Property;
and (f) notwithstanding the foregoing, Mortgagor shall immediately upon request
of Mortgagee pay (and if Mortgagor shall fail so to do, Mortgagee may, but shall
not be required to, pay or cause to be discharged or bonded against) any such
Taxes, Other Charges or claim notwithstanding such contest, if in the opinion of
Mortgagee, the Mortgaged Property or any part thereof or interest therein may be
in danger of being sold, forfeited, foreclosed, terminated, canceled or lost.
Mortgagee may pay over any such cash deposit or part thereof to the claimant
entitled thereto at any time when, in the judgment of Mortgagee, the entitlement
of such claimant is established.
31. Recovery of Sums Required to Be Paid. Mortgagee shall have the right
from time to time to take action to recover any sum or sums which constitute a
part of the Debt as the same become due, without regard to whether or not the
balance of the Debt shall be due, and without prejudice to the right of
Mortgagee thereafter to bring an action of foreclosure, or any other action, for
a default or defaults by Mortgagor existing at the time such earlier action was
commenced.
32. Handicapped Access. Mortgagor agrees that the Mortgaged Property shall
at all times strictly comply to the extent applicable with the requirements of
the Americans with Disabilities Act of 1990, the Fair Housing Amendments Act of
1988, all state and local laws and ordinances related to handicapped access and
all rules, regulations, and orders issued pursuant thereto including, without
limitation, the Americans with Disabilities Act Accessibility Guidelines for
Buildings and Facilities (collectively "Access Laws").
(a) Notwithstanding any provisions set forth herein or in any other
document regarding Mortgagee's approval of alterations of the Mortgaged
Property, Mortgagor shall not alter the Mortgaged Property in any manner which
would increase Mortgagor's responsibilities for compliance with the applicable
Access Laws without the prior written approval of Mortgagee. The foregoing shall
apply to tenant improvements constructed by Mortgagor or by any of its tenants.
Mortgagee may condition any such approval upon receipt of a certificate from an
architect, engineer, or other person acceptable to Mortgagee of compliance with
Access Laws.
(b) Mortgagor agrees to give prompt notice to Mortgagee of the receipt by
Mortgagor of any complaints related to violation of any Access Laws and of the
commencement of any proceedings or investigations which relate to compliance
with applicable Access Laws.
33. ERISA. (a) Mortgagor shall not engage in any transaction which would
cause any obligation, or action taken or to be taken, hereunder (or the exercise
by Mortgagee of any of its rights under the Note, this Mortgage and the other
Loan Documents) to be a non-exempt (under a statutory or administrative class
exemption) prohibited transaction under the Employee Retirement Income Security
Act of 1974, as amended ("ERISA").
(b) As of the date hereof and throughout the term of this Mortgage, (i)
Mortgagor is not and will not be an "employee benefit plan" as defined in
Section 3(3) of ERISA, which is subject to Title I of ERISA, and (ii) the assets
of Mortgagor do not and will not constitute "plan assets" of one or more such
plans for purposes of Title I of ERISA.
(c) As of the date hereof and throughout the term of this Mortgage, (i)
Mortgagor is not and will not be a "governmental plan" within the meaning of
Section 3(3) of ERISA, and (ii) transactions by or with Mortgagor are not and
will not be subject to state statutes applicable to Mortgagor regulating
investments of and fiduciary obligations with respect to governmental plans.
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(d) Mortgagor further covenants and agrees to deliver to Mortgagee such
certifications or other evidence from time to time throughout the term of the
Mortgage, as requested by Mortgagee in its sole discretion, that (i) Mortgagor
is not an "employee benefit plan" as defined in Section 3(3) of ERISA, which is
subject to Title I of ERISA, or a "governmental plan" within the meaning of
Section 3(3) of ERISA; (ii) Mortgagor 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 Mortgagor 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 Mortgagor are held by "benefit plan investors" within the
meaning of 29 C.F.R. ss. 2510.3-101(f)(2); or (C) Mortgagor 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.
34. Indemnification. In addition to any other indemnifications provided in
any of the Loan Documents, Mortgagor shall, at its sole cost and expense,
protect, defend, indemnify, release and save harmless Mortgagee or any person or
entity who is or will have been involved in the servicing of this Loan, any
person or entity whose name the encumbrance created by this Mortgage is or will
have been recorded, persons and entities who may hold or acquire or will have
held a full or partial interest in this Loan (including but not limited to
investors or prospective investors, as well as custodians, trustees and other
fiduciaries who hold or have held a full or partial interest in the Loan for the
benefit of third parties) as well as the respective affiliates, subsidiaries,
persons controlling or under common control, directors, officers, shareholders,
members, partners, employees, agents, servants, representatives, contractors,
subcontractors, 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 Mortgaged 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 Mortgagee's assets and business) (collectively, the
"Indemnified Parties"), from and against all liabilities, obligations, claims,
demands, damages, penalties, causes of action, losses, fines, costs and expenses
(including without limitation reasonable attorneys' fees and expenses), imposed
upon or incurred by or asserted against any of the Indemnified Parties and
directly or indirectly arising out of or in any way relating to any one or more
of the following: (a) ownership of this Mortgage, the Mortgaged Property or any
interest therein or receipt of any Rents; (b) any amendment to, or restructuring
of, the Debt, and the Note, this Mortgage or any other Loan Documents; (c) any
and all lawful action that may be taken by Mortgagee in connection with the
enforcement of the provisions of this Mortgage or the Note or any other Loan
Documents; (d) any and all lawful action that may be taken by Mortgagee in
connection with the enforcement of the provisions of this Mortgage or the Note
or any other Loan Documents, whether or not suit is filed in connection with
same, or in connection with Mortgagor, any Guarantor 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; (e)
any accident, injury to or death of persons or loss of or damage to property
occurring in, on or about the Mortgaged Property or any part thereof or on the
adjoining sidewalks, curbs, adjacent property or adjacent parking areas, streets
or ways; (f) any use, nonuse or condition in, on or about the Mortgaged Property
or any part thereof or on adjoining sidewalks, curbs, adjacent property or
adjacent parking areas, streets or ways; (g) any failure on the part of
Mortgagor to perform or comply with any of the terms of Sections 2 through 54 of
this Mortgage; (h) performance of any labor or services or the furnishing of any
materials or other property in respect of the Mortgaged Property or any part
thereof; (i) any failure of the Mortgaged Property to comply with any laws or
ordinances affecting or which may be interpreted to affect the Mortgaged
Property, including, without limitation, the Access Laws; (j) any representation
or warranty made in the Note, this Mortgage or the other Loan Documents being
false or misleading in any respect as of the date such representation or
warranty was made; (k) any claim by brokers, finders or similar persons claiming
to be entitled to a commission in connection with any Lease or other transaction
involving the Mortgaged Property or any part thereof under any legal requirement
or any liability asserted against Mortgagee with respect thereto; (l) the claims
of any lessee to any portion of the Mortgaged Property or any person acting
through or under any lessee or otherwise arising under or as a consequence of
any Lease; (m) performance of any labor or services or the furnishing of any
materials or other property in respect of the Mortgaged Property or any part
thereof; (n) the enforcement by any Indemnified Party of the provisions of this
Section 34; (o) any and all claims and demands whatsoever which may be asserted
against Mortgagee 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; or (p) any investigation, defense, and settlement
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 Mortgagee's sole discretion as a result of a
default under Section 33. The obligations and liabilities of
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Mortgagor under this Section 34 (A) shall survive for a period of one (1) year
following any release of this Mortgage executed by Mortgagee and satisfaction of
the Loan evidenced by the Loan Documents, and (B) shall survive the transfer or
assignment of this Mortgage, the entry of a judgment of foreclosure, sale of the
Mortgaged Property by nonjudicial foreclosure sale, or delivery of a deed in
lieu of foreclosure (including, without limitation, any transfer by Mortgagor of
any of its rights, title and interest in and to the Mortgaged Property to any
party, whether or not affiliated with Mortgagor).
35. Duty to Defend. Upon written request by an Indemnified Party, Mortgagor
shall defend such Indemnified Party (if requested by an 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 the
Indemnified Parties, their attorneys shall control the resolution of claim or
proceeding. Upon demand, Mortgagor 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, and
other professionals in connection therewith. Any amounts payable to any of the
Indemnified Parties by reason of the application of Section 34 or this Section
shall be secured by this Mortgage and shall become immediately due and payable
and shall bear interest at the Default Rate specified in the Note from the date
loss or damage is sustained by any of the Indemnified Parties until paid.
36. Notices. Unless oral notice is expressly permitted hereunder any
notice, demand, statement, request or consent made hereunder shall be in writing
and shall be deemed to be received by the addressee on the first (1st) business
day after such notice is tendered to a nationally-recognized overnight delivery
service or on the third (3rd) day following the day such notice is deposited
with the United States postal service first class certified mail, return receipt
requested, in either instance, addressed to the address, as set forth above, of
the party to whom such notice is to be given, or to such other address as
Mortgagor or Mortgagee, as the case may be, shall in like manner designate in
writing.
37. Fee for Handling Interest-Bearing Escrows. Upon the request of
Mortgagee, Mortgagor agrees to pay to Mortgagee a fee of Fifty Dollars ($50.00)
per year (not to exceed Mortgagor's interest on the account) on each separate
escrow account maintained by Mortgagee on which Mortgagor is credited with
interest to compensate Mortgagee (or its servicer) for administrative costs
associated with Mortgagee's deposit into an interest-bearing account any funds
escrowed under this Mortgage or under any separate escrow agreement between
Mortgagee and Mortgagor. Mortgagor agrees that Mortgagee (or its servicer) shall
have the right to debit any interest earned for the benefit of Mortgagor on such
escrow account maintained by Mortgagee (or its servicer) for the account of
Mortgagor hereunder to pay such administrative fee.
38. Authority. (a) Mortgagor (and the undersigned representative of
Mortgagor, if any) has full power, authority and right to execute, deliver and
perform its obligations pursuant to this Mortgage, and to mortgage, give, grant,
bargain, sell, alien, enfeoff, convey, confirm, warrant, pledge, hypothecate and
assign the Mortgaged Property pursuant to the terms hereof and to keep and
observe all of the terms of this Mortgage on Mortgagor's part to be performed;
(b) Mortgagor is duly organized, validly existing and in good standing under the
laws of its state of organization or incorporation; (c) Mortgagor is duly
qualified to transact business and is in good standing in the state where the
Mortgaged Property is located and has all necessary approvals, governmental and
otherwise, and full power and authority to own the Mortgaged Property and carry
out its business as now conducted and proposed to be conducted; and (d)
Mortgagor represents and warrants that Mortgagor is not a "foreign person"
within the meaning of Section 1445(f)(3) of the Internal Revenue Code of 1986,
as amended and the related Treasury Department regulations.
39. Waiver of Notice. Mortgagor shall not be entitled to any notices of any
nature whatsoever from Mortgagee except with respect to matters for which this
Mortgage specifically and expressly provides for the giving of notice by
Mortgagee to Mortgagor and except with respect to matters for which Mortgagee is
required by applicable law to give notice, and Mortgagor hereby expressly waives
the right to receive any notice from Mortgagee with respect to any matter for
which this Mortgage does not specifically and expressly provide for the giving
of notice by Mortgagee to Mortgagor.
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40. Remedies of Mortgagor. In the event that a claim or adjudication is
made that Mortgagee has acted unreasonably or unreasonably delayed acting in any
case where by law or under the Note, this Mortgage or the other Loan Documents,
it has an obligation to act reasonably or promptly, Mortgagee shall not be
liable for any monetary damages, and Mortgagor's remedies shall be limited to
injunctive relief or declaratory judgment.
41. Sole Discretion of Mortgagee. Wherever pursuant to this Mortgage,
Mortgagee exercises any right given to it to approve or disapprove, or any
arrangement or term is to be satisfactory to Mortgagee, the decision of
Mortgagee to approve or disapprove or to decide that arrangements or terms are
satisfactory or not satisfactory shall be in the sole discretion of Mortgagee
and shall be final and conclusive, except as may be otherwise expressly and
specifically provided herein.
42. Non-Waiver. The failure of Mortgagee to insist upon strict performance
of any term hereof shall not be deemed to be a waiver of any term of this
Mortgage. Mortgagor shall not be relieved of Mortgagor's obligations hereunder
by reason of (a) the failure of Mortgagee to comply with any request of
Mortgagor or Guarantor to take any action to foreclose this Mortgage or
otherwise enforce any of the provisions hereof or of the Note or other Loan
Documents, (b) the release, regardless of consideration, of the whole or any
part of the Mortgaged Property, or of any person liable for the Debt or any
portion thereof, or (c) any agreement or stipulation by Mortgagee extending the
time of payment or otherwise modifying or supplementing the terms of the Note,
this Mortgage, or the other Loan Documents. Mortgagee may resort for the payment
of the Debt to any other security held by Mortgagee in such order and manner as
Mortgagee, in its discretion, may elect. Mortgagee may take action to recover
the Debt, or any portion thereof, or to enforce any covenant hereof without
prejudice to the right of Mortgagee thereafter to foreclosure this Mortgage. The
rights and remedies of Mortgagee under this Mortgage shall be separate, distinct
and cumulative and none shall be given effect to the exclusion of the others. No
act of Mortgagee shall be construed as an election to proceed under any one
provision herein to the exclusion of any other provision. Mortgagee shall not be
limited exclusively to the rights and remedies herein stated but shall be
entitled to every right and remedy now or hereafter afforded at law or in
equity. It is agreed that the risk of loss or damage to the Mortgaged Property
is on the Mortgagor and Mortgagee shall have no liability whatsoever for decline
in the value of the Mortgaged 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.
43. No Oral Change. This Mortgage may not be modified, amended, waived,
extended, changed, discharged or terminated orally or by any act or failure to
act on the part of Mortgagor or Mortgagee, but only by an agreement in writing
signed by the party against whom enforcement of any modification, amendment,
waiver, extension, change, discharge or termination is sought.
44. Liability. If Mortgagor consists of more than one person, the
obligations and liabilities of each such person hereunder shall be joint and
several. Subject to the provisions hereof requiring Mortgagee's consent to any
transfer of the Mortgaged Property, this Mortgage shall be binding upon and
inure to the benefit of Mortgagor and Mortgagee and their respective successors
and assigns forever.
45. Inapplicable Provisions. If any term, covenant or condition of this
Mortgage is held to be invalid, illegal or unenforceable in any respect, this
Mortgage shall be construed without such provision.
46. Headings, etc. The headings and captions of various paragraphs of this
Mortgage are for convenience of reference only and are not to be construed as
defining or limiting, in any way, the scope or intent of the provisions hereof.
47. Counterparts. This Mortgage may be executed in any number of
counterparts each of which shall be deemed to be an original but all of which
when taken together shall constitute one agreement.
48. Definitions. Unless the context clearly indicates a contrary intent or
unless otherwise specifically provided herein, words used in this Mortgage may
be used interchangeably in singular or plural form and the word "Mortgagor"
shall mean "each Mortgagor and any subsequent owner or owners of the Mortgaged
Property or any part thereof or any interest therein," the word "Mortgagee"
shall mean "Mortgagee and any subsequent holder of the Note," the word "Debt"
shall mean "the Note and any other evidence of indebtedness secured by this
Mortgage," the word "person" shall include an individual, corporation,
partnership, trust, unincorporated association, government,
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governmental authority, and any other entity, and the words "Mortgaged Property"
shall include any portion of the Mortgaged Property and any interest therein and
the words "attorneys' fees" shall include any and all attorneys' fees, paralegal
and law clerk fees, including, but not limited to, fees at the pre-trial, trial
and appellate levels incurred or paid by Mortgagee in protecting its interest in
the Mortgaged Property and Collateral and enforcing its rights hereunder.
Whenever the context may require, any pronouns used herein shall include the
corresponding masculine, feminine or neuter forms, and the singular form of
nouns and pronouns shall include the plural and vice versa.
49. Homestead. Mortgagor hereby waives and renounces all homestead and
exemption rights provided by the constitution and the laws of the United States
and of any state, in and to the Premises as against the collection of the Debt,
or any part hereof.
50. Assignments. Mortgagee shall have the right to assign or transfer its
rights under this Mortgage and the other Loan Documents without limitation,
including, without limitation, the right to assign or transfer its rights to a
servicing agent. Any assignee or transferee shall be entitled to all the
benefits afforded Mortgagee under this Mortgage and the other Loan Documents.
51. Survival of Obligations; Survival of Warrants and Representations. Each
and all of the covenants and obligations of Mortgagor (other than warranties and
representations contained herein) shall survive the execution and delivery of
the Loan Documents and shall continue in full force and effect until the Debt
shall have been paid in full; provided, however, that nothing contained in this
paragraph shall limit the obligations of Mortgagor except as otherwise set forth
herein. In addition, any and all warranties and representations of Mortgagor
contained herein shall survive the execution and delivery of the Loan Documents
and (i) shall continue for a period of one (1) year following any release of
this Mortgage executed by Mortgagee and satisfaction of the loan evidenced by
the Loan Documents, and (ii) shall survive the transfer or assignment of this
Mortgage, the entry of a judgment of foreclosure, sale of the Mortgaged Property
by non-judicial foreclosure or deed in lieu of foreclosure (including, without
limitation, any transfer of the Mortgage by Mortgagee of any of its rights,
title and interest in and to the Mortgaged Property to any party, whether or not
affiliated with Mortgagee).
52. Mortgagor's Expense. Mortgagor acknowledges and confirms that Mortgagee
shall impose certain administrative processing and/or commitment fees in
connection with (a) the extension, renewal, modification, amendment and
termination of its loans, (b) the release or substitution of collateral
therefor, (c) obtaining certain consents, waivers and approvals with respect to
the Mortgaged Property, or (d) the review of any Lease or proposed Lease or the
preparation or review of any subordination, non-disturbance. Mortgagor further
acknowledges and confirms that it shall be responsible for the payment of all
costs of reappraisal of the Mortgaged Property or any part thereof, whether
required by law, regulation, Mortgagee or any governmental or quasi-governmental
authority. Mortgagor hereby acknowledges and agrees to pay, immediately, with or
without demand, all such fees (as the same may be increased or decreased from
time to time), and any additional fees of a similar type or nature which may be
imposed by Mortgagee from time to time, upon the occurrence of an event set
forth in this Section or otherwise. Wherever it is provided for herein that
Mortgagor pay any costs and expenses, such costs and expenses shall include, but
not be limited to, all legal fees and disbursements of Mortgagee, whether of
retained firms, the reimbursement for the expenses of in-house staff or
otherwise.
53. Attorneys' Fees. (a) Mortgagor shall pay all legal fees incurred by
Mortgagee in connection with (i) the preparation of the Note, this Mortgage and
the other Loan Documents; and (ii) the items set forth in Section 52 above, and
(b) Mortgagor shall pay to Mortgagee on demand any and all expenses, including
legal expenses and attorneys' fees, incurred or paid by Mortgagee in protecting
its interest in the Mortgaged Property or in collecting any amount payable under
the Note, Mortgage or other Loan Documents or enforcing its rights hereunder
with respect to the Mortgaged Property, whether or not any legal proceeding is
commenced hereunder or thereunder and whether or not any default or Event of
Default shall have occurred and is continuing, together with interest thereon at
the Default Rate from the date paid or incurred by Mortgagee until such expenses
are paid by Mortgagor.
54. Covenants Running with the Land. All covenants, conditions, warranties,
representations and other obligations contained in this Mortgage and the other
Loan Documents are intended by Mortgagor and Mortgagee to be, and shall be
construed as, covenants running with the Mortgaged Property until the lien of
this Mortgage has been fully released by Mortgagee.
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55. Governing Law; Jurisdiction. THIS MORTGAGE AND THE OTHER LOAN DOCUMENTS
SHALL BE GOVERNED, CONSTRUED, APPLIED AND ENFORCED IN ACCORDANCE WITH THE LAWS
OF THE STATE IN WHICH THE MORTGAGED PROPERTY IS LOCATED (WITHOUT REGARD TO ANY
CONFLICT OF LAWS PRINCIPLES) AND THE APPLICABLE LAWS OF THE UNITED STATES OF
AMERICA. MORTGAGOR HEREBY IRREVOCABLY SUBMITS TO THE JURISDICTION OF ANY COURT
OF COMPETENT JURISDICTION LOCATED IN THE STATE IN WHICH THE MORTGAGED PROPERTY
IS LOCATED IN CONNECTION WITH ANY PROCEEDING OUT OF OR RELATING TO THIS
MORTGAGE.
56. Time. Time is of the essence in this Mortgage and the other Loan
Documents.
57. No Third Party Beneficiaries. The provisions of this Mortgage and the
other Loan Documents are for the benefit of Mortgagor and Mortgagee and shall
not inure to the benefit of any third party (other than any successor or
assignee of Mortgagee). This Mortgage and the other Loan Documents shall not be
construed as creating any rights, claims or causes of action against Mortgagee
or any of its officers, directors, agents or employees in favor of any party
other than Mortgagor including but not limited to any claims to any sums held in
the Tax and Insurance Escrow Fund or the Replacement Escrow Fund.
58. Relationship of Parties. The relationship of Mortgagee and Mortgagor is
solely that of debtor and creditor, and Mortgagee has no fiduciary or other
special relationship with the Mortgagor, and no term or condition of any of the
Loan Documents shall be construed to be other than that of debtor and creditor.
Mortgagor represents and acknowledges that the Loan Documents do not provide for
any shared appreciation rights or other equity participation interest.
59. Investigations. Any and all representations, warranties, covenants and
agreements made in this Mortgage (and/or in other Loan Documents) shall survive
any investigation or inspection made by or on behalf of Mortgagee.
60. Certain Hotel Covenants. Mortgagor further covenants and agrees with
Mortgagee as follows:
(a) Mortgagor shall cause the hotel located on the Mortgaged Property
to be operated pursuant to the Franchise Agreement and the Management
Agreement.
(b) Mortgagor shall:
(i) promptly perform and/or observe all of the covenants and
agreements required to be performed and observed by it under the
Franchise Agreement and the Management Agreement and do all things
necessary to preserve and to keep unimpaired its material rights
thereunder;
(ii) promptly notify Mortgagee of any default under the Franchise
Agreement or the Management Agreement of which it is aware;
(iii) promptly deliver to Mortgagee a copy of each financial
statement, business plan, capital expenditures plan, notice, report
and estimate received by it under the Franchise Agreement or the
Management Agreement; and
(iv) promptly enforce the performance and observance of all of
the covenants and agreements required to be performed and/or observed
by the franchisor under the Franchise Agreement and the manager under
the Management Agreement.
(c) Mortgagor shall not, without Mortgagee's prior consent:
(i) surrender, terminate or cancel the Franchise Agreement or the
Management Agreement;
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(ii) reduce or consent to the reduction of the term of the
Franchise Agreement or the Management Agreement;
(iii) increase or consent to the increase of the amount of any
charges under the Franchise Agreement or the Management Agreement; or
(iv) otherwise modify, change, supplement, alter or amend, or
waive or release any of its rights and remedies under, the Franchise
Agreement or the Management Agreement in any material respect.
(d) Mortgagor shall not, without Mortgagee's prior consent, enter into
transactions with any affiliate, including without limitation, any arrangement
providing for the managing of the hotel on the Mortgaged Property, the rendering
or receipt of services or the purchase or sale of inventory, except any such
transaction in the ordinary course of business of Mortgagor if the monetary or
business consideration arising therefrom would be substantially as advantageous
to Mortgagor as the monetary or business consideration that would obtain in a
comparable transaction with a person not an affiliate of Mortgagor.
(e) Mortgagor shall maintain the Management Agreement for the operation of
the Mortgaged Property in full force and effect and timely perform all of
Mortgagor's obligations thereunder and enforce performance of all obligations of
the manager thereunder, and not permit the termination or amendment of such
Management Agreement unless the prior written consent of Mortgagee is first
obtained. Mortgagor will enter into and cause the manager to enter into an
assignment and subordination of such Management Agreement in form satisfactory
to Mortgagee, assigning and subordinating the manager's interest in the
Mortgaged Property and all fees and other rights of the manager pursuant to such
Management Agreement to the rights of Mortgagee. Upon an Event of Default,
Mortgagor at Mortgagee's request made at any time while such Event of Default
continues, shall terminate the Management Agreement and replace the manager with
a manager selected by Mortgagee.
61. Other Mortgages. Pursuant to the Loan Agreement, Mortgagee has advanced
an aggregate $30,700,000 (the "Related Debt") to JAGI Cleveland - Independence,
LLC, a Delaware limited liability company ("JAGI Independence"), JAGI Montrose
West, LLC, a Delaware limited liability company ("JAGI Montrose"), and JAGI
North Canton, LLC, a Delaware limited liability company ("JAGI Canton"). Each of
JAGI Independence, JAGI Montrose, and JAGI Canton has executed a promissory note
(the "Other Notes") to evidence the Related Debt and a Second Mortgage and
Security Agreement (the "Other Mortgages") as additional security for the Debt.
62. Mechanics' Lien Laws. Mortgagee shall be and hereby is authorized and
empowered to do, as mortgagee, all things provided to be done in the mechanic's
lien laws of the State of Ohio (including Section 1311.14 of the Ohio Revised
Code), and all acts amendatory or supplementary thereto.
63. Protective Advances. The Debt secured by this Mortgage shall include
unpaid balances of advances made by Mortgagee with respect to the Mortgaged
Property for the payment of taxes, assessments, and insurance premiums and for
costs incurred for the protection of the Mortgaged Property as provided for in
Section 5301.233 of the Ohio Revised Code, and all acts amendatory or
supplementary thereto.
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Mortgagor has executed this instrument the day and year first above
written.
MORTGAGOR:
In the presence of: JAGI CLEVELAND-HUDSON, LLC, a
Delaware limited liability company
By Janus American Group, Inc., a Delaware
corporation
/s/ CHARLES S. BADGETT By /s/ JAMES E. BISHOP
- --------------------------------- --------------------------------------
Print Name: Charles S. Badgett Name: James E. Bishop
Title: President
/s/ ELENA ANDERSON
- ---------------------------------
Print Name: Elena Anderson
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STATE OF TEXAS )
) SS.
COUNTY OF DALLAS )
Before me, a Notary Public in and for said county and state, personally
appeared the above-named JAGI CLEVELAND - HUDSON, LLC, a Delaware limited
liability company, by Janus American Group, Inc., a Delaware corporation, its
Manager, by James E. Bishop, its President, who acknowledged that he did sign
the foregoing instrument on behalf of said corporation and said limited
liability company, that the same is the free act and deed of said limited
liability company, the free act and deed of said corporation individually and as
such manager, and his free act and deed individually and as such officer.
In testimony whereof, I have hereunto set my hand and official seal at
Dallas, Texas, this 12th day of August 1998.
/s/ ANGELA BEWLEY
---------------------------------
Notary Public
This instrument prepared by:
Richard L. Reppert, Esq.
Jones, Day, Reavis & Pogue
North Point
901 Lakeside Avenue
Cleveland, Ohio 44114
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<PAGE>
EXHIBIT A
Legal Description
<PAGE>
EXHIBIT A
PARCEL "A"
- ----------
Premises/situated in the VILLAGE of BOSTON HEIGHTS, County of Summit and State
of Ohio, and known as being a part of Lot No. 3 east of the Cuyahoga River,
formerly in Boston Township, and more fully described as follows:
Beginning at a stone at the northwest corner of said Lot No. 3, said stone
being at the intersection of the centerline tangents of Hines Hill Road
(C. H. 115);
Thence S 68 deg. 51' 10" East, 140.02 feet along the centerline tangent of
Hines Hill Road (C. H. 115) to a point and the true place of beginning;
Thence S 68 deg. 51' 10" East, 231.33 feet along the centerline tangent of
Hines Hill Road (C. H. 115) to a point on the westerly line of a highway
easement conveyed to the State of Ohio for Relocated State Route 8 and
recorded in Volume 2990, Page 348 of the Summit County Record of Deeds;
Thence along the westerline of said highway following a circular curve to
the left, 33.46 feet to a point, said circular curve having a central angle
of 00 deg. 38' 52", a radius of 2,959.79 feet, a tangent of 16.73 feet, and
a chord of 33.46 feet;
Thence N 70 deg. 21' 01" West, 115.10 feet along the westerly line of said
highway;
Thence S 55 deg. 36' 00" East, 136.05 feet along the westerly line of said
highway;
Thence along the westerly line of said highway following a circular curve
to the left, 248.43 feet to a point, said circular curve having a central
angle of 04 deg. 48' 43", a radius of 2,959.79 feet, a tangent of 124.29
feet, and a chord of 248.36 feet:
Thence WEST, 146.07 feet to a point;
Thence NORTH, 35.00 feet to a point;
Thence WEST, 224.32 feet to a point;
Thence NORTH 210.26 feet to a point
Thence S 75 deg. 26' 37" East, 114.26 feet to a point;
Thence NORTH 183.95 feet to a point and the true place of beginning, and
containing 2.2659 acres of land as determined by Messmore & Fay, Registered
Surveyors in February, 1975, but subject to all legal roads, highways, and
easements of record.
PARCEL "B"
- ----------
Situated in the Village of Boston Heights, County of Summit and State of Ohio,
and known as being a part of Lot No. 3, east of the Cuyahoga River, formerly in
Boston Township, and more fully described as follows:
Beginning at a stone at the northwest corner of said Lot No. 3, said stone
being at the intersection of the centerline tangents of Hines Hill Road
(C. H. 115);
Thence S 200.55 feet along the westerly line of said lot No. 3, to a point
and the true place of beginning;
Thence S 75 deg. 26' 37" East, 20.66 feet to a point;
Thence SOUTH 210.26 feet to a point;
<PAGE>
Thence EAST 224.32 feet to a point;
Thence SOUTH 35.00 feet to a point;
Thence EAST 146.07 feet to a point on the westerly line of a highway
easement conveyed to the State of Ohio for relocated State Route 8 and
recorded in Volume 2990, Page 348 of the Summit County Record of Deeds;
Thence along the westerly line of said highway following a circular curve
to the left, 44.28 feet to a point, said circular curve having a central
angle of 00 deg. 51' 26", a radius of 2,959.79 feet, a tangent of 22.14
feet, and a chord of 44.28 feet;
Thence along the westerly line of said highway the following courses:
S 13 deg. 48' 20" East, 304.94 feet to a point.
S 14 deg. 49' 10" East, 116.68 feet to a point
S 12 deg. 55' 00" East, 473.76 feet to a point
N 89 deg. 14' 30" East, 15.70 feet to a point
S 14 deg. 49' 10" East, 116.89 feet to a point on the northerly
right-of-way line of the Ohio Turnpike Project No. 1, as recorded in
Plat Book 44, Page 154 of the Summit County Records of Plats;
Thence along the northerly line of said highway following a circular curve to
the left, 5251 feet to a point, said circular curve having a central angle of
00 deg. 15' 32", a radius of 11,619.16 feet, a tangent of 26.25 feet, and a
chord of 52.50 feet;
Thence N 03 deg. 36' 10" West, 50.00 feet to a point;
Thence N 77 deg. 05' 00" East, 4.50 feet to a point;
Thence N 12 deg. 55' 00" West, 381.49 feet to a point;
Thence West, 516.83 feet to a point on the westerly line of Lot No. 3;
Thence NORTH, 858.03 feet along the westerly line of Lot No. 3 to a point and
the true place of beginning, and containing 7.0156 acres of land as determined
by Messmore & Fay, Registered Surveyors in February, 1975, but subject to all
legal roads, highways and easements of record.
PARCEL "C"
- ----------
Situated in the Village of Boston Heights, the County of Summit and State of
Ohio, and known as being a part of Lot No. 3, east of the Cuyahoga River,
formerly in Boston Township, and more fully described as follows:
Beginning at a stone at the northwest corner of said Lot No. 3, said stone
being at the intersection of the centerline tangents of Hines Hill Road
(C.H. 115),
Thence SOUTH 1,058.58 feet along the westerly line of said Lot No. 3 to a
point and the true place of beginning;
Thence EAST 516.83 feet to a point;
Thence S 12 deg. 55' 00" East, 256.49 feet to a point;
Thence WEST 574.16 feet to point on the westerly line of said Lot No. 3;
Thence NORTH along the westerly line of said Lot No. 3, 250.00 feet to a
point and the true place of beginning, and containing 3.1309 acres of land
as determined by Messmore & Fay, Registered Surveyors in February, 1975,
but subject to all legal roads, highways, and easements of record.
<PAGE>
The above described Parcels "A", "B" and "C" also include the use of the
following described easement for ingress and egress from Hines Hill Road;
Situated in the Village of Boston Heights, County of Summit, and State of Ohio,
and known as being a part of Lot No. 16, East of the Cuyahoga River, formerly in
Boston Township, and more fully described as follows:
Beginning at a stone at the northeast corner of Lot No. 16 on the
centerline of Hines Hill Road (C. H. 115);
Thence SOUTH, 1,110.00 feet along the easterly line of Lot No. 16 to a
point;
Thence WEST, 40.00 feet to a point;
Thence NORTH, 1,110,00 feet to a point on the center line of Hines Hill
Road;
Thence EAST, 40.00 feet along the center line of Hines Hill Road to the
place of beginning.
Together with all rights, title and interest which the grantor now holds or
hereafter acquire in and to an easement for ingress and egress as more fully
set forth in a Right-of-Way Agreement from The Bostonian Country Club, Inc. to
The Bostonian Company and Galburton Inn, Inc. dated September 19, 1966 and filed
for record October 5, 1966 in Volume 4622, Page 637 of Summit County Records.
Together with all rights, title and interest in and to an EASEMENT for ingress
and egress to include parking privileges on PARCEL "B" described above.
<PAGE>
<TABLE>
<CAPTION>
SCHEDULE TO EXHIBIT 10.27
OTHER MORTGAGE AND SECURITY AGREEMENTS
I.
<S> <C>
- ------------------------------------------------------------ ---------------------------------------------------------
Name of Mortgagor JAGI Cleveland - Independence, LLC, a Delaware limited
liability company
- ------------------------------------------------------------ ---------------------------------------------------------
Amount of Loan $21,800,000
- ----------------------------------------------------------- ---------------------------------------------------------
Definition of Franchise Agreement referenced in Section The Holiday Inn Hotel Change of Ownership Agreement
8(r) between Mortgagor and Holiday Hospitality
Franchising, Inc.
- ------------------------------------------------------------ ---------------------------------------------------------
Exhibit A Legal Description of Property
II.
- ------------------------------------------------------------ ---------------------------------------------------------
Name of Mortgagor JAGI Montrose West, LLC, a Delaware limited liability
company
- ------------------------------------------------------------ ---------------------------------------------------------
Amount of Loan $3,500,000
- ------------------------------------------------------------ ---------------------------------------------------------
Definition of Franchise Agreement referenced in Section Comfort Inn Change of Ownership Agreement between
8(r) Mortgagor and Choice Hotels International, Inc.
- ------------------------------------------------------------ ---------------------------------------------------------
Exhibit A Legal Description of Property
III.
- ------------------------------------------------------------ ---------------------------------------------------------
Name of Mortgagor JAGI North Canton, LLC, a Delaware limited liability
company
- ------------------------------------------------------------ ---------------------------------------------------------
Amount of Loan $5,400,000
- ------------------------------------------------------------ ---------------------------------------------------------
Definition of Franchise Agreement referenced in Section The Holiday Inn Hotel Change of Ownership Agreement
8(r) between Mortgagor and Holiday Hospitality
Franchising, Inc.
- ------------------------------------------------------------ ---------------------------------------------------------
Exhibit A Legal Description of Property
- ------------------------------------------------------------ ---------------------------------------------------------
</TABLE>
LOAN NO. 400030964
SECURITY AGREEMENT
(Hotel/Motel)
THIS SECURITY AGREEMENT (as amended, supplemented or modified from time to
time, this "Security Agreement") is made as of August 14, 1998, by JAGI
CLEVELAND - HUDSON, LLC, a Delaware limited liability company ("Borrower"), and
AMRESCO CAPITAL, L.P., a Delaware limited partnership ("Lender").
RECITALS:
Borrower is obligated to Lender for the payment of the Debt as defined in
that certain Note made by Borrower to Lender, dated the date hereof, in the
principal sum of $13,300,000 (the "Note"), and secured by the Mortgage (as
defined in the Note) covering the Mortgaged Property (as defined in the Note).
To induce Lender to make the loan evidenced by the Note, Borrower has
agreed to grant Lender a security interest in all Collateral (hereinafter
defined) as herein provided.
ARTICLE I
DEFINITIONS; RULES OF CONSTRUCTION
Section I.1. Defined Terms. As used in this Security Agreement, terms
defined in the Note shall have their defined meanings when used herein, and the
following terms shall have the following meanings:
"Accounts" means all accounts now or hereafter owing to Borrower, and all
accounts receivable, contract rights, documents, instruments or chattel paper
representing amounts payable or monies due or to become due to Borrower in
connection with the ownership, operation and/or maintenance of the Mortgaged
Property, including, without limitation, all revenues and credit card receipts
collected from guest rooms, restaurants, bars, banquet rooms, meeting rooms, and
recreational facilities, all receivables, customer obligations, installment
payment obligations and other obligations now existing or hereafter arising or
created out of the sale, lease, sublease, license, concession or other grant of
the right of the use and occupancy of property or rendering of services by
Borrower or any operator or manager of the hotel or the commercial space located
on the Mortgaged Property or acquired from others (including, without
limitation, from the rental of any office space, retail space, guest rooms or
other space, halls, stores, and offices, and deposits securing reservations of
such space), license, lease, sublease and concession fees and rentals, health
club membership fees, food and beverage wholesale and retail sales, service
charges, vending machine sales and proceeds, if any, from business interruption
or other loss of income insurance, or arising from the sale of Inventory or the
rendition of services in the ordinary course of business or otherwise (whether
or not earned by performance), together with all Inventory returned by or
reclaimed from customers wherever such Inventory is located, and all guaranties,
securities and liens held for the payment of any such account, account
receivable, contract right, document, instrument or chattel paper.
"Account Debtor" means, with respect to any Receivable or Other Intangible,
any Person (as defined in the UCC) obligated to make payment thereunder,
including without limitation any account debtor thereon.
"Business Day" means a day other than a Saturday, Sunday or other day on
which commercial banks are authorized to close under the laws of the state where
the Mortgaged Property is located.
"Collateral" has the meaning assigned to it in Section 2.1 of this Security
Agreement.
"Franchise Agreement" means all rights of Borrower pursuant to that certain
Holiday Inn Hotel Change of Ownership Agreement regarding the Mortgaged Property
dated as of even date herewith, between Borrower and Holiday Hospitality
Franchising, Inc.
<PAGE>
"General Intangibles" shall have the meaning assigned to it under Section
9-106 of the UCC.
"Inventory" means all inventory and equipment now owned or hereafter
acquired by Borrower in connection with the ownership, operation and/or
maintenance of the Mortgaged Property, including (i) all goods and other
personal property which are held for sale or lease or are furnished or are to be
furnished under a contract of service or which constitute raw materials, work in
process or materials used or consumed or to be used or consumed in Borrower's
business, (ii) all inventory, wherever located, evidenced by negotiable and
non-negotiable documents of title, warehouse receipts and bills of lading, (iii)
all of Borrower's rights in, to and under all purchase orders now owned or
hereafter received or acquired by it for goods or services and, (iv) all rights
of Borrower as an unpaid seller, including rescission, replevin, reclamation and
stopping in transit.
"Obligations" means (i) the Debt and all amounts now or hereafter payable
by Borrower to Lender on the Note, and (ii) all other obligations or liabilities
now or hereafter payable by Borrower to Lender pursuant to, under, arising out
of or in connection with this Security Agreement or any other Loan Document.
"Other Intangibles" means all documents, instruments, chattel paper, money
and General Intangibles relating to the ownership, operation and/or maintenance
of the Mortgaged Property now owned or hereafter acquired by Borrower including,
without limitation, to the extent not included in accounts, all rights to
payment from guests and customers, all customer and guest lists, federal and
state tax refunds, reversionary interests in pension plan assets, trademarks,
patents, licenses, copyrights and other rights in intellectual property, other
than Accounts, and, to the extent assignable, all permits, business licenses,
liquor licenses and franchise agreements.
"Proceeds" means all proceeds, including (i) whatever is received upon any
collection, exchange, sale or other disposition of any of the Collateral and any
property into which any of the Collateral is converted, whether cash or
non-cash, including without limitation all cash on hand, income and other
amounts now or hereafter generated from the operation, use or maintenance of the
Mortgaged Property and all cash or cash equivalents to cover pre-paid
reservations related to the Mortgaged Property, (ii) any and all payments or
other property (in any form whatsoever) made or due and payable on account of
any insurance, indemnity, warranty or guaranty payable to Borrower with respect
to any of the Collateral, (iii) any and all payments (in any form whatsoever)
made or due and payable in connection with any requisition, confiscation,
condemnation, seizure or forfeiture of all or any part of the Collateral by any
governmental body, authority, bureau or agency (or any person, corporation,
agency, authority or other entity acting under color of any governmental
authority), and (iv) any and all other amounts from time to time paid or payable
under or in connection with any of the Collateral.
"Property Management Contract" means all rights of Borrower pursuant to
that certain Management Agreement regarding the Mortgaged Property dated as of
July 20, 1998, between Borrower and Janus American Group, Inc.
"UCC" means at any time the Uniform Commercial Code as the same may from
time to time be in effect in the state of the location of the Mortgaged
Property, provided that, if, by reason of mandatory provisions of law, the
validity or perfection of any security interest granted herein is governed by
the Uniform Commercial Code as in effect in a jurisdiction other such state
then, as to the validity or perfection of such security interest, "UCC" shall
mean the Uniform Commercial Code in effect in such other jurisdiction.
Section I.2. UCC Definitions. The uncapitalized terms "account," "account
debtor," "chattel paper," "contract right," "document," "warehouse receipt,"
"bill of lading," "document of title," "instrument," "inventory," "equipment,"
"general intangible," "money," "proceeds" and "purchase money security interest"
as used in Section 1.1 or elsewhere in this Security Agreement have the meanings
of such terms as defined in the UCC.
Section 1.3. Rules of Construction.
(a) Except as otherwise specified herein, all references in this Security
Agreement (i) to any person shall be deemed to include such person's successors,
transferees and assignees, but only, in the case of transferees and assignees of
the parties to this Security Agreement, to the extent the applicable transfer or
assignment complies with the provisions of this Security Agreement, and (ii) to
any applicable law defined or referred to herein shall be
2
<PAGE>
deemed a reference to such applicable law as the same may have been or may be
amended or supplemented from time to time.
(b) When used in this Security Agreement, the words "herein," "hereof" and
"hereunder" and words of similar import shall refer to this Security Agreement
as a whole and not to any provision of this Security Agreement, and the words
"Section," "Schedule" and "Exhibit" shall refer to Sections of and Schedules and
Exhibits to this Security Agreement unless otherwise specified.
(c) Whenever the context so requires, each gender includes the other
gender, and the singular number includes the plural, and vice versa.
(d) When used in this Security Agreement in conjunction with a reference to
the Note or any other obligation, or any document or agreement evidencing or
securing one or more of such obligations, the terms "related" and "relate to"
shall refer to events, circumstances or conditions directly affecting or
directly applying to the particular maker, endorser, guarantor, grantor or
pledgor of collateral with respect to the Debt or such other obligation, as the
case may be.
ARTICLE II
SECURITY INTERESTS
Section II.1. Grant of Security Interests. To secure the due and punctual
payment of all Obligations and in order to induce Lender to make the loan
evidenced by the Note, Borrower hereby grants to Lender a security interest in
all of Borrower's right, title and interest in, to and under the following,
whether now existing or hereafter acquired (all of which are herein collectively
called the "Collateral"):
(a) all Accounts;
(b) all Other Intangibles;
(c) all Inventory;
(d) the Franchise Agreement;
(e) the Property Management Contract;
(f) to the extent not included in the foregoing, all other personal
property related to the ownership, operation and/or maintenance of the Mortgaged
Property, whether tangible or intangible, and wherever located, including, but
not limited to, the balance of every deposit account of Borrower relating to the
ownership, operation and/or maintenance of the Mortgaged Property owned by
Borrower now or hereafter existing with any bank and all monies of Borrower and
all rights to payment of money of Borrower;
(g) to the extent not included in the foregoing, all of Borrower's books,
ledgers and records and all computer programs, tapes, discs, punch cards, data
processing software, transaction files, master files and related property and
rights (including computer and peripheral equipment) necessary or helpful in
enforcing, identifying or establishing any item of Collateral, whether
maintained by Borrower or a management company; and
(h) to the extent not otherwise included, all Proceeds and products of any
or all of the foregoing, whether existing on the date hereof or arising
hereafter.
Section II.2. Continuing Liability of Borrower. Anything herein to the
contrary notwithstanding, Borrower shall remain liable to observe and perform
all the terms and conditions to be observed and performed by it under any
contract, agreement, warranty or other obligation with respect to the
Collateral, and shall do nothing to impair the security interests herein
granted. Lender shall not have any obligation or liability under any such
contract, agreement, warranty or obligation by reason of or arising out of this
Security Agreement or the receipt by
3
<PAGE>
Lender of any payment relating to any Collateral, nor shall Lender be required
to perform or fulfill any of the obligations of Borrower with respect to the
Collateral, to make any inquiry as to the nature or sufficiency of any payment
received by it or the sufficiency of the performance of any party's obligations
with respect to any Collateral. Furthermore, Lender shall not be required to
file any claim or demand to collect any amount due or to enforce the performance
of any party's obligations with respect to the Collateral.
Section II.3. Sales and Collections.
(a) Borrower is authorized (i) to sell in the ordinary course of its
business for fair value and on an arm's-length basis any of its Inventory
normally held by it for such purpose and (ii) to use and consume, in the
ordinary course of its business, any raw materials, supplies and materials
normally held by it for such purpose. Lender may upon the occurrence of any
Event of Default (as defined in the Mortgage), without cause or notice, curtail
or terminate such authority at any time.
(b) Borrower is authorized to collect amounts owing to it with respect to
the Collateral. However, Lender may at any time, after an Event of Default shall
have occurred, notify Account Debtors obligated to make payments under any or
all Accounts or Other Intangibles that Lender has a security interest in such
Accounts or Other Intangibles and that all payments by such Account Debtors with
respect to same shall be made directly to Lender. Upon the request of Lender at
any time, Borrower will so notify such Account Debtors. Borrower will use all
reasonable efforts to cause each account debtor to comply with the foregoing
instruction. In furtherance of the foregoing, Borrower authorizes Lender (i) to
ask for, demand, collect, receive and give acquittances and receipts for any and
all amounts due and to become due under any Collateral and, in the name of
Borrower or its own name or otherwise, (ii) to take possession of, endorse and
collect any checks, drafts, notes, acceptances or other instruments for the
payment of moneys due under any Collateral, and (iii) to file any claim or take
any other action in any court of law or equity or otherwise which it may deem
appropriate for the purpose of collecting any amounts due under any Collateral.
Lender shall have no obligation to obtain or record any information relating to
the source of such funds or the obligations in respect of which payments have
been made.
Section II.4. Verification of Accounts. Lender shall have the right to make
test verifications of Accounts in any manner and through any medium that it
considers advisable, and Borrower agrees to furnish all such assistance and
information as Lender may require in connection therewith. Borrower shall
provide such information concerning the Accounts as Lender may hereafter from
time to time reasonably request.
Section II.5. Release of Collateral.
(a) Borrower may sell or realize upon or transfer or otherwise dispose of
Collateral as permitted by Section 4.12, and the security interests of Lender in
such Collateral so sold, realized upon or disposed of (but not in the Proceeds
arising from such sale, realization or disposition) shall cease immediately upon
such sale, realization or disposition, without any further action on the part of
Lender. Lender, if requested in writing by Borrower but at the expense of
Borrower, is hereby authorized and instructed to deliver to the Account Debtor
or the purchaser or other transferee of any such Collateral a certificate
stating that Lender no longer has a security interest therein, and such Account
Debtor or such purchaser or other transferee shall be entitled to rely
conclusively on such certificate for any and all purposes.
(b) Upon the payment in full of all of the Obligations, Lender will (as
soon as reasonably practicable after receipt of notice from Borrower requesting
the same but at the expense of Borrower) send Borrower, for each jurisdiction in
which a UCC financing statement is on file to perfect the security interests
granted to Lender hereunder, a termination statement to the effect that Lender
no longer claims a security interest under such financing statement.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
Borrower represents and warrants that, except as otherwise disclosed to
or known by Lender as of the date of hereof:
4
<PAGE>
Section III.1. Validity of Security Agreement; Consents. The execution,
delivery and performance of this Security Agreement and the creation of the
security interests provided for herein (i) do not violate any law or regulation
or any order or decree of any court or governmental instrumentality applicable
to Borrower, (ii) do not conflict with or result in a breach of, or constitute a
default under, any indenture, mortgage, deed of trust, lease, agreement or other
instrument to which Borrower is a party or by which it or any of its properties
is bound, (iii) do not result in the creation or imposition of any lien upon any
property of Borrower other than in favor of Lender, and (iv) do not require the
consent or approval of any governmental body, agency or official or other person
other than those that have been obtained. This Security Agreement has been duly
executed and delivered by Borrower and constitutes the legal, valid and binding
obligation of Borrower, enforceable against it in accordance with its terms,
except as such enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws relating to or affecting
the enforceability of creditors' rights generally and by general provisions of
equity (regardless of whether such enforceability is considered in a proceeding
in equity or at law).
Section III.2. Title to Collateral. Except for the security interests
granted to Lender pursuant to this Security Agreement or as security for the
Related Debt (defined in the Mortgage), Borrower is the sole owner of each item
of the Collateral, having good and marketable title thereto, free and clear of
any and all liens, encumbrances, security interests and claims of others.
Section III.3. Validity, Perfection and Priority of Security Interests.
(a) By complying with Section 4.1, Borrower will have created a valid
security interest in favor of Lender in all existing Collateral and in all
identifiable Proceeds of such Collateral, which security interest (except in
respect of motor vehicles for which the exclusive manner of perfecting a
security interest therein is by noting such security interest on the certificate
of title in accordance with local law) would be prior to the claims of a trustee
in bankruptcy under Section 544(a) of the United States Bankruptcy Code.
Continuing compliance by Borrower with the provisions of Section 4.2 will also
(i) create valid security interests in all Collateral acquired after the date
hereof and in all identifiable Proceeds of such Collateral and, (ii) cause such
security interests in all Collateral and in all Proceeds which are (A)
identifiable cash Proceeds of Collateral covered by financing statements
required to be filed hereunder, (B) identifiable Proceeds in which a security
interest may be perfected by such filing under the UCC, and (C) any Proceeds in
the Cash Collateral Account to be duly perfected under the UCC, in each case
prior to the claims of a trustee in bankruptcy under the United States
Bankruptcy Code.
(b) The security interests of Lender in the Collateral rank first in
priority. Other than financing statements or other similar documents perfecting
the security interests or deed of trust liens of Lender, no financing
statements, deeds of trust, mortgages or similar documents covering all or any
part of the Collateral are on file or of record in any government office in any
jurisdiction in which such filing or recording would be effective to perfect a
security interest in such Collateral, nor is any of the Collateral in the
possession of any Person (other than Borrower) asserting any claim thereto or
security interest therein.
Section III.4. Enforceability of Accounts and Other Intangibles. To the
best knowledge of Borrower, each Receivable and Other Intangible is a valid and
binding obligation of the related Account Debtor in respect thereof, enforceable
in accordance with its terms, except as such enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting the enforcement of creditors' rights generally and by general
provisions of equity (regardless of whether such enforceability is considered in
a proceeding in equity or at law), and complies with any applicable legal
requirements.
Section III.5. Place of Business; Location of Collateral. Schedule 1
correctly sets forth Borrower's chief executive office and principal place of
business and the offices of Borrower where records concerning Accounts and Other
Intangibles are kept. Schedule 2 correctly sets forth the location of all
Inventory, other than rolling stock, aircraft, goods in transit and Inventory
sold in the ordinary course of business as permitted by Section 4.12 of this
Security Agreement. Except as otherwise specified in Schedule 2, all Inventory
has been located at the address specified on Schedule 2 at all times during the
four-month period prior to the date hereof while owned by Borrower. No Inventory
is evidenced by a negotiable document of title, warehouse receipt or bill of
lading. No non-negotiable document of title, warehouse receipt or bill of lading
has been issued to any person other than Borrower, and Borrower has retained
possession of all of such non-negotiable documents, warehouse receipts and bills
of lading. No amount payable under or in connection with any of the Collateral
is evidenced by promissory notes or other
5
<PAGE>
instruments. The real estate listed in Schedule 3 constitutes all existing real
estate to which any of the Collateral is related.
Section III.6. Trade Names. Any and all trade names, division names,
assumed names or other names under which Borrower transacts, or within the six
(6)-month period prior to the date hereof has transacted, business are specified
on Schedule 4.
ARTICLE IV
COVENANTS
Borrower covenants and agrees with Lender that until the payment in full of
all Obligations and until there is no commitment by Lender to make further
advances, incur obligations or otherwise give value, Borrower will comply with
the following.
Section IV.1. Perfection of Security Interests. Borrower will, at it
expense, cause all filings and recordings and other actions specified on
Schedule 5 to have been completed on or prior to the date of the Note.
Section IV.2. Further Actions.
(a) At all times after the date hereof and upon Lender's request, Borrower
will, at its expense, comply with the following:
(i) as to all Accounts, Other Intangibles and Inventory, it will cause
UCC financing statements and continuation statements to be filed and to be
on file in all applicable jurisdictions as required to perfect the security
interests granted to Lender hereunder, to the extent that applicable law
permits perfection of a security interest by filing under the UCC;
(ii) as to all Proceeds, it will cause all UCC financing statements
and continuation statements filed in accordance with clause (i) above to
include a statement or a checked box indicating that Proceeds of all items
of Collateral described therein are covered;
(iii) upon the request of Lender, it will ensure that the provisions
of Section 4.4 are complied with; and
(iv) as to any amount payable under or in connection with any of the
Collateral which shall be or shall become evidenced by any promissory note
or other instrument, Borrower will immediately pledge and deliver such note
or other instrument to Lender as part of the Collateral, duly endorsed in a
manner satisfactory to Lender.
(b) Borrower will, from time to time and at its expense, execute, deliver,
file or record such financing statements pursuant to the Uniform Commercial
Code, applications for certificates of title and such other statements,
assignments, instruments, documents, agreements or other papers and take any
other action that Lender may reasonably request, in order to create, preserve,
perfect, confirm or validate the security interests, to enable Lender to obtain
the full benefits of this Security Agreement or to enable it to exercise and
enforce any of its rights, powers and remedies hereunder, including, without
limitation, its right to take possession of the Collateral, and will use its
best efforts to obtain such waivers from landlords and mortgagees as Lender may
request.
(c) To the fullest extent permitted by law, Borrower authorizes Lender to
sign and file financing and continuation statements and amendments thereto with
respect to the Collateral without its signature thereon.
Section IV.3. Change of Name, Identity or Structure. Borrower will not
change its name, will not conduct its business under any trade, assumed or
fictitious name unless it shall have given Lender at least thirty (30) days'
prior written notice thereof and shall have taken all action (or made
arrangements to take such action substantially simultaneously with such change
if it is impossible to take such action in advance) necessary or reasonably
requested by Lender to amend any financing statement or continuation statement
relating to the security interests
6
<PAGE>
granted hereby in order to preserve such security interests and to effectuate or
maintain the priority thereof against all Persons.
Section IV.4. Place of Business and Collateral. Borrower will not change
the location of (i) its place of residence and (ii) the office or other
locations where it keeps or holds any Collateral or any records relating thereto
from the applicable location listed on Schedule 1 or 2 hereto unless, prior to
such change, it notifies Lender of such change, makes all UCC filings required
by Section 4.2 and takes all other action that Lender may reasonably request to
preserve, perfect, confirm and protect the security interests granted hereby.
Borrower will in no event change the location of any Collateral if such change
would cause the security interest granted hereby in such Collateral to lapse or
cease to be perfected. Borrower will at all times maintain its principal place
of business in the state of the location of the Mortgaged Property.
Section IV.5. Maintenance of Records. Borrower will keep and maintain at
its own cost and expense complete books and records relating to the Collateral
which are satisfactory to Lender including, without limitation, a record of all
payments received and all credits granted with respect to the Collateral and all
of its other dealings with the Collateral. Borrower will mark its books and
records pertaining to the Collateral to evidence this Security Agreement and the
security interests granted hereby. For Lender's further security, Borrower
agrees that Lender shall have a special property interest in all of Borrower's
books and records pertaining to the Collateral and Borrower shall deliver and
turn over any such books and records, or copies thereof, to Lender or to its
representatives at any time on demand of the Lender.
Section IV.6. Compliance with Laws, etc. Borrower will comply, in all
material respects, with all acts, rules, regulations, orders, decrees and
directions of any governmental body, agency or official applicable to the
Collateral or any part thereof or to the operation of the Mortgaged Property
except to the extent that the failure to comply would not have a material
adverse effect on the financial or other condition of the Mortgaged Property;
provided, however, that Borrower may contest any act, regulation, order, decree
or direction in any reasonable manner which shall not in the sole opinion of
Lender adversely affect Lender's rights or the first priority of its security
interest in the Collateral.
Section IV.7. Payment of Taxes, etc. Borrower will pay promptly when due,
all taxes, assessments and governmental charges or levies imposed upon the
Collateral or in respect of its income or profits therefrom, as well as all
claims of any kind (including claims for labor, materials and supplies), except
that no such charge need be paid if (i) the validity thereof is being contested
in good faith by appropriate proceedings, and (ii) such charge is adequately
reserved against in accordance with generally accepted accounting principals,
consistently applied.
Section IV.8. Compliance with Terms of Accounts, Contracts and Licenses.
Borrower will perform and comply in all material respects with all of its
obligations under and, all agreements relating to the Collateral to which it is
a party or by which it is bound.
Section IV.9. Limitation on Liens on Collateral. Except as to any liens now
in existence and known to Lender, Borrower will not create, permit or suffer to
exist, and will defend the Collateral and Borrower's rights with respect thereto
against and take such other action as is necessary to remove, any Lien, security
interest, encumbrance, or claim in or to the Collateral other than the security
interests created hereunder.
Section IV.10. Limitations on Modifications of Accounts and Other
Intangibles; No Waivers or Extensions. Borrower will not (i) amend, modify,
terminate or waive any provision of any material Receivable or Other Intangible
in any manner which might have a materially adverse effect on the value of such
Receivable or Other Intangible as Collateral, (ii) fail to exercise promptly and
diligently each and every material right which it may have under each Receivable
and Other Intangible, or (iii) fail to deliver to Lender a copy of each material
demand, notice or document received by it relating in any way to any Receivable
or Other Intangible. Borrower will not, without Lender's prior written consent,
grant any extension of the time of payment of any material Receivable or amounts
due under any material Other Intangible, compromise, compound or settle the same
for less than the full amount thereof, release, wholly or partly, any person
liable for the payment thereof or allow any credit or discount whatsoever
thereon other than trade discounts granted in the normal course of business,
except such as in the reasonable judgment of Borrower are advisable to enhance
the collectibility thereof.
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Section IV.11. Maintenance of Insurance. Borrower will maintain insurance
policies with financially sound insurance companies licensed to do business in
Ohio (i) insuring the Inventory against loss by fire, explosion, theft and such
other casualties as are usually insured against by companies engaged in the same
or similar business for an amount satisfactory to Lender, and (ii) insuring
Borrower and Lender against liability for personal injury arising from, and
property damage relating to, such Inventory, such policies to be in such form
and to cover such amounts as set forth in the Mortgage, with losses payable to
Borrower and Lender as their respective interests may appear. Borrower shall, if
so requested by Lender, deliver to Lender as often as Lender may reasonably
request a report of Borrower or, if requested by Lender, of an insurance broker
satisfactory to Lender of the insurance on the Inventory. All insurance with
respect to the Inventory shall satisfy the requirements for policies of
insurance set forth in Section 3.3(c) of the Mortgage.
Section IV.12. Limitations on Dispositions of Collateral. Borrower will not
directly or indirectly (through the sale of stock, merger or otherwise) without
the prior written consent of Lender sell, transfer, lease or otherwise dispose
of any of the Collateral, or attempt, offer or contract to do so except for
sales of Inventory in the ordinary course of its business for fair value in
arm's-length transactions. The inclusion of Proceeds of the Collateral under the
security interests granted hereby shall not be deemed a consent by Lender to any
sale or disposition of any Collateral other than as permitted by this Section
4.12.
Section IV.13. Further Identification of Collateral. Borrower will furnish
to Lender from time to time statements and schedules further identifying and
describing the Collateral and such other reports in connection with the
Collateral as Lender may reasonably request.
Section IV.14. Notices. Borrower will advise Lender promptly and in
reasonable detail, (i) of any Lien, security interest, encumbrance or claim made
or asserted against any of the Collateral, (ii) of any material change in the
composition of the Collateral, and (iii) of the occurrence of any other event
which would have a material effect on the aggregate value of the Collateral or
on the security interests granted to Lender in this Security Agreement.
Section IV.15. Right of Inspection. Lender shall at all times have full and
free access during normal business hours to all the books, correspondence and
records of Borrower related to the Mortgaged Property, and Lender or its
representatives may examine the same, take extracts therefrom, make photocopies
thereof and have such discussions with officers, employees and public
accountants of Borrower as Lender may deem necessary, and Borrower agrees to
render to Lender, at Borrower's cost and expense, such clerical and other
assistance as may be reasonably requested with regard thereto. Lender and its
representatives shall at all times also have the right to enter into and upon
any premises where any of the Inventory is located for the purpose of inspecting
the same, observing its use or protecting interests of Lender therein.
Section IV.16. Reimbursement Obligation. Should Borrower fail to comply
with the provisions of this Security Agreement, any other Collateral Document to
which it is a party or any other agreement relating to the Collateral such that
the value of any Collateral or the validity, perfection, rank or value of any
security interest granted to Lender hereunder or thereunder is thereby
diminished or potentially diminished or put at risk (as reasonably determined by
Lender), Lender on behalf of Borrower may, but shall not be required to, effect
such compliance on behalf of Borrower, and Borrower shall reimburse Lender for
the cost thereof on demand, and interest shall accrue on such reimbursement
obligation from the date the relevant costs are incurred until reimbursement
thereof in full at the Default Rate set forth in the Note.
ARTICLE V
REMEDIES; RIGHTS UPON DEFAULT
Section V.1. UCC Rights. If any Event of Default shall have occurred,
Lender may in addition to all other rights and remedies granted to it in this
Security Agreement and in any other instrument or agreement securing, evidencing
or relating to the Obligations, exercise all rights and remedies of a secured
party under the UCC and all other rights available to Lender at law or in
equity.
Section V.2. Payments on Collateral. Without limiting the rights of Lender
under any other provision of the Security Agreement, if an Event of Default
shall occur and be continuing:
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(a) all payments received by Borrower under or in connection with any of
the Collateral shall be held by Borrower in trust for Lender, shall be
segregated from other funds of Borrower and shall forthwith upon receipt by
Borrower be turned over to Lender, in the same form as received by Borrower
(duly indorsed by Borrower to Lender, if required to permit collection thereof
by Lender); and
(b) all such payments received by Lender (whether from Borrower or
otherwise) may, in the sole discretion of Lender, be held by Lender as
collateral security for, and/or then or at any time thereafter applied in whole
or in part by Lender to the payment of the expenses and Obligations as set forth
in Section 5.10.
Section V.3. Possession of Collateral. In furtherance of the foregoing,
Borrower expressly agrees that, if an Event of Default shall occur and be
continuing, Lender may (i) by judicial powers, or without judicial process if it
can be done without breach of the peace, enter any premises where any of such
Collateral is or may be located, and without charge or liability to Lender seize
and remove such Collateral from such premises and (ii) have access to and use of
Borrower's books and records relating to such Collateral.
Section V.4. Sale of Collateral.
(a) Borrower expressly agrees that if an Event of Default shall occur and
be continuing, Lender, without demand of performance or other demand or notice
of any kind (except the notice specified below of the time and place of any
public or private sale) to Borrower or any other Person (all of which demands
and/or notices are hereby waived by Borrower), may forthwith collect, receive,
appropriate and realize upon the Collateral and/or forthwith sell, lease,
assign, give an option or options to purchase or otherwise dispose of and
deliver the Collateral (or contract to do so) or any part thereof in one or more
parcels at public or private sale, at any exchange, broker's board or at any
office of Lender or elsewhere in such manner as is commercially reasonable and
as Lender may deem best, for cash or on credit or for future delivery without
assumption of any credit risk. Lender shall have the right upon any such public
sale, and, to the extent permitted by law, upon any such private sale, to
purchase the whole or any part of the Collateral so sold. Borrower further
agrees, at Lender's request, to assemble the Collateral, and to make it
available to Lender at places which Lender may reasonably select. To the extent
permitted by applicable law, Borrower waives all claims, damages and demands
against Lender arising out of the foreclosure, repossession, retention or sale
of the Collateral.
(b) Unless the Collateral threatens to decline speedily in value or is of a
type customarily sold in a recognized market, Lender shall give Borrower ten
days written notice of its intention to make any such public or private sale or
sale at a broker's board or on a securities exchange. Such notice shall (i) in
the case of a public sale, state the time and place fixed for such sale, (ii) in
the case of a sale at a broker's board or on a securities exchange, state the
board or exchange at which such sale is to be made and the day on which the
Collateral, or any portion thereof being sold, will first be offered for sale,
and (iii) in the case of a private sale, state the day after which such sale may
be consummated. Lender shall not be required or obligated to make any such sale
pursuant to any such notice. Lender may adjourn any public or private sale or
cause the same to be adjourned from time to time by announcement at the time and
place fixed for the sale, and such sale may be made at any time or place to
which the same may be so adjourned. In the case of any sale of all or any part
of the Collateral for credit or for future delivery, the Collateral so sold may
be retained by Lender until the selling price is paid by the purchaser thereof,
but Lender shall not incur any liability in case of failure of such purchaser to
pay for the Collateral so sold and, in the case of such failure, such Collateral
may again be sold upon like notice.
Section V.5. Rights of Purchasers. Upon any sale of the Collateral (whether
public or private), Lender shall have the right to deliver, assign and transfer
to the purchaser thereof the Collateral so sold. Each purchaser (including
Lender) at any such sale shall hold the Collateral so sold free from any claim
or right of whatever kind, including any equity or right of redemption of
Borrower, and Borrower, to the extent permitted by law, hereby specifically
waives all rights of redemption, including, without limitation, the right to
redeem the Collateral under Section 9-506 of the UCC, and any right to a
judicial or other stay or approval which it has or may have under any law now
existing or hereafter adopted.
Section V.6. Additional Rights of Lender.
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(a) Lender shall have the right and power to institute and maintain such
suits and proceedings as it may deem appropriate to protect and enforce the
rights vested in it by this Security Agreement and may proceed by suit or suits
at law or in equity to enforce such rights and to foreclose upon and sell the
Collateral or any part thereof pursuant to the judgment or decree of a court of
competent jurisdiction.
(b) Lender shall, to the extent permitted by law and without regard to the
solvency or insolvency at the time of any Person then liable for the payment of
any of the Obligations or the then value of the Collateral, and without
requiring any bond from any party to such proceedings, be entitled to the
appointment of a special receiver or receivers (who may be Lender) for the
Collateral or any part thereof and for the rents, issues, tolls, profits,
royalties, revenues and other income therefrom, which receiver shall have such
powers as the court making such appointment shall confer, and to the entry of an
order directing that the rents, issues, tolls, profits, royalties, revenues and
other income of the property constituting the whole or any part of the
Collateral be segregated, sequestered and impounded for the benefit of Lender,
and Borrower irrevocably consents to the appointment of such receiver or
receivers and to the entry of such order.
Section V.7. Remedies Not Exclusive.
(a) No remedy conferred upon or reserved to Lender in this Security
Agreement is intended to be exclusive of any other remedy or remedies, but every
such remedy shall be cumulative and shall be in addition to every other remedy
conferred herein or now or hereafter existing at law, in equity or by statute.
(b) If Lender shall have proceeded to enforce any right, remedy or power
under this Security Agreement and the proceeding for the enforcement thereof
shall have been discontinued or abandoned for any reason or shall have been
determined adversely to Lender, Borrower and Lender shall, subject to any
determination in such proceeding, severally and respectively be restored to
their former positions and rights under this Security Agreement, and thereafter
all rights, remedies and powers of Lender shall continue as though no such
proceedings had been taken.
(c) All rights of action under this Security Agreement may be enforced by
Lender without the possession of any instrument evidencing any Obligation or the
production thereof at any trial or other proceeding relative thereto, and any
suit or proceeding instituted by Lender shall be brought in its name and any
judgment shall be held as part of the Collateral.
Section V.8. Waiver and Estoppel.
(a) Borrower, to the extent it may lawfully do so, agrees that it will not
at any time in any manner whatsoever claim or take the benefit or advantage of
any appraisement, valuation, stay, extension, moratorium, turnover or redemption
law, or any law now or hereafter in force permitting it to direct the order in
which the Collateral shall be sold which may delay, prevent or otherwise affect
the performance or enforcement of this Security Agreement and Borrower hereby
waives the benefits or advantage of all such laws, and covenants that it will
not hinder, delay or impede the execution of any power granted to Lender in this
Security Agreement but will permit the execution of every such power as though
no such law were in force; provided that nothing contained in this Section 5.8
shall be construed as a waiver of any rights of Borrower under any applicable
federal bankruptcy law.
(b) Borrower, to the extent it may lawfully do so, on behalf of itself and
all who may claim through or under it, including without limitation any and all
subsequent creditors, vendees, assignees and lienors, waives and releases all
rights to demand or to have any marshaling of the Collateral upon any sale,
whether made under any power of sale granted herein or pursuant to judicial
proceedings or upon any foreclosure or any enforcement of this Security
Agreement and consents and agrees that all the Collateral may at any such sale
be offered and sold as an entirety.
(c) Borrower, to the extent it may lawfully do so, waives presentment,
demand, protest and any notice of any kind (except notices explicitly required
hereunder) in connection with this Security Agreement and any action taken by
Lender with respect to the Collateral.
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Section V.9. Power of Attorney. Borrower hereby irrevocably constitutes and
appoints Lender, with full power of substitution, as its true and lawful
attorney-in-fact with full irrevocable power and authority in the place and
stead of Borrower and in the name of Borrower or in its own name, from time to
time in Lender's reasonable discretion for the purpose of carrying out the terms
of this Security Agreement, to take any and all appropriate action and to
execute any and all documents and instruments which may be necessary or
desirable to accomplish the purposes of this Security Agreement and, without
limiting the generality of the foregoing, hereby gives Lender the power and
right, on behalf of Borrower, without notice to or assent by Borrower to do the
following:
(a) to pay or discharge taxes, liens, security interests or other
encumbrances levied or placed on or threatened against the Collateral;
(b) to effect any insurance called for by the terms of this Security
Agreement and to pay all or any part of the premiums therefor and the costs
thereof; and
(c) upon the occurrence and continuance of any Event of Default and
otherwise to the extent provided in this Security Agreement, (i) to direct any
party liable for any payment under any of the Collateral to make payment of any
and all moneys due and to come due thereunder directly to Lender or as Lender
shall direct; (ii) to receive payment of and receipt for any and all moneys,
claims and other amounts due and to become due at any time in respect of or
arising out of any Collateral; (iii) to sign and indorse any invoices, freight
or express bills, bills of lading, storage or warehouse receipts, drafts against
debtors, assignments, verifications and notices in connection with accounts and
other documents relating to the Collateral; (iv) to commence and prosecute any
suits, actions or proceedings at law or in equity in any court of competent
jurisdiction to collect the Collateral or any part thereof and to enforce any
other right in respect of any Collateral; (v) to defend any suit, action or
proceeding brought against Borrower with respect to any Collateral; (vi) to
settle, compromise and adjust any suit, action or proceeding described above
and, in connection therewith, to give such discharges or releases as Lender may
deem appropriate; and (vii) generally to sell, transfer, pledge, make any
agreement with respect to or otherwise deal with any of the Collateral as fully
and completely as though Lender were the absolute owner thereof for all
purposes, and to do, at Lender's option and Borrower's expense, at any time, or
from time to time, all acts and things which Lender deems necessary to protect,
preserve or realize upon the Collateral and Lender's security interest therein,
in order to effect the intent of this Security Agreement, all as fully and
effectively as Borrower might do.
Borrower hereby ratifies all that said attorneys shall lawfully do or cause
to be done by virtue hereof. This power of attorney is a power coupled with an
interest and shall be irrevocable.
Section V.10. Application of Proceeds. Lender shall retain the net proceeds
of any collection, recovery, receipt, appropriation, realization or sale of the
Collateral and, after deducting all reasonable costs and expenses of every kind
incurred therein or incidental to the care and safekeeping of any or all of the
Collateral or in any way relating to the rights of Lender hereunder, including
reasonable attorneys' fees and legal expenses, apply such net proceeds to the
payment in whole or in part of the Obligations in such order as Lender may
elect. Only after applying such net proceeds and after the payment by Lender of
any other amount required by any provision of law, including Section 9-504(1)(c)
of the UCC, need Lender account for the surplus, if any, to Borrower or to
whomsoever may be lawfully entitled to the same.
ARTICLE VI
MISCELLANEOUS
Section VI.1. Notices. Any notice, demand, statement, request or consent
made hereunder shall be in writing and shall be deemed to be received by the
addressee on the first (1st) business day after such notice is tendered to a
nationally-recognized overnight delivery service or on the third (3rd) day
following the day such notice is deposited with the United States postal service
first class certified mail, return receipt requested, addressed to the address,
as set forth above, of the party to whom such notice is to be given, or to such
other address as Borrower or Lender, as the case may be, shall in like manner
designate in writing.
Section VI.2. No Waivers. No failure on the part of Lender to exercise, no
course of dealing with respect to, and no delay in exercising any right, power
or privilege under this Security Agreement or any document or
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agreement contemplated hereby shall operate as a waiver thereof or shall any
single or partial exercise of any such right, power or privilege preclude any
other or further exercise thereof or the exercise of any other right, power or
privilege.
Section VI.3. Compensation and Expenses of Lender. Borrower shall pay to
Lender from time to time upon demand, all of the fees, costs and expenses
incurred by Lender (including, without limitation, the reasonable fees and
disbursements of counsel and any amounts payable by Lender to any of its agents,
whether on account of fees, indemnities or otherwise) (i) arising in connection
with the administration, modification, amendment, waiver or termination of this
Security Agreement or any document or agreement contemplated hereby or any
consent or waiver hereunder or thereunder or (ii) incurred in connection with
the administration of this Security Agreement, or any document or agreement
contemplated hereby, or in connection with the administration, sale or other
disposition of Collateral hereunder or under any document or agreement
contemplated hereby or the preservation, protection or defense of the rights of
Lender in and to the Collateral.
Section VI.4. Amendments, Supplements and Waivers. The parties hereto may,
from time to time, enter into written agreements supplemental hereto for the
purpose of adding any provisions to this Security Agreement, waiving any
provisions hereof or changing in any manner the rights of the parties.
Section VI.5. Successors and Assigns. This Security Agreement shall be
binding upon and inure to the benefit of each of the parties hereto and shall
inure to the benefit of Lender's successors and assigns. Nothing herein is
intended or shall be construed to give any other Person any right, remedy or
claim under, to or in respect of this Security Agreement or any Collateral.
Section VI.6. Limitation of Law; Severability.
(a) All rights, remedies and powers provided in this Security Agreement may
be exercised only to the extent that the exercise thereof does not violate any
applicable provision of law, and all the provisions of this Security Agreement
are intended to be subject to all applicable mandatory provisions of law which
may be controlling and to be limited to the extent necessary so that they will
not render this Security Agreement invalid, unenforceable in whole or in part,
or not entitled to be recorded, registered or filed under the provisions of any
applicable law.
(b) If any provision hereof is invalid and unenforceable in any
jurisdiction, then, to the fullest extent permitted by law, (i) the other
provisions hereof shall remain in full force and effect in such jurisdiction and
shall be liberally construed in order to carry out the intentions of the parties
hereto as nearly as may be possible; and (ii) the invalidity or unenforceability
of any provision hereof in any jurisdiction shall not affect the validity or
enforceability of such provisions in any other jurisdiction.
Section VI.7. Governing Law. This Security Agreement shall be governed by
and construed in accordance with the laws of the state of the location of the
Mortgaged Property.
Section VI.8. Counterparts; Effectiveness. This Security Agreement may be
signed in any number of counterparts with the same effect as if the signatures
thereto and hereto were upon the same instrument. This Security Agreement shall
become effective when Lender shall receive counterparts executed by itself and
Borrower.
Section VI.9. Termination; Survival. This Security Agreement shall
terminate when the security interests granted hereunder have terminated and the
Collateral has been released as provided in Section 2.5, provided that the
obligations of Borrower under any of Sections 4.16 and 6.3 shall survive any
such termination.
[The balance of this page is intentionally left blank.]
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first written above.
BORROWER:
JAGI CLEVELAND-HUDSON, LLC, a Delaware
limited liability company
By Janus American Group, Inc., a Delaware
corporation
By /s/ JAMES E. BISHOP
------------------------------------
Name: James E. Bishop
Title: President
Address:
8534 East Kemper Road
Cincinnati, Ohio 45249
LENDER:
AMRESCO CAPITAL, L.P.,
a Delaware limited partnership
By: AMRESCO Mortgage Capital, Inc.,
a Delaware corporation,
Its sole General Partner
By: /s/ FRED A. BROWN
---------------------------------
Name: Fred A. Brown
Title: Senior Investment Officer
Address:
700 North Pearl Street
Suite 2400, LB#342
Dallas, Texas 75201
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SCHEDULE 1
Borrower's Chief Executive Office
and Principal Place of Business:
8534 East Kemper Road
Cincinnati, Ohio 45249
Location(s) of Records of
Accounts and Other Intangibles:
8534 East Kemper Road
Cincinnati, Ohio 45249
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SCHEDULE 2
Location(s) of Inventory
240 Hines Hill Road
Hudson, Ohio
15
<PAGE>
SCHEDULE 3
Real Estate
16
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PARCEL "A"
- ----------
Premises/situated in the VILLAGE of BOSTON HEIGHTS, County of Summit and State
of Ohio, and known as being a part of Lot No. 3 east of the Cuyahoga River,
formerly in Boston Township, and more fully described as follows:
Beginning at a stone at the northwest corner of said Lot No. 3, said stone
being at the intersection of the centerline tangents of Hines Hill Road
(C. H. 115);
Thence S 68 deg. 51' 10" East, 140.02 feet along the centerline tangent of
Hines Hill Road (C. H. 115) to a point and the true place of beginning;
Thence S 68 deg. 51' 10" East, 231.33 feet along the centerline tangent of
Hines Hill Road (C. H. 115) to a point on the westerly line of a highway
easement conveyed to the State of Ohio for Relocated State Route 8 and
recorded in Volume 2990, Page 348 of the Summit County Record of Deeds;
Thence along the westerline of said highway following a circular curve to
the left, 33.46 feet to a point, said circular curve having a central angle
of 00 deg. 38' 52", a radius of 2,959.79 feet, a tangent of 16.73 feet, and
a chord of 33.46 feet;
Thence N 70 deg. 21' 01" West, 115.10 feet along the westerly line of said
highway;
Thence S 55 deg. 36' 00" East, 136.05 feet along the westerly line of said
highway;
Thence along the westerly line of said highway following a circular curve
to the left, 248.43 feet to a point, said circular curve having a central
angle of 04 deg. 48' 43", a radius of 2,959.79 feet, a tangent of 124.29
feet, and a chord of 248.36 feet:
Thence WEST, 146.07 feet to a point;
Thence NORTH, 35.00 feet to a point;
Thence WEST, 224.32 feet to a point;
Thence NORTH 210.26 feet to a point
Thence S 75 deg. 26' 37" East, 114.26 feet to a point;
Thence NORTH 183.95 feet to a point and the true place of beginning, and
containing 2.2659 acres of land as determined by Messmore & Fay, Registered
Surveyors in February, 1975, but subject to all legal roads, highways, and
easements of record.
PARCEL "B"
- ----------
Situated in the Village of Boston Heights, County of Summit and State of Ohio,
and known as being a part of Lot No. 3, east of the Cuyahoga River, formerly in
Boston Township, and more fully described as follows:
Beginning at a stone at the northwest corner of said Lot No. 3, said stone
being at the intersection of the centerline tangents of Hines Hill Road
(C. H. 115);
Thence S 200.55 feet along the westerly line of said lot No. 3, to a point
and the true place of beginning;
Thence S 75 deg. 26' 37" East, 20.66 feet to a point;
Thence SOUTH 210.26 feet to a point;
<PAGE>
Thence EAST 224.32 feet to a point;
Thence SOUTH 35.00 feet to a point;
Thence EAST 146.07 feet to a point on the westerly line of a highway
easement conveyed to the State of Ohio for relocated State Route 8 and
recorded in Volume 2990, Page 348 of the Summit County Record of Deeds;
Thence along the westerly line of said highway following a circular curve
to the left, 44.28 feet to a point, said circular curve having a central
angle of 00 deg. 51' 26", a radius of 2,959.79 feet, a tangent of 22.14
feet, and a chord of 44.28 feet;
Thence along the westerly line of said highway the following courses:
S 13 deg. 48' 20" East, 304.94 feet to a point.
S 14 deg. 49' 10" East, 116.68 feet to a point
S 12 deg. 55' 00" East, 473.76 feet to a point
N 89 deg. 14' 30" East, 15.70 feet to a point
S 14 deg. 49' 10" East, 116.89 feet to a point on the northerly
right-of-way line of the Ohio Turnpike Project No. 1, as recorded in
Plat Book 44, Page 154 of the Summit County Records of Plats;
Thence along the northerly line of said highway following a circular curve to
the left, 5251 feet to a point, said circular curve having a central angle of
00 deg. 15' 32", a radius of 11,619.16 feet, a tangent of 26.25 feet, and a
chord of 52.50 feet;
Thence N 03 deg. 36' 10" West, 50.00 feet to a point;
Thence N 77 deg. 05' 00" East, 4.50 feet to a point;
Thence N 12 deg. 55' 00" West, 381.49 feet to a point;
Thence West, 516.83 feet to a point on the westerly line of Lot No. 3;
Thence NORTH, 858.03 feet along the westerly line of Lot No. 3 to a point and
the true place of beginning, and containing 7.0156 acres of land as determined
by Messmore & Fay, Registered Surveyors in February, 1975, but subject to all
legal roads, highways and easements of record.
PARCEL "C"
- ----------
Situated in the Village of Boston Heights, the County of Summit and State of
Ohio, and known as being a part of Lot No. 3, east of the Cuyahoga River,
formerly in Boston Township, and more fully described as follows:
Beginning at a stone at the northwest corner of said Lot No. 3, said stone
being at the intersection of the centerline tangents of Hines Hill Road
(C.H. 115),
Thence SOUTH 1,058.58 feet along the westerly line of said Lot No. 3 to a
point and the true place of beginning;
Thence EAST 516.83 feet to a point;
Thence S 12 deg. 55' 00" East, 256.49 feet to a point;
Thence WEST 574.16 feet to point on the westerly line of said Lot No. 3;
Thence NORTH along the westerly line of said Lot No. 3, 250.00 feet to a
point and the true place of beginning, and containing 3.1309 acres of land
as determined by Messmore & Fay, Registered Surveyors in February, 1975,
but subject to all legal roads, highways, and easements of record.
<PAGE>
The above described Parcels "A", "B" and "C" also include the use of the
following described easement for ingress and egress from Hines Hill Road;
Situated in the Village of Boston Heights, County of Summit, and State of Ohio,
and known as being a part of Lot No. 16, East of the Cuyahoga River, formerly in
Boston Township, and more fully described as follows:
Beginning at a stone at the northeast corner of Lot No. 16 on the
centerline of Hines Hill Road (C. H. 115);
Thence SOUTH, 1,110.00 feet along the easterly line of Lot No. 16 to a
point;
Thence WEST, 40.00 feet to a point;
Thence NORTH, 1,110,00 feet to a point on the center line of Hines Hill
Road;
Thence EAST, 40.00 feet along the center line of Hines Hill Road to the
place of beginning.
Together with all rights, title and interest which the grantor now holds or
hereafter acquire in and to an easement for ingress and egress as more fully
set forth in a Right-of-Way Agreement from The Bostonian Country Club, Inc. to
The Bostonian Company and Galburton Inn, Inc. dated September 19, 1966 and filed
for record October 5, 1966 in Volume 4622, Page 637 of Summit County Records.
Together with all rights, title and interest in and to an EASEMENT for ingress
and egress to include parking privileges on PARCEL "B" described above.
<PAGE>
SCHEDULE 4
Trade Names, Division Names, etc.
Holiday Inn Hudson
<PAGE>
SCHEDULE 5
Required Filings and Recordings
UCC-1 Financing Statements filed with:
1. Summit County, Ohio, Recorder
2. Hamilton County, Ohio, Recorder
3. Ohio Secretary of State
4. Florida Secretary of State
<PAGE>
<TABLE>
<CAPTION>
SCHEDULE TO EXHIBIT 10.28
OTHER SECURITY AGREEMENTS
I.
<S> <C>
- ------------------------------------------------------------ ---------------------------------------------------------
Name of Borrower JAGI Cleveland - Independence, LLC, a Delaware limited
liability company
- ------------------------------------------------------------ ---------------------------------------------------------
Amount of Note $21,800,000
- ------------------------------------------------------------ ---------------------------------------------------------
Definition of Franchise Agreement All rights of Borrower pursuant to that certain Holiday
Inn Hotel Change of Ownership Agreement between
Borrower and Holiday Hospitality Franchising, Inc.
- ------------------------------------------------------------ ---------------------------------------------------------
Monthly Payment $169,557.73
- ------------------------------------------------------------ ---------------------------------------------------------
Schedule 2--Location of Inventory 6001 Rockside Road, Independence, Ohio
- ------------------------------------------------------------ ---------------------------------------------------------
Schedule 3 Legal Description of Real Estate
- ------------------------------------------------------------ ---------------------------------------------------------
II.
- ------------------------------------------------------------ ---------------------------------------------------------
Name of Borrower JAGI Montrose West, LLC, a Delaware limited liability
company
- ------------------------------------------------------------- ---------------------------------------------------------
Amount of Note $3,500,000
- ------------------------------------------------------------ ---------------------------------------------------------
Definition of Franchise Agreement All rights of Borrower pursuant to that certain Comfort
Inn Hotel Change of Ownership Agreement between
Borrower and Choice Hotels International, Inc.
- ------------------------------------------------------------ ---------------------------------------------------------
Monthly Payment $27,222.57
- ------------------------------------------------------------ ---------------------------------------------------------
Schedule 2--Location of Inventory 130 Montrose Avenue, Copley, Ohio
- ------------------------------------------------------------ ---------------------------------------------------------
Schedule 3 Legal Description of Real Estate
- ------------------------------------------------------------ ---------------------------------------------------------
III.
- ------------------------------------------------------------ ---------------------------------------------------------
Name of Borrower JAGI North Canton, LLC, a Delaware limited liability
company
- ------------------------------------------------------------ ---------------------------------------------------------
Amount of Note $5,400,000
- ------------------------------------------------------------ ---------------------------------------------------------
Definition of Franchise Agreement All rights of Borrower pursuant to that certain Holiday
Inn Hotel Change of Ownership Agreement between
Borrower and Holiday Hospitality Franchising, Inc.
- -----------------------------------------------------------------------------------------------------------------------
Monthly Payment $42,000.54
- ------------------------------------------------------------ ---------------------------------------------------------
Schedule 2--Location of Inventory 4520 Everhard, N.W., North Canton, Ohio
- ------------------------------------------------------------ ---------------------------------------------------------
Schedule 3 Legal Description of Real Estate
- ------------------------------------------------------------ ---------------------------------------------------------
</TABLE>
Loan No. 400030964
SECOND MORTGAGE AND SECURITY AGREEMENT
THIS SECOND MORTGAGE AND SECURITY AGREEMENT, (as the same may from time to
time be extended, renewed or modified, the "Mortgage"), is granted as of the 14
day of August 1998, by JAGI CLEVELAND - HUDSON, LLC, a Delaware limited
liability company ("Mortgagor"), having its principal place of business at 8534
East Kemper Road, Cincinnati, Ohio 45249, to AMRESCO CAPITAL, L.P., a Delaware
limited partnership ("Mortgagee"), having its principal place of business at 700
North Pearl Street, Suite 2400, LB 342, Dallas, Texas 75201-7424, Attention:
Loan Servicing, the mortgagee hereunder.
RECITALS
A. Mortgagor is justly indebted unto the Mortgagee under that certain Note,
dated of even date herewith, made by Mortgagor and payable to the order of
Mortgagee in the principal amount of $13,300,000 (as now or hereafter amended,
restated, modified, substituted, or replaced, the "First Note").
B. The First Note is secured, inter alia, by a Mortgage and Security
Agreement, of even date herewith, executed by Mortgagor in favor of Mortgagee,
and filed for record in Summit County, Ohio, prior to this Mortgage (as now or
hereafter amended, restated, modified, substituted, or replaced, the "First
Mortgage").
C. Mortgagee, Mortgagor, JAGI Cleveland - Independence, LLC, an Ohio
limited liability company ("JAGI Independence"), JAGI Montrose West, LLC, an
Ohio limited liability company ("JAGI Montrose"), and JAGI North Canton, LLC, an
Ohio limited liability company ("JAGI Canton"), have entered into a Loan
Agreement, also dated of even date herewith (the "Loan Agreement"), whereby
Mortgagee agreed to lend an aggregate $44,000,000 to Mortgagor, JAGI
Independence, JAGI Montrose, and JAGI Canton, evidenced by the First Note and by
three other notes (the "Other Notes"), all of even date herewith, payable to the
order of Mortgagee in the aggregate principal amount of $30,700,000, one being
made by JAGI Independence in the principal amount of $21,800,000, one being made
by JAGI Montrose in the principal amount of $3,500,000, and one being made by
JAGI Canton in the principal amount of $5,400,000.
D. Mortgagee has required Mortgagor to grant this Mortgage as a condition
to making the $44,000,000 loan pursuant to the Loan Agreement.
NOW, THEREFORE, to secure (i) the payment of an indebtedness in the
original principal sum of Thirty Million Seven Hundred Thousand and No/100
Dollars ($30,700,000), lawful money of the United States of America, to be paid
with interest according to the Other Notes, and all other sums, liabilities and
obligations constituting the Debt (as defined in the Other Notes), (ii) the
payment of all sums advanced or incurred by Mortgagee contemplated hereby, and
(iii) the performance of the obligations and covenants herein contained,
Mortgagor has mortgaged, given, granted, bargained, sold, alienated, enfeoffed,
conveyed, confirmed, warranted, pledged, assigned, and hypothecated and by these
presents does hereby mortgage, give, grant, bargain, sell, alien, enfeoff,
convey, confirm, warrant, pledge, assign and hypothecate unto Mortgagee the real
property described in Exhibit A attached hereto (the "Premises") and the
buildings, structures, fixtures, additions, enlargements, extensions,
modifications, repairs, replacements and improvements now or hereafter located
thereon (the "Improvements");
TOGETHER WITH: all right, title, interest and estate of Mortgagor now
owned, or hereafter acquired, in and to the following property, rights,
interests and estates (the Premises, the Improvements together with the
following property, rights, interests and estates being hereinafter described
are collectively referred to herein as the "Mortgaged Property"):
<PAGE>
(a) all easements, rights-of-way, strips and gores of land, streets,
ways, alleys, passages, sewer rights, water, water courses, water rights
and powers, air rights and development rights, and all estates, rights,
titles, interests, privileges, liberties, tenements, hereditaments and
appurtenances of any nature whatsoever, in any way belonging, relating or
pertaining to the Premises and the Improvements and the reversion and
reversions, remainder and remainders, and all land lying in the bed of any
street, road or avenue, opened or proposed, in front of or adjoining the
Premises, to the center line thereof and all the estates, rights, titles,
interests, dower and rights of dower, curtesy and rights of curtesy,
property, possession, claim and demand whatsoever, both at law and in
equity, of Mortgagor of, in and to the Premises and the Improvements and
every part and parcel thereof, with the appurtenances thereto;
(b) all machinery, furnishings, equipment, fixtures (including but not
limited to all heating, air conditioning, plumbing, lighting,
communications and elevator fixtures) and other personal property of every
kind and nature (hereinafter collectively called the "Equipment"), whether
tangible or intangible, whatsoever owned by Mortgagor, or in which
Mortgagor has or shall have an interest, now or hereafter located upon the
Premises and the Improvements, or appurtenant thereto, and usable in
connection with the present or future operation and occupancy of the
Premises and the Improvements, including without limitation, beds, bureaus,
chiffonniers, chests, chairs, desks, lamps, mirrors, bookcases, tables,
rugs, carpeting, drapes, draperies, curtains, shades, venetian blinds,
screens, paintings, hangings, pictures, divans, couches, luggage carts,
luggage racks, stools, sofas, chinaware, linens, pillows, blankets,
glassware, foodcarts, cookware, dry cleaning facilities, dining room
wagons, keys or other entry systems, bars, bar fixtures, liquor and other
drink dispensers, icemakers, radios, television sets, cable t.v. equipment,
intercom and paging equipment, electric and electronic equipment, dictating
equipment, private telephone systems, medical equipment, potted plants,
heating, lighting and plumbing fixtures, fire prevention and extinguishing
apparatus, fittings, plants, apparatus, stoves, ranges, refrigerators,
cutlery and dishes, laundry machines, tools, machinery, engineers, dynamos,
motors, boilers, incinerators, washers and dryers, other customary hotel
equipment, and all building equipment, materials and supplies of any nature
whatsoever owned by Mortgagor, or in which Mortgagor has or shall have an
interest, now or hereafter located upon the Premises and the Improvements,
or appurtenant thereto, or usable in connection with the present or future
operation, enjoyment and occupancy of the Premises and the Improvements,
including the proceeds of any sale or transfer of the foregoing, and the
right, title and interest of Mortgagor in and to any of the Equipment 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 Mortgaged Property is located (the "Uniform Commercial Code") superior
in lien to the lien of this Mortgage;
(c) all awards or payments, including interest thereon, which may
heretofore and hereafter be made with respect to the Premises and the
Improvements, whether from the exercise of the right of eminent domain or
condemnation (including but not limited to any transfer made in lieu of or
in anticipation of the exercise of said rights), or for a change of grade,
or for any other injury to or decrease in the value of the Premises and
Improvements;
(d) all leases, subleases and other agreements affecting the use,
enjoyment or occupancy of the Premises and the Improvements heretofore or
hereafter entered into (including, without limitation, any and all security
interests, contractual liens and security deposits) (the "Leases") and all
income, rents, issues, profits and revenues (including all oil and gas or
other mineral royalties and bonuses) from the Premises and the
Improvements, including, without limitation, all revenues and credit card
receipts collected from guest rooms, restaurants, bars, meeting rooms,
banquet rooms and recreational facilities, all receivables, customer
obligations, installment payment obligations and other obligations now
existing or hereafter arising or created out of the sale, lease, sublease,
license, concession or other grant of the right of the use and occupancy of
property or rendering of services by Mortgagor or any operator or manager
of the hotel or the commercial space located in the Improvements or
acquired from others (including, without limitation, from the rental of any
office space, retail space, guest rooms or other space, halls, stores, and
offices, and deposits securing reservations of such space), license, lease,
sublease and concession fees and rentals, health club membership fees, food
and beverage wholesale and retail sales, service charges, vending machine
sales and proceeds, if any, from business interruption or other loss of
income insurance (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;
<PAGE>
(e) all proceeds of and any unearned premiums on any insurance
policies covering the Mortgaged Property, including, without limitation,
the right to receive and apply the proceeds of any insurance, judgments, or
settlements made in lieu thereof, for damage to the Mortgaged Property;
(f) the right, in the name and on behalf of Mortgagor, to appear in
and defend any action or proceeding brought with respect to the Mortgaged
Property and to commence any action or proceeding to protect the interest
of Mortgagee in the Mortgaged Property;
(g) all accounts, escrows, documents, instruments, chattel paper,
claims, deposits and general intangibles, as the foregoing terms are
defined in the Uniform Commercial Code, and all contract rights,
franchises, books, contracts, certificates, records, plans, specifications,
permits, licenses (to the extent assignable), approvals, actions, and
causes of action which now or hereafter relate to, are derived from or are
used in connection with the Premises, or the use, operation, construction,
management, maintenance, occupancy or enjoyment thereof or the conduct of
any business or activities thereon (hereinafter collectively called the
"Intangibles"); and
(h) all refunds, rebates or credits in connection with a reduction in
real estate taxes and assessments charged against the Mortgaged Property as
a result of tax certiorari or any application or proceedings for reduction;
(i) 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; and
(j) any and all proceeds and products of any of the foregoing and any
and all other security and collateral of any nature whatsoever, now or
hereafter given for the repayment of the Debt and the performance of
Mortgagor's obligations under the Loan Documents (as defined in the Note),
including (without limitation) the Tax and Insurance Escrow Fund (hereafter
defined) and the Replacement Escrow Fund (hereafter defined), and all other
escrows established with Mortgagee by Mortgagor.
TO HAVE AND TO HOLD the above granted and described Mortgaged Property unto
and to the use and benefit of Mortgagee and its successors and assigns, forever;
PROVIDED, HOWEVER, these presents are upon the express condition that, if
Mortgagor shall well and truly pay to Mortgagee the Debt at the time and in the
manner provided in the Note and this Mortgage and shall well and truly abide by
and comply with each and every covenant and condition set forth herein, in the
Note and in the other Loan Documents in a timely manner, these presents and the
estate hereby granted shall cease, terminate and be void;
AND Mortgagor represents and warrants to and covenants and agrees with
Mortgagee as follows:
1. Payment of Debt and Incorporation of Covenants, Conditions and
Agreements. Mortgagor will duly and punctually perform all of the covenants,
conditions and agreements contained in this Mortgage and the other Loan
Documents all of which covenants, conditions and agreements are hereby made a
part of this Mortgage to the same extent and with the same force as if fully set
forth herein.
2. Warranty of Title. Mortgagor warrants that Mortgagor is the sole owner
of and has good, legal, marketable and insurable fee simple title to the
Mortgaged Property and has the full power, authority and right to execute,
deliver and perform its obligations under this Mortgage and to encumber,
mortgage, give, grant, bargain, sell, alienate, enfeoff, convey, confirm,
pledge, assign and hypothecate the same and that Mortgagor possesses an
unencumbered fee estate in the Premises and the Improvements and that it owns
the Mortgaged Property free and clear of all liens, encumbrances and charges
whatsoever except for the First Mortgage and those exceptions shown in the title
insurance policy insuring the lien of the First Mortgage. This Mortgage is and
will remain a valid and enforceable second lien on and security interest in the
Mortgaged Property, subject only to said exceptions. Mortgagor shall forever
warrant, defend and preserve such title and the validity and priority of the
lien of this Mortgage and shall forever warrant and defend the same to Mortgagee
against the claims of all persons whomsoever except as aforesaid.
<PAGE>
3. Insurance. Mortgagor, at its sole cost and expense, will keep the
Mortgaged Property insured during the entire term of this Mortgage as required
by the terms of the First Mortgage.
(a) All policies of insurance (the "Policies") maintained by the terms of
the First Mortgage (i) shall contain a standard noncontributory mortgagee
(subject the rights of the holder of the First Mortgage) clause naming Mortgagee
as the person to which all payments made by such insurance company shall be
paid, (ii) shall be maintained throughout the term of this Mortgage without cost
to Mortgagee, shall contain such provisions as Mortgagee deems reasonably
necessary or desirable to protect its interest including, without limitation,
endorsements providing that neither Mortgagor, Mortgagee nor any other party
shall be a co-insurer under said Policies and that Mortgagee shall receive at
least thirty (30) days prior written notice or, of any modification, reduction
or cancellation, (v) shall be for a term of not less than one year, (vi) shall
be issued by an insurer licensed in the state in which the Mortgaged Property is
located, (vii) shall provide that Mortgagee may, but shall not be obligated to,
make premium payments to prevent any cancellation, endorsement, alteration or
reissuance, and such payments shall be accepted by the insurer to prevent same,
(viii) shall be satisfactory in form and substance to Mortgagee and shall be
approved by Mortgagee as to amounts, form, risk coverage, deductibles, loss
payees and insureds, and (ix) shall provide that all claims shall be allowable
on events as they occur. Upon demand therefor, Mortgagor shall reimburse
Mortgagee for all of Mortgagee's (or its servicer's) reasonable costs and
expenses incurred in obtaining any or all of the Policies or otherwise causing
the compliance with the terms and provisions of this Section 3. Mortgagor shall
pay the premiums for such Policies (the "Insurance Premiums") as the same become
due and payable (unless such Insurance Premiums have been paid by Mortgagee
pursuant to Section 5 hereof). Not later than thirty (30) days prior to the
expiration date of each of the Policies, Mortgagor will deliver to Mortgagee
satisfactory evidence of the renewal of each Policy. If Mortgagor receives from
any insurer any written notification or threat of any actions or proceedings
regarding the non-compliance or non-conformity of the Mortgaged Property with
any insurance requirements, Mortgagor shall give prompt notice thereof to
Mortgagee.
(b) If the Mortgaged Property shall be damaged or destroyed, in whole or in
part, by fire or other casualty, Mortgagor shall give prompt notice thereof to
Mortgagee.
4. Payment of Other Charges. Mortgagor shall pay all assessments, water
rates and sewer rents, ground rents, maintenance charges, other governmental
impositions, and other charges, including without limitation vault charges and
license fees for the use of vaults, chutes and similar areas adjoining the
Premises, now or hereafter levied or assessed or imposed against the Mortgaged
Property or any part thereof (the "Other Charges") as the same become due and
payable. Mortgagor will deliver to Mortgagee evidence satisfactory to Mortgagee
that the Taxes and Other Charges have been so paid or are not then delinquent no
later than thirty (30) days following the date on which the Taxes and/or Other
Charges would otherwise be delinquent if not paid. Mortgagor shall not suffer
and shall promptly cause to be paid and discharged any lien or charge whatsoever
which may be or become a lien or charge against the Mortgaged Property, and
shall promptly pay for all utility services provided to the Mortgaged Property.
5. Condemnation. Mortgagor shall promptly give Mortgagee written notice of
the actual or threatened commencement of any condemnation or eminent domain
proceeding and shall deliver to Mortgagee copies of any and all papers served in
connection with such proceedings. Subject to the rights of the holder of the
First Mortgage, Mortgagee is hereby irrevocably appointed as Mortgagor's
attorney-in-fact, coupled with an interest, with exclusive power to collect,
receive and retain any award or payment for said condemnation or eminent domain
and to make any compromise or settlement in connection with such proceeding,
subject to the provisions of this Mortgage. Unless Mortgagor is obligated to pay
the same to the holder of the First Mortgage, Mortgagor shall cause the award or
payment made in any condemnation or eminent domain proceeding, which is payable
to Mortgagor, to be paid directly to Mortgagee. Mortgagee may apply any such
award or payment to the reduction or discharge of the Debt whether or not then
due and payable (such application to be without the prepayment consideration
provided in the Other Notes, except that if an Event of Default, or an event
which with notice and/or the passage of time, or both, would constitute an Event
of Default, has occurred, then such application shall be subject to the full
prepayment consideration computed in accordance with the Other Notes). If the
Mortgaged Property is sold, through foreclosure or otherwise, prior to the
receipt by Mortgagee of such award or payment, Mortgagee shall have the right,
whether or not a deficiency judgment on the Other Notes shall have been sought,
recovered or denied, to receive said award or payment, or a portion thereof
sufficient to pay the Debt.
<PAGE>
6. Representations. Mortgagor represents, warrants and covenants as
follows:
(a) There is no action, suit or proceeding, judicial administrative or
otherwise pending or, to the best of Mortgagor's knowledge threatened or
contemplated against Mortgagor, or Guarantor or against or affecting the
Mortgaged Property that (i) has not been disclosed to Mortgagee and has a
material, adverse effect on the Mortgaged Property or Mortgagor's and
Guarantor's ability to perform their obligations under any Loan Document or
(ii) is not adequately covered by insurance, each as determined by
Mortgagee in its sole and absolute discretion.
(b) All certifications, permits and approvals, including, without
limitation, certificates of completion and occupancy permits required for
the legal use and occupancy of the Mortgaged Property as a hotel,
including, without limitation, any applicable liquor license (collectively,
the "Licenses") have been obtained and are in full force and effect. The
Mortgaged Property is in good repair, good order and good condition and
free and clear of any damage that would affect materially and adversely the
value of the Mortgaged Property as security for the Debt and the Mortgaged
Property has not been materially damaged by fire, wind or other casualty or
physical condition (including, without limitation, any soil or geological
condition), which damage has not been fully repaired. There are no
proceedings pending or threatened for the partial or total condemnation of
the Mortgaged Property.
(c) The Mortgaged Property is located on a dedicated, all-weather
road, or has access to an irrevocable easement permitting ingress and
egress which are adequate in relation to the premises and location on which
the Mortgaged Property is located.
(d) The Mortgaged Property is served by public utilities and services
in the surrounding community, including police and fire protection, public
transportation, refuse removal, public education, and enforcement of safety
codes which are adequate in relation to the premises and location on which
the Mortgaged Property is located.
(e) The Mortgaged Property is serviced by public water and sewer
systems which are adequate in relation to the premises and location on
which the Mortgaged Property is located.
(f) The Mortgaged Property has parking and other amenities necessary
for the operation of the business currently conducted thereon which are
adequate in relation to the premises and location on which the Mortgaged
Property is located.
(g) The Mortgaged Property is a contiguous parcel and a separate tax
parcel, and there are no delinquent Taxes or other outstanding charges
adversely affecting the Mortgaged Property.
(h) The Mortgaged Property is not relied upon by, and does not rely
upon, any building or improvement not part of the Mortgaged Property to
fulfill any zoning, building code or other governmental or municipal
requirement for structural support or the furnishing of any essential
building systems or utilities, except to the extent of any valid and
existing reciprocal easement agreements shown in the title insurance policy
insuring the lien of this Mortgage.
(i) No action, omission, misrepresentation, negligence, fraud or
similar occurrence has taken place on the part of any person that would
reasonably be expected to result in the failure or impairment of full and
timely coverage under any insurance policies providing coverage for the
Mortgaged Property.
7. Maintenance of Mortgaged Property. Mortgagor shall cause the Mortgaged
Property to be operated and maintained in a good and safe condition and repair
and in keeping with the condition and repair of properties of a similar use,
value, age, nature and construction. Mortgagor shall not use, maintain or
operate the Mortgaged Property in any manner which constitutes a public or
private nuisance or which makes void, voidable, or cancelable, or increases the
premium of, any insurance then in force with respect thereto. The Improvements
and the Equipment shall not be removed, demolished or materially altered (except
for normal replacement of the Equipment) without the consent of Mortgagee.
Mortgagor shall promptly comply with all laws, orders and ordinances affecting
the Mortgaged Property, or the use thereof. Mortgagor shall promptly repair,
replace or rebuild any part of the Mortgaged Property which may be destroyed by
any casualty, or become damaged, worn or
<PAGE>
dilapidated or which may be affected by any proceeding of the character referred
to in Section 5 hereof and shall complete and pay for any structure at any time
in the process of construction or repair on the Premises.
8. Use of Mortgaged Property. Mortgagor shall not initiate, join in,
acquiesce in, or consent to any change in any private restrictive covenant,
zoning law or other public or private restriction, limiting or defining the uses
which may be made of the Mortgaged Property or any part thereof, nor shall
Mortgagor initiate, join in, acquiesce in, or consent to any zoning change or
zoning matter affecting the Mortgaged Property. If under applicable zoning
provisions the use of all or any portion of the Mortgaged Property is or shall
become a nonconforming use, Mortgagor will not cause or permit such
nonconforming use to be discontinued or abandoned without the express written
consent of Mortgagee. Mortgagor shall not permit or suffer to occur any waste on
or to the Mortgaged Property or to any portion thereof and shall not take any
steps whatsoever to convert the Mortgaged Property, or any portion thereof, to a
condominium or cooperative form of management. Mortgagor will not install or
permit to be installed on the Premises any underground storage tank or
above-ground storage tank without the written consent of Mortgagee.
9. Transfer or Encumbrance of the Mortgaged Property. (a) Mortgagor
acknowledges that Mortgagee has examined and relied on the creditworthiness and
experience of Mortgagor in owning and operating properties such as the Mortgaged
Property in agreeing to make the loan secured hereby, and that Mortgagee will
continue to rely on Mortgagor's ownership of the Mortgaged Property as a means
of maintaining the value of the Mortgaged Property as security for repayment of
the Debt. Mortgagor acknowledges that Mortgagee has a valid interest in
maintaining the value of the Mortgaged Property so as to ensure that, should
Mortgagor default in the repayment of the Debt, Mortgagee can recover the Debt
by a sale of the Mortgaged Property. Except for liens and security interests
granted by Mortgagor to Mortgagee in connection with the First Note and the
Debt, Mortgagor shall not, without the prior written consent of Mortgagee, sell,
convey, alienate, mortgage, encumber, pledge or otherwise transfer the Mortgaged
Property or any part thereof, or permit the Mortgaged Property or any part
thereof to be sold, conveyed, alienated, mortgaged, encumbered, pledged or
otherwise transferred; provided, however, Mortgagee may, in its sole discretion,
give such written consent (but shall have no obligation to do so) to any such
sale, conveyance, alienation, mortgage, encumbrance, pledge or other transfer,
and any such consent may be conditioned upon the satisfaction of such conditions
precedent as Mortgagee may require (including, without limitation, the
conditions precedent set forth in subsection 12[c] below). Notwithstanding any
other provision of this Section 12, Mortgagee will consent, subject to the
conditions of subsection 12(c) and provided that no Event of Default has
occurred and is continuing, to one sale, conveyance, alienation, mortgage,
encumbrance, pledge or other transfer of the Mortgaged Property by the original
Mortgagor as set forth in this Mortgage.
(b) A sale, conveyance, alienation, mortgage, encumbrance, pledge or
transfer within the meaning of this Section 12 shall not include (x) transfers
made by devise or descent or by operation of law upon the death of a joint
tenant, partner or shareholder, subject, however, to all the following
requirements: (1) written notice of any transfer under this subsection 12(b)(x),
whether by will, trust or other written instrument, operation of law or
otherwise, is provided to Mortgagee or its servicer, together with copies of
such documents relating to the transfer as Mortgagee or its servicer may
reasonably request, (2) control over the management and operation of the
Mortgaged Property is retained by Janus American Group, Inc., a Delaware
corporation (the AOriginal Principals@, whether one or more) at all times prior
to the death or legal incapacity of all the Original Principals and is
thereafter assumed by persons who are acceptable in all respects to Mortgagee in
its sole and absolute discretion, (3) no such transfer by any of the Original
Principals will release the respective estate from any liability as a Guarantor,
as more particularly provided in subsection 12(c) below, and (4) no such
transfer, death or other event has any adverse effect either on the
bankruptcy-remote status of Mortgagor under the requirements of any national
rating agency for the Certificates (hereinafter defined) or on the status of
Mortgagor as a continuing legal entity liable for the payment of the Debt and
the performance of all other obligations secured hereby, or (y) transfers
otherwise by operation of law in the event of a bankruptcy, nor shall the
meaning include a Lease, but shall be deemed to include (i) an installment sales
agreement wherein Mortgagor agrees to sell the Mortgaged Property or any part
thereof for a price to be paid in installments; (ii) an agreement by Mortgagor
leasing all or a substantial part of the Mortgaged Property for other than
actual occupancy by a space tenant thereunder or a sale, assignment or other
transfer of, or the grant of a security interest in, Mortgagor's right, title
and interest in and to any Leases or any Rents; (iii) if Mortgagor, Guarantor,
or any general partner of Mortgagor or Guarantor is a corporation, any merger,
consolidation or the voluntary or involuntary sale, conveyance or transfer of
such corporation's stock (or the stock of any corporation directly or indirectly
controlling such corporation by operation of law or otherwise) or the creation
or issuance of
<PAGE>
new stock in one or a series of transactions by which an aggregate of more than
10% of such corporation's stock shall be vested in a party or parties who are
not now stockholders (provided, however, in no event shall this subpart [iii]
apply to any Guarantor whose stock, shares or partnership interests are traded
on a nationally recognized stock exchange); (iv) if Mortgagor, Guarantor, or any
general partner of Mortgagor or Guarantor is a limited liability company or
limited partnership, the voluntary or involuntary sale, conveyance or transfer
by which an aggregate of more than fifty percent (50%) of the ownership interest
in such limited liability company or more than fifty percent (50%) of the
limited partnership interests in such limited partnership shall be vested in
parties not having an ownership interest as of the date of this Mortgage; and
(v) if Mortgagor, any Guarantor or any general partner of Mortgagor or any
Guarantor is a limited or general partnership or joint venture, the change,
removal or resignation of a general partner, managing partner or joint venturer
or the transfer of all or any portion of the partnership interest of any general
partner, managing partner or joint venturer.
(c) Notwithstanding the provisions of subsections 9(a) and (b) above,
Mortgagee will give its consent to any transfer consented to by the holder of
the First Mortgage.
(d) Mortgagor agrees to bear and shall pay or reimburse Mortgagee on demand
for all reasonable expenses (including, without limitation, all recording costs,
taxes, reasonable attorney's fees and disbursements and title search costs)
incurred by Mortgagee in connection with the review, approval and documentation
of any such sale, conveyance, alienation, mortgage, encumbrance, pledge or
transfer.
10. Changes in the Laws Regarding Taxation. If any law is amended, enacted
or adopted after the date of this Mortgage which deducts the Debt from the value
of the Mortgaged Property for the purpose of taxation or which imposes a tax,
either directly or indirectly, on the Debt or Mortgagee's interest in the
Mortgaged Property, Mortgagor will pay such tax, with interest and penalties
thereon, if any. In the event Mortgagee is advised by counsel chosen by it that
the payment of such tax or interest and penalties by Mortgagor would be unlawful
or taxable to Mortgagee or unenforceable or provide the basis for a defense of
usury, then in any such event, Mortgagee shall have the option, by written
notice of not less than forty-five (45) days, to declare the Debt immediately
due and payable.
11. No Credits on Account of the Debt. Mortgagor will not claim or demand
or be entitled to any credit or credits on account of the Debt for any part of
the Taxes or Other Charges assessed against the Mortgaged Property, or any part
thereof, and no deduction shall otherwise be made or claimed from the assessed
value of the Mortgaged Property, or any part thereof, for real estate tax
purposes by reason of this Mortgage or the Debt. In the event such claim, credit
or deduction shall be required by law, Mortgagee shall have the option, by
written notice of not less than ninety (90) days, to declare the Debt
immediately due and payable.
12. Documentary Stamps. If at any time the United States of America, any
State thereof or any subdivision of any such State shall require revenue or
other stamps to be affixed to the Note or this Mortgage, or impose any other tax
or charge on the same, Mortgagor will pay for the same, with interest and
penalties thereon, if any.
13. Performance of Other Agreements. Mortgagor shall observe and perform
each and every term to be observed or performed by Mortgagor pursuant to the
terms of any agreement or recorded instrument affecting or pertaining to the
Mortgaged Property.
14. Further Acts, etc. Mortgagor will, at the cost of Mortgagor, and
without expense to Mortgagee, do, execute, acknowledge and deliver all and every
such further acts, deeds, conveyances, mortgages, assignments, notices of
assignment, Uniform Commercial Code financing statements or continuation
statements, transfers and assurances as Mortgagee shall, from time to time,
require, for the better assuring, conveying, assigning, transferring, and
confirming unto Mortgagee the property and rights hereby mortgaged, given,
granted, bargained, sold, alienated, enfeoffed, conveyed, confirmed, pledged,
assigned and hypothecated or intended now or hereafter so to be, or which
Mortgagor may be or may hereafter become bound to convey or assign to Mortgagee,
or for carrying out the intention or facilitating the performance of the terms
of this Mortgage or for filing, registering or recording this Mortgage.
Mortgagor, on demand, will execute and deliver and hereby authorizes Mortgagee
to execute in the name of Mortgagor or without the signature of Mortgagor to the
extent Mortgagee may lawfully do so, one or more financing statements, chattel
mortgages or other instruments, to evidence more effectively the security
interest of
<PAGE>
Mortgagee in the Mortgaged Property. Mortgagor grants to Mortgagee an
irrevocable power of attorney coupled with an interest for the purpose of
exercising and perfecting any and all rights and remedies available to Mortgagee
at law and in equity, including without limitation such rights and remedies
available to Mortgagee pursuant to this paragraph.
15. Recording of Mortgage, etc. Upon the execution and delivery of this
Mortgage and thereafter, from time to time, Mortgagor will cause this Mortgage,
and any security instrument creating a lien or security interest or evidencing
the lien hereof upon the Mortgaged Property and each instrument of further
assurance to be filed, registered or recorded in such manner and in such places
as may be required by any present or future law in order to publish notice of
and fully to protect the lien or security interest hereof upon, and the interest
of Mortgagee in, the Mortgaged Property. Mortgagor will pay all filing,
registration or recording fees, and all expenses incident to the preparation,
execution and acknowledgment of this Mortgage, any mortgage supplemental hereto,
any security instrument with respect to the Mortgaged Property and any
instrument of further assurance, and all federal, state, county and municipal,
taxes, duties, imposts, assessments and charges arising out of or in connection
with the execution and delivery of this Mortgage, any mortgage supplemental
hereto, any security instrument with respect to the Mortgaged Property or any
instrument of further assurance, except where prohibited by law so to do.
Mortgagor shall hold harmless and indemnify Mortgagee, its successors and
assigns, against any liability incurred by reason of the imposition of any tax
on the making and recording of this Mortgage.
16. Reporting Requirements. Mortgagor agrees to give prompt notice to
Mortgagee of the insolvency or bankruptcy filing of Mortgagor or the death,
insolvency or bankruptcy filing of any Guarantor.
17. Events of Default. The term "Event of Default" as used herein shall
mean the occurrence or happening, at any time and from time to time, of any one
or more of the following:
(a) if any portion of the Debt is not paid within five (5) days from
the date when the same is due;
(b) there occurs an Event of Default under any one or both of the
First Note and the First Mortgage;
(c) if there occurs Default under the Loan Agreement, as defined
therein;
(d) if Mortgagor sells, conveys, alienates, mortgages, encumbers,
pledges or otherwise transfers any portion of the Mortgaged Property or
permits the Mortgaged Property or any part thereof to be sold, conveyed,
alienated, mortgaged, encumbered, levied, pledged or otherwise transferred
without Mortgagee's prior written consent;
(e) if any representation or warranty of Mortgagor, or of any
Guarantor, made herein, in any Loan Document, any guaranty, or in any
certificate, report, financial statement or other instrument or document
furnished to Mortgagee shall have been false or misleading in any material
respect when made;
(f) if Mortgagor or any Guarantor shall make an assignment for the
benefit of creditors or if Mortgagor or any Guarantor shall admit in
writing its inability to pay, or Mortgagor's or any Guarantor's failure to
pay, debts generally as the debts become due;
(g) if a receiver, liquidator or trustee of Mortgagor or of any
Guarantor shall be appointed or if Mortgagor or any Guarantor shall be
adjudicated a bankrupt or insolvent, or if any petition for bankruptcy,
reorganization or arrangement pursuant to federal bankruptcy law, or any
similar federal or state law, shall be filed by or against, consented to,
or acquiesced in by, Mortgagor or any Guarantor or if Mortgagor or any
Guarantor shall admit in writing its insolvency or bankruptcy or if any
proceeding for the dissolution or liquidation of Mortgagor or of any
Guarantor shall be instituted; however, if such appointment, adjudication,
petition or proceeding was involuntary and not consented to by Mortgagor or
such Guarantor, upon the same not being discharged, stayed or dismissed
within sixty (60) days;
(h) subject to Mortgagor's right to contest as provided herein, if the
Mortgaged Property becomes subject to any mechanic's, materialman's,
mortgage or other lien except a lien for local real estate taxes and
assessments not then due and payable;
<PAGE>
(i) if Mortgagor fails to cure properly any violations of laws or
ordinances affecting or which may be interpreted to affect the Mortgaged
Property;
(j) except as permitted in this Mortgage, the actual or threatened
alteration, improvement, demolition or removal of any of the Improvements
without the prior consent of Mortgagee;
(k) damage to the Mortgaged Property in any manner which is not
covered by insurance solely as a result of Mortgagor's failure to maintain
insurance required in accordance with this Mortgage;
(l) if Mortgagor shall default under any term, covenant, or condition
of this Mortgage or any of the other Loan Documents, including the Loan
Agreement other than as specified in any of the above subparagraphs;
(m) if all or a substantial part of Mortgagor's assets (other than the
Mortgaged Property) are attached, seized, subjected to a writ or distress
warrant or are levied upon (unless such attachment, seizure, writ, distress
warrant or levy is vacated within sixty [60] days following the date of the
same);
(n) entry of a judgment in excess of $100,000.00 and the expiration of
any appeal rights or the dismissal or final adjudication of appeals against
Mortgagor (unless such judgment is vacated within sixty [60] days following
the date of the same);
(o) the Mortgage shall cease to constitute a second-priority lien on
the Mortgaged Property (other than in accordance with its terms); and
(p) seizure or forfeiture of the Mortgaged Property, or any portion
thereof, or Mortgagor's interest therein, resulting from criminal
wrongdoing or other unlawful action of Mortgagor, its affiliates, or any
tenant in the Mortgaged Property under any federal, state or local law.
18. Notice and Cure. Notwithstanding the foregoing, Mortgagee agrees to
give to Mortgagor written notice as described below of (a) Mortgagor's failure
to pay any part of the Debt when due (a "Monetary Default"), (b) a default
referred to in subsection 17(o) above (a "Lien Default") and (c) a default
referred to in subsections 17(c),(i) or (1) above (a "Nonmonetary Default").
Mortgagor shall have a period of five (5) days from its receipt of notice in
which to cure a Monetary Default (which written notice period may run
concurrently with the five [5] day period referred to in subsection 17[a]),
shall have a period of twenty (20) days from its receipt of notice to cure a
First Lien Default and shall have a period of twenty (20) days from its receipt
of notice in which to cure a Nonmonetary Default unless such Nonmonetary Default
is not susceptible to cure within such twenty (20) day period, in which case
Mortgagor shall commence to cure such Nonmonetary Default within twenty (20)
days following notice and diligently prosecute such cure to completion,
provided, however, that Mortgagor will provide Mortgagee with such information
as Mortgagee may reasonably request concerning the status of any attempted cure
of any such Nonmonetary Default and the cure of any such Nonmonetary Default
must be completed to the satisfaction of Mortgagee within sixty (60) days of
notice in any case. Notwithstanding the foregoing, Mortgagee may, but shall not
be required, to give notice of a Monetary Default or a recurrence of the same
Nonmonetary Default more frequently than two times in any calendar year. A
Monetary Default and/or First Lien Default and/or Nonmonetary Default shall
nevertheless be an Event of Default for all purposes under the Loan Documents
except that the acceleration of the Debt or other exercise of remedies shall not
be prior to the expiration of the applicable cure and/or grace periods provided
in Section 17 or in this section.
19. Remedies. Upon the occurrence of an Event of Default and subject to any
applicable cure period, Mortgagee may, at Mortgagee's option, do any one or more
of the following:
(a) Right to Perform Mortgagor's Covenants. If Mortgagor has failed to
keep or perform any covenant whatsoever contained in this Mortgage or the
other Loan Documents, Mortgagee may, but shall not be obligated to any
person to do so, perform or attempt to perform said covenant; and any
payment made or expense incurred in the performance or attempted
performance of any such covenant, together with any sum expended by
Mortgagee that is chargeable to Mortgagor or subject to reimbursement by
Mortgagor under the Loan Documents, shall be and become a part of the
"Debt," and Mortgagor promises, upon demand, to pay to Mortgagee, at the
place
<PAGE>
where the Note is payable, all sums so incurred, paid or expended by
Mortgagee, with interest from the date when paid, incurred or expended by
Mortgagee at the Default Rate as specified in the Other Notes.
(b) Right of Entry. Subject to the rights of the holder of the First
Mortgage, Mortgagee may, prior or subsequent to the institution of any
foreclosure proceedings, enter upon the Mortgaged Property, or any part
thereof, and take exclusive possession of the Mortgaged Property and of all
books, records, and accounts relating thereto and to exercise without
interference from Mortgagor any and all rights which Mortgagor has with
respect to the management, possession, operation, protection, or
preservation of the Mortgaged Property, including without limitation the
right to rent the same for the account of Mortgagor and to deduct from such
Rents all costs, expenses, and liabilities of every character incurred by
the Mortgagee in collecting such Rents and in managing, operating,
maintaining, protecting, or preserving the Mortgaged Property and to apply
the remainder of such Rents on the Debt in such manner as Mortgagee may
elect. All such costs, expenses, and liabilities incurred by the Mortgagee
in collecting such Rents and in managing, operating, maintaining,
protecting, or preserving the Mortgaged Property, if not paid out of Rents
as hereinabove provided, shall constitute a demand obligation owing by
Mortgagor and shall bear interest from the date of expenditure until paid
at the Default Rate as specified in the Other Notes, all of which shall
constitute a portion of the Debt. If necessary to obtain the possession
provided for above, the Mortgagee may invoke any and all legal remedies to
dispossess Mortgagor, including specifically one or more actions for
forcible entry and detainer, trespass to try title, and restitution. In
connection with any action taken by the Mortgagee pursuant to this
subparagraph, the Mortgagee shall not be liable for any loss sustained by
Mortgagor resulting from any failure to let the Mortgaged Property, or any
part thereof, or from any other act or omission of the Mortgagee in
managing the Mortgaged Property unless such loss is caused by the willful
misconduct of the Mortgagee, nor shall the Mortgagee be obligated to
perform or discharge any obligation, duty, or liability under any Lease or
under or by reason hereof or the exercise of rights or remedies hereunder.
Mortgagor shall and does hereby agree to indemnify the Mortgagee for, and
to hold the Mortgagee harmless from, any and all liability, loss, or
damage, which may or might be incurred by the Mortgagee under any such
Lease or under or by reason hereof or the exercise of rights or remedies
hereunder, and from any and all claims and demands whatsoever which may be
asserted against the Mortgagee 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 such Lease. Should the Mortgagee
incur any such liability, the amount thereof, including without limitation
costs, expenses, and reasonable attorneys' fees, together with interest
thereon from the date of expenditure until paid at the Default Rate as
specified in the Other Notes, shall be secured hereby, and Mortgagor shall
reimburse the Mortgagee therefor immediately upon demand. Nothing in this
subsection shall impose any duty, obligation, or responsibility upon the
Mortgagee for the control, care, management, leasing, or repair of the
Mortgaged Property, nor for the carrying out of any of the terms and
conditions of any such Lease; nor shall it operate to make the Mortgagee
responsible or liable for any waste committed on the Mortgaged Property by
the tenants or by any other parties, or for any hazardous substances or
environmental conditions on or under the Mortgaged Property, or for any
dangerous or defective condition of the Mortgaged Property or for any
negligence in the management, leasing, upkeep, repair, or control of the
Mortgaged Property resulting in loss or injury or death to any tenant,
licensee, employee, or stranger. Mortgagor hereby assents to, ratifies, and
confirms any and all actions of the Mortgagee with respect to the Mortgaged
Property taken under this subparagraph.
(c) Right to Accelerate. Mortgagee may, without notice except as
provided in Section 18 above, demand, presentment, notice of nonpayment or
nonperformance, protest, notice of protest, notice of intent to accelerate,
notice of acceleration, or any other notice or any other action, all of
which are hereby waived by Mortgagor and all other parties obligated in any
manner whatsoever on the Debt, declare the entire unpaid balance of the
Debt immediately due and payable, and upon such declaration, the entire
unpaid balance of the Debt shall be immediately due and payable.
(d) Foreclosure-Power of Sale. Mortgagee may institute a proceeding or
proceedings, judicial, or nonjudicial, by advertisement or otherwise, for
the complete or partial foreclosure of this Mortgage or the complete or
partial sale of the Mortgaged Property under the power of sale contained
herein or under any applicable provision of law. Mortgagee may sell the
Mortgaged Property, and all estate, right, title, interest, claim and
demand of Mortgagor therein, and all rights of redemption thereof, at one
or more sales, as an entirety or in parcels, with such elements of real
and/or personal property, and at such time and place and upon such terms as
it may deem expedient, or as may be required by applicable law, and in the
event of a sale, by foreclosure or otherwise, of less than all of the
Mortgaged Property, this Mortgage shall continue as a lien and security
interest on the remaining portion of the Mortgaged Property.
<PAGE>
(e) Rights Pertaining to Sales. Subject to the requirements of
applicable law and except as otherwise provided herein, the following
provisions shall apply to any sale or sales of all or any portion of the
Mortgaged Property under or by virtue of subsection (d) above, whether made
under the power of sale herein granted or by virtue of judicial proceedings
or of a judgment or decree of foreclosure and sale:
i) Mortgagee may conduct any number of sales from time to time.
The power of sale set forth above shall not be exhausted by any one or
more such sales as to any part of the Mortgaged Property which shall
not have been sold, nor by any sale which is not completed or is
defective in Mortgagee's opinion, until the Debt shall have been paid
in full.
ii) Any sale may be postponed or adjourned by public announcement
at the time and place appointed for such sale or for such postponed or
adjourned sale without further notice.
iii) After each sale, Mortgagee or an officer of any court
empowered to do so shall execute and deliver to the purchaser or
purchasers at such sale a good and sufficient instrument or
instruments granting, conveying, assigning and transferring all right,
title and interest of Mortgagor in and to the property and rights sold
and shall receive the proceeds of said sale or sales and apply the
same as specified in the Other Notes. Mortgagee is hereby appointed
the true and lawful attorney-in-fact of Mortgagor, which appointment
is irrevocable and shall be deemed to be coupled with an interest, in
Mortgagor's name and stead, to make all necessary conveyances,
assignments, transfers and deliveries of the property and rights so
sold, Mortgagor hereby ratifying and confirming all that said attorney
or such substitute or substitutes shall lawfully do by virtue thereof.
Nevertheless, Mortgagor, if requested by Mortgagee, shall ratify and
confirm any such sale or sales by executing and delivering to
Mortgagee or such purchaser or purchasers all such instruments as may
be advisable, in Mortgagee's judgment, for the purposes as may be
designated in such request.
iv) Any and all statements of fact or other recitals made in any
of the instruments referred to in subparagraph (iii) of this
subsection (e) given by Mortgagee shall be taken as conclusive and
binding against all persons as to evidence of the truth of the facts
so stated and recited.
v) Any such sale or sales shall operate to divest all of the
estate, right, title, interest, claim and demand whatsoever, whether
at law or in equity, of Mortgagor in and to the properties and rights
so sold, and shall be a perpetual bar both at law and in equity
against Mortgagor and any and all persons claiming or who may claim
the same, or any part thereof or any interest therein, by, through or
under Mortgagor to the fullest extent permitted by applicable law.
vi) Upon any such sale or sales, Mortgagee may bid for and
acquire the Mortgaged Property and, in lieu of paying cash therefor,
may make settlement for the purchase price by crediting against the
Debt the amount of the bid made therefor, after deducting therefrom
the expenses of the sale, the cost of any enforcement proceeding
hereunder, and any other sums which Mortgagee is authorized to deduct
under the terms hereof, to the extent necessary to satisfy such bid.
vii) Upon any such sale, it shall not be necessary for Mortgagee
or any public officer acting under execution or order of court to have
present or constructively in its possession any of the Mortgaged
Property.
(f) Mortgagee's Judicial Remedies. Mortgagee may proceed by suit or suits,
at law or in equity, to enforce the payment of the Debt to foreclose the liens
and security interests of this Mortgage as against all or any part of the
Mortgaged Property, and to have all or any part of the Mortgaged Property sold
under the judgment or decree of a court of competent jurisdiction. This remedy
shall be cumulative of any other nonjudicial remedies available to the Mortgagee
under this Mortgage or the other Loan Documents. Proceeding with a request or
receiving a judgment for legal relief shall not be or be deemed to be an
election of remedies or bar any available nonjudicial remedy of the Mortgagee.
<PAGE>
(g) Mortgagee's Right to Appointment of Receiver . Mortgagee, as a matter
of right and (i) without regard to the sufficiency of the security for repayment
of the Debt, (ii) without notice to Mortgagor, (iii) without any showing of
insolvency, fraud, or mismanagement on the part of Mortgagor, (iv) without the
necessity of filing any judicial or other proceeding other than the proceeding
for appointment of a receiver, and (v) without regard to the then value of the
Mortgaged Property, shall be entitled to the appointment of a receiver or
receivers for the protection, possession, control, management and operation of
the Mortgaged Property, including (without limitation), the power to collect the
Rents, enforce this Mortgage and, in case of a sale and deficiency, during the
full statutory period of redemption (if any), whether there be a redemption or
not, as well as during any further times when Mortgagor, except for the
intervention of such receiver, would be entitled to collection of such Rents.
Mortgagor hereby irrevocably consents to the appointment of a receiver or
receivers. Any receiver appointed pursuant to the provisions of this subsection
shall have the usual powers and duties of receivers in such matters.
(h) Mortgagee's Uniform Commercial Code Remedies. The Mortgagee may
exercise its rights of enforcement under the Uniform Commercial Code in effect
in the state in which the Mortgaged Property is located.
(i) Discontinuance of Remedies. In case Mortgagee shall have proceeded to
invoke any right, remedy, or recourse permitted under the Loan Documents and
shall thereafter elect to discontinue or abandon same for any reason, Mortgagee
shall have the unqualified right so to do and, in such event, Mortgagor and
Mortgagee shall be restored to their former positions with respect to the Debt,
the Loan Documents, the Mortgaged Property or otherwise, and the rights,
remedies, recourses and powers of Mortgagee shall continue as if same had never
been invoked.
(j) Remedies Cumulative. All rights, remedies, and recourses of Mortgagee
granted in the Note, this Mortgage and the other Loan Documents, any other
pledge of collateral, or otherwise available at law or equity: (i) shall be
cumulative and concurrent; (ii) may be pursued separately, successively, or
concurrently against Mortgagor, the Mortgaged Property, or any one or more of
them, at the sole discretion of Mortgagee; (iii) may be exercised as often as
occasion therefor shall arise, it being agreed by Mortgagor that the exercise or
failure to exercise any of same shall in no event be construed as a waiver or
release thereof or of any other right, remedy, or recourse; (iv) shall be
nonexclusive; (v) shall not be conditioned upon Mortgagee exercising or pursuing
any remedy in relation to the Mortgaged Property prior to Mortgagee bringing
suit to recover the Debt; and (vi) in the event Mortgagee elects to bring suit
on the Debt and obtains a judgment against Mortgagor prior to exercising any
remedies in relation to the Mortgaged Property, all liens and security
interests, including the lien of this Mortgage, shall remain in full force and
effect and may be exercised thereafter at Mortgagee's option.
(k) Subordinate Priority.
i) Notwithstanding any provision of this Mortgage to the contrary,
this Mortgage is subject and subordinate to the First Mortgage.
ii) The First Mortgage and all other documents encumbering all or any
part of the Mortgaged Property as security for the First Note are sometimes
referred to herein as the "First Security Documents."
iii) For so long as the First Security Documents remain undischarged
of record, notwithstanding any term, provision, or condition of this
Mortgage:
A. The lien and security interest upon and in the Mortgaged
Property created by this Mortgage are and shall be subordinate to the
lien and security interest upon and in the Mortgaged Property created
by the First Security Documents; and
B. To the extent that the provisions of the First Security
Documents are inconsistent with the provisions of this Mortgage, the
provisions of the First Security Documents shall control and govern.
(l) Election of Remedies. Mortgagee may release, regardless of
consideration, any part of the Mortgaged Property without, as to the remainder,
in any way impairing, affecting, subordinating, or releasing the
<PAGE>
lien or security interests evidenced by this Mortgage or the other Loan
Documents or affecting the obligations of Mortgagor or any other party to pay
the Debt. For payment of the Debt, Mortgagee may resort to any collateral
securing the payment of the Debt in such order and manner as Mortgagee may
elect. No collateral taken by Mortgagee shall in any manner impair or affect the
lien or security interests given pursuant to the Loan Documents, and all
collateral shall be taken, considered, and held as cumulative.
(m) Waivers. Mortgagor hereby irrevocably and unconditionally waives and
releases: (i) all benefits that might accrue to Mortgagor by virtue of any
present or future law exempting the Mortgaged Property from attachment, levy or
sale on execution or providing for any appraisement, valuation, stay of
execution, exemption from civil process, redemption, or extension of time for
payment; (ii) all notices of any Event of Default except as expressly provided
herein; or of Mortgagee's exercise of any right, remedy, or recourse provided
for under the Loan Documents; and (iii) any right to a marshalling of assets, a
sale in inverse order of alienation or any other right to direct in any manner,
the order of sale of any of the Mortgaged Property.
(n) Statute of Limitations. To the extent permitted by applicable law,
Mortgagee's rights hereunder shall continue even to the extent that a suit for
collection of the Debt, or part thereof, is barred by a statute of limitations.
Mortgagor hereby expressly waives and releases to the fullest extent permitted
by law, the pleading of any statute of limitations as a defense to payment of
the Debt.
(o) Waiver of Automatic or Supplemental Stay. In the event of the filing of
any voluntary or involuntary petition under the Bankruptcy Code by or against
Mortgagor (other than an involuntary petition filed by or joined in by
Mortgagee), the Mortgagor shall not assert, or request any other party to
assert, that the automatic stay under ss. 362 of the Bankruptcy Code shall
operate or be interpreted to stay, interdict condition, reduce or inhibit the
ability of Mortgagee to enforce any rights it has by virtue of this Mortgage, or
any other rights that Mortgagee has, whether now or hereafter acquired, against
any guarantor of the Debt. Further, Mortgagor shall not seek a supplemental stay
or any other relief, whether injunctive or otherwise, pursuant to ' 105 of the
Bankruptcy Code or any other provision therein to stay, interdict, condition,
reduce or inhibit the ability of Mortgagee to enforce any rights it has by
virtue of this Mortgage against any guarantor of the Debt. The waivers contained
in this paragraph are a material inducement to Mortgagee's willingness to enter
into this Mortgage and Mortgagor acknowledges and agrees that no grounds exist
for equitable relief which would bar, delay or impede the exercise by Mortgagee
of Mortgagee's rights and remedies against Mortgagor or any guarantor of the
Debt.
(p) Bankruptcy Acknowledgment. In the event the Mortgaged Property or any
portion thereof or any interest therein becomes property of any bankruptcy
estate or subject to any state or federal insolvency proceeding, then Mortgagee
shall immediately become entitled, in addition to all other relief to which
Mortgagee may be entitled under this Mortgage, to obtain (i) an order from the
Bankruptcy Court or other appropriate court granting immediate relief from the
automatic stay pursuant to ss. 362 of the Bankruptcy Code so to permit Mortgagee
to pursue its rights and remedies against Mortgagor as provided under this
Mortgage and all other rights and remedies of Mortgagee at law and in equity
under applicable state law, and (ii) an order from the Bankruptcy Court
prohibiting Mortgagor's use of all "cash collateral" as defined under ss. 363 of
the Bankruptcy Code. In connection with such Bankruptcy Court orders, Mortgagor
shall not contend or allege in any pleading or petition filed in any court
proceeding that Mortgagee does not have sufficient grounds for relief from the
automatic stay. Any bankruptcy petition or other action taken by the Mortgagor
to stay, condition, or inhibit Mortgagee from exercising its remedies are hereby
admitted by Mortgagor to be in bad faith and Mortgagor further admits that
Mortgagee would have just cause for relief from the automatic stay in order to
take such actions authorized under state law.
20. Right of Inspection. Mortgagee and its agents shall have the right to
enter and inspect the Mortgaged Property during normal business hours upon
reasonable notice.
21. Security Agreement. This Mortgage is both a real property mortgage or
deed of trust and a "security agreement" within the meaning of the Uniform
Commercial Code. The Mortgaged Property includes both real and personal property
and all other rights and interests, whether tangible or intangible in nature, of
Mortgagor in the Mortgaged Property. Mortgagor by executing and delivering this
Mortgage has granted and hereby grants to Mortgagee, as security for the Debt, a
security interest in the Mortgaged Property to the full extent that the
Mortgaged Property may be subject to the Uniform Commercial Code (said portion
of the Mortgaged Property so subject to the Uniform Commercial Code being called
in this paragraph the "Collateral"). Mortgagor hereby agrees
<PAGE>
with Mortgagee to execute and deliver to Mortgagee, in form and substance
satisfactory to Mortgagee, such financing statements and such further assurances
as Mortgagee may from time to time, reasonably consider necessary to create,
perfect, and preserve Mortgagee's security interest herein granted. This
Mortgage shall also constitute a "fixture filing" for the purposes of the
Uniform Commercial Code. All or part of the Mortgaged Property are or are to
become fixtures. Information concerning the security interest herein granted may
be obtained from the parties at the addresses of the parties set forth in the
first paragraph of this Mortgage. If an Event of Default shall occur, Mortgagee,
in addition to any other rights and remedies which they may have, shall have and
may exercise immediately and without demand, any and all rights and remedies
granted to a secured party upon default under the Uniform Commercial Code,
including, without limiting the generality of the foregoing, the right to take
possession of the Collateral or any part thereof, and to take such other
measures as Mortgagee may deem necessary for the care, protection and
preservation of the Collateral. Upon request or demand of Mortgagee, Mortgagor
shall at its expense assemble the Collateral and make it available to Mortgagee
at a convenient place acceptable to Mortgagee. Mortgagor shall pay to Mortgagee
on demand any and all expenses, including legal expenses and attorneys' fees,
incurred or paid by Mortgagee in protecting the interest in the Collateral and
in enforcing the rights hereunder with respect to the Collateral. Any notice of
sale, disposition or other intended action by Mortgagee with respect to the
Collateral sent to Mortgagor in accordance with the provisions hereof at least
five (5) days prior to such action, shall constitute commercially reasonable
notice to Mortgagor. The proceeds of any disposition of the Collateral, or any
part thereof, may be applied by Mortgagee to the payment of the Debt in such
priority and proportions as Mortgagee in its discretion shall deem proper. In
the event of any change in name, identity or structure of any Mortgagor, such
Mortgagor shall notify Mortgagee thereof and promptly after request shall
execute, file and record such Uniform Commercial Code forms as are necessary to
maintain the priority of Mortgagee's lien upon and security interest in the
Collateral, and shall pay all expenses and fees in connection with the filing
and recording thereof. If Mortgagee shall require the filing or recording of
additional Uniform Commercial Code forms or continuation statements, Mortgagor
shall, promptly after request, execute, file and record such Uniform Commercial
Code forms or continuation statements as Mortgagee shall deem necessary, and
shall pay all expenses and fees in connection with the filing and recording
thereof, it being understood and agreed, however, that no such additional
documents shall increase Mortgagor's obligations under the Note, this Mortgage
and the other Loan Documents. Mortgagor hereby irrevocably appoints Mortgagee as
its attorney-in-fact, coupled with an interest, to file with the appropriate
public office on its behalf any financing or other statements signed only by
Mortgagee, as Mortgagor's attorney-in-fact, in connection with the Collateral
covered by this Mortgage. Notwithstanding the foregoing, Mortgagor shall appear
and defend in any action or proceeding which affects or purports to affect the
Mortgaged Property and any interest or right therein, whether such proceeding
effects title or any other rights in the Mortgaged Property (and in conjunction
therewith, Mortgagor shall fully cooperate with Mortgagee in the event Mortgagee
is a party to such action or proceeding).
22. Actions and Proceedings. Mortgagee has the right to appear in and
defend any action or proceeding brought with respect to the Mortgaged Property
and to bring any action or proceeding, in the name and on behalf of Mortgagor,
which Mortgagee, in its discretion, decides should be brought to protect their
interest in the Mortgaged Property. Mortgagee shall, at its option, be
subrogated to the lien of any mortgage or other security instrument discharged
in whole or in part by the Debt, and any such subrogation rights shall
constitute additional security for the payment of the Debt.
23. Waiver of Setoff and Counterclaim. All amounts due under this Mortgage,
the Note and the other Loan Documents shall be payable without setoff,
counterclaim or any deduction whatsoever. Mortgagor hereby waives the right to
assert a setoff, counterclaim or deduction in any action or proceeding in which
Mortgagee is a participant, or arising out of or in any way connected with this
Mortgage, the Note, any of the other Loan Documents, or the Debt.
24. Contest of Certain Claims. Notwithstanding the provisions of Sections 4
and 23(h) hereof, Mortgagor shall not be in default for failure to pay or
discharge Taxes, Other Charges or mechanic's or materialman's lien asserted
against the Mortgaged Property if, and so long as, (a) Mortgagor shall have
notified Mortgagee of same within five (5) days of obtaining knowledge thereof;
(b) Mortgagor shall diligently and in good faith contest the same by appropriate
legal proceedings which shall operate to prevent the enforcement or collection
of the same and the sale of the Mortgaged Property or any part thereof, to
satisfy the same; (c) Mortgagor shall have furnished to Mortgagee a cash
deposit, or an indemnity bond satisfactory to Mortgagee with a surety
satisfactory to Mortgagee, in the amount of the Taxes, Other Charges or
mechanic's or materialman's lien claim, plus a reasonable
<PAGE>
additional sum to pay all costs, interest and penalties that may be imposed or
incurred in connection therewith, to assure payment of the matters under contest
and to prevent any sale or forfeiture of the Mortgaged Property or any part
thereof; (d) Mortgagor shall promptly upon final determination thereof pay the
amount of any such Taxes, Other Charges or claim so determined, together with
all costs, interest and penalties which may be payable in connection therewith;
(e) the failure to pay the Taxes, Other Charges or mechanic's or materialman's
lien claim does not constitute a default under any other deed of trust, mortgage
or security interest covering or affecting any part of the Mortgaged Property;
and (f) notwithstanding the foregoing, Mortgagor shall immediately upon request
of Mortgagee pay (and if Mortgagor shall fail so to do, Mortgagee may, but shall
not be required to, pay or cause to be discharged or bonded against) any such
Taxes, Other Charges or claim notwithstanding such contest, if in the opinion of
Mortgagee, the Mortgaged Property or any part thereof or interest therein may be
in danger of being sold, forfeited, foreclosed, terminated, canceled or lost.
Mortgagee may pay over any such cash deposit or part thereof to the claimant
entitled thereto at any time when, in the judgment of Mortgagee, the entitlement
of such claimant is established.
25. Recovery of Sums Required to Be Paid. Mortgagee shall have the right
from time to time to take action to recover any sum or sums which constitute a
part of the Debt as the same become due, without regard to whether or not the
balance of the Debt shall be due, and without prejudice to the right of
Mortgagee thereafter to bring an action of foreclosure, or any other action, for
a default or defaults by Mortgagor existing at the time such earlier action was
commenced.
26. ERISA. (a) Mortgagor shall not engage in any transaction which would
cause any obligation, or action taken or to be taken, hereunder (or the exercise
by Mortgagee of any of its rights under the Note, this Mortgage and the other
Loan Documents) to be a non-exempt (under a statutory or administrative class
exemption) prohibited transaction under the Employee Retirement Income Security
Act of 1974, as amended ("ERISA").
(b) As of the date hereof and throughout the term of this Mortgage, (i)
Mortgagor is not and will not be an "employee benefit plan" as defined in
Section 3(3) of ERISA, which is subject to Title I of ERISA, and (ii) the assets
of Mortgagor do not and will not constitute "plan assets" of one or more such
plans for purposes of Title I of ERISA.
(c) As of the date hereof and throughout the term of this Mortgage, (i)
Mortgagor is not and will not be a "governmental plan" within the meaning of
Section 3(3) of ERISA, and (ii) transactions by or with Mortgagor are not and
will not be subject to state statutes applicable to Mortgagor regulating
investments of and fiduciary obligations with respect to governmental plans.
(d) Mortgagor further covenants and agrees to deliver to Mortgagee such
certifications or other evidence from time to time throughout the term of the
Mortgage, as requested by Mortgagee in its sole discretion, that (i) Mortgagor
is not an "employee benefit plan" as defined in Section 3(3) of ERISA, which is
subject to Title I of ERISA, or a "governmental plan" within the meaning of
Section 3(3) of ERISA; (ii) Mortgagor 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 Mortgagor 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 Mortgagor are held by "benefit plan investors" within the
meaning of 29 C.F.R. ss. 2510.3-101(f)(2); or (C) Mortgagor 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.
27. Indemnification. In addition to any other indemnifications provided in
any of the Loan Documents, Mortgagor shall, at its sole cost and expense,
protect, defend, indemnify, release and save harmless Mortgagee or any person or
entity who is or will have been involved in the servicing of this Loan, any
person or entity whose name the encumbrance created by this Mortgage is or will
have been recorded, persons and entities who may hold or acquire or will have
held a full or partial interest in this Loan (including but not limited to
investors or prospective investors, as well as custodians, trustees and other
fiduciaries who hold or have held a full or partial interest in the Loan for the
benefit of third parties) as well as the respective affiliates, subsidiaries,
persons controlling or under common control, directors, officers, shareholders,
members, partners, employees, agents, servants, representatives, contractors,
subcontractors, 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
<PAGE>
participation or other full or partial interest in this Loan or the Mortgaged
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
Mortgagee's assets and business) (collectively, the "Indemnified Parties"),
from and against all liabilities, obligations, claims, demands, damages,
penalties, causes of action, losses, fines, costs and expenses (including
without limitation reasonable attorneys' fees and expenses), imposed upon or
incurred by or asserted against any of the Indemnified Parties and directly or
indirectly arising out of or in any way relating to any one or more of the
following: (a) ownership of this Mortgage, the Mortgaged Property or any
interest therein or receipt of any Rents; (b) any amendment to, or restructuring
of, the Debt, and the Note, this Mortgage or any other Loan Documents; (c) any
and all lawful action that may be taken by Mortgagee in connection with the
enforcement of the provisions of this Mortgage or the Note or any other Loan
Documents; (d) any and all lawful action that may be taken by Mortgagee in
connection with the enforcement of the provisions of this Mortgage or the Note
or any other Loan Documents, whether or not suit is filed in connection with
same, or in connection with Mortgagor, any Guarantor 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; (e)
any accident, injury to or death of persons or loss of or damage to property
occurring in, on or about the Mortgaged Property or any part thereof or on the
adjoining sidewalks, curbs, adjacent property or adjacent parking areas, streets
or ways; (f) any use, nonuse or condition in, on or about the Mortgaged Property
or any part thereof or on adjoining sidewalks, curbs, adjacent property or
adjacent parking areas, streets or ways; (g) any failure on the part of
Mortgagor to perform or comply with any of the terms of Sections 2 through 54 of
this Mortgage; (h) performance of any labor or services or the furnishing of any
materials or other property in respect of the Mortgaged Property or any part
thereof; (i) any failure of the Mortgaged Property to comply with any laws or
ordinances affecting or which may be interpreted to affect the Mortgaged
Property, including, without limitation, the Access Laws; (j) any representation
or warranty made in the Note, this Mortgage or the other Loan Documents being
false or misleading in any respect as of the date such representation or
warranty was made; (k) any claim by brokers, finders or similar persons claiming
to be entitled to a commission in connection with any Lease or other transaction
involving the Mortgaged Property or any part thereof under any legal requirement
or any liability asserted against Mortgagee with respect thereto; (l) the claims
of any lessee to any portion of the Mortgaged Property or any person acting
through or under any lessee or otherwise arising under or as a consequence of
any Lease; (m) performance of any labor or services or the furnishing of any
materials or other property in respect of the Mortgaged Property or any part
thereof; (n) the enforcement by any Indemnified Party of the provisions of this
Section 34; (o) any and all claims and demands whatsoever which may be asserted
against Mortgagee 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; or (p) any investigation, defense, and settlement
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 Mortgagee's sole discretion as a result of a
default under Section 33. The obligations and liabilities of Mortgagor under
this Section 34 (A) shall survive for a period of one (1) year following any
release of this Mortgage executed by Mortgagee and satisfaction of the Loan
evidenced by the Loan Documents, and (B) shall survive the transfer or
assignment of this Mortgage, the entry of a judgment of foreclosure, sale of the
Mortgaged Property by nonjudicial foreclosure sale, or delivery of a deed in
lieu of foreclosure (including, without limitation, any transfer by Mortgagor of
any of its rights, title and interest in and to the Mortgaged Property to any
party, whether or not affiliated with Mortgagor).
28. Duty to Defend. Upon written request by an Indemnified Party, Mortgagor
shall defend such Indemnified Party (if requested by an 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 the
Indemnified Parties, their attorneys shall control the resolution of claim or
proceeding. Upon demand, Mortgagor 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, and
other professionals in connection therewith. Any amounts payable to any of the
Indemnified Parties by reason of the application of Section 34 or this Section
shall be secured by this Mortgage and shall become immediately due and payable
and shall bear interest at the Default Rate specified in the Note from the date
loss or damage is sustained by any of the Indemnified Parties until paid.
29. Notices. Unless oral notice is expressly permitted hereunder any
notice, demand, statement, request or consent made hereunder shall be in writing
and shall be deemed to be received by the addressee on the
<PAGE>
first (1st) business day after such notice is tendered to a
nationally-recognized overnight delivery service or on the third (3rd) day
following the day such notice is deposited with the United States postal service
first class certified mail, return receipt requested, in either instance,
addressed to the address, as set forth above, of the party to whom such notice
is to be given, or to such other address as Mortgagor or Mortgagee, as the case
may be, shall in like manner designate in writing.
30. Authority. (a) Mortgagor (and the undersigned representative of
Mortgagor, if any) has full power, authority and right to execute, deliver and
perform its obligations pursuant to this Mortgage, and to mortgage, give, grant,
bargain, sell, alien, enfeoff, convey, confirm, warrant, pledge, hypothecate and
assign the Mortgaged Property pursuant to the terms hereof and to keep and
observe all of the terms of this Mortgage on Mortgagor's part to be performed;
(b) Mortgagor is duly organized, validly existing and in good standing under the
laws of its state of organization or incorporation; (c) Mortgagor is duly
qualified to transact business and is in good standing in the state where the
Mortgaged Property is located and has all necessary approvals, governmental and
otherwise, and full power and authority to own the Mortgaged Property and carry
out its business as now conducted and proposed to be conducted; and (d)
Mortgagor represents and warrants that Mortgagor is not a "foreign person"
within the meaning of Section 1445(f)(3) of the Internal Revenue Code of 1986,
as amended and the related Treasury Department regulations.
31. Waiver of Notice. Mortgagor shall not be entitled to any notices of any
nature whatsoever from Mortgagee except with respect to matters for which this
Mortgage specifically and expressly provides for the giving of notice by
Mortgagee to Mortgagor and except with respect to matters for which Mortgagee is
required by applicable law to give notice, and Mortgagor hereby expressly waives
the right to receive any notice from Mortgagee with respect to any matter for
which this Mortgage does not specifically and expressly provide for the giving
of notice by Mortgagee to Mortgagor.
32. Remedies of Mortgagor. In the event that a claim or adjudication is
made that Mortgagee has acted unreasonably or unreasonably delayed acting in any
case where by law or under the Note, this Mortgage or the other Loan Documents,
it has an obligation to act reasonably or promptly, Mortgagee shall not be
liable for any monetary damages, and Mortgagor's remedies shall be limited to
injunctive relief or declaratory judgment.
33. Sole Discretion of Mortgagee. Wherever pursuant to this Mortgage,
Mortgagee exercises any right given to it to approve or disapprove, or any
arrangement or term is to be satisfactory to Mortgagee, the decision of
Mortgagee to approve or disapprove or to decide that arrangements or terms are
satisfactory or not satisfactory shall be in the sole discretion of Mortgagee
and shall be final and conclusive, except as may be otherwise expressly and
specifically provided herein.
34. Non-Waiver. The failure of Mortgagee to insist upon strict performance
of any term hereof shall not be deemed to be a waiver of any term of this
Mortgage. Mortgagor shall not be relieved of Mortgagor's obligations hereunder
by reason of (a) the failure of Mortgagee to comply with any request of
Mortgagor or Guarantor to take any action to foreclose this Mortgage or
otherwise enforce any of the provisions hereof or of the Note or other Loan
Documents, (b) the release, regardless of consideration, of the whole or any
part of the Mortgaged Property, or of any person liable for the Debt or any
portion thereof, or (c) any agreement or stipulation by Mortgagee extending the
time of payment or otherwise modifying or supplementing the terms of the Note,
this Mortgage, or the other Loan Documents. Mortgagee may resort for the payment
of the Debt to any other security held by Mortgagee in such order and manner as
Mortgagee, in its discretion, may elect. Mortgagee may take action to recover
the Debt, or any portion thereof, or to enforce any covenant hereof without
prejudice to the right of Mortgagee thereafter to foreclosure this Mortgage. The
rights and remedies of Mortgagee under this Mortgage shall be separate, distinct
and cumulative and none shall be given effect to the exclusion of the others. No
act of Mortgagee shall be construed as an election to proceed under any one
provision herein to the exclusion of any other provision. Mortgagee shall not be
limited exclusively to the rights and remedies herein stated but shall be
entitled to every right and remedy now or hereafter afforded at law or in
equity. It is agreed that the risk of loss or damage to the Mortgaged Property
is on the Mortgagor and Mortgagee shall have no liability whatsoever for decline
in the value of the Mortgaged 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.
<PAGE>
35. No Oral Change. This Mortgage may not be modified, amended, waived,
extended, changed, discharged or terminated orally or by any act or failure to
act on the part of Mortgagor or Mortgagee, but only by an agreement in writing
signed by the party against whom enforcement of any modification, amendment,
waiver, extension, change, discharge or termination is sought.
36. Liability. If Mortgagor consists of more than one person, the
obligations and liabilities of each such person hereunder shall be joint and
several. Subject to the provisions hereof requiring Mortgagee's consent to any
transfer of the Mortgaged Property, this Mortgage shall be binding upon and
inure to the benefit of Mortgagor and Mortgagee and their respective successors
and assigns forever.
37. Inapplicable Provisions. If any term, covenant or condition of this
Mortgage is held to be invalid, illegal or unenforceable in any respect, this
Mortgage shall be construed without such provision.
38. Headings, etc. The headings and captions of various paragraphs of this
Mortgage are for convenience of reference only and are not to be construed as
defining or limiting, in any way, the scope or intent of the provisions hereof.
39. Counterparts. This Mortgage may be executed in any number of
counterparts each of which shall be deemed to be an original but all of which
when taken together shall constitute one agreement.
40. Definitions. Unless the context clearly indicates a contrary intent or
unless otherwise specifically provided herein, words used in this Mortgage may
be used interchangeably in singular or plural form and the word "Mortgagor"
shall mean "each Mortgagor and any subsequent owner or owners of the Mortgaged
Property or any part thereof or any interest therein," the word "Mortgagee"
shall mean "Mortgagee and any subsequent holder of the Note," the word "Debt"
shall mean "the Note and any other evidence of indebtedness secured by this
Mortgage," the word "person" shall include an individual, corporation,
partnership, trust, unincorporated association, government, governmental
authority, and any other entity, and the words "Mortgaged Property" shall
include any portion of the Mortgaged Property and any interest therein and the
words "attorneys' fees" shall include any and all attorneys' fees, paralegal and
law clerk fees, including, but not limited to, fees at the pre-trial, trial and
appellate levels incurred or paid by Mortgagee in protecting its interest in the
Mortgaged Property and Collateral and enforcing its rights hereunder. Whenever
the context may require, any pronouns used herein shall include the
corresponding masculine, feminine or neuter forms, and the singular form of
nouns and pronouns shall include the plural and vice versa.
41. Homestead. Mortgagor hereby waives and renounces all homestead and
exemption rights provided by the constitution and the laws of the United States
and of any state, in and to the Premises as against the collection of the Debt,
or any part hereof.
42. Assignments. Mortgagee shall have the right to assign or transfer its
rights under this Mortgage and the other Loan Documents without limitation,
including, without limitation, the right to assign or transfer its rights to a
servicing agent. Any assignee or transferee shall be entitled to all the
benefits afforded Mortgagee under this Mortgage and the other Loan Documents.
43. Survival of Obligations; Survival of Warrants and Representations. Each
and all of the covenants and obligations of Mortgagor (other than warranties and
representations contained herein) shall survive the execution and delivery of
the Loan Documents and shall continue in full force and effect until the Debt
shall have been paid in full; provided, however, that nothing contained in this
paragraph shall limit the obligations of Mortgagor except as otherwise set forth
herein. In addition, any and all warranties and representations of Mortgagor
contained herein shall survive the execution and delivery of the Loan Documents
and (i) shall continue for a period of one (1) year following any release of
this Mortgage executed by Mortgagee and satisfaction of the loan evidenced by
the Loan Documents, and (ii) shall survive the transfer or assignment of this
Mortgage, the entry of a judgment of foreclosure, sale of the Mortgaged Property
by non-judicial foreclosure or deed in lieu of foreclosure (including, without
limitation, any transfer of the Mortgage by Mortgagee of any of its rights,
title and interest in and to the Mortgaged Property to any party, whether or not
affiliated with Mortgagee).
<PAGE>
44. Mortgagor's Expense. Mortgagor acknowledges and confirms that Mortgagee
shall impose certain administrative processing and/or commitment fees in
connection with (a) the extension, renewal, modification, amendment and
termination of its loans, (b) the release or substitution of collateral
therefor, (c) obtaining certain consents, waivers and approvals with respect to
the Mortgaged Property, or (d) the review of any Lease or proposed Lease or the
preparation or review of any subordination, non-disturbance. Mortgagor further
acknowledges and confirms that it shall be responsible for the payment of all
costs of reappraisal of the Mortgaged Property or any part thereof, whether
required by law, regulation, Mortgagee or any governmental or quasi-governmental
authority. Mortgagor hereby acknowledges and agrees to pay, immediately, with or
without demand, all such fees (as the same may be increased or decreased from
time to time), and any additional fees of a similar type or nature which may be
imposed by Mortgagee from time to time, upon the occurrence of an event set
forth in this Section or otherwise. Wherever it is provided for herein that
Mortgagor pay any costs and expenses, such costs and expenses shall include, but
not be limited to, all legal fees and disbursements of Mortgagee, whether of
retained firms, the reimbursement for the expenses of in-house staff or
otherwise.
45. Attorneys' Fees. (a) Mortgagor shall pay all legal fees incurred by
Mortgagee in connection with (i) the preparation of the Note, this Mortgage and
the other Loan Documents; and (ii) the items set forth in Section 52 above, and
(b) Mortgagor shall pay to Mortgagee on demand any and all expenses, including
legal expenses and attorneys' fees, incurred or paid by Mortgagee in protecting
its interest in the Mortgaged Property or in collecting any amount payable under
the Note, Mortgage or other Loan Documents or enforcing its rights hereunder
with respect to the Mortgaged Property, whether or not any legal proceeding is
commenced hereunder or thereunder and whether or not any default or Event of
Default shall have occurred and is continuing, together with interest thereon at
the Default Rate from the date paid or incurred by Mortgagee until such expenses
are paid by Mortgagor.
46. Covenants Running with the Land. All covenants, conditions, warranties,
representations and other obligations contained in this Mortgage and the other
Loan Documents are intended by Mortgagor and Mortgagee to be, and shall be
construed as, covenants running with the Mortgaged Property until the lien of
this Mortgage has been fully released by Mortgagee.
47. Governing Law; Jurisdiction. THIS MORTGAGE AND THE OTHER LOAN DOCUMENTS
SHALL BE GOVERNED, CONSTRUED, APPLIED AND ENFORCED IN ACCORDANCE WITH THE LAWS
OF THE STATE IN WHICH THE MORTGAGED PROPERTY IS LOCATED (WITHOUT REGARD TO ANY
CONFLICT OF LAWS PRINCIPLES) AND THE APPLICABLE LAWS OF THE UNITED STATES OF
AMERICA. MORTGAGOR HEREBY IRREVOCABLY SUBMITS TO THE JURISDICTION OF ANY COURT
OF COMPETENT JURISDICTION LOCATED IN THE STATE IN WHICH THE MORTGAGED PROPERTY
IS LOCATED IN CONNECTION WITH ANY PROCEEDING OUT OF OR RELATING TO THIS
MORTGAGE.
48. Time. Time is of the essence in this Mortgage and the other Loan
Documents.
49. No Third Party Beneficiaries. The provisions of this Mortgage and the
other Loan Documents are for the benefit of Mortgagor and Mortgagee and shall
not inure to the benefit of any third party (other than any successor or
assignee of Mortgagee). This Mortgage and the other Loan Documents shall not be
construed as creating any rights, claims or causes of action against Mortgagee
or any of its officers, directors, agents or employees in favor of any party
other than Mortgagor including but not limited to any claims to any sums held in
the Tax and Insurance Escrow Fund or the Replacement Escrow Fund.
50. Relationship of Parties. The relationship of Mortgagee and Mortgagor is
solely that of debtor and creditor, and Mortgagee has no fiduciary or other
special relationship with the Mortgagor, and no term or condition of any of the
Loan Documents shall be construed to be other than that of debtor and creditor.
Mortgagor represents and acknowledges that the Loan Documents do not provide for
any shared appreciation rights or other equity participation interest.
51. Investigations. Any and all representations, warranties, covenants and
agreements made in this Mortgage (and/or in other Loan Documents) shall survive
any investigation or inspection made by or on behalf of Mortgagee.
<PAGE>
52. Mechanics' Lien Laws. Mortgagee shall be and hereby is authorized and
empowered to do, as mortgagee, all things provided to be done in the mechanic's
lien laws of the State of Ohio (including Section 1311.14 of the Ohio Revised
Code), and all acts amendatory or supplementary thereto.
53. Protective Advances. The Debt secured by this Mortgage shall include
unpaid balances of advances made by Mortgagee with respect to the Mortgaged
Property for the payment of taxes, assessments, and insurance premiums and for
costs incurred for the protection of the Mortgaged Property as provided for in
Section 5301.233 of the Ohio Revised Code, and all acts amendatory or
supplementary thereto.
Mortgagor has executed this instrument the day and year first above
written.
MORTGAGOR:
In the presence of: JAGI CLEVELAND - HUDSON, LLC, a
Delaware limited liability company
By Janus American Group, Inc.,
a Delaware corporation
/s/ CHARLES S. BADGETT By /s/ JAMES E. BISHOP
- ------------------------------- -------------------------------------
Print Name: Charles S. Badgett Name: James E. Bishop
Title: President
/s/ ELENA A. ANDERSON
- -------------------------------
Print Name: Elena A. Anderson
<PAGE>
STATE OF TEXAS )
) SS.
COUNTY OF DALLAS )
Before me, a Notary Public in and for said county and state, personally
appeared the above-named JAGI CLEVELAND - HUDSON, LLC, a Delaware limited
liability company, by Janus American Group, Inc., a Delaware corporation, its
Manager, by James E. Bishop, its President, who acknowledged that he did sign
the foregoing instrument on behalf of said corporation and said limited
liability company, that the same is the free act and deed of said limited
liability company, the free act and deed of said corporation individually and as
such manager, and his free act and deed individually and as such officer.
In testimony whereof, I have hereunto set my hand and official seal at
Dallas, TX, this 12th day of August 1998.
/s/ ANGELA BEWLEY
-----------------------------------
Notary Public
This instrument prepared by:
Richard L. Reppert, Esq.
Jones, Day, Reavis & Pogue
North Point
901 Lakeside Avenue
Cleveland, Ohio 44114
<PAGE>
EXHIBIT A
Legal Description
<PAGE>
EXHIBIT "A"
Situated in the Township of Copley, County of Summit, State of Ohio and known as
being part of original Copley Township Lot Number 2, also known as being the
south 122 feet of Lot Number 14, all of Lot Number 15 and the north 75 feet of
Lot Number 16 of the Montrose West Allotment Phase I-Part 2 and Rerecord of
Phase I as recorded in Plat Cabinet "B" Slides 747 to 753 of said County Records
and being further described as follows:
Parcel Number 1-South 122 feet of Lot Number 14.
- -----------------------------------------------
Beginning at the northwest corner of said Montrose West Allotment, said
northwest corner also being the northwest corner of Lot Number 1 of said
Montrose West Allotment, thence S 00 deg. 13' 30" W for a distance of 1298.76
feet to a point, said point being the northwest corner of said Lot Number 14,
thence continuing S 00 deg. 13' 30" W for a distance of 96.00 feet to the true
place of beginning of the parcel of land hereinafter described;
Thence clockwise along the following five (5) courses and distances;
1) Thence S 89 deg. 46' 30" E for a distance of 400.60 feet to a point, said
point being on the western right of way line of Montrose West Avenue (70
feet);
2) Thence S 02 deg. 47' 57" W along said western right of way line for a
distance of 19.29 feet to a point, said point being a point of curvature;
3) Thence continuing along said western right of way line along the arc of a
curve to the right having the following properties;
Delta = 01 deg. 33' 28"
Radius = 3784.72 feet
Tangent = 51.45 feet
Chord = 102.90 feet
Chord Bearing = S 03 deg. 34' 41" deg. W for a distance of 102.90
feet to a point, said point being the
southeast corner of said Lot Number 14;
4) Thence N 89 deg. 46' 30" W along the southern line of said Lot Number 14
for a distance of 393.72 feet to a point, said point being the southwest
corner of said Lot Number 14;
5) Thence N 00 deg. 13' 30" E along the western line of said Lot Number 14 and
western line of said Montrose West Allotment for a distance of 122.00 feet
to a point; said point being the true place of beginning, and containing
1.1132 acres of land, more or less, and subject to all easements,
restrictions, and convenants of record.
<PAGE>
Parcel Number 2--All of Lot Number 15
- -------------------------------------
Situated in the Township of Copley, County of Summit, State of Ohio and known as
being part of original Copley Township Lot Number 2, also known as being all of
Lot Number 15 of the Montrose West Allotment Phase I-Part 2 and Rerecord of
Phase I as recorded in Plat Cabinet "B" Slides 747 to 753 of said County Records
and being further described as follows:
Beginning at the northwest corner of said Montrose West Allotment, said
northwest corner also being the northwest corner of Lot Number 1 of said
Montrose West Allotment, thence S 00 deg. 13' 30" W along the western line of
said Montrose West Allotment for a distance of 1516.76 feet to a point, said
point being the northwest corner and true place of beginning of the parcel of
land hereinafter described;
Thence clockwise along the following four (4) courses and distances;
1) Thence S 89 deg. 46' 30" E along the north line of said Lot Number 15, said
north line also being the south line of Parcel Number 1 as above described,
for a distance of 393.72 feet to a point, said point being on the western
right of way line of Montrose West Avenue (70 feet);
2) Thence along the said western right of way line, along the arc of a curve
to the right having the following properties;
Delta = 04 deg. 52' 40"
Radius = 3784.72 feet
Tangent = 161.20 feet
Chord = 322.12 feet
Chord Bearing = S 06 deg. 47' 45" W for a distance of 322.21
feet to a point, said point being the
southeast corner of said Lot Number 15;
3) Thence N 89 deg. 46' 30" W along the south line of said Lot Number 15 for a
distance of 356.86 feet to a point; said point being the southwest corner
of said Lot Number 15;
4) Thence N 00 deg. 13' 30" E along the western line of said Lot Number 15 for
a distance of 320.00 feet to a point, said point being the true place of
beginning, and containing 2.7738 acres of land, more or less, and subject
to all easements, restrictions, and covenants of record.
Parcel Number 3--North 75 feet of Lot Number 16
- ----------------------------------------------
Situated in the Township of Copley, County of Summit, State of Ohio and known as
being part of original Copley Township Lot Number 2, also known as being the
north 75 feet of Lot Number 16 of the Montrose West Allotment Phase I-Part 2 and
Rerecord of Phase I as recorded in Plat Cabinet "B" Slides 747 to 753 of said
County Records and being further described as follows:
<PAGE>
Beginning at the northwest corner of said Montrose West Allotment, said
northwest corner also being the northwest corner of Lot Number 1 of said
Montrose West Allotment, thence S 00 deg. 13' 30" W along the western line of
said Montrose West Allotment for a distance of 1836.76 feet to a point, said
point being the northwest corner of said Lot Number 16 and true place of
beginning of the parcel of land hereinafter described;
Thence clockwise along the following four (4) courses and distances;
1) Thence S 89 deg. 46' 30" E along the north line of said Lot Number 16, said
north line also being the south line of Parcel Number 2 as above described,
for a distance of 356.86 feet to a point, said point being on the western
right of way line of Montrose West Avenue (70 feet);
2) Thence along the said western right of way line, long the arc of a curve to
the right having the following properties;
Delta = 01 deg. 09' 05"
Radius = 3784.72'
Tangent = 38.03'
Chord = 76.06'
Chord Bearing = S 09 deg. 48' 37.5" W for a distance of 76.06
feet to a point;
3) Thence N 89 deg. 46' 30" W for a distance of 344.19 feet to a point, said
point being on the western line of said Lot Number 16;
4) Thence W 00 deg. 13' 30" E along said western line for a distance of 75.00
feet to a point, said point being the true place of beginning, and
containing 0.6037 acres of land, more or less, and subject to all
easements, restrictions, and covenants of record.
The total acreage of all three parcels in 4.4907 acres.
Excepting therefrom the following described premises:
Situated in the Township of Copley, County of Summit, State of Ohio, and known
as being part of original Copley Township Lot Number 2, also known as being the
south 42.42 feet of Original Lot Number 15 and north 75.00 feet of Original Lot
Number 16 of the Montrose West Allotment Phase I-Part 2 and Re-record of Phase I
as recorded in Plat Cabinet "B" Slides 747 to 753 of said County Records and
being further described as follows:
Beginning at the northwest corner of said Montrose West Allotment, said
northwest corner also being the northwest corner of Lot Number 1 of said
Montrose West Allotment, thence S 00 deg. 13' 30" W. along the western line of
said Montrose West Allotment for a distance of 1836.76 feet to a point, said
point being the northwest corner of Lot Number 16 of said Montrose West
Allotment, said point also being the True Place of Beginning of the parcel of
land hereinafter described, thence clockwise along the following five (5)
courses and distances:
1. Thence N 00 deg. 13' 30" E. along the westerly line of said Lot Number 15
for a distance of 42.42 feet to a point;
2. Thence S 89 deg. 46' 30" E. for a distance of 363.33 feet to a point, said
point being on the westerly right of way line of Montross West Avenue (75
feet wide);
3. Thence along said westerly right of way line along the arc of a curve to
the right having the following properties:
Delta = 01 deg. 48' 04"
Radius = 3784.72
Tangent = 59.49
Chord = 118.97
Chord Bearing = S 09 deg. 29' 10" W. for a distance of 118.98
feet to a point;
4. Thence N 89 deg. 46' 30" W. for a distance of 344.18 feet to a point,
said point being on the westerly line of said Lot Number 16;
5. Thence N 00 deg. 13' 30" E. along the westerly line of said Lot Number 16
for a distance of 75.00 feet to the True Place of Beginning and containing
0.9544 of an acre of land of which 0.6037 of an acre is in Lot Number 16
and 0.3507 of an acre is in Lot Number 15, more or less, and subject to all
easements, restrictions and covenants of record as surveyed under the
supervision of L. Terry Frease, P.S., Number 5917, for GPD Associates, in
September of 1992.
<PAGE>
EXHIBIT A
PARCEL 1
Situated in the Township of Jackson, County of Stark and State of Ohio: and
known as being part of the Northwest Quarter of Section No. 24, Township 11,
Range 9, Jackson Township, and being further described as follows:
Beginning at an iron pin at the Southeasterly corner of said Northwest Quarter
of Section No. 24; thence from said place of beginning North 2 deg. 14' 12"
East, measured along the Easterly line of said Northwest Quarter of Section No.
24 and along the center line of Dressler Road, Proposed, 80 feet wide, 1065.06
feet to a point therein; Thence North 87 deg. 45' 48" West, 40.00 feet to a
point in the Westerly line of said Dressler Road, proposed, which is the
principal place of beginning for premises herein described; Thence from said
principal place of beginning North 56 deg. 05' 21" West, 83.99 feet to a point
in the Southeasterly curved line of Everhard Road, 80 feet wide; Thence
Northeasterly, along said Southeasterly curved line of Everhard Road, 25.00 feet
along the arc of a circle, deflecting to the right, said arc having a radius of
1870.73 feet and a chord which bears North 65 deg. 19' 32" East, 25.00 feet to a
point of compound curvature at the Southwesterly end of a curved turnout,
between said Southeasterly curved line of Everhard Road and said Westerly line
of Dressler Road, Proposed; Thence Northeasterly and Southeasterly along said
curved turnout, 69.16 feet along the arc of a circle, deflecting to the right,
said arc having a radius of 34.00 feet and a chord which bears South 56 deg. 01'
39" East, 57.83 feet to a point of tangency in said Westerly line of Dressler
Road Proposed; Thence South 2 deg. 14' 12" West, measured along said Westerly
line of Dressler Road, Proposed, 25.00 feet to the principal place of beginning.
PARCEL 2
Situated in the Township of Jackson, County of Stark and State of Ohio: and
known as being part of the Northwest Quarter of Section No. 24, Township 11,
Range 9, Jackson Township, and being further described as follows:
Beginning at an iron pin at the Southeasterly corner of said Northwest Quarter
of Section No. 24; Thence from said place of beginning North 2 deg. 14' 12"
East, measured along the Easterly line of said Northwest Quarter of Section No.
24 and along the center line of Dressler Road, Proposed, 80 feet wide, 588.34
feet to a point therein; Thence North 87 deg. 53' 14" West, 40.00 feet to a
point in the Westerly line of said Dressler Road, Proposed, which is the
principal place of beginning for premises
<PAGE>
herein described; Thence from said principal place of beginning, continuing
North 87 deg. 53' 14" West, 696.8 feet to a point in the Southeasterly curved
line of Everhard Road, 80 feet wide; Thence Northeasterly along said
Southeasterly curved line of Everhard Road, 696.47 along the arc of a circle,
deflecting to the right, said arc having a radius of 1870.73 feet and a chord
which bears North 50 deg. 26' 55" East, 692.45 feet to a point therein; Thence
South 56 deg. 51' 03" East, 210.46 feet to a point in said Westerly line of
Dressler Road, Proposed. Thence South 2 deg. 14' 12" West, measured along said
Westerly line of Dressler Road Proposed, 351.81 feet to the principal place of
beginning.
<PAGE>
EXHIBIT A
PARCEL NO. 1:
Situated in the City of Independence, County of Cuyahoga and State of Ohio and
known as being part of Original Independence Township Lot No. 21, Tract No. 2,
West of River and is bounded and described as follows:
Beginning at a 1" iron pin monument found in the centerline of Rockside Road, 80
feet in width, at its intersection with the Westerly line of said Lot No. 21;
Thence South 73 deg. 38' 43" East, 1074.21 feet along the centerline of Rockside
Road, passing through a 1" iron pin monument at 928.43 feet;
Thence North 06 deg. 00' 22" East 190.66 feet along the Easterly line of land
conveyed to William F. Bay by the deed recorded in Volume 9487, Page 564 of
Cuyahoga County Deed Records and the most Easterly line of land conveyed to
George Hajek and Stella Hajek by the deed recorded in Volume 4871, Page 402 of
Cuyahoga County Deed Records, to the principal place of beginning, of the
premises herein to be described;
Thence North 83 deg. 59' 38" West, 143.30 feet to a point;
Thence South 06 deg. 00' 22" West, 14.00 feet to a point of compound curvature
in the Northeasterly line of Frontage Road, 60 feet in width, also being on the
Northeasterly line of Parcel No. 410AWD as shown by the deed to the State of
Ohio recorded in Volume 12396, Page 621 of Cuyahoga County Deed Records;
Thence Northwesterly along the arc of a circle deflecting to the left 45.24
feet, said arc having a radius of 142.47 feet and a chord which bears North 64
deg. 33' 46" West, 45.05 feet along the Northeasterly line of Frontage Road to a
point of tangency therein,
Thence North 73 deg. 39' 37" West, 275.63 feet along said Northeasterly line to
a point of curvature in the Northeasterly line of Parcel No. 410WD as shown by
the deed to the State of Ohio recorded in Volume 12389, Page 491 of Cuyahoga
County Deed Records.
<PAGE>
Thence Northwesterly along the arc of a curve deflecting to the right, 45.85
feet, said arc having a radius of 32.00 feet and a chord which bears North 32
deg. 36' 32" West 42.03 feet to a point of tangency in the Easterly line of
Frontage Road;
Thence North 08 deg. 26' 33" East 548.15 feet along said Easterly line to the
Southerly line of land conveyed to Frank Trem and Ruth Trem by the deed recorded
in Volume 12379, Page 357 of Cuyahoga County Deed Records;
Thence South 81 deg. 34' 00" East 146.47 feet along said Southerly line to an
angle point therein;
Thence North 87 deg. 54' 35" East, 316.70 feet along said Southerly line and the
Northerly line of land so conveyed to George Hajek and Stella Hajek as
aforementioned;
Thence South 06 degrees 00' 22" West, 669.32 feet along the Easterly line of
land so conveyed to George Hajek and Stella Hajek to the principal place of
beginning, according to a survey by Dempsey & Neff Inc., dated October 18, 1994.
PARCEL NO. 2
Situated in the City of Independence, County of Cuyahoga and State of Ohio and
known as being part of original Independence Township Lot No. 21, Tract No. 2,
West of River and bounded and described as follows:
Beginning at a 1" iron pin monument found in the centerline of Rockside Road, 80
feet in width, at its intersection with the Westerly line of said Original Lot
No. 21;
Thence South 73 deg. 38' 43" East, 551.77 feet along the centerline of Rockside
Road to its intersection with the Easterly line of land conveyed to S-I-D
Management Co., by deed dated August 4, 1967 and is recorded in Volume 12149,
Page 333 of Cuyahoga County Deed Records;
Thence North 08 deg. 23' 17" East, 96.00 feet along the Easterly line of land so
conveyed to the most Southerly corner of Parcel No. 409WD conveyed to the State
of Ohio by the deed recorded in Volume 12357, Page 639 of Cuyahoga County Deed
Records;
Thence North 23 deg. 36' 20" West, 69.41 feet along the Southwesterly line of
said Parcel No. 409WD and a Southwesterly line of Frontage Road, 60 feet in
width, to an angle point therein,
<PAGE>
Thence North 08 deg. 26' 33" East, 413.00 feet along the Westerly line of said
Parcel No. 409WD and Frontage Road to its intersection with the Northerly line
of land conveyed to C-C Restaurant LTD-9 dated December 12, 1985 and recorded in
Volume 85-6917, Page 63 of Cuyahoga County Deed Records and the principal place
of beginning of the premises herein to be described;
Thence North 81 deg. 33' 27" West, 166.00 feet along the Northerly line of land
so conveyed to an angle point therein;
Thence South 77 deg. 59' 26" West, 162.50 feet along said Northerly line,
parallel to a line drawn between the center of the existing transmission towers,
to the Easterly line of Parcel No. 409WL as conveyed to the State of Ohio by the
deed recorded in Volume 12357, Page 639, said Easterly line also being the
Easterly line of Interstate Route 77,
Thence North 16 deg. 49' 33" East, 415.27 feet along said Easterly line to an
angle point therein;
Thence North 54 deg. 52' 41" East, 75.61 feet along said Easterly line to an
angle point therein;
Thence North 21 deg. 37' 43" East, 209.82 feet along said Easterly line to the
Northeasterly corner of Parcel No. 409WL as aforementioned and the Northerly
line of Original Lot No. 21;
Thence North 88 deg. 11' 40" East, 193.93 feet along said Northerly line of
Original Lot No. 21 to the Northeasterly corner of land so conveyed to S-I-D
Management Co., as aforesaid;
Thence South 08 deg. 23' 17" West, 217.39 feet along the Easterly line of land
so conveyed to the most Northerly corner of Parcel No. 409WD as aforementioned
and the Westerly line of Frontage Road;
Thence Southwesterly along the arc of a curve deflecting to the left, 233.15
feet, said arc having a radius of 749.38 feet and a chord which bears South 17
deg. 21' 20" West, 232.21 feet along said Westerly line to a point of tangency
therein;
Thence continuing South 08 deg. 26' 33" West, 198.16 feet along said Westerly
line to the principal place of beginning, according to a survey by Dempsey &
Neff, Inc., dated October, 18, 1994.
<PAGE>
<TABLE>
<CAPTION>
SCHEDULE TO EXHIBIT 10.29
OTHER SECOND MORTGAGE AND SECURITY AGREEMENTS
I.
<S> <C>
- ------------------------------------------------------------ ---------------------------------------------------------
Name of Mortgagor JAGI Cleveland - Independence, LLC, a Delaware limited
liability company
- ------------------------------------------------------------ ---------------------------------------------------------
Amount of First Note $21,800,000
- ------------------------------------------------------------ ---------------------------------------------------------
Exhibit A Legal Description of Real Estate
- ------------------------------------------------------------ ---------------------------------------------------------
II.
- ------------------------------------------------------------ ---------------------------------------------------------
Name of Mortgagor JAGI Montrose West, LLC, a Delaware limited liability
company
- ------------------------------------------------------------ ---------------------------------------------------------
Amount of First Note $3,500,000
- ------------------------------------------------------------ ---------------------------------------------------------
Exhibit A Legal Description of Real Estate
- ------------------------------------------------------------ ---------------------------------------------------------
III.
- ------------------------------------------------------------ ---------------------------------------------------------
Name of Mortgagor JAGI North Canton, LLC, a Delaware limited liability
company
- ------------------------------------------------------------ ---------------------------------------------------------
Amount of First Note $5,400,000
- ------------------------------------------------------------ ---------------------------------------------------------
Exhibit A Legal Description of Real Estate
- ------------------------------------------------------------ ---------------------------------------------------------
</TABLE>
LOAN NO. 400030964
SECOND SECURITY AGREEMENT
(Hotel/Motel)
THIS SECOND SECURITY AGREEMENT (as amended, supplemented or modified from
time to time, this "Security Agreement") is made as of August 14, 1998, by JAGI
CLEVELAND - HUDSON, LLC, a Delaware limited liability company ("Borrower"), and
AMRESCO CAPITAL, L.P., a Delaware limited partnership ("Lender").
RECITALS:
A. Borrower is indebted unto the Lender under that certain Note, dated of
even date herewith, made by Borrower and payable to the order of Lender in the
principal amount of $13,300,000 (as now or hereafter amended, restated, modified
substituted, or replaced, the "First Note").
B. The First Note is secured, inter alia, by a Mortgage and Security
Agreement dated of even date herewith, executed by Borrower in favor of Lender
and filed for record in Summit County, Ohio (as now or hereafter amended,
restated, modified, substituted, or replaced, the "First Mortgage"), and by a
Security Agreement, dated of even date herewith, executed by Borrower in favor
or Lender (as now or hereafter amended, restated, modified, substituted, or
replaced, the "First Security Agreement").
C. Lender, Borrower, JAGI Cleveland - Independence, LLC, an Ohio limited
liability company ("JAGI Independence"), JAGI Montrose West, LLC, an Ohio
limited liability company ("JAGI Montrose"), and JAGI North Canton, LLC, an Ohio
limited liability company ("JAGI Canton"), have entered into a Loan Agreement,
also dated of even date herewith (the "Loan Agreement"), whereby Lender agreed
to lend an aggregate $44,000,000 to Borrower, JAGI Independence, JAGI Montrose,
and JAGI Canton, evidenced by the First Note and by three other notes (the
"Other Notes"), all of even date herewith, payable to the order of Lender in the
aggregate principal amount of $30,700,000, one being made by JAGI Independence
in the principal amount of $21,800,000, one being made by JAGI Montrose in the
principal amount of $3,5000,000, and one being made by JAGI Canton in the
principal amount of $5,400,000.
D. Lender has required Borrower to grant this Security Agreement as a
condition to making the $44,000,000 loan pursuant to the Loan Agreement.
ARTICLE I
DEFINITIONS; RULES OF CONSTRUCTION
Section I.1. Defined Terms. As used in this Security Agreement, terms
defined in the Note shall have their defined meanings when used herein, and the
following terms shall have the following meanings:
"Accounts" means all accounts now or hereafter owing to Borrower, and all
accounts receivable, contract rights, documents, instruments or chattel paper
representing amounts payable or monies due or to become due to Borrower in
connection with the ownership, operation and/or maintenance of the Mortgaged
Property, including, without limitation, all revenues and credit card receipts
collected from guest rooms, restaurants, bars, banquet rooms, meeting rooms, and
recreational facilities, all receivables, customer obligations, installment
payment obligations and other obligations now existing or hereafter arising or
created out of the sale, lease, sublease, license, concession or other grant of
the right of the use and occupancy of property or rendering of services by
Borrower or any operator or manager of the hotel or the commercial space located
on the Mortgaged Property or acquired from others (including, without
limitation, from the rental of any office space, retail space, guest rooms or
other space, halls, stores, and offices, and deposits securing reservations of
such space), license, lease, sublease and concession fees and rentals, health
club membership fees, food and beverage wholesale and retail sales, service
charges, vending machine sales and proceeds, if any, from business interruption
or other loss of income insurance, or arising from the sale of Inventory or the
rendition of services in the ordinary course of business or otherwise (whether
or
<PAGE>
not earned by performance), together with all Inventory returned by or reclaimed
from customers wherever such Inventory is located, and all guaranties,
securities and liens held for the payment of any such account, account
receivable, contract right, document, instrument or chattel paper.
"Account Debtor" means, with respect to any Receivable or Other Intangible,
any Person (as defined in the UCC) obligated to make payment thereunder,
including without limitation any account debtor thereon.
"Business Day" means a day other than a Saturday, Sunday or other day on
which commercial banks are authorized to close under the laws of the state where
the Mortgaged Property is located.
"Collateral" has the meaning assigned to it in Section 2.1 of this Security
Agreement.
"Franchise Agreement" means all rights of Borrower pursuant to that certain
Holiday Inn Hotel Change of Ownership Agreement regarding the Mortgaged Property
dated of even date herewith, between Borrower and Holiday Hospitality
Franchising, Inc.
"General Intangibles" shall have the meaning assigned to it under Section
9-106 of the UCC.
"Inventory" means all inventory and equipment now owned or hereafter
acquired by Borrower in connection with the ownership, operation and/or
maintenance of the Mortgaged Property, including (i) all goods and other
personal property which are held for sale or lease or are furnished or are to be
furnished under a contract of service or which constitute raw materials, work in
process or materials used or consumed or to be used or consumed in Borrower's
business, (ii) all inventory, wherever located, evidenced by negotiable and
non-negotiable documents of title, warehouse receipts and bills of lading, (iii)
all of Borrower's rights in, to and under all purchase orders now owned or
hereafter received or acquired by it for goods or services and, (iv) all rights
of Borrower as an unpaid seller, including rescission, replevin, reclamation and
stopping in transit.
"Obligations" means (i) the Debt and all amounts now or hereafter payable
by Borrower to Lender on the Note, and (ii) all other obligations or liabilities
now or hereafter payable by Borrower to Lender pursuant to, under, arising out
of or in connection with this Security Agreement or any other Loan Document.
"Other Intangibles" means all documents, instruments, chattel paper, money
and General Intangibles relating to the ownership, operation and/or maintenance
of the Mortgaged Property now owned or hereafter acquired by Borrower including,
without limitation, to the extent not included in accounts, all rights to
payment from guests and customers, all customer and guest lists, federal and
state tax refunds, reversionary interests in pension plan assets, trademarks,
patents, licenses, copyrights and other rights in intellectual property, other
than Accounts, and, to the extent assignable, all permits, business licenses,
liquor licenses and franchise agreements.
"Proceeds" means all proceeds, including (i) whatever is received upon any
collection, exchange, sale or other disposition of any of the Collateral and any
property into which any of the Collateral is converted, whether cash or
non-cash, including without limitation all cash on hand, income and other
amounts now or hereafter generated from the operation, use or maintenance of the
Mortgaged Property and all cash or cash equivalents to cover pre-paid
reservations related to the Mortgaged Property, (ii) any and all payments or
other property (in any form whatsoever) made or due and payable on account of
any insurance, indemnity, warranty or guaranty payable to Borrower with respect
to any of the Collateral, (iii) any and all payments (in any form whatsoever)
made or due and payable in connection with any requisition, confiscation,
condemnation, seizure or forfeiture of all or any part of the Collateral by any
governmental body, authority, bureau or agency (or any person, corporation,
agency, authority or other entity acting under color of any governmental
authority), and (iv) any and all other amounts from time to time paid or payable
under or in connection with any of the Collateral.
"Property Management Contract" means all rights of Borrower pursuant to
that certain Management Agreement regarding the Mortgaged Property dated as of
July 20,1998, between Borrower and Janus American Group, Inc.
"UCC" means at any time the Uniform Commercial Code as the same may from
time to time be in effect in the state of the location of the Mortgaged
Property, provided that, if, by reason of mandatory provisions of law, the
validity or perfection of any security interest granted herein is governed by
the Uniform Commercial Code as in
2
<PAGE>
effect in a jurisdiction other such state then, as to the validity or perfection
of such security interest, "UCC" shall mean the Uniform Commercial Code in
effect in such other jurisdiction.
Section I.2. UCC Definitions. The uncapitalized terms "account," "account
debtor," "chattel paper," "contract right," "document," "warehouse receipt,"
"bill of lading," "document of title," "instrument," "inventory," "equipment,"
"general intangible," "money," "proceeds" and "purchase money security interest"
as used in Section 1.1 or elsewhere in this Security Agreement have the meanings
of such terms as defined in the UCC.
Section I.3. Rules of Construction.
(a) Except as otherwise specified herein, all references in this Security
Agreement (i) to any person shall be deemed to include such person's successors,
transferees and assignees, but only, in the case of transferees and assignees of
the parties to this Security Agreement, to the extent the applicable transfer or
assignment complies with the provisions of this Security Agreement, and (ii) to
any applicable law defined or referred to herein shall be deemed a reference to
such applicable law as the same may have been or may be amended or supplemented
from time to time.
(b) When used in this Security Agreement, the words "herein," "hereof" and
"hereunder" and words of similar import shall refer to this Security Agreement
as a whole and not to any provision of this Security Agreement, and the words
"Section," "Schedule" and "Exhibit" shall refer to Sections of and Schedules and
Exhibits to this Security Agreement unless otherwise specified.
(c) Whenever the context so requires, each gender includes the other
gender, and the singular number includes the plural, and vice versa.
(d) When used in this Security Agreement in conjunction with a reference to
the Note or any other obligation, or any document or agreement evidencing or
securing one or more of such obligations, the terms "related" and "relate to"
shall refer to events, circumstances or conditions directly affecting or
directly applying to the particular maker, endorser, guarantor, grantor or
pledgor of collateral with respect to the Debt or such other obligation, as the
case may be.
ARTICLE II
SECURITY INTERESTS
Section II.I. Grant of Security Interests. To secure the due and punctual
payment of all Obligations and in order to induce Lender to make the loan
evidenced by the Note, Borrower hereby grants to Lender a security interest in
all of Borrower's right, title and interest in, to and under the following,
whether now existing or hereafter acquired (all of which are herein collectively
called the "Collateral"):
(a) all Accounts;
(b) all Other Intangibles;
(c) all Inventory;
(d) the Franchise Agreement;
(e) the Property Management Contract;
(f) to the extent not included in the foregoing, all other personal
property related to the ownership, operation and/or maintenance of the
Mortgaged Property, whether tangible or intangible, and wherever located,
including, but not limited to, the balance of every deposit account of
Borrower relating to the ownership, operation and/or maintenance of the
Mortgaged Property owned by Borrower now or hereafter existing with any
bank and all monies of Borrower and all rights to payment of money of
Borrower;
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(g) to the extent not included in the foregoing, all of Borrower's
books, ledgers and records and all computer programs, tapes, discs, punch
cards, data processing software, transaction files, master files and
related property and rights (including computer and peripheral equipment)
necessary or helpful in enforcing, identifying or establishing any item of
Collateral, whether maintained by Borrower or a management company; and
(h) to the extent not otherwise included, all Proceeds and products of
any or all of the foregoing, whether existing on the date hereof or arising
hereafter.
Section II.2. Continuing Liability of Borrower. Anything herein to the
contrary notwithstanding, Borrower shall remain liable to observe and perform
all the terms and conditions to be observed and performed by it under any
contract, agreement, warranty or other obligation with respect to the
Collateral, and shall do nothing to impair the security interests herein
granted. Lender shall not have any obligation or liability under any such
contract, agreement, warranty or obligation by reason of or arising out of this
Security Agreement or the receipt by Lender of any payment relating to any
Collateral, nor shall Lender be required to perform or fulfill any of the
obligations of Borrower with respect to the Collateral, to make any inquiry as
to the nature or sufficiency of any payment received by it or the sufficiency of
the performance of any party's obligations with respect to any Collateral.
Furthermore, Lender shall not be required to file any claim or demand to collect
any amount due or to enforce the performance of any party's obligations with
respect to the Collateral.
Section II.3. Sales and Collections.
(a) Borrower is authorized (i) to sell in the ordinary course of its
business for fair value and on an arm's-length basis any of its Inventory
normally held by it for such purpose and (ii) to use and consume, in the
ordinary course of its business, any raw materials, supplies and materials
normally held by it for such purpose. Lender may upon the occurrence of any
Event of Default (as defined in the Mortgage), without cause or notice, curtail
or terminate such authority at any time.
(b) Borrower is authorized to collect amounts owing to it with respect to
the Collateral. However, Lender may at any time, after an Event of Default shall
have occurred, notify Account Debtors obligated to make payments under any or
all Accounts or Other Intangibles that Lender has a security interest in such
Accounts or Other Intangibles and that all payments by such Account Debtors with
respect to same shall be made directly to Lender. Upon the request of Lender at
any time, Borrower will so notify such Account Debtors. Borrower will use all
reasonable efforts to cause each account debtor to comply with the foregoing
instruction. In furtherance of the foregoing, Borrower authorizes Lender (i) to
ask for, demand, collect, receive and give acquittances and receipts for any and
all amounts due and to become due under any Collateral and, in the name of
Borrower or its own name or otherwise, (ii) to take possession of, endorse and
collect any checks, drafts, notes, acceptances or other instruments for the
payment of moneys due under any Collateral, and (iii) to file any claim or take
any other action in any court of law or equity or otherwise which it may deem
appropriate for the purpose of collecting any amounts due under any Collateral.
Lender shall have no obligation to obtain or record any information relating to
the source of such funds or the obligations in respect of which payments have
been made.
Section II.4. Verification of Accounts. Lender shall have the right to make
test verifications of Accounts in any manner and through any medium that it
considers advisable, and Borrower agrees to furnish all such assistance and
information as Lender may require in connection therewith. Borrower shall
provide such information concerning the Accounts as Lender may hereafter from
time to time reasonably request.
Section II.5. Release of Collateral.
(a) Borrower may sell or realize upon or transfer or otherwise dispose of
Collateral as permitted by Section 4.12, and the security interests of Lender in
such Collateral so sold, realized upon or disposed of (but not in the Proceeds
arising from such sale, realization or disposition) shall cease immediately upon
such sale, realization or disposition, without any further action on the part of
Lender. Lender, if requested in writing by Borrower but at the expense of
Borrower, is hereby authorized and instructed to deliver to the Account Debtor
or the purchaser or other transferee of any such Collateral a certificate
stating that Lender no longer has a security interest therein, and such Account
Debtor or such purchaser or other transferee shall be entitled to rely
conclusively on such certificate for any and all purposes.
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(b) Upon the payment in full of all of the Obligations, Lender will (as
soon as reasonably practicable after receipt of notice from Borrower requesting
the same but at the expense of Borrower) send Borrower, for each jurisdiction in
which a UCC financing statement is on file to perfect the security interests
granted to Lender hereunder, a termination statement to the effect that Lender
no longer claims a security interest under such financing statement.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
Borrower represents and warrants that, except as otherwise disclosed to or
known by Lender as of the date of hereof:
Section III.1. Validity of Security Agreement; Consents. The execution,
delivery and performance of this Security Agreement and the creation of the
security interests provided for herein (i) do not violate any law or regulation
or any order or decree of any court or governmental instrumentality applicable
to Borrower, (ii) do not conflict with or result in a breach of, or constitute a
default under, any indenture, mortgage, deed of trust, lease, agreement or other
instrument to which Borrower is a party or by which it or any of its properties
is bound, (iii) do not result in the creation or imposition of any lien upon any
property of Borrower other than in favor of Lender, and (iv) do not require the
consent or approval of any governmental body, agency or official or other person
other than those that have been obtained. This Security Agreement has been duly
executed and delivered by Borrower and constitutes the legal, valid and binding
obligation of Borrower, enforceable against it in accordance with its terms,
except as such enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws relating to or affecting
the enforceability of creditors' rights generally and by general provisions of
equity (regardless of whether such enforceability is considered in a proceeding
in equity or at law).
Section III.2. Title to Collateral. Except for the security interests
granted to Lender pursuant to this Security Agreement, Borrower is the sole
owner of each item of the Collateral, having good and marketable title thereto,
free and clear of any and all liens, encumbrances, security interests and claims
of others.
Section III.3. Validity, Perfection and Priority of Security Interests.
(a) By complying with Section 4.1, Borrower will have created a valid
security interest in favor of Lender in all existing Collateral and in all
identifiable Proceeds of such Collateral, which security interest (except in
respect of motor vehicles for which the exclusive manner of perfecting a
security interest therein is by noting such security interest on the certificate
of title in accordance with local law) would be prior to the claims of a trustee
in bankruptcy under Section 544(a) of the United States Bankruptcy Code.
Continuing compliance by Borrower with the provisions of Section 4.2 will also
(i) create valid security interests in all Collateral acquired after the date
hereof and in all identifiable Proceeds of such Collateral and, (ii) cause such
security interests in all Collateral and in all Proceeds which are (A)
identifiable cash Proceeds of Collateral covered by financing statements
required to be filed hereunder, (B) identifiable Proceeds in which a security
interest may be perfected by such filing under the UCC, and (C) any Proceeds in
the Cash Collateral Account to be duly perfected under the UCC, in each case
prior to the claims of a trustee in bankruptcy under the United States
Bankruptcy Code.
(b) The security interests of Lender in the Collateral rank first in
priority, second only to the rights of the secured party under the First
Security Agreement. Other than financing statements or other similar documents
perfecting the security interests or deed of trust liens of Lender, no financing
statements, deeds of trust, mortgages or similar documents covering all or any
part of the Collateral are on file or of record in any government office in any
jurisdiction in which such filing or recording would be effective to perfect a
security interest in such Collateral, nor is any of the Collateral in the
possession of any Person (other than Borrower) asserting any claim thereto or
security interest therein.
Section III.4. Enforceability of Accounts and Other Intangibles. To the
best knowledge of Borrower, each Receivable and Other Intangible is a valid and
binding obligation of the related Account Debtor in respect thereof, enforceable
in accordance with its terms, except as such enforceability may be limited by
applicable bankruptcy,
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insolvency, reorganization, moratorium or similar laws affecting the enforcement
of creditors' rights generally and by general provisions of equity (regardless
of whether such enforceability is considered in a proceeding in equity or at
law), and complies with any applicable legal requirements.
Section III.5. Place of Business; Location of Collateral. Schedule 1
correctly sets forth Borrower's chief executive office and principal place of
business and the offices of Borrower where records concerning Accounts and Other
Intangibles are kept. Schedule 2 correctly sets forth the location of all
Inventory, other than rolling stock, aircraft, goods in transit and Inventory
sold in the ordinary course of business as permitted by Section 4.12 of this
Security Agreement. Except as otherwise specified in Schedule 2, all Inventory
has been located at the address specified on Schedule 2 at all times during the
four-month period prior to the date hereof while owned by Borrower. No Inventory
is evidenced by a negotiable document of title, warehouse receipt or bill of
lading. No non-negotiable document of title, warehouse receipt or bill of lading
has been issued to any person other than Borrower, and Borrower has retained
possession of all of such non-negotiable documents, warehouse receipts and bills
of lading. No amount payable under or in connection with any of the Collateral
is evidenced by promissory notes or other instruments. The real estate listed in
Schedule 3 constitutes all existing real estate to which any of the Collateral
is related.
Section III.6. Trade Names. Any and all trade names, division names,
assumed names or other names under which Borrower transacts, or within the six
(6)-month period prior to the date hereof has transacted, business are specified
on Schedule 4.
ARTICLE IV
COVENANTS
Borrower covenants and agrees with Lender that until the payment in full of
all Obligations and until there is no commitment by Lender to make further
advances, incur obligations or otherwise give value, Borrower will comply with
the following.
Section IV.1. Perfection of Security Interests. Borrower will, at it
expense, cause all filings and recordings and other actions specified on
Schedule 5 to have been completed on or prior to the date of the Note.
Section IV.2. Further Actions.
(a) At all times after the date hereof and upon Lender's request, Borrower
will, at its expense, comply with the following:
i) as to all Accounts, Other Intangibles and Inventory, it will cause
UCC financing statements and continuation statements to be filed and to be
on file in all applicable jurisdictions as required to perfect the security
interests granted to Lender hereunder, to the extent that applicable law
permits perfection of a security interest by filing under the UCC;
ii) as to all Proceeds, it will cause all UCC financing statements and
continuation statements filed in accordance with clause (i) above to
include a statement or a checked box indicating that Proceeds of all items
of Collateral described therein are covered;
iii) upon the request of Lender, it will ensure that the provisions of
Section 4.4 are complied with; and
iv) as to any amount payable under or in connection with any of the
Collateral which shall be or shall become evidenced by any promissory note
or other instrument, Borrower will immediately pledge and deliver such note
or other instrument to Lender as part of the Collateral, duly endorsed in a
manner satisfactory to Lender.
(b) Borrower will, from time to time and at its expense, execute, deliver,
file or record such financing statements pursuant to the Uniform Commercial
Code, applications for certificates of title and such other statements,
assignments, instruments, documents, agreements or other papers and take any
other action that Lender
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may reasonably request, in order to create, preserve, perfect, confirm or
validate the security interests, to enable Lender to obtain the full benefits of
this Security Agreement or to enable it to exercise and enforce any of its
rights, powers and remedies hereunder, including, without limitation, its right
to take possession of the Collateral, and will use its best efforts to obtain
such waivers from landlords and mortgagees as Lender may request.
(c) To the fullest extent permitted by law, Borrower authorizes Lender to
sign and file financing and continuation statements and amendments thereto with
respect to the Collateral without its signature thereon.
Section IV.3. Change of Name, Identity or Structure. Borrower will not
change its name, will not conduct its business under any trade, assumed or
fictitious name unless it shall have given Lender at least thirty (30) days'
prior written notice thereof and shall have taken all action (or made
arrangements to take such action substantially simultaneously with such change
if it is impossible to take such action in advance) necessary or reasonably
requested by Lender to amend any financing statement or continuation statement
relating to the security interests granted hereby in order to preserve such
security interests and to effectuate or maintain the priority thereof against
all Persons.
Section IV.4. Place of Business and Collateral. Borrower will not change
the location of (i) its place of residence and (ii) the office or other
locations where it keeps or holds any Collateral or any records relating thereto
from the applicable location listed on Schedule 1 or 2 hereto unless, prior to
such change, it notifies Lender of such change, makes all UCC filings required
by Section 4.2 and takes all other action that Lender may reasonably request to
preserve, perfect, confirm and protect the security interests granted hereby.
Borrower will in no event change the location of any Collateral if such change
would cause the security interest granted hereby in such Collateral to lapse or
cease to be perfected. Borrower will at all times maintain its principal place
of business in the state of the location of the Mortgaged Property.
Section IV.5. Maintenance of Records. Borrower will keep and maintain at
its own cost and expense complete books and records relating to the Collateral
which are satisfactory to Lender including, without limitation, a record of all
payments received and all credits granted with respect to the Collateral and all
of its other dealings with the Collateral. Borrower will mark its books and
records pertaining to the Collateral to evidence this Security Agreement and the
security interests granted hereby. For Lender's further security, Borrower
agrees that Lender shall have a special property interest in all of Borrower's
books and records pertaining to the Collateral and Borrower shall deliver and
turn over any such books and records, or copies thereof, to Lender or to its
representatives at any time on demand of the Lender.
Section IV.6. Compliance with Laws, etc. Borrower will comply, in all
material respects, with all acts, rules, regulations, orders, decrees and
directions of any governmental body, agency or official applicable to the
Collateral or any part thereof or to the operation of the Mortgaged Property
except to the extent that the failure to comply would not have a material
adverse effect on the financial or other condition of the Mortgaged Property;
provided, however, that Borrower may contest any act, regulation, order, decree
or direction in any reasonable manner which shall not in the sole opinion of
Lender adversely affect Lender's rights or the first priority of its security
interest in the Collateral.
Section IV.7. Payment of Taxes, etc. Borrower will pay promptly when due,
all taxes, assessments and governmental charges or levies imposed upon the
Collateral or in respect of its income or profits therefrom, as well as all
claims of any kind (including claims for labor, materials and supplies), except
that no such charge need be paid if (i) the validity thereof is being contested
in good faith by appropriate proceedings, and (ii) such charge is adequately
reserved against in accordance with generally accepted accounting principals,
consistently applied.
Section IV.8. Compliance with Terms of Accounts, Contracts and Licenses.
Borrower will perform and comply in all material respects with all of its
obligations under and, all agreements relating to the Collateral to which it is
a party or by which it is bound.
Section IV.9. Limitation on Liens on Collateral. Except as to any liens now
in existence and known to Lender, Borrower will not create, permit or suffer to
exist, and will defend the Collateral and Borrower's rights with respect thereto
against and take such other action as is necessary to remove, any Lien, security
interest, encumbrance, or claim in or to the Collateral other than the security
interests created hereunder.
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Section IV.10. Limitations on Modifications of Accounts and Other
Intangibles; No Waivers or Extensions. Borrower will not (i) amend, modify,
terminate or waive any provision of any material Receivable or Other Intangible
in any manner which might have a materially adverse effect on the value of such
Receivable or Other Intangible as Collateral, (ii) fail to exercise promptly and
diligently each and every material right which it may have under each Receivable
and Other Intangible, or (iii) fail to deliver to Lender a copy of each material
demand, notice or document received by it relating in any way to any Receivable
or Other Intangible. Borrower will not, without Lender's prior written consent,
grant any extension of the time of payment of any material Receivable or amounts
due under any material Other Intangible, compromise, compound or settle the same
for less than the full amount thereof, release, wholly or partly, any person
liable for the payment thereof or allow any credit or discount whatsoever
thereon other than trade discounts granted in the normal course of business,
except such as in the reasonable judgment of Borrower are advisable to enhance
the collectibility thereof.
Section IV.11. Maintenance of Insurance. Borrower will maintain insurance
policies with financially sound insurance companies licensed to do business in
Ohio (i) insuring the Inventory against loss by fire, explosion, theft and such
other casualties as are usually insured against by companies engaged in the same
or similar business for an amount satisfactory to Lender, and (ii) insuring
Borrower and Lender against liability for personal injury arising from, and
property damage relating to, such Inventory, such policies to be in such form
and to cover such amounts as set forth in the Mortgage, with losses payable to
Borrower and Lender as their respective interests may appear. Borrower shall, if
so requested by Lender, deliver to Lender as often as Lender may reasonably
request a report of Borrower or, if requested by Lender, of an insurance broker
satisfactory to Lender of the insurance on the Inventory. All insurance with
respect to the Inventory shall satisfy the requirements for policies of
insurance set forth in Section 3.3(c) of the Mortgage.
Section IV.12. Limitations on Dispositions of Collateral. Borrower will not
directly or indirectly (through the sale of stock, merger or otherwise) without
the prior written consent of Lender sell, transfer, lease or otherwise dispose
of any of the Collateral, or attempt, offer or contract to do so except for
sales of Inventory in the ordinary course of its business for fair value in
arm's-length transactions. The inclusion of Proceeds of the Collateral under the
security interests granted hereby shall not be deemed a consent by Lender to any
sale or disposition of any Collateral other than as permitted by this Section
4.12.
Section IV.13. Further Identification of Collateral. Borrower will furnish
to Lender from time to time statements and schedules further identifying and
describing the Collateral and such other reports in connection with the
Collateral as Lender may reasonably request.
Section IV.14. Notices. Borrower will advise Lender promptly and in
reasonable detail, (i) of any Lien, security interest, encumbrance or claim made
or asserted against any of the Collateral, (ii) of any material change in the
composition of the Collateral, and (iii) of the occurrence of any other event
which would have a material effect on the aggregate value of the Collateral or
on the security interests granted to Lender in this Security Agreement.
Section IV.15. Right of Inspection. Lender shall at all times have full and
free access during normal business hours to all the books, correspondence and
records of Borrower related to the Mortgaged Property, and Lender or its
representatives may examine the same, take extracts therefrom, make photocopies
thereof and have such discussions with officers, employees and public
accountants of Borrower as Lender may deem necessary, and Borrower agrees to
render to Lender, at Borrower's cost and expense, such clerical and other
assistance as may be reasonably requested with regard thereto. Lender and its
representatives shall at all times also have the right to enter into and upon
any premises where any of the Inventory is located for the purpose of inspecting
the same, observing its use or protecting interests of Lender therein.
Section IV.16. Reimbursement Obligation. Should Borrower fail to comply
with the provisions of this Security Agreement, any other Collateral Document to
which it is a party or any other agreement relating to the Collateral such that
the value of any Collateral or the validity, perfection, rank or value of any
security interest granted to Lender hereunder or thereunder is thereby
diminished or potentially diminished or put at risk (as reasonably determined by
Lender), Lender on behalf of Borrower may, but shall not be required to, effect
such compliance on behalf of Borrower, and Borrower shall reimburse Lender for
the cost thereof on demand, and
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interest shall accrue on such reimbursement obligation from the date the
relevant costs are incurred until reimbursement thereof in full at the Default
Rate set forth in the Note.
ARTICLE V
REMEDIES; RIGHTS UPON DEFAULT
Section V.1. UCC Rights. If any Event of Default shall have occurred,
Lender may in addition to all other rights and remedies granted to it in this
Security Agreement and in any other instrument or agreement securing, evidencing
or relating to the Obligations, exercise all rights and remedies of a secured
party under the UCC and all other rights available to Lender at law or in
equity.
Section V.2. Payments on Collateral. Without limiting the rights of Lender
under any other provision of the Security Agreement, if an Event of Default
shall occur and be continuing:
(a) all payments received by Borrower under or in connection with any of
the Collateral shall be held by Borrower in trust for Lender, shall be
segregated from other funds of Borrower and shall forthwith upon receipt by
Borrower be turned over to Lender, in the same form as received by Borrower
(duly indorsed by Borrower to Lender, if required to permit collection thereof
by Lender); and
(b) all such payments received by Lender (whether from Borrower or
otherwise) may, in the sole discretion of Lender, be held by Lender as
collateral security for, and/or then or at any time thereafter applied in whole
or in part by Lender to the payment of the expenses and Obligations as set forth
in Section 5.10.
Section V.3. Possession of Collateral. In furtherance of the foregoing,
Borrower expressly agrees that, if an Event of Default shall occur and be
continuing, Lender may (i) by judicial powers, or without judicial process if it
can be done without breach of the peace, enter any premises where any of such
Collateral is or may be located, and without charge or liability to Lender seize
and remove such Collateral from such premises and (ii) have access to and use of
Borrower's books and records relating to such Collateral.
Section V.4. Sale of Collateral.
(a) Borrower expressly agrees that if an Event of Default shall occur and
be continuing, Lender, without demand of performance or other demand or notice
of any kind (except the notice specified below of the time and place of any
public or private sale) to Borrower or any other Person (all of which demands
and/or notices are hereby waived by Borrower), may forthwith collect, receive,
appropriate and realize upon the Collateral and/or forthwith sell, lease,
assign, give an option or options to purchase or otherwise dispose of and
deliver the Collateral (or contract to do so) or any part thereof in one or more
parcels at public or private sale, at any exchange, broker's board or at any
office of Lender or elsewhere in such manner as is commercially reasonable and
as Lender may deem best, for cash or on credit or for future delivery without
assumption of any credit risk. Lender shall have the right upon any such public
sale, and, to the extent permitted by law, upon any such private sale, to
purchase the whole or any part of the Collateral so sold. Borrower further
agrees, at Lender's request, to assemble the Collateral, and to make it
available to Lender at places which Lender may reasonably select. To the extent
permitted by applicable law, Borrower waives all claims, damages and demands
against Lender arising out of the foreclosure, repossession, retention or sale
of the Collateral.
(b) Unless the Collateral threatens to decline speedily in value or is of a
type customarily sold in a recognized market, Lender shall give Borrower ten
days written notice of its intention to make any such public or private sale or
sale at a broker's board or on a securities exchange. Such notice shall (i) in
the case of a public sale, state the time and place fixed for such sale, (ii) in
the case of a sale at a broker's board or on a securities exchange, state the
board or exchange at which such sale is to be made and the day on which the
Collateral, or any portion thereof being sold, will first be offered for sale,
and (iii) in the case of a private sale, state the day after which such sale may
be consummated. Lender shall not be required or obligated to make any such sale
pursuant to any such notice. Lender may adjourn any public or private sale or
cause the same to be adjourned from time to time by announcement at the time and
place fixed for the sale, and such sale may be made at any time or place to
which the same may be so adjourned. In the case of any sale of all or any part
of the Collateral for credit or for future
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delivery, the Collateral so sold may be retained by Lender until the selling
price is paid by the purchaser thereof, but Lender shall not incur any liability
in case of failure of such purchaser to pay for the Collateral so sold and, in
the case of such failure, such Collateral may again be sold upon like notice.
Section V.5. Rights of Purchasers. Upon any sale of the Collateral (whether
public or private), Lender shall have the right to deliver, assign and transfer
to the purchaser thereof the Collateral so sold. Each purchaser (including
Lender) at any such sale shall hold the Collateral so sold free from any claim
or right of whatever kind, including any equity or right of redemption of
Borrower, and Borrower, to the extent permitted by law, hereby specifically
waives all rights of redemption, including, without limitation, the right to
redeem the Collateral under Section 9-506 of the UCC, and any right to a
judicial or other stay or approval which it has or may have under any law now
existing or hereafter adopted.
Section V.6. Additional Rights of Lender.
(a) Lender shall have the right and power to institute and maintain such
suits and proceedings as it may deem appropriate to protect and enforce the
rights vested in it by this Security Agreement and may proceed by suit or suits
at law or in equity to enforce such rights and to foreclose upon and sell the
Collateral or any part thereof pursuant to the judgment or decree of a court of
competent jurisdiction.
(b) Lender shall, to the extent permitted by law and without regard to the
solvency or insolvency at the time of any Person then liable for the payment of
any of the Obligations or the then value of the Collateral, and without
requiring any bond from any party to such proceedings, be entitled to the
appointment of a special receiver or receivers (who may be Lender) for the
Collateral or any part thereof and for the rents, issues, tolls, profits,
royalties, revenues and other income therefrom, which receiver shall have such
powers as the court making such appointment shall confer, and to the entry of an
order directing that the rents, issues, tolls, profits, royalties, revenues and
other income of the property constituting the whole or any part of the
Collateral be segregated, sequestered and impounded for the benefit of Lender,
and Borrower irrevocably consents to the appointment of such receiver or
receivers and to the entry of such order.
Section V.7. Remedies Not Exclusive.
(a) No remedy conferred upon or reserved to Lender in this Security
Agreement is intended to be exclusive of any other remedy or remedies, but every
such remedy shall be cumulative and shall be in addition to every other remedy
conferred herein or now or hereafter existing at law, in equity or by statute.
(b) If Lender shall have proceeded to enforce any right, remedy or power
under this Security Agreement and the proceeding for the enforcement thereof
shall have been discontinued or abandoned for any reason or shall have been
determined adversely to Lender, Borrower and Lender shall, subject to any
determination in such proceeding, severally and respectively be restored to
their former positions and rights under this Security Agreement, and thereafter
all rights, remedies and powers of Lender shall continue as though no such
proceedings had been taken.
(c) All rights of action under this Security Agreement may be enforced by
Lender without the possession of any instrument evidencing any Obligation or the
production thereof at any trial or other proceeding relative thereto, and any
suit or proceeding instituted by Lender shall be brought in its name and any
judgment shall be held as part of the Collateral.
Section V.8. Waiver and Estoppel.
(a) Borrower, to the extent it may lawfully do so, agrees that it will not
at any time in any manner whatsoever claim or take the benefit or advantage of
any appraisement, valuation, stay, extension, moratorium, turnover or redemption
law, or any law now or hereafter in force permitting it to direct the order in
which the Collateral shall be sold which may delay, prevent or otherwise affect
the performance or enforcement of this Security Agreement and Borrower hereby
waives the benefits or advantage of all such laws, and covenants that it will
not hinder, delay or impede the execution of any power granted to Lender in this
Security Agreement but will permit the execution of every such power as though
no such law were in force; provided that nothing contained in
10
<PAGE>
this Section 5.8 shall be construed as a waiver of any rights of Borrower under
any applicable federal bankruptcy law.
(b) Borrower, to the extent it may lawfully do so, on behalf of itself and
all who may claim through or under it, including without limitation any and all
subsequent creditors, vendees, assignees and lienors, waives and releases all
rights to demand or to have any marshalling of the Collateral upon any sale,
whether made under any power of sale granted herein or pursuant to judicial
proceedings or upon any foreclosure or any enforcement of this Security
Agreement and consents and agrees that all the Collateral may at any such sale
be offered and sold as an entirety.
(c) Borrower, to the extent it may lawfully do so, waives presentment,
demand, protest and any notice of any kind (except notices explicitly required
hereunder) in connection with this Security Agreement and any action taken by
Lender with respect to the Collateral.
Section V.9. Power of Attorney. Borrower hereby irrevocably constitutes and
appoints Lender, with full power of substitution, as its true and lawful
attorney-in-fact with full irrevocable power and authority in the place and
stead of Borrower and in the name of Borrower or in its own name, from time to
time in Lender's reasonable discretion for the purpose of carrying out the terms
of this Security Agreement, to take any and all appropriate action and to
execute any and all documents and instruments which may be necessary or
desirable to accomplish the purposes of this Security Agreement and, without
limiting the generality of the foregoing, hereby gives Lender the power and
right, on behalf of Borrower, without notice to or assent by Borrower to do the
following:
(a) to pay or discharge taxes, liens, security interests or other
encumbrances levied or placed on or threatened against the Collateral;
(b) to effect any insurance called for by the terms of this Security
Agreement and to pay all or any part of the premiums therefor and the costs
thereof; and
(c) upon the occurrence and continuance of any Event of Default and
otherwise to the extent provided in this Security Agreement, (i) to direct any
party liable for any payment under any of the Collateral to make payment of any
and all moneys due and to come due thereunder directly to Lender or as Lender
shall direct; (ii) to receive payment of and receipt for any and all moneys,
claims and other amounts due and to become due at any time in respect of or
arising out of any Collateral; (iii) to sign and indorse any invoices, freight
or express bills, bills of lading, storage or warehouse receipts, drafts against
debtors, assignments, verifications and notices in connection with accounts and
other documents relating to the Collateral; (iv) to commence and prosecute any
suits, actions or proceedings at law or in equity in any court of competent
jurisdiction to collect the Collateral or any part thereof and to enforce any
other right in respect of any Collateral; (v) to defend any suit, action or
proceeding brought against Borrower with respect to any Collateral; (vi) to
settle, compromise and adjust any suit, action or proceeding described above
and, in connection therewith, to give such discharges or releases as Lender may
deem appropriate; and (vii) generally to sell, transfer, pledge, make any
agreement with respect to or otherwise deal with any of the Collateral as fully
and completely as though Lender were the absolute owner thereof for all
purposes, and to do, at Lender's option and Borrower's expense, at any time, or
from time to time, all acts and things which Lender deems necessary to protect,
preserve or realize upon the Collateral and Lender's security interest therein,
in order to effect the intent of this Security Agreement, all as fully and
effectively as Borrower might do.
Borrower hereby ratifies all that said attorneys shall lawfully do or cause
to be done by virtue hereof. This power of attorney is a power coupled with an
interest and shall be irrevocable.
Section V.10. Application of Proceeds. Lender shall retain the net proceeds
of any collection, recovery, receipt, appropriation, realization or sale of the
Collateral and, after deducting all reasonable costs and expenses of every kind
incurred therein or incidental to the care and safekeeping of any or all of the
Collateral or in any way relating to the rights of Lender hereunder, including
reasonable attorneys' fees and legal expenses, apply such net proceeds to the
payment in whole or in part of the Obligations in such order as Lender may
elect. Only after applying such net proceeds and after the payment by Lender of
any other amount required by any provision of law, including Section 9-504(1)(c)
of the UCC, need Lender account for the surplus, if any, to Borrower or to
whomsoever may be lawfully entitled to the same.
11
<PAGE>
Section V.11. Subordinate Priority.
(a) Notwithstanding any provision of this Security Agreement to the
contrary, this Security Agreement is subject and subordinate to the First
Security Agreement.
(b) The Security Agreement and all other documents encumbering all or any
part of the Collateral as security for the First Note are sometimes referred to
herein as the "First Security Documents."
(c) For so long as the First Security Documents remain undischarged,
notwithstanding any term, provision, or condition of this Security Agreement:
i) The lien and security interest upon and in the Collateral created by
this Security Agreement are and shall be subordinate to the lien and security
interest upon and in the Collateral created by the First Security Documents; and
ii) To the extent that the provisions of the First Security Documents are
inconsistent with the provisions of this Security Agreement, the provisions of
the First Security Documents shall control and govern.
ARTICLE VI
MISCELLANEOUS
Section VI.1. Notices. Any notice, demand, statement, request or consent
made hereunder shall be in writing and shall be deemed to be received by the
addressee on the first (1st) business day after such notice is tendered to a
nationally-recognized overnight delivery service or on the third (3rd) day
following the day such notice is deposited with the United States postal service
first class certified mail, return receipt requested, addressed to the address,
as set forth above, of the party to whom such notice is to be given, or to such
other address as Borrower or Lender, as the case may be, shall in like manner
designate in writing.
Section VI.2. No Waivers. No failure on the part of Lender to exercise, no
course of dealing with respect to, and no delay in exercising any right, power
or privilege under this Security Agreement or any document or agreement
contemplated hereby shall operate as a waiver thereof or shall any single or
partial exercise of any such right, power or privilege preclude any other or
further exercise thereof or the exercise of any other right, power or privilege.
Section VI.3. Compensation and Expenses of Lender. Borrower shall pay to
Lender from time to time upon demand, all of the fees, costs and expenses
incurred by Lender (including, without limitation, the reasonable fees and
disbursements of counsel and any amounts payable by Lender to any of its agents,
whether on account of fees, indemnities or otherwise) (i) arising in connection
with the administration, modification, amendment, waiver or termination of this
Security Agreement or any document or agreement contemplated hereby or any
consent or waiver hereunder or thereunder or (ii) incurred in connection with
the administration of this Security Agreement, or any document or agreement
contemplated hereby, or in connection with the administration, sale or other
disposition of Collateral hereunder or under any document or agreement
contemplated hereby or the preservation, protection or defense of the rights of
Lender in and to the Collateral.
Section VI.4. Amendments, Supplements and Waivers. The parties hereto may,
from time to time, enter into written agreements supplemental hereto for the
purpose of adding any provisions to this Security Agreement, waiving any
provisions hereof or changing in any manner the rights of the parties.
Section VI.5. Successors and Assigns. This Security Agreement shall be
binding upon and inure to the benefit of each of the parties hereto and shall
inure to the benefit of Lender's successors and assigns. Nothing herein is
intended or shall be construed to give any other Person any right, remedy or
claim under, to or in respect of this Security Agreement or any Collateral.
Section VI.6. Limitation of Law; Severability.
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<PAGE>
(a) All rights, remedies and powers provided in this Security Agreement may
be exercised only to the extent that the exercise thereof does not violate any
applicable provision of law, and all the provisions of this Security Agreement
are intended to be subject to all applicable mandatory provisions of law which
may be controlling and to be limited to the extent necessary so that they will
not render this Security Agreement invalid, unenforceable in whole or in part,
or not entitled to be recorded, registered or filed under the provisions of any
applicable law.
(b) If any provision hereof is invalid and unenforceable in any
jurisdiction, then, to the fullest extent permitted by law, (i) the other
provisions hereof shall remain in full force and effect in such jurisdiction and
shall be liberally construed in order to carry out the intentions of the parties
hereto as nearly as may be possible; and (ii) the invalidity or unenforceability
of any provision hereof in any jurisdiction shall not affect the validity or
enforceability of such provisions in any other jurisdiction.
Section VI.7. Governing Law. This Security Agreement shall be governed by
and construed in accordance with the laws of the state of the location of the
Mortgaged Property.
Section VI.8. Counterparts; Effectiveness. This Security Agreement may be
signed in any number of counterparts with the same effect as if the signatures
thereto and hereto were upon the same instrument. This Security Agreement shall
become effective when Lender shall receive counterparts executed by itself and
Borrower.
Section VI.9. Termination; Survival. This Security Agreement shall
terminate when the security interests granted hereunder have terminated and the
Collateral has been released as provided in Section 2.5, provided that the
obligations of Borrower under any of Sections 4.16 and 6.3 shall survive any
such termination.
[The balance of this page is intentionally left blank.]
13
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first written above.
BORROWER:
JAGI CLEVELAND - HUDSON, LLC, a Delaware
limited liability company
By: Janus American Group, Inc., a Delaware
corporation
By /s/ James E. Bishop
-----------------------------------
Name: James E. Bishop
Title: President
Address:
8534 East Kemper Road
Cincinnati, Ohio 45249
LENDER:
AMRESCO CAPITAL, L.P.,
a Delaware limited partnership
By: AMRESCO Mortgage Capital, Inc.,
a Delaware corporation,
Its sole General Partner
By: /s/ Fred A. Brown
-----------------------------------
Name: Fred A. Brown
Title: Senior Investment Officer
Address:
700 North Pearl Street
Suite 2400, LB#342
Dallas, Texas 75201
14
<PAGE>
SCHEDULE 1
Borrower's Chief Executive Office
and Principal Place of Business:
8534 East Kemper Road
Cincinnati, Ohio 45249
Location(s) of Records of
Accounts and Other Intangibles:
8534 East Kemper Road
Cincinnati, Ohio 45249
15
<PAGE>
SCHEDULE 2
Location(s) of Inventory
240 Hines Hill Road
Hudson, Ohio
<PAGE>
SCHEDULE 3
Real Estate
<PAGE>
EXHIBIT "A"
Situated in the Township of Copley, County of Summit, State of Ohio and known as
being part of original Copley Township Lot Number 2, also known as being the
south 122 feet of Lot Number 14, all of Lot Number 15 and the north 75 feet of
Lot Number 16 of the Montrose West Allotment Phase I-Part 2 and Rerecord of
Phase I as recorded in Plat Cabinet "B" Slides 747 to 753 of said County Records
and being further described as follows:
Parcel Number 1-South 122 feet of Lot Number 14.
- -----------------------------------------------
Beginning at the northwest corner of said Montrose West Allotment, said
northwest corner also being the northwest corner of Lot Number 1 of said
Montrose West Allotment, thence S 00 deg. 13' 30" W for a distance of 1298.76
feet to a point, said point being the northwest corner of said Lot Number 14,
thence continuing S 00 deg. 13' 30" W for a distance of 96.00 feet to the true
place of beginning of the parcel of land hereinafter described;
Thence clockwise along the following five (5) courses and distances;
1) Thence S 89 deg. 46' 30" E for a distance of 400.60 feet to a point, said
point being on the western right of way line of Montrose West Avenue (70
feet);
2) Thence S 02 deg. 47' 57" W along said western right of way line for a
distance of 19.29 feet to a point, said point being a point of curvature;
3) Thence continuing along said western right of way line along the arc of a
curve to the right having the following properties;
Delta = 01 deg. 33' 28"
Radius = 3784.72 feet
Tangent = 51.45 feet
Chord = 102.90 feet
Chord Bearing = S 03 deg. 34' 41" deg. W for a distance of 102.90
feet to a point, said point being the
southeast corner of said Lot Number 14;
4) Thence N 89 deg. 46' 30" W along the southern line of said Lot Number 14
for a distance of 393.72 feet to a point, said point being the southwest
corner of said Lot Number 14;
5) Thence N 00 deg. 13' 30" E along the western line of said Lot Number 14 and
western line of said Montrose West Allotment for a distance of 122.00 feet
to a point; said point being the true place of beginning, and containing
1.1132 acres of land, more or less, and subject to all easements,
restrictions, and convenants of record.
<PAGE>
Parcel Number 2--All of Lot Number 15
- -------------------------------------
Situated in the Township of Copley, County of Summit, State of Ohio and known as
being part of original Copley Township Lot Number 2, also known as being all of
Lot Number 15 of the Montrose West Allotment Phase I-Part 2 and Rerecord of
Phase I as recorded in Plat Cabinet "B" Slides 747 to 753 of said County Records
and being further described as follows:
Beginning at the northwest corner of said Montrose West Allotment, said
northwest corner also being the northwest corner of Lot Number 1 of said
Montrose West Allotment, thence S 00 deg. 13' 30" W along the western line of
said Montrose West Allotment for a distance of 1516.76 feet to a point, said
point being the northwest corner and true place of beginning of the parcel of
land hereinafter described;
Thence clockwise along the following four (4) courses and distances;
1) Thence S 89 deg. 46' 30" E along the north line of said Lot Number 15, said
north line also being the south line of Parcel Number 1 as above described,
for a distance of 393.72 feet to a point, said point being on the western
right of way line of Montrose West Avenue (70 feet);
2) Thence along the said western right of way line, along the arc of a curve
to the right having the following properties;
Delta = 04 deg. 52' 40"
Radius = 3784.72 feet
Tangent = 161.20 feet
Chord = 322.12 feet
Chord Bearing = S 06 deg. 47' 45" W for a distance of 322.21
feet to a point, said point being the
southeast corner of said Lot Number 15;
3) Thence N 89 deg. 46' 30" W along the south line of said Lot Number 15 for a
distance of 356.86 feet to a point; said point being the southwest corner
of said Lot Number 15;
4) Thence N 00 deg. 13' 30" E along the western line of said Lot Number 15 for
a distance of 320.00 feet to a point, said point being the true place of
beginning, and containing 2.7738 acres of land, more or less, and subject
to all easements, restrictions, and covenants of record.
Parcel Number 3--North 75 feet of Lot Number 16
- ----------------------------------------------
Situated in the Township of Copley, County of Summit, State of Ohio and known as
being part of original Copley Township Lot Number 2, also known as being the
north 75 feet of Lot Number 16 of the Montrose West Allotment Phase I-Part 2 and
Rerecord of Phase I as recorded in Plat Cabinet "B" Slides 747 to 753 of said
County Records and being further described as follows:
<PAGE>
Beginning at the northwest corner of said Montrose West Allotment, said
northwest corner also being the northwest corner of Lot Number 1 of said
Montrose West Allotment, thence S 00 deg. 13' 30" W along the western line of
said Montrose West Allotment for a distance of 1836.76 feet to a point, said
point being the northwest corner of said Lot Number 16 and true place of
beginning of the parcel of land hereinafter described;
Thence clockwise along the following four (4) courses and distances;
1) Thence S 89 deg. 46' 30" E along the north line of said Lot Number 16, said
north line also being the south line of Parcel Number 2 as above described,
for a distance of 356.86 feet to a point, said point being on the western
right of way line of Montrose West Avenue (70 feet);
2) Thence along the said western right of way line, long the arc of a curve to
the right having the following properties;
Delta = 01 deg. 09' 05"
Radius = 3784.72'
Tangent = 38.03'
Chord = 76.06'
Chord Bearing = S 09 deg. 48' 37.5" W for a distance of 76.06
feet to a point;
3) Thence N 89 deg. 46' 30" W for a distance of 344.19 feet to a point, said
point being on the western line of said Lot Number 16;
4) Thence W 00 deg. 13' 30" E along said western line for a distance of 75.00
feet to a point, said point being the true place of beginning, and
containing 0.6037 acres of land, more or less, and subject to all
easements, restrictions, and covenants of record.
The total acreage of all three parcels in 4.4907 acres.
Excepting therefrom the following described premises:
Situated in the Township of Copley, County of Summit, State of Ohio, and known
as being part of original Copley Township Lot Number 2, also known as being the
south 42.42 feet of Original Lot Number 15 and north 75.00 feet of Original Lot
Number 16 of the Montrose West Allotment Phase I-Part 2 and Re-record of Phase I
as recorded in Plat Cabinet "B" Slides 747 to 753 of said County Records and
being further described as follows:
Beginning at the northwest corner of said Montrose West Allotment, said
northwest corner also being the northwest corner of Lot Number 1 of said
Montrose West Allotment, thence S 00 deg. 13' 30" W. along the western line of
said Montrose West Allotment for a distance of 1836.76 feet to a point, said
point being the northwest corner of Lot Number 16 of said Montrose West
Allotment, said point also being the True Place of Beginning of the parcel of
land hereinafter described, thence clockwise along the following five (5)
courses and distances:
1. Thence N 00 deg. 13' 30" E. along the westerly line of said Lot Number 15
for a distance of 42.42 feet to a point;
2. Thence S 89 deg. 46' 30" E. for a distance of 363.33 feet to a point, said
point being on the westerly right of way line of Montross West Avenue (75
feet wide);
3. Thence along said westerly right of way line along the arc of a curve to
the right having the following properties:
Delta = 01 deg. 48' 04"
Radius = 3784.72
Tangent = 59.49
Chord = 118.97
Chord Bearing = S 09 deg. 29' 10" W. for a distance of 118.98
feet to a point;
4. Thence N 89 deg. 46' 30" W. for a distance of 344.18 feet to a point,
said point being on the westerly line of said Lot Number 16;
5. Thence N 00 deg. 13' 30" E. along the westerly line of said Lot Number 16
for a distance of 75.00 feet to the True Place of Beginning and containing
0.9544 of an acre of land of which 0.6037 of an acre is in Lot Number 16
and 0.3507 of an acre is in Lot Number 15, more or less, and subject to all
easements, restrictions and covenants of record as surveyed under the
supervision of L. Terry Frease, P.S., Number 5917, for GPD Associates, in
September of 1992.
<PAGE>
EXHIBIT A
PARCEL 1
Situated in the Township of Jackson, County of Stark and State of Ohio: and
known as being part of the Northwest Quarter of Section No. 24, Township 11,
Range 9, Jackson Township, and being further described as follows:
Beginning at an iron pin at the Southeasterly corner of said Northwest Quarter
of Section No. 24; thence from said place of beginning North 2 deg. 14' 12"
East, measured along the Easterly line of said Northwest Quarter of Section No.
24 and along the center line of Dressler Road, Proposed, 80 feet wide, 1065.06
feet to a point therein; Thence North 87 deg. 45' 48" West, 40.00 feet to a
point in the Westerly line of said Dressler Road, proposed, which is the
principal place of beginning for premises herein described; Thence from said
principal place of beginning North 56 deg. 05' 21" West, 83.99 feet to a point
in the Southeasterly curved line of Everhard Road, 80 feet wide; Thence
Northeasterly, along said Southeasterly curved line of Everhard Road, 25.00 feet
along the arc of a circle, deflecting to the right, said arc having a radius of
1870.73 feet and a chord which bears North 65 deg. 19' 32" East, 25.00 feet to a
point of compound curvature at the Southwesterly end of a curved turnout,
between said Southeasterly curved line of Everhard Road and said Westerly line
of Dressler Road, Proposed; Thence Northeasterly and Southeasterly along said
curved turnout, 69.16 feet along the arc of a circle, deflecting to the right,
said arc having a radius of 34.00 feet and a chord which bears South 56 deg. 01'
39" East, 57.83 feet to a point of tangency in said Westerly line of Dressler
Road Proposed; Thence South 2 deg. 14' 12" West, measured along said Westerly
line of Dressler Road, Proposed, 25.00 feet to the principal place of beginning.
PARCEL 2
Situated in the Township of Jackson, County of Stark and State of Ohio: and
known as being part of the Northwest Quarter of Section No. 24, Township 11,
Range 9, Jackson Township, and being further described as follows:
Beginning at an iron pin at the Southeasterly corner of said Northwest Quarter
of Section No. 24; Thence from said place of beginning North 2 deg. 14' 12"
East, measured along the Easterly line of said Northwest Quarter of Section No.
24 and along the center line of Dressler Road, Proposed, 80 feet wide, 588.34
feet to a point therein; Thence North 87 deg. 53' 14" West, 40.00 feet to a
point in the Westerly line of said Dressler Road, Proposed, which is the
principal place of beginning for premises
<PAGE>
herein described; Thence from said principal place of beginning, continuing
North 87 deg. 53' 14" West, 696.8 feet to a point in the Southeasterly curved
line of Everhard Road, 80 feet wide; Thence Northeasterly along said
Southeasterly curved line of Everhard Road, 696.47 along the arc of a circle,
deflecting to the right, said arc having a radius of 1870.73 feet and a chord
which bears North 50 deg. 26' 55" East, 692.45 feet to a point therein; Thence
South 56 deg. 51' 03" East, 210.46 feet to a point in said Westerly line of
Dressler Road, Proposed. Thence South 2 deg. 14' 12" West, measured along said
Westerly line of Dressler Road Proposed, 351.81 feet to the principal place of
beginning.
<PAGE>
EXHIBIT A
PARCEL NO. 1:
Situated in the City of Independence, County of Cuyahoga and State of Ohio and
known as being part of Original Independence Township Lot No. 21, Tract No. 2,
West of River and is bounded and described as follows:
Beginning at a 1" iron pin monument found in the centerline of Rockside Road, 80
feet in width, at its intersection with the Westerly line of said Lot No. 21;
Thence South 73 deg. 38' 43" East, 1074.21 feet along the centerline of Rockside
Road, passing through a 1" iron pin monument at 928.43 feet;
Thence North 06 deg. 00' 22" East 190.66 feet along the Easterly line of land
conveyed to William F. Bay by the deed recorded in Volume 9487, Page 564 of
Cuyahoga County Deed Records and the most Easterly line of land conveyed to
George Hajek and Stella Hajek by the deed recorded in Volume 4871, Page 402 of
Cuyahoga County Deed Records, to the principal place of beginning, of the
premises herein to be described;
Thence North 83 deg. 59' 38" West, 143.30 feet to a point;
Thence South 06 deg. 00' 22" West, 14.00 feet to a point of compound curvature
in the Northeasterly line of Frontage Road, 60 feet in width, also being on the
Northeasterly line of Parcel No. 410AWD as shown by the deed to the State of
Ohio recorded in Volume 12396, Page 621 of Cuyahoga County Deed Records;
Thence Northwesterly along the arc of a circle deflecting to the left 45.24
feet, said arc having a radius of 142.47 feet and a chord which bears North 64
deg. 33' 46" West, 45.05 feet along the Northeasterly line of Frontage Road to a
point of tangency therein,
Thence North 73 deg. 39' 37" West, 275.63 feet along said Northeasterly line to
a point of curvature in the Northeasterly line of Parcel No. 410WD as shown by
the deed to the State of Ohio recorded in Volume 12389, Page 491 of Cuyahoga
County Deed Records.
<PAGE>
Thence Northwesterly along the arc of a curve deflecting to the right, 45.85
feet, said arc having a radius of 32.00 feet and a chord which bears North 32
deg. 36' 32" West 42.03 feet to a point of tangency in the Easterly line of
Frontage Road;
Thence North 08 deg. 26' 33" East 548.15 feet along said Easterly line to the
Southerly line of land conveyed to Frank Trem and Ruth Trem by the deed recorded
in Volume 12379, Page 357 of Cuyahoga County Deed Records;
Thence South 81 deg. 34' 00" East 146.47 feet along said Southerly line to an
angle point therein;
Thence North 87 deg. 54' 35" East, 316.70 feet along said Southerly line and the
Northerly line of land so conveyed to George Hajek and Stella Hajek as
aforementioned;
Thence South 06 degrees 00' 22" West, 669.32 feet along the Easterly line of
land so conveyed to George Hajek and Stella Hajek to the principal place of
beginning, according to a survey by Dempsey & Neff Inc., dated October 18, 1994.
PARCEL NO. 2
Situated in the City of Independence, County of Cuyahoga and State of Ohio and
known as being part of original Independence Township Lot No. 21, Tract No. 2,
West of River and bounded and described as follows:
Beginning at a 1" iron pin monument found in the centerline of Rockside Road, 80
feet in width, at its intersection with the Westerly line of said Original Lot
No. 21;
Thence South 73 deg. 38' 43" East, 551.77 feet along the centerline of Rockside
Road to its intersection with the Easterly line of land conveyed to S-I-D
Management Co., by deed dated August 4, 1967 and is recorded in Volume 12149,
Page 333 of Cuyahoga County Deed Records;
Thence North 08 deg. 23' 17" East, 96.00 feet along the Easterly line of land so
conveyed to the most Southerly corner of Parcel No. 409WD conveyed to the State
of Ohio by the deed recorded in Volume 12357, Page 639 of Cuyahoga County Deed
Records;
Thence North 23 deg. 36' 20" West, 69.41 feet along the Southwesterly line of
said Parcel No. 409WD and a Southwesterly line of Frontage Road, 60 feet in
width, to an angle point therein,
<PAGE>
Thence North 08 deg. 26' 33" East, 413.00 feet along the Westerly line of said
Parcel No. 409WD and Frontage Road to its intersection with the Northerly line
of land conveyed to C-C Restaurant LTD-9 dated December 12, 1985 and recorded in
Volume 85-6917, Page 63 of Cuyahoga County Deed Records and the principal place
of beginning of the premises herein to be described;
Thence North 81 deg. 33' 27" West, 166.00 feet along the Northerly line of land
so conveyed to an angle point therein;
Thence South 77 deg. 59' 26" West, 162.50 feet along said Northerly line,
parallel to a line drawn between the center of the existing transmission towers,
to the Easterly line of Parcel No. 409WL as conveyed to the State of Ohio by the
deed recorded in Volume 12357, Page 639, said Easterly line also being the
Easterly line of Interstate Route 77,
Thence North 16 deg. 49' 33" East, 415.27 feet along said Easterly line to an
angle point therein;
Thence North 54 deg. 52' 41" East, 75.61 feet along said Easterly line to an
angle point therein;
Thence North 21 deg. 37' 43" East, 209.82 feet along said Easterly line to the
Northeasterly corner of Parcel No. 409WL as aforementioned and the Northerly
line of Original Lot No. 21;
Thence North 88 deg. 11' 40" East, 193.93 feet along said Northerly line of
Original Lot No. 21 to the Northeasterly corner of land so conveyed to S-I-D
Management Co., as aforesaid;
Thence South 08 deg. 23' 17" West, 217.39 feet along the Easterly line of land
so conveyed to the most Northerly corner of Parcel No. 409WD as aforementioned
and the Westerly line of Frontage Road;
Thence Southwesterly along the arc of a curve deflecting to the left, 233.15
feet, said arc having a radius of 749.38 feet and a chord which bears South 17
deg. 21' 20" West, 232.21 feet along said Westerly line to a point of tangency
therein;
Thence continuing South 08 deg. 26' 33" West, 198.16 feet along said Westerly
line to the principal place of beginning, according to a survey by Dempsey &
Neff, Inc., dated October, 18, 1994.
<PAGE>
SCHEDULE 4
Trade Names, Division Names, etc.
Holiday Inn Hudson
<PAGE>
SCHEDULE 5
Required Filings and Recordings
<PAGE>
<TABLE>
<CAPTION>
SCHEDULE TO EXHIBIT 10.30
OTHER SECOND SECURITY AGREEMENTS
I.
<S> <C>
- ------------------------------------------------------------ ---------------------------------------------------------
Name of Borrower JAGI Cleveland - Independence, LLC, a Delaware limited
liability company
- ------------------------------------------------------------ ---------------------------------------------------------
Definition of Franchise Agreement All rights of Borrower pursuant to that certain Holiday
Inn Hotel Change of Ownership Agreement between Borrower
and Holiday Hospitality Franchising, Inc.
- ------------------------------------------------------------ ---------------------------------------------------------
Schedule 2--Location of Inventory 6001 Rockside Road, Independence, Ohio
- ------------------------------------------------------------ ---------------------------------------------------------
Schedule 3 Legal Description of Real Estate
- ------------------------------------------------------------ ---------------------------------------------------------
II.
- ------------------------------------------------------------ ---------------------------------------------------------
Name of Borrower JAGI Montrose West, LLC, a Delaware limited liability
company
- ------------------------------------------------------------ ---------------------------------------------------------
Definition of Franchise Agreement All rights of Borrower pursuant to that certain Comfort
Inn Hotel Change of Ownership Agreement between Borrower
and Choice Hotels International, Inc.
- ------------------------------------------------------------ ---------------------------------------------------------
Schedule 2--Location of Inventory 130 Montrose Avenue, Copley, Ohio
- ------------------------------------------------------------ ---------------------------------------------------------
Schedule 3 Legal Description of Real Estate
- ------------------------------------------------------------ ---------------------------------------------------------
III.
- ------------------------------------------------------------ ---------------------------------------------------------
Name of Borrower JAGI North Canton, LLC, a Delaware limited liability
company
- ------------------------------------------------------------ ---------------------------------------------------------
Definition of Franchise Agreement All rights of Borrower pursuant to that certain Holiday
Inn Hotel Change of Ownership Agreement between
Borrower and Holiday Hospitality Franchising, Inc.
- ------------------------------------------------------------ ---------------------------------------------------------
Schedule 2--Location of Inventory 4520 Everhard, N.W., North Canton, Ohio
- ------------------------------------------------------------ ---------------------------------------------------------
Schedule 3 Legal Description of Real Estate
- ------------------------------------------------------------ ---------------------------------------------------------
</TABLE>
LOAN NO. 400030964
GUARANTY
This GUARANTY ("Guaranty") is executed as of August 14, 1998, by JANUS
AMERICAN GROUP, INC., a Delaware corporation (singularly and collectively
referred to as "Guarantor"), for the benefit of AMRESCO CAPITAL, L.P., a
Delaware limited partnership ("Lender").
A. JAGI CLEVELAND - HUDSON, LLC, a Delaware limited liability company
("Borrower"), is indebted to Lender with respect to a loan ("Loan") pursuant to
that certain Note dated of even date herewith, payable to the order of Lender in
the original principal amount of $13,300,000 (together with all renewals,
modifications, increases and extensions thereof, the "Note"), which is secured
by the liens and security interests of that certain Mortgage and Security
Agreement, of even date herewith granted by Borrower to Lender with respect to
certain property located in the Village of Boston Heights, County of Summit, and
State of Ohio (the "Mortgage"), and further evidenced, secured or governed by
the other Loan Documents (as defined in the Note); and
B. Lender is not willing to make the Loan, or otherwise extend credit, to
Borrower unless Guarantor unconditionally guarantees payment and performance to
Lender of the Guaranteed Obligations (as herein defined); and
C. Guarantor is the owner of a direct or indirect interest in Borrower, and
Guarantor will directly benefit from Lender's making the Loan to Borrower.
NOW, THEREFORE, as an inducement to Lender to make the Loan to Borrower
thereunder, and to extend such additional credit as Lender may from time to time
agree to extend under the Loan Documents, and for other good and valuable
consideration, the receipt and legal sufficiency of which are hereby
acknowledged, the parties do hereby agree as follows:
ARTICLE I
NATURE AND SCOPE OF GUARANTY
I.1 Guaranty of Obligation. Guarantor hereby irrevocably and
unconditionally guarantees to Lender (and its successors and assigns), jointly
and severally, the payment and performance of the Guaranteed Obligations as and
when the same shall be due and payable, whether by lapse of time, by
acceleration of maturity or otherwise. Guarantor hereby irrevocably and
unconditionally covenants and agrees that it is liable, jointly and severally,
for the Guaranteed Obligations as a primary obligor, and that each Guarantor
shall fully perform, jointly and severally, each and every term and provision
hereof.
<PAGE>
I.2 Definition of Guaranteed Obligations. As used herein, the term
"Guaranteed Obligations" shall mean the unpaid balance of the Debt (as defined
in the Note) in the event of (i) any fraud or material misrepresentation by
Borrower or any Guarantor in connection with the Loan or (ii) Borrower's failure
to make the first full payment of principal and interest due under the Note. In
addition, the Guaranteed Obligations shall also include and Guarantor shall also
be liable for, and shall indemnify, defend and hold Lender harmless from and
against, any and all loss, cost, expense, damage, claim or other obligation
(including without limitation reasonable attorney=s fees and costs of defense)
incurred or suffered by Lender and arising out of or in connection with the
matters listed in subparagraph (a) through (k) immediately below.
(a) any breach by Borrower of the Environmental Agreement (as defined in
the Note), including the indemnification provisions contained therein;
(b) Borrower's failure to obtain Lender's prior written consent to (a) any
subordinate financing or any other encumbrance on the Mortgaged Property (as
defined in the Mortgage), or (b) any transfer of the Mortgaged Property or
majority ownership in Borrower in violation of the Mortgage;
(c) any litigation or other legal proceeding related to the Debt that
delays or impairs Lender's ability to preserve, enforce or foreclose its lien on
the Security Property (as defined in the Note), including, but not limited to,
the filing of a voluntary or involuntary petition concerning Borrower under 11
U.S.C. ' 101 et seq. (the "Bankruptcy Code"), in which action a claim,
counterclaim, or defense is asserted against Lender, other than any litigation
or other legal proceeding in which a final, non-appealable judgment for money
damages or injunctive relief is entered against Lender;
(d) Borrower's failure to pay required taxes, assessments, and insurance
premiums payable with respect to the Mortgaged Property or to maintain the
required escrows therefor, to the extent that monies are not paid by Borrower in
escrow for the payment of such amounts, except for any amounts applicable to the
period after foreclosure of Lender=s lien on the Mortgaged Property, or the
delivery by Borrower of a deed to the Mortgaged Property in lieu of foreclosure
(which deed has been accepted by Lender in writing), or the appointment of a
receiver for the Mortgaged Property;
(e) the gross negligence or willful misconduct of Borrower, its agents,
affiliates, officers or employees which causes or results in a diminution, or
loss of value, of the Security Property that is not reimbursed by insurance or
which gross negligence or willful misconduct exposes Lender to claims, liability
or costs of defense in any litigation or other legal proceeding;
(f) the seizure or forfeiture of the Security Property, or any portion
thereof, or Lender's interest therein, resulting from criminal wrongdoing by any
person or entity other than Lender under any federal, state or local law;
(g) (i) any physical waste of the Mortgaged Property caused by the
intentional or grossly negligent act(s) or omission(s) of Borrower, its agents,
affiliates, officers and employees, (ii) the failure by Borrower to maintain,
repair or restore any part of the Mortgaged Property as may be required by the
Mortgage or any of the other Loan Documents to the extent
2
<PAGE>
of all gross revenues that have been generated by the Mortgaged Property
following the date which is eighteen (18) months prior to notice to Borrower
from Lender of such failure to maintain, repair or restore any part of the
Mortgaged Property and that have not been applied to pay any portion of the
Debt, reasonable and customary operating expenses and capital expenditures for
the Mortgaged Property paid to third parties not affiliated (directly or
indirectly) with Borrower, taxes and insurance premiums for the Mortgaged
Property and escrows deposited with Lender, or (iii) the removal or disposal of
any portion of the Mortgaged Property after an Event of Default under the Loan
Documents (as defined in the Loan Documents) to the extent such Mortgaged
Property is not replaced by Borrower with like property of equivalent value,
function and design;
(h) the misapplication or conversion by Borrower of any insurance proceeds
paid by reason of any loss, damage or destruction to the Mortgaged Property; and
any awards or amounts received in connection with the condemnation of all or a
portion of the Mortgaged Property and not used by Borrower for restoration or
repair of the Mortgaged Property;
(i) Borrower's failure to pay in accordance with the terms of the Mortgage
any charges for labor or materials or other charges for work performed or
materials furnished prior to foreclosure that can create liens on any portion of
the Mortgaged Property, to the extent of the amount rightfully claimed by the
lien claimant, or found in any legal proceeding to be owed to the lien claimant,
and not so paid;
(j) Borrower=s failure to deliver any security deposits collected with
respect to the Mortgaged Property to Lender or any other party entitled to
receive such security deposits under the Loan Documents following an Event of
Default; and
(k) any rents (including advanced or prepaid rents), issues, profits,
accounts or other amounts generated by or related to the Mortgaged Property
attributable to, or accruing after an Event of Default, which amounts were
collected by Borrower or its property manager and not turned over to the Lender
or used to pay unaffiliated third parties for reasonable and customary operating
expenses and capital expenditures for the Mortgaged Property, taxes and
insurance premiums with respect to the Mortgaged Property and any other amounts
required to be paid under the Loan Documents with respect to the Mortgaged
Property.
I.3 Nature of Guaranty. This Guaranty is an irrevocable, absolute,
continuing guaranty of payment and performance, is joint and several and is not
a guaranty of collection. This Guaranty may not be revoked by Guarantor and
shall continue to be effective with respect to any Guaranteed Obligations
arising or created after any attempted revocation by Guarantor and after (if
Guarantor is a natural person) Guarantor's death (in which event this Guaranty
shall be binding upon Guarantor's estate and Guarantor's legal representatives
and heirs). The fact that at any time or from time to time the Guaranteed
Obligations may be increased or reduced shall not release or discharge the
obligation of Guarantor to Lender with respect to Guaranteed Obligations. This
Guaranty may be enforced by Lender and any subsequent holder of the Note and
shall not be discharged by the assignment or negotiation of all or part of the
Note.
I.4 Guaranteed Obligations Not Reduced by Offset. The Guaranteed
Obligations and the liabilities and obligations of Guarantor to Lender
hereunder, shall not be reduced, discharged
3
<PAGE>
or released because or by reason of any existing or future offset, claim or
defense of Borrower, or any other party, against Lender or against payment of
the Guaranteed Obligations, whether such offset, claim or defense arises in
connection with the Guaranteed Obligations (or the transactions creating the
Guaranteed Obligations) or otherwise.
I.5 Payment by Guarantor. If all or any part of the Guaranteed Obligations,
as limited by Paragraph 1.2, shall not be punctually paid when due, whether at
maturity or earlier by acceleration or otherwise, Guarantor shall, immediately
upon demand by Lender, and without presentment, protest, notice of protest,
notice of non-payment, notice of intention to accelerate the maturity, notice of
acceleration of the maturity, or any other notice whatsoever, pay in lawful
money of the United States of America, the amount due on the Guaranteed
Obligations to Lender at Lender's address as set forth herein. Such demand(s)
may be made at any time coincident with or after the time for payment of all or
part of the Guaranteed Obligations, and may be made from time to time with
respect to the same or different items of Guaranteed Obligations. Such demand
shall be deemed made, given and received in accordance with the notice
provisions hereof.
I.6 No Duty to Pursue Others. It shall not be necessary for Lender (and
Guarantor hereby waives any rights which Guarantor may have to require Lender),
in order to enforce such payment by Guarantor, first to (i) institute suit or
exhaust its remedies against Borrower or others liable on the Loan or the
Guaranteed Obligations or any other person, (ii) enforce or exhaust any of
Lender's rights or remedies against any collateral which shall ever have been
given to secure the Loan, (iii) enforce Lender's rights or remedies available to
Lender against any other guarantors of the Guaranteed Obligations, (iv) join
Borrower or any others liable on the Guaranteed Obligations in any action
seeking to enforce this Guaranty, or (v) resort to any other means of obtaining
payment of the Guaranteed Obligations. Lender shall not be required to mitigate
damages or take any other action to reduce, collect or enforce the Guaranteed
Obligations.
I.7 Waivers. Guarantor agrees to the provisions of the Loan Documents, and
hereby waives notice of (i) any loans or advances made by Lender to Borrower,
(ii) acceptance of this Guaranty, (iii) any amendment or extension of the Note
or of any other Loan Documents, (iv) the execution and delivery by Borrower and
Lender of any other loan or credit agreement or of Borrower's execution and
delivery of any promissory notes or other documents arising under the Loan
Documents or in connection with the Mortgaged Property, (v) the occurrence of
any breach by Borrower or Event of Default, (vi) Lender's transfer or
disposition of the Guaranteed Obligations, or any part thereof, (vii) sale or
foreclosure (or posting or advertising for sale or foreclosure) of any
collateral for the Guaranteed Obligations, (viii) protest, proof of non-payment
or default by Borrower, or (ix) any other action at any time taken or omitted by
Lender, and, generally, all demands and notices of every kind in connection with
this Guaranty, the Loan Documents, any documents or agreements evidencing,
securing or relating to any of the Guaranteed Obligations and the obligations
hereby guaranteed.
I.8 Payment of Expenses. In the event that Guarantor should breach or fail
to timely perform any provisions of this Guaranty, Guarantor shall, immediately
upon demand by Lender, pay Lender all costs and expenses (including court costs
and reasonable attorneys' fees) incurred by Lender in the enforcement hereof or
the preservation of Lender's rights hereunder. The
4
<PAGE>
covenant contained in this section shall survive the payment and performance of
the Guaranteed Obligations.
I.9 Effect of Bankruptcy. In the event that, pursuant to any insolvency,
bankruptcy, reorganization, receivership or other debtor relief law, or any
judgment, order or decision thereunder, Lender must rescind or restore any
payment, or any part thereof, received by Lender in satisfaction of the
Guaranteed Obligations, as set forth herein, any prior release or discharge from
the terms of this Guaranty given to Guarantor by Lender shall be without effect,
and this Guaranty shall remain in full force and effect. It is the intention of
Borrower and Guarantor that Guarantor's obligations hereunder shall not be
discharged except by Guarantor's performance of such obligations and then only
to the extent of such performance.
I.10 Deferment of Rights of Subrogation, Reimbursement and Contribution.
(a) Notwithstanding any payment or payments made by any Guarantor
hereunder, no Guarantor will assert or exercise any right of Lender or of such
Guarantor against Borrower to recover the amount of any payment made by such
Guarantor to Lender by way of subrogation, reimbursement, contribution,
indemnity, or otherwise arising by contract or operation of law, and such
Guarantor shall not have any right of recourse to or any claim against assets or
property of Borrower, whether or not the obligations of Borrower have been
satisfied, all of such rights being herein expressly waived by such Guarantor.
Each Guarantor agrees not to seek contribution or indemnity or other recourse
from any other guarantor. If any amount shall nevertheless be paid to a
Guarantor by Borrower or another Guarantor prior to payment in full of the
Obligations (hereinafter defined), such amount shall be held in trust for the
benefit of Lender and shall forthwith be paid to Lender to be credited and
applied to the Obligations, whether matured or unmatured. The provisions of this
paragraph shall survive the termination of this Guaranty, and any satisfaction
and discharge of Borrower by virtue of any payment, court order or any
applicable law.
(b) Notwithstanding the Provisions of Section 1.10(a), each Guarantor shall
have and be entitled to (1) all rights of subrogation otherwise provided by
applicable law in respect of any payment it may make or be obligated to make
under this Guaranty and (2) all claims it would have against Borrower in the
absence of Section 1.10(a) and to assert and enforce same, in each case on and
after, but at no time prior to, the date (the ASubrogation Trigger Date@) which
is 91 days after the date on which all sums owed to Lender under the Loan
Documents (the AObligations@) have been paid in full, if and only if (x) no
Event of Default of the type described in Section 23(f) or 23(g) of the Mortgage
with respect to Lender or any other Guarantor has existed at any time on and
after the date of this Guaranty to and including the Subrogation Trigger Date
and (y) the existence of each Guarantor=s rights under this Section 1.10(b)
would not make such Guarantor a creditor (as defined in the Code, as such term
is hereinafter defined) of Borrower or any other Guarantor in any insolvency,
bankruptcy, reorganization or similar proceeding commenced on or prior to the
Subrogation Trigger Date.
I.11 Bankruptcy Code Waiver. It is the intention of the parties that the
Guarantor shall not be deemed to be a "creditor" or "creditors" (as defined in
Section 101 of the United States Bankruptcy Code [the "Bankruptcy Code"]) of
Borrower, or any such guarantor, by reason of the existence of this Guaranty, in
the event that Borrower or any such guarantor, becomes a debtor in
5
<PAGE>
any proceeding under the Bankruptcy Code, and in connection herewith, Guarantor
hereby waives any such right as a "creditor" under the Bankruptcy Code. This
waiver is given to induce Lender to make the Loan evidenced by the Note to
Borrower. After the Loan is paid in full and there shall be no obligations or
liabilities under this Guaranty outstanding, this waiver shall be deemed to be
terminated.
I.12 "Borrower." The term "Borrower" as used herein shall include any new
or successor corporation, association, partnership (general or limited), joint
venture, trust or other individual or organization formed as a result of any
merger, reorganization, sale, transfer, devise, gift or bequest of Borrower or
any interest in Borrower.
ARTICLE II
EVENTS AND CIRCUMSTANCES NOT REDUCING
OR DISCHARGING GUARANTOR'S OBLIGATIONS
Guarantor hereby consents and agrees to each of the following, and agrees
that Guarantor's obligations under this Guaranty shall not be released,
diminished, impaired, reduced or adversely affected by any of the following, and
waives any common law, equitable, statutory or other rights (including without
limitation rights to notice) which Guarantor might otherwise have as a result of
or in connection with any of the following:
II.1 Modifications. Any renewal, extension, increase, modification,
alteration or rearrangement of all or any part of the Guaranteed Obligations,
Note, Loan Documents, or other document, instrument, contract or understanding
between Borrower and Lender, or any other parties, pertaining to the Guaranteed
Obligations or any failure of Lender to notify Guarantor of any such action.
II.2 Adjustment. Any adjustment, indulgence, forbearance or compromise that
might be granted or given by Lender to Borrower or any Guarantor.
II.3 Condition of Borrower or Guarantor. The insolvency, bankruptcy,
arrangement, adjustment, composition, liquidation, disability, dissolution or
lack of power of Borrower, Guarantor or any other party at any time liable for
the payment of all or part of the Guaranteed Obligations; or any dissolution of
Borrower or Guarantor, or any sale, lease or transfer of any or all of the
assets of Borrower or Guarantor, or any changes in the shareholders, partners or
members of Borrower or Guarantor; or any reorganization of Borrower or
Guarantor.
II.4 Invalidity of Guaranteed Obligations. The invalidity, illegality or
unenforceability of all or any part of the Guaranteed Obligations, or any
document or agreement executed in connection with the Guaranteed Obligations,
for any reason whatsoever, including without limitation the fact that (i) the
Guaranteed Obligations, or any part thereof, exceeds the amount permitted by
law, (ii) the act of creating the Guaranteed Obligations or any part thereof is
ultra vires, (iii) the officers or representatives executing the Note or the
other Loan Documents or otherwise creating the Guaranteed Obligations acted in
excess of their authority, (iv) the Guaranteed Obligations violate applicable
usury laws, (v) Borrower has valid defenses, claims or
6
<PAGE>
offsets (whether at law, in equity or by agreement) which render the Guaranteed
Obligations wholly or partially uncollectible from Borrower, (vi) the creation,
performance or repayment of the Guaranteed Obligations (or the execution,
delivery and performance of any document or instrument representing part of the
Guaranteed Obligations or executed in connection with the Guaranteed
Obligations, or given to secure the repayment of the Guaranteed Obligations) is
illegal, uncollectible or unenforceable, or (vii) the Note or any of the other
Loan Documents have been forged or otherwise are irregular or not genuine or
authentic, it being agreed that Guarantor shall remain liable hereon regardless
of whether Borrower or any other person be found not liable on the Guaranteed
Obligations or any part thereof for any reason.
II.5 Release of Obligors. Any full or partial release of the liability of
Borrower on the Guaranteed Obligations, or any part thereof, or of any
co-guarantors, or any other person or entity now or hereafter liable, whether
directly or indirectly, jointly, severally, or jointly and severally, to pay,
perform, guarantee or assure the payment of the Guaranteed Obligations, or any
part thereof, it being recognized, acknowledged and agreed by Guarantor that
Guarantor may be required to pay the Guaranteed Obligations in full without
assistance or support of any other party, and Guarantor has not been induced to
enter into this Guaranty on the basis of a contemplation, belief, understanding
or agreement that other parties will be liable to pay or perform the Guaranteed
Obligations, or that Lender will look to other parties to pay or perform the
Guaranteed Obligations.
II.6 Other Collateral. The taking or accepting of any other security,
collateral or guaranty, or other assurance of payment, for all or any part of
the Guaranteed Obligations.
II.7 Release of Collateral. Any release, surrender, exchange,
subordination, deterioration, waste, loss or impairment (including without
limitation negligent, willful, unreasonable or unjustifiable impairment) of any
collateral, property or security, at any time existing in connection with, or
assuring or securing payment of, all or any part of the Guaranteed Obligations.
II.8 Care and Diligence. The failure of Lender or any other party to
exercise diligence or reasonable care in the preservation, protection,
enforcement, sale or other handling or treatment of all or any part of such
collateral, property or security, including but not limited to any neglect,
delay, omission, failure or refusal of Lender (i) to take or prosecute any
action for the collection of any of the Guaranteed Obligations, or (ii) to
foreclose, or initiate any action to foreclose, or, once commenced, prosecute to
completion any action to foreclose upon any security therefor, or (iii) to take
or prosecute any action in connection with any instrument or agreement
evidencing or securing all or any part of the Guaranteed Obligations.
II.9 Unenforceability. The fact that any collateral, security, security
interest or lien contemplated or intended to be given, created or granted as
security for the repayment of the Guaranteed Obligations, or any part thereof,
shall not be properly perfected or created, or shall prove to be unenforceable
or subordinate to any other security interest or lien, it being recognized and
agreed by Guarantor that Guarantor is not entering into this Guaranty in
reliance on, or in contemplation of the benefits of, the validity,
enforceability, collectibility or value of any of the collateral for the
Guaranteed Obligations.
7
<PAGE>
II.10 Offset. The Note, the Guaranteed Obligations and the liabilities and
obligations of Guarantor to Lender hereunder, shall not be reduced, discharged
or released because of or by reason of any existing or future right of offset,
claim or defense of Borrower against Lender, or any other party, or against
payment of the Guaranteed Obligations, whether such right of offset, claim or
defense arises in connection with the Guaranteed Obligations (or the
transactions creating the Guaranteed Obligations) or otherwise.
II.11 Merger. The reorganization, merger or consolidation of Borrower into
or with any other corporation or entity.
II.12 Preference. Any payment by Borrower to Lender is held to constitute a
preference under bankruptcy laws, or for any reason Lender is required to refund
such payment or pay such amount to Borrower or someone else.
II.13 Other Actions Taken or Omitted. Any other action taken or omitted to
be taken with respect to the Loan Documents, the Guaranteed Obligations, or the
security and collateral therefor, whether or not such action or omission
prejudices Guarantor or increases the likelihood that Guarantor will be required
to pay the Guaranteed Obligations pursuant to the terms hereof, it is the
unambiguous and unequivocal intention of Guarantor that Guarantor shall be
obligated to pay the Guaranteed Obligations when due, notwithstanding any
occurrence, circumstance, event, action, or omission whatsoever, whether or not
contemplated, and whether or not otherwise or particularly described herein,
which obligation shall be deemed satisfied only upon the full and final payment
and satisfaction of the Guaranteed Obligations.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
To induce Lender to enter into the Loan Documents and extend credit to
Borrower, Guarantor represents and warrants to Lender as follows:
III.1 Benefit. Guarantor is an affiliate of Borrower, is the owner of a
direct or indirect interest in Borrower, and has received, or will receive,
direct or indirect benefit from the making of this Guaranty with respect to the
Guaranteed Obligations.
III.2 Familiarity and Reliance. Guarantor is familiar with, and has
independently reviewed books and records regarding, the financial condition of
Borrower and is familiar with the value of any and all collateral intended to be
created as security for the payment of the Note or Guaranteed Obligations;
however, Guarantor is not relying on such financial condition or the collateral
as an inducement to enter into this Guaranty.
III.3 No Representation by Lender. Neither Lender nor any other party has
made any representation, warranty or statement to Guarantor in order to induce
Guarantor to execute this Guaranty.
8
<PAGE>
III.4 Guarantor's Financial Condition. As of the date hereof, and after
giving effect to this Guaranty and the contingent obligation evidenced hereby,
Guarantor is, and will be, solvent, and has and will have assets which, fairly
valued, exceed its obligations, liabilities (including contingent liabilities)
and debts, and has and will have property and assets sufficient to satisfy and
repay its obligations and liabilities.
III.5 Legality. The execution, delivery and performance by Guarantor of
this Guaranty and the consummation of the transactions contemplated hereunder do
not, and will not, contravene or conflict with any law, statute or regulation
whatsoever to which Guarantor is subject or constitute a default (or an event
which with notice or lapse of time or both would constitute a default) under, or
result in the breach of, any indenture, mortgage, deed of trust, charge, lien,
or any contract, agreement or other instrument to which Guarantor is a party or
which may be applicable to Guarantor. This Guaranty is a legal and binding
obligation of Guarantor and is enforceable in accordance with its terms, except
as limited by bankruptcy, insolvency or other laws of general application
relating to the enforcement of creditors' rights.
III.6 Survival. All representations and warranties made by Guarantor herein
shall survive the execution hereof.
III.7 Review of Documents. Guarantor has examined the Note and all of the
Loan Documents.
III.8 Litigation. Except as otherwise disclosed to Lender, there are no
proceedings pending or, so far as Guarantor knows, threatened before any court
or administrative agency which, if decided adversely to Guarantor, would
materially adversely affect the financial condition of Guarantor or the
authority of Guarantor to enter into, or the validity or enforceability of this
Guaranty.
III.9 Tax Returns. Guarantor has filed all required federal, state and
local tax returns and has paid all taxes as shown on such returns as they have
become due. No claims have been assessed and are unpaid with respect to such
taxes.
ARTICLE IV
SUBORDINATION OF CERTAIN INDEBTEDNESS
IV.1 Subordination of All Guarantor Claims. As used herein, the term
"Guarantor Claims" shall mean all debts and liabilities of Borrower to
Guarantor, whether such debts and liabilities now exist or are hereafter
incurred or arise, or whether the obligations of Borrower thereon be direct,
contingent, primary, secondary, several, joint and several, or otherwise, and
irrespective of whether such debts or liabilities be evidenced by note,
contract, open account, or otherwise, and irrespective of the person or persons
in whose favor such debts or liabilities may, at their inception, have been, or
may hereafter be created, or the manner in which they have been or may hereafter
be acquired by Guarantor. The Guarantor Claims shall include without limitation
all rights and claims of Guarantor against Borrower (arising as a result of
subrogation or otherwise) as a result of Guarantor's payment of all or a portion
of the Guaranteed Obligations
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to the extent the provisions of Section 1.4 hereof are unenforceable. Upon the
occurrence of an Event of Default or the occurrence of an event which would,
with the giving of notice or the passage of time, or both, constitute an Event
of Default, Guarantor shall not receive or collect, directly or indirectly, from
Borrower or any other party any amount upon the Guarantor Claims.
IV.2 Claims in Bankruptcy. In the event of receivership, bankruptcy,
reorganization, arrangement, debtor's relief, or other insolvency proceedings
involving Guarantor as debtor, Lender shall have the right to prove its claim in
any such proceeding so as to establish its rights hereunder and receive directly
from the receiver, trustee or other court custodian dividends and payments which
would otherwise be payable upon Guarantor Claims. Guarantor hereby assigns such
dividends and payments to Lender. Should Lender receive, for application upon
the Guaranteed Obligations, any such dividend or payment which is otherwise
payable to Guarantor, and which, as between Borrower and Guarantor, shall
constitute a credit upon the Guarantor Claims, then upon payment to Lender in
full of the Guaranteed Obligations, Guarantor shall become subrogated to the
rights of Lender to the extent that such payments to Lender on the Guarantor
Claims have contributed toward the liquidation of the Guaranteed Obligations,
and such subrogation shall be with respect to that proportion of the Guaranteed
Obligations which would have been unpaid if Lender had not received dividends or
payments upon the Guarantor Claims.
IV.3 Payments Held in Trust. In the event that, notwithstanding anything to
the contrary in this Guaranty, Guarantor should receive any funds, payment,
claim or distribution which is prohibited by this Guaranty, Guarantor agrees to
hold in trust for Lender an amount equal to the amount of all funds, payments,
claims or distributions so received, and agrees that it shall have absolutely no
dominion over the amount of such funds, payments, claims or distributions so
received except to pay them promptly to Lender, and Guarantor covenants promptly
to pay the same to Lender.
IV.4 Liens Subordinate. Guarantor agrees that any liens, security
interests, judgment liens, charges or other encumbrances upon Borrower's assets
securing payment of the Guarantor Claims shall be and remain inferior and
subordinate to any liens, security interests, judgment liens, charges or other
encumbrances upon Borrower's assets securing payment of the Guaranteed
Obligations, regardless of whether such encumbrances in favor of Guarantor or
Lender presently exist or are hereafter created or attach. Without the prior
written consent of Lender, Guarantor shall not (i) exercise or enforce any
creditor's right it may have against Borrower, or (ii) foreclose, repossess,
sequester or otherwise take steps or institute any action or proceedings
(judicial or otherwise, including without limitation the commencement of, or
joinder in, any liquidation, bankruptcy, rearrangement, debtor's relief or
insolvency proceeding) to enforce any liens, mortgages, deeds of trust, security
interest, collateral rights, judgments or other encumbrances on assets of
Borrower held by Guarantor.
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ARTICLE V
MISCELLANEOUS
V.1 Waiver. No failure to exercise, and no delay in exercising, on the part
of Lender, any right hereunder shall operate as a waiver thereof, nor shall any
single or partial exercise thereof preclude any other or further exercise
thereof or the exercise of any other right. The rights of Lender hereunder shall
be in addition to all other rights provided by law. No modification or waiver of
any provision of this Guaranty, nor consent to departure therefrom, shall be
effective unless in writing and no such consent or waiver shall extend beyond
the particular case and purpose involved. No notice or demand given in any case
shall constitute a waiver of the right to take other action in the same, similar
or other instances without such notice or demand.
V.2 Notices. Any notice, demand, statement, request or consent made
hereunder shall be in writing and shall be deemed to be received by the
addressee on the day such notice is tendered to a nationally recognized
overnight delivery service or on the third day following the day such notice is
deposited with the United States Postal Service first class certified mail,
return receipt requested, in either instance, addressed to the address, as set
forth below, of the party to whom such notice is to be given, or to such other
address as either party shall in like manner designate in writing. The addresses
of the parties hereto are as follows:
Guarantor:
JANUS AMERICAN GROUP, INC.
8534 East Kemper Road
Cincinnati, Ohio 45249
Lender:
AMRESCO CAPITAL, L.P.
700 North Pearl Street
Suite 2400, LB #342
Dallas, Texas 75201-7424
Attn: Loan Servicing
V.3 Governing Law; Jurisdiction. This Guaranty shall be governed by and
construed in accordance with the laws of the State in which the real property
encumbered by the Mortgage is located and the applicable laws of the United
States of America. Guarantor hereby irrevocably submits to the jurisdiction of
any court of competent jurisdiction located in the state in which the Mortgaged
Property is located in connection with any proceeding out of or relating to this
Guaranty.
V.4 Invalid Provisions. If any provision of this Guaranty is held to be
illegal, invalid, or unenforceable under present or future laws effective during
the term of this Guaranty, such provision shall be fully severable and this
Guaranty shall be construed and enforced as if such illegal, invalid or
unenforceable provision had never comprised a part of this Guaranty, and the
remaining provisions of this Guaranty shall remain in full force and effect and
shall not be affected by the illegal, invalid or unenforceable provision or by
its severance from this Guaranty, unless such continued effectiveness of this
Guaranty, as modified, would be contrary to the basic understandings and
intentions of the parties as expressed herein.
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V.5 Amendments. This Guaranty may be amended only by an instrument in
writing executed by the party or an authorized representative of the party
against whom such amendment is sought to be enforced.
V.6 Parties Bound; Assignment. This Guaranty shall be binding upon and
inure to the benefit of the parties hereto and their respective successors,
assigns and legal representatives; provided, however, that Guarantor may not,
without the prior written consent of Lender, assign any of its rights, powers,
duties or obligations hereunder.
V.7 Headings. Section headings are for convenience of reference only and
shall in no way affect the interpretation of this Guaranty.
V.8 Recitals. The recital and introductory paragraphs hereof are a part
hereof, form a basis for this Guaranty and shall be considered prima facie
evidence of the facts and documents referred to therein.
V.9 Counterparts. To facilitate execution, this Guaranty may be executed in
as many counterparts as may be convenient or required. It shall not be necessary
that the signature or acknowledgment of, or on behalf of, each party, or that
the signature of all persons required to bind any party, or the acknowledgment
of such party, appear on each counterpart. All counterparts shall collectively
constitute a single instrument. It shall not be necessary in making proof of
this Guaranty to produce or account for more than a single counterpart
containing the respective signatures of, or on behalf of, and the respective
acknowledgments of, each of the parties hereto. Any signature or acknowledgment
page to any counterpart may be detached from such counterpart without impairing
the legal effect of the signatures or acknowledgments thereon and thereafter
attached to another counterpart identical thereto except having attached to it
additional signature or acknowledgment pages.
V.10 Financial Statements: Guarantor shall furnish or cause to be furnished
to Lender the following:
(a) within ninety (90) days after the close of each fiscal year of
Guarantor, a balance sheet of Guarantor dated as of the close of such
fiscal year;
(b) contemporaneously with its delivery to the Internal Revenue
Service, copies of any and all tax returns, requests for extension and
other similar items; and
(c) from time to time, such additional financial statements and
financial information as Lender shall require.
All balance sheets shall include, among other things, disclosure of all
contingent liabilities and changes in financial condition, together with such
supporting schedules and documentation as Lender shall require. All balance
sheets shall be certified by Guarantor and by Guarantor's independent certified
public accountant.
V.11 Rights and Remedies. If Guarantor becomes liable for any indebtedness
owing by Borrower to Lender, by endorsement or otherwise, other than under this
Guaranty, such liability
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shall not be in any manner impaired or affected hereby and the rights of Lender
hereunder shall be cumulative of any and all other rights that Lender may ever
have against Guarantor. The exercise by Lender of any right or remedy hereunder
or under any other instrument, or at law or in equity, shall not preclude the
concurrent or subsequent exercise of any other right or remedy.
V.12 ENTIRETY. THIS GUARANTY EMBODIES THE FINAL, ENTIRE AGREEMENT OF
GUARANTOR AND LENDER WITH RESPECT TO GUARANTOR'S GUARANTY OF THE GUARANTEED
OBLIGATIONS AND SUPERSEDES ANY AND ALL PRIOR COMMITMENTS, AGREEMENTS,
REPRESENTATIONS, AND UNDERSTANDINGS, WHETHER WRITTEN OR ORAL, RELATING TO THE
SUBJECT MATTER HEREOF. THIS GUARANTY IS INTENDED BY GUARANTOR AND LENDER AS A
FINAL AND COMPLETE EXPRESSION OF THE TERMS OF THE GUARANTY, AND NO COURSE OF
DEALING BETWEEN GUARANTOR AND LENDER, NO COURSE OF PERFORMANCE, NO TRADE
PRACTICES, AND NO EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL
AGREEMENTS OR DISCUSSIONS OR OTHER EXTRINSIC EVIDENCE OF ANY NATURE SHALL BE
USED TO CONTRADICT, VARY, SUPPLEMENT OR MODIFY ANY TERM OF THIS GUARANTY
AGREEMENT. THERE ARE NO ORAL AGREEMENTS BETWEEN GUARANTOR AND LENDER.
V.13 WAIVER OF RIGHT TO TRIAL BY JURY. GUARANTOR HEREBY AGREES NOT TO ELECT
A TRIAL BY JURY OF ANY ISSUE TRIABLE OF RIGHT BY JURY, AND WAIVES ANY RIGHT TO
TRIAL BY JURY FULLY TO THE EXTENT THAT ANY SUCH RIGHT SHALL NOW OR HEREAFTER
EXIST WITH REGARD TO THIS GUARANTY, THE MORTGAGE, OR THE OTHER LOAN DOCUMENTS,
OR ANY CLAIM, COUNTERCLAIM OR OTHER ACTION ARISING IN CONNECTION THEREWITH. THIS
WAIVER OF RIGHT TO TRIAL BY JURY IS GIVEN KNOWINGLY AND VOLUNTARILY BY
GUARANTOR, AND IS INTENDED TO ENCOMPASS INDIVIDUALLY EACH INSTANCE AND EACH
ISSUE AS TO WHICH THE RIGHT TO A TRIAL BY JURY WOULD OTHERWISE ACCRUE. LENDER IS
HEREBY AUTHORIZED TO FILE A COPY OF THIS PARAGRAPH IN ANY PROCEEDING AS
CONCLUSIVE EVIDENCE OF THIS WAIVER BY GUARANTOR.
(The balance of this page is intentionally left blank.)
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EXECUTED under seal as of the day and year first above written.
GUARANTOR:
JANUS AMERICAN GROUP, INC., a
Delaware corporation
By /s/ James E. Bishop
----------------------------------
Name: James E. Bishop
Title: President
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<TABLE>
<CAPTION>
SCHEDULE TO EXHIBIT 10.31
OTHER GUARANTIES
I.
<S> <C>
- ------------------------------------------------------------ ---------------------------------------------------------
Name of Borrower JAGI Cleveland - Independence, LLC, a Delaware limited
liability company
- ------------------------------------------------------------ ---------------------------------------------------------
Amount of Note $21,800,000
- ------------------------------------------------------------ ---------------------------------------------------------
Property Location City of Independence, County of Cuyahoga, State of Ohio
- ------------------------------------------------------------ ---------------------------------------------------------
II.
- ------------------------------------------------------------ ---------------------------------------------------------
Name of Borrower JAGI Montose West LLC, a Delaware limited liability
company
- ------------------------------------------------------------ ---------------------------------------------------------
Amount of Note $3,500,000
- ------------------------------------------------------------ ---------------------------------------------------------
Property Location Township of Copley, County of Summit, State of Ohio
- ------------------------------------------------------------ ---------------------------------------------------------
III.
- ------------------------------------------------------------ ---------------------------------------------------------
Name of Borrower JAGI North Canton, LLC, a Delaware limited liability
company
- ------------------------------------------------------------ ---------------------------------------------------------
Amount of Note $5,400,000
- ------------------------------------------------------------ ---------------------------------------------------------
Property Location Township of Jackson, County of Stark, State of Ohio
- ------------------------------------------------------------ ---------------------------------------------------------
</TABLE>
